Registered number 03959429
accesso Technology Group plc
2017 Annual report and financial statements
accesso Technology Group plc
Contents of the consolidated financial statements
for the financial year ended 31 December 2017
Company information
Introduction and key financial highlights
Chairman's statement
Chief Executive’s statement
The Board of directors
Strategic report
Report of the directors
Directors’ remuneration report
Statement of Directors’ responsibilities in respect of the annual report and the financial statements
Report of the independent auditor to the members of accesso Technology Group plc
Consolidated statement of comprehensive income
Consolidated statement of financial position
Company statement of financial position
Consolidated statement of cash flow
Company statement of cash flow
Consolidated statement of changes in equity
Company statement of changes in equity
Notes to the consolidated financial statements
Page
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1
accesso Technology Group plc
Company information
for the financial year ended 31 December 2017
Directors:
Secretary:
Registered office:
Tom Burnet, Executive Chairman
John Alder, Executive
Steve Brown, Executive
David Gammon, Non-Executive
Karen Slatford, Non-Executive
John Weston, Senior Independent Director
Martha Bruce
7 Clifton Terrace
Cliftonville, Dorking
Surrey
RH4 2JG
Unit 5, The Pavilions
Ruscombe Park
Twyford
Berkshire
RG10 9NN
Registered number:
03959429 (England and Wales)
Auditor:
Bankers:
KPMG LLP
Arlington Business Park
Theale
Reading
Berkshire
RG7 4SD
Lloyds Bank plc
The Atrium
Davidson House
Forbury Square
Reading
Berkshire
RG1 3EU
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accesso Technology Group plc
Introduction and key financial highlights
for the financial year ended 31 December 2017
Financial Highlights
Revenue
Operating profit
Adjusted operating profit *
Adjusted EBITDA*
Cash generated from operations
Adjusted cash generated from operations**
Underlying cash conversion***
Net cash/ (debt) ****
Earnings per share – basic (cents)
Adjusted Earnings per share – basic (cents) *****
Year ended
31 Dec 17
(audited)
$m
133.4
Year ended
31 Dec 16
(audited)
$m
102.5
9.2
19.1
24.6
33.1
21.2
86.2%
12.5
40.83
56.73
10.5
15.7
19.1
18.6
18.6
97.4%
(3.4)
33.95
51.48
Change
+30.1%
-12.4%
+21.7%
+28.8%
+78.0%
+14.0%
$15.9m
+20.3%
+10.2%
* Adjusted operating measures are based on reported profit numbers excluding acquisition expenses, amortisation of acquired
intangibles, charges relating to any contingent element of acquisition consideration, and share-based payments. Page 14.
** Cash generated from operations, less specific cash balances as detailed on page 10
*** Adjusted cash generated from operations as a percentage of Adjusted EBITDA
**** Cash less Borrowings. Page 14
***** Adjusted for acquisition expenses, amortisation of acquired intangibles, charges relating to any contingent element of
acquisition consideration, share-based payments, net of tax effect, and the revaluation of US deferred tax assets and liabilities. Page
48
Operational Highlights – Broadening our horizons
o
o
Strong performance continues with new business wins, renewed partnerships, geographic expansion and new acquisitions
driving growth from our evolved offering
accesso extends leadership in traditional verticals through product innovation, while applying expertise to greenfield
opportunities with similar guest-management challenges
o Acquisitions of Ingresso and The Experience Engine (TE2) broaden our reach, enhance our technology offering and help us
impact more of the digital guest journey
Strength at our core, innovating for the future in our Established Verticals (Theme Parks, Water Parks)
o
o
o
Installed accesso Prism as the backbone of the world’s first 100% virtual queuing based water park, winning the IAAPA award
for most impactful new product across the industry
Total accesso Passport volumes up 37% reflecting, in part, the continued Merlin rollout
Key new customer win in geography of growing importance with Village Roadshow Theme Parks, Queensland (accesso
Passport)
Growing scale and expanding globally in our Adjacent Verticals (ski resorts, cultural attractions, tours and live event ticketing)
o
o
o
o
55 new customers for accesso ShoWare during the year including ski resorts, walking destinations, sports clubs and museums
Real-time interface between accesso ShoWare and Ingresso completed, allowing accesso ShoWare customers to list and sell
their tickets on numerous eCommerce platforms, expanding reach and driving revenue
Event tickets sold for concerts given by Bruno Mars, Ed Sheeran, John Mayer, Green Day and Jack Johnson among others
accesso Siriusware continues its global expansion with customer wins now including Watercourse Distillery Limited in Ireland
and Experiencias Xcaret in Mexico, rolling out 400 accesso Siriusware salespoints across its 6 popular ecotourism venues
Expanding our impact on the digital guest journey across a number of Greenfield Opportunities
TE2, acquired in July 2017, extending accesso’s offer with digitalisation and personalisation software
o
o Mobile technology allows operators to reach out to their guests and offer seamless, integrated experiences using data-driven
insights to understand and act on preferences
Impressive early performance opening up new verticals including healthcare with the announcement of Henry Ford Health
Systems partnership post period end
Ingresso, acquired in March 2017, helps ticket-sellers find new routes to market via third party channels
o
o Volume growth of 67% year-on-year reflects customer wins including Ticketmaster UK, opening up access to West End
o
theatres in London
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accesso Technology Group plc
Commenting on the results, Tom Burnet, Executive Chairman of accesso, said:
“This has been another strong year. We continue to execute on our strategy with precision and focus, and we are continuing to see the
rewards.
Our financial performance was ahead of our expectations, and our resilience as a global business is becoming more evident. Our clients
are increasingly seeing the benefit we bring to their customers, and in turn their own profitability. This is evidenced by today’s results
with another profitable period for our own growth at Accesso.
We have pushed boundaries this year as we continued to focus on investment, building and improving our business, and finding new
ways to support the digital customer journey. Two important strategic acquisitions present us with many more opportunities, and we
are excited about the new markets they open up for us as well as how they can support our existing customer base.
I am excited by where we are as an organisation, and I see enormous growth opportunities in our future.”
Commenting on the results, Steve Brown, Chief Executive Officer of accesso, said:
“These results speak to the quality of our technology and our ability to create innovative solutions for our customers. Ensuring the
quality of our product offering in terms of both functionality and security remains a key part of our ongoing plan and we will invest
behind our platform to make certain of our continued leadership in this area.
The acquisitions we made in 2017 have both broadened and strengthened our offering, and our approach to M&A reflects our continued
ambition to bring the best technology, people and ideas to Accesso.
Having decided to step down from my role as CEO, I know I am leaving the Group in fantastic hands. Accesso has an extremely bright
future ahead with Paul Noland at the helm.”
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accesso Technology Group plc
Chairman’s Statement
Redefining the guest journey
2017 was another year of growth and expansion for accesso as we integrated new acquisitions, rolled-out market-leading technology
and won new business across the world. At the heart of our success remains our focus on the digital guest journey: helping our
customers improve their guests’ experience and in turn driving increased revenues. From the initial online research and buying decision
to arrival and at the attraction itself, to the feedback and follow-up processes operators use to better understand their customers,
accesso’s technology continues to help clients upgrade the experiences they can offer. Our ambition to support the largest operators
has taken our business to every corner of the globe and it is pleasing to see that our solutions are as applicable in different geographies
as they are across a number of vertical markets is being proven as we expand.
The year’s financial results reflect the progress being made across the business. During the year we delivered revenue of $133.4m up
from $102.5m last year, while operating profit was $9.2m in 2017, from $10.5m in 2016, as the income statement absorbed the
acquisition expenses of the two acquisitions made in the period and ongoing non-cash charges related to the acquisition strategy that
the Group has followed over recent years. More importantly, adjusted EBITDA was $24.6m up from $19.1m, which is more
representative of the Group’s underlying performance. These revenue and adjusted EBITDA numbers translate into 30.1% and 28.8%
growth respectively, indicating our ability to deliver meaningful profit from our revenue despite ongoing investment in R&D to ensure
our product remains the best in our industry. We are proud to have now delivered a 7-year revenue CAGR of 23.9% and a 7-year
adjusted EBITDA CAGR of 32.2%.
Broad thinking focused on solutions
At accesso we think in terms of solutions rather than individual product lines. Over the past years, we have evolved our offering to
include a range of complementary technologies designed to meet a wide range of client needs, and we engage with existing and
prospective customers on this basis. We continue to increase the number of combined deployments of accesso technologies, with the
addition of Ingresso and TE2 strengthening our hand still further.
Looking through a different lens
The range and flexibility of our solutions also makes accesso particularly well placed to expand into new and exciting industry verticals.
We are increasingly establishing ourselves beyond our traditional theme and water park markets, making particular progress in ski and
snow sports, cultural attractions, museums, sports stadia, live music events and many more areas where we see the opportunity to
expand. Gradually, we have come to see our business progress more in terms of these established, adjacent and greenfield areas than
we have in terms of our individual products in isolation. This review of our 2017 results reflects that evolution in our thinking, and lays
out how accesso technology is helping operators in each of these three areas meet the challenges that mean the most to them.
One Team
accesso’s people are the bedrock of the Company’s success. Our culture of self-improvement and passionate innovation delivers results
for our customers year after year, and it is our nearly 500 dedicated employees that translate the spirit of that idea into action. On
behalf of the Board, I thank them all wholeheartedly for their efforts.
Opening 2018
accesso has started 2018 with a number of new business wins, a significant contract extension with our long-term partner Cedar Fair
and an exciting new partnership with the Henry Ford Health System, accesso’s initial step into a material Greenfield opportunity,
Healthcare. We have also announced that Steve Brown will be stepping down as accesso’s CEO in April 2018 to be replaced by Paul
Noland. Steve has made an outstanding contribution to the Group since 2012 and we wish him all the very best for the future. We are
delighted to be welcoming Paul to accesso. He brings a wealth of industry experience from heading up IAAPA, the largest international
trade association for amusement facilities and attractions worldwide, a range of senior executive roles with Walt Disney Parks and
Resorts during a 16-year tenure and at Marriott. I am confident he is exactly the right leader for the next phase of development for
our company and along with the rest of the Board, I’m very much looking forward to working with him.
Tom Burnet
Executive Chairman
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accesso Technology Group plc
Chief Executive’s Statement
Operational Review
accesso has once again made significant strides in 2017. We continue to win a range of business across the Group and geographic
expansion continues at a good pace. New clients of varying size have deployed accesso technology for this first time this year, while
on a geographic view, deployments have also gone live for the first time in India, Singapore, Thailand, Ireland, Portugal and New
Zealand.
We also continue to progress well with the rollout of technology related to our agreement with Merlin Entertainments Group Ltd
(“Merlin”). With the majority of the initial investment required to deliver on that project now behind us, we are well placed to begin
benefiting from the longer-term international expansion opportunities that we always envisaged would be available as a result of
enhancing our global technology offering, establishing regional support networks and integrating with local payment and regulatory
systems.
We have also spent part of the year ensuring the smooth integration of Ingresso and TE2 into the accesso family. These acquisitions
have improved both the breadth and impact of our offering and are already being set to work with our existing products to improve
the range of solutions we can offer our customers.
People
We are acutely aware that our ability to attract and retain the best available talent across our organisation is vital to our ongoing
success, and during the year we have introduced a number of initiatives with this goal in mind. We continue to expand our workforce
to meet the growing demands of our scaling business and, our year end non-seasonal employee count, including those who joined as
part of the acquisitions, totaled nearly 500 at the end of the year, up from 362 in 2016. To better integrate our functional teams we
are currently combining three of our US East Coast offices into our largest office in Lake Mary, Florida, and we have also launched a
substantial computer-based training initiative available for all staff. I want to thank the whole team for its commitment and endeavour
during 2017, and we look forward to welcoming many more new faces in 2018.
Established Verticals
accesso sees its traditional verticals as theme and water park operators. We are proud to have many of the largest operators in this
area as clients, deploying multiple product offerings across what remains a vital and growing part of our business.
During 2017 we saw a number of positive developments in these verticals, with none more important than the continued roll out of
accesso Prism, our state-of-the-art in-park wearable device. In May, accesso Prism was successfully installed as the backbone of the
world’s first 100% queueless water park, bringing to life a long-held company ambition that has the potential to redefine our industry
with long queue lines remaining the single greatest dissatisfaction metric amongst theme park attendees worldwide. The device has
been well received across the board and was recognised as the most impactful new product globally by IAAPA at its Attractions Expo
event in Florida in November. During the period accesso Prism also proved its ability to act as a replacement for our Qbot device in a
number of successful trials, and we expect the device to be rolled out across large parts of our existing accesso LoQueue customer
base over the next 12 to 24 months. We are excited about the opportunities that this should present to enhance revenue within our
existing estate.
Another important dynamic in these markets is the growing desire among some operators to move substantial parts of their guest
bases to pre-committed season pass arrangements. Supported by accesso Passport, their ability to utilise monthly payment plans
accelerated the trend. While the adjustment has led to certain changes in guest visitation behaviour, the strength and versatility of
accesso Prism’s commercial model opens up a range of new in-park revenue opportunities.
In addition to the continued deployment of our technology to Merlin, we were delighted to secure an agreement with Village
Roadshow Theme Parks in Queensland, Australia, with four of their attractions now live with accesso Passport for ticketing,
eCommerce and point-of-sale. This installation also included Ingresso to support the client’s third-party ticket distribution efforts,
underscoring the value of our combined solution offering. Wins like these are particularly important as we seek to broaden our reach
in the Asia-Pacific region, which is now supported by offices and technology infrastructure in the region and provides a good example
of our ability to add incremental new business on the back of global investments undertaken in recent years. The proportion of our
queuing revenues coming from Europe also continues to increase and we have secured a commitment to add the Qsmart mobile app
to three European properties, ensuring that all of our European queueing clients can now access our services through their mobile
device.
Adjacent Verticals
The acquisitions of accesso Siriusware and accesso ShoWare supported both our technology offering within our established vertical
and provided the impetus for accesso to break out beyond its traditional markets into new verticals including ski resorts, cultural
attractions, tours and live event ticketing. Our ambition is to increase penetration in these areas and we were able to make excellent
progress against this aim during 2017.
accesso ShoWare continued to make excellent strides adding 55 new customers during the period, with 38 coming from North America
and 17 coming from Latin America. Among these new customers were Welk Resorts, a collection of premiere destination and travel
resorts in California; SLS Las Vegas, a luxury boutique hotel and Casino; Charleston Battery, a football club from South Carolina; and
Museo Anahuacalli, a museum in Coyocan, Mexico. Also in Mexico, accesso Siriusware secured its largest ever agreement with
Experiencias Xcaret, which is rolling out 400 salespoints across its 6 luxury ecotourism venues. accesso Siriusware also won its second
European contract during the period with Watercourse Distillery Limited in Ireland, which owns the Jameson whiskey brand. This
6
accesso Technology Group plc
Chief Executive’s Statement (continued)
represented a joint win with accesso Passport, which also is now used by the NFL Experience in Times Square, New York and The CNN
Studio Tour in Atlanta, Georgia.
Within accesso ShoWare we continue to make good progress in the live event ticketing space, supporting concerts given by Ed Sheeran,
Bruno Mars, John Mayer, Green Day and Jack Johnson among others during the period. We also rolled out our complete solution for
Toluca FC and its new 31,000 seat football stadium.
Greenfield Opportunities
Last year’s acquisitions of Ingresso and TE2 have brought a range of new capability to accesso and, in addition to supporting our
product offerings in our existing verticals, have enabled the Group to make its first steps into a new set of entirely greenfield areas
including London’s West End Theatre market and the Healthcare space.
With Ingresso as part of our offering, we are now able to tap in to the vast third-party distribution market, helping our clients find new
routes to buyers for their tickets while increasing the platform’s ability to serve its existing clients by significantly enhancing the range
of inventory it can access. We have established connectivity between Ingresso and pre-existing accesso systems and the initial accesso
clients’ inventory is now available via Ingresso’s global distribution system. This acquisition has also helped us reach further into
London’s fragmented West End Theatre market and will, over time, allow accesso to exploit the significant inefficiencies that exist
within the travel and leisure industry.
Ingresso delivered calendar year-on-year growth of 67%, achieved with a strong showing across all its major channels and we continue
to invest in their distribution technology paying particular attention to its high-volume, high-speed sale capabilities. Whilst our
distribution partner, Amazon, announced post-period end that they are discontinuing their ticketing distribution business, we have
been delighted to welcome major customer wins from Ticketmaster UK and Superbreak.com, a major UK tour operator. We see
broader future opportunity with the focus we have made on integrating with our other accesso offerings and facilitating access to the
wide range of third-party distribution channels that are important to our customers. As the distribution landscape continues to evolve
and modernise, a key part of our strategy is to underpin our core ticketing technologies with multi-point distribution capabilities and
Ingresso provides that critical infrastructure and know-how.
The July acquisition of TE2 enables accesso to offer highly personalised user experiences to our customers, leveraging data-led insights
to capture, model and anticipate guest behaviour and preferences. As previously reported, TE2 has performed well ahead of its
business plan since acquisition, generating greater than expected levels of non-recurring services revenue and operating with lower
costs than expected. We have made significant progress with the integration of our HR, payroll and sales & marketing teams and have
focused on a range of product integrations initially with accesso Passport. We expect to see tangible signs of progress on this combined
offering later in 2018.
After the period end we also announced a significant win for TE2 with the Henry Ford Health System (HFHS), a six-hospital system in
Detroit, Michigan. HFHS will leverage TE2 to digitalise and personalise the entire patient journey, using its technology to build unique
patient profiles which can be easily integrated with existing electronic medical records. This process will enable healthcare providers
to offer convenient and frictionless experiences in real-time, with features such as wayfinding support, concierge services, smartphone
bill-payments and patient feedback and communication. This groundbreaking partnership will begin with technology pilots in Autumn
2018, in preparation for full launch to coincide with the grand opening of the Brigitte Harris Cancer Pavilion, the new home of the
Henry Ford Cancer Institute, expected in 2020.
This agreement marks a bold new step for accesso beyond the leisure, entertainment and cultural markets that has been its home,
and provides a significant endorsement of the versatility and range of technology within the Group’s portfolio.
Investing in technology
accesso aspires to be the premier technology solutions provider to the verticals it serves. To maintain this position, we continue to
invest heavily to expand the functionality, effectiveness and robustness of our technology across our full range of offerings. In addition
to development work carried out during the period on accesso Prism and a range of longer-term initiatives to support our growth into
the future, 2017 saw a host of significant enhancements to our platforms.
In particular, we continue to invest in readying our products for the international expansion driving our growth. During the year we
introduced localised user-interface elements that now allows for distribution of accesso Passport in 20 languages, and added enhanced
support for Global Sales Tax configuration including tax tiers, tax percentages and GL code linking. We also expanded our support of
alternative payment solutions, added true-multi-language support for accesso Siriusware and opened a new datacentre in Sydney.
In accesso Passport we launched Passport Exchange: our new platform enabling fully integrated third-party ticket sales, and introduced
a full-featured API for clients desiring more direct integration. Through a new booking portal, we also now offer service management
of date and time-based tickets helping to mitigate risk for whose operations may be impacted by cancellations due to weather or other
external factors.
We also continued to improve our accesso ShoWare product, enhancing our dynamic pricing capability, completing an important
PayPal integration including PayPal Credits, improving event messaging technology and seatmap wizards.
7
accesso Technology Group plc
Chief Executive’s Statement (continued)
Information Security
Another increasingly important element of our business relates to information security, which is at the heart of all development
decisions. The business continues to focus increasing levels of resource and technology on initiatives to ensure data minimization,
more robust monitoring of our applications, enhanced response capabilities and increased staff training across the whole business.
The start of 2018
accesso is pleased to report that the Group is showing good momentum at the start of 2018. We look forward to a promising year
ahead.
Financial Review
accesso continues to deliver strong financial performance as a result of our increasingly global revenue base and diversified product
portfolio. Our business continues to be driven forward by long term transaction-based agreements with several of the world’s leading
operators that deliver high-quality and highly-visible revenue underpinned by long-term relationships.
Alternative Performance Measures
The Board utilises consistent alternative performance measures (“APMs”) in evaluating and presenting the results of the business.
APMs include adjusted EBITDA, adjusted operating profit, adjusted administrative expenses, adjusted net debt, and adjusted cash from
operations. A reconciliation of these measures from IFRS is provided below.
The Board views these APMs as more representative of the Group’s performance as they remove certain items which are not reflective
of the underlying business, including acquisition expenses, amortisation related to acquired intangibles, deferred and contingent
payments related to acquisitions, changes to earn-out considerations and share-based payments. The APMs help ensure the Group is
focused on translating sales growth into profit. By making these adjustments, the Group is more readily comparable against a business
that does not have the same acquisition history and share-based payment policy. Additionally, these are the measures commonly used
by the Group’s investor base.
Key Financial Metrics
Revenue for the year ended 31 December 2017 was $133.4m, an increase of 30.1% on the previous year’s result of $102.5m,
benefitting from our increased global footprint, the broader range of markets we now serve and the acquisition of Ingresso at the end
of March and TE2 in July. This growth was delivered despite challenging weather events impacting certain clients, an earthquake in
Mexico City, unprecedented forest fires in California and to a lesser extent, European terror-related incidents. The impact of foreign
exchange movements on revenue, or costs, was not material.
accesso tracks a number of specific operational metrics that influence Group revenue as follows:
•
•
Total transactional ticket sales, including Ingresso distribution, increased 20.2%, with like for like increasing 14.8%
Total ticket volumes, processed via our hosted solutions, increased 30.9%, exceeding 100m for the first time. On a like for
like basis the increase was 28.0%
• North America now accounts for 70% of eCommerce ticket volume (2016: 89%), with Europe accelerating to 25% (2016: 9%)
•
•
42% of eCommerce volume now takes place via a mobile device (2016: 35%)
accesso LoQueue like for like attendance data was broadly flat
The gross profit margin in 2017 was 55.0%, compared to 54.0% in 2016, reflecting the improvement in our mix of revenue towards
higher margin offerings and a higher level of non-recurring services revenues than in the comparative period.
We estimate that for the full year 81% (2016: 91%) of Group revenue is repeatable in nature. This represents the proportion of Group
revenue that is derived on a transactional basis plus annual support and annual license revenue. The decrease from 2016 is largely
driven by the acquisition of TE2, which currently derives the majority of its revenues from professional services, but remains at a level
that gives the Board the continued confidence to innovate to extend our product leadership and provides the opportunity to
outperform revenue expectations through winning new business.
Adjusted EBITDA and operating profit
Adjusted EBITDA of $24.6m was up from $19.1m, an increase of 28.8%. Operating Profit for 2017 was $9.2m (2016: $10.5m), while
adjusted operating profit, which the Board considers a key underlying metric, was $19.1m in 2017, equating to 21.7% growth when
compared to 2016 ($15.7m). Our adjusted operating margin was 14.3% for 2017 (2016: 15.3%) but as previously identified, the Board
maintains its view that there is potential for future improvement in this metric as the Group benefits from the step-down in investment
across the business to support the global rollout.
The tables below set out a reconciliation between Operating profit and adjusted EBITDA:
8
accesso Technology Group plc
Chief Executive’s Statement (continued)
Operating profit
Add: Acquisition expenses
Add: Deferred and contingent payments
Add: Amortisation related to acquired intangibles
Less: Profit recognised on reduction of earn out -liability
Add: Share-based payments
Adjusted Operating Profit
Add: Amortisation and depreciation (excluding acquired intangibles)
Adjusted EBITDA
2017
$000
9,241
1,249
2,131
8,591
(3,228)
1,089
19,073
5,531
24,604
2016
$000
10,512
-
-
4,227
-
987
15,726
3,387
19,113
Administrative expenses were up 43.3% to $64.2m (2016: $44.8m). Adjusted administrative expenses reflect the adjusting items shown
in the table above were $48.9m, representing an increase of 35.1% on 2016 ($36.2m) and driven primarily by a continued increase in
headcount and operational infrastructure to support our short and medium term growth, and by the acquisition of Ingresso and TE2
in March and July respectively.
The table below sets out a reconciliation between the statutory and adjusted measure:
Administrative expenses
Net adjustments detailed above
Adjusted administrative expenses
2017
$000
64,204
(15,363)
48,841
2016
$000
44,813
(8,601)
36,212
Profit before tax of $7.2m was down from $10.1m in 2016 as the income statement absorbed the increase in non-cash charges related
to the acquisition strategy that the Group has followed over recent years, together with the acquisition expenses incurred in the period.
Profit after tax of $9.9m (2016: $7.5m) is after a tax credit for the year ended 31 December 2017 of $2.7m. Tax is covered in more
detail below and within note 10.
As a result, earnings per share (basic) were 40.83 cents for 2017, an increase of 20.3% on 2016 (33.95 cents). Adjusted earnings per
share, were 56.73 cents for 2017, an increase of 10.2% on 2016 (51.48 cents).
These results reflect a well-optimised and efficient group capable of delivering sustainable profit expansion while continuing to execute
on its shorter-term commitments and heavily investing in its future. As time goes on, accesso expects earnings expansion ahead of top
line growth as the business benefits from improving operating leverage as a result of investments made in products, including accesso
Prism.
Total R&D expenditure during 2017 of $20.0m, (2016: $17.9m) represents 15.0% of revenues (2016: 17.5%). The slight step down in
this percentage from 2016, reflects the heavy initial investment in accesso Prism in 2016 and leads us on a track towards what we
expect will be a normalised rate on an ongoing basis. Capitalised development expenditure was $12.4m (2016: $11.7m) representing
62.0% (2016: 65.4%) of total R&D expenditure. The net benefit of development capitalisation less related amortisation, fell to $8.2m
from $9.8m in 2016.
Net debt and cash flow
Our closing net cash balance of $12.5m (2016 net debt: $3.4m), includes balances of approximately $5.5m in respect of cash paid back
to the Group by the sellers of TE2 to make payments to employees in lieu of a pre-acquisition option scheme over a three year period.
In addition, cash balances totaling approximately $11.0m are held by the Group to make near term settlements to venue operators in
respect of the Ingresso platform.
These balances are beneficially owned by the Group but, while there are no restrictions on their use, they have been excluded from
our current definition of net debt. Adjusting for these items offers an adjusted net debt position of $4.0m at 31 December 2017.
Cash generated from operations of $33.1m (2016: $18.6) includes the benefit of these TE2 and Ingresso balances, and is after
acquisition related expenses. Adjusted cash generated from operations was $21.2m for the year ended 31 December 2017, per the
table below, and was 14.0% better than in 2016 ($18.6m). This represents an underlying cash conversion from adjusted EBITDA of
86.2% (2016: 97.4%). This cash conversion percentage remains an indication of a business with a sustainable and strong cash
conversion cycle.
9
accesso Technology Group plc
Chief Executive’s Statement (continued)
Cash flow from operating activities
Add: Acquisition related expenses (including debt arrangement)
Less: TE2 option cash
Less: Increase in Ingresso near term settlement cash since acquisition
Adjusted cash from operations
2017
$000
33,097
1,249
(5,500)
(7,600)
21,246
2016
$000
18,632
-
-
-
18,632
Financing costs included interest of $0.7m (2016: $0.2m) and an arrangement fee of $0.4m relating to the extension of the Group’s
borrowing facility.
Financing and investing activities
During the year, the Group extended its borrowing facilities, and undertook a share placing in order to fund the acquisitions of Ingresso
and TE2.
The acquisition of Ingresso Group Limited in March 2017 was funded via an initial cash investment (net of cash acquired) of $18.7m.
To allow for sufficient headroom, the Group extended its borrowing facility with Lloyds Bank plc. The extended Facility provides the
Group with the ability to draw down a total of $60m, denominated in either US dollars, GB Pound Sterling or Euros, and has a term of
four years, with an option to extend by a further twelve months at the end of the first year. The facility is at an agreed rate of 140 basis
points above LIBOR at a borrowing to EBITDA ratio of less than 1.5 times, rising to a maximum 190 basis points if the borrowing to
EBITDA ratio is greater than 2.25 times. It provides an additional accordion mechanism allowing for a further $10m relating to future
acquisitions, and includes a commitment interest on undrawn funds of 35% of the relevant interest rates above. The total available for
drawdown is subject to a reduction of US$10m on each of the first, second and third anniversaries of the Extended Facility. The Facility
had an arrangement fee of $0.4m.
In July 2017, the Group announced the acquisition of Blazer and Flip Flops Inc (TE2). The cash element of the acquisition costs (net of
cash acquired) was $69.2m and was funded via an underwritten vendor and cash placing, raising gross proceeds of $75.6m.
Cash balances at 31 December 2017 totaled $28.7m (including the $16.5m of ‘excluded cash’ referenced above), while borrowings at
31 December 2017 totaled $16.1m, versus the facility of $60m.
The Board believes that the Group remains in a strong financial position at the period end, with good access to debt finance on
attractive terms.
Taxation
On a statutory basis, the Group had a tax credit of $2.7m (2016: tax expense $2.6m). This includes an initial beneficial impact to the
Group of changes to the US tax code that were introduced via The Tax Cuts and Jobs Act of 2017 resulting in a revaluation of US
deferred tax assets and liabilities to incorporate the reduction in the headline federal tax rates. This resulted in a one-off credit to
2017 earnings of $5.1m.
On an adjusted basis, which excludes the US tax code benefit, the Group’s effective tax rate on its underlying earnings, was 24%.
The Group has for a number of years focused on tax planning that lowers its effective rate. Taking into account the relative taxable
territories in which the Group operates, and its growth in the relative territories, together with the benefit of the reduced US income
tax rates introduced by The Tax Cuts and Jobs Act of 2017, the Group expects the tax rate on its adjusted earnings to be between
21% and 23% in the short term.
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 product development and complementary M&A.
Summary and Outlook
This year has been one of significant progress at accesso, and these results reflect a business pleasing its customers, thinking about
the future and translating its potential into financial results. While 2018 has only just begun, the Board remains confident in its
expectations for the full year and is focused fully on delivering its growth plan. After joining the accesso Board in 2012, I will formally
step down in April and hand the baton to Paul Noland who I have known, trusted and worked with for more than 20 years. I can think
of no one better suited to lead accesso through its next exciting stage of growth.
Steve Brown
Chief Executive Officer
10
accesso Technology Group plc
The Board of directors
for the financial year ended 31 December 2017
Tom Burnet, Executive Chairman
Tom Burnet joined accesso as the Chief Executive Officer in late 2010. In his current position as Executive Chairman, he
leads accesso’s medium and long-term growth plans. He has particular responsibility for Group strategy, Investor Relations, and M&A
activity. Tom was formerly Managing Director of a division of Serco Group plc, a global outsourcing company, overseeing the 5,000
person Defense Services division.
During his career he has been involved in creating, growing and running several businesses and started his career as the UK’s youngest
Army Officer. He also has an MBA from the University of Edinburgh.
He believes accesso can grow to become a billion-dollar business and a cornerstone of the attraction and leisure industry’s
supply chain.
John Alder, Chief Financial Officer
John Alder joined accesso in 2008 and is the Chief Financial Officer for the company. He is a Chartered Accountant who qualified with
Coopers and Lybrand (PricewaterhouseCoopers) and brings expertise in finance, mergers and acquisitions, strategic planning and
financial modeling.
Prior to joining accesso, John spent 4 years as European Controller and Interim Finance Director of private equity backed Palletways
Group Limited, supporting the Continental European development of Europe’s largest and fastest growing palletized freight network
business.
He also held Finance Director and Controller positions in quoted and private pan-European businesses.
John was appointed Chief Financial Officer of the company in August 2009.
Steve Brown, President, Chief Executive Officer
Steve Brown brings a strong operations and finance background to the accesso team with extensive experience in ticketing, pricing
strategy, eCommerce and revenue management. As the company’s President and Chief Executive Officer, he guides accesso’s global
operations.
Steve’s theme park career began during college at Walt Disney World Resort. Over the course of sixteen years, he held a variety of
roles with increasing responsibility in financial planning and pricing strategy including Director, Walt Disney World Ticketing and Vice
President, Revenue Management for Disneyland Resort, where he drove dramatic growth in park admission and hotel revenues
utilizing strategic and promotional pricing.
Prior to joining accesso, Steve served as the corporate Vice President of Ticket Strategy and Sales for Six Flags. While at Six Flags, Steve
championed an overhaul of the company’s eCommerce process, which doubled the already significant online sales and established Six
Flags’ national partnerships with major distributors.
Steve received his MBA from the Goizueta Business School at Emory University in Atlanta and graduated with a BS in Marketing from
the University of South Florida in Tampa.
David Gammon, Non-Executive Director
David Gammon has widespread experience in developing and building technology based businesses. Since 2001, David has focused on
finding, advising and investing in UK technology companies. David founded Rockspring, an advisory and investment firm, which focuses
on early stage technology companies and where David continues as CEO today. Other current positions include non-executive
chairman at Frontier Developments plc, non-executive director at Raspberry Pi Trading Limited, and adviser to Marshall of Cambridge
(Holdings) Limited.
Previous experience includes non-executive director and advisor at artificial general intelligence company DeepMind Technologies
Limited, advisor to Hawkwood Capital LLP, non-executive director at real time location technology specialist Ubisense Trading Limited,
non-executive director at internet TV specialist Amino Technologies plc, non-executive director at smart metering and software
company BGlobal plc and acting CFO at internet specialist Envisional Solutions Limited. Earlier in his career David worked as an
investment banker for over 15 years.
David joined accesso in November 2010 and is a member of the remuneration committee and the Chair of the audit committee.
11
accesso Technology Group plc
The Board of directors (continued)
for the financial year ended 31 December 2017
Karen Slatford, Non-Executive Director
Karen Slatford has significant experience working in the global technology and business arenas, serving currently as Senior Independent
Director at Micro Focus International plc. Karen has also served since 2009 as Chairman of The Foundry, a global software company
and since 2013 as a non-executive director of Intelliflo, a SaaS based financial services software company. Between 1983 and 2001,
Karen worked at Hewlett Packard where, in 2000, she became Vice President and General Manager Worldwide Sales & Marketing for
the Business Customer Organisation. She was responsible for sales of all Hewlett Packard’s products, services and software to business
customers globally.
Karen is a member of accesso’s audit committee and the Chair of the remuneration committee.
John Weston, Senior Independent Director
John Weston joined accesso in 2011 and serves as the Senior Independent Director. Prior to joining, he served as the Chief Executive
of British Aerospace and BAE Systems 1998 to 2002, at which time it was a £12.5 billion business employing more than 120,000 people.
John brings vast experience in the electronics and technology industries and in addition to accesso, he currently is Chairman of Brittpac
PLC.
Previously, John served on the board of directors for MB Aerospace, AWS Electronics, Torotrak, Acra Control, Ufi Charitable Trust and
Ufi Ltd, Fibercore PLC, Windar Photonics PLC and Pro-Drive Composites.
John is a member of accesso’s audit and remuneration committees.
12
accesso Technology Group plc
Strategic report
for the financial year ended 31 December 2017
Review of business
The results for the period and financial position of the company and the Group are as shown in the annexed financial statements and
explained in the Chairman’s statement and Chief Executive Officer’s statement.
Principal risks and key performance indicators
The Board has identified the principal risks and uncertainties which it believes may impact the Group and its operations, as well as a
number of key performance indicators with which to measure the progress of the Group and are presented in the financial highlights
on page 3.
Principal risks and uncertainties
In line with groups of a similar size, the Group is managed by a limited number of key personnel, including Executive directors and
senior management, who have significant experience within the Group and the sectors it operates within, and who could be difficult
to replace. Executive remuneration plans, incorporating long-term incentives, have been implemented to mitigate this risk.
A key risk relates to the high concentration of revenue derived from particular customers or guests of particular theme parks groups.
The Group continues to increase its customer base, extending its geographical presence and broadening its technologies to a wider
range of venues. In addition, the Group continues to seek appropriate complementary acquisitions to reduce reliance on specific
customers, sectors or geographies.
The Group has a significant seasonal business with revenue and cash flows predominantly linked to leisure venue attendance which,
with the current profile of business, peak in the summer months of the Northern Hemisphere. Attendance at leisure venues can be
impacted by circumstances outside the control of the Group including, but not limited to, inclement weather, consumer spending
capability within the regions we operate together with operator venue pricing, discount policies, investment capability, safety record
and marketing.
A significant proportion of revenues of the business are denominated in US dollars. Although the majority of expenditure is also
denominated in this currency, there remains an exposure to movements between the US dollar and either sterling, euros, the
Australian dollar, the Brazilian real, the Mexican peso or the Canadian dollar.
The Group has reviewed its operations as a result of the UK’s referendum to leave the European Union (“Brexit”). It is not expected
that this will 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.
It is of fundamental importance in maintaining a sustainable long-term business that the Group is aware and takes action to mitigate
competitive threats, whether from technological change, or from competition. Effort is directed to ensure that the Group invests in
appropriate and focused research and development activity and monitors technological advances and competitor activity. Linked to
this, the Group is committed to protecting its technology by the development and/or purchase of patents and will take appropriate
action to defend its intellectual property rights or ensure infringers enter into licensing arrangements. The Group capitalises
appropriate levels of development expenditure but is exposed to the risk that development of a specific technology could suffer
impairment.
Key performance indicators and alternative performance measures
Key performance indicators are used to measure and control both financial and operational performance. Ticket volumes, revenues,
margins, costs, cash and sales pipeline are trended to ensure plans are on track and corrective actions taken where necessary. See the
Chief Executive’s Statement on pages 6-10 for a discussion of the metrics. Product development performance is also monitored and
tracked through measurement against agreed milestones. In addition, further key performance indicators include the proportion of
business that is delivered via mobile technology and the sales mix of services offered.
The Board utilizes consistent alternative performance measures (“APMs”) in evaluating and presenting the results of the business,
including adjusted EBITDA, adjusting operating profit and repeatable revenue. A reconciliation of these measures from IFRS, along with
their definition, is provided below.
The Board views these APMs as more representative of the Group’s performance as they remove certain items which are not reflective
of the underlying business, including acquisition expenses, amortisation related to acquired intangibles, deferred and contingent
payments related to acquisitions, changes to earn-out considerations and share-based payments. The APMs help ensure the Group is
focused on translating sales growth into profit. By making these adjustments, the Group is more readily comparable against a business
that does not have the same acquisition history and share-based payment policy. Additionally, these are the measures commonly used
by the Group’s investor base.
13
accesso Technology Group plc
Strategic report (continued)
for the financial year ended 31 December 2017
Reconciliation of APMs
Adjusted operating profit and adjusted EBITDA
Operating profit
Add: Acquisition expenses
Add: Deferred and contingent payments
Add: Amortisation related to acquired intangibles
Less: Profit recognised on reduction of earn out -liability
Add: Share-based payments
Adjusted operating Profit
Add: Amortisation and depreciation (excluding acquired intangibles)
Adjusted EBITDA
Adjusted administrative expenses
Administrative expenses
Net adjustments detailed above
Adjusted administrative expenses
Net cash/ (debt) and adjusted net cash/ (debt)
Cash and cash equivalents
Less: Borrowings
Net cash/ (debt)
Less: TE2 option cash
Less: Ingresso near term settlements treated as non-cash
Adjusted net cash/ (debt)
2017
$000
9,241
1,249
2,131
8,591
(3,228)
1,089
19,073
5,531
24,604
64,204
(15,363)
48,841
28,668
(16,140)
12,528
(5,500)
(11,000)
(3,972)
2016
$000
10,512
-
-
4,227
-
987
15,726
3,387
19,113
44,813
(8,601)
36,212
5,866
(9,298)
(3,432)
-
-
(3,432)
Definitions of APMs
•
Adjusted operating profit: operating profit before the deduction of amortisation related to acquisitions, acquisition costs,
deferred and contingent payments, profit recognised on the reduction of the earn-out liability, and costs related to share-based
payments
Adjusted EBITDA: operating profit before the deduction of amortisation, depreciation, acquisition costs, deferred and
contingent payments, profit recognised on the reduction of the earn-out liability, and costs related to share-based payments
Adjusted administrative expenses: Administrative expenses adjusted for the items in adjusted operating profit
Repeatable revenue: transactional revenue that the Group would expect to occur every year from a current customer without a
new customer being acquired; for example, ecommerce income (see page 8)
Adjusted EPS: earnings per share 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 (see page 48)
•
•
•
•
Risk management and internal control
The Board is satisfied that the Group’s risk management and internal control systems are adequate. At this stage the Board do not
consider it to be appropriate to establish an internal audit function.
On behalf of the Board:
John Alder
Chief Financial Officer
26 March 2018
Unit 5, The Pavilions
Ruscombe Park, Twyford
RG10 9NN
14
accesso Technology Group plc
Report of the directors
for the financial year ended 31 December 2017
The directors present their report with the financial statements of the company and the Group for the financial year ended 31
December 2017.
Dividends
No dividends will be proposed for the financial year ended 31 December 2017.
Research and development
The Group's research and development activities relate to the development of technologies that can be deployed by entertainment
operators and venue owners within leisure, entertainment and cultural markets. During the financial year ended 31 December 2017
the Group invested $20.0m into research and development (year ended 31 December 2016: $17.9m).
Directors
The directors during the period under review were:
Tom Burnet, Executive Chairman
John Alder, Executive
Steve Brown, Executive
David Gammon, Non-Executive
Karen Slatford, Non-Executive
John Weston, Senior Independent Director
The company paid for sufficient directors and officer’s indemnity insurance during the period, and to the date of approval of these
financial statements, to enable the directors to carry out their duties.
The beneficial interests of the directors holding office on 31 December 2017 in the issued share capital of the company were as
follows:
Ordinary share capital £0.01 shares
Tom Burnet, Executive Chairman (1)
John Alder, Executive
Steve Brown, Executive
David Gammon, Non-Executive
Karen Slatford, Non-Executive (Appointed 24 March 2016)
John Weston, Senior Independent Director
(1) Shares held by the employee benefit trust of the Company
As at 31 December
2017
426,909
6,612
633,916
48,000
-
165,144
Details of the directors' share options are disclosed within the Directors’ remuneration report.
As at 1 January 2017
426,909
6,612
633,916
48,000
-
165,144
Financial instruments
Details of the Group's financial risk management objectives and policies, including the use of financial instruments, are included
within the accounting policies in note 4 to the financial statements.
Substantial shareholdings
As at 31 December 2017 the company had been notified that the following were interested in 3% or more of the ordinary share
capital of the company:
Shareholder
Hargreave Hale Limited
Standard Life Investments Limited
BlackRock Investment Management
Allianz Global Investors
Old Mutual Global Investors
Mr Leonard Sim
Number of ordinary shares
% of Issued ordinary
share capital
2,957,618
2,843,497
2,796,560
1,502,114
810,394
804,635
11.21%
10.78%
10.60%
5.70%
3.07%
3.05%
15
accesso Technology Group plc
Report of the directors (continued)
for the financial year ended 31 December 2017
Annual general meeting
The annual general meeting of the company will be held on Tuesday, 22nd May 2018. The notice convening the meeting is enclosed
with these financial statements.
Branch registration
The company operates a branch in Germany.
Corporate governance
The Board of directors comprises three Executive directors, one of whom is the Chairman, and three independent Non-Executive
directors. The company holds board meetings regularly throughout the year at which financial and other reports are considered. The
Board is responsible for formulating, reviewing and approving the Group’s strategy, budgets and major items of expenditure.
The committees of the Board
The following committees have been established to assist the Board in fulfilling its responsibilities:
Audit committee
The members of the Audit Committee are David Gammon, who chairs the committee, John Weston and Karen Slatford.
The committee met three times during the year to fulfil its duties. The Chairman, Chief Executive Officer, Chief Financial Officer and
external auditor attended meetings by invitation.
The committee is comprised of independent Non-Executive directors only and its terms of reference are to promote appropriate
standards of integrity, financial reporting, risk management and internal controls. This committee is responsible for overseeing the
involvement of the Group’s auditor in the planning and review of the Group’s financial statements, any other formal announcements
relating to the Group’s financial performance, for recommending the appointment and fees of its auditor, and for discussing with the
auditor the findings of the audit and issues arising from the audit. It reviews the Group’s compliance with accounting, legal and listing
requirements. It is also responsible, along with the Board, for reviewing the effectiveness of the systems of internal control. The
committee considers the independence and objectivity of the auditors with regard to the way in which they conduct their audit duties.
The committee looks to ensure that the auditor’s independence is not compromised by their undertaking of non-audit services.
Non-audit/tax advisory services are benchmarked by management to ensure value for money, auditor objectivity and independence
of advice.
The Audit Committee’s recommendation is that KPMG LLP be appointed as the company’s auditor and an appropriate resolution will
be put before the shareholders at this year’s annual general meeting.
Remuneration committee
The members of the Remuneration Committee are John Weston, David Gammon, and Karen Slatford, who chairs the committee.
The full committee met three times during the year to fulfil its duties. The committee considers and approves specific remuneration
packages for each Executive director. In accordance with guidelines set by the Board, the committee determines the Group’s policy on
remuneration of senior executives and the operation of share option schemes, the grant of options, and the implementation and
operation of other long-term incentive arrangements. Remuneration of Non-Executive directors is set by the Executive directors.
It is considered that the composition and size of the Board does not warrant the appointment of a nominations committee and
appointments are dealt with by the Board as a whole. The need to appoint such a committee is subject to review by the Board.
Going concern
After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future, with an underlying business that has good revenue visibility and strong cash
generation, continues to perform well, a confident Group outlook for 2018, and a strong balance sheet and cash position and significant
headroom to its borrowing facility. For this reason, the Board continues to adopt the going concern basis in preparing the accounts.
16
accesso Technology Group plc
Report of the directors (continued)
for the financial year ended 31 December 2017
Disabled employees
The Group's policy is one of equal opportunity in the selection, training, career development and promotion of staff. The Group has a
policy not to discriminate against disabled employees for those vacancies that they are able to fill and will provide facilities, equipment
and training to assist any disabled persons employed.
All necessary assistance with initial training courses will be given. Once employed, a career plan will be developed so as to ensure
suitable opportunities for each disabled person. Arrangements will be made, wherever possible, for re-training employees who
become disabled to enable them to perform work identified as appropriate to their aptitudes and abilities.
Employees
The Group's policy is to consult and engage with employees, by way of meetings, surveys and through personal contact by directors
and other senior executives, on matters likely to affect employees' interests. Information on matters of concern to employees is given
in meetings, handouts, letters and reports, which seek to achieve a common awareness on the part of all employees on the financial
and economic factors affecting the Group's performance.
Relations with shareholders
The company and Board recognise the importance of developing and maintaining good relationships with all the various categories of
shareholders and devotes significant effort and resource in this respect.
There have been regular dialogues with shareholders during the year including holding briefings with analysts and other investors,
including staff shareholders. The company also uses the annual general meeting as an opportunity to communicate with its
shareholders. All directors are expected to attend the annual general meeting with the chairman of the audit and remuneration
committees being available to answer shareholders’ questions.
Notice of the date of the 2018 annual general meeting is included with this report. Separate resolutions on each substantially separate
issue, in particular any proposal relating to the annual report and accounts, will be made at the annual general meeting.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial
statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of
the company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the
financial statements contained therein.
Statement as to disclosure of information to auditor
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of
which the Group's auditor is unaware, and each director has taken all the steps that he ought to have taken as a director in order to
make himself aware of any relevant audit information and to establish that the Group's auditor is aware of that information.
Auditor
A resolution approving the re-appointment of KPMG LLP will be proposed at the forthcoming annual general meeting.
On behalf of the Board
John Alder
Chief Financial Officer
26 March 2018
17
accesso Technology Group plc
Directors’ remuneration report
for the financial year ended 31 December 2017
This report is for the year to 31 December 2017 and sets out the remuneration details in respect of the Executive and Non-Executive
Directors of the Company.
As an AIM-quoted company, the information provided is disclosed to fulfil the requirements of AIM Rule 19. Accesso Technology Group
plc is not required to comply with Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008.
Remuneration
Remuneration of the Executive Directors is designed to ensure that the Group achieves its potential and increases shareholder value.
In respect of all aspects of the Executives remuneration package, the objective is to ensure that the Group attracts and retains high
calibre Executives with the skills, experience and motivation necessary to direct and manage the affairs of the Group.
Base remuneration consists of salary, retirement benefits and other benefits, such as the provision of medical and life insurance
arrangements. In terms of retirement benefits, the Executive Chairman, Chief Executive and the Chief Financial Officer are all entitled
to receive a payment in lieu of a pension or a matching contribution to a retirement scheme operated by a Group company.
In addition, annual bonuses and Long-Term Incentive Programs (LTIPs) are seen as an important element of each Director’s total
remuneration and are designed to drive and reward exceptional performance.
The Remuneration Committee
The Board has appointed a remuneration committee consisting of independent non-executive directors John Weston, David Gammon
and Karen Slatford, who chairs the committee. The committee takes regard of the return to the shareholders in its deliberations. It
reviews the performance of the executive directors, sets their remuneration, considers the grant of options under any of the share
option scheme and ensures that the Executive Directors are properly rewarded and motivated. In addition, they provide guidance on
pay and conditions for other employees in the Group. The Remuneration Committee meets on an “as required” basis.
The Remuneration Committee reviews remuneration of the Executives in light of market conditions, performance and developments
in good corporate governance, whilst taking account of the Company’s status as a larger AIM company. Remuneration is benchmarked
against similar listed companies and takes into account company performance and any increase in scale and complexity, the role,
experience and performance of the individual Director, and average workforce salary adjustments within the Company.
Executive Directors are entitled to be considered for the grant of awards under a Long-Term Incentive Plan (“LTIP”). The over-riding
objective of this plan is to drive and reward exceptional performance, while aligning the interests of Executives and shareholders.
The awards currently take the form of nominal cost options over a specified number of Ordinary Shares. Awards are released to
participants after a performance period of three years, subject to certain performance and service conditions being met. The LTIP
rewards the future performance of the Executive Directors and certain other employees by linking the size of the award to the
achievement of Group performance targets. Participation is at the discretion of the Remuneration Committee and will typically be
made annually based on a percentage of annual salary.
The Remuneration Committee will make LTIP awards at a level they believe is consistent with its underlying objective to attract and
retain high calibre Executives. The maximum annual award permissible under the plan is 200% of salary. The performance conditions
for the LTIP scheme are normally related to the achievement of stringent compound share price growth rates from the date of the
award. The specific performance conditions related to each award that has been made are set out within this report.
Performance and decisions on remuneration taken in 2017
Salaries are normally reviewed annually, in March, and any change applied retrospectively to the beginning of the year. In light of the
criteria presented above, the Remuneration Committee determined, from 1 January 2017, to increase the salary of the Executive
Chairman by 2.75% to £298,488, to increase the salary of the CEO by 2.75% to $359,624 and to increase the salary of the CFO by 5%
to $313,250.
The Company produced strong financial results for the 2017 financial year with adjusted earnings per share (“EPS”) 10.2% above the
prior year and basic EPS 20.3% higher and the Group completed two important strategic acquisitions.
For 2017, the bonus awarded to the Executive Chairman and CEO was 120% (maximum: 150%) of base pay and for the CFO was 100%
(maximum: 120%) of base pay.
During 2017 the first awards of share options under the Shareholder Approved 2014 LTIP Scheme also matured. The target CAGR for
full vesting of LTIPs issued in 2014 was 15% per year over 3 years. This target has been substantially exceeded and, therefore, 100% of
the options granted have vested. No additional awards were made to the Executive Directors in 2017.
18
accesso Technology Group plc
Directors’ remuneration report (continued)
for the financial year ended 31 December 2017
Non-Executive Director remuneration
The Senior Independent Director and the other Non-Executive Directors remuneration comprises only fees. They are reviewed annually
with changes effective from 1 January each year. Their fees are approved by the Board on the recommendation of the Executive
Chairman. The Non-Executive Directors are not involved in any decisions about their own remuneration. The Senior Independent
Director and the other independent Non-Executive Directors are entitled to be reimbursed for reasonable expenses.
Directors Remuneration for the year ended 31 December 2017
Salary
$000
Fees
$000
Bonus
$000
Share-
based
payments
$000
Other
Benefits
$000
2017
Total
$000
2016
Total
$000
2017 2016
Retirement
Contributions
$000
$000
Non - Executive Directors
Matt Cooper (1)
David Gammon (2)
Karen Slatford
John Weston
-
-
-
-
-
52
52
77
-
-
-
-
-
-
-
-
-
-
-
-
52
52
77
Executive Directors
John Alder
Steve Brown
Tom Burnet
Leonard Sim (3)
Total
(1) Resigned 18 March 2016
(2) Fee payments in respect of the services provided by David Gammon were paid to Rockspring
(3) Resigned 16 March 2016
313
360
385
-
1,058
313
432
480
-
1,225
121
136
162
-
419
-
-
-
-
181
21
14
2
-
37
768
942
1,029
-
2,920
11
51
31
78
615
758
812
18
2,374
-
-
-
-
9
-
13
-
22
-
-
-
-
9
-
17
1
27
Summary of share option and LTIP awards
The share option and LTIP awards of the directors are set out below:
Share Options
John Alder (1)
David Gammon (2)
31 December
2016
Exercised
in the
period
31 December
2017
Exercise
price
Date from
which
exercisable
Expiry
Date
100,000
80,000
-
(40,000)
100,000
40,000
156p
156p
10 Mar 12
10 Mar 12
9 Mar 21
9 Mar 21
LTIP (3)
John Alder
Steve Brown
-
-
-
-
-
-
-
-
-
(1) Options may only be exercised when the share price is above £1.82
(2) Held by Rockspring
(3) LTIP awards represent the maximum award if the performance conditions are fully met
29,818
42,127
59,731
32,027
42,463
69,653
45,395
47,805
82,960
29,818
42,127
59,571
32,027
42,463
69,653
45,395
47,805
82,960
Tom Burnet
1p
1p
1p
1p
1p
1p
1p
1p
1p
8 July 2017
15 Apr 2018
14 Mar 2019
8 July 2017
15 Apr 2018
14 Mar 2019
8 July 2017
15 Apr 2018
14 Mar 2019
-
-
-
-
-
-
-
-
-
Employee benefit trust share subscription and Tom Burnet equity incentive plan
On 10 March 2011, the Remuneration Committee of the Board recommended, and the Board approved, an incentive arrangement
pursuant to which the company lent its employee benefit trust (‘’EBT’’) £1,331,956, and the EBT subscribed for 853,818 new ordinary
shares of 1 penny each in the company (‘’New Ordinary Shares’’).
19
accesso Technology Group plc
Directors’ remuneration report (continued)
for the financial year ended 31 December 2017
The EBT plan subsequently granted Tom Burnet an interest in the growth in value above a share price of £2 per share in the New
Ordinary Shares. Cash reserves of the Group will not be impacted when this is realised. In addition, the EBT granted Tom Burnet an
option to acquire, in relation to half of the New Ordinary Shares (426,909), the EBT’s interest in the value between £1.30 and £2,
provided that at the date of exercise the share price is above £1.82.
On 5 April 2016, Tom Burnet terminated his interest in 426,909 of the New Ordinary Shares and the EBT subsequently disposed of
these in order to settle its obligations relating to the value above £2. The remaining shares are registered in the name of Lo-Q (Trustees)
Limited, a wholly owned subsidiary of the company. John Alder and David Gammon are the directors of Lo-Q (Trustees) Limited.
Long-Term Incentive Plan (LTIP) Awards
There have been three awards to the executive Directors since the introduction of the LTIP scheme in 2014. The performance
conditions are identical for each executive director subject to the award. No awards were made during the year ended 31 December
2017.
Date of
Award
Vesting
Period
(months)
Period stock to
be held following
exercise
(months)
Performance Conditions
8 July 2014
36
6 Compound Annual Growth Rate (CAGR) of share price, from date of award to
vesting date, for maximum vesting of award: 15%
CAGR of share price for partial vesting: 10%
100% of the maximum number of Ordinary Shares pursuant to the Award shall
vest and become exercisable if the average share price during the thirty days
prior to the Release Date (“ASP”) is 803.40 pence or more.
The Award shall vest in respect of 30% of the maximum number of Ordinary
Shares comprised in it if the ASP is 748.37 pence.
An ASP between 748.37 pence and 803.40 pence, shall result in the partial
vesting on a straight-line basis between 30% and 100%. The Awards shall not
vest at all if the ASP is less than 748.37 pence.
15 April 2015
36
6 CAGR of share price for maximum vesting of award: 15%
CAGR of share price for partial vesting: 10%
100% of the maximum number of Ordinary Shares pursuant to the Award shall
vest and become exercisable if the average share price during the thirty days
prior to the Release Date (“ASP”) is 864.37 pence or more.
The Award shall vest in respect of 30% of the maximum number of Ordinary
Shares comprised in it if the ASP is 805.16 pence.
An ASP between 805.16 pence and 864.37 pence, shall result in the partial
vesting on a straight-line basis between 30% and 100%. The Awards shall not
vest at all if the ASP is less than 805.16 pence.
14 September
2016
30
6 CAGR of share price for maximum vesting of award: 20%
CAGR of share price for partial vesting: 10%
100% of the maximum number of Ordinary Shares pursuant to the Award shall
vest and become exercisable if the average share price during the thirty days
prior to the Release Date (“ASP”) is 1583 pence or more.
An ASP between 1219 pence and 1583 pence, shall result in the partial vesting
on a straight-line basis between 57% and 100% The Awards shall not vest at all if
the ASP is less than 1219 pence.
John Alder
Chief Financial Officer
26 March 2018
20
accesso Technology Group plc
Statement of Directors’ responsibilities in respect of the annual report and the financial statements
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare group and parent company financial statements for each financial year. Under that
law they have elected to prepare both the group and the parent company financial statements in accordance with International
Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the group
and parent company financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant and reliable;
•
•
state whether they have been prepared in accordance with IFRSs as adopted by the EU;
assess the group and parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern; and
use the going concern basis of accounting unless they either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
•
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to
ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the
group and to prevent and detect fraud and other irregularities.
On behalf of the Board
John Alder
Chief Financial Officer
26 March 2018
21
Independent
auditor’s report
to the members of accesso Technology Group plc
Overview
Materiality:
Group financial
statements as a
whole
Coverage
$360,000 (2016: $465,000)
4.3% (2016: 5%) of Group profit
before tax and exceptional items
90% (2016: 81%) of revenue
Risks of material misstatement
vs 2016
New risks
Valuation of
acquisition intangibles
(Ingresso and TE2)
▲
Recurring risks Goodwill impairment
R&D capitalisation
Recoverability of
parent company’s
investment in
subsidiaries
◄►
◄►
◄►
1. Our opinion is unmodified
We have audited the financial statements of accesso
Technology Group plc (“the Company”) for the year
ended 31 December 2017 which comprise the
Consolidated Statement of Comprehensive Income,
Consolidated Statement of Financial Position,
Company Statement of Financial Position,
Consolidated Statement of Cash Flow, Company
Statement of Cash Flow, Statement of Changes in
Group Equity, Statement of Changes in Company
Equity and the related notes, including the accounting
policies in note 2.
In our opinion:
— the financial statements give a true and fair view
of the state of the Group’s and of the parent
Company’s affairs as at 31 December 2017 and of
the Group’s profit for the year then ended;
— the Group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards as adopted by the European
Union (IFRSs as adopted by the EU);
— the parent Company financial statements have
been properly prepared in accordance with IFRSs
as adopted by the EU and as applied in accordance
with the provisions of the Companies Act 2006;
and
— the financial statements have been prepared in
accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities are described
below. We have fulfilled our ethical responsibilities
under, and are independent of the Group in
accordance with, UK ethical requirements including
the FRC Ethical Standard as applied to listed entities.
We believe that the audit evidence we have obtained
is a sufficient and appropriate basis for our opinion.
22
2.
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit
opinion above, the key audit matters, in decreasing order of audit significance, were as follows:
Valuation of acquisition
intangibles (Ingresso and TE2)
($41.9m, 2016: $nil)
Refer to page 39 (accounting
policy) and pages 52 to 57
(financial disclosures).
The risk
Our response
Subjective valuation
Our procedures included:
The group acquired Ingresso in March
2017 for $28.3m and TE2 in July 2017
for $74.3m. The assets and liabilities
acquired have been measured at their
acquisition-date fair values and
previously unrecognised intangible
assets recognised on the balance sheet.
The identification and measurement of
these intangible assets requires
judgment and the application of complex
valuation techniques. Acquisition
intangibles are also valued using cash
flow models and therefore the
recoverable amount is subjective due to
the inherent uncertainty involved in
forecasting and discounting future cash
flows.
— Methodology choice: Involving our
own valuation specialists to assess
whether the valuation methodology
applied to each asset was appropriate;
— Benchmarking assumptions:
Comparing the key assumptions used
in the cash flow and replacement cost
models to externally available industry
data or post-acquisition results. For
replacement cost models the key
assumptions are those relating to cost
inputs and the relevant mark ups
applied and for cash flow models,
attrition and gross margin;
— Assessing transparency: We
assessed whether the group’s
disclosures of the critical judgments
reflected the risks inherent in the
valuation of these intangible assets.
23
Recoverability of group goodwill
and of parent’s investment in
subsidiaries
(Group: $117.3m; 2016: $43.9m;
Parent: $73.4m; 2016: $37.8m)
Refer to page 39 (accounting
policy) and pages 52 to 57
(financial disclosures).
The risk
Our response
Forecast-based valuation
Our procedures included:
Goodwill in the group and the carrying
amount of the parent company’s
investments in subsidiaries are
significant and recoverability is
dependent on achieving sufficient levels
of future cash flows. These assets relate
to businesses located in highly
competitive markets resulting in pricing
pressures which may impact future cash
flows. The estimated recoverable
amount is therefore highly subjective
due to the inherent uncertainty involved
in forecasting and discounting future
cash flows.
— Benchmarking assumptions:
Comparing the assumptions used in
cash flow forecasts to externally
derived data in relation to key inputs
such as long term growth and inputs to
discount rates. Inputs to discount rate
include risk free rates, size premium
and market risk premium;
— Historical comparisons: Comparing
previous forecast revenue growth and
EBITDA margins to actual performance
to assess the historical accuracy of the
group’s forecasting;
— Sensitivity analysis: Performing
breakeven analysis on the key
assumptions noted above, including
discount rate and projected cash flows;
— Assessing transparency: We
considered whether the group’s
disclosures about the sensitivity of the
outcome of the impairment
assessment to changes in key
assumptions reflected the risks
inherent in the valuation of goodwill.
We also assessed the adequacy of the
parent company’s disclosures in
respect of the investment in
subsidiaries.
24
Capitalised development costs
Subjective estimate
Our procedures included:
The risk
Our response
(Costs capitalised in the year
$12.4m, 2016: $11.6m)
Refer to page 39 (accounting
policy) and pages 52 to 57
(financial disclosures).
Eligible employment costs in respect of
software developers working to develop
new software products are capitalised if
they meet the relevant criteria, which
materially impacts the groups’
profitability.
There is judgement involved in
determining whether costs incurred
meet the criteria for capitalisation as the
future financial and technical feasibility
of new products is often uncertain.
There is also judgment required to
identify those costs that are directly
attributable to development projects
from those that relate to speculative
R&D and bug fixes.
— Tests of detail: For a sample of
projects we assessed the allocation of
time to development projects with
reference to the developers’
timesheets;
— Test of detail: For a sample of
development projects where costs
were capitalised we corroborated the
directors’ analysis that the projects
met the criteria for capitalisation by
comparing to sales forecasts and
obtaining evidence of the project being
technically feasible;
— Assessing transparency: We
assessed the adequacy of the Group’s
disclosures in respect of the
judgements made in relation to
capitalised development costs.
3. Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at $360,000 (2016: $465,000), determined with reference to a
benchmark of group profit before tax normalised to exclude acquisition related costs, deferred and contingent payments and profit
recognised on reduction of earn out liability incurred in the year, of $8,280,000 (2016: $10,102,000, of which it represents 4.3%
(2016: 5%).
Materiality for the parent company financial statements as a whole was set at $149,000 (2016: $131,000), determined with
reference to a benchmark of parent company revenue, of which it represents 1% (2016: 5% of profit before tax).
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding $18,000 (2016:
$23,000), in addition to other identified misstatements that warranted reporting on qualitative grounds.
Of the group’s 18 (2016: 12) reporting components, we subjected 6 (2016: 3) to full scope audits for group purposes and 0 (2016:
1) to an audit of account balances. The components for which we performed an audit of account balances in 2016 were not
individually financially significant enough to require an audit for group reporting purposes in the prior year, but did present specific
individual risks that needed to be addressed.
The components within the scope of our work accounted for the percentages illustrated opposite.
For the residual components, we performed analysis at an aggregated Group level to re-examine our assessment that there were
no significant risks of material misstatement within these.
The work on all 6 of the components (2016: all 4 of the components), including the audit of the parent company, was performed by
the group team. Component materiality ranged from $100,000 to $200,000 (2016: $150,000 to $250,000), subject to the mix of
size and risk profile of the Group across the components. The group team performed procedures on the items excluded from
normalised group profit before tax.
25
4. We have nothing to report on going concern
We are required to report to you if we have concluded that
the use of the going concern basis of accounting is
inappropriate or there is an undisclosed material uncertainty
that may cast significant doubt over the use of that basis for
a period of at least twelve months from the date of approval
of the financial statements. We have nothing to report in
these respects.
5. We have nothing to report on the other information in
the Annual Report
The Directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not
express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial
statements audit work, the information therein is materially
misstated or inconsistent with the financial statements or
our audit knowledge. Based solely on that work we have
not identified material misstatements in the other
information.
Strategic report and Directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
strategic report and the Directors’ report;
— in our opinion the information given in those reports for
the financial year is consistent with the financial
statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
6. We have nothing to report on the other matters on
which we are required to report by exception
Under the Companies Act 2006, we are required to report
to you if, in our opinion:
a. adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
b.
the parent Company financial statements are not in
agreement with the accounting records and
returns; or
c. certain disclosures of Directors’ remuneration specified
by law are not made; or
d. we have not received all the information and
explanations we require for our audit.
We have nothing to report in these respects.
7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page
21, the Directors are responsible for: the preparation of the
financial statements including being satisfied that they give
a true and fair view; such internal control as they determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error; assessing the Group and
parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern;
and using the going concern basis of accounting unless
they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
8. The purpose of our audit work and to whom we owe
our responsibilities
This report is made solely to the Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company
and the Company’s members, as a body, for our audit
work, for this report, or for the opinions we have formed.
Simon Haydn-Jones
(Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Arlington Business Park
Reading
RG7 4SD
27 March 2018
26
accesso Technology Group plc
Consolidated statement of comprehensive income
for the financial year ended 31 December 2017
Revenue
Cost of sales
Gross profit
Administrative expenses (including credit of $3,228 ($’000) (2016: $nil) related
to reversal of Ingresso earn out liability – see note 13)
Operating profit
Finance expense
Finance income
Profit before tax
Income tax benefit / (expense)
Profit for the period
Other comprehensive income
Items that will be reclassified to income statement
Exchange differences on translating foreign operations
Total comprehensive income
Notes
2017
$000
2016
$000
6
133,429
102,511
(59,984)
(47,186)
73,445
55,325
(64,204)
(44,813)
9
9
10
9,241
(2,099)
24
7,166
2,735
9,901
166
10,067
10,512
(414)
4
10,102
(2,576)
7,526
(1,579)
5,947
All profit and comprehensive income is attributable to the owners of the parent
Earnings per share expressed in cents per share:
Basic
Diluted
12
12
40.83
38.70
33.95
32.02
All activities of the company are classified as continuing
The accompanying notes on pages 34 to 65 form part of these consolidated financial statements
27
accesso Technology Group plc
Consolidated statement of financial position
as at 31 December 2017
Registered Number: 03959429
Registered address: Unit 5, The Pavilions, Ruscombe Park, Twyford, Berkshire
RG10 9NN
31 December
2017
31 December
2016
Notes
$000
$000
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Income tax receivable
Cash and cash equivalents
Liabilities
Current liabilities
Trade and other payables
Finance lease liabilities
Income tax payable
Net current (liabilities) / assets
Non-current liabilities
Deferred tax liabilities
Finance lease liabilities
Other non-current liabilities
Borrowings
Total liabilities
Net assets
Shareholders' equity
Called up share capital
Share premium
Own shares held in trust
Other reserves
Retained earnings
Merger relief reserve
Translation reserve
Total shareholders’ equity
13
14
10
16
17
18
10
18
19
20
198,298
3,400
8,937
210,635
506
19,761
-
28,668
48,935
49,874
9
613
50,496
(1,561)
14,629
-
3,024
16,140
33,793
84,289
175,281
411
105,207
(1,163)
14,453
39,820
19,641
(3,088)
175,281
81,612
3,494
6,008
91,114
491
10,232
681
5,866
17,270
11,242
54
-
11,296
5,974
9,990
9
-
9,298
19,297
30,593
77,791
357
28,150
(1,163)
9,242
29,919
14,540
(3,254)
77,791
The financial statements were approved by the Board of directors on 26 March 2018 and were signed on its behalf by:
Tom Burnet
Executive Chairman
The accompanying notes on pages 34 to 65 form part of these consolidated financial statements
28
accesso Technology Group plc
Company statement of financial position
as at 31 December 2017
Registered Number: 03959429
Registered address: Unit 5, The Pavilions, Ruscombe Park, Twyford, Berkshire
RG10 9NN
31 December
2017
31 December
2016
Notes
$000
$000
Assets
Non-current assets
Intangible assets
Investments in subsidiaries
Property, plant and equipment
Deferred tax asset
Current Assets
Inventories
Trade and other receivables
Income tax receivable
Cash and cash equivalents
Liabilities
Current liabilities
Trade and other payables
Income tax payable
Net current assets
Non-current liabilities
Deferred tax
Borrowings
Total liabilities
Net assets
Shareholders' equity
Called up share capital
Share premium
Other reserves
Retained earnings
Merger relief reserve
Translation reserve
Total shareholders' equity
13
15
14
10
16
17
18
10
19
20
7,375
73,353
1,309
353
82,390
279
91,634
-
1,909
93,822
11,412
1,614
13,026
80,796
-
16,140
16,140
29,166
147,046
411
105,207
7,138
24,806
19,641
(10,157)
147,046
6,426
37,806
1,353
1,014
46,599
303
16,306
238
1,303
18,150
1,258
-
1,258
16,892
1,069
9,298
10,367
10,625
53,124
357
28,150
4,439
20,364
14,540
(14,726)
53,124
The financial statements were approved by the Board of directors on 26 March 2018 and were signed on its behalf by:
Tom Burnet
Executive Chairman
The accompanying notes on pages 34 to 65 form part of these consolidated financial statements
29
accesso Technology Group plc
Consolidated statement of cash flow
for the financial year ended 31 December 2017
Cash flows from operations
Profit for the period
Adjustments for:
Depreciation
Amortisation on acquired intangibles
Amortisation on development costs
Amortisation on other intangibles
Share-based payment
Finance expense
Finance income
Loss on disposal of fixed assets
Foreign exchange gain
Income tax (benefit) / expense
(Increase) / decrease in inventories
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Purchase of subsidiary, net of cash acquired
Purchase of intangible fixed assets
Capitalised internal development costs
Purchase of property, plant and equipment
Interest received
Net cash used in investing activities
Cash flows from financing activities
Share issue
Sale of shares held in trust
Interest paid
Payments to finance lease creditors
Cash paid to refinance
Proceeds from borrowings
Repayments of borrowings
Net cash generated from / (used) in financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange gain / (loss) on cash and cash equivalents
Cash and cash equivalents at end of year
Notes
2017
$000
2016
$000
9,901
7,526
14
13
13
13
7
9
9
14
10
13
13
14
19
1,321
8,591
4,166
44
1,089
2,099
(24)
12
(241)
(2,735)
24,223
(15)
(2,792)
11,681
33,097
(224)
32,873
(78,074)
-
(12,395)
(936)
24
1,393
4,227
1,927
67
987
414
(4)
5
(1,465)
2,576
17,653
70
(1,152)
2,061
18,632
(810)
17,822
-
(84)
(11,591)
(1,948)
4
(91,381)
(13,619)
77,112
-
(741)
(54)
(410)
31,376
(26,037)
81,246
22,738
5,866
64
28,668
1,313
1,240
(414)
(51)
(184)
5,550
(10,825)
(3,371)
832
5,307
(273)
5,866
The accompanying notes on pages 34 to 65 form part of these consolidated financial statements
30
accesso Technology Group plc
Company statement of cash flow
for the financial year ended 31 December 2017
Cash flows from operations
Profit for the period
Adjustments for:
Amortisation on development costs
Depreciation and amortisation on other fixed assets
Share-based payment
Finance expense
Finance income
Foreign exchange loss / (gain)
Income tax expense
Decrease in inventories
(Decrease) / increase in trade and other receivables
(Decrease) / increase in trade and other payables
Cash (used in) / generated from operations
Tax paid
Net cash (outflow) / inflow from operating activities
Cash flows from investing activities
Purchase of subsidiary
Purchase of intangible fixed assets
Capitalised internal development costs
Purchase of property, plant and equipment
Interest received
Net cash used in investing activities
Cash flows from financing activities
Share Issue
Interest paid
Cash paid to refinance
Repayments of borrowings
Proceeds from borrowings
Notes
13
14
13
13
14
19
2017
$000
4,442
1,323
468
289
1,890
(3,944)
79
2,028
6,575
24
(64,971)
(1,624)
(59,996)
(79)
(60,075)
(18,736)
-
(1,642)
(307)
2
(20,683)
77,112
(741)
(410)
31,376
(26,037)
2016
$000
6,096
544
567
276
414
(1)
(651)
990
8,235
57
2,356
11
10,659
(393)
10,266
-
(84)
(4,883)
(947)
1
(5,913)
1,313
(414)
(184)
5,550
(10,825)
Net cash generate from / (used in) from financing activities
81,300
(4,560)
Increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange gain / (loss) on cash and cash equivalents
Cash and cash equivalents at end of year
542
1,303
64
1,909
(207)
1,734
(224)
1,303
The accompanying notes on pages 34 to 65 form part of these consolidated financial statements
31
accesso Technology Group plc
Consolidated statement of changes in equity
for the financial year ended 31 December 2017
Share
capital
$000
Share
premium
Retained
earnings
Merger
relief
reserve
Other
reserves
Own shares
held in trust
Translation
reserve
$000
$000
$000
$000
$000
$000
Balance at 31
December 2016
357
28,150
29,919
14,540
9,242
(1,163)
(3,254)
Attributable
to equity
holders
$000
77,791
Comprehensive income for the year
Profit for period
Other
comprehensive
income
Total
comprehensive
income for the
year
-
-
-
-
-
-
9,901
-
9,901
77,057
-
-
54
Contributions by and distributions to owners
Issue of share
capital
Share-based
payments
Equity-settled
deferred
consideration
Change in tax
rates
Share option tax
credit
Total
contributions by
and
distributions by
owners
54
-
-
-
-
-
-
77,057
-
-
-
-
-
-
-
-
-
5,101
-
-
-
-
-
-
-
-
1,089
1,314
(2,213)
5,021
5,101
5,211
-
-
-
-
-
-
-
-
-
-
166
9,901
166
166
10,067
-
-
-
-
-
-
82,212
1,089
1,314
(2,213)
5,021
87,423
411
105,207
39,820
19,641
14,453
(1,163)
(3,088)
175,281
Balance at 31
December 2017
Balance at 31
December 2015
Comprehensive income for the year
Profit for period
Other
comprehensive
income
Total
comprehensive
income for the
year
-
-
-
-
-
-
Contributions by and distributions to owners
Issue of share
capital
Share-based
payments
Reduction of
shares held in
trust
4
-
-
1,309
-
-
-
-
-
-
-
-
Removal of NCI
Change in tax
rates
Share option tax
credit
Total
contributions by
and distributions
by owners
Balance at 31
December 2016
7,526
-
7,526
-
-
222
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
987
-
-
(11)
4,796
-
-
-
-
-
973
-
-
-
5,772
973
-
7,526
(1,579)
(1,579)
(1,579)
5,947
-
-
-
-
-
-
-
1,313
987
1,195
2
(11)
4,796
8,282
4
1,309
224
357
28,150
29,919
14,540
9,242
(1,163)
(3,254)
77,791
32
Non-
controlling
interest
$000
-
-
-
-
-
-
-
-
-
-
-
Total
$000
77,791
9,901
166
10,067
82,212
1,089
1,314
(2,213)
5,021
87,423
175,281
-
-
-
-
-
(2)
-
-
(2)
-
7,526
(1,579)
5,947
1,313
987
1,195
-
(11)
4,796
8,280
77,791
353
26,841
22,169
14,540
3,470
(2,136)
(1,675)
63,562
2
63,564
accesso Technology Group plc
Company statement of changes in equity
for the financial year ended 31 December 2017
Share
capital
$000
357
Share
premium
$000
Retained
Earnings
$000
28,150
20,364
Balance at 31
December 2016
Comprehensive income for the year
Profit for period
-
Other comprehensive
income
-
Total comprehensive
income for the year
-
Contributions by and distributions by owners
Issue of share capital
Share-based payments
Equity-settled deferred
consideration
Change in tax rates
Share option tax credit
54
-
-
-
-
-
-
-
77,057
-
-
-
-
Merger
relief
reserve
$000
14,540
-
-
-
5,101
-
-
-
-
Other
reserves
$000
Translation
reserve
$000
Total
$000
4,439
(14,726)
53,124
-
-
-
-
1,089
1,314
-
296
-
4,569
4,442
4,569
4,569
9,011
-
-
-
-
-
-
82,212
1,089
1,314
-
296
84,911
4,442
-
4,442
-
-
-
-
-
-
54
77,057
5,101
2,699
411
105,207
24,806
19,641
7,138
(10,157)
147,046
353
26,841
14,268
14,540
2,643
(4,691)
53,954
Total contributions by
and distributions by
owners
Balance at 31
December 2017
Balance at 31
December 2015
Comprehensive income for the year
Profit for period
Other comprehensive
income
Total comprehensive
income for the year
-
-
-
Contributions by and distributions by owners
Issue of share capital
Share-based payments
4
-
-
4
Share option tax credit
Total contributions by
and distributions by
owners
Balance at 31
December 2016
-
-
-
1,309
-
-
1,309
6,096
-
6,096
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
987
(11)
820
1,796
-
6,096
(10,035)
(10,035)
(10,035)
(3,939)
-
-
-
-
1,313
987
(11)
820
3,109
357
28,150
20,364
14,540
4,439
(14,726)
53,124
33
accesso Technology Group plc
Notes to the consolidated financial statements
for the financial year ended 31 December 2017
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. These consolidated financial statements comprise 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, and
licensing and operation of virtual queuing solutions for 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 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.
Significant accounting policies
Basis of accounting
The Group's financial statements have been prepared in accordance with International Financial Reporting Standards, as
adopted by the European Union (“adopted IFRSs”).
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have
been consistently applied to all the periods presented, unless otherwise stated.
New standards that have been adopted during the period
•
•
•
•
•
Annual improvements to IFRSs
IAS 16 and 38: Amendments to Clarification of Acceptable Methods of Depreciation and Amortisation
IAS 27: Amendments related to Equity Method in Separate Financial Statements
IAS 11: Amendments relating to Acquisitions of Interest in Joint Operations
IAS 7: Amendments related to Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The adoption of the above has not had a material impact on the financial statements during the period ended 31 December
2017.
New standards and interpretations not yet adopted
A number of new standards, amendments to standards, and interpretations are not effective for 2017, and therefore have
not been applied in preparing these accounts. The effective dates shown are for periods commencing on the date quoted.
•
•
•
•
IFRS 15 Revenue from Contracts with Customers (effective for year ending 31 December 2018)
IFRS 9 Financial Instruments (effective for year ending 31 December 2018)
IFRS 16 Leases (effective for year ending 31 December 2019)
Annual improvements to IFRSs
Management have been considering the impact IFRS 15 and IFRS 9 will have on the Group’s financial statements in the period
of initial application, and its review is still in process.
Management is currently starting its assessment of the impact of IFRS 16 on the Group’s financial statements, but has not
yet completed its assessment of the impact on the financial statements. The assessment is ongoing.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes a comprehensive framework for determining whether, how much, and when revenue is recognized. It
replaces existing revenue recognition guidance, including IAS 18 Revenue, and IAS 11 Construction Contracts.
The following areas are those management anticipate may have the greatest impact or are the most judgemental under the
new standard:
Queuing revenue
The Group has developed virtual queuing technology which enables guests to virtually queue using proprietary software and
hardware. The technology is installed in theme parks under agreement with the theme park operator. Revenue is earned as
guests use the product while visiting the park and is recognised on either a gross or net basis, when the Group is acting as
the principal or agent, respectively.
34
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Significant accounting policies (continued)
Currently where revenue is recognised on a gross basis, the group recognise the entire fee payable by the park guest and
recognises costs payable to the theme park operator. Where revenue is recognised on a net basis the group recognises only
a portion of the fee payable by the park guest representing the services provided by the group to the theme park operator
The factors in determining whether the Group is acting as principal or agent in the transaction are different under IFRS 15
than current guidance, and reflect who has control over the good or service prior to delivery to the end customer.
In some agreements, management considers that the technology, hardware, and virtual queue provided to the end customer
are controlled by the Group prior to transfer to the end customer. Effectively, the Group has purchased the right to operate
and control the virtual queue, and accepts responsibility for staffing the sales office and operation, maintaining the
concession from which the product is sold, and ensuring guest satisfaction.
In other agreements, management considers that the Group has passed control of the technology, hardware, and virtual
queue to the park operator, and has minimal responsibility for the operation. The Group will be responsible for maintenance
and support of the technology, but not take part in daily operating decisions. These agreements generally take the form of
a licensing contract.
Management is still assessing the impact on the Group. Regardless of the outcome of its review, it will not result in an impact
to net profit, as only the classification of revenue and cost of sales are impacted.
Software licenses and maintenance and technical support
The Group sells software licenses for its guest management and POS software, which requires a large initial investment and
yearly maintenance and technical support. Additionally, it licenses its on-site ticketing system, requiring an annual payment.
In regard to the guest management and POS software, the customer is required to purchase the yearly maintenance and
technical support to maintain an active license. The fees are typically higher in the first year, with an upfront license fee
payable, than in subsequent years, when only the annual support fee is payable.
Under IFRS 15, these types of agreements are treated as containing an option for a renewal at a discounted price – the cost
of the yearly support – after the initial up-front purchase of the license. Accordingly, the Group will defer revenue on the
initial license sale and recognize a portion of the up-front license payment at the time of the subsequent annual renewal.
Where no term is agreed, the contract renews perpetually until the customer declines the yearly support, or the Group
terminates the contract. In these circumstances, the initial fee will be spread over 5 years, which is in line with the expected
useful life of software.
For on-site ticketing licenses, the customer generally agrees to a fixed term over which it is required to pay annual
instalments if the agreement is longer than one year. As the customer has control of the license upon delivery by the Group,
the total amount of revenue related to the license, for the term of the agreement, will be recognized at the point of delivery.
This will create a receivable which future annual instalment payments will be applied against. Revenue related to
maintenance and support of the license, such as updates and technical support, will be spread over the contract term.
Contract costs
The Group pays commission on certain contracts and currently expenses the cost when incurred, unless there is a clawback
provision. IFRS 15 requires incremental costs associated with obtaining a contract, such as commissions, be capitalised and
amortised over the life of the contract. Accordingly, commissions will become an asset on the consolidated statement of
financial position and tested annually for impairment.
Transition
The Group plans to adopt IFRS 15 using the retrospective method, using the practical expedient in paragraph C5(c) of the
standard, allowing non-disclosure of the amount of the transaction price allocated to the remaining performance obligations
or an explanation of when the Group expects to recognize that amount as revenue for all reporting periods presented before
the date of initial application – i.e. 1 January 2018.
IFRS 9 Financial Instruments
IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities, and some contracts to buy
or sell non-financial items. This standard replaces IAS 39 Financial Instruments: Recognition and Measurement.
Management’s assessment of the impact on the financial statements is still ongoing.
35
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Significant accounting policies (continued)
Functional and presentation currency
The presentation currency of the Group is US dollars (USD). 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.
Basis of consolidation
The consolidated financial statements incorporate the results of accesso Technology Group plc and all of its subsidiary
undertakings as at 31 December 2017 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.
Disclosure and details of the subsidiaries are provided in note 15.
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.
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 OCI, 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 recognition
Revenue primarily arises from the operation and licensing of virtual queuing solutions, the development and application
eCommerce ticketing, professional services, and license sales in relation to point of sale and guest management software
and related hardware.
36
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Significant accounting policies (continued)
Revenue is recognized when the significant risks and rewards of ownership have been transferred to the customer, the
amount of revenue can be reliably estimated, and recovery of consideration is probable. Revenue is measured net of
discounts and service credits.
In relation to virtual queuing, the Group contracts with theme park operators to offer the technology and service to park
guests and share the profit or revenue generated by purchases by park guests. The Group’s contracts are either a profit-
share, where the Group and the park split the profit of the operation, or a revenue-share, where the Group receives a
percentage of revenue of sales at the park. Under both types of contracts, revenue is recognised when the guest utilises the
technology.
Where the contract is a profit-share, revenue represents the total payment by the park guest, net of sales taxes, to utilise
the technology. The park’s share is deducted in cost of sales within the statement of comprehensive income. Typically in
these agreements, the Group accepts responsibility for the operation within the park, including sales, operation,
maintenance of the equipment and facility, and guest relations.
In a revenue-share contract, only the Group’s share of the revenue generated by the technology, as per the customer
agreement, is recognised as revenue. Any costs incurred by the Group are deducted within cost of sales within the statement
of comprehensive income. The Group generally does not influence operation of the product, sales, maintenance, guest
relations, or employees.
Ticketing revenue is generated from owners or operators of venues utilising the Group’s technology, and is earned either by
a per-ticket fee or as a percent of the total transaction of ticket purchases by guests or visitors of the venue. It is recognised
at the time of the sale to the guest or visitor, and the fee collected for the sale of the ticket is not refundable to the customer.
The Group provides implementation, support, and customisation services (collectively, “professional services”) in relation to
its products. Professional services revenue is either earned on a time and materials basis as the services are provided to the
customer, or on a percentage of completion method when it’s a fixed price contract.
Revenue in relation to point of sale and guest management software licences is earned via installing software onto a
customer’s owned-hardware and giving the customer the ability to use the software. While installations often occur over a
period of time, no revenue is recognized until installation is complete and accepted by the customer. The revenue related to
the license fee for the software purchased by the customer is recognized at the time installation is complete, as at the time
of the installation the Group has fulfilled its obligation to provide the customer the software, and there is no recourse for
revenue to be refunded. Any revenue relating to an on-going support obligation is deferred and recognised over the period
of such obligation.
Customers of point-of-sale and guest management software are also charged an annual maintenance and support fee,
calculated as a percentage of the original cost of the software, each year they remain a customer. This revenue is recognized
rateably over the support term, which is generally 12 months. If the customer cancels during the term, the Group is entitled
to retain the full amount of the consideration.
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 recognized 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. 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
37
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Significant accounting policies (continued)
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
Installed systems
Furniture and fixtures
Leasehold Improvements
20 - 33.3% of the original costs each year
25 - 33.3%, or life of contract, of the original costs each year
20% of the original costs each year
Shorter of useful life of the asset or time remaining within the lease contract
of the original costs each year
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.
38
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Significant accounting policies (continued)
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 10 for further discussion on provisions related to tax positions.
Goodwill and intangible assets
Goodwill is carried at cost less any provision for impairment. Intangible assets are valued at cost less amortisation and any
provision for impairment.
Goodwill arising on business combinations (representing the excess of fair value of the consideration given over the fair
value of the separable net assets acquired) is capitalised, and its subsequent measurement is based on annual impairment
reviews, with any impairment losses recognised immediately in the income statement. Direct costs of acquisition are
recognised immediately in the income statement as an expense.
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 (see note 13). The significant
intangibles recognised by the Group and their useful economic lives are as follows:
•
•
•
•
Trademarks over 3 years
Patents over 20 years
Customer relationships and supplier contracts over 1 to 15 years
Intellectual property 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 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
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, which is considered to be up to a maximum of 5 years. 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 criteria noted above.
The Group has contractual commitments for development costs of $nil (2016: $nil).
39
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Significant accounting policies (continued)
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 9 years.
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. 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 policy:
•
•
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.
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 statements. 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 statements. 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.
3.
Critical judgments and key sources of estimation uncertainty
In preparing these consolidated financial statements, 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 statements are discussed below.
40
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Critical judgements and key sources of estimation uncertainty (continued)
Judgements
Information about judgements made in applying accounting policies that have the most significant effects on the amounts
recognised in these consolidated financial statements 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. Significant judgements include 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 2 for details on the Group’s capitalisation and amortisation policies, and Intangible
Assets, note 13, for the carrying value of capitalised development costs.
Agent versus principal
As identified in note 2, revenue in respect of the Group’s queuing contracts is recognised on either a gross or net basis.
When analysing whether the Group is acting as a principal or agent in a given arrangement, this requires management to
consider several judgemental factors. These factors include whether the Group has the ability to influence operating hours,
employees, and prices, whether it bears significant credit and inventory risk, and whether it has primary responsibility for
providing the goods or services to the ultimate customer (the park guest or venue).
When revenue is recognised on a gross basis, management has determined that the Group is operating the product with
enough autonomy and control over the outcome that is bears significant risk and responsibility such that it is acting as the
principal. The Group is generally responsible for the operation within the attraction, including sales, operation, employee
management (including hiring), maintenance of the equipment and facility, and guest relations.
When revenue is recognised on a net basis, management does not view the Group’s participation in the operation as
significant enough to influence the factors noted above, including operation of the product, sales, maintenance, guest
relations, or employee management. Revenue is generally recognised on a net basis in a revenue-share contract, as the
Group’s responsibility would not extend significantly beyond initial installation of the system and annual upkeep.
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:
Determination of fair values of intangible assets acquired in business combinations
Intangible assets acquired in business combinations are important to the revenue generating capacity of the Group. The
recognition of intangible assets requires management to apply judgement, and may require management to contract with
specialists to assist when it deems necessary. The recognition of goodwill in a business combination results from assets
which do not qualify for separate recognition, such as an assembled workforce, and buyer-specific synergies.
The fair values are based on a market participant’s ability to utilise the assets, determined using a method appropriate to
the specific intangible asset, and reflect assumptions and estimates that have a material effect on the carrying value of the
asset.
Key assumptions and estimates made in valuing the acquired intangible assets include:
•
•
•
Cash flow forecasts prepared at the time of acquisition, which involve estimating future business volumes;
The discount rate applied to the forecasted future cash flows; and
The costs to recreate the asset.
The nature and inherent uncertainty relating to these assumptions and estimates means that the actual cash flow may be
materially different from the forecast, and would therefore have led to a different asset value. See note 2 for the useful
lives and amortisation policies regarding intangible assets acquired in business combinations.
Impairment of non-financial assets (excluding inventories and deferred tax assets)
Impairment tests on goodwill are subject to annual review. Other non-financial assets are subject to impairment tests
whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the
smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units
(‘CGUs’). Goodwill is allocated on initial recognition to each of the Group's CGUs that are expected to benefit from the
synergies of the combination giving rise to the goodwill. As the Group’s CGUs have become more interrelated, and
acquisitions are made with the intention of platform integration, the allocation of goodwill is monitored across the CGUs.
41
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Critical judgements and key sources of estimation uncertainty (continued)
Management must make estimates of the pre-tax discount rate, operating margin, and terminal growth rate when testing
for impairment. These inputs are based upon historical data and estimates of future events which can be difficult to predict,
and actual results could vary from the estimate. See note 13 for management’s assumptions used in testing for impairment.
4.
Financial risk management
Overview:
The Group’s use of financial instruments exposes it to a number of risks, including:
• Liquidity risk;
• Interest rate risk;
• Credit risk; and,
• Market risk.
This note presents information about the Group’s exposure to each of the above risks and the Group’s policies and processes
for measuring and managing these risks. The risks are managed centrally following Board-approved policies, and by regularly
monitoring the business and providing ongoing forecasts of the impact on the business. The Group operates a centralised
treasury function in accordance with Board-approved policies and guidelines covering funding and management of foreign
exchange exposure and interest rate risk. Transactions entered into by the treasury function are required to be in support
of, or as a consequence of, underlying commercial transactions.
Other than short-term trade receivables and trade payables that arise directly from operations, as detailed in notes 17 and
18, the Group’s financial instruments comprise cash, borrowings, and finance leases. The fair values of these instruments
are not materially different to their book values. The objective of holding financial instruments is to finance the Group’s
operations and manage related risks.
Liquidity risk
The Group closely monitors its access to bank and other credit facilities in comparison to its outstanding commitments to
ensure it has sufficient funds to meet its obligations as they fall due. The Group finance function produces regular forecasts
that estimate the cash inflows and outflows for the next 12 months, so that management can ensure that sufficient financing
is in place as it is required. The Group’s objective is to maintain a balance between continuity of funding and flexibility
through the use of banking arrangements in place.
Maturity analysis
The following table analyses the Group’s liabilities on a contractual gross basis based on amount outstanding at the balance
sheet date up to date of maturity:
31 December 2017
Group
Financial liabilities
Finance lease
Bank loan
Total
Company
Financial liabilities
Bank loan
Total
Less than
6 months
$000
Note
Between 6
months and
1 year
$000
Between 1
and 5 years
$000
Over 5
Years
$000
18
19
18
19
18,123
9
-
18,132
583
-
583
1,240
-
1,240
-
-
-
3,024
-
16,462
19,486
-
16,462
16,462
-
-
-
-
-
-
-
Total
$000
22,387
9
16,462
38,858
583
16,462
17,045
42
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Financial risk management (continued)
31 December 2016
Group
Financial liabilities
Finance lease
Bank loan
Total
Company
Financial liabilities
Bank loan
Total
Less than 6
months
$000
Note
Between 6
months and
1 year
$000
Between 1
and 5 years
$000
Over 5
Years
$000
18
19
17
19
1,701
27
-
1,728
149
-
149
99
27
-
126
-
-
-
-
9
9,434
9,443
-
9,434
9,434
-
-
-
-
-
-
-
Total
$000
1,800
63
9,434
11,297
149
9,434
9,583
The Group would normally expect that sufficient cash is generated in the operating cycle to meet the contractual cash flows
as disclosed above through effective cash management.
Interest rate risk
The Group’s interest rate risk arises mainly from interest on its bank loan facility, which is subject to a floating interest rate,
and as such, exposes the entity to cash flow risk if prevailing interest rates were to increase.
The Group regularly reviews its funding arrangements to ensure they are competitive with the marketplace.
The table below shows the Group’s and company’s financial assets and liabilities that could be affected by the fluctuation in
interest rates split by those bearing fixed and floating rates and those that are non-interest bearing:
31 December 2017
Group
Financial assets
Cash
Total
Bank loan
Finance lease
Total
Company
Financial assets
Cash
Total
Bank loan
Total
Fixed
rate
$000
Floating
rate
$000
Non-interest
bearing
$000
Total assets
$000
Total
liabilities
$000
Note
17
19
17
19
-
-
-
(9)
(9)
79,819
-
79,819
-
-
-
(16,462)
-
(16,462)
-
-
-
-
-
(16,462)
(16,462)
17,141
28,668
45,809
-
-
-
10,954
1,909
12,863
-
-
17,141
28,668
45,809
-
-
-
90,773
1,909
92,682
-
-
-
(16,462)
(9)
(16,471)
-
-
-
-
-
(16,462)
(16,462)
43
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Financial risk management (continued)
Fixed
rate
$000
-
-
-
-
(63)
(63)
13,973
-
13,973
31 December 2016
Group
Financial assets
Cash
Total
Bank loan
Finance lease
Total
Company
Financial assets
Cash
Total
Bank loan
Total
Credit risk exposure
Note
17
19
17
19
Floating
rate
$000
Non-interest
bearing
$000
Total assets
$000
-
-
-
(9,434)
-
(9,434)
-
-
-
8,905
5,866
14,771
-
-
-
1,985
1,303
3,288
-
-
Total
liabilities
$000
-
-
-
(9,434)
(63)
(9,497)
-
-
-
8,905
5,866
14,771
-
-
-
15,958
1,303
17,261
-
-
(9,434)
(9,434)
-
-
(9,434)
(9,434)
Credit risk predominantly arises from trade receivables, cash and cash equivalents, and deposits with banks. Credit risk is
managed on a Group basis. External credit checks are obtained for larger customers. In addition, the credit quality of each
customer is assessed internally before accepting any terms of trade. Internal procedures take into account a customer’s
financial position, their reputation in the industry, and past trading experience. As a result, the Group’s exposure to bad debts
is generally not significant due to the nature of its trade and relationships with customers.
Indeed, the Group, having considered the potential impact of its exposure to credit risk, and having due regard to both the
nature of its business and customers, do not consider this to have a materially significant impact to the results. Credit risk
also arises from cash and cash equivalents and deposits with banks and financial institutions that have acceptable credit
ratings.
Financial assets
Cash
Estimated irrecoverable amounts
Note
19
18
Group
Company
2017
$000
17,141
28,668
(222)
45,587
2016
$000
8,905
5,866
(75)
14,696
2017
$000
90,773
1,909
-
92,682
2016
$000
15,958
1,303
-
17,261
The maximum exposure is the carrying amount as disclosed in trade and other receivables. The average credit period taken
by customers is 31 days (2016: 31 days). The allowance for estimated irrecoverable amounts has been made based upon the
knowledge of the financial circumstances of individual trade receivables at the balance sheet date. The Group holds no
collateral against these receivables at the balance sheet date.
The following table provides an analysis of trade and other receivables that were past due at 31 December 2017 and 31
December 2016, but against which no provision has been made. The Group believes that the balances are ultimately
recoverable based on a review of past payment history and the current financial status of the customers.
Group
Company
Up to 3 months
3 to 6 months
2016
$000
3,542
515
4,057
2017
$000
644
59
703
2016
$000
505
2
507
2017
$000
10,173
612
10,785
44
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Financial risk management (continued)
Capital risk management
The Group considers its capital to comprise its ordinary share capital, share premium, own shares held in trust, other reserves,
accumulated retained earnings and borrowings as disclosed in the Consolidated statement of financial position. Further
details of the Group’s borrowing facilities are included in note 19. The Group manages its capital structure in the light of
changes in economic conditions and financial markets generally and regularly evaluates its compliance with covenants
applicable to their borrowing facilities.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to
provide returns for current and future shareholders and benefits for other stakeholders, and to maintain an optimal capital
structure to minimise the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount
of dividends paid to shareholders, return capital to shareholders, issue new shares, or increase or reduce debt.
The Group does not seek to maintain any specific debt to capital ratio, but considers investment opportunities on their merits
and funds them in what it considers to be the most effective manner.
Foreign currency exposure
The Group primarily has operations or customers in the UK, USA, Canada, Italy, Germany, Australia, Brazil, and Mexico, and,
as such, is exposed to the risk of foreign currency fluctuations. The main operating currencies of its operations are in sterling,
US dollars, and euros. The Group's currency exposure comprises the monetary assets and liabilities of the Group that are not
denominated in the operating or 'functional' currency of the operating unit involved. At the period end, Group companies
held monetary assets in currencies other than their local currency. Balances at 31 December 2017 are (in $’000s):
$714 (2016: $280) denominated in US dollars
AUD$9 (2016: AUD$80) denominated in Australian dollars
€85 (2016: €133) denominated in euros
Kr856 (2016: Kr419) denominated in Danish krone
CAD$nil (2016: CAD$16) denominated in Canadian dollars
The Group manages risk by its subsidiaries matching revenue and expenditure in their local currency wherever possible. The
Group tries to keep foreign intercompany balances as low as possible to avoid translation adjustments. Given the nature of
the Group’s operations and their management of foreign currency exposure, they limit the potential down side risk as far as
practicably possible.
The Group considers the volatility of currency markets over the year to be representative of the potential foreign currency
risk it is exposed to. The main currency the Group’s results were exposed to was sterling and over the year the average rate
for 1GBP = 1.2906USD (2016: 1GBP = 1.345USD). If sterling had been an average of 5% stronger than the dollar through the
year, then it would have increased Group profit before tax by $199,805 (1.77%). If sterling had been an average of 5% weaker
than the dollar through the year then it would have decreased Group profit before tax by $199,805 (1.77%).
Fair Value Measurement
The Group does not have any level 2 or 3 financial assets or liabilities that have unobservable inputs that require disclosure.
5.
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 as a whole and monitors its operational performance against this strategy.
The Board consider the Group in its current form to consist of one Operating Segment and appraises the entity’s performance
as a whole. The Group’s revenues, costs, assets, liabilities, currency exposure, and cash flows are therefore totally
attributable to the single Operating Segment.
The ticketing and queuing operations of the Group are evolving and continually merging, and the Group is now serviced
through a single sales team, transferable staff, and is appraised on a Group basis in terms of incentive arrangements.
Additionally, similar economic characteristics, including customers, markets, and operating margins, are shared by the
revenue generating activities of the Group. As the business gains more scale, large shared customers are becoming
increasingly common. Allocation of resources is driven by customer needs across the Group as a whole.
45
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Business and geographical segments (continued)
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) by geographical location are
detailed below:
UK
Other Europe
Australia/South Pacific
USA and Canada
Central and South America
Revenue
Non-current assets
2017
$000
22,701
2,138
1,565
103,294
3,731
133,429
2016
$000
4,384
2,053
765
92,993
2,316
102,511
2017
$000
38,788
67
637
162,048
158
201,698
2016
$000
7,459
86
93
77,353
115
85,106
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.
The majority of the ultimate revenue of the business is derived from guest rentals of the Group’s virtual queuing technology
or tickets purchased by guests via the Group’s ecommerce technology, but no single guest forms a significant proportion of
the revenue of the Group. However, the ability to generate guest rentals or ticket related revenue is fully dependant on the
Group maintaining and developing agreements with theme parks or attraction owners to operate its technology.
The customers of one of the park operators with which the Group has a contractual relationship accounts for $44.8m of
Group revenue for 2017 (2016: $51.3m).
6.
Revenue
Management categorises revenue based upon the likelihood it will be repeatable.
Transactional revenue is repeatable revenue earned as either a fixed amount per sale of an item by the customer or as a
percent of the total sale (e.g. eCommerce income, ticket sales). Other repeatable revenue is repeatable revenue, excluding
transactional revenue, that is expected to be earned each year of a customer’s contract (e.g. annual license fees,
maintenance support). Non-repeatable revenue is revenue that occurs one-time (e.g. up-front license fees) or is not
repeatable based upon the current contract (e.g. billable hours), and is unlikely to be repeatable without additional sales
activity. Other revenue consists of hardware sales and other revenue that may be repeatable with no sales activity if
customer behaviour is consistent.
Transactional revenue
Other repeatable revenue
Non-repeatable revenue
Other revenue
2017
$000
99,188
9,045
17,297
7,899
133,429
2016
$000
84,912
7,942
5,415
4,242
102,511
See note 2 for a description of revenue recognition policies, and note 5 for a geographical breakdown of revenue.
7.
Employees and directors
Wages and salaries
Social security costs
Defined contribution pension costs
Share-based payment transactions
46
2017
$000
34,315
2,600
904
1,089
38,908
2016
$000
28,725
2,464
750
987
32,926
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Employees and directors (continued)
In respect of directors’ remuneration, the disclosures required by Schedule 5 to Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008 are included in the detailed disclosures in the Directors’ Remuneration
report.
The average monthly number of employees during the year was made up as follows:
2017
2016
Operations
Research & development
Sales & marketing
Finance & administration
Seasonal staff
8.
Expenses by nature
Park operating costs (i) and costs associated with ticket sales
Staff costs, less costs associated with research and development
Deferred and contingent compensation related to acquisitions
Legal and professional costs
Travel
Marketing
Inventories and consumables
Other costs
Other operating leases
Depreciation - owned assets
Depreciation - finance leased assets
Amortisation
Research and development
Research and development capitalized to balance sheet
Foreign exchange differences
169
200
34
60
418
881
2017
$000
59,071
24,549
2,131
5,784
2,249
1,679
315
4,777
1,675
1,277
44
12,801
20,025
(12,395)
206
124,188
131
140
33
47
398
749
2016
$000
44,274
21,050
-
3,067
1,621
1,733
678
5,035
1,229
1,345
48
6,221
17,869
(11,591)
(582)
91,997
(i) Park operating costs include an amount payable to the park when the Group is acting as the principal in the contract, along
with the Group’s other park operating costs, regardless of whether it is principal or agent. See notes 2 and 3 for details on
how the Group recognises revenue and determines whether principal or agent treatment is appropriate.
Auditor’s remuneration
During the period the following services were obtained from the Group's auditor at a cost detailed below:
Audit services
Fees payable to the company's auditors of the parent company and consolidated
accounts
Fees payable to the company's auditors for the audit of subsidiaries
Non-audit services
Tax compliance
Tax advisory
Tax other
Corporate finance
Audit-related assurance services
2017
$000
148
138 2
32 4
291
5
203 5
29
846
2016
$000
91
84
8
20
-
96
-
299
47
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
9.
Finance income and expense
The table below details the finance income and expense for the current and prior periods:
Finance income:
Bank interest received
Interest received from customers
Total finance income
Finance costs:
Bank interest
Amortisation of capitalised refinance costs
Interest expense associated with contingent and deferred compensation
Finance lease
Total finance costs
Net finance expense
10.
Tax
2017
$000
5
19
24
(741)
(224)
(1,131)
(3)
(2,099)
(2,075)
2016
$000
4
-
4
(360)
(48)
-
(6)
(414)
(410)
The table below provides an analysis of the tax charge for the periods ended 31 December 2017 and 31 December 2016:
UK corporation tax
Current tax on income for the period
Adjustment in respect of prior periods
Overseas tax
Current tax on income for the period
Adjustment in respect of prior periods
Total current taxation
Deferred taxation
Original and reversal of temporary difference - for the current period
Impact on deferred tax of US rate change
Original and reversal of temporary difference - for the prior period
Total taxation (benefit) / charge
2017
$000
1,012
154
1,166
1,289
(707)
582
1,748
382
(5,094)
229
(4,483)
(2,735)
2016
$000
179
(113)
66
1,432
129
1,561
1,627
831
-
118
949
2,576
48
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Tax (continued)
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:
Profit on ordinary activities before tax
Tax at United States tax rate of 40% (2016: 40.0%)
Effects of:
Expenses not deductible for tax purposes
Additional deduction for patent box
Additional deduction for R&D expenditure – current period
Profit subject to foreign taxes at a lower marginal rate
Adjustment in respect of prior period – income statement
Deferred tax not recognized
Impact of US tax rate change
Other including impact of rate differential
Total tax (benefit) / charge
Deferred taxation
Group
At 31 December 2015
Charged to income
Credited directly to equity
At 31 December 2016
Charged to income
Credited directly to equity
Acquired from business combinations
At 31 December 2017
Company
At 31 December 2015
Charged to income
Credited directly to equity
At 31 December 2016
Charged to income
Credited directly to equity
Netted against the asset
At 31 December 2017
The following table summarises the recognised deferred tax asset and liability:
Group
Recognised asset
Tax relief on unexercised employee share options
Short term timing differences
Net operating losses & tax credits
Deferred tax asset
49
2017
$000
7,166
2,866
1,380
(175)
(130)
(1,050)
(324)
1
(5,094)
(209)
(2,735)
Asset
$000
1,377
(105)
4,736
6,008
(5,056)
2,793
5,192
2016
$000
10,102
4,041
60
(104)
(200)
(1,197)
134
70
-
(228)
2,576
Liability
$000
(9,196)
(843)
49
(9,990)
9,539
(181)
(13,997)
8,937
(14,629)
283
(29)
760
1,014
(62)
585
(1,184)
353
2017
$000
6,977
974
986
8,937
(228)
(890)
49
(1,069)
(115)
-
1,184
-
2016
$000
5,796
180
32
6,008
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Tax (continued)
Recognised liability
Depreciation in excess of capital allowances
Short term timing differences
Business combinations
Deferred tax liability
Company
Recognised asset
Tax relief on unexercised employee share options
Short term timing differences
Offset against Company deferred tax asset
Deferred tax asset
Recognised liability
Depreciation in excess of capital allowances
Offset against Company deferred tax asset
Deferred tax liability
2017
$000
(3,078)
(272)
(11,279)
(14,629)
1,535
2
(1,184)
353
(1,184)
1,184
-
2016
$000
(4,116)
(257)
(5,617)
(9,990)
1,012
2
-
1,014
(1,069)
-
(1,069)
Tax rates in the UK will reduce from 19% to 17% with effect from 1 April 2020. Tax rates in the US will reduce from 35% to
21%, before state taxes, with effect from 1 January 2018. As both rate changes have been substantively enacted at the
balance sheet date, deferred tax assets and liabilities have been measured at a rate of 17% and 21% plus state taxes in the
UK and US, respectively (2016: 17% and 40%, respectively). The significant reduction in the US corporate rate will also reduce
the Group's effective tax rate in future periods. There are no material unrecognized deferred tax assets.
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 significant 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.
50
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
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 $0.6 million
in relation to transfer pricing risks and $0.4 million in relation to availability of tax losses and international R&D claims.
11.
Profit of parent company
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent company is not presented
as part of these financial statements. The parent company's profit for the financial year ended 31 December 2017 was (in
$’000) $4,442 (2016: $6,096).
12.
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, acquisition costs, deferred and contingent consideration, credits to the income
statement from the reversal of the earn-out liability, and costs related to share-based payments, less tax at the effective
rate.
The table below reflects the income and share data used in the total basic, diluted, and adjusted earnings per share
computations.
Profit attributable to ordinary shareholders ($000)
Basic EPS
Denominator
Weighted average number of shares used in basic EPS
Basic earnings per share (cents)
Diluted EPS
Denominator
Weighted average number of shares used in basic EPS
Effect of dilutive securities
Options
Weighted average number of shares used in diluted EPS
Diluted earnings per share (cents)
Adjusted EPS
Profit attributable to ordinary shareholders ($000)
Adjustments for the period related to:
Amortisation relating to acquired intangibles from acquisitions
Interest expense related to deferred and contingent liabilities
Acquisition expenses (including debt arrangement fees)
Deferred and contingent payments
Profit recognised on reduction of earn out -liability
Share-based compensation and social security costs on unapproved options
US tax code – tax credit from revaluation of US deferred balances
Net tax related to the above adjustments (2017: 24.0%, 2016: 25.5%):
2017
9,901
2016
7,526
24,250
40.83
22,169
33.95
24,250
22,169
1,337
25,587
38.70
1,332
23,501
32.02
9,901
7,526
8,591
1,131
1,474
2,131
(3,228)
1,089
(4,450)
16,639
(2,880)
4,227
-
-
-
-
987
-
12,740
(1,330)
Adjusted profit attributable to ordinary shareholders ($000)
13,759
11,410
51
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Earnings per share (continued)
Adjusted profit attributable to ordinary shareholders ($000)
Adjusted basic EPS
Denominator
Weighted average number of shares used in basic EPS
Adjusted basic earnings per share (cents)
Adjusted diluted EPS
Denominator
Weighted average number of shares used in diluted EPS
Adjusted diluted earnings per share (cents)
2017
13,759
2016
11,410
24,250
56.73
22,169
51.48
25,587
53.77
23,501
48.55
13.
Intangible assets
The cost and amortisation of the Group’s intangible fixed assets are detailed in the following table:
Customer
relationships
& supplier
contracts
$000
Goodwill
$000
Trademarks
$000
Internally
developed
technology
$000
Patent
& IPR
costs
$000
Development
costs
$000
Totals
$000
Cost
At 31 December
2015
Foreign currency
translation
Additions
At 31 December
2016
Foreign currency
translation
Additions
Acquired with
acquisition
At 31 December
2017
Amortisation
At 31 December
2015
Foreign currency
translation
Charged
At 31 December
2016
Foreign currency
translation
Charged
At 31 December
2017
43,862
10,240
470
20,280
658
13,775
89,285
-
-
-
-
(1)
-
-
-
(93)
84
(989)
11,591
(1,083)
11,675
43,862
10,240
469
20,280
649
24,377
99,877
1,533
-
71,942
129
-
109
-
834
-
8,046
1,349
32,522
51
-
64
993
12,395
3,649
12,395
-
113,923
117,337
18,415
1,927
53,636
764
37,765
229,844
-
-
-
-
-
-
-
1,676
241
6,129
416
4,267
12,729
-
882
2,558
8
1,837
-
142
383
3
170
-
3,205
(58)
62
(624)
1,927
(682)
6,218
9,334
420
5,570
18,265
55
6,585
33
43
381
4,166
480
12,801
4,403
556
15,974
496
10,117
31,546
52
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Intangible assets (continued)
Customer
relationships
& supplier
contracts
$000
Goodwill
$000
Trademarks
$000
Internally
developed
technology
$000
Patent
& IPR
costs
$000
Development
costs
$000
Totals
$000
117,337
14,012
1,371
37,662
268
27,648
198,298
43,862
7,682
86
10,946
229
18,807
81,612
Net book value
At 31 December
2017
At 31 December
2016
The cost and amortisation of the company’s intangible fixed assets are detailed in the following table:
Patent costs
$000
Development costs
$000
Cost
At 31 December 2015
Foreign currency translation
Additions
At 31 December 2016
Foreign currency translation
Additions
At 31 December 2017
Amortisation
At 31 December 2015
Foreign currency translation
Charged
At 31 December 2016
Foreign currency translation
Charged
At 31 December 2017
Net Book Value
At 31 December 2017
At 31 December 2016
551
(93)
84
542
51
-
593
329
(57)
62
334
33
43
410
183
208
Totals
$000
6,488
(1,081)
4,967
10,374
1,046
1,642
5,937
(988)
4,883
9,832
995
1,642
12,469
13,062
3,732
(622)
504
3,614
383
1,280
5,277
7,192
6,218
4,061
(679)
566
3,948
416
1,323
5,687
7,375
6,426
Acquisition of Ingresso Group Limited
On 30 March 2017, the Group acquired 100% of the voting equity of Ingresso Group Limited (“Ingresso”), a provider of live
access to ticketed events worldwide across multiple platforms, languages and currencies, for initial cash consideration of
£14.8m ($18.5m), plus a potential earn out payment, capped at £10.5m ($13.1m). The total aggregate consideration was
capped at £28.0m ($35.0m), assuming the earn out was achieved in full. A true-up of working capital brought the total cash
investment to $18.7m.
The acquisition of Ingresso is expected to further deepen the Group’s ability to help its customers drive efficiency and realise
greater value from their ticketing operations. Additionally, it will open up a significantly larger global distribution channel
through which existing Group customers can seek to sell their event and attraction tickets, along with providing Ingresso
with a significant opportunity to grow its business via access to the Group’s expansive ticket inventory, eCommerce expertise,
infrastructure and global relationships. Finally, Ingresso allows the Group to address significant inefficiencies it has identified
within the travel and leisure industry, and help clients generate more revenue from third party distribution channels
53
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Intangible assets (continued)
The earn out, payable in 2018, is based on the financial performance of Ingresso for the year ended 31 December 2017
exceeding its financial performance in 2016. It is payable in cash and secured by a floating charge on the assets of Ingresso.
The full earn out was not achieved, resulting in a credit to the Consolidated and company statement of comprehensive
income of $3.2m. The Group's statement of financial position includes a liability in relation to the earn out of $9.1m. Under
IFRS 3, consideration payable to employees of the acquired company is compensation expense, rather than deferred
consideration. The Group’s income statement contains $1.0m of compensation expense due to this treatment within
administrative expenses, and $0.2m of interest expense related to this treatment.
To fund the acquisition, the Group entered into an amendment and restatement agreement in relation to its Lloyds Bank
facility dated 14 March 2016, extending the facility to allow for the ability to draw down $60m, denominated in US dollars,
GB Pound Sterling, or Euros. The agreement has a four-year term, with a $10m reduction in the total available for drawdown
on the first, second and third anniversaries of the restatement. There is an option to extend the agreement for a further 12
months at the end of the first year, and an accordion mechanism allowing for a further $10m related to future acquisitions.
The drawdown rate is 140 basis points above LIBOR at a borrowing to EBITDA ratio of less than 1.5 times, rising to 190 basis
points if the borrowing to EBITDA ratio is greater than 2.25 times. Commitment interest on the undrawn funds is 35% of
margin.
Acquisition related costs of $0.7m were incurred in relation to this acquisition, excluding capitalised finance costs ($0.4m),
and are included within administrative expenses within the Statement of comprehensive income for the period. Finance
costs are amortised over the life of the agreement, and presented netted against bank loans within borrowings in the
statement of financial position.
Ingresso contributed $16.7m to revenue and $0.06m to profit before tax from the date of acquisition.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration, and goodwill are below as of
the acquisition date:
Book value
$000
Adjustment
$000
Fair value
$000
Identifiable intangible assets
Internally developed technology
Customer relationships
Supplier contracts
Trademarks
Property, plant and equipment
Receivables and other debtors
Payables and other liabilities
Cash
Deferred tax asset
Deferred tax liability
Total net assets
Cash paid at completion
Contingent consideration
Working capital true-up
Total consideration
Goodwill on acquisition
514
-
-
-
49
3,129
(11,630)
5,744
582
(20)
(1,632)
18,528
9,553
208
28,289
9,835
674
931
1,349
-
-
-
-
-
(2,406)
10,383
-
-
-
-
10,349
674
931
1,349
49
3,129
(11,630)
5,744
582
(2,426)
8,751
18,528
9,553
208
28,289
19,538
The main factors leading to the recognition of goodwill are the presence of certain intangible assets, such as the assembled
workforce of the acquired entity and the expected synergies of the enlarged Group, which do not qualify for separate
recognition, including the ability to integrate into the Group’s current product mix and enable increased sales through third
party channels, unavailable to other market participants without its contracts.
The net cash outflow in respect of the acquisition comprised:
Cash paid
Net cash acquired
Total cash outflow in respect of acquisition
54
$000
(18,736)
5,744
(12,992)
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Intangible assets (continued)
Acquisition of Blazer and Flip Flops Inc DBA The Experience Engine (“TE2”)
On 20 July 2017, the Group acquired 100% of the voting equity of Blazer and Flip Flops, Inc, a privately-owned developer of
software solutions which enables leading enterprises to offer a highly-personalised guest experience to their customers,
primarily in the leisure, hospitality, entertainment and retail sectors. The acquisition was for an enterprise value of $80
million and was funded by the issue of $14.5 million in new Ordinary shares of the Group to the Vendors, and an underwritten
vendor and cash placing of $75.6 million.
Management believe that TE2's cloud based solution offers market-leading personalisation capabilities and data
orchestration technologies which capture, model and anticipate guest behaviour and preferences not only pre- and post-
visit online, but in the physical in-venue environment. The acquisition of TE2 will greatly complement and enhance the
Group's existing offerings, which help its enterprise customers both improve and monetise their customers' experiences.
Using the Group's greater scale, customer relationships, sales and delivery capability, established reputation and capital
resources will help accelerate adoption of TE2's solution among new and existing customers.
Acquisition related costs of $0.5m were incurred in relation to this acquisition, and are included within administrative
expenses within the Statement of comprehensive income for the period.
TE2 contributed $11.9m to revenue and $1.8m to profit before tax from the date of acquisition.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are below:
Identifiable intangible assets
Internally developed technology
Customer relationships
Customer relationships - backlog
Property, plant and equipment
Receivables and other debtors
Payables and other liabilities
Cash
Deferred tax liability
Deferred tax asset
Total net assets
Cash paid at completion
Equity instruments (245,128 ordinary shares)
Working capital true-up
Total consideration
Goodwill on acquisition
Book value
$000
Adjustment
$000
Fair value
$000
-
-
-
195
3,608
(7,676)
4,108
(80)
4,565
4,720
69,753
5,101
(563)
74,291
(1)
22,173
4,981
1,460
-
-
-
-
(11,446)
-
17,168
-
-
-
-
22,173
4,981
1,460
195
3,608
(7,676)
4,108
(11,526)
4,565
21,888
69,753
5,101
(563)
74,291
52,403
(1)
In accordance with IFRS 3 Business Combinations, the consideration paid in shares is based on the share price at the
date on which the company obtained control of TE2. The price determined in the Purchase Agreement for calculating
the number of shares to be issued to the vendors is based on an average price of $20.81. The amount is booked to the
Merger Relief Reserve within the consolidated statement of financial position.
Deferred consideration consisting of 454,547 shares will be issued to certain key employees of TE2, contingent upon their
continued employment, over 36 months. Shares will be issued in 3 separate tranches: one-third 12 months after the
completion date; a further one-third 24 months after the completion date; and the final one-third is released rateably over
12 months from the 25th to 36th month after the completion date. A charge in relation to this of $1.3m is booked to Other
Reserves.
The main factors leading to the recognition of goodwill are the presence of certain intangible assets, such as the assembled
orkforce of the acquired entity and the expected synergies of the enlarged Group, which do not qualify for separate
recognition. Expected synergies include the ability to drive increased sales via additional data collection on users of the
Group’s current products, and enhanced relationships with current customers.
55
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Intangible assets (continued)
The net cash outflow in respect of the acquisition comprised:
Cash paid
Net cash acquired
Total cash outflow in respect of acquisition
$000
69,190
(4,108)
65,082
Had Ingresso and TE2 been part of the Group for the full period, revenue would have been $148.7m, with profit before tax
of $10.8m.
Impairment testing of goodwill
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. 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 Group considers acquisitions based upon their ability to add accretive earnings to the Group and leverage off customer
relationships already in place, or bring the Group’s portfolio into new markets. As such, the goodwill of cash generating units
(CGUs) is monitored at a Group level, rather than at the individual CGU level. Accordingly, for the impairment test of goodwill,
the CGUs are tested collectively.
The recoverable amounts of all the CGUs have been determined from value in use calculations based on cash flow projections
using budget and forecast projections and assumes a perpetuity based terminal value.
The key assumptions used for value in the calculations in 2017 and 2016 are as follows:
Pre-tax discount rate (%)
Acquired cash generating unit: accesso, LLC & Siriusware, Inc. (CGU 1)
Acquired cash generating unit: VisionOne Worldwide Limited and its
subsidiaries (CGU 2)
Acquired cash generating unit: Ingresso Group (CGU 3)
Acquired cash generating unit: TE2 (CGU 4)
Average operating margin (%)
Acquired cash generating unit: accesso, LLC & Siriusware, Inc. (CGU 1)
Acquired cash generating unit: VisionOne Worldwide Limited and its
subsidiaries (CGU 2)
Acquired cash generating unit: Ingresso Group (CGU 3)
Acquired cash generating unit: TE2 (CGU 4)
Average EBITDA growth rate (%)
Acquired cash generating unit: accesso, LLC & Siriusware, Inc. (CGU 1)
Acquired cash generating unit: VisionOne Worldwide Limited and its
subsidiaries (CGU 2)
Acquired cash generating unit: Ingresso Group (CGU 3)
Acquired cash generating unit: TE2 (CGU 4)
Terminal growth rate (%)
Acquired cash generating unit: accesso, LLC & Siriusware, Inc. (CGU 1)
Acquired cash generating unit: VisionOne Worldwide Limited and its
subsidiaries (CGU 2)
Acquired cash generating unit: Ingresso Group (CGU 3)
Acquired cash generating unit: TE2 (CGU 4)
Forecast period (years)
Acquired cash generating unit: accesso, LLC & Siriusware, Inc. (CGU 1)
Acquired cash generating unit: VisionOne Worldwide Limited and its
subsidiaries (CGU 2)
Acquired cash generating unit: Ingresso Group (CGU 3)
Acquired cash generating unit: TE2 (CGU 4)
56
2017
$000
9.1
9.1
10.1
12.5
25.8
17.9
4.7
16.3
7.0-21.0
11.0-27.0
10.0-48.0
(56.0)-65.0
3
3
3
3
5
5
5
5
2016
$000
15.5
15.5
-
-
19.1
35.8
-
-
8.0-20.0
11.0-15.5
-
-
3
3
-
-
5
5
-
-
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Intangible assets (continued)
Operating margins have been based on experience, where possible, and future expectations in the light of anticipated
economic and market conditions. Discount rates are based on the Group’s WACC adjusted to reflect market participant’s
expected capital structure. Growth rates beyond the formally budgeted period are based on economic data pertaining to
the region concerned.
In respect of the pooled goodwill, a reasonable change in the key assumptions of the terminal growth rate and operating
margin did not significantly impact the recoverable value. If the pre-tax discount rate used for the test was 34.4%, the carrying
amount and recoverable amount would be equal.
The value-in-use of the CGUs exceeds their carrying value by $247m.
14.
Property, plant and equipment
The cost and depreciation of the Group’s tangible fixed assets are detailed in the following table:
Cost
At 31 December 2015
Foreign currency translation
Additions
Disposals
At 31 December 2016
Foreign currency translation
Additions
Acquired with acquisition
Disposals
At 31 December 2017
Depreciation
At 31 December 2015
Foreign currency translation
Charged
Disposals
At 31 December 2016
Foreign currency translation
Charged
Acquired with acquisitions
Disposals
At 31 December 2017
Net book value
At 31 December 2017
At 31 December 2016
Installed
systems
$000
5,435
(683)
361
(104)
5,009
364
146
-
(30)
5,489
4,179
(500)
671
(104)
4,246
343
473
-
(27)
5,035
454
763
Plant,
machinery and
office
equipment
$000
3,635
(88)
859
(1,087)
3,319
104
705
195
(301)
4,022
3,173
(209)
337
(1,087)
2,214
48
461
95
(298)
2,520
1,502
1,105
57
Furniture
& fixtures
Leasehold
improvements
Totals
$000
11,821
(876)
1,948
(1,292)
$000
1,114
-
155
(8)
1,261
11,601
-
21
-
-
542
936
295
(366)
$000
1,637
(105)
573
(93)
2,012
74
64
100
(35)
2,215
1,282
13,008
734
(34)
242
(92)
850
28
284
20
(29)
1,153
1,062
1,162
658
-
143
(4)
797
-
103
-
-
900
382
464
8,744
(743)
1,393
(1,287)
8,107
419
1,321
115
(354)
9,608
3,400
3,494
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Property, plant and equipment (continued)
The cost and depreciation of the company’s tangible fixed assets are detailed in the following table:
Installed
systems
$000
Plant, machinery and
office equipment
$000
Furniture &
fixtures
$000
Cost
At 31 December 2015
Foreign currency translation
Additions
At 31 December 2016
Foreign currency translation
Additions
At 31 December 2017
Depreciation
At 31 December 2015
Foreign currency translation
Charged
At 31 December 2016
Foreign currency translation
Charged
At 31 December 2017
Net book value
At 31 December 2017
At 31 December 2016
4,264
(683)
224
3,805
364
6
4,175
3,652
(587)
418
3,483
343
221
4,047
128
322
509
(85)
473
897
94
292
1,283
410
(68)
56
398
44
161
603
680
499
637
(105)
250
782
73
9
864
216
(36)
70
250
27
86
363
501
532
15.
Investments
Investment in subsidiaries
The investment balance on the company’s books at 31 December 2017 is as detailed below:
Totals
$000
5,410
(873)
947
5,484
531
307
6,322
4,278
(691)
544
4,131
414
468
5,013
1,309
1,353
Cost
At 31 December 2016
Purchase of subsidiaries
Foreign currency translation
At 31 December 2017
At 31 December 2015
Foreign currency translation
At 31 December 2016
Net book value
At 31 December 2016
At 31 December 2017
58
$000
37,806
28,289
7,258
73,353
45,614
(7,808)
37,806
37,806
73,353
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Investments (continued)
Name
Lo-Q, Inc. (1)
Lo-Q Service Canada Inc (1)
Lo-Q (Trustees) Limited (2)
accesso, LLC. (3)
Siriusware, Inc. (4)
Lo-Q Limited (5)
VisionOne Worldwide Limited (6)
VisionOne, Inc. (7)
VisionOne S.A. de C.V. (8)
ShoWare do Brazil Ltda (9)
VisionOne do Brazil Ltda (9)
Accesso Australia PTY Limited (10)
Blazer and Flip Flops Inc (11)
TE2 Ireland (12)
Ingresso Group Limited (13)
accesso Nederland NV (14)
Country of incorporation
United States of America
Canada
United Kingdom
United States of America
United States of America
United Kingdom
British Virgin Islands
United States of America
Mexico
Brazil
Brazil
Australia
United States of America
Ireland
United Kingdom
Netherlands
% Ownership
interest
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
% Voting
Rights
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
As required by the Companies Act, the registered addresses of each business are:
(1) Registered address of 420 Thornton Rd, Suite 109, Lithia Springs, GA, USA
(2) Registered address of Unit 5, The Pavilions, Ruscombe Park, Twyford, Berkshire RG10 9NN, UK
(3) Registered address of 1025 Greenwood Blvd, Suite 500, Lake Mary, FL, USA
(4) Registered address of 302 Camino de la Placita, Taos, NM, USA
(5) Registered address of Unit 5, The Pavilions, Ruscombe Park, Twyford, Berkshire RG10 9NN, UK
(6) Registered address of Geneva Place, PO Box 3469, Waterfront Drive, Road Town, British Virgin Islands
(7) Registered address of 6781 N Palm Ave, #120, Fresno, CA 93704, USA
(8) Registered address of Montecito #38, Piso 30 Oficinas 26 y 27, Colonia Napoles, 03810, Mexico City, Mexico, D.F.
(9) Registered address of Rua Joaquim Floriano, no. 888, Suite 1003, Itaim Bibi, CEP 04534-003, Sao Paulo, Sao Paulo, Brazil
(10) Registered address of 135 King Street, Floor 13, Sydney City, 2000, NSW, Australia
(11) Registered address of 4660 La Jolla Village Dr, Suite 620, Sand Diego, CA 92122
(12) Registered address of Block 3, Harcourt Centre, Harcourt Rd, Dublin 2 Ireland
(13) Registered address of Unit 5, The Pavilions, Ruscombe Park, Twyford, Berkshire RG10 9NN, UK
(14) Registered address of Butterwick 1, London, W6 8DL, UK
accesso, LLC, Siriusware, Inc. and VisionOne, Inc. and Blazer and Flip Flops Inc are 100% owned by Lo-Q, Inc. VisionOne do
Brazil Ltda and VisionOne do Mexico Ltda are 100% owned by VisionOne Worldwide Ltd. Showare Do Brazil Ltda is 100%
owned by VisionOne do Brazil Ltda. TE2 Ireland is 100% owned by Blazer and Flip Flops Inc.
The trade for both Lo-Q, Inc. and Lo-Q Service Canada Inc is that of the application of virtual queue technologies. The trade
of accesso, LLC, Siriusware, Inc., the VisionOne subsidiaries, Accesso Australia PTY Limited, Ingresso Group Limited and Blazer
and Flip Flops Inc is that of ticketing, point-of-sale and experience management technology solutions. The economic
characteristics of the entities are similar, including customer bases, and operating margins, and therefore they are classified
as one segment.
Lo-Q (Trustees) Limited operates an employee benefit trust on behalf of accesso Technology Group plc to provide benefits in
accordance with the terms of a joint share ownership plan. Further details of this can be found on page 19.
16.
Inventories
Stock
Park installation
Group
Company
2017
$000
443
63
506
2016
$000
478
13
491
2017
$000
279
-
279
2016
$000
303
-
303
The amount of inventories recognised as an expense and charged to cost of sales for the year ended 31 December 2017 was
$2,468,289 (2016: $1,878,066). Park installation balances includes equipment installed at a theme or water park on a trial
basis or during the phase prior to a new or updated operation commencing.
59
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
17.
Trade and other receivables
Trade debtors
Accrued income
Social security and other taxes
Other debtors
Amounts owed by Group undertakings
Financial assets
VAT
Prepayments
Group
Company
2017
$000
15,013
1,428
17
683
-
17,141
-
2,620
19,761
2016
$000
5,903
2,812
-
190
-
8,905
(1)
1,328
10,232
2017
$000
1,533
108
17
137
88,978
90,773
-
861
91,634
2016
$000
970
129
-
38
14,821
15,958
4
344
16,306
The Group’s financial assets are short term in nature. In the opinion of the directors, the book values equate to their fair
value.
Included within Trade debtors are amounts owed to the Group from ticket sales, equating to the total value of the ticket and
the commission earned by the Group. The value of the ticket, less the commission, is payable to the supplier of the ticket,
and is not revenue to the Group.
18.
Trade and other payables
Current
Trade creditors
Current other creditors
Non-current other creditors
Financial liabilities
Deferred revenue
Social security and other taxes
Accruals
Group
Company
2017
$000
14,212
5,151
19,363
3,024
22,387
12,004
1,934
16,573
52,898
2016
$000
1,281
519
1,800
-
1,800
4,050
42
5,350
11,242
2017
$000
585
(2)
583
-
583
356
175
10,298
11,412
2016
$000
150
(1)
149
-
149
-
(19)
1,128
1,258
The Group’s financial liabilities are generally short-term in nature. In the opinion of the directors the book values equate to
their fair value.
Included within trade creditors are amounts payable to ticket suppliers. In certain agreements, the Group receives the total
cash from the sale of the ticket.
Included within current other creditors and non-current other creditors is a balance related to the TE2 acquisition owed to
employees in lieu of a pre-acquisition option scheme. The Group holds cash of $5.5m at 31 December 2017 in respect of this
liability, which was cash paid to the Group by the sellers of Blazer and Flip Flops Inc to make the payments over a three year
period.
Included within accruals for the Group and company are amounts owed related to contingent and deferred consideration
resulting from acquisitions ($9.1m, 2016: $nil).
60
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
19.
Borrowings
Bank loans
Arrangement fees, less amortised cost
Group
Company
2017
$000
16,462
(322)
16,140
2016
$000
9,434
(136)
9,298
2017
$000
16,462
(322)
16,140
2016
$000
9,434
(136)
9,298
On 7 November 2014 the Group entered into an amendment and restatement agreement with Lloyds Bank plc in relation to
a Revolving Loan Facility dated 4 December 2013.
On 14 March 2016, the Group amended the facility. The amended facility extends it to allow a drawdown facility of $25m,
with no step downs, at an improved drawdown rate of 1.35% above LIBOR, and an improved commitment rate. The renewed
facility terminates on 14 March 2019 with the possibility for this to extend for a further 24 months in two separate 12 month
extensions.
As discussed in note 13, on 30 March 2017, in conjunction with the purchase of Ingresso Group Ltd, the Group entered into
an amendment and restatement agreement in relation to the facility dated 14 March 2016, extending the facility to allow
for the ability to draw down $60m, denominated in US dollars, GB Pound Sterling, or Euros. The agreement has a four-year
term, with a $10m reduction in the total available for drawdown on the first, second and third anniversaries of the
restatement. There is an option to extend the agreement for a further 12 months at the end of the first year, and an accordion
mechanism allowing for a further $10m related to future acquisitions.
The drawdown rate is 140 basis points above LIBOR at a borrowing to EBITDA ratio of less than 1.5 times, rising to 190 basis
points if the borrowing to EBITDA ration is greater than 2.25 times. Commitment interest on the undrawn funds is 35% of
margin. The Facility had an arrangement fee of $0.4m.
20.
Called up share capital
Ordinary shares of 1p each
Number
$000
Number
$000
2017
2016
Opening balance
Issued in relation to exercised share options
Issued in relation to acquisitions
Closing balance
22,277,631
189,962
3,908,155
26,375,748
357
2
52
411
21,984,321
293,310
-
22,277,631
353
4
-
357
During the period, 189,962 shares, with a nominal value $2,381, were allotted following the exercise of share options.
On 30 March 2017, the Group entered into a subscription agreement, subsequent to the acquisition of Ingresso Group
Limited, with Bart Van Schriek, Chief Executive Officer of Ingresso Group plc. Mr Van Schriek agreed to subscribe for 31,685
new ordinary shares of 1p each for a total cash payment of $0.6m ($19.71 per share). Shares are subject to certain lock-up
restrictions, under which no disposals are allowed during the first 12 months from the subscription date, with one third
being released from the restriction at each 12 month period from the subscription date.
On 19 July 2017, the Group issued 3,631,342 ordinary shares, with a nominal value of $0.05m, in connection with the
purchase of Blazer and Flip Flops Inc as part of an accelerated book build. The shares issued in relation to the vendor placing
were 3,304,507, with 326,835 issued in relation to a cash placing. The shares had a placing price of $20.81, resulting in gross
proceeds of $75.6m. Shares
On 20 July 2017, the Group issued 245,128 ordinary shares as consideration for the acquisition of Blazer and Flip Flops Inc.
The shares had a nominal value of $0.004m. Additional shares will be issued over the next 36 months as contingent
consideration.
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, except for 426,909 treasury shares registered in the name of Lo-Q (Trustees) Limited, a
wholly owned subsidiary of the company on behalf of the Lo-Q Employee Benefit Trust.
61
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
21.
Reserves
The following describes the nature and purpose of each reserve within equity:
Reserve
Share premium:
Own shares held in trust:
Other reserve:
Merger relief reserve:
Retained earnings:
Translation reserve:
Description and purpose
Amount subscribed for share capital in excess of nominal value
Weighted average cost of own shares held by the EBT
Reserve to account for share option equity-based transactions and equity-settled
deferred consideration
The merger relief reserve represents the difference between the fair value and
nominal value of shares issued on the acquisition of subsidiary companies, where the
company has taken advantage of merger relief
All other net gains and losses and transactions not recognised elsewhere
Gains/losses arising on retranslating the net assets of overseas operations into US
dollars
22.
Pension commitments
The Group operates defined contribution pension schemes in the UK and US. The assets of each scheme are held separately
from those of the Group in an independently administered fund. The pension charge represents contributions payable by
the Group to the fund. The amounts related to the charge in the period and payable at period end are:
Pension charge in the period
Payable to the fund (included within other creditors)
23.
Related party disclosures
Ultimate controlling party
There is no ultimate controlling party.
Subsidiaries
2017
$000
904
85
2016
$000
750
57
All intercompany revenues, expenses, and balances are eliminated upon consolidation.
Other related parties
Rockspring, a company in which David Gammon, an accesso Technology Group plc director, is a director invoiced the
company in respect of director’s fees $51,625 (2016: $43,357), of which $4,254 (2016: $7,032) was outstanding at year end.
Maven Creative, LLC., a company in which Steve Brown, an accesso Technology Group plc director, is a member and has a
33% interest, invoiced the Group $55,434 (2016: $197,627) in respect of marketing services, of which $1,778 (2016: $164)
was outstanding at year end.
Siriusware Inc, a subsidiary of the Group, is party to a property lease, in respect of a corporate office of the Group, with B
Sirius LLC and lease payments totaling $80,400 (2016: $80,400) were payable in 2017 to B Sirius LLC, of which $nil (2016:
$nil) was outstanding at year end. An officer of Siriusware Inc is a member of B Sirius LLC.
All the above outstanding amounts are included within trade creditors.
Key management compensation
The key management of the company staff are considered to be the Executive directors, and their remuneration is as follows:
Executive director’s remuneration
Executive director's contribution to retirement scheme
Employer’s social security costs
Share-based payments
62
2017
$000
2,283
22
229
324
2,858
2016
$000
1,987
27
166
198
2,378
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
24.
Share-based payment schemes and transactions
Share option schemes
At 31 December 2017 the following share options were outstanding in respect of the ordinary shares:
Scheme
EMI Scheme
US Scheme
UK unapproved Scheme
Long term incentive plan
Number of shares
1,850
18,235
6,714
8,000
4,750
18,000
17,300
100,000
2,500
9,789
5,000
61,250
92,400
175,110
2,008
201,450
2,262
95,000
182,205
40,400
277,534
216,125
18,851
Period of Option
25 June 2010 to 24 June 2019
24 June 2013 to 23 June 2021
30 November 2014 to 29 November 2022
25 April 2015 to 25 April 2023
23 January 2017 to 22 January 2024
15 April 2018 to 15 April 2025
29 April 2019 to 28 April 2026
10 March 2012 to 9 March 2021 (1)
24 June 2013 to 23 June 2021
30 November 2014 to 29 November 2022
26 March 2014 to 25 March 2022
25 April 2015 to 25 April 2023
23 January 2017 to 22 January 2024
15 April 2018 to 15 April 2025
14 January 2018 to 14 January 2026
29 April 2019 to 28 April 2026
23 May 2019 to 22 May 2026
10 March 2012 to 9 March 2021
8 July 2017
27 October 2017
15 April 2018
13 March 2019
30 March 2017
Price per share
57.5p
179p
323.5p
600p
697.5p
557.5p
1105p
156p
179p
323.5p
292.5p
600p
697.5p
557.5p
851p
1105p
1061p
156p
-p (2)
-p (2)
-p (2)
-p (2)
-p (2)
(1) Options may only be exercised when the share price is above £1.82.
(2) Vesting is conditional on achievement of certain market based conditions.
Equity-settled share option schemes
Details of the number of share options and the weighted average exercise price (WAEP) outstanding during the period are
as follows:
Outstanding at beginning of year
Granted during the year
Exercised during the year
Leavers, lapsed & other
2017
Number
1,823,684
18,851
(189,962)
(45,240)
WAEP (pence)
340.04
.01
449.64
834.14
Outstanding at end of the year
Exercisable at the end of the year
Weighted average share price at date of exercise for share
options exercised during the year:
1,607,333
365,488
309.90
394.30
1,737.04
2016
Number
1,591,300
558,345
(293,310)
(32,651)
1,823,684
387,250
WAEP (pence)
289.10
496.39
321.29
683.64
340.04
289.02
1,092.3
The exercise price of options outstanding at 31 December 2017 range between £.01 and 1,105p (2016: £.01 and 1,105p) and
their weighted average contractual life was 3.3 years (2016: 4.5 years).
The weighted average share price at the date of exercise for share options exercised during the period was 1,737.04p (2016:
1,092.3p). The only awards granted during the year were under the LTIP, and more information is provided below.
The inputs to the model for options issued in the prior period were as follows:
Weighted average exercise price of options issued during the period (pence)
Expected volatility (%)
Expected life beyond vesting date (years)
Risk free rate (%)
Dividend yield (%)
63
2016
1,102.58
31.47
2.00
1.00
-
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Share-based payment schemes and transactions (continued)
The Group did not enter into any share-based payment transactions with parties other than employees during the current
or previous period.
Expected volatility was determined by calculating the historic volatility of the Group’s share price over the previous twelve-
month period. Expected life is based on the Group’s assessment of the average life of the option following the vesting period.
The market vesting condition was factored into the valuation of shares issued under the LTIP as explained on page 20.
Long-term incentive plan
On 30 March 2017, the Group granted conditional share award (“Awards”) over a total of 18,851 ordinary shares of 1 penny
under the Long-Term Incentive Plan, which was approved by shareholders on 27 May 2014.
On 14 March and 14 September 2016 the Group granted Awards over a total of 306,974 ordinary shares of 1 penny under
the LTIP, and during 2014 and 2015, the company granted Awards over 222,206 and 277,534 ordinary shares of 1 penny
under the LTIP, respectively.
All Awards vest three years from the date of grant, are required to be held for a further six months, and are subject to certain
performance conditions.
The fair values of the Awards at the dates of grant were calculated using the Monte Carlo statistical modelling approach to
reflect the market conditions within the Award conditions. The inputs to this model were as follows:
Expected volatility (%)
Expected life years
Risk free rate (%)
Dividend yield (%)
30 March
2017
30.0
3.0
0.16
-
14 March
2016
28.0
3.0
0.73
-
14 September
2016
28.0
2.5
0.16
-
25.
Reconciliation of net cash flow to movements in net funds and analysis of net funds
The amounts disclosed on the cash flow statement in respect of cash and cash equivalents are in respect of these balance
sheet amounts.
Group
Cash in hand & at bank
Company
Cash in hand & at bank
Group
Cash in hand & at bank
Company
Cash in hand & at bank
2016
$000
5,866
5,866
1,303
1,303
Acquired
with
acquisitions
$000
9,852
9,852
-
-
2015
$000
5,307
5,307
1,734
1,734
64
Cash Flow
$000
12,886
12,884
542
542
Cash
Flow
$000
832
832
(207)
(207)
Exchange
movement
$000
64
64
64
64
Exchange
movement
$000
(273)
(273)
(224)
(224)
2017
$000
28,668
28,668
1,909
1,909
2016
$000
5,866
5,866
1,303
1,303
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2017
Reconciliation of net cash flow to movements in net funds and analysis of net funds (continued)
Group net debt reconciliation
Borrowings (including capitalised finance costs)
Less: Cash in hand & at bank
Net (cash) / debt
26.
Commitments under operating leases
Note
19
2017
$000
16,140
(28,668)
(12,528)
Total of future minimum operating lease payments under non-cancellable operating leases:
Group
Land & buildings
Less than one year
Within one to five years
Greater than five years
Other
Less than one year
Within one to five years
Greater than five years
Company
Land & buildings
Less than one year
Within one to five years
Greater than five years
Other
Less than one year
Within one to five years
Greater than five years
2017
$000
1,306
3,147
436
4,889
48
28
-
76
154
308
-
462
37
-
-
37
2016
$000
9,298
(5,866)
3,432
2016
$000
935
3,123
1,003
5,061
39
34
-
73
100
365
-
465
39
34
-
73
Operating leases within ‘Land & buildings’ include the leases of company and Group offices. Leasing arrangements from the
respective lessors can be viewed as standard. Leases within ‘Other’ include office equipment and a vehicle. Terms can be
viewed as standard.
65