Registered number 03959429
accesso Technology Group plc
2018 Annual report and financial statements
accesso Technology Group plc
Contents of the consolidated financial statements
for the financial year ended 31 December 2018
Company information
Introduction and key financial highlights
Chief Executive’s statement
2017 Pro-forma Data
The Board of directors
Strategic report
Directors’ remuneration report
Report of the directors
Corporate governance 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
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accesso Technology Group plc
Company information
for the financial year ended 31 December 2018
Directors:
Bill Russell, Non-Executive Chairman
Andy Malpass, Non-Executive Director
David Gammon, Non-Executive Director
John Alder, Executive
Karen Slatford, Senior Independent Director
Paul Noland, Executive
Tom Burnet, Non-Executive Director
Secretary:
Registered office:
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:
Banker:
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 2018
Highlights
Continued growth with revenue of $118.7m representing an increase of 15.5% on 2017 revenue (proforma for IFRS 15) of
$102.8m.
Gross profit has increased 20.2% to $88.2m from $73.4m in 2017.
Adjusted Operating Profit up 25.5% to $25.1m and adjusted EBITDA up 36.5%, against proforma comparatives, to $34.8m.
Organic revenue growth, which excludes the impact of the 2017 acquisitions, of 7.8% reflects continued strong Ticketing and
Distribution performance, which was up 18.3%, offset by an 11% decline in Guest Experience revenue due to weather and
changing park visitation patterns.
Transactional and Repeatable revenues grew 15.1% to $88.4m or 74.4% of total revenues.
Major client activity continued with a significant contract win with Marriott Hotels, renewal of our agreement with Cedar Fair and
a strategic partnership with Village Roadshow Theme Parks.
Current addressable market opportunity for the group identified estimated to be in the region of $3.4bn.
Decision taken to accelerate the investment required to evolve and broaden our range of solutions, unlocking additional cross-
sell and up-sell potential within our installed base and allowing for more efficient development, support and service delivery.
For 2019 we expect further strong growth in our transactional and repeatable revenues, partly offset by headwinds from non-
recurring revenues, resulting in high single digit overall organic revenue growth, similar to 2018.
Year ended
31 Dec 18
IFRS15
$m
118.7
6.3
25.1
34.8
74.7%
0.5
12.23
73.58
Year ended
31 Dec 17
(proforma)1
IFRS15
$m
102.8
∆
reported
IFRS15
15.5%
10.1
20.0
(37.6%)
25.5%
25.5
36.5%
83.1%
12.5
(12.0)
41.06
(70.2%)
59.45
23.8%
Year ended
31 Dec 17
IAS18
$m
133.4
9.2
19.1
24.6
86.2%
12.5
40.83
56.73
Revenue7
Operating profit7
Adjusted operating profit 2
Adjusted EBITDA3
Underlying cash conversion4
Net cash5,7
Earnings per share – basic
(cents) 7
Adjusted Earnings per share –
basic (cents)6
1Unaudited information that adjusts the audited 2017 results to be comparable with 2018 as a result of the adoption of IFRS 15.
Reconciliation included within the Financial Review
2Operating profit 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 15)
3Adjusted operating profit before depreciation and amortisation
4Adjusted cash generated from operations (cash from operations, adjusted for non-underlying items) as a percentage of Adjusted
EBITDA
5Cash less Borrowings (Note 28)
6Adjusted 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 (Note 15)
7Audited number; all other numbers are unaudited.
3
accesso Technology Group plc
Introduction and key financial highlights
for the financial year ended 31 December 2018 (continued)
Commenting on the results, Paul Noland, Chief Executive Officer of accesso, said:
“2018 has been another year of global expansion at Accesso. Our progress continues to be driven by the variety of solutions we have
to offer and our relentless focus on delivering excellent service and support.
We continue to integrate the 2017 acquisitions of TE2 and Ingresso, along with identifying and executing opportunities for integration
across the Group’s entire portfolio of solutions. As hoped, we saw increased demand for multiple applications at individual sites and
have made positive strides in that direction.
Our customers are asking us to bring even more flexibility, integration and scalability to the products and services we offer. As such,
and in order to accelerate future growth, we will invest where necessary to maintain our market leadership and to ensure we capitalise
on customer demand for our products, as either an integrated or as an individual solution.”
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accesso Technology Group plc
Chief Executive’s Statement
These 2018 annual results represent the first fiscal year end since I joined accesso last spring. During my time at accesso, I have
developed an increased appreciation that this is a business with an industry-leading technology proposition that serves a truly
impressive set of clients. We are succeeding in a competitive landscape due in no small part to the efforts of the amazing staff that I
have come to know and appreciate.
Our stated strategy has been to make the most of demand for our technology within our installed base, increase penetration within
our existing verticals, and diversify our business through expansion across adjacent markets. I firmly believe that 2018 has been a year
of positive progress against each of these goals.
All businesses experience headwinds and we’ve had our share this past year. We witnessed several events that impacted our clients,
and therefore accesso, including attendance fluctuations due to weather and changing park visitation patterns. We were also unable
to complete a well-advanced acquisition opportunity which was terminated in October 2018. It is a tribute to our strength as an
organisation that we have grown through these challenges.
We start the year with renewed determination to continue to expand and evolve. As such, an important part of our go-forward
strategy is to ensure we are applying our resources in the most efficient way given the growth in demand for solutions that combine
our technology offerings.
We have affirmed the positive potential of our strategy and see a clear path toward improving our already successful solutions. We
look forward to the year ahead with the enthusiasm that comes from knowing where we need to go and a clear plan on how to get
there.
2018 in Review
Financial Performance
As set out in the Interim results of 19 September 2018, the Group adopted IFRS 15 Revenue from Contracts with Customers from 1
January 2018, using the cumulative effect method, with the effect of applying this standard recognized at the date of adoption.
Accordingly, information presented for 2017 has not been restated. However, the Group has provided, where relevant, pro-forma data
for the comparative period that shows the metric that would have been reported had IFRS15 been adopted for 2017 together with a
full reconciliation from the statutory 2017 numbers.
The Group’s financial results in 2018 demonstrates continued progress. In terms of headlines, revenue for the year was $118.7m, up
from a proforma revenue of $102.8m in 2017, while adjusted operating profit grew to $25.1m from a proforma $20.0m in 2017. This
represents growth of 15.5% and 25.5% respectively. Furthermore, adjusted EBITDA was $34.8m representing 36.5% growth on
proforma 2017 of $25.5m and while 2018 benefited from having a full year of the two acquisitions undertaken in 2017, it represents
a strong top and bottom line.
Evolving our Reporting
The growth in accesso’s size, our additional acquisitions, and subsequent changes to our organisational structure led the Board to
review the reporting of its operating segments. This review concluded we should present more granularity around our individual
product lines as they pertain to accesso’s two main activities: ‘Ticketing & Distribution’ and ‘Guest Experience’. A number of
acquisitions, each of which has broadened our horizons and helped us better-address our market opportunity, have added new
revenue models and new market dynamics, and now make additional disclosure appropriate.
Our Ticketing and Distribution segment consists of accesso Passport, accesso SiriuswareSM, accesso ShoWareSM and Ingresso; while
our Guest Experience segment consists of accesso LoQueueSM and TE2. These groupings align products with similar financial,
technological and go-to-market characteristics with the strategic thrusts of our business: on the one hand selling and distributing
tickets, and on the other, providing in-venue technology that helps guests get more out of their visits to attractions. In our view, these
changes have three main benefits. First, they will ensure our financial reporting better reflects the way we see ourselves and run our
business. Second, they will better enable our followers to discern the moving parts within accesso and fully understand the dynamics
driving our performance. Finally, they will help followers differentiate between organic and inorganic revenue, clarifying our underlying
performance as we integrate our 2017 acquisitions. All in all, we hope to paint a more detailed and representative picture as we look
towards the future.
5
accesso Technology Group plc
Chief Executive’s Statement (Continued)
A View of our Market Opportunity
In 2018, accesso engaged an external firm to support our efforts to estimate our total addressable market. We were interested in
understanding not only the total potential but also how it relates to geographies and identified verticals. The result was a detailed
analysis of accesso’s opportunities by market segment. We estimate our current total addressable market opportunity is approximately
$3.4bn, with Ticketing and Distribution representing an addressable market opportunity of $1.9bn and Guest Experience representing
an addressable market opportunity of approximately $1.5bn. Given the Group’s current level of revenue, this represents a significant
opportunity with material room for further growth. Beyond the market statistics, accesso has been able to successfully showcase the
value of digitizing the guest journey to be universal across the leisure, entertainment and hospitality space, providing significant
opportunities. Expansion of this kind remains a key part of our strategy, increasing our potential with every step into a new geography
or industry vertical.
Operational Highlights
Established Verticals
accesso views its traditional verticals as theme park, water park and attraction 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.
Key among this year’s achievements was the near-completion of our accesso Passport roll-out across Merlin Entertainment’s global
estate. We are now present with Merlin in 30 countries, each of which presents a significant opportunity to expand by leveraging the
localized footprints and technologies we have established. Our strong relationship with Merlin is also enabling expansion beyond
accesso Passport, and we were extremely pleased to announce the first same-site integration of accesso Passport, accesso LoQueue,
TE2 and PrismSM at The Bear Grylls Adventure in the UK during Q4.
We also signed a contract extension with long-term partner Cedar Fair and announced a further TE2 / accesso Passport integration at
their Knotts Berry Farm theme park. With respect to TE2, we have now deployed the first version of a new Food & Beverage capability
within the platform which enables personalisation and pre-ordering, enhancing spend-per-customer for those engaging with the
platform.
TE2 also played its part in the November 2018 announcement of a material expansion to our existing relationship with Village
Roadshow Theme Parks, Australia’s largest theme park operator. This marks the first holistic integration of four of accesso’s solutions
– accesso Passport, accesso LoQueue, accesso ShoWare and TE2 will be integrated and installed across its Gold Coast Properties -
Warner Bros. Movie World, Wet'n'Wild Gold Coast and Sea World (Australia).
This agreement is representative of accesso’s rapid growth in the APAC region during the year, with the business now supporting
operations for 22 venues in 7 countries there. We have a number of additional roll-outs in this region scheduled for 2019.
In our queuing business, we continued to replace legacy QbotSM devices with new and improved technology, including deployment of
QsmartSM across our European client base and seeing our state-of-the-art Prism wearable device complete its first full season as the
premium queuing device at a tier-1 US park. While a more mature market than some of the others in which we operate, our long-term
relationships with large operators in the queuing space continues to provide an excellent foundation for our business and a tangible
entry point for the cross and up-sell of additional accesso technologies.
This part of the business also continues to make progress addressing the challenge that has arisen in recent years from a significant
increase in the proportion of guests who gain admission to the venue as part of a season pass or membership program. The visitation
behaviour of this proportion of guests flattens attendance on both a daily basis and across a season and reduces demand for an all-
day queuing product. Actions to address this headwind are ongoing and include offering our clients increased options for guests to
purchase and access our queuing solution and these efforts continue to gain traction.
6
accesso Technology Group plc
Chief Executive’s Statement (Continued)
Adjacent Verticals
accesso’s adjacent verticals are those that accompanied the acquisitions of accesso Siriusware and accesso ShoWare in 2013 and 2014
respectively. The solutions these acquisitions delivered have provided the opportunity for accesso to break out beyond its traditional
markets into ski resorts, cultural attractions, tours and live event ticketing.
We have continued to make good progress against our stated aim of expanding our penetration in these new markets, with accesso
Passport and accesso Siriusware now working in tandem in twelve locations across four industry verticals, including a maiden combined
deployment in the Ski Industry. Our continued progress in the Ski market was also boosted by our agreement with Alterra Mountain
Company to deploy TE2’s platform.
We continued to make similarly good progress in the Live Entertainment, Cultural Attractions and Live Sports markets. Noteworthy
new wins for the accesso ShoWare solution included Vibes International Music Festival in Fort Lauderdale, along with strides made in
sports with the Brampton Beast and Nanaimo Clippers Hockey teams, and NOLA Gold and Austin Elite - both teams in Major League
Rugby.
Lastly, TE2’s partnership with Carnival Corporation also delivered success in 2018. For the last 3.5 years, TE2 has been, and will continue
to be, a key guest experience technology partner for Carnival’s Medallion Class enabled cruise ships. Guests are enjoying an extensive
portfolio of Ocean Medallion-enabled features, specifically designed to enhance their vacation experience. The successful completion
of the initial phase with Carnival contributed to an expected reduction in license and implementation income that reduced TE2
revenues by 30.8% in 2018 when compared to the whole of 2017 and including the pre-acquisition ownership period. We greatly value
our ongoing partnership with Carnival.
Overall our progress in adjacent markets continues to confirm that the characteristics of the digital guest journey are universal
irrespective of industry vertical or geography. We therefore expect our outward expansion to continue during 2019.
Greenfield Opportunities
The 2017 acquisitions of Ingresso and TE2 brought a range of new capabilities to accesso and, in addition to supporting our product
offerings in our existing verticals, the Group has made strides into greenfield areas including ticketing distribution and continues to
evaluate the opportunity within the Healthcare vertical.
We continue to see strong demand from ticketing inventory aggregators for our Ingresso platform and have delivered significant
contract wins or partnerships with the likes of Reserve with Google, Groupon and Yplan, as well undertaking a considerable degree of
work during the year to internationalize Ingresso to offer global capability.
Ingresso grew revenues by 11.1% on a full year basis, including the pre-acquisition ownership period, despite the loss of their largest
client when Amazon UK exited the ticketing space early in the year. We expect the impact of the new contract wins and partnerships
together with the work we have done on the supply side of the business will help us take advantage of this material distribution
network. We remain at the start of an extremely exciting opportunity in large scale global leisure venue ticketing distribution and have
seen pleasing momentum which gives us confidence for the year to come.
In July 2018 our accesso ShoWare solution went live in four of Marriott International’s Gaylord Hotels, a new client, which along with
the Alterra Mountain Company, represents exciting progress in the hospitality space.
Prioritising our Security Infrastructure
accesso aspires to be the premier technology solutions provider to the verticals it serves, and as a result, we continue to invest in
ensuring our technology offering leads the market. An increasingly critical focus of our clients, and therefore the Group, is around data
security and compliance against an evolving global landscape where intrusion threats become more sophisticated and regulations
covering the handling of data demand that compliance is at the forefront of our business.
accesso has recently appointed a Chief Information Officer who leads a team dedicated to the security of accesso and client data and
global compliance with data hosting legislation. accesso is acutely aware of the importance of security to the Group’s clients and their
guests and has continued to implement state-of-the-art systems to mitigate risk across the group. With the introduction of GDPR and
other global privacy initiatives, compliance has given renewed focus across the business and accesso has maintained pace with all
relevant developments.
7
accesso Technology Group plc
Chief Executive’s Statement (Continued)
Brexit
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 recognized that depending on the specific exit arrangements that are agreed and how
these are implemented, there could be an impact to consumer spending within the UK or EU and this could impact attendance at
certain venues or investment decisions by leisure operators. Additionally, there could be an impact on exchange rates which could
alter international visitation patterns.
People
During 2018 we continued the consolidation of our US offices, by bringing staff together in three centres of excellence located in Lake
Mary, Florida; San Diego, California; and Fresno, California and by expanding our long running ability to accommodate remote working
arrangements. Our Lake Mary office is now our largest and continues to expand with the arrival of new colleagues who can now
collaborate under one roof. We were also named number four on The Best Places to Work list for large companies by the Orlando
Business Journal. In addition, we implemented an accesso culture guide for the first time. During the year accesso’s headcount
increased by approximately 10% on the number at 31 December 2017 to just over 550 people, with turnover below the market norm.
2019 and beyond
Investing in the Digital Guest Journey
accesso has brought together a product set that now stretches across the whole waterfront of the evolving digital guest journey, which
the Group helped to define, from queuing and ticketing to distribution and in-venue experience. This unique collection of assets is not
matched by other providers within our market. While our portfolio was assembled as individual products, in many cases secured via
acquisition, the positive client response to the breadth of our offerings has driven cross and up-selling opportunities of our products
to our clients that have in-turn led to increasing technology integration across our portfolio. Clients are benefitting from our ability to
offer multi-product solutions, delivering significant economic benefits for their business through combining our technology offerings.
Thus far, our approach to integrated business opportunities, such as The Bear Grylls adventure and the Knotts Berry Farm project
mentioned above, has been to provide a series of unique installations for specific operators or venues. While this delivery is both
effective and prudent in satisfying individual clients and testing market appetite for various combinations of our products and services,
it is clear that there are alternative approaches that will be faster and more efficient to scale and will offer the opportunity to unlock
a larger market opportunity.
It is becoming clear that there is significant opportunity with operators that choose to buy or build parts of the technology they require
and do not wish to utilize the whole of our offerings. For these operators or venues, a platform that allows the opportunity to integrate
their solutions, our solutions and those from third party providers would, we believe, be a compelling and unique proposition.
Therefore, to make the most of these market-led opportunities, we now need to introduce a more unified, efficient and flexible
architecture which allows existing and prospective clients to be selective not just around which solutions they implement, but how,
and to what extent they deploy them, including the ability to integrate their own or other, third party applications. This shift will
ultimately also offer to accesso the opportunity to realize material efficiency gains and reduce the overall cost of supporting,
maintaining and improving our current product portfolio. This is the direction of our industry and the future of our business.
We started along this path in 2017 focused on evolving accesso Passport, accesso Siriusware and accesso ShoWare to provide a single,
functionally rich ticketing offering. We now believe we need to expand and accelerate this project to fully and properly incorporate
the functionality offered by TE2, accesso LoQueue and Ingresso as well as offering the opportunity for clients and third parties to use
the platform itself as a foundation for their own systems. This is a fundamental but critical shift for accesso. Whereas in the past we
have always offered comprehensive end-to-end solutions, we will now be free to offer our solutions individually, in combination, as a
platform upon which systems can be built, or with which other systems can be integrated.
The case for technological and organisational evolution is clear and compelling, but to deliver it will require investment over the course
of the next two to three years. Accurately estimating the required investment at this stage of the project is difficult and likely to change
but will lead to an incremental increase in development expenditure in the near term.
8
accesso Technology Group plc
Chief Executive’s Statement (Continued)
2019 and beyond (continued)
As elements of this development and rationalisation project are deployed, the Group’s evolved technology platform will generate
numerous benefits including:
Faster time to market
Easier to sell and deploy multiple solutions
Open platform that will appeal to clients that want control over the interfaces and other elements of their system
More efficient development, implementation and support organisation
Ability for third parties to integrate with the accesso platform and vice versa
Reduced setup and configuration costs for the client
Improved ability to scale both up and down market and therefore increase penetration within our available markets
Building on the work begun in 2017, the use of micro services technologies, agile development and a largely SaaS (software as a service)
deployment model, will allow for a rapid pace of development and distribution. Initial focus will be on delivering features that will be
attractive to clients running our existing software, as our choice of architecture will support operation in tandem or integrated with
other systems, including our own. This will allow us to sell and evolve our current products, continuing to build our customer base,
while we evolve our next generation solution. We anticipate being able to sell and deploy parts of the evolved solution to new and
existing clients as early as 2020 with the remaining elements being delivered over the next two to three years. The architecture of the
platform will allow for continuous development and improvement for the foreseeable future with the ability to grow the client base
and associated revenue from early on in the project.
Expanding our ability to market and sell
The exercise in quantifying accesso’s total addressable market also revealed an opportunity to find additional growth through further
investment in our sales and marketing efforts. As a part of this we will be increasing the Group’s sales and marketing spend to the
level required to fully pursue the expansive market opportunity we have identified across traditional, adjacent and greenfield
opportunities. We estimate this incremental investment to be in the region of $2.5m in 2019 with an intention to continue to scale
expenditure in absolute terms as the business grows.
The Board expect these initiatives to be funded from within the Group’s existing financial facilities.
Building on strength
The fundamentals of accesso’s business model provide a solid foundation from which to move forward. The unique and
complementary nature of the technology assets we possess already provides the ability to support the requirements of our client base
and our emphasis has been on building strong relationships and a repeatable revenue stream backed by long term agreements. Our
willingness to recognise the requirements of our markets, and to proactively pursue change set us apart over recent years and our
planned technological path will provide a stronger foundation for our future success.
Outlook
Although it is still early in the year, trading for 2019 has started in line with our expectations.
In terms of revenue guidance for 2019, we expect to see organic growth in line with that achieved in 2018. Growth within Ticketing
and Distribution is expected to be in line with the mid-teens percentage growth achieved in 2018. Guest Experience revenues overall
are expected to be broadly flat, with queuing revenues expected to reverse the trend experienced in 2018, and the evolution of
repeatable platform revenues within TE2 largely offsetting the expected reduction of $2.9m of license revenue related to a single
customer that will not repeat. We expect the accelerated investment in development and marketing spend in 2019 to build the
platform for accelerating growth in 2020 and beyond.
Total development expenditure in 2019 is expected to increase to between $36m to $39m (2018: $29.3m), but with a reduced level of
capitalisation within the range 60% and 65%. This expenditure includes incremental investment as referenced above. Looking further
ahead, we expect there will progressively be opportunities to absorb further incremental expenditure within our ongoing development
effort and we are focused on delivering material reductions in total development expenditure as a proportion of revenues and a
reduction in the level of capitalisation.
9
accesso Technology Group plc
Chief Executive’s Statement (Continued)
2018 Financial Review
accesso’s financial performance continues to be underpinned by its highly repeatable and highly visible revenue stream, supplemented
by a high-quality professional services component, delivering organic growth through long-term and transactional agreements with
many of the world’s largest attraction operators. The Group is also diversifying its revenue stream as it expands across industry verticals
and geographies, reducing customer concentration and lessening its dependence on weather conditions and regional macroeconomic
factors.
Reflecting the increased scale of accesso and its revised management organisational structure, the Board have updated its operational
and financial reporting which will allow a greater level of understanding of the organic growth of the business within a period and the
factors which drive growth, the amount and nature of development expenditure and increased granularity generally in relation to its
cost base.
Alternative Performance Measures
The Board utilizes alternative performance measures (“APMs”) in evaluating and presenting the results of the business and views these
APMs as more representative of the Group’s performance.
The historic strategy of enhancing its technology offerings via acquisitions, as well as an all employee share option arrangement
necessitate the making of adjustments to statutory metrics to remove certain items which are not reflective of the underlying business.
These adjustments include acquisition expenses, amortisation related to acquired intangibles, deferred and contingent payments
related to acquisitions, changes to earn-out considerations, share-based payment and exceptional items.
These APMs help ensure the Group is focused on translating sales growth into profit. By consistently making these adjustments, the
Group provides a better period to period comparison and is more readily comparable against a business that does not have the same
acquisition history and equity award policy.
APMs include adjusted EBITDA, adjusted cash EBITDA, adjusted operating profit, adjusted net debt, and adjusted cash from operations.
A reconciliation of these measures from IFRS 15 is also provided within this Financial Review.
Segments
The Board revised its segmental information during 2018 to align with an updated organisational structure, consistent with our
investment plans outlined above, and that reflects how the Board now review and make decisions about resources to be allocated to
each segment. The Board considers the group to consist of two reportable operating segments:
Ticketing and Distribution
Guest Experience
Ticketing and Distribution
We have formed a single ticketing group, headed by the President of Ticketing. This group is made up of our accesso Passport, accesso
Siriusware, accesso ShoWare and Ingresso products. All of these technologies were acquired by the Group with the strategic intention
of providing operators with best-of-breed point of sale, ticketing and eCommerce technologies, together with the opportunity to
participate in a global distribution platform. As the strategy has progressed, the technology and the teams that develop and support
it, have become increasingly inter-dependent and the formation of this group is reflective of the objective to formally merge and align
the ticketing related activities of the group to allow increased penetration of the markets serviced and to leverage the synergies that
exist in their solutions, technological capabilities and pooled expertise.
10
accesso Technology Group plc
Chief Executive’s Statement (Continued)
Guest Experience
This segment consists of the Group’s virtual queuing solution (accesso LoQueue) and experience management platform (TE2) each of
which are headed by their respective Presidents. These two distinct but complementary operating segments share similar economic
characteristics, customers and markets; the solutions are often heavily tailored, technology and software intensive in their delivery
and are directly targeted at improving a guest’s experience of an attraction or entertainment venue, whilst providing cross selling
opportunities and increased revenues to the venues. Management therefore conclude that they meet the aggregation criteria for
reporting purposes.
The Board monitors the results of the operating segments prior to central costs and charges for interest, depreciation, tax, amortisation
and exceptional items. The Group’s central costs are not segment specific and therefore not allocated. These costs have therefore
been excluded from segment profitability and presented as a separate line below segment profit.
The Group’s assets and liabilities are reviewed on a group basis and therefore segmental information is not provided for the statements
of financial position of the segments. Prior year segmental information has been restated to provide comparability.
Adoption of IFRS 15
As detailed earlier in this statement the Group adopted IFRS 15 Revenue from Contracts with Customers from 1 January 2018.
The most significant impact from the adoption of IFRS 15 relates to revenue recognition in respect of certain accesso LoQueue
agreements. Under the previous revenue recognition standard (IAS 18), management determined the Group was acting as the principal
in such agreements, revenue was recognised on a gross basis and amounts due to the operator were recorded as an expense within
cost of sales.
IFRS 15 introduces revised criteria for determining the principal or agent relationship, focusing on control of the goods or services
provided by the Group under the terms of the agreement. Management has determined that, under IFRS 15, the Group acts as the
agent in its queuing contracts, and consequently now recognises the net revenue portion of the sale as revenue, rather than the full
amount of the guest payment for the service.
There is no impact on profit of the Group due to the revised assessment of agent vs principal and therefore the Group will present
improved operating margins in the current year and looking forward.
The adoption of IFRS 15 has increased 2018 and 2017 operating profit by $3.3m and $0.9m respectively.
References to 2017 proforma data presented within this Financial Review have been provided as additional information to the
statutory reported requirements to better illustrate the performance of the business. This information is unaudited and does not form
part of the audited annual financial statements. Reconciliations between the statutory audited 2017 and 2017 proforma numbers are
included as an appendix to this Financial Review.
Further details relating to the adoption of IFRS 15 are included in Note 3 of the financial statements.
11
accesso Technology Group plc
Chief Executive’s Statement (Continued)
Key Financial Metrics
Revenue
On an IFRS 15 consistent basis total revenue increased by 15.5% to $118.7m (2017 Proforma: $102.8m) and includes $38.7m (2017:
$28.6m) from the 2017 acquisitions. Statutory reported revenue reduced by 11% from $144.4m to $118.7m. Segmental information
has been revised in 2018 and 2017, with the information from the comparative period being extracted from management accounts
and is unaudited. The impact of currency movements during the period was not significant on revenue or earnings.
Ticketing and distribution
Guest Experience
Total revenue
Ticketing and distribution – excluding 2017 acquisition
Ingresso)
Guest Experience – excluding 2017 acquisition (TE2)
Total revenue – excluding 2017 acquisitions
Ingresso
TE2
Total revenue attributable to 2017 acquisitions
2018
(audited)
IFRS 15
$000
78,550
40,197
2017
(proforma)
IFRS 15
$000
64,418
38,424
2017
IAS 18
$000
63,536
69,893
118,747
102,842
133,429
2018
(audited)
IFRS 15
$000
2017
(proforma)
IFRS 15
$000
2017
IAS 18
$000
56,435
23,581
80,016
22,115
16,616
38,731
47,700
46,818
26,495
57,964
74,195
104,782
16,718
11,929
16,718
11,929
28,647
28,647
Total revenue
118,747
102,842
133,429
Removing the benefit of the 2017 acquisitions, revenue increased to $80.0m (2017 Proforma: $74.2m) reflecting growth of 7.8%. This
growth included a strong performance within ticketing and distribution, which delivered growth of 18.3%, offset by an 11.0% reduction
in Guest Experience revenues. This is principally attributable to 2017 benefiting from $2.5m of non-repeatable implementation
revenue from a significant queuing solution to a major US operator, and 2018 continuing to address the headwind discussed within
the Operational Review relating to the proportion of guests who gain admission to the venue as part of a season pass or membership
program Repeatable revenues within guest experience, excluding the 2017 acquisition and significant implementation revenue, were
broadly flat.
Ticketing and distribution revenue growth was driven by a strong performance from existing venues coupled with the introduction of
additional venues from the roll out of the Merlin Entertainments agreement and new customers implemented in the year. An element
of this growth was derived from a higher than usual proportion of revenues from up front point of sale licenses, which are unlikely to
be repeated to a similar level in 2019. We estimate that this mix benefit to revenue in 2018 was approximately $2m.
12
accesso Technology Group plc
Chief Executive’s Statement (Continued)
Key Financial Metrics (continued)
Revenue: 2017 acquisitions
During 2017, the group completed the acquisitions of Ingresso and TE2 in March 2017 and July 2017 respectively.
In March 2018, we announced the decision of Amazon UK to immediately exit the UK ticketing distribution space. This was a significant
customer of Ingresso but this decision does not impact the strategic opportunity that the group expects to derive from this technology,
and was mitigated by new and potentially larger distribution arrangements. It did however negatively impact management revenue
expectations in the shorter-term. Notwithstanding the impact of Amazon, full year pro-forma revenues including the pre-acquisition
period in 2017, rose by 11.1% to $22.1m (2017: $19.9m).
TE2 revenues continue to be largely focused on the ongoing delivery of professional services to Carnival in support of the roll out of its
Medallion Class program, the initial part of which was formally launched by that operator at the end of 2017. The focus required to
successfully execute on the delivery of these services did impact the planned development of the platform element of this business.
Full year revenues on a pro-forma basis, including the pre-acquisition period in 2017, fell by 30.8% to $16.6m (2017: $24.0m). This
reduction reflects significant professional services activity in the pre and post-acquisition periods of 2017 together with the full year
benefit of license fee recognition revenue relating to a single customer of $4.6m in 2017. While we expect to continue to generate
professional services revenues from the ongoing relationship with this customer, the remaining portion of this license was recognized
in the current reporting period and represented $2.9m of 2018 TE2 revenues.
Revenue Visibility
Transactional revenue
Other repeatable revenue
Non-repeatable revenue
Other revenue
2018
(audited)
IFRS 15
$000
79,665
8,698
26,487
3,897
118,747
2017
(proforma)
IFRS 15
$000
67,719
9,045
18,179
7,899
102,842
2017
(audited)
IAS 18
$000
99,188
9,045
17,297
7,899
133,429
Transactional revenue is defined as revenue earned as either a fixed amount per sale of an item, such as a ticket sold by a customer or
as a percent of revenue generated by a venue operator. Normally this revenue is repeatable where a multi-year agreement exists and
purchasing patterns by venue guests do not significantly change. Other repeatable revenue is defined as revenue, excluding
transactional revenue, that is expected to be earned through each year of a customer’s agreement, such as maintenance support
revenue without the need for additional sales activity. Non-repeatable revenue is revenue that occurs one-time (e.g. up-front license
fees) or is not repeatable based upon the current agreement (e.g. billable professional services hours) and is unlikely to be repeatable
without additional successful selling execution by accesso. Other revenue consists of hardware sales and other revenue that may or
may not be repeatable with limited sales activity if customer behaviour remains consistent.
We estimate that for 2018 74.4% (2017 Proforma: 74.6%) of Group revenue is repeatable in nature (transactional revenue plus other
repeatable). There is an expectation that the repeatable % will increase as TE2 repeatable platform revenues evolve at a greater rate
than their non-repeatable professional services revenues.
Gross Margin
The gross profit margin in 2018 was 74.3%, compared to a 2017 reported margin of 55.0% (pre-adoption of IFRS 15), and a 2017
Proforma margin of 72.3% in 2017. There were no significant beneficial or adverse margin changes and the slight increase in margin is
principally related to mix, with a higher proportion of ticketing revenues in the year.
13
accesso Technology Group plc
Chief Executive’s Statement (Continued)
Key Financial Metrics (continued)
Administrative Expenses
Development expenditure gross expenditure
Less capitalized development expenditure
Development expenditure included in administrative expenses
Sales and marketing
Other operating expenditure
Underlying administrative expenses (excluding depreciation)
Amortisation and depreciation (excluding acquired intangibles)
Underlying administrative expenses (including depreciation)
Acquisition and aborted acquisition expenses
Deferred and contingent payments
Amortisation related to acquired intangibles
Profit recognized on reduction of earn-out liability
Share based payments
2018
$000
29,403
(21,100)
8,303
4,893
40,253
53,449
9,624
63,073
1,703
3,176
11,740
-
2,245
2017
$000
20,025
(12,395)
7,630
3,848
37,363
48,841
5,531
54,372
1,249
2,131
8,591
(3,228)
1,089
Administrative expenses per the income statement
81,937
64,204
Administrative expenses were up 27.6% to $81.9m (2017: $64.2m), as the group absorbed a full year of the enlarged Group and the
related full year amortisation of the 2017 acquired intangibles, and employment related consideration together with increased share-
based payment charges. Development expenditure, net of capitalisation increased to $8.3m (2017: $7.6m). A $2.7m reduction in
expenditure was recorded in respect of year-end director and staff bonuses, which totalled $1.5m (2017: $4.2m), with executive
directors and the senior leadership team not accruing any bonus for the year. Finally, an expense of $1.7m was incurred relating to
professional fees associated with a significant and well-advanced acquisition opportunity, which was ultimately terminated by the
Board of accesso in October 2018.
Underlying administrative expenses, which exclude acquisition expenses, amortisation of acquired intangibles, charges relating to any
contingent element of acquisition consideration, and share based payments were $53.4m, representing an increase of 9.4% on 2017
($48.8m) and driven primarily by a full year of the 2017 acquisitions and continued increase in headcount and operational
infrastructure to support short and longer-term growth.
Adjusted EBITDA and operating profit
Adjusted EBITDA of $34.8m was up 41.5% (2017: $24.6m) and 36.5% from a 2017 Proforma of $25.5m.
Operating Profit for 2018 was $6.3m, down from a reported $9.2m in 2017, and a Proforma of $10.1m, as the increase in the underlying
profitability of the group was unable to absorb the full year of the amortisation on the 2017 acquired intangibles, employment-related
consideration, increased share-based payment charges and the additional acquisition related expenses (including aborted acquisition
expense). 2017 had also included a one-time non-underlying $3.2m benefit relating to the reduction in the expected earn-out payable
to the sellers of Ingresso.
Adjusted operating profit, which the Board considers a key underlying metric, was $25.1m in 2018, equating to 25.5% growth when
compared to a 2017 Proforma adjusted operating profit of $20.0m. Adjusted operating margin increased to 21.1% for 2018 (2017
Proforma: 19.5%).
14
accesso Technology Group plc
Chief Executive’s Statement (Continued)
Key Financial Metrics (continued)
Adjusted EBITDA and Operating Profit (continued)
The tables below set out a reconciliation between operating profit and adjusted EBITDA:
Operating profit
Add: Acquisition expenses (including aborted acquisition)
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
2018
IFRS 15
$000
6,267
1,703
3,176
11,740
-
2,245
25,131
9,624
34,755
The following is an analysis of the Group’s adjusted EBITDA by reportable segment.
Ticketing and distribution
% of ticketing and distribution segment revenue
Guest Experience
% of guest experience segment revenue
Central unallocated costs
Adjusted EBITDA
% of total revenue
2018
IFRS 15
$000
30,805
39.2%
19,256
47.9%
(15,306)
34,755
29.3%
2017
(proforma)
IFRS 15
$000
10,124
1,249
2,131
8,591
(3,228)
1,089
19,956
5,531
25,487
2017
(proforma)
IFRS 15
$000
23,772
36.9%
18,224
47.4%
(16,509)
25,487
24.8%
2017
IAS 18
$000
9,241
1,249
2,131
8,591
(3,228)
1,089
19,073
5,531
24,604
2017
IAS 18
$000
22,890
36.0%
18,224
26.1%
(16,510)
24,604
18.4%
Profit before tax of $5.2m was down from $7.2m in 2017 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 increase in acquisition expenses incurred
in the period.
Financing costs totalled $1.1m (2017: $2.1m) and included net interest payable of $0.7m (2017: $0.7m) together with amortisation of
capitalised finance costs and the interest costs associated with contingent and deferred compensation of $0.4m (2017: $1.4m).
15
accesso Technology Group plc
Chief Executive’s Statement (Continued)
Key Financial Metrics (continued)
Development Expenditure
Development expenditure by segment
Ticketing and distribution
% of ticketing and distribution segment IFRS 15 revenue
Guest Experience
% of guest experience segment IFRS 15 revenue
Total development expenditure
% of total IFRS 15 revenue
Development expenditure – organic and acquisition related
Ticketing and distribution – excluding 2017 acquisitions
% of segment IFRS 15 revenue – excluding 2017 acquisitions
Guest Experience – excluding 2017 acquisitions
% of segment IFRS 15 revenue – excluding 2017 acquisitions
Total – excluding 2017 acquisitions
% of total IFRS 15 revenue – excluding 2017 acquisitions
Ingresso
% of Ingresso IFRS 15 revenue
TE2
% of TE2 IFRS 15 revenue
Total development expenditure
% of total IFRS 15 revenue
2018
$000
16,182
20.6%
13,221
32.9%
29,403
24.8%
2018
$000
15,099
26.8%
1,904
8.1%
17,003
21.2%
1,083
4.9%
11,317
68.1%
29,403
24.8%
2017
$000
14,067
21.8%
5,958
15.5%
20,025
19.5%
2017
$000
13,378
28.0%
2,161
8.2%
15,539
20.9%
690
4.1%
3,796
31.8%
20,025
19.5%
Total development expenditure, before capitalisation, during 2018 was $29.4m (2017: $20m). The principal driver of this increase was
the additional $7.9m related to a full year of the 2017 acquisitions. Both acquisitions represent businesses that were less mature than
the group they joined and accordingly the total expenditure represented 24.8% of 2018 revenue (2017: 19.5%). Excluding the
acquisitions, development expenditure represented 21.2% of revenues (2017: 20.9%).
Development expenditure remains a significant but critically important element of the cost base of the business and the table above
demonstrates the significant development resources that are deployed within ticketing and TE2 parts of the business. The group
undertakes development primarily in response to revenue enhancing, customer led initiatives and limits exposure to research type
work.
The expenditure within ticketing includes such customer led enhancements to functionality, the continued globalisation of the product
and, new in 2018, initial expenditure in relation to an internal project to re-engineer the product platform to more readily execute on
revenue opportunities and to more efficiently develop, maintain and support on a forward-looking basis, as discussed earlier in this
review.
Expenditure in relation to TE2 represents the ongoing development of its platform, while dovetailing with the broader re-engineering
project of the accesso platform referenced above. It also includes a modest investment in relation to our initial work to understand
the opportunity within the adjacent healthcare market.
The group capitalizes elements of development expenditure, where it is appropriate and in accordance with IAS 38 ‘Intangible assets’.
Capitalised development expenditure was $21.1m (2017: $12.4m) representing 71.8% (2017: 61.9%) of total development
expenditure. The net benefit of development capitalisation less related amortisation increased to $13.0m from $8.2m in 2017.
16
accesso Technology Group plc
Chief Executive’s Statement (Continued)
Key Financial Metrics (continued)
Taxation
On a statutory basis, the Group had a tax charge of $1.9m (2017: tax credit $2.7m).
The effective tax rate of the group of 36.4% is inflated by certain items of expenditure, which are not deductible for tax purposes such
as aborted acquisition costs, charges related to the accounting for acquisition consideration that is linked to continued employment
and therefore deemed to be compensation from an IFRS perspective, together with share based payments.
On an adjusted basis, the Group’s effective tax rate on its adjusted earnings, was 18.8%. This rate includes the benefit of credits relating
to prior periods of approximately $1.0m. The group maintains its forward-looking guidance in respect of the effective tax rate on
adjusted earnings as being between 21% and 23%.
Tax is covered in more detail within Note 13.
Profit after tax was $3.3m (2017: $9.9m). In addition to the full year of the amortization on the 2017 acquired intangibles and
employment related consideration, increased share-based payment charges and the additional acquisition related expenses (including
aborted acquisition expense) the prior period benefited from the $2.7m tax credit.
As a result, earnings per share (basic) were 12.23 cents for 2018, a decrease of 70% (2017: 40.83 cents).
Adjusted basic and fully diluted earnings per share were 73.58 cents and 70.61 cents respectfully for 2018, with increases of 23.8%
and 27.6% on 2017 Proforma basis of 59.45 cents and Proforma fully diluted of 55.36 cents.
Net Debt and Cash Generated from Operations
Underlying cash from operations (see below)
Tax
Capitalised development costs
Other capital expenditure
Underlying free cash flow
(Less)/ plus: TE2 option cash movement in period
(Less)/ plus: movement in Ingresso short term cash
Share issues
Acquisition related payments (including costs)
Interest
Other
Movement in net debt in year
Opening net cash/ (debt)
Closing net cash
2018
$000
25,954
(452)
(21,100)
(1,959)
2,443
(3,992)
(2,403)
1,906
(9,269)
(541)
(192)
(12,048)
12,528
480
2017
$000
21,246
(224)
(12,395)
(936)
7,691
5,500
7,600
77,112
(79,733)
(741)
(1,469)
15,960
(3,432)
12,528
Our closing net cash balance was $0.5m (2017: $12.5m). Within the financial review for the year ended 31 December 2017, we
disclosed that the net cash position at that date included balances of approximately $16.5m 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 and cash
balances held by the Group to make near term settlements to venue operators in respect of the Ingresso platform. We took the
conservative view that these balances should be viewed as non-cash and movements in these balances ignored when looking at the
underlying cash generation within the business.
17
accesso Technology Group plc
Chief Executive’s Statement (Continued)
Key Financial Metrics (continued)
Net Debt and Cash Generated from Operations
The TE2 balance at 31 December 2018, of $1.5m (2017: $5.5m) is expected to outflow from the business over an 18-month period
from 31 December 2018. The cash balances in relation to Ingresso of $8.6m at 31 December 2018 (2017: $11.0m) represent cash
received from ticket distributors or direct ticket sales that includes both ticket commissions, which are recognized as revenue by
Ingresso and the ticket value payable to the venues. This ticket value element does not form part of accesso’s revenue or expenses
and, by its nature, is difficult to model at any point in time.
Both the TE2 and Ingresso balances are beneficially owned by the Group, and while there are no restrictions on their use, they have
been excluded from our current definition of net debt and the movements on these balances. Adjusting for these items results in an
adjusted net debt position of $10.0m at 31 December 2018 (2017: $4.0m).
Cash Generated from Operations
Cash flow from operating activities
Add: Acquisition related expenses (including debt arrangement)
Add: Payment of deferred consideration to employees (Ingresso)
Plus/ (less): TE2 option cash movement in period
Plus/ (less): Increase in Ingresso short term cash
Adjusted cash from operations
2018
$000
17,825
392
1,342
3,992
2,403
25,954
2017
$000
33,097
1,249
-
(5,500)
(7,600)
21,246
Cash generated from operations of $17.8m (2017: $33.1m) includes a $6.4m outflow in relation to these TE2 and Ingresso balances
(2017: $13.1m inflow). Adjusted cash generated from operations was $26m for the year ended 31 December 2018, per the table above,
an increase of 22.6% from 2017 ($21.2m).
This represents an underlying cash conversion from adjusted EBITDA of 74.7% (2017: 83.1% on IFRS consistent basis). The reduction
from 2017 reflects a higher level of multi-year licenses where, under IFRS 15, revenue is recognized in the period of deployment with
cash flows received over the term of the agreement and a lower level of payables at 31 December 2018.
Looking forward, we expect the underlying cash conversion percentage from adjusted EBITDA to be close to that in 2017.
The increase in capital expenditure in the period has not been matched by a corresponding increase in cash generated from operations
and therefore underlying free cash flow reduced to $2.4m in the current year (2017: $7.7m).
Financing and Investing Activities
During the year, a final payment of $9.3m was made to the sellers of Ingresso Group Limited, which was based on the results of that
business for the year ended 31 December 2017 and was recognized as a liability when the fair value of that acquisition was disclosed
within the 2017 annual report. There are no further contingent or non-contingent acquisition related payments due.
Borrowing Facility
The Group maintains a borrowing facility with Lloyds Bank plc. This facility currently provides the Group with the ability to draw down
a total of $50m, denominated in either US dollars, GB Pound Sterling or Euros, and expires in 2021. 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 30 March 2019 and a further reduction of $10m on 30 March
2020.
Cash balances at 31 December 2018 totalled $20.7m (2017: $28.7m) while borrowings at 31 December 2018 totalled $20.2m ($16.1m),
versus the current facility of $50m.
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.
18
accesso Technology Group plc
Chief Executive’s Statement (Continued)
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.
Paul Noland
Chief Executive Officer
27 March 2019
19
accesso Technology Group plc
2017 Pro-forma Data
The proforma information presented below has been provided as additional information to the statutory reported requirements to
illustrate the performance of the business. The statutory reported results for 2018 and 2017 are not directly comparable due to the
fact that IFRS 15 was adopted from 1 January 2018 and was not applied retrospectively. This information is unaudited and does not
form part of the audited annual financial statements.
Selected income statement information has been extracted from the Group’s management accounts for the two comparative years to
present this proforma information.
IFRS 15 impact 1: Certain accesso LoQueue revenues now recognized on a net basis (previously gross)
Under IAS 18, certain queuing contracts were recognised on a gross basis where management determined the company was acting
the principal in the agreement.
IFRS 15 contains different criteria for determining who is the principal in an agreement, focusing on control of the goods or services.
Management have determined the Group is acting as the agent in all queuing contracts, and therefore only recognises its portion of
the sale as revenue, rather than the full amount of the guest payment.
IFRS 15 Change 2 – Term and annual licenses
a) Point-of-sale (POS) licenses and support revenue: Under IAS 18, the license revenue was recognised equally over the term
of the agreement, reflecting the pattern of availability to the customer. IFRS 15 considers these licenses to be recognised at
a point in point in time which is determined to be when the customer has been provided the software. These licences provide
the customer with the right of use of the POS software as it exists, it is at the customers discretion to accept any updates to
the software, it is fully functional from the date it is provided to the customer and considered a distinct performance
obligation. Support revenue is carved out of the total consideration using an estimate that best reflects its stand-alone selling
price and is continued to be recognised rateably as the customer receives the benefit of the support. Accordingly, the license
revenue is recognised sooner under IFRS 15, with support revenue, equal to a percentage of the license fee, continuing to
be recognised over the term of the agreement. The impact of these changes on items other than revenue is an increase in
net assets in the form of a contract asset.
b) Software licenses and the related maintenance and support revenue: Under IAS 18, these software licenses were
recognised when accepted by the client, as there was a non-refundable right to payment. IFRS 15 considers right of use
licenses to be recognised at a point in point in time which is determined to be when the customer has been provided with a
functional software licence. The maintenance and support revenue is determined using an estimate that best reflects its
stand-alone selling price and is continued to be recognised rateably as the customer receives the benefit of the maintenance
and support. The option to renew each year’s licence at a full discount by paying the annual maintenance and support is
deferred and recognised at a future point in time when the customer renews. The amount that is deferred is dependent on
the term of the contract. For example: on the inception of a three-year contract, two thirds of the licence fee consideration
would be deferred and released equally on the first and second anniversary when the customer renews their maintenance
and support. Perpetual licences are recognised in the same manner, with the exception being that the contract term is
estimated to be five years. As such, the renewal discounts are deferred and spread over the remaining four years at each
point the customer renews their maintenance and support. Accordingly, for these type of licenses the phasing of revenue
has changed significantly with a smaller portion of the licence revenue being recognised on inception of a new contract, a
renewal right to a discounted licence fee is deferred for between three and five years which is held as a contract liability,
being recognised on each anniversary of the contract when a customer renews their maintenance and support.
20
accesso Technology Group plc
2017 Pro-forma Data (continued)
Income Statement
Revenue
Cost of sales
Gross profit
Gross profit %
Administrative expenses
Operating profit
Total revenue by reportable segment
Ticketing and distribution
Guest Experience
Total revenue
Statutory
2017
audited
$000
IFRS 15
change 1
IFRS 15
change 2
$000
$000
Proforma
2017
Unaudited
$000
133,429
(31,469)
882
102,842
(59,984)
31,469
-
(28,515)
73,445
55.0%
(64,204)
9,241
-
-
-
-
882
-
74,327
72.3%
1
(64,203)
883
10,124
Statutory
2017
IFRS 15
change 1
IFRS 15
change 2
$000
63,536
69,893
$000
-
(31,469)
$000
882
-
Proforma
2017
Unaudited
$000
64,418
38,424
133,429
(31,469)
882
102,842
Revenue by reportable segment demonstrating impact of 2017 acquisitions
Ticketing and distribution – excluding 2017 acquisitions
Guest Experience – excluding 2017 acquisitions
Statutory
2017
IAS 18
$000
46,818
57,964
$000
-
-
(31,469)
Total Revenue – excluding 2017 acquisitions
104,782
(31,469)
Ingresso
TE2
Total revenue attributable to 2017 acquisitions
16,718
11,929
28,647
-
-
-
IFRS 15
change 1
IFRS 15
change 2
Proforma 2017
$000
882
-
-
882
-
-
-
IFRS 15
$000
47,700
26,495
74,195
16,718
11,929
28,647
Total revenue
Revenue Visibility
Transactional revenue
Other repeatable revenue
Non-repeatable revenue
Other revenue
133,429
(31,469)
882
102,842
Statutory
2017
audited
IAS 18
$000
99,188
9,045
17,297
7,899
133,429
IFRS 15
change 1
IFRS 15
change 2
Proforma 2017
$000
$000
(31,469)
-
-
-
(31,469)
-
-
882
-
882
Unaudited
IFRS 15
$000
67,719
9,045
18,179
7,899
102,842
21
accesso Technology Group plc
2017 Pro-forma Data (continued)
Operating profit 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
Revenue and adjusted EBITDA by reportable segment
Ticketing and distribution
% of segment revenue
Guest Experience
% of segment revenue
Central unallocated costs
Adjusted EBITDA
% of total revenue
Statutory
2017
IAS 18
$000
9,241
1,249
2,131
8,591
(3,228)
1,089
19,073
5,531
24,604
Statutory
2017
IAS 18
$000
22,890
36.0%
18,224
26.1%
(16,510)
24,604
18.4%
IFRS 15
change 1
IFRS 15
change 2
Proforma 2017
$000
-
-
-
-
-
-
-
-
-
$000
883
-
-
-
-
-
883
-
883
IFRS 15
$000
10,124
1,249
2,131
8,591
(3,228)
1,089
19,956
5,531
25,487
IFRS 15
change 1
IFRS 15
change 2
Proforma 2017
$000
-
-
-
-
-
$000
882
-
-
-
1
883
IFRS 15
$000
23,772
36.9%
18,224
47.4%
(16,509)
25,487
24.8%
22
accesso Technology Group plc
The Board of directors
for the financial year ended 31 December 2018
Bill Russell, Non-Executive Chairman
Bill Russell was appointed as the Group's new Non-Executive Chairman, effective concurrently with Tom Burnet's move to the Non-
Executive Director position on 1 March 2019.
Bill Russell has served in a variety of roles in both public and private technology company boards, in a career spanning several decades,
including 23 years across a number of senior management roles at Hewlett Packard, including Vice President and General Manager of
Hewlett Packard's multi-billion-dollar Enterprise Systems Group and its Software Solutions Group. Bill is currently Non-Executive
Chairman at leading technology solutions provider Piksel Group and PROS Holdings, a provider of AI-powered solutions that optimize
selling in the digital economy, and previously held roles at SABA Software, Inc., webMethods and Cognos. Bill is based in the United
States
Andy Malpass, Non-Executive Director
Andy Malpass has over 30 years’ experience in the software industry covering both private and public companies, including
approximately 20 years as Group Finance Director of Fidessa Group plc. Andy also served as Company Secretary of Fidessa Group plc
for many years. He is currently an Independent Non-Executive Director and Chair of the Audit Committee at Kainos Group plc. Andy
graduated with a BA (Hons) in Accounting and Finance from Lancaster University and is a Fellow of the Chartered Institute of
Management Accountants.
Andy joined accesso on 26 June 2018 as Independent Non-Executive Director, Andy is the Chair of the Audit Committee and became a
member of the Remuneration Committee in March 2019.
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. In 2017 David was elected as an Honorary Fellow of the Royal Academy of Engineering and in 2018 was elected as
a member of the Scale Up Institute. In 2019 he became a member of the industrial advisory board to IQ Capital Partners Limited.
Previous experience includes non-executive director and advisor at artificial general intelligence company DeepMind Technologies
Limited. Earlier in his career David worked as an investment banker for over 15 years.
David joined accesso in November
audit committees and performed the role of audit committee Chair from 18 March 2016 to until 26 June 2018.
a Non-Executive Director. David is a member of
2010 as
the
remuneration and
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 modelling.
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.
23
accesso Technology Group plc
The Board of directors
for the financial year ended 31 December 2018 (continued)
Karen Slatford, Senior Independent Director
Karen Slatford has significant experience working in the global technology and business arenas, serving currently as Senior Independent
Director and Micro Focus International plc, Chair of Draper Esprit and Senior Independent Director of Alfa Financial Software
Holdings. Between 1983 and 2001 Karen worked at Hewlett Packard where in 2000 she became Vice President and General Manager
Worldwide Sales & Marketing for Business Customers.
Karen joined accesso on 24 May 2016 and is a member of accesso’s audit committee and is the Chair of the remuneration committee.
Paul Noland, Chief Executive Officer
Paul Noland joined accesso as Chief Executive Officer in April 2018, guiding the company’s growth and day-to-day operations as it
serves more than 1,000 venues in over 30 countries.
Paul has built an impressive resume as a leader in the international attractions and entertainment industries. Prior to joining accesso,
Paul served as President and CEO of the International Association of Amusement Parks and Attractions (IAAPA) from 2013 to 2018,
helping the organization continue its growth as the largest international trade association for amusement facilities and attractions
worldwide. He also served for 16 years in senior executive roles with Walt Disney Parks and Resorts where he championed major
growth initiatives across the company’s domestic theme parks and resorts and oversaw the financial planning, revenue management
and pricing functions at Walt Disney World Resort. Prior to Disney, he spent more than a dozen years in leadership roles with Marriott
International where he focused on optimizing revenue across the company’s then 900 hotels.
Paul earned a Master of Business Administration from the College of William and Mary in Williamsburg, Virginia, and a Bachelor of
Science in Journalism and Speech Communication from Radford University in Radford, Virginia.
Tom Burnet, Non-Executive Director
Tom Burnet joined accesso as the Chief Executive Officer in late 2010. Tom fulfilled the role of Executive Chairman through 2018 until
1 March 2019 when he stepped down as Executive Chairman and is now a Non-Executive Director with the provision of strategic and
acquisition support. 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.
24
accesso Technology Group plc
Strategic report
for the financial year ended 31 December 2018
Our strategy
accesso’s purpose is a simple one. It is to partner with the operators of leisure attractions around the world and to help them deploy
technology solutions to engage with their guests to deliver better guest experiences. We look to establish long-term agreements with
our customers – our technology is typically a key part of their enterprise software stack. Importantly, we look to find mutually
beneficial participative revenue models where we are paid for our services as a percentage of the profit or revenue that our systems
deliver, underpinning our group revenues for many years to come.
Our strategy has been to identify technology solutions that can engage with guests as they journey through their visit – from their
early online research, their arrival and enjoyment of the attraction and the post visit follow ups. Over the last 7 years we have both
developed technology in house and acquired businesses which add value to operators along the journey. In addition to operators, our
strategy of promoting long term value for shareholders is supported by the management incentive plans being aligned with the
interests of investors.
Looking ahead, we find ourselves in an enviable situation. No other vendor in the attractions and leisure market has anything like the
scale or breadth of competency that we have. Our opportunity is to maximise the cross and upsell opportunity for our products
globally by combining core elements of each of our platforms into one unified system. Our plan is to deliver this over the next 2 years
at which time we should be uniquely positioned to capture a significant share of what we believe is a $3.4bn global market.
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 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.
25
accesso Technology Group plc
Strategic report
for the financial year ended 31 December 2018
Principal risks and uncertainties (continued)
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.
Cyber security is a primary concern at accesso. We have a team led by our Chief Information Officer focused on the security of our
operations and platforms. accesso takes a multi-layer approach to security employing many solutions to protect our systems at every
level including vulnerability management, intrusion detection and endpoint protection to name just a few. We conduct aggressive
penetration testing throughout the year and against all of our platforms. All of the above is built upon an ever-expanding set of policies
that govern our approach to engagement, security and response.
We also recognize that the first, and most likely, point of attack is against our people and go to great lengths to provide training on the
types of attacks they may encounter and vulnerabilities to which they are subject. This includes, but is not limited to, regular phishing
simulations at varying degrees of sophistication followed up by additional training and clarification. As attacks become more
sophisticated and customized, our staff need to understand how to recognize and respond as they are the last line of defense when
something slips through our various protections.
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.
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 5 to 19 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.
26
accesso Technology Group plc
Strategic report (continued)
for the financial year ended 31 December 2018
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
Less: TE2 option cash
Less: Ingresso near term settlements treated as non-cash
Adjusted net debt
2018
$000
6,267
1,703
3,176
11,740
-
2,245
25,131
9,624
34,755
81,937
(28,488)
53,449
20,704
(20,224)
480
(1,508)
(8,598)
(9,626)
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)
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 13)
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 85)
•
•
•
•
On behalf of the Board:
John Alder
Chief Financial Officer
27 March 2019
27
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018
Introduction
As Chair of the Remuneration Committee, I am pleased to present our report setting out accesso’s remuneration policy and practice
and activities over the previous year. The Remuneration Policy is intended to incentivise and motivate the leadership team to achieve
the Company’s strategic goals.
Although a full remuneration report is not a requirement of an AIM listed company, the Committee has decided that a more
comprehensive report is good practice and aids shareholder information.
This report is in three parts. The Annual Statement gives an overview of the year. This is followed by the Remuneration Policy. Finally,
the Annual Report on Remuneration, on pages 35 to 40, provides greater detail of the amounts paid in 2018 and how the remuneration
policy will be implemented in the 2019 financial year.
During the year the company adopted the Quoted Companies Alliance’s Corporate Governance Code (the ‘QCA Code’), and the report
has been prepared in accordance with the principles of the QCA Code. The content of this report is unaudited unless otherwise stated.
We hope you find the information in this report helpful to you as a shareholder.
Membership
Chair
Karen Slatford
Members
David Gammon
Andy Malpass (appointed 21 March 2019)
Committee membership is limited to independent Non-Executive Directors of the Company unless there is an insufficient number of
appointed Non-Executive Directors at any point, in which case an Executive Director will be appointed. Martha Bruce, the Company
Secretary, or her designate acts as secretary to the Committee.
Role of the Committee
The Committee’s primary role is to determine and agree with the Board, the remuneration policy for the Executive Directors. Within
the terms of the policy it also approves performance-related and discretionary awards to Executive Directors. The Committee’s full
Terms of Reference may be viewed on accesso’s website. Senior members of accesso’s management team may attend by invitation
but will not be present when their own remuneration is discussed.
Appointment of external advisors
The Committee has not appointed any external advisors.
Principal activities in 2018
The principal activities undertaken by the Committee during 2018 were as follows:
• Reviewed and agreed the remuneration and related terms for the new CEO;
• Reviewed and approved the bonus awards in respect of the 2017 performance year and salary increases with effect from
January 2018;
• Reviewed and approved the LTIP grants for 2018;
• Approved the grant of Special Option Awards to key staff;
• Reviewed the annual bonus targets for the Executive Directors for the financial year 2018 and measured performance against
them;
• Agreed the annual bonus targets for the Executive Directors for the financial year 2019;
• Reviewed and approved the terms of reference of the Committee.
28
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018 (continued)
Remuneration policy overview
The principal objectives of the Company’s remuneration policy are to attract, retain and motivate the Company’s Executive Directors
and Senior Management and provide incentives that align with, and support, the Company’s business strategy.
The Remuneration Committee oversees the implementation of this policy and seeks to ensure that the Executive Directors are fairly
rewarded for the Company’s performance over the short, medium and long-term. Taking typical practice within the sector into
account, the Committee has decided that a significant proportion of potential total remuneration should be performance-related.
In order to align salaries and total compensation with the market, the Committee approved salary increases 2.8% for the Executive
Chairman and 7% for the Chief Financial Officer with effect from 1 January 2018. The Committee will continue closely monitor the
salary and total remuneration for Executive Directors and reserves the right to make an increase in excess of typical market practice if
it considers it necessary and appropriate.
Focus for 2019
In the coming year the Remuneration Committee will consider a number of matters including:
•
assessment of Group performance against 2018 budget and determination of bonus awards in conjunction with the
company’s strategy and risk appetite;
approval of bonus performance measures and targets for 2019;
approval of performance conditions and awards under the Company’s Long-Term Incentive Plan for 2019;
assessment of the ongoing appropriateness of the remuneration arrangements in light of remuneration trends and market
practice;
The Committee believes that the total remuneration package for each Executive Director represents an appropriate balance between
fixed and variable remuneration. It will reward personal and corporate outperformance whilst ensuring overall awards remain
competitive.
Resolutions at the AGM
Shareholders will not be asked to vote on our Remuneration Policy as such a vote is not required for AIM listed companies. The policy
has been prepared only for information and to give shareholders full background on the Company’s approach to remuneration.
Directors remuneration policy
This section sets out accesso’s Remuneration Policy for Executive and Non-Executive Directors. The policy is not subject to a separate
shareholder vote and is included for information only.
The Policy explains the purpose and principles underlying the structure of remuneration packages and how the Policy links
remuneration to the achievement of sustained high performance and long-term value creation.
Overall remuneration is structured and set at levels to enable accesso to recruit and retain high calibre executives necessary
for business success whilst ensuring that:
our reward structure, performance measures and mix between fixed and variable elements is comparable with similar
organisations,
rewards are aligned to the support the implementation of strategy and aims of the business, and effective risk
management for the medium to long-term
the right behaviours, values and culture are encouraged and rewarded; and
the approach is simple to communicate to participants and shareholders.
29
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018 (continued)
Fixed Elements of remuneration for Executive Directors
Element
of
Remuneration
Salary
set
level of
Provides a
remuneration sufficient
to
attract and retain Executives
appropriate
with
experience and expertise.
the
Link to Company Strategy
Operation
Maximum Opportunity
Benefits
Provides benefits sufficient to
attract and retain Executives
with
appropriate
experience and expertise.
the
Retirement
Schemes
sufficient
Provides retirement scheme
contributions
to
attract and retain Executives
with
appropriate
experience and expertise.
the
There is no set maximum to
salary levels or salary increases.
Account will be
taken of
increases applied to colleagues as
a whole when determining salary
the Executive
increases
Directors,
the
Committee retains the discretion
to award higher increases where
it considers it appropriate.
however
for
to maintain
The Committee recognises the
need
suitable
flexibility in the benefits provided
to ensure it is able to support the
objective of attracting and
retaining personnel in order to
deliver the Company strategy.
The maximum will be set at the
cost of providing the benefits
described.
One-off payments such as legal
fees or outplacement costs may
also be paid if it is considered
appropriate.
for
the
4% of salary per annum for the
CEO and CFO and 8% of salary per
Executive
annum
Chairman, subject to an annual
maximum for the type of scheme
per local tax and/or retirement
regulations.
The Committee takes into account
a number of factors when setting
and reviewing salaries, including:
• Scope and responsibility of the
role;
• Any changes to the scope or size
of the role;
• The skills and experience of the
individual;
• Salary levels for similar roles
within appropriate comparators;
and
• Value of the remuneration
package as a whole.
Executive Directors are eligible for
the following benefits;
Healthcare
Life Insurance
Critical Illness cover
Directors are eligible to receive
employer contributions to the
Company’s pension plan(s) (which
are defined contribution plan) or
a salary supplement in lieu of
pension benefits.
30
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018 (continued)
None of the fixed elements of remuneration are subject to performance metrics.
Variable Elements of Remuneration for Executive Directors
Element of
Remuneration
Link to Company
Strategy
Operation
Maximum
Opportunity
Performance Metrics
Annual Bonus
Up to 150% salary
for the Executive
Chairman
and
CEO and up to
120% salary for
the CFO.
Variable
remuneration
that rewards the
achievement of
annual financial,
operational and
individual
objectives
integral
Company
strategy.
to
are
Objectives
set
annually based on the
achievement
of
strategic goals. At the
end of the year, the
Committee meets
to
performance
review
agreed
against
the
and
objectives
determines
payout
levels.
Awards are made
cash.
in
Awards are based on
financial,
operational and individual goals set at
the start of the year. Up to 50% of the
award will be assessed against the
Company’s financial performance in
that year. The remainder of the award
will be based on achievement against
specific
strategic
objectives. The Committee reserves
the right to make an award of a
different
by
achievement against the measures if it
believes the outcome is not a fair
reflection of Company or personal
performance.
produced
personal
amount
and
Overall maximum
of 200% salary in
year,
any one
including
any
Share Option Plan
awards.
The split between these performance
measures will be determined annually
by the Committee and exceptionally
during the year if there is a compelling
reason to do so.
Performance measures are currently
related
to TSR. The Committee
reserves the right to adjust the
measures before awards are granted to
reflect relevant strategic targets.
to adjust
The Committee reserves the right to
exercise discretion
the
outcome produced by achievement
against the measures if it believes the
outcome is not a fair reflection of
Company performance.
Long-Term
Incentive Plan
(LTIP)
Variable
remuneration
designed
to
incentivise and
reward the
achievement of
long-term
targets aligned
with
shareholder
interests.
LTIP
provides
flexibility
in the retention
and recruitment
of
Executive
Directors.
The
also
Awards granted under
the LTIP vest subject to
achievement
of
performance conditions
measured over a three-
year period. LTIPs may
be made as conditional
share awards or in other
(e.g. nil cost
forms
is
if
options)
considered appropriate.
Accrued dividends may
be paid
in cash or
shares, to the extent
that awards vest.
it
The plan also allows for
Share Options to be
granted, subject to a six-
month exercise period.
The Committee may
and
adjust
amend
awards
in accordance
with the LTIP rules.
31
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018 (continued)
Variable Elements of Remuneration for Executive Directors (continued)
Element of
Remuneration
Link to Company
Strategy
Operation
Maximum
Opportunity
Performance Metrics
Overall maximum
of 200% salary in
any one
year,
including any LTIP
awards
if
The CSOP will be used for Executive
Directors
Remuneration
the
Committee feel it is advantageous to
do so, and on such terms as they regard
as appropriate and in shareholder’s
interests.
Company
Share Option
Plan (CSOP)
Variable
remuneration
designed
to
incentivise and
reward
the
achievement of
long-term
targets aligned
with
shareholder
interests.
CSOP
provides
flexibility in the
retention
and
recruitment of
Executive
Directors.
The
also
CSOP
Awards granted under
the
become
exercisable subject to
and
timings
such
performance conditions
as may be set by the
Committee.
Options are granted at
market value or the
nominal share price if
higher.
Accrued dividends may
be paid
in cash or
shares, to the extent
that awards vest. The
Committee may adjust
and amend awards
in accordance with the
CSOP rules.
Notes to the Policy Table
All LTIP, CSOP and bonus awards made to Executive Directors are subject to Malus and Clawback provisions. The Committee may, in
its absolute discretion, determine to reduce the number of shares to which an award or option relates or cancel it altogether.
Alternatively, the Committee could impose further conditions on the vesting or exercise of an award or option. At any time within 2
years of an award vesting the Committee may require the Executive Director to transfer to the Company a number of shares or a cash
amount in:
any circumstances justifying summary dismissal of a participant from his office or employment with any Group Company
including, but not limited to, dishonesty, fraud, misrepresentation or breach of trust;
any material breach of a participant's terms and conditions of employment;
any material violation of Company policy, rules or regulations;
any material failure of risk management; and/or
any inaccurate reporting of any accounts, financial data or such other similar information resulting in such accounts, financial
data or other information or any future accounts, financial data or other information having to include material write-downs,
adjustments or other corrective items
Remuneration Policy for Other Employees
As with the Executive Directors, salary for other employees is set at a level sufficient to attract and retain them, taking into account
their experience and expertise. Annual bonus for other employees is normally payable as a percentage of salary and is set annually,
based on the achievement of strategic or personal goals.
Selected employees may be invited to participate in accesso’s LTIP and/or CSOP to aid retention and motivation. Pension arrangements
are consistent across the UK and US workforce including Executive Directors.
Executive Directors’ service contracts
Each of the Executive Directors has entered into rolling service contracts terminable by either party on six months’ notice. Each
Executive Director receives life insurance, the benefit of which amounts to a maximum of four times or two times basic annual salary
dependant on whether the Executive Director is UK or US based. Each Executive Director is entitled to reimbursement of reasonable
expenses incurred by them in the performance of their duties. The service contracts for Executive Directors make no provision for
termination payments, other than for payment in lieu of salary.
32
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018 (continued)
Recruitment Policy
The Committee will seek to align a new Executive Director’s remuneration package to the Company’s remuneration policy as set out
above. In determining remuneration for a new Executive Director, the Committee will consider all relevant factors, including the
requirements of the role, the external market and internal relativities, while ensuring it does not pay more than is necessary to appoint
the preferred candidate. Benefits will be limited to those outlined in the remuneration policy, with relocation assistance provided
where appropriate. Awards under the LTIP rules and/or CSOP rules that may be awarded to a new Executive Director will be limited
to 200% of salary and bonus limited to 200% of salary. Within these limits, the Committee may include any element included within
the approved policy, or any other element which the Committee considers is appropriate given the particular circumstances. The
Committee may buy out remuneration a new hire has had to forfeit on joining the Group if it considers the cost can be justified and is
in the best interests of the Company. Any such buyout would be in addition to the limits set out above. Any such buyout awards will
be of comparable commercial value and reflect as closely as practicable the form and structure of the forfeited awards, including
timing of vesting, performance conditions and the probability of those conditions being met. The fair value of any bought-out awards
will be no higher than that of those forfeited. Where appropriate, the Committee retains the discretion to use the provisions provided
in the Listing Rules for the purpose of making such an award, or to utilise any other incentive plan operated by the Group.
Where an Executive Director is appointed from within the Group, any legacy arrangements would be honoured in line with the original
terms and conditions as long as these do not cause a material conflict with the remuneration policy. If an Executive Director is
appointed following an acquisition of, or merger with, another Company, legacy terms and conditions that are of higher value than
provided in the Policy would normally be honoured.
Termination of office policy
If the employment of an Executive Director is terminated, any compensation payable will be determined by reference to the terms of
the service contract in force at the time. As variable pay awards are not contractual, treatment of these awards is determined by the
relevant rules. The Committee may structure any compensation payments beyond the contractual notice provisions in the contract in
such a way as it deems appropriate.
The Company may at its discretion make termination payments in lieu of notice calculated only on base salary. Service agreements
may allow for garden leave during any notice period.
There is no entitlement to a bonus in any year. The Committee retains discretion to award bonuses for leavers taking into account the
circumstances of departure. Any bonus would normally be subject to performance, deferral and time pro-rating as appropriate.
Treatment of share awards is governed by the plan rules. If an Executive Director ceases to be a director or employee of a Group
Company before (i) the release date of an award granted as a conditional share award or (ii) the date on which an award granted as
an option becomes capable of exercise by reason of death or any other reason other than for cause, the award shall be released or
become exercisable to the participant. The release or exercise will be subject to the extent that any relevant performance condition
has been satisfied over the relevant period, which may be determined by the Board. Any part of the Award which remains unvested
as at the date of cessation, office or employment shall lapse immediately.
If a participant ceases to be a director or employee of a Group Company for cause, all awards shall lapse immediately.
The Committee has discretion regarding whether to pro-rate the bonus based on the proportion of the year worked. The Committee’s
intention is that it will pro-rate the bonus for time, taking performance measures up to that time into account. The Committee
anticipates it would only use its discretion to not pro-rate only where there is an exceptional business case, which would be explained
in full to shareholders.
Change of Control policy
The rules of the equity incentive plans provide that the number of shares that vest shall be determined by the Committee, taking into
account the extent to which any performance conditions have been satisfied and, unless the Committee determines otherwise, pro-
rating to reflect the period from the start of the performance period to the date of the change of control. Where an award is in the
form of an option, this will then be exercisable for a period of one month and will then lapse. The rules also provide for awards to be
exchanged for equivalent awards which relate to shares in a different company.
The rules provide that the number of options that vest shall be determined by the Committee, taking into account the extent to which
any performance conditions have been satisfied and, unless the Committee determines otherwise, pro-rating to reflect the period
from the start of the performance period to the date of the change of control. The option will then be exercisable for a period of one
month and will then lapse. The rules also provide for awards to be exchanged for equivalent awards which relate to shares in a
different company.
33
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018 (continued)
Other considerations
In making remuneration decisions, the Committee takes into account the pay and employment conditions elsewhere in the Group
although employees were not formally consulted prior to setting the remuneration policy for Executive Directors. Employees within
the Group receive base salary, benefits, pension and an annual bonus subject to appropriate eligibility conditions. The terms and value
of these elements vary based on seniority. The Committee appreciates the importance of understanding the views of the Company’s
shareholders. The Committee is open to listening to the views of our shareholders and engaging in ongoing dialogue with them on
executive remuneration matters. The Committee also takes full account of the guidelines of investor bodies and shareholder views in
determining the remuneration arrangements in operation within the Group. Shareholders should also note that a significant
proportion of the Company’s workforce are based in the USA and their remuneration reflects that market.
External Appointments
Executive Directors may hold external directorships if the Board determines that such appointments do not cause any conflict of
interest. Where such appointments are approved and held, it is a matter for the Board to agree whether fees paid in respect of the
appointment are retained by the individual or paid to the Company.
Non-Executive Director Remuneration
Element of Remuneration
Link to Company Strategy
Operation
Maximum Opportunity
Non-Executive Director Fees
Fees are set at a level to reflect
the amount of time and level
of
in
involvement required
order to carry out their duties
as members of the Board and
its committees and to attract
and
retain Non-Executive
Directors of the highest calibre
with relevant commercial and
other experience.
The fees paid to the Non-
Executive
are
determined by the Board as a
whole.
Directors
Fee levels are set by reference
to Non-Executive Director fees
at companies of similar size
and complexity and general
salaried
increases
for
employees
the
Company.
within
Appointment of Non-Executive Directors
All the Non-Executive Directors have letters of appointment with the Company. Appointment is terminable on written notice. The
appointment letters for the Non-Executive Directors provide that no compensation is payable upon termination of employment.
Letters of appointment are available for inspection at the Company’s registered offices. Each of the Non-Executive Directors are
subject to annual re-election by the Company.
34
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018 (continued)
The Annual Report sets out how the Directors’ Remuneration Policy of the Company has been applied during 2018 and how the
Committee intends to apply the policy going forward. The Committee will review the Policy on an annual basis. No shareholder
resolution to approve this report will be proposed at the AGM as this report is for information only.
Single total figure of remuneration (audited information)
The following tables set out the aggregate emoluments earned by the Directors in the years ended 31 December 2018 and 2017
respectively.
2018
Share-
based
payments
Other
Benefits
$000
$000
2017
2018
2017
Total
$000
Total
$000
Retirement
Contributions
$000
$000
Salary
$000
Fees
$000
Bonus
$000
Non - Executive Directors
David Gammon (1) (6)
Andy Malpass (2) (6)
Karen Slatford (6)
John Weston (3) (6)
Executive Directors
John Alder
Steve Brown (4)
Tom Burnet (6)
Paul Noland (5)
-
-
-
-
335
114
410
256
57
29
60
41
-
-
-
-
Total
1,115
187
-
-
-
-
-
-
-
-
-
-
-
-
-
144
33
196
65
-
-
-
21
14
3
13
57
29
60
41
500
161
609
334
52
0
52
77
768
942
1,029
0
-
-
-
-
9
-
13
-
11
-
13
6
438
51
1,791
2,920
30
22
(1) Fee payments were paid to Rockspring (family office of the Gammon family)
(2) Appointed 26 June 2018
(3) Resigned 26 June 2018
(4) Resigned 9 April 2018
(5) Appointed 9 April 2018
(6) Salary or fees payable in GBP and converted at the applicable monthly exchange rate
(i)
(ii)
(iii)
(iv)
(v)
Annual salary and fees – corresponds to the amount received during the relevant financial year, either as
base salary for executives or fees for non-executives.
Annual bonus – corresponds to the amount earned in respect of the relevant financial year. Details of how this
was calculated are set out below.
Benefits – corresponds to the taxable value of benefits received during the relevant financial year and principally
includes life assurance and permanent health insurance.
Share-based payment – corresponds to the amount charged against current financial year earnings for equity
awards to the Executive Directors in the current or previous financial year.
Retirement Contributions – corresponds to the amount contributed to a defined contribution retirement plan. The
Executive Directors received a retirement plan contribution of between 4% and 8% of salary as detailed earlier in
this report.
35
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018 (continued)
2018 Annual bonus
The 2018 annual bonus performance measures were selected to reflect accesso’s annual and long-term objectives and reflect financial
and strategic priorities, as appropriate. Performance targets are set to be stretching but achievable, taking into account a range of
reference points including financial performance versus budget and achievement of certain strategic milestones.
In respect of the year ended 31 December 2018, the Remuneration Committee reviewed corporate performance and decided that no
bonuses should be paid to the Executive Directors.
Statement of Directors’ shareholding and scheme interests (audited information)
The share option and LTIP awards of the directors are set out below:
31 December
2017
Exercised in the
period
Granted in the
period
31
December
2018
Exercise
price
Date from
which
exercisable
Expiry
Date
100,000
40,000
(100,000)
(40,000)
-
-
-
-
156p
156p
10 Mar 12
10 Mar 12
9 Mar 21
9 Mar 21
29,818
42,127
59,731
-
32,027
42,463
69,653
45,395
47,805
82,960
-
-
(29,818)
-
-
-
(32,027)
(42,463)
-
(45,395)
-
-
-
-
-
-
-
15,308
-
-
-
-
-
-
20,416
32,028
-
42,127
59,731
15,308
-
-
69,653
-
47,805
82,960
20,416
32,028
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
8 July 2018
15 Apr 2018
14 Mar 2019
16 Feb 2021
8 July 2018
15 Apr 2018
14 Mar 2019
8 July 2018
15 Apr 2018
14 Mar 2019
16 Feb 2021
16 Feb 2021
-
-
-
-
-
-
-
-
-
-
-
-
Share Options
John Alder (1)
David Gammon (2)
LTIP (3)
John Alder
Steve Brown
Tom Burnet
Paul Noland
(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
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’’).
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.
On 5 April 2018, Tom Burnet terminated his interest in 226,909 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.
36
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018 (continued)
Long-Term Incentive Plan (LTIP) Awards
There have been five 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.
Performance Conditions
Date of
Award
Vesting
Period
(months)
Period
stock to be
held
following
exercise
(months)
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
Septem
ber
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.
37
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018 (continued)
Long-Term Incentive Plan (LTIP) Awards (continued)
Performance Conditions
Date of
Award
Vesting
Period
(months)
Period
stock to be
held
following
exercise
(months)
16 Feb
2018
9 April
2018
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 3335 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 2919 pence.
An ASP between 2919 pence and 3335 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 2919 pence.
34
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 3462 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 3029 pence.
An ASP between 3029 pence and 3462 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 3029 pence.
Employee share ownership
Widespread share ownership has always been and remains an integral part of our culture. All of our employees contribute to the
achievement of our strategy and we believe that extending share ownership throughout the company enhances loyalty and
engagement. In keeping with this ethos, the Committee approved share awards to the vast majority of employees during 2018.
Payments for loss of office (audited information)
There were no payments for loss of office during the year.
Payments to past directors (audited information)
Following the resignation of Steve Brown on 9 April 2018, Steve Brown remained with the business as an employee until 31 December
2018 in order to facilitate an orderly handover of duties and as an advisor to Paul Noland and the accesso Board of directors. Steve
Brown was paid for his post director services at a salary of $84,000 per annum and retained his health insurance cover. No retirement
contributions were made.
38
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018 (continued)
Unaudited Section of the Remuneration Report
External appointments
Executive Directors may accept appointments outside the Company, with the prior approval of the Board. Any fees may be retained
by the Director, although this is at the discretion of the Board. Executive Directors hold external appointments for which they receive
a fee as follows:
Tom Burnet – Kainos Group plc, PCMS Group and Ballie Gifford
Fees for the Non-Executive Directors
A summary of current fees is shown below:
David Gammon
Andy Malpass
Karen Slatford
Basic fee (1)
$
58,960
58,960 Chair of the Audit Committee
67,000
Senior Independent Director, Chair of the Remuneration Committee
(1) Payable in GBP and converted at an average GBP/USD exchange rate of 1.34
Implementation of the Remuneration Policy for the year ended 31 December 2019
2018 Executive Directors’ base salary
The table below shows the salaries for the Executive Directors as at 1 January 2019 in comparison to base salary at 1 January 2018;
Tom Burnet (1)
Paul Noland (2)
John Alder
1 January 2018 or
date of appointment
$
411,174
360,000
335,178
1 January 2019
% change
$
411,174
360,000
344,395
0%
0%
2.8%
(1) Payable in GBP and converted at an average GBP/USD exchange rate of 1.34
(2) Appointed 9 April 2018
Implementation of Policy for 2019
Salaries for Executive Directors are reviewed each year taking into account the Remuneration Policy set out in this report. Increases
for John Alder was approved from 1 January 2019 as shown in the table above.
Annual bonus and LTIP performance measures are selected annually to reflect accesso’s annual and long-term objectives and reflect
financial and strategic priorities, as appropriate. Performance targets are set to be stretching and achievable, taking into account a
range of reference points including the strategic plan and broker forecasts, as well as the Group’s strategic priorities and the external
context.
In respect of the annual bonus, the following measures have been agreed:
Profit before tax;
Revenue;
Meeting the relevant 2019 targets in the Company’s long-term plan; and
Staff Retention, turnover calculated over a rolling 12-month period.
Each measure has a target. Achieving a maximum percentage of target will usually result in the maximum bonus being awarded under
the formula. Falling below the set targets will ordinarily result in no award being made in respect of that measure. The final
determination on bonus awards is however made by the Committee talking all available factors into account.
The Committee will set appropriate performance conditions for LTIP awards made to Executive Directors in 2019. These will be shown
in the 2019 report.
39
accesso Technology Group plc
Directors Remuneration Report
for the financial year ended 31 December 2018 (continued)
2019 Non-Executive Director remuneration
No increase to Non-Executive Director Fees had been determined at the time of this report. If any increases are determined during
2019 they will be disclosed in the 2019 report.
Karen Slatford
Chair of the Remuneration Committee
26 March 2019
40
accesso Technology Group plc
Report of the directors
for the financial year ended 31 December 2018
The directors present their report with the financial statements of the company and the Group for the financial year ended 31
December 2018.
Dividends
No dividends will be proposed for the financial year ended 31 December 2018 (31 December 2017: none).
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 2018
the Group invested $21.1m into research and development (year ended 31 December 2017: $12.4m).
Directors
The directors during the period under review and to the date of approval of the financial statements were:
Tom Burnet, Non-Executive (Executive Chairman until 1 March 2019)
Bill Russell, Non-Executive Chairman (Appointed 1 March 2019)
John Alder, Executive
Steve Brown, Executive (Resigned 9 April 2018)
Paul Noland, Executive (Appointed 9 April 2018)
David Gammon, Non-Executive
Andy Malpass, Non-Executive (Appointed 26 June 2018)
Karen Slatford, Senior Independent Director
John Weston, Senior Independent Director (Resigned 26 June 2018)
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 2018 in the issued share capital of the company were as
follows:
Ordinary share capital £0.01 shares
Tom Burnet, Non-Executive (1)
John Alder, Executive
David Gammon, Non-Executive
Paul Noland, Executive
Andy Malpass, Non-Executive
Karen Slatford, Non-Executive
As at 31 December
2018
224,158
37,913
48,000
-
4,352
-
As at 1 January 2018
426,909
6,612
48,000
-
-
-
(1) Shares held by the employee benefit trust of the Company
Details of the directors' share options are disclosed within the Directors’ remuneration report.
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 7 to the financial statements.
41
accesso Technology Group plc
Report of the directors
for the financial year ended 31 December 2018 (continued)
Substantial shareholdings
As at 26 March 2019 the company had been notified that the following were interested in 3% or more of the ordinary share capital
of the company:
Shareholder
Canaccord Genuity Group Inc
Aberdeen Standard Investments
Liontrust Investment Partners LLC
Allianz Global Investors
BlackRock Investment Management*
The Capital Group Companies, Inc
*Holding as of 31 January 2019
Annual general meeting
Number of ordinary shares
% of Issued ordinary
share capital
2,706,545
2,686,807
1,365,223
1,340,982
1,301,689
1,279,385
9.90%
9.83%
5.00%
4.91%
4.76%
4.68%
The annual general meeting of the company will be held on Tuesday, 21st May 2019. The notice convening the meeting is enclosed
with these financial statements.
Branch registration
The company operates branches in Germany and Italy.
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 2019, 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.
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.
42
accesso Technology Group plc
Report of the directors (continued)
for the financial year ended 31 December 2018
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.
Other Information
An indication of likely future developments in the business and particulars of significant events which have occurred since the end of
the financial year have been included in the Strategic Report on page 25.
On behalf of the Board
John Alder
Chief Financial Officer
27 March 2019
43
accesso Technology Group plc
Corporate Governance report
for the financial year ended 31 December 2018
The Board of Directors (the ‘Board’) is committed to achieving high standards of corporate governance within the Company and its
subsidiaries, which it seeks to demonstrate by adopting and being fully compliant with the principles of the Quoted Companies
Alliance’s Corporate Governance Code (the ‘QCA Code’). The Board has chosen to adopt the QCA Code as it considers it is relevant
and appropriate for the Company as the ten principles of the QCA Code focus on ‘pursuit of medium to long-term value for
shareholders without stifling the entrepreneurial spirit in which the Company was created.’
accesso adheres to a high standard of ethics, values and corporate social responsibility and these principles underpin our governance
procedures and the strategic and management decisions that we make. Accordingly, the Board ensures the Company has a strong
governance framework embedded within its culture and applies the principles of the QCA Code. The Board periodically reviews the
governance framework and, as the Company evolves, will make such improvements as considered necessary.
The Board is primarily responsible for the strategic direction of accesso and comprises the chairman, two executive directors and four
non- executive directors. The Board is satisfied that its overall composition has an appropriate level of independence.
Bill Russell
Non-Executive Chairman
27 March 2019
The Board
Board composition
The Board of directors comprises two executive directors, the chairman and four non-executive directors, three of whom are
independent. Full details of the directors are on pages 23 to 24.
During the year the Board appointed Paul Noland as chief executive officer following the resignation of Steve Brown. Andy Malpass
was appointed as a non-executive director and chair of the audit committee following John Weston’s retirement from the Board. Bill
Russell was appointed Non-Executive Chairman from 1 March 2019. All directors are subject to election by shareholders at their first
annual general meeting after their appointment to the Board and seek re-election at each annual general meeting thereafter.
Each of the directors brings a mix of skills and experience and knowledge, the balance of which enables the Board to discharge its
duties effectively. Upon joining the Board, directors receive an induction on various aspects of the Company. The directors receive
updates from the company secretary and other various external advisers on legal requirements and regulations, remuneration matters
and corporate governance best practice.
Three of the Non-Executive Directors are deemed by the Board to be independent. Tom Burnet, who was previously Chief Executive
Officer and Executive Chairman, was appointed to a Non-Executive Director role from 1 March 2019, following the appointment of Bill
Russell as Non-Executive Chairman. The Board acknowledges that Tom Burnet whilst not independent, brings a wealth of experience
and knowledge that he can continue to contribute to the Group and the overall composition of the Board has an appropriate level of
independent members appointed. He does not serve on either the audit or the remuneration committee.
The Board will continue to look to build further diversity into leadership and across the business recognising the value of building and
developing a diverse workforce at all levels. Succession planning is a continuous strategic process and the Board has continued over
the year to focus on both long-term and short succession both for board and senior management succession.
44
accesso Technology Group plc
Corporate Governance report (continued)
for the financial year ended 31 December 2018
The role of the Board
The Board is responsible for the overall leadership of the Company and setting the Company’s vision, purpose, values and standards.
It approves the Group’s strategic aims and objectives and the annual operating and capital expenditure budgets and ensures
maintenance of a sound system of internal control and risk management. There is a formal schedule of matters reserved for the Board.
The executive directors have day to day responsibility for the operational management of the Groups’ activities. The non-executive
directors are responsible for bringing independent and objective judgement to Board decisions. The chairman is responsible for
overseeing the running of the Board, ensuring that no individual or group dominates the Board’s decision making and ensuring the
non-executive directors are properly briefed on matters. The chief executive officer has responsibility for implementing the strategy
of the Board, alongside the chairman, and managing the day to day activity of the Group. The company secretary is responsible for
ensuring that Board procedures are followed, and applicable rules and regulations are complied with. All directors have access to the
company secretary and are permitted to obtain independent professional advice at the Company’s expense where they consider it
necessary for them to effectively discharge their duties.
The Board has established an Audit Committee and Remuneration Committee to assist the Board in fulfilling its responsibilities. Both
board committees have separate terms of reference, which along with the Board’s schedule of matters reserved are reviewed on a
regular basis. 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.
The Board has appointed Karen Slatford as the Senior Independent Director who regularly engages with investors on behalf of the
Company.
Board and Committee meetings 2018
The Company holds board meetings regularly throughout the year. Eleven scheduled board meetings were held during the year, as
well as three audit committee meetings and two remuneration committee meetings. Attendance by board members is shown below.
Number of meetings held
Board
Executive board members
Tom Burnet (Note 1)
John Alder
Steve Brown (Note 2)
Paul Noland (Note 3)
Non-executive board members
David Gammon
Andy Malpass (Note 4)
Karen Slatford
John Weston (Note 5)
Notes to attendance table:
11
11
10
3
8
10
6
11
4
Audit
Committee
3
-
-
-
-
3
2
3
-
Remuneration
Committee
2
-
-
-
-
2
-
2
-
(1) Tom Burnet held the position of Executive Chairman during the year. He was appointed a Non-Executive Director from 1
March 2019. Bill Russell was appointed to the Board from 1 March 2019 and was therefore not eligible to attend meetings
during 2018.
(2) Steve Brown resigned from the Board with effect from 9 April 2018.
(3) Paul Noland was appointed to the Board with effect from 9 April 2018 and was eligible to attend 8 board meetings.
(4) Andy Malpass was appointed to the Board with effect from 26 June 2018 and was eligible to attend 6 board meetings and 2
audit committee meetings.
(5) John Weston retired from the Board with effect from 26 June 2018.
45
accesso Technology Group plc
Corporate Governance report (continued)
for the financial year ended 31 December 2018
Board and Committee meetings 2018 (continued)
In the event that Board approval is required between Board meetings, Board members are emailed the details, including supporting
information in order to make a decision. The decision of each Board member is communicated and recorded at the following Board
meeting. Board members are aware of the time commitment required when joining the Board.
The Board agenda for each meeting is collated by the chairman in conjunction with the company secretary. The agenda ensures that
adequate time is spent on operational and financial issues as well as strategic matters. During the course of the year, the topics subject
to Board discussion at formal scheduled board meetings included:
Strategic plan and annual forecast and budget
Financial performance and budget
Business operations and project updates
Succession planning
Acquisitions and group structure changes
Share structure and capital
Market and competitor reports
Risk and internal controls
Approval of annual and half year reports
Investor engagement
Reports from the audit and remuneration committees
Detailed proposal papers, management reports, a risk register, progress on key initiatives and routine matters such as financial reports
and a statement on current trading are produced in advance of meetings to enable proper consideration and debate of matters by the
Board in its meetings. Major strategic initiatives involving significant cost or perceived risk are only undertaken following their full
evaluation by the Board. Matters of an operational nature are delegated to executive management. The Board also receives
management information on a regular basis between formal meetings.
The Chairman, the CEO and CFO are invited to attend the Audit and Remuneration Committee meetings if appropriate. Minutes of all
board and committee meetings are recorded by the Company Secretary.
Audit Committee
The audit committee is chaired by Andy Malpass and both David Gammon and Karen Slatford are members. Andy Malpass became
chair of the audit committee when joining the Board with effect from June 2018. David Gammon stepped down from the chair’s
position but remained a member of the committee.
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 responsible for monitoring and reviewing the financial reporting of the Group from information provided by the
management and the auditor. As part of this it reviews both the financial information and the narrative reporting within the externally
published announcements and company reports. It also considers the objectivity, independence and cost effectiveness of the external
auditor. The committee keeps under review the effectiveness of the Group’s system of internal control on behalf of the Board. As
part of this role it reviews the Group’s controls and procedures for the evaluation, monitoring and management of risks, advises the
Board on the Group’s risk strategy. The executive directors are closely involved with the management and review of business
operations.
The committee considers the objectivity, independence and cost effectiveness of the external auditor, taking into account the views
of management. Non-audit/tax advisory services are benchmarked by management to ensure value for money, auditor objectivity
and independence of advice.
During the year the committee worked with the group auditors, KPMG on the findings of the 2017 audit as well as reviewing the
company’s full year and half year results on behalf of the Board. It considered significant accounting policies, ensured compliance with
accounting standards and considered reports from the CFO and external auditor on accounting topics of a judgemental nature requiring
attention. Several members of the Committee over the year, had separate discussions with the auditor without management being
present on the adequacy of controls and any judgemental areas, as well as feedback on the 2017 audit.
The audit committee’s recommendation is that KPMG LLP be appointed as the company’s auditor and an appropriate resolution be
put to the shareholders at this year’s annual general meeting.
46
accesso Technology Group plc
Corporate Governance report (continued)
for the financial year ended 31 December 2018
Remuneration Committee
The full Remuneration Committee report is on pages 28 to 40 which includes full details of the composition and terms of reference of
the committee.
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 and the company holds capital market days as appropriate. 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 2019 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.
Board performance evaluation
The Board commenced a formal review of its own performance, the performance of the Boards committees and of the chairman at
the start of 2019. The review was conducted internally by the company secretary and consisted of written responses to a standard
questionnaire. Views and recommendations were consolidated into a report which is due to be presented to the Board. It is intended
that issues raised by the evaluation exercise will be used to improve the effectiveness of the Board and to introduce improvements to
Board processes.
47
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 Group and parent Company 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 the
AIM rules of the London Stock Exchange they are required to prepare the Group financial statements in accordance with
International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law and
they have elected to prepare the parent Company financial statements on the same basis.
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.
Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report and a Directors’ Report that
complies with that law and those regulations.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s
website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions.
On behalf of the Board
John Alder
Chief Financial Officer
27 March 2019
48
53 accesso Technology Group plc
Consolidated statement of comprehensive income
for the financial year ended 31 December 2018
Revenue
Cost of sales
Gross profit
Administrative expenses (including credit of nil during 2018 (2017: $3,228k)
related to reversal of Ingresso earn-out liability – see Note 21)
Operating profit
Finance expense
Finance income
Profit before tax
Income tax (expense)/ benefit
Profit for the period
Other comprehensive income
Notes
2018
$000
2017
$000
9
118,747
133,429
(30,543)
(59,984)
88,204
73,445
(81,937)
(64,204)
6,267
9,241
(1,127)
(2,099)
12
12
37
5,177
13
(1,887)
3,290
24
7,166
2,735
9,901
Items that will be reclassified to income statement
Exchange differences on translating foreign operations
Total comprehensive income
(2,291)
166
999
10,067
All profit and comprehensive income is attributable to the owners of the parent
Earnings per share expressed in cents per share:
Basic
Diluted (2017 restated – see note 15)
15
15
12.23
11.74
40.83
38.02
All activities of the company are classified as continuing
The accompanying notes on pages 61 to 102 form part of these consolidated financial statements
54
accesso Technology Group plc
Consolidated statement of financial position
as at 31 December 2018
Registered Number: 03959429
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Contract assets
Deferred tax assets
Current assets
Inventories
Contract assets
Trade and other receivables
Income tax receivable
Cash and cash equivalents
Liabilities
Current liabilities
Trade and other payables
Finance lease liabilities
Contract liabilities
Income tax payable
Net current assets / (liabilities)
Non-current liabilities
Deferred tax liabilities
Contract liabilities
Other non-current liabilities
Borrowings
Total liabilities
Net assets
Shareholders' equity
Called up share capital
Share premium
Own shares held in trust
Retained earnings
Merger relief reserve
Translation reserve
Total shareholders’ equity
31 December
2018
$000
31 December
2017
$000
Notes
16
17
9
13
19
9
20
21
9
13
9
21
22
23
197,332
3,723
5,141
5,346
211,542
1,083
3,337
18,833
1,961
20,704
45,918
28,856
-
7,093
1,440
37,389
198,298
3,400
-
8,937
210,635
506
-
19,761
-
28,668
48,935
49,874
9
-
613
50,496
8,529
(1,561)
15,435
2,412
543
20,224
38,614
76,003
14,629
-
3,024
16,140
33,793
84,289
181,457
175,281
421
107,103
(665)
60,486
19,641
(5,529)
411
105,207
(1,163)
54,273
19,641
(3,088)
181,457
175,281
The financial statements were approved by the Board of directors on 27 March 2019 and were signed on its behalf by:
Paul Noland
Chief Executive Officer
The accompanying notes on pages 61 to 102 form part of these consolidated financial statements
55
accesso Technology Group plc
Company statement of financial position
as at 31 December 2018
Registered Number: 03959429
Assets
Non-current assets
Intangible assets
Investments in subsidiaries
Property, plant and equipment
Contract assets
Deferred tax asset
Current Assets
Inventories
Contract assets
Trade and other receivables
Income tax receivable
Cash and cash equivalents
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Income tax payable
Net current assets
Non-current liabilities
Deferred tax
Contract liabilities
Borrowings
Total liabilities
Net assets
Shareholders' equity
Called up share capital
Share premium
Retained earnings
Merger relief reserve
Translation reserve
Total shareholders' equity
31 December
2018
$000
Notes
31 December
2017
$000
16
18
17
9
13
19
9
20
21
9
13
9
22
23
6,396
69,112
1,128
3,723
-
80,359
339
1,186
99,401
8
3,311
104,245
4,055
282
1,346
5,683
98,562
327
616
20,224
21,167
26,850
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
157,754
147,046
421
107,103
45,903
19,641
(15,314)
157,754
411
105,207
31,944
19,641
(10,157)
147,046
The profit for the financial year for the Company was $6.743m (2017: profit of $4.44m).
The financial statements were approved by the Board of directors on 27 March 2019 and were signed on its behalf by:
Paul Noland
Chief Executive Officer
The accompanying notes on pages 61 to 102 form part of these consolidated financial statements
56
accesso Technology Group plc
Consolidated statement of cash flow
for the financial year ended 31 December 2018
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
Payment of deferred consideration to employees
Foreign exchange gain
Income tax expense / (benefit)
Increase in inventories
Decrease / (increase) in trade and other receivables
Increase in contract assets/ contract liabilities
(Decrease) / 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
Deferred consideration settlement
Capitalised internal development costs
Purchase of property, plant and equipment
Acquisition of other intangible assets
Interest received
Net cash used in investing activities
Cash flows from financing activities
Share issue
Interest paid
Payments to finance lease creditors
Cash paid to refinance
Proceeds from borrowings
Repayments of borrowings
Net cash generated from 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
2018
$000
2017
$000
3,290
9,901
17
16
16
16
10
12
12
17
13
16
21
16
17
22
1,519
11,740
8,067
38
2,245
1,127
(37)
-
(1,342)
(304)
1,887
28,230
(577)
928
666
(11,422)
17,825
(452)
17,373
-
(6,962)
(21,100)
(1,959)
(2)
37
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
(29,986)
(91,381)
1,906
(1,833)
(9)
-
15,530
(10,089)
5,505
(7,108)
28,668
(856)
20,704
77,112
(741)
(54)
(410)
31,376
(26,037)
81,246
22,738
5,866
64
28,668
The accompanying notes on pages 61 to 102 form part of these consolidated financial statements
57
accesso Technology Group plc
Company statement of cash flow
for the financial year ended 31 December 2018
Cash flows from operations
Profit for the period
Adjustments for:
Amortisation
Depreciation
Share-based payment
Finance expense
Finance income
Foreign exchange loss
Income tax (benefit) / expense
(Increase) / decrease in inventories
Decrease / (increase) in trade and other receivables
Decrease in contract assets/ liabilities
Increase / (decrease) in trade and other payables
Cash generated / (used in) from operations
Tax paid
Net cash inflow / (outflow) operating activities
Cash flows from investing activities
Investment in subsidiary
Payment of deferred acquisition consideration
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
Proceeds from borrowings
Repayments of borrowings
Net cash generated from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange (loss) / gain on cash and cash equivalents
Cash and cash equivalents at end of year
Notes
16
17
18,16
16
17
22
2018
$000
6,743
1,865
396
387
1,135
(4,787)
(39)
(1,180)
4,520
(60)
1,690
(898)
1,278
6,530
(619)
5,911
(50)
(8,635)
(1,279)
(277)
12
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
(10,229)
(20,683)
1,906
(1,502)
-
15,530
(10,089)
5,845
1,527
1,909
(125)
3,311
77,112
(741)
(410)
31,376
(26,037)
81,300
542
1,303
64
1,909
The accompanying notes on pages 61 to 102 form part of these consolidated financial statements.
58
accesso Technology Group plc
Consolidated statement of changes in equity
for the financial year ended 31 December 2018
Balance at 31 December
2017 as previously
reported
Adjustment in respect of
IFRS 15, net of tax
Adjusted balance at
1 January 2018
Share capital
$000
Share
premium
$000
Retained
earnings
$000
Merger relief
reserve
$000
Own shares
held in trust
$000
Translation
reserve
$000
Total
$000
411
105,207
54,273
19,641
(1,163)
(3,088)
175,281
-
-
398
-
-
(150)
248
411
105,207
54,671
19,641
(1,163)
(3,238)
175,529
Comprehensive income for the year
Profit for period
Other comprehensive
income
Exchange differences
on translating foreign
operations
Total comprehensive
income for the year
-
-
-
Contributions by and distributions to owners
Issue of share capital
Share-based payments
Equity-settled deferred
consideration
Reduction of shares held
in trust
Share option tax charge -
deferred
Share option tax charge -
current
Total contributions by
and distributions by
owners
10
-
-
-
-
-
10
-
-
-
1,896
-
-
-
-
-
3,290
-
3,290
-
2,245
2,824
(107)
(4,621)
2,184
1,896
2,525
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
498
-
-
498
-
3,290
(2,291)
(2,291)
-
-
-
-
-
-
-
(2,291)
999
1,906
2,245
2,824
391
(4,621)
2,184
4,929
Balance at 31 December
2018
Balance at 31 December
2016
Comprehensive income for the year
Profit for period
Other comprehensive
income
Exchange differences
on translating foreign
operations
Total comprehensive
income for the year
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
421
107,103
60,486
19,641
(665)
(5,529)
181,457
357
28,150
39,161
14,540
(1,163)
(3,254)
77,791
-
-
-
54
-
-
-
-
-
-
-
77,057
-
-
-
-
9,901
-
9,901
-
1,089
1,314
(2,213)
5,021
-
-
-
5,101
-
-
-
-
54
77,057
5,211
5,101
-
-
-
-
-
-
-
-
-
-
9,901
166
166
-
-
-
-
-
-
166
10,067
82,212
1,089
1,314
(2,213)
5,021
87,423
Balance at 31 December
2017
411
105,207
54,273
19,641
(1,163)
(3,088)
175,281
The accompanying notes on pages 61 to 102 form part of these consolidated financial statements.
59
accesso Technology Group plc
Company statement of changes in equity
for the financial year ended 31 December 2018
Share
capital
$000
Share
premium
$000
Retained
Earnings
$000
Merger
relief
reserve
$000
Translation
reserve
$000
Total
$000
411
105,207
31,944
19,641
(10,157)
147,046
-
-
3,113
-
(143)
2,970
411
105,207
35,057
19,641
(10,300)
150,016
Balance at 31 December
2017 as previously
reported
Adjustment in respect of
IFRS 15, net of tax
Adjusted balance at
1 January 2018
Comprehensive income for the year
Profit for period
Other comprehensive
income
Exchange differences
Total comprehensive
income for the year
-
-
-
Contributions by and distributions by owners
Issue of share capital
Share-based payments
Equity-settled deferred
consideration
Share option tax charge -
deferred
10
-
-
-
-
-
-
1,896
-
-
-
6,743
-
6,743
-
2,245
2,824
(966)
10
1,896
4,103
Total contributions by and
distributions by owners
Balance at 31 December
2018
Balance at 31 December
2016
-
-
-
-
-
-
-
-
-
6,743
(5,014)
(5,014)
(5,014)
1,729
-
-
-
-
-
1,906
2,245
2,824
(966)
6,009
421
107,103
45,903
19,641
(15,314)
157,754
357
28,150
24,803
14,540
(14,726)
53,124
Comprehensive income for the year
Profit for period
Other comprehensive
income
Exchange differences
Total comprehensive
income for the year
-
-
-
Contributions by and distributions by owners
Issue of share capital
Share-based payments
Equity-settled deferred
consideration
Share option tax credit
54
-
-
-
-
-
-
77,057
-
-
-
4,442
-
4,442
-
1,089
1,314
296
-
-
-
5,101
-
-
-
54
77,057
2,699
5,101
Total contributions by and
distributions by owners
Balance at 31 December
2017
-
4,442
4,569
4,569
-
-
-
-
-
4,569
9,011
82,212
1,089
1,314
296
84,911
411
105,207
31,944
19,641
(10,157)
147,046
The accompanying notes on pages 61 to 102 form part of these consolidated financial statements.
60
accesso Technology Group plc
Notes to the consolidated financial statements
for the financial year ended 31 December 2018
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,
licensing and operation of virtual queuing solutions and providing a personalised experience to customers within the
attractions and leisure industry. The eCommerce technologies are generally licensed to operators of venues, enabling the
online sale of tickets, guest management, and point-of-sale (“POS”) transactions. The virtual queuing solutions and
personalised experience platforms are installed by the Group at a venue, and managed and operated by the Group directly
or licensed to the operator for their operation.
2.
Basis of accounting
These consolidated financial statements have been prepared in accordance with IFRS. They were authorised for issue by
the Company’s board of directors on 27 March 2019.
The consolidated financial statements have been prepared on the historical cost basis except for contingent consideration
and acquired intangible assets arising on business combinations, which are measured at fair value.
Details of the Group’s accounting policies are included in Notes 3 and 4.
This is the first set of the Group’s annual financial statements in which IFRS 15 Revenue from Contracts with Customers and
IFRS 9 Financial Instruments have been applied. Changes to significant accounting policies are described in Note 3.
3.
Changes to significant accounting policies
The Group has initially adopted IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments from 1
January 2018, details of the impact are set out below. The adoption of IFRS 9 did not have a material impact on the company.
A number of other new standards are also effective from 1 January 2018 but they do not have a material effect on the
Group’s financial statements.
Revenue from contracts with customers
Due to the transition method chosen by the Group in applying IFRS 15, comparative information throughout these financial
statements has not been restated to reflect the requirements of the new standard.
IFRS 15 provides a single, principles based five step model to be applied to all sales contracts as outlined below. It is based
on the transfer of control of goods and services to customers and replaces the separate models for goods and services.
Identify the contract(s) with a customer
Identify the performance obligations in the contract
1.
2.
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognise revenue when or as the entity satisfies its performance obligations.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be measured reliably. The following table provides information about the nature and timing of the satisfaction of
performance obligations in contracts with customers, including significant payment terms, and the related revenue
recognition policies.
61
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Changes to significant accounting policies (continued)
Revenue from contracts with customers (continued)
Type of
product/service
a. Point-of-sale
(POS) licenses
support
and
revenue
Nature of the performance
obligations and significant
payment terms
Customers obtain control of the
POS license once it is installed on
their hardware for terms between
one and three years. They have
access to ongoing support which is
typically for a twelve-month period,
this support is not necessary for the
functionality of the licence, support
revenue
is therefore a distinct
performance obligation from the
licence performance obligation.
With agreements longer than one
year, invoices are generated either
quarterly or annually, usually
payable within thirty days.
Although payments are made over
the term of the agreement, the
the
is binding
agreement
negotiated
total
term.
transaction price is payable over the
term of the agreement via the
annual or quarterly instalments.
The
for
b. Software
licenses and
the
related
maintenance
and
support
revenue
software
Certain
licenses are
installed on a customer’s hardware
in a fully functional state together
with support and maintenance for a
twelve-month term. The software
the
licence does not
to
and
maintenance
operate, providing the customer
with control of the licence for a
twelve-month
and
representing
separate
performance obligation.
require
support
term
a
the maintenance
Whilst
and
support revenue must be paid
annually to be granted a licence for
the
the next
is
performance
considered distinct
the
licence.
twelve-months,
obligation
from
Contract terms are typically either
three years or perpetual whereby
on each anniversary of the contract
the customer is required to pay the
annual support and maintenance to
be granted the annual software
licence at a 100% discount from the
selling price. This option to renew is
considered a material right under
IFRS 15 and represents a separate
performance obligation.
Nature of change in accounting policy
Under IAS 18 Revenue, the license revenue was recognised equally over
the term of the agreement, reflecting the pattern of availability to the
customer.
IFRS 15 considers these licenses to be recognised at a point in time which
is determined to be when the customer has been provided the software.
These licences provide the customer with the right of use of the POS
software as it exists, it is at the customers discretion to accept any
updates to the software, it is fully functional from the date it is provided
to the customer and considered a distinct performance obligation.
Support revenue is carved out of the total consideration using an estimate
that best reflects its stand-alone selling price and is continued to be
recognised rateably as the customer receives the benefit of the support.
Accordingly, the license revenue is recognised sooner under IFRS 15, with
support revenue, equal to a percentage of the license fee, continuing to
be recognised over the term of the agreement.
The impact of these changes on items other than revenue is an increase
in net assets in the form of a contract asset.
Under IAS 18, these software licenses were recognised when accepted by
the client, as there was a non-refundable right to payment.
IFRS 15 considers right of use licenses to be recognised at a point in time
which is determined to be when the customer has been provided with a
functional software licence.
The maintenance and support revenue is determined using an estimate
that best reflects its stand-alone selling price and is continued to be
recognised rateably as the customer receives the benefit of the
maintenance and support.
The option to renew each year’s licence at a full discount by paying the
annual maintenance and support is deferred and recognised at a future
point in time when the customer renews. The amount that is deferred is
dependent on the term of the contract. For example: on the inception of
a three-year contract, two thirds of the licence fee consideration would
be deferred and released equally on the first and second anniversary
when the customer renews their maintenance and support. Perpetual
licences are recognised in the same manner, with the exception being that
the contract term is estimated to be five years. As such, the renewal
discounts are deferred and spread over the remaining four years at each
point the customer renews their maintenance and support.
Accordingly, for these type of licenses the phasing of revenue has changed
significantly with a smaller portion of the licence revenue being
recognised on inception of a new contract, a renewal right to a discounted
licence fee is deferred for between three and five years which is held as a
contract liability, being recognised on each anniversary of the contract
when a customer renews their maintenance and support.
62
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Changes to significant accounting policies (continued)
Revenue from contracts with customers (continued)
Type of
product/service
Nature of the performance obligations and
significant payment terms
Nature of change in accounting policy
c. Virtual
queuing
system
Virtual queuing systems are installed at a client’s
location, and revenue is recognised when the
park guest uses the service. The Group’s
performance obligation is either to provide a
license to and maintain a system in the park or
operate the system within the park.
d. Ticketing and
eCommerce
revenue
Revenue is recognised at the time the ticket is
sold or the transaction takes place. Invoices are
issued monthly and generally payable within
thirty days.
e. Professional
services
f. Hardware
sales
is
services
revenue
Professional
typically
providing customised software development and
in general is agreed with the customer and billed
at each month end. Certain contracts span longer
time periods whereby the Group carry out
customisation and deliver software releases to
customers at predetermined milestones, in these
situations the Group has enforceable rights to
revenue
in the event of cancellation and
therefore is able to recognise the revenue over
time using the
(hours/total
budgeted hours) which best depicts the group’s
performance of transferring control.
On certain contracts customers request that the
group procure hardware on their behalf which the
to be a distinct
group has determined
performance obligation.
is
This
recognised at the point the customer obtains
control of the hardware which is considered to be
the point of delivery when legal title passes.
input method
revenue
Under IAS 18, certain queuing contracts were recognised on
a gross basis where management determined the company
was acting the principal in the agreement.
IFRS 15 has different criteria for determining who is the
principal in an agreement, focusing on control of the goods
or services. Management have determined the Group is
acting as the agent in all queuing contracts, and therefore
only recognises its portion of the sale as revenue, rather
than the full amount of the guest payment.
There is no impact on profit of the Group due to this change,
the Group’s revenue continues to be driven by park
attendance.
IFRS 15 did not have a significant impact on the Group’s
accounting policies.
IFRS 15 did not have a significant impact on the Group’s
revenue recognition.
IFRS 15 did not have a significant impact on the Group’s
revenue recognition.
Contract assets and contract liabilities
Upon implementation of IFRS 15 the group now separately recognises contract assets and contract liabilities. Where these
assets or liabilities mature in periods beyond 12 months of the balance sheet date they are recognised within non-current
assets or non-current liabilities as appropriate.
Contract assets represent licence fees which have been recognised at a point in time but where the consideration is
contractually payable over time, professional service revenue whereby control has been passed to the customer and
deferred contract commissions incurred in obtaining a contract which are recognised in line with the recognition of the
revenue. Contract assets for point in time licence fees and unbilled professional service revenue represent financial assets
and are considered for impairment on an expected credit loss model, these assets have historically had immaterial levels of
bad debt and are with credit worthy customers, and consequently the group has not recognised any impairment provision
against them.
63
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Changes to significant accounting policies (continued)
Revenue from contracts with customers (continued)
Contract assets and contract liabilities (continued)
Contract liabilities represent discounted renewal options on licence arrangements whereby a customer has the right to
renew their licence at a full discount subject to the payment of annual support and or maintenance fees on each anniversary
of the contract. Contract liabilities are recognised as income when a customer exercises their renewal right on each
anniversary of the contract and pays their annual maintenance and support. In the situation of a customer terminating their
contract all unexercised deferred renewal rights would be recognised as income, representing a lapse of the renewal right
options. The licence fees related to these contract liabilities are non-refundable.
The following table summarises the impact, net of tax, of transition to IFRS 15 on retained earnings at 1 January 2018.
Retained Earnings
License fees recognised up front at point in time
License fees recognised on customer renewals in future periods at point in time
Deferred contract commissions
Related tax
Impact at 1 January 2018
Impact of adopting IFRS
15 at 1 January 2018
$000
4,522
(4,428)
267
37
398
If reporting under IAS 18 for the period, revenue would have been $29.4m higher, and operating profit $3.3m lower. There
was no material impact on the Group’s statement of cash flows for the year ended 31 December 2018.
Impact on the consolidated statement of financial position – all figures in $000s
As at 31 December 2018
As reported
Adjustments
Amounts without
adoption of IFRS 15
Assets
Non-current assets
Contract assets – non-current
Total non-current assets
Trade and other receivables
Contract assets
Total Current assets
Total assets
Liabilities
Non-current liabilities
Contract liabilities – non-current
Total non-current liabilities
Trade and other payables
Contract liabilities
Total current liabilities
Total liabilities
Total net assets
Equity
Retained earnings
Other equity
Total equity
-
(5,141)
(5,141)
1,531
(3,337)
(1,806)
(6,947)
-
(2,412)
(2,412)
4,648
(7,093)
(2,445)
(4,857)
(2,090)
(2,703)
613
(2,090)
206,401
-
206,401
44,112
-
44,112
250,513
36,202
-
36,202
34,944
-
34,944
71,146
179,367
57,783
121,584
179,367
206,401
5,141
211,542
42,581
3,337
45,918
257,460
36,202
2,412
38,614
30,296
7,093
37,389
76,003
181,457
60,486
120,971
181,457
64
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Changes to significant accounting policies (continued)
Revenue from contracts with customers (continued)
Impact on the consolidated statement of comprehensive income – all figures in $’000s
For the year ended 31 December 2018
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Profit before tax
Income tax expense
Profit for the period
Total comprehensive income for the period
As reported
118,747
(30,543)
88,204
(81,937)
6,267
5,177
(1,887)
3,290
999
Adjustments
29,445
(32,725)
(3,280)
(67)
(3,347)
(3,347)
828
(2,519)
(2,519)
Amounts without
adoption of IFRS 15
148,192
(63,268)
84,924
(82,004)
2,920
1,830
(1,059)
771
(1,520)
4.
Significant accounting policies
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 (see Note 3).
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 2018 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 18.
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.
65
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Significant accounting policies (continued)
Foreign operations
The assets and liabilities of foreign operations, including goodwill, are translated into USD at the exchange rates at the
reporting date. The income and expenses of foreign operations are translated into USD at the rates ruling when the
transactions occur, or appropriate averages.
Foreign currency differences on translating the opening net assets at an opening rate and the results of operations at actual
rates are recognised in other comprehensive income and accumulated in the translation reserve. Retranslation differences
recognised in other comprehensive income will be reclassified to profit or loss in the event of a disposal of the business, or
the Group no longer has control or significant influence.
Revenue from contracts with customers
Information about the Group’s accounting policies relating to contracts with customers and the effect of initially applying
IFRS 15 is described in Note 3.
Interest expense recognition
Expense is recognised as interest accrues, using the effective interest method, to the net carrying amount of the financial
liability.
Employee benefits
Share-based payment arrangements
The Group issues equity-settled share-based payments to full-time employees. Equity-settled share-based payments are
measured at the fair value at the date of grant, with the expense recognised over the vesting period, with a corresponding
increase in equity. The amount recognised as an expense is adjusted to reflect the Group's estimate of shares that will
eventually vest, such that the amount recognised is based on the number of awards that meet the service and non-market
performance conditions at the vesting date.
The fair value of Enterprise Management Incentive (EMI) and unapproved share options is measured by use of a Black-
Scholes model, and share options issued under the Long-Term Incentive Plan (LTIP) are measured using the Monte Carlo
method, due to the market-based conditions upon which vesting is dependent. The expected life used in the model has
been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and
behavioural considerations.
The LTIP awards contain market-based vesting conditions. Market vesting conditions are factored into the fair value of the
options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or
where a non-vesting condition is not satisfied.
Pension costs
Contributions to the Group's defined contribution pension schemes are charged to the Consolidated statement of
comprehensive income in the period in which they become due.
Property, plant and equipment
Items of property, plant and equipment are stated at cost of acquisition or production cost less accumulated depreciation
and impairment losses.
Depreciation is charged so as to write off the cost of assets, less residual value, over their estimated useful lives, using the
straight-line method, on the following bases:
Plant, machinery, and office equipment
Installed systems
Furniture and fixtures
Leasehold Improvements
20 - 33.3%
25 - 33.3%, or life of contract
20%
Shorter of useful life of the asset or time remaining within the lease contract
66
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Significant accounting policies (continued)
Inventories
The Group’s inventories consist of parts used in the manufacture and maintenance of its virtual queuing product, along with
peripheral items that enable the product to function within a park.
Inventories are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow-
moving items. Inventories are calculated on a first in, first out basis.
Park installations are valued on the basis of the cost of inventory items and labour plus attributable overheads. Net realisable
value is based on estimated selling price less additional costs to completion and disposal.
Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the Consolidated and
Company statements of financial position differs from its tax base, except for differences arising on:
the initial recognition of goodwill;
the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit; and
investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal
of the difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available
against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax liabilities / (assets) are settled / (recovered).
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
the same taxable Group company; or
different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the
assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax
assets or liabilities are expected to be settled or recovered.
Current income tax
The tax expense or benefit for the period comprises current and deferred tax. Tax is recognised in the income statement,
except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the
tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance
sheet date in the countries where the company and its subsidiaries operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject
to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities. See note 13 for further discussion on provisions related to tax positions.
Goodwill
Any excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities is recognised in the Consolidated Statement of Financial Position as goodwill and is not
amortised.
After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being
reviewed for impairment, at least annually and whenever events or changes in circumstances indicate that the carrying value
may be impaired.
Where the recoverable amount of the cash-generating unit is less than its carrying amount including goodwill, an impairment
loss is recognised in the Consolidated Statement of Profit or Loss.
67
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Significant accounting policies (continued)
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 16). 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
related to a research phase or to a development phase. Development expenditure not satisfying the above criteria and
expenditure on the research phase of internal projects is recognised in the Consolidated income statement as incurred.
Development expenditure is capitalised and amortised within administrative expenses on a straight-line basis over its useful
economic life, which is considered to be up to a maximum of 5 years from the date the intangible asset goes into use. The
amortisation expense is included within administrative expenses in the Consolidated income statement.
All advanced research phase expenditure is charged to the income statement. For development expenditure, this is
capitalised as an internally generated intangible asset, only if it meets the criteria noted above.
The Group has contractual commitments for development costs of $nil (2017: $nil).
Intellectual property rights and patents
Intellectual property rights comprise assets acquired, being external costs, relating to know how, patents, and licences.
These assets have been capitalised at the fair value of the assets acquired and are amortised within administrative expenses
on a straight-line basis over their estimated useful economic life of 5 to 7 years.
Fair value of contingent consideration
Contingent consideration payable in cash in connection with acquisitions is measured at its fair value as of the reporting date
and classified as a financial liability with subsequent re-measurement through profit and loss.
Equity settled contingent consideration that results in either a fixed number of equity instruments or no issue of equity
where the employment condition is not met is treated as equity settled. Equity settled contingent consideration is fair valued
at the acquisition date, it is not re-measured at each reporting date and its subsequent settlement is accounted for within
equity.
Where cash or equity consideration is contingent on the continued employment of the sellers the fair value of the expense
is recognised as a remuneration expense in the statement of comprehensive income over the deferral period, where the
employment condition does not apply and the consideration is in respect of a business combination it is included within cost
of investment.
68
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Significant accounting policies (continued)
Financial assets
The Group classifies all its financial assets into one of the following categories, depending on the purpose for which the asset
was acquired. The Group's accounting policy for each category is as follows:
Trade and loan receivables: Trade receivables are initially recognised by the Group and carried at original invoice
amount less an allowance for any uncollectible or impaired amounts. An estimate for doubtful debts is made when
collection of the full amount is no longer probable. Debts are written off when they are identified as being
uncollectible. Contract assets and other receivables are recognised at fair value. Loan receivables are non-derivative
financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally
through the provision of goods and services to customers (trade receivables), but also incorporate other types of
contractual monetary asset. Impairment of a financial asset is recognised if there is objective evidence that the balance
will not be recovered.
Cash and cash equivalents in the statement of financial position comprise cash at bank, cash in hand and short-term
deposits with an original maturity of three months or less. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a component of cash and cash equivalents for the
purposes of the consolidated statement of cash flow.
Financial liabilities
The Group treats its financial liabilities in accordance with the following accounting policies:
•
Trade payables and other short-term monetary liabilities are recognised at fair value and subsequently at amortised
cost.
Bank borrowings and finance leases are initially recognised at fair value net of any transaction costs directly
attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised
cost using the effective interest rate method, which ensures that any interest expense over the period to repayment
is at a constant rate on the balance of the liability carried in the statement of financial position. "Interest expense" in
this context includes initial transaction costs and premiums payable on redemption, as well as any interest payable
while the liability is outstanding.
The group had a contingent consideration liability relating to the acquisition of Ingresso Group Limited as at 31
December 2017. This was included in cost at its acquisition date fair value and is classified as a financial liability, re-
measured at fair value subsequently through profit or loss.
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.
New standards and interpretations not yet adopted
A number of new standards, amendments to standards, and interpretations are either not effective for 2018 or not relevant
to the group, and therefore have not been applied in preparing these accounts. The effective dates shown are for periods
commencing on the date quoted.
IFRS 16 Leases
IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a
Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a
Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires
lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS
17. The standard includes two recognition exemptions for lessees – leases of ‘low-value’ assets (eg personal computers) and
short-term leases (ie leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will
recognise a liability to make lease payments (ie the lease liability) and an asset representing the right to use the underlying
asset during the lease term (ie the right-of-use asset). Lessees will be required to separately recognise the interest expense
on the lease liability and the depreciation expense on the right-of-use asset.
69
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Significant accounting policies (continued)
Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (eg a change in the lease
term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The
lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use
asset.
IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an
entity applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective
approach. The standard’s transition provisions permit certain reliefs.
The Group has entered into a number of long-term leases in respect of land and buildings. The Group has assessed the leases
under IFRS 16 and expects an impact as the right of use assets and lease liabilities will come onto the consolidated statement
of financial position for the first time in respect of its current operating leases. The Group expects that IFRS 16 will have a
material impact on the financial statements of the Group, however the Group are currently assessing the impact. To see the
volume of operating leases please see Note 29 to the Group’s consolidated financial statements for the year ended 31 March
2018 for more information.
The Group plans to apply the practical expedient to grandfather the definition of a lease on transition. This means that it will
apply IFRS 16 to all contracts entered into before 1 January 2019 and identified as leases in accordance with IAS 17 and IFRIC
4.
IFRIC 23
IFRIC 23, “Uncertainty over Income Tax Treatments” clarifies how to apply the recognition and measurement requirements
in IAS 12 when there is uncertainty over income tax treatments. In such a circumstance, an entity shall recognise and measure
its current or deferred tax asset or liability applying the requirements in IAS 12 based on taxable profit (tax loss), tax bases,
unused tax losses, unused tax credits and tax rates determined applying this interpretation. This interpretation is effective
for annual periods beginning on or after 1 January 2019, subject to EU endorsement.
Annual improvements 2017
Annual Improvements 2017 includes amendments to IFRS 3, “Business combinations”, IFRS 11, “Joint arrangements” and IAS
12, “Income taxes” applies for periods beginning on or after 1 January 2019, subject to EU endorsement.
Amendments to References to the Conceptual Framework in IFRS Standards –
Amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and
SIC-32 to update those pronouncements with regard to the revised Conceptual Framework, effective 1 January 2020, subject
to EU endorsement.
The impact of IFRS 16 is discussed above. The impact of the other standards, amendments and interpretations listed above
are not expected to have a material impact on the consolidated financial statements.
5.
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. The Group’s choice of presentation currency reflects
its significant dealings in that currency.
6.
Critical judgments and key sources of estimation uncertainty
In preparing 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.
70
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Critical judgments 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 4 for details on the Group’s capitalisation and amortisation policies, and Intangible
Assets, note 16, for the carrying value of capitalised development costs.
Agent versus principal
Management have determined that under IFRS 15 the Group is acting as the agent in all queuing contracts, and therefore
only recognises its portion of the sale as revenue, rather than the full amount of the guest payment. When analysing whether
the Group is acting as a principal or agent in a given arrangement, this requires management to consider several judgemental
factors.
The main factor is whether the Group has control over the goods and services to be provided within the contract, with
indicators of control including whether the entity is primarily responsible for fulfilling the promise to the customer, the
entity has inventory risk, and the entity has discretion over pricing. These factors are different than those under IAS 18
Revenue, which focused more on the risks and rewards of the generating the revenue.
Selection of reporting segments and aggregation of accesso LoQueue and The Experience Engine (‘TE2’) reporting segments
During 2018 management have organised their business into three operating segments and now monitor goodwill at this
level, comprising Ticketing and Distribution, accesso LoQueue and The Experience Engine (‘TE2’). This represents a change
from 2017 whereby goodwill was monitored at a group level.
Judgement is applied in the assessment of whether the operating segments of accesso LoQueue and TE2 meet the
aggregation criteria as set out in IFRS 8 ‘Operating Segments’ and therefore can be presented as a single reportable segment
within Guest Experience. This assessment has been made following consideration of economic characterises, nature of the
products and services, the type of customers and nature of businesses. Principally the products of each segment are directly
targeted at improving a guest’s experience of an attraction or entertainment venue, whilst also providing cross-selling
opportunities and increased revenues to the venues, both of which are heavily underpinned by a focus on product
development investment activities.
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in material adjustments
in the following year are:
Goodwill testing and goodwill allocated to cash generating units
The goodwill arising on the respective ticketing entities enhances the value of only the Ticketing and Distribution group of
CGUs and has therefore been monitored at a Ticketing and Distribution segment level for impairment testing. accesso
LoQueue has no underlying goodwill for consideration of reallocation. $52.4m of goodwill arising on the acquisition of TE2
was identified at the acquisition date as being expected to drive synergies in Ticketing and Distribution and accesso LoQueue,
this goodwill has been allocated to Ticketing and Distribution and accesso LoQueue respectively ($28.5m and $6.5m) in line
with the apportionment set out at acquisition leaving $17.4m within TE2’s CGU. This allocation has been based on a relative
proportion of the EBITDA synergies of the respective CGUs which is considered the most accurate reflection of where the
value of the synergies of the goodwill will be driven.
71
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
7.
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 20 and
21, 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 2018
Group
Financial liabilities
Bank loan
Total
Company
Financial liabilities
Bank loan
Total
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
21
22
21
22
23,229
-
23,229
2,258
-
2,258
Less than 6
months
$000
Note
21
22
21
22
18,123
9
-
18,132
583
-
583
543
-
543
-
-
-
Between 6
months and
1 year
$000
1,240
-
1,240
-
-
-
72
-
20,466
20,466
-
20,466
20,466
-
-
-
-
-
-
Between 1
and 5 years
$000
Over 5
Years
$000
3,024
-
16,462
19,486
-
16,462
16,462
-
-
-
-
-
-
-
Total
$000
23,772
20,466
44,238
2,258
20,466
22,724
Total
$000
22,387
9
16,462
38,858
583
16,462
17,045
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Financial risk management (continued)
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:
Fixed
rate
$000
Floating
rate
$000
Non-interest
bearing
$000
Total assets
$000
Total
liabilities
$000
Note
31 December 2018
Group
Financial assets –
trade and other
receivables
Financial assets –
contract assets
Cash
Total
Bank loan
Total
Company
Financial assets –
trade and other
receivables
Financial assets –
contract assets
Cash
Total
Bank loan
Total
31 December 2017
Group
Financial assets
Cash
Total
Bank loan
Finance lease
Total
Company
Financial assets
Cash
Total
Bank loan
Total
20
9
22
20
9
22
Note
20
22
20
22
-
-
-
-
-
83,710
-
83,710
-
-
Fixed
rate
$000
-
-
-
(9)
(9)
79,819
-
79,819
-
4,271
4,271
20,466
20,466
-
-
-
20,466
20,466
Floating
rate
$000
-
-
-
(16,462)
-
(16,462)
-
-
-
-
-
(16,462)
(16,462)
73
16,559
8,143
16,433
41,135
-
-
15,206
4,909
3,311
23,426
-
-
16,559
8,143
20,704
45,406
-
-
98,9161
4,909
3,311
107,136
-
-
Non-interest
bearing
$000
Total assets
$000
17,141
28,668
45,809
-
-
-
90,773
1,909
92,682
17,141
28,668
45,809
-
-
-
10,954
1,909
12,863
-
-
-
-
-
20,466
20,466
-
-
-
20,466
20,466
Total
liabilities
$000
-
-
-
(16,462)
(9)
(16,471)
-
-
-
-
-
(16,462)
(16,462)
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Financial risk management (continued)
Credit risk exposure
Credit risk predominantly arises from trade receivables, contract assets, 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 – trade and other
receivables
Financial assets – contract assets
Cash
Estimated irrecoverable amounts
Note
20
9
28
20
Group
2018
$000
16,559
8,143
20,704
(236)
45,170
2017
$000
17,141
-
28,668
(222)
45,587
Company
2018
$000
98,916
4,909
3,311
-
107,136
2017
$000
90,773
-
1,909
-
92,682
The maximum exposure is the carrying amount as disclosed in trade and other receivables. The average credit period taken
by customers is 48 days (2017: 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 2018 and 31
December 2017, 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.
Up to 3 months
3 to 6 months
Capital risk management
Group
Company
2018
$000
3,659
559
4,218
2017
$000
10,173
612
10,785
2018
$000
661
438
1,099
2017
$000
644
59
703
The Group considers its capital to comprise its ordinary share capital, share premium, own shares held in trust, 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 22. 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.
74
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Financial risk management (continued)
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 2018 are (in ’000s):
$742 (2017: $714) denominated in US dollars
AUD$9 (2017: AUD$9) denominated in Australian dollars
€307 (2017: €85) denominated in euros
Kr1,654 (2017: Kr856) denominated in Danish krone
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 = 1.3359USD (2017: 1GBP = 1.2906USD). In light of the UK’s scheduled departure from the EU on 29 March 2019
the directors have considered the risk of greater volatility in sterling to USD to assess the potential impact on the Group’s
profitability, 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 $252,060 (4.87%). 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 $252,060 (4.87%).
Fair Value Measurement
The Group does not have any level 2 or 3 financial assets or liabilities that have unobservable inputs that require disclosure.
8.
Business and geographical segments
Segmental analysis
The Group’s operating segments under IFRS have been determined with reference to the financial information presented to
the Board of directors. The Board of the Group is considered the Chief Operating Decision Maker (“CODM”) as defined within
IFRS 8, as it sets the strategic goals for the Group and monitors its operational performance against this strategy.
The Board have revised its segmental disclosure during 2018 to align with its new organisational structure and how the
CODM now review and make decisions about resources to be allocated to the segments. During 2018 the ticketing group
was reorganised and is now headed by a President of Ticketing who is identified as the segment manager. The segment
manager maintains regular contact with the CODM to discuss operating activities, financial results, forecasts, or plans for the
ticketing segment as a whole. This change is reflective of the continued objective to merge and align the ticketing entities of
the group to leverage the synergies that exist in their solutions, technological capabilities and pooled expertise.
The Group’s Ticketing operating segment comprises the following solutions:
o
o
o
o
accesso Passport ticketing suite using our hosted proprietary technology offering to maximise up selling,
cross selling and selling greater volumes.
accesso Siriusware software solutions providing modules in ticketing & admissions, memberships,
reservations, resource scheduling, retail, food service, gift cards, kiosks and eCommerce.
The accesso ShoWare ticketing solution for box office, online, kiosk, mobile, call centre and social media
sales.
Ingresso operate a consolidated distribution platform which connects venues and distributors, opening
up a larger global channel for clients to sell their event, theatre and attraction tickets.
The Group’s virtual queuing solution (accesso LoQueue) and experience management platform (The Experience Engine ‘TE2’)
are headed by their respective Presidents who act as segment managers and discuss the operating activities, financial results,
forecasts and plans of their respective segments with the CODM. These two distinct operating segments share similar
economic characteristics, customers and markets; the products are heavily bespoke, technology and software intensive in
their delivery and are directly targeted at improving a guest’s experience of an attraction or entertainment venue, whilst
providing cross-selling opportunities and increased revenues to the venues. Management therefore conclude that they meet
the aggregation criteria.
75
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Business and geographical segments (continued)
The Group’s Guest Experience operating segment comprises the following aggregated segments:
o
o
accesso LoQueue providing leading edge virtual queuing solutions to take customers out of line, improve
guest experience and increase revenue for theme parks
The Experience Engine (“TE2”) experience management platform which delivers personalised real time
immersive customer experiences at the right time elevating the guest’s experience and loyalty to the
brand
The Group’s assets and liabilities are reviewed on a group basis and therefore segmental information is not provided for the
statements of financial position of the segments. The prior year segmental information has been restated to provide
comparability.
The CODM monitors the results of the operating segments prior to charges for interest, depreciation, tax, amortisation and
exceptional items. The Group has a significant amount of central unallocated costs which are not segment specific. These
costs have therefore been excluded from segment profitability and presented as a separate line below segment profit.
The following is an analysis of the Group’s revenue and results from the continuing operations by reportable segment which
represents revenue generated from external customers.
Ticketing
Guest Experience
Total revenue
Year ended 31 December 2018
2018
$000
78,550
40,197
2017
$000
63,393
70,036
118,747
133,429
Ticketing
Guest
Experience
$000
$000
Central
unallocated
costs
$000
Group
$000
Adjusted EBITDA (1)
30,805
19,256
(15,306)
34,755
Depreciation and amortisation (excluding acquired intangibles)
Acquisition expenses
Deferred and contingent payments
Amortisation related to acquired intangibles
Share-based payments
Finance income
Finance expense
Profit before tax
Year ended 31 December 2017
Ticketing
Guest
Experience
$000
$000
Central
unallocated
costs
$000
(9,624)
(1,703)
(3,176)
(11,740)
(2,245)
37
(1,127)
5,177
Group
$000
Adjusted EBITDA (1)
22,890
18,224
(16,510)
24,604
Depreciation and amortisation (excluding acquired intangibles)
Acquisition expenses
Deferred and contingent payments
Amortisation related to acquired intangibles
Profit recognised on reduction of earn-out liability
Share-based payments
Finance income
Finance expense
Profit before tax
76
(5,531)
(1,249)
(2,131)
(8,591)
3,228
(1,089)
24
(2,099)
7,166
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Business and geographical segments (continued)
(1) 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
The segments will be assessed as the Group develops and continues to make acquisitions.
An analysis of the Group’s external revenues and non-current assets (excluding deferred tax and contract assets) by
geographical location are detailed below:
UK
Other Europe
Australia/South Pacific
USA and Canada
Central and South America
Revenue
Non-current assets
2018
$000
29,962
2,901
4,569
77,595
3,720
118,747
2017
$000
22,701
2,138
1,565
103,294
3,731
133,429
2018
$000
37,616
3
169
163,046
221
201,055
2017
$000
38,788
67
637
162,048
158
201,698
Revenue in 2017 presented above on a comparable basis with 2018 under IFRS 15 would be $102.8m (unaudited).
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 customers of one of the park operators within the Guest Experience segment with which the Group has a contractual
relationship accounts for $13.3m of Group revenue for 2018 (2017: $43.9m on IAS18 basis/ 2017: $13.8m on IFRS15 basis).
A further customer within the Guest Experience segment accounted for $12.0m of group revenue in 2018 (2017: $8.3m).
9.
Revenue
The revenue recognition accounting policies and the effect of initially applying IFRS 15 on the Group’s revenue from contracts
with customers is described in Note 3. Due to the transition method chosen in applying IFRS 15, comparative information
has not been restated to reflect the new requirements.
Revenue primarily arises from the operation and licensing of virtual queuing solutions, the development and application of
eCommerce ticketing, professional services, and license sales in relation to point-of-sale and guest management software
and related hardware. All revenue of the group is from contracts with customers.
Disaggregated revenue
The Group has disaggregated 2018 revenue into various categories in the following table which is intended to depict the
nature, amount, timing and uncertainty of revenue recognition and to enable users to understand the relationship with
revenue segment information provided in note 8. Comparative information has not been provided as permitted when
adopting IFRS 15 using the cumulative catch up method of adoption.
77
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Revenue (continued)
Year ended 31 December 2018
Primary geographic markets
UK
Other Europe
Australia/South Pacific/Asia
USA and Canada
Central and South America
Product type
Licence fees
Support and maintenance
Virtual queuing
Ticketing and eCommerce
Professional services
Hardware
Other
Timing of transfer of goods and services
Point in time licence fees
Point in time virtual queuing/ticketing/hardware/other
Over time maintenance, support and professional services
Ticketing
$000
Guest
Experience
$000
27,463
938
4,277
42,331
3,541
78,550
6,623
8,393
-
57,100
4,014
1,533
887
78,550
6,623
57,100
14,827
78,550
2,500
1,962
291
35,264
180
40,197
2,963
-
21,637
980
12,672
-
1,945
40,197
2,963
22,617
14,617
40,197
Group
$000
29,963
2,900
4,568
77,595
3,721
118,747
9,586
8,393
21,637
58,080
16,686
1,533
2,832
118,747
9,586
79,717
29,444
118,747
Revenue included within point in time licence fees above related
to the exercise or lapse of renewal rights
1,953
-
1,953
Contract balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with
customers.
At 1 January 2018
At 31 December 2018
Breakdown of Contract assets at 31 December 2018
Unbilled income
Contract commissions
Group
Contract
assets
$000
Contract
liabilities
$000
Company
Contract
assets
$000
Contract
liabilities
$000
4,790
8,478
8,143
335
8,478
4,428
4,593
9,505
4,909
-
-
-
4,909
-
4,909
790
898
-
-
-
Transfers of contract liabilities to revenue during the period were $10m (Company $266k).
78
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Revenue (continued)
The contract assets primarily relate to the Group’s rights to consideration for license fees or professional services recognised
but not billed. The contract assets are transferred to receivables when the rights become unconditional. This usually occurs
when the Group issues an invoice to the customer. The Group also capitalises commissions paid in connection with obtaining
a contract and recognises the expense over the term of the agreement, testing for impairment annually.
The contract liabilities primarily relate to material rights customers of the Group’s guest management software receive at
the time contract is signed, which allows them to renew at a discount in subsequent years. The revenue is recognised when
the customer renews over the term of the contract or 5 years for contracts that do not have a term. The balance also consists
of support services to be provided for POS licenses and guest management software, and the revenue for the support is
recognised over the terms of the agreements.
No revenue was recognised in the period ended 31 December 2018 from performance obligations satisfied (or partially
satisfied) in previous periods.
Remaining performance obligations
No information is provided about remaining performance obligations at 31 December 2018 that have an original expected
duration of one year or less, as allowed by IFRS 15.
The amount of revenue that will be recognised in future periods on contracts with material rights over future discounted
licence fees is analysed as follows:
Material rights over discounted licence fee renewal
10.
Employees and directors
Wages and salaries
Deferred compensation related to acquisitions
Social security costs
Defined contribution pension costs
Share-based payment transactions
Less than 1 year
$000
2,097
2018
$000
47,555
3,176
4,075
1,348
2,245
58,399
Between 1 and
5 years
$000
1,651
2017
$000
39,028
2,131
2,600
904
1,089
45,752
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:
Operations
Research & development
Sales & marketing
Finance & administration
Seasonal staff
2018
2017
170
227
62
59
406
924
169
200
34
60
418
881
79
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Employees and directors (continued)
Key management compensation
The key management of the company in 2018 are considered to be the Executive directors and the three respective
presidents of Ticketing and Distribution, accesso LoQueue and The Experience Engine (TE2). Their remuneration is as follows.
In 2017 key management were considered to be the Executive Directors.
Salary
Short term-non-monetary benefits
Contribution to retirement scheme
Employer’s social security costs
Share-based payments
Deferred compensation treated as remuneration expense
Directors emoluments are disclosed on page 35 in the directors’ remuneration report.
11.
Expenses by nature
Park operating costs
Other operating leases
Depreciation - owned assets
Depreciation - finance leased assets
Amortisation of intangible assets
Foreign exchange differences
Research and development gross spend
Research and development capitalized to balance sheet (note 16)
Research and development recognized in operating profit
2018
$000
1,879
97
62
561
513
2,247
5,359
2018
$000
6,557
1,917
1,519
-
19,845
304
29,403
(21,100)
8,303
2017
$000
2,283
37
22
229
324
-
2,895
2017
$000
38,806
1,675
1,277
44
12,801
206
20,025
(12,395)
7,630
Park operating costs for the period ended 31 December 2017 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. The factors in determining whether the Group is acting as an agent or principal in an agreement have changed
under IFRS 15 resulting in net presentation in 2018 and a decrease in park operating costs. See notes 6 and 9 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
2018
$000
132
136 2
6 4
104
-
530 5
9
917
2017
$000
148
138
32
291
5
203
29
846
80
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
12.
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
13.
Tax
2018
$000
23
14
37
(687)
(110)
(330)
-
(1,127)
(1,090)
2017
$000
5
19
24
(741)
(224)
(1,131)
(3)
(2,099)
(2,075)
The table below provides an analysis of the tax charge for the periods ended 31 December 2018 and 31 December 2017:
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 rate changes
Original and reversal of temporary difference - for the prior period
Total taxation charge/(benefit)
2018
$000
2,498
(457)
2,041
607
(537)
70
2,111
(670)
(483)
929
(224)
1,887
2017
$000
1,012
154
1,166
1,289
(707)
582
1,748
382
(5,094)
229
(4,483)
(2,735)
81
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
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:
2018
$000
5,177
1,242
1,269
(25)
-
(137)
(64)
-
(483)
(61)
35
111
1,887
Asset
$000
6,008
(5,056)
2,793
5,192
8,937
1,030
(4,621)
2017
$000
7,166
2,866
1,380
(175)
(130)
(1,050)
(324)
1
(5,094)
-
-
(209)
(2,735)
Liability
$000
(9,990)
9,539
(181)
(13,997)
(14,629)
(806)
-
5,346
(15,435)
1,014
(1,069)
(62)
585
(1,184)
353
-
1
(966)
612
-
(115)
-
1,184
-
812
(527)
-
(612)
(327)
Profit on ordinary activities before tax
Tax at United States tax rate of 24% (2017: 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 recognised
Impact of rate changes
Withholding tax credit
Share options
Other
Total tax charge/(benefit)
Deferred taxation
Group
At 31 December 2016
Charged to income
Credited directly to equity
Acquired from business combinations
At 31 December 2017
Charged to income
Debited directly to equity
At 31 December 2018
Company
At 31 December 2016
Charged to income
Credited directly to equity
Acquired from business combinations
At 31 December 2017
IFRS 15 opening adjustment
Charged/(credited) to income
Debited directly to equity
Netted against the asset
At 31 December 2018
82
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Tax (continued)
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
Recognised liability
Capital allowances in excess of depreciation
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
Capital allowances in excess of depreciation
Offset against Company deferred tax asset
Deferred tax liability
2018
$000
2,443
658
2,245
5,346
2018
$000
(6,052)
(506)
(8,877)
(15,435)
623
2
(625)
-
(952)
625
(327)
2017
$000
6,977
974
986
8,937
2017
$000
(3,078)
(272)
(11,279)
(14,629)
1,535
2
(1,184)
353
(1,184)
1,184
-
Tax rates in the UK will reduce from 19% to 17% with effect from 1 April 2020. Tax rates in the US were reduced from 35%
to 21%, before state taxes, with effect from 1 January 2018. As both rate changes had been substantively enacted during
the previous period, deferred tax assets and liabilities were measured at a rate of 17% and 21% plus state taxes in the UK
and US, respectively. The same rates were in effect for 2018. The significant reduction in the US corporate rate will also
reduce the Group's effective tax rate in future periods. There are no material unrecognised 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.
83
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Tax (continued)
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.
The Group is consequently, from time to time, subject to tax enquiries by local tax authorities and certain tax positions
related to intercompany transactions may be subject to challenge by the relevant tax authority.
The Group has recognised provisions where it is not probable that tax positions taken will be accepted, totalling $0.5m (2017:
$0.5 million) in relation to transfer pricing risks and $0.3 million (2017: $0.5 million) in relation to availability of tax losses
and international R&D claims.
14.
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 2018 was (in
$’000) $6,743 (2017: $4,442).
15.
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
Deferred share consideration on business combinations
Weighted average number of shares used in diluted EPS
Diluted earnings per share (cents)
84
2018
3,290
26,905
12.23
26,905
709
421
28,035
11.74
2017
9,901
24,250
40.83
24,250
1,337
454
26,041
38.02
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Earnings per share (continued)
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 consideration linked to employment
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 (2018: 18.8%, 2017: 25.5%):
Adjusted profit attributable to ordinary shareholders ($000)
2018
2017
3,290
11,740
331
1,703
3,176
-
2,245
-
22,485
(2,689)
19,796
9,901
8,591
1,131
1,474
2,131
(3,228)
1,089
(4,450)
16,639
(2,880)
13,759
*The 2017 weighted average number of shares for diluted EPS has been restated to include the dilutive effect of the TE2
deferred shares which are contingent on future employment from the date of the agreement.
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)
2018
19,796
26,905
73.58
2017
13,759
24,250
56.73
28,035
70.61
26,041
52.84
137,432 LTIP awards were not included in the calculation of diluted EPS because their exercise is contingent on the
satisfaction of certain criteria that had not been met as at 31 December 2018.
85
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
16.
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
2016
Foreign currency
translation
Additions
Acquired with
acquisition
At 31 December
2017
Foreign currency
translation
Additions
At 31 December
2018
Amortisation
At 31 December
2016
Foreign currency
translation
Charged
At 31 December
2017
Foreign currency
translation
Charged
At 31 December
2018
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
(1,193)
-
(101)
-
(86)
-
(655)
-
(34)
2
(839)
21,100
(2,908)
21,102
116,144
18,314
1,841
52,981
732
58,026
248,038
-
-
-
-
-
-
-
2,558
383
9,334
420
5,570
18,265
8
1,837
3
170
55
6,585
33
43
381
4,166
480
12,801
4,403
556
15,974
496
10,117
31,546
(25)
2,818
(14)
146
(206)
8,776
(27)
38
(413)
8,067
(685)
19,845
7,196
688
24,544
507
17,771
50,706
86
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
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
116,144
11,118
1,153
28,437
225
40,255
197,332
117,337
14,012
1,371
37,662
268
27,648
198,298
Net book value
At 31 December
2018
At 31 December
2017
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 2016
Foreign currency translation
Additions
At 31 December 2017
Foreign currency translation
Additions
At 31 December 2018
Amortisation
At 31 December 2016
Foreign currency translation
Charged
At 31 December 2017
Foreign currency translation
Charged
At 31 December 2018
Net Book Value
At 31 December 2018
At 31 December 2017
542
51
-
593
(35)
2
560
334
33
43
410
(26)
37
421
139
183
Totals
$000
10,374
1,046
1,642
9,832
995
1,642
12,469
13,062
(781)
1,277
(816)
1,279
12,965
13,525
3,614
383
1,280
5,277
(397)
1,828
6,708
6,257
7,192
3,948
416
1,323
5,687
(423)
1,865
7,129
6,396
7,375
Capitalised development costs are not treated as a realised loss for the purpose of determining the Company’s distributable
profits as the costs meet the conditions requiring them to be treated as an asset in accordance with IAS 38.
Prior period 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.
87
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Intangible assets (continued)
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.
The final agreed earn-out was paid in cash during 2018 at $9.1m which was accrued at 31 December 2017 this was based on
the financial performance of Ingresso for the year ended 31 December 2017 exceeding its financial performance in 2016.
Due to the full earn-out not being achieved a credit was recorded to the Consolidated and company statement of
comprehensive income of $3.2m during the year ended 31 December 2017. In addition to the contingent earn-out based
consideration, up to $1.8m of further consideration was payable to employees of the acquired company which was
contingent on their continued employment, this is treated as a compensation expense, rather than deferred consideration.
The Group’s income statement contains $0.4m (2017: $1.0m) of compensation expense due to this treatment within
administrative expenses, and $0.3m (2017: $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 ended 31
December 2017. Finance costs are amortised over the life of the agreement and presented netted against bank loans within
borrowings in the statement of financial position.
During 2017, 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
88
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Intangible assets (continued)
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 which will benefit the ticketing operation of the enlarged Group.
These 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 to existing customers, which is not available to other market participants.
The net cash outflow in respect of the acquisition comprised:
Cash paid
Net cash acquired
Total cash outflow in respect of acquisition
$000
18,736
(5,744)
12,992
Prior period 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 in Ticketing and Virtual Queuing, 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 ended 31 December 2017.
During 2017, 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.
89
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Intangible assets (continued)
Deferred consideration consisting of 454,547 shares is to be issued to certain key employees of TE2, contingent upon their
continued employment, over 36 months with the cost being recognised as a compensation expense. Shares will be issued in
3 separate tranches: one-third was scheduled 12 months after the completion date however this did not complete until
2019; 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 credit in relation to this of $2.8m (2017: $1.3m) is booked directly
to Retained Earnings. Two of the key employees left during 2018 and accordingly 33,401 shares will not be issued.
The main factors leading to the recognition of goodwill are the presence of certain intangible assets, such as the assembled
work force of the acquired entity and the expected synergies that will benefit 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.
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 ended 31 December 2017, 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.
During 2018 management have organised their business into three operating segments and now monitor goodwill at this
level, comprising Ticketing and Distribution, accesso LoQueue and The Experience Engine (‘TE2’). This represents a change
from 2017 whereby goodwill was monitored at a group level.
The goodwill arising on the respective ticketing entities enhances the value of only the Ticketing and Distribution group of
CGUs and has therefore been monitored at a Ticketing and Distribution segment level for impairment testing. accesso
LoQueue has no original goodwill. $52.4m of goodwill arising on the acquisition of TE2 was identified at the acquisition date
as being expected to drive synergies in Ticketing and Distribution, this goodwill has been allocated to Ticketing and
Distribution and accesso LoQueue respectively ($28.5m and $6.5m) in line with the apportionment set out at acquisition
leaving $17.4m within TE2’s CGU. This allocation has been based on a relative proportion of the EBITDA synergies of the
respective CGUs which is considered the most accurate reflection of where the value of the synergies of the goodwill will be
driven.
The carrying amount of goodwill is allocated as follows:
Group
Ticketing and Distribution *
LoQueue **
The Experience Engine TE2
2018
$000
n/a
70,241
28,500
17,403
2017
$000
117,337
n/a
n/a
n/a
116,144
117,337
* Comprises accesso, LLC, Siriusware, Inc., VisionOne Worldwide Limited & its subsidiaries and Ingresso Group Limited &
subsidiaries and accesso Passport/ accesso Showare trading within Accesso Australia PTY Limited
** Comprises the accesso LoQueue trading within accesso Technology Group plc, Lo-Q, Inc., Lo-Q Service Canada Inc and
Accesso Australia PTY Limited
90
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Intangible assets (continued)
Development cost assets not yet available for use reside in the CGUs as follows and are considered annually for impairment
in line with the goodwill attached to those CGUs. These capitalised costs relate to development projects which have not been
put into use as at the year-end:
accesso, LLC & Siriusware, Inc. (CGU 1)
The key assumptions used for value in the calculations in 2018 and 2017 are as follows:
Pre-tax discount rate (%)
accesso, LLC & Siriusware, Inc. (CGU 1)
VisionOne Worldwide Limited and its subsidiaries (CGU 2)
Ingresso Group Limited and subsidiaries (CGU 3)
The Experience Engine (CGU 4)
LoQueue ** (CGU 5)
Average EBITDA growth rate during forecast period (average %)
accesso, LLC & Siriusware, Inc. (CGU 1)
VisionOne Worldwide Limited and its subsidiaries (CGU 2)
Ingresso Group (CGU 3)
The Experience Engine (CGU 4)
LoQueue ** (CGU 5)
Terminal growth rate (%)
accesso, LLC & Siriusware, Inc. (CGU 1)
VisionOne Worldwide Limited and its subsidiaries (CGU 2)
Ingresso Group (CGU 3)
The Experience Engine (CGU 4)
LoQueue ** (CGU 5)
Period on which detailed forecasts based (years)
accesso, LLC & Siriusware, Inc. (CGU 1)
VisionOne Worldwide Limited and its subsidiaries (CGU 2)
Ingresso Group (CGU 3)
The Experience Engine (CGU 4)
LoQueue ** (CGU 5)
2018
$000
1,790
2017
$000
3,286
2018
2017
11.7
11.7
10.2
11.7
11.7
18.5
7.9
68.2
31.2
8.4
3
3
3
3
3
5
5
5
5
5
9.1
9.1
10.1
12.5
n/a
11.5
15.5
19.7
105.8
n/a
3
3
3
3
n/a
5
5
5
5
n/a
** Comprises the accesso LoQueue trading within accesso Technology Group plc, Lo-Q, Inc., Lo-Q Service Canada Inc and
Accesso Australia PTY Limited
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 a market participant’s
expected capital structure. Growth rates beyond the formally budgeted period are based on economic data pertaining to
the region concerned.
91
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Intangible assets (continued)
Sensitivity analysis
If any of the following changes were made to the following key assumptions the carrying value and recoverable amount
would be equal as at 31 December 2018. The Board concluded that the sensitivities set out below were not reasonably
possible and that there was no impairment of goodwill.
Pre-tax discount rate
EBITDA Growth rate during
detailed forecast period
(average)
Ticketing and
distribution*
accesso
LoQueue**
The Experience Engine
Increase by
14.9%
Reduce by
42.5%
Increase by 11.2%
Increase by 4.5%
Reduce by 39.2%
Reduce by 28.3%
Terminal growth rate
Reduce by 18%
Reduce by 16.2%
Reduce by 4.7%
Excess over carrying value
($000)
$323,790
$66,336
$37,941
* Comprises accesso, LLC, Siriusware, Inc., VisionOne Worldwide Limited & its subsidiaries and Ingresso Group Limited &
subsidiaries and accesso Passport/ accesso Showare trading within Accesso Australia PTY Limited
** Comprises the LoQueue trading within accesso Technology Group plc, Lo-Q, Inc., Lo-Q Service Canada Inc and Accesso
Australia PTY Limited
In 2017 a reasonable change in the key assumptions of the terminal growth rate and EBITDA growth did not significantly
impact the recoverable value of the pooled goodwill allocated to the collective CGUs.
92
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
17.
Property, plant and equipment
The cost and depreciation of the Group’s tangible fixed assets are detailed in the following table:
Installed
systems
$000
5,009
364
146
-
(30)
5,489
(242)
600
(1,160)
4,687
4,246
343
473
-
(27)
5,035
(238)
269
(1,154)
3,912
775
454
Plant,
machinery and
office
equipment
$000
3,319
104
705
195
(301)
4,022
(83)
782
(807)
3,914
2,214
48
461
95
(298)
2,520
(53)
684
(786)
2,365
1,549
1,502
Cost
At 31 December 2016
Foreign currency translation
Additions
Acquired with acquisition
Disposals
At 31 December 2017
Foreign currency translation
Additions
Disposals
At 31 December 2018
Depreciation
At 31 December 2016
Foreign currency translation
Charged
Acquired with acquisition
Disposals
At 31 December 2017
Foreign currency translation
Charged
Disposals
At 31 December 2018
Net book value
At 31 December 2018
At 31 December 2017
Furniture
& fixtures
Leasehold
improvements
Totals
$000
2,012
74
64
100
(35)
2,215
(56)
330
(297)
2,192
850
28
284
20
(29)
1,153
(33)
290
(265)
1,145
1,047
1,062
$000
$000
1,261
11,601
-
21
-
-
542
936
295
(366)
1,282
13,008
-
247
(102)
(381)
1,959
(2,366)
1,427
12,220
797
-
103
-
-
900
-
276
(101)
1,075
352
382
8,107
419
1,321
115
(354)
9,608
(324)
1,519
(2,306)
8,497
3,723
3,400
93
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
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 2016
Foreign currency translation
Additions
At 31 December 2017
Foreign currency translation
Additions
Disposals
At 31 December 2018
Depreciation
At 31 December 2016
Foreign currency translation
Charged
At 31 December 2017
Foreign currency translation
Charged
Disposals
At 31 December 2018
Net book value
At 31 December 2018
At 31 December 2017
3,805
364
6
4,175
(242)
228
(999)
3,162
3,483
343
221
4,047
(237)
94
(999)
2,905
257
128
897
94
292
1,283
(76)
37
(157)
1,087
398
44
161
603
(45)
203
(157)
604
483
680
782
73
9
864
(52)
12
(187)
637
250
27
86
363
(26)
99
(187)
249
388
501
18.
Investments
Investment in subsidiaries
The investment balance on the company’s books at 31 December 2018 is as detailed below:
Cost
At 31 December 2017
Capital contribution to Chinese subsidiary
Foreign currency translation
At 31 December 2018
At 31 December 2016
Purchase of subsidiaries
Foreign currency translation
At 31 December 2017
Net book value
At 31 December 2017
At 31 December 2018
94
Totals
$000
5,484
531
307
6,322
(370)
277
(1,343)
4,886
4,131
414
468
5,013
(308)
396
(1,343)
3,758
1,128
1,309
$000
73,353
50
(4,291)
69,112
37,806
28,289
7,258
73,353
73,353
69,112
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
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 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 Netherlands NV (14)
Accesso China (15)
Ingresso US Inc (16)
All shares owned are ordinary shares.
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
China
United States of America
% Ownership
interest
100
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
100
As required by the Companies Act, the registered addresses of each business are:
(1) Registered address of 1025 Greenwood Blvd, Suite 500, Lake Mary, FL 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 1025 Greenwood Blvd, Suite 500, Lake Mary, FL, 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, San Diego, CA 92122
(12) Closed during 2018
(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
(15) Registered address of No.778, Chuangxin West Road, FTA, Shanghai, China
(16) Registered address of 19C Trolley Square, Wilmington, Delaware, DE 19806, USA
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.
The trade for both Lo-Q, Inc. and Lo-Q Service Canada Inc is that of the application of virtual queue technologies, Accesso
Australia PTY Limited includes in part the virtual queuing customers pertaining to that region. The trade of accesso, LLC,
Siriusware, Inc., the VisionOne subsidiaries, Accesso Australia PTY Limited, Ingresso Group Limited and Blazer and Flip Flops
Inc is primarily that of ticketing, point-of-sale and experience management technology solutions. 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 36.
19.
Inventories
Stock
Park installation
Group
Company
2018
$000
888
195
1,083
2017
$000
443
63
506
2018
$000
339
-
339
2017
$000
279
-
279
The amount of inventories recognised as an expense and charged to cost of sales for the year ended 31 December 2018 was
(in thousands) $1,032 (2017: $2,468). 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.
95
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
20.
Trade and other receivables
Trade debtors
Accrued income
Social security and other taxes
Other debtors
Amounts owed by Group undertakings
Financial assets
Prepayments
Group
Company
2018
$000
15,806
-
1
516
-
16,323
2,510
18,833
2017
$000
15,013
1,428
17
683
-
17,141
2,620
19,761
2018
$000
3,223
-
-
67
95,626
98,916
485
99,401
2017
$000
1,533
108
17
137
88,978
90,773
861
91,634
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.
21.
Trade and other payables
Current
Trade creditors
Current other creditors
Non-current other creditors
Financial liabilities
Social security and other taxes
Accruals
Group
Company
2018
$000
20,270
2,959
23,229
543
23,772
712
4,915
29,399
2017
$000
14,212
5,151
19,363
3,024
22,387
1,934
28,577
52,898
2018
$000
2,096
162
2,258
-
2,258
464
1,333
4,055
2017
$000
585
(2)
583
-
583
175
10,654
11,412
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 $1.5m at 31 December 2018 (2017: $5.5m) 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.
96
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Trade and other payables (continued)
Included within accruals for the Group and company are amounts owed related to contingent and deferred consideration
resulting from the acquisition of Ingresso (2018: $nil, 2017: $9.1m). The movement on deferred consideration treated as a
liability during the period is set out below:
Balance at 1
January 2018
$000
Recognised at
acquisition
$000
Fair value
adjustment
$000
Deferred
compensation
expense accrued
in the period
$000
Unwinding
of discount
$000
OCI
adjustment
$000
Settlement
of liability
$000
At 31 December
2018
$000
Deferred cash
consideration
Deferred cash
consideration
9,092
-
-
351
331
(178)
9,596*
-
Balance at 1
January 2017
$000
Recognised at
acquisition
$000
Fair value
fair value
adjustment
$000
Deferred
compensation
expense accrued
in the period
$000
Unwinding
of discount
$000
OCI
adjustment
$000
Settlement
of liability
$000
At 31 December
2017
$000
-
9,553
(3,228)
1,037
961
769
-
9,092
*Includes $961k of accrued interest expense.
22.
Borrowings
Bank loans
Arrangement fees, less amortised cost
Group
Company
2018
$000
20,466
(242)
20,224
2017
$000
16,462
(322)
16,140
2018
$000
20,466
(242)
20,224
2017
$000
16,462
(322)
16,140
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 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. Financial covenants are attached to the facility in respect of interest cover
and leverage which are both tested on a quarterly basis. The group was operating within the covenants with significant
headroom during 2018.
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.
97
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
23.
Called up share capital
Ordinary shares of 1p each
Number
$000
Number
$000
2018
2017
Opening balance
Issued in relation to exercised share options
Issued in relation to Ingresso share subscription
Issued in relation to acquisitions
26,375,748
719,277
22,970
-
411
9
1
-
22,277,631
189,962
-
3,908,155
Closing balance
27,117,995
421
26,375,748
357
2
-
52
411
During the period, 719,277 shares, with a nominal value $9,494, were allotted following the exercise of share options.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote
per share at meetings of the Company.
On 3 May 2018, under the terms of the subscription agreement as set out in the in connection with the acquisition of
Ingresso Group Limited, Bart Van Schriek, Chief Executive Officer of Ingresso Group Limited, committed to applying 40% of
his net earn-out proceeds to subscribing to further new ordinary shares of 1 pence in the company. A total of 22,970 new
ordinary shares were issued for a total cash payment of $0.5m ($20.51 per share). These Subscription Shares will be subject
to restrictions on disposal for a period of two years, whereby Bart Van Schriek, is prohibited from making any disposal of
two thirds of the stock for the first 12 months, with half of such shares being released from the restriction at the end of
each 12-month period from the date issued.
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 200,000 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.
24.
Reserves
The following describes the nature and purpose of each reserve within equity:
Reserve
Share premium:
Own shares held in trust:
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
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
25.
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)
2018
$000
1,348
176
2017
$000
904
85
98
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
26.
Related party disclosures
Ultimate controlling party
There is no ultimate controlling party.
Subsidiaries
All intercompany revenues, expenses, and balances between group companies, which are related parties, have been
eliminated on consolidation and have not been included in this note.
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 $45,510 (2017: $51,625), of which $3,600 (2017: $4,254) 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 (2017: $80,400) were payable in 2018 to B Sirius LLC, of which $nil (2017:
$nil) was outstanding at year end. An officer of Siriusware Inc is a member of B Sirius LLC, this transaction is undertaken at
an arms length.
All the above outstanding amounts are included within trade creditors.
27.
Share-based payment schemes and transactions
Share option schemes
At 31 December 2018 the following share options were outstanding in respect of the ordinary shares:
Scheme
EMI Scheme
UK CSOP Scheme
UK unapproved Scheme
US Scheme
Other schemes
Long-term incentive plan
Number of shares
1,350
18,235
6,714
8,000
4,500
27,500
46,700
9,800
16,800
2,500
9,789
43,500
66,850
92,550
2,008
183,450
2,262
45,000
226,500
5,000
12,800
18,600
89,932
296,124
85,112
29,935
22,385
2,471
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
30 March 2020 to 22 March 2028
22 March 2021 to 22 March 2028
15 April 2018 to 15 April 2025
29 April 2019 to 28 April 2026
24 June 2013 to 23 June 2021
30 November 2014 to 29 November 2022
25 April 2015 to 25 April 2023
23 January 2018 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
12 July 2020 to 21 March 2028
22 March 2021 to 22 March 2028
26 March 2014 to 25 March 2022
22 March 2021 to 22 March 2028
22 March 2021 to 22 March 2028
15 April 2018
13 March 2019
16 February 2021
21 March 2021
16 February 2021
1 May 2021
Price per share
57.5p
179p
323.5p
600p
697.5p
2270p
2270p
557.5p
1105p
179p
323.5p
600p
697.5p
557.5p
851p
1105p
1061p
2270p
2270p
292.5p
2270p
2270p
1p (1)
1p (1)
1p (1)
1p (1)
1p (1)
1p (1)
(1) Vesting is conditional on achievement of certain market-based conditions.
99
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
Share-based payment schemes and transactions (continued)
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
2018
2017
Number
1,607,333
553,496
(719,277)
(65,185)
WAEP (pence)
309.90
1,639.12
142.55
1,868.39
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
1,376,367
870.86
1,607,333
Exercisable at the end of the year
Weighted average share price at date of exercise for share
options exercised during the year:
360,728
416.15
365,488
2,263.62
309.90
394.30
1,737.04
The exercise price of options outstanding at 31 December 2018 range between £.01 and 2,270p (2017: £.01 and 1,105p) and
their weighted average contractual life was 7.55 years (2017: 3.3 years).
The weighted average share price at the date of exercise for share options exercised during the period was 2,263.62p (2017:
1,737.04p). Options were granted in the period and the inputs to the model for options issued in the current 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 (%)
There were no options issued in the prior period.
2018
22.7
29.9
2
1.0
-
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 37 to 38.
Long-term incentive plan
During the current and prior period, the Group granted conditional share award (“Awards”) over ordinary shares of 1 penny
under the Long-Term Incentive Plan, which was approved by shareholders on 27 May 2014. All Awards vest three years from
the date of grant, except those granted in April 2018 which have a thirty-four month vesting period, 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 award dates, number of awards granted assuming the
performance conditions are fully met, and inputs to the valuation model were as follows:
Awards issued
Expected volatility (%)
Expected life years
Risk free rate (%)
Dividend yield (%)
1 May 2018
2,471
30.0
2.9
0.83
-
9 April 2018
22,385
30.0
2.8
0.91
-
21 March
2018
29,935
30.0
2.9
0.98
-
16 February
2018
99,105
30.0
2.9
0.85
-
30 March
2017
18,851
30.0
3.0
0.16
-
100
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
28.
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
Acquired
with
acquisitions
$000
-
-
Acquired
with
acquisitions
$000
Cash Flow
$000
Exchange
movement
$000
2018
$000
(7,114)
(850)
20,704
1,527
(125)
3,311
Cash Flow
$000
Exchange
movement
$000
2017
$000
9,852
12,886
64
28,668
2017
$000
28,668
1,909
2016
$000
5,866
1,303
-
542
64
1,909
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
Note
22
2018
$000
20,224
(20,704)
2017
$000
16,140
(28,668)
Net cash
(480)
(12,528)
Below we set out the breakdown of cash and non-cash movements on the Group’s borrowings:
At beginning of period
Cash flows
Drawings on loan
Repayments of drawings
Capitalised finance costs
Non-cash movements
Effects of foreign exchange
Release of capitalised finance costs
At end of period
Note
2018
$000
16,140
15,530
(10,089)
-
(1,467)
110
20,224
2017
$000
9,298
31,376
(26,037)
(350)
1,628
225
16,140
101
accesso Technology Group plc
Notes to the consolidated financial statements (continued)
for the financial year ended 31 December 2018
29.
Commitments under operating leases
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
2018
$000
1,343
3,872
941
6,156
23
19
-
42
145
122
-
267
-
-
-
-
2017
$000
1,306
3,147
436
4,889
48
28
-
76
154
308
-
462
37
-
-
37
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.
102