Accesso Technology Group Regulatory News (ACSO)

4 April 2023

accesso® Technology Group plc

("accesso" or the "Group")

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022

Return to full-demand environment drives record revenues

accesso Technology Group plc (AIM: ACSO), the premier technology solutions provider for attractions and venues worldwide, today announces preliminary results for the year ended 31 December 2022 ('2022').

Commenting on the results, Steve Brown, Chief Executive Officer of accesso, said:

"In 2022 we delivered a record year for revenue, continuing our robust growth trend as well as very strong cash EBITDA, beating our expectations.

accesso today is a strategically well-aligned, focused, and efficient business which is resilient in the face of challenge and capable of meeting the complex and evolving needs of the leading venue operators in the world.

During the year, with clear demand for our expanded offering, we achieved long-term renewals for two key enterprise customers, continued to secure a range of new customers and further expanded our penetration within our client base with ongoing cross-sell success. We move forward into 2023 with a clear focus on continued operational excellence and further organic growth whilst also evaluating opportunities for further expansion through strategic opportunities.

With a strong operating performance track record and a robust balance sheet, we have never been better positioned as we move into 2023 and beyond."

2022 Financial highlights

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement, this inside information is now considered to be in the public domain

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The Company will be hosting a presentation for analysts at 1300 UK time today. Analysts and institutional investors are also able to request a copy of the presentation and audio webcast conference details by contacting accesso@fticonsulting.com. A copy of the presentation made to analysts will be available for download from the Group's website, shortly after the conclusion of the meeting.

About accesso Technology Group

At accesso, we believe technology has the power to redefine the guest experience. Our patented and award-winning solutions drive increased revenue for attraction operators while improving the guest experience. Currently serving over 1,000 clients in 29 countries around the globe, accesso's solutions help our clients streamline operations, generate increased revenues, improve guest satisfaction and harness the power of data to facilitate business and marketing decisions.

accesso stands as the leading technology provider of choice for tomorrow's attractions, venues and institutions. To stay ahead, we invest heavily in research and development because our industries demand it, our clients benefit from it and it makes a positive impact on the guest experience. Our innovative technology solutions allow venues to increase the volume and range of on-site spending and to drive increased transaction-based revenue through cutting edge ticketing, point-of-sale, virtual queuing, distribution and experience management software.

Many of our team members come from backgrounds working within the attractions and cultural industry. In this way, we are experienced operators who run a technology company serving attractions operators, versus a technology company that happens to serve the market. Our staff understand the day-to-day operations of managing complex venues and the challenges this creates, and together we strive to provide our clients and their guests with technology that empowers them to do more and enjoy more. From our agile development team to our dedicated client service specialists, every team member knows that their passion, integrity, commitment, teamwork and innovation are what drive our success.

accesso is a public company, listed on AIM: a market operated by the London Stock Exchange. For more information visit www.accesso.com. Follow accesso on Twitter, LinkedIn and Facebook.

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Chief Executive's statement

With visitor demand back to pre-pandemic levels, during 2022 accesso delivered another strong year with record revenue and very strong cash EBITDA reflecting continued progress along our growth path. We have navigated our business through the unique challenge of the pandemic and improved the resilience and capability of our operational platform. To have exited this extremely difficult time stronger than ever is a testament to the commitment, talent, and creativity of our team. I would like to thank them for their efforts and their continued dedication to driving accesso forward each, and every, year.

Our 2022 results are the product of the efforts we've made to realign our business and refocus on profitable growth. We've done this through driving efficiency across our business, boosting our already-leading product set, and doubling down on the areas of greatest growth potential. Of course, one of these is the business we win with totally new customers. But we are also capitalising on the significant growth potential we have within our existing base.

We're driving this activity forward in two main ways. First, we are driving increased product utilisation across our customer base, ensuring operators get the most from the technology they use. Second, we're driving hard on cross-sell opportunities from other solutions in our product set.

This might mean a ski venue deploying accesso Passport for eCommerce alongside accesso SiriuswareSM for its point-of-sale capability, or it might mean customers using our mobile-first accesso LoQueue® product to improve guest experience and monetise a premium service. In any of these use cases, accesso technology is a mission critical component of our customers' ability to run their operations efficiently, productively, with the agility they need to adapt to change. We remain unmatched in delivering the range and quality of solutions across our portfolio.

The breadth of customers and venues we serve also continues to expand. Historically accesso has been seen as a company primarily serving theme parks in North America. Today accesso is active and growing in live entertainment, museums, theatres, zoos and aquariums, and with our most recent technology addition we aim to expand by reaching into the broader hospitality marketplace with our newly acquired food and retail offering. Of course, North America remains an important market, but our customers are spread broadly across Europe, South America, and Asia Pacific. Revenue outside North America grew by 67.2% compared to 2021 and accounted for 31.2% of Group revenue (20.9% in 2021), returning to the pre-COVID geographic revenue mix.

Through the year, we have again proved our ability to be nimble and add value through change. Our near-term revenue, particularly in our queuing business, could have been significantly affected by a change in strategy from a major customer during the first half of the year. I am proud that we were able to absorb the impact of this situation during the second half by managing the circumstances with robust yield management while still delivering strong revenue growth across the wider customer base and product set.

Our agility in responding to the dynamic environment in which we operate continues to demonstrate our strength in the face of adversity and further demonstrates the increasing breadth, diversity, and resilience of our business as well as the underlying strength across the remainder of our business. This same agility, inherent in our operation, also allows us to respond to new opportunities as they present themselves by adjusting our resources and priorities accordingly.

In 2023, accesso will continue to innovate and help customers broaden their horizons as they consider how technology can transform their businesses for the better. Our pipeline is strong, our team is motivated, and we are off to a solid start on the year. With the strength of our balance sheet and solid operational model, we are prepared for the next step in our growth trajectory. We look forward to continuing our progress and delivering another strong year of profitable growth in 2023 and the years beyond. 

2022 in review

Return to full-demand environment supporting growth

During 2022 we delivered record full year revenue, beating our initial expectations as demand returned to pre-pandemic levels across our key markets. This was despite the impact of reduced revenue from accesso LoQueue as a key customer strategically realigns its business. This strong growth was driven by a combination of new business volume and growing product utilisation across our product set.

Through the year we continued our successful new business performance, signing 29 new venues. Of these, 8 were in the live entertainment space. This area continues to present new opportunities as it returns to pre-pandemic events and performances as evidenced by 78.9% growth in accesso ShoWare ticket sales across all territories.

In addition, we won 25 combination deals, where customers take more than one accesso product, 15 of these deals were cross sales from existing customers, with 21 instances of customers utilising accesso Passport alongside accesso Siriusware. This takes the total number of customers using a combination of the Group's products to 97, up from 72 at the end of 2021. 

Our sales to existing clients were well diversified during the year across attractions, cultural venues, and ski resorts. The ski market continues to represent significant growth potential for the Group, making up half of all combination deals signed with existing customers. The Group's strong performance in 2022, delivered across our wider customer base, highlights the underlying growth and demand for our products as well as the value in the diversity of our client base, geographies served, and the range of solutions offered.

Operational excellence drives improved profitability

Our operational model is continually evolving to further improve the quality of our revenues and drive profitability. We delivered cash EBITDA of $25.8m during the year, well ahead of our initial expectations. Importantly, this performance came against an expected 14.2% increase in our underlying administrative costs as hiring conditions improved and wage inflation continued. We also benefited from our strategic decision to shift to a near fully remote working model, which we believe contributed to our low churn and record employee engagement scores. Moreover, this approach further aligns our business with the geographical diversity of our customer base whilst expanding our opportunity to hire high quality talent. The full year impact of this increased headcount will be observable in our 2023 results and will lay the foundation for growth.

Importantly, our cost growth was in line with our plan and the expectation we set in our March 2022 preliminary results announcement, where we noted that staffing would increase to capture the new opportunity presented by increased demand for our products as well as the inflationary pressure on salaries. We continue to align our team to the current and future potential of our business. Deployment of talent is not a static process, and we continuously review and adjust as demands shift or new opportunities present themselves.

Growing the business profitability remains a key focus for the Group and it was pleasing to see another year of strong profitability, as we continued to deliver revenue growth despite the expected increases in operating costs. 

Key operator renewals underpin future growth plan

Our market leading positioning continues to be underpinned by long-term and constructive relationships with some of the largest and most important players in our market. We built upon our success in 2021 with the key renewal with Merlin; the continuation of our agreement with Six Flags, where they opted not to exercise their early termination rights and by reaching an agreement with Village Roadshow Theme Parks in September 2022. Village Roadshow is a customer central to our APAC presence and has renewed for five years with an option to extend by a further two, extending the relationship to at least 2027. In November 2022, we also announced a five-year extension with Cedar Fair Entertainment, securing our relationship through to 2028. These are the latest examples of our accesso Passport solution helping to enable the continued shift of the entertainment market to mobile-first technologies, where we are very well positioned across our solutions. 

These companies are some of the largest attraction operators in the world and they continue to show their belief that accesso is the right partner for them. We're proud and grateful for their support. These renewals are important in providing a solid foundation on which the Group can plan its future growth. They demonstrate the quality and durability of our technology proposition for all to see. This gives us great confidence that we are investing in the right areas as we continue to drive product innovation and enhance our value proposition for both new and existing customers.

Increased geographic and customer diversity

Our outperformance in 2022 has been delivered, in part, because of our geographic and customer diversity. The breadth of our customer base provides us with resilience to economic challenges and as we increase our presence in newer markets, further routes to future growth.

Our increasingly global footprint can be seen in the performance of accesso Passport eCommerce outside of our North American market. Beyond North America we sold approximately 30 million tickets, with growth of 30.9% in EMEA and 75.0% in the Asia Pacific region. In EMEA we were particularly pleased to welcome new customers including Transport for London (TfL) and Lift 109, for whom we will facilitate the viewing experience at the newly renovated and iconic Battersea Power Station in London.

Our portfolio diversification was supported during the year by a landmark agreement with Parques Reunidos, one of the world's leading operators of leisure parks. This is a five-year deal to serve as Parques' enterprise provider of queue management services across its portfolio theme parks with an initial implementation of four theme parks completed in 2022 and further opportunity for additional installations.

Continued product innovation

Innovation is at the heart of our business. Quite simply, the quality of our product sets us apart. For many of our customers, we are the key support system helping them run efficient operations that delight guests, reduce cost and drive revenue.

Through the year we have innovated globally across our portfolio, expanding our partnership with PayPal with support for Venmo and Pay Later, along with expanding our alternative payment support including for Kakao Pay, Grab Pay and Alipay which are important to our APAC operations. We have also introduced Protecht Ticket Insurance as our preferred ticket insurance provider for accesso ShoWare and accesso Passport and introduced a post-purchase advertising platform to help our customers drive revenue beyond the final moment of sale.

During the year, we also delivered enhancements across our products. We launched a new, updated version of the customer service module for accesso Passport; enhanced the reconciliation of activities between accesso Siriusware and accesso Passport eCommerce to improve operational performance; and introduced a Stay 22 post-purchase accommodation integration for accesso ShoWare. We are also continuing to fine tune the innovative Queue Length Measurement product offered by accesso LoQueue, which utilises purpose-placed cameras or park CCTV and our own Machine Learning service to calculate accurate queue wait times. We look forward to bringing these enhancements to the market through 2023.

Technology acquisition update

We are always looking for ways to improve our high-quality suite of solutions, whether by innovating our products or acquiring externally.

Last July we announced the £750k acquisition of high-quality technology assets in the Food & Retail space, giving us significant intellectual property and functionality across food and retail sales operations. The solution is well regarded by some of the largest and most well-known enterprise venue operators around the world. 

The key rationale for this acquisition was to augment our existing business with a nearly complete, modernised version of this well-established solution. We will bring to the market a modern technology platform with robust functionality to serve food and retail operations delivered as a fully hosted solution. In a landscape of legacy providers with dated technologies and a stagnant focus on POS terminals, we believe this product will provide the operational model and modern system architecture that operators now expect in the mobile first and self-service landscape. 

I am pleased to report that work to complete the solution is on track for operational readiness in the latter half of 2023 and we have already begun preliminary sales efforts.

Our strong cash position gives us the ability to add further to our proposition should we choose to do so. We are assessing opportunities with great care as any acquisition would need to fully align with our strategic needs and provide significant long-term growth opportunity.

People & culture

We are always looking for ways to improve the strength and diversity of our team, ensuring that we recruit and retain the very best talent. During 2022 we continued this effort, onboarding 162 new hires.

While recruitment is an important part of the puzzle, retention is key. I am delighted that we achieved our highest ever employee engagement score during 2022, launched our Wellness Programme and our Diversity, Equity, and Inclusion Council. All of this has combined to ensure our people feel accesso supports, trusts, and champions them. With a staff churn rate of just 15%, we are proud of the investments we have made in our team and the strong culture that sets us apart as a business.

Outlook and guidance

I'm very pleased with our 2022 performance. It isn't easy to deliver against our bold expectations across the board, and the team has done an extraordinary job. We provide a quality product offering which is in clear demand and touching even more verticals. We have never been better positioned as we start a new financial year, and I am excited by what accesso can achieve this year and beyond. I am confident we are on track with our platform, strategy, products, and team to make the most of our expanding market opportunity and deliver further growth.

Naturally, we are mindful of evolving economic conditions and continue to monitor key indicators closely. As things stand, our trading performance has been encouraging, with January and February in line with expectations. Our geographic diversity and the nature of the Group's client base are key strengths as regional and local activities serve as substitutes for more expensive destination travel.

This operational resilience is underpinned by a strong cash position as the Group continues to trade with no debt, ending the year with net cash of $64.7m.

For the full year 2023, we expect to see continued revenue growth and look forward to another profitable and cash generative year.

Steve Brown

Chief Executive Officer

3 April 2023

Financial review

Commenting on the results, Fern MacDonald, Chief Financial Officer of accesso, said:

"We are delighted to have built upon our excellent performance in 2021, delivering record revenue and profit before tax and exceeding the high expectations we set ourselves in all of our key metrics. The stability of our balance sheet, net cash on hand and fully resourced and motivated team presents us with the perfect platform to capitalise on the opportunities available and drive our value proposition into new markets. The technology-based solutions for ticketing, virtual queuing and food & beverage provided by accesso continues to drive the expectations of consumers across our key markets." 

Financial overview

During 2022 the Group delivered record financial performance in revenue and profit before tax, with earnings significantly ahead of our initial expectations set at the start of 2022.

Our customer venues returned to their pre-pandemic operating levels, which delivered significant improvement in our earnings with the Group working extremely hard to get our team fully assembled to deliver on this revenue potential and capture the available opportunities in the market.

Key performance indicators and alternative performance measures

The Board continues to utilise consistent alternative performance measures ("APMs") internally and in evaluating and presenting the results of the business. The Board views these APMs as representative of the Group's underlying performance.

The historic strategy of enhancing accesso's technology offerings via acquisitions, as well as an all-employee share option arrangement, necessitate adjustments to statutory metrics to remove certain items which the Board does not believe are reflective of the underlying business. These adjustments may include aborted acquisition or aborted sale related expenses, amortisation related to acquired intangibles, deferred and contingent consideration linked to continued employment, share-based payments and impairments.

By consistently making these adjustments, the Group provides a better period-to-period comparison and is more readily comparable against businesses that do not have the same acquisition history and equity award policy.

APMs include cash EBITDA, adjusted basic EPS, net cash, underlying administrative expenditure and repeatable and non-repeatable revenue analysis and are defined as follows:

Key performance indicators and alternative performance measures

The Group considers cash EBITDA, which disregards any benefit to the income statement of capitalised development expenditure, as its principal operating metric.

These APMs should not be viewed in isolation but as supplementary information. As adjusted results include the benefits of the Group's acquisition history but exclude significant costs (such as significant legal or amortisation expenditure), they should not be regarded as a complete picture of the Group's financial performance, which is presented in its total results.

Key Financial Metrics

Revenue

Group revenue of $139.7m (2021: $124.8m) represents a record for the Group and built on the excellent performance in 2021. Through 2022, customers continued to use our technology to tackle more typical problems, such as physical queues and, also newer use-cases, with technology driving efficiency and compensating for staffing difficulties, including wage inflation and recruitment challenges. Our touchless technologies and ability to drive eCommerce ahead of visitation reduces labour-intensive point-of-sale models and delivers an enhanced guest experience. These technology-based solutions are now the base-level consumer expectation across our key markets and will increasingly become the industry standard over time. We set out details of our revenue by segment, geography and repeatable to non-repeatable analysis below.

Revenue on a segmental basis was as follows:

Ticketing and Distribution revenue was 25.5% up on 2021, benefiting from a full year with minimal capacity restrictions on venues. The distribution business, in particular, continues to be largely dependent on the UK theatre sector which was significantly impacted by mandated restrictions through most of 2021. These were lifted in early 2022 resulting a significant rebound in 2022 distribution revenues which were 79.9% ahead of 2021. In addition, the distribution business is beginning to diversify away from its reliance on the UK theatre market and is benefiting from wider integration into the Group's customer base, allowing existing customers to distribute their ticket supply to wider markets.

During 2022 the Group went live with 54 new eCommerce ticketing clients, following on from a very strong 64 during 2021. This demonstrates a continued shift in consumer and attraction behaviour towards sales online, significantly benefiting both accesso and its customers as spend per guest increases, operational costs are reduced, and we gain additional insight into consumer behaviour through data.

Within the Guest Experience segment, accesso LoQueue's transactional-based queuing products had mixed performance with our most significant US located queuing and ticketing customer launching a more premium focused experience resulting in lower volumes through the year. Their attendance fell by significantly in 2022 and as a consequence our queuing customer penetration fell from 6.1% to 4.4%. Encouragingly, our other accesso LoQueue customers were able to deliver an attendance level improvement of 39.4% and maintain penetration levels, which helped to offset the reduction to a 14.2% revenue fall on 2021. During the year we worked hard with customers to enhance their yield management strategies, ensuring that revenue is increasingly being maximised from the available attendance at each venue.

The remaining revenue within the Guest Experience segment comes from The Experience EngineTM business which delivered consistent year-on-year performance, with revenues up 2.0% on 2021. This highlights the continued customer confidence in our bespoke professional services offerings, with large customers in the ski, theme park and cruise ship markets using our services.

Revenue on a geographic and segmental basis was as follows:

Our USA based customers reduced revenues by 3.6% due to the point noted above with our large US queuing and ticketing customer, as well as other customers turning off their reservation functionality due to COVID related capacity restrictions being removed during 2022 which had generated $4.1m of revenue in the USA during 2021.

Selling our eCommerce solution into the USA and Canadian ski market continues to be one of the Group's medium-term strategic priorities.

Live entertainment across multiple geographies demonstrated superb performance during 2022, with rebounding volumes and a number of new customers being onboarded. Our accesso ShoWare product, which predominantly serves customers in North and South America, delivered a 78.9% increase year over year in ticket volumes following a difficult 2021 impacted by COVID restrictions. This translated to $5.0m of additional revenue across the regions and the addition of 27 accesso ShoWare new customers going live during the year (2021: 28).

In the UK, live entertainment remained closed for the majority of the first half of 2021, opening with partial capacities from May 2021 and then at full capacities from July 2021 with the key month of December being impacted by Omicron disruption with many shows being cancelled at short notice. During 2022, the region encountered very little disruption and was therefore able to deliver growth of 58.2% being an $10.0m increase on 2021, a result more aligned to pre-pandemic levels.

Other European countries delivered growth of 94.3%, significantly ahead of pre pandemic levels represented by 2019, due to the onboarding of several key new clients in the region and an improvement in ticket volumes.

Australia, Asia and the South Pacific delivered growth of 49.3% with revenues of $6.8m, up from $4.5m in 2021. The Australian region delivered the majority of this increase and saw excellent performance from accesso LoQueue and accesso Passport with the success of a partnership renewal with a key customer in the region, Village Roadshow Theme Parks, extending our relationship through to 2027 with an option to extend to 2029.

Revenue quality

The above is an analysis of the Group's revenue by type. Transactional revenue consisting of Virtual Queuing, Ticketing and eCommerce is defined as revenue earned as either a fixed amount per sale of an item, such as a ticket sold by a customer, or as a percentage of revenue generated by a venue operator. Normally this revenue is repeatable where a multi-year agreement exists and purchasing patterns by venue guests do not significantly change, as they did in 2020 as a result of the pandemic. Other repeatable revenue is defined as revenue, excluding transactional revenue, that is expected to be earned through each year of a customer's agreement, without the need for additional sales activity, such as maintenance and support revenue. Repeatable of 83.1% is marginally behind the 84.4% achieved in 2021 but remains ahead of historic performance (2020: 73.6%, 2019: 81.5%). Non-repeatable revenue is revenue that occurs one-time (e.g., up-front licence fees) or is not repeatable based upon the current agreement (e.g., billable professional services hours) and is unlikely to be repeatable without additional successful sales execution by accesso.

Other revenue consists of hardware sales and other revenue that may or may not be repeatable with limited sales activity if customer behaviour remains consistent.

The Group's transactional revenue streams delivered exceptional performance during 2022 of $106.0m, up 11.0% on 2021. The Group's eCommerce products performed particularly well, while Virtual Queuing's fall year over year is explained by the change to a US customer's admission strategy. As expected, reservation revenue fell significantly as there was no longer a requirement from some customers for advanced bookings as had been the case during the pandemic. Professional services revenue performed significantly ahead of our budget and 2021, a credit to our exceptional team which continued to deliver excellent bespoke solutions to the ski, cruise and attractions markets and delivering revenue 8.1% ahead of pre-pandemic levels in 2019. Our platform revenues continue to benefit from this bespoke development work whereby professional service customers have taken up repeatable platform fees for hosting food and beverage mobile apps. Platform revenues grew to $3.0m, which is above both 2021 and 2019. We have seen increased demand for contactless technology, such as our mobile food and beverage apps, which both reduce physical contact points and help our attraction operators to reduce labour costs. 

Other revenues were 28.7% higher, due to increased referral income received from the Group's guest payment gateway partners as well as the expiration of unused gift cards offered to West End theatre customers following COVID cancellations in 2020 and 2021.

Gross margin

The Group's reported gross profit margin of 74.4% is a reduction on 77.2% in 2021 but remains slightly ahead of 2020 and 2019 (when adjusted for $1.6m and $1.2m of server costs to aid comparability respectively). This 2.8% gross margin decrease is a result of the change in sales mix compared with 2021. Our lower margin distribution business performed well in 2022 and represented 4.4% of our gross profit compared to 2.5% in 2021.

Administrative expenses

Reported administrative expenses increased 10.1% to $91.2m in the year, while underlying administrative expenditure increased by 14.2% to $79.6m in 2022, as anticipated, due to a combination of factors; the most significant being the Group's headcount increasing from 513 to 568 (excluding seasonal staff). Positions were filled in a highly competitive job market alongside wage increases for our existing staff in a response to the inflationary pressure, which aided our retention of staff.

Share-based payment costs increased on 2021 to $2.6m from $2.5m, reflective of key management incentive arrangements being granted in both 2020 and 2021 and an all-other staff share-based payment award granted in July 2021.

During the year the Group continued to take action to rationalise its property leases following the move to a hybrid and remote work environment, exiting two-thirds of the space leased in Lake Mary, Orlando. This follows on from the action taken in 2021 where the Group did not renew expiring leases in San Diego, London, Sao Paulo, Belfast and Annapolis. The Group will save a further $0.6m in property lease payments in 2023.

No government assistance has been received during 2022.

Cash EBITDA

The Group delivered cash EBITDA for the year of $25.8m, an 8.3% reduction on the record 2021 result however significantly ahead of our initial expectations for 2022. Whilst the Group delivered revenue growth of 12.0%, this was at lower margins as explained above, along with an increase in payroll costs due to 55 full time additional headcount, the full year impact of 2021 headcount additions and wage inflationary pressure on existing pay levels. The Group also benefited from a reversal of part of our sales tax accrual from 2021 totalling $1.2m.

The table below sets out a reconciliation between statutory operating profit and cash EBITDA:

The Group recorded an operating profit of $12.8m in 2022 (2021: $13.5m); and adjusted basic earnings per share decreased to 35.93 cents (2020: 61.1 cents).

Development expenditure

2022 has been another tremendous period of innovation for accesso, with frontline and technical teams working at pace to deliver solutions to enable our customers to manage capacities, capture the uptick in demand for technology-based solutions to ticketing, eCommerce, distribution, queuing and mobile food and beverage purchasing. Our total development expenditure for 2022 increased to $43.2m, 24.5% higher than 2021 with open positions in our Engineering and Product groups being filled during the year. The development expenditure also includes $1.9m of cost incurred in relation to the recently acquired food & beverage intellectual property.

Development expenditure represents all expenses incurred by the Group's Engineering and Product Management functions, predominantly comprising payroll and software related costs. These functions maintain our existing solutions and work with our customers to ensure the Group's products are well positioned to meet customer needs. In addition, these functions also perform research and development activities based on the product roadmaps which set out the planned features and releases over time.

The Group capitalises elements of development expenditure where it is appropriate and in accordance with IAS 38 Intangible Assets. Capitalised development expenditure of $2.2m (2021: $0.7m) represents 5.2% (2021: 2.1%) of total development expenditure. The Group's research and development is primarily focused on improving existing customer products, which in turn leads to increased customer satisfaction and retention, rather than a focus on creating new revenue streams. It continues to be critical in order to continue to meet and exceed the expectations of our existing customers' requirements and the current solutions they utilise. Development continues to expand the product set and add features that will be important for our customers' operations in the future. 

Cash and net cash

Net cash at the end of the period has increased to $64.7m from 31 December 2021.

The Group has maintained a strong net cash position with net cash inflow from operating activities of $14.5m (2021 Net inflow of $39.1m) offset by $3.8m used in investing activities and $7.5m used in financing activities. This included $5.8m of shares purchased by the Group's Employee Benefit Trust.

The Group continues to hold a 3-year, £18m Coronavirus Large Business Interruption Scheme Loan revolving credit facility at a 3.75% margin with a commitment fee of 1.5%, expiring in March 2024. Quarterly covenant tests were in place on minimum revenue and minimum liquidity for 2 years to December 2022. From March 2023 additional covenants are added for leverage and interest cover until the facility expires. No drawings have been made on this facility and all covenants have been met. The Group's increase in trade and other receivables cash flow of $10.5m is a result of the strong end to the Group's trading year, with many venues opening over the festive period in comparison with the same period in 2021 which was severely impacted by venue closures due to the Omicron COVID variant.

Dividend

The Board maintains its consistent view that the payment of a dividend is unlikely in the short to medium term with surplus cash more efficiently invested in strategic product development or, where the opportunities arise, value accretive acquisitions.

Employee Benefit Trust

The Group funded the trustees of the Employee Benefit Trust in the second half of 2022 to enable the trustees to purchase 761,971 shares at a total cost of $5.8m. The shares are held by the trustees and will be used to satisfy awards granted under the Company's employee share plans that are expected to vest in future years.

Impairment

In line with relevant accounting standards, the Group reviews the carrying value of all intangible assets on an annual basis or at the interim where indicators of impairment exist. As a result, the Group recognised a $0.03m impairment charge in the year over previously capitalised research and development projects where they were no longer expected to generate economic benefit.

Taxation

The tax charge of $2.36m represents an effective tax rate on the $12.4m of statutory profit before tax of 19.0% (2021: 81.8% effective tax rate based on a tax credit of $9.9m and a statutory profit before tax of $12.1m).

The key reconciling item to actual tax rates is $1.0m relating to the impact of changes in statutory tax rates being applied to the Group's earnings. The Group's principal rate of tax for the period, being the US federal rate of 21% plus a blended rate of 5.87% for US state taxes, was 26.87% compared to 24.0% in the prior year. This increase in principal tax rate arises predominantly due to an uplift in the number of states within the USA where income taxes are filed.

Fern MacDonaldChief Financial Officer

3 April 2023

Consolidated statement of comprehensive income

for the financial year ended 31 December 2022

All activities of the Company are classified as continuing

Consolidated statement of financial position

as at 31 December 2022

Consolidated statement of cash flow

for the financial year ended 31 December 2022

Consolidated statement of changes in equity

for the financial year ended 31 December 2022

Notes to the consolidated financial statementsfor the financial year ended 31 December 2022

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 licenced 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 licenced to the operator for their operation.

2. Basis of accounting

The preliminary results for the year ended 31 December 2021 and the results for the year ended 31 December 2020 are prepared under UK-adopted international accounting standards ("UK-adopted IFRS") and applicable law. The accounting policies adopted in this preliminary announcement are consistent with the Annual Report for the year ended 31 December 2022.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2022 or 2021 but is derived from those accounts. Statutory accounts for 2021 have been delivered to the registrar of companies, and those for 2022 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

While the financial information included in this announcement has been prepared in accordance with the recognition and measurement criteria of UK-adopted IFRS, this announcement does not itself contain sufficient information to comply with UK-adopted IFRS.

The Group's consolidated financial statements have been prepared in accordance with IFRS. They were authorised for issue by the Company's board of directors on 3 April 2023.

Details of the Group's accounting policies are included in notes 3 and 4

3. Changes to significant accounting policies

Other new standards and improvements

Other than as described below, the accounting policies, presentation and methods of calculation adopted are consistent with those of the Annual Report and Accounts for the year ended 31 December 2022, apart from standards, amendments to or interpretations of published standards adopted during the period.

The following standards, interpretations and amendments to existing standards are now effective and have been adopted by the Group. The impacts of applying these policies are not considered material:

· Property, Plant and Equipment: Proceeds before Intended Use - Amendments to IAS 16;

· Onerous contracts - Cost of Fulfilling a Contract - Amendments to IAS 37;

· Annual Improvements to IFRS Standards 2018-2020; and

· Reference to the Conceptual Framework - Amendments to IFRS 3. 

The Group also elected not to adopt the following amendments early:

· Deferred Tax related to Assets and Liabilities arising from a Single Transaction - amendments to IAS 12; and

· Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2.

New standards and interpretations not yet adopted

A number of new standards, amendments to standards, and interpretations are either not effective for 2022 or not relevant to the Group, and therefore have not been applied in preparing these accounts. These standards, amendments or interpretations are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

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.

Basis of consolidation

The consolidated financial statements incorporate the results of accesso Technology Group plc and all of its subsidiary undertakings and the Employee Benefit Trust as at 31 December 2022 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.

accesso Technology Group Employee Benefit Trust is considered to be a special purpose entity in which the substance of the relationship is that of control by the group in order that the Group may benefit from its control. The assets held by the trust are consolidated into the Group and Company Financial Statements.

All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

Going concern

The financial statements have been prepared on a going concern basis which the Directors consider to be appropriate for the following reasons.

The Directors have prepared cash flow forecasts for the going concern period, which indicate that, taking account of severe but plausible downsides, the Group will have sufficient funds to meet the liabilities of the Group as they fall due for that period. The Group's severe but plausible downside scenario models revenue of $136.3m for 2023 and marginally decreases thereafter. Underlying administrative spend reduces to $82.1m and a marginal decrease thereafter for the same corresponding periods to reflect cost cutting measures that would be implemented. The severe but plausible downside scenario indicates that the Group's cash balance reaches a low point of $61.2m and does not utilise any of its £18m loan facility. The Group's forecasts do not include the impact of any possible future potential acquisitions and, if needed, the Group would ensure additional funding had been obtained prior to committing to such acquisitions.

At 31 December 2022 the Group has cash of $64.7m and an available undrawn loan facility of £18m. Covenants on the undrawn facility were passed during 2022 and are forecast to be passed through the going concern period. 

Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they fall due for the assessment period being at least 12 months from the date of signing and therefore have prepared the financial statements on a going concern basis.

Foreign currency

Contract assets and contract liabilities

Contract assets represent licence fees which have been recognised at a point in time but where the consideration is contractually payable over time, professional service revenue whereby control has been passed to the customer and deferred contract commissions incurred in obtaining a contract which are recognised in line with the recognition of the revenue. Contract assets for point in time licence fees and unbilled professional service revenue are considered for impairment on an expected credit loss model, these assets have historically had immaterial levels of bad debt and are with credit worthy customers, and consequently the Group has not recognised any impairment provision against them.

Contract liabilities represent discounted renewal options on licence arrangements whereby a customer has the right to renew their licence at a full discount subject to the payment of annual support and or maintenance fees on each anniversary of the contract. Contract liabilities are recognised as income when a customer exercises their renewal right on each anniversary of the contract and pays their annual maintenance and support. In the situation of a customer terminating their contract all unexercised deferred renewal rights would be recognised as income, representing a lapse of the renewal right options. The licence fees related to these contract liabilities are non-refundable.

Where these assets or liabilities mature in periods beyond 12 months of the balance sheet date they are recognised within non-current assets or non-current liabilities as appropriate.

Interest expense recognition

Expense is recognised as interest accrues, using the effective interest method, to the net carrying amount of the financial liability.

Employee benefits

Share-based payment arrangements

The Group issues equity-settled share-based payments to full-time employees. Equity-settled share-based payments are measured at the fair value at the date of grant, with the expense recognised over the vesting period, with a corresponding increase in equity. The amount recognised as an expense is adjusted to reflect the Group's estimate of shares that will eventually vest, such that the amount recognised is based on the number of awards that meet the service and non-market performance conditions at the vesting date.

The fair value of our share awards with time-based and employment conditions are measured by use of a Black-Scholes model, and share options issued under the Long-Term Incentive Plan (LTIP) are measured using the Monte Carlo method, due to the market-based conditions upon which vesting is dependent. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

The LTIP awards contain market-based vesting conditions where they have been set. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.

LTIP awards granted in 2020 included continued employment conditions only due to the unprecedented market instability, before being modified on 12 February 2021 by the Remuneration Committee to include a market-based total shareholder return condition and cash EBITDA non-market-based conditions. The fair value of these LTIP share awards were initially valued by use of a Black-Scholes model due to them including only continued employment conditions. On their modification they were reassessed using a Monte Carlo method, due to the market-based conditions upon which vesting is dependent, this resulted in a fair value below that on which the awards were initially granted, as such the fair value was not reduced in line with IFRS 2 Share-based payments and they continue to be recognised at their original grant date fair value.

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 to write off the cost of assets, less residual value, over their estimated useful lives, using the straight-line method, on the following bases:

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:

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:

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 and impairment of non-financial assets

Any excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the Consolidated Statement of Financial Position as goodwill and is not amortised.

After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being reviewed for impairment at an operating segment level before aggregation, at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired.

Where the recoverable amount of the cash-generating unit is less than its carrying amount including goodwill, an impairment loss is recognised in the Consolidated Statement of Profit or Loss.

Any non-financial assets other than goodwill which have suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Assets that are subject to amortisation and depreciation are also reviewed for any possible impairment at each reporting date.

Externally acquired intangible assets

Intangible assets are capitalised at cost and amortised to nil by equal instalments over their estimated useful economic life.

Intangible assets are recognised on business combinations if they are separable from the acquired entity. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques. The significant intangibles recognised by the Group and their useful economic lives are as follows:

Internally generated intangible assets and research and development

Expenditure on internally developed products is capitalised if it can be demonstrated that it is substantially enhancing an asset and:

In accordance with IAS 38 Intangible Assets, expenditure incurred on research and development is distinguished as either related to a research phase or to a development phase. Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects is recognised in the Consolidated income statement as incurred.

Development expenditure is capitalised and amortised within administrative expenses on a straight-line basis over its useful economic life between 3 to 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 (2021: $nil).

Acquired intellectual property rights and patents

Intellectual property rights comprise assets acquired, being external costs, relating to know-how, patents, and licences. These assets have been capitalised at the fair value of the assets acquired and are amortised within administrative expenses on a straight-line basis over their estimated useful economic life of 5 to 7 years.

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:

Financial liabilities

The Group treats its financial liabilities in accordance with the following accounting policies:

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 and the Company has elected to consolidate within the Company balance sheet. 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 and Company statements of financial position as if they were treasury shares.

IFRS 16 Leases

The Group assesses whether a contract is or contains a lease. Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.