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Accesso has a spring in its step

Last updated: 07:31 14 Sep 2016 EDT, First published: 07:50 21 Mar 2016 EDT

Fun fair
A lot of work goes into localising the Passport product

Accesso Technology Group PLC (LON:ACSO) said business wins and technological advances were reasons for higher annual profit and revenue.

The group, which provides ticketing solutions and technology that allows theme Parks and other leisure attractions to reduce queuing, invested heavily in 2016 globalising its product, largely to serve its flagship customer, Alton Towers owner Merlin Entertainments PLC (LON:MERL), which plans to instal the accesso Passport product across its entire global estate.

Its 2016 results confirmed another strong year in what was considered an “investment phase” for accesso.

Revenue rose 10% to US$102.5mln in 2016 from US$93.2mln in 2015, slightly ahead of the US$102mln that had been forecast by Cantor Fitzgerald.

Growth was driven by a combination of new contract awards and long-term contract extensions. The group managed to bag 51 customer wins during the course of 2016.

Adjusted underlying earnings (EBITDA) jumped 25.7% to US$19.1mln from US$15.2mln, while good old profit before tax surged 40.3% to US$10.1mln from US$7.2mln.

Adjusted earnings per share climbed 25.7% to 51.48 cents from 40.96 cents the previous year.

WHAT THE BOSS SAID

On its 2016 performance...

Tom Burnet, executive chairman, said it was "all good from a financial point of view” but stressed it was a particularly pleasing performance as the group had put in a lot of work in the background preparing for global expansion.

On product development...

“We’ve made some really big strides in globalising our platform, and this is particularly to serve our client Merlin,” Burnet said.

The company has also been working on the accesso Prism device, a wearable gizmo that is being trialled in a water Park – so presumably it is water proof.

“We see this as the next exciting evolution of our hardware technology,” Burnet said.

On the outlook...

“Accesso continues to invest to ensure we are at the forefront of product functionality, customer relationship management and internal talent acquisition. Beyond these investments to prepare us for long term growth, these efforts are already delivering results for our customers and our business today," said Steve Brown, chief executive officer of accesso.

ABOUT THE COMPANY

The key to future success for accesso Technology looks set to lie in building on what it achieved in 2016 -  and tapping new markets.

“We don’t earn any money until we start selling tickets, so we have to make large investments ahead of the revenues starting to flow,” Burnet explained.

That big push on the investment side will start to tail off, which is good news for a company that earns a lot, most of which converts to cash.

Cash generated from operations clocked in at US$18.6mln in 2016 from US$14.7mln the previous year as the cash conversion rate improved to 97.4% from 96.7%.

Net debt tumbled to US$3.4mln by the end of the year from US$9.4mln at the end of 2015.

WHAT THE BROKERS SAID

"The outlook is confident, and indicates scope for significant long term margin expansion, albeit relatively cautious margin growth near term as management continue with their investment plans," said Numis Securities, which has an "add" recommendation and price target of 1,730p.

"The scale of the market opportunity remains substantial in our view with plenty of runway ahead of accesso, thus we are happy to remain positive," the broker said.

For 2017, Numis forecasts revenue will rise to £112.4mln and earnings per share will advance to 58.1p from 52.1p in 2016.

The broker expects the company will turn cash positive, with a net cash position of £5mln at the end of 2017.

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