REG - Accesso Technology - Covid-19 Business Update

accesso TechnologyAnnouncement

27/04/2020 07:05

RNS Number : 8830K
  
Accesso Technology Group PLC
  
27 April 2020
  
 

27 April 2020
accesso® Technology Group plc
(the "Group" or "Company")
Covid-19 Business Update
accesso Technology Group plc (AIM: ACSO), the premier technology solutions provider to leisure, entertainment and cultural markets, today announces the following business update in relation to the ongoing Covid-19 pandemic. The Group continues to work constructively with employees, customers and financial stakeholders, ensuring it remains operationally resilient and strategically focused through this period of unprecedented global disruption.
·    Extensive cost mitigation actions taken in line with reduced revenue: monthly operating cost run rate reduced by $2.6m to approximately $3.8m per month;
·    Current liquidity supports operations into autumn, with $19.5m currently available to the Group in cash and undrawn facilities;
·    Focus on standing ready to enable customers when they commence a gradual return to operations;
·    Group in constructive discussion with existing credit provider re increasing liquidity headroom as well as giving full consideration to additional funding options.
Steve Brown, CEO of accesso, commented:
"My priorities at this time are to ensure the health and safety of our accesso team; to reinforce our financial resilience and flexibility; to maintain the operational readiness of our business platform; and to ensure we keep focused on our long-term strategy for success. Having started the year strongly, we are now acting decisively to manage our cost-base while this situation endures. We have sufficient liquidity in place to manage a range of forward-looking scenarios, and we are considering further options to ensure the Company is fully prepared should the impacts extend beyond the range of our current expectations." 
Covid-19 Impact Assessment
The Covid-19 pandemic has struck the Group's served markets severely, leading to disruption across all geographies including our key North American market. While this is a challenging situation for our customers, we believe the great majority will rebound strongly, being leaders in their respective markets with significant latent demand and strong long-term customer propositions.  
 
Most of the theme parks, attractions, and other venues in our client portfolio are regional in nature, meaning their visitors live within a short distance of the venue.  A visit does not require significant advance planning, air travel or hotel accommodation. This means demand for these venues is likely to rebound strongly even if visitors are required to stay close to home and will likely increase as individuals seek leisure activities with their friends and families following an extended period of isolation. 
 
The impact of current events on our full year trading outlook remains heavily dependent on how soon attractions are able to reopen and the speed with which visitor volumes recover. We are in close dialogue with our customers around their plans and expect that many theme parks and other attractions will begin to reopen throughout the summer, most likely on a staggered basis and operating initially at reduced capacities. However, this is clearly not entirely within the control of venue operators and accordingly we are planning conservatively to ensure we can withstand less favourable scenarios. 
 
Cost mitigation actions taken
 
The Group has taken swift and decisive action to reduce its operating cost base in cash terms since the start of the crisis. The staffing expense reductions detailed below, combined with reduced discretionary spending including travel, marketing, and tradeshows, and the permanent closure of our San Diego office effective 27 April, will together reduce the company's monthly operating cost run rate by approximately $2.6m compared to 2019, resulting in a run rate of approximately $3.8m during this period of reduced operations. These cost reductions are combined with permitted deferrals of tax payments in the UK and US and the release of tax losses permitted under the US Government's CARES Act to further enhance our cash position.  
 
While the Group both recognises and seeks to mitigate the personal toll of lowering staffing levels, its significant ability to flex operating costs relative to expected changes in revenue remains an important lever in its efforts to manage its business through this time. Total staffing costs, inclusive of taxes and benefits, represented approximately 76% of the Company's overall operating expenses in 2019. 
 
As announced in our preliminary results of 18 March 2020, the Group had commenced measures to reduce overhead costs prior to the COVID-19 crisis with our first tranche of cost-reduction activity in late February which included:
 
·    Lowering headcount by 23 full-time positions and 4 independent contractor roles;
·    Permanently closing an additional 14 open roles;
 
As our clients began implementing closures and postponing scheduled season opens, the Group immediately commenced measures on 16 March to adjust operations alongside anticipated reduction in revenues including: 
 
·    Implementing a 20% pay reduction via a 4-day work week for most of our staff;
·    A 20% reduction in remuneration for the Group's directors until further notice. 
 
In recognition of the outlook worsening into the summer, we have now taken further cost action, including:
 
·    Lowering headcount by a further 29 full-time positions and 26 independent contractor roles;
·    Placing roughly half of our remaining staff on furlough;
 
These staffing changes are significant and represent a material reduction from the 568-headcount level at the end of 2019. Wherever possible we have utilised available government programmes in both the UK and North America to provide the best possible support to staff while reducing our cash expense.  For those staff members on furlough, the company will fully underwrite health insurance coverages.
 
As clients begin plans to resume operations, staffing levels will be recalled at appropriate levels.
 
Trading and liquidity position
accesso started the 2020 financial year trading ahead of the Board's expectations, with a promising sales pipeline and a renewed focus on long-term success. With the return of former CEO Steve Brown at the end of January, revenue through February was up 12.9% on the prior year. However, revenues fell sharply towards the end of March as our customers started either to postpone season openings or close sites per government advisories.  The strong start to the year was offset by the negative impacts as the COVID-19 crisis begin to set into our business with revenue through March down 11.9% on prior year.
 
As a result of the various closures and postponements, transactional revenues, which in 2019 comprised approximately 73% of our total revenue, fell to close to zero and professional services have reduced as our customers seek to conserve cash. Ongoing revenue consists primarily of support, maintenance and license fees as well as recurring platform fees and the remaining professional services work. As of this update, revenues for the month of April are expected to be down by 72% year-on-year.
 
As announced in the 2020 Preliminary Results, the Group's net cash position at the end of December 2019 was $0.4m. As at 17 April 2020, the Group's net debt position was $10.5m, comprising cash at hand of $14.7m and borrowings of $25.2m against a committed revolving credit facility of $30m with Lloyds Bank, which is committed until March 2022. As a result, cash available to the Group is $19.5m as at 17 April 2020. It is also worth noting that the $10.9m movement in net debt since 31 December is attributable to the typical seasonal dynamics of our business, tax payments and the additional unwinding of 'pass-through' cash relating to the Ingresso ticketing business as they move from their peak period to a period of minimal activity due to the impacts of COVID-19.
 
While the Board continues to monitor liquidity carefully in the context of the fast-evolving circumstances, we consider that alongside our aggressive mitigating actions our existing facility gives us sufficient liquidity to support operations through summer and into the autumn period, assuming a nominal level of activity from mid-summer onward. 
 
If the pandemic persists further, additional operational adjustments may be made to further reduce operating costs, and expanded financing may be needed. To that end we are currently in constructive discussions with our debt provider to ensure that any necessary covenant waivers are granted and potentially to increase our available liquidity, whether under the COVID Larger Business Loans Scheme or otherwise. We are diligently evaluating all other options to ensure the Company is fully prepared should the impacts extend beyond the range of our current expectations and further to ensure the Company is adequately positioned for the future beyond this crisis.
 
CFO Appointment
 
Today the Group announced the appointment of Fern MacDonald as Chief Financial Officer. Fern also joins the Board of accesso with immediate effect. Fern is an experienced international accounting and finance professional and has served as Senior Vice President of Finance at accesso since May 2018. 
 
 
ENDS
 
For further information, please contact:



 accesso Technology Group plc
Steve Brown, CEO
Fern MacDonald, CFO
  






+44 (0)118 934 7400
 
 
 




Numis Securities Limited (Nominated Adviser and Broker)
Simon Willis, Mark Lander, Hugo Rubinstein






+44 (0)20 7260 1000


















FTI Consulting, LLP 
Matt Dixon, Adam Davidson, Chris Birt






accesso@fticonsulting.com
 



 
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 more than 30 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 educate business and marketing decisions.
accesso stands as the leading technology provider of choice for tomorrow's attractions, venues and institutions. 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 understands 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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