Accesso Technology Share Discussion Threads

[rivaldo] 23/4/2024 09:35

Shore Capital see 50% upside here:



"Accesso has '50% upside' according to broker

Published: 13:34 22 Apr 2024 BST

Accesso Technology Group PLC (AIM:ACSO, OTC:LOQPF) should see positive margin impacts emerging from a focus on higher-quality revenue streams, says house broker Shore Capital.

“The market opportunity appears promising spanning across various venues and geographies, and we see ACSO as well place to capture a greater share through leveraging its now broader solutions suite”.

“We do not believe the current valuation reflects these positive trends, noting our fair value sees +50% upside on a low/mid-teens EV/cash EBITDA multiple,”

'Buy' is the broker’s recommendation for the virtual ticketing and queuing specialist."

[melloteam] 22/4/2024 10:16

FREE EVENT: accesso will be presenting on the Mello Results Show Webinar on Thursday 25th April 2024, starting at 1pm. There will also be company presentations from
Team Internet; Journeo; Zinc Media; Gelion; and The Property Franchise Group
Register for FREE here:

[smithie6] 19/4/2024 13:24

since the co. apparently holds nett cash it seems strange to me that there is a finance cost of 2.1m$

if the co. keeps its cash at the same bank, to be nett positive, one would think that the borrowing facility would be cheap..& not 2.1m$

well, hopefully in this 6 month period hopefully the finance cost will be markedly reduced....due to cash generation reducing the debt.

[wjccghcc] 19/4/2024 12:45

Actually, it doesn't come from the accounts .. unless I'm missing it somewhere in the notes. You've calculated it based on accounting finance expense divided by end of year borrowing.

I've calculated mine based on cash interest paid divided by average borrowing.

The real answer is probably somewhere between the two. If you're that concerned, I suggest you email the CFO and ask.

[smithie6] 19/4/2024 12:14

I disagree.

the data I gave comes from the accounts.
~10% interest/debt cost/rate

whether it includes anything for amortisation of the set up cost for the loan or a factor for the wind blowing from the west..

....is all irrelevant imo
..the accounts state what the debt was at the end of the reporting period & what the cost was for that. full stop. imo

...while I would agree that the average value of the debt during the reporting period might be different than the end of period amount.

[wjccghcc] 19/4/2024 08:54

The loan cost won't be 10% as their working capital fluctuates significantly due to seasonality. Drawn borrowings at the interims were $33mm so average debt $27mm.

Also, the interest expense will include the amortisation of the bank loan arrangement fee. Better to look at the interest actually paid in the cashflow statement which was $1.4mm. That gives a rough interest rate of 5.3%.

The covenant is a general belt and braces condition for bank loans. No bank wants to see a borrower carve out the most profitable business from their security. The breach seems to have come about because the non-secured businesses actually grew ahead of expectations. All they need to do is amend the loan agreement to include those non-secured businesses as part of the security to the loan.

[mortal1ty] 19/4/2024 08:29

Seems odd. Why does a company with that much net-cash need to fund these acquisitions out of expensive debt?

Actually I read note 13 of the statement.

"The Group also has a general undertaking to ensure that entities acting as guarantors to the HSBC facility aggregate to at least 85% of the Group's Cash EBITDA. Post year end the Group obtained a waiver from this requirement as a result of the existing guarantors falling below the 85% threshold, due to greater than anticipated growth in an acquired entity, accesso Italy s.r.l, and the accession of additional entities not taking place within the required timeframe. This waiver is conditional on the accession of two additional entities, Lo-Q Service Canada Limited and Lo-Q Limited, by 30 April 2024 to ensure the general undertaking continues to be met"

The business had to waive covenants on its facility due to a breach in one of the subsidiaries they put as collateral. In return they had to bring in more subsidiaries as collateral.

How weird is that.

Thanks mate, sold my position. Don't need oddities like that and anything to do with covenant breaching scares me a mile off.

[smithie6] 18/4/2024 18:23

4% ?
the amount of loans was, in last accoumts, ~20m$, with a loan cost of 2.1m$
if correct then the % interest is just above 10%, not 4%, no ?

[mortal1ty] 18/4/2024 15:30

VGS - $3.8m PBT, for $38m, that is a 10% return on capital.

Given it was paid out of cash earning c. 4%, that seems like a decent use of cash to me.

To your point though, this is classic Accesso. They have a disparate set of businesses, built through acquisition.

Someone comes along and creates a decent competitor with modern systems and Accesso has to buy it.

[smithie6] 18/4/2024 09:31

WJCC

do the acquisitions provide an increase to the profit for '24 ?

cost ~50m$, so one hopes so.

-----

ski resort software acquisition.
tiny turnover & profit is even smaller, so forget that one in '24 imo
cost was ~10m$

VGS acquisition, cost ~38m$ nett, expected to produce 4m$ pbt, (about 10% return pbt, if 3.2m$ pat, 8.4% return, so that should increase the ACSO profit.....but perhaps not very much due to the interest cost on the debt to fund the deal. Strategically it looks like a good deal.
(only has 33 employees !!!)

-----

will any existing ACSO software or goodwill be written off due to any of these acquisitions, if acquired software replaces ACSO software, or vice versa ?

[smithie6] 18/4/2024 08:35

Amort. was 9.2m$/year in '23.
And similar amount in the prior year.
I calculate it as 7m$ for '24. (1.5 + 1.4 +4 = 7. (4=2/3 of 6m).

(& In 2025, remaining book value of devel. costs, perhaps ~ 6+3-4= 3, so amort. = 1.5 + 1.5 + 2= 5, a reduction of 2m$ from 7m$ in '24)

(The % amortisation rate per year on development costs is surprisingly high, ~67%. Perhaps the intention is hard/fast amortisation of development costs & then stop capitalising any development costs at all)

Of course whether one wants to ignore it is a different question (& value the co. based on EBITDA (or "cash EBITDA" ) rather than eps.

[wjccghcc] 18/4/2024 07:25

It's in Note 11. There is still a bunch of amortisation of the acquisition intangibles but that's pretty standard. It was the capitalised internal development costs which used to be very high (flattering PBT) that has now been dealt with. With amortisation = 3 x current capitalised dev costs, it's suppressed PBT but as I said, that should be gone in a couple of years as the NBV is now only $6.3mm.

[smithie6] 17/4/2024 23:08

...OCF...SBP....need to get my dictionary out tomorrow.

----
You say there is only 6.3m$ of capitalised costs left to amortise..

I will try to check that out tomorrow, but it seems far too low imo
...noting that for 2023 the amount amortised & depreciated was 8m$ !
...& normally it is perhaps 20% of the amount being 'amortised & depreciated', (ie. over 5 years) inferring that the total value being amortised/depreciated is a much much higher amount than the 6m$ you wrote
----
Depreciation, amortisation, capitalisation of costs...
....too late at night to grind thru that complexity !

----

The amount avoiding the P&L calcs by being capitalised is much lower than the D & A cost, that's good.

[wjccghcc] 17/4/2024 20:16

Fair point Smithie.

I use the OCF pre working capital changes of 23836 - SBP of 3187 = 20649. Then deduct the average capex from the last 2 years of (2839 + 2155 + 14 + 1140 - 25 + 638 + 725 - 8) / 2= 3739 giving FCF of 20649-3739 = 16910

The accounts are a lot cleaner than in LOQ days and I like the fact that they've amortised most of the capitalised development costs. There's only 6.3mm left which will be gone in 2 years, at which point there will be a 3mm uplift to PBT.

[davidosh] 17/4/2024 19:56

Accesso will be presenting on the Mello results show next week.

About 16 companies will be presenting or analysed on the show and free to register

[smithie6] 17/4/2024 19:32

FCF. 17m$
Hmmmmm

Would need to look at the numbers.
Can easily get confusing with adjusted EBITDA (2,4,7) sorry, ACSO (ex-LoQuo) label it "cash EBITDA"...
...(The only listed company imo that uses such a term).
(Many of us who are getting old, will recall the accounting 'problems'/intriques that LoQuo had......and Globo and....
..we are perhaps a bit cautious about triple adjusted numbers....sure it is subjective, but in many businesses there are one-off negatives every year (& some positives) which arguably should be considered on-going & a normal price of being
In business)


....I remember when people used to use eps ...
;-)
----

But yes, FCF is valid, just needs a bit more concentrating to work out a number one has confidence in.

[bouleversee] 17/4/2024 18:49

And I'm still losing quite a lot on my holding. Have come to the conclusion that being a shareholder is a mug's game these days. We carry all the risk and others get all the benefits. I have more losses than gains in my portfolio at the moment.

[wjccghcc] 17/4/2024 18:25

Not sure you should use PBT as that's still being suppressed by the accelerated amortisation of development capitalisation ($6mm amortised vs $2.8mm capitalised). I make it $3.2mm in SBP vs $20mm in free cash flow so reduces the FCF to $17mm. Gives them an EV/FCF of 17.5 at 600p which looks good value vs the rest of the sector, particularly with EBITDA forecast to grow by 25% next year.

[deanowls] 17/4/2024 17:58

Yea smithie, very little thought given for shareholder returns here.

[smithie6] 17/4/2024 16:42

PBT 9m$. (PAT ~8m$)

Money spent on buying shares for the employee share option plans
4m$

& 2.2m$ for shares bought back & cancelled, a benefit for shareholders.

So, 1/2 of the PAT was spent buying shares for employees !

The cost of share benefits for employees, 4m$, was about double the cost of share benefits to the owners of the company (the shareholders). The shareholders have invested a lot of money to get the company where it is now, with the employees as well. Current cap. value is ~£260m. The employees didn't invest any money to get the co. to this stage & they have been paid every month & one assumes other stuff is paid like social security,/Medicare & some pension payments (or in USA-Canada perhaps they don't get that).

Dividend to shareholders. 0.

Interesting.

-----

Normal cost of share payment to employees is 2.5m$/year, every year.
Costing ~4.8p/share for each share. (Higher at 7.7p/share for 2023)

[mortal1ty] 17/4/2024 15:30

...so $27m cash EBITDA forecast... with a $320m market-cap.

Clearly massively undervalued.

Can't think of many tech companies on nearly a 10% FCF yield.

Management should use that FCF to buyback shares instead of acquisitive growth.

Anyway, starting a position.

Just a small one... because the UK market is woeful and this might stay cheap until someone decides to make a bid.

[rivaldo] 17/4/2024 09:36

Shore Capital also say Buy:



Encouraging new interview with the CEO:

- 5 new wins for the new Freedom platform since Jan 1st alone
- won 28 new venues last year organically
- added 273 new venues from acquisitions, inclusing 50 Canadian ski resorts
- "another strong year ahead"

[rivaldo] 16/4/2024 12:48

Peel Hunt say Buy - their last target price was 1,035p, but the article doesn't say if this has been increased:



"accesso operating in a 'structurally growing industry', says broker
Published: 12:57 16 Apr 2024

Accesso, the ticketing and virtual queuing specialist, trades at a discount to both US SaaS and UK SaaS/IT services peers, says broker Peel Hunt, something that it sees as unwarranted.

Results for 2023 were ahead of indications while, since the end of the year, the company has culled its lower margin B2C distribution business.

Added to the removal of the legacy staffing issues, this will help give a step up to gross margins in the current year.

New client wins across the group have been encouraging while projects such as Saudi Entertainment Ventures (where ACSO is the key provider of ticketing and visitor management technology across 21 destinations) underpin assumptions that it is operating in a structurally growing industry supported by major investment into digitalisation and the tourism and entertainment markets.

“We believe actions made against lower-margin revenue streams help support the future profitability potential and improve the model quality.

While "We continue to see scale opportunities across multiple geographies and sectors.”

'Buy' is Peel Hunt’s investment view.

Shares rose 3% to 580p on a tough day generally in the market."

[rivaldo] 16/4/2024 08:07

Everyone knew that last year was to be one of investment in technology, staff and acquisition integration, whereas today's narrative specifically states that this year will be about improvements in efficiencies and lowering admin costs.

Combined with the guidance for a significant rise in EBITDA I suspect shareholders will benefit rather nicely this year.

It's worth noting that over 84% of all revenues are repeatable, i.e "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".

[deanowls] 16/4/2024 07:00

Is that bought in revenue and profit Riv?

Would like ACSO to become for me a bit shareholder focused, I get the investing for growth but shareholders have seen a decline in returns. Maybe it’s the London market?