Lo-Q Share Discussion Threads

[someuwin] 05/12/2012 07:05

RNS Number : 7660S

Lo-Q PLC

05 December 2012

5 December 2012

Lo-Q plc

("Lo-Q" or the "Company")

Acquisition of accesso LLC

-Lo-Q announces acquisition of leading US ticketing and e-Commerce company for total consideration of GBP13.7m-

-Acquisition will extend Lo-Q's market penetration in the US, enhance its product development capability and bring European and Asian distribution to accesso's product set for the first time-

-Acquisition expected to be immediately earnings accretive-

Lo-Q (AIM: LOQ), the AIM listed provider of virtual queuing systems for theme parks, water parks and major attractions, is pleased to announce the acquisition of accesso LLC ("accesso") ("Acquisition"): the leading provider of ticketing solutions for theme parks, water parks, zoos and cultural attractions in North America.

Acquisition Key Points

The Directors believe that accesso will:

-- Deepen Lo-Q's customer relationships, particularly with important 'top 10' theme and water park operators;

-- Enhance Lo-Q's ability to develop new products and value-added services for customers, particularly in mobile, by combining both companies' strong IP and product development skills;

-- Strengthen Lo-Q's management team, with accesso's current CEO, Steven Brown, joining the Lo-Q board with immediate effect and becoming Chief Operating Officer of the merged North American business and other key staff remaining with the enlarged Group in key management positions;

-- Be immediately earnings accretive;
-- Enable Lo-Q to cross-sell accesso's solutions to customers and prospects in Europe and Asia;

-- Accelerate Lo-Q's existing growth strategy by opening up new complementary verticals;
-- Help to reduce the seasonality currently inherent in Lo-Q's business.
Commenting on the Acquisition, Tom Burnet, Chief Executive of Lo-Q said:

"I am delighted to announce the news today of our acquisition of accesso. Both parties believe that this combination presents an excellent opportunity to build a trusted, proven and energetic supplier of scale across multiple Leisure markets. accesso's customer base complements our own and our products and technologies will be hugely synergistic. Bringing these two businesses together will expand the opportunity for both of us globally and we firmly believe that the deal is an excellent use of Lo-Q's cash, as we seek to grow the size, scope and potential of our firm. This is a very exciting day for the entire Lo-Q team."

Commenting on the Acquisition, Steven K. Brown, Chief Executive Officer of accesso, said:

"We're thrilled to be joining the Lo-Q portfolio and look forward to offering our combined set of revenue-driving resources to attractions around the globe. Blending our unique and highly successful companies will allow us to jointly leverage the talent of both teams and our combined technological, mobile and operations expertise to develop next generation solutions to meet the rapidly changing needs of the attractions marketplace."

Rationale for Acquisition

The Directors of Lo-Q believe that the combination of accesso's platform, products, customer base and skilled employees with Lo-Q's existing operations and customer relationships will open up new routes to growth for the enlarged group as well as defend and deepen existing client relationships. As such, the Board believes that this acquisition represents an excellent and appropriate use of Company cash, supporting its potential to deliver future growth from a broader, more balanced mix of end-markets.

accesso is recognised as the attractions industry's leading provider of ticketing solutions offering a range of proprietary PCI Level 1, fully-hosted ticketing, ecommerce, mobile and payment processing solutions to more than 100 leading venues across the United States, Canada and Mexico. accesso is on track to process nearly $1 billion in transactions in 2012 and deliver more than 14 million print-at-home and mobile admission tickets for its clients.

accesso's strong customer base is highly complementary to Lo-Q's, with both companies sharing some of the theme park and water park industry's largest operators as customers. Similar to Lo-Q, accesso has a strong track record of customer growth and customer retention and the acquisition will add a number of new 'top 10' worldwide operator names to Lo-Q's existing relationships. In addition, accesso currently operates only in North and Central America, which presents the Enlarged Group with an opportunity to leverage Lo-Q's existing presence in Europe and its partnership in Asia to expand sales of accesso's products internationally.

accesso's product suite represents an important strategic bridgehead for Lo-Q into adjacent Leisure verticals, such as zoos and cultural attractions. These relationships and products will support Lo-Q's stated ambition to move in to new verticals, expanding the range of opportunities open to the Company. It will also help to broaden and deepen Lo-Q's potential market in areas that see less 'seasonal' revenue flows, thereby reducing, over time, the seasonality Lo-Q's business currently demonstrates. Furthermore, the addition of accesso's highly experienced management team which includes extensive expertise in the theme park and attractions market to the Company's existing employee base will support and enhance Lo-Q's continued expansion into the Leisure market.

Both organisations believe that the industry trend of convergence to mobile based solutions - with payment, ticketing, queue-line management and privilege and content - will become intrinsic to delivering a great guest experience. By combining accesso's existing mobile product and its sales track-record in this area with Lo-Q's increasingly successful Smartphone-based solution, the Directors believe that Lo-Q will be better able to exploit the growth that this trend is enabling.

For example, accesso's comprehensive mobile content and secure commerce platform will reach more than 1.1 million downloads in 2012. accesso has demonstrated a strong track record in exploiting its market-leading position to acquire clients that want a mobile presence. Then, by demonstrating the strength of its customer support and solutions, accesso has in turn successfully upsold to those customers its ticketing system. This strategy has worked well, resulting in a mobile client base of 36 venues since the programme's inception two years ago.

Board Appointment

Upon completion of the Acquisition, Steven Brown will become Chief Operating Officer of the merged North American business and will join the Lo-Q board with immediate effect. Steven Brown, aged 44, President and Chief Executive Officer of accesso, spent 16 years with the Walt Disney Co. where he held executive positions as Director of Walt Disney World Ticketing and Vice President of Revenue Management for Disneyland Resort. He has also worked as Corporate Vice President of Ticket Strategy and Sales for Six Flags. Further details in connection with Steven Brown's appointment, which are required under the AIM Rules, are included below.

Terms of the Acquisition

Under the terms of the Acquisition, Lo-Q will purchase 100% of the equity in accesso for a total consideration of $22.0m (GBP13.7m). This consideration consists of the following: $6,337,500 (c.GBP4.0m) in cash at completion; the issue of 1,802,246 new ordinary shares ("New Ordinary Shares") in Lo-Q (equating to approximately 9.3 per cent of the enlarged issued share capital) (the "Initial Stock Consideration"); and a loan note from accesso for $6,337,500 (c.GBP4.0m) ("Loan Note") which attracts a coupon of 1.25% per annum until 31 March 2013 and 2.5% per annum from 1 April 2013. The Loan Note is convertible into Ordinary Shares of the Company from 1 April 2013 at nil cost and has a redemption date of 31 March 2014. The Company is in discussion with a number of banks with the intention of re-financing this loan note. The New Ordinary Shares making up the Initial Stock Consideration were issued at a price of GBP3.2265 with an exchange rate of 1GBP to 1USD of 1.6036.

Application has been made for the admission of 1,802,246 New Ordinary Shares, being the Initial Stock Consideration, to trading on AIM. It is expected that dealings in these New Ordinary Shares, which will rank pari passu in all respects with the existing ordinary shares of the Company, will commence on 10 December 2012. Following the issue of the New Ordinary Shares, the issued share capital of the Company will comprise 19,331,206 ordinary shares.

Steven Brown, who owned 100% of the equity in accesso, is the sole recipient of the Initial Stock Consideration. Following completion Steven Brown will transfer 78,330 Ordinary Shares of the Initial Stock Consideration to members of the current management team of accesso, 50% of which will be subject to lock-up restrictions for 12 months following completion with the next 25% and the final 25% subject to lock-up restrictions for 24 and 36 months following completion respectively. A further 483,176 Ordinary Shares of the Initial Stock Consideration will be subject to lock-up restrictions for 36 months following completion. Of the remaining 1,240,740 Ordinary Shares of the Initial Stock Consideration, 50% will be subject to lock-up restrictions for 12 months following completion with the next 25% and the final 25% subject to lock-up restrictions for 24 and 36 months following completion respectively.

Financial Information

For the full year ended 31st December 2011, accesso generated unaudited revenues of $5.65m (GBP3.52m), EBITDA of $842k (GBP525k) and net assets of $1.1m (GBP0.7m). During 2012 accesso has experienced material revenue growth of approximately 40%, which has resulted in significant year on year growth in earnings, and building on this strong growth trajectory, Lo-Q expects immediate and significant earnings accretion from the Acquisition.

Additional Information

Under the terms of the employment agreement between the Company and Mr Brown, which will take effect immediately following completion of the Acquisition, Mr Brown will be entitled to receive a salary of $275,000 per annum and be eligible for a performance related annual bonus which would pay, at 100% performance level, 40% of Mr Brown's annual salary. Details of Steven Kyle Brown's current and previous directorships in the past five years are set out below.

Current directorships:


Date Appointed Company Name Position

June 2012 Maven Creative, LLC Member
June 2011 Accesso, LLC Managing Member
November 2010 Resillient Holdings, Member
LLC

Previous directorships:


Tenure Company Name Position

November 2007 to July Cygnus eTransactions Chief Executive Officer
2008 Group, Inc.

In 2008, whilst Mr Brown was CEO of Cygnus eTransactions Group, Inc, its board of directors voted to reorganise under Chapter 11 of the US Bankruptcy Code and its assets were subsequently liquidated.

There is no further information in connection with the appointment of Steven Brown to the Board of Directors which is required to be disclosed in accordance with Rule 17 and Schedule 2(g) of the AIM Rules for Companies.

[davidosh] 04/12/2012 16:57

Next contract news following a successful IAPA hopefully will move it back on an upward curve I guess.

[rivaldo] 04/12/2012 15:40

A sudden burst of five 2.5k buys plus a few others. Someone's keen to buy in.

[spud] 03/12/2012 16:25

I doubt it..

spud

[ccraig69] 03/12/2012 11:13

It must almost be time for a small but increasing over time dividend with so much cash and a good number of new contracts to pay for expansion.

[orange1] 30/11/2012 14:08

15000 bought at 322,94. The best you can buy for now is 325 and you will only be able to buy no more than 3500.

[spud] 29/11/2012 18:02

Absolutely. I'm in for the haul and have been for a good few years.

I'm hoping that the news will be fresh contracts and not necessarily just expansion of existing ones.

spud

[supernumerary] 29/11/2012 17:09

Well, OK, I believe you ;¬). But it's an immutable law of AIM tiddlers that in the absence of news the price will drift lower, and it tends to happen more sharply in shares like loq that remain relatively illiquid. Of course the corollary is also true - good news will move the price back up pretty fast. I'm confident that we'll get the usual flurry before spring of next year - it's just a matter of resisting the temptation to try too hard to game it.

[spud] 29/11/2012 16:46

No super, i've not sold a bean since I added about 3 months ago. I'm merely passing an observation. I intend to hold this to circa £10 which equates to the early part of 2015. However, for this to pan out, we need to be closing those deals pretty regularly which need not be overly onerous bearing in mind the valuable IP we have.

spud

[supernumerary] 29/11/2012 16:17

So I take it you're out and looking for a new entry point?

[spud] 29/11/2012 16:13

Interesting to see this falling with zero support in evidence. I suspect that many were expecting the year end statement to beat expectations. Allied to the news vacuum I see 3 quid as pretty much a certainty imo. I also suspect it will start to fall more sharply towards this support level before a technical bounce. If we don't get further contract news after the bounce we will be looking at 270-250p.

I still expect this to hit a high of 420p next year, but the Company really does need to keep closing those deals for that to happen.

spud

[m.t.glass] 28/11/2012 18:38

They could almost make that a condition - ie, as long as you pay for another ride/meal/whatever above a certain price within your queing time, you get it free or at a discount.

[alphabeta4] 28/11/2012 18:16

Holder here, bit surprised some operators aren't giving this away as part of the price (on a one reservation at a time basis) given it would lead to more spend on the various activities within the park.

[rivaldo] 28/11/2012 14:13

Interesting interview with Guy Feld, co-manager of the Marlborough UK Micro-Cap Growth Fund, who also holds LOQ personally:



Excerpt:

"Other attractive features, if I may carry on – so IP, intellectual property, really good intellectual property is extremely valuable. A company called Lo-Q (LSE: LOQ), which I hold personally, is a virtual human management software company. The guy who founded it spent two hours queuing up at a rollercoaster in the States, and what happened when he got to the front of the queue – it broke down. He went back to his garage, and built some software.

Owain:

Oh, I didn't know that.

Guy:

This is a very, very interesting company, because there are a lot of people out there who will pay a premium not to have to queue, or do something else with their time, like feed the kids, or go to another ride.

Owain:

For people who don't know, this is the thing where you can effectively take a place in a queue without being in the queue?

Guy:

In a virtual queue, yes, so you're paying your $20 or $30 bucks, or whatever it is, and you're going away, you're going to a less popular ride, or you're going to the restaurant, and it'll vibrate, and you'll come back. Anyway, there's a lot they can do with that IP, and they've got some valuable patterns there. That's a good example of that one."

[spud] 27/11/2012 08:04

Good question.spud

[glyn10] 27/11/2012 07:48

Brain dead moment (apologies) but what happened over the deal with the credit card company?

[davidosh] 26/11/2012 13:53

LOQ mentioned in the press release out this morning rating AIM listed companies. LOQ got a top rating...




Note that the system is not designed to give buy or sell recommendations on companies
and is not a substitute for full financial analysis and other due diligence that investors
should perform before they invest in a company. But it's interesting to mention the scores
that resulted when we rated two companies which ShareSoc has commented on in the
past. These are Intercede (which ShareSoc has criticised for its pay arrangements, lack of
a Non-Executive Chairman and shortage of independent Non-Executive directors) and
Lo-Q which is a popular AIM company among private investors. Intercede scored positive
ticks on 53% of questions and Lo-Q scored 85% - clearly a major differentiation. Note that
we will not be disclosing the details of the scoring because some of the answers are
subjective and may vary over time – this is not a recommendation to buy or sell the
shares in those companies.

[spud] 23/11/2012 08:57

Looks as if we've a delayed trade yet to print from the opening bell :Bid 327p (Max = 1500)Offer 330p (Max = 1449)spud

[eddie catflap] 22/11/2012 10:02

More of the same...

[eddie catflap] 22/11/2012 09:55

Sorry if already posted but I'd not seen this before...

[spud] 21/11/2012 16:17

Stocktrade - Been loose on the Offer for a while now:Bid 327p (Max = 250)Offer 328.8p (Max = 10000)Can see this slipping back to 3 quid on relatively low volumes without news with this sell order on the books.spud

[orange1] 21/11/2012 15:31

What online portal are you looking at spud?

[davidosh] 21/11/2012 13:38

Tom has made the shortlist...



Excellent recognition of the hard work and achievements over the last two years even if he does not win the award.


Chief Executive Officer of the Year

Tom Burnet – LO-Q
Tim Hair – Chamberlin
David Hearson – Latchways
Alan Hudson – AFH Financial Group
Clive Martell – Delcam
Sean Riddell - Emis Group
David Webster - Driver Group

[spud] 21/11/2012 12:39

Looking at the online portal, it appears that we have a sizeable overhang in situ. Hopefully when news hits, we can take a bite out of it.spud

[davidosh] 20/11/2012 15:00

If you go back one year you will remember that nearly all the Winter contract announcements came in January 2012 so I do not think you need to start having any concerns until late January 2013. Additionally with Sanderson the new far East partner on board announcements could come through at any point making contract work less seasonal.