‘Queuing, ticketing & distribution and in-venue experience’ technology group Accesso (ACSO) has announced 2018 results emphasising “continued growth with revenue of $118.7m representing an increase of 15.5% on 2017 revenue (proforma for IFRS 15) of $102.8m… adjusted operating profit up 25.5% to $25.1m” and “for 2019 we expect… high single digit overall organic revenue growth, similar to 2018”. Though having already been hit from around 3000p as recently as September, the shares are currently further lower around 800p. Hmmm…
It capitalises the company currently at a bit over £200 million – with the noted adjusted operating profit presently equating to circa £19 million. A potentially attractive valuation then? Er… The results also noted “investment required to evolve and broaden our range of solutions” – and against $9.6 million of depreciation+amortisation (excluding acquired intangibles), there was capitalised development expenditure of… $21.1 million! With also particularly a $10.4 million net working capital outflow and $7 million of deferred consideration paid, net cash actually FELL by more than $12 million, to just $0.5 million. Worse is also suggested by that interest received was just $37k and interest paid $1.8 million!
The net current asset/liabilities position was improved by $10.1 million to +$8.5 million, though non-current liabilities were $4.8 million higher to $38.6 million – and it is net cash generation which is eventually key. The company argues it “believes that the group remains in a strong financial position at the period end, with good access to debt finance on attractive terms… current facility of $50m”. However, currently “the total available for drawdown is subject to a reduction of US$10m on 30 March 2019 and a further reduction of $10m on 30 March 2020” and not only “we will be increasing the group's sales and marketing spend to the level required to fully pursue the expansive market opportunity we have identified”, but… “we now need to introduce a more unified, efficient and flexible architecture which allows existing and prospective clients to be selective not just around which solutions they implement, but how, and to what extent they deploy them, including the ability to integrate their own or other, third party applications… will require investment over the course of the next two to three years… Total development expenditure in 2019 is expected to increase to between $36m to $39m (2018: $29.3m)”!
The announcement concludes “the board maintains its consistent view that the payment of a dividend is unlikely in the short to medium term”. Quite! – I suggest it instead looks like further cash (debt) burn ahoy here and that the detailed short thesis from November now looks even more prescient. I consider this here still a sell.
Filed under: Accesso, Maistro, Dignity, Vast Resources Time Out, Woodford, Cloudbuy
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