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Lo-Q PLC  -  LOQ   

Preliminary Results

Released 07:00 12-Feb-2013

RNS Number : 6507X
Lo-Q PLC
12 February 2013
 



 

12 February 2013

Lo-Q plc

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

 

AUDITED RESULTS ANNOUNCEMENT

For the period ended 4 November 2012

 

Lo-Q plc (AIM: LOQ), the AIM-listed technology solutions provider to the attractions and leisure industry, announces audited results for the period ended 4 November 2012.  The results show strong double-digit growth across all financial metrics, with profitability growth in-line and net cash growth slightly ahead of market expectations for the period.

 

Financial Highlights

 


4 November 2012

31 October 2011

Percentage change


£m

£m

%

Revenue

24.5

18.7%

Profit before tax

3.2

2.7

16.7%

Net cash

8.9

7.5

18.9%

Earnings per share - basic (pence)

14.6

11.5

26.2%

 

Operational Highlights

 

·      Significant six-year contract extension to 2017 with Six Flags for the Company's Q-bot and Q-band solutions including expansion to all nine Six Flags Water parks

·      Continued strong product adoption and installation progress

§  Successful installation of and first season trading of 11 Q-band water parks

§  12.6 per cent like for like, year on year increase in average customer spend on Lo-Q products

§  9.0 per cent increase in park attendees utilising Lo-Q systems

·      Global sales momentum across traditional and new product lines maintained

§  First Q-smart contract win secured with Walibi Holland and successful installation completed

§  Water Park progress extended to Palace Entertainments' Splish Splash Water Park in Long Island and Zoombezi Bay in Columbus, Ohio

§  Q-bot contract wins also secured with a major US operator and with LEGOLAND Germany

·      Important partnership signed with Sanderson Group to spearhead expansion in to Asia

·      Two major new operator relationships secured, including with Compagnie des Alpes

·      Strengthening of the senior team with the appointment of Matt Cooper and, post-period end, Steve Brown joining from accesso LLC ('accesso') to the board and Chris Galley joining the management team as CTO

 

Post-Period End Highlights

 

·      Transformational and accretive acquisition of leading US ticketing and e-Commerce company, accesso

·      IAAPA  award for best new product for Q-band, our virtual queuing wristband for water parks

·      Contract wins for Q-band at Palace Entertainments' Raging Waters, Dollywood's Splash Country and Camelbeach Mountain  Waterpark

·      Contract extension for Q-bot virtual queuing services at Dollywood.

·      Installation of accesso's Passport eCommerce platform at Palace Entertainments' Noah's Ark Water Park, expanding accesso's relationship to all 18 Palace Entertainments' theme parks and water parks across North America.

 

Commenting on the results Tom Burnet, Chief Executive of Lo-Q, said:

 

"I am delighted to report on a profitable and exciting year for Lo-Q.  The strength of our products and their clear end-market appeal has enabled us to continue to drive sales across all segments, securing not only landmark wins for our newest smartphone based system, but also retaining the trust and confidence of some of our longest-held customers.

 

"In previous years I have used these reports to talk of my excitement and confidence in the year ahead.  Such sentiment is particularly true this year, with the transformational acquisition of accesso complete and the technology, operations and sales synergies we expected already beginning to prove evident.  I have great confidence in the abilities of our expanded team and in our prospects for the months ahead."

 

Enquiries:

 

Lo-Q plc

Tom Burnet, Chief Executive Officer

John Alder, Chief Financial Officer

+44 (0)118 934 7400



FTI Consulting

Matt Dixon, Clare Thomas, James Melville-Ross, Jessica Liebmann

+44 (0)20 7831 3113



Canaccord Genuity Limited            

Simon Bridges, Cameron Duncan, Brendan Gulston        

+44 (0)20 7523 8000

 

These preliminary results are available on Lo-Q's website at www.lo-q.com

 

About Lo-Q

 

Lo-Q is the premier technology solutions provider to the attractions and leisure industry, focused on driving increased revenues and improved guest experiences through its range of innovative award-winning solutions operated in over 130 attractions worldwide. 

 

Virtual Queuing Solutions

Used by over 8.4 million guests since 2001, Lo-Q's range of patented virtual queuing solutions allow users to queue without having to stand in line.  Instead, they reserve their place in a queue line electronically and are notified when their turn is up.  For attraction operators, this means increased guest satisfaction and increased revenues thanks to customers being unlocked from queue lines, enjoying the rest of the park's attractions instead and spending time in retail and food and beverage outlets.

 

Whether delivered on the smartphone based; Q-smart, the waterproof RFID wristband; Q-band, or the original handheld device; Q-bot - Lo-Q's range of virtual queuing solutions are designed to deliver revenue driving systems to all theme park and water park environments.  Customers including Six Flags Entertainment, Merlin Entertainments, Parques Reunidos, Herschend Family Entertainment and Compagnie des Alpes are all currently benefiting from the happier guests and additional revenues that Lo-Q's virtual queuing solutions bring.  For more information visit www.lo-q.com

 

accesso Ticketing and Content Solutions

A wholly owned subsidiary of Lo-Q plc is recognized as the attraction industry's leading provider of ticketing solutions; offering a range of proprietary, fully-hosted ticketing, eCommerce, mobile and payment processing solutions to more than 100 top venues including Six Flags Entertainment, Cedar Fair Entertainment, Herschend Family Entertainment, and Palace Entertainment.

 

The accesso Passport ticketing suite is a comprehensive solution built for where customers shop - OnSite. OnLine. OnTheGo. noted for a streamlined, easy-to-use design with seamlessly integrated revenue driving features that allow attractions to up-sell, cross-sell and simply-sell. Combined with level 1 PCI security certification, and 24/7 support, accesso Passport gives clients the tools, security and support they need to drive sales.

 

With over 1 million native mobile app downloads for clients so far, the accesso brand also provide content rich iPhone and Android applications that deliver added value info and functionality to attraction guests plus revenue driving mobile ticketing functionality that seamlessly integrates with the rest of the Passport Suite.  For more information visit www.accesso.com.  

 



Chairman's Statement

 

An excellent year

 

Today's results are the end product of an excellent year for Lo-Q.  Notwithstanding the continuing global economic uncertainty we all face, in addition to challenging weather conditions in some of our key markets this year, Lo-Q has delivered strong year-on-year growth in revenue, profit before tax and net cash. Encouragingly, our strong performance continues to be driven by both revenue increases derived from existing sites as well as the 'switch on' of new and additional mandates won during the year.

 

We have also delivered on a number of important operational and strategic milestones during the period, be that the first sale of our innovative smartphone-based product or the extension of long-term customer relationships, such as our relationship with Six Flags.  As these achievements evolve, they will undoubtedly reinforce and enhance Lo-Q's future growth.

 

Our team

 

During the period, the Lo-Q product development and sales teams have continued to work both hard and closely to generate success.  Their work, and that of all our staff, has contributed to the strong sales momentum enjoyed this year, particularly in new product areas.  On behalf of the board, I extend my thanks to all our colleagues for those efforts.

 

It is also important to note the growth in our team this year, with new colleagues joining us in recent months.  Matt Cooper, who joined our board in September, brings with him a wealth of experience in technology and in markets that are particularly important to us, such as the US.  Post-period end we also welcomed Steve Brown to the Lo-Q board.  Steve joined us as CEO of accesso, the business we acquired in December 2012, and now serves as Chief Operating Officer of our expanded North American business.  Additionally, in November we welcomed Chris Galley to our senior team as CTO.

 

I would also like to offer my thanks on behalf of the board to departing Director, John Lillywhite.  In August 2012 we announced that John, who was Non-Executive Deputy Chairman of Lo-Q and had served as Non-Executive Director of the Company since September 2000, had decided to retire from the board.  His contribution in that time was central to the development and growth of our company.

 

Looking ahead

 

On 5 December 2012, we announced the acquisition of accesso, which was a hugely important day for our team. In combination the two businesses can deliver an enhanced and expanded product offering, deepened customer relationships, significant opportunities for further technological innovation and a larger addressable market. Together, we have an excellent opportunity to build a trusted, proven and energetic supplier of scale across multiple Leisure markets and I look forward to reporting our progress in this endeavour as this new year moves forward.

 

Of course, the integration of the accesso and Lo-Q businesses also presents us with new challenges. However, progress with sales is already showing through and, with geographical expansion on the horizon, new parks still to install and a fresh, powerful product range to market, 2013 promises to contain additional exciting opportunities for Lo-Q. I am confident that our dedicated, talented and now expanded team will work hard this year to prove the benefit of Lo-Q's technology to a larger audience than ever before.

 

 

John Weston

Non-Executive Chairman

 



Chief Executive's Statement

 

Strong, profitable growth

 

2012 has been a great year for our firm.  At the heart of our strategy is the delivery of sustainable growth and we have delivered convincingly on that goal this year.  Double digit growth in profitability and net cash is gratifying to see, particularly in a year with continued economic and consumer uncertainty and challenging weather conditions. The hottest July on record in North America; the wettest summer since national records began in the UK and much of Europe and the impact of Hurricane Sandy on America's east coast all featured in a year where like for like attendance at the parks in which we operate showed very limited growth.

 

The resilience of our performance owes much to the strength of our technology and the hugely compelling offering this offers our guests, particularly our newest innovations.  The appeal of these products has enabled us to maintain strong relationships with our key park operators, in some cases extending these relationships by adding further parks, as well as expanding to serve entirely new operators through important contract wins throughout the year. We also continue to pay close attention to the ways in which our customers are evolving their own attendance strategies.  In recent years, for example, operators have been placing increasing focus on solutions that can balance-out attendance in their parks and also improve 'out of season' utilisation rates.  There are opportunities to both adapt our existing offering and develop new approaches to ensure that we support and benefit from this trend.

 

Average like for like guest spend on Lo-Q products increased by 12.6 per cent year-on-year, supported by a 9 per cent increase in the number of park attendees choosing to utilise a Lo-Q system. This continued growth in the appeal and adoption of our products is the consequence of improved sales and marketing efforts and particularly our success in upselling Lo-Q products, moving park-guests to premium-priced solutions. Profit before tax increased to £3.2m, a 16.7% increase on 2011.

 

Moreover and despite significant investment in additional installations in the period, the Company achieved a 18.9% increase in its cash position at the end of the period. Approximately £4.4m of this cash was utilised post period end to fund part of the accesso acquisition.

 

Customers and Markets

 

Not only have we delivered sales momentum this year, but our team has also worked hard to lay the foundations for future sales success.  Progress has been particularly encouraging in new product areas and in the conversion of new customers to our solutions.  The Company has also made further progress in extending long-standing customer relationships, securing the partnerships and trials that will support its future expansion in to new markets and verticals.

 

Building on existing relationships

 

In January 2012, Lo-Q announced a three year contract to install its patented Q-bot system at LEGOLAND® Deutschland: a part of Merlin Entertainments Group, the world's second largest visitor attraction operator. The agreement builds on the success of Lo-Q's existing system at two other Merlin parks: LEGOLAND® Windsor in the UK and Heide Park in Germany and further strengthens the Company's presence in the European theme park arena.

 

During the period, Lo-Q has further expanded its key relationship with Six Flags, the Company's largest customer. Under an extended agreement, Six Flags have committed to a six year extension to their existing Q-bot contract which includes 10 Six Flags theme parks. In addition, Six Flags have deployed Q-band across 9 of their North American water parks, also for a six year term. This demonstrates an important vote of confidence in the sustained value and capability of Lo-Q's technology.

 

Continued progress with Q-band

 

Sales of Q-band, the Company's water park ride reservation system launched in 2011, continue to generate encouraging momentum.  During the year the Company signed a three-year agreement with Palace Entertainment, the largest operator of water parks in the United States, to bring Q-band to Splish Splash in Long Island, NY.

 

In addition, Lo-Q also signed a five-year agreement with Zoombezi Bay, which is owned and operated by Columbus Zoo and Aquarium, to install and operate its Q-band.

 

Strength in our core

 

The Company has also seen continued momentum with Q-bot, its innovative virtual queuing system. During the period, Lo-Q signed a new agreement with a major US theme park operator to install Q-bot at two of the operator's parks in the USA. Under the terms of the agreement, the Q-bot solution will be installed in both parks for four years, with the option to extend this for a further two years. This new relationship highlights the good progress the Company has made in building on and converting its sales pipeline, particularly within large global operators.

 



Landmark first sale for Q-smart

 

Lo-Q has also made significant headway with Q-smart, the Company's new smartphone-based system, that can be deployed to compliment or as an alternative to Q-bot.  Following the successful trial of the Q-smart solution at a North American Park during the summer of 2012, Lo-Q secured a contract to install Q-smart at Walibi Holland, one of The Netherlands' top theme parks. Not only does this mark the Company's first Q-smart customer, the agreement also opens the door to a new, top-tier customer relationship for Lo-Q with Compagnie des Alpes: the park's owner and a major player in the tourism and leisure industries in Europe. We believe that this is a good further example of Lo-Q's innovative product offering as well as illustrating the significant advancements in expanding its footprint within the global operator community. 

 

Post-period end, Lo-Q has continued this momentum with further contract wins secured. The Company has extended its relationship with Palace Entertainment, the largest operator of water parks in the United States and operating a total of 40 attractions in North America.  Raging Waters, California's largest water park, is adding Q-band, while Noah's Ark, the largest water park in the US, has begun utilising accesso Passport's eCommerce platform. Herschend Family Entertainment Group owns, operates or manages 26 family-oriented theme parks and attractions across ten states in the US and we were delighted to announce the extension of our Q-bot solution at Dollywood in Tennessee, together with the installation of Q-band at Dollywood's Splash Country water park. All of these agreements operate through 2015. Finally, we have also been contracted to install and operate our Q-band system at Camelbeach Mountain Waterpark; Pennsylvania's largest water park, for a 5 year term. 

 

Extending our reach

 

An important part of Lo-Q's strategy is to expand sales in to markets where the Company does not currently operate. This year, we commenced a project to gain a foothold in the Asian market place, the fastest-growing theme and water park market globally, were a key area of focus for the Company: and took a step closer to becoming reality. 

 

In September, Lo-Q signed a partnership agreement with Sanderson Group - an Australian multi-national corporation with over 23 years' experience in delivering high quality, themed tourist attractions - to advance Lo-Q's expansion in Asia.  The arrangement sees both firms collaborate on the promotion, sale and support of Lo-Q's products in the region. This venture formally started in December 2012, for an initial one year period and an option to convert into a formal joint venture arrangement and the Company is encouraged by the initial progress that the partnership has facilitated.

 

Positioning our business for the future

 

The board has as its strategic ambition the vision to build a trusted, proven and energetic supplier of scale across multiple Leisure markets.  At the heart of this, we believe the convergence of queuing, ticketing, payments and digital content on to mobile platforms is inevitable and that this represents a huge potential opportunity for Lo-Q.    It is this belief that led Lo-Q to the acquisition of accesso.

 

accesso and Lo-Q together make for a powerful combination.  Together, the enlarged group opens up new routes to growth, possibilities for operational leverage across our combined teams as well positioning us well to defend and deepen both parties' existing client relationships.

 

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 adds scale and reach to our existing business.  accesso also brings to Lo-Q a number of significant operator customers, adding to Lo-Q's existing and expanding base of relationships.  The addition of accesso's product suite also represents an important strategic step forward for Lo-Q, opening up the potential to expand sales into adjacent Leisure verticals, such as zoos and cultural attractions.

 

As with all good combinations, the benefits flow both ways.  At this time accesso currently operates only in North America, presenting the enlarged group with an exciting opportunity to leverage Lo-Q's existing presence in Europe and its partnership in Asia to expand sales of accesso's products internationally.

 

We are still at an early stage in the integration progress, but - as recent announcements have highlighted - we have already begun to see some evidence of the sales synergies we predicted as a part of the transaction coming through as well as numerous operational benefits as our teams start to work together more closely.

 

Industry recognition

 

2012 is notable for the success delivered across all of our product lines, but particularly strong for our water park queuing solution, Q-band, despite being at an early stage in its development.  We are extremely proud to have been awarded an International Association of Amusement Parks and Attractions (IAAPA) Best New Product Award for Q-band.

 

This award is an important industry endorsement. It, together, of course, with the important contracts we have secured this year, demonstrates the value of our team's dedication to innovation and technology.  It is precisely this innovation that has helped us to become the leading provider of virtual queuing systems for the amusement industry around the world and we look forward to continued innovation in future years.

 

 

Intellectual Property and Research & Development

 

One of our greatest strengths as a firm is the extensive portfolio of patents and IP innovations upon which our product set is based.  The Company is committed both to the protection of this portfolio and, where appropriate, a pragmatic extension of it.  As such, this year the Company continued to acquire patents that further differentiate and enhance the capabilities of our software and, we believe, extend our technological leadership in the market in which we operate.  Whilst committed to defending our investments in IP from infringement, the Company is also aware of the additional revenue potential these assets hold.  Where appropriate and advantageous, the Company is prepared to consider selective licensing of its IP, as demonstrated this year with the signing of an IP licensing agreement for one of our patent families.

 

Our commitment to invest in technology is unchanged and total research and development expenditure was £0.85m in the period (2011: £0.69m). 48% of this was capitalised (2011: 49%).

 

Dividend

 

The board has consistently communicated its view that the payment of a dividend is unlikely in the short to medium term, given anticipated new product investment or deployment and other investment opportunities. The accesso acquisition clearly demonstrates the investment opportunities that the board sees as available and the dividend policy therefore remains unchanged.

 

Summary and Outlook for 2013

 

In summary, I am delighted to report another successful year for Lo-Q.  The double-digit growth we have delivered is testament to the hard work of our team and the products they have created, sold and operated.  I would like to echo my Chairman's thanks to that team and re-iterate my welcome to the accesso colleagues who join us at this exciting time for the enlarged Company. 

 

At this time of year, I talk of my excitement and confidence for the year ahead.  Such sentiment is particularly true this year, with the transformational acquisition of accesso complete and the sales and technological opportunities available to be exploited.  I have great confidence in the abilities of our expanded team and in our prospects for the months ahead.

 

 

Tom Burnet

Chief Executive Officer

 



 

Consolidated statement of comprehensive income

for the 52 week and 6 day financial period ended 4 November 2012

 




2012

 


2011

 




£


£













Revenue



29,137,370


24,546,020







Cost of sales



(22,326,209)


(18,339,014)







Gross profit



6,811,161


6,207,006







Administrative expenses



(3,717,224)


(3,540,316)







Operating profit



3,093,937


2,666,690







Finance income



59,594


34,825







Profit before tax



3,153,531


2,701,515







Income tax



(632,187)


(760,696)







Profit for the period



2,521,344


1,940,819







Other comprehensive income












Exchange differences on translating foreign operations



(84,954)


74,478







Other comprehensive income for the period,






net of tax



(84,954)


74,478







Total comprehensive income for the period



2,436,390


2,015,297







Profit attributable to






Owners of the parent



2,521,344


1,940,819







Total comprehensive income attributable to






Owners of the parent



2,436,390


2,015,297







Earnings per share expressed






in pence per share:






Basic



14.56


11.54

Diluted



13.94


11.04

 

All activities of the company are classified as continuing.

 



 

Consolidated statement of financial position

for the 52 week and 6 day financial period ended 4 November 2012

 




2012


2011

Registered Number : 03959429                            



£


£







Assets






Non-current assets






Intangible assets



1,233,179


1,182,607

Property, plant, and equipment



1,450,592


477,775

Deferred tax



284,061


-










2,967,832


1,660,382

Current assets






Inventories



455,647


494,301

Trade and other receivables



1,032,966


1,134,576

Cash and cash equivalents



8,914,404


7,497,791










10,403,017


9,126,668

Liabilities






Current liabilities






Trade and other payables



764,468


1,007,477

Corporation tax payable



205,780


346,570










970,248


1,354,047







Net current assets



9,432,769


7,772,621







Non-current liabilities






Deferred tax



43,491


-







Net assets



12,357,110


9,433,003







Shareholder's equity






Called up share capital



175,290


171,702

Share premium



6,654,906


6,515,908

Own shares held In trust



(1,331,956)


(1,331,956)

Other reserves



583,792


238,661

Retained earnings



6,206,283


3,684,939

Translation reserve



68,795


153,749







Total equity



12,357,110


9,433,003







Total shareholder's equity



12,357,110


9,433,003

 

 



 

Consolidated statement of cash flow

for the 52 week and 6 day financial period ended 4 November 2012

 




2012

 


2011

 




£


£







Cash flows from operating activities






Cash generated from operations



4,062,552


2,882,023

Tax paid



(752,641)


(621,897)







Net cash from operating activates



3,309,911


2,260,126













Cash flows from investing activities






Purchase of intangible fixed assets



(453,360)


(344,050)

Purchase of property, plant and equipment



(1,642,118)


(532,398)

Interest received



59,594


34,825







Net cash used in investing activities



(2,035,884)


(841,623)













Cash flows from financing activities






Share issue



142,586


60,845







Net cash from financing activities



142,586


60,845













Increase in cash and cash equivalents



1,416,613


1,479,348

Cash and cash equivalents at beginning of period



7,497,791


6,018,443



















Cash and cash equivalents at end of period



8,914,404


7,497,791

 

 



 

 

Statement of changes in equity

for the 52 week and 6 day financial period ended 4 November 2012

 

 

 

Group

Share

Retained

Share

Other

Own

Translation

Total


capital

earnings

premium

reserves

shares

reserve







held in








trust




£

£

£

£

£

£

£

At 1 November 2011

171,702

3,684,939

6,515,908

238,661

(1,331,956)

153,749

9,433,003

Profit for period

-

2,521,344

-

-

-

-

2,521,344

Foreign exchange

-

-

-

-

-

(84,954)

(84,954)

Issue of share capital

3,588

-

138,998

-

-

-

142,586

Share-based payments

-

-

-

84,225

-

-

84,225

Share option tax credit

-

-

-

260,906

-

-

260,906









At 4 November 2012

175,290

6,206,283

6,654,906

583,792

(1,331,956)

68,795

12,357,110

 

 



 1.     Accounting policies

 

Basis of preparation

 

Lo-Q plc is a public limited company incorporated in the United Kingdom, whose shares are publicly traded on the AIM market. The company is domiciled in the United Kingdom and its registered address is Thames House, Portsmouth Road, Esher, Surrey, KT10 9AD.

 

The financial period represents the 52 weeks and 6 days to 4 November 2012 (prior financial year 52 weeks and 1 day to 31 October 2011). The consolidated financial results for the 52 weeks and 6 days to 4 November 2012 comprise the financial results of the company and its subsidiaries ('group'). The group's principal activities are the development and application of virtual queuing technologies.

 

 

Statement of compliance with IFRS

 

The financial information set out in this release does not constitute the group's full statutory accounts for the period ended 4 November 2012 for the purposes of section 435 of the Companies Act 2006, but it is derived from those that have been audited. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered after the forthcoming AGM. The auditors have reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006 in either 2012 or 2011.

 

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRSS) as endorsed for the use in the European Union, this announcement does not itself contain sufficient information to comply with IFRS. The company expects to publish the full financial statements for the period ended 4 November 2012 that comply with IFRS in March 2013.

 

The principal accounting policies adopted in the preparation of the financial results are set out below. The policies have been consistently applied to all the periods presented, unless otherwise stated.

 

The following new standards have been adopted during the period

 

 

·      IFRS 9 Classification and Measurement of Financial Instruments (effective 1 January 2013)

·      Amendments to IFRS 7 Financial Instrument: Disclosures (effective 1 January 2011/July 2011)

·      Amendments to IAS 1 Presentation of Financial Statements (effective 1 January 2011/July 2012)

·      IAS 24 Related Party transactions (revised) (effective 1 January 2011)

 

The adoption of the above new standards has not had a material impact on the financial results during the period ended 4 November 2012.

 

New standards and interpretations not yet adopted

 

A number of new standards, amendments to standards and interpretations are not effective for 2012 and therefore have not been applied in preparing these results. The effective dates shown are for periods commencing on the date quoted.

 

·      IFRS 9 Classification and Measurement of Financial Instruments (effective 1 January 2013)

·      IFRS 10 Consolidated Financial Statements (effective 1 January 2013)

·      IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2013)

·      IFRS 13 Fair Value Measurement (effective 1 January 2013)

·      Amendment to IAS 12 Income Taxes (effective 1 January 2012)

·      Amendment to IAS 12 Employee Benefits (effective 1 January 2013)

·      IAS 27 Consolidated and Separate Financial Statements (reissued) (effective 1 January 2013)

·      IAS 28 Investments in Associates (reissued) (effective 1 January 2013)

 

The group has considered the above new standards, interpretations and amendments to published standards that are not yet effective and concluded that they are either not relevant to the group or that they would not have a significant impact on the group's financial results, apart from additional disclosures.

 



Basis of accounting

 

The financial results of Lo-Q plc have been prepared in accordance with EU Endorsed International Financial Reporting Standards and IFRIC interpretations (IFRS) and the Companies Act 2006 applicable to companies reporting under IFRS. The financial results  have been prepared under the historical cost convention.

 

The preparation of financial results in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial results are noted below.

 

Critical estimates and judgements

 

The group makes judgements and assumptions concerning the future that impact the application of policies and reported amounts. The resulting accounting estimates calculated using these judgements and assumptions may not equal the related actual results but are based on historical experience and expectations of future events. The judgements and key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial results are discussed below.

 

Impairment of assets

 

Financial and non-financial assets including other intangibles are subject to impairment reviews based on whether current or future events and circumstances suggest that their recoverable amount may be less than their carrying value. Recoverable amount is based on a calculation of expected future cash flows which includes management assumptions and estimates of future performance.

 

If there is an indication that impairment exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the group estimates the recoverable amount of the cash-generating unit to which this asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

 

Recoverable amount is the higher of the fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of the future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a re-valued amount, in which case the impairment loss is treated as a revaluation decrease.

 

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately unless the relevant asset is carried at a re-valued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

 

Basis of consolidation

 

The consolidated financial information presents the results of Lo-Q plc and all of its subsidiary undertakings as at 4 November 2012 using the acquisition method of accounting. The results of subsidiary undertakings are included from the date of acquisition.

 

Where necessary, adjustments are made to the financial results of subsidiaries to bring the accounting policies used in line with those used by the group.

 

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

 

Lo-Q (Trustees) Limited, a subsidiary company that holds an employee benefit trust on behalf of Lo-Q plc is under control of the board of directors and hence has been consolidated into the group results.

 

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the group in exchange for control of the acquiree. Any costs directly attributable to the business combination are written off to the group income statement. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions under IFRS3 are recognised at their fair value at the acquisition date.

 

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised.

 

Subsidiaries

 

Subsidiaries are all entities over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than half of the voting rights. The results of subsidiaries are included in the group income statement from the date of acquisition.

 

 

Revenue recognition

 

Revenue arises from the development and application of virtual queuing technologies and the rental of such technology by theme park, water park or attraction guests. Revenue recognised represents either total rentals, net of sales taxes, to theme park, water park or attraction guests, where the group is responsible for the operation within the park or attraction, or the group's share of such rental. Where total revenue is accounted for, the park operators share of such rental is included within cost of sales.

 

Turnover also includes, where applicable, revenue from the sale of an installed system to a new or existing park operator.

 

Interest expense recognition

 

Expense is recognised as interest accrues, using the effective interest method, to the net carrying amount of the financial liability.

 

Employee expenses

 

The group has applied the requirements of IFRS 2 share-based payment. In accordance with the transitional provisions, IFRS2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2007.

 

The group issues equity-settled share-based payments to full time employees. Equity settled share-based payments are measured at the fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group's estimate of shares that will eventually vest.

 

Fair value is measured by use of a Black-Scholes model for all share options in issue. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

 

Commitments under operating leases

 

Where substantially all of the risks and rewards incidental to ownership are not transferred to the group (an "operating lease"), the total rentals payable under the lease are charged to the consolidated statement of comprehensive income on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.

 

Property, plant, equipment and installed systems

 

Items of property, plant and equipment are stated at cost of acquisition or production cost less accumulated depreciation and impairment losses.

 

Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method, on the following bases:

 

                       Plant and machinery
           33.3%
                       Office equipment
33.3%
                       Installed systems
25 – 33.3% or seasons within life of contract
                       Furniture and fixtures
20.0%
  

For installed systems the depreciation is charged over a season of operation as this directly reflects the period of operation of the assets in which economic benefits are generated.

 

Inventories

 

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. Stocks are calculated on a first in first out basis.

 

Park installations are valued on the basis of the cost of stock items and labour plus attributable overheads.

 

Net realisable value is based on estimated selling price less additional costs to completion and disposal.

 

Deferred tax

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial results and the corresponding tax bases used in the computation of taxable profits ("temporary differences") and is accounted for using the balance sheet liability method.

 

Deferred tax liabilities are generally recognised for all taxable temporary differences. Where there are taxable temporary differences arising on subsidiaries, deferred tax liabilities are recognised.

 

Deferred tax assets are generally recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Where there are deductible temporary differences arising on subsidiaries, deferred tax assets are recognised only where it is probable that they will reverse in the foreseeable future and taxable profits will be available against which the temporary differences can be utilised.

 

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient tax profits will be available to allow all or part of the asset to be recovered.

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.

 

Current income tax 

 

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

 

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes

provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

 

Research and development

 

In accordance with IAS 38 'Intangible Assets', expenditure incurred on research and development is distinguished as either to a research phase or to a development phase.

 

All advanced research phase expenditure is charged to the income statement. For development expenditure, this is capitalised as an internally generated intangible asset, only if it meets strict criteria, relating in particular to technical feasibility and generation of future economic benefits.

 

Development expenditure is capitalised and amortised within administrative expenses on a straight line basis over its useful economic life, which is considered to be up to a maximum of 5 years. The group has contractual commitments for development costs of £nil (2011: £nil).

 

Intellectual property rights and patents

 

Intellectual property rights comprise assets acquired, being external costs, relating to know how, patents and licences and have been capitalised at the fair value of the assets acquired and are amortised within administrative expenses on a straight line basis over their estimated useful economic life of 5 and 9 years.

 

Foreign currency exchange

 

Transactions in currencies other than the functional currency of the group are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.

 

Gains and losses arising on retranslation are included in net profit or loss for the period, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly in equity.

 

On consolidation, the assets and liabilities of the group's overseas operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly. Exchange differences arising, if any, are classified as equity and movement shown in reserves.

 

Pension costs

 

Contributions to the group's defined contribution pension scheme are charged to the profit and loss account in the period/ year in which they become due.

 

Financial assets

 

The group classifies all its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. Other than financial assets in a qualifying hedging relationship, the group's accounting policy for each category is as follows:

 

·     Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade receivables), but also incorporate other types of contractual monetary asset.

 

·     Trade receivables are initially recognised by the group and carried at original invoice amount less an allowance for any uncollectible or impaired amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when they are identified as being bad. Other receivables are recognised at fair value.

 

·     Cash and cash equivalents in the statement of financial position comprise cash at bank, cash in hand and short term deposits with an original maturity of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the group's cash management are included as a component of cash and cash equivalents for the purposes ofthe consolidated cash flow statement. Bank overdrafts are shown within loans and borrowings in current liabilities in the statement of financial position.

 

·     Impairment is recognised if there is objective evidence that the balance will not be recovered.

 

·     The group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the statement of financial position.

 

·     Fair value through profit or loss: This category comprises only 'in the money' foreign exchange derivatives (see 'Financial Instruments' below). Other than these derivative financial instruments, the group does not have any assets held for trading nor has it designated any financial assets as being at fair value through profit or loss.

 

Financial liabilities

 

With the exception of financial liabilities in a qualifying hedging relationship, the group treats its financial liabilities in accordance with the following accounting policy:

 

·     Trade payables and other short-term monetary liabilities are recognised at fair value and subsequently at amortised cost.

 

·     Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the statement of financial position. "Interest expense" in this context includes initial transaction costs and premiums payable on redemption, as well as any interest payable while the liability is outstanding.

 

·     Fair value through profit or loss: This category comprises only 'out of-the-money derivatives' (see 'financial instruments' below). Other than these derivative financial instruments, the group does not have any liabilities that are accounted for at fair value through profit or loss.

 

Financial instruments

 

Financial instruments are used to manage the financial risks arising from the business activities of the group and the financing of those activities. There is no trading in financial instruments.

 

Forward exchange contracts: Where forward exchange contracts are used to manage foreign currency exchange risk, they are valued by deducting the year end spot rate from the discounted contractual forward price. The discounted contractual forward price is based on market discount rates for similar instruments at the statement of financial position date. Any movement, should it be material, in the valuation of the forward element of these contracts is recognised directly in the consolidated Income statement within administration expenses.

 

 

Equity instruments regarding share capital

 

Equity instruments are recorded at the proceeds received, net of direct issue costs.

 

Employee benefit trust (EBT)

 

As the company is deemed to have control of its EBT trust, it is treated as a subsidiary and consolidated for the purposes of the consolidated financial results. The EBT's assets (other than investments in the company's shares), liabilities, income and expenses are included on a line-by-line basis in the consolidated financial results. The EBT's investment in the company's shares is deducted from equity in the consolidated statement of financial position as if they were treasury shares.

 

 

2.     Tax

 

Analysis of the tax charge







2012


2011



£


£

UK corporation tax





Current tax on income for the period


558,944


687,081

Adjustment in respect of prior periods


(33,544)


-






Overseas tax





Current tax on income for the period


86,451


73,615

Total current taxation


611,851


-






Deferred taxation





Original and reversal of temporary differences


20,336


-






Total taxation charge


632,187


760,696






The differences between the actual tax charge for the year and the theoretical amount that would arise using the applicable weighted average tax rate are as follows:






Profit on ordinary activities before tax


3,153,531


2,701,515






Tax at the UK corporation tax rate of 24.83% (2011 26.83%)


783,023


724,816






Effects of:





Expenses not deductable for tax purposes


11,918


79,757

Income not chargeable for tax purposes


-


(7,980)

Profit subject to foreign taxes at an higher marginal rate


13,961


21,681

Unrelieved tax losses and other deductions arising in the period


5,723


-

Additional deduction for R&D expenditure


(51,017)


-

Share scheme deduction


(191,037)


(12,719)

Depreciation greater/(less) than capital allowances


90,847


(44,859)

Adjustment in respect of prior periods


(33,544)


-

Change in rates


2,313


-






Total tax charge


632,187


760,696

 

During the period, as a result of the change in the corporation tax rate from 26% to 24% that was substantively enacted on 26 June 2011 and that was effective from 1 April 2012, the relevant deferred tax balances have been re-measured. Deferred tax expected to reverse in the period to 4 November 2012 has been measured using the effective rate that will apply for the period (23%).

 

 

 

 

3.     Earnings per share

 

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

 

Diluted earnings per share is calculated by dividing the net profit attributable to ordinary shareholders after adjustments for instruments that dilute basic earnings per share by the weighted average of ordinary shares outstanding during the period (adjusted for the effects of dilutive instruments).

 

The following reflects the income and share data used in the total operations and diluted earnings per share computations.

 




2012






Weighted


Per share


Earnings


average


amount




number


(pence)




of




£


shares









Basic EPS






Earnings attributable to ordinary shareholdings

2,521,344


17,319,153


14.56

Effect of dilutive securities






Options



770,223



Diluted EPS






Adjusted earnings

2,521,344


18,089,376


13.94

 

 

4.     Notes to cash flow - reconciliation of profit before tax to cash generated from operations 

 

 

Group


2012

 


2011

 



£


£

Profit before tax


3,153,531


2,701,515

Depreciation and amortisation charges


1,072,089


598,324

Share based payment


84,225


97,040

Foreign exchange


(84,954)


74,478

Finance income


(59,594)


(34,825)



4,165,297


3,436,532

Decrease/(Increase) in inventories


38,654


(251,028)

Decrease/(Increase) in trade and other receivables

101,610


(305,840)

(Decrease)/Increase in trade and other payables


(243,009)


2,359






Cash generated from operations


4,062,552


2,882,023

 

 

 

 

 

 

 

 

 

5.     Events after reporting date

 

On 4 December 2012, the group acquired 100% of the voting equity of accesso, a leading US ticketing and e-commerce provider to the entertainment sector. The principal reason for this acquisition was to take advantage of the complimentary opportunities available within the sector in which we operate.

 

At the date of authorisation of these financial results  an initial assessment of the fair value of the identifiable net assets had been undertaken but not fully completed.

 

 

Details of the provisional fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are:

 

 



Provisional

book value


Provisional adjustment


Provisional fair value



£


£


£

Identifiable intangible assets







Goodwill


856,752


(856,752)


-

Internally developed technology


162,184


3,196,707


3,358,891

Customer relationships


-


9,260,144


9,260,144

Property, plant and equipment


328,350


(1,794)


326,556

Receivables and other debtors


411,822


-


411,822

Payables and other liabilities


(496,780)


-


(496,780)

Cash


397,844


-


397,844

Total net assets


1,660,172


11,598,305


13,258,477








Cash paid at completion


3,952,045

(1)

-


3,952,045

Loan note to seller


3,952,045

(1),(2)

-


3,952,045

Lo-Q plc shares


5,815,041

(1),(3)

96,326


5,911,367

Estimated cash to be paid reflecting surplus working capital


371,968


-


371,968

Estimated total consideration


14,091,099


96,326


14,187,425








Provisional goodwill on acquisition






928,948

 

 

 

(1)   Fair value of consideration paid, based on exchange rate of £1:$1.6036.

(2)   The loan note to seller is repayable on 31 March 2014 with an interest rate of 1.25% for the period to 31 March 2013 and 2.5% from 1 April 2013 to repayment. The note can be repaid by Lo-Q at any time before maturity and can be converted to Lo-Q plc shares at any time after 1 April 2013 at the option of the holder.

(3)   In accordance with IFRS 3 Business Combinations (revised 2008) the fair value adjustment to consideration paid in shares is based on the difference between the share price at the date on which the company obtained control of accesso and the price determined in the Membership Interest Purchase Agreement for calculating the number of shares to be issued to the vendors.

 

Acquisition costs of approximately £395,000 were incurred in relation to this transaction and will be expensed to the income statement of the 2013 financial results. .

 

The main factors leading to the recognition of goodwill are the presence of certain intangible assets, such as the assembled workforce of the acquired entity and the expected synergies of the enlarged group which do not qualify for separate recognition.

 

The goodwill and intangible assets recognised will attract tax deductions under the applicable local tax jurisdictions.

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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