Lo-Q's (LON:LOQ)  new water park product Q-band has made a bright start in the first two US water parks to roll-out the technology this season, the virtual queuing specialist said today.

In total, eleven new water parks are scheduled to start using Q-band this year, after very strong demand for the product from operators. Three different water park operators signed to take Q-band over the past six months. 

Lo-Q said Q-band went live in the two new parks in the first weekend in May and both sites received encouraging early user numbers and good inital user feedback. 

Q-band, which uses RFID technology, is waterproof and worn on the wrist like a watch. 

Users can reserve a time to use a park's most popular slides, which Lo-Q says cuts they time they have to queue and allows them more time to enjoy the park.

Tom Burnet, Lo-Q’s chief executive said:  "I am delighted with the excellent visitor reaction to Q-band at our first two roll-outs of the year.

This is a really encouraging start to our Q-band operations, and we are now increasingly excited about the next nine roll-outs on the horizon: each of which remains on track to launch in the coming weeks." 

Lo-Q's customers including Parques Reunidos, Six Flags, Dollywood and Merlin Entertainments. 

Harry Norman: Tom thank you very much for joining us for this interview.

Tom Burnet: Pleasure.

Harry Norman: What does Lo-Q do as a company and how did Lo-Q win a Queen’s Award for International Trade?

Tom Burnet: Lo-Q allows guests at theme parks and water parks to virtually queue rather than really queue.  Our flagship product is the q-bot; guests rent the q-bot which allows them to scroll through a list of rides available in the park that they happen to be in and to virtually join the back of a queue line for any ride that they want to in the park.  As the time lapses that they would have spent in a normal queue, they can go and spend the time as they choose, whether they’re having lunch or going and riding a less popular ride and when it’s their turn to ride the queue or when they would have reached the front if they had have joined the real queue line, the machine beeps at them and summons them to a separate entrance to the ride, the rollercoaster whatever it might be, which they walk straight on to and ride. The Queen’s Award is a huge feather in the cap for the team here and I’m delighted that Leonard Sim, our founder should have been the chap who was able to receive it. We won our Queen’s Award for International Trade, clearly there are lots of theme parks overseas and 90% of our business is conducted in North America.  And it’s a super endorsement of the team at Lo-Q and indeed for our park operator customers who I know are proud on our behalf.

Harry Norman: Please will you talk us through the details of progress of sales to revenue sharing operators in your first year or so as CEO.

Tom Burnett: Well one of the things I really concentrated on since I arrive at Lo-Q is increasing the levels of sales activity in the business and I’ve been delighted to see the progress that we’ve made.  I think since I’ve arrived, I’m just working it out, we’ve sold 16 new bits of business to operators across Europe and North America and really this is just about increasing energy and activity levels I think.  We’ve got a good brand and a good reputation in the vertical in which we operate leisure and attractions, we’ve put a lot of time and energy in at trade shows around the world and I’m delighted to see that the energy we’ve been putting into that work is beginning to pay off.

Harry Norman: What revenue related trends are showing up with Lo-Q’s technologies that are hired out by operators to their customers?

Tom Burnett: Well there’s two key KPI’s that we think about at Lo-Q.  The first one is how much are our guests spending, we’re delighted that to the year we’ve just reported we’ve seen guest spend increase by something in the region of 17%.  Now some of that we can put down to just an annual price rise, some of it is about our consumers, particularly in North America feeling a little richer and being prepared to spend a little bit more on their day out in parks and the rest of it’s about us just selling better, engaging with customers better, both online and when we greet them at the park.  The other really satisfying statistic this year is the number of Lo-Q quests has increased by 9% and the analogy I use here is, it’s like flying in business class as apposed to sitting in economy, once you’ve used our product it’s very difficult to imagine not using it again and clearly therefore every year as guests come back and back and back to the parks we have a broader community of guests who’s used our products before who have a higher propensity to buy from us again.

Harry Norman: Please talk us through the technologies that operators actually hire and handle.  You’ve spoken about the q-bot but there’s also the q-band and the q-smart, please can you tell us about the progress with developing your technologies.

Tom Burnett: Well q-bot as you say I’ve already talked about is our proprietary theme park product and q-band is our new product for water parks, which we successfully trialled ** [03.39] in Georgia, North America last summer and the response to that had been really terrific both from park operators and from their guests.  To the extent that we’ve now sold to 11 parks for the operating for the summer 2012 season and hopefully we’ll have more in due course.  The other really exciting thing for us is we have announced to trial with a major attraction where customers are going to be able to use their smart phones to buy and receive a ticket to the attraction and then turn up at the attraction at an appropriate time and to enter the attraction without standing in the queue line and we feel that’s got an enormous potential market for us around the world.

Harry Norman: Patents and IP have always been important to Lo-Q, what can you tell us about the company’s patent and IP activities over the last year or so?

Tom Burnett: Patents absolutely sit at the heart of Lo-Q and in the last year we’ve spent time and energy both to initiate our own new patents, to extend patents that we already own and indeed to buy patents that have come available in the market or indeed we have sought out patents that we think compliment and support our current patent portfolio and made arrangements with their owners to purchase them from them.  In terms of IP in the round however, our IP really extends beyond just our patents and into our understanding of how our industry works.  The 8 and a half million or so guests that we’ve worked with over the last few years in parks have given us a really very substantial understanding of how theme parks and water parks operate, which also is a very important part of who we are and why we’re unique in the market.

Harry Norman: One of your goals last year was to improve the company’s governance and strengthen your team, what steps have been taken and how will this benefit the company Tom?

Tom Burnett: Well I think strong governance is at the heart of every important company, and certainly every serious company.  It’s been my pleasure to be able to make a range of changes in Lo-Q over my first year and that’s really from the board down.  We’ve installed a new Chairman in John Weston and a new Non-Executive Director in David Gammon both of whom bring huge experience to our board.  We’ve restructured our business to reflect the lines of business we’re now pursuing around the products we’ve established as our priority, we’ve reviewed and changed in many cases all of our professional advisors around the business and I think all of these things are about giving ourselves, our customers and our shareholders confidence that we are an appropriately run and serious organisation.  I think that all our investors, but particularly our institutional investors are extremely keen that we should be able to demonstrate rock solid foundations on which to grow and I think the benefit that we’ve seen is in the growing institutional stake in our business.

Harry Norman: Please talk us through the highlights of Lo-Q’s annual results for the year ending 31st of October 2011 which were recently published and tell us about the company’s capital structure and financial situation going forward.

Tom Burnett: Well we’ve been very pleased to be able to report some strong results, our revenue’s are up just over 20%, our profit before tax just around 17.5% and our net cash is up 25% at 7 and a half million at the end of October.  We remain with no debt, currently we have something in the order of just over 17 million shares in issue and we’ve seen substantial change in shareholder ownership over the last 12 months to the extent that I think when I joined we had 1 institutional shareholder with a 3% holding in our business and we now have a number of very substantial institutional shareholders including M & G, Blackrock and Standard Life, just to name but three and nearly a 50% intuitional ownership in Lo-Q.

Harry Norman: What can we expect from Lo-Q over the next 12 to 18 months Tom?

Tom Burnett: Well I hope you’ll see us capitalise on the momentum that we’ve created in the last 12 to 15 months, I’m certainly going to be expecting to be able to report more sales and particularly I think to water parks around the world and to single line attractions with our smart phone technology.  I hope to be able to report activity in new geographies, right now we don’t have anything substantial in Asia for example or at least only one park in Australia and I’d very much like to see us participate in that growing market.  I hope to be able to announce activity with new operators, so we’re talking to new operators, theme park operators around the world and with luck we’ll be able to convert that into new business and perhaps the most exciting news for the future, I’d like us to be starting to look outside our core markets and to be going to find cash rich and time poor consumers and hopefully offering them a much better experience then they are currently able to find anywhere else.

Virtual queuing specialist Lo-Q (LON:LOQ) has made an encouraging start to the new trading year, it told shareholders at its annual meeting today.

Lo-Q said that while it is still very early in the trading year for the majority of its theme and water park customers, a healthy sales pipeline and encouraging early trading made it confident of hitting market expectations.

The company had a strong year to October 2011 with profits rising by 17 per cent to £2.7 million and Six Flags, its main customer, signing a six-year contract extension for its core product, the Q-bot.

Six Flags also agreed to put Lo-Q’s new water park product, the Q-band, into nine of its water parks.

Other major theme park customers include Parques Reunidos, Herschend Group and Merlin Entertainments.

“Having secured strong new business momentum, the main challenge for Lo-Q in this first half has been to ensure the efficient implementation and installation of each new customer mandate.  

"The board is pleased with the progress that the company's service teams have made in this regard ahead of the important peak park trading season,” it said.

The group added that its performance is traditionally significantly second-half weighted and this weighting will increase this year due to the investments made in supporting new products and new customer installations.  

Lo-Q shares have almost doubled over the past twelve months to stand at 295 pence. 

Zoombezi Bay, owned and run by the Columbus Zoo and Aquarium, is a new customer for Lo-Q and has signed a five-year agreement for Q-band.

Visitors renting the RFID-enabled wristband can reserve a "virtual" place in line at a park's most popular slides using kiosks located throughout the park. 

When their reservation time arrives, guests enter via a separate entrance and have their band scanned to get on the ride.

Zoombezi Bay is the eleventh US water park to sign up for Q-band since its launch last year. US theme park giant Six Flags has already agreed to install the system in nine of its water parks.

Tom Burnet, Lo-Q’s chief executive, said: “Today's news is yet another example of the enthusiastic response our recently launched water park product has received from the operator community.”

“Both large-scale groups and individual park operators such as Zoombezi Bay have been quick to realise the revenue enhancing and experience enhancing qualities of the product and its ease of use.

Zoombezi Bay’s general manager John Gannon added: “We believe our guests will greatly appreciate having the option to make ride reservations to avoid waiting in line for our exciting rides.”  

AS well as Six Flags, Lo-Q has installed its virtual queuing systems in parks run by Lo-Q's system has been adopted by leading theme park and attraction operators globally, with customers including Parques Reunidos, Herschend Group and Merlin Entertainments.

Shares in the firm were up 5.88 per cent in early deals, to trade at 216 pence.

Lo-Q (LON:LOQ), the provider of virtual queuing systems used in theme parks, is teaming up with MasterCard to create its latest innovation.

Under the terms of the memorandum of understanding the pair will develop a new contactless payment device that combines the card gaint’s PayPass payments technology with Lo-Q's software.

Once developed, they will then promote the combined product to theme parks, water parks and other attractions.

Lo-Q chief executive Tom Burnet said: "This really is an exciting partnership for all concerned.  

“Lo-Q's queuing solutions are highly sophisticated and routinely trusted by some of the world's largest, most demanding attractions operators.  

“Visitors like our products and they get much more from their days out by leaving the queues behind and focusing solely on having fun.  

“By combining these qualities with the world-class payment technologies and reach offered by MasterCard means that we can now work together to create new and exciting growth opportunities for both our firms."

Lo-Q’s flagship offering is the Q-bot, a handheld device that allows theme park visitors to queue virtually. After making a reservation with a Q-bot unit, the system registers that person or group into a virtual queue. 

Guests are informed via the Q-bot’s display, and with a beep and vibration, that their ride is ready, while the device can also inform users of a ride’s breakdown and allow rescheduling of reservations.

The advantage of Q-bot is that it enables theme park visitors to reserve their rides without having to queue, so a visitor does not have to spend their time waiting in a line and he or she can spend time enjoying other attractions or do something else at the park, such as go to a restaurant.

A wristband product for water park visitors and a smart phone app can also provide a similar service

Lo-Q operates primarily on a revenue share basis with its clients, thus sales are hugely skewed towards the summer but the vast majority of deals are actually signed over the winter off-season, Jeans explained. 

Edison’s Richard Jeans said that Monday’s extension to Lo-Q’s relationship with US theme park operator Six Flags substantially underpins the market’s consensus forecasts for 2012 and beyond. 

Additionally, the analyst points out that a three-month smartphone-based pilot at the EDF London Eye begins next week.

"We understand that Lo-Q is receiving a lot of interest elsewhere for this (smartphone) product,” he added. 

“Further contract announcements over the coming months could lay the foundation for positive earnings surprises and lend substantial credence to management initiatives to broaden both the product offering and customer base.” 

Lo-Q’s flagship offering is the Q-bot, a handheld device that allows theme park visitors to queue virtually. After making a reservation with a Q-bot unit, the system registers that person or group into a virtual queue. 

Guests are informed via the Q-bot’s display, and with a beep and vibration, that their ride is ready, while the device can also inform users of a ride’s breakdown and allow rescheduling of reservations.

The advantage of Q-bot is that it enables theme park visitors to reserve their rides without having to queue, so a visitor does not have to spend their time waiting in a line and he or she can spend time enjoying other attractions or do something else at the park, such as go to a restaurant.

A wristband product for water park visitors and a smart phone app can also provide a similar service

Lo-Q operates primarily on a revenue share basis with its clients, thus sales are hugely skewed towards the summer but the vast majority of deals are actually signed over the winter off-season, Jeans explained. 

“(Monday’s) agreement with Six Flags extends its existing agreement (covering 11 sites) by five years to 2017 and also extends the scope to cover eight water park sites for the Q-band solution. 

“The trial with the London Eye is unlikely to be material financially, but we understand that interest in the product is healthy and broader uptake could add incremental revenue streams, diversify customer exposure and reduce seasonality.”

The analyst says that the current valuation is not demanding. “Further, the scalability of the business suggests there is a realistic potential for growth and positive earnings surprises,” he added.

The queueing systems group Lo-Q (LON:LOQ) has received a double dose of good news from its largest customer, the American theme park operator Six Flags.

Lo-Q’s deal to its Q-bot handheld devices, which was due to expire at the end of next year, has now been extended to December 31, 2017. It is currently used at 11 sites.  

Additionally the trial of wristband system trialled at White Water Atlanta will be rolled out to seven other water parks as quickly as possible, Lo-Q revealed.

Chief executive Tom Burnet said: "We are delighted to be extending our enduring partnership with Six Flags for another six years.  

“This is the clearest proof yet of the power of our existing and new products, the strength of our sales force and the long-term opportunity open to us."

Lo-Q’s flagship offering is Q-bot. This is a handheld unit that park visitors can rent. 

After making a reservation with a Q-bot unit, the system registers that person or group into a virtual queue. 

Guests are informed via the Q-bot’s display, and with a beep and vibration, that their ride is ready, while the device can also inform users of a ride’s breakdown and allow rescheduling of reservations.

The advantage of Q-bot is that it enables theme park visitors to reserve their rides without having to queue, so a visitor does not have to spend their time waiting in a line and he or she can spend time enjoying other attractions or do something else at the park, such as go to a restaurant.

The wristband is a waterproof derivative that allows guests to enjoy rides without standing in line.

John Bement, Senior Vice President, In-Park Services at Six Flags, said: "We are pleased to be extending and broadening our relationship with Lo-Q, the leading provider of virtual line queuing systems.

“Six Flags prides itself on offering our guests outstanding technology and The Flash Pass is an important element in enhancing our guests' experience when they visit our parks."

Virtual queuing technology firm Lo-Q (LON:LOQ) has signed an agreement to pilot a new smartphone-based ticketing and queuing system at The London Eye – a popular UK tourist attraction.

Beginning at the start of December and running until February 25 next year, the 12-week pilot trial will see Lo-Q’s technology evaluated at the attraction, which is operated by The Merlin Entertainment Group (an operator of many theme parks and visitor attractions).

Lo-Q said that its smartphone-based solution represents an evolution of its tried-and-tested queuing systems and will open up a range of new target markets for the company around the world. The new system effectively extends all of the benefits of the firm’s proprietary them park queuing product, combined with mobile ticketing and payment solutions, to patrons of any type of attraction. The solution is also Cloud-based, so it does not require expensive infrastructure to be deployed at customer sites.

The London Eye trial will allow visitors to the attraction to bypass its ticket office by purchasing tickets at any time through any Internet-enabled phone and from any location. It will also allow visitors to buy a ‘fast pass’ to board the Eye without having to wait in line.

“This is a fantastic and far-sighted project to be involved with and I am very pleased to see some of our most innovative technology being put to the test in this way,” said Tom Burnet, Lo-Q’s chief executive officer. “Visitors to theme parks and attractions are interested in one thing – the experience.  Today that isn’t just about the ride or the trip, it's increasingly also about the customer experience of accessing the attraction and maximising the time spent on fun, not formalities.  We see today’s trial as an exciting first step toward extending our offering outside of the theme park world and in to all manner of single line attractions where reducing queue time will not only benefit the visitor but the operator, too.”

Weston, the former BAE Systems chief executive, joined Lo-Q back in April. 

This afternoon the company, which has developed virtual queuing systems for theme parks, revealed that Weston bought shares on three separate occasions between 1 July and 8 July. In total he bought 29,500 shares, priced between 185 and 192 pence each.

The chairman now owns 55,700 Lo-Q shares which represents 0.33 per cent of the company’s issued share capital.

Last month Lo-Q unveiled a strong rise in revenues in its traditionally slow first half.

Turnover for the six months ended April 30 rose 33 per cent to £3.27 million, while the loss was steady £940,000. Cash at the period end was £4.03 million, a 40 per cent increase on the year earlier.

Lo-Q said it had signed up four new parks during the six months as well as contract extension with Parque Isla Mágica in Seville, which was sealed after the period end. The results statement revealed a 28 per cent increase in average customer spend by people using products such as its Q-bot handheld device.

The figures also pointed to a 4 per cent like-for-like increase in park visitors using its queuing systems.  

The company, which this year won the Queen’s Award for International Trade, said its Q-Credits wristband for water parks is now live, while it has also developed a smartphone product called Q-txt.

"It's a pleasure to be able to report strong interim figures today and trading continues to be positive,” said chief executive Tom Burnet. 

“As always at this stage of the year, there remains a great deal to be done over the important summer trading period, but the board remains confident that the company is well on track to perform in line with market expectations for the year as a whole."

In this morning’s interim results Lo-Q unveiled a strong rise in revenues in what is traditionally a slow first half.

Turnover for the six months ended April 30 rose 33 per cent to £3.27 million, while the loss was steady £940,000. Cash at the period end was £4.03 million, a 40 per cent increase on the year earlier.

“First half revenue and earnings were stronger than expected,” Liao said.

“As a result, in order to meet our full-year forecasts, we only need to see a 7 percent rise in pre-tax profit in the second half to £3.5 million from £3.2 million in the second half of last year. Due to a higher cost base, second half revenue needs to rise 14 percent to £20.3 million, from £17.8 million in the second half of 2010.”

The group told investors that it had signed up four new parks during the six months as well as contract extension with Parque Isla Mágica in Seville, which was sealed after the period end.

Today’s results statement revealed a 28 per cent increase in average customer spend by people using products such as its Q-bot handheld device.

The figures also pointed to a 4 per cent like-for-like increase in park visitors using its queuing systems.  

The company, which this year won the Queen’s Award for International Trade, said its Q-Credits wristband for water parks is now live, while it has also developed a smartphone product called Q-txt.

"It's a pleasure to be able to report strong interim figures today and trading continues to be positive,” said chief executive Tom Burnet. 

“As always at this stage of the year, there remains a great deal to be done over the important summer trading period, but the board remains confident that the company is well on track to perform in line with market expectations for the year as a whole."

Canaccord’s Liao repeated a ‘buy’ recommendation and increased his target price from 182 to 200 pence a share, in response to the news.

“Lo-Q's full-year outlook is positive and we see potential for upgrades, but we leave our forecasts unchanged at this stage due to the strong seasonal second half bias.”

Lo-Q (LON:LOQ) said that it is pleased with the operational and strategic progress made so far in 2011 and that the strategy implemented by the new chief executive appointed last year is working.

The AIM-listed developer of virtual queuing systems for theme parks reminded that at the time of his appointment in October 2010, chief executive Tom Burnet identified the need for investment in the company's sales functions and product development activities, which have now been made in the first half of the year and Lo-Q is pleased with the early and positive results these are generating.

Together with the new park installation costs and the Water Park trials, this means that the company will report an increased loss for the first half compared to the equivalent period of the previous year, which is in line with expectations.

In recent weeks Lo-Q has announced a significant number of new business gains, which mean that its VQ2020 queuing technology will be operational in four additional parks in the 2011 season.

The board said that the majority of these business gains are new mandates won with existing customers, which have used Lo-Q’s system within other parks in their portfolios.

"The company continues to pursue opportunities to expand our presence across existing park customers, where the company believes real opportunity exists to expand our business, as well as cultivating new client relationships," said Lo-Q.

Shares in Lo-Q have performed very well so far this year, surging from 97 pence at the beginning of January to the current 145 pence.

Canaccord Genuity analyst Bob Liao said in a note out today that he sees earnings upside and rating upgrade potential for Lo-Q.  For now, he reiterates the 'buy' recommendation and 182 pence price target on the stock.

Lo-Q has seen progress in revenue year-to-date and contract momentum has been strong. Four new parks have been signed recently, which are all expected to be operational for the 2011 season. "While the prospects for the year based on the company's current trajectory appear promising, we conservatively maintain our full year expectations due to sales being seasonally biased towards H2," the analyst said.

"In addition, revenue potential from new contracts is typically higher in the second and third years when Lo-Q's services are more familiar to the park operator and attendees. We believe the company should have more clarity on the full year outlook when it reports its H1 results in a few months."

"The shares are trading at only 10 times ex-cash 2011E P/E and 7.2 times EV/EBITA. 2010 net cash represents 26% of the current market capitalisation and we expect significant free cash flow in 2011," Liao concluded."