Small Cap Value Report (25 Mar 2014) - ACSO, KBC, UBI

Tuesday, Mar 25 2014 by

Good morning!



accesso Technology (LON:ACSO)

As regulars will know, I've never quite been able to understand why the market chased this share up to such a huge market cap, given the lacklustre historic performance, but it's starting to make sense now with results for the 14-months ended 31 Dec 2013. They also include proforma figures for the 12 months to 3 Nov 2013, which enables comparison against the previous year.

Year end date changes are always problematic, as they skew comparisons for a couple of years, but in this case I can see the logic for moving to a more conventional 31 Dec year end. Also, given that it's a theme-park orientated business (supplying electronic queuing systems, and similar) then it's highly seasonal - with the vast bulk of activity occurring over the summer months, so having a 30 Jun interim period end should split the two halves more evenly going forwards, so it's a sensible move that has obviously been done for the right reasons.

Another accounting change that may happen is that the group is considering changing its reporting currency to US dollars, which again seems sensible to me given where it operates.

So looking at the proforma 12 month results, turnover is up 29% to £37.7m, and headline operating profit is up an impressive 53% to £4.7m. They have excluded £335k costs relating to an acquisition, and £810k of amortisation on acquisitions from this figure, which looks fine to me.

Adjusted 12-month EPS has risen 31.5% to 19.2p, so at 699p that puts the shares on a PER of 36.4 times. That seems to be well ahead of broker forecast of 14.5p. That rating is expensive, but given that the company is showing strong growth, and building recurring revenue, and seems to dominate a niche on its own, then I can see why long-term shareholders might be tolerant of such a high valuation. If you forecast forwards 2 or 3 years, then the PER would come down dramatically, as often happens with high growth companies.

Bear in mind that the group has made several acquisitions, so it's not clear (unless I have missed it) what element of the growth in profit has come from acquisitions, and what is organic? That is my main reservation here - is the high PER justified on organic…

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accesso Technology Group plc is a United Kingdom-based company engaged in the development and application of ticketing, mobile and e-commerce technologies, and virtual queuing solutions for the attractions and leisure industry. The Company's solutions include accesso LoQueue, accesso Passport, accesso Siriusware and accesso ShoWare. accesso LoQueue is a queuing solution that includes Qsmart, Qbot and Qband. The accesso Passport ticketing suite is built where its customers shop. accesso Siriusware provides clients with ticketing and admission solutions, and includes various modules, such as OnSite Ticketing, OnLine eCommerce, Point-of-Sale and Guest Management. accesso ShoWare offers a range of ticketing software solutions for theaters, fairs, arenas and tours. The Company's products and services support attractions in the world, including a range of paid admission operations ranging from theme parks, water parks and zoos to cultural attractions and sporting events. more »

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IQGgeo Group PLC, formerly Ubisense Group Plc, is engaged in providing enterprise location intelligence solutions for manufacturing, logistics, transit, communication and utility companies. The Company operates through Geospatial. The RTLS segment takes real-time location data from its own sensing hardware, or from standards-based integration with third party hardware, and transforms this data into spatial event information, delivering asset identification, real-time location and spatial monitoring. The Geospatial segment delivers software solutions that integrate data from any source, including geographic, real-time asset, global positioning system, location, corporate and external cloud-based sources into a live Geospatial common operating picture. The Company offers various products, such as Smart Factory, myWorld, myWorld Damage Assessment, myWorld Inspection & Survey, myWorld Network Insight, Dimension4 and AngleID. more »

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  Is LON:ACSO fundamentally strong or weak? Find out More »

9 Comments on this Article show/hide all

marben100 25th Mar '14 1 of 9

Hi Paul,

I broadly agree with your analysis, but personally consider the shares too expensive for my taste & sold out at around the £4 mark, having more than 10-bagged. Too much risk of the shares being hammered in the event of a banana-skin.

Just one point I'd like to make: worth noting that the major acqusition wasn't of the common or garden bolt-on variety, rather I'd regard it as transformational - as the name change suggests. Accesso brought in ticketing systems, complemantary to the former LoQ's queuing sytems. At the time of the acquisition TB commented that he was very impressed by Accesso's team, with excellent sales & marketing - looks like we're seeing that confirmed in these results. The acquisition worked for both sides because the former LoQ could help Accesso (formerly exclusively US) expand internationally, opening doors in Europe & elsewhere.

Well done to TB on sound decisions & delivering on (beating) expectations. The Accesso story shows how transformational a management change can be, with the formerly plodding business becoming a growth star. Kudos also to the founder Leonard Sim for recognising the weakness and bringing TB in.



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DJLJ23 25th Mar '14 2 of 9

ACSO: Paul many thanks for your views on ACSO, for me this is a great growth story, that seems to really make sense for both the company and its clients.

If I have read it correctly, then its revenues are directly linked to volumes going through the park, which in a recovering economy should really boost their results. However I do have concerns that it may be held back, in europe, by the current problems with Russia.

I think another, big driver is the use of smartphones, it removes the client end user capital element and associated risk of theft/loss, and effectively makes the delivery a piece of software, with the associated margins those services enjoy.

If the problems with Russia reduce, i would not be surprised to see the company significantly exceed current forecasts over the course of the year, of course this is just my view, and please DYOR.

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Ramridge 25th Mar '14 3 of 9

Hi Paul -
Re; ACSO. The results for 14 months to Dec compared to 12 months to 3 Nov are puzzling. Although revenues are up, both net profits and EPS are considerably down. Unless I have missed it there is no explanation given as to why this should be.

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IGC WHITE 25th Mar '14 4 of 9

Hello Paul,
Any thoughts on FAROE results this a.m.?

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Paul Scott 25th Mar '14 5 of 9

In reply to post #82222

Hi Ramridge,

That's due to one-off factors, as I mentioned in my report.
The most meaningful comparison (in my opinion) is using the pro forma 12 month figures and comparing at the adjusted profit line. That way you are comparing apples with apples.

The 14 month figures will include 2 sets of Nov & Dec trading, which for theme parks will be dead, as they're nearly all shut! Hence the 14 month figures are not representative of underlying performance, so are best ignored in my view. With a highly seasonal business it only makes sense to compare full 12 month periods, not a lop-sided 14-month period.

So from the results below, the most meaningful comparison of profti is the £4,731k figure, against the £3,094k figure, which shows profit up 53%.

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Ramridge 25th Mar '14 6 of 9

In reply to post #82224

Hi Paul - makes sense. Thanks. Ram

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mgallear 25th Mar '14 7 of 9

Hi Paul

There were insider buys for KBC in 09/2013 and 10/2013 which are up more than 35% for the directors. It was in the Tiny Titans screen at this time. However, no such signals to buy at this stage and no longer appears in the Stockopedia screens.


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bsharman 25th Mar '14 8 of 9

This is an excellent article and thought I would post here.

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DJLJ23 25th Mar '14 9 of 9

Paul, many thanks for your comments on UBI, while i can see why you might be concerned by the dependence on some large customers. They all so bring big benfits, for the services ubi provide, once established moving to an other supplier will be a significant business risk, creating an economic moat for UBI.

With repeat orders from their existing customer base (Airbus, Aston Martin, BMW, Cummins, Daimler and John Deere) and several new solutions contracts including major strategic wins at customers such as VW, Honda and Toyota. They are also delivering to Telecoms and Utility network operators and identified new customer wins with Swisscom, Central Hudson, Piedmont Gas and Kepco in the Preliminary results.

For me one of the key problems for ubi is actually getting the right people to support their growth ( which i think could be substantial), as many of companies it supports have multiple, simular production lines world wide.

Extract from Rechard Green CEO comments
"With an established and growing presence in the three German automotive OEMs, our progress in this strategic market has been a key driver of the 2013 performance and importantly it represents the model which we can replicate in North America and Asia, large attractive markets where we have a strategic foothold and see a vast near term opportunity." My bold, italics

So for me, one to hold onto

Regards David

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 Are LON:ACSO's fundamentals sound as an investment? Find out More »

About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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