Accesso Technology (LSE: ACSO), formerly Lo-Q, has delivered a stunning return for investors over the past 10 years. It’s turned a £10,000 investment into £600,000.
For the moment, I’ll put aside the question of whether Accesso remains good value for investors today, because first I want to show you how the history of this company offers valuable insights for anyone looking to invest in early-stage businesses with high growth potential.
Rollercoaster
Accesso was floated on the small OFEX market (now NEX Exchange) in 2000. It raised £2.3m at 106p a share and a further £3.6m at 100p when it moved to AIM in 2002.
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The company had developed a system for virtual queuing at theme parks, prototyped at Thorpe Park in the UK and Six Flags Over Georgia in the US. It looked a decent idea and the OFEX prospectus contained management projections for rapid revenue and profit growth.
Unfortunately, as the table below shows, the projections proved to be over-optimistic.
| 2001 | 2002 | 2003 | |
| Projected revenue (£m) | 2.4 | 7.7 | 17.2 |
| Projected profit (£m) | 0.1 | 1.9 | 6.7 |
| Actual revenue (£m) | 0.3 | 0.9 | 2.3 |
| Actual profit (£m) | (0.8) | (1.6) | (1.3) |
Accesso’s fortunes weren’t helped by a downturn in US theme park visitors following the 9/11 attacks of 2001 and delays in rolling out its systems at Six Flags’ parks. A profit warning in 2002 sent the shares tumbling and by early 2003 they were trading below 10p.
Business remained tough — indeed, it was touch and go whether the company would even survive — and the share price languished in single digits to beyond the end of 2005.
However, things gradually improved. Accesso reported a maiden full-year statutory profit for 2007 and hasn’t looked back since.
Risk and reward
Accesso’s shares have been trading around 1,500p of late. The table below shows the current value of a £10,000 investment made on a number of key dates in its history.
| Share price | Return on £10,000 investment | |
| OFEX admission (30/10/2000) | 106p | £141,509 |
| AIM admission (24/4/2002) | 100p | £150,000 |
| Share price all-time low (21/6/2005) | 2.88p | £5,208,333 |
| Announcement of maiden profit (10/4/2008) | 25p | £600,000 |
Things rarely go smoothly for a company that comes to market with a product or service but no trading history. Even if the story is good, setbacks can be devastating — indeed, terminal for many fledgling businesses.
Accesso’s early investors in the OFEX and AIM placings were sorely tested, seeing the value of their £10,000 investment falling to just a few hundred pounds for the best part of three years, before ending up with a 14/15-fold increase of their original stake.
In the darkest days, Accesso could hardly be classed as an investment. It was an out-and-out gamble. A lucky punter who put 10 grand on the nose at the all-time low would be a millionaire five times over today. However, you could go a lifetime of making similar bets without ever hitting such a jackpot — and losing many 10 grands along the way.
In my opinion, as a general rule, waiting for an early-stage business to prove it can turn a profit offers the best risk-reward proposition. In Accesso’s case, this transformed £10,000 into £600,000 — a return most investors would be more than happy with.
Finally, is Accesso still worth buying today? The forward P/E is a premium 38 and forecast earnings growth of 24% isn’t high enough relative to the P/E to persuade me that the shares are outstanding value. But nor is the valuation grotesquely high. As such, I would rate the shares a ‘hold’.
