Live Company Group

Live Company Group PLC (LVCG) is a Surrey, United Kingdom-based, AIM-listed live events and entertainment company, which operates leading global kids’ education and entertainment brands. The company’s operations are differentiated in two operating segments: product & content sales, and tours, events, shows, licences and content rental fees.

Trading Statement
Along with multi-year contracts with a value of GBP 4.4 million for 2019 and GBP 1.3 million for 2020, the company has secured 67% of its revenues for 2019 thus far and is trading in line with market expectations. With 52 events already confirmed and many more in the pipeline, the company expects to exceed its current aim of 60 events for 2019. The total number of brick models owned by the company is 690 models, as further 40 models had been added since 31 March 2019, when the company owned 650 brick models. The group reported that it is on track to have 15 touring shows by the end of 2019 as the number of themed touring assets owned by the group was 12 as at 13 June 2019.

Financial Highlights (FY 2018, in GBP million)
Driven by the expansion of activities, with 34 shows and events held in 2018 as compared to 18 in 2017, revenues from continued and discontinued activities increased by 178% in 2018 from GBP 1,928,000 in 2017 to GBP 5,351,000 in 2018. EBITDA from continuing activities, excluding the loss from the newly acquired Bright Bricks entity, was GBP 333,000. Against the loss per share from continuing activities of 11.3p in FY2017, the company improved to a loss of 3.8p per share in FY18. Net assets increased to GBP 10,627,000, driven by the consolidation of Bright Bricks.

Share Price Commentary

Daily Chart as at July-08-19, before the market closed (Source: Thomson Reuters)
 
On 08 July 2019, at the time of writing (before the market closed, GMT 11:55 am), LVCG shares were trading at GBX 46.5, up by 10.85% against the previous day closing price. Stock's 52 weeks High and Low is GBX 105.00/GBX 43.50. The company's stock beta was 0.14, reflecting less volatility as compared to the benchmark index. Total outstanding market capitalisation was around £33.46 million.

Conclusion
With a focus on markets in which it sees significant future growth, the company continues to grow its international network and will continue to produce touring models which appeal to families and customers. To provide an additional revenue stream and further diversify its business, the company will license and merchandise BRICKLIVE branded products for sale at events and create customised corporate commissions to launch a new product. However, the company faces several operational, strategic and financial risks as it is still in its early stage of development, with the growth of the revenues challenging to predict, despite substantial investment in the development of its content and the pipeline. It will be imperative for the group to maintain & develop its business and stay competitive with its pricing as future growth and prospects will depend on it.

Based on the headwinds faced by the company, we have given a “WATCH" recommendation at the closing price of GBX 47.5 (as on 5 July 2019), while we look for any upcoming catalysts.
 

Vela Technologies

Vela Technologies PLC (VELA) is a Bingley, United Kingdom-based AIM-listed company which invests in early stage technology company and seeks valuation anomalies in publicly listed small-cap companies. The group focuses on companies which can disrupt an area of business or sector on a long term basis using existing or developing new technologies. The company has also started investing in companies listed on a Recognised Stock Exchange.

Financial Highlights (H1 FY 2019, in GBP m)
Like previous years and in consonance with the long-term approach of the company, the company did not report any revenue. The company reported an overall loss after tax of GBP 298,000 (1H FY 2018: profit after tax of GBP 184,000), as the latest accounting practices resulted in a loss on assets available for sale of GBP 166,000, against a profit on disposal of available-for-sale assets of GBP 304,000 in the corresponding period last year. Loss per share was reported at 0.03 pence. The value of investments stood at GBP 3,034,000 (30 September 2017: GBP 3,469,000) and total equity as at 30 September 2018 were at GBP 2,370,000 (30 September 2017: GBP 3,153,000). The cash balance of the company at the end of the period was GBP 262,000 (30 September 2017 - GBP 526,000).

Share Price Commentary

Daily Chart as at July-08-19, before the market closed (Source: Thomson Reuters)
 
On 08 July 2019, at the time of writing (before the market closed, GMT 10:25 am), VELA shares were trading at GBX 0.1164, up by 10.85% against the previous day closing price. Stock's 52 weeks High and Low is GBX 0.65/GBX 0.08. The company's stock beta was 3.17, reflecting significantly more volatility as compared to the benchmark index. Total outstanding market capitalisation was around £1.53 million.

Conclusion
Due to the higher valuation expected by targeted companies, the group was not able to progress towards finalising an investment into a new business, highlighting the bleak investment market faced by the group. The uncertainty due to Brexit would make the environment of the industry even more tough and unpredictable, possibly hindering the operational activity of the group. Since the group has not generated any revenue until now, its growth potential seems highly speculative and it faces the risk that the investments might not materialise as intended by the group. Moreover, the company’s profitability ratios are significantly lower than its peers, with all its ratios are in the negative territory, as against positive margins reported by the industry. The share has consistently declined over the last year and is currently trading nearer to its 52-week low.

Based on the risks faced by the company, along with negative profitability, we have given an “AVOID” recommendation at the current price of GBX 0.1164 (as on 08 July 2019).

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