News blog
LiteBulb Group Ltd
- BY: Andrew Hore |
- POSTED: 18/05/2015 |
Branded products designer and distributor LiteBulb Group Ltd continues to grow its revenues but it remains in loss.
In 2014, revenues were £21.9m and the loss was £1.95m, including £628,000 of exceptional charges relating to past acquisitions. Capitalised product development costs were £547,000. There was a positive EBITDA in the second half but this business is likely to be skewed towards the second half. There was a £2.16m cash inflow from operating activities mainly due to a large rise trade creditors. Net debt was £1.45m at the end of 2014. Debt includes £3.5m of convertible loan notes issued last year that are convertible at 1p a share, plus £1.5m of loan notes issued in 2013 convertible at 0.5p a share.
Revenues for the first four months of this year are 150% ahead at £5m – partly due to acquisitions. Retailers are positive about new product ranges so LiteBulb should get them in the shops and it is just a question of how well they sell. A profit of £2.4m has been forecast for this year.
The share price has fallen 0.03p to 0.65p, which values LiteBulb at £16.7m.
LiteBulb is consolidating 50 existing shares into one new share. If it goes to plan, this should happen on 5 June. It makes sense to consolidate the shares but without earnings to provide a floor it could lead to a post-consolidation fall in the share price.
Based on the finnCap 2015 profit forecast, earnings per share will be 0.07p this year – 3.5p after consolidation – based on a nil tax charge. That makes the shares appear attractive on nine times forecast earnings. On that basis there should not be a large fall in the post-consolidation share price. However, that is something that is expected to happen in the future and the current loss could have more of an influence on the share price.
The acquisitive nature of the group makes it difficult to compare old forecasts with the outcome. The fact that back in 2013 finnCap expected near breakeven in 2013 and a profit in 2014 shows that LiteBulb has tended to disappoint financially. Acquisitions meant that revenues in 2014 were double the forecast from nearly two years ago yet it could not make a profit. Even last November, a 2014 profit was forecast on revenues of £24.5m. In six months, the profit forecast has been cut from £3.2m to £2.4m.
A share price fall may not be warranted on current expectations but it could provide an opportunity to pick up shares at a lower price.
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