Recent Interim Result Updates On Two Stocks: BIDS and WPCT

Bidstack Group Plc

United Kingdom-based Bidstack Group Plc (BIDS) is a provider of native in-game advertising. The group delivers technology that assists video game companies and advertisers in inserting advertisements into video games. The company supports game publishers and developers to monetise their games by integrating adverts naturally into the game environment. Advertisers use its technology to run targeted campaigns within these spaces, such as engaging their audiences and boosting their brands without breaking immersion. The company was earlier known as Kin Group Plc. Currently, the company is a member of the FTSE AIM All-Share index.

Financial Highlights (for the period ended 30 June 2019, £ million)

In the first half of 2019, the company’s reported revenue (test spend) was £0.03 million, while there was no revenue in H1 FY18. The loss for the period stood at £1.8 million, an increase as compared with the corresponding period of the last year. Loss per share though improved to 0.83 pence against the loss of 3.04 pence per share. The current period had shown that the group’s balance sheet improved substantially, due to the current result of the placing the new ordinary shares of 40 million by institutional and other shareholders at 12.5 pence per share to raise £5 million in MayThe group had also received an additional £0.7 million with the exercise of 4.38 million warrants allotted in November 2017 at an exercise cost of 20 pence per warrant.  At the end of the current period, the group had a healthy £6 million in cash available to it.

In the current period, the platform went programmatic end-to-end, firstly through DSP (demand-side platform) Avocet Systems Limited, a substantial technical milestone in the development, and secondly through Platform 161. Demand side platforms enable advertisers to aim for advertising inventory, either by agency or direct, that suits their campaign demographics and permits media buyers to optimise and trade campaigns with real‐time reporting. On the start of Football Manager 20, the new SDK (software development kits) technology will feature in the fourth quarter of 2019. The company is also into the development and testing of SDK. On 30th June 2019, the company generated the first true programmatic revenue subsequent the test through the advertising customers. The company was awarded Brand Safety Seal via Digital Trading Standard Group. The company had gone to 34 staff in H1 FY18 from 17 staff on 31st December 2018, with the emphasis on developing the publisher/customer and technology facing functions. In the first half of 2019, the company set up the Advisory Board Committee to enable the team to get support from a remarkable range of industry stalwarts in relative to commercial and technical questions. In the group’s board, the company had added two well connected and talented new Non-Executive Directors, Derek Wise and Mike Hayes in the current period.

Recent Developments

On 27th September 2019, the company declared the alliance with Dentsu Aegis Network.

On 26th September 2019, the company reported that they had revived the deal with Sports Interactive for Football Manager for an additional three years.

On 22nd August 2019, the company announced that they had hired Stifel (Stifel Nicolaus Europe Limited) as the group’s only corporate broker to help the progress.

On 1st August 2019, the company purchased Minimised Media Limited, trading as Pubguard software for £300 thousand satisfied by the issue of 869,565 the company shares at 34.5 pence per share. This software will be utilized to improve its software development kits and to safeguard the company’s gaming inventory.

Outlook

During the first half of 2019, the plan has been at the cost of short-term revenues, the group’s board is confident that making the fundamentals right is vital to upcoming achievement. In the technical development team, there will be a sizeable extension. However, both the supply and sales teams are anticipated to increase swiftly with additions in Europe and the United States and also in the United Kingdom signifying where the company anticipate finding games publishers and advertisers. During the financial year 2020, the revenues are anticipated to increase substantially, and this will create material profitability in 2021. In the second half of 2019, the group’s board continues to anticipate that the cash flow will be pessimistic but believes that market prospects for 2019 revenues stay achievable.

Share Price Performance

Daily Chart as at 30-September-19, before the market close (Source: Thomson Reuters)

On 30 September 2019, at the time of writing (before the market close, at 2:00 pm GMT), Bidstack Group Plc shares were trading at GBX 26, up by 10.64 per cent against the previous day closing price. Stock’s 52 weeks High and Low is GBX 42/GBX 4.20. The company’s stock beta was negative 0.85, reflecting negative volatility as compared to the benchmark index. The outstanding market capitalisation was around £57.63 million.

Woodford Patient Capital Trust Plc

Woodford Patient Capital Trust Plc (WPCT) is an investment company, which primarily invests in unquoted and quoted equities of enterprises listed or incorporated mainly in the UK with the long-term perspective and the fundamental attractions of a business. The company’s investment purpose is to accomplish long-term capital progress over investing in a portfolio, mainly including the UK companies. The company’s portfolio is spread across several sectors, which include industrials, financials, telecommunication, technology, healthcare, and consumer goods industries. Currently, the company is a member of the FTSE All-Share index.

Financial Highlights (for the period ended 30 June 2019, £ million)

The company’s total return before finance costs and taxation decreased from a profit of £6,301 thousand in H1 FY18 to the loss of £230,227 thousand in H1 FY19. Total loss for the period stood at £231,707 thousand, a huge decrease from the profit of £5,052 thousand in the first half of 2018. Total return per ordinary share was negative 26.27 pence as compared with the first half of 2018 positive return per ordinary share of 0.61 pence.

In the first half of 2019, the company’s net asset value (NAV) stood at £654 million, a decrease from the corresponding period of the last year. Net asset value per share stood at 72 pence, a decrease of 21.69 per cent against the 91.94 pence in H1 FY2018. On 30th June 2019, share price decreased by 32.53 per cent to 56 pence as compared to 83 pence as on June 30, 2017. The company had already produced improvement with the commitment to decrease levels of gearing over time with borrowings declined to £111.1 million as at 26th September 2019 from £116.1 million, albeit the gearing as a percentage of NAV had surged due to the drop in NAV.  On 30th June 2019, the group’s board invited Link to conduct an independent specific valuation review of the top 20 investments for the half-year process, which were earlier reviewed by Grant Thornton as part of its independent interim evaluation of the group’s half-year results. From September 5, 2019, and additional amendment with effect from September 19, 2019, the group came in sync with its lender for greater flexibility around certain requirements relating to the borrowing base for a current period. The company had agreed a revised interest rate with the lender of LIBOR (London Interbank Offered Rate) plus 1.5 per cent. The company had appointed Jane Tufnell, Raymond Abbott, and Stephen Cohen as independent Non-Executive Directors, consistent with earlier stated objective to evolve the Board. The group’s board continues to assess the position of the Portfolio Manager and, as earlier announced, is talking to other potential managers.

Key Risks

Portfolio risk, portfolio manager risk, Outsourced service provider model risk, NAV gearing, and Brexit.

Outlook

Neil Woodford, as a Head of Investment of the company, said that they stay passionate for the early-stage asset class. He has repeatedly said that a long-term “patient capital” tactic can bring extremely successful results, help businesses to achieve their potential, while also serving to develop the UK’s knowledge economy, and supporting rebalancing of the economy. The company requires just a handful of the larger companies in the portfolio to deliver and to produce the returns investors expects. The business environment does not augur well for its performance. The geopolitical and economic uncertainties in the United Kingdom as well as abroad has caused significant volatility in the market. The Brexit implication, stiff competition, and operational risks may affect the growth of the company. The company’s board is evolving, and steps have been taken to increase the scope of the Audit Committee, allowing it to spend even additional time with the Portfolio Manager on its plan and the portfolio. The company has shown decent signs of progress in the current financial year, while the portfolio is sound with strength and depth.

Share Price Performance

Daily Chart as at 30-September-19, before the market close (Source: Thomson Reuters)

On 30 September 2019, at the time of writing (before the market close, at 2:30 pm GMT), Woodford Patient Capital Trust Plc shares were trading at GBX 44.35, up by 0.80 per cent against the previous day closing price. Stock’s 52 weeks High and Low is GBX 93.95/GBX 38.10. The company’s stock beta was 0.04, reflecting less volatility as compared to the benchmark index. The outstanding market capitalisation was around £399.80 million.