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Live Company Group Plc

Live Company Group PLC 178% increase in revenues and a strong pipeline

Live Company Group PLC (LON: LVCG) has today announced its audited results for the year ended 31 December 2018, which was a transformational year for the Group.

Key 2018 Highlights included

  1. Significant expansion in the number of BRICKLIVE events and shows held during the year with 34 held globally in 2018 compared to 18 in 2017
  2. The launch of the BRICKLIVE Animal Paradise show in China. In September 2018 BRICKLIVE Animal Paradise was opened by H.S.H Prince Albert II of Monaco in the prestigious Birds Nest, Beijing
  3. The launch of the BRICKLIVE brand in America with the first BRICKLIVE event subsequently held post year end in January 2019 at The Star in Frisco (Dallas), promoted by Live Nation in partnership with the Dallas Cowboys
  4. The £8.5 million acquisition of Bright Bricks Holdings Limited (“Bright Bricks”) in October 2018, providing the Group with access to one of the world’s premier brick model building companies with Bright Bricks being the Group’s production hub, enabling the Group to accelerate growth plans

2018 Financial Highlights

The Group achieved significant growth in 2018:

· 178% increase in revenues from £1,928,000 in 2017 to £5,351,000 in 2018; and

· Net assets increasing from £2,844,000 in 2017 up to £10,627,000 in 2018 as a result of the acquisition.

2019 Highlights, year to date

· Strong pipeline, with 46 shows and events already secured and this is expected to increase to 60 events and shows for 2019

· As at 31 May 2019, had already secured multi-year contracts with a value of £4.0 million for 2019, £1.3 million for 2020 and £0.7 million for 2021, which together with our other revenue streams, demonstrates our ability to create significant shareholder value

· Raised £2.2 million (before expenses) in February 2019 to support our continued growth and investment in expanding our asset base, with 12 tours currently being exhibited across Europe and the US

· Focusing on five key areas in 2019

  • Continued expansion of BRICKLIVE brand in Europe, having already secured multi-year partnerships with AWC in Germany, Pal Expo in Switzerland and Exhibition Hub in Belgium
  • Continued expansion of the BRICKLIVE brand in America
  • Fostering relationships with global IP partners across the world. Already agreed a multi-year contract with Nickelodeon UK, one of the world’s leading children’s entertainment brand
  • Expansion and development of a new merchandise range, having appointed Licensing Management International Limited as the Group’s agent

· Continued expansion of the Group’s touring business, through the creation of new touring shows/assets

CHAIRMAN’S STATEMENT

I have great pleasure in presenting the Group’s Annual Report, Strategic Report, and Financial Statements for the year ended 31 December 2018.

Following the completion of the acquisitions at the end of 2017 to create the Live Company Group, 2018 was a year of significant transformation for the Group.

Key 2018 highlights included:

  1. Significant expansion in the number of BRICKLIVE events and shows held during the year;
  2. The launch of the BRICKLIVE Animal Paradise show in China. In September 2018 BRICKLIVE Animal Paradise was opened by H.S.H Prince Albert II of Monaco in the prestigious Birds Nest, Beijing;
  3. The launch of the BRICKLIVE brand in America with the first BRICKLIVE event subsequently held post year end in January 2019 at The Star in Frisco (Dallas), promoted by Live Nation in partnership with the Dallas Cowboys; and
  4. The £8.5 million acquisition of Bright Bricks Holdings Limited (“Bright Bricks”) in October 2018, providing the Group with access to one of the world’s premier brick model building companies.

2018 saw a significant increase in the number of BRICKLIVE shows and events, with 34 held globally compared to only 18 in 2017, in locations as varied as Birmingham and Glasgow (UK), Turin (Italy), Basel (Switzerland), Bangkok (Thailand), Rosario (Argentina), Seoul (South Korea), Tokyo and Osaka (Japan) and Beijing and Shanghai (China).

The acquisition of Bright Bricks was also an important milestone for the Group, as the Group has now become both a content producer and content provider, with Bright Bricks being the Group’s production hub. The acquisition has acted as a spring board for the Group, as it has allowed us to accelerate our growth plans and to take advantage of new and existing opportunities that previously we were not able to fulfil, such as our recent agreement with Nickelodeon UK Limited (“Nickelodeon UK”) to produce and create themed tours in the UK and Ireland for some of Nick Jr.’s hit shows.

The Board believes that following the integration of Bright Bricks, the Group is now one of the most significant brick-based companies in the world. The acquisition has also provided the Group with security of supply of bricks, enhanced speed to the market and increased competitive advantage whilst raising barriers to entry.

Our growth plans were boosted further following the £2.2 million equity funding announced in February 2019, with the funds being used to continue the growth of the Group’s offering, in particular in respect of expanding the Group’s BRICKLIVE Zoo programme, which has and continues to experience significant demand.

As a result of the above, the Group achieved significant growth in 2018:

· 178% increase in revenues from £1,928,000 in 2017 to £5,351,000 in 2018; and

· Net assets increasing from £2,844,000 in 2017 up to £10,627,000 in 2018 as a result of the acquisition.

The Group made an EBITDA profit of £333,000 before exceptional items, discontinued activities and the Bright Bricks Q4 losses (2017 – EBITDA loss of £273,000). The reason for excluding the Bright Bricks Q4 post acquisition loss of £809,000 is that it distorted the trading of the core Brick Live business for the final quarter.

Overall the Group’s total loss was £2,610,000 (2017: loss £5,440,000). The exceptional items included transactional costs of £1,033,000 which is further explained in Note 7.

I am delighted to report that the Group has made a very good start to 2019 and that it has a strong pipeline, with 46 shows and events already secured in 2019 with an expectation to provide 60 events and shows by the end of the year. As a result and taking into account the Group’s ability to secure multi-year contracts for shows, events, activities and corporate builds, as at 31 May 2019, the Group had already secured contracts with a value of £4.0 million for 2019, £1.3 million for 2020 and £0.7 million for 2021. Securing forward sales and multi-year contracts provides us with significant confidence of the short and medium term growth strategy and, together with other revenue streams, our ability to deliver shareholder value.

However, we must not stand still and during 2019, the Group will focus on five key areas to underpin our growth strategy as summarised below, with further details set out in the Strategic Report.

  • Expansion of BRICKLIVE brand in Europe

We are pleased to report that in 2019 the Group has already secured multi-year partnerships with AWC in Germany, Pal Expo in Switzerland and Exhibition Hub in Belgium.

The Group has also taken the strategic decision to self-promote and run the BRICKLIVE show at the NEC in Birmingham, the Group’s flagship show. This will be the first year the Group will be responsible for the promotion, management and operation of the NEC Show which is a significant step for the Group.

  • Expansion of the BRICKLIVE brand in America

We have already launched the BRICKLIVE brand in Dallas as well as recently launching BRICKLIVE Animal Paradise in Brookfield Zoo, Chicago. We are also in discussions to bring further BRICKLIVE events and shows to America.

  • Foster relationships with global IP partners across the world

The Group has successfully agreed a multi-year contract with Nickelodeon UK, one of the world’s leading children’s entertainment brand. The Board believes that this partnership is potentially transformational for the Group.

  • The Group is committed to the expansion and development of a new merchandise range

The Group announced in May 2019 that it had appointed Licensing Management International Limited as the Group’s agent in respect of identifying partners for the licensing and merchandising of BRICKLIVE branded merchandise and products to be sold at the Group’s BRICKLIVE shows, tours and events. The Board believes that this will provide an additional revenue stream for the Group and is a further diversification of its business.

  • Expansion of the Group’s touring business, through the creation of new touring shows/assets

The Group continues to grow its touring portfolio with the creation and recent launch of BRICKLIVE Force in Germany, BRICKLIVE Brickosaurs in Marwell Zoo, BRICKLIVE Ocean in Edinburgh Zoo and BRICKLIVE Outer Space exhibited in a number of cities in the UK.

We continue to invest in staff to ensure the Group has sufficient resources to accommodate its growth strategy. The Group has recently announced that it has adopted a share option scheme for key employees so that staff can share in the growth of the Group.

I would like to thank our Board, who provide invaluable experience and advice. In 2018 we appointed two new Non-Executive Directors, Simon Horgan and Trudy Norris-Grey. Both have a wealth of industry experience that complements the existing Board.

The Group has also created an Executive Board that is responsible for the Group’s day-to-day operations and the implementation of the Board’s strategic plans.

In addition, I must draw your attention to certain related party transactions entered into between myself and the Company, being the Rental Arrangements, Payments and Further Payments (together the “Resolution Transactions”), as detailed in note 31 to these financial statements. The Resolution Transactions were not notified to shareholders, and did not receive Related Party Transaction approval, as required under Rule 13 of the AIM Rules for Companies, at the point in time they were each entered into and, accordingly, it is required that the Resolution Transactions be put to shareholders to vote on at the upcoming Annual General Meeting. I can also confirm that I have volunteered to abstain from voting on the Resolution Transactions at that Annual General Meeting.

I would like to thank all our production, finance, sales, events and administrative teams for all their hard work during 2018, which was a transformational year for the Group.

Finally, I would personally like to thank all of our shareholders and those who have supported me over the last year and look forward to meeting you in person at our Annual General Meeting on 19 July 2019.

David Ciclitira

Chairman

13 June 2019

STRATEGIC REPORT

2018 was a transformational year in establishing the foundations for the future success of the business. As David set out in his Chairman’s Statement, the Group achieved four key highlights during 2018.

For 2019, management has set five key objectives, which will be used as a barometer to measure the Group’s success and performance, focusing our attention on key activities to ensure our teams remain concentrated in those areas. We have planted our flag far and wide across the globe and now we remain focused on delivering the following:

  • Extension of BRICKLIVE brand in Europe

In 2019, the Group has already secured multi-year partnerships with AWC in Germany, Pal Expo in Switzerland and Exhibition Hub in Belgium and we aim to continue this expansion programme across Europe.

Our ability to host multiple events and shows at the same time continues to grow as we increase the number of our touring assets. Currently we have 12 tours being exhibited across Europe and the US and this will continue to grow as we continue to expand our asset base. We are also in multiple discussions with existing and new partners for new shows.

The Group has also taken the strategic decision to promote and run the BRICKLIVE show at the NEC in Birmingham, the Group’s flagship show. This will be the first year that we will be responsible for the promotion, management and operation of our flagship show, though we believe that, whilst this will result in a greater initial outlay, we will benefit from increased revenue through the receipt of all ticket and commercial sales for the show, having previously only received a content and licence fee.

  • Expansion of the BRICKLIVE brand in America

Obtaining a presence in the United States has been a strategic priority for the Group and with our joint partner, Live Nation Entertainment, Inc., we delivered the first BRICKLIVE show in Dallas, Texas in January 2019 and have since launched BRICKLIVE Animal Paradise at Brookfield Zoo, Chicago in May 2019.

Moving forward, together with our US joint venture partner, we will focus on establishing our touring assets in zoos, museums, tourist attractions and other venues, which we believe is the perfect platform to expand our US presence and brand given the risk profile and commercial returns. We will also review opportunities to deliver BRICKLIVE shows and take these forward where the risk profile and commercial return is favourable to the Group.

  • Foster relationships with globally recognised IP partners across the world

Our latest announcement confirms the Group has secured a five year agreement with Nickelodeon UK for the creation of themed tours associated with the Nickelodeon brand, such as PAW Patrol and Nick Jr. tours with the first tour expected to launch in summer 2019.

Historically, we have created our own tours, thanks to the brilliantly creative minds of our design team and builders, though our ambition has always been to achieve this with external world class brands. We are therefore delighted to be working with Nickelodeon UK, the number one children’s entertainment brand in the world delivering brick-based tours of their popular show’s characters in the UK and Ireland.

The Board believes that securing a five year agreement with an organisation as prestigious as Nickelodeon UK is a truly significant achievement and has the potential to be transformational to the Group.

We will seek to continue this expansion and will look for more partners that complement the BRICKLIVE brand in delivering educational and entertainment experiences.

  • Commitment to the expansion and development of the merchandise range

The Group recently announced it had appointed Licensing Management International Limited as the Group’s agent in respect of identifying partners for the licensing and merchandising of BRICKLIVE branded merchandise and products. We are focused on the expansion of our merchandise range for the following reasons:

· It represents an important opportunity to capitalise on a secondary revenue stream whereby we can sell BRICKLIVE merchandise at our events and shows or in venues which exhibit our touring assets such as zoos, museums, tourist attractions venues; and

· The world we live in is about creating moments and experiences that remind us ‘I was there’, such as a selfie opportunity or purchasing merchandise. We need to ensure we stay ahead of the market and creating and offering merchandise as a reminder of an experience, is key to achieving that outcome, as well as building brand awareness more generally.

  • Expansion of the Group’s offering, through the creation of new themed tours and shows

We provide a diverse range of themed tours that come in many shapes and sizes and suit a variety of budgets. Our themed tours can be shown either individually or they can form the centrepiece of one of our shows and are characterised as being:

· Mobile and footloose in nature;

· Flexible in size and can be adapted to meet any venue requirements; and

· Based around fun, exiting and fresh themes and content.

Themed Tours

Our themed tours can be categorised in two ways:

· Very large themed tours that typically consist of between 50 to 80 models which are normally exhibited in significant sized spaces such as zoos, aquariums or other similar scale venues; or

· Small to medium sized themed tours consisting of approximately 15 models, which can be exhibited in a range of high footfall venues such as shopping centres, tourist attractions and other similar sized venues. The benefit of smaller tours is that they tend to be exhibited indoors and are not exposed to seasonal constraints of larger outdoor tours.

Providing tours of varying sizes is extremely important as it increases our ability to source tours for multiple venues. We are constantly expanding and updating our touring range to ensure that our offerings appeal to all audiences including clients, customers, families and fans.

Shows

For BRICKLIVE shows, the Group has entered into licence agreements with partners which has aided the speed of our growth as demonstrated by the multiple partnerships with exhibitors across the world. Going forward, we will look to expand the number of self-promoted and owned shows in key markets through adopting partnership agreements with venues. This provides the flexibility to showcase new concepts and trial new activities at our shows. In 2019, the Group announced the self-promotion of the BRICKLIVE show at the NEC in Birmingham, the Group’s flagship show.

The Group also completed a fundraising to facilitate the expansion of the BRICKLIVE Zoo programme in February 2019. The Group has secured contracts with zoos in the UK and had a successful launch in Brookfield Zoo, Chicago, USA in May 2019 and anticipates continued expansion of the BRICKLIVE Zoo touring assets.

2019 looks set to be a very exciting year. With our strategies beginning to come to fruition, which is hugely satisfying, we are now focused on delivering the five objectives which are integral to the growth of the business. We would like to thank our shareholders, partners and other stakeholders for their support and we look forward to a prosperous 2019.

Andy Smith

Chief Strategic Officer

13 June 2019

STRATEGIC FRAMEWORK

OUR ASPIRATION

To become a world-class ‘edutainment’ brand providing BRICKLIVE events, shows and tours across the world, fostering an education and entertainment experiences through interactive physical play and to become one of the world’s largest producers of interlocking brick models and provide memorable experiences.

OUR STRATEGY

In order to deliver the Group’s aspiration, the Board remains focused on BRICKLIVE’s brand principles, which are based on the foundations of creating an educational and fun experience through physical play for children. We are creating a brand where customers want to repeatedly visit our incredible events and tours. BRICKLIVE’s values are:

· Providing educational and fun experiences through physical play;

· Encourage interactive physical play that fosters creativity and innovation;

· Provide an inclusive, collaborative and engaging environment;

· Memorable fun experiences for families and fans; and

· Delivers an entertaining and memorable experience.

We will continuously review all BRICKLIVE experiences and activities to ensure they embody our brand value. We will continuously enhance our show format and content, introducing new interactive features to ensure they appeal to our global audience.

OUR BUSINESS MODEL

Delivering BRICKLIVE ‘edutainment’ experiences that are memorable for our customers and partners, is integral to underpinning the performance of the Group. We will work with customers and partners to produce incredible bespoke models. We will continue to work with global partners and establish multi-year partnerships that will support the strategic growth of the Group and deliver value for our shareholders.

We will do this through the following core activities which are:

· Content producer of brick-based models and statues;

· Promoting BRICKLIVE events;

· Content provider for BRICKLIVE shows and exhibitions;

· Content provider of BRICKLIVE touring assets; and

· Producer of bespoke corporate commissions.

BUSINESS OVERVIEW

Live Company Group plc is a live events and entertainment group. The Company was admitted to trading on AIM in December 2017, following the reverse acquisition of Brick Live Group and Parallel Live Group by Live Company Group plc (previously Parallel Media Group plc).

The Group owns the BRICKLIVE brand which is a content provider for brick-based events around the world. LEGO® is a trademark of the LEGO Group of companies and the BRICKLIVE Group is not associated with the LEGO Group of companies. BRICKLIVE is an independent producer of BRICKLIVE events.

Principal Activities

The principal activities during the year ended 31 December 2018 related to providing content for BRICKLIVE shows and events taking place in the UK, South Korea, China, Italy, Japan, Thailand, Argentina, Indonesia, Monaco and Switzerland. The Group hosted 34 shows and events in 2018 (2017:18 shows and events), representing almost a 100% increase from the previous year and is seeking to increase its global footprint with a target of 60 shows and events in 2019.

The Group’s strategic aim is to build a global children’s education and entertainment brand focused on creating environments that encourage interactive play, foster creativity, collaboration and physical experiences in an inclusive and safe environment. The BRICKLIVE brand is about creating memorable and enjoyable ‘live’ experiences through physical play.

BRICKLIVE comprises a network of global partners to deliver shows and events around the world including Europe, North America, South America and Asia. The Group has registered the BRICKLIVE brand in multiple jurisdictions and owns the intellectual property rights of sophisticated software used in the detailed design and engineering of models.

In October 2018, the Group completed the acquisition of Bright Bricks, one of the world’s premier model building companies. Having built models for Jaguar Land Rover, Rolls Royce, Force India (Formula 1), McLaren, Chiquita and Footlocker, it has also accomplished an impressive seven Guinness World records for its models. Bright Bricks has now been successfully integrated into the Group and is the production hub producing brick-based models for the Group’s events, shows and tours. The acquisition of Bright Bricks has resulted in an expansion of the Group’s Intellectual Property and capabilities, enhanced speed to market, increased competitive advantage, security over supply of bricks and increased barriers to entry.

BRICKLIVE Brand

BRICKLIVE is the principal brand of the Group. This name was originally associated solely with events based in large arenas or exhibition spaces in the UK, notably the ExCel in London and the NEC in Birmingham. The Group has complemented this large format with a pop-up concept that is able to occupy smaller spaces with the growth of smaller themed Touring shows. Over the last 18 months, the BRICKLIVE brand extensions have grown from the original BRICKLIVE shows format and these include:

· BRICKLIVE Touring: A new division created in April 2018 to deliver concepts and content for themed touring events across the globe includes zoos, museums, city centres, business improvement districts and other tourist attractions around the world.

· BRICKLIVE Kids Cafes: These are branded BRICKLIVE cafes, featuring a range of play activities including a brick pit, graffiti wall and race tracks as well as family dining and have been launched in South Korea.

· BRICKLIVE Centres: Permanent hotel or shopping mall-based fixtures of a play zone of around 100 sqm and launched in South Korea and China.

· BRICKLIVE Kids: These are smaller versions of BRICKLIVE Centres, which include permanent childcare creches, offering professionally supervised play areas for children in shopping centres, while parents go shopping.

· BRICKLIVE Education: This is a wholly-owned subsidiary of LVCG that has entered an agreement with ImmersiveMinds to develop and enhance educational content for BRICKLIVE shows globally.

· BRICKLIVE Lite: The Lite format covers 400 to 1,000 square metres in venues such as shopping malls and hotels for up to 10 days, launched in South Korea.

Business Model

  • WORLDWIDE SHOWS, TOURS & EXHIBITIONS

BRICKLIVE is seeking to become a global brand that is focused on creating educational entertainment experiences through physical play. The Group has rapidly established a presence in Europe, Asia, South and North America and in 2018, 34 BRICKLIVE shows/events were held and in 2019, 46 shows/events have already been contracted to date. The Board is anticipating that there will be approximately 60 shows/events in 2019.

The Group plans to continue investment in the BRICKLIVE touring products to drive long term sustainable growth. The Group is working with partners, exhibition promoters, venues, destination and tourist attractions globally to facilitate this growth strategy.

  • Expansion of BRICKLIVE Assets

Touring

The acquisition of Bright Bricks resulted in the Group’s portfolio of assets increasing significantly from one tour prior to acquisition, namely Animal Paradise to nine tours post acquisition, with the addition of eight tours including an additional Animal Paradise, Big Cats, Fantasy Kingdom, Metropolis, Britannia, Safari, Mythical Beasts and Brickosaurs. These tours are exhibited in zoos, aquariums and horticultural societies, town and city centres, Business Improvement Districts (BIDS), museums, tourist attractions and shopping centres.

The Group has continued to expand the number of its touring assets, with BRICKLIVE Zoo programme and the addition of new tours including BRICKLIVE Force, BRICKLIVE Ocean and BRICKLIVE Outer Space. The Board believes that the number of touring assets will increase to 15 by the end of 2019 and to 20 by the end of 2020, further expanding the Group’s ability to host multiple shows and events across numerous locations and geographies at the same time.

Bricks and Models

Including the assets acquired as part of the Bright Bricks acquisition, the total value of the Group’s models and brick stock as at 31 December 2018 amounted to £9,904,000 (2017: £798,000).

This growth in the Group’s fixed assets is significant, and it has enabled us to significantly expand the range of our assets for our shows, events and tours, which continues to attract new partners and customers. The continued investments in growing the number of models we have also enables us to host multiple shows and events at any one time, thereby continuing to grow our revenue potential.

  • Opportunity to work with Partners

The Group is increasing its scale and global reach, improving opportunities to establish worldwide networks with partners in Europe, Asia and North and South America including global IP partnerships, where there are clear synergies with the edutainment industry. More recently, the Group has secured multi-year partnerships with AWC in Germany, Pal Expo in Switzerland and Exhibition Hub in Belgium. The Group is actively progressing new opportunities and potential partnerships for its touring assets.

Our latest announcement confirms the Group has secured a five year agreement with Nickelodeon UK for the creation of themed tours in the UK and Ireland associated with the Nickelodeon brand, including Nick Jr. The first themed tour will be based on PAW Patrol, one of Nick Jr.’s most watched television shows in Europe and America by young children, with the tour expected to feature a collection of 15 models of the show’s most popular characters including Ryder, Chase, Marshall and Sky and is expected to launch in summer 2019. The partnership is a significant milestone for the Group and we look forward to working with Nickelodeon UK to develop new tours for other popular Nickelodeon Children’s TV shows.

The Group will continue to seek new opportunities to work with partners to deliver the BRICKLIVE brand.

  • Develop revenue streams

For BRICKLIVE shows and events, historically the Group received revenue from content rental and licence fees. However, in April 2019 the Board was excited to announce that the Group will be promoting and running the Group’s flagship BRICKLIVE show at the NEC in Birmingham. This will be the first year the Group will be responsible for the promotion, management and operation of the NEC Show and the Board believes that, whilst this will result in a greater outlay for the Group in hosting the NEC Show, the Group expects to benefit from increased revenue through the receipt of all ticket and commercial sales for the NEC Show, having previously only received a content and licence fee.

The Group is also seeking, where appropriate, to move more towards a partnership-based approach to its events, similar to its model for the Monaco shows, whereby the Group provides the content with the exhibitor providing the venue, with the events profits after costs being shared equally as opposed to the Group receiving just a content and licence fee.

The Group will continue to produce touring models which appeal to families and customers. The hugely successful Brickosaurs tour is currently leased to venues until the end of 2020 and there are several other popular tours such as Safari and Fantasy Kingdom which have also secured bookings for 2020. Being able to create and produce popular touring assets of varying sizes that are adaptable to venues is key to underpinning the organic growth and performance of our business, providing sustainable and predictable income.

We continually seek new opportunities to increase and diversify our revenue streams. This includes creating bespoke corporate commissions, which are an excellent marketing tool to launch new products, enhance corporate events and engage customers and new audiences. In addition to this, the Group sells consumer kits at BRICKLIVE events and will works with partners and venues such as zoos where these can be purchased, further developing the revenue opportunities for the business. The Group is also working with Licensing Management International Limited to identify partners for the licensing and merchandising of BRICKLIVE branded merchandise and products to be sold at the Group’s BRICKLIVE shows, tours and events, further developing our revenue streams.