TIDMIDP
RNS Number : 2131L
InnovaDerma PLC
11 January 2021
InnovaDerma PLC
("InnovaDerma" or the "Company")
Trading Update and Directorate change
InnovaDerma (LSE: IDP), a UK developer of beauty, personal care
and life sciences products, provides a trading update for the six
months ended 31 December 2020.
Trading in H1
The continued impact of COVID-19 and tighter restrictions
imposed in the UK over the important festive season has affected
our performance.
We expect revenue to be c.GBP4.1m (H1 19: GBP5.1m). A decline in
UK sales (H1 20: GBP2.9m, down c.32%), was partially offset by
encouraging growth in our key international markets (H1 20: US
GBP0.4m, up c.17%; and Australia GBP0.8m, up c.52%) led by Skinny
Tan. Both Retail as well as Direct-to-Consumer ("DTC") sales have
been impacted by a reduction in beauty category consumption,
particularly in the tanning category, due to Covid-19. DTC remains
our priority channel and represents c.62% of the Company's sales
(H1 19: 60%). We expect the tanning category consumption to
significantly improve as Covid-19 restrictions ease, and moreover
as we enter the peak tanning season from April to June.
Skinny Tan sales have declined across both Retail and DTC to
GBP3.4m (H1 19: GBP4.4m). Both channels have been severely impacted
by the reduction in consumer consumption of the tanning category as
mentioned above. However, the launches of Notox Beauty Elixir and
Strawberry & Cream Pink Whipped Gradual Tanner have been very
successful on our UK DTC platform in December. Notox Beauty Elixir
was sold at full retail price and was our best-selling item. Skinny
Tan remains well positioned to perform with a strong roster of new
products to be launched during 2021.
Charles & Lee continues to grow and show its scale potential
in Australia across both Retail and DTC, (GBP0.3m, up c.39%),
despite the pandemic. Key drivers have been new product
introductions as well as a very successful Retail multipack
promotion, particularly in Myer and David Jones. The brand was
launched in the UK through our DTC channel last year and we will
expand further the brand internationally in 2021.
Roots revenues declined 29% due to its predominant UK Retail
focus. The new brand packaging is now being rolled out in the UK
and the pricing repositioning will be fully implemented in January
2021.
Nuthing sales have been subdued as the UK hair removal category
is very reliant on physical Retail and has been severely impacted
by category consumption decline. The 2020 brand launch coincided
with the UK March lockdown and we are therefore planning further
instore enhanced visibility over 2021. The Nuthing Black Cherry
& Kiwi scented hair removal Wax Strips, our first product in
the largest hair removal category, will launch in February 2021 in
Superdrug.
Life Sciences revenues remain relatively modest and the Board is
focusing on the US market while we await CE accreditation which has
been delayed by Covid-19.
Cash and Balance sheet
The cash position of the Company has been materially impacted by
COVID-19. The Company has agreed in principle to enter into a loan
agreement in the amount of GBP500,000 with M.Ward, a Non-executive
Director and the largest shareholder of the Company. A further
announcement will be made shortly providing details of the
agreement once it has been signed.
The Board will also be undertaking an impairment review exercise
on certain intangible items on the balance sheet to reflect the
impact of Covid-19 and recent trading. This impairment is likely to
be substantial but will have no material impact on the Company's
prospects, trading outlook or working capital position. The Board
expects to conclude this review ahead of the financial year end (30
June 2021).
Board Update
On 2 December 2020, the Company announced that Joe Bayer will
resign as a Director of the Company with effect from 31 January
2021. The Board has now agreed to dismiss Joe Bayer as an employee
of the Company with immediate effect and, as such, he will cease to
be a Director of the Company with immediate effect.
The Board is pleased to announce that Ross Andrews, an existing
Non-executive Director of the Company, has accepted the position of
Non-executive Chairman of the Company and will assume this position
with immediate effect.
Outlook
As in previous years, the Company expects revenue and EBITDA to
be strongly weighted to H2 FY2021. This reflects the peak tanning
season in the UK and US as well as an anticipated recovery in the
last quarter of the financial year as Covid-19 restrictions ease
and it is therefore expected that the business will be EBITDA
positive in H2. The Company will be exploring options to strengthen
the balance sheet to ensure it is in a strong position to benefit
from the substantial growth opportunities anticipated once
restrictions begin to ease.
Blake Hughes, CEO InnovaDerma PLC, commented:
"I have now been the CEO of InnovaDerma for a little over seven
weeks and I am very positive about the future growth potential of
the business. Whilst it is disappointing to be reporting the extent
of the continued impact that Covid-19 has had on the beauty
category, and therefore our business, particularly over the last
quarter, I believe our results in the US and Australia, as well as
the strong growth of Charles & Lee, show the significant
international growth potential of the business. I remain confident
that UK beauty category consumption will quickly improve once
Covid-19 restrictions ease.
"Over the coming weeks I will be formalising our sharpened
strategic focus for future growth. In addition, we will be
exploring options to strengthen the balance sheet to ensure the
business is well positioned for the future. InnovaDerma was
performing well going into the pandemic and with the support of our
major shareholders, I have every confidence in the prospects of the
Company which has some excellent brands with substantial potential,
underpinned by our strong customer following and our broad DTC
platform."
This announcement contains inside for the purposes of Article 7
of EU Regulation 596/2014.
Further enquiries
InnovaDerma
Blake Hughes c/o TB Cardew
finnCap Ltd
Geoff Nash/Kate Bannatyne +44 (0)207 220 0500
Alice Lane - Corporate Broking www.finncap.com
----------------------------
TB Cardew
Shan Shan Willenbrock/ + 44 (0)7775 848537
Olivia Rosser + 44 (0)20 7930 0777
innovaDerma@tbcardew.com
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END
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