InnovaDerma PLC Trading Statement (5378E)
08 Julio 2021 - 1:00AM
UK Regulatory
TIDMIDP
RNS Number : 5378E
InnovaDerma PLC
08 July 2021
InnovaDerma PLC
("InnovaDerma" or the "Company")
Pre-Close Trading Update
InnovaDerma (LSE: IDP) a UK developer of beauty, personal care,
and life sciences products, issues the following trading update for
the year ended 30 June 2021, for which the results are expected to
be announced in October 2021.
Trading Performance
Despite the continued impact of COVID-19 restrictions, and the
unseasonably poor weather in the UK over April and May, revenues
for the year have performed broadly in line with expectations and
we expect to report revenues of no less than GBP10.2 million for
the year ended 30 June 2021.
We have made strong progress in rebuilding our gross margin,
delivering a substantial H2 improvement of over 700 basis points
versus same period in 2020. The margin improvement has been
achieved by selling new products at higher gross margin, strictly
controlling our global promotional spending and greater recovery of
e-commerce delivery costs. This gross margin improvement strategy
will continue into next year and we expect it to deliver enhanced
profitability for the Company moving forward.
Our Direct to Consumer ("DTC") revenues saw a marked and
seasonal improvement during the second half of the year as expected
but remains behind historical levels, which reflects lower category
consumption due to UK Government restrictions on social gatherings
and also the weather, as described above. However, we do expect
trading conditions to improve in the new financial year as
Government imposed restrictions are eased and a number of new
product initiatives are launched.
Our Retail revenue momentum is returning, with our H2 revenue
greater than the same period in the previous year, but levels have
remained materially impacted by the restrictions on movement and
social gatherings. We expect our retail performance to return as
and when restrictions are relaxed, and social interaction norms
return.
Trading EBITDA
Trading EBITDA before accounting changes is expected be broadly
in line with consensus forecasts for the year of GBP(0.9) million,
which is a satisfactory performance given the challenges we have
faced.
As previously announced the Company has been undertaking a
comprehensive impairment review and validation exercise with
regards to all assets held on the balance sheet. As part of this,
the new executive management team have reversed the accounting
treatment incorrectly adopted by the previous executive management
team and their auditors in relation to the capitalisation of
internally generated intangible assets; specifically marketing
costs relating to customer acquisition. In reversing the accounting
treatment, the marketing costs will now be included in the
calculation of the Company's EBITDA and consequently this reduced
the Company's EBITDA by circa GBP0.6 million. As a result, the
Company expects to report trading EBITDA for the year ended 30 June
2021 of circa GBP(1.5) million.
Prior Year Balance Sheet Adjustments
In addition to the above accounting policy change, the balance
sheet review identified further goodwill and other balance sheet
write downs that will require non-cash prior year adjustment to the
2020 accounts. The total of these prior year adjustments is circa
GBP8.9 million. These include:
- Incorrect adoption of accounting standards relating to
marketing cost and product development amortisation (GBP3.0m)
- Goodwill write-down of acquisitions where brands were not
adequately supported by the previous executive management team
(GBP4.0m)
- Overstated inventory position due to incorrect accounting
treatment including inventory write down of out-of-date stock which
should have been written off in prior years (GBP1.5m)
- Additional assets written off (GBP0.4m).
Cashflow and Funding
The Company had net cash of GBP2.2 million at the end of the
Period (GBP0.2 million as at 31 December 2020) following a
fundraise of GBP4.5 million (GBP4.0 million net of expenses)
completed in April 2021. The Company's positive cash position is
further improved by access to a CBILS loan of GBP0.95 million,
which at year end remained undrawn. The Directors believe that the
Company has more than sufficient working capital to return the
business to profitability.
Outlook
Irrespective of the non-cash impact of unwinding a number of
accounting policies the results for the year ended 30 June 2021,
particularly for the second half of the year, confirm the Company's
belief that the future prospects will improve once Covid-19
restrictions are lifted and social norms return. The organization
is now UK led and focused with key foundations for future growth in
place; higher gross margins, enhanced new product development
pipeline and stronger cost control. Moreover, the new executive
management team now have a solid foundation from which to return
the Company to profitability and fully expect to achieve that in
the year ending 30 June 2022.
Blake Hughes, CEO, said:
"Our strategic review, as announced in our interim results,
highlighted that important measures needed to be taken to improve
the financial and structural foundations of the company in order to
move forward and generate profitable and sustainable growth. These
actions have and continue to take place and it is pleasing to see
our strategy has already delivered a strong improvement in gross
margin.
"In addition, we have strengthened our key e-commerce
infrastructure, with over 76% of customer reviews rating us 5
stars, which together with investments in new product development
and our renewed focus on cost control are important pillars in our
growth strategy. I am confident that InnovaDerma is now well-placed
to return to profitability as social interactions return to
historical norms."
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)7552 864250
innovaDerma @ tbcardew.com
--------------------------
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the company's obligations under Article 17 of MAR.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTDKOBNOBKDPOK
(END) Dow Jones Newswires
July 08, 2021 02:00 ET (06:00 GMT)
Innovaderma (LSE:IDP)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Innovaderma (LSE:IDP)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024