Innovaderma Share Discussion Threads

[lord loads of lolly] 10/7/2021 11:13

jam4u2 - it’s stated quite clearly in Thursday’s trading update: “This gross margin improvement strategy will continue into next year”.

[jam4u2] 09/7/2021 18:19

LLL, You say "4) Current gross margin improvement thanks to stronger cash controls will continue into next year."

Where did you get that from?

[lord loads of lolly] 09/7/2021 09:35

We can argue for ever about the cash position and what caused its depletion. But I'd rather focus on the future. The new management team really hasn't been in place that long, so I think it's only fair to judge them by their results in a year's time. They've said: 1) They can deliver more value than Creightons' offer. 2) They won't need more cash to return to profitability next year. 3) They have a strong pipeline of new products. 4) Current gross margin improvement thanks to stronger cash controls will continue into next year. Those are pretty unambiguous objectives and the market will judge them accordingly. So far, the share price has held up pretty well to yesterday's kitchen sinking. Given their track record & relevant experience, I personally have confidence in Blake & Mark to turn this one round & took up the cash call accordingly. Mark, in particular, is clearly very confident in IDP's future, given his large shareholding. And in light of what he achieved with Hunter Macdonald, it would be a brave person who bet against him.

[cockerhoop] 09/7/2021 08:35

jam4u2,

Mark Ward converted the £500k loan into 1.428m shares so it wasn't repaid in cash.

The working capital position was dire prior to the raise so will have soaked up significant cash just to enable continued trading.

[jam4u2] 08/7/2021 22:15

Folks need to remember that effectively of the £4.5m raise, about 0.5 was in fees. Another 0.5m was the loan from M Ward (which was given to pay off debts I assume, so straight away the company is down to 3.5m. Kemche highlights the debt position and so I think its fair to assume that 0.7/8m was taken off that debt level leaving 0.6m for the Customer list values that was dded into the figures for this year end.

My take is that there are two options left to move the needle:

1) Cut operating cost base to drive efficiency and therefore profitability (remember we are doing less revs now and so the company shouldnt need as much resources/costs now)

2) Revenue growth to drive better contribution toward covering cost base and therefore profitability (Lockdown easing will help this).

I firmly believe the two factors above tied in with the actions the mgt team have taken CAN deliver profitable revenues this new FY, but there really is no more place to hde, no more excuses for the Board to use.

It simply is time to deliver...

[ishwar] 08/7/2021 14:38

Been hoping Mark is still a buyer and will take the price over to 40 plus ?

[lord loads of lolly] 08/7/2021 12:06

pugugly - possibly. But any reduction/delisting decision would largely hinge on the momentum brands have already built up - i.e. their historical sales rates, profitability & repeat purchase levels. Given Skinny Tan's & Root's premium pricing, they're likely to be far more profitable for retailers per unit. Most large retailers like Tesco, Boots & Superdrug aim for a good spread of pricepoints within any given category. With IDP's range clearly being at the top end. So whilst they may lose some shelf presence if others outgun them on marketing spend, I doubt it would be too significant, particularly given their generally favourable customer reviews & decent sell-through levels. Let's also remember they've committed to an "enhanced new product development pipeline". And traditionally, it's often been these new products - like Wonder Serum - that have created the most sales momentum.

[kemche] 08/7/2021 11:57

A minor point but let us not forget that they were carrying nigh on £4.7m in current liabilities at 31 December 2020 and no doubt some of the £4m was used to satisfy that. So there is that.

[pugugly] 08/7/2021 11:51

LOL: As mentioned before competitors with plenty of dry powder in their Marketing and Promotion budgets may well use it to get the major retailers to give them more promotional slots to the detriment and possibly delisting of our brands. I am sure PZC will be polishing off their offensive plans ready for immediate implementation.

[lord loads of lolly] 08/7/2021 11:18

Fact remains, new management has stated current cash position should be more than adequate to return IDP to profitability by next year. H2 loss hasn't increased on a LFL basis. If you read the RNS again, you'll see it's only the revised treatment of marketing costs which has led to the loss going from £0.9M to £1.5M. Sure, they were in a bad way before the cash call. And some of that probably was used up purely to keep the lights on. But that was down to previous management, not the current team. For now - given Mark Ward's track record in particular - I'm confident the new Directors will deliver. They've made a fairly bold promise - returning IDP to profitability by the year ending June 22. If they achieve this, things will start looking rosier again. If they don't, Creightons are sure to be back.

[shandypants2] 08/7/2021 10:48

LLOL - not sure i agree with your positivity re the cash position. H2 is the period when cash usually increases quite substantially yet in H2 just reported not only has the loss increase but cash is down in the period by c£2m (200k at period start plus £4m net placing). Back in 2019 when things were going well a PBT of £1.4m was reported and a cash position of £2m. The next H1 saw record revenues of £5.1m (up c30%) yet cash was down to £400k so a £1.6m burn in 6 months. Last year H1 the decline in cash was over £1m too. So current position of £2.2m is manageable but as the significant heavily discounted placing was only completed a few months ago IMHO it is concerning so much has already been spent for no tangible benefit, other than keeping the lights on.

[dave4545] 08/7/2021 10:48

I was wondering if the placing was used to pay say a debt because they have spent £2 mil of it in a few months ?

But seems by the drop and comments it's actually cash burn which is scary ?

[solarsurfer] 08/7/2021 10:37

I think the price falling, dictates that the market doesn't like the report, and at the end of the day that's all that matters to the share price !

[lord loads of lolly] 08/7/2021 10:30

Funny how different people draw such different conclusions. Where exactly did you go for your category "research"? The catalyst for recovery was spelt out in terms of an enhanced product development pipeline & improved margins. I agree this wasn't a detailed trading update product wise. But I disagree with your conclusions. Think you're reading too much into information that was never given.

[boonkoh] 08/7/2021 09:53

Terrible. Skinny Tan sales not picking up. My own research shows category doing decent, it's just that skinny tan market share declining.Then complete silence on the new brands. Must not be flying off the shelves.Barely any mention of DTC ecommerce, so that must have waned too.What about USA? No word either. Overall Where's the catalyst for recovery?

[lord loads of lolly] 08/7/2021 09:41

They've done what most sensible new managements do. Restated the accounts prudently (/over-cautiously?), to give themselves the best possible chance of "turning things round" within the next year or two. I think they deserve some credit for this. Unlike the previous management, whose antics - it could be argued - bordered on the fraudulent, this new team is finally getting to grips. How the previous auditors failed to detect a delay in writing down out-of-date stock, for example, is beyond me & appears negligent. There are some glimmers of hope now though. Margins up significantly. Period end net cash of £2.2M, with a further £0.95M available on an undrawn loan. The Directors believe this will be more than enough to return IDP to profitability, implying no further cash calls (assuming they can be believed of course). I, for one, will keep the faith for now and give the new team the benefit of the doubt. If they fail to deliver, Creightons will be back.

[its the oxman] 08/7/2021 08:34

Looks a case of come back Creightons, all is forgiven.

[zipstuck] 08/7/2021 08:14

Sweet FA left on the balance sheet

[pugugly] 08/7/2021 07:44

Kitchen sinked!

The BIG question - Will cash left be enough to support the necessary marketing spend to generate the required level of sales - Jury (imo) still out.

Signal given again (imo) to competitors to attack and destroy key brands.

[jam4u2] 05/7/2021 20:21

Yip, expecting bad numbers at headline level, but looking for signal that things have turned in terms of running a cash generative, cash positive, profitable company from which to grow from..., with balance sheet cleaned up.

[doc robinson] 05/7/2021 15:00

Trading update will hopefully confirm they have turned the corner , as well as indicating current expectations once restrictions are lifted in next couple of weeks.

[lord loads of lolly] 05/7/2021 11:22

Today's RNS confirms there'll be a trading update this Thursday (8 July). Also proposal to use UK auditor, rather than current Oz based one.

[jam4u2] 24/6/2021 08:31

I should add that is the bare minimum I am hoping for, but I've tried to be "feet on the ground" with my expectations given state of accounts at year end (ie. no cash, Mark Ward £500k loan, Prospectus tend to cost around £300k to 500k, broker fees etc)