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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Innovaderma Plc | LSE:IDP | London | Ordinary Share | GB00BT9PTW34 | ORD EUR0.10 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 29.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMIDP
RNS Number : 4178N
InnovaDerma PLC
24 September 2019
InnovaDerma PLC
("InnovaDerma", the "Company" or the "Group")
Final results
Disciplined Execution of our Strategy Delivers Strong Financial Performance
InnovaDerma (LSE: IDP), a UK developer of life sciences, beauty and personal care products, is pleased to announce its audited results for the year ended 30 June 2019.
Financial Highlights
Hot Features
Premium
FY2019 FY2018 % change
Revenue* GBP12.9m GBP10.7m +21%
--------- --------- ---------
Gross profit GBP8.1m GBP6.1m +32.8%
--------- --------- ---------
Gross margin 63% 57% +600bps
--------- --------- ---------
Profit before
tax GBP1.4 GBP0.7 +100%
--------- --------- ---------
Basic EPS (pence) 7p 3p +133%
--------- --------- ---------
Cash and cash
equivalents GBP2.0 GBP1.9 +5%
--------- --------- ---------
*on a constant currency basis
Operational Highlights
-- Significantly increased national distribution of Skinny Tan - in c.2,300 stores (FY2018: c.800)
-- Highly successful launch of Wonder Serum - No.1 SKU (Stock Keeping Unit) in its category in Boots regularly since launch
-- Roots secured several new retail distribution channels, including Tesco, and multiple product extensions launched
-- DTC customer base grew strongly, delivering record number of orders in H2 2019 with revenue up 22% on the previous year
-- Multiple new international retail and distribution opportunities secured for Skinny Tan, Roots and Prolong
Outlook
-- A very positive start to the new financial year with current trading being in line with management's expectations
-- Skinny Tan will benefit from a full-year contribution from ranging in Boots in FY2020
-- Significant new retail and DTC channels added in UK, US and Australia and distributors appointed in multiple regions globally expected to contribute to future growth
-- Roots development will be accelerated by a new social media campaign and the roll out of new products
-- Major new product launch with multiple SKUs intended to disrupt a large new category in H2 generated by the in-house team for DTC and retail channels
-- Prolong expected to make a significant contribution to current FY driven by DTC channel and multiple distribution contracts signed covering eight countries with minimum-order quantities
-- Implementation of a new ERP to facilitate management of rapid growth
-- Supply chain being consolidated to ensure inventory management has the capability to support expected growth
Haris Chaudhry, Executive Chairman of InnovaDerma, said:
"I am very pleased to report an excellent set of results and a year of strong operational progress. Despite retail headwinds, we have delivered an impressive 21% rise in revenue and doubled profit before tax with good gross margin improvement. Our performance has been supported by the disciplined execution of our strategy, continuous product innovation to disrupt our markets and leveraging consumer desire for unique and high performing products.
"We are excited about the opportunities that lie ahead, supported by a near term major launch in a new category, fast-growing retail footprint and with a robust foundation in place, the Group is well placed to generate further growth. The year has started very positively, and current trading is in line with management's expectations."
Further enquiries:
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
Further enquiries
InnovaDerma
Haris Chaudhry/Joe Bayer
Kieran Callan +61 (0)3 9863 8030
finnCap Ltd
Geoff Nash/Giles Rolls/Kate +44 (0)207 220 0500
Bannatyne www.finncap.com
Alice Lane - Corporate Broking
---------------------------
TB Cardew
Shan Willenbrock/Tom Allison + 44 (0)20 7930 0777
Joe McGregor innovaDerma@tbcardew.com
---------------------------
About InnovaDerma:
InnovaDerma PLC (LSE: IDP) specializes in the research, manufacture and marketing of clinically proven products in life sciences, beauty and personal care products. InnovaDerma has presence in Europe, US, Australasia, North Asia and Africa.
Executive Chairman's Statement
I am pleased to report an excellent set of results and a period of significant progress underpinned by our execution of three clear strategic aims as outlined at our interim results: to leverage commercial opportunities secured with retail partners and distributors; to grow our DTC channel and focus on new product development. This focus has enabled us to deliver strong growth across our key performance indicators. Revenue increased by 21% to GBP12.9m and profit before tax doubled to GBP1.4m. These results were achieved in the context of a volatile economic environment and a challenging retail sector.
Retail partners and distribution channels
We have well-established and deep relationships with our retail partners and distributors enabling us to range our brands in the UK and internationally. During the year, Skinny Tan secured ranging in more than 1,300 stores in Boots and together with Superdrug, our core brand is now available in more than 2,000 stores in the UK. Roots, our haircare range has extended its distribution and is now available in 1,800 stores in the UK (FY2018: c.400) and now sold in Canada. Charles + Lee, our men's skincare range has received positive feedback internationally and completed its entry into New Zealand and secured opening orders in South Africa. In our Life Sciences business, Prolong successfully secured two distribution agreements in Hong Kong and eight Middle Eastern countries and established minimum-order quantities in excess of 6,000 devices for the first contractual year.
Project innovation
Accelerating growth through innovation is a key driver of the business. Consumer tastes, trends and expectations are continuously changing. There is a growing trend towards more natural, organic and highly effective ingredients which is influencing the pace and the way in which we innovate. Our disciplined execution has delivered highly successful new product launches including Wonder Serum by Skinny Tan which combines self-tanning technology, with anti-aging, anti-oxidant and hydrating skincare ingredients. The product was very well-received, achieving positive often five-star reviews from our customer base and is regularly the best-selling product in its category in Boots. Roots, our haircare range also benefitted from new product development and the brand now has 14 products for a range of different hair types. Charles + Lee, our affordable alternative premium range of men's skin care products is growing in popularity and we have extended the product range to include shave care to capitalise on the growing trend in men's grooming.
DTC channel
Our DTC channel is an important platform to engage directly with our customers and is key to our marketing campaigns. Digital and online shopping has changed the retail industry and since InnovaDerma was founded, our strategy has always embraced the opportunities presented by the digital transformation across marketing, social media and e-commerce. Our digital strategy has differentiated and strengthened our business. In H1 2019, following changes in the Facebook algorithm, we implemented a new DTC strategy which encompasses complimentary channels such as Instagram, Google, Ad Roll and Taboola to provide us with depth and breadth of consumer engagement. This has enabled us to deliver strong growth of the DTC channel with our customer base growing by c.50% to more than 600,000. Our DTC channel also delivered a record number of orders in H2 2019 and revenue is up 22% on the previous year.
Growth strategy
We delivered strong results, with solid execution this financial year. The Board believes there are significant opportunities to grow the business and our focus in FY2020 will be based on the following initiatives to generate further growth over the long term:
-- Skinny Tan performed very well in Boots and we will seek additional ranging and increased store depth as the category review process commences. This will be underpinned by the benefit of having a full year revenue contribution from the account. Our core brand will bring a number of innovative new products to market during the year to ensure the brand remains at the forefront of category development and to capitalise on the success of products such as Wonder Serum, which demonstrates the ability of the brand to compete effectively in skincare and skin conditioning;
-- Superdrug will launch an exclusive Skinny Tan limited edition range in time for Christmas 2019 and also create a major feature around a specially designed gift pack;
-- The DTC channel will receive major investment through the addition of Artificial Intelligence, a 360-degree strategy for comprehensive consumer engagement and contracting of a proven digital sales platform to drive revenue. This is a multi-market strategy covering the UK, US and Australia;
-- Roots will receive major marketing investment to capitalise on the increase in store presence in Boots. This will be supported by the roll out of new product development;
-- In international markets, Roots will continue to build its presence in existing and new geographies including India and the EU through our new distributor relationships;
-- Charles & Lee will continue to build in Australia and New Zealand driven by a strong pipeline of new product development. New opportunities will be developed in international markets. In addition, we will continue our discussions with a key UK retail partner for a launch in H2. Charles & Lee is in the process of being launched in the US and UK markets through our DTC channel. We believe there is a strong fit between the brand and social media as a method of engaging with consumers; and
-- Innovative new product with multiple SKUs in a new category on the topical side of our business is planned for launch in H2. The product is to be launched with an initial 12 SKUs and has been formulated and designed with the intention to disrupt a large category. Our new brand has been generated by the in-house new product development team.
People
On behalf of the Board, I would like to thank the highly dedicated team who worked so diligently to deliver this strong year of continued growth for the business. I am always impressed by their hard work, creativity and commitment to our business. In order to sustain our growth trajectory, the business has invested in additional personnel for our DTC channel, in addition to retail management in the UK. This ensures we have the skills and capacity to deliver on the strategies and plans we have developed.
Outlook
The new financial year has begun very positively, and current trading is line with management's expectations. We look forward to a year of significant growth both in terms of revenue and earnings. We are excited about our new product launches, especially the new category we will be entering later this year. This combined with our expanded retail and DTC channels, both for topical and life science products, gives us much confidence in the business and its future growth opportunities.
CEO Statement
The period under review marked a strong year of progress for the Company. We have secured new distribution channels in the UK and internationally, released category leading products and strengthened our digital platform.
Topical
Self-tanning
The growth of the Skinny Tan has continued, with the brand securing the number two or three self-tanning brand in Boots (depending on the period) and the exclusive Wonder Serum product regularly being the number one SKU across the total category. The online customer community has also grown, particularly on Instagram and the business has implemented a 360-degree multi-platform strategy to ensure we exploit all growth channels in the DTC environment.
Skinny Tan's sales for the period to 30 June 2019 has grown significantly. Sales through the DTC channel was up 22% year on year which reflects the strength of our DTC model that has underpinned the significant growth of Skinny Tan since it was acquired by the Company in May 2015. The number of SKUs increased from 45 to 58 during the period. These new products are being progressively rolled into distribution which will support further growth during the new financial year.
Off the back of the fantastic success of Wonder Serum, additional new product development is being undertaken in the serums format to bring new and additional product benefits to consumers. It is essential that Skinny Tan remains at the forefront of the bronzing category and is seen as an innovator.
The brand continues its transition from bronzing-only to an emerging beauty brand and it is targeting a much larger market and year-round utility through developing new products aimed at a wider demographic.
The international distribution of Skinny Tan has been an area of specific focus as it represents the next major growth opportunity for the brand. Post period end, Skinny Tan entered into a new DTC marketing agreement in the US with a major digital marketing organisation. It has also relaunched in Australia via our DTC channel with encouraging early results. Our Canadian distributor is seeking distribution for the 2020 season and in Europe discussions are under way to potentially launch Skinny Tan with a new distributor in certain regions.
Haircare
Roots continues to develop as a premium haircare range which assists in reducing hair loss. It has delivered consistent revenue throughout the year achieving one of our key objectives of offsetting the seasonality of Skinny Tan. Additionally, unlike Skinny Tan, it has global applicability providing a huge potential target market.
The brand now has distribution in Boots, Superdrug, Tesco and Asda. In the case of Boots, its shelf presence was doubled, and new SKU's were added in the range review which went live in store in July. This is a major vote of confidence in the brand and we have planned a comprehensive marketing support programme to fully capitalise on this opportunity.
Roots has continued to evolve and has launched new products to cater for both coloured hair, with a 'Protect' range, and specific hair types such as curly hair. The 'Curls' product forms part of the Boots range expansion. The brand now has 14 (up from the original five) products in total providing a comprehensive offering to meet the needs of consumers across a wide range of hair types and conditions.
Roots was launched into its first retail distribution in Canada this year and our partner there is pursuing additional opportunities. It is also close to completing registration for the Indian market and opening orders will be received as soon as this has been finalised.
Skincare
Charles + Lee is our affordable alternative premium range of men's skin care products and has had a breakthrough year in FY2019. The Company launched Charles + Lee initially in 30 of Myer's stores (Australia's largest department store chain) and then followed up with a hugely successful Christmas gift pack. This earned it an extension to all stores. The brand went on to secure ranging in Australia's largest Beauty retailer Priceline (with approximately 450 stores nationally) and Terry White Chemmart, a retail pharmacy chain in Australia.
The brand is demonstrating that it has international appeal having successfully completed its entry into New Zealand and secured opening orders in South Africa. The registration process for the Indian market is under way and opening orders will be received as soon as this is finalised.
In the UK we have had extensive discussions with our key retail partners with a positive response. We will continue to develop these opportunities with the objective of converting them in FY2020.
The brand continues to innovate and has added a number of exciting and very well received products during the year. The shave range and the hair and body wash have been particularly successful. The range now consists of 16 SKU's and three different gift sets.
Life Sciences
Prolong
Life Science has made significant progress throughout the period. Prolong delivered very promising revenue growth with average gross margins in excess of 65% during the period. The Company recommenced marketing for Prolong in USA and Australia in Q2 of calendar year 2019 which has created momentum and supported our revenue generation.
The Company had been negotiating exclusive contracts with distributors worldwide throughout the period. As a direct result, we have signed two major distribution agreements in Hong Kong and eight Middle Eastern countries and established minimum-order-quantities in excess of 6,000 for the first contractual year. The Company expects to secure more distribution contracts throughout the current FY which will support incremental and strong revenue generation combined with increasing DTC sales.
Outside of the US, Australia and New Zealand where the Company already has regulatory approvals, it undertook regulatory approvals process for Hong Kong, China, India, Canada, UK, Europe & GCC countries. The Company's objective is to broaden its distribution where it has regulatory approvals thereby growing Prolong's revenue and profit base through the incremental distribution contracts and DTC channels.
GrowLase
The Company has secured inventory of its FDA-cleared hair loss helmet, GrowLase, during the period and is creating various online platforms to enable it to generate scale.
As part of ensuring the product remains an attractive proposition to its target audience, is competitive amongst other hair loss devices and to ensure recurring sales, the Company embarked on two separate projects:
-- Obtaining visual-evidence of progress amongst dozens of men and women suffering from hair loss through a third-party-managed process using GrowLase. Before and after images will then be used in all our marketing
-- Designing a new wet-products regime with GrowLase branded shampoo, conditioner, day serum and spray.
Both projects are expected to complete in the first half of this financial year with the objective of bringing the expanded range of product lines under the GrowLase brand to a far wider and geographically diverse client base through our DTC platform and distribution channels globally and adding annuity streams through repeat purchases after the initial purchase.
As our distribution channels grow in Life Sciences and begin to contribute a material level of annualised revenue and profit, the Company would seek to acquire new products that would benefit from its DTC platform and distribution channels.
Finance Director's Review
Overview
The Group delivered a strong revenue performance, driven predominantly by our UK DTC platform and our retail channels. In addition, Roots contributed strongly in the year under review. The key focus for the past twelve months has been supporting sales growth through DTC customer acquisition, major new product development and rolling out planned launches. Group revenues grew 21% to GBP12.9m (FY2018: GBP10.7m). Profit before tax rose by 100% to GBP1.4m (FY2018: GBP0.7m).
Operating Results
Gross margins increased 600bps from 57% in FY2018 to 63% in the financial year under review. The stronger DTC channel revenue mix as against retail sales in Skinny Tan, drove higher returns. The successful launch of new products Wonder Serum and Coconut Water spray generated a higher sales basket size than previously achieved.
Marketing expenditure was GBP3.7m, 60% higher than the previous year (FY2018: GBP2.3m) driven by launch and promotional costs for the Boots roll-out, continued support for Superdrug, other new retailers and a strong drive on DTC customer acquisition and re-marketing. As we highlighted in the half year report, the DTC channel was presented with significant technology challenges as major platforms devised higher charges for less promotion. We also highlighted a change in our approach which was rewarded with very strong DTC revenues in the second half, a combination of better strategic spend and new product offerings setting the pace. Our DTC customer database grew significantly, both in the UK and the US, with the business having just over 625,000 customers, up from 422,500 a year ago. As highlighted previously, we see this as a critical asset for the generation of future revenue for the business. The Company has taken a conservative approach to valuing the customer list intangible assets carried on the balance sheet.
Staff costs reduced slightly, with a reduction in director payments and a move to replace higher salaried cost personnel with better support staff. Administration costs were only 4% higher at GBP1.5m over the comparative period last year.
Revenue for the year was slightly impacted by the occurrence of the last two DTC trading days falling on the weekend. Orders were placed however, as they were not delivered, the Company held over the resulting revenue and profit. The impact of GBP122k in revenue and GBP68k in profit will flow into FY20.
Cash and net debt
The Group remains in a strong cash position and continues to carry no external debt. Cash and equivalents balance were GBP2.0m as at 30 June 2018 up from GBP1.9m in the previous year. Inventory levels reduced to GBP2.4m (FY2018: GBP2.9m) as a result of better inventory and supply chain management. Trade and other payables increased to GBP3.0m (FY2018: GBP2.3m) with Receivables increasing to GBP3.3 (FY2018: GBP1.9m) as a result of strong season opening Boots and Superdrug sales.
Taxation
The Group has recognised a tax expense of GBP0.4m against profit (FY2018: GBP0.3m). The effective tax rate of 28% is a reduction over last year (FY2018: 38%) due to the strong performance in the UK market. The Group has recognised a small timing difference as a deferred tax liability.
Dividends
The Board has elected not to declare a dividend at this time.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEARED 30 JUNE 2019
Year ended 30 Year ended 30
June 2019 June 2018
Note GBP GBP
Revenue 7 12,851,835 10,699,311
Cost of sales (4,763,366) (4,607,346)
-------------- --------------
Gross profit 8,088,469 6,091,964
Other Income 19,859 81,715
Marketing expenses (3,683.649) (2,323,278)
Listing expenses (48,489) (36,256)
Wages & salaries expenses (1,458,813) (1,698,460)
Administrative expenses (1,506,218) (1,446,622)
-------------- --------------
Profit before tax 1,411,159 669,064
Income Tax expense 6 (398,612) (254,869)
-------------- --------------
Net profit for the period 1,012,547 414,195
Other comprehensive income (49,712) (16,561)
Total comprehensive income
for the period 962,835 397,633
-------------- --------------
Attributable to:
Owners of the parent 826,227 291,098
Non-controlling interests 136,608 106,535
Basic & diluted profit/(loss) 28 GBP0.07 GBP0.03
per share
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
As at 30 June As at 30 June As at 30 June
2019 2018 2017
Note GBP GBP GBP
Current assets
Cash and cash equivalents 8 2,043,048 1,906,215 207,301
Trade and other receivables 9 3,295,255 1,918,982 1,781,773
Inventory 10 2,364,530 2,873,533 2,258,989
Prepayment and other
assets 11 314,210 180,139 114,705
-------------- -------------- --------------
Total current assets 8,017,043 6,878,868 4,362,768
Non-current assets
Property, Plant and Equipment 53,455 45,197 127,199
Intangible assets 12 6,578,562 5,694,469 3,645,198
Other assets 17,186 30,368 14,031
Deferred tax asset 13 234,329 158,583 115,905
-------------- -------------- --------------
Total non-current assets 6,883,532 5,928,617 3,902,333
-------------- -------------- --------------
Total assets 14,900,575 12,807,485 8,265,101
-------------- -------------- --------------
Current liabilities
Trade and other payables 14 2,957,136 2,309,132 2,419,332
Current tax payable 14 1,202,729 638,778 501,408
-------------- -------------- --------------
Total current liabilities 4,159,865 2,947,910 2,920,740
Non-current liabilities
Borrowings 15 (552) 12,627 404,845
Deferred tax liability 16 170 3,560 0
-------------- --------------
Total non-current liabilities (382) 16,187 404,845
-------------- -------------- --------------
Total liabilities 4,159,483 2,964,097 3,325,585
-------------- -------------- --------------
Net assets 10,741,092 9,843,388 4,939,516
============== ============== ==============
Equity
Share Capital 17 1,735,798 1,727,771 1,565,905
Share premium 8,288,479 8,219,525 3,890,210
Merger reserve 18 (721,132) (721,132) (721,132)
Warrant Reserve 0 132,000 0
Foreign Exchange reserve (172,202) (157,099) (53,686)
Non-controlling interest 318,970 234,465 164,481
Retained Profit/(Accumulated
Losses) 19 1,291,179 407,858 93,738
-------------- -------------- --------------
Total equity and reserves 10,741,092 9,843,388 4,939,516
============== ============== ==============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR 1 JULY 2018 TO 30 JUNE 2019
Ordinary Share Merger Warrant Foreign Accumulated Non-controlling Total
Share Premium Reserve Reserve Exchange Earnings/ interests Equity
Capital Reserve (Losses)
GBP GBP GBP GBP GBP GBP GBP
Balance as at
1 July 2018 1,727,771 8,219,525 (721,132) 132,000 (157,099) 407,858 234,465 9,843,388
Comprehensive
income
Profit for the
period - - - - 875,939 136,808 1,012,547
Other
comprehensive
income - - - - (49,712) - - (49,712)
---------- ---------- ---------- ---------- ---------- ------------ ---------------- -----------
Total
comprehensive
income
for the year - - - - (49,712) 875,939 136,808 962,835
---------- ---------- ---------- ---------- ---------- ------------ ---------------- -----------
Transactions
with owners,
in their
capacity as
owners
Shares issued 10,511 121,489 - - - - - 132,000
Foreign
exchange
differences
on
translation
of foreign
denominated
subsidiaries - - - 34,609 2,579 - 37,189
Increase
holding in
Skinny
Tan AU - - - - 2,319 (52,103) (49,785)
Cost of Share
Warrant (132000) (132,000)
Cost of shares
issued (52,535) - - - - - (52,535)
---------- ---------- ---------- ---------- ---------- ------------ ---------------- -----------
Total
transactions
with
owners, in
their
capacity
as owners 10,511 68,954 0 (132,000) 34,609 4,898 (52,103) (65,131)
---------- ---------- ---------- ---------- ---------- ------------ ---------------- -----------
Balance at 30
June 2019 1,735,798 8,288,479 (721,132) 0 (172,202) 1,291,179 318,970 10,741,092
---------- ---------- ---------- ---------- ---------- ------------ ---------------- -----------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD 1 JULY 2018 TO 30 JUNE
2019
Year ended Year ended
30 Jun 2019 30 Jun
2018
Note GBP GBP
Cash flows from operating activities
Receipts from customers 11,475,562 10,562,102
Payments to suppliers and employees (10,220,492) (10,454,037)
EDMG Grants 0 35,902
Taxes Paid (75,746) (42,678)
Interest received 3 1,029
Net cash used by operating activities 25 1,179,327 102,318
------------- -------------
Cash flows from investing activities
Purchase of property, plant and equipment (46,844) (13,861)
Payments for product development/Intangibles (884,094) (2,049,271)
Net cash used by investment activities (930,937) (2,063,132)
------------- -------------
Cash flows from financing activities
Proceeds from borrowings 0 -
Proceeds from issue of shares 132,000 4,416,000
Repayments of borrowings (13,179) (392,218)
Payments for convertible notes 0 0
Transaction costs for shares issued 0 (506,760)
Net cash from financing activities 118,821 3,517,022
------------- -------------
Increase in cash and cash equivalents 367,210 1,556,208
Cash and cash equivalents at the beginning
of the period 1,906,214 207,301
Effect of movement in foreign exchange
rates (230,377) 142,705
Cash and cash equivalents at the end
of the period 8 2,043,048 1,906,214
------------- -------------
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
As at 30 June 2019 As at 30 June
2018
Note GBP GBP
Current assets
Cash and cash equivalents 977,084 1,568,170
Prepayments 182,047 10,550
Total current assets 1,159,130 1,578,720
------------------- --------------
Non-current assets
Intercompany Receivable 20 5,018,328 4,998,093
Investment In subsidiaries 21 2,312,379 2,312,379
Product development 215,851 215,571
Deferred Tax Asset 0 0
Total non-current assets 7,546,558 7,526,043
------------------- --------------
Total assets 8,705,689 9,104,764
------------------- --------------
Current liabilities
Trade and other payables (2,340) (62,191)
Total current liabilities (2,340) (62,191)
Non-current liabilities
Total non-current liabilities 0 0
------------------- --------------
Total liabilities (2,340) (62,191)
------------------- --------------
Net assets 8,708,029 9,166,954
=================== ==============
Equity
Share Capital 17 1,738,282 1,727,771
Share premium 17 8,288,479 8,219,525
Warrant Reserve 0 132,000
Foreign Exchange reserve (109,337) (109,337)
Accumulated Losses (1,209,395) (803,004)
------------------- --------------
Total equity and reserves 8,708,029 9,166,954
=================== ==============
In accordance with section 408 of the UK Companies Act 2006, the Company is availing itself of the exemption from presenting its individual statement of profit or loss and other comprehensive income. The company's loss for the financial period as determined in accordance with IFRS's is $406,025. The company had no cashflow in the period, and therefore no cashflow statement has been prepared.
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR 1 JULY 2018 TO 30 JUNE 2019
Ordinary Share Warrant Foreign Accumulated Total
Share Premium Reserve Exchange Earnings/ Equity
Capital Reserve (Losses)
GBP GBP GBP GBP GBP
Balance as at 30 June 2018 1,727,771 8,219,525 132,000 (109,337) (803,004) 9,166,954
Comprehensive income
Profit for the period - - - (406,390) (406,390)
Other comprehensive income - - - - 0
---------- ---------- ---------- ---------- ------------ ----------
Total comprehensive income for the year - - - 0 (406,390) (406,390)
---------- ---------- ---------- ---------- ------------ ----------
Transactions with owners, in their capacity
as owners
Shares issued 10,511 121,489 - - - 132,000
Foreign exchange differences on translation
of foreign denominated subsidiaries - - - - 0
Cost of Share Warrant (132000) - - (132,000)
Cost of shares issued (52,535) - - (52,535)
---------- ---------- ---------- ---------- ------------ ----------
Total transactions with owners, in their
capacity
as owners 10,511 68,954 (132,000) 0 0 (52,535)
---------- ---------- ---------- ---------- ------------ ----------
Balance at 30 June 2019 1,738,282 8,288,479 0 (109,337) -1,209,395 8,708,029
---------- ---------- ---------- ---------- ------------ ----------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2019
1. Accounting Policies 1.1 Basis of Preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements are drawn up under the historical cost convention, except for the revaluation of financial assets.
IFRS, issued by the International Accounting Standards Board (IASB) set out accounting policies that the IASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Material accounting policies adopted in the preparation of the consolidated financial statements are presented below and have been consistently applied unless otherwise stated.
1.2 Going Concern
This report has been prepared on the going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.
1.3 Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by InnovaDerma PLC at 30 June 2019. A controlled entity is any entity over which InnovaDerma PLC has the power to govern the financial and operating policies so as to obtain benefits from its activities.
In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the consolidated group have been eliminated in full on consolidation.
Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exceptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations are expensed to the statement of comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
Goodwill
Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum of:
(i) the consideration transferred;
(ii) any non-controlling interest (determined under either the full goodwill or proportionate interest method); and
(iii) the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of net identifiable assets acquired.
Goodwill on acquisition of subsidiaries is included in intangible assets.
Goodwill is tested for impairment annually and is allocated to the Parent Company's cash-generating units or groups of cash-generating units, representing the lowest level at which goodwill is monitored being not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of.
Changes in the ownership interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions and do not affect the carrying amounts of goodwill.
Non-controlling interests
The interest of non-controlling shareholders in subsidiary companies (holdings of greater than 0%, but less than 50%), are initially recognised at fair value. Subsequent results of the subsidiary are apportioned to the non-controlling interests in proportion to their shareholding.
1.4 Foreign Currencies
Functional and presentation currency
An entity's functional currency is the currency of the primary economic environment in which it operates. Since incorporation, InnovaDerma PLC has had global operations, with its trading subsidiaries using different functional currencies including British pounds, Australian dollars, and United States dollars, reflective of their local operating environments.
At 1 July 2016, the directors reviewed the Group's spread of economic activity in its different functional currencies and decided to change the presentation currency of the Group from Australian Dollars to British Pounds. The directors believe this will better reflect the levels of activity within the Group, as well as enhance comparability with its industry peer group. The change in presentation currency represents a voluntary change in accounting policy and has been applied retrospectively.
To give effect to the change in presentation currency, the assets and liabilities of the Group, which were presented in Australian dollars as at 30 June 2016, were converted into British pounds at a fixed exchange rate on 1 July 2016 of A$1: GBP0.5763 and the contributed equity, reserves and retained earnings were converted at applicable historical rates.
The Australian dollar assets and liabilities at 1 July 2015 were converted at the rate of A$1: GBP0.5085 in order to derive British pound opening balances. Revenue and expenses for the twelve months ended 30 June 2016 were converted at the exchange rates ruling at the date of the transaction to the extent practicable (at an average of A$1: GBP0.5117 for the reporting period), and equity balances were converted at applicable historical rates.
The above stated procedures resulted in the recognition of a foreign currency translation reserve of (GBP158,726) on 1 July 2016, as set out in the statement of changes in equity.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the dates of the transactions.
Foreign currency monetary assets and liabilities at the reporting date are translated at the exchange rate existing at the reporting date. Exchange differences are recognised in the statement of comprehensive income in the period in which they arise.
1.5 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the group's activities, as described below. The group bases its estimate of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Sales of goods - retail
The group manufactures and sells a range of health and beauty products for sale to the retail market. Sales of goods are recognised when an order is executed, and stock is segregated from the Group's inventory, ready for collection in accordance with that customer's terms of trade.
The life science products are often sold with volume discounts; customers have a right to return faulty products in the wholesale market. Sales are recorded based on the price specified in the sales contracts, net of the estimated volume discounts and returns at the time of sale. Accumulated experience is used to estimate and provide for the discounts and returns. The volume discounts are assessed based on anticipated annual purchases.
Internet revenue
Revenue from the provision of the sale of goods on the internet is recognised as at the date that payment is received, because that is the point the buyer accepts legal responsibility for the good being sold. Transactions are settled by credit or payment card.
1.6 Finance income
Interest income is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.
1.7 Intangible Assets
Brands
Externally acquired brands, where identifiable, are capitalised as assets of the group. Brands are initially capitalised at historical cost, or attributable value, when acquired as part of a business combination.
Brands have a limited legal life; however, the Group monitors global expiry dates and renews registrations where required. Brands recorded in the financial statements are not currently associated with products which are likely to become commercially or technically obsolete. Accordingly, the Directors are of the view that brands have an indefinite life.
Brands are tested annually for impairment and carried at cost less accumulated impairment charges.
Digital Asset
A specific website/e-commerce platform developed by InnovaDerma PLC is an intangible asset, and therefore subject to the same recognition and measurement requirements. Expenditure on websites in existence (which were previously expensed in prior financial statements) cannot be later recognised as part of the cost of an intangible asset at a later date.
The stages of a website's development and treatment of these expenditures is as follows:
a) Planning - includes undertaking feasibility studies, defining objectives and specifications, evaluating alternatives and selecting preferences.
b) Application and Infrastructure Development - includes obtaining a domain name, purchasing and developing hardware and operating software, installing developed applications and stress testing
c) Graphical Design Development - includes designing the appearance of web pages.
d) Content development - includes creating, purchasing, preparing and uploading information, either textual or graphical in nature, on the website before the completion of the website's development. This information may either be stored in separate databases that are integrated into (or accessed from) the website or coded directly into the web pages.
Accounting treatment - providing for purposes other than to advertise and promote InnovaDerma's products (e.g. digital photographs of products) and not previously recognised as an expense, then to capitalise.
Amortisation Useful life, InnovaDerma is to assess whether the useful life of an intangible asset is finite or indefinite. An intangible asset has an indefinite useful life when there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. An intangible asset with a finite useful life is to be amortised over its useful life. The amortisation method should reflect the pattern in which the asset's future economic benefits are expected to be consumed. If that pattern cannot be determined reliably, the straight-line method is to be used. Amortisation is to be charged in relation to the asset from the first day that it is put into use and to cease at the earlier of the date that the asset is classified as held for sale in accordance with AASB 5 Non-Current Assets held for Sale and Discontinued Operations and the date that the asset is derecognised.
The amortisation period and method for an intangible asset with a finite useful life are to be reviewed at least at the end of each annual reporting period. If the expected useful life or expected pattern of consumption of the future economic benefits is different from previous estimates, the amortisation period or the method is to be changed accordingly. Guidance given in relation to amortisation of websites is that the best estimate of a website's useful life shall be short.
Intangible assets with an indefinite useful life are not to be amortised.
An intangible asset shall be derecognised on disposal, or when no future economic benefits are expected from its use or disposal. Any gain or loss arising is to be recognised in the statement of comprehensive income when the asset is derecognised. Gains must not be classified as revenue but shown as a gain in the statement of comprehensive income.
Operating stage - follows completion of development, when InnovaDerma is maintaining and enhancing the applications, infrastructure, graphical design and content of the website.
Accounting treatment - recognise as an expense when incurred unless the definition and recognition criteria still apply, and these costs have been subsequently incurred in order to add to, replace part of or service the existing intangible asset.
This does not apply to expenditure on purchasing, developing, and operating hardware (e.g. web servers, staging servers, production servers and laptops) of a website. This expenditure is to be accounted for in line with IAS 16.
Customer Lists
Separately Identifiable Direct costs incurred in the creation of Customer Lists (Lists of previous buyers maintained in order to continue business relationship) are recognised as an intangible asset, in accordance with the provisions of IAS 38. The asset is an identifiable asset from which future economic benefits are expected. InnovaDerma has full control over the databases as they are linked to website domains and only the Company can engineer the data. InnovaDerma generates close to 60% of its group revenue from direct to consumer (DTC) sales. A material proportion of sales are driven by customer lists and the economic value to the business of this customer list is an integral component of the future of the business.
Costs have been recognised with the specific task of customer acquisition and include the relevant costs from digital suppliers and other avenues where the intention is to grow the lists.
Amortisation Useful life, InnovaDerma is to assess whether the useful life of an intangible asset is finite or indefinite. An intangible asset has an indefinite useful life when there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. An intangible asset with a finite useful life is to be amortised over its useful life. The amortisation method should reflect the pattern in which the asset's future economic benefits are expected to be consumed. If that pattern cannot be determined reliably, the straight-line method is to be used.
Customer lists are tested annually for impairment and carried at cost less accumulated impairment charges if seen appropriate with regards to infinite/finite useful life.
1.8 Impairment
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, to the asset's carrying amount. Any excess of the asset's carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard. Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other Standard.
1.9 Research and Development
Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project is expected to deliver future economic benefits and these benefits can be measured reliably.
Capitalised development costs have a finite useful life and are amortised on a systematic basis based on the future economic benefits over the useful life of the project. At this stage, the useful life of the project has not been determined as development is incomplete, hence amortization has not commenced.
1.10 Cash & Cash Equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the consolidated balance sheet, bank overdrafts are shown within borrowings in current liabilities.
1.11 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. The cost of finished goods and work in progress comprises design costs, raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Costs of inventories include the transfer from equity of any gains/losses on qualifying cash flow hedges for purchases of raw materials.
1.12 Trade Receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
1.13 Trade Payables
Trade and other payables are recognised when the Group becomes obliged to make future payments resulting from the purchase of goods and services. They are initially recognised at fair value and subsequently at amortised cost using the effective interest rate method. Current liabilities represent those amounts falling due within one year.
1.14 Goods and Services Tax (GST) & Value Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount of GST/VAT, except where the amount of GST/VAT incurred is not recoverable from the Australian Taxation Office (ATO) or HER MAJESTY'S REVENUE & CUSTOMS (HMRC)
Receivables and payables are stated inclusive of the amount of GST/VAT receivable and payable. The net amount of GST/VAT recoverable from, or payable to, the ATO/HMRC is included with the receivables or payables in the statement of financial position.
1.15 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
1.16 Income Tax
Income tax expense or benefit represents the sum of current corporation tax payable and provision for deferred income taxes.
Current income tax payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Group's liability for current corporation tax is calculated using tax rates and laws that have been enacted or substantively enacted at the period-end date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the date of the statement of financial position where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exceptions:
Deferred tax assets are recognised only to the extent that the Directors consider that it is probable that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the period-end date.
1.17 Post-Retirement Benefits
For salaries paid (all by the Australian subsidiary):
A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. Superannuation - the Australian defined contribution pension scheme - is mandated by Australian law and presently set at 9.5% of gross salary payable to an employee.
The group pays contributions to publicly or privately administered pension insurance plans on a mandatory basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due.
1.18 Contributed Equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.
If the Company reacquires its own equity instruments, e.g. as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.
1.19 Segment Reporting
The operating segments were reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segment, has been identified as the board of directors, which has overall control for strategic decisions.
1.20 Estimates and Judgements
The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation or future events and are based on current trends and economic data, obtained both externally and within the Group.
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policies described in Note 1.6 and Note 1.7. The recoverable amounts of cash-generating units (required to determine fair value less costs to sell) have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows.
1.21 New accounting standards for application in future periods (a) New and amended standards adopted by the group
There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial period beginning on 1 July 2017 that would be expected to have a material impact on the group.
(b) New standards and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning on or after 1 July 2017 and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the financial statements of the group, except the following set out below:
IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in July 2014. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories:
1) those measured as at fair value and 2) those measured at amortised cost. The determination is made at initial recognition.
The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The group is yet to assess IFRS 9's full impact. The group will also consider the impact of the remaining phases of IFRS 9 when completed by the Board.
2. Parent Information
Guarantees
InnovaDerma PLC has not entered into any guarantees, in the financial period, in relation of the debts of its subsidiary.
Contingent Liabilities
At 30 June 2019, InnovaDerma PLC did not have any contingent liabilities.
Contractual Commitments
At 30 June 2019, InnovaDerma PLC had not entered into any contractual commitments.
3. Operating segments
The Group has three (3) geographical/regional segments it operates in the United Kingdom, the United States of America, and the Asia Pacific region respectively. Each region is subject to differing rates of profitability, stage of development, opportunities for growth, future prospects, and risks in the Group's growth stage. The Group's internal management and reporting structure is geographically structured with senior executives responsible for each region. We have specific customers in line with these regions and have acquired assets within each region.
Year ended Year ended
30-Jun-19 30-Jun-18
GBP GBP
----------- -----------
Revenue by Geographical
region
United Kingdom 11,856,668 9,563,773
United States of
America 667,781 650,535
Australia/NZ/Asia 327,385 485,003
----------- -----------
12,851,835 10,699,311
----------- -----------
Year ended Year ended
30-Jun-19 30-Jun-18
GBP GBP
----------- -----------
Assets by Geographical
region
United Kingdom 10,349,659 9,957,818
United States of
America 1,022,694 825,388
Australia/NZ/Asia 3,528,222 2,024,279
----------- -----------
14,900,575 12,807,485
----------- -----------
4. Operating profit/(loss)
The following items have been included in arriving at the operating profit:
Year ended Year ended
30-Jun-19 30-Jun-18
GBP GBP
----------- -----------
Expenses:
----------- -----------
Directors' remuneration 324,101 365,272
----------- -----------
Depreciation 104,085 109,251
----------- -----------
Auditor's remuneration
----------- -----------
- As auditors (for
parent company and
consolidation) 34,467 33,625
----------- -----------
- Taxation compliance
(for parent company
and subsidiaries) 3,185 2,659
----------- -----------
All remuneration payable to the auditors has been disclosed above. No benefits in kind are payable to the auditors.
Contributions to superannuation (money purchase pension schemes) are made on behalf of four directors of the group.
5. Employees
Year ended Year ended
30-Jun-19 30-Jun-18
GBP GBP
----------- -----------
Staff costs for the Group
during the period:
Wages and salaries 1,263,563 1,548,165
Pension costs (including
superannuation) 109,502 150,295
----------- -----------
1,373,065 1,698,460
----------- -----------
The average monthly number of staff (including executive Directors) employed by the Group during the period amounted to:
Year ended Year ended
30-Jun-19 30-Jun-18
----------- -----------
Management staff 5 5
Other employees 36 29
----------- -----------
41 34
----------- -----------
6. Taxation
Year ended Year ended
30 June 2019 30 June 2018
GBP GBP
-------------- --------------
Current Tax
Current tax on profits in the
period 409,060 395,955
Deferred tax expense (11,843) (39,117)
Under/over provision for income
tax 1,395 (101,969)
-------------- --------------
Income Tax Expense 398,612 254,869
-------------- --------------
Factors affecting current tax charge
The effective rate of tax for the period is higher than the standard rate of corporation tax in the UK of 19% due to tax on subsidiaries located in higher tax jurisdictions. The differences are explained below:
Year ended Year ended
30 June 2019 30 June 2018
GBP GBP
--------------- ---------------
Profit before taxation 1,411,159 669,064
Profit on ordinary activities
multiplied by the standard rate
of tax in the UK of 19% 262,056 127,122
Differences in tax rates in subsidiary
jurisdictions (46,077) 115,111
Effect of change in tax rate - 18,612
Excluded (gain)/loss from foreign
jurisdictions 103,759 95,708
Losses carried forward 77,214 -
Under (over) provision in prior
years 1,395 (101,969)
Permanent differences 265 285
--------------- ---------------
Total current tax 398,612 254,869
--------------- ---------------
7. Revenue
Year ended Year ended
----------------------
30-Jun-19 30-Jun-18
----------------------
GBP GBP
---------------------- ----------- -----------
Haircare Products 1,322,209 997,206
----------- -----------
Life Science devices 298,744 101,429
----------- -----------
Skin & Beauty
Products 11,230,882 9,600,675
----------- -----------
12,851,835 10,699,311
----------- -----------
8. Cash and cash equivalents
30-Jun-19 30-Jun-18
GBP GBP
---------- ----------
Cash at bank 2,043,048 1,906,215
---------- ----------
Cash at bank is included as cash and cash equivalents in connection with the statement of cash flows.
When in overdraft, this balance is included in trade and other payables.
9. Trade and other receivables
30-Jun-19 30-Jun-18
GBP GBP
---------- ----------
Trade Receivables 3,295,255 1,918,982
---------- ----------
10. Inventory
30-Jun-19 30-Jun-18
GBP GBP
---------- ----------
Finished goods
(Leimo & GrowLase) 227,586 105,855
Finished goods
(Charles & Lee
and Stevie K) 215,949 149,513
Finished Goods
(Prolong) 42,106 74,465
Finished Goods
(Roots) 258,881 106,620
Finished goods
(Skinny Tan) 1,553,330 2,263,204
Stock Material
(Work in Progress) 66,678 173,876
2,364,530 2,873,533
---------- ----------
The costs of inventories recognised as an expense and included in cost of sales amounted to GBP3,404,178 for the year.
11. Prepayments and Sundry Assets
30-Jun-19 30-Jun-18
GBP GBP
---------- ----------
Deposits held 10,318 7,021
Prepayments 303,892 165,770
Input tax - -
Sundry assets - 7,348
314,210 180,139
---------- ----------
12. Intangible Assets
Group:
30-Jun-19 30-Jun-18
GBP GBP
---------- ----------
Goodwill (Skinny Tan) 408,067 402,357
Customers Lists 2,168,388 1,240,435
Goodwill (Leimo) 1,841,818 1,862,847
Brands (Charles+Lee and
Stevie K) 43,940 38,482
Digital Asset (Prolong) 65,816 139,870
Intellectual Property
(Ergon) 1,472,920 1,463,370
Development Costs 577,613 547,107
---------- ----------
6,578,562 5,694,469
---------- ----------
Movement in capitalised development
costs:
30-Jun-19 30-Jun-18
GBP GBP
---------- ----------
Balance brought forward 252,392 294,715
Development expenditure
during the year 325,221 252,392
---------- ----------
577,613 547,107
---------- ----------
*Refer to note 1.7 for definition and recognition criteria for intangible assets
13. Deferred tax asset
30 June 2019 30 June 2018
GBP GBP
------------- -------------
Deferred tax items recognised in income
statement:
* Other timing differences 24,359 16,161
* Income tax losses 209,970 142,422
------------- -------------
234,329 158,583
------------- -------------
14. Trade and other payables
30-Jun-19 30-Jun-18
GBP GBP
---------- ----------
Trade payables 2,738,363 1,392,803
Other payables 218,773 930,114
Current tax payable 1,202,729 624,993
4,159,865 2,947,910
---------- ----------
15. Borrowings
30-Jun-19 30-Jun-18
GBP GBP
---------- ----------
General Borrowings (552) 12,627
(552) 12,627
---------- ----------
16. Deferred tax liability
30 June 2019 30 June 2018
GBP GBP
------------- -------------
Deferred tax items recognised
in income statement:
* Other timing differences 170 3,560
------------- -------------
170 3,560
------------- -------------
17. Contributed equity
Share Capital Share Premium
2018/19 No. of GBP GBP
shares
----------- -------------- --------------
Opening balance as
at 1 July 2018 14,376,633 1,725,287 8,219,525
Shares issued during
the year 120,000 10,511 121,489
Share issue costs - - (52,535)
----------- -------------- --------------
Balance as at 30 June
2019 14,496,633 1,735,798 8,288,479
----------- -------------- --------------
Share Capital Share Premium
2017/18 No. of shares GBP GBP
-------------- -------------- --------------
Opening balance as at 1 July
2017 12,569,556 1,565,905 3,890,210
Shares issued during the year 1,807,077 159,381 4,836,075
Share issue costs - - (506,760)
-------------- -------------- --------------
Balance as at 30 June 2018 14,376,633 1,725,286 8,219,525
-------------- -------------- --------------
The holder of the ordinary shares is entitled to one vote per share at any meeting of the Company whether in person or by proxy. The holder is entitled to receive dividends declared from available profits and to the surplus of assets on a winding up.
18. Merger reserve
InnovaDerma PLC acquired 100% of the share capital of InnovaDerma AUS & NZ Pty Ltd, InnovaDerma International Limited, InnovaDerma NZ Limited, and ID Philippines, Inc, on 28 November 2014.
These transactions are noted as being completed under common control - all companies involved in the deal were controlled by Mr Haris Chaudhry before and after the transaction was processed.
This condition falls under a scope exemption for IFRS 3. Per IAS 8.12, the company may, in this circumstance, utilise pronouncements of other standard-setting bodies that use a similar conceptual framework to develop accounting standards.
As a UK company, the directors decided to apply UK Generally Accepted Accounting Principles, which make provision for Pooling of Interests in a common control situation, also commonly referred to as Merger Accounting.
In this circumstance, the difference between the consideration transferred and the nominal value of share capital acquired is taken to equity, creating a Merger Reserve.
28 November 2014 Acquisitions:
GBP
--------
Consideration transferred (8,969,960
shares) 721,187
Nominal value of share capital
acquired (55)
--------
Value of Merger Reserve 721,132
--------
19. Retained Profits
30-Jun-19 30-Jun-18
GBP GBP
---------- ----------
Balance brought
forward 407,858 93,738
Profit for the
period 883,321 314,120
---------- ----------
Balance carried
forward 1,291,179 407,858
---------- ----------
20. Intercompany loan - parent company
30-Jun-19 30-Jun-18
GBP GBP
---------- ------------
Balance brought
forward 4,998,093 3,058,612
Movement in funds (20,235) (1,939,481)
---------- ------------
Balance carried
forward 5,018,328 4,998,093
---------- ------------
21. Investment in subsidiaries
During the year, the Company held interests in the following subsidiaries:
Company Name Date of Acquisition Percentage Holding Percentage Holding
30 June 2019 30 June 2018
InnovaDerma AUS & NZ 28 November
Pty Ltd 2014 100% 100%
--------------------- ------------------- -------------------
InnovaDerma International 28 November
Limited 2014 100% 100%
--------------------- ------------------- -------------------
28 November
InnovaDerma NZ Limited 2014 100% 100%
--------------------- ------------------- -------------------
28 November
ID Philippines Inc 2014 100% 100%
--------------------- ------------------- -------------------
23 January
Bach Health Pty Ltd 2015 100% 100%
--------------------- ------------------- -------------------
InnovaScience Inc 31 March 2015 100% 100%
--------------------- ------------------- -------------------
Skinny Tan Pty Ltd (a) 28 May 2015 94% 93%
--------------------- ------------------- -------------------
SkinnyTan UK Limited
(a) 28 May 2015 94% 93%
--------------------- ------------------- -------------------
Ergon Medical Limited
(b) 28 April 2017 100% 100%
--------------------- ------------------- -------------------
a) During the year, InnovaDerma PLC paid GBP104,142 to acquire a further 1% of Skinny Tan Pty Ltd, and through direct holding, SkinnyTan UK Limited.
b) During the financial year FY17 InnovaDerma PLC acquired Ergon Medical Limited, owner of Prolong. The following table shows the allocation of consideration paid for Ergon Medical Limited, the fair value of assets acquired, liabilities assumed, and the non-controlling interest at the acquisition date.
Consideration for Ergon GBP
Cash Consideration 1,022,710
----------
Total Consideration 1,022,710
----------
Recognised fair value of assets acquired and
liabilities assumed
Other assets 3,532
Brand 1,333,721
Trade and other payables (314,543)
----------
Total fair value of assets acquired, and liabilities
assumed 1,022,710
----------
22. Related party transactions
Name Transaction Amount received from/ Amount due from/(to)
(paid to) in year related party
------------------------------ ----------------------------
2019 2018 2019 2018
----------------- ---------- ------------------ ----------- ---------------
GBP GBP GBP GBP
----------------- ---------- ------------------ ----------- ---------------
Farris Marketing Loan payable(1) - (85,395) - -
Concepts Pty Ltd
----------------- ---------- ------------------ ----------- ---------------
Cygenta Capital Provision - (26,773) - -
& Advisory of services(2)
----------------- ---------- ------------------ ----------- ---------------
Graise Partners Provision - (3,078) - -
International of services(2)
Pty Ltd
----------------- ---------- ------------------ ----------- ---------------
Zaymar Investments
Pty Ltd Loan payable(1) - (292,274) - (13,186)
----------------- ---------- ------------------ ----------- ---------------
Mr Haris Chaudhry Loan payable(1) - 160 1,552 1,552
----------------- ---------- ------------------ ----------- ---------------
(1) These loans are interest free and unsecured.
(2) These expenses were settled via the issue of equity instruments in InnovaDerma PLC.
Nature of related parties
Farris Marketing Concepts Pty Ltd and Zaymar Investments are related parties of Mr Haris Chaudhry, the Executive Chairman.
Cygenta Capital & Advisory Pty Ltd is a related party of Mr Joseph Bayer, the Executive Director.
Graise Partners International Pty Ltd is a related party of Mr Rodney Turner, a Non-Executive Director.
23. Key Management Personnel
All transactions with key management personnel (the directors) during the year ended 30 June 2019 are disclosed below:
Salary Superannuation Consultancy Total Total 2018
Fees
Haris Chaudhry 100,279 9,527 - 109,806 189,200
-------- --------------- ------------ -------- -----------
Joseph Bayer 105,121 9,987 - 115,108 119,827
-------- --------------- ------------ -------- -----------
Rodney Turner 16,598 1,577 - 18,175 18,920
-------- --------------- ------------ -------- -----------
Ross Andrews - - 19,992 19,992 18,831
-------- --------------- ------------ -------- -----------
Kieran Callan 56,500 4,520 - 61,020 18,494
-------- --------------- ------------ -------- -----------
278,498 25,611 19,992 324,101 365,272
-------- --------------- ------------ -------- -----------
During the period, there were no advances, credits or guarantees subsisting on behalf of the directors.
24. Commitments and contingencies
At 30 June 2019, the Group did not have any contingencies.
At 30 June 2019, the Group had an obligation to pay GBP77,876 in rent for the forthcoming 12 months, under a non-cancellable operating lease.
25. Reconciliation of operating profit to net cash outflow from operations
30-Jun-19 30-Jun-18
GBP GBP
------------ ----------
Profit after income tax 1,012,547 414,195
Depreciation 38,586 95,863
(Increase)/decrease in trade and other
receivables (1,497,163) (218,980)
(Increase)/decrease in inventories 509,003 (614,544)
Increase in trade and other payables 1,171,987 27,170
Increase/(decrease) in payables settled
by Shares - 449,940
(Increase)/decrease in foreign exchange
gains/losses 20,113 (8,648)
Increase/(decrease) in taxes payable (75,746) (42,678)
------------ ----------
Net cash outflow from operations 1,179,327 102,318
------------ ----------
26. Financial risk management
The Group's financial instruments consist mainly of deposits with banks, accounts receivable and payable & loans from related parties.
The Group's financial instruments at 30 June 2019 were classified as follows:
Note 30-Jun-19 30-Jun-18
GBP GBP
---------- ----------
Financial assets
Cash and cash equivalents 8 2,043,048 1,906,215
Trade and other
receivables 9 3,295,255 1,918,982
---------- ----------
Total financial
assets 5,338,303 3,825,197
---------- ----------
Financial liabilities
Trade and other
payables 14 4,159,865 2,947,910
Borrowings 15 (552) 12,627
---------- ----------
4,159,313 2,960,537
---------- ----------
Fair value versus carrying amounts
All items shown in the preceding table as either financial assets or financial liabilities are short term instruments whose carrying value is equivalent to the fair value. There is not considered to be a material difference between the fair value and the carrying value.
Specific Financial Risk Exposures and Management
The Group's activities expose it to a number of financial risks that include market risk, credit risk and liquidity risk.
(a) Market Risk
i) Foreign exchange risk
The Group does not hold any material financial assets denominated in a foreign currency at the period end, hence it is not exposed to foreign exchange risk.
ii) Interest rate risk
The Group had interest-bearing liabilities during the period but is not exposed to interest rate risk because the interest rates on their liabilities are set by private agreement, not by reference to market rates. The group does not have any liabilities to financial institutions as at 30 June 2018. As such, sensitivity analysis with regard to movements in interest rates would not be meaningful.
(b) Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance of counter-parties of contract obligations that could lead to financial losses to the group.
Credit risk exposures
The Group had no significant concentrations of credit risk.
(c) Liquidity risk
Liquidity risk arises from the possibility that the group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The group manages this risk through careful cash management policies. In order to meet its short-term obligations, the group has the support of several key shareholders who are willing to provide funds to the group on an as-needed basis.
For loans receivable and payable, please refer to Note 9 - Trade and Other Receivables, Note 14 - Trade and Other Payables & Note 15 - Borrowings. Loans are unsecured and have no fixed repayment date.
27. Share Based Payments
No share options have been granted to employees or directors during the current or preceding financial year. In this Financial year, an exercisable warrant for 120,000 shares at GBP1.10, were issued to a supplier for services provided. Instrument is to be settled by 12 December 2018.
28. Earnings per share
Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
The following reflects earnings and share data used in the earnings per share calculation.
Year ended Year ended
30-Jun-19 30-Jun-18
GBP GBP
----------- -----------
Profit/(loss) for the year 1,012,547 414,195
Weighted average number of
shares 14,496,633 13,891,362
----------- -----------
29. Subsequent Events
There were no subsequent to report.
30. Company Details
The registered office of InnovaDerma PLC is:
27 Old Gloucester Street
London
United Kingdom
WC1N 3AX
The principal place of business is:
Level 10, Suite 1031, 1 Queens Road
Melbourne VIC 3004
Australia
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.
END
FR PGUQCBUPBUCC
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