TIDMIDP
RNS Number : 6799G
InnovaDerma PLC
31 March 2022
InnovaDerma PLC
("InnovaDerma" or the "Company")
Interim Results for the 6 months ended 31 December 2021
InnovaDerma (LSE: IDP), a leading digitally focused UK beauty
brand developer, announces its unaudited half year results for the
period ended 31 December 2021.
Financial Highlights
H1 2022 H1 2021(1) Change
Revenue(2) GBP3.7m GBP4.1m (9.5%)
---------- ----------- ---------
Gross profit GBP2.1m GBP2.0m 3.1%
---------- ----------- ---------
Gross margin 56.3% 49.4% 690 bps
---------- ----------- ---------
Adjusted EBITDA(3) (GBP0.7m) (GBP1.2m) GBP0.5m
---------- ----------- ---------
Basic EPS (GBP0.03) (GBP0.10) GBP0.07
---------- ----------- ---------
Cash and cash equivalents GBP1.33m GBP0.15m GBP1.18m
---------- ----------- ---------
(1) See note 2.3 for a description of the prior year
restatement.
(2) On a constant currency basis
(3) Adjusted EBITDA defined as EBITDA before non-recurring
items, including impairments, abortive and restructuring costs. A
reconciliation of adjusted EBITDA can be found in note 5 below.
Operational Highlights
Our strategy of driving increased profitable sales through gross
margin improvement, radical simplification of business operations,
rigorous cost control and the prioritisation of our Skinny Tan
brand, is working.
Financial performance is markedly improved vs H1 2020. Our
previously announced strategy has been implemented with a
disciplined approach to marketing and overhead costs.
Short-term impact on revenue (revenues of c. GBP3.7m versus H1
20: GBP4.1m) primarily driven by ceasing loss-making sales
promotions and reducing marketing investment in lower priority
brands such as Nuthing.
Adjusted EBITDA improved significantly to GBP0.7m loss (H1 21
restated: GBP1.2m loss).
We have further improved our return on marketing spend to 38.1%
(H1 21: 40.0%, H2 21: 39.2%) and have reduced less-efficient
marketing spend during the low tanning season to ensure we have the
right ammunition to maximise returns over the peak H2 tanning
season (UK + US).
Our Liberty Poole collaboration continues to yield benefits and
is helping to increase the share of our business in the key 18-25
age group.
Global Amazon relationship already delivering material sales in
lead UK market at a healthy margin.
Enhanced e-commerce operational excellence with 76% of customers
giving Skinnytan.co.uk 5 stars.
Joint venture agreement signed in December 2021 to accelerate
sales of the Prolong medical device, with InnovaDerma plc retaining
45% stake in the business, and enabling the Group to focus on its
topical products.
Outlook
The Board remains optimistic that the transformation plan
enacted this year, as well as underlying improved consumer
consumption and retail momentum versus last year will enable the
business to continue its improvement trajectory over the second
half year with a return to profitability this year remaining the
Board's intention. The second half of our financial year has
historically been considerably stronger than the first, driven by
Skinny Tan in the UK, and this is expected to be the case again
this year. We continue to closely monitor residual impacts of
COVID-19 and other global impacts on underlying beauty category
consumption and we believe they will continue to improve towards
the peak tanning season in the UK.
Blake Hughes, CEO InnovaDerma plc, commented:
"We continue to make good progress in simplifying and reshaping
our business as we focus on delivering sustainable, profitable
revenue growth. It is pleasing to see that our strategy is
delivering tangible financial improvements.
"We have a strong foundation for the second half of the year,
especially as the focus on Amazon and our Liberty Poole
collaboration are delivering strong benefits, even before peak
tanning season. This will be supported by our well-honed digital
capabilities and conversion optimised e-commerce site and exciting
new Skinny Tan product launches which have already received
excellent retailer support."
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
--------------------------
Non-Executive Chairman's statement
I am pleased to deliver the Company's interim results for the
period ended 31 December 2021.
The Company's change in strategy, to concentrate on driving
increased profitable sales, ceasing loss making promotions and
prioritising Skinny Tan, has been endorsed by the improvement in
the Company's operating performance for the six months to 31
December 2021, as outlined in the Trading Update issued on 12
January 2022 and in the interim results announced today.
I am pleased to be able to report an improvement in gross
margin, EBITDA and EPS.
Strategic report: Chief Executive's report
As previously detailed in our annual results published in
December, the Group has implemented a number of necessary
operational and financial interventions to transform and
future-proof the business. The action plan focused on:
1. Optimising our organisation
Our business is only as strong as our people and how they
collaborate as a team. The focus remains to ensure that we have the
right people, in the right country, with the right skills, focused
on the right targets and powered by the right mindset.
2. Strengthen our financial foundations
During H1 21 we have significantly reduced the EBITDA loss
versus the prior year, with a laser-like focus on improving gross
margins, reducing non-productive inventory, cutting low return
costs and introducing real time accurate financial profitability
metrics.
3. Focusing our resources on our priority brands
Skinny Tan is our flagship brand and number one priority.
Despite its ongoing success there remain significant profitable
growth opportunities when compared to successful global beauty
brands. Given the effects of the pandemic we have further
strengthened our e-commerce foundations in the UK market, through
the previously untapped potential of Amazon as a key driver of
future profitable growth.
4. Improve our customer experience online and in store
Our enhanced brand architecture and new packaging is rolling out
on priority brands Skinny Tan and Charles + Lee, and we expect both
to enhance the consumers' online and instore shopping experience.
Initial consumer and retailer reaction to the new packaging, as
well as our new product innovations for 2023, has been extremely
positive..
5. Modernising our customer acquisition marketing model
We now have in place a modern, nuanced digital marketing
strategy that leverages the full gamut of digital media. As well as
our expertise in social media advertising, the model now includes a
strong focus on cost-effective e-mail marketing and high-return
influencer marketing, all supported by a conversion optimised
e-commerce site.
Our performance
Our strategy of driving increased profitable sales through gross
margin improvement, radical simplification of business operations,
rigorous cost control and the prioritisation of our Skinny Tan
brand, is working.
Skinny Tan is the Company's largest brand (84% of revenue) and
highest priority future growth driver. The previously communicated
strategic decision to move away from certain loss leading sales led
to a reduction in sales but is consistent with the Group's
strategic focus on longer-term profitability. Amazon is now the
Company's 3rd largest retailer, with further significant future
growth anticipated as we enter the peak tanning season. This sales
channel is becoming increasingly significant whilst allowing us to
achieve a healthy margin.
Charles + Lee has shown excellent retail sales growth though
revenues of c. GBP0.3m remain slightly below last year (H1 20:
GBP0.4m) with the difference driven by shipment phasing. Positioned
around 'No-nonsense, high-performance Aussie-made male grooming' we
are successfully focusing the brand at the entry premium tier,
adjusting pricing up c.10%, and with excellent growth
potential.
Investment in Roots and Nuthing has been deprioritised as we
focus on Skinny Tan and Charles + Lee as the Company's priority
growth brands.
As previously announced, the Company entered into a Joint
Venture for the Prolong brand in Dec 2021. Prolong revenues prior
to the partnership agreement are included in our consolidated
figures. Revenues after the partnership agreement are excluded from
our consolidated figures and from future forecasts, however,
InnovaDerma will directly benefit from any future dividends which
are paid by the Joint Venture and/or any proceeds achieved by a
future sale of the business.
Financial review
The Group has reported an increased gross profit of GBP2.1m, up
3.1% compared to the same period in the prior year, despite a
decrease in revenue of 9.5% versus the previous year. This is due
to a gross margin improvement of 690 basis points to 56.3% as the
Group continues to focus on profitable sales, rather than revenue
generation at the expense of profits.
Marketing efficiency continues to improve, to 38.1% (H1 21:
40.0%, H2 21: 39.2%), as the Group diversifies its digital
strategy, including a strong focus on cost effective e-mail
marketing and a conversion optimised e-commerce site, that goes
beyond a pure Facebook play.
Adjusted EBITDA improved to GBP0.7m loss, as compared to GBP1.2m
loss in the same period in the prior year, as a consequence of
improved gross margin, diversified marketing strategy, greater
recovery of e-commerce delivery costs, and tighter overhead cost
control.
Cash
Cash reaches a seasonal low at the half year as we invest in
appropriate levels of inventory ahead of the peak Skinny Tan UK
sales peak months in H2. We reached this position at 31 December
2021 with cash at hand of GBP1.3m (H1 21: GBP0.15m), less
structured, low-cost borrowings of GBP1.2m repayable in 2-5 years.
The prior year cash position was achieved via extreme creditor
position which precipitated the H2 21 fundraise.
Previous ad hoc funding, including seasonal invoice factoring,
deferred VAT (COVID-19), and HMRC repayment plans, have been
replaced by a single CBILS loan of GBP950k drawn down in full on 2
July 2021.
Dividends
The Board has elected not to declare an interim dividend.
Directors' report: Directors' responsibility statement
The Directors confirm that this condensed, consolidated interim
financial information has been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union, and that the half
year management report herein includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- An indication of important events that have occurred during
the first six months and their impact on the condensed,
consolidated interim financial information, and a description of
the principal risks and uncertainties for the remaining six months
of the financial year; and
-- Material related party transactions in the first six months
and any material changes in the related party transactions
described in the last annal report.
Unaudited consolidated statement of comprehensive income
For the six months ended 31 December 2021
Unaudited
6 months
Unaudited ended 31
6 months December
ended 31 2020 Audited year
December (restated(1) ended 30
2021 ) June 2021
GBP'000 GBP'000 GBP'000
Continuing operations
--------- ------------- ------------
Revenue 3,689 4,077 10,211
--------- ------------- ------------
Cost of sales (1,613) (2,064) (4,421)
--------- ------------- ------------
Gross profit 2,076 2,013 5,790
--------- ------------- ------------
Marketing expenses (1,405) (1,632) (4,036)
--------- ------------- ------------
Wages and salaries expenses (813) (837) (1,731)
--------- ------------- ------------
Administrative expenses (810) (958) (1,902)
--------- ------------- ------------
-
--------- ------------- ------------
Loss from operations (952) (1,414) (1,879)
--------- ------------- ------------
Finance credit / (cost) 2 - (4)
--------- ------------- ------------
Operating loss before tax (950) (1,414) (1,883)
--------- ------------- ------------
Taxation credit / (charge) 2 - (371)
--------- ------------- ------------
Operating loss after tax (948) (1,414) (2,254)
--------- ------------- ------------
Other comprehensive Income
--------- ------------- ------------
Exchange income on foreign currency
net investments (6) (16) 20
--------- ------------- ------------
Total comprehensive expense
for the period (954) (1,430) (2,234)
--------- ------------- ------------
Attributable to:
--------- ------------- ------------
Owners of the parent (942) (1,394) (2,246)
--------- ------------- ------------
Non-controlling interests (12) (36) 12
--------- ------------- ------------
Loss per share
--------- ------------- ------------
Basic and diluted (GBP) (0.03) (0.10) (0.13)
--------- ------------- ------------
(1) See note 2.3 for a description of the prior year
restatement.
Unaudited consolidated Statement of Financial Position
As at 31 December 2021
Unaudited Audited
31 December 30 June
2020 2021
Unaudited
31 December (restated(1)
2021 )
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
--- ------- ------------ ------- ------------- ------- --------
Goodwill 214 439 439
------- ------------ ------- ------------- ------- --------
Investments in associates 225 - -
------- ------------ ------- ------------- ------- --------
Other intangible assets 193 115 230
------- ------------ ------- ------------- ------- --------
Property, plant and
equipment 194 225 233
------- ------------ ------- ------------- ------- --------
Deferred tax asset - 382 -
------- ------------ ------- ------------- ------- --------
826 1,161 902
-------------------------------- ------- ------------ ------- ------------- ------- --------
Current assets
--- ------- ------------ ------- ------------- ------- --------
Cash and cash equivalents 1,333 151 2,338
------- ------------ ------- ------------- ------- --------
Inventories 2,323 2,411 1,808
------- ------------ ------- ------------- ------- --------
Trade and other receivables 1,369 991 1,896
------- ------------ ------- ------------- ------- --------
5,025 3,553 6,042
-------------------------------- ------- ------------ ------- ------------- ------- --------
Current liabilities
--- ------- ------------ ------- ------------- ------- --------
Trade and other payables (2,467) (4,480) (3,547)
------- ------------ ------- ------------- ------- --------
Borrowings (144) - -
------- ------------ ------- ------------- ------- --------
(2,611) (4,480) (3,547)
-------------------------------- ------- ------------ ------- ------------- ------- --------
Net current assets 2,414 (927) 2,495
------- ------------ ------- ------------- ------- --------
Total assets less current
liabilities 3,240 234 3,397
------- ------------ ------- ------------- ------- --------
Non-current liabilities
--- ------- ------------ ------- ------------- ------- --------
Borrowings (1,064) - -
------- ------------ ------- ------------- ------- --------
(1,064) - -
-------------------------------- ------- ------------ ------- ------------- ------- --------
Net assets 2,176 234 3,397
------- ------------ ------- ------------- ------- --------
Equity
--- ------- ------------ ------- ------------- ------- --------
Share capital 2,916 1,738 2,859
------- ------------ ------- ------------- ------- --------
Share premium account 11,380 8,288 11,193
------- ------------ ------- ------------- ------- --------
Merger reserve (721) (721) (721)
------- ------------ ------- ------------- ------- --------
Foreign exchange reserve 276 246 282
------- ------------ ------- ------------- ------- --------
Share-based payment
reserve 16 10 10
------- ------------ ------- ------------- ------- --------
Accumulated losses (11,691) (9,319) (10,262)
------- ------------ ------- ------------- ------- --------
Equity attributable
to owners of parent 2,176 242 3,361
------- ------------ ------- ------------- ------- --------
Non-controlling interest - (8) 36
------- ------------ ------- ------------- ------- --------
Total equity 2,176 234 3,397
------- ------------ ------- ------------- ------- --------
(1) See note 2.3 for a description of the prior year
restatement.
Unaudited consolidated Statement of Changes in Equity
For the six months ended 31 December 2021
Accumulated
losses Equity
Foreign Share-based attributable attributable
Share Share Merger exchange payment to owners of to owners of Non-controlling Total
capital premium reserve reserve reserve parent parent interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
July 2021 2,859 11,193 (721) 282 10 (10,262) 3,361 36 3,397
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Loss for the
period - - - - - (936) (936) (12) (948)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Exchange
difference on
translation
of foreign
operations - - - (6) - - (6) - (6)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Total
comprehensive
income
for the year - - - (6) - (936) (942) (12) (954)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Issue of new
shares 57 201 - - - - 258 - 258
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Issue costs
related to
equity - (14) - - - - (14) - (14)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Share-based
payment
expense - - - - 6 - 6 - 6
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Increase
holding in
subsidiary - - - - - (493) (493) (24) (517)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Balance at 31
December 2021 2,916 11,380 (721) 276 16 (11,691) 2,176 - 2,176
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Balance at 1
July 2020 1,738 8,288 (721) 262 78 (7,941) 1,704 28 1,732
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Loss for the
period - - - - - (1,378) (1,378) (36) (1,414)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Exchange
difference on
translation
of foreign
operations - - - (16) - - (16) - (16)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Total
comprehensive
income
for the year - - - (16) - (1,378) (1,394) (36) (1,430)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Share-based
payment
expense - - - - (68) - (68) - (68)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Balance at 31
December 2020 1,738 8,288 (721) 246 10 (9,319) 242 (8) 234
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Balance at 1
July 2020 1,738 8,288 (721) 262 78 (7,941) 1,704 28 1,732
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Loss for the
period - - - - - (2,266) (2,266) 12 (2,254)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Exchange
difference on
translation
of foreign
operations - - - 20 - - 20 - 20
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Total
comprehensive
income
for the year - 20 - (2,266) (2,246) 12 (2,234)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Issue of new
shares 1,121 3,379 - - - - 4,500 - 4,500
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Issue costs
deducted from
equity - (474) - - - - (474) - (474)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Share-based
payment
credit - - - - (68) - (68) - (68)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Increase
holding in
subsidiary - - - - - (55) (55) (4) (59)
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
Balance at 30
June 2021 2,859 11,193 (721) 282 10 (10,262) 3,361 36 3,397
------- ------- ------- -------- ----------- ------------ ------------ --------------- -------
(1) See note 2.3 for a description of the prior year
restatement.
Unaudited consolidated Statement of Cash Flows
For the six months ended 31 December 2021
Unaudited
6 months
Unaudited ended 31 Audited
6 months December year ended
ended 31 2020 30 June
December (restated(1) 2021
2021 )
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net cash (used in)/inflow from
operating activities (1,883) (934) (2,559)
------- --------- ------- -------------- ------- -----------
Investing activities
------- --------- ------- -------------- ------- -----------
Consideration paid for increased
shareholding of subsidiary - - (59)
------- --------- ------- -------------- ------- -----------
Purchases of property, plant
and equipment (4) (80) (114)
------- --------- ------- -------------- ------- -----------
Capitalisation of development
costs (37) (71) (220)
------- --------- ------- -------------- ------- -----------
Net cash used in investing activities (41) (151) (393)
------- --------- ------- -------------- ------- -----------
Financing activities
------- --------- ------- -------------- ------- -----------
Net proceeds on issue of shares - - 3,526
------- --------- ------- -------------- ------- -----------
Proceeds from borrowings 936 - 500
------- --------- ------- -------------- ------- -----------
Interest received / (paid) 2 - (4)
------- --------- ------- -------------- ------- -----------
Cash divested on disposal of
investment (12) - -
------- --------- ------- -------------- ------- -----------
Net cash generated/(used) from
financing activities 926 - 4,022
------- --------- ------- -------------- ------- -----------
Net increase/(decrease) in cash
and cash equivalents (998) (1,085) 1,070
------- --------- ------- -------------- ------- -----------
Cash and cash equivalents at
beginning of year 2,338 1,241 1,241
------- --------- ------- -------------- ------- -----------
Effect of foreign exchange rate
changes (7) (5) 27
------- --------- ------- -------------- ------- -----------
Cash and cash equivalents at
end of year 1,333 151 2,338
------- --------- ------- -------------- ------- -----------
(1) See note 2.3 for a description of the prior year
restatement.
Notes to the consolidated financial statements
For the six months ended 31 December 2021
1. General information
InnovaDerma plc is a Group incorporated and domiciled in England
and Wales under the Companies Act 2006. The address of its
registered office is 27 Old Gloucester Street, London, United
Kingdom, WC1N 3AX.
The principal activity of the Group is the development,
distribution and sale of skincare, haircare, beauty and life
science products in the markets that it operates.
2. Accounting policies and critical accounting judgements
2.1 Basis of preparation
These financial statements are presented in pounds sterling
because that is the currency of the primary economic environment in
which the Group operates.
The Group's interim financial information has been prepared in
accordance with IAS 34, 'Interim Financial Reporting as adopted by
the EU.
The annual financial statements of the Group are prepared in
accordance with the International Financial Reporting Standards
("IFRS") as adopted for use by the European Union. A copy of the
statutory accounts for the year ended 30 June 2021 has been
delivered to the Registrar of Companies. The auditor's report on
those accounts was unqualified and did not contain any statements
under Section 498(2) or (3) of the Companies Act 2006.
The same accounting policies, presentation and methods of
computation have been followed in this unaudited interim financial
information as those which were applied in the preparation of the
Group's annual financial statements for the year ended 30 June
2021.
Certain new standards, amendments to standards and
interpretations are not year effective for the year ended 30 June
2022 and have therefore not been applied in preparing this interim
financial information.
The interim accounts are unaudited and do not constitute
statutory accounts as defined in Section 434 of the Companies Act
2006.
2.2 Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for
the foreseeable future. In reaching this conclusion the Directors
have considered the financial position of the Group, its cash,
liquidity position and borrowing facilities together with its
forecasts and projections for 12 months from the approval date that
take into account reasonably possible changes in trading
performance. The going concern basis of accounting has therefore
continued to be adopted in preparing the financial statements.
The Group has taken into account the uncertainty due to the
economic impact of COVID-19, and has made prudent forecasts,
incorporating mitigating actions, based on current knowledge. It
has also secured a CBILS loan of GBP950k, drawn down in full on 2
July 2021.
2.3 Prior year restatement
The Group has restated the prior year comparatives to correct
the following prior period accounting errors:
-- To expense marketing costs incorrectly capitalised totalling
GBP1,249k for the year ended 30 June 2018, GBP984k for the year
ended 30 June 2019, and GBP840k for the year ended 30 June
2020.
-- Write down inventory due to incorrect allocation of cost of
sales by GBP413k in the year ended 30 June 2019 and by GBP1,428k in
the year ended 30 June 2020.
-- Reclassify Prolong intellectual property of GBP1,423k, prior
to impairment, to goodwill to reflect the underlying nature of the
April 2017 acquisition of Ergon Medical Limited.
-- Impairment of goodwill on acquisitions of GBP2,566k relating
to Leimo / Grow Lase, Prolong and Stevie K, to correctly reflect
the Group accounting policies.
-- An amortisation charge relating to intangible assets,
totalling GBP489k for the year ended 30 June 2018, GBP235k for the
year ended 30 June 2019, and GBP215k for the year ended 30 June
2020, to correctly reflect the Group accounting policies.
-- GBP701k reduction in goodwill of Skinny Tan, due to incorrect
accounting for step acquisition of Skinny Tan Pty Ltd.
-- Register accruals totalling GBP392k for audit, tax and legal
fees and bonus payments predominantly for the year ended 30 June
2020.
-- Recognise GBP140k expense relating to PAYE and VAT payments
in the year ended 30 June 2019.
-- Recognise expense totalling GBP109k incorrectly recorded as
prepayments in the year ended 30 June 2018 and GBP121k incorrectly
recorded in the period ended 31 December 2020.
-- Register GBP60k bad debt provision relating to the year ended 30 June 2020.
-- Recognise GBP78k share-based payment expense in the statement
of changes in equity for the year ended 30 June 2020, reallocated
from the statement of comprehensive income.
-- GBP408k intercompany loan exchange movements reallocated from
foreign exchange reserve to administrative expenses
-- Recognise amortisation of GBP32k and depreciation of GBP14k
for the period ended 31 December 2020, not previously recorded.
-- Recognise corporation tax charges for the year ended 30 June
2017 of GBP217k and for the year ended 30 June 2018 of GBP118k.
-- Derecognise a deferred tax asset of GBP18k due to uncertainty
of sufficient future profits in those subsidiaries.
-- To reclassify exceptional items of GBP196k and listing
expenses of GBP76k to administrative expenses, and other operating
income of GBP59k to cost of goods sold, in the period ended 31
December 2020.
-- Reduce corporation tax liability by GBP1,387k as a result of
the above-listed adjustments.
-- Reduce the non-controlling interest by GBP184k as a result of
the above-listed adjustments.
These changes have had a material impact on the Group's reported
statement of comprehensive income and statement of financial
position for the financial year 31 December 2020. Please refer to
note 11 for further details of the restatement.
3. Operating segments
The Group derives revenue from the sale of skin and beauty,
haircare and life science products. The income streams are all
derived from the utilisation of these products which, in all
aspects except details are revenue, are reviewed and managed
together within the Group and as such are considered to be only one
segment.
A geographical analysis of the revenue from the Group's
customers, by destination, is as follows:
Unaudited
Unaudited 6 months
6 months ended 31 Audited
ended December year ended
31 December 2020 30 June
2021 (restated) 2021
GBP'000 GBP'000 GBP'000
United Kingdom 2,754 2,833 7,919
United States of America 309 360 1,151
Asia Pacific 626 884 1,141
3,689 4,077 10,211
------------ ----------- -----------
4. Revenue
The Group's revenues from products and services were as
follows:
Unaudited
Unaudited 6 months
6 months ended 31 Audited
ended December year ended
31 December 2020 30 June
2021 (restated) 2021
GBP'000 GBP'000 GBP'000
Skin and beauty products 3,462 3,780 9,610
Haircare products 173 243 440
Life science devices 54 54 161
3,689 4,077 10,211
------------ ----------- -----------
5. Loss from operations
Loss before tax for the year has been arrived at after
(crediting)/charging:
Unaudited
Unaudited 6 months
6 months ended 31 Audited
ended December year ended
31 December 2020 30 June
2021 (restated) 2021
GBP'000 GBP'000 GBP'000
Depreciation 43 17 35
Amortisation 50 58 116
Net foreign exchange losses/(gains) (1) (8) 140
Cost of inventories recognised
as an expense 1,112 1,386 2,918
Non-recurring items including impairments,
abortive and restructuring 35 196 210
Share-based payment expense 6 (68) (68)
Directors' remuneration 224 155 438
Staff costs 807 905 1,731
------------ ----------- -----------
Adjusted EBITDA
Adjusted EBITDA has been arrived at after accounting for:
Unaudited
Unaudited 6 months
6 months ended 31 Audited
ended December year ended
31 December 2020 30 June
2021 (restated) 2021
GBP'000 GBP'000 GBP'000
Operating loss before tax (950) (1,414) (1,883)
Depreciation 43 17 35
Amortisation 50 58 116
Loss on disposal of investment 138 - -
Foreign exchange losses/(gains) on intercompany
loans (16) 21 135
Non-recurring items including impairments,
abortive and restructuring 35 196 210
Share-based payment (credit)/expense 6 (68) (68)
Adjusted EBITDA (694) (1,190) (1,455)
------------ ----------- -----------
6. Taxation
Analysis of tax (charge) / credit for the period:
Unaudited
Unaudited 6 months
6 months ended 31 Audited
ended December year ended
31 December 2020 30 June
2021 (restated) 2021
GBP'000 GBP'000 GBP'000
Current tax - - (1)
Deferred tax - (2) (370)
- (2) (371)
------------ ----------- -----------
7. Losses per share
Unaudited
Unaudited 6 months
6 months ended 31 Audited
ended 31 December year ended
December 2020 30 June
2021 (restated) 2021
GBP'000 GBP'000 GBP'000
Losses for the purposes of basic and
diluted losses per share being net losses
attributable to owners of the Group 942 1,394 2,246
---------- ------------ -----------
2021 2020 2020
Number of shares Number Number Number
Weighted average number of ordinary shares
for the purposes of basic and diluted
losses per share 27,378,386 14,496,633 17,449,621
Loss per share
Unaudited
Unaudited 6 months
6 months ended 31 Audited
ended 31 December year ended
December 2020 30 June
2021 (restated) 2021
GBP GBP GBP
Basic and diluted (0.03) (0.10) (0.13)
IAS 33 requires presentation of diluted EPS when a Group could
be called upon to issue shares that would decrease earnings per
share or increase the loss per share. For a loss-making Group with
outstanding share options, the net loss per share would be
decreased by the exercise of options. Therefore, as per IAS33:36,
the anti-dilutive potential ordinary shares are disregarded in the
calculation of diluted EPS.
8. Notes to the cash flow statement
Unaudited
Unaudited 6 months
6 months ended 31 Audited
ended 31 December year ended
December 2020 30 June
2021 (restated) 2021
GBP'000 GBP'000 GBP'000
Operating loss before tax (950) (1,414) (1,883)
Adjustments for:
Finance costs (2) - 4
Depreciation 43 17 35
Amortisation 50 58 116
Loss on disposal of investment 138 - -
Share-based payment expense 6 (68) (68)
Operating cash flows before movements in
working capital (715) (1,407) (1,796)
Decrease / (increase) in inventories (515) (1,136) (533)
Decrease / (increase) in receivables 527 599 (306)
(Decrease) / increase in payables (1,080) 1,010 77
Cash used in operations (1,783) (934) (2,558)
Income taxes received / (paid) (100) - (1)
--------- ----------- -----------
Net cash used in operating activities (1,883) (934) (2,559)
--------- ----------- -----------
9. Related party transactions
On 3 December 2021, Ergon Medical Limited, a wholly owned
subsidiary of InnovaDerma plc, subdivided its 3,614 GBP1 Ordinary A
shares into GBP0.10 shares and re-designated them Ordinary B shares
and issued 51,060 new Ordinary A shares to Mark Ward, Non-Executive
Director of InnovaDerma plc. The issue of new shares dilutes
InnovaDerma plc's shareholding in Ergon Medical Limited to 45%. The
transaction is an effective step disposal and as such Ergon Medical
Limited is now an associate rather than a subsidiary of InnovaDerma
plc.
On 3 December 2021, InnovaDerma plc signed a deed of release
forgiving in full debt totalling GBP805,310 owed by the Ergon
Medical Limited to InnovaDerma plc and its subsidiaries. It is this
debt forgiveness that gives rise to the loss on disposal of
investment in the period.
Other than those disclosed within this note, there have been no
other transactions with related parties.
10. Events after the reporting date
The Directors confirm that there are no events after the
reporting date which require disclosure.
11. Prior period restatement
The comparative figures for the six months ended 31 December
2020 have been restated to correct the prior period accounting
errors disclosed in note 2.3. The following tables show the
financial impact of the restatements by comparing the previously
stated and the now restated Statement of Comprehensive Income and
Statement of Financial Position.
As reported As restated
6 months 6 months
ended 31 ended 31
December Restatements December
2020 2020 2020
GBP'000 GBP'000 GBP'000
Continuing operations
----------- ------------ -----------
Revenue 4,145 (68) 4,077
----------- ------------ -----------
Cost of sales (2,078) 14 (2,064)
----------- ------------ -----------
Gross profit 2,067 (54) 2,013
----------- ------------ -----------
Other operating income 59 (59) -
----------- ------------ -----------
Listing expenses (76) 76 -
----------- ------------ -----------
Marketing expenses (1,626) (6) (1,632)
----------- ------------ -----------
Wages & salaries expenses (906) 69 (837)
----------- ------------ -----------
Administrative expenses (544) (414) (958)
----------- ------------ -----------
Exceptional items (196) 196 -
----------- ------------ -----------
Operating loss (1,222) (192) (1,414)
----------- ------------ -----------
Finance cost - - -
----------- ------------ -----------
Operating loss before tax (1,222) (192) (1,414)
----------- ------------ -----------
Income Tax expense 173 (173) -
----------- ------------ -----------
Net loss for the period (1,049) (365) (1,414)
----------- ------------ -----------
Other comprehensive Income 6 (6) -
----------- ------------ -----------
Exchange loss on foreign currency
net investments - (16) (16)
----------- ------------ -----------
Total comprehensive income for the
period (1,043) (387) (1,430)
----------- ------------ -----------
Attributable to:
----------- ------------ -----------
Owners of the parent (1,020) (374) (1,394)
----------- ------------ -----------
Non-controlling interests (23) (13) (36)
----------- ------------ -----------
Loss per share
----------- ------------ -----------
- basic and diluted (GBP) (0.07) (0.03) (0.10)
----------- ------------ -----------
As reported As restated
as at 31 as at 31
December Restatements December
2020 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
------- ----------- ------- ------------ ------- -----------
Intangible assets 8,003 (8,003) -
------- ----------- ------- ------------ ------- -----------
Goodwill - 439 439
------- ----------- ------- ------------ ------- -----------
Other intangible assets - 115 115
------- ----------- ------- ------------ ------- -----------
Property, plant and
equipment 157 68 225
------- ----------- ------- ------------ ------- -----------
Deferred tax asset 400 (18) 382
------- ----------- ------- ------------ ------- -----------
Other assets 16 (16) -
------- ----------- ------- ------------ ------- -----------
8,576 (7,415) 1,161
------- ----------- ------- ------------ ------- -----------
Current assets
------- ----------- ------- ------------ ------- -----------
Cash and cash equivalents 156 (5) 151
------- ----------- ------- ------------ ------- -----------
Inventories 4,142 (1,731) 2,411
------- ----------- ------- ------------ ------- -----------
Trade and other receivables 725 266 991
------- ----------- ------- ------------ ------- -----------
Prepayments and other
assets 500 (500) -
------- ----------- ------- ------------ ------- -----------
5,523 (1,970) 3,553
------- ----------- ------- ------------ ------- -----------
Current liabilities
------- ----------- ------- ------------ ------- -----------
Trade and other payables (4,745) 265 (4,480)
------- ----------- ------- ------------ ------- -----------
Net current assets 778 (1,705) (927)
------- ----------- ------- ------------ ------- -----------
Total assets less current
liabilities 9,354 (9,120) 234
------- ----------- ------- ------------ ------- -----------
Non-current liabilities
------- ----------- ------- ------------ ------- -----------
Borrowings (1) 1 -
------- ----------- ------- ------------ ------- -----------
Net assets 9,353 (9,119) 234
------- ----------- ------- ------------ ------- -----------
Equity
------- ----------- ------- ------------ ------- -----------
Share capital 1,736 2 1,738
------- ----------- ------- ------------ ------- -----------
Share premium account 8,288 - 8,288
------- ----------- ------- ------------ ------- -----------
Merger reserve (721) - (721)
------- ----------- ------- ------------ ------- -----------
Foreign exchange reserve (162) 408 246
------- ----------- ------- ------------ ------- -----------
Share-based payment
reserve - 10 10
------- ----------- ------- ------------ ------- -----------
Accumulated profit/(loss) 36 (9,355) (9,319)
------- ----------- ------- ------------ ------- -----------
Equity attributable
to owners of parent 9,177 (8,935) 242
------- ----------- ------- ------------ ------- -----------
Non-controlling interest 176 (184) (8)
------- ----------- ------- ------------ ------- -----------
Total equity 9,353 (9,119) 234
------- ----------- ------- ------------ ------- -----------
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END
IR JMMMTMTIJTIT
(END) Dow Jones Newswires
March 31, 2022 02:01 ET (06:01 GMT)
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