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
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
(END) Dow Jones Newswires
September 24, 2019 02:01 ET (06:01 GMT)
Innovaderma (LSE:IDP)
Historical Stock Chart
From Apr 2024 to May 2024
Innovaderma (LSE:IDP)
Historical Stock Chart
From May 2023 to May 2024