Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
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I posted this somewhere else:
End of year is nearly upon us. What are thoughts/expectations or what good might look like?
My take is somewhere near to £10m revs will be very good, given its still a Covid-ravaged year. Hopefully this half was profitable to help bring down some of the 1.0m loss in H1. AT the very least, I'll be looking for breakeven so we stay static.
I am mindful of this from the H1 Trading Update RNS from Mon 11th Jan where this was statted:
"The Board will also be undertaking an impairment review exercise on certain intangible items on the balance sheet to reflect the impact of Covid-19 and recent trading. This impairment is likely to be substantial but will have no material impact on the Company's prospects, trading outlook or working capital position. The Board expects to conclude this review ahead of the financial year end (30 June 2021)."
I draw particular emphasis on "This impairment is likely to be substantial but will have no material impact on the company's prospects, trading outlook or working capital position". I hope this will mean we will get rid of or write down some of the somewhat dodgy accounting principles that the old lot (read Joe Beyer) was employing by valuing Customer Lists, the valuation applied to ProLong/LifeSciences that clearly is not delivering. If so, this will have a paper-based impact that will likely inflate the loss on paper by a big amount, but I would take that positively as the new team clean up the company.
Key will then be what the company will do to improve in 2021/22 going forward. Its all been very slow to happen and the pace needs to be upped, with visible progress being made in delivering results. Otherwise, I can see a Creightons coming back for another go and this time, it would be difficult resist.
as of the last accounts intangible assets totalled £7.8m which is quite high for a company valued at c£10m.
Almost certainly the customer list value of just over £3m will be reduced/eliminated. These costs should really be recognised as costs so arguably IDP has over inflated profits over the last 5 years or so.
The other biggie is c£1.7m for Growlase a product that we are not actively selling. This is a legacy of an older product Leimo which was sold only in Australia and has been discontinued. This is c3 times the value of Skinny Tan goodwill so is clearly massively wrong. I can see this being reduced by maybe 90%.
There is also £1.5m assigned as Intellectual Property (Ergon). I think this relates to our purchase of Prolong. As we paid £1m for this i'm not sure how the IP can be valued at a higher amount. I can see this being reduced by c80%.
Based on these 3 i can see c£5m of the £7.8m being written off .
It will be difficult to spin this as a positive despite it not having a cash impact.
Agree Shandy - You've saved me a job. I was going to go through the accounts this weekend to work out how much untangibles were valued at and come up with an estimation my self.
Based on your numbers you've provided, I think if they do this and I expect a good £6m being written off, thus making the losses £7m (adding in the £1.0m loss from H1) then the accounts should be cleaned up and the Company properly reset to start from scratch. The key then is that they have sufficient sales this 2nd half to end Jun (that is profitable at least), and a future roadmap to grow from.
The false profit reporting is what the likes of Graeme Neary and Co. were not happy about, that stopped them (and others) from even considering IDP as an investment. For me, its a huge positive AS LONG AS the new Board start delivering demonstrably growth in sales and profitable sales.