Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
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CRL now at over 90p. the 3 for 2 offer would now be worth 60p. Just saying
CRL and BAR recently reported decent results. It just shows that even with the impact of covid small(ish) companies can still thrive within the personal care market competing alongside the big boys.
Hopefully this bodes well for IDP
kernowlad - I, too, first bought when this was a lot higher. But I also added with the latest cash call. Hindsight is a wonderful thing, but we are where we are I guess! I think the positives are that the new team dismissed Creightons' offer out of hand. Since they've also plenty of skin in the game (notably Mark Ward), this implies they're confident of unlocking greater value than Creightons' offer would have. Mark Ward appears a very smart cookie to me, with highly relevant IT experience and a successful track record in creating shareholder value. Coupled with Covid restrictions easing and a renewed in-house focus on cost control, margin improvement & new product development, this looks like a potentially very lucrative (albeit still quite risky) proposition to me at current levels. Barring a black swan event, I plan to hold for at least the next 12 months & seeing whether the new team delivers.
LLOL - strange comment. No one can have confidence in the past management and the present ones are unproven. All we can see is that the full YE loss is great than the H1 loss under the old mgmt so despite H2 being the profitable period for IDP this hasn't occurred this year. Clearly covid has played a significant part but i suspect there are other issues. For example, i notice that Tesco has dropped Roots and Superdrug has massively reduced range and shelf space for the same brand.
Let's see how the next 6 months pan out as the honeymoon period for the new BOD is now over.
I hope you are right lordload as my average is £1 and this would be a big pill to swallow.
First bought in Dec 17 when it was well over £2 a share. Been averaging down since but am not now sure that was wise.
Ah well
Might be wrong, but I suspect Creightons will wait & see now. If management fails to deliver by June '22, investors would welcome almost any low ball offer. So Creightons could be quids in. But on the flip side, if - as I suspect - new management delivers, investors would likely want to stick with them. Personally, I think Creightons were just trying to scoop something up on the cheap and won't come back unless they can buy even cheaper then.
Sales not stellar but I think the older customers should come out to play post 19 July. And the weather has been truly dire.
I think there should be real valuation support at sub 1x Sales given it used to trade at 4-5x back in 2017,2018 at a sales level lower in absolute terms than this Covid ravaged set of results.
Cash situation is absolutely fine as there is no way they will make a £3m H1 loss before the 2022 spring/summer rolls around. At least the brand and route to market isn't dead which I did fear was a risk given the changed marketing environment and higher competition on Facebook, IG post Covid.
Inventory, the cost base, the accounting, the narrower SKU range puts them in a far better position than under the old mgmt.
would love to have a debate about the risk/reward. Creightons could come back with a bid 24 August (6 months after) and its shares are 30% higher so they shd b able to make us a better offer this time. Other than being just fed up of a reopening trade that has really underperformed, why are people selling today?
I don't think you can safely conclude that, when H1 results were unaudited and didn't give a full breakdown. But by all means go ahead if that's what you want. I shan't be responding further, except to add that it sounds like you should be selling up, as you don't appear to have any confidence in past/present management.
LLOL - just to prove my point i've checked the last 2 accounts. At YE 2020 intangible assets were £7.8m and at H1 they were reported as £8.003m so an increase of £193k. Although H1 were unaudited and are not detailed it is fair to assume that this increase related to the proportion of marketing spend that was used to increase the customer list (think it is £3.50 per new customer).
So of the £600k they have just stated it appears £200k relates to H1 and £400k to H2.
H1 loss was £1m so added the intangibles on that's a £1.2m loss. If loss is now £1.5m then that's a 300k loss for H2, a period when IDP usually make money.
Showing 2 different EBITDA figures is a bit disingenuous IMHO and designed to confuse. I would have preferred them to state £1.5m loss but note that £600k of this relates to marketing costs that previously would have been recorded as intangibles.
Happy to be proved wrong, but i disagree. The £600k difference is this year's marketing costs - previous years are already on the accounts as intangible assets and are being written off.
You can't state the previous accounting treatment was wrong and then continue to use it to show your figures in a better light.
Whilst i think the RNS was poorly worded the EBITDA loss is £1.5m is the actual figure and the £600k appears to relate to this year spend and not previous year costs.
shandypants2 - I'd query your conclusions about EBITDA. The RNS clearly states: "Trading EBITDA before accounting changes is expected be broadly in line with consensus forecasts for the year of £(0.9) million......In reversing the (previous) accounting treatment, the marketing costs will now be included in the calculation of the Company's EBITDA and consequently this reduced the Company's EBITDA by circa £0.6 million. As a result, the Company expects to report trading EBITDA for the year ended 30 June 2021 of circa £(1.5) million." So nothing to do with a specific H2 loss. The new management team has made a fairly bold promise - return to profitability for the year ending June 22. If they deliver, fine. If they don't, Creightons will be back anyhow. So also probably fine (compared to the current share price at least).
This update is not great and current trading is still a massive concern and just blaming it on covid/social distancing and the weather isn't sufficient IMHO.
Loss at H1 was c1m so reporting a EBITDA loss of £1.5m YE indicates that H2 was also a loss despite higher gross margins and limited marketing spend and revenues of £6m in that period.
Also H2 is the period when the cash usually increases quite significantly (usually at least £1m increase from H1 close) yet it appears it's down £2m as IDP has burnt through half the £4m net placing raise. I would have hoped cash would be at least £3m YE as H1 period usually is quite a cash intensive period for the company. Maybe there were no large retail orders as they still had stock from previous year.
Of the write downs the £3m marketing cost/ customer book costs were always going to go , the £4m on brand goodwill is higher than i expected but ok. The inventory write down (£1.5m ) and 400k relating to other assets is a bit of a concern as these should have been cash generating assets and are clearly not intangibles.
No news on brand or overseas expansion too which is a little disappointing.
Creightons offer of 2 shares for every 3 IDP earlier in the year valued IDP at c44p based on CRL share price at the time. CRL is now over 80p so that deal would value IDP at c55p now. Just saying!!!
Certainly brutal! But they've done what most sensible new managements do. Restated the accounts prudently (/over-cautiously?), to give themselves the best possible chance of "turning things round" within the next year or two. I think they deserve some credit for this. Unlike the previous management, whose antics - it could be argued - bordered on the fraudulent, this new team is finally getting to grips. How the previous auditors failed to detect a delay in writing down out-of-date stock, for example, is beyond me & appears negligent. There are some glimmers of hope now though. Margins up significantly. Period end net cash of £2.2M, with a further £0.95M available on an undrawn loan. The Directors believe this will be more than enough to return IDP to profitability, implying no further cash calls (assuming they can be believed of course). I, for one, will keep the faith for now and give the new team the benefit of the doubt. If they fail to deliver, Creightons will be back.
Well that was more brutal that I thought in terms of the Balance Sheet clean-up, but I'd rather they get it all done in the one go, and at least they explained why - just goes to show how bad Joe Beyer was with it all.
Also, good to see applying a value to Customer Lists and accounting for it on the Balance sheet will be done away with - I was never comfortable with that - it does mean the Mgt team now need to deliver on margins to ensure a profitable and cash positive business. All eyes on this new Financial year now....
Yip, and plus the last lot werent up to much given they allowed Joe Beyer to do what he did - The Clean-up is nearly complete - just need final year end numbers and how the new Mgt team intend to sort out the dodgy accounting ...
RNS just out. The company will give a trading update on Thursday 8th July. Also announced a change of auditors for the financial year 2021/22. Proposal to appoint a new UK based auditor vs Australian previously. It does make sense as the bulk of the business is UK based.
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.
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.
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.
early July i'd assume. Get YE done and then give some guidance in maybe 2nd week of July. I suspect it's been difficult to predict sales as lockdown has been a bit of a moving target. With £1m loss at H1 YE will definitely also be a loss, although a H2 is the most profitable period hopefully a fair chunk f H1 losses can be reversed.
Really need a strategy update too - more overseas deals, the plan for life sciences etc
Difficult to say, given the reorganisation of the company. Previously they did 3 or so per year but I would think they would be eager to build on the last update in April to demonstrate progress. July/August would be my guess.
when is next update due?
Been buying at this level with one eye on the next update which will, hopefully, demonstrate some progress/turnaround.
Boots are offering discounts for the whole skinny tan range, including the new products.
Hopefully with peak tanning and relaxation in social distancing etc this is well timed.
https://www.boots.com/brands/skinny-tan
RNS today has Octopus Investments Nominees Limited moving from 4.3% to 9.6%
Seems to be a reasonably chunky change.