14 August 2019 – commercial update/fund raising plans

The group has issued a commercial update in which it has set out its plans to move to a pure-play licensing organisation by the end of 2019.  This will mean that it will exit from all direct sales businesses by the end of the year.  This will mean a reduction in the headcount to under 60 by the start of 2020 from 160 in September 2018.  The group has also announced that following a number of approaches by third parties, it has decided to sell the US high performance workwear cleaning business and a sales process for this has been approved.  The group is also going to spin out its tanning business to its management in exchange for future royalty payments.  The effect of these moves will be to reduce the company’s cash burn to £0.6m per month by Q1 2020 from the level of £2.2m in 2018.  Cash reserves at the end of July were £5.2m and these are sufficient to fund the group through to early 2020.  The group is also looking to raise between £5m and £10m of new equity with the latter figure expected to be enough to fund the company through to cash breakeven.  The long term prospects for the company are encouraging and although the share price remains volatile we believe the shares are a SPECULATIVE BUY.