Small Cap Value Report (Thurs 16 Sept 2021) - EKF, CIR, SDRY, GFRD

Good morning, it's Jack here with the SCVR for Thursday. Paul’s in transit this morning and has his hands full with airport admin so hopefully he gets back here without any complications!

Edit - Paul's got an hour to spare at the airport so currently has the laptop out and Superdry in his sights.

Today's report is now finished.

Agenda:

Jack's section

Ekf Diagnostics Holdings (LON:EKF) - attended the company's presentation yesterday evening. A complex and in-demand company with multiple lines of business and some promising growth opportunities. It's a high relative valuation and the group has received a lot of business around Covid testing, so it needs to be able to justify that valuation should Covid business subside.

Circassia (LON:CIR) - full year EBITDA to be materially ahead of expectations, although the market cap of £167m is still pricing in a lot of future growth. Still there's a clear story and catalyst revolving around its market-leading asthma testing products and patents, and new management has done a good job of dealing with legacy issues.

Galliford Try Holdings (LON:GFRD) - return to profits and dividends after recovering from a horrible 2019. It's got good revenue visibility, a strong order book, and a balance sheet stacked with cash (but also a lot of creditors). It could do well - the outlook certainly sounds supportive - but the thin margins will always be a concern.

Paul's section:

Superdry (LON:SDRY) - Shares are up today, but the company is still loss-making and faces cost headwinds. I remain sceptical of the turnaround.

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to cover trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty.

We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to.

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Jack's section

Ekf Diagnostics Holdings (LON:EKF)

Meeting notes

The company is at an inflection point in terms of growth; upgrade in results earlier this week.

EKF has moved into working with very large customers over the last 18mths so longer payment terms from key accounts.

Still managed to generate net cash of £20.38m, dividend to be paid.

Operations - Core business has seen a 'tremendous return to pre-Covid times in H1'; revenue up. Key products here grew at double-digits. PBS +142% to £18.5m.

PrimeStore MTM - EKF was concerned that there's a perception of one big customer in the kitting business and this isn't the case. It also supplies all the kits to major pharmacy outlets in the UK, Public Health England, Signpost (Paddington Station, airports), Irish healthcare system.

This year EMEA outperformed the US due to above demand.

Significant growth in MTM, now three sites outside Cardiff producing these kits.

1. Cannot see testing for Covid declining
2. Entering flu season

On one MTM test device you can test Flu A, Flu B, and Covid so market will grow and grow over next 3m - but what about next year, or three years from now? Is at-home diagnostics testing here to stay?

The group is starting to really grow kitting business in other areas outside the pandemic.

The kits are CE marked and FDA approved so EKF is one of the few authorised manufacturer of kits that this big global partner can choose from. Very few out there actually supplying the kitting due to strong regulatory environment.

CEO's new job is working with Mount Sinai to drive further opportunities here.

Growth plan

1. Contract manufacturing: Life Sciences
   1. placed orders with two companies for fermentation build, in progress. 3,000l faciltiy ready for Q3 next year, 14,500l for Q4 next year. Total investment of $9.3m and aims for $20m in revenues by 2024
2. Contract manufacturing: molecular diagnostics and other applications
   1. continued expansion of facilities in UK and UK
   2. Demand for services driving non-Covid related products
   3. Increased production of components and kits for Covid sample collection to meet demand
3. Earnings enhancing acquisition talks ongoing
   1. Can't say too much right now; looking for nice fit between point-of-care and contract manufacturing
   2. Also for core business
   3. It will be a company already generating revenue with products on market
   4. Will not be raising more money for acquisitions and no debt
4. Leveraging distribution channels for organic growth
   1. delivering growth for core business
   2. Has identified additional products to expand core range; adding a bit of life to core products by eg. helping hospital physicians to handle data
   3. Major distributor private label agreement
5. Value creating investments - new Mt Sinai opps
   1. Best form of dividend - you can invest in company or technology, receive dividend in specie via shares, and investors gain exposure to various new technologies
   2. Biggest blocker to this kind of thing is trying to get key opinion leaders on board; this way around with Mt Sinai, those opinion leaders are already present
   3. There is another opportunity right now the board is considering, again in a brand new market, 'extremely exciting' & will talk with Mt Sinai, hopes to make a new investment in a new tech by end of 2021
   4. Then potentially spin business out onto AIM in H2 2022
6. Progressive dividend policy for enhanced shareholder returns
   1. paying 1.1p per share in December

US - Things are ramping up in the US this half due to new rules from Joe Biden.

Biden a few days ago: any company that employs more than 100 staff has to test staff on a weekly basis —> EKF was immediately pulled up by global partner to significantly increase test packs. US demand really growing. Three new sites in Texas.

Testing is going to continue for the next six months re tests.

Global partner - kitting business is not just Covid now. They want to test for other diseases & will leverage distribution network to drive a cultural change in at-home testing. Kitting / testing is not going away even if Covid does die off.

Business unit performance

All biz units grew

• Diabetes £10.18m rev
• Hematology £5.86
• Life Sciences £18.5m

Central Lab & Life Sciences - only declining business is clinical something. Old products, from the 60s, commodity products, competition from China

Hematology - revenue flat - DiaSpect Tm, HemataStat II, Hemo Control, HemoPoint H2, UltracCrit

Regions

APAC £2.322m, +£490k

EMEA £19.195m, +10.791m

LATAM £870k, -£366k

USCAN £16.172m, +£1.316m

Outlook

Really very confident of being comfortably ahead for the year

Could be more upgrades in the next few months. Very strong trading in Q2. All of the core product lines have improved significantly in the past 6m and demand not going away.

Targeting double-digit growth in adjusted EBITDA over next 3-4y.

Cash generation

Since big problems in 2015, EKF has managed to reduce inventory yoy consistently

Inventory went up yoy this year by £1.6m as things last year were beginning to get scarce. Started building safety stock from China product early. Since then things have got more difficult sourcing across the board

Printed circuit boards in point-of-care testing, plastic resin in consumables etc., most products have some component that is causing a bottleneck of some kind. Therefore the company began stockpiling last year. Printed circuit boards - was asked 2 weeks ago to place orders for 2023 to ensure supply.

Long term should actually be a benefit as there will be a positive cash flow effect in future. Most of the stock has long expiry date.

It's forcing EKF to look for alternatives, a good discipline, should pay dividends in future as will take bargaining power from suppliers and give some flexibility back to EKF.

Receivables is the other number that sticks out - went up by more than £5m. Of that, £3.5m was prepayments on equipment as factories are full. Has questioned its inclusion in receivables line, slightly deceptive. Benefits of having this equipment will be big so best thing is to just install ASAP. Another £1m is from a deep pocketed customer being a little bit difficult. Nothing to worry about. The team has cleared out about £1m and the rest should be done by end of October.

Gross margin has decreased - H1 last year was selling MTM in buld back to Longhorn at high margins which influenced average margin. there was none of that this year. Kitting business is not its most profitable so this pulled the margin down. Longhorn has asked to start making bulk MTM again, a good sign; margins should go up in Q4.

Longhorn relationship over 12y, currently negotiating new contract. Was global distributor outside of the US but will now take US as well and will make Longhorn MTM test kits there.

Luke as chief scientific officer- molecular biologist. Wants to take EKF into early detection of disease. Will be full time, lives near San Antonio

Questions

AGM statement - private sector partner in discussions for testing beyond Covid.

• EKF has potential orders in for about 500k kits a week from the big industrial partner
• Was concerned that investors would think EKF is too dependent on. asingle customer
• Wants investors to know this isn't the only game in town, many other customers being supplied
• One of very few companies that has registered kits. Very fast moving dynamic
• It is looking at other products to sell into the diagnostics market as well. D2C diagnostics could be big as the barrier to entry (swabbing) has been overcome. It sees more and more reliance on home testing for the basics
• Industrial partner has asked to make molecular enzyme for them to use in diagnostics. Very well embedded with this industrial partner

Are any individual customers material ie. more than 15% of revenue. And are they new or existing clients?

• Not one that's over 15% however Public Health England was ordering 40k a month, then 20k, now 60k. Very fast moving
• Only new customer is Signpost, who does testing at train stations etc.
• 'Beautiful spread across a number of customers';

Clear Lab for diagnostics tests

• If it had the opp to do this then it would be a stepchange as it combines POC with kitting
• Atm so busy with kits that it hasn't had time
• Would combine EKF ops into one very strong diagnostic offering for people

Major molecular diagnostics players in the US being supplied to, decent growth opp. Mike has great connections

Type of non-covid products?

• CRISPR tech for gene editing. that's how MRNA vaccines are made at the moment, gene edited. DNA sequencing and products that fit into a molecular workflow and allow single-cell analysis.

Mexico supply arrangement - raw material shortages?

• EKF doesn't need to produce its own but has secured a dedicated line in Mexico. Biggest risk was swabs and tubes, this has been sorted now.
• Issue is not making the stuff - EKF could make them. The shortage is the plastic resin and similar components. Nearly the same problem with everything. This is why they have secured extra inventory, no benefit making it themselves.

Old products overhaul?

• Part of R&D programme includes this over the next 2y so yes looking to update all the time.

Chairman as Harwood Funds and EKF - may have to reduce holding. How to reconcile fund and EKF duties.

• Biggest issue that Christopher has got is that every fund must have a balanced portfolio and EKF is too large in the fund. He does not have to sell quickly. At the right time, he would have to sell down a bit. A big concern is that there is not enough free float. As it moves towards mid cap, will need more and more free float. Not a conflict of interest.

Plans for website refresh given expansion of business?

• Yes. Something to look at in the very near future.

Conclusion

The management team sounds competent and business is clearly in demand. EKF's regulated status and the consequent barriers to entry for other businesses is something to investigate.

The call confirms my view that EKF is an exciting company, but one with a quite a broad range of ongoing activities that is evolving all the time according to exceptional market conditions. It will require quite a lot more research to really get a handle on all of the group's product lines and to gauge their prospects.

That time investment made in researching the company might prove to be worth it though, as EKF looks to be a fairly unusual proposition. One with potential barriers to entry, relatively high margins, growing markets (but testing has an uncertain long term future in terms of mass adoption), and a hard to quantify opportunity with this unusual Mt Sinai agreement.

The valuation is a concern, particularly as there has been an influx of Covid-related business. The group is regularly posting earnings upgrades, but could this tail off at some point, or is the company on a more sustainable growth path?

At the very least, EKF justifies a closer look. Possibly heading back to 'the big problems' seen in 2015 and tracking progress since then could be a good way of getting to grips with the group's progress and prospects.

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Circassia (LON:CIR)

Share price: 39.82p (+6.18%)

Shares in issue: 418,216,495

Market cap: £166.5m

Circassia is a dedicated diagnostics and management company focused on point of care asthma diagnosis and management. Its market-leading NIOX® products are used by physicians in over 50 countries to help improve asthma diagnosis and management. The group also provides customer service and after sales support.

This is a live situation in that a fairly drastic turnaround or reshaping of the business is taking place here. Over the past five or so years, the share price has fallen from the 300p-400p range to the 30s and shares in issue have gone up from around 250m to 418m.

It’s a vastly different company now, although still quite heavily loss-making, but brokers are forecasting an uptick in revenue over the next couple of years. Woodford was a holder and then distressed seller here.

Circassia has recently sold its loss-making division though and a new management team is in place. The remaining business is Niox, which is growing fast. The prospects here have previously been obscured by the recently offloaded business.

Niox is something of a leader in a fragmented market, with over 70 patents, revenue growth, and high gross margins.

The story is there but the StockRanks remain lukewarm here for now, with a StockRank of just 28 and some financial health concerns getting flagged up.

Interim results

the Board believes the full year EBITDA performance is likely to be materially ahead of current market expectations.

Financial highlights:

• Niox sales +28% to £14.6m and seeing a post-Covid recovery,
• Gross margin steady at 68%,
• Niox EBITDA profit for the first time of £0.6m (up from a £4.9m loss),
• Total group EBITDA still negative but up from a loss of £6.2m to a loss of £0.1m,
• Operating loss down from £9.4m to £2m,
• Net cash of £11.3m, up from £7.4m in December 2020, helped by £5m of equity finance raised in the period.

COPD products have now been transferred back to AstraZeneca. A settlement with Beyond Air which, ‘subject to FDA approval of their product may provide further cash resources of up to $16.5m’.

Circassia has been named 'Global Leaders in FeNO Testing 2021' by Global Health & Pharma Awards and has sold more than 40m FeNO tests since launch. FeNO is Fractional Exhaled nitric oxide, a non-invasive and simple way to measure airway inflammation and assist in asthma identification.

Niox trading marginally above break even EBITDA is a milestone for the company and this (low) level of EBITDA profitability has continued in July and August. The group has reduced its cost base over Covid and the board therefore believes that full year EBITDA performance is likely to be materially ahead of current market expectations.

H1 2021 saw a much improved performance at Niox, which has a ‘dominant’ market share outside of China with over 17,000 devices sold worldwide.

Clinical sales grew by 11% compared with the first half of 2020 and were 10% higher than the second half of 2020. Recurring revenues from test kit sales were 90% of total clinical sales in H1 2021 (H1 2020: 85%).

In terms of regions, revenues in EMEA were up 17% to £4.2m, Americas revenues were up 4% to £2.9m, and revenues in APAC were up 24% to £5.1m, benefitting from a one-off recovery in China of £0.6m from prior years.

Research sales more than doubled to £2.4m in H1 2021 from £0.9m year-on-year and were 50% up on H2 2020. Circassia doesn’t expect this level of business to continue in H2 but the ‘medium-term outlook for this business is good’. Recurring revenues from test kit sales were 54% of total research sales in H1 2021 (H1 2020: 65%), reflecting the higher number of new devices purchased in this half compared with H1 2020.

Beyond Air - the dispute here has concluded. Under the terms of the Settlement, Circassia will surrender its rights to the LungFit® product in exchange for payments by Beyond Air for up to a maximum of $16.5m, payable in cash over the next few years. Circassia is entitled to a further royalty of 5% of net sales from the second anniversary of FDA approval, capped at $6m.

Ian Johnson, Executive Chairman, says:

We are pleased to report that the Company has reached a significant milestone with the continuing NIOX® business now profitable at the EBITDA level. Management has made substantial progress in implementing a new strategy, right sizing the business and ensuring it has the capability to generate profitable revenue growth. The cost base is now stable and plans to expand international distribution are being executed.

Cash burn - there was just a £0.5m cash outflow from operations, which looks manageable. This is in sharp contrast to prior periods: a £19.4m negative CFO in H1 2020 and negative £23.9m for the full year 2020. If the company returns to anything like those rates then additional equity finance will be required.

Conclusion

Asthma testing sounds like a large and attractive market to operate in.

Circassia is now exclusively focussed on this and, with the business now restructured (this has taken 18 months of hard work), management is turning its attention to driving top-line growth.

It is at the early stages of implementing a NIOX growth strategy that will raise the awareness of the benefits of FeNO testing and NIOX®, significantly improve its availability worldwide by expanding distribution, and, in the medium term, explore its use in the home and workplace as greater emphasis is placed on managing patients in non-hospital locations.

This is an interesting point - we’ve seen EKF make similar remarks about a cultural shift towards more at-home testing. I don’t think that’s a certainty, but it is a possibility which could lead to intriguing commercial opportunities.

The outlook is obscured by ongoing limited visibility due to the pandemic but Singer has improved its FY22 and FY23 forecasts as a result of the reduced cost base, with estimates of 0.2p and 1p in adjusted earnings per share. At 33p today given the ongoing risks, holders will be hoping for far more growth than that in the years ahead. The broker sees scope for revenue to grow to c£50m on a 3-5 year view. Most of this would be recurring, with good margin potential.

I think it’s a company to keep an eye on although I can’t yet say more than that. Its market cap is already £167m so it’s hardly a bargain on historic figures, but it looks like management is doing a good job here

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Galliford Try Holdings (LON:GFRD)

Share price: 176.07p (+2.6%)

Shares in issue: 111,053,489

Market cap: £195.5m

There’s a bit of a story here. Galliford was set up back in 2000 following the merger of Try Group and Galliford. The enlarged group then purchased housebuilders which it consolidated into Linden Homes.

The failure of Carillion contributed to an increasingly costly large, fixed price contract. What followed was a restructuring and recapitalisation of the business. Bovis Group then bought Linden Homes in January 2020. This transaction got rid of the debt and pension liabilities and allowed the group to focus on core construction businesses.

As you might imagine, management is extremely focused on high quality contracts now, in order to prevent a repeat of 2019. This will always be a risk when the business model is low margin with large fixed price contracts though.

Annual results

Financial highlights:

• Revenue +3.2% to £1.125bn,
• Operating profit before amortisation of £10.1m, up from a loss of £62.2m,
• Profit before tax up to £11.4m from a loss of £59.7m,
• Earnings per share of 9.5p,
• Divisional operating profit margin ahead of expectations at 2%,
• Final dividend of 3.5p; total dividend of 4.7p,
• Order book stable at £3.3bn (2020: £3.2bn),

Building and Infrastucture - appointed to contracts and frameworks worth over £641m and £590m respectively. Frameworks provide certainty of pipeline of work with repeat clients and established terms and conditions, and amount to 87% of the order book (2020: 90%) affording good visibility of future revenues. Wins include:

• The £400m NEPO Civil Works framework,
• Scottish Water’s £350m SR21 Non-Infrastructure framework,
• Scottish Water’s £350m Delivery Vehicle 2 programme, and
• Leicestershire County Council’s £48m Grantham Southern Relief Road.

Building revenue is up 9.6% to £789.2m and an operating margin of 2% makes for operating profit of £15.9m. The order book of £1.92bn (2020: £2.15bn), is split 27% in Education, 20% in Defence and Custodial, 16% in Health, and 21% in Facilities Management.

Infrastructure revenue is down 7.8% to £329.2m at a margin of 1.8%, so operating profit of £6m. Infrastructure currently has an order book of £1.35bn (2020: £1.01bn), comprising 38% in Highways and 62% in Environment.

PPP Investments - this division delivers major building and infrastructure projects through public-private partnerships, generating work for the wider group in the process. Revenue fell from £8.2m to £6.4m and there’s a loss of £1.8m, but also net interest income of £3.9m. The directors’ valuation has risen from £40.7m to £49.1m.

Current trading and outlook:

We are encouraged by the pipeline of new opportunities across our chosen sectors in the public, regulated and private markets together with our significant contract wins during the period. The Government's plans to increase capital expenditure, together with the Group's strong balance sheet and quality order book, mean that the Group is well placed to meet its growth objectives for the new financial year.

Targets for 2026:

• 3% operating margin across Building and Infrastructure,
• £1.6bn of revenue,
• Strong balance sheet and operating cash flows,
• Sustainable dividends with cover in the range 2.0 to 2.5 times earnings

Getting to that point would see a company generating around £50m of operating profit by 2026.

Balance sheet - looks strong. Average month end cash for the period was £164m (2020: £141m1), PPP asset portfolio of £49m (2020: £41m), and no pension liabilities. That’s nearly as much cash as the entire market cap, making for a tiny enterprise value. Net cash reported at the balance sheet date is £216.2m, which is more than the entire market cap. There are a lot of trade creditors though, £485.4m.

Conclusion

The important points here are around balance sheet strength and valuation. Galliford ended the year with a larger net cash position than its entire market cap, which is rare. The group does have a lot of current liabilities though, £492.7m in total.

After the sale to Vistry, Galliford is now a pure-play construction business with a large, high quality order book and good visibility on revenue. Much of the pipeline comes from repeat clients and existing frameworks, and Galliford started the new financial year with 90% of planned revenue secured for the 2022 financial year (2020: 90%).

And by all accounts the government is going to continue spending on projects, so the company looks well placed to continue winning good contracts.

Operating margins are very thin though, so there’s not much leeway if a contract falls through or anything else crops up. It’s potentially interesting, but the risk is also plain to see in the low margins.

That said, broker forecasts are improving and the outlook does appear supportive.

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Paul's section

Superdry announces its Preliminary results covering the 52-week period from 26 April 2020 to 24 April 2021 ("FY21") and a trading update covering the 18-week period from 25 April 2021 to 28 August 2021.

Sharpened strategy sets out key pillars of brand reset; Performance significantly impacted by Covid-19 disruption

My initial reaction to the headline loss, is that it’s nowhere near as bad as I feared. Although note the considerable size of adjustments.

There are a lot of unusual items in these results, so I don’t think we can draw much from the figures, e.g. -

Full year adjusted loss before tax of £(12.6)m (FY20: £(41.8)m), with cost saving measures and government support helping to offset trading shortfalls. FY21 includes a £33.8m year-on-year benefit from reduced depreciation, primarily due to the FY20 impairment charge, and a £14.3m accounting credit due to lease modifications…

We expect to generate operating leverage from reduced store rents and payroll compared to pre-Covid levels, although we anticipate a £35-45m year-on-year increase in costs due to one-off benefits recognised in FY21, such as the return of UK business rates, the end of furlough support, and the normalisation of other variable and discretionary costs.

Those increased costs are going to be a massive headwind. At say a 53% gross margin, the company will need to increase sales by c.£75m to generate enough additional gross profit just to cover the increased costs (based on the mid range figure of £40m). That’s a 13.5% increase in revenues needed next year, just to stand still, due to those increased costs.

The table below shows that for the first 18 weeks, sales are only up 1.9% - nowhere near enough.

eCommerce - is vital for any fashion brand. I’m looking for ideally half sales to be online, and showing strong growth. There’s very good growth in eCommerce reported today for FY 04/2021, see table below, so it does look encouraging that so much business has moved online -

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Current trading - sales from stores are improving against very soft comparatives, but are still way below pre-pandemic levels.

Also, what concerns me with SDRY, is that online sales recently are actually considerably down on last year, and have barely grown against the 2-year comparative. Whatever the reasons are, that’s just not good enough. Although to be fair, the online gross margin is much better, up 10.5%, as less discounting was done.

The table below shows the revenue change on a 1- and 2-year basis for the 18-week period ending 28 August 2021:

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Rents - there’s some progress on rent reductions -

As part of our continued lease renegotiations, we renewed 39 stores in FY21 representing an annualised cash saving of £5.3m6. In addition, there were £7.7m of one-off rent savings recognised in FY21, and we are targeting in excess of £10m in FY22.

Outlook - no change to expectations, although we’re not told what those expectations are!

Whilst significant market uncertainty remains, we do expect a recovery in total revenue in FY22, driven by:

* Improving store trading from gradually improving footfall throughout the year, although not reaching historic levels;
* Strong 2-year Ecommerce growth compared to FY20, but supressed year-on-year as we anniversary tough promotion-driven comparatives and some trade switches back into physical stores; and
* A modest, but sustainable revenue recovery in Wholesale

We expect margin to increase across all channels as we transition towards a full price stance, supported by further mix benefits from the switch back into stores.

We expect to generate operating leverage from reduced store rents and payroll compared to pre-Covid levels, although we anticipate a £35-45m year-on-year increase in costs due to one-off benefits recognised in FY21, such as the return of UK business rates, the end of furlough support, and the normalisation of other variable and discretionary costs.

Considering the above, we don't expect a change to the adjusted PBT market expectations for FY22...

Recognising the structural growth opportunity in Ecommerce, as well as the geographic and customer segmental targeting opportunities in our Wholesale business, we expect revenue to exceed peak historic levels in the medium term. Disciplined full price trading, continuing rent renegotiations, and the operating leverage from cost savings will also return the business to historic operating profit margins.

That’s a very bold statement at the end there. If it can return to historic profit margins, then the share would be a multibagger from here. I remain sceptical about the likelihood of that happening, and there’s no evidence in these numbers that it’s even begun to happen.

Balance sheet - quite complicated. Liquidity & working capital look OK, so no concerns there. It can probably keep going without having to dilute shareholders.

However, the lease liabilities really jump out at me. Right of use assets are £91.1m, but lease liabilities total £270m! That’s telling us that the company has got a big problem with onerous leases, and loss-making retail units, despite a considerable reduction in liabilities compared with last year.

My opinion - I have no idea why the share price has shot up 14% today, because the company is still loss-making, is facing huge cost headwinds, and there’s no change to market expectations.

Stockopedia is showing broker consensus of £7.5m profit after tax this year, FY 04/2022. I reckon that could be too optimistic. After that, who knows what might happen?

The commentary is the usual super-bullish stuff I expect from Mr Dunkerton, who believes he’s carrying out a “brand reset”, even though the figures don’t show any evidence of progress.

Personally I like turnarounds, but don’t invest in them until there’s clear evidence of a return to meaningful levels of profit. That’s not been demonstrated yet at Superdry, hence I remain sceptical.

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