If where you live is anything like where I live in Oxford, you won’t have failed to notice the craze among kids for those small three-wheeled scooters. They’re everywhere.
Well, those scooters are about to get an upgrade in terms of appearance, thanks to a soon-to-be-released range of accessories called ‘Scootrix’. Kids will be able to customise their trusty steeds with flashing lights, wheel trim, nameplates and the like. And Scootrix has, in the words of AIM-quoted ILA Group (ILA), “the makings of a playground craze”.
The idea here seems to be to allow young children to gain some of the street-cred of their skateboarding teenage brothers by whizzing around the playground at high speed and performing a series of stunts. Let us just hope that primary school teachers don’t invoke health and safety rules and blow the whistle on the whole idea.
Although it has not said much about it yet, ILA clearly has high hopes for this new range of kids’ products, which it expects to launch later this year. If it does indeed become a must-have accessory for trendy tots, it will add to the momentum of a business that has put out a series of positive announcements since I featured it in January.
To date, ILA has been best known for its personal alarms. In a copybook example of product development, it has taken an existing idea and, through product extension, fashionable design and low cost manufacturing, has turned it into a worldwide success.
These innovative products are getting more and more overseas orders
The two principal iterations are ‘Dusk’ and ‘Pebble’. The former is an alarm for a lady’s handbag, the latter attaches to a keyring. On activation both emit a sound which is sufficiently loud and disconcerting to deter assailants. Also in the range are a pedometer alarm for the lonely jogger and a wedge that can be jammed under a hotel bedroom door to set off an alarm in the event of an intruder.
These products are inexpensive, they come in fancy coloured designs and – in the sort of accolade that sends the women’s magazines into a tizzy of excitement – they were included in the contents of the infamous goodie bags presented to this year’s Oscar winners and nominees.
With this seal of approval, ILA’s security alarms are now being sold directly or through distributors in 30 countries, including the USA. Three weeks ago ILA announced its largest order yet, worth $800,000 from a “major new multi-national client”, adding that, “further orders are expected over the next three months from this blue-chip customer”.
Up in Scandinavia – where there are more dark, dusky and dangerous hours than further south – the Norwegian retailer Elkjop has followed up January’s $250,000 order with a follow on for $195,000. Another $350,000 deal will see the products distributed to 600 stores in Germany and Austria.
With this evidence of sales momentum, ILA has given a series of positive trading statements, the latest that “we continue to expect sales growth for the following 12 months to be significantly stronger than previously forecast, and as a consequence expect to reach breakeven earlier than previously predicted”.
Investors seem to have paid little attention, with the share price lower that it was at the start of the year. In part this may be due to ILA’s continuing need for working capital – it raised £1.5m through a share placing at 1.2p this month – or it might reflect scepticism that ILA can be more than a one-product wonder.
Scootrix may go some way to nailing that prejudice. But in any event, ILA is now a more diverse business than it was. In March it acquired Premium Factory, which sells children’s school lunch boxes in the shape of football shirts but also develops promotional items for big consumer goods companies such as Nestle and Unilever.
This is all about ‘brand extension’, a favourite marketing trick that adds value to a humdrum product by the simple means of sticking a brand name and logo on it. Thus Premium Factory has been responsible for a tin tea caddy with the PG Tips logo, a china mug decorated with Aero chocolate and a computer mouse in the image of a glass of Guinness.
Two big hitters backing this creative team
ILA, run by a young, creative team given to writing rather cheesy biographies on the corporate website, argues that the combination with Premium Factory will diversify the group’s product range, add sales outlets and manufacturing expertise.
But perhaps the most intriguing aspect to this ambitious penny share company is the presence on its board of the former head of Marks and Spencer (M&S), Sir Richard Greenbury and, since March, of Gordon Black, who ran one of M&S’s biggest suppliers, Peter Black Holdings.
Somehow I cannot see those two test-driving Scootrix-enhanced scooters. But it is reassuring to know that they are behind the wheel of this true penny share. I’m not ready to buy into this one yet. But from what I’ve seen so far, it’s definitely one to watch out for in the years ahead.
• This article is taken from Tom Bulford’s free twice-weekly small-cap investment email The Penny Sleuth. Sign up to The Penny Sleuth here.
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