Good morning, it's Paul here with Thursday's SCVR.

There's not a lot of small cap news again today, so I'll have a ramble about markets generally a bit later, and pad out company sections with other thoughts. As always, just skip any sections that you find tedious - nobody is obliged to read everything!

Estimated time of completion - I should be able to achieve the 1pm official finish time today.
Edit at 14:05 - the main report was done by 1pm, but I've added some extra bits on micro caps at the end.
Today's report is now finished.


Warpaint London (LON:W7L)

Share price: 83p (up c.4% in early trading, at 08:21)
No. shares: 76.7m
Market cap: 63.7m

Trading update

Warpaint London plc (AIM: W7L), the specialist supplier of colour cosmetics and owner of the W7 and Technic brands, is pleased to provide a trading update in respect of the financial year ended 31 December 2019, together with details of certain corporate initiatives.

Background - this share has failed to recover its previous levels, after a profit warning in Oct 2018. My impression is that, whilst nicely profitable, the company does seem rather accident-prone. Growth has stalled, but free cashflow is good, and the dividend yield of 5.7% looks attractive, if it can be maintained.

Trading update today -

Subject to audit, the Company expects to report revenue of £49.3 million and adjusted profit before tax (excluding amortisation in connection with acquisitions, share incentive scheme costs and exceptional items, which the board expects to total approximately £2.8 million) of £5.2 million for the year ended 31 December 2019, in line with the guidance provided in the Company's trading update on 20 December 2019.

That's actually a revenue miss of £0.7m, or 1.4% below the previous guidance of £50.0m. Not a huge miss, but coming right at the end of the year, it would be a proportionately larger miss if seen in isolation for December's sales.

The adjusted profit of £5.2m is towards the lower end of the previous company guidance of £5.1 to £5.5m.

I should say that achieving £5.2m adj profit on £49.3m revenues is a good profit margin of 10.5%.

I tend to find that around 10% is the cut-off where companies are starting to demonstrate good pricing power - i.e. a company must have a good product/service, if…

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