REG - Revolution Beauty Gp - Interim Results
19/11/2024 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241119:nRSS7012Ma&default-theme=true
RNS Number : 7012M Revolution Beauty Group PLC 19 November 2024
REVOLUTION BEAUTY GROUP PLC
("Revolution Beauty", the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2024
Reigniting the Revolution strategy delivering growth in core SKUs and improved
underlying profitability
FY25 underlying adjusted EBITDA expected to be at least in line with FY24
Revolution Beauty Group plc (AIM: REVB), the multi-channel mass beauty brand,
today announces its unaudited Half Year Results for the six months ended 31
August 2024 ("H1 25" or the "Period").
Financial Highlights
H1 25 H1 24
£ million £ million Change
Revenue 72.4 90.4 -20%
Gross profit 23.2 44.7 -48%
Gross margin 32.0% 49.4% -17.4ppts
Underlying gross profit margin(i) 46.2% 46.0% +20bps
Operating costs(ii) 29.5 38.3 -23%
Underlying adjusted EBITDA(iii) 3.9 3.3 +18%
% of revenue 5.4% 3.7% +1.7ppts
Underlying Adjusted profit/(loss) before tax(iv) 0.3 (0.7) +£1.0m
GAAP measures
Operating Loss (9.8) (0.5) -£9.3m
(Loss)/profit before tax (10.9) 0.4 -£11.3m
Cash and cash equivalents 6.3 8.0 -£1.7m
Net (debt) (25.5) (23.8) -£1.7m
Gross inventory 61.9 58.6 +£3.3m
(i) Underlying gross profit margin is an alternative performance measure as
detailed in note 7. It is calculated as the gross profit as a percentage of
sales before one-off charges related to the provision for non-strategic
inventory in H1 FY25 and also adjusted to reflect the release of the stock
provision related to stock clearance in H1 FY24 (see note 7).
ii Operating costs is defined as Distribution & Administrative costs
excluding depreciation, amortisation, adjusting items set out in note 7 &
share based payment charges.
(iii) Underlying adjusted EBITDA is an alternative performance measure used by
management to compare the underlying performance of the business, adjusting
for certain non-cash, non-recurring and normalising items that are not
considered to form part of underlying performance and also adjusted to reflect
the release of the stock provision in the first half of FY24 of £3.1m (see
note 7).
iv Underlying Adjusted profit before tax is calculated as profit before tax,
share-based payment charges and adjusting items (see note 7).
· Group revenue declined by 20% driven by the planned simplification of
the product portfolio and the discontinuation of unproductive SKUs.
o Decline also reflects significant stock clearance activity in the first half
of FY24.
o Revenue growth from core SKUs of 6% in H1 25 and accelerated to 16% in Q2.
· Underlying Adjusted EBITDA of £3.9m (FY24 £3.3m).
· Improvement in Underlying gross profit margin of 20bps.
· One off stock provision charges relating to non-core stock of £10.2m
impacted statutory performance and GAAP measures due to focus on clearing
slow-moving discontinued inventory from previous years to generate cash.
· Cost savings programme remains on track
o Distribution costs decreased by 33% year on year.
o Administrative costs decreased 30% year on year.
o Marketing costs increased 2% year on year with investment in brand marketing
to underpin the future growth of core products.
· Cash balances of £6.3m and net debt of £25.5m, including a fully
drawn RCF of £32 million.
Operational Highlights
· Ongoing delivery of Reigniting the Revolution strategy.
o Rationalised portfolio from seven brands across eleven categories to three
brands across seven categories, with core range of 1,058 SKUs.
o Improved service levels from c.70% to consistently over 90%.
o Targeted NPD process driven increase in NPD sales per SKU of over 40%
year-on-year, with 177 SKUs set to be added in H2 2025.
· Encouraging progress with existing and new retailers.
o New relationship agreed with DM Germany with a launch in 850 stores in
January 2025.
o Expansion into 250 new Boots stores in the UK in October 2024.
o Walmart US to carry full assortment of Revolution Beauty products in more
than 1800 stores from January 2025.
o Launch of Amazon US first party business selling on a wholesale basis,
performing well in early months of trading.
· Community awareness and engagement continues to build. Return to
growth in Instagram followers, 3.5m and growing, reach and impressions and
growing audience on TikTok 778k (+11% YoY).
Outlook
The Group reiterates its guidance that sales for FY25 are expected to decline
year on year at a slightly lower rate than in H1, with a return to growth in
the fourth quarter as several of the Group's new strategic growth initiatives
take effect, and this growth is expected to accelerate through FY26.
With the continuing momentum in the underlying business, as gross margins
strengthen in the second half of the year and as cost savings programmes
continue to deliver, Underlying Adjusted EBITDA is expected to be at least in
line with FY24 as previously guided, prior to the one-off stock provision
announced on 9 October 2024.
Lauren Brindley, Group Chief Executive Officer, said:
"This is a year of transformation for Revolution Beauty, and our performance
in the first half reflects the steps we have taken to position the Group for
long-term, profitable growth. Since launching our new strategy in February, we
have substantially cut a long tail of unproductive SKUs, improved our
operational delivery and made good progress with our cost savings programmes.
Consequently, we now have a core portfolio that is growing globally with a
significantly improved underlying gross margin.
"As we look to the second half and beyond, we have a strong pipeline of growth
initiatives, including new and expanded retailer relationships, a
reinvigorated pipeline of make-up innovation, the launch of our new Skincare
range and the global expansion of our budget brand, Relove. As these
initiatives start to take effect, we expect a return to growth in Q4 and
anticipate that this will accelerate through FY26. With good momentum in the
underlying business, I remain highly confident in the Reigniting the
Revolution strategy and in our ability to become a top five mass beauty
brand."
Presentation
A recorded management presentation from Lauren Brindley, CEO and Neil Catto,
CFO will be available on the Company's website:
https://www.investis-live.com/revolution-beauty/6733463d642e91000e309270/tjhrt
(https://www.investis-live.com/revolution-beauty/6733463d642e91000e309270/tjhrt)
For further information please contact:
Investor Relations
Lauren Brindley, CEO
Neil Catto, CFO
Investor.Relations@revolutionbeautyplc
(mailto:Investor.Relations@revolutionbeautyplc) .com
Joint Corporate Brokers
Panmure Liberum Limited: Edward Thomas / Dru Danford / John More
Tel: +44 (0) 203 100 2222
Zeus: Benjamin Robertson / Nick Cowles / Jordan Warburton
Tel: +44 (0) 161 831 1512
Media enquiries
Headland Consultancy: Matt Denham / Antonia Pollock
Tel: +44 (0)20 3805 4822
Revolutionbeauty@headlandconsultancy.com
(mailto:Revolutionbeauty@headlandconsultancy.com)
About Revolution Beauty
Revolution Beauty is a global mass beauty and personal care business which
operates a multi brand, multi category strategy and sells its products both
direct-to-consumer (DTC) via its e-commerce operations, and in physical and
digital retailers through wholesale relationships.
Today, the Group has a retail footprint of c.17,500 doors across leading
retail chains in the UK, USA and other international markets. Revolution
Beauty has access to a wide customer base, predominantly aged between 16 and
35, through its digital partners and own DTC platform. It has established and
invested to streamline its supply chain with its own manufacturing facility in
the UK, and third-party warehousing facilities across the UK, USA and
Australia. The Group has offices in the UK, USA, New Zealand and Germany.
Revolution Beauty currently employs 318 people.
Chief Executive Officer's Review
Introduction
This is our first set of results since the Group embarked on its new strategy
to Reignite the Revolution, which we announced at our Capital Markets Day in
February 2024. FY 2025 is a transformational year for the Group as we lay the
foundations for future growth.
Reflecting on our first half performance, the simplification of the product
portfolio and the associated discontinuation of unproductive SKUs has driven a
20% decline in revenue versus the prior year, which also reflects significant
stock clearance activity in H1 2024. Our underlying business delivered an
encouraging performance with our core SKUs delivering 6% growth in H1 25,
accelerating to 16% in Q2. Underlying gross profit margin improved by 10bps
with the Group delivering Underlying Adjusted EBITDA of £3.9m.
I remain confident that the optimisation of our product portfolio will deliver
as we release resources and capital to invest in profitable global growth
opportunities for our Masterbrand, Revolution Beauty, and our value brand,
Relove. The potential is clear as we continue towards our ultimate goal of
becoming a top five global mass beauty player by 2030.
The Masterbrand and Powering the Core
We have been sharply focused on simplifying our offering, which is now
complete. We have rationalised our portfolio from seven brands across eleven
categories to three brands: Revolution, I Heart and Relove, across seven
categories, with a core range of 1,058 SKUs.
This simplification coupled with the strengthening of our operations is
beginning to yield significant benefits. We have delivered an improvement in
our customer service level from c.70% to consistently over 90%, with reduced
lead times from our suppliers and therefore increasing the speed to market for
our products. We also expect to have reduced our inventory by c. 15m units by
year-end through a faster turn of core strategic SKUs and clearance of
non-core product.
Moreover, a targeted and efficient new product development process has
resulted in NPD sales per SKU increasing to over 40% year-on-year in the first
half, with 177 SKUs set to be added in H2 2025. In January 2025, the Group is
also set to launch a major skin innovation and relaunch Relove with a new
operationally efficient model.
Within the Revolution Beauty Masterbrand, Face has delivered a strong
performance with foundation sales up 50% year-on-year reflecting the
successful launch of Skin Silk. The Group's top five SKUs were also all in
growth in the Period with Lip accelerating and delivering 50% growth in the
year.
Awareness of and engagement with the Masterbrand continues to build, with a
return to growth in followers, reach and impressions on Instagram, a growing
audience and ranking on TikTok, and a significant increase in Earned Media
Value as we continue to engage with the Revolution Beauty community across the
World.
Focused global growth
The Group continues to secure new partnerships and expand existing
relationships with brands and retailers in the UK and internationally. In
October 2024, the Group's Masterbrand, Revolution Beauty expanded into 250 new
Boots stores, which is already generating positive momentum and has returned
to growth in Target, the number one retailer in the US.
In January 2025, the Masterbrand, Revolution Beauty will launch in more than
850 stores with DM Germany, Germany's number one mass beauty retailer, in a
new partnership for the Group. In the US, also from January 2025, more than
1,800 Walmart Stores will carry a full assortment of Revolution Beauty
products.
The Group continues to generate momentum with third party digital channels,
with its new Amazon US shop, which launched in H1 2025 growing ahead of plan
and up 70% year-on-year, with growth delivered through the Amazon EU shop of
over 18% in the first half.
Outlook and Summary
The Group reiterates its guidance that sales for FY25 are expected to decline
year on year at a slightly lower rate than in H1, with a return to growth in
the fourth quarter as several of the Group's new strategic growth initiatives
take effect, and this growth is expected to accelerate through FY26.
With the continuing momentum in the underlying business, as gross margins
strengthen in the second half of the year and as cost savings programmes
continue to deliver, Underlying Adjusted EBITDA is expected to be at least in
line with FY24 as previously guided, prior to the one-off stock provision.
I am encouraged by the progress that we have delivered since we announced the
strategic shift in February, and we remain confident in the scale of the
opportunity for the brand as we move forward.
Having been CEO of Revolution Beauty for over a year now, I continue to be
impressed by the energy of our customer base and retail partners, the vibrancy
of our community and, of course, the dedication and commitment of our team.
The passion of our team amazes me on a daily basis and I would like to thank
them for their continued hard work.
Financial Review
Revenue
Revenue for H1 24 was £72.4m, down 19.9% on H1 24. This reduction is driven
by the planned simplification of the product portfolio and the associated
discontinuation of unproductive SKUs. The decline also reflects significant
stock clearance activity in the first half of FY24.
Global store group revenue declined 17% from £72.3m to £59.8m. Digital
revenues declined by 30% from £18.1m to £12.7m. Digital wholesale revenue
reduced by 20% reflecting clearance activity in H1 24, and temporarily reduced
levels of innovation early in the year and the strategic discontinuation of
brands and SKUs.
Geographically, UK sales declined by 32% to £21.3m. In the US, Store Groups
declined by 17%. £1.0m of additional clearance activity in the prior period,
when the Group was selling through excess inventory, contributed to the
decline as well as currency exchange movements versus the prior year. In the
Rest of the World, strategic discontinuation of brands, categories and SKUs
had an effect, with distributor sales down 20% on an FY24 period including
significant clearance of older inventory. In Australia, sales grew by 20% as
the Group expanded distribution in the region.
Gross Margin
Gross margin in the Period was 32.0% (H1 FY24: 49.4%). This is after taking
into account a one of additional stock provision charge of £7.9m, the details
of which are explained in notes 7 and 9. Underlying gross profit margin,
excluding the impact of stock provision charges and releases (see note7) was
46.1% (FY24 - 46.0%).
Adjusted EBITDA and Operating Loss
The adjusted EBITDA for the Period was a loss of £6.3m (H1 24 EBITDA profit
£6.4m). However, profitability on an underlying basis improved.
Underlying Adjusted EBITDA (see note 8) accounting for the impact of one-off
stock provision charges and releases was £3.9m compared with £3.3m in the
prior year.
The increase in underlying profitability has been achieved despite declining
revenues as operating costs have decreased significantly as the group's cost
saving plans have been effective. The reductions in operating costs are
shown in the table below and have been possible as a result of the
simplification of the brand and product portfolio.
6 month period ended 31 August 2024 6 month period ended 31 August 2023 % change
Unaudited Unaudited
£m £m
Distribution costs 8.9 13.3 -33%
Marketing costs 9.7 9.5 +2%
Administrative costs 10.9 15.5 -30%
Total operating costs 29.5 38.3 -23%
Operating loss was £9.8m, against a loss of £0.5m in H1 24. There were
material adjusting items, as detailed in note 7, relating to restructuring and
legal and professional costs in the statement of comprehensive income, as well
as a one-off stock provision charge (see note 9).
The loss before tax of £10.9m (FY24 - profit of £0.4m) resulted from the
stock provision charges in the Period related to non-strategic stock as
detailed in note 7. The Underlying adjusted PBT was £0.3m compared with a
loss of £0.7m in the previous period.
The reported loss after tax was £10.9m against a profit of £0.4m in H1 24.
Cash
We ended the Period with a cash balance of £6.3m and gross borrowing amounted
to £32.0m.
The company generated cash from operations of £1.2m. This was driven by
movements in working capital totalling £7.8m offsetting cash operating
losses. After taxes paid of£0.6m, capital expenditure of £1.1m, interest
payments of £1.2m and payments related to lease liabilities of £0.5m, cash
and cash equivalents decreased by £2.2m during the Period.
The Group has sufficient cash resources and covenant headroom to finance its
current organic growth plans.
Regulator action
The Company informed shareholders on 21 July 2023 that the Financial Conduct
Authority had notified Revolution Beauty that it had commenced an
investigation into potential breaches of the Market Abuse Regulation (EU)
596/2014 (as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018) in relation to certain matters in the Period from July
2021 to September 2022. Revolution Beauty continues to cooperate fully with
the FCA and will provide updates as necessary.
REVOLUTION BEAUTY GROUP PLC
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF-YEAR ENDED 31 AUGUST 2024
6 months ended 31 August 2024 6 months ended 31 August Year ended 29 February 2024
Note 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue 5 72,424 90,399 191,287
Cost of sales (49,192) (45,733) (102,932)
Gross profit 23,231 44,666 88,355
Marketing and distribution costs (18,624) (22,845) (47,132)
Administrative expenses
- General administrative expenses (14,357) (22,349) (37,899)
- Impairment losses on financial assets - - (1,035)
- Impairment of property, plant and equipment - - (75)
- Provision for legal cases - - (293)
Total administrative expenses (14,357) (22,349) (39,302)
Other operating income - - 2,414
Operating (Loss)/Profit (9,750) (528) 4,335
Finance income 84 2,358 10,247
Finance costs (1,230) (1,464) (3,139)
(Loss)/Profit before taxation (10,896) 366 11,443
Income tax credit/(expense) (7) (21) (743)
(Loss)/Profit for the year/period (10,903) 345 10,700
Other comprehensive expense
for the period, net of tax
Exchange differences 188 829 153
Total comprehensive (Loss)/Income for the period (10,715) 1,174 10,853
(Loss)/ earnings per share (p) 6 (3.4) 0.0 3.4
Diluted earnings per share (p) 6 (3.4) 0.0 3.2
Adjusted EBITDA 7 (6,271) 6,438 12,570
Underlying Adjusted EBITDA 7 3,943 3,338 Not reported
The total comprehensive loss for the period is entirely attributable to the
owners of the parent company.
The above consolidated condensed statement of comprehensive income should be
read in conjunction with the accompanying notes.
REVOLUTION BEAUTY GROUP PLC
(Company Number: 11666025)
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
AS AT 31 AUGUST 2024
31 August 2024 31 August 29 February 2024
Notes 2023
As restated
Unaudited Unaudited Audited
ASSETS £'000 £'000 £'000
Non-current assets
Intangible assets 4,628 5,116 4,934
Property, plant and equipment 8,981 7,399 9,242
Right-of-use assets 3,606 1,501 4,177
Other receivables 1,563 - 1,931
Deferred tax asset 490 - 496
19,268 14,016 20,780
Current assets
Inventories 9 40,517 42,320 40,775
Trade and other receivables 10 37,652 41,855 42,739
Corporation Tax Receivable - 340 -
Reimbursement asset - 4,079 6,122
Cash and cash equivalents 6,292 8,006 8,636
Total current assets 84,461 96,600 98,272
Current liabilities
Lease liabilities (890) (1,204) (894)
Trade and other payables 11 (69,176) (64,374) (67,249)
Provisions (897) (6,815) (6,622)
Borrowings 8 - (31,807) -
Corporation tax payable 39 - (579)
Total current liabilities (70,923) (105,715) (75,344)
Net current assets/ (liabilities) 13,538 (7,600) 22,928
Total assets less current liabilities 32,806 6,416 43,708
Non-current liabilities
Lease liabilities (3,005) (708) (3,481)
Borrowings (31,848) - (31,785)
Deferred consideration (8,264) (16,137) (8,264)
Deferred tax liabilities - 91 `-
Provisions (40) - -
Total non-current liabilities (43,157) (16,754) (45,530)
Net (liabilities)/ assets (10,351) (10,338) 178
Equity
Share capital 3,185 3,183 3,185
Share premium 103,487 103,487 103,487
Warrant reserve 7,239 7,239 7,239
Merger reserve 14,860 14,860 14,860
Translation reserve 634 1,275 599
Retained earnings (139,756) (140,382) (129,192)
Total equity (10,351) (10,338) 178
REVOLUTION BEAUTY GROUP PLC
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 31 AUGUST 2023
Share capital Merger reserve Translation reserve Retained earnings Total
equity
Share Warrant reserve
premium
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 March 2023 3,097 103,487 7,239 14,860 446 (142,264) (13,135)
Profit for the period - - - - - 345 345
Other comprehensive expense net of taxation:
Foreign operations - foreign currency translation differences - - - - 829 - 829
Total comprehensive loss for the period - - - - 829 345 1,174
Transactions with owners in their capacity as owners:
Issue of shares, net of transaction costs 86 - - - - - 86
Share-based payments - - - - - 1,537 1,537
Total transactions with owners 86 - - - - 1,537 1,623
Balance at 31 August 2023 3,183 103,487 7,239 14,860 1,275 (140,382) (10,338)
The above consolidated statement of changes in equity should be read in
conjunction with the accompanying notes
REVOLUTION BEAUTY GROUP PLC
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 31 AUGUST 2024
Share capital Merger reserve Translation reserve Retained earnings Total
equity
Share Warrant reserve
premium
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 March 2024 3,185 103,487 7,239 14,860 599 (129,192) 178
Loss for the period - - - - - (10,903) (10,903)
Other comprehensive expense net of taxation:
Foreign operations - foreign currency translation differences - - - - 35 - 35
Total comprehensive loss for the period - - - - 35 (10,903) (10,690)
Transactions with owners in their capacity as owners:
Issue of shares, net of transaction costs - - - - - - -
Share-based payments - - - - - 339 339
Total transactions with owners - - - - - 339 339
Balance at 31 August 2024 3,185 103,487 7,239 14,860 634 (139,756) (10,351)
The above consolidated statement of changes in equity should be read in
conjunction with the accompanying notes
REVOLUTION BEAUTY GROUP PLC
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
FOR THE HALF-YEAR ENDED 31 AUGUST 2024
6 months ended 31 August 2024 6 months ended 31 August Year ended 29 February 2024
2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flows from operating activities
Profit/ (Loss) for the financial period (10,903) 345 10,700
Adjustments for:
Taxation (7) 21 743
Finance costs 1,230 1,464 3,139
Finance income - (2,358) (10,247)
Depreciation of property, plant and equipment 2,064 2,100 4,208
Impairment of property, plant and equipment - - 75
Amortisation of intangible assets 345 462 897
Loss/(profit) on disposal of property, plant and equipment 1 5 2
Loss/(profit) on disposal of intangible assets - - 28
Equity settled share-based payment expense 339 1,537 2,372
Proceeds from reimbursement assets 6,122 - -
Provisions movement (5,725) (245) (201)
Movements in working capital:
Movement in inventories 258 5,285 6,933
Movement in receivables 3,679 9,339 3,523
Movement in payables 3,805 (18,346) (14,900)
Cash used in operating activities 1,208 (391) 7,272
Income tax refunded/(paid) (619) (516) (753)
Net cash used in operating activities 589 (907) 6,519
Cash flows from investing activities
Purchase of intangible assets (190) (128) (270)
Purchase of property, plant and equipment (897) (896) (4,265)
Finance income - - 3
Net cash used in investing activities (1,087) (1,024) (4,532)
Cash flows from financing activities
Interest paid (1,230) (1,199) (2,634)
Proceeds from issue of shares - - 88
Payment of lease liabilities (480) (1,102) (2,172)
Net cash generated from financing activities (1,710) (2,301) (4,718)
Cash and cash equivalents
Net (decrease) in the period (2,208) (4,232) (2,731)
Cash and cash equivalents at the beginning of the period 8,636 11,044 11,044
Effects of exchange rate changes (136) 1,194 323
Cash and cash equivalents at the end of the period 6,292 8,006 8,636
REVOLUTION BEAUTY GROUP PLC
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 AUGUST 2024
1. General information
Revolution Beauty Group Plc ("the Company") is a company limited by shares and
is registered and incorporated in England and Wales. The registered office is
201 Temple Chambers, 3-7 Temple Avenue, London EC4Y 0DT.
The group ("the Group") consists of Revolution Beauty Group Plc and all of its
subsidiaries.
The Board of Directors approved this unaudited interim financial information
on 18 November 2024.
2. Material accounting policies
The condensed consolidated unaudited interim financial statements ("interim
financial statements") for the period 1 March 2024 to 31 August 2024 are
unaudited. The group has chosen not to adopt IAS 34 "Interim Financial
Statements" in preparing the interim financial information. The condensed
consolidated interim financial statements incorporate unaudited comparative
figures for the interim period from 1 March 2023 to 31 August 2023 and the
audited financial year ended 31 March 2024.
The Interim financial statements for the six months ended 31 August 2024 have
been prepared on the basis of the accounting policies expected to be adopted
for the year ended 28 February 2025. These are in accordance with the
accounting policies as set out in the Group's last annual consolidated
financial statements for the year ended 29 February 2024.
The comparative figures for the year ended 31 March 2024 do not constitute the
Group's statutory accounts for 2024 as defined in Section 434(3) of the
Companies Act 2006. Statutory accounts for 2024 have been delivered to the
Registrar of Companies. The Independent Auditor's report on the Annual Report
and Financial Statements for 2024 was qualified in and contained a statement
by way of emphasis in respect of going concern. The independent auditor's
report for 2024 filed with the Registrar of Companies contains information in
respect of each matter that has contributed to a qualified opinion.
These Condensed Consolidated Interim Financial Statements do not include all
the information required for full Annual Financial Statements and should be
read in conjunction with the Annual Financial Statements of the Group as at
and for the year ended 29 February 2024.
Tax charged within the 6 months ended 31 August 2024 has been calculated by
applying the effective rate of tax which is expected to apply to the Group for
the year ending 29 February 2024.
The interim financial statements have been prepared on the historical cost
basis except for, where disclosed in the accounting policies, certain
financial instruments that are measured at fair value. The interim financial
statements are prepared in Sterling, which is the functional currency and
presentational currency of the parent Company and primary operating
subsidiary. Monetary amounts in these interim financial statements are rounded
to the nearest £1,000.
New Policies and Standards
At the date of authorisation of these Condensed Consolidated Interim Financial
Statements, several new standards and amendments to existing standards have
been issued, some of which are effective. None of these standards and
amendments have a material impact on the Group.
The preparation of the Condensed Consolidated Interim Financial Statements
requires management to make judgments, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The Group's latest Annual
Financial Statements for the year ended 29 February 2024, which are available
via Revolution Beauty Group plc's website, set out the key sources of
estimation uncertainty and the critical judgements that were made in preparing
those Financial Statements.
Going concern
The Directors have completed a full assessment of forecast and banking
arrangements to consider going concern.
The Group's revenue growth, margin improvement and return to positive
Underlying Adjusted EBITDA in H1 all represent key improvement in the Group's
financial stability since the previous assessment. Steps taken to improve the
financial position of the Group include the amendment of lending arrangements
and rationalising the Group's core number of SKUs.
Having considered the information available and recent changes to the
business, the directors are satisfied that the base case supports the
application of the going concern assumption in preparation of the financial
statements.
However, the directors also recognise the challenges the business has faced
since its listing on AIM and the underperformance of sales versus previous
expectations, as well as the uncertainty in the wider economy. The strength of
the Group's brand and recent strategic changes have enabled the Group to
continue its recovery from this challenging period. The Directors are working
to build on this period of stabilisation with the renewed strategy to keep the
Group on a stable financial footing on a long-term basis.
In the event that revenue falls below the level forecast in the base case
scenario, the Directors are also confident that they are able to take
mitigating actions to reduce controllable costs further on a timely basis, in
order to maintain compliance with the EBITDA and minimum liquidity covenant
tests.
The Directors acknowledge that, in the event either a financial or
non-financial covenant were to be breached, due to either a downturn in
operational activity or the impact or timing of settlement of any financial
commitments, known or otherwise, arising from legacy issues, the Group would
be reliant on its lenders not requiring immediate repayment of the outstanding
loan or obtaining alternative finance in order to continue to operate as a
going concern.
The lenders have provided a waiver in respect of the covenant relating to the
Auditors qualifications of their audit report on the FY 24 financial
statements.
The Group's Revolving Credit Facility matures in October 2025. The Group is
currently discussing the life of the facility with its banking partners, with
the intention to extend the facility for a period of 12 months beyond the
current maturity. The board is confident that the discussion will result in an
extension of the facility. Whilst the board has confidence in the process and
lenders remain supportive, there is uncertainty in the extension of the
current facility until a further agreement is signed. Were an agreement for an
extension not to be reached the Group would need to find additional financing
upon maturity of the RCF, the board is confident that this would be
achievable.
These factors, in conjunction with the sensitivity identified in the severe
but plausible downside scenario with respect to the recently agreed Adjusted
EBITDA covenant, represents a material uncertainty which may cast significant
doubt over the Group's ability to continue to operate as a going concern. The
financial statements do not include the adjustments that would be required
should the going concern basis of preparation no longer be appropriate.
3. Correction of prior period errors
The Directors have identified a number of balances which were previously
classified as trade and other payables which should have been offset against
the trade receivables and other receivables. These balances are deductions
from revenue, relating to shortages and damages, that are payable to the
customer from whom the revenue was recognised. This adjustment is solely a
balance sheet reclassification, and therefore only has an impact on the
Statement of Financial Position. The total of £1,515k has been reclassified
as at 31 August 2023, resulting in a decrease to both trade and other
receivables and trade and other payables.
Impact on the Statement of Financial Position
6 month period ended 6 month period ended
31 August 2023 31 August 2023
Extract
Reported Adjustments Restated
£'000 £'000 £'000
Trade and other receivables 43,370 (1,515) 41,855
Total current assets 98,115 (1,515) 96,600
Trade and other payables (65,889) 1,515 (64,374)
Total current liabilities (105,715) 1,515 (104,200)
Net assets/ (liabilities) (10,338) - (10,338)
Total equity (10,338) - (10,338)
4. Segmental reporting
IFRS 8 Operating Segments requires that operating segments be identified on
the basis of internal reporting and decision-making. The Group identifies
operating segments based on internal management reporting that is regularly
reported to and reviewed by the board of directors, which is identified as the
chief operating decision maker. Management information is reported as one
operating segment, being revenue from sales of products.
5. Revenue
An analysis of the Group's revenue is as follows: 6 month period ended 31 August 2024 6 month period ended 31 August 2023 Year ended 29 February 2024
Unaudited Unaudited
£'000 £'000 £'000
Revenue analysed by class of business
Digital 12,659 18,098 42,347
Store Groups 59,765 72,301 148,940
72,424 90,399 191,287
Revenue analysed by geographical location
United Kingdom 21,302 31,397 62,514
United States of America 18,431 23,619 44,207
Rest of World 32,691 35,383 84,566
72,424 90,399 191,287
6. Earnings per share
The Group reports basic and diluted earnings per common share. Basic earnings
per share is calculated by dividing the profit attributable to common
shareholders of the Company by the weighted average number of common shares
outstanding during the period.
Diluted earnings per share is determined by adjusting the profit attributable
to common shareholders by the weighted average number of common shares
outstanding, taking into account the effects of all potential dilutive common
shares, including options.
6 month period ended 31 August 2024 6 month period ended 31 August 2023 Year ended 29 February 2024
Unaudited Unaudited
Loss attributable to shareholders (£'000) (10,903) 345 10,700
Weighted average number of shares ('000) 318,794 311,776 315,003
Basic earnings per share (p) (3.4) 0.0 3.4
Total comprehensive expense attributable to the owners of the company (£'000) 345 345 10,700
Weighted average number of shares ('000) 318,794 311,776 315,003
Dilutive effect of share options - - 19,724
Diluted earnings per share (p) (3.4) 0.0 3.2
Pursuant to IAS 33, options whose exercise price is higher than the value of
the Company's security were not taken into account in determining the effect
of dilutive instruments. The calculation of diluted earnings per share does
not assume conversion, exercise, or other issue of potential ordinary shares
that would have an antidilutive effect on earnings per share.
7. Adjusted performance measures
The Group uses a number of Alternative Performance Measures ("APMs") in
addition to those measures reported in accordance with IFRS. Such APMs are not
defined terms under IFRS and are not intended to be a substitute for any IFRS
measure. The Directors believe that the APMs are important when assessing the
underlying financial and operating performance of the Group.
The APMs are used internally in the management of the Group's business
performance, budgeting and forecasting, and for determining Executive
Directors' remuneration and that of other management throughout the Group. The
APMs are also presented externally to meet investors' requirements for further
clarity and transparency of the Group's financial performance. Where items of
profits or costs are being excluded in an APM, these are included elsewhere in
our reported financial information as they represent actual income or costs of
the Group.
The Group's Alternative Performance Measures are set out below.
Adjusted EBITDA
Adjusted EBITDA is defined as Operating Profit adjusted for depreciation and
amortisation, impairments and reversals of impairment, profits and losses on
the disposal of assets, share based payment charges and releases and adjusting
items.
6 month period ended 31 August 2024 6 month period ended 31 August 2023 Year ended 29 February 2024
Unaudited Unaudited
£'000 £'000 £'000
Operating profit / (loss) (9,750) (528) 4,335
Amortisation of intangible assets 345 462 897
Depreciation of property, plant and equipment 2,064 2,100 4,208
Impairment of property, plant and equipment - - 75
Loss on disposal of asset 1 5 (6)
Share-based payments 339 1,640 2,372
Operating items adjusted for:
Settlement Income - - (2,414)
Restructuring costs 154 440 1,439
Provision for settlement of legal cases - - (1,644)
Non-recurring legal fees 576 2,319 2,917
Non-recurring audit fees - - 391
Adjusted EBITDA (6,271) 6,438 12,570
Depreciation, amortisation and impairments (2,409) (2,562) (5,174)
Adjusted EBIT (8,680) 3,876 7,396
Net finance income/ (costs) (1,146) 894 7,107
Adjusting items:
Gain on amendment of deferred consideration - (2,370) (10,243)
Adjusted PBT (9,826) 2,400 4,260
Underlying gross profit and underlying gross profit margin
Underlying gross profit is defined as reported gross profit adjusted for
non-recurring charges or releases related to inventory provisions. During the
period, an additional inventory provision was recognised, as set out in note
9. In addition to this increase, a charge of £2.3m has been incurred on
additional provision for non-strategic SKUs during H1 of FY25.
6 month period ended 31 August 2024 6 month period ended 31 August 2023
Unaudited Unaudited
£'000 £'000
Reported gross profit 23,231 44,666
Provision charge on non-strategic inventory at the end of the period 7,914 -
Provision charges during the period related to non-strategic inventory 2,300 -
Provision releases in FY24 related to aged inventory sold - (3,100)
Underlying gross profit 33,445 41,566
Underlying gross profit margin as a percentage of revenue 46.2% 46.0%
Underlying Adjusted EBITDA
Underlying Adjusted EBITDA is defined as Operating Profit adjusted for
depreciation and amortisation, impairments and reversals of impairment,
profits and losses on the disposal of assets, share based charges and releases
and exceptional items including and adjustment for the one-off provision
charges related to non-strategic stock and the release of the stock provision
in FY24 related to the sale of aged stock.
6 month period ended 31 August 2024 6 month period ended 31 August 2023
£'000 £'000
Underlying Adjusted EBITDA
Adjusted EBITDA (6,271) 6,438
Provision charge on non-strategic inventory at the end of the period 7,914 -
Provision charges during the period related to non-strategic inventory 2,300 -
Provision releases in FY24 related to aged inventory sold - (3,100)
Underlying Adjusted EBITDA 3,943 3,338
Depreciation, amortisation and impairments (2,409) (2,562)
Underlying Adjusted EBIT 1,534 776
Net finance income/(costs) (1,146) 894
Adjusting items:
Gain on amendment of deferred consideration - (2,370)
Underlying adjusted PBT 338 (700)
Operating adjusting items
During the period, the Group incurred legal fees associated with the following
matters, each of which were determined to be exceptional and outside the
normal course of business, these included the ongoing regulator investigation
in relation to certain matters in the period from July 2021 to September 2022,
the uninsured element of the settlement of a legal claim made for copyright
infringement on music rights in the US. Costs were also incurred on other
legal claims contested in the period and the extension of the Group's
financing facility.
During the period the Group incurred £154k in restructuring and redundancy
costs.
During the period, an additional inventory provision was recognised, as set
out in note 9. In addition to this increase, a charge of £2.3m has been
incurred on additional provision of £7.9m for non-strategic SKUs during H1 of
FY25.
Thess charges are recorded through costs of sales, but do not relate to the
ongoing sell out of goods through the business. Therefore, they do not
represent part of the underlying cost base of the business, or the expected
gross profit margin achievable on the strategic assortment. Therefore, these
charges will be recognised and disclosed as adjustments to Adjusted EBITDA,
outside of the Group's underlying performance in the financial statements.
8. Borrowings
31 August 2024 31 August 2023 29 February 2024
Unaudited Unaudited
£'000 £'000 £'000
Bank revolving credit facility 31,848 31,807 31,785
31,848 31,807 31,785
Payable within one year - 31,807 -
9. Inventories
31 August 2024 31 August 2023 29 February 2024
Unaudited Unaudited
£'000 £'000 £'000
Finished goods and goods for resale 40,517 42,320 40,775
Value of inventory provided for at period end (20,676) (18,512) (15,056)
Value of inventory written down/(written back) during period 5,620 (14,926) (17,914)
The total cost of inventories recognised as an expense in cost of sale in the
period was £49,192,000 (Period ended August 2023: £45,673,000, full year
ended February 2024: £123,131,000).
As set out in note 3 to the financial statements in the Group's Annual Report.
The Group's inventory provision methodology is made up of a net realisable
value (NRV) component and a slow-moving component. The slow-moving component
includes a provision for inventory that has recently been launched and
therefore has limited sales history and also for more mature inventory, which
is assessed based on its sales cover, which gives rise to the key source of
estimation uncertainty.
The NRV provision is determined by assessing the latest sales price of a Stock
Keeping Unit ("SKU"), less the cost of selling it, against the cost of
purchasing it. There is judgment applied in assessing the costs included in
selling each SKU. The Group determines cost to sell on an average basis across
all SKUs. The cost to sell includes the incremental costs of selling, such as
commissions, as well as non-incremental selling costs including expected
marketing costs and expected costs to hold the inventory until the anticipated
time of sale.
During the current period, following the rationalisation of the Group's SKU
assortment, it was determined that, where a SKU no longer forms part of the
Group's strategic selling assortment, recent selling price is no longer an
appropriate measure of the value a SKU can be sold for going forward. This is
due to discontinued SKUS no longer being sold though primary channels.
Therefore, it has been determined that, for non-strategic SKU that will not
form a part of the Group's strategic assortment going forward, where excess
units are on hand above the amount forecast to be required for the coming
three months, clearance prices achievable should be used in place of recent
selling prices in calculated the NRV provision required.
This increased provision resulted in an additional charge of £7.9m during the
period, which when added to the £2.3m described in note 7 above, results in
an additional charge of £10.2m.
10. Trade and Other Receivables
31 August 2024 31 August 2023 29 February 2024
As restated
Unaudited Unaudited
£'000 £'000 £'000
Trade Receivables 36,554 39,394 37,733
Other Receivables 454 364 2,412
Prepayments 2,420 2,097 2,594
39,428 41,855 42,739
11. Trade and Other Payables
Trade and other payables are initially recognised at fair value less
transaction costs and subsequently measured at amortised cost using the
effective interest rate method, with all movements being recognised in the
statement of comprehensive income. Cost is considered to approximate fair
value.
31 August 31 August 2023 29 February 2024
2024 as restated
Unaudited Unaudited
£'000 £'000 £'000
Trade Payables 46,321 37,480 40,256
Other Taxation and Social Security 1,478 1,044 1,206
Other Payables 80 60 201
Accruals and Contract Liabilities 21,297 25,790 25,586
69,176 64,374 67,249
12. Contingent Liabilities
FCA Investigation
The Group announced on 21 July 2023 that the Financial Conduct Authority
("FCA") had commenced an investigation into potential breaches of the Market
Abuse Regulation (EU) 596/2014 (as it forms part of UK domestic law by virtue
of the European Union (Withdrawal) Act 2018) in relation to certain matters in
the period from July 2021 to September 2022. The Group is cooperating fully
with the FCA. Until such time as more information is available on the outcome
of the investigation, no assessment can be made of any potential liabilities
that may arise from it.
Chrysalis Investments Limited
As previously announced, the Group received notice from Chrysalis Investments
Limited ("Chrysalis") on 22 November 2023, stating that Chrysalis believed it
had certain potential claims against the Group in relation to its purchase of
Revolution Beauty Plc shares in July 2021 and the sale of those shares in late
2022. Chrysalis had not commenced formal legal proceedings at this point.
On 19 April 2024, the Group received a further letter from Chrysalis's legal
advisers, including draft particulars of Chrysalis's alleged claims and
details of the quantum of Chrysalis' thereof. These were stated as a claim of
£39m, together with a claim for consequential losses of a further £6.2m.
Further to this additional letter, no claim has yet been filed with the court.
The Company strongly contests the Chrysalis allegations and believes that the
claim is fundamentally flawed in a number of respects. Nonetheless, the
Company continues to engage with Chrysalis and its advisers, as it is required
to do under the UK's civil procedure rules, with a view to reaching a
resolution of this matter.
13. Events after the reporting period
No reportable events arose between to the 31 August 2024 and the release of
this statement.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FVLLFZFLZFBFRecent news on Revolution Beauty
See all newsREG - Revolution Beauty Gp - Total Voting Rights
AnnouncementREG - Revolution Beauty Gp - Holding(s) in Company
AnnouncementREG - Revolution Beauty Gp - Holding(s) in Company
AnnouncementREG - Revolution Beauty Gp - Holding(s) in Company
AnnouncementREG - Revolution Beauty Gp - Directorate Change
Announcement