Interim Results
17/09/2024 07:00
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RNS Number : 4050E Warpaint London PLC 17 September 2024
17 September 2024
Warpaint London PLC
("Warpaint", the "Company" or the "Group")
Interim Results for the six months ended 30 June 2024
Significant growth in sales, margins and profit to achieve another record
first half
Warpaint London plc (AIM: W7L; OTCQX: WPNTF), the specialist supplier of
colour cosmetics and owner of the W7 and Technic brands is pleased to announce
its unaudited interim results for the six months ended 30 June 2024 ("H1").
Unaudited six months to 30 June 2024 Unaudited six months to 30 June 2023 Growth
Revenue £45.8m £36.7m +25%
Gross profit margin 42.5% 39.1% +334bps
EBITDA £12.0m £7.3m +66%
Adjusted EBITDA* £11.4m £7.9m +44%
Profit from operations £11.0m £6.3m +75%
Basic earnings per share (EPS) 10.37p 6.22p +67%
Highlights
· Strong growth in sales during the period, particularly in the UK and Europe,
achieving a record first half
· Group sales increased by 25% to £45.8 million in H1 2024 (H1 2023: £36.7
million)
· UK revenue increased by 17% to £15.5 million (H1 2023: £13.3 million)
· International revenue increased by 30% to £30.3 million (H1 2023: £23.4
million)
· W7 sales increased by 25% and Technic sales increased by 34%
· Gross profit margin increased by a further 334 bps to 42.5% (H1 2023: 39.1%),
primarily due to successful launches of new product lines, sourcing and volume
savings, growing e-commerce revenue and increased US profitability
· Adjusted EBITDA* grew 44% to £11.4 million (H1 2023: £7.9 million)
· Profit from operations was up 75% to £11.0 million (H1 2023: £6.3 million)
· Cash of £5.5 million as at 30 June 2024 (30 June 2023: £7.1 million),
reflecting the increase in stock and corporation tax paid on account in H1 and
no debt. As at 1 July 2024, the cash balance was £6.5 million, reflecting
cash receipts immediately post period end
· Basic EPS improved by 67% to 10.37p (H1 2023: 6.22p)
· The board has declared an increased interim dividend of 3.5p per share (2023
interim dividend 3.0p per share), up 17%
· Consistent with previous years due to Christmas gifting orders and the Group's
momentum, sales are expected to again be second half weighted
* Adjusted for foreign exchange movements and share-based payments. Adjusted
numbers are close to the underlying cash flow performance of the business
which is regularly monitored and measured by management.
Post-Period End Highlights
· Continued positive business momentum post period end, with Group sales for the
nine months to 30 September 2024 expected to be approximately £76 million
(nine months to 30 September 2023 £64 million), providing confidence that
full year expectations will be met
· The Group's expansion strategy continues, with further planned launches in H2
2024 to increase the number of products stocked and outlets served with
certain existing customers, particularly in the UK, Europe and the US, while
discussions with additional major retailers globally are ongoing
Commenting, Sam Bazini Chief Executive, said:
"I am delighted with the Group's performance in the first half, with
continuing strong growth in sales and profits reflecting the ongoing success
of the Group's strategy of focusing on growing profitable sales of its branded
products globally, whilst increasing overall margins.
"There continues to be significant growth opportunities for Warpaint, and the
Group is very well positioned to achieve further growth with additional
improvement in margins. As in previous years, the Group's sales are expected
to be second half weighted, reflecting Christmas seasonal sales and ongoing
sales momentum.
"We anticipate updating further on trading later in the year, and with
significant opportunities for continued growth, both already secured with our
existing retailers and in discussion with additional major retailers globally,
I am confident that the Group will continue to perform well for the remainder
of the year and beyond."
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 which is part of UK law by virtue of the European
Union (Withdrawal) Act 2018
Enquiries:
Warpaint London c/o IFC
Sam Bazini - Chief Executive Officer
Eoin Macleod - Managing Director
Neil Rodol - Chief Financial Officer
Adam Kay - Investor Relations +1 310 868 6380
Shore Capital (Nominated Adviser & Broker) 020 7408 4090
Patrick Castle, Daniel Bush - Corporate Advisory
Fiona Conroy - Corporate Broking
IFC Advisory (Financial PR & IR) 020 3934 6630
Tim Metcalfe, Graham Herring, Florence Chandler
Warpaint London plc
Warpaint sells branded cosmetics under the lead brand names of W7 and Technic.
W7 is sold in the UK primarily to major retailers and internationally to local
distributors or retail chains. The Technic brand is sold in the UK and
continental Europe with a significant focus on the gifting market, principally
for high street retailers and supermarkets. In addition, Warpaint supplies
cosmetics under its other brand names of Man'stuff, Body Collection and Chit
Chat, each targeting a different demographic.
CHIEF EXECUTIVE'S REVIEW
I am very pleased to report that the Group again achieved another record level
of sales in the first half, with an improved profit margin. Group sales
increased by 25% to £45.8 million (H1 2023: £36.7 million), importantly at
an increased gross margin of 42.5% (H1 2023: 39.1%), driving an increase of
75% in profit from operations to £11.0 million (H1 2023: £6.3 million).
This continued growth reflects the ongoing success of the Group's strategy of
focusing on growing profitable sales of its branded products globally, whilst
increasing overall margins. Increased sales are being achieved both through
existing customers and those new to the Group. With existing customers, the
focus is on increasing the number of their outlets stocking Group branded
product and increasing the Group's footprint within each store. The focus
being to gain more space, with more product stocked, in more stores. As an
example of this, 'impulse' units are being installed close to the checkouts in
189 Tesco stores, to drive additional volumes. In addition, we also continue
to be in active discussions with new major retailers globally, with our
management team in the US, in particular, having a number of meaningful
discussions.
As has been the trend for some time, the global cosmetics market continues to
see customers transferring to more value orientated brands, such as those
produced by the Group. I believe we are very well placed with our
high-quality focused offering to capture further market share and to continue
to grow sales and profits. Our global market share remains modest and there
continues to be substantial opportunities for further growth.
W7
W7 is the Group's lead brand, with sales in H1 2024 increasing by 25% to
£30.2 million (H1 2023: £24.2 million), accounting for 66% of total Group
revenue (H1 2023: 66%).
Strong growth was seen particularly in the UK and Europe, with W7 sales in the
UK increasing by 18% to £8.8 million (H1: 2023 £7.5 million), representing
29% of W7 sales in the period (H1 2023: 31%). W7 sales in the UK continue to
see substantial growth and this is expected to continue, particularly with
existing retailers, where plans are in place to expand the number of stores
served and to increase the footprint in existing stores. For example, W7 has
seen an over fourfold increase in weekly retail sales in Boots since the start
of 2024, due to further rollouts, being stocked in larger stores, better
placement in store and larger displays.
In H1 2024, W7 sales to Europe grew by 38% to £18.1 million (H1 2023: £13.2
million), representing 60% of W7 sales (H1 2023: 54%). The sales growth in
Europe was assisted by additional sales to existing customers, particularly as
they expanded the size of their estates, and to new customers, including in
countries where the Group has previously had only a limited presence.
W7 sales in the US grew by 10% to £2.2 million (H1 2023: £2.0 million),
representing 7% of W7 sales (H1 2023: 8%), supported by growth with CVS, where
a rollout to a further 387 stores was undertaken in Q1, and with Five Below,
including the stocking of an increased range of W7 product in all 1,544 of
their stores, with a further 225+ Five Below stores expected to open in the
next 12 months, stocking W7 products.
Sales of W7 in the rest of the world were £1.0 million (H1 2023: £1.5
million), reflecting the timing of delivery of certain orders.
Technic
In H1 2024, Technic sales (which includes Technic and the other Retra brands,
including Body Collection and retailer own brand white label cosmetics) grew
by 34% to £14.5 million (H1 2023: £10.9 million), with particularly strong
sales growth seen in Europe, up 47%, and in the UK, up 28%. A particular
highlight in the UK was the launch in March 2024 of a full range of Technic
products in an initial 202 Morrisons stores.
Sales of the Technic brands in the US and the rest of the world remain small
in the context of the Group as a whole, representing less than 1.5% of Group
revenue, presenting a further opportunity for future growth.
Overall sales of the Technic brands were 32% of total Group revenue in H1 2024
(H1 2023: 30%).
E-commerce
Online sales grew in all regions in H1 2024 to reach £2.32 million (H1 2023:
£1.77 million as restated), an increase of 31%, at a similar net margin to
other Group sales. Direct online sales in H1 2024 represented 5.1% of Group
sales (H1 2023: 4.8%) as sales through physical stores grew at a faster rate.
The Group continues to have significant opportunities to grow sales through
the W7 and Technic brands' own e-commerce sites, and on Amazon in the UK,
Europe and the US, and in China through official W7 brand stores owned by the
Group.
Close-out
Close-out sales continued to reduce as they are not a core focus, although the
Group will continue to take advantage of profitable close-out opportunities as
they become available, as they continue to provide a significant and
profitable source of intelligence in the colour cosmetics market. In H1
2024, close-out sales were £1.2 million (H1 2023: £1.6 million) and
represented only 3% of the overall revenue of the Group (H1 2023: 4%).
Customers & Geographies
The largest markets for sales of the Group's brands are in Europe and the UK,
with a growing presence in the US, as well as significant sales to Australia,
coupled with global online sales. In H1 2024 the Group's top ten customers
represented 69% of revenues (H1 2023: 67%).
UK
In the first half, sales in the UK were up 17% and accounted for 34% of Group
sales (H1 2023: 36%), with increased sales of both the Group's lead brand W7,
up 18%, and the Technic brands, up by 28%, with a 21% reduction in close-out
sales compared to H1 2023.
Strong growth was seen during the period with many UK retailers, with a
pleasing start to the rollout with Superdrug, which has continued post period
end, and further growth with Boots and Tesco. Additionally, in March 2024, a
full range of Technic products were launched in an initial 202 Morrisons
stores in the UK. We are also in continued talks with other major UK
retailers who stock W7 and Technic product to increase the offering in their
stores and anticipate further expansion across their estates this year and
into 2025.
Europe
Since 2022, Europe has been the largest sales area for the Group, now
accounting for 58% of sales (H1 2023: 51%). During the first half, sales in
Europe increased by 40% compared to H1 2023, with growth seen through both
existing customers and those new to the Group. Sales for the Group's brands
into Europe are mainly to Denmark, Holland, Spain and Sweden, but with an
increasing presence in many other countries in the region. Europe continues
to present growth opportunities, both with existing customers, and
particularly in countries where the Group currently has a limited presence,
such as Germany and Italy.
US
First half sales in the US increased by 1% (up 3% on a constant currency
basis), accounting for 5% of Group sales (H1 2023: 7%), as the Group continued
to expand its presence with larger retailers and reduced its focus on deep
discounters. In the US, 99.5% of sales in H1 2024 (H1 2023: 97% and H1 2022:
88%) were from the sale of the Group's brands as only minimal close-out sales
were undertaken.
A new US management team was appointed earlier this year, focused on
generating new business at higher margins, moving away from selling to
retailers whose focus is on selling products at deep discounts. As a result,
US sales in the first half generated significantly higher profits than has
previously been the case, with an increase of 12 percentage points in the
gross margin achieved. For 2024 as a whole, US sales are expected to be more
second half weighted than previously as gifting orders are delivered. In
particular, a large Christmas order received from Walmart for W7 and Chit Chat
products will contribute to the Group's US performance in the second half.
Rest of the World
H1 2024 sales across the rest of the world accounted for 3% of overall Group
sales (H1 2023: 6%), due to the timing of certain orders. The focus
continues to be on Australia and China, as well as other countries, such as
the Philippines, where a range of W7 products was rolled out to 100 Watsons
stores in late 2023. In this region, the focus remains on generating
profitable sales in appropriate volumes as opportunities are presented and we
expect increased sales in the rest of the world region in the second half of
the year.
Dividend
In accordance with the Group's policy to continue to pay appropriate
dividends, the board is pleased to declare an increased interim dividend of
3.5p per share (2023 interim dividend: 3.0p per share) which will be paid on
22 November 2024 to shareholders on the register at 8 November 2024. The
shares will go ex-dividend on 7 November 2024.
Board
We were delighted to welcome Sharon Daly and Indira Thambiah as independent
Non-Executive Directors with effect from 1 January 2024. Both have
considerable experience on the boards of public companies in the consumer
sector and they have made a valuable contribution since joining the board.
Both joined the Company's Audit and Remuneration Committees on appointment,
and Indira was appointed as Chair of the Remuneration Committee on 3 September
2024, taking over from Keith Sadler. Keith Sadler remains Chair of the Audit
Committee, which has been reconstituted as the Audit and Risk Committee with
new terms of reference.
Summary and Outlook
I am again delighted with the Group's continuing strong performance in the
first half of 2024, with a record level of sales delivered at a significantly
higher margin. I believe there remains significant global growth
opportunities for Warpaint and the Group is very well positioned to achieve
further growth, alongside additional improvement in margins.
Warpaint is a global business with the capacity, expertise and strategy,
coupled with balance sheet strength, to drive continued growth from both
existing and new customers. We have a robust and evolving supply chain,
coupled with a growing distribution network, to ensure that we are able to
supply our customers' outlets on time, with the product that consumers are
demanding, and in the required volumes.
Consistent with previous years, the Group's sales are expected to be second
half weighted, reflecting Christmas seasonal sales and ongoing sales momentum.
We anticipate updating further on trading later in the year, and with
significant opportunities for continued growth, both already secured with our
existing retailers and in discussion with additional major retailers globally,
I am confident that the Group will continue to perform well for the remainder
of the year and beyond.
Sam Bazini
Chief Executive Officer
17 September 2024
CHIEF FINANCIAL OFFICER'S REVIEW
The first half of 2024 was another record for the Group and significantly
ahead of the first half of 2023, with strong growth in revenue, margins and
profit before tax. The Group continues its strategy of building the W7 and
Technic brands in the UK and internationally, and we remain focused on margin,
being debt free, and generating cash.
Headline results, shown below, represent the performance comparisons between
the consolidated statements of income for the half years ended 30 June 2024
and 30 June 2023.
Statutory Results 6 Months ended 30 June 2024 6 Months ended 30 June 2023
Revenue £45.8m £36.7m
Profit from operations £11.0m £6.3m
Profit margin from operations 23.9% 17.1%
Profit before tax (PBT) £10.9m £6.2m
Earnings per share (EPS) 10.4p 6.2p
Cash and cash equivalents £5.5m £7.1m
Revenue
Total revenue increased by 25% from £36.7 million in H1 2023 to £45.8
million in H1 2024.
Group branded sales were £43.6 million in H1 2024 (H1 2023: £35.0
million). The W7 brand generated sales of £30.2 million (H1 2023: £24.2
million), while the Technic brand, excluding sales of retailer own brand white
label cosmetics, contributed sales of £13.4 million (H1 2023: £10.8
million).
In the first half, sales of white label cosmetics were £1.1 million (H1 2023:
£0.05 million). The white label business is traditionally cost competitive
and is only undertaken based on commercial viability, in particular margin.
The close-out business had sales in the first half of £1.2 million (H1 2023:
£1.6 million), as the Group, in line with its strategy, continued to reduce
its focus on close-out opportunities.
In the UK, sales increased by 17% to £15.5 million (H1 2023: £13.3 million).
Internationally, revenue increased by 30%, from £23.4 million in H1 2023 to
£30.3 million in H1 2024. In Europe, Group sales increased by 40% to £26.4
million (H1 2023: £18.9 million). In the US, Group sales were marginally up
at £2.43 million (H1 2023: £2.40 million), however, in US dollar terms,
there was an increase in sales of 3% to US$3.1 million in the first half. We
have a new management team in place in the US, who are focused on generating
profitable business with larger customers as we move away from selling to deep
discounters, and we anticipate good profitable growth in the second half of
this year as gifting orders are delivered. In the rest of the world, Group
sales decreased by 31% to £1.5 million (H1 2023: £2.1 million). It is
expected that sales in the rest of the world will catch up in the second half
of the year due to the timing of certain orders falling into H2.
E-commerce sales continued to grow in the first half and represented 5.1%, or
£2.3 million, of Group revenue (H1 2023: 4.8% / £1.77 million as restated).
Product Gross Margin
Gross margin was 42.5% for H1 2024, compared to 39.1% in H1 2023.
This is the third year in a row that gross margin has improved incrementally
in the first half of the year, driven by new product development and improved
sourcing, without the need for an inflationary price increase to customers at
the start of the year. Also, contributing to the improvement in gross margin
is the performance in the US, where the new management team have delivered a
12 percentage point increase in gross margin in H1, compared to H1 2023. The
improvement in gross margin at the Group level is despite increased freight
rates during the period.
We remain focused on improving gross margin where possible in all our
businesses and are working with our Asian business units to execute this.
Margins are also benefiting from the increased scale of our orders placed
with existing suppliers as the business grows. To counter currency pressure,
we continue to move production to new factories of equal quality to retain or
improve margin and have a natural hedge from our US dollar revenue which
continues to grow.
At 31 December 2023, forward foreign exchange contracts were in place for the
purchase of US$42 million at an average exchange rate of US$1.2537. Since
the start of 2024, we have purchased more forward foreign exchange contracts
to further help protect our gross margin in 2024 and into 2025.
The currency options we have for the current year, along with new product
development, sourcing, and increasing sales and margin in the US, will all
contribute to protecting our gross margin for the remainder of 2024.
Operating Expenses
Total operating expenses before amortisation costs, depreciation, foreign
exchange movements and share-based payments, were £8.1 million in the first
half of the year (H1 2023: £6.5 million), reducing marginally as a percentage
of sales from 17.7% to 17.6%.
The absolute increase of £1.6 million year on year was necessary to support
the growth of the business and was made up of increases in wages and salaries,
PR and marketing spend, insurance costs, legal and professional fees, and the
cost of a larger US sales team. There was a decrease in the charge for bad
debts.
Warpaint remains a business with most operating expenses relatively fixed and
evenly spread across the whole year. We continue to monitor and examine
significant costs to ensure they are controlled and strive to reduce them.
Adjusted EBITDA
The board considers Adjusted EBITDA, which excludes the impact of foreign
exchange movements and share-based payments, as a key indicator of the
performance of the Group and one that is more closely aligned to the
underlying performance of the business. Adjusted EBITDA for the half year to
30 June 2024 was £11.4 million (H1 2023: £7.9 million).
£m* 6 Months ended 30 June 2024 6 Months ended 30 June 2023
Statutory profit from operations 11.0 6.3
Depreciation 1.0 0.9
Amortisation 0.0 0.1
EBITDA 12.0 7.3
Foreign exchange movements (0.8) 0.6
Share-based payments 0.2 0.1
Adjusted EBITDA 11.4 7.9
*Rounded to the nearest £0.1 million
Profit Before Tax
Group profit before tax for the half year to 30 June 2024 was £10.9 million
(H1 2023: £6.2 million). The changes in profitability between the six months
to 30 June 2023 and 30 June 2024 were due to:
£m Effect on Profit
Sales volume growth 3.6
Margin growth 1.5
Increase in operating expenses (1.6)
FX gain in H1 2024 of 0.8 (H1 2023: Loss 0.5) 1.3
Other items (0.1)
TOTAL 4.7
Earnings Per Share
The statutory interim basic and diluted earnings per share were 10.37p and
10.30p respectively in H1 2024 (H1 2023: 6.22p and 6.20p).
The adjusted interim basic and diluted earnings per share before amortisation
costs and share-based payments were 10.59p and 10.53p respectively in H1 2024
(H1 2023: 6.46p and 6.44p).
LTIP, EMI and CSOP Share Options
Date Shares Transaction Scheme Exercise price
7 May 2024 85,895 Exercise EMI 237.5p
30 May 2024 290,000 Exercise CSOP 122.0p
The exercise of EMI and CSOP share options during the period had an immaterial
dilutive impact on earnings per share in the period. The share-based payment
charge of the EMI and CSOP share options for the half year to 30 June 2024 was
£0.16 million (H1 2023: £0.06 million) and has been taken to the share
option reserve.
Cash Flow and Cash Position
Net cash flow from operating activities was £(2.0) million compared to £1.9
million in H1 2023. The Group's cash balance decreased by £1.6 million to
£5.5 million as at 30 June 2024 (30 June 2023: £7.1 million), but was £1.0
million higher as at 1 July 2024, at £6.5 million, due to payments received
on that date.
Cash balances were negatively impacted, exclusively in H1 2024, by an increase
in corporation tax paid in the period, due to a change in collection policy by
HMRC. Tax paid on account in H1 2024 was £4.7 million (H1 2023: £0.9
million).
We expect the capital expenditure requirements of the Group to remain low.
However, as part of our strategy to grow market share in the UK and US, there
will be occasions where investment in store furniture for customers is
required to secure business. In H1 2024, £1.3 million (H1 2023: £0.3
million) was spent on store furniture, solar panels, new computer software and
equipment, and other general office fixtures and fittings and plant upgrades.
As the Group continues to grow, it is both necessary and prudent to have bank
facilities available to help fund day to day working capital requirements.
Accordingly, the Group maintains a £9.5 million invoice and stock finance
facility, which is used to help fund imports in our gifting business during
the peak season. At 30 June 2024, no invoice and stock finance remained
outstanding (30 June 2023: £nil). In addition, the Group has a 'general
purpose' facility, which on renewal in March 2024, was increased to a £5.0
million facility. This facility was unused at 30 June 2024 and 30 June 2023.
These facilities, together with the Group's positive cash generation and the
cash balance, ensure that future growth can be comfortably funded.
Balance Sheet
Inventories at 30 June 2024 were £33.0 million (30 June 2023: £25.7
million). The rise in inventory is a function of the growth of the business
and to ensure delivery disruption is avoided for our customers. One of the
Group's unique selling propositions is that it can deliver a full range of
colour cosmetics to our customers, in good time all year round. Having
appropriate inventory levels is vital to providing that service.
The provision for old and slow inventory was £0.8 million/2.3% at 30 June
2024 (30 June 2023: £0.4 million/1.4%). Across the Group we work hard to
sell through older stock lines, allowing for our provision for old and slow
inventory to remain modest in percentage terms. Our Group policy is to
provide for 50% of the cost of perishable items that are over two years old.
However, we remain comforted by the fact that many such items in the normal
course of business are eventually sold through our close-out division without
a loss to the Group.
Trade receivables are monitored by management to ensure collection is made to
terms, to reduce the risk of bad debt and to control debtor days. Trade
receivables, excluding other receivables, at 30 June 2024 were £14.9 million
(30 June 2023: £10.7 million). The provision for bad and doubtful debts
carried forward at 30 June 2024 was £0.15 million, 1.0% of gross trade
receivables (30 June 2023: £0.15 million/1.4%).
At 30 June 2024, the Group had no borrowings or lease liabilities outstanding
(30 June 2023: £nil), apart from those associated with right-of-use assets as
directed by IFRS 16 (see below). The Group was therefore debt free at 30
June 2024.
Working capital increased by £9.0 million from 30 June 2023 to 30 June
2024. The main components were an increase in inventory of £7.3 million, an
increase in trade and other receivables of £4.1 million, a decrease in cash
of £1.6 million, and an increase in trade and other payables of £0.8
million.
The Group's balance sheet remains in a very healthy position. Net assets
totalled £51.0 million at 30 June 2024, with the majority made up of liquid
assets of inventory, trade receivables and cash.
Included in the balance sheet is £7.3 million of goodwill. Goodwill
represents the excess of consideration over the fair value of the Group's
share of the net identifiable assets of the acquired business / cash
generating units at the date of acquisition. The carrying value at 30 June
2024 of £7.3 million included Treasured Scents Limited (close-out business)
of £0.5 million, Retra Holdings Limited of £6.2 million and Marvin Leeds
Marketing Services, Inc. of £0.6 million. Management have performed a
mid-year review at 30 June 2024 and have concluded that no impairment is
indicated for Treasured Scents Limited, Retra Holdings Limited or Marvin Leeds
Marketing Services, Inc. as the recoverable amount exceeds the carrying value.
The balance sheet also includes £4.7 million of right-of-use assets, which is
the inclusion of Group leasehold properties, recognised as right-of-use assets
as directed by IFRS 16. An equivalent lease liability is included of £4.9
million at the balance sheet date.
Foreign Exchange
The Group imports most of its finished goods from China, paid for in US
dollars, which are purchased throughout the year at spot as needed, or by
taking forward foreign exchange contracts when rates are deemed favourable,
and with consideration for the budget rate set by the board for the year.
Similarly, forward foreign exchange contracts are taken to sell forward our
expected Euro income in the year to ensure our sales margin is protected.
We started 2024 with forward foreign exchange contracts in place for the
purchase of US$42 million at an average exchange rate of US$1.2537/£, and the
sale of €3.8 million at €1.1447/£.
In addition, when currency rates were favourable, we purchased additional US
dollar forward foreign exchange contracts and spot rate amounts to help cover
our total US dollar requirement for this year, and forward foreign exchange
contracts towards our requirement for 2025.
The Group has a natural hedge from sales to the US which are entirely in US
dollars; in H1 2024 these sales were US$3.1 million (H1 2023: US$3.0
million).
Together with sourcing product from new factories where it makes commercial
sense to do so, new product development, and by buying US dollars when rates
are favourable, we are able to mitigate to a large extent the effect of a
strong US dollar against sterling.
Dividend
The board is pleased to have declared an increased interim dividend of 3.5p
per share which will be paid on 22 November 2024 to shareholders on the
register at 8 November 2024. The shares will go ex-dividend on 7 November
2024.
Neil Rodol
Chief Financial Officer
17 September 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2023
Notes 2024 2023
£'000 £'000 £'000
Revenue 45,848 36,685 89,590
Cost of sales (26,377) (22,331) (53,857)
Gross profit 19,471 14,354 35,733
Administrative expenses 3 (8,507) (8,089) (17,252)
Analysed as:
Adjusted profit from operations¹ 11,141 6,445 18,802
Amortisation (13) (118) (187)
Share-based payments (164) (62) (134)
Profit from operations 10,964 6,265 18,481
Finance income 4 22 - 6
(137)
(101)
Finance expense
(369)
Profit before tax 3 10,849 6,164 18,118
Tax expense 5 (2,833) (1,384) (4,219)
Profit for the period attributable to equity holders of the parent company 8,016 4,780 13,899
Other comprehensive income (net of tax):
Exchange gain on translation of foreign subsidiary (31) 64 72
Total comprehensive income for the period attributable to equity holders of 7,985 4,844 13,971
the parent company
Basic earnings per share (pence) 6 10.37 6.22 18.05
Diluted earnings per share (pence) 6 10.30 6.20 17.98
Note 1 - Adjusted profit from operations is calculated as earnings before
interest, taxation, amortisation, impairment costs, share-based payments and
exceptional items.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
As at As restated* As at
30 June As at 31 December 2023
2024 30 June
2023
£'000 £'000 £'000
ASSETS
Non-current assets
Goodwill 7,274 7,274 7,274
Intangible assets 76 159 93
Property, plant and equipment 2,153 1,338 1,245
Right-of-use assets 4,720 5,147 5,280
Deferred tax assets 701 352 592
14,924 14,270 14,484
Current assets
Inventories 32,975 25,720 27,963
Trade and other receivables 17,559 13,439 13,529
Cash and cash equivalents 5,506 7,066 9,053
Derivative financial instruments 7 - -
56,047 46,225 50,545
Total assets 70,971 60,495 65,029
LIABILITIES
Current liabilities
Trade and other payables 14,207 13,347 9,576
Borrowings and lease liabilities 1,300 1,005 1,259
Corporation tax payable 557 1,295 2,501
Derivative financial instruments 143 938 518
16,207 16,585 13,854
Non-current liabilities
Borrowings and lease liabilities 3,590 4,350 4,190
Deferred tax liabilities 180 160 180
3,770 4,510 4,370
Total liabilities 19,977 21,095 18,224
NET ASSETS 50,994 39,400 46,805
EQUITY
Share capital 19,408 19,282 19,314
Share premium 20,190 19,452 19,726
Merger reserve (16,100) (16,100) (16,100)
Foreign exchange reserve (9) 14 22
Share option reserve 610 1,980 594
Retained earnings 26,895 14,772 23,249
Total equity attributable to 50,994 39,400 46,805
shareholders
*30 June 2023 figures have been restated to include the final dividend for the
year ended 31 December 2022 of £3,470,759 which was approved by shareholders
in the period.
CONSOLIDATED STATEMENT OF CASH FLOW
Unaudited Unaudited 6 Months ended Audited
6 Months ended 30 June 2023 Year ended
30 June 2024 31 December 2023
Notes
£'000 £'000 £'000
Profit before tax for the period 10,849 6,164 18,118
Adjusted by:
Finance expense 4 137 101 369
Finance income 4 (22) - (6)
Depreciation of property, plant and equipment 3 415 357 662
Depreciation on right of use assets 626 512 1,111
Loss on disposal of property, plant, and equipment 1 - 40
Amortisation of intangible assets 3 17 118 187
Share-based payments 164 62 134
Movement in inventories (5,012) (7,005) (9,248)
Movement in trade and other receivables (4,030) (1,746) (1,836)
Movement in trade and other payables (27) 3,888 3,588
Movement in deferred tax assets - - (51)
Movement in derivative financial instruments (382) 346 (74)
Foreign exchange translation differences (19) 24 (7)
Cash inflow generated from operations 2,717 2,821 12,987
Income tax paid (4,745) (935) (2,569)
Cash flows from operating activities (2,028) 1,886 10,418
Purchase of property, plant and equipment (1,323) (263) (515)
Purchase of intangible assets - - (3)
Cash flows used by investing activities (1,323) (263) (518)
Proceeds from issued share capital 558 186 492
Principal elements of lease payments (626) (507) (1,144)
Lease liability interest (108) (94) (230)
Interest paid (29) (7) (139)
Interest received 22 - 6
Dividends - - (5,785)
Cash flows used by financing activities (183) (422) (6,800)
Net change in cash and cash equivalents (3,534) 1,201 3,100
Cash and cash equivalents at beginning of period 9,053 5,865 5,865
Exchange (loss)/gain on cash and cash equivalents (13) - 88
Cash and cash equivalents at end of period 5,506 7,066 9,053
Cash and cash equivalents consists of:
Cash and cash equivalents 5,506 7,066 9,053
5,506 7,066 9,053
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share Premium Merger reserve Foreign exchange reserve Share option reserve Retained earnings
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 January 2023 19,188 19,360 (16,100) (50) 2,003 13,378 37,779
Equity shares issued 94 92 - - - - 186
On translation of foreign subsidiary - - - 64 - - 64
Transfer to the profit and loss reserve - - - - (85) 85
- 4,780 4,780
Profit for the - - - -
period
Total comprehensive income for the period 94 92 - 64 (85) 4,865 5,030
Transactions with owners
Share-based payments - - - - 62 - 62
Dividends payable - - - - - (3,471) (3,471)
Total transactions with owners - - - - 62 (3,471) (3,409)
As at 30 June 2023 19,282 19,452 (16,100) 14 1,980 14,772 39,400
As at 1 January 2023 19,188 19,360 (16,100) (50) 2,003 13,378 37,779
Equity shares issued 126 366 - - - - 492
On translation of foreign subsidiary - - - 72 - - 72
Transfer to the profit or loss - - - - (130) 130 -
reserve exercised share options
Transfer to the profit or loss - - - - (1,627) 1,627 -
reserved expired and lapsed share options
Corporation tax charge on - - - - 214 - 214
share-based payments
Profit for the year - - - - - 13,899 13,899
Total comprehensive income for the year 126 366 - 72 (1,543) 15,656 14,677
Transactions with owners
Share-based payments - - - - 134 - 134
Dividends paid - - - - - (5,785) (5,785)
Total transactions with owners - - - - 134 (5,785) (5,651)
As at 31 December 2023 19,314 19,726 (16,100) 22 594 23,249 46,805
As at 1 January 2024 19,314 19,726 (16,100) 22 594 23,249 46,805
Equity shares issued 94 464 - - - - 558
On translation of foreign subsidiary - - - (31) - - (31)
Transfer to the profit or loss reserve exercised share options - - - - (288) 288 -
Corporation tax charge on share-based payments - - - - 140 - 140
Profit for the period - - - - - 8,016 8,016
Total comprehensive income for the period 94 464 - (31) (148) 8,304 8,683
Transactions with owners
Share-based payments - - - - 164 - 164
Dividend payable - - - - - (4,658) (4,658)
Total transactions with owners - - - - 164 (4,658) (4,494)
As at 30 June 2024 19,408 20,190 (16,100) (9) 610 26,895 50,994
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
The consolidated interim financial information for the 6 months to 30 June
2024 has been prepared in accordance with the measurement and recognition
principles of UK adopted international accounting and accounting policies that
are consistent with the Group's Annual report and Accounts for the year ended
31 December 2023 and that are expected to be applied in the Group's Annual
Report and Accounts for the year ended 31 December 2024. They do not include
all of the information required for the full financial statements and should
be read in conjunction with the 2023 Annual Report and Accounts which were
prepared in accordance with UK adopted international accounting standards.
The comparative financial information for the year ended 31 December 2023 in
this interim report does not constitute statutory accounts for that period
under section 435 of the Companies Act 2006. Statutory accounts for the year
ended 31 December 2023 have been reported on by the Group's auditors and
delivered to the Registrar of Companies.
The auditors' report on the accounts for the year ended 31 December 2023 was
unqualified, did not draw attention to any matters by way of emphasis, and did
not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
2. Changes in significant accounting policies
The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2023.
3. Profit from operations
Profit from operations is arrived at after charging/ (crediting):
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2023
2024 2023
£'000 £'000 £'000
Depreciation of property, plant and equipment 415 357 662
Depreciation of right-of-use assets 626 512 1,111
Amortisation of intangible assets 17 118 187
Write down inventories at net realisable value 434 (8) 13
Exchange differences (793) 545 433
4. Finance income and finance expenses
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2023
2024 2023
£'000 £'000 £'000
Finance income
Interest received 22 - 6
22 - 6
Lease liability interest (108) (94) (230)
Other interest (29) (7) (139)
Finance expenses (137) (101) (369)
5. Tax expenses
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2023
2024 2023
£'000 £'000 £'000
Current tax expense
Current income tax charge 2,802 1,121 4,245
Adjustment in respect of previous periods - 206 -
2,802 1,327 4,245
Deferred tax expense
Relating to origination and reversal of temporary differences 31 (20) (26)
Adjustment in respect of previous periods - 77 -
Total tax in income statement 2,833 1,384 4,219
6. Earnings per share
Profit for the period used in the calculation of the basic and diluted
earnings per share:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2023
2024 2023
£'000 £'000 £'000
Profit after tax for the period 8,016 4,780 13,899
The weighted average number of shares for the purposes of diluted earnings per
share reconciles to the weighted average number of shares used in the
calculation of basic earnings per share as follows:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2023
2024 2023
Weighted average number of shares
Weighted number of ordinary shares for the purpose of basic earnings per share 77,331,174 76,802,439 76,983,311
Potentially dilutive shares awarded 472,542 253,678 325,443
Weighted number of ordinary shares for the purpose of diluted earnings per 77,803,716 77,056,117 77,308,754
share
Basic Earnings per share (pence) 10.37 6.22 18.05
Diluted earnings per share (pence) 10.30 6.20 17.98
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