REG - Warpaint London PLC - Results for the year ended 31 December 2024
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RNS Number : 5196G Warpaint London PLC 29 April 2025
29 April 2025
Warpaint London PLC
("Warpaint", the "Company" or the "Group")
Results for the year ended 31 December 2024
Record sales and profits in 2024 at an improved margin; solid start to 2025
Warpaint London plc (AIM: W7L; OTCQX: WPNTF), the specialist supplier of
colour cosmetics and owner of the W7, Technic, Skin & Tan, Super
Facialist, Dirty Works and Fish Soho brands is pleased to announce its audited
results for the year ended 31 December 2024.
Audited 12 months to Audited 12 months to Growth
31 December 2024 31 December 2023
Revenue £101.6m £89.6m +13%
Gross profit margin 41.2% 39.9% +130bps
EBITDA £24.2m £20.9m +16%
Adjusted profit before tax* £24.6m £18.4m +33%
Profit from operations £24.0m £18.5m +30%
Basic earnings per share (EPS) 23.5p 18.1p +29%
Financial Highlights
· Continued growth in sales, margins and profits to reach record levels for the
Group. Significant organic growth in all key geographic regions reflecting the
focus on growing sales of the Group's branded products
· Group sales for 2024 grew by 13% to £101.6 million (2023: £89.6 million)
· EU revenue increased by 22% to £54.7 million (2023: £45.1 million)
· UK revenue increased by 8% to £35.0 million (2023: £32.4 million)
· US revenue increased by 19% to £8.7 million (2023: £7.3 million),
an increase of 22% in US dollar terms
· Gross profit margin increased to 41.2% (2023: 39.9%)
· EBITDA increased 16% to £24.2 million (2023: £20.9 million)
· Adjusted profit before tax* up by 33% to £24.6 million (2023: £18.4 million)
· Earnings per share up 29% to 23.5p (2023: 18.1p)
· Cash of £21.9 million (including £14.0 million held in escrow to fund the
Brand Architekts Group PLC consideration paid post-year end) as at 31 December
2024 (31 December 2023: £9.1 million), with no debt
· Recommended final dividend of 7.5 pence per share (2023: 6.0 pence per share),
bringing the total dividend for the year to 11 pence per share (2023: 9.0
pence per share), an increase of 22%
*Adjusted for amortisation costs, share-based payments and costs associated
with the acquisition of Brand Architekts Group PLC
Operational Highlights
· Sales of the Group's branded products were £95.1 million (2023: £84.8
million), up 12%, driven by the Group's lead brand W7, which increased by 14%
to £65.4 million (2023: £57.4 million)
· Direct online sales continue to grow significantly, with an increase of 35% in
2024 to £8.4 million, accounting for 8.3% of Group sales (2023: £6.2
million, 6.9% of Group sales)
· Continuing brand sales momentum, both internationally and the UK,
including:
o In Europe: further range and store expansions with existing customers
including Etos and Normal
o In the UK: a full range of Technic products were launched in an initial
202 Morrisons stores; further expansion with Boots, with an over fourfold
increase in retail space; further rollout with Superdrug; and expansion with
Tesco
o In the US: expanding the W7 range stocked and roll-out to a further 387
stores with CVS; significant order received from Walmart, for W7 and Chit Chat
product; significant expansion with Five Below
Post-Period End Highlights and Outlook
· Solid start to trading in Q1 2025, with unaudited Group sales for the
three months to 31 March 2025 of £26.7 million, an increase of 14% on the
same period in 2024 (3 months to 31 March 2024: £23.5 million). Excluding the
contribution from Brand Architekts (from 12 February 2025), Group sales up 7%
in Q1 2025 compared to Q1 2024
· Margins in Q1 increased and were better than those achieved in the
full year 2024
· Maintained a strong balance sheet, with no debt. Cash balances as at
8 April 2025 were £17.3 million (2 April 2024: £7.5 million)
· Completion of the acquisition of Brand Architekts on 12 February
2025, adding a portfolio of health, beauty and personal care brands to the
Group, including Skin & Tan, Super Facialist, Dirty Works and Fish Soho,
sold throughout the UK and internationally. The integration of Brand
Architekts into the Group is progressing well and the Warpaint directors
continue to believe that the acquisition will be earnings enhancing in the
year ending 31 December 2025
· Continuing brand sales momentum expected in 2025, both
internationally and the UK, including:
o In Europe: Tigota in Italy launching a range of products in 200 stores
with a capsule collection going into an additional 400 stores and in the
Netherlands Etos is expected to expand its product assortment in all 546
stores with a permanent fixture and an enhanced range in selected stores
o In the UK: Superdrug rolling out W7 into 140 new stores and travel size
products in all stores from June 2025. Tesco have confirmed a 150 store
expansion of the Group's W7 impulse offering during 2025. Boots to take
gifting products for the first time for Christmas 2025 (to be stocked in 350
stores) and accessories going into 250 stores
o In the US: expanding the W7 range stocked and roll-out to a further 399
stores with CVS from August 2025, taking the number of CVS stores stocking the
Group's products to 918
o In talks with other large retailers in Europe, the UK and the US to stock
the Group's products
· Despite continuing headwinds, including the effect of increased US
tariffs, the Group has significant planned expansion opportunities and the
board expects the Group's performance to remain strong and for sales and
profits to grow in line with previous expectations over the remainder of 2025
and beyond. Accordingly, the board's expectations for the Group's financial
performance in 2025 are unchanged
· Despite continuing headwinds, including the effect of increased US
tariffs, the Group has significant planned expansion opportunities and the
board expects the Group's performance to remain strong and for sales and
profits to grow in line with previous expectations over the remainder of 2025
and beyond. Accordingly, the board's expectations for the Group's financial
performance in 2025 are unchanged
Commenting, Clive Garston, Chairman, said: "I am very pleased with the Group's
record 2024 financial performance. in 2024 which has continued into 2025,
despite the challenging macroeconomic environment. This reflects the delivery
of Warpaint's consistent and focussed strategy of ensuring its branded
products are sold through an ever-expanding network of large retailers
globally, by gaining more space within these retailers, entering relationships
with new ones and increasing the Group's online sales presence.
"The board expects the Group performance to remain strong and for sales and
profits to continue to grow over the remainder of 2025 and beyond. We continue
to see significant growth opportunities, particularly in the UK and Europe,
and with the addition of the Brand Architekts' brands we have further
opportunities for growth. The recently implemented increased US tariffs are
having an impact on our US business, but the US remains a modest part of the
Group's overall business, and with significant growth opportunities elsewhere
and strategies in place to mitigate their effect, we do not expect tariffs to
have a material impact on the Group's financial performance in 2025.
Accordingly, the board's expectations for the Group's financial performance in
2025 are unchanged."
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
Shore Capital (Nominated Adviser & Broker) 020 7408 4090
Patrick Castle, Daniel Bush, Lucy Bowden - Corporate Advisory
Fiona Conroy - Corporate Broking
IFC Advisory (Financial PR & IR) 020 3934 6630
Tim Metcalfe, Graham Herring, Florence Staton
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. Additionally, in February 2025,
Warpaint acquired Brand Architekts Group PLC with a number of complimentary
health, beauty and personal care brands, including Skin & Tan, Super
Facialist, Dirty Works and Fish Soho.
HEADLINE RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024
Statutory Results Year ended 31 Dec 2024 Year ended 31 Dec 2023
£m
Revenue £101.6m £89.6m
Profit from operations £24.0m £18.5m
Profit margin from operations 23.6% 20.6%
Profit before tax ("PBT") £23.8m £18.1m
Earnings per share ("EPS") 23.5p 18.1p
Cash and cash equivalents(1) £21.9m £9.1m
(1)Cash and cash equivalents includes £14.0m (2023: nil) which was held in an
escrow account at 31 December 2024. The funds were released in February 2025
and utilised in the acquisition of Brand Architekts Group PLC. Further details
of this acquisition are provided in Note 28.
Adjusted Statutory Results Year ended 31 Dec 2024 Year ended 31 Dec 2023
£m
Revenue £101.6m £89.6m
Adjusted profit from operations(2) £24.8m £18.8m
Adjusted profit margin from operations(2) 24.4% 21.0%
Adjusted PBT(2) £24.6m £18.4m
Adjusted EPS(2) 24.3p 18.4p
Cash and cash equivalents(1) £21.9m £9.1m
(2)Adjusted numbers are closer to the underlying cash flow performance of the
business which is regularly monitored and measured by management, the
adjustments made to the statutory numbers are as follows:
£m Year ended 31 Dec 2024 Year ended 31 Dec 2023
Statutory profit from operations £24.00m £18.48m
Depreciation £0.93m £0.66m
Amortisation of right of use assets £1.27m £1.11m
Amortisation of intangible assets £0.03m £0.19m
Foreign exchange gain/loss £(2.0)m £0.43m
EBITDA £24.23m £20.87m
Acquisition related expenses £0.42m -
Share-based payments £0.35m £0.13m
Adjusted EBITDA £25.00m £21.00m
Statutory profit from operations £24.00m £18.48m
Acquisition related expenses £0.42m -
Amortisation £0.03m £0.19m
Share-based payments £0.35m £0.13m
Adjusted profit from operations(2) £24.80m £18.80m
Adjusted profit margin from operations(2) £24.80m / £101.61m = 24.4% £18.80m / £89.59m = 21.0%
Statutory PBT £23.76m £18.12m
Acquisition related expenses £0.42m -
Amortisation £0.03m £0.19m
Share-based payments £0.35m £0.13m
Adjusted PBT(2) £24.56m £18.44m
Statutory profit attributable to equity holders £18.23m £13.90m
Acquisition related expenses £0.42m -
Amortisation £0.03m £0.19m
Share-based payments £0.35m £0.13m
Tax attributable to adjusting items £(0.18)m £(0.08)m
Adjusted profit attributable to equity holders £18.85m £14.14m
Weighted number of ordinary shares 77,691,505 76,983,311
Adjusted EPS(2) 24.26p 18.37p
CHAIRMAN'S STATEMENT
2024 was another year of strong performance for the Group. Warpaint has
continued to grow in its main geographic areas of focus, the UK, Europe and
the US. Notwithstanding a challenging economic environment, the continued
successful execution of Warpaint's business strategy and model is reflected in
the Group's record financial performance. One of the strengths of Warpaint is
its people and I would like to thank my colleagues on the board and all of the
Warpaint team for their dedication and exceptional efforts in achieving this
performance. I believe that these efforts will stand us in good stead in the
future and enable Warpaint to achieve its objectives.
During the year, we continued our strategy of concentrating on increasing our
presence in larger retailers globally, together with growing direct online
sales, at attractive margins. This focus on doing more business with larger
customers and expanding the number of large retailers stocking the Group's
products is reflected in the Group's results and provides a continuing strong
platform for the future.
Post year end, on 12 February 2025, we were pleased to complete the
acquisition of Brand Architekts Group PLC ("Brand Architekts") and the
integration of the business into the Group is progressing well. I believe that
the acquisition is an exciting and relatively low risk opportunity to further
bolster Warpaint's growth opportunities, and I would like to take this
opportunity to formally welcome the Brand Architekts team to the Group.
Trading has continued to be robust in the first quarter of 2025, with the
Group maintaining continued growth with quarterly sales 7% ahead of the same
period in 2024 on a like-for-like basis, excluding the contribution from Brand
Architekts from 12 February 2025. Margins in Q1 2025 increased and were better
than those achieved in the full year 2024. I expect the Group performance to
remain strong, with significant planned expansion opportunities, and for sales
and profits to continue to grow in line with previous expectations over the
remainder of 2025 and beyond, notwithstanding the current challenging
conditions, including subdued consumer confidence in many parts of the world
and the effect of increased US tariffs recently introduced.
Results
2024 was again a year of significant achievement, with the Group delivering
record sales and profits, at an increased margin.
Adjusted profit before tax grew 33% to £24.6 million (2023: £18.4 million)
on revenue of £101.6 million (2023: £89.6 million) with basic earnings per
share of 23.5 pence (2023: 18.1 pence).
The Group continues to ensure inventory levels are appropriate to allow
on-time delivery for customers and to service the anticipated growth in
demand, with inventory at 31 December 2024 increasing to £31.2 million (31
December 2023 £28.0 million). The balance sheet remains strong, with cash at
31 December 2024 of £21.9 million, including £14.0 million held in escrow to
fund the acquisition of Brand Architekts (31 December 2023: £9.1 million),
and the Group remains debt free.
Dividend
In accordance with the Group's progressive dividend policy and reflecting the
board's confidence in the Company's prospects, the board is pleased to
recommend an increased final dividend of 7.5 pence per share which, if
approved by shareholders at the annual general meeting ("AGM"), will be paid
on 4 July 2025 to shareholders on the register at 13 June 2025. The shares
will go ex-dividend on 12 June 2025.
During the year, an interim dividend of 3.5 pence per share was paid on 22
November 2024, bringing the total dividend for the year to 11.0 pence per
share, a 22% increase over the 9.0 pence per share dividend for 2023.
Board
I was delighted to welcome Sharon Daly and Indira Thambiah as independent
Non-Executive Directors with effect from 1 January 2024. They have
considerable experience on the boards of public companies in the consumer
sector and they have made a valuable contribution since joining the board.
They 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, who remains Chair of the
Audit Committee, which has been reconstituted as the Audit and Risk Committee
with new terms of reference.
Annual General Meeting
The Company's AGM will be held at the Company's offices at Units B&C,
Orbital Forty Six, The Ridgeway Trading Estate, Iver, Bucks, SL0 9HW on 17
June 2025 at 10.00 a.m. and the board looks forward to welcoming those
shareholders who are able to attend in person.
Summary and Outlook
I am very pleased with the Group's performance in 2024 and that this has
continued into 2025, despite the challenging macroeconomic environment. This
reflects the delivery of Warpaint's consistent and focused strategy of
ensuring its branded products are sold through an ever-expanding network of
large retailers globally, by gaining more space within these retailers,
entering into relationships with new ones and increasing the Group's online
sales presence. With the addition of the Brand Architekts' brands, we have
further opportunities for growth.
The Group is keeping a careful watch on the developing US tariff environment
and is taking steps to mitigate the effects of tariffs as far as possible,
whilst focusing on US business that remains profitable and benefits the longer
term strategic positioning of the Group. The Group's US business is currently
a modest contributor to Group profit, at less than 3% of 2024 Group profit
before tax, and current US tariff rates, whilst impacting on the amount of
business the Group expects to do in the US in 2025, are not expected to have a
material impact on the Group's financial performance in 2025. Accordingly, the
board's expectations for the Group's financial performance in 2025 are
unchanged.
The Board works closely with executive management and carries out an annual
review of Group strategy. This is focused on growth and increasing our share
of the global value colour cosmetics and skin care markets, taking into
account changing market dynamics. Warpaint is a founder led entrepreneurial
company which leads to a culture that, notwithstanding the challenging
environment and difficulties that face many of our customers and consumers,
should lead to a continuation of the strong performance that has been seen
over recent years. I therefore believe that we have the right offering and
strategy in place to continue to deliver profitable future growth.
Clive Garston
Chairman
28 April 2025
CHIEF EXECUTIVE'S STATEMENT
I am very pleased that the Group again achieved another record level of sales
and profits in 2024, with an improved profit margin. Group sales increased by
13% to £101.6 million (2023: £89.6 million), importantly at an increased
gross margin of 41.2% (2023: 39.9%), driving a 33% increase in adjusted profit
before tax to £24.6 million (2023: £18.4 million).
This performance reflects the ongoing success of the Group's strategy of
focusing on growing profitable sales of its branded products, with a focus on
the UK, Europe and the US, whilst increasing overall margins. Increased sales
are being achieved through existing customers, where the focus is on supplying
more stores and increasing the Group's footprint within each store, as well as
adding new large retailers to the Group. In 2024 we secured an over fourfold
increase in retail space within Boots in the UK, driven by both additional
outlets and larger displays. In addition, we also continue to be in active
discussions with new major retailers globally.
In 2024, the Group continued to concentrate on its core W7, Technic, Body
Collection, Man'stuff and Chit Chat brands. In 2024, sales of the Group's
branded products accounted for 94% of revenue (2023: 95%).
As has been the trend for some time, the global cosmetics market continues to
see consumers transferring to more value orientated brands, such as those
produced by the Group. In 2025, the addition of the Brand Architekts' brands
to our portfolio is expected to provide additional opportunities to grow sales
and profits over and above those we expect from our historic brands. Our
global market share remains modest and there continue to be substantial
opportunities for further growth.
W7
The Group's lead brand is W7, with sales in 2024 increasing by 14% to £65.4
million, accounting for 64% of total Group revenue in 2024 (2023: £57.4
million/64%).
In the UK, W7 revenue was up 9% year-on-year, representing 28% of W7 sales in
the year (2023: 30%), as stronger sales growth was generated in regions
outside of the UK, particularly in Europe and the US. W7 sales in the UK
continue to see significant 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.
During 2024 there was an approximate 2.5 times increase in the space allocated
to W7 in Superdrug, in addition to the over fourfold increase in retail space
within Boots noted above.
In 2024, W7 sales in Europe grew by 21% to £36.8 million (2023: £30.4
million), representing 56% of W7 sales (2023: 53%). This was driven 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.
In the US, W7 sales grew by 23% to £7.8 million in 2024 (2023: £6.3
million), and accounted for 12% of overall W7 sales (2023: 11%), with the
Group benefiting, in particular, from growth within CVS and Five Below,
together with increased online sales.
Across the rest of the world, which is not a primary focus for the Group, W7
sales were £2.3 million (2023: £3.6 million) and remain a modest proportion
of overall W7 sales at 4%.
Technic
Sales of branded Technic product in 2024, which includes products sold under
the Technic, Body Collection, Man'stuff and Chit Chat brands, increased by 8%
to £29.7 million, representing 29% of total Group revenue (2023: £27.5
million/31%).
The Technic business also produces and sells white label cosmetics for several
major high street retailers. Such opportunities are assessed case-by-case,
based on the return they can deliver. In 2024, Technic's white label business
grew by 90% to £4.3 million (2023: £2.3 million), accounting for 4% of Group
revenue (2023: 2.5%) as higher margin opportunities were presented.
In 2024, UK revenue was 42% of Technic's total sales at £14.3 million (2023:
£13.1 million/44%), increasing 9% year-on-year. 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.
Technic enjoyed particularly strong sales growth in Europe, up 23% to £17.8
million (2023: £14.5 million), accounting for 53% of Technic sales (2023:
49%), driven by increased product being sold to existing customers, and the
launch into new customers, including significant further expansion with the
Dutch retailer, Wibra.
Sales for the Technic brand outside of the UK and Europe accounted for 5% of
Technic sales (2023: 7%) and are therefore small in the context of the Group
as a whole, representing less than 2% of Group revenue, presenting an
opportunity for future growth.
Technic continues to grow its direct online sales, particularly through the
brand stores on Amazon.co.uk, Amazon.com and on continental European Amazon
sites. These direct online sales remain a modest proportion of Technic's
overall sales and present a further opportunity for growth.
e-Commerce
In 2024, the Group continued to drive direct online ("D2C") sales, a strategy
that started in 2020. Revenue of £8.4 million in 2024 was an increase of 35%
(2023: £6.2million), and as a proportion of Group revenue, D2C sales
increased to 8.3% in 2024 (2023: 6.9%). While growing these online sales, the
focus remains on achieving a similar net margin to the Group's sales through
traditional physical outlets.
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 on Taobao
Mall (Tmall), the most visited B2C online retail platform in China and
Xiaohongshu (Red), one of China's foremost social media, fashion and luxury
shopping platforms.
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 2024,
close-out sales were £2.3 million (2023: £2.5 million) and represented only
2% of the overall revenue of the Group (2023: 3%).
Brand Architekts
Post year end, on 12 February 2025, we were pleased to complete the
acquisition of Brand Architekts. Having followed the company for some time, I
believe that the acquisition is an exciting and relatively low risk
opportunity to further bolster Warpaint's growth opportunities.
Brand Architekts is a health, beauty and personal care brand specialist sold
throughout the UK and internationally, with a focus on every day,
high-performing brands and products that engender high levels of consumer
loyalty. Brand Architekts' brand portfolio encompasses female beauty,
skincare, self-tan and male grooming. Brands (including Skin & Tan, Super
Facialist, Dirty Works and Fish Soho) are available on the high street in
leading pharmacy and drugstore chains, in national grocery stores, on the
platforms of global e-tailers, and through ecommerce websites.
Warpaint has a strong track record of successfully acquiring, integrating and
growing businesses with complementary brands, offerings and customers, and I
consider that Brand Architekts provides a similar opportunity. Brand
Architekts has a number of high-quality brands with a well-established
customer base that complements Warpaint's existing customer relationships and
brand portfolio. In addition, while Brand Architekts has grown its gross
margins over recent financial periods, it carried a high overhead cost base
relative to the level of gross profit generated by the business. We have
identified significant cost synergies and have already begun to reduce
overheads to a more efficient level, which should increase Brand Architekts'
profitability. The integration of the business into the Group is progressing
well and accordingly, the Warpaint board expects the acquisition to be
earnings enhancing to Warpaint in the year ending 31 December 2025.
New Product Development
New product development ("NPD") continues to be core to the Group's
proposition to provide new products that are exciting, on trend, fast to
market and that meet consumers' evolving tastes.
During 2024, the NPD team continued to develop a strong pipeline of
customer-focused new products. The NPD team works with around 25 manufacturing
partners, in China and globally, that can provide high quality products
quickly, at very competitive prices, while meeting our legal and ethical
compliance requirements, together with ensuring continuity of delivery. The
Group continues to investigate new manufacturing partners, particularly
outside of China, to ensure a diversity of supply and to mitigate, as far as
possible, the effects of tariffs increasingly being implemented, particularly
in the US on Chinese manufactured product.
The Group's cosmetic products are 'cruelty free' and are not tested on animals
irrespective of where the products are being supplied. The Group supports
cruelty free alternatives to animal testing to become compulsory and animal
testing overall to cease globally. Warpaint proudly displays the PETA company
logo on its products and its commitment to the PETA 'Beauty without Bunnies
program' covers all brands within the Group, including the newly acquired
Brand Architekt brands, apart from Skin & Tan, which is approved under the
Cruelty Free International Leaping Bunny programme.
Environmental impact
Warpaint is very focused on the environmental impact of its products and is
committed to becoming an industry leader for sustainable products and
packaging. The Group is proud to be associated with Planet Mark, which
provides a clear framework for businesses to measure their carbon reporting
through certification. As a member of Planet Mark, the Company is committed to
implementing carbon reduction strategies, staying ahead of legislation and
risk mitigation, and eliminating greenwashing through effective and
transparent communication. Alongside the ways our team members operate in the
workplace and wider communities, and the efforts of product teams in ensuring
the most recyclable materials and least plastic consuming designs are put into
production, Planet Mark forms a key part of the Group's sustainability agenda.
The Group uses only recyclable plastics in the outer packaging of its gifting
products and continues to remove unrecyclable plastics from all year-round
products. The Group's product packaging therefore uses paper and cardboard
wherever practicable, enabling the Group, its customers and end users to
recycle waste effectively.
All branded products across the Group are manufactured vegan friendly and
without parabens. No heavy metals such as TBTO (preservative) and other
ingredients of concern are added to products and all raw materials comply with
the strict regulations applicable in the UK, EU, US, Canada and other markets
in which the Group operates.
Marketing and PR
The Group's marketing, PR and social media teams continued to work to ensure
our marketing programmes remain fresh, innovative, focused on customer loyalty
and showcasing our products to new potential consumers. The Group has a
particular emphasis on social media using brand ambassadors, influencers and
make-up artists and has individuals dedicated to each of the main social media
platforms to ensure maximum benefit is gained in these areas. In 2024 we
successfully introduced the W7 TikTok shop, demonstrating to consumers the
benefits of our products whilst enabling them to order at the same time.
Strategy
On an annual basis the board reviews and appropriately adapts its three-year
strategic plan for the business based on consumer insight, market data,
experience and the Group's aims. This is targeted by year, measured, monitored
and reviewed as part of the board's on-going business throughout the year. The
strategic plan was updated in January 2025, forming the basis of the Group's
focused activity through to 2027. The plan is developed to drive shareholder
value and has defined targets for sales by the six key pillars below, EBITDA,
earnings per share and cash generation with a particular emphasis on driving
incremental EBITDA growth.
The strategic plan comprises six key pillars:
· Develop and build the Group's brands and ensure new product
development reflects trends and consumer needs
The Group ensures that everybody within the business has crystal clarity of
the positioning and hierarchy of the Group's portfolio of brands. A key
activity of the Group is developing affordable, quality new product, which
remains a crucial part of the Group's activity. It is essential to provide
great new product that is on trend, fast to market and meets the consumers'
evolving tastes. A healthy pipeline of new products is the continual focus of
our NPD team who are also developing category extensions where appropriate to
each brand and gifting sets.
· Develop and nurture current core business
There is still significant potential to be realised and further distribution
gains to be made with the current customers, and the Group is committed to
ensuring this potential is maximised. The Group is focused on ensuring there
is a clarity of product offering to each customer segment and to supporting
its customers with relevant new products, by using appropriate marketing and
innovative merchandising solution to draw consumers into stores and by
enhancing the customer offer by cross selling the Group's brands and category
extensions for example accessories, body mists, gifting and skin care where
appropriate.
· Grow market share in the UK
The Group continues to focus on increasing the presence of its brands across
the channels in which our consumers shop, thereby increasing accessibility and
driving profitable market share growth. As a result of this strategy, the W7
brand successfully launched into Superdrug in 2023. As a result, further
stores were awarded in 2024 with merchandising solutions that provided greater
space and range. Further store and space growth is expected in 2025. Our
partnership with Tesco continues to grow, with distribution gains across all
store formats, including the recent launch of an impulse solution at till
points in more than 200 Tesco Extra and Supermarket stores, while the group is
gaining greater space and distribution in Boots and diversifying into new
categories. At the same time the Technic brand was successfully launched with
a range of product into Morrisons. Active discussions continue with other
major retailers who the Group is yet to supply. The expansion of the UK
customer base is a key aim of management, as the business continues to
capitalise on consumers and retailers across all sectors who are increasingly
looking to provide quality products at affordable prices to their customers.
· Grow market share in the US and China
The US and China continue to provide major long-term growth opportunities for
the Group. In the US, Warpaint increased its management and selling capability
in 2024. A compelling core product range for the US has been established, with
minimum margin requirements. The business is focused on targeted customer
initiatives that have gained both gifting and all-year-round listings with
major retailers across key channels. For example, in CVS, following a
successful launch of W7 for a selection of all-year-round products into 186
stores in 2023, W7 launched into a further 387 stores in February 2024, with
an additional 398 more stores expected to launch in 2025. The Group also
successfully launched a range of Christmas gifts into Walmart in 2024. In
China, the Group conducts business locally through its Chinese subsidiary. We
are also continuing to register products for sale in China in order to grow
our total offering and increase sales. This has led to the sales of W7
products via W7 branded storefronts on on-line marketplaces.
· Develop the online/e-commerce strategy for brand development and
profitable sales
Warpaint aims to grow and maximise profitable sales across the Group's Direct
to Consumer ("D2C") channels. As well as continuing to sell on its own
websites and developing its own consumer community, plans continue to be
executed to develop sales across Amazon platforms. W7 stores fulfilled by
Amazon traded successfully in the UK, US, Italy and Germany in 2024 seeing
substantial growth, whilst the Group also launched on Amazon France and on our
own TikTok shop in the UK. Further on-line sales platforms and geographies
continue to be evaluated and, where profitable opportunities are identified,
launched over the course of the three-year plan. The Group continues to
develop and build its brands by utilising brand ambassadors, influencers and
make-up artists to engage actively with its target audience. The Group aims to
ensure that consumers are adequately inspired and educated on how the Group's
products can be used to experiment and achieve different looks. Developing the
social media strategy also directly impacts the Group's online sales
strategy.
· Develop and implement appropriate strategies that ensure Warpaint
reduces its impact on the environment
Warpaint recognises consumers', customers' and its own requirement to reduce
its environmental impact. The business has already identified and implemented
a number of initiatives to reduce its environmental footprint via reduced
shipping and road mileage; removing plastics where possible from packaging and
improving recyclability; removing parabens from ingredients and ensuring all
products are manufactured cruelty free. Further initiatives have been
identified, targeted and will be implemented across the course of the
three-year plan. Further information is contained within the ESG section of
this annual report.
Customers & Geographies
The largest markets for sales of the Group's brands are continental Europe and
the UK, with a growing presence in the US, coupled with global online sales.
In 2024 the Group's top ten customers represented 66% of revenues (2023: 69%).
UK
In 2024, revenue from the UK was £35.0 million (2023: £32.4 million), an
increase of 8%. The UK accounted for 34% of Group revenue in 2024 (2023: 36%).
Growth in the UK was seen by both our lead W7 brand and the Technic brand,
both of which increased by 9%.
The top ten UK customers accounted for 69% of UK sales (2023: 66%). Strong
growth was achieved during the year with many UK retailers, with a strong
start to the rollout with Superdrug and further growth with Boots and Tesco,
particularly increasing the average sales footprint per store. Additionally,
in March 2024, a full range of Technic products was launched in an initial 202
Morrisons stores.
We are also in continued talks with major UK retailers who stock W7 and
Technic product to increase the offering in their stores and anticipate
further expansion across their estates during 2025. Confirmed UK expansion in
2025 includes Superdrug rolling out W7 into 140 new stores and travel size
products in all stores from June 2025. Tesco have confirmed a 150 store
expansion of the Group's W7 impulse offering during 2025. Boots are to take
gifting products for the first time for Christmas 2025 (to be stocked in 350
stores) and accessories going into 250 stores.
Europe
Since 2022, continental Europe has been the largest sales area for the Group.
In 2024, Group revenue from Europe increased by 22% to £54.7 million (2023:
£45.1 million), accounting for 54% of overall Group sales (2023: 50%), with
growth seen from both existing customers and those new to the Group. The
largest markets for the Group's brands in continental Europe are Spain,
Denmark, the Netherlands and Sweden, but with an increasing presence in many
other countries in the region. Europe continues to present growth
opportunities, both with existing and new customers, and particularly in
countries where the Group currently has a more limited presence, such as
Germany and Italy.
Expansion of the Group's footprint in Europe in 2025 is expected to include
contributions from Tigota in Italy launching a range of products in 200 stores
with a capsule collection going into an additional 400 stores and in the
Netherlands, Etos is expected to expand its product assortment in all 546
stores with a permanent fixture and an enhanced range in selected stores.
US
Revenue from the US, in sterling terms, increased by 19% in 2024 to £8.7
million (2023: £7.3 million) and grew by 22% in US dollar terms. This equated
to 8.5% of overall 2024 Group sales (2023: 8%). Over 99% of US revenue was
from the sale of Group brands in 2024 as very limited close-out activity was
undertaken, in line with the Group's strategy to focus on its own brands.
A new US management team was appointed in the first half of 2024, tasked with
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 2024 generated significantly higher profits than has previously
been the case and for the first time the Group's US business delivered more
than US$1 million of pre-tax profits.
Significant US sales were generated in the second half of the year as gifting
orders were delivered, including a large Christmas order received from Walmart
for W7 and Chit Chat products.
The recent imposition of additional tariffs, particularly on goods
manufactured in China, is having an impact on the margins achievable from the
Group's US sales, although we are seeking to mitigate the effects as far as
possible. Online, which accounts for a significant proportion of the Group's
US business and where we have more selling price flexibility, price increases
have been implemented. We continue to monitor the situation closely and are
focused on ensuring the Group maintains its position in the US, whilst
maximising the available margin.
Despite this backdrop we are still seeing appropriate growth opportunities in
the US and, for example, CVS will be expanding the W7 range stocked and
rolling-out to a further 399 stores from August 2025, taking the number of CVS
stores stocking the Group's products to 918.
Rest of the World
2024 sales from the rest of the world reduced to 3% of overall Group sales
(2023: 5%). Whilst the rest of the world is not a primary focus for the Group,
within this area the largest sales are to Australia and China, with other
countries, such as the Philippines, being served where profitable sales in
appropriate volumes can be achieved.
Summary and Outlook
I am again very pleased with the Group's performance in 2024. We have
continued to grow sales and importantly these sales have been achieved at a
higher gross margin as we focus on sales through large retailers in the UK,
Europe and the US, together with growing our online presence. Our robust
supply chain and distribution network, coupled with maintaining appropriate
levels of stock, ensures that we are able to supply our retail customers on
time with product that their customers are demanding.
Whilst trading conditions remain challenging, and recently implemented tariffs
in the US are having an impact on US margins, trading in 2025 has started
strongly with a solid first quarter, and we continue to see significant growth
opportunities, particularly in the UK and Europe. We continue to regularly
review our sourcing and are investigating additional opportunities to
manufacture products outside of China, including in the UK, to ensure the
maximum available margin, whilst ensuring consistency and quality of supply.
Revenue for the first three months of 2025 is 14% ahead of the same period in
2024, including a contribution from Brand Architekts from 12 February 2025,
with sales increases seen across all of the Group's brands, both in stores and
online, and at an improved gross margin to that achieved for 2024 as a whole.
Whilst I believe the US remains a longer term growth opportunity for the
Group, in particular due to the limited level of the Group's current business
in the US and the size of the market, the recent imposition of additional US
tariffs, particularly on goods manufactured in China, is having an impact on
the Group's current US business. In the US we remain focused on ensuring that
sales the Group undertakes remain profitable, whilst benefiting the
longer-term strategic positioning of the Group's brands in a potentially
improved tariff environment. Whilst sales to the US are likely to be impacted
in 2025 by the current tariff levels, their modest contribution to Group
profits and the growth opportunities we are seeing elsewhere mean that the
board's expectations for the Group's financial performance in 2025 remain
unchanged.
We will update further on our progress later in the year and with significant
opportunities for further growth, including from the recently acquired Brand
Architekts' brands, I am confident that the Group will continue to perform
well for the remainder of the year and beyond.
Sam Bazini
Chief Executive Officer
28 April 2025
CHIEF FINANCIAL OFFICER'S REVIEW
2024 was another record year for the Group, with continued growth in revenue,
margins and profit before tax. Group revenue increased in the year by 13% and
adjusted profit before tax increased by 34%. Gross margin improved in the
year, with a 1.3 percentage point increase to 41.2%. This is the fourth year
running that gross margin has improved.
On the 12 February 2025 the Group completed the purchase of Brand Architekts,
the owner of a number of complimentary health, beauty and personal care
brands, sold throughout the UK and internationally. Brand Architekts brands
include Skin & Tan, Super Facialist, Dirty Works and Fish Soho. The Group
believes that the acquisition is an exciting and relatively low risk
opportunity to further bolster Warpaint's growth opportunities.
The Group continues its strategy of building the W7 and Technic brands,
together with its recently acquired brands. We remain focused on margin,
generating cash and remaining debt free.
The Group monitors its performance using a number of key performance
indicators which are agreed and monitored by the board.
*Adjusted numbers are closer to the underlying cash flow performance of the
business which is regularly monitored and measured by management, the
adjustments made to the statutory profit before tax are as follows:
£m 2024 2023
Statutory PBT 23.76 18.12
Acquisition related expenses 0.42 nil
Amortisation of intangible assets 0.03 0.19
Share-based payments 0.35 0.13
*Adjusted PBT 24.56 18.44
Headline results, shown below, represent the performance comparisons between
the consolidated statements of income for the years ended 31 December 2023 and
31 December 2024.
Revenue
Group revenue for 2024 increased by 13.4% to £101.6 million (2023: £89.6
million).
Company branded sales were £95.1 million (2023: £84.8 million). The W7 brand
generated sales in the year of £65.4 million (2023: £57.4 million), while
the Technic brand, excluding sales of retailer own brand white label
cosmetics, contributed sales of £29.7 million (2023: £27.5 million).
In 2024, sales of white label cosmetics were £4.3 million (2023: £2.3
million). The white label business is traditionally cost competitive and is
only undertaken based on commercial viability, in particular margin.
Close-out sales were £2.3 million (2023: £2.5 million), as the Group, in
line with its strategy, continued to reduce its focus on close-out
opportunities.
The major regions for Group sales are the UK, Europe and the US. In the UK,
sales increased by 8.0% to £35.0 million (2023: £32.4 million).
International revenue increased by 16.5% to £66.6 million (2023: £57.2
million).
In Europe, sales increased by 21.5% to £54.7 million (2023: £45.1 million).
In the US, Group sales increased by 18.5% to £8.7 million (2023: £7.3
million), which, in US dollar terms, was an increase of 22%, to US$11.1
million (2023: US$9.1 million). For the first time, the US business delivered
in excess of US$1 million of pre-tax profits, as the new management team put
in place at the start of 2024 focused on generating profitable business with
larger customers and moved away from selling to deep discounters. Since the
year end, tariffs into the US have increased, and currently this is still a
developing situation. Management have considered the newly implemented US
tariffs and have calculated that the changes in tariffs will have no material
impact on the business as a whole, or the carrying value of the goodwill in
its US entity.
In the rest of the world, Group sales decreased by 33.3% to £3.2 million
(2023: £4.8 million).
E-commerce sales were up by 35% to £8.4 million, now representing 8.3% of
Group revenue (2023: £6.2 million/6.9%).
Product Gross Margin
Gross margin was 41.2% for the year compared to 39.9% in 2023.
This is the fourth year in a row that gross margin has improved incrementally.
New product development, and sourcing product from new factories have helped
achieve a gross margin improvement in 2024, 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 3.4 percentage point increase
in gross margin in the year compared to 2024. The improvement in gross margin
at the Group level is despite increased freight rates during the year.
In 2024, the proportion of Group revenue from Group branded product, which
overall achieves a higher margin than close-out sales and retailer own brand
white label sales, remained relatively unchanged at 94% (2023: 95%). Group
brand sales include all-year-round colour cosmetics and gifting, which is sold
at a more competitive margin than all-year-round colour cosmetics. Gifting
sales in 2024 grew slightly but remained at the same percentage of overall
Group brand sales and therefore made little impact to the overall margin
achieved by the Group in the year.
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.
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, this
helped to protect our margin in 2024. 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. At 31 December 2024, forward foreign
exchange contracts were in place for the purchase of US$57 million at an
average exchange rate of US$1.2912.
The currency options we have for the current year, along with new product
development and sourcing strategies, will all contribute to protect our gross
margin in 2025.
Operating Expenses
Total operating expenses before acquisition related expenses, amortisation
costs, depreciation, foreign exchange movements and share-based payments,
increased in line with sales, increasing by 14.7% to £16.9 million in the
year, or 16.6% of revenue (2023: £14.7 million/16.4%).
The absolute increase of £2.2 million in the year was necessary to support
the growth of the business and included increases in wages and salaries,
business rates, insurance costs, the spend on PR and marketing as e-commerce
sales continue to grow, 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 relatively fixed operating expenses evenly
spread across the whole year. We continue to monitor and examine significant
costs to ensure they are controlled and strive to reduce them. In addition,
the increased scale of the business continues to give the Group increased
buying power.
Adjusted EBITDA
The board considers Adjusted EBITDA (adjusted for foreign exchange movements,
share-based payments and acquisition related expenses) 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 year was
£25.0 million (2023: £21.0 million).
£m Year ended 31 Dec 2024 Year ended 31 Dec 2023
Statutory profit from operations 24.00m 18.48m
Depreciation 0.93m 0.66m
Amortisation of right of use assets 1.27m 1.11m
Amortisation of intangible assets 0.03m 0.19m
Foreign exchange gain/loss (2.0)m 0.43m
EBITDA 24.23m 20.87m
Acquisition related expenses 0.42m -
Share-based payments 0.35m 0.13m
Adjusted EBITDA 25.00m 21.00m
Profit Before Tax
Group profit before tax for the year was £23.8 million (2023: £18.1
million). A reconciliation between profits in 2024 and 2023 is shown below:
£m Effect on Profit
Sales volume growth 4.8m
Margin growth 1.3m
Increase in operating expenses (detailed above) (2.2)m
FX gain in 2024 £2.0 million (2023: Loss £0.4 million) 2.4m
Acquisition related expenses in the year (0.4)m
Other items (0.2)m
Change in profit before tax between 2024 and 2023 5.7m
Tax
The tax rate for the Group for 2024 was 23.3% compared to the average UK
corporation tax standard rate of 25.0% for 2024. Since the acquisition of LMS,
the Group is exposed to tax in the USA at an effective rate of approximately
25% and in other jurisdictions the Group operates cost centres, but these are
not materially exposed to changes in tax rates.
Earnings Per Share
The statutory basic and diluted earnings per share were 23.47p and 23.34p
respectively in 2024 (2023: 18.05p and 17.98p).
The adjusted basic and diluted earnings per share before acquisition related
expenses in the year, amortisation costs and share-based payments were 24.25p
and 24.12p respectively in 2024 (2023: 18.37p and 18.30p).
Dividends
The board is recommending a final dividend for 2024 of 7.5 pence per share,
making a total dividend for the year of 11.0 pence per share of which 3.5
pence per share was paid on 24 November 2024 (2023: Total dividend of 9.0
pence per share, of which the interim dividend was 3.0 pence per share and the
final dividend was 6.0 pence per share). The dividend for the year is covered
2.2 times by adjusted earnings per share.
Cash Flow and Cash Position
The Group's year end cash balance increased by £12.8 million to £21.9
million (2023: £9.1 million). The year end cash balance includes restricted
cash of £14.0 million which was held in an escrow account at 31 December
2024. The funds were released in February 2025 and utilised in the acquisition
of Brand Architekts. Further details of this acquisition are provided in Notes
14 and 28.
Net cash flow generated from operating activities was £9.2 million (2023:
£10.4 million). The cash generated was principally used to fund working
capital, make dividend payments in the year, and for the planned acquisition
of Brand Architekts.
Cash balances were negatively impacted in the year by an increase in
corporation tax paid in the period, due to a change in collection policy by
HMRC. This change affected the first half of 2024 in which tax paid was £4.7
million (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 2024, £2.2 million (2023: £0.5 million) was spent on store furniture,
solar panels, new computer software and equipment, warehouse improvements 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 that is used to help fund imports in our gifting business during its
peak season. At the year end, no invoice and stock finance remained
outstanding (2023: £nil). In addition, the Group has a 'general purpose'
facility of £5.0 million (reducing at the Company's request to £1.0 million
from 1 May 2025). This facility was unused at 31 December 2024. These
facilities, together with the Group's positive cash generation and the cash
balance, ensure that future growth can be comfortably funded.
Share Options
The following options over ordinary shares have been exercised or granted by
the Company in the year:
Date Shares Transaction Scheme Exercise price
7 May 2024 85,895 Exercise EMI 237.5p
30 May 2024 290,000 Exercise CSOP 122.0p
19 September 2024 110,000 Exercise CSOP 122.0p
30 October 2024 362,509 *Granted CSOP 490.0p
30 October 2024 255,992 *Granted EMI (unapproved) 490.0p
5 December 2024 205,000 *Granted EMI (unapproved) 490.0p
*See note 21 for the general terms and conditions of the shares granted in the
year.
The exercise of EMI & CSOP share options during the year 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 year was £0.35 million
(2023: £0.13 million) and has been taken to the share option reserve.
Balance Sheet
Inventory was £3.2 million higher at the year end at £31.2 million (2023:
£28.0 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 £0.42 million, 1.3% at the year-end (2023:
£0.38 million, 1.3%). Across the Group we worked hard in the year to sell
through older stock lines, allowing for our provision for old and slow
inventory to remain unchanged year-on-year 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, which remain
broadly in line with the prior year. At the year end, trade receivables,
excluding other receivables, were £13.6 million (2023: £11.0 million), the
increase on 2023 being due to the rise in sales year-on-year. The provision
for bad and doubtful debts carried forward at the year-end was £0.09 million,
0.6% of gross trade receivables (2023: £0.13 million, 1.2%).
At year end, the Group had no borrowings or lease liabilities outstanding
(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 the year
end.
Working capital increased by £22.4 million in the year, to £63.4 million.
The main components were an increase in inventory of £3.2 million, an
increase in trade and other receivables of £2.8 million, an increase in cash
at the year-end of £12.8 million, and a decrease in trade and other payables
of £2.0 million. Other items contributed an increase of £1.6 million. The
year end cash balance includes restricted cash of £14.0 million which was
held in an escrow account at 31 December 2024.
Free cash flow (cash from operating activities less capital expenditure)
remained strong at £6.9 million (2023: £9.9 million). Cash flow was
negatively impacted in the year by an increase in corporation tax paid in the
period, due to a change in collection policy by HMRC. This change affected the
first half of 2024 in which tax paid was £4.7 million (2023: £0.9 million).
The Group's balance sheet remains in a very healthy position. Net assets
totalled £73.3 million at 31 December 2024, an increase of £26.5 million
from 2023. Most of the balance sheet is made up of liquid assets, inventory,
trade receivables and cash. Included on the balance sheet is £7.3 million of
goodwill (2023: £7.3 million) and £0.1 million of intangible fixed assets
(2023: £0.1 million). As at the year-end, cash totalled £21.9 million (31
December 2023: £9.1 million). The year end cash balance includes restricted
cash of £14.0 million which was held in an escrow account at 31 December
2024.
Goodwill represents the excess of consideration over the fair value of the
Group's share of the net identifiable assets of acquired businesses / cash
generating units at the date of acquisition. The carrying value at 31 December
2024 of £7.3 million included Treasured Scents Limited at £0.5 million,
Retra Holdings Limited at £6.2 million and Marvin Leeds Marketing Services,
Inc. at £0.6 million. Management has performed the required annual impairment
review at 31 December 2024 and 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 £4.1 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 £4.2
million at the balance sheet date.
Foreign Exchange
The Group currently 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 €3.7 million at €1.1447/£. During 2024 when currency rates were
favourable, we purchased additional US dollar forward foreign exchange
contracts and spot rate amounts to cover our total US dollar requirement for
the year.
In addition, during 2024 we purchased forward foreign exchange contracts to
help protect the Group's gross margin in 2025. At 31 December 2024, forward
foreign exchange contracts were in place for the purchase of US$57 million at
an average exchange rate of US$1.2912/£, and the sale of €2.3 million at
€1.1627/£.
The Group additionally has a natural hedge from sales to the US which are
entirely in US dollars, in 2024 these sales were US$11.1 million (2023: US$9.1
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.
Post balance sheet events
On 12 February 2025, the Company completed the acquisition of 100% of the
ordinary shares of Brand Architekts for £13.3 million in cash and the issue
of 103,422 Warpaint shares at £5.24, making a total purchase consideration of
£13.9 million (the "Acquisition").
Including legal and professional fees, the total purchase price of the
Acquisition was £14.7 million, of which £0.42 million was incurred in 2024.
The Acquisition will be accounted for using the acquisition method of
accounting in accordance with IFRS 3. Management is still in the process of
allocating the purchase price, however, initially the book value of net assets
acquired was £11.28 million, including £6.2 million of cash. Further details
are shown in note 28.
Directors' Loans
The Company raised funds in the year in order to pay for the Acquisition.
Before raising the funds through a placing and retail offering, which
completed on 9 December 2024, the Company received loans from two of its
directors in order to demonstrate adequate cash resources (the "Directors'
Loans"). The funds from the Directors' Loans were held in escrow.
The Company considered various alternative ways to obtain the finance required
ahead of the placing to fund the Acquisition. The cost of this short term
funding was significant and accordingly Sam Bazini and Eoin Macleod offered to
provide the Directors' Loans at no arrangement cost to the Company and on the
terms set out below. The board (excluding Sam Bazini and Eoin Macleod)
considered this offer and resolved to accept it as it was comfortably the most
cost-effective and practical way to obtain this finance. Sam Bazini and Eoin
Macleod requested the Company donate the interest that they would have earned
from the Directors' Loans to UK children's charities, which the board was
happy to do. On the 6 January 2025 a donation of £24,164 was made by the
Company to Noah's Ark, Children's Hospice.
The Directors' Loans to the Company in the year consisted of a loan from Sam
Bazini of £8,500,000 and a loan from Eoin Macleod of £5,500,000.
The Directors' Loans were each on the same terms and interest was payable by
the Company on the full amount of each Directors Loan at the Bank of England's
base rate plus 0.5 percent, until the date on which the relevant loan was
repaid in full, there was no fixed term, and no security was provided by the
Company.
The Director's Loans were made on the 29 November 2024 and repaid in full on
10 December 2024. There were no amounts outstanding at the end of the year
(2023: £nil).
Section 172(1) Statement
The directors are well aware of their duty under section 172 of the Companies
Act 2006. Further information on how the directors have had regard to the
Section 172(1) Matters can be found in the Stakeholder Engagement and Section
172 Report.
Strategic Report - Risk Management
Warpaint is exposed to a variety of risks that can have financial, operational
and regulatory impacts on the Group's business performance. The board
recognises that creating shareholder returns is the reward for taking and
accepting risk. The effective management of risk is therefore critical to
supporting the delivery of the Group's strategic objectives.
Risk Risk Level Movement
Currency / Foreign Exchange ("FX") Medium Unchanged
Due to the Group's goods being manufactured outside of its key trading areas
and its extensive export business from the UK, it both generates revenues and
incurs manufacturing costs in foreign currencies. As a result, the Group is
exposed to the risk that adverse exchange rate movements cause the value
(relative to its reporting currency) of its revenues to decrease, or costs to
increase, resulting in reduced profitability.
Management continues to review the Group's hedging policy to ensure it remains
appropriate while it increases its international business. There is a Group FX
committee made up of senior management who communicate regularly. Whenever
possible foreign currency is purchased (using forward foreign exchange
contracts) at, or as close as possible to, the budget rate to cover the annual
needs of the business.
Warpaint has determined this remains a principal risk of the business.
Reliance on Key Suppliers Medium Reduced
In 2024, one key supplier from China was responsible for approximately 17.3%
(2023: 19%) of the Group's brand ranges of colour cosmetics. This is the first
time since IPO to AIM that this key supplier percentage has fallen below 17.5%
as we continue to source from new suppliers. If there were some catastrophic
event that reduced or stopped deliveries from this key supplier, management
would be able to place orders with other existing suppliers. However, this
would take several months to implement and such an event would therefore have
a material adverse effect on the Group's financial position, results of
operations and future prospects.
Management retains close relations with suppliers with relatively short lead
times, and the Group typically holds four to six months of inventory at any
one time, nevertheless the sourcing of new suppliers in a wider geographic
location is ongoing.
Product Liability Medium Unchanged
All products are manufactured in facilities approved by relevant authorities.
The ingredients in each product are compliant with and meet the relevant
standards required by the markets to which the products will be sold into.
There is however always the risk that an end user could have an allergic or
other reaction to an individual product leading to the possibility of
compensation claims and potentially damaging the good reputation of the
Group's brands.
Management has every colour cosmetic ingredient independently checked by a
qualified chemist for compliance with UK, EU, US regulations and when
necessary, any other relevant legislation, and maintain adequate product and
public liability insurance to ensure that any claims have little impact on the
Group's profitability.
Warpaint has determined this remains a principal risk of the business.
Significant Customers Medium Unchanged
The Group has one customer in Denmark with over 850 stores across Denmark,
Norway, Sweden, the Netherlands, France, Finland, Portugal and Spain. In 2024
this customer represented 27.2% (2023: 25.9%) of Group revenue. We currently
have an excellent working relationship with this customer who has a
significant awareness of Warpaint's brands.
Management believes that, should the customer decide not to sell our brands, a
large amount (if not all) of the existing business will be taken up by other
retailers in the countries in which the customer operates.
Warpaint has determined this remains a principal risk of the business.
Location Low Unchanged
The Group has the majority of its operations and assets split across three
locations in Iver, West Drayton and Silsden in the UK. If a fire were to
befall any of the Group's premises, a significant amount of assets might be
destroyed or damaged and - although the Group has insurance cover in place -
the Group's business, financial results and prospects might be negatively
affected by such an event.
Fire alarm systems are tested weekly, smoke detectors inspected quarterly,
fire extinguishers tested annually, and trained fire marshals are onsite.
Staff have regular fire drills and fire risk assessments are carried out to
ensure compliance with fire regulations.
Cyber Attacks Medium Unchanged
There is an increasing risk that cybercrime will cause business interruption,
loss of key systems, loss of online sales, theft of data or damage to
reputation.
The Group regularly reviews, tests and invests in the development and
maintenance of its IT infrastructure, systems and security. There is in place
disaster recovery and business continuity plans that are tested annually. The
Group has a password policy in place and utilises Multifactor Authentication
(MFA) before access is granted to its systems and data.
Warpaint has determined this remains a principal risk of the business.
Covid-19 Type Pandemic High Unchanged
Covid-19 or another similar virus pandemic will cause major disruption to the
business. Staff will be absent either through illness or from isolation
measures, the business strategy will be affected, delayed and perhaps will
require reassessment, capital markets and foreign exchange markets will become
volatile, and the supply chain and customer base may temporarily close.
In a pandemic situation, the Group will follow Government guidelines and
enable staff to work remotely where possible, until such time that they can
return to work with new workplace safety measures in place, will explore and
examine liquidity continuity measures and implement business continuity plans.
A committee made up of the Chief Executive Officer, the managing director of
Retra and Keith Sadler, a non-executive director will be utilised to formulate
and implement a Group wide response in the event of a further pandemic or
other similar disruptive event.
This information forms part of the strategic report and has been approved for
issue by the board on 28 April 2025.
Neil Rodol
Chief Financial Officer
28 April 2025
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
Year ended 31 December
2024 2023
Note £'000 £'000
Revenue 2 101,607 89,590
Cost of sales 2 (59,739) (53,857)
Gross profit 41,868 35,733
Administrative expenses 3,4 (17,882) (17,252)
Profit from operations 23,986 18,481
Finance expense 5 (341) (369)
Finance income 5 116 6
Profit before tax 23,761 18,118
Tax expense 6 (5,528) (4,219)
Profit for the year attributable to equity holders of the parent company 18,233 13,899
Other comprehensive income:
Item that will or may be reclassified to profit or loss:
Exchange gain on translation of foreign subsidiary 11 72
Total comprehensive income attributable to equity holders of the parent 18,244 13,971
company, net of tax
Basic earnings per share (pence) 26 23.47 18.05
Diluted earnings per share (pence) 26 23.34 17.98
The notes form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 31 DECEMBER 2024
As at 31 December
2024 2023
Note £'000 £'000
Non-current assets
Goodwill 8 7,274 7,274
Intangibles 9 90 93
Property, plant, and equipment 10 2,527 1,245
Right-of-use assets 11 4,073 5,280
Deferred tax assets 17 568 592
Total non-current assets 14,532 14,484
Current assets
Inventories 12 31,192 27,963
Trade and other receivables 13 16,336 13,529
Corporation tax recoverable 273 -
Cash and cash 14 21,887 9,053
equivalents
Derivative financial instruments 23 1,340 -
Total current assets 71,028 50,545
Total assets 85,560 65,029
Current liabilities
Trade and other payables 15 (7,630) (9,576)
Lease liabilities 16 (1,326) (1,259)
Corporation tax liability - (2,501)
Derivative financial instruments 23 - (518)
Total current liabilities (8,956) (13,854)
Non-current liabilities
Lease liabilities 16 (2,919) (4,190)
Deferred tax liabilities 17 (391) (180)
Total non-current liabilities (3,310) (4,370)
Total liabilities (12,266) (18,224)
NET ASSETS 73,294 46,805
The notes form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 31 DECEMBER 2024
2024 2023
£'000 £'000
Equities
Share capital 19 20,171 19,314
Share premium 34,114 19,726
Merger reserve (16,100) (16,100)
Foreign exchange reserve 33 22
Share option reserves 21 652 594
Retained earnings 34,424 23,249
TOTAL EQUITY 73,294 46,805
The financial statements of Warpaint London plc were approved and authorised
for issue by the Board of Directors and were signed on its behalf by:
Neil Rodol
Chief Financial Officer
Date: 28 April 2025
The notes form part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
Share Capital Share Premium Merger Reserve Foreign exchange reserve Share option reserve Retained Earnings Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 31 December 2022 19,188 19,360 (16,100) (50) 2,003 13,378 37,779
Comprehensive Income for the year
Profit for the year - - - - - 13,899 13,899
Other comprehensive income:
Exchange gain arising on translation of foreign subsidiaries - - - 72 - - 72
Total comprehensive income for the year - - - 72 - 13,899 13,971
Contributions by and distributions to owners
Equity shares issued (note 19) 126 366 - - - - 492
Transfer to retained earnings for exercised share options - - - - (130) 130 -
Transfer to retained earnings for expired and lapsed share options - - - - (1,627) 1,627 -
Deferred tax movement - - - - 214 - 214
Share based payment charge - - - - 134 - 134
Dividends paid - - - - - (5,785) (5,785)
Total contributions by and distributions to owners 126 366 - - (1,409) (4,028) (4,945)
As at 31 December 2023 19,314 19,726 (16,100) 22 594 23,249 46,805
Comprehensive Income for the year
Profit for the year - - - - - 18,233 18,233
Other comprehensive income:
Exchange gain arising on translation of foreign subsidiaries - - - 11 - - 11
Total comprehensive income for the year - - - 11 - 18,233 18,244
Contributions by and distributions to owners
Equity shares issued (note 19) 857 14,835 - - - - 15,692
Share issue costs (note 19) - (447) - - - - (447)
Transfer to retained earnings for exercised share options - - - - (321) 321 -
Deferred tax movement - - - - 30 - 30
Share based payment charge - - - - 349 - 349
Dividends paid - - - - - (7,379) (7,379)
Total contributions by and distributions to owners 857 14,388 - - 58 (7,058) 8,245)
As at 31 December 2024 20,171 34,114 (16,100) 33 652 34,424 73,294
The notes form part of these financial statements
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2024
Year ended 31 December
2024 2023
Note £'000 £'000
Operating activities
Profit before tax 23,761 18,118
Non- cash items:
Finance expense 5 341 369
Finance income 5 (116) (6)
Amortisation of intangible assets 9 26 187
Depreciation of property, plant, and equipment 10 934 662
Depreciation on right of use assets 11 1,273 1,111
Loss on disposal of property, plant, and equipment 10 9 40
Share based payments 21 349 134
Movement in deferred tax assets 24 (51)
Fair value gain on derivative financial instruments (1,858) (74)
Foreign exchange translation differences 45 (7)
Other adjustments:
Acquisition related costs 418 -
Working capital adjustments:
Increase in trade and other receivables (2,807) (1,836)
Increase in inventories 12 (3,229) (9,248)
(Decrease)/Increase in trade and other payables (1,943) 3,588
Cash generated from operations 17,227 12,987
Tax paid (8,070) (2,569)
Net cash flows from operating activities 9,157 10,418
Investing activities
Acquisition related costs (418) -
Purchase of intangible assets 9 (23) (3)
Purchase of property, plant, and equipment 10 (2,237) (515)
Proceeds from sales of Property Plant & Equipment 12 -
Interest received 116 -
Net cash used in investing activities (2,550) (518)
Financing activities
Loans received from Directors 14,000 -
Loans repaid to Directors (14,000) -
Lease payments 16 (1,270) (1,144)
Proceeds from issued share capital 15,245 492
Lease liability interest 5 (206) (230)
Interest paid 5 (135) (139)
Interest received 5 - 6
Dividends 18 (7,379) (5,785)
Net cash from / (used in) financing activities 6,255 (6,800)
Net increase in cash and cash equivalents 12,862 3,100
Cash and cash equivalents at beginning of period 9,053 5,865
Exchange(loss) gain on cash and cash equivalents (28) 88
Cash and cash equivalents at end of period 14 21,887 9,053
Cash and cash equivalents consist of:
Cash and cash equivalents¹ 14 21,887 9,053
21,887 9,053
Note 1: Cash and cash equivalents include restricted cash of £14,021,000 (see
Note 14) which was held in an escrow account at 31 December 2024. The funds
were released in February 2025 and utilised in the acquisition of Brand
Architekts Group PLC. Further details of this acquisition are provided in
Note 28.
The notes form part of these financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT ENDED 31 DECEMBER 2024
1. Material accounting policies
Basis of preparation
The financial statements of Warpaint London PLC (the "Company" or "Warpaint")
and its subsidiaries (together the "Group") for the year ended 31 December
2024 were authorised for issue by the board of directors on 28 April 2025.
Warpaint London PLC is a public limited Company incorporated and registered in
England and Wales. Its registered office is Units B&C, Orbital Forty-Six,
The Ridgeway Trading Estate, Iver, Buckinghamshire, SL0 9HW.
The Group's financial statements have been prepared in accordance with UK
adopted international accounting standards and in conformity with the
requirements of the Companies Act.
The financial statements are presented in pounds sterling and are rounded to
the nearest thousand (£'000) except where otherwise indicated foreign
operations are included in accordance with policies set out in the Foreign
Currencies accounting policy.
The annual financial statements have been prepared on the historical cost
basis, except for certain financial assets and liabilities which are carried
at fair value.
The preparation of financial statements in accordance with UK adopted
international accounting standards requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reported period. Although these estimates are based on management's best
knowledge of current events and actions, actual results ultimately may differ
from those estimates. The principal accounting policies adopted are set out
below.
Basis of consolidation
Where the company has control over an investee, it is classified as a
subsidiary. The company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the company and
its subsidiaries as if they formed a single entity. Intercompany transactions
and balances between group companies are therefore eliminated in full. All
subsidiaries have a reporting date of December.
The consolidated financial statements incorporate the results of business
combinations using the acquisition method. In the statement of financial
position, the acquiree's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition
date. The results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is obtained.
They are deconsolidated from the date on which control ceases.
On consolidation, the results of overseas operations are translated into
pounds sterling at rates approximating to those ruling when the transactions
took place. All assets and liabilities of overseas operations, including
goodwill arising on the acquisition of those operations, are translated at the
rate ruling at the reporting date. Exchange differences arising on translating
the opening net assets at opening rate and the results of overseas operations
at actual rate are recognised in other comprehensive income and accumulated in
the foreign exchange reserve.
Exchange differences recognised profit or loss in Group entities' separate
financial statements on the translation of long-term monetary items forming
part of the Group's net investment in the overseas operation concerned are
reclassified to other comprehensive income and accumulated in the foreign
exchange reserve on consolidation.
On disposal of a foreign operation, the cumulative exchange differences
recognised in the foreign exchange reserve relating to that operation up to
the date of disposal are transferred to the consolidated statement of
comprehensive income as part of the profit or loss on disposal.
Going concern
The Directors have concluded that it is reasonable to adopt a going concern
basis in preparing the financial statements. This is based on a reasonable
expectation that the Group has adequate resources to continue in operational
existence for at least twelve months from the date of signing of these
accounts. The Group made a statutory profit of £18.2 million in the year to
31 December 2024 (2023: £13.9 million) and had net current assets of £62.1
million at 31 December 2024 (2023: £36.7 million).
The Group occasionally makes use in its Retra Holdings Limited ("Retra")
subsidiary of a £6.0 million bank facility that can be used for confidential
invoice discounting, and a £3.5 million bank facility that can be used for
stock finance, which is used if needed during the peak gift buying season.
These facilities are ongoing without a fixed term. In addition, the Group has
a £5.0 million reducing to £1.0 million from 1 May 2025 (2023: £5.0
million) general purpose bank facility in its Warpaint Cosmetics (2014)
Limited ("Warpaint Cosmetics") subsidiary. This facility will renew annually
and was put in place to support the continued growth of the business. As at
the yearend £nil of the bank facilities were utilised and the Directors
expect that in 2025 the facilities will only be used to modest levels well
within the facility limits, to support the day to day working capital of the
business. At the 8 April 2025 the company had cash of £17.3 million (2 April
2024: £7.5 million), no debt and had used £nil of its bank facilities (31
March 2023: No debt and £nil bank facilities were used).
The Directors have prepared forecasts covering the period to December 2026,
built from the detailed Board-approved budget for 2025. The forecasts include
a number of assumptions in relation to varying levels of sales revenue. Whilst
the Group's trading and cash flow forecasts have been prepared using current
trading assumptions, the operating environment presents a number of challenges
which could negatively impact the actual performance achieved. These
challenges include, but are not limited to, achieving forecast levels of sales
and order intake, the impact on customer confidence as a result of general
economic conditions, achieving forecast margin improvements, supply side price
inflation, increases in freight costs, and the director's ability to implement
cost saving initiatives in areas of discretionary spend where required.
The Group's cash flow forecasts and projections, taking account of reasonable
and possible changes in trading performance, offset by mitigating actions
within the control of management including reductions in areas of
discretionary spend, show that the Group will be able to operate comfortably
through to the end of December 2026, and in Retra and Warpaint Cosmetics
within the level of their own bank facility.
In preparing this analysis, a number of scenarios were modelled. The scenarios
modelled were all based on varying levels of sales revenue, including one that
assumes no growth for 2025 and 2026 as a reasonable downside scenario, and
more extreme falls in revenue of up to 30% in both years as a worst-case
scenario. In each scenario, mitigating actions within the control of
management have been modelled. In addition, management have considered the
changing US tariffs made in recent months, even though sales into the US are a
small part of the business (Sales 2024: £8.7million, 2023: £7.3million).
Management calculated that the changes in tariff made an immaterial impact on
the business and the carrying value of the goodwill in its US entity. Under
each of the scenarios modelled, the Group has sufficient cash to meet its
liabilities as they fall due and consequently, the directors believe that the
Group has sufficient financial strength to withstand the possible disruption
to its activities.
Based on the above indications the directors believe that it remains
appropriate to prepare the financial statements on a going concern basis.
Revenue Recognition
Performance obligations and timing of revenue recognition
The Group's revenue is derived from selling goods with revenue recognised at a
point in time when control of the goods has transferred to the customer. This
is generally when the goods are delivered to the customer. However, for export
sales, control might also be transferred when delivered either to the port of
departure or port of arrival, depending on the specific terms of the contract
with a customer. There is limited judgement needed in identifying the point
control passes: once physical delivery of the products to the agreed location
has occurred, the group no longer has physical possession, usually will have a
present right to payment (as a single payment on delivery) and retains none of
the significant risks and rewards of the goods in question.
UK sales are recognised and invoiced to the customer once the goods have been
delivered to the customer. Overseas sales are recognised and invoiced to the
customer once the goods have been delivered to the customer or collected by
the customer from the Group's warehouse according to the terms of sale. Online
sales are recognised and invoiced to the customer once the goods have been
delivered to the customer.
Under IFRS 15, volume rebates and early settlement discounts represent
variable consideration and is estimated and recognised as a reduction to
revenue as performance obligations are satisfied. Management recognises
revenue based on the amount of estimated rebate and discounts to the extent
that revenue is highly probably of not reversing. Management monitors this
estimate at each reporting date and adjusts it as necessary.
Determining the transaction price
Most of the group's revenue is derived from fixed price contracts and
therefore the amount of revenue to be earned from each contract is determined
by reference to those fixed prices. Exceptions are as follows:
· Some contracts provide customers with a limited right of return.
These relate predominantly, but not exclusively, to online sales direct to
consumers and sales made to certain large retailers. Historical experience
enables the group to estimate reliably the value of goods that will be
returned and restrict the amount of revenue that is recognised such that it is
highly probable that there will not be a reversal of previously recognised
revenue when goods are returned.
· Variable consideration relating to volume rebates has been considered
in estimating revenue in order that it is highly probable that there will not
be a future reversal in the amount of revenue recognised when the amount of
volume rebates has been determined.
Allocating amounts to performance obligations
For most contracts, there is a fixed unit price for each product sold, with
reductions given for bulk orders placed at a specific time. Therefore, there
is no judgement involved in allocating the contract price to each unit ordered
in such contracts (it is the total contract price divided by the number of
units ordered). Where a customer orders more than one product line, the Group
is able to determine the split of the total contract price between each
product line by reference to each product's standalone selling prices (all
product lines are capable of being, and are, sold separately).
Practical Exemptions
The group has taken advantage of the practical exemptions:
· not to account for significant financing components where the time
difference between receiving consideration and transferring control of goods
(or services) to its customer is one year or less; and
· expense the incremental costs of obtaining a contract when the
amortisation period of the asset otherwise recognised would have been one year
or less.
Alternative Performance Measures
Alternative performance measures (APM's) are used by the Board to assess the
Group's performance and are applied consistently from one period to the next.
They therefore provide additional useful information for shareholders on the
underlying performance and position of the Group. Additionally, adjusted
profit from operations is used to determine adjusted EPS which is used in some
instances for the Company's share option schemes. These measures are not
defined by IFRS and are not intended to be a substitute for IFRS measures.
Adjusted numbers are closer to the underlying cash flow performance from
recurring operations of the business, which is regularly monitored and
measured by management.
Underlying results are used in the day-to-day management of the Group. They
represent statutory measures adjusted for items which could distort the
understanding of performance and comparability year on year. Non-underlying
items include the amortisation of intangible assets, acquisition related costs
in respect of the acquisition of Brand Architekts Group Plc (see note 25) and
share-based payments.
Non-underlying items are considered my management to be non - cash items such
which are included as part of the consolidation process such as amortisation
of intangible assets other non - cash items and one-off expenditure which
management consider will distort the performance measures being monitored.
The table below discloses the performance measured monitored by the Company.
Year ended 31 Dec 2024 Year ended 31 Dec 2023
Statutory profit from operations £24.00m £18.48m
Depreciation £0.93m £0.66m
Depreciation of right of use assets £1.27m £1.11m
Amortisation of intangible assets £0.03m £0.19m
Foreign exchange gain/loss £ (2.0) m £0.43m
EBITDA £24.23m £20.87m
Acquisition related expenses £0.42m -
Share based payments £0.35m £0.13m
Adjusted EBITDA £24.99m £21.00m
Statutory profit from operations £24.00m £18.48m
Acquisition related expenses £0.42m -
Amortisation of intangible assets £0.03m £0.19m
Share based payments £0.35m £0.13m
Adjusted profit from operations £24.80m £18.80m
Adjusted profit margin from operations £24.80m / £101.61m = 24.4% £18.80m / £89.59m = 21.0%
Statutory PBT £23.76m £18.12m
Acquisition related expenses £0.42m -
Amortisation of intangible assets £0.03m £0.19m
Share based payments £0.35m £0.13m
Adjusted PBT £24.56m £18.44m
Statutory profit attributable to equity holders £18.23m £13.90m
Acquisition related expenses £0.42m -
Amortisation of intangible assets £0.03m £0.19m
Share based payments £0.35m £0.13m
Tax attributable to adjusting items £ (0.18) m £ (0.08) m
Adjusted profit attributable to equity holders £18.85m £14.14m
Weighted number of ordinary shares 77,691,505 76,983,311
Adjusted EPS 24.26p 18.37p
Intangible assets
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately
from goodwill are initially recognised at their fair value at the acquisition
date (which is regarded as their cost). Subsequent to initial recognition,
intangible assets acquired in a business combination are reported at cost less
accumulated amortisation and accumulated impairment losses, on the same basis
as intangible assets that are acquired separately. Amortisation is provided on
customer lists and brands so as to write off the carrying value over the
expected useful economic life of five years. Other details of the acquisition
are detailed in note 9.
Goodwill
Goodwill represents the excess of the cost of a business combination over the
Group's interest in the fair value of identifiable assets, liabilities and
contingent liabilities acquired.
Cost comprises the fair value of assets given, liabilities assumed, and equity
instruments issued, plus the amount of any non-controlling interests in the
acquiree. Contingent consideration is included in cost at its acquisition date
fair value and, in the case of contingent consideration classified as a
financial liability, remeasured subsequently through profit or loss.
Goodwill is considered to have an indefinite useful economic life and is
capitalised as an intangible asset with any impairment in carrying value being
charged to the consolidated statement of comprehensive income. Where the fair
value of identifiable assets, liabilities and contingent liabilities exceed
the fair value of consideration paid, the excess is credited in full to the
consolidated statement of comprehensive income on the acquisition date.
Impairment of non-financial assets (excluding inventories and deferred tax
assets)
Impairment tests on goodwill and other intangible assets with indefinite
useful economic lives are undertaken annually at the financial year end.
Other non-financial assets are subject to impairment tests whenever events or
changes in circumstances indicate that their carrying amount may not be
recoverable.
Where the carrying value of an asset exceeds its recoverable amount (i.e. the
higher of value in use and fair value less costs to sell), the asset is
written down accordingly. Where it is not possible to estimate the recoverable
amount of an individual asset, the impairment test is carried out on the
smallest group of assets to which it belongs for which there are separately
identifiable cash flows; its cash generating units ('CGUs').
Goodwill is allocated on initial recognition to each of the Group's CGUs that
are expected to benefit from a business combination that gives rise to the
goodwill. Impairment charges are included in profit or loss, except to the
extent they reverse gains previously recognised in other comprehensive income.
An impairment loss recognised for goodwill is not reversed.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic
benefits are expected from use or disposal. Gains or losses arising from
derecognition of an intangible asset, measured as the difference between the
net disposal proceeds and the carrying amount of the asset, are recognised in
profit or loss when the asset is derecognised.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As
well as the purchase price, cost includes directly attributable costs.
Depreciation is provided on all items of property, plant and equipment so as
to write off their carrying value over the expected useful economic lives. It
is provided at the following rates:
Plant and machinery - 25% reducing balance or 20% straight line
Fixtures and fittings - 25% reducing balance or 20% straight line or 33.3% straight line
Computer equipment - 25% reducing balance or 33.33% straight line
Motor vehicles - 20% straight line
Financial assets
The Group classifies its financial assets into one of the categories discussed
below, depending on the purpose for which the asset was acquired. Other than
financial assets in a qualifying hedging relationship, the Group's accounting
policy for each category is as follows:
Fair value through profit or loss
This category comprises in-the-money derivatives and out-of-money derivatives
where the time value offsets the negative intrinsic value (see "Financial
liabilities" section for out-of-money derivatives classified as liabilities).
They are carried in the statement of financial position at fair value with
changes in fair value recognised in the consolidated statement of
comprehensive income in the finance income or expense line. Other than
derivative financial instruments which are not designated as hedging
instruments, the Group does not have any assets held for trading nor does it
voluntarily classify any financial assets as being at fair value through
profit or loss.
Amortised cost
These assets arise principally from the provision of goods and services to
customers (e.g. trade receivables) but also incorporate other types of
financial assets where the objective is to hold these assets in order to
collect contractual cash flows and the contractual cash flows are solely
payments of principal and interest. They are initially recognised at fair
value plus transaction costs that are directly attributable to their
acquisition or issue and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
Impairment requirements use an 'expected credit loss' ('ECL') model to
recognise an allowance. Impairment is measured using a 12- month ECL method
unless the credit risk on a financial instrument has increased significantly
since initial recognition in which case the lifetime ECL method is adopted.
For receivables, a simplified approach to measuring expected credit losses
using a lifetime expected loss allowance is available and has been adopted by
the Group. During this process the probability of the non-payment of the trade
receivables is assessed. This probability is then multiplied by the amount of
the expected loss arising from default to determine the lifetime expected
credit loss for the trade receivables. For trade receivables, which are
reported net, such provisions are recorded in a separate provision account
with the loss being recognised within administrative expenses in the
consolidated statement of comprehensive income. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
The Group's financial assets measured at amortised cost comprise trade and
other receivables, and cash and cash equivalents in the consolidated statement
of financial position.
Cash and cash equivalents include cash in hand, deposits held at call with
banks and restricted cash held under escrow (see note 14). For the purpose of
the statement of cash flows - bank overdrafts. Bank overdrafts are shown
within loans and borrowings in current liabilities on the consolidated
statement of financial position.
Financial liabilities
The Group classifies its financial liabilities into one of two categories,
depending on the purpose for which the liability was acquired. The Group's
accounting policy for each category is as follows:
Fair value through profit or loss
This category comprises out-of-the-money derivatives where the time value does
not offset the negative intrinsic value (see "Financial assets" for
in-the-money derivatives and out-of-money derivatives where the time value
offsets the negative intrinsic value). They are carried in the consolidated
statement of financial position at fair value with changes in fair value
recognised in the consolidated statement of comprehensive income. The Group
does not hold or issue derivative instruments for speculative purposes, but
for hedging purposes. Other than these derivative financial instruments, the
Group does not have any liabilities held for trading nor has it designated any
financial liabilities as being at fair value through profit or loss.
Other financial liabilities
Other financial liabilities include the following items:
· Trade payables, other borrowings and other short-term monetary
liabilities, which are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest method.
·
Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage
its exposure to foreign exchange rate risk, through the use of foreign
exchange rate forward contracts.
Derivatives are initially recognised at fair value at the date the derivative
contracts are entered into and are subsequently re-measured to their fair
value at the end of each reporting period. The resulting gain or loss is
recognised in profit or loss immediately unless the derivative is designated
and effective as a hedging instrument, in which event the timing of the
recognition in profit or loss depends on the nature of the hedge relationship.
Foreign currencies
Transactions entered into by Group entities in a currency other than the
currency of the primary economic environment in which they operate (their
"functional currency") are recorded at the rates ruling when the transactions
occur. Foreign currency monetary assets and liabilities are translated at the
rates ruling at the reporting date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities are recognised
immediately in profit or loss.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the group's foreign operations are translated at exchange
rates prevailing on the reporting date. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the exchange rates
at the date of transactions are used. Exchange differences arising, if any,
are recognised in other comprehensive income and accumulated in a foreign
exchange translation reserve.
Leases
All leases are accounted for by recognising a right-of-use asset and a lease
liability except for:
· leases of low value assets; and
· leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the
group's incremental borrowing rate on commencement of the lease is used.
Variable lease payments are only included in the measurement of the lease
liability if they depend on an index or rate. In such cases, the initial
measurement of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments are
expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also
includes:
· amounts expected to be payable under any residual value guarantee;
· the exercise price of any purchase option granted in favour of the
group if it is reasonably certain to assess that option; and
· any penalties payable for terminating the lease, if the term of the
lease has been estimated on the basis of termination option being exercised.
Right of use assets are initially measured at the amount of the lease
liability, reduced for any lease
incentives received, and increased for:
· lease payments made at or before commencement of the lease;
· initial direct costs incurred; and
· the amount of any provision recognised where the group is
contractually required to dismantle, remove or restore the leased asset.
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining economic life
of the asset if, rarely, this is judged to be shorter than the lease term.
When the group revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination
option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted at
a revised discount rate. The carrying value of lease liabilities is similarly
revised when the variable element of future lease payments dependent on a rate
or index is revised. In both cases an equivalent adjustment is made to the
carrying value of the right-of-use asset, with the revised carrying amount
being amortised over the remaining (revised) lease term.
When the group renegotiates the contractual terms of a lease with the lessor,
the accounting depends
on the nature of the modification:
· if the renegotiation results in one or more additional assets being
leased for an amount commensurate with the standalone price for the additional
rights-of-use obtained, the modification is accounted for as a separate lease
in accordance with the above policy;
· in all other cases where the renegotiated increases the scope of the
lease (whether that is an extension to the lease term, or one or more
additional assets being leased), the lease liability is remeasured using the
discount rate applicable on the modification date, with the right-of-use asset
being adjusted by the same amount ; and
· if the renegotiation results in a decrease in the scope of the lease,
both the carrying amount of the lease liability and right-of-use asset are
reduced by the same proportion to reflect the partial of full termination of
the lease with any difference recognised in profit or loss. The lease
liability is then further adjusted to ensure its carrying amount reflects the
amount of the renegotiated payments over the renegotiated term, with the
modified lease payments discounted at the rate applicable on the modification
date. The right-of-use asset is adjusted by the same amount.
For contracts that both convey a right to the group to use an identified asset
and require services to be provided to the group by the lessor, the group has
elected to account for the entire contract as a lease, i.e. it does allocate
any amount of the contractual payments to, and account separately for, any
services provided by the supplier as part of the contract.
Nature of leasing activities (in the capacity as lessee)
The group leases a number of properties in the jurisdictions from which it
operates with a fixed periodic rent over the lease term. The group has a total
of 7 property leases.
The Group depreciates the right-of-use assets on a straight-line basis from
the lease commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term.
The Group also assesses the right-of-use asset for impairment when such
indicators exist.
The right-of-use assets are included in a separate line within non-current
assets on the Consolidated Balance Sheet.
Taxation
Income tax expense represents the sum of the tax currently payable and
deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from 'profit before tax' as reported in the consolidated
statement of comprehensive income and other comprehensive income because of
items of income or expense that are taxable or deductible in other years and
items that are never taxable or deductible.
The Group's current tax is calculated using tax rates that have been enacted
or substantively enacted by the end of the reporting period.
Deferred taxation
A deferred tax liability shall be recognised for all taxable temporary
differences, except to the extent that the deferred tax liability arises from:
· the initial recognition of goodwill;
· the initial recognition of an asset or liability in a transaction
which is not a business combination and at the time of the transaction affects
neither accounting or taxable profit at the time of the transaction, does not
give rise to equal taxable and deductible temporary differences; and
· investments in subsidiaries and jointly controlled entities where the
Group is able to control the timing of the reversal of the difference and it
is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it
is probable that taxable profit will be available against which the difference
can be utilised.
The amount of the asset or liability is determined using tax rates that have
been enacted or substantively enacted by the end of the reporting period and
are expected to apply when the deferred tax liabilities or assets are settled
or recovered. Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally
enforceable right to offset current tax assets and liabilities and the
deferred tax assets and liabilities relate to taxes levied by the same tax
authority on either:
· the same taxable group company; or
· different company entities which intend either to settle current tax
assets and liabilities on a net basis, or to realise the assets and settle the
liabilities simultaneously, in each future period in which significant amounts
of deferred tax assets and liabilities are expected to be settled or
recovered.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of
the cost and net realisable value. Cost comprises all costs of purchase, costs
of conversion and other costs incurred in bringing the inventories to their
present location and condition. Costs are calculated using the FIFO (first in,
first out) method. Provision is made for obsolete, slow-moving or defective
items where appropriate.
Operating segments
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision maker has been identified as the management team including the Chief
Executive Officers, Managing Director and the Chief Financial Officer.
The Board considers that the Group's project activity constitutes the two
operating and two reporting segments presented in Note 2, as defined under
IFRS 8. Management reviews the performance of the Group by reference to total
results against budget.
The total profit measures are operating profit and profit for the year, both
disclosed on the face of the combined income statement. No differences exist
between the basis of preparation of the performance measures used by
management and the figures in the Group financial information.
Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders of the parent by the weighted average number of
ordinary shares outstanding during the year, excluding treasury shares and
shares in employee benefit trusts, determined in accordance with the
provisions of IAS 33 earnings per Share. Diluted earnings per share is
calculated by dividing earnings attributable to ordinary shareholders of the
parent by the weighted average number of ordinary shares outstanding during
the year adjusted for the potentially dilutive ordinary shares.
Share Capital
The Group's ordinary shares are classified as equity instruments. Costs
specifically relating to the issue of shares are offset against any share
premium arising on the issue of those shares. Any share issue costs in excess
of share premium are expensed to the consolidated statement of comprehensive
income.
Share-based payments
Where equity settled share options are awarded to employees, the fair value of
the options at the date of grant is charged to the consolidated statement of
comprehensive income over the vesting period. Non-market vesting conditions
are considered by adjusting the number of equity instruments expected to vest
at each reporting date so that, ultimately, the cumulative amount recognised
over the vesting period is based on the number of options that eventually
vest. Non-vesting conditions and market vesting conditions are factored into
the fair value of the options granted. As long as all other vesting conditions
are satisfied, a charge is made irrespective of whether the market vesting
conditions are satisfied. The cumulative expense is not adjusted for failure
to achieve a market vesting condition or where a non-vesting condition is not
satisfied.
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to the consolidated statement of
comprehensive income over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the
consolidated statement of comprehensive income is charged with the fair value
of goods and services received.
Dividends
Dividends are recognised when they become legally payable. In the case of
interim dividends to equity shareholders, this is when paid to the
shareholders. In the case of final dividends, this is when approved by the
shareholders at the annual general meeting.
Changes in accounting policies
a) New standards, interpretations and amendments adapted
from 1 January 2024
The following amendments are effective for the period beginning 1 January
2024:
· Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 17).
· Lease Liability in Sales and Leaseback (Amendments to IFRS 16)
· Classification of Liabilities as Current or Non- Current (Amendments
to IAS 1); and
· Non-current Liabilities with Covenants (Amendments to IAS 1)
These amendments had no effect on the consolidated financial statements of the
Group In the current year the group has applied a number of new and amended
IFRS Accounting Standards issued by the International accounting Standards
Board ("IASB") and adopted by the UK, that are effective for the first time
for the financial year beginning 1 January 2024 Their adoption has not had any
material impact on the disclosure or on the amounts reported in these
financial statements.
New standards, interpretations and amendments effective from 1 January 2025
onwards
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
Effect annual periods beginning before or after
IAS 21 The Effects of Changes in Foreign Exchange Rates 1 January 2025
Lack of Exchangeability (Amendment to IAS 21 The Effects of Changes in Foreign
Exchange Rates)
IFRS 7 Financial Instruments: Disclosure 1 January 2026
Amendments regarding the classification and measurement of financial
instruments
IFRS 7 Financial Instruments: Disclosure 1 January 2026
Amendments resulting from Annual Improvements to IFRS Accounting Standards
IFRS 7 Financial Instruments 1 January 2026
Contracts Referencing Nature-dependent Electricity
IFRS 9 Financial Instruments 1 January 2026
Amendments regarding the classification and measurement of financial
instruments
IFRS 9 Financial Instruments 1 January 2026
Amendments resulting from Annual Improvements to IFRS Accounting Standards
IFRS 9 Financial Instruments 1 January 2026
Contracts Referencing Nature-dependent Electricity
IFRS 18 Presentation and Disclosure of Financial Statements 1 January 2027
Original issue
IFRS 19 Subsidiaries without Public Accountability: Disclosures 1 January 2027
Original issue
IFRS 18 Presentation and Disclosures in Financial Statements
IFRS 18 replaces IAS 1, carrying forward many of the requirements in IAS 1
unchanged and complementing them with new requirements.
IFRS 18 introduces new requirements to:
• present specified categories and defined subtotals in the
statement of profit or loss
• provide disclosures on management-defined performance measures
(MPMs) in the notes to the financial statements
• improve aggregation and disaggregation.
The directors of the company anticipate that the application of these
amendments may have an impact on the group's consolidated financial statements
in future periods.
The Group is currently assessing the effect of these new accounting standards
and amendments.
The Group does not expect to be eligible to apply IFRS 19.
Critical accounting judgements and key sources of estimation uncertainty
The Group makes certain estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including the expectations of future events that
are believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are discussed below.
Key sources of estimation uncertainty
a) Inventories
Inventories are initially recognised at cost, and subsequently at the lower of
the cost and net realisable value. There is judgement involved in assessing
the level of inventory provision required in respect of slow-moving inventory.
Inventory is carried at a value of £31.2 million at the year end.
The Group makes a 50% provision for perishable items of stock that are greater
than two years old. Should the Group increase the provision to 100% of
perishable items that are greater than two years old, this would decrease
profit by £0.31 million. The Group does not provide any provision on its
non-perishable goods that are greater than two years old on the basis that the
products have long shelf life. Should the Group increase the provision to 100%
of non-perishable items that are greater than two years old, this would
decrease profit by £0.23 million.
Critical accounting judgements
There are no critical judgements that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year.
2. Segmental information
For management purposes, the Group is organised into two operating segments;
Branded and Close-out. The segment 'Branded' relates to the sale of own
branded products whereas 'Close-out' relates to the purchase of third-party
stock which is then repackaged for sale. These segments are the basis on which
the Group reports internally to the Board. The executive directors Sam Bazini,
Eoin Macleod and Neil Rodol together with members from the Groups senior
management teams are the chief operating decision makers of the whole
business.
Year ended 31 December 2024 2024 2024 2023 2023 2023
Branded Close-out Total Branded Close-out Total
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 99,357 2,250 101,607 87,068 2,522 89,590
Cost of sales (58,416) (1,323) (59,739) (52,341) (1,516) (53,857)
Gross profit 40,941 927 41,868 34,727 1,006 35,733
Administrative expenses (17,486) (396) (17,882) (16,765) (487) (17,252)
Exceptional items - - - - - -
Segment result 23,455 531 23,986 17,962 519 18,481
Reconciliation of segment result to profit before tax:
Segment result 23,455 531 23,986 17,962 519 18,481
Finance Income 116 - 116 6 - 6
Finance expense (341) - (341) (369) - (369)
Profit before tax 23,230 531 23,761 17,599 519 18,118
Analysis of total revenue by geographical market:
UK 32,870 2,128 34,998 30,097 2,308 32,405
Europe - Other 10,283 10 10,293 8,213 11 8,224
Europe - Spain 14,623 84 14,707 11,223 82 11,305
Europe - Denmark 29,716 17 29,733 25,499 28 25,527
Rest of World - USA 8,649 11 8,660 7,213 93 7,306
Rest of World - Australia and New Zealand 2,168 - 2,168 3,067 - 3,067
Rest of World - Other 1,048 - 1,048 1,756 - 1,756
Total 99,357 2,250 101,607 87,068 2,522 89,590
During the year ended 31 December 2024, revenues of approximately £27.7
million (2023: £23.2 million) were derived from a single external customer
based in Denmark (27.3%; 2023: 25.9%).
The Directors are not able to attribute the Group's assets and liabilities by
reportable business segment.
Analysis of non-current assets by geographical market:
Year ended 31 December 2024 2024 2024 2023 2023 2023
UK USA Total UK USA Total
£'000 £'000 £'000 £'000 £'000 £'000
Goodwill 6,720 554 7,274 6,720 554 7,274
Customer lists - - - - - -
Brand - 3 3 - 3 3
Patents 60 - 60 83 - 83
Website 27 - 27 7 - 7
Property, plant and equipment 1,986 541 2,527 1,239 6 1,245
Right of use assets 4,023 50 4,073 5,214 66 5,280
12,816 1,148 13,964 13,263 629 13,892
Prior year figures have been amended to exclude deferred tax assets in
accordance with IFRS 8.
The Group has disaggregated revenue into the following category:
Year ended 31 December
2024 2023
Sales Type £'000 £'000
Sales to retailers and distributors 93,199 83,831
E-commerce sales 8,408 6,209
101,607 90,040
3. Operating profit
Operating profit for the period is stated after (crediting)/charging:
Year ended 31 December
2024 2023
£'000 £'000
Foreign exchange (gain)/loss (2,004) 433
Depreciation 934 662
Loss on disposal of property, plant and equipment 9 -
Depreciation of right-of-use assets 1,273 1,111
Amortisation of intangible assets 26 187
Acquisition related costs 418 -
Staff costs (note 4) 9,337 8,115
Write off of inventories 45 13
Inventories recognised as an expense (note 12) 50,244 45,900
Acquisition relates expenses relate to legal and financial due diligence costs
incurred prior to 31 December 2024 on the acquisition of Brand Architekts
Group PLC. Further details of the acquisition are provided in note 28.
Auditor's Remuneration
Analysis of auditor's remuneration is as follows:
Year ended 31 December
2024 2023
£'000 £'000
Fees payable to the Company's auditor for the audit of the Group's annual 147 99
accounts
Fees payable to the Company's auditor and its associates for the audit of 186 142
subsidiary companies
Total audit fees 333 241
Tax advice 5 16
Total non-audit fees 5 16
4. Staff costs
Year ended 31 December
2024 2023
£'000 £'000
Wages and salaries 8,199 7,130
Social security costs 1,004 863
Pension costs (note 24) 134 122
9,337 8,115
The average monthly number of employees during the period was as follows:
Year ended 31 December
2024 2023
No. No.
Directors 9 7
Administrative 23 24
Finance 14 12
Warehouse 71 65
Sales 17 14
New Product Development and PR 21 19
155 141
2024 2023
Directors' remuneration, included in staff costs £'000 £'000
Salaries 1,616 1,273
Share based payments (note 21) 74 75
Benefits 28 27
Pension contributions 4 2
1,722 1,377
The Directors' remuneration, included in staff costs includes the remuneration
of non - executive directors.
Remuneration of the highest paid director:
2024 2023
Directors' remuneration, included in staff costs £'000 £'000
Salaries 450 375
Benefits 15 15
465 390
The highest paid director did not exercise any share options in the year and
had no shares receivable under long-term incentive schemes.
The highest paid director is not a member of the company's money purchase
pension scheme.
Number of executive directors to whom retirement benefits are accruing under
the money purchase pension scheme was 2 (2023:Nil). No non- executive
directors accrued any benefit under the money purchase scheme in the current
or prior year.
During the year Directors exercised 250,000 (2023: 105,262) options over
ordinary shares of 25p at an exercise price of 122 pence per share (2023:
237.5p) and sold for 485p (2023: 321.75p).
The Directors of the Group are the only key management personnel.
5. Finance income and finance expenses
Year ended 31 December
2024 2023
£'000 £'000
Finance income
Interest received 116 6
116 6
Finance expenses
Lease liability interest (note 16) (206) (230)
Other interest relating to trade finance facilities (135) (139)
(341) (369)
6. Income tax
Year ended 31 December
2024 2023
£'000 £'000
Current tax expense
Current tax on profits for the period 5,335 4,245
Overprovided tax in respect of prior periods (72) -
5,263 4,245
Deferred tax expense
Origination and reversal of temporary differences 265 (26)
Total tax expense 5,528 4,219
The reasons for the difference between the actual tax charge for the year and
the standard rate of corporation tax in the United Kingdom applied to profit
for the year before tax as follows:
Year ended 31 December
2024 2023
£'000 £'000
Profit for the period before taxation 23,761 18,118
Expected tax charge based on UK effective corporation tax rate of 25% (2023: 5,940 4,258
23.5% UK standard rate)
Expenses/(Income)/ not deductible/(allowable) (175) (6)
Other adjustments - (74)
Different tax rates applied in overseas jurisdiction (68) 18
Differences due to an increase in tax rate - 23
Reduction of deferred tax on losses utilised (97)
Overprovided tax in prior years (72) -
Total tax expense 5,528 4,219
The standard rate of UK corporation tax is 25% (2023: 25%). The Group's
effective tax rate for the year is 23.27% (2023: 23.29%).
7. Subsidiaries
At the period end, the Group has the following subsidiaries:
Subsidiary name Nature of business Place of incorporation Percentage owned
Warpaint Cosmetics Group Limited Holding company England and Wales 100%
Warpaint Cosmetics (2014) Limited* Wholesaler England and Wales 100%
Treasured Scents (2014) Limited Holding company England and Wales 100%
Treasured Scents Limited* Non - operating entity England and Wales 100%
Warpaint Cosmetics Inc. Holding company U.S.A. 100%
Retra Holdings Limited Holding company England and Wales 100%
Badgequo Limited* Wholesaler England and Wales 100%
Retra Own Label Limited* Non - operating entity England and Wales 100%
Badgequo Hong Kong Limited* Supply chain management Hong Kong 100%
Jinhua Badgequo Cosmetics Trading Co., Ltd* Wholesaler People's Republic of China 100%
Marvin Leeds Marketing Services, Inc.* Wholesaler U.S.A. 100%
Warpaint Cosmetics (ROI) Limited Wholesaler Republic of Ireland 100%
Beaute Sales EU Limited Wholesaler England & Wales 100%
* Indicates indirect interest
All entities detailed above have been in existence for the whole of the
reporting period.
The registered office for all UK incorporated subsidiaries is Units B&C,
Orbital Forty-Six, The Ridgeway Trading Estate, Iver, Bucks. SL0 9HW, with the
exception of Beaute Sales EU Limited (Units 3 & 4 Zodiac Business Park,
High Road, Cowley, UB8 2GU as per CH, as below.
The registered office for Warpaint Cosmetics Inc. is 445 Northern Boulevard -
Great Neck, New York 11021.
The registered office for Badgequo Hong Kong Limited is 12F, 3 Lockhart Road,
Wanchai, Hong Kong.
The registered office for Jinhua Badgequo Cosmetics Trading Co. Ltd is Room
1401, Gongyuan Building No. 307 South Shuanglong Street, Wucheng District,
Jinhua, Zhejiang, China 321000.
The registered office for Marvin Leeds Marketing Services, Inc. is 34W. 33(rd)
St. - Suite 301, New York NY 10001.
The registered office for Warpaint Cosmetics (ROI) Limited is 6(th) Floor,
South Bank House, Barrow Street, Dublin 4, D04 TR29.
The registered office for Beaute Sales EU Limited is Units 3 & 4 Zodiac
Business Park, High Road, Cowley, Uxbridge, UB8 2GU.
8. Goodwill
Cost £'000
At 1 January 2023, 31 December 2023 and 31 December 2024 8,086
Impairment
At 1 January 2023,31 December 2023 and 31 December 2024 812
Net book value
At 31 December 2024 7,274
At 31 December 2023 7,274
Goodwill represents the excess of consideration over the fair value of the
Group's share of the net identifiable assets of the acquired business/CGU at
the date of acquisition. The carrying value as at 31 December 2024 includes
Treasured Scents (2014) Limited ("TS2014") (the Close-out business) of
£513,000, Retra Holdings Limited £6,207,000 and Marvin Leeds Marketing
Services, Inc. £554,000.
The assessment of the recoverable amount of goodwill allocated to Retra
Holdings Limited, Marvin Leeds Marketing Services, Inc. and Treasured Scents
Limited, was based on fair value less costs of disposals which involved
judgements over the assumptions applied.
For each entity, a multiple of 6.9 was applied to the EBITDA for the year
ended 31 December 2024. The multiple was selected from external sources of
data applicable to the valuation of private companies. The costs of disposal
were based on management's estimate. As the recoverable amount based on the
fair value less costs of disposal was, in each case, in excess of the carrying
value, the value in use was not calculated.
The most sensitive input to the model was the EBITDA multiple applied. For
Retra Holdings Limited, a 25% decrease in the EV/EBITDA multiple from 6.9 to
5.2 would reduce the fair value less costs of disposal by approximately £12
million leaving headroom of £30 million above the carrying value. For Marvin
Leeds Marketing Services, Inc., a 25% decrease in the EV/EBITDA multiple from
6.9 to 5.2 would reduce the fair value less costs of disposal by approximately
£1.5 million leaving headroom of £3.9 million above the carrying value. For
Treasured Scents Limited, a 25% decrease in the EV/EBITDA multiple from 6.9 to
5.2 would reduce the fair value less costs of disposal by approximately £1.0
million leaving headroom of £2.3 million above the carrying value. In each
case, a 25% reduction in the EV/EBITDA multiple is considered to be an
improbable adjustment when estimating fair value.
None of these scenarios would therefore result in any impairment of the
goodwill.
Since the year end tariffs into the US have increased, and currently this is
still a developing situation. Management have considered the newly implemented
US tariffs and have calculated that the changes in tariffs will have no
material impact on the business, or the carrying value of the goodwill in its
US entity.
In previous years, the value in use was calculated using a discounted cash
flow approach to obtain the recoverable amount but this year as the fair value
less costs of disposal calculation gave headroom when compared to the carrying
value, hence discounted cash flow approach was not used to calculate value in
use. This is compliant with the requirements under IFRS.
9. Intangible assets
Brands Customer lists Patents Website Licences Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2023 3,802 8,241 270 53 6 12,372
Additions - - 3 - - 3
Disposals - - (29) (4) - (33)
At 31 December 2023 3,802 8,241 244 49 6 12,342
Additions - - - 23 - 23
At 31 December 2024 3,802 8,241 244 72 6 12,365
Accumulated amortisation
At 1 January 2023 3,799 8,081 165 44 6 12,095
Charge for the year - 160 25 2 - 187
Amortisation on disposals - - (29) (4) - (33)
At 31 December 2023 3,799 8,241 161 42 6 12,249
Charge for the year - - 24 2 - 26
At 31 December 2024 3,799 8,241 185 44 6 12,275
Net book value
At 31 December 2024 3 - 59 28 - 90
At 31 December 2023 3 - 83 7 - 93
10. Property, plant and equipment
Plant and machinery Fixtures and fittings Computer equipment Motor vehicles Total
£'000 £'000 £'000 £'000 £'000
Costs
At 1 January 2023 1,291 2,291 471 78 4,131
Additions 146 221 148 - 515
Disposals - (749) - - (749)
Foreign exchange (loss) - (2) (1) - (3)
At 31 December 2023 1,437 1,761 618 78 3,894
Additions 56 2,089 42 50 2,237
Disposals - (155) (2) (34) (191)
Foreign exchange gain - 1 - - 1
At 31 December 2024 1,493 3,696 658 94 5,941
Accumulated depreciation
At 1 January 2023 941 1,384 326 48 2,699
Charge for year 108 492 56 6 662
Disposals - (709) - - (709)
Foreign exchange gain - (2) (1) - (3)
At 31 December 2023 1,049 1,165 381 54 2,649
Charge for year 99 741 83 11 934
Disposals - (135) (1) (34) (170)
Foreign exchange loss - 1 - - 1
At 31 December 2024 1,148 1,772 463 31 3,414
Net book value
At 31 December 2024 345 1,924 195 63 2,527
At 31 December 2023 388 596 237 24 1,245
11. Right-of-use assets
Leasehold property Computer equipment Total
£'000 £'000 £'000
Costs
At 1 January 2023 8,600 8,677
77
Additions 732 - 732
Disposals (334) - (334)
At 31 December 2023 8,998 9,075
77
Additions 66 - 66
Disposals (139) - (139)
At 31 December 2024 8,925 77 9,002
Accumulated amortisation
At 1 January 2023 2,941 77 3,018
Charge for the year 1,111 - 1,111
Disposals (334) - (334)
At 31 December 2023 3,718 77 3,795
Charge for the year 1,273 - 1,273
Disposals (139) - (139)
At 31 December 2024 4,852 77 4,929
Net Book Value
At 31 December 2024 4,073 - 4,073
At 31 December 2023 5,280 - 5,280
The weighted average incremental borrowing rate applied to measure lease
liabilities is 4.16% (2023: 4.10%) for leasehold property.
12. Inventories
As at 31 December
2024 2023
£'000 £'000
Finished goods 31,615 28,341
Provision for impairment (423) (378)
31,192 27,963
The cost of inventories recognised as an expense and included in 'cost of
sales' amounted to £50.2 million in the year ended 31 December 2024 (2023:
£45.9 million).
The cost of inventories recognised as an expense includes a write down of
inventory to net realisable value of £45,000 (2023: £13,000 write down).
13. Trade and other receivables
As at 31 December
2024 2023
£'000 £'000
Trade receivables - gross 13,562 10,997
Provision for impairment of trade receivables (85) (129)
Trade receivables - net 13,477 10,868
Other receivables 465 397
Prepayments 2,394 2,264
Total 16,336 13,529
The directors consider that the carrying values of trade and other
receivables, excluding prepayments, measured at book value and amortised cost
approximates to their fair value.
The individually impaired receivables relate to the supply of goods to
customers. A provision is recognised for amounts not expected to be recovered.
Movements in the accumulated impairment losses on trade receivables were as
follows:
As at 31 December
2024 2023
£'000 £'000
Accumulated impairment losses at 1 January 129 70
(Reversal)/additional impairment losses recognised during the year, net (39) 101
Amounts written off during the year as uncollectible (5) (42)
Accumulated impairment losses at 31 December 85 129
The impairment losses recognised during the year are net of a credit of £Nil
(2023: £Nil) relating to the recovery of amounts previously written off as
uncollectable.
14. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash
flow statement:
As at 31 December
2024 2023
£'000 £'000
Cash at bank and in hand 7,866 9,053
Cash and cash equivalents (restricted) 14,021 -
21,887 9,053
Cash and cash equivalents (restricted) refers to cash held in escrow and could
only be used for the acquisition that took place in February 2025 (see note
28).
15. Trade and other payables
As at 31 December
2024 2023
£'000 £'000
Current
Trade payables 3,119 1,892
Social security and other taxes 1,101 1,355
Other payables 85 86
Accruals 3,325 6,243
Total 7,630 9,576
The directors consider that the carrying values of trade and other payables
measured at book value and amortised cost approximates to their fair value.
Accruals comprise goods in transit accruals of £1,353,276 (2023: £3,275,168)
while the remaining are accruals for usual business expenses.
16. Lease liabilities
As at 31 December
2024 2023
£'000 £'000
Lease liabilities
Repayable within 1 year 1,326 1,259
Repayable within 2 - 5 years 2,263 3,227
Repayable in more than 5 years 656 963
4,245 5,449
Undiscounted lease payments
As at 31 December
2024 2023
£'000 £'000
Lease liabilities
Repayable within 1 year 1,476 1,459
Repayable within 2 - 5 years 2,605 3,673
Repayable in more than 5 years 689 1,031
Total 4,770 6,163
Lease liabilities
As at 31 December
Leasehold property Total
£'000 £'000
As at 1 January 2023 5,862 5,862
Lease additions 731 731
Interest expense 230 230
Lease payments (1,374) (1,374)
As at 31 December 2023 5,449 5,449
Lease additions 66 66
Interest expense 206 206
Lease payments (1,476) (1,476)
As at 31 December 2024 4,245 4,245
Nature of lease liabilities
The Group leases a number of properties in the United Kingdom and United
States of America.
The interest rates expected are as follows:
As at 31 December
2024 2023
% %
Interest rates 6.74¹ 7.24¹
Note 1: Base rate + 1.99%
17. Deferred tax
Deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. The carrying amount of deferred tax assets is
reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all
or part of the assets to be recovered.
Deferred tax is calculated in full on temporary differences under the
liability method using tax rate of 25%.
The movement on the deferred tax account is as shown below:
Deferred tax liability Deferred tax asset
Year ended 31 December Year ended 31 December
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Opening balance (180) (180) 592 429
Foreign exchange adjustment - -
Recognised in profit and loss:
Accelerated capital allowances (211) - - -
Available losses - - (56) -
Release of deferred tax on intangible assets - (115) -
Deferred tax on share based payment recognised in the income statement - - 2 100
Deferred tax on share-based payments recognised in the share option reserve - - 30 214
Tax expense - 115 - (74)
Adjustment in respect of previous periods - - - (77)
Closing balance (391) (180) 568 592
The deferred tax liability has arisen due to the temporary difference on
accelerated capital allowances amounting to £391,000 (2023: £115,000).
The deferred tax asset has arisen from loss carry forward for LMS amounting to
£1,198,923 (2023: £1,451,944) and recognised at a rate of 21% amounting to
£222,000 (2023: £278,000) and from share options amounting to £346,316
(2023: £314,000), of which £244,376 (2023: 214,000) has been recognised in
the share option reserve, in the Statement of Changes in Equity.
18. Dividends
Year to December 2024 Paid Amount per share Total £'000
Final dividend - 2023 05 July 24 6p 4,658
Interim dividend - 2024 22 Nov 24 3.5p 2,721
7,379
Year to December 2023 Paid Amount per share Total £'000
Final dividend - 2022 04 July 23 4.5p 3,471
Interim dividend - 2023 24 Nov 23 3p 2,314
5,785
The Group has proposed a final dividend for the year ended 31 December 2024 of
7.5p per share.
19. Called up share capital
No. of shares
'000 £'000
Allotted and issued
Ordinary shares of £0.25 each:
At 1 January 2023 and 31 December 2023 77,257 19,314
Issued on 9 May 2024 86 21
Issued on 30 May 2024 290 73
Issued on 19 September 2024 110 28
Issued on 9 December 2024 2,941 735
At 31 December 2024 80,684 20,171
On 9 May 2024, the Company issued 85,895 equity shares with par value of
£0.25 per share for £2.375 per share. The entire amount was paid in cash. No
shares were allotted other than for cash. £182,527 was recognised in share
premium.
On 30 May 2024, the Company issued 290,000 equity shares with par value of
£0.25 per share for £1.22 per share. The entire amount was paid in cash. No
shares were allotted other than for cash. £281,300 was recognised in share
premium.
On 19 September 2024, the Company issued 110,000 equity shares with par value
of £0.25 per share for £1.22 per share. The entire amount was paid in cash.
No shares were allotted other than for cash. £106,700 was recognised in share
premium.
On 9 December 2024, the Company issued 2,941,176 equity shares with par value
of £0.25 per share for £5.10 per share. The entire amount was paid in cash.
No shares were allotted other than for cash. £14,264,704 was recognised in
share premium.
Expenses incurred on the issue of shares amounting to £447,000 were deducted
from Share Premium.
All ordinary shares carry equal rights.
20. Reserves
Share premium
The share premium reserve contains the premium arising on the issue of equity
shares, net of issue expenses incurred by the Company.
Retained earnings
Retained earnings represent cumulative profits or losses, net of dividends and
other adjustments.
Merger reserve
The merger reserve arose due to the group reconstruction in 2016. The effect
of the application of merger accounting principles on the merger reserve is
that the share capital and other distributable reserves that existed in
Warpaint Cosmetics Group Limited (the Company) as at the point Warpaint London
PLC legally acquired Warpaint Cosmetics Group Limited is accounted for as if
it had been in existence as at 31 December 2015 and as at 1 January 2015. The
corresponding entry being the merger reserve so the overall net assets as at
the comparative dates are not affected.
Share option reserves
'Share option reserves' have arisen from the share-based payment charge. The
shares over which the options were issued are that of the parent company.
Foreign exchange reserves
'Foreign exchange reserves' have arisen on translation of foreign
subsidiaries.
21. Share based payments
The Company have granted options under two schemes:
Company Share Option Plan (CSOP)
These options are granted to key persons discharging managerial
responsibilities (PDMR's). The options are exercisable between three and ten
years from the date of grant, with the usual first exercise date being the 3rd
anniversary of the date of the grant. There are no performance conditions
attaching to these options.
Company Share Option scheme (unapproved)
Under the Company share option scheme which follows the Enterprise Management
Incentive (EMI) scheme rules. The options are exercisable between three and
ten years from the date of grant, with the usual first exercise date being the
3rd anniversary of the date of the grant. In general, there are no performance
conditions attaching to these options except or those issued on 5 December
2024. These Options are exercisable subject to certain non-market based
performance conditions being met, including that the compound annual growth
rate in the Company's Adjusted Basic earnings per share must exceed 10 per
cent. over the three financial years commencing 1 January 2025, subject to the
discretion of the Board.
Long term Investment Plan (LTIP)
Share options with an exercise price of 254.50p, equal to the closing
mid-market value immediately prior to the date of grant, and subject to the
achievement of demanding Earnings Per Share ("EPS") and Total Shareholder
Return ("TSR") performance conditions measured over a period of up to 5 years
were granted to certain directors.
All options are equity settled.
CSOP
Movements in the number of options and their weighted average exercise price
are as follows:
Weighted average exercise price (pence) Number of options Weighted average exercise price (pence) Number of options
2024 2024 2023 2023
Outstanding at the beginning of the year 313.54 675,781 57.50 430,223
Granted during the year 490.00 360,509 325.00 641,191
Exercised 216.7 (46,090) 49.50 (372,633)
Expired and lapsed during the year - - 121.67 (23,000)
Outstanding at the end of the year 382.51 990,200 313.54 675,781
The weighted average remaining contractual life of the options is 9.79 years
(2023: 10.64 years).
EMI
Weighted average exercise price (pence) Number of options Weighted average exercise price (pence) Number of options
2024 2024 2023 2023
Outstanding at the beginning of the year 177.08 839,456 185.16 969,138
Granted during the year 272.07 460,922 - -
Exercised 143.51 (461,305) 237.50 (128,840)
Expired and lapsed during the year - - 237.50 (842)
Outstanding at the end of the year 247.72 839,073 177.08 839,456
The weighted average remaining contractual life of the options is 8.96 years
(2023: 7.65 years).
LTIP
Weighted average exercise price (pence) Number of options Weighted average exercise price (pence) Number of options
2024 2024 2023 2023
Outstanding at the beginning of the year - - 254.50 3,837,462
Expired and lapsed during the year 254.50 (3,837,462)
Outstanding at the end of the year - - - -
The following options over ordinary shares have been granted by the Company
and remain unexercised at the year end:
Share option scheme Exercise price Expiry period Number of options
Pence (years)
29 June 2017 EMI 237.50 10 10,842
20 May 2020 CSOP 49.50 10 10,000
01 March 2022 EMI 127.50 10 200,000
24 November 2023 CSOP 325.00 10 619,691
24 November 2023 EMI 325.00 10 167,309
30 October 2024 CSOP 490.00 10 362,509
30 October 2024 EMI 490,00 10 255,992
05 December 2024 EMI 490.00 10 205,000
At the date of grant, the options were valued using the Black-Scholes option
pricing model. The fair value of options granted and the assumptions used in
the calculations were as follows:
05 Dec 24 30 Oct 24 24 Nov 23 01 Mar 22 25 May 21 20 May 20 29 June 17
Expected volatility 42% 41% 40% 54% 78% 76% 64%
Expected life (years) 3 3 3 3 3 3 3
Risk-free interest rate 4.03% 4.06% 4.35% 0.99% 0.15% 0.01% 0.38%
Expected dividend yield 1.75% 1.75% 1.79% 4.94% 1.76% 2.08% 2%
Fair value per option (£) 1.617 1.371 0.918 0.354 0.552 0.213 0.963
On 30 October 2024, the Company granted in aggregate 362,509 ordinary shares
of 25 pence each at an exercise price of 490 pence each under a Company Share
Option Plan (CSOP) scheme. The options are exercisable between three and ten
years from the date of grant, with the usual first exercise date being the 3rd
anniversary of the date of the grant.
On 30 October 2024, the Company granted in aggregate 255,992 ordinary shares
of 25 pence each at an exercise price of 490 pence each under an unapproved
Enterprise Management Incentive (EMI) scheme. The options are exercisable
between three and ten years from the date of grant, with the usual first
exercise date being the 3rd anniversary of the date of the grant.
On 05 December 2024, the Company granted in aggregate 205,000 ordinary shares
of 25 pence each at an exercise price of 490 pence each under an unapproved
Enterprise Management Incentive (EMI) scheme. The options are exercisable
between three and ten years from the date of grant, with the usual first
exercise date being the 3rd anniversary of the date of the grant. The Options
are exercisable subject to certain non-market based performance conditions
being met, including that the compound annual growth rate in the Company's
Adjusted Basic earnings per share must exceed 10 per cent. over the three
financial years commencing 1 January 2025, subject to the discretion of the
Board.
The charge in the statement of comprehensive income for the share-based
payments during the year was £348,913 (2023: £134,284).
22. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation.
Key management personnel are considered to be the directors. Compensation of
the directors is disclosed in note 4 with the exception of dividends which are
disclosed in note 18.
The lease between Warpaint Cosmetics (2014) Limited and Direct Supplies (2014)
Group Limited is a 10 year lease which commenced on the 3 August 2016, with
annual rental payments of £138,800.
During 2024, Warpaint Cosmetics (2014) Limited paid rent in the sum of
£138,800 (2023: £138,800) to Direct Supplies (2014) Group Limited, of which
S Bazini is a director. At the year end the amount due to Direct Supplies
(2014) Group Limited was £34,700 (2023: £34,500).
The lease between Warpaint Cosmetics (2014) Limited and Trading Scents Group
Limited is a 10 year lease which commenced on the 3 August 2016, with annual
rental payments of £138,800.
During 2024, Warpaint Cosmetics (2014) Limited paid rent in the sum of
£138,800 (2023: £138,800) to Trading Scents Group Limited, of which E
Macleod is a director. At the year end the amount due to Trading Scents Group
Limited was £34,700 (2023: £34,500).
During the year ended 31 December 2023, Warpaint Cosmetics (2014) Limited
entered into two lease agreements, for two additional units with Warpaint
Cosmetics Limited. The agreements relate to two leases to the 2 August 2026,
with annual rental payments of £138,000 and £110,250 respectively.
Warpaint Cosmetics (2014) Limited paid rent in the sum of £248,250 (2023:
£303,966) to Warpaint Cosmetics limited, of which S Bazini and E Macleod are
directors. At the year end the amount due to Warpaint Cosmetics Limited was
£62,063 (2023: £62,063).
During 2023, Warpaint Cosmetics (2014) Limited also entered into a 10 year
lease agreement with Warpaint Cosmetics Limited on the 3 August 2016, with
annual rental payments of £138,800.
During 2024, Warpaint Cosmetics (2014) Limited paid rent in the sum of
£138,800 (2023: £138,800) to Warpaint Cosmetics Limited, of which E Macleod
and S Bazini are directors.
During 2024, Retra Holdings Limited paid rent in the sum of £410,107 (2023:
£410,107) to Warpaint Cosmetics Limited, of which E Macleod and S Bazini are
directors.
The leases between Retra Holdings Limited and Warpaint Cosmetics Limited are
two 10 year leases which commenced on 11(th) March 2018 with annual rental
payments of £225,000, and £185,107 respectively.
Paul Hagon, an executive director of Warpaint London plc ("Warpaint"), is a
member of Ward & Hagon. Ward & Hagon were paid £225,000 fees (2023:
£190,000), £101,504 commission (2023: £116,763) and expenses of £8,487 in
2024 (2023: £9,346) and were issued with 200,000 share options in 2022,
details of which are disclosed in note 21.
Financing of the Acquisition of Brand Architekts PLC - Directors' Loans
The Company completed its purchase of the entire ordinary share capital of
Brand Architekts PLC in February 2025 (see note 28). Before raising the funds
through a placing which completed on 9 December 2024, the Company received
loans from two of its Directors in order to demonstrate adequate cash
resources prior to the placing of new shares in the Company.
The Directors' Loans in the year consisted of:
· a loan from Sam Bazini of £8,500,000 to Warpaint London PLC; and
· a loan from Eoin Macleod of £5,500,000 to Warpaint London PLC.
The Directors' Loans were each on the same terms and interest was payable
by the Company on the full amount of each Directors Loan at the Bank of
England's base rate plus 0.5 percent, until the date on which the relevant
loan was repaid in full, there was no fixed term, and no security was provided
by the Company.
The Director's Loans were made on the 29(th) November 2024, and repaid in full
on the 10(th) December 2024. There were no amounts outstanding at the end of
the year (2023: £nil).
23. Financial instruments
Capital risk management
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies. The overall objective of the Board is to
set policies that seek to reduce risk as far as possible without unduly
affecting the Group's competitiveness and flexibility. The Group reports in
Sterling. All funding requirements and financial risks are managed based on
policies and procedures adopted by the Board of Directors.
The Group manages its capital to ensure its ability to continue as a going
concern and to maintain an optimal capital structure to reduce cost of
capital. The capital structure of the Group comprises equity attributable to
equity holders of the Company consisting of invested capital as disclosed in
the Statement of Changes in Equity and cash and cash equivalents.
The Group's invested capital is made up of share capital, share premium and
retained earnings totalling £88,709,000 as at 31 December 2024 (2023:
£62,289,000) as shown in the statement of changes in equity.
The Group maintains or adjusts its capital structure through the payment of
dividends to shareholders and issue of new shares.
Year ended 31 December
2024 2023
£'000 £'000
Financial assets
Financial assets at amortised cost:
Trade and other receivables 13,942 11,265
Cash and cash equivalents 21,887 9,053
Financial assets measured at fair value through the profit and loss:
Derivative financial instruments 1,340 -
37,169 20,318
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables (6,529) (8,221)
Lease liabilities (4,245) (5,449)
Financial liabilities measured at fair value through the profit and loss:
Derivative financial instruments - (518)
(10,774) (14,188)
Net 26,395 6,130
The comparative has been amended to reclassify cash and cash equivalents to
financial assets at amortised cost due to an inaccurate classification in the
prior period.
Financial assets measured at fair value through the profit and loss comprise
cash and cash equivalents and derivative financial instruments.
Financial assets measured at amortised cost comprise trade receivables and
other receivables, excluding prepayments.
Financial liabilities measured at amortised cost comprise trade payables and
other payables, and lease liabilities but exclude social security costs and
other taxes.
Cash and cash equivalents
This comprises cash and short-term deposits held by the Group as well as
restricted cash raised in the placing of ordinary shares that took place in
December 2024. The restricted cash was held under escrow and could only be
used for the acquisition that took place in February 2025 (see note 28). The
carrying amount of these assets approximates their fair value.
General risk management principles
The Group's activities expose it to a variety of risks including market risk
(interest rate risk), credit risk and liquidity risk. The Group manages these
risks through an effective risk management programme and through this
programme, the Board seeks to minimise potential adverse effects on the
Group's financial performance. The Directors have an overall responsibility
for the establishment of the Group's risk management framework. A formal risk
assessment and management framework for assessing, monitoring and managing the
strategic, operational and financial risks of the Group is in place to ensure
appropriate risk management of its operations.
The following represent the key financial risks that the Group faces:
Market risk
The Group's activities expose it to the financial risk of interest rates.
Interest rate risk
The Group has minimal interest rate exposure as it has no external borrowing.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or a
counterparty to a financial instrument fails to meet its contractual
obligations.
The Group's principal financial assets are trade and other receivables and
bank balances and cash. The credit risk on liquid funds is limited because the
counterparties are banks with high credit-ratings assigned by international
credit-rating agencies.
The Group's credit risk is primarily attributable to trade receivables. The
Group has a policy of assessing credit worthiness of potential and existing
customers before entering into transactions. There is ongoing credit
evaluation on the financial condition of accounts receivable using independent
ratings where available or by assessment of the customer's credit quality
based on its financial position, past experience and other factors. The Group
manages the collection of its receivables through its ongoing contact with
customers so as to ensure that any potential issues that could result in
non-payment of the amounts due are addressed as soon as identified. The Group
makes a provision in the financial statements for expected credit losses based
on an evaluation of historical data and applies percentages based on the
ageing of trade receivables.
The maximum exposure to credit risk in respect of the above is the carrying
value of financial assets recorded in the financial statements. As at 31
December 2024, the Group has trade receivables of £13,562,000 (2023:
£10,835,000).
The following table provides an analysis of trade receivables that were due,
but not impaired, at each financial year end. The Group believes that the
balances are ultimately recoverable based on a review of past impairment
history and the current financial status of customers.
As at 31 December
2024 2023
£'000 £'000
Current 7,000 5,680
1 - 30 days 4,560 3,514
31 - 60 days 1,573 980
61 - 90 days 185 547
91 + days 244 276
13,562 10,997
Provision for impairment of trade receivables (85) (129)
Total trade receivables - net 13,477 10,868
The Directors are unaware of any factors affecting the recoverability of
outstanding balances at 31 December 2024 and, consequently, no further
provisions have been made for bad and doubtful debts.
The allowance for bad debts has been calculated using a 12-month lifetime
expected credit loss model, as set out below, in accordance with IFRS 9.
As at 31 December As at 31 December
2024 2023
£'000 % £'000 £'000 % £'000
Current 7,000 0.135% 9 5,680 0.135% 8
1 - 30 days 4,560 0.405% 18 3,514 0.405% 14
31 - 60 days 1,573 1.215% 19 980 1.215% 12
61 - 90 days 185 3.645% 7 547 3.645% 20
91 + days 244 13.115% 32 276 27.174% 75
85 129
Credit quality of financial assets
As at 31 December
2024 2023
Trade receivables, gross (note 13): £'000 £'000
Receivable from large companies (see below for definition) 6,284 5,190
Receivable from small or medium-sized companies 716 490
Total neither past due nor impaired 7,000 5,680
For the purpose of the Group's monitoring of credit quality, large companies
or groups are those that, based on information available to management at the
point of initially contracting with the entity, have annual turnover in excess
of £100,000 (2023: £100,000).
As at 31 December
2024 2023
Past due but not impaired: £'000 £'000
Less than 30 days overdue 4,542 3,500
30 - 90 days overdue 1,732 1,495
91+ days 212 201
Total past due but not impaired 6,486 5,196
Lifetime expected loss provision:
Less than 30 days overdue 27 22
30 - 90 days overdue 26 32
91+ days 32 75
Total lifetime expected loss provision (gross) 85 129
Less: Impairment provision (85) (129)
Total trade receivables, net of provision for impairment 13,486 10,876
Cash and cash equivalents, neither past due nor impaired:
The Group holds is cash balances with reputable and stable banking
institutions such as NatWest. The stability of these counterparties is
regularly reviewed and monitored by the management.
Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is
the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due. The Group's policy is to ensure that it will
always have sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it closely monitors its access to bank and
other credit facilities in comparison to its outstanding commitments on a
regular basis to ensure that it has sufficient funds to meet the obligations
as they fall due. Bank and loan facilities are available within the Group but
they were not utilised during the financial year or after the year end.
The Board receives monthly cash balance updates and weekly sales and margin
reports marked against budget. At the start of each year the Board approve and
adopt a budget and cash flow for the next 24 months, the CFO monitors these
and reports any material divergences to the Board, so that management can
ensure that sufficient funding is in place as it is required. The budget and
cash flow are updated at the end of each year, for the following 24 months.
The tables below summarise the maturity profile of the combined group's
non-derivative financial liabilities at each financial year end based on
contractual undiscounted payments, including estimated interest payments where
applicable:
Year ended 31 December 2024
Less than 6 months Between 6 months and 1 year Between 1 and 5 years Over 5 years Total
£'000 £'000 £'000 £'000 £'000
Trade payables 3,119 - - - 3,119
Other payables 85 - - - 85
Accruals 3,325 - - - 3,325
Lease liabilities 738 738 2,605 689 4,770
7,267 738 2,605 689 11,299
Year ended 31 December 2023
Less than 6 months Between 6 months and 1 year Between 1 and 5 years Over 5 years Total
£'000 £'000 £'000 £'000 £'000
Trade payables 1,892 - - - 1,892
Other payables 86 - - - 86
Accruals 6,243 - - - 6,243
Lease liabilities 729 730 3,673 1,031 6,163
8,950 730 3,673 1,031 14,384
The borrowings of the subsidiary companies, Retra Holdings Limited and
Badgequo Limited, are secured by a debenture including a fixed charge over the
present leasehold property, a first fixed charge over book and other debts and
a first floating charge over all assets of those companies.
Foreign exchange risk
The Group operates in a number of markets across the world and is exposed to
foreign exchange risk arising from various currency exposure in respect of
cash and cash equivalents, trade receivables and trade payables, in particular
with respect to the US dollar and Euro.
Foreign exchange risk arises when individual Group entities enter into
transactions denominated in a currency other than their functional currency.
The Group's policy is, where possible, to allow group entities to settle
liabilities denominated in their functional currency with the cash generated
from their own operations in that currency. Where group entities have
liabilities denominated in a currency other than their functional currency
(and have insufficient reserves of that currency to settle them), cash already
denominated in that currency will, where possible, be transferred from
elsewhere within the Group.
As of 31 December the Group's net exposure to foreign exchange risk was as
follows:
Currency Liabilities Assets
2024 2023 2024 2023
USD $7,487,643 $7,155,852 $7,284,506 $9,026,439
EUR €13,289 €61,313 €2,252,459 €1,482,253
HKD HKD 22952 HKD 22,952 - -
RMB ¥52,942 ¥271,301 ¥418,453 ¥634,950
Included within the assets and liabilities of the Group are balances in
currencies other than GBP £. If these currencies were to strengthen by 5%
against GBP£, this would give rise to a gain of £86,312 (2023: £137,001)
Foreign exchange risk
2024 2023
£'000 £'000
Derivatives carried at fair value:
Forward foreign currency contracts 1,340 (518)
The Group, along with other businesses, will face the risk of inflationary
pressures through commodities cost increases.
Derivatives: Foreign currency forward contracts
The Group enters into forward foreign exchange contracts to manage the risk
associated with anticipated sale and purchase transactions which are
denominated in foreign currencies. Derivatives are recognised initially at
their fair value at the date the derivative contract is entered into and are
subsequently remeasured to their fair value at each reporting date. The
resulting gain or loss is recognised immediately in the profit or loss unless
the derivative is designed and effective as a hedging instrument, in which
event the timing and recognition in the profit or loss depends on the nature
of the hedging relationship. Derivative financial instruments are measured at
fair value as level 2 instruments. Level 2 assets and liabilities are valued
using externally sourced information provided by the counterparties, Santander
and NatWest.
As at 31 December 2024, the group has in total 66 (2023: 52) forward foreign
exchange contracts outstanding, made up of regular forward foreign exchange
contracts.
Regular forward foreign exchange contracts:
At 31 December 2024, there were 66 (2023: 52) regular forward foreign exchange
contracts, to buy US dollars and sell Euros, for an agreed amount of foreign
currency on a specific future date. The purchase or sale is made at a
predetermined exchange rate. The outcome is certain and will deliver a known
fixed amount. The following table details the regular forward foreign exchange
contracts outstanding as at the balance sheet date.
a) Contracted exchange rate 2024 2023 2024 2023
£/$ £/€
3 months or less 1.2851 1.2660 n/a n/a
3 to 6 months 1.2855 1.2526 1.1635 1.1491
6 to 12 months 1.2752 1.2546 1.1613 1.1435
12 months or more n/a n/a n/a n/a
b) Contract value 2024 2023 2024 2023
£/$ £/€
£'000 £'000 £'000 £'000
3 months or less 27,403 10,310 - -
3 to 6 months 13,882 16,554 1,289 872
6 to 12 months 3,530 6,792 728 2,382
12 months or more - - - -
44,815 33,656 2,017 3,254
c) Foreign currency 2024 2023 2024 2023
$'000 $'000 €'000 €'000
3 months or less 35,242 12,943 - -
3 to 6 months 17,830 20,750 1,500 1,000
6 to 12 months 4,500 8,500 845 2,725
12 months or more - - - -
57,572 42,193 2,345 3,725
Fair value of financial assets and liabilities
Financial instruments are measured in accordance with the accounting policy
set out in Note 1. All financial instruments carrying value approximates its
fair value with the exception of foreign currency forward contracts and
options which are considered Level 2. The Directors consider that there is no
significant difference between the book value and fair value of the Group's
financial assets and liabilities and is considered to be immaterial.
24. Pension costs
The Group operates a defined contribution pension scheme. Contributions
payable to the company's pension scheme are charged to the statement of
comprehensive income in the period to which they relate. The amount charged to
profit in each period was £134,432 (2023: £121,682).
25. Controlling party
In the opinion of the directors there is no ultimate controlling party.
26. Earnings per share
Basic earnings per share are calculated by dividing profit or loss
attributable to ordinary equity holders by the weighted average number of
ordinary shares in issue during the period.
2024 2023
Basic earnings per share (pence) 23.47 18.05
Diluted earnings per share (pence) 23.34 17.98
The calculation of basic and diluted earnings per share is based on the
following data:
2024 2023
Earnings £'000 £'000
Earnings for the purpose of basic earnings per share, being the net profit 18,233 13,899
Number of shares 2024 2023
Weighted number of ordinary shares for the purpose of basic earnings per share 77,691,505 76,983,311
Potentially dilutive shares awarded 433,257 325,443
Weighted number of ordinary shares for the purpose of diluted earnings per 78,124,762 77,308,754
share
In the current year, all share options (2023: 905,237 were not included in the
computation) in issue have been included in the computation of diluted
earnings per share, as per IAS 33, all share options are dilutive as they are
all likely to be exercised given that the average market price is higher than
the exercise price.
27. Notes supporting statement of cash flows
Changes in liabilities arising from financing activities are shown in the
table below.
Non-current loans and borrowings Current loans and borrowings
Total
£'000 £'000 £'000
At 31 December 2022 4,847 1,015 5,862
Non-cash flows 731 - 731
Cash flows - (1,144) (1,144)
Reclassification from Non-current loans and borrowings to current loans and (1,388 ) 1,388 -
borrowings
At 31 December 2023 4,190 1,259 5,449
Non-cash flows 66 - 66
Cash flows - (1,270) (1,270)
Reclassification from Non-current loans and borrowings to current loans and (1,337) 1,337
borrowings
Loan received - 14,000 14,000
Loan repaid - (14,000) (14,000)
At 31 December 2024 2,919 1,326 4,245
The above relates to payments in respect of the groups right of use assets.
The group does not have any loans and borrowings.
28. Post balance sheet events
On 12 February 2025, the Company completed the acquisition of 100% of the
ordinary shares of Brand Architekts Group PLC ("Brand Architekts") for £13.3
million in cash and the issue of 103,422 Warpaint shares at £5.24, making a
total purchase consideration of £13.9 million.
Total broker advisory fees, legal & professional fees and registrar fees
incurred for the acquisition was £0.8 million, of which £0.42 million was
incurred in 2024.
Brand Architekts is a beauty brand specialist which offers a portfolio of
problem-solving challenger beauty brands, sold throughout the UK and
internationally. Brand Architekts' focus is on brands and products that
engender high levels of consumer loyalty and reflect the focus on
high-performance problem-solving solution-led brands for everyday beauty.
Brand Architekts' brand portfolio encompasses female skincare, self-tan and
male grooming. Brands (including Super Facialist, Skinny Tan and Dirty Works)
are available on the high street in leading pharmacy and drugstore chains; in
national grocery stores; on the platforms of global e-tailers; and through
ecommerce websites.
The acquisition will be accounted for using the acquisition method of
accounting in accordance with IFRS 3.
The book value of net assets acquired is shown below. Management are still in
the process of allocating the purchase price:
Cash and Cash Equivalents £ 6.2 million
Accounts Receivable £ 4.6 million
Inventory £ 4.0 million
Property, Plant, and Equipment £ 0.03 million
Accounts Payable £ (3.43) million
Deferred Tax Liabilities £ (0.12) million
Book value of net assets acquired £11.28 million
At the date of authorisation of these financial statements a detailed
assessment of the fair value of
the identifiable net assets has not been completed. In particular the value of
identifiable intangible assets (customer relationships and brands), goodwill
and deferred tax liability / assets (as a consequence of fair value
adjustments), are in the process of being independently valued.
Key Aspects of the Acquisition:
· Warpaint believes that the acquisition is an exciting and
relatively low risk opportunity to further bolster Warpaint's growth
opportunities.
· The deferred tax liability/asset, represents the future tax
consequences of the fair value adjustments made to the acquired assets and
liabilities.
The results of Brand Architekts operations will be included in the Company's
consolidated financial statements from the acquisition date.
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