REG - Warpaint London PLC - Interim Results
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RNS Number : 6807Y Warpaint London PLC 10 September 2025
10 September 2025
Warpaint London PLC
("Warpaint", the "Company" or the "Group")
Interim Results for the six months ended 30 June 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 announces its unaudited interim
results for the six months ended 30 June 2025 ("H1").
Unaudited six months to 30 June 2025 Unaudited six months to 30 June 2024 Change
Revenue £49.3m £45.8m +8%
Gross profit margin 45.0% 42.5% +250bps
Adjusted EBITDA* £10.8m £11.4m -5%
Profit before tax £6.4m £10.9m -41%
Adjusted earnings per share (EPS)** 8.5p 9.8p -13%
Cash and cash equivalents £17.0m £5.5m +209%
Interim dividend per share 4.0p 3.5p +14%
Highlights
· Group sales increased by 8% to £49.3 million in H1 2025 (H1 2024: £45.8
million) including the contribution from the acquisition of Brand Architekts
from 12 February 2025
· UK revenue was up by 15.9% to £18.0m (H1 2024: £15.5 million)
· International revenue increased by 3.2% to £31.3 million (H1 2024: £30.3
million)
· Brand Architekts sales of £6.1 million represented 12% of overall Group
revenue in the period
· Gross profit margin grew by a further 250 bps to 45.0% (H1 2024: 42.5%) due to
successful launches of new product lines, sourcing and volume savings.
Excluding Brand Architekts, like-for-like gross margin improved to 45.5%, up
300bps.
· Adjusted EBITDA* was £10.8 million (H1 2024: £11.4 million)
· Profit before tax was £6.4 million (H1 2024: £10.9 million), predominantly
reflecting £4.6 million of non-cash losses on foreign exchange forward
contracts, of which £2.7 million were unrealised at 30 June 2025, a £3.9
million gain as a result of the 'bargain purchase' (negative goodwill) of
Brand Architekts and £1.3 million of exceptional costs associated with the
acquisition of Brand Architekts
· Cash of £17.0 million as at 30 June 2025 (30 June 2024: £5.5 million),
having acquired £6.2 million of cash as a result of the acquisition of Brand
Architekts
· Adjusted EPS** fell to 8.5p (H1 2024: 9.8p) partly reflecting the increase in
shares in issue as a result of the Brand Architekts acquisition
· Given the available cash and ongoing profitability of the Group, the board has
declared an increased interim dividend of 4.0p per share (2024 interim
dividend 3.5p per share), up 14%
* Adjusted for foreign exchange movements, exceptional items and share-based
payments. Adjusted numbers are close to the underlying cash flow performance
of the business which is regularly monitored and measured by management.
** Adjusted for foreign exchange movements, exceptional items, share-based
payments, amortisation and impairments and the gain on bargain purchase.
Operational Highlights
· Successfully completed the acquisition of Brand Architekts in February 2025,
and are already benefitting from the expansion of its brands into a number of
Group customers
· Implemented an inflationary price increase to all customers, which will have a
greater impact in H2 2025
· Rest of World sales up by 144% to £3.6 million (H1 2024: £1.5 million),
including the launch of an expanded range with a significant Australian
customer
· Direct online sales, including £1.3 million from Brand Architekts brands,
were up 48% to £3.4 million (H1 2024: £2.3 million) representing 6.8% of
Group sales (H1 2024: 5.1%)
· Significant store rollouts for H2 2025 agreed:
o UK: Superdrug started rolling out W7 into 140 new stores in June 2025,
Tesco have undertaken a 150 store expansion of the Group's W7 impulse
offering, and a gifting offering is going into 350 Boots stores at Christmas
for the first time alongside an expansion of accessories into 250 additional
stores
o Europe: Tigota in Italy launching a range of products in 200 stores with a
capsule collection going into an additional 400 stores; Etos in the
Netherlands is expected to expand its product assortment in all 546 stores
with a permanent fixture and an enhanced range in selected stores
o US: expanding the W7 range stocked and roll-out to a further 399 stores
with CVS which commenced in August 2025
Current Trading and Outlook
· Group sales for the eight months to 31 August 2025, including £7.7 million
from the Brand Architekts brands, were £67.0 million (eight months to 31
August 2024: £63.5 million)
· A long-term customer of the Group's Technic products, G.R. & M.M.
Blackledge plc, trading as Bodycare, has recently entered administration.
Amounts due from this customer at 30 June 2025, totalled £0.5 million, have
been provided for in full. There is a further £0.3 million due from this
customer from trading after period end. Future revenue from this customer is
now uncertain
· As a result of the above, along with an increasingly weak UK consumer
environment and an uncertain US market given the recent tariff disruption, for
the 2025 full year at a GBP/US$ exchange rate of £1/US$1.34, the board now
expects the Company to achieve revenues of between £107 million and £112
million, and adjusted EBITDA of between £23.5 million and £25.5 million
These expectations reflect a second half weighting to the full year
performance which is supported by price increases to all customers and the
on-going programme of store rollouts described above, as well as the Group's
Christmas gifting sales
Commenting, Sam Bazini Chief Executive, said:
"The Group traded satisfactorily during the first half despite the challenging
macroeconomic environment, but we have seen conditions remain difficult in
recent months, with both consumer and customer confidence being subdued, which
now seems likely to remain for some time. Coupled with continuing US market
uncertainty, alongside a specific customer recently going into administration,
we are disappointed to be lowering our expectations for the full year.
"Nevertheless, we continue to have a strong second half roll out and see
excellent medium- and long-term growth opportunities across the Group,
particularly in the UK and Europe, and further opportunities from the addition
of the Brand Architekts' brands. We also remain focused on achieving
additional improvements in margins across the Group.
"Despite the short-term headwinds, the board looks forward to the future with
confidence."
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 a number of leading health, beauty and personal care brands
that complement its existing cosmetics brands, including Skin & Tan, Super
Facialist, Dirty Works and Fish Soho.
CHIEF EXECUTIVE'S REVIEW
Against a backdrop of challenging macroeconomic conditions and subdued
consumer confidence, both in the UK and more widely, Group sales increased by
8% to £49.3 million (H1 2024: £45.8 million), importantly at an improved
gross margin of 45.0% (H1 2024: 42.5%). This is the fourth year in a row that
margins have improved incrementally in the first half of the financial year.
The completion of the acquisition of Brand Architekts in the period provided
the Group with an additional portfolio of high-quality complementary health,
beauty and personal care brands, with a well-established customer base that
complements Warpaint's existing customer relationships and brand portfolio.
The acquisition fits well with the Group's strategy which remains focused on
growing profitable sales of its branded products, particularly in the UK and
Europe, whilst increasing overall margins.
Sales for the remainder of 2025 are expected to be achieved through both
existing customers, where a number of significant store expansions are taking
place, alongside increases in the Group's footprint within each store, as well
as adding new large retailers to the Group.
I believe Warpaint remains very well positioned for profitable future growth.
Our global market share remains modest and we see substantial opportunities
ahead of us.
W7
W7 is the Group's lead brand, accounting for 60% of total Group revenue in the
period (H1 2024: 66%). Sales in H1 2025 of £29.8 million were at a similar
level to H1 2024 (£30.2 million), with a return to growth expected in the
second half of the year.
Reflective of more subdued consumer confidence, W7 sales in the UK decreased
14% to £7.6 million (H1 2024: £8.8 million). However, post period end, the
UK returned to growth with more scheduled expansions of the range and outlets
served by existing retail partners of W7 expected in the second half of the
year.
Europe sales decreased 3% to £17.6 million (H1 2024: £18.1 million), as
certain larger retailers reduced historic levels of stock, however, order
levels are expected to return to more normal levels in the second half, and
additional sales to existing customers are expected, particularly as they
expand the size of their estates, as well as sales to new customers, including
in countries where the Group has previously had only a limited presence.
Europe continues to present significant growth opportunities for the Group.
In the US, W7 sales decreased 12% to £2.0 million (H1 2024: £2.2 million).
We are monitoring closely the ongoing tariff situation in the US, and the US
currently remains a modest proportion of Group sales.
Sales to the rest of the world increased by 159% to £2.6 million (H1 2024:
£1.0 million), representing 9% of W7 sales (H1 2024: 3%), driven by strong
growth in Australia.
Technic
In H1 2025, Technic sales decreased by 15% to £12.4 million (H1 2024: £14.5
million), due particularly to a fall in sales of retailer own brand white
label cosmetics. White label opportunities are assessed case-by-case, based on
the return they can deliver. In 2024, Technic's white label business grew by
90%, but similar appropriate margin opportunities were not presented in the
period and white label sales have returned to more historic levels.
The largest proportion of Technic sales in the period, at 59%, continued to be
sold in Europe (H1 2024: 57%). The UK accounted for 33% of Technic sales in
the period (H1 2024: 38%), with sales of the Technic brands in the US and the
rest of the world accounting for 8% (H1 2024: 5%). Technic sales outside of
the Europe and the UK remain small in the context of the Group as a whole,
representing approximately 1.8% of Group revenue, but present a further
opportunity for continued growth.
Ecommerce
Including Brand Architekts, online sales reached £3.4 million (H1 2024: £2.3
million), an increase of 48%, at a similar net margin to other Group sales.
Direct online sales in H1 2025 represented 6.8% of Group sales (H1 2024:
5.1%).
The Group continues to have significant opportunities to grow sales through
the W7, Technic and Brand Architekts own ecommerce sites, and on Amazon in the
UK, Europe and the US, and in China.
Close-out
Close-out sales continue to be reduced as they are not a core focus, although
the Group will take advantage of profitable close-out opportunities as they
become available, as they provide an important and profitable source of
intelligence in the colour cosmetics market. In H1 2025, close-out sales were
£1.1 million (H1 2024: £1.2 million) and represented only 2% of the overall
revenue of the Group (H1 2024: 3%).
Brand Architekts
On 12 February 2025, we were pleased to complete the acquisition of Brand
Architekts, a health, beauty and personal care brand specialist selling
predominantly in the UK. The brands have a focus on every day, high-performing
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 retailers, 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 identified
significant cost synergies and have already reduced overheads to a more
efficient level, increasing Brand Architekts' profitability. This has included
disposing of three non-core brands and their associated stock, with no
material impact on Group results in the period. The Warpaint board continues
to expect the acquisition to be earnings enhancing to Warpaint in the current
financial year.
In H1 2025 Brand Architekts sales were £6.1 million from 12 February 2025.
The majority of Brand Architekts' sales are in the UK (90% / £5.5 million),
with the remainder in the EU (4%), the US (3%) and the rest of the world (3%).
Brand Architekts sales represented 12% of the overall revenue of the Group in
the period. Expanding the geographical reach of the Brand Architekts brands is
expected in the second half of 2025 and further in 2026 as we continue to
introduce them to existing customers. Brand Architekts' gross margin since
acquisition was 41.0% and they contributed £0.5 million to EBITDA in H1 2025.
Customers & Geographies
The largest markets for sales of the Group's brands are in Europe and the UK.
In H1 2025 the Group's top ten customers represented 65% of revenues (H1 2024:
69%).
UK
In the first half, sales in the UK were up 15.9% to £18.0 million (H1 2024:
£15.5 million) and accounted for 36.5% of Group sales (H1 2024: 33.9%),
assisted by the contribution from Brand Architekts. On a like-for-like basis
sales were £12.5 million, a decrease of £3 million or 19%. The reduction in
white label cosmetics in the first half of 2025 accounted for £0.8 million of
the decrease, with the balance partially due to a change in buying patterns
from some UK customers to reduce stock holding levels, because of falling
consumer confidence.
We are in continued talks with major UK retailers who stock W7 and Technic
product to increase the offering in their stores and have planned further
expansion across a number of their estates this year. Near the end of the
period in June 2025, Superdrug started rolling out W7 into 140 new stores, and
travel size products in all stores; Tesco have recently undertaken a 150 store
expansion of the Group's W7 impulse offering; and Boots are to take gifting
products for the first time for Christmas 2025 (to be stocked in 350 stores),
with accessories going into 250 stores.
Europe
In the first half, sales in Europe decreased by 4% to £25.3 million (H1 2024:
£26.4 million) and accounted for 51% of Group sales (H1 2024: 58%). The
reduction in sales reflected one-off change in buying patterns by several
large customers, who reduced the amount of warehouse stock they hold. Since
the end of the period, buying patterns have returned to more normal levels,
and we expect to return to growth for the full year.
US
In the US, Group sales were flat at £2.4 million (H1 2024: £2.4 million),
however, in US dollar terms, sales increased by 2% to US$3.1 million,
accounting for 5% of Group sales (H1 2024: 5%).
The period saw the imposition of additional tariffs, particularly on goods
manufactured in China, and this is having an impact on the margins achievable
from the Group's US sales. However, we are seeking to mitigate the effects as
far as possible and to navigate the evolving tariff landscape. Ecommerce
accounts for a majority proportion of the Group's US business, where we have
greater flexibility with the selling price, and have implemented price
increases. We are maintaining relationships with most retail partners and will
sacrifice some margin to continue a bricks and mortar presence. 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.
Rest of the World
In the first half, sales in the Rest of the World were up 144% to £3.6
million (H1 2024: £1.5 million) and accounted for 7% of Group sales (H1 2024:
3%), driven by a significant increase in sales in Australia. The period saw
increased sales of both the Group's lead brand W7, up 159% and the Technic
brands, up by 75%. Brand Architekts sales in the ROW were £0.2 million.
Dividend
Given the available cash and the ongoing profitability of the Group, the board
is pleased to declare an increased interim dividend of 4.0p per share (2024
interim dividend: 3.5p per share), which will be paid on 21 November 2025 to
shareholders on the register at 7 November 2025. The shares will go
ex-dividend on 6 November 2025.
Summary and Outlook
The Group traded satisfactorily during the first half despite the challenging
macroeconomic environment, but we have seen conditions remain difficult in
recent months, with both consumer and customer confidence being subdued, which
is likely to remain for some time. Coupled with continuing US market
uncertainty, alongside a specific customer recently going into administration,
we are disappointed to be lowering our expectations for the full year.
Nevertheless, we continue to have a strong second half roll out and we
continue to see excellent medium- and long-term growth opportunities across
the Group, particularly in the UK and Europe, and further opportunities from
the addition of the Brand Architekts' brands. We also remain focused on
achieving additional improvements in margins across the Group.
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. We continue
to regularly review our sourcing and are investigating additional
opportunities to manufacture products outside China, including in the UK, to
ensure the maximum available margin, whilst ensuring consistency and quality
of supply.
The US remains a modest part of the Group's overall business, and we have
growth opportunities elsewhere and strategies in place to mitigate the effects
of US tariffs.
Despite the short-term headwinds, the board looks forward to the future with
confidence.
Sam Bazini
Chief Executive Officer
9 September 2025
CHIEF FINANCIAL OFFICER'S REVIEW
We achieved revenue growth and improved margins in the first half of 2025,
that also included the successful acquisition of Brand Architekts. However,
like-for-like revenue (excluding Brand Architekts) declined slightly in the
period as the uncertainty around economic issues and cost of living increases
in the UK had a knock-on effect on consumer confidence and willingness to
spend.
On 12 February 2025, the Group completed the acquisition of Brand Architekts,
the owner of a number of complementary health, beauty and personal care
brands, sold predominantly in the UK. 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 potential.
The Group continues its organic strategy of building the W7 and Technic
brands, together with its more 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.
Statutory Results H1 2025 H1 2024
£m
Revenue 49.3 45.8
Profit from operations 2.7 11.0
Adjusted EBITDA* 10.8 11.4
Profit before tax (PBT) 6.4 10.9
Basic Earnings per share (EPS) 6.7p 10.4p
Adjusted earnings per share* (EPS) 8.5p 9.8p
Cash and cash equivalents 17.0 5.5
*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 EBITDA are shown below:
Headline results, shown below, represent the performance comparisons between
the consolidated statements of income for the half years ended 30 June 2025
and 30 June 2024.
Revenue
In H1 2025, Group revenue increased by 8% to £49.3 million (H1 2024: £45.8
million). On a like-for-like basis, excluding the sales generated by Brand
Architekts in the period, revenue was £43.2 million.
Company branded sales were £47.6 million (H1 2024: £43.5 million). The W7
brand generated sales of £29.8 million (H1 2024: £30.2 million), while the
Technic brand, excluding sales of retailer own brand white label cosmetics,
contributed sales of £12.0 million (H1 2024: £13.4 million). Sales made from
the Brand Architekts brands from 12 February to 30 June 2025 were £6.1
million.
In the first half, sales of white label cosmetics were £0.3 million (H1 2024:
£1.1 million). The white label business is traditionally cost competitive and
is only undertaken based on commercial viability, in particular margin.
Close-out sales in the first half were £1.1 million (H1 2024: £1.2 million),
as the Group, in line with its strategy, continued to reduce its focus on
close-out opportunities.
In the US, management has considered the newly implemented US tariffs and have
calculated that the changes in tariffs will have no material impact on the
Group, or the carrying value of the goodwill in its US entity, however,
management does expect sales in the US in H2 2025 to be less than in the prior
year (H2 2024: $8.1 million).
Product Gross Margin
Gross margin was 45.0% for H1 2025, compared to 42.5% in H1 2024.
This is the fourth year in a row that gross margin has improved incrementally
in the first half of the year, driven by new product development and improved
sourcing. During the first half of the year an inflationary price increase to
all customers was implemented, which will have more impact in H2 2025. Also
contributing to the improvement in gross margin are more normalised annual
freight rates compared to prior years and an improved exchange rate for GBP
against the US$.
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. We continue to move production to
new factories of equal quality to retain or improve margin and have a partial
natural hedge from our US dollar revenue.
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. Since the
start of 2025, we have purchased more forward foreign exchange contracts to
further help protect our gross margin in 2025 and into 2026.
The currency options we have for the current year, along with new product
development and sourcing strategies, will all contribute to protecting our
gross margin for the remainder of 2025.
Operating Expenses
Total operating expenses before exceptional items, amortisation costs,
depreciation, foreign exchange movements and share-based payments, were £11.3
million in the first half of the year (H1 2024: £8.1 million). On a
like-for-like basis, excluding Brand Architekts in the period, operating
expenses were £9.2 million, and as a percentage of sales, excluding those
sales of Brand Architekts in the period, they were 21.3% (H1 2024: 17.6%).
The absolute like-for-like increase of £1.1 million year-on-year was made up
of increases in wages and salaries, business rates, PR and marketing spend,
and the cost of a larger US sales team that was put in place in late 2024, all
of which are necessary to support the growth of the business, along with an
increase in bad debt provision.
Warpaint remains a business with relatively fixed operating expenses evenly
spread across the whole year. We continue to monitor and examine major 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 on certain scalable costs.
Adjusted EBITDA
The board considers Adjusted EBITDA (adjusted for foreign exchange movements,
share-based payments and exceptional items) a key indicator of the performance
of the Group and one that is more closely aligned to the underlying
performance of the business. Adjusted EBITDA for the half year to 30 June 2025
was £10.8 million (H1 2024: £11.4 million).
£m H1 2025 H1 2024
Profit from operations 2.72 11.00
Depreciation 0.56 0.42
Depreciation of right of use assets 0.66 0.63
Amortisation of intangible assets 0.71 0.02
Foreign exchange loss/(gain)* 4.59 (0.79)
EBITDA 9.24 11.23
Exceptional items - acquisition related expenses 1.29 -
Share-based payments 0.31 0.16
Adjusted EBITDA 10.84 11.39
*Foreign exchange loss in the period totalled £4.6 million, of which £2.7
million was unrealised losses of forward foreign exchange contracts in place
at 30 June 2025.
Profit Before Tax
Group profit before tax for the half year to 30 June 2025 was £6.4 million
(H1 2024: £10.8 million). The changes in profitability between the six months
to 30 June 2024 and 30 June 2025 were due to:
Effect on Profit
£m
Sales volume growth 1.4
Margin growth 1.2
Increase in operating expenses (2.7)
*FX loss in H1 2025 £4.6 million (H1 2024: Gain £0.8 million) (5.4)
Exceptional Items - acquisition related expenses (1.3)
Share-based payments (0.2)
Amortisation of intangible assets (0.7)
Gain on Brand Architekts acquisition 3.9
Increase in bad debt provision (0.5)
Other items (0.2)
Change in profit before tax between H1 2024 and H1 2025 (4.5)
*Foreign exchange loss in the period totalled £4.6 million, of which £2.7
million was unrealised losses of forward foreign exchange contracts in place
at 30 June 2025.
Adjusted profit before tax was £4.8 million (H1 2024: £11.0 million), the
reconciliation to reported profit before tax is as follows:
£m H1 2025 H1 2024
Profit before tax 6.4 10.8
Exceptional items - acquisition related expenses 1.3 -
Share-based payments 0.3 0.2
Gain on bargain purchase (3.9) -
Amortisation of intangible assets 0.7 -
Adjusted profit before tax 4.8 11.0
Earnings Per Share
The statutory interim basic and diluted earnings per share were 6.73p and
6.70p respectively in H1 2025 (H1 2024: 10.37p and 10.30p).
The adjusted interim basic and diluted earnings per share before exceptional
items, amortisation costs and share-based payments were 8.52p and 8.49p
respectively in H1 2025 (H1 2024: 9.78p and 9.72p).
H1 2025 H1 2024
£m
Statutory profit attributable to equity holders 5.43 8.02
Exceptional items - acquisition-related expenses 1.29 -
Amortisation of intangible assets 0.71 0.02
Share-based payments 0.31 0.16
Gain on Brand Architekts acquisition (3.89) -
Foreign exchange loss/(gain)* 4.59 (0.79)
Tax attributable to adjusting items (1.55) 0.16
Adjusted profit attributable to equity holders 6.88 7.56
Weighted number of ordinary shares 80,762,751 77,331,174
Adjusted Earnings per share 8.52p 9.78p
* Foreign exchange loss in the period totalled £4.6 million, of which £2.7
million was unrealised losses of forward foreign exchange contracts in place
at 30 June 2025.
Share Options
The exercise of EMI and CSOP share options during the period had an immaterial
dilutive impact on earnings per share in the period. The share-based payment
charge of the EMI and CSOP share options for the half year to 30 June 2025 was
£0.31 million (H1 2024: £0.16 million) and has been taken to the share
option reserve.
Cash Flow and Cash Position
Net cash flow from operating activities was £5.4 million compared to £(2.0)
million in H1 2024. The Group's cash balance increased by £11.5 million to
£17.0 million as at 30 June 2025 (30 June 2024: £5.5 million), having
acquired £6.2 million of cash as a result of the Brand Architekts
acquisition.
We expect the capital expenditure requirements of the Group to remain low.
However, as part of our strategy to grow market share in the UK and US, there
will be occasions where investment in store furniture for customers is
required to secure business. In H1 2025, £1.1 million (H1 2024: £1.3
million) was spent on store furniture, new computer software and equipment,
warehouse improvements and other general office fixtures and fittings and
plant upgrades. Warehouse improvements include the preparation of a 94,000 sq.
ft. warehouse to store and distribute the Technic brands, and Brand Architekts
brands when existing third party logistic arrangements come to an end.
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, and a 'general purpose' £1.0 million facility (reduced at the
Company's request from £5.0 million on 1 May 2025). At 30 June 2025, both
facilities were unused and the balance outstanding was £nil (30 June 2024:
£nil). These facilities, together with the Group's positive cash generation
and the cash balance, ensure that future growth can be comfortably funded.
Exceptional Items
Exceptional costs in H1 2025 of £1.286 million included £0.68 million of
acquisition-related costs, £0.50 million of staff redundancy costs, and
£0.10 million of restructuring and other costs (H1 2024: nil).
Balance Sheet
Inventories at 30 June 2025 were £35.9 million (30 June 2024: £33.0
million). Included in the inventory total at 30 June 2025 is £3.1 million of
Brand Architekts product. The level of inventory supports 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. At 30 June
2025, the provision for old and slow inventory was £0.9 million/2.5% (30 June
2024: £0.8 million/2.3%). Across the Group we endeavoured to sell through
older stock lines, allowing for our provision for old and slow inventory to
remain modest in percentage terms. Our Group policy is to provide for 50% of
the cost of perishable items that are over two years old. However, we remain
confident that many such items in the normal course of business are eventually
sold through our close-out operations without a loss to the Group.
Trade receivables are monitored by management to ensure collection is made to
terms, to reduce the risk of bad debt and to control debtor days. Trade
receivables, excluding other receivables, at 30 June 2025 were £18.8 million
(30 June 2024: £14.9 million). The Brand Architekts business trade
receivables at 30 June 2025 were £5.1 million. The provision for bad and
doubtful debts carried forward at 30 June 2025 was £0.73 million, 3.7% of
gross trade receivables (30 June 2024: £0.15 million/1.0%), as a result of a
long-term customer of Technic products, G.R. & M.M. Blackledge plc,
trading as Bodycare, which has recently entered administration. Amounts due
from this customer at 30 June 2025, totalling £0.5 million, have been
provided for in full. There is a further £0.3 million due from this customer
from trading after period end, which currently has been provided for in full.
At 30 June 2025, the Group had no borrowings or lease liabilities outstanding
(30 June 2024: £nil), apart from those associated with right-of-use assets as
directed by IFRS 16 (see below). The Group was therefore debt free at 30 June
2025.
Working capital increased by £17.2 million from 30 June 2024 to 30 June 2025.
The main components were an increase in inventory of £2.9 million, an
increase in trade and other receivables of £6.2 million, an increase in cash
of £11.5 million, and an increase in trade and other payables of £3.5
million.
The Group's balance sheet remains in a very healthy position. On 30 June 2025,
net assets totalled £73.5 million (30 June 2024: £51.0 million), with the
majority made up of liquid assets of inventory, trade receivables and cash.
Included in the balance sheet is £7.3 million of goodwill, which represents
the excess of consideration over the fair value of the Group's share of the
net identifiable assets of the acquired business / cash generating units at
the date of acquisition. The carrying value at 30 June 2025 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 a mid-year review at 30 June 2025 and has concluded
that no impairment is indicated for Treasured Scents Limited, Retra Holdings
Limited, Marvin Leeds Marketing Services, Inc. and Brand Architekts Group
Limited as the recoverable amount exceeds the carrying value.
The balance sheet includes £10.1 million of right-of-use assets (H1 2024:
£4.7 million), 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 £10.6 million (H1 2024: £4.9 million) at the
balance sheet date. The increase relates to the new 94,000 sq. ft. warehouse
discussed above.
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 2025 with forward foreign exchange contracts in place for the
purchase of US$57 million at an average exchange rate of US$1.2912/£, and the
sale of €2.3 million at €1.1627/£.
In addition, when currency rates were favourable, we purchased additional US
dollar forward foreign exchange contracts and spot rate amounts to help cover
our total US dollar requirement for this year, and forward foreign exchange
contracts towards our requirement for 2026.
There was a foreign exchange loss in the period of £4.6 million, of which
£2.7 million was unrealised losses of forward foreign exchange contracts in
place at 30 June 2025, when the US$/GBP exchange rate was 1.3721. This had
fallen to 1.3490 on 29 August 2025, reversing most of the unrealised losses.
The Group has a natural hedge from sales to the US which are entirely in US
dollars; in H1 2025 these sales were US$3.13 million (H1 2024: US$3.08
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.
Acquisition of Brand Architekts
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 per share, 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 has been 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, the initial book value of net assets
acquired was £11.45 million, including £6.2 million of cash. The acquisition
is considered a "bargain purchase" because the provisionally assessed fair
value of the assets acquired of £17.8 million was greater than the purchase
price of £13.9 million, resulting in negative goodwill of £3.9 million
(subject to audit), which has been treated as other operating income as
directed by IFRS3. Further details are shown in note 9.
The Acquisition included a defined benefit occupational pension scheme which
has been closed to new members since 2015. The scheme will have its next
triannual valuation in April 2026. Current valuations indicate the scheme is
in surplus, such that its assets exceed pension liabilities. The scheme
surplus at 30 June 2025 has been valued at £2.0 million (30 June 2024: £0.8
million, 12 February 2025: £1.5 million) and has been included as an asset in
the balance sheet. Further details are shown in note 10.
Dividends
The board is pleased to have declared an increased interim dividend of 4.0p
per share (2024: 3.5p), which will be paid on 21 November 2025 to shareholders
on the register at 7 November 2025. The shares will go ex-dividend on 6
November 2025.
Neil Rodol
Chief Financial Officer
9 September 2025
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2024
Notes 2025 2024
£'000 £'000 £'000
Revenue 49,298 45,848 101,607
Cost of sales (27,129) (26,377) (59,739)
Gross profit 22,169 19,471 41,868
Administrative expenses 3 (19,445) (8,507) (17,882)
Profit from operations 2,724 10,964 23,986
Finance income 4 152 22 116
Finance expense 4 (356) (137) (341)
Gain on bargain purchase 9 3,889 - -
Profit before tax 3 6,409 10,849 23,761
Tax expense 5 (979) (2,833) (5,528)
Profit for the period attributable to equity holders of the parent company 5,430 8,016 18,233
Other comprehensive income (net of tax):
Exchange gain on translation of foreign subsidiary (64) (31) 11
Re-measurement of defined benefit pension 324 - -
Total comprehensive income for the period attributable to equity holders of 5,690 7,985 18,244
the parent company
Basic earnings per share (pence) 6 6.73 10.37 23.47
Diluted earnings per share (pence) 6 6.70 10.30 23.34
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 December 2024
2025 2024
£'000 £'000 £'000
ASSETS
Non-current assets
Goodwill 7,274 7,274 7,274
Intangible assets 7 5,233 76 90
Property, plant and equipment 3,026 2,153 2,527
Right-of-use assets 8 10,114 4,720 4,073
Retirement benefit surplus 1,970 - -
Deferred tax assets 839 701 568
28,456 14,924 14,532
Current assets
Inventories 35,934 32,975 31,192
Trade and other receivables 21,465 17,559 16,336
Corporation tax recoverable 2,321 - 273
Cash and cash equivalents 17,017 5,506 21,887
Derivative financial instruments - 7 1,340
76,737 56,047 71,028
Total assets 105,193 70,971 85,560
LIABILITIES
Current liabilities
Trade and other payables 17,686 14,207 7,630
Borrowings and lease liabilities 1,353 1,300 1,326
Corporation tax liability 14 557 -
Derivative financial instruments 2,665 143 -
21,718 16,207 8,956
Non-current liabilities
Borrowings and lease liabilities 9,070 3,590 2,919
Deferred tax liabilities 936 180 391
10,006 3,770 3,310
Total liabilities 31,724 19,977 12,266
NET ASSETS 73,469 50,994 73,294
EQUITY
Share capital 20,197 19,408 20,171
Share premium 34,630 20,190 34,114
Merger reserve (16,100) (16,100) (16,100)
Foreign exchange reserve (31) (9) 33
Share option reserve 654 610 652
Pension remeasurement reserve 1,478 - -
Retained earnings 32,641 26,895 34,424
Total equity attributable to 73,469 50,994 73,294
shareholders
CONSOLIDATED STATEMENT OF CASH FLOW
Unaudited Unaudited 6 Months ended Audited
6 Months ended 30 June 2024 Year ended
30 June 2025 31 December 2024
Notes
£'000 £'000 £'000
Profit before tax for the period 6,409 10,849 23,761
Adjusted by:
Finance expense 4 356 137 341
Finance income 4 (152) (22) (116)
Gain on bargain purchase 9 (3,889) - -
Depreciation of property, plant and equipment 3 559 415 934
Depreciation on right of use assets 661 626 1,273
Loss on disposal of property, plant, and equipment 90 1 9
Amortisation of intangible assets 3 706 17 26
Share based payments 310 164 349
Movement in derivative financial instruments 4,005 (382) (1,858)
Foreign exchange translation differences 8 (19) 45
Other adjustments
Acquisition related costs 682 - 418
Working capital adjustments
Movement in inventories (1,446) (5,012) (3,229)
Movement in trade and other receivables (480) (4,030) (2,807)
Movement in trade and other payables 374 (27) (1,943)
Movement in deferred tax assets (105) - 24
Cash inflow generated from operations 8,088 2,717 17,227
Income tax paid (3,266) (4,745) (8,070)
Cash flows from operating activities 4,822 (2,028) 9,157
Acquisition of subsidiary, net of cash acquired 9 (7,661)
Purchase of property, plant and equipment (1,067) (1,323) (2,237)
Proceeds from sales of Property Plant and Equipment - - 12
Interest received 152 22 116
Acquisition related costs (682) - (418)
Purchase of intangible assets - - (23)
Cash flows used by investing activities (9,258) (1,301) (2,550)
Loans received from Directors - - 14,000
Loans repaid to Directors - - (14,000)
Proceeds from issued share capital 516 558 15,245
Principal elements of lease payments (524) (626) (1,270)
Lease liability interest (212) (108) (206)
Interest paid (144) (29) (135)
Dividends - - (7,379)
Cash flows used by financing activities (364) (205) 6,255
Net change in cash and cash equivalents (4,800) (3,534) 12,862
Cash and cash equivalents at beginning of period 21,887 9,053 9,053
Exchange loss on cash and cash equivalents (70) (13) (28)
Cash and cash equivalents at end of period 17,017 5,506 21,887
Cash and cash equivalents consists of:
Cash and cash equivalents 17,017 5,506 21,887
17,017 5,506 21,887
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share Premium Merger reserve Foreign exchange reserve Share option res-erve Pension re-measurement reserve Retained earnings
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 January 2024 19,314 19,726 (16,100) 22 594 - 23,249 46,805
Comprehensive income for the period
Profit for the period - - - - - - 8,016 8,016
Other comprehensive income
On translation of foreign subsidiary - - - (31) - - - (31)
Total comprehensive income for the period - - - (31) - - 8.016 7,985
Contributions by and distributions to owners
Equity shares issued 94 464 - - - - - 558
Transfer to the profit and loss reserve - - - - (288) - 288 -
Corporation tax charge - - - - 140 - - 140
Share based payments - - - - 164 - - 164
Dividends payable - - - - - - (4,658) (4,658)
Total Contributions by and distributions to owners 94 464 - - 16 - (4,370) (3,796)
As at 30 June 2024 19,408 20,190 (16,100) (9) 610 26,895 50,994
As at 1 January 2024 19,314 19,726 (16,100) 22 594 - 23,249 46,805
Comprehensive income for the period
Profit for the year - - - - - - 18,233 18,233
Other comprehensive income
On translation of foreign subsidiary - - - 11 - - - 11
Total comprehensive income for the period - - - 11 - - 18,233 18,244
Contributions by and distributions to owners
Equity shares issued 857 14,835 - - - - - 15,692
Share issue costs - (447) - - - - (447)
Transfer to retained earnings on exercise of share options - - - - (321) - 321 -
Deferred tax movement - - - - 30 - - 30
Share based payments - - - - 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
Share capital Share Premium Merger reserve Foreign exchange reserve Share option reserve Pension re-measurement reserve Retained earnings
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 January 2025 20,171 34,114 (16,100) 33 652 - 34,424 73,294
Comprehensive income for the period
Profit for the period - - - - - - 5,430 5,430
Other comprehensive income
On translation of foreign subsidiary - - - (64) - - - (64)
Transfer on acquisition of subsidiary - - - - - 1,154 (1,154) -
Remeasurement of defined benefit pension - - - - - 324 - 324
Total comprehensive income for the period - - - (64) - 1,478 4,276 5,690
Contributions by and distributions to owners
Equity shares issued 26 516 - - - - - 542
Share based payments - - - - 310 - - 310
Deferred tax movement - - - - (308) - - (308)
Dividend payable - - - - - - (6,059) (6,059)
Total Contributions by and distributions to owners 26 516 - - 2 - (6,059) (5,515)
As at 30 June 2025 20,197 34,630 (16,100) (31) 654 1,478 32,641 73,469
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
The consolidated interim financial information for the 6 months to 30 June
2025 has been prepared in accordance with the measurement and recognition
principles of UK adopted international accounting and accounting policies that
are consistent with the Group's Annual report and Accounts for the year ended
31 December 2024 and that are expected to be applied in the Group's Annual
Report and Accounts for the year ended 31 December 2025. They do not include
all of the information required for the full financial statements and should
be read in conjunction with the 2024 Annual Report and Accounts which were
prepared in accordance with UK adopted international accounting standards.
The comparative financial information for the year ended 31 December 2024 in
this interim report does not constitute statutory accounts for that period
under section 435 of the Companies Act 2006. Statutory accounts for the year
ended 31 December 2024 have been reported on by the Group's auditors and
delivered to the Registrar of Companies.
The auditors' report on the accounts for the year ended 31 December 2024 was
unqualified, did not draw attention to any matters by way of emphasis, and did
not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
2. Changes in significant accounting policies
The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2024.
3. Profit from operations
Profit from operations is arrived at after charging/ (crediting):
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2024
2025 2024
£'000 £'000 £'000
Depreciation of property, plant and equipment 559 415 934
Depreciation of right-of-use assets 661 626 1,273
Amortisation of intangible assets 706 17 26
Provision for doubtful debts 730 151 85
Exceptional costs 1,285 - 418
Write down inventories at net realisable value 505 434 45
Exchange differences 4,587 (793) (2,004)
A breakdown of exceptional costs is as follows:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2024
2025 2024
£'000 £'000 £'000
Acquisition related costs 682 - 418
Restructuring costs 37 - -
Redundancy costs 502 - -
Other costs 64 - -
1,285 - 418
Acquisition related expenses of £682,000 relate to legal and financial due
diligence incurred in the period (31 December 2024: £418,000, 30 June 2024:
£nil), all of which relate to the acquisition of Brand Architekts Group
Plc.
Restructuring costs and redundancy costs incurred in the period (31 December
2024: £Nil, 30 June 2024: £Nil) relate to the acquisition of Brand
Architekts Group Plc.
4. Finance income and finance expenses
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2024
2025 2024
£'000 £'000 £'000
Finance income
Interest received 152 22 116
152 22 116
Lease liability interest (212) (108) (206)
Other interest (144) (29) (135)
Finance expenses (356) (137) (341)
5. Tax expenses
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2024
2025 2024
£'000 £'000 £'000
Current tax expense
Current income tax charge 1,230 2,802 5,335
Adjustment in respect of previous periods - - (72)
1,230 2,802 5,263
Deferred tax expense
Relating to origination and reversal of temporary differences (251) 31 265
Adjustment in respect of previous periods - - -
Total tax in income statement 979 2,833 5,528
6. Earnings per share
Profit for the period used in the calculation of the basic and diluted
earnings per share:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2024
2025 2024
£'000 £'000 £'000
Profit after tax for the period 5,430 8,016 18,233
The weighted average number of shares for the purposes of diluted earnings per
share reconciles to the weighted average number of shares used in the
calculation of basic earnings per share as follows:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2024
2025 2024
Weighted average number of shares
Weighted number of ordinary shares for the purpose of basic earnings per share 80,762,751 77,331,174 77,691,505
Potentially dilutive shares awarded 359,413 472,542 433,257
Weighted number of ordinary shares for the purpose of diluted earnings per 81,122,164 77,803,716 78,124,762
share
Basic Earnings per share (pence) 6.73 10.37 23.47
Diluted earnings per share (pence) 6.70 10.30 23.34
7. Intangible assets
Brands Customer lists Patents Website Licences Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2024 3,802 8,241 244 49 6 12,342
Additions - - - 23 - 23
Disposals
At 31 December 2024 3,802 8,241 244 72 6 12,365
Accumulated amortisation
At 1 January 2024 3,799 8,241 161 42 6 12,249
Charge for the year - - 24 2 - 26
Amortisation on disposals
At 31 December 2024 3,799 8,241 185 44 6 12,275
Net book value
At 31 December 2024 3 - 59 28 - 90
Brands Customer lists Patents Website Licences Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2024 3,802 8,241 244 49 6 12,342
At 30 June 2024 3,802 8,241 244 49 6 12,342
Accumulated amortisation
At 1 January 2024 3,799 8,241 161 42 6 12,249
Charge for the year - - 16 1 - 17
At 30 June 2024 3,799 8,241 177 43 6 12,266
Net book value
At 30 June 2024 3 - 67 6 - 76
Brands Customer lists Patents Website Licences Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2025 3,802 8,241 244 72 6 12,365
Additions 5,428 419 - 2 5,849
Disposals
At 30 June 2025 9,230 8,660 244 74 6 18,214
Accumulated amortisation
At 1 January 2025 3,799 8,241 185 44 6 12,275
Charge for the year 661 31 14 - - 706
Amortisation on disposals
At 30 June 2025 4,460 8,272 199 44 6 12,981
Net book value
At 30 June 2025 4,770 388 45 30 - 5,233
8. Right of Use Assets
Leasehold property Computer equipment Total
£'000 £'000 £'000
Costs
At 1 January 2024 8,998 77 9,075
Additions 66 - 66
Disposals (139) - (139)
At 31 December 2024 8,925 77 9,002
Accumulated amortisation
At 1 January 2024 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
Leasehold property Computer equipment Total
£'000 £'000 £'000
Costs
At 1 January 2024 8,998 77 9,075
Additions 66 - 66
Disposals
At 30 June 2024 9,064 77 9,141
Accumulated amortisation
At 1 January 2024 3,718 77 3,795
Charge for the year 626 - 626
Disposals
At 30 June 2024 4,344 77 4,421
Net Book Value
At 30 June 2024 4,720 - 4,720
Leasehold property Computer equipment Total
£'000 £'000 £'000
Costs
At 1 January 2025 8,925 77 9,002
Additions 6,702 - 6,702
At 30 June 2025 15,627 77 15,704
Accumulated amortisation
At 1 January 2025 4,852 77 4,929
Charge for the year 661 - 661
At 30 June 2025 5,513 77 5,590
Net Book Value
At 30 June 2025 10,114 - 10,114
9. Business Combination during the period
On 12 February 2025 the Group acquired 100% of the voting equity instruments
of Brand Architekts Group Plc ("Brand Architekts"), 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.
Management are in the process of finalising the fair value of identifiable
assets. Details of the provisional fair value of identifiable assets and
liabilities acquired, purchase consideration and goodwill are as follows (note
that fair value was not used as a measurement basis for assets and liabilities
that require a different basis, which include leases, contingent liabilities,
income taxes and defined benefit pension plans):
Book value Adjustment Provisional
Fair value
£'000 £'000 £'000
Non-current assets
Intangible assets 12,791 (12,791) -
Brands - 5,428 5,428
Customer relationships - 419 419
Property plant and equipment 81 - 81
Retirement benefit surplus 1,539 1,539
Deferred tax asset 1,750 - 1,750
Current assets
Inventories 3,988 (688) 3,300
Trade and other receivables 4,649 - 4,649
Cash 6,193 - 6,193
Current liabilities
Trade and other payables (3,410) (213) (3,623)
Tax payable (2) - (2)
Non- Current liabilities
Deferred tax (1,803) (162) (1,965)
Total net assets 24,237 (6,468) 17,769
Fair value of consideration paid
Cash 13,338
Shares 542
Total consideration 13,880
Negative goodwill 3,889
Total consideration paid of £13.9 million, exceeded the provisional fair
value of identifiable assets and liabilities acquired which was a net value of
£17.8 million. Accordingly, the excess gives rise to negative goodwill, known
as a "gain on bargain purchase" totalling £3.9 million.
Acquisition costs of £1,100,000 arose as a result of the transaction.
£682,000 have been recognised as part of administrative expenses in the
statement of comprehensive income in the period ended 30 June 2025 and
£418,000 in the year ended 31 December 2024.
Since the acquisition date, Brand Architekts has contributed £ 6,191,000 to
group revenues and incurred a loss of £ 465,000 against group profit. If the
acquisition had occurred on 1 January 2025, the Group's revenue would have
been £51,219,00 and the Group's profit for the period would have been
£4,911,000.
10. IAS 19 Employee benefits
Expected future cash flows to and from the Group's defined benefit pension
scheme
The acquisition of Brand Architects included a defined benefit occupational
pension scheme.
The Scheme is closed to new members since 2015 and to further accruals of
benefits. It is subject to the scheme funding requirements outlined in UK
legislation. The last scheme funding valuation of the Scheme was as at 5 April
2023 and revealed a deficit of £4,612,000.
The deficit reduction payment will remain at £318,000 per annum until 30 June
2033.
In addition, the Group has agreed to meet the cost of administrative expenses
and Pension Protection Fund insurance premiums for the Scheme. Anticipated
payments by the Group in respect of the plan administrative expenses and the
Pension Protection Fund premium in the year ended 30 June 2025 are expected to
be of a similar order of magnitude to payments in 2024.
Payments made by the Group to the Scheme and in respect of the Scheme
liabilities were:
Period 13 February 2025 to Year
ended
30 June 2025 30 June 2024
£'000 £'000
Deficit recovery payments 106 -
Scheme administrative expenses 35 -
Pension Protection Fund premium - -
Total 141 -
The amount expensed in the Group Statement of Comprehensive Income were:
Period ended Year ended
30 June 2025 30 June 2024
£'000 £'000
In operating profit:
Plan administrative expenses 35 -
Pension Protection Fund premium 27 -
62 -
In finance costs:
Unwinding of notional discount factor 25 -
Total 87 -
IAS 19 requires a separate valuation of the Scheme on a different basis to the funding valuation referred to above. The key assumptions used were:
At 30 June 2025 At 12 February 2025 At 30 June 2024
Discount rate 5.55% 5.35% -
Inflation assumption (RPI) 2.90% 3.15% -
Inflation assumption (CPI) 2.50% 2.75% -
The amount recognised in the Group Statement of Financial Position were:
At 30 June 2025 At 12 February 2025 At 30 June 2024
£'000 £'000 £'000
Present value of funded obligations (21,230) (21,299) -
Fair value of scheme assets 22,199 22,838 -
Surplus 1,970 1,539 -
Unrecognised surplus - - -
Net assets recognised in the Statement of Financial Position
1,970 1,539 -
Deferred tax liability (492) (385)
Net assets after deferred tax 1,478 1,154
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