Warpaint London PLC Announces Interim Results

Rhea-AI Summary

Warpaint London PLC announced record interim results for the six months ended 30 June 2024.

Revenue increased by 25% to £45.8 million from £36.7 million in H1 2023. UK revenue rose 17% to £15.5 million, while international revenue grew 30% to £30.3 million. The W7 brand saw a 25% increase in sales, and Technic sales grew by 34%.

Gross profit margin improved by 334 basis points to 42.5%. EBITDA increased 66% to £12.0 million, and profit from operations was up 75% to £11.0 million. Basic EPS rose 67% to 10.37p.

The company declared an increased interim dividend of 3.5p per share, up 17%. Cash as of 30 June 2024 was £5.5 million, reflecting increased stock and tax payments.

Warpaint highlighted strong sales growth in the UK and Europe, ongoing expansion plans, and expects the second half to be weighted due to seasonal sales.

Positive

• Revenue increased by 25% to £45.8 million.
• UK revenue rose 17% to £15.5 million.
• International revenue grew 30% to £30.3 million.
• Gross profit margin improved by 334 basis points to 42.5%.
• EBITDA increased 66% to £12.0 million.
• Profit from operations up 75% to £11.0 million.
• Basic EPS rose 67% to 10.37p.
• Interim dividend increased by 17% to 3.5p per share.

Negative

• Cash decreased to £5.5 million from £7.1 million.

Interim Results for the six months ended 30 June 2024

Significant growth in sales, margins and profit to achieve another record first half

LONDON, UNITED KINGDOM / ACCESSWIRE / September 17, 2024 / Warpaint London plc ("Warpaint", the "Company" or the "Group") (AIM:W7L)(OTCQX:WPNTF), the specialist supplier of colour cosmetics and owner of the W7 and Technic brands is pleased to announce its unaudited interim results for the six months ended 30 June 2024 ("H1").

		Unaudited six months to 30 June 2024				Unaudited six months to 30 June 2023				Growth
Revenue		£	45.8m			£	36.7m				+25	%
Gross profit margin			42.5	%			39.1	%		+334bps
EBITDA		£	12.0m			£	7.3m				+66	%
Adjusted EBITDA*		£	11.4m			£	7.9m				+44	%
Profit from operations		£	11.0m			£	6.3m				+75	%
Basic earnings per share (EPS)			10.37p				6.22p				+67	%

Highlights

	Strong growth in sales during the period, particularly in the UK and Europe, achieving a record first half
	Group sales increased by 25% to £45.8 million in H1 2024 (H1 2023: £36.7 million)
	UK revenue increased by 17% to £15.5 million (H1 2023: £13.3 million)
	International revenue increased by 30% to £30.3 million (H1 2023: £23.4 million)
	W7 sales increased by 25% and Technic sales increased by 34%
	Gross profit margin increased by a further 334 bps to 42.5% (H1 2023: 39.1%), primarilydue to successful launches of new product lines, sourcing and volume savings, growing e-commerce revenue and increased US profitability
	Adjusted EBITDA* grew 44% to £11.4 million (H1 2023: £7.9 million)
	Profit from operations was up 75% to £11.0 million (H1 2023: £6.3 million)
	Cash of £5.5 million as at 30 June 2024 (30 June 2023: £7.1 million), reflecting the increase in stock and corporation tax paid on account in H1 and no debt. As at 1 July 2024, the cash balance was £6.5 million, reflecting cash receipts immediately post period end
	Basic EPS improved by 67% to 10.37p (H1 2023: 6.22p)
	The board has declared an increased interim dividend of 3.5p per share (2023 interim dividend 3.0p per share), up 17%
	Consistent with previous years due to Christmas gifting orders and the Group's momentum, sales are expected to again be second half weighted

* Adjusted for foreign exchange movements and share-based payments. Adjusted numbers are close to the underlying cash flow performance of the business which is regularly monitored and measured by management.

Post-Period End Highlights

	Continued positive business momentum post period end, with Group salesfor the nine months to 30 September 2024 expected to be approximately £76 million (nine months to 30 September 2023 £64 million), providing confidence that full year expectations will be met
	The Group's expansion strategy continues, with further planned launches in H2 2024 to increase the number of products stocked and outlets served with certain existing customers, particularly in the UK, Europe and the US, while discussions with additional major retailers globally are ongoing

Commenting, Sam Bazini Chief Executive, said:

"I am delighted with the Group's performance in the first half, with continuing strong growth in sales and profits reflecting the ongoing success of the Group's strategy of focusing on growing profitable sales of its branded products globally, whilst increasing overall margins.

"There continues to be significant growth opportunities for Warpaint, and the Group is very well positioned to achieve further growth with additional improvement in margins. As in previous years, the Group's sales are expected to be second half weighted, reflecting Christmas seasonal sales and ongoing sales momentum.

"We anticipate updating further on trading later in the year, and with significant opportunities for continued growth, both already secured with our existing retailers and in discussion with additional major retailers globally, I am confident that the Group will continue to perform well for the remainder of the year and beyond."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018

Enquiries:

Warpaint London Sam Bazini - Chief Executive Officer Eoin Macleod - Managing Director Neil Rodol - Chief Financial Officer Adam Kay - Investor Relations	c/o IFC +1 310 868 6380
Shore Capital (Nominated Adviser & Broker) Patrick Castle, Daniel Bush - Corporate Advisory Fiona Conroy - Corporate Broking	020 7408 4090
IFC Advisory (Financial PR & IR) Tim Metcalfe, Graham Herring, Florence Chandler	020 3934 6630

Warpaint London plc

Warpaint sells branded cosmetics under the lead brand names of W7 and Technic. W7 is sold in the UK primarily to major retailers and internationally to local distributors or retail chains. The Technic brand is sold in the UK and continental Europe with a significant focus on the gifting market, principally for high street retailers and supermarkets. In addition, Warpaint supplies cosmetics under its other brand names of Man'stuff, Body Collection and Chit Chat, each targeting a different demographic.

CHIEF EXECUTIVE'S REVIEW

I am very pleased to report that the Group again achieved another record level of sales in the first half, with an improved profit margin. Group sales increased by 25% to £45.8 million (H1 2023: £36.7 million), importantly at an increased gross margin of 42.5% (H1 2023: 39.1%), driving an increase of 75% in profit from operations to £11.0 million (H1 2023: £6.3 million).

This continued growth reflects the ongoing success of the Group's strategy of focusing on growing profitable sales of its branded products globally, whilst increasing overall margins. Increased sales are being achieved both through existing customers and those new to the Group. With existing customers, the focus is on increasing the number of their outlets stocking Group branded product and increasing the Group's footprint within each store. The focus being to gain more space, with more product stocked, in more stores. As an example of this, 'impulse' units are being installed close to the checkouts in 189 Tesco stores, to drive additional volumes. In addition, we also continue to be in active discussions with new major retailers globally, with our management team in the US, in particular, having a number of meaningful discussions.

As has been the trend for some time, the global cosmetics market continues to see customers transferring to more value orientated brands, such as those produced by the Group. I believe we are very well placed with our high-quality focused offering to capture further market share and to continue to grow sales and profits. Our global market share remains modest and there continues to be substantial opportunities for further growth.

W7

W7 is the Group's lead brand, with sales in H1 2024 increasing by 25% to £30.2 million (H1 2023: £24.2 million), accounting for 66% of total Group revenue (H1 2023: 66%).

Strong growth was seen particularly in the UK and Europe, with W7 sales in the UK increasing by 18% to £8.8 million (H1: 2023 £7.5 million), representing 29% of W7 sales in the period (H1 2023: 31%). W7 sales in the UK continue to see substantial growth and this is expected to continue, particularly with existing retailers, where plans are in place to expand the number of stores served and to increase the footprint in existing stores. For example, W7 has seen an over fourfold increase in weekly retail sales in Boots since the start of 2024, due to further rollouts, being stocked in larger stores, better placement in store and larger displays.

In H1 2024, W7 sales to Europe grew by 38% to £18.1 million (H1 2023: £13.2 million), representing 60% of W7 sales (H1 2023: 54%). The sales growth in Europe was assisted by additional sales to existing customers, particularly as they expanded the size of their estates, and to new customers, including in countries where the Group has previously had only a limited presence.

W7 sales in the US grew by 10% to £2.2 million (H1 2023: £2.0 million), representing 7% of W7 sales (H1 2023: 8%), supported by growth with CVS, where a rollout to a further 387 stores was undertaken in Q1, and with Five Below, including the stocking of an increased range of W7 product in all 1,544 of their stores, with a further 225+ Five Below stores expected to open in the next 12 months, stocking W7 products.

Sales of W7 in the rest of the world were £1.0 million (H1 2023: £1.5 million), reflecting the timing of delivery of certain orders.

Technic

In H1 2024, Technic sales (which includes Technic and the other Retra brands, including Body Collection and retailer own brand white label cosmetics) grew by 34% to £14.5 million (H1 2023: £10.9 million), with particularly strong sales growth seen in Europe, up 47%, and in the UK, up 28%. A particular highlight in the UK was the launch in March 2024 of a full range of Technic products in an initial 202 Morrisons stores.

Sales of the Technic brands in the US and the rest of the world remain small in the context of the Group as a whole, representing less than 1.5% of Group revenue, presenting a further opportunity for future growth.

Overall sales of the Technic brands were 32% of total Group revenue in H1 2024 (H1 2023: 30%).

E-commerce

Online sales grew in all regions in H1 2024 to reach £2.32 million (H1 2023: £1.77 million as restated), an increase of 31%, at a similar net margin to other Group sales. Direct online sales in H1 2024 represented 5.1% of Group sales (H1 2023: 4.8%) as sales through physical stores grew at a faster rate.

The Group continues to have significant opportunities to grow sales through the W7 and Technic brands' own e-commerce sites, and on Amazon in the UK, Europe and the US, and in China through official W7 brand stores owned by the Group.

Close-out

Close-out sales continued to reduce as they are not a core focus, although the Group will continue to take advantage of profitable close-out opportunities as they become available, as they continue to provide a significant and profitable source of intelligence in the colour cosmetics market. In H1 2024, close-out sales were £1.2 million (H1 2023: £1.6 million) and represented only 3% of the overall revenue of the Group (H1 2023: 4%).

Customers & Geographies

The largest markets for sales of the Group's brands are in Europe and the UK, with a growing presence in the US, as well as significant sales to Australia, coupled with global online sales. In H1 2024 the Group's top ten customers represented 69% of revenues (H1 2023: 67%).

UK

In the first half, sales in the UK were up 17% and accounted for 34% of Group sales (H1 2023: 36%), with increased sales of both the Group's lead brand W7, up 18%, and the Technic brands, up by 28%, with a 21% reduction in close-out sales compared to H1 2023.

Strong growth was seen during the period with many UK retailers, with a pleasing start to the rollout with Superdrug, which has continued post period end, and further growth with Boots and Tesco. Additionally, in March 2024, a full range of Technic products were launched in an initial 202 Morrisons stores in the UK. We are also in continued talks with other major UK retailers who stock W7 and Technic product to increase the offering in their stores and anticipate further expansion across their estates this year and into 2025.

Europe

Since 2022, Europe has been the largest sales area for the Group, now accounting for 58% of sales (H1 2023: 51%). During the first half, sales in Europe increased by 40% compared to H1 2023, with growth seen through both existing customers and those new to the Group. Sales for the Group's brands into Europe are mainly to Denmark, Holland, Spain and Sweden, but with an increasing presence in many other countries in the region. Europe continues to present growth opportunities, both with existing customers, and particularly in countries where the Group currently has a limited presence, such as Germany and Italy.

US

First half sales in the US increased by 1% (up 3% on a constant currency basis), accounting for 5% of Group sales (H1 2023: 7%), as the Group continued to expand its presence with larger retailers and reduced its focus on deep discounters. In the US, 99.5% of sales in H1 2024 (H1 2023: 97% and H1 2022: 88%) were from the sale of the Group's brands as only minimal close-out sales were undertaken

A new US management team was appointed earlier this year, focused on generating new business at higher margins, moving away from selling to retailers whose focus is on selling products at deep discounts. As a result, US sales in the first half generated significantly higher profits than has previously been the case, with an increase of 12 percentage points in the gross margin achieved. For 2024 as a whole, US sales are expected to be more second half weighted than previously as gifting orders are delivered. In particular, a large Christmas order received from Walmart for W7 and Chit Chat products will contribute to the Group's US performance in the second half.

Rest of the World

H1 2024 sales across the rest of the world accounted for 3% of overall Group sales (H1 2023: 6%), due to the timing of certain orders. The focus continues to be on Australia and China, as well as other countries, such as the Philippines, where a range of W7 products was rolled out to 100 Watsons stores in late 2023. In this region, the focus remains on generating profitable sales in appropriate volumes as opportunities are presented and we expect increased sales in the rest of the world region in the second half of the year.

Dividend

In accordance with the Group's policy to continue to pay appropriate dividends, the board is pleased to declare an increased interim dividend of 3.5p per share (2023 interim dividend: 3.0p per share) which will be paid on 22 November 2024 to shareholders on the register at 8 November 2024. The shares will go ex-dividend on 7 November 2024.

Board

We were delighted to welcome Sharon Daly and Indira Thambiah as independent Non-Executive Directors with effect from 1 January 2024. Both have considerable experience on the boards of public companies in the consumer sector and they have made a valuable contribution since joining the board. Both joined the Company's Audit and Remuneration Committees on appointment, and Indira was appointed as Chair of the Remuneration Committee on 3 September 2024, taking over from Keith Sadler. Keith Sadler remains Chair of the Audit Committee, which has been reconstituted as the Audit and Risk Committee with new terms of reference.

Summary and Outlook

I am again delighted with the Group's continuing strong performance in the first half of 2024, with a record level of sales delivered at a significantly higher margin. I believe there remains significant global growth opportunities for Warpaint and the Group is very well positioned to achieve further growth, alongside additional improvement in margins.

Warpaint is a global business with the capacity, expertise and strategy, coupled with balance sheet strength, to drive continued growth from both existing and new customers. We have a robust and evolving supply chain, coupled with a growing distribution network, to ensure that we are able to supply our customers' outlets on time, with the product that consumers are demanding, and in the required volumes.

Consistent with previous years, the Group's sales are expected to be second half weighted, reflecting Christmas seasonal sales and ongoing sales momentum. We anticipate updating further on trading later in the year, and with significant opportunities for continued growth, both already secured with our existing retailers and in discussion with additional major retailers globally, I am confident that the Group will continue to perform well for the remainder of the year and beyond.

Sam Bazini
Chief Executive Officer
17 September 2024

CHIEF FINANCIAL OFFICER'S REVIEW

The first half of 2024 was another record for the Group and significantly ahead of the first half of 2023, with strong growth in revenue, margins and profit before tax. The Group continues its strategy of building the W7 and Technic brands in the UK and internationally, and we remain focused on margin, being debt free, and generating cash.

Headline results, shown below, represent the performance comparisons between the consolidated statements of income for the half years ended 30 June 2024 and 30 June 2023.

Statutory Results		6 Months ended 30 June 2024				6 Months ended 30 June 2023
Revenue		£	45.8m			£	36.7m
Profit from operations		£	11.0m			£	6.3m
Profit margin from operations			23.9	%			17.1	%
Profit before tax (PBT)		£	10.9m			£	6.2m
Earnings per share (EPS)			10.4p				6.2p
Cash and cash equivalents		£	5.5m			£	7.1m

Revenue

Total revenue increased by 25% from £36.7 million in H1 2023 to £45.8 million in H1 2024.

Group branded sales were £43.6 million in H1 2024 (H1 2023: £35.0 million). The W7 brand generated sales of £30.2 million (H1 2023: £24.2 million), while the Technic brand, excluding sales of retailer own brand white label cosmetics, contributed sales of £13.4 million (H1 2023: £10.8 million).

In the first half, sales of white label cosmetics were £1.1 million (H1 2023: £0.05 million). The white label business is traditionally cost competitive and is only undertaken based on commercial viability, in particular margin.

The close-out business had sales in the first half of £1.2 million (H1 2023: £1.6 million), as the Group, in line with its strategy, continued to reduce its focus on close-out opportunities.

In the UK, sales increased by 17% to £15.5 million (H1 2023: £13.3 million). Internationally, revenue increased by 30%, from £23.4 million in H1 2023 to £30.3 million in H1 2024. In Europe, Group sales increased by 40% to £26.4 million (H1 2023: £18.9 million). In the US, Group sales were marginally up at £2.43 million (H1 2023: £2.40 million), however, in US dollar terms, there was an increase in sales of 3% to US$3.1 million in the first half. We have a new management team in place in the US, who are focused on generating profitable business with larger customers as we move away from selling to deep discounters, and we anticipate good profitable growth in the second half of this year as gifting orders are delivered. In the rest of the world, Group sales decreased by 31% to £1.5 million (H1 2023: £2.1 million). It is expected that sales in the rest of the world will catch up in the second half of the year due to the timing of certain orders falling into H2.

E-commerce sales continued to grow in the first half and represented 5.1%, or £2.3 million, of Group revenue (H1 2023: 4.8% / £1.77 million as restated).

Product Gross Margin

Gross margin was 42.5% for H1 2024, compared to 39.1% in H1 2023.

This is the third year in a row that gross margin has improved incrementally in the first half of the year, driven by new product development and improved sourcing, without the need for an inflationary price increase to customers at the start of the year. Also, contributing to the improvement in gross margin is the performance in the US, where the new management team have delivered a 12 percentage point increase in gross margin in H1, compared to H1 2023. The improvement in gross margin at the Group level is despite increased freight rates during the period.

We remain focused on improving gross margin where possible in all our businesses and are working with our Asian business units to execute this. Margins are also benefiting from the increased scale of our orders placed with existing suppliers as the business grows. To counter currency pressure, we continue to move production to new factories of equal quality to retain or improve margin and have a natural hedge from our US dollar revenue which continues to grow.

At 31 December 2023, forward foreign exchange contracts were in place for the purchase of US$42 million at an average exchange rate of US$1.2537. Since the start of 2024, we have purchased more forward foreign exchange contracts to further help protect our gross margin in 2024 and into 2025.

The currency options we have for the current year, along with new product development, sourcing, and increasing sales and margin in the US, will all contribute to protecting our gross margin for the remainder of 2024.

Operating Expenses

Total operating expenses before amortisation costs, depreciation, foreign exchange movements and share-based payments, were £8.1 million in the first half of the year (H1 2023: £6.5 million), reducing marginally as a percentage of sales from 17.7% to 17.6%.

The absolute increase of £1.6 million year on year was necessary to support the growth of the business and was made up of increases in wages and salaries, PR and marketing spend, insurance costs, legal and professional fees, and the cost of a larger US sales team. There was a decrease in the charge for bad debts.

Warpaint remains a business with most operating expenses relatively fixed and evenly spread across the whole year. We continue to monitor and examine significant costs to ensure they are controlled and strive to reduce them.

Adjusted EBITDA

The board considers Adjusted EBITDA, which excludes the impact of foreign exchange movements and share-based payments, as a key indicator of the performance of the Group and one that is more closely aligned to the underlying performance of the business. Adjusted EBITDA for the half year to 30 June 2024 was £11.4 million (H1 2023: £7.9 million).

£m*		6 Months ended 30 June 2024				6 Months ended 30 June 2023
Statutory profit from operations			11.0				6.3
Depreciation			1.0				0.9
Amortisation			0.0				0.1
EBITDA			12.0				7.3
Foreign exchange movements			(0.8	)			0.6
Share-based payments			0.2				0.1
Adjusted EBITDA			11.4				7.9

*Rounded to the nearest £0.1 million

Profit Before Tax

Group profit before tax for the half year to 30 June 2024 was £10.9 million (H1 2023: £6.2 million). The changes in profitability between the six months to 30 June 2023 and 30 June 2024 were due to:

£m		Effect on Profit
Sales volume growth			3.6
Margin growth			1.5
Increase in operating expenses			(1.6	)
FX gain in H1 2024 of 0.8 (H1 2023: Loss 0.5)			1.3
Other items			(0.1	)
TOTAL			4.7

Earnings Per Share

The statutory interim basic and diluted earnings per share were 10.37p and 10.30p respectively in H1 2024 (H1 2023: 6.22p and 6.20p).

The adjusted interim basic and diluted earnings per share before amortisation costs and share-based payments were 10.59p and 10.53p respectively in H1 2024 (H1 2023: 6.46p and 6.44p).

LTIP, EMI and CSOP Share Options

Date		Shares		Transaction		Scheme		Exercise price
7 May 2024		85,895		Exercise		EMI		237.5	p
30 May 2024		290,000		Exercise		CSOP		122.0	p

The exercise of EMI and CSOP share options during the period had an immaterial dilutive impact on earnings per share in the period. The share-based payment charge of the EMI and CSOP share options for the half year to 30 June 2024 was £0.16 million (H1 2023: £0.06 million) and has been taken to the share option reserve.

Cash Flow and Cash Position

Net cash flow from operating activities was £(2.0) million compared to £1.9 million in H1 2023. The Group's cash balance decreased by £1.6 million to £5.5 million as at 30 June 2024 (30 June 2023: £7.1 million), but was £1.0 million higher as at 1 July 2024, at £6.5 million, due to payments received on that date.

Cash balances were negatively impacted, exclusively in H1 2024, by an increase in corporation tax paid in the period, due to a change in collection policy by HMRC. Tax paid on account in H1 2024 was £4.7 million (H1 2023: £0.9 million).

We expect the capital expenditure requirements of the Group to remain low. However, as part of our strategy to grow market share in the UK and US, there will be occasions where investment in store furniture for customers is required to secure business. In H1 2024, £1.3 million (H1 2023: £0.3 million) was spent on store furniture, solar panels, new computer software and equipment, and other general office fixtures and fittings and plant upgrades.

As the Group continues to grow, it is both necessary and prudent to have bank facilities available to help fund day to day working capital requirements. Accordingly, the Group maintains a £9.5 million invoice and stock finance facility, which is used to help fund imports in our gifting business during the peak season. At 30 June 2024, no invoice and stock finance remained outstanding (30 June 2023: £nil). In addition, the Group has a 'general purpose' facility, which on renewal in March 2024, was increased to a £5.0 million facility. This facility was unused at 30 June 2024 and 30 June 2023. These facilities, together with the Group's positive cash generation and the cash balance, ensure that future growth can be comfortably funded.

Balance Sheet

Inventories at 30 June 2024 were £33.0 million (30 June 2023: £25.7 million). The rise in inventory is a function of the growth of the business and to ensure delivery disruption is avoided for our customers. One of the Group's unique selling propositions is that it can deliver a full range of colour cosmetics to our customers, in good time all year round. Having appropriate inventory levels is vital to providing that service.

The provision for old and slow inventory was £0.8 million/2.3% at 30 June 2024 (30 June 2023: £0.4 million/1.4%). Across the Group we work hard to sell through older stock lines, allowing for our provision for old and slow inventory to remain modest in percentage terms. Our Group policy is to provide for 50% of the cost of perishable items that are over two years old. However, we remain comforted by the fact that many such items in the normal course of business are eventually sold through our close-out division without a loss to the Group.

Trade receivables are monitored by management to ensure collection is made to terms, to reduce the risk of bad debt and to control debtor days. Trade receivables, excluding other receivables, at 30 June 2024 were £14.9 million (30 June 2023: £10.7 million). The provision for bad and doubtful debts carried forward at 30 June 2024 was £0.15 million, 1.0% of gross trade receivables (30 June 2023: £0.15 million/1.4%).

At 30 June 2024, the Group had no borrowings or lease liabilities outstanding (30 June 2023: £nil), apart from those associated with right-of-use assets as directed by IFRS 16 (see below). The Group was therefore debt free at 30 June 2024.

Working capital increased by £9.0 million from 30 June 2023 to 30 June 2024. The main components were an increase in inventory of £7.3 million, an increase in trade and other receivables of £4.1 million, a decrease in cash of £1.6 million, and an increase in trade and other payables of £0.8 million.

The Group's balance sheet remains in a very healthy position. Net assets totalled £51.0 million at 30 June 2024, with the majority made up of liquid assets of inventory, trade receivables and cash.

Included in the balance sheet is £7.3 million of goodwill. Goodwill represents the excess of consideration over the fair value of the Group's share of the net identifiable assets of the acquired business / cash generating units at the date of acquisition. The carrying value at 30 June 2024 of £7.3 million included Treasured Scents Limited (close-out business) of £0.5 million, Retra Holdings Limited of £6.2 million and Marvin Leeds Marketing Services, Inc. of £0.6 million. Management have performed a mid-year review at 30 June 2024 and have concluded that no impairment is indicated for Treasured Scents Limited, Retra Holdings Limited or Marvin Leeds Marketing Services, Inc. as the recoverable amount exceeds the carrying value.

The balance sheet also includes £4.7 million of right-of-use assets, which is the inclusion of Group leasehold properties, recognised as right-of-use assets as directed by IFRS 16. An equivalent lease liability is included of £4.9 million at the balance sheet date.

Foreign Exchange

The Group imports most of its finished goods from China, paid for in US dollars, which are purchased throughout the year at spot as needed, or by taking forward foreign exchange contracts when rates are deemed favourable, and with consideration for the budget rate set by the board for the year. Similarly, forward foreign exchange contracts are taken to sell forward our expected Euro income in the year to ensure our sales margin is protected.

We started 2024 with forward foreign exchange contracts in place for the purchase of US$42 million at an average exchange rate of US$1.2537/£, and the sale of €3.8 million at €1.1447/£.

In addition, when currency rates were favourable, we purchased additional US dollar forward foreign exchange contracts and spot rate amounts to help cover our total US dollar requirement for this year, and forward foreign exchange contracts towards our requirement for 2025.

The Group has a natural hedge from sales to the US which are entirely in US dollars; in H1 2024 these sales were US$3.1 million (H1 2023: US$3.0 million).

Together with sourcing product from new factories where it makes commercial sense to do so, new product development, and by buying US dollars when rates are favourable, we are able to mitigate to a large extent the effect of a strong US dollar against sterling.

Dividend

The board is pleased to have declared an increased interim dividend of 3.5p per share which will be paid on 22 November 2024 to shareholders on the register at 8 November 2024. The shares will go ex-dividend on 7 November 2024.

Neil Rodol
Chief Financial Officer
17 September 2024

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Notes				Unaudited 6 months ended 30 June 2024				Unaudited 6 months ended 30 June 2023				Audited Year ended 31 December 2023
						£'000				£'000				£'000
Revenue							45,848				36,685				89,590
Cost of sales							(26,377	)			(22,331	)			(53,857	)
Gross profit							19,471				14,354				35,733
Administrative expenses			3				(8,507	)			(8,089	)			(17,252	)
Analysed as:
Adjusted profit from operations1							11,141				6,445				18,802
Amortisation							(13	)			(118	)			(187	)
Share-based payments							(164	)			(62	)			(134	)
Profit from operations							10,964				6,265				18,481
Finance income							22				-				6
Finance expense			4				(137	)			(101	)			(369	)
Profit before tax			3				10,849				6,164				18,118
Tax expense			5				(2,833	)			(1,384	)			(4,219	)
Profit for the period attributable to equity holders of the parent company							8,016				4,780				13,899
Other comprehensive income (net of tax):
Exchange gain on translation of foreign subsidiary							(31	)			64				72
Total comprehensive income for the period attributable to equity holders of the parent company							7,985				4,844				13,971
Basic earnings per share (pence)			6				10.37				6.22				18.05
Diluted earnings per share (pence)			6				10.30				6.20				17.98

Note 1 - Adjusted profit from operations is calculated as earnings before interest, taxation, amortisation, impairment costs, share-based payments and exceptional items.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		Unaudited As at 30June 2024				Unaudited As restated* As at 30June 2023				Audited As at 31December 2023
		£'000				£'000				£'000
ASSETS
Non-current assets
Goodwill			7,274				7,274				7,274
Intangible assets			76				159				93
Property, plant and equipment			2,153				1,338				1,245
Right-of-use assets			4,720				5,147				5,280
Deferred tax assets			701				352				592
			14,924				14,270				14,484
Current assets
Inventories			32,975				25,720				27,963
Trade and other receivables			17,559				13,439				13,529
Cash and cash equivalents			5,506				7,066				9,053
Derivative financial instruments			7				-				-
			56,047				46,225				50,545
Total assets			70,971				60,495				65,029
LIABILITIES
Current liabilities
Trade and other payables			14,207				13,347				9,576
Borrowings and lease liabilities			1,300				1,005				1,259
Corporation tax payable			557				1,295				2,501
Derivative financial instruments			143				938				518
			16,207				16,585				13,854
Non-current liabilities
Borrowings and lease liabilities			3,590				4,350				4,190
Deferred tax liabilities			180				160				180
			3,770				4,510				4,370
Total liabilities			19,977				21,095				18,224
NET ASSETS			50,994				39,400				46,805
EQUITY
Share capital			19,408				19,282				19,314
Share premium			20,190				19,452				19,726
Merger reserve			(16,100	)			(16,100	)			(16,100	)
Foreign exchange reserve			(9	)			14				22
Share option reserve			610				1,980				594
Retained earnings			26,895				14,772				23,249
Total equity attributable to shareholders			50,994				39,400				46,805

*30 June 2023 figures have been restated to include the final dividend for the year ended 31 December 2022 of £3,470,759 which was approved by shareholders in the period.

CONSOLIDATED STATEMENT OF CASH FLOW

		Notes				Unaudited 6 Months ended 30 June 2024				Unaudited6 Months ended 30 June 2023				Audited Year ended 31 December 2023
						£'000				£'000				£'000
Profit before tax for the period							10,849				6,164				18,118
Adjusted by:
Finance expense			4				137				101				369
Finance income			4				(22	)			-				(6	)
Depreciation of property, plant and equipment			3				415				357				662
Depreciation on right of use assets							626				512				1,111
Loss on disposal of property, plant, and equipment							1				-				40
Amortisation of intangible assets			3				17				118				187
Share-based payments							164				62				134
Movement in inventories							(5,012	)			(7,005	)			(9,248	)
Movement in trade and other receivables							(4,030	)			(1,746	)			(1,836	)
Movement in trade and other payables							(27	)			3,888				3,588
Movement in deferred tax assets							-				-				(51	)
Movement in derivative financial instruments							(382	)			346				(74	)
Foreign exchange translation differences							(19	)			24				(7	)
Cash inflow generated from operations							2,717				2,821				12,987
Income tax paid							(4,745	)			(935	)			(2,569	)
Cash flows from operating activities							(2,028	)			1,886				10,418
Purchase of property, plant and equipment							(1,323	)			(263	)			(515	)
Purchase of intangible assets							-				-				(3	)
Cash flows used by investing activities							(1,323	)			(263	)			(518	)
Proceeds from issued share capital							558				186				492
Principal elements of lease payments							(626	)			(507	)			(1,144	)
Lease liability interest							(108	)			(94	)			(230	)
Interest paid							(29	)			(7	)			(139	)
Interest received							22				-				6
Dividends							-				-				(5,785	)
Cash flows used by financing activities							(183	)			(422	)			(6,800	)
Net change in cash and cash equivalents							(3,534	)			1,201				3,100
Cash and cash equivalents at beginning of period							9,053				5,865				5,865
Exchange (loss)/gain on cash and cash equivalents							(13	)			-				88
Cash and cash equivalents at end of period							5,506				7,066				9,053
Cash and cash equivalents consists of:
Cash and cash equivalents							5,506				7,066				9,053
							5,506				7,066				9,053

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Share capital			Share Premium			Merger reserve			Foreign exchange reserve			Share option reserve			Retained earnings			Total
		£'000			£'000			£'000			£'000			£'000			£'000			£'000
As at 1 January 2023			19,188			19,360			(16,100	)		(50	)		2,003			13,378			37,779
Equity shares issued			94			92			-			-			-			-			186
On translation of foreign subsidiary			-			-			-			64			-			-			64
Transfer to the profit and loss reserve			-			-			-			-			(85	)		85			-
Profit for the period			-			-			-			-			-			4,780			4,780
Total comprehensive income for the period			94			92			-			64			(85	)		4,865			5,030
Transactions with owners
Share-based payments			-			-			-			-			62			-			62
Dividends payable			-			-			-			-			-			(3,471	)		(3,471	)
Total transactions with owners			-			-			-			-			62			(3,471	)		(3,409	)
As at 30 June 2023			19,282			19,452			(16,100	)		14			1,980			14,772			39,400
As at 1 January 2023			19,188			19,360			(16,100	)		(50	)		2,003			13,378			37,779
Equity shares issued			126			366			-			-			-			-			492
On translation of foreign subsidiary			-			-			-			72			-			-			72
Transfer to the profit or loss reserve exercised share options			-			-			-			-			(130	)		130			-
Transfer to the profit or loss reserved expired and lapsed share options			-			-			-			-			(1, 627	)		1,627			-
Corporation tax charge on share-based payments			-			-			-			-			214			-			214
Profit for the year			-			-			-			-			-			13,899			13,899
Total comprehensive income for the year			126			366			-			72			(1,543	)		15,656			14,677
Transactions with owners
Share-based payments			-			-			-			-			134			-			134
Dividends paid			-			-			-			-			-			(5,785	)		(5,785	)
Total transactions with owners			-			-			-			-			134			(5,785	)		(5,651	)
As at 31 December 2023			19,314			19,726			(16,100	)		22			594			23,249			46,805
As at 1 January 2024			19,314			19,726			(16,100	)		22			594			23,249			46,805
Equity shares issued			94			464			-			-			-			-			558
On translation of foreign subsidiary			-			-			-			(31	)		-			-			(31	)
Transfer to the profit or loss reserve exercised share options			-			-			-			-			(288	)		288			-
Corporation tax charge on share-based payments			-			-			-			-			140			-			140
Profit for the period			-			-			-			-			-			8,016			8,016
Total comprehensive income for the period			94			464			-			(31	)		(148	)		8,304			8,683
Transactions with owners
Share-based payments			-			-			-			-			164			-			164
Dividend payable			-			-			-			-			-			(4,658	)		(4,658	)
Total transactions with owners			-			-			-			-			164			(4,658	)		(4,494	)
As at 30 June 2024			19,408			20,190			(16,100	)		(9	)		610			26,895			50,994

NOTES TO THE INTERIM FINANCIAL STATEMENTS

1. Basis of preparation
The consolidated interim financial information for the 6 months to 30 June 2024 has been prepared in accordance with the measurement and recognition principles of UK adopted international accounting and accounting policies that are consistent with the Group's Annual report and Accounts for the year ended 31 December 2023 and that are expected to be applied in the Group's Annual Report and Accounts for the year ended 31 December 2024. They do not include all of the information required for the full financial statements and should be read in conjunction with the 2023 Annual Report and Accounts which were prepared in accordance with UK adopted international accounting standards.

The comparative financial information for the year ended 31 December 2023 in this interim report does not constitute statutory accounts for that period under section 435 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2023 have been reported on by the Group's auditors and delivered to the Registrar of Companies.

The auditors' report on the accounts for the year ended 31 December 2023 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

2. Changes in significant accounting policies
The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2023.

3. Profit from operations
Profit from operations is arrived at after charging/ (crediting):

		Unaudited 6 months ended 30 June 2024				Unaudited 6 months ended 30 June 2023				Audited Year ended 31 December 2023
		£'000				£'000				£'000
Depreciation of property, plant and equipment			415				357				662
Depreciation of right-of-use assets			626				512				1,111
Amortisation of intangible assets			17				118				187
Write down inventories at net realisable value			434				(8	)			13
Exchange differences			(793	)			545				433

4. Finance income and finance expenses

		Unaudited 6 months ended 30 June 2024				Unaudited 6 months ended 30 June 2023				Audited Year ended 31 December 2023
		£'000				£'000				£'000
Finance income
Interest received			22				-				6
			22				-				6
Lease liability interest			(108	)			(94	)			(230	)
Other interest			(29	)			(7	)			(139	)
Finance expenses			(137	)			(101	)			(369	)

5. Tax expenses

		Unaudited 6 months ended 30 June 2024				Unaudited 6 months ended 30 June 2023				Audited Year ended 31 December 2023
		£'000				£'000				£'000
Current tax expense
Current income tax charge			2,802				1,121				4,245
Adjustment in respect of previous periods			-				206				-
			2,802				1,327				4,245
Deferred tax expense
Relating to origination and reversal of temporary differences			31				(20	)			(26	)
Adjustment in respect of previous periods			-				77				-
Total tax in income statement			2,833				1,384				4,219

6. Earnings per share

Profit for the period used in the calculation of the basic and diluted earnings per share:

Unaudited 6 months ended 30 June 2024

Unaudited 6 months ended 30 June 2023

Audited Year ended 31 December 2023

£'000

£'000

£'000

Profit after tax for the period

8,016

4,780

13,899

The weighted average number of shares for the purposes of diluted earnings per share reconciles to the weighted average number of shares used in the calculation of basic earnings per share as follows:

		Unaudited 6 months ended 30 June 2024				Unaudited 6 months ended 30 June 2023				Audited Year ended 31 December 2023
Weighted average number of shares
Weighted number of ordinary shares for the purpose of basic earnings per share			77,331,174				76,802,439				76,983,311
Potentially dilutive shares awarded			472,542				253,678				325,443
Weighted number of ordinary shares for the purpose of diluted earnings per share			77,803,716				77,056,117				77,308,754
Basic Earnings per share (pence)			10.37				6.22				18.05
Diluted earnings per share (pence)			10.30				6.20				17.98

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

SOURCE: Warpaint London plc

View the original press release on accesswire.com

FAQ

What are Warpaint London PLC's interim results for H1 2024?

Warpaint London PLC reported a 25% increase in revenue to £45.8 million, a gross profit margin of 42.5%, and a 66% rise in EBITDA to £12.0 million for H1 2024.

How did Warpaint London PLC's UK revenue perform in H1 2024?

UK revenue rose by 17% to £15.5 million in H1 2024.

What was Warpaint London PLC's international revenue in H1 2024?

International revenue grew by 30% to £30.3 million in H1 2024.

How much did Warpaint London PLC's W7 brand sales increase in H1 2024?

W7 brand sales increased by 25% to £30.2 million in H1 2024.

What was Warpaint London PLC's gross profit margin for H1 2024?

The gross profit margin improved by 334 basis points to 42.5% in H1 2024.

What is Warpaint London PLC's interim dividend for H1 2024?

The interim dividend has been increased by 17% to 3.5p per share.

What is Warpaint London PLC's basic EPS for H1 2024?

Basic earnings per share (EPS) rose by 67% to 10.37p in H1 2024.

What was Warpaint London PLC's cash balance as of 30 June 2024?

Warpaint London PLC's cash balance was £5.5 million as of 30 June 2024.