Warpaint London plc (LON:W7L), the specialist supplier of colour cosmetics and owner of the W7 and Technic brands, has today announced its audited results for the year ended 31 December 2017.
Financial Highlights
· Proforma revenue increased by 15.6% to £31.2 million (2016: £27.0 million)
· Proforma adjusted operating margin 24.4% (2016: 25.2%)
· Proforma adjusted earnings per share increased by 8.0% to 9.4p (2016: 8.7p)
· Net cash at the year end of £2.0 million (31 December 2016: £3.5 million)
· Cash generated from operating activities £5.2 million (2016: £3.0 million)
· Final dividend for the year of 2.6p per share (total dividend for the year of 4p per share including interim dividend)
(Proforma numbers are adjusted to exclude the revenue of Retra for Dec 2017, and for exceptional items and amortisation costs on acquisitions in 2017 and 2016)
Operational Highlights
· Acquisition of Retra Holdings Ltd (“Retra”) for £18.2 million on 30 November 2017
· W7 brand sales in the UK up 17.1%
· W7 brand sales internationally up 16.8%
Clive Garston, Chairman of Warpaint London Plc, commented: “2017 was Warpaint’s first full year as an AIM company and I am pleased to report that the year was one of significant growth and achievement. The acquisition of Retra, which we made in November 2017, has been successfully integrated into the Group and we continue to focus heavily on building brand awareness, both in the UK and in overseas markets.
“After a successful first year as a quoted company, we look to the future with considerable optimism. We have had a promising start to the current year, in line with the Board’s expectations, and with a sound financial base, including net cash, prospects are encouraging. I believe we are well positioned to continue to deliver increasing shareholder value in 2018 and the outlook for the Group remains positive.”
Warpaint London is a colour cosmetics business, based in Iver, Buckinghamshire. It is made up of two divisions: close-out and own-brand. The second and larger own-brand division consists primarily of the Group’s flagship brand, W7 – an extremely creative, design-focused cosmetic brand proposition with a focus on the 16-30 age range, delivering high-quality cosmetics at affordable prices. The W7 brand has grown organically since its inception in 2002 and now contains over 700 items which are sold into high street retailers and independent beauty shops across the UK, Europe, Australia and the US. In 2017, W7 was supplied in more than 60 countries.
In 2017 Warpaint completed the acquisition of Retra Holdings Limited, a UK colour cosmetics business with a significant focus on the gifting market, principally for high street retailers and supermarkets including Boots, Superdrug and Asda. Retra owns three major brands: Technic, Body Collection and Man’stuff, in addition to supplying white label cosmetics produced for several major high street retailers including Asda and Matalan.
Chairman’s Statement
2017 was Warpaint’s first full year as an AIM company and I am pleased to announce that the year was one of significant growth and achievement. Notwithstanding continuing uncertainty caused by the prospect of Brexit and a fluctuating Sterling exchange rate, the 2017 results are highly satisfactory. The effect of the US dollar exchange rate cannot be overemphasised. Had it been constant with 2016 the margin would have been 2.9 % higher with an accompanying increase in earnings. In addition, in November 2017, Warpaint acquired Retra, which is an own brand and white label colour cosmetics and gifting company with its head office in Yorkshire. Retra brands include Technic, Body Collection and Man’stuff. The acquisition has been successfully integrated into the Warpaint Group and Warpaint continues to focus heavily on building its brand awareness, both in the UK and its successful overseas markets. I believe that we have made excellent progress in doing this. Following the Retra acquisition the Group’s earnings are likely to be greater in the second half of the year than the first, as a result of a substantial proportion of Retra sales being made in connection with Christmas gifts.
Results
The proforma numbers will be quoted throughout this annual report in order to give shareholders clarity in understanding the results for the year.
Profit before tax was £6.9 million (proforma £6.7 million) on a revenue of £32.5 million (proforma £31.2 million) with basic earnings per share of 8.34p. Net cash at 31st December 2017 of £2.0 million emphasises the Group’s strong position. Margins were strong and our priorities are to maximise earnings in all the key markets.
Queen’s Award
As was announced on 23rd April 2018, Warpaint has been awarded the Queen’s Award for Enterprise – International Trade. This is a very prestigious award and we are all very excited about it. It is further testament to the foresight and hard work of the executive team that this award has been made to Warpaint.
Dividend
In accordance with the Group’s progressive dividend policy, the Board is pleased to recommend a final dividend of 2.6p per share which, if approved by shareholders at the AGM, will be paid on the 20th July 2018 to shareholders on the register at the 6th July 2018. The shares will go ex-dividend on the 5th July 2018.
Board and People
These results would not have been possible without the commitment, dedication and enthusiasm of my fellow Board members and all the Group’s employees. I would like to thank all of them for their contribution to the Group’s success.
A key strength of the Company is the commitment of its employees which helps to make Warpaint the progressive, energetic and dynamic company that it is. Nowhere is this demonstrated more than by the dedication and ambition of the Joint Chief Executives, Sam Bazini and Eoin Macleod and Neil Rodol, the Chief Financial Officer. They are determined to drive Warpaint forward. The Non-Executive Directors, Keith Sadler and Paul Hagon make a very meaningful contribution to the Board and I regard it as a privilege and pleasure to work alongside them. During the year, there have been a number of significant hires, which has strengthened the team and the Board is fully supportive of recruiting the right people to make the Group stronger.
Awards of EMI options were made to all staff in June 2017 and it is proposed to introduce an LTIP for senior management in the current calendar year.
Annual General Meeting
The annual general meeting will be held on 12th June 2018 at 11am at the offices of DAC Beachcroft LLP, 100 Fetter Lane, London, EC4A 1BN. I look forward to meeting all shareholders who are able to attend.
Outlook
After a very successful first year as a quoted company, Warpaint looks to the future with considerable optimism. We have had a promising start to the current year and the Retra acquisition has been well integrated. With a sound financial foundation and being net debt free, prospects are encouraging and Warpaint is well positioned to continue to deliver increasing shareholder value in 2018. The outlook for the Group remains positive.
Clive Garston
Chairman
24 April 2018
