# Warpaint London Plc 1H’18 interims: delivering the results

- Link: https://www.directorstalkinterviews.com/warpaint-london-plc-1h18-interims-delivering-the-results/412759547
- Published: 2018-10-05T10:00:09+01:00
- Author: Charlotte Edwards

[⌊Hardman & Co Report Report Downloads⌉⌊Hardman & Co Report Report Downloads⌉[**Warpaint 
London Plc** (LON:W7L) interim results for the six months ending June 2018 showed
revenue
 up 38.7% to £18.4m (1H’17: £13.3m). The company’s two divisions, own-brand
and close-out, represented 84% and 16%, respectively, of the total revenue. Exports
now account for 56% of sales, of which sales to the EU grew by 110% to £6.7m. Both
of the company’s leading brands, W7 and Technic, are 2H-biased due to the nature
of the gifting market, and about two thirds of FY revenue will be concentrated in
the second half. While costs remain relatively flat, we expect profitability to 
be very much 2H-weighted also.

► **Interim results**: Group gross profit increased 30% to £6.7m, and the gross

margin fell slightly to 36.5% due to product mix. The net cash position increased
by £2.1m to £4.6m. Warpaint declared a 1.5p interim dividend – a 7.1% increase compared
to 1H’17 – in keeping with its progressive dividend policy.

► **Retra**: Retra is now fully integrated, and its revenue contribution was £4.1m

for 1H’18, of which Technic accounted for £2.9m. Since the acquisition, Retra has
expanded its presence by attending trade shows. As a result, the Christmas order
book had increased significantly at end-June 2018, ahead of the prior period.

► **Acquisitions**: The past 12 months have proved exciting for the company, with

the acquisition of Retra in Nov’17, and then the acquisition of US distribution 
business, Leeds Marketing, in Aug’18. We believe these new add-ons will give Warpaint
better access to/control of the largest colour cosmetics market in the world (the
US).

► **Risks**: For Warpaint to remain successful, several key factors have to be
 
considered: i) continuing growth in the discount retail sector; ii) the successful
integration of the new acquisitions; and iii) the company’s ability to deliver new
and innovative products.

►** Investment summary**: Retra now fully integrated and with the recent
 acquisition
of Leeds Marketing, Warpaint is well positioned to maximise the benefit of the additional
assets. It enjoys a much faster growth rate than the rest of the colour cosmetics
sector globally, and has an attractive RoE. Warpaint offers the opportunity to invest
in the fast-growing colour cosmetics sector, with a highly experienced management
team.

Share on: