Warpaint London weathered the pandemic storm well and proves its flexibility and resilience

Warpaint London

Warpaint London plc (LON:W7L), the specialist supplier of colour cosmetics and owner of the W7 and Technic brands has announced its audited results for the year ended 31st December 2020.

2020 Financial Highlights

·     Group revenue of £40.3 million (2019: £49.3 million) in light of the Covid-19 pandemic and the impact of temporary closures of a number of customers’ retail outlets
·     Cash generated from operating activities increased by 70.7% to £7.5 million (2019: £4.4 million)
·     Adjusted profit from operations of £2.5* million (2019: £5.6* million)
·     Reported loss before tax of £1.1 million (2019: profit before tax £1.8 million)
·     Adjusted earnings per share of 3.1p* (2019: 6.3p*)
·     The Group continued to generate significant cash and cash at the year end increased by 81.5% to £4.9 million (31 December 2019: £2.7 million) 
·     Final dividend recommended of 3.0 pence per share, bringing the total dividend for the year to 5.8 pence per share, including a special dividend of 1.3 pence per share paid in November 2020 to reflect that no final dividend was declared for 2019

* Adjusted for £0.3 million of exceptional costs (2019 £0.2 million),£2.4 million of amortisation of intangible assets (2019: £2.4 million) and share based payments of £0.7 million (2019: £0.8 million). Adjusted numbers are closer to the underlying cash flow performance of the business which is regularly monitored and measured by management.

2020 Operational Highlights

·     Swift reaction to the impact of Covid-19 with a plan quickly formulated and successfully executed
·     Repositioned business to increase focus on mainstream high street stores and online
·     Commencement of sales of:·    W7 products in Tesco stores·    Technic and Body Collection products in wilko stores 
·     Launch of Amazon FBA and e-Commerce revenue significantly accelerated in the UK and the USA
·     Rationalisation of brand and product range in line with focused strategy

Post-Period End Highlights

·     Improved trading experienced in the first quarter of 2021 – sales for the first three months of 2021 9% ahead of the same period in 2020, a period that was only impacted by Covid-19 related lockdowns in its last few weeks, with sales increases seen in all the Group’s geographic regions
·     Product gross margin improved in the first quarter of 2021 versus the same period in 2020.
·     Further expansion in the number of Tesco stores stocking the Group’s products and the stocking of additional W7 product lines
·     Further product expansion in USA with W7 products now being stocked in over 1,000 Five Below stores
·     The Company is now debt free with the remaining loans and HP contracts totalling £0.3 million being repaid in full in April 2021.  As at 27 April 2021 the Company had cash balances of £5.8 million

Commenting, Clive Garston, Warpaint London Chairman, said: “2020 was a year dominated by the Covid-19 pandemic.  These were unprecedented trading conditions, with the economy and industry facing some of its most significant challenges ever.  Warpaint entered the pandemic in robust health, with a strong balance sheet and an agile management team capable of dealing with the challenges.  I believe the Group has weathered the pandemic storm well and has proved its flexibility and resilience in dealing with an unprecedented and unforeseeable situation. 

“During the year we took the opportunity to reposition the business to increase our focus on mainstream high street stores and to build our online presence.  We also worked to ensure that our product range, pricing and customer base gives us the best possible opportunity for future growth as the world recovers.

“I am particularly pleased to note the progress we have made with the expansion of the number and type of UK retailers stocking the Group’s products and the growth of our online presence during 2020, together with the more recent roll out with Five Below in the USA.

“Trading improved in the second half of 2020 and we are pleased to report this trend has continued into the first quarter of 2021.  I am optimistic that these encouraging trends will continue and that we have the right strategy in place to deliver profitable future growth.”

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