Covid-19 Update and Notice of Results

RNS Number : 2810J

Warpaint London PLC

09 April 2020

 

9 April 2020

Warpaint London PLC

("Warpaint", the "Company" or the "Group")

Covid-19 Update and Notice of Results

Warpaint London plc (AIM: W7L), the specialist supplier of colour cosmetics and owner of the W7 and Technic brands , provides a further update on the impact of Covid-19 on the Group.

Current Trading and Covid-19 Mitigating Actions

Prior to the Covid-19 lockdowns, the Group's current year trading to the end of February 2020 was at the upper end of the board's expectations.  However, since the Company's last trading update announced on 19 March 2020, there has, as anticipated, been a substantial reduction in Group sales as a result of the lockdowns causing the closure of many of the Group's customer's retail outlets in the UK and its other markets.  As a result, most customers are currently reducing, deferring or cancelling orders of all year round cosmetics.  The Company continues to sell online and through those retail outlets stocking the Group's products that remain open.

In order to mitigate the impact of this, as far as possible, the Group has undertaken a number of significant cost cutting measures which include reducing non-essential spend, furloughing 84 of the Group's 115 UK staff whilst maintaining their salaries and participating in the UK Government's Coronavirus Job Retention Scheme, landlords agreeing to defer rental payments, and the suspension of all marketing, travel and other discretionary expenditure.  Staff who have not been furloughed are primarily working on the Group's 2020 Christmas order book, which continues to build.

Outlook and Dividend

Given the ongoing uncertainty regarding the duration of the Covid-19 outbreak, the board is unable to provide guidance as to the financial outcome for the year ending 31 December 2020.  Whilst it anticipates a significant fall in revenue in the current financial year, the board believes that, even if the current lockdown measures were to remain in place until the end of the year, the Group has the financial strength to withstand a disruption to its activities until at least the end of 2020 without the need to seek any additional funding.  At 8 April 2020, the Company had cash of £3.3 million and hire purchase and term debt of approximately £500,000.

As announced on 6 February 2020, subject to audit, the Company expects to report revenue of £49.3 million and adjusted profit before tax (excluding amortisation in connection with acquisitions, share incentive scheme costs and exceptional items, which the board expects to total approximately £2.8 million) of £5.2 million for the year ended 31 December 2019.  T he board, under ordinary circumstances, would have sought to maintain its progressive dividend policy, but, in the interests of prudence given the considerable on-going uncertainty, and in order to further preserve the Company's cash resources, the board has resolved to not recommend a final dividend for the year ended 31 December 2019.

With the cost cutting measures undertaken and the Group's current financial resources, the directors believe that the Group is well placed to weather the Covid-19 crisis and is well positioned to take advantage of any improvement in market conditions.

Notice of Results

The Company will provide a further update at the time of announcing its results for the year ended 31 December 2019 which is now expected to be on 13 May 2020.

Commenting, Sam Bazini, Chief Executive of Warpaint, said:

"The wellbeing and health of our employees is of paramount importance and we are doing everything possible to support them and to ensure that they are well protected in these difficult times.

"The current situation is challenging, but I am confident that Warpaint with its differentiated product offering, strong balance sheet and ability to react quickly to changes in circumstances is well positioned to withstand the Covid-19 pandemic."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Enquiries:

Warpaint London Sam Bazini - Chief Executive Officer Eoin Macleod - Managing Director Neil Rodol - Chief Financial Officer	c/o IFC
Shore Capital (Nominated Adviser and Joint Broker) Antonio Bossi - Corporate Advisory Daniel Bush - Corporate Advisory Fiona Conroy - Corporate Broking	020 7408 4090
N+1 Singer (Joint Broker) Shaun Dobson - Corporate Finance Alex Bond - Corporate Finance	020 7496 3000
IFC Advisory (Financial PR & IR) Tim Metcalfe Graham Herring Florence Chandler	020 3934 6630

Warpaint London plc

Warpaint London plc is made up of two divisions.

The largest division sells cosmetics under the lead brand names of W7 and Technic. W7 is sold in the UK primarily to discount retailers and internationally to local distributors or retail chains. The Technic brand is sold in the UK and the rest of Europe with a significant focus on the gifting market, principally for high street retailers and supermarkets. In addition, this division supplies white label cosmetics produced for several major high street retailers. The Group also sells cosmetics using the smaller brand names of Man'stuff, Body Collection, Vintage, Outdoor Girl, Very Vegan, Chit Chat, Smooch, Copy Cat and Taxi.

The second division trades in close-out and excess stock of other branded cosmetics and fragrances from around the world.

 

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