FINAL RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2024

About this update from Revolution Beauty Group Plc

[{"type":"text","content":"\n \n For immediate release \n 26 June 2024 \n Revolution Beauty Group plc \n (\"Revolution Beauty\", the \"Group\", or the \"Company\") \n AUDITED FINAL RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2024 \n Return to profitability and good progress with Reigniting the Revolution strategy \n Revolution Beauty (AIM: REVB), the multi-channel mass beauty innovator, today announces its Full Year Results for the year ended 29 February 2024 (\"FY 2024\" or the \"Period\"). \n \n \n \n \n \n \n \n 2024 \n £ million \n \n \n 2023 \n £ million \n \n \n   \n Change \n \n \n \n \n Revenue \n \n \n 191.3 \n \n \n 187.8 \n \n \n +2% \n \n \n \n \n Gross profit \n \n \n 88.4 \n \n \n 75.9 \n \n \n +16% \n \n \n \n \n Gross margin \n \n \n 46.2% \n \n \n 40.4% \n \n \n +5.8ppts \n \n \n \n \n Operating costs 1 \n \n \n 75.8 \n \n \n 83.4 \n \n \n -9% \n \n \n \n \n Adjusted measures 2 \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Adjusted EBITDA \n \n \n 12.6 \n \n \n (7.5) \n \n \n +£20.1m \n \n \n \n \n % of revenue \n \n \n 6.7% \n \n \n (4.0%) \n \n \n +10.7ppts \n \n \n \n \n Adjusted EBIT \n \n \n 7.4 \n \n \n (23.4) \n \n \n +£30.8m \n \n \n \n \n % of revenue \n \n \n 3.9% \n \n \n (12.5%) \n \n \n +16.4ppts \n \n \n \n \n Adjusted profit before tax \n \n \n 4.3 \n \n \n (26.7) \n \n \n +£31.0m \n \n \n \n \n Statutory measures \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Profit before tax \n \n \n 11.4 \n \n \n (33.9) \n \n \n +£45.3m \n \n \n \n \n Diluted earnings/(loss) per share \n \n \n 3.2p \n \n \n (10.9p) \n \n \n +14.1p \n \n \n \n \n Cash and cash equivalents \n \n \n 8.6 \n \n \n 11.0 \n \n \n -£2.4m \n \n \n \n \n Net debt excluding lease liabilities \n \n \n (23.1) \n \n \n (20.7) \n \n \n -£2.4m \n \n \n \n \n Notes: \n(1)  Operating costs is defined as Distribution & Administrative costs excluding depreciation, amortisation, exceptional items & share based compensation \n(2)  Adjusted measures, which are not statutory measures, show the underlying performance of the Group excluding large, non-cash and exceptional items. \n Financial highlights \n ·    Sales up 2% year on year to £191.3m, including the impact of significant product clearance activity in the first half \n o  Strong performance in Rest of World more than offset weakness in US and e-commerce. \n ·    Gross margin of 46.2% (FY23: 40.4%) up 5.8 percentage points with a focus on inventory management and profitability. \n ·    Adjusted EBITDA of £12.6m - adjusted EBITDA margin of 6.7% (FY23: negative 4.0%) as a result of the improved gross margin, controlled reductions in marketing spend and reductions in distribution costs. \n ·   Operating costs as a percentage of sales decreased to 39.6% from 44.4%; £10m, three-year cost saving programme underway. \n ·    Profit before tax of £11.4m (FY23: loss of £33.9m). \n ·    Net debt contained at £23.1m despite exceptional cash costs of £4.7m. \n Operational highlights \n ·   Clear strategy in place to \"Reignite the Revolution\" by focussing on the Revolution Masterbrand and powering core product categories, to become a global top 5 player in the mass beauty market. \n ·    Expansion of retail distribution across key geographies. \n ·    New Product Development (\"NPD\") strategy launched, with greater focus on efficiency. \n ·    Gross inventory reduced by 32%. Inventories (net of provision) reduced to £40.7m and stock turn increased by 47% to 2.2 (from 1.5 a year ago). \n ·    Improved service levels during the second half of the year for all retailers. \n ·    Social media followers increased from 5.9m to 6.4m. \n ·    Strengthened board of directors and management team. \n Summary and outlook \n The Group's strategy to focus on the Masterbrand and core product categories was unveiled at the capital markets event in February 2024. This strategy is already showing good progress in improving profitability and working capital efficiency. This will enable greater investment in New Product Development and marketing to return the business to growth. \n In FY25, we expect revenues to decline year-on-year in the first half at a slightly higher rate than in the second half of FY24, reflecting our more focused product portfolio and the impact of stock clearance in the first half of FY24. With a reinvigorated innovation pipeline and opportunities to expand our offering and distribution network, we expect a return to revenue growth in the second half of the year. Benefitting from the Group's ongoing cost savings programme, Adjusted EBITDA for FY25 is expected to be at least in-line with FY24 with a significant weighting to the second half. \n Lauren Brindley, CEO commented: \n \"FY24 was a year of great strategic and financial progress following two challenging years. I am extremely proud of what Team Revolution has achieved. Our new Reigniting the Revolution strategy is already delivering improvements across the business, strengthening our core and providing a much firmer platform from which to grow. \n As we progress through the new financial year, I am excited about the potential of our reinvigorated pipeline of innovation and the number of opportunities to expand our retail distribution globally.  As the strategy continues to take effect, we expect to see a return to growth in the second half of the year. That will put us firmly on the right trajectory to achieving our ambition of being a top 5 player in the mass beauty market.\" \n THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014 AS IT FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. \n   \n The company will hold a video webcast for analysts and investors at 9am (UK time) today.  The webcast is available via the following link: \n   \n https://www.investis-live.com/revolution-beauty/66680b14e119530d002bb711/bdffv \n   \n A replay will subsequently be available on the Revolution Beauty investor relations webpage. \n   \n For further information, please contact: \n Investor Relations \n Lauren Brindley, CEO \n Neil Catto, CFO \n Investor.Relations@revolutionbeautyplc .com \n   \n Joint Corporate Brokers \n Liberum (NOMAD):  Edward Thomas / Dru Danford / John More \n Tel: +44 (0) 203 100 2222 \n   \n Zeus:  Nick Cowles / Jamie Peel / Jordan Warburton \n Tel: +44 (0) 161 831 1512 \n   \n Media enquiries \n Headland Consultancy:  Matt Denham / Antonia Pollock \n Tel: +44 (0)20 3805 4822 \n [email protected] \n   \n   \n CHAIRMAN'S STATEMENT \n As Chairman of Revolution Beauty Group plc, it is my privilege to present to you our annual report for the fiscal year 2024. It has been a year marked by significant achievements, challenges, and opportunities, and I am pleased to report that Revolution Beauty Group has demonstrated its resilience and commitment to excellence. \n In the face of a rapidly changing landscape, Revolution Beauty Group has continued to adapt and innovate, remaining at the forefront of the beauty industry. We are delighted to report a return to profit against a backdrop of well documented challenges, as we now look to the future. \n LIFTING OF SHARE SUSPENSION \n Following publication of the FY22 and H1 23 results, the Company's shares were restored to trading on the Alternative Investment Market (AIM) on 28 June 2023. As well as the publication of the results, the group took steps to improve controls around the financial and governance issues that led to the reporting delays and the initial suspension. Having subsequently issued the H1 24 financial results and this Annual Report and Accounts, in line with the reporting deadlines, I am pleased to say that we have returned to a typical reporting cycle. \n CORPORATE GOVERNANCE, BOARD AND MANAGEMENT CHANGES \n The Group has adopted the Quoted Companies Alliance Corporate Governance Code 2023 (QCA Code), and the Board remains committed to upholding the highest levels of corporate governance. \n Following the publication of the FY22 Annual Report and Accounts, boohoo Group plc, a significant shareholder in the Group, requested board representation. Following discussion between the previous board and boohoo, a settlement agreement was reached and announced on 18 July 2023. The agreement included the following board changes: \n •  Bob Holt resigned as CEO, leaving the board on 31 August 2023. \n •  Derek Zissman resigned from the board on 18 July 2023 and I became executive Chair whilst a search for a new CEO was undertaken. \n •  Rachel Maguire and Matthew Eatough who had been appointed under the leadership of Bob Holt, resigned from the Board following his departure. \n •  Jeremy Schwartz also resigned from the Board following Bob Holt's departure. \n •  Three further NEDs were appointed (Peter Hallett, Neil Catto and Rachel Horsefield) to reflect the change in leadership, bringing with them experience closely aligned to the direction of the new leadership team. \n I would like to take this opportunity to thank everyone who served as members of the Board for the service, both during the year and previously. FY24 saw significant challenges for the governance of the Group and the performance of the board throughout is a credit to its members. \n Following an extensive search undertaken by the nomination committee, the Group announced on 31 August that Lauren Brindley would join as our new CEO from 18 September and that I would become non-executive Chair. Lauren has now been with us for nine months in which time she has brought a fresh perspective and strategic vision that has energized our company's direction. Her leadership has been instrumental in driving innovation, fostering collaboration, and enhancing shareholder value. \n At the same time, it was announced that Chris Fry and Colin Henry were appointed as independent non-executive directors. Chris and Colin were identified following a search led by the Nomination Committee. They have become chairs of the remuneration and audit committees respectively and I have enjoyed working with them both very much. \n On 13 December 2023 it was announced that Elizabeth Lake had decided to resign from the Board. Elizabeth held the role of CFO through a challenging period and I am grateful to her for her service. \n Following Elizabeth's resignation, Neil Catto was appointed as CFO. Having already served as a non-executive director and with extensive relevant experience, Neil was well placed to take over. I have enjoyed working with Neil since his appointment as CFO, his excellent work to date and partnership with Lauren provides the Group with strong financial leadership for the next chapter on its journey. \n On 13 December 2023 it was also announced that Erin Brookes would join the board. Erin joins with sector experience in her role as Managing Director at Alvarez and Marsal and I welcome her to the board and look forward to working with her further. \n The Board changes over the past two years have caused upheaval in the leadership of the business and some uncertainty through this period. I am delighted that we now have a settled board with the right executive leadership and a strong non-executive Group to support and challenge them in the delivery of our strategy. \n SETTLEMENT AGREEMENTS \n The outcome of the investigation that was undertaken over the past 24 months and the costs associated resulted in claims being made against our founders. \n On 2 February 2024, the Group and Adam Minto, the former CEO and founder of the Group, entered into a settlement agreement relating to the events that led to the delay of the audit of Revolution Beauty's FY22 results and the suspension of trading of the Group's shares during Mr. Minto's time as CEO, with no admission or acceptance of liability by either party. Further details are set out in note 5 to the Financial Statements. \n Under the Settlement agreement, a full and final settlement of certain claims between them has been reached. \n In connection with this settlement, Mr. Minto will pay Revolution Beauty a settlement sum of £2.9m. \n On 5 February 2024 the Group announced that it had come to an agreement with Tom Allsworth, the former Executive Chairman and co-founder of the Group, regarding: \n (i)     the settlement of certain claims between Revolution Beauty and Mr. Allsworth, \n (ii)    the timing of future payments relating to the prior acquisition of Medichem Manufacturing Limited (now \n called Revolution Beauty Labs Ltd) and \n (iii)   Mr. Allsworth's future role within Revolution Beauty Labs Limited. \n The agreement made full and final settlement of certain claims between the Group and Mr. Allsworth, with no admission or acceptance of liability by either party. \n Under the agreement, the Group agreed to pay Mr. Allsworth an ex-gratia payment of £270,000 in respect of certain historical legal fees incurred by Mr. Allsworth. \n A deed of variation regarding the remaining deferred consideration in respect of the purchase of Medichem by the Group was also entered into. Pursuant to which the total remaining consideration under the Medichem SPA of £19.0m will now be repaid in instalments on a revised payment schedule. \n As part of the arrangements, Mr Allsworth will continue in the management team of Revolution Beauty Labs, but not as a formal director. \n I am pleased to have these settlements behind us, drawing a line under a period of uncertainty and meaning that the Group can move forward. \n REGULATOR ACTION \n The Company informed the shareholders on 21 July 2023 that the Financial Conduct Authority (the \"FCA\") had notified Revolution Beauty that it had commenced an investigation into potential breaches of the Market Abuse Regulation (EU) 596/2014 (as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018) in relation to certain matters in the period from July 2021 to September 2022. Revolution Beauty is cooperating fully with the FCA and will provide updates in due course. \n   \n OUR PEOPLE \n I would like to take this opportunity to thank our shareholders for their continued support and confidence in Revolution Beauty Group. I would also like to express my gratitude to our dedicated employees, whose hard work and passion are the driving force behind our success. \n   \n LOOKING FORWARD \n Looking ahead, we are optimistic about the future of Revolution Beauty. We see tremendous opportunities for growth and expansion, both domestically and internationally, and we remain committed to delivering innovative products and exceptional customer products. \n I am confident that the Group is well-positioned to deliver value to our shareholders and stakeholders in the years to come. Together, we will continue to Revolutionise the beauty industry and create long-term sustainable value. \n   \n Alistair McGeorge \n Non-Executive Chair \n 25 June 2024 \n   \n   \n CHIEF EXECUTIVE OFFICER'S REVIEW \n INTRODUCTION \n It is with great pride and enthusiasm that I address you today as the CEO of Revolution Beauty plc in the first Annual Report since my appointment in September. As we reflect on the past year, I am pleased to report that our company has returned to positive profitability and demonstrated resilience in the face of challenges. \n The lifting of the suspension of trading in the Group's shares during the year, and the appointment of the new management team, brought to a close a tumultuous period for the Group. \n I, with my new management team, am pleased to say that as we review the FY24 performance we are firmly focused on the future and opportunities ahead at this exciting time in the Group's history. \n The FY24 results reflect the start of major strategic changes that are taking place in the business to create an efficient cost base from which the company can grow. The operating model is being transformed to deliver efficiency and enable the Group to deliver growth in an attractive global beauty market. \n The major changes have included simplifying our brand offering, moving from seven brands across eleven categories to three brands across seven categories. We have also reduced the excessive volume of new products being launched, to focus on building a profitable and sustainable new product pipeline. \n This optimisation of our product portfolio releases resources and investment to unlock the major profitable growth opportunities for our Masterbrand, Revolution, and our value brand, Relove, globally. \n The Masterbrand, Revolution, will continue to bring innovative products, inspired by our community, to the mass beauty market faster than the competition, but by re-establishing a digital test and learn model, alongside a streamlined product portfolio we can scale profitably to our physical distribution footprint. \n Alongside the portfolio simplification, the company has also implemented a rigorous control environment following the investigation process that was completed in 2023. \n By optimising the brand portfolio, by powering up our major product categories of cosmetics and skincare and with focussed growth globally both by market and channel, I am confident we can unlock the many opportunities ahead of us as a company. These steps will deliver our vision to revolutionise beauty for every 'you' and become a top five mass beauty player by 2030. \n FY24 PERFORMANCE \n We are pleased to report the results for the year ended 29 February 2024, with the Group returning to profit. Turnover grew by 1.8% to £191.3m (FY23 £187.8m) and the Group reports profit before tax of £11.4m compared with a loss of £33.9m in FY23. \n Adjusted EBITDA for the period was positive £12.6m compared to a loss of £7.5m in FY23. The improvement in performance was driven by improved inventory purchasing, better control of overhead and direct costs, including reduced marketing investment. \n During the year, we achieved a small increase in Group sales, up 1.8% to £191.3m as compared to the same 12-month period last year. This performance includes a major benefit from the sell through of material amounts of excess inventory in the first half of the year. \n Our gross margin in the year improved to 46.2% from 40.4% in FY23. The improvement was driven largely from reduced inventory provision charges. The reduced charges were achieved with a more focussed purchasing plan based on a significantly optimised product assortment globally. This smarter operational delivery brought significant improvements to our retail service levels in the second half of the year, driving sales of our core products and removing the excess inventory purchasing of previous years. These cash savings will in turn allow further investment in our growth strategy going forward. \n The Group continues to trade with two strategic routes to market for offline trade; direct retail in our key markets of the UK, US, Germany and APAC and through our network of distributor partners through other geographies. In total the company is now present in over 75 markets around the world. \n Sales in UK direct retail continued to grow in FY24, supported by the inventory clearance program, our core Revolution master-brand make-up assortment and our Revolution Pro skincare franchise. \n We saw a 14.9% decline in sales in our USA business during FY24. Performance was impacted by reduced US focused marketing investment and poor service levels to major customers. With the optimised product portfolio, we are now delivering strong service to all retail customers in the market and have just launched a US focused marketing program to drive brand awareness and conversion. We have a new President in place, Erin Cast, who has deep US beauty experience, and a focused strategy, I am sure she and the team will enable the brand to fulfil its potential moving forward. \n Our Rest of World direct Retail and distributor channels are a fundamental part of our strategy and this business grew 22.8% in FY24, demonstrating the excitement around the brand and the demand for our products in new markets. Our strategy of localising for key markets, both with our product portfolio and marketing campaigns, is proving highly effective and we have many opportunities ahead, both in existing markets and new territories. \n Our digital business has two major channels, our third-party wholesale digital business and our own ecommerce sites. Our third- party wholesale digital business grew in the year, with strong growth from major digital partners including Amazon EU & Zalando. To accelerate further we are launching Amazon US & Tik Tok shop in H1 FY25. \n Our own ecommerce sites saw reduced sales in FY24, driven by a strategic decision in H1 to significantly reduce non-profitable traffic driving marketing investments. Despite the reduction in traffic driving marketing, the business increased both conversion and average order value in H2. We also drove incremental value from our loyalty scheme. We have robust plans in place to elevate our digital proposition in FY25 profitably, including an improve ecommerce proposition for the US market and new marketplace partnerships. \n CURRENT TRADING AND OUTLOOK \n The post year end trading has continued to perform in line with our internal expectations. We continue to execute our Masterbrand strategy, which requires a reduction in both brands and SKUs and means we will not address certain aspects of sales made in H1 FY24. We remain confident of growing the business in the short term and reigniting our core offering as we work towards our goal of becoming a top five global mass beauty player by 2030. \n I would like to take this opportunity to express my gratitude to our dedicated team, who's hard work and passion have been instrumental to the delivery of this performance through a challenging year. The talent on show within team Revolution since I joined the Group has been so impressive and I am excited to see how the team develops as we execute our strategy over the coming years. \n I would also like to thank our loyal customers and shareholders for their continued support and confidence in Revolution Beauty. \n As we embark on the next chapter of our journey, I am confident that together, we will continue to Revolutionise the beauty industry. \n   \n Lauren Brindley \n Chief Executive Officer \n 25 June 2024 \n   \n   \n   \n FINANCIAL REVIEW \n The following results are presented for the year ended 29 February 2024. Following the publication of the FY22 Annual Report and Accounts and the H1 FY23 interims, the suspension on the Company's shares was lifted and the shares have been trading as normal since 28 June 2023. \n \n \n \n \n REVENUE \n \n \n Year ended 29 February \n 2024 \n £'M \n \n \n Year ended 28 February \n 2023 \n £'M \n \n \n \n \n \n   \n   \n Change \n £'000 \n \n \n   \n   \n   \n % \n \n \n \n \n By business channel: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Digital \n \n \n 42.3 \n \n \n 22.1% \n \n \n 51.0 \n \n \n 27.2% \n \n \n (8.7) \n \n \n (17.1%) \n \n \n \n \n Stores \n \n \n 149.0 \n \n \n 77.9% \n \n \n 136.8 \n \n \n 72.8% \n \n \n 12.2 \n \n \n 8.9% \n \n \n \n \n Total revenue \n \n \n 191.3 \n \n \n   \n \n \n 187.8 \n \n \n   \n \n \n 3.5 \n \n \n 1.9% \n \n \n \n \n By region: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n UK \n \n \n 62.5 \n \n \n 32.7% \n \n \n 67.0 \n \n \n 35.7% \n \n \n (4.5) \n \n \n (6.7%) \n \n \n \n \n US \n \n \n 44.2 \n \n \n 23.1% \n \n \n 51.9 \n \n \n 27.6% \n \n \n (7.7) \n \n \n (14.8%) \n \n \n \n \n ROW \n \n \n 84.6 \n \n \n 44.2% \n \n \n 68.9 \n \n \n 36.7% \n \n \n 15.7 \n \n \n 22.8% \n \n \n \n \n Total revenue \n \n \n 191.3 \n \n \n   \n \n \n 187.8 \n \n \n   \n \n \n 3.5 \n \n \n 1.9% \n \n \n \n \n   \n   \n As shown in the table above, Group revenue increased by £3.5m to £191.3m in the year ended 29 February 2024 (2023: £187.8m). This revenue growth was achieved whilst the business went through a period of significant change as a result of the issues that arose from the internal investigation conducted ahead the Group's readmission to the AIM market. \n Revenue in the year increased by £3.5m or 1.9%. Revenue performance varied across the Group's geographic reporting segments, the UK declined by 6.7%, although UK Store Group Revenue actually grew, digital revenue declined as digital marketing spend was reduced and customers continued the return to the high street. The \n US declined by 14.8%, driven by store Group revenue declines as the US business went through a period of volatility. The ROW segment grew by 22.8%, driven by growth in direct retail and sales through distributors channels. \n Store revenue increased by £12.2m or 8.9% to £149.0m (2023: £136.8m). UK store group revenue grew by 2.0%, the US declined by 14.8% and the ROW grew by 22.8%. Declines in the US were significantly impacted by the changes taking place in the business during the year, steps have been taken to stabilise the US business in recent months. \n FY24 has seen a continuation of the return to high street shopping in the wake of the COVID-19 pandemic. This trend, coupled with a reduction in the online marketing spend as the Group consolidated its cash position earlier in the year, has resulted in a reduction in sales through the Groups own ecommerce channels. Sales through our digital partners were in line with FY23. \n US revenue decreased by £7.7m, the Group retained consistent distribution throughout the US and remains focussed on this key market. In the Rest of the World (ROW) we saw 22.8% growth overall, which was driven by 45% growth in revenue from our distributer channel, which remains a key source of growth as we enter new markets. \n   \n   \n   \n   \n \n \n \n \n PROFITS \n \n \n Year ended 29 February \n 2024 \n £'000 \n \n \n Year ended 28 February \n 2023 \n £'000 \n \n \n   \n   \n Change \n £'000 \n \n \n \n \n Gross profit \n \n \n 88,355 \n \n \n 75,884 \n \n \n 12,471 \n \n \n \n \n Marketing and distribution costs \n \n \n (47,132) \n \n \n (57,469) \n \n \n (10,337) \n \n \n \n \n Administrative expenses \n \n \n (37,899) \n \n \n (42,161) \n \n \n (4,262 \n \n \n \n \n Impairment losses on financial assets \n \n \n (1,035) \n \n \n (204) \n \n \n 831 \n \n \n \n \n Impairment of property, plant and equipment \n \n \n (75) \n \n \n (2,177) \n \n \n (2,102 \n \n \n \n \n Impairment of goodwill \n \n \n - \n \n \n (3,388) \n \n \n (3,388 \n \n \n \n \n Provision for legal cases \n \n \n (293) \n \n \n (1,066) \n \n \n (773 \n \n \n \n \n Other income \n \n \n 2,414 \n \n \n - \n \n \n 2,414 \n \n \n \n \n Operating profit/(loss) \n \n \n 4,335 \n \n \n (30,581) \n \n \n 34,916 \n \n \n \n \n Net finance income/(costs) \n \n \n 7,108 \n \n \n (3,293) \n \n \n 10,401 \n \n \n \n \n Profit/(loss) before taxation \n \n \n 11,443 \n \n \n (33,874) \n \n \n 45,317 \n \n \n \n \n Gross profit margin \n \n \n 46.2% \n \n \n 40.4% \n \n \n 5.8ppt \n \n \n \n \n   \n Gross margin for the year ended 29 February 2024 improved significantly to 46.2%/£88.4m (FY2023: 40.4%/£75.9m) as a result of improved inventory management, and significant reduction in the inventory provision charges. The margin at H1 was higher at 49.4% due to seasonality, with higher seasonal promotions in H2 and a higher proportion of the inventory provision release occurring in H1 following the implementation of managements exit strategy for slow-moving inventory. \n Whilst there will be ongoing movements in the inventory provision due to levels of New Product Development (NPD), Net Realisable Value (NRV) and slow-moving inventory, the movement between FY23 and FY24 has reduced due to the actions taken by new management to manage inventory purchasing, establish exit routes for slow-moving inventory and focus NPD on fewer better products. \n Adjusted EBITDA increased from a loss of £7.5m in FY23 to a profit of £12.6m in FY24. The main driver for this profit was the improvement in the gross margin described above, a controlled reduction in marketing during a focus on liquidity early in the year and lower distribution costs compared to FY23 which was impacted by the significant decrease in global freight rates. In addition, the business has decreased operating costs in FY24, driven by the removal of internal warehouse costs. \n Operating profit for the year ended 29 February 2024 of £4.6m increased by £35.2m (2023 operating loss: £30.6m). This was due to a number of factors: \n •              Improvement in gross profit (£12.8m) driven by reduction in inventory provision charges and lower freight rates following record levels previously experienced. \n •              Reduction in one off cost incurred in FY24; impairment of assets (reduced by £2.1m, mostly from the full impairment of the acquisition of Medichem), and the recognition of the settlement income with the Group's co-founder and former CEO (£2.4m) (see note 5 to the financial statements for details) \n •              Decrease in spend on stand updates (£2.9m) following the increased spend in the prior year catching up with updates missed during the pandemic and decrease in marketing and distribution spend (£4.8m) \n Profit before taxation for the year increased to £11.4m (2023: Loss before taxation £33.9m), an improvement of £45.3m. \n   \n   \n FINANCE INCOME AND COSTS \n On 12 December 2023 the Group announced that it had reached agreement to sign a second deed of variation in respect of the timing and value of payments of deferred consideration for its acquisition of Revolution Beauty Labs Limited (Formerly: Medichem Manufacturing Limited). The amendment to the deferred consideration payable resulted in a net gain of £8.8m being recognised within finance income (see note 24 to the financial statements for details). \n TAXATION \n The Group's tax charge increased from a credit of £0.2m to a charge of £0.7m. The increase to the tax charge was the result of the Group's return to profitability. \n PROFIT/(LOSS) AFTER TAXATION \n Profit after taxation increased to £10.7m (2023: Loss after taxation £33.7m). \n ALTERNATIVE PERFORMANCE MEASURES \n The Group uses a number of Alternative Performance Measures (\"APMs\") in addition to those measures reported in accordance with IFRS. Such APMs are not defined terms under IFRS and are not intended to be a substitute for any IFRS measure. The Directors believe that the APMs are important when assessing the underlying financial and operating performance of the Group. Full details of the adjusting charges incurred during the year are presented in Note 5 to the financial statements. \n The adjusting items identified as non-recurring in nature are set out below and were considered in calculating the adjusted profits. Adjusting Items are defined in Note 2 and Note 5. \n \n \n \n \n \n \n \n Year ended 29 February \n 2024 \n £'000 \n \n \n Year ended 28 February \n 2023 \n £'000 \n \n \n   \n   \n Change \n £'000 \n \n \n \n \n Operating profit/(loss) \n \n \n 4,335 \n \n \n (30,581) \n \n \n 34,916 \n \n \n \n \n Depreciation, amortisation & impairment \n \n \n 5,180 \n \n \n 15,867 \n \n \n (10,687) \n \n \n \n \n Share-based payment \n \n \n 2,372 \n \n \n 303 \n \n \n 2,069 \n \n \n \n \n (Profit)/Loss on disposal of asset \n \n \n (6) \n \n \n 62 \n \n \n (68) \n \n \n \n \n Adjusting items: \n \n \n \n \n \n \n \n \n \n \n \n \n \n Settlement Income \n \n \n (2,414) \n \n \n - \n \n \n (2,414) \n \n \n \n \n Acquisition costs \n \n \n - \n \n \n 262 \n \n \n (262) \n \n \n \n \n Restructuring costs \n \n \n 1,439 \n \n \n 1,310 \n \n \n 129 \n \n \n \n \n Provision for legal cases \n \n \n (1,644) \n \n \n 1,474 \n \n \n (3,118) \n \n \n \n \n Legal and professional fees \n \n \n 2,917 \n \n \n 3,528 \n \n \n (611) \n \n \n \n \n Audit Fees \n \n \n 391 \n \n \n 300 \n \n \n 91 \n \n \n \n \n Total adjusting items added back \n \n \n 791 \n \n \n 6,874 \n \n \n (6,083) \n \n \n \n \n Adjusted EBITDA \n \n \n 12,570 \n \n \n (7,475) \n \n \n 20,045 \n \n \n \n \n Adjusted EBIT \n \n \n 7,396 \n \n \n (23,404) \n \n \n 30,800 \n \n \n \n \n Net finance income/(costs) \n \n \n (7,107) \n \n \n 3,293 \n \n \n (10,400) \n \n \n \n \n Adjusting items: \n \n \n \n \n \n \n \n \n \n \n \n \n \n Gain on amendment of deferred consideration \n \n \n (10,243) \n \n \n - \n \n \n (10,243) \n \n \n \n \n Adjusted PBT \n \n \n 4,260 \n \n \n (26,697) \n \n \n 30,957 \n \n \n \n \n   \n Adjusted EBITDA increased by £20.1m to a profit of £12.6m during the year (2023: £7.5m loss). The increase in EBITDA was primarily due to the reduction in inventory provision after the actions taken to establish exit routes for slow-moving inventory, and to better manage inventory purchasing. \n Depreciation, amortisation and impairment was significantly lower as a result of the impairments to stands and goodwill made in FY23. The remaining amount of goodwill and assets acquired for Medichem were impaired in FY23, bringing the carrying value to zero, as a result in changes to forecast performance. \n Changes in the leadership of the company and certain other minor restructuring activity that took place in the year resulted in one off cost associated with the restructure. \n Significant one off legal and professional fees were incurred in relation to the completion of the Independent Investigation and the subsequent legal settlements with the Group's co-founders and previous Directors. \n Additional, exceptional legal fees were associated to the work required to enable the suspension on the Company's shares to be lifted in July 2023 and the requisitioned general meeting raised by the Group's major shareholder, boohoo Group plc. \n FINANCIAL POSITION AND RESOURCES \n \n \n \n \n \n \n \n   \n As at 29 February \n 2024 \n £'000 \n \n \n As at 28 February \n 2023 \n Restated \n £'000 \n \n \n   \n   \n   \n Change \n £'000 \n \n \n \n \n Intangible assets \n \n \n 4,934 \n \n \n 5,728 \n \n \n (794) \n \n \n \n \n Property, plant and equipment \n \n \n 9,242 \n \n \n 7,928 \n \n \n 1,314 \n \n \n \n \n Right of use asset \n \n \n 4,177 \n \n \n 2,310 \n \n \n 1,867 \n \n \n \n \n Other receivable \n \n \n 1,931 \n \n \n - \n \n \n 1,931 \n \n \n \n \n Deferred tax asset \n \n \n 496 \n \n \n - \n \n \n 496 \n \n \n \n \n Non-current assets \n \n \n 20,780 \n \n \n 15,966 \n \n \n 4,814 \n \n \n \n \n Current assets excluding cash \n \n \n 89,635 \n \n \n 102,416 \n \n \n (12,781) \n \n \n \n \n Liabilities excluding borrowings \n \n \n (87,088) \n \n \n (110,840) \n \n \n 23,752 \n \n \n \n \n Cash and cash equivalents \n \n \n 8,636 \n \n \n 11,044 \n \n \n (2,408) \n \n \n \n \n Borrowings \n \n \n (31,785) \n \n \n (31,721) \n \n \n (64) \n \n \n \n \n Net debt \n \n \n (23,149) \n \n \n (20,677) \n \n \n (2,472) \n \n \n \n \n Net assets/(liabilities) \n \n \n 178 \n \n \n (13,135) \n \n \n 13,313 \n \n \n \n \n   \n NON-CURRENT ASSETS \n The Group states property, plant and equipment at cost, less depreciation or provision for impairment. Non- current assets as at 29 February 2024 increased to £20.8m (2023: £16.0m), mainly due to the recognition of the legal settlement reached with one of the Company's co-founders and former CEO, which is to be paid in six equal instalments annually between 28 March 2024 and 28 March 2029, the instalments due after twelve months from the balance sheet date have been recognised as a non-current asset. \n CURRENT ASSETS \n Current assets excluding cash decreased to £89.6m as at 29 February 2024 (2023: £102.4m). The inventory balance was lower at £40.8m (2023: £47.6m) which was due to the improvement in inventory purchasing. There was a decrease in Trade Receivables of £11.0m due to the timing of sales in the current and prior year, as well as an improved recovery of aged debt. Other receivables have increased by £3.0m representing the reimbursement asset on a copyright infringement legal case and first instalment of the legal settlement with the Company's co-founder and former CEO. \n LIABILITIES \n The decrease in total liabilities excluding borrowings as at 29 February 2024 of £23.8m relates mainly to the decrease in trade payables of £16.0m due to the active reduction in legacy payables through agreed payment plans with the largest inventory suppliers and the improved inventory purchasing process, and additionally the impact of foreign exchange. Accruals have also decreased by £2.0m predominantly due to the reduction in legal and professional costs. \n LIQUIDITY \n On 29 February 2024, the Group had £8.6m cash, with gross borrowing of £32m fully drawn from the Revolving Credit Facility ('RCF'). The face value of the Group net debt is £26.4m. The reported net debt of £31.8m is after deducting £0.2m of prepaid fees. These figures exclude the deferred consideration. \n BANKING FACILITIES \n As of 29 February 2024 the Group had a £32m RCF in place. As announced on 8 February 2024, the Group signed a twelve-month extension to the £32m RCF, which will now run until October 2025 and be on terms consistent with those agreed on 29 March 2023.  As set out in the going concern disclosure in note 1 to the financial statements, amendments to the EBITDA covenant were made subsequent to the year end. As also set out in note 1, compliance with these covenants is forecast under the base case scenario. However, under a severe but plausible downside scenario, a breach of the amended covenants is possible, which has resulted in the Directors material uncertainty assessment with regard to going concern. \n \n \n \n \n CASHFLOW \n \n \n Year ended 29 February \n 2024 \n £'000 \n \n \n Year ended 28 February \n 2023 \n £'000 \n \n \n   \n   \n Change \n £'000 \n \n \n \n \n Net cash (used in) generated from operations \n \n \n 7,272 \n \n \n (1,959) \n \n \n 9,231 \n \n \n \n \n Income tax \n \n \n (753) \n \n \n 1,898 \n \n \n (2,651) \n \n \n \n \n Net cash generated from operating activities \n \n \n 6,519 \n \n \n (61) \n \n \n 6,580 \n \n \n \n \n Purchase of intangible assets \n \n \n (270) \n \n \n (1,018) \n \n \n 748 \n \n \n \n \n Purchase of property, plant and equipment \n \n \n (4,265) \n \n \n (7,496) \n \n \n 3,231 \n \n \n \n \n Others \n \n \n 3 \n \n \n 1 \n \n \n 2 \n \n \n \n \n Net cash used in investing activities \n \n \n (4,532) \n \n \n (8,513) \n \n \n 3,981 \n \n \n \n \n Interest paid \n \n \n (2,634) \n \n \n (1,175) \n \n \n (1,459) \n \n \n \n \n Drawdown of borrowings \n \n \n - \n \n \n 8,000 \n \n \n (8,000) \n \n \n \n \n Issue of new shares \n \n \n 88 \n \n \n - \n \n \n 88 \n \n \n \n \n Others \n \n \n (2,172) \n \n \n (2,127) \n \n \n (45) \n \n \n \n \n Net cash generated from financing activities \n \n \n (4,718) \n \n \n 4,698 \n \n \n (9,416) \n \n \n \n \n Net increase/(decrease) in cash during the year \n \n \n (2,731) \n \n \n (3,876) \n \n \n 1,145 \n \n \n \n \n   \n In FY24 net cash generated from operations improved significantly, by £9.2m year on year. Without the level of adjusting costs incurred in the year particularly relating to legal and professional fees surrounding the Independent Investigation, and activities to secure the lifting of the suspension on the Company's shares, together with significant restructuring costs, the Group would have generated significant operating cash inflows. \n ISSUE OF NEW SHARES \n In FY24, a total of 8,791,984 ordinary shares were issued under the share incentive plans, in note 29. \n   \n   \n DIVIDEND \n No ordinary dividends were paid during the year under review. The Directors do not recommend payment of a final ordinary dividend for the year (2023: £nil). Consistent with the guidance provided at IPO, the Group does not envisage paying dividends in the foreseeable future and intends to re-invest surplus funds in the development of the Group's business. \n   \n   \n DIRECTORS' RESPONSIBILITY STATEMENT \n STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND ACCOUNTS \n The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable law and regulations. \n Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with UK adopted International Accounting Standards ('IFRSs') and have elected to prepare the parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 101 'Reduced Disclosure Framework'. Under company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. \n In preparing the Group financial statements, International Accounting Standard 1 requires that Directors: \n •              properly select and apply accounting policies; \n •              present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; \n •              provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and \n •              make an assessment of the Group's ability to continue as a going concern. \n In preparing the Parent Company financial statements, the Directors are required to: \n •              select suitable accounting policies and then apply them consistently; \n •              make judgements and accounting estimates that are reasonable and prudent; \n •              state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and \n •              prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. \n The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy, at any time, the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and other irregularities. \n The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. \n Alistair McGeorge \n Executive Chair 25 June 2024 \n   \n CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME \n For the year ended 29 February 2024 \n \n \n \n \n   \n   \n   \n Note \n \n \n Year ended 29 February \n 2024 \n £'000 \n \n \n Year ended 28 February \n 2023 \n £'000 \n \n \n \n \n Revenue \n \n \n 7 \n \n \n 191,287 \n \n \n 187,842 \n \n \n \n \n Cost of sales \n \n \n \n \n \n (102,932) \n \n \n (111,958 \n \n \n \n \n Gross profit \n \n \n 88,355 \n \n \n 75,884 \n \n \n \n \n Marketing and distribution costs \n \n \n \n \n \n (47,132) \n \n \n (57,469 \n \n \n \n \n Administrative expenses \n \n \n \n \n \n \n \n \n \n \n \n \n \n - General administrative expenses \n \n \n \n \n \n (37,899) \n \n \n (42,161 \n \n \n \n \n - Impairment losses on financial assets \n \n \n \n \n \n (1,035) \n \n \n (204 \n \n \n \n \n - Impairment of property, plant and equipment and right-of-use assets \n \n \n   \n 17, 18 \n \n \n   \n (75) \n \n \n   \n (2,177 \n \n \n \n \n - Impairment of goodwill and other intangibles \n \n \n 16 \n \n \n - \n \n \n (3,388 \n \n \n \n \n - Provision for legal cases \n \n \n 27 \n \n \n (293) \n \n \n (1,066 \n \n \n \n \n Total administrative expenses \n \n \n \n \n \n (39,302) \n \n \n (48,996 \n \n \n \n \n Other operating income \n \n \n 10 \n \n \n 2,414 \n \n \n - \n \n \n \n \n Operating profit/(loss) \n \n \n 10 \n \n \n 4,335 \n \n \n (30,581 \n \n \n \n \n Finance income \n \n \n 12 \n \n \n 10,247 \n \n \n 1 \n \n \n \n \n Finance costs \n \n \n 13 \n \n \n (3,139) \n \n \n (3,294 \n \n \n \n \n Profit/(Loss) before taxation \n \n \n \n \n \n 11,443 \n \n \n (33,874 \n \n \n \n \n Income tax (expense)/ credit \n \n \n 14 \n \n \n (743) \n \n \n 228 \n \n \n \n \n Profit/(Loss) for the year \n \n \n 10,700 \n \n \n (33,646 \n \n \n \n \n Other comprehensive income net of taxation \n Exchange differences on translation of foreign operations - may be reclassified to profit and loss \n \n \n   \n   \n 153 \n \n \n   \n   \n (223 \n \n \n \n \n Total comprehensive profit/(loss) for the year \n \n \n 10,853 \n \n \n (33,869 \n \n \n \n \n Earnings per share (p) \n \n \n 15 \n \n \n 3.4 \n \n \n (10.9 \n \n \n \n \n Diluted earnings per share (p) \n \n \n 15 \n \n \n 3.2 \n \n \n (10.9 \n \n \n \n \n Adjusted EBITDA* \n \n \n 5 \n \n \n 12,570 \n \n \n (7,475 \n \n \n \n \n   \n *Adjusted EBITDA is a non-GAAP measure and is defined as Operating Loss adjusted for depreciation and amortisation, impairments and reversals of impairment, profits and losses on the disposal of assets, share based charges and releases and operating adjusting items as disclosed in note 4. \n The following notes are an integral part of these financial statements. \n   \n   \n \n CONSOLIDATED STATEMENT OF FINANCIAL POSITION \n As at 29 February 2024 \n \n \n \n \n   \n   \n   \n   \n Note \n \n \n   \n As at 29 February \n 2024 \n £'000 \n \n \n As at 28 February \n 2023 \n Restated \n £'000 \n \n \n \n \n Non-current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n Intangible assets \n \n \n 16 \n \n \n 4,934 \n \n \n 5,728 \n \n \n \n \n Property, plant and equipment \n \n \n 17 \n \n \n 9,242 \n \n \n 7,928 \n \n \n \n \n Right-of-use assets \n \n \n 18 \n \n \n 4,177 \n \n \n 2,310 \n \n \n \n \n Other receivables \n \n \n 20 \n \n \n 1,931 \n \n \n - \n \n \n \n \n Deferred tax asset \n \n \n 26 \n \n \n 496 \n \n \n - \n \n \n \n \n Total non-current assets \n \n \n 20,780 \n \n \n 15,966 \n \n \n \n \n Current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n Inventories \n \n \n 19 \n \n \n 40,775 \n \n \n 47,606 \n \n \n \n \n Trade and other receivables \n \n \n 20 \n \n \n 42,739 \n \n \n 50,731 \n \n \n \n \n Reimbursement asset \n \n \n 27 \n \n \n 6,122 \n \n \n 4,079 \n \n \n \n \n Cash and cash equivalents \n \n \n 21 \n \n \n 8,636 \n \n \n 11,044 \n \n \n \n \n Total current assets \n \n \n 98,272 \n \n \n 113,460 \n \n \n \n \n Current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Lease liabilities \n \n \n 18 \n \n \n (894) \n \n \n (2,060) \n \n \n \n \n Trade and other payables \n \n \n 22 \n \n \n (67,249) \n \n \n (82,730) \n \n \n \n \n Deferred consideration \n \n \n 24 \n \n \n - \n \n \n (10,910) \n \n \n \n \n Provisions \n \n \n 27 \n \n \n (6,622) \n \n \n (7,060) \n \n \n \n \n Borrowings \n \n \n 23 \n \n \n - \n \n \n (31,721) \n \n \n \n \n Corporation tax payable \n \n \n \n \n \n (579) \n \n \n (28) \n \n \n \n \n Total current liabilities \n \n \n (75,344) \n \n \n (132,509) \n \n \n \n \n Net current assets/(liabilities) \n \n \n 22,928 \n \n \n (19,049) \n \n \n \n \n Total assets less current liabilities \n \n \n 43,708 \n \n \n (3,083) \n \n \n \n \n Non-current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Lease liabilities \n \n \n 18 \n \n \n (3,481) \n \n \n (954) \n \n \n \n \n Borrowings \n \n \n 23 \n \n \n (31,785) \n \n \n - \n \n \n \n \n Deferred consideration \n \n \n 24 \n \n \n (8,264) \n \n \n (9,098)) \n \n \n \n \n Total non-current liabilities \n \n \n \n \n \n (43,530) \n \n \n (10,052) \n \n \n \n \n Net assets/(liabilities) \n \n \n 178 \n \n \n (13,135) \n \n \n \n \n Equity \n \n \n \n \n \n \n \n \n \n \n \n \n \n Share capital \n \n \n 30 \n \n \n 3,185 \n \n \n 3,097 \n \n \n \n \n Share premium \n \n \n \n \n \n 103,487 \n \n \n 103,487 \n \n \n \n \n Warrant reserve \n \n \n \n \n \n 7,239 \n \n \n 7,239 \n \n \n \n \n Merger reserve \n \n \n \n \n \n 14,860 \n \n \n 14,860 \n \n \n \n \n Translation reserve \n \n \n \n \n \n 599 \n \n \n 446 \n \n \n \n \n Retained earnings \n \n \n \n \n \n (129,192) \n \n \n (142,264) \n \n \n \n \n Total (deficit)/equity \n \n \n 178 \n \n \n (13,135) \n \n \n \n \n The following notes are an integral part of these financial statements and refer to Note 4 for detailed information on the correction of prior period errors. \n These financial statements of Revolution Beauty Group plc, registered number 11666025, were approved and authorised for issue by the Board of Directors on 25 June 2024 and were signed on its behalf by: \n Neil Catto, Director \n   \n CONSOLIDATED STATEMENT OF CHANGES IN EQUITY \n \n \n \n \n   \n   \n Note \n \n \n Share capital \n £'000 \n \n \n Share premium \n £'000 \n \n \n Warrant reserve \n £'000 \n \n \n Merger reserve \n £'000 \n \n \n Translation \n reserve \n £'000 \n \n \n Retained earnings \n £'000 \n \n \n Total equity \n £'000 \n \n \n \n \n Balance at 1 March 2022 \n \n \n \n \n \n 3,097 \n \n \n 103,487 \n \n \n 7,239 \n \n \n 14,860 \n \n \n 669 \n \n \n (108,921) \n \n \n 20,431 \n \n \n \n \n Loss for the year \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (33,646) \n \n \n (33,646) \n \n \n \n \n Other comprehensive income net of taxation: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Foreign operations - foreign currency translation differences \n \n \n \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n (223) \n \n \n   \n - \n \n \n   \n (223) \n \n \n \n \n Total comprehensive income/ expense for the year \n \n \n \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n (223) \n \n \n   \n (33,646) \n \n \n   \n (33,869) \n \n \n \n \n Transactions with owners in their capacity as owners: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Share-based payments \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 303 \n \n \n 303 \n \n \n \n \n Total transactions with owners \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 303 \n \n \n 303 \n \n \n \n \n Balance at 28 February 2023 \n \n \n \n \n \n 3,097 \n \n \n 103,487 \n \n \n 7,239 \n \n \n 14,860 \n \n \n 446 \n \n \n (142,264) \n \n \n (13,135) \n \n \n \n \n Profit for the year \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 10,700 \n \n \n 10,700 \n \n \n \n \n Other comprehensive income net of taxation: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Foreign operations - foreign currency translation differences \n \n \n \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n 153 \n \n \n   \n - \n \n \n   \n 153 \n \n \n \n \n Total comprehensive income/ expense for the year \n \n \n \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n - \n \n \n   \n 153 \n \n \n   \n 10,700 \n \n \n   \n 10,853 \n \n \n \n \n Transactions with owners in their capacity as owners: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Issue of shares \n \n \n 30 \n \n \n 88 \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 88 \n \n \n \n \n Share-based payments \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 2,372 \n \n \n 2,372 \n \n \n \n \n Total transactions with owners \n \n \n \n \n \n 88 \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 2,372 \n \n \n 2,460 \n \n \n \n \n Balance at 29 February 2024 \n \n \n \n \n \n 3,185 \n \n \n 103,487 \n \n \n 7,239 \n \n \n 14,860 \n \n \n 599 \n \n \n (129,192) \n \n \n 178 \n \n \n \n \n For the year ended 29 February 2024 \n   \n The following notes are an integral part of these financial statements. \n   \n   \n \n   \n CONSOLIDATED STATEMENT OF CASH FLOWS \n For the year ended 29 February 2024 \n \n \n \n \n   \n   \n   \n Note \n \n \n Year ended 29 February \n 2024 \n £'000 \n \n \n Year ended 28 February \n 2023 \n £'000 \n \n \n \n \n Profit/(Loss) for the period \n \n \n \n \n \n 10,700 \n \n \n (33,646 \n \n \n \n \n Adjustments for: \n \n \n \n \n \n \n \n \n \n \n \n \n \n Taxation charge/(credit) \n \n \n 14 \n \n \n 743 \n \n \n (228 \n \n \n \n \n Finance costs \n \n \n 13 \n \n \n 3,139 \n \n \n 3,294 \n \n \n \n \n Finance income \n \n \n 12 \n \n \n (10,247) \n \n \n (1 \n \n \n \n \n Depreciation of property, plant and equipment and right-of-use assets \n \n \n   \n 17, 18 \n \n \n   \n 4,208 \n \n \n   \n 8,369 \n \n \n \n \n Impairment of property, plant and equipment and right-of-use assets \n \n \n   \n 17, 18 \n \n \n   \n 75 \n \n \n   \n 2,177 \n \n \n \n \n Amortisation of intangible assets \n \n \n 16 \n \n \n 897 \n \n \n 1,933 \n \n \n \n \n Impairment of intangible assets \n \n \n 16 \n \n \n - \n \n \n 3,388 \n \n \n \n \n Loss/(profit) on disposal of property, plant and equipment \n \n \n 17 \n \n \n 2 \n \n \n - \n \n \n \n \n Loss/(profit) on disposal of intangible assets \n \n \n 16 \n \n \n 28 \n \n \n 62 \n \n \n \n \n Equity settled share-based payment expense \n \n \n \n \n \n 2,372 \n \n \n 303 \n \n \n \n \n Provisions movement \n \n \n 27 \n \n \n (201) \n \n \n 1,565 \n \n \n \n \n Movements in working capital: \n \n \n \n \n \n \n \n \n \n \n \n \n \n Movement in inventories \n \n \n \n \n \n 6,933 \n \n \n (2,923) \n \n \n \n \n Movement in receivables \n \n \n \n \n \n 3,523 \n \n \n 3,791 \n \n \n \n \n Movement in payables \n \n \n \n \n \n (14,900) \n \n \n 9,957 \n \n \n \n \n Cash used in operations \n \n \n \n \n \n 7,272 \n \n \n (1,959 \n \n \n \n \n Income taxes received/(paid) \n \n \n \n \n \n (753) \n \n \n 1,898 \n \n \n \n \n Net cash generated by/( used in) operating activities \n \n \n \n \n \n 6,519 \n \n \n (61) \n \n \n \n \n Cash flows from investing activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Purchase of intangible assets \n \n \n \n \n \n (270) \n \n \n (1,018 \n \n \n \n \n Purchase of property, plant and equipment \n \n \n \n \n \n (4,265) \n \n \n (7,496 \n \n \n \n \n Finance income \n \n \n \n \n \n 3 \n \n \n -1 \n \n \n \n \n Net cash used in investing activities \n \n \n (4,532) \n \n \n (8,513) \n \n \n \n \n Cash flows from financing activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Interest paid \n \n \n \n \n \n (2,634) \n \n \n (1,175 \n \n \n \n \n Proceeds from borrowings \n \n \n \n \n \n - \n \n \n 8,000 \n \n \n \n \n Proceeds from issue of shares, net of transaction costs \n \n \n \n \n \n 88 \n \n \n - \n \n \n \n \n Payment of lease liabilities (1) \n \n \n \n \n \n (2,172) \n \n \n (2,127) \n \n \n \n \n Net cash (used in)/generated by financing activities \n \n \n (4,718) \n \n \n 4,698 \n \n \n \n \n   \n   \n   \n Note \n \n \n Year ended 29 February \n 2024 \n £'000 \n \n \n Year ended 28 February \n 2023 \n £'000 \n \n \n \n \n Cash and cash equivalents \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net decrease in the year \n \n \n \n \n \n (2,731) \n \n \n (3,876 \n \n \n \n \n At 1 March \n \n \n 21 \n \n \n 11,044 \n \n \n 15,619 \n \n \n \n \n Effects of exchange rate changes on cash and cash equivalents \n \n \n \n \n \n 323 \n \n \n (699) \n \n \n \n \n At 29 February \n \n \n 21 \n \n \n 8,636 \n \n \n 11,044 \n \n \n \n \n \n \n \n \n \n \n \n (1)                    Payment of lease liabilities includes £49k (2023: £115k) of interest payments and £2,069k (2023: £2,012k) of principal lease payments. \n (2)                    The share-based payment charge for the year is £2,370k (2023: £303k), of which £Nil (2023: £Nil) was paid in cash. \n The following notes are an integral part of these financial statements. \n \n NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n For the year ended 29 February 2024 \n 1              GENERAL INFORMATION \n Revolution Beauty Group plc (\"the Company\") is a public company limited by shares, and incorporated in England and Wales, with company number 11666025, and domiciled in the United Kingdom. The Company listed on the Alternative Investment Market (AIM) on 19 July 2021. The address of the registered office is 201 Temple Chambers, 3-7 Temple Avenue, London, EC4Y 0DT. \n The Group (\"the Group\") consists of Revolution Beauty Group plc and all of its subsidiaries as listed in note 4 to the Company financial statements. \n The Group's principal activity, business activities and other factors likely affecting the Groups performance are set out in the Chief Executive Officers Review on pages 8 to 9 and the Principal Risk and Uncertainties affecting the Group are set out on pages 22 to 26. \n These results for the year ended 29 February 2024 are an excerpt from the Annual Report & Accounts 2024 and do not constitute the Group's statutory accounts for 2024 or 2023.  Statutory accounts for 2023 have been delivered to the Registrar of Companies, and those for 2024 will be delivered following the Company's Annual General Meeting.  The Auditor has reported on those accounts; their reports were qualified and include an emphasis of matter with regard to the correction to prior year disclosed in note 4 to the financial statements. The report also draws attention to the material uncertainty over the Group's ability to continue as going concern, as set out in note 2 to the financial statements by the directors. They did not contain statements under Sections 498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation. \n 2              SUMMARY OF MATERIAL ACCOUNTING POLICIES \n Basis of preparation \n The financial statements have been prepared in accordance with UK-adopted International Accounting Standards (\"IFRS\"). The financial statements have been prepared on the historical cost basis. \n The financial statements are prepared and presented in Sterling, which is the functional currency of the Company. Monetary amounts in these financial statements are rounded to the nearest £'000. \n Prior period adjustments made to the amounts reported in the Company's 2023 financial statements have been set out in note 4. \n Measurement convention \n The financial statements have been prepared under the historical cost convention except for, where disclosed in the accounting policies, certain items shown at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for goods, services and assets. \n The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. If in the future, such estimates and assumptions which are based on management's best judgement at the reporting date, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change. \n Critical accounting estimates and key sources of estimation uncertainty in applying the accounting policies are disclosed in note 3. \n Basis of consolidation \n The consolidated financial statements incorporate those of Revolution Beauty Group plc and all of its subsidiaries (as included in note 4 of the parent entity accounts). \n Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. \n De-facto control exists in situations where the company has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights. In determining whether de-facto control exists the company considers all relevant facts and circumstances, including: \n •              The size of the company's voting rights relative to both the size and dispersion of other parties who hold voting rights \n •              Substantive potential voting rights held by the company and by other parties \n •              Other contractual arrangements \n •              Historic patterns in voting attendance. \n The consolidated financial statements present the results of the company and its subsidiaries (\"the Group\") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. \n Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. \n Business Combinations \n The cost of a business combination is the fair value at acquisition date of the assets given, equity instruments issued, and liabilities incurred or assumed. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. Costs directly attributable to the business combination are expensed to the profit or loss as incurred. \n Going concern Base Case Forecast \n Having achieved the lifting of the suspension of the Company's shares on AIM on 28 June 2023 and delivered sales growth of 1.9% on the previous year, with a return to profitability at the Adjusted EBITDA level, the Group has updated its base case forecast for the period through to August 2025 to reflect the management team's latest expectations. \n The Group set out its refreshed strategy in February, with a focus on the core Masterbrand to drive global growth by powering up its core, underpinned by smarter operations and improved financial rigour. This new strategy is designed to deliver long term growth across the Group's regions and channels, through the strength of the Masterbrand. In the short term, the Group will no longer address certain brand and category sales that had previously driven revenue, whilst not always achieving the profitability that the management team expect. Therefore, a softness in sales in the short term is expected as the Group rebalances its revenues and positions itself to capitalise on its new strategy. This has been seen in recent months as sales in the final months of FY24, and early FY25, have not reached the levels of the preceding year. \n Management have determined that the period up to the end of August 2025 is the relevant period over which to consider the Groups performance for the assessment of going concern and have therefore forecast \n operational and financial performance over that period. Twelve months has been selected as the going concern period because forecasting over this period is the most accurate, the further out the forecast the greater likelihood of volatility. The three months to 31 May 2024 have shown sales performing below levels seen in the previous year, which was expected as the implementation of the new strategy takes place. The updated base case to July 2024 forecasts that the Group will generate cash as it builds sustainable growth from a solid core business and will then be well positioned to accelerate in the years to come. \n In addition to sustainable growth in sales, the base case forecasts that the management team's strategy will drive improvements in working capital, with inventory and receivables managed in line with trading volumes. Existing trading terms with supplier and customers are forecast to be maintained under the base case. \n Cost reduction measures taken over the last two years have been adhered to and the Group continues to take steps to address its costs base. The right balances of marketing and capital investment is key to the delivery of the strategy and returning to growth as quickly as possible. \n The significant accounting changes made in the prior year remain and form the basis of the Groups reporting and forecast model, the application of more rigorous financial reporting and control applied following the readmission of the Group's shares to the AIM market continues as it moves forward. \n The Groups gross inventory balance has reduced significantly once again, resulting in a further reduction in its inventory provision since FY23. Inventory reductions have been driven by a more rationalised purchasing program, which is more targeted to the Group's demand forecast. In addition, significant amounts of older inventory have been sold through the Groups outlet channels or destroyed where no longer considered to be of any value. \n Lending Arrangements \n On 30 March 2023 the Group announced that it had secured an amended facility agreement with its banking partners (the \"Lenders\"). The amendment includes a waiver of breaches of the terms of the original agreement. As part of the amended facility agreement, the overall size of the facility was agreed at £32m, reduced from £40m, and is fully drawn. \n On the 8 February 2024, the Group signed a twelve-month extension to the facility, to run until October 2025 on unchanged terms. \n Revised covenants remain in place and include a minimum liquidity threshold of £5.0 million and an Adjusted EBITDA covenant. Certain non-financial covenants that applied following the amendments of the agreement were complied with and are no longer in place. Adjusted EBITDA covenant is tested quarterly and the minimum liquidity threshold is tested weekly. \n On 4 June 2024, a further amendment to the facility was signed to reduce the Adjusted EBITDA covenant through the remaining term of the facility. \n The Directors are of the view that the reduced facility provides the business with sufficient liquidity as it continues delivering its strategy for the Going Concern period. The facility matures in October 2025, it is the board's intention and expectation that the facility will be refinanced during FY25. The Group continues to enjoy the support of its banking partners, management believe that recent progress in stabilising, realigning the strategy, generating cash, ensuring covenant compliance and rationalising the cost base have positioned the Group well for refinancing its debt facilities, and is confident of refinancing beyond October 2025. \n The remaining non-financial covenants include a condition that would result in an Event of Default occurring where the auditors qualify the annual consolidated financial statements. The lenders have provided a waiver in respect of the covenant relating to the Auditors qualifications in their audit report for these financial statements as was indicated in the FY23 financial statements. \n The forecast results under the base case indicate that the Group will remain in compliance with financial covenants throughout the going concern period. \n On 7 March 2023 the Group announced that it had reached an agreement in respect of the timing of payments of deferred consideration for its acquisition of Medichem Manufacturing Limited. A Deed of Variation dated 6 March 2023 was signed which amends the terms of the deferred consideration and completion net asset adjustment, adjusting the timing of the payment. \n On 12 December 2023 the Group announced that it had reached agreement to sign a second deed of variation in respect of the timing and value of payments of deferred consideration for its acquisition of Medichem Manufacturing Limited. \n Downside Scenarios \n Under the base case scenario, the lowest amount of headroom against the minimum liquidity covenant is £741k in June 2024, the lowest test point in the EBITDA covenant is August 2024, when there is £819k of headroom. \n In addition to the base case scenario, the Group has considered the potential impact of a severe but plausible downside scenario. Under the severe but plausible scenario, a 10% reduction in total sales from August 2024, driven by consumer demand in the beauty market caused by wider economic factors has been modelled. Under such circumstances the Group would need to take action to reduce costs, which would include, but not be limited to, reducing capital expenditure, marketing and general overheads including people costs. \n In such a scenario, if mitigating actions were taken, the Group would remain in compliance with its covenants throughout the forecast period. However, the sensitivity of the Adjusted EBITDA performance under such circumstances suggests that there is a realistic possibility that a prolonged reduction in sales of 10% could result in the Group breaching its Adjusted EBITDA covenant. Were the Group exposed to a similar scenario and no mitigating actions taken, the Adjusted EBITDA covenant would be breached in November 2024. \n Under a scenario in which the Groups revenue reduced to 10% below the forecast levels in the base case from August 2024 onward and no mitigating actions were taken, the Group would maintain headroom against its minimum liquidity threshold throughout the forecast period, although a breach would be a realistic possibility. The Directors are confident that under such a scenario, there would be sufficient time for them to take actions within their control over the cost base to prevent a breach occurring. \n If the Group were to breach either of its covenants, it would be reliant on the support of its lenders in order to be able to continue to operate. The Group enjoys a good relationship with its banking partners and is confident of their continued support. The Group would have sufficient cash to continue operating under all plausible scenarios modelled. \n Conclusion \n The Directors are satisfied with the current performance of the business as the transition to the new strategy is undertaken, particularly given the disruption faced by the business in recent years. \n Steps taken with regard to the deferral and renegotiation of the Medichem consideration and the amendment of the Groups lending arrangements and reductions to the cost base are significant in strengthening liquidity and providing a base from which to grow. \n Having considered the information available and recent changes to the business, the Directors are satisfied that the base case supports the application of the going concern assumption in preparation of the financial statements. \n However, the Directors also recognise the continuing challenges the business has faced since its shares resumed trading on AIM, including addressing legacy issues, as well as the underperformance of sales versus previous expectations, as well as the uncertainty in the wider economy. As noted above, the Directors have reset the strategy with reductions in forecast expenditure and improvements to the working capital cycle considered to be commensurate with the level of revenues forecast. The current Board continue to believe in this strategy and look to enhance the business further so that it is well place to grow to deliver its full potential. \n The Directors are confident that the adopted strategy and actions taken to address the cost base and working capital cycle can be successfully executed. In the event that revenue falls below the level forecast in the base case scenario, the Directors are also confident that they are able to take mitigating actions within their control to reduce costs further on a timely basis, in order to maintain compliance with the Adjusted EBITDA and minimum liquidity covenant tests. \n The Directors acknowledge that, in the event either a financial or non-financial covenant were to be breached, due to either a downturn in operational activity or the impact or timing of settlement of any financial commitments, known or otherwise, arising from legacy issues, the Group would be reliant on its lenders not requiring immediate repayment of the outstanding loan or obtaining alternative finance in order to continue to operate as a going concern. The lenders have provided a waiver in respect of the covenant relating to the Auditor qualifications of their audit report on these financial statements. \n These factors, in conjunction with the sensitivity identified in the severe but plausible downside scenario with respect to the Adjusted EBITDA covenant, represent material uncertainty which may cast significant doubt over the Group's ability to continue to operate as a going concern. The financial statements do not include the adjustments that would be required should the going concern basis of preparation no longer be appropriate. \n   \n Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the group. \n The following standards and interpretations relevant to the Group have been published for accounting periods after 1 March 2024 but have not been adopted by the UK and have not been applied in the preparation of the financial statements. \n Standard/amendment \n Amendments to IAS 1 - Classification of liabilities as current or non-current \n Amendments to IAS 1 - Non-current liabilities with covenants \n Amendments to IAS 21 - The effects of Changes in Foreign Exchange Rate \n The above standards are not expected to impact the Group materially. \n Revenue recognition \n Revenue represents invoiced sale of goods to customers net of sales tax. Revenue is recognised when control of a good is transferred to the customer, which is when the Group's performance obligations are considered to have been met in line with its contracts and is adjusted for returns and provisions for expected returns, discounts, rebates and refunds. \n Estimation is required in assessing concessions provided to the customer such as refunds and returns. Such estimates are determined using either the 'expected value' or 'most likely amount' method, which are determined by assessing historic concessions made to customers for refunds and returns. Provisions for refunds and returns are recognised within trade and other payables. Returns are an area of significant judgement, as set out below. \n The Group sells its products via their own website and to third party online retailers (\"digital\") and wholesale sales to retailers and distributors (\"store groups\"). \n Revenue from the sale of goods sold through the Group's website is recognised when the product is delivered to the customer. Payment of the transaction price is due immediately when the customer purchases the products. The Group's policy is to offer a right of return if notified within a specified time period. The Group therefore retains an insignificant risk of ownership through a digital sale when a refund is offered or when return goods are accepted if a customer is not satisfied. Revenue in such cases is recognised at the point of delivery to the customer provided the Group can reliably estimate future returns and the Group recognises a liability for returns against revenue based on previous accumulated experience and other factors. \n LOYALTY SCHEME \n The Group operates a loyalty card scheme for 'digital' customers where points are earned for products purchased online. The Group accounts for loyalty points as a separately identifiable component of the sales transaction in which they are granted. Deferred revenue is recognised in relation to points issued but not yet redeemed. Deferred revenue is subsequently recognised when the loyalty points are redeemed or when they expire. \n A portion of the transaction price is allocated to the loyalty scheme points based on relative stand-alone selling price of the points issued. When estimating relative stand-alone selling price, the Group assesses the likelihood that the customer will redeem the points based on historic redemption rates. \n STORE GROUPS \n Store group revenue is recognised when title has passed in accordance with the terms of the contract. The timing of transfer of control in wholesale transactions is either when the goods have been collected by the customer or when the goods have been delivered to the location specified in the contract and the customer has accepted the products in accordance with the sales contract. \n Sales incentives, cash discounts and product returns are deducted from net sales, such as commercial cooperation and discounts. Incentives granted to customers are recorded as a deduction from net sales. \n Sales incentives, cash discounts, provisions for returns and incentives granted to distributors and customers are recorded simultaneously to the recognition of sales if it is highly probable that the incentive will be utilised., The determination of whether incentives will be utilised is based mainly on statistics compiled from past experience and contractual conditions. Historical experience enables the group to estimate reliably the value of goods that will be returned, or the extent of utilisation of any incentive given, and restrict the amount of revenue that is recognised such that it is highly probable that there will not be a reversal of previously recognised revenue. \n In some cases, the Group can enter into arrangements with customers where payments are made to compensate for certain promotional actions or operational costs for which the Group will be invoiced. As such payments cannot usually be separated from the supply relationship, the compensation for promotional actions is not deemed to be a distinct service and therefore the Group recognises the consideration paid as a deduction of revenue. \n Foreign currencies \n The financial statements are presented in Sterling, this being the functional currency of the primary economic environment of the parent company. \n Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Non-monetary items are not retranslated. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. \n On consolidation, assets and liabilities of foreign operations are translated into sterling at closing rate at the date of that statement of financial position. The results of foreign operations are translated into sterling at average rates of exchange for the year. Exchange differences arising on translating net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the translation reserve. \n Finance income and costs \n Finance costs comprise interest charged on liabilities and finance costs accruing from lease liabilities. \n Interest income and interest payable are recognised in the statement of comprehensive, using the effective interest method. Amounts included in finance income and finance costs are set out in notes 12 and 13 respectively. \n   \n   \n Adjusting Items \n Adjusting items are those which are non-recurring and not assessed to represent charges and credits incurred or gained in the Group's normal course of business and are material by size or nature. All items identified as adjusting are set out in note 5. \n Segmental reporting \n The Group has one operating segment; being its retail business. The Chief Operating Decision Maker has been identified as the board of directors of Revolution Beauty Group plc, which receives regular reporting on its retail business. \n Property, plant and equipment \n The Group states property, plant and equipment at cost, less accumulated depreciation and accumulated impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. \n Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. \n Stands are provided to retail customers for displaying the Group's products in store. The Group recognises stands as property, plant and equipment as the Group are solely responsible for providing, maintaining and disposing of the stands and therefore the Group is considered to have control of these assets. \n Depreciation is calculated using the straight-line method to write down assets' cost amounts to their residual values over their estimated useful lives. The estimated useful lives are as follows: \n Leasehold improvements                   5 years \n Stands                                                    2 to 10 years \n Office equipment                                  3 years \n Computer equipment                         3 years \n The assets' residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within 'Administrative expenses' in the income statement. \n Goodwill \n Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed. \n Intangible assets other than goodwill \n Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses. \n Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably. \n Amortisation is calculated on a straight-line basis, less its estimated residual value, over its useful economic life. The estimated useful lives are as follows: \n Software                5 years \n Website costs       3 years \n Trademarks           5 years \n Intellectual property     5 -10 years \n Impairment of property, plant and equipment and of intangible assets, including right-of-use assets \n At each reporting period end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. \n Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. \n If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. \n Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried in at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. \n Inventories \n Inventories are stated at the lower of cost and net realisable value on a 'Weighted Average Cost' basis. Costs of purchased inventory includes the purchase price, import duties, other taxes and delivery costs and are determined after deducting rebates and discounts received or receivable. Cost comprises of direct materials and delivery costs, direct labour, import duties and other taxes, an appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity. \n Inventory in transit is stated at the lower of cost and net realisable value. \n Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. \n Financial instruments \n Financial assets and liabilities are recognised on the statement of financial position when the Group has become party to the contractual provisions of the instrument and derecognised when it ceases to be a party to such provisions. \n TRADE AND OTHER RECEIVABLES \n Trade receivables are initially measured at their transaction price. Other receivables are initially measured at fair value plus any directly attributable transaction costs. Receivables are held to collect the contractual cash flows which are solely payments of principal and interest. Therefore, these receivables are subsequently measured at amortised cost using the effective interest rate method. The Group does not hold any receivables with a significant financing component. \n   \n   \n CASH AND CASH EQUIVALENTS \n Cash and cash equivalents comprise cash at bank and other short-term investments held by the Group with maturities of less than three months from date of acquisition. These are highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of change in fair value. \n TRADE AND OTHER PAYABLES \n Trade and other payables are initially recognised at fair value less transaction costs and subsequently measured at amortised cost using the effective interest rate method, with all movements being recognised in the statement of comprehensive income. Cost is considered to approximate fair value. \n   \n DEFERRED CONSIDERATION \n Deferred consideration is initially recognised at fair value and subsequently measured at amortised cost. Charges arising on significant financing component of deferred consideration are recognised in profit or loss over the life of the deferral period. \n BORROWINGS \n Interest-bearing loans are initially measured at fair value, net of direct transaction costs and are subsequently measured at amortised cost. Borrowings are classified between current and non-current liabilities dependent on the remaining term of the loan, alongside compliance with attached covenants. The effective interest method allocates interest expense to each period at the rate which discounts estimated future cash payments through the expected life of the debt to the net carrying amount on initial recognition. Finance charges, including fees and premiums payable on settlement or redemption, are recognised in profit or loss over the term of the loan using an effective rate of interest. Arrangement fees in relation to undrawn facilities are recognised as a prepayment to reflect the right for the Group to borrow in the future on pre-specified terms which may be favourable. The prepayment is released to profit or loss on a systematic basis, the timing of which depends on the probability of further draw down of the facility. If further draw down is not probable, the fee is recognised over the period of the facility to which it relates, if it is probable, the prepayment is held at full amount until draw down. \n CLASSIFICATION AND SUBSEQUENT MEASUREMENT OF FINANCIAL LIABILITIES \n Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements and financial covenants entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all its liabilities. \n DERIVATIVES \n The Group enters into foreign exchange forward contracts and swaps. These derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. Fair value gains and losses are recognised in profit and loss. \n EQUITY \n Equity instruments issued are recorded at fair value on initial recognition net of transaction costs. \n Provisions \n Provisions are recognised when the company has a present (legal or constructive) obligation as a result of a past event, it is probable the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost. \n Where the Group has contractual arrangements in place that are expected to result in reimbursement of liabilities for which a liability has been provided for, a reimbursement asset is separately recognised. Such assets are only recognised where the Group is virtually certain that the reimbursement will be received. The resulting recognition within the profit and loss, is that the provision is recognised net of the reimbursement asset. \n Impairment of financial assets under IFRS 9 \n The Group establishes a provision for impairment of financial assets when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivable. \n The probability of default and expected amounts recoverable are assessed using reasonable and supportable past and forward-looking information that is available without undue cost or effort. The expected credit loss is a probability-weighted amount determined from a range of outcomes and takes into account the time value of money. \n Trade receivables \n For trade receivables, the simplified approach is used for expected credit losses as there is no significant financing component. The lifetime expected credit losses are measured by applying an expected loss rate to the gross carrying amount. The expected loss rate comprises the risk of a default occurring and the expected cash flows on default based on the aging of the receivable. The risk of a default occurring always takes into consideration all possible default events over the expected life of those receivables (\"the lifetime expected credit losses\"). Different provision rates and periods are used based on groupings of historic credit loss experience by product type, customer type and location. \n Impairment of other receivables measured at amortised cost \n The measurement of impairment losses depends on whether the financial asset is 'performing', 'underperforming' or 'non-performing' based on the Group's assessment of increases in the credit risk of the financial asset since its initial recognition and any events that have occurred before the year-end which have a detrimental impact on cash flows. The financial asset moves from 'performing' to 'underperforming' when the increase in credit risk since initial recognition becomes significant. \n In assessing whether credit risk has increased significantly, the Group compares the risk of default at the year- end with the risk of a default when the receivable was originally recognised using reasonable and supportable past and forward-looking information that is available without undue cost. The risk of a default occurring takes into consideration default events that are possible within 12 months of the year-end (\"the 12-month expected credit losses\") for 'performing' financial assets, and all possible default events over the expected life of those receivables (\"the lifetime expected credit losses\") for 'underperforming' financial assets. \n Impairment losses and any subsequent reversals of impairment losses are adjusted against the carrying amount of the receivable and are recognised in profit or loss. \n Employee benefits \n The costs of short-term employee benefits are recognised as a liability and an expense unless those costs are required to be recognised as part of the cost of other assets. \n The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received. Termination benefits are recognised immediately as an expense when the Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits. \n   \n   \n Defined contribution pension plans \n Obligations for contributions to defined contribution pension plans are recognised as an expense in the Consolidated Statement of Profit or Loss in the periods which services are rendered by employees. \n Share-based payments \n The company issues equity-settled share-based incentives to certain employees in the form of share options and incentive shares and recharges the cost of these to the relevant subsidiary company. Equity-settled share- based payments are measured at fair value at the date of grant. The fair value determined at the grant date is expensed in the relevant subsidiary's financial statements on a straight-line basis over the estimated vesting period, based on the estimate of shares that will eventually vest. For share options which vest in instalments over the vesting period, each instalment is treated as a separate share option grant, each with a different vesting period. A corresponding adjustment is made to equity. \n The fair value of incentive shares and share options are measured using the Monte Carlo model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non- transferability, exercise restrictions and behavioural conditions. \n If the vesting conditions of incentive shares or share options are modified in a manner that is beneficial to the employee and this modification increases the fair value of the equity instruments granted (or increases the number of equity instruments granted) measured immediately before and after the modification, the entity shall include the incremental fair value granted in the measurement of the amount recognised for services received as consideration for the equity instruments granted. The incremental fair value granted is the difference between the fair value of the modified equity instrument and that of the original equity instrument, both estimated as at the date of modification. If the modification occurs during the vesting period, the incremental fair value granted is included in the measurement of the amount recognised for services received over the period from the modification date until the date when the modified equity instruments vest, in addition to the amount based on the grant date at fair value of the original equity instruments, which is recognised over the remained of the original vesting period. Cancellations or settlements are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately. \n Taxation \n The tax expense for the period comprises current and deferred tax. T...

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