TIDMREVB
RNS Number : 3825A
Revolution Beauty Group PLC
23 September 2022
This announcement contains inside information for the purposes
of Article 7 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 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
For Immediate Release 23 September 2022
REVOLUTION BEAUTY GROUP PLC
("Revolution Beauty", the "Group" or the "Company")
Further Update on the Group's audit for year ended 28 February
2022
Appointment of Independent Advisers to conduct an Independent
Investigation
FY23 Trading Update
Revolution Beauty Group Plc (AIM: REVB) the multi-channel mass
beauty innovator provides the following updates regarding the
Group's audit for the year ended 28 February 2022 ("FY22") and
provides a further trading update regarding the financial year
ending 28 February 2023 ("FY23").
Previous Announcements regarding the FY22 Audit
On 2(nd) August 2022, the Company announced;
"The Company will now report its final results for the year
ended 28 February 2022 ("FY22") on 30 August 2022. This is due to
additional time required to complete the Company's audit.
Management is not aware of any material issues that have been
raised by the auditors during the audit process to date. The annual
report will be sent to shareholders and made available on our
website on the 31 August 2022."
On 11(th) August 2022, the Company then announced;
"The auditors have subsequently raised certain accounting issues
with management regarding the audit and these could have a material
impact on the results for FY22 that have previously been
communicated by the Group. In the event that material adjustments
are required, the Group profitability for FY22 could be materially
reduced across a number of potential adjustments including stock
and bad debt provisioning and revenue recognition. Once these
issues have been fully resolved and agreed between the auditors and
management a further announcement will be made...
And...
The Group continues to work constructively with the auditors on
the audit process and continues to aim for this to be completed by
30 August 2022. The Company will keep shareholders updated on this
process and any revisions to the audit timeline."
On 30 August 2022 the Company announced;
"Revolution Beauty confirms that it will not be in a position to
publish its audited final results and annual report for FY22 by 31
August 2022 in accordance with AIM Rule 19. Consequently, trading
in the Company's ordinary shares will be suspended with effect from
7:30 a.m. on 1 September 2022.
The Company aims to complete its audit and publish its annual
report within a matter of weeks of this announcement, post which
trading in the Company's ordinary shares is expected to
recommence."
FY22 Audit Update, appointment of independent external advisers
and commencement of external review process
Today, the Company announces that BDO LLP ("BDO"), the Company's
auditor, has written to the Board and identified a number of
serious concerns that have arisen during the course of its work on
the FY22 audit regarding, amongst others, the Group's ability to
provide sufficient and accurate audit evidence in respect of a
number of key audit areas and the validity of certain commercial
arrangements entered into by the Company. BDO has indicated that,
at the present time, it is not able to sign an audit report in
respect of the FY22 accounts.
BDO has further recommended that the Board appoint independent
external advisers to undertake an independent investigation
regarding the concerns raised and report their findings to an
independent committee.
The Company has today appointed Macfarlanes LLP and Forensic
Risk Alliance to commence an independent investigation into the
matters raised by BDO and any other matters that may become
relevant during the course of their review. The Company has also
formed an investigation committee of Derek Zissman (Non-executive
Director) and Elizabeth Lake (CFO since June 2022) to lead the
process with the independent advisers.
At this point it is difficult to estimate a timeline for the
investigation, however, the Board considers that it may take
several months to complete. Announcements will be made as
appropriate.
Current trading and financing
On 2 August 2022, the Group provided the following update on
current trading: " we now expect the first half of the year to
deliver low single digit revenue growth versus H1 FY22, resulting
in a small adjusted EBITDA loss for the six month period ending 31
August 2022. For the full year to 28 February 2023, we now expect
between GBP215m - GBP225m net sales and adj. EBITDA of between
GBP18m - GBP20m."
The Group has now entered its seasonally stronger second half of
the financial year and has increased retail distribution worldwide,
with its products now in over 15,000 stores. The Company has,
however, continued to encounter macro headwinds, including the
ongoing impact of the Russia/Ukraine conflict, consumer spending
patterns and cost inflation. In light of the above, the Company now
expects that its results for FY23 will be materially below market
expectations and the previous guidance given.
In addition, it is possible that accounting adjustments arising
as a result of the FY22 audit, when finalised, could impact upon
the FY23 results also, and there is currently no certainty as to
whether this will occur or the quantum of any such adjustments if
they are required.
As at 21 September 2022, the Group had net debt of GBP16.1m and
a GBP40m revolving credit facility which the directors believe
provides sufficient liquidity for Groups current requirements.
The Group is currently in breach of its facility agreement given
the Audited Accounts for FY22 have not been filed, however, prior
to this announcement the banks have continued to be supportive and
the full facility remains available to the Group.
Derek Zissman, Non-executive Director and Head of the
Investigations Committee, said:
"We are taking BDO's concerns very seriously and will conduct a
full and independent investigation. We will continue to keep
investors and stakeholders fully updated as the process
continues."
- Ends -
For further information please
contact:
Revolution Beauty Investor Relations
Elizabeth Lake / Nic Wing investor.relations@revolutionbeautyplc.com
J oint Corporate Brokers
Zeus (NOMAD): Nick Cowles /Jamie Tel: +44 (0) 161 831 1512
Peel /Jordan Warburton
Liberum: Clayton Bush / Edward Tel: +44 (0) 203 100 2222
Thomas / Miquela Bezuidenhoudt
Media enquiries:
Headland Consultancy Tel: +44 (0)20 3805 4822
Rosh Field / Will Smith / Marta Revolutionbeauty@headlandconsultancy.com
Parry-Jones
About Revolution Beauty
Revolution Beauty is a global mass beauty and personal care
business which operates a multi brand, multi category strategy and
sells its products both direct-to-consumer (DTC) via its e-commerce
operations, and in physical and digital retailers through wholesale
relationships.
Today, the Group has a retail footprint of c.15,000 doors across
leading retail chains in the UK, USA and other international
markets. Revolution Beauty has access to a wide customer base,
predominantly aged between 16 and 35, through its digital partners
and own DTC platform. It has established and invested to streamline
its supply chain with its own manufacturing facility in the UK, and
third-party warehousing facilities across the UK, USA and
Australia. The Group has offices in the UK, USA, New Zealand and
Germany. Revolution Beauty currently employs 411 people.
The total mass beauty market was worth $219bn in 2019 and is
expected to grow to $274bn over the next 3 years, driven by a new
marketing era dominated by Social Media and influencers. Revolution
Beauty has been a leading innovator building a significant global
following across social channels, enabling it to spot trends and
respond quickly to consumer demand.
Revolution Beauty strategy
Revolution Beauty Group is disrupting the traditional beauty
market through products that are more accessible to more people.
Through its digital-first strategy, Revolution Beauty brings
trend-led products to market faster than competitors. We invest in
innovative marketing strategies designed to appeal to a wider
audience, and offer products combining quality, inclusivity,
innovation and affordability.
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