29 April 2025

Warpaint London PLC

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

Results for the year ended 31 December 2024

Record sales and profits in 2024 at an improved margin; solid start to 2025

Warpaint London plc (AIM: W7L; OTCQX: WPNTF), the specialist supplier of colour cosmetics and owner of the W7, Technic, Skin & Tan, Super Facialist, Dirty Works and Fish Soho brands is pleased to announce its audited results for the year ended 31 December 2024.

Financial Highlights

*Adjusted for amortisation costs, share-based payments and costs associated with the acquisition of Brand Architekts Group PLC

Operational Highlights

Post-Period End Highlights and Outlook

Commenting, Clive Garston, Chairman, said: "I am very pleased with the Group's record 2024 financial performance. in 2024 which has continued into 2025, despite the challenging macroeconomic environment. This reflects the delivery of Warpaint's consistent and focussed strategy of ensuring its branded products are sold through an ever-expanding network of large retailers globally, by gaining more space within these retailers, entering relationships with new ones and increasing the Group's online sales presence.

"The board expects the Group performance to remain strong and for sales and profits to continue to grow over the remainder of 2025 and beyond. We continue to see significant growth opportunities, particularly in the UK and Europe, and with the addition of the Brand Architekts' brands we have further opportunities for growth. The recently implemented increased US tariffs are having an impact on our US business, but the US remains a modest part of the Group's overall business, and with significant growth opportunities elsewhere and strategies in place to mitigate their effect, we do not expect tariffs to have a material impact on the Group's financial performance in 2025. Accordingly, the board's expectations for the Group's financial performance in 2025 are unchanged."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018

Enquiries:

Warpaint London plc

Warpaint sells branded cosmetics under the lead brand names of W7 and Technic. W7 is sold in the UK primarily to major retailers and internationally to local distributors or retail chains. The Technic brand is sold in the UK and continental Europe with a significant focus on the gifting market, principally for high street retailers and supermarkets. In addition, Warpaint supplies cosmetics under its other brand names of Man'stuff, Body Collection and Chit Chat, each targeting a different demographic. Additionally, in February 2025, Warpaint acquired Brand Architekts Group PLC with a number of complimentary health, beauty and personal care brands, including Skin & Tan, Super Facialist, Dirty Works and Fish Soho.

HEADLINE RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024

¹Cash and cash equivalents includes £14.0m (2023: nil) which was held in an escrow account at 31 December 2024. The funds were released in February 2025 and utilised in the acquisition of Brand Architekts Group PLC. Further details of this acquisition are provided in Note 28.

²Adjusted numbers are closer to the underlying cash flow performance of the business which is regularly monitored and measured by management, the adjustments made to the statutory numbers are as follows:

CHAIRMAN'S STATEMENT

2024 was another year of strong performance for the Group. Warpaint has continued to grow in its main geographic areas of focus, the UK, Europe and the US. Notwithstanding a challenging economic environment, the continued successful execution of Warpaint's business strategy and model is reflected in the Group's record financial performance. One of the strengths of Warpaint is its people and I would like to thank my colleagues on the board and all of the Warpaint team for their dedication and exceptional efforts in achieving this performance. I believe that these efforts will stand us in good stead in the future and enable Warpaint to achieve its objectives.

During the year, we continued our strategy of concentrating on increasing our presence in larger retailers globally, together with growing direct online sales, at attractive margins. This focus on doing more business with larger customers and expanding the number of large retailers stocking the Group's products is reflected in the Group's results and provides a continuing strong platform for the future.

Post year end, on 12 February 2025, we were pleased to complete the acquisition of Brand Architekts Group PLC ("Brand Architekts") and the integration of the business into the Group is progressing well. I believe that the acquisition is an exciting and relatively low risk opportunity to further bolster Warpaint's growth opportunities, and I would like to take this opportunity to formally welcome the Brand Architekts team to the Group.

Trading has continued to be robust in the first quarter of 2025, with the Group maintaining continued growth with quarterly sales 7% ahead of the same period in 2024 on a like-for-like basis, excluding the contribution from Brand Architekts from 12 February 2025. Margins in Q1 2025 increased and were better than those achieved in the full year 2024. I expect the Group performance to remain strong, with significant planned expansion opportunities, and for sales and profits to continue to grow in line with previous expectations over the remainder of 2025 and beyond, notwithstanding the current challenging conditions, including subdued consumer confidence in many parts of the world and the effect of increased US tariffs recently introduced.

Results

2024 was again a year of significant achievement, with the Group delivering record sales and profits, at an increased margin.

Adjusted profit before tax grew 33% to £24.6 million (2023: £18.4 million) on revenue of £101.6 million (2023: £89.6 million) with basic earnings per share of 23.5 pence (2023: 18.1 pence).

The Group continues to ensure inventory levels are appropriate to allow on-time delivery for customers and to service the anticipated growth in demand, with inventory at 31 December 2024 increasing to £31.2 million (31 December 2023 £28.0 million). The balance sheet remains strong, with cash at 31 December 2024 of £21.9 million, including £14.0 million held in escrow to fund the acquisition of Brand Architekts (31 December 2023: £9.1 million), and the Group remains debt free.

Dividend

In accordance with the Group's progressive dividend policy and reflecting the board's confidence in the Company's prospects, the board is pleased to recommend an increased final dividend of 7.5 pence per share which, if approved by shareholders at the annual general meeting ("AGM"), will be paid on 4 July 2025 to shareholders on the register at 13 June 2025. The shares will go ex-dividend on 12 June 2025.

During the year, an interim dividend of 3.5 pence per share was paid on 22 November 2024, bringing the total dividend for the year to 11.0 pence per share, a 22% increase over the 9.0 pence per share dividend for 2023.

Board

I was delighted to welcome Sharon Daly and Indira Thambiah as independent Non-Executive Directors with effect from 1 January 2024. They have considerable experience on the boards of public companies in the consumer sector and they have made a valuable contribution since joining the board. They both joined the Company's Audit and Remuneration Committees on appointment, and Indira was appointed as Chair of the Remuneration Committee on 3 September 2024, taking over from Keith Sadler, who remains Chair of the Audit Committee, which has been reconstituted as the Audit and Risk Committee with new terms of reference.

Annual General Meeting

The Company's AGM will be held at the Company's offices at Units B&C, Orbital Forty Six, The Ridgeway Trading Estate, Iver, Bucks, SL0 9HW on 17 June 2025 at 10.00 a.m. and the board looks forward to welcoming those shareholders who are able to attend in person.

Summary and Outlook

I am very pleased with the Group's performance in 2024 and that this has continued into 2025, despite the challenging macroeconomic environment. This reflects the delivery of Warpaint's consistent and focused strategy of ensuring its branded products are sold through an ever-expanding network of large retailers globally, by gaining more space within these retailers, entering into relationships with new ones and increasing the Group's online sales presence. With the addition of the Brand Architekts' brands, we have further opportunities for growth.

The Group is keeping a careful watch on the developing US tariff environment and is taking steps to mitigate the effects of tariffs as far as possible, whilst focusing on US business that remains profitable and benefits the longer term strategic positioning of the Group. The Group's US business is currently a modest contributor to Group profit, at less than 3% of 2024 Group profit before tax, and current US tariff rates, whilst impacting on the amount of business the Group expects to do in the US in 2025, are not expected to have a material impact on the Group's financial performance in 2025. Accordingly, the board's expectations for the Group's financial performance in 2025 are unchanged.

The Board works closely with executive management and carries out an annual review of Group strategy. This is focused on growth and increasing our share of the global value colour cosmetics and skin care markets, taking into account changing market dynamics. Warpaint is a founder led entrepreneurial company which leads to a culture that, notwithstanding the challenging environment and difficulties that face many of our customers and consumers, should lead to a continuation of the strong performance that has been seen over recent years. I therefore believe that we have the right offering and strategy in place to continue to deliver profitable future growth.

Clive Garston

Chairman

28 April 2025

CHIEF EXECUTIVE'S STATEMENT

I am very pleased that the Group again achieved another record level of sales and profits in 2024, with an improved profit margin. Group sales increased by 13% to £101.6 million (2023: £89.6 million), importantly at an increased gross margin of 41.2% (2023: 39.9%), driving a 33% increase in adjusted profit before tax to £24.6 million (2023: £18.4 million).

This performance reflects the ongoing success of the Group's strategy of focusing on growing profitable sales of its branded products, with a focus on the UK, Europe and the US, whilst increasing overall margins. Increased sales are being achieved through existing customers, where the focus is on supplying more stores and increasing the Group's footprint within each store, as well as adding new large retailers to the Group. In 2024 we secured an over fourfold increase in retail space within Boots in the UK, driven by both additional outlets and larger displays. In addition, we also continue to be in active discussions with new major retailers globally.

In 2024, the Group continued to concentrate on its core W7, Technic, Body Collection, Man'stuff and Chit Chat brands. In 2024, sales of the Group's branded products accounted for 94% of revenue (2023: 95%).

As has been the trend for some time, the global cosmetics market continues to see consumers transferring to more value orientated brands, such as those produced by the Group. In 2025, the addition of the Brand Architekts' brands to our portfolio is expected to provide additional opportunities to grow sales and profits over and above those we expect from our historic brands. Our global market share remains modest and there continue to be substantial opportunities for further growth.

W7

The Group's lead brand is W7, with sales in 2024 increasing by 14% to £65.4 million, accounting for 64% of total Group revenue in 2024 (2023: £57.4 million/64%).

In the UK, W7 revenue was up 9% year-on-year, representing 28% of W7 sales in the year (2023: 30%), as stronger sales growth was generated in regions outside of the UK, particularly in Europe and the US. W7 sales in the UK continue to see significant growth and this is expected to continue, particularly with existing retailers, where plans are in place to expand the number of stores served and to increase the footprint in existing stores. During 2024 there was an approximate 2.5 times increase in the space allocated to W7 in Superdrug, in addition to the over fourfold increase in retail space within Boots noted above.

In 2024, W7 sales in Europe grew by 21% to £36.8 million (2023: £30.4 million), representing 56% of W7 sales (2023: 53%). This was driven by additional sales to existing customers, particularly as they expanded the size of their estates, and to new customers, including in countries where the Group has previously had only a limited presence.

In the US, W7 sales grew by 23% to £7.8 million in 2024 (2023: £6.3 million), and accounted for 12% of overall W7 sales (2023: 11%), with the Group benefiting, in particular, from growth within CVS and Five Below, together with increased online sales.

Across the rest of the world, which is not a primary focus for the Group, W7 sales were £2.3 million (2023: £3.6 million) and remain a modest proportion of overall W7 sales at 4%.

Technic

Sales of branded Technic product in 2024, which includes products sold under the Technic, Body Collection, Man'stuff and Chit Chat brands, increased by 8% to £29.7 million, representing 29% of total Group revenue (2023: £27.5 million/31%).

The Technic business also produces and sells white label cosmetics for several major high street retailers. Such opportunities are assessed case-by-case, based on the return they can deliver. In 2024, Technic's white label business grew by 90% to £4.3 million (2023: £2.3 million), accounting for 4% of Group revenue (2023: 2.5%) as higher margin opportunities were presented.

In 2024, UK revenue was 42% of Technic's total sales at £14.3 million (2023: £13.1 million/44%), increasing 9% year-on-year. A particular highlight in the UK was the launch in March 2024 of a full range of Technic products in an initial 202 Morrisons stores.

Technic enjoyed particularly strong sales growth in Europe, up 23% to £17.8 million (2023: £14.5 million), accounting for 53% of Technic sales (2023: 49%), driven by increased product being sold to existing customers, and the launch into new customers, including significant further expansion with the Dutch retailer, Wibra.

Sales for the Technic brand outside of the UK and Europe accounted for 5% of Technic sales (2023: 7%) and are therefore small in the context of the Group as a whole, representing less than 2% of Group revenue, presenting an opportunity for future growth.

Technic continues to grow its direct online sales, particularly through the brand stores on Amazon.co.uk, Amazon.com and on continental European Amazon sites. These direct online sales remain a modest proportion of Technic's overall sales and present a further opportunity for growth.

e-Commerce

In 2024, the Group continued to drive direct online ("D2C") sales, a strategy that started in 2020. Revenue of £8.4 million in 2024 was an increase of 35% (2023: £6.2million), and as a proportion of Group revenue, D2C sales increased to 8.3% in 2024 (2023: 6.9%). While growing these online sales, the focus remains on achieving a similar net margin to the Group's sales through traditional physical outlets.

The Group continues to have significant opportunities to grow sales through the W7 and Technic brands' own e-commerce sites, and on Amazon in the UK, Europe and the US, and in China through official W7 brand stores on Taobao Mall (Tmall), the most visited B2C online retail platform in China and Xiaohongshu (Red), one of China's foremost social media, fashion and luxury shopping platforms.

Close-out

Close-out sales continued to reduce as they are not a core focus, although the Group will continue to take advantage of profitable close-out opportunities as they become available, as they continue to provide a significant and profitable source of intelligence in the colour cosmetics market. In 2024, close-out sales were £2.3 million (2023: £2.5 million) and represented only 2% of the overall revenue of the Group (2023: 3%).

Brand Architekts

Post year end, on 12 February 2025, we were pleased to complete the acquisition of Brand Architekts. Having followed the company for some time, I believe that the acquisition is an exciting and relatively low risk opportunity to further bolster Warpaint's growth opportunities.

Brand Architekts is a health, beauty and personal care brand specialist sold throughout the UK and internationally, with a focus on every day, high-performing brands and products that engender high levels of consumer loyalty. Brand Architekts' brand portfolio encompasses female beauty, skincare, self-tan and male grooming. Brands (including Skin & Tan, Super Facialist, Dirty Works and Fish Soho) are available on the high street in leading pharmacy and drugstore chains, in national grocery stores, on the platforms of global e-tailers, and through ecommerce websites.

Warpaint has a strong track record of successfully acquiring, integrating and growing businesses with complementary brands, offerings and customers, and I consider that Brand Architekts provides a similar opportunity. Brand Architekts has a number of high-quality brands with a well-established customer base that complements Warpaint's existing customer relationships and brand portfolio. In addition, while Brand Architekts has grown its gross margins over recent financial periods, it carried a high overhead cost base relative to the level of gross profit generated by the business. We have identified significant cost synergies and have already begun to reduce overheads to a more efficient level, which should increase Brand Architekts' profitability. The integration of the business into the Group is progressing well and accordingly, the Warpaint board expects the acquisition to be earnings enhancing to Warpaint in the year ending 31 December 2025.

New Product Development

New product development ("NPD") continues to be core to the Group's proposition to provide new products that are exciting, on trend, fast to market and that meet consumers' evolving tastes.

During 2024, the NPD team continued to develop a strong pipeline of customer-focused new products. The NPD team works with around 25 manufacturing partners, in China and globally, that can provide high quality products quickly, at very competitive prices, while meeting our legal and ethical compliance requirements, together with ensuring continuity of delivery. The Group continues to investigate new manufacturing partners, particularly outside of China, to ensure a diversity of supply and to mitigate, as far as possible, the effects of tariffs increasingly being implemented, particularly in the US on Chinese manufactured product.

The Group's cosmetic products are 'cruelty free' and are not tested on animals irrespective of where the products are being supplied. The Group supports cruelty free alternatives to animal testing to become compulsory and animal testing overall to cease globally. Warpaint proudly displays the PETA company logo on its products and its commitment to the PETA 'Beauty without Bunnies program' covers all brands within the Group, including the newly acquired Brand Architekt brands, apart from Skin & Tan, which is approved under the Cruelty Free International Leaping Bunny programme.

Environmental impact

Warpaint is very focused on the environmental impact of its products and is committed to becoming an industry leader for sustainable products and packaging. The Group is proud to be associated with Planet Mark, which provides a clear framework for businesses to measure their carbon reporting through certification. As a member of Planet Mark, the Company is committed to implementing carbon reduction strategies, staying ahead of legislation and risk mitigation, and eliminating greenwashing through effective and transparent communication. Alongside the ways our team members operate in the workplace and wider communities, and the efforts of product teams in ensuring the most recyclable materials and least plastic consuming designs are put into production, Planet Mark forms a key part of the Group's sustainability agenda.

The Group uses only recyclable plastics in the outer packaging of its gifting products and continues to remove unrecyclable plastics from all year-round products. The Group's product packaging therefore uses paper and cardboard wherever practicable, enabling the Group, its customers and end users to recycle waste effectively.

All branded products across the Group are manufactured vegan friendly and without parabens. No heavy metals such as TBTO (preservative) and other ingredients of concern are added to products and all raw materials comply with the strict regulations applicable in the UK, EU, US, Canada and other markets in which the Group operates.

Marketing and PR

The Group's marketing, PR and social media teams continued to work to ensure our marketing programmes remain fresh, innovative, focused on customer loyalty and showcasing our products to new potential consumers. The Group has a particular emphasis on social media using brand ambassadors, influencers and make-up artists and has individuals dedicated to each of the main social media platforms to ensure maximum benefit is gained in these areas. In 2024 we successfully introduced the W7 TikTok shop, demonstrating to consumers the benefits of our products whilst enabling them to order at the same time.

Strategy

On an annual basis the board reviews and appropriately adapts its three-year strategic plan for the business based on consumer insight, market data, experience and the Group's aims. This is targeted by year, measured, monitored and reviewed as part of the board's on-going business throughout the year. The strategic plan was updated in January 2025, forming the basis of the Group's focused activity through to 2027. The plan is developed to drive shareholder value and has defined targets for sales by the six key pillars below, EBITDA, earnings per share and cash generation with a particular emphasis on driving incremental EBITDA growth.

The strategic plan comprises six key pillars:

·      Develop and build the Group's brands and ensure new product development reflects trends and consumer needs

The Group ensures that everybody within the business has crystal clarity of the positioning and hierarchy of the Group's portfolio of brands. A key activity of the Group is developing affordable, quality new product, which remains a crucial part of the Group's activity. It is essential to provide great new product that is on trend, fast to market and meets the consumers' evolving tastes. A healthy pipeline of new products is the continual focus of our NPD team who are also developing category extensions where appropriate to each brand and gifting sets.

·    Develop and nurture current core business

There is still significant potential to be realised and further distribution gains to be made with the current customers, and the Group is committed to ensuring this potential is maximised. The Group is focused on ensuring there is a clarity of product offering to each customer segment and to supporting its customers with relevant new products, by using appropriate marketing and innovative merchandising solution to draw consumers into stores and by enhancing the customer offer by cross selling the Group's brands and category extensions for example accessories, body mists, gifting and skin care where appropriate. 

·      Grow market share in the UK

The Group continues to focus on increasing the presence of its brands across the channels in which our consumers shop, thereby increasing accessibility and driving profitable market share growth. As a result of this strategy, the W7 brand successfully launched into Superdrug in 2023. As a result, further stores were awarded in 2024 with merchandising solutions that provided greater space and range. Further store and space growth is expected in 2025. Our partnership with Tesco continues to grow, with distribution gains across all store formats, including the recent launch of an impulse solution at till points in more than 200 Tesco Extra and Supermarket stores, while the group is gaining greater space and distribution in Boots and diversifying into new categories. At the same time the Technic brand was successfully launched with a range of product into Morrisons. Active discussions continue with other major retailers who the Group is yet to supply. The expansion of the UK customer base is a key aim of management, as the business continues to capitalise on consumers and retailers across all sectors who are increasingly looking to provide quality products at affordable prices to their customers.

·      Grow market share in the US and China

The US and China continue to provide major long-term growth opportunities for the Group. In the US, Warpaint increased its management and selling capability in 2024. A compelling core product range for the US has been established, with minimum margin requirements. The business is focused on targeted customer initiatives that have gained both gifting and all-year-round listings with major retailers across key channels. For example, in CVS, following a successful launch of W7 for a selection of all-year-round products into 186 stores in 2023, W7 launched into a further 387 stores in February 2024, with an additional 398 more stores expected to launch in 2025. The Group also successfully launched a range of Christmas gifts into Walmart in 2024. In China, the Group conducts business locally through its Chinese subsidiary. We are also continuing to register products for sale in China in order to grow our total offering and increase sales. This has led to the sales of W7 products via W7 branded storefronts on on-line marketplaces.

·      Develop the online/e-commerce strategy for brand development and profitable sales

Warpaint aims to grow and maximise profitable sales across the Group's Direct to Consumer ("D2C") channels. As well as continuing to sell on its own websites and developing its own consumer community, plans continue to be executed to develop sales across Amazon platforms. W7 stores fulfilled by Amazon traded successfully in the UK, US, Italy and Germany in 2024 seeing substantial growth, whilst the Group also launched on Amazon France and on our own TikTok shop in the UK. Further on-line sales platforms and geographies continue to be evaluated and, where profitable opportunities are identified, launched over the course of the three-year plan. The Group continues to develop and build its brands by utilising brand ambassadors, influencers and make-up artists to engage actively with its target audience. The Group aims to ensure that consumers are adequately inspired and educated on how the Group's products can be used to experiment and achieve different looks. Developing the social media strategy also directly impacts the Group's online sales strategy. 

·      Develop and implement appropriate strategies that ensure Warpaint reduces its impact on the environment

Warpaint recognises consumers', customers' and its own requirement to reduce its environmental impact. The business has already identified and implemented a number of initiatives to reduce its environmental footprint via reduced shipping and road mileage; removing plastics where possible from packaging and improving recyclability; removing parabens from ingredients and ensuring all products are manufactured cruelty free. Further initiatives have been identified, targeted and will be implemented across the course of the three-year plan. Further information is contained within the ESG section of this annual report.

Customers & Geographies

The largest markets for sales of the Group's brands are continental Europe and the UK, with a growing presence in the US, coupled with global online sales. In 2024 the Group's top ten customers represented 66% of revenues (2023: 69%).

UK

In 2024, revenue from the UK was £35.0 million (2023: £32.4 million), an increase of 8%. The UK accounted for 34% of Group revenue in 2024 (2023: 36%). Growth in the UK was seen by both our lead W7 brand and the Technic brand, both of which increased by 9%.

The top ten UK customers accounted for 69% of UK sales (2023: 66%). Strong growth was achieved during the year with many UK retailers, with a strong start to the rollout with Superdrug and further growth with Boots and Tesco, particularly increasing the average sales footprint per store. Additionally, in March 2024, a full range of Technic products was launched in an initial 202 Morrisons stores.

We are also in continued talks with major UK retailers who stock W7 and Technic product to increase the offering in their stores and anticipate further expansion across their estates during 2025. Confirmed UK expansion in 2025 includes Superdrug rolling out W7 into 140 new stores and travel size products in all stores from June 2025.  Tesco have confirmed a 150 store expansion of the Group's W7 impulse offering during 2025. Boots are to take gifting products for the first time for Christmas 2025 (to be stocked in 350 stores) and accessories going into 250 stores.

Europe

Since 2022, continental Europe has been the largest sales area for the Group. In 2024, Group revenue from Europe increased by 22% to £54.7 million (2023: £45.1 million), accounting for 54% of overall Group sales (2023: 50%), with growth seen from both existing customers and those new to the Group. The largest markets for the Group's brands in continental Europe are Spain, Denmark, the Netherlands and Sweden, but with an increasing presence in many other countries in the region. Europe continues to present growth opportunities, both with existing and new customers, and particularly in countries where the Group currently has a more limited presence, such as Germany and Italy.

Expansion of the Group's footprint in Europe in 2025 is expected to include contributions from Tigota in Italy launching a range of products in 200 stores with a capsule collection going into an additional 400 stores and in the Netherlands, Etos is expected to expand its product assortment in all 546 stores with a permanent fixture and an enhanced range in selected stores.

US

Revenue from the US, in sterling terms, increased by 19% in 2024 to £8.7 million (2023: £7.3 million) and grew by 22% in US dollar terms. This equated to 8.5% of overall 2024 Group sales (2023: 8%). Over 99% of US revenue was from the sale of Group brands in 2024 as very limited close-out activity was undertaken, in line with the Group's strategy to focus on its own brands.

A new US management team was appointed in the first half of 2024, tasked with generating new business at higher margins, moving away from selling to retailers whose focus is on selling products at deep discounts. As a result, US sales in 2024 generated significantly higher profits than has previously been the case and for the first time the Group's US business delivered more than US$1 million of pre-tax profits.

Significant US sales were generated in the second half of the year as gifting orders were delivered, including a large Christmas order received from Walmart for W7 and Chit Chat products.

The recent imposition of additional tariffs, particularly on goods manufactured in China, is having an impact on the margins achievable from the Group's US sales, although we are seeking to mitigate the effects as far as possible. Online, which accounts for a significant proportion of the Group's US business and where we have more selling price flexibility, price increases have been implemented. We continue to monitor the situation closely and are focused on ensuring the Group maintains its position in the US, whilst maximising the available margin.

Despite this backdrop we are still seeing appropriate growth opportunities in the US and, for example, CVS will be expanding the W7 range stocked and rolling-out to a further 399 stores from August 2025, taking the number of CVS stores stocking the Group's products to 918.

Rest of the World

2024 sales from the rest of the world reduced to 3% of overall Group sales (2023: 5%). Whilst the rest of the world is not a primary focus for the Group, within this area the largest sales are to Australia and China, with other countries, such as the Philippines, being served where profitable sales in appropriate volumes can be achieved.

Summary and Outlook

I am again very pleased with the Group's performance in 2024. We have continued to grow sales and importantly these sales have been achieved at a higher gross margin as we focus on sales through large retailers in the UK, Europe and the US, together with growing our online presence. Our robust supply chain and distribution network, coupled with maintaining appropriate levels of stock, ensures that we are able to supply our retail customers on time with product that their customers are demanding.

Whilst trading conditions remain challenging, and recently implemented tariffs in the US are having an impact on US margins, trading in 2025 has started strongly with a solid first quarter, and we continue to see significant growth opportunities, particularly in the UK and Europe. We continue to regularly review our sourcing and are investigating additional opportunities to manufacture products outside of China, including in the UK, to ensure the maximum available margin, whilst ensuring consistency and quality of supply.

Revenue for the first three months of 2025 is 14% ahead of the same period in 2024, including a contribution from Brand Architekts from 12 February 2025, with sales increases seen across all of the Group's brands, both in stores and online, and at an improved gross margin to that achieved for 2024 as a whole.

Whilst I believe the US remains a longer term growth opportunity for the Group, in particular due to the limited level of the Group's current business in the US and the size of the market, the recent imposition of additional US tariffs, particularly on goods manufactured in China, is having an impact on the Group's current US business. In the US we remain focused on ensuring that sales the Group undertakes remain profitable, whilst benefiting the longer-term strategic positioning of the Group's brands in a potentially improved tariff environment. Whilst sales to the US are likely to be impacted in 2025 by the current tariff levels, their modest contribution to Group profits and the growth opportunities we are seeing elsewhere mean that the board's expectations for the Group's financial performance in 2025 remain unchanged.

We will update further on our progress later in the year and with significant opportunities for further growth, including from the recently acquired Brand Architekts' brands, I am confident that the Group will continue to perform well for the remainder of the year and beyond.

Sam Bazini

Chief Executive Officer

28 April 2025

CHIEF FINANCIAL OFFICER'S REVIEW

2024 was another record year for the Group, with continued growth in revenue, margins and profit before tax. Group revenue increased in the year by 13% and adjusted profit before tax increased by 34%. Gross margin improved in the year, with a 1.3 percentage point increase to 41.2%. This is the fourth year running that gross margin has improved.

On the 12 February 2025 the Group completed the purchase of Brand Architekts, the owner of a number of complimentary health, beauty and personal care brands, sold throughout the UK and internationally. Brand Architekts brands include Skin & Tan, Super Facialist, Dirty Works and Fish Soho. The Group believes that the acquisition is an exciting and relatively low risk opportunity to further bolster Warpaint's growth opportunities.

The Group continues its strategy of building the W7 and Technic brands, together with its recently acquired brands. We remain focused on margin, generating cash and remaining debt free.

The Group monitors its performance using a number of key performance indicators which are agreed and monitored by the board.

*Adjusted numbers are closer to the underlying cash flow performance of the business which is regularly monitored and measured by management, the adjustments made to the statutory profit before tax are as follows:

Headline results, shown below, represent the performance comparisons between the consolidated statements of income for the years ended 31 December 2023 and 31 December 2024.

Revenue

Group revenue for 2024 increased by 13.4% to £101.6 million (2023: £89.6 million).

Company branded sales were £95.1 million (2023: £84.8 million). The W7 brand generated sales in the year of £65.4 million (2023: £57.4 million), while the Technic brand, excluding sales of retailer own brand white label cosmetics, contributed sales of £29.7 million (2023: £27.5 million).

In 2024, sales of white label cosmetics were £4.3 million (2023: £2.3 million). The white label business is traditionally cost competitive and is only undertaken based on commercial viability, in particular margin.

Close-out sales were £2.3 million (2023: £2.5 million), as the Group, in line with its strategy, continued to reduce its focus on close-out opportunities.

The major regions for Group sales are the UK, Europe and the US. In the UK, sales increased by 8.0% to £35.0 million (2023: £32.4 million). International revenue increased by 16.5% to £66.6 million (2023: £57.2 million).

In Europe, sales increased by 21.5% to £54.7 million (2023: £45.1 million).

In the US, Group sales increased by 18.5% to £8.7 million (2023: £7.3 million), which, in US dollar terms, was an increase of 22%, to US$11.1 million (2023: US$9.1 million). For the first time, the US business delivered in excess of US$1 million of pre-tax profits, as the new management team put in place at the start of 2024 focused on generating profitable business with larger customers and moved away from selling to deep discounters. Since the year end, tariffs into the US have increased, and currently this is still a developing situation. Management have considered the newly implemented US tariffs and have calculated that the changes in tariffs will have no material impact on the business as a whole, or the carrying value of the goodwill in its US entity.

In the rest of the world, Group sales decreased by 33.3% to £3.2 million (2023: £4.8 million).

E-commerce sales were up by 35% to £8.4 million, now representing 8.3% of Group revenue (2023: £6.2 million/6.9%).

Product Gross Margin

Gross margin was 41.2% for the year compared to 39.9% in 2023.

This is the fourth year in a row that gross margin has improved incrementally. New product development, and sourcing product from new factories have helped achieve a gross margin improvement in 2024, without the need for an inflationary price increase to customers at the start of the year. Also, contributing to the improvement in gross margin is the performance in the US, where the new management team have delivered a 3.4 percentage point increase in gross margin in the year compared to 2024. The improvement in gross margin at the Group level is despite increased freight rates during the year.

In 2024, the proportion of Group revenue from Group branded product, which overall achieves a higher margin than close-out sales and retailer own brand white label sales, remained relatively unchanged at 94% (2023: 95%). Group brand sales include all-year-round colour cosmetics and gifting, which is sold at a more competitive margin than all-year-round colour cosmetics. Gifting sales in 2024 grew slightly but remained at the same percentage of overall Group brand sales and therefore made little impact to the overall margin achieved by the Group in the year.

We remain focused on improving gross margin where possible in all our businesses and are working with our Asian business units to execute this. Margins are also benefiting from the increased scale of our orders placed with existing suppliers as the business grows. To counter currency pressure, we continue to move production to new factories of equal quality to retain or improve margin and have a natural hedge from our US dollar revenue.

At 31 December 2023, forward foreign exchange contracts were in place for the purchase of US$42 million at an average exchange rate of US$1.2537, this helped to protect our margin in 2024. Since the start of 2024, we have purchased more forward foreign exchange contracts to further help protect our gross margin in 2024 and into 2025. At 31 December 2024, forward foreign exchange contracts were in place for the purchase of US$57 million at an average exchange rate of US$1.2912.

The currency options we have for the current year, along with new product development and sourcing strategies, will all contribute to protect our gross margin in 2025.

Operating Expenses

Total operating expenses before acquisition related expenses, amortisation costs, depreciation, foreign exchange movements and share-based payments, increased in line with sales, increasing by 14.7% to £16.9 million in the year, or 16.6% of revenue (2023: £14.7 million/16.4%).

The absolute increase of £2.2 million in the year was necessary to support the growth of the business and included increases in wages and salaries, business rates, insurance costs, the spend on PR and marketing as e-commerce sales continue to grow, legal and professional fees, and the cost of a larger US sales team. There was a decrease in the charge for bad debts.

Warpaint remains a business with relatively fixed operating expenses evenly spread across the whole year. We continue to monitor and examine significant costs to ensure they are controlled and strive to reduce them. In addition, the increased scale of the business continues to give the Group increased buying power.

Adjusted EBITDA

The board considers Adjusted EBITDA (adjusted for foreign exchange movements, share-based payments and acquisition related expenses) a key indicator of the performance of the Group and one that is more closely aligned to the underlying performance of the business. Adjusted EBITDA for the year was £25.0 million (2023: £21.0 million).

Profit Before Tax

Group profit before tax for the year was £23.8 million (2023: £18.1 million). A reconciliation between profits in 2024 and 2023 is shown below:

Tax

The tax rate for the Group for 2024 was 23.3% compared to the average UK corporation tax standard rate of 25.0% for 2024. Since the acquisition of LMS, the Group is exposed to tax in the USA at an effective rate of approximately 25% and in other jurisdictions the Group operates cost centres, but these are not materially exposed to changes in tax rates.

Earnings Per Share

The statutory basic and diluted earnings per share were 23.47p and 23.34p respectively in 2024 (2023: 18.05p and 17.98p).

The adjusted basic and diluted earnings per share before acquisition related expenses in the year, amortisation costs and share-based payments were 24.25p and 24.12p respectively in 2024 (2023: 18.37p and 18.30p).

Dividends

The board is recommending a final dividend for 2024 of 7.5 pence per share, making a total dividend for the year of 11.0 pence per share of which 3.5 pence per share was paid on 24 November 2024 (2023: Total dividend of 9.0 pence per share, of which the interim dividend was 3.0 pence per share and the final dividend was 6.0 pence per share). The dividend for the year is covered 2.2 times by adjusted earnings per share.

Cash Flow and Cash Position

The Group's year end cash balance increased by £12.8 million to £21.9 million (2023: £9.1 million). The year end cash balance includes restricted cash of £14.0 million which was held in an escrow account at 31 December 2024. The funds were released in February 2025 and utilised in the acquisition of Brand Architekts. Further details of this acquisition are provided in Notes 14 and 28.

Net cash flow generated from operating activities was £9.2 million (2023: £10.4 million). The cash generated was principally used to fund working capital, make dividend payments in the year, and for the planned acquisition of Brand Architekts.

Cash balances were negatively impacted in the year by an increase in corporation tax paid in the period, due to a change in collection policy by HMRC. This change affected the first half of 2024 in which tax paid was £4.7 million (2023: £0.9 million).

We expect the capital expenditure requirements of the Group to remain low. However, as part of our strategy to grow market share in the UK and US, there will be occasions where investment in store furniture for customers is required to secure business.

In 2024, £2.2 million (2023: £0.5 million) was spent on store furniture, solar panels, new computer software and equipment, warehouse improvements and other general office fixtures and fittings and plant upgrades.

As the Group continues to grow, it is both necessary and prudent to have bank facilities available to help fund day-to-day working capital requirements. Accordingly, the Group maintains a £9.5 million invoice and stock finance facility that is used to help fund imports in our gifting business during its peak season. At the year end, no invoice and stock finance remained outstanding (2023: £nil). In addition, the Group has a 'general purpose' facility of £5.0 million (reducing at the Company's request to £1.0 million from 1 May 2025). This facility was unused at 31 December 2024. These facilities, together with the Group's positive cash generation and the cash balance, ensure that future growth can be comfortably funded.

Share Options

The following options over ordinary shares have been exercised or granted by the Company in the year:

*See note 21 for the general terms and conditions of the shares granted in the year.

The exercise of EMI & CSOP share options during the year had an immaterial dilutive impact on earnings per share in the period. The share-based payment charge of the EMI and CSOP share options for the year was £0.35 million (2023: £0.13 million) and has been taken to the share option reserve.

Balance Sheet

Inventory was £3.2 million higher at the year end at £31.2 million (2023: £28.0 million). The rise in inventory is a function of the growth of the business and to ensure delivery disruption is avoided for our customers. One of the Group's unique selling propositions is that it can deliver a full range of colour cosmetics to our customers, in good time all year round. Having appropriate inventory levels is vital to providing that service. The provision for old and slow inventory was £0.42 million, 1.3% at the year-end (2023: £0.38 million, 1.3%). Across the Group we worked hard in the year to sell through older stock lines, allowing for our provision for old and slow inventory to remain unchanged year-on-year in percentage terms. Our Group policy is to provide for 50% of the cost of perishable items that are over two years old. However, we remain comforted by the fact that many such items in the normal course of business are eventually sold through our close-out division without a loss to the Group.

Trade receivables are monitored by management to ensure collection is made to terms, to reduce the risk of bad debt and to control debtor days, which remain broadly in line with the prior year. At the year end, trade receivables, excluding other receivables, were £13.6 million (2023: £11.0 million), the increase on 2023 being due to the rise in sales year-on-year. The provision for bad and doubtful debts carried forward at the year-end was £0.09 million, 0.6% of gross trade receivables (2023: £0.13 million, 1.2%).

At year end, the Group had no borrowings or lease liabilities outstanding (2023: £nil), apart from those associated with right-of-use assets as directed by IFRS 16 (see below). The Group was therefore debt free at the year end.

Working capital increased by £22.4 million in the year, to £63.4 million. The main components were an increase in inventory of £3.2 million, an increase in trade and other receivables of £2.8 million, an increase in cash at the year-end of £12.8 million, and a decrease in trade and other payables of £2.0 million. Other items contributed an increase of £1.6 million. The year end cash balance includes restricted cash of £14.0 million which was held in an escrow account at 31 December 2024.

Free cash flow (cash from operating activities less capital expenditure) remained strong at £6.9 million (2023: £9.9 million). Cash flow was negatively impacted in the year by an increase in corporation tax paid in the period, due to a change in collection policy by HMRC. This change affected the first half of 2024 in which tax paid was £4.7 million (2023: £0.9 million).

The Group's balance sheet remains in a very healthy position. Net assets totalled £73.3 million at 31 December 2024, an increase of £26.5 million from 2023. Most of the balance sheet is made up of liquid assets, inventory, trade receivables and cash. Included on the balance sheet is £7.3 million of goodwill (2023: £7.3 million) and £0.1 million of intangible fixed assets (2023: £0.1 million). As at the year-end, cash totalled £21.9 million (31 December 2023: £9.1 million). The year end cash balance includes restricted cash of £14.0 million which was held in an escrow account at 31 December 2024.

Goodwill represents the excess of consideration over the fair value of the Group's share of the net identifiable assets of acquired businesses / cash generating units at the date of acquisition. The carrying value at 31 December 2024 of £7.3 million included Treasured Scents Limited at £0.5 million, Retra Holdings Limited at £6.2 million and Marvin Leeds Marketing Services, Inc. at £0.6 million. Management has performed the required annual impairment review at 31 December 2024 and concluded that no impairment is indicated for Treasured Scents Limited, Retra Holdings Limited or Marvin Leeds Marketing Services, Inc. as the recoverable amount exceeds the carrying value.

The balance sheet also includes £4.1 million of right-of-use assets, which is the inclusion of Group leasehold properties, recognised as right-of-use assets as directed by IFRS 16. An equivalent lease liability is included of £4.2 million at the balance sheet date.

Foreign Exchange

The Group currently imports most of its finished goods from China, paid for in US dollars, which are purchased throughout the year at spot as needed, or by taking forward foreign exchange contracts when rates are deemed favourable, and with consideration for the budget rate set by the board for the year. Similarly, forward foreign exchange contracts are taken to sell forward our expected Euro income in the year to ensure our sales margin is protected.

We started 2024 with forward foreign exchange contracts in place for the purchase of US$42 million at an average exchange rate of US$1.2537/£, and the sale of €3.7 million at €1.1447/£. During 2024 when currency rates were favourable, we purchased additional US dollar forward foreign exchange contracts and spot rate amounts to cover our total US dollar requirement for the year.

In addition, during 2024 we purchased forward foreign exchange contracts to help protect the Group's gross margin in 2025. At 31 December 2024, forward foreign exchange contracts were in place for the purchase of US$57 million at an average exchange rate of US$1.2912/£, and the sale of €2.3 million at €1.1627/£.

The Group additionally has a natural hedge from sales to the US which are entirely in US dollars, in 2024 these sales were US$11.1 million (2023: US$9.1 million).

Together with sourcing product from new factories where it makes commercial sense to do so, new product development, and by buying US dollars when rates are favourable, we are able to mitigate to a large extent the effect of a strong US dollar against sterling.

Post balance sheet events

On 12 February 2025, the Company completed the acquisition of 100% of the ordinary shares of Brand Architekts for £13.3 million in cash and the issue of 103,422 Warpaint shares at £5.24, making a total purchase consideration of £13.9 million (the "Acquisition").

Including legal and professional fees, the total purchase price of the Acquisition was £14.7 million, of which £0.42 million was incurred in 2024.

The Acquisition will be accounted for using the acquisition method of accounting in accordance with IFRS 3. Management is still in the process of allocating the purchase price, however, initially the book value of net assets acquired was £11.28 million, including £6.2 million of cash. Further details are shown in note 28.

Directors' Loans

The Company raised funds in the year in order to pay for the Acquisition. Before raising the funds through a placing and retail offering, which completed on 9 December 2024, the Company received loans from two of its directors in order to demonstrate adequate cash resources (the "Directors' Loans"). The funds from the Directors' Loans were held in escrow.

The Company considered various alternative ways to obtain the finance required ahead of the placing to fund the Acquisition. The cost of this short term funding was significant and accordingly Sam Bazini and Eoin Macleod offered to provide the Directors' Loans at no arrangement cost to the Company and on the terms set out below. The board (excluding Sam Bazini and Eoin Macleod) considered this offer and resolved to accept it as it was comfortably the most cost-effective and practical way to obtain this finance. Sam Bazini and Eoin Macleod requested the Company donate the interest that they would have earned from the Directors' Loans to UK children's charities, which the board was happy to do. On the 6 January 2025 a donation of £24,164 was made by the Company to Noah's Ark, Children's Hospice.

The Directors' Loans to the Company in the year consisted of a loan from Sam Bazini of £8,500,000 and a loan from Eoin Macleod of £5,500,000.

The Directors' Loans were each on the same terms and interest was payable by the Company on the full amount of each Directors Loan at the Bank of England's base rate plus 0.5 percent, until the date on which the relevant loan was repaid in full, there was no fixed term, and no security was provided by the Company.

The Director's Loans were made on the 29 November 2024 and repaid in full on 10 December 2024. There were no amounts outstanding at the end of the year (2023: £nil).

Section 172(1) Statement

The directors are well aware of their duty under section 172 of the Companies Act 2006. Further information on how the directors have had regard to the Section 172(1) Matters can be found in the Stakeholder Engagement and Section 172 Report.

Strategic Report - Risk Management

Warpaint is exposed to a variety of risks that can have financial, operational and regulatory impacts on the Group's business performance. The board recognises that creating shareholder returns is the reward for taking and accepting risk. The effective management of risk is therefore critical to supporting the delivery of the Group's strategic objectives.

This information forms part of the strategic report and has been approved for issue by the board on 28 April 2025.

Neil Rodol
Chief Financial Officer

28 April 2025

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2024

The notes form part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION                                                                                           

AS AT 31 DECEMBER 2024

The notes form part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION                                                                                           

AS AT 31 DECEMBER 2024

The financial statements of Warpaint London plc were approved and authorised for issue by the Board of Directors and were signed on its behalf by:

Neil Rodol

Chief Financial Officer

Date: 28 April 2025

The notes form part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY                                                                                            

FOR THE YEAR ENDED 31 DECEMBER 2024

The notes form part of these financial statements