Warpaint London plc (LON:W7L), the specialist supplier of colour cosmetics and owner of the W7 and Technic brands, has announced an update on trading for the year ended 31 December 2020.
As a result of stronger than previously anticipated trading in the second half, the board now expects sales for the year ended 31 December 2020 to be not less than £40 million. This is ahead of the board’s expectation of sales of at least £37 million as announced at the time of the release of the Company’s interim results for the six months ended 30 June 2020 on 23 September 2020.
The Company’s board expects unaudited adjusted profit from operations*, excluding a non-cash accounting charge on forward foreign exchange options for 2021, to now be in excess of £2.6 million. The Group imports most of its finished goods from China paid for in US Dollars and to help mitigate risk, forward foreign exchange options are entered into. The Pound/US Dollar exchange rate at the end of December 2020 will result in a non-cash charge and as a result it is the board’s expectation that, subject to audit, adjusted profit from operations* for the year ended 31 December 2020 will be in excess of £2.2 million. This is at least 10% ahead of its previously stated guidance of £2 million (and c.30% ahead excluding the foreign exchange related accounting charge).
The Company’s net cash** balances as at 31 December 2020 totalled £4.9 million (31 December 2019: £1.5 million).
The Company is also pleased to announce that following successful initial sales of a range of 15 W7 cosmetics products in 209 Tesco Express stores from November 2020, these products will now be stocked in a further 469 Tesco Express stores starting at the end of February 2021. This is in addition to, as previously announced, the core range of 190 of the Group’s W7 products being sold in 56 Tesco Extra stores and the four new lines currently being introduced by Tesco into 605 Tesco Extra stores and Tesco supermarkets, together with a further four new lines which will be shortly stocked in 96 of these stores.
The Group expects to release its results for the year ended 31 December 2020 in April 2021.
* Adjusted for exceptional costs, amortisation of intangible assets, and share based payments
** Net cash consists of cash and cash equivalents less invoice and stock finance lines