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Cosmetics company Warpaint London reported a 63% drop in annual profit and scrapped its final dividend, as a modest rise in sales was tempered by lower margins.
Pre-tax profit for the year through December fell to £1.8m, down from £4.7m on-year, even as revenue rose 1.6% to £49.3m.
Gross profit margin contracted to 33.5%, back from 35.5%, which the company said was due to impact of lower-margin US sales and adverse exchange rates.
Warepaint London said its trading up until March 2020 had been at the upper end of its expectations, but the situation had deteriorated as customers were impacted by the Covid-19 crisis.
The company said its Christmas order book has continued to build, standing at £6.9m in April, down from £7.8m in April last year.
The decision to scrap the final dividend was taken to preserve cash. Over 70% of the company's UK staff had been furlouged.
'The directors have prepared forecasts for the period to December 2021, which are based on assumptions which the directors believe are conservative, although the unknown impact of Covid-19 could impact them negatively or positively,' chairman Clive Garston said.
'In preparing these forecasts a number of different scenarios were modelled, including a complete lockdown in all our markets to the end of 2020.'
'In this unlikely event the directors believe that Warpaint has sufficient financial strength to withstand such disruption for at least the next 12 months.'