Revolution Beauty warns of 'material impact' of issues raised in audit

Revolution Beauty Group warned of a “material impact” on its 2022 accounts on Thursday, as a result of the ongoing audit.

The AIM-traded firm had announced on 2 August that its results for the 12 months ended 28 February were being delayed to 30 August due to “additional time required to complete the company's audit”.

At the time it said it was “not aware of any material issues” raised by the auditors during the process.

On Thursday, it said its auditors had subsequently raised certain accounting issues with management regarding the audit, which “could have a material impact on the results” for the 2022 financial year that Revolution had previously communicated.

“In the event that material adjustments are required, the group profitability for 2022 could be materially reduced across a number of potential adjustments including stock and bad debt provisioning and revenue recognition,” the board explained in its statement.

“Once these issues have been fully resolved and agreed between the auditors and management a further announcement will be made.”

Revolution said the potential changes to the results would not impact its previously-announced net debt position of £21.2m as at 31 July, as it reiterated that its £40m revolving credit facility provided “sufficient liquidity” for the future.

“Management also confirms that guidance for the year ending 28 February 2023, as set out in the announcement on 2 August, remains unchanged.

“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.

“The company will keep shareholders updated on this process and any revisions to the audit timeline.”

At 1316 BST, shares in Revolution Beauty Group were down 50.44% at 8.4p.

Reporting by Josh White at Sharecast.com.