Revolution Beauty’s co-founder has stepped down as the troubled online retailer unveiled results ‘significantly below’ forecasts after an auditing probe found it had cooked the books.
Tom Allsworth, who was found to have made undisclosed loans, has resigned with immediate effect from his position as non-executive chairman and been replaced by the company’s senior non-executive director, Derek Zissman.
The board change was announced alongside the company’s results for the year to the end of February 2022, which were severely delayed after auditor BDO flagged ‘serious concerns’ with its accounts.
Revolution Beauty overstated profit by around £23m and revenues by £9.6m, its results show
The results show Revolution Beauty overstated profit by around £23million and revenues by £9.6million.
The group, whose shares remain suspended, made an adjusted loss before ‘nasties’ (Ebitda) of around £800,000, instead of the £22million profit it forecast before the account irregularities were unveiled.
Revenues rose by 17 per cent to £184.6million, though they’re below the £194milion previously reported by the group.
Zissman told shareholders: ‘Whilst these results are significantly below that forecast by the previous management team to the market, they nevertheless reflect a robust business with a strong brand, loyal following, and significant potential in terms of both sales and profitability.’
He now expects the company to return to ‘normalised trading’ and were making ‘significant’ progress to resolve the issues raised in the investigation.
‘We continue to take action to ensure we have the right processes and governance in place across our business,’ he added.
The probe launched in September, which is now closed, had identified ‘a number of serious issues’ with the running of the business under previous management.
These include loans from former chief executive Adam Minto and Tom Allsworth, founder of Medichem – which was acquired by Revolution Beauty in 2021 – to an employee and some distributors.
None of these loans, worth around £1million in total, had been disclosed to the board.
Chief executive, Bob Holt, said: ‘Integrity and honesty in every aspect of our business is paramount.
‘This has been the focus of the new leadership team as we reset internal controls and processes to ensure that we are in a position to achieve consistent operational excellence at a global scale, and in line with the standards of a UK plc.’
Revolution Beauty said it would publish a current trading update alongside its interim results within the next couple of weeks and its 2023 results by the end of August.
It will also update investors about its shares, which have been suspended since September last year.