Jan 13, 2023
An independent investigation into Revolution Beauty Group’s accounts found several concerns, including over certain historical sales, inventory provisioning and personal loans made by a former CEO, the company said on Friday.
The British company’s former chief executive Adam Minto stepped down in November amid the accounting probe.
Among several concerns flagged, the investigation found issues with the firm’s acquisition of Medichem in October 2021 for £26 million ($31.73 million), payment of which only £7 million was made with £19 million still overdue, Revolution said in a statement.
It said the auditor, BDO, also raised concerns about personal loans made by Minto and Tom Allsworth, the founder of Medichem, which supplies haircare and skincare products, to an employee and senior directors of the group as well as some distributors.
The investigation also flagged loans and other investments of about £1 million to one of its distributors, adding that none of these loans had been disclosed and it “required investigation”.
Minto and Allsworth could not immediately be reached for comment.
Shares of the London-listed company, which makes cosmetics and personal care products, were suspended from trading in September after it failed to publish its annual accounts.
The company said on Friday it expected adjustments to its full-year 2022 results, specifically relating to inventory provisioning and revenue.
It said BDO also found there were issues with sales made in February 2022 to Revolution’s three key distributors – to whom loans were made by Minto and Allsworth – stating that Revolution Beauty had placed substantially larger than normal orders.
Sales to two of its distributors in February, the last month of the financial year, comprised around 70% of all its annual orders from them while 56% of annual sales to the third distributor were also recorded in the same month.
These sales, amounting to about £9 million, will not be recognised in Revolution Beauty’s annual results which are due to be published after the audit.
Allsworth, who still holds a board position, is to step down before publication of the results, the company said.
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