Revolution Beauty Regulatory News (REVB)

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

REVOLUTION BEAUTY GROUP PLC

("Revolution Beauty", the "Group" or the "Company")

Acquisition of Medichem Manufacturing Ltd

Provides Revolution Beauty with its own, fully-owned and vertically integrated manufacturing businessBoard expects the acquisition to be significantly earnings enhancing in FY23

Revolution Beauty Group plc (AIM: REVB), the mass beauty innovator, is pleased to announce Revolution Beauty Holdings Limited, a direct subsidiary of the Company, has acquired the entire issued share capital of Medichem Manufacturing Ltd ("Medichem") for total consideration of £23.0 million subject to a net assets adjustment by reference to completion accounts (the "Acquisition").

Medichem is a long-standing supplier of haircare and skincare products to Revolution Beauty, manufacturing all products from its UK facility. Medichem's end-to-end operations include an R&D laboratory, bulk manufacturing, warehousing and distribution, and employs more than 170 people. During its last financial year to 31 December 2020, Medichem reported audited revenues of £13.4 million and profit before tax of £1.6 million. Given the strong year to date growth in Revolution Beauty's haircare and skincare categories, Medichem has continued to perform well in 2021. Medichem has a limited number of customers other than Revolution Beauty (which has contributed in excess of 90% of Medichem's revenue in the calendar year to date).

The option to acquire Medichem was disclosed at the time IPO and today's announcement demonstrates Revolution Beauty's delivery against its strategy set out at the time of listing. It is Revolution Beauty's first acquisition and provides the Group with its own, fully-owned and vertically integrated manufacturing business. It will enable the Group to enhance margins, increase control of its supply chain and enhance productivity. The Company expects the Acquisition will be significantly earnings enhancing for the financial year ending 28 February 2023.

Transaction overview and financial impact

As disclosed in the Company's Admission Document dated 13 July 2021, Revolution Beauty entered into a call option arrangement whereby it obtained the right to acquire the entire issued share capital of Medichem for £23.0 million post completion of an independent due diligence and valuation process managed by the non-executive directors of the Group.

The Acquisition constitutes a related party transaction under the AIM Rules as Tom Allsworth, Executive Chairman of Revolution Beauty, is the sole shareholder of Medichem. In addition Medichem has four leases for properties with Walbrook Investments Limited, a company controlled by Tom Allsworth, with an aggregate annual rental of c.£0.2 million (the "Leases").

The consideration due of £23.0 million will be payable in instalments, with £7.0 million payable in cash on completion from the Group's current cash resources, and the balance payable in equal annual £4.0 million instalments over four years (together with an amount equivalent to interest accrued thereon at the rate of 2.5% per annum). The cash consideration payable will be subject to a post-completion net assets adjustment (up to an additional amount capped at £4.5 million) by reference to completion accounts.

The Board of Revolution Beauty expect Medichem will contribute c.£3.0 million of incremental pre-tax profits to the Group for the financial year ending 28 February 2023.

As a result of the due diligence undertaken on the Acquisition and the associated advice provided by the Company's auditors, it has been determined that under IFRS accounting standards, Medichem will be consolidated into the Group's results as at the date the option agreement was entered into on 13 July 2021, as opposed to being consolidated from the date of the Acquisition. The Company estimates that such consolidation will make a relatively modest contribution to profitability in the Group's interim results for the period ended 31 August 2021 as sales of Medichem produced products in this period were largely of stock acquired at the prevailing rates prior to consolidation. Similarly, contribution to revenue is expected to be modest as the majority of Medichem's revenues are from Revolution Beauty and will be eliminated on consolidation.

Related Party Transactions

The Directors of Revolution Beauty, with the exception of Tom Allsworth, having consulted with Zeus Capital (the Company's Nominated Adviser), consider that the terms of the Acquisition and the Leases are fair and reasonable insofar as its shareholders are concerned.

Adam Minto, CEO and Joint Founder of Revolution Beauty Group plc, said: "The intention to acquire Medichem was disclosed at the time of our IPO, and I am pleased to announce today that we are delivering against our strategy and exercising our option to acquire this highly-complementary manufacturing business. By vertically integrating Revolution Beauty in this way and taking manufacturing in-house for the first time, we will have even more control of our supply chain, allowing us to improve productivity, our cost base and margins, while being earnings accretive."

For further information:

Media enquiries:

- Ends -