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")

INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 31 AUGUST 2021

Strong progress successfully executing against the strategy outlined at IPO

Further profitable growth within large and attractive Beauty market

Confident as we look ahead into the second half

Announcing new US retail expansion with launch into 2,800 stores in Q4

Revolution Beauty Group plc (AIM: REVB), the multi-channel mass beauty innovator, today announces its results for the six months ended 31 August 2021 ("H1" or the "Period")

Financial Highlights

-     Group revenue up c.39% to £78.6m, providing a platform for growth ahead of seasonal peak trading

-     Performance driven by international Store Group growth across a number of categories; North America Store Groups +102%; UK Store Groups +78% and ROW Store Groups +56% as stores rebounded from Covid-19 related trading restrictions

-     Strong performance across Revolution Beauty brands, including Makeup Revolution up c.53% versus the first half of last year

-     Gross Margin increased to 47.9%, ahead of 47.7% in the same period last year primarily driven by underlying product margins and customer mix. This is despite the increased costs pressures on freight which have successfully been offset in H1. The Group is working collaboratively with suppliers to continue to mitigate them in H2

-     Against very strong prior year comparatives, as a result of a significant shift to Digital during strict Covid-19 lockdowns, Digital sales were up 53% against two years ago

-     Adjusted EBITDA increased by c.39%, compared with the first half of last year, to £5.1m

-     Net cash of £17.6m post restructuring of the Group's balance sheet on its IPO on AIM in July 2021

Adjusted EBITDA and Adjusted EBIT are alternative performance measures used by management to gauge the underlying performance of the business, adjusting for certain non-cash, non-recurring and normalising items that are not considered to form part of underlying performance (note 7).

*inclusive of exceptional IPO costs and interest on debt, which was repaid on IPO

Operational Highlights

-     Significant progress in creating a globally balanced business; building international presence online and in-store

-     Acceleration of growth and brand presence in North America; now the Group's largest geography in stores, representing 26% of sales, with further opportunities to come

-     New partnerships with blue chip retailers underline appeal of own Makeup Revolution brand; with agreements signed to launch into 1,800 US Target stores in the first quarter and 350 UK Boots stores in the fourth quarter

-     Zalando now within our top 3 Digital Partners demonstrating an excellent consumer fit for the Revolution Beauty brand and its categories

-     Strong performance in the Group's own DTC; revolutionbeauty.com customers increased by over 200,000 in the Period and is performing particularly well in the US, Australia and New Zealand 

-     Further brand innovation through launch of Revolution Haircare Plex in February 2021 with retail roll out across 2022. Well-advanced in preparing to launch Revolution Man next year

-     A powerful and cost-effective marketing strategy; we are one of the fastest growing brands on TikTok and now have a global social media following of over 6.8m

-     Increased service levels through improved operational execution and building stock holdings to mitigate supply chain challenges

Post-Period End Highlights and outlook

-     Acquisition of skincare producer Medichem Manufacturing Limited (now named Revolution Beauty Labs Ltd) for c.£27m (subject to completion accounts), to vertically integrate the Group and improve productivity, cost base and margins over the long-term

-     The Group has seen an acceleration in sales as we have progressed in the third quarter, which is the start of the beauty industry's seasonal peak. This has been driven by a strong Halloween and a promising start to the Christmas trading period with a good uptake of the Revolution Beauty advent calendars and festive products. We believe this acceleration will now continue into the fourth quarter

-     We are pleased to announce today the launch of Makeup Revolution with a major new US customer commencing with a roll out into 2,800 of its mass-market US retail stores in the fourth quarter. We also plan the launch of Revolution Haircare into 870 Target stores in the US early next year

-     In the UK, further category expansion and enhanced in-store distribution is also due in Q4, with our planned roll-out of Makeup Revolution across 350 Boots stores

-     Our digital channels have also returned to growth with acceleration in the third quarter. Further digital expansion will continue in the fourth quarter with the launch of Revolution Beauty products by Next, Fashion Nova, River Island and Forever 21

-     New category launches planned throughout the second half of the year, including Fragrance and Derma Skin

-     Given the sales acceleration in the third quarter and the significant new store roll outs agreed in the US and UK for the fourth quarter, we remain confident of meeting market expectations for the full year, though remain mindful of ongoing global volatility caused by the global pandemic and supply chain disruptions.  We have been actively managing cost pressures related to global supply chain. Through careful forward planning, strong inventory management and working collaboratively with our suppliers, we have successfully offset these cost pressures in H1. We continue to take action to mitigate costs into H2

Adam Minto, Chief Executive, said:

"This is a momentous year for Revolution Beauty. We have continued to focus on accelerating the delivery of our strategy to expand distribution of Revolution Beauty brands around the world. We doubled sales in the US, grew our global community to almost 7 million, and floated on the London Stock Exchange.

In the first half of the year, we grew sales by c.39%, with adjusted EBITDA also up c.39%. Particularly pleasing was the operational progress we made to match our sales growth. We expanded our global distribution launching our Makeup Revolution Brand into 1,800 US Target stores in H1, increased our direct-to-consumer customer figure by over 200,000 and signed agreements to launch into 2,800 US Stores from Q4, and 350 UK Boots stores from February 2022.

Our digital first strategy underpins our success. Our ability to anticipate trends through our social and influencer-led marketing approach, coupled with our speed to market, ensures we are continually innovating ahead of the market.  This approach means our DTC digital customer base is growing strongly, while our in-store distribution network grows in our key markets of the US and UK, as more retailers come to us for our market-leading innovations.

As anticipated at our trading update in October, we continued the strong momentum in the first half into the seasonal peak of beauty in the third quarter, with sales growth across online and in-store, driven by Halloween and the start of Christmas trading. We remain confident of meeting market expectations for the full year, though we continue to be mindful of ongoing volatility and disruption caused by the pandemic. The medium and long-term growth drivers and opportunity in mass beauty remain strong, and we are confident in our strategy, the resilience of our business model and our differentiated products as Revolution Beauty continues to win new customers around the world."

Analysts and Investors

There will be a webinar, followed by a Q&A, for equity analysts at 09:30am GMT today, hosted by CEO Adam Minto and CFO Andrew Clark. Those wishing to join should follow the link below to register or contact investor.relations@revolutionbeautyplc.com.

https://webcasting.brrmedia.co.uk/broadcast/617a5c15df7b150b81e95858

Those who would like to participate in the Q&A can submit questions via the webcast or, alternatively, please dial in to the conference call facility via the number below. When prompted, provide the confirmation code or event title.

For further information:

Media enquiries:

About Revolution Beauty

Revolution Beauty is a global mass beauty and personal care business which operates a multi brand, multi category strategy and sells its products both direct-to-consumer (DTC) via its e-commerce operations, and in physical and digital retailers through wholesale relationships.

Today, the Group has a retail footprint of c.15,000 doors across leading retail chains in the UK, USA and other international markets. Revolution Beauty has access to a wide customer base, predominantly aged between 16 and 35, through its digital partners and own DTC platform. It has established and invested to streamline its supply chain with its own manufacturing facility in the UK, and third-party warehousing facilities across the UK, USA and Australia. The Group has offices in the UK, USA, New Zealand and Germany. Revolution Beauty currently employs 411 people.

The total mass beauty market was worth $219bn in 2019 and is expected to grow to $274bn over the next 3 years, driven by a new marketing era dominated by Social Media and influencers. Revolution Beauty has been a leading innovator building a significant global following across social channels, enabling it to spot trends and respond quickly to consumer demand.

Revolution Beauty strategy

Revolution Beauty Group is disrupting the traditional beauty market through products that are more accessible to more people. Through its digital-first strategy, Revolution Beauty brings trend-led products to market faster than competitors. We invest in innovative marketing strategies designed to appeal to a wider audience, and offer products combining quality, inclusivity, innovation and affordability.

Further opportunity presents itself through;

·      Brand and category expansion

·      Significant digital expansion

·      Selective store expansion in both existing and new markets

·      Innovative, category leading marketing

·      Complementary global partnerships

CEO Review

This was a strong first half for the Group with revenue growth of c.39%, despite pandemic restrictions continuing to impact a number of our markets.

This performance is testament to our strategy and the strength of the Group's multichannel and diversified business model - both in-store, online, and across international territories. These multiple and diversified routes to market proved particularly attractive during a period of consumer volatility.

As a Group, our supply chain infrastructure was in place to respond at speed and scale to changing consumer behaviour. We successfully fulfilled heightened online demand during the early part of the year, adding over 200,000 new DTC customers to the Revolution Beauty community.

Meanwhile, as restrictions gradually fell away and physical stores reopened, our strong and growing relationships with international blue chip retail partners ensured our brands were in the places that mattered as consumers returned to the high street. As socialising returned, so we experienced in-store growth across all territories, including 78% first half revenue growth in the UK, and 102% in North America, which now represents our largest geography by sales for stores.

As sales have increased, we have successfully grown adjusted EBITDA by c.39% to £5.1m. Our strong global supplier relationships, forward planning and robust supply chains enabled us to largely mitigate the widely trailed rising inflation and freight costs impacting the whole industry.

Our acquisition of haircare and skincare producer Medichem in October 2021, vertically integrates our business and means we will have even more control of our supply chain, allowing us to improve productivity, our cost base and margins in the years ahead.

Overall, this strong first half performance, achieved during the beauty industry's seasonably quieter period of the year, ensures we have a platform in place from which to accelerate growth in H2 and into peak trading.

Category strength within a large and growing market

Revolution Beauty operates within a large, attractive and growing global beauty market. The market has proved resilient through the cycle and has already seen rapid recovery following the peak of the pandemic. It is forecast that the mass beauty market will grow beyond its pre-pandemic size, from $219bn in 2019 to $274bn in 2024.

In order to capitalise on this growth and continue to maintain its position at the forefront of innovation in the category, Revolution Beauty is focused on rapidly developing and launching high quality beauty products at accessible prices, while promoting brand awareness via social influencer marketing.

It is this approach which helped us achieve strong growth across all categories in the first half of the year.

Makeup 

While the global Makeup market continued to be impacted by ongoing Covid-19 related restrictions, Revolution Beauty reported Group Makeup sales up 35% for H1. This performance was driven by regional expansion and some key new product launches and licencing partnerships, including into mascara via our new product - 5D Lash.

This product has seen us launch confidently into a mascara market which represents 20% of the total mass cosmetics USA market, and which is key for encouraging brand loyalty and repeat purchases. As such we have been encouraged by initial consumer reaction to 5D Lash.

Skincare

In Skincare, we had a strong H1. The Group saw total sales growth of 34%, driven through our core serums innovation continuing to resonate with our consumers. We plan to relaunch our Tanning Range into our retail footprint in the UK. The launch of our market leading Ceramides 5 range is aimed at bringing credible and accessible skincare into a specialist market.

Haircare

Our Haircare business was relaunched this year with the creation of our Revolution Plex Haircare Range. Revolution Plex was one of our top products by sales on revolutionbeauty.com for the first half of the year. We are seeing exciting repeat purchases in this loyal category and will continue to roll out Plex to our retail partners around the world throughout the year.

A balanced business model

Revolution Beauty benefits from having a multichannel business model underpinned by a digital-first strategy. Our model enables us to respond to trends quickly, test new products online and optimise distribution across both retail and online. This model has proven particularly effective over the past 18 months, enabling us to respond quickly to changing consumer behaviour during the pandemic, while anticipating trends.

Stores

During lockdowns around the world, we took the opportunity to strengthen and build partnerships with some of the world's leading beauty retailers. This further strengthened our physical distribution network and ensured we were well-placed to grow sales and win over new customers as physical retail began to reopen.

This approach underpinned a particularly strong first half store performance.

North America

In North America, Revolution Beauty grew sales by over 100%, with the US on track to become our biggest contributing territory in the Group. During the half, Revolution Beauty launched into 1,800 Target stores throughout the US via its Makeup Revolution brand.

Encouragingly, we are already a top performing brand in the Target makeup category, and we remain confident in building out an influential multi-brand and multi-category relationship with the retailer. In addition, the Group has also seen strong sales growth through beauty chain Ulta, demonstrating the opportunity for Revolution Brands & Categories to expand into previously single retailer territories.

We are pleased to announce today that we have signed agreements to launch our Makeup Revolution range into 2,800 mass-market US retail stores and our Revolution Haircare into 870 Target stores in Q4.

UK

Similarly, in our well-established UK market, we saw in-store sales growth of 78% as consumers returned to the high street and responded to a strengthened product offer in Superdrug and Boots stores.

In addition, we signed agreements for our new Revolution Tanning range to enter into over 1,000 UK retail locations, and more recently for the Makeup Revolution brand to launch into the top 350 Boots stores in Q4.

Rest of World

As expected, ROW growth was slower than the UK and USA markets as pandemic restrictions lasted longer throughout the half in international markets such as Australia, New Zealand and Turkey. That said, stores in India and Russia performed well during the first half versus last year.

Digital

Against very strong comparators in the first half of last year, Digital sales were down 10% in the first half of this year. Digital sales were up by 53.5% when compared with the same period two years ago. This performance was in line with expectations, as an increased number of consumers switched their online purchases of Revolution Beauty products to in-store.

Nonetheless, the Group continued to make good progress expanding its digital offer during the Period with the addition of over 200,000 new customers joining our global revolutionbeauty.com platform.

We formed a partnership with THG Ingenuity in late 2020 to enable the Group to accelerate its DTC localisation plans - including the launch of its site in the USA in January 2021 and in Australia/New Zealand in March 2021. We are pleased to have seen strong results in the half, with 96% growth versus the same period last year.

Our Digital Partnership strategy also continues to thrive with seven new global digital partners joining the revolution in the first half of the year. Great progress has been made in the European digital space with Zalando where we are competing within the top five brands for them in beauty, and some strong performance across our core product offering on Amazon Europe.

Social media marketing strength

As a Group, we have successfully leveraged our existing social media channels to achieve a global reach of over 6.8 million social media users.

Our Influencer Marketing plan to fully support the TikTok phenomenon has proved successful - we are now the one of the fastest growing beauty brands on the platform globally and had high levels of user interaction via our recent and successful TikTok Competition 'Creator Revolution'.

The Creator Revolution competition saw us invite the global TikTok Community to create a specific look using Makeup Revolution products, accompanied by our Revolution Song. The results were hugely successful - with a combined 5.4bn views on the videos.

Influencer's value continues to grow for us as a brand - our Earned Media Value grew by 38% in H1, Community by 66% and Engagement by 42%, in October we were ranked the 2^nd biggest beauty brand for EMV in UK and 12^th for US.

Acquisition of Medichem

We announced the acquisition of skincare and haircare manufacturer, Medichem, on 27 October 2021 for c.£27m (subject to completion accounts). Now renamed Revolution Labs, the acquisition enables Revolution Beauty to manufacture some of its skincare and haircare products in-house, thereby streamlining our supply chain, reducing costs and improving margins over the long-term. The vertical integration of our business also enables the Group to increase our speed to market on new product development and increase our rate of innovation.

Sustainability

Following the launch of Planet Revolution in 2021, we have continued to deliver against our commitment to offer customers a range of affordable products with conscious packaging and clean formulations.

Adam Minto, our CEO, supported by Edward Rumsey, a non-executive director, lead the Group's ESG strategy and we made further progress against our ESG agenda. During the Period we strengthened our environmental policy through the introduction of a Reef Safe Policy - to restrict ingredients that fail to conform to the Palau Responsible Tourism Education Pact of 2018.

In addition, we created a policy for all our suppliers to use FSC or PEFC - certified paper packaging, while also publishing a list of all Revolution Beauty banned and restricted materials.

These actions build upon our existing sustainability standards, including being cruelty-free and vegan, having ethical manufacturing supplier standards to SA8000, and ensuring every product is independently tested and complies with all global cosmetics regulations.

Current trading and outlook

We have now entered the beauty industry's seasonal peak trading period and in Q3 have seen an acceleration in year-on-year growth, particularly in our digital channels driven by Halloween and the start of Christmas trading. 

In Q4, we have plans for further category, product and brand expansion and enhanced in-store distribution. This is evidenced with our planned roll-out of Makeup Revolution across 350 Boots stores in the UK, and a recently signed agreement with a new major national US retailer to initially launch across 2,800 stores, with opportunity for further store roll outs with this customer. We also expect to expand our Revolution Plex haircare range into 870 Target stores across the US. These expansions and other new exciting opportunities will further enhance our visibility in-store and drive traffic to revolutionbeauty.com and provide an initial sales boost as our store portfolios are stocked.

We remain confident of meeting market expectations for the full year, though we continue to be mindful of ongoing volatility and disruption caused by the pandemic. We have been actively managing cost pressures related to global supply chain disruptions through careful forward planning, strong inventory management and working collaboratively with our suppliers. We continue to take action to mitigate costs in H2.

As we said at IPO, the long-term growth opportunity in mass beauty remains vast with more consumers switching to online, while the market as a whole continues to grow rapidly. Revolution Beauty is well positioned to take advantage of these trends through its innovative influencer led marketing strategies and rapid innovation delivering quality at an accessible price point.

Financial Review

The Group has continued to make progress against its strategic objectives set out at IPO, whilst continuing to navigate ongoing challenges and disruption caused by Covid-19.

Revenue was £78.6m, up c.39% on H1 21. This breaks down as North American Store Groups £20.3m, up 102%, UK Store Groups £15.8m, up 78%, Rest of the World Store Groups £20.7m, up 56%. Digital amounted to £21.8m, down 10% against very strong prior year comparatives as a result of a significant shift to digital during strict Covid-19 lockdowns.

The 102% growth in North America reflects the opening in Target across Q4 21 and Q1 22, demonstrating that we doubled our North American business year on year. Performance has benefited from lockdown restrictions being eased earlier in the US compared to other parts of the world. In UK Store Groups, revenue was up 78% as stores rebounded following the easing of lockdown on 19 July 2021.

Outside of North America and the UK, Store Group sales grew by 56%, which is still encouraging given that lockdown restrictions persisted in many of our major markets through H1and into H2, particularly in Australasia.

Digital sales at £21.8m are 10% down year-on-year, which is to be expected given the high level of digital sales last year when stores across the world were largely closed. During H1 21, digital sales represented 28% of our total business.

Gross Margin was 47.9%, up on last year of 47.7%. This is encouraging not only because the first half of 2020 benefitted from an elevated digital mix, which delivers accretive gross margins, but also because the first half of this year has been impacted by the well-trailed, and extraordinary freight charges from the Far East.

Adjusted EBTIDA is £5.1m, up c.39% vs. the same period last year. Growth in Adjusted EBITDA is in line with sales, with investment in supply chain and commissions on licenced products offsetting leverage on overheads and other fixed costs.

Reported loss after tax of £15.2m, reflects exceptional IPO costs of £9.7m, share based payments of £1.5m, and interest on the pre-IPO capital structure of £4.0m.

On 13^th July 2021 the Group was granted a call option to acquire 100% of the issued share capital of Medichem Manufacturing Limited ("Medichem"), a long-standing supplier of haircare and skincare products to the Group. From this date, the Group obtained control of Medichem and so its results are consolidated from this date, albeit there is an immaterial impact on the Group Income Statement for the half. A liability for the purchase consideration and post-completion net assets adjustment has been reflected in the balance sheet as at 31 August 2021.

Inventory has increased at the half as we deliberately increased stock holdings to mitigate global supply chain challenges and ensure we could meet our supply obligations and increasing demand from consumer and retailers globally. This level of inventory will start to decrease as we move into the second half.

We ended the Period with net cash of £17.6m, reflecting the proceeds raised on IPO on 19 July 2021. Furthermore, in October, we negotiated a new £40.0m revolving credit facility, giving additional liquidity headroom (note 2).

CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF-YEAR ENDED 31 AUGUST 2021

The total comprehensive loss for the period is entirely attributable to the owners of the parent company.

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

1.       General information

Revolution Beauty Group Plc ("the Company") is a company limited by shares and is registered and incorporated in England and Wales. The registered office is 2-3 Sheet Glass Road, Cullet Drive, Queenborough, Kent, ME11 5JS.

The Group ("the Group") consists of Revolution Beauty Group Plc and all of its subsidiaries.

2.       Significant accounting policies

These consolidated condensed financial statements for the interim half-year reporting period ended 31 August 2021 have been prepared in accordance with IAS 34 'Interim Financial Reporting'.

These interim financial statements do not constitute full financial statements and do not include all the notes of the type normally included in annual financial statements.

The statutory accounts for the 14 month period ended 28 February 2021 were prepared in accordance with FRS 102 and have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The Group has applied the same accounting policies and methods of computation in its interim consolidated financial statements as in the historical financial information included within its AIM Admission document, which were prepared in accordance with International Accounting Standards ("IAS") in conformity with the requirements of the Companies Act 2006. A description of the nature and effect of the change in accounting policies is provided within the historical financial information included within the Group's AIM Admission Document. The figures presented in these interim financial statements for the 14 month period ended 28 February 2021 are as per those reported within the Group's AIM Admission Document. Accordingly, these financial statements are to be read in conjunction with the financial information included within the Group's AIM Admission Document. The Group will also prepare its first full financial statements under IFRS for the year ended 28 February 2022 in line with those accounting policies.

On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. This change constitutes a change in accounting framework from that applied in the AIM Admission Document. However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change in framework.

The opinion provided on the historical financial information included within the Group's AIM Admission Document was based on work conducted in accordance with Standards for Investment Reporting issued by the Financial Reporting Council and not in accordance with statutory auditing standards. Therefore, the figures presented in these interim financial statements for the 14 month period ended 28 February 2021 are presented as unaudited.

Tax charged within the 6 months ended 31 August 2021 has been calculated by applying the effective rate of tax which is expected to apply to the Group for the year ending 28 February 2022 as required by IAS 34 'Interim Financial Reporting'.

The financial statements have been prepared on the historical cost basis. The financial statements are prepared in Sterling, which is the functional currency and presentational currency of the parent Company and primary operating subsidiary. Monetary amounts in these financial statements are rounded to the nearest £1,000.

Going concern

After reviewing the Group's forecasts and projections, taking into account the proceeds of the Placing and the new £40m revolving credit facility agreed in October (note 9), the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group has therefore adopted the going concern basis in preparing these interim financial statements.

3.       Segmental reporting

IFRS 8 Operating Segments requires that operating segments be identified on the basis of internal reporting and decision-making. The Group identifies operating segments based on internal management reporting that is regularly reported to and reviewed by the board of directors, which is identified as the chief operating decision maker. Management information is reported as one operating segment, being revenue from sales of products.

4.       Revenue

An analysis of the Group's revenue is as follows:

5.       IPO related costs

IPO related costs of in the 6 months ended 31 August 2021 relate to significant one-off costs, which have not been deducted from equity, associated with the Group's admission onto AIM in July 2021. The costs comprise advisors' fees, stock exchange listing fees and other IPO costs.

6.       Earnings per share      

The Group reports basic and diluted earnings per common share. Basic earnings per share is calculated by dividing the profit attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is determined by adjusting the profit attributable to common shareholders by the weighted average number of common shares outstanding, taking into account the effects of all potential dilutive common shares, including options.

The weighted average number of ordinary shares outstanding during the periods ended 28 February 2021 and 31 August 2020 has been adjusted for events, being a subdivision of shares, that have changed the number of ordinary shares outstanding without a corresponding change in resources in accordance with IAS 33.

Pursuant to IAS 33, options whose exercise price is higher than the value of the Company's security were not taken into account in determining the effect of dilutive instruments. The calculation of diluted earnings per share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an antidilutive effect on earnings per share.

7.       Adjusted EBITDA         

Adjusted EBITDA is considered to be an alternative performance measure by management to gauge the underlying performance of the business, adjusting for certain non-cash, non-recurring and normalising items that are not considered to form part of the underlying performance due to their nature. The release of prepaid retailer stand contributions related to a one-off amount paid to a retailer for the fixtures within their stores. The normalised January marketing costs are annual costs which were reflected twice in the period to 28 February 2021 due to the change in year end, and therefore a year's charge has been excluded to normalise earnings. The non-recurring stock write downs includes costs associated with discontinued brands, the sale of returned inventory at below cost prior to implementation of a new returns process and stock used in a one-time campaign in the US. The remaining items are in line with their description above and are all either one-off, non-recurring or non-cash items.

8.       Business combinations

On 13 July 2021, the Group was granted a call option to acquire 100 per cent of the issued share capital of Medichem Manufacturing Ltd (now named Revolution Beauty Labs Ltd) ("Medichem"), a company incorporated in England and Wales. Medichem's principal activity is that of invention, development and production of personal healthcare and beauty products.

The equity of Medichem is not owned by the Group, however to comply with IFRS 10, the Group is considered to have obtained control of the company via potential voting rights, and therefore the results of Medichem are consolidated from 13 July 2021. There was not considered to be any substantive non-controlling interest following the option agreement being signed and therefore a liability has been recognised for the purchase consideration, which has been aged to reflect the option period expiry on 31 December 2022. After the period end, the Group exercised the call option and the share capital of the Medichem was acquired on 26 October 2021.

Medichem was previously 100% owned and controlled by a director and shareholder of Revolution Beauty Group plc.

At the period end, the business combination had not been completed and therefore the Group has recognised provisional amounts in respect of the business combination. These amounts shall be retrospectively adjusted during the measurement period, which shall not exceed one year from the acquisition date, to reflect new information obtained about facts and circumstances that existed as of the acquisition date. Details of provisional assets and liabilities acquired are set out below:

The book value of contractual amounts receivable is considered to approximate to fair value.

The fair value of the consideration liability would be settled by cash consideration of £6,946,000, deferred consideration of £15,772,000 and contingent consideration of £4,279,000 which has been recognised based on Medichem achieving a certain net asset target.

Medichem contributed revenues of £259,000 and losses after tax of £367,000 to the Group for the period. If the acquisition occurred on 1 March 2021, the full period contributions

9.       Borrowings

The Group has access to a receivable financing facility of £11,000,000 of which £4,183,000 was drawn down at the period end (28 February 2021: £5,849,000). Interest accrues daily at a rate of 2% plus base rate. A non-utilisation fee is charged on any undrawn amount at a rate of 0.7%.

Post half-year end, the receivable financing facility was settled and a new revolving credit facility of £40,000,000 has been agreed with HSBC and Natwest.

During the 6 month period, all other borrowings were repaid in full.

10.     Share-based payments

The Group granted options to certain employees of the Group over its D Ordinary shares ("share options"). Furthermore, the Group has issued C Ordinary shares and E Ordinary shares to certain Group employees ("incentive shares").

During the 6 month period, 469,613 options were granted under the existing C share scheme. On IPO, this scheme was modified and replaced by a new scheme, and the existing D and E share schemes were cancelled, with a cash payment being made to the holders based on the vested portion.

Subsequent to the IPO, the Group introduced four new equity-settled share-based payment schemes and one new cash-settled scheme. During the 6 month period, 8,464,969 share options with a total fair value of £8,848,000 were granted under these schemes. The vesting periods range from 3 to 60 months. One equity-settled scheme has market-based vesting conditions for which the fair value has been calculated using a Monte Carlo valuation model. The other equity-settled schemes have been valued using the observable share price at the date of grant. The cash-settled scheme has been valued using the observable share price at the period end.

The expense recognised in the period for the share-based payment transactions was £1,470,000 (6 month period ended 31 August 2020: £310,000, 14 month period ended 28 February 2021: £741,000), of which £992,000 relates to the old and modified schemes in place prior to the IPO.

11.     Share capital  

During the period, 469,613 C Ordinary shares were issued and 11,050 C Ordinary shares, 2,250,000 A1 Deferred shares and 228,000 A2 Deferred shares were bought back and cancelled.

As part of the company's admission to AIM on 13 July 2021, a capital reorganisation occurred, pursuant to which the existing shares were subdivided and redesignated into Ordinary shares and Deferred shares, following which all such Deferred shares were cancelled. On completion of the capital reorganisation, the share capital comprised 240,180,313 Ordinary shares of £0.01 each. A further 69,194,687 Ordinary shares of £0.01 each were issued as part of the Placing on 19 July 2021. On 20 August 2021, the Company issued a further 362,250 Ordinary shares of £0.01 each.

12.     Equity instrument reserve                                                        

During the period, equity instruments issued to the directors totalling £3,150,000 and equity instruments issued to a related party totalling £2,850,000 were settled in cash. Interest of £1,117,000 incurred on these equity instruments during the period has been recognised directly in equity.