Warpaint London plc - Statement of Compliance with the QCA Corporate Governance Code

Warpaint London plc - Statement of Compliance with the QCA Corporate Governance Code

Chairman’s Introduction

I am pleased to present the Corporate Governance Report for the year ended 31 December 2024. The Warpaint directors recognise and prioritise the importance of sound corporate governance in supporting and delivering the strategy of the Company and its subsidiaries (together the “Group”). This involves managing the Group in an efficient manner for the benefit of its shareholders and other stakeholders (principally employees, customers and suppliers), whilst maintaining a corporate culture which is consistent with our values.

The Company has adopted the QCA Corporate Governance Code (“QCA Code”) and is reporting against the QCA Code 2023 (“the 2023 QCA Code”) in respect of the Group’s financial year ended 31 December 2024. This is ahead of the required adoption and reporting dates which would ordinarily be in respect of the Group’s financial year ended 31 December 2025.

The Company’s Corporate Governance Statement is available to view on the Company’s website at www.warpaintlondonplc.com.

The board of directors is responsible for the long-term success of the Company and, as such, devises the Group strategy and ensures that it is implemented. The board is responsible for governance and is determined that the Company protects and respects the interests of all stakeholders and in particular is focused upon creating the right environment for its employees. We want a happy work place, and we want our employees to be fully and properly rewarded and to feel that they are an integral part of the Warpaint family. A reward structure is therefore in place, which includes the grant of share options, enabling members of staff to participate in the growth of the Company, as appropriate. We want our suppliers, who are an essential part of the Company to feel part of the Warpaint family and we work closely with them to ensure that this is the case. Above all, the Company wishes to ensure that shareholders obtain a good return on their investment and that the Company is managed for the long-term benefit of all shareholders and other stakeholders. Appropriate corporate governance procedures will ensure that that is the case and reduce the risk of failure. The board also seeks to ensure that there are effective internal controls, risk is properly managed and that the Group strategy is implemented.

Board Composition

It has been a priority to bring more diversity and greater independent non-executive experience and balance to the board of directors. As previously mentioned in the report for 31 December 2023, a comprehensive search was undertaken in Q42023 to identify candidates who would fulfil this objective. Reflecting the high calibre and exceptional quality of the shortlisted candidates and the difficulty of narrowing the field down, Indira Thambiah and Sharon Daly were appointed as non-executive directors and members of the Audit and Risk Committee and Remuneration Committee, on 1 January 2024. Indira was subsequently appointed as Chair of the Remuneration Committee on 3 September 2024, replacing Keith Sadler who stepped down as Chair but remains a member of the Committee.

These appointments are extremely welcome, and I am pleased that the Company has a such a strong, balanced board comprising three independent non-executive directors, myself as Chairman and five executive directors and which is fully diverse.

This report sets out our approach to governance and provides further information on the operation of the board of directors and its committees and how the Group seeks to comply with the ten principles of the QCA Code.

Clive Garston, Chairman

Principle 1 – Establish a strategy and business model which promote long term value for shareholders

Purpose and Mission

Warpaint’s purpose and mission is to provide access to an extensive range of high-quality cosmetics at an affordable price. It is core to the Company’s ethos which resonates throughout the Group and is reflected in its strategy, targets and long-term objectives.

Business Overview

Warpaint sells branded cosmetics under the lead brand names of W7 and Technic. W7 is sold in the UK primarily to major retailers and internationally to local distributors or retail chains. The Technic brand is sold in the UK and continental Europe with a significant focus on the gifting market, principally for high street retailers and supermarkets. In addition, Warpaint supplies cosmetics under its other brand names of Man’stuff, Body Collection and Chit Chat, each targeting a different demographic. In February 2025, Warpaint acquired Brand Architekts Group plc, which has a number of leading health, beauty and personal care brands that complement Warpaint’s existing cosmetics brands, including Skin & Tan, Super Facialist, Dirty Works, Root Perfect, Fish Soho and MR Solutions.

Strategy

The Group’s strategy is reviewed each year by the board, taking account of relevant market data, the Group’s track record, key strengths and experience, along with the Group’s aims. The strategy is targeted by year and measured monitored and reviewed as part of the board’s on-going business throughout the year.

The strategic plan, which comprises six key pillars, has been updated for 2025 forming the basis of the Group’s development through to 2027. It is designed to drive shareholder value and contains defined targets for sales, EBITDA, earnings per share and cash generation, with a particular emphasis on driving incremental EBITDA growth.

Further details of the Group’s strategy are set out in the strategy section of the Chief Executive’s statement in the Group’s Annual Reports and Accounts for the year ended 31 December 2024 which is available to download here.

Principle 2 – Promote a corporate culture that is based on ethical values and behaviours

The board maintains a corporate culture consistent with the Group’s strategic objectives which aims to promote an ethical and responsible business. This is monitored by the Chief Executive Officer who appraises the board of any issues arising.

During 2024 a board meeting was held at Badgequo’s offices in Silsden, Yorkshire. This allowed the board to meet and engage fully with other senior management and key staff at the Badgequo subsidiary headquarters to both convey and receive important messaging about the Company, its business and culture directly from these key staff members. The board is planning a similar exercise at Warpaint’s headquarters at Iver in 2025.

The board is equally committed to maintaining appropriate standards for all the Company’s business activities and ensuring that these standards are set out in written policies and procedures to support these standards. These include policies on Anti-Bribery, Whistleblowing and Modern Slavery details of which are included in the ESG report.

See the ESG and Stakeholder Engagement sections of the Corporate Governance Report for further information on the Group’s approach to and activities relating to its environmental responsibilities, key stakeholders and corporate culture.

Principle 3 – Seek to understand and meet shareholder needs and expectations

The Company remains committed to maintaining good communications and constructive dialogue with both its retail and institutional investors. The interests of shareholders are considered paramount to the decision-making process and strategic direction of the Group and good communication allows the Company to convey its strategy, business model and performance to its investors and, to understand and respond to the needs and expectations of shareholders. The board declared an interim dividend of 3.5p per share which was paid on 22 November 2024. In accordance with the Group’s policy to pay appropriate dividends, the board is recommending a final dividend for 2024 of 7.5p per share, making a total dividend for the year of 11.0p per share.

The Chairman is available to engage with shareholders on governance and other matters if requested and the board takes into consideration comments and proxy voting recommendations received on the resolutions and business at the Annual General Meeting each year. The Chief Executive Officer takes part in online conferences and Q and A sessions for retail investors and the Chief Executive Officer, Managing Director and Chief Financial Officer make presentations to institutional shareholders and participate in Investor Roadshows around the time of the announcement of the full-year and half-year results and other conferences throughout the year.

On the Company’s IPO in 2016 Samuel Bazini and Eoin Macleod entered into a Relationship agreement dated 24 November 2016 with the Company and Stockdale Securities Limited, the Company’s NOMAD, as their aggregate holdings were in excess of 50% of the Company’s issued share capital at that time (the “Relationship Agreement”). The Relationship Agreement provided for termination if the shareholdings of each director and his associates went below 20% of the Company’s share capital. The shareholdings of Samuel Bazini and Eoin Macleod (and their associates) at 31 December 2024 were 19.82% so these undertakings and the Relationship Agreement have now fallen away. In 2024 Samuel Bazini and Eoin Macleod reaffirmed their agreement to abide by their undertakings given in the Relationship Agreement.

All individual investor queries should be addressed to the Warpaint company secretary at: investors@warpaintlondonplc.com or to the Company’s retained investor relations adviser, IFC Advisory Limited at: warpaint@investor-focus.co.uk.

The means by which the Company communicates with its retail and institutional shareholders are set out in Principle 10.

Principle 4 – Take into account wider stakeholder interests, including social and environmental responsibilities and their implications for long-term success

The Group has strong regard for the importance of its stakeholders including customers, distributors, suppliers, employees, shareholders, the environment and community in which we live.  

See the ESG and Stakeholder Engagement sections of the Corporate Governance Report and Principle 10 for further information on the Group’s approach to and activities relating to its environmental and social responsibilities, and other key stakeholders and how it garners and responds to feedback from these important stakeholders. The environmental KPIs by which the Company may be measured are set out in the ESG and Directors’ Report sections of the Corporate Governance Report.  

The Group’s workforce is vital to the long-term success of the Company. The Company nurtures its employees and provides an environment and processes which allow for grievances to be raised in confidence via the whistleblowing policy and otherwise.

Principle 5 – Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Company is exposed to a variety of risks that can have financial, operational and regulatory impacts on the Group’s business performance. The board recognises that creating shareholder returns is the reward for taking and accepting risk. The evaluation, identification and effective management of risk are therefore critical to developing and supporting the delivery of the Group’s strategic objectives.

Internal Control and Risk Management

The board is responsible for establishing and maintaining the Group’s system of internal controls and reviewing its effectiveness. The procedures, which include financial, compliance and risk management, are reviewed on an on-going basis. The internal control system can only provide reasonable and not absolute assurance against material misstatement or loss. The board has considered the need for an internal audit function but does not consider it necessary at the present time with the current controls in place. The board considers that the internal controls in place are appropriate for the size, relative simplicity of the business and the risk profile of the Group.  

The assessment and management of risk is primarily the function of the executive officers, most specifically the Chief Executive Officer for strategic and business risk and the Chief Financial Officer for financial risk. The Group maintains a formal risk register which is reviewed periodically and, where appropriate, matters of risk are referred to the board for consideration. The Audit Committee was reconstituted by the board of directors on 3 September 2024 as the Audit and Risk Committee with associated and updated Terms of Reference. An annual assessment of risk matters is undertaken each year by the Audit and Risk Committee.  

The principal risks identified by the board are set out in the Risk Management section of the Strategic Report in the Group’s Annual Reports and Accounts for the year ended 31 December 2024 which is available to download here.

Principle 6 – Establish and maintain the board as a well-functioning, balanced team led by the Chair

Composition, Roles and Responsibilities

The board currently comprises of the Chairman, Clive Garston three non-executive directors, Keith Sadler, Indira Thambiah and Sharon Daly and five executive directors, Sam Bazini, Eoin Macleod, Neil Rodol, Paul Hagon and Sally Craig, who is also the Company Secretary.

Indira Thambiah was appointed Chair of the Remuneration Committee on 3 September 2024 in place of Keith Sadler who remains on the Committee. The Audit and Risk Committee and the Remuneration Committee are entirely comprised of independent non-executive directors.

The board is responsible for the long-term success of the Company. This includes formulating, reviewing and approving the Group’s strategy, budgets, major items of capital expenditure and acquisitions and, reporting to the shareholders.

The board believes that it is fully diverse and is made up of individuals with varied and different backgrounds and experience. The board does not consider that having a senior independent director is presently appropriate, but this will also remain under review. The board considers that its composition is pertinent at this stage of the Company’s evolution, but this will also remain under review. Both Clive Garston and Keith Sadler were appointed as directors on the Company’s IPO in November 2016 and in November 2025 will have been board members for nine years. In January 2025 the board gave consideration as to whether, in these circumstances, they should resign from the board in 2026. However, there was unanimous support from the Chief Executive Officer and the rest of the board that they should be asked to remain, and they are very happy to do so.

No single director is dominant in the decision-making process.

Roles of the Chairman, Chief Executive Officer, Managing Director, Chief Financial Officer and General Counsel & Company Secretary

The Chairman is responsible for running the business of the board and for ensuring appropriate strategic focus and direction. The Chief Executive Officer is primarily responsible for implementing and driving the Group strategy once it has been approved, investor relations and overseeing the management of the Company through the executive team. The Managing Director is responsible for driving sales operations and profitability.

The Chief Financial Officer works closely with the Chief Executive Officer and Managing Director and is responsible for all the financial affairs of the Group. In particular, the oversight of cash flow, the provision of monthly financial information to the board, control of working capital, overseeing the audit and preparation of all Group company statutory accounts and Interim Statements along with the overall financial management of the Group and its processes. The executive officers are responsible for formulation of the Group strategy for submission to the board, the day-to-day management of the Group’s businesses and its overall trading, operational and financial performance in fulfilment of that strategy, as well as plans and budgets to be discussed, considered and approved by the board of directors.

The General Counsel & Company Secretary is responsible for the oversight of legal issues and regulatory compliance along with executive share schemes, investor queries, insurances and policy implementation. In addition, she assists the Chairman and other committee chairs in ensuring all meetings of the board and committees are informed and effective.

Board Operation

The board has adopted a formal schedule of matters reserved solely for its consideration. These include reviewing and approving the Group’s strategy, budgets, major items of capital expenditure and acquisitions, internal controls and reporting to the shareholders.

Board meetings are held in person and online and in 2024 four in person and six online meetings were scheduled. These meetings are supplemented by additional meetings where required for the proper management of the business. For 2025 there are scheduled to be four quarterly meetings and five online meetings that will be supplemented by additional meetings throughout the year as required for the proper oversight and scrutiny of the business and the executives, one of which includes a dedicated focused strategy session.

Board papers are circulated to board and committee members in advance to allow directors adequate time for discussion and consideration.

Dialogue occurs regularly between directors outside of scheduled meetings.

Board Meetings during the year and time committed

The board met 12 times during the financial year ended 31 December 2024 for both scheduled and ad hoc meetings and calls.

In the event that directors are unable to attend a meeting, their comments on papers submitted may be discussed in advance with the Chairman enabling their contribution to be included in the wider board discussion.

Board and Committee Meeting attendance for the year ended 31 December 2024

The following table shows directors’ attendance at scheduled and ad hoc board meetings during the year.

The following directors are each required to commit at least the following number of days per week to their roles: The Chief Executive Officer and Managing Director, five days; the Chief Financial Officer, four days and the General Counsel & Company Secretary, three days (26 hours). Effective 1 May 2025, Sally Craig will be required to commit at least four days per week to her role. Paul Hagon, executive director, and the non-executive directors are required to provide such time as is required to fully and diligently perform their duties. All board members are expected to attend all meetings of the board and the committees on which they sit, wherever possible.

Board Rotation

The Articles of Association of the Company (the “Articles”) require that one-third of the directors must stand for re-election by shareholders annually in rotation and that any new directors appointed during the year must stand for re-election at the Annual General Meeting (“AGM”) immediately following their appointment. There are no directors who have been appointed since the date of the last AGM and, in accordance with the Articles, Samuel Bazini, Neil Rodol and Sally Craig will retire by rotation and stand for re-election at the forthcoming AGM. It is intended that in compliance with the 2023 QCA Code, all directors will retire by rotation and stand for re-election at the 2026 AGM.

Principle 7 – Maintain appropriate governance structures and ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

The Group’s governance structures have been reviewed against the 2023 QCA Code and the board believes them to be in accordance with best practice as adapted to best comply with the Group’s circumstances and stage of development.

The board is responsible for implementing the Group’s strategy and promoting the long-term success of the Company. The executive directors have overall responsibility for managing the Group’s day to day operational, commercial and financial activities supported by senior management. The non-executive directors are responsible for bringing independent and objective judgement to board decisions.

The business reports bi-monthly on its headline performance against its agreed budget, and the board reviews the monthly update on performance and any significant variances are reviewed at each scheduled meeting. The board challenges the executive directors and senior management on performance against budgets, forecasts and key business milestones. Monthly updates on performance are reviewed at each formal board meeting.

At each meeting the board considers directors’ conflicts and potential conflicts of interest (if any). The Company’s Articles provide for the board to authorise any actual or potential conflicts of interest.

The board is confident that its governance structures and processes are appropriate and fit for purpose consistent with its current size and the relative simplicity of the business. The appropriateness of the Group’s governance structures and practices will be reviewed and refined over time to take account of further developments in accepted best practice and the development of the Company.

The matters reserved for the board and the directors’ roles and responsibilities are outlined in Principle 6.

The committees of the board of directors are described below.

Audit and Risk, Remuneration and Insider Committees

The board has established the Audit and Risk Committee, Remuneration Committee and Insider Committee with formally delegated duties and responsibilities and with written terms of reference. The full terms of reference of each committee are available on the Company’s website at www.warpaintlondonplc.com.

The Audit and Risk Committee and the Remuneration Committee each comprises three independent non-executive directors: Keith Sadler (Chair of the Audit and Risk Committee), Indira Thambiah (Chair of the Remuneration Committee since 3 September 2024) and Sharon Daly. The Insider Committee comprises one non-executive director and two executive directors: Clive Garston (Chairman), Sam Bazini and Neil Rodol.

During the financial year ended 31 December 2024, the Audit Committee met four times, the Remuneration Committee four times and the Insider Committee did not meet. From time to time, separate committees are set up by the board to consider specific issues when the need arises.

The board retains a range of financial, commercial and entrepreneurial experience and there is a good balance of skills, independence, diversity and knowledge of both the Company and the sectors in which it operates including cosmetics, retailing, finance, legal, computing, innovation, international trading, e-commerce, marketing and public markets. Non-executive directors are appointed on merit and for their specific areas of expertise and knowledge. This enables them to bring independent judgement on issues of strategy and performance and to debate matters constructively.

The biographies of each of the directors, including the committees on which they serve, and chair and the skills brought to the board, are shown in the section headed Board of Directors.

The board is satisfied that, between the directors, it has an effective and appropriate balance of skills, knowledge, experience and time committed to enable it to deliver the strategy of the Group, it is nevertheless mindful of the need to continually review the needs of the business to ensure that this remains true. Involvement with a variety of other boards allows directors to witness alternative approaches to similar business issues and to benefit from the advice of more than just the Group’s advisers.

From time to time, directors attend seminars and trade events where appropriate to ensure that their knowledge and industry sector contacts remain current and may attend such courses or training, as they feel appropriate, to keep their knowledge up to date.

External and Internal Advice

The board seeks external advice from time to time to enable it to effectively perform its duties including from its lawyers, accountants, nominated adviser and corporate broker, financial PR advisers, remuneration consultants and insurance brokers.

In the latter part of 2024, the board engaged extensively with its advisers and others in connection with offer by the Company to acquire the entire issued share capital of Brand Architekts Group PLC (“Brand Architekts”) which was announced on 5 December 2024. The offer was a cash offer at 48 pence per share, with a share consideration alternative of 0.0916 new Warpaint shares for each Brand Architeckts share. In connection with the acquisition the Company raised gross proceeds of £15 million via a Placing and a Retail Offer of shares at a price of 510p, which was also announced on 5 December 2024.

The Remuneration Committee received advice in 2024 from h2g Remuneration Advisory LLP and Fladgate LLP to assist them in connection with the grant of options.

All directors have access to the advice and services of the General Counsel & Company Secretary, who is responsible for ensuring that board procedures are followed and that the Company complies with applicable rules, regulations and obligations.

Principle 8 – Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

The Group’s performance is reported bi-monthly against headline performance and agreed budgets and reviewed by the board (as a minimum) at each monthly board meeting. The board challenges the executive directors and senior management on performance against budgets, forecasts and key business milestones and have adopted a set of KPI’s against which the performance of the Company and therefore the board, may be measured.

The Company is yet to adopt a formal performance evaluation procedure for the board and directors individually. This will remain under review and the board will consider the implementation of performance evaluations facilitated by external advisers for the board, both individually and as a group, to ensure the efficient and productive operation of the board.

As the business of the Group grows, the expertise required at management level is expanded and developed although there are no prescribed procedures for succession planning at board level. Nevertheless, the board gives due consideration to succession planning.

Due to the size of the Group, issues concerning the nomination of directors have traditionally been dealt with by the board, aided by an ad hoc Nomination Committee if deemed appropriate. An ad hoc Nomination Committee comprising of Clive Garston (Chair), Sam Bazini and Keith Sadler, was constituted most recently in relation to the recruitment of Indira and Sharon on 1 January 2024. Since the year end the board have resolved that a Nomination Committee comprising of these individuals will be formally constituted in 2025. The Nomination Committee will assist with any succession process if deemed appropriate.

Principle 9 – Establish a Remuneration Policy which is supportive of long-term value creation and the Company’s purpose, strategy and culture

The board has adopted a remuneration policy that takes into account both Group and individual performance, market value and sector conditions in determining director and senior employee remuneration. Remuneration packages are constructed to provide a balance between fixed and variable rewards and for the vast majority of employees includes basic salary, pension, death in service benefit, discretionary annual bonus and long-term incentive awards. The board believes that this policy is aligned with the Company’s purpose, strategy and culture at this stage of its development.

Compensation reflects the role and the experience of the individual and is benchmarked against the market and the annual bonus and LTIP is intended to align the interests of the executive directors and certain senior management with the interests of shareholders and stakeholders in the long term. Bonuses are paid in cash, based on Group performance and individual director contributions, and are discretionary. LTIPs are also granted at the discretion of the Remuneration Committee. Share option awards to executive directors and certain senior management have a minimum vesting period of three years and are subject to three-year objective group performance conditions.

In formulating the policy, pay and conditions across throughout the Group are taken into consideration and the board (via the Remuneration Committee) has consulted with external remuneration consultant h2g Remuneration Advisory LLP. The Committee’s policy is to consult with major shareholders in respect of significant decisions on executive remuneration and the Chair of the Remuneration Committee, Indira Thambiah, is available for contact with investors concerning the Company’s approach to remuneration.

Consideration is also given to the feedback from Proxy Advisers which in respect of the AGM in 2024 noted that options had been granted to executive directors during 2023 without performance conditions. In response to this the Company consulted its advisers and in December 2024, the share options granted to three senior executives, including Neil Rodol and Sally Craig were subject to certain performance conditions being met, including CAGR in the Company’s adjusted basic earnings per share exceeding 10% over the three years commencing 1 January 2025.

The Company’s remuneration policy is set out in the Remuneration Committee Report and will continue to be monitored and developed throughout the coming year

In line with previous practice, the Remuneration Report (excluding the Remuneration policy) will be put to an advisory resolution at the 2025 AGM. Throughout 2025, consideration will continue to be given to the guidance contained in the 2023 QCA Code.

Principle 10 – Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other key stakeholders

The Company’s principal means of communication with shareholders is through the Annual Report and Financial Statements, the full-year and half-year announcements and the AGM. The board receives regular updates on the views of shareholders through briefings and reports from the executive directors, the Company’s brokers and PR advisers and responds to and will take account, wherever possible, of recommendations made by proxy adviser companies.

Retail Investors

The board recognises that the AGM is an important opportunity to meet retail shareholders. Each substantially separate issue is the subject of a separate resolution at the AGM and all shareholders have the opportunity to put questions to the Board. All board members endeavour to attend AGMs and answer questions put to them which may be relevant to their responsibilities. In addition, the directors are available to listen informally to the views of shareholders immediately following the AGM, allowing all shareholders an opportunity to ask questions or represent their views

For each vote, the number of proxy votes received for, against and withheld is announced at the meeting. The Company releases the voting results for the AGM and other General Meetings by RNS and the results of the AGM are published on the Company’s website.

The Chief Executive Officer takes part in online conferences and Q and A sessions for retail investors.

Corporate information, including Company announcements and presentations, are also available to shareholders, investors and the public on the Group’s website www.warpaintlondonplc.com. The Company’s contact details and email address for investor queries, and correspondence address are listed on the website and the website offers a facility to sign up for email alert notifications of the Company’s news and regulatory announcements

Institutional Shareholders

The Chief Executive Officer, the Managing Director and the Chief Financial Officer make presentations to institutional shareholders and participate in Investor Roadshows and conferences both following the announcement of the full-year and half-year results and, at other times throughout the year. Not every executive officer participates in every investor presentation. A summary of investor sentiment is regularly circulated to the board. The Chairman participates in these presentations where appropriate and is available to speak with shareholders. The Chief Executive Officer takes part in additional online conferences and dialogue with individual institutional shareholders also takes place in order to understand and work with these investors to seek to comply with their investor principles where practicable.

Investor queries may be addressed to the Company Secretary at investors@warpaintlondonplc.com. A range of corporate information (including all Company announcements) is also available to shareholders, investors and the public on the Company’s website www.warpaintlondonplc.com.

Other Key Stakeholders

The Company’s means of communicating with its other stakeholders are set out in the Stakeholder Engagement and ESG sections of the Strategic Report and the Section 172 report.

The Reports of the Audit and Remuneration Committee and the Remuneration Committee describe the responsibilities of those committees and the work undertaken throughout the year.

Updated 16 June 2025

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