Revolution Beauty reaches £2.9M settlement with co-founder after accounting dispute
06 Feb 2024 --- In the latest developments to a drawn out boardroom conflict with its largest shareholder, Boohoo Group, Revolution Beauty reaches a settlement agreement with Adam Minto, its co-founder and former CEO.
Minto, who stepped down in November 2022 amid an accounting probe, will pay Revolution Beauty a sum of £2.9 million (US$3.6 million). The settlement did not entail an admission or acceptance of liability by either party.
Boohoo has long demanded shake ups for Revolution Beauty at the management level, following an accounting oversight that took place under Minto’s leadership. This resulted in the installment of Boohoo’s own executive team into Revolution’s leadership last December.
The accounting issue was first signaled when the brand delayed publishing its FY22 accounts, which were due in February of last year, prompting an audit into the situation by BDO.
BDO’s audit disclosed that Adam Minto and Tom Allsworth had made personal loans of around £1 million (US$1.3 million) to unnamed distributors. It also flags that sales were made to Revolution Beauty’s three key distributors in February 2022, the final month of its full-year accounting period for 2022.
Minto pays out
Last Friday, the two parties entered into a settlement agreement over the accounting oversight that led to Revolution Beauty suspending its trading of shares on the London Stock Exchange during Minto’s time as CEO.
In January, Revolution Beauty released the results of an independent investigation conducted by law firm Macfarlanes and forensic accountant Forensic Risk Alliance, which divulged “a number of issues” regarding historical sales, inventory provisioning and personal loans involving former CEO and co-founder Adam Minto.
“We are very pleased to have reached an agreement with Adam. This, together with the revised payment schedule agreed in December 2023 for the acquisition of Medichem, means we can now focus on the future,” comments Alistair McGeorge, non-executive chairman.
“We look forward to providing an update on our strategy at our upcoming Capital Markets Event on February 8, 2024.”
Structured settlement
Pursuant to the Settlement Agreement, Revolution Beauty and Adam Minto have agreed to the full and final settlement of certain claims between them.
The settlement sum will be paid in six annual installments, with the first payment of £483,333.35 (US$607,218.94) due on 28 March, 2024, and subsequent equal installments of £483,333.33 (US$607,218.91) due on 28 March of each calendar year. If a settlement sum installment is not paid on time, then interest will be charged at 8% per year.
Having considered its options and the legal advice received, the Board of Directors believe this is a fair settlement for the company.
The signing of the Settlement Agreement constitutes a related party transaction under Rule 13 of the AIM Rules for companies, by virtue of Minto being a substantial shareholder, as defined in the AIM Rules, of Revolution Beauty, holding approximately 15.34% of the ordinary shares in Revolution Beauty.
The directors of Revolution Beauty consider, having consulted with Revolution Beauty’s nominated adviser, Liberum Capital Limited, that the terms of this related party transaction are “fair and reasonable” as far as shareholders of Revolution Beauty are concerned.
Revolution Beauty has had a tumultuous time with Boohoo, previously calling out “hostile shareholder actions” by Boohoo, claiming the shareholder was acting in a “reckless” manner.
By Benjamin Ferrer
