Warpaint London Initiates £2.5 Million Share Buyback Scheme to Mitigate Shareholder Dilution

Warpaint Strengthens Cosmetics Portfolio with Barry M Acquisition

Warpaint London plc specializes in supplying affordable, high-quality colour cosmetics and personal care products primarily to major retailers, retail chains, supermarkets, and through a growing direct online channel. Its portfolio includes six established brands: W7, Technic, Skin & Tan, Super Facialist, Dirty Works, and Fish Soho, each targeting distinct market segments.

In February 2026, Warpaint expanded its brand portfolio by acquiring the Barry M colour cosmetics brand, diversifying its market presence within the competitive cosmetics industry. This strategic acquisition enhances Warpaint’s position as a multi-brand operator in the affordable colour cosmetics sector. Leveraging its distribution network and retail partnerships, Warpaint aims to maximize Barry M’s reach across existing retail channels while advancing its direct-to-consumer capabilities.

Robust Cash Position Supports £2.5 Million Buyback Initiative

As of 30 June 2026, Warpaint held £20.6 million in cash, providing ample financial flexibility for capital allocation. The board determined that initiating a share buyback programme with a maximum aggregate consideration of £2.5 million, approximately 12% of the company’s cash reserves, is a prudent use of capital.

This strategic capital allocation balances shareholder value enhancement with maintaining financial flexibility. While no specific earnings per share accretion targets or financial metrics were disclosed to guide buyback pricing or execution, the company’s decision to retain significant cash reserves alongside the buyback signals confidence in its sustainable cash generation and a commitment to reducing share count to benefit shareholders.

Treasury Shares to Offset Employee Share Scheme Dilution

Shares repurchased under the buyback will be held in treasury rather than cancelled. These treasury shares are intended to satisfy future employee share scheme obligations, mitigating dilution for existing shareholders. This strategy offers operational flexibility in managing employee incentives without issuing new shares.

By holding shares in treasury, Warpaint can fulfill employee share scheme commitments using existing shares, thereby avoiding dilution that new share issuance would cause. The announcement did not specify the scale or timeline for utilizing treasury shares in relation to employee schemes.

Shore Capital Mandated for Independent Buyback Execution

Warpaint has appointed Shore Capital Stockbrokers Limited to conduct on-market share purchases on an irrevocable and non-discretionary basis. Shore Capital, also acting as the company’s Nominated Adviser and Joint Broker, will execute purchases independently according to pre-set parameters without daily company instructions.

This arrangement ensures compliance with market abuse regulations and promotes independent, orderly execution of the buyback. The programme operates under the general authority granted by shareholders at the Annual General Meeting on 16 June 2026.

Price Limits and Compliance with Market Abuse Regulations

The maximum price payable per Ordinary Share (excluding expenses) will not exceed the greater of: 105% of the average middle market price over the five business days before purchase, or the higher of the last independent trade price and the highest current independent bid on the London Stock Exchange. These safeguards ensure fair market pricing and protect the company from overpaying.

The programme will, as far as possible, comply with the UK Market Abuse Regulation (MAR) safe harbour provisions. However, buyback activity on any trading day may represent a significant portion of daily volume and could exceed 25% of average daily trading volume, potentially negating MAR exemptions. This does not restrict the company from making further purchases under its general authority when deemed appropriate.

Buyback Timeline and Regulatory Disclosure Obligations

The buyback programme began immediately after the 27 July 2026 announcement and will continue until 31 December 2026, allowing a six-month window for orderly execution. This timeframe enables Warpaint to deploy the £2.5 million allocation while adapting to market conditions.

All market purchases will be publicly disclosed in compliance with regulatory requirements, including details on shares bought, prices paid, and total consideration. The company confirmed it holds no other unpublished price-sensitive information, and this announcement constitutes inside information under Article 7 of the UK Market Abuse Regulation.

Investor Advisory on Trading Volume and Safe Harbour Limitations

Warpaint has alerted shareholders that buyback activity may on occasion represent a substantial share of daily trading volume on the London Stock Exchange, possibly exceeding 25% of average daily volume. This may impact stock liquidity and pricing on such days, and investors should consider this in their trading strategies.

The company’s disclosure regarding potential safe harbour limitations informs shareholders that buyback transactions may not always benefit from MAR exemptions. This transparency helps market participants make informed decisions during the buyback period.

Strategic Intent and Commitment to Shareholder Value

The board views the £2.5 million share buyback as an effective deployment of cash reserves aimed at enhancing shareholder value through share count reduction. Allocating approximately 12% of cash balances reflects a balanced approach between returning value and preserving financial flexibility for operations and growth.

By limiting buyback prices to no more than 105% of recent average market prices, Warpaint demonstrates disciplined capital allocation and a commitment to protecting shareholders who retain their shares during the buyback. This strategy aligns with management’s view that current share prices represent reasonable value.