Revolution Beauty rocked by accounting scandal
AN ACCOUNTING scandal has been uncovered at one of Britain’s most popular beauty companies.
A probe into Revolution Beauty by accounting and consulting firm Forensic Risk Alliance and lawyers Macfarlanes found ‘extremely serious’ issues with its finances.
Investigators highlighted a litany of problems including an ‘unusual’ loan from the firm’s founders to an employee. Adam Minto and Tom Allsworth, who set up Revolution in 2014, were also found to have made personal loans to senior managers, non-executive directors and distributors for the firm.
And the investigators spotted £9m of business in Revolution’s full-year results which were booked with suppliers ‘for the purposes of meeting sales targets’.
It marks a stunning fall from grace for the duo who set up the business to take on industry giants L’Oreal, Revlon and Rimmel. A source close to one shareholder described the findings as ‘a s***show’. Revolution grew rapidly as partnerships with social media influencers helped it steal customers from rivals. In May the firm, which counts Boohoo as its biggest shareholder, said it hit £194m in annual sales with £22m of profit. Ahead of its £495m float in 2021, Minto, 52, said the industry had ‘become elitist’ and Revolution was ‘genuinely doing something very different’. And the pair were rewarded handsomely, pocketing £31m between them when Revolution joined the stock market.
Minto once referred to Allsworth, 57, as ‘the Ant to my Dec’.
But the duo ran into trouble last summer when Revolution missed a deadline to publish its accounts and its shares were suspended having fallen almost 90pc from their peak.
In September auditor BDO called in Macfarlanes and the FRA to investigate ‘serious concerns’ over its inability to publish an audit report for the year to February.
Allsworth and Minto stepped down as executive chairman and chief executive while the probe was ongoing, with turnaround specialist Bob Holt being brought in to run the firm.
Senior board director Derek Zissman said there were ‘material leadership issues’ under the pair. He said: ‘We have already begun taking action to ensure we have strengthened processes and the right team in place to deliver the true potential of Revolution Beauty.’