Chrysalis holding Revolution Beauty auditor raises serious concerns

Revolution Beauty has announced that BDO LLP, its auditor, has written to the board and identified a number of serious concerns that have arisen during the course of its work on the FY22 audit regarding, amongst others, the group’s ability to provide sufficient and accurate audit evidence in respect of a number of key audit areas and the validity of certain commercial arrangements entered into by the company. BDO has indicated that, at the present time, it is not able to sign an audit report in respect of the FY22 accounts.

BDO has further recommended that the board appoint independent external advisers to undertake an independent investigation regarding the concerns raised and report their findings to an independent committee.

The company has today appointed Macfarlanes LLP and Forensic Risk Alliance to commence an independent investigation into the matters raised by BDO and any other matters that may become relevant during the course of their review. The company has also formed an investigation committee of Derek Zissman (non-executive director) and Elizabeth Lake (CFO since June 2022) to lead the process with the independent advisers.

At this point it is difficult to estimate a timeline for the investigation, however, the board considers that it may take several months to complete. Announcements will be made as appropriate.

Revolution Beauty was 0.7% of Chrysalis’ NAV at 18 August 2022.

Starling bank stake sale

Separately, Jupiter UK Mid Cap is said to be in negotiations to sell a 7% stake in Starling Bank for £100m, implying a valuation for the bank of £1.5bn. Chrysalis’ board is not obliged to write down the value of Chrysalis’ stake in the bank. It might argue that Jupiter Mid Cap is a forced seller, for example.

CHRY : Chrysalis holding Revolution Beauty auditor raises serious concerns

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