Silverwood Brands PLC

Earnings Release • Sep 30, 2024

National Storage Mechanism | Additional information

RNS Number : 2872G

Silverwood Brands PLC

30 September 2024

30 September 2024

Silverwood Brands Plc

("Silverwood" or the "Company", together with its subsidiaries, the "Group")

Unaudited Interim Results for the six months ended 30 June 2024

Silverwood Brands plc (Aquis: SLWD), a holding company established to invest primarily in branded consumer businesses, announces the Group's unaudited interim results in respect of the six months ended 30 June 2024.

Chief Executive's Statement

During the six months ended 30 June 2024, we have been focused on growth in our brands and getting to know our new colleagues at Cosme Science and Dr Baeltz in Japan. As you may recall, we completed the acquisition of Cosme Science and Dr Baeltz in April 2024.

Growing small brands is never easy so it is comforting to note the grit displayed by our teams in their pursuit of expansion.

Balmonds Skincare Ltd

Balmonds completed the re-branding of the range to satisfy requests from potential stockists for a new look to our products. The introduction of new packaging and products invariably creates a frustrating period of disruption as the old look is phased out and the new look is phased in.

The team handled this with their usual determined perseverance and we now hope to see an improved response from retailers and customers (feedback so far has been encouraging). As a result, we are planning for year-on-year sales growth for the full year.

For the 6 month period

Sales £1.082k

Brand Contribution £(147.8)k

Nailberry

Nailberry has maintained high margins and continues to experiment with new sales channels. Growth in the six months to June 2024 has slowed on the previous run rate, but we are still expecting year on year sales growth this year. Our expansion into the US and Japanese markets is still at an early stage, setting us up well for 2025.

For the 6 month period

Sales £1,385k

Brand Contribution £345k

Sonotas

In the 6 months to June 2024, Sonotas operated 3 brands: Steamcream, Cigarro and Nailberry in Japan.  

Steamcream, our main Sonotas brand, experienced steady growth in the 3 existing sales channels to June 2024, being online, wholesale, and short term events or pop-ups. We closed our retail stores in May of 2023 to improve profitability, and we are now working on a new retail concept to launch in late 2025.

Cigarro sales, a much smaller brand, have been depressed on a LFL basis as the brand recovers from a series of packaging supply issues.  Work on new product development and improved supply sourcing is expected to drive renewed growth at Cigarro.

Nailberry launched in October 2023.  Awareness building through pop-up sales events continues and online sales continue to grow.  A big push is underway to expand wholesale accounts.

For the 6 month period

Sales £ 2,744 k

Brand Contribution £(72k)

Cosme Science Group

Cosme Science and its subsidiary Dr. Baeltz became part of the Sonotas group on March 29.  The business year-end for Cosme Science and Dr. Baeltz is March 31. 

Work has begun to cover group manufacturing and distribution needs which will deliver savings starting in the second half of the year.

For 3 month period

Sales £1,849k

Brand Contribution £(0)k

New Opportunities

We continue to assess new opportunities.

Financial Performance

The Group's unaudited interim results for the six months ended 30 June 2024, show:

·    Sales of                                                                       £7,077,234

·    Gross profit of                                                            £4,347,890

·    Operating profit/( loss)                                                £772,332

·    Profit/ (loss) of                                                            £157,876

The impact of acquisition accounting and rules for statutory accounting result in a view which is somewhat different to our management accounting. To provide some clarity we have detailed the trading result below with the non-operating or exceptional costs listed.

The reported P&L item "Acquisition costs, acquisition related contingent consideration and earn outs" includes a £668,936 fair value gain on a loan asset acquired as part of the Cosme Science and Dr Baeltz acquisition. Additionally, a cost of £197,809 represents the financing costs of the loan used to fund the acquisition.

The group has suffered a non cash loss on the revaluation of the Japanese foreign operations. The decrease in the value of the yen over the course of 2024 is reflected in both the P&L and balance sheet figures. The movement for the six months ended June 2024 is represented by a revaluation charge of £517,484 within total comprehensive income.

An adjusted view is below:

·    Sales                                                                            £7,077,234

·    Gross profit of                                                            £4,347,890

·    Operating contribution                                                £(122,903)

Non operating items:

Gain on acquisition of debt on Cosme Science                      £668,936

Acquisition costs, including loan set up costs                        £(197,809)

Net interest costs & legal fees                                                 £(40,377)

Depreciation expense                                                              £(64,765)

Other expenses & legal costs                                                  £(85,207)

Net exceptional items                                                             £280,778

Profit/(loss)                                                                             £157,876

Balance Sheet Movements

There have been some obvious movements in our Balance Sheet.

Lush unwind

As explained in previous reports we chose to unwind the Lush transaction resulting in the large movements to investments.

Cosme Science acquisition     

The purchase of Cosme Science in Japan explains the majority of movements in assets, stock and loans.

Summary

Integration of Cosme Science has been positive.

We all remain focused on building our brands.

Our culture of tight cost control endures.

We continue to assess new opportunities.

Our brands are growing overall, and with our internal focus on sales execution, expansion across our channels, and work in new markets coming to fruition, we continue to be optimistic about our brands.

Consolidated Profit and Loss and Other Comprehensive Income
For the Six Months ended 30 June 2024	Unaudited	Unaudited	Audited
	Six Months to 30 June 2024	Six Months to 30 June 2023	Year ended 31 December 2023
	£	£	£
Revenue	7,077,234	5,847,148	11,202,566
Cost of Sales	(2,729,343)	(1,407,009)	(3,062,983)
Gross Profit	4,347,890	4,440,139	8,139,583
Other Operating Income	-	-	26,799
Administrative Expenses	(3,997,743)	(4,225,481)	(10,122,332)
Acquisition costs, acquisition related contingent consideration and earn outs	422,185	-	(3,842,615)
Profit/(Loss) from Operations	772,332	214,658	(5,798,565)
Finance Income	68,036	37,645	41,649
Finance Expense	(162,376)	(441,535)	(805,786)
Profit/(Loss) before tax	677,992	(189,232)	(6,562,702)
Tax expense	(2,633)	(15,508)	471,528
Profit/(Loss) for the period	675,360	(204,740)	(6,091,174)
Items that are or may be reclassified subsequently to profit or loss.
Exchange loss arising on translation on foreign operations	(517,484)	-	(421,716)
Total comprehensive income	157,876	(204,740)	(6,512,890)

Consolidated Statement of Financial Position
For the Six Months ended 30 June 2024	Unaudited	Unaudited	Audited
	Six Months to 30 June 2024	Six Months to 30 June 2023	Year ended 31 December 2023
	£	£	£
Non-current assets
Property, plant and equipment	3,598,266	110,947	199,306
Intangible assets	26,331,297	20,214,673	23,594,130
Investments	80	216,802,081	80
Trade and other receivables	-	-	101,943
	29,929,642	237,127,701	23,895,459
Current Assets
Inventories	2,763,139	1,797,117	1,727,768
Trade and other receivables	8,038,486	7,323,074	3,293,618
Cash and cash equivalents	3,434,830	3,785,124	2,799,380
	14,236,455	12,905,315	7,820,766
Total Assets	44,166,097	250,033,016	31,716,225
Non-current liabilities
Trade and other liabilities	4,068,859	354,991	1,996,367
Loans and borrowings	9,398,159	12,199,699	1,264,449
Deferred tax	1,799,442	657,298	1,799,191
	15,266,460	13,211,988	5,060,007
Current liabilities
Trade and other liabilities	5,050,185	1,487,971	6,099,082
Loans and borrowings	-	173,133	5,368,149
Provisions	161,282		286,282
	5,211,468	1,661,104	11,753,513
Total Liabilities	20,477,928	14,873,092	16,813,520
Net Assets	23,688,169	235,159,924	14,902,705

Equity
Share Capital	4,250,018	26,071,281	3,250,018
Share Premium	27,195,826	216,776,564	22,795,826
Shares to be issued	831,450	831,450	831,450
Reverse takeover reserve	(4,797,432)	(4,797,432)	(4,797,432)
Share based payment reserve	6,110,807	3,257,875	6,110,807
Foreign exchange reserve	(939,200)		(421,716)
Retained earnings	(8,912,588)	(6,979,814)	(12,815,536)
Non-controlling interest	(50,712)		(50,712)
Total Equity	23,688,169	235,159,924	14,902,705

Consolidated Statement of Changes in Equity For the Six Months ended 30 June 2024
	Share Capital	Share Premium	Shares to be issued	Reverse takeover reserve	Share based payment reserve	Foreign Exchange Reserve	Retained earnings	Non-Controlling interest	Total Equity
	£	£	£	£	£	£	£	£	£
At 1 January 2024	3,250,018	22,795,826	831,450	(4,797,432)	6,110,807	(421,716)	(12,815,536)	(50,712)	14,902,705
Comprehensive income for the period
Profit for the period	-	-	-	-	-	-	675,359	-	675,359
Exchange Loss arising on translation of foreign operations	-	-	-	-	-	(517,484)	-	-	(517,484)
Total comprehensive income for the period	-	-	-	-	-	(517,484)	675,359	-	157,875
Issue of share capital	1,000,000	4,400,000	-	-	-	-	-	-	5,400,000
Gain on bargain purchase	-	-	-	-	-	-	3,227,589	-	3,227,589
At 30 June 2024	4,250,018	27,195,826	831,450	(4,797,432)	6,110,807	(939,200)	(8,912,588)	(50,712)	23,688,169

Notes to the Consolidated Interim Statements for the six months ended 30 June 2024

These consolidated interim financial statements have been prepared in accordance with the Aquis rules for Companies. As permitted, the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing this interim financial information. The consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2023, which have been prepared in accordance with UK adopted International Accounting Standards. 

The interim financial information set out above does not constitute statutory accounts as defined by Section 434 of the Companies Act 2006.  It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of the UK adopted International Accounting Standards.

These consolidated interim financial statements have not been audited or reviewed by the Company's auditor.

--Ends--

Silverwood Brands Plc Andrew Gerrie Paul Hodgins	[email protected]
Peterhouse Capital Limited (Aquis Corporate Adviser) Mark Anwyl Narisha Ragoonanthun Brefo Gyasi	+44 (0)20 7469 0930

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation EU 596/2014 as it forms part of retained EU law (as defined in the European Union (Withdrawal) Act 2018).

The Directors of the Company accept responsibility for the contents of this announcement.

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