SLWD Silverwood Brands PLC

29 January 2024

Silverwood Brands Plc

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

Unaudited Interim Results for the six months ended 30 June 2023

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 2023.

Chief Executive's Statement

During the six months ended 30 June 2023, we have introduced our various brand teams to one another and started the creation of a support platform across the Group.

Balmond Skincare Ltd

As mentioned in the Company's audited accounts for the year ended 31 December 2022, Balmonds enjoyed some well-placed press coverage during that period, alongside some well executed marketing activities which gave the business a welcome boost. We have not seen a repeat of this in the year to date, although similar marketing and press activities were undertaken.

The Balmonds' team has remained focused on the longer-term build of the business, with a number of sensible initiatives introduced in the current year, which we expect to deliver growth in the years ahead.

Nailberry

Nailberry has maintained high margins and enjoyed a steady growth in the six months to June 2023. The brand remains on track to meet the financial performance objectives set in the Sale and Purchase agreement. Nailberry is working hard on developing the US market and other countries.

We have been impressed with the smooth implementation of the changes to the Nailberry management team with, the addition of Silvain Reviron as GM. The introduction of new leadership members is never simple but, in this case, it has been implemented seamlessly.

Sonatas

Sonotas operates 2 brands, Steamcream and Cigarro in Japan. In the six months to June 2023, Steamcream began an exit from its 5 retail stores and shifted to a flexible retail model of pop-up events.  This medium-term strategy is designed to allow Steamcream to build its retail model without fixed-cost retail leases as the market settles into new footfall patterns post Covid-19.  

Gross profit in Steamcream and Cigarro improved with new buying initiatives and direct material imports.  Cigarro's margins are improving more quickly, due to growing sales volumes driving better production cost of goods.

Nailberry launched in Japan at the end of September 2023.  Sonotas will continue to build its portfolio of brands leveraging its platform to develop, manufacture and sell in the Japanese market.

New Opportunities

Silverwood is continually presented with numerous businesses opportunities to acquire or invest in. We continue to apply our strict criteria to these opportunities, which rules out the vast majority quickly. We undertake thorough due diligence on those that remain.

Financial Performance

The Group's unaudited interim results for the six months ended 30 June 2023, show:

·    Sales of £5,847,148

·    Gross profit of £4,440,139

·    Pre-tax loss of £189,232

Summary

The Company has been incredibly disappointed with the Lush management team's opposition to the Lush Transaction, but we have taken action to minimise the impact of this on our core brands.  

We are pleased with the continued tight cost control that is exercised across the business, where our main areas of concern have historically been expenditure on legal fees and interest. We have taken, and continue to take, positive steps to reduce the spend in both of these areas, allowing us to direct investment to areas which can directly impact the further growth of our business.

We continue to investigate new opportunities to add to our portfolio, whilst remaining focused on the long-term growth of our existing brands, whose prospects we view with confidence.

Lush

On 9 October 2023, the Company announced it was taking steps with a view to unwinding the Company's acquisition of a 19.8% stake in each of Lush Cosmetics Limited and Lush Cosmetic Warriors ("Lush", the "Lush Transaction"). The Company took this decision in light of legal advice and the significant risks and uncertainties of continuing the Company's litigation with Lush, as well as the potentially significant costs that would be incurred in fully defending the proceedings, and the associated disruption to the Company's business.

Since then, in accordance with the terms of the Settlement Deed announced on 10 January 2024, the Company has received an initial cash payment of £300,000 from Andrew Gerrie and Alison Hawksley as a contribution to Silverwood for some of the costs it has incurred and/or will incur in connection with the Lush Transaction and the subsequent litigation. The Company also retains an interest in any potential upside from certain ongoing litigation.

For the avoidance of doubt, the operational performance of Lush is not recorded in the financial statements of Silverwood.

The Company will announce further information regarding the process to unwind the Lush Transaction as soon as practicable.