28 June 2024
SILVERWOOD BRANDS PLC
AQSE: SLWD
("Silverwood" or "the
Company")
AUDITED RESULTS FOR THE YEAR ENDED 31
DECEMBER 2023
Silverwood Brands plc, a holding company
established to invest primarily in branded consumer businesses, is
pleased to announce its audited results for the year ended 31
December 2023.
Our trading year ending December 2023 was a
period covering a drive for growth in our brands, the due diligence
and investigation of new acquisitions and the frustrations of
dealing with the Lush team.
Whilst we will repeat some of the information
provided in our Trading Update of 1st May 2024 we will also
endeavour to provide details of how we perceive our brands and
business.
The year saw the first full year of trading for
our existing brand portfolio of Balmonds, Nailberry and Sonotas
(our Japanese business comprising SteamCream and
Cigarro).
We would note that our underlying brands
performed in line with our expectations - that is, we do not expect
a simple tidy linear pattern when growing these smaller brands. On
a month to month basis, even a year to year basis, we expect a
bumpy ride. However, over the longer term we expect a picture of
profitable growth.
Our teams remain committed to the task of
delivering that growth and we continue to be impressed by their
efforts.
Balmonds
As mentioned in our report for the previous
financial year, "Balmonds enjoyed some well-placed press coverage
during the year which gave a pleasant boost to sales. This may
prove difficult to replicate…."
Annoyingly we were unable to replicate the
boost we enjoyed in 2022 and sales fell by approximately 20% on a
year on year basis. We would note that 2023 still achieved a
substantial uplift against 2021, which is in line with the bumpy
growth patterns we expect and represents strong growth over the two
year period.
Sales and brand contribution history has
been:
|
2023
£
|
2022
£
|
2021
£
|
2020
£
|
Sales
|
2,456,758
|
3,062,027
|
1,408,905
|
1,420,500
|
Net Profit/(Loss)
|
(131,158)
|
282,646
|
(296,700)
|
(91.618)
|
Whilst a rebranding project has proved
disruptive, we believe it will help build sales in the long term.
The new look and packaging have been well received by those
customers who have seen it and also by buyers from retail chains we
are targeting. Now we need to convert that response to
sales.
Additional work has gone in to supporting a
medical device license application for Balmonds' Skin Salvation
balm. If granted, we believe skin salvation will be the first
petroleum-free 100% natural emollient for the prevention and
treatment of eczema & psoriasis. This will allow for more
effective marketing around the benefits of this product.
Nailberry
Nailberry continues to attract new customers
and open new sales channels. This has resulted in sales growth over
the prior year.
Sales and brand contribution history has
been:
|
2023
£
|
2022
£
|
2021
£
|
Sales
|
2,933,329
|
2,399,121
|
2,172,797
|
Net Profit/(Loss)
|
1,093,743
|
551,861
|
847,870
|
Sonotas
Our acquisition of Sonotas in January 2023
added Steamcream and Cigarro brands to the Silverwood Brands
portfolio. In addition to the brands, Sonotas brings a growth
platform to the group that provides direct market access to Japan,
the world's 3rd largest beauty market and proximity to the globally
fastest growing beauty region of Asia.
Through Sonotas, we have continued to expand
our capabilities in Japan with the acquisition in March 2024 of
Cosme Science, a beauty R&D and manufacturing business. Cosme
Science has 40 years of experience and more than 2,000 formulations
to draw from. Additionally, the nearly 7,000 sq m
facility is only 7 years old and complete with new, modern fit
out.
We also acquired a small skincare brand, Dr
Baeltz, as part of the Cosme Science purchase.
As per earlier announcements, Cosme Science
(including Dr Baeltz) generated revenue of Yen 1.6bn (approx.
£8.4m) and ebitda of Yen 123m (approx. £650k) in the year ending
March 2023.
We believe that having a significant presence
in Japan provides Silverwood with a strategic advantage for
building brands as well as sourcing new opportunities such as the
Cosme Science transaction.
Sonotas's business model is similar to that of
Silverwood Brands in that Sonotas is run as a platform to provide
R&D and product, sales channels development and back office
support to its brands.. Branding, marketing and direct sales
roles are unique to each brand. Sonotas's P&L is
inclusive of all its brands in addition to cost centres such
general R&D, IT, finance and other costs such as those occurred
with the Cosme Science transaction.
|
30 June 2023
K¥
|
30 June 2022
K¥
|
30 June 2021
K¥
|
|
Unaudited
|
Unaudited
|
Unaudited
|
Sales
|
1,160,908
|
1,103,804
|
1,116,958
|
Pre-tax result
|
143,203
|
(8,327)
|
49,039
|
The figures above are reported to 30 June, the
Sonatas financial year-end.
We are working on a process to align financial
year ends across the group.
Steamcream
In 2023 the Japan Steamcream team focused on
rebuilding from the Covid related dip, primarily hitting our retail
store portfolio. In May 2023, we chose to temporarily exit
all retail stores to work on growing our wholesales and digital
channels.
Cigarro
Cigarro's growth slowed in 2023 with some
frustrating supply problems out of China early in the year that
took nearly 6 months to solve by replacing several suppliers.
Supply issues have been resolved and we forecast renewed growth in
the coming year.
Nailberry Japan
Sonotas brought Nailberry to Japan
in October of 2023 and work continues to build brand
awareness.
Portfolio of gems
We believe we have assembled a portfolio of
gems. Although these are small brands today we believe that they
all have the potential to be much larger. That's our challenge.
With great management teams, determined focus, ambitious plans,
some time and a few lucky breaks we can build these small brands to
be much larger. We continue to search for more gems to add to our
collection.
Silverwood
Our holding company is primarily a cost centre
where we endeavour to manage a lean operation.
We incur various expenses to investigate new
opportunities and this year we incurred large costs around the Lush
transaction. We recovered most of these costs. We have
retained an upside through our settlement agreement with the
vendors should the Lush stake which was unwound from our business
be sold.
Some of these costs, we believe, were due to
the unnecessary delay caused by our previous advisors, VSA Capital,
in returning their shares. We are seeking advice on the
recoverability of these excess costs.
We wish to highlight below a number of areas of
cost incurred in the year which do not directly relate to the
underlying operations of the group.
Acquisition costs.
We incurred over £300,000 of net fees in
acquisition costs over the period. As explained earlier, we
recovered £300,000 relating to the Lush unwind process. Whilst we
will incur costs on future acquisitions, we will always endeavour
to restrict these to a minimum.
Impairment costs
We have made an impairment against our holding
in Ginger Teleporter following the decision to reduce our focus to
health & beauty.
Recognition of post combination
remuneration.
As previously reported, we negotiated
performance related components to each of the brand purchases we
have made. This allowed us to match market conditions, whilst, it
derisking the purchase by deferring a large element to the future
and making these dependent on performance. This also aligned the founders/shareholder management with all
shareholders.
Non-cash post combination remuneration costs
are recorded as costs. This year these amounted to
£4.58m.
Our hope is that we do pay these amounts as the
full purchase prices we pay after allowing for these earn out
amounts are usually a greatly reduced multiple of achieved results
should the pre-agreed performance criteria be met.
All future payments are contracted to allow for
settlement in shares.
Finance costs
We have reported a finance cost for the year of
£748k. This is mostly a non-cash charge relating to the loan from
Castlenau Group.
We are fortunate to have Castlenau Group
Limited ("Castelnau") as a shareholder, and one that shares
our long term view on building businesses.
Following the year end, Castlenau agreed to
convert the majority of its loan position into ordinary shares in
the Company. This was completed on 29 January 2024 at a price of
54p per share.
At the same time, the Company completed a £1.0
million subscription from Andrew Gerrie, also at 54p per share, and
Silver Americum Limited, a company in which Mr Gerrie and his wife
each hold separate 20% interests, agreed to provide an unsecured
convertible loan of £0.5 million to the Company.
Aquis.
Recently the Aquis exchange has suffered from
severe liquidity issues with numerous investors withdrawing from
the market and selling down shares where they could.
This has obviously affected
valuations.
Whilst we have a long term view and believe the
immediate answer is to focus on our business we will continue to
monitor all opportunities or changes our Aquis listing leads us
to.
Lush
Again, we repeat our previous announcements
about this transaction, we were very disappointed with the reaction
of the Lush management team to our position, and we have taken the
pragmatic approach of withdrawing from the acquisition due to the
aggressive stance adopted by Lush. Our previous announcements
covered the details of this.
We have now effected an unwinding of the
transaction via a capital reduction which was approved by the court
on 16 April 2024 and completed on 30 April 2024.
The attempted transaction consumed a huge
amount of management time and focus, along with associated costs.
Much of this fee cost was reimbursed by Andrew Gerrie and Alison
Hawksley. We now wish them good luck in their endeavours to achieve
a sale of their Lush shares.
Group
Group numbers show a consolidated pre-tax loss
for the 2023 financial year.
Q1 2024 - Trading Update
Trading in our brands since our December year
end has been as expected.
Future Prospects
Our existing portfolio of businesses holds
wonderful potential for profitable growth.
The addition of Cosme Science in Japan provides
a great under pinning to our ambitions in Asia and introduces
various new avenues of growth.
We have reviewed numerous additional
opportunities and believe we will continue to find exciting
ventures to enhance our business.
In summary, we have suffered some frustrations
in the year under review, however, we have also enjoyed some
improvements and exciting additions.
We remain optimistic about the
future.
Shareholder online meeting
We are planning to hold a shareholder webinar
following the announcement of our 2023 full year results with a
focus on Q&A with the management team. Further details will be
announced in due course.
Financial key performance indicators
|
For our portfolio of controlled brands we are
focused on financial indicators of:
Revenue
We have identified some exciting smaller brands
which we believe can grow to be larger businesses. Obviously,
revenue growth is key measurement here.
EBITDA
These businesses need to maintain a profitable
business model as they grow. EBITDA will give us a guide for this
and should represent a cash generation proxy.
Profit After Tax
Profitable business models don't stop at EBITDA
so we will also look for true bottom line profitability.
Cash at year end
We need cash to support our growing businesses,
to absorb the bumps we encounter and to cover our central
costs.
For our investment positions we will look for
similar KPI's within the reported data from the underlying
businesses. This will allow us to assess the carrying value of our
investment positions.
The Directors of the Company accept
responsibility for the contents of this announcement.
ENQUIRIES:
Silverwood
Brands plc:
Andrew
Gerrie
info@silverwoodbrands.com
Paul Hodgins
Peterhouse
Capital
Limited
+44 (0) 207 469 0930
(AQSE Corporate Adviser)
Consolidated
Statement of Comprehensive Income
|
|
|
|
2023
|
2022
|
|
|
|
|
£
|
£
|
|
|
|
|
Revenue
|
|
11,202,566
|
3,667,488
|
Cost of sales
|
|
(3,062,983)
|
(1,398,229)
|
Gross profit
|
|
8,139,583
|
2,269,259
|
|
|
|
|
Other operating income
|
|
26,799
|
30,119
|
Administrative expenses
|
|
(9,099,105)
|
(2,559,358)
|
Deemed cost of listing
|
|
-
|
(2,665,094)
|
Acquisition costs, acquisition
related contingent consideration and earn outs
|
|
(3,482,615)
|
(2,832,049)
|
Loss from operations
|
|
(5,798,565)
|
(5,757,123)
|
|
|
|
|
Finance income
|
|
41,649
|
25,588
|
Finance expense
|
|
(805,786)
|
(160,085)
|
Fair value gains/(losses)
|
|
-
|
(120,703)
|
Loss before tax
|
|
(6,562,702)
|
(6,012,323)
|
|
|
|
|
Tax expense
|
|
471,528
|
(23,403)
|
Loss for the period
|
|
(6,091,174)
|
(6,035,726)
|
|
|
|
|
Items that are or may be reclassified
subsequently to profit or loss.
|
|
|
|
Exchange loss arising on translation
on foreign operations
|
|
(421,716)
|
-
|
|
|
(421,716)
|
-
|
|
|
|
|
Other comprehensive income for the
period, net of tax
|
|
(421,716)
|
-
|
|
|
|
|
Total comprehensive income
|
|
(6,512,890)
|
(6,035,726)
|
Loss for the period attributable
to:
|
|
|
|
Owners of the parent
|
|
(6,040,462)
|
(6,035,726)
|
Non-controlling interests
|
|
(50,712)
|
-
|
|
|
(6,091,174)
|
(6,035,726)
|
|
|
|
|
Total comprehensive income for the period attributable
to:
|
|
|
|
Owners of the parent
|
|
(6,462,178)
|
(6,035,726)
|
Non-controlling interests
|
|
(50,712)
|
-
|
|
|
(6,512,890)
|
(6,035,726)
|
|
|
|
|
Earnings per
share
|
|
|
|
Basic and diluted loss per share
(pence)
|
|
(2.33)
|
(37.5)
|
Basic and diluted loss per share - post capital
contribution (pence)
|
|
(19.38)
|
(37.5)
|
Consolidated
Statement of Financial Position
|
2023
|
2022
|
|
£
|
£
|
Assets
|
|
|
Non‑current assets
|
|
|
|
Property, plant and
equipment
|
|
199,306
|
45,490
|
Intangible assets
|
|
23,594,130
|
5,973,797
|
Other non‑current
investments
|
|
80
|
216,802,081
|
Trade and other
receivables
|
|
101,943
|
-
|
|
|
23,895,459
|
222,821,368
|
Current assets
|
|
|
|
Inventories
|
|
1,727,768
|
401,132
|
Trade and other
receivables
|
|
3,293,618
|
968,021
|
Cash and cash equivalents
|
|
2,799,380
|
2,055,143
|
|
|
7,820,766
|
3,424,296
|
Total assets
|
|
31,716,225
|
226,245,664
|
Liabilities
|
|
|
Non‑current liabilities
|
|
|
|
Trade and other
liabilities
|
|
1,996,367
|
-
|
Loans and borrowings
|
|
1,264,449
|
13,947
|
Deferred tax liability
|
|
1,799,191
|
657,535
|
|
|
5,060,007
|
671,482
|
Current liabilities
|
|
|
|
Trade and other
liabilities
|
|
6,099,082
|
5,858,054
|
Loans and borrowings
|
|
5,368,149
|
1,529,265
|
Provisions
|
|
286,282
|
-
|
|
|
11,753,513
|
7,387,319
|
|
|
|
|
Total liabilities
|
|
16,813,520
|
8,058,801
|
|
|
|
|
Net assets
|
|
14,902,705
|
218,186,863
|
Issued capital and reserves
attributable to owners of the parent
|
|
|
|
Share capital
|
|
3,250,018
|
24,202,969
|
Share premium reserve
|
|
22,795,826
|
201,467,075
|
Shares to be issued
|
|
831,450
|
831,450
|
Reverse takeover reserve
|
|
(4,797,432)
|
(4,797,432)
|
Share based payment
reserve
|
|
6,110,807
|
3,257,875
|
Foreign exchange reserve
|
|
(421,716)
|
-
|
Retained earnings
|
|
(12,815,536)
|
(6,775,074)
|
|
|
14,953,417
|
218,186,863
|
Non-controlling interest
|
|
(50,712)
|
|
TOTAL EQUITY
|
|
14,902,705
|
218,186,863
|
|
|
|
|
|
Company
Statement of Financial Position
|
2023
|
2022
|
|
£
|
£
|
Assets
|
|
|
Non‑current assets
|
|
|
|
Other non‑current
investments
|
|
34,381,407
|
14,254,164
|
Trade and other
receivables
|
|
170,216
|
218,007,377
|
|
|
34,551,623
|
232,261,541
|
Current assets
|
|
|
|
Trade and other
receivables
|
|
1,462,557
|
362,264
|
Cash and cash equivalents
|
|
38,027
|
1,249,007
|
|
|
1,500,584
|
1,611,271
|
|
|
|
|
Total
assets
|
|
31,939,424
|
233,872,812
|
Liabilities
|
|
|
Non-Current liabilities
|
|
|
|
Trade and other
liabilities
|
|
1,967,349
|
-
|
|
|
1,967,349
|
-
|
Current liabilities
|
|
|
|
Trade and other
liabilities
|
|
6,857,301
|
7,535,493
|
Loans and borrowings
|
|
5,204,659
|
1,511,713
|
Provisions
|
|
286,282
|
-
|
|
|
12,348,242
|
9,047,206
|
Total liabilities
|
|
12,348,242
|
9,047,206
|
|
|
|
|
Net assets
|
|
21,736,616
|
224,825,606
|
|
|
|
|
Issued capital and reserves
attributable to owners of the parent
|
|
|
|
Share capital
|
|
3,250,018
|
24,202,969
|
Share premium reserve
|
|
22,795,826
|
201,467,075
|
Shares to be issued
|
|
831,450
|
831,450
|
Share based payment
reserve
|
|
3,445,713
|
592,781
|
Retained earnings
|
|
(8,586,391)
|
(2,268,669)
|
TOTAL EQUITY
|
|
21,736,616
|
224,825,606
|
The Company's loss for the year was £6,091,174
(2022: loss for the 13-month
period £6,035,726)
Market Abuse
Regulation (MAR) Disclosure
The information contained within this
announcement is deemed by the Company to constitute inside
information. Upon the publication of this announcement via a
Regulatory Information Service, this inside information is now
considered to be in the public domain.