Silverwood Brands - Unaudited Interim Results

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.