TIDMSLWD
RNS Number : 6342E
Silverwood Brands PLC
30 June 2023
DATE: 30 June 2023
Silverwood Brands plc
("Silverwood" or the "Company")
Financial Results for the Period Ended 31 December 2022
Silverwood Brands plc (AQSE:SLWD) an enterprise company
established to invest primarily in branded consumer businesses is
pleased to announce its Full Year Audited Results for the period
ended 31 December 2022 ("FY22") and provide an update on current
trading.
FY22 Highlights:
-- Financial performance
o Revenue of GBP3.67m, a 160% increase YoY (FY21: GBP1.41m)
o 191% YoY increase in Gross Profit of GBP2.27m (FY21:
GBP785k)
o Operating income of -GBP5.78m (FY21: -GBP329k)
o Adjusted operating income less one off costs of -GBP260k
(FY21: -GBP329k)
o Total comprehensive income of -GBP6.04m (FY21: -GBP297k)
-- Major acquisitions during the year
o In May 2022 Silverwood acquired 100% of Balmonds Skincare, a
UK based skincare company that manufactures cosmetic skincare
products primarily for consumers who suffer from skin conditions
such as eczema, psoriasis and dermatitis. Balmonds' product line is
made from natural ingredients that work to protect and hydrate sore
and inflamed skin.
o In September 2022, Silverwood acquired Nailberry, a fast
growing range of a premium nail products that are vegan and use a
healthy and breathable formula, known as L'Oxygéné.
o In December 2022, Silverwood acquired Sonotas, consisting of
two Japanese based brands, Steamcream and Cigarro. This transaction
completed in January 2023 and is not included in the 2022
numbers.
o In December 2022, the Company entered into a sale and purchase
agreement in respect of a 19.8% stake in each of Lush Cosmetics
Limited and Cosmetic Warriors Limited. Lush is a leading
manufacturer and seller of fresh handmade skincare goods and
cosmetic products.
-- Building our team
o In addition to the teams joining us through our acquisitions,
we added to our group of directors, forming a strong core team with
in-depth experience from the beauty sector and beyond. We added
Tanith Dodge, Sonia Hully, and Joel Palix to the existing group of
Andrew Gerrie, Andrew Tone, and Paul Hodgins, strengthening our
corporate governance.
Current Trading Highlights:
-- Silverwood completed the acquisition of Sonotas in January
2023 therefore Sonatas will now be included in FY 23 numbers.
-- Trading to end May has been in line with expectations
-- As announced on 20 February 2023, Silverwood received
notification from Lush declining to record the transfers of the
Lush shares to the Company's wholly owned subsidiary, Cosmic
Circles Limited. Silverwood rejects the reasons provided by Lush
management and, alongside Cosmic Circles, it has instructed the
Company's lawyers to engage with Lush to resolve the issue.
Silverwood is comfortable with its position and will continue to
take appropriate steps to protect its interests. It continues to
hold contractual rights of control in respect of the Lush
shares.
The Company's 2022 Annual Report will be posted to shareholders
and available for download from the Company's investor relations
website at https://www.silverwoodbrands.com/.
Andrew Gerrie, Director, Commented:
"2022 has been an exciting year for Silverwood Brands. It has
been a story of "setting up" our core business by agreeing three
full acquisitions. In 2023, we have a number of opportunities
available to us to further build the Company. We are continuing to
assess them, and will move forward with them if and when they make
sense for Silverwood. I am looking forward to continued development
this year, including further development of our existing
brands."
Ends
For more information, please contact:
Silverwood Brands plc
Andrew Gerrie info@silverwoodbrands.com
Paul Hodgins
--------------------------
VSA Capital - AQSE Corporate Adviser and
Broker +44(0)20 3005 5000
--------------------------
Andrew Raca, Simba Khatai, Alexander Cabral
(Corporate Finance)
--------------------------
SILVERWOOD BRANDS PLC
Audited financial results for the year ended 31 December 2022
Business review
The period to 31 December 2022 has been a story of "setting
up."
The company was incorporated on 10(th) August 2021. Our initial
admission document was published on 29 October 2021 and our shares
admitted to trading on London's AQSE Growth Market on 8(th)
November 2021.
We moved our year end to December to provide a more sensible and
uniform reporting period.
Following the corporate set up we embarked on our plans to
assemble an experienced, ambitious and curious team who could find,
acquire and build a portfolio of beauty brands.
Firstly, our team.
We have been lucky to attract some wonderful people as
Directors, non-exec Directors, Board Advisors and members of our
management teams. This group has a rare combination of intellect,
ambition and humility which I believe will prove to be advantageous
for all our stakeholders.
You can see details of our Directors on our website, however,
the true heroes of our business are the teams leading and managing
our brands. The Directors will be focused on supporting these teams
and hopefully celebrating their achievements.
Secondly, our brands
Our focus is the beauty and wellness sectors. Within this we
will simply look for brands where we believe the opportunity
warrants our activity and investment.
Brands where we understand the downside and have a better than
fair chance of creating upside.
We will de-risk the opportunity as far as we can and then take a
long term view on building the business or our holding.
We will build a background of shared facilities and support
whilst allowing each brand to retain its own flavour and
positioning via a mixture of autonomy and responsibility. That is,
room to manage the business to best build that brand and to meet
the targets we have agreed.
We have made a good start and now have a portfolio of smaller
brands and other investments.
Our portfolio of owned brands
(Note. Where we did not own the brand for the full period we
have provided full year unaudited numbers to provide a more useful
comparison)
Balmonds
In May 2022 we agreed to acquire 100% of Balmonds Skincare
Limited, a small UK based brand focused on providing natural
solutions for sensitive skin.
We agreed a market price for the business then de-risked our
purchase by deferring approximately 40% of the acquisition price
for 3 years with these payments being subject to future performance
criteria and continued employment of the management team. All
payments to Balmond's former shareholders were made with the issue
of Silverwood shares. 85% of Balmonds was acquired from my wife and
I where the deferred performance criteria also apply, with the
remaining 15% acquired from the Balmonds management team.
The business is based in Brighton where we manufacture virtually
all our own products.
Balmonds is led by Weze McIntosh who is fortunate to be part of
a very dedicated team. Over the past three years, they have moved
to a new factory, re-branded the business, addressed various cost
issues and grown the business to be profitable. This has resulted
in a solid team culture and desire to succeed. Balmonds enjoyed
some well placed press coverage during the year which gave a
pleasant boost to sales. This may prove difficult to replicate in
the current year, however, we are focused on doing so.
Balmonds by numbers: (audited)
2021 2022
GBP GBP
Sales 1,408,905 3,062,027
---------- ----------
Pre-tax result (331,306) 282,646
---------- ----------
Nailberry
In September 2022 we agreed to acquire Nailberry, a fast growing
range of vegan, breathable nail varnishes, from the brand's founder
Sonia Hully.
Again, we agreed a fair market price for the business and again,
deferred 40% of the price for 3 years, subject to performance
targets.
Whilst the initial 60% tranche was paid in cash, the deferred
40% tranche will be settled with the issue of Silverwood shares,
with the deferred consideration being subject to future performance
and the continued employment of the brand's founder.
Fortunately for us all, Sonia Hully will remain in the Nailberry
management team for at least 3 years and, even better, Sonia has
also joined the Silverwood board.
Sonia has done a wonderful job in creating and building this
business (we are secretly working on convincing Sonia to stay for
much longer than 3 years). Sonia has been joined by Sylvain Reviron
and together they are leading a small dynamic team to expand the
business. Although, we are only a few months together we are
delighted with the team and the plan they have embarked on.
Nailberry by numbers: (unaudited)
2021 2022
GBP GBP
Sales 2,172,797 2,399,121
---------- ----------
Pre-tax result 1,050,438 761,499
---------- ----------
Sonotas
In December 2022 we agreed to acquire Sonotas. This transaction
did not complete until January 2023 therefore is not included in
our 2022 numbers.
Sonotas is based in Japan and holds two brands, SteamCream, a
beautiful range of skincare, and, Cigarro, a new men's focused self
care range.
Again we have a large deferred, performance based element to the
purchase price.
Sonotas brings further huge benefits to our business.
-- A wonderful team which is headed up by Andrew Tone. I was
lucky enough to work with Andrew previously when he was Co-MD of
Lush Japan. In this role, Andrew helped build Lush Japan into
Lush's largest and most profitable market at the time.
-- Secondly, we now have a base in Japan. In fact, Japan is now our largest market!
Japan is a big market, however, it can be a difficult market to
crack. With the Sonotas team we have a great head start to making
Japan a key market for all our brands.
Sonotas by numbers: (unaudited)
2021 2022
KYen KYen
Sales 1,116,958 1,103,804
---------- ----------
Pre-tax result 49,039 (8,327)
---------- ----------
The figures above are reported to 30 June, the Sonatas financial
year-end.
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.
Lush investment
First a reminder of our earlier announcements:
"..... Silverwood Brands Plc announced on 12 December 2022 that
it had entered into a sale and purchase agreement in respect of a
19.8% stake in each of Lush Cosmetics Limited and Cosmetic Warriors
Limited (together referred to as "Lush")
The Company further announced on 20 February 2023 that it had
received notification from Lush declining to record the transfers
of the Lush shares to the Company's wholly owned subsidiary, Cosmic
Circles Limited ("Cosmic Circles")
Silverwood rejects the reasons given by Lush management and,
alongside Cosmic Circles, it has instructed the Company's lawyers
to take up the issues with Lush.
Silverwood is comfortable with its position and will continue to
take appropriate steps to protect its interests. In the meantime,
Silverwood would like to reiterate to its shareholders that,
pending the transfers being recorded, it continues to hold
contractual rights of control through an agreement with Andrew
Gerrie and Alison Hawksley in respect of the Lush shares,
including, but not limited to voting control and participation in
General Meetings, and receipt of dividends and distributions."
It is noted that Lush disputes the existence and effect of those
contractual rights of control. The exchanges of letters between the
various legal advisors has continued.
Whilst we are very disappointed with the position taken by the
Lush management team, we retain our long term approach to this
investment. The underlying brand and business is a good operation
with many aspects to admire. Those commercial and governance areas
which we do not admire will be subject to challenges from us until
we see improvements. We believe this will benefit all stakeholders
in the business.
Our set up period in numbers
As per our consolidated statutory accounts
2021 2022
GBP GBP
Sales 1,408,905 3,667,488
---------- ------------
Pre-tax result (331,306) (6,012,323)
---------- ------------
Under reverse acquisition accounting our 2021 consolidated
results reflect those of Balmonds only.
Our 2022 results include a number of non-operational and largely
non-cash charges arising from the reverse acquisition of Balmonds
and the acquisition of Nailberry and the investment in Lush. These
charges represent a combination of the requirements of applying
reverse acquisition accounting principles, the costs of making the
acquisitions, which we are required to expense and acquisition
related contingent consideration and earn outs to be charged to
consolidated profits over the earn out periods.
Obviously, we incurred a large number of legal and advisor's
fees to set up the company, to undertake the listing on AQSE, to
carry out the acquisitions and to respond to the claims from the
Lush management team.
Further details are set out in notes 3 and 7 to the financial
statements.
Acquisition of Balmonds
The Balmonds acquisition value was agreed at GBP9,411,765. This
was split between a shareholder loan of GBP1,398,365 and equity of
GBP8,013,400. The loan was acquired at full value by Silverwood by
issuing 1,398,365 shares at 85p.
The equity was acquired on a split basis with 60% of the agreed
value paid on completion, being a value of GBP4,086,833 settled by
issuing 4,808,039 shares at 85p each. The remaining 40% is subject
to performance criteria (and continuing employment of the
management team who are also the vendors) to be assessed at the
third anniversary of purchase. The maximum amount payable being
GBP2,724,556 to be settled by issuing 3,205,360 Silverwood shares
at 85p each.
We expect the performance criteria will be met at the 3rd
anniversary and, that being the case, the market value of this
brand to be substantially higher than the consolidated balance
sheet reflects.
Acquisition of NBY London Ltd
The Nailberry acquisition value was set at GBP10m, comprising an
initial cash payment of GBP6m and a deferred payment of up to GBP4m
which is subject to performance criteria (and the continued
employment of the founder vendor) to be assessed at the third year
anniversary. The payment of any deferred amount is to be settled by
issuing Silverwood shares at the prevailing share price at the
time.
Again, we expect the performance criteria will be met at the 3rd
anniversary and, that being the case, the market value of this
brand to be substantially higher than the consolidated balance
sheet reflects.
Consolidated results and underlying operating performance
To give you a view of the underlying operating performance of
the businesses, excluding the various accounting adjustments
referred to above:
2021 2022
GBP GBP
Sales 1,408,905 3,667,488
---------- ------------
Statutory operating result (328,595) (5,757,123)
---------- ------------
Deemed cost of reverse listing - 2,665,094
---------- ------------
Acquisition costs and acquisition-related
contingent consideration and
earn outs - 2,832,049
---------- ------------
Underlying operating result (328,595) (259,980)
---------- ------------
Note that our 2022 operations include less than 10 weeks of the
results of Nailberry. As set out in note 26, had Nailberry been
part of the group for the full year it would have contributed sales
of GBP2,399,121 and profit of GBP551,861.
Trading since the year end
You've already read about or experienced the numerous macro
challenges that exist in consumer markets. We are not immune to
these and will need to manage these challenges accordingly.
However, our brands are very small and operate in market segments
which are very large. We therefore have plenty of upside to go
after. We need to focus on that growth and not find excuses in the
cost of living crisis, post pandemic turmoil or shifting sales
channels of modern consumer markets.
Trading to end May has been in line with expectations.
We remain focused on profitable growth over the longer term,
however, our current very lean cost base is limiting our growth so
we will be adding costs to better support the numerous growth
opportunities we have.
Summary
We have assembled a wonderful group of talented people,
established an AQSE listed vehicle and acquired an exciting
portfolio of brands - we've started.
Whilst we would all like a well defined straight forward path to
growing small brands we realise that the reality is a bumpy
ride.
With great management teams, determined focus, ambitious plans,
some time and a few lucky breaks we can absorb the bumps and build
these small brands to be much larger businesses.
We will continue our search for gems to add to our portfolio and
to add bigger opportunities where we believe these to be high
return low risk ventures.
SILVERWOOD BRANDS PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE PERIODED 31 DECEMBER 2022
2022 2021
Note GBP GBP
Revenue 5 3,667,488 1,408,905
Cost of sales (1,398,229) (623,868)
Gross profit 2,269,259 785,037
Other operating income 6 30,119 -
Administrative expenses (2,559,358) (1,113,632)
Deemed cost of listing 7 (2,665,094) -
Acquisition costs, acquisition related contingent
consideration and earn outs 7 (2,832,049) -
Loss from operations (5,757,123) (328,595)
Finance income 11 25,588 -
Finance expense 11 (160,085) (2,711)
Fair value (losses)/gains (120,703) -
Loss before tax (6,012,323) (331,306)
Tax (expense)/credit 12 (23,403) 34,606
Loss for the period (6,035,726) (296,700)
Total comprehensive income (6,035,726) (296,700)
Earnings per share
Basic and diluted loss per share (pence) 13 (37.5) (7.3)
The notes on pages 45 to 85 form part of these financial statements.
SILVERWOOD BRANDS PLC
REGISTERED NUMBER: 13557318
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
2022 2021
Note GBP GBP
Assets
Non--current assets
Property, plant and equipment 14 45,490 68,778
Intangible assets 15 5,973,797 33,238
Investments 16 216,802,081 80
222,821,368 102,096
Current assets
Inventories 17 401,132 121,704
Trade and other receivables 18 968,021 218,938
Cash and cash equivalents 2,055,143 36,176
3,424,296 376,818
Total assets 226,245,664 478,914
SILVERWOOD BRANDS PLC
REGISTERED NUMBER: 13557318
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2022
2022 2021
Note GBP GBP
Liabilities
Non--current liabilities
Loans and borrowings 20 13,947 16,534
Deferred tax liability 12 657,535 -
671,482 16,534
Current liabilities
Trade and other liabilities 19 5,858,054 1,171,110
Loans and borrowings 20 1,529,265 30,616
7,387,319 1,201,726
Total liabilities 8,058,801 1,218,260
Net assets/(liabilities) 218,186,863 (739,346)
Issued capital and reserves attributable to
owners of the parent
Share capital 21 24,202,969 532,494
Share premium reserve 201,467,075 1,406,108
Shares to be issued 26 831,450 -
SILVERWOOD BRANDS PLC
REGISTERED NUMBER: 13557318
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2022
Reverse takeover reserve (4,797,432) (1,938,600)
Share based payment reserve 3,257,875 -
Retained earnings (6,775,074) (739,348)
218,186,863 (739,346)
TOTAL EQUITY 218,186,863 (739,346)
2022
Note GBP
Assets
Non--current assets
Other non--current investments 16 14,254,164
Trade and other receivables 18 218,007,377
232,261,541
Current assets
Trade and other receivables 18 362,264
Cash and cash equivalents 1,249,007
1,611,271
Total assets 233,872,812
SILVERWOOD BRANDS PLC
REGISTERED NUMBER: 13557318
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2022
2022
Note GBP
Liabilities
Current liabilities
Trade and other liabilities 19 7,535,493
Loans and borrowings 20 1,511,713
9,047,206
Total liabilities 9,047,206
Net assets 224,825,606
Issued capital and reserves attributable to
owners of the parent
Share capital 21 24,202,969
Share premium reserve 201,467,075
Shares to be issued 26 831,450
Share based payment reserve 592,781
Retained earnings (2,268,669)
TOTAL EQUITY 224,825,606
The Company's loss for the period was GBP2,268,669
SILVERWOOD BRANDS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 31 DECEMBER 2022
Reverse Share based
Shares takeover payment Retained
Share capital Share premium to be issued reserve reserve earnings Total equity
GBP GBP GBP GBP GBP GBP GBP
At 1 January
2022 532,494 1,406,108 - (1,938,600) - (739,348) (739,346)
Comprehensive
income for the
period
Loss for the
period - - - - - (6,035,726) (6,035,726)
Total
comprehensive
income for
the period - - - - - (6,035,726) (6,035,726)
Issue of
share capital 23,670,475 200,060,967 - - - - 223,731,442
Equity share
options
issued - - - - 20,000 - 20,000
Deemed cost
of listing - - - - 2,665,094 - 2,665,094
Shares to be
issued as
part of
the
consideration
in a business
combination - - 831,450 - - - 831,450
Reverse
takeover - - - (2,858,832) - - (2,858,832)
Post
combination
remuneration
- equity
component - - - - 572,781 - 572,781
Total
contributions
by and
distributions
to owners 23,670,475 200,060,967 831,450 (2,858,832) 3,257,875 - 224,961,935
At 31
December 2022 24,202,969 201,467,075 831,450 (4,797,432) 3,257,875 (6,775,074) 218,186,863
Reverse
takeover Retained
Share capital Share premium reserve earnings Total equity
GBP GBP GBP GBP GBP
At 1 January
2021 - - - (442,648) (442,648)
Comprehensive
income for the
period
Loss for the
year - - - (296,700) (296,700)
Total
comprehensive
income for
the period - - - (296,700) (296,700)
Contributions
by and
distributions
to owners
Issue of
share capital 532,494 1,406,108 - - 1,938,602
Reverse
takeover - - (1,938,600) - (1,938,600)
Total
contributions
by and
distributions
to owners 532,494 1,406,108 (1,938,600) - 2
At 31
December 2021 532,494 1,406,108 (1,938,600) (739,348) (739,346)
SILVERWOOD BRANDS PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 31 DECEMBER 2022
Share based
Shares payment Retained
Share capital Share premium to be issued reserve earnings Total equity
GBP GBP GBP GBP GBP GBP
Comprehensive
income for the
period
Loss for the
period - - - - (2,268,669) (2,268,669)
Total
comprehensive
income for
the period - - - - (2,268,669) (2,268,669)
Contributions
by and
distributions
to owners
Issue of
share capital 24,202,969 201,467,075 - - - 225,670,044
Equity share
options
issued - - - 20,000 - 20,000
Shares to be
issued as
part of the
consideration
in a business
combination - - 831,450 - - 831,450
Post
combination
remuneration
- equity
component - - - 572,781 - 572,781
Total
contributions
by and
distributions
to owners 24,202,969 201,467,075 831,450 592,781 - 227,094,275
At 31
December 2022 24,202,969 201,467,075 831,450 592,781 (2,268,669) 224,825,606
SILVERWOOD BRANDS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODED 31 DECEMBER 2022
2022 2021
Note GBP GBP
Cash flows from operating activities
Loss for the period (6,035,726) (296,700)
Adjustments for
Deemed cost of listing 2,665,094 -
Acquisition costs, acquisition related contingent
consideration and earn outs 2,832,049 -
Depreciation of property, plant and equipment 14 18,714 55,604
Amortisation of intangible fixed assets 15 125,363 -
Finance income 11 (25,588) -
Finance expense 11 160,085 2,711
Loss on sale of property, plant and equipment - 13,406
Bad debt charge 7,320 -
Fair value movements 120,703 -
Share--based payment expense 20,000 -
Net foreign exchange loss 25 -
Income tax expense 12 23,403 -
(88,558) (224,979)
SILVERWOOD BRANDS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODED 31 DECEMBER 2022
Movements in working capital:
Increase in inventories (50,785) (26,115)
(Increase)/decrease in trade and other
receivables (167,475) 41,161
Increase/(decrease) in trade and other payables 1292,715 (6,160)
Cash generated from/used in operations (14,103) (216,093)
Net cash generated from/(used in) operating
activities (14,103) (216,093)
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired 26 (5,893,163) -
Cash acquired on reverse acquisition 1,491,957 -
Purchases of property, plant and equipment (9,827) (7,825)
Purchase of intangibles 15 (2,860) (5,928)
Payments to acquire financial assets (1,284,025) -
Net cash from investing activities (5,607,918) (13,753)
Cash flows from financing activities
Issue of ordinary shares 1,600,000 -
Issue of loan note 4,400,000 254,800
Issue of convertible loan note 1,500,000 -
Proceeds from bank borrowings 154,921 -
Payment of lease liabilities (19,366) (18,439)
Net cash from/(used in) financing activities 7,635,555 (18,439)
Net cash increase in cash and cash equivalents 2,018,967 6,515
Cash and cash equivalents at the beginning
of period 36,176 29,661
Cash and cash equivalents at the end of the
period 2,055,143 36,176
SILVERWOOD BRANDS PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE PERIODED 31 DECEMBER 2022
2022
Note GBP
Cash flows from operating activities
(Loss)/profit for the period (2,268,669)
Adjustments for
Finance income 11 (19,644)
Finance expense 11 156,370
Fair value movements 120,703
Acquisition costs, acquisition related contingent
consideration and earn outs 1,306,673
Net foreign exchange loss 2,044
(702,523)
Movements in working capital:
Increase in trade and other receivables (381,472)
Increase in trade and other payables 124,426
Cash generated from operations (959,569)
Net cash (used in)/from operating activities (959,569)
Cash flows from investing activities
Acquisition of subsidiary 26 (6,000,000)
Payments for financial assets (1,284,025)
Net cash (used in)/from investing activities (7,284,025)
Cash flows from financing activities
Issue of ordinary shares 3,592,601
Issue of loan note 4,400,000
Issue of convertible loan note 1,500,000
Net cash from financing activities 9,492,601
Net cash increase in cash and cash equivalents 1,249,007
Cash and cash equivalents at the end of the
period 1,249,007
SILVERWOOD BRANDS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2022
1. General Information
Silverwood Brands plc (the Company) is a public company limited
by shares and registered in England and Wales with company number
13557318. The Company, which was incorporated on 10 August 2021, is
domiciled in the United Kingdom and the registered office is 2nd
Floor 38--43 Lincoln's Inn Fields, London, England, WC2A 3PER. The
shares of the Company are traded on the Growth Market of the Acquis
Stock Exchange with the ticker code SLWD. PL. The financial
statements for the Company are the first statutory financial
statements for the period from incorporation to 31 December 2022.
The consolidated financial statements comprise the Company and its
subsidiaries (together referred to as the "Group") and are for the
year ended 31 December 2022. Further details of the basis of
preparation of the financial statements are set out in note 3.
The principal activity of the Group is the sale and distribution
of beauty products.
2. Accounting policies
2.1 Basis of preparation
These financial statements have been prepared in accordance with
UK adopted international accounting standards..
The financial statements are presented in Pounds Sterling and
all values are rounded to the nearest pound.
These consolidated financial statements have been prepared in
accordance with the accounting policies set out below, which have
been consistently applied to all the years presented.
Standards adopted in the year
There have been no standards adopted that have had a material
impact on the financial statements
and no standards adopted in advance of their implementation
date.
Standards, amendments and interpretations to published standards
not yet effective
The Directors have considered those standards and
interpretations, which have not been applied in the
financial statements but are relevant to the Group's operations,
that are in issue but not yet effective
and do not consider that they will have a material impact on the
future results of the Group.
2.2 Going concern
At the year--end, the Group had cash balances of GBP2,055,143
(2021: GBP36,176) and net assets of GBP218,186,183 (2021: net
liabilities GBP739,346). The Group has posted a loss for the year
after tax of GBP6,035,726 (2021: loss of GBP296,700) and retained
losses were GBP6,775,074 (2021: losses of GBP739,348). The loss
after tax of GBP6,035,726 was after charging exceptional
acquisition costs of GBP2,832,049 and a non--cash charge of
GBP2,536,000 relating to the Reverse Takeover described in note
3.
Silverwood entered into two loan agreements with Castelnau Group
Limited (Castelnau) in the period:
-- An unsecured convertible loan facility of approximately
GBP1.5 million to be applied towards general working capital
requirements of the Company repayable on the first anniversary of
draw down. The loan was converted in full into ordinary shares on
31 May 2023.
-- An unsecured term loan facility of approximately GBP4.4
million to be applied towards the acquisition of NBY London Limited
and to general working capital requirements of the Company
repayable on the first anniversary of draw down (or earlier at the
option of the Company). There are no conversion provisions in this
loan agreement. Castelnau has confirmed to the directors of
Silverwood its intention to convert the loan into ordinary shares
and also confirmed that if for any reason the loan was not
converted in October 2023 to extend the repayment date by 12
months.
The financial statements have been prepared on a going concern
basis. The Directors have
reviewed forecasts for the Group for a period of at least 12
months from the date of approval of the financial statements.
Based on their assessment, the Directors have a reasonable
expectation that the Group and Company have adequate resources to
for at least twelve months and that there are no material
uncertainties that cast significant doubt about the Group's ability
to continue in operational existence. Accordingly, they have
adopted the going concern basis in preparing the consolidated
financial statements.
2.3 Basis of consolidation
The Group financial statements consolidate those of the Company
and its subsidiaries undertakings drawn up to 31 December 2022.
Subsidiaries are entities over which the Group has control. Control
comprises an investor having power over the investee and is
exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns
through its power. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases. Intra--group
balances and transactions, and any unrealised income and expenses
arising from intragroup transactions, are eliminated. Unrealised
losses are eliminated in the same way as unrealised gains, but only
to the extent that there is no evidence of impairment.
On 14 June 2022, the Company, completed a reverse acquisition of
Balmonds Skincare Ltd a company registered in the United Kingdom.
Further information about this transaction is disclosed in note
3.
The comparative period for the Group is 1 January 2021 to 31
December 2021 and includes the results of Balmonds only.
Undertaking Country Holding Registered Office Proportion Proportion
of Incorporation of voting of voting
rights and rights and
shares held shares held
2022 2021
Balmonds United Kingdom Ordinary Unit 7 Westergate 100% --
Skincare Shares Business Centre,
Ltd Westergate Road,
Brighton, BN2 4QN
NBY London United Kingdom Ordinary 5.17 Grand Union 100% --
Ltd Shares Studios 322 Ladbroke
Grove, London, England,
W10 5AD
Cosmic Circles United Kingdom Ordinary 38 -- 43, Lincoln's 100% --
Ltd Shares Inn Fields, London,
United Kingdom,
WC2A 3PE
2.4 Revenue
Revenue is measured on the consideration specified in a contract
with a customer.
Revenue is recognised when the Group's obligations are
fulfilled, i.e. when control over goods is transferred to
customers. Customers obtain control of the goods when they are
delivered to and have been accepted at their premises, or other
agreed upon location, or made available for ex--works collection,
depending on individual customer arrangements.
Invoices are generated at that point in time and are usually
payable within 30 days. Revenue is recorded based on the price
specified in sales invoices, net of any agreed discounts and
rebates, and exclusive of value added tax on goods supplied to
customers during the year.
There are a variety of discounts and rebates provided to
customers, which are assessed on a case--by--case basis as to
whether the resulting payment to customers is for a distinct good
or service (such as marketing) or for a promotional discount.
Returns are permitted, but typically these only occur in
isolated instances where inaccuracy has been made in the order.
2.5 Government grants
Government grants are recognised when the entity complies with
any conditions for the grant it is receivable and with the value of
any unmet performance obligations required to receive the grants
recognised as deferred revenue.
2.6 Right--of--use assets
A right--of--use asset is recognised at the commencement date of
a lease. The right--of--use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for,
as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial
direct costs incurred, and, except where included in the cost of
inventories, an estimate of costs expected to be incurred for
dismantling and removing the underlying asset, and restoring the
site or asset.
Right--of--use assets are depreciated on a straight--line basis
over the unexpired period of the lease or the estimated useful life
of the asset, whichever is the shorter. Where the Group expects to
obtain ownership of the leased asset at the end of the lease term,
the depreciation is over its estimated useful life. Right--of use
assets are subject to impairment or adjusted for any remeasurement
of lease liabilities..
2.7 Property, plant and equipment
All plant and equipment is stated at cost less subsequent
depreciation and impairment. The costs of the property, plant and
equipment is purchase price plus any incidental costs of
acquisition. Depreciation commences at the point the asset is
available for use.
If there is any indication that an asset's value is less than
it's carrying amount an impairment review is carried out. Where
impairment is identified an asset's value is reduced to reflect
this.
The residual values and useful economic lives of property, plant
and equipment are reviewed by management on an annual basis and
revised to the extent required.
Depreciation
Depreciation is provided to write off the cost, less estimated
residual values, of all plant and equipment equally over their
expected useful lives. It is calculated at the following rates:
-- Office Equipment at 33% per annum
-- Plant & Machinery at 25% per annum
-- Computer Equipment at 25--33% per annum
-- Short--Term Leasehold Property - over the life of the
lease
-- Freehold Property - 25% per annum
2.8 Intangible assets
All intangible assets, excluding goodwill arising on a business
combination, are stated at their amortised cost or value at initial
recognition less amortization and/or any provision for
impairment.
Definite useful life intangibles
-- Trademarks -- amortised at 10% per annum straight--line
-- Customer relationships -- amortised at 20% per annum
straight--line
-- Development -- amortised at 20% per annum straight--line
-- Patents - amortised at 25% per annum straight--line
-- Other intangible assets - amortised at 20% per annum
straight--line
Indefinite useful life intangibles
Goodwill is allocated to the cash generating unit (CGU) to which
it relates and is tested for impairment annually, or more
frequently when there is an indication that the unit maybe
impaired. The testing takes the form of a discounted cashflow
analysis using a pretax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the CGU. Impairment losses cannot be subsequently reversed.
2.9 Investments
Investments are non-derivative financial assets that cannot be
classified as loans and other receivables or cash and cash
equivalents. Investments are recognised when the Group becomes
party to the contractual arrangements relevant to ownership and
de-recognised when it ceases to be party to such arrangements.
Dividends and interest income from investments are included
within finance income when the Group's right to receive payments is
established. This category includes financial assets at fair value
through profit and loss and financial assets at fair value through
other comprehensive income.
Measurement of fair values
When measuring the fair value of an asset or a liability, the
Group uses observable market data as far as possible. Fair values
are categorised into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques as
follows.
-- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
-- Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a
liability fall into different levels of the fair value hierarchy,
then the fair value measurement is categorised in its entirety in
the same level of the fair value hierarchy as the lowest level
input that is significant to the entire measurement.
2.10 Leases
A lease liability is recognised at the commencement date of a
lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. Lease payments comprise of fixed payments less any
lease incentives receivable, variable lease payments that depend on
an index or a rate, amounts expected to be paid under residual
value guarantees, exercise price of a purchase option when the
exercise of the option is reasonably certain to occur, and any
anticipated termination penalties. Lease payments that do not
depend on an index or a rate are expensed in the period in which
they are incurred.
Lease liabilities are measured at amortised cost using the
effective interest method. The carrying amounts are remeasured if
there is a change in the following: future lease payments arising
from a change in an index or a rate used; residual guarantee; lease
term; certainty of a purchase option and termination penalties.
When a lease liability is remeasured, an adjustment is made to the
corresponding right--of use asset, or to profit or loss if the
carrying amount of the right--of--use asset is fully written
down.
2.11 Taxation
The tax expense for the period comprises current tax and
deferred tax. Current tax is recognised in profit or loss, except
that a charge attributable to an item of income or expense
recognised as other comprehensive income is also recognised
directly in other comprehensive income.
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the consolidated financial
statements and the corresponding tax bases used in the computation
of taxable profit and is accounted for using the statement of
financial position liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
2.12 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and other
short--term highly liquid investments (less than three months at
inception) that are readily convertible to a known amount of cash
and are subject to an insignificant risk of change in value.
2.13 Inventories
Inventories are valued on a first in, first out basis at the
lower of cost and net realizable value. Cost
includes all expenditure incurred during the normal course of
business in bringing in inventories to their present location and
condition. Net realizable value is based on the estimated useful
selling price less any direct sale costs.
2.14 Financial instruments
Non--derivative financial instruments
A financial instrument is recognised if the Group becomes a
party to the contractual provisions of the instrument. Financial
assets are derecognised if the Group's contractual rights to the
cash flows from the financial assets expire or if the Group
transfers the financial asset to another party without retaining
control or substantially all risks and rewards of the asset.
Regular purchases and sales of financial assets are accounted for
at trade date, i.e., the date that the Group commits itself to
purchase or sell the asset. Financial liabilities are derecognised
if the Group's obligations specified in the contract expire or are
discharged or cancelled.
Trade and other receivables
Trade receivables are amounts due from customers for goods sold
or services performed in the ordinary course of business. They are
generally due for settlement within 90 days and therefore are all
classified as current. Trade receivables are recognised initially
at the amount of consideration that is unconditional unless they
contain significant financing components, when they are recognised
at fair value. The Group holds the trade receivables with the
objective to collect the contractual cash flows and therefore
measures them subsequently at amortised cost using the effective
interest method.
Interest--bearing borrowings
Interest--bearing borrowings are classified as nonderivative
financial instruments, measured at amortised cost using the
effective interest rate method.
Trade and other payables
Trade and other payables are stated at net payable amounts.
Derivative financial instruments
The Group has no derivative financial instruments..
2.15 Share capital and reserves
"Ordinary Shares" are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from proceeds.
"Share premium" represents the excess over nominal value of the
fair value of consideration received for equity shares net of
expenses of the share issue.
"Retained earnings" represents retained losses of the group. As
a result of the reverse takeover, the consolidated figures include
the retained losses of the Group only from the date of the reverse
takeover together with the brought forward losses of Balmonds
Skincare Ltd.
"Reverse takeover reserve" represents the accounting adjustments
required to reflect the reverse takeover upon consolidation.
"Shares to be issued" represents the deferred consideration
arising from the acquisition of Balmonds Skincare Ltd which will be
recognised as an issue of shares in Silverwood Brands plc.
"Share based payments reserve" represents amounts recognised in
equity in relation to share based payments and similar charges.
2.16 Critical judgements and significant accounting estimates
In the application of the Company's accounting policies, the
Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not apparent from other sources. The estimates and
assumptions are based on historical experience and other factors,
including expectations of future events that are believed to be
reasonable under the circumstances. Actual results may differ from
these estimates.
Critical accounting judgements
In applying the Group's accounting policies, management has made
the following judgements, which have the most significant effect on
the consolidated financial statements.
Reverse acquisition accounting - identifying the accounting
acquirer
As disclosed in the basis of preparation (accounting policy
2.1), management has used judgement to determine an appropriate
accounting policy to account for the business combination in the
period. The most significant judgement is in determining the
accounting acquiror as the conclusion of this has a fundamental
impact on the presentation of the financial statements. In arriving
at that judgement management had regard to the guidance in IFRS 3
to identify the accounting acquirer and on this basis determined
that Balmonds Skincare Ltd was the accounting acquirer and
therefore presented the financial statements as disclosed in note
3.
Investment in Lush
As set out in note 16, the directors of Cosmetic Warriors
Limited and Lush Cosmetics Limited have disputed the transfer of
the shareholdings to Cosmic Circles Limited and declined to record
the share transfers. The directors of the Company have exercised
judgement in considering the circumstances in relation to the
Company's investment in the Lush companies and determining that the
investment meets the definition of an asset in IFRS because it is a
resource controlled by the entity as a result of past events from
which future economic benefits are expected to flow to the
Group.
Contingent consideration
The agreements, made in 2022, to acquire Balmonds Skincare Ltd
("Balmonds") and NBY London Ltd
("NBY") include provision for the Group to pay additional
consideration to the selling shareholders in future years
conditional on the achievement of incremental revenue or other
specific growth targets. We have evaluated each agreement in
accordance with IFRS 3 to determine whether these payments should
be included as part of the business combination or post combination
remuneration expensed to the income statement. Where agreements
include conditions for continuing employment, therefore we have
concluded that these payments should be charged to the income
statement in future periods.
The acquisition--related contingent consideration and earn--out
liabilities may include estimates of future
financial performance against targets. When estimating the
future financial performance, we use Board--approved budgets and,
if the timeframe goes beyond available budgets, reasonable growth
rates are assessed for each business thereafter.
Valuation of intangible assets
The determination of the fair value of assets and liabilities
including goodwill arising on the acquisition of businesses, the
acquisition of industry--specific knowledge, branding and customer
relationships, whether arising from separate purchases or from the
acquisition as part of business combinations, and development
expenditure which is expected to generate future economic benefits
and the time over which this is expected, are based, to a
considerable extent, on management's estimations.
The fair value of these assets and their expected useful
economic lives are determined by discounting estimated future net
cash flows generated by the asset where no active market for the
assets exists. The use of different assumptions for the
expectations of future cash flows and the discount rate would
change the valuation of the intangible assets.
Key sources of estimation uncertainty
The key areas where estimates and assumptions are significant to
the financial statements are described below.
Goodwill
The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might be
impaired. The recoverable amounts of the CGUs are determined from
value in use. The key assumptions for the value in use calculations
are those regarding the discount rates (being the cost of capital),
growth rates (based on Board approved forecasts) and future profit
margins (based on Board approved forecasts). The Directors are
satisfied that recoverable amounts are in excess of the value of
the goodwill held. At 31 December 2022, the carrying amount of
goodwill was GBP5,829,691 (2021: GBP5,000).
3. Reverse take over
On 15 June 2022, the Company acquired through a share for share
exchange the entire shares of Balmonds Skincare Ltd ("Balmonds")
whose principal activity is the sale and distribution of beauty
products.
Although the transaction resulted in Balmonds becoming a wholly
owned subsidiary of the Company, the transaction constitutes a
reverse acquisition as the previous shareholders of Balmonds own a
majority of the ordinary shares of the Company.
In substance, the shareholders of Balmonds acquired a
controlling interest in the Company and the transaction has
therefore been accounted for as a reverse acquisition. As the
Company's activities prior to the acquisition were purely the
maintenance of its listing on the the Acquis Growth Market,
acquiring Balmonds and raising equity finance to provide the
required funding for the operations of the acquisition it did not
meet the definition of a business in accordance with IFRS 3 for the
purpose of these consolidated financial statements of the
Group.
Accordingly, in these consolidated financial statements, the
reverse acquisition did not constitute a business combination and
was accounted for in accordance with IFRS 2 "Share--based Payments"
and the associated IFRIC guidance. Although, the reverse
acquisition is not a business combination, the Company has become a
legal parent and is required to apply IFRS 10 and prepare
consolidated financial statements. The Directors have prepared
these consolidated financial statements using the reverse
acquisition methodology, but rather than recognising goodwill, the
difference between the equity value given up by the Balmonds
shareholders and the share of the fair value of net assets gained
by the Balmonds shareholders is charged to the statement of
comprehensive income as a share--based payment on reverse
acquisition and represents in substance the cost of acquiring a
market listing.
These financial statements of the Company are its financial
statements for the first period of account from incorporation to 31
December 2022. In accordance with reverse acquisition accounting
principles, these consolidated financial statements represent a
continuation of the consolidated statements of Balmonds and
therefore are the financial statements of the group for the year
ended 31 December 2022, including activities before the legal
formation of the parent entity. The consolidated financial
statements include:
--the assets and liabilities of Balmonds at their
pre--acquisition carrying value amounts and the results for both
years; and
-- the assets and liabilities of the Company as at 14 June 2022
and its results from the date of the reverse acquisition to 31
December 2022.
On 14 June 2022, the Company issued 4,808,039 ordinary shares to
acquire the whole of the share capital of Balmonds an issue price
of GBP0.85 per share. In addition, a further 1,398,365 Ordinary
shares were issued to shareholders in Balmonds in consideration of
the novation of the Company of a shareholder loan and a further
3,205,360 Ordinary shares are to be issued to the shareholders in
Balmonds as deferred consideration.
Because the legal subsidiary, Balmonds, was treated on
consolidation as the accounting acquirer the fair value of the
shares deemed to have been issued by Balmonds to acquire the
company less the fair value of the net assets of the company at
acquisition resulted in GBP2,665,094, being recognised as a reverse
acquisition expense within Exceptional Costs in accordance with
IFRS 2, Share Based Payments, reflecting the economic cost to
Balmonds shareholders of acquiring a quoted entity.
4. Functional and presentation currency
These consolidated financial statements are presented in pound
sterling, which is the Company's functional currency. All amounts
have been rounded to the nearest pound, unless otherwise
indicated.
5. Revenue
The following is an analysis of the Group's revenue for the period
from continuing operations:
2022 2021
GBP GBP
Sale of goods 3,667,488 1,408,905
3,667,488 1,408,905
Analysis of revenue by country of destination:
2022 2021
GBP GBP
United Kingdom 2,656,606 1,195,773
Rest of Europe 460,547 45,644
Rest of the world 550,335 167,488
3,667,488 1,408,905
Timing of revenue recognition:
2022 2021
GBP GBP
Goods transferred at a point in time 3,667,488 1,408,905
3,667,488 1,408,905
6. Other operating income
2022 2021
GBP GBP
Other operating income 119 -
Government grants receivable 30,000 -
30,119 -
7. Exceptional costs
2022 2021
GBP GBP
Deemed cost of listing 2,665,094 -
Acquisition related contingent consideration
and earn--outs 896,196 -
Acquisition costs 1,935,853 -
Deemed cost of listing
As explained in note 3, the reverse acquisition of Silverwood
Brands plc does not meet the requirements of IFRS 3 Business
Combinations so has been accounted for under IFRS 2 Share Based
Payments.
The amount of GBP2,665,094 represents the deemed cost of acquisition
over the net assets of Silverwood Brands plc that were acquired.
Under IFRS 2, the deemed costs of obtaining the listing has been
expensed to profit and loss.
Acquisition related contingent consideration and earn--outs
Under IFRS 3, contingent consideration on business combination
is apportioned between consideration for the acquisition and
remuneration for post combination services. The contingent consideration
for both the acquisition of NBY London Ltd and Balmonds Skincare
Ltd ("Balmonds") include elements that require the sellers to
remain engaged by the company. This contingent consideration
is accounted for as remuneration for post combination services
which is recognised in the profit and loss.
Deferred consideration for Balmonds is recognised in two parts.
Contingent consideration attributable to sellers who are not
required to remain engaged with the business, is recognised as
part of the investment and a corresponding amount is recognised
in the "shares to be issued reserve". The remainder of the deferred
consideration, which requires individuals to remain engaged with
the Company, is recognised as remuneration for post combination.
The amount recognised in the current period the profit and loss
in respect of the Balmonds contingent consideration is GBP572,781.
Contingent consideration for NBY London Ltd is recognised as
remuneration for post combination services. An amount of GBP323,412
has been recognised in the profit and loss in respect of this
business combination in the current period with a corresponding
amount recognised in other liabilities.
The maximum deferred consideration payable to the former shareholders
of Balmonds on or around the third anniversary of the reverse
take over, is 3,205,360 ordinary shares in the Company, subject
to certain conditions including certain performance targets being
satisfied and, in most but not all cases, on continuing employment
in the business. The maximum deferred consideration payable to
the former shareholder of Nailberry is GBP4.0 million, subject
to the achievement of certain performance criteria dependent
on sales and EBITDA growth over the next three years and on continuing
employment in the business.
Acquisition related costs
Costs arising as a result of business combinations in the period
have been recognised as exceptional items.
8. Auditors' remuneration
During the period, the Group obtained the following services from
the Group's auditors:
2022 2021
GBP GBP
Fees payable to the 's auditors for the audit
of the consolidated and parent Company's financial
statements 85,000 -
9. Employee benefit expenses
Group
2022 2021
GBP GBP
Employee benefit expenses (including
directors)
comprise:
Wages and salaries 346,671 209,825
National insurance 29,372 20,254
Defined contribution pension cost 9,761 7,442
385,804 237,521
In addition to the above, acquisition related contingent
consideration and earn out amounts of GBP896,196 have been
accounted for as post combination remuneration in the period.
Key management personnel compensation
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the activities
of the Group, including the directors of the Company listed on
page 1.
2022 2021
GBP GBP
Salary 65,547 53,000
65,547 53,000
SILVERWOOD BRANDS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2022
9. Employee benefit expenses (continued)
The monthly average number of persons, including the directors, employed
by the Group during the period was as follows:
2022 2021
No. No.
Executive Directors 2 2
Sales 1 -
Marketing 2 1
Admin 4 4
Despatch 2 1
Production 3 2
14 10
10. Directors' remuneration
2022 2021
GBP GBP
Directors' emoluments 65,547 53,000
65,547 53,000
The remuneration recognised above relates to directors of Balmonds
Skincare Ltd and NBY London Ltd. Details of the director's remuneration
for Silverwood Brands plc is detailed in the governance report.
No retirement benefits are accruing to Company Directors under
a defined contribution scheme (2021: none).
SILVERWOOD BRANDS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2022
11. Finance income and expense
Recognised in profit or loss
2022 2021
GBP GBP
Finance income
Interest on
bank deposits 99 -
Other interest receivable 25,489 -
Total finance income 25,588 -
Finance expense
Interest portion of
lease payments 3,715 2,711
Other loan interest
payable 156,370 -
Total finance expense 160,085 2,711
Net finance expense
recognised in profit or
loss (134,497) (2,711)
SILVERWOOD BRANDS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2022
12. Tax expense
12.1 Income tax recognised in profit or loss
2022 2021
GBP GBP
Current tax
Current tax on profits for the period 23,166 (34,606)
Total current tax 23,166 (34,606)
Deferred tax expense
Origination and reversal of timing
differences 237 -
Total deferred tax 237 -
23,403 (34,606)
Total tax expense
Tax expense excluding tax on sale of discontinued
operation and share of tax of equity accounted
associates and joint ventures 23,403 (34,606)
23,403 (34,606)
The reasons for the difference between the actual tax charge
for the period and the standard rate of corporation tax in the
United Kingdom applied to losses for the period are as follows:
2022 2021
GBP GBP
Loss for the period (6,035,726) (296,700)
Income tax credit/expense (including income
tax on associate, joint venture and
discontinued
operations) 23,403 (34,606)
Loss before income taxes (6,012,323) (331,306)
Tax using the Company's domestic tax rate
of
19% (2021:19%) (1,142,341) (62,948)
Expenses not deductible for tax purposes,
other
than goodwill, amortisation and impairment 1,258,391 9,487
Non--taxable income (4,031) -
Adjustment in research and development tax
credit
leading to an increase/(decrease) in the
tax
charge (32,260) (34,606)
Unrelieved tax losses carried forward (56,356) 53,461
Total tax expense 23,403 (34,606)
Changes in tax rates and factors affecting the future tax
charges
On 3 March 2021 the UK government announced that the standard
rate of corporation tax in the UK would change from 19% to 25% from
2023.
At 31 June 2022 the group had unutilised trading tax losses of
GBP1,138,795 (2021: GBP716,855) . The related deferred tax asset of
approximately GBP284,700 (2021: GBP136,000) has not been recognised
on the basis that there is insufficient certainty of future profits
in the subsequent financial year to warrant recognition at this
stage.
12.2 Deferred tax balances
The following is the analysis of deferred tax assets/(liabilities)
presented in the consolidated statement of financial position:
2022 2021
GBP GBP
Deferred tax liabilities (657,535) -
(657,535) -
Recognised
in profit Acquisitions/ Utilised Closing
or loss disposals in the year balance
GBP GBP GBP GBP
2022
Property,
plant and
equipment (237) - - (237)
Intangible
assets - (682,737) 25,439 (657,298)
(237) (682,737) 25,439 (657,535)
13. Earnings per share
(i) Basic earnings per share
2022 2021
Pence Pence
From continuing operations attributable
to the ordinary equity holders of the Company (37.5) (7.2)
Total basic earnings per share attributable
to the ordinary equity holders of the Company (37.5) (7.3)
(ii) Reconciliation of earnings used in calculating earnings
per share
2022 2021
GBP GBP
Loss attributable to the ordinary equity
holders
of the Company used in calculating basic
earnings
per share:
From continuing operations (6,035,726) (296,700)
(6,035,726) (296,700)
(iii) Weighted average number of shares used as the denominator
2022 2021
Number Number
Weighted average number of ordinary shares
used
as the denominator in calculating basic
earnings
per share 16,105,381 4,068,833
Weighted average number of ordinary shares
and potential ordinary shares used as the
denominator
in calculating diluted earnings per share 16,105,381 4,086,833
Weighted average shares in issue is calculated in accordance
with Application Guidance B25 to B27 of IFRS3. In the period
prior to the RTO the loss attributable to the deemed acquirer,
Balmonds, is divided by the number of Balmonds shares in issue
multiplied by the share exchange ratio established in the RTO.
In the period following the RTO the loss attributable to the
Group is divided by the weighted average number of shares of
the Company in issue.
Where the Group reports a loss for the current period, then in
accordance with IAS 33, the share options in issue are not considered
dilutive.
SILVERWOOD BRANDS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2022
14. Property, plant and equipment
Group
Short--term
Freehold leasehold Plant and Office Computer
property property machinery equipment equipment Total
GBP GBP GBP GBP GBP GBP
Cost or valuation
At 1 January 2021 25,818 81,316 73,192 - 2,500 182,826
Additions - - 7,075 - 750 7,825
Disposals - - (24,750) - - (24,750)
At 31 December 2021 25,818 81,316 55,517 - 3,250 165,901
Additions - - 9,827 - 1,041 10,868
Acquisition of
subsidiary - - - 339 - 339
At 31 December 2022 25,818 81,316 65,344 339 4,291 177,108
SILVERWOOD BRANDS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2022
14. Property, plant and equipment (continued)
Short--term
Freehold leasehold Plant and Office Computer
property property machinery equipment equipment Total
GBP GBP GBP GBP GBP GBP
Accumulated
depreciation
and
impairment
At 1 January
2021 11,338 30,494 26,966 - 1,342 70,140
Charge owned
for the
period 6,454 - 15,555 - 537 22,546
Charged
financed for
the period - 13,553 2,228 - - 15,781
Disposals - - (11,344) - - (11,344)
At 31
December
2021 17,792 44,047 33,405 - 1,879 97,123
Charge owned
for the
period 5,617 - 12,189 75 833 18,714
Charged
financed for
the period - 13,553 2,228 - - 15,781
At 31
December
2022 23,409 57,600 47,822 75 2,712 131,618
Net book
value
At 31
December
2021 8,026 37,269 22,112 - 1,371 68,778
At 31
December
2022 2,409 23,716 17,522 264 1,579 45,490
SILVERWOOD BRANDS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2022
14. Property, plant and equipment (continued)
14.1. Assets held under leases
The net book value of owned and leased assets included as "Property,
plant and equipment" in the Consolidated statement of financial
position is as follows:
31 December 31 December
2022 2021
GBP GBP
Property, plant and equipment owned 21,404 28,911
Right--of--use assets, excluding investment
property 24,086 39,867
45,490 68,778
Information about right--of--use assets is summarised below:
Net book value
31 December 31 December
2022 2021
GBP GBP
Property 23,716 37,269
Plant and machinery 370 2,598
24,086 39,867
Depreciation charge for the period ended
31 December 31 December
2022 2021
GBP GBP
Property 13,553 13,553
Plant and machinery 2,228 2,228
15,781 15,781
15. Intangible assets
Group
Customer
Development contracts
Goodwill expenditure Patents Trademarks Brands and relationships Total
GBP GBP GBP GBP GBP GBP GBP
Cost
At 1 January 2021 5,000 - 80,000 6,838 - - 91,838
Additions --
external - - - 5,928 - - 5,928
At 31 December
2021 5,000 - 80,000 12,766 - - 97,766
Additions --
external - 2,064 - 2,860 - - 4,924
On acquisition of
subsidiaries 3,192,356 - - - 1,319,726 1,548,916 6,060,998
At 31 December
2022 3,197,356 2,064 80,000 15,626 1,319,726 1,548,916 6,163,688
SILVERWOOD BRANDS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2022
15. Intangible assets (continued)
Customer
Development contracts
Goodwill expenditure Patents Trademarks Brands and relationships Total
GBP GBP GBP GBP GBP GBP GBP
Accumulated
amortisation
and
impairment
At 1 January
2021 - - 46,567 684 - - 47,251
Charge for
the year --
owned - - 16,000 1,277 - - 17,277
At 31
December
2021 - - 62,567 1,961 - - 64,528
Charge for
the period
-- owned - 516 16,000 1,961 49,168 57,718 125,363
At 31
December
2022 - 516 78,567 3,922 49,168 57,718 189,891
Net book
value
At 1 January
2021 5,000 - 33,433 6,154 - - 44,587
At 31
December
2021 5,000 - 17,433 10,805 - - 33,238
At 31
December
2022 3,197,356 1,548 1,433 11,704 1,270,558 1,491,198 5,973,797
SILVERWOOD BRANDS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2022
16. Other non--current investments
Group
2022 2021
GBP GBP
Investments 80 80
Other fixed asset investments 216,802,001 -
216,802,081 80
Company
2022
GBP
Investments in subsidiary companies 14,254,164
14,254,164
Other fixed asset investments - investment in Lush
By executed stock transfer forms dated 15 December 2022, Cosmic
Circles Limited, a wholly owned subsidiary of the Company, 1,808
shares in Cosmetic Warriors Limited and 1,808 shares in Lush
Cosmetics Limited (together the 'Lush companies'), representing
approximately 19.8% of the issued capital of the Lush companies
from Andrew Gerrie and Alison Hawksley. The directors of the
Lush companies have not registered the transfers and dispute
that they have had effect. Consideration for the transfer to
Cosmic Circles Limited was GBP216,802,001, satisfied by the allotment
and issue credited as fully paid of 228,212,632 ordinary shares
in the Company at a price equal to the closing price on AQUIS
Growth Market the last business day prior to the date of the
agreement to sell and purchase, such price being determined to
be 95 pence per share. The directors of the Lush companies dispute
that this was valid consideration.
On 15 December 2022 the Company and Andrew Gerrie and Alison
Hawksley entered into a deed of grant of power of contractual
control ('the deed') over the shares in the Lush companies. The
deed seeks to have effect until such time as Cosmic Circles Limited
is registered as the holder of the shares by the Lush companies.
The directors of the Lush companies dispute that the deed has
any effect.
The directors of the Company have considered the circumstances
in relation to the Company's investment in the Lush companies
and consider the investment meets the definition of an asset
in IFRS because it is a resource controlled by the entity as
a result of past events from which future economic benefits are
expected to flow to the Group.
At the date of approval of the financial statements the dispute
over the registration of the transfer of the shares in the Lush
companies is ongoing. Until such time as the dispute is resolved,
either by agreement or by court sanction, there is uncertainty
in relation to the legal status of the ownership arrangements
of the investment. The future conduct of the dispute cannot be
accurately predicted. Although the Directors consider the matter
can be resolved through constructive engagement between the parties,
the Group is exposed to ongoing legal costs in relation to this
matter which cannot be reliably measured.
The fair value of this investment was categorised as Level 3
at 31 December 2022. This was because the shares were not listed
on an exchange and there were no recent observable arm's length
transactions in the shares.
The valuation technique applied in considering fair value was
the market comparison technique: The valuation model is based
on market multiples derived from quoted prices of companies comparable
to the investee, adjusted for the effect of the non-marketability
of the equity securities, and the revenue and EBITDA of the investee.
The estimate is adjusted for the net debt of the investee.
Investments in subsidiaries - Company
Details of the Company's subsidiary undertakings are set out
in note 2.3. All of the investments in subsidiaries were acquired
in the period.
17. Inventories
Group
2022 2021
GBP GBP
Raw materials 220,926 121,704
Finished goods and goods for resale 180,206 -
401,132 121,704
The Directors are satisfied that all inventory at 31 December
2022 is recorded at the lower of cost or net realisable value.
There is no provision for impaired inventory as at 31 December
2022.
Inventory of GBP1,312,541 (2021: GBP623,828) was recognised as
an expense in the year.
18. Trade and other receivables
Group
2022 2021
GBP GBP
Trade receivables 452,205 152,139
Trade receivables -- net 452,205 152,139
Prepayments and accrued income 53,302 50,723
Other receivables 462,514 16,076
Total trade and other receivables 968,021 218,938
Total current portion 968,021 218,938
Company
2022
GBP
Trade receivables 681
Trade receivables -- net 681
Loans to subsidiary undertakings 218,007,377
Total financial assets other than cash and
cash equivalents classified as loans and receivables 218,008,058
Other receivables 361,583
Total trade and other receivables 218,369,641
Less: current portion -- trade receivables (681)
Less: current portion -- other receivables (361,583)
Total current portion 362,264
Total non--current portion 218,007,377
19. Trade and other payables
Group
2022 2021
GBP GBP
Trade payables 391,768 78,497
Payables to related parties 4,544,657 -
Other payables 328,302 1,033,916
Accruals 273,294 17,379
Total financial liabilities, excluding loans
and borrowings, classified as financial liabilities
measured at amortised cost 5,538,021 1,129,792
Other payables -- tax and social security payments 319,086 41,318
Deferred income 947 -
Total trade and other payables 5,858,054 1,171,110
Less: current portion -- trade payables 391,768 78,497
Less: current portion -- payables to related
parties 4,544,657 -
Less: current portion -- other payables 647,388 1,075,234
Less: current portion -- accruals 273,294 17,379
Less: current portion -- deferred income 947 -
Total current portion 5,858,054 1,171,110
Total non--current position - -
Company
2022
GBP
Trade payables 184,529
Payables to related parties 6,876,186
Other payables 323,412
Accruals 151,366
Total financial liabilities, excluding loans
and borrowings, classified as financial liabilities
measured at amortised cost 7,535,493
Total current portion 7,535,493
20. Loans and borrowings
Group
2022 2021
GBP GBP
Non--current
Lease liabilities 13,947 16,534
13,947 16,534
Current
Convertible debt 1,511,713 -
Lease liabilities 17,552 30,616
1,529,265 30,616
Total loans and borrowings 1,543,212 47,150
Convertible debt
Company
2022
GBP
Non--current
Current
Convertible debt 1,511,713
1,511,713
Total loans and borrowings 1,511,713
Convertible debt
On 12 December 2022 a short term convertible loan note ("CLN")
for GBP1.5m was issued, The CLN had a term ending 31 May 2023 and
an interest rate of 15% p.a, which is non--compounding, and, if
payable, accrued daily. The CLN was converted to equity after the
reporting date at 70p per Ordinary Share.
21. Share capital
Issued
and fully
paid
2022 2022 2021 2021
Number GBP Number GBP
Ordinary
shares of
GBP0.10
each
At 1 January 5,324,942 532,494 - -
Shares issued 236,704,751 23,670,475 5,324,942 532,494
At 31 December 242,029,693 24,202,969 5,324,942 532,494
On 15 June 2022, the Company completed a reverse acquisition
transaction with Balmonds Skincare Limited. It was considered
that Balmonds Skincare Limited was the accounting acquirer in
the transaction. The share capital set out above, and the comparative
share capital, is that of the Company, which is the legal acquirer.
During the period ended 31 December 2022 the Company undertook
the following transactions in relation to its issued share capital:
(a) At incorporation, the Company allotted 2 Ordinary shares
at nominal value for consideration of GBP0.01 each.
(b) On 14 October 2021, the Company allotted 98 Ordinary shares
at nominal value for consideration of GBP0.01 each.
(c) On 14 October 2021, 100 Ordinary shares of GBP0.01 each
were consolidated to 10 Ordinary shares of GBP0.10 each.
(d) On 14 October 2021, the Company allotted 2,747,432 Ordinary
shares of GBP0.10 each at a price of GBP0.35 per share for total
consideration of GBP961,601.
(e) On 8 November 2021, the Company allotted 2,577,500 Ordinary
shares of GBP0.10 each at a price of GBP0.40 each for total consideration
of GBP1,031,000.
(f) On 15 June 2022, the Company allotted 4,808,039 Ordinary
shares of GBP0.10 each at a price of GBP0.85 per share in exchange
for the entire share capital for Balmonds Skincare Limited.
(g) On 15 June 2022, the Company allotted 1,398,365, Ordinary
shares of GBP0.10 each at a price of GBP0.85 per share in exchange
for the novation of a Balmonds Skincare Limited shareholder loan
of GBP1,188,611.
(h) On 21 October 2022, the Company allotted 2,285,715 Ordinary
shares of GBP0.10 each at a price of GBP0.70 per share for total
consideration of GBP1,600,000.
(i) On 19 December 2022, Silverwood Brands plc allotted 228,212,632
Ordinary shares of GBP0.10 each at a price of GBP0.95 per share
for total consideration of GBP216,802,001 in exchange for a 19.8%
stake in the Lush companies. Further details of this can be found
in note 16.
(ii) Share options
During the period options to acquire 300,000 ordinary shares with
an exercise price of 60p per share were granted to three members of
management. The options will vest 12 months from the date of grant
subject to satisfaction of service condition. A share based payment
charge of approximately GBP80,000 will be recognised over the vesting
period. A charge of GBP20,000 is included in administrative expenses
in the current period. At 31 December 2022 there were 300,000 options
outstanding with a weighted average remaining contractual life of
3.0 years and a weighted average exercise price of 60p.
22. Leases
Group
(i) Leases as a lessee
The lease liabilities relate to equipment and property leased
by the group. The details of the right of use assets can be found
in note 14.1.
Lease liabilities are due as follows:
2022 2021
GBP GBP
Not later than one year 13,947 16,534
Between one year and five years 17,552 30,616
31,499 47,150
Lease liabilities included in the
Consolidated
Statement of Financial Position
at 31 December 31,499 47,150
Non--current 13,947 16,534
Current 17,552 30,616
The following amounts in respect of leases have been recognised
in profit or loss:
2022 2021
GBP GBP
Interest expense on lease liabilities 3,715 2,711
23. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial
risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The Group's
overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects
on the financial performance of the Group.
Risk management is carried out by senior executives
("executives") under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis
of the risk exposure of the Group and appropriate procedures,
controls and risk limits.
Market risk
Foreign currency risk
Although not currently material to the financial statements, the
Group undertakes certain transactions denominated in foreign
currency and is exposed to foreign currency risk through foreign
exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions
and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional
currency. The risk is measured using sensitivity analysis and cash
flow forecasting
Price risk
The Group is exposed to changes in price of its equity
investments.
Interest rate risk
The Group's main interest rate risk arises from borrowings.
Borrowings obtained at variable rates expose the Group to interest
rate risk. Borrowings obtained at fixed rates expose the Group to
fair value risk.
At present the directors do not believe that the Group has
significant interest rate risk and consequently does not hedge
against such risk. Cash balances earn interest at variable
rates
.
The Group's interest generating financial assets as at 31
December 2021 comprised cash at bank of GBP2,055,143 (2021:
GBP36.176) and a convertible loan of GBP219,544 (2021: GBPNil).
Interest is paid on cash at bank at floating rates in line with
prevailing market rates. Interest on the convertible loan is
accrued at a fixed rate.
The Group's interest generating financial liabilities as at 31
December 2022 included terms loans and convertible loan agreements
totaling GBP6,056,370. Interest on the loans is accrued at a fixed
rate.
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. The maximum exposure to credit risk at the reporting date to
recognised financial assets is the carrying amount, net of any
provisions for impairment of those assets, as disclosed in the
statement of financial position and notes to the financial
statements. The Group does not hold any collateral.
The Group has no concentration of credit risk exposure. The
Company is exposed to credit risk through amounts due from
subsidiary entities of GBP218,007,377 (see note 18).
Generally, trade receivables are written off when there is no
reasonable expectation of recovery. Indicators of this include the
failure of a debtor to engage in a repayment plan, no active
enforcement activity and a failure to make contractual payments for
a period greater than one year.
Liquidity risk
Vigilant liquidity risk management requires the Group to
maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay
debts as and when they become due and payable
The Group manages liquidity risk by maintaining adequate cash
reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity
profiles of financial assets and liabilities.
Capital risk management
The Group is not subject to any external capital requirements.
The Group's management objectives are to ensure the Group is
appropriately funded to continue as a going concern and to provide
an adequate return to shareholders commensurate with risk. The
Group defines shareholder's equity as share capital and equity
reserves. The Group has external debt finance in the form of leases
and overdrafts, gearing is not measured. The Group's structure is
periodically reviewed and, if appropriate, adjustments are made in
the light of expected future funding needs, changes in economic
conditions, financial performance and changes in Group
structure.
The Group adheres to the maintenance requirements as set out in
the Companies Act 2006.
.
24. Related party transactions
Acquisition of Balmonds
As set out in note 3, in June 2022 the Company acquired the
entire share capital of Balmonds, a cosmetics company. The
principal vendors of Balmonds were Andrew Gerrie & Alison
Hawksley. Andrew Gerrie is a director of the Company and Alison
Hawksley is his wife.
investment in Lush
As set out in note 16, in December 2022 Silverwood acquired a
stake of approximately 19.8% in Lush for total consideration of
GBP216.8 million to be satisfied by an issue and allotment of
228,212,632 new ordinary shares to Lush co-founder Andrew Gerrie
and his wife Alison Hawksley for a 95p per share price. Andrew
Gerrie is a director of the Company
Loans from Castelnau Group Limited
Castelnau Group Limited ("Castelnau") is a public company traded
on the London Stock Exchange which was formed by Phoenix Asset
Management Partners Limited ("Phoenix") in 2020. Andrew Gerrie is a
non--executive director at Phoenix.
On 12 October 2022, GBP4.4m was loaned to Silverwood Brands plc
from Castelnau for the acquisition of NBY London Ltd. The loan has
an interest rate of 15% p.a, which is non--compounding and is
repayable by 12 October 2023. The directors expect this loan is to
be converted into equity.
On 15 December 2022 a short term convertible loan note ("CLN")
for GBP1.5m was issued to Castelnau. The CLN has a term ending 31
May 2023 and an interest rate of 15% p.a, which is
non--compounding, and, if payable, will accrue daily.
Both of these amounts have been recognised as current
liabilities.
Loan to Ginger Teleporter Limited
Ginger Teleporter Limited ("Ginger") is a private company
incorporated and registered in England and Wales. Andrew Gerrie and
Paul Hodgins are directors of Ginger.
On 6 May 2022, Silverwood Brands plc entered into a convertible
loan agreement to loan up to GBP350,000 to Ginger. On 9 May 2022
GBP200,000 was loaned to Ginger. The loan has an interest rate of
15% and is repayable in 2024.
This amount has been recognised in other receivables.
Post balance sheet acquisition of Sonotas
As set out in note 27 below, in January 2023 the Company
completed the acquisition of 90% of the issued share capital of
Sonotas Holdings Corporation and 100% of the share capital of
Sonotas Corporation from executive director Andrew Tone, as well as
other seller and entered into a put and call option agreement with
Andrew Tone, which entitles the company to acquire from him the 10
percent balance of the total issued share capital of Sonotas
Holdings Corporation during the six month period commencing 48
months after the completion date.
On completion of the Sonotas Acquisition, Japanese Yen69,999,992
(approximately GBP417,000) in cash and Japanese Yen2,613,146,722
(approximately GBP15.6 million) in Silverwood shares will be paid
to the Sonotas vendors by Silverwood ("Sonotas Consideration
Shares"). The issue price of the Silverwood shares will be 95p per
share, being the closing price of a Silverwood share on the
business day immediately before this announcement. The Company has
also agreed to pay Andrew Tone a deferred payment in respect of his
shares in Sonotas Holdings of Yen392,268,790 (approximately GBP2.18
million) if settled in cash or Yen426,379,120 (approximately
GBP2.37 million) if settled by issuing shares on or before 15
December 2023.
Directors
Directors' remuneration for the period is detailed in the
director's report.
25. Controlling party
At 31 December 2022 the individual controlling party was
considered to be Andrew Gerrie due to his owning 50.65% of the
share capital of Silverwood Brands plc. The next highest individual
shareholding is 45.36% owned by Alison Hawksley, Andrew Gerrie's
wife.
26. Business combinations during the period
26.1 Subsidiaries acquired
Proportion
of voting
Date of equity interests Consideration
Name Principal activity acquisition acquired transferred
% GBP
Production and
distribution of
NBY London Ltd nail products 24/10/22 100 8,268,119
8,268,119
26.2 Consideration transferred
NBY London
Ltd
GBP
Cash 6,000,000
Surplus cash and working capital adjustments 2,268,119
8,268,119
26.3 Assets acquired and liabilities recognised at the date
of acquisition
NBY London
Ltd Total
GBP GBP
Non--current assets
Property, plant and equipment 340 340
Intangible assets 2,868,642 2,868,642
Current assets
Cash and cash equivalents 2,464,956 2,464,956
Trade and other receivables 639,861 639,861
Inventories 66,643 66,643
Non--current liabilities
Deferred taxation (682,737) (682,737)
Current liabilities
Trade and other liabilities (309,445) (309,445)
5,048,261 5,048,261
26.4 Goodwill arising on acquisition
NBY London
Ltd Total
GBP GBP
Consideration transferred 8,268,119 8,268,119
Fair value of identifiable net assets acquired (5,048,261) (5,048,261)
Goodwill arising on acquisition 3,219,858 3,219,858
26.5 Net cash outflow on acquisition
2022
GBP
Consideration paid in cash 8,268,119
Less: cash and cash equivalent balances acquired (2,464,956)
5,803.163
26.6 Impact of acquisition on the results of the Group
Acquisition of NBY London Ltd
On 24 October 2022, the group acquired 100% of the share capital
of NBY London Ltd ("NBY") for a total consideration of GBP8.3m.
NBY trades internationally as Nailberry - a premium nail product
brand using a healthy and breathable formula known as L'Oxygéné.
The group intends to use its market knowledge to grow the brand
both in the UK and internationally and are excited about the future
of the business within the Silverwood Brands portfolio.
Goodwill of GBP3,219,858 recognised in relation to the
acquisition of NBY relates to the synergistic benefits able to be
realised through NBY being a part of the larger Silverwood Group,
as well as goodwill in relation to the assembled workforce.
Contingent consideration is treated as renumeration for post
combination services. An amount of GBP323,412 has been charged to
the profit and loss in the current period.
Post acquisition revenue of GBP605,460 and loss of GBP104,560
have been recognised in respect of NBY London Ltd. The loss
GBP104,560 recognised in the group includes GBP340,000 of
exceptional legal costs. If NBY London Ltd had been part of the
group for their full financial period (1 January 2022 -- 31
December 2022) it would have contributed revenue of GBP2,399,121
and a profit for the period of GBP551,861. Transaction costs of
GBP114,304 in relation to the acquisition have been expensed in the
period.
27. Events after the reporting date
Acquisition of Sonatas
On 9 January 2023 the Company completed the acquisition of 90%
of the total issued share capital of Sonotas Holdings Corporation
together with 100% of the total issued share capital of Sonotas
Corporation from Andrew Tone, a director of the Company and certain
other sellers.
In addition, the Company entered into a put and call option
arrangement with Andrew Tone which entitles the Company to acquire
from him (or for him to require the Company to acquire from him)
the 10% balance of the total issued share capital of Sonotas
Holdings during the 6 month period commencing 48 months from the
date of completion.
A summary of the consideration and the further terms of the
Sonotas acquisition is as follows:
-- Japanese Yen70 million (approximately GBP417,000) in cash and
Japanese Yen2,613 million (approximately GBP15.6 million) in
ordinary shares will be paid to the Sonotas vendors on completion
of the acquisition.
-- The issue price of the Silverwood shares will be 95p per
share, being the closing price of a Silverwood share on the
business day immediately before the announcement of the transaction
on 12 December 2022.
-- The Company also agreed to pay Andrew Tone a deferred payment
in respect of his shares in Sonotas Holdings of Yen341.1 million
(approximately GBP2.0 million) on or before 1 July 2023. An
extension period was subsequently agreed for this payment to 15th
December 2023. This includes an additional 15% for cash payments
and an additional 25% payment if settled in shares.
-- Upon the exercise of the put and call option, the purchase
price for the option shares will be the sum of Japanese Yen275.7
million (approximately GBP1.6 million), which will be settled
through the issue to Andrew Tone of new Silverwood shares at the
mid-market closing price on the business day before the exercise of
the put and call option.
-- Certain earn-out payments, which will be settled in
Silverwood shares, will become due to Andrew Tone and certain
Sonotas vendors, subject to the Sonotas companies achieving
performance criteria, as follows:
- 10% profitability with the SteamCream brand and a minimum 10%
compound annual growth rate in Japan over a 48 month period (the
First Earn-out Payment); and
- a 100% compound annual growth rate per year average over 48
months for sales outside of Japan (the Second Earn-out
Payment).
-- The maximum amount of the First Earn-out Payment will be
equal to 100% of the revenue generated by the Sonotas companies in
Japan in the final 12-month period of the 48-month performance
period and the maximum amount of the Second Earn-out Payment will
be equal to 300% of the revenue generated outside of Japan in the
same period (subject to maximum payment of GBP9 million).
At the date of approval of these financial statements work on
the valuation of the assets and liabilities acquired, including the
fair value of separable intangible assets and residual goodwill,
has not yet been completed.
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END
NEXURSNROKUNOAR
(END) Dow Jones Newswires
June 30, 2023 12:54 ET (16:54 GMT)
Silverwood Brands (AQSE:SLWD)
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De May 2024 a Jun 2024
Silverwood Brands (AQSE:SLWD)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024
