Silverwood Brands - Statement re. Update on acquisition of Lush stake

20 February 2023 

Silverwood Brands plc

("Silverwood" or the "Company")

Update on acquisition of stake Lush Cosmetics Limited and Cosmetic Warriors

The Company announced on 12 December 2022, the acquisition of a 19.8% stake ("Lush Sale Shares") in Lush Cosmetics Limited and Cosmetic Warriors Limited (together referred to as "Lush") for a total consideration of £216.8m payable in Silverwood shares.  Lush is a manufacturer and seller of fresh handmade skincare goods and cosmetic products. Lush operates retail outlets in 48 countries and has manufacturing facilities in 6 nations.

The Company has received notification from Lush declining to record the transfer of shares to the Company's wholly owned subsidiary, Cosmic Circles Limited ("Cosmic Circles" ). The letters failed to provide any reasons for this, and the Company's solicitors have been instructed to seek further clarification from Lush.

Silverwood is disappointed by the response from Lush. The Company believes the transfers complied with Lush's articles of association and therefore it believes Lush's actions have no merit. Together with its legal advisers, Silverwood will seek to engage with Lush and its solicitors to resolve the current situation, however the Company will explore all options available to it to protect its interests for the benefit of its shareholders as a whole. As a purported arbiter of fairness, ethics, and champion of environmental, social and governance ("ESG") issues, the Company is surprised that Lush is behaving in this manner and expects that ultimately it will stand by their ethos and avoid potentially prejudicing minority interests.

Silverwood believes it is important to reiterate the following for its shareholders:

1.   As announced on 12 December 2022, pending the registration of Cosmic Circles as shareholder of Lush, Andrew Gerrie and Alison Hawksley (the "Lush Vendors") have granted to the Company full contractual power to direct, and to give binding instructions to them in respect of, and to control, the exercise and/or non-exercise of any and all rights, powers and privileges attached to the Lush Sale Shares including without limitation, receipt of dividends and distributions, voting, participation and attendance at shareholders meetings of Lush. Therefore, the Company believes its interests are maintained.

2.   Silverwood has taken legal advice at each stage of this transaction.

3.   Lush has been a great British success story. Silverwood acquired the Lush shares because of a strong belief in an even greater future potential to increase its value and therefore the value of the Company's stake in Lush. The Company intends to be a strong critical friend, advocating on behalf of all stakeholders in Lush including minority shareholders and employees through the Employee Benefit Trust (EBT), to stay on the right strategic track, avoiding the pitfalls that other previously great British success stories have fallen into in recent years. While Silverwood is disappointed with the message given by Lush to date, and its reasons and motives must be explained, the Company fully intends to continue extending its offer of engaging constructively. Silverwood's involvement brings great opportunity for Lush, its employees, and all its shareholders.

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