Silverwood Brands - Full Year Results 31 December 2022
Announcement provided by
Silverwood Brands PLC · SLWD30/06/2023 17:54
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
o 191% YoY increase in Gross Profit of
o Operating income of -
o Adjusted operating income less one off costs of -
o Total comprehensive income of -
· Major acquisitions during the year
o In May 2022 Silverwood acquired 100% of Balmonds Skincare, a
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 Paul Hodgins |
info@silverwoodbrands.com |
|
|
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 10th August 2021. Our initial admission document was published on 29 October 2021 and our shares admitted to trading on
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
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
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 £ |
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 £ |
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
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
Sonotas by numbers: (unaudited)
|
2021 K¥ |
2022 K¥ |
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 £ |
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
The equity was acquired on a split basis with 60% of the agreed value paid on completion, being a value of
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
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 £ |
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
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 PERIOD ENDED 31 DECEMBER 2022
|
|
|
|
2022 |
2021 |
|
|
|
|
Note |
£ |
£ |
|
|
|
|
|
|||
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 |
£ |
£ |
|
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 |
£ |
£ |
|
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 |
£ |
|
|
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 |
£ |
|
|
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
|
|
SILVERWOOD BRANDS PLC
|
|
|
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 31 DECEMBER 2022 |
|
|
|
Share capital |
Share premium |
Shares to be issued |
Reverse takeover reserve |
Share based payment reserve |
Retained earnings |
Total equity |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
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 |
|
|
|||||||
|
Share capital |
Share premium |
Reverse takeover reserve |
Retained earnings |
Total equity |
|
|
|
£ |
£ |
£ |
£ |
£ |
|
|
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 PERIOD ENDED 31 DECEMBER 2022 |
|
Share capital |
Share premium |
Shares to be issued |
Share based payment reserve |
Retained earnings |
Total equity |
|
£ |
£ |
£ |
£ |
£ |
£ |
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 PERIOD ENDED 31 DECEMBER 2022
|
|
|
|
2022 |
2021 |
|
|
|
|
Note |
£ |
£ |
|
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 PERIOD ENDED 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 |
- |
|
|
(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 PERIOD ENDED 31 DECEMBER 2022
|
|
|
|
2022 |
|
|
|
|
|
Note |
£ |
|
|
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 PERIOD ENDED 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
Silverwood entered into two loan agreements with Castelnau Group Limited (Castelnau) in the period:
· An unsecured convertible loan facility of approximately
· An unsecured term loan facility of approximately
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 of Incorporation |
Holding |
Registered Office |
Proportion of voting rights and shares held 2022 |
Proportion of voting rights and shares held 2021 |
|
|
|
|
|
|
Balmonds Skincare Ltd |
United Kingdom |
Ordinary Shares |
Unit 7 Westergate Business Centre, Westergate Road, Brighton, BN2 4QN |
100% |
‑ |
NBY London Ltd |
United Kingdom |
Ordinary Shares |
5.17 Grand Union Studios 322 Ladbroke Grove, London, England, W10 5AD |
100% |
‑ |
Cosmic Circles Ltd |
United Kingdom |
Ordinary Shares |
38 ‑ 43, Lincoln's Inn Fields, London, United Kingdom, WC2A 3PE |
100% |
‑ |
|
|
|
|
|
|
|
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
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
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
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 |
|
|
|
|
|
£ |
£ |
|
|
|
|
|||
|
Sale of goods |
3,667,488 |
1,408,905 |
|||
|
|
3,667,488 |
1,408,905 |
|
Analysis of revenue by country of destination:
|
|||||
|
|
|
|
|
2022 |
2021 |
|
|
|
|
|
£ |
£ |
|
|
|
|
|||
|
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 |
|
|
|
|
£ |
£ |
|
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 |
|
|
|
|
|
|
£ |
£ |
|
|
|
|
|
||||
|
Other operating income |
119 |
- |
||||
|
Government grants receivable |
30,000 |
- |
||||
|
|
30,119 |
- |
||||
7.
|
Exceptional costs
|
|||||
|
|
|
|
|
2022 |
2021 |
|
|
|
|
|
£ |
£ |
|
|
|
|
|||
|
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
Acquisition related costs
|
|||||
8.
|
Auditors' remuneration
|
|||||
|
During the period, the Group obtained the following services from the Group's auditors:
|
|||||
|
|
|
|
|
2022 |
2021 |
|
|
|
|
|
£ |
£ |
|
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 |
|
|
|
|
|
£ |
£ |
|
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
|
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 |
|
|
|
|
|
£ |
£ |
|
|
|
|
|||
|
Salary |
65,547 |
53,000 |
|||
|
|
65,547 |
53,000 |
|
SILVERWOOD BRANDS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 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 |
|
|
|
|
|
£ |
£ |
|
|
|
|
|||
|
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.
|
|
|
|
|
|
SILVERWOOD BRANDS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
11.
|
Finance income and expense
|
|||||
|
Recognised in profit or loss
|
|||||
|
|
|
|
|
2022 |
2021 |
|
|
|
|
|
£ |
£ |
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 PERIOD ENDED 31 DECEMBER 2022
12.
|
Tax expense
|
|||||
|
12.1 Income tax recognised in profit or loss
|
|||||
|
|
|
|
|
2022 |
2021 |
|
|
|
|
|
£ |
£ |
|
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 |
|
|
|
|
|
£ |
£ |
|
|
|
|
|||
|
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 £1,138,795 (2021: £716,855) . The related deferred tax asset of approximately £284,700 (2021: £136,000) 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 |
|
|
|
|
|
£ |
£ |
|
|
|
|
|||
|
Deferred tax liabilities |
(657,535) |
- |
|||
|
|
(657,535) |
- |
|
|
|
|
|
|
|
|
Recognised in profit or loss |
Acquisitions/ disposals |
Utilised in the year |
Closing balance |
|
|
£ |
£ |
£ |
£ |
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 |
|
|
|
|
|
£ |
£ |
|
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 PERIOD ENDED 31 DECEMBER 2022 |
|
|
|||
|
14.
|
Property, plant and equipment
|
|
|||||||||
|
Group
|
|
|||||||||
|
|
|
|
|
|
||||||
|
|
Freehold property |
Short‑term leasehold property |
Plant and machinery |
Office equipment |
Computer equipment |
Total |
||||
|
|
£ |
£ |
£ |
£ |
£ |
£ |
||||
|
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 PERIOD ENDED 31 DECEMBER 2022 |
14. Property, plant and equipment (continued)
|
Freehold property |
Short‑term leasehold property |
Plant and machinery |
Office equipment |
Computer equipment |
Total |
|
£ |
£ |
£ |
£ |
£ |
£ |
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 PERIOD ENDED 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 2022 |
31 December 2021 |
|
|
£ |
£ |
|
|
|
|
|
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 2022 |
31 December 2021 |
|
|
|
|
£ |
£ |
|
Property |
23,716 |
37,269 |
||
|
Plant and machinery |
370 |
2,598 |
||
|
|
24,086 |
39,867 |
|
Depreciation charge for the period ended
|
||||
|
|
|
|
31 December 2022 |
31 December 2021 |
|
|
|
|
£ |
£ |
|
Property |
13,553 |
13,553 |
||
|
Plant and machinery |
2,228 |
2,228 |
||
|
|
15,781 |
15,781 |
15.
|
Intangible assets
|
|
||||||||||
|
Group
|
|
||||||||||
|
|
|
|
|
|
|||||||
|
|
Goodwill |
Development expenditure |
Patents |
Trademarks |
Brands |
Customer contracts and relationships |
Total |
||||
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
||||
|
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 PERIOD ENDED 31 DECEMBER 2022 |
|
|
|||
|
15. Intangible assets (continued)
|
Goodwill |
Development expenditure |
Patents |
Trademarks |
Brands |
Customer contracts and relationships |
Total |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
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 PERIOD ENDED 31 DECEMBER 2022
16.
|
Other non‑current investments
|
||||
|
Group
|
||||
|
|
|
|
2022 |
2021 |
|
|
|
|
£ |
£ |
|
Investments |
80 |
80 |
||
|
Other fixed asset investments |
216,802,001 |
- |
||
|
|
216,802,081 |
80 |
|
Company
|
||||
|
|
|
|
2022 |
|
|
|
|
|
£ |
|
|
Investments in subsidiary companies |
14,254,164 |
|
||
|
|
14,254,164 |
|
|
Other fixed asset investments - investment in Lush
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.
|
|
|||
18.
|
Trade and other receivables
|
||
|
|
||
|
Group
|
||
|
|
2022 |
2021 |
|
|
£ |
£ |
|
|
|
|
|
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 |
|
|
|
£ |
|
|
|
|
|
|
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 |
|
|
£ |
£ |
|
|
|
|
|
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 |
|
|
|
£ |
|
|
|
|
|
|
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 |
|
|
£ |
£ |
|
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 |
|
|
|
|
£ |
|
|
|
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 £1.5m 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 |
£ |
Number |
£ |
|
|
|
|
|
|
|
Ordinary shares of £0.10 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.
(b) On 14 October 2021, the Company allotted 98 Ordinary shares at nominal value for consideration of £0.01 each.
(c) On 14 October 2021, 100 Ordinary shares of £0.01 each were consolidated to 10 Ordinary shares of £0.10 each.
(d) On 14 October 2021, the Company allotted 2,747,432 Ordinary shares of £0.10 each at a price of £0.35 per share for total consideration of £961,601.
(e) On 8 November 2021, the Company allotted 2,577,500 Ordinary shares of £0.10 each at a price of £0.40 each for total consideration of £1,031,000.
(f) On 15 June 2022, the Company allotted 4,808,039 Ordinary shares of £0.10 each at a price of £0.85 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 £0.10 each at a price of £0.85 per share in exchange for the novation of a Balmonds Skincare Limited shareholder loan of £1,188,611.
(h) On 21 October 2022, the Company allotted 2,285,715 Ordinary shares of £0.10 each at a price of £0.70 per share for total consideration of £1,600,000.
(i) On 19 December 2022, Silverwood Brands plc allotted 228,212,632 Ordinary shares of £0.10 each at a price of £0.95 per share for total consideration of £216,802,001 in exchange for a 19.8% stake in the Lush companies. Further details of this can be found in note 16. (ii) Share options
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|||||
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 £80,000 will be recognised over the vesting period. A charge of £20,000 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.
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22.
|
Leases
|
|||||
|
Group
|
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(i) Leases as a lessee
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|
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 |
|
|
|
|
|
£ |
£ |
|
|
|
|
|||
|
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 |
|
|
|
|
£ |
£ |
|
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 £2,055,143 (2021: £36.176) and a convertible loan of £219,544 (2021: £Nil). 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 £6,056,370. 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 £218,007,377 (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 £216.8 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, £4.4m 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 £1.5m 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 £350,000 to Ginger. On 9 May 2022 £200,000 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 ¥69,999,992 (approximately £417,000) in cash and Japanese ¥2,613,146,722 (approximately £15.6 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 ¥392,268,790 (approximately £2.18 million) if settled in cash or ¥426,379,120 (approximately £2.37 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
|
|
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|
26.1 Subsidiaries acquired
|
|
||||
|
Name |
Principal activity |
Date of acquisition |
Proportion of voting equity interests acquired |
Consideration transferred |
|
|
|
|
|
% |
£ |
|
|
NBY London Ltd |
Production and distribution of nail products |
24/10/22 |
100 |
8,268,119 |
|
|
|
|
|
|
8,268,119 |
|
|
26.2 Consideration transferred
|
|
|
|
|
|
|
NBY London Ltd |
|
|
£ |
|
|
|
|
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 |
|
|
£ |
£ |
|
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 |
||
|
|
£ |
£ |
||
|
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 |
|
|
|
|
|
£ |
|
|
|
|||
|
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 £8.3m.
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 £3,219,858 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 £323,412 has been charged to the profit and loss in the current period.
Post acquisition revenue of £605,460 and loss of £104,560 have been recognised in respect of NBY London Ltd. The loss £104,560 recognised in the group includes £340,000 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 £2,399,121 and a profit for the period of £551,861. Transaction costs of £114,304 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 ¥70 million (approximately £417,000) in cash and Japanese ¥2,613 million (approximately £15.6 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 ¥341.1 million (approximately £2.0 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 ¥275.7 million (approximately £1.6 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 £9 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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