31 March 2025

Silverwood Brands Plc

("Silverwood" or the "Company", together with its subsidiaries, the "Group")

Unaudited Interim Results for the six months ended 31 December 2024

Silverwood Brands plc (AQSE: SLWD), a holding company established to invest primarily in branded consumer businesses, announces the Group's unaudited interim results in respect of the six months ended 31 December 2024. These are the Group's second interim results following the change of accounting reference date announced on 29 October 2024. The Group's next results will be the final audited results for the 18 months ending 30 June 2025.

Chief Executive's Statement

Our teams remain focused on delivering profitable growth. As previously noted, growing small brands demands resilience and perseverance. Whilst we encounter the inevitable challenges, we have found areas of growth and made improvements to our underlying operations with each of our brands being better positioned than this time last year.

We have also reviewed a number of new opportunities and remain confident that we will find attractive ventures to add to our existing portfolio.

Like all businesses we are experiencing cost inflation. We are fortunate to have a culture of cost consciousness across the Group which ensures we retain a tight grip on cost increases.

Executive Summary

For the 12-month period to 31 December 2024, excluding Cosme and Dr. Baeltz which were acquired in April 2024 our underlying performance remained flat compared to 2023. In the second half of the 2024 year, we concentrated on establishing a solid foundation for growth in 2025 by setting up new and exciting opportunities, making strategic hires, and streamlining systems and processes across our brands. Specifically, we have expanded our finance team and have focused on putting in place robust and standardised reporting across our brands, including the newly acquired Cosme and Dr Baeltz.

Our early results for 2025 have been promising, and we are excited to see this year capitalise on the hard work and determination our brands continue to demonstrate.

Revenue Comparison to December 2023

* The exchange rate used for the six months results to December 2024 has been used for the six months results to December 2023 to offer a like-for-like comparison excluding any impacts of exchange rate fluctuations.

**The results for Dr Baeltz and Cosme Science have not been included in the table above as they were acquired in April 2024.

We have presented the metric above to show the revenue growth across our brands excluding any impact of seasonality across the two halves of 2024. All our brands showing an increase in revenue is encouraging and we are excited to continue supporting their growth.

Set out below is a summary of the underlying performance of our individual brands in the six months between June 2024 and December 2024. We present this information by revenue, normalised EBITDA (excluding exceptional items), and non-operating income/expenses to give a true indication of each brand's trading performance.

Intra-group trading is excluded from these figures.

Balmond Skincare Ltd

Balmonds successfully completed their rebrand in June 2024. Despite initial disruptions early in the year, the rebranding efforts have produced positive results. Retail sales experienced a noticeable increase in the second half of 2024, even as we phased out previous designs. We continue to see growth in these channels and remain committed to strategically expanding our product range while attentively listening to consumer feedback.

We are also delighted to announce our upcoming launch in Boots set for April 2025. This is a huge achievement for a small brand, and we are thrilled to see the benefits this will bring, not only from a revenue standpoint but also in terms of reputation. Well done to the team for their incredible efforts!

Although growing our retail sales has impacted our EBITDA margin, we plan to refine our marketing strategy in 2025 to focus on driving traffic to our website to benefit from higher margins and expand our customer base.

The non-operating expenses of £18,489 include depreciation of machinery, leasehold improvements and right-of-use assets.

Nailberry

Our expansion into the US has been slower than anticipated, but benefits are now emerging. The increase in revenue between H1 and H2 is largely driven by an increase in E-commerce sales of £160,000, with £75,000 of the £160,000 attributable to US operations. The remaining increase primarily comes from growth across our UK retail and D2C business, which showed an expected rise in the lead-up to Black Friday and Christmas.

Although expanding into new territories has increased costs and impacted our EBITDA margin, we now have an established presence in the US and expect these effects to level out in 2025. We will continue to analyse profitability by territory and explore new avenues for expansion.

Non-operating expenses primarily reflect the impact of foreign exchange fluctuations resulting from a significant portion of our trading in EUR. We continue to monitor these movements closely and take proactive steps to mitigate the associated risks.

Sonotas Group

Overview

The results above incorporate the trading performance of Sonotas Corporation, Sonotas Holdings, and Steamcream Limited. Sonotas Holdings is the holding company in Japan, while Steamcream UK operates a small-scale operation in the UK.

Sonotas Corporation manages three beauty brands in Japan: Steamcream, Cigarro, and Nailberry. For the year ending 31 December 2024, these three brands contributed 93%, 6%, and 1% of the revenue, respectively.

In the 6 months leading up to December 2024, total Sonotas revenue increased by 5.3%, and operating margins improved by 3.3%. Gross profits also increased due to a price raise in November and savings in operational costs.

As highlighted in our previous interim results, non-operating income to June 2024 was driven by an exceptional fair-value uplift on a loan acquired during the Cosme purchase. Conversely, the non-operating expense to December 2024 are primarily reflects depreciation and interest on a bank loan.

Details of the three individual brands are shown below.

Steamcream

During the six months to 31 December 2024, the total Steamcream revenue increased by 6%, driven by a significant 20.4% increase in digital sales channels, the largest sales channel for Steamcream in Japan. Within digital sales growth, Amazon and Rakuten platform sales grew 47.8% and 29% respectively, due to improved advertising strategy and operational knowledge. Wholesale sales increased by 10.6%, while retail event sales decreased by 12.1% over the same period. Retail events are a people-intensive channel with low margins, and  Steamcream has been actively shifting sales to digital and wholesale channels. The drop in event sales aligns with the budget.

Cigarro

Cigarro revenue decreased by 7.9% during the 6-month period. The new brand website launch in July did not initially produce results, although the team has identified and implemented several key improvements. These improvements resulted in a 30.4% increase in sales in December compared to the previous year. Wholesale sales increased by 5.2%, while retail events fell by 12.9% during this half due to staffing challenges.

There are currently exciting ongoing talks with distributors to launch Cigarro outside of Japan which we hope will materialise in 2025 and bring a new dimension to the brand.

Nailberry

Nailberry revenue increased over the prior year, although from a very small base. Revenue has doubled but is far below budget, as barriers to gaining wholesale shelf space are high. However, social media engagement and interest continue to grow, and further digital sales growth is projected.

Cosme Science Group

Sonotas completed the purchase of the Cosme Science group on 29 March  2024. Significant work was done to incorporate R&D and production into the Sonotas brands through December. Handover work from the previous owner continued over the 6 months.

The facilities and expertise gained from the Cosme acquisition are now providing opportunities to streamline our manufacturing processes, which we expect will drive more efficient revenue growth and improved margins. We are excited to see these benefits unfold in the near future.

We would like to highlight a couple of key items on the balance sheet related to the Cosme acquisition. The acquisition was externally financed through a bank loan in Japan, which is reflected in the balance sheet at just over £5,000,000. Conversely, the value of the factory, land, and plant and machinery acquired as part of this transaction is recorded at just over £3,450,000. Notably, the replacement value of the acquired assets has been estimated to exceed twice the net book value currently presented.

Silverwood

Operating with a lean cost base in a PLC is challenging given the ongoing compliance expenses-such as Non-Executive Director fees, stock exchange fees, and increased advisory, legal, and accounting costs. Nevertheless, we believe the normalized EBITDA in H2 reflects a realistic ongoing cost base. We remain committed to internalizing costs where possible and maintaining robust cost control measures.

Details of the items included in our non-operating expense is detailed below.

We incurred significant exceptional non-operating expenditures in H1, which tapered off in H2. Going forward, the only expected ongoing cost is the interest accruing on £1.65M of Convertible Loan Notes, included in a non-current liabilities in the Statement of Financial Position.

Additionally, the £36,351 recorded under Acquisition Costs, acquisition-related contingent consideration, and earn-outs pertains to the unwinding of the fair value of the deferred consideration related to the acquisition of our subsidiaries, which is accounted for as post-combination remuneration.

Group Financial Performance

Below shows a detailed reconciliation of the group's underlying trading result to the loss reported in the Consolidated Profit and Loss and Other Comprehensive Income.

The costs outlined above, including approximately £300,000 arising from accounting adjustments, non-cash movements, and items outside of our control. This demonstrates how our trading performance has been significantly impacted by factors beyond core operations.

In summary, trading in 2024 has remained flat on a like-for-like basis. However, the foundations we have laid and the progress we have made during the year set us up for a positive 2025.

We continue to assess new opportunities to expand our portfolio.

Restatements to June 2024

During this last period we have expanded our finance team, refined our internal controls and more closely aligned the reporting across our entities, especially in Japan which would otherwise report against Japanese GAAP. We have also changed our year end to June to align our companies and are thus publishing this second six month interim report before our next audited results. We believe it is prudent to restate the June 2024 interims here to align with the reporting in place as at December 2024. For clarity, these adjustments do not impact our previously audited results.

Details of these restatements can be found in note 4 of our accounting policies.