TIDMSOS
RNS Number : 5649F
Sosandar PLC
11 July 2023
Date: 11 July 2023
On behalf of: Sosandar plc ('Sosandar' or 'the Company')
Embargoed until: 0700hrs
Sosandar plc
Full Year Results
A milestone year delivering first full year of profitability and
laying the foundations for next stage of growth journey
Sosandar PLC (AIM: SOS), one of the fastest growing fashion
brands in the UK creating quality, trend-led products for women of
all ages, is pleased to announce its financial results for the year
ended 31 March 2023 and an update on trading for Q1 of the current
financial year.
FY23 has been a transformational year for Sosandar as the Group
delivered a strong financial performance including increases in
both revenue and profitability despite the challenging
macroeconomic conditions. Sosandar has seen continued progression
against its KPIs with growth across all metrics on its own site and
sustained momentum with third party partners.
FY2023 Financial Highlights
-- Revenue growth of 44% to GBP42.5m (FY22: GBP29.5m)
-- First full year of profitability, delivering PBT of GBP1.6m
which is a GBP2.2m positive swing versus the previous
year (FY22: GBP0.6m loss)
-- Gross margin maintained at 56.1% (FY22: 56.0%) despite
growth in revenue through lower margin wholesale channel
-- Net cash of GBP10.6m as at 31 March 2023 (FY2022: GBP7.0m)
following strong trading and an oversubscribed fund raise
in February 2023
FY2023 Operational and Strategic Highlights
-- The Company continues to deliver increasing levels of
customer engagement on Sosandar.com with all KPIs increasing
YoY:
o Total orders increased 22% to 621k
o Active customers increased 19% to 265k
o Conversion Rate of 4.11%, up from 3.87% in FY2022
o Average order frequency continues to grow, now at 2.34
times per annum
-- The fast-tracked development of key product lines has
proven successful with all identified lines meeting or
exceeding expectations with strong sales of knitwear,
formal tailoring, coats and occasion wear
-- Trading with our now well-established third-party partners,
including Next and Marks and Spencer, has been extremely
strong, with a record quarter for the Group delivered
through third parties in Q3 FY23 followed by a strong
Q4
-- Successful initial online launch of partnership with J
Sainsbury's is currently performing in line with expectations
and the in-store rollout of our curated collection is
on track for launch in September 2023
-- Accelerated investment in strategic growth initiatives
following a successful over-subscribed equity fundraise
of GBP5.5m in January 2023
Post-period Trading Highlights
-- Strong start to Q1 FY2024 with revenue of GBP11.4m, up
10% against a strong prior year comparator, with the
impact of strategic initiatives to come through in H2
FY24
-- Global-e to go live in July 2023 allowing the Company
to transact and fulfil orders worldwide in a cost-effective
manner
-- Current trading in line with market expectations reflecting
strong performance on both own site and through third-party
partners
-- Product across all categories has continued to resonate
with customers with particularly strong sales of summer
occasion wear and holiday clothing
-- Mobile app is currently in user testing and is expected
to launch in Q2 FY24
-- Partnered with Bloomreach, a market leading customer
data platform, to deliver a more bespoke and data driven
customer experience with a full launch expected in July
2023
-- Signed a new third-party wholesale partnership with Freemans,
part of the Otto Group, to commence in September 2023
-- Cash at 30 June 2023 of GBP10m, reflecting further investment
in inventory and continued strong trading
* Sosandar believes that market expectations for the year ending
31 March 2024 are currently revenue of GBP57.0 million, and PBT of
GBP2.8 million.
FY2023 KPIs (Own Site)
Year ended 31 Year ended 31 Change
March 2023 March 2022
GBP'000 GBP'000
------------------------- -------------- -------------- -------
Sessions 15,091,247 13,141,632 15%
Conversion rate 4.11% 3.87% 24bps
Number of orders 620,977 508,473 22%
AOV GBP97.27 GBP90.39 8%
Active customers 264,832 223,253 19%
Average Order Frequency 2.34 2.28 3%
------------------------- -------------- -------------- -------
Ali Hall and Julie Lavington, Co-CEOs commented:
"We are delighted to report on what has been a transformational
year for Sosandar. Despite the challenging macroeconomic backdrop,
we have seen increasing demand for our products across all
categories with strong trading across both Sosandar.com and through
our third-party partners. The sustained growth in revenue and
profitability throughout the period is testament to our ability to
deliver a unique quality product offering and highly effective
marketing strategy, that resonates with our customer base. Our
success to date would not be possible without the commitment and
dedication of our team and we would like to take this opportunity
to extend our appreciation to all of our staff for their hard work
during the year.
As Sosandar continues to grow, we remain committed to investing
in our product range to offer our customers an ever-growing variety
of on-trend, affordable, long lasting, lifestyle appropriate
clothes. We are delighted to report that demand for our
fast-tracked product range has continued to increase with knitwear,
formal tailoring, coats, partywear, summer occasion wear and swim
and beach wear all performing particularly well during the
year.
Our third-party partnerships continue to perform extremely well
and we were delighted to become an omnichannel retailer through our
partnership with Sainsbury's. The partnership will accelerate
growth in our market share and the awareness of our brand as we
provide our large but underserved demographic with more
opportunities to purchase our unique and diverse products. We are
also excited that we will imminently be able to transact and fulfil
orders worldwide through our agreement with Global-e which is set
to go live this month, providing women across the globe with access
to our unique and diverse product range.
The momentum built throughout FY23 has continued into FY24 with
current trading in line with expectations. We are very excited for
the opportunity available to us in FY24 and beyond as we deploy the
money raised from our over-subscribed equity fundraise in January
2023 to support our growth both in the UK and internationally."
Presentations
Sosandar is hosting a webinar for analysts at 09:00 hrs BST
today. If you would like to register, please contact
sosandar@almapr.co.uk
The Company is also hosting a webinar for retail investors at
12:30 hrs BST today. If you would like to attend, please register
here: https://bit.ly/SOS_FY_results_webinar
Enquiries
Sosandar plc www.sosandar.com
Julie Lavington / Ali Hall, Joint c/o Alma PR
CEOs
Steve Dilks, CFO
Singer Capital Markets
Peter Steel / Tom Salvesen / Alaina +44 (0) 20 7496
Wong 3000
+44 (0) 20 3405
Alma PR Limited (Financial PR) 0205
Sam Modlin / Matthew Young sosandar@almapr.co.uk
This announcement contains inside information for the purposes
of the retained UK version of the EU Market Abuse Regulation (EU)
596/2014 ("UK MAR").
About Sosandar plc
Sosandar is one of the fastest growing women's fashion brands in
the UK targeting style conscious women who have graduated from
price-led alternatives. The Company offers this underserved
audience fashion-forward, affordable, quality clothing to make them
feel sexy, feminine, and chic. The business sells predominantly
own-label exclusive product designed in-house.
Sosandar's product range is diverse, providing its customers
with an array of choice for all occasions across all women's
fashion categories. The company sells through Sosandar.com and has
brand partnerships in place with Next, John Lewis, Marks &
Spencer, The Very Group, JD Williams and J Sainsbury.
Sosandar's strategy is to continue growing brand awareness and
expand its customer database, whilst also further driving its high
levels of customer retention. This is achieved through its
exceptional products, seamless customer experience and impactful,
lifestyle marketing activities all of which is underpinned by
combining innovation with data analysis.
Sosandar was founded in 2016 and listed on AIM in 2017. More
information is available at www.sosandar-ir.com
Chairman's Statement
Introduction
I am pleased to be reporting my first set of results as Chairman
of Sosandar. I took over as Interim Chairman in incredibly sad
circumstances following the sudden death of Bill Murray in February
this year. Bill was with Sosandar from the beginning and played an
important part in steering the Group to the great success it has
achieved. He has left a lasting legacy on the business.
FY23 has been a pivotal year for Sosandar and it is pleasing to
report a set of results which demonstrates another period of
significant momentum across all aspects of the business. The Group
has delivered substantial increases in revenue, gross margin and
scale economies, whilst also delivering its first full year of
profitability. This performance once again demonstrates the
desirability of the Sosandar product range with our customers and
its managements' ability to steer the business through the
challenging backdrop we have faced.
This outstanding performance has been driven by the continued
success across both our own site as well as our third-party
partners. Sosandar.com is the heart of the Group's success and is
the lifestyle hub where customers access the complete Sosandar
experience including the full extent of our diverse range. This
site is continually updated with new product and content and we are
constantly working and investing to ensure that we maintain a
seamless customer experience through this channel. Trading with our
now well-established third-party partners, John Lewis, Marks and
Spencer, NEXT, The Very Group and JD Williams, has been extremely
strong, with a record quarter for the Group delivered through third
parties in Q3 FY23 followed by a strong Q4. In January, we were
delighted to secure a new partnership with another renowned British
retailer, J Sainsbury's. This partnership has elevated our strategy
from pureplay to an omnichannel brand and will enable us to provide
our large but underserved demographic with more opportunities to
purchase our unique and diverse products.
Executing the next stage of our growth strategy
In February 2023 we successfully completed an over-subscribed
equity fundraise of GBP5.5m of net proceeds, with both existing and
new investors showing support for the business and its plans for
future growth. These funds will provide the balance sheet
flexibility to enable us to execute our omni-channel strategy,
starting with increasing stock from Autumn/Winter 2023 for the
in-store launch with Sainsbury's, fast-tracking other growth
initiatives and accelerating our proven customer acquisition
model.
Despite the strength of the sustained performance over the past
two years, we continue to see a number of opportunities for further
growth both on our own site and through our third-party partners in
the coming months and beyond as we to move forward with our
objective to make Sosandar one of the largest womenswear brands
globally. As a result, as previously announced, in order to prepare
for further momentum in FY24, we brought forward investment in some
growth initiatives in the latter part of Q4 FY23 that were
originally planned for FY24. These investments are centred around
operations, technology platforms and international strategy, which
will help support and develop the Group's future growth
initiatives.
Nurturing and investing in our team
The Sosandar team is the heartbeat of the business. Our 85
employees continuously show dedication, creativity, enthusiasm and
passion for the Sosandar brand. The culture that transmits
throughout the organisation is testament to the team that has been
built and the performance that we have delivered over the past year
would not have been possible without their commitment to the
Sosandar brand and customers.
As previously announced, in the latter part of Q4 FY23 we
further strengthened Sosandar's operational capabilities in order
to ready ourselves for the opportunities ahead with the recruitment
of an Ecommerce Director, Commercial International Director and
Head of Operations. Their significant experience will help us
continue to execute against the next stage of our growth
strategy.
Maintaining effective governance
The Board of Sosandar remains committed to maintaining and
enhancing our corporate governance framework. We have an agile,
balanced board, able to make decisions based upon robust assessment
and evaluation, but always in a timely fashion.
In September 2022, we were delighted to welcome Lesley Watt to
the Group's Board as a Non-Executive Director. Lesley has provided
a wealth of knowledge and experience with her appointment to the
board. At the same time, we announced that Mark Collingbourne would
step down from the Board having supported the Group as Group
Finance Director and subsequently as a Non-Executive Director.
Being a responsible business
As a business we are committed to having a positive impact on
our society, the environment, and our team. We acknowledge there is
increasing interest from a wide range of stakeholders on the
various positive impacts that the business has and what we are
doing to improve outcomes. As we continue on our growth journey, we
will further expand our activity, with an ambition to increase the
positive, lasting impact Sosandar has on the fashion industry.
Outlook
The current financial year has started pleasingly, and we are
trading in line with our expectations for full year growth. The
investments that were made in Q4 FY23 are already bearing fruit
across the business, and we are making large strides operationally
with the development of our technology platform and finalising our
international strategy. The Sosandar product range continues to
resonate with our customers and we are committed to ensuring that
we offer them a seamless customer experience through all of our
sales channels, and continuing to deliver for all our
stakeholders.
Nicholas Mustoe
Chairman
CO-CEO'S STATEMENT
A milestone year
FY23 has been a milestone year for Sosandar. Over the last six
years, the business has grown from a true start-up to what is now a
profitable brand delivering multi-million-pound revenue with
clothes being sold in the UK's biggest retailers.
Sosandar's sustained progress to date is testament to our
ability to deliver a unique quality product offering and highly
effective marketing strategy that resonates with our customer base.
We have continued to drive momentum within the business and the
success of our strategy is reflected by the 44% growth in sales
during the period and substantial positive swing of PBT to GBP1.6m,
marking the first year of profitability for Sosandar. This
performance is even more notable when considering it has been
achieved against the backdrop of some of the most challenging
macroeconomic conditions facing the retail sector in decades.
While we have achieved considerable financial and operational
success during the year, we have not rested on our laurels and in
the latter part of Q4 we took the decision to make investments in
order to accelerate our growth strategy to capitalise on the
considerable opportunity available to us in the market right now
and build the infrastructure to start serving our target customers
internationally. These investments have been made possible
following our recent over-subscribed equity fundraise in February
2023 which saw Sosandar raise GBP5.5 million of net proceeds from
both existing and new shareholders. We would like to thank all who
took part in the raise, and we are excited to utilise this capital
to accelerate investments as we begin the next phase of our growth
journey.
As ever, the growth achieved during the year is a result of the
hard work and dedication of our valued staff and partners. We would
like to take this opportunity to extend our sincere gratitude to
everyone who has contributed to this transformational year for the
Group.
While we are so pleased with progress made throughout FY23, it
is tinged with sadness following the sudden passing of our former
Chairman, Bill Murray, in February 2023. Bill will be deeply missed
by all of the Sosandar team, and he has left a lasting legacy on
the business.
Our vision and purpose
Our vision is to become one of the largest womenswear brands
globally. Our purpose is to empower women of all ages to feel good
in the clothes they wear, catering to the burgeoning 'ageless'
generation. Our incredibly strong performance has evidenced the
success of our strategy to allow women of all ages to feel sexy and
chic through our unique and diverse range of products.
There is an ongoing shift in the consumer mindset towards
fashion; women are leaving behind dated ideas of what they must
wear at what age, and instead embracing clothes that make them feel
good, work in their everyday lives and reflect their individual
personalities. Our offering is ideally placed to cater to this
trend.
While our products are trend-led, they are designed to be kept
and loved for years. This is why we invest so highly in quality and
fit, reflected in our price point.
Financial performance
Despite the challenging macroeconomic headwinds impacting the
wider retail sector we have delivered a strong financial
performance for the year which included a record Q3 and a full year
revenue increase of 44% to GBP42.5m. As we continue to build on the
momentum from previous years, we are delighted to report PBT of
GBP1.6m, a significant positive swing of GBP2.2m year on year and
first full year of profitability for Sosandar.
The strength of our performance has given us the confidence to
accelerate investment previously anticipated for FY24 in order to
capitalise on this momentum and execute on our growth strategy
ahead of plan.
Performance across our own site has continued to go from
strength to strength and drive growth with the number of orders
increasing 22% to 620,977 of which 148,382 were from brand new
customers and average order value up 8% to GBP97.27 (FY22:
GBP90.39).
Our net cash balance as at 31 March 2023 was GBP10.5m (FY22:
GBP4.2m), following the successful equity fundraise of GBP5.5
million (net) in February, which will allow us invest further into
FY24.
Our strategy and future objectives
Our strategy is central to the ongoing success and scale of our
business and is spread over four pillars: product, marketing, sales
channels, and supply chain.
1. Expanding our product range
As a clothing brand our product is obviously everything. This is
the key driver to success that makes everything work and our unique
product range continues to resonate very well with our customer
base.
As we execute on the next stage of our growth strategy, we have
invested further in the procurement of stock to facilitate demand
across both our own site and third-party partners.
The fast-tracked development of key product lines has proven
successful with all identified lines meeting or exceeding
expectations. In particular, during the Winter season we saw strong
sales of knitwear, formal tailoring, coats and partywear. As we
entered the Spring / Summer season the new launch of categories
such as summer occasion wear and swim and beach wear have performed
very well.
2. Refinement of our data-driven marketing strategy
Our highly effective marketing strategy has been a central
growth driver for the Group, delivering both new and repeat
customers on our own site and through our third-party partners. We
ensure that our industry-leading strategy is constantly evolving
using data-driven learnings to improve its effectiveness in
reaching an ever-increasing audience. Our strategy is to acquire
high quality customers who will go onto repeat purchase.
We focus on TV advertising, brochures and social media as our
three main areas for marketing investment. Because of our
backgrounds in media, we have been able to develop a strategy that
makes all forms of media work from print to digital, and this has
stood us in good stead as we are not reliant on one channel.
Our brochures are produced brand new at every issue, put
together like we would a magazine with fresh imagery, new product
and turned round in a matter of days so that we can exactly tap
into what customers are thinking and feeling at any moment.
These three areas are then supplemented by our email marketing
communications. The success that we have seen through this channel
allows us to deliver such high repeat orders and retention rates.
We believe that we have industry leading open rates as we use our
email database like a Newsdesk.
Post period, we are delighted to announce the launch of our
first TV sponsorship campaign with ITV's weekend breakfast which
runs from April through to September.
3. Driving sales through multiple channels
Sosandar's multi-channel sales strategy has continued to see
success with an outstanding year of trading across both
Sosandar.com and our well-established third-party partners.
Sosandar.com is the anchor of our business and we have seen
increases across all of our KPIs including total number of orders
increasing by 22% to 620,977 and the average order value up 8% to
GBP97.27 (FY22: GBP90.39).
Trading with our now well-established third-party partners, John
Lewis, Marks and Spencer, NEXT, The Very Group and JD Williams, has
been extremely strong, with a record quarter for the Group
delivered through third parties in Q3 FY23 followed by a strong
Q4.
Throughout the period, the amount of stock allocated to each
partner was increased to meet the rising demand generated through
these channels.
In January, we were delighted to announce our decision to become
an omnichannel retailer as we entered into an agreement to sell a
curated collection of products through J Sainsbury's. Initially,
Sosandar products began selling with Sainsbury's online in March
2023 and have been performing in line with expectations. The
rollout of Sosandar's products across a number of selected stores
is expected in August 2023 and in time for the important
Autumn/Winter season. This expansion instore will elevate our
business and will enable us to provide our large but underserved
demographic with more opportunities to purchase our unique and
diverse products. We expect this partnership to deliver a
significant combined contribution in the current financial year and
beyond.
4. An agile, resilient supply chain
The importance of a diversified, flexible supply base and having
partners with expertise in this area, has always been at the heart
of our operation. We are an agile business, allowing us to
continually adjust our product offering, warehousing and fulfilment
operations in line with the ever-changing needs of our
customers.
Fostering strong, long-term relations with a number of
manufacturers in different territories and pivoting rapidly between
transport methods has been the key to our success and is vital to
achieving our desired scale.
Accelerated investment in growth initiatives
The market opportunity available to Sosandar in the UK and
internationally is significant and in order to position the Group
to fully capitalise on this, the Board accelerated investment in
growth initiatives in the latter part of Q4 FY23 that were
originally planned for FY24. To facilitate this, in February 2023
we successfully completed an over-subscribed equity fundraise of
GBP5.5m (net) with support from current and new investors to enable
future growth.
This capital will significantly support and develop the Group's
future growth initiatives and allow us to boost our customer
acquisition strategy and ultimately increase market share.
1. Operational enhancements
Operationally, these investments have included the strategic
hiring of an ecommerce Director, Commercial International Director
and Head of Operations which will significantly enhance our
operational capabilities and provide the infrastructure to scale to
meet the market demand for Sosandar's products.
While originally planned for FY24, we have been fortunate to
find the right people to fill these positions and their significant
experience will help the Group continue to execute its growth
strategy as it enters into its next phase of development and
invests for future growth.
2. Technology platforms
Ensuring that our technology is constantly evolving is an
integral part of allowing the increasing number of Sosandar
customers to effectively engage with brand online and avail of our
expanded product offering. To facilitate this further, we have
commenced the development of a mobile app which will launch in Q2
FY24.
Sosandar.com is the anchor of our business and we make sure that
it is constantly improving to increase user experience and make it
more accessible for current and new customers. As such, we have
invested in personalisation and segmentation tools to enable
further progression customer acquisition, retention, order
frequency and average order value, as well as build the
infrastructure to take advantage of international
opportunities.
3. International strategy
The opportunity available for Sosandar both in the UK and
internationally is vast and as we progress into the next stage of
our growth journey, we are exploring and researching opportunities
to serve this targeted international customer base whilst remaining
conscious of managing costs and implementation risk.
As part of this strategy, we are delighted to announce that we
have signed an agreement with Global-e, the world's leading
platform to enable and accelerate global, direct-to-consumer,
cross-border ecommerce, that will allow us to transact and fulfil
orders worldwide in a cost-effective manner. This agreement is
expected to go live in Q2 FY24 and will mark a notable milestone
for the Group as it increases market share across the globe.
Outlook
The sustained momentum across Sosandar, with growth in revenue
and profitability delivered in FY23, is testament to our ability to
provide a unique quality product offering and highly effective
marketing strategy that resonates with our customer base. However,
we are not resting on our laurels and are committed to constantly
evolving.
FY24 has started well, and we are trading in line with full year
expectations. We have continued to see growth across all product
ranges with particular success in our summer occasion wear and
beach and swim ranges. As such, we are going to be launching our
biggest ever occasion wear range in time for the key trading period
towards Christmas and will also stock beach and swim wear all year
round to cater for all of our customers' needs at any time of the
year.
Looking ahead, in Q2FY24 we expect to launch our mobile app
after the user testing process is completed and are finalising our
international strategy which will run in conjunction with our
agreement with Global-e, both of which will enable us to increase
our market share and offer our customers more ways to shop with
Sosandar. Our in-store launch with J Sainsbury's continues to
progress to plan and is expected to launch in selected stores in
August 2023 and in time for the important Autumn/Winter season.
This expansion instore will elevate our business and will enable
us to provide our large but underserved demographic with more
opportunities to purchase our unique and diverse products. We
expect this partnership to deliver a significant combined
contribution in the current financial year and beyond.
Whilst we are trading well and have not had any material
disruption to date, we remain vigilant to the external challenges
including inflationary pressures on consumer spending and believe
our agile approach and understanding of our customers positions us
well.
We are extremely excited about the next stage of our growth
journey as we take the Sosandar brand to more customers across the
globe and continue on our journey to become one of the largest
womenswear brands globally.
Ali Hall & Julie Lavington
Co-CEO's
FINANCIAL REVIEW
KPI's
Year ended 31 Year ended 31 Change
March 2023 March 2022
GBP'000 GBP'000
------------------------- -------------- -------------- -------
Revenue GBP42,451 GBP29,458 44%
Gross Profit GBP23,837 GBP16,496 45%
Gross Margin 56.15% 56.00% 15bps
Administrative Expenses GBP22,200 GBP17,042 30%
Profit / (Loss) before
tax GBP1,597 (GBP554) 388%
EBITDA* GBP1,872 (GBP229) 917%
------------------------- -------------- -------------- -------
Year ended 31 Year ended 31 Change
March 2023 March 2022
GBP'000 GBP'000
------------------------- -------------- -------------- -------
Sessions 15,091,247 13,141,632 15%
Conversion rate 4.11% 3.87% 24bps
Number of orders 620,977 508,473 22%
AOV GBP97.27 GBP90.39 8%
Active customers
** 264,832 223,253 19%
Average Order Frequency
*** 2.34 2.28 3%
------------------------- -------------- -------------- -------
*EBITDA is calculated as profit before tax less interest,
depreciation and amortisation
** Active customers is the number of individual customers who
purchased from Sosandar.com in the last 12 months
*** Average Order Frequency is the total number of orders in the
last 12 months divided by the number of active customers
The Group has had a milestone year in terms of growth, resulting
in the first full year of profitability, with PBT of GBP1.6m which
is a GBP2.2m positive swing versus the previous year. All KPI's
have moved positively on Sosandar.com and results through our
growing number of third-party partnerships continuing to go from
strength to strength.
The performance is particularly pleasing given it has been
delivered against a backdrop of macro-economic challenges which
increased throughout the year. Our agility and underlying approach
to spreading risk across our business has enabled us to thrive in
spite of these challenges including supply chain disruption and
inflationary pressures.
The oversubscribed equity raise of GBP5.5m (net) in February
2023 will enable the business to invest further in its many growth
opportunities including the first move into bricks & mortar
through the partnership with J Sainsburys from the autumn season.
The balance sheet strength will allow us to take advantage of
further opportunities as and when these arise.
Revenue up +44% to GBP42.5m
The substantial growth in revenue reflects the ever-growing
demand for Sosandar product with incredibly strong performance from
both Sosandar.com and through third-party web platforms.
Revenue each quarter increased during the year with Q1, Q2 and
Q3 setting new all-time records and even the traditionally quieter
Q4 being strong with the month of March being +32% up on the
previous year.
Gross Margin +15bps to 56.15%
Gross Margin improved compared with the prior year to 56.15%
despite the growth in lower gross margin wholesale channel
following the launch with The Very Group, NBrown and J Sainsbury's
in March 2023.
Actions taken have continued to deliver gross margin benefits
throughout the year. These have included price increases, improved
supplier cost prices and further efficiencies in inbound freight
costs.
Selected price increases were implemented in Q3 to help mitigate
the impact of the weaker Sterling against the Dollar. Minimal price
increases have been implemented since Sosandar was launched and as
such, in some product categories our price points were below
comparable brands in the market.
Further benefits have been delivered by the Sosandar buying and
sourcing team with regards to supplier cost prices reflecting
increased buying power, larger quantities being ordered and the
increased importance and trust that suppliers have in the Sosandar
brand.
Following the significant change in our inbound freight strategy
during FY22, this has continued to be refined during FY23 resulting
in further incremental benefits. The mix of inbound freight has
been balanced between road, air and sea throughout the year and
additional partners have been onboarded to ensure the best value is
delivered by managing methods, routes and vessels for each
shipment.
Administrative Expenses
Total administrative expenses increased by 30% to GBP22.2m (FY
2022 GBP17.0m) compared to a 44% increase in revenue.
As a result, administrative expenses as a percentage of revenue
reduced to 52% (FY2022 58%) reflecting the benefit of scale whilst
continuing to invest in all areas of the business to drive
sustained growth in revenue and all KPI's.
Spend on marketing in the year continued to follow a similar
strategy to the previous year with focus on TV, social and
brochures with peak months of investment being where the return on
investment is greatest. Overall, spend increased by 3% year on year
with the cost of customer acquisition remaining below GBP20 which
is really pleasing.
The cost of fulfilment which includes warehousing and customer
order delivery costs increased by 26% compared to the previous
year.
From a warehousing perspective, our 3PL partner, GXO (Clipper)
have continued to deliver for our multi-channel customers and have
adapted the operation to manage bulk-order wholesale customer in
addition to B2C demand. In Q4, we onboarded Evri as an additional
customer delivery partner, in addition to Royal Mail in order to
give our customer greater choice. This has also helped to reduce
our average cost of delivery, which will yield greater benefit in
FY24.
The largest increase in administrative expenses is from third
party commissions (increased by 59%) which reflects the growth in
revenue through our concession partners (John Lewis, NEXT, Marks
and Spencer). The commission is retained by the concession partner
and is reported within overheads covering all costs of the
operation including warehousing and fulfilment, returns handling,
marketing and other operational costs. The revenue and gross profit
figures are therefore undiluted when compared with trading through
Sosandar.com.
Other administrative expense which includes staff costs
increased by GBP1.7m (52%) compared to the previous year. Headcount
increased by 24 during the year to an average of 78 with a closing
headcount of 85 as at March 2023. The investment in people has been
across all functions of the business and has including pivotal
roles to equip us to deliver the growth plans in FY24. Key roles
have included an Ecommerce Director, Commercial International
Director, Head of Operations and Head of People.
Statement of Financial Position
The statement of financial position is robust. As at 31 March
2023, the Group had net assets of GBP18.4m (FY2022 GBP10.6m) and a
net current asset position of GBP17.2m (FY 2022 GBP10.1m - refer to
note 1, deferred tax assets have been represented as part of
non-current assets).
During FY23, the financial position was further strengthened
following an equity raise of GBP5.5m (net) which will enable the
Group to accelerate concurrent growth initiatives including roll
out into stores through the wholesale arrangement with Sainsbury's
and to take advantage of international opportunities. The strength
of the balance sheet which includes a cash balance of GBP10.6m
(FY2022 GBP7.0m) and no bank indebtedness will allow for ongoing
investment in inventory to support all sales channels, whilst also
investing in people and technology to ensure the trajectory of
growth can be delivered.
The movements in the statement of financial position reflects
the investment in the business throughout the year, with an
increase in inventory to GBP12.4m (FY2022 GBP7.3m).
This includes stock on hand, stock in transit reflecting the
higher proportion of supply coming to the UK via sea and road as
well as an increase in the right to return asset which covers post
year end returns.
Trade and other payables increased to GBP8.4m (FY2022 GBP6.8m)
reflecting the increase in business scale in the year.
Creditor payment days have continued to move favourably as the
Group has become a more important and trusted customer for our
supply partners and credit insurance is now being available
following the sustained strong financial performance over the last
18 months. Contract liabilities increased to GBP2.6m (FY2022
GBP2.0m) which is as expected and reflects the growth in provision
required for post year end refunds for orders fulfilled within the
year reflecting the year-on-year increase in revenue. Liability for
VAT increased to GBP1.1m (FY2022 GBP0.9m) which is due to the
increase in revenue with settlement to HMRC being made
quarterly.
Trade and other receivables increased to GBP2.7m (FY2022
GBP2.5m) which includes amounts owing from concession and wholesale
customers. No change to payment terms have been made during the
year and all payments have been received on time and in full.
Non-current assets have increased to GBP1.7m (FY2022 GBP0.9m -
refer to note 1, deferred tax assets have been represented as part
of non-current assets) being due to the second office lease taken
on in April 2022 to provide the space for our growing team to be
accommodated.
Cashflow
The Group had a net cash position as at 31 March 2023 of
GBP10.6m (FY2022 GBP7.0m). As highlighted already, the Group's cash
position was strengthened with the fund raise in February 2023 with
the proceeds being utilised to:
-- accelerate the execution of its omni-channel strategy
through further investment in stock, enabling increased
provision of Sosandar's product range in-store with third
party partners including J Sainsbury's from Autumn/Winter
2023 onwards;
-- create further balance sheet headroom to fast-track other
growth initiatives as well as enable accelerated investment
in the Group's proven customer acquisition model.
The Group is in a strong position, with sufficient working
capital to take advantage of opportunities in FY24 and beyond.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year ended 31 March 2023
Year ended 31 March Year ended 31 March
2023 2022
Notes GBP'000 GBP'000
------------------------------------------------------------------ ------ -------------------- --------------------
Revenue 3 42,451 29,458
Cost of sales (18,614) (12,962)
------------------------------------------------------------------ ------ -------------------- --------------------
Gross profit 23,837 16,496
Administrative expenses (22,200) (17,042)
Operating profit/(loss) 1,637 (546)
Finance costs 5 (40) (8)
Profit/(loss) before taxation 1,597 (554)
Income tax credit 7 284 412
------------------------------------------------------------------ ------ -------------------- --------------------
Group profit/(loss) for the year 1,881 (142)
Other comprehensive income - -
Total comprehensive profit/(loss) for the year 1,881 (142)
------------------------------------------------------------------ ------ -------------------- --------------------
Earnings/(loss) per share:
Earnings/(loss) per share - basic, attributable to ordinary
equity holders of the parent
(pence) 8 0.84 (0.07)
Earnings/(loss) per share - diluted, attributable to ordinary
equity holders of the parent
(pence) 0.74 (0.07)
------------------------------------------------------------------ ------ -------------------- --------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2023
As at 31 March As at 31 March
2023 2022
Notes GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 9 - -
Property, plant and equipment 10 991 446
Deferred income tax asset 1,7 696 412
Total non-current assets 1,687 858
Current assets
Inventories 12 12,361 7,307
Trade and other receivables 14 2,730 2,495
Cash and cash equivalents 15 10,576 7,048
Total current assets 25,667 16,850
Total assets 27,354 17,708
Equity and liabilities
Equity
Share capital 16 248 221
Share premium 16 52,619 47,089
Capital Reserves 4,648 4,648
Other reserves 1,223 912
Reverse acquisition reserve (19,596) (19,596)
Retained earnings (20,773) (22,654)
Total equity 18,369 10,620
Current liabilities
Trade and other payables 18 8,355 6,761
Lease liability 19 148 38
Total current liabilities 8,503 6,799
Non current liabilities
Lease liability 19 482 289
Total non current liabilities 482 289
Total liabilities 8,985 7,088
Total equity and liabilities 27,354 17,708
Consolidated statement of cash flows
For the Year ended 31 March 2023
Year ended 31 March Year ended 31 March
2023 2022
Notes GBP'000 GBP'000
------------------------------------------------- ------ -------------------- --------------------
Cash flows from operating activities
Group profit/(loss) before tax 1,597 (554)
Adjustments for:
Share based payments 17 311 255
Depreciation and amortisation 9, 10 235 317
Finance costs 40 8
Working capital adjustments:
Change in inventories (5,054) (4,441)
Change in trade and other receivables (235) (1,768)
Change in trade and other payables 1,594 3,906
Net cash flow from operating activities (1,512) (2,277)
------------------------------------------------- ------ -------------------- --------------------
Cash flow from investing activities
Addition of property, plant and equipment 10 (400) (36)
Initial direct costs on right of use asset - (18)
Bank interest paid 5 - (4)
Net cash flow from investing activities (400) (58)
------------------------------------------------- ------ -------------------- --------------------
Cash flow from financing activities
Gross proceeds from issue of equity instruments 16 5,900 5,813
Costs from issue of equity instruments (343) (287)
------------------------------------------------- ------ -------------------- --------------------
Lease payment 19 (117) (71)
------------------------------------------------- ------ -------------------- --------------------
Net cash flow from financing activities 5,440 5,455
------------------------------------------------- ------ -------------------- --------------------
Net change in cash and cash equivalents 3,528 3,120
Cash and cash equivalents at beginning of year 15 7,048 3,928
------------------------------------------------- ------ -------------------- --------------------
Cash and cash equivalents at end of year 15 10,576 7,048
------------------------------------------------- ------ -------------------- --------------------
Consolidated statement of changes in equity
For the year ended 31 March 2023
Share Share Reverse Capital Retained Other Total
capital premium acquisition redemption earnings reserves
reserve reserve
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------ --------- --------- ------------- ------------ ---------- ---------- --------
Balance
at 31 March
2021 192 41,592 (19,596) 4,648 (22,512) 657 4,981
---------------- ------ --------- --------- ------------- ------------ ---------- ---------- --------
Loss for
the year - - - - (142) - (142)
Share-based
payments 17 - - - - - 255 255
Issue of
share capital 16 29 5,784 - - - - 5,813
Costs on
issue of
share capital 16 - (287) - - - - (287)
Balance
at 31 March
2022 221 47,089 (19,596) 4,648 (22,654) 912 10,620
---------------- ------ --------- --------- ------------- ------------ ---------- ---------- --------
Profit for
the year - - - - 1,881 - 1,881
Share-based
payments 17 - - - - - 311 311
Issue of
share capital 16 27 5,873 - - - - 5,900
Costs on
issue of
share capital 16 - (343) - - - - (343)
Balance
at 31 March
2023 248 52,619 (19,596) 4,648 (20,773) 1,223 18,369
---------------- ------ --------- --------- ------------- ------------ ---------- ---------- --------
Share capital is the amount subscribed for shares at nominal
value.
Share premium represents the excess of the amount subscribed for
share capital over the nominal value of those shares net of share
issue expenses.
Other reserve relates to the charge for share-based payments in
accordance with International Financial Reporting Standard 2.
Retained earnings represent the cumulative loss of the Group
attributable to equity shareholders.
Reverse acquisition reserve relates to the effect on equity of
the reverse acquisition of Thread 35 Limited.
Capital redemption reserve represents the aggregate nominal
value of all the deferred shares repurchased and cancelled by the
Company. The reserve is non-distributable.
Company statement of Financial Position
For the year ended 31 March 2023
Restated Restated
As at 31 March As at 31 March As at 31 March
2023 2022 2021
Notes GBP'000 GBP'000 GBP'000
------------------------------ ------ --------------- --------------- ---------------
Assets
Non-current assets
Investments 11 7,432 7,128 6,878
Loans to subsidiaries 13 - - -
Total non-current assets 7,432 7,128 6,878
------------------------------ ------ --------------- --------------- ---------------
Current assets
Trade and other receivables 14 23 34 38
Cash and cash equivalents 15 5,119 3,399 2,952
Total current assets 5,142 3,433 2,990
------------------------------ ------ --------------- --------------- ---------------
Total assets 12,574 10,561 9,868
------------------------------ ------ --------------- --------------- ---------------
Equity and liabilities
Equity
Share capital 16 248 221 192
Share premium 16 52,619 47,089 41,592
Other reserves 1,223 912 657
Capital redemption reserve 4,648 4,648 4,648
Retained earnings (46,220) (42,361) (37,251)
Total equity 12,518 10,509 9,838
------------------------------ ------ --------------- --------------- ---------------
Current liabilities
Trade and other payables 18 56 52 30
Total current liabilities 56 52 30
------------------------------ ------ --------------- --------------- ---------------
Total liabilities 56 52 30
------------------------------ ------ --------------- --------------- ---------------
Total equity and liabilities 12,574 10,561 9,868
------------------------------ ------ --------------- --------------- ---------------
In accordance with the provisions of the Companies Act 2006, the
Company has not presented a statement of profit or loss and other
comprehensive income. The Company's loss for the year was GBP3,859k
(restated 2022: GBP5,110k loss).
The financial statements were approved and authorised for issue
by the Board of Directors on 7 July 2023 and were signed on its
behalf by:
Company statement of Cash Flows
For the year ended 31 March 2023
Restated
Year ended 31 March Year ended 31 March
2023 2022
Notes GBP'000 GBP'000
------------------------------------------------ ------ -------------------- --------------------
Cash flows from operating activities
Profit/(loss) before tax (3,859) (5,110)
Adjustments for: - -
Share based payments 17 7 5
Working capital adjustments:
Change in trade and other receivables 11 4
Change in trade and other payables 4 22
Net cash flow from operating activities (3,837) (5,079)
------------------------------------------------ ------ -------------------- --------------------
Cash flow from financing activities
Net proceeds from issue of equity instruments 16 5,557 5,526
Net cash flow from financing activities 5,557 5,526
------------------------------------------------ ------ -------------------- --------------------
Net change in cash and cash equivalents 1,720 447
Cash and cash equivalents at beginning of year 15 3,399 2,952
------------------------------------------------ ------ -------------------- --------------------
Cash and cash equivalents at end of year 15 5,119 3,399
------------------------------------------------ ------ -------------------- --------------------
Company statement of changes in equity
For the year ended 31 March 2023
Share capital Share premium Other reserves Capital Retained Total
redemption earnings
reserve
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------ -------------- -------------- --------------- --------------- ---------------- --------
Balance at 31
March 2021 192 41,592 657 4,648 (37,847) 9,242
---------------- ------ -------------- -------------- --------------- --------------- ---------------- --------
Effect of
restatement on
opening
balance 596 596
----------------
Restated
Balance at 31
March 2021 192 41,592 657 4,648 (37,251) 9,838
---------------- ------ -------------- -------------- --------------- --------------- ---------------- --------
Loss for the
year - - - - (5,110) (5,110)
Shares based
payments 17 - - 255 - - 255
Issue of share
capital 16 29 5,784 - - - 5,813
Costs on issue
of share
capital 16 - (287) - - - (287)
Restated
Balance at 31
March 2022 221 47,089 912 4,648 (42,361) 10,509
---------------- ------ -------------- -------------- --------------- --------------- ---------------- --------
Loss for the
year - - - - (3,859) (3,859)
Share-based
payments 17 - - 311 - - 311
Issue of share
capital 16 27 5,873 - - - 5,900
Costs on issue
of share
capital 16 - (343) - - - (343)
Balance at 31
March 2023 248 52,619 1,223 4,648 (46,220) 12,518
---------------- ------ -------------- -------------- --------------- --------------- ---------------- --------
Share capital is the amount subscribed for shares at nominal
value.
Share premium represents the excess of the amount subscribed for
share capital over the nominal value of those shares net of share
issue expenses.
Other reserves relate to the charge for share-based payments in
accordance with International Financial Reporting Standard 2. The
cumulative share-based payment expense recognised in the
consolidated statement of comprehensive income is GBP311k. The
cumulative share payment expense recognised in the parent company
statement of comprehensive income is GBP7k.
Retained earnings represent the cumulative loss of the Company
attributable to the equity shareholders.
Capital redemption reserve represents the aggregate nominal
value of all the deferred shares repurchased and cancelled by the
Company. The reserve is non-distributable.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 General information
Sosandar Plc (the 'Company') is a public limited company by
shares incorporated in England and Wales. Details of the registered
office, the officers and advisers to the Company are presented on
the Company Information page at the end of this report. The Company
is listed on the AIM market of the London Stock Exchange (ticker:
SOS).
The principal activity of the Group in the year under review was
that of a clothing manufacturer and distributer via internet and
mail order.
The principal activity of the company is that of a holding
company.
2 Significant accounting policies
Basis of preparation
The consolidated financial statements consolidate those of the
Company and its subsidiary (together the 'Group' or 'Sosandar').
The consolidated financial statements of the Group and the
individual financial statements of the Company are prepared in
accordance with applicable UK law and UK adopted international
accounting standards (IFRSs) and as applied in accordance with the
provisions of the Companies Act 2006. The Directors consider that
the financial information presented in these Financial Statements
represents fairly the financial position, operations and cash flows
for the year, in conformity with IFRS.
Prior period adjustments
The following table summarises the impact of the prior period
adjustment on the financial statements of the Company. Note that
the Group financial statements are unaffected.
31/03/2022 31/03/2021
Company statement of comprehensive
income GBP'000 GBP'000
Share based payment 250 596
Increase in profit 250 596
Company statement of financial
position
Investments 250 596
Increase in net assets 250 596
The adjustment of GBP596k shown in restated 2021 relates to the
aggregate of 2021 and all years preceding.
The presentation of deferred tax asset has been amended in
accordance with IAS 1 paragraph 56 to present deferred tax asset as
non-current. GBP312k has been reclassified from current assets to
non-current assets in the prior year.
Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in Chairman's Statement on pages 2-3. The financial
position of the Group, its cash flows and liquidity position are
described in the financial statements and associated notes. In
addition, note 21 to the financial statements includes the Group's
objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial
instruments; and its exposures to credit risk and liquidity
risk.
In order to assess the going concern of the Group, the directors
have reviewed the Group's bank balances, cash flows, the annual
budgets and forecasts, including assumptions concerning revenue
growth, marketing spend, returns and repeat customers and
expenditure commitments and their impact on cash flow. These cash
flow and profit and loss forecasts show the Group expect an
increase in revenue based on the assumptions set out in note 11 of
the financial statements. This will have sufficient headroom over
available banking facilities. Management continue to monitor costs
and manage cashflows against these forecasts.
In February 2023, the Group's cashflow position was strengthened
through raising net proceeds of GBP5.5 million via a Placing and
Retail Offer. At 31 March 2023, the Group had a cash balance of
GBP10.6m and is therefore in a strong position, with sufficient
working capital to take advantage of opportunities in FY24. This
substantiates the view that the Group is a going concern.
The directors continue to monitor the Group's going concern
basis against the backdrop of significant external events. Whilst
Covid 19 still exists, it had significantly less impact on the
Group compared with the prior year and the normal course of
business resumed. In addition to this, it was concluded the Ukraine
war has had no material impact on the consumer behaviour. During
the financial year, rising inflation and increased interest rates
led to a 'cost of living crisis' in the UK. Whilst at a macro
level, these changes are expected to impact consumer spending, the
Group has not experienced a material downturn in activity with
gross margin remaining stable.
Therefore, despite these events, the directors confirm that they
have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due for
the foreseeable future.
Should the underlying assumptions of the working capital model
prove invalid and the Group be unable to continue as a going
concern it may be required to realise its assets and discharge its
liabilities other than in the normal course of business and at
amounts different to those stated in the financial statements. The
financial statements do not include any adjustments relating to the
recoverability and classifications of recorded asset amounts or
liabilities that may be necessary should the Group and Company be
unable to continue as a going concern.
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing the
financial statements.
Consolidation
The consolidated financial statements include the financial
statements of the Company and its subsidiary undertakings; Thread
35 Limited has a reporting date of 31 March.
Subsidiaries are all entities over which Sosandar Plc has the
power to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting
rights.
The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing
whether the Group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Company. They are de-consolidated from the date that control
ceases.
In November 2017, Sosandar Plc ('Company') acquired the entire
issued share capital of Thread 35 Ltd ('legal subsidiary') for a
consideration of GBP6,281,618, satisfied by the issue of shares of
GBP1,603,422 and cash of GBP4,678,196.
As the legal subsidiary is reversed into the Company (the legal
parent), which originally was a publicly listed cash shell company,
this transaction cannot be considered a business combination, as
the Company, the accounting acquiree, does not meet the definition
of a business under IFRS 3 'Business Combinations'. However, the
accounting for such capital transaction should be treated as a
share-based payment transaction and therefore accounted for under
IFRS 2 'Share-based payment'.
Any difference in the fair value of the shares deemed to have
been issued by the Thread 35 Ltd (accounting acquirer) and the fair
value of Sosandar Plc's (the accounting acquiree) identifiable net
assets represents a service received by the accounting
acquirer.
Although the consolidated financial information has been issued
in the name of Sosandar Plc, the legal parent, it represents in
substance continuation of the financial information of the legal
subsidiary.
The assets and liabilities of the legal subsidiary are
recognised and measured in the Group financial statements at the
pre-combination carrying amounts and not restated at fair
value.
The retained earnings and other reserves balances recognised in
the Group financial statements reflect the retained earnings and
other reserves balances of the legal subsidiary immediately before
the business combination and the results of the period from 1 April
2017 to the date of the business combination are those of the legal
subsidiary only.
The equity structure (share capital and share premium) appearing
in the Group financial statements reflects the equity structure of
Sosandar Plc, the legal parent. This includes the shares issued in
order to effect the business combination.
Functional and presentation currency
Items included in the financial statements of the Group are
measured using the currency of the primary economic environment in
which the entity operates (the functional currency). The
financial
statements are presented in Pounds Sterling (GBP), which is the
Group's presentation currency and the Company's functional
currency.
Foreign currency transactions are translated into the functional
currency using exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement.
The results and financial position of all Group entities (none
of which has the currency of a hyper-inflationary economy) that
have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
-- monetary assets and liabilities for each statement of
financial position presented are translated at the closing
rate at the date of that statement of financial position;
-- income and expenses for each income statement are translated
at average exchange rates (unless this average is not
a reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which
case income and expenses are translated at the rate on
the dates of the transactions); and
-- all resulting exchange differences are recognised as a
separate component of equity.
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations, and of
borrowings and other currency instruments designated as hedges of
such investments, are taken to shareholders' equity. When a foreign
operation is partially disposed of or sold, exchange differences
that were recorded in equity are recognised in the income statement
as part of the gain or loss on sale.
Changes in accounting policies and disclosures
The accounting policies adopted are consistent throughout the
financial period. Standards and amendments to UK adopted
international accounting standards (IFRSs) effective as of 1 April
2022 have been applied by the Group.
Adoption of new and revised standards
During the financial year, the Group has adopted the following
new IFRSs (including amendments thereto) and IFRIC interpretations,
that became effective for the first time.
Standard Effective date,
annual period
beginning on or
after
Reference to the Conceptual Framework (Amendments 1 January 2022
to IFRS 3 Business Combinations)
-----------------
Property, Plant and Equipment: Proceeds before 1 January 2022
Intended Use (Amendments to IAS 16)
-----------------
Onerous Contracts - Cost of Fulfilling a Contract 1 January 2022
(Amendments to IAS 37 Provisions, Contingent
Liabilities and Contingent Assets)
-----------------
Annual improvements 2018-2020 cycle 1 January 2022
-----------------
Their adoption has not had any material impact on the
disclosures or amounts reported in the financial statements.
Standards issued but not yet effective:
At the date of authorisation of these financial statements, the
following standards and interpretations relevant to the Group and
which have not been applied in these financial statements, were in
issue but were not yet effective.
Standard Effective date,
annual period beginning
on or after
Disclosure of Accounting Policies (Amendments 1 January 2023
to IAS 1 Presentation of Financial Statements
and IFRS Practice Statement 2 Making Materiality
Judgements)
-------------------------
Definition of Accounting Estimates (Amendments 1 January 2023
to IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors)
-------------------------
Deferred Tax related to Assets and Liabilities 1 January 2023
arising from a Single Transaction (Amendments
to IAS 12 Income Taxes)
-------------------------
The Directors have assessed the full impact of these accounting
changes on the Company. To the extent that they may be applicable,
the Directors have concluded that none of these pronouncements will
cause material adjustments to the Group's Financial Statements.
They may result in consequential changes to the accounting policies
and other note disclosures. The new standards will not be early
adopted by the Group and will be incorporated in the preparation of
the Group Financial Statements from the effective dates noted
above.
The directors anticipate that the adoption of these standards
and interpretations in future periods will have no material effect
on the financial statements of the group.
The Directors have taken advantage of the exemption available
under Section 408 of the Companies Act 2006 and not presented an
income statement nor a statement of comprehensive income for the
Company alone.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of Financial Statements in conformity with IFRS
requires management to make estimates and judgements that affect
the reported amounts of assets and liabilities as well as the
disclosure of contingent assets and liabilities at the year end and
the reported amounts of revenues and expenses during the reporting
period. Estimates and judgements are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. The key areas identified by the Group are
as follows:
Inventories
Inventories are valued at the lower of cost and net realisable
value, on a weighted average cost basis. Net realisable value is
the estimated selling price in the ordinary course of the business
less applicable variable selling expenses. Cost of purchase
comprises the purchase price including import duties and other
taxes, transport and handling costs and other attributable costs,
less trade discounts.
A provision is made to write down any slow-moving or obsolete
inventory to net realisable value.
The provision is GBP387k at 31 March 2023 (2022: GBP761k). A
difference of 1%pt in the provision as a percentage of gross
inventory would give rise to a difference of +/- GBP124k in gross
profit (2022: +/- GBP81k).
Contract liabilities - refund accruals
Accruals for sales returns are estimated on the basis of
historical returns and are recorded so as to allocate them to the
same period in which the original revenue is recorded. These
accruals are reviewed regularly and updated to reflect management's
latest best estimates, although actual returns could vary from
these estimates. The accrual for refunds totalled GBP2,617k (2022
refund accrual: GBP2,029k) and a right to returned goods asset
recognised of GBP1,113k (2022: GBP814k). A performance obligation
is deemed for returns and refunds. A 14 days return policy is noted
for a full refund through Sosandar.com and up to 30 days on third
party retailer websites. A difference of 1%pt in the sales returns
rate have an impact of +/- GBP134k (2022: +/- GBP92k) on the refund
provision, and +/- GBP60k (2022: +/- GBP38k) on the right to
returned goods asset.
Calculation of share-based payment charges
The charge related to equity-settled transactions with employees
is measured by reference to the fair value of the equity
instruments at the date they are granted, using an appropriate
valuation model selected according to the terms and conditions of
the grant. Judgement is applied in determining the most appropriate
valuation model and in determining the inputs to the model.
Judgements are also applied in relation to estimations of the
number of options which are expected to vest, by reference to
historic leaver rates and expected outcomes under relevant
performance conditions. Please see note 17.
Depreciation of property, plant and equipment and amortisation
of other intangible assets
Depreciation and amortisation are provided to write down assets
to their residual values over their estimated useful lives. The
determination of these residual values and estimated lives, and any
change to the residual values or estimated lives, requires the
exercise of management judgement. Please see notes 9 and 10.
Revenue recognition
Revenue is recognised at the point where legal title in the
goods passes from the Group to the customer. This includes the
price paid for the goods as well as any delivery charge where
applicable. Typically legal title is passed when the goods are
despatched from the warehouse and as the invoice is created.
Revenue is reported after making deduction for actual and
anticipated returns, relevant vouchers and sales taxes.
Revenue is generated both on Sosandar's own website, and through
third party partners. No breakdown of revenue can be made in
tabular form as all sales are UK and online, with similar risk
profiles.
Intangible assets
Identifiable development expenditure is capitalised to the
extent that the technical, commercial and financial feasibility can
be demonstrated. Costs are capitalised where the expenditure will
bring future economic benefit to the company.
Amortisation is recognised so as to write off the cost of assets
less their residual values over their useful economic lives. The
estimated useful economic life of intangible assets has been
revised to 5 years. For any assets older than this with a net book
value at year end, the amortisation has been accelerated to make
the net book value nil at the end of the financial year.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less
subsequent accumulated depreciation and accumulated impairment
losses, if any. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the company and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to profit
or loss during the financial period in which they are incurred.
Depreciation on property, plant and equipment is calculated
using the straight-line and reducing balance methods to write off
their cost over their estimated useful lives at the following
annual rates:
Plant and Machinery 15% Straight line
Computer Equipment 33.33% Straight line
Fixture and Fittings 15% Reducing balance
Office Equipment 25% Reducing balance
Leasehold Improvements 20% Straight line
Right of Use Asset 20% Straight line
Investments
In order to assess the impairment of the investment in the
subsidiary, the Directors use a value in use calculation.
The key assumptions used for the value in use calculation for
the year ended 31 March 2023 were as follows:
2023 2022
% %
Discount rate 11 11
Returns assumption 45 45
Compound annual revenue
growth rate 20 20
The Directors have made significant estimates on future revenues
and EBITDA growth in future years based on the budgeted investment
and expansion of our clothing and footwear ranges, increased
stocking levels and continued investment in marketing channels to
acquire new customers.
The Directors have performed a sensitivity analysis to assess
the impact of downside risk of the key assumptions underpinning the
projected results of the Group. The projections and associated
headroom used for the Group is sensitive to the EBITDA growth
assumptions that have been applied.
Equity
Equity instruments issued by the Group are recorded at the value
of the proceeds received, net of direct issue costs, allocated
between share capital and share premium.
Impairment of non-financial assets
At each statement of financial position date, the Group reviews
the carrying amounts of its investments to determine whether there
is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the
asset is estimated in
order to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are independent
from other assets, the Group estimates the recoverable amount of
the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years.
A reversal of an impairment loss is recognised as income
immediately, unless the relevant asset is carried at a revalued
amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
Taxation
Income tax
Income tax expense represents the sum of the tax currently
payable and deferred tax. The tax currently payable is based on
taxable profit for the year. Taxable profit differs from profit as
reported in the same income statement because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Group and Company's liability for current tax is calculated using
tax rates that have been enacted or substantively enacted by the
statement of financial position date.
Deferred tax
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the 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.
The carrying amount of deferred tax is reviewed at each
statement of financial position date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset
realised . Deferred tax is charged or credited to the income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity. Deferred tax assets and liabilities are offset when
there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the Group and
Company intends to settle its current tax assets and liabilities on
a net basis.
Share-based compensation
The Group has issues equity-settled share-based payments to
employees. The fair value of the employee and suppliers' services
received in exchange for the grant of the options is recognised as
an expense. The total amount to be expensed over the vesting year
is determined by reference to the fair value of the options
granted, excluding the impact of any non-market vesting conditions
(for example, profitability and sales growth targets). Non-market
vesting conditions are included in assumptions about the number of
options that are expected to vest. At each statement of financial
position date, the entity revises its estimates of the number of
options that are expected to vest. It recognises the impact of the
revision to original estimates, if any, in the income statement,
with a corresponding adjustment to other reserves within equity.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium when the options are exercised.
The fair value of share-based payments recognised in the income
statement taking into account conditions attached to the vesting
and exercise of the equity instruments.
The expected life used in the model is adjusted; based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations. The share
price volatility percentage factor used in the calculation is based
on management's best estimate of future share price behaviour and
is selected based on past experience, future expectations and
benchmarked against peer companies in the industry.
Pension costs
The Group contributes to a defined contribution scheme for
employees. The costs of these contributions are charged to the
statement of comprehensive income on an accruals basis as they
become payable under the scheme rules.
Investments
Investments in subsidiary companies are stated at cost less any
provision for impairment. Investments are accounted for at cost
unless there is evidence of a permanent diminution in value, in
which case they are written down to their estimated realisable
value. Any such provision, together with any realised gains and
losses, is included in the statement of comprehensive income.
Impairment of investments
The impairment of the carrying value of the investment in
subsidiaries is calculated using forward-looking assumptions of
profit growth rates, discount rates and timeframe which require
management judgement and estimates that cannot be certain. Note 11
contains the assumptions made by management.
Provisions
Provisions are recognised when the Group and Company has a
present obligation as a result of a past event, and it is probable
that the Group and Company will be required to settle that
obligation. Provisions are measured at the Directors' best estimate
of the expenditure required to settle the obligation at the
statement of financial position date and are discounted to present
value where the effect is material.
Financial instruments
Non-derivative financial instruments comprise investments in
equity and debt securities, trade and other receivables, cash and
cash equivalents, loans and borrowings, and trade and other
payables.
Non-derivative financial instruments are recognised initially at
fair value plus, for instruments not at fair value through profit
or loss, any directly attributable transactions costs, except as
described below. Subsequent to initial recognition non-derivative
financial instruments are measured as described below.
A financial instrument is recognised when 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 assets 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.
Fair values
The carrying amounts of the financial assets and liabilities
such as cash and cash equivalents, receivables and payables of the
Group and Company at the statement of financial position date
approximated their fair values, due to the relatively short-term
nature of these financial instruments.
Trade payables and other non-derivative financial
liabilities
Trade payables and other creditors are non-interest bearing and
are measured at amortised cost.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on
call with banks, other short-term highly liquid investments with
original maturities of three months or less, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities
on the statement of financial position.
Trade and other receivables
Trade and other receivables are recognised initially at
transaction price and subsequently measured at their cost when the
contractual right to receive cash or other financial assets from
another entity is established.
Trade receivables are considered past due when they have passed
their contracted due date. Trade receivables are assessed for
impairment based upon the expected credit losses model. The Group
applies the IFRS 9 Simplified Approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade
receivables. To measure, expected credit losses on a collective
basis are grouped based on similar credit risk and aging.
Financial assets and liabilities
The Group classifies its financial assets at inception as
measured at amortised cost. The Group classifies its financial
liabilities, other than financial guarantees and loan commitments,
as measured at amortised cost. Management determines the
classification of its investments at initial recognition. A
financial asset or financial liability is measured initially at
fair value. At inception transaction cost that are directly
attributable to its acquisition or issue, for an item not at fair
value through profit or loss, is added to the fair value of the
financial asset and deducted from the fair value of the financial
liability.
Amortised cost measurement
The amortised cost of a financial asset or financial liability
is the amount at which the financial asset or liability is measured
at initial recognition, minus principal payments, plus or minus the
cumulative amortisation using the effective interest method of any
difference between the initial amount recognised and maturity
amount, minus any reduction for impairment.
Fair value measurement
Fair value is the amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing parties in
an arm's length transaction on the measurement date. The fair value
of assets and liabilities in active markets are based on current
bid and offer prices respectively. If the market is not active the
group establishes fair value by using appropriate valuation
techniques. These
include the use of recent arm's length transactions, reference
to other instruments that are substantially the same for which
market observable prices exist, net present value and discounted
cash flow analysis.
Derecognition
Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or where the
group has transferred substantially all of the risks and rewards of
ownership.
In transaction in which the group neither retains nor transfers
substantially all the risks and rewards of ownership of a financial
asset and it retains control over the asset, the group continues to
recognise the asset to the extent of its continuing involvement,
determined by the extent to which it is exposed to changes in the
value of the transferred asset. There have not been any instances
where assets have only been partly derecognised. The group
derecognizes a financial liability when its contractual obligation
are discharge, cancelled or expire.
Impairment losses from contracts with customers
The Group assesses at each financial position date whether there
is objective evidence that a financial asset or group of financial
assets is impaired. If there is objective experience (such as
significant financial difficulty of obligor, breach of contract, or
it becomes probable that debtor will enter bankruptcy), the asset
is tested for impairment. The amount of the loss is measured as the
difference between the asset's carrying amount and the present
value of the estimated future cash flows (excluding future expected
credit losses that have not been incurred) discounted at the
financial asset's original effective interest rate (that is, the
effective interest rate computed at initial recognition). The
carrying amount of the asset is reduced through use of an allowance
account. The amount of loss is recognised in the Statement of
Comprehensive Income.
Leases
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability
-- any lease payments made at or before the commencement date
less any lease incentives received
-- any initial direct costs, and
-- restoration costs.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise
IT-equipment and small items of office furniture less than
GBP5k.
3 Revenue
The directors have considered the requirement of IFRS 15 with
regards to disaggregation of revenue and do not consider this to be
required as the group only has one operating segment which is
retail sales.
The income recognition for delivery receipts, commissions on
partner-fulfilled sales and wholesale revenue are in line with that
of retail sales and linked to dispatch/delivery to customers.
Due to the nature of its activities, the group is not reliant on
any individual major customers.
There is one geographical market being the UK.
4 Operating loss
31 March 31 March
2023 2022
GBP'000 GBP'000
Operating loss is stated after charging/(crediting):
Operating lease rentals 86 24
Auditors' remuneration:
Audit fee - group and company 54 44
Legal and other fees 155 167
Foreign currency loss 190 48
Share based payment 311 255
5 Finance cost
31 March 31 March
2023 2022
GBP'000 GBP'000
Interest on the lease 40 4
Other interest - 4
Total 40 8
6 Employees
31 March 31 March
2023 2022
GBP'000 GBP'000
Aggregate Directors' emoluments including consulting fees 752 629
Wages and salaries 2,571 1,641
Social security costs 353 230
Pension costs 148 94
Share-based payments 311 255
Total 4,135 2,849
----------------------------------------------------------- --------- ---------
31 March 31 March
2023 2022
GBP'000 GBP'000
Directors 8 8
Staff 70 45
Total 78 53
----------- --------- ---------
Directors' remuneration
Details of emoluments received by Directors of the Group for the
year ended 31 March 2023 are as follows:
2023 2023 2023 2023 2022
-------------------- ------------ --------- --------------- -------- --------
Base Salary Pensions Other Benefits Total Total
-------------------- ------------ --------- --------------- -------- --------
GBP GBP GBP GBP GBP
-------------------- ------------ --------- --------------- -------- --------
Alison Hall 199,583 19,633 3,351 222,567 186,300
Julie Lavington 199,583 19,633 3,705 222,921 186,300
Steve Dilks 139,583 10,438 1,757 151,778 128,132
Bill Murray 38,019 - - 38,019 39,750
Nicholas Mustoe 30,692 - - 30,692 28,500
Adam Reynolds 30,000 - - 30,000 39,000
Mark Collingbourne 25,000 - - 25,000 28,500
Andrew Booth 30,000 - - 30,000 28,500
Jonathan Wragg 29,230 - - 29,230 -
Lesley Watt 17,500 - - 17,500 -
Total 739,190 49,704 8,813 797,707 664,982
-------------------- ------------ --------- --------------- -------- --------
Details of the share options held by each Director can be found
in the Group Directors' Report on pages 32-33.
The key management personnel are deemed to be the directors.
7 Income tax
a) Analysis of charge in the period
31 March 31 March
2023 2022
GBP'000 GBP'000
-------------------------------------------------------- --------- ---------
Deferred tax
Origination and reversal of timing differences (284) (412)
Total deferred tax charge/(credit) (284) (412)
-------------------------------------------------------- --------- ---------
b) Factors affecting the tax charge for the period
31 March 31 March
2023 2022
GBP'000 GBP'000
-------------------------------------------------------- --------- ---------
Loss on ordinary activities before taxation 1,597 (554)
Tax at the UK corporation tax rate of 19% (2022: 19%) 303 (105)
Expenses not deductible for tax purposes 60 60
Fixed asset differences (15) (2)
Remeasurement of deferred tax for changes in tax rates (63) (1,256)
Movement in deferred tax not recognised (569) 890
Tax on loss on ordinary activities (284) (412)
-------------------------------------------------------- --------- ---------
The Chancellor confirmed in the Spring Budget on 15 March 2023
that the rate of corporation tax will increase from 19% to 25% from
1 April 2023, as originally planned in the 2021 Budget. From the
same date a small companies' rate of 19% will be introduced for
companies with profits of GBP50,000 or less. The main rate applies
to companies with profits over GBP250,000 and marginal relief will
apply to for profits in between the thresholds.
The unrecognised deferred tax asset amounts to GBP4,073k (2022:
GBP4,693k) and has been calculated at the tax rate of 25%.
The deferred tax asset of GBP696k (2022: GBP412k) has been
recognised due to the expectation that it will be reversed in
future years.
8 Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing the
loss attributable to equity shareholders by the weighted average
number of ordinary shares in issue during the year:
31 March 31 March
2023 2022
Profit / (Loss) after tax attributable
to equity holders of the parent (GBP'000) 1,881 (142)
Weighted average number of ordinary
shares in issue 224,738,344 216,844,739
Fully diluted average number of ordinary
shares in issue 252,499,241 216,844,739
-------------------------------------------- ------------ ------------
Basic earnings/(loss) per share
(pence) 0.84 (0.07)
Diluted earnings/(loss) per share
(pence) 0.74 (0.07)
-------------------------------------------- ------------ ------------
Where a loss is incurred the effect of outstanding share options
and warrants is considered anti-dilutive and is ignored for the
purpose of the loss per share calculation. For the prior year loss
per share, the share options outstanding as at 31 March 2022
totalled 27,760,897 and were potentially dilutive.
9 Intangible assets - Group
Website Trademark Total
GBP'000 GBP'000 GBP'000
------------------------------ -------- ---------- --------
Cost
At 1 April 2021 228 2 230
Additions - - -
At 31 March 2022 228 2 230
Amortisation
At 1 April 2021 31 1 32
Charge for the year 197 1 198
At 31 March 2022 228 2 230
Carrying value 31 March 2022 - - -
------------------------------ -------- ---------- --------
Cost
At 1 April 2022 228 2 230
At 31 March 2023 228 2 230
Amortisation
At 1 April 2022 228 2 230
At 31 March 2023 228 2 230
Carrying value 31 March 2023 - - -
------------------------------- -------- ---------- --------
10 Property, plant and equipment - Group
Computer Equipment Fixtures and Total
fittings equipment Right of use asset Assets under
Construction
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------------- -------------------- -------------------- -------------------- --------
Cost
At 1 April 2021 93 306 192 - 591
Additions 30 6 364 - 400
--------------------- ------------------- -------------------- -------------------- -------------------- --------
At 31 March 2022 123 312 556 - 991
Accumulated
depreciation
At 1 April 2021 58 218 150 - 426
Charge for year 27 38 54 - 119
At 31 March 2022 85 256 204 - 545
Carrying value 31
March 2022 38 56 352 - 446
--------------------- ------------------- -------------------- -------------------- -------------------- --------
Cost
At 1 April 2022 123 312 556 - 991
Additions 68 280 380 52 780
--------------------- ------------------- -------------------- -------------------- -------------------- --------
At 31 March 2023 191 592 936 52 1,771
Accumulated
depreciation
At 1 April 2022 85 256 204 - 545
Charge for year 34 53 148 - 235
At 31 March 2023 119 309 352 - 780
Carrying value 31
March 2023 72 283 584 52 991
--------------------- ------------------- -------------------- -------------------- -------------------- --------
11 Non-current assets
Investments in subsidiaries:
Company
------------------------
2023 Restated 2022
GBP'000 GBP'000
------------------------------- -------- --------------
Cost at 1 April 7,128 6,878
Additions during the year 305 250
Cost at 31 March 7,432 7 ,128
------------------------------- -------- --------------
Impairment at 1 April - -
Disposals during the year - -
Impairment at 31 March - -
------------------------------- -------- --------------
Carrying value as at 31 March 7,432 7,128
------------------------------- -------- --------------
A prior period adjustment was made during the year to take the
share-based payments charge related to employees of Thread 35
Limited through the subsidiary P&L rather than that of the
parent. This was treated as a capital contribution in the
subsidiary and an increase in investment value of the subsidiary in
the parent company.
Investments are tested for impairment at the balance sheet date.
There were no investments held by the group. The recoverable amount
of the investment in Thread 35 Ltd as at 31 March 2023 was assessed
on the basis of value in use. As this exceeded carrying value no
impairment loss was recognised.
The key assumptions in the calculation to access value in use
are the future revenues and the ability to generate future cash
flows. The most recent financial results and forecast approved by
management were for the next 9 years and included terminal value.
The projected results were discounted at a rate which is a prudent
evaluation of the pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to
the cash-generating unit.
The key assumptions used for the value in use calculation for
the year ended 31 March 2023 are disclosed in note 2, Critical
accounting judgements and key sources of estimation uncertainty on
page 53.
The subsidiaries of Sosandar Plc are as follows:
% Holding
Subsidiary companies Incorporation Holding Type of share held 2023 % Holding 2022
------------------------ --------------- ----------- ---------------------- ---------- ---------------
Thread 35 Limited UK Direct Ordinary shares 100 100
The registered office of Thread 35 Limited is 40 Water Lane,
Wilmslow, SK9 5AP.
12 Inventories - Group
31 March 31 March
2023 2022
GBP'000 GBP'000
Stock - finished goods 11,251 6,493
Right to returned stock 1,110 814
Total 12,361 7,307
The cost of inventories charged in the year as an expense
equated to GBP18,614k (2022: GBP12,962k). Right to returned stock
relates to the cost of products sold in the financial year but
expected to be returned after the financial period.
13 Loans to subsidiaries
Group Company
---------------------------------- -----------------------------------
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Loan to subsidiary - - - -
-------------------- ----------------- --------------- --------------- ------------------
The loan made to Thread 35 Limited by Sosandar Plc of GBP26,470k
(2022: GBP23,047k) was fully impaired at the year end.
14 Trade and other receivables
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables 1,973 1,683 - -
VAT recoverable 23 16 23 16
Other receivables 86 329 - -
Prepayments 648 467 - 18
Trade and other receivables 2,730 2,495 23 34
The Directors consider that the carrying amount of trade and
other receivables approximates their fair value.
Trade receivables are considered past due when they have passed
their contracted due date. Trade receivables are assessed for
impairment based upon the expected credit losses model. The Group
applies the IFRS 9 Simplified Approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade
receivables. To measure, expected credit losses on a collective
basis are grouped based on similar credit risk and aging.
At 31 March 2023 there were 7 customers who owed in excess of
80% of the total trade debtor balance. These customers were
operating within their credit terms and the directors do not
foresee an increased credit risk associated with these customers.
As such no impairment provision has been recognised on trade
debtors.
Expected credit losses have been recognised in the parent
company on the loan to the subsidiary.
External Internal 12 month Gross
credit credit or lifetime carrying Loss Net carrying
31/03/2023 Note rating rating ECL amount allowance amount
GBP'000 GBP'000 GBP'000
--------------- ----- --------- --------- ------------- ---------- ----------- -------------
Loans to
subsidiaries 13 N/A Doubtful Lifetime 26,471 (26,471) -
--------------- ----- --------- --------- ------------- ---------- ----------- -------------
15 Cash and cash equivalents
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 10,577 7,048 5,119 3,399
16 Share capital and reserves
Details of ordinary shares issued are in the table below:
Ordinary Shares (GBP0.01)
----------------------------------------------------------------------------------------------------------------------
Number of shares Issue Price GBP Total Share Capital Total Share Premium
GBP'000 GBP'000
------------------------- ----------------- ---------------- ---------------------------- ------------------------
At 31 Mar 2022 221,408,332 0.001 221 47,089
Shares issued: Fundraise
Feb 2023 26,818,181 0.001 27 5,873
Direct costs: Fundraise
Feb 2023 (343)
------------------------- ----------------- ---------------- ---------------------------- ------------------------
At 31 Mar 2023 248,226,513 0.001 248 52,619
------------------------- ----------------- ---------------- ---------------------------- ------------------------
17 Share based payments
Share option plans
The Group has a share ownership compensation scheme for
Directors and senior employees of the Group. On 2(nd) November 2017
share options over ordinary shares of 15.1p were issued with a
further issue over ordinary shares of 29.1p issued on 25(th)
February 2019. On 21 June 2021 the Group announced the
establishment of a new Long Term Incentive Plan in which it granted
new nil cost options totalling 21,431,942 ordinary shares of 0.1
pence each to its executive directors and members of the senior
management team. Some of the existing options granted, totalling
13,888,742 ordinary shares, were modified as part of these
arrangements. There was no incremental fair value because of this
modification.
The options are settled in equity once exercised. If the options
remain unexercised for a period after ten years from the date of
grant, the options expire.
Details of the number of share options and the weighted average
exercise price ("WAEP") outstanding during the period are as
follows:
31 March 2023 31 March 2022
Number ('000) WAEP GBP Number ('000) WAEP GBP
Outstanding at 31 March 2022 27,761 0.035 20,218 0.154
Modifications in the year - - (13,889) 0.154
- - 11,789 0.000
Issuances in the year - - 9,643 0.000
Cancellations in the year - - - -
Outstanding at 31 March 2023 27,761 0.035 27,761 0.154
Exercisable at 31 March 2023 18,118 0.035 14,682 0.154
The options outstanding at 31 March 2023 had a weighted average
exercise price of GBP0.035 and a weighted average remaining
contractual life of 7.59 years.
The fair values of options granted prior to 2021 were calculated
using the Black Scholes pricing model. The fair values of the
options granted in June 2021 were calculated using the Monte Carlo
model. The Group used historical data to estimate expected period
to exercise, within the valuation model. Expected volatilities of
options outstanding granted prior to the Company's admission to AIM
were based on implied volatilities of a sample of listed companies
based in similar sectors. The risk-free rate for the expected
period to exercise of the option was based on the UK gilt yield
curve at the time of the grant.
The Group recognised a charge of GBP311k (2022: GBP255k) related
to equity-settled share-based payment transactions during the year.
Of this, the charge recognised in the subsidiary, Thread 35 Ltd,
was GBP305k (2022: GBP250k).
The assumptions used in the valuation of the options at the
grant date are as follows. There were no new share issues in the
year.
Share options Share options Share options
2022 2020 2018
Exercise price 0.0p 29.1p 15.1p
-------------- -------------- --------------
Share price at date of
grant 23.75p 29.1p 15.1p
-------------- -------------- --------------
Risk-free rate 0.25% 0.25% 0.25%
-------------- -------------- --------------
Volatility 42% 25% 25%
-------------- -------------- --------------
Expected Life 5 years 10 years 10 years
-------------- -------------- --------------
Fair Value 0.13 0.07 0.05
-------------- -------------- --------------
18 Trade and other payables
Group Company
------------------ ------------------
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- --------
Trade payables 3,694 2,869 20 22
Accruals 549 656 36 30
Other payables 384 269 - -
VAT payable 1,077 856 - -
Contract liabilities 2,617 2,029 - -
Deferred income 34 82
Trade and other payables 8,355 6,761 56 52
-------------------------- -------- -------- -------- --------
19 Leases
The Group has a property lease contract which is used in its day
to day operations.
31 March 31 March
2023 2022
GBP'000 GBP'000
Lease liability brought forward 327 49
Additions 380 345
Finance cost 40 4
Lease payments (117) (71)
Lease liability recognised in statement of financial position 630 327
---------------------------------------------------------------- ---------- ---------
31 March 31 March
2023 2022
GBP'000 GBP'000
Of which
Current lease liabilities 148 38
Non-current lease liabilities 482 289
Lease liability recognised in statement of financial position 630 327
---------------------------------------------------------------- ---------- ---------
Both leases have a term of five years with a break clause after
three years. On 1 April 2022, the Group entered into a second
property lease in Wilmslow, England in order to expand its office
space.
20 Related party transactions
During the year to 31 March 2023 the Group was charged GBP10k
(2022: GBP39k) for services provided by Reyco Limited, a company
controlled by A Reynolds. There was no amount outstanding at the
balance sheet date (2022: GBPnil).
During the year to 31 March 2023 the Group was charged GBP28k
(2022: GBP29k) for services provided by Morrison Kingsley
Consultants Limited, a company controlled by M Collingbourne. There
was no amount outstanding at the balance sheet date (2022:
GBP3k).
During the year to 31 March 2023 the Group was charged GBP14k
(2022: GBP40k) for services provided by Bill Murray and Associates,
a company controlled by B Murray. There was no amount outstanding
at the balance sheet date (2022: GBPnil).
During the year to 31 March 2023 the Group was charged GBP10k
(2022: GBP29k) for services provided by N Mustoe. There was GBPnil
outstanding at the balance sheet date (2022: GBP10k).
During the year to 31 March 2023 the Group was charged GBP9k
(2022: GBP29k) for services provided by Skale Limited, a company
controlled by A Booth. There was no amount outstanding at the
balance sheet date (2021: GBP3k).
21 Financial instruments - risk management
In common with all other businesses, the Group is exposed to
risks that arise from its use of financial instruments. This note
describes the Group's objectives, policies and processes for
managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented
throughout these financial statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this
note.
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining responsibility for them it has delegated the authority
for designing and operating processes that ensure the effective
implementation of the objectives and policies to the Group's
finance function. The Board receives regular updates from the
management team through which it reviews the effectiveness of the
processes put in place and the appropriateness of the objectives
and policies it sets. The overall objective of the Board is to set
policies that seek to reduce risk as far as possible without unduly
affecting the Group's competitiveness and flexibility. The Group's
operations expose it to some financial risks arising from its use
of financial instruments, the most significant ones being cash flow
interest rate risk, foreign exchange risk, liquidity risk and
capital risk. Further details regarding these policies are set out
below:
Cash flow interest rate risk
The Group is exposed to cash flow interest rate risk from its
deposits of cash and cash equivalents with banks. The cash balances
maintained by the Group are proactively managed in order to ensure
that attractive rates of interest are received for the available
funds but without affecting the working capital flexibility the
Group requires.
The Group is not at present exposed to cash flow interest rate
risk on borrowings as it has no debt. No subsidiary company of the
Group is permitted to enter into any borrowing facility or lease
agreement without the prior consent of the Company.
Foreign exchange risk
Foreign exchange risk may arise because the Group purchases
stock in currencies other than the functional currency.
The Group monitors whether there is a requirement for foreign
currency on a monthly basis. The Group considers this policy
minimises any unnecessary foreign exchange exposure.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital; it is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. The principal
obligations of the Group arise in respect of committed expenditure
in respect of its stock purchases and design. The Group's policy is
to ensure that it will always have sufficient cash to allow it to
meet its obligations when they become due. To achieve this aim, it
seeks to maintain readily available cash balances (or agreed
facilities) to meet expected requirements and to raise new equity
finance if required for future development or expansion.
The Board receives cash flow projections on a monthly basis as
well as information on cash balances. The Board will not commit to
material expenditure in respect of its ongoing commitments prior to
being satisfied that sufficient funding is available to the Group
to finance the planned programmes . For cash and cash equivalents,
the Group only uses recognised banks with medium to high credit
ratings.
The maturity of borrowings and other financial liabilities
(representing undiscounted contractual cash-flows) is as
follows:
Notes Group Company
Within 1 year 1-2 years Within 1 year 1-2 years
As at 31 March 2023 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 18 8,073 - 56 -
Lease liabilities 19 148 485 - -
Total 8,221 485 56 -
Group Company
Within 1 year 1-2 years Within 1 year 1-2 years
As at 31 March 2022 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 18 6,761 - 52 -
Lease liabilities 19 38 289 - -
Total 6,799 289 52 -
Financial assets
At the reporting date, the Group held the following financial
assets, all of which were classified as financial assets at
amortised cost:
Group Company
-------------------- --------------------
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- --------- ---------
Cash and cash equivalents 10,576 7,048 5,122 3,399
Trade & other receivables* 2,081 2,027 23 34
Total 12,657 9,075 5,145 3,433
---------------------------- --------- --------- --------- ---------
*excluding prepayments
Financial liabilities
At the reporting dates, the Group held the following financial
liabilities, all of which were classified as other financial
liabilities at amortised cost:
Group Company
31 March 31 March 31 March 31 March
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 3,694 2,869 20 22
Accruals 549 656 36 30
Other payables 384 269 - -
Contract liabilities 2,617 2,029 - -
Lease liabilities 633 327 - -
Trade and other payables 7,877 6,150 56 52
*excluding VAT
Capital risk
The Group's objectives when managing capital are to safeguard
the ability to continue as a going concern in order to provide
returns for shareholders and benefits to other stakeholders and to
maintain an optimal capital structure to reduce the cost of
capital.
22 Net cash
The below table shows the Group's cash position less lease
liabilities.
At 1 Accrued At 31
April Cash interest March
2022 flow Additions charges 2023
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- ---------- ---------- --------
Cash and cash equivalents 7,048 3,411 - - 10,459
Lease liabilities (327) 117 (380) (40) (630)
Net cash (excluding lease
liabilities) 6,721 3,528 (380) (40) 9,830
--------------------------- -------- -------- ---------- ---------- --------
23 Post balance sheet events
There were no post balance sheet events.
24 Contingent liabilities
The Company and Group has no contingent liabilities.
25 Ultimate controlling party
There is no ultimate controlling party of the Company.
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END
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