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Annual Report
2019
Sosandar Plc
Annual Report & Accounts 2019
Our vision is
to be a global
one-stop online
destination for
fashion forward
women
H I G H L I G H T S
£4.44m
Revenue (+228%)
102.9k
Annual Orders (+224%)
2019
2018
2017*£0.03m
£1.35m
£4.44m
2019
102.9k
2018 31.7k
2017*7k
55.5%
Gross Margin (+607 bps)
2019
2018
2017*
55.5%
49.4%
37.8%
2.92%
Conversion Rate (+76 bps)
£103.19
Average Order Value (+10%)
105.7k
Customer Database (+95%)
2019
2018
2017*
1.29%
2.92%
2.16%
2019
2018
2017*
£103.19
£94.18
£87.22
2019
2018
2017*6.8k
54.1k
105.7k
*
2017 reflects seven months of trading, first sales in September 2016.
Sosandar Plc
Annual Report & Accounts 2019
Overview
Overview
Ataglance
Investmentcase
Strategic Report
Chairman’sStatement
MarketOverview
BusinessModel
Strategy
OperatingReview
FinancialReview
RiskManagement
Corporate Governance
BoardofDirectors
GroupDirectorsReport
2
4
8
10
12
14
16
18
20
24
26
Consolidated and Company
Financial Statements
IndependentAuditor’sReport
34
ConsolidatedStatementof
IncomeandOther
ComprehensiveIncome
ConsolidatedStatementof
FinancialPosition
ConsolidatedStatementof
CashFlows
ConsolidatedStatementof
ChangesinEquity
CompanyStatementof
FinancialPosition
CompanyStatementof
CashFlows
CompanyStatementof
ChangesinEquity
NotestotheConsolidated
andCompanyFinancial
Statements
38
39
40
41
42
43
44
45
1
Sosandar Plc
Annual Report & Accounts 2019
A T A G L A N C E
So much growth
& opportunity
and we’ve only just begun
Sosandar provide a one-stop online shop for
style conscious women who have graduated from
price-led alternatives. We offer this underserved
audience fashion forward, affordable, quality
clothing to make them feel sexy, feminine and
chic. The business sells entirely own label
exclusive product designed in-house.
F R O M S T A R T U P T O T R I P L E D I G I T G R O W T H I N 2 . 5 Y E A R S
Nov 2015
Business founded
Sep 2016
Website launched,
first customer
purchase within
5 minutes
Oct 2016
First garment
features on
television
Nov 2016
Loose Women
celebrities begin
wearing Sosandar
May 2017
Deal signed
between
Sosandar and
Orogen Plc for
reverse takeover
Sep 2017
Break £1 million
cumulative gross
revenue since
launch
Nov 2017
Float on AIM at 15.1p,
£5.3 million raised
rate of over 5%
Jan 2018
More than 1,000
items sold in a day
for the first time
with a conversion
rate of over 5%
Mar 2018
Record monthly
sales
Jun 2018
Instagram
followers exceed
10,000 – allowing
addition of swipe
up to shop
functionality
Oct 2018
Clipper Logistics
operation moves to
7 days a week in
order to meet
increasing demand
Jan 2019
Email database
exceeds 100,000
2
Sosandar Plc
Annual Report & Accounts 2019
Overview
A G R O W I N G
C U S T O M E R B A S E
Repeat Order Growth
Instagram Follower Growth
391%
208%
A W I D E R A N G E
O F P R O D U C T S
Clothing
Footwear
Gifts & Accessories
3
Sosandar Plc
Annual Report & Accounts 2019
I N V E S T M E N T C A S E
So quick, so easy
& so good
we understand what our customers
want and how to deliver it!
E X P E R I E N C E D
A N D D R I V E N
M A N A G E M E N T T E A M
Highly experienced
management team
with combined
experience of 35
years in fashion
and previous success
taking a business
from concept to
market leader.
H U G E A N D
G R O W I N G M A R K E T
O P P O R T U N I T Y
Online fashion forecast
to be worth £29bn by
2022 with Sosandar’s
core demographic
spending £3.7bn a
year on fashion.
A U N I Q U E
P R O P O S I T I O N
Product exclusively
designed in-house
to suit a wide-ranging
yet underserved
demographic.
Exclusively designed
trend-led, quality,
affordable clothing
with a premium
aesthetic targeting
a demographic
graduating from fast
fashion brands and
frustrated with high
street alternatives.
4
Sosandar Plc
Annual Report & Accounts 2019
Overview
Great quality garments at
reasonable prices ... very
up to the minute fashion
in a classy way. Well done
Sosandar.
G R O W I N G , L O Y A L
C U S T O M E R B A S E
Repeat orders up
391% in the last year
with a 15% increase
in order frequency.
Growing social
engagement and huge
amounts of positive
customer feedback.
S T RONG & SCAL ABL E
INF R AS T RUC T URE
IN PL ACE
Mobile-first website
built on leading
Magento platform
and logistics run
through Clipper
provide capacity for
large-scale growth.
N U M E R O U S
P O T E N T I A L
O P P O R T U N I T I E S F O R
F U T U R E E X PA N S I O N
Building an engaged
customer base in an
attractive demographic
allows opportunities for
new product categories
along with geographical
expansion and
cross selling into
complementary
markets.
5
Sosandar Plc
Annual Report & Accounts 2019
So many loyal
customers
our customer base and reach
continues to rocket – thank you!
6
Sosandar Plc
Annual Report & Accounts 2019
Strategic Report
S T R A T E G I C
R E P O R T
Chairman’sStatement
MarketOverview
BusinessModel
Strategy
OperatingReview
FinancialReview
RiskManagement
8
10
12
14
16
18
20
What an incredible
business. Great selection
of sassy clothing, I have
now bought pretty much
the whole collection.
Thank you Sosandar
for coming into my life
7
Sosandar Plc
Annual Report & Accounts 2019
C H A I R M A N ’ S S T A T E M E N T
It’s so exciting to
be in our space
right now
Bill Murray
Chairman
The past year has been
another period of rapid
growth for Sosandar, building
on the strong foundations
previously put in place and
taking us another step
forward in our journey to
become a global one stop
online destination for a new
generation of fashion forward
women. The demand we see
from our underserved market
continues to grow and
underpins the brand’s
increasing momentum.
It has been remarkable to see the
change the Company has been through
over the last year. The team has grown
significantly and our capabilities across
every aspect of the business have
become more sophisticated. It has been
particularly striking this year to see the
business begin to achieve conversion
rates and average order sizes which
compare favourably to well-established
industry peers, testament to the hard
work the team has put in to build a
first-rate fashion business.
Alongside strong top line growth in our
financials, we have continued our focus
on increasing efficiency. The entire
Sosandar team is motivated by the
same ambition of long-term,
sustainable success, and we are proud
to have achieved another year of
evolution towards that goal.
Corporate governance
The Board has committed to a
corporate governance approach
commensurate with more mature
businesses. Both Julie and Ali have
decades of experience in running and
overseeing a large, dynamic business,
bringing discipline and a prudent
financial approach to day-to-day
management.
8
As a Board, it is a priority to keep all our
shareholders up-to-date and engaged
with progress and we are committed to
transparency in all our corporate
communications. The aim to create
long-term success is front of mind and
the Board believes it is well aligned to
the interests of our shareholders, and
we would like to thank them all for
another year of support.
People
I would like to thank Ali, Julie and the rest
of the Sosandar team for all their hard
work and dedication to building the
brand over the past year. Our growth
means we have been able to make some
key hires that have resulted in the wider
team benefitting from added expertise
and creativity, all of which reflected in our
new product ranges and high-quality
marketing campaigns. The enthusiastic
and vibrant culture that Sosandar has
built is something of which the team
should be extremely proud. It was
fantastic to see this recognised at the
2019 Drapers Digital Awards where they
won an incredible pair of awards for best
new Online Business and Digital Team of
the Year.
Outlook
Going into the new financial year we are
well placed to drive further growth across
all of our KPIs. Our customers
demonstrate amazing loyalty both via
their shopping activity and continued
engagement via social channels. Growth
is expected to be realised through
further investment into product - adding
more SKUs and investing in our product
teams, whilst also continuing to invest in
marketing channels to acquire new
customers. Sosandar has set out a clear
growth plan and we remain confident of
delivering long term, sustainable success.
B I L L M U R R A Y
Chairman
3 July 2019
Sosandar Plc
Annual Report & Accounts 2019
Strategic Report
Gorgeous clothes , lovely
quality , super quick
delivery ....
What’s not to
C O N V E R S I O N R A T E
2.92%
(+76 bps)
A V E R A G E O R D E R V A L U E
£103.19
(+10%)
9
Sosandar Plc
Annual Report & Accounts 2019
M A R K E T O V E R V I E W
Positioned
so well to capture
market share
Fashion e-commerce
represents a large and
growing opportunity to
build a multimillion-pound
business in an area of the
market that is currently
underserved by existing
retailers.
Online growth
Fashion retail is changing. There is a
buy-now, wear-now mentality and
customers want convenient shopping
that fits around their busy lifestyles.
The UK womenswear sector is a large
market with several areas of growth.
The online fashion market is valued
at £16.2bn, with the overall market
expected to be worth £29bn by 2022,
fuelled by mobile purchasing.
Online sales accounted for 24% of total
UK fashion market spend in 2017, up
from 17% in 2014, and are forecast to
continue outpacing the overall clothing
market with double-digit growth over
the next five years (Mintel).
UK Annual Online Fashion Sales
)
m
£
(
e
u
a
v
l
t
e
k
r
a
M
Underserved market
Online-only retailers account for 38%
of the online fashion market in the UK
and are growing at a faster rate than
multi-channel retailers. One of the
main advantages of online shopping for
retailers is having the ability to reach
customers anywhere 24/7 through both
traditional and social media channels.
Sosandar focuses on an underserved
demographic of women with high
purse spend. This core demographic
spends £3.7bn a year on fashion*
(GB TGI Q2 Jan-Dec 2016), the highest
aggregate and fastest-growing spend
out of all women aged 15-75
(Euromonitor).
The business has successfully accessed
this market. Our customer has a
high disposable income and is very
fashion-conscious, with 60% of her
purchases made online. She’s looking
for trend-led, quality, affordable clothes
in a flattering design for all occasions
(CIL customer survey).
Social media
Social media plays a big part in driving
growth and leading how online
retailers engage with and understand
customer wants and needs, driving
design and fulfilment capabilities.
Sosandar has exploited this to the
fullest by using product imagery and
content to create a lifestyle hub and
engage with customers. Strong PR
also enhances our social reach with
extensive endorsement from key
fashion influencers via Instagram and
blog posts.
Vision and ambition
Our vision is to be a global one-stop
online destination for a new generation
of fashion forward women who have
graduated from younger fast fashion
brands. We aim to build Sosandar
into the go to fashion destination
for all occasions combining
exceptional product with a first-class
customer experience.
*Annual Expenditure on Fashion by Age Group –
Women
Sosandars’ core demographic spend £3.7bn per annum on fashion
15-24
25-34
35-44
45-54
55-64
65-74
75+
£1.7bn
£1.8bn
£1.8bn
£1.9bn
£1.6bn
£1.4bn
£0.9bn
Source: GB TGI 2017 Q2 (Jan 2016 – Dec 2016) Kantar Media UK Ltd –
base 9.751 women
Bestcase
(£m)
38,575
Mintel
forecast
(£m)28,951
Worstcase
(£m)19,327
Confidence
Intervals
95%
90%
70%
50%
10
2012 2013 2014 2015 2016 2017
2018
2019
2020 2021 2022
Actual
Forecast
Source: Mintel - UK online fashion market, published UK June 2017
Sosandar Plc
Annual Report & Accounts 2019
Strategic Report
U N D E R S T A N D I N G T H E U K
O N L I N E F A S H I O N M A R K E T
Current value
£16.2bn
Expected value in 2022
£29bn
Online sales
24%
of total fashion market
17%
growth from 2014
11
Sosandar Plc
Annual Report & Accounts 2019
B U S I N E S S M O D E L
Creative flair,
skillfully combined
with a data
centric approach
Our business is driven by creative flair
skilfully combined with a data centric
approach in order to understand and
respond to our customers’ needs.
We excite and inspire our customers
with affordable, trend-led clothes
for every occasion showcased with
stunning lifestyle photography,
beautiful e-commerce imagery and
video for every product. Our customer
sits at the heart of everything we do
and we are committed to serving her
every fashion need. We also provide
fashion and lifestyle magazine style
content with styling tips, fashion ideas
and trend advice.
01
D E S I G N
02
D A T A
03
E N G A G E M E N T
01
D E S I G N
02
D A T A
03
E N G A G E M E N T
Our exclusive designs created entirely
in-house offer exceptional quality at
affordable prices. New products are
launched every month to deliver
constant newness and to keep the
brand at the forefront of fashion trends.
Data underpins everything that we
do: it leads our thinking on product
and customer engagement, giving
a deep insight into our customers’
decision-making and buying
preferences, driving product
efficiency and enabling personalised
marketing to ensure we continue to
exceed customer expectations.
We use stunning product imagery
and inspirational content to engage
with our customers and build brand
awareness through both our own
e-commerce site and a variety of
channels, including social media,
PR and direct mail.
12
Sosandar Plc
Annual Report & Accounts 2019
Strategic Report
Great quality garments at
reasonable prices ... very
up to the minute fashion
in a classy way. Well done
Sosandar.
13
Sosandar Plc
Annual Report & Accounts 2019
S T R A T E G Y
Everything
we do is with our
customers in mind
Sosandar targets an
underserved market of
women looking for trend-led,
affordable, quality clothing
with a premium aesthetic.
We design and manufacture
clothing and footwear for
all occasions with fashion
forward styles designed to
flatter. Our strategy is to
build a loyal customer base,
focusing on customer growth
and retention, by taking
advantage of the increasing
convergence of e-commerce
and media.
We do this by focusing on the
following areas:
01
02
P R O D U C T D E V E L O P M E N T
M A N U F A C T U R I N G
M A R K E T I N G
A N A L Y T I C S A N D
T E C H N O L O G Y
I N F R A S T R U C T U R E
We provide frequent new product
ranges to ensure constant newness
for our customers. Exclusive product
design is created in-house, and we
continually assess trends and the
performance of existing ranges to
expand the product range. Our
in-house designers can react quickly
to changing customer demand to
ensure we are always on the cutting
edge of fashion, while tailoring
garments to fit customers
Objectives
• Continue to broaden product
range to offer increased choice
to customer
• Manage expansion and increased
selling of lines by buying deeper,
resulting in a better selection for
the customer and improved
margins for Sosandar
• Continue to monitor trends using
data analytics to drive design and
maximise product demand and
repeat rates
We outsource manufacturing to a
range of subcontractors around the
world including India, China, Turkey
and Spain, focusing on a high quality of
output and strong skillset. The breadth
of strong supplier relationships
mitigates the risk of overreliance on
a small number of specific contacts,
and we regularly review their output.
These relationships enable us to
order in small minimum quantities,
de-risking new product launches and
maximising sell-through rates. Waitlist
functionality allows us to track excess
demand and influence re-orders on
top performing product.
Objectives
• Continue to invest in global
manufacturer network
• Broaden fabric supplier base to
enhance product choice
• Continued investment in new
product areas
• Reinforce ‘test and repeat’ model,
with low initial order quantities on
new product and re-orders on
top-performing product
Progress
• Conversion and margin
improvements reflect success in
product range and deeper buys.
Style count up 106% and depth of
buy increased by 59%
Progress
• Lead times successfully reduced
with some product lines repeated
in as quick as 16 days. Multiple new
factories added to the supplier base
during the year
14
Our focus is on building Sosandar’s
We invest in scalable and integrated
We outsource our logistics to Clipper
brand awareness across a multitude of
technologies throughout Sosandar to
channels and on building emotional
ensure that our e-commerce, stock
Logistics, a leading supplier to the
fashion industry, for warehousing,
and marketing capabilities are robust.
e-fulfilment and distribution.
engagement with our customers.
To enhance the desirability of our
product, we invest in high-quality
lifestyle product imagery and fashion
content used through all channels.
Data is captured and monitored
to learn more about customer
With no legacy infrastructure, our
mobile-first website is capable of
servicing high levels of site traffic
and is built on an open-sourced
e-commerce platform to ensure
customer experience stays high. We
preferences, so we can flexibly deploy
are adopters of new proven
funds to better performing products,
technology.
improve the impact of marketing
spend and optimise returns.
Clipper can provide a first class
scalable service as Sosandar expands.
It receives inbound deliveries,
manages storage, order dispatch
and order returns.
Objectives
Objectives
• Continue to build brand awareness
• Drive further efficiencies with
across all channels, and increase
volume of social media coverage,
particularly Instagram
data analytics in marketing and
product development
•
Invest in building data analytics
for customer
• Further expand celebrity and social
team
influencer network to increase third
• Ongoing review of e-commerce
advancements to enhance
customer experience
Objectives
•
Invest in improving processes
such as delivery options and
refunds to ensure ease of purchase
• Review delivery service providers
for most cost-effective solution and
maximising customer convenience
• Carefully monitor overheads,
selectively investing in value-add
areas
party endorsement
• Build on content generation to
further customer engagement
• Use data analytics to enhance
customer understanding and
deliver personalised and relevant
marketing campaigns
growth. Instagram following up
208% reflecting increased use of
content and engagement of
celebrities and influencers
Progress
Progress
Progress
• All channels show significant
• Transition to Magento 2
• Automation of refunds completed
implemented during the year
enhancing website performance
and delivering conversion
improvements. Data analyst
recruited to deliver insight and drive
efficiencies from increasing data in
the business
during the year enhancing
customer experience. Clipper
operation expanded to 7 day
operation to assist with growing
demand and new delivery provider
identified for implementation in
new year
Sosandar Plc
Annual Report & Accounts 2019
Strategic Report
P R O D U C T D E V E L O P M E N T
M A N U F A C T U R I N G
We provide frequent new product
ranges to ensure constant newness
for our customers. Exclusive product
design is created in-house, and we
continually assess trends and the
performance of existing ranges to
expand the product range. Our
in-house designers can react quickly
to changing customer demand to
edge of fashion, while tailoring
garments to fit customers
We outsource manufacturing to a
range of subcontractors around the
world including India, China, Turkey
and Spain, focusing on a high quality of
output and strong skillset. The breadth
of strong supplier relationships
mitigates the risk of overreliance on
a small number of specific contacts,
and we regularly review their output.
order in small minimum quantities,
de-risking new product launches and
maximising sell-through rates. Waitlist
functionality allows us to track excess
demand and influence re-orders on
top performing product.
ensure we are always on the cutting
These relationships enable us to
Objectives
• Continue to broaden product
range to offer increased choice
to customer
Objectives
• Continue to invest in global
manufacturer network
• Broaden fabric supplier base to
• Manage expansion and increased
enhance product choice
selling of lines by buying deeper,
resulting in a better selection for
the customer and improved
margins for Sosandar
• Continued investment in new
product areas
• Reinforce ‘test and repeat’ model,
with low initial order quantities on
• Continue to monitor trends using
new product and re-orders on
top-performing product
data analytics to drive design and
maximise product demand and
repeat rates
Progress
• Conversion and margin
improvements reflect success in
product range and deeper buys.
Style count up 106% and depth of
buy increased by 59%
Progress
• Lead times successfully reduced
with some product lines repeated
in as quick as 16 days. Multiple new
factories added to the supplier base
during the year
03
M A R K E T I N G
Our focus is on building Sosandar’s
brand awareness across a multitude of
channels and on building emotional
engagement with our customers.
To enhance the desirability of our
product, we invest in high-quality
lifestyle product imagery and fashion
content used through all channels.
Data is captured and monitored
to learn more about customer
preferences, so we can flexibly deploy
funds to better performing products,
improve the impact of marketing
spend and optimise returns.
Objectives
• Continue to build brand awareness
across all channels, and increase
volume of social media coverage,
particularly Instagram
• Further expand celebrity and social
influencer network to increase third
party endorsement
• Build on content generation to
further customer engagement
• Use data analytics to enhance
customer understanding and
deliver personalised and relevant
marketing campaigns
Progress
• All channels show significant
growth. Instagram following up
208% reflecting increased use of
content and engagement of
celebrities and influencers
04
05
A N A L Y T I C S A N D
T E C H N O L O G Y
We invest in scalable and integrated
technologies throughout Sosandar to
ensure that our e-commerce, stock
and marketing capabilities are robust.
With no legacy infrastructure, our
mobile-first website is capable of
servicing high levels of site traffic
and is built on an open-sourced
e-commerce platform to ensure
customer experience stays high. We
are adopters of new proven
technology.
I N F R A S T R U C T U R E
We outsource our logistics to Clipper
Logistics, a leading supplier to the
fashion industry, for warehousing,
e-fulfilment and distribution.
Clipper can provide a first class
scalable service as Sosandar expands.
It receives inbound deliveries,
manages storage, order dispatch
and order returns.
Objectives
• Drive further efficiencies with
data analytics in marketing and
product development
Invest in building data analytics
team
•
• Ongoing review of e-commerce
advancements to enhance
customer experience
Objectives
•
Invest in improving processes
such as delivery options and
refunds to ensure ease of purchase
for customer
• Review delivery service providers
for most cost-effective solution and
maximising customer convenience
• Carefully monitor overheads,
selectively investing in value-add
areas
Progress
• Transition to Magento 2
implemented during the year
enhancing website performance
and delivering conversion
improvements. Data analyst
recruited to deliver insight and drive
efficiencies from increasing data in
the business
Progress
• Automation of refunds completed
during the year enhancing
customer experience. Clipper
operation expanded to 7 day
operation to assist with growing
demand and new delivery provider
identified for implementation in
new year
15
Sosandar Plc
Annual Report & Accounts 2019
O P E R A T I N G R E V I E W
We have
achieved so much
this year
Alison Hall and Julie Lavington
Co CEOs
Sosandar is focused on
creating chic and fashion-
forward products for
a generation of women who
are overlooked by existing
fashion brands, and this
offers a significant untapped
opportunity – a demographic
that spends £3.7bn on fashion
per year.
Our typical customer has a high
disposable income and is very fashion
conscious. She is looking for quality,
affordable clothing with a premium,
trend-led aesthetic for all areas of her life.
Our strategy is to expand Sosandar’s
customer base and build our brand
awareness through developing
exceptional products, providing a
seamless customer experience and
continuing to expand our highly
successful online and offline marketing
activity. This is underpinned by
combining our creativity with gathering
and analysing data on shopping habits,
trends and customer preferences
to drive product development and
effectively target new customers.
Highlights
We are delighted to have achieved high
levels of growth in our KPIs. Revenues
increased by 228%, driven by a variety
of factors including the continued
success of our customer acquisition
activities across multiple channels,
increased average order values and a
surge in repeat orders.
Gross margin also increased to 55%
driven by economies of scale achieved
through increased order quantities and
higher proportion of sales from product
sold at full price, successfully utilising
the outlet pages to sell older or less
16
seasonally relevant stock without
impacting margin. We believe delivering
improvements in efficiency and the
quality of the customer experience is
vital to prepare the business for future
success.
Site visits increased by 140% year on
year, and our customer database
increased by 95% to over 105,000.
We were pleased to deliver exceptional
growth across both new and repeat
orders, with new customers increasing
by 131% and repeat customers by 391%,
demonstrating the desirability of our
products and increasing engagement
with the brand.
Customer acquisition
Marketing, combined with highly
desirable product, are the primary
drivers behind Sosandar’s growth and
we operate a multi-channel
marketing strategy. We have built a
highly-engaged and growing
community of Sosandar fans across
social platforms through carefully-
targeted content generation and
aspirational lifestyle photography.
Particular channels of note are the
Company’s highly successful direct mail
brochures, Facebook and Instagram.
The Sosandar brochures have proven
that the use of high-quality lifestyle
content is particularly valuable in
driving high-converting customers to
the website. Facebook and Instagram
followings have increased by 72%
and 208% respectively. The launch of
Instagram shopping in June 2018 has
also helped to drive conversion; the
swipe to shop functionality enhances
brand engagement and capitalises on
the growing number of influencers
and celebrities posting about Sosandar
on Instagram.
Sosandar Plc
Annual Report & Accounts 2019
Strategic Report
with the wider industry and are in line
with management’s expectations.
Our test and repeat strategy continues
to work well as we focus on fast stock
turn with new product launching
constantly, helping to minimise stock
risk and allowing us to capitalise on
best-selling items in real time.
The product range, by number of
intake styles, has been expanded
by 106%, with the addition of more
choice within product types, and
new categories such as loungewear,
accessories and denim.
Technology
As a relatively young e-commerce
company, we are focusing on
implementing scalable and integrated
technologies across the business.
We have had the benefit of building
a mobile-first platform and have not
suffered from any legacy issues of
internally-developed systems, allowing
us to fully exploit the increasing use of
mobile devices for e-retail.
We use technology and data to
analyse sales and customer behaviour
to influence design decisions, product
strategy, marketing and customer
service. Data analysis underpins
our creative excellence and we are
continuing to invest in this area,
expanding data analytics resource
in Sosandar.
Our technology strategy is to continue
to invest across web and digital
platforms to enhance customer
experiences and provide frictionless
online journeys, through in-depth
analysis of customer shopping habits.
People
As we continue to grow we have
focused on building out the team to
ensure we are fully resourced to meet
operational development. Our product
design, garment technology and data
teams have all expanded over the past
year bringing a combination of
increasing creative and commercial
e-commerce experience into the
business.
Our people are very important to us;
they are a vital part of what makes
Sosandar a successful business. We
recruit people who are entrepreneurial
and who are fully committed to our
vision. We consider ourselves to have
an inclusive workplace where everyone
is fully engaged.
Outlook
Looking forward there are exciting
plans for extensive product range
expansion & new factory relationships
to enhance choice for our existing and
new customers. We will also build on
our successful marketing activities by
investing into new channels to expand
customer acquisition whilst leveraging
the growing data & content in the
business to enrich communication
strategies with our already loyal
customer base.
The expansion of repeat orders and
increasing economies of scale will drive
efficiencies in the business and our
unique offering and market positioning
puts us in a strong position to deliver
continued future growth.
With a clear growth plan, we are
confident in the outlook for the year
and very excited about Sosandar’s long
term prospects.
J U L I E L A V I N G T O N
Co CEO and founder
A L I S O N H A L L
Co CEO and founder
3 July 2019
17
The success of our paid-for marketing
strategy has been complemented
by sustained high levels of PR-driven
media coverage. Management’s
expertise in this area has seen Sosandar
featured regularly on national TV,
newspapers and magazines. Sosandar
clothing continues to be worn regularly
by an ever-growing list of celebrities
and social influencers including
Melanie Sykes, Kelly Brook, Susanna
Reid and Amanda Holden.
Our target demographic has continued
to engage with the Sosandar brand as
we continue to capture a highly
affluent customer demographic. Our
unique in-house designs are selling
ahead of our forecasts across all
categories: dresses, skirts, trousers and
tops, outerwear, leather and footwear.
A core part of our strategy is to pursue
an aggressive marketing programme to
drive customer acquisition, which has
thus far proven successful in building
our customer database to over 105,000.
With a larger customer database,
we can utilise data-led, personalised
communications to engage with both
our existing customers and target
prospects who do not purchase
immediately. It also provides a platform
to promote the Sosandar brand and
our new products in a cost-effective
way, helping to improve longer-term
marketing efficiencies.
As more customers learn of Sosandar,
we are continually learning more
about our customers; building our
understanding of exactly what they
are looking for from a one-stop fashion
destination. This increased insight has
led to a decreasing cost per customer
acquisition over the period, in line with
previously reported trends.
More product choice, same
quality style
The rise of repeat orders and average
order value size, alongside positive
feedback from customers,
demonstrates that Sosandar continues
to produce excellent quality products
across the entire range. Sosandar aims
to be at the forefront of trends with
a wide variety of styles and choice for
all occasions, with high demand for
products across all categories.
Returns levels of 50% reflect the
anticipated improvement in the second
half of the year from the 52% reported
at interim results reflecting the
different product mix in Autumn/
Winter. These levels of returns are in line
Sosandar Plc
Annual Report & Accounts 2019
F I N A N C I A L R E V I E W
Strong year-on-year
growth in both
topline revenue
and margin
In the last 12 months
Sosandar built on the
momentum achieved in the
prior year to deliver growth of
228% with revenue of £4.44m.
The revenue growth was achieved
through improvements across all KPIs.
The increasing brand awareness and
marketing activity helped generate
more visitors to the website as
represented by session growth of 140%.
These visitors also bought increasing
amount of product with conversion rate
up 76 basis points to 2.92% and average
order value up 10% to £103 representing
the success of investment into product
range expansion and product imagery.
Returns for the year were 50%,
split 52% for the first six months and
48% for the second half of the year
reflecting the increased learnings in
the business and investment into the
garment technology team.
Product design teams also expanded
and there was continued investment
into customer acquisition. Enhanced
product and more efficient campaigns
contributed to an increased customer
base that is purchasing more frequently
with active customer base up 185%
and repeat order rate up 15%. This
increasingly loyal customer base
provided a 391% increase in repeat
orders which, along with economies of
scale that come with growth, are helping
to drive cost efficiencies with the 228%
revenue growth delivered off only a 58%
increase in administrative expenses.
The growing brand awareness and
demand for product is also helping to
drive margin improvements. Increased
sell through and buying efficiencies
have combined to provide margin
improvements with gross margin of
55.5% up from 49.4% in the prior year
and now comparing favourably with
much more established businesses
with higher order volumes.
Increased sell through has also
benefited working capital with
revenue growth achieved from a
95% increase in stock, all of which has
been managed seamlessly by Clipper
Logistics providing a truly scalable
solution, allowing the business to focus
on continuing to grow demand.
In order to ensure that the website
continued to provide a best-in-class
customer experience, the business
invested capital during the year to
transfer onto the Magento 2 platform,
again ensuring that the infrastructure
is in place to allow for unobstructed
growth and easy implementation of
any new e-commerce advancements
that come to market.
With a year end cash position of £3.64m
the business will continue to use
these funds to invest in growth whilst
working on cost efficiencies in order to
drive bottom line improvements.
18
Sosandar Plc
Annual Report & Accounts 2019
Strategic Report
K E Y P E R F O R M A N C E I N D I C A T O R S
% Growth
We are delighted to have achieved high levels of growth in our KPIs.
Revenue
Gross Margin
EBITDA**
£4.44m (+228%)
55.5% (+607 bps)
(£3.4m) (-13%)
2019
2018
£1.35m
2017*£0.03m
£4.44m
2019
2018
2017*
55.5%
49.4%
2019
2018
(£3.4m)
(£3.1m)
37.8%
2017*
(£1.8m)
Operating Profit **
Number of Orders
Conversion Rate
(£3.5m) (+41%)
102.9k (+224%)
2.92% (+76 bps)
2019
2018
(£3.5m)
2019
102.9k
(£3.1m)
2018
31.7k
2019
2018
2.92%
2.16%
2017*
(£1.8m)
2017*7.0k
2017*
1.29%
AOV
£103.19 (+10%)
Active Customers
62.2k (+185%)
Repeat Order Rate
1.66% (+15%)
2019
2018
2017*
£103.19
2019
62.2k
£94.18
2018
21.8k
£87.22
2019
2018
1.66%
1.45%
2017 reflects seven months of trading, first sales in September 2016.
*
** excluding reverse costs
19
+228%Revenue+268%Gross profit+28%Marketing+32%Central Ops+60%Total costs
Sosandar Plc
Annual Report & Accounts 2019
R I S K M A N A G E M E N T
There are a number of risks and uncertainties associated with the business. The Board
believes the following are the principle risks along with the mitigating actions being applied.
Strategic and Market Risks
Risk Factor
Impact
Market
competition
• As the business continues to
grow, competitors may try and target
the same demographic using a similar
proposition.
Fashion risk
• As trends change there is a risk that
design does not keep up with
customer requirements for the latest
fashion.
Mitigating Actions
• Competitor activity is regularly reviewed to ensure Sosandar’s
brand proposition continues to be viewed as a leader of the
trend-led, affordable market within its target demographic.
• Sosandar puts the customer at the heart of all decisions,
focusing on up-to-date trends, design principles important to
its demographic and a seamless purchase experience to
attract new customers.
• This is combined with a relentless pursuit of service
excellence to make sure customers have the best possible
experience to build loyalty and further purchases.
• As a first mover, Sosandar has begun building up a repeat
customer base loyal to the brand.
• The business operates on monthly drops with tight design
lead times that allow the design team to track the latest
catwalk and commercial fashion trends. These are then fed
into the product development to ensure that customers have
access to the latest trends at affordable prices.
Customer
demands and
e-commerce
advancements
Negative online
reviews
• As the e-commerce market grows
across all sectors and industries,
consumers have increased
expectations and increasing demands
around ease of purchasing and
returns.
• Regular meetings are held with developers of new
technology and services that enhance customer experience
to ensure that the business stays up-to-date with the latest
e-commerce trends. This is not limited to the fashion industry
with review and adoption of best practice principles from all
areas of e-commerce.
• Negative comments on social
• A dedicated customer service team is able to monitor any
platforms could influence purchasing
decisions for new visitors.
reviews or comments in order to contact customers to resolve
any issues. Any unwarranted malicious content is removed
and the user reported to the relevant social platform.
Operational Risks
Risk Factor
Impact
Mitigating Actions
Supplier risk
• The business relies on its outsourced
• Purchases are spread over a number of suppliers to avoid over
Data and GDPR
manufacturing supplier base to
provide the final product. Loss of
suppliers through insolvency, disaster
or ceasing of working relationship
could impact short term supply.
• Non-compliance with labour or
environmental requirements could
interrupt supply chain and cause
reputational damage.
• Product supplied could be of
insufficient quality for sale.
• New GDPR legislation could impact
our ability to communicate with
customers.
• GDPR could impact ability to work
with data providers who help identify
prospective customers for marketing
purposes.
• Data breaches could impact
reputation and business continuity.
dependency on any single supplier and as the business is
growing and increasing order quantities the potential supplier
base is widening.
• All design is done in-house with detailed specification packs
provided for each product which helps on-board new
suppliers quickly.
• All suppliers are asked to confirm that they adopt all relevant
Ethical Trade Initiative (ETI) base code principles.
• Each product goes through an extensive sampling process
and final quality control process to ensure it is suitable for
sale.
• As a young business data has been captured with an inherent
awareness of the GDPR legislation with little or no legacy data
issues.
• Legal and data security experts have been engaged in 2018 to
review processes and policies to ensure compliance and data
security protection.
• We work with industry leading data providers with extensive
compliant databases to ensure sufficient sources of target
information for marketing purposes.
• Dedicated cyber insurance policies are in place which include
specialist resource and plans to minimise the impact of any
cyber attacks.
20
Sosandar Plc
Annual Report & Accounts 2019
Strategic Report
Risk Factor
Impact
Mitigating Actions
Mis-use of returns
policy by
customers
• Customers may wear the product then
use the returns policy to gain refund
with the product not suitable for
re-sale.
Slow moving
stock
• Slow moving stock could increase
warehousing or impact margin if
discounted.
• Each product is quality controlled upon return to the
warehouse to check for wear or damage and make sure that
a refund should be processed. The quality control process
includes equipment that ensures the product is in the same
condition as when first received and that it is suitable for sale.
• Stock turn is reviewed regularly at product level by senior
management. Focused marketing techniques are applied to
stimulate demand and maximise conversion.
• The outlet section of the website exists for fragmented stock
lines and any out of season stock should we decide to reduce
the price if the above are unsuccessful.
Brexit risk
• The UK’s decision to leave the EU
• Less than 10% of imports come from EU countries and the
could impact costs.
• Changes to import/export rules could
impact delivery of goods to customers
and delay delivery of stock ordered
from the EU.
company continues to expand its supplier base to de-risk any
impact Brexit may have.
• Sales are currently UK only, any expansion into overseas
market would be done with an understanding of any rules
implemented as part of the Brexit process.
Financial Risks
Risk Factor
Impact
Foreign
exchange rate risk
• The business buys some product in
foreign currency. Adverse currency rate
movements could impact margins.
Working capital
risk
• As the company invests in product
and customer acquisition there is a
risk that funds will be required to fund
continued growth.
Mitigating Actions
• A detailed forward-looking purchase plan to identify any
potential currency exposure and appropriate hedging
techniques are used to avoid any margin erosion caused by
FX movements.
• The business has detailed forward-looking forecasts and
in-depth analysis of both product and marketing channel
performance. This analysis is used to maximise efficiency of
spend and return on investment, balancing the growth
requirements against the funds available to the business.
Activities are adjusted accordingly to manage cash flows
whilst maintaining communication with any potential funders
should any further growth capital be required.
This Strategic Report was approved by the Board on 3 July 2019.
J U L I E L A V I N G T O N
Co CEO and founder
A L I S O N H A L L
Co CEO and founder
21
Sosandar Plc
Annual Report & Accounts 2019
So much
customer
engagement
inspired by quality and relevant content
22
Sosandar Plc
Annual Report & Accounts 2019
Corporate Governance
C O R P O R A T E
G O V E R N A N C E
BoardofDirectors
GroupDirectorsReport
24
26
Love them!! Found this
brand at the start of the
year and I just can’t get
enough! Statement pieces
at affordable prices, and
items look exactly as they
do on site.
23
Sosandar Plc
Annual Report & Accounts 2019
B O A R D O F D I R E C T O R S
Bill Murray
Non-Executive Chairman
Alison Hall
Co CEO and Founder
Julie Lavington
Co CEO and Founder
Former fashion magazine editor,
Alison Hall, is co-founder and joint
CEO of Sosandar.
Former fashion magazine publishing
director, Julie Lavington, is co-founder
and joint CEO of Sosandar.
Prior to founding Sosandar in 2015,
Alison was editor of Look magazine.
After its launch in 2007, Alison helped
it grow to become a leading fashion
magazine title. Alison has been a highly
influential fashion editor, and has twice
been awarded the Editor of the Year
(Women’s Magazines (weekly or
fortnightly)) accolade by the British
Society of Magazine Editors. During
her tenure at Look, Alison designed
successful clothing ranges for several
of the UK’s top retailers.
Alison started out her career as a
newspaper journalist, before holding
editor positions on magazine brands
such as Slimming, Bliss and More.
She successfully implemented major
relaunches of various titles, creating
growing businesses, reinvigorating
the brands and increasing circulations.
Alison has also been a fashion
contributor to both local and national
radio and TV shows.
In 2007, Julie launched Look
magazine, a leading UK women’s
fashion publication. During her
tenure, Julie steered Look to have a
multi-platform presence with a wide
social media reach. She diversified
into producing successful Look branded
clothing ranges with leading UK
fashion retailers. Julie was awarded
the prestigious Publisher of the Year
Award in 2010 by the Professional
Publishers Association. From August
2014, Julie was also publishing
director of UK InStyle magazine a
global fashion brand published in
17 countries worldwide.
Prior to her role at Look and InStyle,
Julie was publishing director of the
TV portfolio at H. Bauer from 2001
to 2006, where she took TV Choice
from fledgling brand to market leader.
She has also held publishing roles on
numerous women’s brands, including
Marie Claire, after starting her career in
advertising sales following a modern
languages degree at Durham University.
Bill Murray has extensive experience
in the media industry, having spent
22 years until 2008 with one of the
largest independent media
companies, Haymarket Media Group.
Since the late 1990s he has focused
on the digital arena. He served as
managing director of digital strategy
at Haymarket where he developed
online business across the Haymarket
Group and led a number of successful
launches and acquisitions.
Over the last 11 years, Bill has worked
across a portfolio of digital, media
and other commercial organisations,
providing strategic and commercial
direction on both a non-executive and
consultancy basis.
He has been chairman of The Hollins
Murray Group since 2009, a north
west-based commercial property group
that now has a portfolio valued at more
than £100 million. He chairs the board
of 10ACT Ltd, trading as Trackback,
a software company that provides
lead follow-up and customer
experience improvement services to
the automotive industry worldwide.
Bill is also a director of Jayess Assets
Limited. Bill was founding chairman of
the UK Association of Online Publishers
from 2002, a position he held for four
years and was chairman, then President
of his beloved Camberley RFC between
2006 and 2014.
Bill has worked with the founders of
Sosandar since early 2014, has assisted
them with fundraising and numerous
aspects of bringing the business to life
and has chaired the Sosandar Board
since its inception at the start of 2016.
24
Sosandar Plc
Annual Report & Accounts 2019
Corporate Governance
Mark Collingbourne
Finance Director
Adam Reynolds
Non-Executive Director
Nick Mustoe
Non-Executive Director
Andrew Booth
Non-Executive Director
Andrew is a 20-year
digital marketing veteran
working with hypergrowth
companies, starting with
gettyimages in 1999
developing his career
throughout the rise from
Aim to Nasdeq, to NYSE
becoming vice president
of marketing.
Following the sale of
gettyimages in 2008 for
$2.4bn to Hellman and
Friedman, Andrew joined
Time Out as group marketing
director leading the
migration of digital with the
customers and growth of the
worldwide brand. Thereafter
he became chief marketing
officer for the Hut Group
spanning all brands and all
customer facing activity
globally. In 2014 Andrew
joined Laterooms.com, part
of TUI Plc as chief marketing
officer/chief revenue officer,
remaining on until its sale.
Andrew remains within the
plural environment focused
on brands that are utilising
technology to significantly
grow the customer
relationship.
Mark is a qualified
accountant with significant
experience in financial
management, particularly in
the area of publicly quoted
companies. He has dealt
with all aspects of Plc
development from bringing
small companies to flotation
to supervising the ongoing
accountancy and ensuring
the good governance of
international businesses.
During his ten-year tenure
with ViaLogy Plc (now
Yourgene Health Plc), Mark
was a key member of the
team that arranged its
transformation from a private
US organisation to an AIM
company, via a merger with
Original Investments Plc.
He also played a major part
in arranging the financial
details of ViaLogy’s
restructuring.
Previously, after periods with
ITV Network Centre and
Mechanical Copyright
Protection Society Limited,
Mark was appointed finance
director of Curtis Brown
Group Limited, one of the UK’s
leading literary agencies, in
1996, where he managed the
financial implications of the
management buyout in 2001.
Mark is currently chief
finance officer of Optibiotix
Health Plc and also holds
board positions on a number
of small private companies.
Adam began his career
in the City in 1980 with
stockbrokers Rowe Rudd. He
later joined Public Relations
business Basham & Coyle
heading their Investor
Relations Division. In 2000,
he established his own PR/IR
and Corporate Finance firm,
which listed on AIM in
November 2000 and was
then sold in 2004.
Nick started his career in
1981 working in London
advertising agency Foote
Cone and Belding followed
by nine years at Lowe
Howard Spink. In that time
Nick worked across many
clients including Tesco,
Heineken, Whitbread,
Vauxhall, Wicks, Weetabix,
Bauer Publishing and
Hanson Group Companies.
Adam was approached
in 2005 to become
non-executive chairman of
International Brand Licensing
Plc. In 2009, Adam brought
David Evans and Julian
Baines – the two leading
diabetes specialists in the UK
– into the company and the
business changed direction.
Today it is known as EKF
Diagnostics Plc. Adam is a
non-executive director and
a shareholder.
In 2012, Adam was introduced
to Autoclenz Plc through an
institutional fund manager.
In November 2012, Adam
launched a successful agreed
bid with the management
for the business to be
taken private. Adam is a
director and shareholder
of this business.
Nick started his own agency,
Mustoe Merriman Levy, in
1993, which he ran as an
independent agency for 15
years, with a brief period
under the ownership of
Japanese multi-national
Hakuhodo. During this time
the agency managed clients
including Kia Cars, Lloyds
Pharmacy, Doctor Marten,
Bauer Publishing, Coca Cola
and Unilever.
In 2008, Mustoe Merriman
Levy merged with a leading
PR agency Geronimo to
form Kindred, the first
fully integrated PR and
advertising agency. Nick
subsequently led an MBO
of Kindred in 2010 and
continues to lead the
company as the
chief executive.
Nick is chairman of
Kempton Park Racecourse,
Big Sofa Technologies
Group Plc, ABC Connection
Limited and Starlight
Children’s Foundation and
a non-executive director of
Yourgene Health Plc.
25
Sosandar Plc
Annual Report & Accounts 2019
G R O U P D I R E C T O R S R E P O R T
The Directors present their report and the consolidated financial statements for the year ended 31 March 2019.
Results and dividends
The Group loss after tax for the year ended 31 March 2019 amounts to £3.54m (2018: £6.06m). The Directors are not
recommending payment of a final dividend for the year (2018: £nil).
Directors
The Directors who served on the Board during the year and to the date of this report are as follows:
• Adam Reynolds
• Alison Hall
• Julie Lavington
• Bill Murray
• Nicolas Mustoe
• Mark Collingbourne
• Andrew Booth (appointed 29th June 2018)
Under the terms of the Articles of Association all Directors must retire by rotation every three years and may seek re-election
to the Board at the Annual General Meeting of the Company. The articles also provide for one-third of the Directors to retire
by rotation. All new Directors appointed since the previous Annual General Meeting must seek re-election at the next Annual
General Meeting in order to ratify their appointment to the Board by the members.
The Directors required to seek re-election at the next Annual General Meeting are Andrew Booth as Director appointed
since the previous AGM and Alison Hall, Julie Lavington, Bill Murray, Nicolas Mustoe, Mark Collingbourne and Adam Reynolds
by rotation.
Substantial shareholdings
As at 14 June 2019 the following held 3% or more of the share capital of the Company:
Rank
Shareholder
1
2
3
4
5
6
7
8
Hargreaves Landsdown (Nominees) Ltd (1)
Barclays Direct Investing Nominees Ltd
Alison Hall
Julie Lavington
UBS Private Banking Nominees Ltd
Vidacos Nominees Ltd
Nicholas Mustoe
Hargreaves Landsdown (Nominees) Ltd (2)
Based on 116,189,658 ordinary shares on 31 March 2019.
As at 31 March 2019 the following held 3% or more of the share capital of the Company:
Rank
Shareholder
1
2
3
4
5
6
7
8
Hargreaves Landsdown (Nominees) Ltd (1)
Barclays Direct Investing Nominees Ltd
Vidacos Nominees Ltd
Alison Hall
Julie Lavington
UBS Private Banking Nominees Ltd
Nicholas Mustoe
Hargreaves Landsdown (Nominees) Ltd (2)
Based on 116,189,658 ordinary shares on 31 March 2019.
26
No of shares at
14 June 2019
5,811,987
5,706,327
5,309,343
5,309,343
5,101,393
4,766,755
4,706,202
3,708,599
No of shares at
31 March 2019
5,871,201
5,560,164
5,426,114
5,309,343
5,309,343
5,101,393
4,706,202
4,088,946
% Issued capital
5.00%
4.91%
4.57%
4.57%
4.39%
4.10%
4.05%
3.19%
% Issued capital
5.05%
4.79%
4.67%
4.57%
4.57%
4.39%
4.05%
3.52%
Sosandar Plc
Annual Report & Accounts 2019
Corporate Governance
Corporate governance
The Directors recognise the importance of sound corporate governance and, following Admission, have undertaken to take
account of the requirements of the QCA Guidelines to the extent that they consider it appropriate, having regard to the
Company’s size, board structure, stage of development and resources.
The QCA Guidelines recommend that the Board of Directors should include a balance of Executive and Non-Executive
Directors, such that no individual or small company of individuals can dominate the Board’s decision taking.
The Company will hold regular Board meetings and the Directors will be responsible for formulating, reviewing and approving
the Company’s strategy, budget and major items of capital expenditure. The Directors have, conditional on Admission,
established an Audit Committee, a Nomination Committee, a Disclosure Committee and a Remuneration Committee with
formally delegated rules and responsibilities.
Remuneration Committee
The Remuneration Committee, which will comprise Nick Mustoe (chairman), Adam Reynolds and Bill Murray, will meet twice
each year. The Committee will be responsible for the review and recommendation of the scale and structure of remuneration
for senior management, including any bonus arrangements or the award of share options with due regard to the interests of
the Shareholders and the performance of the Company.
Audit Committee
The Audit Committee, which will comprise Bill Murray (chairman), Adam Reynolds and Nick Mustoe, will meet not less than
twice a year. The committee will be responsible for making recommendations to the Board on the appointment of auditors
and the audit fee and for ensuring that the financial performance of the Company is properly monitored and reported. In
addition, the Audit Committee will receive and review reports from management and the auditors relating to the interim
report, the Annual Report and Accounts and the internal control systems of the Company.
Nomination Committee
The Nomination Committee, which will comprise Adam Reynolds (chairman), Bill Murray and Nick Mustoe, will meet at such
times and frequency as necessary. The Nomination Committee will monitor the size and composition of the Board and the
other Board Committees and be responsible for identifying suitable candidates for Board membership.
Disclosure Committee
The Disclosure Committee, which will comprise Nick Mustoe (chairman), Bill Murray and Adam Reynolds, will meet at such
times as shall be necessary or appropriate to discharge its obligations and comply with applicable law and regulation.
The Committee will be responsible for overseeing the Company’s compliance with its obligations under the Market Abuse
Regulation and the AIM Rules for Companies in relation to the disclosure of inside information and price sensitive information.
Introduction
The Board of Sosandar Plc seeks to follow best practice in corporate governance as appropriate for a company of our size,
nature and stage of development. As a public company listed on AIM, we are cognisant of the trust placed in the Board by
institutional and retail investors, employees and other stakeholders. We recognise the importance of an effectively operating
corporate governance framework.
The Board has adopted the principles of the 2018 Quoted Companies Alliance Corporate Governance Code – (the QCA Code)
to support the Company’s governance framework. The Directors acknowledge the importance of the ten principles set out in
the QCA Code and this statement briefly sets out how we currently comply with the provisions of the QCA Code. The Board
considers that it does not depart from any of the principles of the QCA code.
Principle
1. Establish a strategy and business model which promote long-term value for shareholders
Sosandar intends to build long-term shareholder value by targeting an underserved market of women looking for trend-led,
affordable, quality clothing with a premium aesthetic. We design and manufacture clothing and footwear for all occasions
with fashion forward styles designed to flatter. Our strategy is to build a loyal customer base, focusing on customer growth
and retention, by taking advantage of the increasing convergence of e-commerce and media.
27
Sosandar Plc
Sosandar Plc
Annual Report & Accounts 2019
Annual Report & Accounts 2019
G R O U P D I R E C T O R S R E P O R T c o n t i n u e d
2. Seek to understand and meet shareholder needs and expectations
The Company recognises the importance of engaging with its shareholders and reports formally to them when its full-year
and half-year results are published.
The Board also seeks to engage with shareholders to understand their needs and expectations, primarily through meetings
with the Executive Directors, both individually as required (this mainly applies to institutional investors and/or those with
significant shareholdings) and at Annual General Meetings, at which all shareholders are welcome.
The Joint CEOs and Executive Directors regularly present at private investment events during the year.
Investors may contact the Company directly through the investor enquiries email address noted on the Company’s
website sosandar@almapr.co.uk. Investors may also receive Investor Email Alerts from the Company by signing up at
http://www.sosandar-ir.com/content/investors/alert.asp
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
We recognise that we are responsible not only to our shareholders and employees, but to a wider group of stakeholders
(including, inter alia, our customers and suppliers) and the communities in which we operate.
Sosandar Plc is committed to the highest standards of corporate social responsibility in its activities, as outlined in more
detail in the Annual Report and Accounts.
Suppliers
We outsource manufacturing to 16 subcontractors around the world including India, China, Turkey and Spain. All suppliers
are asked to confirm they adhere to the ethical trade guidelines. The breadth of strong supplier relationships mitigates the
risk of over reliance on a small number of specific contacts. The output from suppliers is regularly reviewed to ensure
continued success.
Customers
We provide frequent new product ranges to ensure constant newness for our customers. Our in-house designers react
quickly to changing customer demand to ensure the Company is on the cutting edge of fashion, while tailoring garments to
fit customers.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board has identified what we believe to be a sensible approach to risk management for a company of our size.
We outline the Company’s approach to risk management and the principal risks we face, along with what we do to mitigate
those risks, in detail on pages 20 to 21 of our Annual Report and Accounts.
The Company receives regular feedback from its external auditors on the state of its risk management and
internal controls.
This area is subject to regular review as our business and the risks we face evolve.
5. Maintain the board as a well-functioning, balanced team led by the chair
The Board includes a balance of Executive and Non-Executive Directors, with four Non-Executive Directors compared to
three Executive Directors.
The Board’s activities are supported by Nomination, Audit and Remuneration Committees.
All the Directors have appropriate skills and experience for the roles they perform at the Company, including as members
of Board Committees.
Directors are subject to re-election at least every three years in accordance with the Articles of Association.
The Company is satisfied that the current Board is sufficiently resourced to discharge its governance obligations on behalf
of all stakeholders and will consider the requirement for additional Non-Executive Directors as the Company fulfils its
growth objectives.
28
28
Sosandar Plc
Sosandar Plc
Annual Report & Accounts 2019
Annual Report & Accounts 2019
Corporate Governance
Corporate Governance
6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Board currently comprises three Executive and four Non-Executive Directors with an appropriate balance of sector,
financial and public market skills and experience.
More details of the skills and experience of the Directors are provided in the Annual Report and Accounts as well as
the website.
The experience and knowledge of each of the Directors gives them the ability to constructively challenge the strategy and
to scrutinise performance.
The Board has access to external advisors where necessary. The Board and Committees receive training as appropriate. In
particular, the members of the Audit Committee receive technical updates from the Company’s external auditors to keep
them abreast of the latest accounting, auditing, tax and reporting developments. The Directors also receive regular briefings
and updates from the Company’s NOMAD in respect of continued compliance with, inter alia, the AIM Rules and the Market
Abuse Regulation.
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
Evaluation of the performance of the Company’s Board has historically been implemented in an informal manner.
The Nomination Committee formally reviews and considers the performance of each Director at or around the time of
publication of the Company’s Annual Report.
The review looks at Director performance during the year, which includes but is not limited to: financial targets; adherence
to Company policies, effectiveness of management as well as attendance and contribution at Company meetings.
On an ongoing basis, Board members maintain a watching brief to identify relevant internal and external candidates who
may be suitable additions to or backup for current Board members.
8. Promote a corporate culture that is based on ethical values and behaviours
The Board believes that the promotion of a corporate culture based on sound ethical values and behaviours is essential to
maximise shareholder value.
The Company carefully assesses each of the companies it works with to ensure the requisite standards and values are in
place. All new suppliers must confirm in writing that they adhere to the Ethical Trading Initiative base code
www.ethicaltrade.org/eti-base-code.
The Company’s policies set out its zero tolerance approach towards any form of modern slavery, discrimination or unethical
behaviour relating to bribery, corruption or business conduct.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the board
The roles and responsibilities of specific Directors and Board Committees are available on our website.
The Board meets formally at least six times per year.
Each Committee has terms of reference outlining the specific responsibilities delegated to it.
The terms of reference of each Committee can be found on the corporate governance section of the Company website.
The appropriateness of the Board’s structures and processes are reviewed through the ongoing evaluation process by the
Nomination Committee, which will evolve in parallel with the Company’s objectives, strategy and business model as the
Company develops.
29
29
Sosandar Plc
Sosandar Plc
Annual Report & Accounts 2019
Annual Report & Accounts 2019
G R O U P D I R E C T O R S R E P O R T c o n t i n u e d
10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other
relevant stakeholders
The Company communicates progress throughout the year through Regulatory News Service announcements and in more
detail in its interim financial statements and Annual Report and Accounts. All historical Annual Reports and other
governance related material, including notices of all general meetings, since the Company’s formation, are available on the
Company’s website.
Results of shareholder votes are made public on the Company’s website after the meetings concerned.
Directors’ remuneration
The Directors are entitled to receive relevant fees, as detailed in the Directors remuneration in note 6.
Directors and their interests
The Directors of the Company held the following beneficial interests in the shares and share options of Sosandar Plc at
31 March 2019 and 31 March 2018:
31 March 2018 and 31 March 2019
Alison Hall
Julie Lavington
Nicholas Mustoe
Adam Reynolds
Mark Collingbourne
Bill Murray
Share Options
Ordinary
shares of
0.01p each
Ordinary
shares of
0.01p each
Option
exercise
Price £
Expiry
5,309,343 8,400,000
5,309,343 8,400,000
400,000
4,872,871
400,000
1,960,802
400,000
928,919
400,000
345,107
0.151 03/11/2027
0.151 03/11/2027
0.151 03/11/2027
0.151 03/11/2027
0.151 03/11/2027
0.151 03/11/2027
Going concern
After making appropriate enquires, the Directors consider that the Group and Company has adequate resources to continue
in operational existence for the foreseeable future. As part of their enquiries the Directors have reviewed cash forecasts for
the Group and Company’s operations for the 12 months from the date of approval of the financial statements. The Group and
Company has adequate cash to cover its corporate overheads and management costs over this year but management
continues to monitor these costs and manage cashflows. Refer to note 2 for further information.
Events after the reporting period
Further information on events after the reporting period is set out in note 23.
Principal risks and uncertainties
The principal risks and uncertainties of the business are discussed in the Strategic Report and in note 22.
Overseas branches
The Company has no overseas branches.
Directors’ responsibilities
The Directors are responsible for preparing the Group Directors’ Report and financial statements in accordance with applicable
law and International Financial Reporting Standards.
Company law requires the Directors to prepare financial statements for each financial period. Under that law the Directors
have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted
for use in the European Union that give a true and fair view of the state of the affairs of the Group and the Company and of
the profit or loss of the Group for that period.
In preparing these financial statements the Directors are required to:
• select suitable accounting policies and apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether the Group and Company financial statements have been prepared in accordance with IFRS as adopted
by the European Union, subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and
Company will continue in business.
30
30
Sosandar Plc
Sosandar Plc
Annual Report & Accounts 2019
Annual Report & Accounts 2019
Corporate Governance
Corporate Governance
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and
to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website.
Auditors
The Board are recommending Jeffreys Henry LLP for reappointment as auditors of the Group and Company. Jeffreys Henry
LLP have expressed their willingness to accept this appointment and a resolution reappointing them will be submitted to the
forthcoming Annual General Meeting.
Disclosure of information to the auditors
At the date of approving this report, each Director confirms that, so far as that he is aware, there is no relevant audit
information of which the Group and Company’s auditors are unaware and she/he has taken all the steps that s/he ought to
have taken as a Director in order to make her/himself aware of any relevant audit information and to establish that the Group
and Company’s auditors are aware of that information.
For and on behalf of the Board:
J U L I E L A V I N G T O N
Director
3 July 2019
31
31
Sosandar Plc
Annual Report & Accounts 2019
So much quality
and choice
we’re delighted at how well we’re performing
across all our product categories!
32
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
F I N A N C I A L
S T A T E M E N T S
IndependentAuditor’sReport
34
ConsolidatedStatementof
IncomeandOther
ComprehensiveIncome
ConsolidatedStatementof
FinancialPosition
ConsolidatedStatementof
CashFlows
ConsolidatedStatementof
ChangesinEquity
CompanyStatementof
FinancialPosition
CompanyStatementof
CashFlows
CompanyStatementof
ChangesinEquity
NotestotheConsolidated
FinancialStatements
38
39
40
41
42
43
44
45
Love the clothes I have
purchased. They have
that extra quality at a
reasonable price and
are always a little
different to the high
street. Will definitely
be buying more.
33
Sosandar Plc
Annual Report & Accounts 2019
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
TO THE MEMBERS OF SOSANDAR PLC FOR THE YEAR ENDED 31 MARCH 2019
Opinion
We have audited the financial statements of Sosandar Plc (the ‘parent Company’) and its subsidiaries (the ‘Group’) for the year
ended 31 March 2019 which comprise the consolidated statement of income and other comprehensive income, the
consolidated and parent Company statements of financial position, the consolidated and parent Company statements of
cash flows, the consolidated and parent Company statements of changes in equity and notes to the financial statements,
including a summary of significant accounting policies. The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent
Company financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31
March 2019 and of the Group’s loss for the period then ended;
• the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
• the parent Company financial statements have been properly prepared in accordance with IFRS’s as adopted by the
European Union as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to
you where:
• the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
• the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant
doubt about the Company’s ability to continue to adopt the going concern basis of accounting for a period of at least
twelve months from the date when the financial statements are authorised for issue.
Our audit approach
Overview
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified
by our audit.
• Inventory provisioning.
• Going concern issues.
• Carrying value of investments and recoverability of intercompany loans.
These are explained in more detail below.
Audit scope
• We conducted audits of the complete financial information of Sosandar Plc and Thread 35 Ltd.
• We performed specified procedures over certain account balances and transaction classes at other Group companies.
• Taken together, the Group companies over which we performed our audit procedures accounted for 100% of the absolute
profit before tax (i.e. the sum of the numerical values without regard to whether they were profits or losses for the relevant
reporting units) and 100% of revenue.
34
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
Key audit matters
Key audit matter
Inventory Provisioning
The Group held £1,036,714 of inventory as at 31 March
2019 (2018: £531,385) net of provisions totalling £91,022
(2018: £54,990).
There are key assumptions that drive the inventory
provision. Including the ability to sell through older
inventory and the realisable value that will be achieved
on sale. A provision for items looking to be sold off at
below cost and a provision for aged items which there
is a concern may ultimately be sold at below cost.
Going concern assumption
The Group is dependent upon its ability to generate
sufficient cash flows to meet continued operational
costs and hence continue trading.
Although the current loss-making status is as expected
due its relative newness, given the scale of cash
outflows, the Group needs to be generating sufficient
revenues to sustain its position.
Investments and Company loans to subsidiaries
The Company has amounts due from the subsidiary
Thread 35 Ltd totalling £7,093,954 (2018: £2,834,472),
and an investment of £6,281,618 (2018: £6,281,618).
The carrying amount of the intercompany balance
between the parent and the subsidiary represents 43%
of the parent Company’s total assets.
The recoverability of this balance is reliant on the
continued growth and profitability of the subsidiary.
The Directors consider these loans are fully recoverable.
Management have provided cash flow forecasts and
performed impairment reviews relating to the
investments and loans.
How our audit addressed the key audit matter
We understood the methodology used to calculate the inventory
provision and determined it was consistent with that applied in the
prior year.
For items looking to be sold at below cost we checked the
calculation performed by management as to the required provision
to write these items down to the net realisable value.
We reviewed the level of provision having regard to the Group’s
provisioning methodology.
Evaluated the suitability of management’s model for the forecast.
The forecast includes a number of assumptions related to future
cash flows and associated risks. Our audit work has focused on
evaluating and challenging the reasonableness of these
assumptions and their impact on the forecast period.
Specifically, we obtained, challenged and assessed managements
going concern forecast and performed procedures including:
• Verifying the consistency of key inputs relating to future sales and
costs to other financial and operational information obtained
during the audit;
• Assessed the reasonableness of expenses and costs established;
• Corroborated with management relating to future cash inflows.
• We reviewed the latest management accounts to gauge the
financial position.
We have reviewed the carrying value of the investments and loans
to subsidiaries. The review considered the current position of the
subsidiary, the future outlook and forecasts prepared by
management.
We have assessed the cash flow forecasts and impairment reviews
provided. The methodology and assumptions used by management
have been evaluated, and deemed reasonable.
We have considered the Company’s assessments, and the results
of audit work conducted on the subsidiary for any unrecognised
indicators of impairment.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
35
Sosandar Plc
Annual Report & Accounts 2019
I N D E P E N D E N T A U D I T O R ’ S R E P O R T c o n t i n u e d
TO THE MEMBERS OF SOSANDAR PLC FOR THE YEAR ENDED 31 MARCH 2019
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Company financial statements
Overall materiality
£177,000 (31 March 2018: £260,000).
£162,000 (31 March 2018: £220,000).
How we determined it
5% of net loss before tax.
1% of gross assets.
Rationale for
benchmark applied
We believe that loss before tax is a primary
measure used by shareholders in assessing
the performance of the Group.
As the nature of the Company is that of a holding
company, gross asset values are a representation of its
size of the Company; and is a generally accepted
auditing benchmark.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality.
The range of materiality allocated across components was between £162,000 and £168,000.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit
above £8,850 (Group audit) (31 March 2018: £12,500) and £8,100 (Company audit) (31 March 2018: £10,300) as well as
misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the Directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was
evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and
controls, and the industry in which they operate.
The Group financial statements are a consolidation of two reporting units, comprising the Group’s operating businesses and
holding companies.
We performed audits of the complete financial information of Sosandar Plc, and Thread 35 Ltd reporting units, which were
individually financially significant and accounted for 100% of the Group’s revenue and 100% of the Group’s absolute loss
before tax (i.e. the sum of the numerical values without regard to whether they were profits or losses for the relevant
reporting units). We also performed specified audit procedures over goodwill and other intangible assets, as well as certain
account balances and transaction classes that we regarded as material to the Group at two reporting units.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the
Annual Report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
36
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
Use of this report
This report is made solely to the Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report, or for
the opinions we have formed.
S A C H I N R A M A I Y A
(Senior Statutory Auditor)
For and on behalf of Jeffreys Henry LLP
(Statutory Auditors)
Finsgate
5-7 Cranwood Street
London EC1V 9EE
3 July 2019
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent Company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit.
Responsibilities of directors
As explained more fully in the Directors’ responsibilities
statement set out on pages 30 – 31, the Directors are
responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view, and
for such internal control as the Directors determine is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and parent Company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either
intend to liquidate the Group or the parent Company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial
Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Other matters which we are required to address
The non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the Group or the parent
Company and we remain independent of the Group and the
parent Company in conducting our audit.
Our audit opinion is consistent with the additional report to
the Audit Committee.
37
Sosandar Plc
Annual Report & Accounts 2019
C O N S O L I D A T E D S T A T E M E N T O F I N C O M E A N D
O T H E R C O M P R E H E N S I V E I N C O M E
FOR THE YEAR ENDED 31 MARCH 2019
Revenue from contracts with customers
Operational costs
Gross profit
Administrative expenses
Deemed cost of reverse
Reverse acquisition cost
Operating (loss)
Finance income
Loss on ordinary activities before taxation
Tax on loss on ordinary activities
Profit/(loss) for the year
Other Comprehensive income
Total Comprehensive loss for the year
Attributable to:
Equity holders of the parent
Group loss for the year
Total comprehensive loss for the year
Year ended
31 March
2019
£’000
Year ended
31 March
2018
£’000
Notes
4
5
7
4,440
(1,975)
2,465
(6,011)
–
–
(3,546)
–
(3,546)
–
(3,546)
–
(3,546)
(3,546)
(3,546)
(3,546)
1,353
(684)
669
(3,793)
(1,439)
(1,493)
(6,056)
–
(6,056)
–
(6,056)
–
(6,056)
(6,056)
(6,056)
(6,056)
Loss per share:
Loss per share – basic and diluted, attributable to ordinary equity holders of the
parent (pence)
Loss per share – basic and diluted, from continuing operations (pence)
8
8
(3.19)
(3.19)
(10.31)
(10.31)
The notes on pages 45 to 60 form part of these financial statements.
38
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N
AS AT 31 MARCH 2019
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Capital redemption reserve
Other reserves
Reverse acquisition reserve
Retained earnings
Equity attributable to owners of the parent
Total equity
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
9
10
11
14
15
16
16
16
17
16
18
19
2019
£’000
163
147
310
1,037
366
3,645
5,048
5,358
116
30,703
4,648
107
(19,596)
(11,600)
4,378
4,378
980
980
980
2018
£’000
56
172
228
531
478
4,616
5,625
5,853
107
27,796
4,648
32
(19,596)
(8,055)
4,932
4,932
921
921
921
5,358
5,853
The financial statements were approved and authorised for issue by the Board of Directors on 3 July 2019 and were signed on
its behalf by:
J U L I E L A V I N G T O N
Director
Company Number: 05379931
The notes on pages 45 to 60 form part of these financial statements.
39
Sosandar Plc
Annual Report & Accounts 2019
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
FOR THE YEAR ENDED 31 MARCH 2019
Cash flows from operating activities
Group loss for the year
Share-based payments
Depreciation and amortisation
Reverse acquisition costs
Working capital adjustments:
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Net cash flow from operating activities
Cash flow from investing activities
Addition of property, plant and equipment, and intangibles
Acquisition, net of cash acquired
Net cash flow from investing activities
Cash flow from financing activities
Net proceeds from issue of equity instruments
Net cash flow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes on pages 45 to 60 form part of these financial statements.
.
Year ended
31 March
2019
£’000
Year ended
31 March
2018
£’000
(3,546)
76
61
–
(506)
112
59
(6,056)
582
55
1,439
(168)
(445)
849
(3,744)
(3,744)
(143)
–
(143)
2,916
2,916
(971)
4,616
3,645
(18)
(1,938)
(1,956)
9,978
9,978
4,278
338
4,616
Notes
17
9 & 10
9 & 10
16
15
15
40
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y
FOR THE YEAR ENDED 31 MARCH 2019
Notes
Share capital
£’000
Share
premium
£’000
Reverse
acquisition
reserve
£’000
Capital
redemption
reserve
£’000
Retained
earnings
£’000
Share-based
payment
reserve
£’000
4,651
12,268
(17,441)
610
Sosandar Plc
Balance at 1 January 2017
Thread 35 retained
earnings b/f
Loss for the year
Transfer of share-based
payment reserve
Loss for the period to
acquisition
Reverse acquisition
Share-based payments
Issue of share capital
Cancellation of share
capital
Balance at 31 March 2018
Loss for the year
Shares-based payments
Lapsed options
Issue of share capital
Costs on issue of share
capital
17
16
16
17
16
16
–
–
–
–
–
–
–
–
–
–
15,528
–
(19,596)
–
–
–
–
–
–
–
–
104
–
–
–
–
–
–
–
–
(4,648)
–
–
107
27,796
(19,596)
4,648
4,648
–
–
9
–
–
–
2,991
(84)
–
–
–
–
–
–
–
–
Total
£’000
88
(1,999)
(6,056)
–
–
(1,999)
(6,056)
610
(610)
–
(770)
17,601
–
–
–
(8,055)
(3,546)
–
1
–
–
–
–
32
–
–
32
–
76
(1)
–
–
107
(770)
(1,995)
32
15,632
–
4,932
(3,546)
76
–
3,000
(84)
4,378
Balance at 31 March 2019
116
30,703
(19,596)
4,648
(11,600)
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.
Share-based payments reserve relate 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.
The notes on pages 45 to 60 form part of these financial statements.
41
Sosandar Plc
Annual Report & Accounts 2019
C O M P A N Y S T A T E M E N T O F F I N A N C I A L P O S I T I O N
AS AT 31 MARCH 2019
Assets
Non-current assets
Investments
Loans to subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Other reserves
Capital reserves
Retained earnings – prior years
Retained earnings – current year
Total equity
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
2019
£’000
2018
£’000
12
13
14
15
16
16
17
18
18
19
6,282
7,094
13,376
8
3,134
3,142
6,282
–
6,282
2,989
4,312
7,301
16,518
13,583
116
30,703
107
4,648
(19,206)
115
16,483
107
27,796
32
4,648
(17,441)
(1,765)
13,377
35
35
35
206
206
206
16,518
13,583
The financial statements were approved and authorised for issue by the Board of Directors on 3 July 2019 and were signed on
its behalf by:
J U L I E L A V I N G T O N
Director
Company Number: 05379931
The notes on pages 45 to 60 form part of these financial statements.
42
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
C O M P A N Y S T A T E M E N T O F C A S H F L O W S
FOR THE YEAR ENDED 31 MARCH 2019
Cash flows from operating activities
Profit/(loss) for the year
Impairment of investments and loans to subsidiaries
Interest charged on intercompany loan
Share-based payments
Working capital adjustments:
Change in trade and other receivables
Change in trade and other payables
Net cash flow from operating activities
Cash flow from investing activities
Loans to subsidiary undertakings
Investment in subsidiary undertakings
Net proceeds for sale of subsidiaries
Net cash flow from investing activities
Cash flow from financing activities
Net proceeds from issue of equity instruments
Net cash flow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes on pages 45 to 60 form part of these financial statements.
Notes
12
13
17
14
19
2019
£’000
114
–
(293)
76
146
(222)
(179)
(3,966)
–
51
(3,915)
2018
£’000
(2,375)
100
–
582
(2,927)
68
(4,552)
–
(4,678)
–
(4,678)
16
15
15
2,916
2,916
13,478
13,478
(1,178)
4,312
3,134
4,248
64
4,312
43
Sosandar Plc
Annual Report & Accounts 2019
C O M P A N Y S T A T E M E N T O F C H A N G E S I N E Q U I T Y
FOR THE YEAR ENDED 31 MARCH 2019
Balance at 1 January 2017
Loss and total comprehensive loss for the year
Transfer of share-based payment reserve
Issue of share capital
Cancellation of share capital
Shares-based payments
Balance at 31 March 2018
Profit for the year
Issue of share capital
Costs on issue of share capital
Shares-based payments
Lapsed options
Balance at 31 March 2019
Share
capital
£’000
4,651
–
–
104
(4,648)
–
Share
premium
£’000
12,268
–
–
15,528
–
–
107
27,796
–
9
–
–
–
2,991
(84)
–
Notes
16
16
17
16
16
17
Share-
based
payment
reserve
£’000
Capital
redemption
reserve
£’000
Retained
earnings
£’000
(17,441)
(2,375)
610
–
–
–
Total
equity
£’000
88
(2,375)
–
15,632
–
32
–
–
–
–
4,648
–
4,648
(19,206) 13,377
–
–
–
–
114
–
–
–
1
114
3,000
(84)
76
–
610
–
(610)
–
–
32
32
–
–
–
76
(1)
116
30,703
107
4,648
(19,091) 16,483
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.
Share-based payments reserve relate to the charge for share-based payments in accordance with International Financial
Reporting Standard 2.
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.
The notes on pages 45 to 60 form part of these financial statements.
.
4 4
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
1 General Information
Sosandar Plc (formerly Orogen Plc) (the ‘Company’) is a company 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 company in the year under review was that of a clothing manufacturer and distributer via internet
and mail order.
2 Significant Accounting Policies
Basis of preparation
The consolidated financial statements consolidate those of the Company and its subsidiaries (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 International Financial Reporting Standards (‘IFRS') as adopted by the
European Union 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.
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 page 8. The financial position of the Group, its cash flows, liquidity position and
borrowing facilities are described in the financial statements and associated notes. In addition, note 22 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 prepared cash flow and profit and loss forecasts for
companies within the Group. These cash flow and profit and loss forecasts show the Group expect an increase in revenue
based on the assumptions set out in note 12 of the financial statements. This will have sufficient headroom over available
banking facilities. Management continue to monitor costs and manage cashflows against these forecasts.
The directors have reviewed the Group’s profitability in the four-year plans, 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. For further details also refer to note 12.
Based on their assessment of prospects and viability, 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 or shareholder support was withdrawn 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 subsidiaries and associated
undertakings. Thread 35 Limited has a reporting date of 31 March. All the other subsidiaries have a reporting date of
31 December.
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 £6,281,618, satisfied by the issue of shares of £1,603,422 and cash of £4,678,196. 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 acquire, 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.
45
Sosandar Plc
Annual Report & Accounts 2019
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
c o n t i n u e d
2 Significant Accounting Policies continued
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.
The difference between the aggregate deemed fair value of the consideration paid and the identified assets and liabilities
acquired of Sosandar Plc is £1,438,608 and this amount was charged to the income statement for the period ended
31 March 2018.
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
(£), 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.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
Changes in accounting policies and disclosures
(a) New and amended standards adopted by the Group
The Group has applied any applicable new standards, amendments to standards and interpretations that are mandatory for
the financial year beginning on or after 1 January 2018 including IFRS 9 and IFRS 15. However, none of them has a material
impact on the Group’s Consolidated Financial Statements.
I.
Impact of IFRS 15 – Revenue from contracts with customers
IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018. Management have assessed the
impact of the adoption of IFRS 15 in detail and conclude that there is no material impact on the Group’s consolidated
Financial Statements. Further there was no impact on prior year revenue. The approach was to undertake a detailed
assessment of the core principles of IFRS 15 and confirmed that the existing revenue recognition policy for each type of
revenue was compliant.
II. Impact of IFRS 9 – Financial instruments
IFRS 9 replaced the classification and measurement models for financial instruments contained in IAS 39 Financial
Instruments:
Recognition and Measurement and is effective for accounting periods beginning on or after 1 January 2018. The main
changes from IAS 39 include the following:
• financial assets are to be classified and measured based on the business model for managing the financial and the cash
flow characteristics of the financial asset, either at fair value or amortised cost
• a financial asset or liability that would otherwise be at amortised cost may only be designated as at fair value through
profit or loss if such a designation reduces an accounting mismatch
46
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
The impairment model in IFRS 9 is based on the premise of providing for expected losses. IFRS 9 requires that the same
impairment model apply to all of the following:
• financial assets measured at amortised cost
• financial assets mandatorily measured at fair value through other comprehensive income
• financial guarantee contracts to which IFRS 9 is applied
• lease receivables within the scope of IFRS 17 Leases
• contract assets within the scope of IFRS 15 Revenue from contracts with customers
The adoption of this standard has not had a significant impact on the group
(b) New, amended standards, interpretations not adopted by the Group
The following Adopted IFRSs have been issued but have not been applied by the Group in these Financial Statements.
The full impact of their adoption has not yet been fully assessed; however, management do not expect the changes to have
a material effect on the Financial Statements unless otherwise indicated:
• Annual Improvements to IFRSs – 2015-2017 Cycle (1 January 2019)
• Amendments to IAS 1 and IAS 8 – on definition of materiality (1 January 2019)
• Amendments to IAS 19 – employees benefits plan amendments, curtailments or settlements
• Amendments to IAS 28 on long term interests in associates and joint ventures
• Amendments to IFRS 3 ‘Business combinations’ on definition of a business
• Amendments to IFRS 9, financial instruments on prepayment features with negative compensation
• IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration (effective date to be confirmed)
• Amendments to IAS 40 Investment Property (effective date to be confirmed)
• IFRIC 23 Uncertainty over Income Tax Treatments (1 January 2019)
• Amendments to IAS 28 Investments in Associates and Joint Ventures (effective date to be confirmed)
• IFRS 16 Leases (1 January 2019)
• IFRS 17 Insurance contracts (1 January 2021)
IFRS 16 Leases:
The group will not be early adopting this standard which becomes effective from 1 January 2019. The group will be taking
advantage of the practical expedient which allows the continuation of the existing assessment as to whether a contract
contains a lease for all ongoing contracts entered into before 1 January 2019. The IFRS 16 definition of a lease will apply to all
contracts entered into after 1 January 2019. The modified retrospective approach will be used, resulting in the cumulative
effect of application on 1 January 2019 being recognised through an adjustment to opening retained earnings.
A full assessment of the impact of the above has not been performed. Whilst there is no change to the recognition of finance
leases, there may well be a material change to the group’s assets and liabilities due to the requirement to bring the group’s
operating leases on balance sheet.
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.
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 £91k at
31 March 2019 (2018: £55k).
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 net refunds totalled £126k
(2018: £15k). A performance obligation is deemed for returns and refunds. A 14 days return policy is noted for a full refund.
47
Sosandar Plc
Annual Report & Accounts 2019
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
c o n t i n u e d
2 Significant Accounting Policies continued
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.
Principal accounting policies
The principal accounting policies are summarised below. They have been consistently applied throughout the year covered
by the financial statements.
Revenue recognition
Revenue is recognised in according with the requirements of IFRS 15 ‘Revenue from Contracts with Customers’. The Company
recognises revenue to depict the transfer of promised goods and services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is
delivered in a five-step model framework:
1. Identify the contract(s) with the customer;
2. Identify the performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to the performance obligations in the contract; and
5. Recognise revenue when (or as) the entity satisfy a performance obligation.
Revenue is recognised when control of the products have been transferred to the customer. Control is considered to have
transferred once products have been received by the customer unless shipping terms dictate any different. Revenues
exclude intra-group sales and value added taxes and represent net invoice value less estimated rebates, returns and
settlement discounts. The net invoice value is measured by reference to the fair value of consideration received or receivable
by the Group for goods supplied.
The practical expedient allowed under IFRS 15 para 122 has been taken.
No breakdown of revenue can be made in tabular form as all sales are UK and online, with similar risk profiles.
Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling
interest in the acquiree. In the consolidated financial statements, acquisition costs incurred are expensed and included in
general and administrative expenses.
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 or valuation of assets less their residual values over their useful
economic lives.
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 method to write off their cost over their
estimated useful lives at the following annual rates:
48
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
Plant and Machinery
Computer Equipment
Fixture and Fittings
Office Equipment
Leasehold Improvements
15% Straight line
33.33% Straight line
15% Reducing balance
25% Reducing balance
20% Straight line
Equity
Equity instruments issued by the Company 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 Company 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 Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment
annually and whenever there is an indication that the asset may be impaired.
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.
Leasing
Assets held under finance leases are initially recognised as assets of the company at their fair value at the inception of the
lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in
the statement of financial position as a finance lease obligation. Lease payments are treated as a reduction of the lease
obligation on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they
are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy
on borrowing costs (see below). Contingent rentals are recognised as expenses in the periods in which they are incurred.
Rental leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the
income statement. Rentals payable under operating leases are charged against the statement of comprehensive income on
a straight-line basis over the lease term.
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.
49
Sosandar Plc
Annual Report & Accounts 2019
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
c o n t i n u e d
2 Significant Accounting Policies continued
Taxation continued
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 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 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 is measured by use of the Black Scholes model,
which takes 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.
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.
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.
50
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
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 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 fair value and subsequently measured at their cost when the
contractual right to receive cash or other financial assets from another entity is established.
A provision for doubtful debts is made when there is objective evidence that the Group will not be able to collect all amounts
due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the
debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments are considered indicators
that a trade and other receivables are impaired.
Financial assets and liabilities
The Group classifies its financial assets at inception into three measurement categories; ‘amortised cost’, ‘fair value through
other comprehensive income’ (‘FVOCI’) and ‘fair value through profit and loss’ (‘FVTPL’). 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 derecognises 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.
51
Sosandar Plc
Annual Report & Accounts 2019
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
c o n t i n u e d
3 Segmental Information
In the opinion of the Directors, the Group has one class of business, being that of a clothing manufacturer and distributer via
internet and mail order. The Group’s primary reporting format is determined by the geographical segment according to the
location of its establishments. There is currently only one geographic reporting segment, which is the UK. All costs are
derived from the single segment.
4 Operating Loss
Operating loss is stated after charging/(crediting):
Operating lease rentals
Auditors’ remuneration
Audit fee – group and company
Non audit fees
Legal and other fees transactions
Foreign currency (gain)/loss
Deemed cost of reverse acquisition
Reverse acquisition cost
5 Finance Income
Bank interest received
6 Employees
Aggregate Directors’ emoluments including consulting fees
Wages and salaries
Social security costs
Pension costs
Share-based payments
Total
Directors
Staff
Total
2019
£’000
55
30
13
54
3
–
–
2019
£’000
–
2019
£’000
461
906
128
29
76
1,600
2018
£’000
51
25
3
122
10
1,439
1,493
2018
£’000
–
2018
£’000
1,235
553
89
32
582
2,491
2019
2018
6
21
27
6
12
18
Directors’ remuneration
Details of emoluments received by Directors of the Company for the year ended 31 March 2019 are as follows:
Alison Hall
Julie Lavington
Nicholas Mustoe
Bill Murray
Adam Reynolds
Mark Collingbourne
Steven Metcalfe
Andrew Booth
Total
2019
Base
Salary
£
2019
Share-based
payment
£
144,418
144,418
30,000
30,000
60,000
30,000
–
22,500
31,443
31,443
1,497
1,497
2,995
1,497
–
–
2019
Total
£
175,861
175,861
31,497
31,497
62,995
31,497
–
22,550
2018
Base
Salary
£
118,800
118,800
12,500
32,500
468,410
190,740
293,100
–
2018
Fee
Shares
£
2018
Share-based
payment
£
–
–
–
–
200,000
100,000
200,000
–
34,397
34,397
1,638
1,638
3,276
1,638
3,276
–
2018
Total
£
153,197
153,197
14,138
34,138
671,686
292,378
496,376
–
461,336
70,372
531,708 1,234,850
500,000
80,260 1,815,111
52
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
7 Income Tax Benefit/(Expense)
No corporation tax charge arises in the year ended 31 March 2019 and the year ended 31 March 2018. A reconciliation of the
expected tax benefit computed by applying the tax rate applicable in the primary jurisdiction, the UK, to the loss before tax
to the actual tax credit is as follows:
Loss on ordinary activities before taxation
Tax at the UK corporation tax rate of 19% (2018: 19%)
Expenses not deductible for tax purposes
Losses unutilised
Accelerated depreciation
Group relieved
Tax on loss on ordinary activities
Group
Company
2019
£’000
(3,546)
(674)
2018
£’000
(6,056)
(1,151)
16
658
–
–
–
557
594
–
–
–
2019
£’000
114
21
5
–
–
(26)
–
2018
£’000
(2,375)
(451)
380
71
–
–
–
The Group has estimated tax losses of £10,400,000 (2018: £2,000,000) to carry forward against future taxable profits. The
deferred tax asset on these tax losses at 17% amounts to approximately £1,768,000 (2018: £380,000) and has not been
recognised due to the uncertainty of the recovery. Due to the fundamental change in the Company’s business following the
exit of the mineral exploration industry, tax losses carried forward may not be fully available for use against the future profits
of the Group.
8 Loss Per Share
Basic 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:
Loss after tax attributable to equity holders of the parent (£’000)
Weighted average number of ordinary shares in issue
Fully diluted average number of ordinary shares in issue
Basic and diluted loss per share (pence) – continuing operations
Basic and diluted loss per share (pence)
2019
2018
(3,546)
111,104,042
111,104,042
(6,056)
58,770,354
58,770,354
(3.19)
(10.31)
(3.19)
(10.31)
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. The share options outstanding as at 31 March 2019 totalled 20,400,000 (2018:
20,056,748) and are potentially dilutive.
53
Sosandar Plc
Annual Report & Accounts 2019
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
c o n t i n u e d
9 Intangible Assets – Group
Cost
At 1 April 2017
Additions
At 31 March 2018
Amortisation
At 1 April 2017
Charge for the year
At 31 March 2018
Carrying value 31 March 2018
Cost
At 1 April 2018
Additions
At 31 March 2019
Amortisation
At 1 April 2018
Charge for the year
At 31 March 2019
Carrying value 31 March 2019
10 Property, Plant and Equipment – Group
Cost
At 1 April 2017
Additions
At 31 March 2018
Accumulated depreciation
At 1 April 2017
Charge for year
At 31 March 2018
Carrying value 31 March 2018
Cost
At 1 April 2018
Additions
At 31 March 2019
Accumulated depreciation
At 1 April 2018
Charge for year
At 31 March 2019
Carrying value 31 March 2019
11 Inventories – Group
Stock
Website
£’000
Total
£’000
56
4
60
1
3
4
56
60
113
173
4
6
10
163
Computer
equipment
£’000
Fixtures and
fittings
equipment
£’000
12
13
25
3
5
8
17
25
24
49
8
10
18
31
225
1
226
24
47
71
155
226
6
232
71
45
116
116
2019
£’000
1,037
56
4
60
1
3
4
56
60
113
173
4
6
10
163
Total
£’000
237
14
251
27
52
79
172
251
30
281
79
55
134
147
2018
£’000
531
The cost of inventories charged in the year as an expense equated to £1,975k (2018: £665k).
54
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
12 Non-Current Assets
Investments in subsidiaries and associates:
Cost at 1 April
Disposals during the year
Cost at 31 March
Impairment at 1 April
Disposals during the year
Intercompany balance received during the year
Reclassed to current intercompany debtor balance
Impairment at 31 March
Carrying value as at 31 March
Break down of carrying value of investment:
Thread 35
Total non-current assets
Group
2019
£’000
2018
£’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Company
2019
£’000
15,618
(9,336)
6,282
9,336
(9,336)
–
–
–
6,282
2018
£’000
15,618
–
15,618
9,236
–
77
23
9,336
6,282
Group
Company
2019
£’000
–
–
2018
£’000
–
–
2019
£’000
6,282
6,282
2018
£’000
6,282
6,282
Investments are tested for impairment at the balance sheet date. The recoverable amount of the investment in Thread 35
Ltd at 31 March 2019 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 four years. 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 in 2019 were as follows:
Discount rate
Returns assumption
Repeats assumption
Units per order
%
8.5
47
12
Units
1.92
The Directors have made significant estimates on future revenues and EBITDA growth over the next four 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.
55
Sosandar Plc
Annual Report & Accounts 2019
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
c o n t i n u e d
12 Non-Current Assets continued
The subsidiaries of Sosandar Plc are as follows:
Subsidiary companies
Incorporation
Holding
Type of share held
Thread 355
Medavinci Gold Limited6
Emotion Fitness Limited4
Orogen Gold Limited6
Orogen Gold (Serbia) Limited3
Orogen Gold (Armenia) Limited6
Georaid CJSC2
UK
UK
UK
Ireland
Ireland
Ireland
Armenia
Direct
Direct
Direct
Indirect
Indirect
Indirect
Indirect
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary Shares
Ordinary shares
Ordinary Shares
Ordinary Shares
%
Holding1
2019
%
Holding1
2018
100
0
0
0
0
0
0
100
100
100
100
100
100
80
1 Percentage of share type held and overall voting rights.
2 Disposed of in May 2018, net sale proceeds after costs $117,500.
3 Disposed of on 8 April 2018 for €1.
4 Application made to strike off on 1st July 2018, no proceeds or carrying value noted.
5 Thread 35 Limited is the trading entity.
6 These are dormant entities, and these subsidiaries have been wound up and dissolved and shown as discontinued operations in 2016 accounts, no proceeds or
carrying value noted.
Medavinci Gold Limited (MGL)
Proceeds on disposal
Carrying value of investment
Costs of disposal
Profit / (loss) on disposal
Orogen Gold Limited ("OGL")
Proceeds on disposal
Carrying value of investment
Costs of disposal
Profit / (loss) on disposal
Georaid CJSC ("Georaid")
Proceeds on disposal
Carrying value of investment
Costs of disposal
Profit / (loss) on disposal
Orogen Gold (Serbia) Limited ("OGSL")
Proceeds on disposal
Carrying value of investment
Costs of disposal
Profit / (loss) on disposal
13 Loans To Subsidiaries
Loan to subsidiary
£
–
1
–
(1)
£
–
–
(15,456)
(15,456)
£
107,845
–
(40,907)
66,938
£
1
–
–
1
Group
Company
2019
£’000
–
2018
£’000
–
2019
£’000
7,094
2018
£’000
–
The loan represents advancements to Thread 35 Limited and includes £293k of interest charged in the year at a rate of
6%. The loan is secured and fixed and floating charges. The floating charges covers all the property or undertaking of
the company.
56
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
14 Trade And Other Receivables
VAT recoverable
Other receivables and prepayments
Receivables from Group Companies
Trade and other receivables
Group
Company
2019
£’000
25
341
–
366
2018
£’000
257
221
–
478
2019
£’000
8
–
–
8
2018
£’000
154
–
2,835
2,989
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
15 Cash And Cash Equivalents
Cash at bank
Cash and cash equivalents
16 Share Capital And Reserves
Details of ordinary shares issued are in the table below:
Ordinary shares (£0.01)
Group
Company
2019
£’000
3,645
3,645
2018
£’000
4,616
4,616
2019
£’000
3,134
3,134
2018
£’000
4,312
4,312
Number of
shares
106,814,658
9,375,000
116,189,658
Issue
price
£
Total share
capital
£’000
Total share
premium
£’000
0.001
0.001
0.001
107
27,796
9
2,907
116
30,703
Date
Details
At 31 Mar 2018
15 Oct 2018
At 31 Mar 2019
Group
Share Issue
Balance at 31 March 2018
Loss for the year
Share-based payments
Lapsed options
Issue of share capital
Costs on issue of share capital
Balance at 31 March 2019
Share
capital
£’000
107
–
–
–
9
–
116
Share
premium
£’000
27,796
–
–
–
2,991
(84)
Reverse
acquisition
reserve
£’000
Capital
redemption
reserve
£’000
(19,596)
–
–
–
–
–
4,648
–
–
–
–
–
Retained
earnings
£’000
(8,055)
(3,546)
–
1
–
–
Share-based
payment
reserve
£’000
32
–
76
(1)
–
–
Total
£’000
4,932
(3,546)
76
–
3,000
(84)
30,703
(19,596)
4,648
(11,600)
107
4,378
57
Sosandar Plc
Annual Report & Accounts 2019
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
c o n t i n u e d
16 Share Capital And Reserves continued
Reserves
The following describes the nature and purpose of each reserve within equity:
Share premium
Amount subscribed for share capital in excess of nominal value.
Share-based payment reserve
Cumulative fair value of share options and warrants granted and recognised as an expense
in the Income Statement.
Capital redemption reserve
Capital redemption reserve arises from the 100% acquisition of Thread 35 Limited in
November 2017 whereby the excess of the fair value of the issued ordinary share capital
issued over the nominal value of these shares is transferred to this reserve in accordance
with section 612 of the Companies Act 2006.
Reverse acquisition reserve
Effect on equity of the reverse acquisition of Thread 35 Limited
Retained earnings
Retained earnings represents all other net gains and losses and transactions with
shareholders (example dividends) not recognised elsewhere.
17 Share-based Payments
The Group has a share ownership compensation scheme for Directors and senior employees of the Group. In accordance
with the provisions of the plan, Directors and senior employees may be granted options to purchase ordinary shares in
the Company.
Balance at 31 March 2018
Issued during the year
Lapsed during the year
Balance at 31 March 2019
Exercisable at 31 March
Number of
share options
20,024,748
837,626
(462,374)
20,400,000
6,604,125
Weighted
average
exercise price
15.1p
29.2p
22.7p
15.5p
15.1p
The fair value of equity-based share options granted is estimated at the date of grant using the Black-Scholes pricing model,
taking into account the terms and conditions upon which the options have been granted. The calculated fair value of share
options and warrants charged to the Group and Company financial statements in the year is £76k (2018: £32k). During the
prior year the Company settled fees of £550,000 by way of issuing shares to Directors and advisors.
The following are the inputs to the model for the options granted during the prior year:
Exercise price
Share price at date of grant
Risk-free rate
Volatility
Expected Life
Fair Value
Share
options
2019
29.1p
29.1p
0.25%
25%
10 years
0.07
Share
options
2018
15.1p
15.1p
0.25%
25%
10 years
0.05
58
Sosandar Plc
Annual Report & Accounts 2019
Financial Statements
18 Retained Earnings
Opening balance
(Loss)/profit for the year
Transfer from share-based payment reserve
Closing balance
Group
2019
£’000
(8,055)
(3,546)
1
(11,600)
2018
£’000
(1,999)
(6,056)
–
(8,055)
Company
2019
£’000
(19,206)
114
1
2018
£’000
(17,441)
(2,375)
610
(19,091)
(19,206)
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 profit for the year was £114k (2018: loss £2,375k).
19 Trade And Other Payables
Trade payables
Accruals and deferred income
Other payables
Contract liabilities
Trade and other payables
20 Operating Lease Commitments
Within one year
Between one and five years
Operating lease commitments
Group
Company
2019
£’000
579
102
173
126
980
2018
£’000
491
271
144
15
921
2019
£’000
–
35
–
–
35
2018
£’000
–
206
–
–
206
Group
Company
2019
£’000
76
127
203
2018
£’000
65
202
267
2019
£’000
2018
£’000
–
–
–
–
–
–
21 Related Party Transactions
During the year to 31 March 2019 the Group was charged £60,000 (2018: £268,410) for services provided by Reyco Limited, a
company controlled by A Reynolds. There was no amount outstanding at the balance sheet date.
During the year to 31 March 2019 the Group was charged £30,000 (2018: £90,740) for services provided by Morrison Kingsley
Consultants Limited, a company controlled by M Collingbourne. There was no amount outstanding at the balance sheet date.
During the year to 31 March 2019 the Group was charged £30,000 (2018: £36,500) for services provided by Bill Murray and
Associates, a company controlled by B Murray. There was no amount outstanding at the balance sheet date.
During the year to 31 March 2019 the Group was charged £30,000 (2018: £13,900) for services provided by N Mustoe. There
was no amount outstanding at the balance sheet date.
During the year to 31 March 2019 the Group was charged £22,500 (2018: £nil) for services provided by Skale Limited, a
company controlled by A Booth. There was no amount outstanding at the balance sheet date.
At the balance sheet date, Julie Lavington owed Thread 35 Ltd £1,200 (2018: £1,200) for personal tax invoices paid for by
Thread 35 Ltd. This balance will be repaid within 9 months of the year end.
At the balance sheet date, Alison Hall owed Thread 35 Ltd £1,200 (2018: £1,200) for personal tax invoices paid for by Thread 35 Ltd.
This balance will be repaid within 9 months of the year end.
During the year to 31 March 2019, a management fee of £190,808 (2018 - £38,162) was received from Thread 35 Limited.
During the year to 31 March 2019, interest of £292,938 was charged to Thread 35 Limited relating to the intercompany loan.
The Company’s intercompany loan receivable balance at the year-end was £7,093,954 from Thread 35 Limited
(2018 - £2,811,016).
59
Sosandar Plc
Annual Report & Accounts 2019
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
c o n t i n u e d
22 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 Company’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 the requirement for foreign currency on a monthly basis. The Group will forward purchase the currency
to fix the cost of goods for stock. Once the cost of goods has been fixed a final selling price can be derived.
The Group considers this policy minimises any unnecessary foreign exchange exposure.
22 Financial Instruments – Risk Management continued
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 Company only uses
recognised banks with medium to high credit ratings.
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.
23 Post Balance Sheet Events
The Company had no post balance sheet events.
24 Contingent Liabilities
The Company has no contingent liabilities.
25 Ultimate Controlling Party
There is no ultimate controlling party of the Company.
60
C O M P A N Y I N F O R M A T I O N
40 Water Lane,
Wilmslow, Cheshire,
England SK9 5AP
05379931, England and Wales
Bill Murray – Non-Executive Chairman
Adam Reynolds – Non-Executive Director
Mark Collingbourne – Finance Director
Alison Hall – Joint CEO
Julie Lavington – Joint CEO
Nicholas Mustoe – Non-Executive Director
Andrew Booth – Non-Executive Director
Mark Collingbourne
Jeffreys Henry LLP
Finsgate
5-7 Cranwood Street
London EC1V 9EE
Shore Capital and Corporate Limited
Bond Street House
14 Clifford Street
London W1S 4JU
Shore Capital and Corporate Limited
Bond Street House
14 Clifford Street
London W1S 4JU
Share Registrars Limited
27/28 Eastcastle Street
London W1W 8DH
BPE Solicitors LLP
St. James’ House
St. James’ Square
Cheltenham GL50 3PR
Alma PR
Aldwych House
71-91 Aldwych House
London WC2B 4HN
Registered office
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Directors
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Auditors
Nominated advisor
Broker
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SOSANDAR PLC
40 Water Lane
Wilmslow
Cheshire
SK9 5AP
Investor Relations
sosandar@almapr.com