264087 Sosandar ARC cover spread.qxp 01/08/2022 17:02 Page 1
Perivan 264087
Sosandar Plc
Annual Report
For the year ended
31 March 2022
Company Registration Number: 05379931
Contents
Company Overview
Chairman’s Statement
Strategic Report
Corporate Governance
Board of Directors
Directors’ Report
Consolidated and Company Financial Statements
Independent Auditors’ Report
Consolidated Statement of Income and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Company Statement of Financial Position
Company Statement of Cash Flows
Company Statement of Changes in Equity
Notes to the Consolidated and Company Financial Statements
Company Information
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Sosandar Plc
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Annual Report 2022
CHAIRMAN’S STATEMENT
For the year ended 31 March 2022
Introduction
It is incredibly pleasing to be able to present annual results which reflect another remarkable year of
growth for the company, especially against a backdrop of heightened macro-economic and societal
challenges. Revenue of £29.5m is 142% up year on year and our EBITDA loss of £0.2m is around 13
times smaller than the previous year. Our loss before tax improved to £0.6m (FY21 £3.1m loss) with
every month in the second half of the year being profitable. These metrics provide great proof of our
growing presence in our market.
It is testament to the quality of our products and the strength of our management team that we
have been able to deliver such a strong performance despite the backdrop of macro-economic and
societal challenges that we have all faced. Mitigating risk has been at the heart of our operation
since inception and while we could not claim to have foreseen all of these things coming, we
typically build flexibility into everything we do. Fostering strong, long-term relations with a number
of manufacturers in different territories, pivoting rapidly between transport methods and
responding rapidly to changing consumer sentiment has meant that we have been able to navigate
these headwinds and deliver a record performance.
Drivers of growth
As reported last year, in May 2021 we completed a raise of c. £5.8m (via an over-subscribed Placing,
Subscription and Primary Bid offer). As planned, these funds enabled investment into our inventory,
allowing us to buy both wider and deeper across our categories. The positive results of this strategy
started to show in the autumn, and our sales continued to grow across the year as we put more
stock into our third-party partners and offered greater range on our own site.
Our growing balance sheet strength reflects the effectiveness of this strategy, with net assets of
£10.6m at year end being much healthier than at 31st March 2021. Crucially, that figure included a
cash position of £7.0m.
This continued success is down to many factors, but above all, it is down to our product. Led by our
inspiring Co-CEOs, we have a growing, talented team who understand our customers inside out and
design unique products with them in mind. Everything we do is centred upon delivering good-value,
high quality, lasting clothes for women who care about being fashionable and chic. Our customers
are not defined by age or any other demographic, rather they relish the stylish aesthetic and
regularly refreshed range we offer.
Our team
Over the year, our team has been agile, responsive, and intelligent. As consumers have wrestled
with going in and out of lockdown, returning to work, starting to go out socially again, and all against
cost-of-living challenges, so our teams have altered our product mix and tailored all of our
communications and offers to ensure highest relevance and maximum engagement. Our number of
active customers has increased 65% year on year and is more loyal than ever, with repeat customers
now shopping 4.0 times per year.
I do want to take a moment to reflect on the whole team at Sosandar, a business which is six years
old, and was made up of just over 50 people at March 2022. They have adapted well to a rapid
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Annual Report 2022
CHAIRMAN’S STATEMENT
For the year ended 31 March 2022
growth environment, dealt with a myriad of challenges and continually exhibited imaginative,
enthusiastic, customer-focussed commitment. Sosandar is no longer a start-up, although it retains a
few of those healthy facets, such as the ability to react quickly to changing circumstances. Sosandar
is a business based on data and planning, with experienced people delivering great results for our
customers. I therefore take this moment to recognise all our fantastic team’s hard work.
FY22 was the first full year of our third-party partnerships with Next, M&S and John Lewis. While the
initial approach from all three was already testament to the appeal of our offering, it has been
excellent to see sales grow substantially over time, and it has become clear that each sees Sosandar
as a very important partner. Late in the year, we launched our first wholesale partnership with
Very.co.uk, which has begun well, and we continue to consider further partnerships, both UK and
overseas, in the future.
Committed to effective governance
The last couple of years have presented unprecedented governance challenges for all businesses.
The Board of Sosandar has remained committed to maintaining and enhancing our corporate
governance framework. Over the last two years we have met far more frequently, via a blend of
video call and physical meetings and been effective as a result. We have an agile, balanced board,
able to make decisions based upon robust assessment and evaluation, but always in a timely
fashion. It was also a pleasure to welcome Jon Wragg as Non-executive Director in April 2022. His
substantial experience in the fashion retail sector adds a valuable dimension to our Board.
Responsible business
Running our business with responsibility, in all its forms, remains important to us. This is an evolving
challenge, and we look to constantly develop our actions in this area. There is more detail provided
later in the report. However, key achievements in the year include beginning the roll-out of recycled
packaging across our supply chain (formerly implemented only to consumer-facing packaging),
increasing wages for Clipper staff working on Sosandar logistics, and engaging with a charity to
support us and our customers in an increased recycling of garments.
Outlook
The current financial year has started strongly and we are trading in line with our expectations for
full year growth. As we are well practiced at, we will continue to manage the business carefully,
building our partnerships and growing our existing customer base whilst remaining cognisant of the
external environment.
Consumers are becoming ever more selective about where they spend and also more demanding of
those brands with which they spend. We are confident that Sosandar will continue to benefit from
this shift in behaviour as our fashion forward, high quality, responsible value proposition clearly
differentiates us from the rest of the sector.
Bill Murray
Date: 11 July 2022
Sosandar Plc
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
AT A GLANCE
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 predominantly own label exclusive
product designed in-house.
Investment case
A unique proposition
Product exclusively designed in-house to suit a wide-ranging yet underserved demographic.
Exclusively designed product for women who are united by a desire for on-trend, affordable, long
lasting, lifestyle appropriate clothes with high fashion credibility
Experienced and driven management team
Highly experienced management team with combined experience of 35 years in fashion and
previous success taking a business from concept to market leader.
Huge and growing market opportunity
According to Statista, the ecommerce fashion industry’s compound annual growth rate (CAGR) is
tipped to reach 14.2% between 2017 and 2025, with the industry hitting a $672.71 billion valuation
by 2023. In Europe, it’s expected that by 2025, each consumer will spend $999 on fashion-related
items over the course of a year.
Growing, loyal customer base
The success of our distinct, flattering styles with bold prints can be seen by the momentum we saw
across our KPIs. Total orders increased by 84% to 508,473, repeat orders increased 93% to 366,848,
whilst our conversion rate increased to 3.9% from 3.1% and our average order frequency increased
by 10% to 2.28 times per annum. This data provides further evidence that we have an ever
increasing and loyal customer base.
Strong and scalable infrastructure in place
Mobile-first website built on leading Magento platform and logistics run through Clipper provide
capacity for large-scale growth. Agility and entrepreneurial spirit allows the Company to mitigate
risk and respond rapidly to changing consumer sentiment.
Numerous potential opportunities for future expansion
Continuing to increase the product range, in particular the number of styles within each category as
well as new categories which are not currently served by Sosandar. We see numerous opportunities
for further growth through the continued success of our own site and existing third parties. We are
also continuing to explore opportunities for further partnerships in the UK and overseas.
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
MARKET AND OPPORTUNITY
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.
BUSINESS MODEL
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.
Design
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
Data underpins everything 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.
Engagement
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 e-mail
campaigns, social media, PR and direct mail.
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
CO-CEO’S STATEMENT
A brilliant year
FY22 has been a brilliant year for Sosandar. We have successfully grown sales by 142% year on year
and, importantly, moved into profitability in the second half. A result which is even more remarkable
when set against a backdrop of pandemic restrictions as well as the challenges of a worldwide supply
chain crisis and substantial inflation. All our KPIs are positive year-on-year, and the forward
momentum which can be felt throughout the business gives us cause for great excitement.
It is thanks to our well-planned approach, together with our entrepreneurial, agile culture, that we
have improved both the top and bottom line in the period. Our business is underpinned by the
continuous collection and analysis of multiple data points, which allows us to track exactly what trends
are emerging and where we need to act. Given the current macro-environment, this approach is more
important than ever.
As always, everything we achieved has been down to the hard work and creativity of our people and
our partners. We take this opportunity to provide our heartfelt thanks.
A clear vision and purpose
Our vision is to become one of the largest womenswear brands globally. Our purpose is to empower
women of all ages to feel good in the clothes they wear, catering to the burgeoning ‘ageless’
generation.
There is a clear ongoing shift in the consumer mindset towards fashion; women are leaving behind
dated ideas of what they must wear at what age, and instead embracing clothes that make them feel
good, work in their everyday lives, and reflect their individual personalities. Our offering is ideally
placed to cater to this trend.
While our products are trend-led, our clothes are designed to be kept and loved for years. This is
why we invest so highly in quality and fit, reflected in our price point.
Our strategy and future objectives
Our strategy is central to the ongoing success and scale of our business and is spread over four pillars:
product, marketing, sales channels, and supply chain.
1. Expanding our unique product range
Our proven design, buying and merchandising capabilities make up the foundations of our
product strategy. We maximise the frequency of best-sellers and ensure our customers
receive new styles in line with the latest trends. All our products are sold at a mid-price point
and are increasingly designed with sustainable materials – offering our customers on-trend,
affordable, long lasting, lifestyle appropriate clothes with high fashion credibility.
Further expansion is paramount for FY23, increasing the number of styles across all categories
with specific fast track development of categories such as occasion wear, swim and beach,
blazers and suits. To capture an even wider customer base we are developing new shapes and
an expansion of length varieties to suit all heights.
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STRATEGIC REPORT
For the year ended 31 March 2022
2. Constant refinement of our data-driven marketing strategy
Since inception we have been constantly refining our marketing strategy based on data
driven learnings. We use aspirational product imagery and content to connect and engage
with our customers, building brand awareness through both our own e-commerce site and a
variety of channels, including TV, glossy brochures, social media, PR and digital. Using these
channels alongside our email marketing, which has industry leading open rates and
contributes to over 50% of revenue at no cost, enables us to successfully attract and retain
customers. All of these materials are created by our in-house creative team who have a
fantastic grasp on how women are feeling at that specific moment.
3. Driving sales through multiple channels
Our multi-channel sales strategy has two core pillars: our own e-commerce site and third-
party partnerships. Sosandar.com is the anchor of our success, it is where our customers
receive the most diverse choice and constant newness. In addition, we have established very
strong relationships with strategically chosen third parties – all large retailers with whom we
believed we could grow rapidly and this has proven to be true.
As part of our strategy, we will continue to invest in our own site, the bedrock of the
Sosandar lifestyle hub whilst also exploring additional third-party partnerships in the UK and
abroad.
4. An agile, resilient supply chain
The importance of a diversified, flexible supply base and having partners with expertise in
this area, has always been at the heart of our operation. We are an agile, online-only
business, allowing us to continually adjust our product offering, warehousing and fulfilment
operations in line with the ever-changing needs of our customers. Fostering strong, long-
term relations with a number of manufacturers in different territories and pivoting rapidly
between transport methods has been the key to our success and is vital to achieving our
desired scale.
Record financial performance
We have delivered a very strong revenue performance over the year, with sales up 142% year on year
to £29.5m. This was driven by a greater number of active customers and more frequent purchases. A
small uptick in average order value also contributed. While we did benefit from a broader range of
products being available than in FY21 (49% more new styles in total), our ability to buy deeper and
therefore satisfy more customers has also been crucial. As previously communicated, we maintained
a relatively low (but highly cost-effective) marketing spend as a proportion of revenues.
With the increase in sales and a continued monitor on costs, we were able to steadily reduce our
losses over the first half and were delighted to report profitable monthly trading from October 2021
onwards. Overall, in the year this led to an EBTIDA loss of £0.2m (FY21: £2.9m). Our loss before tax
was £0.6m, reflecting a one-off change in accounting treatment in relation to website costs.
Our net cash balance as at 31 March was £7.0m (FY21: £3.9m), which will allow us invest further into
FY23.
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
In-house design led product range continues to attract and retain new customers
The product range that we have created is what truly sets Sosandar apart. Our sexy and chic
clothing, made with quality materials and well-designed fit, continues to resonate with fashion
forward women. Our in-house design process ensures that our clothes are long-lasting and can be
worn for many occasions.
The success of our distinct, flattering styles with bold colours and prints can be seen by the
momentum we saw across our KPIs. Total orders increased by 84% to 508,473, repeat orders
increased 93% to 366,848, whilst our conversion rate increased to 3.9% from 3.1% and our average
order frequency increased by 10% to 2.28 times per annum. This data provides further evidence that
we have an ever increasing and loyal customer base.
We believe that we are currently experiencing a widespread cultural shift in how women dress, as
they feel confident in their ability to stay at the forefront of fashion no matter what their age.
Creating product in line with this shift is very important for our design teams.
Third Party arrangements go from strength to strength
Third party partnerships have become an important part of our ongoing strategy. Trading with our
longstanding partners, John Lewis, M&S and Next, has continued to be very strong, with Sosandar
product resonating very well across all types of product category. We increased the amount of stock
allocated to each partner and this has enabled us to meet the demand that is being generated
through these channels.
At the time of our Half Year results announcement, we highlighted that we were exploring new
opportunities with other partners where there was a strong strategic fit with the Sosandar brand. So,
we were delighted to extend our relationship with Next PLC in the second half, with Sosandar
products being sold through Next's 'Platform Plus'.
'Platform Plus' allows Next customers to order items picked from Sosandar's warehouse hosted by
Clipper, which are then delivered via Next's distribution network. We launched with Next Platform
Plus towards the end of Q1 FY23, and are excited to be sharing even more of our product range with
Next’s customer.
In addition, following an approach by The Very Group, we were pleased to commence a wholesale
agreement in March 2022 and immediately saw strong sales and quick repeat orders being placed.
The arrangements with the third parties further increase the brand's reach amongst its core target
demographic and are delivering incremental revenue and profitability. We are confident that
significant opportunities for further growth remain with each of our current third parties and
continue to consider additional opportunities with a good strategic fit.
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
Infrastructure in place to scale
To ensure that we remain at the forefront of fashion innovation and remain agile and
entrepreneurial, we are constantly evolving our infrastructure and capabilities.
We were delighted to take on more office space in April 2022. This has doubled our space which
will provide a positive working environment for our team, allowing us to further attract and retain
great people to drive our business in the future.
We have built an incredibly strong team across the whole business with an experienced layer of
senior staff leading each department. We have continued to add strength in depth across all
departments during the year and continue to be well supported by our external partners.
A confident outlook
To deliver six consecutive months of profitability alongside strong revenue growth shows the
trajectory that Sosandar is on. It is evident that our product range is unique and desirable for fashion
forward women.
This strong performance has continued into the new financial year. Every month in the new financial
year has been profitable and we have seen strong sales of workwear, occasion wear and holiday
clothes.
Whilst we are trading well and have not had any material disruption to date, we remain vigilant to
the external challenges including inflationary pressures on consumer spending and believe our agile
approach and understanding of our customers positions us well.
We believe Sosandar is well on the road to becoming a substantial business and has the
infrastructure in place to scale as we continue to grow our customer base.
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
FINANCIAL REVIEW
KPI’s
Revenue
Gross Profit
Gross Margin
Administrative Expenses
Profit / (Loss) before tax
EBITDA
Sessions
Conversion rate
Number of orders
AOV
Active customers *
Average Order Frequency **
Year ended 31
March 2022
£'000
£29,458
£16,496
56.0%
£16,470
£(554)
£(229)
Year ended 31
March 2022
13,141,632
3.87%
508,473
£90.39
223,253
2.28
Year ended 31
March 2021 £'000
£12,163
£5,844
48.0%
£8,729
£(3,098)
£(2,925)
Year ended 31
March 2021
8,922,789
3.09%
276,008
£82.70
135,381
2.08
Change
142%
182%
800bps
89%
82%
92%
Change
47%
78bps
84%
9%
65%
10%
* Active customers is the number of individual customers who purchased from Sosandar.com in the last 12 months
** Average Order Frequency is the total number of orders in the last 12 months divided by the number of active customers
The Group has delivered a significant step up in its financial performance, underpinned by continued
momentum across all KPI’s, resulting in strong growth in revenue and a substantial reduction in losses.
The second half of FY2022 was a milestone period with every month profitable which demonstrates
the trajectory that the Group is on with the foundations laid to be profitable in FY2023.
The performance is even more pleasing given the challenges in the external environment which have
affected all businesses in our sector. Our agility and underlying approach to spreading risk across our
business has enabled us to thrive in spite of these challenges including supply chain disruption and
inflationary pressures.
The fund raise (£5.8m gross proceeds) in May 2021 enabled the business to invest in greater levels of
stock from the autumn which was executed to plan, enabling us to meet the clear and growing
consumer demand for Sosandar product, both on Sosandar.com and through each of the third party
partners.
Revenue up +142% to £29.5m
The substantial growth in revenue reflects the ever-growing demand for Sosandar product with
incredibly strong performance from both Sosandar.com and through third-party web platforms.
Revenue in the first half of FY 2022 was equal to the entirety of the prior year with growth being
sustained into the second half. The year included a series of new records being broken for the
business including three consecutive record months for revenue in September, October and then
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
again in November. In addition, there were multiple records per day and per week as well as new
records for the number of orders and items throughout the second half of the year.
Gross Margin +800bps to 56%
Gross Margin improved significantly compared with the prior year which reflected a more normal year,
being much less impacted by the covid pandemic.
As the scale of the business has increased, there are opportunities which result in incremental benefit
to the gross margin. In FY2022, this has included ordering much larger quantities of stock including
being able to forward book capacity in factories which enables some prices to be agreed for the season
knowing that larger volumes will be required.
In addition, there has been an increase in the use of alternative freight methods where applicable and
where there was a high level of confidence that stock will arrive on time. During the year, a larger
proportion of stock has arrived using rail, road and sea which are at reduced cost compared with air
resulting in gains to the gross margin. The proportion of non-air methods will continue to increase
whilst balancing the need for margin, on time delivery, cash flow and environmental impact.
The margin in the prior year resulted from a much higher proportion of promotional activity to ensure
that inventory sold through, in particular during periods of lockdown. This has not been repeated in
FY2022 as the impact of Covid was much less severe and consumers were gradually able to return to
some sort of normality including going back to work, going out and taking holidays.
Administrative Expenses
Total administrative expenses increased by 89% to £16.5m (FY 2021 £8.7m) compared to a 142%
increase in revenue. As a result, administrative expenses as a percentage of revenue reduced to 56%
(FY2021 72%) reflecting the benefit of scale whilst continuing to invest in all areas of the business to
drive sustained growth in revenue and all KPI’s.
In terms of marketing activity, FY2022 was a normal year in terms of sustaining customer acquisition
activity across the whole year, with spending focused on the months where the return on investment
was greatest. Spend on marketing increased by 43% year on year with the cost of acquisition
remaining at half the level it was pre-pandemic which enabled the cost-effective recruitment of new
customers to the brand.
The cost of fulfilment which includes warehousing and customer order delivery costs increased by
96% during the year. Despite there being industry wide wage inflation in the logistics sector, our
partner, Clipper Logistics, has done an excellent job managing the situation with minimal disruption
to Sosandar. Its retention of staff has been excellent, and it has successfully recruited new staff to
support the revenue growth whilst reducing the cost per unit as result of ongoing productivity
initiatives in the warehouse. These initiatives are ongoing with further opportunities to maintain or
reduce the CPU further in FY2023.
By far the largest increase in administrative expenses is from third party commissions (increased by
779%) given the substantial increase in revenue from a relatively low base in the prior year. The
commission is retained by John Lewis, Next or Marks & Spencer and is reported within overheads
covering all costs of the operation including warehousing and fulfilment, returns handling, marketing
and other operational costs. The revenue and gross profit figures are therefore undiluted when
compared with trading through Sosandar.com
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STRATEGIC REPORT
For the year ended 31 March 2022
Amortisation increased in FY2022 reflecting the reduction in term to fully amortise website costs.
These are now fully amortised with zero carry forward balance.
Statement of Financial Position
The statement of financial position is robust. As at 31 March 2022, the Group had net assets of £10.6m
(FY2021 £5.0m) and a net current asset position of £10.5m (FY 2021 £4.6m).
During FY2022, the financial position was strengthened following a fund-raise of £5.8m gross which
enabled the Group to further accelerate the growth through greater investment in inventory to meet
ever-increasing consumer demand. As at 31 March 2022 the cash balance was £7.0m (FY2021 £3.9m).
The movements in the statement of financial position reflects the investment in the business
throughout the year, with an increase in inventory to £7.3m (FY2021 £2.9m). This includes stock on
hand, stock in transit reflecting the higher proportion of supply coming to the UK via sea and road as
well as an increase in the right to return asset which covers post year end returns.
Trade and other payables increased to £6.8m (FY2021 £2.9m) reflecting the step change in scale
through FY2022. Creditor payment days have continued to move favourably as the Group has become
a more important and trusted customer for our supply partners. Contract liabilities increased to
£2.0m (FY2021 £0.7m) which is as expected and reflects the growth in provision required for post year
end refunds for orders fulfilled within the year reflecting the significant year on year increase in
revenue.
Cashflow
The Group had a net cash position as at 31 March 2022 of £7.0m (FY2021 £3.9m). As highlighted
already, the Group’s cash position was strengthened with the fund raise in May 2021 with the
proceeds being utilised to:
(cid:120)
capitalise on the growth opportunity with its third party retail partners by investing in a
greater amount of stock from the Autumn / Winter 2021 season onwards. This included
increasing both the number of styles and the number of units per style to be sold through
the third party partner websites;
(cid:120) provide additional funding to engage with other third party partners in the UK and
internationally; and
(cid:120) provide additional working capital and further balance sheet flexibility to support other
incremental growth initiatives.
The plan for the Autumn / Winter 2021 season was executed as envisaged, with further investment
made ahead of the Spring / Summer 2022 season, resulting in £4.4m increase in inventory during the
year.
The Group is in a strong position, with sufficient working capital to take advantage of opportunities in
FY2023.
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
Risk Factors
There are a number of risks and uncertainties associated with the business. The Board believes the
following are the principal risks along with the mitigating actions being applied.
External Risks
Risk Factor
Economic -
Inflation
Impact
(cid:120)
Inflation is having a
negative impact on
consumers with
essential costs such as
food and energy
significant higher. As a
consequence,
disposable incomes are
being squeezed which
could lead to a loss of
revenue.
(cid:120) All revenue is generated
in the UK therefore a
deterioration of the UK
economy specifically
could have an adverse
impact on revenue if
consumer confidence
and spending reduce.
(cid:120) Severe loss of revenue
(cid:120) Closure of the
(cid:120)
warehouses
Loss Absence of
employees due to
illness
COVID 19
Mitigating Actions
(cid:120) The typical customer of the business tends
to have a higher level of disposable income
and therefore able to withstand economic
turbulence. Therefore, the business is able
to trade well through periods of high
inflation or wider economic downturn.
(cid:120) The business is online only and does not
have significant fixed costs and therefore
can flex its operations in order to respond to
any change in the economy.
(cid:120) The product range offered is diverse
covering all main wardrobe needs of the
target demographic and can be agile to
manage any situation.
(cid:120) The business has built partnerships with four
third party retailers resulting in greater
routes to the consumer and a reduction in
overall risk profile.
(cid:120) Diversified supply chain with no over-
reliance on one single country
(cid:120) Detailed live insight on customer demand
allows immediate insight into any changes in
demand allowing resource to be flexed
accordingly.
Limited fixed/committed expenditure with a
highly flexible cost base.
(cid:120) Supply chain disruption
(cid:120)
(cid:120) Flexible supply chain to adapt to any change
in product type demand.
(cid:120) Test and repeat model on stock to maximise
on fast selling product lines whilst
minimising risk on slower lines.
(cid:120) Safe working practices rigorously imposed
(cid:120) Employees working from home wherever
possible
(cid:120) Outsourced UK warehousing to Clipper
Logistics plc gained access to their disaster
recovery capabilities
(cid:120) 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
Fashion
(cid:120) As trends change there
is a risk that design does
not keep up with
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
customer requirements
for the latest fashion.
(cid:120) From new or existing
competitors.
(cid:120)
Loss of Revenue
(cid:120) Reduction in margin
and profitability if
competitors increase
discounting resulting in
consumers shopping
elsewhere
(cid:120) The business buys a
relatively small
proportion of product in
foreign currency.
Adverse currency rate
movements could
impact margins.
(cid:120) Negative comments on
social platforms could
influence purchasing
decisions for new
visitors.
fed into the product development to ensure
that customers have access to the latest
trends at affordable prices.
(cid:120) The business is agile and can adjust its
strategy according to all external factors
including those of its competitors.
(cid:120) The business has an increasingly loyal and
growing active customer database which
allows the business to engage with them
regularly through e-mail and brochures.
(cid:120) A detailed forward-looking purchase plan to
identify any potential currency exposure.
(cid:120) RRP’s can be increased to offset any
significant pressure on cost prices
(cid:120) A dedicated customer service team is able to
monitor any 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.
Impact
Mitigating Actions
(cid:120) The business relies on
(cid:120) Purchases are spread over a number of
Competition
Foreign
exchange
Negative
online reviews
Internal risks
Risk Factor
Suppliers
its outsourced
manufacturing supplier
base to provide the final
product. Loss of
suppliers through
insolvency, disaster or
ceasing of working
relationship could
impact short term
supply.
(cid:120) Non-compliance with
(cid:120)
labour or
environmental
requirements could
interrupt supply chain
and cause reputational
damage.
(cid:120) Product supplied could
be of insufficient quality
for sale.
suppliers to avoid over dependency on any
single supplier and as the business is
growing and increasing order quantities the
potential supplier base is widening.
(cid:120) All design is done in-house with detailed
specification packs provided for each
product which helps on-board new suppliers
quickly.
(cid:120) All suppliers are asked to confirm adherence
with the business code of conduct.
Independent supplier audits are conducted
at least once every two years, ensuring
compliance with working practices and
ethics.
(cid:120) Each product goes through an extensive
sampling process and final quality control
process to ensure it is suitable for sale.
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
Systems –
security and
availability
Key
employees
Working
capital
(cid:120) System outages would
prevent the business
from operating and
therefore would see a
reduction in revenue
during this time.
(cid:120) GDPR could impact
ability to work with data
providers who help
identify prospective
customers for
marketing purposes.
(cid:120) Data breaches could
impact reputation and
business continuity.
(cid:120) The loss of one or more
of key employees could
have an adverse impact
on the business and
inhibit its ability to grow
as planned
(cid:120) The business has agreements with external
partners to manage and support its systems
and they would ensure that any outage is
minimised.
(cid:120) The business works with industry leading
data providers with extensive compliant
databases to ensure sufficient sources of
target information for marketing purposes.
(cid:120) Dedicated cyber insurance policies are in
place which include specialist resource and
plans to minimise the impact of any cyber-
attacks.
(cid:120) The remuneration committee ensure that
key employees are rewarded sufficiently to
retain and motivate on an ongoing basis.
(cid:120) During the year, modifications were made to
the Long Term Incentive Plan including
replacement of existing share options for
the three members who previously held
share options. In addition share options
were granted to other members of the
senior management team to further ensure
that they are rewarded and incentivised
appropriately.
(cid:120) As the company
(cid:120) The business has detailed forecasting
requires working capital
to further invest to
grow the business. This
will include investment
in inventory, customer
acquisition, product
development and
operations.
models including sensitivity scenarios so that
robust decisions can be made, balance
growth potential with risk mitigation.
(cid:120) Marketing spend efficiencies have been
made over the past two years. The
relatively low cost of acquisition is expected
to be maintained, which reduces the risk as
the return on investment is strong when
investment is being made.
(cid:120) Weekly and monthly cash flow projections
are reviewed by senior management and
actions taken where necessary, with all key
members of staff aware of the cash flow
objective.
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
Sosandar: A responsible fashion business
At Sosandar, we understand that our business has an impact on the world around us. Our business
touches the lives of not only our team and our customers, but our suppliers, our garment
manufacturers, our shareholders and the wider communities these groups exist in. We also have an
impact on the environment.
We are therefore committed to working towards making this impact increasingly more positive, and
our business more sustainable.
We aim to implement positive change across the business in line with our ‘responsible fashion
business’ framework. This framework is broken down into the three key areas we focus on:
(cid:120) Ethical Operations
A fair, transparent and collaborative supply chain
(cid:120) Environmental Sustainability
Minimising the footprint left on the natural world
(cid:120) Fabulous Sosandar
An inclusive and uplifting workplace
We are proud to have a level of rigour in place in line with best practice, and that the Directors believe
is more than appropriate for a business of our size and maturity. We currently work with four third-
party brands: Marks & Spencer, John Lewis, Next and The Very Group; each has established exacting
sustainability and ethical standards for partner companies, and we are proud to meet them.
Reflecting its position as a key part of our strategic decision making, our responsible fashion business
activities are discussed and managed by the Board, overseen by Chairman Bill Murray.
Ethical Operations
We are committed to sourcing our products from suppliers who share our belief in operating
responsibly and with integrity. As we continue to grow, we are focused on ensuring that we maintain
and proactively enhance our corporate governance and commitment to ethical trade within our
supply chain. Ethical Operations within our supply chain are led by our Head of Sourcing and overseen
at Board level.
Transparency
Sosandar currently uses over 80 suppliers across multiple countries including Turkey, China, India,
Brazil, Romania and Spain.
We have established a comprehensive ‘Code of Conduct’ which covers key areas of ethical and social
compliance, including child labour policies, which our suppliers must comply with.
To further ensure transparency and compliance, independent audits are used such as SMETA (Sedex
Members Ethical Trade Audit) or BSCI (Business Social Compliance Initiative) ensuring our global
supply chain continues to comply with expected standards. During the year, 95% of suppliers had
been audited with the balance being new suppliers with audits to follow in the near future.
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
Partnership approach
We have established long-term, close-knit relationships with many of our suppliers, and aim to build
this with all new suppliers we work with, taking the time to ensure any new suppliers are the right fit
for us. We have an open and regular dialogue, interacting on a daily basis.
Following Covid restrictions lifting, our Sourcing team has been undertaking a comprehensive
programme of in-person supplier visits, further cementing these relationships, ensuring the
collaborative way of working is protecting our supply chain for the future. These in-person visits are
now taking place on a rolling basis.
We would like to sincerely thank all our suppliers for their support over the last year. We look forward
to growing together with them going forward; sharing in each other’s success.
Clipper
Since we were established, we have outsourced our product storage, pick, pack and returns logistics
to Clipper, a leading retail logistics specialist. Clipper is an important part of the Sosandar family and
have consistently adapted to ensure we receive the highest quality of service as we grow. It is
important to us to know that Clipper also has a clear focus on being a responsible business, with a
well-developed Corporate Social Responsibility programme, further details of which can be found on
its website at www.clippergroup.co.uk/people/csr
Whilst the impact of the pandemic reduced throughout the year, Clipper continued with best practice
health and safety measures on site in order to protect their employees and colleagues.
During the year, we were delighted to support Clipper with increasing wages for all staff working with
Sosandar as the wider logistics sector struggled to retain and recruit staff as the number of migrant
workers reduced following Brexit.
Environmental Sustainability
Minimising the mark we leave on the world around us is a key imperative for Sosandar, and despite
our size we are dedicated to continually expanding our environmental activities.
We continue to scrutinise the raw materials and components used in our products to see how they
can be sourced and produced more sustainably.
Minimising waste
Whilst we operate in the fashion industry and always have new, products available, all of our clothing
and accessories are designed to be robust and long-lasting. Sosandar pieces are high-quality, made
from durable materials and with the quality necessary to last wear after wear.
During the 2022, we have reduced the proportion of product transported from suppliers into the UK
using air freight. The majority of product from Turkey is arriving by road and in 2023 most China
origin product will be transported by sea. It is anticipated that in 2023, there will be a relatively equal
split between air, road and sea which will further reduce our emissions.
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
Recycling
Following the launch of recycled, carbon neutral and sustainable consumer packaging in 2021, we are
delighted to have started to roll out fully recycled packaging across the rest of our supply chain (non-
consumer facing). We have appointed a dedicated packaging supplier for all of our product suppliers
to order from, ensuring full transparency, ensuring that all packaging will now be from recycled
materials.
Whilst at an early stage, we are engaged with a charity to support both us, and our consumer with
recycling garments which are no longer wanted or where the item has a minor fault or blemish. This
will enable us to ensure that no Sosandar garments are thrown away unnecessarily.
Fabulous Sosandar
Our teams
Our team are the lifeblood of our business, and we are committed to providing them with a fair,
inclusive and rewarding place to work.
We have an open door, family friendly policy, and are very proud of our inclusive and open culture.
We support the learning and development of all our team members, allowing them to develop their
careers.
We were delighted to take on additional office space in April 2022, which has allowed us to have the
whole team back in the office at the same time. We actively encourage a culture based on
collaboration, in which ideas and thoughts are shared which enables our people to develop personally
and professionally.
We are an equal opportunity employer, recruiting from a wide talent pool and we are determined to
ensure that no applicant or employee receives less favourable treatment. Promoting diversity and
inclusion across the business is very important to us.
The future
Running a responsible business is a continually evolving challenge, and we look to constantly develop
our actions in this area. We know that sustainability, already at the core of our business, must continue
to be at the forefront of our minds as we take each next step to grow Sosandar and expand our
influence.
As we grow in size and scale as a company, we will further expand our activity, with an ambition to
increase the positive, lasting impact Sosandar has on the fashion industry.
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
Section 172 Statement
Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of
stakeholders in their decision making. They must make decision in good faith that they believe will
most likely promote the success of the Company for the benefit of its shareholders. In making these
decisions the Directors must consider, amongst other things:
Likely long term impact of their decisions
Interests of employees and the need to act fairly between members of the Company
(cid:120)
(cid:120)
(cid:120) The reputation of the Company with customers and suppliers
(cid:120) The community and environment in which the Company operates
Key Stakeholders
Employees
Shareholders
Suppliers
Customers
How we engage
As a relatively small team of around 50 people as at March 2022, there is
regular engagement on a daily basis between all departments either in the
office or using video conferencing. Regular business wide updates are given
through a variety of channels with more formal updates via presentations
around key events.
As an AIM listed business, we have a dedicated investor website with all key
information and RNS updates. We also conduct regular presentations with
investors, both institutional and retail around the time of key trading
updates. Presentations are made available online for those who did not
have the opportunity to attend in a live capacity.
We have a dedicated Sourcing team, whose role it is to ensure ongoing
assessment and onboarding of new suppliers. In addition we have personal
relationships from all levels within our business across all our supply chain
and update each other through regular meetings and phone calls.
Our customers are at the heart of everything we do. We use email and
social platforms to update them about new products and regularly review
any feedback we received to understand how we can improve their
experience.
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
Significant events/decisions 2022
Event/Decision
Fund Raise
Key
Stakeholders
Shareholders
Supply Chain
disruption
All stakeholders
Ukraine war
All stakeholders
Actions & Impact
(cid:120) Raised gross proceeds of £5.8 million gross via a
Placing, Subscription and Primary Bid Offer in May
2021
(cid:120) Representing approximately 15 per cent of the
existing issued share capital
(cid:120) Allowed for greater investment in stock from H2
FY2022 which facilitated the significant step up in
trading during Autumn and Winter
Investment was in both breadth and depth of stock,
meaning increasing the product range size and
quantity per style to drive incremental revenue
across all sales channels
(cid:120)
(cid:120) Well documented industry-wide challenges, in
particular with sea freight have been prevalent
throughout the year
(cid:120) Air freight has always been used for the majority of
inventory movements, meaning the impact to the
business has been substantially less than many
other businesses
(cid:120) Focus has always been on ensuring stock arrives on
time into the UK warehouse and this has been
maintained throughout the year
(cid:120) Road, Rail and Sea were used increasingly as
disruption started to reduce
(cid:120) The business has mitigated the risks through
strategic planning and having a diverse supplier
base including across multiple countries
(cid:120) Upward pressure on supply chain costs has been
mitigated through inclusion in budgets as well as
being offset through underlying margin gains
(cid:120) There is no direct exposure to either Russia or
Ukraine in terms of impact to either sales or stock
(cid:120) There has been no material impact to consumer
behaviour as a direct consequence of the events in
Ukraine
COVID 19
Impact
All stakeholders
(cid:120) FY2022 had significantly less impact as a
consequence of COVID compared with the previous
year
(cid:120) The previous year saw the business focussing on
cash preservation with reductions in all
discretionary spend. The current year has been a
much more normal year in terms of consumer
behaviour with marketing activity maintained to
drive customer acquisition and engagement
(cid:120) All employees were able to work in the office much
more as restrictions were lifted. Buying and Design
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
All stakeholders
Growing with
third party
retailer web
platforms
Product range
development
All stakeholders
Investment in
marketing
Shareholders,
customers
teams worked in the office throughout the
pandemic, with other teams being able to return
during the year
(cid:120) Sales accelerated throughout the year as greater
stock was made available with each partner
(cid:120) FY2022 was the first full year of trading with Next,
John Lewis and Marks & Spencer
(cid:120) An additional agreement was entered into with The
Very Group to sell on their web platform which
launched March 2022
(cid:120) Sales accelerated throughout the year as greater
stock was made available with each partner
(cid:120) All four retailers approached Sosandar to sell
(cid:120)
(cid:120)
through them which is a positive validation of the
Sosandar brand
Increase in brand awareness for Sosandar through
association with such well known UK retailers who
each have multi-million number of e-commerce
customers has further accelerated visits and sales
through Sosandar.com
Increase in revenue and profitability as a result of
these agreements with accelerated economies of
scale
(cid:120) The continued Development in the product range
has continued following the accelerated range
development in the previous year.
(cid:120) The product mix is highly diverse with an equitable
balance across many categories, including dresses,
denim, knitwear and footwear. The customer has
choice across all main womenswear categories
(cid:120) Pre-pandemic a higher proportion of the product
mix was formal and work wear. Developments into
new product categories were already taking place
pre-pandemic and these were accelerated during
the year
(cid:120) The product range available at the year-end is
substantially more diverse than at the beginning of
the year with all product categories widened during
the year
(cid:120)
Investment in marketing, specifically to acquire new
customers returned to normal following the COVID
impacted previous year where investment was
postponed in order to focus on preserving cash
(cid:120) Customer acquisition activity maintained a strong
return on investment which was significantly
improved on pre-pandemic levels
(cid:120) All of the data driven learnings from previous years
were absorbed and incorporated into the current
year campaigns
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Annual Report 2022
STRATEGIC REPORT
For the year ended 31 March 2022
(cid:120) Successful new customer acquisition resulted in a
significant increase in the database size which in
turn enables revenue to grow.
Julie Lavington
Director
Date: 11 July 2022
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Annual Report 2022
BOARD OF DIRECTORS
Biographical details of the Directors
Bill Murray – Non-Executive Chairman
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 13 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, Rothes Glen Ltd and Paragraph Publishing Ltd. 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. Bill is the chairman of the Audit Committee and also a member of the
Nomination, Remuneration and Disclosure committees.
Alison Hall – Co CEO and Founder
Former fashion magazine editor, Alison Hall, 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.
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Annual Report 2022
BOARD OF DIRECTORS
Julie Lavington – Co CEO and Founder
Former fashion magazine publishing director, Julie Lavington, is co-founder and joint CEO of
Sosandar.
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 the biggest selling magazine
on UK newsstands. 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.
Stephen Dilks – Chief Financial Officer
Steve joined Sosandar from Regatta, the outdoor apparel business in September 2020 as Finance
Director and was appointed Chief Financial Officer in May 2021 . Steve is CIMA qualified and has a
broad skillset gained across a number of roles in highly complex organisations with a blend of
financial, commercial and strategic experience.
During his eleven years at Regatta, the last four as Finance Director, Steve supported the Group’s
consistent double-digit growth across multiple brands, countries and channels including wholesale,
own retail, concessions and online. He was also the finance lead for several key strategic projects
including the Group's Brexit planning and the implementation of group wide new IT systems.
Prior to his tenure at Regatta, Steve held a broad range of financial and commercial roles in retail
and FMCG organisations including Kraft Foods and The Co-Operative Group.
Mark Collingbourne – Non-Executive Director
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 on-going accountancy, regulation and good
governance of international businesses.
During his ten-year tenure with ViaLogy plc (now Yourgene 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.
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Annual Report 2022
BOARD OF DIRECTORS
Mark has undertaken consultancy projects for a number of publicly listed entities across a wide
range of industries and has a wealth of experience particularly in bringing company’s forward to IPO
and listing on public markets.
Mark is currently Chief Finance Officer of Optibiotix Health PLC and Intuitive Investments Group
PLC, he also holds board positions on a number of small private companies.
Adam Reynolds – Non-Executive Director
Adam began his career in the City in 1980 with stockbrokers Rowe Rudd. In 2000, he established his
own IR and Corporate Finance firm, which listed on AIM in 2000 and was then sold in 2004.
In 2005 Adam was approached to become Non-Executive Chairman of International Brand Licensing
Plc. In 2009 Adam brought David Evans and Julian Baines – two of the leading diabetes specialists in
the UK – into the company and the business changed direction. Today it is known as EKF Diagnostics
Plc and through various spin offs and listings has a total market capitalisation of over £1bn, Adam
remained a director until May 2021.
Adam is also Chairman and a shareholder for Yourgene Health Plc, MyHealthChecked Plc, Belluscura
Plc and Autoclenz Limited
Adam is the chairman of the Nomination committee and is a member of the Remuneration, Audit
and Disclosure committees.
Nick Mustoe - Non Executive Director
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.
Nick started his own agency, Mustoes 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, Mustoes 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 Chair the company.
Nick is also Chairman of Sandown Park Racecourse and Big Sofa Technologies Group Ltd and a Non-
Executive Director Your Gene Plc
Nick is the chairman of the Remuneration committee and is a member of the Nomination, Audit and
Disclosure committees.
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Annual Report 2022
BOARD OF DIRECTORS
Andrew Booth - Non-Executive Director
Andrew is a 20-year digital marketing veteran, working with hypergrowth companies.
Starting with gettyimages in 1999, he developed his career through the rise from AIM to Nasdeq, to
NYSE, becoming Vice President of Marketing.
Following the $2.4bn sale of gettyimages to Hellman and Friedman in 2008, Andrew joined Time Out
as Group Marketing Director, leading the migration of digital with customers and growth of the
worldwide brand, in preparation for inclusion to AIM. Thereafter, he became Chief Marketing
Officer for the Hut Group, spanning all their 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 continues within the plural environment as an advisor to brands that are utilising technology
to significantly drive change and growth with customers.
Jon Wragg - Non-Executive Director
Jon is an experienced senior executive with a track record of driving growth in consumer businesses
through digital channels. From April 2014 to September 2021, Jon held a number of executive roles
with Superdry plc, including e-Commerce and Wholesale Director and Global Wholesale Director.
During his time at Superdry Jon oversaw rapid sales and profit growth with e-commerce sales tripling
in three years; and sales doubling in the larger Wholesale division over three years. In addition, he
helped establish global partnerships through which circa 500 franchise stores were opened across 65
countries.
Prior to this, Jon spent seven years at ASDA WalMart and 26 years at Littlewoods SDG Ltd (now The
Very Group) where he led a team of 260 to develop, procure and trade the product portfolio of a
£1bn business and was responsible for creating a portfolio of new web-based niche businesses. Jon
is currently an Independent Non-Executive Director of Manchester Airport Group, appointed in part
for his digital experience, and is a member of the company's Audit, Nomination and Corporate &
Social Responsibilities Committees.
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Annual Report 2022
GROUP DIRECTORS’ REPORT
The Directors present their report and the consolidated financial statements for the year ended 31
March 2022.
Results and dividends
The Group loss after tax for the year ended 31 March 2022 amounts to £0.14m (2021: £3.10m). The
Directors are not recommending payment of a final dividend for the year (2021: £nil).
Directors
The Directors who served on the Board during the year and to the date of this report are as follows:
Alison Hall
Julie Lavington
Stephen Dilks (appointed 5th May 2021)
Bill Murray
Nicolas Mustoe
Adam Reynolds
Mark Collingbourne
Andrew Booth
Jonathan Wragg (appointed 14th April 2022)
Substantial shareholdings
As at 30 June 2022 the following held 3% or more of the share capital of the Company:
No of shares at
% Issued
Rank Shareholder
30 June 2022
1
2
3
4
5
6
7
8
Octopus Investments (London)
Canaccord Genuity Wealth Mgmt
Hargreaves Lansdown Asset Mgt
Lombard Odier Asset Mgmt
Schroder Investment Mgt
Amati Global Investors
EdenTree Investment Mgmt
Interactive Investor
Based on 221,408,332 ordinary shares on 30 June 2022.
28,469,490
19,854,660
19,316,168
17,179,462
16,956,699
12,480,000
9,432,235
9,145,128
Capital
12.86%
8.97%
8.72%
7.76%
7.66%
5.64%
4.26%
4.13%
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Annual Report 2022
GROUP DIRECTORS’ REPORT
As at 31 March 2022 the following held 3% or more of the share capital of the Company:
No of shares at
% Issued
Rank Shareholder
31 March 2022
1
2
3
4
5
6
7
8
Octopus Investments (London)
Canaccord Genuity Wealth Mgmt
Hargreaves Lansdown Asset Mgt
Lombard Odier Asset Mgmt
Schroder Investment Mgt
Amati Global Investors
EdenTree Investment Mgmt
Interactive Investor
Based on 221,408,332 ordinary shares on 31 March 2022.
Corporate governance
28,469,490
20,829,660
19,253,337
17,179,462
16,581,195
12,480,000
9,432,235
9,322,619
Capital
12.86%
9.41%
8.70%
7.76%
7.49%
5.64%
4.26%
4.21%
The Directors recognise the importance of robust 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 holds 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, established an Audit Committee, a Nomination Committee, a Disclosure Committee
and a Remuneration Committee with formally delegated rules and responsibilities.
The following table summarises the number of Board meetings held in the year along with the
attendance of each Director.
Board
Remuneration Audit Nomination Disclosure
Total In Year
Alison Hall
Julie Lavington
Stephen Dilks *
Bill Murray
Nicolas Mustoe
Adam Reynolds
Mark Collingbourne
Andrew Booth
Jonathan Wragg **
* Appointed on 5th May 2021
** Appointed on 14th April 2022
Remuneration Committee
24
22
22
21
23
24
23
23
23
N/A
2
-
-
-
2
2
2
-
-
N/A
2
2
-
-
-
2
2
2
-
-
N/A
-
-
-
2
2
2
-
-
N/A
2
-
-
-
2
2
2
-
-
N/A
Sosandar Plc
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Annual Report 2022
GROUP DIRECTORS’ REPORT
The Remuneration Committee, which comprises Nick Mustoe (chairman), Adam Reynolds and Bill
Murray, meet twice each year. The Committee is 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, comprising Bill Murray (chairman), Adam Reynolds and Nick Mustoe, meet
twice a year. The committee is 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 received and
reviewed reports from management and the auditors relating to the interim report, the Annual Report
and Accounts and the internal control systems of the Company. The Audit Committee is responsible
for assessing the suitability of the external auditor and recommending any rotations required to the
Board.
Nomination Committee
The Nomination Committee, comprises Adam Reynolds (chairman), Bill Murray and Nick Mustoe,
meet at such times and frequency as necessary. The Nomination Committee monitor the size and
composition of the Board and the other Board Committees and are responsible for identifying suitable
candidates for Board membership.
Disclosure Committee
The Disclosure Committee, which comprises Nick Mustoe (chairman), Bill Murray and Adam Reynolds,
meet at such times as shall be necessary or appropriate to discharge its obligations and comply with
applicable law and regulation. The Committee is 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
How we comply with the QCA Code in this area
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
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Annual Report 2022
GROUP DIRECTORS’ REPORT
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.
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 CFO 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 over 80 subcontractors around the world including Turkey. China,
India, Brazil, Romania 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 13 to 15 of our Annual Report and Accounts.
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Annual Report 2022
GROUP DIRECTORS’ REPORT
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 six Non-Executive
Directors compared to three Executive Directors.
The Board's activities are supported by Nomination, Disclosure, 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.
6. Ensure that between them the Directors have the necessary up-to-date experience, skills and
capabilities
The Board currently comprises three Executive and six 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.
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Annual Report 2022
GROUP DIRECTORS’ 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 in 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.
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
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Annual Report 2022
GROUP DIRECTORS’ REPORT
The Company operates a remuneration policy with the remuneration committee taking
responsibility for all matters relating to Executive, Non-Executive and Senior Management.
Executive Directors
The remuneration policy on executive director remuneration is designed to ensure that there is
alignment between shareholder and executive interests. The desire to sufficiently retain and
motivate the executive is achieved through a combination of a competitive base salary and long
term incentives.
Basic Salary
The remuneration committee review basic salaries annually. The review of Executive Directors’
basic salaries was delayed by 12 months as a consequence of Covid-19. In July 2021 the basic
salaries for Julie Lavington and Alison Hall increased by 27% to £185,000 and have remained at this
level for the remainder of the financial year. Following the appointment of Stephen Dilks to the
board of directors in May 2021, his basic salary increased to £125,000 and have remained at this
level for the remainder of the financial year.
Annual Bonus
Currently there are no short term bonus plans in place however this remains under review by the
remuneration committee.
Pension
The Group operates a defined contribution pension scheme which is available to all employees
following successful completion of the probationary period. The assets of the scheme are held
separately from those of the Group in independently administered funds. The pension contributions
made to Julie Lavington and Alison Hall during the year ending 31 March 2022 was 8 per cent of
basic salary. The pension contributions made to Stephen Dilks during the year ending 31 March
2022 was 7 per cent of basic salary.
Long Term Incentive Plan
The Group has a share ownership compensation scheme for Directors and senior employees of the
Group to further align their interests with those of the shareholders. On 21 June 2021 the Group
announced the establishment of a new Long Term Incentive Plan in which it granted new nil cost
options totalling 21,431,942 ordinary shares of 0.1 pence each to its executive directors and
members of the senior management team. Some of the existing options granted, totalling
13,888,742 ordinary shares, were modified as part of these arrangements. There was no incremental
fair value because of this modification. The share options granted will vest at various future dates
based on agreed commercial criteria and are detailed in the table on page 34 and in note 17.
Non-Executive Directors
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Annual Report 2022
GROUP DIRECTORS’ REPORT
The remuneration policy on Non-Executive Director remuneration is determined by the
Remuneration Committee. The remuneration is set according to the level of contribution, relevant
experience and specialist knowledge. During FY 2022, the Non-Executive remuneration increased
by 20 per cent to return to the remuneration levels prior to the pandemic.
The Directors of the Company held the following beneficial interests in the shares and share options
of Sosandar Plc at 31 March 2022 and 31 March 2021:
31-Mar-22
Alison Hall
Ordinary
shares of
0.01p each
5,309,343
Julie Lavington
5,309,343
Nicholas Mustoe
Adam Reynolds
Mark Collingbourne
Bill Murray
Andrew Booth
Steve Dilks
4,872,871
1,960,802
928,919
345,107
150,000
-
Share Options
Ordinary
Option
shares of exercise
Price £
0.151
0.000
0.151
0.000
0.151
0.151
0.151
0.151
N/A
0.000
0.01p each
1,655,629
9,725,971
1,655,629
9,725,971
400,000
800,000
400,000
400,000
-
720,000
Share based
payment P&L
charge
4,191
100,558
4,191
100,558
1,013
2,025
1,013
1,013
-
15,491
Expiry
03/11/2027
18/06/2031
03/11/2027
18/06/2031
03/11/2027
03/11/2027
03/11/2027
03/11/2027
N/A
18/06/2031
31-Mar-21
Alison Hall
Julie Lavington
Nicholas Mustoe
Adam Reynolds
Mark Collingbourne
Bill Murray
Share Options
Ordinary
shares of
0.01p each
5,309,343
5,309,343
4,872,871
1,960,802
928,919
345,107
Ordinary
Option
shares of exercise
Price £
0.151
0.151
0.151
0.151
0.151
0.151
0.01p each
8,400,000
8,400,000
400,000
800,000
400,000
400,000
Share based
payment P&L
charge
72,767
72,767
3,465
6,930
3,465
3,465
Expiry
03/11/2027
03/11/2027
03/11/2027
03/11/2027
03/11/2027
03/11/2027
Further details with regards to Executive and Non-Executive remuneration is detailed in note 6.
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
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Annual Report 2022
GROUP DIRECTORS’ REPORT
Further information on events after the reporting period is set out in note 22.
Principal risks and uncertainties
The principal risks and uncertainties of the business are discussed in the Strategic Report and in note
21.
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 UK adopted international accounting 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 UK adopted
international accounting standards 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:
(cid:120)
select suitable accounting policies and apply them consistently;
(cid:120) make judgements and estimates that are reasonable and prudent;
(cid:120)
state whether the Group and Company financial statements have been prepared in
accordance with UK adopted international accounting standards, subject to any material
departures disclosed and explained in the financial statements; and
(cid:120) prepare the financial statements on the going concern basis unless it is inappropriate
to presume that the Group and Company will continue in business.
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 intend to consider Jeffreys Henry LLP for re-appointment as auditors of the Group and
Company.
Disclosure of information to the auditors
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Annual Report 2022
GROUP DIRECTORS’ REPORT
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 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:
Julie Lavington
Director
Date: 11 July 2022
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Annual Report 2022
INDEPENDENT AUDITORS’ REPORT
Independent auditor’s report to the members of Sosandar Plc for the year ended 31 March 2022
Opinion
We have audited the financial statements of Sosandar Plc (the ‘parent Company’) and its subsidiary
(the ‘Group’) for the year ended 31 March 2022 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 UK adopted International Accounting Standards. The financial
reporting framework that has been applied in the preparation of the parent Company financial
statements is applicable law and UK-adopted International Accounting Standards, 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 2022 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK-adopted
International Accounting Standards;
the parent Company financial statements have been properly prepared in accordance with
UK-adopted International Accounting Standards 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
In auditing the financial statements, we have concluded that the director's use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the
directors’ assessment of the entity’s ability to continue to adopt the going concern basis of accounting
included reviews of expected cash flows for a period of 12 months, to determine expected cash
outflow, which was compared to the liquid assets held in the entity.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the group's ability
to continue as a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
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Annual Report 2022
INDEPENDENT AUDITORS’ REPORT
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
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.
Key audit matter
Valuation of inventory
The Group held £7,307,000 of inventory as at 31
March 2022 (2021: £2,866,000) net of provisions
of totalling £761,000 (2021: £666,000).
The provisioning policy is driven by margin
rather than age of stock. The key assumptions
driving the inventory provision are the net
realisable value expected to be achieved on sale,
and the saleability of older stock lines.
Carrying value of investments
The Company has investments in the subsidiary
of £6,282,000 (2021: £6,282,000).
Management have provided cash flow forecasts
and performed impairment reviews relating to
the investments and loans.
Management’s assessment of the recoverable
amount of investments within the subsidiary
judgement around
requires estimation and
assumptions used, including the cash flows to be
generated from continuing operations. Changes
to assumptions could lead to material changes in
the estimated recoverable amount, impacting
the value of investment in the subsidiary and
impairment of the inter-company balance.
the
provision
How our audit addressed the key audit matter
We have understood the methodology used to
calculate
and
inventory
determined it was consistent with that applied
in the prior year.
We reconciled the inventory values used in the
provision to the general ledger.
As part of our work, we reviewed the
calculations for arithmetical accuracy and for a
sample of items compared NRV inputs to prices
latest sale
available on the website, and
information.
We recalculated the provision based on the
for
inputs, assessed the underlying data
some
appropriateness, and
sensitivity analysis to assess whether there was
risk of material misstatement of the provision.
A sense check of the provision was undertaken
by reviewing slower moving stock items for
unprovided balances. We did not identify any
significant omissions.
performed
We have reviewed the carrying value of the
investments, and 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
Company’s
considered
assessments, and the results of audit work
conducted on
any
the
unrecognised indicators of impairment.
We have assessed the appropriateness and
applicability of the discount rate applied to the
current business performance;
subsidiary
have
the
for
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Annual Report 2022
INDEPENDENT AUDITORS’ REPORT
We have confirmed that any adverse change in
key assumptions would not materially increase
the impairment loss.
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.
Based on our professional judgement, we determined materiality for the financial statements as a
whole as follows:
Overall materiality
How we determined it
Rationale for
benchmark applied
Group financial statements
£295,000 (2021: £155,000)
1% revenue (2021: 5% of net
loss before tax)
We believe that revenue is a
primary measure used by
shareholders in assessing the
performance of the Group.
Company financial statements
£97,000 (2021: £93,000)
1% gross assets
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 £97,000
and £294,000.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified
during our audit above £14,750 (Group audit) (2021: £7,600) and £4,850 (Company audit) (2021:
£4,650) 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.
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Annual Report 2022
INDEPENDENT AUDITORS’ REPORT
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 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.
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 page 35, 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
Sosandar Plc
P a g e | 40
Annual Report 2022
INDEPENDENT AUDITORS’ REPORT
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
The extent to which the audit was considered capable of detecting irregularities including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of
irregularities, including fraud and non-compliance with laws and regulations, was as follows:
•
the senior statutory auditor ensured the engagement team collectively had the appropriate
competence, capabilities and skills to identify or recognise non-compliance with applicable
laws and regulations;
• we focused on specific laws and regulations which we considered may have a direct material
effect on the financial statements or the operations of the company.
• we assessed the extent of compliance with the laws and regulations identified above through
•
making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the
team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement,
including obtaining an understanding of how fraud might occur, by:
• making enquiries of management as to where they considered there was susceptibility to
•
fraud, their knowledge of actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with
laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
•
•
•
•
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting
estimates set out in Note 1 were indicative of potential bias;
investigated the rationale behind significant or unusual transactions.
Sosandar Plc
P a g e | 41
Annual Report 2022
INDEPENDENT AUDITORS’ REPORT
In response to the risk of irregularities and non-compliance with laws and regulations, we designed
procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
•
reading the minutes of meetings of those charged with governance;
•
enquiring of management as to actual and potential litigation and claims;
•
• Obtaining confirmation of compliance from the company’s legal advisors.
There are inherent limitations in our audit procedures described above. The more removed that laws
and regulations are from financial transactions, the less likely it is that we would become aware of
non-compliance. Auditing standards also limit the audit procedures required to identify non-
compliance with laws and regulations to enquiry of the directors and other management and the
inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from
error as they may involve deliberate concealment or collusion. 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.
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.
Sanjay Parmar (Senior Statutory Auditor)
For and on behalf of Jeffreys Henry LLP (Statutory Auditors)
Finsgate
5-7 Cranwood Street
London EC1V 9EE
11 July 2022
Sosandar Plc
P a g e | 42
Annual Report 2022
CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2022
Revenue
Operational costs
Gross profit/(loss)
Other operating income
Administrative expenses
Share-based payment
Depreciation and amortisation
Operating profit/(loss)
Finance costs
Profit/(loss) before taxation
Income tax credit/(expense)
Group profit/(loss) for the year
Other comprehensive income
Total comprehensive profit/(loss) for the period
Notes
3
17
9, 10
5
7
Year ended
31 March
2022
£’000
29,458
(12,962)
16,496
-
(16,470)
(255)
(317)
(546)
(8)
(554)
412
(142)
-
(142)
Year ended
31 March
2021
£’000
12,163
(6,319)
5,844
135
(8,729)
(175)
(163)
(3,088)
(10)
(3,098)
-
(3,098)
-
(3,098)
Earnings/(loss) per share:
Earnings/(loss) per share – basic and diluted, attributable
to ordinary equity holders of the parent (pence)
8
(0.07)
(1.61)
The notes on pages 50 to 71 form part of these financial statements.
Sosandar Plc
P a g e | 43
Annual Report 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2022
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
Deferred income tax asset
Total current assets
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Capital Reserves
Other reserves
Reverse acquisition reserve
Retained earnings
Total equity
Current liabilities
Trade and other payables
Lease liability
Total current liabilities
Non current liabilities
Lease liability
Total non current liabilities
Total liabilities
Total equity and liabilities
Notes
9
10
12
14
15
7
17
17
18
19
19
As at 31
March
2022
£’000
As at 31
March
2021
£’000
-
446
446
7,307
2,495
7,048
412
17,262
17,708
198
165
363
2,866
728
3,928
-
7,522
7,885
221
47,089
4,648
912
(19,596)
(22,654)
10,620
192
41,592
4,648
657
(19,596)
(22,512)
4,981
6,761
38
6,799
289
289
2,855
49
2,904
-
-
7,088
17,708
2,904
7,885
The financial statements were approved and authorised for issue by the Board of Directors on 11 July
2022 and were signed on its behalf by:
Julie Lavington
Director
Company Number: 05379931
The notes on pages 50 to 71 form part of these financial statements.
Sosandar Plc
P a g e | 44
Annual Report 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2022
Cash flows from operating activities
Group profit/(loss) before tax
Share based payments
Depreciation and amortisation
Finance 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
Addition of intangibles
Initial direct costs on right of use asset
Bank interest paid
Net cash flow from investing activities
Cash flow from financing activities
Net proceeds from issue of equity instruments
Lease payment
Net cash flow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
(554)
255
317
8
(4,441)
(1,768)
3,906
(2,277)
(36)
-
(18)
(4)
(58)
5,526
(71)
5,455
(3,098)
175
163
10
944
273
261
(1,272)
(34)
(12)
-
(5)
(51)
-
(82)
(82)
3,120
(1,405)
3,928
7,048
5,333
3,928
Notes
17
9, 10
10
9
5
16
19
15
15
The notes on pages 50 to 71 form part of these financial statements.
Sosandar Plc
P a g e | 45
Annual Report 2022
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S
COMPANY STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 MARCH 2022
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
Total equity
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
As at 31
March
2022
£’000
As at 31
March
2021
£’000
Notes
11
13
14
15
16
16
18
6,282
-
6,282
34
3,399
3,433
9,715
221
47,089
912
4,648
(43,207)
9,663
52
52
52
9,715
6,282
-
6,282
38
2,952
2,990
9,272
192
41,592
657
4,648
(37,847)
9,242
30
30
30
9,272
In accordance with the provisions of the Companies Act 2006, the Company has not presented a
statement of profit or loss and other comprehensive income. The Company's loss for the year was
£5,360k (2021: £18,851k loss).
The financial statements were approved and authorised for issue by the Board of Directors on 11 July
2022 and were signed on its behalf by:
Julie Lavington
Director
Company Number: 05379931
The notes on pages 50 to 71 form part of these financial statements.
Sosandar Plc
P a g e | 47
Annual Report 2022
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2022
Cash flows from operating activities
Profit/(loss) before tax
Waiver of 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 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 period
Cash and cash equivalents at end of period
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Notes
13
17
13
16
15
15
(5,360)
4,681
255
4
22
(398)
(18,851)
18,366
175
94
(235)
(451)
(4,681)
(4,681)
(1,416)
(1,416)
5,526
5,526
447
2,952
3,399
-
-
(1,867)
4,819
2,952
The notes on pages 50 to 71 form part of these financial statements.
Sosandar Plc
P a g e | 48
Annual Report 2022
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 General information
Sosandar Plc (formerly Orogen Plc) (the ‘Company’) is a public limited company by shares incorporated
in England and Wales. Details of the registered office, the officers and advisers to the Company are
presented on the Company Information page at the end of this report. The Company is listed on the
AIM market of the London Stock Exchange (ticker: SOS).
The principal activity of the 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 UK
adopted international accounting standards (IFRSs) and as applied in accordance with the provisions
of the Companies Act 2006. The Directors consider that the financial information presented in these
Financial Statements represents fairly the financial position, operations and cash flows for the year,
in conformity with IFRS.
These are the first financial statements prepared under UK adopted international accounting
standards. On 31 December 2020, IFRS as adopted by the European Union, at that date, was brought
into UK law and became UK adopted international accounting standards, with future changes being
subject to endorsement by the UK Endorsement Board. Sosandar plc transitioned to UK-adopted
International Accounting Standards in its consolidated and Company financial statements on 1 April
2021. This change constitutes a change in accounting framework. However, there is no change on
recognition, measurement or disclosure in the financial year reported as a result of the change in
framework.
Going Concern
The Group’s business activities, together with the factors likely to affect its future development,
performance and position, are set out in Chairman’s Statement on pages 2-3. The financial position of
the Group, its cash flows and liquidity position are described in the financial statements and associated
notes. In addition, note 21 to the financial statements includes the Group’s objectives, policies and
processes for managing its capital; its financial risk management objectives; details of its financial
instruments; and its exposures to credit risk and liquidity risk.
In order to assess the going concern of the Group, the directors have reviewed the Group’s bank
balances, cash flows, the annual budgets and forecasts, including assumptions concerning revenue
growth, marketing spend, returns and repeat customers and expenditure commitments and their
impact on cash flow. These cash flow and profit and loss forecasts show the Group expect an increase
in revenue based on the assumptions set out in note 11 of the financial statements. This will have
sufficient headroom over available banking facilities. Management continue to monitor costs and
manage cashflows against these forecasts.
In May 2021, the Group’s cashflow position was strengthened through raising gross proceeds of £5.8
million via a Placing, Subscription and Primary Bid Offer. At 31 March 2022, the Group had a cash
balance of £7.0m and is therefore in a strong position, with sufficient working capital to take
advantage of opportunities in FY2023. This substantiates the view that the Group is a going concern.
Sosandar Plc
P a g e | 50
Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Significant accounting policies (continued)
Going Concern (continued)
The directors continue to monitor the Group’s going concern basis against the backdrop of significant
external events. Whilst Covid 19 still exists, it had significantly less impact on the Group compared
with the prior year and the normal course of business resumed. In addition to this, it was concluded
the Ukraine war has had no material impact on the consumer behaviour. Therefore, despite these
events, the directors confirm that they have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due for the foreseeable future.
Should the underlying assumptions of the working capital model prove invalid and the Group be
unable to continue as a going concern it may be required to realise its assets and discharge its liabilities
other than in the normal course of business and at amounts different to those stated in the financial
statements. The financial statements do not include any adjustments relating to the recoverability and
classifications of recorded asset amounts or liabilities that may be necessary should the Group and
Company be unable to continue as a going concern.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. Accordingly, they continue
to adopt the going concern basis in preparing the financial statements.
Consolidation
The consolidated financial statements include the financial statements of the Company and its
subsidiaries and associated undertakings. Thread 35 Limited has a reporting date of 31 March.
Subsidiaries are all entities over which Sosandar Plc has the power to govern the financial and
operating policies generally accompanying a shareholding of more than one half of the voting rights.
The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Company. They are de-consolidated
from the date that control ceases.
In November 2017, Sosandar Plc (‘Company’) acquired the entire issued share capital of Thread 35 Ltd
(‘legal subsidiary’) for a consideration of £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 acquiree, does not meet the definition of a business
under IFRS 3 ‘Business Combinations’. However, the accounting for such capital transaction should
be treated as a share-based payment transaction and therefore accounted for under IFRS 2 ‘Share-
based payment’. Any difference in the fair value of the shares deemed to have been issued by the
Thread 35 Ltd (accounting acquirer) and the fair value of Sosandar Plc’s (the accounting acquiree)
identifiable net assets represents a service received by the accounting acquirer.
Although the consolidated financial information has been issued in the name of Sosandar Plc, the legal
parent, it represents in substance continuation of the financial information of the legal subsidiary.
The assets and liabilities of the legal subsidiary are recognised and measured in the Group financial
statements at the pre-combination carrying amounts and not restated at fair value.
The retained earnings and other reserves balances recognised in the Group financial statements
reflect the retained earnings and other reserves balances of the legal subsidiary immediately before
Sosandar Plc
P a g e | 51
Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Significant accounting policies (continued)
Consolidation (continued)
the business combination and the results of the period from 1 April 2017 to the date of the business
combination are those of the legal subsidiary only.
The equity structure (share capital and share premium) appearing in the Group financial statements
reflects the equity structure of Sosandar Plc, the legal parent. This includes the shares issued in order
to effect the business combination.
Functional and presentation currency
Items included in the financial statements of the Group are measured using the currency of the
primary economic environment in which the entity operates (the functional currency). The financial
statements are presented in Pounds Sterling (£), 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:
(cid:120) monetary assets and liabilities for each statement of financial position presented are
(cid:120)
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
(cid:120) 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
The accounting policies adopted are consistent throughout the financial period. Standards and
amendments to UK adopted international accounting standards (IFRSs) effective as of 1 April 2021
have been applied by the Group.
There were a number of standards and interpretations which were in issue at 31 March 2022 but were
not effective for periods commencing 1 April 2021 and have not been adopted for these Financial
Statements.
Sosandar Plc
P a g e | 52
Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Significant accounting policies (continued)
Changes in accounting policies and disclosures (continued)
These include:
(cid:120) Amendments to IFRS 3 Business Combinations – change in reference to the conceptual
framework (applicable on or after 1 January 2022)
(cid:120) Amendments to IFRS 17 Insurance Contracts – measurement of insurance liabilities
(applicable on or after 1 January 2023)
(cid:120) Amendments to IAS 1 Presentation of Financial Statements – further disclosure requirements
including additional detail around accounting policies (applicable on or after 1 January 2023)
(cid:120) Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors –
definition of accounting estimates (applicable on or after 1 January 2023)
(cid:120) A number of narrow-scope amendments to IFRS 3, IAS 16, IAS 17, IAS 37 and some annual
improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16 (applicable on or after 1 January 2022)
The Directors have assessed the full impact of these accounting changes on the Company. To the
extent that they may be applicable, the Directors have concluded that none of these pronouncements
will cause material adjustments to the Group’s Financial Statements. They may result in consequential
changes to the accounting policies and other note disclosures. The new standards will not be early
adopted by the Group and will be incorporated in the preparation of the Group Financial Statements
from the effective dates noted above.
The directors anticipate that the adoption of these standards and interpretations in future periods
will have no material effect on the financial statements of the group.
The Directors have taken advantage of the exemption available under Section 408 of the Companies
Act 2006 and not presented an income statement nor a statement of comprehensive income for the
Company alone.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of Financial Statements in conformity with IFRS requires management to make
estimates and judgements that affect the reported amounts of assets and liabilities as well as the
disclosure of contingent assets and liabilities at the year end and the reported amounts of revenues
and expenses during the reporting period. Estimates and judgements are continually evaluated and
are based on historical experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. The key areas identified by the Group are as
follows:
Inventories
Inventories are valued at the lower of cost and net realisable value, on a weighted average cost basis.
Net realisable value is the estimated selling price in the ordinary course of the business less applicable
variable selling expenses. Cost of purchase comprises the purchase price including import duties and
other taxes, transport and handling costs and other attributable costs, less trade discounts.
A provision is made to write down any slow-moving or obsolete inventory to net realisable value.
Sosandar Plc
P a g e | 53
Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Significant accounting policies (continued)
Critical accounting judgements and key sources of estimation uncertainty (continued)
The provision is £761k at 31 March 2022 (2021: £665k). A difference of 1%pt in the provision as a
percentage of gross inventory would give rise to a difference of +/- £81k in gross profit (2021: +/-
£35k).
Contract liabilities - refund accruals
Accruals for sales returns are estimated on the basis of historical returns and are recorded so as to
allocate them to the same period in which the original revenue is recorded. These accruals are
reviewed regularly and updated to reflect management’s latest best estimates, although actual
returns could vary from these estimates. The accrual for refunds totalled £2,029k (2021 refund
accrual: £726k) and a right to returned goods asset recognised of £814k (2021: £311k). A performance
obligation is deemed for returns and refunds. A 14 days return policy is noted for a full refund through
Sosandar.com and up to 30 days on third party retailer websites. A difference of 1%pt in the sales
returns rate have an impact of +/- £92k (2021: +/- £53k) on the refund provision, and +/- £38k (2021:
+/- £21k) on the right to returned goods asset.
Calculation of share-based payment charges
The charge related to equity-settled transactions with employees is measured by reference to the fair
value of the equity instruments at the date they are granted, using an appropriate valuation model
selected according to the terms and conditions of the grant. Judgement is applied in determining the
most appropriate valuation model and in determining the inputs to the model. Judgements are also
applied in relation to estimations of the number of options which are expected to vest, by reference
to historic leaver rates and expected outcomes under relevant performance conditions. Please see
note 18.
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 10 and 11.
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 at the point where legal title in the goods passes from the Group to the
customer. This includes the price paid for the goods as well as any delivery charge where
applicable. Typically legal title is passed when the goods are despatched from the warehouse and
as the invoice is created.
Revenue is reported after making deduction for actual and anticipated returns, relevant vouchers
and sales taxes.
No breakdown of revenue can be made in tabular form as all sales are UK and online, with similar
risk profiles.
Sosandar Plc
P a g e | 54
Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Significant accounting policies (continued)
Principal accounting policies (continued)
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. The estimated useful economic life of intangible assets has been
revised to 5 years. For any assets older than this with a net book value at year end, the amortisation
has been accelerated to make the net book value nil at the end of the financial year.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less subsequent accumulated depreciation
and accumulated impairment losses, if any. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the company and the cost of the item can be measured reliably. All other repairs and maintenance
are charged to profit or loss during the financial period in which they are incurred.
Depreciation on property, plant and equipment is calculated using the straight-line method to write
off their cost over their estimated useful lives at the following annual rates:
15% Straight line
Plant and Machinery
33.33% Straight line
Computer Equipment
15% Reducing balance
Fixture and Fittings
25% Reducing balance
Office Equipment
20% Straight line
Leasehold Improvements
Right of Use Asset 20% Straight line
On 1 February 2022, the Group entered into a new lease. The corresponding right of use asset is
depreciated over the life of the lease at 20% per annum.
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.
Government grants
Grants are recognised only when there is reasonable assurance that the Group will comply with the
conditions attached to them and that the grants will be received. Any grants that are receivable as
Sosandar Plc
P a g e | 55
Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Significant accounting policies (continued)
Principal accounting policies (continued)
compensation for expenses already incurred are recognised in profit or loss in the period in which
they become receivable.
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.
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.
Sosandar Plc
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Significant accounting policies (continued)
Principal accounting policies (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 taking into account
conditions attached to the vesting and exercise of the equity instruments. The expected life used in
the model is adjusted; based on management’s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations. The share price volatility percentage factor used
in the calculation is based on management’s best estimate of future share price behaviour and is
selected based on past experience, future expectations and benchmarked against peer companies in
the industry.
Pension costs
The Group contributes to a defined contribution scheme for employees. The costs of these
contributions are charged to the statement of comprehensive income on an accruals basis as they
become payable under the scheme rules.
Investments
Investments in subsidiary companies are stated at cost less any provision for impairment.
Investments are accounted for at cost unless there is evidence of a permanent diminution in value, in
which case they are written down to their estimated realisable value. Any such provision, together
with any realised gains and losses, is included in the statement of comprehensive income.
Impairment of investments
The impairment of the carrying value of the investment in subsidiaries is calculated using forward-
looking assumptions of profit growth rates, discount rates and timeframe which require management
Sosandar Plc
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Significant accounting policies (continued)
Principal accounting policies (continued)
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.
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
Sosandar Plc
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Significant accounting policies (continued)
Principal accounting policies (continued)
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.
Sosandar Plc
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Significant accounting policies (continued)
Principal accounting policies (continued)
Leases
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease
liabilities include the net present value of the following lease payments:
(cid:120)
fixed payments (including in-substance fixed payments), less any lease incentives receivable
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be
determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would
have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability
(cid:120)
(cid:120) any lease payments made at or before the commencement date less any lease incentives
received
(cid:120) any initial direct costs, and
(cid:120)
restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a
straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12
months or less. Low-value assets comprise IT-equipment and small items of office furniture less than
£5k.
3 Other operating income
The Group did not receive any government grants through the Furlough scheme during the year
(2021: £135k).
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
Foreign currency (gain)/loss
Share based payment
5 Finance cost
Interest on the lease
Other interest
Total
31 March
2022
£'000
31 March
2021
£'000
24
44
-
167
48
255
47
32
4
105
(33)
175
31 March
2022
£'000
4
4
8
31 March
2021
£'000
5
5
10
Sosandar Plc
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6 Employees
Aggregate Directors’ emoluments including consulting fees
Wages and salaries
Social security costs
Pension costs
Share-based payments
Total
Directors
Staff
Total
Directors’ remuneration
31 March
31 March
2022
£'000
629
1,641
230
94
255
2,849
2021
£'000
414
1,324
175
72
175
2,160
31 March
2022
£'000
8
45
53
31 March
2021
£'000
7
34
41
Details of emoluments received by Directors of the Company for the year ended 31 March 2022 are
as follows:
2022
Base Salary
2022
Pensions
2022
Total
£
£
£
172,500
172,500
119,750
28,500
39,750
39,000
28,500
28,500
13,800
13,800
8,382
-
-
-
-
-
186,300
186,300
128,132
28,500
39,750
39,000
28,500
28,500
2021
Total
£
145,800
145,800
63,344
24,000
24,000
48,000
24,000
24,000
629,000
35,982
664,982
498,944
Alison Hall
Julie Lavington
Steve Dilks
Nicholas Mustoe
Bill Murray
Adam Reynolds
Mark Collingbourne
Andrew Booth
Total
Details of the share options held by each Director can be found in the Group Directors’ Report on
page 34.
Sosandar Plc
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7 Income tax
a) Analysis of charge in the period
Current tax
UK corporation tax based on the profit/loss for the period
Adjustment in respect of prior periods
Total current tax charge/(credit)
Deferred tax
Origination and reversal of timing differences
Total deferred tax charge/(credit)
b) Factors affecting the tax charge for the period
Loss on ordinary activities before taxation
Tax at the UK corporation tax rate of 19% (2021: 19%)
Expenses not deductible for tax purposes
Losses unutilised
Adjustments to losses
Fixed asset differences
Remeasurement of deferred tax for changes in tax rates
Movement in deferred tax not recognised
Tax on loss on ordinary activities
31 March
2022
£'000
-
-
-
31 March
2021
£'000
-
-
-
(412)
(412)
-
-
31 March
2022
£'000
(554)
(105)
31 March
2021
£'000
(3,098)
(589)
60
-
1
(2)
(1,256)
890
(412)
15
581
-
(7)
-
-
-
On 3 March 2021, it was announced that the UK corporation tax rate will increase to 25% from 19%,
effective from 1 April 2023. The deferred tax asset recognised in the accounts has been calculated
using the current year tax rate of 19% (2021: 19%). The unrecognised deferred tax asset amounts to
£4,692,886 (2021: £3,970,000) and has been calculated at the tax rate of 25%.
The deferred tax asset has been recognised due to the expectation that it will be reversed in future
years.
Sosandar Plc
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8 Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing the loss attributable to equity shareholders by
the weighted average number of ordinary shares in issue during the year:
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 earnings/(loss) per share (pence)
31 March
2022
(142)
216,844,739
216,844,739
(0.07)
31 March
2021
(3,098)
192,268,110
192,268,110
(1.61)
Where a loss is incurred the effect of outstanding share options and warrants is considered anti-
dilutive and is ignored for the purpose of the loss per share calculation. For the prior year loss per
share, the share options outstanding as at 31 March 2021 totalled 20,217,698 and were potentially
dilutive.
9 Intangible assets – Group
Cost
At 1 April 2020
Additions
At 31 March 2021
Amortisation
At 1 April 2020
Charge for the year
At 31 March 2021
Carrying value 31 March 2021
Cost
At 1 April 2021
Additions
Disposals
At 31 March 2022
Amortisation
At 1 April 2021
Charge for the year
Disposals
At 31 March 2022
Carrying value 31 March 2022
Website
£’000
Trademark
£’000
Total
£’000
218
10
228
20
11
31
197
228
-
-
228
31
197
-
228
-
-
2
2
-
1
1
1
2
-
-
2
1
1
-
2
-
218
12
230
20
12
32
198
230
-
-
230
32
198
-
230
-
Sosandar Plc
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10 Property, plant and equipment – Group
Computer
Equipment
£’000
Fixtures and
fittings
equipment
£’000
Right of
use asset
Total
£’000
£’000
Cost
At 1 April 2020
Additions
At 31 March 2021
Accumulated depreciation
At 1 April 2020
Charge for year
At 31 March 2021
Carrying value 31 March 2021
Cost
At 1 April 2021
Additions
At 31 March 2022
Accumulated depreciation
At 1 April 2021
Charge for year
At 31 March 2022
Carrying value 31 March 2022
86
7
93
279
27
306
192
557
- 34
591
192
33
25
58
35
167
51
218
88
75
75
150
42
275
151
426
165
93
30
123
306
6
312
192
364
556
591
400
991
58
27
85
38
218
38
256
56
150
54
204
352
426
119
545
446
11 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
Impairment at 31 March
Carrying value as at 31 March
Group
Company
2022
£’000
-
-
-
-
-
-
-
2021
£’000
-
-
-
-
-
-
-
2022
£’000
6,282
-
6,282
-
-
-
6,282
2021
£’000
6,282
-
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 2022 was assessed on the basis of value in use. As this
exceeded carrying value no impairment loss was recognised.
The key assumptions in the calculation to access value in use are the future revenues and the ability
to generate future cash flows. The most recent financial results and forecast approved by
management were for the next 9 years and included terminal value. The projected results were
discounted at a rate which is a prudent evaluation of the pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the cash-generating unit.
Sosandar Plc
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11 Non-current assets (continued)
The key assumptions used for the value in use calculation in 2022 were as follows:
Discount rate
Returns assumption
Compound annual revenue growth rate
%
11
45
20
The Directors have made significant estimates on future revenues and EBITDA growth in future years
based on the budgeted investment and expansion of our clothing and footwear ranges, increased
stocking levels and continued investment in marketing channels to acquire new customers.
The Directors have performed a sensitivity analysis to assess the impact of downside risk of the key
assumptions underpinning the projected results of the Group. The projections and associated
headroom used for the Group is sensitive to the EBITDA growth assumptions that have been applied.
The subsidiaries of Sosandar Plc are as follows:
Subsidiary companies
Incorporation
Holding
Type of share held
%
Holding
2022
%
Holding
2021
Thread 35 Limited
UK
Direct
Ordinary shares
100
100
12 Inventories – Group
Stock – finished goods
Right to returned stock
Total
31 March
2022
£'000
6,493
814
7,307
31 March
2021
£'000
2,555
311
2,866
The cost of inventories charged in the year as an expense equated to £12,962k (2021: £6,319k).
Right to returned stock relates to the cost of products sold in the financial year but expected to be
returned after the financial period.
13 Loans to subsidiaries
Loan to subsidiary
Group
Company
2022
£’000
-
2021
£’000
-
2022
£’000
-
2021
£’000
-
The loan made to Thread 35 Limited by Sosandar Plc of £4,681,346 (2021: £18,366,142) was waived
at the year end. The interest due on this loan was waived at the start of the year and subsequently,
no further amounts are due between the two entities.
Sosandar Plc
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14 Trade and other receivables
Trade receivables
VAT recoverable
Other receivables and prepayments
Trade and other receivables
Group
Company
2022
£’000
1,683
16
796
2,495
2021
£’000
305
18
405
728
2022
£’000
-
16
18
34
2021
£’000
-
18
20
38
The Directors consider that the carrying amount of trade and other receivables approximates their
fair value.
15 Cash and cash equivalents
Cash at bank
Group
Company
2022
£’000
7,048
2021
£’000
3,928
2022
£’000
3,399
2021
£’000
2,952
16 Share capital and reserves
Details of ordinary shares issued are in the table below:
Ordinary Shares (£0.01)
Number of
shares
Issue
Price
£
192,268,122 0.001
28,840,210 0.001
300,000 0.001
Total Share
Capital
£’000
192
29
-
221,408,332 0.001
221
Total Share
Premium
£’000
41,592
5,739
45
(287)
47,089
At 31 Mar 2021
Shares issued: Fundraise May 21
Shares issued: Warrants exercised Dec 21
Direct costs: Fundraise May 21
At 31 Mar 2022
17 Share based payments
Share option plans
The Group has a share ownership compensation scheme for Directors and senior employees of the
Group. On 2nd November 2017 share options over ordinary shares of 15.1p were issued with a further
issue over ordinary shares of 29.1p issued on 25th February 2019. On 21 June 2021 the Group
announced the establishment of a new Long Term Incentive Plan in which it granted new nil cost
options totalling 21,431,942 ordinary shares of 0.1 pence each to its executive directors and members
of the senior management team. Some of the existing options granted, totalling 13,888,742 ordinary
shares, were modified as part of these arrangements. There was no incremental fair value because of
this modification.
17 Share based payments (continued)
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The options are settled in equity once exercised. If the options remain unexercised for a period after
ten years from the date of grant, the options expire.
Details of the number of share options and the weighted average exercise price (“WAEP”)
outstanding during the period are as follows:
Outstanding at 31 March 2021
Modifications in the year
Issuances in the year
Cancellations in the year
Outstanding at 31 March 2022
31 March 2022
31 March 2021
Number (‘000)
20,218
(13,889)
11,789
9,643
-
27,761
WAEP £
0.154
0.154
0.000
0.000
-
0.035
Number (‘000) WAEP £
0.155
20,400
-
-
-
(182)
20,218
-
0.265
0.154
Exercisable at 31 March 2022
14,682
0.035
13,502
0.154
The options outstanding at 31 March 2022 had a weighted average exercise price of £0.035 and a
weighted average remaining contractual life of 8.59 years.
The fair values of options granted prior to 2021 were calculated using the Black Scholes pricing
model. The fair values of the options granted in June 2021 were calculated using the Monte Carlo
model. The Group used historical data to estimate expected period to exercise, within the valuation
model. Expected volatilities of options outstanding granted prior to the Company’s admission to AIM
were based on implied volatilities of a sample of listed companies based in similar sectors. The risk-
free rate for the expected period to exercise of the option was based on the UK gilt yield curve at the
time of the grant.
The Group recognised a charge of £255k (2021: £175k) related to equity-settled share-based payment
transactions during the year.
The assumptions used in the valuation of the options at the grant date are as follows. There were no
new share issues in the year.
Share options
2022
0.0p
23.75p
0.25%
42%
5 years
0.13
Share options
2020
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
Exercise price
Share price at date of grant
Risk-free rate
Volatility
Expected Life
Fair Value
18 Trade and other payables
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Trade payables
Accruals
Other payables
VAT payable
Contract liabilities
Deferred income
Trade and other payables
19 Leases
Group
Company
2022
£’000
2,869
656
269
856
2,029
82
6,761
2021
£’000
1,110
405
12
529
726
73
2,855
2022
£’000
22
30
-
-
-
2021
£’000
3
27
-
-
-
52
30
The Group has a property lease contract which is used in its day to day operations.
Lease liability brought forward
Additions
Finance cost
Lease payments
Lease liability recognised in statement of financial position
Of which
Current lease liabilities
Non-current lease liabilities
Lease liability recognised in statement of financial position
31 March
2022
£’000
49
345
4
(71)
327
31 March
2021
£’000
126
-
6
(83)
49
31 March 31 March
2021
£’000
2022
£’000
38
289
327
49
-
49
The lease has a term of five years with a break clause after three years. On 1 April 2022, the Group
entered into a second property lease in Wilmslow, England in order to expand its office space.
20 Related party transactions
During the year to 31 March 2022 the Group was charged £39,000 (2021: £48,000) for services
provided by Reyco Limited, a company controlled by A Reynolds. There was no amount outstanding
at the balance sheet date (2021: £nil).
During the year to 31 March 2022 the Group was charged £28,500 (2021: £24,000) for services
provided by Morrison Kingsley Consultants Limited, a company controlled by M Collingbourne. There
was £3,040 outstanding at the balance sheet date (2021: £nil).
20 Related party transactions (continued)
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
During the year to 31 March 2022 the Group was charged £39,750 (2021: £24,000) for services
provided by Bill Murray and Associates, a company controlled by B Murray. There was no amount
outstanding at the balance sheet date (2021: £nil).
During the year to 31 March 2022 the Group was charged £28,500 (2021: £24,000) for services
provided by N Mustoe. There was £10,000 outstanding at the balance sheet date (2021: £nil).
During the year to 31 March 2022 the Group was charged £28,500 (2021: £24,000) for services
provided by Skale Limited, a company controlled by A Booth. There was £3,000 outstanding at the
balance sheet date (2021: £nil).
During the year to 31 March 2022, a management fee of £166,302 (2021: £157,946) was waived in
line with the intercompany loan.
During the year to 31 March 2022, interest of £nil (2021: £nil) was charged to Thread 35 Limited
relating to the intercompany loan as a result of the waiving of the loan and interest by the Company.
The Company’s intercompany loan receivable balance from Thread 35 Limited at the year-end was
£nil (2021: £nil).
21 Financial instruments – risk management
In common with all other businesses, the Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group’s objectives, policies and processes for managing those
risks and the methods used to measure them. Further quantitative information in respect of these
risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its
objectives, policies and processes for managing those risks or the methods used to measure them
from previous periods unless otherwise stated in this note.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives
and policies and, whilst retaining responsibility for them it has delegated the authority for designing
and operating processes that ensure the effective implementation of the objectives and policies to
the Group’s finance function. The Board receives regular updates from the management team
through which it reviews the effectiveness of the processes put in place and the appropriateness of
the objectives and policies it sets. The overall objective of the Board is to set policies that seek to
reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. The
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:
21 Financial instruments – risk management (continued)
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cash flow interest rate risk
The Group is exposed to cash flow interest rate risk from its deposits of cash and cash equivalents with
banks. The cash balances maintained by the Group are proactively managed in order to ensure that
attractive rates of interest are received for the available funds but without affecting the working
capital flexibility the Group requires. The Group is not at present exposed to cash flow interest rate
risk on borrowings as it has no debt. No subsidiary company of the Group is permitted to enter into
any borrowing facility or lease agreement without the prior consent of the Company.
Foreign exchange risk
Foreign exchange risk may arise because the Group purchases stock in currencies other than the
functional currency.
The Group monitors whether there is a requirement for foreign currency on a monthly basis. The
Group considers this policy minimises any unnecessary foreign exchange exposure.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital; it is the risk that the Group will
encounter difficulty in meeting its financial obligations as they fall due. The principal obligations of the
Group arise in respect of committed expenditure in respect of its stock purchases and design. The
Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its obligations
when they become due. To achieve this aim, it seeks to maintain readily available cash balances (or
agreed facilities) to meet expected requirements and to raise new equity finance if required for future
development or expansion.
The Board receives cash flow projections on a monthly basis as well as information on cash balances.
The Board will not commit to material expenditure in respect of its ongoing commitments prior to
being satisfied that sufficient funding is available to the Group to finance the planned programmes.
For cash and cash equivalents, the Company only uses recognised banks with medium to high credit
ratings.
The maturity of borrowings and other financial liabilities (representing undiscounted contractual cash-
flows) is as follows:
Group
Company
As at 31 March 2022
Trade and other payables
Lease liabilities
Total
As at 31 March 2021
Trade and other payables
Lease liabilities
Total
Within 1
year 1-2 years
£’000
£’000
6,761
38
6,799
Within 1
year
£’000
- 52
-
289
52
289
1-2 years
£’000
-
-
-
Group
Company
Within 1
year 1-2 years
£’000
£’000
2,855
49
2,904
Within 1
year
£’000
- 29
-
-
- 29
1-2 years
£’000
-
-
-
21 Financial instruments – risk management (continued)
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Annual Report 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financial assets
At the reporting date, the Group held the following financial assets, all of which were classified as
financial assets at amortised cost:
Cash and cash equivalents
Trade & other receivables
Total
Group
31 March 31 March
2021
£’000
3,928
728
4,656
2022
£’000
7,048
2,027
9,075
Company
31 March
2022
£’000
3,399
34
3,433
31 March
2021
£’000
2,952
38
2,990
Financial liabilities
At the reporting dates, the Group held the following financial liabilities, all of which were classified
as other financial liabilities at amortised cost:
Trade payables
Accruals
Other payables
VAT payable
Contract liabilities
Lease liabilities
Trade and other payables
Group
31 March 31 March
2021
£’000
1,110
405
12
529
726
49
2,831
2022
£’000
2,869
656
269
856
2,029
327
7,006
Company
31 March
2022
£’000
22
30
-
31 March
2021
£’000
3
27
-
-
-
52
-
-
30
Capital risk
The Group’s objectives when managing capital are to safeguard the ability to continue as a going
concern in order to provide returns for shareholders and benefits to other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital.
22 Post balance sheet events
On 1 April 2022, the Group entered into a new lease in Wilmslow, England in order to expand its
office space. On 1 April 2022, the lease liability on the new lease totalled £361k.
On 14 April 2022, Jonathan Wragg was appointed as a Director to the Board.
23 Contingent liabilities
The Company and Group has no contingent liabilities.
24 Ultimate controlling party
There is no ultimate controlling party of the Company.
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Registered office
COMPANY INFORMATION
40 Water Lane,
Wilmslow, Cheshire,
England SK9 5AP
Registered number
05379931, England and Wales
Directors
Bill Murray – Non-Executive Chairman
Alison Hall – Joint CEO
Julie Lavington – Joint CEO
Stephen Dilks - CFO
Adam Reynolds – Non-Executive Director
Andrew Booth – Non-Executive Director
Mark Collingbourne – Non-Executive Director
Nicholas Mustoe – Non-Executive Director
Jonathan Wragg – Non-Executive Director
Mark Collingbourne
Jeffreys Henry LLP
Finsgate
5-7 Cranwood Street
London EC1V 9EE
Singer Capital Markets Advisory LLP
1 Bartholomew Lane
London
EC2N 2AX
United Kingdom
Singer Capital Markets Advisory LLP
1 Bartholomew Lane
London
EC2N 2AX
United Kingdom
Share Registrars Limited
The Courtyard
17 West St
Farnham
GU9 7DR
BPE Solicitors LLP
St. James’ House
St. James’ Square
Cheltenham GL50 3PR
Alma PR
71-73 Carter Lane
London EC4V 5EQ
Secretary
Auditors
Nominated advisor
Broker
Registrars
Solicitors
Public Relations
Sosandar Plc
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