REG - Sosandar PLC - Final Results
11/07/2023 07:00
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RNS Number : 5649F Sosandar PLC 11 July 2023
Date: 11 July 2023
On behalf of: Sosandar plc ('Sosandar' or 'the Company')
Embargoed until: 0700hrs
Sosandar plc
Full Year Results
A milestone year delivering first full year of profitability and laying the
foundations for next stage of growth journey
Sosandar PLC (AIM: SOS), one of the fastest growing fashion brands in the UK
creating quality, trend-led products for women of all ages, is pleased to
announce its financial results for the year ended 31 March 2023 and an update
on trading for Q1 of the current financial year.
FY23 has been a transformational year for Sosandar as the Group delivered a
strong financial performance including increases in both revenue and
profitability despite the challenging macroeconomic conditions. Sosandar has
seen continued progression against its KPIs with growth across all metrics on
its own site and sustained momentum with third party partners.
FY2023 Financial Highlights
· Revenue growth of 44% to £42.5m (FY22: £29.5m)
· First full year of profitability, delivering PBT of £1.6m which is a £2.2m
positive swing versus the previous year (FY22: £0.6m loss)
· Gross margin maintained at 56.1% (FY22: 56.0%) despite growth in revenue
through lower margin wholesale channel
· Net cash of £10.6m as at 31 March 2023 (FY2022: £7.0m) following strong
trading and an oversubscribed fund raise in February 2023
FY2023 Operational and Strategic Highlights
· The Company continues to deliver increasing levels of customer engagement on
Sosandar.com with all KPIs increasing YoY:
o Total orders increased 22% to 621k
o Active customers increased 19% to 265k
o Conversion Rate of 4.11%, up from 3.87% in FY2022
o Average order frequency continues to grow, now at 2.34 times per annum
· The fast-tracked development of key product lines has proven successful with
all identified lines meeting or exceeding expectations with strong sales of
knitwear, formal tailoring, coats and occasion wear
· Trading with our now well-established third-party partners, including Next and
Marks and Spencer, has been extremely strong, with a record quarter for the
Group delivered through third parties in Q3 FY23 followed by a strong Q4
· Successful initial online launch of partnership with J Sainsbury's is
currently performing in line with expectations and the in-store rollout of our
curated collection is on track for launch in September 2023
· Accelerated investment in strategic growth initiatives following a successful
over-subscribed equity fundraise of £5.5m in January 2023
Post-period Trading Highlights
· Strong start to Q1 FY2024 with revenue of £11.4m, up 10% against a strong
prior year comparator, with the impact of strategic initiatives to come
through in H2 FY24
· Global-e to go live in July 2023 allowing the Company to transact and fulfil
orders worldwide in a cost-effective manner
· Current trading in line with market expectations reflecting strong performance
on both own site and through third-party partners
· Product across all categories has continued to resonate with customers with
particularly strong sales of summer occasion wear and holiday clothing
· Mobile app is currently in user testing and is expected to launch in Q2 FY24
· Partnered with Bloomreach, a market leading customer data platform, to deliver
a more bespoke and data driven customer experience with a full launch expected
in July 2023
· Signed a new third-party wholesale partnership with Freemans, part of the Otto
Group, to commence in September 2023
· Cash at 30 June 2023 of £10m, reflecting further investment in inventory and
continued strong trading
* Sosandar believes that market expectations for the year ending 31 March
2024 are currently revenue of £57.0 million, and PBT of £2.8 million.
FY2023 KPIs (Own Site)
Year ended 31 March 2023 Year ended 31 March 2022 Change
£'000
£'000
Sessions 15,091,247 13,141,632 15%
Conversion rate 4.11% 3.87% 24bps
Number of orders 620,977 508,473 22%
AOV £97.27 £90.39 8%
Active customers 264,832 223,253 19%
Average Order Frequency 2.34 2.28 3%
Ali Hall and Julie Lavington, Co-CEOs commented:
"We are delighted to report on what has been a transformational year for
Sosandar. Despite the challenging macroeconomic backdrop, we have seen
increasing demand for our products across all categories with strong trading
across both Sosandar.com and through our third-party partners. The sustained
growth in revenue and profitability throughout the period is testament to our
ability to deliver a unique quality product offering and highly effective
marketing strategy, that resonates with our customer base. Our success to date
would not be possible without the commitment and dedication of our team and we
would like to take this opportunity to extend our appreciation to all of our
staff for their hard work during the year.
As Sosandar continues to grow, we remain committed to investing in our product
range to offer our customers an ever-growing variety of on-trend, affordable,
long lasting, lifestyle appropriate clothes. We are delighted to report that
demand for our fast-tracked product range has continued to increase with
knitwear, formal tailoring, coats, partywear, summer occasion wear and swim
and beach wear all performing particularly well during the year.
Our third-party partnerships continue to perform extremely well and we were
delighted to become an omnichannel retailer through our partnership with
Sainsbury's. The partnership will accelerate growth in our market share and
the awareness of our brand as we provide our large but underserved demographic
with more opportunities to purchase our unique and diverse products. We are
also excited that we will imminently be able to transact and fulfil orders
worldwide through our agreement with Global-e which is set to go live this
month, providing women across the globe with access to our unique and diverse
product range.
The momentum built throughout FY23 has continued into FY24 with current
trading in line with expectations. We are very excited for the opportunity
available to us in FY24 and beyond as we deploy the money raised from our
over-subscribed equity fundraise in January 2023 to support our growth both in
the UK and internationally."
Presentations
Sosandar is hosting a webinar for analysts at 09:00 hrs BST today. If you
would like to register, please contact sosandar@almapr.co.uk
(mailto:sosandar@almapr.co.uk)
The Company is also hosting a webinar for retail investors at 12:30 hrs BST
today. If you would like to attend, please register here:
https://bit.ly/SOS_FY_results_webinar (https://bit.ly/SOS_FY_results_webinar)
Enquiries
Sosandar plc www.sosandar.com (http://www.sosandar.com)
Julie Lavington / Ali Hall, Joint CEOs c/o Alma PR
Steve Dilks, CFO
+44 (0) 20 7496 3000
Singer Capital Markets
Peter Steel / Tom Salvesen / Alaina Wong
Alma PR Limited (Financial PR) +44 (0) 20 3405 0205
Sam Modlin / Matthew Young sosandar@almapr.co.uk (mailto:sosandar@almapr.co.uk)
This announcement contains inside information for the purposes of the retained
UK version of the EU Market Abuse Regulation (EU) 596/2014 ("UK MAR").
About Sosandar plc
Sosandar is one of the fastest growing women's fashion brands in the UK
targeting style conscious women who have graduated from price-led
alternatives. The Company offers this underserved audience fashion-forward,
affordable, quality clothing to make them feel sexy, feminine, and chic. The
business sells predominantly own-label exclusive product designed in-house.
Sosandar's product range is diverse, providing its customers with an array of
choice for all occasions across all women's fashion categories. The company
sells through Sosandar.com and has brand partnerships in place with Next, John
Lewis, Marks & Spencer, The Very Group, JD Williams and J Sainsbury.
Sosandar's strategy is to continue growing brand awareness and expand its
customer database, whilst also further driving its high levels of customer
retention. This is achieved through its exceptional products, seamless
customer experience and impactful, lifestyle marketing activities all of which
is underpinned by combining innovation with data analysis.
Sosandar was founded in 2016 and listed on AIM in 2017. More information is
available at www.sosandar-ir.com (http://www.sosandar-ir.com/)
Chairman's Statement
Introduction
I am pleased to be reporting my first set of results as Chairman of Sosandar.
I took over as Interim Chairman in incredibly sad circumstances following the
sudden death of Bill Murray in February this year. Bill was with Sosandar from
the beginning and played an important part in steering the Group to the great
success it has achieved. He has left a lasting legacy on the business.
FY23 has been a pivotal year for Sosandar and it is pleasing to report a set
of results which demonstrates another period of significant momentum across
all aspects of the business. The Group has delivered substantial increases in
revenue, gross margin and scale economies, whilst also delivering its first
full year of profitability. This performance once again demonstrates the
desirability of the Sosandar product range with our customers and its
managements' ability to steer the business through the challenging backdrop we
have faced.
This outstanding performance has been driven by the continued success across
both our own site as well as our third-party partners. Sosandar.com is the
heart of the Group's success and is the lifestyle hub where customers access
the complete Sosandar experience including the full extent of our diverse
range. This site is continually updated with new product and content and we
are constantly working and investing to ensure that we maintain a seamless
customer experience through this channel. Trading with our now
well-established third-party partners, John Lewis, Marks and Spencer, NEXT,
The Very Group and JD Williams, has been extremely strong, with a record
quarter for the Group delivered through third parties in Q3 FY23 followed by a
strong Q4. In January, we were delighted to secure a new partnership with
another renowned British retailer, J Sainsbury's. This partnership has
elevated our strategy from pureplay to an omnichannel brand and will enable us
to provide our large but underserved demographic with more opportunities to
purchase our unique and diverse products.
Executing the next stage of our growth strategy
In February 2023 we successfully completed an over-subscribed equity fundraise
of £5.5m of net proceeds, with both existing and new investors showing
support for the business and its plans for future growth. These funds will
provide the balance sheet flexibility to enable us to execute our omni-channel
strategy, starting with increasing stock from Autumn/Winter 2023 for the
in-store launch with Sainsbury's, fast-tracking other growth initiatives and
accelerating our proven customer acquisition model.
Despite the strength of the sustained performance over the past two years, we
continue to see a number of opportunities for further growth both on our own
site and through our third-party partners in the coming months and beyond as
we to move forward with our objective to make Sosandar one of the largest
womenswear brands globally. As a result, as previously announced, in order to
prepare for further momentum in FY24, we brought forward investment in some
growth initiatives in the latter part of Q4 FY23 that were originally planned
for FY24. These investments are centred around operations, technology
platforms and international strategy, which will help support and develop the
Group's future growth initiatives.
Nurturing and investing in our team
The Sosandar team is the heartbeat of the business. Our 85 employees
continuously show dedication, creativity, enthusiasm and passion for the
Sosandar brand. The culture that transmits throughout the organisation is
testament to the team that has been built and the performance that we have
delivered over the past year would not have been possible without their
commitment to the Sosandar brand and customers.
As previously announced, in the latter part of Q4 FY23 we further strengthened
Sosandar's operational capabilities in order to ready ourselves for the
opportunities ahead with the recruitment of an Ecommerce Director, Commercial
International Director and Head of Operations. Their significant experience
will help us continue to execute against the next stage of our growth
strategy.
Maintaining effective governance
The Board of Sosandar remains committed to maintaining and enhancing our
corporate governance framework. We have an agile, balanced board, able to make
decisions based upon robust assessment and evaluation, but always in a timely
fashion.
In September 2022, we were delighted to welcome Lesley Watt to the Group's
Board as a Non-Executive Director. Lesley has provided a wealth of knowledge
and experience with her appointment to the board. At the same time, we
announced that Mark Collingbourne would step down from the Board having
supported the Group as Group Finance Director and subsequently as a
Non-Executive Director.
Being a responsible business
As a business we are committed to having a positive impact on our society, the
environment, and our team. We acknowledge there is increasing interest from a
wide range of stakeholders on the various positive impacts that the business
has and what we are doing to improve outcomes. As we continue on our growth
journey, we will further expand our activity, with an ambition to increase the
positive, lasting impact Sosandar has on the fashion industry.
Outlook
The current financial year has started pleasingly, and we are trading in line
with our expectations for full year growth. The investments that were made in
Q4 FY23 are already bearing fruit across the business, and we are making large
strides operationally with the development of our technology platform and
finalising our international strategy. The Sosandar product range continues to
resonate with our customers and we are committed to ensuring that we offer
them a seamless customer experience through all of our sales channels, and
continuing to deliver for all our stakeholders.
Nicholas Mustoe
Chairman
CO-CEO'S STATEMENT
A milestone year
FY23 has been a milestone year for Sosandar. Over the last six years, the
business has grown from a true start-up to what is now a profitable brand
delivering multi-million-pound revenue with clothes being sold in the UK's
biggest retailers.
Sosandar's sustained progress to date is testament to our ability to deliver a
unique quality product offering and highly effective marketing strategy that
resonates with our customer base. We have continued to drive momentum within
the business and the success of our strategy is reflected by the 44% growth in
sales during the period and substantial positive swing of PBT to £1.6m,
marking the first year of profitability for Sosandar. This performance is even
more notable when considering it has been achieved against the backdrop of
some of the most challenging macroeconomic conditions facing the retail sector
in decades.
While we have achieved considerable financial and operational success during
the year, we have not rested on our laurels and in the latter part of Q4 we
took the decision to make investments in order to accelerate our growth
strategy to capitalise on the considerable opportunity available to us in the
market right now and build the infrastructure to start serving our target
customers internationally. These investments have been made possible following
our recent over-subscribed equity fundraise in February 2023 which saw
Sosandar raise £5.5 million of net proceeds from both existing and new
shareholders. We would like to thank all who took part in the raise, and we
are excited to utilise this capital to accelerate investments as we begin the
next phase of our growth journey.
As ever, the growth achieved during the year is a result of the hard work and
dedication of our valued staff and partners. We would like to take this
opportunity to extend our sincere gratitude to everyone who has contributed to
this transformational year for the Group.
While we are so pleased with progress made throughout FY23, it is tinged with
sadness following the sudden passing of our former Chairman, Bill Murray, in
February 2023. Bill will be deeply missed by all of the Sosandar team, and he
has left a lasting legacy on the business.
Our vision and purpose
Our vision is to become one of the largest womenswear brands globally. Our
purpose is to empower women of all ages to feel good in the clothes they wear,
catering to the burgeoning 'ageless' generation. Our incredibly strong
performance has evidenced the success of our strategy to allow women of all
ages to feel sexy and chic through our unique and diverse range of products.
There is an ongoing shift in the consumer mindset towards fashion; women are
leaving behind dated ideas of what they must wear at what age, and instead
embracing clothes that make them feel good, work in their everyday lives and
reflect their individual personalities. Our offering is ideally placed to
cater to this trend.
While our products are trend-led, they are designed to be kept and loved for
years. This is why we invest so highly in quality and fit, reflected in our
price point.
Financial performance
Despite the challenging macroeconomic headwinds impacting the wider retail
sector we have delivered a strong financial performance for the year which
included a record Q3 and a full year revenue increase of 44% to £42.5m. As we
continue to build on the momentum from previous years, we are delighted to
report PBT of £1.6m, a significant positive swing of £2.2m year on year and
first full year of profitability for Sosandar.
The strength of our performance has given us the confidence to accelerate
investment previously anticipated for FY24 in order to capitalise on this
momentum and execute on our growth strategy ahead of plan.
Performance across our own site has continued to go from strength to strength
and drive growth with the number of orders increasing 22% to 620,977 of which
148,382 were from brand new customers and average order value up 8% to £97.27
(FY22: £90.39).
Our net cash balance as at 31 March 2023 was £10.5m (FY22: £4.2m), following
the successful equity fundraise of £5.5 million (net) in February, which will
allow us invest further into FY24.
Our strategy and future objectives
Our strategy is central to the ongoing success and scale of our business and
is spread over four pillars: product, marketing, sales channels, and supply
chain.
1. Expanding our product range
As a clothing brand our product is obviously everything. This is the key
driver to success that makes everything work and our unique product range
continues to resonate very well with our customer base.
As we execute on the next stage of our growth strategy, we have invested
further in the procurement of stock to facilitate demand across both our own
site and third-party partners.
The fast-tracked development of key product lines has proven successful with
all identified lines meeting or exceeding expectations. In particular, during
the Winter season we saw strong sales of knitwear, formal tailoring, coats and
partywear. As we entered the Spring / Summer season the new launch of
categories such as summer occasion wear and swim and beach wear have performed
very well.
2. Refinement of our data-driven marketing strategy
Our highly effective marketing strategy has been a central growth driver for
the Group, delivering both new and repeat customers on our own site and
through our third-party partners. We ensure that our industry-leading strategy
is constantly evolving using data-driven learnings to improve its
effectiveness in reaching an ever-increasing audience. Our strategy is to
acquire high quality customers who will go onto repeat purchase.
We focus on TV advertising, brochures and social media as our three main areas
for marketing investment. Because of our backgrounds in media, we have been
able to develop a strategy that makes all forms of media work from print to
digital, and this has stood us in good stead as we are not reliant on one
channel.
Our brochures are produced brand new at every issue, put together like we
would a magazine with fresh imagery, new product and turned round in a matter
of days so that we can exactly tap into what customers are thinking and
feeling at any moment.
These three areas are then supplemented by our email marketing communications.
The success that we have seen through this channel allows us to deliver such
high repeat orders and retention rates. We believe that we have industry
leading open rates as we use our email database like a Newsdesk.
Post period, we are delighted to announce the launch of our first TV
sponsorship campaign with ITV's weekend breakfast which runs from April
through to September.
3. Driving sales through multiple channels
Sosandar's multi-channel sales strategy has continued to see success with an
outstanding year of trading across both Sosandar.com and our well-established
third-party partners.
Sosandar.com is the anchor of our business and we have seen increases across
all of our KPIs including total number of orders increasing by 22% to 620,977
and the average order value up 8% to £97.27 (FY22: £90.39).
Trading with our now well-established third-party partners, John Lewis, Marks
and Spencer, NEXT, The Very Group and JD Williams, has been extremely strong,
with a record quarter for the Group delivered through third parties in Q3 FY23
followed by a strong Q4.
Throughout the period, the amount of stock allocated to each partner was
increased to meet the rising demand generated through these channels.
In January, we were delighted to announce our decision to become an
omnichannel retailer as we entered into an agreement to sell a curated
collection of products through J Sainsbury's. Initially, Sosandar products
began selling with Sainsbury's online in March 2023 and have been performing
in line with expectations. The rollout of Sosandar's products across a number
of selected stores is expected in August 2023 and in time for the important
Autumn/Winter season. This expansion instore will elevate our business and
will enable us to provide our large but underserved demographic with more
opportunities to purchase our unique and diverse products. We expect this
partnership to deliver a significant combined contribution in the current
financial year and beyond.
4. An agile, resilient supply chain
The importance of a diversified, flexible supply base and having partners with
expertise in this area, has always been at the heart of our operation. We are
an agile business, allowing us to continually adjust our product offering,
warehousing and fulfilment operations in line with the ever-changing needs of
our customers.
Fostering strong, long-term relations with a number of manufacturers in
different territories and pivoting rapidly between transport methods has been
the key to our success and is vital to achieving our desired scale.
Accelerated investment in growth initiatives
The market opportunity available to Sosandar in the UK and internationally is
significant and in order to position the Group to fully capitalise on this,
the Board accelerated investment in growth initiatives in the latter part of
Q4 FY23 that were originally planned for FY24. To facilitate this, in February
2023 we successfully completed an over-subscribed equity fundraise of £5.5m
(net) with support from current and new investors to enable future growth.
This capital will significantly support and develop the Group's future growth
initiatives and allow us to boost our customer acquisition strategy and
ultimately increase market share.
1. Operational enhancements
Operationally, these investments have included the strategic hiring of an
ecommerce Director, Commercial International Director and Head of Operations
which will significantly enhance our operational capabilities and provide the
infrastructure to scale to meet the market demand for Sosandar's products.
While originally planned for FY24, we have been fortunate to find the right
people to fill these positions and their significant experience will help the
Group continue to execute its growth strategy as it enters into its next phase
of development and invests for future growth.
2. Technology platforms
Ensuring that our technology is constantly evolving is an integral part of
allowing the increasing number of Sosandar customers to effectively engage
with brand online and avail of our expanded product offering. To facilitate
this further, we have commenced the development of a mobile app which will
launch in Q2 FY24.
Sosandar.com is the anchor of our business and we make sure that it is
constantly improving to increase user experience and make it more accessible
for current and new customers. As such, we have invested in personalisation
and segmentation tools to enable further progression customer acquisition,
retention, order frequency and average order value, as well as build the
infrastructure to take advantage of international opportunities.
3. International strategy
The opportunity available for Sosandar both in the UK and internationally is
vast and as we progress into the next stage of our growth journey, we are
exploring and researching opportunities to serve this targeted international
customer base whilst remaining conscious of managing costs and implementation
risk.
As part of this strategy, we are delighted to announce that we have signed an
agreement with Global-e, the world's leading platform to enable and accelerate
global, direct-to-consumer, cross-border ecommerce, that will allow us to
transact and fulfil orders worldwide in a cost-effective manner. This
agreement is expected to go live in Q2 FY24 and will mark a notable milestone
for the Group as it increases market share across the globe.
Outlook
The sustained momentum across Sosandar, with growth in revenue and
profitability delivered in FY23, is testament to our ability to provide a
unique quality product offering and highly effective marketing strategy that
resonates with our customer base. However, we are not resting on our laurels
and are committed to constantly evolving.
FY24 has started well, and we are trading in line with full year expectations.
We have continued to see growth across all product ranges with particular
success in our summer occasion wear and beach and swim ranges. As such, we are
going to be launching our biggest ever occasion wear range in time for the key
trading period towards Christmas and will also stock beach and swim wear all
year round to cater for all of our customers' needs at any time of the year.
Looking ahead, in Q2FY24 we expect to launch our mobile app after the user
testing process is completed and are finalising our international strategy
which will run in conjunction with our agreement with Global-e, both of which
will enable us to increase our market share and offer our customers more ways
to shop with Sosandar. Our in-store launch with J Sainsbury's continues to
progress to plan and is expected to launch in selected stores in August 2023
and in time for the important Autumn/Winter season.
This expansion instore will elevate our business and will enable us to provide
our large but underserved demographic with more opportunities to purchase our
unique and diverse products. We expect this partnership to deliver a
significant combined contribution in the current financial year and beyond.
Whilst we are trading well and have not had any material disruption to date,
we remain vigilant to the external challenges including inflationary pressures
on consumer spending and believe our agile approach and understanding of our
customers positions us well.
We are extremely excited about the next stage of our growth journey as we take
the Sosandar brand to more customers across the globe and continue on our
journey to become one of the largest womenswear brands globally.
Ali Hall & Julie Lavington
Co-CEO's
FINANCIAL REVIEW
KPI's
Year ended 31 March 2023 Year ended 31 March 2022 Change
£'000
£'000
Revenue £42,451 £29,458 44%
Gross Profit £23,837 £16,496 45%
Gross Margin 56.15% 56.00% 15bps
Administrative Expenses £22,200 £17,042 30%
Profit / (Loss) before tax £1,597 (£554) 388%
EBITDA* £1,872 (£229) 917%
Year ended 31 March 2023 Year ended 31 March 2022 Change
£'000
£'000
Sessions 15,091,247 13,141,632 15%
Conversion rate 4.11% 3.87% 24bps
Number of orders 620,977 508,473 22%
AOV £97.27 £90.39 8%
Active customers ** 264,832 223,253 19%
Average Order Frequency *** 2.34 2.28 3%
*EBITDA is calculated as profit before tax less interest, depreciation and
amortisation
** Active customers is the number of individual customers who purchased from
Sosandar.com in the last 12 months
*** Average Order Frequency is the total number of orders in the last 12
months divided by the number of active customers
The Group has had a milestone year in terms of growth, resulting in the first
full year of profitability, with PBT of £1.6m which is a £2.2m positive
swing versus the previous year. All KPI's have moved positively on
Sosandar.com and results through our growing number of third-party
partnerships continuing to go from strength to strength.
The performance is particularly pleasing given it has been delivered against a
backdrop of macro-economic challenges which increased throughout the year.
Our agility and underlying approach to spreading risk across our business has
enabled us to thrive in spite of these challenges including supply chain
disruption and inflationary pressures.
The oversubscribed equity raise of £5.5m (net) in February 2023 will enable
the business to invest further in its many growth opportunities including the
first move into bricks & mortar through the partnership with J Sainsburys
from the autumn season. The balance sheet strength will allow us to take
advantage of further opportunities as and when these arise.
Revenue up +44% to £42.5m
The substantial growth in revenue reflects the ever-growing demand for
Sosandar product with incredibly strong performance from both Sosandar.com and
through third-party web platforms.
Revenue each quarter increased during the year with Q1, Q2 and Q3 setting new
all-time records and even the traditionally quieter Q4 being strong with the
month of March being +32% up on the previous year.
Gross Margin +15bps to 56.15%
Gross Margin improved compared with the prior year to 56.15% despite the
growth in lower gross margin wholesale channel following the launch with The
Very Group, NBrown and J Sainsbury's in March 2023.
Actions taken have continued to deliver gross margin benefits throughout the
year. These have included price increases, improved supplier cost prices
and further efficiencies in inbound freight costs.
Selected price increases were implemented in Q3 to help mitigate the impact of
the weaker Sterling against the Dollar. Minimal price increases have been
implemented since Sosandar was launched and as such, in some product
categories our price points were below comparable brands in the market.
Further benefits have been delivered by the Sosandar buying and sourcing team
with regards to supplier cost prices reflecting increased buying power, larger
quantities being ordered and the increased importance and trust that suppliers
have in the Sosandar brand.
Following the significant change in our inbound freight strategy during FY22,
this has continued to be refined during FY23 resulting in further incremental
benefits. The mix of inbound freight has been balanced between road, air
and sea throughout the year and additional partners have been onboarded to
ensure the best value is delivered by managing methods, routes and vessels for
each shipment.
Administrative Expenses
Total administrative expenses increased by 30% to £22.2m (FY 2022 £17.0m)
compared to a 44% increase in revenue.
As a result, administrative expenses as a percentage of revenue reduced to 52%
(FY2022 58%) reflecting the benefit of scale whilst continuing to invest in
all areas of the business to drive sustained growth in revenue and all KPI's.
Spend on marketing in the year continued to follow a similar strategy to the
previous year with focus on TV, social and brochures with peak months of
investment being where the return on investment is greatest. Overall,
spend increased by 3% year on year with the cost of customer acquisition
remaining below £20 which is really pleasing.
The cost of fulfilment which includes warehousing and customer order delivery
costs increased by 26% compared to the previous year.
From a warehousing perspective, our 3PL partner, GXO (Clipper) have continued
to deliver for our multi-channel customers and have adapted the operation to
manage bulk-order wholesale customer in addition to B2C demand. In Q4,
we onboarded Evri as an additional customer delivery partner, in addition to
Royal Mail in order to give our customer greater choice. This has also
helped to reduce our average cost of delivery, which will yield greater
benefit in FY24.
The largest increase in administrative expenses is from third party
commissions (increased by 59%) which reflects the growth in revenue through
our concession partners (John Lewis, NEXT, Marks and Spencer). The
commission is retained by the concession partner and is reported within
overheads covering all costs of the operation including warehousing and
fulfilment, returns handling, marketing and other operational costs. The
revenue and gross profit figures are therefore undiluted when compared with
trading through Sosandar.com.
Other administrative expense which includes staff costs increased by £1.7m
(52%) compared to the previous year. Headcount increased by 24 during
the year to an average of 78 with a closing headcount of 85 as at March
2023. The investment in people has been across all functions of the
business and has including pivotal roles to equip us to deliver the growth
plans in FY24. Key roles have included an Ecommerce Director, Commercial
International Director, Head of Operations and Head of People.
Statement of Financial Position
The statement of financial position is robust. As at 31 March 2023, the
Group had net assets of £18.4m (FY2022 £10.6m) and a net current asset
position of £17.2m (FY 2022 £10.1m - refer to note 1, deferred tax assets
have been represented as part of non-current assets).
During FY23, the financial position was further strengthened following an
equity raise of £5.5m (net) which will enable the Group to accelerate
concurrent growth initiatives including roll out into stores through the
wholesale arrangement with Sainsbury's and to take advantage of international
opportunities. The strength of the balance sheet which includes a cash
balance of £10.6m (FY2022 £7.0m) and no bank indebtedness will allow for
ongoing investment in inventory to support all sales channels, whilst also
investing in people and technology to ensure the trajectory of growth can be
delivered.
The movements in the statement of financial position reflects the investment
in the business throughout the year, with an increase in inventory to £12.4m
(FY2022 £7.3m).
This includes stock on hand, stock in transit reflecting the higher proportion
of supply coming to the UK via sea and road as well as an increase in the
right to return asset which covers post year end returns.
Trade and other payables increased to £8.4m (FY2022 £6.8m) reflecting the
increase in business scale in the year.
Creditor payment days have continued to move favourably as the Group has
become a more important and trusted customer for our supply partners and
credit insurance is now being available following the sustained strong
financial performance over the last 18 months. Contract liabilities
increased to £2.6m (FY2022 £2.0m) which is as expected and reflects the
growth in provision required for post year end refunds for orders fulfilled
within the year reflecting the year-on-year increase in revenue. Liability
for VAT increased to £1.1m (FY2022 £0.9m) which is due to the increase in
revenue with settlement to HMRC being made quarterly.
Trade and other receivables increased to £2.7m (FY2022 £2.5m) which includes
amounts owing from concession and wholesale customers. No change to
payment terms have been made during the year and all payments have been
received on time and in full.
Non-current assets have increased to £1.7m (FY2022 £0.9m - refer to note 1,
deferred tax assets have been represented as part of non-current assets) being
due to the second office lease taken on in April 2022 to provide the space for
our growing team to be accommodated.
Cashflow
The Group had a net cash position as at 31 March 2023 of £10.6m (FY2022
£7.0m). As highlighted already, the Group's cash position was strengthened
with the fund raise in February 2023 with the proceeds being utilised to:
· accelerate the execution of its omni-channel strategy through further
investment in stock, enabling increased provision of Sosandar's product range
in-store with third party partners including J Sainsbury's from Autumn/Winter
2023 onwards;
· create further balance sheet headroom to fast-track other growth initiatives
as well as enable accelerated investment in the Group's proven customer
acquisition model.
The Group is in a strong position, with sufficient working capital to take
advantage of opportunities in FY24 and beyond.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year ended 31 March 2023
Year ended 31 March Year ended 31 March
2023 2022
Notes £'000 £'000
Revenue 3 42,451 29,458
Cost of sales (18,614) (12,962)
Gross profit 23,837 16,496
Administrative expenses (22,200) (17,042)
Operating profit/(loss) 1,637 (546)
Finance costs 5 (40) (8)
Profit/(loss) before taxation 1,597 (554)
Income tax credit 7 284 412
Group profit/(loss) for the year 1,881 (142)
Other comprehensive income - -
Total comprehensive profit/(loss) for the year 1,881 (142)
Earnings/(loss) per share:
Earnings/(loss) per share - basic, attributable to ordinary equity holders of 8 0.84 (0.07)
the parent (pence)
Earnings/(loss) per share - diluted, attributable to ordinary equity holders 0.74 (0.07)
of the parent (pence)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2023
As at 31 March As at 31 March
2023 2022
Notes £'000 £'000
Assets
Non-current assets
Intangible assets 9 - -
Property, plant and equipment 10 991 446
Deferred income tax asset 1,7 696 412
Total non-current assets 1,687 858
Current assets
Inventories 12 12,361 7,307
Trade and other receivables 14 2,730 2,495
Cash and cash equivalents 15 10,576 7,048
Total current assets 25,667 16,850
Total assets 27,354 17,708
Equity and liabilities
Equity
Share capital 16 248 221
Share premium 16 52,619 47,089
Capital Reserves 4,648 4,648
Other reserves 1,223 912
Reverse acquisition reserve (19,596) (19,596)
Retained earnings (20,773) (22,654)
Total equity 18,369 10,620
Current liabilities
Trade and other payables 18 8,355 6,761
Lease liability 19 148 38
Total current liabilities 8,503 6,799
Non current liabilities
Lease liability 19 482 289
Total non current liabilities 482 289
Total liabilities 8,985 7,088
Total equity and liabilities 27,354 17,708
Consolidated statement of cash flows
For the Year ended 31 March 2023
Year ended 31 March Year ended 31 March
2023 2022
Notes £'000 £'000
Cash flows from operating activities
Group profit/(loss) before tax 1,597 (554)
Adjustments for:
Share based payments 17 311 255
Depreciation and amortisation 9, 10 235 317
Finance costs 40 8
Working capital adjustments:
Change in inventories (5,054) (4,441)
Change in trade and other receivables (235) (1,768)
Change in trade and other payables 1,594 3,906
Net cash flow from operating activities (1,512) (2,277)
Cash flow from investing activities
Addition of property, plant and equipment 10 (400) (36)
Initial direct costs on right of use asset - (18)
Bank interest paid 5 - (4)
Net cash flow from investing activities (400) (58)
Cash flow from financing activities
Gross proceeds from issue of equity instruments 16 5,900 5,813
Costs from issue of equity instruments (343) (287)
Lease payment 19 (117) (71)
Net cash flow from financing activities 5,440 5,455
Net change in cash and cash equivalents 3,528 3,120
Cash and cash equivalents at beginning of year 15 7,048 3,928
Cash and cash equivalents at end of year 15 10,576 7,048
Consolidated statement of changes in equity
For the year ended 31 March 2023
Share capital Share premium Reverse acquisition reserve Capital redemption reserve Retained earnings Other reserves Total
Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 March 2021 192 41,592 (19,596) 4,648 (22,512) 657 4,981
Loss for the year - - - - (142) - (142)
Share-based payments 17 - - - - - 255 255
Issue of share capital 16 29 5,784 - - - - 5,813
Costs on issue of share capital 16 - (287) - - - - (287)
Balance at 31 March 2022 221 47,089 (19,596) 4,648 (22,654) 912 10,620
Profit for the year - - - - 1,881 - 1,881
Share-based payments 17 - - - - - 311 311
Issue of share capital 16 27 5,873 - - - - 5,900
Costs on issue of share capital 16 - (343) - - - - (343)
Balance at 31 March 2023 248 52,619 (19,596) 4,648 (20,773) 1,223 18,369
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital
over the nominal value of those shares net of share issue expenses.
Other reserve relates to the charge for share-based payments in accordance
with International Financial Reporting Standard 2.
Retained earnings represent the cumulative loss of the Group attributable to
equity shareholders.
Reverse acquisition reserve relates to the effect on equity of the reverse
acquisition of Thread 35 Limited.
Capital redemption reserve represents the aggregate nominal value of all the
deferred shares repurchased and cancelled by the Company. The reserve is
non-distributable.
Company statement of Financial Position
For the year ended 31 March 2023
Restated Restated
As at 31 March As at 31 March As at 31 March
2023 2022 2021
Notes £'000 £'000 £'000
Assets
Non-current assets
Investments 11 7,432 7,128 6,878
Loans to subsidiaries 13 - - -
Total non-current assets 7,432 7,128 6,878
Current assets
Trade and other receivables 14 23 34 38
Cash and cash equivalents 15 5,119 3,399 2,952
Total current assets 5,142 3,433 2,990
Total assets 12,574 10,561 9,868
Equity and liabilities
Equity
Share capital 16 248 221 192
Share premium 16 52,619 47,089 41,592
Other reserves 1,223 912 657
Capital redemption reserve 4,648 4,648 4,648
Retained earnings (46,220) (42,361) (37,251)
Total equity 12,518 10,509 9,838
Current liabilities
Trade and other payables 18 56 52 30
Total current liabilities 56 52 30
Total liabilities 56 52 30
Total equity and liabilities 12,574 10,561 9,868
In accordance with the provisions of the Companies Act 2006, the Company has
not presented a statement of profit or loss and other comprehensive income.
The Company's loss for the year was £3,859k (restated 2022: £5,110k loss).
The financial statements were approved and authorised for issue by the Board
of Directors on 7 July 2023 and were signed on its behalf by:
Company statement of Cash Flows
For the year ended 31 March 2023
Restated
Year ended 31 March Year ended 31 March
2023 2022
Notes £'000 £'000
Cash flows from operating activities
Profit/(loss) before tax (3,859) (5,110)
Adjustments for: - -
Share based payments 17 7 5
Working capital adjustments:
Change in trade and other receivables 11 4
Change in trade and other payables 4 22
Net cash flow from operating activities (3,837) (5,079)
Cash flow from financing activities
Net proceeds from issue of equity instruments 16 5,557 5,526
Net cash flow from financing activities 5,557 5,526
Net change in cash and cash equivalents 1,720 447
Cash and cash equivalents at beginning of year 15 3,399 2,952
Cash and cash equivalents at end of year 15 5,119 3,399
Company statement of changes in equity
For the year ended 31 March 2023
Share capital Share premium Other reserves Capital redemption reserve Retained earnings Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 March 2021 192 41,592 657 4,648 (37,847) 9,242
Effect of restatement on opening balance 596 596
Restated Balance at 31 March 2021 192 41,592 657 4,648 (37,251) 9,838
Loss for the year - - - - (5,110) (5,110)
Shares based payments 17 - - 255 - - 255
Issue of share capital 16 29 5,784 - - - 5,813
Costs on issue of share capital 16 - (287) - - - (287)
Restated Balance at 31 March 2022 221 47,089 912 4,648 (42,361) 10,509
Loss for the year - - - - (3,859) (3,859)
Share-based payments 17 - - 311 - - 311
Issue of share capital 16 27 5,873 - - - 5,900
Costs on issue of share capital 16 - (343) - - - (343)
Balance at 31 March 2023 248 52,619 1,223 4,648 (46,220) 12,518
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital
over the nominal value of those shares net of share issue expenses.
Other reserves relate to the charge for share-based payments in accordance
with International Financial Reporting Standard 2. The cumulative share-based
payment expense recognised in the consolidated statement of comprehensive
income is £311k. The cumulative share payment expense recognised in the
parent company statement of comprehensive income is £7k.
Retained earnings represent the cumulative loss of the Company attributable to
the equity shareholders.
Capital redemption reserve represents the aggregate nominal value of all the
deferred shares repurchased and cancelled by the Company. The reserve is
non-distributable.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 General information
Sosandar Plc (the 'Company') is a public limited company by shares
incorporated in England and Wales. Details of the registered office, the
officers and advisers to the Company are presented on the Company Information
page at the end of this report. The Company is listed on the AIM market of the
London Stock Exchange (ticker: SOS).
The principal activity of the Group in the year under review was that of a
clothing manufacturer and distributer via internet and mail order.
The principal activity of the company is that of a holding company.
2 Significant accounting policies
Basis of preparation
The consolidated financial statements consolidate those of the Company and its
subsidiary (together the 'Group' or 'Sosandar'). The consolidated financial
statements of the Group and the individual financial statements of the Company
are prepared in accordance with applicable UK law and UK adopted international
accounting standards (IFRSs) and as applied in accordance with the provisions
of the Companies Act 2006. The Directors consider that the financial
information presented in these Financial Statements represents fairly the
financial position, operations and cash flows for the year, in conformity with
IFRS.
Prior period adjustments
The following table summarises the impact of the prior period adjustment on
the financial statements of the Company. Note that the Group financial
statements are unaffected.
31/03/2022 31/03/2021
Company statement of comprehensive income £'000 £'000
Share based payment 250 596
Increase in profit 250 596
Company statement of financial position
Investments 250 596
Increase in net assets 250 596
The adjustment of £596k shown in restated 2021 relates to the aggregate of
2021 and all years preceding.
The presentation of deferred tax asset has been amended in accordance with IAS
1 paragraph 56 to present deferred tax asset as non-current. £312k has been
reclassified from current assets to non-current assets in the prior year.
Going Concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position, are set out in Chairman's
Statement on pages 2-3. The financial position of the Group, its cash flows
and liquidity position are described in the financial statements and
associated notes. In addition, note 21 to the financial statements includes
the Group's objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial instruments;
and its exposures to credit risk and liquidity risk.
In order to assess the going concern of the Group, the directors have reviewed
the Group's bank balances, cash flows, the annual budgets and forecasts,
including assumptions concerning revenue growth, marketing spend, returns and
repeat customers and expenditure commitments and their impact on cash flow.
These cash flow and profit and loss forecasts show the Group expect an
increase in revenue based on the assumptions set out in note 11 of the
financial statements. This will have sufficient headroom over available
banking facilities. Management continue to monitor costs and manage cashflows
against these forecasts.
In February 2023, the Group's cashflow position was strengthened through
raising net proceeds of £5.5 million via a Placing and Retail Offer. At 31
March 2023, the Group had a cash balance of £10.6m and is therefore in a
strong position, with sufficient working capital to take advantage of
opportunities in FY24. This substantiates the view that the Group is a going
concern.
The directors continue to monitor the Group's going concern basis against the
backdrop of significant external events. Whilst Covid 19 still exists, it had
significantly less impact on the Group compared with the prior year and the
normal course of business resumed. In addition to this, it was concluded the
Ukraine war has had no material impact on the consumer behaviour. During the
financial year, rising inflation and increased interest rates led to a 'cost
of living crisis' in the UK. Whilst at a macro level, these changes are
expected to impact consumer spending, the Group has not experienced a material
downturn in activity with gross margin remaining stable.
Therefore, despite these events, the directors confirm that they have a
reasonable expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due for the foreseeable future.
Should the underlying assumptions of the working capital model prove invalid
and the Group be unable to continue as a going concern it may be required to
realise its assets and discharge its liabilities other than in the normal
course of business and at amounts different to those stated in the financial
statements. The financial statements do not include any adjustments relating
to the recoverability and classifications of recorded asset amounts or
liabilities that may be necessary should the Group and Company be unable to
continue as a going concern.
After making enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going concern
basis in preparing the financial statements.
Consolidation
The consolidated financial statements include the financial statements of the
Company and its subsidiary undertakings; Thread 35 Limited has a reporting
date of 31 March.
Subsidiaries are all entities over which Sosandar Plc has the power to govern
the financial and operating policies generally accompanying a shareholding of
more than one half of the voting rights.
The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group
controls another entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Company. They are de-consolidated from the
date that control ceases.
In November 2017, Sosandar Plc ('Company') acquired the entire issued share
capital of Thread 35 Ltd ('legal subsidiary') for a consideration of
£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 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:
· monetary assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of that statement of
financial position;
· income and expenses for each income statement are translated at average
exchange rates (unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the rate on the dates of the
transactions); and
· all resulting exchange differences are recognised as a separate component of
equity.
On consolidation, exchange differences arising from the translation of the net
investment in foreign operations, and of borrowings and other currency
instruments designated as hedges of such investments, are taken to
shareholders' equity. When a foreign operation is partially disposed of or
sold, exchange differences that were recorded in equity are recognised in the
income statement as part of the gain or loss on sale.
Changes in accounting policies and disclosures
The accounting policies adopted are consistent throughout the financial
period. Standards and amendments to UK adopted international accounting
standards (IFRSs) effective as of 1 April 2022 have been applied by the Group.
Adoption of new and revised standards
During the financial year, the Group has adopted the following new IFRSs
(including amendments thereto) and IFRIC interpretations, that became
effective for the first time.
Standard Effective date, annual period beginning on or after
Reference to the Conceptual Framework (Amendments to IFRS 3 Business 1 January 2022
Combinations)
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 1 January 2022
16)
Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37 1 January 2022
Provisions, Contingent Liabilities and Contingent Assets)
Annual improvements 2018-2020 cycle 1 January 2022
Their adoption has not had any material impact on the disclosures or amounts
reported in the financial statements.
Standards issued but not yet effective:
At the date of authorisation of these financial statements, the following
standards and interpretations relevant to the Group and which have not been
applied in these financial statements, were in issue but were not yet
effective.
Standard Effective date, annual period beginning on or after
Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of 1 January 2023
Financial Statements and IFRS Practice Statement 2 Making Materiality
Judgements)
Definition of Accounting Estimates (Amendments to IAS 8 Accounting Policies, 1 January 2023
Changes in Accounting Estimates and Errors)
Deferred Tax related to Assets and Liabilities arising from a Single 1 January 2023
Transaction (Amendments to IAS 12 Income Taxes)
The Directors have assessed the full impact of these accounting changes on the
Company. To the extent that they may be applicable, the Directors have
concluded that none of these pronouncements will cause material adjustments to
the Group's Financial Statements. They may result in consequential changes to
the accounting policies and other note disclosures. The new standards will not
be early adopted by the Group and will be incorporated in the preparation of
the Group Financial Statements from the effective dates noted above.
The directors anticipate that the adoption of these standards and
interpretations in future periods will have no material effect on the
financial statements of the group.
The Directors have taken advantage of the exemption available under Section
408 of the Companies Act 2006 and not presented an income statement nor a
statement of comprehensive income for the Company alone.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of Financial Statements in conformity with IFRS requires
management to make estimates and judgements that affect the reported amounts
of assets and liabilities as well as the disclosure of contingent assets and
liabilities at the year end and the reported amounts of revenues and expenses
during the reporting period. Estimates and judgements are continually
evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances. The key areas identified by the Group are as follows:
Inventories
Inventories are valued at the lower of cost and net realisable value, on a
weighted average cost basis. Net realisable value is the estimated selling
price in the ordinary course of the business less applicable variable selling
expenses. Cost of purchase comprises the purchase price including import
duties and other taxes, transport and handling costs and other attributable
costs, less trade discounts.
A provision is made to write down any slow-moving or obsolete inventory to net
realisable value.
The provision is £387k at 31 March 2023 (2022: £761k). A difference of 1%pt
in the provision as a percentage of gross inventory would give rise to a
difference of +/- £124k in gross profit (2022: +/- £81k).
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 £2,617k
(2022 refund accrual: £2,029k) and a right to returned goods asset recognised
of £1,113k (2022: £814k). 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 +/- £134k (2022: +/-
£92k) on the refund provision, and +/- £60k (2022: +/- £38k) on the right
to returned goods asset.
Calculation of share-based payment charges
The charge related to equity-settled transactions with employees is measured
by reference to the fair value of the equity instruments at the date they are
granted, using an appropriate valuation model selected according to the terms
and conditions of the grant. Judgement is applied in determining the most
appropriate valuation model and in determining the inputs to the model.
Judgements are also applied in relation to estimations of the number of
options which are expected to vest, by reference to historic leaver rates and
expected outcomes under relevant performance conditions. Please see note 17.
Depreciation of property, plant and equipment and amortisation of other
intangible assets
Depreciation and amortisation are provided to write down assets to their
residual values over their estimated useful lives. The determination of these
residual values and estimated lives, and any change to the residual values or
estimated lives, requires the exercise of management judgement. Please see
notes 9 and 10.
Revenue recognition
Revenue is recognised at the point where legal title in the goods passes from
the Group to the customer. This includes the price paid for the goods as
well as any delivery charge where applicable. Typically legal title is
passed when the goods are despatched from the warehouse and as the invoice is
created.
Revenue is reported after making deduction for actual and anticipated returns,
relevant vouchers and sales taxes.
Revenue is generated both on Sosandar's own website, and through third party
partners. No breakdown of revenue can be made in tabular form as all sales are
UK and online, with similar risk profiles.
Intangible assets
Identifiable development expenditure is capitalised to the extent that the
technical, commercial and financial feasibility can be demonstrated. Costs are
capitalised where the expenditure will bring future economic benefit to the
company.
Amortisation is recognised so as to write off the cost of assets less their
residual values over their useful economic lives. The estimated useful
economic life of intangible assets has been revised to 5 years. For any assets
older than this with a net book value at year end, the amortisation has been
accelerated to make the net book value nil at the end of the financial year.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less subsequent
accumulated depreciation and accumulated impairment losses, if any. Historical
cost includes expenditure that is directly attributable to the acquisition of
the items.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the company and the
cost of the item can be measured reliably. All other repairs and maintenance
are charged to profit or loss during the financial period in which they are
incurred.
Depreciation on property, plant and equipment is calculated using the
straight-line and reducing balance methods to write off their cost over their
estimated useful lives at the following annual rates:
Plant and
Machinery
15% Straight line
Computer
Equipment
33.33% Straight line
Fixture and
Fittings
15% Reducing balance
Office
Equipment
25% Reducing balance
Leasehold Improvements
20%
Straight line
Right of Use
Asset
20% Straight line
Investments
In order to assess the impairment of the investment in the subsidiary, the
Directors use a value in use calculation.
The key assumptions used for the value in use calculation for the year ended
31 March 2023 were as follows:
2023 2022
% %
Discount rate 11 11
Returns assumption 45 45
Compound annual revenue growth rate 20 20
The Directors have made significant estimates on future revenues and EBITDA
growth in future years based on the budgeted investment and expansion of our
clothing and footwear ranges, increased stocking levels and continued
investment in marketing channels to acquire new customers.
The Directors have performed a sensitivity analysis to assess the impact of
downside risk of the key assumptions underpinning the projected results of the
Group. The projections and associated headroom used for the Group is sensitive
to the EBITDA growth assumptions that have been applied.
Equity
Equity instruments issued by the Group are recorded at the value of the
proceeds received, net of direct issue costs, allocated between share capital
and share premium.
Impairment of non-financial assets
At each statement of financial position date, the Group reviews the carrying
amounts of its investments to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if any). Where the asset
does not generate cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to which the
asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised as an expense immediately, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (cash-generating unit) in prior years.
A reversal of an impairment loss is recognised as income immediately, unless
the relevant asset is carried at a revalued amount, in which case the reversal
of the impairment loss is treated as a revaluation increase.
Taxation
Income tax
Income tax expense represents the sum of the tax currently payable and
deferred tax. The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the same income
statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable
or deductible. The Group and Company's liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by
the statement of financial position date.
Deferred tax
Deferred tax is recognised on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, and is accounted for using
the statement of financial position liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference
arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax is reviewed at each statement of financial
position date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realised. Deferred tax is
charged or credited to the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity. Deferred tax assets and liabilities are offset when
there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the
same taxation authority and the Group and Company intends to settle its
current tax assets and liabilities on a net basis.
Share-based compensation
The Group has issues equity-settled share-based payments to employees. The
fair value of the employee and suppliers' services received in exchange for
the grant of the options is recognised as an expense. The total amount to be
expensed over the vesting year is determined by reference to the fair value of
the options granted, excluding the impact of any non-market vesting conditions
(for example, profitability and sales growth targets). Non-market vesting
conditions are included in assumptions about the number of options that are
expected to vest. At each statement of financial position date, the entity
revises its estimates of the number of options that are expected to vest. It
recognises the impact of the revision to original estimates, if any, in the
income statement, with a corresponding adjustment to other reserves within
equity. The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share premium when the
options are exercised.
The fair value of share-based payments recognised in the income statement
taking into account conditions attached to the vesting and exercise of the
equity instruments.
The expected life used in the model is adjusted; based on management's best
estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations. The share price volatility percentage factor used
in the calculation is based on management's best estimate of future share
price behaviour and is selected based on past experience, future expectations
and benchmarked against peer companies in the industry.
Pension costs
The Group contributes to a defined contribution scheme for employees. The
costs of these contributions are charged to the statement of comprehensive
income on an accruals basis as they become payable under the scheme rules.
Investments
Investments in subsidiary companies are stated at cost less any provision for
impairment. Investments are accounted for at cost unless there is evidence of
a permanent diminution in value, in which case they are written down to their
estimated realisable value. Any such provision, together with any realised
gains and losses, is included in the statement of comprehensive income.
Impairment of investments
The impairment of the carrying value of the investment in subsidiaries is
calculated using forward-looking assumptions of profit growth rates, discount
rates and timeframe which require management judgement and estimates that
cannot be certain. Note 11 contains the assumptions made by management.
Provisions
Provisions are recognised when the Group and Company has a present obligation
as a result of a past event, and it is probable that the Group and Company
will be required to settle that obligation. Provisions are measured at the
Directors' best estimate of the expenditure required to settle the obligation
at the statement of financial position date and are discounted to present
value where the effect is material.
Financial instruments
Non-derivative financial instruments comprise investments in equity and debt
securities, trade and other receivables, cash and cash equivalents, loans and
borrowings, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value
plus, for instruments not at fair value through profit or loss, any directly
attributable transactions costs, except as described below. Subsequent to
initial recognition non-derivative financial instruments are measured as
described below.
A financial instrument is recognised when the Group becomes a party to the
contractual provisions of the instrument. Financial assets are derecognised if
the Group's contractual rights to the cash flows from the financial assets
expire or if the Group transfers the financial assets to another party without
retaining control or substantially all risks and rewards of the asset. Regular
purchases and sales of financial assets are accounted for at trade date, i.e.
the date that the Group commits itself to purchase or sell the asset.
Financial liabilities are derecognised if the Group's obligations specified in
the contract expire or are discharged or cancelled.
Fair values
The carrying amounts of the financial assets and liabilities such as cash and
cash equivalents, receivables and payables of the Group and Company at the
statement of financial position date approximated their fair values, due to
the relatively short-term nature of these financial instruments.
Trade payables and other non-derivative financial liabilities
Trade payables and other creditors are non-interest bearing and are measured
at amortised cost.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call with
banks, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the statement of financial position.
Trade and other receivables
Trade and other receivables are recognised initially at transaction price and
subsequently measured at their cost when the contractual right to receive cash
or other financial assets from another entity is established.
Trade receivables are considered past due when they have passed their
contracted due date. Trade receivables are assessed for impairment based upon
the expected credit losses model. The Group applies the IFRS 9 Simplified
Approach to measuring expected credit losses using a lifetime expected credit
loss provision for trade receivables. To measure, expected credit losses on a
collective basis are grouped based on similar credit risk and aging.
Financial assets and liabilities
The Group classifies its financial assets at inception as measured at
amortised cost. The Group classifies its financial liabilities, other than
financial guarantees and loan commitments, as measured at amortised cost.
Management determines the classification of its investments at initial
recognition. A financial asset or financial liability is measured initially at
fair value. At inception transaction cost that are directly attributable to
its acquisition or issue, for an item not at fair value through profit or
loss, is added to the fair value of the financial asset and deducted from the
fair value of the financial liability.
Amortised cost measurement
The amortised cost of a financial asset or financial liability is the amount
at which the financial asset or liability is measured at initial recognition,
minus principal payments, plus or minus the cumulative amortisation using the
effective interest method of any difference between the initial amount
recognised and maturity amount, minus any reduction for impairment.
Fair value measurement
Fair value is the amount for which an asset could be exchanged, or a liability
settled, between knowledgeable, willing parties in an arm's length transaction
on the measurement date. The fair value of assets and liabilities in active
markets are based on current bid and offer prices respectively. If the market
is not active the group establishes fair value by using appropriate valuation
techniques. These
include the use of recent arm's length transactions, reference to other
instruments that are substantially the same for which market observable prices
exist, net present value and discounted cash flow analysis.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or where the group has transferred
substantially all of the risks and rewards of ownership.
In transaction in which the group neither retains nor transfers substantially
all the risks and rewards of ownership of a financial asset and it retains
control over the asset, the group continues to recognise the asset to the
extent of its continuing involvement, determined by the extent to which it is
exposed to changes in the value of the transferred asset. There have not been
any instances where assets have only been partly derecognised. The group
derecognizes a financial liability when its contractual obligation are
discharge, cancelled or expire.
Impairment losses from contracts with customers
The Group assesses at each financial position date whether there is objective
evidence that a financial asset or group of financial assets is impaired. If
there is objective experience (such as significant financial difficulty of
obligor, breach of contract, or it becomes probable that debtor will enter
bankruptcy), the asset is tested for impairment. The amount of the loss is
measured as the difference between the asset's carrying amount and the present
value of the estimated future cash flows (excluding future expected credit
losses that have not been incurred) discounted at the financial asset's
original effective interest rate (that is, the effective interest rate
computed at initial recognition). The carrying amount of the asset is reduced
through use of an allowance account. The amount of loss is recognised in the
Statement of Comprehensive Income.
Leases
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
· fixed payments (including in-substance fixed payments), less any
lease incentives receivable
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be determined, the lessee's incremental borrowing
rate is used, being the rate that the lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
· the amount of the initial measurement of lease liability
· any lease payments made at or before the commencement date less
any lease incentives received
· any initial direct costs, and
· restoration costs.
Payments associated with short-term leases and leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of 12 months or less. Low-value
assets comprise IT-equipment and small items of office furniture less than
£5k.
3 Revenue
The directors have considered the requirement of IFRS 15 with regards to
disaggregation of revenue and do not consider this to be required as the group
only has one operating segment which is retail sales.
The income recognition for delivery receipts, commissions on partner-fulfilled
sales and wholesale revenue are in line with that of retail sales and linked
to dispatch/delivery to customers.
Due to the nature of its activities, the group is not reliant on any
individual major customers.
There is one geographical market being the UK.
4 Operating loss
31 March 2023 31 March 2022
£'000 £'000
Operating loss is stated after charging/(crediting):
Operating lease rentals 86 24
Auditors' remuneration:
Audit fee - group and company 54 44
Legal and other fees 155 167
Foreign currency loss 190 48
Share based payment 311 255
5 Finance cost
31 March 31 March
2023 2022
£'000 £'000
Interest on the lease 40 4
Other interest - 4
Total 40 8
6 Employees
31 March 31 March
2023 2022
£'000 £'000
Aggregate Directors' emoluments including consulting fees 752 629
Wages and salaries 2,571 1,641
Social security costs 353 230
Pension costs 148 94
Share-based payments 311 255
Total 4,135 2,849
31 March 31 March
2023 2022
£'000 £'000
Directors 8 8
Staff 70 45
Total 78 53
Directors' remuneration
Details of emoluments received by Directors of the Group for the year ended 31
March 2023 are as follows:
2023 2023 2023 2023 2022
Base Salary Pensions Other Benefits Total Total
£ £ £ £ £
Alison Hall 199,583 19,633 3,351 222,567 186,300
Julie Lavington 199,583 19,633 3,705 222,921 186,300
Steve Dilks 139,583 10,438 1,757 151,778 128,132
Bill Murray 38,019 - - 38,019 39,750
Nicholas Mustoe 30,692 - - 30,692 28,500
Adam Reynolds 30,000 - - 30,000 39,000
Mark Collingbourne 25,000 - - 25,000 28,500
Andrew Booth 30,000 - - 30,000 28,500
Jonathan Wragg 29,230 - - 29,230 -
Lesley Watt 17,500 - - 17,500 -
Total 739,190 49,704 8,813 797,707 664,982
Details of the share options held by each Director can be found in the Group
Directors' Report on pages 32-33.
The key management personnel are deemed to be the directors.
7 Income tax
a) Analysis of charge in the period
31 March 31 March
2023 2022
£'000 £'000
Deferred tax
Origination and reversal of timing differences (284) (412)
Total deferred tax charge/(credit) (284) (412)
b) Factors affecting the tax charge for the period
31 March 31 March
2023 2022
£'000 £'000
Loss on ordinary activities before taxation 1,597 (554)
Tax at the UK corporation tax rate of 19% (2022: 19%) 303 (105)
Expenses not deductible for tax purposes 60 60
Fixed asset differences (15) (2)
Remeasurement of deferred tax for changes in tax rates (63) (1,256)
Movement in deferred tax not recognised (569) 890
Tax on loss on ordinary activities (284) (412)
The Chancellor confirmed in the Spring Budget on 15 March 2023 that the rate
of corporation tax will increase from 19% to 25% from 1 April 2023, as
originally planned in the 2021 Budget. From the same date a small companies'
rate of 19% will be introduced for companies with profits of £50,000 or less.
The main rate applies to companies with profits over £250,000 and marginal
relief will apply to for profits in between the thresholds.
The unrecognised deferred tax asset amounts to £4,073k (2022: £4,693k) and
has been calculated at the tax rate of 25%.
The deferred tax asset of £696k (2022: £412k) has been recognised due to the
expectation that it will be reversed in future years.
8 Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing the loss
attributable to equity shareholders by the weighted average number of ordinary
shares in issue during the year:
31 March 31 March
2023 2022
Profit / (Loss) after tax attributable to equity holders of the parent 1,881 (142)
(£'000)
Weighted average number of ordinary shares in issue 224,738,344 216,844,739
Fully diluted average number of ordinary shares in issue 252,499,241 216,844,739
Basic earnings/(loss) per share (pence) 0.84 (0.07)
Diluted earnings/(loss) per share (pence) 0.74 (0.07)
Where a loss is incurred the effect of outstanding share options and warrants
is considered anti-dilutive and is ignored for the purpose of the loss per
share calculation. For the prior year loss per share, the share options
outstanding as at 31 March 2022 totalled 27,760,897 and were potentially
dilutive.
9 Intangible assets - Group Website Trademark
Total
£'000 £'000 £'000
Cost
At 1 April 2021 228 2 230
Additions - - -
At 31 March 2022 228 2 230
Amortisation
At 1 April 2021 31 1 32
Charge for the year 197 1 198
At 31 March 2022 228 2 230
Carrying value 31 March 2022 - - -
Cost
At 1 April 2022 228 2 230
At 31 March 2023 228 2 230
Amortisation
At 1 April 2022 228 2 230
At 31 March 2023 228 2 230
Carrying value 31 March 2023 - - -
10 Property, plant and equipment - Group
Computer Equipment Fixtures and fittings equipment Total
Right of use asset Assets under Construction
£'000 £'000 £'000 £'000 £'000
Cost
At 1 April 2021 93 306 192 - 591
Additions 30 6 364 - 400
At 31 March 2022 123 312 556 - 991
Accumulated depreciation
At 1 April 2021 58 218 150 - 426
Charge for year 27 38 54 - 119
At 31 March 2022 85 256 204 - 545
Carrying value 31 March 2022 38 56 352 - 446
Cost
At 1 April 2022 123 312 556 - 991
Additions 68 280 380 52 780
At 31 March 2023 191 592 936 52 1,771
Accumulated depreciation
At 1 April 2022 85 256 204 - 545
Charge for year 34 53 148 - 235
At 31 March 2023 119 309 352 - 780
Carrying value 31 March 2023 72 283 584 52 991
11 Non-current assets
Investments in subsidiaries:
Company
2023 Restated 2022
£'000 £'000
Cost at 1 April 7,128 6,878
Additions during the year 305 250
Cost at 31 March 7,432 7,128
Impairment at 1 April - -
Disposals during the year - -
Impairment at 31 March - -
Carrying value as at 31 March 7,432 7,128
A prior period adjustment was made during the year to take the share-based
payments charge related to employees of Thread 35 Limited through the
subsidiary P&L rather than that of the parent. This was treated as a
capital contribution in the subsidiary and an increase in investment value of
the subsidiary in the parent company.
Investments are tested for impairment at the balance sheet date. There were no
investments held by the group. The recoverable amount of the investment in
Thread 35 Ltd as at 31 March 2023 was assessed on the basis of value in use.
As this exceeded carrying value no impairment loss was recognised.
The key assumptions in the calculation to access value in use are the future
revenues and the ability to generate future cash flows. The most recent
financial results and forecast approved by management were for the next 9
years and included terminal value. The projected results were discounted at a
rate which is a prudent evaluation of the pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the
cash-generating unit.
The key assumptions used for the value in use calculation for the year ended
31 March 2023 are disclosed in note 2, Critical accounting judgements and key
sources of estimation uncertainty on page 53.
The subsidiaries of Sosandar Plc are as follows:
Incorporation % Holding % Holding 2022
2023
Holding
Subsidiary companies Type of share held
UK
Thread 35 Limited Direct Ordinary shares 100 100
The registered office of Thread 35 Limited is 40 Water Lane, Wilmslow, SK9
5AP.
12 Inventories - Group
31 March 31 March
2023 2022
£'000 £'000
Stock - finished goods 11,251 6,493
Right to returned stock 1,110 814
Total 12,361 7,307
The cost of inventories charged in the year as an expense equated to £18,614k
(2022: £12,962k). Right to returned stock relates to the cost of products
sold in the financial year but expected to be returned after the financial
period.
13 Loans to subsidiaries
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Loan to subsidiary - - - -
The loan made to Thread 35 Limited by Sosandar Plc of £26,470k (2022:
£23,047k) was fully impaired at the year end.
14 Trade and other receivables
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Trade receivables 1,973 1,683 - -
VAT recoverable 23 16 23 16
Other receivables 86 329 - -
Prepayments 648 467 - 18
Trade and other receivables 2,730 2,495 23 34
The Directors consider that the carrying amount of trade and other receivables
approximates their fair value.
Trade receivables are considered past due when they have passed their
contracted due date. Trade receivables are assessed for impairment based upon
the expected credit losses model. The Group applies the IFRS 9 Simplified
Approach to measuring expected credit losses using a lifetime expected credit
loss provision for trade receivables. To measure, expected credit losses on a
collective basis are grouped based on similar credit risk and aging.
At 31 March 2023 there were 7 customers who owed in excess of 80% of the total
trade debtor balance. These customers were operating within their credit
terms and the directors do not foresee an increased credit risk associated
with these customers. As such no impairment provision has been recognised on
trade debtors.
Expected credit losses have been recognised in the parent company on the loan
to the subsidiary.
31/03/2023 Note External credit rating Internal credit rating 12 month or lifetime ECL Gross carrying amount Loss allowance Net carrying amount
£'000 £'000 £'000
Loans to subsidiaries 13 N/A Doubtful Lifetime 26,471 (26,471) -
15 Cash and cash equivalents
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Cash at bank 10,577 7,048 5,119 3,399
16 Share capital and reserves
Details of ordinary shares issued are in the table below:
Ordinary Shares (£0.01)
Number of shares Issue Price £ Total Share Capital Total Share Premium £'000
£'000
At 31 Mar 2022 221,408,332 0.001 221 47,089
Shares issued: Fundraise Feb 2023 26,818,181 0.001 27 5,873
Direct costs: Fundraise Feb 2023 (343)
At 31 Mar 2023 248,226,513 0.001 248 52,619
17 Share based payments
Share option plans
The Group has a share ownership compensation scheme for Directors and senior
employees of the Group. On 2(nd) November 2017 share options over ordinary
shares of 15.1p were issued with a further issue over ordinary shares of 29.1p
issued on 25(th) February 2019. On 21 June 2021 the Group announced the
establishment of a new Long Term Incentive Plan in which it granted new nil
cost options totalling 21,431,942 ordinary shares of 0.1 pence each to its
executive directors and members of the senior management team. Some of the
existing options granted, totalling 13,888,742 ordinary shares, were modified
as part of these arrangements. There was no incremental fair value because of
this modification.
The options are settled in equity once exercised. If the options remain
unexercised for a period after ten years from the date of grant, the options
expire.
Details of the number of share options and the weighted average exercise price
("WAEP") outstanding during the period are as follows:
31 March 2023 31 March 2022
Number ('000) WAEP £ Number ('000) WAEP £
Outstanding at 31 March 2022 27,761 0.035 20,218 0.154
Modifications in the year - - (13,889) 0.154
- - 11,789 0.000
Issuances in the year - - 9,643 0.000
Cancellations in the year - - - -
Outstanding at 31 March 2023 27,761 0.035 27,761 0.154
Exercisable at 31 March 2023 18,118 0.035 14,682 0.154
The options outstanding at 31 March 2023 had a weighted average exercise price
of £0.035 and a weighted average remaining contractual life of 7.59 years.
The fair values of options granted prior to 2021 were calculated using the
Black Scholes pricing model. The fair values of the options granted in June
2021 were calculated using the Monte Carlo model. The Group used historical
data to estimate expected period to exercise, within the valuation model.
Expected volatilities of options outstanding granted prior to the Company's
admission to AIM were based on implied volatilities of a sample of listed
companies based in similar sectors. The risk-free rate for the expected period
to exercise of the option was based on the UK gilt yield curve at the time of
the grant.
The Group recognised a charge of £311k (2022: £255k) related to
equity-settled share-based payment transactions during the year. Of this, the
charge recognised in the subsidiary, Thread 35 Ltd, was £305k (2022: £250k).
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 Share options 2020 Share options 2018
Exercise price 0.0p 29.1p 15.1p
Share price at date of grant 23.75p 29.1p 15.1p
Risk-free rate 0.25% 0.25% 0.25%
Volatility 42% 25% 25%
Expected Life 5 years 10 years 10 years
Fair Value 0.13 0.07 0.05
18 Trade and other payables
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Trade payables 3,694 2,869 20 22
Accruals 549 656 36 30
Other payables 384 269 - -
VAT payable 1,077 856 - -
Contract liabilities 2,617 2,029 - -
Deferred income 34 82
Trade and other payables 8,355 6,761 56 52
19 Leases
The Group has a property lease contract which is used in its day to day
operations.
31 March 31 March
2023 2022
£'000 £'000
Lease liability brought forward 327 49
Additions 380 345
Finance cost 40 4
Lease payments (117) (71)
Lease liability recognised in statement of financial position 630 327
31 March 31 March
2023 2022
£'000 £'000
Of which
Current lease liabilities 148 38
Non-current lease liabilities 482 289
Lease liability recognised in statement of financial position 630 327
Both leases have a term of five years with a break clause after three years.
On 1 April 2022, the Group entered into a second property lease in Wilmslow,
England in order to expand its office space.
20 Related party transactions
During the year to 31 March 2023 the Group was charged £10k (2022: £39k) for
services provided by Reyco Limited, a company controlled by A Reynolds. There
was no amount outstanding at the balance sheet date (2022: £nil).
During the year to 31 March 2023 the Group was charged £28k (2022: £29k) for
services provided by Morrison Kingsley Consultants Limited, a company
controlled by M Collingbourne. There was no amount outstanding at the balance
sheet date (2022: £3k).
During the year to 31 March 2023 the Group was charged £14k (2022: £40k) for
services provided by Bill Murray and Associates, a company controlled by B
Murray. There was no amount outstanding at the balance sheet date (2022:
£nil).
During the year to 31 March 2023 the Group was charged £10k (2022: £29k) for
services provided by N Mustoe. There was £nil outstanding at the balance
sheet date (2022: £10k).
During the year to 31 March 2023 the Group was charged £9k (2022: £29k) for
services provided by Skale Limited, a company controlled by A Booth. There was
no amount outstanding at the balance sheet date (2021: £3k).
21 Financial instruments - risk management
In common with all other businesses, the Group is exposed to risks that arise
from its use of financial instruments. This note describes the Group's
objectives, policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect of these
risks is presented throughout these financial statements.
There have been no substantive changes in the Group's exposure to financial
instrument risks, its objectives, policies and processes for managing those
risks or the methods used to measure them from previous periods unless
otherwise stated in this note.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies and, whilst retaining responsibility for
them it has delegated the authority for designing and operating processes that
ensure the effective implementation of the objectives and policies to the
Group's finance function. The Board receives regular updates from the
management team through which it reviews the effectiveness of the processes
put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's competitiveness and
flexibility. The Group's operations expose it to some financial risks
arising from its use of financial instruments, the most significant ones being
cash flow interest rate risk, foreign exchange risk, liquidity risk and
capital risk. Further details regarding these policies are set out below:
Cash flow interest rate risk
The Group is exposed to cash flow interest rate risk from its deposits of cash
and cash equivalents with banks. The cash balances maintained by the Group
are proactively managed in order to ensure that attractive rates of interest
are received for the available funds but without affecting the working capital
flexibility the Group requires.
The Group is not at present exposed to cash flow interest rate risk on
borrowings as it has no debt. No subsidiary company of the Group is
permitted to enter into any borrowing facility or lease agreement without the
prior consent of the Company.
Foreign exchange risk
Foreign exchange risk may arise because the Group purchases stock in
currencies other than the functional currency.
The Group monitors whether there is a requirement for foreign currency on a
monthly basis. The Group considers this policy minimises any unnecessary
foreign exchange exposure.
Liquidity risk
Liquidity risk arises from the Group's management of working capital; it is
the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due. The principal obligations of the Group arise in
respect of committed expenditure in respect of its stock purchases and design.
The Group's policy is to ensure that it will always have sufficient cash to
allow it to meet its obligations when they become due. To achieve this aim,
it seeks to maintain readily available cash balances (or agreed facilities) to
meet expected requirements and to raise new equity finance if required for
future development or expansion.
The Board receives cash flow projections on a monthly basis as well as
information on cash balances. The Board will not commit to material
expenditure in respect of its ongoing commitments prior to being satisfied
that sufficient funding is available to the Group to finance the planned
programmes. For cash and cash equivalents, the Group only uses recognised
banks with medium to high credit ratings.
The maturity of borrowings and other financial liabilities (representing
undiscounted contractual cash-flows) is as follows:
Notes Group Company
Within 1 year 1-2 years Within 1 year 1-2 years
As at 31 March 2023 £'000 £'000 £'000 £'000
Trade and other payables 18 8,073 - 56 -
Lease liabilities 19 148 485 - -
Total 8,221 485 56 -
Group Company
Within 1 year 1-2 years Within 1 year 1-2 years
As at 31 March 2022 £'000 £'000 £'000 £'000
Trade and other payables 18 6,761 - 52 -
Lease liabilities 19 38 289 - -
Total 6,799 289 52 -
Financial assets
At the reporting date, the Group held the following financial assets, all of
which were classified as financial assets at amortised cost:
Group Company
31 March 31 March 31 March 31 March
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Cash and cash equivalents 10,576 7,048 5,122 3,399
Trade & other receivables* 2,081 2,027 23 34
Total 12,657 9,075 5,145 3,433
*excluding prepayments
Financial liabilities
At the reporting dates, the Group held the following financial liabilities,
all of which were classified as other financial liabilities at amortised cost:
Group Company
31 March 31 March 31 March 31 March
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Trade payables 3,694 2,869 20 22
Accruals 549 656 36 30
Other payables 384 269 - -
Contract liabilities 2,617 2,029 - -
Lease liabilities 633 327 - -
Trade and other payables 7,877 6,150 56 52
*excluding VAT
Capital risk
The Group's objectives when managing capital are to safeguard the ability to
continue as a going concern in order to provide returns for shareholders and
benefits to other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
22 Net cash
The below table shows the Group's cash position less lease liabilities.
At 1 April 2022 Cash flow Additions Accrued interest charges At 31 March 2023
£'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 7,048 3,411 - - 10,459
Lease liabilities (327) 117 (380) (40) (630)
Net cash (excluding lease liabilities) 6,721 3,528 (380) (40) 9,830
23 Post balance sheet events
There were no post balance sheet events.
24 Contingent liabilities
The Company and Group has no contingent liabilities.
25 Ultimate controlling party
There is no ultimate controlling party of the Company.
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