REG - Sosandar PLC - Full Year Results and Trading Update
16/07/2024 07:00
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RNS Number : 4928W Sosandar PLC 16 July 2024
Date: 16 July 2024
On behalf of: Sosandar plc ('Sosandar' or 'the Company')
Embargoed until: 0700hrs
Sosandar plc
Full Year Results and Trading Update
Robust FY24 performance with continued focus on margin, profitability and cash
generation. First two store leases signed
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 2024.
As the Company transitioned to becoming a true multi-channel retailer, through
the planned opening of its own stores, the second half of FY24 saw the
prioritisation of margin enhancement and profitability, the result of which
can be seen in the FY24 margin uptick and upswing in pre-tax profit in H2
FY24.
FY24 Financial Highlights
· Net revenue growth of 9.0% to £46.3m (FY23: £42.5m)
· Improved gross margin of 57.6% (FY23: 56.2%) (H2 FY24: 59.6%)
· Loss of £0.3m for FY24 following an upswing in PBT in H2 to £1.0m (H1 loss
of £1.3m)
· Strong cash generation in H2, resulting in an improved net cash position of
£8.3m as at 31 March 2024 (£7.7m as at 31 December 2023)
Post-period Trading (Q1 FY25)
· Continued focus on prioritising margin enhancement and profitability
· 80% reduction in price promotional activity on Sosandar.com vs the same
quarter last year
· 670bps improvement in gross margin to 63.4% (Q1 FY24: 56.7%)
· Substantial positive swing from (£0.8m) pre-tax loss in Q1 FY24 to (£0.2m)
pre-tax loss in Q1 FY25
· Net revenue of £8.2m (Q1 FY24: £11.4m) reflecting prioritisation of
increasing gross margins to improve profitability
· Balance sheet remains robust with cash position remaining flat at £8.3m as at
30 June 2024 vs. 31 March 2024, allowing us to self-fund the planned store
roll out
Our Q1 FY25 results at the gross margin and pre-tax profit level have been
highly encouraging and reflect our prioritisation of margins with reduced
discounting ahead of planned store launches. As such, whilst it is early in
the year to predict a full year outturn, we have taken the decision not to
drive revenue growth at the detriment of margins in FY25. The 670bps increase
in gross margin to 63.4% means pre-tax profit levels are expected to remain
in-line with expectations*, despite lower revenues, which are now likely to be
in-line with the prior year.
Looking further ahead, we expect that our enhanced brand presence and sales
mix will, once again, deliver revenue growth in the years ahead, driven by
growth through our own website, the rollout of stores and the compounding
positive effect that the shops will have across all of our channels.
FY 24 Operational and Strategic Progress
· Product continues to resonate with customers with party wear, dresses,
tailoring, knitwear and denim being standout items
· Trading with well-established third-party partners has continued to be strong
· Built on strong existing capabilities with the hiring of a Head of Retail and
Head of Retail Operations
· Set out the components that will shape our decision making over the coming
years as we become a true multichannel retailer:
o To drive sustainable profitable growth with a prioritisation on margin and
profitability
o Leverage our brand equity
o Remain agile on marketing spend, predominantly leveraging stores as a
marketing channel
o Grow the store portfolio with a focus on 'right price, right location'
Post-period Operational and Strategic Progress (Q1 FY25)
· First two Sosandar stores signed for, located in Marlow and Chelmsford. The
Marlow store is on Marlow High Street and the Chelmsford store is in the heart
of Chelmsford, on Bond Street.
· These locations were highly sought after given both stores fit our criteria of
being positioned in top tier locations, located in the right position in
affluent locations and are where Sosandar customers over-index.
· Both shops are expected to open in September, whilst other prospective stores
are at a late stage of negotiation with a broader set of store locations
identified for roll-out over the medium term.
Ali Hall and Julie Lavington, Co-CEOs commented:
"We have delivered a robust financial performance for FY24, delivering a
profitable second half, accelerating revenue growth whilst at the same time
growing our margin and generating cash. This performance has been achieved
against one of the most challenging backdrops our industry has experienced and
is a testament to how our customers feel about our on-trend, affordable, long
lasting, lifestyle appropriate clothes.
"The transition to becoming a true multi-channel retailer, with our products
being sold on our own site, our mobile app, through our own stores and via
highly reputable third-party partners, is well underway. To meet our strategic
goal of delivering a pre-tax profit margin of at least 10% in the medium term
and £100m+ revenues, we have refined our focus and built a roadmap that will
shape our decision making over the coming years. The core ingredients to this
include prioritising margin and sustainable profitable growth rather than
revenue growth through promotional activity. In doing so, we will leverage our
brand equity, creating our own marketing ecosystem through our stores which
will enable us to own our customers directly.
"We are excited to announce the first locations for our Sosandar stores. These
stores fit our criteria of being positioned in top tier locations, located in
the right position in affluent, thriving locations where Sosandar customers
over-index. Throughout the process we have remained disciplined in our
approach to ensuring 'right price, right location'. We look forward to the
official opening of them over the next few months, and with others to come.
"Looking ahead, FY25 is focused primarily on delivering sustainable growth in
our gross margin, pre-tax profit, cash generation and maintaining a strong
balance sheet. Nonetheless, we do expect revenue growth from on our own site,
further third party partnerships, opening shops and the compounding positive
effect that the shops will have across all our channels. We believe that the
future is very bright as we take the Sosandar brand to more customers across
the UK and worldwide, as we move forward towards reaching our strategic goal
in the medium term."
* Sosandar believes that, prior to publication of this announcement, market
expectations for the year ending 31 March 2025 are currently revenue of £54.6
million and PBT of £1.0 million.
Presentations
Sosandar is hosting a webinar for analysts at 08:30 hrs BST today. If you
would like to register, please contact sosandar@almastrategic.com
(mailto:sosandar@almastrategic.com)
The Company is also hosting a webinar for retail investors at 12:00 today. If
you would like to attend, please register here:
https://bit.ly/SOS_FY24_results_webinar
(https://bit.ly/SOS_FY24_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
Singer Capital Markets +44 (0) 20 7496 3000
Peter Steel / Tom Salvesen / Alaina Wong
Alma Strategic Communications +44 (0) 20 3405 0205
Sam Modlin / Rebecca Sanders-Hewett / Kinvara Verdon sosandar@almastrategic.com (mailto:sosandar@almastrategic.com)
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 lower quality,
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 and tested 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 a number of high value brand partnerships
including with Next and Marks & Spencer.
Sosandar's success has been built on an exceptional product range, seamless
customer experience and impactful, lifestyle marketing, all of which is
underpinned by combining innovation with data analysis. Our growth strategy is
focused on continuing to grow brand awareness and expand our addressable
market and routes to market, reaching customers wherever they wish to
shop. This is achieved both through direct to consumer channels and through
chosen third party partners.
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'm pleased to be reporting on another strong year of progress for Sosandar,
delivering an increase in revenues and improved gross margins. The results for
the year reflect management's strategic decision to implement a more targeted
approach to price promotion to improve margins and enable us to be better
placed to deliver long-term, sustainable profitable growth as we continue our
transition towards becoming a multi-channel retailer.
Sosandar has rapidly grown from a start-up into one of the fastest growing
fashion brands in the UK and FY24 saw the business continue to evolve as it
looks to achieve its goal of becoming one of the world's largest womenswear
brands globally.
The strength of Sosandar's brand and unique product range continues to drive
its success. Our product is reaching more women globally, more regularly and
through more channels than ever before.
Delivering on our growth strategy
Following the over-subscribed equity fundraise in February 2023, we were able
to accelerate the execution of our multi-channel strategy and other growth
initiatives.
We have further invested in the functionality of our own site in order to
enable more customers to buy directly from us, have more ways to shop and
provide a more personalised experience. In addition, we successfully launched
our mobile app in July 2023.
Trading with third-party partners, across which we sell at full Recommended
Retail Price (RRP), has continued to be strong and has further increased our
brand awareness, with Sosandar consistently being one of the top selling
brands across all third-party partners, including Next and Marks &
Spencer.
We expanded our global reach through our first international launches, and
have launched with Global-e, enabling Sosandar to transact and fulfil orders
to over 60 countries in a cost-effective manner and substantially broadening
our potential customer reach.
We have now taken the first strides towards becoming a true multi-channel
retailer with the planned opening of our own UK stores, a logical next step as
we look to reach more of our customer demographics by offering more ways to
engage and shop with Sosandar.
In addition to the greater reach and scale stores offer, they will also help
to further expand Sosandar's brand awareness and presence, benefitting all
channels.
Our reduced use of price promotion through on-line channels is an important
precursor to our store openings, expected later this year, as it enables price
parity between our on and off-line offerings. We are progressing well with
our plans to establish our first stores, with multiple locations in high
profile, affluent areas where Sosandar customers over-index at various stages
of the pipeline. Our priority is situating the stores in the right location
and for the right cost.
Our people are our greatest asset
Behind Sosandar's success is our team of hard working and passionate people.
From the initial product designs through to sourcing, logistics, customer
service and all aspects of retailing, it is only possible because of our
excellent team working to create clothing that meets our customers' wants and
needs.
Throughout the year, we strengthened our capabilities across the business. In
particular, as we gear up to opening our stores, we have enhanced the
extensive experience already within the team by appointing a Head of Retail,
Head of Retail Operations and Visual Merchandiser.
I would like to thank all our team members for their continued dedication and
hard work.
Governance and responsibility
Maintaining and enhancing our corporate governance framework remains a
priority for the Sosandar Board. We have processes in place to ensure
adherence to our high standards and the effectiveness of our committees, and
our Board is adept at making executive decisions in a considered and timely
manner.
Sosandar is underpinned by responsible and scalable business practices.
Throughout our business operations, company culture, and interactions with our
community and customers, we strive to have a positive impact on society. We
uphold responsible fashion practices and will continue to review and improve
our activities to deliver them and to increase Sosandar's positive impact on
the fashion industry.
Outlook
FY25 is set to be another year of progress for Sosandar. We remain steadfast
in our focus on growing margins and profitability, whilst also increasing
Sosandar's brand awareness and reach both internationally and in the UK with
the opening of our first physical retail stores. We remain highly committed to
offering a seamless customer experience through all our sales channels and to
returning value to all our stakeholders.
Nicholas Mustoe
Chairman
15 July 2024
CO-CEO'S STATEMENT
A year of significant progress
FY24 has been a year of continued progress at Sosandar. We have delivered a
robust financial performance, with a profitable second half, accelerating
revenue growth whilst at the same time growing our margin and generating cash.
In addition, we have made significant steps on our journey to become a
multi-channel retailer whilst also expanding the reach of the Sosandar brand.
We launched new partnerships with third-party partners, both in the UK and
internationally, and made significant strides towards opening our first
stores.
This has all been achieved against one of the most challenging backdrops our
industry has experienced and is testament to how our customers feel about our
on-trend, affordable, long lasting, lifestyle appropriate clothes.
Robust financial performance
We generated revenue of £46.3m, an increase of 9% versus the prior year
(FY23: £42.5m). Our focus on driving long-term profitable growth has resulted
in our gross margin increasing, with gross margin for the full year being
57.6%, up from 56.2% in FY23. The second half comparisons paint a clearer
picture of the strategic decision to introduce a more targeted approach to
price promotional activity ahead of select store openings, with discounts
purposefully offered much less frequently. Gross margin for the second half
was 59.6%, up from 57.8% in the prior year. Post-period end by Q1 FY25 gross
margin has continued to improve and has increased to 63.4% (Q1 FY24: 56.7%).
Demonstrating the impact of increased revenue and gross margin, H2 FY24 saw
the Group deliver a substantial uplift in profitability, of £1.0m, following
a £1.3m loss in H1 FY24. Combined, this resulted in a loss before tax of
£0.3m for the full year.
Throughout the period we have continued to deploy careful working capital
management, resulting in a cash position at 31 March 2024 of £8.3m (31 March
2023: £10.6m). This further strengthens our ability to execute the next stage
of our growth journey, including, as planned, the roll out of select physical
retail stores during FY25 and beyond funded entirely from existing financial
resources.
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 continued growth is
evidence of 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 are
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, which is reflected
in our price point.
Our unique brand
As a clothing brand, our product is everything. The strength of our brand and
unique product range are the key drivers of our success and keep our customers
returning to us for their wardrobe needs.
Throughout the year, we have seen major successes across key styles with party
wear, dresses, tailoring, knitwear and smart trousers being standout items.
As Sosandar continues to grow, we are committed to developing our product
range to offer our customers an ever-growing variety of on-trend, affordable,
long lasting, lifestyle appropriate clothes. The success of our range has been
consistently strong across all our different routes to market.
Through the success of our own website and third-party partnerships with some
of the largest retailers in the UK and now internationally, the Sosandar brand
is now widely recognised as on-trend, affordable and high quality, providing
us with opportunities to leverage our strong brand in the future.
Our routes to market
1. Our own site
Sosandar.com and our app is the anchor of our offering. Through this channel,
our customers get the whole Sosandar lifestyle experience and can access the
full extent of our diverse product range. The site is continually updated with
new products and content, and we are constantly working and investing to
ensure we maintain a seamless customer experience through this channel.
Since its launch in July 2023, our app has performed well, and is enabling us
to provide mobile first technology to our customers, giving them more avenues
to engage with the Sosandar brand.
Within the year we also launched with Global-e, the world's leading platform
to enable and accelerate global, direct-to-consumer, cross-border ecommerce.
This enabled us to transact and fulfil orders worldwide to over 60 countries
in a cost-effective manner and allowed us to build our knowledge to inform our
future international strategy. We have seen demand from across the globe, with
initial sales in line with our expectations, with Ireland, Australia and the
Middle East in particular getting off to a good start.
2. Third party partners
Trading with our well-established third-party partners has continued to be
strong, with the success of our product resulting in Sosandar being one of the
top selling brands across all third-party partners including Next and Marks
& Spencer. Alongside our existing relationships, we were pleased to form
new third-party partnerships with J Sainsbury's and Freemans, part of the Otto
Group.
In the period, we launched with The Iconic in Australia and The Bay in Canada.
The Iconic has performed incredibly well and we are extremely excited by the
success we have had to date in a previously untapped market for Sosandar
brand. Shortly after launching with The Bay, their marketplace went down due
to technical issues which they have been unable to resolve. We therefore made
the decision to stop working with them and withdraw our stock. Our
performance in Australia validates our belief that the Sosandar product range
will resonate with fashion conscious women across the globe.
Post period-end we were delighted to announce a new partnership with Arnotts,
the oldest and largest department store in Ireland, as we have seen strong
demand from customers in Ireland since our inception. Initially, the Sosandar
range will be sold online, followed by an in-store concession.
Third party partnerships, both domestically and internationally, remain a key
facet of our higher margin multi-channel model and we believe this channel
will play an important role in growing and strengthening our loyal customer
base.
3. The rollout of our own stores
With over 60% of the +£60bn p.a. clothing market in the UK being transacted
in physical stores, we are confident that the opportunity available to
multi-channel retailers far exceeds than if we were to remain an online
pureplay business.
As a reminder, we believe that having our own stores will:
· Deliver multiple benefits both to our total addressable market, profitability
and to the brand as a whole;
· Bring increased brand awareness;
· Drive higher margins, both at the gross and operating level;
· Result in more efficient marketing; and
· Deliver overall lower returns rates
We are delighted to confirm that we have signed for, and have commenced the
fit out of, our first two stores located in Marlow and Chelmsford which are
expected to open in September. As previously disclosed, these are the first of
several stores that we expect to sign this calendar year, with a number of
others currently in the latter stages of legal process.
Marlow is a vibrant and affluent riverside town, with 32,000 visitors daily.
The store is on Marlow High Street, home to various boutiques and cafés,
including The White Company, Sweaty Betty and Toast. Located in
Buckinghamshire, Marlow attracts visitors from London and the Home Counties.
Marlow is distinct in that shoppers can visit major high street retailers, as
well as Michelin-star restaurants and historic monuments, whilst enjoying the
charm of a market town.
Chelmsford is located within the London commuter belt and has a population of
nearly 200,000 people. The city's proximity to London, along with the quality
of its shops, elegant city centre and idyllic surrounding countryside, makes
Chelmsford a vibrant and affluent city. The store is in the heart of the city,
on Bond Street, which boasts a variety of top high street brands, such as Mint
Velvet, The White Company and Tag Heuer.
Our primary focus is to ensure that Sosandar stores are situated in the right
position in affluent, thriving locations where Sosandar customers over-index.
The exact timing of openings will, accordingly, be determined by our
disciplined approach to ensuring 'right price, right location' and that all
other aspects are in place to deliver a fantastic in-store customer
experience.
As part of our rollout, we have hired a Head of Retail, Head of Retail
Operations and Visual Merchandiser to build on the extensive retail experience
within our existing teams. In addition, we have selected an EPOS system to
ensure that the customer journey is seamless and we are now working on the
integration.
Our roadmap
The transition to becoming a true multi-channel retailer, with our product
being sold on our own site, through our own stores and via highly reputable
third-party partners, is well underway. Alongside our strategic goal of
delivering a pre-tax profit margin of at least 10% and £100m+ revenues in the
medium term, we have defined the focus that will shape our decision making
over the coming years:
· Drive sustainable profitable growth with a focus on margin;
· Leverage our growing brand awareness, with a focus on further broadening its
reach and continuing to drive brand equity;
· Remain agile on marketing spend, predominantly leveraging stores as a
marketing channel, and selectively using marketing campaigns as an additional
tool; and
· Grow the store portfolio and review opportunities to broaden the shop formats
and locations from standalone shops, maintaining a low risk approach
Outlook
Our robust performance in FY24 is a testament to the strength of our brand,
the quality of our product offering and our ability to provide our customers
with a diverse range of clothes and accessories for all their wardrobe needs.
We have also made some key advances operationally and strategically, all of
which position us to provide our growing customer base with more opportunities
to interact with the Sosandar brand.
We have set out our roadmap to deliver on our medium-term objectives, designed
to drive profitable growth and generate improved shareholder returns. Our Q1
FY25 results at the gross margin and pre-tax profit level have been highly
encouraging and reflect our prioritisation of margins with reduced discounting
ahead of planned store launches. As such, whilst it is early in the year to
predict a full year outturn, we have taken the decision not to drive revenue
growth at the detriment of margins in FY25. The significant increase in gross
margin to 63.4% means pre-tax profit levels are expected to remain in-line
with expectations, despite lower revenues, which are now likely to be in-line
with the prior year.
Looking further ahead, we expect that our enhanced brand presence and sales
mix will, once again, deliver revenue growth in the years ahead, driven by
growth through our own website, the rollout of stores and the compounding
positive effect that the shops will have across all of our channels.
We are incredibly excited about the future, as we open our first physical
retail stores, continue to take the Sosandar brand to more customers across
the UK and worldwide, and move further towards reaching our strategic goals of
delivering a pre-tax profit margin of at least 10% and £100m+ revenues in the
medium term.
Ali Hall & Julie Lavington
Co-CEO's
15 July 2024
FINANCIAL REVIEW
KPI's
Year ended 31 March 2024 Year ended 31 March 2023 Change
£'000
£'000
Revenue £46,277 £42,451 9%
Gross Profit £26,650 £23,837 12%
Gross Margin 57.6% 56.2% 140bps
Administrative Expenses £26,984 £22,200 22%
Profit / (Loss) before tax (£332) £1,597 -121%
EBITDA* (£18) £1,872 -101%
*EBITDA is calculated as profit before tax less interest, depreciation and
amortisation
Year ended 31 March 2024 Year ended 31 March 2023 Change
Sessions 15,090,432 15,091,247 0%
Conversion rate 3.43% 4.11% -68bps
Number of orders 518,108 620,977 -17%
AOV** £102.25 £97.27 5%
Active customers *** 253,566 264,832 -4%
Average Order Frequency **** 2.08 2.34 -11%
** Average Order Value is calculated on own site sales only, inclusive of
shipping charges and VAT
*** Active customers is the number of individual customers who purchased from
Sosandar.com in the last 12 months
**** Average Order Frequency is the total number of orders in the last 12
months divided by the number of active customers
The Group has delivered a robust financial performance in the year whilst
laying the foundations for a period of significant strategic growth commencing
in FY25. FY25 will include the milestone of opening the first Sosandar
physical retail store, and the performance in FY24 reflects certain actions
that we took to shift our focus from revenue growth to margin enhancement,
with a view to the long-term success of the business. The most significant of
these has been the managed reduction in price promotional activity on our own
website in the second half of FY24 in order to move to a full RRP model which
will be aligned across all sales channels. As a result of this, revenue growth
in FY24 was reduced compared with previous years, and pre-tax profit was
impacted, however, gross margin was significantly up against last year due to
this managed change.
The non-financial KPIs shown above also reflect this managed change away from
revenue growth as the overriding priority and therefore show a reduction.
The performance in the year was delivered against a backdrop of ongoing
challenges presented by the macro environment which has included wars, supply
chain issues and high inflation. The agility and ongoing approach to managing
risk in all aspects of the how the business is led, allowing us to deliver
such a robust performance once more.
The cash balance is particularly strong and we continue to expect to fund the
store opening programme entirely from existing cash resources.
Revenue up +9% to £46.3m
The growth in revenue reflects the continued demand for Sosandar product
across all sales channels which now includes own website, third-party
concessions and third-party wholesale partners.
We had by far our largest quarter of revenue ever in Q3, with revenue up 23%
against Q3 FY23, as our range of occasion and party wear resonated well with
consumers. Q4 was also strong, resulting in H2 being well ahead of last year
despite the reduction during the period in price promotional activity which
drives incremental revenue.
Gross Margin +140bps to 57.6%
Gross Margin improved when compared with the prior year to 57.6%. This growth
is inclusive of the growth in revenue generated from the wholesale channel
which has a lower margin. On a like-for-like basis excluding the proportional
increase in the wholesale channel, the gross margin increased by 250bps to
59.8%.
In the year, there has been significant focus on reducing the levels of price
promotional activity on our own website. This has included reducing the
frequency of promotions and the average level of discount per promotion. This
strategic change resulted in the gross margin in H2 being 420 bps higher than
H1 at 59.6%.
Other actions that have been taken to improve gross margins have included
improved supplier cost prices and further efficiencies in inbound freight
costs. There have been no increases to RRP's during the year, however there is
a small amount of positive rollover benefit from price increases implemented
in the previous year.
Further benefits have been delivered with regards to inbound freight costs
during the year. A higher proportion of product has been delivered using sea
freight although there remains a balanced approach using all methods (sea,
rail, road, air). Furthermore, we have started to do more full container loads
when using sea freight which is cheaper than partial loads. This increased
further as a result of the red sea issues, enabling us to guarantee space on
specific vessels and routes.
Administrative Expenses
Total administrative expenses increased by 22% to £27.0m (FY23 £22.2m)
compared to a 9% increase in revenue.
Administrative expenses as a percentage of revenue increased to 58% (FY23
52%), in part reflecting the change in our promotional strategy partway
through the year as we shifted our primary focus away from revenue growth
towards margin enhancement. The increase also reflects investment in the
business ahead of opening our own physical stores and further international
growth.
Spend on marketing increased slightly compared with the previous year. The
strategy on marketing remains broadly similar with investment being focused on
TV, social and brochures with peak months of investment being where the return
on investment is greatest. During the year we also invested in the launch of
the Sosandar App which has performed ahead of expectations with strong sign
ups, conversion and retention stats being reported.
The cost of fulfilment which includes warehousing and customer order delivery
costs remained flat compared to the previous year despite revenue growing by
9%. As a result the cost as a percentage of revenue reduced from 13% to 12%.
From a warehousing perspective, our 3PL partner, GXO (Clipper) has continued
to deliver for our multi-channel customers as have our two delivery partners,
Evri and Royal Mail. Onboarding Evri as a second delivery partner option
during FY2022 has been an important step enabling us to offer the consumer a
choice to use their preferred delivery company. The average cost per order has
been reduced as a result of this change.
The largest increase in administrative expenses is from third party
commissions (increased by 43% on the prior year) which reflects the growth in
revenue through our concession partners (notably 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 our own site Sosandar.com.
Other administrative expense which includes staff costs increased by £1.7m
(28%) compared to the previous year. Headcount increased by 19 during the year
to an average of 97 with a closing headcount of 103 as at March 2024. 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 FY25 and
beyond including for the retail channel.
Statement of Financial Position
The statement of financial position is robust. As at 31 March 2024, the Group
had net assets of £18.2m (FY23 £18.4m) and a net current asset position of
£16.7m (FY23 £17.2m).
The cash balance at 31 March 2024 is £8.3m and there remains no bank
indebtedness. The Group was cash generative in H2 FY24, increasing the
available balance by £1.3m (30 Sept 2023 £7.0m) which will allow for the
opening of physical retail stores to be self-funded from existing cash
reserves.
Within the year, the cash balance reduced by £2.3m (31 March 2023 £10.6m)
which reflects timing of payments in Q1 FY24, in particular for stock. In
addition, investment has been made in capital projects including for the
launch of the Sosandar App and ongoing costs for the new ERP which is
anticipated to go-live in 2025.
Inventory has reduced in the year, from £12.4m in FY23 to £10.9m in FY24.
The reported inventory balances includes stock on hand at both the main
warehouse and at third-party concession partners, stock in transit and the
right to return asset which covers post year end returns. The reduction in
inventory has been intentional, as product purchased in the year has been
supported by carry over lines from previous seasons to create the overall
product range.
Subsequently, stock cover has reduced with further opportunity to improve in
FY25 which will increase the cash available to deliver the store roll out
programme. Within inventory, the right to return stock, covering the post year
end returns, reduced to £0.6m (FY24 £1.1m) which reflects the reduced
average number of days it takes for our customers to return product. As a
result, the provision is lower as actual refunds have been processed quicker
than in the previous year.
Trade and other payables reduced to £5.1m (FY23 £8.4m) which reflects a
lower trade creditor balance, particularly for inventory and lower provision
for post year end customer refunds.
Trade payables have reduced to £2.1m (FY23 £3.7m) which reflects lower
outstanding stock invoices, partly due to timing but also due to lower
quantity of stock being purchased reflecting the carry-over from the previous
year. Having significantly increased creditor payment days over the last two
years, the average agreed terms are now 75 days for stock and 30 days for
non-stock. It is not anticipated that this will improve further in FY25.
Contract liabilities reduced to £1.4m (FY23 £2.6m) which reflects the lower
provision required for post year end refunds for orders fulfilled within the
year. This reflects the timing of actual refunds being much closer to the
original order date, meaning customers are returning items more quickly than
the previous year. Liability for VAT reduced to £0.5m (FY23 £1.1m) due to
higher on account payments to HMRC each month and therefore reducing the
liability to be paid at the quarter end.
Trade and other receivables increased to £2.8m (FY23 £2.7m) which includes
amounts owing from concession and wholesale customers. No change to payment
terms were made during the year and all payments have been received on time
and in full.
Non-current assets increased to £1.9m (FY23 £1.7m). Investment in fixed
assets remained relatively low, with spend primarily on replacement IT
equipment which has a useful of life of no more than four years. In the year,
investment was focused on software with two significant projects of note. The
development and launch of the Sosandar App with the highly respected partner
Poq has been successful with sign ups and KPI's being in line with our
expectations. In addition, work is ongoing to implement an ERP system for the
Group.
This project commenced a year ago with the main build taking place during FY25
for go-live anticipated early in 2025. The chosen system is Microsoft Business
Central with implementation partners chosen who have significant experience
executing with fashion and multi-channel retailers. The costs for the ERP
project are held as assets under construction with depreciation commencing
when the software goes live.
Cashflow
The Group had a net cash position as at 31 March 2024 of £8.3m (FY23
£10.3m). As highlighted already, the Group's cash position improved in H2
FY24 by £1.3m (H1 FY24 £7.0m).
The movement in the year reflects the reduction in payables and investment in
software (ERP and App) partially offset by the reduction in inventory. The
strong cash balance is particularly important as we invest in opening our
first physical retail stores in FY25 which will incur a significant amount of
capital expenditure compared with previous years. This investment will be
self-funded from existing cash resources.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year ended 31 March 2024
Year ended 31 March Year ended 31 March
2024 2023
Notes £'000 £'000
Revenue 3 46,277 42,451
Cost of sales (19,627) (18,614)
Gross profit 26,650 23,837
Administrative expenses (26,984) (22,200)
Operating profit/(loss) (334) 1,637
Finance income 38 -
Finance costs 5 (36) (40)
Profit/(loss) before taxation (332) 1,597
Income tax credit/ (expense) 7 (91) 284
Profit/(loss) for the year (423) 1,881
Other comprehensive income - -
Total comprehensive profit/(loss) for the year (423) 1,881
Earnings/(loss) per share:
Earnings/(loss) per share - basic, attributable to ordinary equity holders of 8 (0.17) 0.84
the parent (pence)
Earnings/(loss) per share - diluted, attributable to ordinary equity holders (0.17) 0.74
of the parent (pence)
The notes on pages 51 to 77 form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2024
As at 31 March As at 31 March
2024 2023
Notes £'000 £'000
Assets
Non-current assets
Intangible assets 9 391 -
Property, plant and equipment 10 909 991
Deferred income tax asset 1,7 605 696
Total non-current assets 1,905 1,687
Current assets
Inventories 12 10,920 12,361
Trade and other receivables 14 2,768 2,730
Cash and cash equivalents 15 8,313 10,576
Total current assets 22,001 25,667
Total assets 23,906 27,354
Equity and liabilities
Equity
Share capital 16 248 248
Share premium 16 52,619 52,619
Capital Reserves 4,648 4,648
Other reserves 1,485 1,223
Reverse acquisition reserve (19,596) (19,596)
Retained earnings (21,196) (20,773)
Total equity 18,208 18,369
Current liabilities
Trade and other payables 18 5,076 8,355
Lease liability 19 194 148
Total current liabilities 5,270 8,503
Non current liabilities
Lease liability 19 428 482
Total non current liabilities 428 482
Total liabilities 5,698 8,985
Total equity and liabilities 23,906 27,354
The financial statements were approved and authorised for issue by the Board
of Directors on 15 July 2024 and were signed on its behalf by:
Steve Dilks
Director
Company Number: 05379931
Consolidated statement of cash flows
For the Year ended 31 March 2024
Year ended 31 March Year ended 31 March
2024 2023
Notes £'000 £'000
Cash flows from operating activities
Group profit/(loss) before tax (332) 1,597
Adjustments for:
Share based payments 17 262 311
Depreciation and amortisation 9, 10 316 235
Finance costs 36 40
Finance income (38) -
Disposal of intangibles 80 -
Working capital adjustments:
Change in inventories 1,441 (5,054)
Change in trade and other receivables (38) (235)
Change in trade and other payables (3,279) 1,594
Net cash flow from operating activities (1,552) (1,512)
Cash flow from investing activities
Purchase of property, plant and equipment 10 (81) (400)
Purchase of intangibles 9 (458) -
Initial direct costs on right of use asset - -
Bank interest paid 5 - -
Net cash flow from investing activities (539) (400)
Cash flow from financing activities
Gross proceeds from issue of equity instruments 16 - 5,900
Costs from issue of equity instruments (343)
Finance income 38 -
Lease payment 19 (210) (117)
Net cash flow from financing activities (172) 5,440
Net change in cash and cash equivalents (2,263) 3,528
Cash and cash equivalents at beginning of year 15 10,576 7,048
Cash and cash equivalents at end of year 15 8,313 10,576
Consolidated statement of changes in equity
For the YEAR ended 31 March 2024
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 2022 221 47,089 (19,596) 4,648 (22,654) 912 10,620
Loss 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
Profit for the year - - - - (423) - (423)
Share-based payments 17 - - - - - 262 262
Issue of share capital 16 - - - - - - -
Costs on issue of share capital 16 - - - - - - -
Balance at 31 March 2024 248 52,619 (19,596) 4,648 (21,196) 1,485 18,208
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 2024
As at 31 March As at 31 March
2024 2023
Notes £'000 £'000
Assets
Non-current assets
Investments 11 7,694 7,432
Loans to subsidiaries 13 - -
Total non-current assets 7,694 7,432
Current assets
Trade and other receivables 14 8 23
Cash and cash equivalents 15 4,534 5,119
Total current assets 4,542 5,142
Total assets 12,236 12,574
Equity and liabilities
Equity
Share capital 16 248 248
Share premium 16 52,619 52,619
Other reserves 1,485 1,223
Capital redemption reserve 4,648 4,648
Retained earnings (46,825) (46,220)
Total equity 12,175 12,518
Current liabilities
Trade and other payables 18 61 56
Total current liabilities 61 56
Total liabilities 61 56
Total equity and liabilities 12,236 12,574
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 £605k (2023: £3,859k loss).
The financial statements were approved and authorised for issue by the Board
of Directors on 15 July 2024 and were signed on its behalf by:
Steve
Dilks
Director
Company Number: 05379931
Company statement OF CASH FLOWS
For the YEAR ended 31 March 2024
Restated
Year ended 31 March Year ended 31 March
2024 2023
Notes £'000 £'000
Cash flows from operating activities
Profit/(loss) before tax (605) (3,859)
Adjustments for: - -
Impairment of intercompany loan 201 3,423
Share based payments 17 - 7
Finance income (12) -
Working capital adjustments:
Change in trade and other receivables 15 11
Change in trade and other payables 5 4
Net cash flow from operating activities (396) (414)
Cash flow from investing activities
Loans to subsidiaries (201) (3,423)
Net cash flow from investing activities (201) (3,423)
Cash flow from financing activities
Net proceeds from issue of equity instruments 16 - 5,557
Finance income 12 -
Net cash flow from financing activities 12 5,557
Net change in cash and cash equivalents (585) 1,720
Cash and cash equivalents at beginning of year 15 5,119 3,399
Cash and cash equivalents at end of year 15 4,534 5,119
Following a review by the FRC, the comparative year has been re-presented.
Please refer to note 2 on page 51.
Company statement of changes in equity
For the YEAR ended 31 March 2024
Share capital Share premium Other reserves Capital redemption reserve Retained earnings Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
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
Loss for the year - - - - (605) (605)
Share-based payments 17 - - 262 - - 262
Issue of share capital 16 - - - - - -
Costs on issue of share capital 16 - - - - - -
Balance at 31 March 2024 248 52,619 1,485 4,648 (46,825) 12,175
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 £262k. The cumulative share payment expense recognised in the
parent company statement of comprehensive income is nil (2023: £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 company limited 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 and FRC review
In February 2024, the Group received a letter from the Corporate Reporting
Review Department of the Financial Reporting Council (FRC) advising that they
had selected the FY23 Annual Report and Accounts for review. As a result of
the review, it came to light that there was a presentational error in the
Statement of Cashflows for the company. Loans made to subsidiaries of £3,423k
in 2023 and £4,681k in 2022 were omitted from the cash flow statement when
they should have been included as an investing cash outflow with a
corresponding adjustment to operating cash flows relating to the subsequent
impairment. This has been adjusted in the company cash flow statement. The
error had no impact on the company statement of financial position.
The review conducted by the FRC was a limited scope review performed solely on
the Group's Annual Report and Accounts for FY23 and does not provide any
assurance that the annual report and accounts are correct in all material
respects. The FRC's role is not to verify the information provided to it but
to consider the compliance with reporting requirements. As such the FRC
accepts no liability for reliance on their review by any stakeholder of the
company, including but not limited to investors and shareholders.
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.
At 31 March 2024, the Group had a cash balance of £8.3m and is therefore in a
strong position, with sufficient working capital to take advantage of
opportunities in FY25. 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. 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; all subsidiaries have a reporting
date of 31 March.
Subsidiaries are all entities which fall within the definition of control
under IFRS 10; an investor controls an investee when the investor is exposed,
or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee.
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 affect 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 2023 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
IFRS 17 Insurance Contracts 1 January 2023
IFRS S1 General Requirements for Disclosure of Sustainability-related 1 January 2024
Financial Information
IFRS S2 Climate-related Disclosures 1 January 2024
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
Amendment to IFRS 16 - Leases on sale and leaseback 1 January 2024
Amendment to IAS 1 - Non-current liabilities with covenants 1 January 2024
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.
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. It
is impractical to recognise on delivery, and the difference due to this timing
is immaterial. The point of recognition and the point of return is the same
for both direct and third-party sales.
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.
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. Intangible assets have finite useful lives.
Amortisation is recognised within administrative expenses in the Statement of
Comprehensive Income so as to write off the cost of assets less their residual
values over their useful economic lives.
The following annual rates are used:
Website
20% Straight line
Trademark
20 % Straight line
Software
33% Straight line
Assets Under Construction will be depreciated when the assets are in use.
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
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.
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.
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.
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 costs that are directly attributable to
its acquisition or issue, for an item not at fair value through profit or
loss, are 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 a transaction in which the group neither retains nor transfers
substantially all the risks and rewards of ownership of a financial asset and
it retains control over the asset, the group continues to recognise the asset
to the extent of its continuing involvement, determined by the extent to which
it is exposed to changes in the value of the transferred asset. There have not
been any instances where assets have only been partly derecognised. The group
derecognises financial liability when its contractual obligations are
discharged, 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, in
line with IFRS 9. All financial instruments are initially measured at fair
value plus or minus, in the case of a financial asset or financial liability
not at fair value through profit or loss, transaction costs. Any measurement
of expected credit losses under IFRS 9 reflects an unbiased and
probability-weighted amount that is determined by evaluating the range of
possible outcomes as well as incorporating the time value of money.
Impairment losses from contracts with customers
The Group considers reasonable and supportable information about past events,
current conditions and reasonable and supportable forecasts of future economic
conditions when measuring expected credit losses. 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.
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:
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 £1,365k
(2023: £2,617k) and a right to returned goods asset recognised of £555k
(2023: £1,113k). A performance obligation is deemed for returns and refunds.
A 14 day return policy is noted for a full refund through Sosandar.com and up
to 30 days on third party retailer websites.
Critical accounting judgements and key sources of estimation uncertainty
Contract liabilities - refund accruals
Whilst not a key source of estimation uncertainty, the directors believe it
is relevant to disclose the impact of changes to the estimate. A difference of
1%pt in the sales returns rate have an impact of +/- £124k (2023: +/- £134k)
on the refund provision, and +/- £53k (2023: +/- £60k) on the right to
returned goods asset.
A provision is made to write down any slow-moving or obsolete inventory to net
realisable value. The provision is £541k at 31 March 2024 (2023: £384k).
Whilst not a key source of estimation uncertainty, the directors believe it is
relevant to disclose the impact of changes to the estimate. A difference of
1%pt in the provision as a percentage of gross inventory would give rise to a
difference of +/- £109k in gross profit (2021: +/- £124k).
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 2024 were as follows:
2024 2023
% %
Discount rate 6.4 11
Compound annual revenue growth rate 10 20
The Directors assessment of the estimates on future revenues and EBITDA growth
in future years is a key source of estimation uncertainty. The estimations are
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.
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.
Impairment of non-financial assets
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than it's 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.
Share-based compensation
The Group has issued 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.
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.
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.
During the year, the Group expanded into international markets. The major
geographical market remains the UK.
Year ended Year ended
31-Mar 31-Mar
2024 2023
£'000 £'000
UK 46,177 42,451
Rest of World 100 -
Total 46,277 42,451
4 Operating loss
31 March 2024 31 March 2023
£'000 £'000
Operating loss is stated after charging/(crediting):
Operating lease rentals 121 86
Auditors' remuneration:
Audit fee - group and company 64 54
Legal and other fees 242 155
Foreign currency loss 13 190
Share based payment 262 311
5 Finance cost
31 March 31 March
2024 2023
£'000 £'000
Interest on the lease 36 40
Total 36 40
6 Employees
31 March 31 March
2024 2023
£'000 £'000
Aggregate Directors' emoluments including consulting fees 819 752
Wages and salaries 3,621 2,571
Social security costs 433 353
Pension costs 221 148
Share-based payments 262 311
Total 5,356 4,135
31 March 31 March
2024 2023
£'000 £'000
Directors 8 8
Staff 89 70
Total 97 78
Directors' remuneration
Details of emoluments received by Directors of the Group for the year ended 31
March 2024 are shown in the table below.
Details of the share options held by each Director can be found in the Group
Directors' Report on page 28. The key management personnel are deemed to be
the directors.
The share-based payment charge related to directors was £240k (2023: £279k).
2024 2024 2024 2024 2023
Base Salary Pension Other Benefits Total Total
£ £ £ £ £
Alison Hall 235,000 28,200 9,361 272,561 222,567
Julie Lavington 235,000 28,200 7,902 271,102 222,921
Steve Dilks 171,000 13,680 7,651 192,331 151,778
Bill Murray * - - - - 38,019
Nicholas Mustoe ** 45,000 - - 45,000 30,692
Adam Reynolds 30,000 - - 30,000 30,000
Mark Collingbourne *** - - - - 25,000
Andrew Booth 30,000 - - 30,000 30,000
Jonathan Wragg **** 28,654 - - 28,654 29,230
Lesley Watt ***** 30,000 - - 30,000 17,500
Total 804,654 70,080 24,914 899,648 797,707
* Passed away 4 February 2023
** Became Interim Chair 15 March 2023
*** Resigned 1 September 2022
**** Appointed 14 April 2022/ Resigned 15 December 2023
***** Appointed 1 September 2022
7 Income tax
a) Analysis of charge in the period
31 March 31 March
2024 2023
£'000 £'000
Deferred tax
Origination and reversal of timing differences 91 (284)
Total deferred tax charge/(credit) 91 (284)
b) Factors affecting the tax charge for the period
31 March 31 March
2024 2023
£'000 £'000
Loss on ordinary activities before taxation (332) 1,597
Tax at the UK corporation tax rate of 25% (2023: 19%) (83) 303
Expenses not deductible for tax purposes 66 60
Fixed asset differences (13) (15)
Remeasurement of deferred tax for changes in tax rates (4) (63)
Movement in deferred tax not recognised 125 (569)
Tax on loss on ordinary activities 91 (284)
On 1 April 2023 the rate of corporation tax increased to 25%. The deferred tax
asset recognised in the accounts has been calculated using the current year
tax rate of 25% (2023: 19%). The unrecognised deferred tax asset amounts to
£3,425,906 (2023: £3,444,393) and has been recognised at the tax rate of
25%.
The deferred tax asset has been recognised due to the expectation that it will
be reversed in future years.
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
2024 2023
Profit / (Loss) after tax attributable to equity holders of the parent (423) 1,881
(£'000)
Weighted average number of ordinary shares in issue 248,226,513 224,738,344
Fully diluted average number of ordinary shares in issue 248,226,513 252,499,241
Basic earnings/(loss) per share (pence) (0.17) 0.84
Diluted earnings/(loss) per share (pence) (0.17) 0.74
Where a loss is incurred the effect of outstanding share options and warrants
is considered anti-dilutive and is ignored for the purpose of the loss per
share calculation. The prior year calculations of basic earnings per share is
based on the weighted average number of ordinary shares and the diluted
earnings per share calculation includes the effect of outstanding share
options.
9 Intangible Assets
Website Trademark Software Assets under Construction Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 April 2022 228 2 - - 230
Additions - - - - -
At 31 March 2023 228 2 - - 230
Amortisation
At 1 April 2022 228 1 - - 229
Charge for the year - 1 - - 1
At 31 March 2023 228 2 - - 230
Carrying value 31 March 2023 - - - - -
Cost
At 1 April 2023 228 2 - - 230
Additions - 8 191 259 458
Transfers - 52 52
Disposals - - (50) (30) (80)
At 31 March 2024 228 10 141 281 660
Amortisation
At 1 April 2023 228 2 - - 230
Charge for the year - - 39 - 39
Disposals - - - - -
At 31 March 2024 228 2 39 - 269
Carrying value 31 March 2024 - 8 102 281 391
Assets under construction are costs relating to the ERP implementation project
and thus were transferred into intangible assets from property, plant and
equipment. Refer to note 10.
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 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
Cost
At 1 April 2023 191 592 936 52 1,771
Additions 50 31 166 - 247
Transfers - - - (52) (52)
At 31 March 2024 241 623 1,102 - 1,966
Accumulated depreciation
At 1 April 2023 119 309 352 - 780
Charge for year 45 61 171 - 277
At 31 March 2024 164 370 523 - 1,057
Carrying value 31 March 2024 77 253 579 - 909
Assets under construction are costs relating to the ERP implementation project
and thus were transferred into intangible assets from property, plant and
equipment. Refer to note 9.
11 Non-current assets
Investments in subsidiaries:
Company
2024 2023
£'000 £'000
Cost at 1 April 7,432 7,127
Additions during the year 262 305
Cost at 31 March 7,694 7,432
Impairment at 1 April - -
Disposals during the year - -
Impairment at 31 March - -
Carrying value as at 31 March 7,694 7,432
The additions during the year are in respect of the share-based payment
expense which was issued in the Parent Company on behalf of its subsidiary,
Thread 35 Limited and therefore represents a capital contribution during the
year. More information can be found in note 17.
Investments are tested for impairment at the balance sheet date, where
indicators of impairment exist. Indicators were identified including the
reduction in profit in the subsidiary and the write off of the intercompany
loan balance with the subsidiary. The recoverable amount of the investment in
Thread 35 Ltd as at 31 March 2024 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 5
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 2024 are disclosed in note 2, Critical accounting judgements and key
sources of estimation uncertainty on page 59.
The subsidiaries of Sosandar Plc are as follows:
Incorporation % Holding % Holding 2023
2024
Holding
Subsidiary companies Type of share held
UK
Thread 35 Ltd Direct Ordinary shares 100 100
Sosandar (Europe) Limited Ireland Direct Ordinary shares 100 -
The registered office of Thread 35 Limited is 40 Water Lane, Wilmslow, SK9 5AP
and the registered office of Sosandar (Europe) Limited is 5(th) Floor, 40
Mespil Road, Budlin 4, Ireland, D04 C2N4.
There were no other investments held by the Group.
12 Inventories - Group
31 March 31 March
2024 2023
£'000 £'000
Stock - finished goods 10,365 11,251
Right to returned stock 555 1,110
Total 10,920 12,361
The cost of inventories charged in the year as an expense equated to £19,627k
(2023: £18,416k). 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
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Loan to subsidiary - - - -
The loan made to Thread 35 Ltd by Sosandar Plc of £26,671k (2023: £26,470k)
was fully impaired at the year end. The loan was not formalised during FY24.
It does not bear interest and is repayable on demand. Post year end, the loan
agreements between Sosandar PLC and Thread 35 Ltd and Sosandar (Europe)
Limited were formalised.
14 Trade and other receivables
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Trade receivables 2,160 1,973 - -
VAT recoverable 8 23 8 23
Other receivables 100 86 - -
Prepayments 500 648 - -
Trade and other receivables 2,768 2,730 8 23
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. The Group
does not have any non-current receivables.
At 31 March 2024 there were 3 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. None of the trade receivables have been subject to a
significant increase in credit risks since initial recognition and as such no
impairment provision has been recognised on trade receivables.
Expected credit losses have been recognised in the parent company on the loan
to the subsidiary.
31/03/2024 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 26,671 (26,671) -
15 Cash and cash equivalents
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Cash at bank 8,313 10,576 4,534 5,119
16 Share capital and reserves
Details of ordinary shares issued are in the table below:
Ordinary Shares (£0.01)
Number of shares issued and fully paid Issue Price £ Total Share Capital Total Share Premium
£'000 £'000
At 31 Mar 2023 248,226,513 0.001 248 52,619
At 31 Mar 2024 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 2024 31 March 2023
Number ('000) WAEP £ Number ('000) WAEP £
Outstanding at 31 March 2023 27,761 0.035 27,761 0.035
Modifications in the year 0 0.000 - -
0 0.000 - -
Issuances in the year 135 0.000 - -
Cancellations in the year (135) 0.000 0 0
Outstanding at 31 March 2024 27,761 0.035 27,761 0.035
Exercisable at 31 March 2024 18,118 0.054 18,118 0.054
The options outstanding at 31 March 2024 had a weighted average exercise price
of £0.035 and a weighted average remaining contractual life of 6.59 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 and May 2023 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 £262k (2023: £311k) related to
equity-settled share-based payment transactions during the year. Of this, the
charge recognised in the subsidiary, Thread 35 Ltd, was £262k (2023: £305k).
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 FY24 Share options FY22 Share options FY19 Share options FY18
Exercise price 0.0p 0.0p 29.2p 15.1p
Share price at date of grant 27.00p 23.75p 29.2p 15.1p
Risk-free rate 0.25% 0.25% 0.25% 0.25%
Volatility 70% 42% 25% 25%
Expected Life 3 years 5 years 10 years 10 years
Fair Value 0.20 0.13 0.07 0.05
For options exercisable at year end, the exercise price ranged from 0.0p to
29.2p.
18 Trade and other payables
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Trade payables 2,111 3,694 - 20
Accruals 692 549 61 36
Other payables 323 384 - -
VAT payable 535 1,077 - -
Contract liabilities 1,365 2,617 - -
Deferred income 50 34
Trade and other payables 5,076 8,355 61 56
19 Leases
The Group have property lease contracts which are used in its day-to-day
operations.
31 March 31 March
2024 2023
£'000 £'000
Lease liability brought forward 630 327
Additions 166 380
Finance cost 36 40
Lease payments (210) (117)
Lease liability recognised in statement of financial position 622 630
31 March 31 March
2024 2023
£'000 £'000
Of which
Current lease liabilities 194 148
Non-current lease liabilities 428 482
Lease liability recognised in statement of financial position 622 630
On 1 April 2022, the Group entered into a second property lease in Wilmslow,
England in order to expand its office space. Both property leases have a term
of five years with a break clause after three years.
20 Related party transactions
The intercompany loan balance between the Company and its subsidiary, Thread
35 Ltd, increased by £201k during the year (2023: £3,423k).
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. The Group's activities expose it to a
range of financial risks: market risk (including foreign currency risk and
interest rate risk), credit risk and liquidity risk. This note describes the
Group's objectives, policies and processes for managing those risks and the
methods used to measure them.
These methods include sensitivity analysis in the case of foreign exchange and
other price risks, and ageing analysis for credit risk. 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:
Credit risk
The Group faces low credit risk as own site customers pay for their orders in
full on order of the goods. There are credit terms with third party concession
and wholesale customers.
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost, less provision for impairment. A provision for
impairment of trade receivables is recognised on trade receivables if the
Group deem there to be expected credit losses. The amount of expected credit
losses is calculated using the simplified approach under IFRS 9 and is updated
at each reporting date to reflect changes in credit risk since initial
recognition of the financial asset.
Losses arising from impairment are recognised in the statement of
comprehensive income in administrative expenses. The Group will write off,
either partially or in full, the gross carrying amount of a financial asset
when there is no realistic prospect of recovery. This is usually the case when
it is determined that the debtor does not have the assets or sources of income
that could generate sufficient cash flows to repay the amounts subject to the
write off. However, the Group may still choose to pursue enforcement in order
to recover the amounts due.
The types of customers that the Group trades with have strong credit ratings
and a robust payment history with the Group with no aged balances and as such
the Group have not identified any expected credit losses from trade
receivables during the period. The Group does not deem credit risk a material
risk to the business.
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:
Group Company
Within 1 year 1-2 years Within 1 year 1-2 years
As at 31 March 2024 £'000 £'000 £'000 £'000
Trade and other payables 18 5,076 - 61 -
Lease liabilities 19 194 428 - -
Total 5,270 428 61 -
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 -
Financial assets
At the reporting date, the Group held the following financial assets, all of
which were classified as financial assets at amortised cost:
Amortised cost Amortised cost
Group Company
31 March 31 March 31 March 31 March
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Cash and cash equivalents 8,313 10,576 4,534 5,122
Trade & other receivables* 2,270 2,081 8 23
Total 10,583 12,657 4,542 5,145
*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:
Amortised cost Amortised cost
Group Company
31 March 31 March 31 March 31 March
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Trade payables 2,111 3,694 - 20
Accruals 692 549 61 36
Other payables* 323 384 - -
Contract liabilities 1,365 2,617 - -
Lease liabilities 622 633 - -
Trade and other payables 5,113 7,877 61 56
*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 2023 Cash flow Additions Accrued interest charges At 31 March 2024
£'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 10,576 (2,263) - - 8,313
Lease liabilities (630) 210 (166) (36) (622)
Net cash (excluding lease liabilities) 9,946 (2,053) (166) (36) 7,691
23 Post balance sheet events
Post year end, the loan agreements between the parent, Sosandar PLC, and the
subsidiaries, Thread 35 Ltd and Sosandar (Europe) Limited were formalised. The
loans bear interest of 6% and are repayable on demand. Management considers
this a non-adjusting event.
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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