REG - Sosandar PLC - Half Year Results
30/11/2021 07:00
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RNS Number : 9557T Sosandar PLC 30 November 2021
Date: 30 November 2021
On behalf of: Sosandar plc ('Sosandar' or 'the Company')
Embargoed until: 0700hrs
Sosandar plc
Half Year Results
Half year revenue growth +184%, record autumn trading, with October and
November the Company's first EBITDA positive months
Trading ahead of full year market expectations*
Sosandar PLC (AIM: SOS), the online women's fashion brand, is pleased to
announce its financial results for the six months ended 30 September 2021 and
an update on current trading.
Half Year Financial Highlights
· Revenue growth of 184% to £12.2m (H1 FY2021: £4.3m), higher than the
entirety of FY2021
· Gross profit of £6.9m, a 207% increase on the same period in the prior year
(H1 FY2021: £2.24m)
· EBITDA improved to a £0.99m loss against a comparative period in the prior
year where spending was significantly reduced in response to the pandemic (H1
FY2021: £1.02m loss, H2 FY2021: £1.9m loss)
· Increase in gross margin to 56.5% (H1 FY2021: 52.3%)
· Net cash of £7.4m as at 30 September 2021 (30 Sept 2020: £4.5m, 30 June
2021: £9.1m) reflecting the equity fundraise in May 2021, and subsequent
investment in inventory in order to meet growing demand from all customers
including third parties
Half Year Operational and Strategic Highlights
· Ever increasing levels of customer engagement with all KPIs increasing YoY:
o Active customers increased by 41% to 191k
o Conversion Rate of 3.91%, up from 2.58% in H1 FY2021
o Average order frequency increased by 19% to 2.21 times per annum
o Average order values maintained at £86, alongside 153% increase in orders
· Maintained a strong return on investment from marketing, with Cost per
Acquisition (CPA) continuing at half the pre-pandemic level
· Continued expansion of the product range across all categories offering a
broader choice to the customer with rapid sell through across all channels
· Strong trading with third parties M&S, Next and John Lewis across all
product categories
Post-period Trading Highlights
· Revenue for 1 October to 29 November up 120% on the same period in 2020,
reflecting consecutive record months
· EBITDA positive in both October and November, demonstrating the Group's
trajectory towards annual profitability
· Record number of website visits, orders and a conversion rate of 4.0% in
October
· Increase in stock purchased for autumn executed to plan
· Strong revenue from new and repeat customers as well as through third parties
· Product across all categories selling through rapidly with partywear, knitwear
and outerwear particularly strong
· No material impact from supply chain disruption experienced to date, with a
constant flow of stock to meet demand
· Cash at 30 October 2021 of £7.6m, demonstrating strong cash generation
· Trading ahead of market expectations for the full year
H1 FY2022 KPIs (Own Site)
Six months ended 30 Sept 2021 Six months ended 30 Sept 2020 Change
Sessions 6,212,484 3,713,318 67%
Conversion rate 3.91% 2.58% 51%
Number of orders 242,991 95,903 153%
AOV £85.86 £87.59 -2%
Active customers 191,424 135,426 41%
Average Order Frequency 2.21 1.85 19%
Ali Hall and Julie Lavington, Co-CEOs commented:
"We are delighted to be reporting such strong revenue and active customer
growth as well as reaching a significant milestone in delivering two EBITDA
positive months in October and November. This pivotal achievement reflects
customer engagement KPIs being substantially ahead of the prior year,
including the increase in our number of active customers, repeat customers and
conversion rates, highlighting the effectiveness of our marketing strategy,
diverse product range and operational excellence.
Anticipating high demand as restrictions were eased, we decided to bring in
stock early for autumn, including partywear, coats, boots, and knitwear. This
decision has allowed us to meet the exceptionally strong demand for our
product with sequins, Christmas jumpers and fur coats emerging as best
sellers.
Looking ahead, whilst we are cognisant of ongoing supply chain challenges, we
continue to mitigate the impact and our long-term growth strategy remains
unchanged. The Company is trading ahead of market expectations for the full
year and we look forward to a successful second half and beyond."
* Sosandar believes that market expectations for the year ending 31 March 2022
prior to publication of this announcement are currently revenue of £24.4
million and an EBITDA loss of £1.2 million.
Presentations
Sosandar is hosting a webinar for analysts at 1100 hrs GMT today. If you would
like to register, please contact sosandar@almapr.co.uk
The Company is also hosting a webinar for retail investors at 1300 hrs GMT on
Wednesday 1 December 2021. If you would like to attend, please register here:
https://bit.ly/SOS_HY_R (https://bit.ly/SOS_HY_R)
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 / Kailey Aliyar / Tom Salvesen
Alma PR Limited (Financial PR) +44 (0) 20 3405 0205
Susie Hudson / Sam Modlin / Molly Gretton sosandar@almapr.co.uk (mailto:sosandar@almapr.co.uk)
This announcement contains inside information for the purposes of the retained
UK version of the EU Market Abuse Regulation (EU) 596/2014 ("UK MAR").
About Sosandar plc
Sosandar provide a one-stop online shop for style-conscious women who have
graduated from price-led alternatives. The Company offers this underserved
audience fashion-forward, affordable, quality clothing to make them feel sexy,
feminine, and chic. The business sells predominantly own label exclusive
product designed in-house.
Sosandar's offers product across all womenswear categories, ensuring all
wardrobe needs can be fulfilled. The Company has brand partnerships in place
with Next, John Lewis and Marks & Spencer.
Sosandar's growth strategy is to build brand awareness and expand its customer
base through developing exceptional products, providing a seamless customer
experience and using impactful, lifestyle marketing activity. This is
underpinned by combining innovation with data analysis, which drives
successful product development and new customer targeting.
Sosandar was founded in 2016 and listed on AIM in 2017. More information is
available at www.sosandar-ir.com
Co-CEOs' Statement
We are very proud of what our team has achieved in the six-month period to 30
September 2021. The success of our strategy and the agility of our business
has enabled us to build momentum, leading to the delivery of a very strong
performance overall with a substantial improvement in revenue. This has also
positively impacted our EBITDA performance, meaning that we are trading ahead
of market expectations for the full year.
We have achieved sustained progress against all elements of our growth
strategy including cultivating partnerships, broadening our product range and
continuing to grow levels of customer engagement through impactful marketing
activity.
We would like to thank our incredible team, partners and suppliers for their
commitment and ongoing passion for the business.
Strong financial performance, benefitting from increased economies of scale
Total revenue for the period increased 184% to £12.2m, with a reduction in
EBITDA losses to £0.99m (H1 FY2021: £1.02m loss). The revenue growth in the
period was driven by both a larger customer base and an increased frequency of
purchases, whilst maintaining average order values. The EBITDA movement
represents another step forward on our road to profitability and the fact it
has improved against a comparative period where marketing activities were
significantly curtailed due to Covid-19, is pleasing. Further progress has
been made post-period end, with EBITDA positive months recorded in October and
November for the first time since Sosandar was established.
We retain a robust cash position (net cash as at 30 September 2021 of £7.4m)
following the fund raise undertaken in May 2021, allowing us to invest in
stock for H2 FY2022 and positioning us well for sustained growth for the
future.
Great momentum with third parties
Trading with our third party partners (M&S, Next and John Lewis) has been
exceptionally strong in the period, with Sosandar product resonating very well
across all types of product category. Revenue has stepped up each month
throughout the period following additional stock being allocated to each
partner.
As intended, the funds raised through the equity placing in May 2021 have
enabled us to further increase our ability to meet the proven and growing
demand from our third-party partners. We began to accelerate the increase in
inventory levels during September with autumn revenue stepping up
substantially. We intend to continue with this strategy over the second half
of the financial year.
Having proven the third party model with our current partners, we are now
actively engaged in exploring new opportunities with other partners where
there is a strong strategic fit with the Sosandar brand.
Continued operational strength
During the period the business did not experience any material impact from
logistical challenges as a result of the pandemic, including the country-wide
supply chain disruption currently impacting many industries. As a result of
starting to scale the business and an increase in order quantities we have
benefited from margin growth, which has offset the small degree of upwards
pressure experienced by supply chain costs. However, we remain very mindful of
the wider market disruption, and are constantly reviewing the situation and
will take mitigating actions as appropriate.
The importance of a diversified, flexible supply base and having partners with
the expertise in this area, such as Clipper Logistics, continues to be very
important to us. Our operational set-up, alongside the fact that we are an
agile, online-only business, allows us to continually adjust our product
offering, warehousing and fulfilment operations in line with the ever-changing
needs of our customers. We have worked closely with our suppliers to
successfully increase purchases of stock to meet consumer demand and we would
like to thank them all for their support over the recent months.
Operating responsibly continues to flow through all aspects of our business.
We are continually evaluating opportunities to further improve our practices
and reduce our impact on the environment.
KPIs trending well
KPIs in the business are trending well, reflecting the Company's continued
growth and development as we become increasingly able to capitalise on
economies of scale, exploit data-led learnings and cater to the needs of the
Sosandar customer.
Our expanded product range and effective communication to our customers have
resulted in repeat orders increasing 14% in the period, with site visits up
67% and our active customer base up 41%.
We have maintained a strong return on investment from marketing, as we
continue to capitalise on the learnings from previous years, with Cost per
Acquisition (CPA) now at half the pre-pandemic level.
Gross margin increased to 56.5% (H1 FY2021: 52.3%) reflecting a higher
proportion of full price sales compared with the comparative period which was
impacted by actions taken as a consequence of Covid 19. In addition, the
expansion of the product range has enabled us to meet the needs of our
customer.
Average Order Value for the period has been maintained at £86 as the product
mix matures representing a step up versus H2 FY2021 (£80).
Very strong autumn trading
We have had very strong autumn trading with record revenues in both October
and November, which has resulted in each month trading EBITDA positive and
generating net cash. Whilst we expect that seasonality will mean that not
every month will be profitable in H2 FY2022, this is an excellent indication
of the development of the business and we look forward to reporting sustained
profitable growth before long.
The autumn range has been resonating extremely well with customers, with rapid
sell through across all key categories including knitwear, dresses, leather,
coats, and denim. This has resulted in continued strong levels of conversion,
order frequency and repeat order rates on our own site whilst also executing
on the growth plan with third parties.
Whilst we have seen demand swing back to office-wear and 'going out' outfits,
we have retained a more equitable mix across all of our product segments
compared to pre-pandemic, increasing our resilience and reflecting a step
forward towards our vision of being a global one-stop online shop for fashion
forward women.
Outlook
Following the strong first half and subsequent autumn performance, we are now
trading ahead of current market expectations for the full year.
We are more optimistic than ever about the future prospects for Sosandar. The
half year results in addition to our autumn trading demonstrate that our
business model is working and is now delivering the benefits of increased
scale which is leading us towards sustainable profitability.
Our focus has been on continuing to make fantastic products that customers
want to buy whilst constantly refining our marketing strategy based on data
driven learnings. The growth in active customers along with ever increasing
levels of customer engagement reflect this work, however, we have still only
scratched the surface of the full opportunity.
In addition, our existing third party partnerships continue to go from
strength to strength and there remains considerable growth potential as we
increase the product range available on their websites. This has started in
autumn with plans to expand even more through H2 FY2022, as well as to explore
opportunities with new partners, going forward.
Whilst we are trading well and have not had any material disruption to date,
we remain vigilant to the external challenges across global supply chains and
believe our agile approach positions us well.
We believe Sosandar is well on the road to becoming a substantial business and
a sustained success.
Financial review
KPIs
6 months ended 30 September 2021 £'000 6 months ended 30 September 2020 £'000 Change
Revenue 12,177 4,284 +184%
Gross Profit 6,880 2,241 +207%
Gross Margin 56.5% 52.3% +420bps
Operating loss (1,076) (1,098) +2%
EBITDA (991) (1,017) +2%
6 months ended 30 September 2021 6 months ended 30 September 2020 Change
Sessions 6,212,484 3,713,318 +67%
Conversion rate 3.91% 2.58% +133bps
Number of orders 242,991 95,903 +153%
AOV £85.86 £87.59 -2%
Active customer base 191,424 135,426 +41%
Order Frequency 2.21 1.85 +19%
H1 FY2022 has been a period of substantial growth with revenue up by +184%
reflecting the strength and agility of the Group in maximising the opportunity
as restrictions from the pandemic started to lift. Customer engagement KPIs
have stepped up significantly including visits, conversion, order frequency
and active customers. This reflects investment in both product and marketing,
which has delivered revenue during the period in excess of the entirety of
FY2021.
EBITDA losses improved by 2% to (£991k) against a comparative period where
spending was significantly reduced in response to the pandemic as cash
preservation and engaging with existing customers was prioritised. The
trajectory towards profitability is highlighted by the first two months post
period trading EBITDA positive and significantly ahead yoy (H2 FY2021: £1.9m
loss).
The gross margin increased substantially to 56.5% (H1 FY2021: 52.3%). The
comparative period was impacted by actions as a consequence of the pandemic
with the current period having a higher proportion of full price sales.
Economies of scale and the continued management focus on ensuring strong
return on investment across all spend categories resulting in administrative
expenses continuing to drop as a percent of revenue, to 64% (H1 FY2021: 74%).
In particular the growth in active customers has been driven by the cost
effective customer acquisition activity where the CPA has been maintained at
half the level pre- pandemic.
Cash flow
As at 30 September 2021 the cash position was £7.4m (H1 FY2021: £4.50m) with
the balance increasing to £7.6m as at 31 October 2021.
In May 2021 the cash position was strengthened through an oversubscribed
equity placing and Primarybid offer which raised gross proceeds of £5.77m.
Since the fundraise, the Group has executed its plan and invested in stock to
broaden the number of styles and increase the number of units per style to
capitalise on the proven growth opportunities. In particular this has
allowed us to ensure we can meet the increasing demand with our third parties
and now have the cash headroom to drive sustained growth into the future.
UNAUDITED CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2021
6 months to 30 September 2021 6 months to 30 September 2020 Year ended 31 March 2021
Notes £'000 £'000 £'000
Revenue 12,177 4,284 12,163
Operational costs (5,297) (2,043) (6,319)
Gross profit 6,880 2,241 5,844
Other operating income - - 135
Administrative expenses (7,770) (3,184) (8,729)
Share based payment (101) (74) (175)
Depreciation and amortisation (85) (81) (163)
Operating (loss) (1,076) (1,098) (3,088)
Finance income - - -
Finance cost (1) (4) (10)
Loss on ordinary activities before taxation (1,077) (1,102) (3,098)
Tax on loss on ordinary activities - - -
Profit/(Loss) for the period (1,077) (1,102) (3,098)
Other Comprehensive income - - -
Total Comprehensive income for the period (1,077) (1,102) (3,098)
Attributable to:
Equity holders of the parent (1,077) (1,102) (3,098)
Non-controlling interests - - -
Group loss for the period (1,077) (1,102) (3,098)
Exchange translation differences - - -
Total comprehensive loss for the period (1,077) (1,102) (3,098)
Loss per share:
Loss per share - basic and diluted, attributable to ordinary equity holders of 5 (0.51) (0.57) (1.61)
the parent (pence)
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021
As at 30 September 2021 As at 30 September 2020 As at 31 March 2021
Notes £'000 £'000 £'000
Assets
Non-current assets
Intangible assets 200 272 198
Property, plant and equipment 99 149 165
Total non-current assets 299 421 363
Current assets
Inventories 6,005 3,773 2,866
Trade and other receivables 1,100 624 728
Cash and cash equivalents 7,351 4,538 3,928
Total current assets 14,456 8,935 7,522
Total assets 14,755 9,356 7,885
Equity and liabilities
Equity
Share capital 4 221 192 192
Share premium 4 47,044 41,592 41,592
Capital Reserves 4 4,648 4,648 4,648
Other reserves 758 556 657
Reverse acquisition reserve 4 (19,596) (19,596) (19,596)
Retained earnings (23,589) (20,516) (22,512)
Equity attributable to owners of the parent 9,486 6,876 4,981
Total equity 9,486 6,876 4,981
Current liabilities
Trade and other payables 5,269 2,391 2,855
Lease liability - 89 49
Total current liabilities 5,269 2,480 2,904
Non-Current liabilities
Lease liability - - -
Total liabilities 5,269 2,480 2,904
Total equity and liabilities 14,755 9,356 7,885
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
6 months to September 2021 6 months to September 2020 Year ended 31 March
2021
Notes £'000 £'000 £'000
Cash flows from operating activities
Group loss for the period (1,077) (1,102) (3,098)
Share based payments 101 74 175
Depreciation and amortisation 85 81 163
Net finance costs 1 4 10
Adjustment for reverse acquisition - - -
Working capital adjustments:
Change in inventories (3,139) 37 944
Change in trade and other receivables (372) 377 273
Change in trade and other payables 2,365 (167) 261
Net cash flow from operating activities (2,036) (696) (1,272)
Cash flow from investing activities
Addition of property, plant and equipment 13 (59) (34)
Addition of intangibles 8 - (12)
Bank interest paid - - (5)
Bank interest received - - -
Net cash flow from investing activities 21 (59) (51)
Cash flow from financing activities
Payment of lease liability
Net proceeds from issue of equity instruments 5,481 0 -
Payment of lease liabilities (43) (40) (82)
Net cash flow from financing activities 5,438 (40) (82)
Net change in cash and cash equivalents 3,423 (795) (1,405)
Cash and cash equivalents at beginning of period 3,928 5,333 5,333
Cash and cash equivalents at end of period 7,351 4,538 3,928
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 SEPTEMBER 2021
Share capital Share premium Reverse acquisition reserve Capital redemption reserve Retained earnings Share based payment reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 Sep 2020 192 41,592 (19,596) 4,648 (20,516) 556 6,876
Loss for 6 months - - - - (1,996) - (1,996)
Share based payments - - - - - 101 101
Issue of share capital - - - - - - -
Issue Costs - - - - - - -
Balance at 31 March 2021 192 41,592 (19,596) 4,648 (22,512) 657 4,981
Loss for the 6 months - - - - (1,077) - (1,077)
Shares based payments - - - - - 101 101
Issue of share capital 29 5,739 - - - - 5,768
Issue Costs - (287) - - - - (287)
Balance at 30 Sep 2021 221 47,044 (19,596) 4,648 (23,589) 758 9,486
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital
over the nominal value of those shares net of share issue expenses.
Share based payments reserve relate to the charge for share-based payments in
accordance with International Financial Reporting Standard 2.
Retained earnings represent the cumulative loss of the Group attributable to
equity shareholders.
Reverse acquisition reserve relates to the effect on equity of the reverse
acquisition of Thread 35 Limited.
Capital redemption reserve represents the aggregate nominal value of all the
deferred shares repurchased and cancelled by the Company. The reserve is
non-distributable.
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
1. General Information
Sosandar Plc is a company incorporated and domiciled in England and Wales. The
Company's offices are in Wilmslow. The Company is listed on the AIM market of
the London Stock Exchange (ticker: SOS).
The financial information set out in this Half Yearly report does not
constitute statutory accounts as defined in Section 434 of the Companies Act
2006. The Group's statutory financial statements for the year ended 31 March
2021, prepared under International Financial Reporting Standards ("IFRS"),
have been filed with the Registrar of Companies. The auditor's report on those
financial statements was unqualified and did not contain statements under
Sections 498(2) and 498 (3) of the Companies Act 2006.
Copies of the annual statutory accounts and the Half Yearly
report can be found on the Company's website at
http://www.sosandar-ir.com/content/investors/annual-reports.asp
(http://www.sosandar-ir.com/content/investors/annual-reports.asp) .
2. Basis of preparation and significant accounting policies
This Half Yearly report has been prepared using the historical cost
convention, on a going concern basis and in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union, using
accounting policies which are consistent with those set out in the financial
statements for the year ended 31 March 2021.
3. Segmental reporting
In the opinion of the directors, the Group has one class of
business, being that of a clothing manufacturer and distributor via internet
and mail order. The Group's primary reporting format is determined by the
geographical segment according to the location of its establishments. There is
currently only one geographic reporting segment, which is the UK. All costs
are derived from the single segment.
4. Share capital and reserves
Details of ordinary shares issued are in the table below:
Ordinary Shares (£0.001)
Date Details Number of shares Issue Price £ Total Share Capital £'000 Total Share Premium £'000
At 31 Mar 2021 192,268,122 0.001 192 41,592
25 May 2021 Share placing 28,840,210 0.001 29 5,452
At 30 Sep 2021 221,108,332 0.001 221 47,044
5. Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity
shareholders by the weighted average number of ordinary shares in issue during
the period:
6 months to 30 September 2021 6 months to 30 September 2020 Year ended 31 March 2021
Loss after tax attributable to equity holders of the parent (£'000) (1,077) (1,102) (3,098)
Weighted average number of ordinary shares in issue 212,504,070 192,268,110 192,268,110
Fully diluted average number of ordinary shares in issue 212,504,070 192,268,110 192,268,110
Basic and diluted loss per share (pence) (0.51) (0.57) (1.61)
Where a loss is incurred the effect of outstanding share options and warrants
is considered antidilutive and is ignored for the purpose of the loss per
share calculation. The share options outstanding as at 30 September 2021
totalled 27,760,897 (2020: 20,400,000) and are potentially dilutive.
6. Post balance sheet events
The company had no post balance sheet events.
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