Full Year Results
Record revenues and growth across KPIs
Sosandar PLC (AIM: SOS), the online women's fashion brand, is pleased to announce its results for the year ended 31 March 2018.
- Revenue increased 387% to £1.35m (2017: £0.28m)
- Like-for-like sales for the six months to March 2018 up 268% against the prior year
- Gross profit increased 532% to £0.66m (2017: £0.10m)
- Gross margin improved 11.6 percentage points to 49.4% (2017: 37.8%)
- Underlying EBITDA loss of £3.1m, reflecting the increased investment in customer acquisition, product imagery and people to deliver growth.
- Year-end cash balance of £4.6m
- Reverse takeover of Orogen plc in November 2017, start of trading on AIM and fundraise of £5.3m
- Increased product range by over 7x
- Order growth of 353% to 31,732 orders
- Customer database grew 695% to 54,196
- Grew Facebook and Instagram followings over 2.5x and 9x respectively
- Conversion rate increased by 87bps to 2.16%
- Bolstered the Board with the appointment of Adam Reynolds as a Non-Executive Director and Mark Collingbourne as Executive Finance Director
- Appointed Andrew Booth as Non-executive director
Performance against KPIs
|Year ended 31 March 2018||Period ended 31 March 2017*||Change|
|Number of orders||31,732||7,003||+353%|
|As at 31 March 2018||As at 31 March 2017||Change|
* Representing 7 months of trading from Sosandar's launch in September 2016.
Ali Hall and Julie Lavington, Co-CEOs, commented:
"We are very pleased to be reporting on a year of very strong financial and operational progress. Our increased scale, partially facilitated by our listing on AIM in November 2017, has supported us in making a greater variety of products, more frequently, and in buying significantly higher levels of stock.
A key focus for the team has been building awareness of the brand and customer acquisition, and we are proud to report that through implementing a strategic campaign across a multitude of channels we have been able to substantially grow our customer database. Our products are what makes Sosandar unique, and our 'test and repeat' model has delivered well. We've also seen a growing conversion rate and average order value.
The momentum reported in March has continued into the new financial year surpassing March performance, with business continuing to progressively increase revenues with quarter to June 18 revenue up 73% vs quarter to March 18. This has been achieved whilst also driving cost efficiencies, especially with respect to acquiring new customers which is down 14% in the same period, whilst the number of new customers acquired has increased by 97%.
Our strategy is to continue to broaden the product range to give more choice to our customers, buy deeper and engage in a more diversified marketing strategy. We remain focused on data-driven efficiencies and digital investment to improve our customers' journeys. We believe that the results to date demonstrate the considerable potential and opportunity in this underserved market and are testament to the brand's growing momentum. Sosandar's unique offering and market positioning puts us in a strong position to achieve another year of strong growth in 2018/19."
The past 12 months have been an extraordinary period in the short life of Sosandar, with some momentous achievements.
In our first full financial year, we achieved revenue of £1.35m with like-for-like sales for the six months to March 2018 showing 268% growth. Gross margin performance has been particularly pleasing, increasing significantly to 49.4% from 37.8%, with scope to increase further as the Sosandar brand awareness builds and purchasing efficiencies increase.
The conclusion of Sosandar's reverse takeover with Orogen, fund raising of £5.3m and start of trading on AIM in November 2017 were company milestones.
These major transactions have resulted in one off costs & accounting adjustments which have increased losses. We anticipate our increased financial strength unlocks exciting potential for Sosandar and allows us to fully exploit obvious market opportunities. We have seen terrific growth in customer engagement, evidenced by a 695% increase in our customer database, a 181% increase in our Facebook following and an 888% increase in Instagram followers, supported by our investment in marketing via direct mail brochures and social media channels.
For the first half of the year, Sosandar continued to expand while the management team worked to secure the financing required to accelerate our growth, and I credit Julie and Ali, the co-CEOs, with their extraordinary success in surmounting these challenges. Our increased financial strength has allowed the management team to unlock the exciting potential of the Sosandar brand and to fully exploit obvious market opportunities.
Even though Sosandar was little more than a year old in November 2017, the Sosandar Board has committed to a corporate governance approach commensurate with more mature businesses. Both Julie and Ali have decades of experience in running and overseeing large, dynamic media businesses, bringing discipline and prudent financial approach to the day-to-day running of the business. In November 2017, Nick Mustoe and I carried across to the Board, joined by Adam Reynolds and Mark Collingbourne (as Finance Director). The Board is committed to adding real value and oversight to Sosandar's growth and development and, since the start of the 2018/19 financial year, we have appointed Andrew Booth as NED, who brings additional ecommerce and retail experience to the Board.
As an early-stage business, it is a priority to keep all our shareholders up-to-date and engaged. The reverse takeover attracted investment from both private and institutional investors. We appreciate that they share Sosandar's longer-term ambition and we are committed to transparency in all our corporate communications.
Sosandar is blessed with a talented, creative and loyal staff. Much of this is due to Julie and Ali's efforts at maintaining an enthusiastic, vibrant culture, while introducing structures and processes that enable a fast-growing business to stay on track. I would like to thank the Sosandar management team, all of whom have shown depth of vision, creativity and determination throughout a busy first year of trading.
Looking ahead, the new financial year has started encouragingly and we expect strong year-on-year growth. This will be delivered via the expansion of our clothing and footwear ranges, increased stocking levels and continued investment in marketing channels to acquire new customers. Our approach remains underpinned by analysing and using the wealth of data available to us to optimise purchase frequency and to ensure we continue to design, promote and deliver first-class, wearable and affordable fashion.
Date: 10 July 2018
It has been the most incredibly exciting 12 months. In just a year Sosandar has flourished from start-up to a well-resourced listed business. Our vision of creating a global fashion-forward brand is accelerating. Demand we anticipated from an underserved market continues to grow and is testament to the brand's increasing momentum.
Sosandar is focused on creating chic and fashion-forward products for a generation of women who are overlooked by existing fashion brands, and this offers a significant untapped opportunity - a demographic that spent £3.7bn on fashion in 2016.
Our typical customer has a high disposable income and is very fashion conscious. She is looking for quality, affordable clothing with a premium, trend-led aesthetic for all areas of her life.
Our strategy is to expand Sosandar's customer base and build our brand awareness through developing exceptional products, providing a seamless customer experience and continuing to expand our highly successful on and offline marketing activity. This is underpinned by combining our creativity with gathering and analysing data on shopping habits, trends and customer preferences to drive product development and effectively target new customers.
We have made significant progress during the year, including five months as a listed company on AIM following the reverse takeover of Orogen plc in November 2017 and the fundraise of £5.3m. Since listing on AIM, we have seen a major acceleration of our business with all KPIs exceeding management expectations. We have expanded the depth and breadth of our product range, diversified our marketing channels, accelerated customer acquisition and invested in building a first-class team.
Full-year revenue for the year to 31 March 2018 was £1.35m, with like-for-like sales for the six months ending 31 March 2018 showing a 268% increase. We reached record monthly revenues in March, with continued momentum into the new financial year, and we are now selling in just one hour what we used to sell in a day.
Significant margin improvements have been achieved through both economies of scale from increased order quantities and a higher proportion of sales from product sold at full price. Investment in marketing and careful stock management have helped maximise product sell-through rates, creating an 'urgency to buy' with our customers, and decreasing the need to discount. As a result, gross margins have improved from 37.8% to 49.4%.
Basket sizes have increased from £87.22 to £94.18 over the year and while we have limited trading history, there are signals that customers acquired at the end of the financial year are showing greater order frequency. This will drive future marketing cost-efficiencies as our customer base continues to grow and we build loyalty.
Our target demographic has responded positively to the Sosandar brand and we continue to capture a highly-affluent customer demographic. Our unique in-house designs are selling ahead of forecasts across all categories: dresses, skirts, trousers and tops, outerwear, leather and footwear.
We have operated an aggressive marketing strategy to drive customer acquisition, which has proven successful in building our customer database to over 54,000, from just 7,000 a year ago. With a larger customer database, we can use data-led, personalised communications to engage with both our existing customers and target prospects who do not purchase immediately. It also provides a platform to promote the Sosandar brand and our new products in a cost-effective way, helping to reduce longer term cost of acquisition.
We work hard on product fit, driving repeat orders, which we anticipate will lead to improving repeat rates as our customers become used to Sosandar sizing. Return levels are in line with expectations. We expect returns to remain at a similar level in the near future but to reduce over time with the growth of repeat customers.
The £5.3m funds we raised in November 2017 at the time of our flotation on AIM have enabled Sosandar to build on its positive start, expanding both the product range and the stock levels of popular products, to ensure there is sufficient supply for increasing demand.
The funds have also provided working capital to begin testing on new customer acquisition channels, including direct mail and increased social media investment, to increase customer reach, brand awareness and build our customer database.
All our products are designed exclusively in-house, which ensures we retain control of all aspects of garment development. This provides reassurance on quality and enables us to expand capacity according to demand.
Over the year, we have invested in broadening the product range from 74 to 489 styles and have seen excellent rates of sell through, including higher-price point items such as leather, outerwear and footwear.
We monitor our entire product range on an item-by-item basis to identify top-selling and slow-moving items, which acts as a key driver for the design process. We accumulate data to feedback customer preferences and combine this with the creative flair of the design team who monitor catwalks and up-to-date trends to influence our design process. This tailored approach to design ensures that our products stay fresh and relevant to our customers.
Marketing, combined with highly desirable product, are the primary drivers behind Sosandar's growth and we operate a multi-channel marketing strategy.
We have built a highly-engaged & ever-growing community of Sosandar fans across social platforms through carefully-targeted content generation and aspirational lifestyle photography.
Over the past year our customer database has grown by 695%. Since November 2017, direct mail has been Sosandar's most successful route to new customers, diversifying our social marketing platform and increasing brand awareness. As a result, revenue from customers coming directly to our site, or by finding us on internet searches, has grown significantly by 508%. This has contributed to an 809% increase in revenue generated from emails sent to customers, emphasising the value of our highly-engaged customer community.
Growth in these channels helped improve cost efficiencies as they are effectively free. We have seen improvement in performance from key social and paid search channels, as well as increased development in google shopping and referral campaigns, all contributing to customer acquisition improvements since November 2017.
Sosandar's senior management has unrivalled UK fashion PR and editorial experience, market understanding and contacts, which have all contributed to a growing awareness and endorsement of the Sosandar brand with a broad cross-section of major influencers across all demographics. These third-party endorsements mean Sosandar clothes are regularly worn by a host of celebrities and a growing tide of fashion influencers are embracing the brand in their Instagram posts.
Sosandar's level of PR coverage from well-known celebrities is unprecedented for an early-stage brand and continues to go from strength to strength across all forms of social and national media, including national newspapers and regular coverage on television.
Infrastructure and logistics
We outsource our manufacturing to a network of 16 sub-contractors around the world including India, China, Spain and Turkey and this base is increasing as Sosandar grows in scale. We have strong relationships with all our suppliers, which all provide a high-quality skill base. They have worked with us seamlessly as our product range has widened and our order quantities have grown.
To ensure leading customer service and first-class logistics, we work with Clipper Logistics for warehousing and e-fulfilment with Sosandar-branded premium packaging. Clipper is a high quality and scalable operator. It has allowed us to grow at pace and will be able to support our planned growth over the coming years.
Delivery is free for orders over £75 and free returns are offered as standard. We want to maximise customer convenience and next year will be reviewing our delivery service options to ensure we continue to provide the most cost-effective solution, as well as a smooth purchase journey, for all Sosandar's customers.
As a new e-commerce business, we are focusing on scalable and integrated technologies. We have had the benefit of building a mobile-first platform and have not suffered from any legacy issues of internally-developed systems, allowing us to fully exploit the increasing use of mobile devices for e-retail.
We use technology and data to analyse sales and customer behaviour to influence design decisions, product strategy, marketing and customer service. Data analysis underpins our creative excellence and we are continuing to invest in this area, expanding data analytics resource in Sosandar.
Our technology strategy is to continue to invest across web and digital platforms to enhance customer experiences and provide frictionless online journeys, through in-depth analysis of customer shopping habits.
Over the past year we have focused on building our teams in Wilmslow to complement our experienced executive director team, ensuring we are fully resourced to meet operational development. Our marketing, imagery, customer service and finance teams have all expanded over the past year bringing a combination of increasing creative and commercial ecommerce experience into the business.
Our people are everything and are the solution to making Sosandar a successful business. We recruit people who are entrepreneurial and who want to be part of our business. We consider ourselves to have an inclusive workplace were everyone is fully engaged. We encourage everyone to grasp opportunities to develop and show initiative and we support their training needs.
Our substantial momentum has continued into the new financial year. Our strategy is straightforward: we will continue to broaden the product range, including testing into new areas such as bags, loungewear and gifts, to give more choice to our customers; buy deeper; and engage in a more diversified marketing strategy. We remain focused on data-driven marketing efficiencies and digital investment to improve our customers' journeys.
We believe that the results to date demonstrate the considerable potential and opportunity in this underserved market and are testament to the brand's growing momentum. Sosandar's unique offering and market positioning puts us in a strong position to achieve another year of strong growth in 2018/19.
Sosandar has shown strong year on year growth in both topline revenue and margin. Key performance indicators have exceeded expectation and demonstrate the strength of our product offering, our marketing strategy and the infrastructure on which the business is built.
|Year ended 31 March 2018 £'000||Period ended 31 March 2017 £'000||Change|
|*EBITDA adjusted for one-off reverse transaction fees and accounting adjustments|
|Year ended 31 March 2018||Year ended 31 March 2017||Change|
|Number of orders||31,732||7,003||+353%|
|As at 31 March 2018||As at 31 March 2017||Change|
|Year ended 31 March 2018||Year ended 31 March 2017||Change|
In its first full 12 months of trading, Sosandar achieved revenue of £1.35m with like-for-like sales for the six months to March 2018 showing revenue growth of 268%.
The November 2017 fundraise of £5.3m has enabled the business to invest in new marketing channels in the second half of the year, accelerating engagement and customer acquisition.
Marketing investment, combined with further investment in product imagery, has driven an increase in sell-through rates and stock turn, with a number of popular styles selling out. This helped to maximise product sales at full price avoiding the discount strategies adopted by many other ecommerce retailers and, along with buying improvements, increased margin to 49.4% from 37.8% in the prior year.
Average order value has showed an improvement up 8% to £94.18 (2017: £87.22) and customers increased urgency to purchase contributed to conversion rate improvement to 2.16% from 1.29% in the prior year.
The increased funding has allowed Sosandar to establish the teams required to deliver growth with investment across, marketing, finance and technology, enabling the business to gain momentum going into the new year.
Pre-tax losses of £6.06m include £2.9m of one off costs and accounting adjustments related to the reverse takeover (of which £0.9m relate to actual cash costs to the business). Adjusting for these costs shows loss of £3.16m compared to£1.82m in the prior year reflecting the investment in growth. Post investment we are already starting to see cost efficiency improvements in new marketing channels and the economies of scale in other areas that come with growth.
Cash position at the year-end was £4.6m (2017: £0.3m). Over the coming year, Sosandar will continue to invest in customer acquisition and product to drive future profitability. This will be done while we focus on using the growing data in the business to adopt 'test and repeat' models, maximising return on investment across all areas of the business and constantly balancing the need for growth with a focus on cost efficiencies.
Consolidated Statement of Income and other Comprehensive Income
For the year ended 31 March 2018
|Year ended 31 March||Period ended 31 March|
|Deemed cost of reverse||(1,439)||--|
|Reverse acquisition cost||(1,493)||--|
|Loss on ordinary activities before taxation||(6,056)||(1,823)|
|Tax on loss on ordinary activities||--||--|
|Profit/(Loss) for the period||(6,056)||(1,823)|
|Other Comprehensive income||--||--|
|Total Comprehensive income for the period||(6,056)||(1,823)|
|Equity holders of the parent||(6,056)||(1,823)|
|Group loss for the period||(6,056)||(1,823)|
|Exchange translation differences||--||--|
|Total comprehensive loss for the period||(6,056)||(1,823)|
|Loss per share:|
|Loss per share - basic and diluted, attributable to ordinary equity holders of the parent (pence)||4||(10.31)||(1,844)|
|Loss per share - basic and diluted, from continuing operations (pence)||4||(10.31)||(1,844)|
Consolidated Statement of Financial Position
|Property, plant and equipment||172||210|
|Total non-current assets||228||265|
|Trade and other receivables||478||61|
|Cash and cash equivalents||4,616||338|
|Total current assets||5,625||762|
|Equity and liabilities|
|Capital redemption reserve||3||4,648||-|
|Reverse acquisition reserve||3||(19,596)||-|
|Equity attributable to owners of the parent||4,932||745|
|Trade and other payables||921||282|
|Total current liabilities||921||282|
|Total equity and liabilities||5,853||1,027|
The financial statements were approved and authorised for issue by the Board of Directors on 10 July 2018 and were signed on its behalf by:
Consolidated Statement of Cash Flows
For the year ended 31 March 2018
|Cash flows from operating activities|
|Group loss for the period||(6,056)||(1,823)|
|Depreciation and amortisation||55||28|
|Reverse acquisition costs||1,439||-|
|Working capital adjustments:|
|Change in inventories||(168)||(363)|
|Change in trade and other receivables||(445)||(26)|
|Change in trade and other payables||849||278|
|Net cash flow from operating activities||(3,744)||(1,906)|
|Cash flow from investing activities|
|Addition of property, plant and equipment, and intangibles||(18)||(292)|
|Acquisition, net of cash acquired 1||(1,938)||-|
|Bank interest received||-||3|
|Net cash flow from investing activities||(1,956)||(289)|
|Cash flow from financing activities|
|Net proceeds from issue of equity instruments||3||9,978||788|
|Net cash flow from financing activities||9,978||788|
|Net change in cash and cash equivalents||4,278||(1,407)|
|Cash and cash equivalents at beginning of period||338||1,745|
|Cash and cash equivalents at end of period||4,616||338|
1 The cash outflow on acquisition (net of cash acquired) relates to the cash and cash equivalents of Sosandar PLC as at date of acquisition (2 November 2017). Significant non-cash transactions: on 2 November 2017 Sosandar PLC acquired the entire issued share capital of Thread 35 Limited for a consideration of £6,281,618, satisfied by the issue of shares of £1,603,422 (non-cash transaction) and cash of £4,678,196.
Consolidated Statement of Changes in Equity
For the period ended 31 March 2018
|THREAD 35 LIMITED||Notes||£'000||£'000||£'000||£'000||£'000||£'000||£'000|
|Balance at 1 November 2015||1||1,955||-||-||(176)||-||1,780|
|Loss for the period||-||-||-||-||(1,823)||-||(1,823)|
|Shares based payments||-||-||-||-||-||-||-|
|Issue of share capital||3||-||788||-||-||-||-||788|
|Balance at 31 March 2017||1||2,743||-||-||(1,999)||-||745|
|Balance at 1 January 2017||4,651||12,268||-||-||(17,441)||610||88|
|Thread 35 retained earnings b/f||-||-||-||-||(1,999)||-||(1,999)|
|Loss for the year||-||-||-||-||(6,056)||-||(6,056)|
|Transfer of share-based payment reserve||-||-||-||-||610||(610)||-|
|Loss for the period to acquisition||-||-||-||-||(770)||-||(770)|
|Shares based payments||-||-||-||-||-||32||32|
|Issue of share capital||3||104||15,528||-||-||-||-||15,632|
|Cancellation of share capital||3||(4,648)||-||-||4,648||-||-||-|
|Balance at 31 March 2018||107||27,796||(19,596)||4,648||(8,055)||32||4,932|
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 Financial Statements are available in the printable PDF version
Page last updated: 11 July 2018