Sosandar Plc (SOS) Earnings Call Transcript & Summary

Welcome to the Sosandar 2022 Annual General Meeting. I now hand over to Bill Murray, Non-Exec Chairman. Bill, over to you.

Thank you very much, Tamzin. Ladies and gentlemen, I'd like to welcome you to the company's Annual General Meeting. My name is Bill Murray, your company's Chairman, and I'll be chairing this meeting today. I'm joined by Julie Lavington, by Alison Hall, our joint CEOs and Founders; and also by Steve Dilks, our Chief Financial Officer. Also in the room, you have the rest of the Sosandar Board and a couple of shareholders. I'm also delighted to welcome a number of attendees who are participating in this AGM by the PIWORLD platform. So to remind you, participation in the meeting virtually via that platform does not constitute attendance at the AGM and I'm afraid you will not be permitted to vote at the AGM. But thank you in any event for your participation. There are also a number of people attending this AGM who are not members of the company and who are acting as representatives to members. Unless anyone has any formal objections to the attendance of such participants, I shall continue by formally opening the meeting. So the quorum for this meeting is 2 persons entitled to vote upon the business to be transacted, each being a member or a proxy for a member or a duly authorized representative of a corporation, which is a member. Having checked the number of persons present, I declare that a quorum is present, and I further therefore declare the meeting open. In the notice of the meeting, we asked for questions to be submitted beforehand, and we haven't had any of such questions submitted. So in order to deal with things efficiently, we're going to move straight on to the formal part of the business and deal with the resolutions. We will have time for a few questions after that, if there are any. Now as stated in the notice of the AGM, the company will issue a trading update covering the 6-month period to the end of September 2022 in October '22, as is our normal practice. And I therefore request that you limit any questions to matters relevant to the business of the meeting as there will be no comment on current trading and no new material information will be disclosed during this meeting. If you wish to ask a question, use the Q&A button on your screens. So ladies and gentlemen, I would now like to start the formal proceedings of this Annual General Meeting. The notice of AGM was issued on the 22nd of August 2022, and due notice of the meeting has accordingly been issued to the company's members. With your permission, I propose that we take the notice convening the meeting as having been read. Is this agreed? Thank you. Now before proceeding to the business of the meeting, I need to remind you of the methods of voting. In line with corporate government's best practice and in order that any proxy votes of those shareholders who cannot attend and vote in person are fully reflected in the voting on the resolutions, voting today will be done by way of a poll on each of the resolutions put to the meeting. This gives all shareholders the opportunity to participate in the decision-making of the company and have their votes recorded in proportion to the number of shares they hold. As it may take some time to complete the poll procedure, it is likely that the final results of the voting, including the proxy votes on each of the resolutions, will be announced through our regulatory information service and published on our website as soon as reasonably practical after the meeting. There are 3 options for each resolution. You can vote for the proposed resolution, against the proposed resolution, or you may withhold your vote. A vote withheld is not a vote in law and will not be counted in the calculation of the proportion of the votes for or against the resolution. And as I mentioned, it may take some time to complete the poll procedure, and it's likely, therefore, that the results of the poll, including proxy votes that will be received, will be announced through our regulatory information service and posted on our website as soon as practical after the meeting. So we will now proceed to vote on the resolutions, which I will formally propose to the meeting. The full text of each of the resolutions is set out in the notice of the meeting, a copy of which you will have received. Resolutions 1 to 8 are proposed as ordinary resolutions and require a simple majority to be passed. Resolution 9 is proposed as a special resolution, which to be part requires a majority of 75% to vote in favor of the resolution. Resolution #1 is to receive the report and accounts of the company for the period ended 31st of March 2022, together with the auditor's report on those accounts and reports. Any questions? I now propose, as an ordinary resolution, that the shareholders of the company receive the report and accounts of the company for the period ended 31st of March 2022, together with the auditor's report on those accounts and reports. I hold 74,237,585 proxy votes in favor and no votes against with 140 withheld. Thank you. Resolution 2 is to reelect Nicholas Mustoe as he retires as a Director and becomes eligible for reelection as a Director pursuant to the company's Articles of Association. Any questions? I now propose Resolution 2, the text of which has been set out in the notice convening the meeting as an ordinary resolution. I hold 74,220,635 proxy votes in favor, 16,950 against, and 140 withheld. Thank you. Resolution 3 is to reelect Adam Reynolds. He retires as a Director and becomes eligible for reelection as a Director pursuant to the company's Articles of Associations. Any questions? I now propose Resolution 3, the text of which has been set out in the notice convening the meeting as an ordinary resolution. I hold 74,220,635 proxy votes in favor, 16,950 against, and 140 withheld. Thank you. Resolution 4 is to reelect Alison Hall as she retires as a Director and becomes eligible for reelection as a Director pursuant to the company's Articles of Association. Any questions? I now propose Resolution 4, the text of which has been set out in the notice convening the meeting as an ordinary resolution. Please vote now by ticking the appropriate box on the poll card. I hold 74,220,627 proxy votes in favor, 16,958 against, and 140 withheld. Thank you. Resolution 5 relates to the election of Jonathan Wragg as Director who has been appointed by the Board since the company's last Annual General Meeting. Jonathan retires as a Director and becomes eligible for reelection as a director pursuant to the company's Articles of Association. Any questions? I now propose Resolution 5, the text of which has been set out in the notice convening the meeting as an ordinary resolution. I hold 74,220,635 proxy votes in favor, 16,950 against, and 140 withheld. Thank you. Resolution 6 relates to the election of Lesley Watt as a Director who has been appointed by the Board since the company's last Annual General Meeting. Lesley retires as a Director and becomes eligible for reelection as a Director pursuant to the company's Articles of Association. Any questions? I now propose Resolution 6, the text of which has been set out in the notice convening the meeting as an ordinary resolution. I hold 74,220,627 proxy votes in favor, 16,958 against and 140 withheld. Thank you. Resolution #7 is to appoint Saffery Champness LLP as auditor of the company from the conclusion of this meeting until the conclusion of the next Annual General Meeting of the company, of which accounts are laid and to authorize the Directors to fix the remuneration of the auditors. Any questions? I now propose Resolution 7, the text of which has been set out in the notice convening the meeting as an ordinary resolution. I hold 74,220,535 proxy votes in favor, 16,450 against, and 740 withheld. Thank you. Resolution #8 is to generally and unconditionally authorize the directors in accordance with Section 551 of the Companies Act 2006 to allot shares and rights to subscriber shares up to a maximum aggregate nominal value of GBP 73,802.77. Are there any questions? I now propose Resolution 8, the text of which has been set out in the notice convening the meeting as an ordinary resolution. I hold 74,137,863 proxy votes in favor, 72,722 against, and 27,140 withheld. Thank you. And Resolution #8 is subject to the passing of the previous resolution to give power to the Directors in accordance with Sections 570 of the Companies Act 2006 to allot equity securities as defined in Section 560 of that act for cash either by way of a rights issue or other preemptive offer or up to a maximum aggregate nominal value of GBP 33,211.24, as if Section 561(1) of the Act did not apply. Any questions? I now propose that resolution, the text of which is set out in the notice convening the meeting as a special resolution. I hold 70,492,854 proxy votes in favor, 10 Chairman's discretion, 3,701,971 against and 42,890 withheld. Thank you. And just before closing the formal part of the meeting, I'd like to take the opportunity to thank Mark Collingbourne, who has recently stepped down from the Board, for his service for the last 4 or 5 years. And to probably welcome both Jon Wragg and Lesley Watt, who have joined us in the last few months. So that concludes the formal proceedings of the meeting. We now have an opportunity to take any questions either in the room or via the platform, which I'm hoping would have been submitted whilst we were doing the resolutions. So we have a few minutes. Do we have any questions? Richard, could you introduce yourself, so that those who are listening online can know who you are, please.

I'm Richard Straffon of London. I'm a private investor and shareholder. I would imagine I speak for a lot of people on the line offering very, very warm congratulations, the book to the 31st of March and the sensational start to the year. So congratulations. And it's a lot of hard work and to go from 0 to maybe GBP 40 million this year in 6 years is sensational. So I'm sure I speak for a lot of people on the line. So if we agree that Ali and Julie's sort of key USP is their ability to pick up on the site guests to run stuff like a news desk to be able to understand what people are thinking on a day-by-day basis. And that is the USP of this brand, or one of the many USPs. To what extent is that going to be extremely difficult when you go to, say, Germany or another European country to find somebody or several people who can have that kind of ability to tuck into what the people in Germany are thinking on that day? How are you going to find those people? And to what extent do you think that would be very difficult?

I'll take...

Let me just start with that, Rich. I think we will be deliberately general in terms of the comments because we're not proactively in Germany or other parts of Europe...

Sorry, forgive me for thinking that was a [indiscernible].

Yes. But our business, as we speak, is predominantly in the U.K. So to talk about even beyond that would be to cast into the future. And we would think...

I think there's a simple answer to the question though, actually, which is I actually think the USP of this brand is the product. And I think that has been demonstrated by how well we've traded with our product on Marks and Spencer, John Lewis, and Next, because obviously, what you're talking about there is that's how we communicate with our own customers on our own website [indiscernible]. But with M&S, John Lewis and Next, and now Very as well, that's just product. We just give them our product, and our product has resonated brilliantly with those customers. So without any communication turmoils. So I think really the fundamental most important thing is our understanding of women and what women want to wear and a highly differentiated product. And that's really, I think, if you had to pick 1 USP, it's Sosandar, that's I would say. So to me, that translates potentially anywhere.

They can take them online and come back.

What I'm going to do is I'm going to take all questions in the room first, if I can, and then we'll pile into the online if there are any.

Last one. Well I've got a page, but maybe I'll ask them another time. So this is an -- why the people -- given that Sosandar is almost always offering discounts on Sosandar.com, why are people buying, and why are you being so successful on third-party sites when -- is there a danger that people are going to realize that if they go to sosandar.com, they are always going to get a really good offer, whereas maybe you quite often saw full price on the third-party site. And is there a danger of sort of margin erosion and that sort of thing. I don't know if that's a forward-looking [indiscernible].

No. I think there's probably something to be said from a more general perspective. I'll give the team the opportunity to answer you properly. I would just say at the outset, I think your perception is slightly incorrect. The majority of our own site sales are not discounted sales. They are full price. But let me have Steve or Ali who may have more to add to that, or Julie.

Yes, I think Bill is right. The majority of our sales are full price. They're not discounted. But we do use discount tactic claims and position tool in order to convert new customers. And as Julie said, we're selling really well across third party sites and ourselves. So it's used as a tactical marketing tool, but it's not something that we are doing as a mainstay to sell our clothes, and it's not a discount rate in any way, but we sell off. I think that it's just an information tool.

We have lived through a curious couple of years, it has to be said. And so there have maybe been more periods where it's been necessary to work your audience harder than would normally be the case. But we're not a discount brand by any way, structure or means. Tamzin, are there any questions being submitted online?

Yes. We've got 1 question from Alan Charlton, who opens up. I'd also like to pass on my appreciation to the Board for such a superb year of progress. 142% organic growth is truly exceptional, and many congratulations, hugely impressed. He goes on with a question. One feature I've noted in the annual report was that you held 22 Board meetings last year and also have 6 NEDs. I very much like the experience with NEDs we have and the clear entrepreneurial bias. It's unusual for a company of this size to have 22 Board meetings and 6 NEDs. Was the 22 Board meetings an unusual feature of last year? Or does it indicate that the NEDs are more actively involved in the company?

It's a very good question, and it's lovely to know that people are reading that far into the annual report. What you've highlighted is a shift in the way that we manage and govern the business. For a lot of the period under report, we were subject to COVID restrictions. Right at the start of COVID, as a Board we decided it was appropriate for us to meet electronically, using Zoom, actually on a weekly basis. We then shifted to a fortnightly basis as we felt we were getting things on a more even keel as COVID progressed. We are all of the view that meeting regularly briefly allows us to remain close to the business, allows the business to be much more agile to respond and gain all of the input from the non-executive directors on a regular basis. We've started meeting in person again, as you can see, and we do that every 2 to 3 months, but we've maintained the fortnightly 30 minutes to 45 minutes on a Zoom call together. It's something that, actually in all the businesses I'm involved with, has become more the case. But I think Sosandar is a brilliant example of that more modern, agile, flexible approach to governance in action. Anybody wants to answer that, then? Any other questions, Tamzin?

No. That's the end of the questions remotely.

Thank you, I've got 2 minutes left on my watch. Richard, would you like one more?

I'd be interested if you could comment on air freight and the different freight methods that you've used over the time. I know that this -- well, could you comment on that? And what percentage is currently air freight and so on, if you're allowed to say that?

We probably can't talk about that right now, but more generally, Steve will have a good answer for you, I think.

Yes. And I will stay away from what we're doing today, if you don't mind, because, of course, that's not in the public domain. Historically, the business was predominantly air freight. So if we look at the annual report, we've started to transit that to a more balanced mix between air, sea, and freight. It's always linked to the country of origin of where the goods come from, and there are more sensible routes from different markets. And equally, different product types, we use different methods. For obvious reasons, if it's heavier, putting that on a plane is always going to be more expensive. So the balance is shifting to being a much more equitable mix where we can have flexibility to choose the best route from the best supplier or the best country of origin. So I think selecting on a case-by-case basis is much of the methodology that we use.

With an eye on environment...

There's a balance -- and that's fair. There's a balance, isn't it, between speed to market plus an environmental impact or maximizing the benefit of all of those 3 working in tandem.

Okay. That brings the formal proceedings and questions to an end, and I accordingly now declare this Annual General Meeting of the company closed. Thank you very much for attending both in person and for all those of you online. The final results of the meeting will be announced to the markets through our regulatory information service and posted on our website as soon as practical after the meeting. Thank you.