THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this Document or as to what action you should take, you should consult you accountants, legal or professional adviser or financial adviser or an independent professional adviser authorise under the Financial Services and Markets Act 2000 (“FSMA”) if you are in the UK, or, if not another appropriately authorised independent financial adviser who specialises in advising on the acquisition of shares and other securities. This Document comprises a UK Growth Prospectus (the “Document”) and is being issued in connection with the proposed admission of Samarkand Group plc to the Aquis Stock Exchange (“AQSE”) Growth Market. This Document does not constitute and the Company is not making an offer to the public within the meaning of the Prospectus Regulation Rules. This Document is a UK Growth Prospectus as defined in the Prospectus Regulation Rules. It has been prepared in accordance with the Prospectus Regulation Rules. The contents of this Document have not been approved by an authorised person for the purposes of section 21 of FSMA. The Company, the Directors and the Proposed Directors of the Company, whose names appear on page 16 of this Document, have taken all reasonable care to ensure that the facts stated in this Document are true and accurate in all material respects, and that there are no other facts the omission of which would make misleading any statement in this Document, whether of fact or of opinion. The Company, the Directors and the Proposed Directors accept full responsibility accordingly, collectively and individually for the information contained in this Document including the Company’s compliance with the Aquis Stock Exchange Growth Market Rules. The Directors and Proposed Directors, whose names appear on page 16 of this Document, and the Company accept responsibility for the information contained in this Document. The Company, the Directors and the Proposed Directors declare, that to the best of their knowledge, the information contained in the Document is in accordance with the facts and that the Document makes no omission likely to affect its import. The share capital of the Company is not presently listed or dealt in on any stock exchange. Application has been made for the Enlarged Issued Share Capital of the Company to be traded on the Aquis Stock Exchange Growth Market. It is expected that Admission will become effective and that dealings in the Ordinary Shares will commence on the Aquis Stock Exchange Growth Market on 22 March 2021. UK GROWTH PROSPECTUS for admission to trading on the AQSE Growth Market of 35,340,001 existing ordinary shares of £0.01 each and Proposed Placing of 10,373,803 new Ordinary Shares at the Fundraising Price and Proposed Subscription of 4,406,568 new Ordinary Shares at the Fundraising Price and Issue of 1,498,594 new Ordinary Shares pursuant to the Loan Conversion of Samarkand Group plc (incorporated under the companies Act 2006 and registered under the laws of England and Wales under company number 13127277) International Securities Identification Number (ISIN): GB00BLH1QT30 AQSE Code: SMK AQSE Corporate Adviser and Broker VSA Capital Limited The date of this Document is 15 March 2020
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• Keith Higgins, Independent Non-Executive Director
• Jeanette Hern, Non-Executive Director
2.2 Company Financial Information
The Company was incorporated on 12 January 2021 and the
following tables set out the summary audited historical financial
information of the Company as derived from the financial
information of the Company drawn up as at 16 February 2021 and
is not extracted from any statutory financial statements. The
Company has no operational track record and revenue generating
operations.
Summary statement of comprehensive income of the Company
Audited
Period ended
16 February
2021
£
Revenue –
Operating loss –
Loss and comprehensive loss for the period –
Basic and diluted loss per Ordinary Share –
Summary statement of financial position of the Company
Audited
As at
16 February
2021
£
Total assets 353,400
Total equity 353,400
What is the key financial
information regarding
the issuer?
18
Summary statement of cash flows of the Company
Audited
Period ended
16 February
2021
£
Cash from operating activities –
Cash from financing activities –
Cash increase during the period –
As at the date of this Document, the Company had cash reserves
of £3,644,500.
Group Financial Information
The following tables set out the summary audited historical
financial information of the Group as derived from the financial
information of the Group drawn up as at 30 November 2020. This
financial information has been extracted from both statutory
financial statements and audited management information.
Summary statement of comprehensive income of the Group
Audited Audited Unaudited Audited Year Year Eight months Eight months ended ended ended ended 31 March 31 March 30 November 30 November 2019 2020 2019 2020 £ £ £ £
Audited Audited Unaudited Audited Year ended Year ended Period ended Period ended 31 March 31 March 30 November 30 November 2019 2020 2019 2020 £ £ £ £Net cash from/
––––––––– ––––––––– ––––––––– –––––––––Cash and cash equivalents – beginning of
the year 418,018 270,564 572,586 270,564
Effects of exchange rate changes on the
balance of cash held in foreign currencies (2,002) (1,364) (4,142) (7,371) ––––––––– ––––––––– ––––––––– –––––––––Cash and cash equivalents – end of the
year/period 270,564 572,586 1,232,403 427,236
––––––––– ––––––––– ––––––––– –––––––––
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Notes to the Consolidated Group Financial Information
1. General information
Samarkand Holdings was incorporated on 16 November 2017 with registered number 11066615 as a
private company with limited liability under the Companies Act 2006.
Samarkand Holdings is the holding company of a group of entities. Its principal activities are that of a UK &
European distribution business engaged in the B2B and B2C sale of products primarily to premium London
retailers, chain retailers and online e-commerce stores. The subsidiary entities of Samarkand Holdings also
provide e-commerce technology solutions for Western brands and retailers selling into China.
Samarkand Holdings’ registered office is Unit 13 & 14 Nelson Trading Estate, The Path, Merton, London
SW19 3BL.
The Consolidated Group Financial Information represents the consolidated results of Samarkand Holdings
and its subsidiaries, (together referred to as the “Group”).
2. Basis of preparation and measurement
(a) Basis of preparation
The Consolidated Group Financial Information has been prepared in accordance with International
Financial Reporting Standards as adopted by the European Union (“EU IFRS”).
Unless otherwise stated, the Consolidated Group Financial Information is presented in Pounds
Sterling (£) which is the currency of the primary economic environment in which the Group operates.
Transactions in foreign currencies are translated into £ at the rate of exchange on the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the
exchange rate ruling at the reporting date. The resulting gain or loss is reflected in the “Consolidated
Statements of Comprehensive Income” within either “Finance income” or “Finance costs”.
The Consolidated Group Financial Information has been prepared under the historical cost
convention except for certain financial instruments that have been measured at fair value.
The Consolidated Group Financial Information has been prepared on the going concern basis, which
contemplates the continuity of normal business activity and the realisation of assets and the
settlement of liabilities in the normal course of business. The directors of Samarkand Holdings (the
“Samarkand Holdings Directors”) have reviewed the Group’s overall position and outlook and are of
the opinion that the Group is sufficiently well funded to be able to operate as a going concern for at
least the next twelve months from the date of this Document.
(b) Basis of consolidation
The Consolidated Group Financial Information comprises the financial statements of Samarkand
Holdings and its subsidiaries listed in Note 6 “Subsidiaries” to the Consolidated Group Financial
Information.
A subsidiary is defined as an entity over which Samarkand Holdings has control. Samarkand Holdings
controls an entity when the Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted
for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling
interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any
difference between the amount by which the non-controlling interests are adjusted and the fair
value of the consideration paid or received is recognised directly in equity and attributed to owners
of the Company.
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Intra-group transactions, balances and unrealised gains on transactions are eliminated; unrealised
losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made
to the financial statements of subsidiaries to ensure consistency of accounting policies with those of
the Group.
The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the
parent and to the non-controlling interests in proportion to their relative ownership interests.
(c) New standards and interpretations
Adopted
IFRS 16 “Leases”
In January 2016, the IASB issued IFRS 16 “Leases”. The standard establishes the principles for the
recognition, measurement, presentation and disclosure of leases for both the lessee and lessor. The
standard requires all lease transactions (with terms in excess of 12 months) to be recognised on the
statement of financial position as lease assets and lease liabilities, and to depreciate lease assets
separately from interest on lease liabilities in the income statement. IFRS 16 “Leases” replaces the
previous lease standard, IAS 17 “Leases”, and related interpretations. This standard became effective
on 1 January 2019. Early adoption is permitted only if the Group also applies IFRS 15 “Revenue from
Contracts with Customers”. The standard can be applied using either the full retrospective approach
or a modified retrospective approach at the date of adoption. The Group has adopted IFRS 16
“Leases” with full retrospective effect.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on
these assets are expensed to profit or loss as incurred.
IAS 1 “Presentation of Financial Statements” and IAS 8 “Accounting Policies, Changes in Accounting
Estimates and Errors (Amendment – Definition of Material)”
The amendments provide a new definition of material that states “information is material if omitting,
misstating or obscuring it could reasonably be expected to influence decisions that the primary users
of general purpose financial statements make on the basis of those financial statements, which
provide financial information about a specific reporting entity.”
The amendments clarify that materiality will depend on the nature or magnitude of information,
either individually or in combination with other information, in the context of the financial
statements. A misstatement of information is material if it could reasonably be expected to influence
decisions made by the primary users. These amendments had no impact on the consolidated
financial information.
Amendments to IFRS 3: Definition of a Business
The amendments to IFRS 3 clarify that to be considered a business, an integrated set of activities and
assets must include, at a minimum, an input and a substantive process that together significantly
contribute to the ability to create outputs. Furthermore, it was clarified that a business can exist
without including all of the inputs and processes needed to create outputs. These amendments had
no impact on the consolidated financial information of the Group but may impact future periods
should the Group enter into any business combinations.
Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark Reform
The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide
a number of reliefs, which apply to all hedging relationships that are directly affected by interest rate
benchmark reform. These amendments had no impact on the consolidated financial information of
the Group as it does not have any interest rate hedge relationships.
Definition of Material - Amendments to IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors The new definition states that,
81
‘Information is material if omitting, misstating or obscuring it could reasonably be expected to
influence decisions that the primary users of general purpose financial statements make on the basis
of those financial statements, which provide financial information about a specific reporting Group’.
Except for IFRS 16, these amendments had no impact on the consolidated financial information of
the Group.
New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretations which have been
issued by the IASB that are effective in future accounting periods that the Group has decided not to
adopt early. The most significant of these are as follows:
Effective for annual periods beginning on or after 1 January 2021:
IBOR reform and its effects on financial report – phase 2:
In April 2020, the IASB issued exposure draft 2020/1, proposing amendments to IFRS 9, IAS 39, IFRS
7, IFRS 4 and IFRS 16 relating to interest rate benchmark reform (‘IBOR – phase 2’). The IASB issued
the final amendments in August 2020, which are mandatorily effective for annual periods beginning
on or after 1 January 2021.
Effective for annual periods beginning on or after 1 January 2022:
• Annual Improvements to IFRSs – 2018-2020 cycle
• IAS 16 Property, Plant and Equipment (Amendment – Proceeds before Intended Use)
• IFRS 3 Business Combinations (Amendment – Reference to the Conceptual Framework)
Effective for annual periods beginning on or after 1 January 2023
• IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors (Amendment – Classification of Liabilities as Current or Non-
current)*
* In January 2020, the IASB issued amendments to IAS 1 “Presentation of Financial Statements”, which clarify the
criteria used to determine whether liabilities are classified as current or non-current. These amendments
clarify that current or non-current classification is based on whether an entity has a right at the end of the
reporting period to defer settlement of the liability for at least twelve months after the reporting period. The
amendments also clarify that ‘settlement’ includes the transfer of cash, goods, services, or equity instruments
unless the obligation to transfer equity instruments arises from a conversion feature classified as an equity
instrument separately from the liability component of a compound financial instrument.
Management anticipates that these new standards, interpretations and amendments will be
adopted in the financial statements as and when they are applicable and adoption of these new
standards, interpretations and amendments, will be reviewed for their impact on the financial
statements prior to their initial application.
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3. Significant accounting policies
The preparation of the Consolidated Group Financial Information in compliance with IFRS requires the
Samarkand Holdings Directors to exercise judgement in applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the Consolidated Group Financial Information are disclosed in Note 4 “Significant judgements,
estimates and assumptions” to the Consolidated Group Financial Information.
(a) Foreign currency transactions and translation
The Consolidated Group Financial Information is presented in Pounds Sterling, which is the
functional currency of the parent company.
The results and financial position of all the Group entities that have a functional currency different
from the presentation currency are translated into the presentation currency as follows:
• assets and liabilities are translated at the closing rate at the date of the “Statement of
Financial Position”;
• income and expenses 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 dates of the transactions); and
• all resulting exchange differences are recognised in other comprehensive income.
On consolidation, the Group recognises in “other comprehensive income” the exchange differences
arising from the translation of the net investment in foreign entities, and of monetary items
receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the
foreseeable future.
(b) Property, plant and equipment
Property and equipment are stated at cost less accumulated depreciation and impairment losses, if
any. The cost of an item of property, plant and equipment initially recognised includes its purchase
price and any cost that is directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by the Group.
Property, plant and equipment are generally depreciated on a straight-line basis over their estimated
useful lives:
Office equipment 3 years
Computer equipment 3 years
Leasehold improvements Straight line over the lease term
Property and equipment held under leases are depreciated over the shorter of the lease term and
estimated useful life.
(c) Research and development expenditure
Research expenditure is recognised as an expense when it is incurred.
Development expenditure is recognised as an expense except that costs incurred on development
projects are capitalised as long-term assets to the extent that such expenditure is expected to
generate future economic benefits. Development expenditure is capitalised if, and only if an entity
can demonstrate all of the following:
• its ability to measure reliably the expenditure attributable to the asset under development;
• the product or process is technically and commercially feasible;
• its future economic benefits are probable;
83
• its ability to use or sell the developed asset; and
• the availability of adequate technical, financial and other resources to complete the asset
under development.
Capitalised development expenditure is measured at cost less accumulated amortisation and
impairment losses, if any. Certain internal salary costs are included where the above criteria are met.
These internal costs are capitalised when they are incurred in respect of technology with commercial
applications. Development expenditure initially recognised as an expense is not recognised as assets
in subsequent periods.
Capitalised development expenditure is amortised on a straight-line basis over an asset’s expected
useful life which has been estimated at 5 years when the technology or services are ready for use. In
the event that it is no longer probable that the expected future economic benefits will be recovered,
the development expenditure is written down to its recoverable amount.
(d) Intangible assets
All intangible assets, except goodwill, are stated at cost less accumulated amortisation and any
accumulated impairment losses.
Goodwill
Goodwill represents the amount by which the fair value of the cost of a business combination
exceeds the fair value of the net assets acquired. Goodwill is not amortised and is stated at cost less
any accumulated impairment losses.
The recoverable amount of goodwill is tested for impairment annually or when events or changes in
circumstance indicate that it might be impaired. Impairment charges are deducted from the carrying
value and recognised immediately in the income statement. For the purpose of impairment testing,
goodwill is allocated to each of the Group’s cash generating units expected to benefit from the
synergies of the combination. If the recoverable amount of the cash generating unit is less than the
carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of
any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of
the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not
reversed in a subsequent period.
Acquisition-related intangible assets
Net assets acquired as part of a business combination includes an assessment of the fair value of
separately identifiable acquisition-related intangible assets, in addition to other assets, liabilities and
contingent liabilities purchased. These are amortised on a straight-line basis over their useful lives
which are individually assessed.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful
lives of intangible assets unless such lives are indefinite.
The estimated useful lives are as follows:
Patents and trademarks 7 years
Internally developed assets 5 years
Brand names 10 years
(e) Impairment of financial assets
IFRS 9 “Financial Instruments” requires an expected credit loss model to be adopted. The expected
credit loss model requires the Group to account for expected credit losses and changes in those
expected credit losses at each reporting date to reflect changes in credit risk since initial recognition
of the financial assets. The credit event does not have to occur before credit losses are recognised.
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IFRS 9 “Financial Instruments” allows for a simplified approach for measuring the loss allowance at
an amount equal to lifetime expected credit losses for trade receivables and contract assets.
The Group has one type of financial asset subject to the expected credit loss model: trade
receivables.
The expected loss rates are based on the Group’s historical credit loss experience, adjusted for
current and forward-looking information on macroeconomic factors affecting the Group’s customers.
(f) Impairment of non-financial assets
At each reporting date, the Samarkand Holdings Directors assess whether indications exist that an
asset may be impaired. If indications do exist, or when annual impairment testing for an asset is
required, the Samarkand Holdings Directors estimate the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell
and its value-in-use, and is determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or groups of assets. Where the
carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the Samarkand
Holdings Directors consider the asset impaired and write the subject asset down to its recoverable
amount. In assessing value-in-use, the Samarkand Holdings Directors discount the estimated future
cash flows 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. In determining fair value
less costs to sell, the Samarkand Holdings Directors consider recent market transactions, if available.
If no such transactions can be identified, the Samarkand Holdings Directors utilise an appropriate
valuation model.
When applicable, the Group recognises impairment losses of continuing operations in the
“Statements of Profit or Loss and Other Comprehensive Income” in those expense categories
consistent with the function of the impaired asset.
(g) Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable,
any lease payments made at or before the commencement date net of any lease incentives received,
any initial direct costs incurred, and an estimate of costs expected to be incurred for dismantling and
removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or
the estimated useful life of the asset, whichever is the shorter. Right-of use assets are subject to
impairment or adjusted for any re-measurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on
these assets are expensed to profit or loss as incurred.
(h) Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of
the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use
of a specific asset or assets or the arrangement conveys a right to use the asset.
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
• leases of low value assets; and
• leases with a duration of 12 months or less.
IFRS 16 “Leases” was adopted on 1 April 2018 with full retrospective effect.
85
Identifying leases
The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to
use an asset for a period of time in exchange for consideration. Leases are those contracts that
satisfy the following criteria:
• there is an identified asset;
• the Group obtains substantially all the economic benefits from use of the asset; and
• the Group has the right to direct use of the asset.
The Group considers whether the supplier has substantive substitution rights. If the supplier does
have those rights, the contract is not identified as giving rise to a lease.
In determining whether the Group obtains substantially all the economic benefits that arise from use
of the asset, the Group considers only the economic benefits that arise from use of the asset, not
those incidental to legal ownership or other potential benefits.
In determining whether the Group has the right to direct use of the asset, the Samarkand Holdings
Directors consider whether the Group directs how and for what purpose the asset is used
throughout the period of use. If there are no significant decisions to be made because they are pre-
determined due to the nature of the asset, the Samarkand Holdings Directors consider whether
Group was involved in the design of the asset in a way that predetermines how and for what purpose
the asset will be used throughout the period of use. If the contract or portion of a contract does not
satisfy these criteria, the Group applies other applicable IFRSs rather than IFRS 16 “Leases”.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over
the lease term, with the discount rate determined by reference to the rate inherent in the lease
unless (as is typically the case) this is not readily determinable, in which case the Group’s incremental
borrowing rate on commencement of the lease is used, which the Samarkand Holdings Directors
have assessed to be 4%.
Variable lease payments are only included in the measurement of the lease liability if they depend
on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable
element will remain unchanged throughout the lease term. Other variable lease payments are
expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
• amounts expected to be payable under any residual value guarantee;
• the exercise price of any purchase option granted in favour of the Group if it is reasonably
certain to assess that option; and
• any penalties payable for terminating the lease, if the term of the lease has been estimated
on the basis of termination option being exercised.
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a
constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining term of the lease or over the
remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease (because, for example, it re-assesses
the probability of a lessee extension or termination option being exercised), it adjusts the carrying
amount of the lease liability to reflect the payments to make over the revised term, which are
discounted at the same discount rate that applied on lease commencement. The carrying value of
lease liabilities is similarly revised when the variable element of future lease payments dependent
on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of
86
the right-of-use asset, with the revised carrying amount being amortised over the remaining
(revised) lease term.
(i) Taxation
Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the Consolidated Group Financial
Information. Deferred tax is determined using tax rates (and laws) that have been enacted or
substantially enacted by the reporting date and expected to apply when the related deferred tax is
realised or the deferred liability is settled.
Deferred tax assets are recognised to the extent that it is probable that the future taxable profit will
be available against which the temporary differences can be utilised.
Income taxation
Current income tax assets and liabilities are measured at the amount to be recovered from, or paid
to, the taxation authorities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted at the reporting date in the jurisdictions where the Group
operates and generates taxable income.
(j) Revenue from contracts with customers and other income
The Group’s revenue represents the fair value of the consideration received or receivable for the
rendering of services and sale of goods, net of value added tax and other similar sales-based taxes,
rebates and discounts after eliminating intercompany sales. In particular:
Sale of goods
For Distribution, Brand Ownership and Nomad Technology, revenue includes the sale and
distribution of goods. The primary performance obligation is the transfer of goods to the customer.
For wholesale revenue (revenue from other businesses), control is transferred when the goods are
collected from the Group’s premises. For online revenue, control transfers when the title and risk of
loss has passed to the customer, this could be when the goods are shipped from the Group’s
premises or when the goods are delivered to the customer, the timing of transfer is dependent on
the terms of trade with the online platform. Provision for returns and other allowances are reflected
in revenue when revenue from the customer is first recognised. Returns are initially estimated based
on historical levels and adjusted subsequently as returns are incurred.
When the Group acts as principal in sale of goods and services, revenue from customers and costs
with suppliers are reported on a gross basis. When the Group acts as agent in sale of goods and
services, revenue from customer and costs with suppliers are reported on a net basis, representing
the net margin earned. Whether the Group is acting as principal or agent depends on management’s
analysis of both legal form and substance of the agreement between the Group and its business
partner.
Acting as principal to a contract for services
For Nomad technology, the Group provides managed services with certain arrangements that may
be sub-contracted to third party agents. Under these arrangements, a business partner may appoint
the Group as the service provider in respect of the managed services. The Group is responsible for
planning and execution of such services. Whilst the Group may sub-contract its obligation under the
arrangement, it remains responsible for delivery of the service obligations to the business partner.
In these circumstances, the Group is considered to be the principal to the arrangement as it controls
the service before transferring it to the customer. In particular, the Group retains the ability to direct
the use of, and obtain substantially all of the remaining benefits from, the agreement. Accordingly,
the Group recognises revenue and cost on a gross basis.
87
Revenue for these managed services are recognized as the services are performed and the
obligations are discharged, or if there are no key performance obligations, straight line over the
relevant period.
Exceptional revenues
Exceptional revenues in respect of the delivery of personal protective equipment (“PPE”) were
recognised when the performance obligations were discharged, at the time of delivery of the PPE.
(k) Employee benefits
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed
as the related service is provided. A liability is recognised for the amount expected to be paid under
short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive
obligation to pay this amount as a result of past service provided by the employee and the obligation
can be estimated reliably. For the exceptional revenue also note that this was a performance
obligation recognised at a point in time, e.g. on delivery of the PPE.
Long-term benefits
Defined contribution plans
The income statement expense for the defined contribution pension plans operated represent the
contributions payable for the year.
(l) Finance income and expenses
Financing expenses comprise interest payable, leases recognised in profit or loss using the effective
interest method, and net foreign exchange losses that are recognised in the income statement.
Financing income comprise interest receivable on cash deposits and net foreign exchange gains.
Interest income and interest payable is recognised in profit or loss as it accrues, using the effective
interest method.
Foreign currency gains and losses are reported on a net basis.
(m) Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows, cash and cash
equivalents include cash on hand, deposits held at call with financial institutions, other short-term
highly liquid investments with original maturities of three months or less that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank
overdrafts.
(n) Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less provision for impairment.
(o) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is based on the first in first
out principle and includes expenditure incurred in acquiring the inventories and other costs in
bringing them to their existing location and condition.
(p) Provisions
A provision is recognised when the Group has a present obligation, legal or constructive, as a result
of a past event and it is probable that an outflow of resources embodying economic benefits will be
88
required to settle the obligation, and a reliable estimate can be made. Provisions are reviewed at
each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that
an outflow of economic resources will be required to settle the obligation, the provision is reversed.
Where the effect of the time value of money is material, provisions are discounted using a current
pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is
used, the increase in the provision due to the passage of time is recognised as an interest expense.
(q) Contingent liabilities
Contingent liabilities are possible obligations whose existence depends on the outcome of uncertain
future events or present obligations where the outflow of resources is uncertain or cannot be
measured reliably. Contingent liabilities are not recognised in the Consolidated Group Financial
Information, but are disclosed unless they are remote.
(r) Merger relief
The issue of shares by Samarkand Holdings is accounted for at the fair value of the consideration
received. Any excess over the nominal value of the shares issued is credited to the share premium
account other than in a business combination where the consideration for shares in another
company includes the issue of shares, and on completion of the transaction, Samarkand Holdings has
secured at least a 90% equity holding in the other company. In such circumstances the credit is
applied to the merger relief reserve.
In the case of the Samarkand Holdings’ acquisition of Samarkand Global Limited in 2016, where all
of the issued shares were acquired on a share for share basis, then merger relief has been applied to
those shares issued in exchange for shares in Samarkand Global Limited.
(s) Share-based payment arrangements
Equity-settled share-based payments to employees are measured at the fair value of the equity
instruments at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments
that will eventually vest, with a corresponding increase in equity.
Where the conditions are non-vesting, the expense and equity reserve arising from share-based
payment transactions is recognised in full immediately on grant.
At the end of each reporting period, the Group revises its estimate of the number of equity
instruments expected to vest. The impact of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a
corresponding adjustment to other reserves.
(t) Segmental reporting
The Samarkand Holdings Directors consider that the Group has three reportable segments, namely
that of Brand Ownership, NOMAD Technology and Distribution business units engaged in the B2B
and B2C sale of products and e-commerce technology solutions for Western brands and retailers
selling into China. Revenues and direct costs of sale are allocated to each segment by nature of
activity.
The Group also analyses and measures its sales performance into geographic regions, specifically the
UK, China and the Rest of the World.
An analysis is included in Note 8 to the Consolidated Financial Information.
89
4. Significant accounting judgements, estimates and assumptions
The Samarkand Holdings Directors have made the following judgements which may have a significant effect
on the amounts recognised in the Consolidated Group Financial Information:
(a) Valuation of intangible assets
The determination of the fair value of assets and liabilities arising on the acquisition of businesses,
the acquisition of industry-specific knowledge, software technology and brand names, whether
arising from separate purchases or from the acquisition as part of business combinations, and
development expenditure which is expected to generate future economic benefits, are based, to a
considerable extent, on the Samarkand Holdings Directors’ estimations.
The fair value of these assets is determined by discounting estimated future net cash flows
generated by the asset where no active market for the assets exists. The use of different assumptions
for the expectations of future cash flows and the discount rate would change the valuation of the
intangible assets.
Allocation of the purchase price affects the results of the Group as finite life intangible assets are
amortised, whereas indefinite lived intangible assets, including goodwill, are not amortised and
could result in differing amortisation charges based on the allocation to indefinite lived and finite
lived intangible assets.
The useful life used to amortise intangible assets relates to the expected future performance of the
assets acquired and management’s estimate of the period over which economic benefit will be
derived from the asset.
The estimated useful life principally reflects management’s view of the average economic life of each
asset and is assessed by reference to historical data and future expectations. Any reduction in the
estimated useful life would lead to an increase in the amortisation charge.
In December 2017, the Group acquired the entire issued share capital in Forever Young International
Limited. On acquisition, the Group recognised goodwill of £41,373 and identifiable intangible assets
of £459,916 in relation to the Probio 7 brand name.
The Samarkand Holdings Directors used an income approach model to establish the fair value.
The estimated value of the Probio 7 brand name was based on the “Relief from Royalty” method with
assumptions of:
• estimated revenues for the next 4 years;
• a royalty rate (15%); and
• discount rate (20%), being estimated cost of common capital.
These estimates and assumptions resulted in a value for the Probio 7 brand name of £459,916.
Any changes to such judgements, estimates and methodologies would impact on the amounts
attributed to such intangible assets and goodwill and therefore the amount of amortisation
expensed in each year. If the discount rate was increased by 5% to 25%, this would have lead to a
reduction in the value of the Probio 7 brand of approximately £63,000
(b) Impairment of non-financial assets
IFRS requires the Samarkand Holdings Directors to undertake an annual test for impairment of
indefinite lived assets and, for finite lived assets, to test for impairment if events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable.
Impairment testing is an area involving judgement in determining estimates, requiring assessment
as to whether the carrying value of assets can be supported by the net present value of future cash
90
flows derived from such assets using cash flow projections which have been discounted at an
appropriate rate. In calculating the net present value of the future cash flows, certain assumptions
are required to be made in respect of highly uncertain matters including management’s expectations
of:
• growth in EBITDA, calculated as adjusted operating profit before depreciation and
amortisation;
• the level of capital expenditure to support long-term growth; and
• the selection of discount rates to reflect the risks involved.
The Samarkand Holdings Directors prepare and approve cash flow projections which are used in the
fair value calculations.
Changing the assumptions selected by the Samarkand Holdings Directors, in particular the discount
rate and growth rate assumptions used in the cash flow projections, could significantly affect their
impairment evaluation and hence the Group’s results.
Goodwill of £41,373 relating to the acquisition of Forever Young International Limited in 2017 was
allocated to the distribution business of the entity and represents a group of cash generating units
and tested for impairment as of the reporting date. The carrying value of these assets was tested for
impairment on the basis of value in use. These impairment tests indicated that no impairment loss
is required. FYI owns the Probio7 brand asset, a widely sold digestive health supplement in the UK
with growing sales in China.
(c) Research and development costs
Research expenditure is recognised in the income statement in the period in which it is incurred.
Development expenditure is recognised in the income statement in the period in which it is incurred
unless it is probable that economic benefits will flow to the Group from the asset being developed,
the cost of the asset can be reliably measured and technical feasibility can be demonstrated, in which
case it is capitalised as an intangible asset on the statement of financial position.
Initial capitalisation of costs is based on the Samarkand Holdings Directors’ judgement that
technological and economic feasibility of the asset is confirmed, usually when a development project
has reached a defined milestone according to an established project management model. In
determining the amounts to be capitalised, the Samarkand Holdings Directors have made
assumptions regarding the expected future cash generation of the project, discount rates to be
applied and the expected period of benefits. Capitalisation ceases when the asset being developed
is ready for use.
Cost of internally generated intangible assets comprise of directly attributable costs necessary to
create, produce, and prepare the asset to be capable of operating in the manner intended by the
Group. More specifically, time spent that is eligible for capitalisation includes time that is intrinsic to
the development of new software and the enhancement of existing software. Development costs
that do not meet the above criteria are expensed as it is incurred. In particular, time that is spent on
the maintenance of existing software is recognised as an expense.
At 30 November 2020, the carrying amount of capitalised development costs was £904,883
(31 March 2020: £633,374, 31 March 2019: £ 193,614, 30 November 2019: £477,152).
(d) Right-of-use assets
At the commencement of a lease, an initial assessment is made as to whether or not it is likely that
a renewal option will be exercised and therefore the lease term is determined at this point.
Judgement as to the likely lease term has a direct impact on the calculation of right-of-use assets and
lease liabilities as well as related depreciation and finance expenses. The Samarkand Holdings
Directors have assumed that the Group will not extend its lease terms.
91
5. Business acquisitions
Acquisition of the Immergruen Limited
On 12 December 2018, Samarkand Holdings acquired 100% of the issued share capital of Immergruen
Limited for a cash consideration of £39,217. Immergruen Limited is a UK distribution business for B2B sales
through retail and e-commerce sites and B2C through online stores.
The acquisition supported the Group’s strategic goal to achieve its growth plans.
The following table summarises the consideration paid, the fair value of assets acquired, and liabilities
assumed at the acquisition date:
£
Fair value of consideration 39,217 ––––––––Net assets acquired:
Accounts receivable 40,570
Inventories 12,663
Cash 8,072
Accounts payable (38,522) ––––––––Total identifiable net assets acquired at fair value 22,783 ––––––––Goodwill recognised on acquisition 16,434 ––––––––
The main factors leading to the recognition of goodwill are the presence of certain intangible assets, such
as the assembled workforce, which does not qualify for separate recognition, opportunities for synergies,
supply chain and sales channels.
Acquisition of the Shanghai EastWest Network Technology Co., Ltd
On 28 May 2020, Samarkand Holdings acquired 100% of the issued share capital of Shanghai EastWest
Network Technology Co., Ltd for a cash consideration of RMB 83,000 (equivalent to £9,405). Shanghai
EastWest is a technology licensing business for B2B sales through retail and e-commerce sites and B2C
through online stores.
The acquisition supported the Group’s strategic goal to achieve its growth plans in China.
The following table summarises the consideration paid, the fair value of assets acquired, and liabilities
assumed at the acquisition date:
£
Fair value of consideration 9,405 ––––––––
Net assets acquired:
Net current liabilities (994)
Cash 164 ––––––––Total identifiable net assets acquired at fair value 830 ––––––––Goodwill recognised on acquisition 10,235 ––––––––
The main factors leading to the recognition of goodwill are the presence of certain intangible assets, such
as the assembled workforce, which does not qualify for separate recognition, opportunities for synergies,
supply chain and sales channels.
92
6. Subsidiaries
Details of the Group’s subsidiaries as at 30 November 2020 are as follows:
Percentage of
ordinary shares
Country of held by
registration or Samarkand
Company incorporation Registered office Principal activity Holdings
England & Wales 100%
England & Wales As above 100%
England & Wales As above Inactive 100%*
Immergruen Limited England & Wales As above UK distribution 100%
Administrative 100%*
Shanghai WoZeng Trade Inactive 75%*
Administrative 100%*
Hong Kong 100%
Technology licensing 100%*
* held indirectly
7. Revenue
The Group’s principal activities are that of a distribution business engaged in the B2B and B2C sale of
products and eCommerce technology solutions for Western brands and retailers selling into China.
Revenues were mainly generated in the UK, China and the Rest of the World. Further segment analysis is
contained in Note 8 the Consolidated Financial Information.
During the period ended 30 November 2020, one customer individually totalled more than 10% of total
revenues, totalling 36.3%, (year ended 31 March 2020: two customers totalling more than 10%, totalling
14.4%, and 10.8%, year ended 31 March 2019: two customers totalling more than 10%, totalling 17.0% and
16.3%, period ended 30 November 2019 two customers individually totalled more than 10% of total
Amortisation 92,711 5,005 30,661 – 128,377 –––––––– –––––––– –––––––– –––––––– ––––––––As at 30 November 2020 92,711 10,573 134,144 – 237,428
–––––––– –––––––– –––––––– –––––––– ––––––––Net book value
As at 31 March 2019 (Audited) 193,614 12,922 402,426 57,807 666,769 –––––––– –––––––– –––––––– –––––––– ––––––––As at 31 March 2020 (Audited) 633,374 35,759 356,433 57,807 1,083,373 –––––––– –––––––– –––––––– –––––––– ––––––––As at 30 November 2020 (Audited) 904,883 47,880 325,772 68,042 1,346,577 –––––––– –––––––– –––––––– –––––––– ––––––––As at 30 November 2019 (Unaudited) 477,152 11,589 371,765 57,807 918,313
–––––––– –––––––– –––––––– –––––––– ––––––––*: See Note 5 “Business acquisitions” to the Consolidated Group Financial Information for more information about the Group’s
acquisitions.
Goodwill of £41,373 relating to the acquisition of Forever Young International Limited in 2017 and £16,434
relating to the acquisition of Immergruen Limited in 2018 was allocated to the distribution business of the
entity because that is where the benefits are expected to arise from expansion opportunities and synergies
of the business and represents a cash generating unit and tested for impairment as of the reporting dates.
Goodwill of £10,235 relating to the acquisition of Shanghai EastWest Network Technology Co., Ltd in 2020
was allocated to the NOMAD technology business of the entity because that is where the benefits are
expected to arise from expansion opportunities and synergies of the business and represents a separate
cash generating units and tested for impairment as of the reporting date.
99
The carrying value of these assets was tested for impairment on the basis of value in use. These impairment
tests indicated that no impairment loss is required.
14. Property and equipment
Office Computer Leasehold
equipment equipment improvements Total
£ £ £ £
Cost
As at 1 April 2018 11,160 5,366 879 17,405
Additions 15,196 11,458 4,975 31,629 –––––––– –––––––– –––––––– ––––––––As at 31 March 2019 26,356 16,824 5,854 49,034
Additions 39,691 20,711 48,382 108,784 –––––––– –––––––– –––––––– ––––––––As at 30 November 2019 66,047 37,535 54,236 157,818
Additions 7,910 7,219 – 15,129 –––––––– –––––––– –––––––– ––––––––As at 31 March 2020 73,957 44,754 54,236 172,947
Additions 17,393 35,193 – 52,586 –––––––– –––––––– –––––––– ––––––––As at 30 November 2020 91,350 79,947 54,236 225,432
–––––––– –––––––– –––––––– ––––––––Depreciation
As at 1 April 2018 50 1,933 – 1,983
Charge for the year 1,007 3,623 1,171 5,801 –––––––– –––––––– –––––––– ––––––––As at 31 March 2019 1,057 5,556 1,171 7,784
Charge for the period 6,291 7,286 – 13,577 –––––––– –––––––– –––––––– ––––––––As at 30 November 2019 7,348 12,842 1,171 21,361
Charge for the period 7,191 4,680 5,165 17,036 –––––––– –––––––– –––––––– ––––––––As at 31 March 2020 14,539 17,522 6,336 38,397
Charge for the period 12,687 14,642 7,382 34,711 –––––––– –––––––– –––––––– ––––––––As at 30 November 2020 27,226 32,164 13,718 73,108
–––––––– –––––––– –––––––– ––––––––Net book value
As at 31 March 2019 (Audited) 25,299 11,268 4,683 41,250
–––––––– –––––––– –––––––– ––––––––As at 31 March 2020 (Audited) 59,418 27,232 47,900 134,550
–––––––– –––––––– –––––––– ––––––––As at 30 November 2020 (Audited) 64,124 47,783 40,518 152,425
–––––––– –––––––– –––––––– ––––––––As at 30 November 2019 (Unaudited) 58,699 24,693 53,065 136,457
–––––––– –––––––– –––––––– ––––––––
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15. Right-of-use assets
Land and
buildings Total
£ £
Cost
As at 1 March 2018 – –
Additions 1,362,545 1,362,545 ––––––––– –––––––––As at 31 March 2019 1,362,545 1,362,545
Additions – – ––––––––– –––––––––As at 30 November 2019 1,362,545 1,362,545 ––––––––– –––––––––Additions – – ––––––––– –––––––––As at 31 March 2020 1,362,545 1,362,545
Additions – – ––––––––– –––––––––As at 30 November 2020 1,362,545 1,362,545
––––––––– –––––––––Depreciation
As at 1 March 2018 – –
Depreciation 57,993 57,993 ––––––––– –––––––––As at 31 March 2019 57,993 57,993
Depreciation 154,648 154,648 ––––––––– –––––––––As at 30 November 2019 212,641 212,641 ––––––––– –––––––––Depreciation 77,324 77,324 ––––––––– –––––––––As at 31 March 2020 289,965 289,965
Depreciation 154,648 154,648 ––––––––– –––––––––As at 30 November 2020 444,613 444,613
––––––––– –––––––––Net book value
As at 31 March 2019 (Audited) 1,304,552 1,304,552
––––––––– –––––––––As at 31 March 2020 (Audited) 1,072,580 1,072,580
––––––––– –––––––––As at 30 November 2020 (Audited) 917,932 917,932
––––––––– –––––––––As at 30 November 2019 (Unaudited) 1,149,904 1,149,904
––––––––– –––––––––The Group leases land and buildings for its offices and warehouses under agreements of between five to
six years with, in some cases, options to extend. The leases have initial rent-free periods and 5 yearly
upward only rent reviews. No extension to these leases has been assumed. The Group also leases plant and
equipment under short-term agreements of less than one year.
101
Future minimum lease payments associated with the land and building leases were as follows:
Audited Audited Audited Unaudited
As at As at As at As at
31 March 31 March 30 November 30 November
2019 2020 2020 2019
£ £ £ £
Not later than one year 208,085 282,906 283,579 257,109
Later than one year and not later
than two years 282,906 283,579 283,579 283,579
Later than two years and not later
than five years 851,514 756,642 567,072 835,489
More than five years 188,707 – – 15,162 ––––––––– ––––––––– ––––––––– –––––––––Total minimum lease payments 1,531,212 1,323,127 1,134,230 1,391,339
Translation of foreign operations (4,138) 3,527 (611) –––––––––– –––––––––– ––––––––––Comprehensive income 1,662,837 (1,417,501) 245,336
–––––––––– –––––––––– ––––––––––(3) The adjustments to consolidate Samarkand Holdings results in the cancellation of the £353,400 non-current asset investment
on the Statement of Financial Position of the Company and the £1,767 share capital, £28,764 merger relief reserve, the
£266,072 capital contribution, the £(7,471) currency translation reserve and the £(1,675,228) retained deficit and within equity
on the Statement of Financial Position of the Group. The balance of these cancellations results in a £(1,768,260) adjustment to
the merger reserve within equity.
(4) The adjustments to equity and share premium of £14,584 and £1,519,084 respectively represents the aggregate conversion of
£1,533,668 of Directors’ and former directors’ loans, part of the Smollan convertible loan and borrowings into Ordinary Shares.
The loan conversions are summarised as follows:
• £198,486 in respect of Simon Smiley’s Director’s loan balance as at 30 November 2020, converted into 191,774 Ordinary
Shares at £1.035 each;
• £124,739 in respect of David Hampstead’s Director’s loan balance as at 30 November 2020, converted into 120,521
Ordinary Shares at £1.035 each;
• £92,530 in respect of Tom Gooding’s loan balance as at 30 November 2020, converted into 80,461 Ordinary Shares at £1.15
each;
• £967,913 of the £1,967,913 Smollan convertible loan balance as at 30 November 2020, converted into 935,182 Ordinary
Shares at £1.035 each; and
• £150,000 of borrowings as at 30 November 2020, converted into 130,435 Ordinary Shares at £1.15 each.
The adjustment of £6,416 to the pro forma Statement of Comprehensive Income represents the removal of the interest charges
on the above loans from the results for the 36-day period on the basis that the loans were converted on 12 January 2021, being
the start of the period being reported on.
(5) The adjustment to cash of £1,490,000 represents the cash repayment of the following loan balances as at 30 November 2020:
• £1,000,000 in respect of the balance of the Smollan Convertible Loan not being converted into Ordinary Shares as set out
in note 4 above;
• £400,000 in respect of the HSBC Bank Plc Coronavirus Business Interruption Loans Scheme loan; and
122
• £90,000 in respect of the balance of Tom Gooding’s loan not being converted into Ordinary Shares as set out in note 4
above.
The adjustment of £5,261 to the pro forma Statement of Comprehensive Income represents the removal of the interest charges
on the above loans from the results for the 36-day period on the basis that the loans were repaid on 12 January 2021, being
the start of the period being reported on.
(6) The adjustment of £15,621,611 to cash and cash equivalents represents the Gross Proceeds of £16,997,427 from the issue of
the Placing Shares and Subscription Shares, less £1,375,816 of associated costs.
The adjustment of £147,804 to share capital represents nominal value of the aggregate 14,780,371 Placing Shares and the
Subscription Shares of £0.01 each.
The adjustment of £15,841,864 to share premium represents the balance of the issue price over and above the nominal value
of the Placing Shares and the Subscription Shares, being £16,849,623, less £1,007,759 of the Fundraising and Admission costs
allocated to share premium.
Of the £1,375,816 Fundraising and Admission costs, £1,007,759 has been allocated against share premium and £368,057 to
selling and administrative expenses in the pro forma Statement of Comprehensive income, in accordance with UK IFRS.
(7) The Pro Forma Financial Information does not reflect any changes in the trading position, or any other changes arising from
other transactions, since 16 February 2021 in respect of the Company or since 30 November 2020 with respect to the Group.
(8) With respect to the adjustments to the unaudited pro forma Statement of Comprehensive Income, none of the adjustments
will have a continuing impact on the Company.
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Part 9
Taxation
Taxation in the United Kingdom
The following information is based on UK tax law and HMRC practice currently in force in the UK. Such law
and practice (including, without limitation, rates of tax) is in principle subject to change at any time. The
information that follows is for guidance purposes only. Any person who is in any doubt about his or her
position should contact their professional advisor immediately.
Tax treatment of UK investors
The following information, which relates only to UK taxation, is applicable to persons who are resident in
the UK and who beneficially own Ordinary Shares as investments and not as securities to be realised in the
course of a trade. It is based on the law and practice currently in force in the UK. The information is not
exhaustive and does not apply to potential investors:
(i) who intend to acquire, or may acquire (either on their own or together with persons with whom they
are connected or associated for tax purposes), more than 10 per cent., of any of the classes of shares
in the Company; or
(ii) who intend to acquire Ordinary Shares as part of tax avoidance arrangements; or
(iii) who are in any doubt as to their taxation position.
Such Shareholders should consult their professional advisers without delay. Shareholders should note that
tax law and interpretation can change and that, in particular, the levels, basis of and reliefs from taxation
may change. Such changes may alter the benefits of investment in the Company.
Shareholders who are neither resident nor temporarily non-resident in the UK and who do not carry on a
trade, profession or vocation through a branch, agency or permanent establishment in the UK with which
the Ordinary Shares are connected, will not normally be liable to UK taxation on dividends paid by the
Company or on capital gains arising on the sale or other disposal of Ordinary Shares. Such Shareholders
should consult their own tax advisers concerning their tax liabilities.
Dividends
Where the Company pays dividends no UK withholding taxes are deducted at source, Shareholders who are
resident in the UK for tax purposes will, depending on their circumstances, be liable to UK income tax or
corporation tax on those dividends.
• UK resident individual Shareholders who are domiciled in the UK, and who hold their Shares as
investments, will be subject to UK income tax on the amount of dividends received from the
Company.
Dividend income received by UK tax resident individuals will have a £2,000 annum dividend tax allowance
A Dividend receipts in excess of £2,000 will be taxed at 7.5 per cent. for basic rate taxpayers, 32.5 per cent.
for higher rate taxpayers , and 38.1 per cent. for additional rate taxpayers.
Shareholders who are subject to UK corporation tax should generally, and subject to certain anti-avoidance
provisions, be able to claim exemption from UK corporation tax in respect of any dividend received but will
not be entitled to claim relief in respect of any underlying tax.
Disposals of Ordinary Shares
Any gain arising on the sale, redemption or other disposal of Ordinary Shares will be taxed at the time of
such sale, redemption or disposal as a capital gain.
124
The rate of capital gains tax on disposal of Ordinary shares by basic rate taxpayers is 10 per cent., and for
upper rate and additional is 20 per cent.
For Shareholders within the charge to UK corporation tax, indexation allowance up until 1 January 2018
may reduce any chargeable gain arising on disposal of Ordinary Shares but will not create or increase an
allowable loss.
• Subject to certain exemptions, the corporation tax rate applicable to its taxable profits is currently
19 per cent.
Further information for Shareholders subject to UK income tax and capital gains tax
“Transactions in securities”
The attention of Shareholders (whether corporates or individuals) within the scope of UK taxation is drawn
to the provisions set out in, respectively, Part 15 of the Corporation Tax Act 2010 and Chapter 1 of Part 13 of
the Income Tax Act 2007, which (in each case) give powers to HM Revenue and Customs to raise tax
assessments so as to cancel “tax advantages” derived from certain prescribed “transactions in securities”.
Stamp Duty and Stamp Duty Reserve Tax (“SDRT”)
• The statements below are intended as a general guide to the current position. They do not apply to
certain intermediaries who are not liable to stamp duty or SDRT or (except where stated otherwise)
to persons connected with depositary arrangements or clearance services who may be liable at a
higher rate.
• No stamp duty or SDRT will generally be payable on the issue of Ordinary Shares.
• Neither UK stamp duty nor SDRT should arise on transfers of Ordinary Shares on AQSE (including
instruments transferring Shares and agreements to transfer Ordinary Shares) based on the following
assumptions:
(A) the Shares are admitted to trading on AQSE, but are not listed on any market (with the term
“listed” being construed in accordance with section 99A of the Finance Act 1986), and this has
been certified to Euroclear; and
(B) AQSE continues to be accepted as a “recognised growth market” as construed in accordance
with section 99A of the Finance Act 1986).
• In the event that either of the above assumptions does not apply, stamp duty or SDRT may apply to
transfers of Ordinary Shares in certain circumstances.
• Any transfer of Sale Shares for consideration prior to admission to trading on AQSE is likely to be
subject to stamp duty or SDLT.
• The above comments are intended as a guide to the general stamp duty and SDRT position and may
not relate to persons such as charities, market makers, brokers, dealers, intermediaries and persons
connected with depositary arrangements or clearance services to whom special rules apply.
2. THIS SUMMARY OF UK TAXATION ISSUES CAN ONLY PROVIDE A GENERAL OVERVIEW OF THESE
AREAS AND IT IS NOT A DESCRIPTION OF ALL THE TAX CONSIDERATIONS THAT MAY BE RELEVANT
TO A DECISION TO INVEST IN THE COMPANY. THE SUMMARY OF CERTAIN UK TAX ISSUES IS BASED
ON THE LAWS AND REGULATIONS IN FORCE AS OF THE DATE OF THIS DOCUMENT AND MAY BE
SUBJECT TO ANY CHANGES IN UK LAWS OCCURRING AFTER SUCH DATE. LEGAL ADVICE SHOULD BE
TAKEN WITH REGARD TO INDIVIDUAL CIRCUMSTANCES. ANY PERSON WHO IS IN ANY DOUBT AS
TO HIS TAX POSITION OR WHERE HE IS RESIDENT, OR OTHERWISE SUBJECT TO TAXATION, IN A
JURISDICTION OTHER THAN THE UK, SHOULD CONSULT HIS PROFESSIONAL ADVISER.
125
Part 10
Additional Information
This section shall provide information on the issuer’s major shareholders, the existence of potential conflicts
of interest between senior management and the issuer, the issuer’s share capital as well as information on
related party transactions, legal and arbitration proceedings and material contracts.
1. Responsibility Statement
1.1 The Company, the Directors and the Proposed Directors, whose names appear in the section entitled
“Directors, Proposed Directors, Company Secretary, Registered Office and Advisers”, accept
responsibility for the information contained in this Document. To the best of the knowledge of the
Company, the Directors and the Proposed Directors, the information contained in this Document is
in accordance with the facts, and this Document makes no omission likely to affect its import.
2. Company Details
2.1 The Company is incorporated under the laws of England and Wales. The Company was incorporated
on 12 January 2021 under the Companies Act 2006 as a private company limited by shares and under
the name Samarkand Group Limited with registered number 13127277.
2.2 On or around 10 March 2021, the Company re-registered as a public limited company as Samarkand
Group PLC. The principal legislation under which the Company operates, and under which the New
Ordinary Shares will be issued, is the Companies Act and the regulations made thereunder.
2.3 The registered office of the Company is at Unit 13 & 14, Nelson Trading Estate, The Path, Merton,
London SW19 3BL.
2.4 The telephone number of the Company is +44(0) 203 7403933.
2.5 The legal entity identifier of the Company is 213800IYL86FVL5UJB61.
2.6 The website of the Company is www.samarkand.global. The contents of Company’s website do not
form part of this Document.
2.7 The Ordinary Shares are sterling denominated ordinary shares of £0.01 each in the capital of the
Company.
2.8 The Ordinary Shares may be held in certificated form or uncertificated form and traded on CREST,
which is a paperless settlement procedure enabling securities to be evidenced and transferred
otherwise than by a written instrument in accordance with the CREST Regulations.
3. Share Capital
3.1 The issued share capital of the Company as at the date of this Document is as follows:
Amount fully paid up (£) Number
Ordinary Shares 353,400.01 35,340,001
3.2 The issued share capital of the Company immediately following Admission, is expected to be as
follows:
Amount fully paid up (£) Number
Ordinary Shares 516,189.66 51,618,966
3.3 On incorporation, the issued share capital of the Company was £0.01 consisting of 1 ordinary share
of £0.01 each.
126
Share for share exchanges
3.4 Pursuant to the share for share exchanges effective on 16 February 2021, the Company acquired the
entire issued share capital of Samarkand Holdings Limited in exchange for 35,340,000 Ordinary
Shares on the basis of 200 Ordinary Shares for each ordinary share in issue in the capital of
Samarkand Holdings Limited. Immediately following the share for share exchanges, the issued share
capital of the Company was £353,400.01 divided into 35,340,001 Ordinary Shares which includes the
initial subscriber share in the Company.
Option Exchanges
3.5 Pursuant to certain option exchanges, the Company granted options to certain Group employees to
acquire 992,000 ordinary shares in the Company in consideration of them surrendering existing
options granted by Samarkand Holdings. The options are to be satisfied by the transfer of Ordinary
Shares held by David Hampstead and Simon Smiley pursuant to the terms of the Hedging Agreement.
Further information relating to the Hedging Agreement is set out in paragraph 11.15 of this Part 10.
Share Capital Authorities
3.6 The shareholders of the Company passed, inter alia, the following resolutions on 2 March 2021 that,
subject to and conditional upon Admission:
3.6.1 the Directors be generally and unconditionally authorised in accordance with section 551 of
the Companies Act to exercise all the powers of the Company to allot shares in the Company
or grant rights to subscribe for or to convert any security into shares in the Company:
(a) up to an aggregate nominal amount of £300,000; and
(b) comprising equity securities (as defined in section 560(1) of the Companies Act) up to
an aggregate nominal amount of £150,000 in connection with an offer by way of a
rights issue:
(i) to ordinary shareholders in proportion (as nearly as may be practicable) to their
existing holdings; and
(ii) to holders of other equity securities as required by the rights of those securities
or, subject to such rights, as the Directors otherwise consider necessary,
and so that the Directors may impose any limits or restrictions and make any
arrangements which they consider necessary or appropriate to deal with treasury
shares, fractional entitlements, record dates, and legal, regulatory or practical
problems in, or under the laws of, any territory, or any other matter,
such authorities to apply until on the earlier of 15 months after the passing of this resolution
or the conclusion of the annual general meeting of the Company to be held in 2021, save that
the Company may before such expiry make an offer or agreement which would or might
require equity securities to be allotted after such expiry and the Board may allot equity
securities in pursuance of such an offer or agreement as if the authority conferred hereby had
not expired.
3.6.2 That, subject to the passing of the above resolution, the Directors be empowered in
accordance with Section 570 of the Act to allot equity securities (within the meaning of
Section 560 of the Act) wholly for cash pursuant to the authority conferred on them pursuant
to the above resolution as if Section 561(1) of the Act or any pre-emption provisions
contained in the articles of association did not apply to any such allotment, provided that this
power shall be limited to the allotment of equity securities:
(a) up to an aggregate nominal amount of £175,000;
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(b) in connection with an open offer of equity securities by way of rights issue to holders
of equity securities in proportion (as nearly as may be practicable) to their respective
holdings of such equity securities, but subject to such exclusions or other arrangements
as the Directors may consider appropriate to deal with fractional entitlements or
problems arising in any territory or with the requirements of any recognised regulatory
body or stock exchange in any territory; and
(c) otherwise than pursuant to sub-paragraphs (a) to (b) above, following the Admission
up to an aggregate nominal amount equal to 10% of the nominal value of the issued
ordinary share capital of the Company at the time of the Admission (taking into account
any shares issued pursuant to the authority contained in paragraph (a) of the above
resolution at the time of Admission), and such power shall expire on the earlier of
15 months after the passing of this resolution or the conclusion of the annual general
meeting of the Company to be held in 2021, save that the Company may before such
expiry make an offer or agreement which would or might require equity securities to
be allotted after such expiry and the Board may allot equity securities in pursuance of
such an offer or agreement as if the authority conferred hereby had not expired.
3.7 As at the date of this Document, the Company has issued the following convertible securities in the
form of loan notes:
Subscriber Effective Date Amount Date of expiry Exercise price
Smollan 10 March 2021 1,850,000 26 July 2023
3.8 On 12 March 2021, the Company granted broker warrants to VSA Capital, conditional on Admission,
to subscribe for 645,237 Ordinary Shares exercisable at 115 pence per share for a period of five years
from Admission.
3.9 On 12 March 2021, the Company granted warrants to two directors, conditional on Admission, to
subscribe for 21,739 Ordinary Shares and 43,478 Ordinary Shares respectively exercisable at
115 pence per share for a period of three years from Admission.
3.10 Immediately prior to or on Admission, the Company intends to allot and issue:
3.10.1 317,509 Ordinary Shares in satisfaction of the Directors’ convertible loans with a conversion
price of 103.5 pence per share. Further details of the Directors’ Convertible Loans are set out
in paragraph 11.12 of this Part 10; and
3.10.2 967,539 Ordinary Shares in satisfaction of part of the Smollan Loans with a conversion price
of 103.5 pence per share. Further details of the Smollan Loans are set out in paragraphs
11.10 and 11.11 of this Part 10;
3.10.3 83,111 Ordinary Shares in satisfaction of part of a shareholder loan with a conversion price
equal to the Issue Price per share. Further details of the conversion of this loan are set out
in paragraph 11.13 of this Part 10; and
3.10.4 130,435 Ordinary Shares in satisfaction of a loan with a conversion price equal to the Issue
Price per share. Further details of the conversion of this loan are set out in paragraph 11.14
of this Part 10.
3.11 There are no shares in the Company’s share capital that do not represent capital. The Company does
not hold any shares in treasury.
3.12 Save for the warrants and convertible securities detailed at paragraphs 3.5 and 3.7 above, the
Company has not granted acquisition rights and/or obligations over its unissued capital.
90% of the
Fundraising
Price
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3.13 Save as otherwise disclosed in this Document, the Company has not granted commissions, discounts,
brokerages or other special terms in connection with the issue or sale of shares or loan capital in the
Company in the three years preceding the date of this Document.
3.14 No capital of any member of the Group is under option or agreed conditionally to be put under
option.
3.15 Save as otherwise disclosed in this Document, the Company has not issued any preferential
subscription rights for any share capital of the Company.
3.16 Pursuant to the Fundraising and Loan Conversion, existing Shareholders will experience a 31.54 per
cent. dilution of their holdings of Ordinary Shares as a result of the issue of the 16,278,965 New
Ordinary Shares, (that is, his or her proportionate interest in Ordinary Shares will decrease by 31.54
per cent.), following which they will hold approximately 68.46 per cent. of the enlarged Ordinary
Shares capital of the Company.
4. Subsidiaries
4.1 The Company is the ultimate holding company of the Group and it has the following subsidiaries:
Proportion of
ownership
and/or voting
Name of Subsidiary Country of incorporation power held
Samarkand Holdings Limited England 100 per cent.
Samarkand Global Limited England 100 per cent.
Immergruen Limited England 100 per cent.
Forever Young International Limited England 100 per cent.
Samarkand Global HK Limited Hong Kong 100 per cent
Shanghai WoZeng Trade(1) China 75 per cent.
New Silk Road Brand Management Limited England 100 per cent.
Samarkand Global (Beijing) Limited China 100 per cent.
Shanghai Samarkand Technology Service Co. Ltd China 100 per cent.
(1) Shanghai WoZeng Trade has been dormant since incorporation.
4.2 Shanghai EastWest Network Technology Co., Limited (“Eastwest”) is an affiliated consolidated entity
of the Shanghai Samarkand Technology Co. Limited. The Group intends to use EastWest to engage in
the provision of internet content services in the future.
Summary of the contractual arrangements relating to the VIE structure, Samarkand Shanghai and
East West.
Exclusive Call Option Agreement
The EastWest equity holder has granted to Samarkand Shanghai an exclusive call option to purchase
its equity in EastWest at an exercise price equal to the higher of (i) the paid-in registered capital in
EastWest; and (ii) the minimum price as permitted by applicable PRC laws at that time. EastWest has
further granted Samarkand Shanghai or its designee an exclusive call option to purchase its assets at
an exercise price equal to the book value of the assets or the minimum price as permitted by
applicable PRC law, whichever is higher.
The EastWest equity holder and EastWest provides certain undertakings to Samarkand Shanghai in
relation to the share structure of EastWest, information rights and negative pledges.
The Exclusive Call Option agreement remains in effect until Samarkand Shanghai notifies the
EastWest equity holder or EastWest in writing that it terminates the agreement. The parties to the
exclusive call option agreement are the EastWest equity holder, EastWest and Samarkand Shanghai.
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Proxy Agreement
Pursuant to a proxy agreement, the EastWest equity holder irrevocably grants Samarkand Shanghai
or any person designated by Samarkand Shanghai a power of attorney and authorises Samarkand
Shanghai to act as her proxy to exercise her rights as the equity holder of EastWest, including without
limitation the right to vote and appoint directors, execute documents in relation to the equity of
EastWest held by the EastWest equity holder. The parties to the proxy agreement are the EastWest
equity holder, EastWest and Samarkand Shanghai.
Loan Agreement
Pursuant to a loan agreement, Samarkand Shanghai has made a loan to the equity holder of
EastWest, which may only be used for the purpose of business operations of EastWest as agreed by
Samarkand Shanghai. The repayment of the loan may be accelerated at the absolute discretion of
Samarkand Shanghai. On repayment of the loan, the equity holder of EastWest shall transfer the
equity interests in EastWest at a price equal to the outstanding amount of the loan to Samarkand
Shanghai or a designated third party, subject to and in compliance with any applicable PRC laws,
rules and regulations. The EastWest equity holder undertakes not to enter into any prohibited
transactions in relation to EastWest, including the transfer of any business, material assets,
intellectual property rights or equity interests in EastWest to any third-party.
Equity Pledge Agreement
Pursuant to the equity pledge agreement, the EastWest equity holder has pledged all of her interests
in the equity of EastWest as a continuing first priority security interest in favour of Samarkand
Shanghai to secure the outstanding amounts advanced under the loan agreement described above
and to secure the performance of obligations by EastWest and/or its equity holder under the other
structure contracts. Samarkand Shanghai is entitled to exercise its right to dispose of the EastWest
equity holder’s pledged interests in the equity of EastWest and has priority in receiving payment by
the application of proceeds from the auction or sale of the pledged interests, in the event of
any breach or default under the loan agreement or other structure contracts, if applicable. The
equity pledge agreement remains in force until the later of (i) the full performance of the contractual
arrangements by the relevant parties, and (ii) the full repayment of the loan made to the EastWest
equity holder. The parties to the equity pledge agreement for EastWest are the EastWest equity
holder, EastWest and Samarkand Shanghai.
Exclusive Business and Technology Cooperation Agreement
EastWest has entered into an exclusive business and technology cooperation agreement with
Samarkand Shanghai, Samarkand Holdings and Samarkand Global, pursuant to which they agree to
licence certain technology and intellectual property rights to EastWest on a non-exclusive basis in the
PRC. In consideration of such licence, EastWest pays them a licence fee based on an agreed
percentage of EastWest’s revenues or other fair market practice to the extent permitted by
applicable PRC laws. Under such agreement, EastWest shall provide business support, technology
development, technical consulting and services as determined by Samarkand Shanghai, Samarkand
Holdings and Samarkand Global from time to time.
All of the above contracts are governed by the laws of the PRC and Any dispute arising from or in
connection with this agreement shall be submitted to Shanghai International Economic and Trade
Arbitration Commission/Shanghai International Arbitration Center.
4.3 Save as disclosed in this paragraph 4, there are no undertakings in which the Company holds a
proportion of the capital which is likely to have a significant effect on the assessment of its own
assets and liabilities, financial position and profits.
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5. Articles of Association
5.1 Set out below is a summary of the provisions of the New Articles of Association adopted subject to
and conditional on Admission:
5.1.1 Objects
The objects of the Company, in accordance with s.31(1) of the Companies Act, are
unrestricted.
5.1.2 Limited Liability
The liability of the members is limited to the amount, if any, unpaid on the shares in the
Company respectively held by them.
5.1.3 Change of Name
The Company may change its name by resolution of the Board.
5.1.4 Share Capital
Subject to the Companies Acts and to any rights attaching to existing shares, any share may
be issued with or have attached to it such rights and restrictions as the Company may by
ordinary resolution determine, or if no ordinary resolution has been passed or so far as the
resolutions does not make specific provision, as the Board may determine.
Subject to the Companies Acts and to any rights attaching to existing shares, any share may
be issued which can be redeemed or is liable to be redeemed at the option of the Company
or the holder. The Board may determine the terms, conditions and manner of redemption of
any redeemable shares which are issued.
5.1.5 Voting Rights
On a vote on a resolution on a show of hands at a meeting, every holder of Ordinary Shares
who (being an individual) is present in person or by one or more proxies or (being a
corporation) is present by one or more duly authorised representatives or proxies shall have
one vote, and on a poll every holder of Ordinary Shares shall have one vote for every Ordinary
Share he holds.
5.1.6 Variation of Rights
Subject to the Companies Acts, the rights attached to any class of shares may be varied or
abrogated either with the consent in writing of the holders of three-quarters in nominal value
of the issued shares of the class (excluding any shares of that class held as treasury shares) or
with the authority of a special resolution passed at a separate class meeting.
The quorum at such a class meeting shall not be less than two persons holding or representing
by proxy at least one-third of the nominal amount paid up on the issued share of the class
(excluding any shares of that class held as treasury shares).
5.1.7 Transfer of shares
A share held in certificated form may be transferred by an instrument of transfer in writing in
any usual form or in any form approved by the Board, which shall be executed by or on behalf
of the transferor and, unless the share is fully paid, by or on behalf of the transferee. A share
held in uncertificated form may be transferred by means of a relevant system in such manner
provided for in the uncertificated securities rules. The transferor shall be deemed to remain
the holder of the relevant share until the transferee is entered in the Register in respect of it.
The Board may also refuse to register a transfer of shares held in certificated form unless:
(a) it is for a share which is fully paid up;
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(b) it is for a share on which the Company has no lien;
(c) it is only one class of shares;
(d) it is in favour of a single transferee or not more than four joint transferees;
(e) it is duly stamped or is duly certificated or otherwise shown to the satisfaction of the
Board to be exempt from stamp duty (if so required); and
(f) delivered for registration to the registered office of the Company, or such other place
as the Board may determine, accompanied (except in the case of a transfer by a person
to whom the Company is not required by law to issue a certificate and to whom a
certificate has not been issued or in the case of a renunciation) by the certificate for the
shares to which it relates and such other evidence as the Board may reasonably require
to prove the title of the transferor (or person renouncing) and the due execution of
the transfer or renunciation by him or, if the transfer or renunciation is executed by
some other person on his behalf, the authority of that person to do so, provided that
such discretion may not be exercised in such a way as to prevent dealings in such shares
from taking place on an open and proper basis.
Where a member, or any other person appearing to be interested in shares held by that
member, has been issued with a noticed under section 793 of the Act (“section 793 notice”)
and has failed in relation to any shares (“default shares”) to give the Company the information
required by the section 793 notice within the prescribed period from the service of the notice,
then no transfer, other than an excepted transfer, of any shares held by the member shall be
registered unless the member himself is not in default of supplying the required information
and the member proves to the satisfaction of the Board that no person in default of supplying
such information is interested in any of the shares that are subject to the transfer.
5.1.8 Dividends
Subject to the provisions of the Act and the Articles, the Company may by ordinary resolution
declare dividends in accordance with the respective rights and interests of the members, but
no dividend shall exceed the amount recommended by the Board. Subject to the provisions
of the Act, the Board may pay interim dividends if it appears to the Board that they are
justified by the profits of the Company available for distribution.
The Board may, by ordinary resolution of the Company direct, or in the case of an interim
dividend may without the authority of an ordinary resolution direct, that payment of any
dividend declared may be satisfied wholly or partly by the distribution of assets, and in
particular of paid up shares or debentures of any other company, or in any one or more of
such ways.
5.1.9 Winding Up
If the Company is wound up, the liquidator may, by the authority of special resolution of the
Company and any other authority required by law, divide among the members in specie the
whole or any part of the assets of the Company. This applies whether the assets shall consist
of property of one kind or different kinds. For this purpose, the liquidator may set such value
as the liquidator considers fair on any asset or assets and may determine how to divide it
between the members or different classes of members. The Liquidator may, with the
authority of a special resolution and any other authority required by the law, transfer all or
any part of the assets to trustees on such trusts for the benefit of members as the liquidator
decides. Where the liquidator divides or transfers any assets in pursuance of the powers in
this article, no member shall be required to accept any asset in respect of which there is a
liability.
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5.1.10 Untraced Shareholders
The Company shall be entitled to sell at the best price reasonably obtainable any share of a
member or any share to which a person is entitled by virtue of transmission, and to give notice
of the same if an provided that:(i) during the period of twelve years before the date of sending
of the notice, no cheque, order or warrant in respect of such share sent by the Company
through the post in a pre-paid envelope addressed to the member or to the person entitled
by transmission to the share, at his address on the register of members or other last known
address given by the member or the person to which cheques, orders or warrants in respect
of such share are to be sent has been cashed and no communications in respect of such share
from such member or person entitled, provided that during such period of twelve years the
Company has paid at least three dividends (whether interim or final) and no such dividend has
been claimed by the person entitled to it; (ii) on or after expiry of the 12 year period, the
Company has given notice of its intention to sell such share by sending a notice to the
member or person entitled by transmission to the share at his address on the register of
members or other last known address given by the member or person entitled by
transmission to the share and before sending such a notice to the member or other person
entitled by transmission, the Company must have used reasonable efforts to trace the
member or other person entitled, engaging, if considered appropriate, a professional asset
reunification company or other tracing agent and/or giving notice of its intention to sell the
share by advertisement in a national newspaper and in a newspaper circulating in the area of
the address of the member or person entitled by transmission to the share shown in the
register of members; (iii) during the further period of three months following the date of such
notice and prior to the exercise of the power of sale the Company has not received any
communication in respect of such share from the member or person entitled by transmission;
and (iv) the Company has given notice to the relevant stock exchange of its intention to make
such sale, if shares of the class concerned are listed on a recognized stock exchange.
The Company shall account to the member or other person entitled to the share for the net
proceeds of a sale by transferring the proceeds to a separate account. The Company shall be
deemed to be a debtor, not a trustee, to such member or other person. Such monies may be
employed in the business of the Company or invested in investments as the Board sees fit. No
interest is payable on such monies.
5.1.11 Provisions relating to Directors
Unless otherwise determined by ordinary resolution of the Company, the number of Directors
shall not be less than 2.
Subject to the Articles, the Company may by ordinary resolution appoint a person who is
willing to act as a Director, either to fill a vacancy or as an additional Director.
Subject to the Articles, the Board may appoint any person who is willing to act as a Director,
either to fill a vacancy or as an additional Director. Any Director so appointed shall retire at
the next annual general meeting of the Company following such appointment and shall be
eligible for re-appointment thereat but is not taken into account when deciding the number
of directors who are to retire by rotation.
Other than a retiring Director, no person may be appointed or re-appointed a Director at a
general meeting unless (i) he is recommended by the Board; or (ii) the Company has received
notice at least seven but no more than 42 clear days before the date of the general meeting
from a member (other than the person proposed) of his intention to propose a resolution of
such appointment or reappointment.
Each Director shall retire from office and shall be eligible for reappointment at each annual
general meeting if: (i) he has been appointed by the board since the previous annual general
meeting; or (ii) it is his third annual general meeting following the annual general meeting at
133
which he was elected or last re-elected; or (iii) he has held office with the Company as a non-
executive Director for a continuous period of nine years or more at the date of the meeting.
Each Director may be paid a fee at such rate as may be determined by the Board from time to
time but must not exceed £400,000 per annum or such higher amount as may be decided
from time to time by ordinary resolution of the Company. Such fees are distinct from any
salary, remuneration or any other amounts payable to a Director. Each Director may be paid
reasonable travelling, hotel and other expenses properly incurred in relation to his duties as
a Director. A Director may be paid additional remuneration if such Director performs or
renders any special duties or services outside his ordinary duties as a Director.
The remuneration or salary of any executive Director may be fixed or otherwise determined
by the Board and may be in addition to or instead of any fee payable to him for his services as
a Director.
Subject to the provisions of the Companies Acts, the Articles and to any directions given by
special resolution, the business of the Company shall be managed by the Board which may
exercise all the powers of the Company. The Board may delegate its powers to any committee
consisting of one or more Directors and (if thought fit) one or more other persons provided:
(i) a majority of the committee shall be Directors; and (ii) no resolution of a committee shall
be effective unless a majority of those present when it is passed are Directors or alternate
Directors.
The Board or any committee so authorised may delegate or entrust to any executive Director
its powers, authorities and discretions (with power to sub-delegate) for such time and on such
terms as it thinks fit and revoke, withdraw or vary such powers. The Board may establish and
local or divisional boards or agencies and delegate any of its powers to such boards or
agencies for the purpose of managing the affairs of the Company.
The Board may, by power of attorney or otherwise, appoint and delegate any of its powers
(with powers to sub-delegate) to a person or persons to be an agent or attorney of the
Company.
A Director may, and the Secretary at the request of a Director shall, call a meeting of the
Board. The quorum for the transaction of the business of the Board may be determined by the
Board and unless otherwise determined at any other number shall be 2.
Questions arising at a meeting shall be decided by a majority of votes. In the case of an
equality of votes the chairman shall have a second or casting vote.
The Directors may (in accordance with the Articles) authorise (in writing) any matter or
situation proposed to them by any Director which would, if not authorised, involve a Director
(an “Interested Director”) breaching his duty under the Act to avoid conflicts of interest.
Authorisation of such a matter is effective only if:
(a) the matter in question shall have been proposed by any Director for consideration in
the same way that any other matter may be proposed to the Directors under the
Articles;
(b) any requirement as to quorum at the meeting of the Directors at which the matter is
considered is met without counting the Interested Director in question and any other
interested Director; and
(c) the matter has been agreed to without the Interested voting or would have been
agreed to if the Interested Director’s votes had not been counted.
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5.1.12 Borrowing powers
The Board may exercise all the powers of the Company to borrow money, to guarantee, to
indemnify, to mortgage or charge all or any part of the undertaking, property and assets
(present and future) and uncalled capital of the Company, to issue debentures and other
securities and to give security, either outright or as collateral security, for any debt, liability or
obligation of the Company or of any third party.
5.1.13 Uncertificated Shares
The Company may issue shares and other securities which do not have certificates, permit
existing shares and other securities to be held without certificates, and permit any shares or
other securities held without certificate to be transferred by means of relevant system and
may make arrangements for a class of shares to become a participating class. Title to shares
of a particular class may only be evidenced otherwise than by a certificate where that class of
shares is a participating class.
5.1.14 Calls
Subject to the Articles and the terms on which the shares are allotted, the Board may make
calls on the members regarding any monies unpaid on their shares (whether in respect of
nominal value or premium) and not payable on a date fixed by or in accordance with the terms
of issue. Each member shall pay to the Company as require by the notice the amount called
on for his shares. A call is made at the time of the passing of the Board resolution authorising
the call was passed. The joint holders of a share shall be jointly and severally liable to pay all
calls in respect of the share.
5.1.15 General Meetings
All meetings other than annual general meetings shall be called general meetings. The Board
may call general meetings and, on the requisition of members pursuant to the provisions of
the Companies Acts, shall proceed to convene a general meeting.
An annual general meeting shall be held once a year at such time (consistent with the terms
of the Companies Acts) and place as may be determined by the Board.
Every notice of meeting shall specify the place, the day and the time of the meeting and there
shall appear with reasonable prominence in every notice a statement that member entitled
to attend and vote is entitled to a proxy or (if he has more than one share) proxies to exercise
all and any of his rights to attend, speak and vote and that a proxy need not be a member of
the Company.
The notice shall specify the general nature of the business to be transacted and shall set out
the text of all resolutions to be considered by the meeting and shall state in each case whether
it is proposed as an ordinary or a special resolution. In the case of an annual general meeting,
the notice shall specify the meeting as such.
Two members present in person or by proxy and entitled to vote upon the business to be
transacted at the meeting shall be a quorum. A Director (and any other person invited by the
chairman to do so) shall be entitled to attend and speak at any general meeting and at any
separate meeting of the holders of any class of shares in the Company, whether or not he is a
member.
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6. Directorships and interests in Ordinary Shares
6.1 In addition to the directorships held in the Company, the Directors hold, or have held, the following
directorships and are or were members of the following partnerships, within the past five years prior
to the date of this Document:
Name Current Directorships/Partnerships Past Directorships/Directorships
David Richard
Hampstead
Samarkand Holdings Limited
Samarkand Global Limited
Forever Young International Limited
Immergruen Limited
New Silk Road Brand Management
Limited
Samarkand Global ( Beijing ) Limited
Shanghai Samarkand Technology
Service Co., Ltd
Quickthink Media Limited
Blastworks Limited
Simon Peter
Smiley
Tamacre Limited
Samarkand Holdings Limited
Samarkand Global Limited
Forever Young International Limited
Immergruen Limited
New Silk Road Brand Management
Limited
Quickthink Media Limited
Blastworks Limited
Tanith Claire
Dodge
Robert Walters PLC
Member of the Advisory Council at
PriceWaterhouse Coopers
Trustee of Ambitious About Autism
Schools Trust
Regents Inns Plc
Busy Bees Plc
Trustee Kids Out
Board member of CIPD
Jeanette Hern Advantage Smollan Limited
Al Gurg Smollan Commercial
Investment LLC
CIS Combera (CY) Limited
Compass Communications Proprietary
Limited
Dataorbis Proprietary Limited
DataOrbis Information Solutions
Dataorbis East Africa Limited
Dataorbis MENA DMCC
Daymon South Africa Proprietary
Limited
Daymon Netherlands B.V.
DKSH Smollan Field Marketing PTE
Limited
Elevator Agency Proprietary Limited
Elevator People Proprietary Limited
F G Knights Proprietary Limited
Fieldmarketing Group Proprietary
Limited
Flixmedia Limited
Fredsmol Securities Proprietary
Limited
Frontline Marketing Services
Proprietary Limited
Keith Higgins None TWSC Limited(1)
136
Name Current Directorships/Partnerships Past Directorships/Directorships
Global Smollan Holdings
Hamilton Bright Group B.B.
Harding Trend Sales Proprietary
Limited
Headcount Worldwide Field
Marketing Limited
Intermarketing Agency Limited (UK)
Intermarketing Agency Proprietary
Limited (Australia)
Intermarketing Group Limited
K-Markt Retail Services Proprietary
Limited
Liaison Print Solutions Limited
Liguori Agencies Proprietary Limited
Marketing Transform Proprietary
Limited
Mediametrics Proprietary Limited
Nestdiv Trading Proprietary Limited
PT DKSH Smollan Field Marketing
Parmalat Fieldmarketing Services
Proprietary Limited
Partnership SPV 1 Limited
Pioneer Foods InStore Proprietary
Limited
Q-BIC Business Intelligence Centre
Proprietary Limited
RAV – Recolha e Análise de
Informação de Vendas, Lda.
RCA Marketing Proprietary Limited
Research and Planning Intelligence
Proprietary Limited
Retail Marketing Services Proprietary
Limited
RTMA Group Proprietary Limited
Roadster Investments Proprietary
Limited
Samarkand Holdings Limited
Sea Shadow Trade and Invest 189
Proprietary Limited
Selplus – Services e Gestao de
Vendas, S.A.
Sharespec Finance Proprietary Limited
Smollan Africa Investments Limited
Smollan Australia Proprietary Limited
Smollan Botswana Proprietary Limited
Smollan Cape Proprietary Limited
Smollan Diversified Services
Proprietary Limited
Smollan Global Services Proprietary
Limited
Smollan Group Namibia Proprietary
Limited
Smollan Holdings Proprietary Limited
Jeanette Hern
(Continued)
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Name Current Directorships/Partnerships Past Directorships/Directorships
(1) TWSC Limited was a dormant company since incorporation and was dissolved on 26 June 2018.
6.2 Save as disclosed above, none of the Directors has been a director or member of any administrative,
management or supervisory body of any companies or partner in any partnerships at any time in the
period of five years immediately preceding the date of this Document.
6.3 Ms Tanith Dodge was a director of Regent Inns PLC from 26 June 2007 until 15 June 2009. Regent
Inns PLC delisted from the Alternative Investment Market of the London Stock Exchange on 15 June
2009 and subsequently on 20 October 2009, Joint Administrators were appointed by the High Court
of Justice to protect the interests of creditors in Administration. On 21 October 2013, a notice was
passed by the administrators to move the administration to dissolution and Regent Inns PLC was
dissolved on 21 January 2014.
6.4 Within the period of five years preceding the date of this Document, none of the Directors nor
Proposed Directors:
6.4.1 has had any convictions in relation to fraudulent or indictable offences;
6.4.2 has been a member of the administrative, management or supervisory bodies or a director or
senior manager (who is relevant to establishing that a company has the appropriate expertise
Jeanette Hern
(Continued)
Smollan Holdings Singapore Private
Limited
Smollan India Private Limited
Smollan International FZ-LLC
Smollan Kenya Limited
Smollan Lesotho Proprietary Limited
Smollan (Mauritius) Limited
Smollan Morocco Limited
Smollan Mozambique, Limitada
Smollan Properties Proprietary Limited
Smollan Retail Solutions Limited
Smollan Rwanda Limited
Smollan Sales and Marketing
Proprietary Limited
Smollan SA Services Proprietary
Limited
Smollan (Shanghai) Marketing
Consulting Co., Limited
Smollan Swaziland Proprietary Limited
Smollan Tanzania Limited
Smollan Uganda Limited
Smollan Zambia Limited
Smollan Zimbabwe (Private) Limited
Strategic Sales and Merchandising
Services Limited
Student Village Proprietary Limited
STW Smollan Field Marketing (Pty)
Limited
TDFS Operations Proprietary Limited
The Buddi Group Proprietary Limited
The Smollan Group Share Trust
Trimso Proprietary Limited
Workshop International AB (a Limited
Company)
138
and experience for the management of that company) of any company at the time of any
bankruptcy, receivership, liquidation or putting into administration of such company; or
6.4.3 has received any official public incrimination and/or sanction by any statutory or regulatory
authorities (including designated professional bodies) or has been disqualified by a court from
acting as a director or member of an administrative, management or supervisory body of a
company or from acting in the management or conduct of the affairs of a company.
6.5 None of the Directors, nor the Proposed Directors, has any actual or potential conflicts of interests
between their duties to the Company and their private interests or other duties.
6.6 As part of the Subscription, the Directors have subscribed for 84,347 new Ordinary Shares at the
Fundraising Price. The table below sets out the interests (all of which are beneficial unless otherwise
stated) of the Directors, the Proposed Directors and persons connected with them (within the
meaning of sections 252 to 255 of the Companies Act) in the issued share capital of the Company as
at the date of this Document and immediately following Admission:
Ordinary Shares held at the Ordinary Shares held
date of this Document immediately after Admission
Number of % of the Issued Number of % of the Issued
Name Ordinary Shares Share Capital Ordinary Shares Share Capital
David Richard Hampstead(1) 7,783,201 22.02% 7,910,951 15.33%
Simon Peter Smiley(2) 7,095,600 20.08% 7,295,793 14.13%
Tanith Claire Dodge – – 43,478 0.08%
Keith Higgins – – 30,435 0.06%
Jeanette Hern – – – –
(1) 486,400 Ordinary Shares registered in the name of David Hampstead is under option pursuant to the terms of the
Hedging Agreement.
(2) 505,600 Ordinary Shares registered in the name of Simon Smiley is under option pursuant to the terms of the Hedging
Agreement.
6.7 As at the date of this document, the following Directors have outstanding warrants to subscribe for
Ordinary Shares:
Number of Exercise/
Name Date of grant Ordinary Shares Exercise Price vesting period
Tanith Dodge 12 March 2021 43,478
Keith Higgins 12 March 2021 21,739
7. Directors’ Service Agreements and Proposed Directors’ Letters of Appointment
Set out below is information on the employment and remuneration arrangements for the Directors.
7.1 Directors’ terms of employment
The Directors, the Proposed Directors and their respective functions on Admission are set out in
Part III (Directors, Proposed Directors, Senior Managers and Corporate Governance). In advance of
Admission, each of the Executive Directors have entered into a service agreement with the Company
and each of the proposed Non-Executive Directors have entered into a letter of appointment with
the Company.
Fundraising
Price
On Admission
for a period
of 5 years
Fundraising
Price
On Admission
for a period
of 5 years
139
7.2 Executive Directors
On 11 March 2021, David Hampstead and Simon Smiley entered into new service agreements with
the Company for the positions of Chief Executive Officer and Chief Operating Officer respectively,
which will come into effect on Admission.
David Hampstead will receive a salary of £120,000 per annum and Simon Smiley will receive a salary
of £120,000 per annum. The salaries will be reviewed annually by the Remuneration Committee and
any increase will be at the discretion of the Remuneration Committee.
Each Executive Director is entitled to 30 (exclusive of bank holidays) days’ paid holiday per annum
(the statutory minimum is 28 days inclusive of bank holidays).
Each Executive Director’s service agreement will be terminable by either the Company or the
Executive Director on not less than 12 months’ written notice. The Company will also be entitled to
terminate an Executive Director’s service agreement with immediate effect by payment in lieu of
notice equal to the basic annual salary the Executive Director would have been entitled to receive
during the notice period, payable in 12 equal monthly instalments which are reduced if the Executive
Director secures alternative employment/engagement within that period. The Executive Directors
can be placed on garden leave for part or all of their notice period. In the event that the agreement
is terminated following a change of control event, the Executive Director is entitled to compensation
equivalent to 12 months’ salary.
Each of the Executive Directors is subject to a confidentiality undertaking without limitation in time
and intellectual property restriction and non-competition, non-solicitation and non-dealing
restrictive covenants which seek to apply for a period of 12 months after the termination of their
respective employment arrangements. The period of the post-termination restrictive covenants is
reduced by any time spent on garden leave.
The Executive Directors benefit from Directors’ and officers’ liability insurance under the policy
maintained by the Company from time to time and they will be indemnified as provided for in the
New Articles of Association.
7.3 Non-Executive Directors on Admission
Tanith Claire Dodge, Non-Executive Director
Pursuant to the terms of a letter of appointment dated 12 March 2021, Ms Tanith Claire Dodge was
appointed as a non-executive Director and chairperson of the Company conditional on Admission.
Ms Dodge’s fee is £50,000 per annum, payable in monthly arrears. Ms Dodge must spend a minimum
of 1.5 days per month on work for the Company. The appointment may be terminated at any time
by either party giving the other three months’ written notice (or payment of fees in lieu of notice)
or in accordance with the New Articles of Association. The Company has not granted any benefits to
Ms Dodge on termination of her directorship, however, Ms Dodge is subject to a 6 month non-
compete restriction. The appointment is governed by the laws of England and Wales.
Keith Higgins, Non-Executive Director
Pursuant to the terms of a letter of appointment dated 5 February 2021, Mr Keith Higgins was
appointed as a non-executive Director of the Company conditional on Admission.
Mr Higgins’ fee is £25,000 per annum, payable in monthly arrears and Mr Higgins must spend 1 day
per month on work for the Company. The appointment may be terminated at any time by either
party giving the other one month’s written notice (or payment of fees in lieu of notice) or in
accordance with the New Articles of Association. The Company has not granted any benefits to Mr
Higgins on termination of his employment, however, Mr Higgins is subject to a 6 months non-
compete restriction. The appointment is governed by the laws of England and Wales.
140
Jeanette Hern, Non-Executive Director
Pursuant to the terms of a letter of appointment dated 12 March 2021, Ms Jeanette Hern was
appointed as a non-executive Director of the Company conditional on Admission.
Ms Hern is not remunerated by the Company for her appointment, and Ms Hern must spend a
minimum of 1 day per month on work for the Company. The appointment may be terminated at any
time by either party giving the other three months’ written notice or in accordance with the New
Articles of Association. The Company has not granted any benefits to Ms Hern on termination of her
directorship, however, Ms Hern is subject to a 6 months non-compete restriction. The appointment
is governed by the laws of England and Wales.
Each appointment is subject to re-election by the Company at the first annual general meeting of the
Company following Admission, and at subsequent annual general meetings of the Company
pursuant to the New Articles of Association.
In addition, the Non-Executive Directors will be entitled to reimbursement of reasonable and
properly-incurred expenses. The Non-Executive Directors may also, at the Company’s expense,
obtain external independent professional advice reasonably necessary to enable them to carry out
their duties.
The Non-Executive Directors will benefit from Directors’ and officers’ liability insurance under the
policy maintained by the Company from time to time, and they will be indemnified as provided for
in the New Articles of Association.
7.4 Termination benefits
Save as set out in paragraph 7 of this Part 10 (Additional Information), there are no existing or
proposed service agreements between any Director and any member of the Group providing for
benefits upon termination.
8. Directors’ Compensation
8.1 During the period 1 April 2019 and ending on 30 November 2020, the Directors were paid the
following remuneration (including contingent or deferred compensation) and/or granted
the following benefits in kind by the Company and the Subsidiaries for services in all capacities to the
Company and the Subsidiaries:
Fees/basic
Name salary Bonus Pension Benefit in Kind Total
David Richard
Hampstead 108,168 Nil 1,221 Nil 109,389
Simon Peter Smiley 108,168 Nil 1,221 Nil 109,389
Tanith Claire Dodge Nil Nil Nil Nil Nil
Keith Higgins Nil Nil Nil Nil Nil
Jeanette Hern Nil Nil Nil Nil Nil
8.2 No sums have been set aside or accrued by the Company and its Subsidiaries to provide pension,
retirement and similar benefits for the Directors.
8.3 There are no outstanding loans granted or guarantees provided by any member of the Group to or
for the benefit of any of the Directors nor are there any outstanding loans or guarantees provided by
the Directors to or for the benefit of any member of the Group.
8.4 No Director has any interest, whether direct or indirect, in any transaction which is or was unusual
in its nature or conditions or was significant to the business of the Company taken as a whole and
which was effected by the Company during the current or immediately preceding financial year, or
during any earlier financial year and which remains in any respect outstanding or unperformed.
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9. Share Incentive Schemes
The Board believes that it is important that directors, employees and consultants of the Company are
appropriately and properly incentivized. Therefore, following Admission, the Company intends to establish
appropriate share incentive and share option schemes under which eligible persons will be invited to
participate at the discretion of the Remuneration Committee.
10. Major Shareholders
10.1 As at the date of this Document, in so far as the Company is aware, the following persons (other than
Directors) are, or immediately following Admission will be, directly or indirectly, interested in
3 per cent. of more of the voting rights of the Company (being the threshold for notification of voting
rights under Rule 5 of the disclosure guidance and transparency rules made by the FCA under Part VI
of FSMA (as set out in the FCA’s handbook of rules and guidance (the “FCA Handbook”)), as
amended from time to time (the “Disclosure Guidance and Transparency Rules”)):
As at the date of this Immediately following
Document Admission
Number of Percentage of Number of Percentage of
Ordinary Issued Share Ordinary Issued Share
Name of Shareholder Shares Capital Shares Capital
Global Smollan Holdings 7,120,000 20.15% 8,087,539 15.67%