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�PROSPECTUSfor 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

The� AQSE� Growth� Market,� which� is� operated� by� Aquis� Exchange� PLC� (“Aquis� Stock� Exchange”),� a

Recognised�Investment�Exchange,�is�a�market�designed�primarily�for�emerging�or�smaller�companies�to

which� a� higher� investment� risk� tends� to� be� attached� than� to� larger� or�more� established� companies.

A prospective�investor�should�be�aware�of�the�risks�of�investing�in�such�companies�and�should�make�the

decision�to�invest�only�after�careful�consideration�and,�if�appropriate,�consultation�with�an�independent

financial�adviser.

It�is�not�classified�as�a�Regulated�Market�under�Article�2�of�Regulation�(EU)�No�600/2014�of�the�European

Parliament�and�of�the�Council�as�amended�by�s.26�of�The�Markets�in�Financial�Instruments�(Amendment)

(EU� Exit)� Regulations� 2018� and� of� the� Council� on�markets� in� financial� instruments� and�AQSE�Growth

Market�securities�are�not�admitted�to�the�Official�List�of�the�FCA.�Investment�in�an�unlisted�company�is

speculative�and� involves�a�higher�degree�of�risk�than�an� investment� in�a� listed�company.�The�value�of

investments� can� go� down� as� well� as� up� and� investors� may� not� get� back� the� full� amount� originally

invested.� An� investment� should� therefore� only� be� considered� by� those� persons�who� are� prepared� to

sustain�a� loss�on�their� investment.�A�prospective� investor�should�be�aware�of� the�risks�of� investing� in

AQSE�Growth�Market�securities�and�should�make�the�decision�to�invest�only�after�careful�consideration

and,� if� appropriate,� consultation�with� an� independent� financial� adviser� authorised� under� FSMA�who

specialises�in�advising�on�the�acquisition�of�shares�and�other�securities.

Samarkand�Group�Plc�is�required�by�AQSE�to�appoint�an�AQSE�Corporate�Adviser�to�apply�on�its�behalf

for�admission�to�the�AQSE�Growth�Market�and�must�retain�an�AQSE�Corporate�Adviser�at�all�times.�The

requirements�for�an�AQSE�Corporate�Adviser�are�set�out�in�the�AQSE�Corporate�Adviser�Handbook,�and

the� AQSE� Corporate� Adviser� is� required� to� make� a� declaration� to� AQSE� in� the� form� prescribed� by

Appendix�B�to�the�AQSE�Corporate�Adviser�Handbook.

VSA Capital Limited (“VSA�Capital”), which is authorised and regulated by the FCA, is the Company’s AQSE

Corporate Adviser for the purposes of Admission. VSA Capital has not made its own enquires except as to

matters which have come to its attention and on which it considered it necessary to satisfy itself and

accepts no liability whatsoever for the accuracy of any information or opinions contained in this Document,

of for the omission of any material information, for which the Directors and the Proposed Directors are

solely responsible. VSA Capital is acting for the Company and no one else in relation to the arrangements

proposed in this Document and will not be responsible to anyone other than the Company for providing the

protections afforded to its clients or for providing advice to any other person on the content of this

Document.

The�whole�text�of�this�Document�should�be�read.�An�investment�in�the�Company�involves�a�high�degree

of�risk�and�may�not�be�suitable�for�all�recipients�of�this�Document.�Prospective�investors�should�consider

carefully� whether� an� investment� in� the� Company� is� suitable� for� them� in� the� light� of� their� personal

circumstances�and�the�financial�resources�available�to�them.

Copies of this Document will be available free of charge during normal business hours on any day (except

Saturdays, Sundays and public holidays) at the offices of VSA Capital at 15-17 Eldon Street, London

EC2M 7LD from the date of this Document and shall remain available for a period of one month from

Admission.

This Document has been approved by the UK Financial Conduct Authority (“FCA”) as competent UK

authority under the Prospectus Regulation. The FCA only approves this Document as meeting the

standards, completeness, comprehensibility and consistency imposed by the Prospectus Regulation. Such

approval should not be considered as an endorsement of the Issuer or of the quality of the securities that

are the subject of this Document. Investors should make their own assessment as to the suitability of

investing in securities.

This Document has been drawn up as a UK Growth Prospectus in accordance with Article 15 of the

Regulation (EU) 2017/1129.

This Document is valid for 12 months after its approval for offers to the public, provided that it is completed

by any supplement required pursuant to Article 23 of the Prospectus Regulation. Its validity will expire on

2

15 March 2022. The obligation to supplement this Document in the event of significant new factors,

material mistakes or material inaccuracies pursuant to Article 23 of the Prospectus Regulation applies until

the closing of the offer period or the time when trading on a regulated market begins, whichever occurs

later. As the Company and the AQSE Corporate Adviser will not apply for the admission of the New Ordinary

Shares to trading on a regulated market, the end of the offer period will be the relevant point in time for

the obligation to supplement this Document to expire.

IMPORTANT�INFORMATION

The information below is for general guidance only and it is the responsibility of any person or persons in

possession of this Document to inform themselves of, and to observe, all applicable laws and regulations of

any relevant jurisdiction. No person has been authorised by the Company to issue any advertisement or to

give any information or to make any representation in connection with the contents of this Document and,

if issued, given or made, such advertisement, information or representation must not be relied upon as

having been authorised by the Company. This document should not be forwarded or transmitted to or into

the Prohibited Territories or to any resident, national, citizen or corporation, partnership or other entity

created or organised under the laws thereof or in any other country outside the United Kingdom where

such distribution may lead to a breach of any legal or regulatory requirement. The distribution of this

Document may be restricted and accordingly persons into whose possession this Document comes are

required to inform themselves about and to observe such restrictions.

Prospective investors should inform themselves as to: (a) the legal requirements of their own countries for

the purchase, holding, transfer or other disposal of the Ordinary Shares; (b) any foreign exchange

restrictions applicable to the purchase, holding, transfer or other disposal of the Ordinary Shares which

they might encounter; and (c) the income and other tax consequences which may apply in their own

countries as a result of the purchase, holding, transfer or other disposal of the Ordinary Shares. Prospective

investors must rely upon their own representatives, including their own legal advisers and accountants, as

to legal, tax, investment or any other related matters concerning the Company and an investment therein.

Statements made in this Document are based on the law and practice currently in force in the UK and are

subject to change. This Document should be read in its entirety. All holders of Ordinary Shares are entitled

to the benefit of, and are bound by and are deemed to have notice of, the provisions of the Articles.

The delivery of this Document or any subscriptions or purchases made hereunder and at any time

subsequent to the date of this Document shall not, under any circumstances, create an impression that

there has been no change in the affairs of the Company since the date of this Document or that the

information in this Document is correct.

PROSPECTIVE�INVESTORS�SHOULD�READ�THE�WHOLE�TEXT�OF�THIS�DOCUMENT�AND�SHOULD�BE�AWARE

THAT�AN�INVESTMENT�IN�THE�COMPANY�IS�HIGHLY�SPECULATIVE�AND�INVOLVES�A�HIGH�DEGREE�OF�RISK.

PROSPECTIVE�INVESTORS�ARE�ADVISED�TO�READ,�IN�PARTICULAR,�THE�INFORMATION�ON�THE�COMPANY

SET�OUT�IN�PART�3�AND�THE�RISK�FACTORS�SET�OUT�IN�PART�2�OF�THIS�DOCUMENT.

The distribution of this Document outside the UK may be restricted by law. No action has been taken by the

Company, the holders of the Ordinary Shares or VSA Capital that would permit a public offer of Ordinary

Shares or possession or distribution of this Document where action for those purposes is required. Persons

outside the UK who come into possession of this Document should inform themselves about and observe

any restrictions on the holding of Ordinary Shares and/or the distribution of this Document in their

particular jurisdiction. Failure to comply with these restrictions may constitute a violation of the securities

laws of such jurisdiction.

This Document does not constitute an offer to sell or an invitation to subscribe for, or a solicitation of an

offer to subscribe or buy, Ordinary Shares to any person in any jurisdiction to whom it is unlawful to make

such an offer, invitation or solicitation. In particular, this Document is not for distribution (directly or

indirectly) in or into the Prohibited Territories. Accordingly, the Ordinary Shares may not, subject to certain

exceptions, be offered directly or indirectly in or into the Prohibited Territories. The Ordinary Shares have

not been and will not be registered under the United States Securities Act of 1933 (as amended) or under

the securities legislation of any state of the Prohibited Territories and they may not be offered or sold

3

directly or indirectly within the Prohibited Territories or to or for the account or benefit of any national,

citizen or resident of the Prohibited Territories.

This Document has not been approved by an authorised person within the meaning of FSMA. This

document may only be communicated or caused to be communicated in the UK to persons falling within

Articles 19 (investment professionals) and 49 (high net worth companies etc.) of the Financial Services and

Markets Act 2000 (Financial Promotion Order) 2005 (SI. 2005/No. 1529) or other persons to whom it may

otherwise lawfully be communicated or cause to be communicated (“Relevant�Persons”). Consequently,

this Document will not be available in the United Kingdom to anyone other than Relevant Persons and no

one falling outside those categories is entitled to rely on, and they must not act on, any information in this

Document. The communication of this Document to any person in the United Kingdom other than Relevant

Persons is unauthorised and may contravene FSMA.

OVERSEAS�SHAREHOLDERS

This Document does not constitute an offer to sell, or solicitation to buy Ordinary Shares in any jurisdiction

in which such offer or solicitation is unlawful. In particular, this Document is not, subject to certain

exceptions, for distribution in or into the United States, Canada, Australia, the Republic of South Africa or

Japan. The Ordinary Shares have not been nor will be registered under the United States Securities Act of

1933, as amended, nor under the securities legislation of any state of the United States or any province or

territory of Canada, Australia, the Republic of South Africa or Japan or in any country, territory or

possession where to do so may contravene local securities laws or regulations. Accordingly, the Ordinary

Shares may not, subject to certain exceptions, be offered or sold directly or indirectly in or into the United

States, Canada, Australia, the Republic of South Africa or Japan or to any national, citizen or resident of the

United States, Canada, Australia, the Republic of South Africa or Japan. The distribution of this Document

in certain jurisdictions may be restricted by law. No action has been taken by the Company or VSA Capital

that would permit a public offer of Ordinary Shares or possession or distribution of this Document where

action for that purpose is required. Persons into whose possession this Document comes should inform

themselves about and observe any such restrictions. Any failure to comply with these restrictions may

constitute a violation of the securities laws of any such jurisdiction.

Application for the Enlarged Issued Share Capital to be admitted to trading on the AQSE Growth market is

not subject to the rules governing the registration of securities under the United States Securities Act of

1933, as amended, nor those of the US states. Neither the Securities and Exchange Commission nor any

other US or state securities commission or regulatory authority has approved of or passed an opinion on

the accuracy of adequacy of this Document. Any representation to the contrary is a criminal offence. Any

financial information regarding the Company included in this Document has been prepared in accordance

with FRS102 and the requirements of the Companies Act 2006 and may not be comparable to the financial

statements of US companies. US generally accepted accounting principles differ in any respects from IFRS.

None of the financial information included in this Document has been audited in accordance with auditing

standards generally accepted in the United States or the auditing standards of the Public Company

Accounting Oversight Board (United States). It may be difficult for Shareholders who are US persons to

enforce any rights an claim that they may have arising under US federal or state securities laws in respect

of this Document of their holding of any Ordinary Shares, as the Company is located in a country other than

the United States and many of its officers and directors are residents of countries other than the United

states. US holders of Ordinary Shares may not be able to sue a non-US company or its officers or directors

in a non-US court for violations of US securities laws. Further, it may be difficult to compel a non-US

company and its affiliates to subject themselves to a US court’s judgement. Holders subject to tax in the

United States, for example, are strongly urged to contact their tax advisers about the consequences of

holding Ordinary Shares including the potential applicability of special rules concerning US shareholders of

no-US corporations. Also, note, at this time, the Company does not intend to make special accommodations

regarding its financial information to assist holders with their US tax obligations. This present intention may

cause additional difficulty to US holders when attempting to assess the tax profile of the Ordinary Shares.

4

UNDER� NO� CIRCUMSTANCES� SHOULD� THIS� DOCUMENT� BE� COMMUNICATED,� TRANSMITTED� OR

OTHERWISE� SHARED� WITH� PERSONS� DOMICILED,� RESIDENT� OR� BASED� IN� THE� UNITED� STATES� OF

AMERICA� ITS� TERRITORIES� OR� POSSESSIONS� OR�WHO�MAY� OTHERWISE� BE� CONSIDERED� AS� UNITED

STATES�PERSONS,�INCLUDING�REPRESENTATIVES�OF�UNITED�STATES�COMPANIES�OR�NON-UNITED�STATES

SUBSIDIARIES� OF� UNITED� STATES� COMPANIES� UNLESS� THEY� HAVE� RECEIVED� INDEPENDENT� LEGAL

ADVICE�FROM�THEIR�OWN�ADVISERS�THAT�THEY�ARE�ENTITLED�TO�RECEIVE�THIS�DOCUMENT.

FORWARD-LOOKING�STATEMENTS

This Document includes “forward-looking statements” which include all statements other than statements

of historical facts including, without limitation, those regarding the Company’s financial position, business

strategy, plans and objectives of management for future operations and any statements preceded by,

followed by or that include forward-looking terminology such as the words “targets”, “plan”, “project”,

“believes”, “estimates”, “aims”, “intends”, “can”, “may”, “expects”, “forecasts”, “anticipates”, “would”,

“should”, “could”, or similar expressions of the negative thereof. Such forward-looking statements involve

known and unknown risks, uncertainties and other important factors beyond the Company’s control that

could cause the actual results, performance or achievements of the Company and its Group to be materially

different from future results, performance or achievements expressed or implied by such forward-looking

statements. Such forward-looking statements are based on numerous assumptions regarding the Group’s

present and future business strategies and the environment in which the Group will operate in the future.

Among the important factors that could cause the Group’s actual results, performance or achievements to

differ materially from those in forward-looking statements include factors in the section entitled “Risk

Factors” and elsewhere in this Document. These forward-looking statements speak only as at the date of

this Document. The Company expressly disclaims any obligation or undertaking to disseminate any updates

or revisions thereto or any change in events, conditions or circumstances on which any such statements are

based. As a result of these factors, the events described in the forward-looking statements in this Document

may not occur. Prospective investors should be aware that these statements are estimates, reflecting only

the judgement of the Company’s management and prospective investors should not therefore rely on any

forward-looking statements.

By accepting this Document, you agree to be bound by the above conditions and limitations.

5

KEY�HIGHLIGHTS

• Samarkand is headquartered in London and enables the Group’s own brands and other third-party

consumer brands to access Chinese consumers through cross-border eCommerce.

• The Executive Management of Samarkand comprises a team who worked successfully together in a

previous company until it was sold, achieving a significant uplift for shareholders and investors.

• The Board of Directors on Admission will comprise a team that is highly experienced in retail and

eCommerce, including; Tanith Dodge former group HR Director of Marks & Spencer Group Plc and

Value Retail (Bicester Village Collection) who is also a member of the advisory council of PwC and

serves on the Board of Robert Walters Plc and; Keith Higgins who served as eCommerce Director at

P&G for 10 years before heading up Unilever’s global eCommerce strategy for a further 10 years

leading to his current role as Chief Customer Development Officer at Unilever plc.

• The incumbent model for Western brands to enter this market has been through wholesale

distribution relationships which can lead to lack of control and margin sacrifice for brands.

• The Group has developed a proprietary software platform – the Nomad platform – which is

integrated with Chinese eCommerce and social media platforms, as well as payment, logistics and

customs systems to provide a Direct-to-Consumer (“D2C”) alternative.

• The Group’s Nomad platform offers four main technology and service solutions designed for Clients

of varying size who wish to sell their products to end consumers in China; Nomad Checkout, Nomad

Storefront, Nomad Commerce and Nomad Distribution.

• The Group acquired a consumer health brand in December 2017 called Probio7 which it has

launched into the Chinese CBEC market through the same channels and technology that it provides

to Clients.

• The Directors believe that market insights combined with the sales channels it has developed in

China provide the Group with a competitive advantage and an opportunity to buy brands in Europe

that have great potential in China but without the means to access the market.

• Since 2014, the CBEC market in China has grown from approximately £14 billion to a forecast

£138 billion in 2021. During this period, 105 CBEC Zones (“CBEC�Zone”) have been established across

China alongside further policies to encourage and promote the growth of CBEC.

• The CBEC market in China has grown from approximately £14 billion in 2014 and is forecast to reach

£138 billion in 2021.

• For the year ended 31 March 2020, the Group’s revenue was £6.8 million (2019: £4.5 million), its

operating loss was £1.1 million (2019: £1.2 million) and its EBITDA loss was £0.8 million (2019:

£1.0 million).

• For the eight-month period ended 30 November 2020, the Group’s revenue was £16.0 million (2019:

£3.8 million), its operating profit was £2.0 million (2019: loss £1.0 million) and its EBITDA profit was

£2.4 million (2019: loss £0.8 million).

• The Company achieved a turnover of approximately £1.8 million for the month of November 2020

alone.

• The Group has been funded to the net amount of £3.3 million since its formation and has generated

over £27.3 million of revenue from April 2018 to November 2020.

6

Contents

Page

Part 1 Persons Responsible, Third Party Information and Competent Authority Approval 24

Part 2 Risk Factors 26

Part 3 Information on the Company 37

Part 4 Directors, Senior Managers and Corporate Governance 54

Part 5 Details on the Fundraising and Admission to Trading 60

Part 6 Historical Financial Information of the Company 66

Part 7 Historical Financial Information of the Group 74

Part 8 Pro-Forma Financial Information of the Enlarged Group 116

Part 9 Taxation 124

Part 10 Additional Information 126

7

Definitions

The following definitions apply throughout this Document, unless the context requires otherwise:

“2020�Shareholders�Agreement” a shareholder agreement dated 24 September 2020 in respect of

Samarkand Holdings between, amongst others, Smollan, David

Hampstead, Simon Smiley and Thomas Gooding

“Act” or “Companies�Act” the UK Companies Act 2006 (as amended)

“Admission” admission of the Enlarged Issued Share Capital of the Company to

trading on the AQSE Growth Market becoming effective in

accordance with the AQSE Rules

“AI” artificial intelligence

“Articles” or “Articles�of�Association” the articles of association of the Company from time to time

“AQSE” or “Aquis�Stock�Exchange” the Aquis Stock Exchange Limited, a recognised investment

exchange under section 290 of FSMA

VSA Capital Limited

the AQSE Growth Market Rules for Issuers, which set out the

admission requirements and continuing obligations of companies

seeking admission to, and whose shares are admitted to trading

on, the AQSE Growth Market

the market for unlisted securities operated by AQSE

“Audit�Committee” the audit committee of the Company, being a duly appointed sub-

committee of the Board

“Board” or “Directors” the directors of the Company, whose names are set out on page 16

of this Document, and which, if the context requires includes the

Proposed Director

“Business�Day” a day other than Saturday or Sunday or a public holiday in England

and Wales

“CBEC” cross-border eCommerce

“CBEC�Zone” cross-border eCommerce Zone

“City�Code” the City Code on Takeovers and Mergers

“China” or “PRC” The People’s Republic of China

“Clients” the Group’s own brands together with other third-party consumer

brands

Samarkand Group plc, a company registered in England and Wales

with company number 13127277

“Company�Financial�Information” the audited financial information of the Company, covering the

period from incorporation on 12 January 2021 to 16 February

2021.

“AQSE�Corporate�Adviser”

“Aquis�Stock�Exchange�Rules”�or

“AQSE�Rules”

“Aquis�Stock�Exchange�Growth

Market”�or “AQSE�Growth

Market”

“Company”�or “Issuer”�or

“Samarkand”

8

“COVID-19” the respiratory virus Coronavirus 2019-nCoV

“CREST” the relevant system (as defined in the CREST Regulations) for

paperless settlement of share transfers and holding shares in

uncertificated form which is administered by Euroclear

“CREST�Regulations” the Uncertificated Securities Regulations 2001 (SI 2001/3755), as

amended by The Uncertificated Securities (Amendment and EU

Exit) Regulations 2019

“D2C” direct-to-customer

the Disclosure Guidance and Transparency Rules issued by the FCA

“Directors” the directors of the Company as at the date of this Document,

whose names are set out on page 16 of this Document

“Directors’�Convertible�Loans” the loans made by David Hampstead and Simon Smiley for the

sums of £123,198.50 and £196,035.79 respectively to Samarkand

Group plc. Further information of which is set out in paragraph

11.12 of Part 10 of this Document.

“Document” or “Prospectus” this document and its contents

“EastWest” Shanghai EastWest Network Technology Co., Ltd

“EMI” Enterprise Management Incentive

“Enlarged�Group” the Company and the Group together

“Enlarged�Issued�Share�Capital” the issued ordinary share capital of the Company on Admission, as

enlarged by the issue of the Placing Shares, Subscription Shares

and the Loan Conversion Shares

“Exceptional�Revenue” the £5.8m government contract from the Department of Health

and Social Care (DHSC)

“EU�IFRS” International Financial Reporting Standards adopted pursuant to

Regulation (EC) No 1606/2002 as it applies in the European Union

“Euroclear” Euroclear UK & Ireland Limited, a company incorporated under the

laws of England and Wales

“EUWA” the European Union (Withdrawal) Act 2018, as amended by the

European Union (Withdrawal) Act 2020

“Existing�Ordinary�Shares” the 35,340,001 Ordinary Shares in issue prior to the issue of the

Placing Shares, the Subscription Shares and the Loan Conversion

Shares

“FCA” the Financial Conduct Authority

“FSMA” the Financial Services and Markets Act 2000 (as amended)

“Forever�Young” Forever Young International Ltd

“Founders” David Hampstead and Simon Smiley

“FTZ” Free Trade Zone, a special economic area established to facilitate

international trade

“Disclosure�Guidance�and

Transparency�Rules”�or DTR”

9

“Fundraise” or “Fundraising” the Placing and Subscription

“Fundraising�Price” 115 pence per Ordinary Share

“Fundraising�Shares” together, the Placing Shares and the Subscription Shares

“GMV” Gross Merchandise Value

“Gross�Fundraising�Proceeds” the funds received in relation to the Placing and Subscription

“Group” Samarkand Holdings and its subsidiaries:

• Immergruen Limited;

• Forever Young;

• Samarkand Global HK Limited; and

• Samarkand Global and its subsidiaries:

– Shanghai WoZeng Trade Limited;

– New Silk Road Brand Management Limited;

– Samarkand Global (Beijing);

– Samarkand Shanghai and its VIE;

– EastWest

“Group�Financial�Information” The audited financial information of the Group, covering the

period from 1 April 2018 to 30 November 2020.

“Growth�Prospectus” a UK Growth Prospectus prepared in accordance with Article 15 of

the Prospectus Regulation

“Hedging�Agreement” an agreement dated 16 February 2021 between Samarkand

Holdings, the Company, David Hampstead and Simon Smiley in

respect of the transfer of certain Ordinary Shares. Further

information relating to the agreement is set out in paragraph 11.14

of Part 10 of this Document.

“HMRC” HM Revenue and Customs

“KOLs” key opinion leaders

“ISIN” International Securities Identification Number

“LEI” Legal Entity Identifier

“Loan�Conversion” the conversion of part of the Smollan loans, the Directors’

Convertible Loan, TG Loan and PD Loan, details of which are set out

in paragraphs 11.10, 11.12, 11.13 and 11.14 of Part 10 of this

Document

“Loan�Conversion�Shares” the 1,498,594 new ordinary shares issued pursuant to the loan

conversion

“Loan�Repayments” the part repayment of the loan to Thomas Gooding, part of the

Smollan convertible loan and the HSBC CBILS loan from the Net

Fundraising Proceeds

10

“Lock-In�and�Orderly�Agreements” means the respective lock-in and orderly agreements relating to, in

aggregate, 33,666,376 Ordinary Shares entered into between the

respective parties, the Company and VSA, further details of which

are set out in paragraphs 11.2 and 11.3 of Part 10 of this Document

“Lock-In�Shareholders” David Hampstead, Simon Smiley, Tanith Dodge, Keith Higgins,

Jeanette Hern, Thomas Gooding and Global Smollan Holdings

the EU Market Abuse regulation as implemented in the UK by

EUWA

“Net�Fundraising�Proceeds” £15.6m comprising the Gross Fundraise Proceeds of £17.0m less

expenses of £1.4 m

“New�Articles�of�Association” the new articles of association adopted by the Company with effect

from Admission, as approved by the Shareholders, and as

described in paragraph 5 of Part 10 (Additional Information) of this

Document

“New�Ordinary�Shares” together, the Placing Shares, Subscription Shares and Loan

Conversion Shares

“Official�List” the Official List of the FCA

“Option�Exchanges” the exchange of options granted by Samarkand Holdings to certain

employees under its EMI Option Scheme and Unapproved Option

Plan in exchange for options granted by the Company in the same

and proportionate manner

“Ordinary�Shares” ordinary shares of £0.01 each in the capital of the Company

“Pandemic” the rapid spread of the new respiratory virus Coronavirus 2019-

nCoV

“PD�Loan” the loan of £150,000 made by Paul Dracup to Forever Young and

subsequently novated to the Company. Further information on

which is set out in paragraph 11.14 of Part 10 of this Document

as defined in MAR, as may be amended from time to time, and

refers to any person fulfilling such function for the Company or any

of its subsidiaries from time to time and as set out at the date of

this Document

“Placees” those persons who have signed Placing Letters

“Placing” the conditional placing by VSA on behalf of the Company of the

Placing Shares at the Placing Price pursuant to the Placing

Agreement

“Placing�Agreement” the conditional agreement date 12 March 2021 between: (i) the

Company; (ii) the Directors and the Proposed Directors, and (iii)

VSA

“Placing�Letters” the letters from potential investors making irrevocable conditional

applications for Placing Shares to be sold under the Placing

Agreement

“Placing�Shares” the 10,373,803 new Ordinary Shares in the capital of the Company

to be allotted to the Placees

“MAR”�or “Market�Abuse

Regulation”

“Persons�Discharging�Managerial

Responsibility”

11

“Pro�Forma�Financial�Information” the unaudited pro-forma statement of financial position of the

Company as at 16 February 2021 and the unaudited statement of

comprehensive income of the Company for the 36-day period then

ended

“Prohibited�Territories” means the United States, Canada, Australia, the Republic of South

Africa and Japan

“Proposed�Directors” Tanith Dodge, Jeanette Hern and Keith Higgins, who are to be

appointed as Directors with effect from Admission

“Prospectus�Regulation” Regulation (EU) No 2017/1129 of the European Parliament as it

forms part of domestic law by virtue of the European Union

(Withdrawal) Act 2018

“PR�Regulation” Regulation number 2019/980 of the European Commission, which

is part of UK law by virtue of the European Union (Withdrawal) Act

2018

“Prospectus�Regulation�Rules” the prospectus regulation rules made by the FCA pursuant to

section 73A of FSMA, as amended on the 1 January 2021 to

incorporate references to EU Regulation and Commission

Delegated Regulation being to the versions which are part of UK

domestic law by virtue of the EUWA, and as amended by relevant

statutory instruments

“QCA�Code” the Corporate Governance Code 2018 produced by the Quoted

Companies Alliance

“Qualified�Investor” persons who are qualified investors as defined in the Prospectus

Regulation and either (i) persons who have professional experience

in matters relating to investments falling within Article 19(5) of the

Financial Services and Markets Act 2000 (Financial Promotion)

Order 2005 (the “Order”) or (ii) who are high net worth entities

falling within Article 49 of the Order; or (b) other persons to whom

it may otherwise lawfully be communicated (all such persons

under (a) and (b) together being referred to as “relevant persons”).

“RED” Little Red Book, also known as Xiaohongshu, a Chinese social

media platform

“Registrar” Neville Registrars

“Relationship�Agreement” the relationship agreement entered into with Smollan, further

information on which is set out in paragraph 11.4 of Part 10

“Reminbi”�or “RMB” the national currency of the PRC

“Remuneration�Committee” the remuneration committee of the Company, being a duly

appointed sub-committee of the Board

“RIS” a Regulated Information Service which is a Primary Information

Provider (PIP) that is approved by the FCA to disseminate

regulatory information to the market and is on the list of Regulated

Information Services maintained by the FCA

“SaaS” Software as a Service

“SAFE” State Administration of Foreign Exchange of the PRC

12

“Samarkand�Global” Samarkand Global Limited

“Samarkand�Global�(Beijing)” Samarkand Global (Beijing) Limited

“Samarkand�Holdings” Samarkand Holdings Limited

“Samarkand�Holdings�Directors” the directors of Samarkand Holdings

“Samarkand�Shanghai” Shanghai Samarkand Technology Service Co. Ltd

“Senior�Managers” Eva Hang, Paul Gambrell, Sam Deacon, Emily Chang, Weiting Cai,

Jack Porteous, Ava Liu, Shiwen Xiong and Siwei Lu

“Share�Dealing�Code” the code to be operated by the Company from Admission which

governs the restrictions imposed on persons discharging

managerial responsibility and the persons closely associated with

them (as defined in MAR) in relation to dealings in the Company’s

securities

“Shareholders” the persons who are registered as the holders of Ordinary Shares

from time to time

“SDRT” Stamp Duty Reserve Tax

“Smollan” Global Smollan Holdings

“Smollan�Loans” the secured convertible loan notes for the principal sum of

£1,850,000 and the non-convertible loan notes for the principal

sum of £1,146,299.50, all of which have been issued by Samarkand

Holdings. Further information on which is set out in

paragraphs 11.10 and 11.11 of Part 10 of this Document.

“Subscribers” those persons, including the Directors, who have agreed to

subscribe for new Ordinary Shares pursuant to the Subscription

Agreements

“Subscription” the conditional subscription to raise aggregate gross proceeds of

£5.1m, through the issue of the Subscription Shares

“Subscription�Agreements” the conditional subscription agreements entered into between the

Subscribers and the Company on or prior to the date of this

Document

“Subscription�Shares” 4,406,568 new Ordinary Shares which are to be made available for

the subscription to Subscribers pursuant to the Subscription

Agreement

“Subsidiary” as defined in the Act

“TG�Loan” the loan for the sum of £180,276.36 made by Thomas Gooding to

Samarkand Global and subsequently novated to the Company.

Further information on which is set out in paragraph 11.13 of

Part 10 of this Document

“TP” registered trade partner

“UK”�or “United�Kingdom” the United Kingdom of Great Britain and Northern Ireland

“UK�IFRS” UK-adopted international accounting standards

13

recorded on the register of Ordinary Shares as being held in

uncertificated form in CREST entitlement to which, by virtue of the

CREST Regulations, may be transferred by means of CREST

“US”,�“USA” or “United�States” the United States of America

“US�Securities�Act” the United States Securities Act of 1933 (as amended)

“VIE” variable interest entity

“VSA�Capital” VSA Capital Limited, AQSE Corporate Adviser to the Company,

which is authorised and regulated by the FCA

“WFOEs” Wholly Foreign Owned Enterprises

“uncertificated”�or “in

certificated�form”

14

Expected�Timetable�of�Principal�Events

Publication of this Document 15 March 2021

Admission to trading on the AQSE Growth Market becoming effective

and commencement of dealings in the Ordinary Shares 8.00 a.m. on 22 March 2021

CREST members’ accounts credited in respect of New Ordinary Shares 22 March 2021

Ordinary Shares certificates dispatched where applicable by 5 April 2021

Each�of�the�times�and�dates�set�out�above�and�mentioned�elsewhere�in�this�Document�may�be�subject�to

change�at�the�absolute�discretion�of�the�Group.

Fundraise�and�Admission�Statistics

Number of Existing Ordinary Shares in issue at the date of this Document 35,340,001

Issue Price 115 pence

Number of Placing Shares to be issued pursuant to the Placing 10,373,803

Number of Subscription Shares to be issued pursuant to the Subscription 4,406,568

Number of Ordinary Shares in issue on Admission 51,618,966

Placing Shares as a percentage of the Enlarged Share Capital 20.10%

Subscription Shares as a percentage of the Enlarged Share Capital 8.54%

Loan Conversion Shares as a percentage of the Enlarged Share Capital 2.90%

New Ordinary Shares as a percentage of the Enlarged Share Capital 31.54%

Gross Fundraising Proceeds £17.0m

Admission and Fundraising Costs £1.4m

Estimated net proceeds of the Fundraising £15.6m

Market capitalisation of the Company at the Issue Price on Admission £59.4m

Dealing�Codes�on�Admission

ISIN GB00BLH1QT30

SEDOL BLH1QT3

AQSE Growth Market Symbol (TIDM) SMK

LEI 213800IYL86FVL5UJB61

15

Directors,�Proposed�Directors,�Company�Secretary,�

Registered�Office and�Advisers

Directors David Hampstead, Chief Executive Officer

Simon Smiley, Chief Operating Officer

Proposed�Directors Tanith Dodge, Independent Non-Executive Chairperson

Keith Higgins, Independent Non-Executive Director

Jeanette Hern, Non-Executive Director

Company�Secretary Eva Hang

Registered�Office Unit 13 & 14 Nelson Trading Estate

The Path

Merton

London SW19 3BL

AQSE�Corporate�Adviser VSA Capital Limited

New Liverpool House

15-17 Eldon Street

London EC2M 7LD

Legal�Advisers�to�the�Company�(UK) Armstrong Teasdale Ltd

200 Strand

Temple

London WC2R 1DJ

Beijing DHH (Shanghai) Law Firm

62/F, Shanghai Tower

No. 501 Yincheng Middle Road, Pudong New Area

Shanghai, 200120

DAC Beachcroft LLP

25 Walbrook,

London EC4N 8AF

Auditors�and�Reporting�Accountants Crowe U.K. LLP

55 Ludgate Hill

London EC4M 7JW

Financial�PR Alma PR

71-73 Carter Lane

London EC4V 5EQ

Registrar�and�Receiving�Agent Neville Registrars Limited

Neville House

Steelpark Rd

Halesowen B62 8HD

Principal�Bankers�(UK) HSBC UK Bank plc

1 Centenary Square

Birmingham B1 1HQ

Principal�Bankers�(China) Bank of Shanghai

No. 88 North Shanxi Road

Jingan District

Shanghai 200070

Legal�Adviser�to�the�AQSE

Corporate�Adviser

Legal�Advisers�to�the�Company

(China)

16

Summary

Section 1 – Introduction

1.1 This UK Growth Prospectus (the “Document”) relates to

51,618,966 issued, and to be issued, ordinary shares of £0.01

each of Samarkand Group plc (the “Issuer” or the “Company” and

together with its subsidiaries the “Group”), with ISIN

GB00BLH1QT30

1. 2 The issuer is Samarkand Group plc. The registered office of the

issuer is Unit 13 & 14 Nelson Trading Estate, The Path, Merton,

London SW19 3BL. The business address is Unit 13 & 14 Nelson

Trading Estate, The Path, Merton, London SW19 3BL; Tel; +44(0)

203 7403933; website www.samarkand.global. The Issuer’s LEI is

213800IYL86FVL5UJB61

1.3 This prospectus has been approved by the Financial Conduct

Authority in the United Kingdom. The address of the Financial

Conduct Authority is 12 Endeavour Square, London E20 1JN,

+44 (0)20 7066 1000. Contact information relating to the

Financial Conduct Authority can be found at

http://fca.org.uk/contact. The date of approval was 15 March

2021.

1.4 This Document has been approved on 15 March 2021

1.5 Warnings a) This summary (the “Summary”) should be read as an

introduction to the Document and any decision to invest in

the Shares should be based on a consideration of the

Document as a whole by the investor;

b) The investor could lose all or part of the invested capital;

c) Civil liability attaches only to those persons who have table

the Summary including any translation thereof, but only

where the Summary is misleading, inaccurate or

inconsistent when read together with other parts of the

Document, or where it does not provide, when read

together with the other parts of the Document, key

information in order to aid investors when considering

whether to invest in the Shares.

Section 2 – Key Information on the Issuer

2.1 a) The legal and commercial name of the Issuer is Samarkand

Group plc. The issuer is a public limited company

incorporated and registered in England and Wales under

the Companies Act 2006 with company number 13127277

whose registered office is at Unit 13 & 14 Nelson Trading

Estate, The Path, Merton, London SW19 3BL

b) The purpose of the Issuer is to enable third-party

consumer brands to access Chinese consumers through

cross-border eCommerce.

Name and international

securities identification

number (“ISIN”) of the

Shares

Identity and contact

details of the Issuer,

including its legal entity

identifier (“LEI”)

Identity and contact

details of the competent

authority that approved

the Document

Date of approval of the

Document

Information about the

Issuer

17

c) The Issuer’s shareholders are:

Percentage

Number of Existing

Ordinary Ordinary Percentage of

Shares Share Number of Enlarged

as at the Capital at the Ordinary Share

date of this date of this Shares on Capital on

Shareholder Document Document Admission Admission

David Hampstead 7,783,201 22.02% 7,910,951 15.33%

Global Smollan Holdings 7,120,000 20.15% 8,087,539 15.67%

Simon Smiley 7,095,600 20.08% 7,295,793 14.13%

Thomas Gooding 5,380,000 15.22% 5,463,111 10.58%

Wei Ling Emily Chang 1,448,800 4.10% 1,448,800 2.81%

Schroders Investment

Management Ltd – – 4,347,826 8.42%

d) The Issuer’s Board of Directors consists of:

Existing Directors

• David Hampstead, Chief Executive Officer

• Simon Smiley, Chief Operating Officer

Proposed Directors

• Tanith Dodge, Independent Non-Executive

Chairperson

• 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 £ £ £ £

Revenue 4,481,939 6,844,100 3,838,577 16,016,277Operating (loss)/

profit (1,153,855) (1,142,040) (959,808) 2,012,971Comprehensive

(loss)/ profit for theperiod (1,312,941) (1,388,890) (1,169,135) 1,662,837

Basic and diluted(loss)/earningsper share (7.42) (7.85) (6.57) 9.43

Summary statement of financial position of the Group

Audited Audited Unaudited Audited As at As at As at As at 31 March 31 March 30 November 30 November 2019 2020 2019 2020 £ £ £ £

Total assets 4,176,987 5,528,123 4,950,935 7,715,831Total equity (1,678,259) (3,081,101) (2,861,346) (1,418,264)

Summary statement of cash flows of the Group

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/

(used in):Operating activities (1,356,144) (559,181) (601,374) 2,053,962Investing activities (270,870) (590,997) (392,322) (443,0330)Financing activities 1,481,562 1,453,564 1,157,739 (946,973)Net (decrease)/

increase in cash (145,452) 303,386 164,043 663,959

As at the date of this Document, the Group had cash reserves of

£1,092,442.

19

Pro forma financial information

The unaudited pro forma financial information has been prepared

to illustrate the effects of: (i) the consolidation of Samarkand

Holdings, (ii) the conversion of £967,913 convertible loan notes,

£415,755 of Directors’ and former director’s loans and £150,000

of borrowings into Ordinary Shares, (iii) repayment of £1,000,000

convertible loan notes, £400,000 of borrowings and £90,000 of

loans, (iv) the issue of the Fundraising Shares at the Issue Price

and (v) the cash payment of the Transaction Costs on the assets,

liabilities and equity of the Company had the Fundraising and

Admission occurred on 16 February 2021, and on its earnings for

the 36-day period then ended.

Unaudited pro forma statement of financial position: Adjustment Adjustment Consoli-

Company Group Fundraising dation

as at as at Adjustment Adjustment Adjustment and as at

16 February 30 November Consolidation Loan Loan settlement 16 February

2021 2020 adjustments conversions repayments of costs 2021

£ £ £ £ £ £ £

(Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6)

Total assets 353,400 7,715,831 (353,400) – (1,490,000) 15,621,611 21,847,442

Total equity 353,400 (1,418,264) (353,400) 1,533,668 – 15,621,611 15,737,015

Unaudited pro forma statement of comprehensive income: Adjustment Consoli-

Company Group Adjustment dation

36 days 8 months Fundraising 36 days

ended ended Adjustment Adjustment Adjustment and ended

16 February 30 November Consolidation Loan Loan settlement 16 February

2021 2020 adjustments conversions repayments of costs 2021

£ £ £ £ £ £ £

(Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6)

Revenue – 2,363,057 – – – – 2,363,057

EBITDA and

other costs – 358,883 – – – (368,057) (9,174)

Operating profit – 296,995 – – – (368,057) (71,062)

Profit/(loss)

for the period – 245,947 – 6,416 5,261 (368,057) (110,433)

Comprehensive

profit/(loss)

for the period – 245,336 – 6,416 5,261 (368,057) (111,044)

Notes:

1. The financial information of the Company as at 16 February 2020 and for the

36-day period then ended has been extracted, without adjustment, from

the audited financial information for the period.

2. The adjustment represents the audited assets, equity and liabilities of the

Group as at 30 November 2020. With respect to the results of the Group for

the 36-day period, the adjustment represents the audited results for the

Group for the 8-month period ended 30 November 2020, time-apportioned

to reflect a 36-day period.

3. The adjustment represents the adjustments to effect the consolidation of

the Group.

4. The adjustment 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 director’s loans, part of the Smollan convertible loan and

borrowings into Ordinary Shares. 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

certain Directors’ and former director’s loans and borrowings. The

adjustment of £5,261 to the pro forma Statement of Comprehensive Income

represents the removal of the interest charges on the Directors’ and former

20

director’s loans and borrowings 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. 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.

2.3 • Reliance on third parties for compliance with customs law,

tax laws, privacy laws and data protection laws and

regulations in the jurisdictions the Group operates in.

• The Group relies on contractual arrangements with East-

West and its shareholder for a portion of its business

operations in the PRC, which may not be as effective as

direct ownership in providing operational control and such

contractual arrangements are subject to interpretation of

local law.

• The Group relies on third-party providers for distribution

and supply of goods and fulfilment of orders.

• If Group fails to improve and enhance the functionality,

performance, reliability, design, security and scalability of

its software and technology services in a manner that

responds to its clients’ evolving needs, the Group’s

business may be adversely affected.

• A deterioration in the Group’s own brands or reputation

could have a material adverse effect on the Group.

Section 3 – Key Information on the Securities

3.1 a) Description of the type and class of the securities

The type and class of the securities are ordinary shares of

£0.01 each.

b) Currency of the securities issue

The Ordinary Shares are denominated in pounds sterling

with a nominal value of £0.01 each. On Admission, the

Company will have 51,618,966 Ordinary Shares in issue.

c) Description of the rights attaching to the securities

The New Ordinary Shares will, when issued and fully paid,

rank equally in all respects with the Existing Ordinary

Shares and have the following rights attaching to them:

• Every shareholder has the right to receive notice of

and to attend, speak and vote at any meetings of

shareholders of the Company. The number of votes

each shareholder has at a general meeting will be

determined by the number of Ordinary Shares held

by such shareholder. Each Ordinary Share carries the

right to one vote at a meeting of the shareholders of

the Company.

What are the key risks

that are specific to the

issuer?

What are the main

features of the

securities?

21

• The right to receive dividends on a pari passu basis;

and

• If the Company is wound up, the surplus assets

remaining after payment of all creditors are to be

divided amongst the shareholders in the proportion

to the capital which is paid up on the Ordinary

Shares held by them respectively.

Transferability of the securities

The Ordinary Shares are free from any restriction on

transfer, subject to compliance with applicable securities

laws.

d) Relative seniority of the securities in the issuer’s capital

structure in the event of insolvency

Not applicable. The Company does not have any other

securities in issue or liens over its assets. Therefore, the

Ordinary Shares are not subordinated in the Company’s

capital structure at the date of the prospectus, and will not

be immediately following Admission.

e) Description of dividend policy

The Company does not currently intend to pay any

dividends as the Group grows. However, the Company

intends to revisit its dividend policy in future and may

revise its dividend policy from time to time.

3.2 Application has been made for the issued, and to be issued,

ordinary share capital of the Company to be traded on the AQSE

Growth Market. It is expected that Admission will become

effective and that dealings in the Ordinary Shares will commence

on the AQSE Growth Market on 22 March 2021.

3.3 Not applicable

3.4 • Investments in shares traded on the AQSE Growth Market

is perceived to involve a higher degree of risk and be less

liquid than investment in companies whose shares are

listed on the official List or AIM.

• The share price of quoted emerging companies can be

highly volatile and shareholdings illiquid. The price at

which the Ordinary Shares are quoted and the price which

investors may realise for their Ordinary Shares will be

influence by a large number of factors, some specific to the

Group and its operations and some which may affect

quoted companies generally. These factors could include

the performance of the Group, large purchases or sales of

the Ordinary Shares, legislative changes and general

economic, political or regulatory conditions.

• There can be no assurance that the Group will declare

dividends or as to the level of any dividends.

Where will the securities

be traded?

Is there a guarantee

attached to the

securities?

What are the key risks

that are specific to the

securities?

22

Section 4 - Key information on the Offer of Securities to the Public

4.1 The Issuer will, conditional on Admission, raise £17.0m (before

costs and expenses of approximately £1.4m) by the issue of

14,780,371 new Ordinary Shares through the Fundraising. The

Company has conditionally raised gross proceeds of £11.9m

through the proceeds of the Placing and £5.1m through the

Subscription. The aggregate gross proceeds of £17.0m will

accordingly remain the same on completion of the Fundraising.

As part of the Subscription, the Directors have each subscribed

for 84,347 new Ordinary Shares at the Fundraising Price.

This Document does not constitute an offer or an invitation to any

person to subscribe for any Ordinary Shares. The Ordinary Shares

are not being offer to the public.

4.2 a) The Issuer believes that through the Fundraising it will

receive the net proceeds from the sale of the new Ordinary

Shares (after deduction of fees and commissions), which it

can use to grow its business in the cross-border e-

Commerce market. The net proceeds from the Fundraising

will amount to approximately £15.6m.

b) The Fundraising is not subject to an underwriting

agreement.

c) VSA will receive a commission for its activities upon

successful completion of the Fundraising. VSA therefore

has an interest that as many new Ordinary Shares as

possible are placed. Following Admission VSA will be

appointed as AQSE Corporate Adviser to the Issuer. VSA or

its affiliates have, and may from time to time in the future

continue to have, business relations with the Issuer or its

shareholders or may perform services for the Issuer or its

shareholders in the ordinary course of business.

4.3 The new Ordinary Shares will be offered by the Issuer as well as

VSA. The Issuer, together with VSA, expects to apply for admission

of its Ordinary Shares to trading on the AQSE Growth Market.

Under which condition

and timetable can I

invest in this security?

Why is this UK Growth

Prospectus being

produced?

Who is the offerer and/or

the person asking for

admission to trading?

23

Part 1

Persons Responsible, Third Party Information and Competent Authority

Approval

This section shall provide information on the persons who are responsible for the content of this Document.

The purpose of this section is to provide comfort to investors on the accuracy of the information disclosed

in the Document. Moreover, this section provides information on the legal basis of the Document and its

approval by the competent authority.

Persons Responsible

The Company, Samarkand Group plc with its registered offices at Unit 13 & 14 Nelson Trading Estate, The

Path, Merton, London SW19 3BL, United Kingdom, 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 UK Growth Prospectus (hereinafter

“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.

In the event that an investor asserts claims before a court on the basis of the information contained in the

Document, the investor acting as plaintiff may be obliged under the national laws of the countries of the

European Economic Area (EEA) to bear the costs of translating the Document prior to the commencement

of legal proceedings.

The information contained in this Document will not be updated subsequent to the date hereof except for

any significant new factor, material mistake or material inaccuracy relating to the information included in

this Document which may affect the assessment of the securities and which arises or is noted between the

time when this Document is approved. These updates must be disclosed in a prospectus supplement in

accordance with Article 23 of the Prospectus Regulation.

There are no guarantees attached to any of the Company’s securities.

Subject Matter of the Document

This Document relates to the admission of 51,618,966 Ordinary Shares of the Company (consisting of the

10,373,803 Placing Shares, 4,406,568 Subscription Shares, 1,498,594 Loan Conversion Shares and

35,340,001 Existing Ordinary Shares) of £0.01 each, each such share with a nominal value of £0.01 each in

the share capital of the Company and with full dividend rights as of 22 March 2021, to the AQSE Growth

Market.

Note on Financial and Numerical Data

Individual figures (including percentages) in this Document may be commercially rounded. In tables such

commercially rounded figures may not add up exactly to the totals also include in the table. For the

calculation of percentages used in the text, however, it was not assumed that the figures were commercially

rounded, but that the actual values were used. Therefore, it can come in some cases to the fact that the

percentages in the text deviate from percentages, which result on the basis or rounded values.

This Document contains currency information in British pounds sterling, Chinese renminbi and Chinese

yuan. Currency denominations in British pounds sterling have been identified and abbreviated as “£” and

currency denominations in Chinese renminbi as “RMB” before the amount. Where figures are given in

another currency, this is expressly indicated in the relevant number by the designation of the corresponding

currency or currency symbol.

24

Third party information

The Company confirms that all third-party information contained in this Document has been accurately

reproduced and, so far as the Company is aware and is able to ascertain from information published by that

third party, no facts have been omitted that would render the reproduced information inaccurate or

misleading. Where third party information has been used in this Document, the source of such information

has also been identified.

25

Part 2

Risk Factors

An investment in the Ordinary Shares is subject to a number of risks. Accordingly, prospective investors

should consider carefully all of the information set out in this Document and the risks attaching to such

an investment, including in particular the risks described below (which are not set out in any order or

priority), before making any investment decision in relation to any Ordinary Shares.

The information below does not purport to be an exhaustive list of relevant risks, since the Group’s

performance might be affected by other factors including, in particular, changes in market and/or

economic conditions or in legal, regulatory or tax requirements. Prospective investors should consider

carefully whether an investment in Ordinary Shares is suitable for them in the light of information in this

Document and their individual circumstances. An investment in Ordinary Shares should only be made by

those with the necessary expertise to fully evaluate that investment.

This Document contains forward-looking statements, which have been made after due and careful

enquiry and are based on the Directors’ current expectations and assumptions and involve known and

unknown risks and uncertainties that could cause actual results, performance or events to differ

materially from those expressed or implied in such statements. These forward-looking statements are

subject to, inter alia, the risk factors described in this Part 2. The Directors believe that the expectations

reflected in these statements are reasonable, but they may be affected by a number of variables which

could cause actual results or trends to differ materially. Each forward-looking statement speaks only as

of the date of the particular statement. Factors that might cause a difference include, but are not limited

to, those discussed in Part 2. Given these uncertainties, prospective investors are cautioned not to place

any undue reliance on such forward-looking statements. The Group disclaims any obligation to update

any such forward-looking statements in the Document to reflect future events or developments.

Prospective investors are advised to consult an independent adviser authorised under FSMA. If any of the

following risks relating to the Group were to materialise, the Group’s business, financial conditions and

results of future operations could be materially and adversely affected. In such cases, the market price

of the Ordinary Shares could decline, and an investor may lose part or all of their investment. Additional

risks and uncertainties not presently known to the Directors, or which the Directors currently deem

immaterial, may also have an adverse effect upon the Group. In addition to the usual risks associated

with an investment in a company, the Directors consider the following risk factors to be significant to

potential investors.

RISkS RElATInG TO ThE GROuP’S BuSInESS

The purpose of this section is to describe the main risks faced by the issuer and their impact on the issuer’s

future performance.

Tax risks

The Group is active in a number of tax jurisdictions and intends to expand further into other jurisdictions.

The taxation policies of these jurisdictions (including corporation tax rates, withholding taxes, personal and

social taxes and direct taxation of products) may change over time and negatively impact the performance

of the Group.

The Group’s income may be reduced by exchange controls

In the event that exchange controls are imposed with respect to any of the Group’s in-country activities, the

effect will generally be to reduce the income received by the Group on such activities.

There are certain foreign exchange controls in the PRC. Some activities such as payments of current account

items, such as profit distributions and trade and service-related foreign exchange transactions, in foreign

currencies are currently permitted without prior approval from SAFE provided compliance with certain

26

procedural requirements. However, other activities such as the conversion of RMB into foreign currency

and to remit out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign

currencies currently require prior approval from SAFE via the appropriate local governmental authorities or

designated banks. In the event that stricter exchange controls are imposed with respect to any of the

Group’s in-country activities, the effect will generally be to reduce the income received by the Group on

such activities.

Currency and foreign exchange risks

The principal currencies within which the Group transacts are Pound Sterling, Renminbi and Euro. The

Group’s financial position will be reported in Pound Sterling. To the extent that there are fluctuations in

exchange rates, this may have an impact on the figures consolidated in the Company’s accounts, which

could have a material impact on the Group’s financial position or result of operations, as shown in the

Group’s accounts in future.

The Group does not currently undertake foreign currency hedging transactions to mitigate potential foreign

currency exposure but expects to do so in the future. The Board cannot predict the effect of exchange rate

fluctuations upon future operating results and there can be no assurance that exchange rate fluctuations

will not have a material adverse effect on the business, operating results or financial condition of the

Group.

Brexit risk

On 31 December 2020, the United Kingdom exited the European Union. Although certain terms were

agreed in connection with the United Kingdom’s exit, there remains significant uncertainties as to what the

impact will be on the fiscal, monetary and regulatory and legal landscape in the UK, including, amongst

other things, the UK’s regulatory and tax system, the conduct of cross-border business and export and

import tariffs. There is also uncertainty in relation to how, when and to what extent these developments

will impact on the economy in the UK and European Union and the future growth of its various industries

and on levels of investor activity and confidence, on market performance and on exchange rates. Although

it is not possible to predict fully the effects of the UK’s exit from the European Union, any of these risks,

taken singularly or in the aggregate, could have a material adverse effect on companies and therefore could

affect the Group’s business, revenue, financial condition, profitability, results, prospects and/or future

operations.

Force Majeure

The Group’s operations now or in the future may be adversely affected by risks outside the control of the

Group including, but not limited to, labour unrest, war, civil disorder, subversive activities or sabotage, fires,

floods, explosions, or other catastrophes, epidemics or quarantine restrictions.

The COVID-19 pandemic, or other epidemics or pandemics, could have a material adverse effect on the

Group’s revenue and supply chain

The spread of any contagious disease that may result in an epidemic or pandemic on a regional or global

scale may have a negative impact on the operations and results of the Group and the markets in which it

operates. If one or more of the geographical areas in which the Group operates are affected by contagious

diseases that cause an epidemic or pandemic on a regional or global scale, the operations of the Group and

customers of its platforms can be significantly affected. Since December 2019, there has been a rapid global

spread of the new respiratory virus Coronavirus 2019-nCoV (“COVID-19”), which continues to have a

significant impact worldwide. Restrictive measures, including, inter alia, restrictions on the movement of

goods and people, the closure or temporary interruption of most of the production and commercial

activities and various social distancing provisions, have been and continue to be introduced by many

countries, including the UK. Such restrictions may increase the costs associated with the Group’s

transportation, delivery and fulfilment of its orders. In general, the spread of CovID-19 could lead to a

deterioration in the economies of the countries directly affected and at a global level, with possible

negative effects on customers’ purchasing power and perception of safety of goods coming from overseas.

27

Any further regional or global epidemics or pandemics or the further spread of COVID-19 may have an

adverse effect on the Group’s business, results of operations and financial condition.

The Group may be subject to general litigation, regulatory disputes and government inquiries

As a growing company with expanding operations, the Group may in the future increasingly face the risk of

claims, lawsuits, government investigations and other proceedings involving competition and antitrust,

intellectual property, privacy, consumer protection, accessibility claims, securities, tax, labour and

employment, commercial disputes, services and other matters. The number and significance of these

disputes and inquiries have increased as the political and regulatory landscape changes, as the Group has

grown larger and expanded in scope and geographic reach, and as the Group’s business operations have

increased in complexity.

The Group cannot predict the outcome of such disputes and inquiries, and such disputes or inquiries could

have an adverse impact on the Group because of legal costs, diversion of management resources, and other

factors. Determining reserves for any litigation is a complex, fact-intensive process that is subject to

judgement calls. Legal proceedings or inquiries could also result in reputational harm, criminal sanctions,

consent decrees or orders preventing the Group from offering certain products or services, or requiring a

change in the Group’s business practices in costly ways or requiring development of non-infringing or

otherwise altered products or technologies. Litigation and other claims and regulatory proceedings against

the Group could result in unexpected expenses and liabilities, which could have a material adverse effect

on the Group’s business, results of operations and financial condition.

Amendments to existing tax laws, rules or regulations or enactments of new unfavourable tax laws, rules

or regulations could have an adverse effect on the Group’s business and financial performance

Many of the underlying laws, rules or regulations imposing taxes and other obligations were established

before the growth of the internet and eCommerce. The Group cannot predict the effect of current attempts

to impose taxes on commerce over the internet. If such tax or other laws, rules or regulations were

amended, or if new unfavourable laws, rules or regulations were enacted, the results could increase the

Group’s tax payments or other obligations, prospectively or retrospectively, subject it to interest and

penalties, and decrease the demand for its services if it passes on such costs to the consumer. In addition,

any such new laws, rules or regulations may result in increased costs to update or expand the Group’s

technical or administrative infrastructure or effectively limit the scope of its business activities if it decided

not to conduct business in particular jurisdictions. As a result, these changes may have a material adverse

effect on the Group’s business, results of operations and financial condition.

In addition, various governments and intergovernmental organisations could introduce proposals for tax

legislation, or adopt tax laws, that may have a significant adverse effect on the Group’s worldwide effective

tax rate, or increase its tax liabilities, the carrying value of deferred tax assets, or its deferred tax liabilities.

For instance, the Organisation for Economic Co-operation and Development continues to study tax

challenges arising from the digitisation of the economy through the “base erosion and profit shifting”

framework. Multiple jurisdictions, including some of the countries in which the Group operates, have

begun implementing recommended changes aimed at addressing perceived issues within their respective

tax systems that may lead to increased tax liabilities amongst multinational companies. It is possible that

other jurisdictions in which the Group operates or do business could enact tax legislation that could

adversely affect the Group through increasing its tax liabilities which could thereby affect its business,

results of operations and financial condition. If any of the Group’s intergroup’s contractual arrangements

are not entered into on an arm’s lengths basis under all applicable laws, rules and regulations, it could result

in a form of transfer price adjustment for tax purposes, which could in turn increase the Group’s tax

liabilities in the jurisdictions that they operate in.

GROuP SPECIFIC RISkS

Attracting and Retention of key Personnel, including Directors

The Group has a small management team and the Group’s activities require the recruitment of suitably

qualified staff in multiple areas. The loss of a key individual or inability to attract suitably qualified staff

28

could materially adversely impact upon the business, prospects and financial condition of the Group. The

success of the Group depends on the ability of the Directors and staff to manage its business effectively and

ensure that sales are made in accordance with its business plan. The Directors will also have to interpret

and respond appropriately to technological, economic, market, regulatory and other conditions.

No assurance can be given that individuals with the required skills will continue their association or

employment with the Group or that replacement personnel with comparable skills can be found. The Board

has sought to, and will continue to, ensure that the Directors and key employees are appropriately

incentivised. However, their services cannot be guaranteed.

Expansion risk

The Group intends to pursue an aggressive growth strategy, subject to the availability of funding. Such a

strategy brings with it certain risks and will place additional demand on the Group’s management, financial

and operational resources. If the Group is unable to manage its growth effectively, its business, operations

or financial condition may deteriorate.

Competition in the markets in which the Group operates is expected to increase in the future

Existing and potential competitors may have significantly greater financial, research and development, sales

and marketing, personnel and other resources than the Group, which may adversely affect its competitive

position.

key suppliers and distributors

There can be no assurance that the Group’s business relationships with its key suppliers and distributors

will be successfully formed or maintained. A breach or disruptions in these relationships could be

detrimental to the future business, operating results and/or profitability of the Group. To the extent that

the Group cannot engage key suppliers and distributors according to its plans and budgets, its financial and

operational performance may be adversely impaired. Whilst the Directors believe that it can source

alternative suppliers for many of its requirements, any requirement to do so could take longer than

anticipated which could have a consequential detrimental effect on the Group’s results of operations.

A deterioration in the Group’s own brands or reputation could have a material adverse effect on the

Group

Any failure to maintain a consistently high level of customer service, or a market perception that the

Group’s own brand(s) or activities do not maintain high-quality customer service, could adversely affect the

reputations of the Group’s own brand(s) and platform(s). Any loss of the Group’s existing customers may

severely impact the Group’s revenues and financial position. Consumers value readily available information

concerning retailers and their goods and services, and often act on such information without further

investigation and without regard to its accuracy. The Group’s customers may engage with the Group and its

brand(s) online through its social media platforms, including Weibo, WeChat and Little Red Book (“RED”),

by providing feedback and public commentary about all aspects of its business. Information concerning the

Group’s brand(s) and platform(s), whether accurate or not, may be posted on social media platforms at any

time and may have a disproportionately adverse impact on the Group’s brand(s) and platform(s), including

their reputation. This could undermine the Group’s efforts to attract new customers, which may have a

material adverse effect on the Group’s business, results of operations and financial condition.

The Group’s success depends, in part, on the quality, performance and safety of its products

Any loss of confidence on the part of consumers in the quality, performance and safety of brand(s) owned

by the Group, whether related to product contamination or product safety or quality failures, actual or

perceived, or the inclusion of prohibited ingredients, could tarnish the image of that product’s brand, and

could cause consumers to choose other products. Allegations of contamination or other adverse effects on

product safety or suitability by a particular consumer, even if untrue, may require the Group to expend

significant time and resources responding to such allegations and could, from time to time, result in a recall

of a product from any or all of the markets in which the affected product was distributed. Any such issues

29

or recalls could negatively affect the Group’s business, results of operations and financial condition, as well

as that product’s brand image.

If the Group’s own brand’s products are found to be, or perceived to be, defective or unsafe, or if they

otherwise fail to meet the Group’s customers’ expectations, the appeal to customers of the Group’s own

brand products could suffer, the Group may need to recall some of its products and/or become subject to

regulatory action, and the Group could lose sales or market share or become subject to boycotts or liability

claims. In addition, safety or other defects in the products of the Group’s Own Brand’s competitors could

reduce consumer demand for the Group’s Own Brand products if consumers view them to be similar. Any

of these outcomes could result in a material adverse effect on the Group’s business, results of operations

and financial condition.

As an online seller of goods and products, the Group is subject to numerous regulations (including

consumer protection laws) in the jurisdictions that it operates, that govern online sellers specifically. If

these regulations were to change or if the Group were to be found to be in breach of them, the Group may

need to incur costs and expenses, which may be material in some jurisdictions, to rectify such breaches or

adjust its business practices to comply with these changes.

The Group’s success depends upon the continued strength of its brand

Maintaining and enhancing the Group’s brand is critical to retaining and expanding its Client base. Failure

to protect and grow the value of the Group’s brand may have material adverse effects on the Group’s

business and results of operations, including losing its customer base.

The Group’s products may experience quality problems from time to time, which could result in

decreased sales, adversely affecting its results of operations and harming its reputation

The products that the Group sells can contain design and manufacturing defects. Defects may also occur in

components and products that the Group purchases from third-party suppliers. There can be no assurance

that the Group will be able to detect and resolve all defects in the products of the Group. Failure to detect

and fix all defects could result in lost revenue, significant warranty and other expenses and harm the

reputation of the Group.

The Group relies on third parties over whom the Group has limited control for transportation, delivery

and fulfilment of its orders

The Group relies on suppliers and third-party brand owners to properly and promptly prepare products

ordered by the Group for shipment. Any failure by these suppliers to prepare such products for shipment

to the Group on a timely basis will have an adverse effect on the fulfilment of consumer orders, which could

negatively affect the consumer experience and harm the Group’s business, results of operations and

financial condition. The Group also relies upon third-party carriers and transportation providers for

substantially all of its merchandise shipments, including shipments of items from its retailers and brands,

to the Group’s facilities for processing, shipments returning these items to the Group’s retailers and brands

and the shipments to the Group’s consumers after purchase. The Group’s shipments also are subject to risks

that could increase its distribution costs, including rising fuel costs and events such as labour disputes,

inclement weather, pandemic restrictions or other disruptions at ports, which may impact the third party’s

ability to provide delivery services that adequately meet the Group’s needs. If the Group needed to change

third-party carriers or transportation providers, the Group could face logistical difficulties that could

adversely impact deliveries, and the Group would incur additional costs and expend resources in

connection with such change. Moreover, the Group may not be able to obtain terms as favourable as those

received from the independent third-party carriers and transportation providers it currently uses, which

would also increase the Group’s costs. Any of these factors could result in reduced sales or cancelled orders,

which may limit the Group’s growth and damage its reputation, and may have a material adverse effect on

its business, results of operations and financial condition. In addition, any increase in shipping or delivery

costs or any other significant shipping or delivery difficulties or disruptions or any failure by the Group’s

retailers, brands or third-party carriers to deliver high-quality products to the Group’s consumers in a timely

30

manner or to otherwise adequately serve the Group’s consumers could damage the Group’s reputation and

brand and may substantially harm its business, results of operations and financial condition.

The Group’s relationships with its third-party delivery and fulfilment providers also involve risks which could

have a material adverse effect on the Group’s business, results of operations and financial condition. For

example (i) these third-party providers may choose to terminate their relationships with the Group or to

make material changes to their businesses, products or services; (ii) the Group’s competitors may be

effective in providing incentives to third-party delivery and fulfilment providers to favour their products or

services or to prevent or reduce subscriptions to the Group’s platform; and (iv) the Group may in the future

have disagreements or disputes with such providers.

The Group relies on third parties for the provision of its payment services

The Group uses third-party payment service providers. If the Group’s third-party payment services were

disrupted, the Group could incur substantial delays and expenses in finding and integrating alternative

third-party payment service providers, and the quality and reliability of such alternative payment service

providers may not be comparable. Any long-term disruption that impedes the ability of the Group

customers to pay easily and securely on the Group’s platforms could undermine the Group’s model of and

aim to provide frictionless retail, and could have an adverse effect on the Group’s business, results of

operations and financial condition.

The Group has in the past made and, in the future, may make acquisitions and investments, which could

divert management’s attention, result in operating difficulties and otherwise disrupt the Group’s

operations and adversely affect its business, results of operations and financial condition, and such

acquisitions and investments may result in dilution to the Group’s shareholders

Acquisitions play an important part in the Group’s overall strategy, and, from time to time, the Group

evaluates potential strategic acquisition or investment opportunities. Any transactions that the Group

enters into could be material to its financial condition and results of operations. The process of acquiring

and integrating another company or technology could create unforeseen operating difficulties and

expenditures. Additionally, shareholders will not have the opportunity to vote on or approve the

acquisitions. Acquisitions and investments involve a number of risks, such as:

• diversion of management time and focus from operating the business;

• use of resources that are needed in other areas of the business;

• implementation or remediation of controls, procedures and policies of the acquired company;

• difficulty integrating the accounting systems, IT systems and operations of the acquired company,

including potential risks to the Group’s corporate culture;

• co-ordination of product, engineering and selling and marketing functions, including difficulties and

additional expenses associated with supporting legacy services and products and hosting

infrastructure of the acquired company and difficulty converting the customers of the acquired

company onto the Group’s platform and contract terms, including disparities in the revenues,

licensing, support or professional services model of the acquired company;

• retention and integration of employees from the acquired company;

• unforeseen costs or liabilities;

• adverse effects on the Group’s existing business relationships with customers and merchants;

• adverse tax consequences;

• litigation or other claims; and

• the need to integrate operations across different cultures and languages and to address the

particular economic, currency, political and regulatory risks associated with specific countries.

31

In addition, a significant portion of the purchase price of acquisitions may be allocated to acquired goodwill

and other intangible assets, which must be assessed for impairment at least annually. Further, the Group

may not be able to identify acquisition or investment opportunities that meet its strategic objectives, or, to

the extent such opportunities are identified, the Group may not be able to negotiate terms with respect to

the acquisition or investment that are acceptable to it. In the future, if the Group’s acquisitions or

investments do not yield expected returns, it may be required to take charges or impairments to its

operating results based on this impairment assessment process, which could adversely affect the Group’s

business, results of operations and financial condition.

The Group may not be able to prevent others from unauthorised use of its intellectual property, which

could harm its business and competitive position

The Group considers its copyrights, trademarks, trade names, internet domain names and other intellectual

property rights invaluable to its ability to continue to develop and enhance its brand recognition. The Group

has invested significant resources to develop its own intellectual property. Failure to maintain or protect

these rights could harm the Group’s business.

The Group relies on a combination of patents, patent applications, trade secrets, including know-how,

copyright laws, trademarks, intellectual property licenses, contractual rights and any other agreements to

establish and protect its proprietary rights in its technology. Statutory laws and regulations are subject to

judicial interpretation and enforcement and may not be applied consistently due to the lack of clear

guidance on statutory interpretation. Contractual rights may be breached by counterparties, and there may

not be adequate remedies available to the Group for any such breach.

The measures the Group takes to protect its intellectual property rights may not be sufficient or adequate

to prevent infringement on or misuse of its intellectual property. Any unauthorised use of its intellectual

property by third parties may adversely affect the Group’s current and future revenues and its reputation.

Litigation may be necessary to enforce the Group’s intellectual property rights. Initiating infringement

proceedings against third parties can be expensive and time-consuming and divert management’s attention

from other business concerns. Failure to adequately protect the Group’s intellectual property could harm

the Group’s brand name and materially affect its business and results of operations. Reliance on third-party

logistic service providers to deliver the Group’s sales orders.

The Group has not yet conducted a “freedom to operate” search in the jurisdictions it plans to sell its

products. If any infringements on any valid property rights are detected during the search, it could result in

lost revenue, significant litigation and other expenses and harm the reputation of the Group.

The Group’s business is subject to seasonal and quarterly fluctuations

The Group’s revenues and operating results are expected to fluctuate from quarter to quarter, due to,

among others, seasonal factors. Accordingly, any shortfall in expected quarterly revenues would adversely

affect the Group’s annual operating results. The Group’s operating results could suffer if it does not

generate revenues consistent with its expectations for this seasonal demand.

If Group fails to improve and enhance the functionality, performance, reliability, design, security and

scalability of its software and technology services in a manner that responds to its clients’ evolving

needs, the Group’s business may be adversely affected

The Group’s Nomad technology and software services provides businesses with technology and software

solutions for them to market and sell directly to their customers. As a result, the Group is heavily reliant on

its technology and software services. These services are, however, characterised by constant change and

innovation, and the Group expects them to continue to evolve rapidly. The Group’s success has been based

on its ability to identify and anticipate the needs of its clients and design services that provides them with

the tools they need to operate their businesses. The Group’s ability to improve its business, results of

operations and financial condition will depend in large part on the Group’s ability to continue to improve

and enhance the functionality, performance, reliability, design, security and scalability of its technology and

software services.

32

The Group may experience difficulties with software development that could delay or prevent the

development, introduction or implementation of new solutions and enhancements to its technology

platforms. Software development involves significant amounts of time and it can take the Group’s

developers months to update, code and test new and upgraded solutions and integrate them into the

Group’s technology and software solutions. The Group must also continually update, test and enhance its

software and make sure that its Nomad technology and software services operates effectively across

multiple devices, operating systems and internet browsers. The continual improvement and enhancement

of the Group’s Nomad technology and software services requires significant investment. To the extent the

Group is not able to improve and enhance the functionality, performance, reliability, design, security and

scalability of its technology platform in a manner that responds to its own or its merchants’ evolving needs,

the Group’s business, results of operations and financial condition will be adversely affected.

Interruptions in these systems, whether due to system failures, human input errors, computer viruses or

physical or electronic break-ins, and denial-of-service attacks on the technology and software solutions

provided by the Nomad platform or communications infrastructure, could affect the availability of Nomad’s

services and prevent or inhibit the ability of clients to access or complete purchases on the clients’ websites

and apps.

Any errors, defects, disruptions or other performance problems with the Group’s Nomad technology and

services could harm its reputation and may have a material adverse effect on the Group’s business, results

of operations and financial condition. Any of the above could have an adverse impact on the Group’s

business, results of operations and financial condition.

If Group’s software contains serious errors or defects, Group may lose revenue and market acceptance

and may incur costs to defend or settle claims with its customers

The Group’s software may contain errors, defects, security vulnerabilities or software bugs that are difficult

to detect and correct, particularly when new software is introduced or when new versions or

enhancements are released. Despite internal testing, the Group’s software may contain serious errors or

defects, security vulnerabilities or bugs that the Group may be unable to correct in a timely manner or at

all, which could result in lost revenue, significant expenditures of capital, a delay or loss in market

acceptance and damage to Group’s Nomad reputation, any of which could have an adverse effect on

Group’s business, results of operations and financial condition.

Clients of the Group’s Nomad platform use its services for processes that are critical to their businesses,

meaning that errors, defects, security vulnerabilities, service interruptions or bugs in this software could

result in losses to the Group’s clients. The Group’s clients may seek significant compensation from the

Group for any losses they suffer or cease conducting business with the Group altogether. As a SME, the

Group is not able to limit its exposure to claims in standard terms and conditions of the Clients to the extent

it would if it were a larger company. To the extent it has attempted to do so, it may not be enforceable or

may be inadequate to protect the Group from liabilities or damages with respect to any particular claim.

Even if not successful, a claim brought against the Group by any of its clients would likely be time-

consuming and costly to defend and could seriously damage the Group’s reputation and brand, making it

harder for Group to sell its Nomad platform and software solutions. Any of the factors above could have an

adverse impact on Group’s business, results of operations and financial condition.

RISkS RElATInG TO DOInG BuSInESS In ChInA

Reliance on third parties for compliance with customs law, tax laws, privacy laws and data protection

laws and regulations of the PRC

The Group uses third-party couriers to make declaration and pay taxes and duties. If these third parties fail

to provide service complying with customs law, tax laws, privacy and data protection laws and regulations

of the PRC, the Group may assume the default responsibility. As a result, the Group’s financial condition and

reputation could suffer.

33

Change of the PRC regulations or the interpretation of existing PRC regulations

Foreign ownership of certain types of internet businesses, such as internet information services, is subject

to restrictions under applicable PRC laws, rules and regulations. East-West holds an operating license for

online data processing and transaction processing business (operational e-commerce). East-West is an

affiliated, consolidated entity of the Group and the Group controls East-West on a contractual basis. Further

details of this are set out in paragraph 4.2 of Part 10 of this Document. These contractual arrangements are

consistent with arrangements put in place by the Group’s competitors and peers however the Group will

continue to monitor and take PRC legal advice in connection with foreign investment restrictions under PRC

laws and regulations and adapt its corporate structure accordingly.

There are uncertainties regarding the interpretation and application of current and future PRC laws,

regulations and rules. It is uncertain whether any new PRC laws or regulations relating to contractual

arrangement structures will be adopted or if adopted, what they would provide. In any of these cases, it

will be uncertain whether the Group’s contractual arrangements will be deemed to comply with market

access requirements for foreign investment under the PRC laws and regulations, as recently amended.

The Group relies on contractual arrangements with East-West and its shareholder for a portion of its

business operations, which may not be as effective as direct ownership in providing operational control

If the Group had direct ownership of East-West, it would be able to exercise its rights as a shareholder to

effect changes in the board of directors of East-West, which in turn could effect changes, subject to any

applicable fiduciary obligations, at the management level. However, under the current contractual

arrangements, the Group relies on the performance by East-West and its shareholder of their obligations

under the contracts to exercise control over East-West. However, the shareholder of VIE may not act in the

Group’s best interests or may not perform their obligations under these contracts. Such risks exist

throughout the period in which they intend to operate the Group’s business through the contractual

arrangements with East-West. The Group may replace the shareholder of VIE at any time pursuant to its

contractual arrangements with East-West and its shareholder. However, if any dispute relating to these

contracts or the replacement of the shareholder remains unresolved, the Group will have to enforce its

rights under these contracts through the operations of PRC law and arbitrations and therefore will be

subject to the PRC legal system.

Therefore, the Group’s contractual arrangements with East-West may not be as effective in ensuring its

control over the relevant portion of its business operations as direct ownership would be.

Reliance on East-West and its shareholder to perform their obligations under the Group’s contractual

arrangements with them

If East-West or its shareholder fail to perform their respective obligations under the contractual

arrangements, the Group may have to incur substantial costs and expend additional resources to enforce

such arrangements. The Group may also have to rely on legal remedies under PRC laws, including seeking

specific performance or injunctive relief, and claiming damages. The Group cannot assure such remedies

will be effective. For example, if the shareholder of East-West was to refuse to transfer their equity interest

in East-West to the Group or its designee when they exercise the purchase option pursuant to these

contractual arrangements, or if they were otherwise to act in bad faith toward the Group, it may have to

take legal actions to compel them to perform their contractual obligations.

Compliance with the relatively new e-commerce law in the PRC may have a material adverse impact on

the Group’s business, financial conditions and results of operations

As the e-commerce industry is still evolving in China, new laws and regulations may be adopted from time

to time to address new issues that arise from time to time. The e-commerce law in the PRC generally

provides that e-commerce operators must obtain administrative licenses, if their business activities are

subject to administrative licensing requirements under applicable laws and regulations. Failure to comply

with the relatively new regulatory requirements may have a material adverse impact on the Group’s

business and results of operations. As no detailed interpretation and implementation rules have been

34

promulgated, it remains uncertain how the newly adopted e-commerce law in the PRC will be interpreted

and implemented.

PRC laws establish complex procedures for some acquisitions of Chinese companies by foreign investors,

which could make it more difficult for the Group to pursue growth through acquisitions in China

PRC Laws and rules concerning mergers and acquisitions, establish additional procedures and requirements

that could make merger and acquisition activities by foreign investors more time consuming and complex.

For example, the rules require that the relevant government authorities be notified in advance of any

change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i)

any important industry is concerned, (ii) such transaction involves factors that have or may have impact on

the national economic security, or (iii) such transaction will lead to a change in control of a domestic

enterprise which holds famous trademarks or PRC time-honoured brands. In the future, the Group may

grow its business by acquiring complementary businesses. Complying with the requirements of the above-

mentioned regulations and other relevant rules to complete such transactions could be time consuming,

and any required approval processes, including obtaining approval from the relevant government

authorities may delay or inhibit its ability to complete such transactions. The Group’s ability to expand its

business or maintain or expand its market share through future acquisitions would as such be materially

and adversely affected.

RISkS RElATInG TO ThE ORDInARy ShARES AnD TRADInG On ThE AQSE GROWTh MARkET

The purpose of this section is to describe the main risks which are specific to the securities of the issuer.

Investment in unlisted Securities

Investment in shares traded on the AQSE Growth Market is perceived to involve a higher degree of risk and

be less liquid than investment in companies whose shares are listed on the Official List or AIM. An

Investment in Ordinary Shares may be difficult to realise. Prospective investors should be aware that the

value of the Ordinary Shares may go down as well as up and that the market price of Ordinary Shares may

not reflect the underlying value of the Group. Investors may therefore realise less than, or lose all of, their

investment.

Future sales or issuances of Shares or the perception that such sales or issuances could occur may

depress the price of the Ordinary Shares

Other than in connection with Admission, the Company has no current plans for an offering of new

Ordinary Shares. It is possible that the Company may decide to offer additional Ordinary Shares in the

future. Future offering of new Ordinary Shares could, if shareholders do not take up any offer or are not

eligible to participate, dilute the holdings of existing shareholders. Future issuances of Ordinary Shares or

the perception that such issuances could occur or significant sales of Ordinary Shares by major

shareholders, adversely affect the prevailing market price of the Ordinary Shares and impair the Company’s

ability to raise capital through further sales of equity securities.

The issuance of additional Ordinary Shares in connection with future acquisitions, any share incentive or

share option plan or otherwise may dilute all other shareholdings

The Company may seek to raise financing to fund future acquisitions and other growth opportunities, invest

in its business or for general corporate purposes. The Company may, for these and other purposes, such as

in connection with share incentive and share option plans, issue additional Ordinary Shares or securities

convertible into Ordinary Shares. If the Company issues additional Ordinary Shares, the company’s existing

shareholders may suffer dilution in their percentage ownership and the price of the Ordinary Shares may

be adversely affected.

35

Suitability

An investment in the Ordinary Shares may not be suitable for all recipients of this Document. Investors are

accordingly advised to consult an appropriate person authorised under FSMA, or its equivalent in another

jurisdiction, before making their decision.

Share price volatility and liquidity

The share price of quoted emerging companies can be highly volatile and shareholdings illiquid. The price

at which the Ordinary Shares are quoted and the price which investors may realise for their Ordinary Shares

will be influence by a large number of factors, some specific to the Group and its operations and some

which may affect quoted companies generally. These factors could include the performance of the Group,

large purchases or sales of the Ordinary Shares, legislative changes and general economic, political or

regulatory conditions.

Market risks

Continued admission to the AQSE Growth Market is entirely at the discretion of AQSE.

Any changes to the regulatory environment, in particular the AQSE Exchange Rules could, for example,

affect the ability of the Group to maintain a trading facility on the AQSE Exchange Growth Market.

Compliance with corporate governance and accounting requirements

In becoming a publicly quoted company, the Group will be subject to enhanced requirements in relation to

disclosure controls and procedures and internal control over financial reporting. The Group may incur

significant costs associated with its public company reporting requirements, including costs associated with

applicable AQSE corporate governance requirements. If the Group does not comply with all applicable legal

and regulatory requirements, this could result in regulatory investigations which could have a material

adverse effect on the Group’s business, financial condition, results of operations and prospects.

There is no guarantee that the Group will maintain its quotation on AQSE

The Group cannot assure investors that the Group will always retain a quotation on AQSE. If it fails to retain

such a quotation, investors may find it very difficult to sell their shares. Additionally, if in the future the

Group decides to obtain a quotation on another exchange in place of AQSE, the level of liquidity of the

Ordinary Shares could decline.

Dividends

There can be no assurance that the Group will declare dividends or as to the level of any dividends. The

approval of the declaration and amount of any dividends of the Company is subject to the discretion of the

Directors (and, in the case of any final dividend, the discretion of Shareholders) at the relevant time and will

depend upon, among other things, the Group’s earnings, financial position, cash requirements and

availability of distributable profits, as well as the provisions of relevant laws and/or generally accepted

accounting principles from time to time.

The investment opportunity offered in this Document may not be suitable for all recipients of this

Document. Investors are therefore strongly recommended to consult a professional adviser authorised

under FSMA, who specialises in investments of this nature, before making their decision to invest.

36

Part 3

Information on the Company

1. Information about the Company

Founded in 2016, Samarkand (together with its subsidiaries, the “Group”) is headquartered in London, UK

and was established to enable third‐party consumer brands (“Clients”) to access Chinese consumers

through cross‐border eCommerce (“CBEC”). The incumbent model for Western brands to enter this market

has been through wholesale distribution relationships which can lead to lack of control and margin sacrifice

for brands. The Group has developed a proprietary software platform – the Nomad platform – which is

integrated with Chinese eCommerce and social media platforms, as well as payment, logistics and customs

systems to provide a Direct‐to‐Consumer (“D2C”) alternative. In 2014, the Chinese government announced

a range of policies and infrastructure to support the growth of the Chinese CBEC sector. This includes the

introduction of 105 special CBEC Zones across the country and the relaxation of testing and registration

requirements, such as animal testing for skincare products. The CBEC market in China has grown from

approximately £14 billion1 in 2014 and is forecast to reach £138 billion in 20212.

The Group’s Nomad platform offers five main technology and service solutions designed for Clients of

varying size who wish to sell their products to end consumers in China:

• Nomad Checkout;

• Nomad Storefront;

• Nomad Commerce;

• Nomad Analytics; and

• Nomad Distribution.

Nomad Checkout is a Software‐as‐a‐Service (“SaaS”) based solution that integrates with popular

eCommerce software providers, such as Shopify, and enables Clients to sell their products through their

own eCommerce website to Chinese consumers, with the sale finalised on the Nomad platform in China.

Nomad Checkout allows Chinese consumers to use payment methods popular in China, such as Alipay and

WeChat Pay, and benefit from improved delivery methods and product authenticity.

Nomad Storefront is a technology and managed service solution which is integrated with Chinese

eCommerce platforms and managed by the Group’s multilingual teams in the UK and China on behalf of

Clients. The Nomad platform provides product management, order processing, stock management and

analytics across multiple eCommerce platforms giving Clients a consolidated solution to the fragmented

Chinese CBEC market. Over £1.9 million of contracted revenue has already been signed to the Nomad

Storefront solution.

Nomad Commerce offers customisable eCommerce solutions for Clients who wish to establish their own

eCommerce presence in China. Integrated with the dominant payment providers in China, such as AliPay

and WeChat Pay, it also supports a content management system, recommendation engine, detailed

analytics and event tracking. Hosted on AliCloud infrastructure in China it operates inside of the China’s

internet restrictions, improving loading times and website performance.

Nomad Distribution allows Clients to access Chinese key opinion leaders (“KOLs”) and celebrities to

generate sales in China’s fast growing social commerce space. Social commerce has emerged as a driving

force of eCommerce in China in recent years and is estimated to account for CNY 3,703 billion

(£410.1 billion)3 of Gross Merchandise Value (“GMV”) in 2020. Nomad Distribution enables Clients to

37

1 https://www.statista.com/statistics/1006878/china‐cross‐border‐ecommerce‐retail‐imports‐market‐size/

2 https://www.emarketer.com/content/trade‐war‐will‐have‐little‐effect‐on‐cross‐border‐ecommerce

3 https://www.statista.com/statistics/1129864/china‐market‐size‐of‐social‐commerce/

access this sector of Chinese eCommerce and for their products to be drop‐shipped (a retail fulfilment

method where a retailer does not stock the products it sells, instead purchasing it from a third‐party and

shipping directly to the consumer) through CBEC directly to consumers in China. Since Nomad Distribution

was launched in February 2020, approximately 42,000 orders and £3.5 million of revenue across 9 brands

had been achieved by November 2020.

The Group acquired a consumer health brand in December 2017 called Probio7 which it has launched into

the Chinese CBEC market through the same channels and technology that it provides to Clients. In the three

years since the acquisition, the Group has grown the revenue of the brand from £1.2 million for the first 11

months prior to the acquisition to £3.4 million for the calendar year 2020. The Directors believe that market

insights, combined with the sales channels the Group has developed in China, provide the Group with a

competitive advantage and an opportunity to buy brands in Europe that have great potential in China but

without the means to access the market.

For the year ended 31 March 2020, the Group’s revenue was £6.8 million (2019: £4.5 million), its operating

loss was £1.1 million (2019: loss £1.2 million) and its EBITDA loss was £0.8 million (2019: loss £1.0 million).

For the eight‐month period ended 30 November 2020, the Group’s revenue was £16.0 million (2019: £3.8

million), its operating profit was £2.0 million (2019: loss £1.0 million) and its EBITDA profit was £2.4 million

(2019: loss £0.8 million).

The Company achieved a turnover of approximately £1.8 million for the month of November 2020 alone.

The Executive Management of the Group comprises a team of individuals who worked successfully together

in a previous company until it was sold, achieving a significant uplift for shareholders and investors. In

addition, the Board includes senior Non‐Executive Directors with a wealth of relevant corporate experience,

including Tanith Dodge, Independent Non‐Executive Chairperson, currently NED; Chairperson of

Remuneration Committee and Organisational Health Committee on the Board of Robert Walters and

member of the Advisory Council to PricewaterhouseCoopers, previously HR Director for Marks & Spencer

Group. Keith Higgins, Independent Non‐Executive Director, who currently serves as Chief Customer

Development Officer for Unilever. Jeanette Hern, CFO of Smollan Group, also serves as Non‐Executive

Director. Further details of which are set out in paragraph 1 of Part 4 of this Document.

2. Business Overview

2.1 Strategy, Objectives and Principal Markets

In 2019, the Chinese eCommerce market accounted for over 50 per cent. of global online spend,

larger than the next top 10 markets combined. Over US$1.5 trillion was estimated to be spent online

by consumers in China in 20194. The Group primarily operates in the Chinese CBEC market, which is

defined as consumers purchasing foreign products online. The CBEC market has grown rapidly since

2014 when the Chinese government announced a range of policies and infrastructure to support the

sector. Since 2014, the CBEC market in China has grown from approximately £14 billion5 to a forecast

£138 billion in 20216. During this period, 1057 CBEC Zones (“CBEC Zone”) have been established

across China alongside further policies to encourage and promote the growth of CBEC.

The Group is seeking Admission to the AQSE Growth Market and intends to use the net proceeds

from the Fundraising:

• to further develop Nomad platform’s functionality and services;

• to expand the Group’s business development activities in Europe, North East Asia and North

America in order to grow its Client base;

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4 https://www.mckinsey.com/~/media/mckinsey/featured%20insights/china/china%20digital%20consumer%20trends%

20in%202019/chinadigital‐consumer‐trends‐in‐2019.ashx ‐ Page 1

5 https://www.statista.com/statistics/1006878/china‐cross‐border‐ecommerce‐retail‐imports‐market‐size/

6 https://www.emarketer.com/content/trade‐war‐will‐have‐little‐effect‐on‐cross‐border‐ecommerce

7 https://www.china‐briefing.com/news/china‐unveils‐46‐new‐cross‐border‐e‐commerce‐zones‐incentives‐foreign‐

investors‐faqs/

• to extend marketing of its own brands to increase its visibility and awareness to potential

Clients;

• to acquire additional consumer brands and make strategic acquisitions; and

• for general working capital purposes.

In addition to its Nomad platform, the Group has implemented a “buy in the West, build in the East”

strategy in relation to its acquisition of own brands. This strategy is focused on the identification of

Western brands with growth potential, their acquisition, subsequent redevelopment and launch into

the Group’s sales channels in China and elsewhere. Having acquired the probiotic brand Probio7, the

Group has grown the revenue of the brand from £1.2 million for the first 11 months prior to the

acquisition to £3.4 million for the calendar year 2020. The Group intends to make further

acquisitions using this strategy.

2.2 Principal Activities

2.2.1 Nomad

The Nomad platform is the foundation on which the Group’s Nomad technology and service

solutions are built. The core products, as further described below, are designed specifically for

Clients seeking to develop their CBEC capabilities in China. During November 2020, the

platform processed approx. 23,000 orders directly to Chinese consumers and the Directors

expect these numbers to grow as new Clients and channels are developed. The Nomad

platform allows Clients to accelerate their direct‐to‐consumer operations and, through

providing digital content creation, trading and marketing functions in‐house, the Group is able

to apply the same best practices, market knowledge and technologies. The Group typically

also performs website trading and digital marketing functions on Clients’ behalf as part of the

end‐to‐end eCommerce offering.

The Nomad platform is integrated with Chinese eCommerce platforms (such as Tmall, RED,

amongst others), payment methods such as Alipay and WeChat Pay, logistics providers

including a leading Chinese express company, customs agencies and other supporting services

required to achieve CBEC operations in China.

2.2.1.1 Nomad Checkout

Nomad Checkout is a website plugin that is currently compatible with the popular

eCommerce software provider Shopify and can be installed on a Client’s existing

eCommerce website, requiring limited changes to order processing systems or

operational procedures. Nomad Checkout enables Clients to introduce their

products through their own website to Chinese consumers. The sale is finalised by

the Chinese consumer on the Nomad licensed platform in China. There are many

obstacles for Chinese consumers buying products from foreign websites, including

payments, shipping and customs. Nomad Checkout reduces these obstacles and

allows Clients to use their existing eCommerce infrastructure to reach and sell

directly to Chinese consumers. Nomad Checkout provides a cost‐effective solution

for Clients to achieve CBEC sales in China which were not previously possible due to

incumbent services being complex and having high entry costs. The Group intends

to create additional plugins for other popular eCommerce software providers such

as Magento and WooCommerce, amongst others.

For larger companies with specific requirements, such as direct fulfilment from their

own warehouses or their own payment integrations, an enterprise version of

Nomad Checkout exists that can be customised to their specifications. The first

deployment of the enterprise solution went live in November 2020 for one of

Europe’s largest eCommerce companies.

39

Nomad Checkout has processed over 12,000 parcels through the platform during

the pilot phase and is integrated with a large enterprise client. There is interest from

large and small enterprises for this solution, which is expected to provide high

margin, repeat revenue for the Group. The Directors are especially pleased that the

flexibility of the Nomad platform has resulted in interest by both large and small

enterprises.

Using a subscription and transaction‐based fee model, Nomad Checkout can

provide a cost effective and lower risk solution for Clients looking to enter the

Chinese CBEC market.

2.2.1.2 Nomad Storefront

Nomad Storefront is a technology and managed service solution which is integrated

with Chinese eCommerce platforms and managed by the Group’s multilingual

teams in the UK and China. The Group designs, builds and operates stores in

Chinese for Clients on eCommerce platforms in China, such as Tmall and RED. This

is facilitated by Nomad Storefront, providing order processing and fulfilment from

the Group’s distribution centre in the UK and bonded warehouses in Chinese CBEC

Zones. The Client is also provided with detailed information on product sales,

customers, stock management and order fulfilment as well as information from

social media platforms, such as WeChat, through the Nomad Analytics tools.

Managed services include sales and marketing, customs registration, customer

service and order fulfilment. The Group provides services as a registered trade

partner (“TP”) of Tmall Global. The advantage of this TP registration is that the

Group can build and operate stores on behalf of any Client on one of China’s leading

CBEC platform. Nomad Storefront allows Clients to open up tailored eCommerce

channels based on their market entry strategy for China while retaining full control

of their brand and visibility of their sales and operations.

Clients are charged a setup fee, a monthly service fee and a commission on sales.

Typically, Clients are responsible for their own marketing budgets, which can be

executed by the Group or third‐party agencies at the Clients’ discretion.

2.2.1.3 Nomad Commerce

Nomad Commerce is an eCommerce solution that can be tailored to specific

requirements depending on the Client’s objectives for the Chinese CBEC market.

Most of the eCommerce in China takes place on the dominant platforms which

ultimately own the consumer and the data of those consumers. Nomad Commerce

provides Clients with their own eCommerce site with full control over the consumer

experience and data, which is increasingly important to consumer brands.

Websites hosted outside of China can run slowly due to China’s internet restrictions.

Nomad Commerce runs on AliCloud servers within China to remove this issue.

eCommerce stores built on the Nomad Commerce platform are integrated with the

main Chinese payment methods (AliPay, WeChat Pay and UnionPay) which are the

preferred payment methods for Chinese consumers. Integration into these payment

channels can require extensive software integrations. Express shipping is provided

by China’s leading delivery providers through integrations with the Nomad

platform, supporting shipping from overseas or bonded warehouses in CBEC zones.

A content management system means the stores can be built and modified either

by the Client, or internally by the store operations team, to create a customised

experience.

Clients are typically charged an upfront project fee, followed by an ongoing monthly

service fee and a commission on sales.

40

2.2.1.4 Nomad Distribution

Chinese eCommerce has evolved over the last three years to include social

commerce (the use of social media platforms as channels to promote and sell

products and services), which now has grown from approx. CNY 683 billion (£75.6

billion) in 2017 to an estimated CNY 3,703 billion (£410.1 billion)8 in 2020. This

growth has been driven by the widespread use of WeChat amongst Chinese

consumers, the enabling of WeChat for eCommerce, the growth of platforms, such

as Pinduoduo and Douyin, and KOL‐led channels.

Nomad Distribution integrates with multiple social commerce channels and, by

collaborating with Chinese KOLs (who promote Client products to their followers),

provides a way for Clients to penetrate this market and promote their products in

China. Social commerce in China is highly fragmented with a great number of KOLs

working across a range of eCommerce channels and platforms, which makes it

difficult for Western brands to access this route to market in an efficient manner.

Through Nomad Distribution, a KOL’s followers can purchase and receive the Client’s

products via drop‐shipping from the Group’s fulfilment centres in the UK and China.

Since the solution was launched in February 2020, approximately 42,000 orders and

£3.5 million of revenue across 9 brands had been achieved by 30 November 2020.

In November 2020 alone, over £0.5 million of revenue has been achieved.

The Group derives revenue from either applying a commission on sales or on a buy‐

and‐sell margin, negotiated with the Client.

2.2.1.5 Nomad Analytics

Nomad Analytics gives Clients comprehensive marketing and sales data for the

Chinese market in a centralised place, in much the same way as would be available

through their traditional sales channels in Western markets. Real‐time data is

available to Clients across a range of key metrics necessary for insightful

management decision making. A consolidated view of eCommerce sales by channel,

product and customer demographic, along with stock levels, logistics flows

(including delivery times and exceptions) give Clients the visibility and transparency

often lacking when operating through a traditional wholesale distribution

arrangements for sales into China.

The Chinese social media landscape is different to that in the West. For example,

there is restricted access to Facebook, Instagram or Twitter. Instead, local

alternatives dominate along with social media channels that only exist in China.

Whilst the principles for marketing are the same, it is challenging for Western

brands to operate in this environment. Furthermore, viewing data and actionable

insights in the same way they are used to when working on Western platforms

presents additional obstacles. Using Nomad Analytics, a Client receives data driven

insights relating to its social media activity (such as “likes” and “sharing”), follower

demographics and posts. Brand sentiment can be tracked across social platforms in

China, using natural language artificial intelligence (“AI”). This data can then be

correlated back to shopping behaviour on the Client’s eCommerce stores in China.

Access to Nomad Analytics can be provided to Clients as part of the Group’s other

Nomad solutions.

2.2.2 Own Brands

The Directors have identified an opportunity to acquire and develop its own brands through

a ‘buy in the West, build in the East’ strategy. This strategy is focused on identifying brands in

the West, which can be acquired and subsequently developed and launched in the Group’s

41

8 https://www.statista.com/statistics/1129864/china‐market‐size‐of‐social‐commerce/

domestic and international distribution channels. The Group intends to increase sales by

utilising the Nomad platform and sales channels in China.

To date, the Group has implemented this strategy with the acquisition of probiotics brand

Probio7, which was acquired in December 2017. Following its acquisition, based on market

insights, the Group extended the product range from a single product line of probiotics to

cover more categories such as pregnancy, immunity, feminine health and aesthetics, thereby

re‐positioning Probio7 prior to launching it into China. Since acquiring Probio7, revenue from

the product range has increased from £1.2m for the first 11 months prior to acquisition to

£3.4m for the 12‐month period ended December 2020.

The Group intends to make further acquisitions using this strategy in related sectors.

2.2.3 Distribution

In December 2017, the Group acquired the UK and European distribution company, Forever

Young International Ltd (“Forever Young”). Forever Young is an import and distribution

company providing premium, high‐quality health food supplements and beauty products to

UK and European retail companies such as Harrods, Selfridges, Holland & Barrett and Boots,

amongst others. The acquisition of Forever Young increased the Group’s revenue as well as

providing access to UK and European retailers. Forever Young had a small direct‐to‐consumer

(“D2C”) operation when it was acquired which the Group has grown, and which now includes

website and Amazon sales across Europe.

There are many resellers operating in the Chinese eCommerce market across various digital

channels that the Group supplies on a wholesale basis.

2.2.4 Marketing and Business Development Strategy

The Group engages in business development activities for its Nomad solutions and marketing

activities for its own brands. In addition, through its Shanghai office, Clients’ marketing

activities are often supported in order to increase sales.

2.2.4.1 Nomad Solutions Business Development Strategy

The Group’s business development team is responsible for the sale and marketing

of its Nomad solutions and is based in the UK. The Group intends to deploy

resources and teams in other European markets, as well as Japan, in order to

promote its technology and service solutions.

Business development activity takes place between digital and offline channels,

through partners, events and organically by word‐of‐mouth.

Marketing of the Group’s solutions is targeted at brands and retailers that wish to

enter or expand into the Chinese CBEC market. The Group uses traditional digital

marketing, participates in industry conferences and events and works closely with

its partners to develop its Client base. As recognition of the Group and its activities

has grown within the industry, the number of inbound enquiries by potential Clients

is increasing.

2.2.4.2 Own Brands Marketing Strategy

The Group markets its own brand, Probio7, directly to consumers in Europe and

China. Amazon and Western digital marketing platforms are used to promote the

brand online in Europe. In China, Probio7 is promoted across various social

commerce channels via the Group’s Nomad platform and has a Flagship Store on

Tmall Global, one of the leading Chinese CBEC platform. The Directors intend to

increase the marketing activities for the Group’s own brand in the UK, Europe and

internationally.

42

As the Group makes further own brand acquisitions the Group intends to market

these via cross‐selling methods within the Nomad platform and affiliated

eCommerce sites.

2.3 Locations and Facilities

The Group is headquartered in South London and has an office in Shanghai. The London

headquarters comprises 17,000 sq feet of office and warehouse space and currently accommodates

57 employees. The modern, secure facility is configured to support both wholesale distribution of

palletised goods and the pick‐and‐pack of small parcels destined for the consumer in China.

Currently, the parcel volume is handled in‐house and is expected to increase significantly as demand

continues to grow. The location has excellent links to public transport (London Underground,

national and regional train lines) and close links to London Heathrow and London Gatwick airports.

The Group employs 92 people as at November 2020 between the UK and Shanghai. The main

functions of the UK operations are:

Software Development – This comprises a team of 15 software developers, infrastructure engineers,

data scientists and product managers who build and maintain the Group’s technology operations.

Business Development & Account Management – The English, French, Italian, Spanish, German and

Chinese‐speaking team provide Clients with a local point of contact and provide a cultural as well as

linguistic translation of the Chinese market and consumers.

Warehousing & Logistics – A team of 10 full‐time staff handling warehouse management,

eCommerce fulfilment, product finishing and quality control to support the Group’s domestic and

international operations.

Head office, Finance & Administration ‐ The Group finances are controlled from the Group’s head

office in London.

The main functions of the Shanghai operations are:

Sales & Marketing – The team is responsible for the management and development of commercial

relationships with local partners, influencers and celebrities (KOLs), together with marketing

planning, execution and support of promotional events.

Customer Service – Pre‐ and post‐sales support for customers and Clients, including product quality,

logistics and customs enquiries, is managed by a dedicated Customer Service team.

Software Development – The Group is growing its software development team in China giving

broader time zone coverage and local support to meet increasing demand.

eCommerce Store Operations – The design, build and operation of eCommerce stores across a range

of Chinese platforms is handled by a team of specialists including graphic designers, copywriters,

planners and managers.

Finance & Administration – A regional finance operation has been established under the control of

the CFO in London.

With the two centres of operation in the UK and China well established, the Group intends to add

additional locations, as needed, to support international growth in Europe, Asia and North America.

The Group plans to utilise a combination of logistics partners and serviced office providers to support

the Group’s international business development plans. The plug‐and‐play nature of the Nomad

platform’s cloud‐based technology and service solution allows it to be deployed to third‐party

warehouse and logistics providers.

The Group intends to open its next overseas office in Tokyo, Japan, to provide technology and

services to North East Asian Clients who are facing similar challenges accessing Chinese CBEC as their

European Client’s counterparts.

43

2.3.1 Fulfilment and Logistics

Typically, when a western retail company works directly with a Chinese eCommerce platform

or local partner, they are required to commit stock into a Chinese warehouse. The

commitment of stock represents a risk and can incur a significant working capital

requirement, especially if sales do not materialise, as goods must be cleared, returned, or

destroyed. The Group’s technology and operations infrastructure deals with this fundamental

problem. The Group enables its Clients to sell their products directly to Chinese consumers

from overseas locations, avoiding the need to commit large quantities of stock to China as part

of their initial market entry strategy. By working with large Chinese logistics companies, the

Group offers its Clients an effective way to minimise their early stock risk and provide an

efficient delivery service to their consumers.

The Nomad platform’s integrations with Chinese logistics providers, including a leading

Chinese express company and SinoTrans, means the Group can directly ship small parcels

from the UK, Europe or bonded warehouses in China at cost‐effective rates to Chinese

consumers within a short timeframe. The Group’s parcels can be delivered in as little as three

days. This enables Clients to place a small amount of stock on consignment with the Group in

its warehouse in London, lowering their initial stock risk. As the Client’s sales volume grows

and can be more reliably forecasted, stock can be moved to the Group’s Shanghai Free Trade

Zone warehouse which is operated by SinoTrans to offer consumers shorter delivery times and

lower final‐mile delivery costs.

2.4 Organisational Structure

Samarkand Group plc is the holding company for the Group’s existing operations and is the Group’s

ultimate parent company.

The Group has established two Wholly Foreign Owned Enterprises in China, one in Beijing called

Samarkand Global (Beijing) and one in Shanghai called Shanghai Samarkand Technology Service Co.,

Ltd (“Samarkand Shanghai”) in the Shanghai Free Trade Zone.

Samarkand Holdings Limited and all its subsidiaries are 100% directly owned subsidiaries of

Samarkand.

The diagram below illustrates the Group’s current structure:

Due to certain legal restrictions on foreign ownership and investment in China, the Group, similar to

other peer entities with foreign‐incorporated holding company structures, operates its internet

44

content business through various contractual arrangements with variable interest entity (“VIE”)

structure that is incorporated and 100% owned by PRC citizens, or by PRC entities owned and/or

controlled by PRC citizens. The Group’s VIE is EastWest which was established as a domestic company

in China and is an affiliated consolidated entity of Samarkand Shanghai. Samarkand Shanghai is able

to exercise effective control over EastWest through certain contractual arrangements and realise

substantially all of the economic risks and benefits arising from EastWest. It also holds an exclusive

option to purchase all or part of the equity interests in EastWest when and to the extent permitted

by PRC law.

The following diagram is a simplified illustration of the ownership structure and contractual

arrangements EastWest:

Details of the contractual arrangements that give the Group effective control of EastWest can be

found in paragraph 4.2 of Part 10 (Additional Information).

2.5 Investments/M&A Activity

The Company intends to use some of the net proceeds of the Fundraising for acquisitions of

companies and brands in the fin‐tech, lifestyle and health sectors, although no agreements have

currently been entered into. The data and market intelligence that the Group has access to through

its activities in the world’s largest eCommerce market provides it with a deeper understanding of

trends and insights that will be deployed in its M&A strategy.

An example of this was the acquisition of Probio7 and subsequent development of new product lines

for the Chinese market. A female‐focussed body shaping product was launched on a number of KOL‐

led channels and the Probio7 Tmall global store, it generated over £0.7m sales between April 2020

and November 2020.

The Group operates in a high‐growth, fast moving industry and expects M&A to play and important

role in the development of the Group.

2.6 Historical Trading Review

The following information should be read in conjunction with the Group Financial Information

included in Part 7 “Historical Financial Information”.

The Group has achieved rapid growth during the period covered by the Historical Financial

Information with comparatively little funding. The Group has so far been funded through a seed

round from the Founders of £319,234, followed by a loan from UK retailer, Iceland Foods Ltd, in 2017

45

of £2.2m. This was used to increase the operational capability of the Group, begin development of

the Nomad platform and for a strategic acquisition. In December 2017, the Group acquired the UK

distribution company, Forever Young, for £2.1m. In July 2019 a loan of £1.5m was provided by

Smollan, followed by a further £350,000 in January 2020 and term loan of £1.1m in September 2020

to provide additional working capital. The original loan of £2.2m was repaid to Iceland Foods Ltd in

September 2020. For the Review Period from 1 April 2018 to 30 November 2020, £27.3m of revenue

has been generated by the Group from a net funding amount of only £3.3m.

Historically, the Group has experienced seasonality in its trade. The major eCommerce shopping

festivals in China (occurring in June, November and December) are often periods of higher revenue.

The Group has experienced a slow‐down in UK sales during the month of August, as well as during

the Christmas and New Year holiday period and in China during the Chinese New Year period. During

the period covered by the historical financial information, this seasonality has been skewed by new

product launches as well as the introduction of new revenue streams.

The Group achieved £6.8m in revenue in the year ended 31 March 2020 with a gross margin of 48%

compared to £4.5m of revenue in the year ended 31 March 2019 with a gross margin of 35%.

In the eight‐month period ended 30 November 2020, revenue excluding exceptional revenues were

£10.2m, an increase of 167% from the previous period (30 November 2019; £3.8m) which is largely

attributable to the increased use of the Nomad platform, with more than 37,000 additional orders

(an increase of 106%) contributing £3.9m of revenue. Gross margin for the eight‐months ended 30

November 2020 was 57%, compared to 43% for the previous period.

The Group has been repositioning its distribution business in order to develop and grow service‐

based revenues and ultimately improve gross margin. For the year ended 31 March 2020, total

revenue generated from distribution activities was £3.2m with a gross margin of 37%.

During the eight‐month period to 30 November 2020, distribution revenue was £3.7m, with a gross

margin of 50%, compared to revenue of £2.0m and gross margin of 35% during the previous period.

Overall revenue from the Nomad platform was £1.5m for the year ended 31 March 2020 (£1.3m

Nomad Distribution, £0.2m Nomad Storefront and £0.1m Nomad Commerce). Overall gross margin

for the year ended 31 March 2020 was 65%. The increased gross margins are attributable to selling

increased volume of the Group’s own brand products and premium beauty products with a high

gross margin, compared to the sale of low gross margin products previously.

During the eight‐month period ended 30 November 2020, Nomad revenue increased by £3.3m

(+550%) to £3.9m (30 November 2019: £0.6m), primarily due to growth in Nomad Distribution

revenue, which increased by 566% to £3.4m (30 November 2019: £0.5m), which can be attributed

to significant promotions by an influential KOL affiliated with Nomad Distribution. Nomad

Storefront’s revenue increased 396% to £0.4m (30 November 2019: £0.1m). Nomad Commerce

accounted for £0.1m (30 November 2019: nil).

For the year ended 31 March 2020, revenue generated from Probio7 sales was £2.1m, growth of 41%

from £1.5m in 31 March 2019. Gross margins were 53% and 46% respectively. The growth in revenue

can be attributed to the introduction of selling the Probio7 product range on eCommerce platforms

in China, steady 10% growth in UK retail sales and the continued growth of online sales from the

Forever Young website and Amazon in Europe.

During the eight‐month period to 30 November 2020, Probio7 revenue grew by £1.4m to £2.6m (of

which £1.4m was via eCommerce channels, accounting for more than 50%) with a gross margin of

70%, compared to revenue of £1.3m and a gross margin of 50% for the previous period. The gross

margin improvement is due to increased direct‐to‐consumer sales of the Probio7 product range,

which generates higher gross margins.

46

2.7 Trend Information

The Group continues to increase the number of orders processed by the Nomad platform and

delivered to customers. In Q3 FY 2021 (October to December 2020) the number of orders processed

and delivered was more than 27,000, compared to approximately 17,500 parcels in the same period

the previous year. This trend is continuing in the fourth quarter of the current financial year, as

compared to the fourth quarter of the previous financial year.

The number of product lines sold on the Nomad platform has steadily increased over time. The

Group sold 413 product lines during November 2020 and 195 in November 2019.

In the eight‐month period ended 30 November 2020, the Group’s gross margin was 56.9% (in 2019:

43.0%). As the Group has been transitioning away from the B2B distribution model in order to

develop its B2C capability, the increasing gross margin performance reflects the Group’s focus on

technology and services, which is typically higher margin than distribution sales. For the eight‐month

period ended 30 November 2020, Nomad Technology represented 37.9% (2019: 15.6%), brand

ownership 25.7% (2019: 33.3%) and Distribution 35.9% (2019: 51.1%) of total revenues (excluding

exceptional revenues). The Directors expect the increasing gross margin and growth of Nomad

Technology to continue as existing Clients purchase additional solutions and new Clients are added.

2.8 Key Strengths

A strong and experienced management team

The Executive Management of Samarkand comprises a team of individuals who worked successfully

together in previous digital businesses, that were sold to Gaming Realms plc (AIM: GMR) achieving

a significant uplift for shareholders and investors. In addition, the Board on Admission includes

senior Non‐Executive Directors with a wealth of relevant corporate experience in eCommerce, HR

and finance. Tanith Dodge, Independent Non‐Executive Chairperson, is currently NED; Chairperson

of Remuneration Committee and Organizational Health Committee on the Board of Robert Walters

and member of the Advisory Council to Pricewaterhouse Coopers, previously HR Director for Marks

& Spencer Group Plc. Keith Higgins, Independent Non‐Executive Director who currently serves as

Chief Customer Development Officer and previously served as Global Senior Vice President

eCommerce for Unilever. Jeanette Hern, group CFO of Smollan also serves as non‐executive Director.

Strong technical ability

The CEO is a software developer by training and members of the Group’s executive and senior

management team have degrees in computer science. Technology is central to the group’s strategy

and execution and as of November 2020, 15 of the 92 employees of the Group are working in its

software development department.

Widespread shareholdings among staff and shareholder engagement

The Directors believe that employee stakeholders are important to the success of the Group, aligning

the interests of employees and shareholders. Not including the Founders, there is a wide

shareholding amongst staff with employees holding 14.7% of shares and 2.8% holding options over

shares in the enlarged issued share capital of the Company.

Strong track record of increasing growth

The Group has shown significant resilience and maintained triple digit sales growth despite

disruptions in global supply chains, consumer confidence and spending in the face of COVID‐19.

Revenue during the eight‐month period ended 30 November 2020, during the period of the

pandemic, was £10.2m (excluding Exceptional Revenue) up from £3.8m for the same period in the

previous year.

47

A cross-cultural and multilingual organisation

The Group is cross‐cultural and multi‐lingual organisation that operates across time zones and

geography. In Europe the business and account management team consist of English, French,

Spanish, Italian and Mandarin speaking members who are able to communicate directly with Clients.

The Group has a proven ability to provide a framework of support and collaboration to overcome

cultural and language barriers between Chinese and European companies.

A strong and growing reputation for Client service and operational excellence

The Group has a growing reputation within the eCommerce industry and was recognised by the

British Chamber of Commerce in China as a finalist in the 2020 UK Exporter of the Year awards. The

Group has received numerous positive testimonials from its Clients and its Nomad Storefront

solution has 100 per cent. client retention rate.

Strong partnerships enabling rapid growth

The Group intends to build further key business relationships and partnerships, where it will assist

the Group’s overall strategy. The Group already works closely with a leading Chinese express

company and has launched a joint technology solution for one of Europe’s biggest eCommerce

companies. The first joint project together was delivered in November 2020 for one of Europe’s

largest eCommerce companies.

Nomad technology enabling the growth of own brands

The Directors believe that a combination of brand ownership and eCommerce technology will be a

competitive advantage in the future. Brand ownership allows the Group to exercise new technology

before providing these services and solutions to Clients. The Group’s Nomad technology and insight

has supported its own brand, Probio7, to grow rapidly in the Chinese market, generating £1.7 million

of additional sales through this strategy in the first 18 months of launch. The Directors expect this

trend to continue.

Attractive mix of products and solutions to Clients and consumers

The traditional method of entering the Chinese eCommerce market relies on working with

distributors and trade partners and either placing stock on consignment in China or selling stock on

a wholesale basis sacrificing margin and control for access to the market. This can be costly and

represent a stock risk which can preclude many brands that have great potential in China from being

able to consider entering the market.

The Nomad suite of solutions allows a Client to take the first steps toward this market on lower cost

basis and with fulfilment centres in the UK and Europe with a lower risk on stock. This also means

that consumers in China can experience interesting new products from companies that would have

otherwise not been able to reach them.

Strong financial track record

In a short timescale the Group has demonstrated high growth in sales and gross profit. Sales have

increased from £4.5m in the year ended 31 March 2019 to £6.8m in the year ended 31 March 2020,

with further increases in sales to £16m in the eight‐month period to 30 November 2020. Gross profit

has increased from 35 per cent. in the year ended 31 March 2019 to 48 per cent. in the year ended

31 March 2020, with a further increase to 57 per cent. in the eight‐month period to 30 November

2020. This has been achieved through strong financial management and with limited capital

resources. Having been funded to the net amount of £3.3m since formation the Group has generated

over £27.3m of revenue between April 2018 and November 2020.

During this period, EBITDA losses incurred as the business invested in growth of £1.0m in the year

ended 31 March 2019 and £0.8m in the year ended 31 March 2020 have resulted in a sharp

reduction with EBITDA profit of £0.4m in the eight months ended 30 November 2020 (excluding

exceptional revenues).

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2.9 Strategy

The business of Samarkand began in 2016 with the vision to allow businesses from any country

outside China to sell their products on a more D2C basis enabled by technology and on similar terms

as they can do in other international markets. This commenced with the Group providing UK Clients

with a way to access the Chinese CBEC market primarily through a B2B model. The creation of the

Nomad platform is the realisation of that vision and has now facilitated over one hundred thousand

transactions from consumers in China.

The Client portfolio initially centred around UK based SME brands from the health and beauty

sectors. The portfolio now extends to European Clients including a German online retailer of

homeware products, with discussions underway with businesses in mainland Europe and globally.

The Group’s solutions can be utilised by companies in many other countries, and in other industry

sectors, looking to access the Chinese CBEC market. As at 30 November 2020, the contracted

revenue for the Nomad technology and service solutions is £1.9m. Foundations have been built

operationally, financially, and technologically to expand operations into other geographies, sectors

and Clients of increasing size and scale.

Revenue growth will be driven by opening additional eCommerce stores and channels on behalf of

Clients and for the Group’s own brands. As new eCommerce channels and methods of selling emerge

and gain traction in China, the Group will develop solutions to address them. Douyin (known as

TikTok outside of China) for example has rapidly developed its eCommerce capability and the Group

plans to launch its first store on the platform in 2021.

The Nomad Distribution solution has demonstrated the power of an integrated approach to working

with influencers in China through a drop‐shipping structure. In the 10 months to 30 November 2020,

since Nomad was integrated with WeChat eCommerce software Youzan approximately 42,000 orders

have been received from followers of a number of Chinese influencers that have been fulfilled from

the Group’s facilities in the UK and China. The Group intends to integrate Nomad into additional

eCommerce platforms that support other groups of influencers to give wider coverage and to build

on this successful model.

Live‐streaming, whereby a KOL introduces and sells products in real time to their audience, has

increased rapidly in China from 133bn RMB (£15bn) in 2018 to 961bn RMB (£109bn)9 in 2020. The

Group has focused efforts to take advantage of this method of selling and now regularly works with

live‐streamers across multiple eCommerce platforms. A growing number of live‐streamers that

produce positive ROI is being cultivated that can be used across brands and categories to increase

repeat revenue. The number of live‐streamers and platforms that the Group operates on and the

Nomad platform is integrated with will be increased.

The Group will continue to develop innovative software solutions for the complex and evolving

Chinese eCommerce industry. It will do this through recruitment into its software development

teams and, where appropriate, acquisition of businesses that have developed complementary

products and solutions.

The Group’s “buy in the West, build in the East” strategy which has already been deployed for its first

acquisition, Probio7. In the three years since its acquisition the Group has grown the revenue of

Probio7 from £1.2m to £3.8m in 2020. This is in comparison to the three years prior to the

acquisition where revenue increased from £835k to £1.2m between 2014 and 2017.

49

9 https://www.statista.com/statistics/1127635/china‐market‐size‐of‐live‐commerce/

10

The Group has identified significant opportunities to buy brands in Europe that have potential in

China but without the means to access the market. The Group intends to make acquisitions of brand

assets, primarily in the health and beauty sectors that the Directors believe will experience high

growth when incorporated into the distribution and eCommerce channels developed by the Group.

2.10 ESG Policies

The Directors believe that creating an environmentally sustainable and purpose driven business is in

the long‐term interests of both our shareholders and the societies in which the Group operates.

The Group’s sustainability and society committee will be chaired by Keith Higgins and has the

objective of reviewing all aspects of Group operations to ensure that sustainability and its positive

contribution to society is incorporated in all of the Group’s development.

Examples of the commitment to operating for the benefit of environmental sustainability and

societal good include:

• Carbon offsetting shall be provided as a default option for clients using the Nomad Checkout

product;

• Not making use of zero hours contracts for any Group employee;

• The Group shall pay the London living wage for all employees based in London;

• The Group supports employee stock participation and rewards;

• Encouraging diversity at all levels of the group in gender, ethnicity and age. Of the board

directors and senior management 54% are male and 46% are female. 50% of senior

management positions are held by BAME employees. The groups oldest employee is aged 73

and the youngest is 22; and

• Supporting the China Britain Business council through membership and corporate

sponsorship encouraging cooperation and trade between the UK and China.

50

10 Source: Company data

2.11 Hosting and Disaster Recovery

The Group’s hosting and database services are provided by Alibaba Cloud with live replica standbys

in different cloud zones (for example being based in different cities with different power and

networking infrastructure) that can failover automatically in seconds in the event of a single zone

failure. This ensures high availability of data in the event of a catastrophic failure of a specific cloud

zone. Data is backed up daily to a separate cloud region that can be restored from in the event of a

multi‐zone failure in the main region.

All source code is held in Gitlab, who in turn use Google Cloud Platform as their cloud provider. This

puts the Group’s source code in the US under Google Clouds object storage replication.

As well as application code, all infrastructure configuration is also stored as code using the

infrastructure‐as‐code tool Terraform. This means that in the unlikely event of a complete failure of

all production systems in Alibaba Cloud including application nodes and loss of all infrastructure and

configuration, the entire production architecture could be restored.

The Group has been certified as ISO 27001 compliant, which addresses data protection, cyber

security and business continuity provisions. The Group’s core services are hosted on Alibaba Cloud

in China. This enables the Group to keep customer data on Chinese nationals inside China, avoiding

Chinas complicated cross border data transfer requirements, whilst accessing the necessary data for

order fulfilment from the UK at high speed over Alibaba Clouds Cloud Enterprise Network, a high

bandwidth pipeline between China and Europe.

The Alibaba Cloud threat detection service provides a machine learning based threat analysis engine

that recognizes, analyses, and alerts of security threats in real‐time. The threat detection service is

constantly running across all of the Group’s infrastructure inside Alibaba Cloud, which comprises all

of the Group’s production architecture.

All of the Group’s service endpoints and web storefronts whether public or internal are SSL secured

with 256‐bit encryption. The Group’s production databases are hosted using the Alibaba Cloud

managed RDS service ApsaraDB RDS for Mongo DB, Postgres and Redis. This service is ISO20000 and

PCI DSS certified. All databases are accessible only from inside Samarkand Virtual Private Cloud (VPC)

and maintain a full audit trail of all user access.

Hashicorp vault is used for all secrets management. Vault is FIPS 140‐2 compliant and stores and

manages authentication details by encrypting data at rest and in transport allowing secure retrieval

of secrets from across the Group architecture.

The Group follow OWASP (Open Web Application Security Project) coding standards when producing

software for the web, and use OWASP recommended build pipeline plugins to automate the testing

of code against OWASP standards.

2.12 IP/certifications

The Group owns trademarks and other proprietary rights that are necessary to its activities. The

Group owns 54 trademarks in the UK, Europe, USA and China. The Group owns 15 internet domains

related to its brands and businesses. No patents are currently held, instead a combination of

trademarks, trade secrets, confidentiality agreements and other measures to establish and protect

its proprietary technology have been put in place.

The Group holds the international information security and management ISO 27001 certification,

allowing it to tender for contracts with larger enterprises.

2.13 Insurance/Liability

The principal risks covered by the Group’s insurance policies relate to property damage, business

interruption, employers, product and public liability, and certain other claims consistent with

customary practice in the industries in which the Group operates. The Group has not had any

51

material insurance claims, nor has it suffered any material loss following any uninsured claim, in the

last three years.

2.14 Impact of the Pandemic

Whilst the full ramifications of the global pandemic are difficult to predict there is a consensus that

eCommerce will have benefited in both in Western and Chinese markets. China had over 850m

internet users in 201911 and eCommerce penetration was at 74% in H1 2019. With a nationwide

lockdown in China in the first few months of 2020 many consumers resorted to ordering online,

many for the first time. During this time the number of internet users increased to 905m and

eCommerce penetration increased to 79.7% during H1 2020 which is expected to further increase

this penetration rate.12 This equates to 92m new eCommerce consumers being added during this

period or more than the entire population of Germany.

Health and well‐being is a focus for the Group, representing a large proportion of its sales, and the

Directors believe this sector will experience significant growth globally and specifically in China. The

McKinsey & Company China Consumer report 2021 found that 72% of respondents indicated they

intend to pursue a healthy lifestyle and 75% showed a strong preference to eat more healthily post

crisis.13 In Europe, a GSK/IPSOS survey of participants in Europe found that 65% are now more likely

to consider their health in day‐to‐day decision making.14

The Group, with its diversified activities, revenue streams, geographical operations and focus on

eCommerce has demonstrated high resilience during the pandemic and is well positioned to

accelerate and capitalise on its positioning once the situation returns to the (new) normal. One

example is Probio7 which, like many consumer brands, was severely disrupted in the UK offline retail

space due to lockdowns and lower foot traffic. In calendar year 2019 UK offline retail accounted for

79% of the sales revenue for the brand. As a result of the COVID‐19, sales decreased from £1.6m in

2019 to £1.2m in 2020 in UK retail. However, over the same period the group increased sales online

in Europe from £345k in 2019 to £625k in 2020 with £1.5m of additional sales in China during 2020.

The net effect from the Group’s diversified strategy has resulted in the brand growing by 66% despite

the pandemic from £2.1m in 2019 to £3.4m in calendar year 2020.

15

For brands and retailers the pandemic has highlighted the need to open new markets, address new

audiences and to focus on growth through eCommerce. The Group, through its solutions and

52

11 https://www.statista.com/statistics/265140/number‐of‐internet‐users‐in‐china/

12 https://www.statista.com/statistics/302071/china‐penetration‐rate‐of‐online‐shopping/

13 https://www.mckinsey.com/~/media/mckinsey/featured%20insights/china/china%20still%20the%20worlds%20

growth%20engine%20after%20covid%2019/mckinsey%20china%20consumer%20report%202021.pdf

14 https://www.gsk.com/en‐gb/media/resource‐centre/covid‐19‐prompts‐increased‐focus‐on‐self‐care/

15 Source: Company data

services, opens one of the largest markets and does so through eCommerce meaning it is very well

positioned for the macro‐economic changes that have taken place and the transformations that are

happening because of the pandemic.

The Group has not been immune from the effects of the pandemic with supply chains effected for

many of its Clients causing issues with stock availability. In some cases, this has resulted in growth

being less than anticipated.

With teams in both the UK and China the group was ideally positioned to source and supply products

necessary for the coronavirus response. As a result, a £5.8m government contract from the

Department of Health and Social Care (DHSC) (the “Exceptional Revenue”) was awarded to the

company in April 2020 for the supply of personal protective equipment. This contract was

successfully fulfilled.

53

Part 4

Directors, Proposed Directors, Senior Managers and Corporate Governance

1. Directors

The following table lists the names, positions and ages of the Directors and the Proposed Directors.

Name Age Position

Tanith Dodge 60 Independent Non-Executive Chairperson*

David Hampstead 41 Chief Executive Officer

Simon Smiley 40 Chief Operating Officer

Jeanette Hern 53 Non-Executive Director*

Keith Higgins 58 Independent Non-Executive Director*

* On Admission

The proposed Board comprises a team of individuals who individually and collectively bring considerable

experience to bear in promoting and managing the interests of the Group.

A summary of the management expertise and experience of each of the Directors and the Proposed

Directors is set out below:

Tanith Dodge – Independent Non-Executive Chairperson on Admission

Tanith is an International Business Leader working as a member of senior executive teams and providing a

commercial approach to the business and people agenda and has over 35 years of experience working as

an HR Director across a broad sector of International businesses. Her previous positions included Group HR

Director Bicester Village Collection, member of the Management Committee and Group HRD at Marks and

Spencer Group PLC and at WH Smiths PLC. Tanith has held senior HR roles at Intercontinental Hotels,

Diageo, Prudential PLC and Allied Domecq.

Her current Board experience includes Non-Executive Director and Chair of Remuneration Committee,

Chair of Organisational Health Committee and member of Audit Committee and Nominations Committee

at Robert Walters PLC. In addition, she is a member of the Advisory Council for PriceWaterhouseCoopers

responsible for advising internal business leaders on a range of subjects and Trustee for Ambitious About

Autism. She has also been a director of Regents Inns Plc and Busy Bees Plc and is a former Trustee of Kids

Out and former board member of CIPD.

Keith Higgins – Independent Non-Executive Director on Admission

Keith has 20 years of eCommerce experience with two of the largest consumer goods companies in the

world. From 2000 to 2010, Keith held senior positions at Proctor & Gamble (“P&G”) as Innovation Centre

& eCommerce Director (2000-2006) and then as eCommerce and Pharmacy Channel Director (2000-2010).

In 2010, Keith moved to Unilever to become Vice President eCommerce and Channel Development,

becoming Senior Vice President of eCommerce in 2012 and Executive Vice President eCommerce in 2013.

In 2010, after 10 years heading up Unilever’s global eCommerce strategy he was promoted to a C-level role

as Chief Customer Development Officer.

Keith’s experience across two decades at P&G and Unilever brings a unique level of insight, understanding

and network in the global eCommerce industry to the board.

David Hampstead – Chief Executive Officer and Co-founder

David began his career as a software engineer at large blue-chip firms such as Hewlett Packard and

Vodafone before moving to a mobile technology start-up leading a team of engineers building software for

mobile phone companies across EMEA and Asia. In 2008 David returned to the UK to establish QuickThink

Media and Bejig Ltd. Both businesses were subsequently combined and floated on the London AIM Market

54

as Gaming Realms plc (GMR:LSE) where he served as Chief Technology Officer. As group CTO at Gaming

Realms David was responsible for building and managing a 70-person strong technology team spread across

the US and Europe building a state-of-the-art technology platform for the highly competitive online gaming

industry.

Simon Smiley – Chief Operating Officer and Co-founder

Simon started his career as a store management trainee in 2004 with Rank PLC in London. Later Simon co-

founded QuickThink Media with David Hampstead. Post QuickThink’s exit to Gaming Realms PLC, Simon

became the group’s Chief Marketing Officer planning and executing large consumer acquisition campaigns.

Simon holds an MA (hons) in economic and social history.

Jeanette Hern – Non-Executive Director

Jeanette has considerable experience in international finance having joined Smollan as Global CFO in March

2015. Jeanette has played a key role in in the geographic expansion of the Group, managing the successful

integration of acquired businesses, as Smollan’s footprint grew from 22 to 59 countries across the world.

Prior to joining Smollan, Jeanette was a partner at Grant Thornton for 26 years, becoming the youngest

partner and second female partner. Promoted to Deputy CEO during her tenure, her position allowed her

to successfully champion transformation. Jeanette is currently a director of Headcount Worldwide Field

Marketing Limited, Flixmedia Limited, Advantage Smollan Limited, Partnership SPV 1 Limited,

Intermarketing Agency Limited, Intermarketing Group Limited and Liaison Print Solutions Limited.

She is a qualified Chartered Accountant – CA(SA) and a member of the South African Institute of Chartered

Accountants (SAICA).

2. Senior Managers

In addition to the executive management on the Board, the Group employs the following Senior Managers:

Eva Hang – Chief Financial Officer and Company Secretary

Eva is responsible for directing the global financial strategy, planning and forecasting for the Group. She is

also responsible for ensuring that all financial management information and reporting is in line with the

strategic and operational objectives of the business. Having spent two years in a fintech start-up in London,

Eva previously served as Group Financial Controller at Gaming Realms plc (LSE:GMR) where she supervised

all aspects of the finance function and was responsible for the implementation of several acquisitions and

disposals. Eva holds a BSc in Computer Science and a BCom in Finance and Accounting from the University

of Sydney and was previously an audit manager at BDO in the UK. She is a Chartered Accountant.

Languages Spoken: English and Cantonese

Nationality: Australian

Location: London, UK

Paul Gambrell – Chief Technology Officer

Paul is architect of the groups technology strategy and is responsible for the global technology delivery

team. Paul has a successful history of growing start-up tech platforms, building and leading high performing

development teams. Paul is a specialist in cloud technologies and previously served as Chief Technology

Officer at the AIM listed Gaming Realms plc where he led their global technology division and built their

cloud-based gaming platform. Paul holds a BSc in Computer Science from the University of Nottingham.

Languages Spoken: English

Nationality: British

Location: London, UK

55

Sam Deacon – Chief Commercial Officer

Sam is responsible for commercial relationships at Samarkand, brand management and new business

development. Previously Sam served as Commercial Director of the Nasdaq First North Growth Market

listed Ayima Group AB where he led global business development and was responsible for the negotiation

of client contracts. Sam holds a BSc in Marketing from Lancaster University and previously worked in radio

and TV advertising at Dentsu Aegis Network and Global Media & Entertainment.

Languages Spoken: English

Nationality: British

Location: London, UK

Emily Chang – Chief Strategy & Investment Officer

Emily leads business strategy and investor relations for the group. She works across all levels of the

organization and across operations to ensure strategic alignment. Emily was previously the founder of an

e-commerce business in Hong Kong. Emily previously worked at several top investment banks including

Goldman Sachs where she held positions in technology investments and equity analysis.

Languages spoken: Mandarin and English

Nationality: Chinese

Location: China, HKSAR

Weiting Cai – Managing Director, China

Weiting is responsible for Samarkand’s China operations team and leads the groups commercial

development in China. Having built the China business of Blackmores’ from challenger brand to market

leader, Weiting is passionate about fitting international brands into the vast opportunity of Chinese

eCommerce. Raised in Wenzhou China where he lived and learned from various successful entrepreneurs.

Weiting holds a bachelor’s degree in applied biological science from Zhejiang University and a master’s

degree in Nutrition science from North Caroline State University USA.

Languages Spoken: Chinese and English

Nationality: Chinese

Location: Shanghai, China

Jack Porteous – Client Services Director

Jack is responsible for relationships with clients and partners and ensuring excellence in service delivery. He

also takes a leading role in new business development, both through his existing network in the retail and

e-commerce industries and through other channels including further personal outreach, speaking at key

industry events, and professional networking. He previously spent more than three years as the Sector

Director of Retail & E-Commerce for the China-Britain Business Council, the UK’s leading NGO promoting

UK-China trade, and prior to that worked for both the UK government’s Department for International Trade

(formerly UK Trade & Investment) advising consumer brands on international expansion and living in

working in China. Jack holds a BA in Modern Foreign Languages from the University of Newcastle Upon

Tyne, graduating with a 1st class degree and a joint major in Chinese and Spanish.

Languages Spoken: English, Mandarin Chinese, Spanish, and French

Nationality: British

Location: London, UK

56

Ava Liu – Managing Director International

Ava is responsible for the international cross border technology commercialization of the group. Having

previously spent 6 years as GM in an international cross border ecommerce start up, Ava now leads the

group’s international technology client and strategic supplier relationships. Ava holds an MSc in

International Human Resource Management.

Languages spoken: English and Chinese

Nationality: Chinese

Location: London and Shanghai

Shiwen Xiong – Director of Finance APAC

Shiwen is responsible for overseeing all aspects of financial management across the Asia-Pacific region. She

joined Samarkand in 2017 as Group Financial Controller where she managed aspects of finance across the

group including accounting and management reporting, business strategy and development, cash flow

management, internal control, and compliance. Before joining Samarkand, she was an Audit Associate at

EY London office where she conducted financial audits of public companies in consumer products industry.

Shiwen holds a BSc in Computer Science (with a minor in Business Administration) from Wuhan University

and an MSc in Finance from University of Birmingham and is an ACCA Chartered Accountant.

Languages Spoken: English and Mandarin

Nationality: Chinese

Location: Shanghai China and London UK

Siwei Lu – Chief Marketing Officer

Siwei is responsible for all aspects of Samarkand’s China marketing efforts, including e-commerce, customer

research, strategy, brand communication, content and design. Siwei joined Samarkand in 2016 as a member

of the founding team.

Siwei holds a B.A. in International Relations and Affairs from China Foreign Affairs University and an MBA

from Durham University.

Languages: English and Mandarin

Nationality: Chinese

Location: London and Shanghai

3. Corporate Governance

The Board, which will meet formally at least 6 times a year, is responsible for the management of the

business of the Group, establishing the policies and setting the strategic direction of the Group. The

Company will also hold additional Board meetings as and when required. It is the Directors’ responsibility

to oversee the financial position of the Group and monitor the business and affairs of the Group on behalf

of the Shareholders, to whom they are accountable. The primary duty of the Directors is to act in the best

interests of the Company at all times. The Board also addresses issues relating to internal control and the

company’s approach to risk management and has adopted an anti-corruption and bribery policy.

The Group has elected to comply with the regulations of the QCA Code of Corporate Governance from

Admission.

In addition, the Group has entered into a relationship agreement (the “Relationship Agreement”) with

Smollan. Further information on the Relationship Agreement is set out in paragraph 11.5 of Part 10

(Additional Information).

57

3.1 The Board

On Admission, the board will comprise five members, consisting of the Chief Executive Officer, David

Hampstead, the Chief Operating Officer, Simon Smiley, and three non-executive directors, being

Tanith Dodge, Keith Higgins and Jeanette Hern (the “Non-Executive Directors”). The Directors regard

Tanith Dodge and Keith Higgins as being independent.

3.2 Committees of the Board

The Board has established Nomination & Remuneration, Sustainability and Audit Committees, each

with formally delegated duties and responsibilities with written terms of references. From time to

time, separate committees may be set up by the Board to consider specific issues when the need

arises.

Audit and Risk Committee

The Audit and Risk Committee assists the Board in, amongst other matters, discharging its

responsibilities with regard to financial reporting, external and internal audits and controls, including

reviewing the Group’s annual financial statements, reviewing and monitoring the extent of non-audit

work undertaken by external auditors, advising on the appointment, reappointment, removal and

independence of external auditors, and reviewing the effectiveness of the Group’s internal audit

activities, internal controls and risk management systems. The ultimate responsibility for reviewing

and approving the annual report and accounts and the half-yearly reports remains with the Board.

The Audit and Risk Committee is also responsible for (i) advising the Board on the Group’s risk

strategy, risk policies and current risk exposures, (ii) overseeing the implementation and

maintenance of the overall risk management framework and systems, and (iii) reviewing the Group’s

risk assessment processes and capability to identify and manage new risks. The Audit and Risk

Committee will meet with appropriate employees of the Group at least once annually.

The membership of the Audit and Risk Committee comprises Jeanette Hern (as its Chairperson),

Tanith Dodge and Keith Higgins.

The Audit and Risk Committee will meet formally two times a year at appropriate intervals in the

financial reporting and audit cycle and otherwise as required.

Remuneration and Nomination Committee

The Remuneration and Nomination Committee assists the Board in determining its responsibilities

in relation to remuneration and nominations, including, amongst other matters, making

recommendations to the Board on the Group’s policy on executive remuneration, determining the

individual remuneration and benefits package of each of the executive directors.

The membership of the Remuneration and Nomination Committee comprises Tanith Dodge (as its

Chairperson), Keith Higgins and Jeanette Hern.

The Remuneration Committee will meet formally twice a year and otherwise as required.

Sustainability Committee

The Sustainability Committee assists the Board in determining its responsibilities in relation to

sustainability aspects of the Group’s operations to ensure that sustainability and its positive

contribution to society is incorporated in all aspects of the Group’s development.

The membership of the Sustainability Committee comprises Keith Higgins (as its Chairman), Tanith

Dodge and Jeanette Hern.

The Sustainability Committee will meet formally twice a year and otherwise as required.

58

3.3 Share Dealing Code

With effect from Admission, the Company will operate a code of securities dealings in relation to the

Ordinary Shares in compliance with Article 19 of the Market Abuse Regulation. The code will apply

to any person discharging management responsibility, including the Directors, the senior

management and any closely associated persons and applicable employees.

The purpose of the Share Dealing Code is to ensure that persons discharging managerial

responsibility and persons connected with them do not abuse, and do not place themselves under

suspicion of abusing, price-sensitive information that they may have or be thought to have,

especially in periods leading up to an announcement of financial results. The Share Dealing Code sets

out a notification procedure which is required to be followed prior to any dealing in the Company’s

securities.

59

Part 5

Details of the Fundraising and Admission to Trading

IMPORTANT INFORMATION FOR INVITED INVESTORS ONLY REGARDING THE FUNDRAISING.

THE INFORMATION AND TERMS CONTAINED IN THIS DOCUMENT ARE RESTRICTED AND ARE NOT FOR

RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO

OR FROM THE UNITED STATES, THE REPUBLIC OF IRELAND, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC

OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR

DISTRIBUTION WOULD BE UNLAWFUL.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE FUNDRAISING. THIS DOCUMENT AND

THE FUNDRAISING TERMS ARE FOR INFORMATION PURPOSES ONLY AND IS DIRECTED ONLY AT:

(A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (“EEA”) WHO ARE QUALIFIED

INVESTORS AS DEFINED IN SECTION 86(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS

AMENDED (“QUALIFIED INVESTORS”), BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(E)

OF REGULATION (EU) 2017/129 AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUROPEAN

UNION (WITHDRAWAL) ACT 2018 (THE “PROSPECTUS REGULATION”) AND TO THE EXTENT IMPLEMENTED

IN THE RELEVANT MEMBER STATE; AND (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WO ARE

PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING

WITHIN ARTICLE 19(5) (INVESTMENT PROFESSIONALS) OF THE FINANCIAL SERVICES AND MARKETS ACT

2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE “ORDER”); (II) ARE PERSONS FALLING

WITHIN ARTICLE 49(2)(A) TO (D) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS,

ETC.) OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY

COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”).

THIS DOCUMENT AND THE INFORMATION IN IT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS

WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS DOCUMENT MUST SATISFY

THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS

DOCUMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH

RELEVANT PERSONS. THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF

ANY SECURITIES IN THE GROUP.

THIS DOCUMENT IS NOT AN OFFER OF SECURITIES FOR SALE INTO THE UNITED STATES. THE ORDINARY

SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT

1933, AS AMENDED (THE “SECURITIES ACT”) OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY

STATE OR JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED,

DIRECTLY OR INDIRECTLY, IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A

TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN

COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE

UNITED STATES. SUBJECT TO CERTAIN EXCEPTIONS AND AT THE SOLE DISCRETION OF THE GROUP, THE

ORDINARY SHARES ARE BEING OFFERED AND SOLD ONLY OUTSIDE THE UNITED STATES IN “OFFSHORE

TRANSACTIONS” WITHIN THE MEANING OF, AND IN ACCORDANCE WITH, REGULATION S UNDER THE

SECURITIES ACT AND OTHERWISE IN ACCORDANCE WITH APPLICABLE LAWS. NO PUBLIC OFFERING OF

THE ORDINARY SHARES IS BEING MADE IN THE UNITED STATES, THE UNITED KINGDOM OR ELSEWHERE.

NO MONEY, SECURITIES OR OTHER CONSIDERATION FROM ANY PERSON INSIDE THE UNITED STATES IS

BEING SOLICITED AND, IF SENT IN RESPONSE TO THE INFORMATION CONTAINED IN THIS DOCUMENT,

WILL NOT BE ACCEPTED.

EACH INVESTOR SHOULD CONSULT WITH ITS ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED

ASPECTS OF AN INVESTMENT IN ORDINARY SHARES. THE DISTRIBUTION OF THIS DOCUMENT, ANY PART

OF IT OR ANY INFORMATION CONTAINED IN IT MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS,

AND ANY PERSON INTO WHOSE POSSESSION THIS DOCUMENT, ANY PART OF IT OR ANY INFORMATION

CONTAINED IN IT COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, SUCH RESTRICTIONS.

60

This Document or any part of it does not constitute or form part of any offer to issue or sell, or the

solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States (including

its territories and possessions, any state of the United States and the District of Columbia), Canada, the

Republic of Ireland, Australia, the Republic of South Africa or any other jurisdiction in which the same would

be unlawful. No public offering of the Ordinary Shares is being made in any such jurisdiction.

All offers of the Ordinary Shares will be made pursuant to an exemption under the Prospectus Regulation

from the requirement to produce a prospectus. In the United Kingdom, this Document is being directed

solely at persons in circumstances in which section 21(1) of the Financial Services and Markets Act 2000 (as

amended) (the “FSMA”) does not apply.

The Ordinary Shares have not been approved or disapproved by the US Securities and Exchange

Commission, any state securities commission or other regulatory authority in the United States, nor have

any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or

adequacy of this Document. Any representation to the contrary is a criminal offence in the United States.

The relevant clearances have not been, nor will they be, obtained from the securities commission of any

province or territory of Canada, no prospectus has been lodged with, or registered by, the Australian

Securities and Investments Commission or the Japanese Ministry of Finance; the relevant clearances have

not been, and will not be, obtained for the South Africa Reserve Bank or any other applicable body in the

Republic of South Africa in relation to the Placing Shares and the Placing Shares have not been, nor will they

be, registered under or offering in compliance with the securities laws of any state, province or territory of

Australia, Canada, Japan or the Republic of South Africa. Accordingly, the Placing Shares may not (unless an

exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or

indirectly, in or into Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction

outside the United Kingdom.

Persons (including, without limitation, nominees and trustees) who have a contractual right or other legal

obligation to forward a copy of this Document should seek appropriate advice before taking any action.

This Document should be read in its entirety. In particular, you should read and understand the information

provided in this Part 5.

By participating in the Fundraising, each person who chooses to participate in the Fundraising (an

“Investor”) will be deemed to have read and understood this Document in its entirety, to be participating,

making an offer and acquiring Ordinary Shares on the terms and conditions contained herein and to be

providing the representations, warranties, indemnities, acknowledgements and undertakings contained in

this Part 5.

In particular, each such Investor represents, warrants, undertakes, agrees and acknowledges (amongst

other things) that:

1. it is a Relevant Person and undertakes that it will acquire, hold, manage or dispose of any Ordinary

Shares that are allocated to it for the purposes of its business;

2. in the case of a Relevant Person in a member state of the EEA which has implemented Regulation

number 2019/980 of the European Commission (each, a “Relevant Member State”) who acquires

any Ordinary Shares pursuant to the Fundraising:

2.1. it is a Qualified Investor within the meaning of Article 2(E) of Regulation number 2019/980 of

the European Commission;

2.2. in the case of any Ordinary Shares acquired by is as a financial intermediary:

2.2.1. the Ordinary Shares acquired by it in the Fundraising have not been acquired on behalf

of, nor have they been acquired with a view to their offer or resale to, persons in any

Relevant Member State other than Qualified Investors or in circumstances in which the

prior consent of VSA Capital has been given to the offer or resale; or

61

2.2.2. where Ordinary Shares have been acquired by it on behalf of persons in any member

state of the EEA other than Qualified Investors, the offer of those Ordinary Shares to it

is not treated under Regulation number 2019/980 of the European Commission as

having been made to such persons;

3. it is acquiring the Ordinary Shares for its own account or is acquiring the Ordinary Shares for an

account with respect to which it exercises sole investment discretion and has the authority to make

and does make the representations, warranties, indemnities, acknowledgements, undertakings and

agreements contained in this Document;

4. it understands (or if acting for the account of another person, such person has confirmed that such

person understands) the resale and transfer restrictions set out in this Part 5;

5. except as otherwise permitted by the Group and subject to any available exemptions from applicable

securities laws, it (and any account referred to in paragraph 3 above) is outside the United States

acquiring the Ordinary Shares in offshore transactions as defined in and in accordance with

Regulation S under the Securities Act;

6. it acknowledges that the Ordinary Shares have not been, and will not be, registered under the

Securities Act or with any securities regulatory authority of any state or other jurisdiction of the

United States and may not be offered, sold or transferred, directly or indirectly, within the United

States except pursuant to an exemption from, or in a transaction not subject to, the registration

requirements of the Securities Act and in compliance with any applicable securities laws of any state

or other jurisdiction of the United States; and

7. the Group and VSA Capital will rely upon the truth and accuracy of the foregoing representations,

acknowledgements and agreements.

Summary

The Company has conditional on Admission issued 14,780,371 ordinary shares by way of a placing and a

subscription (together the “Fundraising”) at a price of 115 pence per new Ordinary Share (the “Fundraising

Price”), conditionally raising gross proceeds of approximately £17.0 million (the “Gross Fundraising

Proceeds”). The Fundraising has been completed by way of a conditional placing of 10,373,803 Ordinary

Shares (“Placing Shares”) (the “Placing”) and a conditional subscription of 4,406,568 Ordinary Shares

(“Subscription Shares”) (the “Subscription”). Further details of the Placing and Subscription are set out

below. No expenses relating to Admission or the Fundraising are being charged to participants in the

Fundraising, liability for stamp duty and stamp duty reserve tax is as described in Part 9 (Taxation).

The Net Proceeds to the Company amount to approximately £15.6 million, after deduction of fees and

expenses payable by the Company which are related to the Fundraising and Admission. The fundraising is

conditional on Admission as set out in this Part 5 (Details of the Fundraising and Admission to Trading).

The Fundraising Shares will represent approximately 28.64 per cent. of the Enlarged Share Capital

immediately following Admission.

The New Ordinary Shares will be registered with ISIN number GB00BLH1QT30 and trade under the symbol

“SMK”. The rights attaching to the New Ordinary Shares will be uniform in all respects.

Immediately following Admission, it is expected that in excess of 40 per cent. of the issued Ordinary Shares

of the Company will be held in public hands.

The terms of the Fundraising are subject to change, and any terms to be varied shall be agreed between

the Company and VSA Capital Limited.

62

The Placing

VSA Capital has undertaken the Placing. Conditional on Admission, the Placing has raised approximately

£11.9 million (gross) for the Company through the issue of 10,373,803 Placing Shares to certain institutional

investors.

The Placing Shares will represent approximately 20.10 per cent. of the Enlarged Issued Share Capital.

The Placing Shares will be issued credited as fully paid and will, on issue, rank pari passu in all respects with

the Existing Ordinary Shares, including the right to receive all dividends and other distributions thereafter

declared, made or paid on the Enlarged Issued Share Capital.

The Placing is conditional, inter alia, on Admission becoming effective and the Placing Agreement becoming

unconditional in all other respects by no later than 8.00 a.m. on 22 March 2021 or such later date (being

no later than 22 April 2021) as the Company and VSA Capital may determine.

The Placing has not been underwritten.

The Subscription

Conditional on Admission, the Company has raised approximately £5.1 million (gross) through the issue of

4,406,568 Subscription Shares to persons who are qualified investors as defined in the Prospectus

Regulation (“Qualified Investors”) by way of the Subscription at the Fundraising Price.

As part of the Subscription, the Directors have each subscribed for 84,347 new Ordinary Shares at the

Fundraising Price.

The Subscription Shares will represent approximately 8.54 per cent. of the Enlarged Issued Share Capital.

The Subscription Shares will be issued credited as fully paid and will, on issue, rank pari passu in all respects

with the Existing Ordinary Shares, including the right to receive all dividends and other distributions

thereafter declared, made or paid on the Enlarged Issued Share Capital.

The Subscription is conditional, inter alia, on Admission becoming effective by no later than 8.00 a.m. on

22 March 2021 or such later date (being no later than 22 April 2021) as the Company and VSA Capital may

determine.

Proceeds and Costs of the Fundraise

The Company will receive the proceeds (after deduction of the AQSE Corporate Adviser’s commissions and

other costs borne by the Company) resulting from the sale of the Fundraising Shares.

The amount of the gross proceeds from the Fundraising (the “Gross Fundraise Proceeds”) available to the

Company is £17.0m.

Use of Proceeds

The Group will receive net proceeds from the Fundraising of approximately £15.6m. The net proceeds are

expected to be used in the first 18 months post Admission as follows:

• Further develop its Nomad Platform and rollout of Nomad Checkout £2.5m;

• Increase of client service, fulfilment and operational capabilities £0.9m;

• International expansion and business development activities £1.5m;

• Increase marketing of its own brands £2.2m;

• Debt repayments totalling £1.5m consisting of £1.0m repayment of the Smollan loan, £0.4m to repay

the HSBC CBIL loan and £0.1m repayment of the Thomas Gooding loan (further details of which are

set out in paragraphs 11.9,11.10 and 11.13 of Part 10);

63

• Potential acquisitions of complementary brands and strategic assets £6.0m; and

• General working capital purposes £1.0m.

The Company does not anticipate declaring any dividends in the foreseeable future. The Company believes

that the net proceeds from the Fundraising are sufficient to meet its current development plans for the

Nomad Platform and to make potential acquisitions of complementary brands during the working capital

period. Any development plans or potential acquisitions outside of the working capital period may require

the Company to raise additional funding to be able to take advantage of these potential opportunities.

Furthermore, the Company believes that through the listing of the Ordinary Shares it will increases its own

visibility and improves its access to capital markets and diversify its shareholder base, all of which will allow

it to grow as a business.

Admission to trading and dealing arrangements

Application will be made to the AQSE Growth Market for Admission. It is expected that Admission will

become effective and that dealings in the Ordinary Shares will commence on AQSE at 8.00 a.m. (London

time) on 22 March 2021.

If Admission does not proceed, the Fundraising will not proceed and all monies paid will be refunded to the

applicants.

CREST

CREST is a paperless settlement system allowing securities to be transferred from one person’s CREST

account to another’s without the need to use share certificates or written instruments of transfer. The

Articles of Association of the Company permit the holding of the New Ordinary Shares in the CREST system.

Application has been made for the New Ordinary Shares to be admitted to CREST with effect from

Admission.

Accordingly, settlement of transactions in the New Ordinary Shares following Admission may take place

within the CREST system if any shareholder so wishes. As noted above, it is expected that settlement of the

New Ordinary Shares in the Fundraising will take place through CREST. CREST is a voluntary system, and

holders of New Ordinary Shares who wish to receive and retain share certificates following Admission will

be able to do so.

Where applicable, definitive share certificates in respect of the New Ordinary Shares are expected to be

despatched, by post at the risk of the recipients, to the relevant holders, by no later than 5 April 2021 (or

such later date as applicable).

Lock In and Orderly Market Arrangements

The Lock In Shareholders, who will hold a total of 28,831,307 Ordinary Shares (presenting approximately

55.85 per cent. of the Enlarged Share Capital on Admission, have entered into the Lock-In and Orderly

Market Agreements pursuant to which they have each agreed with the Company and VSA Capital that they

will not dispose of any interest in Ordinary Shares for the period of 12 months following Admission except

in certain limited circumstances. In the case of David Hampstead and Simon Smiley, each of them is

expressly permitted to transfer such number of Ordinary Shares to satisfy and discharge his obligations

under the terms of the Hedging Agreement.

The Lock In Shareholders have also agreed that for a further 12 months following the expiry of the initial

12 month period following Admission, they will only dispose of an interest in Ordinary Shares following

consultation with VSA Capital and the Company and in such manner as VSA Capital and the Company may

reasonably require with a view to the maintenance of an orderly market in the Ordinary Shares. The Senior

Managers, who will hold a total of 4,835,069 Ordinary Shares (representing approximately 9.37 per cent. of

the Enlarged share Capital on Admission, have entered into the Lock-In and Orderly Market Agreements

pursuant to which they have each agreed with the Company and VSA Capital that they will not dispose of

64

any interest in Ordinary Shares for the period of 180 days following Admission except in certain limited

circumstances. The Senior Managers have also agreed that for a further 12 months following the expiry of

the initial 180 days period following Admission, they will only dispose of an interest in Ordinary Shares

following consultation with VSA Capital and the Company and in such manner as VSA Capital and the

Company may reasonably require with a view to the maintenance of an orderly market in the Ordinary

Shares.

Further details of the lock in and orderly market undertakings are set out in paragraphs 11.2 and 11.3 of

Part 10 (Additional Information)

Selling Restrictions

The Ordinary Shares will not be registered under the Securities Act or the Securities Laws of any state or

other jurisdiction of the USA and may not be taken up, offered, sold, resold, transferred, delivered or

distributed, directly or indirectly, within, into or in the US.

65

Part 6

Historical Financial Information of the Company

(A) Accountant’s Report on the Historical Financial Information of the Company

Crowe U.K. LLP

Chartered Accountants

Member of Crowe Global

55 Ludgate Hill

London

EC4M 7JW, UK

Tel +44 (0)20 7842 7100

Fax +44 (0)20 7583 1720

DX 0014 London Chancery Lane

www.crowe.co.uk

15 March 2021

The Directors and Proposed Directors

Samarkand Group plc

Unit 13 & 14 Nelson Trading Estate

The Path

Merton

London SW19 3BL

VSA Capital Group Ltd

15 Eldon Street

London EC2M 7LD

Dear Sirs and Madams,

We report on the audited historical financial information of Samarkand Group plc (the “Company”) for the

period from incorporation on 12 January 2021 to 16 February 2021 (the “Company Financial Information”).

Opinion on financial information

In our opinion, the Company Financial Information gives, for the purpose of the of the Company’s

prospectus dated 15 March 2021 (the “Document”), a true and fair view of the state of affairs of the

Company as at 16 February 2021 and of its profits, cash flows, statement of comprehensive income and

changes in equity for the period then ended in accordance with UK-adopted international accounting

standards (“UK IFRS”).

Responsibilities

The directors of the Company (the “Directors”) are responsible for preparing the Company Financial

Information in accordance with UK IFRS.

It is our responsibility to form an opinion on the Company Financial Information, and to report our opinion

to you.

Basis of preparation

The Company Financial Information has been prepared for inclusion in Section (B) “Historical Financial

Information of the Company” of Part 6 “Historical Financial Information of the Company” of the Document,

on the basis of the accounting policies set out in note 3 to the Company Financial Information. This report

66

is required by item 5.3.1 of Annex 24 to the UK version of Regulation number 2019/980 of the European

Commission, which is part of UK law by virtue of the European Union (Withdrawal) Act 2018 (together, the

“PR Regulation”), and is given for the purpose of complying with that requirement and for no other

purpose.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing

Practices Board in the United Kingdom. We are independent of the Company in accordance with the FRC’s

Ethical Standard as applied to Investment Circular Reporting Engagements, and we have fulfilled our other

ethical responsibilities in accordance with these requirements.

Our work included an assessment of evidence relevant to the amounts and disclosures in the Company

Financial Information. It also included an assessment of significant estimates and judgments made by those

responsible for the preparation of the Company Financial Information and whether the accounting policies

are appropriate to the Company’s circumstances consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which we

considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the

Company Financial Information is free from material misstatement whether caused by fraud or other

irregularity or error.

Declaration

For the purposes of Prospectus Regulation Rules PRR 5.3.2R(2)(f), we are responsible for this report as part

of this Document and we declare that, to the best of our knowledge, the information contained in this

report, for which we are responsible, is in accordance with the facts and that this report makes no omission

likely to affect its import. This declaration is included in the Document in compliance with item 1.2 of

Annex 24 to the PR Regulation.

Yours faithfully,

Crowe U.K. LLP

Chartered Accountants

67

(B) Historical Financial Information of the Company

STATEMENT OF COMPREHENSIVE INCOME

The audited statement of comprehensive income of the Company from the date of incorporation on

12 January 2021 to 16 February 2021 is stated below:

Audited

Period ended

16 February 2021

£

Revenue –

Administrative expenses – ––––––––Operating result –

Finance income/(expense) – ––––––––Profit before taxation –

Income tax – ––––––––Profit for the period and total comprehensive income for the period –

––––––––Basic and diluted earnings per Ordinary Share (pence) –

––––––––

68

STATEMENT OF FINANCIAL POSITION

The audited statement of financial position of the Company as at 16 February 2021 is stated below:

Audited

As at

16 February

2021

Note £

ASSETS

Non-current assets

Investments 353,400 ––––––––Total assets 353,400

––––––––EQUITY AND LIABILITIES

Equity attributable to owners

Ordinary Share capital 5 353,400 ––––––––Total equity attributable to Shareholders 353,400

––––––––Total equity and liabilities 353,400

––––––––

69

STATEMENT OF CASH FLOWS

The audited statement of cash flows of the Company from the date of incorporation on 12 January 2021 to

16 February 2021 is stated below:

Audited

Period ended

16 February 2021

£

Cash flows from operating activities

Profit before income tax – ––––––––Net cash from operating activities –

––––––––Cash flows from financing activities

Cash received from issue of Ordinary Shares – ––––––––Net cash inflow from financing activities –

––––––––Net increase in cash and cash equivalents –

Cash and cash equivalents at beginning of period – ––––––––Cash and cash equivalents at end of period –

––––––––

70

STATEMENT OF CHANGES IN EQUITY

The audited statement of statement of changes in equity of the Company from the date of incorporation

on 12 January 2021 to 16 February 2021 is stated below:

Ordinary

Share Share Retained Total

capital premium earnings equity

£ £ £ £

Comprehensive income for the period

Profit for the period – – – – –––––––– –––––––– –––––––– ––––––––Total comprehensive income for the period – – – –

Transactions with owners

Ordinary Shares issued on incorporation – – – –

Issue of Ordinary Shares 353,400 – – 353,400 –––––––– –––––––– –––––––– ––––––––Total transactions with owners 353,400 – – 353,400 –––––––– –––––––– –––––––– ––––––––As at 16 February 2021 353,400 – – 353,400

–––––––– –––––––– –––––––– ––––––––

71

NOTES TO THE COMPANY FINANCIAL INFORMATION

1. General information

The Company was incorporated on 12 January 2021 as a private company in England and Wales with

company number 13127277 under the Companies Act.

The address of its registered office is Unit 13 &14 Nelson Trading Estate, The Path, Merton, London

SW19 3BL, United Kingdom.

The Company did not trade during the period under review.

2. Basis of preparation

The principal accounting policies applied in the preparation of the Company Financial Information are set

out below. These policies have been consistently applied to the period presented, unless otherwise stated.

The Company Financial Information has been prepared in accordance with UK adopted International

Accounting Standards (“IFRS”). The Company Financial Information has been prepared using the

measurement bases specified by IFRS for each type of asset, liability, income and expense.

The Company Financial Information is presented in £ unless otherwise stated.

Comparative figures

No comparative figures have been presented as the Company Financial Information covers the period from

incorporation on 12 January 2021.

Going concern

The Company Financial Information has been prepared on a going concern basis. The Directors have a

reasonable expectation that the Company has adequate resources to continue in operational existence for

the foreseeable future. Furthermore, the Directors have a reasonable expectation that the investments

held by the Company will generate future inflows which will cover the future costs the Company incurs.

Thus the Directors continue to adopt the going concern basis of accounting in preparing the Company

Financial Information.

Standards and interpretations issued and not yet effective:

At the date of the Company Financial Information, the Directors have reviewed the standards in issue by

the International Accounting Standards Board and IFRIC, which are effective for periods beginning on or

after the stated effective date but have not yet been applied. In their view, these standards would not have

a material impact on the financial reporting of the Company.

3. Significant accounting policies

The Company Financial Information is based on the following policies which have been consistently applied:

Investments in subsidiaries

Subsidiaries are entities over which the Company has power to govern the financial and operating policies,

generally accompanying a shareholding of more than one half of the voting rights. The existence and effect

of potential voting rights that are currently exercisable or convertible are considered when assessing

whether the Company controls an entity.

The initial investment in subsidiaries is accounted for at cost less impairment. The cost of the initial

investment is measured as the fair value of the consideration paid, assets given, equity instruments issued

or liabilities incurred or assumed at the date of exchange, plus any costs directly attributable to making the

investment.

The purpose of the financial information presented is for the re-registration of the Company as a public

limited company. For this reason, consolidated financial statements have not been prepared.

72

4. Critical accounting estimates and judgments

In preparing the Company Financial Information, the Directors have to make judgments on how to apply

the Company’s accounting policies and make estimates about the future. The Directors do not consider

there to be any critical judgments that have been made in arriving at the amounts recognised in the

Company Financial Information.

5. Share capital and share premium

Number of Share Share

Ordinary capital premium Total

Shares £ £ £

On incorporation (of £0.01 each) 1 – – –

Shares issued during the period

(35,340,000 Ordinary Shares at

£0.01 each) 35,340,000 353,400 – 353,400 –––––––––– –––––––––– –––––––––– ––––––––––At 16 February 2021 35,340,001 353,400 – 353,400

–––––––––– –––––––––– –––––––––– ––––––––––On incorporation, the Company issued one Ordinary Share of £0.01 at their nominal value of £0.01.

On 16 February 2021, the Company issued 35,340,000 Ordinary Shares, as part of a 200-for-1 share

exchange for existing shareholders of Samarkand Holdings Ltd, at their nominal value of £0.01.

6. Capital management policy

The Directors’ objectives when managing the Company’s capital are to safeguard the Company’s ability to

continue as a going concern in order to provide returns for Shareholders and benefits for other stakeholders

and to maintain an optimal capital structure to reduce the cost of capital. The capital structure of the

Company consists of equity attributable to equity holders of the Company, comprised of issued share

capital.

7. Financial instruments

The Company’s principal financial instruments comprise investments. The Company’s accounting policies

and method adopted, including the criteria for recognition, the basis on which income and expenses are

recognised in respect of each class of financial asset and equity instrument are set out in Note 3

“Accounting policies” to the Company Financial Information. The Company does not use financial

instruments for speculative purposes.

8. Related party transactions

There were no related party transactions in the period from incorporation to 16 February 2021.

9. Ultimate controlling party

As at 16 February 2021, there was no ultimate controlling party of the Company.

10. Events after the reporting date

On 10 March 2021, the Company was re-registered as a public limited company.

11. Nature of the Company Financial Information

The Company Financial Information presented above does not constitute statutory accounts for the period

under review.

73

Part 7

Historical Financial Information of the Group

(A) Accountant’s Report on the Historical Financial Information of the Group

Crowe U.K. LLP

Chartered Accountants

Member of Crowe Global

55 Ludgate Hill

London

EC4M 7JW, UK

Tel +44 (0)20 7842 7100

Fax +44 (0)20 7583 1720

DX 0014 London Chancery Lane

www.crowe.co.uk

15 March 2021

The Directors and Proposed Directors

Samarkand Group plc

Unit 13 & 14 Nelson Trading Estate

The Path

Merton

London SW19 3BL

VSA Capital Group Ltd

15 Eldon Street

London EC2M 7LD

Dear Sirs and Madams,

We report on the audited historical financial information of Samarkand Holdings Ltd (“Samarkand

Holdings”) and its subsidiaries (together, the “Group”) for the years ended 31 March 2019 and 31 March

2020 and the seven-month period ended 30 November 2020 (together, the “Group Financial Information”).

Opinion on financial information

In our opinion, the Group Financial Information gives, for the purpose of Samarkand Group plc’s (the

“Company”) prospectus dated 15 March 2021 (the “Document”), a true and fair view of the state of affairs

of the Group as at 31 March 2019, 31 March 2020 and 30 November 2020 and of its profits, cash flows,

statement of comprehensive income and changes in equity for the periods then ended in accordance with

International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies

in the European Union (“EU IFRS”).

Responsibilities

The directors of the Company (the “Directors”) are responsible for preparing the Group Financial

Information in accordance with EU IFRS.

It is our responsibility to form an opinion on the Group Financial Information, and to report our opinion to

you.

74

Basis of preparation

The Group Financial Information has been prepared for inclusion in Section (B) “Historical Financial

Information of the Group” of Part 7 “Historical Financial Information of the Group” of the Document, on the

basis of the accounting policies set out in note 3 to the Group Financial Information. This report is required

by item 5.3.1 of Annex 24 to the UK version of Regulation number 2019/980 of the European Commission,

which is part of UK law by virtue of the European Union (Withdrawal) Act 2018 (together, the

“PR Regulation”), and is given for the purpose of complying with that requirement and for no other

purpose.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing

Practices Board in the United Kingdom. We are independent of the Group in accordance with the FRC’s

Ethical Standard as applied to Investment Circular Reporting Engagements, and we have fulfilled our other

ethical responsibilities in accordance with these requirements.

Our work included an assessment of evidence relevant to the amounts and disclosures in the Company

Financial Information. It also included an assessment of significant estimates and judgments made by those

responsible for the preparation of the Group Financial Information and whether the accounting policies are

appropriate to the Group’s circumstances consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which we

considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the

Group Financial Information is free from material misstatement whether caused by fraud or other

irregularity or error.

Declaration

For the purposes of Prospectus Regulation Rule PRR 5.3.2R(2)(f), we are responsible for this report as part

of this Document and we declare that, to the best of our knowledge, the information contained in this

report, for which we are responsible, is in accordance with the facts and that this report makes no omission

likely to affect its import. This declaration is included in the Document in compliance with item 1.2 of

Annex 24 to the PR Regulation.

Yours faithfully,

Crowe U.K. LLP

Chartered Accountants

75

(B) Financial Information of the Group

Consolidated statements of comprehensive income

The audited consolidated statements of comprehensive income of the Group for each of the two years

ended 31 March 2020 and the eight month period ended 30 November 2020, and the unaudited

consolidated statement of comprehensive income of the Group for the eight month period ended

30 November 2019 are set out below:

Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

Note £ £ £ £

Revenue 7 4,481,939 6,844,100 16,016,277 3,838,577

Cost of sales (2,926,837) (3,562,548) (6,903,429) (2,188,826) –––––––––– –––––––––– –––––––––– ––––––––––Gross profit 1,555,102 3,281,552 9,112,848 1,649,751

Selling and distribution expenses 9 (629,254) (1,519,294) (4,349,942) (710,872)

Administrative expenses 9 (1,968,840) (2,591,229) (2,330,469) (1,698,468) –––––––––– –––––––––– –––––––––– ––––––––––EBITDA and other costs (1,042,992) (828,971) 2,432,437 (759,589)

Depreciation and amortisation (110,863) (313,069) (317,736) (200,219)

Other costs 9 – – (101,730) – –––––––––– –––––––––– –––––––––– ––––––––––Operating (loss)/profit (1,153,855) (1,142,040) 2,012,971 (959,808) –––––––––– –––––––––– –––––––––– ––––––––––

Finance income 2,992 6,392 27 –

Finance costs 22 (152,687) (296,158) (244,606) (207,775) –––––––––– –––––––––– –––––––––– ––––––––––(Loss)/income before taxation (1,303,550) (1,431,806) 1,768,392 (1,167,583)

Taxation 12 (7,389) 44,247 (101,417) 5,826 –––––––––– –––––––––– –––––––––– ––––––––––(Loss)/income after taxation (1,310,939) (1,387,559) 1,666,975 (1,161,757) –––––––––– –––––––––– –––––––––– ––––––––––

Other comprehensive income:

Exchange differences on translation

of foreign operations (2,002) (1,331) (4,138) (7,378) –––––––––– –––––––––– –––––––––– ––––––––––Items that may be reclassified to

profit or loss in subsequent

periods (2,002) (1,331) (4,138) (7,378) –––––––––– –––––––––– –––––––––– ––––––––––Total comprehensive (loss)/income

for the year/period (1,312,941) (1,388,890) 1,662,837 (1,169,135)

–––––––––– –––––––––– –––––––––– ––––––––––(Loss)/income attributable to:

Equity holders of the Company (1,287,253) (1,373,059) 1,666,975 (1,147,711) –––––––––– –––––––––– –––––––––– ––––––––––Non-controlling interests (23,686) (14,500) – (14,046)

–––––––––– –––––––––– –––––––––– –––––––––– (1,310,939) (1,387,559) 1,666,975 (1,161,757)

–––––––––– –––––––––– –––––––––– ––––––––––Earnings (loss) per share (basic

and diluted) 11 (7.42) (7.85) 9.43 (6.57)

–––––––––– –––––––––– –––––––––– ––––––––––Comprehensive (loss)/income

attributable to:

Equity holders of the Company (1,289,255) (1,374,390) 1,662,837 (1,155,089)

Non-controlling interests (23,686) (14,500) – (14,046) –––––––––– –––––––––– –––––––––– –––––––––– (1,312,941) (1,388,890) 1,662,837 (1,169,135)

–––––––––– –––––––––– –––––––––– ––––––––––

76

Consolidated statements of financial position

The audited consolidated statements of financial position of the Group as at 31 March 2019, 31 March 2020

and 30 November 2020, and the unaudited consolidated statement of financial position of the Group as at

30 November 2019 are set out below:

Audited Audited Audited Unaudited

As at As at As at As at

31 March 31 March 30 November 30 November

2019 2020 2020 2019

Note £ £ £ £

ASSETS

Intangible assets 13 666,769 1,083,373 1,346,577 918,313

Property, plant and equipment 14 41,250 134,550 152,425 136,457

Right-of-use assets 15 1,304,552 1,072,580 917,932 1,149,904 –––––––––– –––––––––– –––––––––– ––––––––––Non-current assets 2,012,571 2,290,503 2,416,934 2,204,674 –––––––––– –––––––––– –––––––––– ––––––––––

Inventories 16 801,605 1,295,193 2,006,217 1,110,680

Trade receivables 17 941,347 1,056,443 1,482,996 986,629

Other receivables and prepayments 18 150,900 313,398 577,281 221,716

Cash and cash equivalents 270,564 572,586 1,232,403 427,236 –––––––––– –––––––––– –––––––––– ––––––––––Current assets 2,164,416 3,237,620 5,298,897 2,746,261

–––––––––– –––––––––– –––––––––– ––––––––––Total assets 4,176,987 5,528,123 7,715,831 4,950,935

–––––––––– –––––––––– –––––––––– ––––––––––EQUITY AND LIABILITIES

Share capital 19 1,767 1,767 1,767 1,767

Merger relief reserve 19 28,764 28,764 28,764 28,764

Capital contribution 21 266,072 266,072 266,072 266,072

Currency translation reserve 21 (2,002) (3,333) (7,471) (9,380)

Retained deficit (1,969,144) (3,342,203) (1,675,228) (3,116,855)

Non-controlling interest (3,716) (32,168) (32,168) (31,714) –––––––––– –––––––––– –––––––––– ––––––––––Total equity (1,678,259) (3,081,101) (1,418,264) (2,861,346) –––––––––– –––––––––– –––––––––– ––––––––––

Right-of-use lease liabilities 15 1,216,485 973,512 805,590 1,055,192

Borrowings 22 1,341,492 1,924,387 1,371,207 2,937,488

Deferred tax liability 85,053 76,314 70,488 79,227 –––––––––– –––––––––– –––––––––– ––––––––––Total non-current liabilities 2,643,030 2,974,213 2,247,285 4,071,907 –––––––––– –––––––––– –––––––––– ––––––––––

Trade and other payables 826,043 1,661,312 2,212,764 1,496,719

Accrued liabilities 190,812 204,762 913,185 140,092

Deferred revenue 7,631 201,715 94,496 22,987

Borrowings 22 1,528,706 2,822,091 2,794,480 1,366,807

Right-of-use lease liabilities 15 159,513 242,974 249,603 214,258

Loans from directors 23 499,511 499,511 505,755 499,511

Taxation 12 – – 107,244 –

Refund liabilities – 2,646 9,283 – –––––––––– –––––––––– –––––––––– ––––––––––Total current liabilities 3,212,216 5,635,011 6,886,810 3,740,374 –––––––––– –––––––––– –––––––––– ––––––––––Total liabilities 5,855,246 8,609,224 9,134,095 7,812,281

–––––––––– –––––––––– –––––––––– ––––––––––Total liabilities and equity 4,176,987 5,528,123 7,715,831 4,950,935

–––––––––– –––––––––– –––––––––– ––––––––––

77

Consolidated statements of changes in shareholders’ equity

The audited consolidated statements of changes in shareholders’ equity of the Group for each of the two

years ended 31 March 2019 and 31 March 2020, and the eight months ended 30 November 2020, and the

unaudited consolidated statement of changes in shareholders’ equity of the Group for the eight months

ended 30 November 2019 are set out below:

Merger Currency Non-

Share relief Capital Translation Retained controlling Total

capital reserve contribution reserve deficit interests equity

Note £ £ £ £ £ £ £

Balance at 1 April 2018 1,767 28,764 266,072 – (681,891) – (385,288)

Loss after taxation – – – – (1,287,253) (23,686) (1,310,939)

Other comprehensive loss – – – (2,002) – – (2,002) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Total comprehensive loss for the year – – – (2,002) (1,287,253) (23,686) (1,312,941) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Minority interest arising on new subsidiary (i) – – – – – 19,970 19,970 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Transactions with owners – – – – – 19,970 19,970 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Balance as at 31 March 2019 (audited) 1,767 28,764 266,072 (2,002) (1,969,144) (3,716) (1,678,259)

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Loss after taxation – – – – (1,373,059) (14,500) (1,387,559)

Other comprehensive loss – – – (1,331) – – (1,331) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Total comprehensive loss for the year – – – (1,331) (1,373,059) (14,500) (1,388,890)

Acquisition of minority interests (i) – – – – – (19,970) (19,970)

Minority interest arising on new subsidiary (ii) – – – – – 6,018 6,018 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Transactions with owners – – – – – (13,952) (13,952) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Balance as at 31 March 2020 (audited) 1,767 28,764 266,072 (3,333) (3,342,203) (32,168) (3,081,101)

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Income after taxation – – – – 1,666,975 – 1,666,975

Other comprehensive loss – – – (4,138) – – (4,138) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Total comprehensive (loss)/income

for the period – – – (4,138) 1,666,975 – 1,662,837 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Balance as at 30 November 2020

(audited) 1,767 28,764 266,072 (7,471) (1,675,228) (32,168) (1,418,264)

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Balance at 1 April 2019 1,767 28,764 266,072 (2,002) (1,969,144) (3,716) (1,678,259)

Income after taxation – – – – (1,147,711) (14,046) (1,161,757)

Other comprehensive (loss)/income – – – (7,378) – – (7,378) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Total comprehensive loss for the period – – – (7,378) (1,147,711) (14,046) (1,169,135) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Acquisition of minority interests – – – – – (13,952) (13,952) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Transactions with owners – – – – – (13,952) (13,952) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Balance as at 30 November 2019

(unaudited) 1,767 28,764 266,072 (9,380) (3,116,855) (31,714) (2,861,346)

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Notes:

i. On the 4 September 2018, Samarkand Holdings Limited incorporated Samarkand Global HK Limited with an issued share capital

of HKD 660,000 (equivalent to £66,567). 70% of the shares were held by Samarkand Holdings Limited with 30% held by a

minority shareholder (equivalent to £19,970). On the 23 July 2019, the 30% non-controlling interest was transferred to

Samarkand Holdings Limited at par value.

ii. On 3 December 2018, Samarkand Global Limited established a Wholly Owned Foreign Enterprise, Shanghai WoZeng Trade.

Samarkand Global Limited contributed a total equivalent to £18,054 into the JV as registered paid capital for a 75% equity

holding. The minority partner contributed £6,018 for its 25% equity interest. Management made a decision to wind up the JV

on Sep 2020 and expect to complete this process by the end of February 2021.

78

Consolidated statements of cash flows

The audited consolidated statements of cash flows of the Group for each of the two years ended 31 March

2020 and the eight month period ended 30 November 2020, and the unaudited consolidated statement of

cash flow of the Group for the eight month period ended 30 November 2019 are set out below:

Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Cash flows from operating activities

(Loss)/income after taxation (1,310,939) (1,387,559) 1,666,975 (1,161,757)

Cash flow from operations reconciliation:

Depreciation and amortisation 110,863 313,069 317,736 200,219

Interest expense 144,799 270,927 206,060 169,810

Finance income – (4) (27) –

Income tax expense/(credit) 7,389 (44,247) 101,417 (5,826)

Working capital adjustments:

Decrease/(increase) in inventories (262,375) (493,588) (711,023) (309,074)

(Increase)/decrease in trade and

other receivables (299,529) (291,544) (690,439) (130,051)

Increase/(decrease) in trade and

other payables 334,936 1,038,256 1,163,263 635,305 ––––––––– ––––––––– ––––––––– –––––––––Cash (used in)/generated from operations (1,274,856) (594,690) 2,053,962 (601,374)

Taxes (paid)/received (81,288) 35,509 – – ––––––––– ––––––––– ––––––––– –––––––––Net cash (used in)/generated from

operating activities (1,356,144) (559,181) 2,053,962 (601,374) ––––––––– ––––––––– ––––––––– –––––––––

Cash flows from investing activities

Purchase of property, plant and equipment (31,629) (123,913) (52,586) (108,784)

Development of intangible assets (207,613) (467,088) (381,346) (283,538)

Acquisition of subsidiary, net of

cash acquired (31,628) – (9,125) –

Finance income – 4 27 – ––––––––– ––––––––– ––––––––– –––––––––Net cash used in investing activities (270,870) (590,997) (443,030) (392,322) ––––––––– ––––––––– ––––––––– –––––––––

Cash flows from financing activities

Interest paid (21,135) (73,920) (36,826) (50,527)

Repayment of right-of-use lease liabilities – (159,512) (161,293) (106,548)

Proceeds from borrowings 1,502,697 1,958,729 1,800,800 1,514,832

Repayment of borrowings – (271,733) (2,549,654) (200,018) ––––––––– ––––––––– ––––––––– –––––––––Net cash from financing activities 1,481,562 1,453,564 (946,973) 1,157,739 ––––––––– ––––––––– ––––––––– –––––––––

Net (decrease)/increase in cash and

cash equivalents (145,452) 303,386 663,959 164,043

––––––––– ––––––––– ––––––––– –––––––––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

––––––––– ––––––––– ––––––––– –––––––––

79

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.

80

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,

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‘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)

• IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendment – Onerous

Contracts – Cost of Fulfilling a Contract)

• 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;

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• 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.

84

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.

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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.

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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

revenues, totalling 17.5% and 11.4 %).

Forever Young

International

Limited

Unit 13 & 14 Nelson Trading

Estate, The Path, Merton,

London, SW19 3BL

UK & European

distribution

Samarkand Global

Limited

e-commerce

service

provider

New Silk Road Brand

Management

Limited

Samarkand Global

(Beijing) Limited

People’s Republic

of China

Room 107, No.701, 7 th Floor,

Building 1 Westend, No. 100

Balizhuang, Chaoyang District,

Beijing

People’s Republic

of China

Room 226, 2nd Floor,

Building 1, No. 225 Xinggong

Road, Tinglin Town, Jinshan

District, Shanghai

Shanghai Samarkand

Technology Service

Co., Ltd

People’s Republic

of China

Room 205, No.438 Pudian

Road, China (Shanghai) Pilot

Free Trade Zone

Samarkand Global

Hong Kong Limited

Suite 1113A, 11/F., Ocean

Centre, Harbour City, 5

Canton Road, Tsim Sha Tsui,

Kowloon, Hong Kong

Sale of goods into

Hong Kong

Shanghai EastWest

Network Technology

Co., Ltd

People’s Republic

of China

Room 2021, Building 2, No.

181 Songyu Road, Tinglin

Town, Jinshan District,

Shanghai, China

93

8. Segmental analysis

Revenues:

Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Revenue by business unit

Brand ownership 1,500,539 2,119,654 2,635,771 1,277,697

NOMAD technology – 1,527,094 3,880,231 597,362

Distribution 2,936,777 3,191,211 3,670,720 1,962,877

Exceptional revenue – – 5,780,000 –

Other 44,623 6,141 49,555 641 ––––––––– ––––––––– ––––––––– –––––––––Total revenue 4,481,939 6,844,100 16,016,277 3,838,577

––––––––– ––––––––– ––––––––– ––––––––– Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Revenue by geographical destination

UK 2,053,627 2,910,994 7,627,808 1,837,322

China 2,263,962 3,497,842 8,008,191 1,731,439

Rest of the World 164,350 435,264 380,278 269,816 ––––––––– ––––––––– ––––––––– –––––––––Total revenue 4,481,939 6,844,100 16,016,277 3,838,577

––––––––– ––––––––– ––––––––– –––––––––Costs of sale:

Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Costs of sale by business unit

Brand ownership 810,868 998,333 792,472 634,066

NOMAD technology – 536,369 1,155,746 274,371

Distribution 2,113,527 2,006,172 1,835,749 1,268,155

Exceptional – – 3,077,860 –

Other 2,442 21,674 41,602 12,234 ––––––––– ––––––––– ––––––––– –––––––––Total costs of sale 2,926,837 3,562,548 6,903,429 2,188,826

––––––––– ––––––––– ––––––––– –––––––––Exceptional revenues:

With teams in both the UK and China the Group was ideally positioned to source and supply products

necessary for the coronavirus response. As a result, a £5.8m government contract from the Department of

Health and Social Care (DHSC) (the “Exceptional Revenue”) was awarded to the Company in April 2020 for

the supply of personal protective equipment. This contract was successfully fulfilled on-time and within

budget.

Segment assets:

The non-current assets of the Group are not measured or reported internally on a segmental basis as they

are not considered to be attributable to any specific business segment.

94

9. Expenses by nature

Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Administrative expenses

Property costs 111,741 253,729 135,723 130,891

Staff costs 1,351,163 1,749,679 1,725,164 1,152,961

Professional fees 199,893 201,240 211,922 167,588

Other 306,043 386,581 257,660 247,028 ––––––––– ––––––––– ––––––––– –––––––––Total administrative expenses 1,968,840 2,591,229 2,330,469 1,698,468

––––––––– ––––––––– ––––––––– ––––––––– Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Other costs

Restructuring costs – – 44,944 –

IPO costs – – 56,786 – ––––––––– ––––––––– ––––––––– –––––––––Total other costs – – 101,730 –

––––––––– ––––––––– ––––––––– –––––––––10. Staff costs

Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Aggregate staff costs (including

Samarkand Holdings Directors)

Wages and salaries (including bonuses) 1,380,679 1,926,867 1,844,634 1,252,028

Social security and other payroll taxes 137,078 209,199 216,758 146,840

Pension costs 10,823 33,274 27,992 19,198

Capitalised development costs (177,417) (419,661) (364,220) (265,105) ––––––––– ––––––––– ––––––––– –––––––––Total staff costs 1,351,163 1,749,679 1,725,164 1,152,961

––––––––– ––––––––– ––––––––– ––––––––– Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

No. No. No. No.

Average monthly number of employees

Management 5 8 9 7

Sales operations 24 35 51 36

Finance and administration 4 6 7 6

Technology 1 8 13 8 ––––––––– ––––––––– ––––––––– ––––––––– 34 57 80 57

––––––––– ––––––––– ––––––––– –––––––––

95

Remuneration of key management personnel

Key Management personnel of the Group comprise the directors of Samarkand Holdings and other senior

members of staff. The emoluments and benefits of Key Management personal were as follows:

Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Aggregate staff costs (including

Samarkand Holdings Directors)

Wages and salaries (including bonuses) 487,159 617,531 495,960 399,513

Social security costs 55,711 69,887 49,999 46,251

Pension costs 4,697 9,355 8,631 6,635

Amounts capitalised (88,115) (63,303) (33,531) (38,319) ––––––––– ––––––––– ––––––––– –––––––––Total staff costs 459,452 633,470 521,059 414,080

––––––––– ––––––––– ––––––––– –––––––––11. Earnings per share

Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Basic and diluted earnings (loss) per share (7.42) (7.85) 9.43 (6.57) ––––––––– ––––––––– ––––––––– –––––––––Basic and diluted weighted average

shares in issue 176,700 176,700 176,700 176,700 ––––––––– ––––––––– ––––––––– –––––––––

Basic earnings per share is calculated by dividing the profit/loss after tax attributable to the equity holders

of Samarkand Holdings by the weighted average number of shares in issue during the year/period after the

sub-division of shares made in September 2020 (see Note 19).

Diluted earnings per share is calculated by dividing the profit/loss attributable to ordinary equity holders of

the parent by the weighted average number of ordinary shares outstanding during the year plus the

weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential

ordinary shares into ordinary shares. As the options issued in the period ended 30 November 2020 are not

dilutive, no adjustment to basic earnings per share is required.

12. Taxation

Income taxes are provided for the tax effects of transactions reported in the Consolidated Group Financial

Information and consist of taxes currently due, plus deferred taxes related to differences between the basis

of assets and liabilities for financial and income tax reporting.

For the taxable period ending 30 November 2020, the Group had a tax expense of £101,417 (year ended

31 March 2020: credit of £44,247, year ended 31 March 2019: expense of £7,389, period ended

30 November 2019: credit of £5,826). The effective tax rate was 6.0% for the period ending 30 November

2020, (year ended 31 March 2020: (3.0%), year ended 31 March 2019: 0.6%, period ended 30 November

2019: (0.5%)). The effective tax rate was primarily impacted by loss carryovers for which no deferred tax

asset was recognised, and other deferred tax and permanent differences, such as disallowable expenditure.

96

The components of the provision for taxation on income included in the “Statements of Profit or Loss and

Other Comprehensive Income” for the periods presented are summarised below:

Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Current income tax expense

UK corporate income taxes 16,127 (35,509) 107,243 –

PRC corporate income taxes – – – – ––––––––– ––––––––– ––––––––– –––––––––Total current income tax expense/(credit) 16,127 (35,509) 107,243 –

Deferred income tax expense

UK (8,738) (8,738) (5,826) (5,826)

PRC – – – – ––––––––– ––––––––– ––––––––– –––––––––Total deferred income tax (credit)/expense (8,738) (8,738) (5,826) (5,826) ––––––––– ––––––––– ––––––––– –––––––––Total income tax (credit)/expense 7,389 (44,247) 101,417 (5,826)

––––––––– ––––––––– ––––––––– –––––––––The differences between the statutory income tax rate and the effective tax rates are summarised as

follows:

Audited

Period ended

30 November 2020

£ %

Expected tax at statutory UK income tax rate of 19% 335,994 19.0

Increase/(decrease) in tax resulting from:

Effect of different tax rates in foreign jurisdictions 120,116 6.8

Tax losses/(utilsed) carried forward (359,849) (20.3)

Capital allowances less depreciation (3,249) (0.2)

Deferred tax credit (5,826) (0.3)

Non-deductible expenditure 14,231 1.0 –––––––– ––––––––

101,417 6.0

–––––––– ––––––––Audited

Year ended

31 March 2020

£ %

Expected tax at statutory UK income tax rate of 19% (272,043) 19.0

Increase/(decrease) in tax resulting from:

Effect of different tax rates in foreign jurisdictions 58,567 (4.1)

Research and development tax credits (35,509) 2.4

Tax losses/(utilised) carried forward 150,660 (10.4)

Capital allowances less depreciation (1,159) 0.1

Deferred tax credit (8,738) 0.6

Non-deductible expenditure 63,975 (4.4) –––––––– ––––––––

(44,247) (3.0)

–––––––– ––––––––

97

Audited

Year ended

31 March 2019

£ %

Expected tax at statutory UK income tax rate of 19% (247,674) 19.0

Increase/(decrease) in tax resulting from:

Effect of different tax rates in foreign jurisdictions 25,581 (2.0)

Tax losses/(utilised) carried forward 175,113 (13.5)

Capital allowances less depreciation 946 (0.1)

Deferred tax credit (8,738) 0.7

Non-deductible expenditure 46,034 (3.5)

Adjustment for under provision in previous periods 16,127 (1.2) –––––––– ––––––––

7,389 0.6

–––––––– ––––––––Unaudited

Period ended

30 November 2019

£ %

Expected tax at statutory UK income tax rate of 19% (221,841) 19.0

Increase/(decrease) in tax resulting from:

Effect of different tax rates in foreign jurisdictions 29,632 (2.5)

Tax losses/(utilised) carried forward 170,177 (14.6)

Capital allowances less depreciation (5,011) 0.4

Non-deductible expenditure 27,043 (2.3)

Deferred tax credit (5,826) 0.5 –––––––– ––––––––

(5,826) (0.5)

–––––––– ––––––––The Group had a deferred tax liability of £70,488 as at 30 November 2020 (31 March 2020: £76,314,

31 March 2019: £85,053, 30 November 2019: £79,227). The deferred tax liabilities relate to taxable

temporary differences.

As at 30 November 2020, the Group had no tax losses available to be carried forward against future profits,

(31 March 2020: £2,184,034, 31 March 2019: £1,391,086, 30 November 2019: £2,288,307).

98

13. Intangible assets

The following table summarises the Group’s intangibles for each of the periods presented:

Development

costs Trademarks Brands Goodwill Total

£ £ £ £ £

Cost

As at 1 April 2018 – – 459,916 41,373 501,289

Additions through business

combinations* – – – 16,434 16,434

Additions 193,614 13,999 – – 207,613 –––––––– –––––––– –––––––– –––––––– ––––––––As at 31 March 2019 193,614 13,999 459,916 57,807 725,336

Additions 283,538 – – – 283,538 –––––––– –––––––– –––––––– –––––––– ––––––––As at 30 November 2019 477,152 13,999 459,916 57,807 1,008,874 –––––––– –––––––– –––––––– –––––––– ––––––––Additions 156,222 27,328 – – 183,550 –––––––– –––––––– –––––––– –––––––– ––––––––

As at 31 March 2020 633,374 41,327 459,916 57,807 1,192,424

Additions through business

combinations* 364,220 17,126 – 10,235 391,581 –––––––– –––––––– –––––––– –––––––– ––––––––As at 30 November 2020 997,594 58,453 459,916 68,042 1,584,005

–––––––– –––––––– –––––––– –––––––– ––––––––Amortisation

As at 1 April 2018 – – 11,498 – 11,498

Amortisation – 1,077 45,992 – 47,069 –––––––– –––––––– –––––––– –––––––– ––––––––

As at 31 March 2019 – 1,077 57,490 – 58,567

Amortisation – 1,333 30,661 – 31,994 –––––––– –––––––– –––––––– –––––––– ––––––––As at 30 November 2019 – 2,410 88,151 – 90,561 –––––––– –––––––– –––––––– –––––––– ––––––––Amortisation – 3,158 15,332 – 18,490 –––––––– –––––––– –––––––– –––––––– ––––––––

As at 31 March 2020 – 5,568 103483 – 109,051

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

–––––––– –––––––– –––––––– ––––––––

100

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

Less: Future finance charges (155,214) (106,641) (79,037) (121,889) ––––––––– ––––––––– ––––––––– –––––––––Present value of minimum lease payments 1,375,998 1,216,486 1,055,193 1,269,450 ––––––––– ––––––––– ––––––––– –––––––––

Impact of IFRS 16 “Leases” on the statement of comprehensive income

The following tables summarises the effect of IFRS 16 “Leases” on the Group’s profit/loss before tax for

each period presented:

Audited Audited Audited Unaudited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Profit/(loss) before tax excluding

lease charges (1,181,022) (1,024,542) 2,004,483 (928,357)

Lease payments under short-term

and low value assets (51,082) (126,720) (53,841) (51,254)

Depreciation of right-of use assets (57,993) (231,972) (154,648) (154,648)

Lease finance expense (13,453) (48,572) (27,602) (33,324) ––––––––– ––––––––– ––––––––– –––––––––Profit/(loss) before tax and after

lease charges (1,303,550) (1,431,806) 1,768,392 (1,167,583)

––––––––– ––––––––– ––––––––– –––––––––16. Inventories

Audited Audited Audited Unaudited

As at As at As at As at

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Finished goods 816,605 1,315,193 2,050,163 1,125,680

Provision for obsolescence (15,000) (20,000) (43,946) (15,000) ––––––––– ––––––––– ––––––––– –––––––––Total inventories 801,605 1,295,193 2,006,217 1,110,680 ––––––––– ––––––––– ––––––––– –––––––––Cost of inventory recognised in profit

and loss 2,926,837 3,562,548 6,903,429 2,188,826

––––––––– ––––––––– ––––––––– –––––––––

102

17. Trade receivables

The majority of trade receivables are current and the Samarkand Holdings Directors believe these

receivables are collectible. The Samarkand Holdings Directors consistently assess the collectability of

these receivables. As at 30 November 2020, the Samarkand Holdings Directors considered a portion of

these receivables uncollectable and recorded a provision in the amount of £3,240 (31 March 2020: £6,096,

31 March 2019: £nil, 30 November 2019: £nil).

Audited Audited Audited Unaudited

As at As at As at As at

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Trade receivables 941,347 1,062,539 1,482,996 988,629

Provision for expected credit loss – (6,096) – (2,000) ––––––––– ––––––––– ––––––––– –––––––––Total trade receivables 941,347 1,056,443 1,482,996 986,629

––––––––– ––––––––– ––––––––– –––––––––The provision for expected loss rates are based on the Group’s historical credit loss experience. Most

significantly, the rate of provision is 100% for amounts more than one year past due. The historical loss rates

are then adjusted for current and forward-looking information on macroeconomic factors affecting the

Group’s customers. The Samarkand Holdings Directors have identified the gross domestic product growth

rates as the key macroeconomic factors in the countries in which the Group operates.

Invoice discount facilities

The carrying amounts of the trade receivables include receivables which are subject to an invoice

discounting arrangement. Under this arrangement, the Group has transferred the relevant receivables to

HSBC Invoice Finance (UK) Limited in exchange for cash and is prevented from selling or pledging the

receivables. However, the Group has retained late payment and credit risk. The Group therefore continues

to recognise the transferred assets in their entirety in its balance sheet. The amount repayable under the

agreement is presented as secured borrowing. The Group considers the held to collect business model to

remain appropriate for these receivables and hence continues measuring them at amortised cost.

The relevant carrying amounts are 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

£ £ £ £

Receivables 831,179 663,140 330,393 654,686

Associated secured borrowing (Note 22) (565,024) (422,133) (219,500) (457,389)

18. Other receivables and prepayments

Audited Audited Audited Unaudited

As at As at As at As at

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Accrued income 1,512 65,352 24,168 –

Prepayments 106,912 111,814 398,358 116,235

Other receivables 42,476 136,232 154,755 105,481 ––––––––– ––––––––– ––––––––– –––––––––Total other receivables and prepayments 150,900 313,398 577,281 221,716

––––––––– ––––––––– ––––––––– –––––––––

103

19. Share capital and merger relief reserve

The following table summarises the share capital of Samarkand Holdings for the periods presented:

Merger

Number of Share relief

Note shares capital reserve Totals

No. £ £ £

Balance as of 1 April 2018,

31 March 2019 and

31 March 2020 1,767 1,767 28,764 30,531

Sub-division of shares (a) 174,933 – – – ––––––––– ––––––––– ––––––––– –––––––––Balance as at 30 November 2020 176,700 1,767 28,764 30,531

––––––––– ––––––––– ––––––––– –––––––––The changes to the issued share capital of Samarkand Holdings during the period are as follows:

(a) By way of an ordinary resolution passed on 24 September 2020, Samarkand Holdings resolved to sub-divide each of its ordinary

shares of £1.00 each in issue into 100 ordinary shares of £0.01 each. Accordingly, the number of shares in issue increased from

1,767 to 176,700.

As at 30 November 2020, Samarkand Holdings’ issued and authorised share capital comprised 176,700

ordinary shares of £0.01 each.

Shareholders are entitled to receive dividends as declared from time to time and are entitled to one vote

per ordinary share at meetings of Samarkand Holdings.

Merger relief reserve

The merger relief reserve arises from the issue of shares by Samarkand Holdings in exchange for shares in

Samarkand Global Limited and is not distributable by way of dividends.

In the case of the Samarkand Holdings’ acquisition of Samarkand Global Limited, where all of the shares

were acquired on a share for share basis, then merger relief has been applied to those shares issued on a

share for share basis.

20. Share option plan

EMI share option scheme

As part of its strategy for executive and key employee remuneration, Samarkand Holdings established an

Approved Enterprise Management Incentive (“EMI”) Share Option Scheme on 20 October 2020 under

which share options may be granted to officers and employees or members of the Group. Under the rules

of the Share Option Scheme, Samarkand Holdings may grant EMI options to recruit or retain an eligible

employee.

There are overall and individual limits on the total market value (at the relevant dates of grant) of the shares

in Samarkand Holdings that can be acquired on the exercise of all EMI Options. The earliest date on which

an option may be exercised shall be the earlier of: (i) the Business Day immediately following the 18 month

anniversary of the Grant Date; and (ii) the date on which an exit occurs (the vesting date). The Option shall

lapse on the tenth anniversary of the Grant Date, assuming it is not exercised before then and no event

occurs to cause it to lapse earlier under the Rules. The exercise of option is not subject to any exercise

conditions.

Options over 16,964 shares were granted on 20 November 2020. The financial impact of such options was

immaterial because of the short period of time which elapsed between grant and the period end.

Unapproved share option scheme

On 20 October 2020, Samarkand Holdings adopted an Unapproved share option scheme whereby

Samarkand Holdings may grant an option to any employee it chooses.

104

On the grant date of any option, the Board may specify one or more appropriate exercise conditions for the

option. The maximum number of shares over which options that may be granted under the scheme is

11,044.

An option holder may not exercise an option before an exit unless otherwise provided for in that option

holder’s option certificate.

No such options had been granted as at 30 November 2020.

21. Other reserves

Currency translation reserve

The currency translation reserve represents cumulative foreign exchange differences arising from the

translation of the financial statements of foreign subsidiaries and is not distributable by way of dividends.

Capital contribution

The capital contribution comprises the difference between the amount of any long-term loans made on

interest-free terms and the fair value of the liabilities and is recorded as a capital contribution as a separate

component of equity.

22. Borrowings

The Group’s borrowings consist of:

• Fixed rate secured loan notes which incur interest at 5% per annum;

• Shareholder loans which incurs interest at between nil and base rate plus a margin of 6% per annum;

• Secured bank loans which incur interest at 3.99% and 5.0%;

• Other loans which incur interest at between nil and 15% per annum; and

• An invoice discount facility;

The following table provides a reconciliation of the Group’s future maturities of its total borrowings for each

of the periods presented:

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:

Fixed rate secured loan notes(a) – – 1,967,913 –

Loans from shareholders(b) 813,682 2,208,283 – 759,418

Bank loans(c) – – 400,000 –

Invoice discount advances(d) 565,024 422,133 219,500 457,389

Other loans 150,000 191,675 207,067 150,000 ––––––––– ––––––––– ––––––––– –––––––––Current 1,528,706 2,822,091 2,794,480 1,366,807 ––––––––– ––––––––– ––––––––– –––––––––

Payable after one year but less than five years:

Fixed rate secured loan notes – 1,903,145 1,157,007 1,525,853

Loans from shareholders 1,341,492 – – 1,400,903

Bank loans – – 200,000 –

Other loans – 21,242 14,200 10,732 ––––––––– ––––––––– ––––––––– –––––––––Non-current 1,341,492 1,924,387 1,371,207 2,937,488

––––––––– ––––––––– ––––––––– –––––––––Total borrowings 2,870,198 4,746,478 4,165,687 4,304,295

––––––––– ––––––––– ––––––––– –––––––––

105

(a) Fixed rate secured loan notes

On 26 July 2019, Samarkand Holdings executed a Convertible Loan Note Instrument for up to £1,500,000 Fixed Rate loan Notes

2022 and, on 20 February 2020, Samarkand Holdings executed a Supplementary Deed of Variation increasing the amount of the

Notes to £1,850,000 – the ‘Fixed Rate Secured Loan Notes 2023’. The maturity date on which the principal amount is due to be

redeemed is 26 July 2023, or, if earlier, the date on which the Notes are redeemed or converted. The redemption value is the

par value of such Notes. Interest is fixed at 5% per annum.

The Notes are secured by way of: i) a debenture from Samarkand Holdings in favour of Global Smollan Holdings (“Smollan”)

dated 26 July 2019; and ii) a deed of priority amongst Samarkand Holdings, Smollan and HSBC Bank plc dated 26 July 2019.

Each Noteholder may convert all or some of the Notes then outstanding (together with accrued interest) at any time on or

following the first Fund Raising (being a fundraising by Samarkand Holdings comprising any or all of loans, loan notes and

subscription for shares in an aggregate amount not exceeding £15,000,000 (and in the case of a subscription for shares, valuing

Samarkand Holdings at a pre-money valuation of not less than £20,000,000). The conversion price per share shall be equal to

90% of the Fund Raising Price. None of the Notes shall be capable of being converted prior to completion of the first Fund

Raising.

(b) Loans from shareholder

A shareholder has made the following loans to Samarkand Holdings:

• An unsecured interest-free loan of £1,499,470 drawn on 14 December 2017. The loan is repayable in full on or before the

third anniversary of the drawdown date.

• Three further loans with an aggregate principal amount of £700,000 were made during the year ended 31 March 2019,

each repayable on the first anniversary of the loan. By letters of variation, each such loan is now repayable on the second

anniversary. The loans incur interest at the rate of 6% per annum above the base rate from time to time of HSBC Bank plc.

(c) Bank loans

• On 13 October 2020, Samarkand Holdings entered in a loan from a bank under the Coronavirus Business Interruption Loans

Scheme (“CBILS”) for a principal sum of £400,000. The loan is guaranteed by the UK Government. The loan incurs interest

at a rate of 3.99% over the Bank of England’s Base Rate from time to time and is repayable over six years. No capital

repayments are due for the first 12 months following the loan advance. Thereafter the loan is repayable in 60 monthly

instalments.

• On 21 October 2020, Forever Young International Limited entered in a loan from Funding Circle under the Coronavirus

Business Interruption Loans Scheme (“CBILS”) for a principal sum of £200,000. The loan is guaranteed by the UK

Government. The loan incurs interest at a fixed rate of 5.0% and is repayable over five years. No capital repayments are

due for the first 12 months following the loan advance. Thereafter the loan is repayable in 48 monthly instalments.

(d) Invoice discount advances

These relate to receivables (see note 16 above) and are secured by an indemnity and undertaking by each of the Samarkand

Holdings Directors and a fixed and floating charge.

Fair value of borrowings

The carrying value of borrowings approximates their fair value.

The following table represents the Group’s finance costs for each of the periods presented:

Audited Audited Audited Unaudited

Year ended Year ended Year ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Interest on borrowings 110,162 213,310 183,196 130,377

Right-of-use lease finance expenses 13,453 48,572 27,602 33,324

Invoice discounting charges 21,135 25,348 9,224 17,203

Loss on foreign currency transactions – – 15,296 21,197

Bank charges 7,937 8,928 9,288 5,674 ––––––––– ––––––––– ––––––––– –––––––––Total finance costs 152,687 296,158 244,606 207,775

––––––––– ––––––––– ––––––––– –––––––––

106

23. Loans from directors

Audited Audited Audited Unaudited

As at As at As at As at

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Total loans from directors 499,511 499,511 505,755 499,511

––––––––– ––––––––– ––––––––– –––––––––The loans from directors are unsecured and incur interest at 5% per annum which shall be payable when

the loans are repaid or on conversion to ordinary shares of Samarkand Holdings.

The loans shall otherwise be repayable on 16 September 2025. No amounts may be repaid without the

prior written consent of Smollan.

Each lender may convert all or some of the loans then outstanding (together with accrued interest) at any

time on or following the first Fund Raising (being a fundraising by Samarkand Holdings comprising any or

all of loans, loan notes and subscription for shares in an aggregate amount not exceeding £15,000,000 (and

in the case of a subscription for shares, valuing Samarkand Holdings at a pre-money valuation of not less

than £20,000,000). The conversion price per share shall be equal to 90% of the Fundraising Price. None of

the loans shall be capable of being converted prior to completion of the first Fund Raising

24. Fair value and financial instruments

(a) Fair value

The fair value of an asset or liability is the price that would be received to sell that asset or paid to

transfer that liability in an orderly transaction occurring in the principal market (or most

advantageous market in the absence of a principal market) for such asset or liability. In estimating

fair value, the Samarkand Holdings Directors utilise valuation techniques that are consistent with the

market approach, the income approach and/or the cost approach. Such valuation techniques are

consistently applied. Inputs to valuation techniques include the assumptions that market

participants would use in pricing an asset or liability. IFRS 13 “Fair Value Measurement” establishes

a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active

markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value

hierarchy is defined as follows:

Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets at the

measurement date.

Level 2: Inputs (other than quoted prices included in Level 1) can include the following:

• observable prices in active markets for similar assets;

• prices for identical assets in markets that are not active;

• directly observable market inputs for substantially the full term of the asset; and

• market inputs that are not directly observable but are derived from or corroborated by

observable market data.

Level 3: Unobservable inputs which reflect the Samarkand Holdings Directors’ best estimates of what

market participants would use in pricing the asset at the measurement date.

All financial instruments measured at fair value use Level 3 valuation techniques for the each of the

years ended 31 March 2020 and 31 March 2019, and each of the periods ended 30 November 2020

and 30 November 2019.

Level 2 fair value measurements are those including inputs other than quoted prices included within

Level 1 that are observable for the asset or liability directly or indirectly.

There were no transfers between fair value levels during the periods presented.

107

(b) Financial instruments

For trade receivables, the Group applies the simplified approach permitted by IFRS 9 “Financial

Instruments”, which requires expected lifetime losses to be recognised from initial recognition of the

receivables.

Financial liabilities are initially measured at fair value and subsequently measured at amortised cost.

In the case of loans from a shareholder made on interest-free terms, the difference between the loan

amount and the fair value is recorded as a capital contribution as a separate component of equity.

The Group is not a financial institution. The Group does not apply hedge accounting and its

customers are considered creditworthy and pay consistently within agreed payments terms.

A classification of the Group’s financial instruments for the periods presented is included in the table

below:

Audited Audited Audited Audited

As at As at As at As at

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Cash and cash equivalents held at

amortised cost 270,564 572,586 1,232,403 427,236

Trade receivables and accrued income

held at amortised cost 942,858 1,121,795 1,507,164 986,629

Financial assets at amortised cost 42,476 136,231 154,755 105,481

Financial liabilities at amortised cost (1,516,368) (2,357,864) (3,736,225) (2,136,319)

Borrowings and leases (4,246,195) (5,962,963) (5,220,880) (5,563,013) ––––––––– ––––––––– ––––––––– –––––––––

Total (4,506,665) (6,490,215) (6,062,783) (6,179,986)

––––––––– ––––––––– ––––––––– –––––––––25. Financial risk management

For the purposes of capital management, capital includes issued capital and all other equity reserves

attributable to the equity holders of Samarkand Holdings. The primary objective of Samarkand Holdings’s

capital management is to ensure that the Group maintains a strong credit rating and healthy capital ratios

in order to support its business and maximise shareholder value.

To maintain or adjust the capital structure, the Samarkand Holdings Directors may adjust any future

dividend payments to shareholders, return capital to shareholders or issue new shares. No changes were

made in the objectives, policies or processes during the periods presented.

The Samarkand Holdings Directors manage Samarkand Holdings’s capital structure and adjust it, in light of

changes in economic conditions and the requirements of its financial covenants. The Group includes in its

net debt, all loans and borrowings less cash and short-term deposits.

The Group’s principal financial liabilities comprise of borrowings and trade and other payables, which it

uses primarily to finance its operations.

The Group’s principal financial assets include cash and cash equivalents and trade and other receivables

derived from its operations.

(a) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates

will affect the Group’s income or the value of its holdings of financial instruments. The objective of

market risk management is to manage and control market risk exposures within acceptable

parameters, while optimising the return.

108

(b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will

fluctuate because of changes in market interest rates. The Group is subject to this risk exposure as it

relates to changes in interest rates on its variable rate borrowings. As discussed in Note 21

“Borrowings”, the Group had £4.2 million of third party borrowings outstanding as at 30 November

2020 (31 March 2020; £4.8 million, 31 March 2019: £3.0 million; 30 November 2019: £4.4 million).

The variable rate loans which incur interest at HSBC base lending rate plus a margin of 6%.

The impact of an increase of 1% in the variable interest rates incurred by the Group is as follows:

Audited Audited Audited Audited

Year ended Year ended Period ended Period ended

31 March 31 March 30 November 30 November

2019 2020 2020 2019

£ £ £ £

Total 3,473 7,038 4,181 4,699

–––––––– –––––––– –––––––– ––––––––(c) Credit risk

Credit risk is the risk that a customer or counterparty to a financial instrument will not meet its

obligations under a contract and arises primarily from the Group’s cash in banks and trade

receivables.

(d) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate

due to changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign

exchange rates relates primarily to its operational activities (when financial assets and liabilities are

denominated other than in a company’s functional currency).

Most of the Group’s transactions are carried out in £. Foreign currency risk is monitored closely on

an ongoing basis to ensure that the net exposure is at an acceptable level.

The Group’s net exposure to foreign exchange risk was as follows:

Functional currency

CNY EUR HK$ US$ NZ$

£ £ £ £ £

As at 30 November 2020

Financial assets denominated in £ 895,969 48,208 18,576 7,989 –

Financial liabilities denominated in £ (42,487) (368,359) (24,546) (25,920) (224) –––––––– –––––––– –––––––– –––––––– ––––––––Net foreign currency exposure 853,482 (320,151) (5,970) (17,931) (224) –––––––– –––––––– –––––––– –––––––– ––––––––

Functional currency

CNY EUR HK$ US$ NZ$

£ £ £ £ £

As at 31 March 2020

Financial assets denominated in £ 614,031 39,594 27,467 50,346 –

Financial liabilities denominated in £ (52,388) (413,105) (37,796) (39,079) (81,499) –––––––– –––––––– –––––––– –––––––– ––––––––Net foreign currency exposure 561,643 (373,511) (10,329) 11,267 (81,499) –––––––– –––––––– –––––––– –––––––– ––––––––

109

Functional currency

CNY EUR HK$ US$ NZ$

£ £ £ £ £

As at 31 March 2019

Financial assets denominated in £ 8,308 33,410 27,121 5,759 –

Financial liabilities denominated in £ (15,308) (162,845) (45,114) (48,453) (22,740) –––––––– –––––––– –––––––– –––––––– ––––––––Net foreign currency exposure (7,000) (129,435) (17,993) (42,694) (22,740) –––––––– –––––––– –––––––– –––––––– ––––––––

Functional currency

CNY EUR HK$ US$ NZ$

£ £ £ £ £

As at 30 November 2019

Financial assets denominated in £ 136,246 3,218 37,892 27,081 –

Financial liabilities denominated in £ (17,281) (44,499) (18,097) – – –––––––– –––––––– –––––––– –––––––– ––––––––Net foreign currency exposure 118,965 (41,281) 19,795 27,081 – –––––––– –––––––– –––––––– –––––––– ––––––––

Foreign currency sensitivity analysis:

The following tables demonstrate the sensitivity to a reasonably possible change in foreign currency

exchange rates, with all other variables held constant.

The impact on the Group’s profit/loss before tax is due to changes in the fair value of monetary

assets and liabilities. The Group’s exposure to foreign currency changes for all other currencies is not

material.

A 10 per cent. movement in each of the Chinese Yuan (CNY), Euro (EUR), Hong Kong Dollar (HK$)

US Dollar (US$) and New Zealand Dollar (NZ$) would increase/(decrease) net assets by the amounts

shown below. This analysis assumes that all other variables, in particular interest rates, remain

constant.

CNY EUR HK$ US$ NZ$

£ £ £ £ £

As at 30 November 2020

Effect on net assets:

Strengthened by 10% 85,348 (32,015) (597) (1,793) (22)

Weakened by 10% (85,348) 32,015 597 1,793 22 –––––––– –––––––– –––––––– –––––––– ––––––––

CNY EUR HK$ US$ NZ$

£ £ £ £ £

As at 31 March 2020

Effect on net assets:

Strengthened by 10% 56,164 (37,351) (1,033) 1,127 (8,150)

Weakened by 10% (56,164) 37,351 1,033 (1,127) 8,150 –––––––– –––––––– –––––––– –––––––– ––––––––

CNY EUR HK$ US$ NZ$$

£ £ £ £ £

As at 31 March 2019

Effect on net assets:

Strengthened by 10% (700) (12,944) (1,799) (4,269) (2,274)

Weakened by 10% 700 12,944 1,799 4,269 2,274 –––––––– –––––––– –––––––– –––––––– ––––––––

110

CNY EUR HK$ US$ NZ$

£ £ £ £ £

As at 30 November 2019

Effect on net assets:

Strengthened by 10% 11,896 (4,128) 1,980 2,708 –

Weakened by 10% (11,896) 4,128 (1,980) (2,708) – –––––––– –––––––– –––––––– –––––––– ––––––––

(e) Cash and cash equivalents

The Group assesses credit risk from its cash and cash equivalents on a regular basis before any credit

losses are experienced. The Group considers such risk is limited as cash is held with banks with high

credit ratings.

(f) Trade receivables

Trade receivables are due from customers and collectability is dependent on the financial condition

of each individual company as well as the general economic conditions of the industry. The

Samarkand Holdings Directors review the financial condition of customers prior to extending credit

and generally does not require collateral in support of the Group’s trade receivables. The majority of

trade receivables are current and the Samarkand Holdings Directors believe these receivables are

collectible.

As at 30 November 2020, the Group had two customers that individually accounted for more than

10% of total receivables, totalling 65.5% of total trade receivables (31 March 2020: three customers

that individually accounted for more than 10% of total receivables, totalling 64.9%; 31 March 2019:

two customers that individually accounted for more than 10% of total receivables, totalling 54.4%;

30 November 2019 no customers that individually accounted for more than 10% of total

receivables).

(g) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they are

due. The Samarkand Holdings Directors manage this risk by:

• maintaining adequate cash reserves through the use of the Group’s cash from operations and

borrowings; and

• continuously monitoring projected and actual cash flows to ensure the Group maintains an

appropriate amount of liquidity.

The maturity profile of the Group’s financial obligations are as follows:

Less than 2nd to 5th

1 year years > 5 years Total

£ £ £ £

Trade and other payables 2,212,764 – – 2,212,764

Borrowings 2,794,480 1,371,207 – 4,165,687

Leases (gross cash flows) 263,360 770,912 102,644 1,136,916

Other liabilities 1,629,963 70,488 – 1,700,451 –––––––––– –––––––––– –––––––––– ––––––––––As at 30 November 2020 6,900,567 2,212,607 102,644 9,215,818

–––––––––– –––––––––– –––––––––– ––––––––––

111

Less than 2nd to 5th

1 year years > 5 years Total

£ £ £ £

Trade and other payables 1,661,312 – – 1,661,312

Borrowings 2,822,091 1,924,387 – 4,746,478

Leases (gross cash flows) 260,674 952,420 117,758 1,330,852

Other liabilities 908,634 76,314 – 984,948 –––––––––– –––––––––– –––––––––– ––––––––––As at 31 March 2020 5,652,711 2,953,121 117,758 8,723,590

–––––––––– –––––––––– –––––––––– –––––––––– Less than 2nd to 5th

1 year years > 5 years Total

£ £ £ £

Trade and other payables 826,043 – – 826,043

Borrowings 1,528,706 1,341,492 – 2,870,198

Leases (gross cash flows) 238,951 1,042,697 249,563 1,531,211

Other liabilities 697,954 85,053 – 783,007 –––––––––– –––––––––– –––––––––– ––––––––––As at 31 March 2019 3,291,654 2,469,242 249,563 6,010,459

–––––––––– –––––––––– –––––––––– –––––––––– Less than 2nd to 5th

1 year years > 5 years Total

£ £ £ £

Trade and other payables 1,496,719 – – 1,496,719

Borrowings 1,366,807 2,937,488 – 4,304,295

Leases (gross cash flows) 268,761 1,024,453 109,857 1,403,071

Other liabilities 662,590 79,227 – 741,817 –––––––––– –––––––––– –––––––––– ––––––––––As at 30 November 2019 3,794,877 4,041,168 109,857 7,945,902

–––––––––– –––––––––– –––––––––– ––––––––––26. Notes to the statements of cash flows

Net debt reconciliation:

Foreign

Opening New Accrued Net cash exchange Closing

balances agreements interest movements differences balances

£ £ £ £ £ £

Period ended

30 November 2020

Cash and cash equivalents 572,586 – – 663,948 (4,131) 1,232,403

Right-of-use lease

liabilities (1,216,486) – – 161,293 – (1,055,193)

Borrowings (4,746,478) – (168,063) 748,854 – (4,165,687)

Directors’ loans (499,511) – (6,244) – – (505,755) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Totals (5,889,889) – (174,307) 1,574,095 (4,131) (4,494,232)

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

112

Foreign

Opening New Accrued Net cash exchange Closing

balances agreements interest movements differences balances

£ £ £ £ £ £

Year ended

31 March 2020

Cash and cash equivalents 270,564 – – 303,388 (1,366) 572,586

Right-of-use lease

liabilities (1,375,998) – – 159,512 – (1,216,486)

Borrowings (2,870,198) – (189,314) (1, 686,966) – (4,746,478)

Directors’ loans (499,511) – – – – (499,511) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Totals (4,475,143) – (189,314) (1, 224,066) (1,366) (5,889,889)

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– Foreign

Opening New Accrued Net cash exchange Closing

balances agreements interest movements differences balances

£ £ £ £ £ £

Year ended

31 March 2019

Cash and cash equivalents 418,018 – – (145,452) (2,002) 270,564

Right-of-use lease liabilities – (1,362,545) (13,453) – – (1,375,998)

Borrowings (1,341,492) – (26,009) (1,502,697) – (2,870,198)

Directors’ loans (499,511) – – – – (499,511) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Totals (1,422,985) (1,362,545) (39,462) (1,648,149) (2,002) (4,475,143)

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– Foreign

Opening New Accrued Cash exchange Closing

balances agreements interest movements differences balances

£ £ £ £ £ £

Period ended

30 November 2019

Cash and cash equivalents 270,564 – – 164,047 (7,375) 427,236

Right-of-use lease

liabilities (1,375,998) – – 106,548 – (1,269,450)

Borrowings (2,870,198) – (119,283) (1,314,814) – (4,304,295)

Directors’ loans (499,511) – – – – (499,511) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––Totals (4,475,143) – (119,283) (1,044,219) (7,375) (5,646,020)

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––27. Contingencies

There are no known contingencies which might impact on the Group’s operations or financial position.

28. Related party transactions

Amounts owed to related parties

In addition to the borrowings from shareholders described in Note 21 above, the Group had the following

amounts owed to related parties:

• As at 31 March 2020, Samarkand Holdings had a net amount owing to a shareholder of £17,931

(31 March 2019: £113,815; 30 November 2019: £32,928). This amount was repaid in the period

ended 30 November 2020.

113

• As at 31 March 2020, Samarkand Holdings had a net amount owing to a shareholder of £3,334

(31 March 2019: £nil; 30 November 2019: £nil). This amount was repaid in the period ended

30 November 2020.

Each of the above balances were unsecured, interest-free and repayable on demand.

Amounts owed from a related party

As at 31 March 2019, Samarkand Holdings was owed £2,530 from a company owned and controlled by a

key member of management. This amount was repaid in the period ended 30 November 2019.

Services provided to/purchases from related parties

During the year ended 31 March 2020, the Group made sales of £30,774 to a shareholder (period ended

30 November 2020: £nil; year ended 31 March 2019: £31,599; period ended 30 November 2019: £29,978).

The Group made purchases from the same party totalling £29,579 in the year ended 31 March 2020 (year

ended 31 March 2019: £61,751; period ended 30 November 2019: £28,071).

During the period ended 30 November 2020, the Group made sales of £10,002 to a shareholder (year

ended 31 March 2020: £3,334; year ended 31 March 2019: £nil; period ended 30 November 2019: £nil).

During the year ended year 31 March 2020 the Group made sales of £68,515 to a company owned and

controlled by a key member of management (period ended 30 November 2020: £nil; year ended 31 March

2019: £18,600; period ended 30 November 2019: £68,515). The Group made purchases from the same

party totalling £2,530 in the year ended 31 March 2020 (period ended 30 November 2019: £2,530).

All of the above transactions were entered into on terms equivalent to those that prevail in arm’s length

transactions. The amounts owing are to be settled in cash.

29. Material subsequent events

On 3 December 2020, options over a total of 10,335 shares were issued under the unapproved share option

scheme.

30. Ultimate controlling party

As at 30 November 2020, Samarkand Holdings did not have any one identifiable controlling party.

31. Nature of the Consolidated Group Financial Information

The Consolidated Group Financial Information presented above does not constitute statutory financial

statements for the periods under review.

114

(C) Capitalisation and indebtedness of the Group

The following table shows the Group’s capitalisation and indebtedness as at 31 December 2020 and has

been extracted without material adjustment from the unaudited management accounts of the Group.

Capitalisation

Unaudited

As at

31 December 2020

£

Total Current Debt

Guaranteed –

Secured 4,153,663

Unguaranteed/Unsecured –

Total Non-Current Debt

Guaranteed –

Secured –

Unguaranteed/Unsecured –

Shareholder Equity

Share capital 1,767

Capital contribution 266,072

Merger relief reserve 28,764

Currency translation reserve (13,584)

Retained deficit (2,031,619)

Non-controlling interest 6,018 ––––––––––Total (1,742,582)

––––––––––There has been no material change in the capitalisation of the Group since 31 December 2020.

Indebtedness

Unaudited

As at

31 December 2020

£

A. Cash 1,405,996

B. Cash equivalent –

C. Trading securities – –––––––––––

D. Liquidity (A) + (B) + (C) 1,405,996 –––––––––––

E. Current financial receivable –

F. Current bank debt 600,000

G. Current portion of non- current debt 3,138,190

H. Other current financial debt 415,473 –––––––––––

I. Current Financial Debt (F) + (G) + (H) 4,153,663 –––––––––––

J. Net Current Financial Indebtedness (I) – (D) – (E) 2,747,667 –––––––––––

K. Non-current Bank loans –

L. Bonds Issued –

M. Other non-current loans – –––––––––––

N. Non-current Financial Indebtedness (K) + (L) + (M) – –––––––––––

O. Net Financial Indebtedness (J) + (N) 2,747,667

–––––––––––There has been no material change in the indebtedness of the Group since 31 December 2020.

As at the date of this Document, the Group had cash reserves of £1,092,442.

115

Part 8

Pro Forma Financial Information

(A) Accountant’s Report on the Pro Forma Financial Information

Crowe U.K. LLP

Chartered Accountants

Member of Crowe Global

55 Ludgate Hill

London

EC4M 7JW, UK

Tel +44 (0)20 7842 7100

Fax +44 (0)20 7583 1720

DX 0014 London Chancery Lane

www.crowe.co.uk

15 March 2021

The Directors and Proposed Directors

Samarkand Global plc

Unit 13 & 14 Nelson Trading Estate

The Path

Merton

London SW19 3BL

VSA Capital Group Ltd

15 Eldon Street

London EC2M 7LD

Dear Sirs and Madams,

We report on the unaudited pro forma Statement of Financial Position of Samarkand Global plc (the

“Company”) as at 16 February 2021 and on the unaudited pro forma Statement of Comprehensive Income

for the 36-day period then ended (together, the “Pro Forma Financial Information”) set out in Section (B)

“Pro Forma Financial Information” of Part 8 “Pro Forma Financial Information” of the Company’s

prospectus dated 15 March 2021 (the “Document”).

Opinion on financial information

In our opinion:

• the Pro Forma Financial Information has been properly compiled on the basis stated; and

• such basis is consistent with the accounting policies of the Company.

Responsibilities

It is the responsibility of the directors of the Company (the “Directors”) to prepare the Pro Forma Financial

Information in accordance with Sections 1 and 2 of Annex 20 to the UK version of Regulation number

2019/980 of the European Commission, which is part of UK law by virtue of the European Union

(Withdrawal) Act 2019 (together, the “PR Regulation”).

It is our responsibility to form an opinion, as required by Section 3 of Annex 20 to the PR Regulation, as to

the proper compilation of the Pro Forma Financial Information and to report that opinion to you.

116

In providing this opinion we are not updating or refreshing any reports or opinions previously made by us

on any financial information used in the compilation of the Pro Forma Financial Information, nor do we

accept responsibility for such reports or opinions beyond that owed to those to whom those reports or

opinions were addressed at the date of their issue.

Basis of preparation

The Pro Forma Financial Information has been prepared on the basis described, for illustrative purposes

only, to provide information about how:

• the consolidation of Samarkand Holdings Limited and its subsidiaries;

• the part-conversion of the Global Smollan Holdings convertible loan into ordinary shares of the

Company;

• the repayment in cash of the balance of the of the Global Smollan Holdings convertible loan;

• the conversion of certain amounts owed to directors into ordinary shares of the Company;

• the repayment in cash of certain amounts owed to directors;

• the conversion of certain borrowings into ordinary shares of the Company;

• the repayment in cash of certain borrowings;

• the issue of the placing shares; and

• the settlement of the transaction costs

might have affected the assets, liabilities, equity and earnings presented on the basis of the accounting

policies adopted by the Company in preparing the audited financial statements for the period ended

16 February 2021. This report is required by Section 3 of Annex 20 to the PR Regulation and is given for the

purpose of complying with that requirement and for no other purpose.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Financial

Reporting Council in the United Kingdom. We are independent of the Enlarged Group in accordance with

the FRC’s Ethical Standard as applied to Investment Circular Reporting Engagements, and we have fulfilled

our other ethical responsibilities in accordance with these requirements.

The work that we performed for the purpose of making this report, which involved no independent

examination of any of the underlying financial information, consisted primarily of comparing the

unadjusted financial information with the source documents, considering the evidence supporting the

adjustments and discussing the Pro Forma Financial Information with the Directors.

We planned and performed our work so as to obtain all the information and explanations which we

considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the

Pro Forma Financial Information is free from material misstatement (whether caused by fraud or other

irregularity or error), has been properly compiled on the basis stated and such basis is consistent with the

accounting policies of the Company.

117

Declaration

For the purposes of Prospectus Regulation Rule PRR 5.3.2R(2)(f), we are responsible for this report as part

of this Document and we declare that, to the best of our knowledge, the information contained in this

report, for which we are responsible, is in accordance with the facts and that this report makes no omission

likely to affect its import. This declaration is included in the Document in compliance with item 1.2 of

Annex 24 to the PR Regulation.

Yours faithfully,

Crowe U.K. LLP

Chartered Accountants

118

(B) Pro Forma Financial Information

Set out below is the unaudited pro-forma statement of financial position of the Company as at 16 February

2021 and the unaudited statement of comprehensive income of the Company for the 36-day period then

ended (together, the “Pro Forma Financial Information”). The Pro Forma Financial Information has been

prepared on the basis of the accounting policies adopted by the Company in preparing its audited financial

information for the for the 36-day period ended 16 February 2021, which is included in Section (B)

“Historical Financial Information of the Company” of Part 6 “Historical Financial Information of the

Company” of this Document and on the basis set out in the notes below, to illustrate the effects of:

• the consolidation of Samarkand Holdings;

• the conversion of £967,913 of the Smollan convertible loan into 935,182 Ordinary Shares and the

repayment in cash of the balance of £1,000,000;

• the conversion of £415,755 of Directors’ and former directors’ loans into 392,756 Ordinary Shares

and the repayment in cash of the balance of £90,000;

• the conversion of £150,000 of borrowings into 130,435 Ordinary Shares and the repayment in cash

of the further borrowings of £400,000;

• the issue of the 14,780,371 Fundraising Shares; and

• the settlement of the Admission and Placing costs

on the financial position of the Company, had the consolidation of Samarkand Holdings, the loan

conversions, the repayments of loans and borrowings, the Placing and Admission occurred on 16 February

2021 and on the earnings of the Company for the 36-day period then ended had the consolidation of

Samarkand Holdings, the loan conversions, the repayments of loans and borrowings, the Placing and

Admission occurred on the 12 January 2021. The Pro Forma Financial Information has been prepared for

illustrative purposes only. Due to its nature, the hypothetical financial position in the Pro Forma Financial

Information may differ from the Company’s actual financial position at this date or its earnings for the

period then ended. It is based on the schedules used in preparing:

• the audited Statement of Financial Position of the Company as at 16 February 2021 and the audited

Statement of Comprehensive Income for the 36-day period then ended, which is included in Section

(B) “Historical Financial Information of the Company” of Part 6 “Historical Financial Information of

the Company” of this Document; and

• the audited statement of financial position of the Group as at 30 November 2020 and the audited

Statement of Comprehensive Income for the 8-month period then ended, which is included in

Section (B) “Historical Financial Information of the Group” of Part 7 “Historical Financial Information

of the Group” of this Document.

Users should read the whole of this Document and not rely solely on the Pro Forma Financial Information

contained in this Section (B) “Pro Forma Financial Information” of Part 8 “Pro Forma Financial Information”

of this Document.

The report on the Pro Forma Financial Information is set out in Section (A) “Accountant’s Report on the Pro

Forma Financial Information” of Part 8 “Pro Forma Financial Information” of this Document.

119

Unaudited pro forma Statement of Financial Position

Adjustment Adjustment

Company Group Fundraising Pro forma

as at as at Adjustment Adjustment Adjustment and balances

16 February 30 November Consolidation Loan Loan settlement as at

2021 2020 adjustments conversions repayments of costs 16 February

(Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6) 2021

£ £ £ £ £ £ £

Intangible assets – 1,346,577 – – – – 1,346,577

Property, plant

and equipment – 152,425 – – – – 152,425

Right-of-use assets – 917,932 – – – – 917,932

Investment in

Samarkand

Holdings 353,400 – (353,400) – – – – –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Non-current

assets 353,400 2,416,934 (353,400) – – – 2,416,934 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Inventories – 2,006,217 – – – – 2,006,217

Trade receivables – 1,482,996 – – – – 1,482,996

Other receivables

and prepayments – 577,281 – – – – 577,281

Cash – 1,232,403 – – (1,490,000) 15,621,611 15,364,014 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Current assets – 5,298,897 – – (1,490,000) 15,621,611 19,430,508 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Total assets 353,400 7,715,831 (353,400) – (1,490,000) 15,621,611 21,847,442

–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Share capital 353,400 1,767 (1,767) 14,584 – 147,804 515,788

Share premium – – – 1,519,084 – 15,841,864 17,360,948

Merger relief

reserve – 28,764 (1,768,260) – – – (1,739,496)

Capital contribution – 266,072 (266,072) – – – –

Currency translation

reserve – (7,471) 7,471 – – – –

Retained deficit – (1,675,228) 1,675,228 – – (354,136) (368,057)

Non-controlling

interest – (32,168) – – – – (32,168) –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Equity 353,400 (1,418,264) (353,400) 1,533,668 – 15,621,611 15,737,015 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Right-of-use

lease liabilities – 805,590 – – – – 805,590

Borrowings – 1,371,207 – – – – 1,371,207

Deferred tax

liability – 70,488 – – – – 70,488 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Non-current

liabilities – 2,247,285 – – – – 2,247,285 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Trade and other

payables – 2,212,764 – – – – 2,212,764

Accrued liabilities – 913,185 – – – – 913,185

Deferred revenue – 94,496 – – – – 94,496

Borrowings – 2,794,480 – (1,117,913) (1,400,000) – 276,567

Right-of-use lease

liabilities – 249,603 – – – – 249,603

Loans from

Directors and

former directors – 505,755 – (415,755) (90,000) – –

Taxation – 107,244 – – – – 107,244

Provisions – 9,283 – – – – 9,283 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Current liabilities – 6,886,810 – (1,533,668) (1,490,000) – 3,863,142 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Total liabilities – 9,134,095 – (1,533,668) (1,490,000) – 6,110,427

–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Equity and

liabilities 353,400 7,715,831 (353,400) – (1,490,000) 15,621,611 21,847,442

–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––

120

Unaudited pro forma Statement of Comprehensive Income

Company Adjustment Pro forma

36 days Adjustment Fundraising results for the

ended Group Adjustment Adjustment Adjustment and 36-day period

16 February 36-day Consolidation Loan Loan settlement ended

2021 period adjustments conversions repayments of costs 16 February

(Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6) 2021

£ £ £ £ £ £ £

Revenue – 2,363,057 – – – – 2,363,057

Cost of sales – (1,018,539) – – – – (1,018,539) –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Gross profit – 1,344,518 – – – – 1,344,518

Selling and

distribution

expenses – (641,795) – – – – (641,795)

Administrative

expenses – (343,840) – – – (368,057) (711,897) –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––EBITDA and other

costs – 358,883 – – – (368,057) (9,174)

Depreciation and

amortisation – (46,879) – – – – (46,879)

Other costs – (15,009) – – – – (15,009) –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Operating profit/

(loss) – 296,995 – – – (368,057) (71,062)

Finance income – 4 – – – – 4

Finance costs – (36,089) – 6,416 5,261 – (24,412) –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Income/(loss)

before taxation – 260,910 – 6,416 5,261 (368,057) (95,470)

Taxation – (14,963) – – – – (14,963) –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Income/(loss)

after taxation – 245,947 – 6,416 5,261 (368,057) (110,433)

–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Other

comprehensive

income:

Translation of

foreign operations – (611) – – – – (611) –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Comprehensive

income/(loss) – 245,336 – 6,416 5,261 (368,057) (111,044)

–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––Notes:

(1) The financial information of the Company as at 16 February 2020 and for the 36-day period then ended has been extracted,

without adjustment, from Section (B) “Historical Financial Information of the Company” of Part 6 “Historical Financial

Information of the Company” of this Document.

(2) The adjustment to the pro forma Statement of Financial Position represents the addition of the audited assets, equity and

liabilities of the Group as at 30 November 2020, as extracted, without adjustment from Section (B) “Historical Financial

Information of the Group” of Part 7 “Historical Financial Information of the Group” of this Document.

121

The adjustment to the pro forma Statement of Comprehensive Income represents the addition of the results of the Group for

a 36-day period, as extracted from Section (B) “Historical Financial Information of the Group” of Part 7 “Historical Financial

Information of the Group” of this Document and adjusted to time-apportion the results for the 8-month period to a 36-day

period to match that of the Company. The time-apportionment adjustment removes 208 days of results from the 244 days

included in the results for the 8-month period ended 30 November 2020, leaving adjusted results for a 36-day period. The

adjustment is as follows:

Audited

Group

results for the Adjustment

8 months Removal of Adjustment

ended 208 days of Group results

30 November results on a for a

2020 pro-rata basis 36-day period

£ £ £

Revenue 16,016,277 (13,653,220) 2,363,057

Cost of sales (6,903,429) 5,884,890 (1,018,539) –––––––––– –––––––––– ––––––––––Gross profit 9,112,848 (7,768,330) 1,344,518

Selling and distribution expenses (4,349,942) 3,708,147 (641,795)

Administrative expenses (2,330,469) 1,986,629 (343,840) –––––––––– –––––––––– ––––––––––EBITDA and other costs 2,432,437 (2,073,554) 358,883

Depreciation and amortisation (317,736) 270,857 (46,879)

Other costs (101,730) 86,721 (15,009) –––––––––– –––––––––– ––––––––––Operating profit 2,012,971 (1,715,976) 296,995

Finance income 27 (23) 4

Finance costs (244,606) 208,517 (36,089) –––––––––– –––––––––– ––––––––––Income before taxation 1,768,392 (1,507,482) 260,910

Taxation (101,417) 86,454 (14,963) –––––––––– –––––––––– ––––––––––Income after taxation 1,666,975 (1,421,028) 245,947

–––––––––– –––––––––– ––––––––––Other comprehensive income:

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.

123

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)

137

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)

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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

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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.

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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%

Thomas Gooding 5,380,000 15.22% 5,463,111 10.58%

Wei Ling Emily Chang 1,448,800 4.10% 1,448,800 2.81%

Schroders Investment Management – – 4,347,826 8.42% –––––––––– –––––––––– –––––––––– ––––––––––Total 13,948,800 39.47% 19,347,276 37.48%

–––––––––– –––––––––– –––––––––– ––––––––––10.2 Save as disclosed above, the Company is not aware of any person who, as at the date of this

Document, directly or indirectly, has a holding of Ordinary Shares which is notifiable under English

law.

10.3 Save as set out above, the Company and the Directors are not aware of any persons who, as at the

date of this Document, directly or indirectly, jointly or severally, exercise or could exercise control

over the Company, nor are they aware of any arrangements the operation of which may at a

subsequent date result in a change of control of the Company.

10.4 None of the Shareholders referred to in this paragraph has different voting rights from any other

Shareholder in respect of any Ordinary Shares held by them.

11. Material Contracts

The following contracts (not being contracts entered into in the ordinary course of business) have been

entered into by the Company or another member of the Group either: (i) within the period of two years

immediately preceding the date of this Document which are or may be material to Group; or (ii) which

contain any provisions under which any member of Group has any obligation or entitlement which is, or

may be, material to Group as at the date of this Document.

11.1 Placing Agreement

The Company, the Directors, the Proposed Directors and VSA Capital have entered into a placing

agreement pursuant to which VSA Capital has agreed to use its reasonable endeavours to procure

placees for the Placing Shares at the Placing Price conditional, amongst other matters, VSA Capital

not having exercised its right to terminate the Placing Agreement and Admission occurring not later

than 8.00 a.m. on 22 March 2021.

The Company has agreed to pay VSA Capital a corporate finance fee and, provided the Placing

Agreement becomes unconditional, a commission payment in respect of the gross aggregate value

at the Placing Price of the Placing Shares, the Subscription Shares and a corporate broking fee. The

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Company has agreed to pay all of the costs and expenses of and incidental to the Placing, together

with any applicable VAT. The Company, Directors and Proposed Directors have given certain

warranties to VSA Capital as to the accuracy of this Document and as to other matters relating to the

Group. The liability of the Directors under these warranties is limited in time and amount save in

certain circumstances. The Company has given an indemnity to VSA Capital against any losses or

liabilities arising out of the proper performance of VSA Capital of its duties under the Placing

Agreement. VSA Capital may terminate the Placing Agreement in certain circumstances, including for

material breach of the warranties referred to above.

The Placing Agreement is governed by English law.

11.2 Lock in and Orderly Market Agreements between each of the Lock-In Shareholders, the Company

and VSA Capital

Pursuant to the terms of the Lock-in and Orderly Market Agreements entered into on 12 March 2021,

the Lock-In Shareholders have agreed not to dispose of any interest in Ordinary Shares for the period

of 12 months following Admission, except in certain limited circumstances and for a further period

of 12 months following the expiry of the initial 12 month period, only to dispose of an interest in the

Ordinary Shares following consultation with VSA Capital and the Company and in such manner as

they may reasonably require with a view to the maintenance of an orderly market in the Ordinary

Shares. In the case of David Hampstead and Simon Smiley, each of them is expressly permitted to

transfer such number of Ordinary Shares to satisfy and discharge his obligations under the terms of

the Hedging Agreement.

The Lock-In and Orderly Market Agreements are governed by English law.

11.3 Lock in and Orderly market Agreements between each of the Senior Managers, the Company and

VSA Capital

Pursuant to the terms of the Lock-in and Orderly Market Agreements entered into on 12 March 2021,

the Senior Managers have agreed not to dispose of any interest in Ordinary Shares for the period of

180 days following Admission, except in certain limited circumstances and for a further period of

12 months following the expiry of the initial 180 day period, only to dispose of an interest in the

Ordinary Shares following consultation with VSA Capital and the Company and in such manner as

they may reasonably require with a view to the maintenance of an orderly market in the Ordinary

Shares.

The Lock-In and Orderly Market Agreements are governed by English law.

11.4 Subscription Agreements

The Subscribers have entered into Subscription Agreements dated on or around 1 March 2021, with

the Company pursuant to which they have conditionally agreed to subscribe for 4,406,568

Subscription Shares at the Fundraising Price. The Subscription Agreements are conditional on,

amongst other matters, Admission occurring on or before 8.00 a.m. London time on 22 March 2021

(or such later date as the Company and VSA Capital shall agree, not to be later than 22 April 2021).

The Subscribers give certain customary confirmations under the Subscription Agreements.

The Subscription Agreements are governed by English Law.

11.5 Relationship Agreement between the Company, VSA and Smollan

The Company, VSA Capital and Smollan have entered into a relationship agreement dated 12 March

2021 under which Smollan, have agreed, conditional upon Admission, to regulate its (and its

associates) (the “Smollan Related Party Group”) ongoing relationship with the Company, to ensure

that the Group is capable of carrying on its business independently of the Smollan Related Party

Group.

143

Under the terms of the relationship agreement, for so long as the Smollan Related Party Group

beneficially owns at least 15 per cent. of the Ordinary Shares in issue and the Company is admitted

to AQSE Growth Market: (a) Smollan, amongst other things, will not (and shall procure so far as it is

able that each member of the Smollan Related Party Group will not) take any action, that would have

the effect of preventing the Group from complying with its obligations under the AQSE Growth

Market Rules; and (b) exercise its voting rights in respect of any shareholder resolution relating to

any transaction, arrangement or agreement between any part of the Group and the Smollan Related

Party Group.

For so long as the Smollan Related Group is interested in voting rights representing at least

15 per cent. of the Ordinary Shares in issue, it shall have be entitled to nominate a director to the

board of the Company subject to the terms and conditions set out in the relationship agreement.

The relationship agreement applies for so long as the Smollan Related Party Group holds at least

15 per cent. of the Ordinary Shares.

11.6 Aquis Corporate Adviser and Broker Agreement

On 12 March 2021, the Company entered into a corporate adviser and broker agreement with VSA

Capital pursuant to which, conditional upon Admission, the Company appointed VSA Capital as its

corporate adviser and broker for the purpose of the Aquis Stock Exchange Rules. The Company

agreed to pay VSA Capital an annual retainer of £50,000 per annum (exclusive of VAT and

disbursements) commencing on Admission (such fee to be paid in monthly arrears) together with

reasonable out of pocket expenses properly incurred in the performance of its services. The annual

retainer fee shall be subject to an annual review. The agreement sets out the ongoing responsibilities

of each party together with certain undertakings, indemnities and warranties given by the Company

to VSA Capital. The Company or VSA Capital may terminate the agreement at any time after the first

anniversary of the date of the agreement by giving to the other party not less than 3 months’ prior

written notice.

11.7 VSA Warrants

The Company executed a warrant instrument on 12 March 2021 to grant VSA Capital 645,347

warrants (equal to 1.25 per cent. of the Company’s market capitalisation on Admission) to subscribe

for Ordinary Shares at an exercise price equal to the Placing Price and such warrants exercisable at

any time from Admission for a period of 5 years.

11.8 VSA Capital Engagement Letter

An engagement letter dated 16 November 2020 was signed by the Company under which VSA

Capital agreed to act as the Company’s corporate adviser in connection with the Admission and the

Company’s corporate adviser and broker for the purposes of the Aquis Stock Exchange Rules. In

consideration of the services specified in the engagement letter, the Company agreed to pay VSA

Capital a fee of £120,000 plus VAT and disbursements and certain agreed commissions. In addition,

the Company agreed to grant VSA Capital certain warrants as described in paragraph 11.7 above.

11.9 CBIL loan Agreement with HSBC

On 20 October 2020, SHL has entered into a secured Coronavirus Business Interruption Loan (CBIL)

agreement with HSBC and drawn down the full facility of £400,000 on 21 October 2020. The purpose

of the loan is for working capital requirements only. No repayment for the first 12 months following

drawdown with the first repayment due on the date that is 13 months after the date of drawdown.

Interest: accrues at 3.99% per annum over the Bank of England Base Rate, payable on the

outstanding principal of the loan monthly and on the final repayment date, being 6 years from the

date of drawdown. The Business Interruption Payment from the UK government covers the interest

payment for the first 12 months following drawdown. The agreement includes customary events of

default for loan agreements of this nature.

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11.10 Convertible Loan Note Instrument constituted by Samarkand Holdings (and novated to the

Company)

On 26 July 2019, Samarkand Holdings issued a secured convertible loan note instrument constituting

up to £1,500,000 fixed rate secured convertible loan notes (the 2019 LN Instrument), for which

Smollan subscribed the full amount.

On 20 February 2020, Samarkand Holdings executed a supplementary deed of variation of the 2019

LN Instrument, increasing the principal amount of the loan notes to £1,850,000. The additional

£350,000 loan notes issued were subscribed for in full by Smollan. Interest accrues at 5% per annum

on the principal amount of the notes and on a daily basis.

The principal amount of the loan notes is due to be redeemed in cash to Smollan on 26 July 2023

together with the interest accrued, unless the loan notes are redeemed or converted earlier in

accordance with the terms of the loan note instrument. With Smollan’s prior written consent,

Samarkand Holdings may redeem all or part of the loan notes that are less than £100,000 on no less

than 10 business days’ prior notice.

Smollan may convert all or some of the loan notes (together with the accrued interest) at any time

on or following the completion of the first fund raising of Samarkand Holdings by way of subscription

of shares in Samarkand Holdings by one or more investors after 16 September 2020 (the Equity Fund

Raising).

Conversion of the loan notes will be effected by Samarkand Holdings redeeming the aggregate par

value amount of the loan notes to be redeemed/converted plus any accrued interests, and then

applying the redemption monies in subscribing for ordinary shares of £0.01 each in the share capital

of Samarkand Holdings, at a subscription price that is equal to 90% of the subscription price to be

paid by those investor(s) participating in the first Equity Fund Raising (or if higher any subsequent

Equity Fund Raising). Any accrued interest that is not converted will be paid separately in accordance

with the terms of the instrument.

On 16 February 2021, Smollan, Samarkand Holdings and the Company entered into a deed to novate

the rights and obligations of the 2019 LN Instrument (as varied on 20 February 2020) from

Samarkand Holdings to the Company to be effective on earlier of the completion of the

re-registration of the Company as a public limited company and 31 March 2021. It is intended that

on or around Admission, the sum of £1 million be repaid by the Company pursuant to the terms of

the instrument and the balance of the 2019 LN Instrument (as varied on 20 February 2020) be

converted into new Ordinary Shares at a subscription price that is equal to 90% of the Fundraising

Price.

11.11 Smollan Non-convertible Loan Notes constituted by Samarkand Holdings (and novated to the

Company)

On 24 September 2020, Samarkand Holdings issued a secured non-convertible loan note instrument

constituting up to £1,146,299.50 fixed rate secured loan notes and which Smollan subscribed the full

amount. Interest accrues at 5% per annum on the principal amount of the notes and on a daily basis.

The maturity date is 24 September 2025 or if earlier, the date on which the notes are redeemed

pursuant to the terms of the instrument.

On 16 February 2021, Smollan, Samarkand Holdings and the Company entered into a deed to novate

the rights and obligations of the £1,146,299.50 fixed rate secured non-convertible loan notes from

Samarkand Holdings to the Company to be effective on earlier of the completion of the

re-registration of the Company as a public limited company and 31 March 2021. In addition, subject

to Admission occurring, the Company and Smollan agreed to enter into a new term loan agreement

for the indebtedness with customary provisions for an agreement of this nature at which time

Smollan shall surrender its rights under the £1,146,299.50 fixed rate secured non-convertible loan

notes. The loan remains repayable with accrued interest on 24 September 2025 unless it is repaid

earlier in accordance with its terms.

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11.12 Loans by Directors to Samarkand Global

David Hampstead (DH) and Simon Smiley (SS) each entered into a letter agreement with Samarkand

Global on 24 September 2020, recording the terms of the unsecured personal loans they have

granted to SGL (the “Directors’ Convertible Loans”). The two letter agreements contain substantially

the same terms.

The main terms of the Directors’ Convertible Loans are:

Principal and Interest. The principal amount of DH’s loan is £123,198.50 and that of SS’s loan is

£196,035.79 respectively. Interest accrues at 5% per annum on a daily basis.

Repayment. The principal together with accrued interest is repayable on 16 September 2025 or if

earlier on an Exit or insolvency event. “Exit” is defined to mean the sale of shares in Samarkand

Global where the buyer becomes the majority shareholder or a disposal of all or a substantial part

of the assets of Samarkand Global to a third party.

Conversion. Conversion of the loan monies by subscribing for ordinary shares of £0.01 each in the

share capital of Samarkand Holdings, at a subscription price that is equal to 90% of the subscription

price to be paid by those investor(s)

Undertakings. DH, SS and Samarkand Global acknowledge that the Directors’ Convertible Loans will

not be repaid without Smollan’s prior written consent or until the Smollan Convertible Loan Notes

are fully repaid or converted, and that DH and SS will not be entitled to convert any part of their

loans unless Smollan has the same right arising at the same time in respect of the Smollan

Convertible Loan Notes.

On 24 February 2021, DH, SS, Samarkand Global and the Company entered into an agreement

conditional on Admission to release and discharge the liability of the principal and interest of the

Directors’ Convertible Loans by the subscription and issue of new Ordinary Shares at a subscription

price that is equal to 90% of the Fundraising Price to DH and SS respectively.

11.13 TG Loan to Samarkand Global (and novated to the Company)

Thomas Gooding (TG) has entered into a letter agreement with Samarkand Global on 24 September

2020, recording the terms of an unsecured personal loan he has granted to Samarkand Global (the

TG Loan). The key terms are:

Principal and Interest. The principal amount is £180,276.36. Interest accrues at 5% per annum on a

daily basis.

Repayment. The principal together with accrued interest is repayable on 16 September 2025.

Undertakings. TG has undertaken that the TG Loan will not be repaid without Smollan’s prior written

consent or until the Smollan Convertible Loan Notes are fully repaid or converted.

On 24 February 2021, TG, Samarkand Global and the Company entered into a deed to novate the

rights and obligations of the TG Loan from Samarkand Global to the Company. It is intended that on

or around Admission, the sum of £90,000 be repaid by the Company and the balance of

approximately £95,577 be converted into new Ordinary Shares at a subscription price that is equal

to the Fundraising Price.

11.14 Paul Dracup Loan to Forever Young (and novated to the Company)

On or around 26 February 2019, Paul Dracup agreed to loan to Forever Young International Limited

the amount of £150,000 (PD Loan) with certain terms including the repayment date subsequently

amended by letter on 22 September 2020. The key terms are as follows:

Principal and Interest: the principal amount of the loan is £150,000. Interest accrued at the rate of

7.5% per annum from 26 February 2019 to 30 June 2020 and from 1 July 2020, the interest accrued

at a rate of 15% per annum. The interest is payable monthly.

146

Repayment: The repayment date of the principal amount and any accrued (but unpaid interest) was

extended to 31 March 2021 on 31 December 2020.

Guarantees: David Hampstead and Simon Smiley agreed to provide personal guarantees to Paul

Dracup on a joint and several basis in respect of the obligations of Forever Young in respect of this

loan.

Forever Young is entitled to repay all or part of the loan at any time without bonus or penalty.

On 24 February 2021, Paul Dracup, Forever Young and the Company entered into a deed to novate

the rights and obligations of the PD Loan from Forever Young to the Company. It is intended that on

or around Admission, the balance of approximately £150,000 be converted into new Ordinary Shares

at a subscription price that is equal to the Fundraising Price.

11.15 Hedging Agreement

Samarkand Holdings, David Hampstead, Simon Smiley and the Company entered into a hedging

agreement on 16 February 2021 pursuant to which Messrs Hampstead and Smiley each agreed to

transfer such number of their Ordinary Shares to satisfy the outstanding options granted to

employees pursuant to the Option Exchanges subject to a maximum of 992,000 Ordinary Shares, of

which it is expected Mr Hampstead will transfer 486,400 Ordinary Shares and Mr Smiley will transfer

505,600 Ordinary Shares upon the exercise of the options by employees at the agreed exercise price.

11.16 SHA Deed of Novation

On 16 February 2021, the Company entered into a deed with Samarkand Holdings, David

Hampstead, Simon Smiley, Thomas Gooding and Smollan. Pursuant to the terms of the deed, the

parties agreed that the 2020 Shareholders’ Agreement is terminated in respect of Samarkand

Holdings. Further, the Company and the other parties (other than Samarkand Holdings) agreed to be

bound by and comply with their respective terms under the 2020 Shareholders’ Agreement which

shall apply in all respects to the Company as if it were Samarkand Holdings and to them in their

respective capacity as shareholders of the Company. The parties agreed that the arrangements

between the Company and the other parties in respect of the Company described in the deed shall

terminate upon Admission.

12. Related Party Transactions

Save as described above, in paragraph 11 above (Additional Information – Material Contracts), the

Company was not party to any related party transactions during the period covered by the historical

financial information contained in Part 10 of this Document up to the date of this Document.

13. Employees

As at 30 November 2020, the Group employed approximately 92 employees. The split of employees by area

of activity is as follows:

Activity Number of Employees

Management 9

Sales 32

Technology 15

Administration 3

Marketing 4

Operations 15

Warehouse 10

Finance 4

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14. Legal and Arbitration Proceedings

There are no, nor have there been any, governmental, legal or arbitration proceedings (including such

proceedings which are pending or threatened of which the Company is aware) during the last 12 months

prior to the date of this Document which may have, or have had in the recent past, a significant effect on

the Company’s and/or Group’s financial position or profitability.

15. Working Capital

In the opinion of the Company, taking into account the committed facilities available to Group, the Group

has sufficient working capital for its present requirements, that is for at least the next 12 months following

the date of this Document.

16. No Significant Change

There has been no significant change in the financial position or financial performance of the Group since

30 November 2020, being the end of the last financial period for which unaudited interim financial

information, set out in Part 7 (Historical Financial Information) of this Document, has been published, to

the date of this Document.

17. Mandatory Takeover Bids, Squeeze-Out Rules, Sell-Out Rules and Takeover Bids

17.1 Mandatory takeover bids

The Takeover Code applies to the Company. Under the Takeover Code, if an acquisition of interests

in shares were to increase the aggregate holding of an acquirer and persons acting in concert with it

to an interest in shares carrying 30 per cent. or more of the voting rights in the Company, the

acquirer and, depending upon the circumstances, persons acting in concert with it, would be

required (except with the consent of the Panel) to make a cash offer for the outstanding shares at a

price not less than the highest price paid for any interest in shares by the acquirer or his/her concert

parties during the previous 12 months. A similar obligation to make such a mandatory offer would

also arise when a person who (together with any persons acting in concert) was interested in shares

which in aggregate carried not less than 30 per cent. of the voting rights of the Company, but did not

hold shares which carried more than 50 per cent. of such voting rights acquired an interest in any

other shares which increased the percentage of shares carrying voting rights in which he/she was

interested.

17.2 Squeeze-out rules

Under the Companies Act, if a “takeover offer” (as defined in section 974 of the Companies Act) is

made for the Ordinary Shares and the offeror were to acquire, or unconditionally contract to acquire,

not less than 90 per cent. in value of the shares to which the offer relates (the “Takeover Offer

Shares”) and not less than 90 per cent. of the voting rights attached to the Takeover Offer Shares,

within three months of the last day on which its offer can be accepted, it could acquire compulsorily

the outstanding shares not assented to the offer. It would do so by sending a notice to outstanding

shareholders telling them that it will acquire compulsorily their shares and then, six weeks later, it

would execute a transfer of the outstanding shares in its favour and pay the consideration to the

Company, which would hold the consideration on trust for outstanding shareholders. The

consideration offered to the shareholders whose shares are acquired compulsorily under

the Companies Act must, in general, be the same as the consideration that was available under the

takeover offer.

17.3 Sell-out rules

The Companies Act also gives minority shareholders a right to be bought out in certain circumstances

by an offeror who has made a takeover offer. If a takeover offer related to all the Ordinary Shares

and at any time before the end of the period within which the offer could be accepted the offeror

held or had agreed to acquire not less than 90 per cent. of the Ordinary Shares to which the

offer relates, any holder of Ordinary Shares to which the offer related who had not accepted the

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offer could by a written communication to the offeror require it to acquire those Ordinary Shares.

The offeror would be required to give any shareholder notice of his or her right to be bought out

within one month of that right arising. The offeror may impose a time limit on the rights of the

minority shareholders to be bought out, but that period cannot end less than three months after the

end of the acceptance period. If a shareholder exercises his or her rights, the offeror is bound to

acquire those Ordinary Shares on the terms of the offer or on such other terms as may be agreed.

17.4 Takeover bids

No public takeover bid has been made in relation to the Company during the last financial year or

the current financial year.

18. Costs and Expenses

The aggregate costs and expenses of the Placing, Subscription and Admission (including the listing fees of

the AQUIS Stock Exchange, professional fees and expenses and the costs of printing and distribution of

documents) payable by the Company are estimated to amount to £1.4m (including VAT).

19. Statutory Auditors

Crowe U.K. LLP of 55 Ludgate Hill, London EC4M 7JW, is registered to carry out audit work by the Institute

of Chartered Accountants in England and Wales. Crowe are the statutory auditors of the Company and have

audited the consolidated statutory financial statements for Company as at and for the years ended

31 March 2019 and 31 March 2020 and the eight-month period ended 30 November 2020.

20. Consents

20.1 On 25 November 2020, Crowe U.K. LLP of 55 Ludgate Hill, London EC4M 7JW were appointed as

auditor of the Company. Crowe U.K. LLP is registered to carry out audit work by the Institute of

Chartered Accountants in England and Wales and the Financial Reporting Council.

20.2 Crowe U.K. LLP has given and has not withdrawn its consent to the inclusion in this Document of its

accountant’s reports in:

• Section A “Accountant’s Report on the Historical Financial Information of the Company” of

Part 6 “Historical Financial Information of the Company” of this Document;

• Section A “Accountant’s Report on the Historical Financial Information of the Group” of Part 7

“Historical Financial Information of the Group” of this Document; and

• Section A “Accountant’s Report on the Pro Forma Financial Information of the Enlarged

Group” of Part 8 “Pro Forma Financial Information of the Enlarged Group” of this Document

and has authorised the contents of those reports for the purposes of 5.3.2R(2)(f) of the Prospectus

Regulation Rules.

20.3 Crowe U.K. LLP has given and not withdrawn its written consent to the inclusion in this Document of

its name and reference.

21. General; and Documents Available for Inspection

21.1 Save as disclosed in this Document, the Directors are unaware of any environmental issues that may

affect the Group’s utilisation of its tangible fixed assets.

21.2 Copies of the following documents will be available for inspection for a period of 12 months

following Admission on the Company’s website at www.samarkand.global:

21.2.1 the New Articles of Association;

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21.2.2 Crowe U.K. LLP’s accountant’s reports set out in:

• Section A “Accountant’s Report on the Historical Financial Information of the Company”

of Part 6 “Historical Financial Information of the Company” of this Document;

• Section A “Accountant’s Report on the Historical Financial Information of the Group” of

Part 7 “Historical Financial Information of the Group” of this Document; and

• Section A “Accountant’s Report on the Pro Forma Financial Information of the Enlarged

Group” of Part 8 “Pro Forma Financial Information of the Enlarged Group” of this

Document

21.2.3 the consent letter referred to in paragraph 20 above of this Part 10 “Additional Information”;

and

21.2.4 this Document.

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