Company registration number 10796186 (England and Wales)
SONDER EUROPE LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 DECEMBER 2022
SONDER EUROPE LTD
COMPANY INFORMATION
Directors
K Potter
(Appointed 9 January 2024)
A Bowen
(Appointed 12 April 2024)
Secretary
Intertrust (UK) Limited
Company number
10796186
Registered office
1 Bartholomew Lane
London
United Kingdom
EC2N 2AX
Auditor
PKF Littlejohn LLP
15 Westferry Circus
London
E14 4HD
SONDER EUROPE LTD
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Directors' responsibilities statement
6
Independent auditor's report
7 - 9
Statement of comprehensive income
10
Statement of financial position
11
Statement of changes in equity
12
Notes to the financial statements
13 - 24
SONDER EUROPE LTD
STRATEGIC REPORT
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 1 -

The directors present the strategic report for the Period ended 30 December 2022.

Principal activities

The Company was incorporated on 31 May 2017 by Sonder Canada Inc., (together with the other subsidiaries of Sonder Holdings Inc. “the Group”) which is headquartered in San Francisco, California. The Group provides short and long-term rentals in various cities across North America and Europe. The Company’s shareholding was transferred to Sonder International Holdings Limited on 20 December 2019 and retransferred to Sonder Group B.V. on 25 June 2020.

As part of a reorganisation as at the 1st January 2021, the Company transferred the trade and assets of the real estate operations to Sonder Hospitality UK, a company under common control. This allowed Sonder Europe to focus on developing real-estate technology and brand for Sonder Holdings’ EMEA operations.

The services offered by the Group bring together the authenticity of peer-to-peer home rental, plus the dependable elevated services of a hotel. The Group offers modern and furnished accommodations in central, desirable neighbourhoods in each of its operating cities.

Review of the business

The loss for the period has been included in these financial statements for £32,648,714 (2021: loss of £12,579,621).

 

The Company is focused on developing real-estate technology and brand for Sonder Holdings’ EMEA operations. The Company did not generate revenue from its operations and is expected to report losses until Sonder’s EMEA operations mature.

Principal risks and uncertainties

Business risk

The Group’s business is particularly sensitive to trends in the travel, hospitality, and real estate markets, and trends in the general economy, which are unpredictable. Travel, including demand for accommodations, is highly dependent on discretionary spending levels. As a result, hospitality sales tend to decline during general economic downturns and recessions, and times of political or economic uncertainty, as consumers engage in less discretionary spending, are concerned about unemployment or inflation, have reduced access to credit or experience other concerns or effects that reduce their ability or willingness to travel. Leisure travel, which accounted for a substantial majority of Sonder’s pre-COVID-19 pandemic traveler demographic, is dependent on discretionary consumer spending levels. Downturns in worldwide or regional economic conditions, such as the downturn resulting from the COVID-19 pandemic, have led to a general decrease in leisure travel and travel spending, and similar downturns in the future may materially adversely impact demand for the Group’s accommodations. Such a shift in consumer behaviour could materially and adversely affect the Group’s business, results of operations, and financial condition.

Financial risk management objectives and policies

The Company’s objective in managing risk is the creation and protection of shareholder value. Risk is inherent in the Company’s activities, but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. The process of risk management is critical to the Company’s continuing success.

The Board of Directors supervises and is ultimately responsible for the overall risk management of the Company. The Board’s considerations of key financial risks impacting the business is set out below.

Liquidity risk management

Liquidity risk is the potential that, although remaining solvent, the Company does not have sufficient liquid financial resources to enable it to meet its obligations as they fall due, or can secure them only at excessive cost.

In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the Company is dependent on its parent, Sonder Holdings, which provides ongoing support both directly, in the form of making available cash funding, and indirectly through settling certain liabilities directly on behalf of the Company. The company has received confirmation from Sonder Holdings that it will ensure that the Company has access to sufficient resources to enable it to settle its liabilities as they fall due for a period of at least one year from the date of approval of these financial statements. See going concern disclosures for further information.

SONDER EUROPE LTD
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 2 -
Credit risk management

The Company’s credit risk is primarily attributable to its receivables and cash balances. The amounts presented in the Balance Sheets are presented net of allowances for doubtful receivables where required. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flow; however, no material allowance for impairment was required at 30 December 2022.

In the case of trade receivables, the Company manages credit risk through requiring payment for its services either in advance or through credit cards provided by reputable international providers of high credit standing. In the case of intercompany trade receivables, the Directors have assessed the credit worthiness of its affiliates, and management expects all Group companies to be fully funded and meeting their financial obligations. In the case of other counterparties, the Company manages its credit risk through credit checks of those counterparties. In the case of its cash balances, the Company believes that its credit risk is limited because it uses banks with high credit ratings as assigned by international credit rating agencies.

The Company does not have additional exposure to credit risk beyond what is recognised on its balance sheet.

Other risk management

The Company undertakes a limited number of transactions denominated in foreign currencies; consequently, the impact of exposure to exchange rate fluctuations is immaterial.

The Company is exposed to interest rate risk because the Company’s cash balances earn interest at variable interest rates, but the impact of interest rate changes is immaterial.

Future Developments

Going forward, the Company will focus its operations on developing real-estate technology and brand for Sonder Holdings’ EMEA operations. Since the Company is not expected to generate revenue from it’s operations, it is expected that it will report losses for the foreseeable future until Sonder’s EMEA operations become profitable.

Section 172 (1) statement

Sonder Europe Ltd is a UK based subsidiary of Sonder Group BV (the "Group"). The company is a special purpose company created to hold the Group's investments in Europe and the Middle East. In identifying key stakeholders and ensuring that their needs are considered in decision-making, the Company follows the policies, procedures and governance arrangements of the Group.

In performing their duties under section 172, the directors of the Company have had regard to the matters set out in section 172(1) as follows:

 

Shareholder

The directors of the Company are officers of the Group and ensure that any long-term decisions are in line with the Group's long-term goals as set in the Group's plan.

 

Employees

The Company does not have any employees of its own; instead, its workforce is provided under the Group. The Company's directors are in ongoing contact with the workforce, allowing them to understand and action any concerns and feedback on ad-hoc basis.

 

Customers, suppliers and business contacts

As a holding company the Company has no customers. The Company's suppliers are primarily the Group's subsidiaries, with which it is in ongoing contact to understand their requirements and collaborate effectively.

 

Tax authorities and regulators

The directors understand the importance of compliance and seeks to ensure the Company develops and maintains transparent, collaborative and professional relationships with tax authorities and regulators. The Company expects the highest standards of integrity from its officers and service providers and seeks to comply with relevant tax legislation and regulations.

 

SONDER EUROPE LTD
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 3 -

On behalf of the board

..............................
..............................
K Potter
A Bowen
Director
Director
Date: .............................................
Date: .............................................
SONDER EUROPE LTD
DIRECTORS' REPORT
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 4 -

The directors present their annual report and financial statements for the Period ended 30 December 2022.

Results and dividends

The results for the Period are set out on page 10.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the Period and up to the date of signature of the financial statements were as follows:

D Gardener
(Resigned 20 March 2024)
P Rothenberg
(Resigned 9 January 2024)
D Watt
(Resigned 12 April 2024)
K Potter
(Appointed 9 January 2024)
H Mehta
(Resigned 4 February 2022)
A Bowen
(Appointed 12 April 2024)
Auditor

The auditor, PKF Littlejohn LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Statement of disclosure to auditor

Each of the persons who is a director at the date of approval of this report confirms that:

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

Going concern

The Company has received confirmation of support from its ultimate parent undertaking, Sonder Holdings Inc, that it will ensure the Company has access to sufficient resources to enable it to settle its liabilities as they fall due for a period of at least one year from the date of approval of these financial statements. Sonder Holdings Inc has acknowledged that there may be a need to secure additional debt or equity financing in order to support the Company.

Sonder Holdings Inc has demonstrated the ability to successfully fundraise and, should the need arise, they are confident the funds can be raised as needed. However, the timing and success of those endeavors are inherently uncertain, giving rise to the material uncertainty in respect of going concern.

The directors conclude that there are material uncertainties about the ability of the Company to continue as a going concern after consideration of mitigating actions. Material uncertainties arise from the fact that while Sonder Holdings Inc has announced significant cash flow streams to support the group, those funds have not been received in their entirety.

The directors continue to adopt the going concern basis in preparing the financial statements. Further details regarding the going concern basis can be found in Note 1.3 to the financial statements.

SONDER EUROPE LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 5 -
On behalf of the board
..............................
..............................
K Potter
A Bowen
Director
Director
Date: .................................
2024-09-05
Date: .................................
2024-09-05
SONDER EUROPE LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 6 -

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

SONDER EUROPE LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF SONDER EUROPE LTD
- 7 -
Opinion

We have audited the financial statements of Sonder Europe Ltd (the 'company') for the Period ended 30 December 2022 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 1.3 in the financial statements, which indicates that the company’s activities and finances are solely dependent on its parent company, Sonder Holdings Inc. Although the company has received a letter of support from Sonder Holdings Inc, Sonder Holdings Inc has acknowledged that they could need to secure additional debt or equity financing in order to support the company. Whilst Sonder Holdings Inc plans to secure the additional financing required, the plans are not entirely within Sonder Holdings Inc’s control and as such, cannot be assessed as being certain.

 

As stated in note 1.3, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

In auditing the financial statements, we have concluded that the director’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report.

 

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

 

 

We have nothing to report in this regard.

SONDER EUROPE LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF SONDER EUROPE LTD
- 8 -

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

SONDER EUROPE LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF SONDER EUROPE LTD
- 9 -

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Timothy Harris (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Date: .........................
2024-09-05
Chartered Accountants
Statutory Auditor
15 Westferry Circus
London
E14 4HD
SONDER EUROPE LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 10 -
Period
Year
ended
ended
30 December
31 December
2022
2021
Notes
£
£
Revenue
3
3,695,353
3,075,107
Staff costs
5
(7,267,543)
(4,919,049)
Depreciation and other amounts written off tangible and intangible fixed assets
4
(994,103)
(994,103)
Other operating expenses
(22,328,532)
(7,900,111)
Operating loss
4
(26,894,825)
(10,738,156)
Finance costs
6
(1,266,346)
(949,886)
Other gains and losses
7
(4,487,543)
(891,579)
Loss before taxation
(32,648,714)
(12,579,621)
Income tax expense
8
-
-
Loss and total comprehensive income for the Period
(32,648,714)
(12,579,621)
SONDER EUROPE LTD
STATEMENT OF FINANCIAL POSITION
AS AT
30 DECEMBER 2022
30 December 2022
- 11 -
30 December
31 December
2022
2021
Notes
£
£
£
£
Non-current assets
Intangible assets
9
994,103
1,988,206
Current assets
Trade and other receivables
10
15,055,378
21,781,874
Cash and cash equivalents
938,593
150,212
15,993,971
21,932,086
Current liabilities
Trade and other payables
12
64,448,502
48,027,406
Net current liabilities
(48,454,531)
(26,095,320)
Total assets less current liabilities
(47,460,428)
(24,107,114)
Non-current liabilities
Borrowings
11
27,352,559
18,708,320
(27,352,559)
(18,708,320)
Net liabilities
(74,812,987)
(42,815,434)
Equity
Called up share capital
13
1
1
Other reserves
14
1,190,615
539,454
Retained earnings
(76,003,603)
(43,354,889)
Total equity
(74,812,987)
(42,815,434)
The financial statements were approved by the board of directors and authorised for issue on
.........................
2024-09-05
and are signed on its behalf by:
..............................
2024-09-05
..............................
K Potter
A Bowen
Director
Director
Company registration number 10796186
SONDER EUROPE LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 12 -
Share capital
Other reserves
Retained earnings
Total
£
£
£
£
Balance at 1 January 2021
1
211,412
(30,775,268)
(30,563,855)
Year ended 31 December 2021:
Loss and total comprehensive income for the year
-
-
(12,579,621)
(12,579,621)
Transactions with owners in their capacity as owners:
Equity-settled share-based payment transactions
-
328,042
-
0
328,042
Balance at 31 December 2021
1
539,454
(43,354,889)
(42,815,434)
Period ended 30 December 2022:
Loss and total comprehensive income for the period
-
-
(32,648,714)
(32,648,714)
Transactions with owners in their capacity as owners:
Equity-settled share-based payment transactions
-
651,161
-
0
651,161
Balance at 30 December 2022
1
1,190,615
(76,003,603)
(74,812,987)
SONDER EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 13 -
1
Accounting policies
Company information

Sonder Europe Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 1 Bartholomew Lane, London, United Kingdom, EC2N 2AX. The company's principal activities and nature of its operations are disclosed in the directors' report.

 

On 20 December 2019, Sonder Holdings, a newly created entity incorporated under the laws of Delaware, became the new ultimate Parent company, succeeding Sonder Canada, Inc. (“Sonder Canada”). In connection with that transaction, the Company's shares were transferred to Sonder International Holdings Ltd, a newly created entity incorporated under the laws of the United Kingdom and a wholly owned subsidiary of the ultimate parent company ("Sonder International"). The Company's shares were subsequently transferred in 2020 to Sonder Group B.V., a wholly owned subsidiary of Sonder International.

The Parent company is a corporation incorporated in Delaware, USA, with its registered address, at the date these financial statements were approved, at Corporation Service Company 251 Little Falls Drive, Wilmington, Delaware 19808. The address of the Parent company is 447 Sutter St. Suite 405, #542, San Francisco, California 94108, USA.

During 2021 Sonder Europe Ltd transferred all business to Sonder Hospitality UK. During the prior year Sonder Europe Ltd. provided short and long-term rentals that brought together the authenticity of home rental plus the dependable elevated services of a hotel. The Company offered modern and furnished accommodations in central, desirable neighbourhoods in each of its operating cities. The Company also owns and develops technology and brand for Sonder Holdings’ Europe and the Middle East (“EMEA”) operations.

As part of a reorganisation as at the 1st January 2021, the Company transferred the trade and assets of the real estate operations to Sonder Hospitality UK, a company under control. This allowed Sonder Europe to focus on developing real-estate technology and brand for Sonder Holdings’ EMEA operations.

1.1
Reporting period

In the current reporting period the financial year-end was changed from 31 December 2022 to 30 December 2022. As a result, the financial statements for the current year cover a period of 364 days, from 1 January 2022 to 30 December 2022, compared to the previous year's 365 days, from 1 January 2021 to 31 December 2021.

1.2
Basis of preparation

The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

SONDER EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -

As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:

 

Where relevant, equivalent disclosures have been given in the group financial statements of Sonder Holdings Inc. These financial statements are presented in British pounds sterling because that is the currency of the primary economic environment in which the Company operates.

The financial statements have been prepared under the historical cost convention. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The principal accounting policies adopted are set out below.

1.3
Going concern

The Company has received confirmation of support from its ultimate parent undertaking, Sonder Holdings Inc, that it will ensure the Company has access to sufficient resources to enable it to settle its liabilities as they fall due for a period of at least one year from the date of approval of these financial statements. Sonder Holdings Inc has acknowledged that there may be a need to secure additional debt or equity financing in order to support the Company.true

Sonder Holdings Inc has demonstrated the ability to successfully fundraise and, should the need arise, they are confident the funds can be raised as needed. However, the timing and success of those endeavors are inherently uncertain, giving rise to the material uncertainty in respect of going concern.

Management concludes that there are material uncertainties about the ability of the Company to continue as a going concern after consideration of mitigating actions. Material uncertainties arise from the fact that while Sonder Holdings Inc has announced significant cash flow streams to support the group, those funds have not been received in their entirety.

1.4
Revenue

The Company has performance obligations to provide market support services to group company by acting on and implementing the Group’s business strategy, developing vendor relationships, and providing administrative services. In return for the market support services provided by the Company, revenue on market support services is recognised as the services are provided.

 

The company recognises revenue from the following major sources:

SONDER EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
1.5
Intangible assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

 

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

 

Acquired technology 4 years

 

Acquired trade names 4 years

1.6
Impairment of intangible assets

At the end of the reporting period, the Company reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its 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. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

1.7
Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.8
Financial assets

All financial assets are recognised and derecognised on the trade date when the purchase or sale of a financial asset is under a contract that requires delivery of the financial asset within the timeframe established by the market. Financial assets are initially measured at fair value plus transaction costs.

Loans and receivables

Loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are measured at amortised cost using the effective interest method, less any impairment. When calculating the effective interest rate, the company estimates cash flows considering all contractual terms of the financial instrument, but does not consider future credit losses. Financial assets with maturities less than one year after the balance sheet date are included in current assets; financial assets with maturities greater than one year are classified as non-current assets.

Cash and Cash equivalents

Cash and cash equivalents are comprised of cash on hand and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

SONDER EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result if one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investments have been adversely affected.

Derecognition of financial asset

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial assets and substantially all the risks and rewards of ownership of the asset to another entity.

Expected credit losses

The Company measures expected losses based on relevant information about past events, including historical experiences, current conditions and reasonable supportable forecasts that affect the collectability of the reported amount.

1.9
Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or equity in accordance with the substance of the contractual arrangement.

Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs, and subsequently at amortised cost.

Derecognition of financial liabilities

The Company derecognises financial liabilities only when the Company’s obligations are discharged, cancelled or they expire.

1.10
Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.

1.11
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

SONDER EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
1
Accounting policies
(Continued)
- 17 -
Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.12
Employee benefits

Share-based payment arrangements in which the Company receives goods or services as consideration for equity instruments of Sonder Holdings Inc are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Company.

Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non market-based vesting conditions.

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 Company’s estimate of equity instruments that will eventually vest. At each balance sheet date, the Company revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the income statement such that the cumulative expense reflects the revised estimate, with the corresponding adjustment to equity reserves.

1.13
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.14
Foreign exchange

The financial statements of the Company are presented in the currency of the primary economic environment in which it operates, or its functional currency, which is British Pounds Sterling.

Transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing on the balance sheet date. Translation differences are recorded in the statements of comprehensive loss

SONDER EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 18 -
2
Critical accounting estimates and judgements

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Key sources of estimation uncertainty
Critical accounting judgement – value added tax

Until 30 June 2020, the Company accounted for value added tax (“VAT”) on its supplies under the Tour Operator’s Margin Scheme (“TOMS”), which required it to account for VAT at 20% on the supply of UK accommodations based on its gross margin (ie the difference between the price a guest pays for accommodations and the price paid by the Company to a property owner).

If VAT had been due outside the TOMS and if accommodation owners did not charge VAT to the Company, the Company would have been required to account for VAT at 20% on all revenue received from guests.

The Company’s application of the relevant definitions in the VAT legislation to determine whether the Company’s particular circumstances placed it within the TOMS has been challenged by HM Revenue & Customs.

This situation will be closely monitored, and adjustments made in future periods if relevant factors indicate that such adjustments are appropriate.

Since 2020, Sonder Europe Ltd has gone to the First Tier Tribunal ("FTT") to support the application of TOMS in the UK on its supplies. In July 2023, the FTT affirmed Sonder Europe's position on the above. HMRC has since appealed the decision and the appeal is scheduled at the Upper Tribunal in December 2024.

This situation is still closely monitored, and adjustments made in future periods if relevant factors indicate that such adjustments are appropriate.

Critical accounting judgement – Intangible assets

Acquired finite-lived intangible assets consist primarily of developed technology and brand acquired as part of the plan of reorganisation following the Corporate Inversion (see Note 1) and are amortised over the assets’ estimated useful economic lives of four years. Refer to Note 9 for details. The Company will also be required to test its intangible assets for potential impairment whenever events or conditions indicate that the carrying values of such assets may exceed their recoverable amounts.

Identification of indicators of impairment requires the application of judgement by management. Should indicators of impairment be identified, the recoverable amount of the assets will be measured by a comparison of their carrying values to the higher of their fair value or value-in use, based on the future discounted cash flows the assets are expected to generate. If such review indicates that the carrying value of intangible assets is not recoverable, the carrying amount of such assets will be reduced to their recoverable amounts.

3
Revenue
2022
2021
£
£
Revenue analysed by class of business
Cost Sharing Revenue from group company
3,695,353
3,075,107
SONDER EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
3
Revenue
(Continued)
- 19 -
2022
2021
£
£
Revenue analysed by geographical market
United Kingdom
3,695,353
3,075,107
4
Operating loss
2022
2021
Operating loss for the period is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
5,119
140,218
Amortisation of intangible assets (included within administrative expenses)
994,103
994,103
5
Employees

The average monthly number of persons (including directors) employed by the company during the Period was:

2022
2021
Number
Number
Operations
68
81
General and administration
40
8
Research and development
-
1
Sales and marketing
4
-
Total
112
90

Their aggregate remuneration comprised:

2022
2021
£
£
Wages and salaries
6,431,638
4,411,230
Social security costs
734,067
441,128
Pension costs
101,838
66,691
7,267,543
4,919,049
SONDER EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
5
Employees
(Continued)
- 20 -

Wages and salaries included share-based payments £651,161 (2021:£328,041) for the Period ended 30 December 2022.

The Company participates in a share option scheme for all employees. Options are exercisable on the shares of the parent Company at a price equal to the estimated fair value of the parent Company’s shares on the date of grant. The vesting period is four years, and options are forfeited if the employee leaves the Company before the options vest.

The Company recognises only the portion of the option award granted that is ultimately expected to vest as compensation expense and elects to recognize gross share-based compensation expense with actual forfeitures as they occur. The fair value of the Company’s stock options is estimated using the Black-Scholes option-pricing model, which uses the fair value of the ultimate parent company’s common stock and requires the input of the following subjective assumptions:

Expected term. The expected term for options granted to employees is based on the historical pattern of option exercise behaviour and the period of time they are expected to be outstanding.

Expected volatility. The expected volatility is based on the average volatility of similar public entities within the parent company’s peer group as the parent company’s common stock has not been trading publicly for a long enough period to rely on its own expected volatility.

Expected dividends. The dividend assumption is based on the parent company’s historical experience. To date, the parent company has not paid any dividends on its common stock.

Risk-free interest rate. The risk-free interest rate used in the valuation is the implied yield currently available on the United States Treasury zero-coupon issues, with a remaining term equal to the expected life term of the Company’s options.

The following table summarises the key assumptions used to determine the fair value of the Company’s stock options granted to employees, non-employees, officers and directors:

 

Period ended

30 December 2022

Year ended

31 December 2021

 

£

£

 

Expected term (in years)

4.09 - 6.25

3.99 - 4.02

Expected volatility

50.0% - 55.4%

62.7% - 64.2%

Dividend yield

  • %

  • %

Risk-free interest rate

1.79% - 4.34%

0.40% - 1.00%

Weighted-average grant date fair value per share

£14.43 - £35.33

£3.37 - £4.89

The weighted average share price at the date of exercise for share options exercised during the prior period was £14.69. The options outstanding at 30 December 2022 had exercise prices ranging from £11.11 to £145.79, and a weighted average remaining contractual life of 8 years.

6
Finance costs
2022
2021
£
£
Interest on financial liabilities measured at amortised cost:
Interest on lease liabilities
1,266,346
949,886
7
Other gains and losses
2022
2021
£
£
Other gains and losses
(4,487,543)
(891,579)
SONDER EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 21 -
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
-
-
-
0
-
0
Deferred tax
Origination and reversal of temporary differences
-
0
-
0
-
0
-
0

The charge for the Period can be reconciled to the loss per the income statement as follows:

2022
2021
£
£
Loss before taxation
(32,648,714)
(12,579,621)
Expected tax credit based on a corporation tax rate of 19.00% (2021: 19.00%)
(6,203,256)
(2,390,128)
Change in unrecognised deferred tax assets
6,203,256
2,390,128
Taxation charge for the period
-
-

The UK Government announced from April 2023 the rate of Corporation Tax will increase to 25% on profits which exceed £250,000. As the company made a loss in the year a rate of 19% will be applied.

9
Intangible fixed assets
Acquired brand
Acquired technology
Total
£
£
£
Cost
At 31 December 2021
1,988,206
1,988,206
3,976,412
At 30 December 2022
1,988,206
1,988,206
3,976,412
Amortisation and impairment
At 31 December 2021
994,102
994,104
1,988,206
Charge for the year
497,051
497,052
994,103
At 30 December 2022
1,491,153
1,491,156
2,982,309
Carrying amount
At 30 December 2022
497,053
497,050
994,103
At 31 December 2021
994,104
994,102
1,988,206
SONDER EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
9
Intangible fixed assets
(Continued)
- 22 -

Acquired technology and brand are amortised over their estimated useful lives, which is 4 years.

10
Trade and other receivables
Current
Non-current
2022
2021
2022
2021
£
£
£
£
VAT recoverable
271,690
450,165
-
-
Amounts owed by fellow group undertakings
14,708,079
21,136,250
-
0
-
0
Other receivables
30,965
134,365
44,644
51,494
Prepayments and accrued income
-
0
9,600
-
-
15,010,734
21,730,380
44,644
51,494
11
Borrowings - loans and promissory notes from group undertakings
2022
2021
£
£
2022
2021
£
£
Interest-bearing loan from Sonder Finance Europe B.V.; Interest at Bank of England plus 300 basis points; Accrued interest each month until 30 June 2023, at which time principal is due.
(23,590,989)
(11,784,216)
Interest-bearing loan from Sonder Canada, Inc; Interest at LIBOR plus 400 basis points; Accruing interest each month until December 2024, at which time principal is due.
(6,773)
(2,110,234)
Interest-bearing loan from Sonder Technology, Inc; Interest at LIBOR plus 400 basis points; Accruing interest each month until December 2024, at which time principal is due.
(2,477,268)
(2,110,234)
Interest-bearing loan from Sonder USA, Inc; Interest at LIBOR plus 400 basis points; Accruing interest each month until December 2024, at which time principal is due.
(1,277,529)
(2,703,636)
(27,352,559)
(18,708,320)
12
Trade and other payables
2022
2021
£
£
Trade payables
52,089
1,550
Amounts owed to fellow group undertakings
64,219,496
47,588,804
Accruals and deferred income
160,649
312,458
Other payables
16,268
124,594
64,448,502
48,027,406
SONDER EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 23 -
13
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
of £1 each
1
1
1
1
14
Other reserves
2022
2021
£
£
At the beginning of the Period
539,454
211,412
Additions
651,161
328,042
At the end of the Period
1,190,615
539,454

The Company’s ultimate parent, Sonder Holdings Inc, issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of the grant. 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 Company’s estimate of when the shares will vest and adjusted for the effect of non-market-based vesting conditions. The corresponding impact is a credit to other reserves.

15
Events after the reporting date

Marriott Agreement

On 19 August 2024, Sonder Holdings Inc, the ultimate parent of Sonder Europe Ltd ,announced that it had entered into a long-term strategic licensing agreement with Marriott International, Inc. Through this strategic agreement over 9,000 live Sonder units are expected to join the Marriott portfolio by the end of 2024, with additional units anticipated to join the Marriott system at later dates. Sonder properties are expected to be fully integrated with Marriott’s extensive distribution channels and are expected to participate in the Marriott Bonvoy travel program with over 201 million members. Full integration with Marriott’s digital channels and platform will occur in 2025.

 

Management expects this strategic agreement to unlock significant opportunities for increased revenue and efficiency, including:

16
Related party transactions

Sonder Holdings Inc is a related party because it is the Company’s parent undertaking. All other related parties are fellow subsidiaries of Sonder Holdings Inc.

The amounts outstanding are unsecured, interest free and will be settled in cash, except for intercompany loans from Sonder Canada Inc. and promissory notes from Sonder USA Inc (see Note 15). For certain leases, Sonder Europe received guarantees from Sonder Canada in lieu of deposits. No provisions have been made for doubtful debts in respect of the amounts owed. Expenses charged to the company by related parties in the period have been disclosed in Note 4.

SONDER EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 DECEMBER 2022
- 24 -
17
Controlling party

In the opinion of the directors, the Company’s ultimate parent company and ultimate controlling party is Sonder Holdings Inc, a company incorporated in Delaware, whose registered office is set out in Note 1. Sonder Holdings Inc is also the smallest and largest group in which the Company is included which prepares consolidated financial statements. The Company’s immediate parent undertaking is Sonder Group B.V., a company incorporated in the Netherlands, whose registered office is Basisweg 10, 1043 AP Amsterdam, The Netherlands.

18
Contingent liability

As discussed in Note 2, the Company has assessed that, until 30 June 2020, it was required to account for VAT on its supplies under the TOMS. If the Company was deemed to be making supplies that did not fall under TOMS, the Company would have been required to account for VAT at 20% on all revenue received from guests, net of any recoverable input VAT. This would result in the recognition of an additional liability of approximately £2,800,000 at 30 December 2022 (2021 £2,800,000).

Subsequent to the balance sheet date, the Tax Tribunal ruled in favour of Sonder Europe Limited (Decision Number TC 08852), HMRC do have the ability to appeal this decision, however, based on the Judgement of the Tax Tribunal, the Company now believes that the risk of any liability is remote.

2022-12-302022-01-01D GardenerP RothenbergD WattK PotterH MehtaA BowenIntertrust (UK) LimitedfalseCCH SoftwareiXBRL Review & Tag 2022.2On 19 August 2024, Sonder Holdings Inc, the ultimate parent of Sonder Europe Ltd ,announced that it hadTimothy Harris107961862022-01-012022-12-3010796186bus:Director42022-01-012022-12-3010796186bus:Director62022-01-012022-12-3010796186bus:CompanySecretary12022-01-012022-12-3010796186bus:Director12022-01-012022-12-3010796186bus:Director22022-01-012022-12-3010796186bus:Director32022-01-012022-12-3010796186bus:Director52022-01-012022-12-3010796186bus:RegisteredOffice2022-01-012022-12-30107961862022-12-3010796186core:ContinuingOperations2022-01-012022-12-30107961862021-01-012021-12-3110796186core:ContinuingOperations12022-01-012022-12-3010796186core:ContinuingOperations12021-01-012021-12-3110796186core:RetainedEarningsAccumulatedLosses2022-01-012022-12-3010796186core:RetainedEarningsAccumulatedLosses2021-01-012021-12-31107961862021-12-3110796186core:WithinOneYear2022-12-3010796186core:WithinOneYear2021-12-3110796186core:CurrentFinancialInstruments2022-12-3010796186core:CurrentFinancialInstruments2021-12-3110796186core:Non-currentFinancialInstruments2022-12-3010796186core:Non-currentFinancialInstruments2021-12-3110796186core:ShareCapital2022-12-3010796186core:ShareCapital2021-12-3110796186core:RetainedEarningsAccumulatedLosses2022-12-3010796186core:RetainedEarningsAccumulatedLosses2021-12-31107961862020-12-3110796186core:FinancialInstrumentsFairValueThroughProfitOrLoss2022-01-012022-12-3010796186core:Non-standardIntangibleAssetClass1ComponentIntangibleAssetsOtherThanGoodwill2021-12-3110796186core:Non-standardIntangibleAssetClass2ComponentIntangibleAssetsOtherThanGoodwill2021-12-3110796186core:Non-standardIntangibleAssetClass1ComponentIntangibleAssetsOtherThanGoodwill2022-12-3010796186core:Non-standardIntangibleAssetClass2ComponentIntangibleAssetsOtherThanGoodwill2022-12-30107961862021-12-3110796186core:FinancialLiabilitiesAmortisedCostcore:Secured2022-12-3010796186core:FinancialLiabilitiesAmortisedCostcore:Secured2021-12-3110796186bus:PrivateLimitedCompanyLtd2022-01-012022-12-3010796186bus:FRS1012022-01-012022-12-3010796186bus:Audited2022-01-012022-12-3010796186bus:FullAccounts2022-01-012022-12-301079618612022-01-012022-12-30xbrli:purexbrli:sharesiso4217:GBP