MySale Group PLC

Preliminary Results

RNS Number : 3516D
MySale Group PLC
09 October 2018
 

MySale Group Plc

Preliminary results for financial year to 30 June 2018

 

MySale Group plc (AIM: MYSL) ('the "group''), the leading international online retailer, is pleased to announce its audited preliminary results for the year to 30 June 2018.

 

Year to 30 June (A$ million)

FY18

 

FY17

 

change

 

 

 

 

 

 

Revenue

292.2

 

268.4

 

+9%

Gross Profit

85.7

 

76.0

 

+13%

Gross Margin

29.3%

 

28.3%

 

+100 bp

Underlying1 EBITDA

11.8

 

8.7

 

+36%

Underlying profit before tax

4.9

 

3.3

 

+50%

Reported loss before tax

(1.7)

 

(1.6)

 

-9%

Underlying basic earnings per share (cents)

4.3

 

2.5

 

+70%

 

Strategic and Operational highlights

·      Active customer base increased 9% to 1.0 million

·      Continued focus on activating customers with higher lifetime-value

·      Strategic plan to increase own-buy inventory delivered at 23% of online revenue

·      Gross margins increased by 100bps

·      Further brand partnerships result in over 1.2 million SKUs2 online 

·      Endless Aisle, including our full-price offer, continues to grow

·      Key online customer metrics improved

§ average order value increased 5% to A$91

§ order frequency per customer increased 4% to 3.5x per annum

§ items per basket increased 4% to 3.4 items

·      Product returns rate remains at industry-leading level of just 5%

 

Technology highlights

·      Data-driven proprietary technology platform fully deployed

§ supporting online revenue increase and cost reductions

·      Recent innovations continue to enhance customer engagement:

§ Increasing uptake of Ourpay - our proprietary 'buy-now, pay-later' payments system

§ Launch of Select, our subscription delivery service

·      Mobile sits at the heart of customer interactions, representing 60% of orders

·      Cumulative app downloads have reached 7.4 million

 

Outlook

·      Current year trading in line with expectations

·      The Board expects FY19 trading and underlying EBITDA to be in line with market forecasts

 

Carl Jackson, Chief Executive Officer commented;

 

''We are very pleased to deliver another set of record results, with significant increases in both our sales and profit performance for the year, demonstrating the strategic progress we have made to harness our technology platform, increase customer engagement and drive growth.

 

"We continue to provide a compelling online retail offer to our global customer base with unrivalled value combined with excellent choice across a number of attractive brands as well as a great user experience across all platforms, particularly mobile, where the majority of our sales are made. Our customer offer was further enhanced this year through the growth of Ourpay, our proprietary 'buy-now, pay-later' solution, and the launch of Select, our delivery subscription service, which have both been very popular with users. We continue to explore the commercialisation opportunities for Ourpay and anticipate launching the first test with an external partner imminently.

 

"Through targeted investment, customer engagement has improved with increases in average order values, basket size and order frequency. At the same time, we continue to deliver the integrated inventory solutions and new sales channels that our international brand partners require, which are becoming all the more relevant given the structural shift to online across the retail sector generally. 

 

''We aim to build on these foundations in the current year. Our online platform has been strengthened and will deliver even greater efficiency and lower unit costs moving forward.

 

''While it is early in the current year, and our peak trading period lies ahead, trading to date has been in line with expectations and the board expects that underlying EBITDA for the year will be in line with market forecasts.''

 

 

The information contained within this announcement is deemed to constitute inside information for the purposes of article 7 of the Market Abuse Regulation (EU) no. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain

 

 

1 Underlying: is the group's EBITDA, profit after tax expense or earnings per share calculated having excluded certain expenditure of a one-off, non-trading or non-cash nature in order to allow clearer understanding of the underlying performance of the year. Full details are contained within Note 6 to the financial statements. EBITDA: earnings before interest, taxation, depreciation and amortisation

 

2 Stock Keeping Unit

 

Enquiries:

MySale Group plc

 

Carl Jackson, Chief Executive Officer

+61 (0) 414 817 843

Graeme Burns, Investor Relations

+44 (0) 777 585 4516

 

 

Zeus Capital Limited (Nominated Adviser & Joint Broker)

+44 (0) 20 3829 5000

Nick Cowles/Andrew Jones, Corporate Finance

Benjamin Robertson, Corporate Broking

 

 

 

N+1 Singer (Joint Broker)

+44 (0) 20 7496 3000

Mark Taylor

 

 

 

MHP Communications (Financial PR Adviser)

+44 (0) 20 3128 8570

Simon Hockridge

Giles Robinson

Pete Lambie

 

 

 

 

 

 

About MySale Group

 

MySale is a leading international online retailer with established retail websites in Australia, New Zealand, South-East Asia and the United Kingdom. Founded in 2007, the Group provides customers with access to outstanding brands and products at discounted prices whilst simultaneously providing brand partners unique international inventory and sales solutions.

 

The Group provides a flexible marketplace solution in ANZ, SE Asia and the UK for domestic and international brands The Group offers a number of solutions for brands including 1P, 3P [strategic partners, managed and self-managed] The core product categories are womenswear, menswear, footwear, sports, health & beauty, homewares, technology and personalised gifts

 

Customers' shopping experiences are enhanced by the Group's deployment of leading edge technology to ensure personalised and localised product offerings. The customer experience has been at the heart of the Group's technology development since the earliest days and now mobile commerce is the Group's main sales channel. Proprietary technology innovations deployed include the Ourpay 'buy-now, pay-later' solution which has proved popular with over 130,000 customers using the solution.

 

The Group's online sales are supported by a robust and flexible network of in-house supply chain infrastructure and technology that enables MySale to offer products from around the world for sale and delivery to customers in each territory.

 

As a result of these exceptional capabilities in inventory management and international sales MySale has built an enviable portfolio of over 2,500 brand partners from whom products are sourced.

 

The Group operates websites under a number of different brands all of which operate on a uniform technology platform and a single international logistics infrastructure.

 

The Group operates 24 websites in eight countries; OzSale and BuyInvite in Australia; NzSale in New Zealand; SingSale in Singapore; MySale in Malaysia, Thailand, the Philippines, the United Kingdom and Hong Kong, and Cocosa in the United Kingdom, Australia and New Zealand; whilst the Group's retail websites are Deals Direct, OO.com and Top Buy in Australia and Identity Direct in Australia and New Zealand.

 

Chairman's statement

 

I am delighted to report that the group has followed up on the strong results seen in FY17 and delivered another year of record financial performance, while making further positive progress on our strategic objectives.

Our strategic focus over the last three years has resulted in significant improvements in the top and bottom lines. Over the past 12 months, the group delivered 9% growth in revenues to A$292 million, with an increase in gross profit of 13% to A$86 million and underlying EBITDA rose 36% to A$11.8 million.

We strive to provide the best possible service and value to our customers and have made further encouraging progress on this front, as demonstrated by our improved customer metrics. In the last 12 months we have continued to attract new customers to our offer, and those that transact with us continue to be extremely loyal and engaged with our online retail proposition, with high levels of repeat purchase activity.

Digital remains at the heart of our proposition and we have focused on ensuring that our user experience is both easy and convenient for customers, while fulfilling the needs of our brand and retail partners. In support of this, our new technology platform has really achieved a step change over the past year, providing the flexibility and scalability that underpins all of our strategic objectives.

While our technology platform supports our objectives, it is our team of dedicated staff that deliver these key outcomes. As such, I wish to record the board's appreciation of all our people who strive tirelessly around the globe every day, with impressive application and ingenuity, to deliver world class service to our customers and brand partners.

In the current year we will continue to leverage our strengths, particularly in the ANZ region, to expand the number of local and international brand partners and further extend our full price offering within Endless Aisle. As ever, the group's ability to provide customised sales solutions to our brand partners is a key aspect of how we support them.

We are confident that these initiatives will continue to support ongoing profitable growth and we remain very positive about the future prospects of the group.

_____________________________

Iain McDonald

Chairman

8 October 2018

 

 

Review of operations by the Chief Executive Officer

 

Over the past 12 months, MySale has delivered another record year of growth and improved financial performance, with the group well positioned to continue this positive trend into the new financial year.

 

We continue to make excellent progress against our strategic initiatives, with a focus on;

·      providing our customers with exceptional value, brands, choice and service;

·      excellence in delivering unique sales channels and world-class inventory management to brand partners;

·      leveraging the significant strength and efficiency of our proprietary technology platform and international logistics network.

 

The group's active customer base increased by 9% in the period, with revenue growing 9% to A$292.2 million (FY17: A$268.4 million). Meanwhile, our customer engagement continued to grow underpinned by our customer-focused digital innovations including Ourpay and Select, which further enhanced our customer offer during the year.

 

The group's strategic focus remained in growing gross profits rather than revenue. Again, we made further progress here, delivering an increase in gross profit of 13% to A$85.7 million (FY17: A$76.0 million) and a 100 bp increase in gross margin to 29.3% (FY17: 28.3%).

 

This represents the group's third successive year of increasing revenue, gross profit and gross margin.

 

Revenue and Margin by segment

 

FY18

 

Growth vs FY17

FY17

 

A$ million

Revenue

Gross profit

GP%

Revenue

Gross profit

GP Bp

Revenue

Gross Profit

GP%

Group

292.2

85.7

29.3%

+9%

+13%

+100

268.4

76.0

28.3%

ANZ

242.4

72.9

30.1%

+9%

+11%

+40

221.5

65.7

29.7%

S-E Asia

33.4

8.9

26.7%

-1%

+10%

+290

33.8

8.1

23.8%

ROW

16.5

3.8

23.5%

+26%

+67%

+580

13.1

2.3

17.7%

 

 

Underlying EBITDA also increased for the third successive year, growing a further 36% to A$11.8 million (FY17: A$8.7 million) as a result of the improved trading together with careful management of the cost base.

 

This positive performance represents another step forward on the group's path of profitable growth, driven by our clear plan to grow online activity;

·      securing more, higher lifetime-value, customers, via better localised merchandising and pricing;

·      increasing the proportion of own-buy (1P) inventory while reducing delivery promotions; and

·      deploying our technology platform to improve customer engagement and increase efficiency.

 

This strategic plan, established in 2015, re-focused the business on its core aims of providing exceptional value to customers in branded products alongside exceptional inventory management solutions to brand partners within the group's three core territories.

 

During the period, and across all territories, the group continued to dedicate its marketing resources and spend almost exclusively into measurable, digital channels to attract and engage both new and existing customers. The ongoing communication programme has seen those loyal and engaged customers spend move frequently (increase 4% to 3.5 times per year on average), and with transaction KPI's such as average order value and basket size also increasing 4% to A$91 and 3.4 items respectively.

Total underlying operating expenses increased 9% to A$73.9 million (FY17: A$67.4 million) reflecting the increased activity and volumes of trade during the year. The group made a planned investment into additional marketing with a 20% increase to 7.5% of revenue to support long term growth in the customer base.

 

Moving forward, we anticipate that our technology platform will be key to unlocking further operational efficiencies and reducing costs.

In the new financial year, we are already seeing the benefits that increased automation technology can bring, specifically in terms of lower staff costs, and we anticipate that our enhanced system will deliver additional future savings across buying, merchandising, marketing and logistics. 

Technology Development

During the year, the group maintained capital expenditure levels with the previous year, as planned, in order to further develop its proprietary technology capabilities. Following the release of a new and enhanced version of the group's technology platform late in FY17, this year's developments leveraged the capability now available within the group. This included more flexible and scalable functionality which supports our key objectives of increasing online revenue and using efficiency gains to decrease costs.

 

The group's marketplace-enabled platform allows full integration across every one of the group's sales channels, with all of the group's global portfolio of websites operating from a single platform. Through this, the group now benefits from a single live view of global inventory, which allows both 1P (owned) and 3P (consignment or drop-ship) products to be sold by any of our websites simultaneously.

 

Similarly, the platform can provide a single live view of each customer and their individual journeys allowing us to better serve their needs across all websites and mobile device apps. The mobile buyer remains at the heart of our customer journey and this channel accounted for 60% of orders received in the past year.

 

A key element of this technology development has been to enhance the group's data capabilities through better collection and analysis, improved machine learning and automation, which in turn is driving improved customer experiences, increased revenue and more efficiency. The platform allows for campaigns to be launched faster and more efficiently as well as providing seamless user interaction across all devices. These developments provide a step change in capability which will support further growth across the group in future.

 

In the prior year, the group launched its proprietary programme Ourpay, a 'buy-now, pay-later' programme which allows customers easy budgeting and seamless integration with their shopping journey. This instalment payment option helps customers manage their finances and has been shown to increase both the spend and shopping frequency of those customers joining the programme. Since its launch, this programme has proved popular with customers - more than 130,000 have now used it successfully - with those customers displaying higher average order values and buying frequency.

 

This payment solution was developed in-house in order to deliver a more flexible, cost-efficient and integrated system, which is better suited to the group's requirements than that provided by third parties. The system automates all aspects of the programme including credit scoring and monitoring; on which the group has adopted a conservative policy. At the year end the receivables balance associated with Ourpay was A$3.8 million and is anticipated to grow as transaction volumes increase. The group is assessing further opportunities to expand the reach of Ourpay and create additional commercial benefits. The launch of a test period with the first external retail partner is anticipated in October 2018.

 

Following the success of Ourpay, in FY17 the group launched Select, our new subscription delivery service, which allows regular customers to access reduced delivery costs in the period under review. This has also been popular, with more than 30,000 subscriptions purchased by the end of the year.

 

These specific digital innovations are part of the group's process of continual improvement in our customer experience, enhancing customer loyalty while giving the group better insights into our customers' needs and preferences.

 

Marketplace

The group's technology platform facilitates our intelligent marketplace and allows direct integration with brands and retailers providing them with access to all of our retail websites, whether that be as part of supporting an inventory management or providing a brand with a new retail channel.

During the period, we invested more time and funds into product selection to ensure customers have the best possible choice available. As a result, our marketplace platform has seen a huge increase in the SKU available in its first full year; increasing over four times to over 1.2 million. The group intends to further extend this product range, allowing brands partners to integrate directly or via third parties.

In addition, as we now have a live feed of global inventory to all websites, the group has been able to extend the length of time products are available and merchandised to customers. We call this Endless Aisle which refers to this incredible shopping selection our platform is now able to offer consumers.

Our marketplace operates with customers' mobile experience at its heart and is also simple and intuitive for vendors to use which allows us to efficiently support our brand partners and their sales ambitions.

 

Increasingly brands are using marketplace solutions to support their international sales as it provides local knowledge, existing audiences, and a cost-effective launch in a new territory. Due to the single global platform, our brand partners are able to offer their products seamlessly to multiple territories rather than be restricted to a single territory as is common with other platforms.

 

Brands and Strategic Partnerships

Following the notable strategic partnerships launched in FY17 in the period under review the group increased the number of brand partners listing on the marketplace platform to 2,000, which has driven the substantial increase in the number of SKU's available to customers.

The majority of the increased product selection has come from relationships with 3P suppliers, on which the group does not take any inventory risk as the terms of business are on a consignment or dropship basis. However, we have also successfully increased the proportion of 1P product on our sales channels as this supports product selection, brand curation and overall service proposition for customers. This reached 23% of sales during the period and the group expects that this proportion will continue to increase again in FY19, with a target to reach 25-30% of the sales mix in the medium-term.

 

Whilst the vast majority of goods sold are still done so on a consignment or drop-ship basis, this 1P strategy supports deeper relationships with brand partners, slightly higher gross margins and provides our customers with a wider product selection and faster delivery times. The group's 1P activity is focused on staple, high quality branded goods where the data supports strong engagement with our customers. This element of our consumer offer is continually improving as it has evolved from a focus on off-price inventory to a more customer-led, data-driven and planned retail solution with more continuity lines.

Our partnerships with flagship retail brands continue to provide a strong endorsement of the group's capabilities in supporting brands in establishing new sales channels as well as in inventory management. The retail landscape is undergoing continued structural change and large brands increasingly recognise the benefits that more integrated inventory partnerships can bring to their operations.

The group's well established international network, flexible and scalable technology platform and resources in key territories make it an ideal partner for international brands and retailers. Our platform allows us to customise our integration with any brand, thus delivering a tailored solution to their requirements.

Operations

During the year, the group's highly efficient platform processed record numbers of transactions, underlining the efficient processes and systems that the group has in place to support brands and serve customers. On average, over the past 12 months more than 40,000 new products were launched daily and over 11 million units were shipped in the year. Positively, customer returns remain at industry leading levels of just 5% overall.

The material progress in establishing the marketplace platform has allowed the group to unlock further operational efficiencies in the period. For example, through increased automation, certain internal functions have been downsized and in some instances outsourced, leaving the group as a leaner and more focused organisation. Having bedded in the new platform throughout the business during FY18 a comprehensive cost reduction programme commenced before the period end, the benefits of which will steadily increase across the FY19 financial year.

Australia & New Zealand (ANZ)

The group's largest operating segment had another year of increased revenues, gross profit and customer volumes. Gross profit increased by 11% to A$72.9 million (FY17: A$65.7 million) while revenue grew 9% to A$242.4 million (FY17: A$221.5 million). Gross Margin rose to 30.1% (FY17: 29.7%).

Our localised offer and strong merchandising continued to resonate with our customer base in the period, with a 4% improvement in our main customer KPIs of average order value, frequency and basket size.

The scale of our operations in this region, combined with our strong position in the online retail landscape, represent significant strengths and opportunities the group. The group plans to focus on developing these further in the new financial year, actively looking to expand the breadth and depth of our online and sales channels in this region, to fully leverage our customer base, physical resource, buying power and expertise. These strengths will be deployed to the benefit of both domestic and international brands using our off-price retail heritage and increasingly the full-price selection our customers seek from us.

 

The group's retail marketplace has its largest presence in ANZ and is an opportunity to significantly increase the group's addressable market in the region. The group is one of the pre-eminent online retailers in ANZ and has further attractive growth possibilities due to both the lower levels of internet penetration, in comparison to territories such as the UK and the USA, and this region's relative lack of off-price retailers.

In ANZ the group has a small network of physical outlets, part of our offline activities, which is used both to clear the group's own surplus inventory and returns via that offline channel. It's planned that the number of outlets will reduce in FY19 to focus this activity into fewer, more profitable, sites.

In total the outlet and wholesale, which constitute our offline activities represented c 12% of revenue (FY17: 11%). The wholesale syndication activity has been very productive over the last two financial periods as it supported the strategic initiatives to build partnerships, increase the own-buy (1P) element of the sales mix and prove the group's marketplace model to partners. Having achieved these aims the group plans to reduce the weighting of wholesale syndication activity which shall bring a number of its own benefits namely; cost efficiency gains and accretion in the underlying EBITDA margin together with a reduction in trade receivable balances with the associated increase in cash inflows.

South-East Asia

During the period South-East Asia saw gross profit grow 10% to A$8.9 million (FY17: A$8.1 million) as margin improvement was prioritised over revenue growth. Gross Margin increased by 280 bps to 26.7% following a revised pricing policy, while revenue remained flat at A$33.4 million (FY17: A$33.8 million). The continued growth in profitability has been driven by the group's localisation plan which ensures that merchandising, pricing, payment and shipping solutions are all tailored to the needs of local consumers.

In this region the strategy has been to grow the active customer base, so acquisition marketing is a priority to build gross profitability and leverage this increasing scale by using resources more efficiently and achieving lower shipping rates. With a more profitable local model now established and an enviable position within the South-East Asian e-commerce market, the region is an important element of the group's long-term profitable growth.

In the medium to long term this region is anticipated to be increasingly significant as the group grows its customer base and demand for branded products, particularly European and USA brands, continues to increase. With a substantial addressable population, increasing disposable income, lack of off-price competition and high mobile penetration this region is well served by the group's strong value, branded sales offer and exceptional mobile commerce capability.

Rest of World

This territory comprises the group's operations within the UK, which trades predominately under the Cocosa brand and which provides customers with compelling value in premium branded products.

The UK had another good year, as gross profit, the group's priority, increased by 65% to A$3.8 million (FY17: A$2.3 million), revenue increased by 26% to A$16.5 million (FY17: A$13.1 million) and gross margins improved. This growth was underpinned by increased numbers of active customers which is a key objective for the group in newer territories.

These are encouraging results and position the business for further growth in FY19 and beyond. While this region currently represents a relatively small part of the group's overall activities, we operates in the UK's large and well developed online marketplace where engaged and active consumers can be acquired successfully and cost effectively.

The group has a material presence in the UK as it is an important centre for the group's product sourcing team for both UK and European brands. Brands from these territories, along with USA, have grown their weighting within group revenues over the past few years and now account for over half of our worldwide revenue.

Outlook

The group had an excellent year to 30 June 2018, with significant growth in profitability and good progress against our strategic goals, which we aim to build upon in the current year.

 

In the new financial year, we plan to focus on leveraging new opportunities in ANZ region, which remains our largest operating territory and has the most powerful marketing, logistics and staffing resources of the group. These will be deployed to the benefit of both domestic and international brands using our off-price retail heritage and the full-price selection that our customers increasingly seek from us.

 

At the same time we plan to reduce our offline activities in the current year, given significant progress against our strategic aims of increasing the own-buy element of our sales mix and proving our marketplace model to partners. As a result, we expect revenues to be broadly level year on year, with growth in core online revenues offsetting this planned reduction in offline. We anticipate, however, that this, along with the full deployment of our technology platform, will bring significant cost efficiency gains and accretion in the underlying EBITDA margin.

 

While it is early in the current year, and our peak trading period lies ahead, trading to date has been in line with expectations and the board expects that underlying EBITDA for the year will be in line with market forecasts with an overall heavier second half weighting.

 

_____________________________

Carl Jackson

Chief Executive Officer

8 October 2018

 

Financial review by the Chief Financial Officer

 

Revenue and Gross Profit

For the year ended 30 June 2018 group revenue increased by 9% to A$292.2 million (FY17: A$268.3 million) and gross profit increased faster, by 13%, to reach A$85.7 million (FY17: A$76.0 million). This improved performance came as a direct result of the strategic plan implemented by the group in 2015.

Operating Expenses

The increase in activity and gross profit resulted in underlying operating expenses of A$73.9 million (FY17: A$67.4 million) in the year. During the year the group increased staff resources in a number of operational departments to support further growth and ensure the group delivers outstanding service to its customers.

 

Profit/Loss before Tax

The underlying profit before tax for the year increased 50% A$4.9 million (FY17: A$3.3 million) and the reported loss before tax for the period is A$1.7 million (FY17: A$1.5 million). This reported loss is after the inclusion of a number of one-off and non-cash items which are shown in more detail below and in note 6 to the financial statements in order to provide greater insight as to the underlying profitability of the group.

 

Profit/Loss after Tax and earnings per share

The underlying profit after tax for the year increased 70% to is A$6.6 million (FY17: A$3.9 million) and the reported loss after tax for the period is $A0.1 million (FY17: A$1.0 million). This reported loss is after the inclusion of a number of one-off and non-cash items which are shown in more detail below and in note 6 to the financial statements in order to provide greater insight as to the underlying profitability of the group.

 

Note 27 shows the detailed calculations of basic earnings per share for the financial year which increased by 70% to 4.3 cents per share (FY16: 2.5 cents) on an underlying basis and was 0.03 cents loss (FY17: 0.1 cents loss) on a reported basis.

 

Taxation

The group has recorded a tax benefit of A$1.6 million for the year (FY17: A$0.6 million) which diverges from the group's long term guidance of an effective tax rate of approximately 30%. This divergence arises due to various tax adjustments and timing differences. Full details are provided in note 9 to the financial statements. The group has total tax losses of A$32.4 million (FY17: A$30 million) with the majority located in Australia. The entire tax loss has been recognised with the provision of a deferred tax asset of A$12.1 million (FY17: A$10.5 million).

 

Balance Sheet, Cash and Working Capital

The group's closing cash balance was A$6.8 million (FY17: A$19.0 million) and the net debt balance was A$6.2 million (FY17: A$8.9 million), well within the group's banking facilities.

The closing cash balance for the year, which is lower than anticipated, reflects a number of significant, temporary working capital outflows which occurred towards the end of the financial year, which will reverse in the current financial period, together with one-off expenditure associated with a prospective acquisition transaction, further details of which are shown below. The working capital impact is predominantly seen by the increase in trade receivables to A$29.9 million (FY17: A$17.0 million) which will reverse in FY19 and thus net cash balances shall increase and are expected to be positive at the end of the current year.

The group's strategic plan allows for selective investment into inventory balances and other working capital deployments to ensure the group is able to take advantage of commercially beneficial purchasing opportunities. A number of purchasing opportunities arose towards the end of the financial year and inventory was acquired and part re-sold, on a wholesale basis.

In the past two financial years the trade receivables balance has built up as the group's offline activities, particularly wholesale syndication, increased. However, now that key objectives, of building partner relationships and proving the marketplace capability, have been achieved, the forward strategy is to reduce that offline wholesale activity which shall deliver a steady reduction in trade receivables and in turn steady increase in cash inflows.

Capital expenditure increased, as planned, as the group invested principally in the development of its proprietary technology platform together with expenditure related to property and equipment upgrades. Total capital expenditure was A$9.1 million (FY17: A$8.5 million).

Banking Facilities

The group's cash balances are held principally with HSBC with whom the group currently has trade finance multi option debt facilities of A$28.1 million. All facilities are renewed on an annual basis.

 

Underlying Basis

As noted above the group manages its operations by looking at the underlying EBITDA which excludes the impact of a number of one-off and non-cash items of a non-trading nature as this, in the Board's opinion, provides a more representative measure of the group's performance. A reconciliation between reported profit before tax and underlying EBITDA is included at note 6 to the financial statements and outlined below.

 

A$ million

FY18

FY17

Reported EBITDA

5.1

3.8

Share based payments

0.9

1.1

Discontinued activities

0.2

0.3

One-off costs

3.6

2.4

Unrealised foreign exchange loss

2.0

1.0

 

6.7

4.8

Underlying EBITDA

11.8

8.7

Depreciation & Amortisation

6.6

5.3

Net interest expense

0.3

0.1

Underlying profit before tax

4.9

3.3

 

 

Included within one-off items are items of a non-trading, non-recurring nature such as acquisition expenses, reorganisation costs, charges arising from system migration and other costs. The principle items in the year under review include A$1.4 million of costs associated with the acquisition and subsequent reorganisation of Identity Direct as previously announced and A$2.0 million of costs associated with potential acquisition transactions which did not conclude.

 

Whilst it is disappointing to incur costs on projects which do not conclude the group has identified key strategic and commercial benefits that can be derived from increasing the scale of the business and continues to evaluate acquisition opportunities.

 

Key Performance Indicators

The group manages its operations through the use of a number of key performance indicators (KPI's) such as revenue, revenue growth, gross margin percentage, average order value (AOV), frequency of customer purchase, items in customer basket, average revenue per active customer (RPAC), and underlying EBITDA.

 

_____________________________

Andrew Dingle

Chief Financial Officer

8 October 2018

MySale Group Plc

 

 

 

 

 

 

Statement of profit or loss and other comprehensive income

 

 

 

 

 

 

For the year ended 30 June 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note

 

2018

 

2017

 

 

 

 

A$'000

 

A$'000

Revenue

 

 

 

 

 

 

Revenue from sale of goods

 

4

 

292,204

 

268,387

Cost of sale of goods

 

 

 

(206,511)

 

(192,344)

 

 

 

 

 

 

 

Gross profit

 

 

 

85,693

 

76,043

 

Other operating loss, net

 

5

 

(1,364)

 

(1,334)

 

 

 

 

 

 

 

Finance income

 

 

 

10

 

105

Finance costs

 

7

 

(271)

 

(223)

Finance costs, net

 

 

 

(261)

 

(118)

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Selling and distribution expenses

 

 

 

(51,047)

 

(44,040)

Administration expenses

 

 

 

(34,713)

 

(32,109)

 

Loss before income tax benefit

 

 

 

(1,692)

 

(1,558)

 

Income tax benefit

 

9

 

1,640

 

576

 

Loss after income tax benefit for the year attributable to the owners of MySale Group Plc

 

 

 

(52)

 

(982)

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

Net change in the fair value of cash flow hedges taken to equity, net of tax

 

23

 

826

 

259

Foreign currency translation

 

23

 

1,271

 

(1,751)

 

Other comprehensive income for the year, net of tax

 

 

 

2,097

 

(1,492)

 

Total comprehensive income for the year attributable to the owners of MySale Group Plc

 

 

 

2,045

 

(2,474)

 

 

 

 

 

Cents

 

Cents

 

 

 

 

 

 

 

Basic earnings per share

 

27

 

(0.03)

 

(0.65)

Diluted earnings per share

 

27

 

(0.03)

 

(0.65)

 

 

 

 

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

MySale Group Plc

 

 

 

 

 

 

Balance sheet

 

 

 

 

 

 

As at 30 June 2018

 

 

 

 

 

 

 

 

Note

 

2018

 

2017

 

 

 

 

A$'000

 

A$'000

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

10

 

6,770

 

19,027

Trade and other receivables

 

11

 

29,854

 

16,951

Inventories

 

12

 

38,670

 

38,042

Derivative financial instruments

 

 

 

38

 

Income tax receivable

 

 

 

115

 

Other

 

13

 

3,957

 

4,949

Total current assets

 

 

 

79,404

 

78,969

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

14

 

2,571

 

2,711

Intangibles

 

15

 

38,542

 

35,572

Deferred tax

 

16

 

12,141

 

10,544

Total non-current assets

 

 

 

53,254

 

48,827

 

 

 

 

 

 

 

Total assets

 

 

 

132,658

 

127,796

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

17

 

30,023

 

28,586

Borrowings

 

18

 

12,998

 

10,014

Derivative financial instruments

 

 

 

 

788

Income tax payable

 

 

 

 

193

Provisions

 

19

 

2,816

 

2,283

Deferred revenue

 

 

 

8,337

 

10,222

Total current liabilities

 

 

 

54,174

 

52,086

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Borrowings

 

20

 

54

 

143

Provisions

 

21

 

272

 

332

Total non-current liabilities

 

 

 

326

 

475

 

 

 

 

 

 

 

Total liabilities

 

 

 

54,500

 

52,561

 

Net assets

 

 

 

78,158

 

75,235

 

Equity

 

 

 

 

 

 

Share capital

 

22

 

 

Share premium account

 

 

 

306,363

 

306,363

Other reserves

 

23

 

(122,983)

 

(125,958)

Accumulated losses

 

 

 

(105,202)

 

(105,150)

Equity attributable to the owners of MySale Group Plc

 

 

 

78,178

 

75,255

Non-controlling interests

 

 

 

(20)

 

(20)

 

 

 

 

 

 

 

Total equity

 

 

 

78,158

 

75,235

 

 

The above balance sheet should be read in conjunction with the accompanying notes

 

The financial statements of MySale Group Plc (company number 115584 (Jersey)) were approved by the Board of Directors and authorised for issue on 8 October 2018. They were signed on its behalf by:

 

 

___________________________ ___________________________

Carl Jackson                                  Andrew Dingle

Director                                          Director 

 

MySale Group Plc

 

 

 

 

 

 

 

 

 

 

Statement of changes in equity

 

 

 

 

 

 

 

 

 

 

For the year ended 30 June 2018

 

 

 

 

 

 

 

 

 

 

 

 

Share premium

 

Other 

 

Accumulated

 

Non-controlling 

 

Total equity

 

 

account 

 

reserves

 

losses

 

interest 

 

 

 

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2016

 

306,363

 

(125,763)

 

(104,168)

 

(20)

 

76,412

 

 

 

 

 

 

 

 

 

 

 

Loss after income tax benefit for the year

 

-

 

-

 

(982)

 

-

 

(982)

Other comprehensive income for the year, net of tax

 

-

 

(1,492)

 

-

 

-

 

(1,492)

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

-

 

(1,492)

 

(982)

 

-

 

(2,474)

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

 

Share-based payments (note 23)

 

-

 

1,297

 

-

 

-

 

1,297

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2017

 

306,363

 

(125,958)

 

(105,150)

 

(20)

 

75,235

 

 

 

 Share premium

 

 Other

 

Accumulated

 

Non-controlling 

 

Total equity

 

 

account

 

reserves

 

losses

 

interest 

 

 

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2017

 

306,363

 

(125,958)

 

(105,150)

 

(20)

 

75,235

 

 

 

 

 

 

 

 

 

 

 

Loss after income tax benefit for the year

 

-

 

-

 

(52)

 

-

 

(52)

Other comprehensive income for the year, net of tax

 

-

 

2,097

 

-

 

-

 

2,097

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

-

 

2,097

 

(52)

 

-

 

2,045

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

 

Share-based payments (note 23)

 

-

 

878

 

-

 

-

 

878

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2018

 

306,363

 

(122,983)

 

(105,202)

 

(20)

 

78,158

 

 

The above statement of changes in equity should be read in conjunction with the accompanying notes

 

 

 

 

 

 

 

MySale Group Plc

 

 

 

 

 

 

Statement of cash flows

 

 

 

 

 

 

For the year ended 30 June 2018

 

 

 

 

 

 

 

 

Note

 

2018

 

2017

 

 

 

 

A$'000

 

A$'000

Cash flows from operating activities

 

 

 

 

 

 

Loss before income tax benefit for the year

 

 

 

(1,692)

 

(1,558)

 

 

 

 

 

 

 

Adjustments for:

 

 

 

 

 

 

Depreciation and amortisation

 

 

 

6,576

 

5,275

Net gain on disposal of property, plant and equipment

 

 

 

(17)

 

(15)

Interest income

 

 

 

(10)

 

(105)

Interest expense

 

 

 

271

 

223

 

 

 

 

 

 

 

 

 

 

 

5,128

 

3,820

 

 

 

 

 

 

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Increase in trade and other receivables

 

 

 

(13,012)

 

(7,893)

Increase in inventories

 

 

 

(627)

 

(2,529)

Decrease in other operating assets

 

 

 

670

 

3,190

Increase/(decrease) in trade and other payables

 

 

 

1,224

 

(1,167)

Increase in other provisions

 

 

 

1,520

 

1,207

Decrease in deferred revenue

 

 

 

(1,733)

 

(1,455)

 

 

 

 

 

 

 

 

 

 

 

(6,830)

 

(4,827)

Interest received

 

 

 

10

 

105

Interest paid

 

 

 

(271)

 

(223)

Income taxes paid

 

 

 

(182)

 

(575)

 

 

 

 

 

 

 

Net cash used in operating activities

 

 

 

(7,273)

 

(5,520)

 

Cash flows from investing activities

 

 

 

 

 

 

Payment for purchase of business, net of cash acquired

 

 

 

 

(3,090)

Payments for property, plant and equipment

 

 

 

(837)

 

(1,184)

Payments for intangibles

 

 

 

(8,263)

 

(7,308)

Proceeds from disposal of property, plant and equipment

 

 

 

 

68

Proceeds from release of security deposits

 

 

 

17

 

103

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

 

(9,083)

 

(11,411)

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from borrowings

 

 

 

 

13,234

Repayment of borrowings

 

 

 

(4,775)

 

(9,671)

Repayments of leases

 

 

 

(38)

 

(28)

Additional lease finance

 

 

 

 

146

 

 

 

 

 

 

 

Net cash (used in)/from financing activities

 

 

 

(4,813)

 

3,681

 

Net decrease in cash and cash equivalents

 

 

 

(21,169)

 

(13,250)

Cash and cash equivalents at the beginning of the financial year

 

 

 

19,027

 

34,005

Effects of exchange rate changes on cash and cash equivalents

 

 

 

1,204

 

(1,728)

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the financial year

 

10

 

(938)

 

19,027

 

 

The above statement of cash flows should be read in conjunction with the accompanying notes

MySale Group Plc

 

 

Notes to the financial statements

 

 

30 June 2018

 

 

 

 

Note 1. General information

 

MySale Group Plc is a group consisting of MySale Group Plc (the 'company' or 'parent entity') and its subsidiaries (the 'group'). The financial statements of the group, in line with the location of the majority of the group's operations and customers, are presented in Australian dollars and generally rounded to the nearest thousand dollars.

 

The principal business of the group is the operating of online shopping outlets for consumer goods like ladies, men and children's fashion clothing, accessories, beauty and homeware items.

 

MySale Group Plc is a public company, limited by shares, listed on the AIM (Alternate Investment Market), a sub-market of the London Stock Exchange. The company is incorporated and registered under the Companies (Jersey) Law 1991. The company is domiciled in Australia.

 

The registered office of the company is 3rd Floor, Ogier House, The Esplanade, 44 Esplanade Street. Helier, JE4 9WG, Jersey and principal place of business is at 3/120 Old Pittwater Road, Brookvale, NSW 2100, Australia.

 

The financial statements were authorised for issue, in accordance with a resolution of directors, on 8 October 2018. The directors have the power to amend and reissue the financial statements.

 

Note 2. Significant accounting policies

 

Basis of preparation

This condensed consolidated financial information for the year ended 30 June 2018 has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards as adopted by the European Union ("Adopted IFRSs"), IFRS IC Interpretations and the Companies (Jersey) Law 1991.

 

The financial information contained in this preliminary announcement for the years ended 30 June 2018 and 30 June 2017 does not comprise the group's statutory financial statements within the meaning of Companies (Jersey) Law 1991. Statutory accounts for the year ended 30 June 2018 will be filed with the Jersey Companies Registry in due course. The auditors' report on the statutory accounts for each of the years ended 30 June 2018 and 30 June 2017 is unqualified, does not draw attention to any matters by way of emphasis and does not contain any statement under any matters that are required to be reported by exception under Companies (Jersey) Law 1991.

 

Going concern

The directors have reviewed the group's forecast and projections, including assumptions concerning capital expenditure and expenditure commitments and their impact on cash flows, and have a reasonable expectation that the group has adequate financial resources to continue its operations for the foreseeable future. For this reason they have continued to adopt the going concern basis in preparing the financial statements.

 

In preparing the preliminary announcement, the directors have also made reasonable and prudent judgements and estimates and prepared the preliminary announcement on the going concern basis. The preliminary announcement and strategic report contained herein give a true and fair view of the assets, liabilities, financial position and profit and loss of the group.

 

Changes to accounting standards

There have been no changes to accounting standards during the year which have had or are expected to have any significant impact on the group.

 

Note 3. Critical accounting judgements, estimates and assumptions

 

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

 

Provision for obsolete and slow-moving inventories

The provision for obsolete and slow-moving inventories assessment requires a degree of estimation and judgement. The level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence.

 

Estimation of useful lives of assets

The group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

 

Goodwill

The group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. No impairment charge was required during the financial year ended 30 June 2018 (2017: A$nil).

 

Impairment of non-financial assets

The group assesses impairment of non-financial assets at each reporting date by evaluating conditions specific to the group and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.

 

Income tax

The group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The group recognises liabilities for anticipated tax audit issues based on the group's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

 

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the group considers it is probable that future taxable amounts will be available to utilise those temporary differences and tax losses.

 

Note 4. Operating segments

 

Identification of reportable operating segments

The group's operating segments are determined based on the internal reports that are reviewed and used by the Board of Directors (being the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.

 

The CODM reviews revenue and gross profit by reportable segments, being geographical regions. The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in these financial statements.

 

The group operates separate websites in each country that it sells goods in. Revenue from external customers is attributed to each country based on the activity on that country's website. Similar types of goods are sold in all segments. The group's operations are unaffected by seasonality.

 

Intersegment transactions

Intersegment transactions were made at market rates and are eliminated on consolidation.

 

Segment assets and liabilities

Assets and liabilities are managed on a group basis. The CODM does not regularly review any asset or liability information by segment and, accordingly there is no separate segment information. Refer to the balance sheet for group assets and liabilities.

 

Major customers

During the year ended 30 June 2018 there were no major customers (2017: none). A customer is considered major if its revenues are 10% or more of the group's revenue.

 

Operating segment information

 

 

 

Australia and 

 

South-East

 

 Rest of the

 

 

 

 

New Zealand

 

Asia

 

world

 

Total

 - 2018

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

Sales to external customers

 

242,365

 

33,360

 

16,479

 

292,204

Total revenue

 

242,365

 

33,360

 

16,479

 

292,204

 

 

 

 

 

 

 

 

 

Gross profit

 

72,920

 

8,896

 

3,877

 

85,693

Other operating loss, net

 

 

 

 

 

 

 

(1,364)

Selling and distribution expenses

 

 

 

 

 

 

 

(51,047)

Administration expenses

 

 

 

 

 

 

 

(34,713)

Finance income

 

 

 

 

 

 

 

10

Finance costs

 

 

 

 

 

 

 

(271)

Loss before income tax benefit

 

 

 

 

 

 

 

(1,692)

Income tax benefit

 

 

 

 

 

 

 

1,640

Loss after income tax benefit

 

 

 

 

 

 

 

(52)

 

 

 

Australia and 

 

South-East

 

Rest of the 

 

 

 

 

New Zealand 

 

Asia

 

World

 

Total

 - 2017

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

Sales to external customers

 

221,451

 

33,806

 

13,130

 

268,387

Total revenue

 

221,451

 

33,806

 

13,130

 

268,387

 

 

 

 

 

 

 

 

 

Gross profit

 

65,662

 

8,058

 

2,323

 

76,043

Other operating loss, net

 

 

 

 

 

 

 

(1,334)

Selling and distribution expenses

 

 

 

 

 

 

 

(44,040)

Administration expenses

 

 

 

 

 

 

 

(32,109)

Finance income

 

 

 

 

 

 

 

105

Finance costs

 

 

 

 

 

 

 

(223)

Loss before income tax benefit

 

 

 

 

 

 

 

(1,558)

Income tax benefit

 

 

 

 

 

 

 

576

Loss after income tax benefit

 

 

 

 

 

 

 

(982)

 

Note 5. Other operating loss, net

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Net foreign exchange loss

 

(1,408)

 

(1,425)

Net gain on disposal of property, plant and equipment

 

17

 

15

Other income

 

27

 

76

 

 

 

 

 

Other operating loss, net

 

(1,364)

 

(1,334)

 

Note 6. EBITDA reconciliation (earnings before interest, taxation, depreciation and amortisation)

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

EBITDA reconciliation

 

 

 

 

Loss before income tax

 

(1,692)

 

(1,558)

Less: Interest income

 

(10)

 

(105)

Add: Interest expense

 

271

 

223

Add: Depreciation and amortisation

 

6,576

 

5,275

 

 

 

 

 

EBITDA

 

5,145

 

3,835

 

Underlying EBITDA represents EBITDA adjusted for significant, unusual and other one-off items.

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

Underlying EBITDA reconciliation

 

 

 

 

EBITDA

 

5,145

 

3,835

Share-based payments

 

878

 

1,132

Reorganisation and discontinued operations

 

190

 

320

One-off costs of non-trading, non-recurring nature including acquisition expenses

 

3,588

 

2,434

Unrealised foreign exchange loss

 

1,950

 

953

 

 

 

 

 

Underlying EBITDA

 

11,751

 

8,674

 

Note 7. Expenses

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Loss before income tax includes the following specific expenses:

 

 

 

 

 

 

 

 

 

Sales, distribution and administration expenses:

 

 

 

 

Staff costs (note 8)

 

37,559

 

34,254

Marketing expenses

 

22,258

 

18,119

Occupancy costs

 

6,148

 

5,575

Merchant and other professional fees

 

7,853

 

5,764

Depreciation and amortisation

 

6,576

 

5,275

Other administration costs

 

5,366

 

7,162

 

 

 

 

 

Total sales, distribution and administration expenses

 

85,760

 

76,149

 

 

 

 

 

Underlying operating expenses

 

 

 

 

Total sales, distribution and administration expenses

 

85,760

 

76,149

Add: Realised foreign currency (gain)/loss

 

(55)

 

472

Add: Other income

 

(27)

 

(76)

Add: Gain on disposal of fixed assets

 

(17)

 

(15)

Less: Share-based payments, one-off costs and reorganisation and discontinued operations

 

(4,656)

 

(3,886)

Less: Depreciation and amortisation

 

(6,576)

 

(5,275)

 

 

 

 

 

Total underlying operating expenses

 

74,429

 

67,369

 

 

 

 

 

Finance costs

 

 

 

 

Interest and finance charges paid/payable

 

271

 

223

 

 

 

 

 

Occupancy costs include:

 

 

 

 

Minimum operating lease payments

 

5,068

 

4,568

 

 

 

 

 

Cost of inventories recognised as an expense in 'cost of sales' in profit or loss

 

159,939

 

152,426

 

Note 8. Staff costs

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Aggregate remuneration:

 

 

 

 

Wages and salaries

 

30,245

 

27,064

Social security costs

 

2,648

 

2,380

Long term employee incentive plan

 

878

 

1,297

Other staff costs and benefits

 

3,788

 

3,513

 

 

 

 

 

Total staff costs

 

37,559

 

34,254

 

 

 

2018

 

2017

 

 

 

 

 

The average monthly number of employees (including executive directors and those on a part-time basis) was:

 

 

 

 

Sales and distribution

 

200

 

363

Administration

 

271

 

181

 

 

 

 

 

 

 

471

 

544

 

 

Note 9. Income tax benefit

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Income tax benefit

 

 

 

 

Current tax

 

842

 

624

Deferred tax - origination and reversal of temporary differences

 

(2,237)

 

(397)

Adjustment recognised for prior years

 

(245)

 

(803)

 

 

 

 

 

Aggregate income tax benefit

 

(1,640)

 

(576)

 

 

 

 

 

Deferred tax included in income tax benefit comprises:

 

 

 

 

Increase in deferred tax assets (note 16)

 

(2,237)

 

(397)

 

 

 

 

 

Numerical reconciliation of income tax benefit and tax at the statutory rate

 

 

 

 

Loss before income tax benefit

 

(1,692)

 

(1,558)

 

 

 

 

 

Tax at the statutory tax rate of 30%

 

(508)

 

(467)

Effect of overseas tax rates

 

(293)

 

183

 

 

 

 

 

Tax effect amounts which are not deductible/(taxable) in calculating taxable income:

 

 

 

 

Non-deductible expenses

 

32

 

22

Tax-exempt income

 

(40)

 

 

 

 

 

 

 

 

(809)

 

(262)

Prior year tax losses not recognised now recognised

 

(524)

 

Change in recognised deductible temporary differences

 

(8)

 

Adjustment recognised for prior periods

 

(299)

 

(314)

 

 

 

 

 

Income tax benefit

 

(1,640)

 

(576)

 

The tax rates of the main jurisdictions are Australia 30% (2017: 30%), Singapore 17% (2017: 17%), New Zealand 28% (2017: 28%), United Kingdom 19% (2017: 20%) and United States 42.8% (2017: 42.8%).

 

Note 10. Current assets - cash and cash equivalents

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Cash at bank

 

6,573

 

12,314

Bank deposits at call

 

197

 

6,713

 

 

 

 

 

 

 

6,770

 

19,027

 

 

 

 

 

Reconciliation to cash and cash equivalents at the end of the financial year

 

 

 

 

The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the statement of cash flows as follows:

 

 

 

 

 

 

 

 

 

Balances as above

 

6,770

 

19,027

Bank overdraft (note 18)

 

(7,708)

 

 

 

 

 

 

Balance as per statement of cash flows

 

(938)

 

19,027

 

Note 11. Current assets - trade and other receivables

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Trade receivables

 

29,780

 

16,800

Less: Provision for impairment of receivables

 

(311)

 

(86)

 

 

29,469

 

16,714

 

 

 

 

 

Other receivables

 

385

 

237

 

 

 

 

 

 

 

29,854

 

16,951

 

Trade receivables include uncleared cash receipts due from online customers which amounted to A$4,996,000 (2017: A$2,515,000).

 

Note 12. Current assets - inventories

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Goods for resale

 

36,476

 

35,403

Obsolete and slow-moving inventory provision

 

(529)

 

(895)

 

 

35,947

 

34,508

 

 

 

 

 

Stock in transit

 

2,723

 

3,534

 

 

 

 

 

 

 

38,670

 

38,042

 

Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2018 amounted to A$275,000 (2017: A$281,000). This expense has been included in 'cost of sales' in profit or loss.

 

Note 13. Current assets - other

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Prepayments

 

1,339

 

1,419

Prepaid inventory

 

2,237

 

3,030

Other deposits

 

316

 

333

Other current assets

 

65

 

167

 

 

 

 

 

 

 

3,957

 

4,949

 

Prepaid inventory relates to the costs of goods for resale that have been paid for by the group but not delivered to its distribution centres for further dispatch to the customers who placed the orders as at the reporting date. The corresponding cash received in advance from customers are accounted for within deferred revenue category in the balance sheet which includes the total amount of cash received for the goods not delivered to customers at the reporting date.

 

Note 14. Non-current assets - property, plant and equipment

 

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

 

 

 

Leasehold

 

Plant and

 

Fixtures

 

Motor

 

 

 

 

improvements

 

equipment

 

and fittings

 

vehicles

 

Total

 

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2016

 

209

 

1,467

 

497

 

53

 

2,226

Additions

 

477

 

154

 

306

 

286

 

1,223

Additions through business combinations

 

-

 

489

 

-

 

-

 

489

Disposals

 

(7)

 

(5)

 

(12)

 

(25)

 

(49)

Exchange differences

 

(3)

 

(37)

 

(1)

 

-

 

(41)

Depreciation expense

 

(169)

 

(729)

 

(189)

 

(50)

 

(1,137)

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2017

 

507

 

1,339

 

601

 

264

 

2,711

Additions

 

278

 

545

 

39

 

-

 

862

Disposals

 

-

 

(36)

 

-

 

(2)

 

(38)

Exchange differences

 

(3)

 

29

 

(14)

 

3

 

15

Depreciation expense

 

(170)

 

(567)

 

(189)

 

(53)

 

(979)

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2018

 

612

 

1,310

 

437

 

212

 

2,571

 

Note 15. Non-current assets - intangibles

 

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

 

 

 

 

 

Customer

 

 

 

ERP

 

 

 

 

 Goodwill

 

relationships

 

Software

 

system

 

Total

 

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2016

 

21,504

 

1,976

 

3,916

 

2,369

 

29,765

Additions

 

-

 

-

 

6,851

 

492

 

7,343

Additions through business combinations

 

2,515

 

124

 

-

 

-

 

2,639

Disposals

 

-

 

-

 

(3)

 

-

 

(3)

Exchange differences

 

-

 

(33)

 

(9)

 

8

 

(34)

Amortisation expense

 

-

 

(1,141)

 

(2,133)

 

(864)

 

(4,138)

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2017

 

24,019

 

926

 

8,622

 

2,005

 

35,572

Additions

 

-

 

251

 

7,451

 

841

 

8,543

Exchange differences

 

24

 

-

 

-

 

-

 

24

Amortisation expense

 

-

 

(572)

 

(4,025)

 

(1,000)

 

(5,597)

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2018

 

24,043

 

605

 

12,048

 

1,846

 

38,542

 

Amortisation expense is included in 'administration expenses' in profit or loss.

 

Note 16. Non-current assets - deferred tax

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Deferred tax asset comprises temporary differences attributable to:

 

 

 

 

 

 

 

 

 

Amounts recognised in profit or loss:

 

 

 

 

Tax losses

 

9,692

 

8,876

Accrued expenses

 

1,281

 

485

Provisions

 

996

 

784

Sundry

 

292

 

673

Property, plant and equipment

 

61

 

4

Intangibles

 

(181)

 

(278)

 

 

 

 

 

Deferred tax asset

 

12,141

 

10,544

 

 

 

 

 

Movements:

 

 

 

 

Opening balance

 

10,544

 

10,295

Credited to profit or loss (note 9)

 

2,237

 

397

Exchange loss

 

(640)

 

(148)

 

 

 

 

 

Closing balance

 

12,141

 

10,544

 

Deferred income tax assets are recognised for tax losses, non-deductible accruals and provisions and capital allowances carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable.

 

Note 17. Current liabilities - trade and other payables

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Trade payables

 

19,879

 

23,518

Other payables and accruals

 

7,663

 

4,450

Sales tax payable

 

2,481

 

618

 

 

 

 

 

 

 

30,023

 

28,586

 

Note 18. Current liabilities - borrowings

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Bank overdraft

 

7,708

 

Bank loans

 

5,200

 

5,200

Bank loans under interchangeable facilities

 

 

4,775

Finance lease liability

 

90

 

39

 

 

 

 

 

 

 

12,998

 

10,014

 

Note 19. Current liabilities - provisions

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Employee benefits provision

 

1,463

 

1,115

Lease make good provision

 

135

 

173

Gift voucher provision

 

535

 

433

Sales returns provision

 

683

 

562

 

 

 

 

 

 

 

2,816

 

2,283

 

Note 20. Non-current liabilities - borrowings

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Finance lease liability

 

54

 

143

 

Total secured liabilities

The total secured liabilities (current and non-current) are as follows:

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Bank overdraft

 

7,708

 

Bank loans

 

5,200

 

5,200

Bank loans under interchangeable facilities

 

 

4,775

Finance lease liability

 

144

 

182

 

 

 

 

 

 

 

13,052

 

10,157

 

Note 21. Non-current liabilities - provisions

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Employee benefits provision

 

272

 

332

 

Note 22. Equity - share capital

 

 

 

2018

 

2017

 

2018

 

2017

 

 

Shares

 

Shares

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

Ordinary shares £nil each (2017: £nil) - issued and fully paid

 

154,331,652

 

151,331,652

 

 

 

Authorised share capital

200,000,000 (2017: 200,000,000) ordinary shares of £nil each.

 

The increase on the ordinary shares happened at the beginning of the year, on 1 July 2017.

 

Note 23. Equity - other reserves

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Foreign currency reserve

 

3,458

 

2,187

Hedging reserve - cash flow hedges

 

38

 

(788)

Share-based payments reserve

 

6,277

 

5,399

Capital reorganisation reserve

 

(132,756)

 

(132,756)

 

 

 

 

 

 

 

(122,983)

 

(125,958)

 

Movements in reserves

Movements in each class of reserve during the current and previous financial year are set out below:

 

 

 

 Foreign

 

 

 

 Share-based

 

Capital

 

 

 

 

 currency

 

Hedging

 

payments

 

reorganisation

 

Total

 

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2016

 

3,938

 

(1,047)

 

4,102

 

(132,756)

 

(125,763)

Foreign currency translation

 

(1,751)

 

-

 

-

 

-

 

(1,751)

Cash flow hedge

 

-

 

259

 

-

 

-

 

259

Share-based payments

 

-

 

-

 

1,297

 

-

 

1,297

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2017

 

2,187

 

(788)

 

5,399

 

(132,756)

 

(125,958)

Foreign currency translation

 

1,271

 

-

 

-

 

-

 

1,271

Cash flow hedge

 

-

 

826

 

-

 

-

 

826

Share-based payments

 

-

 

-

 

878

 

-

 

878

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2018

 

3,458

 

38

 

6,277

 

(132,756)

 

(122,983)

 

Note 24. Equity - dividends

 

There were no dividends paid, recommended or declared during the current or previous financial year.

 

Note 25. Contingent liabilities

 

The group has issued a bank guarantee through its banker ANZ Bank New Zealand Limited, in respect of customs and duties obligations amounting to NZ$150,000 (2017: NZ$150,000).

 

The group issued bank guarantees through its banker, Hong Kong and Shanghai Banking Corporation, in respect of lease obligations amounting to A$979,000 (2017: A$979,000).

 

Note 26. Commitments

 

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Lease commitments - operating

 

 

 

 

Committed at the reporting date but not recognised as liabilities, payable:

 

 

 

 

Within one year

 

3,987

 

3,324

One to five years

 

7,681

 

9,138

More than five years

 

314

 

 

 

 

 

 

 

 

11,982

 

12,462

 

 

 

 

 

Lease commitments - finance

 

 

 

 

Committed at the reporting date and recognised as liabilities, payable:

 

 

 

 

Within one year

 

92

 

51

One to five years

 

56

 

149

 

 

 

 

 

Total commitment

 

148

 

200

Less: Future finance charges

 

(4)

 

(18)

 

 

 

 

 

Net commitment recognised as liabilities

 

144

 

182

 

 

 

 

 

Representing:

 

 

 

 

Finance lease liability - current (note 18)

 

90

 

39

Finance lease liability - non-current (note 20)

 

54

 

143

 

 

 

 

 

 

 

144

 

182

 

 

 

 

 

Sub-lease receivable - operating

 

 

 

 

Committed at the reporting date but not recognised as assets, receivables:

 

 

 

 

Within one year

 

 

269

One to five years

 

 

289

 

 

 

 

 

 

 

 

558

 

The group leases office space, land and buildings and warehouses from non-related parties under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights.

 

The group leases certain motor vehicles from non-related parties under finance leases. The lease agreements do not have renewal clauses but provide the group with options to purchase the leased assets at nominal values at the end of the lease term.

 

The carrying amounts of motor vehicles held under finance leases are A$144,000 (2017: A$182,000) at the reporting date.

 

The company previously subleased some of its office and warehouse space to related and non-related parties. The subleases have varying terms and expiry dates.

 

Note 27. Earnings per share

 

 

2018

 

2017

 

 

A$'000

 

A$'000

 

 

 

 

 

Loss after income tax attributable to the owners of MySale Group Plc

 

(52)

 

(982)

 

 

 

 

 

Add back items of a one-off, non-trading nature (note 6)

 

6,606

 

4,839

 

 

 

 

 

Underlying profit after income tax attributable to the owners of MySale Group Plc

 

6,554

 

3,857

 

 

 

Number

 

Number

 

 

 

 

 

Weighted average number of ordinary shares used in calculating basic earnings per share

 

154,331,652

 

151,331,652

 

 

 

 

 

Weighted average number of ordinary shares used in calculating diluted earnings per share

 

154,331,652

 

151,331,652

 

 

 

Cents

 

Cents

 

 

 

 

 

Basic earnings per share

 

(0.03)

 

(0.65)

Diluted earnings per share

 

(0.03)

 

(0.65)

Underlying basic earnings per share

 

4.25

 

2.50

 

8,047,850 (2017: 8,615,909) employee long term incentives have been excluded from the 2018 diluted earnings calculation as they are anti-dilutive for the year.

 

Note 28. Share-based payments

 

The company has two employee share plans; (1) the Executive Incentive Plan ('EIP') and (2) the Loan Share Plan ('LSP'). In accordance with the terms of each plan 100% of the ordinary shares will vest three years from grant date subject to the achievement of the Underlying Earnings Before Interest, Tax, Depreciation and Amortisation ('EBITDA') included in the company's internal forecasts set by the Board in the year of the grant.

 

In July 2015, 3,000,000 options over the ordinary share capital of the company were granted to the Chairman with an exercise price of £0.53. 1,000,000 options will vest when the company's share price reaches £1.50, a further 1,500,000 shall vest when the company's share price reaches £2.26 and a further 500,000 shall vest when the company's share price reaches £2.75. The options expire five years after the grant date. Other than the vesting conditions, all other terms are the same as the EIP. The fair value of the accounting expense in relation to these options are recognised over the vesting period.

 

Set out below are summaries of share and options granted under the plans for directors and employees:

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

 

 

 

 

 

Expired/

 

Balance at

 

 

 

 

Exercise

 

the start of

 

 

 

 

 

forfeited/

 

the end of

Grant date

 

Expiry date

 

price

 

the year

 

Granted

 

Exercised

 

 other

 

the year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28/05/2014

 

16/06/2019 **

 

£2.26

 

111,499

 

-

 

-

 

-

 

111,499

18/08/2015

 

18/08/2020 **

 

£0.51

 

2,027,806

 

-

 

-

 

(329,991)

 

1,697,815

18/08/2015

 

18/08/2020 *

 

£0.51

 

400,021

 

-

 

-

 

(109,488)

 

290,533

27/07/2015

 

27/07/2020 **

 

£0.53

 

3,000,000

 

-

 

-

 

-

 

3,000,000

19/08/2016

 

19/08/2021 **

 

£0.65

 

1,959,599

 

-

 

-

 

(90,617)

 

1,868,982

19/08/2016

 

19/08/2021 *

 

£0.65

 

1,116,984

 

-

 

-

 

(758,291)

 

358,693

19/08/2017

 

19/08/2022 **

 

£1.15

 

-

 

449,314

 

-

 

-

 

449,314

19/08/2017

 

19/08/2022 *

 

£1.15

 

-

 

271,014

 

-

 

-

 

271,014

 

 

 

 

 

 

8,615,909

 

720,328

 

-

 

(1,288,387)

 

8,047,850

 

*

 

EIP - Options

**

 

LSP

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

 

 

 

 

 

Expired/

 

Balance at

 

 

 

 

Exercise

 

the start of

 

 

 

 

 

forfeited/

 

the end of

Grant date

 

Expiry date

 

price

 

the year

 

Granted

 

Exercised

 

 other

 

the year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28/05/2014

 

16/06/2019 **

 

£2.26

 

111,499

 

-

 

-

 

-

 

111,499

18/08/2015

 

18/08/2020 **

 

£0.51

 

2,027,806

 

-

 

-

 

-

 

2,027,806

18/08/2015

 

18/08/2020 *

 

£0.51

 

400,021

 

-

 

-

 

-

 

400,021

27/07/2015

 

27/07/2020 **

 

£0.53

 

3,000,000

 

-

 

-

 

-

 

3,000,000

19/08/2016

 

19/08/2021 **

 

£0.65

 

-

 

1,959,599

 

-

 

-

 

1,959,599

19/08/2016

 

19/08/2021 *

 

£0.65

 

-

 

1,116,984

 

-

 

-

 

1,116,984

 

 

 

 

 

 

5,539,326

 

3,076,583

 

-

 

-

 

8,615,909

 

*

 

EIP - Options

**

 

LSP

 

The weighted average remaining contractual life of the share plan outstanding at the end of the financial year was 4 years (2017: 4 years).

 

The share-based payment expense for the year was A$878,000 (2017: A$1,297,000).

 

At the end of the year there were only 111,499 shares exercisable at their weighted average exercise price of £2.26.

 

Note 29. Events after the reporting period

 

No matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the group's operations, the results of those operations, or the group's state of affairs in future financial years.

 

This is the last page of this abridged set of accounts.

 

 

 

 


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