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MySale Group PLC (MYSL)

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Wednesday 01 April, 2020

MySale Group PLC

Half Year Results

RNS Number : 3695I
MySale Group PLC
01 April 2020
 

MySale Group plc

 

(the "Group'')

 

Half Yearly Results

 

ANZ focus continues to address key challenges and improve profitability

 

MySale Group plc (AIM: MYSL), the leading international online retailer, today announces its unaudited half yearly results for the six months to 31 December 2019 (H1 FY20).

 

Carl Jackson, Chief Executive Officer of MySale Group plc, commented.

" The Group has undergone a period of significant change with an intense focus on reducing costs and inventory levels. We are still in the first year of pivoting the business to an Inventory Light Marketplace Platform and executing against our 'ANZ First' strategy but continue to make progress in order to improve cash flow and strengthen the balance sheet.

 

The second half to date has been impacted by poor consumer confidence as a result of the bushfire crisis and early challenges with the supply chain due to the COVID-19 pandemic. However, as the pandemic has accelerated, MySale has benefited from additional inventory in the market as retailers and brands have been unable to sell it through their mainly offline existing channels. As a result, revenues in the last two weeks of March have been stronger and we have experienced an increase in the number of brands wanting to sell on our marketplace platform.

 

Due to uncertainties created by the COVID-19 situation, it is too early to predict the impact on Groups financial performance for the full year to 30 June 2020 until the impact of COVID-19 on the Groups business becomes clearer.

 

Balancing the opportunities and ongoing uncertainty, the Board is adopting a prudent approach and has taken immediate steps to preserve cash. We continue to monitor developments and will review the key risks in the near and medium term.

 

We have a very dedicated and strong management team and Board in place who continue to believe in the Group's strategic direction and are committed to ensuring the long-term success of MySale and for its various stakeholders. We are making clear and decisive decisions to navigate through the COVID-19 uncertainty in order to build a stronger and more streamlined business." 

 

Financial Overview

· Performance for the first-half was in line with management expectations, reflecting the decisive steps taken by management to simplify the Group's business as part of its ANZ First strategy (1) which focuses on its Inventory Light Marketplace Platform

· Debt free with net cash balance of A$7.2 million at 31 December 2019 (H1 FY19: $2.7 million)

· Group revenue decreased 43% to A$72 million (H1 FY19: A$126 million)

· Gross profit decreased 50% to A$24.4 million (H1 FY19: A$48.5 million)

· Gross margin reduced to 34% (H1 FY19: 38%)

· Underlying   EBITDA (2) loss reduced by 38% toA$3.1 million (H1 FY19: Loss A$5.0 million)

 

Operational Overview

· Actions taken to preserve cash as a direct impact of uncertainty and volatility created by the COVID-19 outbreak.

· Total active suppliers (4) increased by 44% to 450 at 31 December 2019 (312 at 30 June 2019). The total active supplier base (5) was 1,380 at 31 December 2019. We continue to focus on securing well-known international and domestic brands to improve customer engagement and retention.

· Significant reduction in operating expenses to $27.4 million (H1 2019: $54.1 million) as a result of efficiencies gained from the Group's investment in technology alongside the restructuring and reorganisation of the business.

· Fixed cost base been reduced to $10.5 million (H1 FY19: $17.1 million), with further cost savings identified for the second half of FY20.

· The Group continues to exit all existing own buy 1P (3)   inventory whilst it pivots to a third party platform (Dec 19: Net balance after provision $3.8 million (June 19: $13.0 million). The inventory provision balance remains unchanged at $7.2 million at 31 December 2019 (June 19: $7.2 million). 

· Reduction in headcount to 162 Full Time Equivalents ('FTEs') at 31 December 2019 (320 at 31 December 2018). 

· Subsequent to period end in January 2020, the Group has finalised the move to new warehouse premises in Sydney, Australia. This new warehouse has been designed to allow the Group to operate a more efficient business. 

 

Notes

 

(1)  The key pillars of the Australia and New Zealand ANZ First Strategy are:

· Source international brands to sell into ANZ;

· Source local ANZ brands to sell in ANZ;

· Marketing spend prioritised to ANZ region; and

· Key personnel located in ANZ.

(2)  Underlying EBITDA excludes the impact of a number of one-off and non-cash items of a non-trading nature

(3)  1P represents the Group's owned inventory. 3P represents third party supplier and their respective inventory.

(4)  Active suppliers represent suppliers that have traded with the group in the past 30 days.

(5)  Active supplier base represents suppliers that have traded with the group in the past 12 months.   

 

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.

 

 

Enquiries:

MySale Group plc

 

Carl Jackson, Chief Executive Officer

Mats Weiss, Chief Financial and Operating Officer

+61 (0) 414 817 843

+61 (0) 403 810 762

 

 

 

 

N+1 Singer (Nominated Adviser and Joint Broker)

+44 (0) 20 7496 3000

Mark Taylor

Justin McKeegan

Carlo Spingardi

 

 

 

Zeus Capital (Joint Broker)

Daniel Harris, Ben Burnett (Corporate Finance)

John Goold (Broking)

 

+44 (0) 20 3829 5000

 

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 and South-East Asia. Founded in 2007, the Group provides customers with access to outstanding brands and products at discounted prices whilst simultaneously providing brand partners with unique international inventory and sales solutions.

 

The Group operates an Inventory Light Marketplace Platform in ANZ and SE Asia for domestic and international brands and offers a number of solutions for brands including Just in Time (JIT)] Fulfilment by MySale (FBM) and Drop Ship (DS).

 

MySale's 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 Group operates 12 websites in five countries; OzSale, BuyInvite, DealsDirect, OO, Top Buy and IdentityDirect in Australia; NzSale, Buyinvite and IdentityDirect in New Zealand; SingSale in Singapore, and MySale in Malaysia and Hong Kong.

 

Chairman's statement

 

During the period, management have taken decisive steps to simplify and restructure the business allowing it to transition to its ANZ First and Inventory-Light Marketplace Platform strategy.

 

The Group continues to transition to, and validate, its new strategy, restructuring the supply chain and relaunching brand partners on the Group's platform, where they can benefit from MySale's counter seasonal proposition.

 

The Group has been able to achieve significant reduction in its total operating expenses and its fixed cost base by $26.7 million and $6.6 million respectively. This reduction is attributed to efficiencies gained from the Group's investment in technology along with the restructuring and reorganisation to simplify the business that was implemented in FY19 and H1 FY20. Further cost-saving opportunities have been identified to be actioned in H2 2020.

 

The Group's overall strategic aims remain unchanged:

· Provide the Group's large online customer base with exceptional value, brands, choice and service;

· Provide the e-commerce platform of choice to domestic and international brands in the ANZ region;

· Leverage the significant strength and efficiency of our proprietary technology platform and international logistics network; and

· Focus on activities and opportunities in the ANZ region, through our ANZ First strategy. This aims to optimise the Group's significant scale, resources and market position in this region.

 

 

COVID-19

 

We are facing significant uncertainty as a result of the COVID-19 pandemic. Our first priority remains the health and safety of our employees and continuity of operations. We have implemented a robust business continuity plan to ensure the safety of our team, with all office employees now working from home. Our main Australia warehouse remains fully operational and steps have been taken to mitigate the impact of any future spread of COVID-19 amongst those team members. We are also working closely with our employees and brand partners to assess the day to day financial and operational risks arising from COVID-19. 

Currently, the Group is facing uncertainty and volatility in trading conditions as a result of government mandated lock downs and restrictions on movement, impacting consumer confidence in the ANZ market.  

International lockdowns have also caused disruption to the supply chains of our international brand partners and we are now seeing a similar impact on ANZ based retailers. The Group is proactively engaging with retailers and brand partners as we feel we are well placed to help distribute their excess inventory and leverage counter-seasonal opportunities.

On April 1st the New Zealand Government implemented new guidelines stating that the distribution of non-essential goods is not permitted. This will directly impact the Group, however we are still reviewing the detail of the legislation. It is likely that New Zealand’s Level 4-COVID 19 status will remain in place for a number of weeks. Approximately 20% of the Group’s revenue comes from New Zealand, which has imposed a heightened lockdown compared to Australia. As we are currently seeing strong sales in Australia we will divert and increase our marketing spend there to mitigate the impact on revenues from New Zealand. 

Our international brand partners and their supply chains are also being impacted by increases in international freight costs due to reduced air freight capacity. As the Group now operates a bulk ship model with our international brand partners, we are not seeing a direct impact from these increases in international freight costs. However, the business will be indirectly impacted in the short term with reduced margins as we support our international brand partners through their supply chain disruptions. 

Whilst the international retail environment remains challenging; we have experienced a change in our revenue mix with consumer spending increasing in non-fashion categories for example very strong homewares sales. We are moving quickly to continually diversify our product offering to keep up with the short-term changes in consumer spending patterns.  

The Group operates on a debt free basis and had a cash balance of $7.2 million at 31 December 2019. The current cash balance as at 31 March 2020 is $2.8 million, with an additional $1.3 million of cash deposits secured with our landlords and merchant providers. Since 31 December 19 the Group has reduced Creditors by $4.9 million and its Own-buy inventory at 31 March 2020 is a net balance of $2.5 million.  Given the uncertain trading environment, we have stress-tested our cash flow forecasts under a range of disruptive scenarios for the next 12 months. The Board has taken immediate steps to preserve cash until further certainty is gained and continues to monitor developments and review the key risks of COVID-19 in the near and medium term.

These measures include, but are not limited to:

· reduction of capital expenditure and non-essential operating costs;

· negotiations with landlords for reductions in rent and deferred payments schedule for the Group's office and warehouse rental premises; 

· adopting a temporary reduction in working hours and payroll costs for all fixed employees and executive team members which will be reviewed at the end of April 2020

· renegotiating extended payment terms for non-trade suppliers including direct and indirect taxes paid to government agencies; and

· obtaining government support as part of various economic stimulus initiatives. 

Board changes

 

As we said we would in July 2019, we have significantly strengthened the Board by appointing Dow Famulak and Wally Muhieddine as Non-Executive Directors in December 2019. 

 

Subsequent to the period end, the Group hired Mats Weiss as Chief Financial and Operations Officer. Mats was previously Vice President Regional Finance at 20th Century Fox. Prior to 20th Century Fox, Mats held senior finance roles at Philip Morris International and initially trained as an auditor at PricewaterhouseCoopers at Stockholm, Sweden.

 

Mats is focused on simplifying our operations, improving cash generation and strengthening the balance sheet. The Board is confident Mats will be an excellent addition to the executive team and will deliver enhanced value for all stakeholders.

 

Current Trading and Outlook

We are in the first year of pivoting the business to an Inventory Light Marketplace Platform and executing our ANZ First Strategy. There are still a number of ongoing workstreams as we accelerate delivery, to improve cash flow and strengthen the balance sheet. We also remain focussed on simplifying the business and continuing the cost reduction programme, but overall are pleased with the progress made to date.

In light of the market uncertainty as a result of the Covid-19 situation, the Board believes it is prudent to not give financial guidance for FY20 and beyond at this stage.

 

Sales have been strong in recent weeks, however COVID-19 creates short term uncertainty making it challenging to estimate the level of future supply disruption. Nevertheless, the Group is confident that its proposition to retail partners means it is well-positioned to take advantage of and maximise the opportunities to assist them with inventory management in the wake of the major disruptions caused to their supply chains.

_____________________________

Charles Butler

Non-executive Chairman

31 March 2020

 

 

Chief Executive Officer's operational and financial review

 

Introduction

It has been a period of significant change for the Group with an intense focus on reduction of costs, executing the ANZ First Strategy, scaling the Inventory Light Marketplace Platform, and exiting the Group's 1P inventory.

 

Significant progress has been made in transforming the business and executing the ANZ First strategy, exiting 1P inventory, and growing the number of suppliers using the Group's proprietary marketplace platform. Total active suppliers increased by 44% to 450 at 31 December 2019 (312 at 30 June 2019). The total active supplier base was 1,380 at 31 December 2019. The focus continues to be on partnering with well-known local and international brands to improve customer engagement and retention.

 

The equity fundraise was finalised in September 2019, recapitalising the Group, which is now debt-free with a net cash balance of $7.2 million at 31 December 2019. 

 

The inventory light model uses negative working capital, allowing the business to improve its cash generation.

 

The Group's business model has continued to be simplified as part of its ANZ First strategy. We have exited overseas operations and non-core activities, significantly reducing our overall and fixed cost base. Our investment in technology has allowed our business processes to be improved and simplified, allowing efficiencies to drive cost savings.

 

Our fixed cost base has been reduced to $10.5 million for the six month period (H1 FY19: $17.1 million). Management are confident that further cost savings, which are a work-in-progress, will be achieved in H2 FY20.

 

Management are confident that the strategies implemented in FY19 and H1 FY20 will allow the business to provide a highly efficient solution for our brand partners to clear excessive inventory into the ANZ region positioning the Group as a leading off-price fashion, footwear, accessories and homewares online retail discount platform in ANZ. 

 

 

Operational review

 

H1 FY20

 

vs PY

H1 FY19

 

A$ 000's

Revenue

Gross profit

GP%

Revenue

Gross profit

Revenue

Gross Profit

GP%

Group

71.9

24.4

34%

-43%

-50%

126.2

48.5

38%

ANZ

64.5

21.7

34%

-37%

-50%

101.6

43.3

43%

S-E Asia

7.4

2.7

36%

-51%

-7%

15.1

2.9

19%

ROW

-

-

-

-100%

-100%

9.5

2.3

24%

 

 

 

 

 

 

 

 

 

 

 

ANZ First Strategy

As previously announced, the Group has focused on its activities and opportunities in the ANZ region, through its ANZ First strategy. This strategy aims to optimise the Group's significant scale, resources and market position in this region. The business has remained competitive in the ANZ market by increasing its focus on key brand partners for its marketplace platform. The business is ensuring that well-known local and international brands are being added to the marketplace platform to improve customer engagement and retention.

 

We have also continued to grow the number of 3P brand partners using our platform by simplifying the Marketplace solutions we offer as (i) Bulk ship model (ii) Consignment model and (iii) Drop Ship model.

 

During H1 FY20, the Group continued to further restructure and reorganise its overseas and non-core offline retail operations, which has allowed for significant savings to be achieved through headcount and property cost reductions.

 

The Group's fixed cost base has been reduced by 39% to $10.5 million (FY19 H1: $17.1 million) and variable costs have been reduced by 54% to $16.9 million (FY19 H1: $37.0 million). These initiatives will improve operational effectiveness in the long term. As the group further improves its propriety technologies with automation and simplifies the existing business processes, management are confident that further fixed and variable cost savings will be achieved in H2 FY20.   

 

As part of the ANZ First strategy, the Group has also been able to reduce freight costs by no longer shipping product direct to customers from the UK and US.

In FY19, the Group incurred $11.3 million of costs related to the UK and US warehouse premises, staff and freight directly attributed to shipping product direct to the customer. As part of the ANZ First strategy, the supply chain has been restructured and it is the supplier's responsibility to ship the product direct to the new and more efficient Australian warehouse, leveraging economies of scale for the Group.  

 

South East Asia (SEA)

During the period, the Group reported reduced revenue in SEA as marketing spend was re-directed to the core ANZ market, alongside the closure of non-performing websites in Philippines and Thailand in August 2019. The territory represents an important strategic market allowing Australian brands to access new customers outside the ANZ region and luxury brands to access the lucrative SEA markets.

 

Whilst revenues have declined by 51% to A$7.4 million (H1 FY19: A$15.1 million) and gross profit declined by 7% to A$2.7 million (H1 FY19: A$2.9 million), the gross profit margin has improved to 36% (H1 FY19: 19%). It should also be noted that the websites in the SEA region do not incur any overheads apart from costs incurred in relation to statutory financial and tax compliance requirements.   

 

United Kingdom (ROW)

This territory previously traded predominately under the Cocosa brand, which was focused on providing customers with compelling value in premium branded products and was disposed of in May 2019.  

 

Inventory Light Marketplace Platform

Significant progress has been made in transforming the business into an Inventory Light Marketplace Platform reducing the amount of 1P inventory to a net balance after provision of $3.8 million at 31 December 2019 (N et balance after provision- 30 June 19: $13.0 million; 31 December 2018 : $26.9 million) and increasing the number of active suppliers using the platform. The inventory provision balance remains unchanged as $7.2 million at 31 December 2019 (June 19: $7.2 million).   

 

Technology

The Group is now benefiting from the significant investment in its proprietary technologies in FY18 and FY19. In H1 FY20, efficiencies have been realised in the form of business process simplification and automation resulting in significant cost savings being achieved in the form of head count reduction.

 

Having achieved the platform's key development objectives in prior years, capital investment levels are anticipated to reduce to around half the prior year with further reductions envisaged in future periods. In the current half year period, the Group has spent $1.3 million in capital expenditure (Dec 18: $2.9 million; Dec 17: $4.3 million).

 

The Inventory Light Marketplace proprietary technology has allowed brand partners to re-engage with the business allowing  the business to identify opportunities to easily scale the number of 3P brand partners by simplifying the Marketplace solutions we offer as (i) Just in Time (JIT) (ii) Fulfillment by Mysale (FBM) and (iii) Drop Ship (DS).

 

We continue to operate OURPAY, the Group's proprietary Buy Now Pay Later digital wallet, alongside other digital wallets. The OURPAY net receivable balance has reduced to $0.4 million as at 31 December 2019 (30 June 19: Net receivable of $2.1 million) as we manage the working capital and promote OURPAY only to existing customers.

 

Marketing

Total marketing spend has decreased by 58% to $5.1 million for the half-year period (FY19 H1: $12.3 million) and the relative cost of marketing has also decreased (FY20 H1: 7.1% of total revenues vs FY19 H1: 9.7% of total revenues).

 

In FY19 total online marketing spend was $13.8 million for ANZ (8.3% of total ANZ revenues), $0.7 million for SEA (2.4% of total SEA revenues), and $1.0 million for ROW (7.4% of total ROW revenues). We continue to prioritise the marketing spend into the ANZ region.

 

Financial review

 

Revenue and Gross Profit

For the six months ended 31 December 2019, group revenue decreased by 43% to A$71.9 million (H1 FY19: A$126.2 million) and gross profit decreased by 50% to A$24.4 million (H1 FY19: A$48.5 million). This reduced performance came as a result primarily of the market factors described in the Operating Review.

 

Operating Expenses

The Group took several actions to reduce costs in light of its reduced revenues. As a result, in the six months total underlying operating expenses decreased by 49% at A$27.4 million (H1 FY19: A$54.1 million) and were lower as a percentage of total revenue at 38% (H1 FY19: 43%). The fixed cost base has also been reduced in total to $10.5 million (H1 FY19: $17.1 million) giving the business more flexibility to adapt and grow while only incurring additional variable expenses.

 

A$ million

H1 FY20

H1 FY19

 

 

 

Expenses as per Financials

 

 

Selling and distribution expenses

20.4

42.6

Administration expenses

12.3

16.1

Impairment of receivables

0.2

0.3

Less depreciation & amortisation

(3.6)

(3.5)

Less one-off costs & discontinued activities

(1.9)

(0.9)

Less share-based payments

-

(0.5)

Total underlying expenses per financials

27.4

54.1

 

 

 

Fixed expenses

 

 

Staff Costs

9.1

12.8

Financial  

0.8

1.4

Occupancy

0.6

2.9

Total fixed expenses  

10.5

17.1

 

 

 

Variable expenses

 

 

Delivery to customer expenses

8.6

19.0

Staff costs

0.9

1.4

Marketing

5.1

12.3

Financial (merchant fees)

1.2

1.9

Other

1.1

2.4

Total variable expenses

16.9

37.0

 

 

 

Total underlying expenses (fixed and variable)

27.4

54.1

 

 

 

Delivery to customer expenses reduced to $8.6 million (H1 FY19: $19.0 million) and also reduced as a percentage of total revenue to 12% (H1 FY19: 15%). The reduction in costs is part of the ANZ First strategy where the international operations have been closed down and the international supply chain has been restructured and it is the supplier's responsibility to ship the product direct to the Australian warehouse leveraging the Group's economies of scale.

 

During the period, the Group accelerated pre-existing cost reduction programmes, including a reduction in staff numbers across a number of operational departments, facilitated by increased automation of processes and the closure of overseas warehouses and offices. M anagement are confident that further fixed and variable cost savings in relation to staff, occupancy, and delivery to customer expenses will be achieved in H2 FY20.

 

Profit/Loss before Tax

Underlying loss before tax for the period was A$6.9 million (H1 FY19: A$8.7 million loss) and the reported loss before tax for the period was A$3.7 million (H1 FY19: A$10.3 million loss). This reported loss is after the inclusion of a number of one-off and non-cash costs which are shown in more detail below and in note 5 to the financial statements in order to provide greater insight as to the underlying profitability of the Group.

 

Loss after Tax and earnings per share

The underlying loss after tax for the six months is A$6.8 million (H1 FY19: A$5.1 million loss) and the reported loss after tax for the period is $A3.6 million (H1 FY19: A$6.7 million loss). As mentioned above 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 5 to the financial statements in order to provide greater insight as to the underlying profitability of the group.

 

Note 17 to the financial statements shows the detailed calculations of basic earnings per share for the financial year which were a loss of 1.3 cents per share (H1 FY19: 3.3 cents loss) on an underlying basis and was a loss of 0.70 cents (H1 FY19: 4.3 cents loss) on a reported basis.

 

Taxation

The Group has recorded a tax benefit of A$0.1 million for the six months (H1 FY19: A$3.6 million tax benefit) 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. The group has total tax losses of A$89.7 million (H1 FY19: A$46.7 million) with the majority located in Australia. Management have taken a conservative position to not recognise the entire tax loss as a deferred tax asset with the balance at period end being $3.5 million (H1 FY19: $17.9 million). 

 

Balance Sheet, Cash and Working Capital

The Group's closing cash balance was A$7.2 million (H1 FY19: A$16.6 million) and the net cash balance was A$7.2 million (H1 FY19: A$2.7 million). Following the decisive actions taken by management in H1 FY20, the Group now operates on a debt-free basis.   

 

In the previous two full 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 Group no longer performs wholesale activities. The reduction in wholesale and merchant receivables in H1 FY20 have assisted in working capital inflows with the total trade and other receivable balance reducing to $4.7 million (June 19: $10.0 million) as at period end.   

 

The total inventory balance has reduced to $5.6 million at period end (June 19: $16.0 million). The Group has continued to implement its pivot to an Inventory Light Marketplace Platform strategy of exiting own-buy inventory in H1 FY20.   1P inventory has reduced to a net balance of $3.8 million (June 19: Net balance of $13.0 million). The remaining inventory balance of $1.8 million at period end (June 19: $3.0 million) mainly represents third party stock not yet delivered to customers.   

 

Capital expenditure decreased significantly, as planned, to A$1.3 million (H1 FY19 A$2.9 million) as the group required less investment in the development of its proprietary technology platforms and automation projects. It is anticipated capital expenditure shall continue to reduce in future years.

 

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 5 to the financial statements and outlined below.

 

A$ million

H1 FY20

H1 FY19

Reported EBITDA

0.2

(6.6)

 

 

 

Share based payments

-

0.5

One-off costs & discontinued activities

1.9

0.9

Unrealised foreign exchange loss

2.5

0.2

Debt forgiveness

(7.7)

-

 

(3.3)

1.6

Underlying EBITDA

(3.1)

(5.0)

Depreciation & Amortisation

3.6

3.5

Net interest expense

0.2

0.2

Underlying loss before tax

(6.9)

(8.7)

 

 

Included within one-off items are items of a non-trading, non-recurring nature including reorganisation costs, termination charges and other costs associated with the action plan described above.

Unrealised foreign exchange loss relates to the revaluation of foreign currency balance sheet items at period end. The significant balance in the current period is attributed to the Australian dollar, the Group's functional and presentation currency, weakening against the Group's key trading currencies during the period. 

 

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 and underlying EBITDA.

 

_____________________________

Carl Jackson

Chief Executive Officer

31 March 202

 

MySale Group Plc

 

 

Statements of profit or loss and other comprehensive income

 

 

For the period ended 31 December 2019

 

 

 

 

 

Revenue from contracts with customers

 

 

 

 

 

 

 

 

Revenue from sale of goods

 

3

 

71,870

 

126,186

 

208,596

Cost of sale of goods

 

 

 

(47,453)

 

(77,678)

 

(156,178)

 

 

 

 

 

 

 

 

 

Gross profit

 

3

 

24,417

 

48,508

 

52,418

 

Other operating gain, net

 

4

 

5,078

 

453

 

1,591

Interest revenue calculated using the effective interest method

 

 

 

3

 

 

 

Expenses

 

 

 

 

 

 

 

 

Selling and distribution expenses

 

 

 

(20,428)

 

(42,595)

 

(71,795)

Administration expenses

 

 

 

(12,329)

 

(16,104)

 

(31,814)

Impairment of receivables

 

7

 

(208)

 

(330)

 

(5,261)

Impairment of assets

 

 

 

 

 

(2,832)

Finance costs

 

 

 

(220)

 

(208)

 

(547)

 

Loss before income tax benefit/(expense)

 

 

 

(3,687)

 

(10,276)

 

(58,240)

 

Income tax benefit/(expense)

 

 

 

127

 

3,598

 

(11,090)

 

Loss after income tax benefit/(expense) for the period attributable to the owners of MySale Group Plc

 

 

 

(3,560)

 

(6,678)

 

(69,330)

 

 

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

 

 

 

 

96

 

(38)

Foreign currency translation

 

 

 

1,263

 

782

 

932

 

Other comprehensive income for the period, net of tax

 

 

 

1,263

 

878

 

894

 

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

 

 

 

(2,297)

 

(5,800)

 

(68,436)

 

 

 

Basic earnings per share (cents per share)

 

17

 

(0.69)

 

(4.33)

 

(44.92)

Diluted earnings per share (cents per share)

 

17

 

(0.69)

 

(4.33)

 

(44.92)

 

 

 

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

 

Balance sheets

As at 31 December 2019 

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

  Restated

 

Note

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

6

 

7,257

 

16,659

 

814

Trade and other receivables

 

7

 

4,653

 

24,896

 

9,985

Inventories

 

 

 

5,622

 

36,772

 

15,963

Derivative financial instruments

 

 

 

 

134

 

Income tax receivable

 

 

 

46

 

25

 

Other current assets

 

 

 

2,957

 

5,592

 

4,766

Total current assets

 

 

 

20,535

 

84,078

 

31,528

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

 

1,319

 

2,175

 

1,186

Right-of-use assets

 

8

 

5,814

 

 

Intangibles

 

9

 

32,394

 

38,237

 

34,480

Deferred tax

 

 

 

3,496

 

17,867

 

3,369

Total non-current assets

 

 

 

43,023

 

58,279

 

39,035

Total assets

 

 

 

63,558

 

142,357

 

70,563

 

 

Liabilities

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Trade and other payables

 

10

 

20,086

 

46,335

 

32,968

Contract liabilities

 

11

 

8,912

 

11,233

 

10,408

Borrowings

 

12

 

4

 

13,960

 

18,357

Lease liabilities

 

 

 

1,461

 

 

Income tax payable

 

 

 

 

 

96

Provisions

 

 

 

2,927

 

2,373

 

4,415

Total current liabilities

 

 

 

33,390

 

73,901

 

66,244

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

Borrowings

 

 

 

14

 

16

 

Lease liabilities

 

 

 

5,472

 

 

Provisions

 

 

 

249

 

200

 

231

Total non-current liabilities

 

 

 

5,735

 

216

 

231

Total liabilities

 

 

 

39,125

 

74,117

 

66,475

 

Net assets

 

 

 

24,433

 

68,240

 

4,088

 

Equity

 

 

 

 

 

 

 

 

Share capital

 

13

 

 

 

Share premium account

 

14

 

328,971

 

306,363

 

306,363

Other reserves

 

 

 

(121,828)

 

(121,625)

 

(123,125)

Accumulated losses

 

 

 

(182,690)

 

(116,478)

 

(179,130)

Equity attributable to the owners of MySale Group Plc

 

 

 

24,453

 

68,260

 

4,108

Non-controlling interest

 

 

 

(20)

 

(20)

 

(20)

 

 

 

 

 

 

 

 

 

Total equity

 

 

 

24,433

 

68,240

 

4,088

 

The interim financial statements of MySale Group Plc (company number 115584 (Jersey)) were approved by the Board of Directors and authorised for issue on 31 March 2020. They were signed on its behalf by:


__________________________ __________________________
Carl Jackson  Charles Butler
Director  Chairman

 

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

 

 

Statements of changes in equity

For the period ended 31 December 2019

 

 

 

 

 Share premium

 

 Other

 

Accumulated

 

 Non-controlling

 

Total equity

 

 

account

 

reserves

 

losses

 

interest

 

Unaudited six months ended 31 December

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2018

 

306,363

 

(122,983)

 

(105,202)

 

(20)

 

78,158

 

 

 

 

 

 

 

 

 

 

 

Adjustment for correction of error

 

-

 

-

 

(4,598)

 

-

 

(4,598)

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2018 - restated *

 

306,363

 

(122,983)

 

(109,800)

 

(20)

 

73,560

 

 

 

 

 

 

 

 

 

 

 

Loss after income tax benefit/(expense) for the period

 

-

 

-

 

(6,678)

 

-

 

(6,678)

Other comprehensive income for the period, net of tax

 

-

 

878

 

-

 

-

 

878

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

878

 

(6,678)

 

-

 

(5,800)

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

 

Share-based payments

 

-

 

480

 

-

 

-

 

480

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2018

 

306,363

 

(121,625)

 

(116,478)

 

(20)

 

68,240

 

 

* The opening balance as at 1 July 2018 has been restated due to an adjustment for the correction of an error in relation to the 30 June 2017 and 30 June 2018 financial years. This restatement due to an adjustment for the correction of an error was first presented in the financial statements for the 30 June 2019 financial year. Please refer to Note 4 of the 30 June 2019 financial statements for detailed information on the Restatement of comparatives.

 

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

 

Statements of changes in equity

For the period ended 31 December 2019

 

 

 

 

 Share premium

 

 Other

 

Accumulated

 

 Non-controlling

 

Total equity

 

 

account

 

reserves

 

losses

 

interest

 

Unaudited six months ended 31 December

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2019

 

306,363

 

(123,125)

 

(179,130)

 

(20)

 

4,088

 

 

 

 

 

 

 

 

 

 

 

Loss after income tax benefit/(expense) for the period

 

-

 

-

 

(3,560)

 

-

 

(3,560)

Other comprehensive income for the period, net of tax

 

-

 

1,263

 

-

 

-

 

1,263

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

1,263

 

(3,560)

 

-

 

(2,297)

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

 

Contributions of equity, net of transaction costs (note 14)

 

22,608

 

-

 

-

 

-

 

22,608

Share-based payments

 

-

 

34

 

-

 

-

 

34

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2019

 

328,971

 

(121,828)

 

(182,690)

 

(20)

 

24,433

 

 

 

 

 

Share premium 

 

 Other

 

Accumulated

 

Non-controlling

 

Total equity

 

 

account

 

reserves

 

losses

 

interest

 

Audited year ended 30 June

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2018 - restated *

 

306,363

 

(122,983)

 

(109,800)

 

(20)

 

73,560

 

 

 

 

 

 

 

 

 

 

 

Loss after income tax benefit/(expense) for the period

 

-

 

-

 

(69,330)

 

-

 

(69,330)

Other comprehensive income for the period, net of tax

 

-

 

894

 

-

 

-

 

894

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

894

 

(69,330)

 

-

 

(68,436)

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

 

Share-based payments

 

-

 

(1,036)

 

-

 

-

 

(1,036)

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2019

 

306,363

 

(123,125)

 

(179,130)

 

(20)

 

4,088

 

 

* The opening balance as at 1 July 2018 has been restated due to an adjustment for the correction of an error in relation to the 30 June 2017 and 30 June 2018 financial years. This restatement due to an adjustment for the correction of an error was first presented in the financial statements for the 30 June 2019 financial year. Please refer to Note 4 of the 30 June 2019 financial statements for detailed information on the Restatement of comparatives.

 

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

 

Statements of cash flows

 

 

For the period ended 31 December 2019

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Loss before income tax benefit/(expense) for the period

 

 

 

(3,687)

 

(10,276)

 

(58,240)

 

 

 

 

 

 

 

 

 

Adjustments for:

 

 

 

 

 

 

 

 

Depreciation and amortisation

 

 

 

3,642

 

3,493

 

6,937

Impairment of goodwill

 

 

 

 

 

2,832

Net loss/(gain) on disposal of property, plant and equipment

 

 

 

(38)

 

(6)

 

487

Net gain on disposal of intangibles

 

 

 

 

 

(2,655)

Interest income

 

 

 

(3)

 

 

Interest expense

 

 

 

220

 

208

 

547

 

 

 

 

 

 

 

 

 

 

 

 

 

134

 

(6,581)

 

(50,092)

 

 

 

 

 

 

 

 

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Decrease in trade and other receivables

 

 

 

5,333

 

5,242

 

20,153

Decrease/(increase) in inventories

 

 

 

10,341

 

(3,084)

 

17,687

Decrease/(increase) in other operating assets

 

 

 

2,967

 

(1,366)

 

(399)

Increase/(decrease) in trade and other payables

 

 

 

(12,781)

 

14,269

 

986

Increase/(decrease) in contract liabilities

 

 

 

(1,496)

 

2,612

 

1,787

Increase/(decrease) in other provisions

 

 

 

(1,470)

 

143

 

1,558

 

 

 

 

 

 

 

 

 

 

 

 

 

3,028

 

11,235

 

(8,320)

Interest received

 

 

 

3

 

 

Interest paid

 

 

 

(220)

 

(208)

 

(547)

Income taxes paid

 

 

 

 

(66)

 

(136)

 

 

 

 

 

 

 

 

 

Net cash from/(used in) operating activities

 

 

 

2,811

 

10,961

 

(9,003)

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Payments for property, plant and equipment

 

 

 

(415)

 

(101)

 

(94)

Payments for intangibles

 

9

 

(855)

 

(2,848)

 

(4,865)

Payments for security deposits

 

 

 

(2,471)

 

(15)

 

Proceeds from disposal of property, plant and equipment

 

 

 

 

 

177

Proceeds from disposal of intangibles

 

 

 

 

 

2,655

Proceeds from release of security deposits

 

 

 

1,313

 

94

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

 

(2,428)

 

(2,870)

 

(2,127)

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from issue of shares

 

14

 

22,608

 

 

Proceeds from borrowings

 

 

 

 

2,228

 

Repayment of borrowings

 

 

 

(5,200)

 

(2,228)

 

Proceeds/(repayments) of lease liabilities

 

 

 

755

 

(121)

 

(124)

 

 

 

 

 

 

 

 

 

Net cash from/(used in) financing activities

 

 

 

18,163

 

(121)

 

(124)

 

Net increase/(decrease) in cash and cash equivalents

 

 

 

18,546

 

7,970

 

(11,254)

Cash and cash equivalents at the beginning of the financial period

 

 

 

(12,323)

 

(938)

 

(938)

Effects of exchange rate changes on cash

 

 

 

1,034

 

874

 

(131)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the financial period

 

6

 

7,257

 

7,906

 

(12,323)

 

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

 

MySale Group Plc

Notes to the financial statements

31 December 2019

 

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 (Alternative 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 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 31 March 2020.

 

Note 2. Significant accounting policies

 

These financial statements for the interim half-year reporting period ended 31 December 2019 have been prepared in accordance with International Accounting Standards IAS 34 'Interim Financial Reporting'.

 

These interim financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2019 and any public announcements made by the Company during the interim reporting period.

 

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the periods presented, except for the policies stated below.

 

Going concern
The unaudited condensed consolidated financial statements have been prepared on a going concern basis. In reaching their assessment, the directors have considered a period extending at least 12 months from the date of approval of these financial statements. 

As at 31 December 2019, the Group's current liabilities exceeds current assets by $12,855,000 (30 June 2019: $34,716,000 and at 31 December 2018: positive working capital of $10,177,000) and the Group has incurred a loss before tax of $3,687,000 (30 June 2019: $58,240,000 and at 31 December 2018: $10,276,000) and generated operating cash inflows of $4,914,000 (30 June 2019: operating cash outflows of $9,003,000 and at 31 December 2018: operating cash inflows of $10,961,000). 

 

Subsequent to the end of the financial half-year, the directors continue to monitor developments with, and potential impact of, COVID-19 on the operational and financial risks of the Group. There is significant uncertainty regarding the potential future impact of the COVID-19 outbreak on the Group.

Immediate action has been taken to protect the cash resources of the business until further certainty is gained. These measures include, but are not limited to: 

 

 

further cost actions including the reduction of capital expenditure and non-essential operating costs;

 

negotiations with landlords for reductions in rent and deferred payments schedule in regards to our office and warehouse rental premises;

 

adopting a temporary reduction in working hours for all employees and executive team members which will be reviewed at the end of April 2020;

 

renegotiating extended payment terms for non-trade suppliers including direct and indirect taxes paid to government agencies; and

 

obtaining government support as part of various economic stimulus initiatives.

 

 

The directors have prepared cash flow forecasts covering a period of least 12 months from the signing date of these financial statements. This assessment has included consideration of the forecast performance of the business for the foreseeable future and the cash available to the Group. In preparing these forecasts, the directors have considered a number of detailed sensitivities, including the potential impact of COVID-19. The cash flow forecast assumes there will be adequate cash generated to meet the Group's obligations as and when they fall due. 

 

Given the factors noted above, the directors are confident of delivering the forecast cash flows and have prepared these financial statements on a going concern basis. 

 

New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

The following Accounting Standards and Interpretations are most relevant to the Group:

 

IFRS 16 Leases

The Group has adopted IFRS 16 from 1 July 2019. The standard replaces IAS 17 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under IFRS 16 will be higher when compared to lease expenses under IAS 17. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases.

 

Impact of adoption

IFRS 16 was adopted using the modified retrospective approach and as such the comparatives have not been restated. The impact of adoption on opening accumulated losses as at 1 July 2019 was as follows:

 

 

 

1 July

 

 

2019

 

 

$'000

 

 

 

Operating lease commitments as at 1 July 2019 (IAS 17)

 

5,835

Finance lease commitments as at 1 July 2019 (IAS 17)

 

20

Operating lease commitments discount based on the weighted average incremental borrowing rate of 5% (IFRS 16)

 

(181)

Short-term leases not recognised as a right-of-use asset (IFRS 16)

 

(3,945)

Low-value assets leases not recognised as a right-of-use asset (IFRS 16)

 

(5)

Right-of-use assets (IFRS 16)

 

1,724

 

 

 

Lease liabilities - current (IFRS 16)

 

(243)

Lease liabilities - non-current (IFRS 16)

 

(1,481)

 

 

(1,724)

 

 

 

Reduction in opening accumulated losses as at 1 July 2019

 

-

 

 

As at 31 December 2019 right-of-use assets has a closing balance of $5,814,000. Refer to Note 8 for further details. The total current and non-current lease liabilities in relation to these right-of-use assets is $6,933,000 as at 31 December 2019 as per the balance sheet.

During the period $63,000 (31 December 2018: Nil) of interest expense has been incurred in relation to these lease liabilities and $362,000 (31 December 2018: Nil) of depreciation expense has been recognised for the right-of-use assets. Refer to Note 5 for further details. 

 

Practical expedients applied
In adopting IFRS 16, the Group has used the following practical expedients permitted by the standard:

 

applied a single discount rate to a portfolio of leases with reasonably similar characteristics;

 

accounted for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-term leases;

 

excluded initial direct costs for the measurement of the right-of-use asset at the date of initial application; and

 

used hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

 

Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.

 

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.

 

The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.

 

Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.

 

Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.

 

Comparatives

Certain comparative in the statement of profit or loss and other comprehensive income and balance sheet have been reclassified, where necessary, to be consistent with current period presentation. In particular, delivery costs to customers in the current  period of $8,580,000 (31 December 2018: $18,997,000; 30 June 2019: $33,831,000) has been reclassified from Cost of sale of goods to Selling and distribution expenses to be in line with the online retail industry. 

 

Note 3. 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.

 

Operating segment information

 

 

Australia and

 

South-East

 

Rest of the

 

 

 

 

New Zealand

 

Asia

 

world *

 

Total

Unaudited six months ended 31 December - 2019

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

Sales to external customers transferred at a point in time

 

64,430

 

7,440

 

-

 

71,870

Total revenue

 

64,430

 

7,440

 

-

 

71,870

 

 

 

 

 

 

 

 

 

Gross profit

 

21,720

 

2,697

 

-

 

24,417

Other operating gain, net

 

 

 

 

 

 

 

5,078

Selling and distribution expenses

 

 

 

 

 

 

 

(20,428)

Administration expenses

 

 

 

 

 

 

 

(12,329)

Finance income

 

 

 

 

 

 

 

3

Finance costs

 

 

 

 

 

 

 

(220)

Impairment of receivables

 

 

 

 

 

 

 

(208)

Loss before income tax benefit/(expense)

 

 

 

 

 

 

 

(3,687)

Income tax benefit/(expense)

 

 

 

 

 

 

 

127

Loss after income tax benefit/(expense)

 

 

 

 

 

 

 

(3,560)

 

* There was no revenue in the rest of the world as all UK websites were sold in May 2019. 

 

 

 

Australia and

 

South-East

 

Rest of the

 

 

 

 

New Zealand

 

Asia

 

world

 

Total

Unaudited six months ended 31 December - 2018

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

Sales to external customers transferred at a point in time

 

101,583

 

15,126

 

9,477

 

126,186

Total revenue

 

101,583

 

15,126

 

9,477

 

126,186

 

 

 

 

 

 

 

 

 

Gross profit

 

43,317

 

2,885

 

2,306

 

48,508

Other operating gain, net

 

 

 

 

 

 

 

453

Selling and distribution expenses

 

 

 

 

 

 

 

(42,595)

Administration expenses

 

 

 

 

 

 

 

(16,104)

Finance costs

 

 

 

 

 

 

 

(208)

Impairment of receivables

 

 

 

 

 

 

 

(330)

Loss before income tax benefit/(expense)

 

 

 

 

 

 

 

(10,276)

Income tax benefit/(expense)

 

 

 

 

 

 

 

3,598

Loss after income tax benefit/(expense)

 

 

 

 

 

 

 

(6,678)

 

 

 

 

 

Australia and 

 

South-East

 

 Rest of the

 

 

 

 

New Zealand

 

Asia

 

world

 

Total

Audited year ended 30 June 2019

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

Sales to external customers transferred at a point in time

 

166,082

 

28,386

 

14,128

 

208,596

Total revenue

 

166,082

 

28,386

 

14,128

 

208,596

 

 

 

 

 

 

 

 

 

Gross profit after exceptional items

 

44,786

 

4,865

 

2,767

 

52,418

Other operating gain, net after exceptional items

 

 

 

 

 

 

 

1,591

Selling and distribution expenses after exceptional items **

 

 

 

 

 

 

 

(71,795)

Administration expenses after exceptional items

 

 

 

 

 

 

 

(31,814)

Finance costs

 

 

 

 

 

 

 

(547)

Impairment of receivables after exceptional items

 

 

 

 

 

 

 

(5,261)

Impairment of assets after exceptional items

 

 

 

 

 

 

 

(2,832)

Loss before income tax benefit/(expense) after exceptional items

 

 

 

 

 

 

 

(58,240)

Income tax benefit/(expense) after exceptional items

 

 

 

 

 

 

 

(11,090)

Loss after income tax benefit/(expense) after exceptional items

 

 

 

 

 

 

 

(69,330)

 

** Due to the large restructuring the business went through in FY19 management believe the best way for a reader of the accounts to understand the position of the business is for the profit and loss statement to be shown before exceptional items and on a statutory basis. 

 

Revenue recognition

 

Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.

 

Sale of goods
The Group's revenue mainly comprises the sale of goods online, in-store, and by wholesale to businesses. Revenue is recognised when control of the goods has transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled. 

 

The Group operates mostly an online retail business selling men's, ladies and children's apparel, accessories, beauty and homeware items. Revenue from sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at the time of delivery. Sales represent product shipped less actual and estimated future returns, and slotting fees, rebates and other trade discounts accounted for as reductions of revenue. Online sales are usually by credit card or online payment.

 

It is the Group's policy to sell its products to the customer with a right of return within 14 days. Accumulated experience is used to estimate and provide for such returns at the time of sale.

 

Note 4. Other operating gain, net

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Net foreign exchange (loss)/gain

 

(2,719)

 

444

 

(692)

Net gain/(loss) on disposal of property, plant and equipment

 

38

 

6

 

(487)

Net gain on disposal of other assets *

 

 

 

2,655

Debt forgiveness **

 

7,723

 

 

Other income

 

36

 

3

 

115

 

 

 

 

 

 

 

Other operating gain, net

 

5,078

 

453

 

1,591

 

* In May 2019, the Group sold its Cocosa websites through an asset sale for a net gain on sale of A$2,655,000.

 

**In September 2019, the Group finalised a share placement for A$23,329,000. Net proceeds after considering the share issue costs of A$721,000 was A$22,608,000. The total number of new shares issued under the placement was 640,376,083 bringing the total shares on issue to 794,707,735. As part of the share placement, the Group agreed with its financier Hong Kong and Shanghai Banking Corporation Plc ('HSBC') to extinguish all borrowing facilities, Corporate Guarantees and Indemnities with a repayment of A$10,914,000 in September 2019. As part of this repayment HSBC agreed to provide the Group with a debt forgiveness amount of A$7,723,000.

 

Note 5. EBITDA reconciliation (earnings before interest, taxation, depreciation and amortisation)

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

EBITDA reconciliation

 

 

 

 

 

 

Loss before income tax benefit

 

(3,687)

 

(10,276)

 

(58,240)

Less: Interest income

 

(3)

 

 

Add: Interest expense on borrowings

 

157

 

208

 

547

Add: Interest expense on lease liabilities

 

63

 

 

Add: Depreciation and amortisation

 

3,280

 

3,493

 

6,937

Add: Depreciation from right-of-use assets

 

362

 

 

 

 

 

 

 

 

 

EBITDA

 

172

 

(6,575)

 

(50,756)

 

 

 

 

 

 

 

Underlying EBITDA represents EBITDA adjusted for certain items, as outlined below.

 

 

 

 

 

 

 

Underlying EBITDA reconciliation
EBITDA

 

172

 

(6,575)

 

(50,756)

Impairment of goodwill

 

 

 

2,832

Impairment of receivables

 

 

 

6,760

Net gain on disposal of Cocosa websites and trademarks

 

 

 

(2,655)

Share-based payments

 

34

 

480

 

(1,036)

Debt forgiveness

 

(7,723)

 

 

Reorganisation and discontinued operations *

 

337

 

 

2,502

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

 

1,622

 

868

 

3,096

Inventory write down

 

 

 

18,941

Unrealised foreign exchange loss

 

2,472

 

193

 

1,468

 

 

 

 

 

 

 

Underlying EBITDA

 

(3,086)

 

(5,034)

 

(18,848)

 

 

 

 

 

 

 

 

* Costs in relation to the closure of overseas operations.

 

Note 6. Current assets - cash and cash equivalents

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Cash at bank

 

7,146

 

16,455

 

703

Bank deposits at call

 

111

 

204

 

111

 

 

 

 

 

 

 

 

 

7,257

 

16,659

 

814

 

 

 

 

 

 

 

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

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances as above

 

7,257

 

16,659

 

814

Bank overdraft (note 12)

 

 

(8,753)

 

(13,137)

 

 

 

 

 

 

 

Balance as per statement of cash flows

 

7,257

 

7,906

 

(12,323)

 

Note 7. Current assets - trade and other receivables

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Trade receivables

 

7,897

 

20,136

 

11,307

Less: Allowance for expected credit losses

 

(5,597)

 

(623)

 

(5,389)

 

 

2,300

 

19,513

 

5,918

 

 

 

 

 

 

 

Other receivables

 

1,887

 

5,383

 

1,107

Sales tax receivable

 

466

 

 

2,960

 

 

 

 

 

 

 

 

 

4,653

 

24,896

 

9,985

 

Trade receivables include uncleared cash receipts due from online customers which amounted to A$3,039,000 (30 June 2019: A$5,303,000 and 31 December 2018: A$4,883,000).

 

Allowance for expected credit losses

The Group has recognised a loss of A$208,000 (30 June 2019: A$5,261,000 and 31 December 2018: A$330,000) in profit or loss in respect of impairment of receivables for the half-year ended 31 December 2019.

 

Note 8. Non-current assets - right-of-use assets

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Buildings and equipment - right-of-use

 

6,176

 

 

Less: Accumulated depreciation

 

(362)

 

 

 

 

 

 

 

 

 

 

 

5,814

 

 

 

Additions to the right-of-use assets during the period were A$4,452,000.

 

Note 8. Non-current assets - right-of-use assets (continued)

 

 

The Group leases buildings for its offices, warehouses and retail outlets under agreements of between 1 to 5 years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. The Group also leases plant and equipment under agreements of between 1 to 5 years.

 

The Group leases office equipment under agreements of less than 1 year. These leases are either short-term or low-value, so have been expensed as incurred and not capitalised as right-of-use assets.

 

Note 9. Non-current assets - intangibles

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Goodwill - at cost

 

21,250

 

24,053

 

21,221

 

 

 

 

 

 

 

Customer relationships - at cost

 

3,959

 

3,870

 

1,846

Less: Accumulated amortisation

 

(3,827)

 

(3,592)

 

(1,702)

 

 

132

 

278

 

144

 

 

 

 

 

 

 

Software - at cost

 

27,364

 

24,373

 

23,460

Less: Accumulated amortisation

 

(16,985)

 

(11,707)

 

(11,264)

 

 

10,379

 

12,666

 

12,196

 

 

 

 

 

 

 

ERP system

 

4,901

 

4,918

 

3,300

Less: Accumulated amortisation

 

(4,268)

 

(3,678)

 

(2,381)

 

 

633

 

1,240

 

919

 

 

 

 

 

 

 

 

 

32,394

 

38,237

 

34,480

 

 

 

 

 

Customer

 

 

 

ERP

 

 

 

 

 Goodwill

 

relationships

 

Software

 

system

 

Total

Unaudited six months ended 31 December

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2019

 

21,221

 

144

 

12,196

 

919

 

34,480

Additions

 

-

 

-

 

855

 

-

 

855

Disposals

 

-

 

-

 

(4)

 

(5)

 

(9)

Exchange differences

 

29

 

-

 

7

 

4

 

40

Amortisation

 

-

 

(12)

 

(2,675)

 

(285)

 

(2,972)

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2019

 

21,250

 

132

 

10,379

 

633

 

32,394

 

Note 10. Current liabilities - trade and other payables

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Trade payables

 

14,744

 

38,927

 

28,359

Other payables and accruals

 

5,342

 

6,514

 

4,609

Sales tax payable

 

 

894

 

 

 

 

 

 

 

 

 

 

20,086

 

46,335

 

32,968

 

Note 11. Current liabilities - contract liabilities

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Contract liabilities

 

8,912

 

11,233

 

10,408

 

Unsatisfied performance obligations

The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the reporting period was A$8,912,000 as at 31 December 2019 (A$11,233,000 as at 31 December 2018) and is expected to be recognised as revenue in future periods as follows:

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

2018

 

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

Within 6 months

 

8,912

 

11,233

 

10,408

 

 

Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the Group has transferred the goods or services to the customer.

 

Contract liabilities are recognised where the Group receives consideration from a customer and expects to refund some, or all, of that consideration to the customer. A contract liability is measured at the amount of consideration received or receivable for which the Group does not expect to be entitled and is updated at the end of each reporting period for changes in circumstances. Historical data is used across product lines to estimate such returns at the time of sale based on an expected value methodology.

 

Note 12. Current liabilities - borrowings

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Bank overdraft

 

 

8,753

 

13,137

Bank loans

 

 

5,200

 

5,200

Finance lease liability

 

4

 

7

 

20

 

 

 

 

 

 

 

 

 

4

 

13,960

 

18,357

 

Assets pledged as security

The Group has no borrowing facilities as at 31 December 2019 (30 June 2019: A$21,685,000 and 31 December 2018: A$28,105,000 with Hong Kong and Shanghai Banking Corporation Plc 'HSBC'). The borrowing facilities were secured by a Corporate Guarantee and Indemnity. There were no financial covenants in relation to these borrowing facilities. The average interest rate incurred on these bank borrowings is nil (30 June 2019: 2.96% and at 31 December 2018: 2.96%). 

 

Note 13. Equity - share capital

 

 

Unaudited  31 December

 

Unaudited  31 December

 

Audited  30 June

 

Unaudited  31 December

 

Unaudited  31 December

 

Audited  30 June

 

 

2019

 

2018

 

2019

 

2019

 

2018

 

2019

 

 

Shares

 

Shares

 

Shares

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary shares £nil each - fully paid

 

817,240,853

 

154,331,652

 

154,331,652

 

-

 

-

 

-

Less: Treasury shares

 

(25,533,118)

 

(3,000,000)

 

(3,000,000)

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

791,707,735

 

151,331,652

 

151,331,652

 

-

 

-

 

-

 

Movements in ordinary share capital - issued and fully paid

 

Details

 

Date

 

Shares

 

A$'000

 

 

 

 

 

 

 

Balance

 

1 July 2018

 

154,331,652

 

-

 

 

 

 

 

 

 

Balance

 

31 December 2018

 

154,331,652

 

-

Issue of shares

 

20 September 2019

 

640,376,083

 

-

Issue of shares

 

11 December 2019

 

22,533,118

 

-

 

 

 

 

 

 

 

Balance

 

31 December 2019

 

817,240,853

 

-

 

Movements in treasury shares

 

Details

 

Date

 

Shares

 

A$'000

 

 

 

 

 

 

 

Balance

 

1 July 2018

 

3,000,000

 

-

 

 

 

 

 

 

 

Balance

 

31 December 2018

 

3,000,000

 

-

Issue of shares under the management incentive scheme

 

5 December 2019

 

22,533,118

 

-

 

 

 

 

 

 

 

Balance

 

31 December 2019

 

25,533,118

 

-

 

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held.

 

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

 

Treasury shares

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 either 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 or certain share price hurdles. Share options and loan shares have been granted over the ordinary share capital of the company and are accounted for as share-based payments. That is, the fair value of the accounting expense in relation to these options and loan shares are recognised over the vesting period.   

 

Vested and unvested shares under the plans are recorded as treasury shares representing a deduction against issued capital. When the loans are settled or the options exercise, the treasury shares are reclassified as ordinary shares and the equity will increase accordingly.

 

Note 14. Equity - share premium account

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Share premium account

 

328,971

 

306,363

 

306,363

 

The share premium account is used to recognise the difference between the issued share capital at nominal value and the capital received.

 

In September 2019, the Company finalised a share placement for A$23,329,000. Net proceeds after considering the share issue costs of A$721,000 was A$22,608,000. The total number of new shares issued under the placement was 640,376,083 bringing the total shares on issue to 794,707,735. 

 

In December 2019, the Company issued 22,533,118 ordinary shares, 4,542,614 to MySale Group Trustee Limited, in its capacity as the trustee of the MySale Group Plc Employee Benefit Trust ("EBT"), and 17,990,504 directly to those directors and management taking part in the Loan Share Plan as part of the Company's management incentive scheme for its Directors, Non-executive Directors, and senior management. These shares, in addition to the existing 3,000,000 ordinary shares already held in the EBT, will be used to satisfy the Share Awards, subject to the performance criteria being met. Following admission of these shares the Company's total issued share capital was 817,240,853 Ordinary Shares. The total number of voting rights in the Company is 809,698,239. 

 

Note 15. Contingent liabilities

 

The Group issued bank guarantees through its banker, Hong Kong and Shanghai Banking Corporation, in respect of lease obligations amounting to A$524,000 (30 June 2019: A$1,503,000 and 31 December 2018: A$979,000). 

 

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 (30 June 2019: NZ$150,000 and 31 December 2018: NZ$150,000). 

 

Note 16. Related party transactions

 

Parent entity

MySale Group Plc is the parent company of the Group.

 

Transactions with related parties

The following transactions occurred with related parties:

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Sale of goods and services:

 

 

 

 

 

 

Sale of goods to other related party *

 

1,601

 

 

381

 

 

 

 

 

 

 

Payment for goods and services:

 

 

 

 

 

 

Purchase of goods from other related party *

 

 

5,311

 

6,483

 

*

 

Relates to related party transactions with Arcadia Group Ltd and Sports Direct.Com Retail Ltd. Arcadia Group Ltd is a subsidiary of Shelton Capital. Mike Ashely is a shareholder in Sports Direct.Com Retail Ltd. Shelton Capital and Mike Ashley were shareholders in MySale Group Plc during the course of the financial period.

 

 

Receivable from and payable to related parties

The following balances are outstanding at the reporting date in relation to transactions with related parties:

 

 

 

Unaudited six months ended 31 December

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Current receivables:

 

 

 

 

 

 

Trade receivables from other related party

 

1,834

 

 

 

 

 

 

 

 

 

Current payables:

 

 

 

 

 

 

Trade payables to other related party

 

 

 

488

 

Loans to/from related parties

There were no loans to or from related parties at the current and previous reporting date.

 

Terms and conditions

All transactions were made on normal commercial terms and conditions and at market rates.

 

Note 17. Earnings per share

 

 

Unaudited six months ended 31 December

 

Unaudited six months ended 31 December

 

Audited year ended 30 June

 

 

2019

 

2018

 

2019

 

 

A$000

 

A$000

 

A$000

 

 

 

 

 

 

 

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

 

(3,560)

 

(6,678)

 

(69,330)

 

 

 

Number

 

Number

 

Number

 

 

 

 

 

 

 

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

 

515,374,761

 

154,331,652

 

154,331,652

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

 

515,374,761

 

154,331,652

 

154,331,652

 

 

 

Cents

 

Cents

 

Cents

 

 

 

 

 

 

 

Basic earnings per share

 

(0.69)

 

(4.33)

 

(44.92)

Diluted earnings per share

 

(0.69)

 

(4.33)

 

(44.92)

 

Comment at 31 December 2019
7,542,614 employee long-term incentives have been excluded from the diluted earnings calculation as they are anti-dilutive for the period.

Comment at 30 June 2019
2,580,543 employee long-term incentives have been excluded from the diluted earnings calculation as they are anti-dilutive for the year.

Comment at 31 December 2018
8,047,850 employee long-term incentives have been excluded from the diluted earnings calculation as they are anti-dilutive for the period.

 

Note 18. Events after the reporting period

 

Subsequent to the reporting date, the existence of the infectious disease COVID-19 ('Coronavirus') has become widely known, and begun to rapidly spread throughout the world, including Australia. Since the reporting date this has caused increasing disruption and uncertainty to populations, and to business and economic activity. As this situation is rapidly developing, it is difficult to estimate the short and long term potential impact of this uncertainty on the Group's operations. The Directors have considered the impact of this on the ability of the Group to continue as a going concern, as set out in note 2.

 

No other matter or circumstance has arisen since 31 December 2019 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.

 

 


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