Source - RNS
RNS Number : 0105L
MySale Group PLC
28 September 2016
 

MySale Group Plc

Preliminary Results for financial year to 30 June 2016


 

MySale Group plc (AIM: MYSL) (the ''the group''), the leading international online retailer, is pleased to announce its audited preliminary results for the year to 30 June 2016.

 

Financial highlights

·      Revenue growth of 7% to A$252.3 million (2015: A$235.9 million) for the full year with an accelerating trend in H2 (+10%)

·      Strong gross profit growth of 21%, driven by 300bp margin improvement to 26.4%, also accelerating through the year

·      Performance building well in the target growth territories:

South-East Asia1 20% revenue growth; gross profit +117%

United Kingdom 139% revenue growth; gross profit +133% 

·      Total overheads reduced, in line with plan, to 24% of revenue (2015: 27%)

·      Operational leverage driving underlying EBITDA2up to A$5.5 million (2015: EBITDA loss -A$9.5 million)

·      Strong balance sheet with cash balance of A$34.0 million

·     The good trading momentum has continued - performance above expectations so far in the current year

 

 

Operational highlights

·     Focus on improving gross margins and activating customers with higher lifetime-value

Average order value increased 20% to A$90 (2015: A$75)

Average revenue per active customer increased 9% to A$302 (2015: A$276)

·     Further growth in mobile which now represents 58% of orders (2015: 56%) with over 6.7 million mobile apps downloaded

·     Active customer numbers returned to growth in H2

·     Returns rate remains at industry leading levels of only 5%

·     Increase in sales from own-buy inventory to circa 15% (2015: 10%) in-line with strategic plan to grow gross margin

·     Technology improvements including; enhanced search functionality across the platform to drive customer engagement; and more efficient logistics to reduce unit costs

·      Acquisition of an Australian online retail business was integrated prior to the year end and anticipated to drive marketplace revenues in current and future years.

·      After the year end, a partnership with Sports Direct has been launched in Australia.

 

Carl Jackson, Chief Executive Officer, commented

 

''We have had a very good year in FY16 and saw improved performance throughout the business. This continued improvement was driven by the team's clear focus on improving gross margins whilst still providing exceptional value to customers which in turn was supported by the group's proven digital marketing activity and continued technology investment.

''Our active customer base returned to growth in the second half of the year, core customer metrics remained robust, average order value increased and both revenue growth and margin improvement accelerated in the second half of the year, delivering full year performance ahead of expectations, despite some currency headwinds during the year. We have now grown our underlying EBITDA in each of the last three half year periods.

''All three group territories have seen increases in revenue and gross profit. However it is in South-East Asia and in the United Kingdom, where we trade predominantly as Cocosa, that the Group has seen the most significant rates of growth. Our strategy for these, newer, territories has been firstly to grow the active member base and then to build profitability.

''In FY16 we achieved significantly improved operational performance and solid progress against our strategic aims. We built on a solid first half with further improvements in the second half and our challenge now is to build further on that momentum and execute on the real and exciting opportunities the group has to significantly grow the business.

''The new strategic partnership with Sports Direct is testimony to the capabilities we have to offer large retail partners and alliances such as this will provide further catalyst to our growth plans.

''The group's diversified international operations should be well insulated from any uncertainty associated with the United Kingdom's prospective exit from the EU and in the immediate term the Group will experience some benefit from a weaker GBP Sterling exchange rate. Additionally, our core customer offer of compelling, discounted value in branded products should be highly relevant for consumers in tightening economic conditions.

''We have seen an encouraging start to the current financial year with performance ahead of our expectations and, although the key trading period still lies ahead, the board is confident in the group's prospects for the year.

 

______________________________________________

1 South East Asia: Hong Kong, Malaysia, Singapore, Philippines and Thailand

2 Underlying EBITDA is earnings before interest, tax, depreciation, amortisation, share based payments and one-off and non-trading items as presented in Note 6 to the financial statements

Enquiries:

MySale Group plc

 

Carl Jackson, Chief Executive

+61 (0) 414 817 843

Graeme Burns, Corporate Development Director

+44 (0) 777 585 4516

 

 


 

Zeus Capital Limited (Nominated Adviser & Joint Broker)

+44 (0) 20 3829 5000

Nick How/Giles Balleny, Corporate Finance

Benjamin Robertson, Corporate Broking

 

 

 

N+1 Singer (Joint Broker)

+44 (0) 20 7496 3000

Nic Hellyer

 

 

 

Maitland

+44 (0) 20 7379 5151

Dan Yea

 

 

 

About MySale Group

 

MySale is a leading international online retailer with established online flash sales and 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's flash sales websites host time limited sales in each of its territories. These flash sales are focused on fashion, apparel, health, beauty and homeware categories and are predominantly undertaken on a consignment inventory basis. The retail websites operate in Australia and focus on similar product categories using mostly drop-shipped inventory.

Customers' shopping experiences are enhanced by the Group's deployment of leading edge technology to ensure personalised and localised product offerings. Customer convenience 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.

 

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's flash sales brands are; OzSale and BuyInvite in Australia; NzSale in New Zealand; SingSale in Singapore; MySale in Australia, New Zealand 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.

 

 

Chairman's statement

 

I am delighted to present my second set of full-year results to shareholders. The year to 30 June 2016 has been a key one for the group; we have restored profitability and returned MySale to a growth path. We have now exited the stabilisation phase and are looking forwards with confidence.

During the year the group made good progress against the goals we had set ourselves and this is reflected in the much improved financial performance. The achievements of the year are due to the focus, hard work and dedication of the entire MySale team and their contribution deserves recognition and thanks.

Our strategy is clear - we will drive profitability in our core ANZ market and focus on growth in our less developed markets in South-East Asia and the United Kingdom. We aim to drive increased activity with existing customers, grow our active base and increase profitability whilst re-investing for growth. We already have well invested technology and distribution platforms, but will continue the process of improvement to raise the bar for our customers and global brand partners. Our partnership with Sports Direct is testimony to the quality of the solutions that we provide to our partners.

 

Whilst the peak trading period lies ahead at this early stage we are performing ahead of our expectations for the current financial year and have a number of exciting new initiatives in place which will support our future growth.

 

 

 

Iain McDonald

Chairman

London

27 September 2016

 

 

Review of operations by the Chief Executive Officer

 

MySale Group Plc ('group') has made good progress in the financial year to 30 June 2016 (FY2015-16) as planned strategic initiatives have delivered improved financial performance and positioned the group for further, profitable, growth. The group has now grown underlying EBITDA in each of the last three half year periods.

In the 12 months to 30 June 2016 the group's revenue rose 7% to A$252.3 million (2015: A$235.9 million) and gross profit increased 21% to A$66.7 million (2015: A$55.2 million) following a 300bp improvement in gross margin to 26% (2015: 23%). This growth in both revenue and gross profit accelerated across the financial year.

 


FY2015-16

growth vs 2015

FY2014-15

A$ 000's

Revenue

Gross Profit

Revenue

Gross Profit

Revenue

Gross Profit








Group

252,289

    66,656

+7%

+21%

  235,853

    55,232

ANZ

210,710

    57,060

+3%

+12%

  205,340

    50,879

S-E Asia

31,590

       7,546

+20%

+117%

    26,333

       3,472

ROW

9,989

       2,050

+139%

+133%

       4,180

          881

 

The rate of revenue and gross profit growth progressively strengthened during the financial year driven by the group's clear strategy to provide exceptional value and choice to our customers and supported by the group's proven digital marketing activities, efficient international operations and flexible technology platform.

The improved trading performance combined with the previously reduced overhead base saw the group generate positive underlying EBITDA of A$5.5 million for the year,  in contrast to the underlying loss incurred in the previous financial year (2015: EBITDA loss of A$9.5 million).

During the year the group continued its strategic plan to prioritise growth of gross margins and secure higher lifetime-value customers in all territories by curtailing postage promotions, improving the merchandising and increasing the proportion of own buy inventory.

This strategy has translated into improved overall financial performance as gross profit margin increased 21% driven by a 300bp increase in gross margin, to 26% (2015: 23%). Importantly the plan has delivered increases in both average order values and average annual spend per active member to A$90 (+20%) and A$302 (+10%) respectively. As anticipated the execution of this plan meant fewer active customers in the first half of the financial year but following this period of repositioning growth in active customer numbers resumed in the second half of the year.

 All territories have increased revenue and gross profit however it is in the two target growth territories that the group has seen the most notable rates of growth. In South East Asia revenue grew by 20% but more importantly gross profit increased by over 100% as the strategy of building scale and then focusing on margins began to show its success. The refocus on the core business instigated in early 2015 is also delivering very good results in the United Kingdom, where the group trades predominately under the Cocosa brand, and following refinement to the operations here, the group had an exceptional year with both revenue and gross profit increasing more than 130%.

 

Australia & New Zealand

Within this operating territory the group has successfully implemented its strategic initiatives and improved gross profit, by 12% to A$57.0 million (2015: A$50.9 million) and gross margin to 27% (2015: 25%) whilst also growing revenue by 3% to A$210.7 million (2015: 205.3 million). An improved merchandising offer has seen average order value increase 15%, in line with the group trend, to A$85.

The improvement in gross margin has been achieved despite the challenge of weaker AUD exchange rates increasing the local cost of internationally sourced goods.

While the group's operation in ANZ is long established, it continues to provide attractive growth possibilities due to both the lower levels of internet penetration, in comparison to territories such as the United Kingdom and the USA, and this region's relative lack of off-price retailers.

This region shall benefit from the recent acquisition of three online retail websites which will underpin growth in the number of active customers and expansion into a marketplace offer. 

 

South-East Asia

During the period this region had revenue growth of 20% to A$31.5 million (2015: A$26.3 million) and an excellent 117% increase in gross profit to A$7.5 million (2015: A$3.5 million), principally driven by an almost doubling of the gross margin to 24% (2015: 13%). The growth in revenue and profitability has been driven by the group's localisation plan for each territory which ensures that merchandising, pricing, payment and shipping solutions are all tailored to the needs of local consumers. A 23% rise in average order value to A$91 (2015: A$74) is testimony to the relevance of the group's online retail offer in this region. The increases recorded in revenue and gross margin accelerated across the year.

The significant improvement in the rate of gross margin to 24% has been achieved by the localised plan, as above, an expanded range of merchandise, including own-buy inventory, and fewer delivery promotions and this increased rate represents the group's expectation for future performance.

The group's strategy for this territory has been to firstly grow the active member base and then to build gross profitability and leverage this increasing scale to use resources more efficiently and achieve lower shipping rates. With a more profitable model now established, South-East Asia reinforces its position as a key element of the group's growth strategy.

In the medium to long term this region is anticipated to be increasingly significant as the group grows the member base and demand for branded products, particularly European and USA brands, is expected to grow. 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 nascent operations within the United Kingdom, re-launched in the second half of FY2015 and trading predominately under the Cocosa brand which provides customers with compelling value in premium branded products. The United Kingdom had a positive first half,  as revenue increased by more than 50%, but saw a further step up in the second half with a growth rate over 200% thereby achieving revenues of A$10.0 million (2015: A$4.2 million) for the financial year, some 139% higher than the previous year. This significant growth was underpinned by increased numbers of active customers and leveraged by increased frequency and average order value.

These are encouraging results and position the business for further growth in the current financial year. Whilst currently a relatively small part of the group's overall activities, this business operates in the UK's large and well developed online marketplace where engaged and active consumers can be acquired successfully. Given there is no online flash sale operator of scale in the UK the group has targeted becoming a leading operator in the country.

Group

The basis of the group's improved trading and financial performance this financial year has its foundations from FY2015 when the group re-focused the business on its core aims of providing exceptional value in branded products to our customers and exceptional inventory management solutions to our brand partners within the group's three core territories. Whilst there is still work to do and many opportunities to capture, momentum has increased and FY2015-16 represents another step on the path of profitable growth.

The improved trading performance and gross profit has combined with lower rates of overhead cost (circa 24% of revenue) and delivered underlying EBITDA of $5.5 million for the year, in sharp contrast to the EBITDA loss of A$9.5 million incurred in the previous year. A cost saving programme saw the rate of costs in staff and marketing costs lowered compared to the prior year. The group has however increased investment into its technology capabilities and will increase this investment further in the coming year to ensure the group has a robust and scalable platform on which to grow the business.

During the year, and across all territories, the group continued to dedicate nearly all its marketing spend, which was circa 7% of revenue, into measurable digital channels to attract and engage new and existing customers. Ongoing communications with existing customers has seen those loyal and engaged customers continue to spend with reliable regularity and with increasing order sizes.

The group has maintained its investment into further developments of its technology platform, on which all territories operate. This has resulted in the delivery of a number of key initiatives to improve user experience, data capability and operational efficiency, including; a customer search function, advanced personalisation and recommendation engine and simplified, tokenised checkouts. In the coming year investment will be increased to capture further improvements and efficiencies and to extend the existing platform with wider retail marketplace functionality that will provide a solid base for growth.

Many new brands, including a number from Arcadia, have joined our roster of over 2,500 brands, attracted by the group's excellence in inventory management and our ability to efficiently distribute their products. The group's unique international distribution capability is a particular point of difference for European and USA brands.

The group implemented its strategy to increase the proportion of inventory that is own-buy, rather than on a consignment basis, and that now represents circa 15% of online revenue, up from 10% the previous year, which in turn supports higher gross margins and wider product selection for customers. Own-buy activity is concentrated on staple, branded goods. We are now a little over 18 months into the plan to re-focus our buying teams and have seen the benefits begin to accrue as relationships with brands and suppliers strengthen and deepen and, in the period, a number of exclusive sourcing arrangements were agreed.

The combination of the group's sourcing, compelling consumer value and reliable service means that returned goods remain at industry leading levels of only 5% overall.

The group currently has circa 32,000 square metres of warehouse space which house the group's inventory and logistics and distribution resources and these have the capacity to absorb significant growth. The processes of these warehouse operations are continually refined to accommodate broader product ranges, deliver the most efficient workflows and ensure the group's customers receive the products they select within the timeframes they expect. During this year improved technology deployment in this area reduced individual unit economic costs by around 4.5%.

Acquisition of Australian online retail websites

The group completed the acquisition of three Australian online retail websites during the year. The acquisition includes the domain names 'OO.com.au'; 'dealsdirect.com.au'; and 'topbuy.com.au' and all associated customer databases, intellectual property, trademarks and goodwill and these websites were integrated to the group's technology and logistics platform in the fourth quarter of the financial year.

This acquisition provides an online retail opportunity that is highly complementary to the group's core flash sale model and it will facilitate one of the broadest customer reaches of an Australian based online retailer; widen the product selection for customers and leverage the groups existing infrastructure.

The three websites all fit with MySale's hard discount strategy and offer compelling value to consumers, principally across the key MySale categories of Home and Fashion but also low price unbranded, fun gifts. The group realises a number of strategic benefits from this acquisition. Firstly, it grows the group's ANZ3 active customer base, and secondly, it accelerates the group's development of its retail marketplace capability, focussed on complementary product categories, which provides a good base for further growth in FY2016-17 and beyond. Thirdly, and perhaps most importantly, the acquisition demonstrates the group's ability to efficiently integrate acquisitions onto the group's proprietary technology and operational platforms.

The rapid development of its online retail website offer has also accelerated the group's overall online retail marketplace capability.  A new technology platform supporting flash, retail and marketplace activity is now in place and underpins the group's ability to provide complete marketplace solutions to our brand partners and we shall use this opportunity to broaden and deepen our relationships with brands.

New partnership

The group is pleased to have launched a strategic partnership with Sports Direct after the financial year closed.

The Sports Direct partnership is for the launch of inventory on the group's Australian retail websites. This initiative will offer Australian consumers access to great sports brands at great prices in a sector with few existing operators of scale. The partnership will add approximately 150,000 SKUs to the Australian online retail offer and seamlessly integrates MySale's consumer websites with the Sports Direct supply chain at an individual product level. Once successfully implemented and developed this Sports Direct partnership may be extended into additional territories of New Zealand and South-East Asia.

This partnership also represents the first flagship retailer to join our nascent retail marketplace platform. The first products have already started shipping to customers and this will be reflected in our first half performance.

_____________________________________

3Australia and New Zealand

 

 

Our Goal, Strategy and Tactics

Our goal is a simple one. To grow annual revenues to more than A$1 billion and to improve our return on sales. While this may sound aggressive, we operate in big markets, partner with global brands and already have a strong platform to grow.

 

Our strategic objectives remain unchanged:

·      Drive increased activity with existing customers

·      Grow our active base

·      Increase profitability whilst re-investing for growth

 

The tactics that have or will be adopted to achieve these strategic aims include:

·      Deploy proven digital marketing and engagement tactics to acquire and retain loyal and frequent customers

·      Invest in technology to improve customer experience, conversion and engagement

·      Focus on newer geographies in South-East Asia and the UK

·      Utilise our international sourcing capability to drive frequency and volumes

·      Add new categories and more products to drive activity and profitability

·      Forge partnerships with global brands and retailers and provide solutions to their excess inventories

·      Selective M&A to drive the active customer base and enter new categories

 

 

Outlook

The group has had a good year in FY2015-16 with significantly improved operational performance and solid progress against its strategic aims. There has been an encouraging start to the current financial year, with trading ahead of expectation and, although the group's key trading period still lies ahead, the board is confident in the group's prospects for the year.

The new strategic partnership with Sports Direct is testimony to the capabilities the group is able to offer large retail partners and alliances such as this will provide further catalyst to the growth plans.

The group's diversified international operations should be well insulated from any uncertainty associated with the United Kingdom's prospective exit from the EU and in the immediate term the group will experience some benefit from a weaker GBP Sterling exchange rate. Additionally, the group's core customer offer of compelling, discounted value in branded products should be highly relevant for consumers in tightening economic conditions.

 

 

Carl Jackson

Chief Executive Officer

London

27 September 2016

 

 

Financial review by the Chief Financial Officer

 

Revenue and Gross Profit

For the year ended 30 June 2016 group revenue increased by 7% to A$252.3 million (2015: A$235.9 million) and gross profit increased 21% to A$66.7 million (2015: A$55.2 million) as a result of the strategic plans implemented in 2015.

Operating expenses

Underlying operating expenses decreased 8% to A$61.7 million (2015: A$66.4 million) in the year under review following a cost reduction programme initiated in 2015 which primarily focused on reducing marketing and headcount costs. These efficiencies have reduced the operating expenses as a percentage of Revenue to 24% (2015: 27%).

 

Loss After Tax

The loss after tax reported for the financial year is $A0.2 million (2015: A$17.8 million loss). This loss is after the inclusion of a number of exceptional and non-cash items which are shown in more detail in note 6 to the financial statements in order to give greater insight as to the underlying profitability of the group.

 

Taxation

The group has recorded a tax expense of A$0.4 million for the year (2015: tax benefit of A$3.7 million) which represents an effective rate in excess of the 30% the group anticipates as the long term expectation. This higher rate 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$31 million (2015: 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$9.3 million.

 

Balance Sheet, Cash and Working capital

The group's closing cash balance was A$34.0 million (2015: A$39.9 million). This movement is largely a reflection of changes in working capital during the year, in particular increased inventory. This increase arose principally from the group's strategic investment into more own-buy inventory which supports the drive to improve gross margins.

Inventory is now at a level that will support the continued growth of the group's own-buy business. The group would expect further growth in inventory levels to be in line with the overall growth of the business.

Capital expenditure during the period was A$4.0 million (2015: A$4.1 million), in line with the prior period, and principally represents investment, to support the group's growth plans, in equipment for the group's logistics facilities and development of the technology platform. As part of the Group's strategic plan it is anticipated that investment in capital expenditure shall increase.

Banking Facilities

The group holds significant cash balances, held principally with HSBC with whom the group also has trade finance multi option debt facilities of GBP£3.0 million (increased to GBP£7.0 million post year-end). In addition the group has trade finance facilities of A$12.2 million with ANZ Bank. All facilities are renewed on an annual basis. Of the total facilities of A$18.3 million, A$10.8 million remains undrawn at the year-end.

 

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 revenue per active member, and underlying EBITDA

 

Underlying Basis

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 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.

 

 

 

Andrew Dingle

Chief Financial Officer

London

27 September 2016

 

 

MySale Group Plc

Statement of profit or loss and other comprehensive income

For the year ended 30 June 2016

 



Note


2016


2015

 





A$'000


A$'000

 








 

Revenue







Revenue from sale of goods




252,289


235,853

Cost of sale of goods




(185,633)


(180,621)








Gross profit




66,656


55,232

 

Other operating gains/(loss), net


5


2,173


204








Finance income




125


195

Finance costs


7


(97)


(58)

Finance income, net




28


137








 

Expenses







Selling and distribution expenses




(37,460)


(47,952)

Administration expenses




(31,126)


(28,969)

Share of loss of joint venture




(104)


(116)

 

Profit/(loss) before income tax (expense)/benefit




167


(21,464)

 

Income tax (expense)/benefit


8


(364)


3,675

 

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




(197)


(17,789)

 

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


22


(1,068)


740

Foreign currency translation


22


(2,161)


6,219

 

Other comprehensive income for the year, net of tax




(3,229)


6,959

 

Total comprehensive income for the year




(3,426)


(10,830)

 

Loss for the year is attributable to:







Non-controlling interest




(20)


-

Owners of MySale Group Plc




(177)


(17,789)












(197)


(17,789)

 

Total comprehensive income for the year is attributable to:







Non-controlling interest




(20)


-

Owners of MySale Group Plc




(3,406)


(10,830)












(3,426)


(10,830)

 





Cents

Cents








Basic earnings per share


26


(0.12)


(11.81)

Diluted earnings per share


26


(0.12)


(11.81)

 

 

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 2016

 



Note


2016


2015

 





A$'000


A$'000

 








 

Assets














Current assets







Cash and cash equivalents


9


34,005


39,853

Trade and other receivables


10


9,058


23,630

Inventories


11


35,473


17,880

Derivative financial instruments




-


22

Income tax receivable




-


1,643

Other


12


7,973


4,736

Total current assets




86,509


87,764








Non-current assets







Investments in joint venture




-


134

Property, plant and equipment


13


2,226


3,023

Intangibles


14


29,765


23,517

Deferred tax


15


10,295


10,320

Total non-current assets




42,286


36,994








Total assets




128,795


124,758

 

 

Liabilities














Current liabilities







Trade and other payables


16


29,548


29,240

Borrowings


17


6,476


1,189

Derivative financial instruments




1,047


-

Income tax payable




1,104


1,234

Provisions


18


2,163


2,115

Deferred revenue




11,677


11,147

Total current liabilities




52,015


44,925








Non-current liabilities







Borrowings


19


-


64

Provisions


20


368


328

Total non-current liabilities




368


392








Total liabilities




52,383


45,317

 

Net assets




76,412


79,441

 

 

Equity







Share premium account




306,363


306,363

Other reserves


22


(125,763)


(122,931)

Accumulated losses




(104,168)


(103,991)

Equity attributable to the owners of MySale Group Plc




76,432


79,441

Non-controlling interest


23


(20)


-








Total equity




76,412


79,441

 

The financial statements of MySale Group Plc (company number 115584) were approved by the Board of Directors and authorised for issue on 28 September 2016. They were signed on its behalf by:

 

Carl Jackson                                                             Andrew Dingle

Director                                                                     Director

 

 

 

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

 

MySale Group Plc



Statement of changes in equity



For the year ended 30 June 2016



 


 



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 2014


306,363


(133,595)


(86,202)


-


86,566












Loss after income tax benefit for the year


-


-


(17,789)


-


(17,789)

Other comprehensive income for the year, net of tax


-


6,959


-


-


6,959












Total comprehensive income for the year


-


6,959


(17,789)


-


(10,830)












Transactions with owners in their capacity as owners:











Share-based payments (note 22)


-


3,705


-


-


3,705












Balance at 30 June 2015


306,363


(122,931)


(103,991)


-


79,441

 

 



 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 2015


306,363


(122,931)


(103,991)


-


79,441












Loss after income tax expense for the year


-


-


(177)


(20)


(197)

Other comprehensive income for the year, net of tax


-


(3,229)


-


-


(3,229)












Total comprehensive income for the year


-


(3,229)


(177)


(20)


(3,969)












Transactions with owners in their capacity as owners:











Share-based payments (note 22)


-


397


-


-


397












Balance at 30 June 2016


306,363


(125,763)


(104,168)


(20)


76,412

 

 

 

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 2016



 

 



Note


2016


2015





A$'000


A$'000








Cash flows from operating activities







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




167


(21,464)








Adjustments for:







Depreciation and amortisation




4,383


3,434

Net loss on disposal of property, plant and equipment




30


71

Share of loss - joint ventures




104


116

Share-based payments




-


3,705

Interest income




(125)


(195)

Interest expense




97


58












4,656


(14,275)








Change in operating assets and liabilities:







Decrease/(increase) in trade and other receivables




14,167


(19,508)

Increase in inventories




(17,593)


(5,077)

Decrease/(increase) in other operating assets




(3,153)


11,760

Increase/(decrease) in trade and other payables




155


(1,728)

Increase/(decrease) in other provisions




486


(5,407)

Increase in deferred revenue




530


(4,469)












43


(38,326)

Interest received




125


195

Interest paid




(97)


(58)

Income taxes refunded/(paid)




832


(49)








Net cash from/(used in) operating activities




108


(38,616)

 

Cash flows from investing activities







Payment for purchase of business, net of cash acquired


25


(5,300)


-

Payments for new joint venture capital invested




-


(104)

Payments for property, plant and equipment


13


(782)


(1,033)

Payments for intangibles


14


(3,248)


(3,404)

Proceeds from disposal of property, plant and equipment




153


51

Proceeds from disposal of intangibles




8


-

Proceeds from release of security deposits




(120)


-








Net cash used in investing activities




(9,289)


(4,112)

 

 

Cash flows from financing activities







Proceeds from borrowings




9,089


2,467

Repayment of borrowings




(3,775)


(2,759)

Repayments of leases




(91)


(330)








Net cash generated from/(used in) financing activities




5,223


(622)

 

 

Net decrease in cash and cash equivalents




(3,958)


(43,350)

Cash and cash equivalents at the beginning of the financial year




39,853


77,344

Effects of exchange rate changes on cash




(1,890)


5,859








Cash and cash equivalents at the end of the financial year


9


34,005


39,853

 

 

 

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 2016

 



 

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.

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 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 Ogier House, The Esplanade, St. Helier, JE4 9WG, Jersey and principal place of business is at Unit 5, 111 Old Pittwater Road, Brookvale, NSW 2100, Australia.

 

The financial statements were authorised for issue, in accordance with a resolution of directors, on 28 September 2016.

The directors have the power to amend and reissue the financial statements.

 

Note 2. Significant accounting policies

 

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 years presented, unless otherwise stated.

 

These financial statements are prepared in accordance with International Finance Reporting Standards ('IFRS' or 'IFRSs') as adopted for use in the European Union (the 'EU') and IFRS Interpretations Committee interpretations (together 'EUIFRS').

 

Historical cost convention

The financial statements have been prepared under the historical cost convention, except for derivative financial instruments at fair value.

 

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

 

New, revised or amending Accounting Standards and Interpretations adopted

The group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the International Accounting Standards Board that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the group.

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

 

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of MySale Group Plc as at 30 June 2016 and the results of all subsidiaries for the year then ended.

 

Subsidiaries are all those entities over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases.

 

Intercompany transactions, balances and unrealised gains on transactions between entities in the group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

 

The acquisition of common control subsidiaries is accounted for using the pooling of interest method of accounting. The acquisition of other subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

 

Where the group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

 

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, balance sheet and statement of changes in equity of the group. Losses incurred by the group are attributed to the non-controlling interest in full, even if that results in a deficit balance.

 

Operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

 

Foreign currency translation

Foreign currency transactions

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

 

Foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

 

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.

 

Revenue recognition

Revenue is measured at the fair value of the consideration received, and represents amounts receivable for goods supplied, stated net of trade discounts, returns and value of gift vouchers used. Revenue is recognised when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the group; and when specific criteria have been met for each of the group's activities, as described below. The group bases its estimate of return on historical results and provisions are made for goods expected to be returned.

 

Sale of goods

The group operates an online retail and wholesale business selling men's, ladies and children's apparel, accessories, beauty and homeware items. Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Risks and rewards are considered passed to the buyer when the goods have been delivered to the customer and it is reasonably assured the customer has accepted the goods. Sales represent product shipped plus postage, 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.

 

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

 

Income tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

 

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:


When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or


When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

 

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

 

The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

 

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

 

MySale Group Plc (the 'head entity') and its wholly-owned Australian subsidiaries plus Apac Sale Group Pte. Ltd. have formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.

 

Current and non-current classification

Assets and liabilities are presented in the balance sheet based on current and non-current classification.

 

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

 

A liability is current when: it is expected to be settled in the group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.

 

Deferred tax assets and liabilities are always classified as non-current.

 

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

 

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.

 

Inventories

Goods for resale are stated at the lower of cost and net realisable value on a 'weighted average cost' basis. Cost comprises purchase, delivery and direct labour costs, net of rebates and discounts received or receivable.

 

Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of rebates and discounts received or receivable.

 

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

A provision is made to write down any slow-moving or obsolete inventory to net realisable value, based on management assessment of the expected future sales of that inventory, the condition of the inventory and the seasonality of the inventory.

 

Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

 

Cash flow hedges

Cash flow hedges are used to cover the group's exposure to variability in cash flows that is attributable to particular risks associated with a recognised asset or liability or a firm commitment which could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income through the cash flow hedges reserve in equity, whilst the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred out of equity and included in the measurement of the hedged transaction when the forecast transaction occurs.

 

Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure that each hedge is highly effective and continues to be designated as a cash flow hedge. If the forecast transaction is no longer expected to occur, the amounts recognised in equity are transferred to profit or loss.

 

If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the hedge becomes ineffective and is no longer a designated hedge, the amounts previously recognised in equity remain in equity until the forecast transaction occurs.

 

Joint ventures

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. Investments in joint ventures are accounted for using the equity method. Under the equity method, the share of the profits or losses of the joint venture is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Income/(losses) earned from joint ventures increase/(reduce) the carrying amount of the investment. When the group's share of losses in a joint venture equals to or exceeds its interest in the joint venture, including any other unsecured non-current receivables, the group does not recognise further losses, unless it has obligations to make or has made payments on behalf of the joint venture.

 

Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent expenditure relating to plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in profit or loss when incurred.

 

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over their expected useful lives as follows:

 

Leasehold improvements


5-7 years

Plant and equipment


3-7 years

Fixtures and fittings


5-10 years

Motor vehicles


4-5 years

 

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

 

Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter.

 

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

 

Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

 

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

 

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

 

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the group will obtain ownership at the end of the lease term.

 

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

 

Intangible assets

Externally acquired intangible assets are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

 

Goodwill

Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.

 

Customer relationships

Customer relationships acquired in a business combination are amortised on a straight-line basis over the period of their expected benefit, being their finite useful life of three years.

 

ERP system and software

Acquired enterprise resource planning ('ERP') systems and software costs are initially capitalised at cost which includes the purchase price, net of any discounts and rebates, and other directly attributable cost of preparing the asset for its intended use. Direct expenditure including employee costs, which enhances or extends the performance of these systems beyond its specifications and which can be reliably measured, is added to the original costs incurred. These costs are amortised on a straight-line basis over the period of their expected benefit, being their finite useful lives of between three and five years.

Costs associated with maintenance are recognised as an expense in profit or loss when incurred.

 

Impairment of non-financial assets

Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

 

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

 

Trade and other payables

These amounts represent liabilities for goods and services provided to the group prior to the end of the financial year and which are unpaid. Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost. Due to their short-term nature they are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

 

Deferred revenue

Deferred revenue relates to cash received in advance from customers where the goods have not been delivered as at the reporting date.

 

Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

 

Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

 

Provisions

Provisions are recognised when the group has a present (legal or constructive) obligation as a result of a past event, it is probable the group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

 

Employee benefits

 

Short-term employee benefits

Liabilities for wages and salaries and other employee benefits expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

 

Other long-term employee benefits

Employee benefits not expected to be settled within 12 months of the reporting date are measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

 

Long-term employee incentive plan

The group operates an employee incentive plan to reward and retain key employees. The group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

 

Share-based payments

Equity-settled share-based compensation benefits are provided to employees. There are no cash-settled share-based compensation benefits.

 

Equity-settled transactions are awards of shares, or options over shares that are provided to employees in exchange for the rendering of services.

 

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

 

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

 

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

 

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

 

If the non-vesting condition is within the control of the group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

 

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

 

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

 

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

 

Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

 

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

 

Business combinations

The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.

 

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.

 

On the acquisition of a business, the group assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the group's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.

 

Where the business combination is achieved in stages, the group remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.

 

Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.

 

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer.

 

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.

 

Earnings per share

 

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of MySale Group Plc, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

 

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

 

Value Added Tax ('VAT'), Goods and Services Tax ('GST') and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated VAT/GST, unless the VAT/GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

 

Receivables and payables are stated inclusive of the amount of VAT/GST receivable or payable. The net amount of VAT/GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the balance sheet.

 

Cash flows are presented on a gross basis. The VAT/GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

 

Commitments and contingencies are disclosed net of the amount of VAT/GST recoverable from, or payable to, the tax authority.

 

Rounding of amounts

Amounts in this report have been rounded off to the nearest thousand dollars, or in certain cases, the nearest dollar.

 

New Accounting Standards and Interpretations not yet mandatory or early adopted

International Financial Reporting Standards ('IFRS') and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the group for the annual reporting period ended 30 June 2016. The group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant and material to the group, are set out below:

 

IFRS 9 Financial Instruments

This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The group will adopt this standard from 1 July 2018 and the impact of its adoption is expected to be minimal.

 

IFRS 15 Revenue from Contracts with Customers

This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate performance obligations within the contract; determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity's balance sheet as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts with customers; the significant judgements made in applying the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The group will adopt this standard from 1 January 2018 but the impact of its adoption is yet to be assessed by the group.

 

IFRS 16 Leases

This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces IAS 17 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the balance sheet, measured as the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (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 will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under IFRS 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The group will adopt this standard from 1 July 2019 but the impact of its adoption is yet to be assessed by 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 lives, 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 in 2016 (2015: 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 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's 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 countries 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 2016 there were no major customers (2015: 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

 - 2016


A$'000


A$'000


A$'000


A$'000










Revenue









Sales to external customers


210,710


31,590


9,989


252,289

Total revenue


210,710


31,590


9,989


252,289










Gross profit


57,060


7,546


2,050


66,656

Other operating gains, net








2,173

Selling and distribution expenses








(37,460)

Administration expenses








(31,126)

Finance income








125

Finance costs








(97)

Share of loss of joint venture








(104)

Profit before income tax expense








167

Income tax expense








(364)

Loss after income tax expense








(197)

 



Australia and 


South-East


Rest of the 





New Zealand 


Asia


World


Total

 - 2015


A$'000


A$'000


A$'000


A$'000










Revenue









Sales to external customers


205,340


26,333


4,180


235,853

Total revenue


205,340


26,333


4,180


235,853










Gross profit


50,879


3,472


881


55,232

Other operating gains, net








204

Selling and distribution expenses








(47,952)

Administration expenses








(28,969)

Finance income








195

Finance costs








(58)

Share of loss of joint venture








(116)

Loss before income tax benefit








(21,464)

Income tax benefit








3,675

Loss after income tax benefit








(17,789)

 

Note 5. Other operating gains/(loss), net

 



2016


2015



A$'000


A$'000






Net foreign exchange gain/(loss)


2,177


(205)

Net gain on disposal of property, plant and equipment


19


-

Other (expense)/income


(23)


409






Other operating gains, net


2,173


204

 

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

 



2016


2015



A$'000


A$'000






EBITDA reconciliation





Profit/(Loss) before income tax


167


(21,464)

Add: Share of loss of joint venture


104


116

Less: Interest income


(125)


(195)

Add: Interest expense


97


58

Add: Depreciation and amortisation


4,383


3,434






EBITDA


4,626


(18,051)

 

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

 



2016


2015



A$'000


A$'000

Underlying EBITDA reconciliation





EBITDA


4,626


(18,051)

Share-based payments expenses


397


335

Reorganisation and discontinued operations


265


3,493

One off costs including IPO costs, acquisition expenses, one-off expenses


1,997


2,860

Loss on revaluation of long term incentive plan


-


519

Unrealised foreign exchange (gain)/loss


(1,819)


1,336






Underlying EBITDA


5,466


(9,508)

 

Note 7. Expenses

 



2016


2015



A$'000


A$'000






Profit/(loss) before income tax includes the following specific expenses:










Sales, distribution and administration expenses:





Staff costs


29,716


30,436

Marketing expenses


16,714


27,001

Occupancy costs


5,617


5,326

Merchant and other professional fees


5,936


5,534

Depreciation and amortisation


4,383


3,434

Other administration costs


6,220


5,190






Total sales, distribution and administration expenses


68,586


76,921






Finance costs





Interest and finance charges paid/payable


97


58






Occupancy costs include:





Minimum operating lease payments


4,372


3,420






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


149,297


139,676

 

 

 

Note 8. Income tax expense/(benefit)

 



2016


2015



A$'000


A$'000






Income tax expense/(benefit)





Current tax


759


1,194

Deferred tax - origination and reversal of temporary differences



(5,013)

Adjustment recognised for prior periods


18


144






Aggregate income tax expense/(benefit)


364


(3,675)






Deferred tax included in income tax expense/(benefit) comprises:





Decrease/(increase) in deferred tax assets (note 15)



(5,013)






Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate





Profit/(loss) before income tax (expense)/benefit


167


(21,464)






Tax at the statutory tax rate of 30%


50


(6,439)

Effect of overseas tax rates


-


(412)






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





Non-deductible expenses


218


704

Tax-exempt income


(26)


-

Tax revaluation upon group restructure


-


2,280

Current year tax losses not recognised


58


48

Adjustment recognised for prior years


64


144






Income tax expense/(benefit)


364


(3,675)

 

The tax rates of the main jurisdictions are Australia 30% (2015: 30%), Singapore 17% (2015: 17%), New Zealand 28% (2015: 28%), United Kingdom 20% (2015: 20%) and United States 42.8% (2015: 42.8%).

 

Note 9. Current assets - cash and cash equivalents

 



2016


2015



A$'000


A$'000






Cash at bank


28,805


39,853

Bank deposits at call


5,200


-








34,005


39,853

 

Note 10. Current assets - trade and other receivables

 



2016


2015



A$'000


A$'000






Trade receivables


9,058


23,667

Less: Provision for impairment of receivables


-


(37)








9,058


23,630

 

 

Trade receivables include uncleared cash receipts due from online customers which amounted to A$2,473,000 (2015: A$1,529,000).

 

 

Impairment of receivables

The group has recognised a loss of A$nil (2015: A$37,000) in profit or loss in respect of impairment of receivables for the year ended 30 June 2016.

 

 

The ageing of the impaired receivables provided for above are as follows:

 



2016


2015



A$'000


A$'000






3 to 6 months overdue


-


37

 

 

Movements in the provision for impairment of receivables are as follows:

 



2016


2015



A$'000


A$'000






Opening balance


37


-

Additional provisions recognised


-


37

Unused amounts reversed


(37)


-






Closing balance


-


37

 

 

Past due but not impaired

Customers with balances past due but without provision for impairment of receivables amount to A$580,000 as at 30 June 2016 (A$203,000 as at 30 June 2015).

 

 

The ageing of the past due but not impaired receivables are as follows:

 



2016


2015



A$'000


A$'000






3 to 6 months overdue


580


203

 

 

The group did not consider a credit risk on the aggregate balances after reviewing credit terms of customers based on recent collection practices.

 

 

Note 11. Current assets - inventories

 



2016


2015



A$'000


A$'000






Goods for resale


35,395


16,252

Obsolete and slow moving inventory provision


(456)


(343)



34,939


15,909






Stock in transit


534


1,971








35,473


17,880

 

Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2016 amounted to A$789,000 (2015: A$904,000). This expense has been included in 'cost of sales' in profit or loss.

 

 

Note 12. Current assets - other

 



2016


2015



A$'000


A$'000






Prepayments


984


432

Prepaid inventory


6,271


3,948

Other deposits


435


316

Other current assets


283


40








7,973


4,736

 

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 13. Non-current assets - property, plant and equipment

 



2016


2015



A$'000


A$'000






Leasehold improvements - at cost


993


942

Less: Accumulated depreciation


(784)


(563)



209


379






Plant and equipment - at cost


4,535


4,640

Less: Accumulated depreciation


(3,068)


(2,582)



1,467


2,058






Fixtures and fittings - at cost


1,025


836

Less: Accumulated depreciation


(528)


(456)



497


380






Motor vehicles - at cost


391


538

Less: Accumulated depreciation


(338)


(332)



53


206








2,226


3,023

 

 

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 2014


453


2,080


506


180


3,219

Additions


119


788


32


94


1,033

Disposals


-


(100)


(11)


-


(111)

Exchange differences


20


144


(13)


(1)


150

Depreciation expense


(213)


(854)


(134)


(67)


(1,268)












Balance at 30 June 2015


379


2,058


380


206


3,023

Additions


71


427


284


-


782

Disposals


(4)


(74)


(3)


(102)


(183)

Exchange differences


(4)


(30)


(11)


(5)


(50)

Depreciation expense


(233)


(914)


(153)


(46)


(1,346)












Balance at 30 June 2016


209


1,467


497


53


2,226

 

 

Assets pledged as security

Refer to note 18 for property, plant and equipment pledged as security.

 


 

Depreciation expense is included in the 'administration expenses' in profit or loss.

 

 

Note 14. Non-current assets - intangibles

 



2016


2015



A$'000


A$'000






Goodwill - at cost


21,504


16,849






Customer relationships - at cost


3,512


2,294

Less: Accumulated amortisation


(1,536)


(765)



1,976


1,529






Software - at cost


6,986


4,595

Less: Accumulated amortisation


(3,070)


(1,683)



3,916


2,912






ERP system


3,923


3,084

Less: Accumulated amortisation


(1,554)


(857)



2,369


2,227








29,765


23,517

 

 

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 2014


16,849


2,019


2,110


1,461


22,439

Additions


-


-


1,761


1,265


3,026

Disposals


-


-


-


(10)


(10)

Exchange differences


-


217


11


-


228

Amortisation expense


-


(707)


(970)


(489)


(2,166)












Balance at 30 June 2015


16,849


1,529


2,912


2,227


23,517

Additions


-


-


2,408


840


3,248

Additions through business combinations (note 25)


4,655


1,495


-


-


6,150

Disposals


-


-


(8)


-


(8)

Exchange differences


-


(94)


(11)


-


(105)

Amortisation expense


-


(954)


(1,385)


(698)


(3,037)












Balance at 30 June 2016


21,504


1,976


3,916


2,369


29,765

 

 

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

 

 

Goodwill is allocated to the group's cash-generating units ('CGUs') identified according to business model as follows:

 



2016


2015



A$'000


A$'000






Online Flash


17,144


16,849

Online Retail


4,360


-








21,504


16,849

 

 

The recoverable amounts of the CGUs were determined based on value-in-use. Cash flow projections used in the value-in-use calculations were based on financial budgets approved by management covering a five year period. Cash flows beyond the five year period were extrapolated using the estimated growth rates stated below:

 

 

Management determined budgeted gross margin based on expectations of market developments. The growth rates used were conservative based on industry forecasts. The discount rates used were pre-tax and reflected specific risks relating to the CGUs.

 

 

Online Flash

 

 

Key assumptions used for value-in-use calculations:

 

 



2016


2015



%


%






Budgeted gross margin


28.1%


28.0%

Five year compound growth rate


12.0%


7.0%

Long term growth rate


2.0%


2.0%

Pre-tax discount rate


9.0%


9.0%

 

Based on the assessment, no impairment charge is required. Management have performed a number of sensitivity tests on the above rates and note that there is no impairment indicators arising from this analysis. The recoverable amount exceeded the carrying amount by A$31,734,000.

 

Online Retail

 

Key assumptions used in value-in-use calculation

 



2016




%






Budgeted gross margin


22.7%


Five year compound growth rate


50.0%


Long term growth rate


2.0%


Pre-tax discount rate


9.0%


 

Based on the assessment, no impairment charge is required. Management have performed a number of sensitivity tests on the above rates and note that there is no impairment indicators arising from this analysis. The recoverable amount exceeded the carrying amount by A$4,076,000.

 

 

Note 15. Non-current assets - deferred tax

 



2016


2015



A$'000


A$'000






Deferred tax asset comprises temporary differences attributable to:










Amounts recognised in profit or loss:





Tax losses


9,324


8,863

Accrued expenses


701


310

Provisions


847


807

Sundry


269


1,592

Property, plant and equipment


(253)


(946)

Intangibles


(593)


(306)






Deferred tax asset


10,295


10,320






Movements:





Opening balance


10,320


5,396

Credited/(charged) to profit or loss (note 8)


413


5,013

Additions through business combinations (note 25)


(360)


-

Exchange gain/(loss)


(78)


(89)






Closing balance


10,295


10,320

 

 

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 16. Current liabilities - trade and other payables

 



2016


2015



A$'000


A$'000






Trade payables


22,464


23,838

Other payables and accruals


6,168


4,730

Payable to other related party


50


-

Sales tax payable


866


672








29,548


29,240

 

 

 

Note 17. Current liabilities - borrowings

 



2016


2015



A$'000


A$'000






Bank loans


5,200


-

Bank loans under interchangeable facilities


1,212


1,098

Finance lease liability


64


91








6,476


1,189

 

Refer to note 19 for further information on assets pledged as security and financing arrangements.

 

 

Note 18. Current liabilities - provisions

 



2016


2015



A$'000


A$'000






Employee benefits provision


770


823

Lease make good provision


182


185

Gift voucher provision


699


710

Sales returns provision


512


397








2,163


2,115

 

 

Lease make good provision

The provision represents the present value of the estimated costs to make good the premises leased by the group at the end of the respective lease terms.

 

 

Gift voucher provision

The provision represents the estimated costs to honour gift vouchers that are in circulation and not expired.

 

 

Sales return provision

The provision represents the costs for goods expected to be returned by customers.

 

 

Movements in provisions

Movements in each class of provision during the current financial year, other than employee benefits, are set out below:

 



Lease make good


Gift vouchers


Sales returns



provision


provision


provision

 - 2016


A$'000


A$'000


A$'000








Carrying amount at the start of the year


185


710


397

Additional provisions recognised


-


699


512

Amounts used


-


(710)


(397)

Foreign exchange differences


(3)


-


-








Carrying amount at the end of the year


182


699


512

 

 

Note 19. Non-current liabilities - borrowings

 



2016


2015



A$'000


A$'000






Finance lease liability


-


64

 

 


 

Total secured liabilities

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

 



2016


2015



A$'000


A$'000






Bank loans


5,200


-

Bank loans under interchangeable facilities


1,212


1,098

Finance lease liability


64


155








6,476


1,253

 

 

The group has a A$12,233,000 (2015: A$7,174,000) borrowing facility with Australia and New Zealand Banking Group Limited ('ANZ') which is secured by a Corporate Guarantee and Indemnity. The group is required to comply with the following covenants in relation to this facility:

● EBITDA and sales must not be less then amounts agreed with ANZ, being 90% of budgeted EBITDA and sales on a half-yearly basis. The group is in compliance with the covenant;

● Current ratio being the ratio of total current assets over total current liabilities must exceed 1.5:1 at all times. The group is in compliance with the covenant and its strategy is to maintain the current ratio above the 1.5:1 requirement; and

● Distributions to shareholders must not be made without the written consent of ANZ. The group is in compliance with the covenant as of the reporting date and at the date these financial statements were authorised for issue.

The group has a GBP £3,000,000 (2015: £3,000,000) borrowing facility with Hong Kong and Shanghai Banking Corporation Plc ('HSBC') which is secured by a Corporate Guarantee.

 

 

Assets pledged as security

All bank borrowings of the group are secured by a Corporate Guarantee and Indemnity. Average interest rate incurred on these bank borrowings was 2.0% (2015: 2.1%). The borrowings are expected to be repaid within 90 days.

 

The lease liabilities are effectively secured as the rights to the leased assets, recognised in the balance sheet, revert to the lessor in the event of default.

 

 

The carrying amounts of assets pledged as security for current and non-current borrowings are:

 



2016


2015



A$'000


A$'000






Cash and cash equivalents


5,200


-

 

 

Financing arrangements

Unrestricted access was available at the reporting date to the following lines of credit:

 



2016


2015



A$'000


A$'000






Total facilities





Bank loans and overdrafts


9,970


5,914

Bank guarantees


67


63

Letters of credit


1,805


2,053

Bank loans under interchangeable facilities


6,457


5,930



18,299


13,960






Used at the reporting date





Bank loans and overdrafts


5,200


-

Bank guarantees


21


31

Letters of credit


-


-

Bank loans under interchangeable facilities


2,229


4,803



7,450


4,834






Unused at the reporting date





Bank loans and overdrafts


4,770


5,914

Bank guarantees


46


32

Letters of credit


1,805


2,053

Bank loans under interchangeable facilities


4,228


1,127



10,849


9,126

 

 

Note 20. Non-current liabilities - provisions

 



2016


2015



A$'000


A$'000






Employee benefits provision


368


328

 

Long term incentive plan

Refer to note 26 for details on the long term incentive plan.

 

 

Note 21. Equity - share capital

 



2016


2015


2016


2015



Shares


Shares


A$'000


A$'000










Ordinary shares £nil each - issued and fully paid


150,647,610


150,647,610


-


-

 

 

Authorised share capital

200,000,000 (2015: 200,000,000) ordinary shares of £nil each.

 

 

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.

 

 

Capital risk management

The group's objectives when managing capital is to safeguard the group's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. It is the group's strategy to maintain borrowing base ratio well below 65% requirement in order to comply with the borrowing facility covenants. Refer to note 19.

 

 

Capital is regarded as total equity, as recognised in the balance sheet, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.

In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

 

 

Note 22. Equity - other reserves

 



2016


2015



A$'000


A$'000






Foreign currency translation reserve


3,938


6,099

Hedging reserve - cash flow hedges


(1,047)


21

Share-based payments reserve


4,102


3,705

Capital reorganisation reserve


(132,756)


(132,756)








(125,763)


(122,931)

 

Foreign currency translation reserve

The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign operations to Australian dollars.

 

Hedging reserve - cash flow hedges

The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined to be an effective hedge.

 

Share-based payments reserve

The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services.

 

Capital reorganisation reserve

The reserve is used to recognise the difference between the purchase price of APAC Sale Group Pte. Ltd. and the net assets acquired following a group reorganisation in 2014.

 

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 2014


(120)


(719)


-


(132,756)


(133,595)

Foreign currency translation reserve


6,219


-


-


-


6,219

Cash flow hedge


-


740


-


-


740

Share-based payments


-


-


3,705


-


3,705












Balance at 30 June 2015


6,099


21


3,705


(132,756)


(122,931)

Foreign currency translation reserve


(2,161)


-


-


-


(2,161)

Cash flow hedge


-


(1,068)


-


-


(1,068)

Share-based payments


-


-


397


-


397












Balance at 30 June 2016


3,938


(1,047)


4,102


(132,756)


(125,763)

 

Note 23. Equity - non-controlling interest

 



2016


2015



A$'000


A$'000






Accumulated losses


(20)


-

 

The non-controlling interest has a 40% equity holding in Invite to Buy.

 

 

Note 24. Key management personnel disclosures

 

Compensation

The aggregate compensation made to directors and other members of key management personnel of the group is set out below:

 



2016


2015



A$'000


A$'000






Short-term employee benefits


1,734


1,574

Post-employment benefits


125


121








1,859


1,695

 

 

Key management includes directors (executives and non-executives) and key heads of departments.

During the financial year ended 30 June 2016 A$nil (2015: 22,636) performance rights were granted to members of key management personnel under share-based payments plans operated by the group as disclosed in note 26.

 

 

Note 25. Business combinations

 

Acquisitions of online businesses from Grays eCommerce Group Limited

On 31 January 2016, the group acquired the trade and assets of three online consumer retail businesses from Grays eCommerce Group Limited in Australia. The assets included a membership database of 6,500,000 members. The purchase price of the assets was A$5,200,000.

 

Details of the acquisition are as follows:

 

Fair value of assets acquired



Fair value



A$'000




Customer list


1,200

Deferred tax liability


(360)




Net assets acquired


840

Goodwill


4,360




Acquisition-date fair value of the total consideration transferred


5,200




Representing:



Cash paid or payable to vendor


5,200

 

 

The goodwill is attributable to the synergies expected to be achieved from operating the retail businesses alongside the group's existing online flash businesses. The goodwill recognised will not be deductible for tax purposes.

 

 

Acquisition of trade and assets from Thaisale.co.th

On 1 April 2016, the group acquired the trade and assets of the Thaisale.co.th joint venture in Thailand. Thaisale.co.th was previously partly owned by the group via a joint venture. The assets included a membership database of 652,000 members. The purchase price of the assets was A$590,000.

 

Details of the acquisition are as follows:

 

Fair value of assets acquired



Fair value



A$'000




Customer lists


295




Net assets acquired


295

Goodwill


295




Acquisition-date fair value of the total consideration transferred


590




Representing:



Cash paid or payable to vendor


100

Waiver of debt to Minor Corporation Public Company Limited


490






590

 

 

The goodwill is attributable to the synergies expected to be achieved from integrating the business into the group's existing online flash businesses. The goodwill recognised will not be deductible for tax purposes.

 

 

Change in control of joint venture Invite to Buy

On 1 April 2016, there was a change in the control of the joint venture Invite to Buy.

 

 

 


 

The goodwill is attributable to the synergies expected to be achieved from integrating the business into the group's existing online flash businesses. The goodwill recognised will not be deductible for tax purposes.

 

 

Note 26. Earnings per share

 



2016


2015



A$'000


A$'000






Loss after income tax


(197)


(17,789)

Non-controlling interest


20


-






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


(177)


(17,789)

 

 



Number

Number






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


150,647,610


150,647,610






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


150,647,610


150,647,610

 



Cents

Cents






Basic earnings per share


(0.12)


(11.81)

Diluted earnings per share


(0.12)


(11.81)

 

5,539,326 (2015: 795,541) employee long term incentives have been excluded from the 2016 (2015) diluted earnings calculation as they are anti-dilutive for the year.

 

Note 27. Share-based payments

 

The Long Term Incentive Plan (the 'LTIP') previously approved by APAC shareholders in 2012 and which expired at the date of AIM admission on 16 June 2014, was settled in July 2015. A number of employees were offered the opportunity to defer the payment of their cash bonus owing under the LTIP and to take it in the form of a conditional 'right' to free ordinary shares under the Executive Incentive Plan ('EIP'). The award converted the cash due to them into ordinary shares at the Placing Price of GBP2.26 with a maximum A$75,000 enhancement if they defer 100% of the entitlement. Total ordinary shares applicable to the conditional award was 684,042 with a vest date of 16 June 2015 and no performance conditions but was subject to continued employment. As at 16 June 2015, all of the employees who agreed to deferral of their entitlement met the continued employment condition and the share right awards vested. The fair value of the accounting expense in relation to these share right awards were recognised as at 30 June 2015,

 

The company established two new employee share plans prior to the AIM admission; (1) the Executive Incentive Plan ('EIP') and (2) the Loan Share Plan ('LSP'). In accordance with the terms of each plan, 50% of the award to eligible employees will vest two years and the balance three years after grant date. Vesting is subject to the Remuneration Committee being satisfied that the underlying performance of the group justifies vesting. In determining this, the Remuneration Committee will have regard to revenue and Earnings Before Interest, Tax, Depreciation and Amortisation ('EBITDA') included in the company's internal forecasts as at the date of allocation. The award granted on 28 May 2014 are governed by the terms of these plans.

 

During the year, the Board decided to change the vesting conditions for future grants for the EIP and LSP plans beginning with the August 2015 grant. 100% of future awards will now vest three years from grant date and are subject to the achievement of the Underlying EBITDA target set by the board in the year of the grant. The fair value of the accounting expense in relation to the August 2015 grant are recognised over the vesting period. 

 

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:

 

2016





















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


16/06/2015 *


-


684,042


-


(684,042)


-


-

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







795,541


5,427,827


(684,042)


-


5,539,326

 

*


EIP - Share rights

**


EIP - Options

***


LSP

 

 

 

2015





















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


16/06/2015 *


-


684,042


-


-


-


684,042

28/05/2014


16/06/2019 **


£2.26


102,210


-


-


(102,210)


-

28/05/2014


16/06/2019 ***


£2.26


461,010


-


-


(349,511)


111,499

22/09/2014


16/06/2019 **


£2.26


-


18,386


-


(18,386)


-

22/09/2014


16/06/2019 ***


£2.26


-


45,642


-


(45,642)


-







1,247,262


64,028


-


(515,749)


795,541

 

*


EIP - Share rights

**


EIP - Options

***


LSP

 

The weighted average remaining contractual life of the share plan outstanding at the end of the financial year was 4 years (2015: 4 years).

 

The share-based payment expense for the year was A$397,000 (2015: A$335,000).

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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