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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Mysale Group Plc | LSE:MYSL | London | Ordinary Share | JE00BMH4MR96 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.255 | 1.51 | 3.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMMYSL
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:
o South-East Asia(1) 20% revenue growth; gross profit +117%
o 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 EBITDA(2) up 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
o Average order value increased 20% to A$90 (2015: A$75)
o 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:
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Premium
MySale Group plc
+61 (0) 414 817
Carl Jackson, Chief Executive 843
Graeme Burns, Corporate Development +44 (0) 777 585
Director 4516
Zeus Capital Limited (Nominated +44 (0) 20 3829
Adviser & Joint Broker) 5000
Nick How/Giles Balleny, Corporate
Finance
Benjamin Robertson, Corporate
Broking
+44 (0) 20 7496
N+1 Singer (Joint Broker) 3000
Nic Hellyer
+44 (0) 20 7379
Maitland 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 ANZ(3) 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.
(_____________________________________)
(3) Australia 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 GBPGBP3.0 million (increased to GBPGBP7.0 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$'000
Revenue
Revenue from sale of goods 252,289 235,853
Cost of sale of goods (185,633) (180,621)
Gross profit 66,656 55,232
--------- ---------
Other operating gains/(loss), net 52,173 204
Finance income 125 195
Finance costs 7 (97) (58)
Finance income, net 28 137
Expenses
Selling and distribution expenses (37,460) (47,952)
Administration expenses (31,126) (28,969)
Share of loss of joint venture (104) (116)
-------- --------
Profit/(loss) before income tax (expense)/benefit 167 (21,464)
Income tax (expense)/benefit 8(364) 3,675
----- -----
Loss after income tax (expense)/benefit
for the year (197) (17,789)
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss
Net change in the fair value of cash
flow hedges taken to equity, net of tax 22 (1,068) 740
Foreign currency translation 22 (2,161) 6,219
------- -----
Other comprehensive income for the year,
net of tax (3,229) 6,959
------- -----
Total comprehensive income for the year (3,426) (10,830)
======= ========
Loss for the year is attributable to:
Non-controlling interest (20) -
Owners of MySale Group Plc (177) (17,789)
----- --------
(197) (17,789)
===== ========
Total comprehensive income for the year
is attributable to:
Non-controlling interest (20) -
Owners of MySale Group Plc (3,406) (10,830)
(3,426) (10,830)
======= ========
Cents Cents
Basic earnings per share 26 (0.12) (11.81)
Diluted earnings per share 26 (0.12) (11.81)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
MySale Group Plc
Balance sheet
As at 30 June 2016
Note 2016 2015
A$'000 A$'000
Assets
Current assets
Cash and cash equivalents 9 34,005 39,853
Trade and other receivables 10 9,058 23,630
Inventories 11 35,473 17,880
Derivative financial instruments - 22
Income tax receivable - 1,643
Other 12 7,973 4,736
Total current assets 86,509 87,764
------- -------
Non-current assets
Investments in joint venture - 134
Property, plant and equipment 13 2,226 3,023
Intangibles 14 29,765 23,517
Deferred tax 15 10,295 10,320
Total non-current assets 42,286 36,994
------- -------
Total assets 128,795 124,758
------- -------
Liabilities
Current liabilities
Trade and other payables 16 29,548 29,240
Borrowings 17 6,476 1,189
Derivative financial instruments 1,047 -
Income tax payable 1,104 1,234
Provisions 18 2,163 2,115
Deferred revenue 11,677 11,147
Total current liabilities 52,015 44,925
------ ------
Non-current liabilities
Borrowings 19 - 64
Provisions 20 368 328
Total non-current liabilities 368 392
------ ------
Total liabilities 52,383 45,317
------ ------
Net assets 76,412 79,441
====== ======
Equity
Share premium account 306,363 306,363
Other reserves 22 (125,763) (122,931)
Accumulated losses (104,168) (103,991)
Equity attributable to the owners of
MySale Group Plc 76,432 79,441
Non-controlling interest 23 (20) -
Total equity 76,412 79,441
========= =========
The financial statements of MySale Group Plc (company
number 115584) were approved by the Board of Directors
and authorised for issue on 28 September 2016. They were
signed on its behalf by:
Carl Jackson Andrew Dingle
Director Director
The above balance sheet should be read in conjunction with the accompanying notes
MySale Group Plc
Statement of changes in equity
For the year ended 30 June 2016
Share
premium Other Accumulated Non-controlling
Total
account reserves losses interest equity
A$'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
account reserves losses interest equity
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 Rest
and South-East 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 Rest of
and South-East 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 (413) (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) (413) (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$'000
Leasehold improvements - at cost 993 942
Less: Accumulated depreciation (784) (563)
209 379
Plant and equipment - at cost 4,535 4,640
Less: Accumulated depreciation (3,068) (2,582)
1,467 2,058
Fixtures and fittings - at cost 1,025 836
Less: Accumulated depreciation (528) (456)
497 380
Motor vehicles - at cost 391 538
Less: Accumulated depreciation (338) (332)
53 206
2,226 3,023
======= =======
Reconciliations
Reconciliations of the written down values at the beginning
and end of the current and previous financial year are
set out below:
Plant
Leasehold and Fixtures Motor
improvements equipment and fittings vehicles Total
A$'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$'000
Employee benefits provision 770 823
Lease make good provision 182 185
Gift voucher provision 699 710
Sales returns provision 512 397
2,163 2,115
====== ======
Lease make good provision
The provision represents the present value of the estimated
costs to make good the premises leased by the group at
the end of the respective lease terms.
Gift voucher provision
The provision represents the estimated costs to honour
gift vouchers that are in circulation and not expired.
Sales return provision
The provision represents the costs for goods expected
to be returned by customers.
Movements in provisions
Movements in each class of provision during the current
financial year, other than employee benefits, are set
out below:
Lease Sales
make good Gift vouchers returns
provision provision provision
- 2016 A$'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$7,174,000) borrowing
facility with Australia and New Zealand Banking Group
Limited ('ANZ') which is secured by a Corporate Guarantee
and Indemnity. The group is required to comply with the
following covenants in relation to this facility:
-- EBITDA and sales must not be less then amounts agreed
with ANZ, being 90% of budgeted EBITDA and sales on a
half-yearly basis. The group is in compliance with the
covenant;
-- Current ratio being the ratio of total current assets
over total current liabilities must exceed 1.5:1 at all
times. The group is in compliance with the covenant and
its strategy is to maintain the current ratio above the
1.5:1 requirement; and
-- Distributions to shareholders must not be made without
the written consent of ANZ. The group is in compliance
with the covenant as of the reporting date and at the
date these financial statements were authorised for issue.
The group has a GBP GBP3,000,000 (2015: GBP3,000,000)
borrowing facility with Hong Kong and Shanghai Banking
Corporation Plc ('HSBC') which is secured by a Corporate
Guarantee.
Assets pledged as security
All bank borrowings of the group are secured by a Corporate
Guarantee and Indemnity. Average interest rate incurred
on these bank borrowings was 2.0% (2015: 2.1%). The borrowings
are expected to be repaid within 90 days.
The lease liabilities are effectively secured as the rights
to the leased assets, recognised in the balance sheet,
revert to the lessor in the event of default.
The carrying amounts of assets pledged as security for
current and non-current borrowings are:
2016 2015
A$'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$'000
Ordinary shares GBPnil each
- issued and fully paid 150,647,610 150,647,610 - -
=========== =========== ====== ======
Authorised share capital
200,000,000 (2015: 200,000,000) ordinary shares of GBPnil
each.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends
and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held.
On a show of hands every member present at a meeting in
person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Capital risk management
The group's objectives when managing capital is to safeguard
the group's ability to continue as a going concern, so
that it can continue to provide returns for shareholders
and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.
It is the group's strategy to maintain borrowing base
ratio well below 65% requirement in order to comply with
the borrowing facility covenants. Refer to note 19.
Capital is regarded as total equity, as recognised in
the balance sheet, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure,
the group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell
assets to reduce debt.
Note 22. Equity - other reserves
2016 2015
A$'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 GBP0.53. 1,000,000 options will vest
when the company's share price reaches GBP1.50, a further
1,500,000 shall vest when the company's share price reaches
GBP2.26 and a further 500,000 shall vest when the company's
share price reaches GBP2.75. 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 Balance
at Expired/ at
the
start the end
Exercise of forfeited/ of
Expiry the
Grant date date price year Granted Exercised other the year
16/06/2015
28/05/2014 * - 684,042 - (684,042) - -
16/06/2019
28/05/2014 *** GBP2.26 111,499 - - - 111,499
18/08/2020
18/08/2015 *** GBP0.51 - 2,027,806 - - 2,027,806
18/08/2020
18/08/2015 *** GBP0.51 - 400,021 - - 400,021
27/07/2020
27/07/2015 *** GBP0.53 - 3,000,000 - - 3,000,000
795,541 5,427,827 (684,042) - 5,539,326
------- --------- --------- ---------- ---------
* EIP - Share rights
** EIP - Options
*** LSP
2015
Balance Balance
at Expired/ at
the start the end
Exercise of forfeited/ of
Expiry the
Grant date date price the year Granted Exercised other year
16/06/2015
28/05/2014 * - 684,042 - - - 684,042
16/06/2019
28/05/2014 ** GBP2.26 102,210 - - (102,210) -
16/06/2019
28/05/2014 *** GBP2.26 461,010 - - (349,511) 111,499
16/06/2019
22/09/2014 ** GBP2.26 - 18,386 - (18,386) -
16/06/2019
22/09/2014 *** GBP2.26 - 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
FR BDLLLQKFEBBB
(END) Dow Jones Newswires
September 28, 2016 02:01 ET (06:01 GMT)
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