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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 : 9857N
MySale Group PLC
05 October 2021
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MySale Group Plc
Final results for the financial year to 30 June 2021
Significant strategic and operational progress. Return to underlying profitability and well positioned for strong growth in FY22 and beyond
MySale Group plc (AIM: MYSL) (the "Group"), the leading international online retailer, is pleased to announce its audited final results for the year to 30 June 2021.
Commenting on the results, Carl Jackson, Executive Chairman, said:
"It has been a year of significant strategic and operational progress, with a return to underlying profitability, leaving us well positioned for strong growth in FY22 and beyond. The successful capital raise, backed by experienced industry figures, has allowed us to accelerate the transformation of the business, which is now focused on scaling our unique, off-price marketplace platform by being the partner of choice to more brands who want access to over three million buyers. For our international partners, the platform also provides a counter seasonal solution for their excess fashion inventory.
"There are a number of opportunities ahead, both in our core apparel category, but also across beauty and homewares. The appointment of Kalman Polak as CEO and a strengthened leadership team will help accelerate our progress and we are already seeing momentum continuing into the current financial year, with Gross Merchandise Value in the first quarter over 50% ahead of the prior year period. Underpinned by a right sized cost base and a positive cash position, we look forward with confidence."
Year to 30 June (A$ FY21 FY20 million) Revenue* 117.9 131.0 Gross Merchandise Value (GMV)** 125.4 131.0 Gross Profit 46.4 43.9 Gross Margin 39.4% 33.5% Underlying EBITDA*** 4.2 (2.7) Reported loss before tax (5.4) (3.4)
* In the trading update announced on 21 July 2021, the figure for FY21 GMV was used in place of FY21 revenue. The audited revenue figure is presented here.
**Gross merchandise value is total sales volume transacting through the platform (retail and marketplace).
*** Underlying EBITDA is calculated as EBITDA adjusted for certain items including impairment losses/reversals related to goodwill and receivables, share-based payments and unrealised foreign exchange loss/gain
Financial Highlights
-- Materially improved underlying profitability and strong operational performance with Group underlying EBITDA of A$4.2m, ahead of market expectations and an improvement of A$6.9m from the A$2.7m loss in FY20.
-- Own Stock Channel (1P) revenue of A$25m, underpinned by core revenue of A$21.6m (FY20: Nil), successfully selling through non-core revenue of A$3.4m (FY20: A$23.8m)
-- Gross profit increased to A$46.4m (FY20: A$43.9m)
-- Raised A$9.3m from entities associated with both founders as well as the former CEO of Catch.com.au.
-- Cash position of $A9.2m (FY20: A$6.7m). Debt Free.
Progress against strategic initiatives
-- Maintained a laser sharp focus on delivering our ANZ First Strategy, focused on the simplification of the business and developing our proprietary Marketplace Platform, offering our partners clearly differentiated solutions.
-- Exceptional progress made with scaling our off-price marketplace, with over 200 brand partners launched onto the new platform and significant new business and revenue momentum continuing into FY22.
-- Whilst we are focused on operating an Inventory Light Marketplace Platform, we also successfully scaled our own, higher margin, stock channel, providing access to brands' inventory that may not be available through other channels.
Post financial year end
-- Recruited Kalman Polak as Chief Executive Officer, with Carl Jackson moving to role of Executive Chairman and Charles Butler moving to Senior Independent Director.
-- Further progress in scaling marketplace offering, with brand partners increasing by over 30% to over 300.
-- Recruited a new Marketplace team, based in Melbourne, with deep industry knowledge.
Current Trading and Outlook
-- Continued positive trading momentum in Q1 FY22, with GMV over 50% ahead Q1 FY21. We continue to focus on driving our marketplace offering which is expected to increase significantly in FY22, to become the Group's largest channel underpinned by also tactically scaling the higher margin, own stock channel. The Group's Gross profit is also approximately 15% ahead in Q1 FY22, compared to Q1, FY21.
Enquiries :
MySale Group plc Carl Jackson, Executive Chairman +61 (0) 414 817 843 Mats Weiss, Chief Financial and Operating Officer +61 (0) 403 810 762 Singer Capital Markets (Nominated Adviser and Joint Broker) +44 (0) 20 7496 3000 Mark Taylor Justin McKeegan Zeus Capital (Joint Broker) Daniel Harris/James Hornigold, Corporate Finance John Goold, Corporate Broking +44 (0) 20 3829 5000 MHP Communications (Financial PR Adviser) +44 (0) 20 3128 8789 Simon Hockridge Pete Lambie
About MySale:
MySale operates a group of leading proprietary ecommerce platforms that offer unparalleled access to brands at great prices. Launched in Australia in 2007, MySale continues to be the go-to destination for hard-to-own fashion and lifestyle items ranging across apparel, shoes, accessories, homewares and lifestyle, beauty, kids and baby and at great prices. Brand partners get unparalleled access to a unique shopping audience, leading marketplace experience and channel for counter seasonal goods.
Senior Independent Directors statement
Introduction
I am pleased with the Group's achievements over the past financial year. We have done what we said we would do, and have repositioned the business to be an inventory light platform for domestic and international brands to reach customers in ANZ. The business has returned to positive underlying EBITDA, with the marketplace platform sitting at the heart of the new strategy starting. This focus was already beginning to deliver in FY21 and we have seen an acceleration into FY22 current trading.
Our ambition is to be the partner of choice, allowing brands to access our curated value marketplace and giving them the opportunity to access over 3 million customers. For our international suppliers it provides a counter seasonal solution for their excess fashion inventory.
Market Opportunity (1)
The market opportunity for MySale remains as exciting as ever. For example, online retail penetration in Australia increased to 11.3% in 2021, up from 8.6% in 2020, reflecting the ongoing migration of retail expenditure to the online channel. Despite this increase, it is still lagging the UK (28%) and US (20%). In our largest market, Australia, online clothing & footwear retail sales were estimated at approximately A$5 billion in 2020, 21% of total clothing & footwear retail sales. This is forecast to increase to approximately $10 billion or 35.9% of retail sales by 2024.
Furthermore, the value segment is anticipated to continue to out-perform the broader clothing & footwear market. Research conducted amongst global fashion industry executives indicated that 36% expect conditions in the value segment to improve in 2021 relative to 2020, compared to 22% in the mid-market and 31% in the luxury segments. (1)
There are also categories beyond clothing & footwear, which bring opportunities for the business. As we scale the marketplace, we see an opportunity to access the homeware category, providing significant long term growth opportunities. In Australia, Furniture & Homewares online penetration is 5.1% in 2019, significantly behind the UK (16.6%) and US (15.2%).
Board Changes
Subsequent to the year-end, I am delighted to confirm the appointment of Kalman Polak as Chief Executive Officer. His extensive E-commerce experience gained at Catch.com.au will be invaluable supporting the acceleration of the 'ANZ First' strategy underpinned by growing our unique marketplace platform.
Carl Jackson has become Executive Chairman remaining with the business supporting Kalman to ensure a smooth and orderly transition.as an Executive Director.
I will remain on the board as a Senior Non-Executive Director whilst the business explores an ASX listing.
We have significantly strengthened our leadership team during the year and I believe we now have the right, highly motivated team to build upon the strong start we have made with the new strategy and take it to the next level.
Outlook
Whilst there is a positive story behind the FY21 financial performance, it is only just the start. The building blocks are now in place to drive long term shareholder value and I am pleased to see this positive momentum continuing into FY22 with strong year on year revenue and margin growth.
Charles Butler
Senior Independent Director
04 October 2021
(1) Online retail market report by Frost & Sullivan
Review of operations by the Chief Executive Officer
Significant strategic, financial, and operational progress. Well, positioned for strong growth in FY22
It has been a year of unprecedented change, but also a year of significant, operational and financial progress. I would like to personally thank our loyal customers and suppliers, our dedicated team members, the Leadership team and Board members for their resilience and support throughout.
The collective efforts of the MySale team and the repositioning of the business have culminated in the business returning to profitability delivering underlying EBITDA (2) of A$4.2 million, ahead of market expectations, an improvement of A$6.9 million from the A$2.7 million loss in FY20.
The business is debt free with cash of A$9.2m (2020 - A$6.7m).
These results, however, do not yet fully reflect the benefits of our progress against our strategic plan.
Throughout the year we have maintained a laser sharp focus on delivering our ANZ First Strategy with the first six months predominantly focused on the continuation of our cost savings program, simplifying the business and improving gross profit through select own stock purchases whilst developing our proprietary Inventory Light Marketplace Platform which allows us to offer our suppliers clearly differentiated solutions.
As we entered the second half, we accelerated the pace of change strengthening the senior management team and scaling the marketplace platform significantly. During the year we raised A$9.3m from entities associated with both founders as well as the former CEO of Catch.com.au.
During the fourth quarter we began to see the material benefits of both our operational changes and the investments made. This gave a new, simplified rhythm to day-to-day operations, as the business shifted to scaling its marketplace revenue underpinned by growing the higher margin own stock channel.
Today, MySale is a simplified business focusing on customers, suppliers and cash generation. Whilst it is pleasing to see the benefits of the delivery against our strategy, we are not complacent about this.
The leadership team has been evolving the strategy to ensure we are well placed to seize the opportunities presented by the long-term online structural shifts which have accelerated in the last 18 months. We remain committed to delivering the ANZ First Strategy at the same time will harness the growing contribution from our marketplace channel. We believe these changes will stick and that we are well placed to benefit as we continually improve our customer experience.
Progress against strategic initiatives
ANZ First Strategy
The key pillars of the Australia New Zealand "ANZ" First Strategy are:
1. Source international brands to sell in ANZ 2. Source local ANZ brands to sell in ANZ 3. Marketing spend prioritised to ANZ region 4. Key personnel located in ANZ
Our focus is to be the leading value apparel, beauty and homewares curated Marketplace Platform offering solutions for our suppliers' excess inventory. Over 80% (FY20: 82%) of our revenue was generated from third party suppliers (3P) where we take no inventory risk.
MYSALE's three key inventory solutions connecting customers with products are:
-- 3P: Marketplace: Sellers, offer inventory on MYSALE's websites and apps through MYSALE's marketplace solution at prices determined by the seller. Customers contract to purchase goods directly with the sellers. The sellers then receive the sale price for sold goods, less a commission charged by MYSALE for facilitating the transaction. The seller ships the stock directly to the customer. MYSALE does not take ownership or possession of offered products so as a result takes no inventory risk.
-- 3P: Order After Sale: MYSALE runs promotions to sell inventory on its websites and apps. Orders are placed with MYSALE by customers in advance of MYSALE purchasing the inventory from its brand suppliers. Once an order is received by MYSALE, the brand supplier delivers the stock to MYSALE's warehouse and MYSALE delivers the order to customers. MYSALE faces low inventory risks under this solution as it only purchases inventory from brand supplier after a customer has ordered the product from MYSALE.
-- 1P: Own Stock: MYSALE selectively purchases inventory from brand supplier, in advance, storing the inventory in its warehouse, and offers the products for sale through its websites and apps at prices determined by MYSALE. MYSALE receives the proceeds of sales of own stock and delivers it directly to customers. MYSALE takes inventory risk on excess or slow moving stock and on returns
MYSALE also offers a 3P consignment solution (where brand suppliers deliver inventory to MYSALE for sale by MYSALE on behalf of the brand supplier through MYSALE's websites and apps) (FY21:A$4.9m, FY20: A$7.0m) and a 3P "dropship" solution (where customers purchase goods (from MYSALE) which are offered on its website and apps, but not actually owned or held by MYSALE, with those goods then being delivered by the brand supplier directly to the customer) (FY21:A$20.1m, FY20: A$28.7m).
Marketplace and Order After Sale operate a negative working capital model as we are able to generate cash by selling products to customers before we have to pay suppliers.
The balance of the revenues are from our higher margin own stock channel where there is a focus on buying width not depth and operating a "test and repeat" strategy. This channel represented 17.2% of sales (FY20: Nil) and is forecast to continue to scale in FY22 operating on stock turn of seven times.
(2) Underlying EBITDA is calculated as EBITDA adjusted for certain items including impairment losses/reversals related to goodwill and receivables, share-based payments, and unrealised foreign exchange loss/gain. Refer to note 6 for reconciliation to reported loss.
Strengthened Leadership Team
In addition to the Board Changes outlined in the Chairman's statement, including the appointment of Kalman as CEO, we have strengthened the leadership team and restructured the business creating a new marketplace team, based in Melbourne, with deep industry knowledge. We are confident that these significant hires and dedicated expert resource will facilitate an acceleration of a range of strategic and operational actions aligned to our core values.
Right Sized Cost Base
FY21 reflected the progress we have made in executing our ANZ First Strategy, including significantly reducing our cost base. We now have the right cost base to support this strategy which requires less direct costs primarily as a result of the growth in the marketplace seller program where our suppliers sell directly to customers.
This represents the substantial completion of the cost reduction program announced as part of the Group refinancing and repositioning in August 2019.
We have a flexible cost structure, with fixed costs as a percentage of sales stable at 11.6% in FY21 (FY20:11.3%) that has and will allow us to deliver operational leverage as we scale revenue.
Marketplace Growth (3P)
Our customers are looking for the most comprehensive value fashion, beauty, and homeware assortment. Over the last six months we have taken major steps forward in scaling the marketplace seller program by allowing our suppliers to leverage and access our proprietary platform.
The Marketplace allows us to scale an Endless Aisle providing our customers access to adjacent and new categories that drive deeper engagement and long-term loyalty.
There are already over 200 brand suppliers launched onto our new marketplace seller platform (FY20: Nil) promoting over one million SKUs with significant opportunities for revenue growth underpinned by improving margins as we continue to scale the fashion suppliers both domestically and internationally.
We are also very excited by the opportunity that the New Zealand market offers our Australian suppliers, having launched in 2010 we have an established and exciting business that represents a significant growth opportunity for our marketplace suppliers.
Own Stock Channel (1P)
Whilst we are focused on operating an Inventory Light Marketplace Platform, our own stock channel is a very important strategic pillar as it provides us access to brands inventory that may not be available through other channels.
Committing to our suppliers inventory represent a key success criterion in establishing long term relationships. It allows us access great brands and whilst we to take an inventory position, the channel delivers a higher margin.
As an Inventory Light Marketplace Platform, it is about buying width not depth and operating a "test and repeat strategy"
The MySale Way
Last year we announced the launch of the MySale Way, a new purpose for the Group that was encapsulated in the following core principles: Customer and Suppliers First; Entrepreneurial Thinking; Opportunities not Problems, Earn trust, Keep it Simple and Operate at Pace.
We aim to embed the MySale Way within the organization, to build a company culture to operate at pace and think bigger putting our Customer and Suppliers First.
There has been great progress with our customer satisfaction scores with over 10,000 4 and 5-Star reviews increasing our Trust Pilot score to 4.1 (FY20: 1.2). In parallel, we have materially improved our same day dispatch and continue to be very disciplined with our suppliers as we continue to increase the focus on the customer experience.
COVID-19
COVID-19 has presented both challenges and opportunities for online retailers and MYSALE is no exception. Despite the statewide lockdowns in Australia and New Zealand during FY21 we did not experience any major business disruption. There have been operational challenges including the supply of inventory and reliability of international shipping which we have successfully navigated due to the flexibility of our business model and scaling the number of marketplace sellers using our online platform.
For our employees, COVID-19 has enabled us to review our workplace flexibility with colleagues who are able to work from home are doing so. Where this is not possible, we have put in place social distancing protocols for our office and warehouse team. It has also allowed us to accelerate the recruitment of a new marketplace team in Melbourne and continue to evaluate which roles can be relocated overseas.
Modern Slavery
We are committed to maintaining the highest ethical standards and seek to partner with suppliers that share our commitment to excellence and to operating with integrity. The board of directors have approved the Modern Slavery Statement pursuant to the Modern Slavery Act 2018 for the financial year ended 30(th) June 2021.
Diversity & Inclusion
We are proud to foster a culture of talented individuals from a diverse range of backgrounds and cultures spanning across all our departments and geographical locations. We continue to focus on the objective of being a diverse and inclusive culture, embracing our employee's individual and personal attributes that make up the MySale Way.
Current Trading and Future Outlook
There is no doubt COVID-19 pandemic has and continues to change the global retail industry, with an acceleration in the structural shift to online. We believe that much of this channel switch will be permanent and we are well paced to take advantage of these changes.
Cumulatively, over three million unique customers have used our websites to discover branded fashion, beauty, and homeware products at enviable prices, we have a core base of highly valuable customers with improving underlying metrics and are at an inflection point in our journey.
We are now taking a more dynamic trading stance, reflecting the step change in the number of suppliers integrated onto our curated marketplace platform with refreshed branding and increased and more efficient marketing spend.
Entering FY22, the positive trajectory we saw in Q4 has continued, with our strategies gaining traction and the new team achieving an operational rhythm that has delivered strong year on year revenue and margin growth. Whilst we are cognisant of the ongoing impact of COVID-19, state lockdowns and vaccine rollout, we continue to expect an acceleration in growth with the main revenue driver being the marketplace channel underpinned by increasing the higher margin own stock channel.
In terms of strategic priorities for the coming year, we will accelerate the investment in our technology, user experience, search capability and delivery solutions as we expand the curated Inventory Light Marketplace Platform adding new categories that will drive frequency and increase our share of wallet. In turn, this will accelerate the flywheel effect of offering more choice, driving more traffic, and delivering operational leverage that will deliver incremental revenue and margin that will flow through to the bottom line.
Whilst our near-term and absolute focus is an ANZ First Strategy there is potential to complement our existing geographical footprint by expanding our existing foothold in Singapore. Whilst these are not core to the growth strategy, and we are being cautious in our deployment of resource, they offer optionality in the future.
We continue to evaluate the potential listing of the Group on the Australian Stock Exchange in FY22. As a result, we will also be looking to broaden and strengthen the board.
In closing, we remain committed to supporting our suppliers grow their business providing them with diversified solutions for their excess inventory quickly and efficiently.
There remains a significant growth opportunity for MySale, the business has stabilised, and we will continue to accelerate the ANZ First Strategy and embrace opportunities aligned to this strategy.
Carl Jackson
Executive Chairman
04 October 2021
Financial review by the Chief Financial Officer
We have made good progress against the ANZ First Strategy fixing our financial foundations and whilst there was a decline in revenues as we focussed on the quality of revenue, as outlined in the FY19 strategic review, this was offset by a reduction in the cost base and improved gross profit resulting in the Group trading ahead of management expectations delivering an underlying EBITDA of A$4.2 million an improvement of A$6.9 million from the A$2.7 million loss in FY20.
Financial Performance 2021 2020
-------- --------
Statutory Revenue $117.9 $131.0
================================ ======== ========
Gross Merchandise Value (GMV) $125.4 $131.0
================================ ======== ========
Core Gross Merchandise Value $122.0 $107.2
================================ ======== ========
Gross Profit $46.4 $43.9
================================ ======== ========
Underlying EBITDA $4.2 -$2.7
-------------------------------- -------- --------
Underlying EBITDA / Revenue
(%) 3.6% -2.1%
-------------------------------- -------- --------
Total Operating expenses $42.2 $46.6
-------------------------------- -------- --------
Looking forward, it is important we mitigate the shift in revenue between online sales and marketplace and whilst not a statutory measure under IFRS, management considers Gross Merchandise Value (GMV) (1) and Underlying EBITDA (2) as key performance indicators for assessing the underlying operating performance of the business.
Products sold through our marketplace have lower gross margins but very high contribution to the bottom line as we do not take any inventory risk or operational responsibility. Reported revenue from the sale of these products is significantly lower. As we scale the marketplace this will result in a shift in the proportion of sales to marketplace and would lead to a decrease in revenue (3) as a percentage of GMV, but an increase in gross margin.
The underlying EBITDA improvement was driven primarily by an improvement in the gross margin and lower associated costs that resulted in an improvement in the cost base to sales ratio that will continue to improve as we scale the business.
What the headline figures don't show is what we have done this year to improve the balance sheet, improve liquidity and profitability which will be further explained below.
Following the successful capital raise of A$9.3 million from entities associated with both founders as well as the former CEO of Catch.com.au our balance sheet is now in a better position compared to June 2020.
Statutory Revenue and Gross Merchandise Value (GMV)
For the year ended 30 June 2021, Gross Merchandise Revenue (GMV) and Statutory Revenue decreased by 4.3% and 10.0% respectively in line with management expectations.
2021 2020 Variance
-------- -------- ----------
Statutory Revenue $117.9 $131.0 -10.0%
================================= ======== ======== ==========
Less: Commission Revenue $1.0 $0.0 NA
================================= ======== ======== ==========
Add: Marketplace Seller $8.6 $0.0 NA
================================= ======== ======== ==========
Gross Merchandise Value (GMV) $125.4 $131.0 -4.3%
================================= ======== ======== ----------
As part of the FY19 strategic review and ANZ First Strategy we announced that we were exiting all aged non-core inventory. In FY21 non-core revenue (4) was A$3.4 million representing a year-on-year reduction of 86% (FY20: A$23.8 million).
2021 2020
-------- --------
Core Gross Merchandise Value $122.0 $107.2
==================================== ======== ========
Non-core Gross Merchandise Value $3.4 $23.8
TOTAL $125.4 $131.0
-------- --------
By successfully exiting the non-core aged inventory it has not only generated free cash flow but also had significant operational benefits including creating additional warehouse space and reducing operational complexity.
In parallel we have successfully developed our new Own Stock channel, which achieved revenues of A$21.6 million representing 17.2% of statutory revenue in FY21 (FY20: nil).
Inventory levels increased to A$5.5 million (FY20: A$2.8million) as we executed our strategy of increasing the amount of higher margin own stock focussing on buying width not depth and adopting a test and repeat strategy.
The table below provide further information on the breakdown of GMV.
Gross Merchandise Value Breakdown 2021 2020
-------- --------
1P Revenue $25.0 $23.8
===================================== ======== ========
Core Revenue $21.6 $0.0
===================================== ======== ========
Non-Core revenue $3.4 $23.8
===================================== ======== ========
3P Revenue $91.8 $107.2
===================================== ======== ========
Marketplace $8.6 $0.0
TOTAL $125.4 $131.0
-------- --------
3P GMV declined by A$15.4 million to A$91.8 million (FY20: A$107.2million) as we shifted GMV to the core 1P channel and marketplace.
The financial results do not represent the progress made in the launch of the new marketplace channel which delivered GMV of A$8.6 million and statutory revenue of A$1.0 million, in FY21 (FY20: nil). As we scale the business the marketplace channel will take a larger share of overall GMV, however it will not show comparative growth in statutory revenue as it is presented net of costs, on a commission basis.
We continued to execute towards our ANZ First Strategy, growing our ANZ share of overall revenue.
2021 2020
-------- --------
ANZ $110.8 $118.1
========= ======== ========
Asia $7.1 $12.9
TOTAL $117.9 $131.0
-------- --------
(1) Gross merchandise value is total sales volume transacting through the platform (retail and marketplace).
(2) Underlying EBITDA is calculated as EBITDA adjusted for certain items including impairment losses/reversals related to goodwill and receivables, share-based payments, and unrealised foreign exchange loss/gain. Refer to note 6 for reconciliation to reported loss.
(3) As set out in the revenue recognition policy in Note 2, only commission portion from Marketplace Seller program is recognised as revenue not full transaction value.
(4) Core Revenue: Revenues excluding revenue from legacy inventory
Non-core revenue: Revenue from legacy inventory, inventory purchase on and before 30 June 2019
Gross Profit and Gross Margin
Gross profit for FY21 increased to A$46.4 million (FY20: A$44.0 million).
One of the key drivers was the strong performance of the high margin new Own Stock channel that increased revenues to A$21.6m (FY20: nil) representing 17.2% (FY20: nil) of revenue.
Gross margin has increased in FY21 to 39.4% (FY20: 33.5%) as the share of revenue from new Own Stock increase from nil to 17.2%
Inventories
Inventories increased to A$5.5 million (FY20: A$2.8 million) as we executed our strategy of increasing the amount of higher margin own stock.
Stock Turn is 17 times this year (FY20: 9 times).
Cash
Cash and cash equivalents increased to A$9.2 million (FY20: A$6.7 million) with the Group operating on a debt free basis.
During the FY21 the group raised A$9.3 million from entities associated with both founders as well as the former CEO of Catch.Com.au. Furthermore, we have continued to invest in the growth of the new Own Stock channel with a closing inventory of A$4.2 million.
Operating Expenses
As part of our ANZ First Strategy our cost reduction programme took an annualised A$4.4 million out of our cost base (1) . Whilst there are always further cost saving opportunities, we now have the right balance between fixed and variable costs that will allow us to scale delivering operational leverage.
2021 2020 Variance
------- ------- ----------
Fixed Costs $13.6 $14.8 -8.1%
============================ ======= ======= ==========
Variable Costs $28.6 $31.4 -10.1%
Total Operating Expenses $42.2 $46.6 -9.6%
------- ------- ----------
Fixed Costs have reduced to A$13.6million (FY20: A$14.8 million) representing 11.6% of sales. Variable costs are stable and aligned to revenue although we anticipate further improvements in the operational and marketing efficiencies
We now have the right size cost base that will ensure we deliver operational leverage as we as we scale the marketplace.
([1]) Cost base is the different between gross profit and underlying EBITDA
Profit/Loss Before Tax
The reported loss before tax for the year is A$5.4 million (FY20: A$3.4 million loss). This reported loss is after the inclusion of one-off and non-cash items such as adjustments of deferred tax assets, depreciation, and one-off costs.
Profit/loss after tax and earnings per share
The reported loss after tax for the year is A$8.4 million (FY20: A$3.6 million loss). This reported loss is after the inclusion of a number of one-off and non-cash items which are shown in more detail below and in note 6 to the financial statements in order to provide greater insight as to the underlying profitability of the Group.
Note 31 to the financial statements shows the detailed calculations of basic loss per share for the financial year which after tax was 0.96 cents per share loss (FY20: 0.53 cents loss) and was 0.50 cents profit (FY20: 0.41 cents loss) on underlying EBITDA.
Taxation
The group has recorded a tax expense of A$3.1 million for the year (FY20: A$0.2 million). Further detail of the tax expenses is provided in note 9 to the financial statements. The Group has A$109.3 million (FY20: A$103.6 million) of carried forward tax losses that may be available to use for further offset. A deferred tax asset is only recorded where it is probable that these losses will be recoverable. Included within the FY21 is an expense of A$3.8m, related to the non-cash write off of deferred tax assets previously recognised. This is due to the consideration of a number of factors that determine the potential recoverability of the underlying deferred tax asset, including historical performance and the inherent uncertainty over future profitability over an extended period beyond two years
Net Assets
During FY21 we have improved our current asset position by A$5.2 million which due primarily to an increase in cash and cash equivalent (A$2.5 million) and a reduction in trade and other payable (A$-4.7 million) which was off-set by an increase in inventories (A$2.8 million)
Working Capital
The Group's closing cash balance was A$9.2 million (FY20: A$6.7 million) and is debt free with no bank or trade borrowings.
In FY21 our net cash position has improved as a result of raising additional capital, but also by successfully reducing our aged non-core inventory and further decreasing our cost base by A$4.4 million.
During FY21 the group raised A$9.3 million from entities associated with both founders as well as the former CEO of Catch.com.au.
Total capital expenditure was A$1.4 million (FY20: A$2.6 million) as we focused on benefiting from the historical investment made in the technology platform and prioritizing the development projects in line with the business priorities.
We continue to invest in the growth of the new own stock channel with closing inventory A$4.2 million.
The table below provide further information to the cash movement for the year.
Cash Movement (A$ million) 2021
-------
Cash June 2020 $6.7
=============================== =======
Capital raise $9.2
=============================== =======
Underlying EBITDA $4.2
=============================== =======
IFRS-16 -$1.0
=============================== =======
Capex -$1.4
=============================== =======
New Own Stock Inventory -$4.2
=============================== =======
Prepaid Inventory (Note 13) -$0.9
=============================== =======
Payable & Others -$3.4
Cash June 2021 $9.2
-------
Banking Facilities
Subsequent to the refinancing the Group is debt free and no longer relying on overdraft financing to support the business operations. The sell down of aged non-core inventory and the transition to an inventory light business model has reduced the overall reliance on external financing to support inventories and other working capital requirements.
Going Concern Statement
The consolidated financial statements have been prepared on a going concern basis. The Directors have prepared a going concern assessment covering the 12-month period from the signing of these financial statements, which demonstrates that the Group is capable of continuing to operate as a going concern. The Directors assessment considers the principal risks and financial forecast that have been prepared whilst considering various levels of disruption for the COVID-19 pandemic.
The Group has modelled a number of scenarios for the period ending December 30, 2022, with the base case being consistent with the approved FY22 budget. The financial modelling scenarios take out account of the following:
-- The Group is debt free and has a closing cash position of A$9.2 million
-- 80% of revenue is generated from 3P channels where the Group receives payment from the customer before purchase the product. There is no inventory risk
-- Inventory levels are A$5.5 million achieving a 17 times stock turn
As a result of the financial modelling and taking account of the above points, the Directors have concluded the Group has sufficient financial resources to continue meets its obligations as they fall due for the 12-months from the approval of these accounts.
Conclusion
To conclude, whilst there is a positive story behind the FY21 financial performance it is also about looking forward. There has been excellent progress by the trading teams in scaling the marketplace platform while tactically increasing the amount of higher margin own stock inventory.
Having started FY22 strongly we are constantly reviewing the accelerating revenue and evolving margin mix ensuring it is aligned to our cost base. We remain very confident about the opportunities ahead knowing we have a high growth marketplace underpinned by the higher margin own stock channel. The group now operates a right sized cost-based operating on a debt free basis that meaning we are in a good position to trade profitably with a strong balance sheet.
Mats Weiss
Chief Financial Officer 04 October 2021
MySale Group Plc
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
Consolidated
Note 2021 2020
A$'000 A$'000
Revenue 4 117,893 131,032
Cost of sales (71,476) (87,152)
Gross profit 4 46,417 43,880
---------- ----------
Other operating (losses)/gains, net 5 (1,120) 8,626
Interest income 78 4
Expenses
Selling and distribution expenses (31,955) (37,015)
Administration expenses (18,267) (20,746)
(Recovery)/impairment of receivables 11 (217) 2,262
Finance costs 7 (299) (400)
---------- ----------
Loss before income tax expense (5,363) (3,389)
Income tax expense 9 (3,085) (171)
--------- -------
Loss after income tax expense for the year attributable
to the owners of MySale Group Plc (8,448) (3,560)
Other comprehensive income/(loss)
Items that may be reclassified subsequently to
profit
or loss
Exchange differences on translation of foreign
operations 22 432 (2,125)
Other comprehensive income/(loss) for the year, net
of tax 432 (2,125)
--------- ---------
Total comprehensive loss for the year attributable
to the owners of MySale Group Plc (8,016) (5,685)
========= =========
Cents Cents
Basic earnings per share 31 (0.96) (0.53)
Diluted earnings per share 31 (0.96) (0.53)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
MySale Group Plc
Balance sheet
As at 30 June 2021
Assets
Consolidated
Note 2021 2020
A$'000 A$'000
Current assets
Cash and cash equivalents 10 9,210 6,660
Trade and other receivables 11 3,001 4,107
Inventories 12 5,518 2,761
Income tax receivable - 15
Other assets 13 1,695 634
Total current assets 19,424 14,177
-------- --------
Non-current assets
Property, plant and equipment 14 764 1,216
Right-of-use assets 15 3,487 5,362
Intangibles 16 26,370 30,168
Other assets 13 1,777 1,629
Deferred tax 9 322 3,407
Total non-current assets 32,720 41,782
-------- --------
Total assets 52,144 55,959
-------- --------
Liabilities
Current liabilities
Trade and other payables 17 14,304 18,985
Contract liabilities 18 7,047 6,186
Lease liabilities 19 1,593 1,581
Employee benefits 1,116 1,148
Provisions 20 1,089 1,280
Total current liabilities 25,149 29,180
-------- --------
Non-current liabilities
Lease liabilities 19 3,705 5,048
Employee benefits 584 450
Total non-current liabilities 4,289 5,498
-------- --------
Total liabilities 29,438 34,678
-------- --------
Net assets 22,706 21,281
======== ========
Equity
Stated capital 21 338,215 328,971
Other reserves 22 (124,350) (124,979)
Accumulated losses (191,139) (182,691)
Equity attributable to the owners of MySale
Group
Plc 22,726 21,301
Non-controlling interests (20) (20)
Total equity 22,706 21,281
=========== ===========
The above balance sheet should be read in conjunction with the accompanying notes
The financial statements of MySale Group Plc (company number 115584 (Jersey))
were approved by the Board of Directors and authorised for issue on 04 October
2021. They were signed on its behalf by:
___________________________
Carl Jackson Charles Butler
Chairman Senior Independent Director
04 October 2021
MySale Group Plc
Statement of changes in equity
For the year ended 30 June 2021
Stated
capital Other Accumulated Non-controlling
Total
account reserves losses interest equity
Consolidated A$'000 A$'000 A$'000 A$'000 A$'000
Balance at 1
July 2019 306,363 (123,125) (179,131) (20) 4,087
Loss after
income tax
expense
for the year - - (3,560) - (3,560)
Other
comprehensive
loss for
the year, net
of tax - (2,125) - - (2,125)
Total
comprehensive
loss for
the year - (2,125) (3,560) - (5,685)
Transactions
with owners in
their capacity
as owners:
Issue of
ordinary
shares, net
of transaction
costs (note
21) 22,608 - - - 22,608
Share-based
payments (note
32) - 271 - - 271
Balance at 30
June 2020 328,971 (124,979) (182,691) (20) 21,281
========= =========== ============= ================= =========
Stated
capital Other Accumulated Non-controlling
Total
account reserves losses interest equity
Consolidated A$'000 A$'000 A$'000 A$'000 A$'000
Balance at 1
July 2020 328,971 (124,979) (182,691) (20) 21,281
Loss after
income tax
expense
for the year - - (8,448) - (8,448)
Other
comprehensive
income for
the year, net
of tax - 432 - - 432
Total
comprehensive
(loss)/income
for the year - 432 (8,448) - (8,016)
Transactions
with owners in
their capacity
as owners:
Share-based
payments (note
32) - 197 - - 197
Issue of
ordinary
shares, net
of transaction
costs (note
21) 9,244 - - - 9,244
Balance at 30
June 2021 338,215 (124,350) (191,139) (20) 22,706
========= =========== ============= ================= =========
The non-controlling interest has 49% equity holding in Simply Send It Pty
Limited. Refer to note 30 for details.
The above statement of changes in equity should be read in conjunction with
the accompanying notes on page 43 to 77
MySale Group Plc
Statement of cash flows
For the year ended 30 June 2021
Consolidated
Note 2021 2020
A$'000 A$'000
Cash flows from operating activities
Loss before income tax expense for the year (5,363) (3,389)
Adjustments for:
Depreciation and amortisation 7,007 7,520
Net loss on disposal of property, plant and equipment 155 390
Net loss on disposal of intangibles 4 128
Share-based payments 197 -
Interest income (78) (4)
Interest expense 299 400
2,221 5,045
Change in operating assets and liabilities:
Decrease in trade and other receivables 1,106 7,320
(Increase)/decrease in inventories (2,757) 13,202
Decrease in other operating assets (1,194) 2,502
Decrease in trade and other payables (4,311) (17,307)
Increase/(decrease) in contract liabilities 861 (4,222)
Decrease in other provisions (88) (578)
(4,162) 5,962
Interest received 78 4
Interest paid (299) (51)
Income taxes paid - (321)
Net cash (used in)/from operating activities (4,383) 5,594
--------- ----------
Cash flows from investing activities
Payments for property, plant and equipment 14 (135) (980)
Payments for intangibles 16 (1,231) (1,633)
Net cash used in investing activities (1,366) (2,613)
--------- ---------
Cash flows from financing activities
Proceeds from issue of shares, net of transactions
costs 21 9,244 22,608
Repayment of borrowings - (5,200)
Repayment of leases 25 (1,007) (1,163)
Net cash from financing activities 8,237 16,245
--------- ---------
Net increase in cash and cash equivalents 2,488 19,226
Cash and cash equivalents at the beginning of the
financial year 6,660 (12,323)
Effects of exchange rate changes on cash and cash
equivalents 62 (243)
Cash and cash equivalents at the end of the financial
year 10 9,210 6,660
======= ==========
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 2021
Note 1. General information
MySale Group Plc is a group consisting of MySale Group Plc (the 'Company'
or 'parent entity') and its subsidiaries (the 'Group'). The financial statements
of the Group, in line with the location of the majority of the Group's operations
and customers, are presented in Australian dollars and generally rounded
to the nearest thousand dollars.
The principal business of the Group is the operating of online shopping
outlets for consumer goods like ladies, men's and children's fashion clothing,
accessories, beauty and homeware items.
MySale Group Plc is a public company, limited by shares, listed on the AIM
(Alternate Investment Market), a sub-market of the London Stock Exchange.
The Company is incorporated and registered under the Companies (Jersey)
Law 1991. The company is domiciled in Australia.
The financial information set out in this preliminary announcement does
not constitute the Group's Consolidated financial statements for the years
ended 30 June 2021 or 30 June 2020
The financial information for 2021 and 2020 is derived from the consolidated
financial statements for the year ended 30 June 2021 which includes the
comparatives for year ended 30 June 2020. The consolidated financial statements
for the year ended 30 June 2020 have been audited and delivered to the registrar
of companies with the Jersey Financial Service Commission ("JFSC"). The
financial statements for the year ended 30 June 2021 have been audited and
will be filed with the registrar of companies with the JFSC following the
Company's Annual General Meeting. The Independent Auditors Reports have
reported on the financial statements for the year ended 30 June 2021 and
the year ended 30 June 2020; the audit reports were (i) unqualified, (ii)
did not include a reference to any matters to which the auditor drew attention
by way of emphasis without qualifying their report and (iii) did not contain
a statement under section 113B (3) or (6) of the Companies (Jersey) Law
1991.
The registered office of the Company is Ogier House, The Esplanade, 44 Esplanade
Street. Helier, JE4 9WG, Jersey and principal place of business is at 3/120
Old Pittwater Road, Brookvale, NSW 2100, Australia. Company number 115584
(Jersey). Incorporated as of 28 May 2014.
The financial statements were authorised for issue, in accordance with a
resolution of Directors, on 04 October 2021.
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.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and
Interpretations issued by the International Accounting Standards Board ('IASB')
which have been endorsed by the European Union that are mandatory for the
current reporting period. The adoption of these Accounting Standards and
Interpretations did not have a material impact on the Group.
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 2021. The Group has not yet assessed the impact of these new or
amended Accounting Standards and Interpretations.
Basis of preparation
These financial statements have been prepared in accordance with applicable
Jersey Law and International Financial Reporting Standards ('IFRS' or 'IFRSs')
as adopted for use in the European Union (the 'EU') and IFRS Interpretations
Committee interpretations (together 'EUIFRS').
Parent company financial information
Under Article 105(11) of the Companies (Jersey) Law 1991, a parent company
preparing consolidated financial statements need not present solus (parent
company only) financial information, unless required to do so by an ordinary
resolution of the Company's members. The Company's members did not pass
an ordinary resolution on this matter and hence Parent Company financial
information has not been presented for the year.
Historical cost convention
The financial statements have been prepared under the historical cost convention.
Going concern
The consolidated financial statements have been prepared on a going concern
basis. In reaching their assessment, the Directors have considered a period
extending at least 12 months from the date of approval of these financial
statements.
The Group's business activities and financial position, together with the
factors likely to affect its future development, performance and position,
are set out in (section (4) of the Strategic Report]. In addition, note
24 includes the Group's objectives, policies and processes for managing
its capital; its financial risk management objectives; details of its financial
instruments; and its exposures to credit risk and liquidity risk. The Group
prepare budgets and cashflow forecasts to ensure that the Group can meet
its liabilities as they fall due.
As at 30 June 2021, the Group's current liabilities exceeds current assets
by A$5,725,000 (2020: A$15,003,000) and the Group incurred a loss after
tax of A$8,448,000 (2020: A$3,560,000) and net cash used in operating activities
of A$4,383,000 (2020: net cash from operating activities of A$5,285,000).
The uncertainty as to the future impact on the Group of the COVID-19 pandemic
has been considered as part of the Group's adoption of the going concern
basis. The Directors continue to monitor developments and the potential
impact of any new measures imposed due to COVID-19 on the operational and
financial risks of the Group.
Immediate action has been taken to protect the cash resources of the business
until further certainty is gained. These measures include, but are not limited
to:
-- strengthening the cash position by raising an additional A$9,244,000
as of 8 October 2020 (note 21); and
-- obtaining government support as part of various economic stimulus initiatives.
The Directors have prepared cash flow forecasts covering a period to 31
December 2022. This assessment has included consideration of the forecast
performance of the business for the foreseeable future and the cash available
to the Group. In preparing these forecasts, the Directors have considered
a number of detailed sensitivities, including a worst case scenario considering
the potential impact of Covid-19.
If revenue were to fall in line with the worst case model, the Group would
take further remedial action to counter the reduction in profit and cash
through a cost cutting exercise that would include staff redundancies and
general cost control measures.
Included in the Group's current liabilities is balance for contract liabilities
(non-cash liabilities) of A$7,047,000 (2020: A$6,186,000). Excluding this
the Group's current assets exceed current liabilities by A$1,322,000 (2020:
current liabilities exceed assets by A$8,817,000).
Additionally, the Group has a proven track record of raising capital to
assist with cash flow needs as and when required.
Based on current trading, the worst case scenario is considered unlikely.
However, it is difficult to predict the overall impact and outcome of COVID-19
at this stage, particularly if the second wave continues in to 2022. Nevertheless,
after making enquiries, and considering the uncertainties described above,
the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future.
For these reasons, they continue to adopt the going concern basis in preparing
the annual report and financial statements.
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.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities
of all subsidiaries of MySale Group Plc as at 30 June 2021 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 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 the entity's functional
currency 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 reporting date 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 the
Group's presentational currency, the Australian dollar, using the exchange
rates at the reporting date. The revenues and expenses of foreign operations
included in each of the statement of profit or loss and other comprehensive
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
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which
the Group is expected to be entitled in exchange for transferring goods
or services to a customer. For each contract with a customer, the Group:
identifies the contract with a customer; identifies the performance obligations
in the contract; determines the transaction price; allocates the transaction
price to the separate performance obligations on the basis of the relative
stand-alone selling price of each distinct good or service to be delivered;
and recognises revenue when or as each performance obligation is satisfied
in a manner that depicts the transfer to the customer of the goods or services
promised.
Sale of goods
The Group's revenue mainly comprises the sale of goods online, in-store,
and by wholesale to businesses. Revenue is recognised when control of the
goods has transferred to the customer at an amount that reflects the consideration
to which the Group expects to be entitled.
The Group operates mostly an online retail business selling men's, ladies
and children's apparel, accessories, beauty and homeware items. Revenue
from sale of goods is recognised at the point in time when the customer
obtains control of the goods, which is generally at the time of delivery.
Sales represent product delivered 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 30 days. Accruals for sales returns are estimated on the
basis of historical returns and are recorded so as to allocate them to the
same period in which the original revenue is recorded. Refer to note 20
for details.
Commission revenue
Commission revenue is generated when the Group, acting as an agent, uses
its Marketplace to arrange the sale of products by suppliers to its customers.
The supplier of the products to the customer is the principal in the principal-agency
agreement. Commissions are recognised at the time the goods are sold.
Interest
Interest revenue is recognised as interest accrues using the effective interest
method. This is a method of calculating the amortised cost of a financial
asset and allocating the interest income over the relevant period using
the effective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to
the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive
payment is established.
Government grants
Grants from the government are recognised at their fair value where there
is a reasonable assurance that the grant will be received and the Group
will comply with all attached conditions. Government grants are recognised
in profit or loss over the period necessary to match with the costs that
they are intended to compensate. Government grants relating to COVID-19
wage subsidies in Australia, New Zealand and Singapore are netted off against
employee costs in profit or as detailed in note 8.
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 tax 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 12 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
allowance for expected credit losses. Trade receivables consist of wholesale
debtor and online customer. Wholesale debtors are generally due for settlement
within 30 days of recognition and online customers are generally due for
settlement within 3-43 days.
The Group has applied the simplified approach to measuring expected credit
losses, which uses a lifetime expected loss allowance. To measure the expected
credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for
expected credit losses.
Right of return assets
Right of return assets represents the right to recover inventory sold to
customers and is based on an estimate of customers who may exercise their
right to return the goods and claim a refund. Such rights are measured at
the value at which the inventory was previously carried prior to sale, less
expected recovery costs and any 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.
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 obsolete or slow-moving inventory
to net realisable value, based on management's assessment of the expected
future sales of that inventory, the condition of the inventory and the seasonality
of the inventory.
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 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.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease.
The right-of-use asset is measured at cost, which comprises the initial
amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received,
any initial direct costs incurred, and, except where included in the cost
of inventories, an estimate of costs expected to be incurred for dismantling
and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired
period of the lease or the estimated useful life of the asset, whichever
is the shorter. Where the Group expects to obtain ownership of the leased
asset at the end of the lease term, the depreciation is over its estimated
useful life. Right-of use assets are subject to impairment or adjusted for
any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding
lease liability for short-term leases with terms of 12 months or less and
leases of low-value assets. Lease payments on these assets are expensed
to profit or loss as incurred.
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. 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
Goodwill is not subject to amortisation and is tested annually for impairment,
or more frequently if events or changes in circumstances indicate that it
might be impaired. Other 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.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods
or services to a customer and are recognised when a customer pays consideration,
or when the Group recognises a receivable to reflect its unconditional right
to consideration (whichever is earlier) before the Group has transferred
the goods or services to the customer.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The
lease liability is initially recognised at the present value of the lease
payments to be made over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined,
the Group's incremental borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease payments that
depend on an index or a rate, amounts expected to be paid under residual
value guarantees, exercise price of a purchase option when the exercise
of the option is reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that do not depend on an index or
a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest
method. The carrying amounts are remeasured if there is a change in the
following: future lease payments arising from a change in an index or a
rate used; residual guarantee; lease term; certainty of a purchase option
and termination penalties. When a lease liability is remeasured, an adjustment
is made to the corresponding right-of use asset, or to profit or loss if
the carrying amount of the right-of-use asset is fully written down.
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.
Refund liabilities
Refund liabilities are recognised where the Group receives consideration
from a customer and expects to refund some, or all, of that consideration
to the customer. A refund liability is measured at the amount of consideration
received or receivable for which the Group does not expect to be entitled
and is updated at the end of each reporting period for changes in circumstances.
Historical data is used across product lines to estimate such returns at
the time of sale based on an expected value methodology.
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.
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 high quality
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 Monte-Carlo 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.
Share capital
Financial instruments issued by the Group are classified as equity only
to the extent that they do not meet the definition of a financial liability
or financial asset. The Group's ordinary shares are classified as equity
instruments.
Share capital represents the nominal value of shares that have been issued.
Share premium includes any premiums received on issue of share capital.
Any transaction costs associated with the issuing of shares are deducted
from share premium, net of any related income tax.
Own equity instruments that are reacquired (treasury shares) are recognised
at cost and deducted from equity. No gain or loss is recognised in profit
or loss on the purchase, sale, issue or cancellation of the Group's own
equity instruments. Any difference between the carrying amount and the consideration,
if reissued, is recognised in the share premium.
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 additional ordinary shares
that would have been outstanding assuming conversion of all dilutive potential
ordinary shares. Diluted earnings per share is not calculated if anti-dilutive.
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.
Comparatives
Certain comparatives have been reclassified, where necessary, to be consistent
with current period presentation, particularly in the statement of cash
flows, with no effect on the results and net assets..
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.
Judgements
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.
Lease term
The lease term is a significant component in the measurement of both the
right-of-use asset and lease liability. Judgement is exercised in determining
whether there is reasonable certainty that an option to extend the lease
or purchase the underlying asset will be exercised, or an option to terminate
the lease will not be exercised, when ascertaining the periods to be included
in the lease term. In determining the lease term, all facts and circumstances
that create an economical incentive to exercise an extension option, or
not to exercise a termination option, are considered at the lease commencement
date. Factors considered may include the importance of the asset to the
Group's operations; comparison of terms and conditions to prevailing market
rates; incurrence of significant penalties; existence of significant leasehold
improvements; and the costs and disruption to replace the asset. The Group
reassesses whether it is reasonably certain to exercise an extension option,
or not exercise a termination option, if there is a significant event or
significant change in circumstances.
Estimates
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined,
an incremental borrowing rate is estimated to discount future lease payments
to measure the present value of the lease liability at the lease commencement
date. Such a rate is based on what the Group estimates it would have to
pay a third party to borrow the funds necessary to obtain an asset of a
similar value to the right-of-use asset, with similar terms, security and
economic environment.
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 assessing the
value of the asset at fair value less costs of disposal and using value-in-use
models which incorporate a number of key estimates and assumptions.
Provision for impairment of 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. Refer to note 12 for
further details.
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, right-of-use
assets and finite life intangible assets. The useful lives could change
significantly as a result of technical innovations or some other event.
The depreciation and amortisation charge will increase where the useful
lives are less than previously estimated or technically obsolete or non-strategic
assets that have been abandoned or sold will be written off or written down.
Goodwill
The Group tests annually, or more frequently if events or changes in circumstances
indicate impairment, whether goodwill has suffered any impairment, in accordance
with the accounting policy stated in note 2. The recoverable amounts of
cash-generating units have been determined based on value-in-use calculations.
These calculations require the use of assumptions, including estimated discount
rates based on the current cost of capital and growth rates of the estimated
future cash flows. Refer to note 16 for further details.
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. Significant
judgement is required to determine the amount of deferred tax assets that
can be recognised based on the estimates and assumptions made in relation
to the timing and level of future taxable amounts that will be available.
The assessment of impairment was made by looking into the next two years
of forecasted taxable profits. Refer to note 9 for further details.
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 CODM) in
assessing performance and in determining the allocation of resources.
The CODM reviews revenue and gross profit by reportable segments, being
geographical regions. The accounting policies adopted for internal reporting
to the CODM are consistent with those adopted in these financial statements.
The Group operates separate websites in each country that it sells goods
in. Revenue from external customers is attributed to each country based
on the activity on that country's website. Similar types of goods are sold
in all segments. The Group's operations are unaffected by seasonality.
Intersegment transactions
Intersegment transactions were made at market rates and are eliminated on
consolidation.
Segment assets and liabilities
Assets and liabilities are managed on a Group basis. The CODM does not regularly
review any asset or liability information by segment and, accordingly there
is no separate segment information. Refer to the balance sheet for Group
assets and liabilities.
Major customers
During the year ended 30 June 2021 there were no major customers (2020:
none). A customer is considered major if its revenues are 10% or more of
the Group's revenue.
Operating segment information
Australia
and South-East
New Zealand Asia Total
Consolidated - 2021 A$'000 A$'000 A$'000
Revenue
Sales to external customers transferred
at a
point in time 109,726 7,141 116,867
Commission revenue recognised at a
point in time 1,026 - 1,026
Total revenue 110,752 7,141 117,893
------------- ------------ ----------
Gross profit 43,580 2,837 46,417
------------- ------------
Other (loss)/gain, net (1,120)
Selling and distribution expenses (31,955)
Administration expenses (18,267)
Finance income 78
Finance costs (299)
Impairment of receivables (217)
Loss before income tax expense (5,363)
Income tax expense (3,085)
----------
Loss after income tax expense (8,448)
----------
Australia
and South-East
New Zealand Asia Total
Consolidated - 2020 A$'000 A$'000 A$'000
Revenue
Sales to external customers transferred
at a
point in time 118,107 12,925 131,032
Commission revenue recognised at a
point in time - - -
Total revenue 118,107 12,925 131,032
------------- ------------ ----------
Gross profit 38,943 4,937 43,880
------------- ------------
Other gain/(loss), net 8,626
Selling and distribution expenses (37,015)
Administration expenses (20,746)
Finance income 4
Finance costs (400)
Recovery of receivables 2,262
Loss before income tax expense (3,389)
Income tax expense (171)
----------
Loss after income tax expense (3,560)
----------
Note 5. Other operating (losses)/gains, net
Consolidated
2021 2020
A$'000 A$'000
Net foreign exchange (losses)/gains (921) 893
Net loss on disposal of property, plant and equipment (157) (23)
Debt forgiveness * - 7,723
Other (losses)/income (42) 33
Other operating (losses)/gains, net (1,120) 8,626
========= ========
* In the prior year, the Group agreed with its financier Hong Kong and
Shanghai Banking Corporation Plc ('HSBC') to extinguish all borrowing
facilities, Corporate Guarantees and Indemnities with a repayment of
A$10,914,000. As part of this repayment HSBC agreed to provide the Group
with a debt forgiveness amount of A$7,723,000.
Note 6. EBITDA reconciliation (earnings before interest, taxation, depreciation
and amortisation)
Consolidated
2021 2020
A$'000 A$'000
EBITDA reconciliation
Loss before income tax (5,363) (3,389)
Less: Interest income (78) (4)
Add: Interest expense 299 400
Add: Depreciation and amortisation 7,007 7,526
EBITDA 1,865 4,533
========= =========
Underlying EBITDA represents EBITDA adjusted for certain items, as outlined
below.
Consolidated
2021 2020
A$'000 A$'000
Underlying EBITDA reconciliation
EBITDA 1,865 4,533
(Recovery)/impairment of receivables 217 (1,505)
Debt forgiveness (note 5) - (7,723)
Share-based payments 197 271
Reorganisation costs * 652 1,796
One-off costs of non-trading, non-recurring nature including
acquisition expenses 357 660
Unrealised foreign exchange movements 904 (763)
Underlying EBITDA 4,192 (2,731)
======== =========
* Costs in relation to the closure of overseas operations.
Management has presented the EBITDA and underlying EBITDA as these are performance
measures used to monitor and understand the Group's financial performance.
EBITDA is calculated by adjusting loss before income tax from continuing
operations to exclude the impact of taxation, interest income, interest
expense, depreciation and amortisation. Underlying EBITDA is calculated
as EBITDA adjusted for certain items including impairment losses/reversals
related to goodwill and receivables, share-based payments and unrealised
foreign exchange movements. Underlying EBITDA and EBITDA are not defined
performance measures in IFRS Standards.
Note 7. Expenses
Consolidated
2021 2020
A$'000 A$'000
Loss before income tax includes the following specific
expenses:
Sales, distribution and administration expenses:
Staff costs (note 8) 15,625 17,823
Marketing expenses 10,130 8,297
Delivery costs 11,395 14,776
Short-term leases 512 1,577
Low value leases - 26
Merchant and other professional fees 3,782 4,638
Depreciation and amortisation 7,007 7,526
Loss on disposal of property, plant and equipment 157 81
Loss on disposal of intangibles 4 115
Impairment/(Recovery) of receivables 217 (1,505)
Other administration costs 1,393 4,407
Total sales, distribution and administration expenses 50,222 57,761
Finance costs
Interest and finance charges paid/payable on borrowings - 159
Interest and finance charges paid/payable on lease
liabilities 299 241
Finance costs expensed 299 400
-------- ---------
Note 8. Staff costs
Consolidated
2021 2020
A$'000 A$'000
Aggregate remuneration:
Wages and salaries * 13,359 14,922
Social security costs 1,106 1,344
Long term employee incentive plan (note 32) 197 271
Other staff costs and benefits 963 1,286
Total staff costs 15,625 17,823
======== ========
* During the financial year and related to the COVID-19 pandemic, certain
entities within the Group received JobKeeper support payments from the
Australian government and wage subsidies from the New Zealand and Singapore
governments. These subsidies were passed on to the eligible employees
and have been recognised in the financial statements net of employment
costs over the relevant periods. The net impact (gross amount less top
up payments to casual employees) recognised in profit or loss during
the financial year was A$1,101,000 (2020: A$947,000) in respect of JobKeeper
and A$43,000 (2020: A$91,000) in respect of New Zealand and Singapore
wage subsidies.
Consolidated
2021 2020
The average monthly number of employees (including executive
directors and those on a part-time basis) was:
Sales and distribution 68 81
Administration 54 89
122 170
======= =======
Details of Directors' remuneration and interests are provided in the audited
section of the Directors' remuneration report and should be regarded as
part of these financial statements.
Note 9. Income tax
Consolidated
2021 2020
A$'000 A$'000
Income tax expense
Current tax - 160
Adjustment recognised for prior years - 11
Write-off of deferred tax asset 3,085 -
Aggregate income tax expense 3,085 171
Numerical reconciliation of income tax expense and tax
at the statutory rate
Loss before income tax expense (5,363) (3,389)
Tax at the statutory tax rate of 30% (1,609) (1,017)
Tax effect amounts which are not deductible/(taxable)
in calculating taxable income:
Effect of overseas tax rates (104) 65
Non-taxable income or expense (11) (2,456)
Tax-exempt income - (18)
(1,724) (3,426)
Prior year tax losses not recognised now recognised - 34
Change in unrecognised deductible temporary differences 1,724 3,552
Impairment of deferred tax assets 3,085 -
Adjustment recognised for prior periods - 11
Income tax expense 3,085 171
========= =========
The tax rates of the main jurisdictions are Australia 30% (2020: 30%), Singapore
17% (2020: 17%) and New Zealand 28% (2020: 28%). Company profits are subject
to Jersey Corporate Income Tax at a rate of 0%.
Consolidated
2021 2020
A$'000 A$'000
Deferred tax asset
Deferred tax asset comprises temporary differences
attributable
to:
Amounts recognised:
Tax losses - 299
Accrued expenses 36 258
Provisions 483 2,553
Sundry (347) (285)
Property, plant and equipment - 242
Right-of-use assets 150 380
Intangibles - (40)
Deferred tax asset 322 3,407
Movements:
Opening balance 3,407 3,369
Exchange differences - 38
Write-off to profit or loss (3,085) -
Closing balance 322 3,407
========= ========
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. Deferred tax assets have not been recognised for trading losses
totalling A$109,256,000 (2020: A$103,548,000), given the lack of visibility
over the level of future profitability of the Group.
Note 10. Cash and cash equivalents
Consolidated
2021 2020
A$'000 A$'000
Current assets
Cash at bank 9,100 6,550
Bank deposits at call 110 110
9,210 6,660
======== ========
Note 11. Trade and other receivables
Consolidated
2021 2020
A$'000 A$'000
Current assets
Trade receivables 1,715 2,479
Less: Allowance for expected credit losses (17) (183)
1,698 2,296
Other receivables - 369
Sales tax receivable 1,303 1,442
3,001 4,107
======== ========
Trade receivables include uncleared cash receipts due from online customers
which amounted to A$1,713,000 (2020: A$2,261,000).
Allowance for expected credit losses
The Group has recognised a loss of A$217,000 (2020: recovery of A$2,262,000)
in profit or loss in respect of impairment of receivables for the year ended
30 June 2021.
The ageing of the trade receivables and the merchant receivables (uncleared
cash receipts due from online customers) and allowance for expected credit
losses provided for above are as follows:
Expected credit Allowance for
loss expected
rate Carrying amount credit losses
2021 2020 2021 2020 2021 2020
Consolidated % % A$'000 A$'000 A$'000 A$'000
Merchant
receivables:
1-30 days
overdue - 0.10% 1,652 2,061 - 2
31-60 days
overdue - 56.44% 44 74 - 42
Over 61 days 100.00% 100.00% 17 126 17 126
1,713 2,261 17 170
Trade
receivables:
Not overdue - - 27 96 - -
1-30 days
overdue - - - 109 - -
Over 61 days 100.00% 100.00% (25) 13 - 13
2 218 - 13
1,715 2,479 17 183
======== ======== ======== ===========
Movements in the allowance for expected credit losses are as follows:
Consolidated
2021 2020
A$'000 A$'000
Opening balance 183 5,389
Unused amounts reversed - (2,262)
Receivables written off during the year as uncollectable (166) (2,944)
Closing balance 17 183
======== =========
Note 12. Inventories
Consolidated
2021 2020
A$'000 A$'000
Current assets
Goods for resale 8,790 8,968
Obsolete and slow-moving inventory provision (3,272) (6,207)
5,518 2,761
========= =========
Write-downs of inventories to net realisable value recognised as an expense
during the year ended 30 June 2021 amounted to A$964,000 (2020: expense
of A$948,000) and has been included in 'cost of sales' in profit or loss.
Note 13. Other assets
Consolidated
2021 2020
A$'000 A$'000
Current assets
Prepayments 161 284
Prepaid inventory* 1,033 90
Right of return assets 501 260
1,695 634
-------- --------
Non-current assets
Deposit given for lease agreements 1,213 1,629
Lease receivables 564 -
1,777 1,629
-------- --------
3,472 2,263
======== ========
* Prepaid inventory relates to the costs of goods for resale that have
been paid for by the Group but not delivered to its distribution centres
for further dispatch to the customers who placed the orders as at the
reporting date. The corresponding cash received in advance from customers
are accounted for within the contract liabilities category in the balance
sheet which includes the total amount of cash received for the goods
not delivered to customers at the reporting date.
Note 14. Property, plant and equipment
Consolidated
2021 2020
A$'000 A$'000
Non-current assets
Leasehold improvements - at cost 1,013 1,949
Less: Accumulated depreciation (521) (1,185)
492 764
Plant and equipment - at cost 4,886 5,027
Less: Accumulated depreciation (4,650) (4,670)
236 357
Fixtures and fittings - at cost 704 940
Less: Accumulated depreciation (668) (845)
36 95
Motor vehicles - at cost 79 209
Less: Accumulated depreciation (79) (209)
- -
764 1,216
========= =========
Reconciliations
Reconciliations of the written down values at the beginning and end of the
current and previous financial year are set out below:
Leasehold Plant and Fixtures Motor
and
improvements equipment fittings vehicles Total
Consolidated A$'000 A$'000 A$'000 A$'000 A$'000
Balance at 1
July 2019 309 615 243 19 1,186
Additions 622 48 1 - 671
Disposals - - (65) (16) (81)
Depreciation
expense (167) (306) (84) (3) (560)
Balance at 30
June 2020 764 357 95 - 1,216
Additions 41 101 - - 142
Disposals (114) (25) (16) - (155)
Exchange
differences (1) (3) (3) - (7)
Depreciation
expense (198) (193) (41) - (432)
Balance at 30
June 2021 492 236 36 - 764
============== =========== ========== ========== ========
Depreciation expense is included in 'administration expenses' in profit
or loss.
Note 15. Right-of-use assets
Consolidated
2021 2020
A$'000 A$'000
Non-current assets
Property and equipment - right-of-use 6,180 6,505
Less: Accumulated depreciation (2,693) (1,143)
3,487 5,362
========= =========
The Group leases buildings for its offices, warehouses and retail outlets
under agreements of between one to five years with, in some cases, options
to extend. The leases have various escalation clauses. On renewal, the terms
of the leases are renegotiated.
The Group leases office equipment under agreements of less than one year.
These leases are either short-term or low value, so have been expensed as
incurred and not capitalised as right-of-use assets.
Reconciliations
Reconciliations of the written down values at the beginning and end of the
current and previous financial year are set out below:
Property Equipment Total
Consolidated A$'000 A$'000 A$'000
Balance at 1 July 2019 - - -
Opening cost on adoption of IFRS 16 1,673 51 1,724
Additions 4,781 - 4,781
Depreciation expense (1,130) (13) (1,143)
Balance at 30 June 2020 5,324 38 5,362
Additions 300 - 300
Transfers out* (625) - (625)
Depreciation expense (1,537) (13) (1,550)
Balance at 30 June 2021 3,462 25 3,487
========== =========== =========
* Relates to a sublease which has been recognised as a lease receivable
during the financial year and included in note 13.
For other lease related disclosures refer to the following: -- note 7 for details of short-term and low value lease expensed in profit
or loss;
-- note 19 for lease liabilities as at the reporting date;
-- note 24 for undiscounted future lease commitments; and
-- note 25 and the statement of cash flows for repayment of lease liabilities.
Note 16. Intangibles
Consolidated
2021 2020
A$'000 A$'000
Non-current assets
Goodwill - at cost 21,233 21,214
Customer relationships - at cost 3,906 3,850
Less: Accumulated amortisation (3,906) (3,718)
- 132
Software - at cost 29,189 28,001
Less: Accumulated amortisation (24,203) (19,608)
4,986 8,393
ERP system 4,885 4,905
Less: Accumulated amortisation (4,734) (4,476)
151 429
26,370 30,168
========== ==========
Reconciliations
Reconciliations of the written down values at the beginning and end of the
current and previous financial year are set out below:
Customer ERP
Goodwill relationships Software system Total
Consolidated A$'000 A$'000 A$'000 A$'000 A$'000
Balance at 1
July 2019 21,221 144 12,196 919 34,480
Additions - - 1,621 12 1,633
Disposals - - (112) (3) (115)
Exchange
differences (7) - - - (7)
Amortisation
expense - (12) (5,312) (499) (5,823)
Balance at 30
June 2020 21,214 132 8,393 429 30,168
Additions - - 1,213 - 1,213
Disposals - - (2) (2) (4)
Exchange
differences 19 - (1) (1) 17
Amortisation
expense - (132) (4,618) (275) (5,025)
Balance at 30
June 2021 21,233 - 4,986 151 26,370
========== =============== ========== ======== =========
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:
Consolidated
2021 2020
A$'000 A$'000
Online flash 19,477 19,458
Online retail 1,756 1,756
21,233 21,214
======== ========
The Group's retail websites are OO.com, Deals Direct, and Top Buy. All other
websites owned by the Group are online flash websites.
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: Consolidated
2021 2020
% %
Budgeted gross margin 29.09% 29.50%
Five year compound growth rate 25.49% 3.00%
Long-term growth rate 2.00% 2.00%
Pre-tax discount rate 9.00% 9.00%
Based on the assessment, no impairment charge (2020: none) is required.
Management has 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$138,276,000 (2020:
A$79,700,000).
Online retail
Key assumptions used in value-in-use calculation
2021 2020
% %
Budgeted gross margin 28.73% 28.30%
Five year compound growth rate 25.49% 0.80%
Long-term growth rate 2.00% 2.00%
Pre-tax discount rate 9.00% 9.00%
Based on the assessment, no impairment charge (2020: none) is required.
The recoverable amount exceeded the carrying amount by A$6,318,000 (2020:
A$3,010,000).
Sensitivity
As disclosed in note 3, the Directors have made judgements and estimates
in respect of impairment testing of goodwill. Should these judgements and
estimates not occur the resulting goodwill carrying amount may decrease.
Sensitivity analysis has been performed on the value-in-use calculations,
holding all other variables constant, to:
-- apply a 1% increase in pre-tax discount rate from 9.00% to 10.00%. No
impairment would occur in the online flash CGU. The recoverable amount
exceeded the carrying amount by A$116,245,000;
-- apply a 100 basis point decrease in margin from 28.73% to 27.73%. No
impairment would occur in the online flash CGU. The recoverable amount
exceeded the carrying amount by A$95,274,000;
-- apply a 10% decrease in growth rate from 25.49% to 15.49%. No impairment
would occur in the online flash CGU. The recoverable amount exceeded
the carrying amount by A$93,221,000;
-- apply a 1% increase in pre-tax discount rate from 9.00% to 10.00%. No
impairment would occur in the online retail CGU. The recoverable amount
exceeded the carrying amount by A$5,190,000; and
-- apply a 100 basis point decrease in margin from 28.73% to 27.73%. No
impairment would occur in the online retail CGU. The recoverable amount
exceeded the carrying amount by A$4,117,000.
-- apply a 10% decrease in growth rate from 25.49% to 15.49%. No impairment
would occur in the online retail CGU. The recoverable amount exceeded
the carrying amount by A$4,012,000;
Note 17. Trade and other payables
Consolidated
2021 2020
A$'000 A$'000
Current liabilities
Trade payables 8,380 13,053
Other payables and accruals 3,541 3,163
Sales tax payable 2,383 2,769
14,304 18,985
======== ========
Refer to note 24 for further information on financial instruments and capital
risk management.
Note 18. Contract liabilities
Consolidated
2021 2020
A$'000 A$'000
Current liabilities
Contract liabilities 7,047 6,186
======== ========
Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the performance
obligations that are unsatisfied at the end of the reporting period was
A$7,047,000 as at 30 June 2021 (A$6,186,000 as at 30 June 2020) and is expected
to be recognised as revenue in future periods as follows:
Consolidated
2021 2020
A$'000 A$'000
Within six months 7,047 6,186
======== ========
Contract liabilities represent the Group's obligation to transfer goods
or services to a customer and are recognised when a customer pays consideration,
or when the Group recognises a receivable to reflect its unconditional right
to consideration (whichever is earlier) before the Group has transferred
the goods or services to the customer.
Note 19. Lease liabilities
Consolidated
2021 2020
A$'000 A$'000
Current liabilities
Lease liability 1,593 1,581
Non-current liabilities
Lease liability 3,705 5,048
5,298 6,629
======== ========
Refer to note 24 for information on the maturity analysis of lease liabilities.
Note 20. Provisions
Consolidated
2021 2020
A$'000 A$'000
Current liabilities
Lease make good provision 105 458
Gift voucher provision 160 309
Sales returns provision 824 513
1,089 1,280
======== ========
Lease make good provision
The provision represents the present value of the estimated costs to make
good the premises leased by the Group at the end of the respective lease
terms.
Gift voucher provision
The provision represents the estimated costs to honour gift vouchers that
are in circulation and not expired.
Sales return provision
The provision represents the costs for goods expected to be returned by
customers.
Movements in provisions
Movements in each class of provision during the current financial year are
set out below:
Lease make Gift Sales
good vouchers returns Total
Consolidated - 2021 A$'000 A$'000 A$'000 A$'000
Carrying amount at the start
of the
year 458 309 513 1,280
Additional provisions
recognised - 160 706 866
Amounts used (353) (309) (395) (1,057)
Carrying amount at the end of
the year 105 160 824 1,089
============ ========== ========= =========
Note 21. Stated capital
On 28 May 2014 the company converted ordinary shares of GBP1 nominal value
to ordinary shares of GBPnil nominal value, in a share-for-share exchange.
In accordance with Companies (Jersey) Law 1991 Paragraph 39A, these issued
shares have been recognised and maintained in a stated capital account.
Consolidated
2021 2020 2021 2020
Shares Shares A$'000 A$'000
Ordinary shares GBPnil
each - fully
paid 902,465,982 817,240,853 338,215 328,971
Less: Treasury shares (25,533,118) (25,533,118) - -
876,932,864 791,707,735 338,215 328,971
============== ============== ========= =========
Authorised stated capital
959,403,638 (2020: 874,178,509) ordinary shares of GBPnil each.
Movements in ordinary shares
Details Date Shares A$'000
Balance 1 July 2019 154,331,652 306,363
Issue of shares 20 September 2019 640,376,083 22,608
Issue of shares 11 December 2019 22,533,118 -
Balance 30 June 2020 817,240,853 328,971
Issue of shares 8 October 2020 85,225,129 9,244
Balance 30 June 2021 902,465,982 338,215
============= =========
Movements in treasury shares
Details Date Shares A$'000
Balance 1 July 2019 3,000,000 -
Issue of shares under the management
incentive
scheme 5 December 2019 22,533,118 -
Balance 30 June 2020 25,533,118 -
Balance 30 June 2021 25,533,118 -
============ ========
Ordinary shares
Ordinary shares entitle the holder to participate in any dividends declared
and any proceeds attributable to shareholders should the Company be wound
up in proportions that consider both the number of shares held and the extent
to which those shares are paid up.
Treasury shares
The Company has two employee share plans; (i) the Executive Incentive Plan
('EIP') and (i) the Loan Share Plan ('LSP'). In accordance with the terms
of each plan 100% of the ordinary shares will vest three years from grant
date subject either to the achievement of the Underlying Earnings Before
Interest, Tax, Depreciation and Amortisation ('EBITDA') included in the
Company's internal forecasts set by the Board in the year of the grant or
certain share price hurdles. Share options and loan shares have been granted
over the ordinary share capital of the Company and are accounted for as
share-based payments. That is, the fair value of the accounting expense
in relation to these options and loan shares are recognised over the vesting
period.
Vested and unvested shares under the plans are recorded as treasury shares
representing a deduction against issued capital. When the loans are settled
or the options are exercised, the treasury shares are reclassified as ordinary
shares and the equity will increase accordingly. Treasury shares have no
dividend, or voting, rights.
Current year
On 8 October 2020, the Company issued 85,225,129 new ordinary shares to
entities associated with Gabby Leibovich, Hezi Leibovich and Nati Harpaz
(together, the 'Subscription') and raised A$9,244,000 (GBP5,100,000). The
Subscription successfully built Catch.com.au into one of Australia's most
successful online retailers, which included an inventory business as well
as a successful marketplace which had more than two million products available
for Australian consumers.
The Group intends to use a proportion of the proceeds as capital investments
in technology to expand and develop its marketplace platform. The Group
has been taking advantage of inventory available around the world and the
proceeds will enable further selective investment in inventory to continue
to improve brand and inventory mix. At the reporting date, with this additional
investment, the Group had cash and cash equivalents of A$9,210,000 (2020:
A$6,660,000) and will use the funds to grow the business.
Prior year
On 20 September 2019, the Company finalised a share placement for A$23,329,000.
Net proceeds after considering the share issue costs of A$721,000 was A$22,608,000.
The total number of new shares issued under the placement was 640,376,083.
On 11 December 2019, the Company issued 22,533,118 ordinary shares, 4,542,614
to MySale Group Trustee Limited, in its capacity as the trustee of the MySale
Group Plc Employee Benefit Trust ('EBT'), and 17,990,504 directly to those
Directors and management taking part in the Loan Share Plan as part of the
Company's management incentive scheme for its Directors, Non-executive Directors,
and senior management. These shares, in addition to the existing 3,000,000
ordinary shares already held in the EBT, will be used to satisfy the Share
Awards, subject to the performance criteria being met. Following admission
of these shares, the Company's total issued share capital was 817,240,853
Ordinary Shares. The total number of voting rights in the Company is 791,707,735
(25,553,118 with no voting rights).
Note 22. Other reserves
Consolidated
2021 2020
A$'000 A$'000
Foreign currency reserve 2,697 2,265
Share-based payments reserve 5,709 5,512
Capital reorganisation reserve (132,756) (132,756)
(124,350) (124,979)
=========== ===========
Foreign currency reserve
The reserve is used to recognise exchange differences arising from translation
of the financial statements of foreign operations to Australian dollars.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to
employees and Directors as part of their remuneration, and other parties
as part of their compensation for services.
Capital reorganisation reserve
The reserve is used to recognise the difference between the purchase price
of APAC Sale Group Pte. Ltd. and the net assets acquired following a Group
reorganisation in 2014.
Movements in reserves
Movements in each class of reserve during the current and previous financial
year are set out below:
Foreign Share-based Capital
currency payments reorganisation Total
Consolidated A$'000 A$'000 A$'000 A$'000
Balance at 1 July
2019 4,390 5,241 (132,756) (123,125)
Foreign currency
translation (2,125) - - (2,125)
Share-based payments
(note 32) - 271 - 271
Balance at 30 June
2020 2,265 5,512 (132,756) (124,979)
Foreign currency
translation 432 - - 432
Share-based payments
(note 32) - 197 - 197
Balance at 30 June
2021 2,697 5,709 (132,756) (124,350)
========== ============= ================ ===========
Note 23. Dividends
There were no dividends paid, recommended or declared during the current
or previous financial year.
Note 24. Financial instruments and capital risk management
Financial risk management objectives
The Group's activities expose it to market risk (including foreign currency
risk and interest rate risk), credit risk and liquidity risk. The Group's
overall risk management strategy seeks to minimise any adverse effects from
the unpredictability of financial markets on the Group's financial performance.
The Group uses financial instruments such as currency forwards to hedge
certain financial risk exposures.
The Board of Directors (the 'Board') is responsible for setting the objectives
and underlying principles of financial risk management for the Group.
Financial risk management is carried out by the executive directors and
the executive management team in accordance with the policies set by the
Board. They identify, evaluate and hedge financial risks in close co-operation
with the Group's operating units. Regular reports are circulated and reviewed
by executive directors.
Market risk
Foreign currency risk
Currency risk arises within entities in the Group when transactions are
denominated in foreign currencies. The Company is incorporated in Jersey
and the Group operates predominantly from Australia with operations in New
Zealand, USA, Asia (including Malaysia, Thailand and Singapore) and UK.
Entities in the Group regularly transact in currencies other than their
respective functional currencies ('foreign currencies'). The Group purchases
products in these countries and other European Union countries. Refer to
note 5 for the foreign exchange gain / loss recognised in the year.
The carrying amount of the Group's foreign currency denominated financial
assets and financial liabilities at the reporting date were as follows:
Assets Liabilities
2021 2020 2021 2020
Consolidated A$'000 A$'000 A$'000 A$'000
US dollars 107 121 - (49)
Pound sterling 1,655 996 - (1,261)
New Zealand dollars 1,539 3,479 (26) (330)
Singapore dollars 183 1,331 - (132)
Malaysian ringgit 140 174 - (89)
Russian ruble 185 47 - (37)
3,809 6,148 (26) (1,898)
======== ======== ======== =========
The Group had net assets denominated in foreign currencies of A$3,783,000
as at 30 June 2021 (2020: net assets of A$4,250,000). Based on this exposure,
had the Australian dollar weakened by 10% / strengthened by 10% (2020: weakened
by 10% / strengthened by 10%) against these foreign currencies with all
other variables held constant, the Group's foreign exchange loss before
tax for the year would have been A$378,000 lower / higher (2020: A$425,000
lower / higher). The percentage change is the expected overall volatility
of the significant currencies, which is based on management's assessment
of reasonable possible fluctuations taking into consideration movements
over the last 6 months each year and the spot rate at each reporting date.
Refer to note 5 for the actual foreign exchange gain or loss recognised
for the year.
Capital risk management
The Group's objectives when managing capital is to safeguard the Group's
ability to continue as a going concern, so that it can continue to provide
returns for shareholders and benefits for other stakeholders and to maintain
an optimal capital structure to reduce the cost of capital.
Capital, as detailed in the table below, is regarded as total equity, as
recognised in the balance sheet, plus net debt. Net debt is calculated as
total debt (including borrowings and lease liabilities) less cash and cash
equivalents. Consolidated
2021 2020
A$'000 A$'000
Lease liabilities 5,298 6,629
Borrowings - -
Less: Cash and cash equivalents (9,210) (6,660)
Net debt (3,912) (31)
--------- ---------
Equity 22,706 21,281
Capital 18,794 21,250
========= =========
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.
The capital risk management policy remains unchanged from the 30 June 2020
Annual Report.
Price risk
The Group is not exposed to any significant price risk.
Cash flow and fair value interest rate risk
Cash flow interest rate risk is the risk that the future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. Fair value interest rate risk is the risk that the fair value of
a financial instrument will fluctuate due to changes in market interest
rates.
The Group is not exposed to any significant cash flow interest rate risks
arising mainly from interest bearing deposits.
Credit risk
Credit risk refers to the risk that counterparty will default on its contractual
obligations resulting in financial loss to the Group. The major classes
of financial assets of the Group are bank deposits and cash held by merchant
provider. For bank deposits and merchant, the Group adopts the policy of
dealing only with high credit quality financial institutions and major banks.
The principal business of the Group is online cash sales.
The Group has adopted a lifetime expected loss allowance in estimating
expected credit losses to trade receivables through the use of a provisions
matrix using fixed rates of credit loss provisioning. These provisions are
considered representative across all customers of the Group based on recent
sales experience, historical collection rates and forward-looking information
that is available.
Generally, trade receivables are written off when there is no reasonable
expectation of recovery. Indicators of this include the failure of a debtor
to engage in a repayment plan, no active enforcement activity and a failure
to make contractual payments for a period greater than one year. See note
11 for details of the allowance made against trade receivables.
Concentration of credit risk
There are no significant concentrations of credit risk within the Group.
The credit risk on liquid funds is limited as the counterparties are banks
with high credit ratings.
Credit risk is managed by limiting the amount of credit exposure to any
single counter-party for cash deposits.
Liquidity risk
The Group manages liquidity risk by maintaining adequate cash reserves and
available borrowing facilities by continuously monitoring actual and forecast
cash flows and matching the maturity profiles of financial assets and liabilities.
Remaining contractual maturities
Trade payables and other financial liabilities mainly arise from the financing
of assets used in the Group's ongoing operations such as plant and equipment
and investments in working capital. These assets are considered in the Group's
overall liquidity risk.
The following tables detail the Group's remaining contractual maturity for
its financial instrument liabilities. The tables have been drawn up based
on the undiscounted cash flows of financial liabilities based on the earliest
date on which the financial liabilities are required to be paid. The tables
include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount
in the balance sheet.
Carrying
amount
as
Weighted included
average Total on
interest < 1 1-3 3-12 1-5 undiscounted balance
rate month months months years liability sheet
Consolidated -
2021 % A$'000 A$'000 A$'000 A$'000 A$'000 A$'000
Non-derivatives
Non-interest
bearing
Trade and other
payables - 11,044 1,248 2,012 - 14,304 14,304
Interest-bearing
-
variable
Lease liability 5.00% 172 517 1,331 4,835 6,855 5,298
Total
non-derivatives 11,216 1,765 3,343 4,835 21,159 19,602
-------- -------- -------- -------- -------------- ----------
Carrying
amount
as
Weighted included
average Total on
interest < 1 1-3 3-12 1-5 undiscounted balance
rate month months months years liability sheet
Consolidated -
2020 % A$'000 A$'000 A$'000 A$'000 A$'000 A$'000
Non-derivatives
Non-interest
bearing
Trade and other
payables - 12,877 5,733 510 (135) 18,985 18,985
Interest-bearing
-
variable
Lease liability 5.00% 158 475 1,250 5,673 7,556 6,629
Total
non-derivatives 13,035 6,208 1,760 5,538 26,541 25,614
-------- -------- -------- -------- -------------- ----------
The cash flows in the maturity analysis above are not expected to occur
significantly earlier than contractually disclosed above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect
their fair value. The carrying amounts of trade receivables and trade payables
are assumed to approximate their fair values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the
remaining contractual maturities at the current market interest rate that
is available for similar financial instruments. Also, there is no material
difference between the fair value of cash and cash equivalents and the carrying
amounts.
Note 25. Changes in liabilities arising from financing activities
Bank Lease
loans liability Total
Consolidated A$'000 A$'000 A$'000
Balance at 1 July 2019 5,200 20 5,220
Lease liability opening balance at 1/07/19 on
adoption of IFRS 16 - 1,724 1,724
Net cash used in financing activities (5,200) (1,163) (6,363)
Other changes - cash incentive - 1,026 1,026
Interest and finance charges paid / payable
on
lease liabilities (note 7) - 241 241
Acquisition of buildings and equipment -
right-of-use - 4,781 4,781
Balance at 30 June 2020 - 6,629 6,629
Net cash used in financing activities - (1,007) (1,007)
Lease receivable (sub-lease) - (564) (564)
Interest and finance charges paid / payable
on
lease liabilities (note 7) - 299 299
Other changes - (59) (59)
Balance at 30 June 2021 - 5,298 5,298
========= =========== =========
Note 26. 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:
Consolidated
2021 2020
A$'000 A$'000
Short-term employee benefits 2,213 2,108
Post-employment benefits 199 194
2,412 2,302
======== ========
Key management includes Directors (executives and non-executives) and key
heads of departments.
During the financial year ended 30 June 2021 A$1,968,000 (2020: A$6,323,000)
performance rights were granted to members of key management personnel under
share-based payments plans operated by the Group as disclosed in note 32.
Note 27. Remuneration of auditors
Services provided by the Company's auditors and network firms
During the year the Company (including its overseas subsidiaries) obtained
the following services from the Company's auditors at costs as detailed
below:
Consolidated
2021 2020
A$'000 A$'000
Fees payable to the Company's auditor and its associates
for the audit of the consolidated financial statements 202 201
Fees payable to the Company's auditor and its associates
for other services:
- the audit of the Company's subsidiaries 58 49
- taxation services 12 39
- other non-audit services 240 29
512 318
======== ========
Note 28. Contingent liabilities
During the year ended 30 June 2020, the Group issued bank guarantees through
its banker, Hong Kong and Shanghai Bank Corporation and Macquarie Bank,
in respect of lease obligations amounting A$777,000.
There was no contingent liabilities as at 30 June 2021.
Note 29. Related party transactions
Parent entity
MySale Group Plc is both the parent company of the Group and also the ultimate
parent entity of the group.
Subsidiaries
Interests in subsidiaries are set out in note 30.
The Group has utilised exemptions available to it to not report transactions
with its 100% or majority owned subsidiaries that are listed in note 30.
Key management personnel
Disclosures relating to key management personnel are set out in note 26.
Transactions with related parties
There were no transactions with related parties during the current and previous
financial year.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties
at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous
reporting date.
Ultimate Controlling party
The directors consider that the Group has no ultimate controlling party.
Note 30. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities
and results of the following subsidiaries in accordance with the accounting
policy described in note 2:
Parent Non-controlling interest
Principal place
of business Ownership Ownership Ownership Ownership
/ interest interest interest interest
Country of 2021 2020 2021 2020
Principal
Name incorporation activities % % % %
3 Fusionopolis
APAC Sale Link #02-08
Group Nexus@one-north, Trading
Pte. Ltd. Singapore company 100% 100% - -
1107 S Boyle
APAC Sales Street, Los
Group, Angeles, CA Trading
Inc. 90023, U.S.A company 100% 100% - -
The Old Mill,
APAC UK 9 Soar Lane,
Procurement Leicester, LE3 Trading
Co Limited 5DE, England company 100% 100% - -
The Old Mill,
9 Soar Lane,
APACSale Leicester, LE3 Trading
Limited 5DE, England company 100% 100% - -
Suite 2, Level
2, 122-126 Old
Pittwater Road,
BuyInvite Pty Brookvale, NSW Trading
Limited 2100, Australia company 100% 100% - -
The Old Mill,
Company 9 Soar Lane,
07640503 Leicester, LE3
Limited 5DE, England Dormant 100% 100% - -
25 Barrys Point
Road, Takapuna
NZ Sale Auckland 0632, Trading
Limited NZ company 100% 100% - -
Suite 2, Level
2, 122-126 Old
Pittwater Road,
OzSale Pty Brookvale, NSW Trading
Limited 2100, Australia company 100% 100% - -
29-3, Block
F2, Jalan
PJU1/42A,
Dataran Prima,
47301 Petaling
OzSale Sdn. Jaya, Selangor, Trading
Bhd. Malaysia company 100% 100% - -
Private Sale 3 Anson Road,
Asia Pacific #27-01 Springleaf
Pte Ltd Tower, Singapore Dormant 100% 100% - -
Suite 2, Level
Simply Sent 2, 122-126 Old
It Pty Pittwater Road,
Limited Brookvale, NSW
* 2100, Australia Dormant 51% 51% 49% 49%
Parent Non-controlling interest
Principal place
of business Ownership Ownership Ownership Ownership
/ interest interest interest interest
Country of 2021 2020 2021 2020
Principal
Name incorporation activities % % % %
3 Fusionopolis
SingSale Link #02-08
Pte. Nexus@one-north, Trading
Ltd. Singapore company 100% 100% - -
Suite 2, Level
Brand 2, 122-126 Old
Search Pittwater Road,
Pty Brookvale, NSW
Limited 2100, Australia Dormant 100% 100% - -
The Old Mill,
9 Soar Lane,
Chic Global Leicester, LE3
Limited 5DE, England Dormant 100% 100% - -
Suite 2, Level
BuyInvite 2, 122-126 Old
NZ Pittwater Road,
Pty Brookvale, NSW
Limited 2100, Australia Dormant 100% 100% - -
Click Suite 2, Level
Frenzy 2, 122-126 Old
Australia Pittwater Road,
Pty Brookvale, NSW
Ltd 2100, Australia Dormant 100% 100% - -
25 Barrys Point
Road, Takapuna
NZ Wine Auckland 0632,
Limited NZ Dormant 100% 100% - -
The Old Mill,
9 Soar Lane,
My Trade Leicester, LE3
Ltd 5DE, England Dormant 100% 100% - -
Hong Kong
Suite 2, Level
2, 122-126 Old
MySale Pittwater Road,
Group Brookvale, NSW
Limited 2100, Australia Dormant 100% 100% - -
Russia
Branch of Suite 2, Level
Click 2, 122-126 Old
Frenzy Pittwater Road,
Australia Brookvale, NSW Trading
Pty Ltd 2100, Australia company 100% 100% - -
* This subsidiary has been consolidated as the Group has control over the
partly owned.
Summarised financial information for subsidiaries that have non-controlling
interests has not been provided as they are not material to the Group.
Note 31. Earnings per share
Consolidated
2021 2020
A$'000 A$'000
Loss after income tax attributable to the owners of MySale
Group Plc (8,448) (3,560)
========= =========
Underlying EBITDA attributable to the owners of MySale
Group Plc 4,192 (2,731)
------- ---------
Number Number
Weighted average number of ordinary shares used in
calculating
basic earnings per share 879,350,126 665,483,037
Weighted average number of ordinary shares used in
calculating
diluted earnings per share 879,350,126 665,483,037
============= =============
Cents Cents
Basic earnings per share (0.96) (0.53)
Diluted earnings per share (0.96) (0.53)
Underlying EBITDA basic per share 0.48 (0.41)
59,122,964 (2020: 65,985,501) employee long-term incentives have been excluded
from the diluted earnings calculation as they are anti-dilutive.
Note 32. Share-based payments
The Company has two employee share plans: (i) the Executive Incentive Plan
('EIP') (option plan) and (ii) the Loan Share Plan ('LSP') (share plan).
In accordance with the terms of each plan 100% of the ordinary shares will
vest three years from grant date subject to the achievement of the Underlying
Earnings Before Interest, Tax, Depreciation and Amortisation ('EBITDA')
included in the Company's internal forecasts set by the Board in the year
of the grant.
Set out below are summaries of share and options granted under the plans
for Directors and employees:
Balance Balance
2021 at Expired/ at
the start the end
Exercise of forfeited/ of
Type Grant date Expiry date price the year Granted Exercised other the year
LSP 18/08/2015 18/08/2020 GBP0.51 941,961 - - (259,737) 682,224
EIP 18/08/2015 18/08/2020 GBP0.51 162,207 - - - 162,207
LSP 19/08/2016 19/08/2021 GBP0.65 849,538 - - (339,815) 509,723
EIP 19/08/2016 19/08/2021 GBP0.65 358,693 - - - 358,693
LSP 05/12/2019 05/12/2024 GBP0.05 7,077,638 - - (3,881,892) 3,195,746
LSP 05/12/2019 05/12/2024 GBP0.10 7,077,638 - - (3,881,892) 3,195,746
EIP 05/12/2019 05/12/2024 GBP0.05 9,460,227 - - - 9,460,227
EIP 05/12/2019 05/12/2024 GBP0.10 9,460,227 - - - 9,460,227
LSP 21/04/2020 21/04/2025 GBP0.05 15,298,686 - - (3,611,875) 11,686,811
LSP 21/04/2020 21/04/2025 GBP0.10 15,298,686 - - (3,611,875) 11,686,811
LSP 03/08/2020 03/08/2025 GBP0.10 - 4,413,063 - (2,206,532) 2,206,531
LSP 01/10/2020 01/10/2025 GBP0.15 - 11,518,018 - (5,000,000) 6,518,018
( 22,793,618
65,985,501 15,931,081 - ) 59,122,964
============ ============ =========== ============== ============
Balance Balance
2020 at Expired/ at
the start the end
Exercise of forfeited/ of
Type Grant date Expiry date price the year Granted Exercised other the year
LSP 18/08/2015 18/08/2020 GBP0.51 1,040,198 - - (98,237) 941,961
EIP 18/08/2015 18/08/2020 GBP0.51 162,207 - - - 162,207
LSP 19/08/2016 19/08/2021 GBP0.65 1,019,445 - - (169,907) 849,538
EIP 19/08/2016 19/08/2021 GBP0.65 358,693 - - - 358,693
LSP 05/12/2019 05/12/2024 GBP0.05 - 7,077,638 - - 7,077,638
LSP 05/12/2019 05/12/2024 GBP0.10 - 7,077,638 - - 7,077,638
EIP 05/12/2019 05/12/2024 GBP0.05 - 9,460,227 - - 9,460,227
EIP 05/12/2019 05/12/2024 GBP0.10 - 9,460,227 - - 9,460,227
LSP 21/04/2020 21/04/2025 GBP0.05 - 15,298,686 - - 15,298,686
LSP 21/04/2020 21/04/2025 GBP0.10 - 15,298,686 - - 15,298,686
2,580,543 63,673,102 - (268,144) 65,985,501
=========== ============ =========== ============ ============
The weighted average remaining contractual life of the share plan outstanding
at the end of the financial year was 3.6 years (2020: 4 years).
The share-based payment expense for the year was A$197,000 (2020: A$271,000).
For the options granted during the current financial year, the valuation
model inputs used to determine the fair value at the grant date, are as
follows:
Fair
Share price Exercise Expected Dividend Risk-free value
Expiry at grant interest at grant
Type Grant date date date price volatility yield rate date
GBP0.
LSP 03/08/2020 03/08/2025 GBP0.05665 10 75.00% - 0.14% GBP0.029
GBP0.
LSP 01/10/2020 01/10/2025 GBP0.06 15 75.00% - 0.09% GBP0.025
Note 33. Events after the reporting period
The consequences of the Coronavirus (COVID-19) pandemic are continuing to
be felt around the world, and its impact on the Group, if any, has been
reflected in its published results to date. Whilst it would appear that
control measures and related government policies, including the roll out
of the vaccine, have started to mitigate the risks caused by COVID-19, it
is not possible at this time to state whether the pandemic will have a subsequently
impact on the Group's operations going forward, especially the deadly Delta
outbreak that is currently being felt in Australia and across the world.
The Group has experience in the business continuation processes as and when
future lockdowns of the population occur, and these processes continue to
evolve to minimise any operational disruption. Management continues to monitor
the situation both in Australia and internationally, where the Group operates.
No other matter or circumstance has arisen since 30 June 2021 that has significantly
affected, or may significantly affect the Group's operations, the results
of those operations, or the Group's state of affairs in future financial
years.
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END
FR EADELEDXFFAA
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October 05, 2021 02:01 ET (06:01 GMT)
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