Share Name Share Symbol Market Type Share ISIN Share Description
Mysale Group 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
  -0.375p -0.34% 108.50p 108.50p 109.75p 108.50p 108.50p 108.50p 29,424 16:35:12
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Retailers 158.4 -0.9 -0.4 - 167.45

MySale Group PLC Preliminary Results

26/09/2017 7:01am

UK Regulatory (RNS & others)


TIDMMYSL

RNS Number : 7682R

MySale Group PLC

26 September 2017

MySale Group plc (AIM: MYSL) (the "the group"), the leading international online retailer, is pleased to announce its audited preliminary results for the year to 30 June 2017.

 
 Year to 30 June (A$ million)      FY17    FY16   change 
-------------------------------  ------  ------  ------- 
 
 Revenue                          268.4   252.3      +6% 
 Online Revenue(1)                238.7   217.9     +10% 
 Gross Profit                      76.0    66.7     +14% 
                                                    +191 
 Gross Margin                     28.3%   26.4%       bp 
 Underlying(2) EBITDA               8.7     5.5     +59% 
 Underlying profit before tax       3.3     1.1    +226% 
 Reported profit/(loss) before 
  tax                             (1.5)     0.2 
 Underlying basic earnings 
  per share (cents)                 2.5     0.4    +500% 
 

Financial highlights

   --      Underlying basic earnings per share increased 500% to 2.5 cents 
   --      Underlying EBITDA increased by 59% to A$8.7 million 
   --      Gross profit increased 14% to A$76 million, as gross margins increased 190bp 
   --      Online revenue grew by 10%, to A$238 million, driven by the growing active customer base 
   --      Group revenue grew 6% to A$268 million (CER(3) growth 9%) 
   --      Underlying profit before tax increased 226% to A$3.3 million (FY16: A$1.0 million) 
   --      Reported loss before tax of A$1.5 million (FY16: A$0.2 million) 

Strategic highlights

   --      Technology, supply and customer developments significantly strengthen our capability 
   --      Expansion of our marketplace platform 
   --      Creation of our Endless Aisle concept to leverage platform and supply-side strengths 
   --      Further long-term partnerships formed with notable global retail brands 
   --      M&A activity increased and Identity Direct acquired at end of the year 

Technology highlights

   --      Accelerated investment into our data-driven proprietary technology 
   --      New platform launched including a scalable and flexible marketplace 

to leverage the large customer database

   --      Single live view of all global inventory available to all websites 
   --      Launch of Ourpay a proprietary 'buy-now, pay-later' payments system 

Operational highlights

   --      Active customer base like-for-like increase of 11% to 0.9 million 
   --      Including Identity Direct active base now increased to 1.0 million 
   --      Strategic plan to increase own-buy inventory continues - now 17% of online revenue 
   --      Integration of Identity Direct business progressing ahead of schedule 

KPI's

   --      Continued focus on activating customers with higher lifetime-value 

o Average order value (AOV) stable at A$87

o Robust average revenue per active customer A$292

o Steady average frequency of 3.3x

   --      Mobile activity continues growing and represented 59% of orders 
   --      Returns rate remains at low level of only 5% 

Outlook

-- Good start to current year - revenue growth accelerating and underlying profitability growing strongly

-- Underlying EBITDA for the year expected to be at least in line with upper end of market expectations

Carl Jackson, Chief Executive Officer commented;

"We are very pleased with the group's progress during the year and the improved financial performance, which delivered significantly increased underlying EBITDA. Sustained focus on our strategic goals has delivered yet another year of growing revenue and, more importantly, increasing profitability.

"Our new partnerships are testament to the strength and quality of our international marketplace platform demonstrating further progress in our strategy of working with global brands and retailers to provide our customers with unrivalled value as well as the best possible choice and service. Our partners include some of the largest, most successful international fashion, sports and general retailers.

"There is a structural shift underway in how online and offline retail brands manage their inventory cycle with increased integration and efficiency key criteria. MySale's established international platform is uniquely placed to partner with these brands and deliver the integrated inventory solutions and new sales channels that they seek.

"Investment into our proprietary technology has accelerated and this year saw the launch of a brand new platform which will support all the group's activities, including marketplace, in the future. This enhanced, data-driven, platform transforms our opportunities with brands and customers. We have a fully customisable, integrated proposition for brands to seamlessly support all their needs. We have even greater data insights to our customers' needs and now they have access to our 'Endless Aisle' with an even greater choice of products at compelling discounted prices.

"The Endless Aisle combines our increasingly long tail of inventory, now over 300,000 SKU, with our new, single live view of that global inventory, to which all our websites are linked, providing increased customer choice and merchandising opportunities.

"We also launched Ourpay the group's proprietary 'buy-now, pay-later' payment solution. This further enhances our value proposition and initial experience suggests it is popular with our customers. We anticipate we will see further take-up within our own customer base and also have the potential strategic option to leverage Ourpay, as a standalone product, with others. We shall shortly launch a subscription-delivery model for customers which will be fully integrated to the Ourpay platform.

"We carried good momentum into this year and have a number of exciting strategic initiatives that will support our continued growth in revenue and profitability. This year has started well with revenue growth accelerating from last year and strong growth in underlying profitability. Whilst our peak trading period is still ahead of us we expect that underlying EBITDA for the year will be at least in line with the upper end of market expectations."

(1.) Online: the group's online web-based retail activities (A$238 million of total group revenue A$268 million)

(2.) Underlying: is the group's EBITDA, profit after tax expense or earnings per share calculated having excluded certain expenditure of a one-off, non-trading or non-cash nature in order to allow clearer understanding of the underlying performance of the year. Full details are contained within Notes 6, 7 and 27 to the financial statements. EBITDA: earnings before interest, taxation, depreciation and amortisation

(3.) CER: measure of annual growth based on constant exchange rates

Enquiries:

 
 MySale Group plc 
 Carl Jackson, Chief Executive Officer           +61 (0) 414 817 843 
 Graeme Burns, Corporate Development Director    +44 (0) 777 585 4516 
 
 
 Zeus Capital Limited (Nominated Adviser 
  & Joint Broker)                                +44 (0) 20 3829 5000 
 Giles Balleny, Corporate Finance 
  Benjamin Robertson, Corporate Broking 
 
 N+1 Singer (Joint Broker)                       +44 (0) 20 7496 3000 
 Mark Taylor 
 
 Maitland                                        +44 (0) 20 7379 5151 
 Dan Yea 
 

About MySale Group

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

The group provides a marketplace solution to brands offering both retail and flash-sale websites. The flash sales websites host time limited sales in each of its territories. These flash sales are focused on fashion, apparel, health, beauty and homeware categories and are predominantly undertaken on a consignment inventory basis. The retail websites operate in Australia and New Zealand and focus on similar product categories using mostly drop-shipped inventory.

Customers' shopping experiences are enhanced by the group's deployment of leading edge technology to ensure personalised and localised product offerings. Customer convenience has been at the heart of the group's technology development since the earliest days and now mobile commerce is the group's main sales channel.

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

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

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

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

Chairman's statement

Whilst the financial year 2015-16 was all about restoring the business to underlying profitability, this year our aim was to demonstrate that we could build on this as well as producing real step change improvements in our proprietary technology platform.

I am delighted to report a 59% improvement in underlying EBITDA to A$8.7milllion which was ahead of the market expectations at the beginning of the period. Furthermore we increased our technology investment from $4.0 million to $7.5 million which has allowed us to launch a significantly enhanced marketplace platform, an in-house payments solution ("OurPay") and multiple improvements in marketing automation.

In the last 12 months we have signed notable new brand partnerships, including gilt.com. Global brands and retailers recognise the strength of our international/contra-seasonal platform and our ability to support their inventory management and to connect them to new customers. They increasingly want to deal with a smaller number of regionally dominant partners with leading technology platforms. We are ideally placed to deliver this.

We have made no secret of the fact that strategic acquisitions are a core element of our growth strategy and we continue to refine our process and criteria in this regard. Essentially, we are targeting deals which can either widen the range of products which our existing customers are likely to want to buy or which grow our routes to market in our core geographies. Ideally both.

During the year, we acquired the trade and assets of Identity Direct in Australia and New Zealand. This has opened a new vertical for us in product personalisation; a sector we have been targeting for some time given its attractive margin structure, strong underlying growth and differentiated product set. It has also provided further evidence of our ability to integrate acquisitions onto our platform and add value through cost and revenue synergies.

We have started the current financial year very well and whilst there is much to accomplish both revenue and underlying profitability have grown strongly. Our plans for this year are ambitious and our new partnerships, product verticals and platform enhancements will support these growth plans.

Whilst we are very much a technology focussed business the group owes its success to the ability, intelligence and drive of the hundreds of team members working 24-7 in our global operations and I would like to place on record the board's appreciation of their exceptional hard work.

_____________________________

Iain McDonald

Chairman

25 September 2017

Review of operations by the Chief Executive Officer

MySale Group Plc ('the group') has made excellent progress in the year to 30 June 2017. Planned strategic initiatives have delivered another year of improved financial performance and positioned the group for further, profitable, growth.

The year's success was delivered by; our relentless focus on providing customers with exceptional value, choice and service and; our excellence in delivering unique sales channels and world-class inventory management to brand partners; whilst simultaneously leveraging the significant strength and efficiency of our proprietary technology platform and international logistics network.

The group's focus on customer engagement saw the active customer base grow 11% and in turn online revenue, which represents 90% of the group total, grew 10%, to A$238.7 million (FY16: A$217.9 million). Following the acquisition of Identity Direct, covered in more detail below, the group now has over 1 million active customers.

Total group revenue for the year rose 6% to A$268.4 million (FY16: A$252.3 million) which reflects the strong online growth referred to above, together with a planned reduction in lower margin offline revenue. The group's focus on growing gross profit has delivered an increase of 14% to A$76.0 million (FY16: A$66.7 million) which was underpinned by a 190 bp increase in gross margin to 28.3% (FY16: 26.4%).

 
 A$ m                        FY17                        FY17 Growth                  FY16 
               Revenue      Gross Profit     GP%    Revenue   Gross Profit   Revenue   Gross Profit    GP% 
            -------------  --------------  ------  --------  -------------  --------  -------------  ------ 
 Group             268.4            76.0    28.3%     +6%         +14%        252.3        66.7       26.4% 
----------  -------------  --------------  ------  --------  -------------  --------  -------------  ------ 
 ANZ               221.5            65.7    29.6%     +5%         +15%        210.7        57.1       27.1% 
 S-E Asia            33.8             8.1   23.9%     +7%         +7%         31.6         7.5        23.9% 
 ROW                 13.1             2.3   17.8%    +31%         +14%        10.0         2.1        20.5% 
 

This improved trading performance is driven primarily by the group's clear plan to prioritise the growth of gross profit and secure higher lifetime-value customers. Key elements of this plan include localised merchandising and pricing, increased proportion of own-buy inventory and reduced delivery promotions. The increased levels of revenue and gross profit combined with a carefully controlled cost base delivered a 59% increase in underlying EBITDA to A$8.7 million (FY16: A$5.5 million).

This plan was established in 2015 when the group re-focused the business on its core aims of providing exceptional value in branded products to customers and exceptional inventory management solutions to brand partners within the group's three core territories. The operational achievements and significantly improved financial performance of FY17 represent another step on the group's path of profitable growth, with further significant growth anticipated in the current financial year.

Total underlying operating expenses increased 10% to A$67.4 million (FY16: A$61.2 million) reflecting the increased activity and volumes of trade during the year. The group made a planned investment into additional staff members in key senior management and departments such as buying, merchandising and marketing in order to ensure that the choice and service we provide to customers is maintained as we grow. The same increases are not anticipated in future years and the group will be able to leverage its fixed cost base which represents around 56% of the total operating expenses.

During the period, and across all territories, the group continued to dedicate its marketing resources and spend, which was circa 7% of revenue, almost exclusively into measurable, digital channels to attract and engage both new and existing customers. Our ongoing communication programme has seen those loyal and engaged customers continue to spend with reliable frequency and with stable purchasing metrics.

During the year the group diversified the digital marketing spend, notably in Australia and New Zealand (ANZ), by increasing the emphasis of spend into customer re-engagement activity. The early results of this diversification were encouraging as marketing efficiency improved. This has led to a re-calibrated marketing plan for the entire group. From the beginning of the current financial year marketing objectives have been refocused based on these learnings, and improved data analysis capabilities, to better measure marketing costs and returns per purchase and buyer. Whilst early in this revised programme the initial results have been positive and further improvements in marketing efficiency are anticipated during the year.

Technology Development

During the year the group increased capital expenditure, as planned, in order to further develop its proprietary technology capabilities. An important phase of work reached a conclusion and saw the release of a new and enhanced version of the group's technology platform during the year. This new platform's functionality supports our key objectives of increasing revenue and decreasing costs with more efficiency.

This new, marketplace enabled, platform allows fuller integration across all the group's sales channels and to date all of the group's websites, other than the recently acquired Identity Direct, have migrated to this platform. The group now has a single, live view of global inventory and both 1P (owned) and 3P (consignment or drop-ship) products can be sold by any of our websites simultaneously. Similarly the platform allows a single live view of each customer and their individual journeys allowing us to better serve their preferences across all websites and mobile device apps. As always the mobile buyer is at the heart of our capabilities and this channel accounted for 59% of orders received in the past year.

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

The group has also continued to use its technology innovation for tactical improvements in the customer proposition to drive revenue, one example being the development of Ourpay, a 'buy-now, pay-later' programme. This instalment payment option helps customers manage their finances and has been shown to increase both the spend and the frequency of those customers accepted to the programme. This payment solution was developed in-house in order to deliver a more flexible, cost-efficient and integrated system, which is better suited to the group's requirements than that provided by third parties. The system automates all aspects of the programme including credit scoring and monitoring, an aspect of the programme where the group has adopted a conservative policy. The debtor balance associated with Ourpay was A$1.8 million at the year end and is anticipated to grow as transaction volumes increase.

The initial trials of Ourpay have been very positive. Customer's average spend increased 19% and the frequency of purchase increased by around 30%. Ourpay shall now be rolled out to all territories and websites where legislation currently allows. In addition we shall shortly launch a subscription-delivery model for customers which will be fully integrated to the Ourpay platform.

Brands and Strategic Partnerships

The group has secured a number of new brand partners during the last 12 months, the most notable being the launch of a strategic relationship with gilt.com, a US based online retailer which is part of The Hudson's Bay Company. This and other strategic partnerships have already provided significant additional product choice to customers in all the group's territories.

The partnership launched with Sports Direct with access to more than 150,000 products from their inventory is now operational and the group commenced live sales on its retail marketplace during the year. Good progress has been made. We have direct inventory feeds, tailored merchandising and volumes continue to grow.

Forging partnerships with flagship retail brands such as Gilt.com and Sports Direct is a strong endorsement of the group's capabilities in supporting brands in establishing new sales channels as well as in inventory management. The retail landscape is undergoing some structural change and increasingly large brands recognise the benefits that more integrated inventory partnerships can bring to their operations. The group's well established international network, flexible and scalable technology platform and resources in key territories means it is an ideal partner for international brands and retailers. Our platform allows us to customise our integration with any brand thus delivering a tailored solution to their requirements.

We have invested more time and funds into product selection during the year, ensuring customers have the best possible choice available and by the end of the year we had more than doubled listed SKU's to over 300,000. Nearly all of the increased product selection has come from relationships with 3P suppliers and thus the group does not take any inventory risk as the terms of business are on a consignment or dropship basis. In order that customers can easily find and navigate to their favourite brands and products the group delivers highly personalised experiences and communications to each customer.

Aligned with this materially increased product selection has been an expansion of the product categories in which we have excellent coverage. Refurbished technology is one such example of a category that the group has launched and which resonates strongly with our existing customer base. Finally, the acquisition of Identity Direct has brought significant licensing expertise and licensing relationships with global brands to the group and this is a revenue opportunity the group plans to develop further.

Marketplace

The group's new technology platform ensures that the retail and flash websites operate on the same platform which provides numerous advantages including: better sharing of data; more efficient use of resources; greater visibility of inventory; and reduced buying administration. This will allow the group to substantially increase the range of products available via our websites, particularly 3P inventory, whilst minimising variable costs.

This platform facilitates the group's marketplace and allows the integration of all websites directly with brands and retailers, whether that be as part of supporting an inventory clearance or providing a brand with a new retail channel. It also has created the group's Endless Aisle concept.

The group has always offered a wide range of products but the marketplace development now means that this range shall be significantly expanded and as we now have a live feed of global inventory to all websites, there is an opportunity to extend the length of time products are available and merchandised to customers - our Endless Aisle. Importantly the expansion of this very long tail of product inventory will be driven by 3P vendor relationships which incur limited marginal cost to the group.

The retail websites within the group's marketplace, predominantly operate on a 3P supplier drop-ship basis and serve the product verticals of sports (dealsdirect), home (oo), gifting (topbuy) and personalised goods (Identity Direct) and are founded on the acquisitions undertaken in ANZ over the last two years. The experience gained during the successful integration and launch of these sites will serve the group well as further verticals are added in the future. As over 80% of our revenues are derived from 3P product listings the group has a relatively light working capital requirement and further reductions in this requirement are targeted in the future.

The creation of the retail marketplace platform represents a step change in the potential addressable audience and in future revenue opportunities of the group. Designed with mobile commerce at its heart and to be simple and intuitive for vendors to use, this platform will further support our brand partners and their sales ambitions. Increasingly brands use marketplace solutions to support their international sales as it provides local knowledge, existing audiences, and a cost-effective launch in a new territory.

Operations

In FY15 the group began implementing a strategy to increase the proportion of inventory that is purchased outright as 'own-buy' (1P), rather than on a consignment basis (3P) and during this year 1P goods increased to 17% of orders, consistent with that strategy. Whilst the vast majority of goods sold are still done so on a consignment or drop-ship basis, this 1P strategy supports deeper relationships with brand partners, slightly higher gross margins and wider product selection for customers. 1P activity is focused on staple, branded goods.

During the year the group's highly efficient platform processed record numbers of transactions. The volumes are remarkable and underline the efficient processes and systems that the group has in place to support brands and serve customers; on average more than 20,000 new products were launched daily and 180,000 digital images were created or edited each month. In the year 2.9 million orders were processed and 12 million units shipped which was only possible due to high levels of automation and streamlined workflows. The strength and capability of this platform will be leveraged to further improve efficiency in coming years as our volumes increase further.

The combination of the group's high quality sourcing, compelling consumer value, product selection and reliable service means that returns remain at industry leading levels of only 5% overall.

Investment in the development of the group's capabilities continues and this year saw a number of key senior hires strengthen the executive team and also enhancement of staff within our marketing, data science and merchandising teams.

Acquisition of Identity Direct

The group acquired the business of Identity Direct, in ANZ, during the fourth quarter of the financial year. Identity Direct is a retailer of personalised products with strong licensing relationships, particularly with entertainment brands, such as Disney and Marvel. In relation to the group it is a relatively small business, with annual revenues of circa A$10 million. The long term commercial opportunity in this complementary vertical is very attractive and generates high gross margin, in excess of 60%. The products are strong in childrens and sports categories which fits well with existing MySale customer base. There are good opportunities to leverage efficiencies by deploying the group's scale and platform and also growing revenue with enhanced marketing and cross selling between the two customer bases. The group believes that development of its product licensing capability will lead to significant opportunities to generate incremental revenue in the medium term.

The integration of the Identity Direct business is ahead of plan and, with property and resources now rationalised, cost savings and synergies will accrue to the group in the current year. Operational integration will be complete shortly allowing the group to capitalise on the fourth calendar quarter when Identity Direct generates around 60% of its annual revenues. This is the second integration to our platform undertaken in the last two years and the positive results give the group confidence it can successfully execute further, larger integrations in the future.

Australia & New Zealand (ANZ)

Within this operating territory the group has continued to successfully implement its strategic initiatives and delivered much improved gross profit, up by 15% to A$65.6 million (FY16: A$57.1 million) and gross margin to 29.6% (FY16: 27.1%) whilst also growing revenue by 5% to A$221.5 million (FY16: 210.7 million). The significant increase in AOV to c. $85 achieved in FY16 has been maintained by continued focus on a localised offer with strong merchandising, pricing and overall ANZ customer proposition.

As noted above the group's nascent retail marketplace was launched in ANZ at the end of the prior year and is an opportunity to significantly increase the group's addressable market in the region. To date the group has already seen in excess of 500 suppliers join this marketplace. The first flagship retailer to join this marketplace, as a 3P vendor, was Sports Direct and they are now fully integrated to the group's platform allowing our ANZ team to efficiently market and merchandise the 150,000 products available. The sporting goods market in ANZ is estimated to be worth in excess of A$3 billion annually and the strong value offer provided by Sports Direct combined with group's experience in connecting customers with brands is anticipated to create a compelling proposition in this vertical in the medium term.

The group is one of the pre-eminent online, off-price retailers in ANZ and has further attractive growth possibilities due to both the lower levels of internet penetration, in comparison to territories such as the United Kingdom and the USA, and this region's relative lack of off-price retailers. In ANZ the group has a small network of physical outlets which is used both to clear the group's own surplus inventory and test brands and products in that offline channel.

The group is actively looking to expand further the breadth and depth of our online and offline sales channels in this region in order to fully leverage our customer base, physical resource, buying power and expertise.

South-East Asia

During the period South-East Asia had revenue growth of 7% to A$33.8 million (FY16: A$31.6 million) and a corresponding 7% increase in gross profit to A$8.1 million (FY16: A$7.5 million). On a CER basis the underlying revenue growth was 11%. The continued growth in revenue and profitability has been driven by the group's localisation plan which ensures that merchandising, pricing, payment and shipping solutions are all tailored to the needs of local consumers.

Here the strategy has been to grow the active customer base, so acquisition marketing is a priority, to build gross profitability and then leverage this increasing scale to use resources more efficiently and achieve lower shipping rates. With a more profitable local model now established and first mover advantage South-East Asia is an important element of the group's long-term profitable growth.

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

Rest of World

This territory comprises the group's operations within the United Kingdom, which trade predominately under the Cocosa brand, relaunched in FY15, which provides customers with compelling value in premium branded products.

The United Kingdom had a good year, as revenue increased by more than 30%, thereby achieving revenue of A$13.1 million (FY16: A$10.0 million). On a CER basis the underlying revenue growth was 59%.This growth was underpinned by increased numbers of active customers which is our key objective in a newer territory. Gross margin was lower than the previous year as the group used products and pricing as promotional tools to develop the customer base. This form of promotion is used by the group much more in an early stage territory than in established territories.

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

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

Outlook

The group had an excellent FY17 with significantly improved financial performance and great progress against our strategic goals. Increasing numbers of active customers are driving revenue and efficiency forward.

We have a unique set of brand partners which in turn means that we are able to offer our loyal customers access to a fantastic range of goods and products. When this is combined with our flexible and efficient business platform it gives customers an easy-to-use, compelling value, shopping experience.

The group has carried good momentum into the current year and built on the excellent foundations and initiatives put in place last year. This year has started well with revenue growth accelerating from last year and strong growth in underlying profitability. Whilst our peak trading period is still ahead of us the board has confidence in the current year's prospects and expects that underlying EBITDA for the year will be at least in line with the upper end of market expectations.

_____________________________

Carl Jackson

Chief Executive Officer

25 September 2017

Financial review by the Chief Financial Officer

Revenue and Gross Profit

For the year ended 30 June 2017 group revenue increased by 6% to A$268.4 million (FY16: A$252.3 million) and gross profit increased faster, by 14%, to reach A$76.0 million (FY16: A$66.7 million). This improved performance came as a direct result of the strategic plan implemented by the group in 2015.

On a constant currency basis the growth rates of revenue and gross profit were higher, at 9% and 16% respectively, reflecting the strengthening of the group's reporting currency AUD during the year.

Operating Expenses

The increase in activity and gross profit led underlying operating expenses to increase 10% to A$67.4 million (FY16: A$61.2 million) in the period. During the year the group increased staff resources in a number of operational departments to support further growth and ensure the group delivers outstanding service to its customers. This increase included a number of key hires within the senior management team.

Profit/Loss before Tax

The underlying profit before tax for the year is A$3.3 million (FY16: A$1.1 million) and the reported loss before tax for the period is A$1.5 million (FY16: A$0.2 million profit). This reported loss is after the inclusion of a number of one-off and non-cash items which are shown in more detail in note 6 to the financial statements in order to provide greater insight as to the underlying profitability of the group.

Profit/Loss after Tax and earnings per share

The underlying profit after tax for the year is A$3.9 million (FY16: A$0.6 million) and the reported loss after tax for the period is $A1.0 million (FY16: A$0.2 million). This reported loss is after the inclusion of a number of one-off and non-cash items which are shown in more detail in note 6 to the financial statements in order to provide greater insight as to the underlying profitability of the group.

Note 27 shows the detailed calculations of basic earnings per share for the financial year which increased by 500% to 2.5 cents per share (FY16: 0.4 cents) on an underlying basis and was 0.6 cents loss (FY16: 0.1 cents loss) on a reported basis.

Taxation

The group has recorded a tax benefit of A$0.6 million for the year (FY16: tax expense of A$0.4 million) which diverges from the group's long term guidance of an effective tax rate of approximately 30%. This divergence arises due to various tax adjustments and timing differences. Full details are provided in note 9 to the financial statements. The group has total tax losses of A$30 million (FY16: A$31 million) with the majority located in Australia. The entire tax loss has been recognised with the provision of a deferred tax asset of A$10.5 million (FY16: A$10.3 million).

Balance Sheet, Cash and Working Capital

The group's closing cash balance was A$19.0 million (FY16: A$34.0 million) and the net cash balance was A$8.9 million (FY16: A$27.5 million).

The closing cash balance reflects a number of significant working capital outflows which occurred towards the end of the financial year which are temporary in nature and will reverse in the following period. The group's strategic plan allows for selective investment into inventory balances and other working capital deployments to ensure the group is able to take advantage of commercially beneficial opportunities. The group anticipates that working capital balances will normally lie between 1-3% of annual revenue.

Capital expenditure increased, as planned, as the group invested principally in the development of its proprietary technology platform together with expenditure related to property and equipment upgrades. Total capital expenditure was A$8.5 million (FY16: A$4.0 million).

During the period the group's acquisition activity was focused around the purchase of Identity Direct, a personalisation business, for consideration of A$2.9 million.

Banking Facilities

The group has significant cash balances, held principally with HSBC with whom the group currently has trade finance multi option debt facilities of A$13.1 million. In addition the group has finance facilities of A$0.2 million with ANZ Bank. All facilities are renewed on an annual basis.

Underlying Basis

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

 
 A$ million                                    FY17    FY16 
 Reported EBITDA                                3.8     4.6 
 
 Share based payments                           1.1     0.4 
 Discontinued activities                        0.3     0.3 
 One-off costs                                  2.4     2.0 
 Unrealised foreign exchange gain / (loss)      1.0   (1.8) 
                                                4.8     0.9 
 Underlying EBITDA                              8.7     5.5 
 
 Depreciation & Amortisation                    5.3     4.4 
 Net interest expense                           0.1   (0.0) 
 Underlying profit before tax                   3.3     1.1 
                                             ------  ------ 
 Reported profit / (loss) before tax          (1.5)     0.2 
                                             ======  ====== 
 

Included within one-off items acquisition expenses, post-acquisition reorganisation costs, charges arising from system migration and IPO costs.

Key Performance Indicators

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

_____________________________

Andrew Dingle

Chief Financial Officer

25 September 2017

 
                                                                        Note       2017         2016 
                                                                                  A$'000       A$'000 
 
 Revenue 
  Revenue from sale of goods    4  268,387    252,289 
  Cost of sale of goods          (192,344)  (185,633) 
 
  Gross profit                      76,043     66,656 
                                 ---------  --------- 
Other operating (loss)/gains, net    5(1,334)  2,173 
 
 Finance income                            105    125 
 Finance costs                        7  (223)   (97) 
 Finance (costs)/income, net             (118)     28 
Expenses 
 Selling and distribution expenses      (44,040)  (37,460) 
 Administration expenses                (32,109)  (31,126) 
 Share of loss of joint venture                -     (104) 
                                        --------  -------- 
(Loss)/profit before income tax benefit/(expense)      (1,558)  167 
Income tax benefit/(expense)    9576  (364) 
                                  ---  ----- 
Loss after income tax benefit/(expense) for the year      (982)  (197) 
Other comprehensive income 
 
 Items that may be reclassified subsequently to profit 
  or loss 
 Net change in the fair value of cash flow hedges taken 
  to equity, net of tax                                    23      259  (1,068) 
 Foreign currency translation                              23  (1,751)  (2,161) 
                                                               -------  ------- 
Other comprehensive income for the year, net of tax      (1,492)  (3,229) 
                                                          -------  ------- 
Total comprehensive income for the year      (2,474)  (3,426) 
                                              =======  ======= 
Loss for the year is attributable to: 
 Non-controlling interest                       -   (20) 
 Owners of MySale Group Plc                 (982)  (177) 
                                            -----  ----- 
 
                                            (982)  (197) 
                                            =====  ===== 
Total comprehensive income for the year is attributable 
  to: 
 Non-controlling interest                                           -     (20) 
 Owners of MySale Group Plc                                   (2,474)  (3,406) 
 
                                                              (2,474)  (3,426) 
                                                              =======  ======= 
                                  Cents   Cents 
 
 Basic earnings per share      27  (0.65)  (0.12) 
 Diluted earnings per share    27  (0.65)  (0.12) 
                                                        Note     2017      2016 
                                                                 A$'000    A$'000 
 
  Assets 
 
  Current assets 
  Cash and cash equivalents                                10     19,027      34,005 
  Trade and other receivables                              11     16,951       9,058 
  Inventories                                              12     38,042      35,473 
  Other                                                    13      4,949       7,973 
  Total current assets                                            78,969      86,509 
                                                                --------  ---------- 
 
  Non-current assets 
  Property, plant and equipment                            14      2,711       2,226 
  Intangibles                                              15     35,572      29,765 
  Deferred tax                                             16     10,544      10,295 
  Total non-current assets                                        48,827      42,286 
                                                                --------  ---------- 
 
  Total assets                                                   127,796     128,795 
                                                                --------  ---------- 
Liabilities 
 
 Current liabilities 
 Trade and other payables            17  28,586  29,548 
 Borrowings                          18  10,014   6,476 
 Derivative financial instruments           788   1,047 
 Income tax payable                         193   1,104 
 Provisions                          19   2,283   2,163 
 Deferred revenue                        10,222  11,677 
 Total current liabilities               52,086  52,015 
                                         ------  ------ 
 
 Non-current liabilities 
 Borrowings                          20     143       - 
 Provisions                          21     332     368 
 Total non-current liabilities              475     368 
                                         ------  ------ 
 
 Total liabilities                       52,561  52,383 
                                         ------  ------ 
Net assets      75,235  76,412 
                 ======  ====== 
Equity 
 Share premium account                                      306,363    306,363 
 Other reserves                                       23  (125,958)  (125,763) 
 Accumulated losses                                       (105,150)  (104,168) 
 Equity attributable to the owners of MySale Group 
  Plc                                                        75,255     76,432 
 Non-controlling interests                                     (20)       (20) 
 
 Total equity                                                75,235     76,412 
                                                          =========  ========= 
The financial statements of MySale Group Plc (company number 115584) were 
 approved by the Board of Directors and authorised for issue on 25 September 
 2017. They were signed on its behalf by: 
 
 
 ___________________________ ___________________________ 
 Carl Jackson Andrew Dingle 
 Director Director 
                   Share 
                   premium     Other    Accumulated  Non-controlling 
                                                                        Total 
                   account   reserves     losses        interest       equity 
                   A$'000     A$'000      A$'000         A$'000        A$'000 
 
 Balance at 1 
  July 2015         306,363  (122,931)    (103,991)                -     79,441 
 
 Loss after 
  income tax 
  expense 
  for the year            -          -        (177)             (20)      (197) 
 Other 
  comprehensive 
  income for 
  the year, net 
  of tax                  -    (3,229)            -                -    (3,229) 
 
 Total 
  comprehensive 
  income for 
  the year                -    (3,229)        (177)             (20)    (3,426) 
 
 Transactions 
 with owners in 
 their capacity 
 as owners: 
 Share-based 
  payments (note 
  23)                     -        397            -                -        397 
 
 Balance at 30 
  June 2016         306,363  (125,763)    (104,168)             (20)     76,412 
                  =========  =========  ===========  ===============  ========= 
                    Share 
                    premium     Other    Accumulated  Non-controlling 
                                                                         Total 
                    account   reserves     losses        interest       equity 
                    A$'000     A$'000      A$'000         A$'000        A$'000 
 
  Balance at 1 
   July 2016         306,363  (125,763)    (104,168)             (20)     76,412 
 
  Loss after 
   income tax 
   benefit 
   for the year            -          -        (982)                -      (982) 
  Other 
   comprehensive 
   income for 
   the year, net 
   of tax                  -    (1,492)            -                -    (1,492) 
 
  Total 
   comprehensive 
   income for 
   the year                -    (1,492)        (982)                -    (2,474) 
 
  Transactions 
  with owners in 
  their capacity 
  as owners: 
  Share-based 
   payments (note 
   23)                     -      1,297            -                -      1,297 
 
  Balance at 30 
   June 2017         306,363  (125,958)    (105,150)             (20)     75,235 
                   =========  =========  ===========  ===============  ========= 
                                                          Note       2017       2016 
                                                                     A$'000     A$'000 
 
  Cash flows from operating activities 
  (Loss)/profit before income tax benefit/(expense) 
   for the year                                                       (1,558)         167 
 
  Adjustments for: 
  Depreciation and amortisation                                         5,275       4,383 
  Net loss/(gain) on disposal of property, plant and 
   equipment                                                             (15)          30 
  Share of loss - joint ventures                                            -         104 
  Interest income                                                       (105)       (125) 
  Interest expense                                                        223          97 
 
                                                                        3,820       4,656 
 
  Change in operating assets and liabilities: 
  Decrease/(increase) in trade and other receivables                  (7,893)      14,167 
  Increase in inventories                                             (2,529)    (17,593) 
  Decrease/(increase) in other operating assets                         3,190     (3,153) 
  Increase/(decrease) in trade and other payables                     (1,167)         155 
  Increase in other provisions                                          1,207         486 
  (Decrease)/increase in deferred revenue                             (1,455)         530 
 
                                                                      (4,827)       (752) 
 
  Interest received                                                       105         125 
  Interest paid                                                         (223)        (97) 
  Income taxes (paid)/refunded                                          (575)         832 
 
  Net cash from/(used in) operating activities                        (5,520)         108 
                                                                     --------  ---------- 
Cash flows from investing activities 
 Payment for purchase of business, net of cash acquired          (3,090)  (5,300) 
 Payments for property, plant and equipment                 14   (1,184)    (782) 
 Payments for intangibles                                   15   (7,308)  (3,248) 
 Payments for security deposits                                        -    (120) 
 Proceeds from disposal of property, plant and equipment              68      153 
 Proceeds from disposal of intangibles                                 -        8 
 Proceeds from release of security deposits                          103        - 
 
 Net cash used in investing activities                          (11,411)  (9,289) 
                                                                --------  ------- 
Cash flows from financing activities 
 Proceeds from borrowings                   13,234    9,089 
 Repayment of borrowings                   (9,671)  (3,775) 
 Repayments of leases                         (28)     (91) 
 Additional lease finance                      146        - 
 
 Net cash from financing activities          3,681    5,223 
                                           -------  ------- 
Net decrease in cash and cash equivalents                    (13,250)  (3,958) 
 Cash and cash equivalents at the beginning of the 
  financial year                                                34,005   39,853 
 Effects of exchange rate changes on cash and cash 
  equivalents                                                  (1,728)  (1,890) 
 
 Cash and cash equivalents at the end of the financial 
  year                                                    10    19,027   34,005 
                                                              ========  ======= 
Note 1. General information 
 
 MySale Group Plc is a group consisting of MySale Group Plc (the 'company' 
 or 'parent entity') and its subsidiaries (the 'group'). The financial statements 
 of the group, in line with the location of the majority of the group's operations 
 and customers, are presented in Australian dollars and generally rounded 
 to the nearest thousand. 
 The principal business of the group is the operating of online shopping 
 outlets for consumer goods like ladies, men and children's fashion clothing, 
 accessories, beauty and homeware items. 
 
 MySale Group Plc is a public company, limited by shares, listed on the AIM 
 (Alternate Investment Market), a sub-market of the London Stock Exchange. 
 The company is incorporated and registered under the Companies (Jersey) 
 Law 1991. The company is domiciled in Australia. 
 
 The registered office of the company is Ogier House, The Esplanade, St. 
 Helier, JE4 9WG, Jersey and principal place of business is at Unit 5, 111 
 Old Pittwater Road, Brookvale, NSW 2100, Australia. 
 
 The financial statements were authorised for issue, in accordance with a 
 resolution of directors, on 25 September 2017. The directors have the power 
 to amend and reissue the financial statements. 
 
 

Note 2. Significant accounting policies

Basis of preparation

This condensed consolidated financial information for the year ended 30 June 2017 has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards as adopted by the European Union ("Adopted IFRSs"), IFRS IC Interpretations and the Companies (Jersey) Law 1991.

The financial information contained in this preliminary announcement for the years ended 30 June 2017 and 30 June 2016 does not comprise the group's statutory financial statements within the meaning of Companies (Jersey) Law 1991. Statutory accounts for the year ended 30 June 2017 will be filed with the Jersey Companies Registry in due course. The auditors' report on the statutory accounts for each of the years ended 30 June 2017 and 30 June 2016 is unqualified, does not draw attention to any matters by way of emphasis and does not contain any statement under any matters that are required to be reported by exception under Companies (Jersey) Law 1991.

Going concern

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

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

Changes to accounting standards

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

 
Note 3. Critical accounting judgements, estimates and assumptions 
 
 The preparation of the financial statements requires management to make 
 judgements, estimates and assumptions that affect the reported amounts in 
 the financial statements. Management continually evaluates its judgements 
 and estimates in relation to assets, liabilities, contingent liabilities, 
 revenue and expenses. Management bases its judgements, estimates and assumptions 
 on historical experience and on other various factors, including expectations 
 of future events, management believes to be reasonable under the circumstances. 
 The resulting accounting judgements and estimates will seldom equal the 
 related actual results. The judgements, estimates and assumptions that have 
 a significant risk of causing a material adjustment to the carrying amounts 
 of assets and liabilities (refer to the respective notes) within the next 
 financial year are discussed below. 
------------------------------------------------------------------------------------------------ 
Provision for obsolete and slow moving inventories 
 The provision for obsolete and slow moving inventories assessment requires 
 a degree of estimation and judgement. The level of the provision is assessed 
 by taking into account the recent sales experience, the ageing of inventories 
 and other factors that affect inventory obsolescence. 
Estimation of useful lives of assets 
 The group determines the estimated useful lives and related depreciation 
 and amortisation charges for its property, plant and equipment and finite 
 life intangible assets. The useful lives could change significantly as a 
 result of technical innovations or some other event. The depreciation and 
 amortisation charge will increase where the useful lives are less than previously 
 estimated lives, or technically obsolete or non-strategic assets that have 
 been abandoned or sold will be written off or written down. 
Goodwill 
 The group tests annually, or more frequently if events or changes in circumstances 
 indicate impairment, whether goodwill has suffered any impairment, in accordance 
 with the accounting policy stated in note 2. The recoverable amounts of 
 cash-generating units have been determined based on value-in-use calculations. 
 These calculations require the use of assumptions, including estimated discount 
 rates based on the current cost of capital and growth rates of the estimated 
 future cash flows. No impairment charge was required in 2017 (2016: A$nil). 
Impairment of non-financial assets 
 The group assesses impairment of non-financial assets at each reporting 
 date by evaluating conditions specific to the group and to the particular 
 asset that may lead to impairment. If an impairment trigger exists, the 
 recoverable amount of the asset is determined. This involves fair value 
 less costs of disposal or value-in-use calculations, which incorporate a 
 number of key estimates and assumptions. 
Income tax 
 The group is subject to income taxes in the jurisdictions in which it operates. 
 Significant judgement is required in determining the provision for income 
 tax. There are many transactions and calculations undertaken during the 
 ordinary course of business for which the ultimate tax determination is 
 uncertain. The group recognises liabilities for anticipated tax audit issues 
 based on the group's current understanding of the tax law. Where the final 
 tax outcome of these matters is different from the carrying amounts, such 
 differences will impact the current and deferred tax provisions in the period 
 in which such determination is made. 
Recovery of deferred tax assets 
 Deferred tax assets are recognised for deductible temporary differences 
 only if the group considers it is probable that future taxable amounts will 
 be available to utilise those temporary differences and losses. 
Note 4. Operating segments 
 
 Identification of reportable operating segments 
 The group's operating segments are determined based on the internal reports 
 that are reviewed and used by the Board of Directors (being the Chief Operating 
 Decision Makers ('CODM')) in assessing performance and in determining the 
 allocation of resources. 
The CODM reviews revenue and gross profit by reportable segments, being 
 geographical regions. The accounting policies adopted for internal reporting 
 to the CODM are consistent with those adopted in these financial statements. 
The group operates separate websites in each country that it sells goods 
 in. Revenue from external customers is attributed to each country based 
 on the activity on that countries website. Similar types of goods are sold 
 in all segments. The group's operations are unaffected by seasonality. 
Intersegment transactions 
 Intersegment transactions were made at market rates and are eliminated on 
 consolidation. 
Segment assets and liabilities 
 Assets and liabilities are managed on a group basis. The CODM does not regularly 
 review any asset or liability information by segment and, accordingly there 
 is no separate segment information. Refer to the balance sheet for group 
 assets and liabilities. 
Major customers 
 During the year ended 30 June 2017 there were no major customers (2016: 
 none). A customer is considered major if its revenues are 10% or more of 
 the group's revenue. 
Operating segment information 
                                       Australia               Rest of 
                                          and      South-East    the 
                                      New Zealand     Asia      world    Total 
 - 2017                                 A$'000       A$'000    A$'000    A$'000 
 
 Revenue 
 Sales to external customers              221,451      33,806   13,130   268,387 
 Total revenue                            221,451      33,806   13,130   268,387 
                                      -----------  ----------  -------  -------- 
 
 Gross profit                              65,662       8,058    2,323    76,043 
                                      -----------  ----------  ------- 
 Other operating (loss)/gains, net                                       (1,334) 
 Selling and distribution expenses                                      (44,040) 
 Administration expenses                                                (32,109) 
 Finance income                                                              105 
 Finance costs                                                             (223) 
 Loss before income tax benefit                                          (1,558) 
 Income tax benefit                                                          576 
                                                                        -------- 
 Loss after income tax benefit                                             (982) 
                                                                        -------- 
                                      Australia               Rest of 
                                          and      South-East    the 
                                      New Zealand     Asia      World    Total 
 - 2016                                 A$'000       A$'000    A$'000    A$'000 
 
 Revenue 
 Sales to external customers              210,710      31,590    9,989   252,289 
 Total revenue                            210,710      31,590    9,989   252,289 
                                      -----------  ----------  -------  -------- 
 
 Gross profit                              57,060       7,546    2,050    66,656 
                                      -----------  ----------  ------- 
 Other operating gains, net                                                2,173 
 Selling and distribution expenses                                      (37,460) 
 Administration expenses                                                (31,126) 
 Finance income                                                              125 
 Finance costs                                                              (97) 
 Share of loss of joint venture                                            (104) 
 Profit before income tax expense                                            167 
 Income tax expense                                                        (364) 
                                                                        -------- 
 Loss after income tax expense                                             (197) 
                                                                        -------- 
Note 5. Other operating (loss)/gains, net 
                                                           2017     2016 
                                                          A$'000   A$'000 
 
 Net foreign exchange (loss)/gain                         (1,425)   2,177 
 Net gain on disposal of property, plant and equipment         15      19 
 Other income/(expense)                                        76    (23) 
 
 Other operating (loss)/gains, net                        (1,334)   2,173 
                                                          =======  ====== 
Note 6. EBITDA reconciliation (earnings before interest, taxation, depreciation 
 and amortisation) 
                                         2017     2016 
                                        A$'000   A$'000 
 
 EBITDA reconciliation 
 (Loss)/profit before income tax        (1,558)     167 
 Add: Share of loss of joint venture          -     104 
 Less: Interest income                    (105)   (125) 
 Add: Interest expense                      223      97 
 Add: Depreciation and amortisation       5,275   4,383 
 
 EBITDA                                   3,835   4,626 
                                        =======  ====== 
Underlying EBITDA represents EBITDA adjusted for one-off, non-trading items. 
                                                                 2017    2016 
                                                                 A$'000  A$'000 
 Underlying EBITDA reconciliation 
 EBITDA                                                           3,835    4,626 
 Share-based payments                                             1,132      397 
 Reorganisation and discontinued operations                         320      265 
 One-off costs of non-trading, non-recurring nature including 
  IPO and acquisition expenses                                    2,434    1,997 
 Unrealised foreign exchange loss/(gain)                            953  (1,819) 
                                                                 ------  ------- 
 Total one-off, non-trading items                                 4,839      840 
 
 Underlying EBITDA                                                8,674    5,466 
                                                                 ======  ======= 
Note 7. Expenses 
                                                                  2017     2016 
                                                                 A$'000   A$'000 
 
 (Loss)/profit before income tax includes the following 
  specific expenses: 
 
 Sales, distribution and administration expenses: 
 Staff costs (note 8)                                             34,254   29,716 
 Marketing expenses                                               18,119   16,714 
 Occupancy costs                                                   5,575    5,617 
 Merchant and other professional fees                              5,764    5,936 
 Depreciation and amortisation                                     5,275    4,383 
 Other administration costs                                        7,162    6,220 
 
 Total sales, distribution and administration expenses            76,149   68,586 
 
 Underlying operating expenses 
 Total sales, distribution and administration expenses            76,149   68,586 
 Add: Realised foreign currency loss/(gain)                          472    (359) 
 Add: Other (expense)/income                                        (76)       23 
 Add: Gain on disposal of fixed assets                              (15)     (19) 
 Less: Share-based payments, one-off costs and reorganisation 
  and discontinued operations                                    (3,886)  (2,559) 
 Less: Depreciation and amortisation                             (5,275)  (4,383) 
 Less: Share of loss in joint venture                                  -    (104) 
                                                                 -------  ------- 
 
 Total underlying operating expenses                              67,369   61,185 
                                                                 ------- 
 
 
 Finance costs 
 Interest and finance charges paid/payable                           223       97 
 
 Occupancy costs include: 
 Minimum operating lease payments                                  4,568    4,372 
 
 Cost of inventories recognised as an expense in 'cost 
  of sales' in profit or loss                                    152,426  149,297 
                                                                 -------  ------- 
Note 8. Staff costs 
                                       2017    2016 
                                      A$'000  A$'000 
 
 Aggregate remuneration: 
 Wages and salaries                   27,064  24,463 
 Social security costs                 2,380   2,095 
 Long term employee incentive plan     1,297     397 
 Other staff costs and benefits        3,513   2,761 
 
 Total staff costs                    34,254  29,716 
                                      ======  ====== 
                                                                2017  2016 
 
 The average monthly number of employees (including executive 
  directors and those on a part-time basis) was: 
 Sales and distribution                                           363   357 
 Administration                                                   181   186 
 
                                                                  544   543 
                                                                 ====  ==== 
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 (benefit)/expense 
                                                                      2017     2016 
                                                                     A$'000   A$'000 
 
 Income tax (benefit)/expense 
 Current tax                                                             624     759 
 Deferred tax - origination and reversal of temporary differences      (397)   (413) 
 Adjustment recognised for prior years                                 (803)      18 
 
 Aggregate income tax (benefit)/expense                                (576)     364 
 
 Deferred tax included in income tax (benefit)/expense 
  comprises: 
 Increase in deferred tax assets (note 16)                             (397)   (413) 
 
 Numerical reconciliation of income tax (benefit)/expense 
  and tax at the statutory rate 
 (Loss)/profit before income tax benefit/(expense)                   (1,558)     167 
 
 Tax at the statutory tax rate of 30%                                  (467)      50 
 Effect of overseas tax rates                                            183       - 
 
 Tax effect amounts which are not deductible/(taxable) 
  in calculating taxable income: 
      Non-deductible expenses                                             22     218 
      Tax-exempt income                                                    -    (26) 
      Current year tax losses not recognised                               -      58 
      Change in recognised deductible temporary difference               489       - 
      Adjustment recognised for prior years                            (803)      64 
 
 Income tax (benefit)/expense                                          (576)     364 
                                                                     =======  ====== 
The tax rates of the main jurisdictions are Australia 30% (2016: 30%), Singapore 
 17% (2016: 17%), New Zealand 28% (2016: 28%), United Kingdom 20% (2016: 
 20%) and United States 42.8% (2016: 42.8%). 
Note 10. Current assets - cash and cash equivalents 
                           2017    2016 
                          A$'000  A$'000 
 
 Cash at bank             12,314  28,805 
 Bank deposits at call     6,713   5,200 
 
                          19,027  34,005 
                          ======  ====== 
Note 11. Current assets - trade and other receivables 
                                                   2017    2016 
                                                  A$'000  A$'000 
 
 Trade receivables                                16,800   9,058 
 Less: Provision for impairment of receivables      (86)       - 
                                                  16,714   9,058 
 
 Other receivables                                   237       - 
 
                                                  16,951   9,058 
                                                  ======  ====== 
Trade receivables include uncleared cash receipts due from online customers 
 which amounted to A$2,515,000 (2016: A$2,473,000). 
Note 12. Current assets - inventories 
                                                  2017    2016 
                                                 A$'000  A$'000 
 
 Goods for resale                                35,403  35,395 
 Obsolete and slow moving inventory provision     (895)   (456) 
                                                 34,508  34,939 
 
 Stock in transit                                 3,534     534 
 
                                                 38,042  35,473 
                                                 ======  ====== 
 
 
 Write-downs of inventories to net realisable value recognised as an expense 
 during the year ended 30 June 2017 amounted to A$281,000 (2016: A$789,000). 
 This expense has been included in 'cost of sales' in profit or loss. 
Note 13. Current assets - other 
                          2017    2016 
                         A$'000  A$'000 
 
 Prepayments              1,419     984 
 Prepaid inventory        3,030   6,271 
 Other deposits             333     435 
 Other current assets       167     283 
 
                          4,949   7,973 
                         ======  ====== 
 
 
 Prepaid inventory relates to the costs of goods for resale that have been 
 paid for by the group but not delivered to its distribution centres for 
 further dispatch to the customers who placed the orders as at the reporting 
 date. The corresponding cash received in advance from customers are accounted 
 for within deferred revenue category in the balance sheet which includes 
 the total amount of cash received for the goods not delivered to customers 
 at the reporting date. 
 
  Note 14. Non-current assets - property, plant and equipment 
Reconciliations 
 Reconciliations of the written down values at the beginning and end of the 
 current and previous financial year are set out below: 
                        Leasehold    Plant and    Fixtures     Motor 
                       improvements  equipment  and fittings  vehicles   Total 
                          A$'000      A$'000       A$'000      A$'000   A$'000 
 
 Balance at 1 July 
  2015                          379      2,058           380       206    3,023 
 Additions                       71        427           284         -      782 
 Disposals                      (4)       (74)           (3)     (102)    (183) 
 Exchange differences           (4)       (30)          (11)       (5)     (50) 
 Depreciation expense         (233)      (914)         (153)      (46)  (1,346) 
 
 Balance at 30 June 
  2016                          209      1,467           497        53    2,226 
 Additions                      477        154           306       286    1,223 
 Additions through 
  business 
  combinations                    -        489             -         -      489 
 Disposals                      (7)        (5)          (12)      (25)     (49) 
 Exchange differences           (3)       (37)           (1)         -     (41) 
 Depreciation expense         (169)      (729)         (189)      (50)  (1,137) 
 
 Balance at 30 June 
  2017                          507      1,339           601       264    2,711 
                       ============  =========  ============  ========  ======= 
 
Note 15. Non-current assets - intangibles 
Reconciliations 
 Reconciliations of the written down values at the beginning and end of the 
 current and previous financial year are set out below: 
                                         Customer                ERP 
                             Goodwill  relationships  Software  system   Total 
                              A$'000      A$'000       A$'000   A$'000  A$'000 
 
 Balance at 1 July 2015        16,849          1,529     2,912   2,227   23,517 
 Additions                          -              -     2,408     840    3,248 
 Additions through business 
  combinations                  4,655          1,495         -       -    6,150 
 Disposals                          -              -       (8)       -      (8) 
 Exchange differences               -           (94)      (11)       -    (105) 
 Amortisation expense               -          (954)   (1,385)   (698)  (3,037) 
 
 Balance at 30 June 2016       21,504          1,976     3,916   2,369   29,765 
 Additions                          -              -     6,851     492    7,343 
 Additions through business 
  combinations                  2,515            124         -       -    2,639 
 Disposals                          -              -       (3)       -      (3) 
 Exchange differences               -           (33)       (9)       8     (34) 
 Amortisation expense               -        (1,141)   (2,133)   (864)  (4,138) 
 
 Balance at 30 June 2017       24,019            926     8,622   2,005   35,572 
                             ========  =============  ========  ======  ======= 
Amortisation expense is included in 'administration expenses' in profit 
 or loss. 
 
Note 16. Non-current assets - deferred tax 
                                                                     2017    2016 
                                                                    A$'000  A$'000 
 
 Deferred tax asset comprises temporary differences attributable 
  to: 
 
 Amounts recognised in profit or loss: 
      Tax losses                                                     8,876   9,324 
      Accrued expenses                                                 485     701 
      Provisions                                                       784     847 
      Sundry                                                           673     269 
      Property, plant and equipment                                      4   (253) 
      Intangibles                                                    (278)   (593) 
 
 Deferred tax asset                                                 10,544  10,295 
 
 Movements: 
 Opening balance                                                    10,295  10,320 
 Credited to profit or loss (note 9)                                   397     413 
 Additions through business combinations                                 -   (360) 
 Exchange loss                                                       (148)    (78) 
 
 Closing balance                                                    10,544  10,295 
                                                                    ======  ====== 
Deferred income tax assets are recognised for tax losses, non-deductible 
 accruals and provisions and capital allowances carried forward to the extent 
 that realisation of the related tax benefits through future taxable profits 
 is probable. 
Note 17. Current liabilities - trade and other payables 
                                    2017    2016 
                                   A$'000  A$'000 
 
 Trade payables                    23,460  22,464 
 Other payables and accruals        4,450   6,168 
 Payable to other related party        58      50 
 Sales tax payable                    618     866 
 
                                   28,586  29,548 
                                   ======  ====== 
Note 18. Current liabilities - borrowings 
                                                           2017    2016 
                                                          A$'000  A$'000 
 
 Bank loans                                                5,200   5,200 
 Bank loans under interchangeable facilities including 
  letters of credit                                        4,775   1,212 
 Finance lease liability                                      39      64 
 
                                                          10,014   6,476 
                                                          ======  ====== 
 
 
 Refer to note 20 for further information on assets pledged as security and 
 financing arrangements. 
Note 19. Current liabilities - provisions 
                                 2017    2016 
                                A$'000  A$'000 
 
 Employee benefits provision     1,115     770 
 Lease make good provision         173     182 
 Gift voucher provision            433     699 
 Sales returns provision           562     512 
 
                                 2,283   2,163 
                                ======  ====== 
Note 20. Non-current liabilities - borrowings 
                             2017    2016 
                            A$'000  A$'000 
 
 Finance lease liability       143       - 
                            ======  ====== 
 
Total secured liabilities 
 The total secured liabilities (current and non-current) are as follows: 
                                                           2017    2016 
                                                          A$'000  A$'000 
 
 Bank loans                                                5,200   5,200 
 Bank loans under interchangeable facilities including 
  letters of credit                                        4,775   1,212 
 Finance lease liability                                     182      64 
 
                                                          10,157   6,476 
                                                          ======  ====== 
Note 21. Non-current liabilities - provisions 
                                 2017    2016 
                                A$'000  A$'000 
 
 Employee benefits provision       332     368 
                                ======  ====== 
Note 22. Equity - share capital 
                                            2017         2016       2017    2016 
                                           Shares       Shares     A$'000  A$'000 
 
 Ordinary shares GBPnil each (2016: 
  GBPnil) 
  - issued and fully paid                151,331,652  151,331,652       -       - 
                                         ===========  ===========  ======  ====== 
Authorised share capital 
 200,000,000 (2016: 200,000,000) ordinary shares of GBPnil each. 
Note 23. Equity - other reserves 
                                         2017       2016 
                                        A$'000     A$'000 
 
 Foreign currency reserve                  2,187      3,938 
 Hedging reserve - cash flow hedges        (788)    (1,047) 
 Share-based payments reserve              5,399      4,102 
 Capital reorganisation reserve        (132,756)  (132,756) 
 
                                       (125,958)  (125,763) 
                                       =========  ========= 
Movements in reserves 
 Movements in each class of reserve during the current and previous financial 
 year are set out below: 
                      Foreign            Share-based     Capital 
                      currency  Hedging   payments    reorganisation    Total 
                       A$'000   A$'000     A$'000         A$'000       A$'000 
 
 Balance at 1 July 
  2015                   6,099       21        3,705       (132,756)  (122,931) 
 Foreign currency 
  translation          (2,161)        -            -               -    (2,161) 
 Cash flow hedge             -  (1,068)            -               -    (1,068) 
 Share-based 
  payments                   -        -          397               -        397 
 
 Balance at 30 June 
  2016                   3,938  (1,047)        4,102       (132,756)  (125,763) 
 Foreign currency 
  translation          (1,751)        -            -               -    (1,751) 
 Cash flow hedge             -      259            -               -        259 
 Share-based 
  payments                   -        -        1,297               -      1,297 
 
 Balance at 30 June 
  2017                   2,187    (788)        5,399       (132,756)  (125,958) 
                      ========  =======  ===========  ==============  ========= 
Note 24. Equity - dividends 
 
 There were no dividends paid, recommended or declared during the current 
 or previous financial year. 
Note 25. Contingent liabilities 
 
 The group has reduced its bank guarantees issued by ANZ Bank Limited ('ANZ'), 
 in respect of lease obligations amounting to A$nil (2016: A$874,000). 
 
 The group also issued a bank guarantee through its banker ANZ Bank New Zealand 
 Limited, in respect of customs and duties obligations amounting to NZ$150,000 
 (2016: NZ$150,000) and lease obligations to NZ$nil (2016: NZ$22,000). 
 
 The group issued bank guarantees through its banker, Hong Kong and Shanghai 
 Banking Corporation ('HSBC'), in respect of lease obligations amounting 
 to A$979,000 (2016: A$nil). 
Note 26. Commitments 
                                                                    2017    2016 
                                                                   A$'000  A$'000 
 
 Lease commitments - operating 
 Committed at the reporting date but not recognised as 
  liabilities, payable: 
 Within one year                                                    3,324   3,494 
 One to five years                                                  9,138  10,167 
 
                                                                   12,462  13,661 
 
 Lease commitments - finance 
 Committed at the reporting date and recognised as liabilities, 
  payable: 
 Within one year                                                       51      65 
 One to five years                                                    149       - 
 
 Total commitment                                                     200      65 
 Less: Future finance charges                                        (18)     (1) 
 
 Net commitment recognised as liabilities                             182      64 
 
 Representing: 
 Finance lease liability - current (note 18)                           39      64 
 Finance lease liability - non-current (note 20)                      143       - 
 
                                                                      182      64 
 
 Sub-lease receivable - operating 
 Committed at the reporting date but not recognised as 
  assets, receivables: 
 Within one year                                                      269     559 
 One to five years                                                    289     585 
 
                                                                      558   1,144 
                                                                   ======  ====== 
The group leases office space, land and buildings and warehouses from non-related 
 parties under non-cancellable operating lease agreements. The leases have 
 varying terms, escalation clauses and renewal rights. 
 The group leases certain plant and equipment, and motor vehicles from non-related 
 parties under finance leases. The lease agreements do not have renewal clauses 
 but provide the group with options to purchase the leased assets at nominal 
 values at the end of the lease term. 
The carrying amounts of plant and equipment and motor vehicles held under 
 finance leases are A$nil (2016: A$29,000) and A$182,000 (2016: A$35,000) 
 respectively at the reporting date. 
The company also subleases some of its office and warehouse space to related 
 and non-related parties. The subleases have varying terms and expiry dates. 
 
Note 27. Earnings per share 
                                                                2017         2016 
                                                               A$'000       A$'000 
 
 Loss after income tax                                             (982)        (197) 
 Non-controlling interest                                              -           20 
 
 Loss after income tax attributable to the owners of MySale 
  Group Plc                                                        (982)        (177) 
 
 Add back items of a one-off, non-trading nature (note 
  6)                                                               4,839          840 
 
 Underlying profit after income tax attributable to the 
  owners of MySale Group Plc                                       3,857          663 
                                                             -----------  ----------- 
 
 
                                                               Number       Number 
 
 Weighted average number of ordinary shares used in 
  calculating 
  basic earnings per share                                   151,331,652  151,331,652 
 
 Weighted average number of ordinary shares used in 
  calculating 
  diluted earnings per share                                 151,331,652  151,331,652 
                                                             ===========  =========== 
                                 Cents   Cents 
 
 Basic earnings per share         (0.65)  (0.12) 
 Diluted earnings per share       (0.65)  (0.12) 
 
 Underlying earnings per share      2.50    0.40 
8,615,909 (2016: 5,539,326) employee long term incentives have been excluded 
 from the 2017 (2016) diluted earnings calculation as they are anti-dilutive 
 for the year. 
Note 28. Share-based payments 
 
 The company established two new employee share plans prior to the AIM admission; 
 (1) the Executive Incentive Plan ('EIP') and (2) the Loan Share Plan ('LSP'). 
 In accordance with the terms of each plan 100% of the ordinary shares will 
 vest three years from grant date subject to the achievement of the Underlying 
 Earnings Before Interest, Tax, Depreciation and Amortisation ('EBITDA') 
 included in the company's internal forecasts set by the Board in the year 
 of the grant. 
In July 2015, 3,000,000 options over the ordinary share capital of the company 
 were granted to the Chairman with an exercise price of GBP0.53. 1,000,000 
 options will vest when the company's share price reaches GBP1.50, a further 
 1,500,000 shall vest when the company's share price reaches GBP2.26 and 
 a further 500,000 shall vest when the company's share price reaches GBP2.75. 
 The options expire five years after the grant date. Other than the vesting 
 conditions, all other terms are the same as the EIP. The fair value of the 
 accounting expense in relation to these options are recognised over the 
 vesting period. 
Set out below are summaries of share and options granted under the plans 
 for directors and employees: 
 2017 
                                          Balance                                      Balance 
                                             at                            Expired/       at 
                                         the start                                     the end 
                             Exercise        of                           forfeited/      of 
 Grant date    Expiry date     price     the year    Granted   Exercised    other     the year 
 
                16/06/2019 
 28/05/2014      ***            GBP2.26     111,499          -          -           -    111,499 
                18/08/2020 
 18/08/2015      ***            GBP0.51   2,027,806          -          -           -  2,027,806 
                18/08/2020 
 18/08/2015      **             GBP0.51     400,021          -          -           -    400,021 
                27/07/2020 
 27/07/2015      ***            GBP0.53   3,000,000          -          -           -  3,000,000 
                19/08/2021 
 19/08/2016      ***            GBP0.65           -  1,959,599          -           -  1,959,599 
                19/08/2021 
 19/08/2016      **             GBP0.65           -  1,116,984          -           -  1,116,984 
                                         5,539,326  3,076,583          -           -  8,615,909 
                                         ---------  ---------  ---------  ----------  --------- 
**     EIP - Options 
 ***    LSP 
2016 
                                         Balance                                     Balance 
                                            at                           Expired/       at 
                                           the 
                                          start                                      the end 
                             Exercise      of                           forfeited/      of 
                                           the 
 Grant date    Expiry date     price      year     Granted   Exercised    other     the year 
 
                16/06/2015 
 28/05/2014      *              GBP0.00   684,042          -  (684,042)           -          - 
                16/06/2019 
 28/05/2014      ***            GBP2.26   111,499          -          -           -    111,499 
                18/08/2020 
 18/08/2015      ***            GBP0.51         -  2,027,806          -           -  2,027,806 
                18/08/2020 
 18/08/2015      **             GBP0.51         -    400,021          -           -    400,021 
                27/07/2020 
 27/07/2015      ***            GBP0.53         -  3,000,000          -           -  3,000,000 
                                         795,541  5,427,827  (684,042)           -  5,539,326 
                                         -------  ---------  ---------  ----------  --------- 
*      EIP - Share rights 
 **     EIP - Options 
 ***    LSP 
The weighted average remaining contractual life of the share plan outstanding 
 at the end of the financial year was 4 years (2016: 4 years). 
The share-based payment expense for the year was A$1,297,000 (2016: A$397,000). 
Note 29. Events after the reporting period 
 
 The group's borrowing facility with Hong Kong and Shanghai Banking Corporation 
 increased to $13,353,000 (previously $13,120,000) in July 2017. The facility 
 is secured by a Corporate Guarantee. 
 The group's borrowing facility with ANZ Bank Limited reduced to $174,000 
 (previously $11,576,000) in July 2017. The facility is secured by a term 
 deposit security. 
 All bank guarantees with ANZ were released in August 2017. 
 
 No other matter or circumstance has arisen since 30 June 2017 that has significantly 
 affected, or may significantly affect the group's operations, the results 
 of those operations, or the group's state of affairs in future financial 
 years. 
 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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(END) Dow Jones Newswires

September 26, 2017 02:01 ET (06:01 GMT)

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