ANNUAL REPORT & FINANCIAL STATEMENTS
30 JUNE 2016
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MySale Group Plc
Contents
30 June 2016
2
Corporate directory
3
Strategic report
13
Corporate governance
15
Directors' remuneration report
18
Directors' report
21
Directors' responsibility statement
22
Independent auditors' report to the members of MySale Group Plc
24
Statement of profit or loss and other comprehensive income
25
Balance sheet
26
Statement of changes in equity
27
Statement of cash flows
28
Notes to the financial statements
63
Parent Balance Sheet
64
Parent Statement of changes in equity
Notes to the parent financial statements
65
Notice of Annual General Meeting 72
1
MySale Group Plc
Corporate directory
30 June 2016
Directors
Iain McDonald - Independent Non-Executive Chairman
David Mortimer AO - Independent Non-Executive Director
Jamie Jackson - Executive Director and Vice Chairman
Carl Jackson - Executive Director and Chief Executive Officer
Andrew Dingle - Executive Director and Chief Financial Officer
Head office
5/111 Old Pittwater Road, Brookvale, NSW 2100, Australia
Company secretary
Prism Cosec Limited, 10 Margaret Street, London, W1W 8RL
Registered office
Ogier House, The Esplanade, St. Helier, JE4 9WG, Jersey
Principal place of business
United Kingdom: Second floor, 19-20 Berners Street, London, W1T 3NW
Australia: 5/111 Old Pittwater Road, Brookvale, NSW 2100
United States: 1107 S.Boyle Avenue, Los Angeles, CA 90023
Independent Auditor
PricewaterhouseCoopers LLP,1 Embankment Place, London, WC2N 6RH
Solicitors
United Kingdom: Linklaters LLP, One Silk Street, London, EC2Y 8HQ
Australia: Clayton Utz, Level 15, 1 Bligh Street, Sydney, NSW 2000
Jersey: Ogier, Ogier House, The Esplanade, St. Helier, JE4 9WG
Website
www.mysalegroup.com
Nominated advisor and joint brokers Zeus Capital Limited, 41 Conduit Street, London, W1S 2YQ
Joint Brokers
N+1 Singer, 1 Bartholomew Lane, London, EC2N 2AX
Company registrars
Computershare Investor Services (Jersey) Limited
Queensway House, Hilgrove Street, St. Helier, JE1 1ES, Jersey
2
MySale Group Plc
Strategic report
30 June 2016
This Strategic report for MySale Group Plc (‘MySale’ or the ‘company’) and its subsidiaries (collectively referred to as the
‘group’) is set out under the following main headings:
1. Financial and operating highlights
2. Chairman’s statement
3. Review of operations by the Chief Executive Officer
4. Financial review by the Chief Financial Officer
5. Principal risks and uncertainties
6. Corporate social responsibilities
7. People
Cautionary statement regarding forward looking statements
This document contains certain forward-looking statements. These forward-looking statements include matters that are not
historical facts or are statements regarding the company’s intentions, beliefs or current expectations concerning, among
other things, the group’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industries
in which the group operates. Forward-looking statements are based on the information available to the directors at the time
of preparation of this document, and will not be updated subsequent to the issued of this document. The directors can give
no assurance that these expectations will prove to be correct. Due to inherent uncertainties, including both economic and
business risk factors underlying such forward-looking information, actual results may differ materially from those expressed
or implied by these forward-looking statements.
1. Financial and operating highlights
Financial highlights
• Revenue growth of 7% to A$252.3 million (2015: A$235.9 million) for the full year with an accelerating trend in H2
(+10%)
• Strong gross profit growth of 21%, driven by 300bp margin improvement to 26.4%, also accelerating through the year
• Performance building well in the target growth territories:
o South-East Asia1 20% revenue growth; gross profit +117%
o United Kingdom 139% revenue growth; gross profit +133%
• Total overheads reduced, in line with plan, to 24% of revenue (2015: 27%)
• Operational leverage driving underlying EBITDA2 up to A$5.5 million (2015: EBITDA loss –A$9.5 million)
• Strong balance sheet with cash balance of A$34.0 million
• The good trading momentum has continued - performance above expectations so far in the current year
Operational highlights
• Focus on improving gross margins and activating customers with higher lifetime-value
o Average order value increased 20% to A$90 (2015: A$75)
o Average revenue per active customer increased 9% to A$302 (2015: A$276)
• Further growth in mobile which now represents 58% of orders (2015: 56%) with over 6.7 million mobile apps
downloaded
• Active customer numbers returned to growth in H2
• Returns rate remains at industry leading levels of only 5%
•
Increase in sales from own-buy inventory to circa 15% (2015: 10%) in-line with strategic plan to grow gross margin
• Technology improvements including; enhanced search functionality across the platform to drive customer engagement;
and more efficient logistics to reduce unit costs
• Acquisition of an Australian online retail business was integrated prior to the year end and anticipated to drive
marketplace revenues in current and future years.
• After the year end, a partnership with Sports Direct has been launched in Australia.
1 South East Asia: Hong Kong, Malaysia, Singapore, Philippines and Thailand
2 Underlying EBITDA is earnings before interest, tax, depreciation, amortisation, share based payments and one-off and non-trading items as presented in
Note 6 to the financial statements
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MySale Group Plc
Strategic report
30 June 2016
2. Chairman’s statement
I am delighted to present my second set of full-year results to shareholders. The year to 30 June 2016 has been a key one
for the group; we have restored profitability and returned MySale to a growth path. We have now exited the stabilisation
phase and are looking forwards with confidence.
During the year the group made good progress against the goals we had set ourselves and this is reflected in the much
improved financial performance. The achievements of the year are due to the focus, hard work and dedication of the entire
MySale team and their contribution deserves recognition and thanks.
Our strategy is clear – we will drive profitability in our core ANZ market and focus on growth in our less developed markets
in South-East Asia and the United Kingdom. We aim to drive increased activity with existing customers, grow our active
base and increase profitability whilst re-investing for growth. We already have well invested technology and distribution
platforms, but will continue the process of improvement to raise the bar for our customers and global brand partners. Our
partnership with Sports Direct is testimony to the quality of the solutions that we provide to our partners.
Whilst the peak trading period lies ahead at this early stage we are performing ahead of our expectations for the current
financial year and have a number of exciting new initiatives in place which will support our future growth.
_____________________________
Iain McDonald
Chairman
London
27 September 2016
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MySale Group Plc
Strategic report
30 June 2016
3. Review of operations by the Chief Executive Officer
MySale Group Plc (‘group’) has made good progress in the financial year to 30 June 2016 (FY2015-16) as planned strategic
initiatives have delivered improved financial performance and positioned the group for further, profitable, growth. The group
has now grown underlying EBITDA in each of the last three half year periods.
In the 12 months to 30 June 2016 the group’s revenue rose 7% to A$252.3 million (2015: A$235.9 million) and gross profit
increased 21% to A$66.7 million (2015: A$55.2 million) following a 300bp improvement in gross margin to 26% (2015: 23%).
This growth in both revenue and gross profit accelerated across the financial year.
FY2015-16
growth vs 2015
A$ 000's Revenue Gross Profit Revenue Gross Profit
FY2014-15
Revenue Gross Profit
Group
ANZ
S-E Asia
ROW
252,289
210,710
31,590
9,989
66,656
57,060
7,546
2,050
+7%
+3%
+20%
+139%
+21%
+12%
+117%
+133%
235,853
205,340
26,333
4,180
55,232
50,879
3,472
881
The rate of revenue and gross profit growth progressively strengthened during the financial year driven by the group’s clear
strategy to provide exceptional value and choice to our customers and supported by the group’s proven digital marketing
activities, efficient international operations and flexible technology platform.
The improved trading performance combined with the previously reduced overhead base saw the group generate positive
underlying EBITDA of A$5.5 million for the year, in contrast to the underlying loss incurred in the previous financial year
(2015: EBITDA loss of A$9.5 million).
During the year the group continued its strategic plan to prioritise growth of gross margins and secure higher lifetime-value
customers in all territories by curtailing postage promotions, improving the merchandising and increasing the proportion of
own buy inventory.
This strategy has translated into improved overall financial performance as gross profit margin increased 21% driven by a
300bp increase in gross margin, to 26% (2015: 23%). Importantly the plan has delivered increases in both average order
values and average annual spend per active member to A$90 (+20%) and A$302 (+10%) respectively. As anticipated the
execution of this plan meant fewer active customers in the first half of the financial year but following this period of
repositioning growth in active customer numbers resumed in the second half of the year.
All territories have increased revenue and gross profit however it is in the two target growth territories that the group has
seen the most notable rates of growth. In South East Asia revenue grew by 20% but more importantly gross profit increased
by over 100% as the strategy of building scale and then focusing on margins began to show its success. The refocus on the
core business instigated in early 2015 is also delivering very good results in the United Kingdom, where the group trades
predominately under the Cocosa brand, and following refinement to the operations here, the group had an exceptional year
with both revenue and gross profit increasing more than 130%.
Australia & New Zealand
Within this operating territory the group has successfully implemented its strategic initiatives and improved gross profit, by
12% to A$57.0 million (2015: A$50.9 million) and gross margin to 27% (2015: 25%) whilst also growing revenue by 3% to
A$210.7 million (2015: 205.3 million). An improved merchandising offer has seen average order value increase 15%, in line
with the group trend, to A$85.
The improvement in gross margin has been achieved despite the challenge of weaker AUD exchange rates increasing the
local cost of internationally sourced goods.
While the group’s operation in ANZ is long established, it continues to provide attractive growth possibilities due to both the
lower levels of internet penetration, in comparison to territories such as the United Kingdom and the USA, and this region’s
relative lack of off-price retailers.
This region shall benefit from the recent acquisition of three online retail websites which will underpin growth in the number
of active customers and expansion into a marketplace offer.
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MySale Group Plc
Strategic report
30 June 2016
South-East Asia
During the period this region had revenue growth of 20% to A$31.5 million (2015: A$26.3 million) and an excellent 117%
increase in gross profit to A$7.5 million (2015: A$3.5 million), principally driven by an almost doubling of the gross margin to
24% (2015: 13%). The growth in revenue and profitability has been driven by the group’s localisation plan for each territory
which ensures that merchandising, pricing, payment and shipping solutions are all tailored to the needs of local consumers.
A 23% rise in average order value to A$91 (2015: A$74) is testimony to the relevance of the group’s online retail offer in this
region. The increases recorded in revenue and gross margin accelerated across the year.
The significant improvement in the rate of gross margin to 24% has been achieved by the localised plan, as above, an
expanded range of merchandise, including own-buy inventory, and fewer delivery promotions and this increased rate
represents the group’s expectation for future performance.
The group’s strategy for this territory has been to firstly grow the active member base and then to build gross profitability and
leverage this increasing scale to use resources more efficiently and achieve lower shipping rates. With a more profitable
model now established, South-East Asia reinforces its position as a key element of the group’s growth strategy.
In the medium to long term this region is anticipated to be increasingly significant as the group grows the member base and
demand for branded products, particularly European and USA brands, is expected to grow. With a substantial addressable
population, increasing disposable income, lack of off-price competition and high mobile penetration this region is well served
by the group’s strong value, branded sales offer and exceptional mobile commerce capability.
Rest of World
This territory comprises the group’s nascent operations within the United Kingdom, re-launched in the second half of
FY2015 and trading predominately under the Cocosa brand which provides customers with compelling value in premium
branded products. The United Kingdom had a positive first half, as revenue increased by more than 50%, but saw a further
step up in the second half with a growth rate over 200% thereby achieving revenues of A$10.0 million (2015: A$4.2 million)
for the financial year, some 139% higher than the previous year. This significant growth was underpinned by increased
numbers of active customers and leveraged by increased frequency and average order value.
These are encouraging results and position the business for further growth in the current financial year. Whilst currently a
relatively small part of the group’s overall activities, this business operates in the UK’s large and well developed online
marketplace where engaged and active consumers can be acquired successfully. Given there is no online flash sale
operator of scale in the UK the group has targeted becoming a leading operator in the country.
Group
The basis of the group’s improved trading and financial performance this financial year has its foundations from FY2015
when the group re-focused the business on its core aims of providing exceptional value in branded products to our
customers and exceptional inventory management solutions to our brand partners within the group’s three core territories.
Whilst there is still work to do and many opportunities to capture, momentum has increased and FY2015-16 represents
another step on the path of profitable growth.
The improved trading performance and gross profit has combined with lower rates of overhead cost (circa 24% of revenue)
and delivered underlying EBITDA of $5.5 million for the year, in sharp contrast to the EBITDA loss of A$9.5 million incurred
in the previous year. A cost saving programme saw the rate of costs in staff and marketing costs lowered compared to the
prior year. The group has however increased investment into its technology capabilities and will increase this investment
further in the coming year to ensure the group has a robust and scalable platform on which to grow the business.
During the year, and across all territories, the group continued to dedicate nearly all its marketing spend, which was circa
7% of revenue, into measurable digital channels to attract and engage new and existing customers. Ongoing
communications with existing customers has seen those loyal and engaged customers continue to spend with reliable
regularity and with increasing order sizes.
The group has maintained its investment into further developments of its technology platform, on which all territories
operate. This has resulted in the delivery of a number of key initiatives to improve user experience, data capability and
operational efficiency, including; a customer search function, advanced personalisation and recommendation engine and
simplified, tokenised checkouts. In the coming year investment will be increased to capture further improvements and
efficiencies and to extend the existing platform with wider retail marketplace functionality that will provide a solid base for
growth.
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MySale Group Plc
Strategic report
30 June 2016
Many new brands, including a number from Arcadia, have joined our roster of over 2,500 brands, attracted by the group’s
excellence in inventory management and our ability to efficiently distribute their products. The group’s unique international
distribution capability is a particular point of difference for European and USA brands.
The group implemented its strategy to increase the proportion of inventory that is own-buy, rather than on a consignment
basis, and that now represents circa 15% of online revenue, up from 10% the previous year, which in turn supports higher
gross margins and wider product selection for customers. Own-buy activity is concentrated on staple, branded goods. We
are now a little over 18 months into the plan to re-focus our buying teams and have seen the benefits begin to accrue as
relationships with brands and suppliers strengthen and deepen and, in the period, a number of exclusive sourcing
arrangements were agreed.
The combination of the group’s sourcing, compelling consumer value and reliable service means that returned goods remain
at industry leading levels of only 5% overall.
The group currently has circa 32,000 square metres of warehouse space which house the group’s inventory and logistics
and distribution resources and these have the capacity to absorb significant growth. The processes of these warehouse
operations are continually refined to accommodate broader product ranges, deliver the most efficient workflows and ensure
the group’s customers receive the products they select within the timeframes they expect. During this year improved
technology deployment in this area reduced individual unit economic costs by around 4.5%.
Acquisition of Australian online retail websites
The group completed the acquisition of three Australian online retail websites during the year. The acquisition includes the
domain names ‘OO.com.au’; ‘dealsdirect.com.au’; and ‘topbuy.com.au’ and all associated customer databases, intellectual
property, trademarks and goodwill and these websites were integrated to the group’s technology and logistics platform in the
fourth quarter of the financial year.
This acquisition provides an online retail opportunity that is highly complementary to the group’s core flash sale model and it
will facilitate one of the broadest customer reaches of an Australian based online retailer; widen the product selection for
customers and leverage the groups existing infrastructure.
The three websites all fit with MySale’s hard discount strategy and offer compelling value to consumers, principally across
the key MySale categories of Home and Fashion but also low price unbranded, fun gifts. The group realises a number of
strategic benefits from this acquisition. Firstly, it grows the group’s ANZ3 active customer base, and secondly, it accelerates
the group’s development of its retail marketplace capability, focussed on complementary product categories, which provides
a good base for further growth in FY2016-17 and beyond. Thirdly, and perhaps most importantly, the acquisition
demonstrates the group’s ability to efficiently integrate acquisitions onto the group’s proprietary technology and operational
platforms.
The rapid development of its online retail website offer has also accelerated the group’s overall online retail marketplace
capability. A new technology platform supporting flash, retail and marketplace activity is now in place and underpins the
group’s ability to provide complete marketplace solutions to our brand partners and we shall use this opportunity to broaden
and deepen our relationships with brands.
New partnership
The group is pleased to have launched a strategic partnership with Sports Direct after the financial year closed.
The Sports Direct partnership is for the launch of inventory on the group’s Australian retail websites. This initiative will offer
Australian consumers access to great sports brands at great prices in a sector with few existing operators of scale. The
partnership will add approximately 150,000 SKUs to the Australian online retail offer and seamlessly integrates MySale’s
consumer websites with the Sports Direct supply chain at an individual product level. Once successfully implemented and
developed this Sports Direct partnership may be extended into additional territories of New Zealand and South-East Asia.
This partnership also represents the first flagship retailer to join our nascent retail marketplace platform. The first products
have already started shipping to customers and this will be reflected in our first half performance.
Our Goal, Strategy and Tactics
Our goal is a simple one. To grow annual revenues to more than A$1 billion and to improve our return on sales. While this
may sound aggressive, we operate in big markets, partner with global brands and already have a strong platform to grow.
Our strategic objectives remain unchanged:
3 Australia and New Zealand
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MySale Group Plc
Strategic report
30 June 2016
• Drive increased activity with existing customers
• Grow our active base
•
Increase profitability whilst re-investing for growth
The tactics that have or will be adopted to achieve these strategic aims include:
Invest in technology to improve customer experience, conversion and engagement
• Deploy proven digital marketing and engagement tactics to acquire and retain loyal and frequent customers
•
• Focus on newer geographies in South-East Asia and the UK
• Utilise our international sourcing capability to drive frequency and volumes
• Add new categories and more products to drive activity and profitability
• Forge partnerships with global brands and retailers and provide solutions to their excess inventories
• Selective M&A to drive the active customer base and enter new categories
Outlook
The group has had a good year in FY2015-16 with significantly improved operational performance and solid progress
against its strategic aims. There has been an encouraging start to the current financial year, with trading ahead of
expectations and, although the group’s key trading period still lies ahead, the board is confident in the group’s prospects for
the year.
The new strategic partnership with Sports Direct is testimony to the capabilities the group is able to offer large retail partners
and alliances such as this will provide further catalyst to the growth plans.
The group’s diversified international operations should be well insulated from any uncertainty associated with the United
Kingdom’s prospective exit from the EU and in the immediate term the Group will experience some benefit from a weaker
GBP Sterling exchange rate. Additionally, the group’s core customer offer of compelling, discounted value in branded
products should be highly relevant for consumers in tightening economic conditions.
_____________________________
Carl Jackson
Chief Executive Officer
London
27 September 2016
8
MySale Group Plc
Strategic report
30 June 2016
4. Financial review by the Chief Financial Officer
Revenue and Gross Profit
For the year ended 30 June 2016 group revenue increased by 7% to A$252.3 million (2015: A$235.9 million) and gross
profit increased 21% to A$66.7 million (2015: A$55.2 million) as a result of the strategic plans implemented in 2015.
Operating expenses
Underlying operating expenses decreased 8% to A$61.7 million (2015: A$66.4 million) in the year under review following a
cost reduction programme initiated in 2015 which primarily focused on reducing marketing and headcount costs. These
efficiencies have reduced the operating expenses as a percentage of Revenue to 24% (2015: 27%).
Loss After Tax
The loss after tax reported for the financial year is $A0.2 million (2015: A$17.8 million loss). This loss is after the inclusion of
a number of exceptional and non-cash items which are shown in more detail in note 6 to the financial statements in order to
give greater insight as to the underlying profitability of the group.
Taxation
The group has recorded a tax expense of A$0.4 million for the year (2015: tax benefit of A$3.7 million) which represents an
effective rate in excess of the 30% the group anticipates as the long term expectation. This higher rate arises due to various
tax adjustments and timing differences. Full details are provided in note 9 to the financial statements. The group has total
tax losses of A$31 million (2015: A$30 million) with the majority located in Australia. The entire tax loss has been recognised
with the provision of a deferred tax asset of A$9.3 million.
Balance Sheet, Cash and Working capital
The group’s closing cash balance was A$34.0 million (2015: A$39.9 million). This movement is largely a reflection of
changes in working capital during the year, in particular increased inventory. This increase arose principally from the group’s
strategic investment into more own-buy inventory which supports the drive to improve gross margins.
Inventory is now at a level that will support the continued growth of the group’s own-buy business. The group would expect
further growth in inventory levels to be in line with the overall growth of the business.
Capital expenditure during the period was A$4.0 million (2015: A$4.1 million), in line with the prior period, and principally
represents investment, to support the group’s growth plans, in equipment for the group’s logistics facilities and development
of the technology platform. As part of the Group’s strategic plan it is anticipated that investment in capital expenditure shall
increase.
Banking Facilities
The group holds significant cash balances, held principally with HSBC with whom the group also has trade finance multi
option debt facilities of GBP£3.0 million (increased to GBP£7.0 million post year-end). In addition the group has trade
finance facilities of A$12.2 million with ANZ Bank. All facilities are renewed on an annual basis. Of the total facilities of
A$18.3 million, A$10.8 million remains undrawn at the year-end.
Key Performance Indicators
The group manages its operations through the use of a number of key performance indicators (KPI’s) such as revenue,
revenue growth, gross margin percentage, average revenue per active member, and underlying EBITDA
Underlying Basis
The group manages its operations by looking at the underlying EBITDA which excludes the impact of a number of one off
and non-cash items as this, in the Board’s opinion, provides a more representative measure of the group’s performance. A
reconciliation between reported profit before tax and underlying EBITDA is included at note 6 to the financial statements.
_____________________________
Andrew Dingle
Chief Financial Officer
London
27 September 2016
5. Principal risks and uncertainties
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MySale Group Plc
Strategic report
30 June 2016
The management of the business and the execution of the group’s growth strategies are subject to a number of risks which
could adversely affect the group’s future development. The following is not an exhaustive list or explanation of all risks and
uncertainties associated with the group, but those considered by management to be the principal risks:
Membership base
The group needs to attract new ‘active’ members, in sufficient numbers, especially in markets where the group already has a
degree of market penetration, such as Australia and New Zealand (‘ANZ’). In order to expand its membership base, the
group is appealing to members who have historically used other methods to purchase products, such as in-store, retailers’
own websites or the websites of the group’s competitors. The ‘flash sale’ model operated by the group needs to continue to
be successful. The group’s strategies require existing members to make repeat purchases from the group. The group’s
current ‘lapsed client strategy’ uses personalised emails, vouchers and prompting emails to attempt to re-engage members
to purchase product regularly. If these strategies fail, the group’s membership base may be reduced which could have an
adverse effect on the group’s operating results and financial condition.
Cost efficiencies
The group targets a ‘cost per acquisition’ (‘CPA’) that is acceptable based on the expected member value and the group’s
likelihood of recovering the acquisition costs. Increasing the group’s membership base is necessary to avoid the group
incurring significantly higher marketing expenses and as a result, higher CPA, which could have an adverse effect on the
group’s operating results and financial condition.
Strategies and expansion plans
The group’s strategies and expansion plans, particularly into new geographies, may result in unforeseen costs or require
significant management attention or resources. The group may not perform to expectations and, in the case of new
geographies, prove to be unsuccessful. In new markets, the group is required to develop banking and merchant solutions,
delivery solutions and expand its infrastructure of people and information systems and train and manage its expanding
employee base. In new jurisdictions, the group may compete with companies already operating in the relevant market, and
these companies may understand the local market better than the group. Unsuccessful attempts at expansion into new
jurisdictions could damage the group’s reputation, incur significant unanticipated costs and as a result, adversely affect the
group’s business, prospects, operating results and financial condition.
Product inventory
The group requires a continuous source of inventory, from existing suppliers or new suppliers, at appropriate prices, on
appropriate terms, in a timely manner and/or in sufficient volume. A key driver for the group’s success is its ability to source
product from a wide variety of brands, styles, categories and product types at discounted prices. The group does not have
contractual assurances of continued supply, pricing or access to new products from existing suppliers. However, the group
maintains strong relationships with suppliers and provide them with an effective mechanism to distribute their products. To
maintain its reputation, the group depends on suppliers to provide high quality, genuine, product merchandise that meets
with members’ expectations. If the group is unable to continue to source such products, member engagement and
purchases would likely reduce while costs increase and as a result, the group’s operating results and financial condition
could be adversely affected.
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MySale Group Plc
Strategic report
30 June 2016
Growth in e-commerce and flash sales
The business of selling products over the internet, particularly on the flash sale model, is dynamic and relatively new. The
market segment for the flash sale model has grown significantly, and this growth may not be sustainable. If members cease
to find the flash sale model shopping experience fun, entertaining and good value, or otherwise lose interest in shopping in
this manner, the group’s member base and buying patterns may decline and could negatively affect net sales and have an
adverse effect on the group’s operating results and financial condition.
Global economy
The group’s performance is subject to global economic conditions. Deterioration in these conditions may reduce consumer
spending, particularly on discretionary items, which includes the group’s merchandise. Adverse economic changes in any of
the regions in which the group sells its products could reduce consumer confidence and could negatively affect net sales
and have an adverse effect on the group’s operating results and financial condition.
Technology and emails
The group’s Information Technology (‘IT’) systems are integral to its operations. The technology supports the group’s
websites and mobile applications, logistics management, product information management, administration management
systems, security systems and third-party data centre hosting facilities. If the IT systems do not function properly there could
be system disruptions, corruptions in databases or other electronic information, delays in sales events, delays in transaction
processing, website slowdown or unavailability, loss of data or the inability to accept and fulfil member orders which, if
sustained or regular, could adversely affect the group’s business, operating results and financial condition.
The group’s business is highly dependent on engaging with members via daily emails and other messaging services. These
inform members of the day’s sales events, prompting them to visit the relevant website or mobile application and purchase
products. The group relies on the successful delivery of emails or other messages to members and also that members
actually open and read the emails. Webmail prioritisation, ‘spam’ and blocking filters and local laws on sending emails could
affect the group’s business, prospects, operating results and financial condition.
Competition
Competitive pressures, changes in product and fashion and hence consumer demand are continuing risks which could
result in the loss of sales. The group manages this risk by the continuous sourcing of new products, adding new sales
categories and marketing to stimulate member interest and by maintaining strong relationships with its members.
The group does not take delivery of products from supplier until after it has been ordered by members and therefore delivery
times may be longer than some other competitors. If the group seeks to decrease delivery times in order to tackle the
competition and meet member demand, additional shipping costs are likely to be incurred. These costs may not be able to
be passed on in full or at all to members. Alternatively, the group may be required to change its operations to carry
additional inventory and face additional inventory risk.
Logistics and distribution networks
The group uses third-party logistics providers to manage, process and ship product between group locations and directly to
members. There is a risk that the group may experience network interruptions (including third parties’ delivery services)
which may prevent the timely or proper delivery of products. These could damage the group’s reputation, deter repeat
customers, deter suppliers from dealing with the group and adversely affect its business, operating results and financial
condition.
Loss of people
The group’s senior executive team is instrumental in implementing the group’s business strategies and executing business
plans which support the business operations and growth. The sourcing teams have strong supplier relationships which are
central to the group’s ability to source discounted, quality products. Service agreements are in place and the risk of the loss
of key personnel is mitigated by regular reviews of remuneration packages (including long term incentive schemes) and
succession planning within the team.
Trademarks and brand reputation
Maintaining and enhancing the brand is critical to the group’s strategies going forward. If the group fails to meet member
(and supplier) expectations, receives negative publicity or unfavourable member reviews and complaints on social media
platforms, these could damage the brand and reduce consumer use of the group’s websites and mobile applications. If the
group fails to maintain the brand or if excessive expenses are incurred in this effort, the group’s business, operating results
and financial condition may be materially and adversely affected. As with all brands, the group is exposed to risk from
unauthorised use of the group’s trademarks and other intellectual property. Any infringement could lead to a loss in profits
and have a negative impact on image and continued success. Trademarks are registered and where any infringements are
identified, appropriate legal action is taken.
11
MySale Group Plc
Strategic report
30 June 2016
Changes in indirect tax rules
Changes in local indirect tax, such as sales taxes, good and services tax and value-added taxes, and duty treatment in any
of the markets in which the group operates could have an impact on the sales of products in those markets. Such changes
could reduce the attractiveness of the group’s sales offering and have a material and adverse effect on the group’s financial
condition and financial results.
Cash
The management of the group’s cash is of fundamental importance. The group maintains all cash balances with large,
appropriately capitalised, international financial institutions and seeks any necessary credit facilities from these institutions.
The group relies on access to its cash and credit facilities in order to trade successfully and restrictions to such access could
have a material and adverse effect on the group’s financial condition and financial results.
6. Corporate social responsibilities
The group’s approach is to make a positive difference to the people, environment and communities in which it works.
Examples include engaging not-for-profit employment agencies, to motivate and upskill the local unemployed community to
sustain employment with the group and investing in warehousing training programs such as a Certificate 3 in Warehousing
and Logistics for the group’s Australian staff. To reduce waste and the impact on the environment the group does not put
copies of customer invoices in its parcels, but rather provides them online.
7. People
Equal opportunity
The group is committed to an active equal opportunities policy. It is the group’s policy to promote an environment free from
discrimination, harassment and victimisation, where everyone receives equal treatment regardless of gender, colour, ethnic
or national origin, disability, age, marital status, sexual orientation or religion. Employment practices are applied which are
fair, equitable and consistent with the skills and abilities of the employees and the needs of the group.
Disabled employees
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with
the group continues and that appropriate re-training is arranged. It is the policy of the group that the training, career
development and promotion of disabled persons should, as far as possible, be identical with that of other employees.
Employee consultation
The group places considerable value on the involvement of its employees and has a practice of keeping them informed on
matters affecting them as employees and on the various factors affecting the performance of the group, which is achieved
through formal and informal meetings. Employee representatives are consulted regularly on a wide range of matters
affecting their current and future interests.
12
MySale Group Plc
Corporate governance
30 June 2016
As the company is listed on the Alternative Investment Market, a market regulated by London Stock Exchange Plc, it is not
required to comply with any particular corporate governance code. However, the directors recognise the value and
importance of high standards of corporate governance and acknowledge the importance of the principles set out in Quoted
Companies Alliance (‘QCA’) Corporate Governance Code for Small and Mid-sized Quoted Companies 2013 (the ‘QCA
Code’). The Board therefore applies the principles of the QCA Code where they consider it appropriate for a company of
MySale’s size and nature.
The Board of Directors
During the financial year ended 30 June 2016 and as at the date of approval of these financial statements, the Board
consisted of five directors as shown below. Both non-executive directors are considered independent under the criteria
identified in the QCA Code and together they bring considerable knowledge, skills and experience to the Board and its
deliberations. The members of the Board are:
Iain McDonald
David Mortimer AO
Jamie Jackson
Carl Jackson
Andrew Dingle
Independent Non-Executive Chairman
Independent Non-Executive Director
Executive Director and Vice Chairman
Executive Director and Chief Executive Officer
Executive Director and Chief Financial Officer
Biographies for each of the current directors are set out in the Directors’ report under ‘Information on directors and their
interests’.
Schedule of matters reserved specifically for the Board include:
• overall business strategy of the group;
•
•
review of key operational and commercial matters;
review of key financial matters, including changes to the group’s capital structure, borrowing facilities, acquisitions,
disposals and material capital expenditure;
• membership of the Board and its standing Committees, including delegation of authority to the Audit and Remuneration
Committees;
• approval of full year and half-year financial statements and any interim management statements or other financial
disclosures;
regulatory and shareholder communications; and
•
• appointment and performance review of key advisors.
The Board meets formally on a regular basis to consider strategy, performance and the framework of internal controls. Prior
to each meeting, all directors receive appropriate and timely information including briefing papers which enable them to
discharge their duties. Directors have access to the advice and services of the company secretary and external legal and
financial advisers who together provide guidance and confirmation that Board procedures are followed and applicable rules
and regulations are complied with. With the prior approval of the chairman, directors are able to obtain independent
professional advice in the furtherance of their duties, at the company’s expense.
Details of the service contracts of the executive directors and the letters of appointment of the non-executive directors are
set out in the Directors’ remuneration report.
In order to facilitate the business of the company, and in line with the recommendations of the QCA Code, the Board has
delegated certain of its responsibilities to the Audit Committee or Remuneration Committee, as appropriate.
Audit Committee
The Audit Committee has the primary responsibility for monitoring the adequacy and effectiveness of the group’s systems of
internal financial control and risk management, ensuring that the financial performance of the group is properly measured
and reported on, reviewing and challenging reports from management and the external auditor relating to the company’s
accounting and internal controls and appraising the need for an internal audit function, in all cases having due regard to the
interests of shareholders. The full terms of reference of the Audit Committee are available on the company’s website.
The members of the Audit Committee are:
David Mortimer AO
Iain McDonald
Member
Chair
13
MySale Group Plc
Corporate governance
30 June 2016
The Audit Committee met three times during the financial year.
The Chief Financial Officer has a standing invitation to attend all meetings of the Audit Committee. The remaining executive
directors, other members of the senior management team or the company’s advisers may be invited to attend all or part of
any Audit Committee meeting, where appropriate, and minutes of meetings are circulated to all Board members, unless it
would be inappropriate to do so.
Remuneration Committee
The Remuneration Committee is responsible for reviewing the performance of the executive directors and for determining
the terms and conditions of their employment, level of remuneration including short-term and long-term incentives, having
due regard to the interest of shareholders in all matters. The full terms of reference of the Remuneration Committee are
available on the company’s website.
Details on the structure of the company’s remuneration policy and the emoluments paid to the Board members during the
financial year are set out in the Directors’ remuneration report.
The members of the Remuneration Committee are:
Iain McDonald
David Mortimer AO
Chair
Member
The Remuneration Committee met once during the financial year.
The executive directors, head of human relations or the company’s advisers may be invited to attend all or part of any
Remuneration Committee meeting, where required, and minutes of meetings are circulated to all Board members, unless it
would be inappropriate to do so.
Internal financial controls
The Board place considerable importance on maintaining full control and direction over appropriate strategic, financial,
organisational and compliance issues, and have in place an organisational structure with formally defined lines of
responsibility and delegation of authority. There are established procedures for planning, capital expenditure, information
and reporting systems and for monitoring the group’s business and its performance. Adherence to specified procedures is
required at all times and the Board actively promotes a culture of quality and integrity. Compliance is monitored by the Audit
Committee which, in turn, reports its findings to the Board.
The Board, via delegated authority to the Audit Committee, is also responsible for the group’s system of internal control and
for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve the
group’s business objectives, and can only provide reasonable and not absolute assurance against material misstatement or
loss. The agreed processes include comprehensive budgeting systems with an annual budget approved by the Board,
monthly consideration of actual operational results compared with budgets, forecasts and regular review by the Board of
year end forecasts. The Board reports to shareholders half‑yearly.
The group’s control systems address key business and financial risks. Matters arising are reviewed on a regular basis.
14
MySale Group Plc
Directors' remuneration report
30 June 2016
As the company is listed on the Alternative Investment Market (‘AIM’), it is not required to prepare a Directors’ remuneration
report. The following narrative disclosures are prepared on a voluntary basis for the group and are not subject to audit,
unless otherwise specified.
Principles used to determine the nature and amount of remuneration
The objective of the group's remuneration framework is to ensure reward for performance is competitive and appropriate for
the results delivered. The framework aligns the remuneration for executive directors and key senior management with the
achievement of strategic objectives and the creation of value for shareholders. The Board of Directors ('the Board') ensures
that the remuneration for executive directors and key senior management satisfies the following key criteria for good reward
governance practices:
•
• aligns executive compensation with company performance and shareholder return; and
•
is competitive and is acceptable to shareholders;
is transparent.
The Remuneration Committee, as detailed in the Corporate governance, is responsible for reviewing the performance of the
executive directors and senior employees of the group and for determining the terms and conditions of their employment,
level of remuneration including short-term and long-term incentives, having due regard to the interest of shareholders in all
matters.
The number of times the Remuneration Committee met is also detailed in the Corporate Governance section.
Remuneration of directors
The fees payable to the directors shall not exceed an aggregate amount of £1,500,000 per annum or such greater amount
as shall be determined by the company’s shareholders by ordinary resolution. This is distinct from any salary, remuneration
or other amounts which may be payable to the directors.
The directors are entitled, under the Articles, to be paid all reasonable expenses as they may properly incur in attending
meetings of the directors, committee meetings of the directors, shareholders meetings, or otherwise in connection with the
discharge of their duties.
Executive directors’ remuneration
The group’s remuneration policy for executive directors considers a number of factors and is designed to:
• have regard to the director’s experience and the nature and complexity of their work in order to pay a competitive salary,
•
•
in line with comparable companies, that attracts and retains directors of the highest quality;
reflect the director’s personal performance;
link individual remuneration packages to the group’s long term performance and continued success of the group through
the award of annual bonuses and share-based incentive schemes;
• provide post‑retirement benefits through contributions to individual’s pension schemes; and
• provide employment‑related benefits that may include the provision of a company car or cash alternative, life
assurance, insurance relating to the director’s duties, housing allowance, medical insurance and permanent health
insurance.
Directors’ service agreements, salaries, bonuses and other incentive schemes
Each executive director has a service contract with the group, dated 10 June 2014. Executive directors’ salaries are
reviewed annually in line with the remuneration reviews for all other group employees. The basic annual salaries and key
benefits as at 30 June 2016 are as follows:
Executive director
Base salary
Statutory
superannuation
Motor vehicle
allowance
Group entity with which the contract
is with
Jamie Jackson
Carl Jackson
Andrew Dingle
£150,000
A$275,000
A$288,750
-
A$26,125
A$27,431
£18,000 MySale Group Plc
A$30,000 Ozsale Pty Limited
- Ozsale Pty Limited
Executive directors’ salaries are reviewed annually in line with the remuneration reviews for all other group employees.
15
MySale Group Plc
Directors' remuneration report
30 June 2016
Executive director’s employment contracts are continuous. They may be terminated by either party by 6 months’ written
notice. The company may at its sole and absolute discretion terminate the employment of an executive director by making a
payment in lieu of any unexpired notice period equal to their basic salary for that period. Executive directors have agreed to
confidentiality undertakings, without limitation as to time, and has agreed to non-compete, non-solicitation of staff and non-
interference in supply restrictive covenants that apply for a period of 12 months following termination of employment with the
group.
Executive directors are eligible to participate in a discretionary annual bonus scheme on the terms decided by the
Remuneration Committee and may also participate in any benefits arrangements the group has in place for categories of
employees of which he is a member, subject to and in accordance with the terms and/or rules of those arrangements from
time to time.
Non-executive directors’ remuneration
The remuneration of non-executive directors is a matter for the Chairman of the Board and the executive directors and no
director is involved in any decisions as to their own remuneration.
David Mortimer AO and Iain McDonald entered into letters of appointment on 3 June 2014 and 27 July 2015, respectively.
David Mortimer’s letter was updated on 12 August 2015. Each receives a fee for their services which takes into account the
role undertaken. They do not receive any pension or other benefits from the group.
The annual fees for non-executive directors, effective at the date of this report, are as follows:
Non-executive director
Base fee
Group entity with which the
appointment is with
Iain McDonald
David Mortimer AO
£75,000
£40,000
MySale Group Plc
MySale Group Plc
The appointment of any non-executive director is terminable on 3 months’ written notice.
The following information is subject to audit.
Directors’ remuneration for the year ended 30 June 2016 was as follows and this information is subject to audit:
Basic salary/
fees
Bonus
Taxable
benefits
Pension
contributions
Total
2016
Total
2015
Non-executive
directors:
Iain McDonald
David Mortimer AO
Adrian MacKenzie
£68,750
£45,000
£3,333
Executive
directors:
Jamie Jackson
Carl Jackson
A$307,200
A$275,000
Andrew Dingle
A$288,750
-
-
-
-
-
-
-
-
-
£68,750
£45,000
£3,333
-
£100,000
£40,000
A$36,864
A$47,311
-
A$28,975
A$344,064
A$351,286
A$236,082
A$315,939
A$26,404
A$27,431
A$342,585
A$313,439
The company had two employee share plans prior to its AIM admission on 16 June 2014: (i) the Executive Incentive Plan
(‘EIP’) and (ii) the Loan Share Plan (‘LSP’).
(i) The Executive Incentive Plan
On 16 June 2015, Andrew Dingle became entitled to 201,115 ordinary shares which vested on that date but were not
exercised until July 2015 in accordance with the EIP. Andrew Dingle had a previous entitlement to a cash bonus payable on
AIM admission but had agreed to defer the payment and take it in the form of a conditional award under the EIP, which was
subject to a continued employment with the group.
In July 2015, 3,000,000 options over the ordinary share capital of the company were granted to the chairman Iain McDonald
with an exercise price of 53p. 1,000,000 options will vest when the company’s share price reaches £1.50, a further
16
MySale Group Plc
Directors' remuneration report
30 June 2016
1,500,000 shall vest when the company’s share price reaches £2.26 and a further 500,000 shall vest when the company’s
share price reaches £2.75. The options expire five years after the grant date. Other than the vesting conditions, all other
terms are the same as the EIP. The fair value of the accounting expense in relation to these options are recognised over the
vesting period.
(ii) Loan Share Plan
The emoluments disclosed above do not include any amounts for the value of share awards granted to the directors who
have been selected to participate in the LSP. The LSP enables directors and employees selected to participate to buy or
subscribe for ordinary shares of the company, using a loan from the company. The ordinary shares are bought on-market or
are subscribed at market value. The loan is then repayable, five years from grant date, and the ordinary shares may be sold
to repay the loan on vesting. The loan is interest-free and recourse is limited to the value of the ordinary shares bought with
it. 50% of the ordinary shares vested two years after AIM admission (16 June 2016) and the remaining 50% will vest three
years after (16 June 2017), however vesting is subject to the Remuneration Committee being satisfied that the underlying
performance of the group justifies vesting. In determining this, the Remuneration Committee will have regard to Revenue
and Earnings Before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) included in the company’s internal forecasts as
at the date of allocation. The fair value of the accounting expense in relation to the share awards for the loan share plan are
recognised over the vesting period.
During the year the Board decided to change the vesting conditions for future grants for the EIP and LSP plans beginning
with the August 2015 grant. 100% of future awards will now vest three years from grant date and are subject to the
achievement of the Underlying EBITDA target set by the Board in the year of the grant.
Shares granted under the LSP are as follows:
Balance
1 July
2015
-
-
-
111,499
-
Iain McDonald
David Mortimer AO
Jamie Jackson
Carl Jackson
Andrew Dingle
Granted
Exercised
Cancelled
Balance
30 June
2016
Exercise
price
(£)
Date of
exercise
Market
price on
exercise
(£)
-
-
-
-
357,138
-
-
-
-
-
-
-
-
-
-
-
-
-
111,499
357,138
-
-
-
£2.26
£0.51
-
-
-
-
-
-
-
-
-
-
Share price information
The market price of MySale Group Plc ordinary shares at 30 June 2016 was £0.65 (2015: £0.52) and the range during the
financial year was between £0.41 and £0.72 (2015: £0.47 and £2.35).
17
MySale Group Plc
Directors' report
30 June 2016
The directors present their report, together with the financial statements and independent auditor’s report, on the
consolidated entity (referred to hereafter as the 'consolidated entity', ‘group’ or ‘MySale’) consisting of MySale Group Plc and
the subsidiaries it controlled at the end of, or during, the year ended 30 June 2016.
Directors
The directors who have served on the Board of MySale Group Plc during the whole of the financial year and up to the date
of this report are set out below:
Iain McDonald
David Mortimer AO
Jamie Jackson
Carl Jackson
Andrew Dingle
Information on directors and their interests
Biographies for the directors and their interests in the ordinary shares of the company, are shown below:
Name:
Title:
Age:
Experience and
expertise:
Name:
Title:
Age:
Experience and
expertise:
Name:
Title:
Age:
Experience and
expertise:
Name:
Title:
Age:
Experience and
expertise:
Iain McDonald
Independent Non-Executive Chairman
46
Iain was appointed to the Board in July 2015. Based in London, Iain has a wealth of experience of
high growth, online businesses and capital markets which the Board believes will be of great
benefit to the group. Iain is a partner with the William Currie Group of Companies (‘WCG’), a family
business founded by financier Bill Currie to invest primarily in technology and e-commerce
companies. Iain has worked with WCG for seven years now during which time WCG has built upon
its already strong track record in the sector, having invested in the early stages of development of
companies including ASOS, The Hut Group, Metapack, Eagle Eye Solutions and Anatwine. As well
as working on the investment side of the business, Iain is a non-executive director at The Hut
Group, Anatwine and Houseology.com.
David Mortimer AO
Independent Non-Executive Director
72
David was appointed to the Board in May 2014. He has over 40 years of corporate finance and
commercial experience predominantly whilst working in Australia and the US. Amongst David’s
broad experience, notable appointments include current chairman of Crescent Capital Partners,
and former appointments include CEO of TNT Limited worldwide group, chairman of Australia
Post, chairman of Leighton Holdings, chairman of Sydney Airports and deputy chairman of Ansett
Australia Holdings. David was also appointed an Officer of the Order of Australia in 2005.
Jamie Jackson
Executive Director and Vice Chairman
51
Jamie founded MySale in 2007 having identified the gap in the Asia-Pacific region for an online
flash sales marketplace. He has been involved in the fashion wholesale business for more than 20
years, including senior roles with French Connection and President Stone. Jamie also built up
extensive experience in managing and operating his own retail stores in the UK and Australia
including liquidating leading brands’ excess stock to retailers for companies such as TK Maxx,
Costco and Tesco. Building on this experience. He is currently focused on the group’s international
buying, product development and strategic partnerships.
Carl Jackson
Executive Director and Chief Executive Officer
53
Carl joined MySale in 2009 and has over 26 years of international operational, sales and
commercial management experience gained from a number of retail and consumer venture capital
investments including senior management retail experience and 15 years in retail and consumer
brand private equity. Carl has led MySale’s expansion into New Zealand and South-East Asia to
over 10 million members and has ongoing responsibility for the group’s day-to-day operations and
new market expansion.
18
MySale Group Plc
Directors' report
30 June 2016
Name:
Title:
Age:
Experience
and expertise:
Andrew Dingle
Executive Director and Chief Financial Officer
46
Andrew joined MySale in 2013 having previously served as ANZ CFO for Henry Schein, a US
Fortune 500 company. He started his career with Grant Thornton initially in tax and business
services before moving into insolvency and business reconstruction where he focused on the retail
and manufacturing sectors. A move to the UK in 1997 enabled Andrew to work in a number of
financial accounting roles across various industries including financial services, entertainment and
retail. Andrew possesses strong financial, strategy and commercial management skills, including
distribution and inventory management experience in multi-warehousing environments, and is
focused on group finance, logistics and warehousing and strategy. Andrew is a qualified CPA and
also holds an MBA from the Australian Graduate School of Management.
Directors’ beneficial interests in the shares of the company:
Name
Iain McDonald
David Mortimer AO4
Jamie Jackson
Carl Jackson2
Andrew Dingle
Ordinary
shares
Percentage
holding
248,482
165,000
47,469,189
3,745,000
201,115
0.2%
0.1%
31.4%
2.5%
0.1%
Details of share options or share awards granted to the executive directors are disclosed in the Directors’ remuneration
report.
Information on company secretary
Name:
Title:
Experience and
expertise:
Prism Cosec Limited
Company Secretary
Prism Cosec Limited is UK incorporated professional corporate company secretary, providing
corporate governance and company secretarial services to quoted and unquoted companies.
Results and dividends
The results for the financial year are set out in the statement of profit or loss and other comprehensive income. No dividend
has been paid during the financial year and the directors do not recommend a final dividend in respect of the year ended 30
June 2016.
The directors are responsible for the maintenance and integrity of the company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Going concern
The group’s business activities, together with the factors likely to affect its future development, performance and financial
position are given in the Strategic review and this Directors’ report. In addition, the notes to the financial statements include
details on the group’s borrowing facilities and its objectives, policies and processes for managing its capital; its financial risk
management objectives; and its exposures to credit risk and liquidity risk.
The group has considerable financial resources together with a member base split across different geographic areas. The
group’s forecasts and projections, taking into account reasonably possible changes in trading performance, show that the
group should be able to operate within the level of its current facility. As a consequence, the directors believe that the group
is well placed to manage its business risks successfully.
The directors have, at the time of approving the financial statements, a reasonable expectation that the company and the
group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt
the going concern basis of accounting in preparing the financial statements.
4 Held by David Mortimer and Barbara Mortimer as trustees for the Wallaroy Provident Fund
2 Held by Jackson Capital Pty Ltd as trustee for the Jackson Family Trust.
19
MySale Group Plc
Directors' report
30 June 2016
Subsequent Event
The group’s borrowing facility with Hong Kong and Shanghai Banking Corporation increased to £7,000,000 (previously
£3,000,000) in August 2016. The facility is secured by a Corporate Guarantee. Refer to Note 38 Event after the reporting
period.
Substantial shareholdings
At the reporting date, the company had been notified of the following interests of 3% or more of the share capital of the
company, other than those of the directors above:
Name
Shelton Capital Limited
Schroders plc
Insight Venture Partners VI5
Sports Direct International
Number of shares
held
Percentage
holding
33,237,124
18,134,651
7,871,137
7,251,065
22.0%
12.0%
5.2%
4.8%
Charitable and political donations
The group made charitable donations of nil (2015: A$25,250) during the financial year. The group made no political
donations.
Independent Auditor
In the case of each of the persons who are directors of the company at the date when this report was approved:
•
so far as each of the directors is aware, there is no relevant audit information of which the company’s auditors are
unaware; and
• each of the directors has taken all the steps that he ought to have taken as a director to make himself aware of any
relevant audit information and to establish that the company’s auditors are aware of that information.
PricewaterhouseCoopers LLP have expressed their willingness to continue as auditors and a resolution to re-appoint them
will be proposed at the forthcoming Annual General Meeting.
By Order of the Board.
_____________________________
Iain McDonald
Chairman
London
27 September 2016
5 Held by: (i) Insight Venture Partners VI, L.P. (5,735,901 ordinary shares); (ii) Insight Venture Partners (Cayman) VI, L.P.
(1,801,915 ordinary shares); and (iii) Insight Venture Partners VI (Co-Investors), L.P. (333,321 ordinary shares)
20
MySale Group Plc
Directors' responsibility statement
30 June 2016
The directors are responsible for preparing the financial statements of the group in accordance with applicable law and
International Financial Reporting Standards (‘IFRSs’) as adopted by the European Union and financial statements of the
parent company in accordance with applicable law and United Kingdom Accounting Standards.
The Companies (Jersey) Law 1991 requires the directors to prepare financial statements for each financial year that give a
true and fair view of the state of affairs of the group and the parent company and of the profit or loss of the group for that
period.
select suitable accounting policies and then apply them consistently;
In preparing the financial statements, the directors are required to:
•
• make judgements and accounting estimates that are reasonable and prudent;
•
state whether IFRSs as adopted by the European Union and applicable United Kingdom Accounting Standards have
been followed for the group and the parent company respectively, subject to any material departures disclosed and
explained in the group and parent company financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the
parent company will continue in business.
The directors confirm they have complied with all the above requirements in preparing the financial statements.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time
the financial position of the group and the parent company and enable them to ensure that the financial statements comply
with the Companies (Jersey) Law 1991. They have a general responsibility for taking such steps as are reasonable open to
them to safeguard the assets of the group and the parent company and to prevent and detect fraud and other irregularities.
So far as the directors are aware, there is no relevant audit information of which the group and parent company auditors are
unaware, and each director has taken all steps that he ought to have taken as a director in order to make himself aware of
any relevant audit information and to establish that the group and parent company’s auditors are aware of that information.
The directors are responsible for the maintenance and integrity of the company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The directors consider that the annual report and financial statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to assess the group’s performance, business
model and strategy.
Each of the directors, whose names and functions are listed in the Directors’ report confirm that, to the best of their
knowledge:
•
the group financial statements, which have been prepared in accordance with IFRSs as adopted by the European
Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the group;
the Directors’ report includes a fair review of the development and performance of the business and the position of the
group; and
the Strategic report contains a description of the principal risks and uncertainties that the group faces.
•
•
21
MySale Group Plc
Independent auditors' report to the members of MySale Group Plc
Report on the financial statements
Our opinion
In our opinion:
• Mysale Group plc’s group and parent company financial statements (the “financial statements”) give a true and fair
view of the state of the group’s and parent company’s affairs as at 30 June 2016 and of the group’s profit and cash
flows for the year then ended;
•
•
•
the group financials have been properly prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union;
the parent company financials have been properly prepared in accordance with United Kingdom Accounting
Standards; and
the financial statements have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
What we have audited
The financial statements, included within the Annual Report and Financial Statements, comprise:
•
•
•
•
•
•
•
the Balance sheet as at 30 June 2016;
the Parent company Balance Sheet as at 30 June 2016;
the Statement of profit and loss and other comprehensive income for the year then ended;
the Statement of cash flows for the year then ended;
the Statement of changes in equity for the year then ended;
the Parent company statement of changes in equity for the year then ended; and
the notes to the financial statements, which include a summary of significant accounting policies and other
explanatory information.
The financial reporting framework that has been applied in the preparation of the group financial statements is IFRSs as adopted by
the European Union, and applicable law. The financial reporting framework that has been applied in the preparation of the parent
company financial statements is United Kingdom Accounting Standards, comprising FRS 101: “Reduced Disclosure Framework”,
and applicable law.
In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect
of significant accounting estimates. In making such estimates, they have made assumptions and considered future events.
Opinion on other matter
In our opinion, the information given in the Strategic report, Corporate governance, Directors’ remuneration report, and Directors’
report for the financial year for which the financial statements are prepared is consistent with the financial statements.
Other matters on which we are required to report by exception
Accounting records and information and explanations received
Under the Companies (Jersey) Law 1991 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit ; or
•
•
•
proper accounting records have not been kept; or
proper returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
22
MySale Group Plc
Independent auditors' report to the members of MySale Group Plc
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 22, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”). Those standards require us to comply with the
Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Article
113A of the Companies (Jersey) Law 1991 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an assessment of:
• whether the accounting policies are appropriate to the group’s and parent company’s circumstances and have been
consistently applied and adequately disclosed;
•
•
the reasonableness of significant accounting estimates made by the directors; and
the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our own
judgements, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a
reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with
the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.
Craig Skelton (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
27 September 2016
23
MySale Group Plc
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2016
Revenue
Revenue from sale of goods
Cost of sale of goods
Gross profit
Other operating gains/(loss), net
Finance income
Finance costs
Finance income, net
Expenses
Selling and distribution expenses
Administration expenses
Share of loss of joint venture
Profit/(loss) before income tax (expense)/benefit
Note
2016
A$'000
2015
A$'000
252,289
(185,633)
235,853
(180,621)
66,656
55,232
2,173
125
(97)
28
204
195
(58)
137
(37,460)
(31,126)
(104)
(47,952)
(28,969)
(116)
167
(21,464)
5
7
35
Income tax (expense)/benefit
9
(364)
3,675
Loss after income tax (expense)/benefit for the year
(197)
(17,789)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Net change in the fair value of cash flow hedges taken to equity, net of tax
Foreign currency translation
23
23
(1,068)
(2,161)
740
6,219
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Loss for the year is attributable to:
Non-controlling interest
Owners of MySale Group Plc
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of MySale Group Plc
(3,229)
6,959
(3,426)
(10,830)
(20)
(177)
-
(17,789)
(197)
(17,789)
(20)
(3,406)
-
(10,830)
(3,426)
(10,830)
Cents
Cents
Basic earnings per share
Diluted earnings per share
36
36
(0.12)
(0.12)
(11.81)
(11.81)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
24
MySale Group Plc
Balance sheet
As at 30 June 2016
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Income tax receivable
Other
Total current assets
Non-current assets
Investments in joint venture
Property, plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Income tax payable
Provisions
Deferred revenue
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share premium account
Other reserves
Accumulated losses
Equity attributable to the owners of MySale Group Plc
Non-controlling interest
Total equity
Note
2016
A$'000
2015
A$'000
10
11
12
13
14
15
16
17
18
19
20
21
23
24
34,005
9,058
35,473
-
-
7,973
86,509
-
2,226
29,765
10,295
42,286
39,853
23,630
17,880
22
1,643
4,736
87,764
134
3,023
23,517
10,320
36,994
128,795
124,758
29,548
6,476
1,047
1,104
2,163
11,677
52,015
-
368
368
29,240
1,189
-
1,234
2,115
11,147
44,925
64
328
392
52,383
45,317
76,412
79,441
306,363
(125,763)
(104,168)
76,432
(20)
306,363
(122,931)
(103,991)
79,441
-
76,412
79,441
The financial statements of MySale Group Plc (company number 115584) were approved by the Board of Directors and
authorised for issue on 27 September 2016. They were signed on its behalf by:
___________________________ ___________________________
Carl Jackson Andrew Dingle
Director Director
The above balance sheet should be read in conjunction with the accompanying notes
25
MySale Group Plc
Statement of changes in equity
For the year ended 30 June 2016
Share
premium
account
A$'000
Other
reserves
A$'000
Accumulated
losses
A$'000
Non-
controlling
interest
A$'000
Total equity
A$'000
Balance at 1 July 2014
306,363
(133,595)
(86,202)
Loss after income tax benefit for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments (note 23)
-
-
-
-
-
(17,789)
6,959
-
6,959
(17,789)
3,705
-
Balance at 30 June 2015
306,363
(122,931)
(103,991)
-
-
-
-
-
-
86,566
(17,789)
6,959
(10,830)
3,705
79,441
Share
premium
account
A$'000
Other
reserves
A$'000
Accumulated
losses
A$'000
Non-
controlling
interest
A$'000
Total equity
A$'000
Balance at 1 July 2015
306,363
(122,931)
(103,991)
-
79,441
Loss after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments (note 23)
-
-
-
-
-
(177)
(20)
(197)
(3,229)
-
-
(3,229)
(3,229)
(177)
(20)
(3,969)
397
-
-
397
Balance at 30 June 2016
306,363
(125,763)
(104,168)
(20)
76,412
The above statement of changes in equity should be read in conjunction with the accompanying notes
26
MySale Group Plc
Statement of cash flows
For the year ended 30 June 2016
Cash flows from operating activities
Loss before income tax (expense)/benefit for the year
Adjustments for:
Depreciation and amortisation
Net loss on disposal of property, plant and equipment
Share of loss - joint ventures
Share-based payments
Interest income
Interest expense
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Increase in inventories
Decrease/(increase) in other operating assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in other provisions
Increase in deferred revenue
Interest received
Interest paid
Income taxes refunded/(paid)
Note
2016
A$'000
2015
A$'000
167
(21,464)
4,383
30
104
-
(125)
97
3,434
71
116
3,705
(195)
58
4,656
(14,275)
14,167
(17,593)
(3,153)
155
486
530
43
125
(97)
832
(19,508)
(5,077)
11,760
(1,728)
(5,407)
(4,469)
(38,326)
195
(58)
(49)
Net cash from/(used in) operating activities
108
(38,616)
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Payments for new joint venture capital invested
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of intangibles
Proceeds from release of security deposits
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayments of leases
Net cash generated from/(used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash
33
14
15
(5,300)
-
(782)
(3,248)
153
8
(120)
-
(104)
(1,033)
(3,404)
51
-
-
(9,289)
(4,112)
9,089
(3,775)
(91)
2,467
(2,759)
(330)
5,223
(622)
(3,958)
39,853
(1,890)
(43,350)
77,344
5,859
Cash and cash equivalents at the end of the financial year
10
34,005
39,853
The above statement of cash flows should be read in conjunction with the accompanying notes
27
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 1. General information
MySale Group Plc is a group consisting of MySale Group Plc (the 'company' or 'parent entity') and its subsidiaries (the
'group'). The financial statements of the group, in line with the location of the majority of the group's operations and
customers, are presented in Australian dollars and generally rounded to the nearest thousand.
The principal business of the group is the operating of online shopping outlets for consumer goods like ladies, men and
children’s fashion clothing, accessories, beauty and homeware items.
MySale Group Plc is a public company listed on the AIM (Alternate Investment Market), a sub-market of the London Stock
Exchange. The company is incorporated and registered under the Companies (Jersey) Law 1991. The company is
domiciled in Australia.
The registered office of the company is Ogier House, The Esplanade, St. Helier, JE4 9WG, Jersey and principal place of
business is at Unit 5, 111 Old Pittwater Road, Brookvale, NSW 2100, Australia.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 28 September 2016.
The directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
These financial statements are prepared in accordance with International Finance Reporting Standards ('IFRS' or 'IFRSs')
as adopted for use in the European Union (the 'EU') and IFRS Interpretations Committee interpretations (together
'EUIFRS').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for derivative financial
instruments at fair value.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
New, revised or amending Accounting Standards and Interpretations adopted
The group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
International Accounting Standards Board that are mandatory for the current reporting period. The adoption of these
Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of
the group.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of MySale Group Plc as at 30
June 2016 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the group has control. The group controls an entity when the group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the group.
28
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 2. Significant accounting policies (continued)
The acquisition of common control subsidiaries is accounted for using the pooling of interest method of accounting. The
acquisition of other subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in
equity attributable to the parent.
Where the group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The group
recognises the fair value of the consideration received and the fair value of any investment retained together with any gain
or loss in profit or loss.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, balance sheet and statement of changes in equity of the group. Losses incurred by the
group are attributed to the non-controlling interest in full, even if that results in a deficit balance.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
Foreign currency translation
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
Revenue is measured at the fair value of the consideration received, and represents amounts receivable for goods
supplied, stated net of trade discounts, returns and value of gift vouchers used. Revenue is recognised when the amount of
revenue can be reliably measured; when it is probable that future economic benefits will flow to the group; and when
specific criteria have been met for each of the group’s activities, as described below. The group bases its estimate of return
on historical results and provisions are made for goods expected to be returned.
Sale of goods
The group operates an online retail and wholesale business selling men's, ladies and children's apparel, accessories,
beauty and homeware items. Revenue from sale of goods is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer. Risks and rewards are considered passed to the buyer when the goods
have been delivered to the customer and it is reasonably assured the customer has accepted the goods. Sales represent
product shipped plus postage, less actual and estimated future returns and slotting fees, rebates and other trade discounts
accounted for as reductions of revenue. Online sales are usually by credit card or online payment.
It is the group's policy to sell its products to the customer with a right of return within 14 days. Accumulated experience is
used to estimate and provide for such returns at the time of sale.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
29
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 2. Significant accounting policies (continued)
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when
the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for
the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
MySale Group Plc (the 'head entity') and its wholly-owned Australian subsidiaries plus Apac Sale Group Pte. Ltd. have
formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the
tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has
applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to
members of the tax consolidated group.
Current and non-current classification
Assets and liabilities are presented in the balance sheet based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the group's
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is current when: it is expected to be settled in the group's normal operating cycle; it is held primarily for the
purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to
defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as
non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment.
30
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 2. Significant accounting policies (continued)
Inventories
Goods for resale are stated at the lower of cost and net realisable value on a 'weighted average cost' basis. Cost
comprises purchase, delivery and direct labour costs, net of rebates and discounts received or receivable.
Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of
rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to
make the sale.
A provision is made to write down any slow-moving or obsolete inventory to net realisable value, based on management
assessment of the expected future sales of that inventory, the condition of the inventory and the seasonality of the
inventory.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
Cash flow hedges
Cash flow hedges are used to cover the group's exposure to variability in cash flows that is attributable to particular risks
associated with a recognised asset or liability or a firm commitment which could affect profit or loss. The effective portion of
the gain or loss on the hedging instrument is recognised in other comprehensive income through the cash flow hedges
reserve in equity, whilst the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred out of
equity and included in the measurement of the hedged transaction when the forecast transaction occurs.
Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure that each
hedge is highly effective and continues to be designated as a cash flow hedge. If the forecast transaction is no longer
expected to occur, the amounts recognised in equity are transferred to profit or loss.
If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the hedge becomes
ineffective and is no longer a designated hedge, the amounts previously recognised in equity remain in equity until the
forecast transaction occurs.
Joint ventures
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to
joint control. Investments in joint ventures are accounted for using the equity method. Under the equity method, the share
of the profits or losses of the joint venture is recognised in profit or loss and the share of the movements in equity is
recognised in other comprehensive income. Income/(losses) earned from joint ventures increase/(reduce) the carrying
amount of the investment. When the group’s share of losses in a joint venture equals to or exceeds its interest in the joint
venture, including any other unsecured non-current receivables, the group does not recognise further losses, unless it has
obligations to make or has made payments on behalf of the joint venture.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Subsequent expenditure relating to plant and equipment that has already been recognised is added to the carrying amount
of the asset only when it is probable that future economic benefits associated with the item will flow to the group and the
cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in profit or loss when
incurred.
31
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 2. Significant accounting policies (continued)
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
over their expected useful lives as follows:
Leasehold improvements
Plant and equipment
Fixtures and fittings
Motor vehicles
5-7 years
3-7 years
5-10 years
4-5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or
the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively
retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the
lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the group will obtain ownership at the end of the lease
term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line
basis over the term of the lease.
Intangible assets
Externally acquired intangible assets are initially recognised at cost. Indefinite life intangible assets are not amortised and
are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost
less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of
intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible
asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of
consumption or useful life are accounted for prospectively by changing the amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at
cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not
subsequently reversed.
Customer relationships
Customer relationships acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite useful life of three years.
32
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 2. Significant accounting policies (continued)
ERP system and software
Acquired enterprise resource planning ('ERP') systems and software costs are initially capitalised at cost which includes
the purchase price, net of any discounts and rebates, and other directly attributable cost of preparing the asset for its
intended use. Direct expenditure including employee costs, which enhances or extends the performance of these systems
beyond its specifications and which can be reliably measured, is added to the original costs incurred. These costs are
amortised on a straight-line basis over the period of their expected benefit, being their finite useful lives of between three
and five years.
Costs associated with maintenance are recognised as an expense in profit or loss when incurred.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the group prior to the end of the financial year and
which are unpaid. Trade and other payables are initially recognised at fair value and subsequently measured at amortised
cost. Due to their short-term nature they are not discounted. The amounts are unsecured and are usually paid within 30
days of recognition.
Deferred revenue
Deferred revenue relates to cash received in advance from customers where the goods have not been delivered as at the
reporting date.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Provisions
Provisions are recognised when the group has a present (legal or constructive) obligation as a result of a past event, it is
probable the group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value
of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the
provision resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries and other employee benefits expected to be settled wholly within 12 months of the
reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
Employee benefits not expected to be settled within 12 months of the reporting date are measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the reporting date on
corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
33
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 2. Significant accounting policies (continued)
Long-term employee incentive plan
The group operates an employee incentive plan to reward and retain key employees. The group recognises a provision
where contractually obliged or where there is a past practice that has created a constructive obligation.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees. There are no cash-settled share-based
compensation benefits.
Equity-settled transactions are awards of shares, or options over shares that are provided to employees in exchange for
the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of
dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and
the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the
group receives the services that entitle the employees to receive payment. No account is taken of any other vesting
conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair
value measurement.
34
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 2. Significant accounting policies (continued)
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to
profit or loss.
On the acquisition of a business, the group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the group's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is
recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based
on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement
period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the
information possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of MySale Group Plc, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
35
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 2. Significant accounting policies (continued)
Value Added Tax ('VAT'), Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated VAT/GST, unless the VAT/GST incurred
is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of VAT/GST receivable or payable. The net amount of
VAT/GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the
balance sheet.
Cash flows are presented on a gross basis. The VAT/GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of VAT/GST recoverable from, or payable to, the tax
authority.
Rounding of amounts
Amounts in this report have been rounded off to the nearest thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations not yet mandatory or early adopted
International Financial Reporting Standards ('IFRS') and Interpretations that have recently been issued or amended but are
not yet mandatory, have not been early adopted by the group for the annual reporting period ended 30 June 2016. The
group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant and
material to the group, are set out below:
IFRS 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all
previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall
be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect
contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets
are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on
initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive
income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the
entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge
accounting requirements are intended to more closely align the accounting treatment with the risk management activities of
the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance.
Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has increased
significantly since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional
new disclosures. The group will adopt this standard from 1 July 2018 and the impact of its adoption is expected to be
minimal.
36
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 2. Significant accounting policies (continued)
IFRS 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a
single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or
implied) to be identified, together with the separate performance obligations within the contract; determine the transaction
price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate
performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation
approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied.
Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance
obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is
satisfied when the service has been provided, typically for promises to transfer services to customers. For performance
obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue
should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity's
balance sheet as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's
performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to
understand the contracts with customers; the significant judgements made in applying the guidance to those contracts; and
any assets recognised from the costs to obtain or fulfil a contract with a customer. The group will adopt this standard from
1 January 2018 but the impact of its adoption is yet to be assessed by the group.
IFRS 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces IAS 17
'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a
'right-of-use' asset will be capitalised in the balance sheet, measured as the present value of the unavoidable future lease
payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of
low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby
either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability
corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received,
initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating
lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs)
and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the
expenses associated with the lease under IFRS 16 will be higher when compared to lease expenses under IAS 17.
However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating
expense is replaced by interest expense and depreciation in profit or loss under IFRS 16. For classification within the
statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either
operating or financing activities) component. For lessor accounting, the standard does not substantially change how a
lessor accounts for leases. The group will adopt this standard from 1 July 2019 but the impact of its adoption is yet to be
assessed by the group.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will
seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next
financial year are discussed below.
Provision for obsolete and slow moving inventories
The provision for obsolete and slow moving inventories assessment requires a degree of estimation and judgement. The
level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other
factors that affect inventory obsolescence.
37
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Estimation of useful lives of assets
The group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical
innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less
than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be
written off or written down.
Goodwill
The group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
has suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-
generating units have been determined based on value-in-use calculations. These calculations require the use of
assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated
future cash flows. No impairment charge was required in 2016 (2015: A$nil).
Impairment of non-financial assets
The group assesses impairment of non-financial assets at each reporting date by evaluating conditions specific to the
group and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of
the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a
number of key estimates and assumptions.
Income tax
The group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in
determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. The group recognises liabilities for anticipated tax
audit issues based on the group's current understanding of the tax law. Where the final tax outcome of these matters is
different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in
which such determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the group considers it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Note 4. Operating segments
Identification of reportable operating segments
The group's operating segments are determined based on the internal reports that are reviewed and used by the Board of
Directors (being the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the
allocation of resources.
The CODM reviews revenue and gross profit by reportable segments, being geographical regions. The accounting policies
adopted for internal reporting to the CODM are consistent with those adopted in these financial statements.
The group’s operates separate websites in each country that it sells goods in. Revenue from external customers is
attributed to each country based on the activity on that countries website. Similar types of goods are sold in all segments.
The group's operations are unaffected by seasonality.
Intersegment transactions
Intersegment transactions were made at market rates and are eliminated on consolidation.
Segment assets and liabilities
Assets and liabilities are managed on a group basis. The CODM does not regularly review any asset or liability information
by segment and, accordingly there is no separate segment information. Refer to the balance sheet for group assets and
liabilities.
Major customers
During the year ended 30 June 2016 there were no major customers (2015: none). A customer is considered major if its
revenues are 10% or more of the group's revenue.
38
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 4. Operating segments (continued)
Operating segment information
- 2016
Revenue
Sales to external customers
Total revenue
Gross profit
Other operating gains, net
Selling and distribution expenses
Administration expenses
Finance income
Finance costs
Share of loss of joint venture
Profit before income tax expense
Income tax expense
Loss after income tax expense
- 2015
Revenue
Sales to external customers
Total revenue
Gross profit
Other operating gains, net
Selling and distribution expenses
Administration expenses
Finance income
Finance costs
Share of loss of joint venture
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Note 5. Other operating gains/(loss), net
Net foreign exchange gain/(loss)
Net gain on disposal of property, plant and equipment
Other (expense)/income
Other operating gains, net
Australia and South-East
New Zealand
A$'000
Asia
A$'000
Rest of the
world
A$'000
Total
A$'000
210,710
210,710
31,590
31,590
9,989
9,989
252,289
252,289
57,060
7,546
2,050
66,656
2,173
(37,460)
(31,126)
125
(97)
(104)
167
(364)
(197)
Australia and South-East Rest of the
Asia
New Zealand
A$'000
A$'000
World
A$'000
Total
A$'000
205,340
205,340
26,333
26,333
4,180
4,180
235,853
235,853
50,879
3,472
881
55,232
204
(47,952)
(28,969)
195
(58)
(116)
(21,464)
3,675
(17,789)
2016
A$'000
2015
A$'000
2,177
19
(23)
2,173
(205)
-
409
204
39
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 6. EBITDA reconciliation (earnings before interest, taxation, depreciation and amortisation)
EBITDA reconciliation
Profit/(Loss) before income tax
Add: Share of loss of joint venture
Less: Interest income
Add: Interest expense
Add: Depreciation and amortisation
EBITDA
Underlying EBITDA represents EBITDA adjusted for significant, unusual and other one-off items.
Underlying EBITDA reconciliation
EBITDA
Share-based payments expenses
Reorganisation and discontinued operations
One off costs including IPO costs, acquisition expenses, one-off expenses
Loss on revaluation of long term incentive plan
Unrealised foreign exchange (gain)/loss
Underlying EBITDA
Note 7. Expenses
Profit/(loss) before income tax includes the following specific expenses:
Sales, distribution and administration expenses:
Staff costs (note 8)
Marketing expenses
Occupancy costs
Merchant and other professional fees
Depreciation and amortisation
Other administration costs
Total sales, distribution and administration expenses
Finance costs
Interest and finance charges paid/payable
Occupancy costs include:
Minimum operating lease payments
2016
A$'000
2015
A$'000
167
104
(125)
97
4,383
(21,464)
116
(195)
58
3,434
4,626
(18,051)
2016
A$'000
2015
A$'000
4,626
397
265
1,997
-
(1,819)
(18,051)
335
3,493
2,860
519
1,336
5,466
(9,508)
2016
A$'000
2015
A$'000
29,716
16,714
5,617
5,936
4,383
6,220
30,436
27,001
5,326
5,534
3,434
5,190
68,586
76,921
97
58
4,372
3,420
Cost of inventories recognised as an expense in 'cost of sales' in profit or loss
149,297
139,676
40
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 8. Staff costs
Aggregate remuneration:
Wages and salaries
Social security costs
Long term employee incentive plan
Other staff costs and benefits
Total staff costs
The average monthly number of employees (including executive directors and those on a
part-time basis) was:
Sales and distribution
Administration
2016
A$'000
2015
A$'000
24,463
2,095
397
2,761
24,399
1,803
335
3,899
29,716
30,436
2016
2015
390
193
583
387
172
559
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 expense/(benefit)
Income tax expense/(benefit)
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense/(benefit)
Deferred tax included in income tax expense/(benefit) comprises:
Decrease/(increase) in deferred tax assets (note 16)
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
Profit/(loss) before income tax (expense)/benefit
Tax at the statutory tax rate of 30%
Effect of overseas tax rates
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-deductible expenses
Tax-exempt income
Tax revaluation upon group restructure
Current year tax losses not recognised
Adjustment recognised for prior years
Income tax expense/(benefit)
2016
A$'000
2015
A$'000
759
(413)
18
1,194
(5,013)
144
364
(3,675)
(413)
(5,013)
167
(21,464)
50
-
218
(26)
-
58
64
364
(6,439)
(412)
704
-
2,280
48
144
(3,675)
The tax rates of the main jurisdictions are Australia 30% (2015: 30%), Singapore 17% (2015: 17%), New Zealand 28%
(2015: 28%), United Kingdom 20% (2015: 20%) and United States 42.8% (2015: 42.8%).
41
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 10. Current assets - cash and cash equivalents
Cash at bank
Bank deposits at call
Note 11. Current assets - trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
2016
A$'000
2015
A$'000
28,805
5,200
39,853
-
34,005
39,853
2016
A$'000
2015
A$'000
9,058
-
23,667
(37)
9,058
23,630
Trade receivables include uncleared cash receipts due from online customers which amounted to A$2,473,000 (2015:
A$1,529,000).
Impairment of receivables
The group has recognised a loss of A$nil (2015: A$37,000) in profit or loss in respect of impairment of receivables for the
year ended 30 June 2016.
The ageing of the impaired receivables provided for above are as follows:
3 to 6 months overdue
Movements in the provision for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Unused amounts reversed
Closing balance
2016
A$'000
2015
A$'000
-
37
2016
A$'000
2015
A$'000
37
-
(37)
-
-
37
-
37
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to A$580,000 as at 30 June
2016 (A$203,000 as at 30 June 2015).
The ageing of the past due but not impaired receivables are as follows:
3 to 6 months overdue
2016
A$'000
2015
A$'000
580
203
The group did not consider a credit risk on the aggregate balances after reviewing credit terms of customers based on
recent collection practices.
42
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 12. Current assets - inventories
Goods for resale
Obsolete and slow moving inventory provision
Stock in transit
2016
A$'000
2015
A$'000
35,395
(456)
34,939
16,252
(343)
15,909
534
1,971
35,473
17,880
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2016
amounted to A$789,000 (2015: A$904,000). This expense has been included in 'cost of sales' in profit or loss.
Note 13. Current assets - other
Prepayments
Prepaid inventory
Other deposits
Other current assets
2016
A$'000
2015
A$'000
984
6,271
435
283
432
3,948
316
40
7,973
4,736
Prepaid inventory relates to the costs of goods for resale that have been paid for by the group but not delivered to its
distribution centres for further dispatch to the customers who placed the orders as at the reporting date. The corresponding
cash received in advance from customers are accounted for within deferred revenue category in the balance sheet which
includes the total amount of cash received for the goods not delivered to customers at the reporting date.
Note 14. Non-current assets - property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Fixtures and fittings - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
43
2016
A$'000
2015
A$'000
993
(784)
209
4,535
(3,068)
1,467
1,025
(528)
497
391
(338)
53
942
(563)
379
4,640
(2,582)
2,058
836
(456)
380
538
(332)
206
2,226
3,023
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 14. Non-current assets - property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Leasehold
Plant and
improvements equipment
A$'000
A$'000
Fixtures
and fittings
A$'000
Motor
vehicles
A$'000
Total
A$'000
Balance at 1 July 2014
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2015
Additions
Disposals
Exchange differences
Depreciation expense
453
119
-
20
(213)
379
71
(4)
(4)
(233)
2,080
788
(100)
144
(854)
2,058
427
(74)
(30)
(914)
Balance at 30 June 2016
209
1,467
Assets pledged as security
Refer to note 20 for property, plant and equipment pledged as security.
506
32
(11)
(13)
(134)
380
284
(3)
(11)
(153)
497
180
94
-
(1)
(67)
206
-
(102)
(5)
(46)
3,219
1,033
(111)
150
(1,268)
3,023
782
(183)
(50)
(1,346)
53
2,226
Property, plant and equipment secured under finance leases
Refer to note 31 for further information on property, plant and equipment secured under finance leases.
Depreciation expense is included in the 'administration expenses' in profit or loss.
Note 15. Non-current assets - intangibles
2016
A$'000
2015
A$'000
21,504
16,849
3,512
(1,536)
1,976
6,986
(3,070)
3,916
3,923
(1,554)
2,369
2,294
(765)
1,529
4,595
(1,683)
2,912
3,084
(857)
2,227
29,765
23,517
Goodwill - at cost
Customer relationships - at cost
Less: Accumulated amortisation
Software - at cost
Less: Accumulated amortisation
ERP system
Less: Accumulated amortisation
44
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 15. Non-current assets - intangibles (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Balance at 1 July 2014
Additions
Disposals
Exchange differences
Amortisation expense
Balance at 30 June 2015
Additions
Additions through business combinations (note
33)
Disposals
Exchange differences
Amortisation expense
Goodwill
A$'000
Customer
relationships Software
A$'000
A$'000
ERP
system
A$'000
Total
A$'000
16,849
-
-
-
-
16,849
-
4,655
-
-
-
2,019
-
-
217
(707)
1,529
-
1,495
-
(94)
(954)
2,110
1,761
-
11
(970)
2,912
2,408
-
(8)
(11)
(1,385)
1,461
1,265
(10)
-
(489)
2,227
840
-
-
-
(698)
22,439
3,026
(10)
228
(2,166)
23,517
3,248
6,150
(8)
(105)
(3,037)
Balance at 30 June 2016
21,504
1,976
3,916
2,369
29,765
Amortisation expense is included in 'administration expenses' in profit or loss.
Goodwill is allocated to the group’s cash-generating units ('CGUs') identified according to business model as follows:
Online Flash
Online Retail
2016
A$'000
2015
A$'000
17,144
4,360
16,849
-
21,504
16,849
The recoverable amounts of the CGUs were determined based on value-in-use. Cash flow projections used in the value-in-
use calculations were based on financial budgets approved by management covering a five year period. Cash flows
beyond the five year period were extrapolated using the estimated growth rates stated below:
Management determined budgeted gross margin based on expectations of market developments. The growth rates used
were conservative based on industry forecasts. The discount rates used were pre-tax and reflected specific risks relating to
the CGUs.
Online Flash
Key assumptions used for value-in-use calculations:
Budgeted gross margin
Five year compound growth rate
Long term growth rate
Pre-tax discount rate
45
2016
%
2015
%
28.1%
12.0%
2.0%
9.0%
28.0%
7.0%
2.0%
9.0%
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 15. Non-current assets - intangibles (continued)
Based on the assessment, no impairment charge is required. Management have performed a number of sensitivity tests on
the above rates and note that there is no impairment indicators arising from this analysis. The recoverable amount
exceeded the carrying amount by A$31,734,000.
Online Retail
Key assumptions used in value-in-use calculation
Budgeted gross margin
Five year compound growth rate
Long term growth rate
Pre-tax discount rate
2016
%
22.7%
50.0%
2.0%
9.0%
Based on the assessment, no impairment charge is required. Management have performed a number of sensitivity tests on
the above rates and note that there is no impairment indicators arising from this analysis. The recoverable amount
exceeded the carrying amount by A$4,076,000.
Note 16. Non-current assets - deferred tax
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses
Accrued expenses
Provisions
Sundry
Property, plant and equipment
Intangibles
Deferred tax asset
Movements:
Opening balance
Credited/(charged) to profit or loss (note 9)
Additions through business combinations (note 33)
Exchange gain/(loss)
Closing balance
2016
A$'000
2015
A$'000
9,324
701
847
269
(253)
(593)
8,863
310
807
1,592
(946)
(306)
10,295
10,320
10,320
413
(360)
(78)
5,396
5,013
-
(89)
10,295
10,320
Deferred income tax assets are recognised for tax losses, non-deductible accruals and provisions and capital allowances
carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable.
46
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 17. Current liabilities - trade and other payables
Trade payables
Other payables and accruals
Payable to other related party
Sales tax payable
Refer to note 26 for further information on financial instruments.
Note 18. Current liabilities - borrowings
Bank loans
Bank loans under interchangeable facilities
Finance lease liability
2016
A$'000
2015
A$'000
22,464
6,168
50
866
23,838
4,730
-
672
29,548
29,240
2016
A$'000
2015
A$'000
5,200
1,212
64
-
1,098
91
6,476
1,189
Refer to note 20 for further information on assets pledged as security and financing arrangements.
Refer to note 26 for further information on financial instruments.
Note 19. Current liabilities - provisions
Employee benefits provision
Lease make good provision
Gift voucher provision
Sales returns provision
2016
A$'000
2015
A$'000
770
182
699
512
823
185
710
397
2,163
2,115
Lease make good provision
The provision represents the present value of the estimated costs to make good the premises leased by the group at the
end of the respective lease terms.
Gift voucher provision
The provision represents the estimated costs to honour gift vouchers that are in circulation and not expired.
Sales return provision
The provision represents the costs for goods expected to be returned by customers.
47
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 19. Current liabilities - provisions (continued)
Movements in provisions
Movements in each class of provision during the current financial year, other than employee benefits, are set out below:
- 2016
Carrying amount at the start of the year
Additional provisions recognised
Amounts used
Foreign exchange differences
Carrying amount at the end of the year
Note 20. Non-current liabilities - borrowings
Finance lease liability
Refer to note 26 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Bank loans
Bank loans under interchangeable facilities
Finance lease liability
Lease make
good
provision
A$'000
Gift vouchers
provision
A$'000
Sales returns
provision
A$'000
185
-
-
(3)
182
710
699
(710)
-
699
397
512
(397)
-
512
2016
A$'000
2015
A$'000
-
64
2016
A$'000
2015
A$'000
5,200
1,212
64
-
1,098
155
6,476
1,253
The group has a A$12,233,000 (2015: A$7,174,000) borrowing facility with Australia and New Zealand Banking Group
Limited ('ANZ') which is secured by a Corporate Guarantee and Indemnity. The group is required to comply with the
following covenants in relation to this facility:
● EBITDA and sales must not be less then amounts agreed with ANZ, being 90% of budgeted EBITDA and sales on a half-
yearly basis. The group is in compliance with the covenant;
● Current ratio being the ratio of total current assets over total current liabilities must exceed 1.5:1 at all times. The group is
in compliance with the covenant and its strategy is to maintain the current ratio above the 1.5:1 requirement; and
● Distributions to shareholders must not be made without the written consent of ANZ. The group is in compliance with the
covenant as of the reporting date and at the date these financial statements were authorised for issue.
The group has a GBP £3,000,000 (2015: £3,000,000) borrowing facility with Hong Kong and Shanghai Banking
Corporation Plc ('HSBC') which is secured by a Corporate Guarantee. Refer to updated facility details outlines in Note 38
Event after the reporting period.
48
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 20. Non-current liabilities - borrowings (continued)
Assets pledged as security
All bank borrowings of the group are secured by a Corporate Guarantee and Indemnity. Average interest rate incurred on
these bank borrowings was 2.0% (2015: 2.1%). The borrowings are expected to be repaid within 90 days.
The lease liabilities are effectively secured as the rights to the leased assets, recognised in the balance sheet, revert to the
lessor in the event of default.
The carrying amounts of assets pledged as security for current and non-current borrowings are:
2016
A$'000
2015
A$'000
5,200
-
2016
A$'000
2015
A$'000
9,970
67
1,805
6,457
18,299
5,200
21
-
2,229
7,450
4,770
46
1,805
4,228
10,849
5,914
63
2,053
5,930
13,960
-
31
-
4,803
4,834
5,914
32
2,053
1,127
9,126
2016
A$'000
2015
A$'000
368
328
Cash and cash equivalents
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank loans and overdrafts
Bank guarantees
Letters of credit
Bank loans under interchangeable facilities
Used at the reporting date
Bank loans and overdrafts
Bank guarantees
Letters of credit
Bank loans under interchangeable facilities
Unused at the reporting date
Bank loans and overdrafts
Bank guarantees
Letters of credit
Bank loans under interchangeable facilities
Note 21. Non-current liabilities - provisions
Employee benefits provision
Long term incentive plan
Refer to note 37 for details on the long term incentive plan.
49
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 22. Equity - share capital
2016
Shares
2015
Shares
2016
A$'000
2015
A$'000
Ordinary shares £nil each - issued and fully paid
151,331,652 150,647,610
-
-
Authorised share capital
The company is a no par value company and is authorised to issue an unlimited number of ordinary shares of £nil value
each under its memorandum of association.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Capital risk management
The group’s objectives when managing capital is to safeguard the group’s ability to continue as a going concern, so that it
can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital. It is the group’s strategy to maintain borrowing base ratio well below 65%
requirement in order to comply with the borrowing facility covenants. Refer to note 20.
Capital is regarded as total equity, as recognised in the balance sheet, plus net debt. Net debt is calculated as total
borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
Note 23. Equity - other reserves
Foreign currency translation reserve
Hedging reserve - cash flow hedges
Share-based payments reserve
Capital reorganisation reserve
2016
A$'000
2015
A$'000
3,938
(1,047)
4,102
(132,756)
6,099
21
3,705
(132,756)
(125,763)
(122,931)
Foreign currency translation reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign
operations to Australian dollars.
Hedging reserve - cash flow hedges
The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined
to be an effective hedge.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Capital reorganisation reserve
The reserve is used to recognise the difference between the purchase price of APAC Sale Group Pte. Ltd. and the net
assets acquired following a group reorganisation in 2014.
50 (DRAFT 6)
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 23. Equity - other reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Foreign
currency
A$'000
Hedging
A$'000
Share-based
payments
A$'000
Capital
reorganisation
A$'000
Balance at 1 July 2014
Foreign currency translation reserve
Cash flow hedge
Share-based payments
Balance at 30 June 2015
Foreign currency translation reserve
Cash flow hedge
Share-based payments
(120)
6,219
-
-
6,099
(2,161)
-
-
(719)
-
740
-
21
-
(1,068)
-
-
-
-
3,705
3,705
-
-
397
(132,756)
-
-
-
(132,756)
-
-
-
Total
A$'000
(133,595)
6,219
740
3,705
(122,931)
(2,161)
(1,068)
397
Balance at 30 June 2016
3,938
(1,047)
4,102
(132,756)
(125,763)
Note 24. Equity - non-controlling interest
Accumulated losses
The non-controlling interest has a 40% equity holding in Invite to Buy.
Note 25. Equity - dividends
2016
A$'000
2015
A$'000
(20)
-
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 26. Financial instruments
Financial risk management objectives
The group’s activities expose it to market risk (including foreign currency risk and interest rate risk), credit risk and liquidity
risk. The group’s overall risk management strategy seeks to minimise any adverse effects from the unpredictability of
financial markets on the group’s financial performance. The group uses financial instruments such as currency forwards to
hedge certain financial risk exposures.
The Board of Directors (the 'Board') is responsible for setting the objectives and underlying principles of financial risk
management for the group.
Financial risk management is carried out by the executive directors and the executive management team in accordance
with the policies set by the Board. They identify, evaluate and hedge financial risks in close co-operation with the group’s
operating units. Regular reports are circulated and reviewed by executive directors.
Market risk
Foreign currency risk
The company is incorporated in Jersey and the group operates from Australia with operations in New Zealand, USA and
Asia (including Malaysia, Thailand and Singapore). Entities in the group regularly transact in currencies other than their
respective functional currencies ('foreign currencies'). The group purchases products in these countries and other
European Union countries.
51
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 26. Financial instruments (continued)
Currency risk arises within entities in the group when transactions are denominated in foreign currencies. To manage the
currency risk, the executive management team manages the overall currency exposure mainly by entering into currency
forwards with banks.
The carrying amount of the group's foreign currency denominated financial assets and financial liabilities at the reporting
date were as follows:
US dollars
Euros
Pound sterling
New Zealand dollars
Singapore dollars
Malaysian ringgit
Thai baht
Chinese Yuan
Others
Assets
Liabilities
2016
A$'000
2015
A$'000
2016
A$'000
2015
A$'000
3,052
5,940
15,942
4,842
4,585
1,958
-
586
78
2,556
6,111
34,903
3,849
2,343
1,280
417
-
-
2,399
2,780
1,188
800
6
17
-
-
95
3,691
2,499
3,791
605
103
23
2
-
7
36,983
51,459
7,285
10,721
The group had net assets denominated in foreign currencies of A$29,698,000 as at 30 June 2016 (2015: A$40,738,000).
Based on this exposure, had the Australian dollar weakened by 10% / strengthened by 10% (2015: weakened by 10% /
strengthened by 10%) against these foreign currencies with all other variables held constant, the group's loss before tax for
the year would have been A$2,969,000 lower / higher (2015: A$4,073,000 lower / higher). The percentage change is the
expected overall volatility of the significant currencies, which is based on management’s assessment of reasonable
possible fluctuations taking into consideration movements over the last 6 months each year and the spot rate at each
reporting date. The actual foreign exchange profit for the year ended 30 June 2016 was A$2,177,000 (2015: loss of
A$205,000).
Price risk
The group is not exposed to any significant price risk.
Cash flow and fair value interest rate risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due
to changes in market interest rates.
The group is not exposed to any significant cash flow interest rate risks arising mainly from interest bearing deposits.
Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the
group. The major classes of financial assets of the group are bank deposits. For bank deposits, the group adopts the policy
of dealing only with high credit quality financial institutions and major banks. As the principal business of the group is online
cash sale, trade receivables from wholesale business are relatively immaterial and the group adopts the policy of dealing
with customers of appropriate credit history.
The group’s maximum exposures to credit risk at the end of the reporting period in relation to each class of recognised
financial assets is the carrying amount of those assets as indicated in the balance sheet.
Concentration of credit risk
There are no significant concentrations of credit risk within the group. The credit risk on liquid funds is limited as the
counterparties are banks with high credit ratings.
Credit risk is managed by limiting the amount of credit exposure to any single counter-party for cash deposits.
52
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 26. Financial instruments (continued)
Liquidity risk
The group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Unused borrowing facilities at the reporting date:
Bank loans and overdrafts
Bank guarantees
Letters of credit
Bank loans under interchangeable facilities
2016
A$'000
2015
A$'000
4,770
46
1,805
4,228
10,849
5,914
32
2,053
1,127
9,126
Remaining contractual maturities
Trade payables and other financial liabilities mainly arise from the financing of assets used in the group's ongoing
operations such as plant and equipment and investments in working capital. These assets are considered in the group's
overall liquidity risk.
The following tables detail the group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the balance sheet.
Weighted
average
interest rate
%
1 year or less
A$'000
Between 1
and 5 years
A$'000
Over 5 years
A$'000
Remaining
contractual
maturities
A$'000
- 2016
Non-derivatives
Non-interest bearing
Trade and other payables
Sales tax payable
Payable to related party
Interest-bearing - variable
Bank loans
Lease liability
Total non-derivatives
Derivatives
Forward foreign exchange contracts net settled
Total derivatives
-
-
-
2.00%
8.97%
-
28,632
866
50
6,412
65
36,025
1,047
1,047
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28,632
866
50
6,412
65
36,025
1,047
1,047
53
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 26. Financial instruments (continued)
- 2015
Non-derivatives
Non-interest bearing
Trade and other payables
Sales tax payable
Interest-bearing - variable
Bank loans
Lease liability
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
A$'000
Between 1
and 5 years
A$'000
Over 5 years
A$'000
Remaining
contractual
maturities
A$'000
-
-
2.11%
8.00%
28,568
672
1,098
94
30,432
-
-
-
72
72
-
-
-
-
-
28,568
672
1,098
166
30,504
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 27. Fair value measurement
Fair value hierarchy
The following tables detail the group's assets and liabilities, measured or disclosed at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices)
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
- 2016
Liabilities
Derivative financial instruments
Total liabilities
- 2015
Assets
Derivative financial instruments
Total assets
Level 1
A$'000
Level 2
A$'000
Level 3
A$'000
Total
A$'000
Level 1
A$'000
-
-
-
-
1,047
1,047
Level 2
A$'000
Level 3
A$'000
22
22
-
-
-
-
1,047
1,047
Total
A$'000
22
22
There were no transfers between levels during the financial year.
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts of
trade receivables and trade payables are assumed to approximate their fair values due to their short-term nature. The fair
value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest
rate that is available for similar financial instruments. Also, there is no material difference between the fair value of cash
and cash equivalents and the carrying amounts.
Valuation techniques for fair value measurements categorised within level 2
The fair value of the derivative financial instruments, being forward exchange contracts, are determined using quoted
forward exchange rates at the reporting date. These instruments are included in Level 2.
54
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 28. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the group is set out
below:
Short-term employee benefits
Post-employment benefits
2016
A$'000
2015
A$'000
1,734
125
1,574
121
1,859
1,695
Key management includes directors (executives and non-executives) and key heads of departments.
During the financial year ended 30 June 2016 A$nil (2015: 22,636) performance rights were granted to members of key
management personnel under share-based payments plans operated by the group as disclosed in note 37.
Note 29. Remuneration of auditors
Services provided by the company's auditors and network firms
During the year the company (including its overseas subsidiaries) obtained the following services from the company's
auditors at costs as detailed below:
Fees payable to the company's auditor and its associates for the audit of the consolidated
financial statements
Fees payable to the company's auditor and its associates for other services:
- the audit of the company's subsidiaries
- review related assurance services
- taxation services
- other non-audit services
2016
A$'000
2015
A$'000
190
240
68
129
136
763
245
273
159
234
54
965
Note 30. Contingent liabilities
The group issued a bank guarantee through its banker, ANZ Bank Limited ('ANZ'), in respect of lease obligations
amounting to A$874,000 (2015: A$874,000). As 30 June 2016, the group had no longer had a bank guarantee through
ANZ in respect of a merchant fee agreement deposit (2015: USD$2,100,000).
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 (2015: NZ$100,000) and lease obligations to NZ$22,000 (2015: NZ$34,000).
55
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 31. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Lease commitments - finance
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing:
Finance lease liability - current (note 18)
Finance lease liability - non-current (note 20)
Sub-lease receivable - operating
Committed at the reporting date but not recognised as assets, receivables:
Within one year
One to five years
2016
A$'000
2015
A$'000
3,494
10,167
3,972
3,094
13,661
7,066
65
-
65
(1)
64
64
-
64
94
72
166
(11)
155
91
64
155
559
585
742
1,048
1,144
1,790
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$29,000 (2015:
A$102,000) and A$35,000 (2015: A$74,000) respectively at the reporting date.
The company also subleases some of its office and warehouse space to related and non-related parties. The subleases
have varying terms and expiry dates.
Note 32. Related party transactions
Parent entity
MySale Group Plc is the parent company of the group.
Subsidiaries
Interests in subsidiaries are set out in note 34.
Joint ventures
Interests in joint ventures are set out in note 35.
56
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 32. Related party transactions (continued)
Key management personnel
Disclosures relating to key management personnel are set out in note 28.
Transactions with related parties
The following transactions occurred with related parties:
Sale of goods and services:
Sale of goods to other related party (Arcadia and Sports Direct)
Sale of rent and freight services to other related party (recharges of payment)
Payment for goods and services:
Purchase of goods from other related party
2016
A$'000
2015
A$'000
22,521
1,028
5,236
1,300
685
2,032
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables:
Trade receivables from other related party
Current payables:
Trade payables to other related party
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
2016
A$'000
2015
A$'000
1,784
6,674
224
1,740
57
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 33. Business combinations
Acquisitions of online businesses from Grays eCommerce Group Limited
On 31 January 2016, the group acquired the trade and assets of three online consumer retail businesses from Grays
eCommerce Group Limited in Australia. The assets included a membership database of 6,500,000 members. The
purchase price of the assets was A$5,200,000.
Details of the acquisition are as follows:
Fair value of assets acquired
Customer list
Deferred tax liability
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Fair value
A$'000
1,200
(360)
840
4,360
5,200
5,200
The goodwill is attributable to the synergies expected to be achieved from operating the retail businesses alongside the
group’s existing online flash businesses. The goodwill recognised will not be deductible for tax purposes.
Acquisition of trade and assets from Thaisale.co.th
On 1 April 2016, the group acquired the trade and assets of the Thaisale.co.th joint venture in Thailand. Thaisale.co.th was
previously partly owned by the group via a joint venture. Refer to Note 35 for more details. The assets included a
membership database of 652,000 members. The purchase price of the assets was A$590,000.
Details of the acquisition are as follows:
Fair value of assets acquired
Customer lists
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Waiver of debt to Minor Corporation Public Company Limited
Fair value
A$'000
295
295
295
590
100
490
590
The goodwill is attributable to the synergies expected to be achieved from integrating the business into the group’s existing
online flash businesses. The goodwill recognised will not be deductible for tax purposes.
Change in control of joint venture Invite to Buy
On 1 April 2016, there was a change in the control of the joint venture Invite to Buy. Refer to Note 35 for more details.
58 (DRAFT 6)
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 33. Business combinations (continued)
The goodwill is attributable to the synergies expected to be achieved from integrating the business into the group’s existing
online flash businesses. The goodwill recognised will not be deductible for tax purposes.
Note 34. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 2:
Principal place of
business /
Country of
incorporation
Ownership
interest
2016
%
Principal activities
Ownership
interest
2015
%
Parent
Non-controlling interest
Ownership
interest
2015
%
Ownership
interest
2016
%
Name
Australia
Singapore
United Kingdom
United Kingdom
United States of
America
United Kingdom
New Zealand
APAC Sale Group
Pte. Ltd.
APAC Sale Italy s.r.l Italy
APAC Sales Group,
Inc.
APAC UK
Procurement Co
Limited
APACSale Limited
BuyInvite Pty
Limited
Cocosa Lifestyle
Limited
NZ Sale Limited
Ozsale Pty Limited Australia
Ozsale Sdn. Bhd.
Malaysia
Private Sale Asia
Pacific Pte Ltd
Simply Sent It Pty
Limited
Singsale Pte. Ltd.
APAC France SARL France
Brand Search Pty
Limited
Chic Global Limited United Kingdom
BuyInvite NZ Pty
Limited
Click Frenzy
Australia Pty Ltd
NZ Wine Limited
My Trade Ltd
MySale Group
Limited
Handelsselskabet
Branch of Click
Frenzy Australia Pty
Ltd
Australia
New Zealand
United Kingdom
Hong Kong
Denmark
Australia
Singapore
Singapore
Australia
Australia
Russia
Trading company
Trading company
100%
100%
100%
100%
Trading company
100%
100%
Trading company
Trading company
100%
100%
100%
100%
Trading company
100%
100%
Trading company
Trading company
Trading company
Trading company
100%
100%
100%
100%
100%
100%
100%
100%
Trading company
100%
100%
Trading company
Trading company
Dormant
Trading company
Trading company
Dormant
Dormant
Dormant
Dormant
Dormant
Trading company
51%
100%
100%
100%
50%
51%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
60%
100%
100%
100%
100%
60%
-
-
-
-
-
-
-
-
-
-
-
49%
-
-
-
50%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49%
-
-
-
50%
-
-
-
-
-
40%
-
40%
Trading company
100%
100%
-
-
Summarised financial information for subsidiaries that have non-controlling interests, has not been provided as they are not
material to the group.
59
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 35. Interests in joint ventures
Name
Principal place of business /
Country of incorporation
Thaisale.co.th Limited
Invite to Buy (Handelsselskabet)
Thailand
Denmark
Ownership interest
2015
2016
%
%
-
60.00%
49.00%
60.00%
Thaisale.co.th Limited
Thaisale.co.th was deemed to be a jointly controlled operation of the group as the appointment of its directors and the
allocation of voting rights for the key business decisions require the unanimous approval of its venturers. The joint venture
was dissolved during the financial year. The original investment was accounted for using the equity method after initially
being recognised at cost. The group had not recognised the entire share of its losses of this joint venture because the
group’s cumulative share of losses exceed its interest in that entity and the group has no obligations in respect of those
losses.
On 1 April 2016, the group acquired the membership database of Thaisale.co.th. Refer to note 33.
Invite to Buy
Invite to Buy is deemed to be a jointly controlled operation of the group, as the appointment of its directors and the
allocation of voting rights for the key business decisions require the unanimous approval of its venturers. On 1 April 2016,
the group took operational control of the joint venture though the integration of the joint venture’s business into the group’s
existing online flash businesses.
The group recognised its share of the entire losses of its Invite to Buy joint venture interest amounting to A$49,000 (2015:
A$116,000) for the nine months to 31 March 2016 using the equity method. Thereafter the joint venture operation has
been accounted for on a consolidated basis, due to the exercising of operational control. The group’s loss on investment
upon consolidation at 31 March 2016 amounted to A$55,000.
Note 36. Earnings per share
Loss after income tax
Non-controlling interest
Loss after income tax attributable to the owners of MySale Group Plc
2016
A$'000
2015
A$'000
(197)
20
(17,789)
-
(177)
(17,789)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
151,046,635 150,647,610
Weighted average number of ordinary shares used in calculating diluted earnings per share 151,046,635 150,647,610
Basic earnings per share
Diluted earnings per share
Cents
Cents
(0.12)
(0.12)
(11.81)
(11.81)
5,539,326 (2015: 795,541) employee long term incentives have been excluded from the 2016 (2015) diluted earnings
calculation as they are anti-dilutive for the year.
60
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 37. Share-based payments
The Long Term Incentive Plan (the ‘LTIP’) previously approved by APAC shareholders in 2012 and which expired at the
date of AIM admission on 16 June 2014, was settled in July 2015. A number of employees were offered the opportunity to
defer the payment of their cash bonus owing under the LTIP and to take it in the form of a conditional ‘right’ to free ordinary
shares under the Executive Incentive Plan ('EIP'). The award converted the cash due to them into ordinary shares at the
Placing Price of GBP2.26 with a maximum A$75,000 enhancement if they defer 100% of the entitlement. Total ordinary
shares applicable to the conditional award was 684,042 with a vest date of 16 June 2015 and no performance conditions
but was subject to continued employment. As at 16 June 2015, all of the employees who agreed to deferral of their
entitlement met the continued employment condition and the share right awards vested. The fair value of the accounting
expense in relation to these share right awards were recognised as at 30 June 2015,
The company established two new employee share plans prior to the AIM admission; (1) the Executive Incentive Plan
(‘EIP’) and (2) the Loan Share Plan (‘LSP’). In accordance with the terms of each plan, 50% of the award to eligible
employees will vest two years and the balance three years after grant date. Vesting is subject to the Remuneration
Committee being satisfied that the underlying performance of the group justifies vesting. In determining this, the
Remuneration Committee will have regard to revenue and Earnings Before Interest, Tax, Depreciation and Amortisation
(‘EBITDA’) included in the company’s internal forecasts as at the date of allocation. The award granted on 28 May 2014
are governed by the terms of these plans.
During the year, the Board decided to change the vesting conditions for future grants for the EIP and LSP plans beginning
with the August 2015 grant. 100% of future awards will now vest three years from grant date and are subject to the
achievement of the Underlying EBITDA target set by the board in the year of the grant. The fair value of the accounting
expense in relation to the August 2015 grant are recognised over the vesting period.
In July 2015, 3,000,000 options over the ordinary share capital of the company were granted to the Chairman with an
exercise price of £0.53. 1,000,000 options will vest when the company’s share price reaches £1.50, a further 1,500,000
shall vest when the company’s share price reaches £2.26 and a further 500,000 shall vest when the company’s share price
reaches £2.75. The options expire five years after the grant date. Other than the vesting conditions, all other terms are the
same as the EIP. The fair value of the accounting expense in relation to these options are recognised over the vesting
period.
Set out below are summaries of share and options granted under the plans for directors and employees:
2016
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
28/05/2014
28/05/2014
18/08/2015
18/08/2015
27/07/2015
16/06/2015 *
16/06/2019 ***
18/08/2020 ***
18/08/2020 ***
27/07/2020 ***
-
£2.26
£0.51
£0.51
£0.53
684,042
111,499
-
-
-
795,541
-
-
2,027,806
400,021
3,000,000
5,427,827
(684,042)
-
-
-
-
(684,042)
-
-
-
-
-
-
-
111,499
2,027,806
400,021
3,000,000
5,539,326
EIP - Share rights
EIP - Options
*
**
*** LSP
61
MySale Group Plc
Notes to the financial statements
30 June 2016
Note 37. Share-based payments (continued)
2015
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
28/05/2014
28/05/2014
28/05/2014
22/09/2014
22/09/2014
16/06/2015 *
16/06/2019 **
16/06/2019 ***
16/06/2019 **
16/06/2019 ***
-
£2.26
£2.26
£2.26
£2.26
684,042
102,210
461,010
-
-
1,247,262
-
-
-
18,386
45,642
64,028
-
-
-
-
-
-
-
(102,210)
(349,511)
(18,386)
(45,642)
(515,749)
684,042
-
111,499
-
-
795,541
EIP - Share rights
EIP - Options
*
**
*** LSP
The weighted average remaining contractual life of the share plan outstanding at the end of the financial year was 4 years
(2015: 4 years).
The share-based payment expense for the year was A$397,000 (2015: A$335,000).
Note 38. Events after the reporting period
The group’s borrowing facility with Hong Kong and Shanghai Banking Corporation increased to £7,000,000 (previously
£3,000,000) in August 2016. The facility is secured by a Corporate Guarantee.
No other matters or circumstances have arisen since 30 June 2016 that has significantly affected, or may significantly
affect the group's operations, the results of those operations, or the group's state of affairs in future financial years.
62
MySale Group Plc
Parent balance sheet
30 June 2016
Fixed assets
Tangible assets
Investment in subsidiary
Deferred tax
Total fixed assets
Current assets
Debtors
Cash at bank and in hand
Total current assets
Current liabilities
Creditors - amounts falling due within one year
Total current liabilities
Net current assets
Total assets less current liabilities
Net assets
Equity
Share premium account
Other reserves
Accumulated losses
Total equity
Refer to note 8 for share capital details.
3
4
5
6
7
2016
A$'000
2015
A$'000
125
161,474
383
161,982
189
161,077
-
161,266
5,203
12,231
17,434
4,304
16,084
20,388
385
385
755
755
17,049
19,633
179,031
180,899
179,031
180,899
9
10
306,363
(125,657)
(1,675)
306,363
(123,734)
(1,730)
179,031
180,899
The financial statements of MySale Group Plc (company number 115584) were approved by the Board of Directors and
authorised for issue on 28 September 2016. They were signed on its behalf by:
__________________________ ___________________________
Carl Jackson Andrew Dingle
Director Director
63
MySale Group Plc
Statement of changes in equity
30 June 2016
Share
premium
account
A$'000
Other
reserves
A$'000
Accumulated
losses
A$'000
Total equity
A$'000
Balance at 1 July 2014
306,363
(132,743)
(712)
172,908
Loss after income tax benefit for the year
Other comprehensive income for the year, net
of tax
-
-
-
(1,018)
(1,018)
5,304
-
5,304
Total comprehensive income for the year
306,363
(127,439)
(1,730)
177,194
Transactions with owners in their capacity as
owners:
Share-based payments
-
3,705
-
3,705
Balance at 30 June 2015
306,363
(123,734)
(1,730)
180,899
Share
premium
account
A$'000
Other
reserves
A$'000
Accumulated
losses
A$'000
Total equity
A$'000
Balance at 1 July 2015
306,363
(123,743)
(1,730)
180,899
Profit after income tax benefit for the year
Other comprehensive income for the year, net
of tax
-
-
-
55
55
(2,320)
-
(2,320)
Total comprehensive income for the year
306,363
(126,063)
(1,675)
178,634
Transactions with owners in their capacity as
owners:
Share-based payments
-
397
-
397
Balance at 30 June 2016
306,363
(125,657)
(1,675)
179,031
64
MySale Group Plc
Notes to the parent financial statements
30 June 2016
Note 1. General information
MySale Group Plc (the 'company' or 'parent entity') was incorporated on 28 April 2014 and was admitted onto the
Alternative Investment Market ('AIM') on 16 June 2014.
The financial statements functional currency is Pounds Sterling. The presentation currency is Australian dollars, the most
representable currency of the company's operations and generally rounded to the nearest thousand.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New, revised or amending Accounting Standards and Interpretations adopted
The company has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Financial Reporting Council ('FRC') that are mandatory for the current reporting year. The adoption of these Accounting
Standards and Interpretations did not have any significant impact on the financial performance or position of the company.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
Basis of preparation
These financial statements were prepared in accordance with FRS 101 'Reduced Disclosure Framework'.
As permitted by FRS 101, the company has taken advantage of all of the disclosure exemptions available to it, including:
a. The requirements of paragraph 45(b) and 46-52 of IFRS 2 Share-based payment;
b. The requirements of IFRS 7 Financial Instruments: Disclosures;
c. The requirements of paragraph 91 to 99 of IFRS 13 Fair value measurement;
d. The requirement in paragraph 38 of IAS 1 Presentation of financial statements to present comparative information
in respect of:
i.
ii.
iii.
paragraph 79(a)(iv) of IAS 1;
paragraph 73(e) of IAS 16 Property, plant and equipment;
paragraph 118(e) of IAS 38 Intangible assets.
e. The following paragraphs of IAS 1 Presentation of financial statements:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
10(d) statement of cash flows;
10(f) statement of financial position;
16 statement of compliance with all IFRS;
38A requirement for minimum of two primary statements, including cash flow statements;
38B-D additional comparative information;
40A-D requirement for a third statement of financial position;
111 cash flow statement information; and
134-136 capital management disclosures.
f.
g.
IAS 7 Statement of cash flows
IAS 24 Related party disclosures
The company has elected to take the exemption under section 408 of the Companies Act 2006 not to present its own profit
and loss account. The company reported a profit for the financial year ended 30 June 2016 of A$55,000 (2015: loss of
A$1,018,000).
Historical cost convention
These separate financial statements of the company are designed to include disclosures sufficient to comply with those
parts of the UK Companies Act 2006 applicable to companies reporting under UK accounting standards even though
the company is incorporated and registered in Jersey. They have been prepared under the historical cost convention
and under the going concern assumption. Further details of the Directors’ considerations in relation to going concern are
included in the Directors’ report.
65
MySale Group Plc
Notes to the parent financial statements
30 June 2016
Transition to FRS 101
For all periods up to and including the year ended 30 April 2015, the Company prepared its financial statements in
accordance with United Kingdom Generally Accepted Accounting Practice. These financial statements, for the period
ended 31 December 2015, are the first the Company has prepared in accordance with FRS 101.
Accordingly, the Company has prepared individual financial statements which comply with FRS 101 applicable for periods
beginning on or after 1 January 2015 and the significant accounting policies meeting those requirements are described in
the relevant notes.
In preparing these financial statements, the Company has started from an opening balance sheet as at 1 July 2014, the
Company's date of transition to FRS 101, with assessments made as to adjustments required for the first-time adoption of
FRS 101. In doing so it transpired that no adjustments were required.
Foreign currency translation
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Functional currency translation
The assets and liabilities of operations are translated into Australian dollars using the exchange rates at the reporting date.
The revenues and expenses of operations are translated into Australian dollars using the average exchange rates, which
approximate the rate at the date of the transaction, for the period. All resulting foreign exchange differences are recognised
in other comprehensive income through the foreign currency reserve in equity.
Income tax
Current tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted
or substantively enacted by the reporting date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the reporting date
where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future
have occurred at the reporting date. Timing differences are differences between the company’s taxable profits and its
results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods
different from those in which they are recognised in the financial statements. A net deferred tax asset is regarded as
recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely
than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be
deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing
differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the
reporting date. Deferred tax is measured on a non-discounted basis. The taxation liabilities are reduced wholly or in part by
the surrender of tax losses by fellow group undertakings for which payment is made.
Cash at bank and in hand
Cash at bank and in hand includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Debtors
Other receivables are recognised at amortised cost, less any provision for impairment.
Loans receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are carried at amortised cost using the effective interest rate method. Gains and losses are recognised
in profit or loss when the asset is derecognised or impaired.
The residual amounts due by the group’s undertakings are unsecured, non-interest bearing, have no fixed date of
repayment and are repayable on demand.
66
MySale Group Plc
Notes to the parent financial statements
30 June 2016
Tangible assets
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Subsequent expenditure relating to plant and equipment that has already been recognised is added to the carrying amount
of the asset only when it is probable that future economic benefits associated with the item will flow to the group and the
cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in profit or loss when
incurred.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
over their expected useful lives as follows:
Leasehold improvements
Plant and equipment
Fixtures and fittings
5-7 years
3-7 years
5-10 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or
the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Investments in subsidiaries
Investments in subsidiaries are shown at cost less provision for impairment.
Trade and other payables
These amounts represent liabilities for goods and services provided to the group prior to the end of the financial year and
which are unpaid. Trade and other payables are initially recognised at fair value and subsequently measured at amortised
cost. Due to their short-term nature they are not discounted. The amounts are unsecured and are usually paid within 30
days of recognition.
Employee benefits
Long term employee incentive plan
The company operates an employee incentive plan to reward and retain key employees. The company recognises a
provision where contractually obliged or where there is a past practice that has created a constructive obligation.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after
deducting all of its liabilities.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Rounding of amounts
Amounts in this report have been rounded off to the nearest thousand Australian dollars, or in certain cases, the nearest
dollar.
67
MySale Group Plc
Notes to the parent financial statements
30 June 2016
Note 3. Fixed assets - tangible assets
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Fixtures and fittings - at cost
Less: Accumulated depreciation
Note 4. Fixed assets - investment in subsidiary
Investment in APAC Sale Group Pte. Ltd. - at cost
Investment in Ozsale Pty. Ltd. - at cost
A detailed list of subsidiaries is detailed within note 34 to the consolidated financial statements.
Note 5. Current assets - Debtors - amounts falling within one year
Other receivables
Amounts owed by other group undertakings
Note 6. Current assets - cash at bank and in hand
Cash on bank
68
2016
A$'000
2015
A$'000
75
(28)
47
18
(6)
12
106
(40)
66
125
86
(14)
72
20
(2)
18
120
(21)
99
189
2016
A$'000
2015
A$'000
106,403
55,071
106,403
54,674
161,474
161,077
2016
A$'000
2015
A$'000
281
4,922
20
4,284
5,203
4,304
2016
A$'000
2015
A$'000
12,231
16,084
MySale Group Plc
Notes to the parent financial statements
30 June 2016
Note 7. Current liabilities - Creditors - amounts falling due within one year
Trade payables
Accruals
Note 8. Equity - called up share capital
2016
A$'000
2015
A$'000
93
292
385
118
637
755
2016
Shares
2015
Shares
2016
A$'000
2015
A$'000
Ordinary shares £nil each - issued and fully paid
151,331,652 150,647,610
-
-
Authorised share capital
The company is a no par value company and is authorised to issue an unlimited number of ordinary shares of £nil value
each under its memorandum of association. The share capital was converted from £1 per share to no par value at a
general meeting on 23 May 2014, effective from 28 May 2014.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Note 9. Equity - other reserves
Foreign currency reserve
Share-based payments reserve
Capital reorganisation reserve
2016
A$'000
2015
A$'000
2,997
4,102
(132,756)
5,317
3,705
(132,756)
(125,657)
(123,734)
Foreign currency reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements from the
functional currency to the presentation currency.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Capital reorganisation reserve
This reserve is used to recognise the excess of purchase price of APAC (refer note 10) over the shareholding acquired of
A$132,756,000.
69
MySale Group Plc
Notes to the parent financial statements
30 June 2016
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Balance at 1 July 2014
Foreign currency translation
Share-based payments
Balance at 30 June 2015
Foreign currency translation
Share-based payments
Balance at 30 June 2016
Note 10. Equity - accumulated losses
Foreign
currency
A$'000
Share-based
payments
A$'000
Capital
reorganisation
A$'000
13
5,304
-
5,317
(2,320)
-
-
-
3,705
3,705
-
397
(132,756)
-
-
(132,756)
-
-
Total
A$'000
(132,743)
5,304
3,705
(123,734)
(2,320)
397
2,997
4,102
(132,756)
(125,657)
Accumulated losses at the beginning of the financial year
Profit/(loss) after income tax benefit for the year
Accumulated losses at the end of the financial year
Note 11. Contingent liabilities
The company had no contingent liabilities as at 30 June 2016 and 30 June 2015.
Note 12. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Sub-lease receivable - operating
Committed at the reporting date but not recognised as assets, receivable:
Within one year
One to five years
2016
A$'000
2015
A$'000
(1,730)
55
(712)
(1,018)
(1,675)
(1,730)
2016
A$'000
2015
A$'000
426
997
656
1,650
1,423
2,306
282
585
867
456
804
1,260
The company leases office space from non-related parties under a non-cancellable operating lease agreement. The lease
expires within four years. The company also subleases some of its office and warehouse space to a related party.
70
MySale Group Plc
Notes to the parent financial statements
30 June 2016
Note 13. Events after the reporting period
The company’s borrowing facility with Hong Kong and Shanghai Banking Corporation increased to £7,000,000 (previously
£3,000,000) in August 2016. The facility is secured by a Corporate Guarantee.
No other matters or circumstances have arisen since 30 June 2016 that has significantly affected, or may significantly
affect the company's operations, the results of those operations, or the company's state of affairs in future financial years.
71
MYSALE GROUP PLC
REGISTERED NUMBER: 115584
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the third Annual General Meeting (AGM) of MySale Group plc (MySale or
the Company) will be held at Unit 5, 111 Old Pittwater Road, Brookvale, NSW 2100, Australia on
Tuesday 29 November 2016 commencing at 19.30 Australian Eastern Daylight Time (AEDT) (08.30
GMT) to consider and, if thought fit, to pass resolutions 1 to 7 (inclusive) as ordinary resolutions
and resolutions 8 to 10 (inclusive) as special resolutions.
RESOLUTIONS
ORDINARY RESOLUTIONS
Financial statements for the year ended 30 June 2016
1.
To receive the Company’s Annual Report and Accounts for the financial year ended 30 June
2016 together with the Reports of the Directors and Auditor thereon.
Re-appointment of the auditor
2.
3.
4.
5.
6.
7.
To re-appoint PricewaterhouseCoopers LLP as auditor of the Company, to hold office until the
conclusion of the next general meeting at which accounts are laid before the Company, and to
authorise the Directors to fix the remuneration of the auditor.
Re-election of Directors
To re-elect Iain McDonald as a Director in accordance with Articles 7.2 and 7.9 - 7.12 of the
Company’s Articles of Association (the Articles).
To re-elect Andrew Dingle as a Director in accordance with Articles 7.2 and 7.9 - 7.12 of the
Articles.
To re-elect Carl Jackson as a Director in accordance with Articles 7.2 and 7.9 - 7.12 of the
Articles.
To re-elect Jamie Jackson as a Director in accordance with Articles 7.2 and 7.9 - 7.12 of the
Articles.
To re-elect David Mortimer as a Director in accordance with Articles 7.2 and 7.9 - 7.12 of the
Articles.
SPECIAL RESOLUTIONS
8.
Dis-application of pre-emption rights - general
THAT, in substitution for all existing authorities to the extent unused, the Directors be generally
and unconditionally empowered, pursuant to and in accordance with Article 2.15 of the Articles,
to exercise all powers of the Company to allot Shares (as that term is defined in the Articles) for
cash as if Article 2.8 of the Articles did not apply to any such allotment, provided that this power
shall be limited to:
a)
the allotment of Shares for cash in connection with or pursuant to a rights issue (as
defined below) or any other issue in favour of holders of Shares in proportion (as nearly as
may be practicable) to the respective holdings of Shares then held by them;
b)
the allotment of Shares in connection with any scrip dividend scheme or similar
arrangement implemented in accordance with the Articles from time to time in force; and
c) otherwise than pursuant to paragraphs 8(a) and (b) above, the allotment of Shares for
cash up to an aggregate amount of 7,600,000 Shares, being approximately 5% of the
72
Company's issued Shares as at close of business on 28 October 2016, being the latest
practicable date before publication of this notice,
provided further that such power shall expire at the conclusion of the Company’s Annual
General Meeting in 2017 or fifteen months following the passing of this resolution, whichever is
the sooner, unless previously revoked, varied or renewed by the Company in general meeting
(save that the Company may before such expiry make an offer or agreement which would or
might require Shares to be allotted after such expiry and notwithstanding such expiry the
Directors may allot Shares in pursuance of such offer or agreement).
For the purposes of the authority in paragraph 8(a) above, “rights issue” means an offer to: (i)
holders (other than the Company) on the register on a record date fixed by the Directors of
Shares in proportion (as nearly as may be practicable) to their existing holdings; and (ii) other
persons so entitled by virtue of the rights attaching to any other equity securities held by them,
but subject in both cases to such exclusions, restrictions or other arrangements as the Directors
may deem necessary or expedient in relation to treasury shares, fractional entitlements, record
dates or legal, regulatory or practical problems in, or under the laws of, any territory.
9. Dis-application of pre-emption rights – financing
THAT, in addition to any authority granted under Resolution 8 above, the Directors be generally
and unconditionally empowered, pursuant to and in accordance with Article 2.15 of the Articles,
to exercise all powers of the Company to allot Shares for cash as if Article 2.8 of the Articles did
not apply to any such allotment, provided that this power shall be:
a)
limited to the allotment of Shares for cash up to an aggregate amount of 15,200,000
Shares, being approximately 10% of the Company's issued Shares as at close of
business 28 October 2016, being the latest practicable date before publication of this
notice; and
b) used only for the purposes of financing (or refinancing, if the authority is to be used within
six months after the original transaction) a transaction which the Directors determine to be
an acquisition or other capital investment of a kind contemplated by the Statement of
Principles on Disapplying Pre-emption Rights most recently published by the Pre-Emption
Group prior to the date of this notice,
provided further that such power shall expire at the conclusion of the Company’s Annual
General Meeting in 2017 or fifteen months following the passing of this resolution, whichever is
the sooner, unless previously revoked, varied or renewed by the Company in general meeting
(save that the Company may before such expiry make an offer or agreement which would or
might require Shares to be allotted after such expiry and notwithstanding such expiry the
Directors may allot Shares in pursuance of such offer or agreement).
10. Authority to buy back shares
THAT the Company be and is hereby generally and unconditionally authorised for the purposes
of Article 57 of the Companies (Jersey) Law 1991 (as amended) (the Law) to make one or more
purchases on the AIM market operated by the London Stock Exchange plc of its own Shares on
such terms and in such manner as the Directors may from time to time determine, provided that:
the maximum aggregate number of Shares hereby authorised to be purchased is
15,200,000, (representing approximately 10% of the total number of Shares in issue as at
close of business on 28 October 2016, being the latest practicable date before publication
of this notice);
a)
b)
the minimum price which may be paid for a Share is £0.01 each;
c)
the maximum price which may be paid for a Share is an amount equal to the higher of:
73
i) 5% above the average of the middle market quotations for such shares taken from
the AIM Appendix of The London Stock Exchange Daily Official List for the five
business days immediately preceding the day on which the purchase is made; and
ii)
the higher of the price of the last independent trade of a Share and the highest
current independent bid for a Share as derived from the London Stock Exchange
Trading System;
d) such authority shall expire at the conclusion of the Company’s Annual General Meeting in
2017 or fifteen months following the passing of this resolution, whichever is the sooner,
unless previously revoked, varied or renewed by the Company in general meeting;
e)
the Company may make a contract to purchase its own Shares under the authority
conferred by this resolution prior to the expiry of such authority, which will or may be
executed wholly or partly after the expiry of such authority, and the Company may make a
purchase of its own Shares in pursuance of any such contract as if the authority had not
expired; and
f)
subject to the provisions of the Articles, the Company be and is hereby generally and
unconditionally authorised for the purposes of Article 58A of the Law, to hold any Shares
repurchased under the authority conferred by this Resolution 10 as treasury shares.
By order of the Board
Prism CoSec Limited
Company Secretary, MySale Group plc
28 October 2016
74
1
2
3
4
5
6
7
Notes to the Notice of Annual General Meeting
Record Date
Shareholders registered in the Register of Members of the Company as at 18:00 GMT on 25 November 2016 (or, in the event
of any adjournment, on the date which is two days before the time of the adjourned meeting) shall be entitled to attend or vote
at the AGM in respect of the shares registered in their name at that time. Changes to entries on the Register of Members
after 18:00 GMT on 25 November 2016 will be disregarded in determining the rights of any person to attend or vote at the
AGM.
Attendance at the AGM
The Company’s third AGM will be held at 19.30 Australian Eastern Daylight Time (08.30 GMT) on 29 November 2016.
However, shareholders should note that votes may only be cast in person, by proxy or by corporate representative at the
venue of the AGM.
Proxies
A member is entitled to appoint another person as his proxy (who need not be a member of the Company) to exercise all or
any of their rights to attend and vote on their behalf at the AGM.
A member may appoint more than one proxy in relation to the AGM. When two or more valid but differing appointments of
proxy are delivered or received for the same share, the one which is last validly delivered or received (regardless of its date or
the date of its execution) shall be treated as replacing and revoking the other or others as regards that share. If the Company
is unable to determine which appointment was last validly delivered or received, none of them shall be treated as valid in
respect of that share.
Members who wish to appoint more than one proxy in respect of their holding may obtain additional Forms of Proxy by
contacting the Company’s Registrars, Computershare Investor Services at 0870 707 4040. Lines are open Monday to Friday
9.00am to 5.30pm. Alternatively, members may photocopy the Form of Proxy provided with this document indicating on each
copy the name of the proxy appointed and the number of ordinary shares in the Company in respect of which that proxy is
appointed. All Forms of Proxy should be returned together in the same envelope.
A Form of Proxy is enclosed with this Notice. Completion of the Form of Proxy will not prevent a member from subsequently
attending and voting at the AGM in person if they so wish. The Form of Proxy, and any power of attorney or other authority
under which it is executed (or a duly certified copy of any such power or authority), must be either (i) received by post or
(during normal business hours only) by hand at the offices of the Company’s Registrars, Computershare Investor Services
PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZYUK or (ii) members may submit their proxies electronically at
www.investorcentre.co.uk/je using the designation set out in the Form of Proxy, in each case by no later than 19.30
AEDT/08.30 GMT on 25 November 2016, being 48 working hours before the time appointed for the holding of the AGM.
Corporate Representatives
A corporate shareholder may authorise a person to act as its representative at the AGM. Each representative may exercise
(on behalf of the corporate shareholder) the same powers as the corporate shareholder could exercise if they were an
individual shareholder in the Company.
CREST Proxy Instructions
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so
for the AGM and any adjournment thereof by following the procedures described in the CREST Manual. CREST Personal
Members or other CREST Sponsored Members, and those CREST members who have appointed a voting service provider,
should refer to their CREST sponsor or voting service provider who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message
(a CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear’s specifications and must contain
the information required for such instruction, as described in the CREST Manual (available at www.euroclear.com/CREST).
The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a
previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID number
3RA50) by no later than 19.30 AEDT/08.30 GMT on 25 November 2016. No message received through the CREST network
after this time will be accepted. For this purpose, the time of receipt will be taken to be the time (as determined by the
timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the
message by enquiry to CREST in the manner prescribed by CREST. The CREST Manual is available at
www.euroclear.com/CREST.
CREST members and, where applicable, their CREST sponsors or voting service provider should note that Euroclear does
not make available special procedures in CREST for any particular messages. Normal system timings and limitations will
therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned
to take (or, if the CREST member is a CREST Personal Member or Sponsored Member, or has appointed a voting service
provider, to procure that his CREST sponsor or voting service provider takes) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members
and, where applicable, their CREST sponsors or voting service provider are referred, in particular, to those sections of the
CREST Manual concerning practical limitations of the CREST system and timings.
The Company will treat as invalid a CREST Proxy Instruction in the circumstances set out in Article 34 of the Companies
(Uncertificated Securities) (Jersey) Order 1999, as amended.
Total Voting Rights
Holders of the Company’s ordinary shares are entitled to attend and vote at general meetings of the Company. Each ordinary
share entitles the holder to one vote on a poll. As at 28 October 2016, being the latest practicable date prior to the
publication of this Notice, the Company had 151,331,652 shares in issue. The Company does not hold any shares in treasury.
Therefore, the total voting rights in the Company as at 28 October 2016 are 151,331,652.
Voting at the AGM
In order for the voting preferences of all shareholders to be taken into account, and not only those who can physically attend,
the Company will conduct a poll vote on all resolutions put to the AGM. As soon as practicable following the meeting, the
results of voting at the meeting and the numbers of proxy votes cast for and against each resolution, together with the number
of votes actively withheld will be announced to the market via a Primary Information Provider and also placed on the
75
Company’s website (www.mysalegroup.com).
In the case of joint holders of shares, the vote of the senior member who is entitled to receive notice of general meetings in
accordance with the Articles whether in person or by proxy shall be accepted to the exclusion of any votes of the other joint
holders, and seniority shall be determined by the order in which the names of the holders stand in the register of members of
the Company.
Display Documents
Copies of the service contracts for all Executive Directors and the letters of appointment for the Non-executive Directors are
available for inspection at the registered office of the Company during normal business hours on any weekday (excluding
Saturdays, Sundays and public holidays) from the date of this Notice until the conclusion of the AGM and also at the place of
the AGM from 19.00 AEDT on the day of the AGM until the conclusion thereof.
Electronic address
Please note that shareholders may not use any electronic address provided in this Notice or any related documents (including
the Form of Proxy) to communicate with the Company for any purpose other than those expressly stated.
8
9
76
Explanatory Notes to the Resolutions
Ordinary Resolutions
Resolutions 1 to 7 (inclusive) are being proposed as ordinary resolutions and for each of these resolutions to be passed, more
than 50% of the votes cast must be in favour of the resolution.
1
2
Report and Accounts
The Companies (Jersey) Law 1991 as amended requires the Directors of a public company to lay its Annual Report and
Accounts, together with a copy of any auditor’s report on them, before a general meeting of the shareholders. An
ordinary resolution to receive the Annual Report and Accounts will be proposed.
Appointment of the Auditor and Auditor’s Remuneration
Shareholders are required to appoint the external auditor at the AGM to hold office until the conclusion of the next
annual general meeting. Following a review of the effectiveness, independence and objectivity of the external auditor,
PricewaterhouseCoopers
auditor.
PricewaterhouseCoopers LLP have expressed their willingness to continue in office for a further year.
re-appointment
the Board
proposing
external
LLP,
their
as
is
The resolution also authorises the Directors, in accordance with standard practice, to negotiate and agree the
remuneration of the auditors. In practice, the Audit Committee will consider the audit fees for recommendation to the
Board.
3-7
Re-election of Directors
The Company’s Articles of Association require the Directors to retire by rotation. Directors retiring by rotation may, if
they wish, stand for re-election. Since all the Directors were appointed on 16 December 2015, they have agreed that
they will each retire at the forthcoming AGM and offer themselves for re-election by shareholders. Biographical details
of each of the Directors can be found in the Annual Report and Accounts.
Subject to the Articles, at each subsequent annual general meeting, one third of the continuing Directors will be subject
to retirement by rotation.
Special Resolutions
Resolutions 8 to 10 (inclusive) are being proposed as special resolutions. In order for a special resolution to be passed, at
least two-thirds of the votes cast must be in favour of the resolution.
8
Disapplication of Pre-Emption Rights – general
In relation to Resolution 8, if the Directors wish to allot new Shares for cash (other than bonus shares or in
connection with an employee share scheme) they are required to first offer these Shares to existing shareholders in
proportion to their holdings in accordance with Article 2.8 of the Articles (the Pre-emption Procedure).
The purpose of paragraphs (a) and (b) of resolution 8 is to authorise the Directors to allot new Shares for cash in
connection with or pursuant to a rights issue or any other issue in favour of holders of Shares in proportion (as
nearly as may be practicable) to the respective holdings of Shares then held by them, or in connection with a scrip
dividend scheme or similar arrangement, in each case without following the Pre-emption Procedure.
The purpose of paragraph (c) of Resolution 8 is to allow the Directors, in addition to the authority granted to the
Directors pursuant to paragraphs (a) and (b), generally to allot Shares for cash up to an aggregate amount equal to
5% of the issued Shares, again without following the Pre-emption Procedure.
This authority would remain in force until the conclusion of the Company’s annual general meeting in 2017 or fifteen
months following the passing of this resolution, whichever is the earlier.
9
Disapplication of Pre-Emption Rights – financing
Resolution 9 seeks a separate and additional authority to dis-apply pre-emption rights in respect of 10% of issued
ordinary share capital for certain purposes pursuant to certain elements of the guidance from the Pre-Emption Group
(PEG).
On 5 May 2016, the PEG published a recommended template resolution for dis-applying pre-emption rights. The
template recommends companies request separate authority to dis-apply pre-emption rights in respect of amounts in
addition to a base 5% to be used when the Board considers the use to be for an acquisition or specified capital
investment in accordance with the 2015 Statement of Principles as a separate resolution to the disapplication to
issue share on an unrestricted basis.
The Directors confirm, partly in accordance with the 2015 Statement of Principles, that they will only allot Shares
representing more than 5% of the issued ordinary share capital of the Company for cash pursuant to the authority
referred to in Resolution 9, where the allotment is in connection with an acquisition or specified capital investment,
which is announced contemporaneously with the allotment.
The Directors consider that the authorities sought are appropriate as they provides the Company with the necessary
flexibility to take advantage of business opportunities as they arise.
10. Authority to buy back Shares
Resolution 10 seeks authority for the Company to make market purchases of its own Shares, such authority being
limited to the purchase of 10% of the Shares in issue as at 28 October 2016, being the last practicable date prior to
publication of this Notice.
77
The maximum price payable for the purchase by the Company of its own Shares will be limited to an amount equal
to the higher of (i) 5% above the average of the middle market quotations of the Shares, as derived from the AIM
Appendix of The London Stock Exchange Daily Official List for the five business days prior to the purchase; and (ii)
the higher of the price of the last independent trade of an ordinary share and the highest current independent bid for
a Share as derived from the London Stock Exchange Trading System. The minimum price payable by the Company
for the purchase of its own Shares will be £0.01 per Share.
The Directors have no present intention of exercising the authority to purchase the Company’s Shares but will keep
the matter under review, taking into account other investment opportunities. The authority would only be exercised if
and when, in the light of market conditions prevailing at the time, they believe that the effect of such purchases will
be in the best interests of shareholders generally.
The Law allows the Company to hold in treasury any Shares purchased by it. Such Shares will remain in issue and
will be capable of being re-sold by the Company or used in connection with certain of its share schemes.
At the date of this Notice the Company does not hold any treasury shares, but Resolution 10 seeks authority for any
Shares which are repurchased to be held in treasury.
The authority set out in this resolution will expire at the end of the next AGM or fifteen months after the resolution is
passed, whichever is sooner.
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