ANNUAL REPORT 2017
FY17 OVERVIEW
ANOTHER YEAR OF PROFITABLE GROWTH
2
MySale Group Plc
Contents
30 June 2017
Corporate directory
Strategic report
Corporate governance
Directors' remuneration report
Directors' report
Directors' responsibility statement
Independent auditors' report to the members of MySale Group Plc
Statement of profit or loss and other comprehensive income
Balance sheet
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Parent balance sheet
Parent statement of changes in equity
Notes to the parent financial statements
Notice of Annual General Meeting
4
5
17
17
21
24
25
29
30
31
32
33
69
70
71
79
3
MySale Group Plc
Corporate directory
30 June 2017
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 places 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, 10 Old Burlington Street, London, W1S 3AG
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
4
MySale Group Plc
Strategic report
30 June 2017
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.
2.
3.
4.
5.
6.
7.
Financial and operating highlights
Chairman’s statement
Review of operations by the Chief Executive Officer
Financial review by the Chief Financial Officer
Principal risks and uncertainties
Corporate social responsibilities
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
• Underlying basic earnings per share increased 500% to 2.5 cents
• Underlying EBITDA increased by 59% to A$8.7 million
• Gross profit increased 14% to A$76 million, as gross margins increased 190bp
• Online revenue grew by 10%, to A$238 million, driven by the growing active customer base
• Group revenue grew 6% to A$268 million (CERi growth 9%)
• Underlying profit before tax increased 226% to A$3.3 million (FY16: A$1.0 million)
• Reported loss before tax of A$1.5 million (FY16: A$0.2 million)
Strategic highlights
• Technology, supply and customer developments significantly strengthen our capability
• Expansion of our marketplace platform
• Creation of our Endless Aisle concept to leverage platform and supply-side strengths
• Further long-term partnerships formed with notable global retail brands
• M&A activity increased and Identity Direct acquired at end of the year
Technology highlights
• Accelerated investment into our data-driven proprietary technology
• New platform launched including a scalable and flexible marketplace
to leverage the large customer database
• Single live view of all global inventory available to all websites
• Launch of Ourpay a proprietary ‘buy-now, pay-later’ payments system
Operational highlights
• Active customer base like-for-like increase of 11% to 0.9 million
• Including Identity Direct active base now increased to 1.0 million
• Strategic plan to increase own-buy inventory continues – now 17% of online revenue
• Integration of Identity Direct business progressing ahead of schedule
KPI’s
• Continued focus on activating customers with higher lifetime-value
o Average order value (AOV) stable at A$87
o Robust average revenue per active customer A$292
o Steady average frequency of 3.3x
• Mobile activity continues growing and represented 59% of orders
• Returns rate remains at low level of only 5%
5
MySale Group Plc
Strategic report
30 June 2017
2. Chairman’s statement
Whilst the financial year 2015-16 was all about restoring the business to underlying profitability, this year our aim was to
demonstrate that we could build on this as well as producing real step change improvements in our proprietary technology
platform.
I am delighted to report a 59% improvement in underlying EBITDA to A$8.7milllion which was ahead of the market expectations
at the beginning of the period. Furthermore we increased our technology investment from $4.0 million to $7.5 million which has
allowed us to launch a significantly enhanced marketplace platform, an in-house payments solution (“OurPay”) and multiple
improvements in marketing automation.
In the last 12 months we have signed notable new brand partnerships, including gilt.com. Global brands and retailers recognise
the strength of our international/contra-seasonal platform and our ability to support their inventory management and to
connect them to new customers. They increasingly want to deal with a smaller number of regionally dominant partners with
leading technology platforms. We are ideally placed to deliver this.
We have made no secret of the fact that strategic acquisitions are a core element of our growth strategy and we continue to
refine our process and criteria in this regard. Essentially, we are targeting deals which can either widen the range of products
which our existing customers are likely to want to buy or which grow our routes to market in our core geographies. Ideally both.
During the year, we acquired the trade and assets of Identity Direct in Australia and New Zealand. This has opened a new
vertical for us in product personalisation; a sector we have been targeting for some time given its attractive margin structure,
strong underlying growth and differentiated product set. It has also provided further evidence of our ability to integrate
acquisitions onto our platform and add value through cost and revenue synergies.
We have started the current financial year very well and whilst there is much to accomplish both revenue and underlying
profitability have grown strongly. Our plans for this year are ambitious and our new partnerships, product verticals and
platform enhancements will support these growth plans.
Whilst we are very much a technology focussed business the group owes its success to the ability, intelligence and drive of the
hundreds of team members working 24-7 in our global operations and I would like to place on record the board’s appreciation
of their exceptional hard work.
Iain McDonald
Chairman
25 September 2017
6
MySale Group Plc
Strategic report
30 June 2017
3. Review of operations by the Chief Executive Officer
MySale Group Plc (‘the group’) has made excellent progress in the year to 30 June 2017. Planned strategic initiatives have
delivered another year of improved financial performance and positioned the group for further, profitable, growth.
The year’s success was delivered by; our relentless focus on providing customers with exceptional value, choice and service
and; our excellence in delivering unique sales channels and world-class inventory management to brand partners; whilst
simultaneously leveraging the significant strength and efficiency of our proprietary technology platform and international
logistics network.
The group’s focus on customer engagement saw the active customer base grow 11% and in turn online revenue, which
represents 90% of the group total, grew 10%, to A$238.7 million (FY16: A$217.9 million). Following the acquisition of Identity
Direct, covered in more detail below, the group now has over 1 million active customers.
Total group revenue for the year rose 6% to A$268.4 million (FY16: A$252.3 million) which reflects the strong online growth
referred to above, together with a planned reduction in lower margin offline revenue. The group’s focus on growing gross
profit has delivered an increase of 14% to A$76.0 million (FY16: A$66.7 million) which was underpinned by a 190 bp increase
in gross margin to 28.3% (FY16: 26.4%).
A$ m
FY17
FY17 Growth
FY16
Revenue
Gross Profit
GP%
Revenue
Gross Profit
Revenue
Gross Profit
GP%
Group
ANZ
S-E Asia
ROW
268.4
221.5
33.8
13.1
76.0
28.3%
65.7
29.6%
+6%
+5%
+7%
23.9%
8.1
2.3
17.8%
+31%
+14%
252.3
66.7
26.4%
+15%
210.7
57.1
27.1%
+7%
+14%
31.6
10.0
7.5
2.1
23.9%
20.5%
This improved trading performance is driven primarily by the group’s clear plan to prioritise the growth of gross profit and
secure higher lifetime-value customers. Key elements of this plan include localised merchandising and pricing, increased
proportion of own-buy inventory and reduced delivery promotions. The increased levels of revenue and gross profit combined
with a carefully controlled cost base delivered a 59% increase in underlying EBITDA to A$8.7 million (FY16: A$5.5 million).
This plan was established in 2015 when the group re-focused the business on its core aims of providing exceptional value in
branded products to customers and exceptional inventory management solutions to brand partners within the group’s three
core territories. The operational achievements and significantly improved financial performance of FY17 represent another step
on the group’s path of profitable growth, with further significant growth anticipated in the current financial year.
Total underlying operating expenses increased 10% to A$67.4 million (FY16: A$61.2 million) reflecting the increased activity
and volumes of trade during the year. The group made a planned investment into additional staff members in key senior
management and departments such as buying, merchandising and marketing in order to ensure that the choice and service we
provide to customers is maintained as we grow. The same increases are not anticipated in future years and the group will be
able to leverage its fixed cost base which represents around 56% of the total operating expenses.
During the period, and across all territories, the group continued to dedicate its marketing resources and spend, which
was circa 7% of revenue, almost exclusively into measurable, digital channels to attract and engage both new and existing
customers. Our ongoing communication programme has seen those loyal and engaged customers continue to spend with
reliable frequency and with stable purchasing metrics.
During the year the group diversified the digital marketing spend, notably in Australia and New Zealand (ANZ), by increasing
the emphasis of spend into customer re-engagement activity. The early results of this diversification were encouraging as
marketing efficiency improved. This has led to a re-calibrated marketing plan for the entire group. From the beginning of
the current financial year marketing objectives have been refocused based on these learnings, and improved data analysis
capabilities, to better measure marketing costs and returns per purchase and buyer. Whilst early in this revised programme the
initial results have been positive and further improvements in marketing efficiency are anticipated during the year.
7
MySale Group Plc
Strategic report
30 June 2017
Technology Development
During the year the group increased capital expenditure, as planned, in order to further develop its proprietary technology
capabilities. An important phase of work reached a conclusion and saw the release of a new and enhanced version of the group’s
technology platform during the year. This new platform’s functionality supports our key objectives of increasing revenue and
decreasing costs with more efficiency.
This new, marketplace enabled, platform allows fuller integration across all the group’s sales channels and to date all of the
group’s websites, other than the recently acquired Identity Direct, have migrated to this platform. The group now has a single,
live view of global inventory and both 1P (owned) and 3P (consignment or drop-ship) products can be sold by any of our websites
simultaneously. Similarly the platform allows a single live view of each customer and their individual journeys allowing us to better
serve their preferences across all websites and mobile device apps. As always the mobile buyer is at the heart of our capabilities
and this channel accounted for 59% of orders received in the past year.
A key element of the development has been to enhance the group’s data capabilities for better collection and analysis, improved
machine learning and automation which in turn is driving improved customer experiences, increased revenue and more efficiency.
The platform allows for campaigns to be launched faster and more efficiently as well as providing seamless user interaction across
all devices. These developments provide a step change in capability which will support further growth.
The group has also continued to use its technology innovation for tactical improvements in the customer proposition to drive
revenue, one example being the development of Ourpay, a ‘buy-now, pay-later’ programme. This instalment payment option
helps customers manage their finances and has been shown to increase both the spend and the frequency of those customers
accepted to the programme. This payment solution was developed in-house in order to deliver a more flexible, cost-efficient and
integrated system, which is better suited to the group’s requirements than that provided by third parties. The system automates
all aspects of the programme including credit scoring and monitoring, an aspect of the programme where the group has adopted
a conservative policy. The debtor balance associated with Ourpay was A$1.8 million at the year end and is anticipated to grow as
transaction volumes increase.
The initial trials of Ourpay have been very positive. Customer’s average spend increased 19% and the frequency of purchase
increased by around 30%. Ourpay shall now be rolled out to all territories and websites where legislation currently allows. In
addition we shall shortly launch a subscription-delivery model for customers which will be fully integrated to the Ourpay platform.
Brands and Strategic Partnerships
The group has secured a number of new brand partners during the last 12 months, the most notable being the launch of a
strategic relationship with gilt.com, a US based online retailer which is part of The Hudson’s Bay Company. This and other strategic
partnerships have already provided significant additional product choice to customers in all the group’s territories.
The partnership launched with Sports Direct with access to more than 150,000 products from their inventory is now operational
and the group commenced live sales on its retail marketplace during the year. Good progress has been made. We have direct
inventory feeds, tailored merchandising and volumes continue to grow.
Forging partnerships with flagship retail brands such as Gilt.com and Sports Direct is a strong endorsement of the group’s
capabilities in supporting brands in establishing new sales channels as well as in inventory management. The retail landscape is
undergoing some structural change and increasingly
large brands recognise the benefits that more integrated inventory
partnerships can bring to their operations. The group’s well established international network, flexible and scalable technology
platform and resources in key territories means it is an ideal partner for international brands and retailers. Our platform allows
us to customise our integration with any brand thus delivering a tailored solution to their requirements.
We have invested more time and funds into product selection during the year, ensuring customers have the best possible choice
available and by the end of the year we had more than doubled listed SKU’s to over 300,000. Nearly all of the increased product
selection has come from relationships with 3P suppliers and thus the group does not take any inventory risk as the terms of
business are on a consignment or dropship basis. In order that customers can easily find and navigate to their favourite brands
and products the group delivers highly personalised experiences and communications to each customer.
Aligned with this materially increased product selection has been an expansion of the product categories in which we have
excellent coverage. Refurbished technology is one such example of a category that the group has launched and which resonates
strongly with our existing customer base. Finally, the acquisition of Identity Direct has brought significant licensing expertise and
licensing relationships with global brands to the group and this is a revenue opportunity the group plans to
develop further.
8
MySale Group Plc
Strategic report
30 June 2017
Marketplace
The group’s new technology platform ensures that the retail and flash websites operate on the same platform which provides
numerous advantages including: better sharing of data; more efficient use of resources; greater visibility of inventory; and reduced
buying administration. This will allow the group to substantially increase the range of products available via our websites, particularly
3P inventory, whilst minimising variable costs.
This platform facilitates the group’s marketplace and allows the integration of all websites directly with brands and retailers, whether
that be as part of supporting an inventory clearance or providing a brand with a new retail channel. It also has created the group’s
Endless Aisle concept.
The group has always offered a wide range of products but the marketplace development now means that this range shall be
significantly expanded and as we now have a live feed of global inventory to all websites, there is an opportunity to extend the
length of time products are available and merchandised to customers - our Endless Aisle. Importantly the expansion of this very long
tail of product inventory will be driven by 3P vendor relationships which incur limited marginal cost to the group.
The retail websites within the group’s marketplace, predominantly operate on a 3P supplier drop-ship basis and serve the product
verticals of sports (dealsdirect), home (oo), gifting (topbuy) and personalised goods (Identity Direct) and are founded on the
acquisitions undertaken in ANZ over the last two years. The experience gained during the successful integration and launch of these
sites will serve the group well as further verticals are added in the future. As over 80% of our revenues are derived from 3P product
listings the group has a relatively light working capital requirement and further reductions in this requirement are targeted in the
future.
The creation of the retail marketplace platform represents a step change in the potential addressable audience and in future revenue
opportunities of the group. Designed with mobile commerce at its heart and to be simple and intuitive for vendors to use, this
platform will further support our brand partners and their sales ambitions. Increasingly brands use marketplace solutions to support
their international sales as it provides local knowledge, existing audiences, and a cost-effective launch in a new territory.
Operations
In FY15 the group began implementing a strategy to increase the proportion of inventory that is purchased outright as ‘own- buy’
(1P), rather than on a consignment basis (3P) and during this year 1P goods increased to 17% of orders, consistent with that strategy.
Whilst the vast majority of goods sold are still done so on a consignment or drop-ship basis, this 1P strategy supports deeper
relationships with brand partners, slightly higher gross margins and wider product selection for customers. 1P activity is focused on
staple, branded goods.
During the year the group’s highly efficient platform processed record numbers of transactions. The volumes are remarkable and
underline the efficient processes and systems that the group has in place to support brands and serve customers; on average
more than 20,000 new products were launched daily and 180,000 digital images were created or edited each month. In the year
2.9 million orders were processed and 12 million units shipped which was only possible due to high levels of automation and
streamlined workflows. The strength and capability of this platform will be leveraged to further improve efficiency in coming years
as our volumes increase further.
The combination of the group’s high quality sourcing, compelling consumer value, product selection and reliable service means that
returns remain at industry leading levels of only 5% overall.
Investment in the development of the group’s capabilities continues and this year saw a number of key senior hires strengthen the
executive team and also enhancement of staff within our marketing, data science and merchandising teams.
Acquisition of Identity Direct
The group acquired the business of Identity Direct, in ANZ, during the fourth quarter of the financial year. Identity Direct is a retailer
of personalised products with strong licensing relationships, particularly with entertainment brands, such as Disney and Marvel.
In relation to the group it is a relatively small business, with annual revenues of circa A$10 million. The long term commercial
opportunity in this complementary vertical is very attractive and generates high gross margin, in excess of 60%. The products
are strong in childrens and sports categories which fits well with existing MySale customer base. There are good opportunities to
leverage efficiencies by deploying the group’s scale and platform and also growing revenue with enhanced marketing and cross
selling between the two customer bases. The group believes that development of its product licensing capability will lead to
significant opportunities to generate incremental revenue in the medium term.
The integration of the Identity Direct business is ahead of plan and, with property and resources now rationalised, cost savings
and synergies will accrue to the group in the current year. Operational integration will be complete shortly allowing the group to
capitalise on the fourth calendar quarter when Identity Direct generates around 60% of its annual revenues. This is the
9
MySale Group Plc
Strategic report
30 June 2017
second integration to our platform undertaken in the last two years and the positive results give the group confidence it can
successfully execute further, larger integrations in the future.
Australia & New Zealand (ANZ)
Within this operating territory the group has continued to successfully implement its strategic initiatives and delivered much
improved gross profit, up by 15% to A$65.6 million (FY16: A$57.1 million) and gross margin to 29.6% (FY16: 27.1%) whilst also
growing revenue by 5% to A$221.5 million (FY16: 210.7 million). The significant increase in AOV to c. $85 achieved in FY16 has
been maintained by continued focus on a localised offer with strong merchandising, pricing and overall ANZ customer proposition.
As noted above the group’s nascent retail marketplace was launched in ANZ at the end of the prior year and is an opportunity to
significantly increase the group’s addressable market in the region. To date the group has already seen in excess of 500 suppliers
join this marketplace. The first flagship retailer to join this marketplace, as a 3P vendor, was Sports Direct and they are now fully
integrated to the group’s platform allowing our ANZ team to efficiently market and merchandise the 150,000 products available.
The sporting goods market in ANZ is estimated to be worth in excess of A$3 billion annually and the strong value offer provided
by Sports Direct combined with group’s experience in connecting customers with brands is anticipated to create a compelling
proposition in this vertical in the medium term.
The group is one of the pre-eminent online, off-price retailers in ANZ and has further attractive growth possibilities due to both the
lower levels of internet penetration, in comparison to territories such as the United Kingdom and the USA, and this region’s relative
lack of off-price retailers. In ANZ the group has a small network of physical outlets which is used both to clear the group’s own surplus
inventory and test brands and products in that offline channel.
The group is actively looking to expand further the breadth and depth of our online and offline sales channels in this region in order
to fully leverage our customer base, physical resource, buying power and expertise.
South-East Asia
During the period South-East Asia had revenue growth of 7% to A$33.8 million (FY16: A$31.6 million) and a corresponding 7%
increase in gross profit to A$8.1 million (FY16: A$7.5 million). On a CER basis the underlying revenue growth was 11%. The continued
growth in revenue and profitability has been driven by the group’s localisation plan which ensures that merchandising, pricing,
payment and shipping solutions are all tailored to the needs of local consumers.
Here the strategy has been to grow the active customer base, so acquisition marketing is a priority, to build gross profitability and
then leverage this increasing scale to use resources more efficiently and achieve lower shipping rates. With a more profitable local
model now established and first mover advantage South-East Asia is an important element of the group’s long- term profitable
growth.
In the medium to long term this region is anticipated to be increasingly significant as the group grows its customer base and demand
for branded products, particularly European and USA brands, continues to increase. With a substantial addressable population,
increasing disposable income, lack of off-price competition and high mobile penetration this region is well served by the group’s
strong value, branded sales offer and exceptional mobile commerce capability.
Rest of World
This territory comprises the group’s operations within the United Kingdom, which trade predominately under the Cocosa brand,
relaunched in FY15, which provides customers with compelling value in premium branded products.
The United Kingdom had a good year, as revenue increased by more than 30%, thereby achieving revenue of A$13.1 million (FY16:
A$10.0 million). On a CER basis the underlying revenue growth was 59%.This growth was underpinned by increased numbers of
active customers which is our key objective in a newer territory. Gross margin was lower than the previous year as the group used
products and pricing as promotional tools to develop the customer base. This form of promotion is used by the group much more
in an early stage territory than in established territories.
These are encouraging results and position the business for further growth in the current financial year. Whilst currently a relatively
small part of the group’s overall activities, this business operates in the UK’s large and well developed online marketplace where
engaged and active consumers can be acquired successfully and cost effectively. Given there is no online flash sale operator of scale
in the UK the group has targeted becoming a leading operator in the country.
The group has a material presence in the UK as it an important centre for the group’s product sourcing team for both UK and
European brands. Brands from these territories, along with USA, have grown their weighting within group revenues over the past
few years and now account for over half worldwide revenue.
10
MySale Group Plc
Strategic report
30 June 2017
Outlook
The group had an excellent FY17 with significantly improved financial performance and great progress against our strategic
goals. Increasing numbers of active customers are driving revenue and efficiency forward.
We have a unique set of brand partners which in turn means that we are able to offer our loyal customers access to a
fantastic range of goods and products. When this is combined with our flexible and efficient business platform it gives
customers an easy-to-use, compelling value, shopping experience.
The group has carried good momentum into the current year and built on the excellent foundations and initiatives put in
place last year. This year has started well with revenue growth accelerating from last year and strong growth in underlying
profitability. Whilst our peak trading period is still ahead of us the board has confidence in the current year’s prospects and
expects that underlying EBITDA for the year will be at least in line with the upper end of market expectations.
Carl Jackson
Chief Executive Officer
25 September 2017
11
MySale Group Plc
Strategic report
30 June 2017
4. Financial review by the Chief Financial Officer
Revenue and Gross Profit
For the year ended 30 June 2017 group revenue increased by 6% to A$268.4 million (FY16: A$252.3 million) and gross profit
increased faster, by 14%, to reach A$76.0 million (FY16: A$66.7 million). This improved performance came as a direct result of
the strategic plan implemented by the group in 2015.
On a constant currency basis the growth rates of revenue and gross profit were higher, at 9% and 16% respectively, reflecting
the strengthening of the group’s reporting currency AUD during the year.
Operating Expenses
The increase in activity and gross profit led underlying operating expenses to increase 10% to A$67.4 million (FY16: A$61.2
million) in the period. During the year the group increased staff resources in a number of operational departments to support
further growth and ensure the group delivers outstanding service to its customers. This increase included a number of key hires
within the senior management team.
Profit/Loss before Tax
The underlying profit before tax for the year is A$3.3 million (FY16: A$1.1 million) and the reported loss before tax for the
period is A$1.5 million (FY16: A$0.2 million profit). This reported loss is after the inclusion of a number of one-off and non-
cash items which are shown in more detail in note 6 to the financial statements in order to provide greater insight as to the
underlying profitability of the group.
Profit/Loss after Tax and earnings per share
The underlying profit after tax for the year is A$3.9 million (FY16: A$0.6 million) and the reported loss after tax for the period is
A$1.0 million (FY16: A$0.2 million). This reported loss is after the inclusion of a number of one-off and non-cash items which are
shown in more detail in note 6 to the financial statements in order to provide greater insight as to the underlying profitability
of the group.
Note 36 shows the detailed calculations of basic earnings per share for the financial year which increased by 500% to 2.5 cents
per share (FY16: 0.4 cents) on an underlying basis and was 0.6 cents loss (FY16: 0.1 cents loss) on a reported basis.
Taxation
The group has recorded a tax benefit of A$0.6 million for the year (FY16: tax expense of A$0.4 million) which diverges from
the group’s long term guidance of an effective tax rate of approximately 30%. This divergence arises due to various tax
adjustments and timing differences. Full details are provided in note 9 to the financial statements. The group has total tax
losses of A$30 million (FY16: A$31 million) with the majority located in Australia. The entire tax loss has been recognised with
the provision of a deferred tax asset of A$10.5 million (FY16: A$10.3 million).
Balance Sheet, Cash and Working Capital
The group’s closing cash balance was A$19.0 million (FY16: A$34.0 million) and the net cash balance was A$8.9 million (FY16:
A$27.5 million).
The closing cash balance reflects a number of significant working capital outflows which occurred towards the end of the
financial year which are temporary in nature and will reverse in the following period. The group’s strategic plan allows for
selective investment into inventory balances and other working capital deployments to ensure the group is able to take
advantage of commercially beneficial opportunities. The group anticipates that working capital balances will normally lie
between 1-3% of annual revenue.
Capital expenditure increased, as planned, as the group invested principally in the development of its proprietary technology
platform together with expenditure related to property and equipment upgrades. Total capital expenditure was A$8.5 million
(FY16: A$4.0 million).
During the period the group’s acquisition activity was focused around the purchase of Identity Direct, a personalisation
business, for consideration of A$2.9 million, and described in detail in note 33.
12
MySale Group Plc
Strategic report
30 June 2017
Banking Facilities
The group has significant cash balances, held principally with HSBC with whom the group currently has trade finance multi
option debt facilities of A$13.1 million. In addition the group has finance facilities of A$0.2 million with ANZ Bank. All facilities
are renewed on an annual basis.
Underlying Basis
As noted above the group manages its operations by looking at the underlying EBITDA which excludes the impact of a
number of one-off and non-cash items of a non-trading nature as this, in the Board’s opinion, provides a more representative
measure of the group’s performance. A reconciliation between reported profit before tax and underlying EBITDA is included
at note 6 to the financial statements and outlined below.
A$ million
Reported EBITDA
Shared based payments
Discountinued activities
One-off costs
Unrealised foreign exchange gain / (loss)
Underlying EBITDA
Depreciation & Amortisation
Net interest expense
Underlying profit before tax
FY17
FY16
3.8
1.1
0.3
2.4
1.0
4.8
8.7
5.3
0.1
3.3
4.6
0.4
0.3
2.0
(1.8)
0.9
5.5
4.4
(0.0)
1.1
0.2
Reported profit / (loss) before tax
(1.5)
Included within one-off items acquisition expenses, post-acquisition reorganisation costs, charges arising from system
migration and IPO costs.
Key Performance Indicators
The group manages its operations through the use of a number of key performance indicators (KPI’s) such as revenue,
revenue growth, gross margin percentage, average order value (AOV), average revenue per active customer (RPAC), and
underlying EBITDA.
Andrew Dingle
Chief Financial Officer
25 September 2017
13
MySale Group Plc
Strategic report
30 June 2017
5. Principal risks and uncertainties
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.
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,
14
MySale Group Plc
Strategic report
30 June 2017
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.
Unauthorised access to customer database, either from external attack or internal control weaknesses, could lead to reputational
damage, compliance issues, substantial regulatory fines and loss of customer confidence. The company has implemented a disaster
recovery plan and cyber insurance to support the business in the event of an incident occurring.
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 a large number of suppliers 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.
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
15
MySale Group Plc
Strategic report
30 June 2017
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 provide 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.
By Order of the Board.
Iain McDonald
Chairman
London
25 September 2017
16
MySale Group Plc
Directors’ remuneration report
30 June 2017
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 2017 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
17
MySale Group Plc
Directors’ remuneration report
30 June 2017
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 advisors or the independent Auditors 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.
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:
•
•
•
is competitive and is acceptable to shareholders;
aligns executive compensation with company performance and shareholder return; and
is transparent.
18
MySale Group Plc
Directors’ remuneration report
30 June 2017
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 2017 are as follows:
Executive Director
Base salary
Pension Contributions
Jamie Jackson
Carl Jackson
Andrew Dingle
£200,000
A$337,500
A$303,188
-
A$32,062
A$28,802
Taxable
Benefits
£18,000
A$30,000
A$33,824
Group entity with which the contract is
with
Mysale Group PLC
Ozsale Pty Limited
Ozsale Pty Limited
Executive directors’ salaries are reviewed annually in line with the remuneration reviews for all other group employees.
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.
19
MySale Group Plc
Directors’ remuneration report
30 June 2017
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 2017 was as follows and this information is subject to audit:
Base salary/fee
Bonus
Taxable benefits
Pension
contributions
Total 2017
Total 2016
Non-executive
directors:
Iain McDonald
David Mortimer AO
Executive directors:
Jamie Jackson
Carl Jackson
Andrew Dingle
£75,000
£40,000
A$338,466
A$337,500
A$303,188
-
-
-
-
-
-
-
A$30,487
A$30,000
A$33,824
-
-
-
A$32,062
A$28,802
£75,000
£40,000
£68,750
£45,000
A$368,953
A$344,064
A$399,562
A$351,286
A$365,814
A$342,585
Employee Share Plan
The Company’s employee share plan is called the Loan Share Plan (‘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. 100% of the ordinary shares vested three years from grant date and are subject to the achievement of
the Underlying Earnings Before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) included in the company’s internal
forecasts set by the Board in the year of the grant.
Shares granted under the LSP are as follows:
Balance 1
July 2016
Granted
Exercised
Cancelled
Balance 30
June 2017
Exercise
price (£)
Date of
exercise
Market price on
exercise (£)
Iain McDonald
David Mortimer AO
Jamie Jackson
Carl Jackson
Andrew Dingle
-
-
-
111,499
357,138
-
-
-
-
-
Andrew Dingle
-
509,722
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
111,499
357,138
509,722
-
-
-
£2.26
£0.51
£0.65
-
-
-
-
-
-
-
-
-
-
-
-
Share price information
The market price of MySale Group Plc ordinary shares at 30 June 2017 was £1.15 (2016: £0.65) and the range during the
financial year was between £0.65 and £1.15 (2016: £0.41 and £0.72).
20
MySale Group Plc
Directors’ report
30 June 2017
The directors present their report, together with the audited financial statements and independent auditors’ report, on the
consolidated group (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 2017.
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:
Iain McDonald
Independent Non-Executive Chairman
47
Experience and expertise:
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.
Name:
Title:
Age:
David Mortimer AO
Independent Non-Executive Director
72
Experience and expertise:
David was appointed to the Board in May 2014. He has over 41 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.
Name:
Title:
Age:
Jamie Jackson
Executive Director and Vice Chairman
52
Experience and expertise:
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 21 years, including senior roles with French Connection
wand 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. He
is currently focused on the group’s international buying, product development and strategic partnerships.
Name:
Title:
Age:
Carl Jackson
Executive Director and Chief Executive Officer
54
Experience and expertise:
Carl joined MySale in 2009 and has over 27 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.
21
MySale Group Plc
Directors’ report
30 June 2017
Name:
Title:
Age:
Andrew Dingle
Executive Director and Chief Financial Officer
47
Experience and expertise:
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
Ordinary shares
Iain McDonald
David Mortimer AO¹
Jamie Jackson
Carl Jackson²
Andrew Dingle
248,482
165,000
47,469,189
3,745,000
201,115
Percentage
holding
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:
Prism Cosec Limited
Company Secretary
Experience and expertise:
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 2017 (June 2016: A$nil).
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 report 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 (note 2).
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 at least the next twelve months from the date of
approval of these financial statements. Thus they continue to adopt the going concern basis of accounting in preparing the
financial statements.
1 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.
22
MySale Group Plc
Directors’ report
30 June 2017
Subsequent events
The group’s borrowing facility with Hong Kong and Shanghai Banking Corporation increased to $13,353,000 (previously
$13,120,000) in July 2017. The facility is secured by a Corporate Guarantee.
The group’s borrowing facility with ANZ Bank Limited reduced to $174,000 (previously $11,576,000) in July 2017. The facility
is secured by a Term Deposit security. 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
Number of
shares held
Percentage
holding
Shelton Capital Limited
33,237,124
22.0%
Schroders plc
18,736,175
12.4%
Lombard Odier Asset Management Europe Ltd
15,137,772
10.0%
Sports Direct International
7,251,065
4.8%
Charitable and political donations
The group made charitable donations of nil (2016: nil) during the financial year. The group made no political donations.
Indemnity and insurance of officers
The company maintains directors’ and officers’ liability insurance which gives appropriate cover for any legal action brought
against its Directors. The company has also provided an indemnity for its Directors, which is a qualifying third-party indemnity
provision. This was in place throughout the year and up to the date and approval of the financial statements.
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
25 September 2017
23
MySale Group Plc
Directors’ responsibility statement
30 June 2017
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 reasonably 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 they ought to have taken as a director in order to make themselves aware
of any relevant audit information and to establish that the group and parent company’s auditors are aware of that information.
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.
•
•
24
MySale Group Plc
Independent auditors’ report to the members of MySale Group Plc
Report on the audit of the financial statements
Opinion
In our opinion:
• MySale Group Plc’s group financial statements 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 2017 and of the group’s loss and
cash flows for the year then ended;
•
•
•
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law); and
have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
We have audited the financial statements, included within the Annual Report and Financial Statements (the “Annual Report”),
which comprise: the group and parent company Balance sheets as at 30 June 2017; the group Statement of profit or loss and
other comprehensive income; the group statement of cash flows; and the Group and parent company Statements of changes
in equity for the year then ended; and the notes to the financial statements, which include a description of the significant
accounting policies.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial
statements. These disclosures are cross-referenced from the financial statements and are identified as audited.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
Our audit approach
Context
The principal activities of MySale Group Plc are as an international online retailer with established websites in Australia and
New Zealand, South-East Asia and an expanding presence in the United Kingdom.
Overview
• A$2.6 million (2016: $2.5 million) - group financial statements
• Based on 1% of total revenues.
• A$1.7 million (2016: $A1.7 million) - parent company financial statements
• Based on 1% of total assets.
• We conducted an audit of the complete financial information of the main Australian trading
entity. Specific balances and financial line items were audited at the remaining reporting units
•
•
based on their nature and size.
The reporting unit where we performed an audit of complete financial information accounted
for 94% of group revenue.
Fraud in revenue recognition (group).
25
MySale Group Plc
Independent auditors’ report to the members of MySale Group Plc
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was
evidence of bias by the directors that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments
we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete
list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Fraud in revenue recognition
Refer to Note 2 (Significant accounting policies).
We have identified a risk of fraud in relation to the
potential misstatement of revenue for the year.
Due to the nature of MySale Group plc’s core sales,
transactions are individually low in value and are highly
automated through the website and related systems. As
a result the risk of manipulation is highest at the financial
statement level, as management may seek to inflate
results through the posting of fictitious sales transactions
by way of manual journals, by recognising revenue for
sales made where the goods have yet to be delivered or
by manipulating the provision for sales returns.
As part of our audit work we have understood and
evaluated the control environment surrounding revenue
recognition. We have also substantively tested a sample
of revenue transactions to supporting sales invoices or
contracts, delivery confirmation from external logistics
suppliers, and cash receipt. No discrepancies were noted
from our testing performed.
We discussed the revenue recognition policy with
management and obtained management’s calculation
to assess their procedures around cut-off of revenue
recognition related to sales that have been made where
products have not yet been delivered to the customer. We
tested managements’ calculations which included agreeing
samples to delivery notices to verify their proper inclusion
of exclusion in the revenue figures for the year ended 30
June 2017.
We obtained management’s calculation of the provision
for returns recognised against revenue and considered
historical accuracy of the provision and compared the
provision to actual returns processed subsequent to year
end. The methodology used to calculate the provision
is consistent with prior year and we noted no material
discrepancies from our testing performed.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and parent company, the accounting processes and con-
trols, and the industry in which they operates.
MySale Group Plc trades internationally through a number of websites. The group financial statements are ultimately a consol-
idation of 18 reporting units representing the group’s operating businesses. The reporting units vary in size and we identified
one reporting unit which required an audit of its complete financial information due to its individual size.
The reporting unit where we performed an audit of the complete financial information accounted for 94% of the group’s rev-
enue. Audits of specific financial statement line items were performed on certain balances in a further one reporting unit, to
provide additional coverage over certain financial statement line items. Our scoping considerations for the group audit were
based both on financial information and risk. OzSale Pty Ltd represents the majority of the revenue and trading results for the
group and, as such, is the only reporting unit which we considered required an audit of its complete financial information. We
have additionally performed procedures over an additional seven reporting components that were not deemed material for
the group audit. We also visited the group's main operations and our component team in Sydney, Australia as part of our audit
procedures.
Our audit work at these reporting units, together with the additional procedures performed at group level on the consolidation
gave us the evidence we needed for our opinion on the group and parent company financial statements as a whole.
26
MySale Group Plc
Independent auditors’ report to the members of MySale Group Plc
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the
effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for benchmark applied
Group financial statements
Parent company financial statements
A$2.6 million (2016: $2.5 million).
A$1.7 million (2016: $A1.7 million).
1% of total revenues.
1% of total assets.
Based on the benchmarks used in the
annual report, revenue is one of the
primary measures used by the share-
holders in assessing the performance of
the group, and is a generally accepted
auditing benchmark.
As the parent entity, MySale Group plc,
is essentially a holding company for the
group, the materiality benchmark has
been determined to be based on total
assets which is a generally accepted
auditing benchmark.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.
The range of materiality allocated across components was between A$1.7 million and A$2.5 million. Certain components were
audited to a local statutory audit materiality that was also less than our overall group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above A$134,000
(group audit) (2016: A$126,000) and A$82,500 (parent company audit) (2016: A$85,300) as well as misstatements below those
amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when:
•
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate;
or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant
doubt about the group’s and parent company’s ability to continue to adopt the going concern basis of accounting for a
period of at least twelve months from the date when the financial statements are authorised for issue.
•
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s and
parent company’s ability to continue as a going concern.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not express an audit opinion or any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
27
MySale Group Plc
Independent auditors’ report to the members of MySale Group Plc
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
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 in accordance with the applicable framework and for being satisfied that they give a
true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and Parent company’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have
no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
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.
Other required reporting
Companies (Jersey) Law 1991 exception reporting
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.
Craig Skelton
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Recognized Auditor
London
25 September 2017
28
MySale Group Plc
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2017
Revenue
Revenue from sale of goods
Cost of sale of goods
Gross profit
Other operating (loss)/gains, net
Finance income
Finance costs
Finance (costs)/income, net
Expenses
Selling and distribution expenses
Administration expenses
Share of loss of joint venture
(Loss)/profit before income tax benefit/(expense)
Income tax benefit/(expense)
Loss after income tax benefit/(expense) for the year
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
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
Basic earnings per share
Diluted earnings per share
Note
4
5
7
35
9
23
23
36
36
2017
A$’000
268,387
(192,344)
76,043
(1,334)
105
(223)
(118)
(44,040)
(32,109)
-
(1,558)
576
(982)
259
(1,751)
(1,492)
(2,474)
-
(982)
(982)
-
(2,474)
(2,474)
Cents
(0.65)
(0.65)
2016
A$’000
252,289
(185,633)
66,656
2,173
125
(97)
28
(37,460)
(31,126)
(104)
167
(364)
(197)
(1,068)
(2,161)
(3,229)
(3,426)
(20)
(177)
(197)
(20)
(3,406)
(3,426)
Cents
(0.12)
(0.12)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
29
MySale Group Plc
Balance sheet
As at 30 June 2017
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Income tax payable
Provisions
Deferred revenue
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share premium account
Other reserves
Accumulated losses
Equity attributable to the owners of MySale Group Plc
Non-controlling interests
Total equity
Note
2017
A$’000
2016
A$’000
10
11
12
13
14
15
16
17
18
19
20
21
23
24
19,027
16,951
38,042
4,949
78,969
2,711
35,572
10,544
48,827
34,005
9,058
35,473
7,973
86,509
2,226
29,765
10,295
42,286
127,796
128,795
28,586
10,014
788
193
2,283
10,222
52,086
143
332
475
29,548
6,476
1,047
1,104
2,163
11,677
52,015
-
368
368
52,561
75,235
52,383
76,412
306,363
306,363
(125,958)
(105,150)
75,255
(20)
(125,763)
(104,168)
76,432
(20)
75,235
76,412
The financial statements of MySale Group Plc (company number 115584) were approved by the Board of Directors and
authorised for issue on 25 September 2017. They were signed on its behalf by:
Carl Jackson
Director
Andrew Dingle
Director
The above balance sheet should be read in conjunction with the accompanying notes
30
MySale Group Plc
Statement of changes in equity
For the year ended 30 June 2017
Share premium
account
A$’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)
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)
-
-
-
-
-
(3,229)
(3,229)
(177)
-
(177)
397
-
Balance at 30 June 2016
306,363
(125,763)
(104,168)
-
(20)
-
(20)
-
(20)
79,441
(197)
(3,229)
(3,426)
397
76,412
Accumulated
losses
A$’000
Non-controlling
interest
A$’000
Total equity
A$’000
(20)
-
-
-
-
76,412
(982)
(1,492)
(2,474)
1,297
75,235
Balance at 1 July 2016
Loss after income tax expense for the year
Other comprehensive income for the year, net of
tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments (note 23)
Share premium
account
A$’000
306,363
-
-
-
-
Other
reserves
A$’000
(125,763)
-
(1,492)
(1,492)
(104,168)
(982)
-
(982)
1,297
-
Balance at 30 June 2017
306,363
(125,958)
(105,150)
(20)
The above statement of changes in equity should be read in conjunction with the accompanying notes
31
MySale Group Plc
Statement of cash flows
For the year ended 30 June 2017
Cash flows from operating activities
(Loss)/profit before income tax benefit/(expense) for the year
(1,558)
167
Note
2017
A$’000
2016
A$’000
Adjustments for:
Depreciation and amortisation
Net loss/(gain) on disposal of property, plant and equipment
Share of loss - joint ventures
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 in other provisions
(Decrease)/increase in deferred revenue
Interest received
Interest paid
Income taxes (paid)/refunded
Net cash from/(used in) operating activities
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Payments for property, plant and equipment
Payments for intangibles
Payments for security deposits
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
Additional lease finance
Net cash from 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 and cash equivalents
5,275
(15)
-
(105)
223
3,820
(7,893)
(2,529)
3,190
(1,167)
1,207
(1,455)
(4,827)
105
(223)
(575)
(5,520)
(3,090)
(1,184)
(7,308)
-
68
-
103
4,383
30
104
(125)
97
4,656
14,167
(17,593)
(3,153)
155
486
530
(752)
125
(97)
832
108
(5,300)
(782)
(3,248)
(120)
153
8
-
(11,411)
(9,289)
13,234
(9,671)
(28)
146
9,089
(3,775)
(91)
-
3,681
5,223
(13,250)
34,005
(1,728)
(3,958)
39,853
(1,890)
33
14
15
Cash and cash equivalents at the end of the financial year
10
19,027
34,005
The above statement of cash flows should be read in conjunction with the accompanying notes
32
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 1. General information
MySale Group Plc is a group consisting of MySale Group Plc (the 'company' or 'parent entity') and its subsidiaries (the 'group').
The financial statements of the group, in line with the location of the majority of the group's operations and customers, are
presented in Australian dollars and generally rounded to the nearest thousand.
The principal business of the group is the operating of online shopping outlets for consumer goods like ladies, men and
children’s fashion clothing, accessories, beauty and homeware items.
MySale Group Plc is a public company, limited by shares, listed on the AIM (Alternate Investment Market), a sub-market of the
London Stock Exchange. The company is incorporated and registered under the Companies (Jersey) Law 1991. The company
is domiciled in Australia.
The registered office of the company is Ogier House, The Esplanade, St. Helier, JE4 9WG, Jersey and principal place of
business is at Unit 5, 111 Old Pittwater Road, Brookvale, NSW 2100, Australia.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 25 September 2017. The
directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
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.
Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the company and the
group has adequate resources to continue in operational existence for at least the next twelve months from the date of
approval of these financial statements. The going concern basis of accounting has therefore been adopted in preparing the
financial statements. Further details are contained in the Directors' report on pages 17 to 19.
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
2017 and the results of all subsidiaries for the year then ended
33
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
Subsidiaries are all those entities over which the group has control. The group controls an entity when the group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the group.
The acquisition of common control subsidiaries is accounted for using the pooling of interest method of accounting. The
acquisition of other subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred
and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the
parent.
Where the group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The group recognises the
fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or
loss.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, balance sheet and statement of changes in equity of the group. Losses incurred by the group
are attributed to the non-controlling interest in full, even if that results in a deficit balance.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing their performance.
Foreign currency translation
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit
or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates,
which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are
recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, 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.
34
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
Sale of goods
The group operates an online retail and wholesale business selling men's, ladies and children's apparel, accessories, beauty
and homeware items. Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the
goods have passed to the buyer. Risks and rewards are considered passed to the buyer when the goods have been delivered to
the customer and it is reasonably assured the customer has accepted the goods. Sales represent product shipped plus postage,
less actual and estimated future returns and slotting fees, rebates and other trade discounts accounted for as reductions of
revenue. Online sales are usually by credit card or online payment.
It is the group's policy to sell its products to the customer with a right of return within 14 days. Accumulated experience is used
to estimate and provide for such returns at the time of sale.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
• When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
MySale Group Plc (the 'head entity') and its wholly-owned Australian subsidiaries plus Apac Sale Group Pte. Ltd. have
formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the
tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has
applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members
of the tax consolidated group.
Current and non-current classification
Assets and liabilities are presented in the balance sheet based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the group's
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for
at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is current when: it is expected to be settled in the group's normal operating cycle; it is held primarily for the purpose
of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the
settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.
35
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
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.
Other receivables are recognised at amortised cost, less any provision for impairment.
Inventories
Goods for resale are stated at the lower of cost and net realisable value on a 'weighted average cost' basis. Cost comprises
purchase, delivery and direct labour costs, net of rebates and discounts received or receivable.
Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of
rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make
the sale.
A provision is made to write down any slow-moving or obsolete inventory to net realisable value, based on management
assessment of the expected future sales of that inventory, the condition of the inventory and the seasonality of the inventory.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether
the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
Cash flow hedges
Cash flow hedges are used to cover the group's exposure to variability in cash flows that is attributable to particular risks
associated with a recognised asset or liability or a firm commitment which could affect profit or loss. The effective portion of
the gain or loss on the hedging instrument is recognised in other comprehensive income through the cash flow hedges reserve
in equity, whilst the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred out of equity and
included in the measurement of the hedged transaction when the forecast transaction occurs.
Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure that each
hedge is highly effective and continues to be designated as a cash flow hedge. If the forecast transaction is no longer expected
to occur, the amounts recognised in equity are transferred to profit or loss.
If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the hedge becomes
ineffective and is no longer a designated hedge, the amounts previously recognised in equity remain in equity until the
forecast transaction occurs.
Joint ventures
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to
joint control. Investments in joint ventures are accounted for using the equity method. Under the equity method, the share of
the profits or losses of the joint venture is recognised in profit or loss and the share of the movements in equity is recognised
in other comprehensive income. Income/(losses) earned from joint ventures increase/(reduce) the carrying amount of the
investment. When the group’s share of losses in a joint venture equals to or exceeds its interest in the joint venture, including
any other unsecured non-current receivables, the group does not recognise further losses, unless it has obligations to make or
has made payments on behalf of the joint venture.
36
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Subsequent expenditure relating to plant and equipment that has already been recognised is added to the carrying amount of
the asset only when it is probable that future economic benefits associated with the item will flow to the group and the cost of
the item can be measured reliably. All other repair and maintenance expenses are recognised in profit or loss when incurred.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over
their expected useful lives as follows:
Leasehold improvements
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.
37
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
Customer relationships
Customer relationships acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite useful life of three years.
ERP system and software
Acquired enterprise resource planning ('ERP') systems and software costs are initially capitalised at cost which includes the
purchase price, net of any discounts and rebates, and other directly attributable cost of preparing the asset for its intended
use. Direct expenditure including employee costs, which enhances or extends the performance of these systems beyond its
specifications and which can be reliably measured, is added to the original costs incurred. These costs are amortised on a
straight-line basis over the period of their expected benefit, being their finite useful lives of between three and five years.
Costs associated with maintenance are recognised as an expense in profit or loss when incurred.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-
generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a
cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the group prior to the end of the financial year and
which are unpaid. Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost.
Due to their short-term nature they are not discounted. The amounts are unsecured and are usually paid within 30 days of
recognition.
Deferred revenue
Deferred revenue relates to cash received in advance from customers where the goods have not been delivered as at the
reporting date.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective interest method.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the
period in which they are incurred.
Provisions
Provisions are recognised when the group has a present (legal or constructive) obligation as a result of a past event, it is
probable the group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of
money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries and other employee benefits expected to be settled wholly within 12 months of the reporting
date are measured at the amounts expected to be paid when the liabilities are settled.
38
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
Other long-term employee benefits
Employee benefits not expected to be settled within 12 months of the reporting date are measured as the present value
of expected future payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the reporting date on
corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Long-term employee incentive plan
The group operates an employee incentive plan to reward and retain key employees. The group recognises a provision where
contractually obliged or where there is a past practice that has created a constructive obligation.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees. There are no cash-settled share-based
compensation benefits.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution,
the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free
interest rate for the term of the option, together with non-vesting conditions that do not determine whether the group receives
the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of
the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is
treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best
use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair
value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
39
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis
is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where
applicable, with external sources of data.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued
or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the
acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the
proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the group's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the group remeasures its previously held equity interest in the acquiree
at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in
profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes
in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent
consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of
the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly
in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on
either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible
to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of MySale Group Plc, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
40
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
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.
Diluted earnings per share is not calculated if anti-dilutive.
Value Added Tax ('VAT'), Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated VAT/GST, unless the VAT/GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of VAT/GST receivable or payable. The net amount of VAT/GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the balance sheet.
Cash flows are presented on a gross basis. The VAT/GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of VAT/GST recoverable from, or payable to, the tax authority.
Rounding of amounts
Amounts in this report have been rounded off to the nearest thousand dollars, or in certain cases, the nearest dollar.
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 2017. 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.
41
Mysale Group PLC
Notes to the financial statements
30 June 2017
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 July 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.
42
Mysale Group PLC
Notes to the financial statements
30 June 2017
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 2017 (2016: A$nil).
Impairment of non-financial assets
The group assesses impairment of non-financial assets at each reporting date by evaluating conditions specific to the group
and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset
is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key
estimates and assumptions.
Income tax
The group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining
the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business
for which the ultimate tax determination is uncertain. The group recognises liabilities for anticipated tax audit issues based on
the group's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying
amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is
made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the group considers it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Note 4. Operating segments
Identification of reportable operating segments
The group's operating segments are determined based on the internal reports that are reviewed and used by the Board of
Directors (being the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation
of resources.
The CODM reviews revenue and gross profit by reportable segments, being geographical regions. The accounting policies
adopted for internal reporting to the CODM are consistent with those adopted in these financial statements.
The group operates separate websites in each country that it sells goods in. Revenue from external customers is attributed
to each country based on the activity on that countries website. Similar types of goods are sold in all segments. The group's
operations are unaffected by seasonality.
Intersegment transactions
Intersegment transactions were made at market rates and are eliminated on consolidation.
Segment assets and liabilities
Assets and liabilities are managed on a group basis. The CODM does not regularly review any asset or liability information by
segment and, accordingly there is no separate segment information. Refer to the balance sheet for group assets and liabilities.
Major customers
During the year ended 30 June 2017 there were no major customers (2016: none). A customer is considered major if its
revenues are 10% or more of the group's revenue.
43
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 4. Operating segments (continued)
Operating segment information
- 2017
Revenue
Sales to external customers
Total revenue
Gross profit
Other operating (loss)/gains, net
Selling and distribution expenses
Administration expenses
Finance income
Finance costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
- 2016
Revenue
Sales to external customers
Total revenue
Gross profit
Other operating (loss)/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
Australia and
New Zealand
A$’000
South-East
Asia
A$’000
Rest of the
world
A$’000
221,451
221,451
33,806
33,806
13,130
13,130
65,662
8,058
2,323
Australia and
New Zealand
A$’000
South-East
Asia
A$’000
Rest of the
world
A$’000
210,710
210,710
31,590
31,590
57,060
7,546
9,989
9,989
2,050
Total
A$’000
268,387
268,387
76,043
(1,334)
(44,040)
(32,109)
105
(223)
(1,558)
576
(982)
Total
A$’000
252,289
252,289
66,656
2,173
(37,460)
(31,126)
125
(97)
(104)
167
(364)
(197)
44
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 5. Other operating (loss)/gains, net
Net foreign exchange (loss)/gain
Net gain on disposal of property, plant and equipment
Other income/(expense)
Other operating (loss)/gains, net
2017
A$’000
(1,425)
15
76
(1,334)
Note 6. EBITDA reconciliation (earnings before interest, taxation, depreciation and amortisation)
(Loss)/profit before income tax
Add: Share of loss of joint venture
Less: Interest income
Add: Interest expense
Add: Depreciation and amortisation
EBITDA
Underlying EBITDA represents EBITDA adjusted for one-off, non-trading items.
Underlying EBITDA reconciliation
EBITDA
Share-based payments
Reorganisation and discontinued operations
One-off costs of non-trading, non-recurring nature including IPO and acquisition expenses
Unrealised foreign exchange loss/(gain)
Total one-off, non-trading items
Underlying EBITDA
2017
A$’000
(1,558)
-
(105)
223
5,275
3,835
2017
A$’000
3,835
1,132
320
2,434
953
4,839
8,674
2016
A$’000
2,177
19
(23)
2,173
2016
A$’000
167
104
(135)
97
4,383
4,626
2016
A$’000
4,626
397
265
1,997
(1,819)
840)
5,466
45
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 7. Expenses
(Loss)/profit 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
Underlying operating expenses
Total sales, distribution and administration expenses
Add: Realised foreign currency loss/(gain)
Add: Other (expense)/income
Add: Gain on disposal of fixed assets
Less: Share-based payments, one-off costs and reorganisation and discontinued operations
Less: Depreciation and amortisation
Less: Share of loss in joint venture
Total underlying operating expenses
Finance costs
Interest and finance charges paid/payable
Occupancy costs include:
Minimum operating lease payments
2017
A$’000
2016
A$’000
34,254
18,119
5,575
5,764
5,275
7,162
76,149
76,149
472
(76)
(15)
(3,886)
(5,275)
-
67,369
29,716
16,714
5,617
5,936
4,383
6,220
68,586
68,586
(359)
23
(19)
(2,559)
(4,383)
(104)
61,185
223
97
4,568
4,372
Cost of inventories recognised as an expense in 'cost of sales' in profit or loss
152,426
149,297
Note 8. Staff costs
Aggregate remuneration:
Wages and salaries
Social security costs
Long term employee incentive plan
Other staff costs and benefits
Total staff costs
2017
A$’000
27,064
2,380
1,297
3,513
34,254
2016
A$’000
24,463
2,095
397
2,761
29,716
46
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 8. Staff costs (continued)
The average monthly number of employees (including executive directors and those on a
part-time basis) was:
Sales and distribution
Administration
2017
A$’000
2016
A$’000
363
181
544
357
186
543
Details of directors’ remuneration and interests are provided in the audited section of the Directors’ remuneration report and
should be regarded as part of these financial statements.
Note 9. Income tax (benefit)/expense
Income tax (benefit)/expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior years
Aggregate income tax (benefit)/expense
Deferred tax included in income tax (benefit)/expense comprises:
Increase in deferred tax assets (note 16)
Numerical reconciliation of income tax (benefit)/expense and tax at the statutory rate
(Loss)/profit before income tax benefit/(expense)
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
Current year tax losses not recognised
Change in recognised deductible temporary difference
Adjustment recognised for prior years
Income tax (benefit)/expense
2017
A$’000
2016
A$’000
624
(397)
(803)
(576)
(397)
(1,558)
(467)
183
22
-
-
489
(803)
(576)
759
(413)
18
364
(413)
167
50
-
218
(26)
58
-
64
364
The tax rates of the main jurisdictions are Australia 30% (2016: 30%), Singapore 17% (2016: 17%), New Zealand 28% (2016:
28%), United Kingdom 20% (2016: 20%) and United States 42.8% (2016: 42.8%).
Note 10. Current assets - cash and cash equivalents
Cash at bank
Bank deposits at call
2017
A$’000
12,314
6,713
19,027
2016
A$’000
28,805
5,200
34,005
47
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 11. Current assets - trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Other receivables
2017
A$’000
16,800
(86)
16,714
237
16,951
2016
A$’000
9,058
-
9,058
-
9,058
Trade receivables include uncleared cash receipts due from online customers which amounted to A$2,515,000
(2016: A$2,473,000).
Impairment of receivables
The group has recognised a loss of A$91,000 (2016: A$nil) in profit or loss in respect of impairment of receivables for the
year ended 30 June 2017.
Movements in the provision for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Unused amounts reversed
Closing balance
2017
A$’000
-
86
-
86
2016
A$’000
37
-
(37)
-
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to A$751,000 as at 30 June
2017 (A$580,000 as at 30 June 2016).
The ageing of the past due but not impaired receivables are as follows:
3 to 6 months overdue
2017
A$’000
751
2016
A$’000
580
The group did not consider a credit risk on the aggregate balances after reviewing credit terms of customers based on
recent collection practices.
48
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 12. Current assets - inventories
Goods for resale
Obsolete and slow moving inventory provision
Stock in transit
2017
A$’000
35,403
(895)
34,508
3,534
38,042
2016
A$’000
35,395
(456)
34,939
534
35,473
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2017 amounted
to A$281,000 (2016: A$789,000). This expense has been included in 'cost of sales' in profit or loss.
Note 13. Current assets - other
Prepayments
Prepaid inventory
Other deposits
Other current assets
2017
A$’000
1,419
3,030
333
167
4,949
2016
A$’000
984
6,271
435
283
7,973
Prepaid inventory relates to the costs of goods for resale that have been paid for by the group but not delivered to its
distribution centres for further dispatch to the customers who placed the orders as at the reporting date. The corresponding
cash received in advance from customers are accounted for within deferred revenue category in the balance sheet which
includes the total amount of cash received for the goods not delivered to customers at the reporting date.
Note 14. Non-current assets - property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Fixtures and fittings - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
49
2017
A$’000
1,408
(901)
507
5,064
(3,725)
1,339
1,313
(712)
601
516
(252)
264
2,711
2016
A$’000
993
(784)
209
4,535
(3,068)
1,467
1,025
(528)
497
391
(338)
53
2,226
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 14. Non-current assets - property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Balance at 1 July 2015
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2016
Additions
Additions through business combinations (note 33)
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2017
Leasehold
improvements
A$’000
379
Plant and
equipment
A$’000
2,058
Fixtures
and fittings
A$’000
380
Motor
vehicles
A$’000
206
71
(4)
(4)
(233)
209
477
-
(7)
(3)
(169)
507
427
(74)
(30)
(914)
1,467
154
489
(5)
(37)
(729)
1,339
284
(3)
(11)
(153)
497
306
-
(12)
(1)
(189)
601
-
(102)
(5)
(46)
53
286
-
(25)
-
(50)
264
Total
A$’000
3,023
782
(183)
(50)
(1,346)
2,226
1,223
489
(49)
(41)
(1,137)
2,711
Assets pledged as security
Refer to note 20 for property, plant and equipment pledged as security.
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
Goodwill - at cost
Customer relationships - at cost
Less: Accumulated amortisation
Software - at cost
Less: Accumulated amortisation
ERP system
Less: Accumulated amortisation
50
2017
A$’000
24,019
2016
A$’000
21,504
3,519
(2,593)
926
13,824
(5,202)
8,622
4,436
(2,431)
2,005
3,512
(1,536)
1,976
6,986
(3,070)
3,916
3,923
(1,554)
2,369
35,572
29,765
Mysale Group PLC
Notes to the financial statements
30 June 2017
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 2015
Additions
Additions through business combinations
Disposals
Exchange differences
Amortisation expense
Balance at 30 June 2016
Additions
Additions through business combinations (note 33)
Disposals
Exchange differences
Amortisation expense
Goodwill
A$’000
16,849
-
4,655
-
-
-
21,504
-
2,515
-
-
-
Customer
relationships
A$’000
1,529
-
1,495
-
(94)
(954)
1,976
-
124
-
(33)
Software
A$’000
2,912
2,408
-
(8)
(11)
ERP
system
A$’000
2,227
840
-
-
-
Total
A$’000
23,517
3,248
6,150
(8)
(105)
(1,385)
(698)
(3,037)
3,916
6,851
-
(3)
(9)
2,369
492
-
-
8
29,765
7,343
2,639
(3)
(34)
(1,141)
(2,133)
(864)
(4,138)
Balance at 30 June 2017
24,019
926
8,622
2,005
35,572
Amortisation expense is included in 'administration expenses' in profit or loss.
Goodwill is allocated to the group’s cash-generating units ('CGUs') identified according to business model as follows:
Online Flash
Online Retail
2017
A$’000
19,659
2016
A$’000
17,144
4,360
4,360
24,019
21,504
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 Retail
Key assumptions used for value-in-use calculations:
Budgeted gross margin
Five year compound growth rate
Long term growth rate
Pre-tax discount rate
51
2017
%
29.5%
11.0%
2.0%
9.0%
2016
%
28.1%
12.0%
2.0%
9.0%
Mysale Group PLC
Notes to the financial statements
30 June 2017
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$45,464,000.
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
2017
%
22.7%
(10.0%)
2.0%
9.0%
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$2,456,000.
Note 16. Non-current assets - deferred tax
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses
Accrued expenses
Provisions
Sundry
Property, plant and equipment
Intangibles
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss (note 9)
Additions through business combinations
Exchange loss
Closing balance
2017
A$’000
2016
A$’000
8,876
485
784
673
4
(278)
9,324
701
847
269
(253)
(593)
10,544
10,295
10,295
10,320
397
-
(148)
413
(360)
(78)
10,544
10,295
Deferred income tax assets are recognised for tax losses, non-deductible accruals and provisions and capital allowances
carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable.
52
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 17. Current liabilities - trade and other payables
Trade payables
Other payables and accruals
Payable to other related party
Sales tax payable
Refer to note 26 for further information on financial instruments.
Note 18. Current liabilities - borrowings
Bank loans
Bank loans under interchangeable facilities including letters of credit
Finance lease liability
Refer to note 20 for further information on assets pledged as security and financing arrangements.
Refer to note 26 for further information on financial instruments.
Note 19. Current liabilities - provisions
Employee benefits provision
Lease make good provision
Gift voucher provision
Sales returns provision
2017
A$’000
23,460
4,450
58
618
2016
A$’000
22,464
6,168
50
866
28,586
29,548
2017
A$’000
5,200
4,775
39
10,014
2017
A$’000
1,115
173
433
562
2016
A$’000
5,200
1,212
64
6,476
2016
A$’000
770
182
699
512
2,283
2,163
Lease make good provision
The provision represents the present value of the estimated costs to make good the premises leased by the group at the end
of the respective lease terms.
Gift voucher provision
The provision represents the estimated costs to honour gift vouchers that are in circulation and not expired.
Sales return provision
The provision represents the costs for goods expected to be returned by customers.
53
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 19. Current liabilities - provisions (continued)
Movements in provisions
Movements in each class of provision during the current financial year, other than employee benefits, are set out below:
-2017
Carrying amount at the start of the year
Additional provisions recognised
Amounts used
Foreign exchange differences
Carrying amount at the end of the year
Note 20. Non-current liabilities - borrowings
Finance lease liability
Refer to note 26 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Bank loans
Bank loans under interchangeable facilities including letters of credit
Finance lease liability
Lease make good
provision
Gift vouchers
provision
Sales returns
provision
182
13
(19)
(3)
173
699
433
(699)
-
433
512
562
(512)
-
562
2017
A$’000
143
2016
A$’000
-
2017
A$’000
5,200
4,775
182
10,157
2016
A$’000
5,200
1,212
64
6,476
The group has a A$11,576,000 (2016: A$12,233,000) 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:
• 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 A$13,120,000 (2016: £3,000,000) borrowing facility with Hong Kong and Shanghai Banking Corporation Plc
('HSBC') which is secured by a Corporate Guarantee.
Refer to note 38 for changes in borrowing facilities post 30 June 2017.
54
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 20. Non-current liabilities - borrowings (continued)
Assets pledged as security
All bank borrowings of the group are secured by a Corporate Guarantee and Indemnity. The average interest rate incurred on
these bank borrowings was 2.59% (2016: 2.0%). The borrowings are expected to be repaid within 90 days.
The lease liabilities are effectively secured as the rights to the leased assets, recognised in the balance sheet, revert to the
lessor in the event of default.
The carrying amounts of assets pledged as security for current and non-current borrowings are:
Cash and cash equivalents
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank loans and overdrafts
Bank guarantees
Bank loans under interchangeable facilities including letters of credit
Used at the reporting date
Bank loans and overdrafts
Bank guarantees
Bank loans under interchangeable facilities including letters of credit
Unused at the reporting date
Bank loans and overdrafts
Bank guarantees
Bank loans under interchangeable facilities including letters of credit
Note 21. Non-current liabilities - provisions
Employee benefits provision
Long term incentive plan
Refer to note 37 for details on the long term incentive plan.
Note 22. Equity - share capital
2017
A$’000
5,200
2016
A$’000
5,200
2017
A$’000
5,200
3,096
16,400
24,696
5,200
1,405
4,775
11,380
-
1,691
11,625
13,316
2016
A$’000
9,970
67
8,262
18,299
5,200
21
2,229
7,450
4,770
46
6,033
10,849
2017
A$’000
332
2016
A$’000
368
Ordinary shares £nil each (2016: £nil) - issued and fully paid
154,331,652
151,331,652
2017
Shares
2016
Shares
2017
A$’000
-
2016
A$’000
-
55
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 22. Equity - share capital (continued)
Authorised share capital
200,000,000 (2016: 200,000,000) ordinary shares of £nil each.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
Capital risk management
The group’s objectives when managing capital is to safeguard the group’s ability to continue as a going concern, so that it can
continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure
to reduce the cost of capital. It is the group’s strategy to maintain borrowing base ratio well below 65% requirement in order
to comply with the borrowing facility covenants. Refer to note 20.
Capital is regarded as total equity, as recognised in the balance sheet, plus net debt. Net debt is calculated as total borrowings
less cash and cash equivalents.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
Note 23. Equity - other reserves
Foreign currency reserve
Hedging reserve - cash flow hedges
Share-based payments reserve
Capital reorganisation reserve
2017
A$’000
2,187
(788)
5,399
2016
A$’000
3,938
(1,047)
4,102
(132,756)
(132,756)
(125,958)
(125,763)
Foreign currency reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign operations
to Australian dollars.
Hedging reserve - cash flow hedges
The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined to
be an effective hedge.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration,
and other parties as part of their compensation for services.
Capital reorganisation reserve
The reserve is used to recognise the difference between the purchase price of APAC Sale Group Pte. Ltd. and the net assets
acquired following a group reorganisation in 2014.
56
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 23. Equity - other reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Balance at 1 July 2015
Foreign currency translation
Cash flow hedge
Share-based payments
Balance at 30 June 2016
Foreign currency translation
Cash flow hedge
Share-based payments
Foreign
currency
A$’000
6,099
(2,161)
-
-
3,938
(1,751)
-
-
-
(1,068)
-
(1,047)
-
259
-
Hedging
A$’000
21
Share-based
payments
A$’000
3,705
Capital
reorganisation
A$’000
(132,756)
-
-
397
-
-
-
Total
A$’000
(122,931)
(2,161)
(1,068)
397
4,102
(132,756)
(125,763)
-
-
1,297
-
-
-
(1,751)
259
1,297
Balance at 30 June 2017
2,187
(788)
5,399
(132,756)
(125,958)
Note 24. Equity - non-controlling interests
Accumulated losses
2017
A$’000
(20)
2016
A$’000
(20)
The non-controlling interests has a 40% equity holding in Invite to Buy, 40% in Chic Global Limited and 49% in Simply Send
H Pty Limited.
Note 25. Equity - dividends
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.
57
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 26. Financial instruments (continued)
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.
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
Chinese Yuan
Others
Assets
Liabilities
2017
A$’000
1,333
13,314
5,130
1,702
1,022
697
-
2
2016
A$’000
3,052
5,940
15,942
4,842
4,585
1,958
586
78
2017
A$’000
2,368
6,702
1,093
1,130
5
-
-
49
2016
A$’000
2,399
2,780
1,188
800
6
17
-
95
23,200
36,983
11,347
7,285
The group had net assets denominated in foreign currencies of A$11,853,000 as at 30 June 2017 (2016: A$29,698,000). Based
on this exposure, had the Australian dollar weakened by 10% / strengthened by 10% (2016: 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$1,185,000 lower / higher (2016: A$2,969,000 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 loss for the year ended 30 June 2017 was A$1,425,000 (2016: profit of A$2,177,000).
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.
The principal business of the group is online cash sales. The group adopts the policy of dealing with customers of appropriate
credit history in relation to its online sales and wholesale business.
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.
58
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 26. Financial instruments (continued)
Concentration of credit risk
There are no significant concentrations of credit risk within the group. The credit risk on liquid funds is limited as the
counterparties are banks with high credit ratings.
Credit risk is managed by limiting the amount of credit exposure to any single counter-party for cash deposits.
Liquidity risk
The group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Unused borrowing facilities at the reporting date:
Bank loans and overdrafts
Bank guarantees
Bank loans under interchangeable facilities
2017
A$’000
-
1,691
11,625
13,316
2016
A$’000
4,770
46
6,033
10,849
Remaining contractual maturities
Trade payables and other financial liabilities mainly arise from the financing of assets used in the group's ongoing operations
such as plant and equipment and investments in working capital. These assets are considered in the group's overall liquidity
risk.
The following tables detail the group’s remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the balance sheet.
Weighted
average
interest rate
%
1 year or less
A$’000
Between 1 and
5 years
A$’000
Over 5 years
A$’000
Remaining
contractual
maturities
A$’000
-
-
-
2.59%
7.20%
27,910
618
58
10,160
51
38,797
788
788
-
-
-
-
149
149
-
-
-
-
-
-
-
-
-
-
27,910
618
58
10,160
200
38,946
788
788
- 2017
Non-derivatives
Non-interest bearing
Trade and other payables
Sales tax payable
Payable to other related party
Interest-bearing - variable
Bank loans
Lease liability
Total non-derivatives
Derivatives
Forward foreign exchange contracts net settled
-
Total derivatives
59
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 26. Financial instruments (continued)
- 2016
Non-derivatives
Non-interest bearing
Trade and other payables
Sales tax payable
Payable to other related party
Interest-bearing - variable
Bank loans
Lease liability
Total non-derivatives
Derivatives
Forward foreign exchange contracts net settled
-
Total derivatives
Weighted
average
interest rate
%
1 year or less
A$’000
Between 1 and
5 years
A$’000
Over 5 years
A$’000
Remaining
contractual
maturities
A$’000
-
-
-
2.00%
8.97%
28,632
866
50
6,412
65
36,025
1,047
1,047
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28,632
866
50
6,412
65
36,025
1,047
1,047
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 27. Fair value measurement
Fair value hierarchy
The following tables detail the group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices)
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
- 2017
Liabilities
Derivative financial instruments
Total liabilities
- 2016
Liabilities
Derivative financial instruments
Total liabilities
Level 1
A$’000
Level 2
A$’000
Level 3
A$’000
Total
A$’000
-
-
788
788
-
-
788
788
Level 1
A$’000
Level 2
A$’000
Level 3
A$’000
Total
A$’000
1,047
1,047
-
-
1,047
1,047
There were no transfers between levels during the financial year.
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts of trade
receivables and trade payables are assumed to approximate their fair values due to their short-term nature. The fair value of
financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that
is available for similar financial instruments. Also, there is no material difference between the fair value of cash and cash
equivalents and the carrying amounts.
60
Mysale Group PLC
Notes to the financial statements
30 June 2017
Valuation techniques for fair value measurements categorised within level 2
The fair value of the derivative financial instruments, being forward exchange contracts, are determined using quoted forward
exchange rates at the reporting date. These instruments are included in Level 2.
Note 28. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the group is set out
below:
Short-term employee benefits
Post-employment benefits
2017
A$’000
1,616
117
1,733
2016
A$’000
1,734
125
1,859
Key management includes directors (executives and non-executives) and key heads of departments.
During the financial year ended 30 June 2017 A$nil (2016: A$nil) performance rights were granted to members of key
management personnel under share-based payments plans operated by the group as disclosed in note 37.
Note 29. Remuneration of auditors
Services provided by the company's auditors and network firms. During the year the company (including its overseas subsidiaries)
obtained the following services from the company's auditors at costs as detailed below:
Fees payable to the company's auditor and its associates for the audit of the consolidated financial
statements
Fees payable to the company's auditor and its associates for other services:
- the audit of the company's subsidiaries
- review related assurance services
- taxation services
- other non-audit services
Note 30. Contingent liabilities
2017
A$’000
2016
A$’000
190
207
-
132
74
603
190
240
68
129
136
763
The group has reduced its bank guarantees issued by ANZ Bank Limited ('ANZ'), in respect of lease obligations amounting to
A$nil (2016: A$874,000).
The group also issued a bank guarantee through its banker ANZ Bank New Zealand Limited, in respect of customs and duties
obligations amounting to NZ$150,000 (2016: NZ$150,000) and lease obligations to NZ$nil (2016: NZ$22,000).
The group issued bank guarantees through its banker, Hong Kong and Shanghai Banking Corporation ('HSBC'), in respect of
lease obligations amounting to A$979,000 (2016: A$nil).
61
Note 27. Fair value measurement (continued)
Mysale Group PLC
Notes to the financial statements
30 June 2017
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
2017
A$’000
2016
A$’000
3,324
9,138
3,494
10,167
12,462
13,661
51
149
200
(18)
182
39
143
182
269
289
558
65
-
65
(1)
64
64
-
64
559
585
1,144
The group leases office space, land and buildings and warehouses from non-related parties under non-cancellable operating
lease agreements. The leases have varying terms, escalation clauses and renewal rights.
The group leases certain plant and equipment, and motor vehicles from non-related parties under finance leases. The lease
agreements do not have renewal clauses but provide the group with options to purchase the leased assets at nominal values
at the end of the lease term.
The carrying amounts of plant and equipment and motor vehicles held under finance leases are A$nil (2016: A$29,000) and
A$182,000 (2016: A$35,000) respectively at the reporting date.
The company also subleases some of its office and warehouse space to related and non-related parties. The subleases have
varying terms and expiry dates.
Note 32. Related party transactions
Parent entity
MySale Group Plc is the parent company of the group.
Subsidiaries
Interests in subsidiaries are set out in note 34.
Joint ventures
Interests in joint ventures are set out in note 35.
62
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 32. Related party transactions (continued)
Key management personnel
Disclosures relating to key management personnel are set out in note 28.
Transactions with related parties
The following transactions occurred with related parties:
Sale of goods and services:
Sale of goods to other related party (Arcadia and Sports Direct)
Sale of rent and freight services to other related party (recharges of payment)
Payment for goods and services:
Purchase of goods from other related party
2017
A$’000
3,074
522
2016
A$’000
22,521
1,028
1,782
685
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables:
Trade receivables from other related party
Current payables:
Trade payables to other related party
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
2017
A$’000
2016
A$’000
2,200
1,784
1,452
224
Note 33. Business combinations
Acquisition of the online personalization businesses from the Administrators of Ortega Publishing Pty Ltd and Identity Direct
Ltd
On 4 April 2017, the group acquired the trade and assets of the online personalization businesses from the Administrators of
Ortega Publishing Pty Ltd and Identity Direct Ltd. The assets included a membership database, trade and domain names and
plant and equipment to personalize consumer gifts and products including apparel, sporting goods, labels and books.
The purchase price was A$2,936,000.
63
Mysale Group PLC
Notes to the financial statements
30 June 2017
Inventories
Prepayments
Plant and equipment
Customer list
Adjusted for fair value of sales
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Deduction for leave entitlements
Fair value
A$’000
182
296
489
124
(37)
1,054
1,882
2,936
2,762
174
2,936
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 the business and assets of Hot!mess Fashion Ltd
On 21 April 2017, the group acquired the online trade and certain assets of Hot!mess Fashion Limited from Hot!mess Fashion
Ltd. The business designs and sells apparel, beauty products and accessories online. The assets included a membership
database, trade and domain names, inventory and work in progress. The purchase price was A$633,000 (£362,000).
The goodwill of A$633,000 is attributable to the expected opportunities to grow this business that will come from integrating
the business into the group. The goodwill recognized will not be deductible for tax purposes.
64
Note 33. Business combinations (continued)
Mysale Group PLC
Notes to the financial statements
30 June 2017
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
Ownership
interest
2017
Ownership
interest
2016
Ownership
interest
2017
Ownership
interest
2016
Parent
Non-controlling interest
Principal activities
%
%
%
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
100%
60%
100%
100%
100%
100%
100%
60%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
100%
50%
100%
100%
100%
100%
100%
60%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49%
49%
-
-
-
-
40%
50%
-
-
-
-
-
-
-
-
-
-
40%
40%
-
-
-
-
Name
APAC Sale Group Pte. Ltd.
APAC Sale Italy s.r.l
incorporation
Singapore
Italy
Trading company
Trading company
APAC Sales Group, Inc.
United States of America
Trading company
APAC UK Procurement Co Limited
United Kingdom
Trading company
APACSale Limited
BuyInvite Pty Limited
United Kingdom
Trading company
Australia
Trading company
Cocosa Lifestyle Limited
United Kingdom
Trading company
NZ Sale Limited
Ozsale Pty Limited
Ozsale Sdn. Bhd.
Private Sale Asia Pacific Pte Ltd
Simply Sent It Pty Limited
Singsale Pte. Ltd.
Brand Search Pty Limited
New Zealand
Trading company
Australia
Malaysia
Singapore
Australia
Singapore
Australia
Trading company
Trading company
Trading company
Trading company
Trading company
Trading company
Chic Global Limited
United Kingdom
Trading company
BuyInvite NZ Pty Limited
Click Frenzy Australia Pty Ltd
NZ Wine Limited
Australia
Australia
New Zealand
Ourpay Ltd (formerly My Trade Ltd)
United Kingdom
MySale Group Limited
Hong Kong
Handelsselskabet 1 September 2008 ApS Denmark
Branch of Click Frenzy Australia Pty Ltd
Russia
Dormant
Dormant
Dormant
Dormant
Dormant
Trading company
Trading company
Ozsale Philippine Branch
Philippines
Dormant
65
Mysale Group PLC
Notes to the financial statements
30 June 2017
Name
Registered Address
APAC Sale Group Pte. Ltd.
3 Fusionopolis Link #02-08 Nexus@one-nortth, Singapore
Apac Sale Italy s.r.l.
Impruneta (Florence), via Di Colle Ramole 11, 50023, Bottai, Italy
APAC Sales Group, Inc.
1107 S Boyle Street, Los Angeles, CA 90023, U.S.A
APAC UK Procurement Co Limited
1 Brunel Road, Earlstrees Industrial Estate, Corby, Northants, NN17 4JW, UK
APACSale Limited
The Old Mill, 9 Soar Lane, Leicester, LE3 5DE, UK
Branch of Click Frenzy Australia Pty Ltd
Unit 5, 111 Old Pittwater Road, Brookvale, 2100, Australia
Brand Search Pty Ltd.
Unit 5, 111 Old Pittwater Road, Brookvale, 2100, Australia
BuyInvite NZ Pty Limited
Unit 5, 111 Old Pittwater Road, Brookvale, 2100, Australia
BuyInvite Pty Ltd.
Chic Global Limited
Unit 5, 111 Old Pittwater Road, Brookvale, 2100, Australia
12 Bridgford Road, West Bridgford, Nottingham, Nottingamshire, NG2 6AB, UK
Click Frenzy Australia Pty Limited
Unit 5, 111 Old Pittwater Road, Brookvale, 2100, Australia
Cocosa Lifestyle Ltd
1 Brunel Road, Earlstrees Industrial Estate, Corby, Northants, NN17 4JW, UK
Handelsselskabet 1 September 2008 ApS
c/o Accura Advokatpartnerselskab Tuborg Boulevard 1 2900 Hellerup, Denmark
Mysale Group Limited
Unit 5, 111 Old Pittwater Road, Brookvale, 2100, Australia
MySale Group plc
NZ Sale Limited
NZ Wine Limited
Ourpay Ltd
Ogier House, The Esplanade, St Helier, Jersey JE4 9WG, UK
25 Barrys Point Road, Takapuna Auckland 0632, NZ
25 Barrys Point Road, Takapuna Auckland 0632, NZ
The Old Mill, 9 Soar Lane, Leicester, LE3 5DE, UK
Ozsale Philippine Branch
5J Westgate Tower, Investment Drive, Madrigal Business Park, Muntinlupa City, Philippines 1780
Ozsale Pty Limited
Ozsale Sdn. Bhd
Unit 5, 111 Old Pittwater Road, Brookvale, 2100, Australia
29-3, Block F2, Jalan PJU1/42A, Dataran Prima, 47301 Petaling Jaya, Selangor, Malaysia
Private Sale Asia Pacific Pte Ltd.
3 Anson Road, #27-01 Springleaf Tower, Singapore
Simply Send It Pty Ltd
Singsale Pte. Ltd.
Unit 5, 111 Old Pittwater Road, Brookvale, 2100, Australia
3 Fusionopolis Link #02-08 Nexus@one-nortth, Singapore
Summarised financial information for subsidiaries that have non-controlling interests, has not been provided as they are not
material to the group.
66
Note 34. Interests in subsidiaries (continued)
Mysale Group PLC
Notes to the financial statements
30 June 2017
Note 35. Interests in joint ventures
Name
Ownership interest
Principal place of business /
Country of incorporation
2017
%
2016
%
Invite to Buy (Handelsselskabet 1 September 2008 ApS)
Denmark
60.00%
60.00%
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. Thereafter the joint venture 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$55,000.
Note 36. Earnings per share
Loss after income tax
Non-controlling interest
Loss after income tax attributable to the owners of MySale Group Plc
Add back items of a one-off, non-trading nature (note 6)
Underlying profit after income tax attributable to the owners of MySale Group Plc
2017
A$’000
(982)
-
(982)
4,839
3,857
2016
A$’000
(197)
20
(177)
840
663
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
151,331,652
151,331,652
Weighted average number of ordinary shares used in calculating diluted earnings per share
151,331,652
151,331,652
Basic earnings per share
Diluted earnings per share
Underlying earnings per share
Cents
(0.65)
(0.65)
2.50)
Cents
(0.12)
(0.12)
0.40)
8,615,909 (2016: 5,539,326) employee long term incentives have been excluded from the 2017 (2016) diluted earnings calculation
as they are anti-dilutive for the year.
Note 37. Share-based payments
The company established two new employee share plans prior to the AIM admission; (1) the Executive Incentive Plan (‘EIP’)
and (2) the Loan Share Plan (‘LSP’). In accordance with the terms of each plan 100% of the ordinary shares will vest three years
from grant date subject to the achievement of the Underlying Earnings Before Interest, Tax, Depreciation and Amortisation
(‘EBITDA’) included in the company’s internal forecasts set by the Board in the year of the grant.
67
Mysale Group PLC
Notes to the financial statements
30 June 2017
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:
2017
Grant date
Expiry date
28/05/2014
16/06/2019 ***
18/08/2015
18/08/2020 ***
18/08/2015
18/08/2020 **
27/07/2015
27/07/2020 ***
19/08/2016
19/08/2021 ***
19/08/2016
19/08/2021 **
** EIP - Options
*** LSP
2016
Grant date
Expiry date
28/05/2014
16/06/2015 *
28/05/2014
16/06/2019 ***
18/08/2015
18/08/2020 ***
18/08/2015
18/08/2020 **
27/07/2015
27/07/2020 ***
EIP - Share rights
*
** EIP - Options
*** LSP
Exercise
price
£2.26
£0.51
£0.51
£0.53
£0.65
£0.65
Balance at
the start of
the year
111,499
2,027,806
400,021
3,000,000
-
-
5,539,326
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
1,959,599
1,116,984
3,076,583
-
-
-
-
-
-
-
-
-
-
-
-
-
-
111,499
2,027,806
400,021
3,000,000
1,959,599
1,116,984
8,615,909
Exercise
price
£0.00
£2.26
£0.51
£0.51
£0.53
Balance at
the start of
the year
684,042
111,499
-
-
-
795,541
Granted
Exercised
-
-
2,027,806
400,021
3,000,000
5,427,827
(684,042)
-
-
-
-
(684,042)
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
-
-
111,499
2,027,806
400,021
3,000,000
5,539,326
The weighted average remaining contractual life of the share plan outstanding at the end of the financial year was 4 years
(2016: 4 years).
The share-based payment expense for the year was A$1,297,000 (2016: A$397,000).
Note 38. Events after the reporting period
The group’s borrowing facility with Hong Kong and Shanghai Banking Corporation increased to $13,353,000 (previously
$13,120,000) in July 2017. The facility is secured by a Corporate Guarantee.
The group’s borrowing facility with ANZ Bank Limited reduced to $174,000 (previously $11,576,000) in July 2017. The facility
is secured by a term deposit security.
All bank guarantees with ANZ were released in August 2017.
No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the
group's operations, the results of those operations, or the group's state of affairs in future financial years.
68
Note 37. Share-based payments (continued)
Mysale Group PLC
Parent balance sheet
30 June 2017
Fixed assets
Tangible assets
Investment in subsidiary
Deferred tax
Total fixed assets
Current assets
Debtors
Cash at bank and in hand
Total current assets
Current liabilities
Creditors - amounts falling due within one year
Finance lease liability
Total current liabilities
Net current assets
Total assets less current liabilities
Net assets
Equity
Share premium account
Other reserves
Accumulated losses
Total equity
Refer to note 8 for share capital details.
Note
4
5
6
7
8
2017
A$’000
183
162,771
359
163,313
14,753
2,085
16,838
1,042
96
1,138
2016
A$’000
125
161,474
383
161,982
5,203
12,231
17,434
385
-
385
15,700
17,049
179,013
179,031
179,013
179,031
10
11
306,363
(125,490)
(1,860)
306,363
(125,657)
(1,675)
179,013
179,031
The financial statements of MySale Group Plc (company number 115584) were approved by the Board of Directors and
authorised for issue on 25 September 2017. They were signed on its behalf by:
Carl Jackson
Director
Andrew Dingle
Director
69
Mysale Group PLC
Parent statement of changes in equity
30 June 2017
Balance at 1 July 2015
Profit after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based payments
Balance at 30 June 2016
Balance at 1 July 2016
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based payments
Balance at 30 June 2017
Share premium
account
A$’000
306,363
-
-
-
-
Other
reserves
A$’000
(123,734)
-
(2,320)
(2,320)
397
Accumulated
losses
A$’000
Total equity
A$’000
(1,730)
180,899
55
-
55
-
55
(2,320)
(2,265)
397
306,363
(125,657)
(1,675)
179,031
Share premium
account
A$’000
306,363
-
-
-
-
Other
reserves
A$’000
(125,657)
-
(1,130)
(1,130)
Accumulated
losses
A$’000
Total equity
A$’000
(1,675)
179,031
(185)
-
(185)
(185)
(1,130)
(1,315)
1,297
-
1,297
306,363
(125,490)
(1,860)
179,013
70
Mysale Group PLC
Notes to the parent financial statements
30 June 2017
Note 1. General information
MySale Group Plc (the 'company' or 'parent entity') is a public company limited by shares and 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.
The principal business of the group is the operating of online shopping outlets for consumer goods like ladies, men and
children’s fashion clothing, accessories, beauty and homeware items.
MySale Group Plc is a public company, limited by shares, listed on the AIM (Alternate Investment Market), a sub-market of the
London Stock Exchange. The company is incorporated and registered under the Companies (Jersey) Law 1991. The company
is domiciled in Australia.
The registered office of the company is Ogier House, The Esplanade, St. Helier, JE4 9WG, Jersey and principal place of
business is at Unit 5, 111 Old Pittwater Road, Brookvale, NSW 2100, Australia.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 25 September 2017. The
directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
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:
The requirements of paragraph 45(b) and 46-52 of IFRS 2 Share-based payment;
The requirements of IFRS 7 Financial Instruments: Disclosures;
The requirements of paragraph 91 to 99 of IFRS 13 Fair value measurement;
The requirements of paragraph 38 of IAS 1 Presentation of financial statements to present comparative information in
a.
b.
c.
d.
respect of:
i. paragraph 79(a)(iv) of IAS 1;
ii. paragraph 73(e) of IAS 16 Property, plant and equipment;
iii. paragraph 118(e) of IAS 38 Intangible assets.
e.
The following paragraphs of IAS 1 Presentation of financial statements:
i. 10(d) statement of cash flows;
ii. 10(f) statement of financial position;
iii. 16 statement of compliance with all IFRS;
iv. 38A requirement for minimum of two primary statements, including cash flow statements;
v. 38B-D additional comparative information;
vi. 40A-D requirement for a third statement of financial position;
vii. 111 cash flow statement information; and
viii. 134-136 capital management disclosures.
f. IAS 7 Statement of cash flows; and
g. IAS 24 Related party disclosures
71
Mysale Group PLC
Notes to the parent financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
The company has elected not to present its own profit and loss account. The company reported a loss for the financial year
ended 30 June 2017 of A$185,000 (2016: profit of A$55,000).
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.
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 other group undertakings are unsecured, non-interest bearing, have no fixed date of repayment
and are repayable on demand.
72
Mysale Group PLC
Notes to the parent financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
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
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.
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.
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.
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.
73
Mysale Group PLC
Notes to the parent financial statements
30 June 2017
Note 2. Significant accounting policies (continued)
Rounding of amounts
Amounts in this report have been rounded off to the nearest thousand Australian dollars, or in certain cases, the nearest dollar.
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.
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.
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.
74
Mysale Group PLC
Notes to the parent financial statements
30 June 2017
Note 4. 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
Motor vehicles - at cost
Less: Accumulated depreciation
Note 5. 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 6. Current assets - Debtors
Other receivables
Amounts owed by other group undertakings
Note 7. Current assets - cash at bank and in hand
Cash at bank
75
2017
A$’000
71
2016
A$’000
75
(40)
31
17
(9)
8
99
(57)
42
115
(13)
102
183
(28)
47
18
(6)
12
106
(40)
66
-
-
-
125
2017
A$’000
106,403
56,368
2016
A$’000
106,403
55,071
162,771
161,474
2017
A$’000
144
14,609
2016
A$’000
281
4,922
14,753
5,203
2017
A$’000
2,085
2016
A$’000
12,231
Mysale Group PLC
Notes to the parent financial statements
30 June 2017
Note 8. Current liabilities - Creditors - amounts falling due within one year
Trade payables
Accruals
Sales tax payable
Note 9. Equity - called up share capital
Ordinary shares £nil each - issued and fully paid
154,331,652
151,331,652
2017
Shares
2016
Shares
2017
A$’000
234
405
403
1,042
2016
A$’000
93
292
-
385
2017
A$’000
-
2016
A$’000
-
Authorised share capital
200,000,000 (2016: 200,000,000) ordinary shares of £nil each.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
Note 10. Equity - other reserves
Foreign currency reserve
Share-based payments reserve
Capital reorganisation reserve
2017
A$’000
1,867
5,399
2016
A$’000
2,997
4,102
(132,756)
(132,756)
(125,490)
(125,657)
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 Sale Group Pte Ltd (refer share premium account) over
the shareholding acquired of A$132,756,000.
76
Mysale Group PLC
Notes to the parent financial statements
30 June 2017
Note 10. Equity - other reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Balance at 1 July 2015
Foreign currency translation
Share-based payments
Balance at 30 June 2016
Foreign currency translation
Share-based payments
Balance at 30 June 2017
Note 11. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
(Loss)/profit after income tax benefit for the year
Accumulated losses at the end of the financial year
Note 12. Contingent liabilities
The company had no contingent liabilities as at 30 June 2017 and 30 June 2016.
Note 13. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Sub-lease receivable - operating
Committed at the reporting date but not recognised as assets, receivable:
Within one year
One to five years
Foreign
currency
A$’000
5,317
Share-based
payments
A$’000
3,705
Capital
reorganisation
A$’000
(132,756)
(2,320)
-
2,997
(1,130)
-
1,867
Total
A$’000
(123,734)
(2,320)
397
-
-
(132,756)
(125,657)
-
-
(1,130)
1,297
-
397
4,102
-
1,297
5,399
(132,756)
(125,490)
2017
A$’000
(1,675)
(185)
2016
A$’000
(1,730)
55
(1,860)
(1,675)
2017
A$’000
2016
A$’000
360
390
750
-
-
-
426
997
1,423
282
585
867
The company leases office space from non-related parties under a non-cancellable operating lease agreement. The lease
expires within three years. The company also subleases some of its office space to a related party.
77
Mysale Group PLC
Notes to the parent financial statements
30 June 2017
Note 14. Remuneration of auditors
Services provided by the company's auditors and network firms
During the year the company obtained the following services from the company's auditors at costs as detailed below:
Fees payable to the company's auditor and its associated for the audit of the financial statements
2017
A$’000
120
2016
A$’000
90
Note 15. Events after the reporting period
No matter or circumstance has arisen since 30 June 2017 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.
iCER: measure of annual growth based on constant exchange rates
78
MYSALE GROUP PLC
Registered Number 115584
Notice of Annual General Meeting
Notice is hereby given that the fourth 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 Monday 4 December 2017 commencing at 19.30
Australian Eastern Daylight Time (AEDT) (08.30 GMT) to consider and, if thought fit, to pass resolutions 1 to 4 (inclusive) as
ordinary resolutions and resolutions 5 to 7 (inclusive) as special resolutions.
Resolutions
Ordinary Resolutions
1.
Financial statements for the year ended 30 June 2017
To receive the Company’s Annual Report and Accounts for the financial year ended 30 June 2017 together with the Reports of
the Directors and Auditor thereon.
2.
Re-appointment of the auditor
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.
3.
Re-election of Directors
To re-elect Jamie Jackson as a Director in accordance with Articles 7.2 and 7.9 - 7.12 of the Company’s Articles of Association
(the Articles).
4.
To re-elect David Mortimer as a Director in accordance with Articles 7.2 and 7.9 - 7.12 of the Articles.
Special Resolutions
5.
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 5(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 Company's issued Shares as at close of business on 15 November
2017, being the latest practicable date before publication of this notice,
provided further that such power shall expire at the conclusion of the Company’s next Annual General Meeting 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 5(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.
79
For the purposes of the authority in paragraph 5(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.
6.
Dis-application of pre-emption rights – financing
THAT, in addition to any authority granted under Resolution 5 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 on 15 November 2017, 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 next Annual General Meeting 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).
such expiry and notwithstanding such expiry the Directors may allot Shares in pursuance of such offer or agreement).
7.
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:
a)
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 15 November 2017, being the latest practicable date
before publication of this notice);
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:
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
the higher of the price of the last independent trade of a Share and the highest current independent bid for a Share
ii)
as derived from the London Stock Exchange Trading System;
d) such authority shall expire at the conclusion of the Company’s next Annual General Meeting 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;
.
80
e)
f)
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
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 7 as
treasury shares
By order of the Board
Prism CoSec Limited
Company Secretary, MySale Group plc
15 November 2017
81
Notes to the Notice of Annual General Meeting
1
2
3
4
5
6
Record Date
Shareholders registered in the Register of Members of the Company as at 18:00 GMT on 30 November 2017 (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 30
November 2017 will be disregarded in determining the rights of any person to attend or vote at the AGM.
Attendance at the AGM
The Company’s fourth AGM will be held at 19.30 Australian Eastern Daylight Time (08.30 GMT) on 4 December 2017. 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
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 30 November 2017, 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
-
quired 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 30 November 2017. 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 ser-
vice provider are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system
and timings.
ed 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 15 November 2017, being the latest practicable date prior to the publication of this
Notice, the Company had 154,331,652 shares in issue. The Company does not hold any shares in treasury. However 3,000,000 shares
voting rights in the Company as at 15 November 2017 are 151,331,652.
82
7
8
9
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 ac-
tively withheld will be announced to the market via a Primary Information Provider and also placed on the 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 accor-
dance 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.
83
Explanatory Notes to the Resolutions
Ordinary Resolutions
Resolutions 1 to 4 (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
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.
2
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 LLP, the
Board is proposing their re-appointment as external auditor. PricewaterhouseCoopers LLP have expressed their willingness to continue
in office for a further year.
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 and 4 Re-election of Directors
The Company’s Articles of Association require one-third of the Directors to retire by rotation at the AGM. Directors retiring by rotation may,
if they wish, stand for re-election. Accordingly, this year, Jamie Jackson and David Mortimer will retire by rotation at the AGM and will offer
themselves for re-election as Directors. Biographical details of each of the Directors can be found in the Annual Report and Accounts.
Special Resolutions
Resolutions 5 to 7 (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.
5 Disapplication of Pre-Emption Rights – general
In relation to Resolution 5, 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 5 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 5 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 next annual general meeting or fifteen months
following the passing of this resolution, whichever is the earlier.
6 Disapplication of Pre-Emption Rights – financing
Resolution 6 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 6, 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.
7 Authority to buy back Shares
Resolution 7 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 15 November 2017, being the last practicable date prior to publication of
this Notice.
84
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 7 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 annual general meeting or fifteen months after the
resolution is passed, whichever is sooner.
85