ANNUAL
REPORT
2018
MySale Group Plc
Contents
30 June 2018
Corporate directory
Strategic report
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
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3
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26
27
31
32
34
35
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71
72
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1
MySale Group Plc
Corporate directory
30 June 2018
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
Charles Butler - Independent Non-Executive Director
Head office
3/120 Old Pittwater Road, Brookvale, NSW 2100, Australia
Company secretary
Prism Cosec Limited, Elder House, St Georges Business Park, 207 Brooklands Road,
Weybridge, Surrey KT13 0TS
Company number
115584 (Jersey)
Registered office
Ogier House, The Esplanade, 44 Esplanade Street. Helier, JE4 9WG, Jersey
Principal places of business
United Kingdom: Second floor, 19-20 Berners Street, London, W1T 3NW
Australia: 3/120 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
Registrars and Transfer Agents
Neville Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD
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MySale Group Plc
Strategic report
30 June 2018
This Strategic report for MySale Group Plc (‘MySale’ or the ‘company’) and its subsidiaries (collectively referred to as the
‘group’) is set out under the following main headings:
1. Financial and operating highlights
2. Chairman’s statement
3. Review of operations by the Chief Executive Officer
4. Financial review by the Chief Financial Officer
5. Principal risks and uncertainties
6. Corporate social responsibilities
7. People
8. Corporate Governance
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
Year to 30 June (A$ million)
Revenue
Gross Profit
Gross Margin
Underlying1 EBITDA
Underlying profit before tax
Reported loss before tax
Underlying basic earnings per share (cents)
FY18
292.2
85.7
29.3%
11.8
4.9
(1.7)
4.3
Strategic and Operational highlights
FY17
change
268.4
76.0
28.3%
8.7
3.3
(1.6)
2.5
+9%
+13%
+100 bp
+36%
+50%
-9%
+70%
• Active customer base increased 9% to 1.0 million
• Continued focus on activating customers with higher lifetime-value
• Strategic plan to increase own-buy inventory delivered at 23% of online revenue
• Gross margins increased by 100bps
• Further brand partnerships result in over 1.2 million SKUs2 online
• Endless Aisle, including our full-price offer, continues to grow
• Key online customer metrics improved
o
o
o
average order value increased 5% to A$91
order frequency per customer increased 4% to 3.5x per annum
items per basket increased 4% to 3.4 items
• Product returns rate remains at industry-leading level of just 5%
Technology highlights
• Data-driven proprietary technology platform fully deployed
o
supporting online revenue increase and cost reductions
• Recent innovations continue to enhance customer engagement:
o
o
Increasing uptake of Ourpay – our proprietary ‘buy-now, pay-later’ payments system
Launch of Select, our subscription delivery service
• Mobile sits at the heart of customer interactions, representing 60% of orders
• Cumulative app downloads have reached 7.4 million
1 Underlying: is the group’s EBITDA, profit after tax expense or earnings per share calculated having excluded certain expenditure of a one-off, non-trading
or non-cash nature in order to allow clearer understanding of the underlying performance of the year. Full details are contained within Note 6 to the financial
statements. EBITDA: earnings before interest, taxation, depreciation and amortisation. 2 Stock keeping Unit
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MySale Group Plc
Strategic report
30 June 2018
2. Chairman’s statement
I am delighted to report that the group has followed up on the strong results seen in FY17 and delivered another year of record
financial performance, while making further positive progress on our strategic objectives.
Our strategic focus over the last three years has resulted in significant improvements in the top and bottom lines. Over the
past 12 months, the group delivered 9% growth in revenues to A$292 million, with an increase in gross profit of 13% to A$86
million and underlying EBITDA rose 36% to A$11.8 million.
We strive to provide the best possible service and value to our customers and have made further encouraging progress on
this front, as demonstrated by our improved customer metrics. In the last 12 months we have continued to attract new
customers to our offer, and those that transact with us continue to be extremely loyal and engaged with our online retail
proposition, with high levels of repeat purchase activity.
Digital remains at the heart of our proposition and we have focused on ensuring that our user experience is both easy and
convenient for customers, while fulfilling the needs of our brand and retail partners. In support of this, our new technology
platform has really achieved a step change over the past year, providing the flexibility and scalability that underpins all of our
strategic objectives.
While our technology platform supports our objectives, it is our team of dedicated staff that deliver these key outcomes. As
such, I wish to record the board’s appreciation of all our people who strive tirelessly around the globe every day, with
impressive application and ingenuity, to deliver world class service to our customers and brand partners.
In the current year we will continue to leverage our strengths, particularly in the ANZ region, to expand the number of local
and international brand partners and further extend our full price offering within Endless Aisle. As ever, the group’s abilit y to
provide customised sales solutions to our brand partners is a key aspect of how we support them.
We are confident that these initiatives will continue to support ongoing profitable growth and we remain very positive about
the future prospects of the group.
_____________________________
Iain McDonald
Chairman
8 October 2018
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MySale Group Plc
Strategic report
30 June 2018
3. Review of operations by the Chief Executive Officer
Over the past 12 months, MySale has delivered another record year of growth and improved financial performance, with the
group well positioned to continue this positive trend into the new financial year.
We continue to make excellent progress against our strategic initiatives, with a focus on;
• providing our customers with exceptional value, brands, choice and service;
• excellence in delivering unique sales channels and world-class inventory management to brand partners;
•
leveraging the significant strength and efficiency of our proprietary technology platform and international logistics network.
The group’s active customer base increased by 9% in the period, with revenue growing 9% to A$292.2 million (FY17: A$268.4
million). Meanwhile, our customer engagement continued to grow underpinned by our customer-focused digital innovations
including Ourpay and Select, which further enhanced our customer offer during the year.
The group’s strategic focus remained in growing gross profits rather than revenue. Again, we made further progress here,
delivering an increase in gross profit of 13% to A$85.7 million (FY17: A$76.0 million) and a 100 bp increase in gross margin
to 29.3% (FY17: 28.3%).
This represents the group’s third successive year of increasing revenue, gross profit and gross margin.
Revenue and Margin by segment
A$ million
Revenue
FY18
Gross
profit
Growth vs FY17
Gross
profit
GP% Revenue
GP Bp Revenue
Group
ANZ
292.2
85.7 29.3% +9%
+13% +100
268.4
242.4
72.9 30.1% +9%
+11%
+40
221.5
FY17
Gross
Profit
76.0
65.7
GP%
28.3%
29.7%
S-E Asia
33.4
8.9
26.7%
-1%
+10% +290
33.8
8.1
23.8%
ROW
16.5
3.8
23.5% +26% +67% +580
13.1
2.3
17.7%
Underlying EBITDA also increased for the third successive year, growing a further 36% to A$11.8 million (FY17: A$8.7 million)
as a result of the improved trading together with careful management of the cost base.
This positive performance represents another step forward on the group’s path of profitable growth, driven by our clear plan
to grow online activity;
•
securing more, higher lifetime-value, customers, via better localised merchandising and pricing;
•
increasing the proportion of own-buy (1P) inventory while reducing delivery promotions; and
• deploying our technology platform to improve customer engagement and increase efficiency.
This strategic plan, established in 2015, re-focused the business on its core aims of providing exceptional value to customers
in branded products alongside exceptional inventory management solutions to brand partners within the group’s three core
territories.
During the period, and across all territories, the group continued to dedicate its marketing resources and spend almost
exclusively into measurable, digital channels to attract and engage both new and existing customers. The ongoing
communication programme has seen those loyal and engaged customers spend move frequently (increase 4% to 3.5 times
per year on average), and with transaction KPI’s such as average order value and basket size also increasing 4% to A$91
and 3.4 items respectively.
Total underlying operating expenses increased 9% to A$73.9 million (FY17: A$67.4 million) reflecting the increased activity
and volumes of trade during the year. The group made a planned investment into additional marketing with a 20% increase
to 7.5% of revenue to support long term growth in the customer base.
Moving forward, we anticipate that our technology platform will be key to unlocking further operational efficiencies and reducing
costs.
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MySale Group Plc
Strategic report
30 June 2018
In the new financial year, we are already seeing the benefits that increased automation technology can bring, specifically in
terms of lower staff costs, and we anticipate that our enhanced system will deliver additional future savings across buying,
merchandising, marketing and logistics.
Technology Development
During the year, the group maintained capital expenditure levels with the previous year, as planned, in order to further develop
its proprietary technology capabilities. Following the release of a new and enhanced version of the group’s technology platform
late in FY17, this year’s developments leveraged the capability now available within the group. This included more flexible
and scalable functionality which supports our key objectives of increasing online revenue and using efficiency gains to
decrease costs.
The group’s marketplace-enabled platform allows full integration across every one of the group’s sales channels, with all of
the group’s global portfolio of websites operating from a single platform. Through this, the group now benefits from a single
live view of global inventory, which allows both 1P (owned) and 3P (consignment or drop-ship) products to be sold by any of
our websites simultaneously.
Similarly, the platform can provide a single live view of each customer and their individual journeys allowing us to better serve
their needs across all websites and mobile device apps. The mobile buyer remains at the heart of our customer journey and
this channel accounted for 60% of orders received in the past year.
A key element of this technology development has been to enhance the group’s data capabilities through 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 across the group in future.
In the prior year, the group launched its proprietary programme Ourpay, a ‘buy-now, pay-later’ programme which allows
customers easy budgeting and seamless integration with their shopping journey. This instalment payment option helps
customers manage their finances and has been shown to increase both the spend and shopping frequency of those customers
joining the programme. Since its launch, this programme has proved popular with customers - more than 130,000 have now
used it successfully - with those customers displaying higher average order values and buying frequency.
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; on which the group has adopted a conservative policy. At the year end
the receivables balance associated with Ourpay was A$3.8 million and is anticipated to grow as transaction volumes increase.
The group is assessing further opportunities to expand the reach of Ourpay and create additional commercial benefits. The
launch of a test period with the first external retail partner is anticipated in October 2018.
Following the success of Ourpay, in FY17 the group launched Select, our new subscription delivery service, which allows
regular customers to access reduced delivery costs in the period under review. This has also been popular, with more than
30,000 subscriptions purchased by the end of the year.
These specific digital innovations are part of the group’s process of continual improvement in our customer experience,
enhancing customer loyalty while giving the group better insights into our customers’ needs and preferences.
Marketplace
The group’s technology platform facilitates our intelligent marketplace and allows direct integration with brands and retailers
providing them with access to all of our retail websites, whether that be as part of supporting an inventory management or
providing a brand with a new retail channel.
During the period, we invested more time and funds into product selection to ensure customers have the best possible choice
available. As a result, our marketplace platform has seen a huge increase in the SKU available in its first full year; increasing
over four times to over 1.2 million. The group intends to further extend this product range, allowing brands partners to integrate
directly or via third parties.
In addition, as we now have a live feed of global inventory to all websites, the group has been able to extend the length of
time products are available and merchandised to customers. We call this Endless Aisle which refers to this incredible shopping
selection our platform is now able to offer consumers.
Our marketplace operates with customers’ mobile experience at its heart and is also simple and intuitive for vendors to use
which allows us to efficiently support our brand partners and their sales ambitions.
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MySale Group Plc
Strategic report
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Increasingly brands are using marketplace solutions to support their international sales as it provides local knowledge, existing
audiences, and a cost-effective launch in a new territory. Due to the single global platform, our brand partners are able to offer
their products seamlessly to multiple territories rather than be restricted to a single territory as is common with other platforms.
Brands and Strategic Partnerships
Following the notable strategic partnerships launched in FY17 in the period under review the group increased the number of
brand partners listing on the marketplace platform to 2,000, which has driven the substantial increase in the number of SKU’s
available to customers.
The majority of the increased product selection has come from relationships with 3P suppliers, on which the group does not
take any inventory risk as the terms of business are on a consignment or dropship basis. However, we have also successfully
increased the proportion of 1P product on our sales channels as this supports product selection, brand curation and overall
service proposition for customers. This reached 23% of sales during the period and the group expects that this proportion will
continue to increase again in FY19, with a target to reach 25-30% of the sales mix in the medium-term.
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 provides our customers with a wider product selection and
faster delivery times. The group’s 1P activity is focused on staple, high quality branded goods where the data supports strong
engagement with our customers. This element of our consumer offer is continually improving as it has evolved from a focus
on off-price inventory to a more customer-led, data-driven and planned retail solution with more continuity lines.
Our partnerships with flagship retail brands continue to provide 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 continued
structural change and large brands increasingly 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
make it 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.
Operations
During the year, the group’s highly efficient platform processed record numbers of transactions, underlining the efficient
processes and systems that the group has in place to support brands and serve customers. On average, over the past 12
months more than 40,000 new products were launched daily and over 11 million units were shipped in the year. Positively,
customer returns remain at industry leading levels of just 5% overall.
The material progress in establishing the marketplace platform has allowed the group to unlock further operational efficiencies
in the period. For example, through increased automation, certain internal functions have been downsized and in some
instances outsourced, leaving the group as a leaner and more focused organisation. Having bedded in the new platform
throughout the business during FY18 a comprehensive cost reduction programme commenced before the period end, the
benefits of which will steadily increase across the FY19 financial year.
Australia & New Zealand (ANZ)
The group’s largest operating segment had another year of increased revenues, gross profit and customer volumes. Gross
profit increased by 11% to A$72.9 million (FY17: A$65.7 million) while revenue grew 9% to A$242.4 million (FY17: A$221.5
million). Gross Margin rose to 30.1% (FY17: 29.7%).
Our localised offer and strong merchandising continued to resonate with our customer base in the period, with a 4%
improvement in our main customer KPIs of average order value, frequency and basket size.
The scale of our operations in this region, combined with our strong position in the online retail landscape, represent significant
strengths and opportunities the group. The group plans to focus on developing these further in the new financial year, actively
looking to expand the breadth and depth of our online and sales channels in this region, to fully leverage our customer base,
physical resource, buying power and expertise. These strengths will be deployed to the benefit of both domestic and
international brands using our off-price retail heritage and increasingly the full-price selection our customers seek from us.
The group’s retail marketplace has its largest presence in ANZ and is an opportunity to significantly increase the group’s
addressable market in the region. The group is one of the pre-eminent online 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 UK and the USA, and
this region’s relative lack of off-price retailers.
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MySale Group Plc
Strategic report
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In ANZ the group has a small network of physical outlets, part of our offline activities, which is used both to clear the group’s
own surplus inventory and returns via that offline channel. It’s planned that the number of outlets will reduce in FY19 to focus
this activity into fewer, more profitable, sites.
In total the outlet and wholesale, which constitute our offline activities represented c 12% of revenue (FY17: 11%). The
wholesale syndication activity has been very productive over the last two financial periods as it supported the strategic
initiatives to build partnerships, increase the own-buy (1P) element of the sales mix and prove the group’s marketplace model
to partners. Having achieved these aims the group plans to reduce the weighting of wholesale syndication activity which shall
bring a number of its own benefits namely; cost efficiency gains and accretion in the underlying EBITDA margin together with
a reduction in trade receivable balances with the associated increase in cash inflows.
South-East Asia
During the period South-East Asia saw gross profit grow 10% to A$8.9 million (FY17: A$8.1 million) as margin improvement
was prioritised over revenue growth. Gross Margin increased by 290 bps to 26.7% following a revised pricing policy, while
revenue remained flat at A$33.4 million (FY17: A$33.8 million). The continued growth in 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.
In this region the strategy has been to grow the active customer base, so acquisition marketing is a priority to build gross
profitability and leverage this increasing scale by using resources more efficiently and achieving lower shipping rates. With a
more profitable local model now established and an enviable position within the South-East Asian e-commerce market, the
region 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 UK, which trades predominately under the Cocosa brand and which
provides customers with compelling value in premium branded products.
The UK had another good year, as gross profit, the group’s priority, increased by 67% to A$3.8 million (FY17: A$2.3 million),
revenue increased by 26% to A$16.5 million (FY17: A$13.1 million) and gross margins improved. This growth was
underpinned by increased numbers of active customers which is a key objective for the group in newer territories.
These are encouraging results and position the business for further growth in FY19 and beyond. While this region currently
represents a relatively small part of the group’s overall activities, we operates in the UK’s large and well developed online
marketplace where engaged and active consumers can be acquired successfully and cost effectively.
The group has a material presence in the UK as it is 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 of our worldwide revenue.
Outlook
The group had an excellent year to 30 June 2018, with significant growth in profitability and good progress against our strategic
goals, which we aim to build upon in the current year.
In the new financial year, we plan to focus on leveraging new opportunities in ANZ region, which remains our largest operating
territory and has the most powerful marketing, logistics and staffing resources of the group. These will be deployed to the
benefit of both domestic and international brands using our off-price retail heritage and the full-price selection that our
customers increasingly seek from us.
At the same time we plan to reduce our offline activities in the current year, given significant progress against our strategic
aims of increasing the own-buy element of our sales mix and proving our marketplace model to partners. As a result, we
expect revenues to be broadly level year on year, with growth in core online revenues offsetting this planned reduction in
offline. We anticipate, however, that this, along with the full deployment of our technology platform, will bring significant cost
efficiency gains and accretion in the underlying EBITDA margin.
While it is early in the current year, and our peak trading period lies ahead, trading to date has been in line with expectations
and the board expects that underlying EBITDA for the year will be in line with market forecasts with an overall heavier second
half weighting.
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Strategic report
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_____________________________
Carl Jackson
Chief Executive Officer
8 October 2018
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MySale Group Plc
Strategic report
30 June 2018
4. Financial review by the Chief Financial Officer
Revenue and Gross Profit
For the year ended 30 June 2018 group revenue increased by 9% to A$292.2 million (FY17: A$268.3 million) and gross profit
increased faster, by 13%, to reach A$85.7 million (FY17: A$76.0 million). This improved performance came as a direct result
of the strategic plan implemented by the group in 2015.
Operating Expenses
The increase in activity and gross profit resulted in underlying operating expenses of A$73.9 million (FY17: A$67.4 million) in
the year. 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.
Profit/Loss before Tax
The underlying profit before tax for the year increased 50% A$4.9 million (FY17: A$3.3 million) and the reported loss before
tax for the period is A$1.7 million (FY17: A$1.5 million). This reported loss is after the inclusion of a number of one-off and
non-cash items which are shown in more detail below and in note 6 to the financial statements in order to provide greater
insight as to the underlying profitability of the group.
Profit/Loss after Tax and earnings per share
The underlying profit after tax for the year increased 70% to is A$6.6 million (FY17: A$3.9 million) and the reported loss after
tax for the period is $A0.1 million (FY17: A$1.0 million). This reported loss is after the inclusion of a number of one-off and
non-cash items which are shown in more detail below and in note 6 to the financial statements in order to provide greater
insight as to the underlying profitability of the group.
Note 35 shows the detailed calculations of basic earnings per share for the financial year which increased by 70% to 4.3 cents
per share (FY16: 2.5 cents) on an underlying basis and was 0.03 cents loss (FY17: 0.65 cents loss) on a reported basis.
Taxation
The group has recorded a tax benefit of A$1.6 million for the year (FY17: A$0.6 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$32.4 million
(FY17: A$30 million) with the majority located in Australia. The entire tax loss has been recognised with the provision of a
deferred tax asset of A$12.1 million (FY17: A$10.5 million).
Balance Sheet, Cash and Working Capital
The group’s closing cash balance was A$6.8 million (FY17: A$19.0 million) and the net debt balance was A$6.2 million (FY17:
A$8.9 million net cash), well within the group’s banking facilities.
The closing cash balance for the year, which is lower than anticipated, reflects a number of significant, temporary working
capital outflows which occurred towards the end of the financial year which will reverse in the current financial period,
together with one-off expenditure associated with a prospective acquisition transaction, further details of which are shown
below. The working capital impact is predominantly seen by the increase in trade receivables to A$29.9 million (FY17: A
$17.0 million) which will reverse in FY19 and thus net cash balances shall increase and are expected to be positive at the end
of the current year.
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 purchasing opportunities. A number of purchasing
opportunities arose towards the end of the financial year and inventory was acquired and part re-sold, on a wholesale basis.
In the past two financial years the trade receivables balance has built up as the group’s offline activities, particularly
wholesale syndication, increased. However, now that key objectives, of building partner relationships and proving the
marketplace capability, have been achieved, the forward strategy is to reduce that offline wholesale activity which shall
deliver a steady reduction in trade receivables and in turn steady increase in cash inflows.
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$9.1 million
(FY17: A$8.5 million).
Banking Facilities
The group’s cash balances are held principally with HSBC with whom the group currently has trade finance multi option debt
facilities of A$28.1 million. All facilities are renewed on an annual basis.
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MySale Group Plc
Strategic report
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Underlying Basis
As noted above the group manages its operations by looking at the underlying EBITDA which excludes the impact of a number
of one-off and non-cash items of a non-trading nature as this, in the Board’s opinion, provides a more representative measure
of the group’s performance. A reconciliation between reported profit before tax and underlying EBITDA is included at note 6
to the financial statements and outlined below.
A$ million
Reported EBITDA
Share based payments
Discontinued activities
One-off costs
Unrealised foreign exchange loss
Underlying EBITDA
Depreciation & Amortisation
Net interest expense
Underlying profit before tax
FY18
FY17
5.1
0.9
0.2
3.6
2.0
6.7
11.8
6.6
0.3
4.9
3.8
1.1
0.3
2.4
1.0
4.8
8.7
5.3
0.1
3.3
Included within one-off items are items of a non-trading, non-recurring nature such as acquisition expenses, reorganisation
costs, charges arising from system migration and other costs. The principle items in the year under review include A$1.4
million of costs associated with the acquisition and subsequent reorganisation of Identity Direct as previously announced and
A$2.0 million of costs associated with potential acquisition transactions which did not conclude.
Whilst it is disappointing to incur costs on projects which do not conclude the group has identified key strategic and commercial
benefits that can be derived from increasing the scale of the business and continues to evaluate acquisition opportunities.
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), frequency of customer purchase, items in customer
basket, average revenue per active customer (RPAC), and underlying EBITDA.
_____________________________
Andrew Dingle
Chief Financial Officer
8 October 2018
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MySale Group Plc
Strategic report
30 June 2018
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,
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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.
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6. Corporate social responsibilities
The group’s approach is to make a positive difference to the people, environment and communities in which it works.
Examples include engaging not-for-profit employment agencies, to motivate and upskill the local unemployed community
to sustain employment with the group and investing in warehousing training programs such as a Certificate 3 in
Warehousing and Logistics for the group’s Australian staff. To reduce waste and the impact on the environment the group
does not put copies of customer invoices in its parcels, but rather 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.
8. Corporate governance
Introduction
High standards of corporate governance are a key priority for the Board of MySale Group plc and, in line with the London
Stock Exchange’s requirement that AIM-listed companies adopt and comply with a recognised corporate governance code,
the Board applies the principles of the 2018 Quoted Companies Alliance Corporate Governance Code (the “QCA Code”),
where they consider it appropriate, as the basis of the group’s governance framework. It is the responsibility of the Board to
ensure that the group is managed for the long-term benefit of all shareholders and stakeholders, with effective and efficient
decision-making. Corporate governance is an important aspect of this, reducing risk and adding value to the business.
The Board acknowledge the importance of the QCA Code’s aims that ‘’Companies need to deliver growth in long-term shareholder
value. This requires an efficient, effective and dynamic management framework and should be accompanied by good communication which
helps to promote confidence and trust’’ and the ten principles of corporate governance set out in that Code. The group’s current
approach to complying, as appropriate, with those principles is set out below.
Quoted Company Alliance Corporate Governance Code Principles
Deliver Growth
1.
Establish a strategy and business model which promote long-term value for shareholders
MySale Group Plc has an established strategy to deploy its international ecommerce platform to connect brand partners with
consumers. This strategy has delivered increased revenue and underlying EBITDA in each of the last three years.
The Board has identified the tactics that it believes will support the strategic aims and improve the group’s performance;
Leverage market leading position in ANZ
•
• Utilise technology to improve customer experience and business efficiency
•
Build international brand partnerships to provide a wide product selection
•
Selective M&A where and when appropriate to expand the business model
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A fuller explanation of how the strategy and business model are executed is contained in the Annual Report and presentation
which are available to download from the group website www.mysalegroup.com.
2.
Seek to understand and meet shareholder needs and expectations
The company recognises the importance of engaging with its shareholders and reports formally to them when its full-year and
half-year results are published. At the same time, Executive directors present the results to institutional investors, analysts
and the media. The Non-executive directors are available to discuss any matter stakeholders might wish to raise, and the
Chairman and independent Non-executive directors attend meetings with investors and analysts as required.
The Chief Executive Officer provides the Board with a summary of the content of any engagement the Executive directors
have had with investors to ensure that major shareholders’ views are communicated to the Board as a whole. The Board is
also provided with brokers’ and analysts’ reports when published. This process enables the Chairman and the other Non-
Executive director to be kept informed of major shareholders’ opinions on strategy and governance, and for them to understand
any issues or concerns.
Shareholders are encouraged to attend the annual general meeting at which the group’s activities and results are considered,
and questions answered by the directors. General information about the group is also available on the company’s website.
This includes an overview of activities of the group and details of all recent regulatory announcements
The group maintains a dedicated email address at shareholder.notifications@mysale.com which investors may use to contact
the company which, together with the group’s address, are prominently displayed on the group’s website. Investors may also
make contact requests through the Company’s Nominated Advisor and Joint Broker, Zeus Capital and Joint Broker N+1
Singer.
3.
Take into account wider stakeholder and social responsibilities and their implications for long-term success
In addition to its shareholders, the company believes its main stakeholder groups are its employees, customers, brand
partners, suppliers and relevant statutory authorities in its areas of operation.
The group recognises the increasing importance of corporate social responsibility and endeavours to take it into account when
operating its business in the interests of its stakeholders, including its investors, employees, customers, suppliers, business
partners and the communities where it conducts its activities.
The group believes that having empowered and responsible employees who display sound judgment and awareness of the
consequences of their decisions or actions, and who act in an ethical and responsible way, is key to the success of the
business.
The operation of a profitable business is a priority which in turn means investing for growth and operating in a sustainable
manner. The group has therefore adopted core principles which provide a framework to operating with integrity and respect
for all stakeholders.
The group aims to conduct its business with integrity, respecting the different cultures and the dignity and rights of individuals
in the countries where it operates. The group recognises the obligation to promote universal respect for and observance of
human rights and fundamental freedoms for all, without distinction as to race, religion, gender, language or disability and these
are codified within the operational documents and procedures of the group.
The group has the aim that communities in which it operates should benefit directly from its presence through the wealth and
jobs created, and the investment of its time and money in the community.
Health and safety
The directors are committed to ensuring the highest standards of health and safety, both for employees and for the
communities within which the group operates. The group’s Chief Executive Officer is the person with overall responsibility for
health and safety matters.
The group seeks to meet legal requirements aimed at providing a healthy and secure working environment to all employees
and understands that successful health and safety management involves integrating sound principles and practice into its
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day-to-day management arrangements and requires the collaborative effort of all employees. All employees are positively
encouraged to be involved in consultation and communication on health and safety matters that affect their work.
Environment
The directors are committed to minimising the impact of the group’s operations on the environment. The group recognises
that its business activities have an influence on the local, regional and global environment and accepts that it has a duty t o
carry these out in an environmentally responsible manner. It is the group’s policy to endeavour to meet relevant legal
requirements and codes of practice on environmental issues so as to ensure that any adverse effects on the environment are
minimised.
Consumer
The group has deployed policies and procedures to ensure its compliance with consumer laws and regulations within each
jurisdiction of operation. These policies and procedures and reviewed by external experts on a regular basis.
4.
Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board has overall responsibility for the group’s internal control systems and for monitoring their effectiveness. The Board,
with the assistance of the Audit Committee, maintains a system of internal controls to safeguard shareholders’ investment and
the group’s assets, and has established principles and a continuous process for identifying, evaluating and managing the risks
the group faces.
Further details of the principal risks faced by the group and how they are mitigated are contained on pages 12 and 13 of this
report.
The Board considers risk to the business on an ongoing basis and the group formally reviews and documents the principal
risks at least annually. Both the Board and senior management are responsible for reviewing and evaluating risk and the
Executive directors meet on a regular basis to review ongoing trading performance, discuss budgets and forecasts and any
new risks associated with ongoing trading, the outcome of which is reported 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.
Maintain a dynamic management framework
5.
Maintain the Board as a well-functioning, balanced team led by the chair
The Chairman is responsible for leadership of the Board, ensuring its effectiveness on all aspects of its role, setting its agenda
and ensuring that the directors receive accurate, timely and clear information. The Chairman also ensures effective
communication with shareholders and facilitates the effective contribution of the other Non-executive director. The group is
satisfied that the current Board is sufficiently resourced to discharge its governance obligations on behalf of all stakeholders
and will consider the requirement for additional Non- executive directors as the company fulfils its growth objectives.
To enable the Board to discharge its duties, all directors receive appropriate and timely information. Briefing papers are
distributed to all directors in advance of Board and Committee meetings. All directors have access to the advice and services
of the Chief Financial Officer, who is responsible for ensuring that the Board procedures are followed, and that applicable
rules and regulations are complied with. In addition, procedures are in place to enable the directors to obtain independent
professional advice, at the group’s expense, if necessary.
The Board is responsible to the shareholders and sets the group’s strategy for achieving long-term success. It is ultimately
responsible for the management, governance, controls, risk management, direction and performance of the group. Further
details of the composition of the Board and Committee are set out on page 18 of this report.
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6.
Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The Board currently comprises three Executive and three Non-executive directors with an appropriate balance of the retail
and online sectors, financial and public market skills and experience. The skills and experience of the Board are set out in
their biographies on pages 23 and 24 of this report. The experience and knowledge of each of the directors gives them the
ability to constructively challenge the strategy and to scrutinise performance. The Board also has access to external advisors
where necessary.
Throughout their period in office the directors are continually updated on the group’s business, the industry and competitive
environment in which it operates, corporate social responsibility matters and other changes affecting the group by written
briefings and meetings with senior executives. Advisors provide updates on changes to the legal and governance requirements
of the group, and directors, on an ongoing and timely basis.
7.
Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
The performance of the Board, its Committees and that of the individual directors is monitored by the Chairman on an ongoing
basis. In addition, the executive directors are subject to an annual review process.
8.
Promote a corporate culture that is based on ethical values and behaviours
The group adopts a policy of equal opportunities in the recruitment and engagement of staff as well as during the course of
their employment. It endeavours to promote the best use of its human resources on the basis of individual skills and experience
matched against those required for the work to be performed.
The group recognises the importance of investing in its employees and, as such, the group provides opportunities for training
and personal development and encourages the involvement of employees in the planning and direction of their work. These
values are applied regardless of age, race, religion, gender, sexual orientation or disability.
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.
The group recognises that commercial success depends on the full commitment of all its employees and commits to respecting
their human rights, to provide them with favourable working conditions that are free from unnecessary risk and to maintain fair
and competitive terms and conditions of service at all times.
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.
9.
Maintain governance structures and processes that are fit for purpose and support good decision-making by
the board
The Chairman, Iain McDonald, is responsible for leadership of the Board, ensuring its effectiveness on all aspects of its role,
setting its agenda and ensuring that the directors receive accurate, timely and clear information. The Chairman also ensures
effective communication with shareholders and facilitates the effective contribution of the other Non-executive directors. The
Chief Executive Officer, Carl Jackson, is responsible for the operational management of the group and the implementation of
Board strategy and policy. By dividing responsibilities in this way, no one individual has unfettered powers of decision-making.
There is a schedule of matters reserved for decision by the board which enables the Board to provide leadership and ensure
effectiveness. Such matters include business strategy and management, financial reporting (including the approval of the
annual budget), group policies, corporate governance matters, major capital expenditure projects, materials acquisitions and
divestments and the establishment and monitoring of internal controls.
The appropriateness of the Board’s composition and corporate governance structures are reviewed through the ongoing Board
evaluation process and on an ad hoc basis by the Chairman together with the other directors, and these will evolve in parallel
with the group’s objectives, strategy and business model as the group develops.
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Board Committees
The Board has established Audit and Remuneration Committees.
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:
Charles Butler
David Mortimer AO
Chair
Member
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.
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 on pages 19 to 22 of this report.
The members of the Remuneration Committee are:
Iain McDonald
David Mortimer AO
Chair
Member
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.
Build Trust
10. Communicate how the company is governed and is performing
The group formally reports its performance to all stakeholders with the publication of full year and half-year results. These
publications are supplemented by three regular trading updates each year together with any ad hoc announcement required
in order to ensure appropriate market sensitive information is available to all interested parties.
The company holds and Annual General Meeting each year at which a trading update is provided and shareholders and
encouraged to participate. The results of the resolutions voted upon at the Annual General Meeting are formally published.
The Board maintains a healthy dialogue with all its stakeholders. Throughout the course of the financial year the Board
communicates with shareholders directly and uses external advisors to canvass shareholders on any views, concerns and
expectations they may wish to express indirectly.
By Order of the Board.
_____________________________
Iain McDonald
Chairman
8 October 2018
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High standards of corporate governance are a key priority for the Board of MySale Group plc and, in line with the London
Stock Exchange’s requirement that AIM-listed companies adopt and comply with a recognised corporate governance code,
the Board applies the principles of the 2018 Quoted Companies Alliance Corporate Governance Code (the “QCA Code”),
where they consider it appropriate, as the basis of the group’s governance framework. It is the responsibility of the Board to
ensure that the group is managed for the long-term benefit of all shareholders and stakeholders, with effective and efficient
decision-making. Corporate governance is an important aspect of this, reducing risk and adding value to the business.
The Board of Directors
During the financial year ended 30 June 2018 and as at the date of approval of these financial statements, the Board consisted
of six directors as shown below. Charles Butler was appointed as a Non-Executive Director on 23 October 2017. All 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
Charles Butler
Jamie Jackson
Carl Jackson
Andrew Dingle
Independent Non-Executive Chairman
Independent Non-Executive Director
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. Charles
Butler replaced Iain McDonald as Chair of the Audit Committee on 25 June 2018.
The members of the Audit Committee are:
David Mortimer AO
Charles Butler
Member
Chair
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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:
•
• aligns executive compensation with company performance and shareholder return; and
•
is competitive and is acceptable to shareholders;
is transparent.
The Remuneration Committee, as detailed in the Corporate governance, is responsible for reviewing the performance of the
executive directors and senior employees of the group and for determining the terms and conditions of their employment, level
of remuneration including short-term and long-term incentives, having due regard to the interest of shareholders in all matters.
The number of times the Remuneration Committee met is also detailed in the Corporate Governance section.
20
MySale Group Plc
Directors' remuneration report
30 June 2018
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 2018 are as follows:
Executive director
Base salary
Pension
Contributions
Taxable
Benefits
Group entity with which the contract
is with
Jamie Jackson
Carl Jackson
Andrew Dingle
£200,000
A$371,250
A$325,000
-
A$35,268
A$30,875
£18,000 MySale Group Plc
A$30,000 Ozsale Pty Limited
A$33,560 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, Iain McDonald and Charles Butler entered into letters of appointment on 3 June 2014, 27 July 2015 and
23 October 2017 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.
21
MySale Group Plc
Directors' remuneration report
30 June 2018
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
Charles Butler
£75,000
£40,000
£45,000
MySale Group Plc
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 2018 was as follows and this information is subject to audit:
Basic salary/
fees
Bonus
Taxable
benefits
Pension
contributions
Total
2018
Total
2017
Non-executive
directors:
Iain McDonald
David Mortimer AO
Charles Butler
£75,000
£40,000
£31,038
Executive
directors:
Jamie Jackson
Carl Jackson
A$345,483
A$320,408
Andrew Dingle
A$324,582
-
-
-
-
-
-
-
-
-
-
-
-
£75,000
£40,000
£31,038
£75,000
£40,000
-
A$35,318
A$25,885
-
A$30,439
A$380,801
A$376,732
A$368,953
A$399,562
A$33,560
A$30,835
A$388,977
A$365,814
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
2017
-
-
-
111,499
357,138
509,722
Iain McDonald
David Mortimer AO
Jamie Jackson
Carl Jackson
Andrew Dingle
Andrew Dingle
Granted
Exercised Cancelled
Balance
30 June
2018
Exercise
price
(£)
Date of
exercise
Market
price on
exercise
(£)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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 2018 was £0.70 (2017: £1.15) and the range during the
financial year was between £0.71 and £1.20 (2017: £0.65 and £1.15).
22
MySale Group Plc
Directors' report
30 June 2018
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 2018.
Directors
The directors who have served on the Board of MySale Group Plc during the whole of the financial year (Charles Butler joined
23 October 2017) and up to the date of this report are set out below:
Iain McDonald
David Mortimer AO
Charles Butler
Jamie Jackson
Carl Jackson
Andrew Dingle
Information on directors and their interests
Biographies for the directors and their interests in the ordinary shares of the company, are shown below:
Name:
Title:
Age:
Experience and
expertise:
Name:
Title:
Age:
Experience and
expertise:
Name:
Title:
Age:
Experience and
expertise:
Name:
Title:
Age:
Experience and
expertise:
Iain McDonald
Independent Non-Executive Chairman
48
Iain was appointed to the Board in July 2015. Based in London, Iain has a wealth of experience of
high growth, online businesses and capital markets which the Board believes will be of great benefit
to the group. Iain is a partner with the William Currie Group of Companies (‘WCG’), a family business
founded by financier Bill Currie to invest primarily in technology and e-commerce companies. Iain
has worked with WCG for seven years now during which time WCG has built upon its already strong
track record in the sector, having invested in the early stages of development of companies including
ASOS, The Hut Group, Metapack, Eagle Eye Solutions and Anatwine. As well as working on the
investment side of the business, Iain is a non-executive director at The Hut Group, Anatwine and
Houseology.com.
David Mortimer AO
Independent Non-Executive Director
73
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.
Charles Butler
Independent Non-Executive Director
47
Charles was appointed to the Board in October 2017. He has over two decades experience in senior
and board level positions in growth and digital technology businesses. Amongst Charles’ broad
executive experience, notable roles include Chief Executive Officer of Market Tech Holdings, a
property and digital technology group which he led from successful IPO through to its subsequent
takeover, and Group CEO at NetPlay TV, the interactive gaming company. Charles is a member of
the Institute of Chartered Accountants in England and Wales.
Jamie Jackson
Executive Director and Vice Chairman
53
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 and President Stone. Jamie also built up extensive
experience in managing and operating his own retail stores in the UK and Australia including
liquidating leading brands’ excess stock to retailers for companies such as TK Maxx, Costco and
Tesco. He is currently focused on the group’s international buying, product development and
strategic partnerships.
23
MySale Group Plc
Directors' report
30 June 2018
Name:
Title:
Age:
Experience and
expertise:
Name:
Title:
Age:
Experience
and expertise:
Carl Jackson
Executive Director and Chief Executive Officer
55
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.
Andrew Dingle
Executive Director and Chief Financial Officer
48
Andrew joined MySale in 2013 having previously served as ANZ CFO for Henry Schein, a US
Fortune 500 company. He started his career with Grant Thornton initially in tax and business services
before moving into insolvency and business reconstruction where he focused on the retail and
manufacturing sectors. A move to the UK in 1997 enabled Andrew to work in a number of financial
accounting roles across various industries including financial services, entertainment and retail.
Andrew possesses strong financial, strategy and commercial management skills, including
distribution and inventory management experience in multi-warehousing environments, and is
focused on group finance, logistics and warehousing and strategy. Andrew is a qualified CPA and
also holds an MBA from the Australian Graduate School of Management.
Directors’ beneficial interests in the shares of the company:
Name
Iain McDonald
David Mortimer AO1
Charles Butler
Jamie Jackson
Carl Jackson2
Andrew Dingle
Ordinary
shares
Percentage
holding
248,482
165,000
17,000
47,469,189
3,745,000
201,115
0.2%
0.1%
-
31.4%
2.5%
0.1%
Details of share options or share awards granted to the executive directors are disclosed in the Directors’ remuneration report.
Information on company secretary
Name:
Title:
Experience and
expertise:
Prism Cosec Limited
Company Secretary
Prism Cosec Limited is UK incorporated professional corporate company secretary, providing
corporate governance and company secretarial services to quoted and unquoted companies.
Results and dividends
The results for the financial year are set out in the statement of profit or loss and other comprehensive income. No dividend
has been paid during the financial year and the directors do not recommend a final dividend in respect of the year ended 30
June 2018 (June 2017: 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 26).
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
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.
24
MySale Group Plc
Directors' report
30 June 2018
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.
Subsequent events
No matter or circumstance has arisen since 30 June 2018 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.
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
Schroders plc
Lombard Odier Asset Management
Europe Ltd
Sports Direct International
33,237,124
21,344,111
17,548,036
22.0%
14.1%
11.6%
7,251,065
4.8%
Charitable and political donations
The group made charitable donations of $1,324 (2017: 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
8 October 2018
25
MySale Group Plc
Directors' responsibility statement
30 June 2018
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.
•
•
By Order of the Board
_____________________________
Iain McDonald
Chairman
London
8 October 2018
26
Independent auditors’ report to the members of MySale Group Plc
Report on the audit of the group and parent financial statements
Opinion
In our opinion, MySale Group plc’s group and parent financial statements (the “financial statements”):
•
•
•
•
give a true and fair view of the state of the group’s and of the parent’s affairs as at 30 June 2018 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 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 (“Annual Report”), which
comprise: the Balance sheet and Parent balance sheet as at 30 June 2018; the Statement of profit or loss and other comprehensive income;
the Statement of cash flows; the Statement of changes in equity and the Parent statement of changes in equity for the year then ended; and
the Notes to the financial statements and the Notes to the parent financial statements, which include a description of the significant
accounting policies.
Certain required disclosures have been presented elsewhere in the Annual Report and financial statements (“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 and parent 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 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$2.9 million (2017: A$2.6 million) - group financial statements.
• Based on 1% of total revenues.
• A$1.6 million (2016: $A1.7 million) - parent financial statements.
• Based on 1% of total assets.
• We conducted an audit of the complete financial information of the main Australian trading entity.
Procedures were performed over specific balances and financial line items 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
90% of group revenue.
• Risk of fraud in revenue recognition (group).
27
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
Risk of 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 relating to
wholesale transactions, 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 obtained an understanding and evaluated
the control environment surrounding revenue recognition. We have utilised
computer based audit techniques to test the revenue process, focusing on non-
standard revenue transactions and matching revenue transactions to accounts
receivable and cash based on our understanding of the business and revenue
cycle.
In addition to performing computer based audit techniques, we tested the
existence of wholesale revenue by agreeing the a sample of the revenue to
shipping documents and contracts where accounts receivable balances remain
at 30 June 2018.
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. In addition, we tested managements’
calculations which included agreeing a sample of revenue transactions to
delivery notices to verify their proper inclusion or exclusion in the revenue
figures for the year ended 30 June 2018.
We obtained management’s calculation of the provision for returns recognised
against revenue and compared the provision to actual returns processed
subsequent to year end. The methodology used to calculate the provision is
consistent with the prior year and we noted no 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 the parent, the accounting processes and controls, and the industry in which it
operates.
MySale Group Plc trades internationally through a number of websites. The group financial statements are ultimately a consolidation of 19
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 units where we performed an audit of the complete financial information accounted for 90% of the group’s revenue. 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 financial statements as a whole.
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.
28
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent financial statements
Overall materiality
A$2.9 million (2017: A$2.6 million).
A$1.6 million (2017: A$1.7 million).
How we determined it
1% of total revenues.
1% of total assets.
Rationale for benchmark
applied
Based on the benchmarks used in the annual
report, revenue is one of the primary measure used
by the shareholders 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 the in-scope components was between A$1.6 million and A$2.7 million.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above A$145,000 (group
audit) (2017: A$126,000) and A$77,930 (parent company audit) (2017: A$82,500) as well as misstatements below that amount 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 the parent’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 or the parent’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.
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 26, 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 the parent’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 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 i t 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.
29
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 by the group and parent; or
proper returns adequate for our audit have not been received from branches not visited by us; or
the group and parent’s 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
8 October 2018
30
MySale Group Plc
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2018
Revenue
Revenue from sale of goods
Cost of sale of goods
Gross profit
Other operating loss, net
Finance income
Finance costs
Finance costs, net
Expenses
Selling and distribution expenses
Administration expenses
Loss before income tax benefit
Income tax benefit
Note
2018
A$'000
2017
A$'000
4
5
7
292,204
(206,511)
268,387
(192,344)
85,693
76,043
(1,364)
(1,334)
10
(271)
(261)
105
(223)
(118)
(51,047)
(34,713)
(44,040)
(32,109)
(1,692)
(1,558)
9
1,640
576
Loss after income tax benefit for the year attributable to the owners of MySale
Group Plc
(52)
(982)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Net change in the fair value of cash flow hedges taken to equity, net of tax
Foreign currency translation
23
23
826
1,271
259
(1,751)
Other comprehensive income for the year, net of tax
2,097
(1,492)
Total comprehensive income for the year attributable to the owners of MySale
Group Plc
Basic earnings per share
Diluted earnings per share
2,045
(2,474)
Cents
Cents
35
35
(0.03)
(0.03)
(0.65)
(0.65)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
31
MySale Group Plc
Balance sheet
As at 30 June 2018
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Income tax receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Income tax payable
Provisions
Deferred revenue
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Other reserves
Accumulated losses
Equity attributable to the owners of MySale Group Plc
Non-controlling interests
Total equity
Note
2018
A$'000
2017
A$'000
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
6,770
29,854
38,670
38
115
3,957
79,404
2,571
38,542
12,141
53,254
19,027
16,951
38,042
-
-
4,949
78,969
2,711
35,572
10,544
48,827
132,658
127,796
30,023
12,998
-
-
2,816
8,337
54,174
54
272
326
28,586
10,014
788
193
2,283
10,222
52,086
143
332
475
54,500
52,561
78,158
75,235
-
306,363
(122,983)
(105,202)
78,178
(20)
-
306,363
(125,958)
(105,150)
75,255
(20)
78,158
75,235
The above balance sheet should be read in conjunction with the accompanying notes
32
MySale Group Plc
Balance sheet
As at 30 June 2018
The financial statements of MySale Group Plc (company number 115584 (Jersey)) were approved by the Board of Directors
and authorised for issue on 8 October 2018. They were signed on its behalf by:
___________________________ ___________________________
Carl Jackson Andrew Dingle
Director Director
The above balance sheet should be read in conjunction with the accompanying notes
33
MySale Group Plc
Statement of changes in equity
For the year ended 30 June 2018
Share
premium
account
A$'000
Other
reserves
A$'000
Accumulated
losses
A$'000
Non-
controlling
interest
A$'000
Total equity
A$'000
Balance at 1 July 2016
306,363
(125,763)
(104,168)
(20)
76,412
Loss after income tax benefit for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments (note 23)
-
-
-
-
-
(982)
(1,492)
-
(1,492)
(982)
1,297
-
-
-
-
-
(982)
(1,492)
(2,474)
1,297
Balance at 30 June 2017
306,363
(125,958)
(105,150)
(20)
75,235
Share
premium
account
A$'000
Other
reserves
A$'000
Accumulated
losses
A$'000
Non-
controlling
interest
A$'000
Total equity
A$'000
Balance at 1 July 2017
306,363
(125,958)
(105,150)
(20)
75,235
Loss after income tax benefit for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments (note 23)
-
-
-
-
-
2,097
2,097
(52)
-
(52)
878
-
-
-
-
-
(52)
2,097
2,045
878
Balance at 30 June 2018
306,363
(122,983)
(105,202)
(20)
78,158
The above statement of changes in equity should be read in conjunction with the accompanying notes
34
MySale Group Plc
Statement of cash flows
For the year ended 30 June 2018
Cash flows from operating activities
Loss before income tax benefit for the year
Adjustments for:
Depreciation and amortisation
Net gain on disposal of property, plant and equipment
Interest income
Interest expense
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in inventories
Decrease in other operating assets
Increase/(decrease) in trade and other payables
Increase in other provisions
Decrease in deferred revenue
Interest received
Interest paid
Income taxes paid
Note
2018
A$'000
2017
A$'000
(1,692)
(1,558)
6,576
(17)
(10)
271
5,275
(15)
(105)
223
5,128
3,820
(13,012)
(627)
670
1,224
1,520
(1,733)
(6,830)
10
(271)
(182)
(7,893)
(2,529)
3,190
(1,167)
1,207
(1,455)
(4,827)
105
(223)
(575)
Net cash used in operating activities
(7,273)
(5,520)
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of property, plant and equipment
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 (used in)/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
-
(837)
(8,263)
-
17
(3,090)
(1,184)
(7,308)
68
103
(9,083)
(11,411)
-
(4,775)
(38)
-
13,234
(9,671)
(28)
146
(4,813)
3,681
(21,169)
19,027
1,204
(13,250)
34,005
(1,728)
28
28
28
Cash and cash equivalents at the end of the financial year
10
(938)
19,027
The above statement of cash flows should be read in conjunction with the accompanying notes
35
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 1. General information
MySale Group Plc is a group consisting of MySale Group Plc (the 'company' or 'parent entity') and its subsidiaries (the
'group'). The financial statements of the group, in line with the location of the majority of the group's operations and customers,
are presented in Australian dollars and generally rounded to the nearest thousand dollars.
The principal business of the group is the operating of online shopping outlets for consumer goods like ladies, men 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, 44 Esplanade Street. Helier, JE4 9WG, Jersey and
principal place of business is at 3/120 Old Pittwater Road, Brookvale, NSW 2100, Australia.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 8 October 2018. 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.
The financial statements are prepared in accordance with International Financial 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 12 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 23 to 25.
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 or amended Accounting Standards and Interpretations adopted
The group has adopted all of the new or amended Accounting Standards and Interpretations issued by the International
Accounting Standards Board 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 or amended 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 2018 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the group has control. The group controls an entity when the group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the group. They are de-consolidated from the date that control ceases.
36
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
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 reporting date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit
or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into 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.
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.
37
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
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 tax losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
MySale Group Plc (the 'head entity') and its wholly-owned Australian subsidiaries plus Apac Sale Group Pte. Ltd. have
formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax
consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has
applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members
of the tax consolidated group.
Current and non-current classification
Assets and liabilities are presented in the balance sheet based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the group's
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is current when: it is expected to be settled in the group's normal operating cycle; it is held primarily for the purpose
of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the
settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash
and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the balance
sheet.
38
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
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.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective
evidence that the group will not be able to collect all amounts due according to the original terms of the receivables. Significant
financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or
delinquency in payments are considered indicators that the trade receivable may be impaired. The amount of the impairment
allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect
of discounting is immaterial.
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 obsolete or slow-moving 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.
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.
39
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over
their expected useful lives as follows:
Leasehold improvements
Plant and equipment
Fixtures and fittings
Motor vehicles
5-7 years
3-7 years
5-10 years
4-5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or
the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively
retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease
liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the group will obtain ownership at the end of the lease
term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.
Intangible assets
Externally acquired intangible assets are initially recognised at cost. Indefinite life intangible assets are not amortised and
are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less
amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible
assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The
method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption
or useful life are accounted for prospectively by changing the amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment,
or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.
Customer relationships
Customer relationships acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite useful life of three years.
40
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
ERP system and software
Acquired enterprise resource planning ('ERP') systems and software costs are initially capitalised at cost which includes the
purchase price, net of any discounts and rebates, and other directly attributable cost of preparing the asset for its intended
use. Direct expenditure including employee costs, which enhances or extends the performance of these systems beyond its
specifications and which can be reliably measured, is added to the original costs incurred. These costs are amortised on a
straight-line basis over the period of their expected benefit, being their finite useful lives of between three and five years.
Costs associated with maintenance are recognised as an expense in profit or loss when incurred.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-
financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the group prior to the end of the financial year and
which are unpaid. Trade and other payables are initially recognised at fair value and subsequently measured at amortised
cost. Due to their short-term nature they are not discounted. The amounts are unsecured and are usually paid within 30 days
of recognition.
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.
41
MySale Group Plc
Notes to the financial statements
30 June 2018
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. Consideration
is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected
future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to
maturity and currency that match, as closely as possible, the estimated future cash outflows.
Long-term employee incentive plan
The group operates an employee incentive plan to reward and retain key employees. The group recognises a provision
where contractually obliged or where there is a past practice that has created a constructive obligation.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees. There are no cash-settled share-based
compensation benefits.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
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.
42
MySale Group Plc
Notes to the financial statements
30 June 2018
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.
43
MySale Group Plc
Notes to the financial statements
30 June 2018
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 2018. 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 IFRS 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. IFRS 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.
44
MySale Group Plc
Notes to the financial statements
30 June 2018
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. It 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.
Whilst the Company is finalising the impact of the new standard, the change is not expected to have a significant impact on
the financial statements.
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 and the impact of its adoption will be that operating leases, such as those
detailed in note 32 as commitments under IAS 17, will be brought onto the balance sheet as an asset and liability at the net
present value of the lease commitments, based on the transitional provisions of the standard. The actual amount will depend
on the operating leases held on the date of adoption and any transitional elections made. To date, work has focused on the
identification of the provisions of the standard which will most impact the group and the next phase is a detailed review of
the contracts and the financial reporting impact of IAS 16. Whilst the standard will not be included in the financial statements
until 2020, the impact of the standard will have a material impact. We continue to assess the full impact.
IASB revised Conceptual Framework for Financial Reporting
The revised framework is applicable for annual reporting periods beginning on or after 1 January 2020 and the application
of the new definition and recognition criteria may result in future amendments to several accounting standards. Furthermore,
entities who rely on the conceptual framework in determining their accounting policies for transactions, events or conditions
that are not otherwise dealt with under International Financial Reporting Standards may need to revisit such policies. The
group will apply the revised conceptual framework from 1 July 2020 and is yet to assess its impact.
45
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Other standards and interpretations
The directors have also reviewed all other new Standards and Interpretations that have been issued but are not yet effective
for the year ended 30 June 2018. As a result of this review the directors have determined that there is no impact, material or
otherwise, of the new and revised Standards and Interpretations on the group and, therefore, no change is necessary to
group accounting policies. These accounting policies are consistent with International Financial Reporting Standards.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Provision for obsolete and slow-moving inventories
The provision for obsolete and slow-moving inventories assessment requires a degree of estimation and judgement. The
level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other
factors that affect inventory obsolescence.
Estimation of useful lives of assets
The group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations
or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously
estimated 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 during the financial year ended 30 June 2018 (2017: 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 tax losses.
46
MySale Group Plc
Notes to the financial statements
30 June 2018
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 country's website. Similar types of goods are sold in all segments. The group's
operations are unaffected by seasonality.
Intersegment transactions
Intersegment transactions were made at market rates and are eliminated on consolidation.
Segment assets and liabilities
Assets and liabilities are managed on a group basis. The CODM does not regularly review any asset or liability information
by segment and, accordingly there is no separate segment information. Refer to the balance sheet for group assets and
liabilities.
Major customers
During the year ended 30 June 2018 there were no major customers (2017: none). A customer is considered major if its
revenues are 10% or more of the group's revenue.
Operating segment information
- 2018
Revenue
Sales to external customers
Total revenue
Gross profit
Other operating loss, net
Selling and distribution expenses
Administration expenses
Finance income
Finance costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Australia and South-East
New Zealand
A$'000
Asia
A$'000
Rest of the
world
A$'000
Total
A$'000
242,365
242,365
33,360
33,360
16,479
16,479
292,204
292,204
72,920
8,896
3,877
85,693
(1,364)
(51,047)
(34,713)
10
(271)
(1,692)
1,640
(52)
47
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 4. Operating segments (continued)
- 2017
Revenue
Sales to external customers
Total revenue
Gross profit
Other operating loss, net
Selling and distribution expenses
Administration expenses
Finance income
Finance costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Note 5. Other operating loss, net
Australia and South-East Rest of the
Asia
New Zealand
A$'000
A$'000
World
A$'000
Total
A$'000
221,451
221,451
33,806
33,806
13,130
13,130
268,387
268,387
65,662
8,058
2,323
76,043
(1,334)
(44,040)
(32,109)
105
(223)
(1,558)
576
(982)
Net foreign exchange loss
Net gain on disposal of property, plant and equipment
Other income
Other operating loss, net
2018
A$'000
2017
A$'000
(1,408)
17
27
(1,425)
15
76
(1,364)
(1,334)
Note 6. EBITDA reconciliation (earnings before interest, taxation, depreciation and amortisation)
EBITDA reconciliation
Loss before income tax
Less: Interest income
Add: Interest expense
Add: Depreciation and amortisation
EBITDA
Underlying EBITDA represents EBITDA adjusted for significant, unusual and other one-off items.
Underlying EBITDA reconciliation
EBITDA
Share-based payments
Reorganisation and discontinued operations
One-off costs of non-trading, non-recurring nature including acquisition expenses
Unrealised foreign exchange loss
Underlying EBITDA
48
2018
A$'000
2017
A$'000
(1,692)
(10)
271
6,576
(1,558)
(105)
223
5,275
5,145
3,835
2018
A$'000
2017
A$'000
5,145
878
190
3,588
1,950
3,835
1,132
320
2,434
953
11,751
8,674
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 7. Expenses
Loss before income tax includes the following specific expenses:
Sales, distribution and administration expenses:
Staff costs (note 8)
Marketing expenses
Occupancy costs
Merchant and other professional fees
Depreciation and amortisation
Other administration costs
Total sales, distribution and administration expenses
Finance costs
Interest and finance charges paid/payable
Occupancy costs include:
Minimum operating lease payments
2018
A$'000
2017
A$'000
37,559
22,258
6,148
7,853
6,576
5,366
34,254
18,119
5,575
5,764
5,275
7,162
85,760
76,149
271
223
5,068
4,568
Cost of inventories recognised as an expense in 'cost of sales' in profit or loss
159,939
152,426
Note 8. Staff costs
Aggregate remuneration:
Wages and salaries
Social security costs
Long term employee incentive plan
Other staff costs and benefits
Total staff costs
The average monthly number of employees (including executive directors and those on a
part-time basis) was:
Sales and distribution
Administration
2018
A$'000
2017
A$'000
30,245
2,648
878
3,788
27,064
2,380
1,297
3,513
37,559
34,254
2018
2017
200
271
471
363
181
544
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.
49
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 9. Income tax benefit
Income tax benefit
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior years
Aggregate income tax benefit
Deferred tax included in income tax benefit comprises:
Increase in deferred tax assets (note 16)
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit
Tax at the statutory tax rate of 30%
Effect of overseas tax rates
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-deductible expenses
Tax-exempt income
Prior year tax losses not recognised now recognised
Change in recognised deductible temporary differences
Adjustment recognised for prior periods
2018
A$'000
2017
A$'000
842
(2,237)
(245)
(1,640)
624
(397)
(803)
(576)
(2,237)
(397)
(1,692)
(1,558)
(508)
(293)
32
(40)
(809)
(524)
(8)
(299)
(467)
183
22
-
(262)
-
-
(314)
Income tax benefit
(1,640)
(576)
The tax rates of the main jurisdictions are Australia 30% (2017: 30%), Singapore 17% (2017: 17%), New Zealand 28% (2017:
28%), United Kingdom 19% (2017: 20%) and United States 42.8% (2017: 42.8%).
Note 10. Current assets - cash and cash equivalents
Cash at bank
Bank deposits at call
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial
year as shown in the statement of cash flows as follows:
Balances as above
Bank overdraft (note 18)
Balance as per statement of cash flows
2018
A$'000
2017
A$'000
6,573
197
12,314
6,713
6,770
19,027
6,770
(7,708)
19,027
-
(938)
19,027
50
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 11. Current assets - trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Other receivables
2018
A$'000
2017
A$'000
29,780
(311)
29,469
16,800
(86)
16,714
385
237
29,854
16,951
Trade receivables include uncleared cash receipts due from online customers which amounted to A$4,996,000 (2017:
A$2,515,000).
Impairment of receivables
The group has recognised a loss of A$225,000 (2017: A$86,000) in profit or loss in respect of impairment of receivables for
the year ended 30 June 2018.
Movements in the provision for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Closing balance
2018
A$'000
2017
A$'000
86
225
311
-
86
86
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to A$4,339,000 as at 30 June
2018 (A$751,000 as at 30 June 2017).
The ageing of the past due but not impaired receivables are as follows:
3 to 6 months past due
2018
A$'000
2017
A$'000
4,339
751
The group did not consider a credit risk on the aggregate balances after reviewing credit terms of customers based on recent
collection practices.
51
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 12. Current assets - inventories
Goods for resale
Obsolete and slow-moving inventory provision
Stock in transit
2018
A$'000
2017
A$'000
36,476
(529)
35,947
35,403
(895)
34,508
2,723
3,534
38,670
38,042
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2018 amounted
to A$275,000 (2017: A$281,000). This expense has been included in 'cost of sales' in profit or loss.
Note 13. Current assets - other
Prepayments
Prepaid inventory
Other deposits
Other current assets
2018
A$'000
2017
A$'000
1,339
2,237
316
65
1,419
3,030
333
167
3,957
4,949
Prepaid inventory relates to the costs of goods for resale that have been paid for by the group but not delivered to its
distribution centres for further dispatch to the customers who placed the orders as at the reporting date. The corresponding
cash received in advance from customers are accounted for within deferred revenue category in the balance sheet which
includes the total amount of cash received for the goods not delivered to customers at the reporting date.
Note 14. Non-current assets - property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Fixtures and fittings - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
52
2018
A$'000
2017
A$'000
1,697
(1,085)
612
5,633
(4,323)
1,310
1,331
(894)
437
515
(303)
212
1,408
(901)
507
5,064
(3,725)
1,339
1,313
(712)
601
516
(252)
264
2,571
2,711
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 14. Non-current assets - property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Plant and
Leasehold
improvements equipment
A$'000
A$'000
Fixtures
and fittings
A$'000
Motor
vehicles
A$'000
Total
A$'000
Balance at 1 July 2016
Additions
Additions through business combinations
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2017
Additions
Disposals
Exchange differences
Depreciation expense
209
477
-
(7)
(3)
(169)
507
278
-
(3)
(170)
1,467
154
489
(5)
(37)
(729)
1,339
545
(36)
29
(567)
Balance at 30 June 2018
612
1,310
Assets pledged as security
Refer to note 20 for property, plant and equipment pledged as security.
497
306
-
(12)
(1)
(189)
601
39
-
(14)
(189)
437
53
286
-
(25)
-
(50)
264
-
(2)
3
(53)
212
2,226
1,223
489
(49)
(41)
(1,137)
2,711
862
(38)
15
(979)
2,571
Property, plant and equipment secured under finance leases
Refer to note 32 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
53
2018
A$'000
2017
A$'000
24,043
24,019
3,841
(3,236)
605
21,280
(9,232)
12,048
5,276
(3,430)
1,846
3,519
(2,593)
926
13,824
(5,202)
8,622
4,436
(2,431)
2,005
38,542
35,572
MySale Group Plc
Notes to the financial statements
30 June 2018
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:
Goodwill
A$'000
Customer
relationships Software
A$'000
A$'000
ERP
system
A$'000
Total
A$'000
Balance at 1 July 2016
Additions
Additions through business combinations
Disposals
Exchange differences
Amortisation expense
Balance at 30 June 2017
Additions
Exchange differences
Amortisation expense
21,504
-
2,515
-
-
-
24,019
-
24
-
1,976
-
124
-
(33)
(1,141)
926
251
-
(572)
3,916
6,851
-
(3)
(9)
(2,133)
8,622
7,451
-
(4,025)
2,369
492
-
-
8
(864)
2,005
841
-
(1,000)
29,765
7,343
2,639
(3)
(34)
(4,138)
35,572
8,543
24
(5,597)
Balance at 30 June 2018
24,043
605
12,048
1,846
38,542
Amortisation expense is included in 'administration expenses' in profit or loss.
Goodwill is allocated to the group’s cash-generating units ('CGUs') identified according to business model as follows:
Online flash
Online retail
2018
A$'000
2017
A$'000
19,683
4,360
19,659
4,360
24,043
24,019
The recoverable amounts of the CGUs were determined based on value-in-use. Cash flow projections used in the value-in-
use calculations were based on financial budgets approved by management covering a five year period. Cash flows beyond
the five year period were extrapolated using the estimated growth rates stated below.
Management determined budgeted gross margin based on expectations of market developments. The growth rates used
were conservative based on industry forecasts. The discount rates used were pre-tax and reflected specific risks relating to
the CGUs.
Online flash
Key assumptions used for value-in-use calculations:
Budgeted gross margin
Five year compound growth rate
Long term growth rate
Pre-tax discount rate
2018
%
2017
%
29.9%
10.0%
2.0%
9.0%
29.5%
11.0%
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$218,402,000.
54
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 15. Non-current assets - intangibles (continued)
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
2018
%
2017
%
22.7%
(2.0%)
2.0%
9.0%
22.7%
(10.0%)
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$14,825,000.
Note 16. Non-current assets - deferred tax
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses
Accrued expenses
Provisions
Sundry
Property, plant and equipment
Intangibles
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss (note 9)
Exchange loss
Closing balance
2018
A$'000
2017
A$'000
9,692
1,281
996
292
61
(181)
8,876
485
784
673
4
(278)
12,141
10,544
10,544
2,237
(640)
10,295
397
(148)
12,141
10,544
Deferred income tax assets are recognised for tax losses, non-deductible accruals and provisions and capital allowances
carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable.
Note 17. Current liabilities - trade and other payables
Trade payables
Other payables and accruals
Sales tax payable
Refer to note 26 for further information on financial instruments.
55
2018
A$'000
2017
A$'000
19,879
7,663
2,481
23,518
4,450
618
30,023
28,586
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 18. Current liabilities - borrowings
Bank overdraft
Bank loans
Bank loans under interchangeable facilities
Finance lease liability
2018
A$'000
2017
A$'000
7,708
5,200
-
90
-
5,200
4,775
39
12,998
10,014
Refer to note 20 for further information on assets pledged as security and financing arrangements.
Refer to note 26 for further information on financial instruments.
Note 19. Current liabilities - provisions
Employee benefits provision
Lease make good provision
Gift voucher provision
Sales returns provision
2018
A$'000
2017
A$'000
1,463
135
535
683
1,115
173
433
562
2,816
2,283
Lease make good provision
The provision represents the present value of the estimated costs to make good the premises leased by the group at the end
of the respective lease terms.
Gift voucher provision
The provision represents the estimated costs to honour gift vouchers that are in circulation and not expired.
Sales return provision
The provision represents the costs for goods expected to be returned by customers.
Movements in provisions
Movements in each class of provision during the current financial year, other than employee benefits, are set out below:
- 2018
Carrying amount at the start of the year
Additional provisions recognised
Amounts used
Foreign exchange differences
Carrying amount at the end of the year
Lease make
good
provision
A$'000
Gift vouchers
provision
A$'000
Sales returns
provision
A$'000
173
-
(40)
2
135
433
535
(433)
-
535
562
683
(562)
-
683
56
MySale Group Plc
Notes to the financial statements
30 June 2018
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 overdraft
Bank loans
Bank loans under interchangeable facilities
Finance lease liability
2018
A$'000
2017
A$'000
54
143
2018
A$'000
2017
A$'000
7,708
5,200
-
144
-
5,200
4,775
182
13,052
10,157
The group has a A$28,105,000 (2017: A$13,120,000) total borrowing facility with Hong Kong and Shanghai Banking
Corporation Plc ('HSBC') which is secured by a Corporate Guarantee and Indemnity. There are no financial covenants in
relation to this total borrowing facility.
In 2017, the group had A$11,576,000 borrowing facility with Australia and New Zealand Banking Group Limited ('ANZ') which
was secured by a Corporate Guarantee and Indemnity. The group was required to comply with certain covenants in relation
to this facility.
Assets pledged as security
All bank borrowings of the group are secured by a Corporate Guarantee and Indemnity. The average interest rate incurred
on these bank borrowings was 2.75% (2017: 2.59%). The borrowings are expected to be repaid within 90 days.
The lease liabilities are effectively secured as the rights to the leased assets, recognised in the balance sheet, revert to the
lessor in the event of default.
The carrying amounts of assets pledged as security for current and non-current borrowings are:
Cash and cash equivalents
2018
A$'000
2017
A$'000
5,200
5,200
57
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 20. Non-current liabilities - borrowings (continued)
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank overdraft
Bank loans and overdrafts
Bank guarantees
Bank loans under interchangeable facilities
Used at the reporting date
Bank overdraft
Bank loans and overdrafts
Bank guarantees
Bank loans under interchangeable facilities
Unused at the reporting date
Bank overdraft
Bank loans and overdrafts
Bank guarantees
Bank loans under interchangeable facilities
Note 21. Non-current liabilities - provisions
Employee benefits provision
Long term incentive plan
Refer to note 36 for details on the long term incentive plan.
Note 22. Equity - share capital
2018
A$'000
2017
A$'000
10,262
5,200
1,537
11,106
28,105
7,708
5,200
1,537
-
14,445
2,554
-
-
11,106
13,660
-
5,200
3,096
16,400
24,696
-
5,200
1,405
4,775
11,380
-
-
1,691
11,625
13,316
2018
A$'000
2017
A$'000
272
332
2018
Shares
2017
Shares
2018
A$'000
2017
A$'000
Ordinary shares £nil each (2017: £nil) - issued and fully paid
154,331,652 151,331,652
-
-
Authorised share capital
200,000,000 (2017: 200,000,000) ordinary shares of £nil each.
The increase on the ordinary shares happened at the beginning of the year, on 1 July 2017.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
58
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 22. Equity - share capital (continued)
Capital risk management
The group’s objectives when managing capital is to safeguard the group’s ability to continue as a going concern, so that it
can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the balance sheet, plus net debt. Net debt is calculated as total
borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The capital risk management policy remains unchanged from the 30 June 2017 Annual Report.
Note 23. Equity - other reserves
Foreign currency reserve
Hedging reserve - cash flow hedges
Share-based payments reserve
Capital reorganisation reserve
2018
A$'000
2017
A$'000
3,458
38
6,277
(132,756)
2,187
(788)
5,399
(132,756)
(122,983)
(125,958)
Foreign currency reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign
operations to Australian dollars.
Hedging reserve - cash flow hedges
The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined
to be an effective hedge.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Capital reorganisation reserve
The reserve is used to recognise the difference between the purchase price of APAC Sale Group Pte. Ltd. and the net assets
acquired following a group reorganisation in 2014.
59
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 23. Equity - other reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Foreign
currency
A$'000
Hedging
A$'000
Share-based
payments
A$'000
Capital
reorganisation
A$'000
Balance at 1 July 2016
Foreign currency translation
Cash flow hedge
Share-based payments
Balance at 30 June 2017
Foreign currency translation
Cash flow hedge
Share-based payments
Balance at 30 June 2018
3,938
(1,751)
-
-
2,187
1,271
-
-
3,458
Note 24. Equity - non-controlling interests
Accumulated losses
(1,047)
-
259
-
(788)
-
826
-
4,102
-
-
1,297
5,399
-
-
878
(132,756)
-
-
-
(132,756)
-
-
-
Total
A$'000
(125,763)
(1,751)
259
1,297
(125,958)
1,271
826
878
38
6,277
(132,756)
(122,983)
2018
A$'000
2017
A$'000
(20)
(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.
60
MySale Group Plc
Notes to the financial statements
30 June 2018
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
2018
A$'000
2017
A$'000
Liabilities
2018
A$'000
2017
A$'000
1,671
17,127
9,338
619
308
24
287
59
1,333
13,314
5,130
1,702
1,022
697
-
2
522
820
8,301
778
26
3
-
58
2,368
6,702
1,093
1,130
5
-
-
49
29,433
23,200
10,508
11,347
The group had net assets denominated in foreign currencies of A$18,925,000 as at 30 June 2018 (2017: A$11,853,000).
Based on this exposure, had the Australian dollar weakened by 10% / strengthened by 10% (2017: 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$1,893,000 lower / higher (2017: A$1,185,000 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 2018 was A$1,408,000 (2017: A$1,425,000).
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.
61
MySale Group Plc
Notes to the financial statements
30 June 2018
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 overdraft
Bank guarantees
Bank loans under interchangeable facilities
2018
A$'000
2017
A$'000
2,554
-
11,106
13,660
-
1,691
11,625
13,316
Remaining contractual maturities
Trade payables and other financial liabilities mainly arise from the financing of assets used in the group's ongoing operations
such as plant and equipment and investments in working capital. These assets are considered in the group's overall liquidity
risk.
The following tables detail the group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the balance sheet.
- 2018
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing - variable
Bank overdraft
Bank loans
Lease liability
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
A$'000
Between 1
and 5 years
A$'000
Over 5 years
A$'000
Remaining
contractual
maturities
A$'000
-
27,542
2.75%
3.08%
7.20%
7,708
5,200
92
40,542
-
-
-
56
56
-
-
-
-
-
27,542
7,708
5,200
148
40,598
62
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 26. Financial instruments (continued)
- 2017
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing - variable
Bank loans
Lease liability
Total non-derivatives
Derivatives
Forward foreign exchange contracts net settled
Total derivatives
Weighted
average
interest rate
%
1 year or less
A$'000
Between 1
and 5 years
A$'000
Over 5 years
A$'000
Remaining
contractual
maturities
A$'000
-
27,968
-
2.59%
7.20%
-
9,975
51
37,994
788
788
-
149
149
-
-
-
-
-
-
-
-
27,968
9,975
200
38,143
788
788
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 27. Fair value measurement
Fair value hierarchy
The following tables detail the group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices)
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
- 2018
Assets
Derivative financial instruments
Total assets
- 2017
Liabilities
Derivative financial instruments
Total liabilities
Level 1
A$'000
Level 2
A$'000
Level 3
A$'000
Total
A$'000
Level 1
A$'000
-
-
-
-
38
38
Level 2
A$'000
Level 3
A$'000
788
788
-
-
-
-
38
38
Total
A$'000
788
788
There were no transfers between levels during the financial year.
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts of trade
receivables and trade payables are assumed to approximate their fair values due to their short-term nature. The fair value of
financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is
available for similar financial instruments. Also, there is no material difference between the fair value of cash and cash
equivalents and the carrying amounts.
Valuation techniques for fair value measurements categorised within level 2
The fair value of the derivative financial instruments, being forward exchange contracts, are determined using quoted forward
exchange rates at the reporting date. These instruments are included in level 2.
63
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 28. Changes in liabilities arising from financing activities
Balance at 1 July 2016
Net cash from financing activities
Balance at 30 June 2017
Net cash used in financing activities
Balance at 30 June 2018
Bank loans
under
interchange-
able
facilities
A$'000
Bank
loans
A$'000
Finance lease
liability
A$'000
Total
A$'000
5,200
-
5,200
-
5,200
1,212
3,563
4,775
(4,775)
-
64
118
182
(38)
144
6,476
3,681
10,157
(4,813)
5,344
Note 29. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the group is set out
below:
Short-term employee benefits
Post-employment benefits
2018
A$'000
2017
A$'000
1,911
135
1,616
117
2,046
1,733
Key management includes directors (executives and non-executives) and key heads of departments.
During the financial year ended 30 June 2018 A$nil (2017: A$nil) performance rights were granted to members of key
management personnel under share-based payments plans operated by the group as disclosed in note 36.
Note 30. Remuneration of auditors
Services provided by the company's auditors and network firms
During the year the company (including its overseas subsidiaries) obtained the following services from the company's
auditors, PricewaterhouseCoopers, at costs as detailed below:
Fees payable to the company's auditor and its associates for the audit of the consolidated
financial statements
Fees payable to the company's auditor and its associates for other services:
- the audit of the company's subsidiaries
- taxation services
- other non-audit services
2018
A$'000
2017
A$'000
228
193
111
598
1,130
190
207
132
74
603
64
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 31. Contingent liabilities
The group has issued a bank guarantee through its banker ANZ Bank New Zealand Limited, in respect of customs and duties
obligations amounting to NZ$150,000 (2017: NZ$150,000).
The group issued bank guarantees through its banker, Hong Kong and Shanghai Banking Corporation, in respect of lease
obligations amounting to A$979,000 (2017: A$979,000).
Note 32. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than five years
Lease commitments - finance
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing:
Finance lease liability - current (note 18)
Finance lease liability - non-current (note 20)
Sub-lease receivable - operating
Committed at the reporting date but not recognised as assets, receivables:
Within one year
One to five years
2018
A$'000
2017
A$'000
3,987
7,681
314
3,324
9,138
-
11,982
12,462
92
56
148
(4)
144
90
54
144
-
-
-
51
149
200
(18)
182
39
143
182
269
289
558
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 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 motor vehicles held under finance leases are A$144,000 (2017: A$182,000) at the reporting date.
The company previously subleased some of its office and warehouse space to related and non-related parties. The subleases
have varying terms and expiry dates.
65
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 33. Related party transactions
Parent entity
MySale Group Plc is the parent company of the group.
Subsidiaries
Interests in subsidiaries are set out in note 34.
Key management personnel
Disclosures relating to key management personnel are set out in note 29.
Transactions with related parties
The following transactions occurred with related parties:
Sale of goods and services:
Sale of goods to other related party (Arcadia and Sports Direct)
Sale of rent and freight services to other related party (recharges of payment)
Payment for goods and services:
Purchase of goods from other related party
2018
A$'000
2017
A$'000
509
-
3,074
522
7,679
1,782
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables:
Trade receivables from other related party
Current payables:
Trade payables to other related party
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
2018
A$'000
2017
A$'000
294
2,200
840
1,452
66
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 34. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 2:
Principal place of
business /
Country of
incorporation
Ownership
interest
2018
%
Principal activities
Ownership
interest
2017
%
Parent
Non-controlling interest
Ownership
interest
2017
%
Ownership
interest
2018
%
Name
APAC Sale Group
Pte. Ltd.
3 Fusionopolis Link
#02-08
Nexus@one-north,
Singapore
APAC Sale Italy s.r.l Impruneta
APAC Sales Group,
Inc.
APAC UK
Procurement Co
Limited
(Florence), via Di
Colle Ramole 11,
50023, Bottai, Italy
1107 S Boyle
Street, Los Angeles,
CA 90023, U.S.A
1 Brunel Road,
Earlstrees Industrial
Estate, Corby,
Northants, NN17
4JW, UK
APACSale Limited The Old Mill, 9 Soar
BuyInvite Pty
Limited
Cocosa Lifestyle
Limited
Lane, Leicester,
LE3 5DE, UK
3/120 Old Pittwater
Road, Brookvale,
2100, Australia
1 Brunel Road,
Earlstrees Industrial
Estate, Corby,
Northants, NN17
4JW, UK
25 Barrys Point
Road, Takapuna
Auckland 0632, NZ
Ozsale Pty Limited 3/120 Old Pittwater
NZ Sale Limited
Ozsale Sdn. Bhd.
Private Sale Asia
Pacific Pte Ltd
Simply Sent It Pty
Limited
Road, Brookvale,
2100, Australia
29-3, Block F2,
Jalan PJU1/42A,
Dataran Prima,
47301 Petaling
Jaya, Selangor,
Malaysia
3 Anson Road, #27-
01 Springleaf
Tower, Singapore
Unit 5, 111 Old
Pittwater Road,
Brookvale, 2100,
Australia
Trading company
100%
100%
Trading company
100%
100%
100%
100%
Trading company
100%
100%
Trading company
100%
100%
Trading company
100%
100%
Trading company
100%
100%
Trading company
-
-
Trading company
100%
100%
Trading company
100%
100%
Trading company
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Trading company
51%
51%
49%
49%
67
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 34. Interests in subsidiaries (continued)
Principal place of
business /
Country of
Name
incorporation
Principal
activities
Parent
Ownership
interest
2018
Ownership
interest
2017
Non-controlling interest
Ownership
interest
2017
Ownership
interest
2018
%
%
%
%
Singsale Pte. Ltd.
3 Fusionopolis Link
#02-08 Nexus@one-
north, Singapore
3/120 Old Pittwater
Road, Brookvale,
2100, Australia
Chic Global Limited 1 Brunel Road,
Brand Search Pty
Limited
BuyInvite NZ Pty
Limited
Click Frenzy
Australia Pty Ltd
NZ Wine Limited
Ourpay Ltd
(formerly My Trade
Ltd)
MySale Group
Limited
Handelsselskabet
(Invite to buy)
Branch of Click
Frenzy Australia
Pty Ltd
Ozsale Philippine
Branch
Earlstrees Industrial
Estate Corby,
Northamptonshire,
United Kingdom,
NN17 4JW
Unit 5, 111 Old
Pittwater Road,
Brookvale, 2100,
Australia
Unit 5, 111 Old
Pittwater Road,
Brookvale, 2100,
Australia
25 Barrys Point Road,
Takapuna Auckland
0632, NZ
The Old Mill 9 Soar
Lane Leicester,
Leicestershire, LE3
5DE, UK
Hong Kong
Unit 5, 111 Old
Pittwater Road,
Brookvale, 2100,
Australia
1 September 2008
ApS, c/o Accura
Advokatpartnerselskab
Tuborg Boulevard 1
2900 Hellerup,
Denmark
Russia
Unit 5, 111 Old
Pittwater Road,
Brookvale, 2100,
Australia
5J Westgate Tower,
Investment Drive,
Madrigal Business
Park, Muntinlupa City,
Philippines 1780
Trading company
100%
100%
Trading company
100%
100%
Trading company
100%
60%
Dormant
100%
100%
Dormant
100%
100%
Dormant
100%
100%
Dormant
100%
100%
Dormant
100%
100%
-
-
-
-
-
-
-
-
-
-
40%
-
-
-
-
-
Trading company
60%
60%
40%
40%
Trading company
100%
100%
Dormant
100%
100%
-
-
-
-
Summarised financial information for subsidiaries that have non-controlling interests has not been provided as they are not
material to the group.
68
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 35. Earnings per share
Loss after income tax attributable to the owners of MySale Group Plc
(52)
(982)
Weighted average number of ordinary shares used in calculating basic earnings per share
154,331,652 151,331,652
Weighted average number of ordinary shares used in calculating diluted earnings per share 154,331,652 151,331,652
Number
Number
2018
A$'000
2017
A$'000
Basic earnings per share
Diluted earnings per share
Underlying basic earnings per share
Cents
Cents
(0.03)
(0.03)
4.25
(0.65)
(0.65)
2.50
8,047,850 (2017: 8,615,909) employee long term incentives have been excluded from the 2018 diluted earnings calculation
as they are anti-dilutive for the year.
Note 36. Share-based payments
The company has two employee share plans; (1) the Executive Incentive Plan (‘EIP’) and (2) the Loan Share Plan (‘LSP’).
In accordance with the terms of each plan 100% of the ordinary shares will vest three years from grant date subject to the
achievement of the Underlying Earnings Before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) included in the
company’s internal forecasts set by the Board in the year of the grant.
In July 2015, 3,000,000 options over the ordinary share capital of the company were granted to the Chairman with an exercise
price of £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:
2018
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
28/05/2014
18/08/2015
18/08/2015
27/07/2015
19/08/2016
19/08/2016
19/08/2017
19/08/2017
16/06/2019 **
18/08/2020 **
18/08/2020 *
27/07/2020 **
19/08/2021 **
19/08/2021 *
19/08/2022 **
19/08/2022 *
*
**
EIP - Options
LSP
£2.26
£0.51
£0.51
£0.53
£0.65
£0.65
£1.15
£1.15
111,499
2,027,806
400,021
3,000,000
1,959,599
1,116,984
-
-
8,615,909
-
-
-
-
-
-
449,314
271,014
720,328
-
-
-
-
-
-
-
-
-
-
(329,991)
(109,488)
-
(90,617)
(758,291)
-
-
(1,288,387)
111,499
1,697,815
290,533
3,000,000
1,868,982
358,693
449,314
271,014
8,047,850
69
MySale Group Plc
Notes to the financial statements
30 June 2018
Note 36. Share-based payments (continued)
2017
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
28/05/2014
18/08/2015
18/08/2015
27/07/2015
19/08/2016
19/08/2016
16/06/2019 **
18/08/2020 **
18/08/2020 *
27/07/2020 **
19/08/2021 **
19/08/2021 *
*
**
EIP - Options
LSP
£2.26
£0.51
£0.51
£0.53
£0.65
£0.65
111,499
2,027,806
400,021
3,000,000
-
-
5,539,326
-
-
-
-
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
The weighted average remaining contractual life of the share plan outstanding at the end of the financial year was 4 years
(2017: 4 years).
The share-based payment expense for the year was A$878,000 (2017: A$1,297,000).
At the end of the year there were only 111,499 shares exercisable at their weighted average exercise price of £2.26.
Note 37. Events after the reporting period
No matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the group's
operations, the results of those operations, or the group's state of affairs in future financial years.
70
MySale Group Plc
Parent balance sheet
30 June 2018
Fixed assets
Tangible assets
Investment in subsidiaries
Deferred tax
Total fixed assets
Current assets
Debtors - amounts falling due within one year
Cash at bank and in hand
Total current assets
Current liabilities
Creditors - amounts falling due within one year
Bank overdraft and lease liability
Total current liabilities
Net current assets
Total assets less current liabilities
Net assets
Equity
Called up share capital
Share premium account
Other reserves
Accumulated losses
Total equity
Note
2018
A$'000
2017
A$'000
4
5
6
7
8
9
135
162,771
590
163,496
183
162,771
359
163,313
24,917
-
24,917
14,753
2,085
16,838
1,023
7,785
8,808
1,042
96
1,138
16,109
15,700
179,605
179,013
179,605
179,013
10
11
12
-
306,363
(123,712)
(3,046)
-
306,363
(125,490)
(1,860)
179,605
179,013
In accordance with Companies (GAAP)(Jersey) Order 2010 and Article 105(2)(a) of the Companies (Jersey) Law 1991 the
company has adopted United Kingdom Generally Accepted Accounting Principles and has elected to take the exemptions
available to it not to present its own profit and loss account. The company reported a loss for the financial year ended 30
June 2018 of A$1,186,000 (2017: A$185,000).
The financial statements of MySale Group Plc (company number 115584 (Jersey)) were approved by the Board of Directors
and authorised for issue on 8 October 2018. They were signed on its behalf by:
__________________________ ___________________________
Carl Jackson Andrew Dingle
Director Director
71
MySale Group Plc
Parent statement of changes in equity
30 June 2018
Share
premium
account
A$'000
Other
reserves
A$'000
Accumulated
losses
A$'000
Total equity
A$'000
Balance at 1 July 2016
306,363
(125,657)
(1,675)
179,031
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based payments
-
-
-
-
-
(1,130)
(185)
-
(185)
(1,130)
(1,130)
(185)
(1,315)
1,297
-
1,297
Balance at 30 June 2017
306,363
(125,490)
(1,860)
179,013
Share
premium
account
A$'000
Other
reserves
A$'000
Accumulated
losses
A$'000
Total equity
A$'000
Balance at 1 July 2017
306,363
(125,490)
(1,860)
179,013
Loss after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based payments
-
-
-
-
-
900
900
878
(1,186)
-
(1,186)
900
(1,186)
(286)
-
878
Balance at 30 June 2018
306,363
(123,712)
(3,046)
179,605
72
MySale Group Plc
Notes to the parent financial statements
30 June 2018
Note 1. General information
MySale Group Plc (the 'company' or 'parent entity') 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 in Jersey
under the Companies (Jersey) Law 1991 (required for Companies House disclosure). The company is domiciled in Australia.
The registered office of the company is Ogier House, The Esplanade, 44 Esplanade Street, St. Helier, JE4 9WG, Jersey and
principal place of business is at 3/120 Old Pittwater Road, Brookvale, NSW 2100, Australia.
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 dollars.
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.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 8 October 2018. 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 or amended Accounting Standards and Interpretations adopted
The company has adopted all of the new or amended 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 or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Basis of preparation
These financial statements were prepared in accordance with FRS 101 'Reduced Disclosure Framework'.
As permitted by FRS 101, the company has taken advantage of all of the disclosure exemptions available to it, including:
(a) The requirements of paragraph 45(b) and 46-52 of IFRS 2 Share-based Payment;
(b) The requirements of IFRS 7 'Financial Instruments: Disclosures';
(c) The requirements of paragraph 91 to 99 of IFRS 13 'Fair Value Measurement';
(d) The requirements of paragraph 38 of IAS 1 'Presentation of Financial Statements' to present comparative information
in 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:
i. 10(d) statement of cash flows;
ii. 16 statement of compliance with all IFRS;
iii. 38A requirement for minimum of two primary statements, including cash flow statements;
iv. 38B-D additional comparative information;
v. 111 cash flow statement information; and
vi. 134-136 capital management disclosures.
IAS 7 'Statement of Cash Flows'; and
(f)
(g) IAS 24 'Related Party Disclosures'.
In accordance with Companies (GAAP)(Jersey) Order 2010 and Article 105(2)(a) of the Companies (Jersey) Law 1991 the
company has adopted United Kingdom Generally Accepted Accounting Principles and has elected to take the exemptions
available to it not to present its own profit and loss account. The company reported a loss for the financial year ended 30
June 2018 of A$1,186,000 (2017: A$185,000).
73
MySale Group Plc
Notes to the parent financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
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.
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 company'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.
Foreign currency translation
Foreign currency transactions
Foreign currency transactions are translated into Pounds Sterling 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 fut ure
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 and receivables, including amounts owed by other group undertakings, 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.
74
MySale Group Plc
Notes to the parent financial statements
30 June 2018
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.
Rounding of amounts
Amounts in this report have been rounded off to the nearest thousand Australian dollars, or in certain cases, the nearest
dollar.
75
MySale Group Plc
Notes to the parent financial statements
30 June 2018
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.
Impairment of non-financial assets including investments in subsidiaries
The group assesses impairment of non-financial assets including investments in subsidiaries 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 company 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 company recognises liabilities for anticipated
tax audit issues based on the company'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 company considers it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
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
76
2018
A$'000
2017
A$'000
74
(57)
17
18
(13)
5
105
(81)
24
121
(32)
89
135
71
(40)
31
17
(9)
8
99
(57)
42
115
(13)
102
183
MySale Group Plc
Notes to the parent financial statements
30 June 2018
Note 5. Fixed assets - investment in subsidiaries
Investment in APAC Sale Group Pte. Ltd. - at cost
Investment in Ozsale Pty. Ltd. - at cost
A detailed list of subsidiaries is detailed within note 34 to the consolidated financial statements.
Note 6. Current assets - debtors - amounts falling due within one year
Other receivables
Amounts owed by other group undertakings
Note 7. Current assets - cash at bank and in hand
Cash at bank
Note 8. Current liabilities - Creditors - amounts falling due within one year
Trade payables
Accruals
Sales tax payable
Note 9. Current liabilities - bank overdraft and lease liability
Bank overdraft
Finance lease liability
77
2018
A$'000
2017
A$'000
106,403
56,368
106,403
56,368
162,771
162,771
2018
A$'000
2017
A$'000
213
24,704
144
14,609
24,917
14,753
2018
A$'000
2017
A$'000
-
2,085
2018
A$'000
2017
A$'000
140
400
483
234
405
403
1,023
1,042
2018
A$'000
2017
A$'000
7,708
77
7,785
-
96
96
MySale Group Plc
Notes to the parent financial statements
30 June 2018
Note 10. Equity - called up share capital
2018
Shares
2017
Shares
2018
A$'000
2017
A$'000
Ordinary shares £nil each - issued and fully paid
154,331,652 151,331,652
-
-
Authorised share capital
200,000,000 (2017: 200,000,000) ordinary shares of £nil each.
The increase on the ordinary shares happened at the beginning of the year, on 1 July 2017.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Note 11. Equity - other reserves
Foreign currency reserve
Share-based payments reserve
Capital reorganisation reserve
2018
A$'000
2017
A$'000
2,767
6,277
(132,756)
1,867
5,399
(132,756)
(123,712)
(125,490)
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$132,756,000.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Balance at 1 July 2016
Foreign currency translation
Share-based payments
Balance at 30 June 2017
Foreign currency translation
Share-based payments
Balance at 30 June 2018
Foreign
currency
A$'000
Share-based
payments
A$'000
Capital
reorganisation
A$'000
2,997
(1,130)
-
1,867
900
-
4,102
-
1,297
5,399
-
878
(132,756)
-
-
(132,756)
-
-
Total
A$'000
(125,657)
(1,130)
1,297
(125,490)
900
878
2,767
6,277
(132,756)
(123,712)
78
MySale Group Plc
Notes to the parent financial statements
30 June 2018
Note 12. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax benefit for the year
Accumulated losses at the end of the financial year
Note 13. Contingent liabilities
The company had no contingent liabilities as at 30 June 2018 and 30 June 2017.
Note 14. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
2018
A$'000
2017
A$'000
(1,860)
(1,186)
(1,675)
(185)
(3,046)
(1,860)
2018
A$'000
2017
A$'000
480
31
511
360
390
750
The company leases office space from non-related parties under a non-cancellable operating lease agreement. The lease
expires within three years. The company also subleases some of its office space to a related party.
Note 15. Remuneration of auditors
Services provided by the company's auditors and network firms
During the year the company obtained the following services from the company's auditors, PricewaterhouseCoopers, at costs
as detailed below:
Fees payable to the company's auditor and its associated for the audit of the financial
statements
228
120
Note 16. Events after the reporting period
No matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the
company's operations, the results of those operations, or the company's state of affairs in future financial years.
2018
A$'000
2017
A$'000
79
MySale Group plc
Registered Number 115584
Notice of Annual General Meeting
Notice is hereby given that the fifth Annual General Meeting (AGM) of MySale Group plc (MySale or
the Company) will be held at 120 Old Pittwater Road, Brookvale, NSW 2100, Australia on Monday 3
December 2018 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 2018
To receive the Company’s Annual Report and Accounts for the financial year ended 30 June
2018 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.
Re-election of Directors
3.
To re-elect Carl 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 Charles Butler 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 9 November 20181, 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
1 At least 21 clear days' notice of the meeting must be given
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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.
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 9 November 2018, 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).
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:
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 9 November 2018, being the latest practicable date before publication
of this notice);
a)
b)
the minimum price which may be paid for a Share is £0.01 each;
c)
the maximum price which may be paid for a Share is an amount equal to the higher of:
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
BTLG4-37965278-1
ii)
the higher of the price of the last independent trade of a Share and the highest
current independent bid for a Share as derived from the London Stock Exchange
Trading System;
d) such authority shall expire at the conclusion of the Company’s 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;
e)
the Company may make a contract to purchase its own Shares under the authority
conferred by this resolution prior to the expiry of such authority, which will or may be
executed wholly or partly after the expiry of such authority, and the Company may make a
purchase of its own Shares in pursuance of any such contract as if the authority had not
expired; and
f)
subject to the provisions of the Articles, the Company be and is hereby generally and
unconditionally authorised for the purposes of Article 58A of the Law, to hold any Shares
repurchased under the authority conferred by this Resolution 7 as treasury shares.
By order of the Board
Prism CoSec Limited
Company Secretary, MySale Group plc
9 November 2018
BTLG4-37965278-1
1
2
3
4
5
6
Notes to the Notice of Annual General Meeting
Record Date
Shareholders registered in the Register of Members of the Company as at 18:00 GMT on 29 November 2018 (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 29 November 2018 will be disregarded in determining the rights of any person to attend or
vote at the AGM.
Attendance at the AGM
The Company’s fifth AGM will be held at 19.30 Australian Eastern Daylight Time (08.30 GMT) on 3 December 2018.
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 Transfer Agent, Neville Registrars Limited on 0121 585 1131. Lines are open Monday to Friday
9.00am to 5.00pm. Alternatively, members may photocopy the Form of Proxy provided with this document indicating on each
copy the name of the proxy appointed and the number of ordinary shares in the Company in respect of which that proxy is
appointed. All Forms of Proxy should be returned together in the same envelope.
A Form of Proxy is enclosed with this Notice. Completion of the Form of Proxy will not prevent a member from subsequently
attending and voting at the AGM in person if they so wish. The Form of Proxy, and any power of attorney or other authority
under which it is executed (or a duly certified copy of any such power or authority), must be either (i) received by post or
(during normal business hours only) by hand at the offices of the Company’s Transfer Agent, Neville Registrars Limited
Neville House, Steelpark Road, Halesowen B62 8HD or (ii) members may submit
their proxies online at
www.sharegateway.co.uk using their personal proxy registration code (Activity Code) as shown on the Form of Proxy, in
each case by no later than 19.30 AEDT/08.30 GMT on 29 November 2018, being 48 working hours before the time appointed
for the holding of the AGM.
Corporate Representatives
A corporate shareholder may authorise a person to act as its representative at the AGM. Each representative may exercise
(on behalf of the corporate shareholder) the same powers as the corporate shareholder could exercise if they were an
individual shareholder in the Company.
CREST Proxy Instructions
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do
so for the AGM and any adjournment thereof by following the procedures described in the CREST Manual. CREST Personal
Members or other CREST Sponsored Members, and those CREST members who have appointed a voting service provider,
should refer to their CREST sponsor or voting service provider who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message
(a CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear’s specifications and must contain
the information required for such instruction, as described in the CREST Manual (available at www.euroclear.com/CREST).
The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to
a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID number
7RA11) by no later than 19.30 AEDT/08.30 GMT on 29 November 2018. No message received through the CREST network
after this time will be accepted. For this purpose, the time of receipt will be taken to be the time (as determined by the
timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the
message by enquiry to CREST in the manner prescribed by CREST. The CREST Manual is available at
www.euroclear.com/CREST.
CREST members and, where applicable, their CREST sponsors or voting service provider should note that Euroclear does
not make available special procedures in CREST for any particular messages. Normal system timings and limitations will
therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned
to take (or, if the CREST member is a CREST Personal Member or Sponsored Member, or has appointed a voting service
provider, to procure that his CREST sponsor or voting service provider takes) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members
and, where applicable, their CREST sponsors or voting service provider are referred, in particular, to those sections of the
CREST Manual concerning practical limitations of the CREST system and timings.
The Company will treat as invalid a CREST Proxy Instruction in the circumstances set out in Article 34 of the Companies
(Uncertificated Securities) (Jersey) Order 1999, as amended.
Total Voting Rights
Holders of the Company’s ordinary shares are entitled to attend and vote at general meetings of the Company. Each ordinary
share entitles the holder to one vote on a poll. As at 9 November 2018, 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 are held within the Company’s Employee Benefit Trust and all voting rights in those shares have
been waived. Therefore, the total voting rights in the Company as at 9 November 2018 are 151,331,652.
7
Voting at the AGM
BTLG4-37965278-1
In order for the voting preferences of all shareholders to be taken into account, and not only those who can physically attend,
the Company will conduct a poll vote on all resolutions put to the AGM. As soon as practicable following the meeting, the
results of voting at the meeting and the numbers of proxy votes cast for and against each resolution, together with the number
of votes actively withheld will be announced to the market via a Primary Information Provider and also placed on the
Company’s website (www.mysalegroup.com).
In the case of joint holders of shares, the vote of the senior member who is entitled to receive notice of general meetings in
accordance with the Articles whether in person or by proxy shall be accepted to the exclusion of any votes of the other joint
holders, and seniority shall be determined by the order in which the names of the holders stand in the register of members
of the Company.
Display Documents
Copies of the service contracts for all Executive Directors and the letters of appointment for the Non-executive Directors are
available for inspection at the registered office of the Company during normal business hours on any weekday (excluding
Saturdays, Sundays and public holidays) from the date of this Notice until the conclusion of the AGM and also at the place
of the AGM from 19.00 AEDT on the day of the AGM until the conclusion thereof.
Electronic address
Please note that shareholders may not use any electronic address provided in this Notice or any related documents
(including the Form of Proxy) to communicate with the Company for any purpose other than those expressly stated.
8
9
BTLG4-37965278-1
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
2
Report and Accounts
The Companies (Jersey) Law 1991 as amended requires the Directors of a public company to lay its Annual Report
and Accounts, together with a copy of any auditor’s report on them, before a general meeting of the shareholders.
An ordinary resolution to receive the Annual Report and Accounts will be proposed.
Appointment of the Auditor and Auditor’s Remuneration
Shareholders are required to appoint the external auditor at the AGM to hold office until the conclusion of the next
annual general meeting. Following a review of the effectiveness, independence and objectivity of the external auditor,
PricewaterhouseCoopers LLP,
re-appointment as external auditor.
is proposing
PricewaterhouseCoopers LLP have expressed their willingness to continue in office for a further year.
the Board
their
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, Carl Jackson and Charles Butler
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 provide 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 9 November 2018, being the last practicable date prior
to publication of this Notice.
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
BTLG4-37965278-1
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.
BTLG4-37965278-1
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