MySale Group Plc
Contents
30 June 2019
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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MySale Group Plc
Corporate directory
30 June 2019
Directors
Charles Butler - Chairman
David Mortimer AO - Independent Non-Executive Director
Carl Jackson - Executive Director and Chief Executive Officer
Dow Famulak- Independent Non-Executive Director (appointed 3 December 2019)
Wally Muhieddine - Independent Non-Executive Director (appointed 3 December
2019)
Jamie Jackson - Executive Director and Vice Chairman (resigned 6 September
2019)
Iain McDonald – Chairman (resigned 29 November 2018)
Andrew Dingle - Executive Director and Chief Financial Officer (resigned 9 October
2018)
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
Australia: 3/120 Old Pittwater Road, Brookvale, NSW 2100
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 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 2019
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 Executive 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.
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MySale Group Plc
Strategic report
30 June 2019
1. Financial and operating highlights
Commenting on the results, Carl Jackson, Chief Executive Officer; said:
“It has been a difficult year for MySale during which we faced a series of significant challenges, resulting in a disappointing
financial performance for the Group. We have now implemented the necessary changes to rebuild from a strengthened
platform.
“Crucially, we have simplified our business model and made major changes that will allow us to accelerate our ANZ First
Strategy1, not least by exiting a number of territories where we previously operated. We have also taken steps to pivot the
business towards an Inventory Light Marketplace Platform2, which provides a compelling sales channel for our domestic and
international brand partners, particularly through its counter-seasonal and clearance solutions.
“With a new organisational structure, an improved business model and operating on a debt free basis, the Group is now primed
to deliver value going forwards.”
Year to 30 June (A$ million)
Before Exceptional Items4
Revenue
Gross Profit
Gross Margin
Underlying EBITDA5
Underlying basic earnings per share (cents)
(Loss)/profit before tax before exceptional items
Year to 30 June (A$ million)
Statutory
Revenue
Gross Profit
Gross Margin
EBITDA
Reported loss before tax
Basic (loss)/earnings per share (cents)
FY19
FY18
restated3
208.6
38.2
18.3%
(18.8)
(12.21)
(26.3)
FY19
208.6
18.6
8.9%
(50.8)
(58.2)
(44.92)
292.2
83.7
28.6%
9.7
6.30
2.9
FY18
restated
292.2
83.7
28.6%
3.1
(3.7)
(0.95)
1 The key pillars of the Australia New Zealand “ANZ” First Strategy are:
• Source international brands to sell into ANZ.
• Source local ANZ brands to sell in ANZ.
• Marketing spend prioritised to ANZ region.
• Key personnel located in ANZ.
2 MySale proprietary marketplace platform that allows third party suppliers to sell their inventory to the MySale customer base. Whilst
the majority of the inventory will always be from third party sellers MySale also uses the platform to sell stock that has been returned
by customers and consignment stock that it may take ownership off as well as Identity Direct product.
3 Prior year numbers have been restated. Full details are contained in note 4 to the financial statements. All prior year numbers in the
front half of this report are the restated numbers.
4 Due to the large restructuring the business went through in FY19 management believe the best way for a reader of the accounts to
understand the position of the business is for the profit and loss statement to be shown before exceptional items and on a statutory
basis. Full details on exceptional items are contained in note 10 to the financial statements.
5 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 in note 7 to the financial statements. EBITDA: earnings before interest, taxation, depreciation and amortisation.
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MySale Group Plc
Strategic report
30 June 2019
1. Financial and operating highlights (continued)
Decisive actions taken
(cid:2) Developed and commenced the execution of the ANZ First Strategy
(cid:2)
Pivoted the business to an Inventory Light Marketplace Platform that is counter seasonal to the Northern hemisphere and
attractive to many brands
(cid:2) Relocation of all own-buy (1P) inventory to Australia allowing the exit of own-buy inventory to be accelerated
(cid:2)
After a detailed review of the remaining own-buy and outlet stock, A$18.9 million of write-downs and provisions have
been included as an exceptional item in the accounts
(cid:2) Disposal of UK websites and closure of warehouse and London office
(cid:2) Closure of the US warehouse and office
(cid:2) Restructured our international supply chain, simplifying processes providing suppliers with low cost solutions
(cid:2) Reduction in headcount to 176 Full Time Equivalents (‘FTEs’) at 30 Sep 2019 (393 at 30 Jun 2018)
(cid:2)
The wholesale business receivables still remaining at the end of FY19 were reviewed and an A$6.8 million impairment
has been included as an exceptional item in the accounts
Post financial year end
(cid:2) Raised A$23.3 million which was used to repay and restructure existing bank facilities leaving the Group cash positive
and debt free
The Group now operates a negative working capital model through an inventory light strategy
(cid:2)
(cid:2) Closure of The Philippines and Thailand websites
(cid:2)
(cid:2)
Increased the number of suppliers by 44% in Q1 FY20
Two new highly experienced independent non-executive directors added to the Board
Technology highlights
(cid:2) Delivered benefits from the accelerated market-place investment in FY17 and FY18 allowing reduced overall investment
in FY19 to A$4.9 million and benefit further from ongoing reductions
Accelerated the supplier on-boarding process and fully developing self-managed solutions
(cid:2)
(cid:2) Capturing more data about our customers and insights from our suppliers providing an improved search and
recommendation experience
(cid:2) New features to accelerate supplier on-boarding, including supplier self-service functionality
(cid:2) Mobile sits at the heart of customer interactions, representing 65% of orders in FY19
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MySale Group Plc
Strategic report
30 June 2019
2. Chairman’s statement
There is no doubt FY19 was a difficult year for the MySale business, however I am confident that after raising GBP£12.8
million (A$23.3 million) of new equity, paying off all bank debt and simplifying the business model, the company has built a
much stronger platform and is now on a firm footing from which it can return to profitable growth.
The problems the company experienced were widely reported, starting with the market disruption caused by the change in
Australian GST legislation and exacerbated by having too much owned inventory, too much of which was in the wrong location.
The Board took decisive action which included closing down its US and UK operations, significantly reducing its cost base
and refocusing the business on becoming an Inventory Light Marketplace Platform distributing third party domestic and
international inventory to its core ANZ customer base.
The new simplified business model does not involve buying inventory to sell on its websites and the Company continues to
sell down all existing own buy inventory whilst it pivots to a pure play third party platform. We believe there is a huge opportunity
to harness our highly flexible, scalable proprietary technology and customer base to provide an unparalleled solution for both
domestic and international brands to clear their inventory in the ANZ market.
Since the year end we have strengthened the Board with the addition of two new non-executive directors. Dow Famulak brings
decades of international big brand relationships with his most recent role being a Plc executive at Global Brands Group. Wally
Muhieddine is Managing Partner at Advertising Advantage, a leading Australian media buying and planning agency. I look
forward to working with them both and also want to thank David Mortimer one of our non-executive directors who has served
on the Board since the IPO and has decided not to stand for re-election at the AGM. We continue our search for the right CFO
and will update the market when we have concluded that search.
We could not have reached this point without the significant support shown by our shareholders and lenders along with the
hard work and determination of our staff for which I am very grateful. We now have a clear strategy, strong brand partners
and a highly focussed team through which to deliver future shareholder value.
_____________________________
Charles Butler
Chairman
4 December 2019
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MySale Group Plc
Strategic report
30 June 2019
3. Review of operations by the Chief Executive Officer
MySale experienced a difficult year resulting in a disappointing financial performance however it was also a year of significant
change. We have simplified our business model and made major changes that allow us to accelerate the ANZ First Strategy
and be based on an Inventory Light Marketplace Platform.
The performance was primarily due to the disruption caused by the changes in GST in Australia amplified by the business
being overly focussed on expanding in the UK and increasing its investment in own-buy (1P) inventory. This is in contrast to
the new ANZ First Strategy which is focused around an Inventory Light Marketplace Platform for international and domestic
brands.
In light of the factors outlined above, the Group saw declines in revenue, gross profit and gross margin. Given the significant
costs in the year associated with restructuring the business, the Group changed the presentation of its financial statement of
profit or loss and other comprehensive income to show these adjustments.
Year to 30 June (A$ million)
Revenue
Gross Profit (before exceptional items)
Underlying EBITDA
Depreciation and amortisation
Interest
Cash impacts of exceptional items
Non-cash exceptional items
FY19
FY18
restated
208.6
38.2
(18.8)
6.9
0.5
0.6
(32.5)
292.2
83.7
9.7
6.6
0.3
(2.7)
(4.0)
(Loss)/profit before tax (before exceptional items)
(26.3)
2.9
Reported loss before tax
(58.2)
(3.7)
Following this significant period of change, we now have a focussed Group with strong fundamental drivers:
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
782,000 active customers
12 websites
3.5 million cumulative buyers
9 million product units sold in the year
24.5 million registered email subscribers
3.4 average orders per buyer
$304 annual revenue per active customer
9,700 cumulative brand partners
3.5 million social footprint
7.0 million mobile app downloads, 65% revenue from mobile
The restructuring commenced during FY19 and was completed post year end with a new equity placing of A$23.3 million,
resulting in the company being cash positive and debt free. As part of the restructuring process the following initiatives were
undertaken:
(cid:2) Disposal of our UK websites and closure of the warehouse and London offices
(cid:2) Closure of the US warehouse and office
(cid:2) Fully exited the wholesale business, A$6.8 million impairment recognized in exceptional items
(cid:2) Relocation of all the inventory to Australia allowing us to exit the own-buy (1P) inventory
(cid:2) Detailed review of the remaining own-buy and outlet stock resulting in A$18.9 million of write-downs,
(cid:2) Closure of the Philippines and Thailand websites
(cid:2) Significant reduction in headcount 176 FTE’s at 30 Sep 2019 (393 at 30 Jun 2018) and reduction in cost base,
(cid:2) Reduced Ourpay debtor book
(cid:2) Refocussed and relocated the leadership team to Sydney
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MySale Group Plc
Strategic report
30 June 2019
It has been a difficult transition however despite the disruption the fundamentals of MySale are robust; the addressable
markets in ANZ continue to represent substantial opportunities and we have a proprietary scalable platform that is set up for
success and capable of delivering huge structural advantages. The priority is to focus the team and execute the ANZ First
Strategy.
Cash and working capital
The Group’s net debt was A$17.5 million at the year-end (FY18: A$6.2 million). Subsequent to year end all loans have been
repaid following the share placement of A$23.3 million resulting in a net cash balance of A$6.8 million at 30 October 2019.
As a result of the Group exiting the wholesale business, selling down its own-buy (1P) inventory and operating on a
substantially lower cost base it will now operate with negative working capital.
Going forward the Group has the right cost base aligned to the new simplified business to ensure future profitability significantly
reducing the Group’s inventory risk.
Brands and Strategic Partnerships
We continue to be a leading off-price apparel and home online retail platform in ANZ offering unique solutions for our brand
partners. We are absolutely focussed on the fashion and home categories, leveraging the counter seasonal opportunity. There
is a significant market opportunity and we are ideally placed to provide Northern hemisphere brands access to the Southern
hemisphere markets.
The retail landscape is continually evolving and brands are increasingly recognising the benefits of a more integrated inventory
partnership that allows them to accelerate the sell through of their discounted inventory outside of their core business.
Whilst the number of products has decreased on the platform as a result of us exiting own-buy (1P) inventory and restructuring
the international supply chain, the immediate emphasis is on developing long-term profitable brand partnerships and re-
engaging with our international suppliers. We are already making significant progress on increasing the number of active
brand partners using the platform which will drive substantial increases in the number of products available to customers.
The solutions we offer our international brand partners clearly differentiate us from our competitors. There are no other ANZ
off-price online retailers providing the options we offer international brands to sell their off-price inventory into the region.
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.
Going forward a large majority of the Group’s revenue will come from 3P suppliers, on which the Group does not take any
inventory risk.
ANZ First Strategy
Our focus is for MySale to be the leading off-price apparel and home online retail platform in ANZ offering unique solutions for
our brand partners. These solutions clearly differentiate us from most major retailers, which we see as a significant advantage
and extremely difficult for others to replicate. Our new set-up allows us to operate an Inventory Light Marketplace Platform
offering a large selection and delivering great value to our customers every day, through a combination of brand, fashion,
price and quality.
We believe MySale is well placed to capitalise on the off-price opportunity and continued shift to online shopping.
Our revenue targets are based on a contribution from our international brand partners, despite the disruption MySale is well
placed to provide a solution for our international brands allowing them to leverage the counter seasonal opportunities
accessing the ANZ region via our 782k active customers.
We will continue to provide international brands the opportunity to sell excess inventory into the ANZ market. MySale is a low
cost, highly efficient marketplace offering a wide selection and delivering great value, through a combination of brand, fashion,
price and quality to our customers every day.
During the year, the Group’s platform processed over 9 million units underlining the efficient processes and systems that the
Group has in place to support brands and serve customers.
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MySale Group Plc
Strategic report
30 June 2019
We are in a unique position, and we are not aware of other retailers in ANZ which can offer the off-price solutions we provide
our partners:
(cid:2) Just in Time (‘JIT’): A unique solution, where our partners list their inventory on our platform and we provide a full
warehouse and distribution service shipping direct to the customer.
(cid:2) Fulfilled by MySale (‘FBM’): Our partners store their product in our warehouse on consignment, the MySale team provide
a full service including; planning, merchandising and dispatch to customer.
(cid:2) Dropship (‘DS’): Our partner list their inventory on the platform and ships directly to the customer.
We provide solutions to match our supplier needs including a full API integration directly or via our channel integration partners.
Whilst we have worked with over 1,650 partners in the last 12 months the strategic relationship with Retail Convergence
Group, is a great example of a large US retailer fully integrating into our marketplace platform.
“Retail Convergence has been working with MySale since 2017. They provide us with a seamless solution, via their
marketplace platform, to sell into Australia, New Zealand and SE Asia allowing us to maximize the counter seasonal
opportunities by accessing their large off-price ANZ customer base.”
Retail Convergence Inc.
We have closed our UK and US warehouses and made excellent progress in restructuring our international supply chain,
simplifying processes providing our suppliers with flexible low cost direct shipment or cross docking solutions. Our international
fixed costs have reduced and we will gain variable cost efficiencies as the business scales.
In Australia we are laying the foundations for reduced future capacity by relocating our distribution centre allowing us to be
more efficient and reduce distribution costs significantly in-line with our Inventory Light Marketplace Platform model.
We launched MySale Marketing Services which includes the commercialisation of the customer database, leveraging our
supplier partnerships and increasing the revenue from “Select” our proprietary delivery subscription product.
We are making excellent progress against our ANZ First Strategy as we reset the business and pivot it to an Inventory Light
Marketplace Platform. There has been a significant reduction in the operational cost base, the benefits of which will impact
the current financial year and beyond.
The team is absolutely focussed on the strategy, which has been fully embraced by everyone.
The UK and South East Asia
The sale of the UK assets (cocosa.co.uk) to Brand Alley for a cash consideration of A$2.7 million was completed on 3 May
2019 and was part of the rationalisation programme which will increase the Group’s focus on the ANZ markets. The Group
has also significantly reduced its UK and US cost base with the disposal of its offices and warehouses and the offshoring of
its back office buying and support functions.
Despite selling the UK website, the UK and US remain very important regions for sourcing product to sell on our platform.
Looking forward, we will retain and grow our UK and US business development and account management teams and operate
with 3rd party logistics partners.
We have been in SE Asia since 2010 and have always operated retail websites leveraging ANZ’s infastructure. We have now
closed the Philipinnes and Thailand websites as they were unprofitable.
However, with increased investment from FY21 and beyond we are confident that we are positioning SE Asia to capture a
significant long-term opportunity as we grow the active base and provide the local customer base access to US, UK and
European Brands.
Although the SE Asia business currently has less scale than ANZ, the substantial addressable population, increasing
disposable income, lack of off-price competition and high mobile penetration in the region provide significant further growth
opportunity for the Group given its strong value, branded sales offer and exceptional mobile commerce capability.
Technology development
We are seeing the benefits of the accelerated technology investment in FY17 and FY18 and remain confident that it will
improve MySale’s revenue and profitability and result in growth in shareholder value over time.
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MySale Group Plc
Strategic report
30 June 2019
We have reduced our overall investment in technology in FY19 to A$4.9 million (FY18: A$8.5 million) and will continue to
reduce this investment in FY20 ensuring we focus it into high ROI initiatives. We have built a high performing highly scalable
platform designed for third party suppliers that we will be able to monetise more quickly than we have done in the past. Despite
the reduction in investment we continue to make exceptional progress with a record number of platform releases, averaging
over 1000 per month.
We will continue to prioritise the technology investment into three main areas:
(cid:2)
(cid:2)
(cid:2)
acceleration of the supplier on boarding process and fully developing the self-managed solution;
capturing more data about our customers and insights for our suppliers; and
delivering the best and most relevant user experience.
In FY17 we launched our proprietary programme Ourpay, a ‘buy-now, pay-later’ platform 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 spend and shopping frequency. Ourpay has proved popular with more
than 194,000 customers using the product since its launch.
At its peak, Ourpay captured 23% of orders absorbing A$5.4 million of working capital. As part of the strategic review we
unwound the working capital and migrated a proportion of the existing Ourpay customers onto other payment partners. We
are currently offering Ourpay to our existing customers and are still committed to the development of Ourpay as the Group’s
proprietary buy-now, pay later platform. At the year end the receivables balance associated with Ourpay was A$2.0 million
which we anticipate will further reduce in H1 FY20.
We have built a platform capable of significant scale and moving forward we anticipate that our technology platform will be
key to unlocking further operational efficiencies and reducing costs
Outlook
After a difficult year, we are in a much strengthened position, with a substantially different business, having successfully
pivoted to an Inventory Light Marketplace Platform. Additionally, the Group is now debt free and cash flow positive.
Our ability to offer international brands the opportunity to sell excess inventory by accessing our large ANZ customer database
is unique and when you combine this with the counter seasonal opportunity the benefits to our suppliers are transformational.
During FY19 we worked with over 1,650 suppliers, who sold over 9 million units on the marketplace platform launching over
34,000 sales campaigns. The scale of our international supplier base gives us the confidence and belief that MySale is well
placed to capitalise on the off-price opportunity and the continued shift to online shopping will allow us to build on our solid
foundations, scale and capability.
FY20 is about recovery and stability with a relentless focus on execution and we are fully prepared for the change in the NZ
GST regulation from the 1st December. We expect revenues to be at a substantially lower level year on year as a result of
exiting the UK business and selling down the own-buy (1P) inventory. We anticipate, however, that this, along with the full
deployment of our technology platform, will bring significant cost savings and our cash levels will grow as we exit own-buy
(1P) inventory.
While it is early in the current year, I am pleased with the progress that we are making since the completion of the strategic
review, and the refocusing of the business. Trading to date has been in line with management expectations and the Board
expects that underlying EBITDA and revenue for the year will in line with management forecasts.
Our Board of Directors
As previously reported, Jamie Jackson stepped down as Executive Vice Chairman in September. Jamie founded the business
and has been instrumental in taking the business to where it is today. I would like to thank him for his contribution, and
accomplishments, over a significant period.
Charles Butler, currently Interim non-executive Chairman will become Chairman on a permanent basis on the signing of this
report. Charles was a massive help in the recent share placing, debt restructuring and strategy repositioning, and I am
delighted that Charles will be taking on the role of permanent Chairman and will continue to chair the audit committee.
David Mortimer has indicated he will not offer himself for re-election at this year’s AGM. We thank him for his contribution over
the past five years.
We are delighted to welcome Dow Famulak and Wally Muhieddine as newly appointed non-executive directors. Dow was
appointed on the 3 December 2019 and is a member of the audit and risk committee and will chair the remuneration committee.
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MySale Group Plc
Strategic report
30 June 2019
Wally was appointed on the 3 December 2019 and is a member of the remuneration Committee. We very much look forward
to working with Dow and Wally as we as execute the ANZ First Strategy.
We are also committed to finding the right candidate to fill the CFO position and have been conducting an extensive search
process to fill this role.
These are very important appointments and show our determination to attract the best senior talent to support our business.
We are also making changes to our management ensuring we strengthen the team with external talent as well as ensuring
we fully utilise our ANZ resources.
I would like to thank the MySale team for all their hard work, energy and passion in what has been a challenging environment.
They have been fantastic, and the majority are now based in Australia and working more efficiently, quickly and collaboratively.
We are keeping it very simple, doing what we know best at speed and with no distractions.
Finally, thank you to our customers, shareholders, suppliers and business partners for their ongoing support and engagement
over the past 12 months and we look forward to working with you all in FY20.
_____________________________
Carl Jackson
Chief Executive Officer
4 December 2019
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MySale Group Plc
Strategic report
30 June 2019
4. Financial review by the Chief Executive Officer
During FY19 as part of the restructuring the business undertook a detailed review of stock levels and business processes. As
part of this review management identified system and process errors that have required the prior year balances to be restated.
Full details are contained with note 4 to the financial statements. The restructuring of the business led to a large number of
provisions and write-downs as well as a larger than normal number of one-off costs. This has led management to believe that
the best way for a reader of the accounts to understand the position of the business is for the profit and loss statement to be
split out into 3 columns for each financial year. The exceptional items are covered in more detail in note 10 to the financial
statements.
Revenue and gross profit
For the year ended 30 June 2019 Group revenue decreased by 28.6% to A$208.6 million (FY18: A$292.2 million) and gross
profit decreased before exceptional items, by 54.3%, to A$38.2 million (FY18: A$83.7 million). This performance came as a
result of the GST changes in Australia and the disruption from the restructuring of the business.
Operating expenses
The operating expenses before exceptional items dropped to A$59.3 million (FY18: A$74.3 million) in the year. During the
year the Group closed the UK and US operations that resulted in a reduction in total operating costs.
Profit/loss before tax
The loss before tax before exceptional items for the year is A$26.3 million (FY18: A$2.9 million profit). The reported loss
before tax for the year is A$58.2 million (FY18: A$3.7 million loss). This reported loss is after the inclusion of a number of one-
off and non-cash items which are shown in more detail below and in notes 7 and 10 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 loss after tax before exceptional items for the year is A$28.7 million (FY18: A$7.1 million profit) and the reported loss after
tax for the year is A$69.3 million (FY18: A$1.5 million loss). This reported loss is after the inclusion of a number of one-off and
non-cash items which are shown in more detail below and in notes 7 and 10 to the financial statements in order to provide
greater insight as to the underlying profitability of the Group.
Note 38 to the financial statements shows the detailed calculations of basic loss per share for the financial year which after
tax before exceptional items was 18.60 cents per share loss (FY18: 4.61 cents profit) and was 12.21 cents loss (FY18: 6.30
cents profit) on EBITDA before exceptional items.
Taxation
The Group has recorded a tax expense of A$11.1 million for the year (FY18: A$2.2 million benefit) which includes an
impairment to the deferred tax asset of A$10.6 million. Full details of the tax expense are provided in note 11 to the financial
statements. The Group has A$83.9 million (FY18: A$32.4 million) of carried forward tax losses that may be available to use
for future offset. A deferred tax asset is only recorded where it is probable that these losses will be recoverable. The business
needs to undertake a full review of the impact of the capital restructuring to understand the extent to which this restructure
could put the accessibility of these tax losses at risk. Until this review is completed management have taken the judgement of
not recognising these losses as a deferred tax asset.
Balance sheet, cash and working capital
The Group’s closing cash balance was A$0.8 million (FY18: A$6.8 million) and a net debt balance of A$17.5 million (FY18:
A$6.2 million). As detailed in the subsequent events note, the Group finalised a share placement of 640.4 million shares for
A$23.3 million in September 2019. The placement involved a repayment of borrowings of A$10.9 million and debt forgiveness
of A$7.7 million. After these actions the business is debt free.
As noted in last year’s financials the strategy was to reduce wholesale activity to deliver a steady reduction in gross trade
receivables. Trade receivables reduced to A$11.3 million (FY18: A$29.8 million). The balance includes uncleared cash
receipts from online customers of A$5.3 million (FY18: A$5.0 million). There has been a provision raised against the trade
receivable balances of A$5.4 million (FY18: 0.3 million) which includes a provision against Ourpay receivables of A$1.4 million
and a provision against wholesale debtors of A$4.0 million. Further details are provided in note 13 to the financial statements.
Capital expenditure was reduced on prior year investment levels as the technology platform is maturing and requiring less
major development work than was undertaken in FY17 and 18. Total capital expenditure was A$4.9 million (FY18: A$8.5
million). Goodwill was impaired by A$2.8 million to A$21.2 million. No impairment was considered necessary to the other
intangible assets.
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Inventory value was recognised at the year end as A$16.0 million (FY18: A$33.7 million). The balance includes stock in transit
of A$1.7 million (FY18: A$2.7 million) and is after A$18.9 million (FY18 A$0.3 million) of write-downs and provisions being
applied to reflect the change in business strategy to move away from own-buy.
Banking facilities
Subsequent to the refinancing the Group will not be relying on trade and overdraft financing to support the business operations.
The sell down of ‘ownbuy’ inventory and the switch to an inventory light business model will reduce the overall reliance on
external financing to support inventories and other working capital requirements.
Underlying basis, exceptional Items
As noted above the Group manages its operations by looking at the underlying EBITDA which excludes the impact of a number
of one-off and non-cash items of a non-trading nature as this, in the Board’s opinion, provides a more representative measure
of the Group’s performance. In the FY19 year due to the restructuring this approach has resulted in the profit and loss
statement to be split out into 3 columns for each financial year. Full details on exceptional items are contained within note 10
to the financial statements. A reconciliation between reported profit before tax and underlying EBITDA is included at note 7
with further details in note 10 to the financial statements and outlined below.
Year to 30 June (A$ million)
Reported EBITDA
Impairments
Share-based payments
Discontinued and one-off costs
Inventory write downs
Unrealised foreign exchange loss
Underlying EBITDA
Depreciation and amortisation
Net interest expense
FY19
FY18
restated
(50.8)
9.6
(1.0)
2.9
18.9
1.5
(18.8)
(6.9)
(0.5)
3.1
-
0.9
3.8
-
2.0
9.7
(6.6)
(0.3)
Underlying (loss)/profit before tax
(26.3)
2.9
Included within one-off items are items of a non-trading, non-recurring nature such as reorganisation costs, asset write downs,
charges arising from system migrations and other costs. The principle items in the year under review are the impairments and
inventory write-downs. The impairments include; an A$2.8 million goodwill impairment and A$6.8 million impairment of
receivables from the wholesale business.
Key performance indicators
The Group manages its operations through the use of a number of key performance indicators (‘KPI’s’) including revenue
growth, gross margin %, Underlying EBITDA, active customer growth, monthly buyers, average order value (‘AOV’), revenue
per customers, orders per customer and number of suppliers.
_____________________________
Carl Jackson
Chief Executive Officer
4 December 2019
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5. Principal risks and uncertainties
The management of the business and the execution of the Group’s 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:
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.
Membership base
The Group needs to attract new ‘active’ members, in sufficient numbers. 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.
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. The Group relies on access to its cash 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. The move to an inventory light strategy means the business now operates on a negative working capital
model, reducing the cash risk on the Group’s operating results and financial condition.
Competition and sales model
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.
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.
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.
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.
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Technology
The Group’s Information Technology (‘IT’) systems are integral to its operations. The technology supports the Group’s
websites and mobile applications, logistics management, product information management, administration management
systems, security systems and third-party data centre hosting facilities. If the IT systems do not function properly there could
be system disruptions, corruptions in databases or other electronic information, delays in sales events, delays in transaction
processing, website slowdown or unavailability, loss of data or the inability to accept and fulfil member orders which, if
sustained or regular, could adversely affect the Group’s business, operating results and financial condition.
Data security and data privacy
The Group’s business is highly dependent on engaging with members via daily emails and app notifications. 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 messages to members and also that members actually open and read the
messages. Webmail prioritisation, ‘spam’ and blocking filters and local laws on sending emails could affect the Group’s
business, prospects, operating results and financial condition.
The Group is subject to data and privacy regulations, particularly General Data Protection Regulation (‘GDPR’). Failure to
comply with legal or regulatory requirements relating to data security or data privacy in the course of the Group business
activities, results in reputational damage, fines or other adverse consequences, including criminal penalties and consequential
litigation, adverse impact on the Group’s financial results or unfavourable effects on the Group’s ability to do business.
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.
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.
6. Corporate social responsibilities
The Group’s approach is to make a positive difference to the people, environment and communities in which it works.
Examples include engaging not-for-profit employment agencies, to motivate and upskill the local unemployed community to
sustain employment with the Group and investing in warehousing training programs such as a Certificate 3 in Warehousing
and Logistics for the Group’s Australian staff. To reduce waste and the impact on the environment the Group does not put
copies of customer invoices in its parcels, but rather provides them online.
7. People
Equal opportunity
The Group is committed to an active equal opportunities policy. It is the Group’s policy to promote an environment free from
discrimination, harassment and victimisation, where everyone receives equal treatment regardless of gender, colour, ethnic
or national origin, disability, age, marital status, sexual orientation or religion. Employment practices are applied which are
fair, equitable and consistent with the skills and abilities of the employees and the needs of the Group.
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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 also recognises the importance of their requirements under section 172 of the Companies Act 2006 and note the
disclosure requirements for financial years beginning on or after 1 January 2019. The directors have considered the impact
this may have on the existing business practices and any additional disclosures that may be required.
In reviewing FY19 and commenting the Board’s attention to items considered under section 172 it is noted that:
(cid:2) When conducting the strategic review, the Board ensured open and regular discussions were held with shareholders.
The result was a successful placement that included the continued support of the major shareholders.
(cid:2) The company engaged a human resources specialist to join the management team and assist the business with aligning
(cid:2)
company plans and the interests of the employees.
In ensuring that the company maintains a reputation for high standards of business conduct the directors approved the
appointment of a compliance officer within the business.
As detailed in the directors’ report the number of non-executive directors is being increased and there are plans to add another
executive director in FY20. A key driver in making these appointments is to ensure that the company has suitable experience
and resources at hand to meet its corporate governance responsibilities.
The Board will continue to review for any areas of weakness against the requirements and work with management to
implement any changes required to ensure the business is not only compliant but operating in a manner that provides long-
term benefits to all the stakeholders of 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.
The Board has identified the tactics that it believes will support the strategic aims and improve the Group’s performance:
(cid:2)
(cid:2) Utilise technology to improve customer experience and business efficiency
Leverage market leading position in ANZ
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(cid:2)
(cid:2)
Build international brand partnerships to provide a wide product selection
Selective M&A where and when appropriate to expand the business model
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 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 to
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 14 and 15 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 (or the Chief Executive Officer in the absence of a CFO), 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 20 of this report.
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
At the time of this report the Board comprises of one executive and four non-executive directors with the plan to add a CFO
as a second executive director in Jan 2020. It is also noted that David Mortimer has indicated he will not offer himself for re-
election at this year’s AGM. The two recent appointments and the plan to add a second executive director is to ensure that
the Board continues to have the appropriate balance of skills and experience in the retail and online sectors as well as covering
the necessary financial and public market knowledge. The skills and experience of the Board are set out in their biographies
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on pages 26 and 27 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, 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
Dow Famulak
Chair
Member
Member
The 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 22 to 25 of this report.
The members of the Remuneration Committee are:
David Mortimer AO
Charles Butler
Wally Muhieddine
Chair
Member
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.
_____________________________
Charles Butler
Chairman
4 December 2019
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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
As at the date of signing of these financial statements, the Board consisted of five directors as shown below. Charles Butler,
the Non-Executive Chairman was appointed as a Director on 23 October 2017 and moved into the Non-Executive Chairman
role on 29 November 2018 when Iain McDonald stepped down. 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:
Charles Butler
David Mortimer AO
Carl Jackson
Dow Famulak
Wally Muhieddine
Chairman
Independent Non-Executive Director
Executive Director and Chief Executive Officer
Independent Non-Executive Director (appointed 3 December 2019)
Independent Non-Executive Director (appointed 3 December 2019)
During the financial year ended 30 June 2019 the following individuals served for part of the year or the whole year and have
stepped down subsequent to the year end and before the signing of this report.
Andrew Dingle
Iain McDonald
Jamie Jackson
Executive Director and Chief Financial Officer stepped down from his position on the Board on 9
October 2018 and ceased employment with the Group at the end of October 2018
Chairman resigned from the Board on 29 November 2018
Executive Director and Vice Chairman resigned from the Board on 6 September 2019
Andrew Dingle resigned after just over 5 years with MySale to pursue a new career opportunity. The company has conducted
an extensive search process to find a suitable candidate to fill the CFO position. This process is close to conclusion and the
company will make the appropriate announcements when a candidate has been engaged.
It is also noted that David Mortimer has indicated he will not offer himself for re-election at this year’s AGM.
Biographies for each of the directors who served during the 2019 year or who are currently on the Board are set out in the
Directors’ report under ‘Information on directors and their interests’.
Schedule of matters reserved specifically for the Board include:
(cid:2) overall business strategy of the Group;
(cid:2)
(cid:2)
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;
(cid:2) membership of the Board and its standing Committees, including delegation of authority to the Audit and Remuneration
Committees;
(cid:2) approval of full year and half-year financial statements and any interim management statements or other financial
disclosures;
(cid:2)
regulatory and shareholder communications; and
(cid:2) 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.
21
MySale Group Plc
Directors' remuneration report
30 June 2019
In order to facilitate the business of the company, and in line with the recommendations of the QCA Code, the Board has
delegated certain of its responsibilities to the Audit Committee or Remuneration Committee, as appropriate.
Audit Committee
The Audit Committee has the primary responsibility for monitoring the adequacy and effectiveness of the Group’s systems of
internal financial control and risk management, ensuring that the financial performance of the Group is properly measured and
reported on, reviewing and challenging reports from management and the external auditor relating to the company’s
accounting and internal controls and appraising the need for an internal audit function, in all cases having due regard to the
interests of shareholders. The full terms of reference of the Audit Committee are available on the company’s website.
The members of the Audit Committee are:
Charles Butler
David Mortimer AO
Dow Famulak
Chair
Member
Member
The Audit Committee met two times during the financial year.
The 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:
David Mortimer AO
Charles Butler
Wally Muhieddine
Chair
Member
Member
Due to the challenges the business was facing in FY19 there were no increases in salaries, no new senior people were
recruited and there were no grants of employee share options and hence the Remuneration Committee did not meet 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(cid:2)yearly.
The Group’s control systems address key business and financial risks. Matters arising are reviewed on a regular basis.
22
MySale Group Plc
Directors' remuneration report
30 June 2019
As the company is listed on the Alternative Investment Market (‘AIM’), it is not required to prepare a Directors’ remuneration
report. The following narrative disclosures are prepared on a voluntary basis for the Group and are not subject to audit, unless
otherwise specified.
Principles used to determine the nature and amount of remuneration
The objective of the Group's remuneration framework is to ensure reward for performance is competitive and appropriate for
the results delivered. The framework aligns the remuneration for executive directors and key senior management with the
achievement of strategic objectives and the creation of value for shareholders. The Board of Directors ('the Board') ensures
that the remuneration for executive directors and key senior management satisfies the following key criteria for good reward
governance practices: is competitive and is acceptable to shareholders; aligns executive compensation with company
performance and shareholder return; and is transparent.
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 detailed in the Corporate Governance section of this report.
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:
(cid:2) have regard to the director’s experience and the nature and complexity of their work in order to pay a competitive salary,
(cid:2)
(cid:2)
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;
(cid:2) provide post(cid:2)retirement benefits through contributions to individual’s pension schemes; and
(cid:2) provide employment(cid:2)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 2019 are as follows:
Executive director
Carl Jackson
Base salary
A$371,250
Pension
Contributions
A$38,119
Taxable
Benefits
A$30,000 Ozsale Pty Limited
Group entity with which the
contract is with
Executive directors’ 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 have 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 they are a member, subject to and in accordance with the terms and/or rules of those arrangements from
time to time.
23
MySale Group Plc
Directors' remuneration report
30 June 2019
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, Charles Butler Dow
Famulak and Wally Muhieddine entered into letters of appointment on 3 June 2014, 27 July 2015, 23 October 2017, 3
December 2019 and 3 December 2019 respectively. David Mortimer’s letter was updated 12 August 2015. Each receives a
fee for their services which takes into account the role undertaken. They do not receive any pension or other benefits from the
Group.
The annual fees for non-executive directors, effective at the date of this report, are as follows:
Non-executive director
Charles Butler
David Mortimer AO
Dow Famulak
Wally Muhieddine
Base fee
£75,000
£46,667
£45,000
£45,000
Group entity with which the
appointment is with
MySale Group Plc
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 in line with note 32 of financial statements.
Directors’ remuneration for the year ended 30 June 2019 was as follows:
Basic salary/
fees
Bonus
Taxable
benefits
Pension
contributions
Total
2019
Total
2018
Non-executive
directors:
Iain McDonald
David Mortimer
AO
Charles Butler
Executive
directors:
Jamie Jackson
Carl Jackson
Andrew Dingle
£43,750
£46,667
£62,500
A$474,600
A$371,250
A$106,250
-
-
-
-
-
-
-
-
-
-
-
£43,750
£46,667
£75,000
£40,000
£891
£63,391
£31,038
A$21,093
A$30,000
A$21,721
A$1,577
A$38,119
A$10,094
A$497,270
A$439,369
A$138,065
A$380,801
A$376,732
A$388,977
Employee Share Plan
Details of the operation of the company’s employee share plan can be found in note 39 to the financial statements. No new
share grants were made during FY19 and all historical grants made to Directors were cancelled under the conditions of the
share plan.
Shares granted under the Loan Share Plan (‘LSP’) are as follows:
Iain McDonald
David Mortimer AO
Jamie Jackson
Carl Jackson
Andrew Dingle
Andrew Dingle
Balance 1
July 2018
3,000,000
-
-
111,499
357,138
509,722
Granted
-
-
-
-
-
-
Exercised
-
-
-
-
-
-
Cancelled
3,000,000
-
-
111,499
357,138
509,722
Balance
30 June
2018
Exercise
price
(£)
-
-
-
-
-
-
-
-
-
£2.26
£0.51
£0.65
Date of
exercise
-
-
-
-
-
-
Market
price on
exercise
(£)
-
-
-
-
-
-
Share price information
The market price of MySale Group Plc ordinary shares at 30 June 2019 was £0.026 (2018: £0.70) and the range during the
financial year was between £0.022 and £0.596 (2018: £0.71 and £1.20).
24
MySale Group Plc
Directors' report
30 June 2019
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 2019.
Directors
The directors who have served on the Board of MySale Group Plc during any part of the financial year and up to the date of
this report are set out below:
Charles Butler
David Mortimer AO
Carl Jackson
Dow Famulak
Wally Muhieddine
Jamie Jackson
Iain McDonald
Andrew Dingle
joined the Board on 3 December 2019
joined the Board on 3 December 2019
left the Board on 6 September 2019
left the Board on 29 November 2018
left the Board on 9 October 2018
Information on directors and their interests
Biographies for the directors in office at the 30 June 2019 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:
Charles Butler
Independent Non-Executive Director
47
Charles was appointed to the Board in October 2017 and took over the role of Chairman in
November 2018. 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.
David Mortimer AO
Independent Non-Executive Director
74
David was appointed to the Board in May 2014. He has over 42 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.
Carl Jackson
Executive Director and Chief Executive Officer
56
Carl joined MySale in 2009 and has over 28 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.
Dow Famulak
Independent Non-Executive Director
58
Dow has significant global experience in building, transforming and commercialising businesses,
having worked with a range of high-profile consumer fashion brands over a 30-year career. He is
currently based in London in his role as Advisor to the CEO for Global Brands Group, one of the
world’s leading branded fashion accessories, footwear, and apparel companies. He was previously
President of Global Brands Group from 2014 to September 2019, and before then held roles with
Li & Fung and Colby International Ltd.
25
MySale Group Plc
Directors' report
30 June 2019
Name:
Title:
Age:
Experience and
expertise:
Name:
Title:
Age:
Experience and
expertise:
Name:
Title:
Age:
Experience and
expertise:
Name:
Title:
Age:
Experience and
expertise:
Wally Muhieddine
Independent Non-Executive Director
50
Wally is an expert in media and marketing and has been at the forefront of the evolution of TV
advertising in Australia. For the last 16 years he has been at the helm of one of Australia’s most
successful advertising agencies working closely with leading brands to grow their awareness and
sales. Advertising Advantage has offices and services clients in Australia, Europe and the United
States. He is a valued adviser to local and international CEO’s in sectors including fashion, finance,
FMCG, online and retail.
Jamie Jackson
Executive Director and Vice Chairman
54
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.
Iain McDonald
Independent Non-Executive Chairman
49
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. 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. During Iain’s time at WCG they have built upon an 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.
Andrew Dingle
Executive Director and Chief Financial Officer
49
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. 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 at the 30 June 2019 are:
Name
Charles Butler
Carl Jackson6
David Mortimer AO7
Jamie Jackson
Iain McDonald
Andrew Dingle
Ordinary
shares
Percentage
holding
17,000
3,745,000
165,000
47,469,189
19,911
201,115
0.0%
2.4%
0.1%
30.8%
0.0%
0.1%
6 Held by Jackson Capital Pty Ltd as trustee for the Jackson Family Trust.
7 Held by David Mortimer and Barbara Mortimer as trustees for the Wallaroy Provident Fund
26
MySale Group Plc
Directors' report
30 June 2019
Given the significant re-financing of the Group post the financial year end the revised position of the Directors’ beneficial
interests in the shares of the company has also been provided as at 30 September 2019:
Name
Charles Butler
Carl Jackson8
David Mortimer AO9
Jamie Jackson
Iain McDonald
Andrew Dingle
Ordinary
shares
Percentage
holding
17,000
103,745,000
165,000
57,469,189
19,911
201,115
0.0%
13.1%
0.0%
7.2%
0.0%
0.0%
No share options or share awards were granted to any directors in FY19.
Information on company secretary
Name:
Title:
Experience and
expertise:
Prism Cosec Limited
Company Secretary
Prism Cosec Limited is a 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 2019 (June 2018: 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 29). The share placement that completed in
September 2019 and is detailed under the subsequent events heading below is of particular importance when forming a view
on the ability of the going concern status of the company.
The Group has considerable financial resources together with a member base split across different geographic areas. The
Group’s forecasts and projections, taking into account reasonably possible changes in trading performance, show that the
Group should be able to operate within its current resources. 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
In September 2019 the Group finalised a share placement for A$23.3 million through the issue of 640.3 million new shares.
As part of the share placement, the Group agreed with its financier HSBC to extinguish all borrowing facilities. MySale repaid
A$10.1 million to HSBC who agreed to a debt forgiveness of a further A$7.7 million to leave the business in a debt free
position.
On the 13 November 2019 the business entered into a leasing agreement for a new warehouse in Australia. The agreement
involves the surrender of the existing warehouse and also includes an upfront cash incentive payment to cover the relocation
costs. The lease is for 6 years and includes a break clause after 3 years which is roughly in line with the current warehouse
lease period end.
More detail is provided in the subsequent events note in the financial statements.
8 Held by Jackson Capital Pty Ltd as trustee for the Jackson Family Trust.
9 Held by David Mortimer and Barbara Mortimer as trustees for the Wallaroy Provident Fund
27
MySale Group Plc
Directors' report
30 June 2019
Substantial shareholdings
At the reporting date, the company had been notified of the following interests of 3% or more of the share capital of the
company, other than those of the directors above:
Name
Shelton Capital Limited
Schroders Plc
Lombard Odier Asset Management Europe Ltd
UBS Securities
Number of
shares held
Percentage
holding
33,237,124
24,472,883
7,133,536
6,718,590
22.0%
16.2%
4.7%
4.4%
Given the significant re-financing of the Group that occurred post the financial year end a revised position of interests of 3%
or more of the share capital of the company, has been provided at 30 September 2019, 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
InterTrader Limited
143,237,124
130,788,136
107,133,536
62,500,000
18.0%
16.5%
13.5%
7.9%
Charitable and political donations
The Group made no charitable donations (2018: A$1,324) 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
PricewaterhouseCoopers LLP have expressed their willingness to continue as auditors.
By Order of the Board.
_____________________________
Charles Butler
Chairman
London
4 December 2019
28
MySale Group Plc
Directors’ responsibility statement
30 June 2019
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.
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 year.
select suitable accounting policies and then apply them consistently;
In preparing the financial statements, the directors are required to:
(cid:2)
(cid:2) make judgements and accounting estimates that are reasonable and prudent;
(cid:2)
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; and
(cid:2) 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:
(cid:2)
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.
(cid:2)
(cid:2)
By Order of the Board
_____________________________
Charles Butler
Chairman
London
4 December 2019
29
MySale Group Plc
Independent auditors' report to the members of MySale Group Plc
30 June 2019
Report on the audit of the financial statements
Opinion
In our opinion:
(cid:2) MySale Group Plc’s Group financial statements and parent company financial statements (the “financial statements”) give a true
and fair view of the state of the Group’s and of the parent company’s affairs as at 30 June 2019 and of the Group’s loss and cash
flows for the year then ended;
(cid:2)
(cid:2)
(cid:2)
the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and
applicable law); and
the financial statements have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
We have audited the financial statements, included within the Annual report and financial statements (the “Annual Report”), which
comprise: the Balance sheet and Parent balance sheet as at 30 June 2019; 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, which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of
our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Our audit approach
Context
The principal activities of MySale Group Plc are as an international online retailer with established websites in Australia and New Zealand.
Overview
(cid:2) Overall Group materiality: $2.1 million (2018: $2.9 million), based on 1% of total revenue.
(cid:2) Overall parent company materiality: $0.4 million (2018: $1.6 million), based on 1% of total assets.
(cid:2) We conducted a full scope audit of the main Australian trading entity, Ozsale Pty Ltd. Procedures
were performed over specific balances and financial line items at the remaining reporting units based
on their nature and size.
(cid:2)
The reporting unit where we performed an audit of complete financial information accounted for 91%
of Group revenue.
(cid:2) Goodwill and intangible asset impairment assessment (Group).
(cid:2)
Investment in subsidiaries impairment assessment (Parent).
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.
30
MySale Group Plc
Independent auditors' report to the members of MySale Group Plc
30 June 2019
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
Goodwill and intangible asset impairment assessment
Refer to page 12 (Financial Review by the Chief Executive Officer),
page 52 (Critical accounting judgements, estimates and
assumptions) and page 66 (Note 17 Non-current assets intangibles).
We checked and confirmed there are two CGUs and that the
allocation of CGUs was consistent with internal management
monitoring and included: Online Flash and Online Retail.
Determining if an impairment charge is required for goodwill and
intangible assets involves significant judgements about the ongoing
structure of the business, future results and cash flows of the
business, including forecast growth in future revenues and EBITDA
margins, as well as determining an appropriate discount factor and
long-term growth rate.
Market conditions remain challenging and performance has varied
compared to expectations resulting in a change in strategy for the
Group.
We reviewed the judgements applied to future forecasts to ensure
that these included appropriate consideration of strategic changes
and uncertain market conditions.
We also considered the appropriateness of sensitivity disclosures
provided in the financial statements, to explain the change in
impairment amounts from reasonably possible changes to the
model’s key assumptions.
We evaluated the cash flow forecasts for each CGU and understood
the process by which these were calculated.
In light of these factors and the judgements involved and due to
goodwill impairment charges being recognised in the current year
of AUD$2.8m, we consider this to be a key audit matter.
Management aggregates businesses into Cost Generating Units
(CGUs) which represent the level at which the cash flows of the
businesses (and goodwill) are monitored and therefore this is the
level at which management performs its impairment assessment.
Management used a Value in Use (VIU) model, which included the
factors and judgements referred to above, to compute the present
value of forecast future cash flows for each CGU which was then
compared to the carrying value of the net assets of each CGU
(including goodwill and intangible assets) to determine if there was
an impairment.
(Group)
As part of our assessment we considered:
• the Directors’ key assumptions including the impact on revenue
due to the strategic changes in the business and the reduction of
overheads by comparing them to the board approved strategic
review, economic and industry forecasts;
• the discount rate applied, cost of capital for the Group and
comparable organisations;
• the Long Term Growth Rate (LTGR) applied, by comparing
management’s rate to forecast long term GDP growth in the
Australia and industry growth reports; and
• comparison of trading post year end to the forecast included in
the VIU model.
Our work identified that the LTGR applied in management’s
models was outside our expected range. However, sensitivities
showed that amending the assumption to bring them into our
expected ranges would reduce the impairment in the CGU.
With regard to the above procedures, the Online Flash CGUs
showed headroom above the carrying value of the relevant CGU net
assets and that no further goodwill impairment was required.
Online Retail was impaired by AUD$2.8m.
We also considered the appropriateness of sensitivity disclosures
provided in the financial statements (as set out in Note 17), to
explain the change in impairment amounts from reasonably
possible changes to the model’s key assumptions.
We agree with management’s assessment of goodwill impairment
and the disclosures that have been presented.
Investment in subsidiaries impairment assessment
Refer to page 91 (Critical accounting judgements, estimates and
assumptions) and page 92 (Note 5 Fixed assets – investment in
subsidiaries). IAS 36 Impairment of assets requires management to
We considered management’s assessment of indicators of
impairment and whether the actual impairment recognised in 2019
is appropriate.
31
MySale Group Plc
Independent auditors' report to the members of MySale Group Plc
30 June 2019
Key audit matter
How our audit addressed the key audit matter
consider whether there are any indicators of impairment at the year
end.
The Company has investments in subsidiaries with a total carrying
amount of AUD$35.3m after recognising a AUD$127.5m
impairment in the year. An impairment has been recognised as the
Value In Use (VIU) model used to compute the present value of
forecast future cash flows for each business did not support the
carrying value of investments. Management used a Value in Use
(VIU) model to compute the present value of forecast future cash
flows for each of the Group’s businesses which was then compared
to the carrying value of the underlying investments. We consider
this a key audit matter given the size of the balances and the
significant judgements and estimates involved to determine
whether the carrying value of the investments is appropriate.
(Parent)
Factors considered in our assessment were:
the results of the VIU model used for the impairment test over
goodwill, referred to above, and a review of the assumptions
included within the model;
the market capitalisation of the Group compared to the investment
carrying value.
As a result of these considerations, including the factors above, we
challenged management on their assessment of impairment and
their initial assessment was updated to reflect an impairment
charge of AUD$127.5m. We reviewed the judgements applied to
future forecasts to ensure that these included appropriate
consideration of changes in the Group strategy and uncertain
market conditions. We also considered the appropriateness of
disclosures provided in the financial statements, to explain
impairment amounts.
This involved evaluating the Board approved cash flow forecasts for
the Group and understanding the process by which these were
prepared.
As part of our assessment we considered:
• the Directors’ key assumptions including the impact on revenue
due to the strategic changes in the business and the reduction of
overheads by comparing them to them to the board approved
strategic review, economic and industry forecasts;
• the discount rate applied, cost of capital for the Group and
comparable organisations;
• the Long Term Growth Rate (LTGR) applied, by comparing
management’s rate to forecast long term GDP growth in Australia
and industry growth reports; and
• comparison of trading post year end to the forecast included in
the VIU model.
Our work identified that the LTGR applied in management’s
models was outside our expected ranges. However, sensitivities
showed that amending the assumption to bring it into our expected
ranges would reduce the impairment. We agree with management’s
assessment resulting in impairment of AUD$127.5m and that the
disclosures in the financial statements as set out in Note 5
surrounding the impairment are appropriate.
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 company, the accounting processes and controls, and the industry in
which they operate.
MySale Group Plc trades internationally through a number of websites. The Group financial statements are ultimately a consolidation
of 23 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 full scope component Ozsale Pty Ltd accounted for 91% of the Group’s revenue. Audits of specific financial statement line items were
performed on certain balances in a further seven reporting units, 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 also visited the Group's main operations and our component team in Sydney, Australia as part of
our audit procedures.
Our audit work at these reporting units, together with the additional procedures performed at Group level on the consolidation gave us the
evidence we needed for our opinion on the Group and parent company financial statements as a whole.
32
MySale Group Plc
Independent auditors' report to the members of MySale Group Plc
30 June 2019
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually
and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent company financial statements
Overall materiality
$2.1 million (2018: $2.9 million).
$0.4 million (2018: $1.6 million).
How we determined it
1% of total revenue.
1% of total assets.
Rationale for benchmark
applied
Based on the benchmarks used in the annual
report, revenue is one of the primary measures
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
materiality allocated to the full scope component Ozsale Pty Ltd was $1.9m.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $104,250 (Group
audit) (2018: $126,000) and $18,127 (Parent company audit) (2018: $77,930) as well as misstatements below those amounts that, in our
view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
ISAs (UK) require us to report to you when:
(cid:2)
(cid:2)
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt
about the Group’s and parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least
twelve months from the date when the financial statements are authorised for issue.
We have nothing to report in respect of the above matters.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s and parent
company’s ability to continue as a going concern. For example, the terms on which the United Kingdom may withdraw from the European
Union are not clear, and it is difficult to evaluate all of the potential implications on the Group’s trade, customers, suppliers and the wider
economy.
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’ responsibility statement set out on page 30, 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 company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance,
33
MySale Group Plc
Independent auditors' report to the members of MySale Group Plc
30 June 2019
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’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 parent company’s members as a body in accordance with
Article 113A of the Companies (Jersey) Law 1991 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Other required reporting
Companies (Jersey) Law 1991 exception reporting
Under the Companies (Jersey) Law 1991 we are required to report to you if, in our opinion:
proper accounting records have not been kept by the parent company: or
(cid:2) we have not received all the information and explanations we require for our audit; or
(cid:2)
(cid:2)
(cid:2)
proper returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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
4 December 2019
34
MySale Group Plc
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
Before
Before
exceptional
items
Exceptional
items
Total
exceptional
items
Exceptional
items
Total
Note
2019
A$'000
2019
A$'000
2019
A$'000
Restated
2018
A$'000
2018
A$'000
2018
A$'000
Revenue from contracts with
customers
Cost of sale of goods
Gross profit
Other operating gain/(loss), net
Interest revenue calculated
using the effective interest
method
5
5
6
208,596
(170,398)
38,198
-
(19,611)
(19,611)
208,596
(190,009)
18,587
292,204
(208,532)
83,672
-
-
-
292,204
(208,532)
83,672
743
848
1,591
586
(1,950)
(1,364)
-
-
-
10
-
10
Expenses
Selling and distribution
expenses
Administration expenses
Recovery/(impairment) of
receivables
Impairment of assets
Finance costs
Loss before income tax
(expense)/benefit
(37,798)
(28,427)
(166)
(3,387)
(37,964)
(31,814)
(50,798)
(30,057)
-
(4,656)
(50,798)
(34,713)
13
17
8
1,499
-
(547)
(6,760)
(2,832)
-
(5,261)
(2,832)
(547)
(249)
-
(271)
-
-
-
(249)
-
(271)
(26,332)
(31,908)
(58,240)
2,893
(6,606)
(3,713)
Income tax (expense)/benefit
11
(2,367)
(8,723)
(11,090)
4,228
(1,982)
2,246
Loss after income tax
(expense)/benefit for the
year attributable to the
owners of MySale Group Plc
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
Exchange differences on
translation of foreign
operations
Other comprehensive income
for the year, net of tax
Total comprehensive
(loss)/income for the year
attributable to the owners of
MySale Group Plc
(28,699)
(40,631)
(69,330)
7,121
(8,588)
(1,467)
26
26
(38)
932
894
-
-
-
(38)
826
932
894
1,271
2,097
-
-
-
826
1,271
2,097
(27,805)
(40,631)
(68,436)
9,218
(8,588)
630
Cents
Cents
Cents
Cents
Cents
Cents
Basic earnings per share
Diluted earnings per share
38
38
(18.60)
(18.60)
(26.32)
(26.32)
(44.92)
(44.92)
4.61
4.61
(5.56)
(5.56)
(0.95)
(0.95)
Refer to note 4 for detailed information on Restatement of comparatives.
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
35
MySale Group Plc
Balance sheet
As at 30 June 2019
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Income tax receivable
Other current assets
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
Contract liabilities
Borrowings
Derivative financial instruments
Income tax payable
Provisions
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
Consolidated
Restated
Note
2019
A$'000
2018
A$'000
Restated
1 July 2017
A$'000
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
814
9,985
15,963
-
-
4,766
31,528
1,186
34,480
3,369
39,035
70,563
32,968
10,408
18,357
-
96
4,415
66,244
-
231
231
66,475
6,770
30,138
33,650
38
115
4,367
75,078
19,027
16,951
34,154
-
-
4,949
75,081
2,571
38,542
14,112
55,225
130,303
2,711
35,572
11,909
50,192
125,273
31,982
8,621
12,998
-
-
2,816
56,417
54
272
326
56,743
29,246
10,222
10,014
788
193
2,283
52,746
143
332
475
53,221
4,088
73,560
72,052
-
306,363
(123,125)
(179,130)
4,108
(20)
4,088
-
306,363
(122,983)
(109,800)
73,580
(20)
73,560
-
306,363
(125,958)
(108,333)
72,072
(20)
72,052
The above balance sheet should be read in conjunction with the accompanying notes
36
MySale Group Plc
Balance sheet
As at 30 June 2019
Refer to note 4 for detailed information on Restatement of comparatives.
The financial statements of MySale Group Plc (company number 115584 (Jersey)) were approved by the Board of Directors
and authorised for issue on 4 December 2019. They were signed on its behalf by:
__________________________ __________________________
Carl Jackson Charles Butler
Director Director
The above balance sheet should be read in conjunction with the accompanying notes
37
MySale Group Plc
Statement of changes in equity
For the year ended 30 June 2019
Consolidated
Share
premium
account
A$'000
Other
reserves
A$'000
Accumulated
losses
A$'000
Non-
controlling
interest
A$'000
Total equity
A$'000
Balance at 1 July 2017
306,363
(125,958)
(105,150)
(20)
75,235
Adjustment for correction of error (note 4)
-
-
(3,183)
-
(3,183)
Balance at 1 July 2017 - restated
306,363
(125,958)
(108,333)
(20)
72,052
Restated loss after income tax benefit for the
year
Other comprehensive income for the year, net
of tax
Total comprehensive (loss)/income for the year
Transactions with owners in their capacity as
owners:
Share-based payments (note 26)
-
-
-
-
-
(1,467)
2,097
-
2,097
(1,467)
878
-
-
-
-
-
(1,467)
2,097
630
878
Balance at 30 June 2018
306,363
(122,983)
(109,800)
(20)
73,560
Refer to note 4 for detailed information on Restatement of comparatives.
Consolidated
Share
premium
account
A$'000
Other
reserves
A$'000
Accumulated
losses
A$'000
Non-
controlling
interest
A$'000
Total equity
A$'000
Balance at 1 July 2018
306,363
(122,983)
(109,800)
(20)
73,560
Loss after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive (loss)/income for the year
Transactions with owners in their capacity as
owners:
Share-based payments (note 26)
-
-
-
-
(69,330)
894
-
894
(69,330)
-
-
-
(69,330)
894
(68,436)
-
(1,036)
-
-
(1,036)
Balance at 30 June 2019
306,363
(123,125)
(179,130)
(20)
4,088
The above statement of changes in equity should be read in conjunction with the accompanying notes
38
MySale Group Plc
Statement of cash flows
For the year ended 30 June 2019
Cash flows from operating activities
Loss before income tax (expense)/benefit for the year
Adjustments for:
Depreciation and amortisation
Impairment of goodwill
Net loss/(gain) on disposal of property, plant and equipment
Net gain on disposal of intangibles
Interest income
Interest expense
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease in inventories
Decrease/(increase) in other operating assets
Increase in trade and other payables
Increase/(decrease) in contract liabilities
Increase in other provisions
Interest received
Interest paid
Income taxes paid
Consolidated
Note
2019
A$'000
Restated
2018
A$'000
(58,240)
(3,713)
6,937
2,832
487
(2,655)
-
547
6,576
-
(17)
-
(10)
271
(50,092)
3,107
20,153
17,687
(399)
986
1,787
1,558
(8,320)
-
(547)
(136)
(13,012)
94
670
2,524
(1,733)
1,520
(6,830)
10
(271)
(182)
Net cash used in operating activities
(9,003)
(7,273)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of intangibles
Proceeds from release of security deposits
Net cash used in investing activities
Cash flows from financing activities
Repayment of borrowings
Repayments of leases
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
(94)
(4,865)
177
2,655
-
(837)
(8,263)
-
-
17
(2,127)
(9,083)
31
31
-
(124)
(4,775)
(38)
(124)
(4,813)
(11,254)
(938)
(131)
(21,169)
19,027
1,204
Cash and cash equivalents at the end of the financial year
12
(12,323)
(938)
The above statement of cash flows should be read in conjunction with the accompanying notes
39
MySale Group Plc
Notes to the financial statements
30 June 2019
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 4 December 2019.
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
As at 30 June 2019, the Group’s current liabilities exceeds current assets by $34,716,000 (2018: positive working capital of
$18,661,000) and the Group has incurred a loss before tax of $58,240,000 (2018: loss of $3,713,000) and generated
operating cash outflows of $9,003,000 (2018: operating cash outflows of $7,273,000). Subsequent to the end of the financial
year, the Group has continued to perform in line with their budget which forecasts the business will generate positive cash
flows sufficient to ensure the business will continue as a going concern. The cash flows forecast assumes there will be
adequate cash generated to meet the Group’s obligations as and when they fall due. The directors are confident of delivering
the forecast cash flows and continuing a going concern. Accordingly, the financial statements have been prepared on a going
concern basis. Further details are contained in the directors’ report on pages 26 to 29.
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.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The following Accounting Standards and Interpretations are most relevant to the Group:
40
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
IFRS 9 Financial Instruments
The Group has adopted IFRS 9 from 1 July 2018. The standard introduced 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 that are solely principal and
interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business
model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that
are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are 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 or contingent consideration recognised in a
business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be
irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting
mismatch. For financial liabilities designated at fair value through profit or loss, 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 use an 'expected credit loss' ('ECL') model to
recognise an allowance. Impairment is measured using 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. For
receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.
IFRS 15 Revenue from Contracts with Customers
The Group has adopted IFRS 15 from 1 July 2018. The standard provides a single comprehensive model for revenue
recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised
goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a
measurement approach that is based on an allocation of the transaction price. This is described further in the accounting
policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with
customers are 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.
Impact of adoption
IFRS 9 and IFRS 15 were adopted using the transitional rules under the modified retrospective approach and as such
comparatives have not been restated. The impact of adoption on opening accumulated losses as at 1 July 2018 was A$nil.
There has been no material impact on adoption of IFRS 9 and IFRS 15, other than the changes to disclosure as required by
these standards, and consequential amendments to other standards, which includes:
●
●
●
reclassifying deferred revenue as contract liabilities;
presenting interest income on the face of profit or loss; and
presenting impairment of receivable on the face of profit or loss.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of MySale Group Plc as at 30
June 2019 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
41
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
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
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange
for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a
customer; identifies the performance obligations in the contract; determines the transaction price; allocates the transaction
price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or
service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts
the transfer to the customer of the goods or services promised.
Sale of goods
The Group's revenue mainly comprises the sale of goods online, in-store, and by wholesale to businesses. Revenue is
recognised when control of the goods has transferred to the customer at an amount that reflects the consideration to which
the Group expects to be entitled.
The Group operates mostly an online retail business selling men's, ladies and children's apparel, accessories, beauty and
homeware items. Revenue from sale of goods is recognised at the point in time when the customer obtains control of the
goods, which is generally at the time of delivery. Sales represent product shipped 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.
42
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
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. The Group is not required to pay Jersey tax as none of its entities are Jersey tax residents.
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.
43
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
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.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30
days of recognition.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Right of return assets
Right of return assets represents the right to recover inventory sold to customers and is based on an estimate of customers
who may exercise their right to return the goods and claim a refund. Such rights are measured at the value at which the
inventory was previously carried prior to sale, less expected recovery costs and any impairment.
Inventories
Goods for resale are stated at the lower of cost and net realisable value on a 'weighted average cost' basis. Cost comprises
purchase, delivery and direct labour costs, net of rebates and discounts received or receivable.
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.
44
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Subsequent expenditure relating to plant and equipment that has already been recognised is added to the carrying amount
of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in profit or loss when
incurred.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over
their expected useful lives as follows:
Leasehold improvements
Plant and equipment
Fixtures and fittings
Motor vehicles
5-7 years
3-7 years
5-10 years
4-5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or
the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively
retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease
liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease
term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.
Intangible assets
Externally acquired intangible assets are initially recognised at cost. Indefinite life intangible assets are not amortised and
are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less
amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible
assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset.
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.
45
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Customer relationships
Customer relationships acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite useful life of three years.
ERP system and software
Acquired enterprise resource planning ('ERP') systems and software costs are initially capitalised at cost which includes the
purchase price, net of any discounts and rebates, and other directly attributable cost of preparing the asset for its intended
use. Direct expenditure including employee costs, which enhances or extends the performance of these systems beyond its
specifications and which can be reliably measured, is added to the original costs incurred. These costs are amortised on a
straight-line basis over the period of their expected benefit, being their finite useful lives of between three and five years.
Costs associated with maintenance are recognised as an expense in profit or loss when incurred.
Impairment of non-financial assets
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.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when a
customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration
(whichever is earlier) before the Group has transferred the goods or services to the customer.
Contract liabilities are recognised where the Group receives consideration from a customer and expects to refund some, or
all, of that consideration to the customer. A contract liability is measured at the amount of consideration received or receivable
for which the Group does not expect to be entitled and is updated at the end of each reporting period for changes in
circumstances. Historical data is used across product lines to estimate such returns at the time of sale based on an expected
value methodology.
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.
46
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries and other employee benefits expected to be settled wholly within 12 months of the reporting
date are measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
Employee benefits not expected to be settled within 12 months of the reporting date are measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration
is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected
future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to
maturity and currency that match, as closely as possible, the estimated future cash outflows.
Long-term employee incentive plan
The Group operates an employee incentive plan to reward and retain key employees. The Group recognises a provision
where contractually obliged or where there is a past practice that has created a constructive obligation.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees. There are no cash-settled share-based
compensation benefits.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
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.
47
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and
best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable
inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value
measurement.
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.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of MySale Group Plc, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Diluted earnings per share is not calculated if anti-dilutive.
Value Added Tax ('VAT'), Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated VAT/GST, unless the VAT/GST incurred is
not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of VAT/GST receivable or payable. The net amount of VAT/GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the balance sheet.
Cash flows are presented on a gross basis. The VAT/GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of VAT/GST recoverable from, or payable to, the tax
authority.
Rounding of amounts
Amounts in this report have been rounded off to the nearest thousand dollars, or in certain cases, the nearest dollar.
Comparatives
Certain comparative in the statement of profit or loss and other comprehensive income and balance sheet have been
reclassified, where necessary, to be consistent with current year presentation.
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 2019. 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:
48
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
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.
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 35 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 IFRS 16. Whilst the standard will not be included in the financial
statements until 2020, the impact of the standard will have a material impact. The results of the impact assessment indicates
that right-of-use assets of circa $5,500,000-$5,600,000 and lease liabilities of circa $5,500,000-$5,600,000 will be recognised
in the opening balance sheet at July 2019. The value of the IFRS 16 impact to the Statement of profit or loss and other
comprehensive income is expected to be immaterial.
IASB new Conceptual Framework for Financial Reporting
The new 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 IFRS 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.
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 2019. 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.
Presentation of non-statutory measures
In addition to statutory measures, the Directors use various non-GAAP key financial measures to evaluate the Group’s
performance and consider that presentation of these measures provides shareholders with an additional understanding of
the core trading performance of the Group. The measures used are explained and reconciled to their equivalent statutory
headings below.
Operating profit after exceptional items and earnings per share after exceptional items
The Directors believe that adjusted results and adjusted earnings per share, provide additional useful information on the core
operational performance of the Group to shareholders, and review the results of the Group on an adjusted basis internally.
The term ‘exceptional items’ is not a defined term under IFRS and may not therefore be comparable with similarly titled profit
measurements reported by other companies. It is not intended to be a substitute for, or superior to, IFRS measurements of
profit.
49
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Adjustments are made in respect of:
●
●
●
●
●
●
Exceptional items – the Group considers items of income and expense as exceptional and excludes them from the
adjusted results where the nature of the item, or its magnitude, is material and likely to be non-recurring in nature so as
to assist the user of the financial statements to better understand the results of the core operations of the Group. Details
of exceptional items are shown in note 10.
Share-based payments – share-based payment expenses or credits are excluded from the adjusted results of the Group
as the Directors believe that the volatility of these charges can distort the user’s view of the core trading performance
of the Group. Details of share-based payments are shown in note 39.
Impairment of goodwill – the Directors believe that non-cash impairment charges in relation to goodwill are generally
volatile and material, and therefore exclude any such charges from the adjusted results of the Group. Details of the
goodwill impairment analysis are shown in note 17.
Acquisition related costs – expenses in relation to business combinations or potential business combinations recognised
in profit or loss is not considered reflective of the core trading of the Group since it results from investment activities and
is volatile in nature. As such, the profit or loss items relating to business combinations are removed from adjusted
results. See note 7.
Profit or loss on disposal of assets of subsidiaries – profit or loss on disposals of assets are excluded from adjusted
results of the Group as they are unrelated to core trading and can distort a user’s understanding of the performance of
the Group due to their infrequent and volatile nature. See note 7.
Other separately reported items – certain other items are excluded from adjusted results where they are considered
large or unusual enough to distort the comparability of core trading results year on year. Details of these separately
disclosed items are shown in note 8.
The tax related to adjusting items is the tax effect of the items above that are allowable deductions for tax purposes (primarily
exceptional items), calculated using the standard rate of corporation tax. See note 11 for a reconciliation between reported
and adjusted tax charges.
Further details of exceptional items are included in note 10. A reconciliation between earnings per share after exceptional
items and statutory earnings per share measures is shown in note 38.
Note
2019
A$'000
2018
A$'000
(Loss)/profit before tax and exceptional items reconciles to loss before
tax after exceptional items as follows:
(Loss)/profit before tax before exceptional items
(26,332)
2,893
Exceptional items
Cost of sale of goods
Other operating gain/(loss), net
Selling and distribution expenses
Administration expenses
Impairment of receivables
Impairment of assets
(19,611)
848
(166)
(3,387)
(6,760)
(2,832)
-
(1,950)
-
(4,656)
-
-
8
8
17
Loss before tax and after exceptional items
5
(58,240)
(3,713)
Cash impact of exceptional items
Tax impact of exceptional items
619
(8,723)
(2,742)
(1,982)
Operating cash flow after exceptional items
Operating cash flow after exceptional items is not a measure defined by IFRS. It is defined as cash flow from operations
excluding the impact of exceptional items, which are defined above. The Directors use this measure to assess the
performance of the Group as it excludes volatile items not related to the core trading of the Group.
50
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Statutory cash flow from operations reconciles to operating cash after exceptional
items as below:
Reported cash flow from operating activities
Cash impact of exceptional items (as above)
Working capital impact of exceptional items
Operating cash flow after exceptional items
2019
A$'000
2018
A$'000
(9,003)
(619)
(29,924)
(7,273)
2,742
(4,656)
(39,546)
(9,187)
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Judgements:
Revenue from contracts with customers involving sale of goods
When recognising revenue in relation to the sale of goods to customers, the key performance obligation of the Group is
considered to be the point of delivery of the goods to the customer, as this is deemed to be the time that the customer obtains
control of the promised goods and therefore the benefits of unimpeded access.
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.
Estimates:
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit
loss rate for each group. These assumptions include recent sales experience and historical collection rates.
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.
51
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 3. Critical accounting judgements, estimates and assumptions (continued)
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. An impairment charge was required during the financial year ended 30 June 2019 for $2,832,000 (2018: A$nil).
Refer to note 17 for further details.
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.
Note 4. Restatement of comparatives
Correction of error
During the course of the 2019 financial year management undertook a detailed review of their third party purchase order and
ERP inventory systems. As part of this review process management identified system errors in the processing of third party
purchase orders. As a consequence, it was identified that third party purchase orders had been incorrectly accounted for as
inventory.
The error has been corrected by restating each of the affected financial statement line items for the prior periods as follows:
52
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 4. Restatement of comparatives (continued)
Statement of profit or loss and other comprehensive income
Consolidated
2018
A$'000
Reported
2018
A$'000
Adjustment Restated
A$'000
Revenue from contracts with customers
292,204
-
292,204
Cost of sale of goods
(206,511)
(2,021)
(208,532)
Other operating gain/(loss), net
Interest revenue calculated using the effective interest method
Expenses
Selling and distribution expenses
Administration expenses
Impairment of receivables
Finance costs
Loss before income tax benefit
Income tax benefit
(1,364)
10
(50,798)
(34,713)
(249)
(271)
-
-
-
-
-
-
(1,364)
10
(50,798)
(34,713)
(249)
(271)
(1,692)
(2,021)
(3,713)
1,640
606
2,246
Loss after income tax (expense)/benefit for the year attributable to the
owners of MySale Group Plc
(52)
(1,415)
(1,467)
Other comprehensive income
Net change in the fair value of cash flow hedges taken to equity, net of tax
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
826
1,271
2,097
-
-
-
826
1,271
2,097
Total comprehensive income for the year attributable to the owners of
MySale Group Plc
2,045
(1,415)
630
Basic earnings per share
Diluted earnings per share
Cents
Cents
Cents
Reported
Adjustment Restated
(0.03)
(0.03)
(0.92)
(0.92)
(0.95)
(0.95)
53
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 4. Restatement of comparatives (continued)
Balance sheet at the beginning of the earliest comparative period
Consolidated
1 July 2017
A$'000
Reported
1 July 2017
A$'000
Adjustment Restated
A$'000
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
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
Contract liabilities
Borrowings
Derivative financial instruments
Income tax payable
Provisions
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
54
19,027
16,951
38,042
4,949
78,969
2,711
35,572
10,544
48,827
-
-
(3,888)
-
(3,888)
-
-
1,365
1,365
19,027
16,951
34,154
4,949
75,081
2,711
35,572
11,909
50,192
127,796
(2,523)
125,273
28,586
10,222
10,014
788
193
2,283
52,086
143
332
475
660
-
-
-
-
-
660
-
-
-
29,246
10,222
10,014
788
193
2,283
52,746
143
332
475
52,561
660
53,221
75,235
(3,183)
72,052
-
306,363
(125,958)
(105,150)
75,255
(20)
-
-
-
(3,183)
(3,183)
-
-
306,363
(125,958)
(108,333)
72,072
(20)
75,235
(3,183)
72,052
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 4. Restatement of comparatives (continued)
Balance sheet at the end of the earliest comparative period
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Income tax receivable
Other current assets
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
Contract liabilities
Borrowings
Provisions
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
55
Consolidated
2018
A$'000
Reported
2018
A$'000
Adjustment Restated
A$'000
6,770
30,138
38,260
38
115
4,367
79,688
2,571
38,542
12,141
53,254
-
-
(4,610)
-
-
-
(4,610)
-
-
1,971
1,971
6,770
30,138
33,650
38
115
4,367
75,078
2,571
38,542
14,112
55,225
132,942
(2,639)
130,303
30,023
8,621
12,998
2,816
54,458
54
272
326
1,959
-
-
-
1,959
-
-
-
31,982
8,621
12,998
2,816
56,417
54
272
326
54,784
1,959
56,743
78,158
(4,598)
73,560
-
306,363
(122,983)
(105,202)
78,178
(20)
-
-
-
(4,598)
(4,598)
-
-
306,363
(122,983)
(109,800)
73,580
(20)
78,158
(4,598)
73,560
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 5. 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 2019 there were no major customers (2018: none). A customer is considered major if its
revenues are 10% or more of the Group's revenue.
Operating segment information
Consolidated - 2019
Revenue
Sales to external customers transferred at a point in time
Total revenue
Gross profit after exceptional items
Other operating gain, net after exceptional items
Selling and distribution expenses after exceptional items
Administration expenses after exceptional items
Finance costs
Impairment of receivables after exceptional items
Impairment of assets after exceptional items
Loss before income tax expense after exceptional items
Income tax expense after exceptional items
Loss after income tax expense after exceptional items
Australia and South-East
New Zealand
A$'000
Asia
A$'000
Rest of the
world
A$'000
Total
A$'000
166,082
166,082
28,386
28,386
14,128
14,128
208,596
208,596
10,955
4,865
2,767
18,587
1,591
(37,964)
(31,814)
(547)
(5,261)
(2,832)
(58,240)
(11,090)
(69,330)
56
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 5. Operating segments (continued)
Consolidated – Restated 2018
Revenue
Sales to external customers transferred at a point in time
Total revenue
Gross profit
Other operating loss, net after exceptional items
Selling and distribution expenses
Administration expenses after exceptional items
Interest revenue
Finance costs
Impairment of receivables
Loss before income tax benefit after exceptional items
Income tax benefit after exceptional items
Loss after income tax benefit after exceptional items
Note 6. Other operating gain/(loss), net
Net foreign exchange loss
Net (loss)/gain on disposal of property, plant and equipment
Net gain on disposal of asset *
Other income
Other operating gain/(loss), net
Australia and South-East
New Zealand
A$'000
Asia
A$'000
Rest of the
world
A$'000
Total
A$'000
242,365
242,365
33,360
33,360
16,479
16,479
292,204
292,204
70,899
8,896
3,877
83,672
(1,364)
(50,798)
(34,713)
10
(271)
(249)
(3,713)
2,246
(1,467)
Consolidated
2019
A$'000
2018
A$'000
(692)
(487)
2,655
115
(1,408)
17
-
27
1,591
(1,364)
* In May 2019, the Group sold its Cocosa websites through an asset sale for a net gain on sale of A$2,655,000.
Note 7. EBITDA reconciliation (earnings before interest, taxation, depreciation and amortisation)
EBITDA reconciliation
Loss before income tax
Less: Interest income
Add: Interest expense
Add: Depreciation and amortisation
EBITDA
Underlying EBITDA represents EBITDA adjusted for certain items, as outlined below.
Consolidated
2019
A$'000
2018
A$'000
(58,240)
-
547
6,937
(3,713)
(10)
271
6,576
(50,756)
3,124
57
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 7. EBITDA reconciliation (earnings before interest, taxation, depreciation and
amortisation) (continued)
Underlying EBITDA reconciliation
EBITDA
Impairment of goodwill
Impairment of receivables
Net gain on disposal of Cocosa websites and trademarks
Share-based payments (note 39)
Reorganisation and discontinued operations *
One-off costs of non-trading, non-recurring nature including acquisition expenses
Inventory write down
Unrealised foreign exchange loss
Consolidated
2019
A$'000
2018
A$'000
(50,756)
2,832
6,760
(2,655)
(1,036)
2,502
3,096
18,941
1,468
3,124
-
-
-
878
190
3,588
-
1,950
Underlying EBITDA
(18,848)
9,730
*
Costs in relation to the closure of overseas operations.
Note 8. Expenses
Before
exceptional
items
Exceptional
items
2019
A$'000
2019
A$'000
Total
2019
A$'000
Before
exceptional
items
2018
Restated
A$'000
Exceptional
items
2018
A$'000
Total
2018
A$'000
Loss before income tax
includes the following
specific expenses:
Sales, distribution and
administration expenses:
Staff costs (note 9)
Marketing expenses
Occupancy costs
Merchant and other professional
fees
Depreciation and amortisation
Other administration costs
Total sales, distribution and
administration expenses
25,281
18,725
6,442
7,678
6,937
1,162
(384)
-
-
307
-
3,630
24,897
18,725
6,442
7,985
6,937
4,792
36,532
22,258
6,148
5,824
6,576
3,517
1,027
-
-
2,029
-
1,600
37,559
22,258
6,148
7,853
6,576
5,117
66,225
3,553
69,778
80,855
4,656
85,511
58
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 8. Expenses (continued)
Finance costs
Interest and finance charges
paid/payable
Occupancy costs include:
Minimum operating lease
payments
Cost of inventories recognised
as an expense in 'cost of sales'
in profit or loss
Note 9. Staff costs
547
4,907
-
-
547
271
4,907
5,068
130,551
18,941
149,492
159,939
-
-
-
271
5,068
159,939
Before
exceptional
items
2019
A$'000
Exceptional
items
2019
A$'000
Total
2019
A$'000
Before
exceptional
items
2018
A$'000
Exceptional
items
2018
A$'000
Total
2018
A$'000
Aggregate remuneration:
Wages and salaries
Social security costs
Long-term employee incentive
plan (note 39)
Other staff costs and benefits
20,821
1,876
-
2,584
652
-
(1,036)
-
21,473
1,876
(1,036)
2,584
30,096
2,648
-
3,788
149
-
878
-
30,245
2,648
878
3,788
Total staff costs
25,281
(384)
24,897
36,532
1,027
37,559
The average monthly number of employees (including executive directors and those on a
part-time basis) was:
Sales and distribution
Administration
Consolidated
2019
2018
131
176
307
200
271
471
Details of directors’ remuneration and interests are provided in the audited section of the Directors’ remuneration report and
should be regarded as part of these financial statements.
Note 10. Exceptional items
As discussed in note 2, certain items are presented as exceptional. These are detailed below:
59
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 10. Exceptional items (continued)
Cost of sale of goods
Other operating (gain)/loss, net
Sales, distribution and administration expenses:
Staff costs
Merchant and other professional fees
Other administration costs
Impairment of receivables
Impairment of assets
Exceptional costs:
Note
2019
A$'000
2018
A$'000
19,611
-
(848)
1,950
(384)
307
3,630
6,760
2,832
1,027
2,029
1,600
-
-
9
8
8
17
Staff related exceptional costs
During the 2019 financial year, staff related exceptional costs related to the following: (a) integrating acquired businesses
onto the Group's online platform (b) restructuring overseas offices and warehouses in the US, UK and NZ (c) amounts in
relation to the Group's long-term employee incentive plan to its key management personnel and Directors.
Cost of sale of goods
Cost of sale of goods adjustment relates to the write down of the Group's ownbuy and outlet stock at year end.
Merchant and other professional fees
This relates to the professional fees paid for potential acquisitions and business restructure initiatives.
Other adjusting items
Other adjusting items relate to non-recurring restructuring costs and provisions recognised by the business.
Impairment of receivables
An impairment of $6,760,000 has been recognised against the Group's wholesale business receivables.
Goodwill impairment
An impairment of $2,832,000 has been recognised against goodwill relating to the Online Retail CGU. There were no
impairments in the prior year. See note 17 for further details.
Profit on disposal of assets of a subsidiary
During the 2019 financial year, the Group sold its Cocosa websites and related trademarks for a $2,655,000 profit on disposal.
60
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 11. Income tax expense/(benefit)
Income tax expense/(benefit)
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior years
Aggregate income tax expense/(benefit)
Deferred tax included in income tax expense/(benefit) comprises:
Decrease/(increase) in deferred tax assets (note 18)
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
Loss before income tax (expense)/benefit
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Effect of overseas tax rates
Non-deductible expenses
Tax-exempt income
Prior year tax losses not recognised now recognised
Change in recognised deductible temporary differences
Adjustment recognised for prior periods
Income tax expense/(benefit)
Consolidated
2019
A$'000
Restated
2018
A$'000
247
10,594
249
842
(2,843)
(245)
11,090
(2,246)
10,594
(2,843)
(58,240)
(3,713)
(17,472)
(1,114)
(860)
865
(34)
(17,501)
(1,612)
29,954
249
(293)
32
(40)
(1,415)
(524)
(8)
(299)
11,090
(2,246)
The tax rates of the main jurisdictions are Australia 30% (2018: 30%), Singapore 17% (2018: 17%), New Zealand 28% (2018:
28%), United Kingdom 19% (2018: 19%) and United States 21% (2018: 21%). The Group is not required to pay Jersey tax
as none of its entities are Jersey tax residents.
Note 12. Current assets - cash and cash equivalents
Cash at bank
Bank deposits at call
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial
year as shown in the statement of cash flows as follows:
Balances as above
Bank overdraft (note 21)
Balance as per statement of cash flows
61
Consolidated
2019
A$'000
2018
A$'000
703
111
814
6,573
197
6,770
814
(13,137)
6,770
(7,708)
(12,323)
(938)
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 13. Current assets - trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Sales tax receivable
Consolidated
2019
A$'000
2018
A$'000
11,307
(5,389)
5,918
1,107
2,960
29,780
(311)
29,469
669
-
9,985
30,138
Trade receivables include uncleared cash receipts due from online customers which amounted to A$5,303,000 (2018:
A$4,996,000).
Allowance for expected credit losses
The Group has recognised a loss of A$5,261,000 (2018: A$249,000) in profit or loss in respect of impairment of receivables
for the year ended 30 June 2019.
The ageing of the trade receivables and the merchant receivables (uncleared cash receipts due from online customers) and
allowance for expected credit losses provided for above are as follows:
Consolidated
Wholesale and other trade
receivable:
Not overdue
1-30 days overdue
31-60 days overdue
Over 61 days
Merchant receivables:
1-30 days overdue
31-60 days overdue
Over 61 days
Expected credit loss rate
2019
%
2018
%
Carrying amount
2018
A$'000
2019
A$'000
Allowance for expected
credit losses
2019
A$'000
2018
A$'000
11.00%
-
-
93.00%
-
-
-
-
4.90%
11.50%
90.50%
0.30%
1.60%
52.50%
1,913
-
-
4,115
6,028
3,561
477
1,241
5,279
17,398
2,326
185
4,875
24,784
3,774
671
551
4,996
210
-
-
3,827
4,037
174
55
1,123
1,352
11,307
29,780
5,389
-
-
-
-
-
11
11
289
311
311
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Closing balance
62
Consolidated
2019
A$'000
2018
A$'000
311
5,078
5,389
86
225
311
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 14. Current assets - inventories
Goods for resale
Obsolete and slow-moving inventory provision
Stock in transit
Consolidated
2019
A$'000
Restated
2018
A$'000
21,556
(7,249)
14,307
31,456
(529)
30,927
1,656
2,723
15,963
33,650
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2019 amounted
to A$18,941,000 (2018: A$275,000). This expense has been included in 'cost of sales' in profit or loss.
Note 15. Current assets - Other current assets
Prepayments
Prepaid inventory
Other deposits
Right of return assets
Other current assets
Consolidated
2019
A$'000
2018
A$'000
738
3,406
266
292
64
1,339
2,237
316
410
65
4,766
4,367
Prepaid inventory relates to the costs of goods for resale that have been paid for by the Group but not delivered to its
distribution centres for further dispatch to the customers who placed the orders as at the reporting date. The corresponding
cash received in advance from customers are accounted for within the contract liabilities category in the balance sheet which
includes the total amount of cash received for the goods not delivered to customers at the reporting date.
63
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 16. Non-current assets - property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Fixtures and fittings - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
Consolidated
2019
A$'000
2018
A$'000
1,367
(1,058)
309
4,996
(4,381)
615
1,169
(926)
243
239
(220)
19
1,697
(1,085)
612
5,633
(4,323)
1,310
1,331
(894)
437
515
(303)
212
1,186
2,571
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2017
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2018
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2019
Leasehold
Plant and
improvements equipment
A$'000
A$'000
Fixtures
and fittings
A$'000
Motor
vehicles
A$'000
Total
A$'000
507
278
-
(3)
(170)
612
36
(174)
1
(166)
309
1,339
545
(36)
29
(567)
1,310
57
(273)
(10)
(469)
615
601
39
-
(14)
(189)
437
1
(31)
9
(173)
243
264
-
(2)
3
(53)
212
-
(177)
4
(20)
2,711
862
(38)
15
(979)
2,571
94
(655)
4
(828)
19
1,186
Assets pledged as security
Refer to note 23 for property, plant and equipment pledged as security.
Property, plant and equipment secured under finance leases
Refer to note 35 for further information on property, plant and equipment secured under finance leases.
Depreciation expense is included in the 'administration expenses' in profit or loss.
64
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 17. 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
Consolidated
2019
A$'000
2018
A$'000
21,221
24,043
1,846
(1,702)
144
23,460
(11,264)
12,196
3,300
(2,381)
919
3,841
(3,236)
605
21,280
(9,232)
12,048
5,276
(3,430)
1,846
34,480
38,542
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2017
Additions
Exchange differences
Amortisation expense
Balance at 30 June 2018
Additions
Exchange differences
Impairment of assets
Amortisation expense
Goodwill
A$'000
Customer
relationships Software
A$'000
A$'000
ERP
system
A$'000
Total
A$'000
24,019
-
24
-
24,043
-
10
(2,832)
-
926
251
-
(572)
605
-
-
-
(461)
8,622
7,451
-
(4,025)
12,048
4,852
2
-
(4,706)
2,005
841
-
(1,000)
1,846
13
2
-
(942)
35,572
8,543
24
(5,597)
38,542
4,865
14
(2,832)
(6,109)
Balance at 30 June 2019
21,221
144
12,196
919
34,480
Amortisation expense is included in 'administration expenses' in profit or loss.
Goodwill is allocated to the Group’s cash-generating units ('CGUs') identified according to business model as follows:
Online flash
Online retail
Consolidated
2019
A$'000
2018
A$'000
19,683
1,538
19,683
4,360
21,221
24,043
The Group's retail websites are "OO.com", Deals Direct, and Top Buy. All other websites owned by the Group are online
flash websites.
65
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 17. Non-current assets - intangibles (continued)
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
Consolidated
2019
%
2018
%
22.0%
(8.0%)
2.0%
9.0%
29.9%
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 are no impairment indicators arising from this analysis. The recoverable amount exceeded
the carrying amount by A$4,893,000.
Online retail
Key assumptions used in value-in-use calculation
Budgeted gross margin
Five year compound growth rate
Long-term growth rate
Pre-tax discount rate
2019
%
2018
%
23.0%
(8.0%)
2.0%
9.0%
22.7%
(2.0%)
2.0%
9.0%
Based on the assessment, an impairment charge of $2,832,000 is required. The recoverable amount was below the carrying
amount by A$2,832,000.
Sensitivity
As disclosed in note 3, the directors have made judgements and estimates in respect of impairment testing of goodwill.
Should these judgements and estimates not occur the resulting goodwill carrying amount may decrease. Sensitivity analysis
has been performed on the value-in-use calculations, holding all other variables constant, to:
(i) apply a 1% increase in discount rate from 9% to 10%. No impairment would occur in the Online Flash CGU. The Online
Retail CGU impairment would increase from $2,800,000 to $3,100,000.
(ii) reduce the terminal value growth rate from 2% to 1.5%. No impairment would occur in the Online Flash CGU. The Online
Retail CGU impairment would increase from $2,800,000 to $2,900,000.
66
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 18. Non-current assets - deferred tax
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses
Accrued expenses
Provisions
Sundry
Property, plant and equipment
Intangibles
Inventories
Deferred tax asset
Movements:
Opening balance
Credited/(charged) to profit or loss (note 11)
Exchange loss
Closing balance
Consolidated
2019
A$'000
Restated
2018
A$'000
(2,924)
735
5,029
424
148
(43)
-
9,692
1,281
996
292
61
(181)
1,971
3,369
14,112
14,112
(10,594)
(149)
11,909
2,843
(640)
3,369
14,112
Deferred income tax assets are recognised for tax losses, non-deductible accruals and provisions and capital allowances
carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable.
Note 19. Current liabilities - trade and other payables
Trade payables
Other payables and accruals
Sales tax payable
Refer to note 29 for further information on financial instruments.
Consolidated
2019
A$'000
Restated
2018
A$'000
28,359
4,609
-
21,838
7,663
2,481
32,968
31,982
67
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 20. Current liabilities - contract liabilities
Contract liabilities
Consolidated
2019
A$'000
2018
A$'000
10,408
8,621
Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the
reporting period was A$10,408,000 as at 30 June 2019 (A$8,621,000 as at 30 June 2018) and is expected to be recognised
as revenue in future periods as follows:
Within 6 months
Note 21. Current liabilities - borrowings
Bank overdraft
Bank loans
Finance lease liability
Consolidated
2019
A$'000
2018
A$'000
10,408
8,621
Consolidated
2019
A$'000
2018
A$'000
13,137
5,200
20
7,708
5,200
90
18,357
12,998
Refer to note 23 for further information on assets pledged as security and financing arrangements.
Refer to note 29 for further information on financial instruments.
Note 22. Current liabilities - provisions
Employee benefits provision
Lease make good provision
Gift voucher provision
Sales returns provision
Consolidated
2019
A$'000
2018
A$'000
1,093
564
444
2,314
1,463
135
535
683
4,415
2,816
Lease make good provision
The provision represents the present value of the estimated costs to make good the premises leased by the Group at the
end of the respective lease terms.
Gift voucher provision
The provision represents the estimated costs to honour gift vouchers that are in circulation and not expired.
Sales return provision
The provision represents the costs for goods expected to be returned by customers.
68
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 22. Current liabilities - provisions (continued)
Movements in provisions
Movements in each class of provision during the current financial year, other than employee benefits, are set out below:
Consolidated - 2019
Carrying amount at the start of the year
Additional provisions recognised
Amounts used
Carrying amount at the end of the year
Note 23. Non-current liabilities - borrowings
Finance lease liability
Refer to note 29 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Bank overdraft
Bank loans
Finance lease liability
Lease make
good
provision
A$'000
Gift vouchers
provision
A$'000
Sales returns
provision
A$'000
135
442
(13)
564
535
444
(535)
683
2,314
(683)
444
2,314
Consolidated
2019
A$'000
2018
A$'000
-
54
Consolidated
2019
A$'000
2018
A$'000
13,137
5,200
20
7,708
5,200
144
18,357
13,052
Assets pledged as security
At year end, the Group had a A$21,685,000 (2018: A$28,105,000) borrowing facility with Hong Kong and Shanghai Banking
Corporation Plc (‘HSBC’) which is secured by a Corporate Guarantee and Indemnity. There are no financial covenants in
relation to this total borrowing facility. The average interest rate incurred on these bank borrowings was 2.96% (2018: 2.75%).
Subsequent to reporting date, the Group has extinguished all borrowing facilities and Corporate Guarantees and Indemnities
with Hong Kong and Shanghai Banking Corporation Plc (‘HSBC’). Refer to note 40 for further information.
The lease liabilities are effectively secured as the rights to the leased assets, recognised in the balance sheet, revert to the
lessor in the event of default.
The carrying amounts of assets pledged as security for current and non-current borrowings are:
Cash and cash equivalents
69
Consolidated
2019
A$'000
2018
A$'000
-
5,200
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 23. Non-current liabilities - borrowings (continued)
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank overdraft
Bank loans and overdrafts
Bank guarantees
Bank loans under interchangeable facilities
Used at the reporting date
Bank overdraft
Bank loans and overdrafts
Bank guarantees
Bank loans under interchangeable facilities
Unused at the reporting date
Bank overdraft
Bank loans and overdrafts
Bank guarantees
Bank loans under interchangeable facilities
Note 24. Non-current liabilities - provisions
Employee benefits provision
Long-term incentive plan
Refer to note 39 for details on the long-term incentive plan.
Note 25. Equity - share capital
Consolidated
2019
A$'000
2018
A$'000
13,413
5,886
1,541
845
21,685
13,137
5,200
1,506
116
19,959
276
686
35
729
1,726
10,262
5,200
1,537
11,106
28,105
7,708
5,200
1,537
-
14,445
2,554
-
-
11,106
13,660
Consolidated
2019
A$'000
2018
A$'000
231
272
Consolidated
2019
Shares
2018
Shares
2019
A$'000
2018
A$'000
Ordinary shares £nil each (2018: £nil) - issued and fully paid
154,331,652 154,331,652
-
-
Authorised share capital
200,000,000 (2018: 200,000,000) ordinary shares of £nil each.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held.
70
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 25. Equity - share capital (continued)
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Capital risk management
The Group’s objectives when managing capital is to safeguard the Group’s ability to continue as a going concern, so that it
can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the balance sheet, plus net debt. Net debt is calculated as total
borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The capital risk management policy remains unchanged from the 30 June 2018 Annual Report.
Note 26. Equity - other reserves
Foreign currency reserve
Hedging reserve - cash flow hedges
Share-based payments reserve
Capital reorganisation reserve
Consolidated
2019
A$'000
2018
A$'000
4,390
-
5,241
(132,756)
3,458
38
6,277
(132,756)
(123,125)
(122,983)
Foreign currency reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign
operations to Australian dollars.
Hedging reserve - cash flow hedges
The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined
to be an effective hedge.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Capital reorganisation reserve
The reserve is used to recognise the difference between the purchase price of APAC Sale Group Pte. Ltd. and the net assets
acquired following a Group reorganisation in 2014.
71
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 26. Equity - other reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Foreign currency translation
Cash flow hedge
Share-based payments
Balance at 30 June 2018
Foreign currency translation
Cash flow hedge
Share-based payments
Balance at 30 June 2019
Note 27. Equity - non-controlling interests
Accumulated losses
Foreign
currency
A$'000
Hedging
A$'000
Share-based
payments
A$'000
Capital
reorganisation
A$'000
2,187
1,271
-
-
3,458
932
-
-
4,390
(788)
-
826
-
38
-
(38)
-
5,399
-
-
878
6,277
-
-
(1,036)
(132,756)
-
-
-
(132,756)
-
-
-
Total
A$'000
(125,958)
1,271
826
878
(122,983)
932
(38)
(1,036)
-
5,241
(132,756)
(123,125)
Consolidated
2019
A$'000
2018
A$'000
(20)
(20)
The non-controlling interest has a 40% equity holding in Invite to Buy and 49% in Simply Send H Pty Limited.
Note 28. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 29. 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.
72
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 29. 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, Asia
(including Malaysia, Thailand and Singapore) and UK. Entities in the Group regularly transact in currencies other than their
respective functional currencies ('foreign currencies'). The Group purchases products in these countries and other European
Union countries.
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:
Consolidated
US dollars
Euros
Pound sterling
New Zealand dollars
Singapore dollars
Malaysian ringgit
Swiss Franc
Chinese Yuan
Others
Assets
2019
A$'000
2018
A$'000
Liabilities
2019
A$'000
2018
A$'000
929
5,339
345
167
168
39
227
-
26
1,671
17,127
9,338
619
308
24
-
287
59
1,443
-
10,443
33
-
43
-
-
69
522
820
8,301
778
26
3
-
-
58
7,240
29,433
12,031
10,508
The Group had net liabilities denominated in foreign currencies of A$4,842,000 as at 30 June 2019 (2018: net assets of
A$18,925,000). Based on this exposure, had the Australian dollar weakened by 10% / strengthened by 10% (2018: 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$484,200 lower / higher (2018: A$1,893,000 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 2019 was A$692,000 (2018: A$1,408,000).
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.
73
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 29. Financial instruments (continued)
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through
the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative
across all customers of the Group based on recent sales experience, historical collection rates and forward-looking
information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
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 loans and overdrafts
Bank guarantees
Bank loans under interchangeable facilities
Consolidated
2019
A$'000
2018
A$'000
276
686
35
729
1,726
2,554
-
-
11,106
13,660
Remaining contractual maturities
Trade payables and other financial liabilities mainly arise from the financing of assets used in the Group's ongoing operations
such as plant and equipment and investments in working capital. These assets are considered in the Group's overall liquidity
risk.
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the balance sheet.
Consolidated - 2019
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing - fixed rate
Bank overdraft
Bank loans
Lease liability
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
A$'000
Between 1
and 5 years
A$'000
Over 5 years
A$'000
Remaining
contractual
maturities
A$'000
-
32,967
2.75%
2.92%
6.48%
13,137
5,200
20
51,324
-
-
-
-
-
-
-
-
-
-
32,967
13,137
5,200
20
51,324
74
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 29. Financial instruments (continued)
Consolidated - 2018
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing - variable
Bank overdraft
Bank loans
Lease liability
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
A$'000
Between 1
and 5 years
A$'000
Over 5 years
A$'000
Remaining
contractual
maturities
A$'000
-
31,982
2.75%
3.08%
7.20%
7,708
5,200
92
44,982
-
-
-
56
56
-
-
-
-
-
31,982
7,708
5,200
148
45,038
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 30. Fair value measurement
Fair value hierarchy
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices)
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Consolidated - 2018
Assets
Derivative financial instruments
Total assets
Level 1
A$'000
Level 2
A$'000
Level 3
A$'000
Total
A$'000
-
-
38
38
-
-
38
38
There were no transfers between levels during the financial year.
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts of trade
receivables and trade payables are assumed to approximate their fair values due to their short-term nature. The fair value of
financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is
available for similar financial instruments. Also, there is no material difference between the fair value of cash and cash
equivalents and the carrying amounts.
Valuation techniques for fair value measurements categorised within level 2
The fair value of the derivative financial instruments, being forward exchange contracts, are determined using quoted forward
exchange rates at the reporting date. These instruments are included in level 2.
75
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 31. Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2017
Net cash used in financing activities
Balance at 30 June 2018
Net cash used in financing activities
Balance at 30 June 2019
Bank loans
under
interchange-
able
facilities
A$'000
Bank
loans
A$'000
Finance lease
liability
A$'000
Total
A$'000
5,200
-
5,200
-
5,200
4,775
(4,775)
-
-
-
182
(38)
144
(124)
10,157
(4,813)
5,344
(124)
20
5,220
Note 32. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Consolidated
2019
A$'000
2018
A$'000
2,056
110
1,911
135
2,166
2,046
Key management includes directors (executives and non-executives) and key heads of departments.
During the financial year ended 30 June 2019 A$nil (2018: A$nil) performance rights were granted to members of key
management personnel under share-based payments plans operated by the Group as disclosed in note 39.
Note 33. Remuneration of auditors
Services provided by the company's auditors and network firms
During the year the company (including its overseas subsidiaries) obtained the following services from the company's
auditors, PricewaterhouseCoopers, at costs as detailed below:
Fees payable to the company's auditor and its associates for the audit of the consolidated
financial statements
Fees payable to the company's auditor and its associates for other services:
- the audit of the company's subsidiaries
- taxation services
- other non-audit services
Consolidated
2019
A$'000
2018
A$'000
258
102
142
44
546
228
193
111
598
1,130
76
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 34. Contingent liabilities
The Group issued bank guarantees through its banker, Hong Kong and Shanghai Banking Corporation, in respect of lease
obligations amounting to A$1,503,000 (2018: A$1,537,000).
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 (2018: NZ$150,000).
Note 35. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than five years
Lease commitments - finance
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing:
Finance lease liability - current (note 21)
Finance lease liability - non-current (note 23)
Consolidated
2019
A$'000
2018
A$'000
2,217
3,618
-
3,987
7,681
314
5,835
11,982
20
-
20
-
20
20
-
20
92
56
148
(4)
144
90
54
144
The Group leases office space, land and buildings and warehouses from non-related parties under non-cancellable operating
lease agreements. The leases have varying terms, escalation clauses and renewal rights.
The Group leases motor vehicle 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 vehicle held under finance leases are A$50,000 (2018: A$144,000) at the reporting date.
The company previously subleased some of its office and warehouse space to related and non-related parties. The subleases
have varying terms and expiry dates.
Note 36. Related party transactions
Parent entity
MySale Group Plc is the parent company of the Group.
Subsidiaries
Interests in subsidiaries are set out in note 37.
77
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 36. Related party transactions (continued)
The Group has utilised exemptions available to it to not report transactions with its 100% or majority owned subsidiaries that
are listed in note 37.
Key management personnel
Disclosures relating to key management personnel are set out in note 32.
Transactions with related parties
The following transactions occurred with related parties:
Sale of goods and services:
Sale of goods to other related party *
Payment for goods and services:
Purchase of goods from other related party *
Consolidated
2019
A$'000
2018
A$'000
381
509
6,483
7,679
*
Relates to related party transactions with Arcadia Group Ltd and Sports Direct.Com Retail Ltd. Arcadia Group Ltd is a
subsidiary of Shelton Capital. Mike Ashely is a shareholder in Sports Direct.Com Retail Ltd. Shelton Capital and Mike
Ashley were shareholders in MySale Group Plc during the course of the financial year.
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables:
Trade receivables from other related party
Current payables:
Trade payables to other related party
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Consolidated
2019
A$'000
2018
A$'000
-
294
488
840
78
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 37. 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
2019
%
Principal activities
Ownership
interest
2018
%
Parent
Non-controlling interest
Ownership
interest
2018
%
Ownership
interest
2019
%
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.
(Florence), via Di
Colle Ramole 11,
50023, Bottai, Italy
1107 S Boyle
Street, Los Angeles,
CA 90023, U.S.A
The Old Mill, 9 Soar
APAC UK
Lane, Leicester,
Procurement Co
Limited
England, LE3 5DE.
APACSale Limited The Old Mill, 9 Soar
BuyInvite Pty
Limited
Lane, Leicester,
England, LE3 5DE.
3/120 Old Pittwater
Road, Brookvale,
2100, Australia
Company 07640503
Limited (formerly
called Cocosa
Lifestyle Limited)
NZ Sale Limited
The Old Mill, 9 Soar
Lane, Leicester,
England, LE3 5DE.
25 Barrys Point
Road, Takapuna
Auckland 0632, NZ
Ozsale Pty Limited 3/120 Old Pittwater
Ozsale Sdn. Bhd.
Private Sale Asia
Pacific Pte Ltd
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
Trading company
100%
100%
Deregistered
100%
100%
Trading company
100%
100%
Trading company
100%
100%
Trading company
100%
100%
Trading company
100%
100%
Dormant
100%
100%
Trading company
100%
100%
Trading company
100%
100%
Trading company
100%
100%
Dormant
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 37. Interests in subsidiaries (continued)
Name
Simply Sent It Pty
Limited *
Singsale Pte. Ltd.
Brand Search Pty
Limited
Principal place of
business /
Country of
incorporation
3/120 Old Pittwater
Road, Brookvale,
2100, Australia
3 Fusionopolis Link
#02-08
Nexus@one-north,
Singapore
3/120 Old Pittwater
Road, Brookvale,
2100, Australia
Chic Global Limited The Old Mill, 9 Soar
BuyInvite NZ Pty
Limited
Click Frenzy
Australia Pty Ltd
NZ Wine Limited
My Trade Ltd
MySale Group
Limited
Handelsselskabet
(Invite to buy) *
Branch of Click
Frenzy Australia Pty
Ltd
Lane, Leicester,
England, LE3 5DE.
3/120 Old Pittwater
Road, Brookvale,
2100, Australia
3/120 Old Pittwater
Road, Brookvale,
2100, Australia
25 Barrys Point
Road, Takapuna
Auckland 0632, NZ
The Old Mill, 9 Soar
Lane, Leicester,
England, LE3 5DE.
Hong Kong
3/120 Old Pittwater
Road, Brookvale,
2100, Australia
1 September 2008
ApS, c/o Accura
Advokatpartnersels
kab Tuborg
Boulevard 1 2900
Hellerup, Denmark
Russia
3/120 Old Pittwater
Road, Brookvale,
2100, Australia
APAC France SARL France
3/120 Old Pittwater
Road, Brookvale,
2100, Australia
Parent
Ownership
interest
2019
%
Principal activities
Ownership
interest
2018
%
Non-controlling interest
Ownership
interest
2018
%
Ownership
interest
2019
%
Dormant
51%
51%
49%
49%
Trading company
100%
100%
Dormant
100%
100%
Dormant
100%
100%
Dormant
100%
100%
Dormant
100%
100%
Dormant
100%
100%
Dormant
100%
100%
Dormant
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Deregistered
60%
60%
40%
40%
Trading company
100%
100%
Dormant
-
100%
-
-
-
-
*
These subsidiaries have been consolidated as the Group has control over the partly owned.
Summarised financial information for subsidiaries that have non-controlling interests has not been provided as they are not
material to the Group.
80
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 38. (Loss)/earnings per share
2019
2019
2019
(Losses)/
Earnings
attributable to
owners of the
parent
A$'000
Weighted
average
number of
shares
Millions
2018
(Losses)/
Earnings
attributable to
owners of the
parent
A$'000
Weighted
average
number of
shares
Millions
(Loss)/
Earnings per
share
Cents
(Loss)/
Earnings per
share
Cents
2018
Restated
2018
Basic
Loss after tax before
exceptional items
Diluted
Loss after tax before
exceptional items
Exceptional items
Basic
Cost of sale of goods
(28,699)
154.3
(18.60)
7,121
154.3
4.61
(28,699)
154.3
(18.60)
7,121
154.3
4.61
(28,699)
(19,611)
154.3
-
(18.60)
(12.71)
7,121
-
154.3
-
4.61
-
Other operating gain/(loss), net
848
-
0.55
(1,950)
-
(1.26)
Sales, distribution and
administration expenses:
Selling and distribution
expenses
Administration expenses
Impairment of receivables
Impairment of assets
Income tax (expense)/benefit
Basic after exceptional items
Loss after tax after exceptional
items
Diluted after exceptional
items
Loss after tax after exceptional
items
(166)
(3,387)
(6,760)
(2,832)
(8,723)
-
-
-
-
-
(0.11)
(2.18)
(4.38)
(1.84)
(5.65)
-
(4,656)
-
-
(1,982)
-
-
-
-
-
-
(3.02)
-
-
(1.28)
(69,330)
154.3
(44.92)
(1,467)
154.3
(0.95)
(69,330)
154.3
(44.92)
(1,467)
154.3
(0.95)
Underlying EBITDA per share
(18,848)
154.3
(12.21)
9,730
154.3
6.30
2,580,543 (2018: 8,047,850) employee long-term incentives have been excluded from the 2019 diluted earnings calculation
as they are anti-dilutive for the year.
Note 39. 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.
81
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 39. Share-based payments (continued)
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:
2019
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
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
2018
£2.26
£0.51
£0.51
£0.53
£0.65
£0.65
£1.15
£1.15
111,499
1,697,815
290,533
3,000,000
1,868,982
358,693
449,314
271,014
8,047,850
-
-
-
-
-
-
-
-
-
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
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
Expired/
forfeited/
other
Balance at
the end of
the year
(111,499)
(657,617)
(128,326)
(3,000,000)
(849,537)
-
(449,314)
(271,014)
(5,467,307)
-
1,040,198
162,207
-
1,019,445
358,693
-
-
2,580,543
Expired/
forfeited/
other
Balance at
the end of
the year
-
(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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The weighted average remaining contractual life of the share plan outstanding at the end of the financial year was 2 years
(2018: 4 years).
The share-based payment expense for the year was a benefit of A$1,036,000 (2018: an expense of A$878,000). There is a
benefit in the current year mainly due to vesting conditions for the FY 18 grant not being met so all the related options were
forfeited. The benefit is also a result of the leavers in the restructure and the resignation of the previous Chairman resulting
in their respective options being forfeited.
82
MySale Group Plc
Notes to the financial statements
30 June 2019
Note 40. Events after the reporting period
In September 2019, the Group finalised a share placement for A$23,329,000. Net proceeds after considering the share issue
costs of A$708,000 was A$22,621,000. The total number of new shares issued under the placement was 640,376,083
bringing the total shares on issue to 794,707,735. As part of the share placement, the Group agreed with its financier Hong
Kong and Shanghai Banking Corporation Plc (‘HSBC’) to extinguish all borrowing facilities, Corporate Guarantees and
Indemnities with a repayment of A$10,914,000 in September 2019. As part of this repayment HSBC agreed to provide the
Group with a debt forgiveness amount of A$7,753,000.
On 13 November 2019, the business entered into a leasing agreement for a new warehouse in Australia. The agreement
involves the surrender of the existing warehouse lease including the waiving of any make good provision and no early
termination charges being applied on the existing warehouse lease surrender. The agreement also includes an upfront cash
incentive payment to cover the relocation costs. The new warehouse is less than 75% of the area of the current facility and
aligns with the business's strategy of selling down ‘ownbuy’ inventory and operating an inventory light business. The lease
is for 6 years and includes a break clause after 3 years which is roughly in line with the current warehouse lease period end.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
83
MySale Group Plc
Parent balance sheet
30 June 2019
Fixed assets
Tangible assets
Investment in subsidiaries
Deferred tax
Total fixed assets
Current assets
Debtors - amounts falling due within one year
Total current assets
Current liabilities
Creditors - amounts falling due within one year
Bank overdraft and lease liability
Total current liabilities
Net current assets/(liabilities)
Total assets less current liabilities
Net assets
Equity
Called up share capital
Share premium account
Other reserves
Accumulated losses
Total equity
Note
2019
A$'000
2018
A$'000
4
5
6
7
8
-
35,287
600
35,887
135
162,771
590
163,496
367
367
24,917
24,917
426
10,310
10,736
1,023
7,785
8,808
(10,369)
16,109
25,518
179,605
25,518
179,605
9
10
11
-
306,363
(124,676)
(156,169)
-
306,363
(123,712)
(3,046)
25,518
179,605
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 Standards, comprising FRS 101 "Reduced
Disclosures Framework" 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 2019 of A$153,123,000 (2018: A$1,186,000).
The financial statements of MySale Group Plc (company number 115584 (Jersey)) were approved by the Board of Directors
and authorised for issue on 4 December 2019. They were signed on its behalf by:
______________________ __________________________
Carl Jackson Charles Butler
Director Director
The above balance sheet should be read in conjunction with the accompanying notes
84
MySale Group Plc
Parent statement of changes in equity
30 June 2019
Share
premium
account
A$'000
Other
reserves
A$'000
Accumulated
losses
A$'000
Total equity
A$'000
Balance at 1 July 2017
306,363
(125,490)
(1,860)
179,013
Loss after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based payments
-
-
-
-
-
900
900
878
(1,186)
-
(1,186)
900
(1,186)
(286)
-
878
Balance at 30 June 2018
306,363
(123,712)
(3,046)
179,605
Share
premium
account
A$'000
Other
reserves
A$'000
Accumulated
losses
A$'000
Total equity
A$'000
Balance at 1 July 2018
306,363
(123,712)
(3,046)
179,605
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 for parent entity employees
Share-based payments for other Group employees
-
-
-
-
-
-
72
(153,123)
-
(153,123)
72
72
(153,123)
(153,051)
(363)
(673)
-
-
(363)
(673)
Balance at 30 June 2019
306,363
(124,676)
(156,169)
25,518
The above statement of changes in equity should be read in conjunction with the accompanying notes
85
MySale Group Plc
Directors’ responsibility statement
30 June 2019
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 Company's 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 operation 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 4 December 2019.
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.
The following Accounting Standards and Interpretations are most relevant to the Company:
IFRS 9 Financial Instruments
The Company has adopted IFRS 9 from 1 July 2018. The standard introduced 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 that are solely principal and
interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business
model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that
are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are 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 or contingent consideration recognised in a
business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be
irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting
mismatch. For financial liabilities designated at fair value through profit or loss, 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 use an 'expected credit loss' ('ECL') model to
recognise an allowance. Impairment is measured using 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. For
receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.
The Company has fully impaired the inter-company debtor as at 30 June 2019 therefore there is not further expectation of
material impact from the adoption of this standard.
86
MySale Group Plc
Notes to the parent financial statements
30 June 2018
IFRS 15 Revenue from Contracts with Customers
The Company has adopted IFRS 15 from 1 July 2018. The standard provides a single comprehensive model for revenue
recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised
goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a
measurement approach that is based on an allocation of the transaction price. This is described further in the accounting
policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with
customers are 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.
Due to the nature of the Company's revenue sources there was no impact from the adoption of this standard in the current
reporting period.
Impact of adoption
IFRS 9 and IFRS 15 were adopted using the transitional rules under the modified retrospective approach and as such
comparatives have not been restated. The impact of adoption on opening accumulated losses as at 1 July 2018 was A$nil.
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 Standards, comprising FRS 101 "Reduced
Disclosures Framework" 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 2019 of A$153,123,000 (2018: A$1,186,000). The
significant increase in the loss during the year is due to the investment write down by $127,484,000. Refer to note 5 for
further details.
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.
87
MySale Group Plc
Notes to the parent financial statements
30 June 2018
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. The Company is not required to pay Jersey tax as it is not a Jersey tax resident.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the reporting date
where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future
have occurred at the reporting date. Timing differences are differences between the Company’s taxable profits and its results
as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different
from those in which they are recognised in the financial statements. A net deferred tax asset is regarded as recoverable and
therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there
will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred
tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected
to reverse, based on tax rates and laws that have been enacted or substantively enacted by the reporting date. Deferred tax
is measured on a non-discounted basis. The taxation liabilities are reduced wholly or in part by the surrender of tax losses
by fellow group undertakings for which payment is made.
Cash at bank and in hand
Cash at bank and in hand includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Debtors
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
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.
Investments and other financial assets
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business
model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the financial
asset represent contractual cash flows that are solely payments of principal and interest.
Investments in subsidiaries are shown at cost less any provision for impairment.
88
MySale Group Plc
Notes to the parent financial statements
30 June 2018
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.
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.
89
MySale Group Plc
Notes to the parent financial statements
30 June 2018
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 2019. 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 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.
The Company does not have any lease commitments as at 30 June 2019 as described in note 13. There is no expectation
to renew or acquire any new leases. As such, the adoption of this new standard is not expected to have any impact in the
next reporting period.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Judgements:
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.
Estimates:
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit
loss rate for each group. These assumptions include recent sales experience and historical collection rates.
90
MySale Group Plc
Notes to the parent financial statements
30 June 2018
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
Note 5. Fixed assets - investment in subsidiaries
Investment in APAC Sale Group Pte. Ltd. - at cost
Investment in Ozsale Pty. Ltd. - at cost
2019
A$'000
2018
A$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
74
(57)
17
18
(13)
5
105
(81)
24
121
(32)
89
135
2019
A$'000
2018
A$'000
23,539
11,748
106,403
56,368
35,287
162,771
A detailed list of subsidiaries is detailed within note 37 to the consolidated financial statements.
During the year, the investment in both subsidiaries was written down based on the Value in Use calculation resulting in an
impairment of $127,484,000 which was recognised in profit or loss for the year ended at 30 June 2019.
91
MySale Group Plc
Notes to the parent financial statements
30 June 2018
Note 6. Current assets - debtors - amounts falling due within one year
Other receivables
Amounts owed by other group undertakings
Sales tax receivable
2019
A$'000
2018
A$'000
300
-
67
367
213
24,704
-
24,917
Allowance for expected credit losses
The Company has recognised a loss of $26,361,000 in profit or loss in respect of impairment of receivables to write off the
total amount of related parties debtors for the year ended 30 June 2019 (2018: $nil).
Note 7. Current liabilities - Creditors - amounts falling due within one year
Trade payables
Accruals
Sales tax payable
Note 8. Current liabilities - bank overdraft and lease liability
Bank overdraft
Finance lease liability
Note 9. Equity - called up share capital
2019
A$'000
2018
A$'000
16
410
-
426
140
400
483
1,023
2019
A$'000
2018
A$'000
10,310
-
7,708
77
10,310
7,785
2019
Shares
2018
Shares
2019
A$'000
2018
A$'000
Ordinary shares £nil each - issued and fully paid
154,331,652 154,331,652
-
-
Authorised share capital
200,000,000 (2018: 200,000,000) ordinary shares of £nil each.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion
to the number of and amounts paid on the shares held.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
92
MySale Group Plc
Notes to the parent financial statements
30 June 2018
Note 10. Equity - other reserves
Foreign currency reserve
Share-based payments reserve
Capital reorganisation reserve
2019
A$'000
2018
A$'000
2,839
5,241
(132,756)
2,767
6,277
(132,756)
(124,676)
(123,712)
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$132,756,000.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Foreign
currency
A$'000
Share-based
payments
A$'000
Capital
reorganisation
A$'000
Balance at 1 July 2017
Foreign currency translation
Share-based payments
Balance at 30 June 2018
Foreign currency translation
Share-based payments for parent entity employees
Share-based payments for other Group employees
1,867
900
-
2,767
72
-
-
5,399
-
878
6,277
-
(363)
(673)
(132,756)
-
-
(132,756)
-
-
-
Total
A$'000
(125,490)
900
878
(123,712)
72
(363)
(673)
Balance at 30 June 2019
2,839
5,241
(132,756)
(124,676)
Note 11. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax benefit for the year
Accumulated losses at the end of the financial year
Note 12. Contingent liabilities
The Company had no contingent liabilities as at 30 June 2019 and 30 June 2018.
2019
A$'000
2018
A$'000
(3,046)
(153,123)
(1,860)
(1,186)
(156,169)
(3,046)
93
MySale Group Plc
Notes to the parent financial statements
30 June 2018
Note 13. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
2019
A$'000
2018
A$'000
-
-
-
480
31
511
The Company leased office space from non-related parties under a non-cancellable operating lease agreement. The leases
have already expired.
Note 14. Remuneration of auditors
Services provided by the Company's auditors and network firms
During the year the Company obtained the following services from the Company's auditors, PricewaterhouseCoopers, at
costs as detailed below:
2019
A$'000
2018
A$'000
Fees payable to the Company's auditor and its associated for the audit of the financial
statements
258
228
Note 15. Events after the reporting period
In September 2019, the Company finalised a share placement for A$23,329,000. Net proceeds after considering the share
issue costs of A$708,000 was A$22,621,000. The total number of new shares issued under the placement was 640,376,083
bringing the total shares on issue to 794,707,735. As part of the share placement, the Company agreed with its financier
Hong Kong and Shanghai Banking Corporation Plc (‘HSBC’) to extinguish all borrowing facilities, Corporate Guarantees and
Indemnities with a repayment of A$10,914,000 in September 2019. As part of this repayment HSBC agreed to provide the
Company with a debt forgiveness amount of A$7,753,000.
No other matter or circumstance has arisen since 30 June 2019 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.
94
MySale Group plc
Registered Number 115584
Notice of Annual General Meeting
Notice is hereby given that the sixth 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 30 December 2019 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 2019
To receive the Company’s Annual Report and Accounts for the financial year ended 30 June 2019 together with the
Reports of the Directors and Auditor thereon.
2. Appointment of the auditor
To appoint BDO LLP as auditor of the Company, to hold office from the conclusion of this meeting until the conclusion
of the next annual general meeting of the Company, and to authorise the Directors to fix the remuneration of the auditor.
3. Re-election of Directors – Carl Jackson
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. Re-election of Directors – Charles Butler
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 40 million Shares, being approximately 5% of the Company's issued Shares as at close of business
on 5 December 2019, being the latest practicable date before publication of this notice,
provided further that such power shall expire at the conclusion of the Company’s next Annual General Meeting or fifteen
months following the passing of this resolution, whichever is the sooner, unless previously revoked, varied or renewed
by the Company in general meeting (save that the Company may before such expiry make an offer or agreement which
would or might require Shares to be allotted after such expiry and notwithstanding such expiry the Directors may allot
Shares in pursuance of such offer or agreement).
For the purposes of the authority in paragraph 5(a) above, “rights issue” means an offer to: (i) holders (other than the
Company) on the register on a record date fixed by the Directors of Shares in proportion (as nearly as may be
practicable) to their existing holdings; and (ii) other persons so entitled by virtue of the rights attaching to any other
equity securities held by them, but subject in both cases to such exclusions, restrictions or other arrangements as the
Directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates or legal,
regulatory or practical problems in, or under the laws of, any territory.
BLAW-39939030-1
95
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 80 million Shares, being approximately
10% of the Company's issued Shares as at close of business on 5 December 2019, 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:
a)
the maximum aggregate number of Shares hereby authorised to be purchased is 80 million, (representing
approximately 10% of the total number of Shares in issue as at close of business on 5 December 2019, being
the latest practicable date before publication of this notice);
b)
the minimum price which may be paid for a Share is £0.01 each;
c)
the maximum price which may be paid for a Share is an amount equal to the higher of:
i. 5% above the average of the middle market quotations for such shares taken from the AIM Appendix
of The London Stock Exchange Daily Official List for the five business days immediately preceding the
day on which the purchase is made; and
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
6 December 2019
BLAW-39939030-1
96
Notes to the Notice of Annual General Meeting
1 Record Date
Shareholders registered in the Register of Members of the Company as at 19.30 Australian Eastern Daylight
Time (AEDT) (08.30 GMT) on 24 December 2019 (or, in the event of any adjournment, a time which is 48 working
hours 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 this time (as
applicable) will be disregarded in determining the rights of any person to attend or vote at the AGM.
2 Attendance at the AGM
The Company’s sixth AGM will be held at 19.30 Australian Eastern Daylight Time (08.30 GMT) on 30 December
2019. However, shareholders should note that votes may only be cast in person, by proxy or by corporate
representative at the venue of the AGM.
3
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 24
December 2018, being 48 working hours before the time appointed for the holding of the AGM. Where the AGM
is adjoined for less than 28 days but more than 48 hours, the Form of Proxy shall be delivered not less than 24
hours before the time appointed for the holding of the adjourned meeting. Where the AGM is adjourned for not
more than 48 hours, the Form of Proxy shall be delivered at the adjourned meeting to the chairman or the
secretary or to a director of the Company.
4 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.
5 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
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(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 24 December 2019 (or in the case of an adjourned meeting, received not less than 48 hours before the
time for holding the adjourned meeting). 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.
6
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 5 December 2019, being the latest practicable
date prior to the publication of this Notice, the Company had 794,707,735 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, “MySale Group Trustee Limited” and all voting rights in those shares have been waived. Therefore, the
total voting rights in the Company as at 5 December 2019 are 791,707,735.
7
Voting at the AGM
In order for the voting preferences of all shareholders to be taken into account, and not only those who can
physically attend, the Company will conduct a poll vote on all resolutions put to the AGM. As soon as practicable
following the meeting, the results of voting at the meeting and the numbers of proxy votes cast for and against
each resolution, together with the number of votes actively withheld will be announced to the market via a
Primary Information Provider and also placed on the 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.
8 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.
9
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.
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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 each resolution.
1
Report and Accounts
The Companies (Jersey) Law 1991 as amended requires the Directors of a public company to lay its Annual
Report and Accounts, together with a copy of any auditor’s report on them, before a general meeting of the
shareholders. An ordinary resolution to receive the Annual Report and Accounts will be proposed.
2
Appointment of the Auditor and Auditor’s Remuneration
Shareholders are required to appoint the external auditor at the AGM to hold office until the conclusion of the
next annual general meeting. Following a detailed review, the Board is proposing to appoint BDO LLP as
external auditor. BDO LLP have expressed their willingness to act as external auditor. 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 & 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
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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 5 December 2019, 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 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.
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Perivan 257149