| MySale Group Plc |
| Preliminary results for financial year to 30 June 2018 |
MySale Group plc (AIM: MYSL) ('the "group''), the leading international online retailer, is pleased to announce its audited preliminary results for the year to 30 June 2018.
| Year to 30 June (A$ million) | FY18 |
| FY17 |
| change |
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| Revenue | 292.2 |
| 268.4 |
| +9% |
| Gross Profit | 85.7 |
| 76.0 |
| +13% |
| Gross Margin | 29.3% |
| 28.3% |
| +100 bp |
| Underlying1 EBITDA | 11.8 |
| 8.7 |
| +36% |
| Underlying profit before tax | 4.9 |
| 3.3 |
| +50% |
| Reported loss before tax | (1.7) |
| (1.6) |
| -9% |
| Underlying basic earnings per share (cents) | 4.3 |
| 2.5 |
| +70% |
Strategic and Operational highlights
· Active customer base increased 9% to 1.0 million
· Continued focus on activating customers with higher lifetime-value
· Strategic plan to increase own-buy inventory delivered at 23% of online revenue
· Gross margins increased by 100bps
· Further brand partnerships result in over 1.2 million SKUs2 online
· Endless Aisle, including our full-price offer, continues to grow
· Key online customer metrics improved
§ average order value increased 5% to A$91
§ order frequency per customer increased 4% to 3.5x per annum
§ items per basket increased 4% to 3.4 items
· Product returns rate remains at industry-leading level of just 5%
Technology highlights
· Data-driven proprietary technology platform fully deployed
§ supporting online revenue increase and cost reductions
· Recent innovations continue to enhance customer engagement:
§ Increasing uptake of Ourpay - our proprietary 'buy-now, pay-later' payments system
§ Launch of Select, our subscription delivery service
· Mobile sits at the heart of customer interactions, representing 60% of orders
· Cumulative app downloads have reached 7.4 million
Outlook
· Current year trading in line with expectations
· The Board expects FY19 trading and underlying EBITDA to be in line with market forecasts
Carl Jackson, Chief Executive Officer commented;
''We are very pleased to deliver another set of record results, with significant increases in both our sales and profit performance for the year, demonstrating the strategic progress we have made to harness our technology platform, increase customer engagement and drive growth.
"We continue to provide a compelling online retail offer to our global customer base with unrivalled value combined with excellent choice across a number of attractive brands as well as a great user experience across all platforms, particularly mobile, where the majority of our sales are made. Our customer offer was further enhanced this year through the growth of Ourpay, our proprietary 'buy-now, pay-later' solution, and the launch of Select, our delivery subscription service, which have both been very popular with users. We continue to explore the commercialisation opportunities for Ourpay and anticipate launching the first test with an external partner imminently.
"Through targeted investment, customer engagement has improved with increases in average order values, basket size and order frequency. At the same time, we continue to deliver the integrated inventory solutions and new sales channels that our international brand partners require, which are becoming all the more relevant given the structural shift to online across the retail sector generally.
''We aim to build on these foundations in the current year. Our online platform has been strengthened and will deliver even greater efficiency and lower unit costs moving forward.
''While it is early in the current year, and our peak trading period lies ahead, trading to date has been in line with expectations and the board expects that underlying EBITDA for the year will be in line with market forecasts.''
The information contained within this announcement is deemed to constitute inside information for the purposes of article 7 of the Market Abuse Regulation (EU) no. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain
1 Underlying: is the group's EBITDA, profit after tax expense or earnings per share calculated having excluded certain expenditure of a one-off, non-trading or non-cash nature in order to allow clearer understanding of the underlying performance of the year. Full details are contained within Note 6 to the financial statements. EBITDA: earnings before interest, taxation, depreciation and amortisation
2 Stock Keeping Unit
Enquiries:
| MySale Group plc |
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| Carl Jackson, Chief Executive Officer | +61 (0) 414 817 843 |
| Graeme Burns, Investor Relations | +44 (0) 777 585 4516 |
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| Zeus Capital Limited (Nominated Adviser & Joint Broker) | +44 (0) 20 3829 5000 |
| Nick Cowles/Andrew Jones, Corporate Finance Benjamin Robertson, Corporate Broking |
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| N+1 Singer (Joint Broker) | +44 (0) 20 7496 3000 |
| Mark Taylor |
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| MHP Communications (Financial PR Adviser) | +44 (0) 20 3128 8570 |
| Simon Hockridge Giles Robinson Pete Lambie |
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About MySale Group
MySale is a leading international online retailer with established retail websites in Australia, New Zealand, South-East Asia and the United Kingdom. Founded in 2007, the Group provides customers with access to outstanding brands and products at discounted prices whilst simultaneously providing brand partners unique international inventory and sales solutions.
The Group provides a flexible marketplace solution in ANZ, SE Asia and the UK for domestic and international brands The Group offers a number of solutions for brands including 1P, 3P [strategic partners, managed and self-managed] The core product categories are womenswear, menswear, footwear, sports, health & beauty, homewares, technology and personalised gifts
Customers' shopping experiences are enhanced by the Group's deployment of leading edge technology to ensure personalised and localised product offerings. The customer experience has been at the heart of the Group's technology development since the earliest days and now mobile commerce is the Group's main sales channel. Proprietary technology innovations deployed include the Ourpay 'buy-now, pay-later' solution which has proved popular with over 130,000 customers using the solution.
The Group's online sales are supported by a robust and flexible network of in-house supply chain infrastructure and technology that enables MySale to offer products from around the world for sale and delivery to customers in each territory.
As a result of these exceptional capabilities in inventory management and international sales MySale has built an enviable portfolio of over 2,500 brand partners from whom products are sourced.
The Group operates websites under a number of different brands all of which operate on a uniform technology platform and a single international logistics infrastructure.
The Group operates 24 websites in eight countries; OzSale and BuyInvite in Australia; NzSale in New Zealand; SingSale in Singapore; MySale in Malaysia, Thailand, the Philippines, the United Kingdom and Hong Kong, and Cocosa in the United Kingdom, Australia and New Zealand; whilst the Group's retail websites are Deals Direct, OO.com and Top Buy in Australia and Identity Direct in Australia and New Zealand.
Chairman's statement
I am delighted to report that the group has followed up on the strong results seen in FY17 and delivered another year of record financial performance, while making further positive progress on our strategic objectives.
Our strategic focus over the last three years has resulted in significant improvements in the top and bottom lines. Over the past 12 months, the group delivered 9% growth in revenues to A$292 million, with an increase in gross profit of 13% to A$86 million and underlying EBITDA rose 36% to A$11.8 million.
We strive to provide the best possible service and value to our customers and have made further encouraging progress on this front, as demonstrated by our improved customer metrics. In the last 12 months we have continued to attract new customers to our offer, and those that transact with us continue to be extremely loyal and engaged with our online retail proposition, with high levels of repeat purchase activity.
Digital remains at the heart of our proposition and we have focused on ensuring that our user experience is both easy and convenient for customers, while fulfilling the needs of our brand and retail partners. In support of this, our new technology platform has really achieved a step change over the past year, providing the flexibility and scalability that underpins all of our strategic objectives.
While our technology platform supports our objectives, it is our team of dedicated staff that deliver these key outcomes. As such, I wish to record the board's appreciation of all our people who strive tirelessly around the globe every day, with impressive application and ingenuity, to deliver world class service to our customers and brand partners.
In the current year we will continue to leverage our strengths, particularly in the ANZ region, to expand the number of local and international brand partners and further extend our full price offering within Endless Aisle. As ever, the group's ability to provide customised sales solutions to our brand partners is a key aspect of how we support them.
We are confident that these initiatives will continue to support ongoing profitable growth and we remain very positive about the future prospects of the group.
_____________________________
Iain McDonald
Chairman
8 October 2018
Review of operations by the Chief Executive Officer
Over the past 12 months, MySale has delivered another record year of growth and improved financial performance, with the group well positioned to continue this positive trend into the new financial year.
We continue to make excellent progress against our strategic initiatives, with a focus on;
· providing our customers with exceptional value, brands, choice and service;
· excellence in delivering unique sales channels and world-class inventory management to brand partners;
· leveraging the significant strength and efficiency of our proprietary technology platform and international logistics network.
The group's active customer base increased by 9% in the period, with revenue growing 9% to A$292.2 million (FY17: A$268.4 million). Meanwhile, our customer engagement continued to grow underpinned by our customer-focused digital innovations including Ourpay and Select, which further enhanced our customer offer during the year.
The group's strategic focus remained in growing gross profits rather than revenue. Again, we made further progress here, delivering an increase in gross profit of 13% to A$85.7 million (FY17: A$76.0 million) and a 100 bp increase in gross margin to 29.3% (FY17: 28.3%).
This represents the group's third successive year of increasing revenue, gross profit and gross margin.
| Revenue and Margin by segment | |||||||||
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| FY18
| Growth vs FY17 | FY17
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| A$ million | Revenue | Gross profit | GP% | Revenue | Gross profit | GP Bp | Revenue | Gross Profit | GP% |
| Group | 292.2 | 85.7 | 29.3% | +9% | +13% | +100 | 268.4 | 76.0 | 28.3% |
| ANZ | 242.4 | 72.9 | 30.1% | +9% | +11% | +40 | 221.5 | 65.7 | 29.7% |
| S-E Asia | 33.4 | 8.9 | 26.7% | -1% | +10% | +290 | 33.8 | 8.1 | 23.8% |
| ROW | 16.5 | 3.8 | 23.5% | +26% | +67% | +580 | 13.1 | 2.3 | 17.7% |
Underlying EBITDA also increased for the third successive year, growing a further 36% to A$11.8 million (FY17: A$8.7 million) as a result of the improved trading together with careful management of the cost base.
This positive performance represents another step forward on the group's path of profitable growth, driven by our clear plan to grow online activity;
· securing more, higher lifetime-value, customers, via better localised merchandising and pricing;
· increasing the proportion of own-buy (1P) inventory while reducing delivery promotions; and
· deploying our technology platform to improve customer engagement and increase efficiency.
This strategic plan, established in 2015, re-focused the business on its core aims of providing exceptional value to customers in branded products alongside exceptional inventory management solutions to brand partners within the group's three core territories.
During the period, and across all territories, the group continued to dedicate its marketing resources and spend almost exclusively into measurable, digital channels to attract and engage both new and existing customers. The ongoing communication programme has seen those loyal and engaged customers spend move frequently (increase 4% to 3.5 times per year on average), and with transaction KPI's such as average order value and basket size also increasing 4% to A$91 and 3.4 items respectively.
Total underlying operating expenses increased 9% to A$73.9 million (FY17: A$67.4 million) reflecting the increased activity and volumes of trade during the year. The group made a planned investment into additional marketing with a 20% increase to 7.5% of revenue to support long term growth in the customer base.
Moving forward, we anticipate that our technology platform will be key to unlocking further operational efficiencies and reducing costs.
In the new financial year, we are already seeing the benefits that increased automation technology can bring, specifically in terms of lower staff costs, and we anticipate that our enhanced system will deliver additional future savings across buying, merchandising, marketing and logistics.
Technology Development
During the year, the group maintained capital expenditure levels with the previous year, as planned, in order to further develop its proprietary technology capabilities. Following the release of a new and enhanced version of the group's technology platform late in FY17, this year's developments leveraged the capability now available within the group. This included more flexible and scalable functionality which supports our key objectives of increasing online revenue and using efficiency gains to decrease costs.
The group's marketplace-enabled platform allows full integration across every one of the group's sales channels, with all of the group's global portfolio of websites operating from a single platform. Through this, the group now benefits from a single live view of global inventory, which allows both 1P (owned) and 3P (consignment or drop-ship) products to be sold by any of our websites simultaneously.
Similarly, the platform can provide a single live view of each customer and their individual journeys allowing us to better serve their needs across all websites and mobile device apps. The mobile buyer remains at the heart of our customer journey and this channel accounted for 60% of orders received in the past year.
A key element of this technology development has been to enhance the group's data capabilities through better collection and analysis, improved machine learning and automation, which in turn is driving improved customer experiences, increased revenue and more efficiency. The platform allows for campaigns to be launched faster and more efficiently as well as providing seamless user interaction across all devices. These developments provide a step change in capability which will support further growth across the group in future.
In the prior year, the group launched its proprietary programme Ourpay, a 'buy-now, pay-later' programme which allows customers easy budgeting and seamless integration with their shopping journey. This instalment payment option helps customers manage their finances and has been shown to increase both the spend and shopping frequency of those customers joining the programme. Since its launch, this programme has proved popular with customers - more than 130,000 have now used it successfully - with those customers displaying higher average order values and buying frequency.
This payment solution was developed in-house in order to deliver a more flexible, cost-efficient and integrated system, which is better suited to the group's requirements than that provided by third parties. The system automates all aspects of the programme including credit scoring and monitoring; on which the group has adopted a conservative policy. At the year end the receivables balance associated with Ourpay was A$3.8 million and is anticipated to grow as transaction volumes increase. The group is assessing further opportunities to expand the reach of Ourpay and create additional commercial benefits. The launch of a test period with the first external retail partner is anticipated in October 2018.
Following the success of Ourpay, in FY17 the group launched Select, our new subscription delivery service, which allows regular customers to access reduced delivery costs in the period under review. This has also been popular, with more than 30,000 subscriptions purchased by the end of the year.
These specific digital innovations are part of the group's process of continual improvement in our customer experience, enhancing customer loyalty while giving the group better insights into our customers' needs and preferences.
Marketplace
The group's technology platform facilitates our intelligent marketplace and allows direct integration with brands and retailers providing them with access to all of our retail websites, whether that be as part of supporting an inventory management or providing a brand with a new retail channel.
During the period, we invested more time and funds into product selection to ensure customers have the best possible choice available. As a result, our marketplace platform has seen a huge increase in the SKU available in its first full year; increasing over four times to over 1.2 million. The group intends to further extend this product range, allowing brands partners to integrate directly or via third parties.
In addition, as we now have a live feed of global inventory to all websites, the group has been able to extend the length of time products are available and merchandised to customers. We call this Endless Aisle which refers to this incredible shopping selection our platform is now able to offer consumers.
Our marketplace operates with customers' mobile experience at its heart and is also simple and intuitive for vendors to use which allows us to efficiently support our brand partners and their sales ambitions.
Increasingly brands are using marketplace solutions to support their international sales as it provides local knowledge, existing audiences, and a cost-effective launch in a new territory. Due to the single global platform, our brand partners are able to offer their products seamlessly to multiple territories rather than be restricted to a single territory as is common with other platforms.
Brands and Strategic Partnerships
Following the notable strategic partnerships launched in FY17 in the period under review the group increased the number of brand partners listing on the marketplace platform to 2,000, which has driven the substantial increase in the number of SKU's available to customers.
The majority of the increased product selection has come from relationships with 3P suppliers, on which the group does not take any inventory risk as the terms of business are on a consignment or dropship basis. However, we have also successfully increased the proportion of 1P product on our sales channels as this supports product selection, brand curation and overall service proposition for customers. This reached 23% of sales during the period and the group expects that this proportion will continue to increase again in FY19, with a target to reach 25-30% of the sales mix in the medium-term.
Whilst the vast majority of goods sold are still done so on a consignment or drop-ship basis, this 1P strategy supports deeper relationships with brand partners, slightly higher gross margins and provides our customers with a wider product selection and faster delivery times. The group's 1P activity is focused on staple, high quality branded goods where the data supports strong engagement with our customers. This element of our consumer offer is continually improving as it has evolved from a focus on off-price inventory to a more customer-led, data-driven and planned retail solution with more continuity lines.
Our partnerships with flagship retail brands continue to provide a strong endorsement of the group's capabilities in supporting brands in establishing new sales channels as well as in inventory management. The retail landscape is undergoing continued structural change and large brands increasingly recognise the benefits that more integrated inventory partnerships can bring to their operations.
The group's well established international network, flexible and scalable technology platform and resources in key territories make it an ideal partner for international brands and retailers. Our platform allows us to customise our integration with any brand, thus delivering a tailored solution to their requirements.
Operations
During the year, the group's highly efficient platform processed record numbers of transactions, underlining the efficient processes and systems that the group has in place to support brands and serve customers. On average, over the past 12 months more than 40,000 new products were launched daily and over 11 million units were shipped in the year. Positively, customer returns remain at industry leading levels of just 5% overall.
The material progress in establishing the marketplace platform has allowed the group to unlock further operational efficiencies in the period. For example, through increased automation, certain internal functions have been downsized and in some instances outsourced, leaving the group as a leaner and more focused organisation. Having bedded in the new platform throughout the business during FY18 a comprehensive cost reduction programme commenced before the period end, the benefits of which will steadily increase across the FY19 financial year.
Australia & New Zealand (ANZ)
The group's largest operating segment had another year of increased revenues, gross profit and customer volumes. Gross profit increased by 11% to A$72.9 million (FY17: A$65.7 million) while revenue grew 9% to A$242.4 million (FY17: A$221.5 million). Gross Margin rose to 30.1% (FY17: 29.7%).
Our localised offer and strong merchandising continued to resonate with our customer base in the period, with a 4% improvement in our main customer KPIs of average order value, frequency and basket size.
The scale of our operations in this region, combined with our strong position in the online retail landscape, represent significant strengths and opportunities the group. The group plans to focus on developing these further in the new financial year, actively looking to expand the breadth and depth of our online and sales channels in this region, to fully leverage our customer base, physical resource, buying power and expertise. These strengths will be deployed to the benefit of both domestic and international brands using our off-price retail heritage and increasingly the full-price selection our customers seek from us.
The group's retail marketplace has its largest presence in ANZ and is an opportunity to significantly increase the group's addressable market in the region. The group is one of the pre-eminent online retailers in ANZ and has further attractive growth possibilities due to both the lower levels of internet penetration, in comparison to territories such as the UK and the USA, and this region's relative lack of off-price retailers.
In ANZ the group has a small network of physical outlets, part of our offline activities, which is used both to clear the group's own surplus inventory and returns via that offline channel. It's planned that the number of outlets will reduce in FY19 to focus this activity into fewer, more profitable, sites.
In total the outlet and wholesale, which constitute our offline activities represented c 12% of revenue (FY17: 11%). The wholesale syndication activity has been very productive over the last two financial periods as it supported the strategic initiatives to build partnerships, increase the own-buy (1P) element of the sales mix and prove the group's marketplace model to partners. Having achieved these aims the group plans to reduce the weighting of wholesale syndication activity which shall bring a number of its own benefits namely; cost efficiency gains and accretion in the underlying EBITDA margin together with a reduction in trade receivable balances with the associated increase in cash inflows.
South-East Asia
During the period South-East Asia saw gross profit grow 10% to A$8.9 million (FY17: A$8.1 million) as margin improvement was prioritised over revenue growth. Gross Margin increased by 280 bps to 26.7% following a revised pricing policy, while revenue remained flat at A$33.4 million (FY17: A$33.8 million). The continued growth in profitability has been driven by the group's localisation plan which ensures that merchandising, pricing, payment and shipping solutions are all tailored to the needs of local consumers.
In this region the strategy has been to grow the active customer base, so acquisition marketing is a priority to build gross profitability and leverage this increasing scale by using resources more efficiently and achieving lower shipping rates. With a more profitable local model now established and an enviable position within the South-East Asian e-commerce market, the region is an important element of the group's long-term profitable growth.
In the medium to long term this region is anticipated to be increasingly significant as the group grows its customer base and demand for branded products, particularly European and USA brands, continues to increase. With a substantial addressable population, increasing disposable income, lack of off-price competition and high mobile penetration this region is well served by the group's strong value, branded sales offer and exceptional mobile commerce capability.
Rest of World
This territory comprises the group's operations within the UK, which trades predominately under the Cocosa brand and which provides customers with compelling value in premium branded products.
The UK had another good year, as gross profit, the group's priority, increased by 65% to A$3.8 million (FY17: A$2.3 million), revenue increased by 26% to A$16.5 million (FY17: A$13.1 million) and gross margins improved. This growth was underpinned by increased numbers of active customers which is a key objective for the group in newer territories.
These are encouraging results and position the business for further growth in FY19 and beyond. While this region currently represents a relatively small part of the group's overall activities, we operates in the UK's large and well developed online marketplace where engaged and active consumers can be acquired successfully and cost effectively.
The group has a material presence in the UK as it is an important centre for the group's product sourcing team for both UK and European brands. Brands from these territories, along with USA, have grown their weighting within group revenues over the past few years and now account for over half of our worldwide revenue.
Outlook
The group had an excellent year to 30 June 2018, with significant growth in profitability and good progress against our strategic goals, which we aim to build upon in the current year.
In the new financial year, we plan to focus on leveraging new opportunities in ANZ region, which remains our largest operating territory and has the most powerful marketing, logistics and staffing resources of the group. These will be deployed to the benefit of both domestic and international brands using our off-price retail heritage and the full-price selection that our customers increasingly seek from us.
At the same time we plan to reduce our offline activities in the current year, given significant progress against our strategic aims of increasing the own-buy element of our sales mix and proving our marketplace model to partners. As a result, we expect revenues to be broadly level year on year, with growth in core online revenues offsetting this planned reduction in offline. We anticipate, however, that this, along with the full deployment of our technology platform, will bring significant cost efficiency gains and accretion in the underlying EBITDA margin.
While it is early in the current year, and our peak trading period lies ahead, trading to date has been in line with expectations and the board expects that underlying EBITDA for the year will be in line with market forecasts with an overall heavier second half weighting.
_____________________________
Carl Jackson
Chief Executive Officer
8 October 2018
Financial review by the Chief Financial Officer
Revenue and Gross Profit
For the year ended 30 June 2018 group revenue increased by 9% to A$292.2 million (FY17: A$268.3 million) and gross profit increased faster, by 13%, to reach A$85.7 million (FY17: A$76.0 million). This improved performance came as a direct result of the strategic plan implemented by the group in 2015.
Operating Expenses
The increase in activity and gross profit resulted in underlying operating expenses of A$73.9 million (FY17: A$67.4 million) in the year. During the year the group increased staff resources in a number of operational departments to support further growth and ensure the group delivers outstanding service to its customers.
Profit/Loss before Tax
The underlying profit before tax for the year increased 50% A$4.9 million (FY17: A$3.3 million) and the reported loss before tax for the period is A$1.7 million (FY17: A$1.5 million). This reported loss is after the inclusion of a number of one-off and non-cash items which are shown in more detail below and in note 6 to the financial statements in order to provide greater insight as to the underlying profitability of the group.
Profit/Loss after Tax and earnings per share
The underlying profit after tax for the year increased 70% to is A$6.6 million (FY17: A$3.9 million) and the reported loss after tax for the period is $A0.1 million (FY17: A$1.0 million). This reported loss is after the inclusion of a number of one-off and non-cash items which are shown in more detail below and in note 6 to the financial statements in order to provide greater insight as to the underlying profitability of the group.
Note 27 shows the detailed calculations of basic earnings per share for the financial year which increased by 70% to 4.3 cents per share (FY16: 2.5 cents) on an underlying basis and was 0.03 cents loss (FY17: 0.1 cents loss) on a reported basis.
Taxation
The group has recorded a tax benefit of A$1.6 million for the year (FY17: A$0.6 million) which diverges from the group's long term guidance of an effective tax rate of approximately 30%. This divergence arises due to various tax adjustments and timing differences. Full details are provided in note 9 to the financial statements. The group has total tax losses of A$32.4 million (FY17: A$30 million) with the majority located in Australia. The entire tax loss has been recognised with the provision of a deferred tax asset of A$12.1 million (FY17: A$10.5 million).
Balance Sheet, Cash and Working Capital
The group's closing cash balance was A$6.8 million (FY17: A$19.0 million) and the net debt balance was A$6.2 million (FY17: A$8.9 million), well within the group's banking facilities.
The closing cash balance for the year, which is lower than anticipated, reflects a number of significant, temporary working capital outflows which occurred towards the end of the financial year, which will reverse in the current financial period, together with one-off expenditure associated with a prospective acquisition transaction, further details of which are shown below. The working capital impact is predominantly seen by the increase in trade receivables to A$29.9 million (FY17: A$17.0 million) which will reverse in FY19 and thus net cash balances shall increase and are expected to be positive at the end of the current year.
The group's strategic plan allows for selective investment into inventory balances and other working capital deployments to ensure the group is able to take advantage of commercially beneficial purchasing opportunities. A number of purchasing opportunities arose towards the end of the financial year and inventory was acquired and part re-sold, on a wholesale basis.
In the past two financial years the trade receivables balance has built up as the group's offline activities, particularly wholesale syndication, increased. However, now that key objectives, of building partner relationships and proving the marketplace capability, have been achieved, the forward strategy is to reduce that offline wholesale activity which shall deliver a steady reduction in trade receivables and in turn steady increase in cash inflows.
Capital expenditure increased, as planned, as the group invested principally in the development of its proprietary technology platform together with expenditure related to property and equipment upgrades. Total capital expenditure was A$9.1 million (FY17: A$8.5 million).
Banking Facilities
The group's cash balances are held principally with HSBC with whom the group currently has trade finance multi option debt facilities of A$28.1 million. All facilities are renewed on an annual basis.
Underlying Basis
As noted above the group manages its operations by looking at the underlying EBITDA which excludes the impact of a number of one-off and non-cash items of a non-trading nature as this, in the Board's opinion, provides a more representative measure of the group's performance. A reconciliation between reported profit before tax and underlying EBITDA is included at note 6 to the financial statements and outlined below.
| A$ million | FY18 | FY17 |
| Reported EBITDA | 5.1 | 3.8 |
| Share based payments | 0.9 | 1.1 |
| Discontinued activities | 0.2 | 0.3 |
| One-off costs | 3.6 | 2.4 |
| Unrealised foreign exchange loss | 2.0 | 1.0 |
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| 6.7 | 4.8 |
| Underlying EBITDA | 11.8 | 8.7 |
| Depreciation & Amortisation | 6.6 | 5.3 |
| Net interest expense | 0.3 | 0.1 |
| Underlying profit before tax | 4.9 | 3.3 |
Included within one-off items are items of a non-trading, non-recurring nature such as acquisition expenses, reorganisation costs, charges arising from system migration and other costs. The principle items in the year under review include A$1.4 million of costs associated with the acquisition and subsequent reorganisation of Identity Direct as previously announced and A$2.0 million of costs associated with potential acquisition transactions which did not conclude.
Whilst it is disappointing to incur costs on projects which do not conclude the group has identified key strategic and commercial benefits that can be derived from increasing the scale of the business and continues to evaluate acquisition opportunities.
Key Performance Indicators
The group manages its operations through the use of a number of key performance indicators (KPI's) such as revenue, revenue growth, gross margin percentage, average order value (AOV), frequency of customer purchase, items in customer basket, average revenue per active customer (RPAC), and underlying EBITDA.
_____________________________
Andrew Dingle
Chief Financial Officer
8 October 2018
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The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
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The above balance sheet should be read in conjunction with the accompanying notes
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| The financial statements of MySale Group Plc (company number 115584 (Jersey)) were approved by the Board of Directors and authorised for issue on 8 October 2018. They were signed on its behalf by:
___________________________ ___________________________ Carl Jackson Andrew Dingle Director Director
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The above statement of changes in equity should be read in conjunction with the accompanying notes
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The above statement of cash flows should be read in conjunction with the accompanying notes
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 3rd Floor, Ogier House, The Esplanade, 44 Esplanade Street. Helier, JE4 9WG, Jersey and principal place of business is at 3/120 Old Pittwater Road, Brookvale, NSW 2100, Australia.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 8 October 2018. The directors have the power to amend and reissue the financial statements.
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| Note 2. Significant accounting policies
Basis of preparation This condensed consolidated financial information for the year ended 30 June 2018 has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards as adopted by the European Union ("Adopted IFRSs"), IFRS IC Interpretations and the Companies (Jersey) Law 1991.
The financial information contained in this preliminary announcement for the years ended 30 June 2018 and 30 June 2017 does not comprise the group's statutory financial statements within the meaning of Companies (Jersey) Law 1991. Statutory accounts for the year ended 30 June 2018 will be filed with the Jersey Companies Registry in due course. The auditors' report on the statutory accounts for each of the years ended 30 June 2018 and 30 June 2017 is unqualified, does not draw attention to any matters by way of emphasis and does not contain any statement under any matters that are required to be reported by exception under Companies (Jersey) Law 1991.
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| Going concern The directors have reviewed the group's forecast and projections, including assumptions concerning capital expenditure and expenditure commitments and their impact on cash flows, and have a reasonable expectation that the group has adequate financial resources to continue its operations for the foreseeable future. For this reason they have continued to adopt the going concern basis in preparing the financial statements.
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| In preparing the preliminary announcement, the directors have also made reasonable and prudent judgements and estimates and prepared the preliminary announcement on the going concern basis. The preliminary announcement and strategic report contained herein give a true and fair view of the assets, liabilities, financial position and profit and loss of the group.
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| Changes to accounting standards There have been no changes to accounting standards during the year which have had or are expected to have any significant impact on the group.
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| 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.
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| 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.
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| 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.
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| Goodwill The group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. No impairment charge was required during the financial year ended 30 June 2018 (2017: A$nil).
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| 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.
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| 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.
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| 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.
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| Note 4. Operating segments
Identification of reportable operating segments The group's operating segments are determined based on the internal reports that are reviewed and used by the Board of Directors (being the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.
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| 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.
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| 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.
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| Intersegment transactions Intersegment transactions were made at market rates and are eliminated on consolidation.
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| 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.
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| Major customers During the year ended 30 June 2018 there were no major customers (2017: none). A customer is considered major if its revenues are 10% or more of the group's revenue.
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| Operating segment information
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| Note 5. Other operating loss, net
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| Note 6. EBITDA reconciliation (earnings before interest, taxation, depreciation and amortisation)
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| Underlying EBITDA represents EBITDA adjusted for significant, unusual and other one-off items.
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| Note 7. Expenses
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| Note 8. Staff costs
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| Note 9. Income tax benefit
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| The tax rates of the main jurisdictions are Australia 30% (2017: 30%), Singapore 17% (2017: 17%), New Zealand 28% (2017: 28%), United Kingdom 19% (2017: 20%) and United States 42.8% (2017: 42.8%).
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| Note 10. Current assets - cash and cash equivalents
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| Note 11. Current assets - trade and other receivables
Trade receivables include uncleared cash receipts due from online customers which amounted to A$4,996,000 (2017: A$2,515,000).
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| Note 12. Current assets - inventories
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2018 amounted to A$275,000 (2017: A$281,000). This expense has been included in 'cost of sales' in profit or loss.
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| Note 13. Current assets - other
Prepaid inventory relates to the costs of goods for resale that have been paid for by the group but not delivered to its distribution centres for further dispatch to the customers who placed the orders as at the reporting date. The corresponding cash received in advance from customers are accounted for within deferred revenue category in the balance sheet which includes the total amount of cash received for the goods not delivered to customers at the reporting date.
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| Note 14. Non-current assets - property, plant and equipment
Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
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| Note 15. Non-current assets - intangibles
Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
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| Amortisation expense is included in 'administration expenses' in profit or loss.
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| Note 16. Non-current assets - deferred tax
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| 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.
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| Note 17. Current liabilities - trade and other payables
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| Note 18. Current liabilities - borrowings
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| Note 19. Current liabilities - provisions
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| Note 20. Non-current liabilities - borrowings
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| Total secured liabilities The total secured liabilities (current and non-current) are as follows:
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| Note 21. Non-current liabilities - provisions
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| Note 22. Equity - share capital
Authorised share capital 200,000,000 (2017: 200,000,000) ordinary shares of £nil each.
The increase on the ordinary shares happened at the beginning of the year, on 1 July 2017.
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| Note 23. Equity - other reserves
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| Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below:
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| Note 24. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
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| Note 25. Contingent liabilities
The group has issued a bank guarantee through its banker ANZ Bank New Zealand Limited, in respect of customs and duties obligations amounting to NZ$150,000 (2017: NZ$150,000).
The group issued bank guarantees through its banker, Hong Kong and Shanghai Banking Corporation, in respect of lease obligations amounting to A$979,000 (2017: A$979,000).
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| Note 26. Commitments
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| The group leases office space, land and buildings and warehouses from non-related parties under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights.
The group leases certain motor vehicles from non-related parties under finance leases. The lease agreements do not have renewal clauses but provide the group with options to purchase the leased assets at nominal values at the end of the lease term.
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| The carrying amounts of motor vehicles held under finance leases are A$144,000 (2017: A$182,000) at the reporting date.
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| 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.
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| Note 27. Earnings per share
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| 8,047,850 (2017: 8,615,909) employee long term incentives have been excluded from the 2018 diluted earnings calculation as they are anti-dilutive for the year.
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| Note 28. 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.
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| 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.
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| Set out below are summaries of share and options granted under the plans for directors and employees:
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| The weighted average remaining contractual life of the share plan outstanding at the end of the financial year was 4 years (2017: 4 years).
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| The share-based payment expense for the year was A$878,000 (2017: A$1,297,000).
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| At the end of the year there were only 111,499 shares exercisable at their weighted average exercise price of £2.26.
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| Note 29. Events after the reporting period
No matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the group's operations, the results of those operations, or the group's state of affairs in future financial years.
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This is the last page of this abridged set of accounts.