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MySale Group PLC (MYSL)

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Tuesday 05 October, 2021

MySale Group PLC

Final Results

RNS Number : 9857N
MySale Group PLC
05 October 2021
 

MySale Group Plc

 

Final results for the financial year to 30 June 2021

 

Significant strategic and operational progress. Return to underlying profitability and well positioned for strong growth in FY22 and beyond

 

MySale Group plc (AIM: MYSL) (the "Group''), the leading international online retailer, is pleased to announce its audited final results for the year to 30 June 2021.

 

Commenting on the results, Carl Jackson, Executive Chairman, said:

 

''It has been a year of significant strategic and operational progress, with a return to underlying profitability, leaving us well positioned for strong growth in FY22 and beyond. The successful capital raise, backed by experienced industry figures, has allowed us to accelerate the transformation of the business, which is now focused on scaling our unique, off-price marketplace platform by being the partner of choice to more brands who want access to over three million buyers. For our international partners, the platform also provides a counter seasonal solution for their excess fashion inventory.

"There are a number of opportunities ahead, both in our core apparel category, but also across beauty and homewares. The appointment of Kalman Polak as CEO and a strengthened leadership team will help accelerate our progress and we are already seeing momentum continuing into the current financial year, with Gross Merchandise Value in the first quarter over 50% ahead of the prior year period. Underpinned by a right sized cost base and a positive cash position, we look forward with confidence."

 

Year to 30 June (A$ million)

FY21

FY20

 

 

 

Revenue*

117.9

131.0

Gross Merchandise Value (GMV)**

125.4

131.0

Gross Profit

46.4

43.9

Gross Margin

39.4%

33.5%

Underlying EBITDA***

4.2

(2.7)

Reported loss before tax

(5.4)

(3.4)

 

* In the trading update announced on 21 July 2021, the figure for FY21 GMV was used in place of FY21 revenue. The audited revenue figure is presented here.

**Gross merchandise value is total sales volume transacting through the platform (retail and marketplace).

*** Underlying EBITDA is calculated as EBITDA adjusted for certain items including impairment losses/reversals related to goodwill and receivables, share-based payments and unrealised foreign exchange loss/gain

 

Financial Highlights

 

· Materially improved underlying profitability and strong operational performance with Group underlying EBITDA of A$4.2m, ahead of market expectations and an improvement of A$6.9m from the A$2.7m loss in FY20.

· Own Stock Channel (1P) revenue of A$25m, underpinned by core revenue of A$21.6m (FY20: Nil), successfully selling through non-core revenue of A$3.4m (FY20: A$23.8m)

· Gross profit increased to A$46.4m (FY20: A$43.9m)

· Raised A$9.3m from entities associated with both founders as well as the former CEO of Catch.com.au.

· Cash position of $A9.2m (FY20: A$6.7m). Debt Free.

 Progress against strategic initiatives  

 

· Maintained a laser sharp focus on delivering our ANZ First Strategy, focused on the simplification of the business and developing our proprietary Marketplace Platform, offering our partners clearly differentiated solutions.

· Exceptional progress made with scaling our off-price marketplace, with over 200 brand partners launched onto the new platform and significant new business and revenue momentum continuing into FY22.

· Whilst we are focused on operating an Inventory Light Marketplace Platform, we also successfully scaled our own, higher margin, stock channel, providing access to brands' inventory that may not be available through other channels.

Post financial year end

 

· Recruited Kalman Polak as Chief Executive Officer, with Carl Jackson moving to role of Executive Chairman and Charles Butler moving to Senior Independent Director.

· Further progress in scaling marketplace offering, with brand partners increasing by over 30% to over 300.

· Recruited a new Marketplace team, based in Melbourne, with deep industry knowledge.

Current Trading and Outlook

 

· Continued positive trading momentum in Q1 FY22, with GMV over 50% ahead Q1 FY21. We continue to focus on driving our marketplace offering which is expected to increase significantly in FY22, to become the Group's largest channel underpinned by also tactically scaling the higher margin, own stock channel. The Group's Gross profit is also approximately 15% ahead in Q1 FY22, compared to Q1, FY21.

 

Enquiries :

MySale Group plc

 

Carl Jackson, Executive Chairman

Mats Weiss, Chief Financial and Operating Officer

+61 (0) 414 817 843

+61 (0) 403 810 762

 

 

Singer Capital Markets (Nominated Adviser and Joint Broker)

+44 (0) 20 7496 3000

Mark Taylor

Justin McKeegan

 

 

 

Zeus Capital (Joint Broker)

Daniel Harris/James Hornigold, Corporate Finance

John Goold, Corporate Broking

+44 (0) 20 3829 5000

 

 

MHP Communications (Financial PR Adviser)

+44 (0) 20 3128 8789

Simon Hockridge

Pete Lambie

 

 

About MySale:

 

MySale operates a group of leading proprietary ecommerce platforms that offer unparalleled access to brands at great prices. Launched in Australia in 2007, MySale continues to be the go-to destination for hard-to-own fashion and lifestyle items ranging across apparel, shoes, accessories, homewares and lifestyle, beauty, kids and baby and at great prices.  Brand partners get unparalleled access to a unique shopping audience, leading marketplace experience and channel for counter seasonal goods.

 

 

Senior Independent Directors statement

 

 

Introduction

 

I am pleased with the Group's achievements over the past financial year.  We have done what we said we would do, and have repositioned the business to be an inventory light platform for domestic and international brands to reach customers in ANZ. The business has returned to positive underlying EBITDA, with the marketplace platform sitting at the heart of the new strategy starting. This focus was already beginning to deliver in FY21 and we have seen an acceleration into FY22 current trading.

Our ambition is to be the partner of choice, allowing brands to access our curated value marketplace and giving them the opportunity to access over 3 million customers. For our international suppliers it provides a counter seasonal solution for their excess fashion inventory.

Market Opportunity 1

The market opportunity for MySale remains as exciting as ever. For example, online retail penetration in Australia increased to 11.3% in 2021, up from 8.6% in 2020, reflecting the ongoing migration of retail expenditure to the online channel. Despite this increase, it is still lagging the UK (28%) and US (20%). In our largest market, Australia, online clothing & footwear retail sales were estimated at approximately A$5 billion in 2020, 21% of total clothing & footwear retail sales. This is forecast to increase to approximately $10 billion or 35.9% of retail sales by 2024.

Furthermore, the value segment is anticipated to continue to out-perform the broader clothing & footwear market. Research conducted amongst global fashion industry executives indicated that 36% expect conditions in the value segment to improve in 2021 relative to 2020, compared to 22% in the mid-market and 31% in the luxury segments. 1

There are also categories beyond clothing & footwear, which bring opportunities for the business. As we scale the marketplace, we see an opportunity to access the homeware category, providing significant long term growth opportunities. In Australia, Furniture & Homewares online penetration is 5.1% in 2019, significantly behind the UK (16.6%) and US (15.2%).

Board Changes

Subsequent to the year-end, I am delighted to confirm the appointment of Kalman Polak as Chief Executive Officer. His extensive E-commerce experience gained at Catch.com.au will be invaluable supporting the acceleration of the 'ANZ First' strategy underpinned by growing our unique marketplace platform.

Carl Jackson has become Executive Chairman remaining with the business supporting Kalman to ensure a smooth and orderly transition.as an Executive Director.

I will remain on the board as a Senior Non-Executive Director whilst the business explores an ASX listing. 

We have significantly strengthened our leadership team during the year and I believe we now have the right, highly motivated team to build upon the strong start we have made with the new strategy and take it to the next level.

Outlook

Whilst there is a positive story behind the FY21 financial performance, it is only just the start. The building blocks are now in place to drive long term shareholder value and I am pleased to see this positive momentum continuing into FY22 with strong year on year revenue and margin growth.

 

 

 

 

   

Charles Butler

Senior Independent Director

04 October 2021

 

1 Online retail market report by Frost & Sullivan

 

 

 

Review of operations by the Chief Executive Officer

 

Significant strategic, financial, and operational progress. Well, positioned for strong growth in FY22

It has been a year of unprecedented change, but also a year of significant, operational and financial progress. I would like to personally thank our loyal customers and suppliers, our dedicated team members, the Leadership team and Board members for their resilience and support throughout.

The collective efforts of the MySale team and the repositioning of the business have culminated in the business returning to profitability delivering underlying EBITDA 2 of A$4.2 million, ahead of market expectations, an improvement of A$6.9 million from the A$2.7 million loss in FY20.

The business is debt free with cash of A$9.2m (2020 - A$6.7m).

These results, however, do not yet fully reflect the benefits of our progress against our strategic plan.

Throughout the year we have maintained a laser sharp focus on delivering our ANZ First Strategy with the first six months predominantly focused on the continuation of our cost savings program, simplifying the business and improving gross profit through select own stock purchases whilst developing our proprietary Inventory Light Marketplace Platform which allows us to offer our suppliers clearly differentiated solutions.

As we entered the second half, we accelerated the pace of change strengthening the senior management team and scaling the marketplace platform significantly. During the year we raised A$9.3m from entities associated with both founders as well as the former CEO of Catch.com.au.

During the fourth quarter we began to see the material benefits of both our operational changes and the investments made. This gave a new, simplified rhythm to day-to-day operations, as the business shifted to scaling its marketplace revenue underpinned by growing the higher margin own stock channel.

Today, MySale is a simplified business focusing on customers, suppliers and cash generation. Whilst it is pleasing to see the benefits of the delivery against our strategy, we are not complacent about this.

The leadership team has been evolving the strategy to ensure we are well placed to seize the opportunities presented by the long-term online structural shifts which have accelerated in the last 18 months. We remain committed to delivering the ANZ First Strategy at the same time will harness the growing contribution from our marketplace channel. We believe these changes will stick and that we are well placed to benefit as we continually improve our customer experience. 

Progress against strategic initiatives

ANZ First Strategy

The key pillars of the Australia New Zealand "ANZ" First Strategy are:

1.  Source international brands to sell in ANZ

2.  Source local ANZ brands to sell in ANZ

3.  Marketing spend prioritised to ANZ region

4.  Key personnel located in ANZ

Our focus is to be the leading value apparel, beauty and homewares curated Marketplace Platform offering solutions for our suppliers' excess inventory. Over 80% (FY20: 82%) of our revenue was generated from third party suppliers (3P) where we take no inventory risk.

MYSALE's three key inventory solutions connecting customers with products are:

· 3P: Marketplace: Sellers, offer inventory on MYSALE's websites and apps through MYSALE's marketplace solution at prices determined by the seller. Customers contract to purchase goods directly with the sellers. The sellers then receive the sale price for sold goods, less a commission charged by MYSALE for facilitating the transaction. The seller ships the stock directly to the customer. MYSALE does not take ownership or possession of offered products so as a result takes no inventory risk.

· 3P: Order After Sale: MYSALE runs promotions to sell inventory on its websites and apps. Orders are placed with MYSALE by customers in advance of MYSALE purchasing the inventory from its brand suppliers. Once an order is received by MYSALE, the brand supplier delivers the stock to MYSALE's warehouse and MYSALE delivers the order to customers. MYSALE faces low inventory risks under this solution as it only purchases inventory from brand supplier after a customer has ordered the product from MYSALE.

· 1P: Own Stock: MYSALE selectively purchases inventory from brand supplier, in advance, storing the inventory in its warehouse, and offers the products for sale through its websites and apps at prices determined by MYSALE. MYSALE receives the proceeds of sales of own stock and delivers it directly to customers. MYSALE takes inventory risk on excess or slow moving stock and on returns

MYSALE also offers a 3P consignment solution (where brand suppliers deliver inventory to MYSALE for sale by MYSALE on behalf of the brand supplier through MYSALE's websites and apps) (FY21:A$4.9m, FY20: A$7.0m) and a 3P "dropship" solution (where customers purchase goods (from MYSALE) which are offered on its website and apps, but not actually owned or held by MYSALE, with those goods then being delivered by the brand supplier directly to the customer) (FY21:A$20.1m, FY20: A$28.7m).

Marketplace and Order After Sale operate a negative working capital model as we are able to generate cash by selling products to customers before we have to pay suppliers.

The balance of the revenues are from our higher margin own stock channel where there is a focus on buying width not depth and operating a "test and repeat" strategy. This channel represented 17.2% of sales (FY20: Nil) and is forecast to continue to scale in FY22 operating on stock turn of seven times.

2 Underlying EBITDA is calculated as EBITDA adjusted for certain items including impairment losses/reversals related to goodwill and receivables, share-based payments, and unrealised foreign exchange loss/gain. Refer to note 6 for reconciliation to reported loss.

Strengthened Leadership Team

In addition to the Board Changes outlined in the Chairman's statement, including the appointment of Kalman as CEO, we have strengthened the leadership team and restructured the business creating a new marketplace team, based in Melbourne, with deep industry knowledge. We are confident that these significant hires and dedicated expert resource will facilitate an acceleration of a range of strategic and operational actions aligned to our core values.

 

Right Sized Cost Base

FY21 reflected the progress we have made in executing our ANZ First Strategy, including significantly reducing our cost base. We now have the right cost base to support this strategy which requires less direct costs primarily as a result of the growth in the marketplace seller program where our suppliers sell directly to customers.

This represents the substantial completion of the cost reduction program announced as part of the Group refinancing and repositioning in August 2019.

We have a flexible cost structure, with fixed costs as a percentage of sales stable at 11.6% in FY21 (FY20:11.3%) that has and will allow us to deliver operational leverage as we scale revenue.

 

Marketplace Growth (3P)

Our customers are looking for the most comprehensive value fashion, beauty, and homeware assortment. Over the last six months we have taken major steps forward in scaling the marketplace seller program by allowing our suppliers to leverage and access our proprietary platform.

The Marketplace allows us to scale an Endless Aisle providing our customers access to adjacent and new categories that drive deeper engagement and long-term loyalty.

There are already over 200 brand suppliers launched onto our new marketplace seller platform (FY20: Nil) promoting over one million SKUs with significant opportunities for revenue growth underpinned by improving margins as we continue to scale the fashion suppliers both domestically and internationally.

We are also very excited by the opportunity that the New Zealand market offers our Australian suppliers, having launched in 2010 we have an established and exciting business that represents a significant growth opportunity for our marketplace suppliers.

 

Own Stock Channel (1P)

Whilst we are focused on operating an Inventory Light Marketplace Platform, our own stock channel is a very important strategic pillar as it provides us access to brands inventory that may not be available through other channels.

Committing to our suppliers inventory represent a key success criterion in establishing long term relationships. It allows us access great brands and whilst we to take an inventory position, the channel delivers a higher margin. 

As an Inventory Light Marketplace Platform, it is about buying width not depth and operating a "test and repeat strategy"

 

The MySale Way

Last year we announced the launch of the MySale Way, a new purpose for the Group that was encapsulated in the following core principles: Customer and Suppliers First; Entrepreneurial Thinking; Opportunities not Problems, Earn trust, Keep it Simple and Operate at Pace.

We aim to embed the MySale Way within the organization, to build a company culture to operate at pace and think bigger putting our Customer and Suppliers First.

There has been great progress with our customer satisfaction scores with over 10,000 4 and 5-Star reviews increasing our Trust Pilot score to 4.1 (FY20: 1.2). In parallel, we have materially improved our same day dispatch and continue to be very disciplined with our suppliers as we continue to increase the focus on the customer experience.

 

COVID-19

COVID-19 has presented both challenges and opportunities for online retailers and MYSALE is no exception. Despite the statewide lockdowns in Australia and New Zealand during FY21 we did not experience any major business disruption. There have been operational challenges including the supply of inventory and reliability of international shipping which we have successfully navigated due to the flexibility of our business model and scaling the number of marketplace sellers using our online platform.

For our employees, COVID-19 has enabled us to review our workplace flexibility with colleagues who are able to work from home are doing so. Where this is not possible, we have put in place social distancing protocols for our office and warehouse team. It has also allowed us to accelerate the recruitment of a new marketplace team in Melbourne and continue to evaluate which roles can be relocated overseas. 

 

Modern Slavery

We are committed to maintaining the highest ethical standards and seek to partner with suppliers that share our commitment to excellence and to operating with integrity. The board of directors have approved the Modern Slavery Statement pursuant to the Modern Slavery Act 2018 for the financial year ended 30th June 2021.  

 

Diversity & Inclusion

We are proud to foster a culture of talented individuals from a diverse range of backgrounds and cultures spanning across all our departments and geographical locations. We continue to focus on the objective of being a diverse and inclusive culture, embracing our employee's individual and personal attributes that make up the MySale Way.

 

Current Trading and Future Outlook

There is no doubt COVID-19 pandemic has and continues to change the global retail industry, with an acceleration in the structural shift to online. We believe that much of this channel switch will be permanent and we are well paced to take advantage of these changes.

Cumulatively, over three million unique customers have used our websites to discover branded fashion, beauty, and homeware products at enviable prices, we have a core base of highly valuable customers with improving underlying metrics and are at an inflection point in our journey. 

We are now taking a more dynamic trading stance, reflecting the step change in the number of suppliers integrated onto our curated marketplace platform with refreshed branding and increased and more efficient marketing spend.

Entering FY22, the positive trajectory we saw in Q4 has continued, with our strategies gaining traction and the new team achieving an operational rhythm that has delivered strong year on year revenue and margin growth. Whilst we are cognisant of the ongoing impact of COVID-19, state lockdowns and vaccine rollout, we continue to expect an acceleration in growth with the main revenue driver being the marketplace channel underpinned by increasing the higher margin own stock channel.

In terms of strategic priorities for the coming year, we will accelerate the investment in our technology, user experience, search capability and delivery solutions as we expand the curated Inventory Light Marketplace Platform adding new categories that will drive frequency and increase our share of wallet. In turn, this will accelerate the flywheel effect of offering more choice, driving more traffic, and delivering operational leverage that will deliver incremental revenue and margin that will flow through to the bottom line.

Whilst our near-term and absolute focus is an ANZ First Strategy there is potential to complement our existing geographical footprint by expanding our existing foothold in Singapore. Whilst these are not core to the growth strategy, and we are being cautious in our deployment of resource, they offer optionality in the future.

We continue to evaluate the potential listing of the Group on the Australian Stock Exchange in FY22. As a result, we will also be looking to broaden and strengthen the board.

In closing, we remain committed to supporting our suppliers grow their business providing them with diversified solutions for their excess inventory quickly and efficiently.

There remains a significant growth opportunity for MySale, the business has stabilised, and we will continue to accelerate the ANZ First Strategy and embrace opportunities aligned to this strategy.

 

 

 

 

 

 

 

     

Carl Jackson

Executive Chairman

04 October 2021

 

Financial review by the Chief Financial Officer

 

We have made good progress against the ANZ First Strategy fixing our financial foundations and whilst there was a decline in revenues as we focussed on the quality of revenue, as outlined in the FY19 strategic review, this was offset by a reduction in the cost base and improved gross profit resulting in the Group trading ahead of management expectations delivering an underlying EBITDA of A$4.2 million an improvement of A$6.9 million from the A$2.7 million loss in FY20. 

 

Financial Performance

2021

 

2020

Statutory Revenue

$117.9

 

$131.0

Gross Merchandise Value (GMV)

$125.4

 

$131.0

Core Gross Merchandise Value

$122.0

 

$107.2

Gross Profit

$46.4

 

$43.9

Underlying EBITDA

$4.2

 

-$2.7

Underlying EBITDA / Revenue (%)

3.6%

 

-2.1%

Total Operating expenses

$42.2

 

$46.6

 

Looking forward, it is important we mitigate the shift in revenue between online sales and marketplace and whilst not a statutory measure under IFRS, management considers Gross Merchandise Value (GMV) 1 and Underlying EBITDA 2 as key performance indicators for assessing the underlying operating performance of the business.

Products sold through our marketplace have lower gross margins but very high contribution to the bottom line as we do not take any inventory risk or operational responsibility. Reported revenue from the sale of these products is significantly lower. As we scale the marketplace this will result in a shift in the proportion of sales to marketplace and would lead to a decrease in revenue 3 as a percentage of GMV, but an increase in gross margin.

The underlying EBITDA improvement was driven primarily by an improvement in the gross margin and lower associated costs that resulted in an improvement in the cost base to sales ratio that will continue to improve as we scale the business. 

What the headline figures don't show is what we have done this year to improve the balance sheet, improve liquidity and profitability which will be further explained below.

Following the successful capital raise of A$9.3 million from entities associated with both founders as well as the former CEO of Catch.com.au our balance sheet is now in a better position compared to June 2020.

Statutory Revenue and Gross Merchandise Value (GMV)

For the year ended 30 June 2021, Gross Merchandise Revenue (GMV) and Statutory Revenue decreased by 4.3% and 10.0% respectively in line with management expectations.

 

 

2021

 

2020

 

Variance

Statutory Revenue

$117.9

 

$131.0

 

-10.0%

Less: Commission Revenue

$1.0

 

$0.0

 

NA

Add: Marketplace Seller

$8.6

 

$0.0

 

NA

Gross Merchandise Value (GMV)

$125.4

 

$131.0

 

-4.3%

 

 

As part of the FY19 strategic review and ANZ First Strategy we announced that we were exiting all aged non-core inventory. In FY21 non-core revenue 4 was A$3.4 million representing a year-on-year reduction of 86% (FY20: A$23.8 million).

 

 

 

 

 

 

2021

 

2020

Core Gross Merchandise Value

$122.0

 

$107.2

Non-core Gross Merchandise Value

$3.4

 

$23.8

TOTAL

 

$125.4

 

$131.0

 

 

By successfully exiting the non-core aged inventory it has not only generated free cash flow but also had significant operational benefits including creating additional warehouse space and reducing operational complexity. 

In parallel we have successfully developed our new Own Stock channel, which achieved revenues of A$21.6 million representing 17.2% of statutory revenue in FY21 (FY20: nil).

Inventory levels increased to A$5.5 million (FY20: A$2.8million) as we executed our strategy of increasing the amount of higher margin own stock focussing on buying width not depth and adopting a test and repeat strategy.

The table below provide further information on the breakdown of GMV.

 

Gross Merchandise Value Breakdown

2021

 

2020

1P Revenue

$25.0

 

$23.8

Core Revenue

$21.6

 

$0.0

Non-Core revenue

$3.4

 

$23.8

 

 

 

 

 

3P Revenue

$91.8

 

$107.2

 

 

 

 

 

Marketplace

$8.6

 

$0.0

TOTAL

 

$125.4

 

$131.0

 

3P GMV declined by A$15.4 million to A$91.8 million (FY20: A$107.2million) as we shifted GMV to the core 1P channel and marketplace.

The financial results do not represent the progress made in the launch of the new marketplace channel which delivered GMV of A$8.6 million and statutory revenue of A$1.0 million, in FY21 (FY20: nil). As we scale the business the marketplace channel will take a larger share of overall GMV, however it will not show comparative growth in statutory revenue as it is presented net of costs, on a commission basis.

We continued to execute towards our ANZ First Strategy, growing our ANZ share of overall revenue.

 

 

 

2021

 

2020

ANZ

 

$110.8

 

$118.1

Asia

 

$7.1

 

$12.9

TOTAL

 

$117.9

 

$131.0

 

 

1 Gross merchandise value is total sales volume transacting through the platform (retail and marketplace).

2 Underlying EBITDA is calculated as EBITDA adjusted for certain items including impairment losses/reversals related to goodwill and receivables, share-based payments, and unrealised foreign exchange loss/gain. Refer to note 6 for reconciliation to reported loss.

3 As set out in the revenue recognition policy in Note 2, only commission portion from Marketplace Seller program is recognised as revenue not full transaction value.

4 Core Revenue: Revenues excluding revenue from legacy inventory

Non-core revenue: Revenue from legacy inventory, inventory purchase on and before 30 June 2019

Gross Profit and Gross Margin

Gross profit for FY21 increased to A$46.4 million (FY20: A$44.0 million).

One of the key drivers was the strong performance of the high margin new Own Stock channel that increased revenues to A$21.6m (FY20: nil) representing 17.2% (FY20: nil) of revenue.

Gross margin has increased in FY21 to 39.4% (FY20: 33.5%) as the share of revenue from new Own Stock increase from nil to 17.2%

Inventories

Inventories increased to A$5.5 million (FY20: A$2.8 million) as we executed our strategy of increasing the amount of higher margin own stock.

Stock Turn is 17 times this year (FY20: 9 times).

Cash

Cash and cash equivalents increased to A$9.2 million (FY20: A$6.7 million) with the Group operating on a debt free basis.

During the FY21 the group raised A$9.3 million from entities associated with both founders as well as the former CEO of Catch.Com.au. Furthermore, we have continued to invest in the growth of the new Own Stock channel with a closing inventory of A$4.2 million.

Operating Expenses

As part of our ANZ First Strategy our cost reduction programme took an annualised A$4.4 million out of our cost base 1 . Whilst there are always further cost saving opportunities, we now have the right balance between fixed and variable costs that will allow us to scale delivering operational leverage.

 

 

2021

 

2020

 

Variance

Fixed Costs

$13.6

 

$14.8

 

-8.1%

Variable Costs

$28.6

 

$31.4

 

-10.1%

Total Operating Expenses

$42.2

 

$46.6

 

-9.6%

 

Fixed Costs have reduced to A$13.6million (FY20: A$14.8 million) representing 11.6% of sales. Variable costs are stable and aligned to revenue although we anticipate further improvements in the operational and marketing efficiencies 

We now have the right size cost base that will ensure we deliver operational leverage as we as we scale the marketplace. 

[1] Cost base is the different between gross profit and underlying EBITDA

Profit/Loss Before Tax

The reported loss before tax for the year is A$5.4 million (FY20: A$3.4 million loss). This reported loss is after the inclusion of one-off and non-cash items such as adjustments of deferred tax assets, depreciation, and one-off costs.

Profit/loss after tax and earnings per share

The reported loss after tax for the year is A$8.4 million (FY20: A$3.6 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 note 6 to the financial statements in order to provide greater insight as to the underlying profitability of the Group.

Note 31 to the financial statements shows the detailed calculations of basic loss per share for the financial year which after tax was 0.96 cents per share loss (FY20: 0.53 cents loss) and was 0.50 cents profit (FY20: 0.41 cents loss) on underlying EBITDA.

 

 

 

Taxation

The group has recorded a tax expense of A$3.1 million for the year (FY20: A$0.2 million). Further detail of the tax expenses is provided in note 9 to the financial statements. The Group has A$109.3 million (FY20: A$103.6 million) of carried forward tax losses that may be available to use for further offset. A deferred tax asset is only recorded where it is probable that these losses will be recoverable. Included within the FY21 is an expense of A$3.8m, related to the non-cash write off of deferred tax assets previously recognised.  This is due to the consideration of a number of factors that determine the potential recoverability of the underlying deferred tax asset, including historical performance and the inherent uncertainty over future profitability over an extended period beyond two years

Net Assets

During FY21 we have improved our current asset position by A$5.2 million which due primarily to an increase in cash and cash equivalent (A$2.5 million) and a reduction in trade and other payable (A$-4.7 million) which was off-set by an increase in inventories (A$2.8 million)

Working Capital

The Group's closing cash balance was A$9.2 million (FY20: A$6.7 million) and is debt free with no bank or trade borrowings.

In FY21 our net cash position has improved as a result of raising additional capital, but also by successfully reducing our aged non-core inventory and further decreasing our cost base by A$4.4 million.

During FY21 the group raised A$9.3 million from entities associated with both founders as well as the former CEO of Catch.com.au. 

Total capital expenditure was A$1.4 million (FY20: A$2.6 million) as we focused on benefiting from the historical investment made in the technology platform and prioritizing the development projects in line with the business priorities.

We continue to invest in the growth of the new own stock channel with closing inventory A$4.2 million.

The table below provide further information to the cash movement for the year.

Cash Movement (A$ million)

2021

Cash June 2020

$6.7

Capital raise

$9.2

Underlying EBITDA

$4.2

IFRS-16

 

-$1.0

Capex

 

-$1.4

New Own Stock Inventory

-$4.2

Prepaid Inventory (Note 13)

 

-$0.9

Payable & Others

-$3.4

Cash June 2021

$9.2

 

Banking Facilities

Subsequent to the refinancing the Group is debt free and no longer relying on overdraft financing to support the business operations. The sell down of aged non-core inventory and the transition to an inventory light business model has reduced the overall reliance on external financing to support inventories and other working capital requirements.

 

Going Concern Statement

The consolidated financial statements have been prepared on a going concern basis. The Directors have prepared a going concern assessment covering the 12-month period from the signing of these financial statements, which demonstrates that the Group is capable of continuing to operate as a going concern. The Directors assessment considers the principal risks and financial forecast that have been prepared whilst considering various levels of disruption for the COVID-19 pandemic.

The Group has modelled a number of scenarios for the period ending December 30, 2022, with the base case being consistent with the approved FY22 budget. The financial modelling scenarios take out account of the following:

· The Group is debt free and has a closing cash position of A$9.2 million

· 80% of revenue is generated from 3P channels where the Group receives payment from the customer before purchase the product. There is no inventory risk

· Inventory levels are A$5.5 million achieving a 17 times stock turn

As a result of the financial modelling and taking account of the above points, the Directors have concluded the Group has sufficient financial resources to continue meets its obligations as they fall due for the 12-months from the approval of these accounts.

 

Conclusion

To conclude, whilst there is a positive story behind the FY21 financial performance it is also about looking forward. There has been excellent progress by the trading teams in scaling the marketplace platform while tactically increasing the amount of higher margin own stock inventory.

Having started FY22 strongly we are constantly reviewing the accelerating revenue and evolving margin mix ensuring it is aligned to our cost base. We remain very confident about the opportunities ahead knowing we have a high growth marketplace underpinned by the higher margin own stock channel. The group now operates a right sized cost-based operating on a debt free basis that meaning we are in a good position to trade profitably with a strong balance sheet.

 

 

 

 

 

Mats Weiss

Chief Financial Officer 04 October 2021

 

 

 

 

 

 

 

 

MySale Group Plc

 

Statement of profit or loss and other comprehensive income

 

For the year ended 30 June 2021

 

 

 

 

 

Consolidated

 

 

Note

 

2021

 

2020

 

 

 

 

A$'000

 

A$'000

Revenue

 

4

 

117,893

 

131,032

Cost of sales

 

 

 

(71,476)

 

(87,152)

 

 

 

 

 

 

 

Gross profit

 

4

 

46,417

 

43,880

 

Other operating (losses)/gains, net

 

5

 

(1,120)

 

8,626

Interest income

 

 

 

78

 

4

 

Expenses

 

 

 

 

 

 

Selling and distribution expenses

 

 

 

(31,955)

 

(37,015)

Administration expenses

 

 

 

(18,267)

 

(20,746)

(Recovery)/impairment of receivables

 

11

 

(217)

 

2,262

Finance costs

 

7

 

(299)

 

(400)

 

Loss before income tax expense

 

 

 

(5,363)

 

(3,389)

 

Income tax expense

 

9

 

(3,085)

 

(171)

 

Loss after income tax expense for the year attributable to the owners of MySale Group Plc

 

 

 

(8,448)

 

(3,560)

 

Other comprehensive income/(loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

Exchange differences on translation of foreign operations

 

22

 

432

 

(2,125)

 

 

 

 

 

 

 

Other comprehensive income/(loss) for the year, net of tax

 

 

 

432

 

(2,125)

 

 

 

 

 

 

 

Total comprehensive loss for the year attributable to the owners of MySale Group Plc

 

 

 

(8,016)

 

(5,685)

 

 

 

 

 

Cents

 

Cents

 

 

 

 

 

 

 

Basic earnings per share

 

31

 

(0.96)

 

(0.53)

Diluted earnings per share

 

31

 

(0.96)

 

(0.53)

 

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

 

 

 

 

MySale Group Plc

 

 

Balance sheet

 

 

As at 30 June 2021

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Note

 

2021

 

2020

 

 

 

 

A$'000

 

A$'000

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

10

 

9,210

 

6,660

Trade and other receivables

 

11

 

3,001

 

4,107

Inventories

 

12

 

5,518

 

2,761

Income tax receivable

 

 

 

 

15

Other assets

 

13

 

1,695

 

634

Total current assets

 

 

 

19,424

 

14,177

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

14

 

764

 

1,216

Right-of-use assets

 

15

 

3,487

 

5,362

Intangibles

 

16

 

26,370

 

30,168

Other assets

 

13

 

1,777

 

1,629

Deferred tax

 

9

 

322

 

3,407

Total non-current assets

 

 

 

32,720

 

41,782

 

 

 

 

 

 

 

Total assets

 

 

 

52,144

 

55,959

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

17

 

14,304

 

18,985

Contract liabilities

 

18

 

7,047

 

6,186

Lease liabilities

 

19

 

1,593

 

1,581

Employee benefits

 

 

 

1,116

 

1,148

Provisions

 

20

 

1,089

 

1,280

Total current liabilities

 

 

 

25,149

 

29,180

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Lease liabilities

 

19

 

3,705

 

5,048

Employee benefits

 

 

 

584

 

450

Total non-current liabilities

 

 

 

4,289

 

5,498

 

 

 

 

 

 

 

Total liabilities

 

 

 

29,438

 

34,678

 

Net assets

 

 

 

22,706

 

21,281

 

Equity

 

 

 

 

 

 

Stated capital

 

21

 

338,215

 

328,971

Other reserves

 

22

 

(124,350)

 

(124,979)

Accumulated losses

 

 

 

(191,139)

 

(182,691)

Equity attributable to the owners of MySale Group Plc

 

 

 

22,726

 

21,301

Non-controlling interests

 

 

 

(20)

 

(20)

 

 

 

 

 

 

 

Total equity

 

 

 

22,706

 

21,281

 

The above balance sheet should be read in conjunction with the accompanying notes

 

The financial statements of MySale Group Plc (company number 115584 (Jersey)) were approved by the Board of Directors and authorised for issue on 04 October 2021. They were signed on its behalf by:

 

 

 

 

 

 

 

 

 

 

___________________________

 

 

Carl Jackson

 

Charles Butler

Chairman

 

Senior Independent Director

 

 

 

04 October 2021

 

 

 

 

 

MySale Group Plc

Statement of changes in equity

For the year ended 30 June 2021

 

 

 Stated capital

 

 Other

 

Accumulated

 

Non-controlling 

 

Total equity

 

 

account

 

reserves

 

losses

 

interest 

 

Consolidated

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2019

 

306,363

 

(123,125)

 

(179,131)

 

(20)

 

4,087

 

 

 

 

 

 

 

 

 

 

 

Loss after income tax expense for the year

 

-

 

-

 

(3,560)

 

-

 

(3,560)

Other comprehensive loss for the year, net of tax

 

-

 

(2,125)

 

-

 

-

 

(2,125)

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive loss for the year

 

-

 

(2,125)

 

(3,560)

 

-

 

(5,685)

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

 

Issue of ordinary shares, net of transaction costs (note 21)

 

22,608

 

-

 

-

 

-

 

22,608

Share-based payments (note 32)

 

-

 

271

 

-

 

-

 

271

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2020

 

328,971

 

(124,979)

 

(182,691)

 

(20)

 

21,281

 

 

 

 Stated capital

 

 Other

 

Accumulated

 

Non-controlling 

 

Total equity

 

 

account

 

reserves

 

losses

 

interest 

 

Consolidated

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2020

 

328,971

 

(124,979)

 

(182,691)

 

(20)

 

21,281

 

 

 

 

 

 

 

 

 

 

 

Loss after income tax expense for the year

 

-

 

-

 

(8,448)

 

-

 

(8,448)

Other comprehensive income for the year, net of tax

 

-

 

432

 

-

 

-

 

432

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive (loss)/income for the year

 

-

 

432

 

(8,448)

 

-

 

(8,016)

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

 

Share-based payments (note 32)

 

-

 

197

 

-

 

-

 

197

Issue of ordinary shares, net of transaction costs (note 21)

 

9,244

 

-

 

-

 

-

 

9,244

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2021

 

338,215

 

(124,350)

 

(191,139)

 

(20)

 

22,706

 

 

The non-controlling interest has 49% equity holding in Simply Send It Pty Limited. Refer to note 30 for details.

 

The above statement of changes in equity should be read in conjunction with the accompanying notes on page 43 to 77

 

 

 

 

 

MySale Group Plc

Statement of cash flows

For the year ended 30 June 2021

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Note

 

2021

 

2020

 

 

 

 

A$'000

 

A$'000

Cash flows from operating activities

 

 

 

 

 

 

Loss before income tax expense for the year

 

 

 

(5,363)

 

(3,389)

 

 

 

 

 

 

 

Adjustments for:

 

 

 

 

 

 

Depreciation and amortisation

 

 

 

7,007

 

7,520

Net loss on disposal of property, plant and equipment

 

 

 

155

 

390

Net loss on disposal of intangibles

 

 

 

4

 

128

Share-based payments

 

 

 

197

 

-

Interest income

 

 

 

(78)

 

(4)

Interest expense

 

 

 

299

 

400

 

 

 

 

 

 

 

 

 

 

 

2,221

 

5,045

 

 

 

 

 

 

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Decrease in trade and other receivables

 

 

 

1,106

 

7,320

(Increase)/decrease in inventories

 

 

 

(2,757)

 

13,202

Decrease in other operating assets

 

 

 

(1,194)

 

2,502

Decrease in trade and other payables

 

 

 

(4,311)

 

(17,307)

Increase/(decrease) in contract liabilities

 

 

 

861

 

(4,222)

Decrease in other provisions

 

 

 

(88)

 

(578)

 

 

 

 

 

 

 

 

 

 

 

(4,162)

 

5,962

Interest received

 

 

 

78

 

4

Interest paid

 

 

 

(299)

 

(51)

Income taxes paid

 

 

 

 

(321)

 

 

 

 

 

 

 

Net cash (used in)/from operating activities

 

 

 

(4,383)

 

5,594

 

Cash flows from investing activities

 

 

 

 

 

 

Payments for property, plant and equipment

 

14

 

(135)

 

(980)

Payments for intangibles

 

16

 

(1,231)

 

(1,633)

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

 

(1,366)

 

(2,613)

 

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issue of shares, net of transactions costs

 

21

 

9,244

 

22,608

Repayment of borrowings

 

 

 

 

(5,200)

Repayment of leases

 

25

 

(1,007)

 

(1,163)

 

 

 

 

 

 

 

Net cash from financing activities

 

 

 

8,237

 

16,245

 

Net increase in cash and cash equivalents

 

 

 

2,488

 

19,226

Cash and cash equivalents at the beginning of the financial year

 

 

 

6,660

 

(12,323)

Effects of exchange rate changes on cash and cash equivalents

 

 

 

62

 

(243)

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the financial year

 

10

 

9,210

 

6,660

 

The above statement of cash flows should be read in conjunction with the accompanying notes

 

MySale Group Plc

Notes to the financial statements

30 June 2021

 

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's 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 financial information set out in this preliminary announcement does not constitute the Group's Consolidated financial statements for the years ended 30 June 2021 or 30 June 2020

 

The financial information for 2021 and 2020 is derived from the consolidated financial statements for the year ended 30 June 2021 which includes the comparatives for year ended 30 June 2020. The consolidated financial statements for the year ended 30 June 2020 have been audited and delivered to the registrar of companies with the Jersey Financial Service Commission ("JFSC"). The financial statements for the year ended 30 June 2021 have been audited and will be filed with the registrar of companies with the JFSC following the Company's Annual General Meeting. The Independent Auditors Reports have reported on the financial statements for the year ended 30 June 2021 and the year ended 30 June 2020; the audit reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 113B (3) or (6) of the Companies (Jersey) Law 1991.

 

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. Company number 115584 (Jersey). Incorporated as of 28 May 2014.

 

The financial statements were authorised for issue, in accordance with a resolution of Directors, on 04 October 2021.

 

 

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 Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board ('IASB') which have been endorsed by the European Union that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have a material impact on the Group.

 

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 2021. The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.

 

Basis of preparation

These financial statements have been prepared in accordance with applicable Jersey Law and International Financial Reporting Standards ('IFRS' or 'IFRSs') as adopted for use in the European Union (the 'EU') and IFRS Interpretations Committee interpretations (together 'EUIFRS').

 

Parent company financial information
Under Article 105(11) of the Companies (Jersey) Law 1991, a parent company preparing consolidated financial statements need not present solus (parent company only) financial information, unless required to do so by an ordinary resolution of the Company's members. The Company's members did not pass an ordinary resolution on this matter and hence Parent Company financial information has not been presented for the year.

 

Historical cost convention
The financial statements have been prepared under the historical cost convention.

 

Going concern

The consolidated financial statements have been prepared on a going concern basis. In reaching their assessment, the Directors have considered a period extending at least 12 months from the date of approval of these financial statements.

 

The Group's business activities and financial position, together with the factors likely to affect its future development, performance and position, are set out in (section (4) of the Strategic Report]. In addition, note 24 includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk. The Group prepare budgets and cashflow forecasts to ensure that the Group can meet its liabilities as they fall due.

 

As at 30 June 2021, the Group's current liabilities exceeds current assets by A$5,725,000 (2020: A$15,003,000) and the Group incurred a loss after tax of A$8,448,000 (2020: A$3,560,000) and net cash used in operating activities of A$4,383,000 (2020: net cash from operating activities of A$5,285,000).

 

The uncertainty as to the future impact on the Group of the COVID-19 pandemic has been considered as part of the Group's adoption of the going concern basis. The Directors continue to monitor developments and the potential impact of any new measures imposed due to COVID-19 on the operational and financial risks of the Group.

 

Immediate action has been taken to protect the cash resources of the business until further certainty is gained. These measures include, but are not limited to:

 

 

strengthening the cash position by raising an additional A$9,244,000 as of 8 October 2020 (note 21); and

 

obtaining government support as part of various economic stimulus initiatives.

 

The Directors have prepared cash flow forecasts covering a period to 31 December 2022. This assessment has included consideration of the forecast performance of the business for the foreseeable future and the cash available to the Group. In preparing these forecasts, the Directors have considered a number of detailed sensitivities, including a worst case scenario considering the potential impact of Covid-19.

 

If revenue were to fall in line with the worst case model, the Group would take further remedial action to counter the reduction in profit and cash through a cost cutting exercise that would include staff redundancies and general cost control measures.

 

Included in the Group's current liabilities is balance for contract liabilities (non-cash liabilities) of A$7,047,000 (2020: A$6,186,000). Excluding this the Group's current assets exceed current liabilities by A$1,322,000 (2020: current liabilities exceed assets by A$8,817,000).

 

Additionally, the Group has a proven track record of raising capital to assist with cash flow needs as and when required.

 

Based on current trading, the worst case scenario is considered unlikely. However, it is difficult to predict the overall impact and outcome of COVID-19 at this stage, particularly if the second wave continues in to 2022. Nevertheless, after making enquiries, and considering the uncertainties described above, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the annual report and financial statements.

 

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.

 

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of MySale Group Plc as at 30 June 2021 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.

 

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 the entity's functional currency 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 the Group's presentational currency, the Australian dollar, using the exchange rates at the reporting date. The revenues and expenses of foreign operations included in each of the statement of profit or loss and other comprehensive 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 delivered 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 30 days. Accruals for sales returns are estimated on the basis of historical returns and are recorded so as to allocate them to the same period in which the original revenue is recorded. Refer to note 20 for details.

 

Commission revenue

Commission revenue is generated when the Group, acting as an agent, uses its Marketplace to arrange the sale of products by suppliers to its customers. The supplier of the products to the customer is the principal in the principal-agency agreement. Commissions are recognised at the time the goods are sold.

 

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.

 

Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants are recognised in profit or loss over the period necessary to match with the costs that they are intended to compensate. Government grants relating to COVID-19 wage subsidies in Australia, New Zealand and Singapore are netted off against employee costs in profit or as detailed in note 8.

 

Income tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

 

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

 

when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or

 

when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

 

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and tax losses.

 

The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

 

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

 

MySale Group Plc (the 'head entity') and its wholly-owned Australian subsidiaries plus Apac Sale Group Pte. Ltd. have formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.

 

Current and non-current classification

Assets and liabilities are presented in the balance sheet based on current and non-current classification.

 

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

 

A liability is current when: it is expected to be settled in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

 

Deferred tax assets and liabilities are always classified as non-current.

 

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

 

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 consist of wholesale debtor and online customer. Wholesale debtors are generally due for settlement within 30 days of recognition and online customers are generally due for settlement within 3-43 days.

 

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.

 

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's assessment of the expected future sales of that inventory, the condition of the inventory and the seasonality of the inventory.

 

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

 

5-7 years

Plant and equipment

 

3-7 years

Fixtures and fittings

 

5-10 years

Motor vehicles

 

4-5 years

 

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

 

Leasehold improvements 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.

 

Right-of-use assets

A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.

 

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.

 

The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.

 

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.

 

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 is not subject to amortisation and is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it 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.

 

Lease liabilities

A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.

 

Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.

 

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.

 

Refund liabilities

Refund 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 refund 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.

 

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 Monte-Carlo 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.

 

Share capital

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group's ordinary shares are classified as equity instruments.

 

Share capital represents the nominal value of shares that have been issued. Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax.

 

Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group's own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in the share premium.

 

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 additional ordinary shares that would have been outstanding assuming conversion of all 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 comparatives have been reclassified, where necessary, to be consistent with current period presentation, particularly in the statement of cash flows, with no effect on the results and net assets..

 

 

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

 

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.

 

Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the Group's operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances.

 

Estimates

 

Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the Group estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment.

 

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 assessing the value of the asset at fair value less costs of disposal and using value-in-use models which incorporate a number of key estimates and assumptions.

 

Provision for impairment of 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. Refer to note 12 for further details.

 

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, right-of-use assets and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

 

Goodwill

The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. Refer to note 16 for further details.

 

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Significant judgement is required to determine the amount of deferred tax assets that can be recognised based on the estimates and assumptions made in relation to the timing and level of future taxable amounts that will be available. The assessment of impairment was made by looking into the next two years of forecasted taxable profits. Refer to note 9 for further details. 

 

 

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 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 2021 there were no major customers (2020: none). A customer is considered major if its revenues are 10% or more of the Group's revenue.

 

Operating segment information

 

 

 

Australia and 

 

South-East

 

 

 

 

New Zealand

 

Asia

 

Total

Consolidated - 2021

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

Sales to external customers transferred at a point in time

 

109,726

 

7,141

 

116,867

Commission revenue recognised at a point in time

 

1,026

 

-

 

1,026

Total revenue

 

110,752

 

7,141

 

117,893

 

 

 

 

 

 

 

Gross profit

 

43,580

 

2,837

 

46,417

Other (loss)/gain, net

 

 

 

 

 

(1,120)

Selling and distribution expenses

 

 

 

 

 

(31,955)

Administration expenses

 

 

 

 

 

(18,267)

Finance income

 

 

 

 

 

78

Finance costs

 

 

 

 

 

(299)

Impairment of receivables

 

 

 

 

 

(217)

Loss before income tax expense

 

 

 

 

 

(5,363)

Income tax expense

 

 

 

 

 

(3,085)

Loss after income tax expense

 

 

 

 

 

(8,448)

 

 

 

Australia and 

 

South-East

 

 

 

 

New Zealand

 

Asia

 

Total

Consolidated - 2020

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

Sales to external customers transferred at a point in time

 

118,107

 

12,925

 

131,032

Commission revenue recognised at a point in time

 

-

 

-

 

-

Total revenue

 

118,107

 

12,925

 

131,032

 

 

 

 

 

 

 

Gross profit

 

38,943

 

4,937

 

43,880

Other gain/(loss), net

 

 

 

 

 

8,626

Selling and distribution expenses

 

 

 

 

 

(37,015)

Administration expenses

 

 

 

 

 

(20,746)

Finance income

 

 

 

 

 

4

Finance costs

 

 

 

 

 

(400)

Recovery of receivables

 

 

 

 

 

2,262

Loss before income tax expense

 

 

 

 

 

(3,389)

Income tax expense

 

 

 

 

 

(171)

Loss after income tax expense

 

 

 

 

 

(3,560)

 

 

Note 5. Other operating (losses)/gains, net

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Net foreign exchange (losses)/gains

 

(921)

 

893

Net loss on disposal of property, plant and equipment

 

(157)

 

(23)

Debt forgiveness *

 

 

7,723

Other (losses)/income

 

(42)

 

33

 

 

 

 

 

Other operating (losses)/gains, net

 

(1,120)

 

8,626

 

*

 

In the prior year, 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. As part of this repayment HSBC agreed to provide the Group with a debt forgiveness amount of A$7,723,000.

 

 

Note 6. EBITDA reconciliation (earnings before interest, taxation, depreciation and amortisation)

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

EBITDA reconciliation

 

 

 

 

Loss before income tax

 

(5,363)

 

(3,389)

Less: Interest income

 

(78)

 

(4)

Add: Interest expense

 

299

 

400

Add: Depreciation and amortisation

 

7,007

 

7,526

 

 

 

 

 

EBITDA

 

1,865

 

4,533

 

Underlying EBITDA represents EBITDA adjusted for certain items, as outlined below.

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Underlying EBITDA reconciliation

 

 

 

 

EBITDA

 

1,865

 

4,533

(Recovery)/impairment of receivables

 

217

 

(1,505)

Debt forgiveness (note 5)

 

 

(7,723)

Share-based payments

 

197

 

271

Reorganisation costs *

 

652

 

1,796

One-off costs of non-trading, non-recurring nature including acquisition expenses

 

357

 

660

Unrealised foreign exchange movements

 

904

 

(763)

 

 

 

 

 

Underlying EBITDA

 

4,192

 

(2,731)

 

*

 

Costs in relation to the closure of overseas operations.

 

Management has presented the EBITDA and underlying EBITDA as these are performance measures used to monitor and understand the Group's financial performance. EBITDA is calculated by adjusting loss before income tax from continuing operations to exclude the impact of taxation, interest income, interest expense, depreciation and amortisation. Underlying EBITDA is calculated as EBITDA adjusted for certain items including impairment losses/reversals related to goodwill and receivables, share-based payments and unrealised foreign exchange movements. Underlying EBITDA and EBITDA are not defined performance measures in IFRS Standards. 

 

 

Note 7. Expenses

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Loss before income tax includes the following specific expenses:

 

 

 

 

 

 

 

 

 

Sales, distribution and administration expenses:

 

 

 

 

Staff costs (note 8)

 

15,625

 

17,823

Marketing expenses

 

10,130

 

8,297

Delivery costs

 

11,395

 

14,776

Short-term leases

 

512

 

1,577

Low value leases

 

 

26

Merchant and other professional fees

 

3,782

 

4,638

Depreciation and amortisation

 

7,007

 

7,526

Loss on disposal of property, plant and equipment

 

157

 

81

Loss on disposal of intangibles

 

4

 

115

Impairment/(Recovery) of receivables

 

217

 

(1,505)

Other administration costs

 

1,393

 

4,407

 

 

 

 

 

Total sales, distribution and administration expenses

 

50,222

 

57,761

 

 

 

 

 

Finance costs

 

 

 

 

Interest and finance charges paid/payable on borrowings

 

 

159

Interest and finance charges paid/payable on lease liabilities

 

299

 

241

 

 

 

 

 

Finance costs expensed

 

299

 

400

 

 

Note 8. Staff costs

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Aggregate remuneration:

 

 

 

 

Wages and salaries *

 

13,359

 

14,922

Social security costs

 

1,106

 

1,344

Long term employee incentive plan (note 32)

 

197

 

271

Other staff costs and benefits

 

963

 

1,286

 

 

 

 

 

Total staff costs

 

15,625

 

17,823

 

*

 

During the financial year and related to the COVID-19 pandemic, certain entities within the Group received JobKeeper support payments from the Australian government and wage subsidies from the New Zealand and Singapore governments. These subsidies were passed on to the eligible employees and have been recognised in the financial statements net of employment costs over the relevant periods. The net impact (gross amount less top up payments to casual employees) recognised in profit or loss during the financial year was A$1,101,000 (2020: A$947,000) in respect of JobKeeper and A$43,000 (2020: A$91,000) in respect of New Zealand and Singapore wage subsidies.

 

 

 

Consolidated

 

 

2021

 

2020

 

 

 

 

 

The average monthly number of employees (including executive directors and those on a part-time basis) was:

 

 

 

 

Sales and distribution

 

68

 

81

Administration

 

54

 

89

 

 

 

 

 

 

 

122

 

170

 

Details of Directors' remuneration and interests are provided in the audited section of the Directors' remuneration report and should be regarded as part of these financial statements.

 

 

Note 9. Income tax

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Income tax expense

 

 

 

 

Current tax

 

 

160

Adjustment recognised for prior years

 

 

11

Write-off of deferred tax asset

 

3,085

 

 

 

 

 

 

Aggregate income tax expense

 

3,085

 

171

 

 

 

 

 

Numerical reconciliation of income tax expense and tax at the statutory rate

 

 

 

 

Loss before income tax expense

 

(5,363)

 

(3,389)

 

 

 

 

 

Tax at the statutory tax rate of 30%

 

(1,609)

 

(1,017)

 

 

 

 

 

Tax effect amounts which are not deductible/(taxable) in calculating taxable income:

 

 

 

 

Effect of overseas tax rates

 

(104)

 

65

Non-taxable income or expense

 

(11)

 

(2,456)

Tax-exempt income

 

 

(18)

 

 

 

 

 

 

 

(1,724)

 

(3,426)

Prior year tax losses not recognised now recognised

 

 

34

Change in unrecognised deductible temporary differences

 

1,724

 

3,552

Impairment of deferred tax assets

 

3,085

 

Adjustment recognised for prior periods

 

-

 

11

 

 

 

 

 

Income tax expense

 

3,085

 

171

 

The tax rates of the main jurisdictions are Australia 30% (2020: 30%), Singapore 17% (2020: 17%) and New Zealand 28% (2020: 28%). Company profits are subject to Jersey Corporate Income Tax at a rate of 0%.

 

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Deferred tax asset

 

 

 

 

Deferred tax asset comprises temporary differences attributable to:

 

 

 

 

 

 

 

 

 

Amounts recognised:

 

 

 

 

Tax losses

 

-

 

299

Accrued expenses

 

36

 

258

Provisions

 

483

 

2,553

Sundry

 

(347)

 

(285)

Property, plant and equipment

 

 

242

Right-of-use assets

 

150

 

380

Intangibles

 

 

(40)

 

 

 

 

 

Deferred tax asset

 

322

 

3,407

 

 

 

 

 

Movements:

 

 

 

 

Opening balance

 

3,407

 

3,369

Exchange differences

 

 

38

Write-off to profit or loss

 

(3,085)

 

 

 

 

 

 

Closing balance

 

322

 

3,407

 

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. Deferred tax assets have not been recognised for trading losses totalling A$109,256,000 (2020: A$103,548,000), given the lack of visibility over the level of future profitability of the Group.

 

 

Note 10. Cash and cash equivalents

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Current assets

 

 

 

 

Cash at bank

 

9,100

 

6,550

Bank deposits at call

 

110

 

110

 

 

 

 

 

 

 

9,210

 

6,660

 

 

Note 11. Trade and other receivables

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Current assets

 

 

 

 

Trade receivables

 

1,715

 

2,479

Less: Allowance for expected credit losses

 

(17)

 

(183)

 

 

1,698

 

2,296

 

 

 

 

 

Other receivables

 

 

369

Sales tax receivable

 

1,303

 

1,442

 

 

 

 

 

 

 

3,001

 

4,107

 

Trade receivables include uncleared cash receipts due from online customers which amounted to A$1,713,000 (2020: A$2,261,000).

 

Allowance for expected credit losses

The Group has recognised a loss of A$217,000 (2020: recovery of A$2,262,000) in profit or loss in respect of impairment of receivables for the year ended 30 June 2021.

 

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:

 

 

 

Expected credit loss rate

Carrying amount

Allowance for expected
credit losses

 

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

Consolidated

 

%

 

%

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchant receivables:

 

 

 

 

 

 

 

 

 

 

 

 

1-30 days overdue

 

-

 

0.10%

 

1,652

 

2,061

 

-

 

2

31-60 days overdue

 

-

 

56.44%

 

44

 

74

 

-

 

42

Over 61 days

 

100.00%

 

100.00%

 

17

 

126

 

17

 

126

 

 

 

 

 

 

1,713

 

2,261

 

17

 

170

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables:

 

 

 

 

 

 

 

 

 

 

 

 

Not overdue

 

-

 

-

 

27

 

96

 

-

 

-

1-30 days overdue

 

-

 

-

 

-

 

109

 

-

 

-

Over 61 days

 

100.00%

 

100.00%

 

(25)

 

13

 

-

 

13

 

 

 

 

 

 

2

 

218

 

-

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,715

 

2,479

 

17

 

183

 

Movements in the allowance for expected credit losses are as follows:

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Opening balance

 

183

 

5,389

Unused amounts reversed

 

 

(2,262)

Receivables written off during the year as uncollectable

 

(166)

 

(2,944)

 

 

 

 

 

Closing balance

 

17

 

183

 

 

Note 12. Inventories

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Current assets

 

 

 

 

Goods for resale

 

8,790

 

8,968

Obsolete and slow-moving inventory provision

 

(3,272)

 

(6,207)

 

 

 

 

 

 

 

5,518

 

2,761

 

Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2021 amounted to A$964,000 (2020: expense of A$948,000) and has been included in 'cost of sales' in profit or loss.

 

 

Note 13. Other assets

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Current assets

 

 

 

 

Prepayments

 

161

 

284

Prepaid inventory*

 

1,033

 

90

Right of return assets

 

501

 

260

 

 

 

 

 

 

 

1,695

 

634

 

 

 

 

 

Non-current assets

 

 

 

 

Deposit given for lease agreements

 

1,213

 

1,629

Lease receivables

 

564

 

 

 

 

 

 

 

 

1,777

 

1,629

 

 

 

 

 

 

 

3,472

 

2,263

 

*

 

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.

 

 

Note 14. Property, plant and equipment

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Non-current assets

 

 

 

 

Leasehold improvements - at cost

 

1,013

 

1,949

Less: Accumulated depreciation

 

(521)

 

(1,185)

 

 

492

 

764

 

 

 

 

 

Plant and equipment - at cost

 

4,886

 

5,027

Less: Accumulated depreciation

 

(4,650)

 

(4,670)

 

 

236

 

357

 

 

 

 

 

Fixtures and fittings - at cost

 

704

 

940

Less: Accumulated depreciation

 

(668)

 

(845)

 

 

36

 

95

 

 

 

 

 

Motor vehicles - at cost

 

79

 

209

Less: Accumulated depreciation

 

(79)

 

(209)

 

 

 

 

 

 

 

 

 

 

764

 

1,216

 

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

 

 

 

Leasehold

 

Plant and

 

Fixtures

 

Motor

 

 

 

 

improvements

 

equipment

 

and fittings

 

vehicles

 

Total

Consolidated

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2019

 

309

 

615

 

243

 

19

 

1,186

Additions

 

622

 

48

 

1

 

-

 

671

Disposals

 

-

 

-

 

(65)

 

(16)

 

(81)

Depreciation expense

 

(167)

 

(306)

 

(84)

 

(3)

 

(560)

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2020

 

764

 

357

 

95

 

-

 

1,216

Additions

 

41

 

101

 

-

 

-

 

142

Disposals

 

(114)

 

(25)

 

(16)

 

-

 

(155)

Exchange differences

 

(1)

 

(3)

 

(3)

 

-

 

(7)

Depreciation expense

 

(198)

 

(193)

 

(41)

 

-

 

(432)

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2021

 

492

 

236

 

36

 

-

 

764

 

Depreciation expense is included in 'administration expenses' in profit or loss.

 

 

Note 15. Right-of-use assets

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Non-current assets

 

 

 

 

Property and equipment - right-of-use

 

6,180

 

6,505

Less: Accumulated depreciation

 

(2,693)

 

(1,143)

 

 

 

 

 

 

 

3,487

 

5,362

 

The Group leases buildings for its offices, warehouses and retail outlets under agreements of between one to five years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.

 

The Group leases office equipment under agreements of less than one year. These leases are either short-term or low value, so have been expensed as incurred and not capitalised as right-of-use assets.

 

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

 

 

 

Property

 

Equipment

 

Total

Consolidated

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Balance at 1 July 2019

 

-

 

-

 

-

Opening cost on adoption of IFRS 16

 

1,673

 

51

 

1,724

Additions

 

4,781

 

-

 

4,781

Depreciation expense

 

(1,130)

 

(13)

 

(1,143)

 

 

 

 

 

 

 

Balance at 30 June 2020

 

5,324

 

38

 

5,362

Additions

 

300

 

-

 

300

Transfers out*

 

(625)

 

-

 

(625)

Depreciation expense

 

(1,537)

 

(13)

 

(1,550)

 

 

 

 

 

 

 

Balance at 30 June 2021

 

3,462

 

25

 

3,487

 

*

 

Relates to a sublease which has been recognised as a lease receivable during the financial year and included in note 13.

 

For other lease related disclosures refer to the following:

 

note 7 for details of short-term and low value lease expensed in profit or loss;

 

note 19 for lease liabilities as at the reporting date;

 

note 24 for undiscounted future lease commitments; and

 

note 25 and the statement of cash flows for repayment of lease liabilities.

 

 

Note 16. Intangibles

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Non-current assets

 

 

 

 

Goodwill - at cost

 

21,233

 

21,214

 

 

 

 

 

Customer relationships - at cost

 

3,906

 

3,850

Less: Accumulated amortisation

 

(3,906)

 

(3,718)

 

 

 

132

 

 

 

 

 

Software - at cost

 

29,189

 

28,001

Less: Accumulated amortisation

 

(24,203)

 

(19,608)

 

 

4,986

 

8,393

 

 

 

 

 

ERP system

 

4,885

 

4,905

Less: Accumulated amortisation

 

(4,734)

 

(4,476)

 

 

151

 

429

 

 

 

 

 

 

 

26,370

 

30,168

 

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

 

 

 

 

 

Customer

 

 

 

ERP

 

 

 

 

 Goodwill

 

relationships

 

Software

 

system

 

Total

Consolidated

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2019

 

21,221

 

144

 

12,196

 

919

 

34,480

Additions

 

-

 

-

 

1,621

 

12

 

1,633

Disposals

 

-

 

-

 

(112)

 

(3)

 

(115)

Exchange differences

 

(7)

 

-

 

-

 

-

 

(7)

Amortisation expense

 

-

 

(12)

 

(5,312)

 

(499)

 

(5,823)

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2020

 

21,214

 

132

 

8,393

 

429

 

30,168

Additions

 

-

 

-

 

1,213

 

-

 

1,213

Disposals

 

-

 

-

 

(2)

 

(2)

 

(4)

Exchange differences

 

19

 

-

 

(1)

 

(1)

 

17

Amortisation expense

 

-

 

(132)

 

(4,618)

 

(275)

 

(5,025)

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2021

 

21,233

 

-

 

4,986

 

151

 

26,370

 

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:

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Online flash

 

19,477

 

19,458

Online retail

 

1,756

 

1,756

 

 

 

 

 

 

 

21,233

 

21,214

 

The Group's retail websites are OO.com, Deals Direct, and Top Buy. All other websites owned by the Group are online flash websites.

 

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:

 

 

Consolidated

 

 

2021

 

2020

 

 

%

 

%

 

 

 

 

 

Budgeted gross margin

 

29.09%

 

29.50%

Five year compound growth rate

 

25.49%

 

3.00%

Long-term growth rate

 

2.00%

 

2.00%

Pre-tax discount rate

 

9.00%

 

9.00%

 

Based on the assessment, no impairment charge (2020: none) is required. Management has performed a number of sensitivity tests on the above rates and note that there is no impairment indicators arising from this analysis. The recoverable amount exceeded the carrying amount by A$138,276,000 (2020: A$79,700,000). 

 

Online retail

 

Key assumptions used in value-in-use calculation

 

 

 

2021

 

2020

 

 

%

 

%

 

 

 

 

 

Budgeted gross margin

 

28.73%

 

28.30%

Five year compound growth rate

 

25.49%

 

0.80%

Long-term growth rate

 

2.00%

 

2.00%

Pre-tax discount rate

 

9.00%

 

9.00%

 

Based on the assessment, no impairment charge (2020: none) is required. The recoverable amount exceeded the carrying amount by A$6,318,000 (2020: A$3,010,000).

 

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: 

 

 

apply a 1% increase in pre-tax discount rate from 9.00% to 10.00%. No impairment would occur in the online flash CGU. The recoverable amount exceeded the carrying amount by A$116,245,000;

 

apply a 100 basis point decrease in margin from 28.73% to 27.73%. No impairment would occur in the online flash CGU. The recoverable amount exceeded the carrying amount by A$95,274,000;

 

apply a 10% decrease in growth rate from 25.49% to 15.49%. No impairment would occur in the online flash CGU. The recoverable amount exceeded the carrying amount by A$93,221,000;
 

 

apply a 1% increase in pre-tax discount rate from 9.00% to 10.00%. No impairment would occur in the online retail CGU. The recoverable amount exceeded the carrying amount by A$5,190,000; and

 

apply a 100 basis point decrease in margin from 28.73% to 27.73%. No impairment would occur in the online retail CGU. The recoverable amount exceeded the carrying amount by A$4,117,000.

 

apply a 10% decrease in growth rate from 25.49% to 15.49%. No impairment would occur in the online retail CGU. The recoverable amount exceeded the carrying amount by A$4,012,000;

 

 

Note 17. Trade and other payables

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Current liabilities

 

 

 

 

Trade payables

 

8,380

 

13,053

Other payables and accruals

 

3,541

 

3,163

Sales tax payable

 

2,383

 

2,769

 

 

 

 

 

 

 

14,304

 

18,985

 

Refer to note 24 for further information on financial instruments and capital risk management.

 

 

Note 18. Contract liabilities

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Current liabilities

 

 

 

 

Contract liabilities

 

7,047

 

6,186

 

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$7,047,000 as at 30 June 2021 (A$6,186,000 as at 30 June 2020) and is expected to be recognised as revenue in future periods as follows:

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Within six months

 

7,047

 

6,186

 

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.

 

 

Note 19. Lease liabilities

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Current liabilities

 

 

 

 

Lease liability

 

1,593

 

1,581

 

 

 

 

 

Non-current liabilities

 

 

 

 

Lease liability

 

3,705

 

5,048

 

 

 

 

 

 

 

5,298

 

6,629

 

Refer to note 24 for information on the maturity analysis of lease liabilities.

 

 

Note 20. Provisions

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Current liabilities

 

 

 

 

Lease make good provision

 

105

 

458

Gift voucher provision

 

160

 

309

Sales returns provision

 

824

 

513

 

 

 

 

 

 

 

1,089

 

1,280

 

Lease make good provision

The provision represents the present value of the estimated costs to make good the premises leased by the Group at the end of the respective lease terms.

 

Gift voucher provision

The provision represents the estimated costs to honour gift vouchers that are in circulation and not expired.

 

Sales return provision

The provision represents the costs for goods expected to be returned by customers.

 

Movements in provisions

Movements in each class of provision during the current financial year are set out below:

 

 

 

Lease make

 

Gift

 

Sales

 

 

 

 

good

 

vouchers

 

returns

 

Total

Consolidated - 2021

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

Carrying amount at the start of the year

 

458

 

309

 

513

 

1,280

Additional provisions recognised

 

-

 

160

 

706

 

866

Amounts used

 

(353)

 

(309)

 

(395)

 

(1,057)

 

 

 

 

 

 

 

 

 

Carrying amount at the end of the year

 

105

 

160

 

824

 

1,089

 

 

 

 

Note 21. Stated capital

 

 

On 28 May 2014 the company converted ordinary shares of £1 nominal value to ordinary shares of £nil nominal value, in a share-for-share exchange. In accordance with Companies (Jersey) Law 1991 Paragraph 39A, these issued shares have been recognised and maintained in a stated capital account.

 

 

 

Consolidated

 

 

2021

 

2020

 

2021

 

2020

 

 

Shares

 

Shares

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

Ordinary shares £nil each - fully paid

 

902,465,982

 

817,240,853

 

338,215 

 

328,971 

Less: Treasury shares

 

(25,533,118)

 

(25,533,118)

 

 

 

 

 

 

 

 

 

 

 

 

 

876,932,864

 

791,707,735

 

338,215 

 

328,971 

 

 

Authorised stated capital

959,403,638 (2020: 874,178,509) ordinary shares of £nil each.

 

Movements in ordinary shares

 

Details

 

Date

 

Shares

 

A$'000

 

 

 

 

 

 

 

Balance

 

1 July 2019

 

154,331,652

 

306,363

Issue of shares

 

20 September 2019

 

640,376,083

 

22,608

Issue of shares

 

11 December 2019

 

22,533,118

 

-

 

 

 

 

 

 

 

Balance

 

30 June 2020

 

817,240,853

 

328,971

Issue of shares

 

8 October 2020

 

85,225,129

 

9,244

 

 

 

 

 

 

 

Balance

 

30 June 2021

 

902,465,982

 

338,215

 

Movements in treasury shares

 

Details

 

Date

 

Shares

 

A$'000

 

 

 

 

 

 

 

Balance

 

1 July 2019

 

3,000,000

 

-

Issue of shares under the management incentive scheme

 

5 December 2019

 

22,533,118

 

-

 

 

 

 

 

 

 

Balance

 

30 June 2020

 

25,533,118

 

-

 

 

 

 

 

 

 

Balance

 

30 June 2021

 

25,533,118

 

-

 

Ordinary shares

Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders should the Company be wound up in proportions that consider both the number of shares held and the extent to which those shares are paid up.

 

Treasury shares

The Company has two employee share plans; (i) the Executive Incentive Plan ('EIP') and (i) 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 either 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 or certain share price hurdles. Share options and loan shares have been granted over the ordinary share capital of the Company and are accounted for as share-based payments. That is, the fair value of the accounting expense in relation to these options and loan shares are recognised over the vesting period.

 

Vested and unvested shares under the plans are recorded as treasury shares representing a deduction against issued capital. When the loans are settled or the options are exercised, the treasury shares are reclassified as ordinary shares and the equity will increase accordingly. Treasury shares have no dividend, or voting, rights.

 

Current year

On 8 October 2020, the Company issued 85,225,129 new ordinary shares to entities associated with Gabby Leibovich, Hezi Leibovich and Nati Harpaz (together, the 'Subscription') and raised A$9,244,000 (£5,100,000). The Subscription successfully built Catch.com.au into one of Australia's most successful online retailers, which included an inventory business as well as a successful marketplace which had more than two million products available for Australian consumers.

 

The Group intends to use a proportion of the proceeds as capital investments in technology to expand and develop its marketplace platform. The Group has been taking advantage of inventory available around the world and the proceeds will enable further selective investment in inventory to continue to improve brand and inventory mix. At the reporting date, with this additional investment, the Group had cash and cash equivalents of A$9,210,000 (2020: A$6,660,000) and will use the funds to grow the business.

 

Prior year

On 20 September 2019, the Company finalised a share placement for A$23,329,000. Net proceeds after considering the share issue costs of A$721,000 was A$22,608,000. The total number of new shares issued under the placement was 640,376,083.

 

On 11 December 2019, the Company issued 22,533,118 ordinary shares, 4,542,614 to MySale Group Trustee Limited, in its capacity as the trustee of the MySale Group Plc Employee Benefit Trust ('EBT'), and 17,990,504 directly to those Directors and management taking part in the Loan Share Plan as part of the Company's management incentive scheme for its Directors, Non-executive Directors, and senior management. These shares, in addition to the existing 3,000,000 ordinary shares already held in the EBT, will be used to satisfy the Share Awards, subject to the performance criteria being met. Following admission of these shares, the Company's total issued share capital was 817,240,853 Ordinary Shares. The total number of voting rights in the Company is 791,707,735 (25,553,118 with no voting rights).

 

 

 

 

 

Note 22. Other reserves

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Foreign currency reserve

 

2,697

 

2,265

Share-based payments reserve

 

5,709

 

5,512

Capital reorganisation reserve

 

(132,756)

 

(132,756)

 

 

 

 

 

 

 

(124,350)

 

(124,979)

 

Foreign currency reserve

The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign operations to Australian dollars.

 

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.

 

Movements in reserves

Movements in each class of reserve during the current and previous financial year are set out below:

 

 

 

 Foreign

 

 Share-based

 

Capital

 

 

 

 

 currency

 

payments

 

reorganisation

 

Total

Consolidated

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

Balance at 1 July 2019

 

4,390

 

5,241

 

(132,756)

 

(123,125)

Foreign currency translation

 

(2,125)

 

-

 

-

 

(2,125)

Share-based payments (note 32)

 

-

 

271

 

-

 

271

 

 

 

 

 

 

 

 

 

Balance at 30 June 2020

 

2,265

 

5,512

 

(132,756)

 

(124,979)

Foreign currency translation

 

432

 

-

 

-

 

432

Share-based payments (note 32)

 

-

 

197

 

-

 

197

 

 

 

 

 

 

 

 

 

Balance at 30 June 2021

 

2,697

 

5,709

 

(132,756)

 

(124,350)

 

 

Note 23. Dividends

 

There were no dividends paid, recommended or declared during the current or previous financial year.

 

 

Note 24. Financial instruments and capital risk management

 

Financial risk management objectives

The Group's activities expose it to market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management strategy seeks to minimise any adverse effects from the unpredictability of financial markets on the Group's financial performance. The Group uses financial instruments such as currency forwards to hedge certain financial risk exposures.

 

The Board of Directors (the 'Board') is responsible for setting the objectives and underlying principles of financial risk management for the Group.

 

Financial risk management is carried out by the executive directors and the executive management team in accordance with the policies set by the Board. They identify, evaluate and hedge financial risks in close co-operation with the Group's operating units. Regular reports are circulated and reviewed by executive directors.

 

Market risk

 

Foreign currency risk

Currency risk arises within entities in the Group when transactions are denominated in foreign currencies. The Company is incorporated in Jersey and the Group operates predominantly 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. Refer to note 5 for the foreign exchange gain / loss recognised in the year.

 

The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at the reporting date were as follows:

 

 

 

Assets

Liabilities

 

 

2021

 

2020

 

2021

 

2020

Consolidated

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

US dollars

 

107

 

121

 

-

 

(49)

Pound sterling

 

1,655

 

996

 

-

 

(1,261)

New Zealand dollars

 

1,539

 

3,479

 

(26)

 

(330)

Singapore dollars

 

183

 

1,331

 

-

 

(132)

Malaysian ringgit

 

140

 

174

 

-

 

(89)

Russian ruble

 

185

 

47

 

-

 

(37)

 

 

 

 

 

 

 

 

 

 

 

3,809

 

6,148

 

(26)

 

(1,898)

 

The Group had net assets denominated in foreign currencies of A$3,783,000 as at 30 June 2021 (2020: net assets of A$4,250,000). Based on this exposure, had the Australian dollar weakened by 10% / strengthened by 10% (2020: weakened by 10% / strengthened by 10%) against these foreign currencies with all other variables held constant, the Group's foreign exchange loss before tax for the year would have been A$378,000 lower / higher (2020: A$425,000 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. Refer to note 5 for the actual foreign exchange gain or loss recognised for the year.

 

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, as detailed in the table below, is regarded as total equity, as recognised in the balance sheet, plus net debt. Net debt is calculated as total debt (including borrowings and lease liabilities) less cash and cash equivalents.

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Lease liabilities

 

5,298

 

6,629

Borrowings

 

 

Less: Cash and cash equivalents

 

(9,210)

 

(6,660)

Net debt

 

(3,912)

 

(31)

 

 

 

 

 

Equity

 

22,706

 

21,281

 

 

 

 

 

Capital

 

18,794

 

21,250

 

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 2020 Annual Report.

 

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 and cash held by merchant provider. For bank deposits and merchant, 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 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 one year. See note 11 for details of the allowance made against trade receivables.

 

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.

 

Remaining contractual maturities

Trade payables and other financial liabilities mainly arise from the financing of assets used in the Group's ongoing operations such as plant and equipment and investments in working capital. These assets are considered in the Group's overall liquidity risk.

 

The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the balance sheet.

 

 

 

Weighted average interest rate

 

< 1 month

 

1-3 months

 

3-12 months

 

1-5 years

 

Total undiscounted liability

 

Carrying amount as included on balance sheet

Consolidated - 2021

 

%

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

-

 

11,044

 

1,248

 

2,012

 

-

 

14,304

 

14,304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing - variable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease liability

 

5.00%

 

172

 

517

 

1,331

 

4,835

 

6,855

 

5,298

Total non-derivatives

 

 

 

11,216

 

1,765

 

3,343

 

4,835

 

21,159

 

19,602

 

 

 

Weighted average interest rate

 

< 1 month

 

1-3 months

 

3-12 months

 

1-5 years

 

Total undiscounted liability

 

Carrying amount as included on balance sheet

Consolidated - 2020

 

%

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

-

 

12,877

 

5,733

 

510

 

(135)

 

18,985

 

18,985

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing - variable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease liability

 

5.00%

 

158

 

475

 

1,250

 

5,673

 

7,556

 

6,629

Total non-derivatives

 

 

 

13,035

 

6,208

 

1,760

 

5,538

 

26,541

 

25,614

 

The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.

 

Fair value of financial instruments

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.

 

 

Note 25. Changes in liabilities arising from financing activities

 

 

 

Bank

 

Lease

 

 

 

 

loans

 

 liability

 

Total

Consolidated

 

A$'000

 

A$'000

 

A$'000

 

 

 

 

 

 

 

Balance at 1 July 2019

 

5,200

 

20

 

5,220

Lease liability opening balance at 1/07/19 on adoption of IFRS 16

 

-

 

1,724

 

1,724

Net cash used in financing activities

 

(5,200)

 

(1,163)

 

(6,363)

Other changes - cash incentive

 

-

 

1,026

 

1,026

Interest and finance charges paid / payable on lease liabilities (note 7)

 

-

 

241

 

241

Acquisition of buildings and equipment - right-of-use

 

-

 

4,781

 

4,781

 

 

 

 

 

 

 

Balance at 30 June 2020

 

-

 

6,629

 

6,629

Net cash used in financing activities

 

-

 

(1,007)

 

(1,007)

Lease receivable (sub-lease)

 

-

 

(564)

 

(564)

Interest and finance charges paid / payable on lease liabilities (note 7)

 

-

 

299

 

299

Other changes

 

-

 

(59)

 

(59)

 

 

 

 

 

 

 

Balance at 30 June 2021

 

-

 

5,298

 

5,298

 

 

Note 26. 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:

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Short-term employee benefits

 

2,213

 

2,108

Post-employment benefits

 

199

 

194

 

 

 

 

 

 

 

2,412

 

2,302

 

Key management includes Directors (executives and non-executives) and key heads of departments.

 

During the financial year ended 30 June 2021 A$1,968,000 (2020: A$6,323,000) performance rights were granted to members of key management personnel under share-based payments plans operated by the Group as disclosed in note 32.

 

 

Note 27. Remuneration of auditors

 

Services provided by the Company's auditors and network firms
During the year the Company (including its overseas subsidiaries) obtained the following services from the Company's auditors at costs as detailed below:

 

 

 

Consolidated

 

 

2021

 

2020

 

 

A$'000

 

A$'000

 

 

 

 

 

Fees payable to the Company's auditor and its associates for the audit of the consolidated financial statements

 

202

 

201

Fees payable to the Company's auditor and its associates for other services:
- the audit of the Company's subsidiaries

 

58

 

49

- taxation services

 

12

 

39

- other non-audit services

 

240

 

29

 

 

 

 

 

 

 

512

 

318

 

 

Note 28. Contingent liabilities

 

During the year ended 30 June 2020, the Group issued bank guarantees through its banker, Hong Kong and Shanghai Bank Corporation and Macquarie Bank, in respect of lease obligations amounting  A$777,000.

 

There was no contingent liabilities as at 30 June 2021.

 

 

Note 29. Related party transactions

 

Parent entity

MySale Group Plc is both the parent company of the Group and also the ultimate parent entity of the group.

 

Subsidiaries

Interests in subsidiaries are set out in note 30.

 

The Group has utilised exemptions available to it to not report transactions with its 100% or majority owned subsidiaries that are listed in note 30. 

 

Key management personnel

Disclosures relating to key management personnel are set out in note 26.

 

Transactions with related parties

There were no transactions with related parties during the current and previous financial year.

 

Receivable from and payable to related parties

There were no trade receivables from or trade payables to related parties at the current and previous reporting date.

 

Loans to/from related parties

There were no loans to or from related parties at the current and previous reporting date.

 

Ultimate Controlling party
The directors consider that the Group has no ultimate controlling party.

 

 

Note 30. 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:

 

 

 

 

 

 

 

Parent

Non-controlling interest

 

 

Principal place of business /

 

 

 

Ownership interest

 

Ownership interest

 

Ownership interest

 

Ownership interest

 

 

Country of

 

 

 

2021

 

2020

 

2021

 

2020

Name

 

incorporation

 

Principal activities

 

%

 

%

 

%

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

APAC Sale Group Pte. Ltd.

 

3 Fusionopolis Link #02-08 [email protected], Singapore

 

Trading company

 

100%

 

100%

 

-

 

-

APAC Sales Group, Inc.

 

1107 S Boyle Street, Los Angeles, CA 90023, U.S.A

 

Trading company

 

100%

 

100%

 

-

 

-

APAC UK Procurement Co Limited

 

The Old Mill, 9 Soar Lane, Leicester, LE3 5DE, England

 

Trading company

 

100%