MySale Group plc (LON:MYSL) the leading international online retailer has today provided a trading update for the 12 months to 30 June 2016 (”FY2015-16”).
· Ahead of market expectations for both revenue and underlying EBITDA
· Underlying EBITDA1 expected to be above current market expectations at approximately A$5 million versus consensus market forecast of A$4.7 million
· Revenue increased by 7% to A$252 million (2015: A$235 million) for the full year following second half growth of 10%, also above current market expectations
· Revenue growth in all territories, but notable strength in the target growth markets UK (+140%) and Asia (+20%)
· Gross Profit increased 21% driven by a 300bp margin improvement, with growth of 26% in the second half
· Strong balance sheet with an increased cash balance of A$34 million (31 Dec 2015: A$30 million) and underlying cash position of A$43 million, representing c 16 pence per share
1 Underlying EBITDA: earnings before interest, taxation, depreciation and amortisation and before certain one-off items of a non-recurring nature and other non-cash items
In the second half of the financial year the Group continued its good progress. The active customer base returned to growth, core customer metrics remained robust, average order value increased and both revenue growth and margin improvement accelerated in the second half of the year, delivering full year performance ahead of expectations, despite some currency headwinds during the year.
This continued improvement was driven by the Group’s clear focus on providing exceptional value to customers and supported by proven digital marketing activity and continued technology investment.
The Group has now grown underlying EBITDA in each of the last three half year periods.
All three Group territories have seen increases in revenue and gross profit however it is in South-East Asia2 and the United Kingdom that the Group has seen the most significant rates of growth. The Group’s strategy for these, newer, territories has been firstly to grow the active member base and then to build profitability.
2 South-East Asia: Hong Kong, Malaysia, Singapore, Philippines and Thailand
The refocus on the Group’s core business instigated in early 2015 has delivered particularly strong results in the United Kingdom where revenue grew by 140% over the course of FY2015-16, accelerating to over 200% in the second half. The United Kingdom trades predominantly under the premium Cocosa brand, which has resonated strongly with consumers, and has been acquiring and converting customers at the fastest and most cost effective rate of all the Group’s territories. There is an enormous opportunity to grow the business in the United Kingdom and the Group plans to increase investment in customer acquisition and grow the customer base.
The Group completed its acquisition of the customer lists and IP of the Australian online retail business at the end of January 2016 and subsequently these retail websites were successfully re-platformed and integrated with the Group’s operations. This acquisition is important in three regards. Firstly, it grows the Group’s ANZ3 active customer base, and secondly, it accelerates the Group’s development of its retail marketplace capability, focussed on complementary product categories, which provides a good base for further growth in FY2016-17 and beyond. Thirdly, it demonstrates the Group’s ability to efficiently integrate acquisitions onto the Group’s technology and operational platforms.
3 Australia and New Zealand
The Group had a considerably better year in FY2015-16 with significantly improved operational performance and good progression against its strategic aims. We built on a solid first half with further improvements in the second half and the challenge now is to take the current momentum and execute on the real and exciting opportunities the Group has to grow the business significantly further.
The Group’s diversified international operations should be well insulated from any uncertainty associated with the United Kingdom’s prospective exit from the EU and in the immediate term the Group will experience a slight benefit from a weaker GBP Sterling exchange rate. Additionally the Group’s core customer offer of compelling, discounted value in branded products should be highly relevant for consumers in tightening economic conditions.