MYSL.L Regulatory News (MYSL)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

THIS IS AN ANNOUNCEMENT UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO CERTAINTY THAT AN OFFER WILL BE MADE, NOR AS TO THE TERMS ON WHICH ANY OFFER MIGHT BE MADE.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

MySale Group plc

("MySale", the "Company" or the "Group")

Strategic Review and Formal Sale Process

MySale Group plc (AIM: MYSL) (the "Group"), a leading international online retailer, announces that the board of the Company (the "Board") has decided to commence a review of the Group's options with a view to maximising value for its stakeholders (the "Strategic Review").

The Strategic Review will consider all types of corporate activity, including options to raise additional capital to support the ongoing restructuring and rationalisation of the Group, reduce the Group's debt, the sale of certain parts of the Group or the whole of the Group and de-listing of the Company's shares to trading on AIM. The Strategic Review will include a formal sale process of the Company, further details of which can be found below.

The Strategic Review builds upon initiatives that have already been commenced by the Board in order to rationalise the business and implement a number of cost saving measures to improve business performance and strengthen the Group's balance sheet.

Background

As previously announced the Group has continued to experience challenging trading conditions in Australia, its largest market, primarily due to the market disruption caused by changes to GST regulation introduced in July 2018, exacerbated by the Group's product mix, international cost base and inventory location. This has had and continues to have a negative impact on the Group's financial performance with declines in revenue, gross profit and gross margin.

The Board has implemented a detailed action plan to address these challenges which is ongoing, focusing on its activities and opportunities in the Australia and New Zealand ("ANZ") region through its 'ANZ First' strategy. These actions, which are outlined below are expected to deliver a material reduction in costs and deliver improved business performance in FY20, when the Group is expected to show improved profitability and be cash generative.   

· Cost saving initiatives

As part of its 'ANZ First' strategy, the Group is closing its UK and US operations and has disposed of its UK website, cocosa.co.uk to Brandalley UK Limited, as announced in May. Additionally, the Group is streamlining its supply chain to ANZ and South East Asia (''SEA'') with international suppliers bulk shipping product to the Australian distribution centre where it is then shipped direct to customers, thereby delivering freight savings and operational leverage to the Group.

· Marketplace platform

Over the last two years the Group has made a significant investment in developing its own proprietary marketplace platform which provides customers with a consistent, personalised shopping experience across all websites and channels.

The platform provides significant scalability allowing over 100,000 new products to be launched each day and a single, live view of millions of SKU's in multiple stock locations.

The advanced capabilities of the platform are being used to successfully create revenue opportunities and operational efficiencies. 

Revenue opportunities are being created with functionality such as the Select programme (membership of which provides customers with a number of exclusive benefits and access to discounted delivery packages), which has been shown to strengthen customer engagement and increase frequency.

Accelerated operational efficiencies have been unlocked in areas such as buying and merchandising where significant automation of processes has reduced the headcount in key departments and supported centralisation of functions.

· Marketplace revenue initiatives

The Group has a significant customer base within the ANZ and SEA regions with approximately 780,000 active customers in the last 12 months and over 3.6 million historical customers. The Group remains focussed on accelerating the growth of its marketplace platform and expanding the supplier base, whilst also maintaining focus on its key strategic US and UK brand partners.

The marketplace platform development included the creation of Ourpay, a proprietary buy now, pay later solution, which has been developed further during the current year. Ourpay has continued to prove very effective and attractive to customers and has now been used by more than 180,000 customers, representing in excess of 20% of transaction volumes.

· New service initiatives

The Group is planning to launch MySale Marketing Services in Q1 2020. These initiatives will generate advertising and subscription revenues and leverage data insights from the Group's technology platform and monetise the ANZ and SEA websites by delivering additional commercial revenues.

· Current trading

The Group has continued to experience challenging trading conditions in Australia, its largest market, as previously announced and primarily due to the market disruption caused by changes to GST regulation introduced in July 2018, exacerbated by the Group's product mix and inventory location. This has had, and continues to have, a negative impact on the Group's financial performance with declines in revenue, gross profit and gross margin.

The Group's detailed action plan to address these challenges is ongoing, focusing on its activities and opportunities in the ANZ region through its 'ANZ First' strategy. These actions, including the sale of the UK website and closure of UK and USA offices, are delivering significant cost savings, which will support improved financial performance in the future. However the operational disruption of this significant restructuring is in itself having some temporary negative effect on the group's trading performance.

Further to an internal review the Board has ascertained the FY19 financial statements are to include a one off accounting charge of A$1.96m in relation to an asset that is no longer deemed recoverable. This accounting adjustment has no impact on the Group's current or forecast cash balance.

As a result of the restructuring initiatives and the cost savings the Group's marketplace platform has unlocked, it is anticipated that the Group's underlying operating expenses will be significantly reduced, from A$74 million in FY18 to approximately A$35 million on an annualised basis.

The reconfigured group will have materially lower costs and be able to deliver improved business performance in FY20, when the Group is expected to show improved profitability and to be cash generative.

· Bank Finance

The Group's net debt at 31 May 2019 was A$15.4 million with total available facilities of A$19.7 million. The Group continues to operate within its existing banking facilities, the majority of which are repayable on demand, and is in discussions with its bank who have indicated that they are supportive of the Strategic Review. However, given the market challenges that the Group continues to face and the reduction in financial performance, it is possible that additional funding may be required in the short term to support the restructuring and cost reduction initiatives being undertaken and ongoing working capital requirements of the Company.

The Group's net current assets, excluding the net debt noted above, at 31 May 2019 were A$25.1 million.

Proposed Formal Sale Process

MySale has agreed with the Takeover Panel that any discussions in relation to any takeover offer for the Group may take place within the context of a formal sale process within the meaning of the City Code on Takeovers and Mergers (the "Takeover Code") in order to enable conversations with parties interested in making such a proposal to take place on a confidential basis. The Takeover Panel has granted a dispensation from the requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Takeover Code (as referred to in the Note 2 of Rule 2.6 of the Takeover Code) such that any interested party participating in the formal sale process will not be required to be publicly identified as a result of this announcement and will not be subject to the 28 day deadline referred to in Rule 2.6(a) of the Takeover Code for so long as it is participating in the formal sale process.

Following this announcement, the Company is now considered to be in an "offer period" as defined in the Takeover Code, and the dealing disclosure requirements listed below will apply.

Parties with an interest in making a proposal for the Group or its assets should contact N+1 Singer through the contact details set out below. It is currently expected that any interested parties interested in participating in the formal sale process will, at the appropriate time, enter into a non-disclosure agreement with the Company on terms satisfactory to the Board and on the same terms, in all material respects, as other interested parties. The Group then intends to provide such interested parties with certain information on the business, following which interested parties shall be invited to submit their proposals to N+1 Singer. The Group will update the market in due course regarding timings for the formal sale process as agreed with the Panel. There can be no certainty that any offer will be made, nor as to the terms on which any offer will be made. The Group is not currently in any discussions with any potential offeror relating to an acquisition of the issued and to be issued share capital of the Group.

The Board reserves the right to alter or terminate the process at any time and, in such cases, will make an announcement as appropriate. The Board also reserves the right to reject any approach or terminate discussions with any interested party at any time.

A copy of this announcement is also available on MySale's website atwww.mysalegroup.com  

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement this inside information is now considered to be in the public domain.

Enquiries:

About MySale

MySale is a leading international online retailer with established retail websites in Australia, New Zealand and South-East Asia. Founded in 2007, the Group provides customers with access to outstanding brands and products at discounted prices whilst simultaneously providing brand partners unique international inventory and sales solutions.

 The Group provides a flexible marketplace solution in ANZ and South East Asia for domestic and international brands The Group offers a number of solutions for brands including 1P, 3P (strategic partners, managed and self-managed). The core product categories are womenswear, menswear, footwear, sports, health & beauty, homewares, technology and personalised gifts

Customers' shopping experiences are enhanced by the Group's deployment of leading edge technology to ensure personalised and localised product offerings. The customer experience has been at the heart of the Group's technology development since the earliest days and now mobile commerce is the Group's main sales channel. Proprietary technology innovations deployed include the Ourpay 'buy-now, pay-later' solution which has proved popular with over 180,000 customers using the solution.

The Group's online sales are supported by a robust and flexible network of in-house supply chain infrastructure and technology that enables MySale to offer products from around the world for sale and delivery to customers in each territory.

As a result of these exceptional capabilities in inventory management and international sales MySale has built an enviable portfolio of over 2,500 brand partners from whom products are sourced.

The Group operates websites under a number of different brands all of which operate on a uniform technology platform and a single international logistics infrastructure.

The Group currently operates 14 websites in seven countries; OzSale and BuyInvite in Australia; NzSale in New Zealand; SingSale in Singapore; MySale in Malaysia, Thailand, the Philippines, and Hong Kong,; whilst the Group's retail websites are Deals Direct, OO.com and Top Buy in Australia and Identity Direct in Australia and New Zealand.

MySale is a UK company quoted on the AIM market of the London Stock Exchange. For more information, please www.mysalegroup.com/investor. 

About N+1 Singer

N+1 Singer is authorised and regulated in the United Kingdom by the FCA and is acting exclusively for the Company and no one else in connection with the matters referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the customers of N+1 Singer or for providing advice in relation to the matters described in this Announcement.

Forward-looking statements

This Announcement (including information incorporated by reference in this Announcement), oral statements made regarding the formal sale process, and other information published by the Company contain statements about the Company that are or may be deemed to be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, may be forward looking statements.

These forward-looking statements are not guarantees of future performance. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this Announcement. The Company disclaims any obligation to update any forward-looking or other statements contained in this Announcement, except as required by applicable law.

 Rule 2.9 disclosures

In accordance with Rule 2.9 of the Takeover Code, MySale confirms that as at close of business on 21 June 2019 (being the last Business Day prior to the date of this Announcement), it has in issue 154,331,652 ordinary shares of no par value each. The International Securities Identification Number (ISIN) of the MySale shares is JE00BMH4MR96.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.