MySale has released a trading update covering the 6 months ended 31 December, indicating that the full year outcome will be in line with market expectations, which were revised on 11 December. The principle challenge they experienced was greater than anticipated market disruption, and execution challenges, after the new sales tax rules were introduced in Australia, MySale’s largest market (>75% of sales). This was exacerbated by the product mix, and an insufficient proportion of own-buy inventory being located in the local DC. Revenue has also been impacted by the reduction in offline activities, albeit this is planned and supports working capital improvements. Driven by better working capital management, net cash balances grew ahead of expectations in H1, increasing to A$2.7m (vs A$6.2m net debt at the end of June). The impact in H1 was material, with sales and margin performance (-17% and -680bps) resulting in a cA$5m EBITDA loss. However, the actions that have been rapidly deployed are gaining traction, and in excess of A$10m annualised cost savings are anticipated. Consequently, performance is expected to improve significantly in H2 putting them on track to meet full year expectations. The strategic review of UK/SE Asia operations is ongoing, as are trials to commercialise OurPay. After the warning in Dec we suggested that pencilling in divestments at cA$50m and placing the core on <0.5x EV/sales implies fair value of 57p, with potential value upside from OurPay. We are not making any changes to that view today and await a further update with the interim results in mid March.