The past two years were not fruitful for Apple lifestyle store Story-i (ASX: SRY, formerly Pine Capital Limited), in fact they were pretty gloomy. The years were blemished by an ASX suspension on its shares, hence missed opportunities and accumulated a plethora of ASX queries alongside some failed capital raises. However, things are about to change, as the Company announced that it is ready to make a comeback.
In the attempt to be relisted, it has made several steps to win ASX approval, including engaging independent accounting firm Hall Chadwick to audit the Company’s corporate governance policies and processes, and appointing original founder Michael Chan as the new Managing Director. Story-i has also lodged a full form prospectus to satisfy the ASX’s requirement regarding trading reinstatement, and has engaged EverBlu Capital to provide corporate advisory services for 12 months.
The Company is offering, pursuant to the prospectus, 1,000 Shares at an offer price of $0.02 each to raise up to approximately $20 (twenty dollars, in case you thought it was a typo). The purpose of the Offer is not to raise capital, but to assist the Company in satisfying certain conditions to be officially reinstated to the ASX. The Company is only extending the offer to specific parties on invitation from the Directors.
In engaging EverBlu’s corporate advisory services, Story-i will pay a retainer fee of $10,000 per month and pay a fee of 6% of the gross proceeds of any capital raising transaction.
Story-i, through its subsidiaries in Indonesia and Singapore, operates as a non-exclusive Apple Authorised Reseller, Apple Premium Reseller and Apple Authorised Service Provider, selling full suite Apple products across 26 consumer electronic stores in Indonesia, in which 15 stores belong to the Company. Apple Group does not sell directly to consumers in the country.
The Company listed on the ASX in January 2015 at an IPO Offer Price of $0.20 per share, before being suspended from quotation on the ASX on 24 March 2021 due to various Corporations Act and Listing Rules breaches and compliance matters, such as:
- lodging cleansing notice in respect to issuance of shares when it did not satisfy the statutory requirements to do so;
- failing to have the requisite number of directors ‘ordinarily reside’ in Australia;
- undertaking transactions (sale of products) worth approximately $3.5m to two entities that were closely controlled by one of the Company directors and their close relatives, which was a contravention of related party provisions of the ASX Listing Rules; and,
- concerns in respect to the adequacy of the Company’s existing corporate governance policies and processes.
Story-i aims to have its trading suspension lifted and be reinstated to the ASX on 23 March 2023, subject to the ASX’s discretion.
Moving forward, the Company’s plans to open new stores in more widespread locations to cater to local demographic needs, maintain its current reseller and supplier partnerships, continue to build online sales platforms and expand its eCommerce capability, as well as currently investigating opportunities to be a reseller of gaming products, including but not limited to gaming headsets, keyboards, devices.
For the half year ending on 31 December 2022, the Company achieved a revenue growth of 27%, bringing its total revenue up to $20.9 million compared to $16.3m revenue in the previous corresponding period (pcp). They also slightly improved gross profit from $2.5m in H1 FY21 to almost $3m in H1 FY22, unfortunately this was not enough to cover all associated operational costs which amounted to almost $5m. The Company ended the half year with a net loss of $1.13m, a slight improvement from $1.19m net loss on pcp.
Story-i admitted that the Indonesian retail environment was not the most supportive for discretionary consumer goods that it primarily sells. As general economic conditions worsened in the country, reduction in the disposable incomes may decrease consumer confidence and consumer demand, therefore subsequently resulting in lower levels of revenue and profitability. Competitors such as giant eCommerce platforms are bagging online sales from wider consumer demography, which disadvantaged Story-i which primarily sells through physical stores and is yet to have an established online presence.
The Company has also faced competition from identical goods imported to Indonesia from third countries, which resulted in lower sales and/or the prices of products sold and eroded gross profit margins.
Clara is a Business Reporter for The Sentiment.
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