TIDMATG
RNS Number : 0176M
Auction Technology Group PLC
19 May 2022
AUCTION TECHNOLOGY GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHSED 31 MARCH 2022
Strong first half performance leading to increased full year
outlook as ATG leads the transformation of the auction industry
London, United Kingdom, 19 May 2022 - Auction Technology Group
plc ("ATG", "the Company", "the Group") (LON: ATG), operator of the
world's leading marketplaces for curated online auctions, today
announces its unaudited financial results for the six months ended
31 March 2022.
Financial results
HY 22 HY 21 Movement
Adjusted(1)
Proforma revenue(1&2) GBP57.7m GBP49.9m +16%
Adjusted EBITDA(1) GBP26.8m GBP17.0m + 58%
Adjusted EBITDA margin %(1) 46% 49% -3ppt
Adjusted diluted earnings per share(1) 13.4p 0.9p +1,389%
Adjusted free cash flow(1) GBP24.3m GBP14.5m +68%
Adjusted net (debt)/cash(1) GBP(119.7)m GBP6.1m -GBP125.8m
Reported
Revenue GBP57.7m GBP34.5m +67%
Operating profit/(loss) GBP9.2m GBP(12.0)m +177%
Operating margin % 16% (35%) +51ppt
Profit/(loss) before tax GBP3.3m GBP(22.6)m +115%
Basic earnings/(loss) per share 3.2p (37.1)p +109%
Cash generated by operations GBP22.1m GBP8.7m +154%
Financial highlights
-- Revenue of GBP57.7m, up 16% a proforma basis(2) year-on-year
and up 67% on a reported basis, driven by resilient growth in Total
Hammer Value(3) ("THV") as well as strong growth in value-add
services; a consecutive strong first half performance with the
prior year having benefited from Covid-19 tailwinds
-- Adjusted EBITDA of GBP26.8m, up 58% year-on-year; Adjusted
EBITDA margin of 46%, up from 45% in FY 21
-- Profit before tax of GBP3.3m, compared to a loss of GBP22.6m
in the same period last year, after share-based payments expense,
intangible asset amortisation and FX losses on our USD denominated
loan
-- Basic earnings per share of 3.2p and adjusted diluted
earnings per share of 13.4p compared to 0.9p in the same period
last year
-- Strong cash generation, with GBP24.3m of Adjusted free cash
flow and closing adjusted net debt of GBP119.7m after completion of
the LiveAuctioneers acquisition. Adjusted net debt/ adjusted last
twelve months EBITDA ratio below 2.5x
Operational Highlights
-- THV up 27% to GBP4.9bn, driven by the auction industry's
continuing structural shift online, more inventory coming to
market, higher second-hand asset prices and our continued strategic
expansion into newer verticals
-- Gross Merchandise Value(3) ("GMV") of GBP1.6bn, up 25% year-on-year; online share(3) of 33%
-- Take rate(3) impacted by particularly strong THV growth in
verticals that typically have a significantly lower commission
rate, including real estate. Excluding the impact of real estate,
take rate would have increased by 0.2ppt
-- Successful acquisition and integration of LiveAuctioneers;
performing ahead of our plans. Over 50% of auction houses on
LiveAuctioneers have adopted their payments solution and we are on
track for a payments rollout to Proxibid by the end of the calendar
year
-- Over 89m bidding sessions and over 54m bids placed in the
half, demonstrating the strength of our competitive position in the
online auction market
John-Paul Savant, Chief Executive Officer of Auction Technology
Group plc, said:
"I am delighted with the strong performance that we delivered in
the first half of 2022. Our continued growth clearly demonstrates
that the auction industry's structural shift online that began pre
Covid-19, and accelerated during the pandemic, has continued.
Auctioneers list their assets where they can get the highest return
for their consignors, and bidders buy where they can find the
widest choice while buying with the highest degree of trust. ATG's
growth, even amidst uncertainty in the broader world economy,
demonstrates both the value that we bring to auctioneers and
bidders and the increasing diversity of our revenues. Our team is
continuing to work hard to enhance our offering and we have seen
more bidders, higher asset prices and more items listed to sell,
thereby driving the virtuous cycle for bidders and auctioneers.
"The successful acquisition of LiveAuctioneers has provided us
with access to the huge North America Arts & Antiques market.
We are particularly pleased with the strength of LiveAuctioneers'
payments product and the depth of the LiveAuctioneers team, which
gives us confidence in the roll-out of payments later this year, as
well as giving us good visibility into other value-add services in
the future.
"We are looking forward to building on the milestones we have
achieved as we continue to unlock the value of the secondary goods
market and accelerate the growth of the circular economy. I am
incredibly excited by the future for ATG as we are still in the
early stages of our journey to lead the evolution of the auction
industry. Our shared success model means we are very well placed
both to deliver against the multiple growth opportunities ahead
while enabling our partners to also grow and to maximise the value
of all secondary market goods, which we believe will lead to a less
wasteful, greener world."
Current trading and outlook
Our performance in the first half of FY 22 was better than
expected, driven by the strong growth in THV. Trading for the
second half to date has remained in line with Board expectations.
Therefore, based on our HY 22 outperformance and management's
unchanged view of the second half of FY 22, we are increasing our
revenue growth guidance. For FY 22, we now expect low double digit
proforma revenue growth. Our FY margin guidance remains unchanged
as we continue to invest in our business to support future growth.
We remain confident of achieving our medium-term targets of
mid-teens plus proforma revenue growth and mid-high 40's Adjusted
EBITDA margin percentages.
Webcast presentation
There will be a webcast presentation for analysts this morning
at 9.30am. Please contact ATG@tulchangroup.com if you would like to
attend.
For further information, please contact:
ATG
For investor enquiries rebeccaedelman@auctiontechnologygroup.com
For media enquiries press@auctiontechnologygroup.com
J.P. Morgan Cazenove +44 207 742 4000
(Joint corporate broker to ATG)
Bill Hutchings, James Summer, Will
Vanderspar
Numis Securities Limited +44 207 260 1000
(Joint corporate broker to ATG)
Nick Westlake, Matt Lewis, William
Baunton
Tulchan Communications +44 207 353 4200
(Public relations advisor to ATG) ATG@tulchangroup.com
Tom Murray, Matt Low, Laura Marshall
About Auction Technology Group plc
Auction Technology Group plc ("ATG") is the operator of the
world's leading marketplaces and auction services for curated
online auctions, seamlessly connecting bidders from around the
world to over 3,600 trusted auction houses across two major
sectors: Industrial & Commercial ("I&C") and Art &
Antiques ("A&A").
The Group powers seven online marketplaces using its proprietary
auction platform technology, hosting in excess of 70,000 live and
timed auctions each year. ATG has been supporting the auction
industry since 1971 and the Group has offices in the UK, US and
Germany.
CAUTIONARY STATEMENT The announcement may contain
forward-looking statements. These statements may relate to (i)
future capital expenditures, expenses, revenues, earnings,
synergies, economic performance, indebtedness, financial condition,
dividend policy, losses or future prospects, and (ii) developments,
expansion or business and management strategies of the Company.
Forward-looking statements are identified by the use of such terms
as "believe", "could", "should", "envisage", "anticipate", "aim",
"estimate", "potential", "intend", "may", "plan", "will" or
variations or similar expressions, or the negative thereof. Any
forward-looking statements contained in this announcement are based
on current expectations and are subject to risks and uncertainties
that could cause actual results to differ materially from those
expressed or implied by those statements. If one or more of these
risks or uncertainties materialise, or if underlying assumptions
prove incorrect, the Company's actual results may vary materially
from those expected, estimated or projected. No representation or
warranty is made that any forward-looking statement will come to
pass. Any forward-looking statements speak only as at the date of
this announcement. The Company and its directors expressly disclaim
any obligation or undertaking to publicly release any update or
revisions to any forward-looking statements contained in this
announcement to reflect any change in events, conditions or
circumstances on which any such statements are based after the time
they are made, other than in accordance with its legal or
regulatory obligations (including under the UK Listing Rules and
the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority). Nothing in this announcement shall exclude any
liability under applicable laws that cannot be excluded in
accordance with such laws.
LEI Number: 213800U8Q9K2XI3WRE39
1. The Group provides alternative performance measures ("APMs")
which are not defined or specified under the requirements of
International Financial Reporting Standards as adopted by the EU.
We believe these APMs provide readers with important additional
information on our business and aid comparability. We have included
a comprehensive list of the APMs in note 2 to the Condensed
Consolidated Interim Financial Statements, with definitions, an
explanation of how they are calculated, why we use them and how
they can be reconciled to a statutory measure where relevant.
2. The Group has made certain acquisitions that have affected
the comparability of the Group's results. To aid comparisons
between HY 22 and HY 21, the prior period results have been
presented to include the results as if the acquisition of
LiveAuctioneers and Auction Mobility had occurred on 1 October
2020. Proforma revenue is shown on a constant currency basis using
average exchange rates for the current financial period applied to
the comparative period and are used to eliminate the effects of
fluctuations in assessing performance.
3. Refer to glossary for full definition of the terms.
CEO REVIEW
ATG's mission is to unlock the value of the secondary goods
market and, in doing so, to significantly accelerate growth of the
circular economy. We create value by connecting a large, diverse
and fragmented global buyer base to our seven online marketplaces,
where they bid on a wide range of assets, curated by expert
auctioneers. For auctioneers, we provide global buyer reach,
specialised marketplace technology and operational cost savings.
For bidders, we provide unparalleled choice, convenience and trust
when buying secondary goods online. The combination of these
unlocks the value of each asset sold to ensure maximum return to
the consignors. More bidders participating in online auctions
results in higher realised prices for second-hand items and in turn
attracts more assets to be listed on our marketplaces: a virtuous
circle that benefits both auctioneers and bidders.
Resilience in the auction industry's shift online
In FY 21 we achieved strong growth, benefiting from the ongoing
structural shift of the auction industry from offline to online.
This was accelerated by the Covid-19 pandemic, in addition to
enhancements we made to how auctioneers can sell and how bidders
can buy on our marketplaces. As we lap this period of strong
performance, we have continued to deliver very strong growth across
our marketplaces in the first half, ahead of our expectations at
the start of the year.
THV has grown significantly across both of our sectors, driven
both by more inventory coming to auction, higher second-hand asset
prices as well as strategic growth as we expand into newer
verticals such as real estate. In addition to the benefits that the
ATG model offers for both auctioneers and bidders, the Industrial
& Commercial ("I&C") market has benefited from favourable
market tailwinds including supply chain disruptions for new assets
resulting in inflation for secondary assets, as well as more assets
coming to online auctions from other secondary market channels.
I&C THV grew 27% in the first half of the year and I&C
marketplace revenue grew 16% on a proforma basis. Whilst Arts &
Antiques ("A&A") THV also grew strongly, as anticipated we saw
lower growth in GMV as we lapped the strong performance in the
prior year, which had benefited from Covid-19. However, due to our
multiple growth levers and the diversification in our revenue
streams, we were more than able to offset this lower volume growth
through value-add services, including digital marketing, enabling
ATG to monetise at a higher rate and resulting in A&A
marketplace revenue growing 16% on a proforma basis.
Enhancing the value proposition for both bidders and
auctioneers
Our employees are working hard to enhance ATG's part of the
auction ecosystem to make buying and selling curated second-hand
goods easier and faster. We are improving our Search Engine
Optimisation functionality to drive bidder acquisition and reached
over 89m bidder sessions across the Group in the last six months.
We revamped marketing emails and continue to improve results from
our new recommendation engine to deliver more relevant ads to
bidders. Most importantly, we have driven total bids with over 54m
bids placed in the half year. The incremental bidders we generate
are continuing to attract more assets, reflected in our THV
growth.
Previous investments to improve our technology infrastructure
helped optimise the performance and enhance the security of our
marketplaces in the first half. This, combined with strong account
management and numerous technology updates to help auctioneers
approve bidders faster and with more confidence, resulted in very
high auctioneer retention rates across the Group. It also resulted
in steadily stronger adoption of timed online only auctions, with
THV on timed-only auctions growing 32% year-on-year. Auctioneers
have also increasingly used other offerings such as digital
marketing, with value-add services growing 63% year-on-year across
the Group. As we improve the value proposition, we continue to
drive our flywheel of more bidders, higher online prices, and more
lots to sale.
Strengthening our competitive positioning
Whilst we are the market leader in the geographies and sectors
where we operate, we are constantly working to strengthen our
competitive position, by giving auctioneers more reasons to list
their assets on ATG marketplaces and giving bidders more reasons to
purchase on them. The acquisition of LiveAuctioneers has unlocked
significant opportunities within the North American market and its
integration into the Group has progressed well. The business has
performed ahead of our expectations when we acquired it. Looking
forward, M&A continues to be a key growth driver for us, and we
are actively looking at a number of opportunities, although we
remain disciplined in our approach.
LiveAuctioneers has also seen rapid growth in both its payments
and advertising solutions. Adoption rates of both payments and
advertising for active auction houses on LiveAuctioneers has now
passed 50% and the gross payment transaction value that
LiveAuctioneers processed in the last six months has increased 34%
from the previous six-months to the end of September 2021. Over the
last six months, ATG has adapted this payments product, in
partnership with the LiveAuctioneers team. We have recently
completed our first milestone in the payments rollout across ATG,
ahead of schedule, having processed the first payment on Proxibid.
We remain on track for a payments rollout to Proxibid by the end of
the calendar year.
We have added to the breadth and depth of our executive team to
further strengthen our ability to pursue the attractive future
opportunities in front of ATG. In May, we welcomed Pratyush Rai to
the role of Global Chief Technology Officer and promoted Rob
Cummings, former CPO/CTO of LiveAuctioneers, to the newly created
role of Global Chief Product Officer. In May we also brought on
board Darren Ali as our new Chief People Officer (CPPO) and Jayne
Meacham has joined us as our new company secretary. Pratyush brings
over 20 years of leadership in the technology sector having led
successful transformative work at both McMillan Publishing and
Kaplan. A key focus of his work will be to develop tools to
accelerate the shift towards online only auctions and to enable
cross-listing across our different marketplaces, both with a view
to accelerating the network effect. Pratyush will be based in North
America to align with our growing presence in this large and high
growth market. Rob Cummings brings an extensive depth of knowledge
of the auction industry, having served as Chief Technology Officer
at LiveAuctioneers for the past seven years. The Chief Product
Officer role will be key in developing our value-add services as
well as enhancing the bidding experience on our marketplaces as we
attract and retain an even larger pool of global bidders. Darren,
our CPPO, brings over 20 years' experience in HR with extensive
international experience in the USA, Europe and the UK. He is
passionate about building a strong ATG employee experience, a
critical differentiator for our business and an exciting
opportunity based on the many benefits ATG offers our team.
ESG at the heart of our operations and central to our purpose
and proposition
Environmental sustainability is at the heart of ATG, with our
online marketplaces ensuring that millions of items are resold for
re-use or repurpose each year, extending their value within the
economy, preventing waste, and reducing the massive carbon
emissions that are a derivative of the manufacturing process for
new items. In the secondary market, auctions are especially
important because all used items for sale have been carefully
curated. This curation is key to building trust and bidders'
confidence. External research commissioned by ATG calculated that
in 2021 one million tonnes of carbon emissions was avoided by the
sale of the 15 most popular items sold second-hand at auctions run
on our marketplaces. This is a staggering amount when you consider
both that these top 15 items make up just 6% of the total number of
items sold on our marketplaces and that one million tonnes is
equivalent to the carbon capture of 50 million mature trees growing
for one year. ATG is proud in the role we play in facilitating
these sales.
We are committed to the highest standards of corporate
governance, and we have been delighted to welcome three new Board
members in the last six months. Suzanne Baxter, based in the UK,
brings substantial listed company experience and expertise gained
in both executive and non-executive roles. She has held a range of
senior commercially focused financial and operational roles, as
well as in workplace inclusion programmes. Based in North America,
Pauline Reader brings over 20 years of product marketing,
e-commerce and branding experience through roles at a range of
global, consumer businesses and in investment banking including
eBay and StitchFix. Tamsin Todd is currently CEO of Findmypast,
where she has overseen a period of transformation and growth, and
built a tech-led, mission driven organisation. Prior to this she
has held leadership roles across a range of consumer and technology
companies, including Amazon.
Leading the transformation of the auction industry
ATG is early in our journey to unlock the value of secondary
goods market and we are uniquely positioned to lead the
transformation of the industry, with deep knowledge and the scale
to invest. We are executing against our vision in three phases:
Foundation, End-to-End Experience, and Expansion. In phase one,
Foundation, we have made strong progress, having spent the last ten
plus years developing a set of technologies that are able to work
across multiple geographies, sectors and across live and timed
auctions, unifying the highly fragmented market of auction
inventory and also building the best secondary market bidder base.
Key in this phase is that we have also built a shared success
revenue model that aligns ATG's success to that of auctioneers.
Today, in phase two, we are focused on building our ecommerce
capabilities to a high standard. We are investing to upgrade the
user experience to drive bidder conversion and are integrating
multiple parts of the auction value chain to reduce auctioneer
costs and simplify the buyer experience. This includes the roll out
of payments, which will provide convenience for bidders while
simultaneously saving our auctioneer partners cost relative to
other payment solutions, as well as enabling us to access a new
part of the total auction transaction value. ATG is also providing
multiple tiers of service for our auctioneers so that they can
access the online market seamlessly through either our marketplaces
or our white label offering.
Once these pieces are in place, we will look at the final phase,
Expansion. We will do this by creating value beyond the initial
transaction by integrating the broader auction ecosystem. There is
an opportunity for ATG to extend into a range of other value add
services; from financing to insurance, restoration, repair,
maintenance and logistics. There is also an opportunity to expand
the auction ecosystem digitally, leveraging insight to make our
marketplaces increasingly proactive. Not only will this phase
create new revenue streams for ATG and help further accelerate the
growth in the circular economy, but it will simultaneously allow
auctioneers to lower their operating costs and to share in the
growth and value creation.
We are still early in our journey of growth and expansion.
However, our strong track record of financial and operational
performance gives us confidence in our strategic plan and in our
ability execute. As we grow, we expect our addressable market to
grow even faster as more secondary assets than those traded today
find their way to the auction market.
Six growth levers
Six growth levers underpin our success. We have pulled each of
these levers for the past three years and looking ahead, we see
significant opportunity to pull all six levers into the future:
-- Extending our addressable market : adding new assets from
existing auction houses, adding new auction houses, or moving into
new verticals - we continue to actively identify new THV that we
wish to bring online over the medium term
-- Growing our online share: we facilitate the move from live to
online only auctions on the sell side. On the buy side, we continue
to improve the end-to-end user experience on our marketplaces to
support bidder acquisition and bidder conversion
-- Enhancing the network effect: we will make it easier for
auctioneers to cross-list assets to grow the bidder reach. This
cross-listing also helps encourage bidders to use ATG as their
primary search portal by presenting them with the broadest array of
inventory
-- Expanding operating leverage: we will transition all
marketplaces to a single technology platform and continue to
centralise key back-office functions and streamline processes
-- Growing our take rate via value-add services: we will roll
out our payments platform to Proxibid by the end of 2022. After
this we will develop other value add services for auction houses
and bidders
-- Pursuing accretive M&A: we are actively looking for
opportunities to add to our footprint and to increase value across
our network
Summary
The management team and the Board are very pleased with our
performance in the first half. The structural shift online has
proven to be resilient, driven by cost efficiencies, scale
benefits, convenience and bidder reach for auctioneers and driven
by choice, convenience and trust for bidders. Our team at all
levels have done a superb job at adapting and managing the growth
and higher expectations held of us as a public company. We are
excited by the years ahead and confident in the value we can create
as we lead the transformation of the auction industry. The
opportunity is significant, and whilst our vision is ambitious, it
is underpinned by our scale, depth of industry knowledge, breadth
of capabilities, and shared success model that brings this
important industry with ATG on the journey to the next evolution of
auctions.
John-Paul Savant
Chief Executive Officer
CFO REVIEW
Group presentation of results
The financial results for HY 22 are presented for the six months
ended 31 March 2022. On 1 October 2021, the Group completed its
acquisition of LiveAuctioneers. The results for LiveAuctioneers are
included within the A&A operating segment in HY 22. Full
details of the accounting implications are detailed in note 9 of
the Condensed Consolidated Interim Financial Statements.
The impact of the acquisition affects the comparability of the
Group's results. Therefore, to aid comparisons between HY 21 and HY
22 alternative performance measures ("APMs") have been presented.
The prior period proforma unaudited results have been presented as
if the acquisition of LiveAuctioneers and Auction Mobility had
occurred on 1 October 2020.
Note 2 of the Condensed Consolidated Interim Financial
Statements includes a full reconciliation of all APMs presented to
the reported results.
Revenue
HY 22 HY 21
GBPm GBPm Movement
---------------------------------- ------- ----- --------
Proforma revenue
Arts & Antiques ("A&A") 26.9 23.2 16%
Industrial and Commercial ("I&C") 25.1 21.6 16%
---------------------------------- ------- ----- --------
Total marketplace 52.0 44.8 16%
Auction Services 4.1 3.7 11%
Content 1.6 1.4 14%
---------------------------------- ------- ----- --------
Total 57.7 49.9 16%
---------------------------------- ------- ----- --------
HY 22 HY 21
GBPm GBPm Movement
---------------------------------- ------- ----- --------
Reported revenue
Arts & Antiques ("A&A") 26.9 8.1 232%
Industrial & Commercial ("I&C") 25.1 21.5 17%
---------------------------------- ------- ----- --------
Total marketplace 52.0 29.6 76%
Auction Services 4.1 3.5 17%
Content 1.6 1.4 14%
---------------------------------- ------- ----- --------
Total 57.7 34.5 67%
---------------------------------- ------- ----- --------
Group
On a reported basis, Group revenue increased 67% year-on-year to
GBP57.7m driven by both the contribution from LiveAuctioneers as
well as growth across each of the reporting segments. Proforma
revenue grew at 16% driven by strong growth in THV as the shift of
the auction industry online proved to be resilient. The take rate
across marketplaces fell by 0.2ppt on a proforma basis to 3.2%
impacted by the growth of low commission rate THV, resulting in
marketplace proforma revenue growth of 16%.
Art & Antiques
Reported revenue in the A&A segment increased by 232% to
GBP26.9m and on a proforma basis, revenue grew 16%. The performance
was driven by strong growth in THV as well as growth in
LiveAuctioneers payment and advertising solutions, resulting in an
increase in the take rate for A&A to 7.6%. As we faced tough
comparators due to the tailwinds from the Covid-19 pandemic in the
prior year, GMV grew 2% on a proforma basis, with much of the THV
that was bought online being from newer types of verticals and
newer auction houses which typically have a lower online share.
This was more than offset by strong growth in value-add services.
Adoption rates of both payments and advertising for active auction
houses on LiveAuctioneers has now passed 50% and the gross payment
transaction value that LiveAuctioneers processed in the last six
months increased 34% from the previous six-months to the end of
September 2021.
Industrial & Commercial
I&C revenue grew 16% on a proforma basis and 17% on a
reported basis to GBP25.1m driven by a 27% year-on-year increase in
THV and an increase in online share to 46%. The attractiveness of
the ATG model and the value proposition that we offer to both
bidders and auctioneers, contributed to this strong growth. In
addition, strong THV growth was driven by supply chain disruption
in many parts of the primary market which resulted in asset price
inflation as well as high levels of activity of our auctioneer
base. The strong growth in GMV of 33% was partially offset by a
small decline in the take rate due to the impact of low commission
rate THV, including real estate. Value-add services including
marketing sales also performed well in the I&C sector as
auctioneers adopted a broader range of products on offer from
ATG.
Auction Services
Auction Services revenue of GBP4.1m grew 17% year-on-year, or
11% on a proforma basis, driven by the continued growth of our
white label offering through Auction Mobility. We continue to see
the benefits of providing auctioneers with a suite of integrated
products, which in turn offers them optionality with their online
presence. Revenue growth was largely derived from new account
growth.
Content
Content revenue grew 14% to GBP1.6m, benefiting from the
recovery in advertising volumes following the impact of the
Covid-19 pandemic. Revenue in this segment has now recovered to pre
pandemic volumes.
Financial performance
Reported
------------------------------------------
HY 22 HY 21
GBPm GBPm Movement
------------------------------------------ ------ ------ --------
Revenue 57.7 34.5 67%
Cost of sales (18.6) (11.5) 62%
------------------------------------------ ------ ------ --------
Gross profit 39.1 23.0 70%
------------------------------------------ ------ ------ --------
Administrative expenses (30.0) (35.2) (15)%
Other operating income 0.1 0.1 -
------------------------------------------ ------ ------ --------
Operating profit/(loss) 9.2 (12.1) 176%
------------------------------------------ ------ ------ --------
Adjusted EBITDA (as defined in note 2) 26.8 17.0 58%
------------------------------------------ ------ ------ --------
Finance income - 3.7 (100)%
Finance cost (5.9) (14.2) (58)%
------------------------------------------ ------ ------ --------
Net finance costs (5.9) (10.5) (44%)
------------------------------------------ ------ ------ --------
Profit/(loss) before tax 3.3 (22.6) 115%
Tax credit/(expense) 0.5 (1.5) 133%
------------------------------------------ ------ ------ --------
Profit/(loss) for the period attributable
to the equity holders of the Company 3.8 (24.1) 116%
------------------------------------------ ------ ------ --------
Operating profit
Gross profit increased 70% to GBP39.1m reflecting the increase
in revenue and high flow through to gross profit. The gross profit
margin of 68% was broadly flat year-on-year.
The Group's administrative expenses decreased to GBP30.0m,
largely due to the impact of one-off exceptional costs of GBP9.1m
incurred in the prior year relating to the IPO and the acquisition
of Auction Mobility. The share-based payment expense in HY 22 of
GBP2.5m represents the pre admission awards at IPO, the one-off
LiveAuctioneers LTIPs and the 2021 and 2022 LTIP which have been
issued to Directors and senior management. The charge of GBP10.4m
in HY 21 included the one-off share awards that were issued to
Directors and employees as part of the IPO. Excluding the
year-on-year impact of these costs, administrative expenses
increased by GBP11.8m driven by a GBP5.5m increase in amortisation
in addition to the addition of costs from LiveAuctioneers, costs
associated with being a listed company and planned investments to
support future growth.
The Group reported an operating profit of GBP9.2m compared with
an operating loss of GBP12.1m in HY 21.
Adjusted EBITDA
Adjusted EBITDA increased from GBP17.0m in the six months ended
31 March 2021 to GBP26.8m, driven by the inclusion of
LiveAuctioneers, strong revenue growth and the high operational
leverage with a significant proportion of revenue dropping through
to adjusted EBITDA. Adjusted EBITDA margin of 46% decreased as
expected year-on-year due to the impact of public company costs,
planned investments to drive future growth as well as the mix
impact from the growth in payments. Adjusted EBITDA margin improved
by one percentage point compared to 45% in FY 21 .
Net finance costs
Net finance costs were GBP5.9m in HY 22 (HY 21: GBP10.5m).
Finance costs of GBP5.9m (HY 21: GBP14.2m) primarily relate to the
interest on the New US dollar denominated Senior Term Facility
which carries an interest rate linked to LIBOR, commitment fees on
the undrawn Revolving Credit Facility, foreign exchange losses on
our US dollar denominated loan and the movement in contingent
consideration. During the period, the Auction Mobility contingent
consideration was re-evaluated based on the outperformance of the
business ahead of initial management expectations, resulting in an
additional GBP1.1m uplift to the contingent consideration liability
which totals GBP3.5m at 31 March 2022. Prior period finance costs
related to interest costs and early repayment fees for the Old
Senior Facilities agreement and interest on the preference shares
which were fully settled as part of the IPO restructure.
Profit before tax
After the impact of net finance costs, the Group reported a
profit before tax of GBP3.3m (HY 21: loss of GBP22.6m).
Taxation
In the period, there was a tax credit of GBP0.5m (HY 21: tax
expense of GBP1.5m), arising from the profit in the period, net of
a deferred tax liability rate adjustment which arose on the
LiveAuctioneers intangible assets recognised.
The tax charge is based on the effective tax rate, estimated on
a full year basis, being applied to the reported profit for the six
months ended 31 March 2022. The Group's effective tax rate of 17%
(HY 21: 7%) reflects the impact of the deferred tax liability rate
adjustment.
Earnings/(loss) per share and adjusted earnings per share
Basic earnings per share was 3.2p and diluted earnings per share
was 3.1p for HY 22 compared to a loss of 37.1p in HY 21, due to the
increase in profit before tax year-on-year. The weighted average
number of shares in issue during the period was 120.2m (HY 21:
64.9m shares), with the increase year-on-year attributable to the
equity raise via a cash-box placing for the LiveAuctioneers
acquisition in June 2021.
Adjusted diluted earnings per share of 13.4p (HY 21: 0.9p) is
based on profit after tax adjusted to exclude share-based payment
expense, exceptional items (operating and finance costs),
amortisation of acquired intangible assets and any related tax
effects.
A reconciliation of the Group's diluted earnings per share to
adjusted diluted earnings per share is set out in note 2.
LiveAuctioneers acquisition
On 1 October 2021, the Group acquired 100% of the equity share
capital of LiveAuctioneers for total consideration of GBP404.0m. Of
the total consideration, GBP28.3m was settled via equity
instruments in ATG plc. When determining the consideration, the
equity instruments were fair valued based on the share price as at
the date the acquisition completed. LiveAuctioneers is the largest
curated online marketplace for Art & Antiques in North America
and the purpose of the acquisition was to further strengthen the
Group's presence in this segment. The full acquisition accounting
is detailed in note 9.
Foreign currency impact
The Group's reported performance is sensitive to movements in
both the US dollar and the euro against the British pound sterling.
The pound sterling marginally weakened by 0.7% against the US
dollar and strengthened by 5.3% on an average rate basis against
the euro compared to HY 21, as shown in the table below.
Average rate Closing rate
----------
HY HY HY HY
22 21 Movement 22 21 Movement
---------- ---- ---- -------- ---- ---- --------
Euro 1.19 1.13 5.3% 1.18 1.17 0.9%
US dollar 1.34 1.35 (0.7%) 1.31 1.38 (5.1%)
---- ---- -------- ---- ---- --------
When comparing revenue in HY 21 to HY 22, changes to currency
exchange rates had an unfavourable impact on proforma revenue of
GBP0.1m.
Statement of financial position
Overall net assets at 31 March 2022 have increased by GBP43.1m
to GBP482.6m since 30 September 2021. Total assets increased by
GBP93.8m, and the main drivers for the increase were the goodwill
and other intangibles of GBP449.3m recognised in respect of the
LiveAuctioneers acquisition, net of the cash outflow of GBP376.8m
for the purchase of LiveAuctioneers. Total liabilities increased by
GBP50.7m, primarily due to an increase in the deferred tax
liabilities of GBP44.7m arising from the LiveAuctioneers
acquisition.
Cash flow and adjusted net debt
Cash generated from operations (before tax) remained strong at
GBP22.1m (HY 21: GBP8.7m) driven by the Group's high pass through
of revenue to adjusted EBITDA and capital light model. Capital
expenditure in the period was GBP1.8m (HY 21: GBP1.4m) and
primarily related to investments in technology to support platform
enhancements in addition to infrastructure to support more seamless
dual listing across our marketplaces.
The New Senior Term Facility for $204.0m was drawn down in full
on 30 September 2021, prior to completion of the acquisition of
LiveAuctioneers on 1 October 2021. Using the cash proceeds raised
from the equity placing, (which was held in escrow as a 30
September 2021) and the New Senior Term Facility, the Group paid
total cash consideration of GBP376.8m for LiveAuctioneers during
the period.
Due to the impact of the acquisition, adjusted net debt
increased to GBP119.7m as at 31 March 2022 (30 September 2021:
adjusted net cash of GBP24.6m). The Group had cash in bank of
GBP35.2m and borrowings of GBP154.9m (30 September 2021: cash in
bank of GBP173.6m and borrowings of GBP149.0m).
The Group's adjusted free cash flow was GBP24.3m (HY 21:
GBP14.5m), a conversion rate of 91% (HY 21: 86%). A reconciliation
of cash generated from operations to adjusted free cash flow(1) and
adjusted free cash flow conversion(1) is included below and note
2:
HY 22 HY 21
GBPm GBPm
------------------------------------------------- ----- -----
Adjusted EBITDA 26.8 17.0
------------------------------------------------- ----- -----
Cash generated from operations 22.1 8.7
Adjustments for:
Exceptional items - 9.1
Working capital from exceptional and other items 4.0 (1.8)
Capital expenditure (1.8) (1.4)
------------------------------------------------- -----
Adjusted free cash flow 24.3 14.5
------------------------------------------------- ----- -----
Adjusted free cash flow conversion 91% 86%
Risk and uncertainties
The Board retains ultimate responsibility for the Group's Risk
Management Framework and continues to undertake ongoing monitoring
to review the effectiveness of the Framework and ensure the
principal risks of the Group are being appropriately mitigated in
line with its risk appetite. The principal risks and uncertainties
which could impact the Group for the remainder of the current
financial year remain those detailed on pages 52 to 55 of the 2021
Annual Report available at www.auctiontechnologygroup.com. A
summary of the risks is included as follows:
1. IT infrastructure - stability and business continuity of auction platforms
2. IT infrastructure - inability to keep pace with innovation and changes
3. Data security/data loss
4. Competition
5. Failure to deliver expected benefits from acquisitions and/or
integrate the business into the Group effectively
6. Attracting and retaining skills/capabilities and succession planning
7. Regulatory compliance
8. Governance and internal control
9. Economic and geo-political uncertainty
The Directors note that the global geopolitical outlook suggests
continuing potential for short-term volatility and instability
across markets. A number of these risks and uncertainties could
have an impact on the Group's performance over the remaining six
months of the financial year and could cause actual results to
differ from expected and historical results.
Related parties
Related party disclosures are detailed in note 15.
Going concern
In assessing the appropriateness of the going concern
assumption, the Directors have considered the ability of the Group
to meet the debt covenants and maintain adequate liquidity through
the forecast period. The Group's forecasts and projections, taking
account of reasonably possible changes in trading performance, show
that the Group is able to operate comfortably within the level of
its current facilities and meet its debt covenant obligations.
Sensitivities have been modelled to understand the impact of the
various risks outlined above on the Group's performance and the
Group's debt covenants/cash headroom, including consideration of a
reasonable downside scenario. Given the current demand for services
across the Group at the date of this report, the assumptions in
these sensitivities, when taking into account the factors set out
above, are considered to be unlikely to lead to a debt covenant
breach or liquidity issues under both scenarios.
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and that it
remains appropriate to continue to adopt the going concern basis in
preparing the financial information.
Tom Hargreaves
Chief Financial Officer
1. The Group provides alternative performance measures ("APMs")
which are not defined or specified under the requirements of
International Financial Reporting Standards as adopted by the EU.
We believe these APMs provide readers with important additional
information on our business and aid comparability. We have included
a comprehensive list of the APMs in note 2 to the Condensed
Consolidated Interim Financial Statements, with definitions, an
explanation of how they are calculated, why we use them and how
they can be reconciled to a statutory measure where relevant.
Condensed Consolidated Statement of Profit or Loss and Other
Comprehensive Income or Loss
for the six months ended 31 March 2022
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2022 2021 2021
Note GBP000 GBP000 GBP000
-------------------------------------------- ---- ----------- ----------- -------------
Revenue 4,5 57,738 34,488 70,080
Cost of sales (18,607) (11,451) (24,544)
-------------------------------------------- ---- ----------- ----------- -------------
Gross profit 39,131 23,037 45,536
Administrative expenses (30,051) (35,193) (66,506)
Other operating income 103 131 346
-------------------------------------------- ---- ----------- ----------- -------------
Operating profit/(loss) 4 9,183 (12,025) (20,624)
Finance income 6 1 3,697 10,394
Finance cost 6 (5,931) (14,237) (17,078)
-------------------------------------------- ---- ----------- ----------- -------------
Net finance costs 6 (5,930) (10,540) (6,684)
-------------------------------------------- ---- ----------- ----------- -------------
Profit/(loss) before tax 4 3,253 (22,565) (27,308)
Tax credit/(expense) 7 539 (1,501) (2,322)
-------------------------------------------- ---- ----------- ----------- -------------
Profit/(loss) for the period attributable
to the equity holders of the Company 3,792 (24,066) (29,630)
-------------------------------------------- ---- ----------- ----------- -------------
Other comprehensive income/(loss) for the
period attributable to the equity holders
of the Company
Items that may subsequently be transferred
to profit and loss:
Foreign exchange differences on translation
of foreign operations 10,520 (1,594) (507)
Income tax relating to these items (1,805) - -
-------------------------------------------- ---- ----------- ----------- -------------
Other comprehensive income/(loss) for the
period, net of tax 8,715 (1,594) (507)
-------------------------------------------- ---- ----------- ----------- -------------
Total comprehensive income/(loss) for the
period attributable to the equity holders
of the Company 12,507 (25,660) (30,137)
-------------------------------------------- ---- ----------- ----------- -------------
Earnings/(loss) per share p p p
Basic 8 3.2 (37.1) (33.6)
-------------------------------------------- ---- ----------- ----------- -------------
Diluted 8 3.1 (37.1) (33.6)
-------------------------------------------- ---- ----------- ----------- -------------
The above results are derived from continuing operations.
Condensed Consolidated Statement of Financial Position
as at 31 March 2022
Unaudited Unaudited Audited
31 March 31 March 30 September
2022 2021 2021
Note GBP000 GBP000 GBP000
------------------------------------- ---- --------- --------- -------------
ASSETS
Non-current assets
Goodwill 10 430,703 140,412 141,160
Other Intangible assets 10 227,506 75,884 68,077
Property, plant and equipment 471 379 379
Right of use assets 1,919 1,526 1,401
Deferred tax asset 13 - - 366
Trade and other receivables 85 85 85
------------------------------------- ---- --------- --------- -------------
Total non-current assets 660,684 218,286 211,468
Current assets
Trade and other receivables 16,087 10,307 9,699
Current tax asset 826 - 437
Cash and cash equivalents 11 35,219 44,696 397,451
------------------------------------- ---- --------- --------- -------------
Total current assets 52,132 55,003 407,587
------------------------------------- ---- --------- --------- -------------
Total assets 712,816 273,289 619,055
------------------------------------- ---- --------- --------- -------------
LIABILITIES
Non-current liabilities
Current tax liabilities (1,392) (1,607) (1,392)
Loans and borrowings 12 (140,643) (37,981) (148,686)
Lease liabilities (1,206) (819) (775)
Deferred tax liabilities 13 (50,141) (10,538) (9,260)
------------------------------------- ---- --------- --------- -------------
Total non-current liabilities (193,382) (50,945) (160,113)
Current liabilities
Trade and other payables (20,607) (13,402) (17,310)
Current tax liabilities (1,162) (1,922) (1,168)
Loans and borrowings 12 (14,276) (661) (353)
Lease liabilities (837) (743) (657)
------------------------------------- ---- --------- --------- -------------
Total current liabilities (36,882) (16,728) (19,488)
------------------------------------- ---- --------- --------- -------------
Total liabilities (230,264) (67,673) (179,601)
------------------------------------- ---- --------- --------- -------------
Net assets 482,552 205,616 439,454
------------------------------------- ---- --------- --------- -------------
EQUITY
Share capital 14 12 10 12
Share premium 235,903 235,902 235,903
Other reserve 238,385 1,527 238,385
Capital redemption reserve 5 5 5
Share option reserve 32,157 1,351 1,649
Foreign currency translation reserve 9,573 (2,034) (947)
Retained losses (33,483) (31,145) (35,553)
------------------------------------- ---- --------- --------- -------------
Total equity 482,552 205,616 439,454
------------------------------------- ---- --------- --------- -------------
Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 March 2022
Foreign
Capital Share currency
Share Share Other redemption option translation Retained Total
capital premium reserve reserve reserve reserve losses equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
1 October 2020 11 - 1,125 - 276 (440) (16,388) (15,416)
Comprehensive loss
Loss for the period - - - - - - (29,630) (29,630)
Other comprehensive loss - - - - - (507) - (507)
------------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
- - - - - (507) (29,630) (30,137)
Transactions with owners
Issue of ordinary shares
as consideration for
a business combination,
net of transaction
costs and tax 6 235,903 237,260 - - - - 473,169
Share buyback of ordinary
shares, net of tax (5) - - 5 - - - -
Movement in equity-settled
share-based payments - - - - 1,373 - 10,401 11,774
Tax relating to items
taken directly to equity - - - - - - 64 64
30 September 2021 12 235,903 238,385 5 1,649 (947) (35,553) 439,454
Comprehensive income
Profit for the period - - - - - - 3,792 3,792
Other comprehensive
income/(loss) - - - - - 10,520 (1,805) 8,715
------------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
- - - - - 10,520 1,987 12,507
Transactions with owners
Issue of options as
consideration
for a business, net of
transactions costs and
tax - - - - 28,346 - - 28,346
Movement in equity-settled
share-based payments - - - - 2,162 - 51 2,213
Tax relating to items
taken directly to equity - - - - - - 32 32
------------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
31 March 2022 12 235,903 238,385 5 32,157 9,573 (33,483) 482,552
------------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Foreign
Capital Share currency
Share Share Other redemption option translation Retained Total
capital premium reserve reserve reserve reserve losses equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
1 October 2020 11 - 1,125 - 276 (440) (16,388) (15,416)
Comprehensive loss
Loss for the period - - - - - - (24,066) (24,066)
Other comprehensive loss - - - - - (1,594) - (1,594)
--------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
- - - - - (1,594) (24,066) (25,660)
Transactions with owners
Issue of ordinary shares
as consideration for
a business combination,
net of transaction
costs and tax 4 235,902 402 - - - - 236,308
Share buyback of ordinary
shares, net of tax (5) - - 5 - - - -
Movement in equity-settled
share-based payments - - - - 1,075 - 9,309 10,384
31 March 2021 10 235,902 1,527 5 1,351 (2,034) (31,145) 205,616
--------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Condensed Consolidated Statement of Cash Flows
for the six months ended 31 March 2022
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2022 2021 2021
Note GBP000 GBP000 GBP000
------------------------------------------------ ---- ----------- ----------- -------------
Cash flows from operating activities
Profit/(loss) before tax 3,253 (22,565) (27,308)
Adjustments for:
Amortisation of acquired intangible assets 10 12,855 6,772 13,219
Amortisation of internally generated software 10 1,725 2,310 4,576
Depreciation of property, plant and equipment 135 116 228
Depreciation of right of use assets 467 355 743
Share-based payment expense 2,450 10,384 11,892
Net exchange differences 25 (217) -
Net finance costs 6 5,930 10,540 6,684
Increase in trade and other receivables (2,707) (591) (439)
(Decrease)/increase in trade and other payables (2,073) 1,573 6,271
------------------------------------------------ ---- ----------- ----------- -------------
Cash generated by operations 22,060 8,677 15,866
Income taxes paid (6,123) (2,311) (6,090)
------------------------------------------------ ---- ----------- ----------- -------------
Net cash generated from operating activities 15,937 6,366 9,776
------------------------------------------------ ---- ----------- ----------- -------------
Cash flows from investing activities
Acquisition of subsidiaries, net of cash
acquired 9 (358,763) (24,948) (24,948)
Payment for internally generated software 10 (1,621) (1,367) (1,956)
Payment for property, plant and equipment (130) (40) (149)
Payment of deferred consideration - (234) (234)
------------------------------------------------ ---- ----------- ----------- -------------
Net cash used in investing activities (360,514) (26,589) (27,287)
------------------------------------------------ ---- ----------- ----------- -------------
Cash flows from financing activities
Payment of contingent consideration (18,517) (492) (492)
Repayment of loans and borrowings (359) (70,013) (108,956)
Repayment of preference shares - (117,716) (117,716)
Proceeds from loans and borrowings - 25,382 176,639
Proceeds from the issue of preference shares - 714 714
Interest element of lease payments (73) (45) (74)
Capital element of lease payments (481) (356) (742)
Issue of new share capital, net of share
issue costs - 235,906 473,158
Interest paid (1,608) (21,951) (26,428)
------------------------------------------------ ---- ----------- ----------- -------------
Net cash (used in)/generated by financing
activities (21,038) 51,429 396,103
------------------------------------------------ ---- ----------- ----------- -------------
Cash and cash equivalents at beginning of
the period 397,451 14,193 14,193
Net (decrease)/increase in cash and cash
equivalents (365,615) 31,206 378,592
Effect of foreign exchange rate changes 3,383 (703) 4,666
------------------------------------------------ ---- ----------- ----------- -------------
Cash and cash equivalents at the end of
the period 35,219 44,696 397,451
------------------------------------------------ ---- ----------- ----------- -------------
Notes to the Condensed Consolidated Interim Financial
Statements
1. Accounting policies
General information
Auction Technology Group plc (the "Company") is a company
incorporated in the United Kingdom under the Companies Act. The
Company is a public company limited by shares and is registered in
England and Wales.
These Condensed Consolidated Interim Financial Statements have
been approved for issue on 18 May 2022.
These Condensed Consolidated Interim Financial Statements for
the period do not constitute statutory financial statements within
the
meaning of s434 of the Companies Act 2006. Statutory accounts
for the year ended 30 September 2021 have been delivered to the
Registrar of Companies. They are also available on the Group's
website (www.auctiontechnologygroup.com). The audit report for
those accounts was unqualified, did not draw attention to any
matters by way of emphasis without qualifying the report and did
not contain a statement under 498(2) or (3) of the Companies Act
2006. These Condensed Consolidated Interim Financial Statements
have been reviewed and not audited.
Basis of preparation
These Condensed Consolidated Interim Financial Statements have
been prepared in accordance with United Kingdom adopted
International Accounting Standard 34, "Interim Financial
Reporting". The Condensed Consolidated Interim Financial Statements
do not include all the information required for full annual
financial statements and should be read in conjunction with the
Group's Annual Report and Accounts for the period ended 30
September 2021 which have been prepared in accordance with the
requirements of the Companies Act 2006.
In determining the information to be disclosed in the notes to
the Condensed Consolidated Interim Financial statements in
accordance with IAS 34, the Group has taken into account its
materiality in relation to these Condensed Consolidated Interim
Financial Statements.
The Condensed Consolidated Interim Financial Statements have
been prepared under the historical cost convention, except for
certain financial instruments which have been measured at fair
value.
The accounting policies applied in these Condensed Consolidated
Interim Financial Statements are the same as those applied in the
most recent annual financial statements. Taxes on income in the
interim period is recognised by applying the effective tax rate
that would be applicable to expected total annual profit or loss
for the twelve-month period to the period's result.
The Group's contingent consideration is classified as level 3
(for further details of fair valuation methods used see note 3 and
9). There are no other financial instruments measured at fair value
on a recurring basis.
Going concern
The Directors have undertaken the going concern assessment for
the Group, taking into consideration the Group's business model,
strategy and principal risks. As part of the going concern review
the Directors have reviewed the Group's forecasts and projections,
assessed the headroom on the
Group's current facilities and the banking covenants. This has
been considered under a base case and several plausible but severe
downside scenarios.
These scenarios include significant reduction in commission
revenue due to THV reduction, significant reduction in commission
revenue due to online share decline and delay in the roll-out of
payments technology across the Group. None of these scenarios
individually, or collectively threaten the Group's ability to
continue as a going concern. Even in the combined downside scenario
modelled (the combination of all downside scenarios occurring at
once) the Group would be able to operate within the level of its
current available debt facilities and covenants. As at 31 March
2022 the Group has adjusted net debt of GBP119.7m and is in a net
current asset position.
After due consideration, the Directors have concluded that there
is a reasonable expectation that the Group has adequate resources
to continue in operational existence for at least 12 months from
the date of this report. For this reason, the Directors continue to
adopt the going concern basis in preparing these Condensed
Consolidated Interim Financial Statements for the Group.
2. Alternative performance measures
The Group uses a number of alternative performance measures
("APMs") in addition to those measures reported in accordance with
IFRS. Such APMs are not defined terms under IFRS and are not
intended to be a substitute for any IFRS measure. The Directors
believe that the APMs are important when assessing the ongoing
financial and operating performance of the Group and do not
consider them to be more important than, or superior to, their
equivalent IFRS. The APMs improve the comparability of information
between reporting periods by adjusting for factors such as one-off
items and the timing of acquisitions.
The APMs are used internally in the management of the Group's
business performance, budgeting and forecasting, and for
determining Executive Directors' remuneration and that of other
management throughout the business. The APMs are also presented
externally to meet investors' requirements for further clarity and
transparency of the Group's financial performance. Where items of
profits or costs are being excluded in an APM, these are included
elsewhere in our reported financial information as they represent
actual income or costs of the Group.
Other commentary within the CFO's Review, should be referred to
in order to fully appreciate all the factors that affect the
Group.
Adjusted EBITDA
Adjusted EBITDA is the measure used by the Directors to assess
the trading performance of the Group's businesses and is the
measure of segment profit.
Adjusted EBITDA represents profit/(loss) before taxation,
finance costs, depreciation and amortisation, share-based payment
expense and exceptional operating items. Adjusted EBITDA at segment
level is consistently defined but excludes central administration
costs including Directors' salaries.
The following table provides a reconciliation from profit/(loss)
before tax to adjusted EBITDA:
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
------------------------------------------------- ----------- ----------- -------------
Profit/(loss) before tax 3,253 (22,565) (27,308)
Adjustments for:
Net finance costs (note 6) 5,930 10,540 6,684
Amortisation of acquired intangible assets (note
10) 12,855 6,772 13,219
Amortisation of internally generated software
(note 10) 1,725 2,310 4,576
Depreciation of property, plant and equipment 135 116 228
Depreciation of right of use assets 467 355 743
Share-based payment expense 2,450 10,384 11,892
Exceptional operating items - 9,064 21,765
------------------------------------------------- ----------- ----------- -------------
Adjusted EBITDA 26,815 16,976 31,799
------------------------------------------------- ----------- ----------- -------------
The following table provides the calculation of adjusted EBITDA
margin which represents adjusted EBITDA divided by revenue:
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
---------------------------- ----------- ----------- -------------
Reported revenue (note 4,5) 57,738 34,488 70,080
Adjusted EBITDA 26,815 16,976 31,799
Adjusted EBITDA margin 46.4% 49.2% 45.4%
---------------------------- ----------- ----------- -------------
The basis for treating these items as adjusting is as
follows:
Share-based payment expense
The Group issued several share awards to employees and Directors
before and post IPO and operates employee share schemes. Income
statement charges relating to such schemes are significant non-cash
charges (and related expenses) and are driven by a valuation model
which references the Group's share price. As the share based
payment expense currently includes significant charges related to
the IPO awards and one-off grants made to LiveAuctioneers
management, these charges are not currently representative of the
Group's steady state operational performance.
Exceptional operating items
The Group applies judgement in identifying significant items of
income and expenditure that are disclosed separately from other
administrative expenses as exceptional where, in the judgement of
the Directors, they need to be disclosed separately by virtue of
their nature or size in order to obtain a clear and consistent
presentation of the Group's ongoing business performance. Such
items could include, but may not be limited to, listing costs
associated with the IPO, costs associated with business
combinations, gains and losses on the disposal of businesses,
significant reorganisation or restructuring costs and impairment of
goodwill and acquired intangible assets. Any item classified as an
exceptional item will be significant and not attributable to
ongoing operations and will be subject to specific quantitative and
qualitative thresholds set by and approved by the Directors prior
to being classified as exceptional.
The exceptional operating items are detailed below:
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
---------------------------- ------------ ----------- -------------
Acquisition costs - (1,300) (13,323)
Listing costs - (7,764) (8,442)
Exceptional operating items - (9,064) (21,765)
---------------------------- ------------ ----------- -------------
There were no exceptional operating items for the six months
ended 31 March 2022.
For the six months ended 31 March 2021, the Group's exceptional
costs were in respect of the listing costs of the IPO and the
acquisition costs relating to the acquisition of Auction Mobility
LLC on 16 October 2020.
For the year ended 30 September 2021, the Group's exceptional
operating costs were in respect of listing costs of the IPO and the
acquisition costs relating to the acquisition of the
LiveAuctioneers (see note 9) and Auction Mobility LLC.
The business has undertaken focused acquisitive activity which
has been strategically implemented to increase income, service
range and critical mass of the Group. Acquisition costs comprise
legal, professional and other consultancy expenditure incurred. The
net cash outflow related to exceptional operating items in the
period is GBP3,962,000 (31 March 2021: GBP9,651,000, 30 September
2021: GBP19,058,000).
Adjusted earnings and adjusted diluted earnings per share
Adjusted earnings and adjusted diluted earnings per share
exclude share-based payment expense, exceptional items (operating
and finance), amortisation of acquired intangible assets, and any
related tax effects.
The basis for treating these items as adjusting is as
follows:
Amortisation of intangible assets including software acquired
through business combinations
The amortisation of acquired intangibles arises from the
purchase consideration of a number of separate acquisitions. These
acquisitions are portfolio investment decisions that took place at
different times and are balance sheet items that relate to M&A
activity rather than the trading performance of the business. The
calculation for period ending 31 March 2021 and 30 September 2021
has been restated to include an adjustment for acquired software
intangibles assets as well as customer relationships, brands and
non-compete agreements.
Exceptional finance items
Exceptional finance items include foreign exchange differences
arising on the revaluation of the foreign currency loans and cash
held on escrow (restricted cash), movements in contingent
consideration and costs incurred on the early repayment of loan
costs. These exceptional finance items are excluded from adjusted
earnings to provides readers with helpful additional information on
the performance of the business across periods because it is
consistent with how the business performance is reported and
assessed by the Board.
Adjusted number of ordinary shares for HY 21 and FY 21
The adjusted number of ordinary shares for 31 March 2021 and 30
September 2021 reflects the number of shares in issue at IPO
adjusted for the dilutive effect from non-vested/non-exercised
ordinary shares granted after the IPO through Long Term Incentive
Plan awards to the Executive Directors and other senior
management.
The following table provides a reconciliation from profit/(loss)
after tax to adjusted earnings:
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2022 2021 2021
(restated) (restated)
GBP000 GBP000 GBP000
-------------------------------------------------- ----------- ----------- -------------
Profit/(loss) attributable to equity shareholders
of the Company 3,792 (24,066) (29,630)
Adjustments for:
Amortisation of acquired intangible assets 12,855 6,772 13,219
Exceptional finance items 2,539 (644) (5,652)
Share-based payment expense 2,450 10,384 11,892
Exceptional operating items - 9,064 21,765
Tax on adjusted items (5,318) (641) (2,394)
-------------------------------------------------- ----------- ----------- -------------
Adjusted earnings 16,318 869 9,200
-------------------------------------------------- ----------- ----------- -------------
Number Number Number
Reported weighted average number of shares 120,205,794 64,893,047 88,248,037
Adjustment for: weighted average effect of shares
issued in the period up to and including the
IPO - 35,106,953 11,751,963
-------------------------------------------------- ----------- ----------- -------------
Adjusted weighted average number of shares
in issue 120,205,794 100,000,000 100,000,000
Weighted average number of shares held by the
Trust (26,501) - (622)
Effect of dilutive share options 2,015,643 7,330 128,106
-------------------------------------------------- ----------- ----------- -------------
Number of ordinary shares and dilutive options 122,194,936 100,007,330 100,127,484
-------------------------------------------------- ----------- ----------- -------------
p p
-------------------------------------------------- ----------- ----------- -------------
Adjusted diluted earnings per share (in pence) 13.4 0.9 9.2
-------------------------------------------------- ----------- ----------- -------------
Proforma revenue
The Group has made certain acquisitions that have affected the
comparability of the Group's results. To aid comparisons between HY
22 and HY 21 in the CFO's review, the prior period results have
been presented to include the full year results as if the
acquisition of Platinum Parent Inc. ("LiveAuctioneers") and Auction
Mobility LLC ("Auction Mobility") had occurred on 1 October 2020.
In addition, proforma revenue is stated at constant exchange rates
with the prior year comparatives being restated using current year
exchange rates. This measure is presented as a means of eliminating
the effects of exchange rate fluctuations on the period-on-period
reported results.
The following table provides a reconciliation of proforma
revenue from reported results for the six months ended 31 March
2021:
Unaudited
six months
ended
31 March
2021
GBP000
------------------------------- -----------
Reported revenue 34,488
Acquisition related adjustment 15,329
Constant currency adjustment 89
Proforma revenue 49,906
-------------------------------- -----------
Adjusted net (debt)/cash
Adjusted net (debt)/cash comprises external borrowings net of
arrangement fees, cash and cash equivalents and allows management
to monitor the indebtedness of the Group. Adjusted (debt)/cash
excludes lease liabilities and cash held in escrow (restricted
cash).
Unaudited Unaudited Audited
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
----------------------------------------------- --------- --------- -------------
Cash and cash equivalents excluding restricted
cash (note 11) 35,219 44,696 173,675
----------------------------------------------- --------- --------- -------------
Current loans and borrowings (note 12) (14,276) (661) (353)
Non-current loans and borrowings (note 12) (140,643) (37,981) (148,686)
----------------------------------------------- --------- --------- -------------
Total loans and borrowings (154,919) (38,642) (149,039)
----------------------------------------------- --------- --------- -------------
Adjusted net (debt)/cash (119,700) 6,054 24,636
----------------------------------------------- --------- --------- -------------
Adjusted free cash flow and adjusted free cash flow
conversion
Free cash flow represents cash flow from operations less
capitalised development costs, which include development costs in
relation to software that are capitalised when the related projects
meet the recognition criteria under IFRS for an internally
generated intangible asset. Movement in working capital is adjusted
for balances relating to exceptional items. The Group monitors its
operational efficiency with reference to operational cash
conversion, defined as free cash flow as a percentage of adjusted
EBITDA.
The Group uses adjusted cash flow measures for the same purpose
as adjusted profit measures, in order to assist readers of the
accounts in understanding the operational performance of the Group.
The two measures used are free cash flow and free cash flow
conversion. A reported free cash flow and cash conversion rate has
not been provided as it would not give a fair indication of the
Group's free cash flow and conversion performance given the high
value of exceptional items.
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
------------------------------------------------- ----------- ----------- -------------
Adjusted EBITDA 26,815 16,976 31,799
------------------------------------------------- ----------- ----------- -------------
Cash generated from operations 22,060 8,677 15,866
Adjustments for:
Exceptional items - 9,064 21,765
Working capital from exceptional and other items 3,962 (1,804) (5,098)
Additions to internally generated software (note
10) (1,621) (1,367) (1,956)
Additions to property, plant and equipment (130) (40) (149)
------------------------------------------------- ----------- ----------- -------------
Adjusted free cash flow 24,271 14,530 30,428
------------------------------------------------- ----------- ----------- -------------
Adjusted free cash flow conversion (%) 90.5% 85.6% 95.7%
------------------------------------------------- ----------- ----------- -------------
3. Significant judgements and key sources of estimation uncertainty
The preparation of the Group's Condensed Consolidated Interim
Financial Statements requires the use of certain judgements,
estimates and assumptions that affect the reported amounts of
assets, liabilities, income and expenses.
Estimates and judgements are evaluated continually, and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances.
Key estimation uncertainties are the key assumptions concerning
the future and other key sources of estimation uncertainty at the
reporting date that may have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next period. Changes in accounting estimates
may be necessary if there are changes in the circumstances on which
the estimates were based, or as a result of new information or more
experience.
Significant judgements are those that the Group has made in the
process of applying the Group's accounting policies and that have
the most significant effect on the amounts recognised in the
financial statements.
In preparing these Condensed Consolidated Interim Financial
Statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
most recent annual financial statements for the year ended 30
September 2021 with the exception of the below.
Estimates
Contingent consideration arising on the acquisition of Auction
Mobility
During the period, the Auction Mobility contingent consideration
was re-evaluated based on the outperformance of the business ahead
of initial management expectations, resulting in an additional
GBP1,149,000 increase to the contingent consideration liability.
The contingent consideration for the acquisition of Auction
Mobility has been finalised therefore there no longer remains an
estimate in respect of this balance at 31 March 2022. The
contingent consideration recognised at 31 March 2022 was
GBP3,503,000 and has been paid out post the period end.
Judgements
LiveAuctioneers consideration
The Group acquired LiveAuctioneers on 1 October 2021 for total
consideration of GBP403,974,000. Please see note 9 for further
details. Judgement was required in determining whether the rollover
options and restricted stock units granted, predominantly to
management should be classified as consideration or remuneration
for post-combination services. The indicators under IFRS 3 were
reviewed for each of these elements. One of the key indicators
under IFRS3 leading to managements conclusion the elements should
be treated as consideration is that none of the shareholders,
including management are required to continue in employment for the
options and restricted stock units to vest.
Goodwill and other intangible assets arising from business
combinations
The purchase price of an acquired company is allocated between
intangible assets and the net tangible assets of the acquired
business with the residual of the purchase price recorded as
goodwill. The determination of the value of the intangible assets
requires significant judgements and estimates to be made by the
Directors. These judgements can include, but are not limited to,
the cash flows that an asset is expected to generate in the future
and the appropriate weighted average cost of capital.
Judgement is also required in determining appropriate useful
economic lives ("UEL") of the intangible assets arising from
business combinations.
Management makes this judgement on an asset class basis and has
determined that contracts with customers have a UEL of seven to 14
years; brands have a UEL of five to 15 years; software has a UEL of
three to 10 years; and non-compete agreements have a UEL of four
years.
4 . Operating segments
The operating segments reflect the Group's management and
internal reporting structure, which is used to assess both the
performance of the business and to allocate resources within the
Group. The assessment of performance and allocation of resources is
focused on the category of customer for each type of activity.
The Board has determined an operating management structure
aligned around the four core activities of the Group.
LiveAuctioneers which was acquired in the period, has been
allocated to the Arts and Antiques segment.
The four operating segments are as follows:
- Arts & Antiques ("A&A"): focused on offering auction
houses that specialise in the sale of arts and antiques access to
the platforms thesaleroom.com, liveauctioneers.com and
lot-tissimo.com. A significant part of the Group's services is
provision of the platform as a marketplace for the A&A auction
houses to sell their goods. The segment also generates earnings
through additional services such as marketing income and the
liveauctioneers.com payments platform. The Group contracts with
customers predominantly under service agreements, where the number
of auctions to be held and the service offering differs from client
to client.
- Industrial & Commercial ("I&C"): focused on offering
auction houses that specialise in the sale of industrial and
commercial goods and machinery access to the platforms
BidSpotter.com, BidSpotter.co.uk and Proxibid.com, as well as
i-bidder.com for consumer surplus and retail returns. A significant
part of the Group's services is provision of the platform as a
marketplace for the I&C auction houses to sell their goods. The
segment also generates earnings through additional services such as
marketing income. The Group contracts with customers predominantly
under service agreements, where the number of auctions to be held
and the service offering differs from client to client.
- Auction Services: includes revenues from the Group's auction
house back-office products with Auction Mobility and other white
label products including Wavebid.com.
- Content: focused on the Antiques Trade Gazette paper and
online magazine. The business focuses on two streams of income:
selling subscriptions to the Gazette and also selling advertising
space within the paper and online. The Directors have disclosed
information required by IFRS 8 for the Content segment despite the
segment not meeting the reporting threshold.
There are no undisclosed or other operating segments.
An analysis of the results for the period by reportable segment
is as follows:
Unaudited six months ended 31 March 2022
Centrally
Auction allocated
A&A I&C Services Content costs Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------------- ------- ------- --------- ------- ---------- --------
Revenue 26,948 25,132 4,060 1,598 - 57,738
-------------------------------------- ------- ------- --------- ------- ---------- --------
Adjusted EBITDA (see note
2 for definition and reconciliation) 22,124 21,965 2,899 559 (20,732) 26,815
Amortisation of intangible
assets (note 10) (8,526) (5,453) (601) - - (14,580)
Depreciation of property,
plant and equipment (40) (87) (3) (5) - (135)
Depreciation of right of
use assets (236) (199) (8) (24) - (467)
Share-based payment expense (768) (416) (1,205) (61) - (2,450)
Operating profit/(loss) 12,554 15,810 1,082 469 (20,732) 9,183
Net finance costs (note
6) - - - - (5,930) (5,930)
-------------------------------------- ------- ------- --------- ------- ---------- --------
Profit/(loss) before tax 12,554 15,810 1,082 469 (26,662) 3,253
-------------------------------------- ------- ------- --------- ------- ---------- --------
Unaudited six months ended 31 March 2021
Centrally
Auction allocated
A&A I&C Services Content costs Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------------- ------- ------- --------- ------- ---------- --------
Revenue 8,138 21,468 3,458 1,424 - 34,488
-------------------------------------- ------- ------- --------- ------- ---------- --------
Adjusted EBITDA (see note
2 for definition and reconciliation) 7,045 18,677 3,120 452 (12,318) 16,976
Amortisation of intangible
assets (note 10) (2,198) (6,288) (596) - - (9,082)
Depreciation of property,
plant and equipment (27) (81) (3) (5) - (116)
Depreciation of right of
use assets (124) (196) (8) (27) - (355)
Share-based payment expense (1,235) (2,861) (53) - (6,235) (10,384)
Exceptional operating items
(note 2) - - (1,107) - (7,957) (9,064)
-------------------------------------- ------- ------- --------- ------- ---------- --------
Operating profit/(loss) 3,461 9,251 1,353 420 (26,510) (12,025)
Net finance costs (note
6) - - - - (10,540) (10,540)
-------------------------------------- ------- ------- --------- ------- ---------- --------
Profit/(loss) before tax 3,461 9,251 1,353 420 (37,050) (22,565)
-------------------------------------- ------- ------- --------- ------- ---------- --------
Audited year ended 30 September 2021
Centrally
Auction allocated
A&A I&C Services Content costs Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------------- ------- -------- --------- ------- ---------- --------
Revenue 16,203 43,695 7,129 3,053 - 70,080
-------------------------------------- ------- -------- --------- ------- ---------- --------
Adjusted EBITDA (see note
2 for definition and reconciliation) 13,938 37,897 5,276 1,063 (26,375) 31,799
Amortisation of intangible
assets (note 10) (4,307) (12,321) (1,167) - - (17,795)
Depreciation of property,
plant and equipment (53) (160) (6) (9) - (228)
Depreciation of right of
use assets (259) (410) (17) (57) - (743)
Share-based payment expense (1,415) (3,276) (61) - (7,140) (11,892)
Exceptional operating items
(note 2) - - (1,107) - (20,658) (21,765)
-------------------------------------- ------- -------- --------- ------- ---------- --------
Operating profit/(loss) 7,904 21,730 2,918 997 (54,173) (20,624)
Net finance costs (note
6) - - - - (6,684) (6,684)
-------------------------------------- ------- -------- --------- ------- ---------- --------
Profit/(loss) before tax 7,904 21,730 2,918 997 (60,857) (27,308)
-------------------------------------- ------- -------- --------- ------- ---------- --------
Segment assets which exclude deferred tax assets are measured in
the same way as in the financial statements. These assets are
allocated based on the operations of the segment and the physical
location of the asset.
Unaudited 31 Unaudited 31 March Audited 30 September
March 2022 2021 2021
-----------------
Total Additions Total Additions Total Additions
non-current to non-current non-current to non-current non-current to non-current
assets assets assets assets assets assets
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- ------------ --------------- ------------ --------------- ------------ ---------------
A&A 465,211 412,569 52,150 989 50,433 1,714
I&C 167,875 39,402 137,857 412 133,320 715
Auction Services 27,490 76 28,144 29,509 27,218 29,511
Content 108 6 135 6 131 10
----------------- ------------ --------------- ------------ --------------- ------------ ---------------
660,684 452,053 218,286 30,916 211,102 31,950
----------------- ------------ --------------- ------------ --------------- ------------ ---------------
The Group has taken advantage of paragraph 23 of IFRS 8
"Operating Segments" and does not provide segmental analysis of net
assets as this information is not used by the Directors in
operational decision making or monitoring of business
performance.
5. Revenue
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
----------------------------------------- ----------- ----------- -------------
Product and customer types
A&A 26,948 8,138 16,203
I&C 25,132 21,468 43,695
Auction Services 4,060 3,458 7,129
Content 1,598 1,424 3,053
----------------------------------------- ----------- ----------- -------------
57,738 34,488 70,080
----------------------------------------- ----------- ----------- -------------
Primary geographical markets
United Kingdom 9,402 9,397 18,901
North America 46,422 23,316 47,773
Germany 1,914 1,775 3,406
----------------------------------------- ----------- ----------- -------------
57,738 34,488 70,080
----------------------------------------- ----------- ----------- -------------
Timing of transfer of goods and services
Point in time 53,033 31,113 62,142
Over time 4,705 3,375 7,938
----------------------------------------- ----------- ----------- -------------
57,738 34,488 70,080
----------------------------------------- ----------- ----------- -------------
Due to the nature of the Group's business, it is not materially
affected by seasonal or cyclical trading.
6. Net finance costs
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
-------------------------------------- ----------- ----------- -------------
Foreign exchange gain - 3,524 8,923
Interest income 1 1 9
Movements in contingent consideration - 172 1,462
-------------------------------------- ----------- ----------- -------------
Finance income 1 3,697 10,394
Interest on loans and borrowings (3,094) (6,609) (8,071)
Movements in contingent consideration (1,860) - -
Foreign exchange loss (679) - -
Interest on lease liabilities (73) (45) (65)
Interest payable on preference shares - (6,328) (6,328)
Amortisation of finance costs (225) (1,255) (2,614)
-------------------------------------- ----------- ----------- -------------
Finance cost (5,931) (14,237) (17,078)
-------------------------------------- ----------- ----------- -------------
Net finance costs (5,930) (10,540) (6,684)
-------------------------------------- ----------- ----------- -------------
7. Taxation
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
-------------------------------------------- ----------- ----------- -------------
Current tax
Current tax on profit/(loss) for the period 4,131 2,062 4,566
Adjustments in respect of prior years - - (40)
-------------------------------------------- ----------- ----------- -------------
Total current tax 4,131 2,062 4,526
-------------------------------------------- ----------- ----------- -------------
Deferred tax
Current year (3,144) (1,118) (3,039)
Adjustments from change in tax rates (1,608) 557 1,299
Adjustments in respect of prior years 82 - (464)
-------------------------------------------- ----------- ----------- -------------
Deferred tax (4,670) (561) (2,204)
-------------------------------------------- ----------- ----------- -------------
Tax (credit)/expense (539) 1,501 2,322
-------------------------------------------- ----------- ----------- -------------
The total tax expense recognised based on management's best
estimate of the effective tax rate for the full year is a credit of
17% (31 March 2021: 7%) applied to the profit/(loss) before tax of
the six-month period. In the period ended 31 March 2022
GBP2,262,000 (31 March 2021: GBP1,514,000) of the deferred tax
liability relating to the capitalised acquisition intangible assets
was unwound and credited to the Condensed Consolidated Statement of
Profit or Loss.
Factors that may affect future tax charges
The UK Budget on 3 March 2021 announced an increase in the UK
corporation tax rate from 19% to 25% with effect from 1 April 2023.
The effect of the rate increase is reflected in the Condensed
Consolidated Interim Financial Statements as it had been
substantively enacted at the balance sheet date. The current tax
expense for the year would have been GBP4,554,000 if the expected
increased rate of corporation tax at 25% for the UK entities had
applied.
In addition to the amount charged to the Condensed Statement of
Profit or Loss, the following amounts relating to tax on share
options and foreign exchange differences have been directly
recognised in other comprehensive income/(loss) and equity:
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
---------------------------------- ----------- ----------- -------------
Other comprehensive income/(loss)
Current tax (1,805) - -
Equity
Deferred tax 32 - 64
(1,773) - 64
---------------------------------- ----------- ----------- -------------
8. Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing the
earnings/(loss) for the period attributable to ordinary
shareholders by the weighted average number of ordinary shares
outstanding during the period, after excluding the weighted average
number of non-vested ordinary shares.
Diluted earnings per share is calculated by dividing the
profit/(loss) for the period attributable to ordinary shareholders
by the weighted average number of ordinary shares including
non-vested/non-exercised ordinary shares. During the period and
prior period, the Group awarded conditional share awards to
Directors and certain employees through an LTIP. For the six months
ended 31 March 2021 and the year ended 30 September 2021, the
non-vested/non-exercised ordinary shares are anti-dilutive given
the loss for the period and are therefore excluded from the
weighted average number of ordinary shares for the purpose of
diluted earnings per share calculation.
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
-------------------------------------------------- ----------- ----------- -------------
Profit/(loss) attributable to equity shareholders
of the Company 3,792 (24,066) (29,630)
-------------------------------------------------- ----------- ----------- -------------
Number Number Number
Weighted average number of shares 120,205,794 64,893,047 88,248,037
Weighted average number of shares held by the
Employee Benefit Trust (26,501) - (622)
---------------------------------------------- ----------- ---------- ----------
Weighted average number of shares 120,179,293 64,893,047 88,247,415
Dilutive share options 2,015,643 7,330 128,106
---------------------------------------------- ----------- ---------- ----------
122,194,936 64,900,377 88,375,521
---------------------------------------------- ----------- ---------- ----------
Basic earnings/(loss) per share (in pence) 3.2 (37.1)p (33.6)p
---------------------------------------------- ----------- ---------- ----------
Diluted earnings/(loss) per share (in pence) 3.1 (37.1)p (33.6)p
---------------------------------------------- ----------- ---------- ----------
9. Acquisition of Platinum Parent Inc. ("LiveAuctioneers ")
On 1 October 2021, the Group acquired 100% of the equity share
capital of the LiveAuctioneers. LiveAuctioneers is the provider of
a curated online marketplace focused on the North American A&A
segment, designed for live auctions of collectibles, antiques and
fine art. The purpose of the acquisition was to further strengthen
the Group's presence in the US and expand its A&A segment and
accelerate the Group's build out of an online auction ecosystem
that will benefit all stakeholders via the addition of an
integrated payments solution.
The maximum consideration payable of GBP404,685,000
($543,941,000), comprised:
-- upfront cash consideration of GBP358,763,000 ($482,218,000),
-- rollover options and restricted stock units in Auction
Technology Group plc in exchange for share options previously held
in LiveAuctioneers parent company, Platinum Parent Inc, for the
value of GBP27,322,000 ($36,723,000); and,
-- contingent consideration of up to a maximum GBP18,600,000
($25,000,000), was subject to the performance of the
LiveAuctioneers against certain targets for the year ending 31
December 2021.
Management calculated the fair value of the contingent
consideration based on the expected forecasts for the earn-out
period and discounted using the acquisition's internal rate of
return, resulting in a liability of GBP17,889,000 ($24,045,000).
The targets were met in full and cash contingent consideration of
GBP18,022,000 was paid during the period ended 31 March 2022.
Exchange differences to reserves were recorded within foreign
exchange differences on translation of foreign operations in the
Condensed Consolidated Statement of Comprehensive Income or Loss.
The unwinding of discount of GBP711,000 was reported as a finance
cost in the Condensed Consolidated Statement of Profit or Loss.
At the date of acquisition, LiveAuctioneers had net assets with
a fair value of GBP122,513,000 ($164,678,000). The provisional
acquisition accounting is set out below.
Provisional
fair value
GBP000
---------------------------------------------------- -----------
Acquired intangible assets - software 24,494
Acquired intangible assets - customer relationships 120,023
Acquired intangible assets - brand 21,457
Internally generated software 1,820
Property, plant and equipment 88
Right of use assets 959
Trade receivables and other receivables 3,974
Income tax receivable 194
Trade and other payables (4,733)
Lease liabilities (1,063)
Deferred tax liabilities (44,700)
---------------------------------------------------- -----------
Net assets on acquisition 122,513
Goodwill (note 10) 281,461
---------------------------------------------------- -----------
Total consideration 403,974
---------------------------------------------------- -----------
Consideration satisfied by:
Initial cash consideration 288,524
Debt amounts settled 70,239
Fair value of equity interest 27,322
Contingent consideration - cash 16,865
Contingent consideration - equity 1,024
403,974
---------------------------------------------------- -----------
Net cash outflow arising on acquisition:
Initial cash consideration 288,524
Debt amounts settled 70,239
---------------------------------------------------- -----------
358,763
---------------------------------------------------- -----------
Goodwill arises as a result of the surplus of consideration over
the fair value of the separately identifiable assets acquired. The
main reason leading to the recognition of goodwill is the future
economic benefits arising from assets which are not capable of
being individually identified and separately recognised; these
include the value of future technology including the rollout of the
payments platform to the wider Group, synergies expected to be
realised post acquisition, new customer relationships and the fair
value of the assembled workforce within the business acquired. The
fair value adjustment to the deferred tax liabilities of
GBP33,413,000 relates to the deferred tax liability recognised on
the acquired intangible asset. Goodwill of GBP4,856,000 is
deductible for tax purposes. The fair value of the assets acquired
includes gross trade receivables of GBP3,815,000 which are expected
to be fully recoverable.
Acquisition costs of GBPnil (31 March 2021: GBPnil, 30 September
2021: GBP12,028,000) directly related to the business combination
have been immediately expensed to the Condensed Consolidated
Statement of Profit or Loss as part of administrative expenses and
included within exceptional items (see note 2). Between 1 October
2021 and 31 March 2022, LiveAuctioneers contributed GBP18,530,000
to Group revenues and a profit before tax of GBP5,287,000.
10. Goodwill and other intangible assets
Total
acquired Internally
Customer Non-compete intangible generated
Software relationships Brand agreement assets software Goodwill Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- --------
1 October 2020 7,412 49,712 10,655 - 67,779 7,051 124,023 198,853
Acquisition of business 2,786 6,094 371 1,286 10,537 - 18,972 29,509
Additions - - - - - 1,956 - 1,956
Amortisation (3,422) (8,246) (1,258) (293) (13,219) (4,576) - (17,795)
Exchange differences (207) (690) (222) (54) (1,173) (278) (1,835) (3,286)
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- --------
30 September 2021 6,569 46,870 9,546 939 63,924 4,153 141,160 209,237
Acquisition of business
(note 9) 24,494 120,023 21,457 - 165,974 1,820 281,461 449,255
Additions - - - - - 1,621 - 1,621
Amortisation (3,003) (8,403) (1,293) (156) (12,855) (1,725) - (14,580)
Exchange differences 647 3,213 628 25 4,513 81 8,082 12,676
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- --------
31 March 2022 28,707 161,703 30,338 808 221,556 5,950 430,703 658,209
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- --------
Total
acquired Internally
Customer Non-compete intangible generated
Software relationships Brand agreement assets software Goodwill Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- -------
1 October 2020 7,412 49,712 10,655 - 67,779 7,051 124,023 198,853
Acquisition of business 2,786 6,094 371 1,286 10,537 - 18,972 29,509
Additions - - - - - 1,367 - 1,367
Amortisation (1,747) (4,206) (679) (140) (6,772) (2,310) - (9,082)
Exchange differences (248) (883) (284) (69) (1,484) (284) (2,583) (4,351)
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- -------
31 March 2021 8,203 50,717 10,063 1,077 70,060 5,824 140,412 216,296
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- -------
The Group has reviewed each cash-generating unit for indicators
of impairment at the reporting date and no indicators were
identified.
11. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
cash held in escrow (restricted cash). The carrying amount of these
assets approximates to their fair value.
Unaudited Unaudited Audited
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
-------------------------------------- --------- --------- -------------
Cash in bank 35,219 44,696 173,675
Cash held in escrow (restricted cash) - - 223,776
-------------------------------------- --------- --------- -------------
35,219 44,696 397,451
-------------------------------------- --------- --------- -------------
Cash in bank includes cash of GBP2,402,000 (31 March 2021:
GBP3,881,000; 30 September 2021: GBP2,402,000) held by the Trustee
of the Group's Employee Benefit Trust relating to share awards for
employees. These funds are not available to circulate within the
Group on demand.
As a result of the capital raising on 17 June 2021, the cash,
net of transaction fees associated with the acquisition and
financing of LiveAuctioneers was transferred to an escrow account.
The funds held at 30 September 2021 were restricted and are not
available to circulate within the Group on demand. The funds were
released on 1 October 2021 for the acquisition of LiveAuctioneers
(see note 9).
12. Loans and borrowings
The carrying amount of loan and borrowings classified as
financial liabilities at amortised cost approximates to their fair
value.
Unaudited Unaudited Audited
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
--------------------- --------- --------- -------------
Current
Secured bank loan 14,276 322 -
Unsecured loan notes - 339 353
--------------------- --------- --------- -------------
14,276 661 353
--------------------- --------- --------- -------------
Non-current
Secured bank loan 140,643 37,981 148,686
140,643 37,981 148,686
--------------------- --------- --------- -------------
154,919 38,642 149,039
--------------------- --------- --------- -------------
The Group entered into a New Senior Facilities Agreement on 17
June 2021 which included:
- a senior term loan facility (the "New Senior Term Facility")
for $204.0m for the acquisition of LiveAuctioneers. The New Senior
Term Facility was drawn down in full on 30 September 2021 prior to
completion of the acquisition of LiveAuctioneers on 1 October 2021.
The loan will be due for repayment on 17 June 2026.
- a multi-currency revolving credit working capital facility
(the "New Revolving Credit Facility") for $49.0m. Any sums
outstanding under the New Revolving Credit Facility will be due for
repayment on 17 June 2024, subject to the optionality of two
12-month extensions. The facility has not been drawn down as at 31
March 2022 or 30 September 2021.
The New Senior Facilities Agreement contains an adjusted net
leverage covenant which tests the ratio of adjusted net debt
against adjusted EBITDA and an interest cover ratio which tests the
ratio of adjusted EBITDA against net finance charges, in each case,
as at the last date of each financial quarter, commencing with the
financial quarter ending 30 September 2021. The Group has been in
full compliance with the covenants during the period.
13. Deferred taxation
The movement in net deferred tax liabilities is as follows:
Total
GBP000
------------------------------------------ --------
1 October 2020 (11,588)
Amount credited to Condensed Consolidated
Statement of Profit or Loss 2,204
Amount credited to equity 64
Exchange differences 426
--------------------------------------------- --------
30 September 2021 (8,894)
Acquisition of business (note 9) (44,700)
Amount credited to Condensed Consolidated
Statement of Profit or Loss 4,670
Amount credited to equity 32
Exchange differences (1,249)
--------------------------------------------- --------
31 March 2022 (50,141)
--------------------------------------------- --------
The net deferred tax liabilities include deferred tax asset of
GBPnil at 31 March 2022 (31 March 2021: GBPnil; 30 September 2021:
GBP366,000).
14. Share capital
Unaudited Unaudited Audited
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
------------------------------------------------- --------- --------- -------------
Allotted, called up and fully paid
120,519,793 ordinary shares at 0.01p each
(31 March 2021: 100,000,000, 30 September 2021:
119,999,990) 12 10 12
------------------------------------------------- --------- --------- -------------
12 10 12
------------------------------------------------- --------- --------- -------------
The movements in share capital, share premium and other reserve
are set out below:
Number Share Share Other
of capital premium reserve
shares GBP000 GBP000 GBP000
--------------------------------------- ----------- -------- -------- --------
1 October 2021 119,999,990 12 235,903 238,385
Shares issued for business combination 506,926 - - -
Share options exercised 6,339 - - -
Shares issued to the Trust 6,538 - - -
--------------------------------------- ----------- -------- -------- --------
31 March 2022 120,519,793 12 235,903 238,385
--------------------------------------- ----------- -------- -------- --------
During the period, 519,803 ordinary shares of 0.01p each with an
aggregate nominal value of GBP52 were issued for options that
vested. These included 50% of the restricted stock units granted
for the LiveAuctioneers acquisition (see note 9), Long-term
Incentive Plan Awards ("LTIP Awards"), shares issued to the Trust
for LTIP Awards that have vested in the period but not yet
exercised.
15. Related party transactions
There were no related party transactions for the six month
period ended 31 March 2022. The Group's related party transactions
for FY 21 are disclosed in the Group's 2021 Annual Report. There
have been no material changes in the related party transactions
described in the last annual report.
16. Events after the balance sheet date
There were no events after the balance sheet date.
Responsibility Statement
The Directors confirm that to the best of our knowledge:
-- these Condensed Consolidated Interim Financial Statements
have been prepared in accordance with United Kingdom adopted
International Accounting Standard 34 "Interim Financial
Reporting",
-- the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
and their impact during the first six months and description of
principal risks and uncertainties for the remaining six months of
the year); and
-- the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the Board,
John-Paul Savant Tom Hargreaves
Chief Executive Officer Chief Financial Officer
18 May 2022 18 May 2022
Glossary
A&A Art & Antiques
Auction Mobility Auction Mobility LLC
---------------------------------------------------------------------
Bidder sessions web sessions on the Group's marketplaces online within a
given time frame
---------------------------------------------------------------------
BidSpotter the Group's marketplace operated via the www.BidSpotter.co.uk
and www.BidSpotter.com domain
---------------------------------------------------------------------
Big 4 Christie's, Sotheby's, Phillips and Bonhams A&A auction
houses
---------------------------------------------------------------------
EBITDA earnings before interest, taxes, depreciation and amortisation
---------------------------------------------------------------------
GMV gross merchandise value, representing the total final sale
value of all lots sold via winning bids placed on the marketplaces
or the platform, on a proforma basis, excluding additional
fees (such as online fee and auctioneers' commissions) and
sales of retail jewellery (being new, or nearly new, jewellery)
---------------------------------------------------------------------
i-bidder the Group's marketplace operated by the www.i-bidder.com
domain
---------------------------------------------------------------------
I&C Industrial & Commercial
---------------------------------------------------------------------
KPIs key performance indicators
---------------------------------------------------------------------
LiveAuctioneers the Group's marketplace operated via the www.liveauctioneers.com
domain
---------------------------------------------------------------------
Live auctions Live auctions typically feature a physical auction room
(with bidders participating in the room and by phone) supplemented
by bids made online. Lots are run consecutively and so apart
from the first lot there is no fixed time for specific lots
to be called
---------------------------------------------------------------------
Lot-tissimo the Group's marketplace operated via the www.lot-tissimo.com
domain
---------------------------------------------------------------------
LTIP Awards the Company's Long Term Incentive Plan
---------------------------------------------------------------------
Marketplaces the online auction marketplaces operated by the Group
---------------------------------------------------------------------
Online share represents GMV as a percentage of THV
---------------------------------------------------------------------
Proforma basis certain measures have been used as the acquisition of LiveAuctioneers
on 1 October 2021 and Auction Mobility on 16 October 2020
have affected the comparability of the Group's results of
operations for HY 22. The measures are presented for the
Group to provide comparisons of the Group's results between
HY 21 and HY 22 as if the acquisitions had occurred on 1
October 2020. In addition, proforma revenue is stated at
constant exchange rates with the prior year comparatives
being restated using current year exchange rates. This measure
is presented as a means of eliminating the effects of exchange
rate fluctuations on the period-on-period reported results
---------------------------------------------------------------------
Proxibid the Group's marketplace operated via the www.proxibid.com
domain
---------------------------------------------------------------------
The Saleroom the Group's marketplace operated via the www.the-saleroom.com
domain
---------------------------------------------------------------------
Take rate represents the Group's marketplace revenue as a percentage
of GMV. Marketplace revenue is the Group's reported revenue
excluding Auction Services and Content revenue
---------------------------------------------------------------------
THV total hammer value, representing the total final sale value
of all lots listed on the marketplaces or the platform,
on a proforma basis, excluding additional fees (such as
online fee and auctioneers' commissions) and sales of retail
jewellery (being new, or nearly new, jewellery)
---------------------------------------------------------------------
Timed auctions auctions which are held entirely online (with no in-room
or telephone bidders) and where lots are only made available
to online bidders for a specific, pre-determined timeframe
---------------------------------------------------------------------
Verticals industry or inventory, for example, art and antiques, industrial
and construction, consumer surplus and returns and sub-verticals
such as equine, real estate and classic cars
---------------------------------------------------------------------
Independent Review Report to Auction Technology Group plc
We have been engaged by the Company to review the condensed set
of financial statements in the interim financial report for the six
months ended 31 March 2022 which comprises the Condensed
Consolidated Statement of Profit or Loss and Other Comprehensive
Income or Loss, the Condensed Consolidated Statement of Financial
Position, the Condensed Consolidated Statement of Changes in
Equity, the Condensed Consolidated Statement of Cash Flows and
related notes 1 to 16. We have read the other information contained
in the interim financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' responsibilities
The interim financial report is the responsibility of, and has
been approved by, the Directors. The Directors are responsible for
preparing the interim financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this interim financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34, "Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the interim financial
report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the interim financial report for the six months ended 31 March
2022 is not prepared, in all material respects, in accordance with
United Kingdom adopted International Accounting Standard 34 and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Use of our report
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the Company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, UK
18 May 2022
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END
IR DVLFFLELFBBB
(END) Dow Jones Newswires
May 19, 2022 02:00 ET (06:00 GMT)
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