TIDMATG
RNS Number : 1701I
Auction Technology Group PLC
01 December 2022
AUCTION TECHNOLOGY GROUP PLC
FULL YEAR RESULTS FOR YEARED 30 SEPTEMBER 2022
Strong full year results demonstrating the resilience and
increasing diversification of ATG
London, United Kingdom, 1 December 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 audited financial results for the year ended 30
September 2022.
Financial results
Restated(1)
FY22 FY21 Movement
Adjusted(2)
Proforma revenue(2&3) GBP119.8m GBP107.9m +11%
Adjusted EBITDA(2) GBP54.0m GBP31.8m +70%
Adjusted EBITDA margin %(2) 45% 45% 0ppt
Adjusted diluted earnings per share(2) 29.5p 9.2p +221%
Adjusted free cash flow(2) GBP49.9m GBP30.4m +64%
Adjusted net (debt)/cash(2) GBP(129.0)m GBP24.6m -GBP153.6m
Reported
Revenue GBP119.8m GBP70.1m +71%
Operating profit/(loss) GBP16.8m GBP(20.6)m +182%
Operating margin % 14% (29)% +43ppt
Profit/(loss) before tax GBP9.3m GBP(25.0)m +137%
Basic loss per share (5.1)p (31.0)p +84%
Cash generated by operations GBP49.4m GBP15.9m +211%
--------------------------------------- ----------- ----------- ----------
Financial highlights
-- Revenue of GBP119.8m, up 11% on a proforma basis driven by
resilient growth in Gross Merchandise Value(4) ("GMV") with an
additional boost to growth coming through value-add services.
Revenue up 71% on a reported basis includes contribution from
LiveAuctioneers and foreign exchange benefit due to high proportion
of US dollar revenue
-- Adjusted EBITDA of GBP54.0m, up 70% year-on-year; adjusted
EBITDA margin of 45%, flat year-on-year as expected, as high
operational leverage offset significant planned investments in the
talent and infrastructure necessary for ATG to achieve its scale
ambitions, as well as the full year impact of public company
costs
-- Profit before tax of GBP9.3m increased compared to a loss of
GBP(25.0)m(1) last year largely driven by the increase in revenue
and due to the one-off impact of costs relating to the IPO and
acquisitions incurred last year
-- Basic loss per share of (5.1)p with increase in profit before
tax year-on-year offset by deferred tax charges; adjusted diluted
earnings per share of 29.5p, up 221% year-on-year
-- Strong cash generation driven by capital-light model, with
GBP49.9m of adjusted free cash flow compared to GBP30.4m last year
and 92.5% adjusted free cash conversion
-- Closing adjusted net debt of GBP129.0m, impacted by foreign
exchange movements on US dollar loan
Operational Highlights
-- Total Hammer Value(4) ("THV") up 22% to GBP10.1bn, driven by
higher number of auction houses listing assets on ATG marketplaces,
a favourable mix of higher value assets and higher prices for
secondary goods; highlights the resilience of the auction
industry's structural shift online and the attractiveness of ATG's
model
-- GMV(4) up 20% to GBP3.3bn; growth on the prior year which had
benefited from tailwinds from the Covid-19 pandemic and with the
conversion rate(4) (previously "online share") remaining flat
year-on-year at 33%
-- Proven ability to successfully add new revenue streams,
driving growth and diversifying revenue through development and
successful roll out of paid-for digital marketing and payments
solutions with value-add services now accounting for 16% of
revenue; begun roll out of payments on Proxibid ahead of plan
-- Take rate(4) of 3.3%, down by 0.2ppt from FY21 as rising
adoption of marketing and payments services was offset by the
impact from growth of low commission real estate. Excluding real
estate, take rate would have increased by 0.1ppt
-- ATG marketplaces generated over 172m bidding sessions, on
over 74,000 auctions for almost 3,800 auctioneers; significant
scale and an ever-expanding network which provides a highly
defensible competitive position
John-Paul Savant, Chief Executive Officer of Auction Technology
Group plc, said:
"ATG has delivered another strong year of financial and
operational performance, in line with the increased guidance that
we provided at our Half Year results. Our success demonstrates the
resilience of the ATG model, both as the structural shift online of
the auction industry has continued, and as our business has become
increasingly diversified by vertical and by revenue stream. We have
made strong progress against our strategic growth drivers,
including the roll out of value-add services which drives both
revenue for auctioneers and improves the experience for bidders,
whilst simultaneously providing another layer of growth for ATG.
The acquisition and integration of LiveAuctioneers further
demonstrates our strong track record in value enhancing M&A.
This strong performance is a credit to all the team at ATG and our
auctioneer partners.
"Even as we are facing high levels of macroeconomic uncertainty,
we are confident about the future. Our competitive position and
financial profile allow us to invest in future growth, and our
multi-geography, multi-vertical, multi-product capability can
provide us with diversification and resilience to continue to
execute successfully in more uncertain macroeconomic conditions.
ATG is in a unique position to transform the auction industry and
we are building the team, products and technology platform to
achieve this. Our shared success model will ensure our auctioneer
partners grow alongside us, and most importantly, as ATG grows the
online auction channel, we will also accelerate the growth of the
circular economy."
Current trading and outlook
Trading in the first two months of FY23 has remained broadly in
line with the performance in the second half of FY22. ATG is
confident of continued strong performance in FY23, whilst is also
factoring in the uncertain macroeconomic environment in our
outlook. For FY23 we expect:
-- High single digit to low double digit constant currency
revenue growth with a higher rate of growth in the second half of
the year reflecting the further roll out and take up of value-add
services.
-- Continued investment to support future growth, including in
our single technology platform which is expected to deliver GBP2m
operational cost savings per annum from FY25 onwards. As a result
of these investments, for FY23 we expect our adjusted EBITDA margin
to be broadly flat.
-- As at FY22, over 80% of our revenue is now in US Dollars. For
a 10% change in the pound sterling to US dollar exchange rate, we
would expect a c.8% change in revenue.
We remain confident of achieving our medium-term targets of
mid-teens plus 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, William Baunton,
Havish Patel
Tulchan Communications +44 207 353 4200
(Public relations advisor to ATG) ATG@tulchangroup.com
Tom Murray, Matt Low
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 around 3,800 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 74,000 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 FY21 results have been restated to adjust the foreign
currency translation reserves and finance income by GBP2.3m. Full
details are provided in note 1 of the Consolidated Financial
Statements.
2. The Group provides alternative performance measures ("APMs")
which are not defined or specified under the requirements of
UK-adopted International Accounting Standards. 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 3 to the Consolidated 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.
3. The Group has made certain acquisitions that have affected
the comparability of the Group's results. To aid comparisons
between FY22 and FY21, 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 unaudited
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.
4. Refer to glossary for full definition of the terms.
Conversion rate was previously called "online share."
CEO REVIEW
ATG's purpose is to unlock the value of the secondary goods
market and in doing so, to significantly accelerate growth of the
circular economy. Through our seven online marketplaces, we enable
a large, diverse, and fragmented buyer base to bid on a wide range
of secondary goods curated by thousands of expert auctioneers. We
enable auctioneers to list curated assets online in a
cost-efficient way, through our specialised marketplace technology,
whilst also enabling auctioneers to access a large, global bidder
base. Every year our marketplaces ensure that millions of
specialised and unique used items are resold for re-use or
repurpose, preventing waste and carbon emissions from the
manufacturing of new items.
A year of further growth and progress
In FY22 we have continued to deliver strong revenue growth, even
as we annualised our strong performance in FY21 that had benefited
from the Covid-19 pandemic. Our growth also remained robust as we
faced an increasingly uncertain macroeconomic environment,
particularly in the second half of the year. We have diversified
our business through the acquisition of LiveAuctioneers, which
helps ATG to generate a cyclically balanced mix of revenues across
Art & Antiques ("A&A") and Industrial & Commercial
("I&C") and increases our exposure to the larger US market. We
have also proven our ability to add additional layers of growth
through the roll out of value-add services including marketing and
payments, which now accounts for 16% of Group revenue.
Our strong operational cash generation driven by our profitable
and capital-light financial model has enabled us to carefully
manage our balance sheet, whilst also providing us with the ability
to invest in growth. We have invested in improving our product for
our customers and auctioneers, and have also invested to strengthen
and develop the team at ATG, not only at the leadership level,
where we welcomed three new Board members and five new Leadership
Team members, but also across the business where we added
specialist roles in areas such as technology, marketing and
finance. We have made these investments whilst maintaining a flat
margin year-on-year, highlighting the strength of our financial
model.
Growth across both of our verticals
In FY22 we delivered another year of strong growth,
demonstrating the strength of the ATG model as well as the
resilience of the structural shift online of the auction industry
with growth delivered in both our verticals. Activity in online
auctions has remained strong in FY22, as evidenced by the 22% THV
growth that our marketplaces delivered. In a period of economic
uncertainty, we would expect auction activity to be robust, driven
by the speed of sale and price realisation benefits of the auction
channel, combined with an increase in the volume of secondary goods
coming to auction.
Within I&C, revenue grew by 13% on a proforma basis, driven
by strong growth in GMV of 29%, which in turn was driven by volume,
mix and price growth of assets listed on our marketplaces. We have
welcomed new auctioneers to our marketplaces, and our existing
auctioneers have continued to list assets with us. As the economic
outlook deteriorated in the second half, the rate of price
increases of secondary assets softened. However, this was partly
offset by improving volumes of assets coming to the I&C auction
market, which also began to see a benefit from an increase in the
rate of business insolvencies.
In A&A, revenue grew 10% on a proforma basis, driven by
strong growth in value-add services, including payments and
advertising, as we were able to monetise more parts of the auction
transaction and experience. This demonstrates that ATG has the same
marketplace monetisation options as seen in other online
marketplaces around the world and that we can diversify our revenue
growth levers by following a well-trodden path of marketplace
development. GMV saw a small decline compared to the prior year and
a normalisation in online auction activity following the Covid-19
pandemic and as physical auctions reopened.
Successful roll out of value-add services driving incremental
growth
In the past 12 months, ATG has proven its ability to expand
beyond the initial auction transaction into the broader auction
ecosystem. We have evolved and expanded our auctioneer marketing
programme, providing a revenue opportunity for both auctioneers and
ATG. Auctions supported with marketing have proved to deliver
better results; for example, Proxibid auctions saw an average 72%
increase in registered bidders and 38% increase in winning bidders
when they were supported by ATG's digital marketing programme. We
have upgraded the onsite advertising experience on our
marketplaces, such as through the introduction of rotating banners
and featured auction lots. However, with our marketing revenue
currently at 0.4% of GMV, we still see significant opportunity to
grow, through increasing auctioneer adoption of marketing as well
as through developing new marketing solutions, including, for
example, a new SMS feature that reminds registered bidders that an
auction is about to start.
Our integrated payments solution roll out has continued to grow.
Over 75% of US-based auction houses on LiveAuctioneers have now
adopted the payments solution and in September, 42% of US-based
gross transaction value on LiveAuctioneers was paid for using the
solution. Payments provides both convenience to bidders, with a
99.8% payment rate for bidders who have a credit card on file, as
well as speed and reliability to auctioneers, with a two to three
times faster disbursement cycle when the solution is used. We have
begun the roll out of payments onto Proxibid and are encouraged by
the rate of adoption we have seen so far. In the coming year, we
will focus on growing the adoption of payments across marketplaces
as well as launching an integrated delivery solution on
LiveAuctioneers.
Strengthening our competitive position with our focus on
improving the End-to-End Experience
We are early in our journey to unlock the value of the secondary
goods market. The auction industry remains well behind e-commerce
in its digitisation journey, which represents significant
opportunity for future growth. We have made good progress with
phase one of our vision, "Foundations", to transform the auction
industry and we are now in the second phase, "End-to-End
Experience". In this phase, we are enabling auctioneers to compete
even more effectively with other sellers of specialised and unique
secondary goods as we significantly improve the online bidding
experience and as we simplify and streamline how auction lots are
listed online. This will continue to drive our virtuous circle that
benefits both auctioneers and bidders; more bidders participate in
online auctions resulting in higher realised prices for second-hand
items and in turn attracting more assets to be listed on our
marketplaces.
We have invested in our Search Engine Optimisation ("SEO")
functionality to drive bidder acquisition, whilst also improving
our marketplace taxonomy, filter and search functionality to drive
bidder conversion. New editorial features on our marketplaces as
well as new content-rich emails have driven bidder engagement to
further strengthen the relationship that we have with our bidder
base. Over the medium term we believe there is a significant
opportunity to unlock the next generation of bidders, who are
younger, web-native but time poor. For auctioneers, we have
developed and are rolling out our integrating bidding widget, which
will enable auctioneers to seamlessly cross-list assets across our
marketplaces and our white label solutions to reach an even wider
audience. We continue to facilitate the shift to timed online-only
auctions with THV on timed auctions growing 31% year-on-year. Timed
auctions both increase our conversion rate and reduce costs for our
auctioneer partners and have continued to grow even as the physical
live auction format has returned post pandemic. Retention rates of
auctioneers remains very high demonstrating the value that we
create through our shared success model.
Accelerating the growth of the circular economy
The ATG team has continued to work steadily to make the buying
and selling of second-hand goods easier, and this shared social
conscience is key to our purpose. ATG's online marketplaces ensure
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. A recent survey
commissioned by ATG evidenced the growing consumer preference
towards buying secondary goods, with 44% of respondents in the
survey more likely to buy second-hand today than they were three
years ago and only 13% less likely. Furthermore, of these
respondents, 47% cited the importance of sustainable buying as a
driver to buying second-hand, highlighting how consumers are
looking to make greener choices. However, with over 40% of
respondents in the survey still not realising that buying
second-hand furniture is more sustainable than buying new, we
believe there is a huge opportunity for ATG to be the voice of the
industry in educating consumers on the benefits of buying
second-hand.
ATG is committed to making real reductions in the carbon impact
of our operations. During the year, we implemented governance
processes over our sustainability as the Board established a
Sustainability and Climate Risk Committee, whose primary objective
is to support the implementation of the recommendations of the
Taskforce for Climate Related Financial Disclosures ("TCFD"), in
addition to ensuring that climate-related risks and opportunities
are identified, monitored and integrated into the business.
Executing against our six growth drivers
Six growth drivers underpin our success. We have executed
strongly against these in the past year and see significant
opportunity ahead:
-- Extending our addressable market: Our THV has grown 22% in
the last 12 months as we have added new auction houses and new lots
to our marketplaces. We have actively identified new THV that we
wish to bring online over the medium term.
-- Growing the conversion rate (previously "online share") :
Even as physical auctions have returned post pandemic, our
conversion rate has remained flat. For auctioneers we will continue
to actively facilitate the shift from live to timed auctions, and
for bidders, we will invest to make the bidding experience even
easier driving bidder acquisition, engagement and conversion.
-- Enhancing the network effect: We are continuing to make it
easier for auctioneers to cross-list assets on our marketplaces and
grow bidder reach as we roll out integrated bidding. Cross-listing
also encourages bidders to use ATG as their primary search portal
by presenting them with the broadest array of online inventory.
-- Expanding operating leverage: We are investing in a single
technology platform, which will provide both agility and
flexibility to our operations, whilst also enabling the
acceleration of new product development. We expect capital
expenditure to increase to a range of GBP8m to GBP10m for two years
which includes the capitalised expenditure on the technology
platform, whilst we also expect the platform to lead to operational
cost savings of approximately GBP2m per annum from FY25
onwards.
-- Growing our take rate via value-add services: We have
expanded our marketing offerings, rolled out payments across
LiveAuctioneers and have begun to roll out payments on Proxibid. We
are focused on rolling out payments and driving adoption across
Proxibid and other marketplaces in FY23 and plan to launch an
integrated delivery solution later in the year on
LiveAuctioneers.
-- Pursuing accretive M&A: We have integrated
LiveAuctioneers and remain active in looking for value accretive
opportunities to add to our footprint and to increase value across
our network.
Leading the transformation of the auction industry
ATG remains uniquely positioned to lead the transformation of
the auction industry. FY22 has been another year of growth and
development. Our business is more diversified today by revenue and
by vertical than where it was a year ago, and we have proven our
ability to add additional layers of growth through the successful
roll out of value-add services. Our strong track record of
financial and operational performance, as well as our deep
knowledge and scale to invest, gives us confidence in our ability
to continue to execute against our growth strategy. Importantly,
our shared success model will ensure our auctioneer partners are
able to grow alongside us. The ATG team at all levels has done a
superb job, and whilst the economic outlook is uncertain,
particularly in the more cyclical A&A vertical, we are
confident of the value we can continue to create within the auction
ecosystem.
John-Paul Savant
Chief Executive Officer
CFO REVIEW
The financial results for FY22 are presented for the year ended
30 September 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 FY22. Full details
of the accounting implications are detailed in note 9 of the
Consolidated Financial Statements.
The impact of the acquisition affects the comparability of the
Group's results. Therefore, to aid comparisons between FY21 and
FY22, 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 on a constant currency
basis.
Note 3 of the Consolidated Financial Statements includes a full
reconciliation of all APMs presented to the reported results for
FY22 and FY21.
Revenue
FY22 FY21 Movement Movement
GBPm GBPm reported proforma
-------------------------------- ------ ----- --------- ---------
Arts & Antiques ("A&A") 55.3 16.2 241% 10%
Industrial & Commercial ("I&C") 52.7 43.7 21% 13%
-------------------------------- ------ ----- --------- ---------
Total marketplace 108.0 59.9 80% 11%
Auction Services 8.6 7.1 21% 9%
Content 3.2 3.1 3% 3%
-------------------------------- ------ ----- --------- ---------
Total 119.8 70.1 71% 11%
-------------------------------- ------ ----- --------- ---------
Group
Group revenue on a reported basis increased 71% year-on-year to
GBP119.8m, driven by the contribution from LiveAuctioneers, growth
across each of the reporting segments and due to the foreign
exchange benefit from the strengthening of the US dollar with 82%
of the Group's revenue derived in US dollars. Proforma revenue
growth of 11% was driven by GMV growth, as the structural shift of
the auction industry online proved to be resilient, as well as
strong growth from the roll out of value-added services including
marketing services and payments. Value-add services across A&A
and I&C grew 40% year-on-year at constant currency and now
account for 16% of total revenue. The take rate across the Group
decreased slightly to 3.3% as the positive impact from value-add
services was offset by the growth of real estate which has a high
lot value and lower take rate, resulting in marketplace proforma
revenue growth of 11% to GBP108.0m.
Art & Antiques
Reported revenue in A&A increased by 241% to GBP55.3m and on
a proforma basis, grew 10%. GMV declined by 5% against challenging
comparatives in the prior year which had benefited from the
Covid-19 tailwind. Whilst THV growth on our marketplaces remained
robust as we added new auction houses and new assets, the
conversion rate in A&A decreased to 16% from 19%, impacted by
the reopening of physical auctions and newer THV on our
marketplaces, including THV from global auction houses, which tends
to have a lower conversion rate. Revenue growth was enhanced by an
increasing uptake of our payments solution on LiveAuctioneers, as
well as growth in marketing revenue. As a result, the take rate in
A&A increased by 1.2ppt to 8.0%.
Industrial & Commercial
Reported revenue increased 21% to GBP52.7m and on a proforma
basis revenue grew 13%. This was largely driven by growth in the
value and volume of secondary assets listed on our marketplaces
with THV up 28%. Secondary asset prices increased in the year,
driven by shortages of equipment in primary markets, although the
rate of price inflation did begin to soften in the second half of
the year. High secondary asset prices were partially driven by
lengthened I&C equipment replacement cycles, which in turn
negatively impacted the volume available for secondary markets. The
conversion rate in I&C was flat at 45%, driven by bidder
conversion and a continued growth in the adoption of timed
auctions. Performance in I&C was impacted by the growth of real
estate which has a high lot value and low commission rate resulting
in a decrease in the take rate from 2.3% to 2.0%. Excluding the
impact of real estate, the take rate in I&C would have been
flat.
Auction Services
Auction Services revenue of GBP8.6m grew 21% year-on-year and 9%
on a proforma basis, benefiting from customer acquisition at
Auction Mobility. We continue to see the benefits of offering
auctioneers a suite of integrated products, which provides them
optionality with accessing the online auction market.
Content
Content revenue grew 3% to GBP3.2m, driven by the ongoing
recovery in advertising volumes following the impact of the
Covid-19 pandemic, although we would expect content revenue to
revert to its historic trends of moderate declines going
forward.
Statutory Financial performance
Restated (1)
FY22 FY21
GBPm GBPm Movement
------ ------ --------
Revenue 119.8 70.1 71%
Cost of sales (40.1) (24.5) 64%
--------------------------------------------- ------ ------ --------
Gross profit 79.7 45.6 75%
--------------------------------------------- ------ ------ --------
Administrative expenses (63.6) (66.5) (4)%
Other operating income 0.7 0.3 133%
--------------------------------------------- ------ ------ --------
Operating profit/(loss) 16.8 (20.6) 182%
--------------------------------------------- ------ ------ --------
Adjusted EBITDA (as defined in note 3) 54.0 31.8 70%
--------------------------------------------- ------ ------ --------
Finance income 2.1 12.7 (83)%
Finance cost (9.6) (17.1) (44)%
--------------------------------------------- ------ ------ --------
Net finance costs (7.5) (4.4) (70)%
--------------------------------------------- ------ ------ --------
Profit/(loss) before tax 9.3 (25.0) 137%
Tax expense (15.4) (2.4) (542)%
--------------------------------------------- ------ ------ --------
Loss for the year attributable to the equity
holders of the Company (6.1) (27.4) 78%
--------------------------------------------- ------ ------ --------
1. The FY21 results have been restated following a reassessment
of the Group's subsidiary functional currencies. This resulted in a
GBP2.3m gain within finance income; further details are provided in
note 1.
Operating profit
Operating profit increased by 182% to GBP16.8m driven by the
increase in revenue and a small decrease to the Group's
administrative expenses year-on-year.
Gross profit increased 75% to GBP79.7m reflecting the increase
in revenue and high flow through of revenue to gross profit. The
gross profit margin of 67% was slightly up year-on-year as the
growth of high margin commission revenue offset the dilutive margin
impact from the growth of payments revenue.
The Group's administrative expenses of GBP63.6m slightly
decreased compared to the prior year largely due to the impact of
one-off exceptional costs of GBP21.8m incurred in the prior year
(FY22: nil) relating to the IPO and the acquisition of Auction
Mobility and LiveAuctioneers as detailed in note 9 offsetting the
other increases in the Group's cost base with the inclusion of
LiveAuctioneers. The share-based payment expense in FY22 of GBP5.2m
represents the pre-admission awards at IPO, the one-off
LiveAuctioneers LTIPs and the 2021 and 2022 LTIPs which have been
issued to Directors and senior management, including new additions
to the ATG management team in 2022. This expense compares to a
charge of GBP11.9m in FY21 which included the one-off share awards
that were issued to Directors and employees as part of the IPO. We
would expect share-based payments to increase in FY23, including
the impact of awards for new senior management. Excluding the
year-on-year impact of exceptional costs and share-based payments,
administrative expenses increased by GBP25.6m, driven by a GBP12.9m
increase in amortisation, the additional costs from
LiveAuctioneers, full year costs associated with being a listed
company as well as planned investments to support future growth,
including in new roles in our senior management team.
Adjusted EBITDA
Adjusted EBITDA definitions and reconciliations to the reported
results are presented in note 3 of the Consolidated Financial
Statements.
Adjusted EBITDA increased by GBP22.2m year-on-year to GBP54.0m,
driven by strong revenue growth and the acquisition of
LiveAuctioneers. The adjusted EBITDA margin of 45% was flat from
FY21 as the benefits of strong revenue growth and the Group's high
operational leverage offset the adverse impact from full year
public company costs, planned investments to drive future growth as
well as the mix impact from the growth in lower margin payments
revenue.
Net finance costs
Net finance costs were GBP7.5m compared to finance costs of
GBP4.4m(1) in FY21. Finance costs of GBP9.6m (FY21: GBP17.1m)
primarily relate to interest on our US dollar denominated Senior
Term Facility which carries an interest rate linked to USD LIBOR.
In the second half of the year, the increase in LIBOR as well as
the strengthening of the dollar resulted in an increase in the
interest cost. Finance costs also include commitment fees on the
undrawn Revolving Credit Facility and amortisation of prepaid
finance costs of GBP0.9m, as well as the movement in contingent
consideration for Auction Mobility of GBP1.1m, and GBP0.7m related
to the unwind of the discount on the LiveAuctioneers contingent
consideration. In the prior year, finance costs related to interest
costs on borrowing including 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. Finance
income of GBP2.1m (FY21: GBP12.7m(1) ) related to foreign exchange
gains primarily arising from our cash, external and intergroup loan
balances held in US dollars and the appreciation of the US dollar
versus pound sterling in the year.
Profit/(loss) before tax
After the impact of net finance costs, the Group reported a
profit before tax of GBP9.3m (FY21: loss of GBP25.0m(1) ).
Taxation
The overall tax expense for the year was GBP15.4m (FY21:
GBP2.4m(1) ), arising from the profit in the year and a deferred
tax expense on unrealised foreign exchange differences. The
unrealised foreign exchange differences were not recognised in the
Group's profit for the year due to differences in the functional
currency basis under tax and accounting rules for the US holding
entities. The Group's effective tax rate for FY22 of 166% (FY21:
9.3%(1) ) was higher than the UK tax rate of 19% due to the net
impact of allowable deductions for the exercise of share options
and the deferred tax liability on the foreign exchange movements in
the year.
The Group is committed to paying its fair share of tax and
manages tax matters in line with the Group's Tax Strategy, which is
approved by the Board and is published on our website
www.auctiontechnologygroup.com.
Loss per share and adjusted diluted earnings per share
Basic and diluted loss per share was 5.1p compared to a loss of
31.0p(1) in FY21, driven by the reduction in loss after tax
year-on-year. The weighted average number of shares in issue during
the period was 120.3m (FY21: 88.2m shares), with the increase
year-on-year primarily attributable to the full year impact of the
equity raise for the LiveAuctioneers acquisition which occurred in
June 2021 and shares issued for the IPO in March 2021.
Adjusted diluted earnings per share was 29.5p compared to 9.2p
in FY21 and is based on loss 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. The increase year-on-year is due to the
increase in adjusted earnings, partially offset by an increase in
the weighted average number of ordinary shares and dilutive options
in the year.
A reconciliation of the Group's diluted earnings per share to
adjusted diluted earnings per share is set out in note 3.
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 pound sterling with a
mix of revenues included in the table below.
FY22 FY21
Revenue GBPm GBPm
--------------- ----- -----
United Kingdom 18.5 18.9
USA 97.8 47.8
Germany 3.5 3.4
--------------- ----- -----
Total 119.8 70.1
--------------- ----- -----
The average FY22 exchange rate of pound sterling against the US
dollar significantly weakened by 7.3% and appreciated by 3.5%
against the euro compared to FY21, as shown in the table below.
Average rate Closing rate
FY22 FY21 Movement FY22 FY21 Movement
---- ---- -------- ---- ---- --------
Euro 1.18 1.14 3.5% 1.13 1.16 (2.6)%
US dollar 1.27 1.37 (7.3%) 1.12 1.35 (17.0)%
---- ---- -------- ---- ---- --------
When comparing revenue in FY21 to FY22, changes to currency
exchange rates had a favourable impact on revenue of GBP6.1m. The
Group also has a $204.0m Senior Term Facility with interest costs
which are also sensitive to movements in foreign currency,
resulting in an unfavourable movement of GBP31.8m on the Facility
as at 30 September 2022.
Statement of financial position
Overall net assets at 30 September 2022 have increased by
GBP99.9m to GBP539.3m since 30 September 2021. Total assets
increased by GBP187.9m, mainly due to the acquisition of
LiveAuctioneers with significant additions to goodwill and
intangible assets of GBP449.1m and a net cash outflow of GBP358.8m
for the acquisition. The weakening of pound sterling against the US
dollar during the year has given rise to a gain of GBP115.3m on
assets held. The Group's goodwill and intangibles were tested for
impairment at 30 September 2022 and whilst no impairment was
recognised, the A&A and Auction Services cash generating units
are very sensitive to the key assumptions used in the model. Refer
to note 10 for further details.
Total liabilities increased by GBP88.0m, primarily due to the
inclusion of LiveAuctioneers which included a deferred tax
liability of GBP42.2m that arose due to acquisition accounting,
foreign exchange movements on the external loan of GBP31.8m and a
deferred tax liability of GBP15.9m on unrealised foreign exchange
differences. An GBP86.1m gain was recognised within the foreign
currency translation reserve relating to the net impact of foreign
exchange differences arising on the translation of foreign
operations.
Cash flow and adjusted net debt
The Group generated strong cash from operations at GBP49.4m
(FY21: GBP15.9m) driven by the high flow through of revenue to
adjusted EBITDA. Capital expenditure in the period was GBP4.5m
(FY21: GBP2.1m) and primarily related to the inclusion of
LiveAuctioneers capital expenditure, investments in technology to
support platform enhancements in addition to infrastructure
investment to support more seamless dual listing across our
marketplaces. As we migrate towards a single technology platform,
we would expect our total capital expenditure to increase to GBP8m
to GBP10m for two years before normalising from FY25 onwards.
Adjusted net debt as at 30 September 2022 was GBP129.0m, an
increase from GBP119.7m as at 31 March 2022 as operating cash flow
generation was offset by the foreign exchange impact on our $204.0m
US dollar denominated Senior Term Facility. The Group had cash in
bank of GBP51.8m and borrowings of GBP180.8m which was also
impacted by the year-on-year movement in the US dollar versus pound
sterling (31 March 2022: cash in bank of GBP35.2m and borrowings of
GBP154.9m). As detailed in our post balance sheet events, we
pre-paid $43.7m of our Senior Term Facility at the start of October
2022. We expect to continue to make prepayments to our Senior Term
Loan through FY23.
The adjusted net debt/ adjusted EBITDA ratio was 2.4x and if
recalculating adjusted net debt using an average foreign exchange
rate, the leverage ratio would be 2.2x.
The Group's adjusted free cash flow was GBP49.9m (FY21:
GBP30.4m), a conversion rate(2) of 92.5% (FY21: 95.7%). A
reconciliation of cash generated from operations to adjusted free
cash flow and adjusted free cash flow conversion(2) is included in
note 3 of the Consolidated Financial Statements.
Dividends
The Group sees strong growth opportunities through organic and
inorganic investments and, as such, intends to retain any future
earnings to finance such investments. No dividends have been paid
or proposed for FY22 or FY21.
Post balance sheet events
The Group pre-paid $43.7m of their Senior Term Facility at the
start of October 2022 using the Group's available cash.
Related parties
Related party disclosures are detailed in note 15 to the
Consolidated Financial Statements.
Going concern
The Directors have undertaken the going concern assessment for
the Group for a minimum of 12 months from the date of signing these
financial statements. The Directors have assessed the Group's
prospects, both as a going concern and its longer-term viability.
As part of the going concern review the Directors have reviewed the
Group's forecasts and projections, assessed the headroom on the
Group's Facilities and the banking covenants. This has been
considered under a base case and several plausible but severe
downside scenarios, taking into consideration the Group's principal
risks and uncertainties. Refer to note 1 for further details.
These scenarios individually, or collectively do not threaten
the ability of the Group to continue as a going concern. Even in
the most extreme 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. 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
the Consolidated Financial Statements for the Group.
Tom Hargreaves
Chief Financial Officer
1. The FY21 results have been restated to adjust the foreign
currency translation reserves and finance income by GBP2.3m. Full
details are provided in note 1 of the Consolidated Financial
Statements.
2. The Group provides alternative performance measures ("APMs")
which are not defined or specified under the requirements of
UK-adopted International Accounting Standards. 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 3 to the Consolidated 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.
Consolidated Statement of Profit or Loss and Other Comprehensive
Income or Loss
for the year ended 30 September 2022
Restated
Year Year
ended ended
30 September 30 September
2022 2021
Note GBP000 GBP000
----------------------------------------------------- ---- ------------- -------------
Revenue 4,5 119,846 70,080
----------------------------------------------------- ---- ------------- -------------
Cost of sales (40,101) (24,544)
----------------------------------------------------- ---- ------------- -------------
Gross profit 79,745 45,536
----------------------------------------------------- ---- ------------- -------------
Administrative expenses (63,646) (66,506)
----------------------------------------------------- ---- ------------- -------------
Other operating income 718 346
----------------------------------------------------- ---- ------------- -------------
Operating profit/(loss) 16,817 (20,624)
----------------------------------------------------- ---- ------------- -------------
Finance income 6 2,127 12,660
----------------------------------------------------- ---- ------------- -------------
Finance costs 6 (9,665) (17,078)
----------------------------------------------------- ---- ------------- -------------
Net finance costs 6 (7,538) (4,418)
----------------------------------------------------- ---- ------------- -------------
Profit/(loss) before tax 9,279 (25,042)
----------------------------------------------------- ---- ------------- -------------
Income tax 7 (15,406) (2,322)
----------------------------------------------------- ---- ------------- -------------
Loss for the year attributable to the equity holders
of the Company (6,127) (27,364)
----------------------------------------------------- ---- ------------- -------------
Other comprehensive income/(loss) for the year
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 86,126 (2,773)
----------------------------------------------------- ---- ------------- -------------
Fair value loss arising on hedging instruments
during the year (16,173) -
----------------------------------------------------- ---- ------------- -------------
Tax relating to these items 3,074 -
----------------------------------------------------- ---- ------------- -------------
Other comprehensive income/(loss) for the year,
net of income tax 73,027 (2,773)
----------------------------------------------------- ---- ------------- -------------
Total comprehensive income/(loss) for the year
attributable to the equity holders of the Company 66,900 (30,137)
----------------------------------------------------- ---- ------------- -------------
Loss per share p p
----------------------------------------------------- ---- ------------- -------------
Basic 8 (5.1) (31.0)
----------------------------------------------------- ---- ------------- -------------
Diluted 8 (5.1) (31.0)
----------------------------------------------------- ---- ------------- -------------
The above results are derived from continuing operations.
The Consolidated Statement of Profit or Loss and Other
Comprehensive Income or Loss for the year ended 30 September 2021
has been restated as detailed in note 1.
Consolidated Statement of Financial Position
as at 30 September 2022
Restated
30 September 30 September
2022 2021
Note GBP000 GBP000
------------------------------------- ---- ------------ -------------
ASSETS
------------------------------------- ---- ------------ -------------
Non-current assets
------------------------------------- ---- ------------ -------------
Goodwill 10 488,978 141,160
------------------------------------- ---- ------------ -------------
Other intangible assets 10 246,475 68,077
------------------------------------- ---- ------------ -------------
Property, plant and equipment 526 379
------------------------------------- ---- ------------ -------------
Right of use assets 1,714 1,401
------------------------------------- ---- ------------ -------------
Deferred tax asset 13 - 366
------------------------------------- ---- ------------ -------------
Trade and other receivables 90 85
------------------------------------- ---- ------------ -------------
Total non-current assets 737,783 211,468
------------------------------------- ---- ------------ -------------
Current assets
------------------------------------- ---- ------------ -------------
Trade and other receivables 15,790 9,699
------------------------------------- ---- ------------ -------------
Tax asset 1,565 437
------------------------------------- ---- ------------ -------------
Cash and cash equivalents 11 51,817 397,451
------------------------------------- ---- ------------ -------------
Total current assets 69,172 407,587
------------------------------------- ---- ------------ -------------
Total assets 806,955 619,055
------------------------------------- ---- ------------ -------------
LIABILITIES
------------------------------------- ---- ------------ -------------
Non-current liabilities
------------------------------------- ---- ------------ -------------
Loans and borrowings 12 (149,862) (148,686)
------------------------------------- ---- ------------ -------------
Tax liabilities (1,074) (1,392)
------------------------------------- ---- ------------ -------------
Lease liabilities (1,094) (775)
------------------------------------- ---- ------------ -------------
Deferred tax liabilities 13 (64,618) (9,260)
------------------------------------- ---- ------------ -------------
Total non-current liabilities (216,648) (160,113)
------------------------------------- ---- ------------ -------------
Current liabilities
------------------------------------- ---- ------------ -------------
Trade and other payables (18,780) (17,310)
------------------------------------- ---- ------------ -------------
Loans and borrowings 12 (30,983) (353)
------------------------------------- ---- ------------ -------------
Tax liabilities (475) (1,168)
------------------------------------- ---- ------------ -------------
Lease liabilities (746) (657)
------------------------------------- ---- ------------ -------------
Total current liabilities (50,984) (19,488)
------------------------------------- ---- ------------ -------------
Total liabilities (267,632) (179,601)
------------------------------------- ---- ------------ -------------
Net assets 539,323 439,454
------------------------------------- ---- ------------ -------------
EQUITY
------------------------------------- ---- ------------ -------------
Share capital 14 12 12
------------------------------------- ---- ------------ -------------
Share premium 14 235,903 235,903
------------------------------------- ---- ------------ -------------
Other reserve 14 238,385 238,385
------------------------------------- ---- ------------ -------------
Capital redemption reserve 5 5
------------------------------------- ---- ------------ -------------
Share option reserve 34,690 1,649
------------------------------------- ---- ------------ -------------
Foreign currency translation reserve 66,740 (3,213)
------------------------------------- ---- ------------ -------------
Retained losses (36,412) (33,287)
------------------------------------- ---- ------------ -------------
Total equity 539,323 439,454
------------------------------------- ---- ------------ -------------
The Consolidated Statement of Financial Position at 30 September
2021 has been restated as detailed in note 1.
Consolidated Statement of Changes in Equity
for the year ended 30 September 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)
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Loss for the year - - - - - - (27,364) (27,364)
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Other comprehensive
loss - - - - - (2,773) - (2,773)
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Total comprehensive
loss for the year (restated
see note 1) - - - - - (2,773) (27,364) (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
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Income tax relating
to items taken directly
to equity - - - - - - 64 64
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
30 September 2021 (restated
see note 1) 12 235,903 238,385 5 1,649 (3,213) (33,287) 439,454
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Loss for the year - - - - - - (6,127) (6,127)
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Other comprehensive
income - - - - - 69,953 3,074 73,027
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Total comprehensive
income/(loss) for the
year - - - - - 69,953 (3,053) 66,900
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Transactions with owners
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Issue of options as
consideration for a
business combination,
net of transaction costs
and tax - - - - 28,346 - - 28,346
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Movement in equity-settled
share-based payments - - - - 4,695 - 78 4,773
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Income tax relating
to items taken directly
to equity - - - - - - (150) (150)
============================= ======== ======== ======== =========== ======== ============ ======== ========
30 September 2022 12 235,903 238,385 5 34,690 66,740 (36,412) 539,323
----------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
The Consolidated Statement of Changes in Equity at 30 September
2021 has been restated as detailed in note 1.
Consolidated Statement of Cash Flows
for the year ended 30 September 2022
Restated
Year ended Year ended
30 September 30 September
2022 2021
Note GBP000 GBP000
----------------------------------------------------- ---- ------------- -------------
Cash flows from operating activities
----------------------------------------------------- ---- ------------- -------------
Profit/(loss) before tax 9,279 (25,042)
----------------------------------------------------- ---- ------------- -------------
Adjustments for:
----------------------------------------------------- ---- ------------- -------------
Amortisation of acquired intangible assets 10 26,591 13,219
----------------------------------------------------- ---- ------------- -------------
Amortisation of internally generated software 10 4,118 4,576
----------------------------------------------------- ---- ------------- -------------
Depreciation of property, plant and equipment 280 228
----------------------------------------------------- ---- ------------- -------------
Depreciation of right of use assets 920 743
----------------------------------------------------- ---- ------------- -------------
Share-based payment expense 5,226 11,892
----------------------------------------------------- ---- ------------- -------------
Finance income 6 (2,127) (12,660)
----------------------------------------------------- ---- ------------- -------------
Finance costs 6 9,665 17,078
----------------------------------------------------- ---- ------------- -------------
Operating cash flows before movements in working
capital 53,952 10,034
----------------------------------------------------- ---- ------------- -------------
Decrease/(increase) in trade and other receivables 304 (439)
----------------------------------------------------- ---- ------------- -------------
(Decrease)/increase in trade and other payables (4,847) 6,271
----------------------------------------------------- ---- ------------- -------------
Cash generated by operations 49,409 15,866
----------------------------------------------------- ---- ------------- -------------
Income taxes paid (9,981) (6,090)
----------------------------------------------------- ---- ------------- -------------
Net cash from operating activities 39,428 9,776
----------------------------------------------------- ---- ------------- -------------
Cash flows from investing activities
----------------------------------------------------- ---- ------------- -------------
Acquisition of subsidiaries, net of cash acquired 9 (358,763) (24,948)
----------------------------------------------------- ---- ------------- -------------
Payment for internally generated software 10 (4,209) (1,956)
----------------------------------------------------- ---- ------------- -------------
Payment for property, plant and equipment (270) (149)
----------------------------------------------------- ---- ------------- -------------
Payment of contingent consideration (20,946) -
----------------------------------------------------- ---- ------------- -------------
Payment of deferred consideration - (234)
----------------------------------------------------- ---- ------------- -------------
Net cash used in investing activities (384,188) (27,287)
----------------------------------------------------- ---- ------------- -------------
Cash flows from financing activities
----------------------------------------------------- ---- ------------- -------------
Payment of contingent consideration (1,222) (492)
----------------------------------------------------- ---- ------------- -------------
Repayment of loans and borrowings (359) (108,956)
----------------------------------------------------- ---- ------------- -------------
Repayment of preference shares - (117,716)
----------------------------------------------------- ---- ------------- -------------
Proceeds from loans and borrowings - 176,639
----------------------------------------------------- ---- ------------- -------------
Proceeds from the issue of preference shares - 714
----------------------------------------------------- ---- ------------- -------------
Interest element of lease payments (137) (74)
===================================================== ==== ============= =============
Capital element of lease payments (959) (742)
----------------------------------------------------- ---- ------------- -------------
Issue of new share capital, net of share issue
costs - 473,158
----------------------------------------------------- ---- ------------- -------------
Interest paid (7,283) (26,428)
----------------------------------------------------- ---- ------------- -------------
Net cash (used in)/generated by financing activities (9,960) 396,103
----------------------------------------------------- ---- ------------- -------------
Cash and cash equivalents at beginning of the
year 397,451 14,193
----------------------------------------------------- ---- ------------- -------------
Net (decrease)/increase in cash and cash equivalents (354,720) 378,592
----------------------------------------------------- ---- ------------- -------------
Effect of foreign exchange rate changes 9,086 4,666
----------------------------------------------------- ---- ------------- -------------
Cash and cash equivalents at the end of the year 11 51,817 397,451
----------------------------------------------------- ---- ------------- -------------
The Consolidated Statement of Cash Flows at 30 September 2021
has been restated as detailed in note 1.
Notes to the Consolidated Financial Statements
1. Accounting policies
Basis of preparation
The Consolidated Financial Statements have been prepared and
approved by the Directors in accordance with UK-adopted
International Accounting Standards and with the requirements of the
Companies Act 2006. On 31 December 2020, IFRS as adopted by the
European Union at that date was brought into UK law and became
UK-adopted International Accounting Standards, with future changes
being subject to endorsement by the UK Endorsement Board. The Group
transitioned to UK-adopted International Accounting Standards in
its Financial Statements on 1 October 2021. This change constitutes
a change in accounting framework. However, there is no impact on
recognition, measurement or disclosure in the period reported as a
result of the change in framework.
The Consolidated Financial Statements have been prepared under
the historical cost convention, except for certain financial
instruments which have been measured at fair value. All accounting
policies set out below have been applied consistently to all
periods presented in these Consolidated Financial Statements.
The information for the year ended 30 September 2022 does not
constitute statutory accounts for the purposes of Section 435 of
the Companies Act 2006. A copy of the accounts for the Company for
the year ended 30 September 2021 has been delivered to the
Registrar of Companies. The auditor's report on those accounts was
not qualified and did not contain statements under Section 498(2)
or 498(3) of the Companies Act 2006. The accounts for the year
ended 30 September 2022 have been audited and finalised on the
basis of the financial information presented by the Directors in
this Preliminary Statement and will be delivered to the Registrar
of Companies following the Annual General Meeting.
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.
New and amended accounting standards effective during the
year
The following amended standards and interpretations were
effective during the year:
-- Amendments to IFRS 16: Covid-19-Related Rent Concessions beyond 30 June 2021.
-- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16:
Interest Rate Benchmark Reform Phase 2.
The adoption of the standards and interpretations listed above
has not led to any changes to the Group's accounting policies or
had any other material impact on the financial position or
performance of the Group.
New standards, interpretations and amendments issued but not yet
effective
The following new accounting standards, amendments and
interpretations to accounting standards have been issued but these
are not mandatory for 30 September 2022 and they have not been
adopted early by the Group:
-- Annual Improvements to IFRS Standards 2018-2020
-- Amendments to IAS 16: Property, Plant and Equipment: proceeds before intended use
-- Amendments to IFRS 3: Business Combinations: reference to conceptual framework
-- IFRS 17: Insurance Contracts
-- Amendments to IAS 1: Classification of liabilities as current and non-current
-- IAS 37: Onerous Contracts: costs of fulfilling a contract
-- Amendments to IAS 1 and IFRS Practice Statement 2: disclosure of accounting policies
-- Amendments to IAS 12: Deferred Tax related to assets and
liabilities arising from a single transaction
-- Amendments to IAS 8: Definition of accounting estimates
The Directors anticipate that the adoption of planned standards
and interpretations in future periods will not have a material
impact on the Consolidated Financial Statements of the Group.
Going concern
The Directors are required to assess going concern at each
reporting period. The Directors have undertaken the going concern
assessment for the Group for a minimum of 12 months from the date
of signing these financial statements. The Directors have assessed
the Group's prospects, both as a going concern and its longer-term
viability. After considering the current financial projections, the
bank facilities available and then applying severe but plausible
sensitivities, the Directors of the Company are satisfied that the
Group has sufficient resources for its operational needs and will
remain in compliance with the financial covenants in its bank
facilities for at least the next 12 months from the date of
approving these financial statements. The process and key
judgements in coming to this conclusion are set out below:
Liquidity
The Group entered into the Senior Facilities Agreement on 17
June 2021 which included the Senior Term Facility for $204.0m for
the acquisition of LiveAuctioneers. The 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. At 30 September 2022 the loan
was subject to interest at a margin of 3% over US LIBOR. In
addition the Group has a multi-currency revolving credit working
capital facility (the "RCF") for $49.0m. Any sums outstanding under
the RCF will be due for repayment on 17 June 2025, subject to the
optionality of a 12-month extension. The facility has not been
drawn down as at 30 September 2022. As at 30 September 2022 the
Group has adjusted net debt of GBP129.0m and is in a net current
asset position.
Covenants
The Group is subject to covenant tests on the Senior Term
Facility, with the most sensitive covenant being the net leverage
ratio covenant (net debt: trailing 12-month adjusted EBITDA). The
net leverage ratio covenant is a maximum of 4.0x, which reduces to
3.5x in Q2 FY23 and 3.0x in Q4 FY23. Under the base case forecasts
and each of the downside scenarios, including the combined downside
scenario, the Group is forecast to be in compliance with the
covenants and have cash headroom, without applying mitigating
actions which could be implemented such as reducing capital
expenditure spend. At 30 September 2022, the net leverage ratio was
2.2x compared to the limit of 4.0x and therefore the Group was
comfortably within the covenant.
Scenario planning
The Directors have undertaken the going concern assessment for
the Group, taking into consideration the Group's business model,
strategy, and principal and emerging 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 facilities
and the banking covenants. This has been considered under a base
case and several plausible but severe downside scenarios, taking
into consideration the Group's principal risks and uncertainties.
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. Accordingly, the Directors continue
to adopt the going concern basis in preparing the Consolidated
Financial Statements for the year ended 30 September 2022.
Climate change
In preparing the Consolidated Financial Statements management
has considered the impact of climate change. These considerations
did not have a material impact on the financial reporting
judgements and estimates, consistent with the assessment that
climate change is an emerging risk and not expected to have a
significant impact on the Group's going concern assessment to 30
September 2023 nor the viability of the Group over the next three
years.
Restatements
Following the acquisition of LiveAuctioneers, a review was
performed to ensure that the functional currency of each subsidiary
within the Group had been correctly determined given the revised
structure and operations of the Group.
As a result of the review, the functional currency for all
entities was deemed to be the currency of the primary economic
environment in which the entities operate with no changes proposed,
except for ATG Media US Inc., Proxibid Bidco Inc., Platinum Parent
Inc., Platinum Intermediate Inc., Platinum Purchaser Inc. and
LiveAuctioneers Inc. The functional currency of these entities was
deemed to be pound sterling rather than US dollars. The
LiveAuctioneer entities (Platinum Parent Inc., Platinum
Intermediate Inc., Platinum Purchaser Inc. and LiveAuctioneers
Inc.) have been translated into the new functional currency, using
the exchange rate at 1 October 2021, the date they became part of
the Group. As ATG Media US Inc. and Proxibid Bidco Inc. were part
of the Group previously a prior period adjustment is required to be
disclosed.
A restatement has been recognised for the year ending 30
September 2021 adjusting foreign currency translation reserves and
finance income by GBP2.3m. These changes have no impact on the
adjusted measures used as part of the Group's alternative
performance measures. Treating the functional currency of ATG Media
US Inc. and Proxibid Bidco Inc. as US dollar rather than pound
sterling had no impact on the opening balance sheet as at 1 October
2020, and as such no opening balance sheet has been presented.
Below is a summary of the restatement, outlining the primary
statements and financial statement line items impacted:
Reported Restated
30 September 30 September
2021 Change 2021
GBP000 GBP000 GBP000
------------------------------------------------ --------------- ------- -------------
Consolidated Statement of Profit or Loss and
Other Comprehensive Income or Loss
------------------------------------------------ ---------------------------------------
Finance income 10,394 2,266 12,660
------------------------------------------------ --------------- ------- -------------
Net finance costs (6,684) 2,266 (4,418)
------------------------------------------------ --------------- ------- -------------
Loss before tax (27,308) 2,266 (25,042)
------------------------------------------------ --------------- ------- -------------
Loss for the year attributable to the equity
holders of the Company (29,630) 2,266 (27,364)
------------------------------------------------ --------------- ------- -------------
Foreign exchange differences on translation
of foreign operations (507) (2,266) (2,773)
------------------------------------------------ --------------- ------- -------------
Other comprehensive loss for the year, net
of tax (507) (2,266) (2,773)
------------------------------------------------ --------------- ------- -------------
Basic and diluted earnings per share (in pence) (33.6) 2.6 (31.0)
------------------------------------------------ --------------- ------- -------------
Consolidated Statement of Financial Position and
Consolidated Statement of Changes in Equity
-------------------------------------------------------- -------------------------------
Foreign currency translation reserves (947) (2,266) (3,213)
------------------------------------------------ --------------- ------- -------------
Retained losses (35,553) 2,266 (33,287)
------------------------------------------------ --------------- ------- -------------
2. Significant judgements and key sources of estimation uncertainty
The preparation of the Group's Consolidated 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.
Significant judgements and key sources of estimation uncertainty
are provided below:
Estimates
Impairment of goodwill
At least on an annual basis, or if there is an impairment
indicator, management performs a review of the carrying values of
goodwill and intangible assets. This requires an estimate of the
value in use of the cash-generating unit ("CGU") to which the
goodwill and intangible assets are allocated. To estimate the value
in use, management estimates the expected future cash flows from
the CGU and discounts them to their present value at a determined
discount rate, which is appropriate for the country where the
goodwill and intangible assets are allocated to.
Forecasting expected cash flows and selecting an appropriate
discount rate inherently requires estimation. Sensitivity analysis
has been performed over the estimates (see note 10). The resulting
calculation is sensitive to the assumptions in respect of future
cash flows, the discount rate and long-term growth rate applied.
Management considers that the assumptions made represent their best
estimate of the future cash flows generated by the CGUs, and that
the discount rate and long-term growth rate used is appropriate
given the risks associated with the specific cash flows.
Judgements
LiveAuctioneers consideration
The Group acquired LiveAuctioneers on 1 October 2021 for total
consideration of GBP404.0m. 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 IFRS 3 leading to management's 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 amount 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. Of the
intangibles acquired, the customer relationship balances are
especially sensitive to changes in assumptions around discount
rates and customer attrition rates (see note 9).
At the date of a business combination, goodwill is required to
be allocated to the appropriate CGUs and may only be reallocated in
limited circumstances. Additions to goodwill for LiveAuctioneers is
allocated on a split of 80% and 20% between A&A and I&C
respectively. The allocation was calculated based on the net
present value of segment contribution margin from the roll out of
the payments platform.
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.
Functional currency of subsidiaries
Following the acquisition of LiveAuctioneers, a review was
performed to ensure that the functional currency of each subsidiary
within the Group had been correctly determined given the revised
structure and operations of the Group. When assessing the
functional currency against the requirements and guidance of IAS 21
"The Effects of Changes in Foreign Exchange Rates" there is an
element of judgement required, in particular for intermediate
holding entities.
As a result of the review, the functional currency for all
entities was deemed to be the currency of the primary economic
environment in which the entities operate with no changes proposed,
except for ATG Media US Inc., Proxibid Bidco Inc., Platinum Parent
Inc., Platinum Intermediate Inc., Platinum Purchaser Inc. and
LiveAuctioneers Inc. The functional currency of these entities was
deemed to be pound sterling rather than US dollars. As ATG Media US
Inc. and Proxibid Bidco Inc. were part of the Group previously a
prior period adjustment is required to be disclosed (see note
1).
3. 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
profit or cost 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.
Net finance costs for the year ended 30 September 2021 have been
restated as detailed in note 1.
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:
Restated
Year Year
ended ended
30 September 30 September
2022 2021
GBP000 GBP000
----------------------------------------------------- ------------- -------------
Profit/(loss) before tax 9,279 (25,042)
----------------------------------------------------- ------------- -------------
Adjustments for:
----------------------------------------------------- ------------- -------------
Net finance costs (note 6) 7,538 4,418
----------------------------------------------------- ------------- -------------
Amortisation of acquired intangible assets (note 10) 26,591 13,219
----------------------------------------------------- ------------- -------------
Amortisation of internally generated software (note
10) 4,118 4,576
----------------------------------------------------- ------------- -------------
Depreciation of property, plant and equipment 280 228
----------------------------------------------------- ------------- -------------
Depreciation of right of use assets 920 743
----------------------------------------------------- ------------- -------------
Share-based payment expense 5,226 11,892
----------------------------------------------------- ------------- -------------
Exceptional operating items - 21,765
----------------------------------------------------- ------------- -------------
Adjusted EBITDA 53,952 31,799
----------------------------------------------------- ------------- -------------
The following table provides the calculation of adjusted EBITDA
margin which represents adjusted EBITDA divided by revenue:
Year Year
ended ended
30 September 30 September
2022 2021
GBP000 GBP000
---------------------------- ------------- -------------
Reported revenue (note 4,5) 119,846 70,080
---------------------------- ------------- -------------
Adjusted EBITDA 53,952 31,799
---------------------------- ------------- -------------
Adjusted EBITDA margin 45% 45%
---------------------------- ------------- -------------
The basis for treating these items as adjusting is as
follows:
Share-based payment expense
The Group has issued share awards to employees and Directors: at
the time of IPO; for the acquisition of LiveAuctioneers; and
operates several
employee share schemes. The share-based payment expense is a
significant non-cash charge driven by a valuation model which
references
the Group's share price. As the Group is still early in its life
cycle as a newly listed business the expense is distortive in the
short term and is not
representative of the cash performance of the business. In
addition, as the share-based payment expense include significant
charges related to
the IPO and LiveAuctioneers acquisition, it is not
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:
Year Year
ended ended
30 September 30 September
2022 2021
GBP000 GBP000
---------------------------------- ------------- -------------
Acquisition costs - (13,323)
---------------------------------- ------------- -------------
Listing costs - (8,442)
---------------------------------- ------------- -------------
Total exceptional operating items - (21,765)
---------------------------------- ------------- -------------
There were no exceptional operating items for the year ended 30
September 2022.
For the year ended 30 September 2021, the Group's exceptional
operating costs are in respect of listing costs of the IPO and the
acquisition costs predominantly relating to the acquisition of
LiveAuctioneers Group and Auction Mobility LLC (see note 9).
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 year
is GBP4.0m (30 September 2021: GBP19.1m).
Adjusted earnings and adjusted diluted earnings per share
Adjusted earnings excludes share-based payment expense,
exceptional items (operating and finance), amortisation of acquired
intangible assets, and any related tax effects.
The following table provides a reconciliation from loss after
tax to adjusted earnings:
Restated
Year Year
ended ended
30 September 30 September
2022 2021
GBP000 GBP000
-------------------------------------------------------- ------------- -------------
Loss attributable to equity shareholders of the Company (6,127) (27,364)
-------------------------------------------------------- ------------- -------------
Adjustments for:
-------------------------------------------------------- ------------- -------------
Amortisation of acquired intangible assets 26,591 13,219
-------------------------------------------------------- ------------- -------------
Exceptional finance items (221) (7,918)
-------------------------------------------------------- ------------- -------------
Share-based payment expense 5,226 11,892
-------------------------------------------------------- ------------- -------------
Exceptional operating items - 21,765
-------------------------------------------------------- ------------- -------------
Deferred tax on unrealised foreign exchange differences 15,899 -
-------------------------------------------------------- ------------- -------------
Tax on adjusted items (5,254) (2,394)
-------------------------------------------------------- ------------- -------------
Adjusted earnings 36,114 9,200
-------------------------------------------------------- ------------- -------------
Number Number
--------------------------------------------------------- ----------- -----------
Reported weighted average number of shares 120,364,831 88,248,037
--------------------------------------------------------- ----------- -----------
Adjustment for: weighted average effect of shares issued
in the period up to and including the IPO - 11,751,963
--------------------------------------------------------- ----------- -----------
Adjusted weighted average number of shares in issue 120,364,831 100,000,000
--------------------------------------------------------- ----------- -----------
Weighted average number of shares held by the Trust (61,741) (622)
--------------------------------------------------------- ----------- -----------
Effect of dilutive share options 2,138,826 128,106
--------------------------------------------------------- ----------- -----------
Number of ordinary shares and dilutive options 122,441,916 100,127,484
--------------------------------------------------------- ----------- -----------
p p
--------------------------------------------------------- ----------- -----------
Adjusted diluted earnings per share (pence) 29.5 9.2
--------------------------------------------------------- ----------- -----------
The basis for treating these items not already defined above as
adjusting is as follows:
Amortisation of acquired 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 items in the Consolidated Statement of
Financial Position that relate to M&A activity rather than the
trading performance of the business. The calculation for the year
ending 30 September 2021 has been restated to include an adjustment
of GBP3.4m for acquired software intangible assets as well as
customer relationships, brands and non-compete agreements. This is
due to a change in policy.
Exceptional finance items
Exceptional finance items include foreign exchange differences
arising on the revaluation of the foreign currency loans,
intercompany 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 provide 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.
Deferred tax on unrealised foreign exchange differences
In calculating the adjusted tax rate, the Group excludes the
potential future impact of the deferred tax effects on unrealised
foreign exchange differences arising on intercompany. The
unrealised foreign exchange differences were not recognised in the
Group's profit for the year due to differences in the functional
currency basis under tax and accounting rules for the US holding
entities.
Tax on adjusted items
Tax on adjusted items includes the tax effect of acquired
intangible amortisation, exceptional (operating and finance items)
and share-based payment expense. In calculating the adjusted tax
rate, the Group excludes the potential future impact of the
deferred tax effects on deductible goodwill and intangible
amortisation (other than internally generated software), as the
Group prefers to give users of its accounts a view of the tax
charge based on the current status of such items. Deferred tax
would only crystallise on a sale of the relevant businesses, which
is not anticipated at the current time, and such a sale, being an
exceptional item, would result in an exceptional tax impact.
Adjusted number of ordinary shares for FY21
The adjusted number of ordinary shares for 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.
Proforma revenue
The Group has made certain acquisitions that have affected the
comparability of the Group's results. To aid comparisons between
FY22 and FY21 in the CFO's Review, the prior year results have been
presented to include the full year results as if the acquisition of
LiveAuctioneers and 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
year-on-year reported results. Refer to the Glossary for the full
definition.
The following table provides a reconciliation of proforma
revenue from reported results for the year ended 30 September
2021:
Unaudited
Year ended
30 September
2021
GBP000
------------------------------- -------------
Reported revenue 70,080
-------------------------------- -------------
Acquisition related adjustment 31,725
-------------------------------- -------------
Constant currency adjustment 6,100
-------------------------------- -------------
Proforma revenue 107,905
-------------------------------- -------------
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 net (debt)/cash
excludes lease liabilities and cash held in escrow (restricted
cash).
30 September 30 September
2022 2021
GBP000 GBP000
---------------------------------------------------- ------------ ------------
Cash and cash equivalents excluding restricted cash
(note 11) 51,817 173,675
---------------------------------------------------- ------------ ------------
Current loans and borrowings (note 12) (30,983) (353)
---------------------------------------------------- ------------ ------------
Non-current loans and borrowings (note 12) (149,862) (148,686)
---------------------------------------------------- ------------ ------------
Total loans and borrowings (180,845) (149,039)
---------------------------------------------------- ------------ ------------
Adjusted net (debt)/cash (129,028) 24,636
---------------------------------------------------- ------------ ------------
Adjusted free cash flow and adjusted free cash flow
conversion
Adjusted 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 IAS 38 "Intangible
Assets" 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 adjusted 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 adjusted free cash flow and adjusted free
cash flow conversion.
Year Year
ended ended
30 September 30 September
2022 2021
GBP000 GBP000
----------------------------------------------------- ------------- -------------
Adjusted EBITDA 53,952 31,799
----------------------------------------------------- ------------- -------------
Cash generated by operations 49,409 15,866
----------------------------------------------------- ------------- -------------
Adjustments for:
----------------------------------------------------- ------------- -------------
Exceptional operating items - 21,765
----------------------------------------------------- ------------- -------------
Working capital from exceptional and other items 4,983 (5,098)
----------------------------------------------------- ------------- -------------
Additions to internally generated software (note 10) (4,209) (1,956)
----------------------------------------------------- ------------- -------------
Additions to property, plant and equipment (270) (149)
----------------------------------------------------- ------------- -------------
Adjusted free cash flow 49,913 30,428
----------------------------------------------------- ------------- -------------
Adjusted free cash flow conversion (%) 92.5% 95.7%
----------------------------------------------------- ------------- -------------
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 year, has been allocated
to the Arts & Antiques segment.
The four operating segments are as follows:
- Art & Antiques ("A&A") auction revenues: focused on
offering auction houses that specialise in the sale of arts and
antiques access to the platforms the-saleroom.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") auction revenues:
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 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 year by reportable segment is
as follows:
Year ended 30 September 2022
-------------------------------------- ------------------------------------------------------------
Centrally
Auction allocated
A&A I&C Services Content costs Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------------- -------- -------- --------- ------- ---------- --------
Revenue 55,279 52,775 8,636 3,156 - 119,846
-------------------------------------- -------- -------- --------- ------- ---------- --------
Adjusted EBITDA (see note
3 for definition and reconciliation) 45,777 45,629 6,090 1,089 (44,633) 53,952
-------------------------------------- -------- -------- --------- ------- ---------- --------
Amortisation of intangible
assets (note 10) (18,504) (10,931) (1,274) - - (30,709)
-------------------------------------- -------- -------- --------- ------- ---------- --------
Depreciation of property,
plant and equipment (87) (176) (6) (11) - (280)
-------------------------------------- -------- -------- --------- ------- ---------- --------
Depreciation of right of use
assets (475) (381) (13) (51) - (920)
-------------------------------------- -------- -------- --------- ------- ---------- --------
Share-based payment expense (1,848) (893) (3) - (2,482) (5,226)
-------------------------------------- -------- -------- --------- ------- ---------- --------
Operating profit/(loss) 24,863 33,248 4,794 1,027 (47,115) 16,817
-------------------------------------- -------- -------- --------- ------- ---------- --------
Net finance costs (note 6) - - - - (7,538) (7,538)
-------------------------------------- -------- -------- --------- ------- ---------- --------
Profit/(loss) before tax 24,863 33,248 4,794 1,027 (54,653) 9,279
-------------------------------------- -------- -------- --------- ------- ---------- --------
Year ended 30 September 2021 (restated)
-------------------------------------- -----------------------------------------------------------
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
3 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 3) - - (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) - - - - (4,418) (4,418)
-------------------------------------- ------- -------- --------- ------- ---------- --------
Profit/(loss) before tax 7,904 21,730 2,918 997 (58,591) (25,042)
-------------------------------------- ------- -------- --------- ------- ---------- --------
Net finance costs for the year ended 30 September 2021 have been
restated as detailed in note 1.
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.
30 September 2022 30 September 2021
----------------- ----------------------------- ----------------------------------
Total Additions Additions
non-current to non-current Total non-current to non-current
assets assets assets assets
GBP000 GBP000 GBP000 GBP000
----------------- ------------ --------------- ----------------- ---------------
A&A 506,484 395,683 50,433 1,714
----------------- ------------ --------------- ----------------- ---------------
I&C 199,504 58,829 133,320 715
----------------- ------------ --------------- ----------------- ---------------
Auction Services 31,704 201 27,218 29,511
----------------- ------------ --------------- ----------------- ---------------
Content 91 15 131 10
----------------- ------------ --------------- ----------------- ---------------
737,783 454,728 211,102 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
Year Year
ended ended
30 September 30 September
2022 2021
GBP000 GBP000
----------------------------------------- ------------- -------------
Product and customer types
----------------------------------------- ------------- -------------
A&A 55,279 16,203
----------------------------------------- ------------- -------------
I&C 52,775 43,695
----------------------------------------- ------------- -------------
Auction Services 8,636 7,129
----------------------------------------- ------------- -------------
Content 3,156 3,053
----------------------------------------- ------------- -------------
119,846 70,080
----------------------------------------- ------------- -------------
Primary geographical markets
----------------------------------------- ------------- -------------
United Kingdom 18,539 18,901
----------------------------------------- ------------- -------------
North America 97,765 47,773
----------------------------------------- ------------- -------------
Germany 3,542 3,406
----------------------------------------- ------------- -------------
119,846 70,080
----------------------------------------- ------------- -------------
Timing of transfer of goods and services
----------------------------------------- ------------- -------------
Point in time 110,539 62,142
----------------------------------------- ------------- -------------
Over time 9,307 7,938
----------------------------------------- ------------- -------------
119,846 70,080
----------------------------------------- ------------- -------------
The Group has recognised the following assets and liabilities
related to contracts with customers:
30 September 30 September 1 October
2022 2021 2020
GBP000 GBP000 GBP000
--------------------- ------------ ------------ ---------
Contract assets 837 597 784
--------------------- ------------ ------------ ---------
Contract liabilities 1,783 1,367 585
--------------------- ------------ ------------ ---------
6. Net finance costs
Restated
Year Year
ended ended
30 September 30 September
2022 2021
GBP000 GBP000
-------------------------------------- ------------- -------------
Foreign exchange gain 2,070 11,189
-------------------------------------- ------------- -------------
Interest income 57 9
-------------------------------------- ------------- -------------
Movements in contingent consideration - 1,462
-------------------------------------- ------------- -------------
Finance income 2,127 12,660
-------------------------------------- ------------- -------------
Interest on loans and borrowings (7,214) (8,071)
-------------------------------------- ------------- -------------
Movements in contingent consideration (1,849) -
-------------------------------------- ------------- -------------
Interest on lease liabilities (137) (65)
-------------------------------------- ------------- -------------
Interest payable on preference shares - (6,328)
-------------------------------------- ------------- -------------
Amortisation of finance costs (465) (2,614)
-------------------------------------- ------------- -------------
Finance costs (9,665) (17,078)
-------------------------------------- ------------- -------------
Net finance costs (7,538) (4,418)
-------------------------------------- ------------- -------------
Net finance costs for the year ended 30 September 2021 have been
restated as detailed in note 1.
7. Taxation
Year Year
ended ended
30 September 30 September
2022 2021
GBP000 GBP000
------------------------------------------ ------------- -------------
Current tax
------------------------------------------ ------------- -------------
Current tax on profit/(loss) for the year 11,395 4,566
------------------------------------------ ------------- -------------
Adjustments in respect of prior years (903) (40)
------------------------------------------ ------------- -------------
Total current tax 10,492 4,526
------------------------------------------ ------------- -------------
Deferred tax
------------------------------------------ ------------- -------------
Current year 6,328 (3,039)
------------------------------------------ ------------- -------------
Adjustments from change in tax rates (564) 1,299
------------------------------------------ ------------- -------------
Adjustments in respect of prior years (850) (464)
------------------------------------------ ------------- -------------
Deferred tax 4,914 (2,204)
------------------------------------------ ------------- -------------
Tax expense 15,406 2,322
------------------------------------------ ------------- -------------
The tax on the Group's profit/(loss) before tax differs from the
theoretical amount that would arise using the standard tax rate
applicable to profits of the Group as follows:
Restated
Year Year
ended ended
30 September 30 September
2022 2021
GBP000 GBP000
--------------------------------------------------------- ------------- -------------
Profit/(loss) before tax 9,279 (25,042)
--------------------------------------------------------- ------------- -------------
Tax at United Kingdom tax rate of 19% (2021: 19%) 1,763 (4,758)
--------------------------------------------------------- ------------- -------------
Tax effect of:
--------------------------------------------------------- ------------- -------------
Expenses not deductible for tax purposes - 6,839
--------------------------------------------------------- ------------- -------------
Additional items deductible for tax purposes (1,649) -
--------------------------------------------------------- ------------- -------------
Differences in overseas tax rates (1,317) 283
--------------------------------------------------------- ------------- -------------
Deferred tax on unrealised foreign exchange difference 15,899 -
--------------------------------------------------------- ------------- -------------
Foreign exchange difference not deductible/(taxable)
for tax purposes 3,027 (431)
--------------------------------------------------------- ------------- -------------
Deferred tax not recognised - (381)
--------------------------------------------------------- ------------- -------------
Adjustment to tax charge in respect of deferred tax
arising on acquisition - (25)
--------------------------------------------------------- ------------- -------------
Adjustments from change in tax rates (564) 1,299
--------------------------------------------------------- ------------- -------------
Adjustments in respect of prior years (1,753) (504)
--------------------------------------------------------- ------------- -------------
Tax expense 15,406 2,322
--------------------------------------------------------- ------------- -------------
For the year ended 30 September 2022, additional items
deductible for tax purposes include restricted stock units granted
on acquisition of LiveAuctioneers which vested within the year,
research and development credits and US state tax deductions.
Deferred tax on unrealised foreign exchange difference and foreign
exchange difference not deductible/(taxable) arise due to
differences in the functional currency basis under tax and
accounting rules for the US holding entities. The unrealised
foreign exchange differences were not recognised in the Group's
profit before tax giving rise to the permanent difference.
Adjustments from change in tax rates are due to increases in the
blended US rate for both federal and state taxes.
For the year ended 30 September 2021, expenses not deductible
for tax purposes include interest on preference shares incurred up
to the Group's IPO.
The Group's tax affairs are governed by local tax regulations in
the UK, US and Germany. Given the uncertainties that could arise in
the application of these regulations, judgements are often required
in determining the tax that is due. Where management is aware of
potential uncertainties in local jurisdictions, that are judged
more likely than not to result in a liability for additional tax, a
provision is made for management's best estimate of the liability,
determined with reference to similar transactions and third-party
advice. This provision at 30 September 2022 amounted to GBP1.1m
(2021: GBP1.4m).
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.
As it has been substantively enacted at the balance sheet date, the
effect of the rate increase on deferred tax is reflected in the
Consolidated Financial Statements. The current tax expense for the
year would have been GBP1.9m if the expected increased rate of
corporation tax at 25% for the UK entities had applied.
Tax recognised in other comprehensive income and equity:
Year Year
ended ended
30 September 30 September
2022 2021
GBP000 GBP000
--------------------------- ------------- -------------
Other comprehensive income
--------------------------- ------------- -------------
Income tax 3,074 -
--------------------------- ------------- -------------
Equity
--------------------------- ------------- -------------
Deferred tax (150) 64
--------------------------- ------------- -------------
Tax recognised in other comprehensive income includes income tax
on the Group's net investment hedge. Deferred tax directly
recognised in equity relates to share-based payments.
8. Loss per share
Loss per share is calculated by dividing the loss for the year
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year, after
excluding the weighted average number of non-vested ordinary
shares.
Diluted loss per share is calculated by dividing the loss for
the year attributable to ordinary shareholders by the weighted
average number of ordinary shares including
non-vested/non-exercised ordinary shares. During the year and prior
year, the Group awarded conditional share awards to Directors and
certain employees through an LTIP. The non-vested/non-exercised
ordinary shares are anti-dilutive given the loss for the year and
are therefore excluded from the weighted average number of ordinary
shares for the purpose of diluted earnings per share
calculation.
Restated
Year Year
ended ended
30 September 30 September
2022 2021
GBP000 GBP000
-------------------------------------------------------- ------------- -------------
Loss attributable to equity shareholders of the Company (6,127) (27,364)
======================================================== ============= =============
Number Number
------------------------------------------------------- ----------- ----------
Weighted average number of shares 120,364,831 88,248,037
------------------------------------------------------- ----------- ----------
Weighted average number of shares held by the Employee
Benefit Trust (61,741) (622)
------------------------------------------------------- ----------- ----------
Weighted average number of shares 120,303,090 88,247,415
------------------------------------------------------- ----------- ----------
Dilutive share options 2,138,826 128,106
------------------------------------------------------- ----------- ----------
Diluted weighted average number of shares 122,441,916 88,375,521
------------------------------------------------------- ----------- ----------
P p
------------------------------------------------------- ----------- ----------
Basic loss per share (5.1) (31.0)
------------------------------------------------------- ----------- ----------
Diluted loss per share (5.1) (31.0)
------------------------------------------------------- ----------- ----------
9. Business combinations
Business combinations for the year ended 30 September 2022
Acquisition of Platinum Parent Inc. ("LiveAuctioneers")
On 1 October 2021, the Group acquired 100% of the equity share
capital of 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.
Consideration
The maximum consideration payable of GBP404.7m ($543.9m),
comprised:
- upfront cash consideration of GBP358.8m ($482.2m);
- 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 GBP27.3m ($36.7m); and
- contingent consideration of up to a maximum GBP18.6m ($25.0m), subject to the performance of 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 GBP17.9m ($24.0m). The targets
were met in full and cash contingent consideration of GBP18.0m was
paid during the year ended 30 September 2022. Payments for the fair
value of contingent consideration at acquisition date are presented
in the Consolidated Statement of Cash Flows within cash flows from
investing activities. Payments for the changes in the fair value of
contingent consideration since acquisition date are presented
within cash flows from financing activities. Exchange differences
to reserves were recorded within foreign exchange differences on
translation of foreign operations in the Consolidated Statement of
Comprehensive Income or Loss. The unwinding of discount of GBP0.7m
is reported as a finance cost in the Consolidated Statement of
Profit or Loss.
Purchase price allocation
Management assessed the fair value of the acquired assets and
liabilities as part of the purchase price allocation ("PPA"). This
was prepared on a provisional basis and disclosed in the Group's
Condensed Consolidated Financial Statements for the six months
ended 31 March 2022 and subsequently finalised in the second half
of FY22.
The fair values of the assets and liabilities following the
finalisation of the purchase price allocation are set out
below:
Book Fair value Final
value adjustments fair value
GBP000 GBP000 GBP000
---------------------------------------------------- -------- ------------ -----------
Acquired intangible assets - software 8,133 16,361 24,494
---------------------------------------------------- -------- ------------ -----------
Acquired intangible assets - customer relationships 27,053 92,970 120,023
---------------------------------------------------- -------- ------------ -----------
Acquired intangible assets - brand 2,275 19,182 21,457
---------------------------------------------------- -------- ------------ -----------
Internally generated software 1,820 - 1,820
---------------------------------------------------- -------- ------------ -----------
Property, plant and equipment 88 - 88
---------------------------------------------------- -------- ------------ -----------
Right of use assets 959 - 959
---------------------------------------------------- -------- ------------ -----------
Trade receivables and other receivables 3,974 - 3,974
---------------------------------------------------- -------- ------------ -----------
Income tax receivable/(payable) 194 (644) (450)
---------------------------------------------------- -------- ------------ -----------
Trade and other payables (4,733) (1,784) (6,517)
---------------------------------------------------- -------- ------------ -----------
Lease liabilities (1,063) - (1,063)
---------------------------------------------------- -------- ------------ -----------
Deferred tax liabilities (11,287) (30,865) (42,152)
---------------------------------------------------- -------- ------------ -----------
Net assets on acquisition 27,413 95,220 122,633
---------------------------------------------------- -------- ------------ -----------
Goodwill (note 10) 281,341
---------------------------------------------------- -------- ------------ -----------
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 flow arising on acquisition:
---------------------------------------------------- -------- ------------ -----------
Initial cash consideration 288,524
---------------------------------------------------- -------- ------------ -----------
Debt amounts settled 70,239
---------------------------------------------------- -------- ------------ -----------
358,763
---------------------------------------------------- -------- ------------ -----------
Intangible assets
Intangible assets represent customer relationships, auction
technology platform, payment technology and brand for which
amortisation of GBP13.4m has been charged for the year ended 30
September 2022. The intangible assets will be amortised over their
respective expected useful economic lives: customer relationships
of 14 years, auction technology platform of 10 years, payment
technology of five years and brand of 15 years. Of the intangibles
acquired, the customer relationship balances are especially
sensitive to changes in assumptions around discount rates and
customer attrition rates. A 1% change in the customer attrition
rate results in a GBP12.0m change in the valuation.
Deferred tax
The fair value adjustment to the deferred tax liabilities of
GBP30.9m relates to the deferred tax liability recognised on the
acquired intangible asset and the tax effect of the other fair
value adjustments.
Other fair value adjustments
During the measurement period, the Group finalised the valuation
of onerous contracts and costs not accrued. Adjustments were made
to the provisional PPA resulting in an increase in trade and other
payables of GBP1.8m and income tax payable of GBP0.6m. The fair
value of the assets acquired includes gross trade receivables of
GBP4.1m. At acquisition date, the Group's best estimate of trade
receivables expected not to be collected amounted to GBP0.3m.
Goodwill
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.
Goodwill deductible for tax purposes amounts to GBP18.1m.
Acquisition costs of GBPnil (30 September 2021: GBP12.0m)
directly related to the business combination have been immediately
expensed to the Consolidated Statement of Profit or Loss as part of
administrative expenses and included within exceptional items (see
note 3). Between 1 October 2021 and 30 September 2022,
LiveAuctioneers contributed GBP38.7m to Group revenues and a profit
before tax of GBP5.0m.
10. Goodwill and other intangible assets
Total
Non- acquired Internally
Customer compete intangible generated
Software relationships Brand agreement assets software Goodwill Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Cost
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
1 October 2020 9,373 54,429 11,283 - 75,085 9,894 124,023 209,002
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Acquisition of business
(note 9) 2,786 6,094 371 1,286 10,537 - 18,972 29,509
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Additions - - - - - 1,956 - 1,956
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Exchange differences (214) (706) (228) (50) (1,198) (365) (1,835) (3,398)
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
30 September 2021 11,945 59,817 11,426 1,236 84,424 11,485 141,160 237,069
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Acquisition of business
(note 9) 24,494 120,023 21,457 - 165,974 1,820 281,341 449,135
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Additions - - - - - 4,209 - 4,209
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Exchange differences 5,953 27,966 5,493 260 39,672 2,118 66,477 108,267
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
30 September 2022 42,392 207,806 38,376 1,496 290,070 19,632 488,978 798,680
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Amortisation and impairment
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
1 October 2020 1,961 4,717 628 - 7,306 2,843 - 10,149
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Amortisation 3,422 8,246 1,258 293 13,219 4,576 - 17,795
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Exchange differences (7) (16) (6) 4 (25) (87) - (112)
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
30 September 2021 5,376 12,947 1,880 297 20,500 7,332 - 27,832
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Amortisation 6,118 17,436 2,736 301 26,591 4,118 - 30,709
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Exchange differences 924 2,023 477 106 3,530 1,156 - 4,686
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
30 September 2022 12,418 32,406 5,093 704 50,621 12,606 - 63,227
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Net book value
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
1 October 2020 7,412 49,712 10,655 - 67,779 7,051 124,023 198,853
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
30 September 2021 6,569 46,870 9,546 939 63,924 4,153 141,160 209,237
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
30 September 2022 29,974 175,400 33,283 792 239,449 7,026 488,978 735,453
--------------------------- -------- -------------- ------- ---------- ----------- ---------- -------- -------
Intangible assets, other than goodwill, have a finite life and
are amortised over their expected useful lives at the rates set out
in the accounting policies in note 1.
Impairment assessment
The goodwill and intangibles attributed to each of the Group's
cash-generating units (CGUs) and groups of CGUs are assessed for
impairment at least annually or more frequently where there are
indicators of impairment. The Group tests for impairment of
goodwill at the operating segment level representing an aggregation
of CGUs, the level at which goodwill is monitored by management. No
CGU or group of CGUs is larger than an operating segment as defined
by IFRS 8 "Operating Segments" before aggregation. The recoverable
amount for CGU groups has been determined on a value in use basis
("VIU").
The table below sets out the carrying values of goodwill and
other acquired intangible assets allocated to each CGU at 30
September 2022 along with the pre-tax discount rates applied to the
risk-adjusted cash flow forecasts and the long-term growth
rate.
30 September 30 September Long-term Pre-tax
2022 2021 Valuation growth discount
GBP000 GBP000 method rate rate
----------------- ------------ ------------ --------- --------- ---------
A&A 304,282 32,742 VIU 3% 13.4%
----------------- ------------ ------------ --------- --------- ---------
I&C 162,615 90,179 VIU 3% 13.4%
----------------- ------------ ------------ --------- --------- ---------
Auction Services 22,081 18,239 VIU 3% 12.1%
----------------- ------------ ------------ --------- --------- ---------
Total goodwill 488,978 141,160
----------------- ------------ ------------ --------- --------- ---------
When testing for impairment, recoverable amounts for all of the
Group's CGUs and groups of CGUs are measured at their value in use
by discounting the future expected cash flows from the assets in
the CGUs. These calculations use cash flow projections based on
Board approved budgets and approved plans. While the Group prepares
a five-year plan, levels of uncertainty increase as the planning
horizon extends. The Group's plan focuses more closely on the next
three years, however for the purposes of the impairment testing the
five-year forecasts are used as we do not anticipate the long-term
growth rate to be achieved until after this time.
The key assumptions and estimates used for value in use
calculations are summarised as follows:
Assumption Approach
Risk-adjusted are determined by reference to the budget for the year
cash flows following the balance sheet date and forecasts for the
following four years, after which a long-term perpetuity
growth rate is applied. The most recent financial budget
approved by the Board has been prepared after considering
the current economic environment in each of the Group's
markets. These projections represent the Directors' best
estimate of the future performance of these businesses.
-----------------------------------------------------------------
Long-term are applied after the forecast period. These are based
growth rates on external reports on long-term GDP growth rates for the
main markets in which each CGU operates. Therefore, these
do not exceed the long-term average growth rates for the
individual markets.
-----------------------------------------------------------------
Pre-tax discount are derived from the post-tax weighted average cost of
rates capital ("WACC") which has been calculated using the capital
asset pricing model. They are weighted based on the geographical
area in which the CGU group's revenue is generated. The
assumptions used in the calculation of the WACC are benchmarked
to externally available data and they represent the Group's
current market assessment of the time value of money and
risks specific to the CGUs. Movements in the pre-tax discount
rates for CGUs since the year ended 30 September 2021 are
driven by changes in market-based inputs. Any unsystematic
risk on the CGUs has been inherently built into the cash
flows of each of the CGUs and therefore no additional element
of risk has been included in the discount rates used at
30 September 2022.
-----------------------------------------------------------------
Sensitivity analysis
At 30 September 2022 under the impairment assessments prepared
there is no impairment required. However, both the A&A and
Auction Services CGUs have limited headroom and are very sensitive
to a movement in any one of the key assumptions. Management have
therefore performed sensitivity analysis based on reasonably
possible scenarios including increasing the discount rates and
reducing the CAGR on the future forecast cash flows, both of which
are feasible given the current future uncertainty of
macro-economics.
For the A&A CGU, under the base case there is headroom of
GBP28.0m at 30 September 2022 . For the recoverable amount to fall
to the carrying value, the discount rate would need to be increased
to 13.9% from 13.4%, the long-term growth rate reduced to 2.2% from
3.0%, or the CAGR from FY22 on the five-year future forecast cash
flows reduced by one percentage point. With an uncertain
macroeconomic outlook, it is difficult to model the precise impact
on business performance at this time but should there be an
economic downturn the A&A segment is likely to be impacted in
the short term due to reduced sales and margins but it would then
be expected to return to higher growth in later years. Management
has modelled a scenario where A&A CGU revenue declines 4% in
both FY23 and FY24, resulting in a cumulative decrease of 8% with a
return to steeper growth from FY25 to FY27. Given the Group can
pull levers to reduce discretional spend, management has modelled
that 33% of the revenue lost can be regained through cost savings
(which would maintain the Group's gross profit margin at c.66%).
The overall impact on the five-year adjusted EBITDA CAGR is a
reduction of 2%. A potential increase of 1% in discount rate or a
reasonable worst-case increase of 2% in the discount rate and 2%
reduction in five-year CAGR growth rate could result in an
impairment in the range of GBP59.0m to GBP96m.
For the I&C CGU, under the base case there is headroom of
GBP355.8m and there is no realistic change of assumption that would
cause the CGU's carrying amount to exceed its recoverable
amount.
For Auction Services with a headroom of GBP1.7m for the
recoverable amount to fall to the carrying value, the discount rate
would need to be increased to 12.6% from 12.1%, the long-term
growth rate reduced to 2.3% from 3.0%, or the CAGR on the cash
flows reduced by three percentage points. Auction Services is
particularly sensitive to the long-term growth rate and discount
rate applied. An increase of 1% in the discount rate and 1%
reduction in the long-term growth rate could result in an
impairment of GBP3.6m.
11. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
cash held in escrow.
The carrying amount of these assets approximates to their fair
value.
30 September 30 September
2022 2021
GBP000 GBP000
-------------------- ------------ ------------
Cash in bank 51,817 173,675
-------------------- ------------ ------------
Cash held in escrow - 223,776
-------------------- ------------ ------------
51,817 397,451
-------------------- ------------ ------------
Cash in bank includes cash of GBP2.4m (2021: GBP2.4m) held by
the Trustee of the Group's Employee Benefit Trust relating to
pre-IPO share awards for employees. These funds are restricted and
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 loans and borrowings classified as
financial liabilities at amortised cost approximates to their fair
value.
30 September 30 September
2022 2021
GBP000 GBP000
--------------------- ------------ ------------
Current
--------------------- ------------ ------------
Secured bank loan 30,983 -
--------------------- ------------ ------------
Unsecured loan notes - 353
--------------------- ------------ ------------
30,983 353
--------------------- ------------ ------------
Non-current
--------------------- ------------ ------------
Secured bank loan 149,862 148,686
--------------------- ------------ ------------
149,862 148,686
--------------------- ------------ ------------
180,845 149,039
--------------------- ------------ ------------
The Group entered into a Senior Facilities Agreement on 17 June
2021 which included:
- a senior term loan facility (the "Senior Term Facility") for $204.0m for the acquisition of LiveAuctioneers. The 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; and
- a multi-currency revolving credit working capital facility
(the "Revolving Credit Facility") for $49.0m. Under the terms of
the facility, the Revolving Credit Facility was extended during the
year ended 30 September 2022. Any sums outstanding under the
Revolving Credit Facility will be due for repayment on 17 June
2025, subject to the optionality of a further 12-month extension.
The facility had not been drawn down as at 30 September 2022.
- The 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 complied
with the financial covenants of its borrowing facilities during the
year ended 30 September 2022.
On 10 October 2022, a prepayment of $43.7m was paid on the
Senior Term Facility. In the absence of any other prepayments, the
next scheduled repayment would be $8.7m on 31 March 2024.
T he movements in loans and borrowings are as follows:
30 September 30 September
2022 2021
GBP000 GBP000
--------------------------------------------------- ------------ ------------
1 October 149,039 214,603
--------------------------------------------------- ------------ ------------
Repayment of loans and borrowings (359) (108,956)
--------------------------------------------------- ------------ ------------
Repayments of preference shares - (117,716)
--------------------------------------------------- ------------ ------------
Proceeds from loans and borrowings - 176,639
--------------------------------------------------- ------------ ------------
Proceeds from the issue of preference shares - 714
--------------------------------------------------- ------------ ------------
Accrued interest and amortisation of finance costs 7,679 16,953
--------------------------------------------------- ------------ ------------
Repayment of interest (7,283) (26,388)
--------------------------------------------------- ------------ ------------
Exchange differences 31,769 (6,810)
--------------------------------------------------- ------------ ------------
30 September 180,845 149,039
--------------------------------------------------- ------------ ------------
13. Deferred taxation
The movement of net deferred tax liabilities is as follows:
Capitalised
goodwill Tax
and intangibles losses Other Total
GBP000 GBP000 GBP000 GBP000
--------------------------------------- ---------------- ------- -------- --------
1 October 2020 (14,675) 2,118 969 (11,588)
--------------------------------------- ---------------- ------- -------- --------
Amount credited/(charged) to Statement
of Profit or Loss 1,993 (748) 959 2,204
--------------------------------------- ---------------- ------- -------- --------
Amount credited to equity - - 64 64
--------------------------------------- ---------------- ------- -------- --------
Exchange differences 453 - (27) 426
--------------------------------------- ---------------- ------- -------- --------
30 September 2021 (12,229) 1,370 1,965 (8,894)
--------------------------------------- ---------------- ------- -------- --------
Deferred tax assets (2,628) 1,370 1,624 366
--------------------------------------- ---------------- ------- -------- --------
Deferred tax liabilities (9,601) - 341 (9,260)
--------------------------------------- ---------------- ------- -------- --------
1 October 2021 (12,229) 1,370 1,965 (8,894)
--------------------------------------- ---------------- ------- -------- --------
Acquisition of business (note 9) (43,514) 548 814 (42,152)
--------------------------------------- ---------------- ------- -------- --------
Amount credited/(charged) to Statement
of Profit or Loss 6,327 3,526 (14,767) (4,914)
--------------------------------------- ---------------- ------- -------- --------
Amount charged to equity - - (150) (150)
--------------------------------------- ---------------- ------- -------- --------
Exchange differences (8,869) 673 (312) (8,508)
--------------------------------------- ---------------- ------- -------- --------
30 September 2022 (58,285) 6,117 (12,450) (64,618)
--------------------------------------- ---------------- ------- -------- --------
Deferred tax assets - - - -
--------------------------------------- ---------------- ------- -------- --------
Deferred tax liabilities (58,285) 6,117 (12,450) (64,618)
--------------------------------------- ---------------- ------- -------- --------
No deferred tax asset has been recognised in respect of unused
tax losses in the UK of GBP0.7m (2021: GBP0.7m) as it is not
considered probable that there will be future taxable profits
available to offset these tax losses. The losses may be carried
forward indefinitely.
In presenting the Group's deferred tax balances, the Group
offset assets and liabilities to the extent we have a legally
enforceable right to set off the arising income tax liabilities and
assets when those deferred tax balances reverse. Tax losses include
unrelieved interest in the US, where there are sufficient taxable
profits forecast to be available in the future to enable them to be
utilised. These losses are available indefinitely.
Other includes the tax effect on unrealised foreign exchange
differences and share options.
The temporary differences relating to the unremitted earnings of
overseas subsidiaries amounted to GBP1.1m (2021: GBP22.8m).
However, as the Group can control whether it pays dividends from
its subsidiaries and it can control the timing of any dividends, no
deferred tax has been provided on the unremitted earnings on the
basis there is no intention to repatriate these amounts.
14. Share capital and reserves
30 September 30 September
2022 2021
GBP000 GBP000
------------------------------------------------------------- ------------ ------------
Authorised, called up and fully paid
------------------------------------------------------------- ------------ ------------
120,525,304 ordinary shares at 0.01p each (2021: 119,999,990
ordinary shares at 0.01p each) 12 12
------------------------------------------------------------- ------------ ------------
12 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 2020 1,052,743 11 - 1,125
---------------------------------------------- ------------ -------- -------- --------
Shares issued for grant of pre-IPO
share awards and pre-admission awards 41,834 - - 402
---------------------------------------------- ------------ -------- -------- --------
Share buyback (10,783) - - -
---------------------------------------------- ------------ -------- -------- --------
Capital reorganisation
---------------------------------------------- ------------ -------- -------- --------
- Subdivision of shares creating 97,994,100
shares at 0.01p each 97,014,159 - - -
---------------------------------------------- ------------ -------- -------- --------
- Share buyback (39,337,210) (5) - -
---------------------------------------------- ------------ -------- -------- --------
- Shares issued for IPO 41,239,257 4 247,431 -
---------------------------------------------- ------------ -------- -------- --------
Shares issued for business combination 19,999,990 2 - 243,998
---------------------------------------------- ------------ -------- -------- --------
Share issue costs - - (11,528) (7,140)
---------------------------------------------- ------------ -------- -------- --------
30 September 2021 119,999,990 12 235,903 238,385
---------------------------------------------- ------------ -------- -------- --------
Shares issued for business combination 506,926 - - -
---------------------------------------------- ------------ -------- -------- --------
Share options exercised 10,144 - - -
---------------------------------------------- ------------ -------- -------- --------
Share issued for SIP and ESPP 5,411 - - -
---------------------------------------------- ------------ -------- -------- --------
Shares issued to the Trust 2,833 - - -
---------------------------------------------- ------------ -------- -------- --------
30 September 2022 120,525,304 12 235,903 238,385
---------------------------------------------- ------------ -------- -------- --------
525,314 ordinary shares of 0.01p each with an aggregate nominal
value of GBP53 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 under the Share Incentive Plan ("SIP") and
Employee Stock Purchase Plan ("ESPP") and to the Trust for LTIP
Awards that have vested in the year but not yet exercised.
15. Related party transactions
For the year ended 30 September 2022
There were no related party transactions.
For the year ended 30 September 2021
The following related party transactions took place:
Preference shares including interest were repaid on 1 March 2021
to:
- TA Associates Management LP amounting to GBP97.1m
- ECI Partners LLP amounting to GBP29.4m
- Members of the management team amounting to GBP5.3m.
A loan note issued to a member of the management team was repaid
on 26 February 2021. Interest of GBP49,000 was waived on 26
February 2021.
Subordinated loan notes including interest held by ECI Partners
LLP and TA Associates Management LP amounting to $15.2m (equivalent
of GBP10.9m) were repaid on 1 March 2021.
On 30 September 2020, Tom Hargreaves, a Director of the Company,
received a loan of GBP7,000; the full amount and related interest
were repaid on 26 February 2021.
On 30 December 2020 preference shares of GBP0.3m were issued to
Breon Corcoran, a Non-Executive Director. On 15 January 2021
preference shares were issued to Non-Executive Directors Scott
Forbes and Penny Ladkin-Brand for GBP0.2m each. The proceeds from
the redemption of their preference shares including interest
amounting to GBP0.7m were used to apply for the subscription of
ordinary shares on IPO.
16. Events after the balance sheet date
On 10 October 2022, a prepayment of $43.7m was paid on the
Senior Term Facility. In the absence of any other prepayments, the
next scheduled repayment would be $8.7m on 31 March 2024.
There were no other events after the balance sheet date.
Glossary
A&A Art & Antiques
Auction Mobility Auction Mobility LLC
-----------------------------------------------------------------
web sessions on the Group's marketplaces online within
Bidder sessions a given time frame
-----------------------------------------------------------------
the Group's marketplace operated via the www.BidSpotter.co.uk
BidSpotter and www.BidSpotter.com domain
-----------------------------------------------------------------
Christie's, Sotheby's, Phillips and Bonhams A&A auction
Big 4 houses
-----------------------------------------------------------------
EBITDA earnings before interest, taxes, depreciation and amortisation
-----------------------------------------------------------------
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 fees and auctioneers'
commissions) and sales of retail jewellery (being new,
GMV or nearly new, jewellery)
-----------------------------------------------------------------
the Group's marketplace operated by the www.i-bidder.com
i-bidder domain
-----------------------------------------------------------------
I&C Industrial & Commercial
-----------------------------------------------------------------
KPIs key performance indicators
-----------------------------------------------------------------
LiveAuctioneers the Group's marketplace operated via the www.liveauctioneers.com
Group domain
-----------------------------------------------------------------
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
Live auctions for specific lots to be called
-----------------------------------------------------------------
the Group's marketplace operated via the www.lot-tissimo.com
Lot-tissimo domain
-----------------------------------------------------------------
LTIP Awards the Company's Long Term Incentive Plan
-----------------------------------------------------------------
Marketplaces the online auction marketplaces operated by the Group
-----------------------------------------------------------------
represents GMV as a percentage of THV; previously called
Conversion rate "online share"
-----------------------------------------------------------------
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 FY22. The measures
are presented for the Group to provide comparisons of
the Group's results between FY21 and FY22 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
Proforma basis on the period-on-period reported results
-----------------------------------------------------------------
the Group's marketplace operated via the www.proxibid.com
Proxibid domain
-----------------------------------------------------------------
the Group's marketplace operated via the www.the-saleroom.com
The Saleroom domain
-----------------------------------------------------------------
represents the Group's marketplace revenue as a percentage
of GMV. Marketplace revenue is the Group's reported revenue
Take rate excluding Content and Auction Services revenue
-----------------------------------------------------------------
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 fees and auctioneers' commissions) and sales
THV of retail jewellery (being new, or nearly new, jewellery)
-----------------------------------------------------------------
auctions which are held entirely online (with no in-room
or telephone bidders) and where lots are only made available
Timed auctions to online bidders for a specific, pre-determined timeframe
-----------------------------------------------------------------
like-for-like industry or inventory, for example, art
and antiques, industrial and construction, consumer surplus
and returns and sub-verticals such as equine, real estate
Verticals and classic cars
-----------------------------------------------------------------
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END
FR UROKRUOUAOAA
(END) Dow Jones Newswires
December 01, 2022 02:00 ET (07:00 GMT)
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