TIDMATG
RNS Number : 6483Z
Auction Technology Group PLC
17 May 2023
AUCTION TECHNOLOGY GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHSED 31 MARCH 2023
Strong momentum over the half year and good progress against
strategic growth drivers
London, United Kingdom, 17 May 2023 - Auction Technology Group
plc ("ATG", "the Company", "the Group") (LON: ATG), operator of
world- leading marketplaces for curated online auctions, today
announces its unaudited financial results for the six months ended
31 March 2023.
Financial results
Restated(1)
HY 23 HY 22 Movement Organic(3)
Revenue(2&3) GBP67.3m GBP57.7m +17% 5%
Adjusted EBITDA(2) GBP31.5m GBP26.8m + 18%
Adjusted EBITDA margin %(2) 47% 46% +1ppt
Operating profit GBP9.8m GBP9.2m +7%
Operating margin % 15% 16% -1ppt
Adjusted diluted earnings per share(2) 16.0p 13.4p +19%
Basic earnings per share 9.9p 1.8p +450%
Adjusted net debt(2) GBP132.4m GBP122.1m +GBP10.3m
Cash generated by operations GBP24.6m GBP22.1m +11%
Financial highlights
-- Revenue of GBP67.3m, up 17% year-on-year and up 5% on an
organic basis, driven by robust Gross Merchandise Value(4) ("GMV")
growth. In line with our expectations, organic revenue growth
accelerated across the period as we finished annualising strong
prior year performance that had benefited from Covid-19. Reported
revenue growth also driven by a contribution from the acquisition
of EstateSales.Net ("ESN") and a favourable movement in the foreign
exchange rate.
-- Adjusted EBITDA of GBP31.5m, up 18% year-on-year; adjusted
EBITDA margin of 47%, up from 46% in HY 22, driven by growth in
high-margin commission and fixed fee revenue.
-- Operating profit of GBP9.8m, compared to GBP9.2m in the same
period last year after the impact of exceptional items related to
the ESN acquisition, share-based payments, and intangible asset
amortisation.
-- Adjusted diluted earnings per share of 16.0p compared to
13.4p in the same period last year as the benefits of higher
adjusted EBITDA were partially offset by higher net finance costs;
basic earnings per share of 9.9p compared to 1.8p largely driven by
a deferred tax credit.
-- Closing adjusted net debt of GBP132.4m, in line with the end
of FY 22 as strong cash generation was offset by financing for the
acquisition of ESN. Adjusted net debt/adjusted last twelve months
EBITDA ratio of 2.3x.
Operational highlights
-- GMV of GBP1.9bn, up 5% year-on-year on a constant currency
basis, driven by resilience in the auction market and continued
structural shift online.
-- Take rate(4) flat at 3.2% as the growth in value-added
services as well as higher listing fees across several platforms,
offset the mix impact of a higher growth rate in the Industrial
& Commercial ("I&C") sector, which has a lower commission
rate than Art & Antiques ("A&A").
-- Strong growth in value-added services revenue, up 17% on a
constant currency basis benefiting from strong uptake of paid-for
marketing solutions. 83% of LiveAuctioneers' US based auctioneers
now onboarded on payments. Strong response on Proxibid to atgPay
with 21% of auctioneers onboarded. Activation of auctions with
atgPay on Proxibid proceeding in Q3 23, three months later than
initially planned in order to benefit from latest product
enhancements.
-- On track with transition to a single technology platform,
including launch of phase one of integrated bidding that now
enables auctioneers to seamlessly cross-list and run timed auctions
across our LiveAuctioneers marketplace and on our Auction Mobility
white label.
-- Successful acquisition of ESN, a leading US estate sales
platform; integration on track and business performing ahead of
initial expectations.
John-Paul Savant, Chief Executive Officer of Auction Technology
Group plc, said:
"ATG has delivered another robust set of results with solid
revenue growth, margin expansion and strong cash generation,
against an uncertain macroeconomic environment and exceptional
growth in the prior year. We have made great progress against each
of our six strategic growth drivers including the strong adoption
of value-added services, expansion of our addressable market,
bidder base and potential network effects with the acquisition of
ESN, and the creation of unique timed auction format opportunities
for auctioneers with the launch of our integrated bidding
service.
"As expected, organic revenue growth accelerated across the half
and this rate of growth has continued into the start of the second
half. This momentum, combined with strong traction against our key
strategic initiatives, leaves us confident that we will deliver a
higher rate of organic revenue growth in the second half of the
year and into FY 24. ATG has an exciting future ahead, with
unparalleled scale in the curated auction space, plus the reach,
product offering, and impact to truly make a difference for our
customers, whether they be auctioneers ensuring they achieve the
highest asset sale price for their consignors, or bidders seeking
unique or specialised secondary goods. Many growth opportunities
exist as we lead the transformation of the auction industry and
follow the well-trodden path of online marketplace
development."
Current trading and outlook
As expected, we have seen an improving rate of growth across the
first half as well as at the start of the second half. Auction
markets have remained robust despite an uncertain macroeconomic
backdrop. In particular, our A&A marketplaces have seen
positive GMV growth for the three months to end of April. The
momentum in commission and fixed fee revenue in both the A&A
and I&C sectors also gives us confidence in sustained growth
for the balance of the year.
Based on the strength of core marketplace revenue, we reaffirm
our guidance for organic revenue growth, although at the lower to
mid end of the range reflecting the timing of atgPay activation for
Proxibid auctions. We remain confident in delivering full year
adjusted EBITDA and adjusted EPS in line with current market
expectations. Given the strong demand from Proxibid auctioneers
already seen for atgPay, we do not expect activation timing to
negatively impact revenue in FY 24 and we remain confident in
achieving our medium-term targets of mid-teens plus organic revenue
growth and mid-high 40's adjusted EBITDA margin.
1. The HY 22 profit attributable to equity holders has been
restated by GBP1.7m. Full details are provided in note 1 of the
Condensed Consolidated Interim 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 Condensed Consolidated Interim
Financial Statements, with definitions, an explanation of how they
are calculated, why we use them and how they can be reconciled to a
statutory measure where relevant.
3. The Group has made certain acquisitions that have affected
the comparability of the Group's results. To aid comparisons
between HY 23 and HY 22, organic revenue has been presented to
exclude the acquisition of EstateSales.Net on 6 February 2023.
Organic revenue is shown on a constant currency basis using average
exchange rates for the current financial period applied to the
comparative period and is used to eliminate the effects of
fluctuations in assessing performance .
4. Refer to glossary for full definition of the terms. GMV and
Take Rate exclude the impact of the acquisition of ESN.
Webcast presentation
There will be a webcast presentation for analysts this morning
at 9.30am. Please contact ATG@teneo.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
Teneo Communications +44 207 353 4200
(Public relations advisor to ATG) ATG@teneo.com
Tom Murray, Matt Low, Arthur Rogers
About Auction Technology Group plc
Auction Technology Group plc ("ATG") is the operator of the
world's leading marketplaces and auction services for curated
online auctions, seamlessly connecting bidders from around the
world to over 3,800 trusted auction houses across two major
sectors: Industrial & Commercial ("I&C") and Art &
Antiques ("A&A").
The Group powers eight online marketplaces and listing sites
using its proprietary auction platform technology, hosting in
excess of 70,000 live and timed auctions each year. ATG has been
supporting the auction industry since 1971 and the Group has
offices in the UK, US and Germany.
CAUTIONARY STATEMENT The announcement may contain
forward-looking statements. These statements may relate to (i)
future capital expenditures, expenses, revenues, earnings,
synergies, economic performance, indebtedness, financial condition,
dividend policy, losses or future prospects, and (ii) developments,
expansion or business and management strategies of the Company.
Forward-looking statements are identified by the use of such terms
as "believe", "could", "should", "envisage", "anticipate", "aim",
"estimate", "potential", "intend", "may", "plan", "will" or
variations or similar expressions, or the negative thereof. Any
forward-looking statements contained in this announcement are based
on current expectations and are subject to known and unknown 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
CEO REVIEW
ATG's purpose is to unlock the value of the curated secondary
goods market and, in doing so, to facilitate the growth of the
circular economy. For auctioneers and sellers of secondary items,
we massively extend their reach by giving access to our diverse and
highly fragmented global bidder base, specialised technology, and
operational efficiencies that arise from working with us.
Critically, we help ensure they achieve the highest asset sale
price possible for their consignors. For bidders, we provide access
to millions of unique, specialised, and curated second-hand items
through our eight online marketplaces and listing sites. The
combination of the widest array of inventory and the largest bidder
base has enabled us to create a virtuous circle that benefits both
buyers and sellers, with more buyers participating in online
auctions and estate sales resulting in higher realised prices for
second-hand items, which in turn attracts more secondary assets to
be listed and sold online, and thus more bidders.
In the first half of FY 23, we built on our strong track record
and delivered another period of robust operational and financial
performance. Growth was underpinned by the strength of our core
business, against both an uncertain macroeconomic backdrop and the
annualising of strong revenue comparatives from the prior period.
Our adjusted EBITDA margin improved to 47%, driven by high
operating leverage of our business. Our cash-generative financial
model enabled us to complete the accretive bolt-on acquisition of
ESN whilst also reducing our gross debt balance. We made great
progress against each of our strategic drivers, which, combined
with the improving rate of revenue growth we saw over the first
half, gives us confidence in our outlook for the remainder of the
year and into FY 24.
Progressing against our six strategic drivers
ATG is uniquely positioned to lead the transformation of the
auction industry and in FY 23 we are focused on executing against
our second phase of development: End-to-End Experience. This
involves enhancing our core ecommerce capabilities such as
upgrading the user experience, rolling out integrated payments,
providing even-better marketing solutions for sellers, and
providing multiple tiers of service so auctioneers can access the
online market seamlessly through different channels with different
rate cards based on their online activity and sophistication. Six
growth drivers underpin our success and we have made strong
progress against each of these in the first half of FY 23.
1. Expand the Total Addressable Market
The auction market accounts for approximately 42% of all
secondary goods traded in the A&A market and 32%(1) of goods in
the core I&C market. As we grow, we expect our addressable
market to grow even faster than the secondary goods market as more
secondary assets from other channels are attracted to online
auctions, driven by higher realised prices generated by more eyes
on every asset, greater transparency for consignors and faster time
to sell, thus enabling quicker payment to consignors and higher
velocity of deal flow for auctioneers.
Over the last six months, auction market activity has proved to
be resilient with over GBP6bn Total Hammer Value ("THV") on our
marketplaces in the first half, up 11% on a constant currency
basis. This in turn has been driven by growth in the number of
auctions hosted on our marketplaces, up 8% year-on-year, and growth
in the number of lots listed on our marketplaces, up 14%. This
volume growth has offset the softening of used asset prices in the
I&C equipment market, which is driven by an easing of supply
chain constraints in the primary equipment market. Against an
uncertain consumer backdrop, demand for A&A auctions has also
remained robust. Our auctioneer retention rate has remained in line
with previous years, and we have acquired new auctioneers including
Merritt Auctions, a large US based I&C auctioneer. The
acquisition of ESN has also opened up a new adjacent channel for
secondary goods sales for ATG in the estimated $5bn US estate sales
market.
2. Grow the conversion rate
Whilst our conversion rate of 32% was slightly down year-on-year
due to the impact of physical auctions reopening as well continued
growth in newer auctioneers on our marketplaces who initially have
a lower conversion rate, our conversion rate remains over 10
percentage points higher than pre-pandemic rates. Furthermore, our
marketplaces (which currently exclude ESN) continue to attract
significant pools of bidders for auctioneers, with over 808,000 new
bidding accounts created in the last six months contributing to
over 6.4m auction registrations and over 53m online bids
placed.
We have made good progress on strategies to drive bidder
acquisition, engagement, and conversion. Key activities include an
upgrade to our recommendation engine to include new product
categories, increased number of email alerts we send, including a
new email reminder for bidders who have browsed but not yet bid on
a lot, and SMS alerts across several of our marketplaces. We have
further improved our Search Engine Optimisation to help our bidders
find the most relevant search results, including optimised
sitemaps, enhancements to expired lot pages as well as updates to
category, item, and brand pages.
For auctioneers, we have worked to facilitate the shift from
live to timed auctions through the introduction of a new tiered
pricing structure on Proxibid in March, which incentivises
auctioneers to adopt the timed format. This pricing structure is
expected to have a minimal impact on churn, demonstrating both the
stickiness of our auctioneer base as well as the strength of our
competitive position and the value ATG delivers.
3. Enhance the network effect
In the last six months, ATG hosted over 91m bidder sessions on
its marketplaces (excluding ESN), a scale and reach of bidders that
is unparalleled in online curated auctions. In the first half of FY
23, we made it easier for auctioneers to grow their bidder reach
through cross-listing, with the launch of the first stage of our
integrated bidding programme, 'Timed+'. This functionality enables
auctioneers using both LiveAuctioneers and Auction Mobility to
seamlessly upload an auction catalogue and to run a timed auction
simultaneously on both platforms. To date, auctions run on Timed+
have resulted in an average 26% asset price uplift versus if the
auction was listed on Auction Mobility alone, demonstrating the
benefits of the network effect. Adoption rates of Timed+ continue
to grow, with large auctioneers including Bonhams having signed up
to the solution. Timed+ not only incentivises auctioneers to switch
to ATG's white label solution, but also increasingly facilitates
the shift to timed auctions, which will further enhance our
conversion rate. Cross-listing also encourages more bidders to
participate in auctions and for those bidders to use ATG as their
primary search portal by presenting them with the broadest array of
inventory. This further enhances our competitive position and the
network effect, which all in turn benefits the auctioneers who work
with us, as they see more bidders.
4. Expand operational leverage
ATG has an attractive financial model with high operational
leverage and low capital intensity. As we have grown commission and
fixed fee revenue, we delivered further improvement in our adjusted
EBITDA margin, up 1 percentage point to 47%. In the first half, we
increased listing fees across many of our platforms with many of
these fees having not changed since before the Covid-19 period.
Reflecting the high return on investment that our marketplaces
offer auctioneers, we saw an immaterial impact on auctioneer churn
as a result of these price changes. We have driven efficiency in
our sales model through the development of automated analytics
reports for our auctioneers on auction performance, which reduce
the need for manual touch points with our consumer services team,
whilst we have also redesigned the structure of our sales team to
ensure we are more able to cross-sell new solutions and products to
our auctioneer base. Our single technology platform programme is on
track, with initial success including a significant improvement in
the stability and security across all our marketplaces, as well as
the development of integrated bidding.
5. Grow the take rate via value-added services
Value-added services revenue grew 17% in the first half of FY 23
on a constant currency basis. We saw continued strong adoption
rates of our auctioneer marketing products, with 56% of auctioneers
across our marketplaces now using one or more of our paid-for
marketing solutions. We have developed new assets including
auctioneer sponsored search, enhanced email segmentation for bidder
campaigns and optimised homepage banners. Measuring the performance
of an auctioneer's marketing investment is critical to ensuring we
elevate the shared-success model of which our clients are a part.
We have therefore developed and rolled out reporting dashboards
that allow us to better assess the performance of auctions that are
supported by our marketing. Marketing uptake is most advanced on
LiveAuctioneers and currently represents around 2% of marketplace
GMV, compared to 0.4% of GMV across the whole Group, highlighting
the significant opportunity for further growth across our other
marketplaces.
The acquisition of LiveAuctioneers enabled us to accelerate the
development and roll out of a payment's product across other ATG
marketplaces. We have continued to see strong progress with
payments on LiveAuctioneers, with 83% of US auctioneers having
adopted the product at the end of March, 86% of invoices having
been paid through the LiveAuctioneers checkout, and with the
payment's product accounting for 48% of US gross transaction value
on the marketplace in March. We have updated the solution,
including the integration of wire transfers as a payment method.
Whilst the activation of auctions with atgPay on Proxibid will
proceed in Q3 23, three months later than planned in order to add
additional functionality to the solution, we have been very pleased
with the rates of adoption we have seen since so far, with 21% of
auctioneers having signed up to the solution by the end of March.
This strong demand gives us confidence in the continued growth in
the adoption and usage of payments over the coming year.
6. Pursue accretive M&A
M&A has been and will continue to be a key growth lever for
ATG and the acquisition of ESN, for a purchase price of $40m,
represents an additional proof point of ATG's strong track record
for sourcing and executing on value-enhancing M&A opportunities
within the fragmented secondary goods market. ESN is a leading US
estate sale site, providing a platform to facilitate estate sales.
ESN is a natural fit for ATG, expanding our immediately addressable
market into an attractive adjacent channel for the resale of
secondary goods, in the estimated $5bn US estate sales market. The
acquisition provides significant cross-selling opportunities with
the addition of ESN's 96m bidder sessions and younger demographic
being added to ATG's existing 180m sessions, creating an even
larger pool of buyers of secondary goods. The integration has
progressed well since February with the ATG team working closely
with the ESN founders to ensure a smooth transition. Since
completion, ESN has delivered strong revenue growth, ahead of
expectations. Over the next six months, we will be focused on
optimising the listing site include enhanced marketing
opportunities and an updated pricing structure, as well as
developing plans to successfully accelerate the digital
transformation of the estate sales industry.
Developing and progressing against our ESG programmes
Sustainability is central to our proposition and we are
committed to highlighting the environmental benefits of buying at
auction to bidders. During the half year, TheSaleroom published a
series of social media content and marketplace editorials
showcasing the sustainability credentials of the items listed on
our marketplaces, including highlighting the carbon emissions saved
through buying second hand versus buying new. At the Group level,
the completion of the relocation of our Proxibid office in Omaha in
March to a smaller and more efficient site is a significant step
towards our longer term CO2 reduction targets.
We have also made strong progress against other ESG programmes
in the first half, including the implementation of a new
information security management system, which has been based on a
recognised international standard. We were also delighted with the
results from our global employee engagement survey, which showed
that our employees are not only feel highly engaged with ATG, but
are also confident in its strategy and outlook. The survey is
testament to the positive and collaborative culture that we are
creating, with 95% of employees stating they enjoy working with
their team. I believe this culture of engagement and collaboration
is a critical enabler for ATG to deliver its growth ambitions.
Summary
We are pleased with our performance in the first half of FY 23
as we have continued to execute against each of our strategic
growth drivers. We are confident in our outlook for the rest of the
year as we build on the momentum across the business. Our outlook
is also underpinned by the growing adoption of payments amongst
auctioneers, our updated rate card on select marketplaces,
significant improvements being made to the user experience, as well
as the launch of integrated bidding, which will enable more
seamless cross-listing for our auctioneers. The acquisition of ESN
further demonstrates our ability to supplement our organic growth
with strategic, accretive bolt-on M&A. The auction industry is
still early in its transformation and ATG's continued strong
operational and financial track record, experienced team and shared
success model provides confidence for us to continue to deliver on
our ambitious growth plans.
John-Paul Savant
Chief Executive Officer
1. Management estimates November 2022; A&A market excludes eBay
CFO REVIEW
Group presentation of results
The financial results for HY 23 are presented for the six months
ended 31 March 2023. On 6 February 2023, the Group completed its
acquisition of Vintage Software LLC., trading as EstateSales.NET
("ESN") for a consideration of $40m. The results for ESN are
included within the A&A operating segment in HY 23. Full
details of the accounting implications are detailed in note 9 of
the Condensed Consolidated Interim Financial Statements.
The impact of the acquisition affects the comparability of the
Group's results. Therefore, to aid comparisons between HY 22 and HY
23 organic revenue growth is presented to exclude the acquisition
of ESN on 6 February 2023. Organic 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.
Note 3 of the Condensed Consolidated Interim Financial
Statements includes a full reconciliation of all APMs presented to
the reported results.
Given that a significant majority of the Group's revenue, costs
and cash flows are now generated in US dollars, the Board has
determined that, for financial periods beginning on or after 1
October 2023, the Group will change the presentational currency in
which the Group presents its consolidated financial results from
pound sterling to US dollars.
Revenue
HY 23 HY 22 Movement Movement
GBPm GBPm Reported Organic
---------------------------------- ----- ----- --------- --------
Arts & Antiques ("A&A") 31.8 26.9 18% 4%
Industrial and Commercial ("I&C") 29.8 25.1 19% 7%
---------------------------------- ----- ----- --------- --------
Total marketplace 61.6 52.0 18% 6%
Auction Services 4.2 4.1 2% (7)%
Content 1.5 1.6 (6)% (6)%
---------------------------------- ----- ----- --------- --------
Total 67.3 57.7 17% 5%
---------------------------------- ----- ----- --------- --------
Group
Group revenue increased 17% to GBP67.3m, driven by growth in
commission and fixed fee revenue, a favourable impact from the
movement in foreign exchange and a contribution from the
acquisition of ESN. Organic revenue growth of 5% was driven by
organic marketplace revenue growth of 6%, which in turn benefited
from GMV growth of 5% across the Group and a flat take rate of
3.2%. The Group saw revenue declines on an organic basis in both
the Auction Services and Content divisions.
Art & Antiques
Revenue in the A&A segment increased 18% to GBP31.8m,
growing 4% on an organic basis as the increase in the take rate,
largely driven by value-added services, offset a decline in GMV.
GMV across A&A declined by 3% on an organic basis, impacted by
challenging comparisons to the prior year, which had benefited from
tailwinds from the Covid-19 pandemic, as well as continued
headwinds to our conversion rate year-on-year from the reopening of
physical auctions. This decline in conversion rate was partially
offset by growth in the value and volume of items listed on our
marketplaces. As the comparisons eased across the half, we saw an
improving rate of GMV growth with LiveAuctioneers delivering
positive GMV growth in the second quarter of FY 23. GMV decline was
offset by growth in value-added services revenues driven by
marketing and payments solutions. This growth, combined with fixed
fee increases, resulted in a 0.7ppt increase in the take rate in
A&A to 8.3%. The A&A segment also benefited from ESN's
contribution since the date of acquisition on 6 February, which
delivered a strong revenue growth rate, ahead of initial
expectations, driven by growth in the volume of estate sales
listings.
Industrial & Commercial
I&C revenue grew 7% on an organic basis and 19% on a
reported basis to GBP29.8m, driven by a 7% increase in GMV.
Activity on I&C marketplaces remained resilient in the first
half, as the headwind from the softening of exceptionally high used
equipment prices in the prior year as well as the reopening impact
of physical auctions was offset by an increase in volume of items
listed on our marketplaces. There was also a benefit from an
increase in the rate of business insolvencies, which are an
important source of supply of assets for I&C. The take rate
within I&C was broadly flat, as the benefits from the uptake of
marketing solutions across I&C auctioneers was offset by a
higher mix of lower commission rate items sold. We would expect the
take rate in I&C to increase in the second half, driven by the
updated pricing structure on the Proxibid marketplace as well as
the contribution from payments revenue.
Auction Services
Auction Services revenue of GBP4.2m increased 2% on a reported
basis and declined 7% on an organic basis. This decline was driven
by strong comparisons in the prior year when the uptake of white
label solutions had been elevated during Covid-19. We continue to
see the benefits of enabling auctioneers to access the online
market through multiple channels and ATG's increasingly integrated
suite of products will enable more seamless cross-listing across
ATG marketplaces and ATG white label solutions.
Content
Content revenue declined by 6% to GBP1.5m. As expected, the
segment saw a fall in advertising volumes as auctioneers
increasingly migrate their marketing spend to the online
channel.
Financial performance
Reported
------------------------------------------
Restated(1)
HY 23 HY 22
GBPm GBPm Movement
------------------------------------------ ------ ----------- --------
Revenue 67.3 57.7 17%
Cost of sales (21.3) (18.6) 15%
------------------------------------------ ------ ----------- --------
Gross profit 46.0 39.1 18%
------------------------------------------ ------ ----------- --------
Administrative expenses (36.7) (30.0) 22%
Other operating income 0.5 0.1 400%
------------------------------------------ ------ ----------- --------
Operating profit 9.8 9.2 7%
------------------------------------------ ------ ----------- --------
Adjusted EBITDA (as defined in note 3) 31.5 26.8 18%
------------------------------------------ ------ ----------- --------
Finance income 0.1 - 100%
Finance cost (9.2) (5.5) 67%
------------------------------------------ ------ ----------- --------
Net finance costs (9.1) (5.5) (65)%
------------------------------------------ ------ ----------- --------
Profit before tax 0.7 3.7 (81)%
Income tax 11.2 (1.6) 800%
------------------------------------------ ------ ----------- --------
Profit for the period attributable to the
equity holders of the Company 11.9 2.1 467%
------------------------------------------ ------ ----------- --------
1. The HY 22 profit attributable to equity holders has been
restated by GBP1.7m. Full details are provided in note 1 of the
Condensed Consolidated Interim Financial Statements.
Operating profit
The Group reported an operating profit of GBP9.8m compared with
GBP9.2m in HY 22, driven by the increase in high gross margin
commission and fixed fees revenue, which offset an increase to the
Group's administrative expenses.
Gross profit increased 18% to GBP46.0m, reflecting revenue
growth and a high flow-through of revenue to gross profit. The
gross profit margin of 68% was broadly flat compared to the prior
period as the growth in high margin commission and fixed fees
revenue offset the dilutive gross margin impact from the growth in
payment's revenue.
The Group's administrative expenses increased to GBP36.7m,
driven by the full year impact of investments in senior management
made in FY 22 to support future growth, an increase in amortisation
costs, the adverse impact from foreign exchange rates, an increase
in share-based payments expense and one-off exceptional costs
related to the acquisition of ESN. Amortisation costs of GBP15.4m
increased by GBP0.8m compared to HY 22 due to the adverse impact of
foreign exchange rates and the additional acquired intangible
assets in relation to ESN. The share-based payments expense of
GBP3.9m increased from GBP2.5m, reflecting the impact of one-off
awards for new members of the senior management team and additional
grants awarded in December 2022. Exceptional costs of GBP1.7m (HY
22: nil) relate to the acquisition of ESN. Excluding the impact of
exceptional costs, acquired amortisation and share-based payments,
administrative expenses would have increased by GBP2.3m, reflecting
the movement in foreign exchange and investments in the business to
support future growth.
Adjusted EBITDA
Adjusted EBITDA increased from GBP26.8m in the six months ended
31 March 2022 to GBP31.5m, driven by revenue growth, a high
flow-through of revenue to adjusted EBITDA and the contribution
from ESN. Adjusted EBITDA margin of 47% increased by 1ppt as strong
growth in high margin revenue offset the full-year impact of
investments made in FY 22 to support future growth.
Net finance costs
Net finance costs were GBP9.1m in HY 23 (HY 22 restated:
GBP5.5m). Finance costs of GBP9.2m (HY 22 restated: GBP5.5m)
primarily relate to interest on the US dollar-denominated Senior
Term Facility in addition to non-cash foreign exchange losses of
GBP3.7m related to intergroup loan balances. The increase in
finance costs compared to HY 22 was also due to an increase in the
interest rate on the Senior Facility, which is linked to the
Secured Overnight Financing Rate ("SOFR"), as well as the
unfavourable movement in foreign exchange rates with the interest
payable in US dollars. In the period, the Group pre-paid $53.7m of
the Senior Term Loan facility. This repayment was partially offset
by the net $21.7m drawdown on our Revolving Credit Facility to fund
the ESN acquisition, which carries a similar interest rate that of
to the Senior Loan Facility. Finance costs also include commitment
fees on the Revolving Credit Facility. Prior period finance costs
related to interest costs on our Senior Term Facility, commitment
fees, foreign exchange losses and the movement in contingent
consideration.
Profit before tax
After the impact of net finance costs, the Group reported a
profit before tax of GBP0.7m, a decrease from GBP3.7m (restated) in
the prior period due to the increase in net finance costs, which
offset the higher operating profit year-on-year.
Taxation
In the period, there was a tax credit of GBP11.2m (HY 22
restated: expense of GBP1.6m), arising from the profit in the
period and a deferred tax credit on unrealised foreign exchange
differences and non-deductible foreign exchange differences on
intergroup loan balances.
The tax charge is based on the effective tax rate estimated on a
full year basis, being applied to reported profit for the six
months ended 31 March 2023. The Group's forecast effective tax rate
is 21% which excludes the impact of discreet tax items related to
foreign exchange movements and tax rate changes. The Group's
effective tax rate for the six-month period is 1,462% which
reflects the net impact of foreign exchange movements of GBP11.2m
on the deferred tax liability and GBP1.0m for change in the blended
US tax rate.
Earnings per share and adjusted earnings per share
Basic earnings per share was 9.9p, compared to 1.8p (restated)
in the prior period and diluted earnings per share was 9.7p
compared to 1.8p (restated). The increase was driven by the
deferred tax credit on unrealised foreign exchange differences
partially offset by the decrease in profit before tax compared to
the prior period. The weighted average number of shares in issue
during the period was 120.7m (HY 22: 120.2m shares).
Adjusted diluted earnings per share of 16.0p (HY 22: 13.4p) is
based on profit after tax adjusted to exclude share-based payment
expense, exceptional items (operating and finance costs including
foreign exchange gains and losses), amortisation of acquired
intangible assets and any related tax effects. The increase is due
to higher adjusted earnings for the period, partially offset by an
increase in the weighted average number of ordinary shares and
dilutive options.
A reconciliation of the Group's diluted earnings per share to
adjusted diluted earnings per share is set out in note 3.
EstateSales.NET acquisition
On 6 February 2023, the Group acquired 100% of the equity share
capital of Vintage Software LLC, trading as EstateSales.Net
("ESN"), for total consideration of $40m, funded out of the Group's
existing cash balance and debt facilities . ESN is a leading
estates sales listing site in the US and the purpose of the
acquisition was to access an adjacent channel in the resale of
secondary goods and to enable cross-selling opportunities for the
Group. The full acquisition accounting is detailed in note 9.
Foreign currency impact
The Group's reported performance is sensitive to movements in
both the US dollar and the euro against the British pound sterling
with a mix of revenues included in the table below.
HY 23 HY 22
Revenue GBPm GBPm
--------------- ----- -----
United Kingdom 9.7 9.4
North America 55.5 46.4
Germany 2.1 1.9
--------------- ----- -----
Total 67.3 57.7
--------------- ----- -----
The pound sterling weakened by 10.4% against the US dollar and
weakened by 4.2% on an average rate basis against the euro compared
to HY 22, as shown in the table below.
Average rate Closing rate
----------
HY 23 HY 22 Movement FY 22 HY 23 HY 22 Movement FY 22
---------- ----- ----- -------- ----- ----- ----- -------- -----
Euro 1.14 1.19 (4.2)% 1.18 1.14 1.18 (3.4)% 1.13
US dollar 1.20 1.34 (10.4)% 1.27 1.24 1.31 (5.3)% 1.12
----- ----- -------- ----- ----- ----- -------- -----
When comparing revenue in HY 22 to HY 23, changes to currency
exchange rates had a favourable impact on revenue of GBP5.4m.
Partially offsetting this, the changes to foreign currency exchange
rates had an unfavourable movement on the Group's cost of sales and
administrative expenses of GBP3.4m when compared to HY 22.
The Group has loans and borrowings of $172m with interest costs
sensitive to movements in foreign currency. The movement in the US
dollar resulted in unfavourable movements in interest costs of
GBP0.4m compared to HY 22.
The tax for the period was also significantly impacted by
movements in foreign currency exchange rates, resulting in a
reduction to the tax charge of GBP11.2m.
The strengthening of the pound sterling against the US dollar
during the year has given rise to a loss of GBP61.4m on assets
held. A GBP51.7m loss has been recognised within the foreign
currency translation reserve relating to the net impact of foreign
exchange differences arising on the translation of foreign
operations.
Statement of financial position
Overall net assets at 31 March 2023 have decreased by GBP25.6m
to GBP513.7m since 30 September 2022. Total assets decreased by
GBP79.4m, driven by the cash outflow of GBP44.7m primarily related
to the purchase of ESN and the prepayment of our Senior Term
Facility, net of the drawdown of the Revolving Credit Facility.
Goodwill and intangible assets also decreased by GBP37.7m in the
period, with the goodwill and intangible asset addition of GBP32.9m
acquired with ESN and other additions of GBP3.9m being offset by
foreign exchange movements of GBP59.9m and the amortisation charge
of GBP15.4m. Total liabilities decreased by GBP53.7m, primarily due
a reduction in loans and borrowings of GBP43.2m and a decrease in
the deferred tax liabilities of GBP17.0m largely driven by the
movement on the unrealised foreign exchange differences, and the
unwind of the capitalised acquisition intangible assets.
Cash flow and adjusted net debt
The Group generated strong cash flow from operations (before
tax) at GBP24.6m (HY 22: GBP22.1m) driven by the Group's high
pass-through of revenue to adjusted EBITDA and its capital light
model. Additions to internally generated software and to property,
plant and equipment in the period was GBP4.1m (HY 22: GBP1.8m) and
largely relates to our programme migrating the Group to a single
technology platform, as well as planned investments to improve our
product offering, including new functionality within payments.
The Group pre-paid $53.7m of its Senior Term Loan Facility in
the first half and expects to continue to make prepayments to the
Facility through FY 23. There are no pre-payment penalties
associated with the Facility. The Group paid a cash consideration
of $30.0m for the acquisition of ESN on 6 February 2023 using cash
available as well as utilising a partial withdrawal of its
Revolving Credit Facility with the Senior Facility.
A djusted net debt was GBP132.4m as at 31 March 2023 (restated
30 September 2022: adjusted net debt of GBP131.4m), with the impact
of the acquisition offsetting cash generation from operations and
the movement in foreign exchange. The Group had cash at bank of
GBP5.2m and borrowings of GBP137.6m (restated 30 September 2022:
cash at bank of GBP49.4m and borrowings of GBP180.8m). The adjusted
net debt/ adjusted last twelve months EBITDA ratio was 2.3x as at
31 March 2023.
The Group's adjusted free cash flow was GBP21.8m (HY 22:
GBP24.3m) with a conversion rate of 69% (HY 22: 91%). The
conversion rate was impacted by the timing of working capital
payments driven by stronger trading activity in March, an increase
in additions to internally generated software as well as the impact
from the size and timing of performance related payments. A
reconciliation of cash generated from operations to adjusted free
cash flow and adjusted free cash flow conversion is included below
and note 3:
HY 23 HY 22
GBPm GBPm
------------------------------------------------- ----- -----
Adjusted EBITDA 31.5 26.8
------------------------------------------------- ----- -----
Cash generated from operations 24.6 22.1
Adjustments for:
Exceptional items 1.7 -
Working capital from exceptional and other items (0.4) 4.0
Additions to internally generated software (3.9) (1.6)
Additions to property, plant & equipment (0.2) (0.2)
------------------------------------------------- -----
Adjusted free cash flow 21.8 24.3
------------------------------------------------- ----- -----
Adjusted free cash flow conversion 69% 91%
Risk and uncertainties
The Board retains ultimate responsibility for the Group's Risk
Management Framework and continues to undertake ongoing monitoring
to review the effectiveness of the Framework and ensure the
principal risks of the Group are being appropriately mitigated in
line with its risk appetite. The principal risks and uncertainties
which could impact the Group for the remainder of the current
financial year remain those detailed on pages 40 to 44 of the 2022
Annual Report available at www.auctiontechnologygroup.com. A
summary of the risks is included as follows:
1. IT infrastructure - stability and business continuity of auction platforms
2. IT infrastructure - inability to keep pace with innovation and changes
3. Data security/data loss
4. Competition
5. Failure to deliver expected benefits from acquisitions and/or
integrate the business into the Group effectively
6. Attracting and retaining skills/capabilities and succession planning
7. Regulatory compliance
8. Governance and internal control
9. Economic and geo-political uncertainty
The Directors note that the global geopolitical outlook suggests
continuing potential for short-term volatility and instability
across markets. A number of these risks and uncertainties could
have an impact on the Group's performance over the remaining six
months of the financial year and could cause actual results to
differ from expected and historical results.
Related parties
Related party disclosures are detailed in note 15.
Going concern
In assessing the appropriateness of the going concern
assumption, the Directors have considered the ability of the Group
to meet the debt covenants and maintain adequate liquidity through
the forecast period. The Group's forecasts and projections, taking
account of reasonably possible changes in trading performance, show
that the Group is able to operate comfortably within the level of
its current facilities and meet its debt covenant obligations.
Sensitivities have been modelled to understand the impact of the
various risks outlined above on the Group's performance and the
Group's debt covenants/cash headroom, including consideration of a
reasonable downside scenario. Given the current demand for services
across the Group at the date of this report, the assumptions in
these sensitivities, when taking into account the factors set out
above, are considered to be unlikely to lead to a debt covenant
breach or liquidity issues under both scenarios.
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and that it
remains appropriate to continue to adopt the going concern basis in
preparing the financial information.
Tom Hargreaves
Chief Financial Officer
Condensed Consolidated Statement of Profit or Loss and Other
Comprehensive Income or Loss
for the six months ended 31 March 2023
Restated
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
Note GBP000 GBP000 GBP000
-------------------------------------------- ---- ----------- ----------- -------------
Revenue 4,5 67,311 57,738 119,846
Cost of sales (21,345) (18,607) (40,101)
-------------------------------------------- ---- ----------- ----------- -------------
Gross profit 45,966 39,131 79,745
Administrative expenses (36,638) (30,051) (63,646)
Other operating income 513 103 718
-------------------------------------------- ---- ----------- ----------- -------------
Operating profit 4 9,841 9,183 16,817
Finance income 6 73 1 2,127
Finance cost 6 (9,151) (5,452) (9,665)
-------------------------------------------- ---- ----------- ----------- -------------
Net finance costs 6 (9,078) (5,451) (7,538)
-------------------------------------------- ---- ----------- ----------- -------------
Profit before tax 4 763 3,732 9,279
Income tax 7 11,160 (1,620) (15,406)
-------------------------------------------- ---- ----------- ----------- -------------
Profit/(loss) for the period attributable
to the equity holders of the Company 11,923 2,112 (6,127)
-------------------------------------------- ---- ----------- ----------- -------------
Other comprehensive (loss)/income for the
period attributable to the equity holders
of the Company
Items that may subsequently be transferred
to profit and loss:
Foreign exchange differences on translation
of foreign operations (51,651) 10,041 86,126
Fair value gain/(loss) arising on hedging
instruments during the period 13,288 - (16,173)
Tax relating to these items (2,924) - 3,074
-------------------------------------------- ---- ----------- ----------- -------------
Other comprehensive (loss)/income for the
period, net of tax (41,287) 10,041 73,027
-------------------------------------------- ---- ----------- ----------- -------------
Total comprehensive (loss)/income for the
period attributable to the equity holders
of the Company (29,364) 12,153 66,900
-------------------------------------------- ---- ----------- ----------- -------------
Earnings/(loss) per share p p p
Basic 8 9.9 1.8 (5.1)
-------------------------------------------- ---- ----------- ----------- -------------
Diluted 8 9.7 1.7 (5.1)
-------------------------------------------- ---- ----------- ----------- -------------
The above results are derived from continuing operations.
The Consolidated Statement of Profit or Loss and Other
Comprehensive Income or Loss for the six months ended 31 March 2022
has been restated as detailed in note 1.
Condensed Consolidated Statement of Financial Position
as at 31 March 2023
Restated
Unaudited Unaudited Audited
31 March 31 March 30 September
2023 2022 2022
Note GBP000 GBP000 GBP000
------------------------------------- ---- --------- ---------- -------------
ASSETS
Non-current assets
Goodwill 10 469,085 430,703 488,978
Other intangible assets 10 228,735 227,506 246,475
Property, plant and equipment 729 471 526
Right of use assets 2,126 1,919 1,714
Trade and other receivables 89 85 90
------------------------------------- ---- --------- ---------- -------------
Total non-current assets 700,764 660,684 737,783
Current assets
Trade and other receivables 18,489 16,087 15,790
Tax asset 719 1,408 1,565
Cash and cash equivalents 11 7,622 35,219 51,817
------------------------------------- ---- --------- ---------- -------------
Total current assets 26,830 52,714 69,172
------------------------------------- ---- --------- ---------- -------------
Total assets 727,594 713,398 806,955
------------------------------------- ---- --------- ---------- -------------
LIABILITIES
Non-current liabilities
Loans and borrowings 12 (137,604) (140,643) (149,862)
Tax liabilities (1,067) (1,392) (1,074)
Lease liabilities (1,656) (1,206) (1,094)
Deferred tax liabilities 13 (47,627) (51,614) (64,618)
------------------------------------- ---- --------- ---------- -------------
Total non-current liabilities (187,954) (194,855) (216,648)
Current liabilities
Trade and other payables (24,756) (20,607) (18,780)
Loans and borrowings 12 - (14,276) (30,983)
Tax liabilities (591) (625) (475)
Lease liabilities (606) (837) (746)
------------------------------------- ---- --------- ---------- -------------
Total current liabilities (25,953) (36,345) (50,984)
------------------------------------- ---- --------- ---------- -------------
Total liabilities (213,907) (231,200) (267,632)
------------------------------------- ---- --------- ---------- -------------
Net assets 513,687 482,198 539,323
------------------------------------- ---- --------- ---------- -------------
EQUITY
Share capital 14 12 12 12
Share premium 235,950 235,903 235,903
Other reserve 238,385 238,385 238,385
Capital redemption reserve 5 5 5
Share option reserve 37,557 32,157 34,690
Foreign currency translation reserve 28,377 6,828 66,740
Retained losses (26,599) (31,092) (36,412)
------------------------------------- ---- --------- ---------- -------------
Total equity 513,687 482,198 539,323
------------------------------------- ---- --------- ---------- -------------
The Consolidated Statement of Financial Position at 31 March
2022 has been restated as detailed in note 1.
Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 March 2023
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 2021 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
Profit for the period - - - - - - 11,923 11,923
Other comprehensive loss - - - - - (38,363) (2,924) (41,287)
------------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
Total comprehensive
(loss)/income for the
period - - - - - (38,363) 8,999 (29,364)
Transactions with owners
Exercise of share options - 47 - - - - - 47
Movement in equity-settled
share-based payments - - - - 2,867 - 814 3,681
31 March 2023 12 235,950 238,385 5 37,557 28,377 (26,599) 513,687
------------------------------- -------- -------- -------- ----------- -------- ------------ -------- --------
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 2021 (restated
see note 1) 12 235,903 238,385 5 1,649 (3,213) (33,287) 439,454
Profit for the period - - - - - - 2,112 2,112
Other comprehensive
income/(loss) - - - - - 10,041 - 10,041
-------------------------------- -------- -------- -------- ----------- -------- ------------ -------- -------
Total comprehensive
income for the period - - - - - 10,041 2,112 12,153
Transactions with owners
Issue of options as
consideration
for a business, net of
transactions costs and
tax - - - - 28,346 - - 28,346
Movement in equity-settled
share-based payments - - - - 2,162 - 51 2,213
Tax relating to items
taken directly to equity - - - - - - 32 32
31 March 2022 (restated
see note 1) 12 235,903 238,385 5 32,157 6,828 (31,092) 482,198
-------------------------------- -------- -------- -------- ----------- -------- ------------ -------- -------
The Consolidated Statement of Changes in Equity at 31 March 2022
has been restated as detailed in note 1.
Condensed Consolidated Statement of Cash Flows
for the six months ended 31 March 2023
Restated
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
Note GBP000 GBP000 GBP000
--------------------------------------------------- ---- ----------- ----------- -------------
Cash flows from operating activities
Profit before tax 763 3,732 9,279
Adjustments for:
Amortisation of acquired intangible assets 10 13,748 12,855 26,591
Amortisation of internally generated software 10 1,612 1,725 4,118
Depreciation of property, plant and equipment 165 135 280
Depreciation of right of use assets 475 467 920
Share-based payment expense 3,918 2,450 5,226
Net exchange differences - 25 -
Finance income 6 (73) (1) (2,127)
Finance costs 6 9,151 5,452 9,665
--------------------------------------------------- ---- ----------- ----------- -------------
Operating cash flows before movements in
working capital 29,759 26,840 53,952
(Increase)/decrease in trade and other receivables (3,901) (2,707) 304
Decrease in trade and other payables (1,225) (2,073) (4,847)
--------------------------------------------------- ---- ----------- ----------- -------------
Cash generated by operations 24,633 22,060 49,409
Income taxes paid (4,259) (6,123) (9,981)
--------------------------------------------------- ---- ----------- ----------- -------------
Net cash from operating activities 20,374 15,937 39,428
--------------------------------------------------- ---- ----------- ----------- -------------
Cash flows from investing activities
Acquisition of subsidiaries, net of cash
acquired 9 (24,937) (358,763) (358,763)
Additions to internally generated software 10 (3,885) (1,621) (4,209)
Payment for property, plant and equipment (248) (130) (270)
Payment of contingent consideration - (17,295) (20,946)
Net cash used in investing activities (29,070) (377,809) (384,188)
--------------------------------------------------- ---- ----------- ----------- -------------
Cash flows from financing activities
Payment of contingent consideration - (1,222) (1,222)
Repayment of loans and borrowings (51,777) (359) (359)
Proceeds from loans and borrowings 21,250 - -
Interest element of lease payments (61) (73) (137)
Capital element of lease payments (449) (481) (959)
Issue of new share capital, net of share
issue costs 47 - -
Interest paid (5,026) (1,608) (7,283)
--------------------------------------------------- ---- ----------- ----------- -------------
Net cash used in financing activities (36,016) (3,743) (9,960)
--------------------------------------------------- ---- ----------- ----------- -------------
Cash and cash equivalents at beginning of
the period 51,817 397,451 397,451
Net decrease in cash and cash equivalents (44,712) (365,615) (354,720)
Effect of foreign exchange rate changes 517 3,383 9,086
--------------------------------------------------- ---- ----------- ----------- -------------
Cash and cash equivalents at the end of
the period 7,622 35,219 51,817
--------------------------------------------------- ---- ----------- ----------- -------------
The Consolidated Statement of Cash Flows at 31 March 2022 has
been restated as detailed in note 1.
Notes to the Condensed Consolidated Interim Financial
Statements
1. Accounting policies
General information
Auction Technology Group plc (the "Company") is a company
incorporated in the United Kingdom under the Companies Act. The
Company is a public company limited by shares and is registered in
England and Wales.
These Condensed Consolidated Interim Financial Statements have
been approved for issue on 17 May 2023.
These Condensed Consolidated Interim Financial Statements for
the period do not constitute statutory financial statements within
the
meaning of s434 of the Companies Act 2006. Statutory accounts
for the year ended 30 September 2022 have been delivered to the
Registrar of Companies. They are also available on the Group's
website (www.auctiontechnologygroup.com). The audit report for
those accounts was unqualified, did not draw attention to any
matters by way of emphasis without qualifying the report and did
not contain a statement under 498(2) or (3) of the Companies Act
2006. These Condensed Consolidated Interim Financial Statements
have been reviewed and not audited.
Basis of preparation
These Condensed Consolidated Interim Financial Statements have
been prepared in accordance with United Kingdom adopted
International Accounting Standard 34, "Interim Financial
Reporting". The Condensed Consolidated Interim Financial Statements
do not include all the information required for full annual
financial statements and should be read in conjunction with the
Group's Annual Report and Accounts for the year ended 30 September
2022 which have been prepared in accordance with the requirements
of the Companies Act 2006.
In determining the information to be disclosed in the notes to
the Condensed Consolidated Interim Financial statements in
accordance with IAS 34, the Group has taken into account its
materiality in relation to these Condensed Consolidated Interim
Financial Statements.
The Condensed Consolidated Interim Financial Statements have
been prepared under the historical cost convention, except for
certain financial instruments which have been measured at fair
value.
The accounting policies applied in these Condensed Consolidated
Interim Financial Statements are the same as those applied in the
most recent annual financial statements except for amortisation of
other intangible assets and taxes on income. The acquisition of
EstateSales.NET ("ESN") increases the range of the estimated useful
lives on customer relationships from 7 - 14 years to 2 - 14 years.
Tax on income in the interim period is recognised by applying the
effective tax rate that would be applicable to the expected full
year profit or loss to the period's result.
The Group's deferred consideration is classified as level 2 (for
further details of fair valuation methods used see note 9). There
are no other financial instruments measured at fair value on a
recurring basis.
New and amended accounting standards adopted by the Group
There were no new standards adopted by the Group in the period
but the following amendments became applicable during the current
reporting period:
-- 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
These amendments did not have a material impact on the Group's
accounting policies and have therefore not resulted in any changes
in these Condensed Consolidated Interim Financial Statements.
Going concern
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 conversion rate decline and delay in the roll out of
payments technology across the Group. None of these scenarios
individually or collectively threaten the Group's ability to
continue as a going concern. Even in the combined downside scenario
modelled (the combination of all downside scenarios occurring at
once) the Group would be able to operate within the level of its
current available debt facilities and covenants. As at 31 March
2023 the Group has adjusted net debt of GBP132.4m and is in a net
current asset position.
After due consideration, the Directors have concluded that there
is a reasonable expectation that the Group has adequate resources
to continue in operational existence for at least 12 months from
the date of this report. For this reason, the Directors continue to
adopt the going concern basis in preparing these Condensed
Consolidated Interim Financial Statements for the Group.
Restatements
In the second half of FY22, 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 was required to
be disclosed in the Group's Annual Report and Accounts for the year
ended 30 September 2022.
1 October 2021
The restatement for the prior period adjustment recognised for
the year ending 30 September 2021 is aligned with the Consolidated
Statement of Changes in Equity in the Group's Annual Report and
Accounts for the year ended 30 September 2022.
31 March 2022
As the review took place in the second half of FY 22 a
restatement has been recognised for the six months ended 31 March
2022 adjusting foreign currency reserves, finance costs and
deferred and income tax. These changes have no impact on the
adjusted measures used as part of the Group's alternative
performance measures.
Below is a summary of the restatement for the six months ended
31 March 2022, outlining the primary statements and financial
statement line items impacted:
Reported Restated
31 March 31 March
2022 Change 2022
GBP000 GBP000 GBP000
----------------------------------------------- ----------- ------- ---------
Consolidated Statement of Profit or Loss and
Other Comprehensive Income or Loss
Finance costs (5,931) 479 (5,452)
Net finance costs (5,930) 479 (5,451)
Profit before tax 3,253 479 3,732
Income tax 539 (2,159) (1,620)
Profit for the year attributable to the equity
holders of the Company 3,792 (1,680) 2,112
----------------------------------------------- ----------- ------- ---------
Foreign exchange differences on translation
of foreign operations 10,520 (479) 10,041
Tax relating to these items (1,805) 1,805 -
Other comprehensive income for the year, net
of tax 8,715 1,326 10,041
Basic earnings per share (in pence) 3.2 (1.4) 1.8
Diluted earnings per share (in pence) 3.1 (1.4) 1.7
----------------------------------------------- ----------- ------- ---------
Consolidated Statement of Financial Position
and Consolidated Statement of Changes in Equity
Deferred tax liabilities (50,141) (1,473) (51,614)
Current tax assets 826 582 1,408
Current tax liabilities (1,162) 537 (625)
Foreign currency translation reserves 9,573 (2,745) 6,828
Retained losses (33,483) 2,391 (31,092)
----------------------------------------------- ----------- ------- ---------
2. Significant judgements and key sources of estimation uncertainty
The preparation of the Group's Condensed Consolidated Interim
Financial Statements requires the use of certain judgements,
estimates and assumptions that affect the reported amounts of
assets, liabilities, income and expenses.
In preparing these Condensed Consolidated Interim Financial
Statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
most recent annual financial statements for the year ended 30
September 2022 except for the judgements outlined below which are
no longer applicable.
The significant judgements disclosed in the most recent annual
financial statements for the year ended 30 September 2022 no longer
applicable are:
-- LiveAuctioneers consideration
-- Functional currency of subsidiaries
There are no new significant judgements or estimates during the
period.
3. Alternative performance measures
The Group uses a number of alternative performance measures
("APMs") in addition to those measures reported in accordance with
United Kingdom adopted International Accounting Standards
("UK-adopted IAS"). Such APMs are not defined terms under
UK-adopted IAS and are not intended to be a substitute for any
UK-adopted IAS 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 IAS. 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
income or expense 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.
Net finance costs and income tax for the six months ended 31
March 2022 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 before
tax to adjusted EBITDA:
Restated
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
-------------------------------------------------- ----------- ----------- -------------
Profit before tax 763 3,732 9,279
Adjustments for:
Net finance costs (note 6) 9,078 5,451 7,538
Amortisation of acquired intangible assets (note
10) 13,748 12,855 26,591
Amortisation of internally generated software
(note 10) 1,612 1,725 4,118
Depreciation of property, plant and equipment 165 135 280
Depreciation of right of use assets 475 467 920
Share-based payment expense 3,918 2,450 5,226
Exceptional operating items 1,746 - -
-------------------------------------------------- ----------- ----------- -------------
Adjusted EBITDA 31,505 26,815 53,952
-------------------------------------------------- ----------- ----------- -------------
The following table provides the calculation of adjusted EBITDA
margin which represents adjusted EBITDA divided by revenue:
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
---------------------------- ----------- ----------- -------------
Reported revenue (note 4,5) 67,311 57,738 119,846
Adjusted EBITDA 31,505 26,815 53,952
Adjusted EBITDA margin 47% 46% 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 includes 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, costs associated
with business combinations, gains and losses on the disposal of
businesses, significant reorganisation or restructuring costs and
impairment of goodwill and acquired intangible assets. Any item
classified as an exceptional item will be significant and not
attributable to ongoing operations and will be subject to specific
quantitative and qualitative thresholds set by and approved by the
Directors prior to being classified as exceptional.
The exceptional operating items are detailed below:
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
---------------------------- ----------- ----------- -------------
Acquisition costs (1,746) - -
Exceptional operating items (1,746) - -
---------------------------- ----------- ----------- -------------
For the six months ended 31 March 2023, the Group's exceptional
costs were in respect of the costs relating to the acquisition of
ESN on 6 February 2023.
There were no exceptional operating items for the six months
ended 31 March 2022 and year ended 30 September 2022.
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, other consultancy expenditure incurred and
retention bonuses for ESN employees payable one year after
completion. The retention bonus is subject to service conditions
and is accrued over the period. The net cash outflow related to
exceptional operating items in the period is GBP1.3m (31 March
2022: GBP4.0m, 30 September 2022: GBP4.0m).
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 profit/(loss)
after tax to adjusted earnings:
Restated
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
-------------------------------------------------- ----------- ----------- -------------
Profit/(loss) attributable to equity shareholders
of the Company 11,923 2,112 (6,127)
Adjustments for:
Amortisation of acquired intangible assets 13,748 12,855 26,591
Exceptional finance items 3,756 2,060 (221)
Share-based payment expense 3,918 2,450 5,226
Exceptional operating items 1,746 - -
Deferred tax on unrealised foreign exchange
differences (7,573) 1,474 15,899
Tax on adjusted items (7,866) (4,633) (5,254)
-------------------------------------------------- ----------- ----------- -------------
Adjusted earnings 19,652 16,318 36,114
-------------------------------------------------- ----------- ----------- -------------
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
------------------------------------------------ ----------- ----------- -------------
Number Number Number
Weighted average number of shares (note 8) 120,824,823 120,205,794 120,364,831
Diluted weighted average number of shares (note
8) 122,686,044 122,194,936 122,441,916
------------------------------------------------ ----------- ----------- -------------
p
------------------------------------------------ ----------- ----------- -------------
Adjusted diluted earnings per share (in pence) 16.0 13.4 29.5
------------------------------------------------ ----------- ----------- -------------
The basis for treating these items not already defined above as
adjusting is as follows:
Amortisation of acquired intangible assets 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.
Exceptional finance items
Exceptional finance items include foreign exchange differences
arising on the revaluation of the foreign currency loans,
intercompany and 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
management provides users of its Group 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.
Organic revenue
The Group has made certain acquisitions that have affected the
comparability of the Group's results. Previously the Group had
reported proforma revenue and proforma revenue growth which
included acquisitions as if they had occurred at the start of the
comparative period, with the comparative period being presented on
a constant currency basis using the current year exchange rates. It
was deemed by management more appropriate to present organic
revenue and organic revenue growth at HY 23 given the size of the
ESN acquisition. Organic revenue shows the current period results
excluding the acquisition of ESN on 6 February 2023. Organic
revenue is shown on a constant currency basis using average
exchange rates for the current financial period applied to the
comparative period and is used to eliminate the effects of
fluctuations in assessing performance. Refer to the Glossary for
the full definition.
The following table provides a reconciliation of proforma
revenue from reported results:
Unaudited Unaudited
six months six months
ended ended
31 March 31 March
2023 2022
GBP000 GBP000
------------------------------- ----------- -----------
Reported revenue 67,311 57,738
Acquisition related adjustment (1,251) -
Constant currency adjustment - 5,438
Organic revenue 66,060 63,176
------------------------------- ----------- -----------
Increase in organic revenue % 5%
------------------------------- ----------- -----------
Adjusted net debt
Adjusted net debt comprises external borrowings net of
arrangement fees, cash and cash equivalents and allows management
to monitor the indebtedness of the Group. Adjusted net debt
excludes lease liabilities and restricted cash (see note 11).
Cash at bank in note 11 has been updated to exclude cash held by
the Trustee of the Group's Employee Benefit Trust. This results in
a restatement for the year ended 30 September 2022 and the six
months ended 31 March 2022 (see note 11). This change in policy
provides users with more reliable information about the nature of
the Group's cash and cash equivalents.
Restated Restated
Unaudited Unaudited Audited
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
------------------------------------------- --------- ---------- -------------
Cash at bank (note 11) 5,217 32,817 49,427
------------------------------------------- --------- ---------- -------------
Current loans and borrowings (note 12) - (14,276) (30,983)
Non-current loans and borrowings (note 12) (137,604) (140,643) (149,862)
------------------------------------------- --------- ---------- -------------
Total loans and borrowings (137,604) (154,919) (180,845)
------------------------------------------- --------- ---------- -------------
Adjusted net debt (132,387) (122,102) (131,418)
------------------------------------------- --------- ---------- -------------
Adjusted free cash flow and adjusted free cash flow
conversion
Free cash flow represents cash flow from operations less
additions to internally generated software and property, plant and
equipment. Internally generated software includes development costs
in relation to software that are capitalised when the related
projects meet the recognition criteria under IFRS for an internally
generated intangible asset. Movement in working capital is adjusted
for balances relating to exceptional items. The Group monitors its
operational efficiency with reference to operational cash
conversion, defined as free cash flow as a percentage of adjusted
EBITDA.
The Group uses adjusted cash flow measures for the same purpose
as adjusted profit measures, in order to assist readers of the
accounts in understanding the operational performance of the Group.
The two measures used are free cash flow and free cash flow
conversion. A reported free cash flow and cash conversion rate has
not been provided as it would not give a fair indication of the
Group's free cash flow and conversion performance given the high
value of exceptional items.
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
-------------------------------------------------- ----------- ----------- -------------
Adjusted EBITDA 31,505 26,815 53,952
-------------------------------------------------- ----------- ----------- -------------
Cash generated from operations 24,633 22,060 49,409
Adjustments for:
Exceptional operating items 1,746 - -
Working capital from exceptional and other items (452) 3,962 4,983
Additions to internally generated software (note
10) (3,885) (1,621) (4,209)
Additions to property, plant and equipment (248) (130) (270)
-------------------------------------------------- ----------- ----------- -------------
Adjusted free cash flow 21,794 24,271 49,913
-------------------------------------------------- ----------- ----------- -------------
Adjusted free cash flow conversion (%) 69% 91% 93%
-------------------------------------------------- ----------- ----------- -------------
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. ESN which was
acquired in the period, has been allocated to the Arts and Antiques
segment. This is on the basis that ESN traditionally includes items
sold on Arts and Antique platforms and the purpose of the
acquisition was to expand its Arts and Antiques segment into an
attractive adjacent channel for the resale of second-hand
items.
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, lot-tissimo.com and EstateSales.NET. A
significant part of the Group's services is provision of a platform
as a marketplace for the A&A auction houses to sell their
goods. The segment also generates earnings through additional
services such as listing subscriptions, 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 period by reportable segment
is as follows:
Unaudited six months ended 31 March 2023
Centrally
Auction allocated
A&A I&C Services Content costs Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------------- ------- ------- --------- ------- ---------- --------
Revenue 31,839 29,746 4,192 1,534 - 67,311
-------------------------------------- ------- ------- --------- ------- ---------- --------
Adjusted EBITDA (see note
3 for definition and reconciliation) 26,162 25,492 2,769 538 (23,456) 31,505
Amortisation of intangible
assets (note 10) (9,778) (4,888) (694) - - (15,360)
Depreciation of property,
plant and equipment (89) (74) (2) - - (165)
Depreciation of right of
use assets (287) (150) (5) (33) - (475)
Share-based payment expense (1,171) (395) (38) - (2,314) (3,918)
Exceptional operating items
(note 3) (1,746) - - - - (1,746)
Operating profit/(loss) 13,091 19,985 2,030 505 (25,770) 9,841
Net finance costs (note
6) - - - - (9,078) (9,078)
-------------------------------------- ------- ------- --------- ------- ---------- --------
Profit/(loss) before tax 13,091 19,985 2,030 505 (34,848) 763
-------------------------------------- ------- ------- --------- ------- ---------- --------
Unaudited six months ended 31 March 2022 (restated)
Centrally
Auction allocated
A&A I&C Services Content costs Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------------- -------- -------- ---------- ------- ---------- --------
Revenue 26,948 25,132 4,060 1,598 - 57,738
-------------------------------------- -------- -------- ---------- ------- ---------- --------
Adjusted EBITDA (see note
3 for definition and reconciliation) 22,124 21,965 2,899 559 (20,732) 26,815
Amortisation of intangible
assets (note 10) (8,526) (5,453) (601) - - (14,580)
Depreciation of property,
plant and equipment (40) (87) (3) (5) - (135)
Depreciation of right of
use assets (236) (199) (8) (24) - (467)
Share-based payment expense (768) (416) (1,205) (61) - (2,450)
Operating profit/(loss) 12,554 15,810 1,082 469 (20,732) 9,183
Net finance costs (note
6) - - - - (5,451) (5,451)
-------------------------------------- -------- -------- ---------- ------- ---------- --------
Profit/(loss) before tax 12,554 15,810 1,082 469 (26,183) 3,732
-------------------------------------- -------- -------- ---------- ------- ---------- --------
Audited 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
-------------------------------------- -------- -------- --------- ------- ---------- --------
Segment assets which exclude deferred tax assets are measured in
the same way as in the financial statements. These assets are
allocated based on the operations of the segment and the physical
location of the asset.
Unaudited 31 Unaudited 31 March Audited 30 September
March 2023 2022 2022
-----------------
Total Additions Total Additions Total Additions
non-current to non-current non-current to non-current non-current to non-current
assets assets assets assets assets assets
GBP000 GBP000 GBP0 GBP000 GBP00 GBP000
----------------- ------------ --------------- ------------ --------------- ------------ ---------------
A&A 485,388 35,351 465,211 412,569 506,484 395,683
I&C 187,109 2,614 167,875 39,402 199,504 58,829
Auction Services 28,209 265 27,490 76 31,704 201
Content 58 - 108 6 91 15
----------------- ------------ --------------- ------------ --------------- ------------ ---------------
700,764 38,230 660,684 452,053 737,783 454,728
----------------- ------------ --------------- ------------ --------------- ------------ ---------------
The Group has taken advantage of paragraph 23 of IFRS 8
"Operating Segments" and does not provide segmental analysis of net
assets as this information is not used by the Directors in
operational decision making or monitoring of business
performance.
5. Revenue
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
----------------------------------------- ----------- ----------- -------------
Product and customer types
A&A 31,839 26,948 55,279
I&C 29,746 25,132 52,775
Auction Services 4,192 4,060 8,636
Content 1,534 1,598 3,156
----------------------------------------- ----------- ----------- -------------
67,311 57,738 119,846
----------------------------------------- ----------- ----------- -------------
Primary geographical markets
United Kingdom 9,717 9,402 18,539
North America 55,511 46,422 97,765
Germany 2,083 1,914 3,542
----------------------------------------- ----------- ----------- -------------
67,311 57,738 119,846
----------------------------------------- ----------- ----------- -------------
Timing of transfer of goods and services
Point in time 62,042 53,033 110,539
Over time 5,269 4,705 9,307
----------------------------------------- ----------- ----------- -------------
67,311 57,738 119,846
----------------------------------------- ----------- ----------- -------------
Due to the nature of the Group's business, it is not materially
affected by seasonal or cyclical trading.
6. Net finance costs
Restated
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
-------------------------------------- ----------- ----------- -------------
Foreign exchange gain - - 2,070
Interest income 73 1 57
Finance income 73 1 2,127
Interest on loans and borrowings (5,090) (3,094) (7,214)
Amortisation of finance costs (244) (225) (465)
Movements in contingent consideration - (1,860) (1,849)
Movements in deferred consideration (54) - -
Foreign exchange loss (3,702) (200) -
Interest on lease liabilities (61) (73) (137)
Finance cost (9,151) (5,452) (9,665)
-------------------------------------- ----------- ----------- -------------
Net finance costs (9,078) (5,451) (7,538)
-------------------------------------- ----------- ----------- -------------
7. Taxation
Restated
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
-------------------------------------------- ----------- ----------- -------------
Current tax
Current tax on profit/(loss) for the period 2,289 4,816 11,395
Adjustments in respect of prior years - - (903)
-------------------------------------------- ----------- ----------- -------------
Total current tax 2,289 4,816 10,492
-------------------------------------------- ----------- ----------- -------------
Deferred tax
Current year (12,454) (1,670) 6,328
Adjustments from change in tax rates (1,047) (1,608) (564)
Adjustments in respect of prior years 52 82 (850)
-------------------------------------------- ----------- ----------- -------------
Deferred tax (13,449) (3,196) 4,914
-------------------------------------------- ----------- ----------- -------------
Tax (credit)/expense (11,160) 1,620 15,406
-------------------------------------------- ----------- ----------- -------------
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 the profits of the Group as follows:
Restated
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
--------------------------------------------------------- ----------- ----------- -------------
Profit before tax 763 3,732 9,279
Tax at United Kingdom tax rate of 22% (2022:
19%) 168 709 1,763
Tax effect of:
Expenses not deductible for tax purposes 105 197 -
Additional items deductible for tax purposes - - (1,649)
Differences in overseas tax rates 393 (16) (1,317)
Deferred tax on unrealised foreign exchange differences (7,573) 1,474 15,899
Foreign exchange differences not (taxable)/deductible
for tax purposes (3,258) 782 3,027
Adjustments from change in tax rates (1,047) (1,608) (564)
Adjustments in respect of prior years 52 82 (1,753)
Tax (credit)/expense (11,160) 1,620 15,406
--------------------------------------------------------- ----------- ----------- -------------
The total tax expense recognised based on management's best
estimate of the effective tax rate for the full year, excluding
changes to US blended tax rate, foreign exchange differences and
exceptional operating items, is 21% (31 March 2022: 19%) applied to
the profit before tax of the six-month period.
Deferred tax credit on unrealised foreign exchange differences
of GBP7.6m (charge of - 31 March 2022: GBP1.5m, 30 September 2022:
GBP15.9m) arises from US holding companies with pound sterling as
their functional currency but under US tax rules remains US
dollars. Per the US tax basis these holding companies included an
unrealised foreign exchange loss of GBP30.0m on intra-group loans
denominated in pound sterling totalling GBP295.6m (gain of - 31
March 2022: GBP5.9m, 30 September 2022: GBP61.9m). This deferred
tax has arisen as under US tax rules foreign as exchange
differences are not taxable until they are realised.
Profit before tax includes foreign exchange gain of GBP12.9m
from US holding companies on their US dollar denominated
intra-group balances (loss of - 31 March 2022: GBP3.1m, 30
September 2022: GBP15.9m) which are not (taxable)/deductible for US
tax purposes giving rise to a permanent difference of GBP3.3m (31
March 2022: GBP0.8m, 30 September 2022: GBP3.0m).
Adjustments from changes in tax rates are due to decreases in
the blended US rate for state taxes apportionment. The UK
Government announced an increase in the corporation tax rate from
19% to 25%, with an effective date of 1 April 2023, which was
substantively enacted on 24 May 2021.
Tax recognised in other comprehensive income and equity:
Restated
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
---------------------------------- ----------- ----------- -------------
Other comprehensive (loss)/income
Current tax (2,924) - 3,074
Equity
Deferred tax - 32 (150)
---------------------------------- ----------- ----------- -------------
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. Earnings/(loss) per share
Basic earnings/(loss) per share per share is calculated by
dividing the profit/(loss) for the period attributable to ordinary
shareholders by the weighted average number of ordinary shares
outstanding during the period, after excluding the weighted average
number of non-vested ordinary shares.
Diluted earnings per share is calculated by dividing the
profit/(loss) for the period attributable to ordinary shareholders
by the weighted average number of ordinary shares including
non-vested/non-exercised ordinary shares. During the period and
prior period, the Group awarded conditional share awards to
Directors and certain employees through an LTIP. For the year ended
30 September 2022, the non-vested/non-exercised ordinary shares are
anti-dilutive given the loss for the period and are therefore
excluded from the weighted average number of ordinary shares for
the purpose of diluted earnings per share calculation.
Restated
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
-------------------------------------------------- ----------- ----------- -------------
Profit/(loss) attributable to equity shareholders
of the Company 11,923 2,112 (6,127)
-------------------------------------------------- ----------- ----------- -------------
Number Number Number
Weighted average number of shares 120,824,823 120,205,794 120,364,831
Weighted average number of shares held by the
Employee Benefit Trust (135,521) (26,501) (61,741)
---------------------------------------------- ----------- ----------- -----------
Weighted average number of shares 120,689,302 120,179,293 120,303,090
Dilutive share options 1,996,742 2,015,643 2,138,826
---------------------------------------------- ----------- ----------- -----------
Diluted weighted average number of shares 122,686,044 122,194,936 122,441,916
---------------------------------------------- ----------- ----------- -----------
p p p
---------------------------------------------- ----------- ----------- -----------
Basic earnings/(loss) per share 9.9 1.8 (5.1)
---------------------------------------------- ----------- ----------- -----------
Diluted earnings/(loss) per share 9.7 1.7 (5.1)
---------------------------------------------- ----------- ----------- -----------
9. Acquisition of Vintage Software LLC., trading as EstateSales.NET ("ESN")
On 6 February 2023, the Group acquired 100% of the equity share
capital of ESN. ESN provides a platform to facilitate estate sales
across the US. Both corporate estate sale companies as well as
private customers use ESN to advertise online the sale of millions
of unique second-hand items sourced from a range of events
including private home estate sales and business liquidations. The
purpose of the acquisition was to further strengthen the Group's
presence in the US and expand its A&A segment into an
attractive adjacent channel for the resale of second-hand
items.
The maximum consideration payable is $40m (GBP33.2m), with an
initial cash payment of $30.2m (GBP25.1m), deferred consideration
of $10m (GBP8.3m) payable after 12 months and a working capital
adjustment of $46,000 (GBP38,000).
Management calculated the fair value of the deferred
consideration using the acquisition's internal rate of return to
discount the liability, resulting in a liability of $9.6m
(GBP7.9m). Exchange differences to reserves were recorded within
foreign exchange differences on translation of foreign operations
in the Condensed Consolidated Statement of Comprehensive Income or
Loss. The unwinding of discount of GBP0.4m will be reported as a
finance cost in the Condensed Consolidated Statement of Profit or
Loss over the period of the earn-out.
Provisional purchase price allocation
Management assessed the fair value of the acquired assets and
liabilities as part of the purchase price allocation ("PPA"). This
has been prepared on a provisional basis and the fair values of the
assets and liabilities is as set out below.
Book Fair value Provisional
value adjustments fair value
GBP000 GBP000 GBP000
---------------------------------------------------- ------- ------------ -----------
Acquired intangible assets - software - 2,161 2,161
Acquired intangible assets - customer relationships - 9,559 9,559
Acquired intangible assets - brand 229 2,406 2,635
Property, plant and equipment 161 - 161
Right of use assets 438 - 438
Cash and cash equivalents 155 - 155
Trade receivables and other receivables 41 - 41
Trade and other payables (438) - (438)
Lease liabilities (264) - (264)
Net assets on acquisition 322 14,126 14,448
Goodwill (note 10) 18,576
---------------------------------------------------- ------- ------------ -----------
Total consideration 33,024
---------------------------------------------------- ------- ------------ -----------
Consideration satisfied by:
Initial cash consideration 25,092
Deferred consideration 7,932
33,024
---------------------------------------------------- ------- ------------ -----------
Net cash outflow arising on acquisition:
Initial cash consideration 25,092
Less: cash and cash equivalent balances acquired (155)
---------------------------------------------------- ------- ------------ -----------
24,937
---------------------------------------------------- ------- ------------ -----------
Acquired intangible assets
Acquired intangible assets represent customer relationships,
auction technology platform and brand for which amortisation of
GBP0.4m has been charged for the six months ended 31 March 2023.
The intangible assets will be amortised over their respective
expected useful economic lives: customer relationships of two to
seven years, auction technology platform of five years and brand of
15 years.
Deferred tax
Goodwill and acquired intangible assets of GBP32.5m are expected
to be deductible for income tax purposes.
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 synergies expected to be realised
post-acquisition, new customer relationships and the fair value of
the assembled workforce within the business acquired.
Acquisition costs of GBP1.7m (31 March 2022: GBPnil, 30
September 2022: GBPnil) directly related to the business
combination have been immediately expensed to the Condensed
Consolidated Statement of Profit or Loss as part of administrative
expenses and included within exceptional items (see note 3).
Between 6 February 2023 and 31 March 2023, ESN contributed GBP1.3m
to Group revenues and a profit before tax of GBP0.7m. If the
acquisition had occurred on 1 October 2022, Group revenue would
have been GBP69.5m and Group profit before tax would have been
GBP1.9m.
10. Goodwill and other intangible assets
Total
acquired Internally
Customer Non-compete intangible generated
Software relationships Brand agreement assets software Goodwill Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- --------
1 October 2021 6,569 46,870 9,546 939 63,924 4,153 141,160 209,237
Acquisition of business 24,494 120,023 21,457 - 165,974 1,820 281,341 449,135
Additions - - - - - 4,209 - 4,209
Amortisation (6,118) (17,436) (2,736) (301) (26,591) (4,118) - (30,709)
Exchange differences 5,029 25,943 5,016 154 36,142 962 66,477 103,581
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- --------
30 September 2022 29,974 175,400 33,283 792 239,449 7,026 488,978 735,453
Acquisition of business
(note 9) 2,161 9,559 2,635 - 14,355 - 18,576 32,931
Additions - - - - - 3,885 - 3,885
Amortisation (2,870) (9,246) (1,458) (174) (13,748) (1,612) - (15,360)
Exchange differences (2,837) (14,459) (2,833) (70) (20,199) (421) (38,469) (59,089)
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- --------
31 March 2023 26,428 161,254 31,627 548 219,857 8,878 469,085 697,820
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- --------
Total
acquired Internally
Customer Non-compete intangible generated
Software relationships Brand agreement assets software Goodwill Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- --------
1 October 2021 6,569 46,870 9,546 939 63,924 4,153 141,160 209,237
Acquisition of business 24,494 120,023 21,457 - 165,974 1,820 281,461 449,255
Additions - - - - - 1,621 - 1,621
Amortisation (3,003) (8,403) (1,293) (156) (12,855) (1,725) - (14,580)
Exchange differences 647 3,213 628 25 4,513 81 8,082 12,676
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- --------
31 March 2022 28,707 161,703 30,338 808 221,556 5,950 430,703 658,209
------------------------ -------- -------------- ------- ----------- ----------- ---------- -------- --------
At 31 March 2023, management have considered if any impairment
indicators exist and concluded no impairment is required. As at 30
September 2022, both the A&A and Auction Services cash
generating units had limited headroom and were sensitive to a
movement in any one of the key assumptions. Management performed a
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. At 31 March
2023, management considers these scenarios as disclosed in the
Group's most recent Annual Report and Accounts for the year ended
30 September 2022 to still be applicable.
11. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand. The
carrying amount of these assets approximates to their fair
value.
Restated Restated
Unaudited Unaudited Audited
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
---------------- --------- ---------- -------------
Cash at bank 5,217 32,817 49,427
Restricted cash 2,405 2,402 2,390
7,622 35,219 51,817
---------------- --------- ---------- -------------
Restricted consists of cash held by the Trustee of the Group's
Employee Benefit Trust relating to share awards for employees.
These funds are not available to circulate within the Group on
demand.
Cash at bank excludes cash held by the Trustee of the Group's
Employee Benefit Trust. This results in a restatement for the year
ended 30 September 2022 and the six months ended 31 March 2022.
This change in policy provides users with more reliable information
about the nature of the Group's cash and cash equivalents.
12. Loans and borrowings
The carrying amount of loan and borrowings classified as
financial liabilities at amortised cost approximates to their fair
value.
Unaudited Unaudited Audited
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
-------------------------- --------- --------- -------------
Current
Senior Term Facility - 14,276 30,983
- 14,276 30,983
-------------------------- --------- --------- -------------
Non-current
Senior Term Facility 120,019 140,643 149,862
Revolving Credit Facility 17,585 - -
137,604 140,643 149,862
-------------------------- --------- --------- -------------
137,604 154,919 180,845
-------------------------- --------- --------- -------------
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. During the six months ended 31 March 2023, a prepayment of $53.7m (GBP48.0m) was paid on the Senior Term Facility. In the absence of any other prepayments, the next scheduled repayment would be $7.4m on 30 June 2024. The loan will be due for repayment on 17 June 2026.
- A multi-currency revolving credit working capital facility
(the "Revolving Credit Facility") for $49.0m. 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. On 1 February 2023, $26.3m (GBP21.3m) was drawn down to
partly fund the acquisition of ESN (see note 9), of which $4.6m
(GBP3.8m) has been repaid during the six months ended 31 March
2023.
- 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
six months ended 31 March 2023.
13. Deferred taxation
The movement in net deferred tax liabilities is as follows:
Total
GBP000
------------------------------------------ --------
1 October 2021 (8,894)
Acquisition of business (42,152)
Amount charged to Condensed Consolidated
Statement of Profit or Loss (4,914)
Amount charged to equity (150)
Exchange differences (8,508)
--------------------------------------------- --------
30 September 2022 (64,618)
Amount credited to Condensed Consolidated
Statement of Profit or Loss 13,449
Exchange differences 3,542
--------------------------------------------- --------
31 March 2023 (47,627)
--------------------------------------------- --------
The net deferred tax liabilities include deferred tax asset of
GBPnil at 31 March 2023 (31 March 2022: GBPnil; 30 September 2022:
GBPnil).
14. Share capital
Unaudited Unaudited Audited
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP000
------------------------------------------------- --------- --------- -------------
Allotted, called up and fully paid
121,133,406 ordinary shares at 0.01p each
(31 March 2022: 120,519,793, 30 September 2022:
120,525,304) 12 12 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 2022 120,525,304 12 235,903 238,385
Share options exercised 608,102 - 47 -
31 March 2023 121,133,406 12 235,950 238,385
------------------------ ----------- -------- -------- --------
During the period, 608,102 ordinary shares of 0.01p each with an
aggregate nominal value of GBP61 were issued for options that
vested for a cash consideration of GBP47,000. These included
management rollover options and restricted stock units granted for
the LiveAuctioneers acquisition in FY22, Long-term Incentive Plan
Awards ("LTIP Awards") and shares issued to the Trust for LTIP
Awards that have vested in the period.
15. Related party transactions
During the six months ended 31 March 2023, the Group paid two
months' rent of $20,000 (GBP17,000) to McQuade Enterprises LLC, a
company owned by the previous owners of ESN. There were other no
related party transactions. The Group's related party transactions
for FY 22 are disclosed in the Group's 2022 Annual Report. There
have been no material changes in the related party transactions
described in the last annual report except as detailed above.
16. Events after the balance sheet date
There were no events after the balance sheet date.
Responsibility Statement
The Directors confirm that to the best of our knowledge:
-- these Condensed Consolidated Interim Financial Statements
have been prepared in accordance with United Kingdom adopted
International Accounting Standard 34 "Interim Financial
Reporting",
-- the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
and their impact during the first six months and description of
principal risks and uncertainties for the remaining six months of
the year); and
-- the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the Board,
John-Paul Savant Tom Hargreaves
Chief Executive Officer Chief Financial Officer
17 May 2023 17 May 2023
Glossary
A&A Art & Antiques
Auction Mobility Auction Mobility LLC
----------------------------------------------------------------
Bidder sessions web sessions on the Group's marketplaces online within
a given time frame
----------------------------------------------------------------
BidSpotter the Group's marketplace operated via the www.BidSpotter.co.uk
and www.BidSpotter.com domain
----------------------------------------------------------------
EBITDA earnings before interest, taxes, depreciation and amortisation
----------------------------------------------------------------
ESN the Group's marketplace operated via the www.EstateSales.NET
domain
----------------------------------------------------------------
GMV gross merchandise value, representing the total final
sale value of all lots sold via winning bids placed on
the marketplaces or the platform, on a proforma basis,
excluding additional fees (such as online fees and auctioneers'
commissions) and sales of retail jewellery (being new,
or nearly new, jewellery)
----------------------------------------------------------------
i-bidder the Group's marketplace operated by the www.i-bidder.com
domain
----------------------------------------------------------------
I&C Industrial & Commercial
----------------------------------------------------------------
LiveAuctioneers the Group's marketplace operated via the www.liveauctioneers.com
domain
----------------------------------------------------------------
Lot-tissimo the Group's marketplace operated via the www.lot-tissimo.com
domain
----------------------------------------------------------------
LTIP Awards the Company's Long Term Incentive Plan
----------------------------------------------------------------
Marketplaces the online auction marketplaces operated by the Group
----------------------------------------------------------------
Conversion rate represents GMV as a percentage of THV; previously called
"online share"
----------------------------------------------------------------
Organic revenue The Group has made certain acquisitions that have affected
the comparability of the Group's results. Previously
the Group had reported proforma revenue and proforma
revenue growth which included acquisitions as if they
had occurred at the start of the comparative period,
with the comparative period being presented on a constant
currency basis using the current year exchange rates.
It was deemed by management more appropriate to present
organic revenue and organic revenue growth at HY23 given
the size of the ESN acquisition. Organic revenue shows
the current period results excluding the acquisition
of ESN on 6 February 2023. Organic 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.
----------------------------------------------------------------
Proxibid the Group's marketplace operated via the www.proxibid.com
domain
----------------------------------------------------------------
The Saleroom the Group's marketplace operated via the www.the-saleroom.com
domain
----------------------------------------------------------------
Take rate represents the Group's marketplace revenue, excluding
EstateSales.NET, as a percentage of GMV. Marketplace
revenue is the Group's reported revenue excluding Content
and Auction Services revenue
----------------------------------------------------------------
THV total hammer value, representing the total final sale
value of all lots listed on the marketplaces or the platform,
on a proforma basis, excluding additional fees (such
as online fees and auctioneers' commissions) and sales
of retail jewellery (being new, or nearly new, jewellery)
----------------------------------------------------------------
Timed auctions auctions which are held entirely online (with no in-room
or telephone bidders) and where lots are only made available
to online bidders for a specific, pre-determined timeframe
----------------------------------------------------------------
Independent Review Report to Auction Technology Group plc
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 March 2023 which comprises the Condensed
Consolidated Statement of Profit or Loss, Condensed Consolidated
Other Comprehensive Income or Loss, the Condensed Consolidated
Statement of Financial Position, the Condensed Consolidated
Statement of Changes in Equity, the Condensed Consolidated
Statement of Cash Flow and related notes 1 to 16.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
March 2023 is not prepared, in all material respects, in accordance
with United Kingdom adopted International Accounting Standard 34
and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council for use in the
United Kingdom (ISRE (UK) 2410). A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusion relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the basis for
conclusion section of this report, nothing has come to our
attention to suggest that the Directors have inappropriately
adopted the going concern basis of accounting or that the Directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410; however future events or conditions
may cause the entity to cease to continue as a going concern.
Responsibilities of the Directors
The Directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the Directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the Company a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our conclusion, including our conclusion relating to going
concern, are based on procedures that are less extensive than audit
procedures, as described in the basis for conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
ISRE (UK) 2410. Our work has been undertaken so that we might state
to the Company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, UK
17 May 2023
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END
IR FFFELESIRLIV
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