REG - Auction Technology - Final Results
27/11/2024 07:00
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RNS Number : 7614N Auction Technology Group PLC 27 November 2024
AUCTION TECHNOLOGY GROUP PLC
FULL YEAR RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2024
SOLID PROGRESS AGAINST STRATEGIC INITIATIVES WITH IMPROVING MOMENTUM IN THE
CORE BUSINESS
London, United Kingdom, 27 November 2024 - Auction Technology Group plc
("ATG", "the Company", "the Group") (LON: ATG), operator of world-leading
marketplaces for curated online auctions, today announces its audited
financial results for the year ended 30 September 2024. The Group has
transitioned its presentational currency from pound sterling to US dollars in
FY24 and re-represented the comparatives.
Financial results
FY24 FY23 Movement Organic(2)
Revenue(1&2) $174.2m $165.9m +5% +2%
Adjusted EBITDA(1) $80.0m $78.4m +2%
Adjusted EBITDA margin %(1) 46% 47% -1ppt
Operating profit $32.4m $27.6m +17%
Adjusted diluted earnings per share(1) 38.6c 39.8c -3%
Basic earnings per share 19.7c 16.8c +17%
Adjusted net debt(1) $114.7m $141.2m +$26.5m
Cash generated by operations $71.6m $70.7m +1%
Financial highlights
· Revenue up 5% to $174.2m, driven by +12% A&A revenue and +1%
I&C revenue. Revenue up 2% on an organic basis, including marketplace
organic revenue growth of 3%, with a higher rate of organic marketplace growth
in second half at 4%.
· Adjusted EBITDA up 2% to $80.0m with adjusted EBITDA margin of
46%, down 1ppt year-on-year correlated with revenue mix.
· Operating profit increased 17% to $32.4m, driven by higher
adjusted EBITDA, lower share-based payments charges and lower exceptional
costs year-on-year.
· Adjusted diluted earnings per share of 38.6c, down 3% as increase
in adjusted EBITDA and lower net finance costs offset, as expected, by higher
effective tax rate; basic earnings per share of 19.7c up 17%
· Continued strong adjusted free cash flow generation of $65.8m
(FY23: $61.1m) resulting in significant deleverage with closing adjusted net
debt of $114.7m down from $141.2m and adjusted net debt/adjusted EBITDA ratio
at 1.4x, down from 1.8x
Operational highlights
· GMV(3) Recovery: GMV at $3.6bn, down 11% at a headline level,
but with significant improvement in momentum as year progressed and stronger
underlying trends. GMV down 4% in second half and positive in the first eight
weeks of FY25 driven by recovery in I&C.
· Take Rate(3) Growth: Take rate increased from 3.6% to 4.2% based
on continued success extending value-added services (shipping, payments and
auctioneer paid-for digital marketing) with value-added services now
representing 24% of Group revenue.
· Enhanced both sides of the marketplace: expanded supply &
demand including 23.8m lots listed, +7%; 88,000+ auctions facilitated, +2%;
390m web sessions across all sites, +16%. Promising results from initial
investments to further drive GMV by making it even easier for auctioneers to
reach more bidders with the launch of cross-listing between ATG marketplaces
and ATG white label ("atgXL").
· Strengthened Competitive Position: Differentiated the ATG
offering with the launch of an integrated white label plus marketplace
solution. Over 20% penetration of atg white label in Proxibid I&C GMV
already achieved. Opportunity to grow this meaningfully.
· Consolidated systems & operations: Unified multiple data
warehouses, consolidated systems across the Group in both finance and HR
leading to efficiencies across the business.
· Optimised our Acquisition: Grew ESN revenues +24% versus same
twelve-month period a year ago and enhanced flywheel for LiveAuctioneers via
ESN cross-listing, +9% GMV uplift.
John-Paul Savant, Chief Executive Officer of Auction Technology Group plc,
said:
"ATG continued to deliver growth, generate strong cash flow and execute
against investments that improve the user experience and capture more of the
auction value chain, despite some continued headwinds in our end-markets.
Having connected our $13 billion of supply with 390 million sessions of demand
enhanced by atgXL, and having raised the standard of buying online at auction
via atgShip and atgPay for participating auctioneers, we are now accelerating
the introduction of enhanced buyer search and recommendation algorithms across
our 24 million items. Beyond connecting supply and demand, atgXL
differentiates our proposition as auctioneers can now run their white label
and an ATG marketplace via timed auction at the same time."
"Our strong cash generation positions us to migrate our acquired technology
platforms as well as to invest to raise e-Commerce standards for improved
customer experience. We expect that our program of continuous improvements
will result in extending the addressable base of buyers and sellers and
contribute to ATG's outperformance of the underlying market we serve, with
underlying conversion rate improvements as well as incremental transaction
revenue from value-added solutions."
Current trading and outlook
Trading in the first eight weeks of FY25 has continued to show positive
momentum from the second half of FY24. ATG remains confident in its ability to
sustain this growth through the delivery of its strategic initiatives. For
FY25 we expect
· Revenue growth in the range of 4-6%, supported by the continued
growth of value-added services and positive GMV growth, also reflecting
uncertain end markets.
· Adjusted EBITDA margin of 45% to 46% reflecting operational
leverage from revenue growth offset by ongoing investment into the business.
Webcast presentation
There will be an in-person and webcast presentation this morning at 9.30am.
Please contact ATG@teneo.com (mailto:ATG@teneo.com) if you would like to
attend.
For further information, please contact:
ATG
For investor enquiries rebeccaedelman@auctiontechnologygroup.com
(mailto:rebeccaedelman@auctiontechnologygroup.com)
For media enquiries press@auctiontechnologygroup.com (mailto:press@auctiontechnologygroup.com)
Deutsche Numis +44 207 260 1000
(Joint corporate broker to ATG)
Nick Westlake, William Baunton, Tejas Padalkar
J.P. Morgan Cazenove +44 207 742 4000
(Joint corporate broker to ATG)
Bill Hutchings, James Summer, Will Vanderspar
Teneo Communications +44 207 353 4200
(Public relations advisor to ATG) ATG@teneo.com (mailto:ATG@teneo.com)
Tom Murray, Matt Low, Arthur Rogers
About Auction Technology Group plc
Auction Technology Group plc ("ATG") is the operator of world-leading
marketplaces and auction services for curated online auctions, seamlessly
connecting bidders from around the world to approximately 4,000 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 88,000 live and
timed auctions each year and facilitating the sale of approximately 24 million
secondary goods items. ATG has offices in the UK, North America, Germany and
Mexico.
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
1. 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, with definitions, an
explanation of how they are calculated, why we use them and how they can be
reconciled to a statutory measure where relevant.
2. The Group has made certain acquisitions that have affected the
comparability of the Group's results. To aid comparisons between FY24 and
FY23, 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.
3. Refer to glossary for full definition of the terms. GMV and Take
Rate exclude the impact of the acquisition of ESN.
CEO REVIEW
ATG is executing against an online marketplace strategy that focuses on the
development of core capabilities in order to accelerate the marketplace
flywheel. Over the past eight years, we have built and acquired technology
platforms that have enabled us to grow our extensive auctioneer and bidder
base, and drive volume through our marketplaces. In the last two years, we
have begun to further monetise each online auction transaction by offering
premium solutions for both auctioneers and bidders including value-added
services, such as atgAMP (marketing), atgPay (payments) and atgShip
(shipping). We remain focused on bringing the overall quality of our auction
experience up to global e-commerce standards which will drive continued value
for auctioneers and bidders alike.
In FY24, we extended beyond the core transaction to drive network effects
across our marketplaces substantially through the launch of our cross-listing
solution, atgXL, which enables an auctioneer to simultaneously run a timed
auction across multiple ATG marketplaces and an atg white label. This past
financial year presented challenges too including soft A&A markets, the
impact of the Proxibid rate card standardisation and I&C asset price
deflation, before more recent normalisation. Nevertheless, our steadfast focus
and progress against these strategic programmes was undaunted and we were able
to deliver solid growth.
Our strong financial model, EBITDA margins and cash generation underpinned
significant balance sheet deleveraging with our net debt to adjusted EBITDA
leverage ratio at year-end improving to 1.4x. Furthermore, the improved
momentum of GMV in the second half, especially for the I&C sector, as well
as our exposure to the North America market, accounting for over 80% of
revenues, portends well for the year ahead.
I was delighted to welcome Scott Forbes to the role of Chair of ATG in August
following the resignation of Breon Corcoran six months after his CEO
appointment at IG Group Holdings plc. I am grateful for Breon's contributions
from IPO through his departure and have also been fortunate to benefit from
Scott's considerable digital marketplace experience including over forty
cumulative years as board director and chair. Following the announcement in
October 2024 that Tom Hargreaves will be leaving ATG, I would also like to
personally thank Tom for his partnership and contributions as CFO over the
last eight years, and to wish him the best in the next phase of his career.
1. Expand the total addressable market
The trust of our auctioneers and bidders is built on the value we deliver to
them. Auctioneer loyalty remained strong in FY24, with retention of
auctioneers in GMV terms at 98%, and with around 4,000 auctioneers on our
sites at year-end. Auctioneer retention reflects the value ATG delivers
through increasing the number of bidders, with ATG on average providing 56% of
all bids placed in auctions (hosted on ATG marketplaces) and 40% of GMV coming
from bidders who were new to the auction house. Volumes of auctions remained
robust in FY24. We facilitated over 88,000 auctions and listed 23.8 million
lots, up 2% and 7%, respectively year-on-year. Bidding sessions across our
sites including ESN grew 16% to over 390 million, highlighting the structural
trend towards making sustainable purchases, with 1.6 million new account
registrations, up 3%.
Against this positive volume backdrop, Total Hammer Value ("THV") across the
Group was broadly flat year-on-year at $13.2bn, or up 2% excluding the impact
of the planned rotated volume, which had high service requirements but minimal
revenue contribution as described in our FY23 results. There were also some
headwinds from pricing in both markets and a negative mix impact due to fewer
sales of higher priced items. THV was further affected by the mix of assets
listed on our marketplaces, including an increase in A&A items from
auctioneers outside our core geographies (North America, UK and Germany) and a
decrease in real estate auctions in I&C, both of which tend to be volatile
in nature. However, the diversity in the range of assets we sell, in addition
to the relatively lower-priced points versus some parts of the auction market,
provided resilience. Furthermore, prices in I&C used assets stabilised in
the second half of the year with THV delivering positive growth in the second
half.
2. Grow the conversion rate
The headline conversion rate of 27% for FY24, down 4ppt, was impacted both by
asset category mix on our marketplaces as well as the Proxibid rate card
standardisation. In A&A, a flat conversion rate for THV from our core
geographies, which drives the vast majority of our A&A revenue, was masked
by the growth in other THV, which has a significantly lower conversion rate
whilst also being inherently volatile. A similar impact from asset mix was
seen in I&C, including from the decline in real estate auctions which tend
to be run as an online-only timed format with a 100% conversion rate, yet a
minimal commission impact. However, the underlying conversion rate for many
I&C asset categories improved in the second half, once the impact from the
rate card standardisation was lapped.
ATG is investing to further strengthen its leading competitive position, by
making it easier for auctioneers to use a range of channels to access the
online market through the launch of our marketplace integrated white label
solution. We estimate that white label penetration amongst our auctioneers is
already high, with around 60% of A&A and around 80% of I&C in GMV
terms having either an ATG or an independent white label solution. We
estimate that the winning bids for 20-25% of A&A THV and I&C THV
currently go through an independent white label solution. The opportunity for
ATG is therefore to win share from the independent white label providers, with
our new integrated product offering auctioneers a superior solution through
providing the ability to run an online-only timed auction on an ATG
marketplace concurrently with an atg white label. We have already achieved
over a 20% penetration of our integrated white label solution in Proxibid
I&C GMV, representing an almost $40m additional GMV opportunity. At the
same time, we made the strategic decision to refocus away from pursuing
smaller low margin customers who are using our stand-alone only white label
solution and have a low life-time value, whilst focusing on the majority of
revenue in Auction Services which comes from larger auctioneers who have
bespoke white label solutions but also use our marketplaces.
We are also investing to improve the user experience by making it even easier
for buyers to buy on an ATG marketplace and drive our conversion rate. This
includes through investing in our search function to help improve the
experience for bidders, particularly for those who are new to auction. We are
encouraged by the initial signs of our investments and are accelerating our
investments in some areas, although we acknowledge that it will take time for
our initiatives to have the full impact on increasing the conversion rate.
3. Enhance the network effect
Over FY24, ATG made good progress to drive the network effect across our
marketplaces and white label. We launched atgXL, which enables an auctioneer
to have a single upload of inventory to our system, to then push that
inventory to multiple ATG marketplaces as well as to an atg white label, and
to have a single place to manage bids for an online-only timed auction. Using
atgXL, auctioneers save up to 66% of their time by only uploading the
catalogue once, whilst also benefiting from paying a single event fee, even
with the auction hosted on multiple ATG marketplaces. Bidders also have access
to a greater selection of inventory without needing to hunt across multiple
sites. In FY25, we aim to develop and roll out atgXL for live auctions.
Towards the end of the year, we also launched the ATG Partner Network, which
enables auctioneers to cross-list their auction on four third party partner
listing-only sites that also specialise in I&C used asset sales. The
partner sites we are working with are all high traffic classified sites,
offering the potential for our auctioneers to unlock significantly more
bidders and providing ATG with a source of one-way traffic. Whilst the
programme is in early stages, we have seen some encouraging initial results
and we are looking to develop a Partner Network for our A&A marketplaces.
4. Grow the take rate via value-added services
We have continued to execute strongly against the roll out of value-added
services, with revenue from atgAMP, atgShip and atgPay collectively growing
35% year-on-year and now accounting for 24% of Group revenue. This growth has
contributed to the Group take rate increasing by 0.6ppt to 4.2%. 31% of
auction events were supported by atgAMP in FY24 (FY23: 27%), with auctioneers
attracted to the high return of investment that our marketing products offer,
as well as new features such as new dynamic ad units. 61% of US Gross
Transaction Value on LiveAuctioneers was processed through atgPay in FY24 with
96% of US based auction houses on LiveAuctioneers now onboarded to atgPay.
atgShip, our integrated delivery solution, saw strong adoption in its first
year of launch with shipping available on over 10% of inventory on
LiveAuctioneers in the second half. Importantly, atgShip continues to have a
positive impact on bidding behaviour, with auctions featuring atgShip seeing a
9% increase in bidding activity and a 5% GMV uplift on average. We continue to
see strong growth opportunities for all three services in FY25, including
through driving penetration of marketing on I&C platforms and continuing
to drive the adoption of shipping on LiveAuctioneers.
5. Expand operational leverage
In FY24, ATG has continued to drive efficiencies through improvements to our
hub and spoke operating model and the modernisation of our platforms. This
included through the reorganisation of our North America product and marketing
teams, welcoming a new Chief Product Officer to ATG, as well as through the
consolidation of our financial and people related back-office systems. We also
established a tech hub in Mexico which has enabled us to quickly add
high-quality engineers in a cost-effective way and we have made good progress
on our technology consolidation programme, with a focus on the development of
atgXL, as well as on the integration of the Proxibid technology stack. We also
now have a unified data warehouse providing a single comprehensive view of all
our data, thereby enabling us to improve analytics and support more efficient
decision-making, including through the application of AI.
6. Pursue accretive M&A
The acquisition of ESN has highlighted ATG's ability to find, acquire and
integrate value-accretive businesses. ESN's revenue grew 24% year-on-year in
FY24, primarily driven by improvements in the subscription funnel for estate
sellers, refinements to pricing, advertising growth and strong execution by
the ESN team. The acquisition has also demonstrated that people ready to buy
arts and antiques at auction are not just those who are traditionally buying,
but also a much broader pool of buyers who are buying through other channels
in the secondary goods market. Through enabling cross-listing on ESN,
auctioneers on LiveAuctioneers have been able to tap into a complementary yet
separate pool of potential bidders with strong initial results; in the second
half of FY24, 49% of auctions on LiveAuctioneers were cross-listed on
EstateSales.NET, with buyers originating from ESN driving on average a 9%
uplift on the auctions in which they participate. We have also begun to
incentivise ESN sellers to switch to use an ATG marketplace as their platform
of choice if and when they host auctions of higher value items selected from
their estate sales. We are pleased with the initial response to this
initiative from estate sellers.
Summary
ATG delivered another year of growth and continued to execute well against its
strategic initiatives. Much progress was made with product and platform
development this past year. Our cash-generative model allows us to further
fortify our platform in FY25 as we increase auctioneer reach to an expanded
set of even more bidders who are better positioned than ever to discover and
bid on the widest range of unique secondary market merchandise and contribute
significantly to the efficacy of the circular economy. Our cash-generative
model also enabled us to significantly reduce balance sheet leverage, whilst
our strong market position, diversified revenue base and resilient shared
success business model positions us to continue to deliver significant value
for all our stakeholders. I would like to thank all of our shareholders,
bidders, auctioneers and especially our 400 employees who make our success
possible.
John-Paul Savant
Chief Executive Officer
CFO REVIEW
Group presentation of results
The financial results for FY24 are presented for the year ended 30 September
2024. The Group has changed its presentational currency from pound sterling to
US dollars for FY24 and future financial periods. The FY23 comparatives have
been re-presented in US dollars. Note 1 of the Consolidated Financial
Statements provides further details on the change in presentation currency.
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 FY24 and
FY23 from the date of the acquisition. The impact of the acquisition affects
the comparability of the Group's results. Therefore, to aid comparisons
between FY23 and FY24 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 is used to eliminate the effects of
fluctuations in assessing performance. Note 3 includes a full reconciliation
of all APMs presented to the reported results for FY24 and FY23.
Revenue
FY24 FY23 Movement Movement
$m $m Reported Organic
Arts & Antiques ("A&A") 90.3 80.5 12% 6%
Industrial & Commercial ("I&C") 71.8 71.4 1% 0%
Total marketplace 162.1 151.9 7% 3%
Auction Services 8.4 10.2 (18)% (18)%
Content 3.7 3.8 (3)% (5)%
Total 174.2 165.9 5% 2%
Group
Group revenue increased 5% year-on-year to $174.2m, driven by growth in
marketplace revenue and the acquisition of ESN. On an organic basis, revenue
grew 2% including organic marketplace revenue growth of 3% driven by the
growth in value-added services revenue which offset a 6% reduction in
commission revenue primarily impacted by a 11% decrease in GMV. In the second
half, organic marketplace revenue growth improved to 4%, largely due to the
improvement in the trend of GMV which was down 4%. Marketplace revenue growth
was partially offset by declines in both Auction Services and Content of 18%
and 5% respectively.
Arts & Antiques
Revenue in the A&A segment grew 12% to $90.3m including the ESN
acquisition, and grew 6% on an organic basis. Organic revenue growth was
predominantly driven by the strong growth of all value-added services in
A&A including atgAMP, atgPay and atgShip, with a resultant 1.2ppt increase
in the take rate to 9.8%. GMV across A&A declined 6%, impacted by a softer
market environment, particularly for higher-value items. The overall
conversion rate in A&A was down 1ppt at 14%. The A&A conversion rate
for our core geographies, which generate the vast majority of A&A
revenues, was stable year-on-year. Thus the decline was driven by a dilutive
impact from an increase in the listings of auctioneers from other geographies
who typically have a significantly lower conversion rate. ESN delivered strong
growth, up 24% year-on-year, largely driven by an updated pricing structure
and the growth of marketing revenue.
Industrial & Commercial
I&C revenue increased 1% on a reported basis and was flat year-on-year on
an organic basis at $71.8m. I&C commission revenue fell by 7%, impacted by
a 12% decline in I&C GMV, or a 5% decline when excluding the impact of the
rotated volume which had high service requirements but minimal revenue
contribution. I&C THV was negatively impacted by the normalisation of
asset prices in some used asset categories, although showed momentum in the
second half as asset prices stabilised with THV positive in the second half.
Whilst the headline conversion rate in I&C fell 4ppt to 38%, this was
impacted by asset category mix, including a decline in real estate which tends
to be lumpy and is largely via timed auctions, although has a minimal
commission rate, as well by the Proxibid rate card standardisation which had a
reducing impact over the course of the year. GMV growth was also positive in
the second half when excluding low commission rate real estate, as a result of
improved end markets as well as stabilisation in the conversion rate due to
early positive signs from strategic initiatives to drive GMV such as the roll
out of atgXL and the adoption of atg white label. The continued growth in
value-added services also provided support to I&C revenue contributing to
a 0.3ppt increase in the take rate to 2.5%.
Auction Services
Auction Services revenue of $8.4m declined 18% on a reported basis. Our
strategic decision to focus on our marketplace integrated cross-listing
product, resulted in both the cessation of new customer additions to our
stand-alone (no presence on our marketplaces) product as well as the churn of
a limited number of international customers in auction services who do not use
our marketplaces, with both sets of customers being small auctioneers who are
low margin for ATG and have a low lifetime value. Larger auctioneers, who have
bespoke white label solutions whilst also using our marketplaces and account
for the majority of revenue, remain in auction services. We expect this impact
to be significantly lower in future years. We aim for ATG to increasingly
become the preferred provider for white label solutions to our marketplace
customers, through our atgXL product, with revenue generated from cross-listed
auctions to be recognised in marketplace revenue.
Content
Content revenue declined 3% to $3.7m, as expected, impacted by the historic
gradual decline in print advertising.
Financial performance
Reported
FY24 FY23 Movement
$m $m
Revenue 174.2 165.9 5%
Cost of sales (57.0) (53.3) 7%
Gross profit 117.2 112.6 4%
Administrative expenses (84.8) (85.7) (1)%
Other operating income - 0.7 (100)%
Operating profit 32.4 27.6 17%
Adjusted EBITDA (as defined in note 3) 80.0 78.4 2%
Finance income 0.3 0.2 50%
Finance cost (14.3) (19.2) (26)%
Net finance costs (14.0) (19.0) (26)%
Profit before tax 18.4 8.6 114%
Income tax credit 5.8 11.9 (51)%
Profit for the period attributable to the equity holders of the Company 24.2 20.5 18%
Operating profit
The Group reported an operating profit of $32.4m compared to $27.6m in the
prior year, driven by the increase in gross profit and broadly flat
administrative expenses year-on-year.
Gross profit increased 4% to $117.2m, driven by the 5% increase in revenue,
partially offset by a 1ppt decrease in the gross margin to 67%, driven by the
decline in high margin commission revenue. Administrative expenses decreased
by $0.9m to $84.8m, benefiting from a lower share-based payment expense of
$6.0m (FY23: $8.6m) due to changes in the Senior Management Team as well due
to the financial performance of the Group, in addition to a decrease in
exceptional costs year-on-year to $1.1m (FY23: $3.3m) primarily relating to
final costs from the ESN acquisition. Administrative expenses also include the
amortisation on acquired intangible assets of $28.1m (FY23: $27.0m). Excluding
the impact of these costs, administrative expenses increased $2.8m reflecting
full-year cost contribution from the ESN acquisition versus seven months in
the prior year, an increase in the level of expected credit losses in the
period (particularly from Auction Services), and investments in the business
to support future growth such as the establishment of a tech hub in Mexico.
This increase in costs was partially offset by lower performance-related pay
year-on-year.
Adjusted EBITDA
Adjusted EBITDA definitions and reconciliations to the reported results are
presented in note 3.
Adjusted EBITDA increased from $78.4m to $80.0m year-on-year, driven by
revenue growth. The adjusted EBITDA margin decreased by 1ppt to 46% impacted
by the changing mix of revenue with the decline in high margin commission
revenue. As expected, the adjusted EBITDA margin improved significantly in the
second half, driven by the phasing of costs in the year and an improving trend
in commission revenue.
Net finance costs
Net finance costs were $14.0m compared to $19.0m in FY23. Costs include the
impact of a $0.5m non-cash foreign exchange loss versus a $5.0m loss in FY23
related to intergroup balances. Excluding this impact, finance costs decreased
to $13.8m (FY23: $14.2m), benefiting from a lower average loan balance over
the year offsetting a higher average interest rate of 8%, which is based on
the Secured Overnight Financing Rate ("SOFR"). In the year, the Group repaid
$27.7m on the Senior Term Facility. As a result, the total loan balance
decreased from $148.6m to $121.5m as at 30 September 2024.
Other finance costs of $1.3m (FY23: $1.2m) include commitment fees and loan
origination amortisation on our Senior Term Facility, movement in the deferred
consideration as well as interest on lease liabilities. Finance income of
$0.3m primarily relates to interest income in the year (FY23: $0.2m). In FY25,
we would expect interest costs to be lower reflecting a lower interest rate as
a result of both forward interest rate expectations and a planned debt
refinance in FY25, as well as reflecting a lower average loan balance.
Profit before tax
After the impact of lower net finance costs year-on-year, the Group reported a
profit before tax of $18.4m (FY23: $8.6m).
Taxation
The Group's statutory tax credit of $5.8m (FY23: $11.9m) with an effective tax
rate credit of 32% (FY23: credit of 137%) includes unrealised foreign exchange
differences and non-deductible foreign exchange differences
on intra-group loan balances of $11.5m (FY23: $11.9m). The intra-group loan
which gave rise to the foreign exchange differences has been redenominated at
the end of FY24, and therefore there are not expected to be significant
deferred tax movements in the tax charge going forward. The tax charge,
excluding these permanent differences, is $5.7m (FY23: $nil). Other
reconciling items included non-deductible share-based payment expense and
adjustments in respect of prior years and tax rates. In FY23 other reconciling
items also included allowable deductions on exercise of share associated with
the LiveAuctioneers acquisition.
The tax rate on adjusted earnings of 19%, which includes the benefit of
deductible goodwill, increased from 16% in the prior year, reflecting the
increase in the UK corporate tax rate. The Group expects the tax rate on
adjusted earnings to remain at 19% in FY25 subject to no further changes in
tax rates in our key jurisdictions.
The Group is committed to paying its fair share of tax and manages tax matters
in line with the Group's Tax Strategy, which is approved by the Board and is
published on our website www.auctiontechnologygroup.com.
Earnings per share and adjusted earnings per share
Basic and diluted earnings per share were 19.7c and 19.5c respectively
compared to 16.8c and 16.7c respectively in FY23, benefiting from the increase
in profit before tax. The weighted average number of shares during the year
was 122.7m (FY23: 122.2m), with the increase due to the impact of vested
equity incentive awards.
Adjusted diluted earnings per share was 38.6c compared to 39.8c in FY23 and is
based on profit after tax adjusted to exclude share-based payment expense,
exceptional items (operating and finance costs), amortisation of acquired
intangible assets and any related tax effects. The decrease versus FY23 is
driven by the higher effective tax rate of 19% versus 16% in FY23 reflecting
the increased tax rate in the UK, which offsets the increase in adjusted
earnings largely due to higher adjusted EBITDA. The weighted average number of
ordinary shares and dilutive options in the year was 123.8m (FY23: 123.1m).
A reconciliation of the Group's profit after tax to adjusted earnings is set
out in note 3.
Foreign currency impact
Although the Group has changed its presentational currency to US dollars, the
Group's reported performance is sensitive to movements in both the pound
sterling and the euro against the US dollar with a mix of revenues included in
the table below.
The tax for the period was significantly impacted by movements in foreign
currency exchange rates, resulting in a reduction in the tax charge of $11.5m.
The weakening of the US dollar against pound sterling has given rise to a gain
of $1.0m on assets held and $13.0m on the external dollar loan. A net loss of
$14.0m has been recognised in the foreign currency reserve.
Revenue FY24 FY23
$m $m
United Kingdom 25.3 24.1
North America 143.3 137.0
Germany 5.6 4.8
Total 174.2 165.9
The average FY24 exchange rate of US dollar against pound sterling weakened by
3.3% and by 1.9% against the euro compared to FY23, as shown in the table
below, resulting in a small positive impact on our Group revenue.
Average rate Closing rate
FY24 FY23 Movement FY24 FY23 Movement
Pound Sterling 1.27 1.23 3.3% 1.34 1.22 9.8%
Euro 1.09 1.07 1.9% 1.12 1.06 5.7%
Statement of financial position
Overall net assets at 30 September 2024 have increased by $41.3m to $687.8m
since 30 September 2023. Total assets decreased by $20.7m, driven by a $3.7m
cash outflow related to the prepayment of our Senior Term Facility, a net
reduction in intangible assets of $25.5m (including additions of $10.8m and
amortisation charge of $39.0m) and an $11.4m increase in goodwill due to
foreign exchange movements. The Group's goodwill and intangibles were tested
for impairment at 30 September 2024 and no impairment was recognised. Refer to
note 9 for further details.
Total liabilities decreased by $62.0m, primarily due to a reduction in loans
and borrowings of $27.1m, a decrease in deferred tax liabilities of $15.0m,
which is largely driven by the movement on the unrealised foreign exchange
differences and the unwind of the capitalised acquisition intangible assets,
and the $18.9m reduction in trade and other payables including the $12.0m
payment of deferred consideration and bonus for ESN.
Cash flow and adjusted net debt
The Group generated $71.6m cash from operations, a small increase from the
prior year (FY23: $70.7m). Expenditure on additions to internally generated
software was $10.8m (FY23: $10.8m) primarily relating to investments in new
products such as atgXL, atgPay and atgShip, as well as investment to
consolidate our technology platforms. Spend was in line with the guidance we
provided at the start of FY24. Excluding the impact from exceptional and other
items, working capital was an outflow of $3.0m (FY23: outflow of $5.8m) and
primarily relates to performance related pay accruals and the timing of trade
activity. In the year, the Group paid $10.0m in deferred consideration and
$2.0m in retention bonuses related to the ESN acquisition.
Adjusted net debt as at 30 September 2024 was $114.7m, a decrease from $141.2m
as at 30 September 2023 due to strong operating cash generation. The Group had
cash and cash equivalents excluding restricted cash of $6.8m and borrowings of
$121.5m as at 30 September 2024 (30 September 2023: cash and cash equivalents
excluding restricted cash of $7.4m and borrowings of $148.6m).
Restricted cash reduced by $3.0m due to the payment of restricted cash from
the employee benefit trust as highlighted in the FY23 Annual Report and
Accounts. The Group repaid $27.7m of its Senior Term Facility during the year
and the drawdown on the Revolving Credit Facility to fund the ESN payments was
fully repaid in the second half. The adjusted net debt/adjusted EBITDA ratio
was 1.4x as at 30 September 2024 versus 1.8x as at 30 September 2023.
The Group's adjusted free cash flow was $65.8m (FY23: $61.1m), a conversion
rate of 82% (FY23: 78%). The increase in the conversion rate reflects higher
cash generated from operations.
Reconciliation of cash generated from operations to adjusted free cash flow FY24 FY23
$m
$m
Cash generated from operations 71.6 70.7
Adjustments for:
Exceptional items 1.0 3.3
Working capital from exceptional and other items 4.4 (1.4)
Additions to internally generated software (10.8) (10.8)
Additions to property, plant and equipment (0.4) (0.5)
Payments for right of use assets - (0.2)
Adjusted free cash flow 65.8 61.1
Adjusted free cash flow conversion 82% 78%
Reconciliation of adjusted EBITDA to adjusted free cash flow
FY24 FY23
$m
$m
Adjusted EBITDA 80.0 78.4
Movement in working capital (7.4) (4.4)
Add back: working capital from exceptional and other items 4.4 (1.4)
Adjusted cash from operations 77.0 72.6
Additions to internally generated software (10.8) (10.8)
Additions to property, plant and equipment (0.4) (0.5)
Payments for right of use assets - (0.2)
Adjusted free cash flow 65.8 61.1
Adjusted free cash flow conversion 82% 78%
Dividends
As per the Group's dividend policy, the Group sees strong growth opportunities
through organic and inorganic investments and, as such, intends to retain any
future earnings to finance such investments. The Company will review its
dividend policy on an ongoing basis but does not expect to declare or pay any
dividends for the foreseeable future. Therefore, no dividends have been paid
or proposed for FY24 or FY23.
Post balance sheet events
There were no post balance sheet events.
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.
For further details see note 1.
The Group has its Senior Loan Facility in place which is due to expire in June
2026. The assessment assumes that the Group will continue to have access to
this funding throughout the viability period on the basis that the Group will
either renew the facility or have sufficient time to agree an alternative
source of finance on comparable terms.
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 until at
least 31 December 2025 and therefore it remains appropriate to continue to
adopt the going concern basis in preparing the financial information.
Tom Hargreaves
Chief Financial Officer
Consolidated Statement of Profit or Loss and Other Comprehensive Income or
Loss
for the year ended 30 September 2024
Note Restated
Year ended Year ended
30 September 30 September
2024 2023
$000 $000
Revenue 4,5 174,148 165,886
Cost of sales (56,924) (53,301)
Gross profit 117,224 112,585
Administrative expenses (82,596) (85,834)
Net impairment (loss)/gain on trade receivables 10 (2,224) 210
Other operating income 24 666
Operating profit 32,428 27,627
Finance income 6 258 220
Finance costs 6 (14,303) (19,183)
Net finance costs 6 (14,045) (18,963)
Profit before tax 18,383 8,664
Income tax 7 5,809 11,879
Profit for the year attributable to the equity holders of the Company 24,192 20,543
Other comprehensive income/(loss) for the year attributable to the equity
holders of the Company
Items that may subsequently be transferred to profit and loss:
Foreign exchange differences on translation of foreign operations 944 3,826
Fair value gain arising on hedging instruments during the year 13,019 14,478
Tax relating to these items 7 (3,255) (3,186)
Other comprehensive income for the year, net of income tax 10,708 15,118
Total comprehensive income for the year attributable to the equity holders of 34,900 35,661
the Company
Earnings per share cents cents
Basic 8 19.7 16.8
Diluted 8 19.5 16.7
The above results are derived from continuing operations.
The Consolidated Financial Statements for the year ended 30 September 2023
have been restated throughout to be presented in US dollars, as detailed in
note 1. In addition, net impairment (loss)/gain on trade receivables is
separated from administrative expenses, where they were reported in previous
periods.
Consolidated Statement of Financial Position
as at 30 September 2024
Note 30 September Restated Restated
2024 30 September 1 October
$000 2023 2022
$000 $000
ASSETS
Non-current assets
Goodwill 9 589,989 578,572 546,167
Other intangible assets 9 244,274 269,729 275,332
Property, plant and equipment 827 874 550
Right of use assets 2,699 3,941 1,915
Trade and other receivables 10 1,427 138 100
Total non-current assets 839,216 853,254 824,064
Current assets
Trade and other receivables 10 17,423 19,965 16,725
Contract assets 5 1,499 1,856 927
Tax assets - 124 1,754
Cash and cash equivalents 11 6,826 10,416 57,876
Total current assets 25,748 32,361 77,282
Total assets 864,964 885,615 901,346
LIABILITIES
Non-current liabilities
Loans and borrowings 12 (98,530) (132,923) (167,391)
Tax liabilities - (976) (1,200)
Lease liabilities (2,549) (3,240) (1,185)
Deferred tax liabilities 13 (34,673) (49,629) (72,175)
Total non-current liabilities (135,752) (186,768) (241,951)
Current liabilities
Trade and other payables (11,491) (30,343) (19,097)
Contract liabilities 5 (1,639) (1,851) (1,886)
Loans and borrowings 12 (22,953) (15,688) (34,606)
Tax liabilities (4,483) (3,779) (535)
Lease liabilities (886) (731) (870)
Total current liabilities (41,452) (52,392) (56,994)
Total liabilities (177,204) (239,160) (298,945)
Net assets 687,760 646,455 602,401
EQUITY
Share capital 14 17 17 17
Share premium 14 334,463 334,458 334,045
Other reserve 14 330,310 330,310 330,310
Capital redemption reserve 7 7 7
Share option reserve 31,418 32,683 46,313
Foreign currency translation reserve (28,862) (42,825) (61,129)
Retained earnings/(losses) 20,407 (8,195) (47,162)
Total equity 687,760 646,455 602,401
The Consolidated Financial Statements for the year ended 30 September 2023
have been restated throughout to be presented in US dollars and the
Consolidated Statement of Financial Position has been restated to separately
disclose contracts assets and contract liabilities, as detailed in note 1.
Consolidated Statement of Changes in Equity
for the year ended 30 September 2024
Note Share capital $000 Share premium Other reserve $000 Capital redemption reserve Share option reserve Foreign currency translation reserve $000 Retained earnings/ Total
$000 $000 $000 (losses) equity
$000 £000
1 October 2022 (restated see note 1) 17 334,045 330,310 7 46,313 (61,129) (47,162) 602,401
Profit for the year - - - - - - 20,543 20,543
Other comprehensive income/(loss) - - - - - 18,304 (3,186) 15,118
Total comprehensive income for the year - - - - - 18,304 17,357 35,661
Transactions with owners
Shares issued 14 - 413 - - - - - 413
Options exercised related to previous business combination - - - - (19,297) - 19,297 -
Share-based payments - - - - 5,667 - 2,313 7,980
30 September 2023 (restated see note 1) 17 334,458 330,310 7 32,683 (42,825) (8,195) 646,455
Profit for the year - - - - - - 24,192 24,192
Other comprehensive income/(loss) - - - - - 13,963 (3,255) 10,708
Total comprehensive income for the year - - - - - 13,963 20,937 34,900
Transactions with owners
Shares issued 14 - 5 - - - - - 5
Share-based payments - - - - (1,265) - 7,665 6,400
30 September 2024 17 334,463 330,310 7 31,418 (28,862) 20,407 687,760
Consolidated Statement of Cash Flows
for the year ended 30 September 2024
Note Year ended Restated
30 September 2024 Year ended
$000 30 September 2023
$000
Cash flows from operating activities
Profit before tax 18,383 8,664
Adjustments for:
Amortisation of acquired intangible assets 9 32,484 32,625
Amortisation of internally generated software 9 6,532 4,725
Depreciation of property, plant and equipment 426 391
Depreciation of right of use assets 939 1,099
Loss on derecognition of right of use assets 99 -
Share-based payment expense 6,015 8,616
Finance income 6 (258) (220)
Finance costs 6 14,303 19,183
Operating cash flows before movements in working capital 78,923 75,083
Decrease/(increase) in trade and other receivables 1,907 (3,078)
Decrease/(increase) in contract assets 433 (878)
Decrease in trade and other payables (9,383) (211)
Decrease in contract liabilities (253) (239)
Cash generated by operations 71,627 70,677
Income taxes paid (13,396) (10,120)
Net cash from operating activities 58,231 60,557
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired - (30,004)
Additions to internally generated software 9 (10,843) (10,765)
Payment for property, plant and equipment (362) (503)
Payment for right of use assets - (230)
Receipt of interest on lease receivable 9 -
Receipt of lease asset 132 -
Finance income received 249 220
Net cash used in investing activities (10,815) (41,282)
Cash flows from financing activities
Payment of deferred consideration (10,000) -
Repayment of loans and borrowings 12 (37,150) (80,014)
Proceeds from loans and borrowings 12 9,500 26,300
Payment of interest on lease liabilities (281) (232)
Payment of lease liabilities (749) (964)
Shares issued 14 5 413
Interest paid 12 (12,459) (13,097)
Net cash used in financing activities (51,134) (67,594)
Cash and cash equivalents at the beginning of the year 10,416 57,876
Net decrease in cash and cash equivalents (3,718) (48,319)
Effect of foreign exchange rate changes 128 859
Cash and cash equivalents at the end of the year 11 6,826 10,416
Notes to the Consolidated 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.
Restatements
· The Consolidated Financial Statements for the year ended 30 September
2023 have been restated throughout to be presented in US dollars as set out
below.
· The Consolidated Statement of Profit or Loss has been restated to
separate net impairment (loss)/gain on trade receivables from administrative
expenses, where they were reported in previous periods.
· The Consolidated Statement of Financial Position has been restated to
separately disclose contracts assets (FY23: $1.8m, FY22: $0.9m) and contract
liabilities (FY23: $1.8m, FY22: $1.9m), as defined within the accounting
policies of the Consolidated Financial Statements. All balances relating to
contract assets and contract liabilities had previously been included in
trade and other receivables and trade and other payables respectively. There
is no impact to the Consolidated Statement of Profit and Loss and Other
Comprehensive Income or Loss, the Consolidated Statement of Changes in Equity
or the Consolidated Statement of Cash Flows as a result of this restatement.
Change in presentation currency
On 17 May 2023, the Group announced that from the beginning of the current
financial year, 1 October 2023, it would be changing the currency in which it
presents its financial results from pound sterling to US dollars. The Group's
US dollar denominated earnings account for over 80% of the Group's revenues
and profits. This change reduces the impact of currency movements on reported
results. In accordance with IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors, this change in presentation currency was applied
retrospectively.
In accordance with the provisions of IAS 21 The Effects of Changes in Foreign
Exchange Rates, the historic consolidated financial information has been
re-presented from pound sterling to US dollars as follows:
· items of income and expenditure, other than single material
identifiable transactions, denominated in non-US dollar currencies were
translated into US dollars at the average exchange rate (per month) of the
reporting period. Single material identifiable transactions have been
translated at the exchange rate at the time of the transaction;
· assets and liabilities denominated in non-US dollar currencies were
translated into US dollars at the exchange rates at the relevant balance sheet
dates;
· share capital, share premium and other equity items have been
translated into US dollars at historical exchange rates on the date of each
relevant transaction;
· all resulting exchange differences have been recognised in other
comprehensive income and in the foreign currency translation reserve in
accordance with the Group's existing accounting policy; and
· there is no impact to the Consolidated Statement of Profit or Loss as
a result of the restatement.
The principal rates used for the translation of results, cash flows and
balance sheets in US Dollars were:
Average rate Closing rate
FY24 FY23 FY24 FY23 FY22
Pound sterling 1.27 1.23 1.34 1.22 1.12
Euro 1.08 1.07 1.12 1.06 0.98
Basis of preparation
The Consolidated Financial Statements consolidate those of the Company and its
subsidiaries (together referred to as the "Group").
The Consolidated Financial Statements have been prepared and approved by the
Directors in accordance with UK-adopted International Accounting Standards
("UK-adopted IAS") and with the requirements of the Companies Act 2006.
The Consolidated Financial Statements have been prepared under the historical
cost convention, except for certain financial instruments which have been
measured at fair value. All accounting policies set out below have been
applied consistently to all periods presented in these Consolidated Financial
Statements.
The information for the year ended 30 September 2023 does not constitute
statutory accounts for the purposes of Section 435 of the Companies Act 2006.
A copy of the accounts for the Company for the year ended 30 September 2023
has been delivered to the Registrar of Companies. The auditor's report on
those accounts was not qualified and did not contain statements under Section
498(2) or 498(3) of the Companies Act 2006. The accounts for the year ended 30
September 2024 have been audited and finalised on the basis of the financial
information presented by the Directors in this Preliminary Statement and will
be delivered to the Registrar of Companies following the Annual General
Meeting.
New and amended accounting standards adopted by the Group
The following amendments became applicable during the current reporting
period:
· IFRS 17: Insurance Contracts
· Amendments to IAS 8: Definition of Accounting Estimates
· Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure
of Accounting Policies
· Amendments to IAS 12: Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
· Amendment to IAS 12: International Tax Reform - Pillar Two
Model Rules
The adoption of the standards and interpretations has not led to any changes
to the Group's accounting policies or had any other material impact on the
financial position or performance of the Group. The Group is not in scope for
Pillar Two rules, as it does not meet the threshold of annual revenue of
€750m and therefore the amendment to IAS 12 in relation to Pillar Two has no
impact.
New and amended accounting standards that have been issued but are not yet
effective
New standards and interpretations that are in issue but not yet effective are
listed below:
· Amendment to IFRS 16: Lease Liability in a Sale and Leaseback
· Amendments to IAS 1: Classification of Liabilities as Current
or Non-current
· Amendments to IAS 1: Non-current Liabilities with Covenants
· Amendments to IAS 7 and IFRS 7: Supplier Finance Arrangements
· Amendments to IAS 21: Lack of Exchangeability
· Amendments to IFRS 9 and IFRS 7: Classification and Measurement
of Financial Instruments
· IFRS 18: Presentation and Disclosure in Financial Statements
With the exception of the adoption of IFRS 18, the adoption of the above
standards and interpretations are not expected to lead to any material changes
to the Group's accounting policies nor have any other material impact on the
financial position or performance of the Group. IFRS 18 was issued in April
2024 and is effective for periods beginning on or after 1 January 2027. Early
application is permitted and comparatives will require restatement. The
standard will replace IAS 1 Presentation of Financial Statements and although
it will not change how items are recognised and measured, the standard brings
a focus on the income statement and reporting of financial performance.
Specifically classifying income and expenses into three new defined categories
- "operating", "investing" and "financing" and two new subtotals "operating
profit and loss" and "profit or loss before financing and income tax",
introducing disclosures of management defined performance measures and
enhancing general requirements on aggregation and disaggregation. The impact
of the standard on the Group is being assessed and it is not yet practicable
to quantify the effect of IFRS 18 on these Consolidated Financial Statements,
however there is no impact on presentation for the Group in the current year
given the effective date - this will be applicable for the Group's FY28
reporting period.
Going concern
The Directors are required to assess going concern at each reporting period.
The Directors have undertaken the going concern assessment for the Group for
the period to 31 December 2025. The Directors have assessed the Group's
prospects, both as a going concern and its longer-term viability. After
considering the current financial projections, the bank facilities available
and then applying severe but plausible sensitivities, the Directors of the
Company are satisfied that the Group has sufficient resources for its
operational needs and will remain in compliance with the financial covenants
in its bank facilities until at least 31 December 2025. For this reason, the
Directors continue to adopt the going concern basis in preparing
the Consolidated Financial Statements for the year ended 30 September 2024.
The process and key judgements in coming to this conclusion are set out below:
Liquidity
The Group entered into the Senior Facilities Agreement on 17 June 2021 which
included the Senior Term Facility for $204.0m for the acquisition of
LiveAuctioneers. The Senior Term Facility was drawn down in full on 30
September 2021 prior to completion of the acquisition of LiveAuctioneers on 1
October 2021. The loan is due to be fully repaid by 17 June 2026. In the
absence of any other prepayments, the next scheduled repayment would be $6.1m
on 31 March 2025. At 30 September 2024 the loan balance outstanding was
$122.6m and was subject to interest at a margin of 2.75% over US SOFR.
In addition, the Group has a multi-currency revolving credit working capital
facility (the "RCF") for $49.0m. Any sums outstanding under the RCF will be
due for repayment on 17 June 2026. On 13 February 2024, $9.5m was drawn down
to partly fund the payment of deferred consideration and retention bonuses
relating to the acquisition of ESN, and has been repaid in full.
The Directors are in the early stages of renegotiations on the financing
arrangements for the Group in advance of the current facilities expiring in
June 2026. The Directors assume that the Group will continue to have funding
throughout the going concern period and the three-year viability period on the
basis that the Group will either renew the facility or have sufficient time to
agree an alternative source of finance on comparable terms. As at 30 September
2024 the Group has adjusted net debt of $114.7m and is in a net current
liability position which includes the current Senior Term Facility of $23.0m.
Covenants
The Group is subject to covenant tests on the Senior Term Facility, with the
most sensitive covenant being the net leverage ratio covenant (adjusted net
debt: trailing 12-month adjusted EBITDA). The net leverage ratio covenant was
2.75x at 30 September 2024. Under the base case forecasts and each of the
downside scenarios, including the combined downside scenario, the Group is
forecast to be in compliance with the covenants and have cash headroom,
without applying mitigating actions which could be implemented such as
reducing capital expenditure spend. At 30 September 2024, the net leverage
ratio was 1.4x compared to the limit of 2.75x and therefore the Group was
comfortably within the covenant.
Scenario planning
The Directors have undertaken the going concern assessment for the Group,
taking into consideration the Group's business model, strategy, and principal
and emerging risks. As part of the going concern review the Directors have
reviewed the Group's forecasts and projections, and 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 marketplace revenue due to an 8%
reduction in THV versus the base case
· significant reduction in marketplace revenue due to conversion
rate decline of 6% versus the base case; and,
· 50% lower revenue growth from value-added services across the
Group versus the base case.
None of these scenarios individually, or in the combined scenario, which
reduces adjusted EBITDA by $21m, threaten the Group's ability to continue as a
going concern. Even in the combined downside scenario modelled (the
combination of all downside scenarios occurring at once) the Group would be
able to operate within the level of its current available debt facilities and
covenants. Accordingly, the Directors continue to adopt the going concern
basis in preparing the Consolidated Financial Statements for the year ended
30 September 2024.
Climate change
The Group has assessed the impacts of climate change on the Group's
Consolidated Financial Statements, including our commitment to achieving Net
Zero by 2040 and the actions the Group intends to take to achieve those
targets. The assessment did not identify any material impact on the Group's
significant judgements or estimates at 30 September 2024, or the assessment of
going concern and the Group's viability over the next three years.
Specifically, we have considered the following areas:
· the physical and transition risks associated with climate
change; and
· the actions the Group is taking to meet its carbon reduction
and Net Zero targets.
As a result, the Group has assessed the potential impacts of climate change on
the Consolidated Financial Statements, and in particular on the following
areas:
· the impact on the Group's future cash flows, and the resulting
impact such adjustments to the future cash flows would have on the outcome of
the annual impairment testing of goodwill balances (see note 9), the
recognition of deferred tax assets and our assessment of going concern;
· the carrying value of the Group's assets, in particular the
recoverable amounts of intangible assets and property, plant and equipment;
and
· changes to estimates of the useful economic lives of intangible
assets and property, plant and equipment.
2. Significant judgements and key sources of estimation uncertainty
The preparation of the Group's Consolidated Financial Statements requires the
use of certain judgements, estimates and assumptions that affect the reported
amounts of assets, liabilities, income and expenses.
Estimates and judgements are evaluated continually, and are based on
historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
Key estimation uncertainties are the key assumptions concerning the future and
other key sources of estimation uncertainty at the reporting date that may
have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next period. Changes in
accounting estimates may be necessary if there are changes in the
circumstances on which the estimates were based, or as a result of new
information or more experience.
For the year ended 30 September 2024, the key sources of estimation are
detailed below:
Impairment of goodwill for Auction Services cash-generating unit
At least on an annual basis, or if there is an impairment indicator,
management performs a review of the carrying values of goodwill and intangible
assets. This requires an estimate of the value in use of the cash-generating
unit ("CGU") to which the goodwill and intangible assets are allocated. To
estimate the value in use, management estimates the expected future cash flows
from the CGU and discounts them to their present value at a determined
discount rate, which is appropriate for the country where the goodwill and
intangible assets are allocated.
Forecasting expected cash flows and selecting an appropriate discount rate
inherently require estimation. The resulting calculation for Auction Services
is sensitive to any one of the key assumptions in respect of future cash
flows, the discount rate and long-term growth rate applied. Sensitivity
analysis has been performed over the estimates (see note 9). Management
considers that the assumptions made represent their best estimate of the
future cash flows generated by the CGUs, and that the discount rate and
long-term growth rate used are appropriate given the risks associated with the
specific cash flows.
Significant judgements are those that the Group has made in the process of
applying the Group's accounting policies and that have the most significant
effect on the amounts recognised in the financial statements. For the year
ended 30 September 2024, there were no significant judgements.
The significant judgements disclosed in the annual financial statements for
the year ended 30 September 2023 which are no longer applicable are:
· Goodwill and other intangible assets arising from business
combinations as no business combinations have occurred in FY24, and no changes
have been made in FY24 to the judgements in respect of goodwill and other
intangible assets previously recognised.
· Functional currency of subsidiaries as there have been no
changes to the functional currency of the US holding entities during the year.
The impact of the US holding entities having a functional currency of pound
sterling does impact the deferred tax as a result of movements in exchange
rates but the level of judgement is not expected to significantly change the
amounts recognised in the Consolidated Financial Statements.
3. Alternative performance measures
The Group uses a number of alternative performance measures ("APMs") in
addition to those measures reported in accordance with 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 UK-adopted 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.
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:
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Profit before tax 18,383 8,664
Adjustments for:
Net finance costs (note 6) 14,045 18,963
Amortisation of acquired intangible assets (note 9) 32,484 32,625
Amortisation of internally generated software (note 9) 6,532 4,725
Depreciation of property, plant and equipment 426 391
Depreciation of right of use assets 939 1,099
Share-based payment expense 6,015 8,616
Exceptional operating items 1,145 3,311
Adjusted EBITDA 79,969 78,394
The following table provides the calculation of adjusted EBITDA margin which
represents adjusted EBITDA divided by revenue:
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Reported revenue (note 4, 5) 174,148 165,886
Adjusted EBITDA 79,969 78,394
Adjusted EBITDA margin 46% 47%
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 lifecycle 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:
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Acquisition costs (828) (3,311)
Finance transformation (317) -
Total exceptional operating items (1,145) (3,311)
The acquisition costs were primarily in respect of the costs relating to the
acquisition of ESN on 6 February 2023. 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 was accrued over the
period.
Costs of $0.3m were incurred as a result of the transformation of the North
America finance department. These exceptional operating items include the
sublease of the Omaha office which is no longer being occupied by the finance
team, the merger of trading entities and costs associated with the system
finance transformation which were not capitalised. These costs include
professional fees, retention costs and loss on derecognition of a right of use
asset.
The net cash outflow related to exceptional operating items in the period was
$2.5m (FY23: $2.0m).
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 after tax to
adjusted earnings:
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Profit attributable to equity shareholders of the Company 24,192 20,543
Adjustments for:
Amortisation of acquired intangible assets 32,484 32,625
Exceptional finance items 906 5,258
Share-based payment expense 6,015 8,616
Exceptional operating items 1,145 3,311
Deferred tax on unrealised foreign exchange differences (8,054) (8,810)
Tax on adjusted items (8,929) (12,607)
Adjusted earnings 47,759 48,936
Number Number
Diluted weighted average number of shares (note 8) 123,848,562 123,088,377
cents cents
Adjusted diluted earnings per share (cents) 38.6 39.8
The basis for treating these items not already defined above as adjusting is
as follows:
Amortisation of acquired intangible assets 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 intra-group loans. 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 (see note 7).
Tax on adjusted items
Tax on adjusted items includes the tax effect of acquired intangible
amortisation, exceptional (operating and finance items) and share-based
payment expense. In calculating the adjusted tax rate, the Group excludes the
potential future impact of the deferred tax effects on deductible goodwill and
intangible amortisation (other than internally generated software), as the
Group prefers to give users of its accounts a view of the tax charge based on
the current status of such items. Deferred tax would only crystallise on a
sale of the relevant businesses, which is not anticipated at the current time,
and such a sale, being an exceptional item, would result in an exceptional tax
impact.
Organic revenue
The Group has made certain acquisitions that have affected the comparability
of the Group's results. 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 organic revenue from reported
results:
Unaudited Restated
Year ended Unaudited
30 September 2024 Year ended
$000 30 September 2023
$000
Reported revenue 174,148 165,886
Acquisition related adjustment (11,982) (7,063)
Constant currency adjustment - 945
Organic revenue 162,166 159,768
Increase in organic revenue % 2%
Adjusted net debt
Adjusted net debt comprises external borrowings net of arrangement fees and
cash at bank which allows management to monitor the indebtedness of the Group.
Adjusted net debt excludes lease liabilities and restricted cash (see note
11).
Cash and cash equivalents includes cash held by the Trustee of the Group's
Employee Benefit Trust, which is not available to circulate within the Group
on demand. This has been included in restricted cash.
30 September Restated
2024 30 September
$000 2023
$000
Cash at bank (note 11) 6,824 7,437
Current loans and borrowings (note 12) (22,953) (15,688)
Non-current loans and borrowings (note 12) (98,530) (132,923)
Total loans and borrowings (121,483) (148,611)
Adjusted net debt (114,659) (141,174)
Adjusted free cash flow and adjusted free cash flow conversion
Adjusted 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
UK-adopted IAS 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 working capital from exceptional items.
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Adjusted EBITDA 79,969 78,394
Cash generated by operations 71,627 70,677
Adjustments for:
Exceptional operating items 1,145 3,311
Working capital from exceptional and other items 4,282 (1,348)
Additions to internally generated software (note 9) (10,843) (10,765)
Additions to property, plant and equipment (362) (503)
Payment for right of use assets - (230)
Adjusted free cash flow 65,849 61,142
Adjusted free cash flow conversion (%) 82% 78%
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 operations of the Group.
The four operating segments are as follows:
· Arts & Antiques ("A&A") marketplaces: focused on
offering auction houses that specialise in the sale of arts and antiques
access to the platforms thesaleroom.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, atgPay and atgShip. 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") marketplaces: 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 and atgPay. 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 such as 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
of the Gazette and selling advertising space within the paper and online. The
Directors have disclosed information required by IFRS 8 for the Content
segment despite the segment not meeting the reporting threshold.
· There are no undisclosed or other operating segments.
An analysis of the results for the year by reportable segment is as follows:
Year ended 30 September 2024
A&A I&C Auction Services Content Centrally allocated Total
$000 $000 $000 $000 costs $000
$000
Revenue 90,289 71,795 8,406 3,658 - 174,148
Adjusted EBITDA (see note 3 for definition and reconciliation) 72,398 60,746 5,040 1,224 (59,439) 79,969
Amortisation of intangible assets (note 9) (25,688) (11,413) (1,915) - - (39,016)
Depreciation of property, plant and equipment (158) (240) (12) (16) - (426)
Depreciation of right of use assets (678) (199) (5) (57) - (939)
Share-based payment expense (1,477) (1,810) (65) - (2,663) (6,015)
Exceptional operating items (note 3) (828) - - - (317) (1,145)
Operating profit/(loss) 43,569 47,084 3,043 1,151 (62,419) 32,428
Net finance costs (note 6) - - - - (14,045) (14,045)
Profit/(loss) before tax 43,569 47,084 3,043 1,151 (76,464) 18,383
Year ended 30 September 2023 (restated)
A&A I&C Auction Services Content Centrally allocated Total
$000 $000 $000 $000 costs $000
$000
Revenue 80,551 71,378 10,190 3,767 - 165,886
Adjusted EBITDA (see note 3 for definition and reconciliation) 66,211 61,171 6,403 1,366 (56,757) 78,394
Amortisation of intangible assets (note 9) (24,383) (11,235) (1,732) - - (37,350)
Depreciation of property, plant and equipment (129) (236) (10) (16) - (391)
Depreciation of right of use assets (678) (342) (10) (69) - (1,099)
Share-based payment expense (1,828) (2,163) (103) - (4,522) (8,616)
Exceptional operating items (note 3) (3,311) - - - - (3,311)
Operating profit/(loss) 35,882 47,195 4,548 1,281 (61,279) 27,627
Net finance costs (note 6) - - - - (18,963) (18,963)
Profit/(loss) before tax 35,882 47,195 4,548 1,281 (80,242) 8,664
Segment assets are measured in the same way as in the financial statements.
These assets are allocated based on the operations of the segment and the
physical location of the asset.
30 September 2024 30 September 2023 (restated)
Total Additions Total Additions
non-current to non-current non-current to non-current
assets assets assets assets
$000 $000 $000 $000
By operating segment
A&A 572,367 5,033 589,956 46,142
I&C 234,171 6,088 228,752 7,365
Auction Services 32,398 105 34,212 423
Content 280 18 334 314
839,216 11,244 853,254 54,244
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
By geographical location
United Kingdom 68,202 70,698
United States 765,716 777,618
Germany 5,298 4,938
839,216 853,254
The Group has taken advantage of paragraph 23 of IFRS 8 Operating Segments and
does not provide segmental analysis of net assets as this information is not
used by the Directors in operational decision-making or monitoring of business
performance.
5. Revenue
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Product and customer types
A&A 90,289 80,551
I&C 71,795 71,378
Auction Services 8,406 10,190
Content 3,658 3,767
174,148 165,886
Primary geographical markets
by location of operations
United Kingdom 25,299 24,096
United States 143,282 136,964
Germany 5,567 4,826
174,148 165,886
by location of customer
United Kingdom 25,889 24,557
United States 132,708 125,308
Europe 8,892 8,645
Rest of world 6,659 7,376
174,148 165,886
Timing of transfer of goods and services
Point in time 155,285 150,274
Over time 18,863 15,612
174,148 165,886
The Group has recognised the following assets and liabilities related to
contracts with customers:
30 September Restated Restated
2024 30 September 1 October
$000 2023 2022
$000 $000
Contract assets 1,499 1,856 927
Contract liabilities (1,639) (1,851) (1,886)
The following table shows how much of the revenue recognised in the current
reporting period relates to carried-forward contract liabilities:
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Revenue recognised that was included in the contract liabilities balance at 1,797 1,782
the beginning of the year
6. Net finance costs
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Interest income 249 220
Interest on lease receivable 9 -
Finance income 258 220
Interest on loans and borrowings (12,437) (12,985)
Amortisation of finance costs (679) (612)
Foreign exchange loss (525) (4,995)
Movements in deferred consideration (131) (263)
Interest on lease liabilities (281) (232)
Interest on tax (250) (96)
Finance costs (14,303) (19,183)
Net finance costs (14,045) (18,963)
7. Taxation
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Current tax
Current tax on profit for the year 9,731 11,660
Adjustments in respect of prior years 214 (205)
Total current tax 9,945 11,455
Deferred tax
Current year (15,967) (22,368)
Adjustments from change in tax rates (278) (629)
Adjustments in respect of prior years 491 (337)
Deferred tax (15,754) (23,334)
Tax credit (5,809) (11,879)
The tax on the Group's profit before tax differs from the theoretical amount
that would arise using the standard tax rate applicable to profits of the
Group as follows:
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Profit before tax 18,383 8,664
Tax at United Kingdom tax rate of 25% (FY23: 22%) 4,596 1,907
Tax effect of:
Deferred tax on unrealised foreign exchange differences (8,054) (8,810)
Foreign exchange difference not taxable for tax purposes (3,440) (3,077)
Non-deductible expenditure 1,313 1,278
Deductible items (582) (1,695)
Movement in provisions for tax uncertainties (439) (312)
Differences in overseas tax rates 370 1
Adjustments from change in tax rates (278) (629)
Adjustments in respect of prior years 705 (542)
Tax credit (5,809) (11,879)
The deferred tax credit on unrealised foreign exchange differences of $8.1m
(FY23: $8.8m) arises from US holding companies with pound sterling as their
functional currency for the Consolidated Financial Statements but US dollar
functional currency under US tax rules. Per the US tax basis these holding
companies included an unrealised foreign exchange loss of $30.6m on
intra-group loans denominated in pound sterling totalling £246.2m (FY23:
$34.6m on intra-group loans of £295.6m). Unrealised foreign exchange
differences are not taxable until they are realised, giving rise to deferred
tax (see note 13). On 25 September 2024, the intra-group loan was
redenominated into US dollars and a loss of $0.7m realised. From this date
there is no foreign exchange exposure on this loan and deferred tax liability
at 30 September 2024 is $nil.
The Group's profit before tax includes foreign exchange gain of $13.5m (tax
effected: $3.4m) from US holding companies on their US dollar denominated
intra-group balances (FY23: $12.3m, tax effected: $3.1m) which are not taxable
for US tax purposes.
Non-deductible expenditure primarily relates to share-based payments and in
FY23 it also included non-deductible exceptional operating items.
Deductible items include research and development tax credits and in FY23 it
also included deductions for the exercise of management rollover options and
restricted stock units granted for the acquisition of LiveAuctioneers.
The movement in provisions for tax uncertainties reflects releases due to the
expiry of relevant statutes of limitation. The Group's tax affairs are
governed by local tax regulations in the UK, North America and Germany. Given
the uncertainties that could arise in the application of these regulations,
judgements are often required in determining the tax that is due. Where
management is aware of potential uncertainties in local jurisdictions, that
are judged more likely than not to result in a liability for additional tax, a
provision is made for management's expected value of the liability, determined
with reference to similar transactions and third-party advice. This provision
at 30 September 2024 amounted to $0.6m (FY23: $1.0m).
In the current period, uncertain tax liabilities are recorded within current
tax liabilities on the face of the Consolidated Statement of Financial
Position. In the prior period, uncertain tax liabilities were recorded within
non-current tax liabilities. Management has reassessed the fact pattern of the
uncertain tax liabilities taking into account requirements of IAS 1 and
considers that they are better reflected as current tax liabilities.
Tax recognised in other comprehensive income:
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Current tax (3,255) (3,186)
Tax recognised in other comprehensive income includes current tax on the
Group's net investment hedge.
8. Earnings per share
Basic earnings per share is calculated by dividing the profit for the year
attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the year, after excluding the weighted
average number of non-vested ordinary shares.
Diluted earnings per share is calculated by dividing the profit for the year
attributable to ordinary shareholders by the weighted average number of
ordinary shares including non-vested/non-exercised ordinary shares. During the
year and prior year, the Group awarded conditional share awards to Directors
and certain employees through an LTIP.
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Profit attributable to equity shareholders of the Company 24,192 20,543
Number Number
Weighted average number of shares in issue 121,711,636 121,050,307
Weighted average number of options vested not exercised 1,082,642 1,338,182
Weighted average number of shares held by the Employee Benefit Trust (67,210) (162,934)
Weighted average number of shares 122,727,068 122,225,555
Dilutive share options 1,121,494 862,822
Diluted weighted average number of shares 123,848,562 123,088,377
cents cents
Basic earnings per share 19.7 16.8
Diluted earnings per share 19.5 16.7
9. Goodwill and other intangible assets
Software Customer relationships Brand Non- Total acquired intangible assets Internally generated software Goodwill Total
$000 $000 $000 compete $000 $000 $000 $000
agreement
$000
Cost
1 October 2022 (restated as detailed in note 1) 47,347 232,108 42,940 1,672 324,067 21,911 546,167 892,145
Acquisition of business 2,605 11,521 3,174 - 17,300 - 22,422 39,722
Additions - - - - - 10,765 - 10,765
Exchange differences 683 4,416 624 - 5,723 687 9,983 16,393
30 September 2023 (restated as detailed in note 1) 50,635 248,045 46,738 1,672 347,090 33,363 578,572 959,025
Additions - - - - - 10,843 - 10,843
Exchange differences 780 5,048 702 - 6,530 975 11,417 18,922
30 September 2024 51,415 253,093 47,440 1,672 353,620 45,181 589,989 988,790
Amortisation and impairment
1 October 2022 (restated as detailed in note 1) 13,884 36,182 5,770 785 56,621 14,025 - 70,646
Amortisation 5,626 22,992 3,589 418 32,625 4,725 - 37,350
Exchange differences 615 1,610 166 - 2,391 337 - 2,728
30 September 2023 (restated as detailed in note 1) 20,125 60,784 9,525 1,203 91,637 19,087 - 110,724
Amortisation 4,412 23,925 3,694 453 32,484 6,532 - 39,016
Exchange differences 780 3,026 299 - 4,105 682 - 4,787
30 September 2024 25,317 87,735 13,518 1,656 128,226 26,301 - 154,527
Net book value
1 October 2022 (restated as detailed in note 1) 33,463 195,926 37,170 887 267,446 7,886 546,167 821,499
30 September 2023 (restated as detailed in note 1) 30,510 187,261 37,213 469 255,453 14,276 578,572 848,301
30 September 2024 26,098 165,358 33,922 16 225,394 18,880 589,989 834,263
Included within internally generated software is capital work-in-progress of
$5.7m (FY23: $4.3m).
The expected amortisation profile of acquired intangible assets is shown
below:
Software Customer relationships Brand Non-compete Total
$000 $000 $000 agreement $000
$000
One to five years 19,639 92,964 18,161 16 130,780
Six to 10 years 6,459 60,871 11,210 - 78,540
11 to 15 years - 11,523 4,551 - 16,074
30 September 2024 26,098 165,358 33,922 16 225,394
Impairment assessment
The goodwill and intangibles attributed to each of the group of
cash-generating units ("CGUs") are assessed for impairment at least annually
or more frequently where there are indicators of impairment. The Group tests
for impairment of goodwill at the operating segment level representing an
aggregation of CGUs, the level at which goodwill is monitored by management.
No group of CGUs is larger than an operating segment as defined by IFRS 8
Operating Segments before aggregation. The recoverable amount for the group of
CGUs has been determined on a value in use basis ("VIU").
The table below sets out the carrying values of goodwill and other acquired
intangible assets allocated to each group of CGUs at 30 September 2024 along
with the pre-tax discount rates applied to the risk-adjusted cash flow
forecasts and the long-term growth rate.
2024 Goodwill Acquired Valuation Long-term Pre-tax
$000 intangible assets method growth rate discount
$000 rate
A&A marketplaces 367,618 194,215 VIU 3% 11.8%
I&C marketplaces 197,707 23,878 VIU 3% 11.9%
Auction Services 24,664 7,301 VIU 3% 10.3%
Total 589,989 225,394
2023 (restated) Goodwill Acquired Valuation Long-term Pre-tax
$000 intangible assets method growth rate discount
$000 rate
A&A marketplaces 364,604 215,977 VIU 3% 12.7%
I&C marketplaces 189,304 30,468 VIU 3% 12.7%
Auction Services 24,664 9,008 VIU 3% 11.4%
Total 578,572 255,453
When testing for impairment, recoverable amounts for all the groups of CGUs
are measured at their value in use by discounting the future expected cash
flows from the assets in the group of CGUs. These calculations use cash flow
projections based on Board approved budgets and approved plans. While the
Group prepares a five-year plan, levels of uncertainty increase as the
planning horizon extends. The Group's plan focuses more closely on the next
three years, however for the purposes of the impairment testing the five-year
forecasts are used as we do not anticipate the long-term growth rate to be
achieved until after this time.
The key assumptions and estimates used for value in use calculations are
summarised as follows:
Assumption Approach
Risk-adjusted cash flows are determined by reference to the budget for the year following the balance
sheet date and forecasts for the following four years, after which a long-term
perpetuity growth rate is applied. The most recent financial budget approved
by the Board has been prepared after considering the current economic
environment in each of the Group's markets. These projections represent the
Directors' best estimate of the future performance of these businesses.
CAGR is the five-year compound annual growth rate from FY24 of the risk-adjusted
cash flows above.
Long-term growth rates are applied after the forecast period. These are based on external reports on
long-term GDP growth rates for the main markets in which each CGU operates.
Therefore, these do not exceed the long-term average growth rates for the
individual markets.
Pre-tax discount rates are derived from the post-tax weighted average cost of capital ("WACC") which
has been calculated using the capital asset pricing model. They are weighted
based on the geographical area in which the CGU group's revenue is generated.
The assumptions used in the calculation of the WACC are benchmarked to
externally available data and they represent the Group's current market
assessment of the time value of money and risks specific to the CGUs.
Movements in the pre-tax discount rates for CGUs since the year ended 30
September 2023 are driven by changes in market-based inputs. Any unsystematic
risk on the CGUs has been inherently built into the cash flows of each of the
CGUs and therefore no additional element of risk has been included in the
discount rates used at 30 September 2024.
Sensitivity analysis
At 30 September 2024 under the impairment assessments prepared there is no
impairment required. Management have performed sensitivity analysis based on
reasonably possible scenarios including increasing the discount rates and
reducing the CAGR on the future forecast cash flows, both of which are
feasible given the current future uncertainty of macroeconomics. The Auction
Services CGU is sensitive to a movement in any one of the key assumptions.
For Auction Services, with a headroom of $0.9m (FY23: $7.4m), for the
recoverable amount to fall to the carrying value, the discount rate would need
to be increased to 10.5% from 10.3% (FY23: 13.4% from 11.4%), the long-term
growth rate reduced to 2.7% from 3.0% (FY23: 0.2% from 3.0%), or the CAGR on
the five-year future forecast cash flows reduced by 0.5 ppt (FY23: 2 ppt). In
the future forecast cash flows there is an assumption that the take rate CAGR
improves by 2% over the five-year period. If this is not achieved this would
give rise to an impairment of $7.5m.
For the A&A and I&C marketplaces CGUs, there is no reasonable change
of assumption that would cause the CGU's carrying amount to exceed its
recoverable amount. Under the base case scenario for the A&A marketplaces
CGU there is headroom of $147.8m at 30 September 2024 (FY23: $302.6m). The
year-on-year decrease in headroom is largely driven by the reduction in
five-year CAGR based on the slower consumer environment experienced in FY24.
Under the base case scenario for the I&C marketplaces CGU there is
headroom of $74.5m at 30 September 2024 (FY23: $417.5m). The year-on-year
decrease in headroom is largely driven by the reduction in five-year CAGR
based on the slower consumer environment in A&A and softer performance in
I&C in FY24.
10. Trade and other receivables
30 September Restated
2024 30 September
$000 2023
$000
Current
Trade receivables 13,807 15,819
Less: loss provision (1,505) (500)
12,302 15,319
Other receivables 2,199 1,329
Prepayments 2,786 3,317
Lease receivable 136 -
17,423 19,965
Non-current
Other receivables 1,276 138
Lease receivable 151 -
1,427 138
18,850 20,103
The Group applies the IFRS 9 Financial Instruments simplified approach to
measuring expected credit losses using a lifetime expected credit loss
provision for trade receivables and contract assets. To measure expected
credit losses on a collective basis, trade receivables and contract assets are
grouped based on similar credit risk and ageing. The contract assets have
similar risk characteristics to the trade receivables for similar types of
contracts. The expected loss model incorporates current and forward-looking
information on macroeconomic factors affecting the Group's customers.
The average credit period on sales is 30 days after the invoice has been
issued. No interest is charged on outstanding trade receivables. At
30 September 2024 there were no customers who owed in excess of 10% of the
total trade debtor balance (FY23: $nil).
The ageing of trade receivables at 30 September was:
2024 2023 (restated)
Gross Loss provision Expected loss rate Gross Loss provision Expected loss rate
$000 $000 % $000 $000 %
Within 30 days 11,011 351 3% 12,120 52 0%
Between 30 and 60 days 1,176 25 2% 1,310 3 0%
Between 60 and 90 days 479 23 5% 640 12 2%
Over 90 days 1,141 1,106 97% 1,749 433 25%
30 September 13,807 1,505 11% 15,819 500 3%
The movement in the loss provision during the year was as follows:
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
1 October 500 935
Increase/(decrease) in loss allowance recognised in 2,224 (210)
Consolidated Statement of Profit or Loss
Uncollectable amounts written off (1,233) (234)
Exchange differences 14 9
30 September 1,505 500
Trade receivables and contract assets are written off where there is no
reasonable expectation of recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others, the failure of a debtor to
engage in a repayment plan with the Group, and a failure to make contractual
payments for a period of greater than 120 days past due.
Impairment losses on trade receivables and contract assets are presented as
net impairment losses within operating profit. Subsequent recoveries of
amounts previously written off are credited against the same line item. The
carrying amount of trade and other receivables approximates to their fair
value. The total amount of trade receivables that were past due but not
impaired was $0.5m (FY23: $1.9m).
The decrease in trade receivables held by the Group is driven by the focused
effort on collections pre-year end in addition to the increased level of
amounts written off in the year relating to aged balances which were deemed
uncollectable. The increase in the loss provision is due to the level of
uncollectible amounts written off in the year which impacts the expected
credit loss model calculation combined with the specific risk factors
identified for specific customer groups.
11. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and restricted cash. Cash at
bank includes cash in transit due from credit card providers. The carrying
amount of these assets approximates to their fair value.
30 September Restated
2024 30 September
$000 2023
$000
Cash at bank 6,824 7,437
Restricted cash 2 2,979
6,826 10,416
Restricted cash consists of cash held by the Trustee of the Group's Employee
Benefit Trust ("EBT") relating to share awards for employees. Prior to the
IPO, the EBT facilitated the making of pre-IPO equity awards to beneficiaries
of the sub-fund out of sweet equity that had been allocated to management by
the private equity investors. However, not all of the assets in the sub-fund
were allocated to beneficiaries on IPO. Given February 2024 was three years
since the Company's IPO it was agreed that the legacy sub-fund should be wound
up by the Trustee in February 2024 and the assets of the sub-fund be
distributed to its beneficiaries.
12. Loans and borrowings
The carrying amount of loans and borrowings classified as financial
liabilities at amortised cost approximates to their fair value.
30 September Restated
2024 30 September
$000 2023
$000
Current
Secured bank loan 22,953 15,688
Non-current
Secured bank loan 98,530 132,923
121,483 148,611
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. In FY24, a payment of $27.7m
(FY23: $53.7m) was paid on the Senior Term Facility. In the absence of any
other prepayments, the scheduled repayment in FY25 is $6.1m on 31 March 2025
and then $8.7m quarterly from 30 June 2025. 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 by 17 June 2026. On 13
February 2024, $9.5m (FY23: $26.3m) was drawn down to partly fund the payment
of deferred consideration and retention bonuses relating to the acquisition of
ESN in FY23, and has been fully repaid by 30 September 2024.
· 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 the covenant is measured as at the last date
of each financial quarter, commencing with the financial quarter ending 30
September 2021. The Group has complied with the financial covenants of its
borrowing facilities during the year ended 30 September 2024.
The movements in loans and borrowings are as follows:
30 September Restated
2024 30 September
$000 2023
$000
1 October 148,611 201,997
Repayment of loans and borrowings (37,150) (80,014)
Proceeds from loans and borrowings 9,500 26,300
Accrued interest and amortisation of finance costs 13,116 13,597
Interest paid (12,459) (13,097)
Exchange differences (135) (172)
30 September 121,483 148,611
The currency profile of the loans and borrowings is as follows:
30 September Restated
2024 30 September
$000 2023
$000
US dollar 121,483 148,611
The weighted average interest charge (including amortised cost written off)
for the year is as follows:
Year ended Year ended
30 September 30 September
2024 2023
% %
Secured bank loan 8% 8%
13. Deferred taxation
The movement of net deferred tax liabilities is as follows:
Capitalised goodwill and intangibles Tax losses Share-based payments Foreign Research and development Other Total
$000 $000 $000 exchange $000 temporary differences $000
$000 $000
1 October 2022 (restated as detailed in note 1) (65,101) 6,832 1,267 (15,350) - 177 (72,175)
Amount credited to Consolidated Statement of Profit or Loss 8,055 4,644 827 7,634 1,900 274 23,334
Exchange differences (834) - 111 - - (65) (788)
30 September 2023 (restated as detailed in note 1) (57,880) 11,476 2,205 (7,716) 1,900 386 (49,629)
Deferred tax assets - - - - - - -
Deferred tax liabilities (57,880) 11,476 2,205 (7,716) 1,900 386 (49,629)
1 October 2023 (restated as detailed in note 1) (57,880) 11,476 2,205 (7,716) 1,900 386 (49,629)
Amount credited/(charged) to Consolidated Statement of Profit or Loss 5,568 546 (672) 8,038 1,627 647 15,754
Exchange differences (621) - 172 (322) (31) 4 (798)
30 September 2024 (52,933) 12,022 1,705 - 3,496 1,037 (34,673)
Deferred tax assets - - - - - - -
Deferred tax liabilities (52,933) 12,022 1,705 - 3,496 1,037 (34,673)
Tax losses include unrelieved interest in the US, where there are sufficient
taxable profits forecast to be available in the future to enable them to be
utilised. These losses are available indefinitely. Tax on foreign exchange
include unrealised foreign exchange differences arises from US holding
companies with pound sterling as their functional currency for the
Consolidated Financial Statements but US dollar functional currency under US
tax rules (see note 7). On 25 September 2024, the intra-group loan which has
given rise to the temporary differences on foreign exchange was redenominated
into US Dollars realising the foreign exchange and reducing the temporary
difference to $nil. A deferred tax asset of $3.5m (FY23: $1.9m) relates to the
US research and development credit which is spread over future years rather
than fully deductible in the year it arises.
No deferred tax asset has been recognised in respect of unused tax losses in
the UK of $0.8m (FY23: $0.9m) as it is not considered probable that there will
be future taxable profits available to offset these tax losses. The losses may
be carried forward indefinitely. The temporary differences relating to the
unremitted earnings of overseas subsidiaries amounted to $0.8m (FY23: $1.1m).
However, as the Group can control whether it pays dividends from its
subsidiaries and it can control the timing of any dividends, no deferred tax
has been provided on the unremitted earnings on the basis there is no
intention to repatriate these amounts. In presenting the Group's deferred tax
balances, the Group offsets assets and liabilities to the extent we have a
legally enforceable right to set off the arising income tax liabilities and
assets when those deferred tax balances reverse.
14. Share capital and reserves
30 September Restated
2024 30 September
$000 2023
$000
Authorised, called up and fully paid
121,819,130 ordinary shares at 0.01p each (FY23: 121,491,412) 17 17
The movements in share capital, share premium and other reserve are set out
below:
Number of Share capital Share premium Other reserve
shares $000 $000 $000
1 October 2022 (restated as detailed in note 1) 120,525,304 17 334,045 330,310
Shares issued 680,794 - 413 -
Shares issued in respect of share-based payment plans 285,314 - - -
30 September 2023 (restated as detailed in note 1) 121,491,412 17 334,458 330,310
Shares issued 1,978 - 5 -
Shares issued in respect of share-based payment plans 325,740 - - -
30 September 2024 121,819,130 17 334,463 330,310
For the year ended 30 September 2024
327,718 ordinary shares of 0.01p each with an aggregate nominal value of £33
($42) were issued for options that vested for a cash consideration of £4,000
($5,000). These included Long-term Incentive Plan Awards ("LTIP Awards"),
Share Incentive Plan ("SIP") and Employee Stock Purchase Plan ("ESPP") and to
the Trust for LTIP Awards that have vested in the year.
For the year ended 30 September 2023
966,108 ordinary shares of 0.01p each with an aggregate nominal value of £97
($118) were issued for options that vested for a cash consideration of
£328,000 ($413,000). These included management rollover options and
restricted stock units granted in FY22 for the acquisition of LiveAuctioneers,
Long-term Incentive Plan Awards ("LTIP Awards"), shares issued under the Share
Incentive Plan ("SIP") and Employee Stock Purchase Plan ("ESPP") and to the
Trust for LTIP Awards that have vested in the year.
15. Related party transactions
In FY24, the Group paid rent of $122,700 (FY23: $80,000) to McQuade
Enterprises LLC, a company owned by the previous owners of ESN. There were
other no related party transactions.
Key management personnel compensation
The Group has determined that the key management personnel constitute the
Board and the members of the Senior Management Team.
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Short-term employee benefits 2,757 3,907
Post-employment benefits 83 75
Share-based payment expense 2,536 4,797
Total key management personnel compensation 5,376 8,779
Remuneration of Directors
The total amounts for Directors' remuneration were as follows:
Year ended Restated
30 September Year ended
2024 30 September
$000 2023
$000
Short-term employee benefits 1,131 1,269
Non-Executive Directors' fees 497 410
Post-employment benefits 66 59
Share-based payment expense 569 1,994
Total Directors' remuneration 2,263 3,732
16. Events after the balance sheet date
There were no other events after the balance sheet date.
Glossary
A&A Arts & Antiques
atgAMP The Group's auctioneer marketing programme
atgPay the Group's integrated payment solution
atg Partner Network the Group's partnerships with other Industrial & Commercial sites, which
enables an auctioneer to cross-list on these sites
atgShip the Group's integrated shipping solution
atgXL the Group's cross-listing solution enabling auctioneers to simultaneously run
timed auctions across ATG marketplaces and ATG white label
Auction Mobility Auction Mobility LLC
Bidder sessions web sessions on the Group's marketplaces online within a given timeframe
BidSpotter the Group's marketplace operated via the www.BidSpotter.co.uk and
www.BidSpotter.com domain
Big 4 Christie's, Sotheby's, Phillips and Bonhams A&A auction houses
EBITDA earnings before interest, taxes, depreciation and amortisation
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, 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 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
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, 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
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