REG - Auction Technology - Full Year Results
02/12/2021 07:00
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RNS Number : 3490U Auction Technology Group PLC 02 December 2021
AUCTION TECHNOLOGY GROUP PLC
FULL YEAR RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2021
Strong operational and financial results ahead of expectations as we continue
to support the transformation of the auction industry
London, United Kingdom, 2 December 2021 - Auction Technology Group plc ("ATG",
"the Company", "the Group") (LON: ATG), operator of the world's leading
marketplaces for curated online auctions, reports strong financial results for
the year ended 30 September 2021.
2021 Highlights
Financial results
FY21 FY20 Movement
Adjusted(1)
Aggregate revenue(1&2) £70.1m £52.3m +34%
Aggregate adjusted EBITDA(1&2) £31.8m £22.2m +43%
Aggregate adjusted EBITDA margin %(1&2) 45% 42% +3pp
Adjusted diluted earnings/(loss) per share(1) 6.6p (5.6p) +218%
Adjusted free cash flow(1) £30.4m £14.0m +117%
Adjusted net cash/(debt)(1) £24.6m £(200.4)m +112%
Reported (FY20 represents only 8.5 months of trading)
Revenue £70.1m £35.5m +98%
Operating loss £(20.6)m £(5.0)m -312%
Loss before tax £(27.3)m £(19.0)m -44%
Basic loss per share (33.6)p (34.3)p +2%
Cash generated by operations £15.9m £6.8m +134%
Financial Highlights
• Revenue of £70.1m, a 34% increase on an aggregate basis
year-on-year, with growth achieved in all six of the Group's marketplaces
• Adjusted EBITDA of £31.8m, a margin of 45%
• Loss before tax of £27.3m after share-based payments expense and
charges for exceptional items, primarily related to the IPO and acquisition of
LiveAuctioneers and intangible asset amortisation
• Refinancing complete, with a five-year New Senior Facilities
Agreement, including a $204.0m term loan for the LiveAuctioneers acquisition
and $49.0m revolving credit facility
• Strong cash generation, with £30.4m of adjusted free cash flow in
the period and a closing net cash position of £24.6m
Operational Highlights
• Successful IPO, enhancing our ability to grow and lead the
transformation of the auction industry
• Total hammer value(3) ("THV") up 31% year-on-year, to £6.3bn with
the attraction of new volume and verticals to auctions further expanding
options for growth
• Online share(3) of 35%, up 2pp year-on-year; shift from live to
timed(3) auctions continuing across our marketplaces
• Gross merchandise value(3) ("GMV") of £2.2bn, up 38% year-on-year
as a result of the increased THV and online share
• Over 120m bidder sessions(3), growth of 14% year-on-year driven by
the increasing appeal of the curated online channel and by the range and
quality of our inventory
• Strengthened our team and technology, expanded our product and
service offering
• Acquisition of Auction Mobility during the year, and
LiveAuctioneers on 1 October 2021, transforms our capabilities, reach and
differentiation
Current trading and outlook
We delivered annual revenue growth of 34% in FY21, a fiscal year which
includes three quarters with very strong growth supported by the shift online
accelerated by COVID-19 compared to prior years' quarters before the impact of
COVID-19 had occurred and the final quarter lapping a COVID-19 impacted
quarter in FY20. In that final quarter, including Live Auctioneers on a
pro-forma basis, we saw very encouraging revenue growth rates in the low
double digits. The new financial year has started ahead of our expectations
with positive trends continuing across our core marketplaces.
We anticipate FY22 revenue growth of high single digit to low double digits,
ahead of our original IPO guidance and analyst consensus, and remain confident
of achieving our medium-term growth target of mid-teens plus revenue growth
(pro-forma from FY19). We expect continued improvement in our underlying
operating margin but this will be offset in FY22 by a combination of full year
plc costs, the impact of lower margin Payments revenue and an incremental
c.£2m of growth-focused investment. We remain confident in achieving adjusted
EBITDA margin percentages in the mid-high 40's over the medium term.
John-Paul Savant, Chief Executive Officer of Auction Technology Group plc,
said:
"I am proud of our achievements as a newly listed company over the past 12
months. Our success has been driven by the foundation we have built over the
last five years and by the enormous efforts of our committed team at ATG
working closely with our auctioneers, bidders and partners, which is
collectively allowing us to continue to progress our mission of transforming
the auction industry. We delivered revenue growth of 34% and were excited to
welcome Auction Mobility and, following our financial year end,
LiveAuctioneers, to the Group. These are both examples of highly attractive
opportunities aligned with our desire to add value to our offering for
auctioneers and bidders and to enable an ambitious growth strategy which
provides additional value to all our stakeholders.
"We are ideally placed to lead and benefit from the auction industry's ongoing
structural shift to online and increased consumer demand for auctions, and we
are focused on unlocking the value of the curated secondary goods market. Our
financial and strategic progress reflects this compelling opportunity - we
look forward to continuing to accelerate the growth of the circular economy
and further enhancing an important channel of sustainable commerce."
Webcast presentation
There will be a webcast presentation for analysts this morning at 9.30am.
Please contact ATG@tulchangroup.com if you would like to attend.
For further information, please contact:
J.P. Morgan Cazenove +44 207 742 4000
(Joint corporate broker to ATG)
Bill Hutchings, James Summer, Will Vanderspar
Numis Securities Limited +44 207 260 1000
(Joint corporate broker to ATG)
Nick Westlake, Matt Lewis, William Baunton
Tulchan Communications +44 207 353 4200
(Public relations advisor to ATG) ATG@tulchangroup.com (mailto:ATG@tulchangroup.com)
Tom Murray, Sunni Chauhan, Matt Low, Laura Marshall
ATG
For investor enquiries investorrelations@auctiontechnologygroup.com
(mailto:investorrelations@auctiontechnologygroup.com)
For media enquiries press@auctiontechnologygroup.com (mailto:press@auctiontechnologygroup.com)
About Auction Technology Group plc
Auction Technology Group plc ("ATG") is the operator of the world's leading
marketplaces and auction services for curated online auctions, seamlessly
connecting bidders from around the world to over 3,800 trusted auction houses
across two major sectors: Industrial & Commercial ("I&C") and Art
& Antiques ("A&A").
The Group powers seven online marketplaces using its proprietary auction
platform technology, hosting in excess of 70,000 live and timed auctions each
year. ATG has been supporting the auction industry since 1971 and the
Company has offices in the UK, US and Germany.
CAUTIONARY STATEMENT The announcement may contain forward-looking statements.
These statements may relate to (i) future capital expenditures, expenses,
revenues, earnings, synergies, economic performance, indebtedness, financial
condition, dividend policy, losses or future prospects, and (ii) developments,
expansion or business and management strategies of the Company.
Forward-looking statements are identified by the use of such terms as
"believe", "could", "should", "envisage", "anticipate", "aim", "estimate",
"potential", "intend", "may", "plan", "will" or variations or similar
expressions, or the negative thereof. Any forward-looking statements contained
in this announcement are based on current expectations and are subject to
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied by those statements. If one or more of these
risks or uncertainties materialise, or if underlying assumptions prove
incorrect, the Company's actual results may vary materially from those
expected, estimated or projected. No representation or warranty is made that
any forward-looking statement will come to pass. Any forward-looking
statements speak only as at the date of this announcement. The Company and its
directors expressly disclaim any obligation or undertaking to publicly release
any update or revisions to any forward-looking statements contained in this
announcement to reflect any change in events, conditions or circumstances on
which any such statements are based after the time they are made, other than
in accordance with its legal or regulatory obligations (including under the UK
Listing Rules and the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority). Nothing in this announcement shall exclude any
liability under applicable laws that cannot be excluded in accordance with
such laws.
LEI Number: 213800U8Q9K2XI3WRE39
1. The Group provides alternative performance measures ("APMs") which are
not defined or specified under the requirements of International Financial
Reporting Standards as adopted by the EU. We believe these APMs provide
readers with important additional information on our business and aid
comparability. We have included a comprehensive list of the APMs in note 2 to
the Consolidated Financial Statements, with definitions, an explanation of how
they are calculated, why we use them and how they can be reconciled to a
statutory measure where relevant.
2. FY20 represents only an 8.5 month period to 30 September 2020. To aid
comparability of the Group's results aggregate measures have been used for the
FY20 period as if the acquisitions of the Standalone ATG and Proxibid Group
had occurred on 1 October 2019. For further detail refer to note 2.
3. Refer to glossary for full definition of the terms.
CEO REVIEW
We have delivered strong operational and financial results whilst
simultaneously delivering value to auctioneers and bidders, managing
historically high levels of online auction activity across all our
marketplaces.
Overview
The past 12 months saw ATG take yet another large step in its mission to
transform the auction industry.
Before covering what we have achieved this year, I wanted to take a moment to
recognise briefly how the transformation of the Company in FY20 enabled such a
strong FY21.
In FY20, just as the pandemic hit, we bought Proxibid, a major auction
marketplace in North America. We then focused on the extreme demands placed by
COVID-19 on every aspect of ATG.
While the pandemic presented significant challenges for us, our auctioneer
customers and bidders, we were aided by the fact that the industry had already
been going through a structural shift from offline to online for the past 15
years. The pandemic simply accelerated this transition.
Auctioneers moved heavily into timed auctions and bidders who used to bid
online, in the room or on the phone were often given online as the only
choice. This important dynamic affected not only our customers but our
employees as well. Our team went from one in which we worked in the office
five days per week to one where we are almost never in the office.
While this change would have been a challenge for any other business, our team
supports customers conducting events and sales where the auction activity and
bidding activity is happening in real time. Real time support means that any
glitch is felt instantly, and quality is paramount. As auctioneers increased
the amount of their business being conducted online, the need for robust
technology and quality service was even more imperative.
The fact that our team of c.250, spread across the US, UK, and Europe, has for
the past 18 months been able to transfer so effectively from office to
home-work life while remotely supporting almost 1,000 auctions per week on our
technology, is a testament to their dedication, ability, knowledge, and raw
perseverance. Their performance the previous year in incredibly challenging
personal and work situations is truly commendable. Their work is what enabled
us to have the FY21 we delivered.
In FY21, we delivered strong operational and financial results whilst
simultaneously managing historically high levels of online auction activity
across all our marketplaces, as well as significant corporate events. In
October 2020, we purchased Auction Mobility, the best white label provider to
the art, antiques, and collectables sector globally. In June 2021 we announced
the proposed acquisition of LiveAuctioneers, the largest curated online
marketplace for Art & Antiques ("A&A") in North America. This will add
a massive and fast-growing new geography to our A&A network and greatly
expand both the inventory we offer and the breadth of bidder base for
auctioneers.
In February 2021, we successfully led an Initial Public Offering ("IPO") of
the Company on the London Stock Exchange. The transition to becoming a public
company has given us access to capital to grow and continue to lead the
transformation of the industry; it has enabled us to fund the purchase of
LiveAuctioneers post the year end in October 2021, with additional
institutional funding; it also gives us a more visible platform, with valuable
transparency, and demonstrates a commitment to our customers that we hold
ourselves and our strategy accountable to a public level of scrutiny. This
supports our credibility with customers as they look to choose their online
partner of the future, providing the reassurance of our solid financial
profile and giving them the confidence that we will be able to serve them as a
reliable and trusted partner for many years to come.
Summary of operating performance
We have seen revenue increase this year, reflecting an increase in THV, GMV,
number of bidder sessions and online share. Through our platforms, we
attracted over 680,000 bidders from 160 countries to 44,000 auctions and sold
c6.0 million items on our marketplaces.
We delivered strong financial results and added value to the auction industry
in unique circumstances.
We firmly believe that the shift online will continue as we move into our post
COVID-19 future, as we have demonstrated the advantages that online selling
and buying bring to both sides of the marketplace.
Supporting our stakeholders
Over the last year, we focused on:
1 Supporting our customers - both auctioneers and bidders - to enable
them to keep running their businesses
2 Supporting our employees, both in terms of physical and mental health
3 Emerging from the pandemic in a stronger position than we entered it
We delivered against all of these priorities.
We supported our customers. The auction industry, across all verticals, is
moving increasingly from live auctions to timed. We acted swiftly to
facilitate this change. We invested heavily in our client relationship
management capabilities to better help auctioneers optimise their digital
marketing spend. We also invested in tools such as our timed bidding dashboard
which made it more convenient and efficient for them to run online. For
bidders, we invested in better user experience, and kept almost 1,000 auctions
up and running each week, facilitating the sale of over £6bn of second-hand
items in the past year. For many whose businesses depend on buying at auction,
this meant they could keep going.
We supported our people. We supported our people with a structured health and
wellness programme that was packed with activities each month to help people
focus time on their wellbeing. These included flexible working when needed,
access to an employee assistance and support helpline, external talks with
nutritionists, and scheduled get-togethers to keep in touch regularly. In our
annual survey, our employees rated as exceptionally positive our response to
taking care of their and their families' wellbeing this past year.
We are emerging from the pandemic stronger than we entered it. We grew our key
financial metrics, we strengthened our team, and we reinforced our technology.
When combined with the expansion of our bidder base, we are now undeniably
more valuable to auctioneers and to bidders than just one year ago. We
successfully integrated Proxibid operationally into the Group and enabled
cross-listing on the BidSpotter and Proxibid platforms, resulting in a higher
online share from the cross pollination of bidders. The acquisition of Auction
Mobility at the beginning of the financial year, and the acquisition of
LiveAuctioneers post the year end, will further transform our capabilities and
strengthen our position. One of the value drivers for acquiring
LiveAuctioneers is their online payments product, which we intend to roll out
in the latter half of FY22 to ATG's North American customers and then into
Europe.
The past year has transformed the industry and the value of what we provide to
auctioneers and bidders. An industry with a history and business model
thousands of years old demonstrated that the move it had made online amidst
the pandemic was truly a structural shift, evolving with the needs and
expectations of customers and aligned with online commerce trends.
As we continue to invest in serving auctioneers and their consignors, as well
as the growing pool of bidders both internationally and domestically, we will
unlock further value in this exciting and diverse segment of digital commerce.
Our purpose and strategic focus
We exist to unlock the value of the curated secondary goods market for the
benefit of auctioneers, buyers, and our society as a whole. By giving millions
of items second, third, and even infinite lives, we are accelerating the
growth of the circular economy and creating a new global channel of
sustainable commerce.
We connect bidders to millions of curated specialised and unique items sold by
auctioneers each year. We are changing the way millions of people buy and sell
tens of billions of pounds worth of secondary market items by providing an
integrated suite of digital products and services that expand the capabilities
and reach of auctioneers, while presenting bidders with the best end-to-end
online bidding experience for auctions.
We are leading the transformation of the auction industry by building close
partnerships with our auctioneer customers as part of a shared success
business model and by establishing ourselves as the most trusted and easy
buying option for bidders. We use our insight, digital expertise, technical
breadth, and passion for the auction industry to drive better outcomes for the
consignors and buyers of goods at auction. In the process, we attract more
assets to this powerful channel for accelerating the adoption of a more
circular economy.
Our vision is to be the largest curated online marketplace in the world for
secondary items traded at auction.
Our strategy for achieving this is to provide clear value to both auctioneers
and their consignors, as well as to bidders, through an integrated product and
service offering that meets the end-to-end expectations of auctioneers and
bidders alike.
For our auctioneer customers, we help auction houses achieve target asset sale
prices for their consignors by giving auction houses access to world-leading
digital marketplaces that massively extend their audience reach. Putting them
into contact with bidders from over 160 countries around the world, generating
over 120 million web sessions per year, helps auctioneers ensure that they
have maximised the number of eyeballs on each and every item they are selling
and therefore feel confident they have achieved the maximum possible sale
price for their consignor. At the same time as driving their top line higher,
our integrated offering helps auctioneers lower their operating costs by
eliminating process and service inefficiencies and delivering high return on
investment for their marketing spend, resulting in more profitable auction
houses.
For bidders, our strategy is to enable them to benefit from the incredible
range and value available in the secondary market by giving them access to the
best and largest selection of specialised and unique secondary market items in
the world in an efficient, trusted, and secure online marketplace environment.
Our strategy plays out through execution against six growth levers:
(· )Extending our addressable market
(· )Growing our online share
(· )Enhancing the network effect
(· )Expanding operating leverage
(· )Growing take rate via value added services
(· )Pursuing accretive M&A
Executing on all six growth levers while running an IPO process this year is
testament to the strength of our value proposition to auctioneers and bidders
alike and the commitment and capabilities of our team.
ESG
We believe in doing the right thing, and ESG is both at the heart of our
operations and central to our purpose. For the environment, the auction
industry plays an important role in accelerating the growth of the circular
economy, with the evolution of online auctions supporting the market for
second-hand goods. Our services are a vital contribution towards this.
However, we acknowledge that there are environmental impacts of our operations
that we must address, which is why, as a new PLC, we have calculated carbon
emissions for which we are directly responsible as well as carbon emissions
resulting from the use of our products. This is a vital first step to allow us
to identify our largest emission sources and therefore where we need to focus
future efforts.
For our people, we are committed to being a company where everyone can work
and thrive in a supportive environment. Our people bring talent, energy and
experience to the business and diversity is vital to our success. In line with
our mission to be a trusted partner to our industry we support educational
programmes across auctions, technology and the markets we serve, as well as
sponsorships and partnerships that promote auctioneering, industry standards
and the trade in secondary goods.
Summary
The management team and Board are excited by the year ahead and confident in
the value we can continue to bring to the industry.
Auctioneers are entrepreneurs at heart, and innovation in the face of new
opportunities or changing circumstances is a hallmark of the most successful.
Establishing the true market value for any item has enabled auctions to be one
of the longest-standing and most reliable building blocks of the modern
commercial economy.
For centuries, auctions have survived and thrived through economic change,
wars, the birth of the internet and now, a global pandemic. The auction
landscape has been changed forever by this event. New bidders have been
introduced to the world of auctions, and bidders who had previously bid only
in person and never considered buying online are now using the internet like
seasoned dealmakers.
It is too early to know how many of those new bidders will keep coming back to
buy at auction and how many will remain online, but, as with all
retail-related industries, COVID-19 has accelerated the inexorable shift
towards online.
John-Paul Savant
Chief Executive Officer
CFO REVIEW
Group re-structure and presentation of results
The financial results for FY21 are presented for the year ended 30 September
2021. Prior to the Group embarking on its journey to list on the London Stock
Exchange, in February 2020 the Group underwent a significant restructure at
the same time as acquiring the Proxibid Inc. ("Proxibid Group". Full details
of the restructure and the accounting implications are detailed in note 1 of
the Consolidated Financial Statements. The reported financial results for FY20
represent only an eight-and-a-half month period to 30 September 2020.
During the current financial year, the Group continued with its growth
strategy and acquired Auction Mobility LLC ("Auction Mobility") on 16 October
2020 for consideration of up to £33.4m. The results for Auction Mobility are
included within the Auction Services operating segment in FY21.
On 26 February 2021, the Group successfully completed its IPO on the London
Stock Exchange. Immediately prior to this, as part of the Group's capital
reorganisation, all shares held in Auction Topco Limited, the Group's previous
parent company, were transferred to Auction Technology Group plc, a newly
incorporated parent entity, in a share for share exchange. The reorganisation
did not constitute a business combination under IFRS 3 "Business Combinations"
and therefore the Group has presented its Consolidated Financial Statements as
though the current Group structure had been in place from the date of
incorporation of Auction Topco Limited on 13 January 2020.
The impact of the above restructures affects the comparability of the Group's
results. Therefore to aid comparisons between FY20 and FY21 alternative
performance measures ("APMs") have been presented. The prior period unaudited
aggregate results have been presented as if the acquisitions of Turner
Topco Limited ("Standalone ATG") and Proxibid Group had occurred on 1
October 2019 and include the full year actual results for this period.
Note 2 of the Consolidated Financial Statements includes a full reconciliation
of all APMs presented to the reported results for FY21 and FY20.
Revenue
FY21 FY20 Movement
£m £m
Reported revenue
Arts & Antiques ("A&A") 16.2 8.4 92.9%
Industrial and Commercial ("I&C") 43.7 24.7 76.9%
Total marketplace 59.9 33.1 81.0%
Auction Services 7.1 0.8 787.5%
Content 3.1 1.6 93.8%
Total 70.1 35.5 97.5%
Aggregate revenue (unaudited)
Arts & Antiques ("A&A") 16.2 13.4 20.9%
Industrial & Commercial ("I&C") 43.7 34.6 26.3%
Total marketplace 59.9 48.0 24.8%
Auction Services 7.1 1.5 373.3%
Content 3.1 2.8 10.7%
Total 70.1 52.3 34.0%
Group
Reported revenue was £70.1m for the year, an increase of 97.5%, reflecting a
full 12-month contribution for FY21 compared to only eight-and-a-half months
contribution for FY20. Aggregate revenue grew 34.0%, reflecting strong
performance across both the A&A and I&C marketplace segments, which
increased 24.8% combined with the contribution from the acquisition of Auction
Mobility in FY21 within Auction Services.
Auctioneers across the Group's verticals and geographies remained active,
driving growth in THV above historical levels. In addition, the trends
accelerated by COVID-19, such as the shift to online auctions, have continued,
with the Group's online share remaining strong in spite of the record THV
growth.
Art & Antiques
Reported revenue increased by 92.9% and aggregate revenue by 20.9%. The growth
in both reported and aggregate revenue was driven by the impact of COVID-19
which has led to an acceleration of the structural trend towards online
activity. The second half of FY20 started to see the beginnings of disruption
caused by the national lockdowns as a result of COVID-19, particularly in the
UK, with some reduction in levels of auction activity. Although there have
been further periods of lockdown during FY21, the overall auction activity has
been less impacted.
FY21 has benefitted from the deferral of some activity in the second half of
FY20, which contributed to overall strong growth in THV in the year.
Industrial & Commercial
Reported revenue increased by 76.9% and aggregate revenue by 26.3%. Revenue
grew significantly in the I&C segment due to both THV growth above
historic levels and elevated online share.
Overall levels of activity amongst our auctioneer base remained extremely high
with a high level of inventory coming to market for sale through auction. THV
growth has further benefitted from growth in verticals which have not
traditionally been a major source of activity (for example equine and real
estate). Elevated levels of THV began in the second half of FY20 and have
remained through FY21.
I&C continued to benefit from the structural trends towards online
auctions and timed auctions which were significantly accelerated as a result
of the COVID-19 pandemic. The Group has not seen material reversion to live
auctions from auctioneers who adopted timed auctions for the first time during
the early months of COVID-19, which were particularly prevalent in the US
I&C market.
Auction Services
The significant increase in the Group's reported and aggregate revenue
attributable to Auction Services in FY21 was due to the acquisition of Auction
Mobility on 16 October 2020. Revenue from the Group's back-office products
remained stable.
Content
There has been an increase in both reported and aggregate revenue year on
year. In the second half of FY20 there was a significant decline in reported
and aggregate revenue from advertising fees generated by the Antiques Trade
Gazette that occurred due to the impact of the COVID-19 pandemic. During the
second half of FY21 there has been some recovery in advertising volumes,
however, overall it remains below levels achieved pre pandemic.
Financial performance
Reported Aggregate
FY21 FY20 Movement FY20 Movement
£m £m £m
Revenue 70.1 35.5 97.5% 52.3 34.0%
Cost of sales (24.5) (15.1) 62.3% (22.3) 9.9%
Gross profit 45.6 20.4 123.5% 30.0 52.0%
Administrative expenses (66.5) (25.6) 159.8% (33.1) 100.9%
Other operating income 0.3 0.2 50.0% 0.2 50.0%
Operating loss (20.6) (5.0) 312.0% (2.9) 610.3%
Adjusted EBITDA (as defined in note 2) 31.8 15.9 100.0% 22.2 43.2%
Finance income 10.4 - 100.0% - 100.0%
Finance cost (17.1) (14.0) (22.1)% (16.4) (4.3)%
Net finance costs (6.7) (14.0) 52.1% (16.4) 59.1%
Loss before tax (27.3) (19.0) (43.7)% (19.3) (41.5)%
Tax (expense) / credit (2.3) 2.6 (188.5)% 2.6 (188.5)%
Loss for the year/period attributable to the equity holders of the Company (29.6) (16.4) (80.5)% (16.7) (77.2)%
Reported loss before tax
The Group's gross profit margin has increased to 65.1%, from the reported
margin of 57.5% in FY20. As a result of the Group's operating model, increases
in revenue largely flow through to gross profit.
The Group's administrative expenses have increased, reflecting the nature of
the one-off events which have taken place during the year such as the IPO and
the acquisitions. Costs related to the IPO and the acquisition of Auction
Mobility and LiveAuctioneers totalled £21.8m (FY20: £9.8m related to the
acquisition of Proxibid and the Group restructuring). These costs have been
classified as exceptional items as further detailed in note 2 of the
Consolidated Financial Statements. As the Group is now operating in a listed
environment and has continued to grow and recruit, employee costs have
increased to £21.3m (FY20: £13.3m).
As part of the Group's IPO process shares were issued to Directors and
employees and new share option schemes were launched post the IPO. The
share-based payment expense was £11.9m, which included a one off charge of
£10.9m arising from the equity grants made in the run up to the IPO (FY20:
£0.3m). With the addition of Auction Mobility, and the full year charge for
previous acquisitions, the Group's acquired intangible assets amortisation
charge has also increased to £13.2m (FY20: £7.3m).
The above all contributed to the Group's increased loss before tax of £27.3m
(FY20: £19.0m).
Adjusted EBITDA
Adjusted EBITDA and aggregate adjusted EBITDA definitions and reconciliations
to the reported results are presented in note 2 of the Consolidated Financial
Statements. Adjusted EBITDA increased by 100.0% to £31.8m and aggregate
adjusted EBITDA increased by 43.2% for the year ended 30 September 2021. The
adjusted EBITDA margin for FY21 was 45.4% and in FY20 was 44.8%. The Group
continues to benefit from a high operating leverage with a significant
proportion of revenue dropping through to adjusted EBITDA.
Refinancing
During the year the Group has restructured its financing facilities. The
following events took place:
- 13 October 2020, an additional loan of $75.0m was entered into under the
Old Senior Facilities Agreement, of which $33.5m was drawn down.
- 1 March 2021, proceeds from the IPO were used to part repay the Old Senior
Facilities leaving £39.4m outstanding under the facility.
- 17 June 2021, the Old Senior Facilities were repaid in full, and the Group
entered into a New Senior Facilities Agreement.
- The New Senior Facilities Agreement comprises:
- a senior term loan facility (the "New Senior Term Facility") for $204.0m
for the acquisition of LiveAuctioneers. The New Senior Term Facility was drawn
down in full on 30 September 2021 prior to completion of the acquisition of
LiveAuctioneers on 1 October 2021. The loan will be due for repayment on 17
June 2026.
- a multi-currency revolving credit working capital facility (the "New
Revolving Credit Facility") for $49.0m. Any sums outstanding under the New
Revolving Credit Facility will be due for repayment on 17 June 2024, subject
to the optionality of two 12-month extensions. The facility had not been drawn
down as at 30 September 2021.
Finance costs
Net finance costs were £6.7m (FY20: £14.0m). Finance income of £10.4m
(FY20: nil) related to foreign exchange gains of £8.9m, largely arising from
the £223.8m cash in escrow balance which is held in US dollars and the £1.5m
movement in contingent consideration for Auction Mobility.
Finance costs of £17.1m (FY20: £14.0m) relate to interest costs on the
borrowings of £8.1m including the early repayment fees for the Old Senior
Facilities Agreement, £2.6m for amortised finance costs and £6.3m interest
on the preference shares. In the prior period £8.9m of interest costs were
incurred on the preference shares and £5.0m on the Old Senior Facilities
Agreement. The preference shares were fully settled as part of the IPO
restructure.
Taxation
The overall tax charge during the year was £2.3m, giving an effective tax
rate of 8.5% (FY20: credit of £2.6m). The tax charge for FY21 arises due to
expenses incurred on the IPO and acquisitions that were not deductible for tax
purposes and changes to future tax rates on deferred tax liabilities.
Tax uncertainties and risks are increasing for all multinational groups which
could affect the future tax rate. The Group takes a responsible attitude to
tax, recognising that it affects all our stakeholders. The Group seeks at all
times to comply with the law in each of the jurisdictions in which we operate,
and to build open and transparent relationships with those jurisdictions' tax
authorities. The Group's tax strategy is aligned with the commercial
activities of the business, and within our overall governance structure the
governance of tax and tax risk is given appropriate priority by the Board.
Loss per share and adjusted earnings per share
Basic loss per share was 33.6p in FY21 compared to 34.3p in FY20. The weighted
average number of shares in issue during the period was 88.3m (FY20: 47.8m
shares). Adjusted earnings per share for FY21 was 6.6p (FY20: loss of 5.6p). A
reconciliation of the Group's basic and diluted loss per share to adjusted
earnings per share is set out in note 2 of the Consolidated Financial
Statements.
Foreign currency impact
The Group's reported performance is sensitive to movements in both the US
dollar and the euro against the British pound sterling. The pound sterling
strengthened by 7.1% against the US dollar and 0.8% on an average rate basis
against the euro compared to FY20, as shown in the table below.
Average rate Closing rate
FY21 FY20 Movement FY21 FY20 Movement
Euro 1.14 1.14 0.8% 1.16 1.10 5.2%
US dollar 1.37 1.28 7.1% 1.35 1.29 5.0%
When comparing aggregate revenue in FY20 to FY21, changes to currency exchange
rates had an adverse impact on aggregate revenue of £3.1m.
Statement of financial position
Overall net assets have increased by £454.9m to £439.5m at 30 September
2021. Total assets increased by £394.9m, and the main drivers for the
increase were the cash held in escrow of £223.8m for the LiveAuctioneers
acquisition, the draw down of the New Senior Term Facility of £148.7m and the
additional goodwill in respect of Auction Mobility of £19.0m. Total
liabilities decreased by £60.0m, primarily due to the change in financing
arrangements.
Equity
The capital structure of the Group has undergone two significant events during
the year. The first was the IPO on 26 February 2021, when the Company issued
41,239,257 ordinary shares for a cash consideration of £247.4m. The second
was the equity raise via a cash-box placing for the LiveAuctioneers
acquisition on 17 June 2021, whereby the Company issued 19,999,990 for a cash
consideration of £244.0m.
Cash flow and adjusted net debt
The Group continued to be cash generative at the operating level. Cash
generated from operations (before tax) amounted to £15.9m (FY20: £6.8m),
after incurring cash outflows of £19.1m (FY20: £8.5m) in relation to
exceptional items referred to above.
The net cash used in investing activities during the year was £27.3m (FY20:
£182.6m) primarily driven by the acquisition of Auction Mobility for £24.9m.
The net cash generated from financing activities was £396.1m (FY20: £190.5m)
reflecting the repayment of the preference shares, the Old Senior Facilities
Agreement, the draw down on the New Senior Term Facility and the equity raises
through the IPO and cash-box placing.
Adjusted net cash at 30 September 2021 stood at £24.6m (30 September 2020:
net debt of £200.4m). The Group had cash in bank of £173.7m (FY20: £14.2m)
and borrowings of £149.0m (FY20: £214.6m).
The Group's adjusted free cash flow was £30.4m (FY20: £14.0m), a conversion
rate of 95.7% (FY20: 88.0%). A reconciliation of the Group's cash generated by
operations to adjusted free cash flow and adjusted free cash flow conversion
is set out in note 2 of the Consolidated Financial Statements.
Dividends
As outlined in our IPO prospectus, the Group sees strong growth opportunities
through organic and inorganic investments and, as such, intends to retain any
future earnings to finance such investments. No dividends have been paid or
proposed for FY21 or FY20.
Tom Hargreaves
Chief Financial Officer
Consolidated Statement of Profit or Loss and Other Comprehensive Income or
Loss
for the year ended 30 September 2021
Note Year 8.5 months
ended ended
30 September 30 September
2021 2020(1)
£000 £000
Revenue 4,5 70,080 35,478
Cost of sales (24,544) (15,042)
Gross profit 45,536 20,436
Administrative expenses (66,506) (25,594)
Other operating income 346 179
Operating loss 4 (20,624) (4,979)
Finance income 6 10,394 2
Finance cost 6 (17,078) (14,002)
Net finance costs 6 (6,684) (14,000)
Loss before tax 4 (27,308) (18,979)
Tax (expense)/credit 7 (2,322) 2,591
Loss for the year/period attributable to the equity holders of the Company (29,630) (16,388)
Other comprehensive loss for the year/period attributable to the equity
holders of the Company
Items that may subsequently be transferred to profit and loss:
Foreign exchange differences on translation of foreign operations (507) (440)
Other comprehensive loss for the year/period, net of tax (507) (440)
Total comprehensive loss for the year/period attributable to the equity (30,137) (16,828)
holders of the Company
Loss per share p p
Basic and diluted 8 (33.6) (34.3)
The above results are derived from continuing operations.
(1 )8.5 months ended 30 September 2020 represents the period from date of
incorporation of Auction Topco Limited on 13 January 2020 to 30 September
2020. See note 1 for details on the Group reorganisation.
Consolidated Statement of Financial Position
as at 30 September 2021
Note 30 September 30 September
2021 2020
£000 £000
ASSETS
Non-current assets
Goodwill 10 141,160 124,023
Other Intangible assets 10 68,077 74,830
Property, plant and equipment 379 478
Right of use assets 12 1,401 1,924
Deferred tax asset 366 -
Trade and other receivables 85 88
Total non-current assets 211,468 201,343
Current assets
Trade and other receivables 9,699 8,653
Current tax asset 437 -
Cash and cash equivalents 11 397,451 14,193
Total current assets 407,587 22,846
Total assets 619,055 224,189
LIABILITIES
Non-current liabilities
Trade and other payables - (522)
Current tax liabilities (1,392) (1,578)
Loans and borrowings 13 (148,686) (213,444)
Lease liabilities 12 (775) (1,208)
Deferred tax liabilities (9,260) (11,588)
Total non-current liabilities (160,113) (228,340)
Current liabilities
Trade and other payables (17,310) (7,231)
Current tax liabilities (1,168) (2,119)
Loans and borrowings 13 (353) (1,159)
Lease liabilities 12 (657) (756)
Total current liabilities (19,488) (11,265)
Total liabilities (179,601) (239,605)
Net assets/(liabilities) 439,454 (15,416)
EQUITY
Share capital 14 12 11
Share premium 14 235,903 -
Other reserve 14 238,385 1,125
Capital redemption reserve 5 -
Share option reserve 1,649 276
Foreign currency translation reserve (947) (440)
Retained losses (35,553) (16,388)
Total equity 439,454 (15,416)
Consolidated Statement of Changes in Equity
for the year ended 30 September 2021
Share capital Share premium Other reserve Capital Share option reserve Foreign currency translation reserve Retained losses Total
£000 £000 £000 redemption £000 £000 £000 equity
reserve £000
£000
13 January 2020 - - - - - - - -
Comprehensive loss
Loss for the period - - - - - - (16,388) (16,388)
Other comprehensive loss - - - - - (440) - (440)
- - - - - (440) (16,388) (16,828)
Transactions with owners
Issue of ordinary shares 11 - 1,125 - - - - 1,136
Movement in equity-settled share-based payments - - - - 276 - - 276
30 September 2020 11 - 1,125 - 276 (440) (16,388) (15,416)
Comprehensive loss
Loss for the year - - - - - - (29,630) (29,630)
Other comprehensive loss - - - - - (507) - (507)
- - - - - (507) (29,630) (30,137)
Transactions with owners
Issue of ordinary shares as consideration for a business combination, net of 6 235,903 237,260 - - - - 473,169
transaction
costs and tax
Share buyback of ordinary shares, net of tax (5) - - 5 - - - -
Movement in equity-settled share-based payments - - - - 1,373 - 10,401 11,774
Tax relating to items taken directly to equity - - - - - - 64 64
30 September 2021 12 235,903 238,385 5 1,649 (947) (35,553) 439,454
Consolidated Statement of Cash Flows
for the year ended 30 September 2021
Note Year 8.5 months
ended ended
30 September 30 September
2021 2020
£000 £000
Cash flows from operating activities
Loss before tax (27,308) (18,979)
Adjustments for:
Amortisation of acquired intangible assets 10 13,219 7,306
Amortisation of internally generated software 10 4,576 2,843
Depreciation of property, plant and equipment 228 167
Depreciation of right of use assets 12 743 483
Share-based payment expense 15 11,892 276
Loss on disposal of property, plant and equipment - 10
Net exchange differences - (3)
Net finance costs 6 6,684 14,000
Increase in trade and other receivables (439) (1,527)
Decrease in trade and other payables 6,271 2,248
Cash generated by operations 15,866 6,824
Income taxes paid (6,090) (513)
Net cash generated from operating activities 9,776 6,311
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired 9 (24,948) (181,195)
Payment for internally generated software 10 (1,956) (1,304)
Payment for property, plant and equipment (149) (81)
Payment of deferred consideration 9 (234) -
Net cash used in investing activities (27,287) (182,580)
Cash flows from financing activities
Payment of contingent consideration (492) (1,847)
Repayment of loans and borrowings (108,956) (2,697)
Repayment of preference shares (117,716) -
Proceeds from loans and borrowings 176,639 86,088
Proceeds from the issue of preference shares 714 111,859
Interest element of lease payments 12 (74) (71)
Capital element of lease payments 12 (742) (509)
Issue of new share capital, net of share issue costs 473,158 857
Interest paid (26,428) (3,187)
Net cash generated by financing activities 396,103 190,493
Cash and cash equivalents at beginning of the year/period 14,193 -
Net increase in cash and cash equivalents 378,592 14,224
Effect of foreign exchange rate changes 4,666 (31)
Cash and cash equivalents at the end of the year/period 397,451 14,193
Notes to the Consolidated Financial Statements
1. Accounting policies
While the financial information contained in this Preliminary Announcement has
been prepared in accordance with the recognition and measurement criteria of
International Accounting Standards in conformity with the requirements of the
Companies Act 2006, the applicable legal requirements of the Companies Act
2006 and International Financial Reporting Standards ("IFRS") adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in the European Union, this
announcement does not itself contain sufficient information to comply with
IFRS.
The information for the year ended 30 September 2021 does not constitute
statutory accounts for the purposes of Section 435 of the Companies Act 2006.
A copy of the accounts for the previous holding company Auction Topco Limited
for the year ended 30 September 2020 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 2021 have been audited and
finalised on the basis of the financial information presented by the Directors
in this Preliminary Statement and will be delivered to the Registrar of
Companies following the Annual General Meeting.
General information
Auction Technology Group plc (the "Company") is a company incorporated in the
United Kingdom under the Companies Act. The Company is a public company
limited by shares and is registered in England and Wales.
Group reorganisation
On 13 February 2020, Auction Topco Limited, through its subsidiary Auction
Bidco Limited, simultaneously purchased Turner Topco Limited and its
subsidiaries ("Standalone ATG") and Proxibid Inc. and its subsidiaries
("Proxibid Group") (together forming the "Auction Topco Limited Group"). Prior
to the acquisition of Standalone ATG and Proxibid Group, Auction Topco Limited
had no trading activity.
On 17 February 2021, as part of the capital reorganisation, all shares held in
Auction Topco Limited were transferred to Auction Technology Group plc, a
newly incorporated parent entity, in a share for share exchange. Following
this reorganisation Auction Technology Group plc completed an Initial Public
Offering ("IPO") on the London Stock Exchange for a proportion of its share
capital. The Company was admitted to the premium listing segment of the
Official List of the FCA and London Stock Exchange's Main Market for listed
securities effective 26 February 2021.
As there were no changes in rights or proportion of control exercised because
of the insertion of Auction Technology Group plc on top of the existing
Auction Topco Limited Group, the reorganisation does not constitute a business
combination under IFRS 3 "Business Combinations". Following guidance from IAS
8 "Accounting Policies, Changes in Accounting Estimates and Errors", the
integration of the Company has been prepared under merger accounting
principles. This policy, which does not conflict with IFRS, reflects the
economic substance of the transaction. Under these principles, the Group has
presented the Consolidated Financial statements of the Group as though the
current Group structure had been in place from the date of incorporation of
Auction Topco Limited. The comparative and current year consolidated reserves
of the Group are adjusted to reflect the statutory share capital, share
premium and other reserve of Auction Technology Group plc as if it had always
existed. A merger reserve of £1,527,000 has been recognised in other reserves
to complete the equity position as a result of the application of merger
accounting (see note 14).
These Consolidated Financial Statements are the first full year set of
financial statements presented for the newly formed Group and the prior period
comparison is to that of the former Auction Topco Limited Group. Although
there has been a capital reorganisation, the underlying structure of the Group
is unchanged and as such the Consolidated Statement of Profit or Loss and
Other Comprehensive Income, Consolidated Statement of Financial Position,
Consolidated Statement of Changes in Equity and Consolidated Cash Flow
Statement have been presented on a consistent basis to the prior period.
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 under the historical
cost convention, except for certain financial instruments which have been
measured at fair value. The accounting policies applied in these Consolidated
Financial Statements are the same as those applied in the most recent annual
financial statements for the predecessor group. The Group has presented its
Consolidated Financial Statements of the Group as though the current Group
structure had been in place from the date of incorporation of Auction Topco
Limited.
The following new accounting standards, amendments and interpretations to
accounting standards have been issued but these are not mandatory for
30 September 2021 and they have not been adopted early by the Group:
- IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark
Reform
- Amendment to IFRS 16: COVID-19 Related Rent Concessions beyond June 2021
- Annual Improvements to IFRS Standards 2018 -2020
- Amendments to IAS 16: Property, Plant and Equipment: proceeds before
intended use
- Amendments to IFRS 3: Business Combinations: reference to conceptual
framework
- IFRS 17: Insurance Contracts
- Amendments to IAS 1: Classification of liabilities as current and
non-current
- IAS 37: Onerous Contracts: costs of fulfilling a contract
- IFRS 4: Extension of the temporary exemption from applying IFRS 9
- Amendments to IAS 1 and IFRS Practice Statement 2: disclosure of
accounting policies
- Amendments to IAS 12: Deferred Tax related to assets and liabilities
arising from a single transaction
- Amendments to IAS 8: Definition of accounting estimates
The Directors anticipate that the adoption of planned standards and
interpretations in future periods will not have a material impact on the
financial statements of the Group.
Going concern
At 30 September 2021, the Group's adjusted net cash position, excluding lease
liabilities and cash held, was £24.6m and comprise of cash and cash
equivalents of £173.7m and loans and borrowings of £149.0m.
The following changes took place after the Company was admitted to the London
Stock Exchange on 26 February 2021:
- Primary proceeds were used to, amongst other things, repay all outstanding
liabilities with financing parties except for the loans under the Senior
Facilities Agreement.
- On 1 March 2021 an Amendment and Restatement Deed resulted in £39.4m
(US$43.2m and £8.0m) left outstanding under the Old Senior Facilities
Agreement.
- As part of the proposed acquisition for LiveAuctioneers Group, a New
Senior Facilities Agreement was entered into on 17 June 2021. The New Senior
Facilities Agreement includes the following:
- US$204.0m New Senior Term Facility for the acquisition of LiveAuctioneers
Group. The New Senior Term Facility was drawn in full immediately prior to
completion of the acquisition on 1 October 2021 and will be due for repayment
on 17 June 2026; and
- US$49.0m multi-currency New Revolving Credit Facility. Any sums
outstanding under the New Revolving Credit Facility will be due for repayment
on 17 June 2024, subject to the optionality of two 12-month extensions.
- All outstanding liabilities under the Old Senior Facility Agreement were
repaid in full on 25 June 2021.
On 17 June 2021, as part of a capital raising the Company issued 19,999,990
ordinary shares of 0.01p each for a cash consideration of £244.0m. The
proceeds net of expenses were received and held in escrow for the purposes of
the acquisition of LiveAuctioneers Group.
The Directors have undertaken the going concern assessment for the Group for a
minimum of 12 months from the date of signing these financial statements. The
Directors have assessed the Group's prospects, both as a going concern and its
viability longer term of three years, which includes the LiveAuctioneers Group
acquisition on 1 October 2021 (the "Enlarged Group").
As part of the going concern review the Directors have reviewed the Enlarged
Group's forecasts and projections and assessed the headroom on the Enlarged
Group's New 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. Even in the
most extreme downside scenario (the combination of all downside scenarios
occurring at once) modelled the Group would be able to operate within the
level of its current available debt facilities and covenants.
As 30 September 2021 the Group has cash of £173.7m (excluding the cash held
in escrow) and is in a net current asset position.
After due consideration, the Directors have concluded that there is a
reasonable expectation that the Group has adequate resources to continue in
operational existence for at least 12 months from the date of this report. For
this reason, the Directors continue to adopt the going concern basis in
preparing the Consolidated Financial Statements for the year ended 30
September 2021.
2. Alternative performance measures
The Group uses a number of alternative performance measures ("APMs") in
addition to those measures reported in accordance with IFRS. Such APMs are not
defined terms under IFRS and are not intended to be a substitute for any IFRS
measure. The Directors believe that the APMs are important when assessing the
ongoing financial and operating performance of the Group and do not consider
them to be more important than, or superior to, their equivalent IFRS. The
APMs improve the comparability of information between reporting periods by
adjusting for factors such as one-off items and the timing of acquisitions.
The APMs are used internally in the management of the Group's business
performance, budgeting and forecasting, and for determining Executive
Directors' remuneration and that of other management throughout the business.
The APMs are also presented externally to meet investors' requirements for
further clarity and transparency of the Group's financial performance. Where
items of profits or costs are being excluded in an APM, these are included
elsewhere in our reported financial information as they represent actual
income or costs of the Group.
Other commentary within the CFO's Review, should be referred to in order to
fully appreciate all the factors that affect the Group.
Adjusted EBITDA
Adjusted EBITDA is the measure used by the Directors to assess the trading
performance of the Group's businesses and is the measure of segment profit.
Adjusted EBITDA represents profit/(loss) before taxation, finance costs,
depreciation and amortisation, share-based payment expense and exceptional
items. Adjusted EBITDA at segment level is consistently defined but excludes
central administration costs including Directors' salaries.
The following table provides a reconciliation from loss before tax to adjusted
EBITDA:
Year 8.5 months
ended ended
30 September 30 September
2021 2020
£000 £000
Loss before tax (27,308) (18,979)
Adjustments for:
Net finance costs (note 6) 6,684 14,000
Amortisation of acquired intangible assets (note 10) 13,219 7,306
Amortisation of internally generated software (note 10) 4,576 2,843
Depreciation of property, plant and equipment 228 167
Depreciation of right of use assets (note 12) 743 483
Share-based payment expense (note 15) 11,892 276
Exceptional operating items 21,765 9,789
Adjusted EBITDA 31,799 15,885
The following table provides the calculation of adjusted EBITDA margin which
represents adjusted EBITDA divided by revenue:
Year 8.5 months
ended ended
30 September 30 September
2021 2020
£000 £000
Reported revenue (note 4,5) 70,080 35,478
Adjusted EBITDA 31,799 15,885
Adjusted EBITDA margin 45.4% 44.8%
The basis for treating these items as adjusting is as follows:
Share-based payment expense
The Group issued several share awards to employees and Directors before the
IPO and operates employee share schemes. Income statement charges relating to
such schemes are significant non-cash charges (and related expenses) and are
driven by a valuation model which references the Group's share price and
future performance expectations. The income statement charge or credit is
consequently subject to volatility and does not fully reflect current
operational performance.
Exceptional operating items
The Group applies judgement in identifying significant items of income and
expenditure that are disclosed separately from other administrative expenses
as exceptional where, in the judgement of the Directors, they need to be
disclosed separately by virtue of their nature or size in order to obtain a
clear and consistent presentation of the Group's ongoing business performance.
Such items could include, but may not be limited to, listing costs associated
with the IPO, costs associated with business combinations, gains and losses on
the disposal of businesses, significant reorganisation or restructuring costs
and impairment of goodwill and acquired intangible assets. Any item classified
as an exceptional item will be significant and not attributable to ongoing
operations and will be subject to specific quantitative and qualitative
thresholds set by and approved by the Directors prior to being classified as
exceptional.
The exceptional operating items are detailed below:
Year 8.5 months
ended ended
30 September 30 September
2021 2020
£000 £000
Acquisition costs (13,323) (7,963)
Listing costs (8,442) -
Restructuring costs - (1,826)
Total exceptional operating items (21,765) (9,789)
For the year ended 30 September 2021, the Group's exceptional operating costs
are in respect of listing costs of the IPO and the acquisition costs
predominantly relating to the acquisition of LiveAuctioneers Group (see note
17) and Auction Mobility LLC (see note 9). These costs comprise legal,
professional and other consultancy expenditure incurred. The business has
undertaken focused acquisitive activity in the year which has been
strategically implemented to increase income, service range and critical mass
of the Group. The cash related to exceptional operating items is £19,058,000
(2020: £8,534,000).
For the period ended 30 September 2020, acquisition costs comprise legal,
professional and incidental expenditure incurred in relation to the
acquisition of Proxibid Inc. and Turner Topco Limited. Restructuring costs
comprise costs levied for professional advice and redundancy costs in
connection with restructuring activities.
Adjusted earnings/(losses) and adjusted diluted earnings per share
Adjusted earnings/(losses) excludes share-based payment expense, exceptional
items (operating and finance), amortisation of acquired intangible assets, and
any related tax effects.
The basis for treating these items as adjusting is as follows:
Amortisation of intangible assets acquired through business combinations
The amortisation of acquired intangibles arises from the purchase
consideration of a number of separate acquisitions. These acquisitions are
portfolio investment decisions that took place at different times and are
balance sheet items that relate to M&A activity rather than the trading
performance of the business. The adjustment comprises amortisation of acquired
intangible assets - brand, customer relationships and non-compete agreements
but does not include amortisation of acquired software.
Exceptional finance items
Exceptional finance items include foreign exchange differences arising on the
revaluation of the foreign currency loans and cash held on escrow (restricted
cash) and costs incurred on the early repayment of loan costs. The income
statement charge does not fully reflect current operational performance.
Number of ordinary shares
The number of ordinary shares for 30 September 2021 reflects the number of
shares in issue at IPO adjusted for the dilutive effect from
non-vested/non-exercised ordinary shares granted after the IPO through Long
Term Incentive Plan awards to the Executive Directors and other senior
management. The number of ordinary shares for 30 September 2020 reflects the
number of shares in issue for the IPO.
The following table provides a reconciliation from loss after tax to adjusted
earnings/(losses):
Year 8.5 months
ended ended
30 September 30 September
2021 2020
£000 £000
Loss attributable to equity shareholders of the Company (29,630) (16,388)
Adjustments for:
Amortisation of acquired intangible assets - brand, customer relationships and 9,797 5,345
non-compete agreements
Exceptional finance items (5,652) -
Share-based payment expense 11,892 276
Exceptional operating items 21,765 9,789
Tax on adjusted items (1,538) (4,583)
Adjusted earnings/(losses) 6,634 (5,561)
Number Number
Reported weighted average number of shares 88,248,037 47,784,365
Adjustment for: weighted average effect of shares issued in the period up to 11,751,963 52,215,635
and including the IPO
Number of shares in issue at IPO 100,000,000 100,000,000
Weighted average number of shares held by the Trust (622) -
Effect of dilutive share options 128,106 -
Number of ordinary shares and dilutive options at 30 September 100,127,484 100,000,000
p p
Adjusted diluted earnings per share (in pence) 6.6 (5.6)
Aggregate revenue, adjusted EBITDA and adjusted EBITDA margin
The Group has made certain acquisitions that have affected the comparability
of the Group's results. To aid comparisons between FY21 and FY20 in the CFO's
review, the prior period results have been presented to include the full year
results as if the acquisitions of Turner Topco Limited ("Standalone ATG") and
Proxibid Inc. ("Proxibid Group") had occurred on 1 October 2019. The
adjustment below reflects the actual revenue, adjusted EBITDA and adjusted
EBITDA margin from Proxibid Group and Standalone ATG for the period 1 October
2019 to 12 February 2020. These aggregate measures will fall away after FY21.
The following table provides reconciliation of aggregate revenue and aggregate
adjusted EBITDA from reported results for the year ended 30 September 2020:
Year ended
30 September 2020
£000
Reported revenue 35,478
Unaudited revenue from 1 October 2019 to 12 February 2020 16,828
Aggregate revenue (unaudited) 52,306
Adjusted EBITDA 15,885
Unaudited adjusted EBITDA from 1 October 2019 to 12 February 2020 6,353
Aggregate adjusted EBITDA (unaudited) 22,238
Aggregate adjusted EBITDA margin (unaudited) 42.5%
Adjusted net cash/(debt)
Adjusted net cash/(debt) comprises external borrowings net of arrangement
fees, cash and cash equivalents and allows management to monitor the
indebtedness of the Group. Adjusted cash/(debt) excludes lease liabilities and
cash held in escrow (restricted cash).
30 September 30 September
2021 2020
£000 £000
Cash and cash equivalents excluding restricted cash (note 11) 173,675 14,193
Current loans and borrowings (note 13) (353) (1,159)
Non-current loans and borrowings (note 13) (148,686) (213,444)
Total loans and borrowings (149,039) (214,603)
Adjusted net cash/(debt) 24,636 (200,410)
Adjusted free cash flow and adjusted free cash flow conversion
Free cash flow represents cash flow from operations less capitalised
development costs, which include development costs in relation to software
that are capitalised when the related projects meet the recognition criteria
under IFRS for an internally generated intangible asset. Movement in working
capital is adjusted for balances relating to exceptional items. The Group
monitors its operational efficiency with reference to operational cash
conversion, defined as free cash flow as a percentage of adjusted EBITDA.
The Group uses adjusted cash flow measures for the same purpose as adjusted
profit measures, in order to assist readers of the accounts in understanding
the operational performance of the Group. The two measures used are free cash
flow and free cash flow conversion. A reported free cash flow and cash
conversion rate has not been provided as it would not give a fair indication
of the Group's free cash flow and conversion performance given the high value
of exceptional items.
Year 8.5 months
ended ended
30 September 30 September
2021 2020
£000 £000
Adjusted EBITDA 31,799 15,885
Cash generated from operations 15,866 6,824
Adjustments for:
Exceptional items 21,765 9,789
Working capital from exceptional and other items (5,098) (1,255)
Additions to internally generated software (note 10) (1,956) (1,304)
Additions to property, plant and equipment (149) (81)
Adjusted free cash flow 30,428 13,973
Adjusted free cash flow conversion (%) 95.7% 88.0%
3. Significant judgements and key sources of estimation uncertainty
The preparation of the Group's Consolidated Financial Statements requires the
use of certain judgements, estimates and assumptions that affect the reported
amounts of assets, liabilities, income and expenses.
Estimates and judgements are evaluated continually, and are based on
historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
Key estimation uncertainties are the key assumptions concerning the future and
other key sources of estimation uncertainty at the reporting date that may
have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next period. Changes in
accounting estimates may be necessary if there are changes in the
circumstances on which the estimates were based, or as a result of new
information or more experience.
Significant judgements are those that the Group has made in the process of
applying the Group's accounting policies and that have the most significant
effect on the amounts recognised in the financial statements.
Significant judgements and key sources of estimation uncertainty are provided
below:
Estimates
Impairment of goodwill and other intangible assets
At least on an annual basis management performs a review of the carrying
values of goodwill and intangible assets.
This requires an estimate of the value in use of the cash-generating unit
("CGU") to which the goodwill and intangible assets are allocated. To estimate
the value in use, management estimates the expected future cash flows from the
CGU and discounts them to their present value at a determined discount rate,
which is appropriate for the country where the goodwill and intangible assets
are allocated to.
Forecasting expected cash flows and selecting an appropriate discount rate
inherently requires estimation. Sensitivity analysis has been performed over
the estimates (see note 10). The resulting calculation is sensitive to the
assumptions in respect of future cash flows and the discount rate applied.
Management considers that the assumptions made represent their best estimate
of the future cash flows generated by the CGUs, and that the discount rate
used is appropriate given the risks associated with the specific cash flows.
Although based on the sensitivity analysis performed there is no impairment
charge to goodwill or other intangible assets, and this estimate does not meet
the definition of a key source of estimation uncertainty as per IAS 1, it is
considered appropriate to disclose this as an area of significant estimation
due to the size of the balance and the fact that it could change as a result
of future events.
Contingent consideration arising on the acquisition of Auction Mobility
The Group acquired Auction Mobility LLC on 16 October 2020. The consideration
comprised US$33.0m, which was paid on completion, deferred consideration of
US$0.3m and a contingent amount up to a maximum of US$10.0m, which is payable
in early 2022 subject to the achievement of certain revenue targets. For
further details please see note 9.
Management has prepared a forecast of the expected revenue performance and
fair valued the contingent consideration using a weighted average probability
model, discounting the cash outflow to its net present value using a risk-free
rate. Forecasting expected revenue performance inherently requires estimation
and the potential range of outcomes of the contingent consideration payable is
US$nil to US$10.0m.
Judgements
Goodwill and other intangible assets arising from business combinations
The purchase price of an acquired company is allocated between intangible
assets and the net tangible assets of the acquired business with the residual
of the purchase price recorded as goodwill. The determination of the value of
the intangible assets requires significant judgements and estimates to be made
by the Directors. These judgements can include, but are not limited to, the
cash flows that an asset is expected to generate in the future and the
appropriate weighted average cost of capital.
Judgement is also required in determining appropriate useful economic lives
("UEL") of the intangible assets arising from business combinations.
Management makes this judgement on an asset class basis and has determined
that contracts with customers have a UEL of seven to 14 years; brands have a
UEL of five to 10 years; software has a UEL of three years; and non-compete
agreements have a UEL of four years.
4 . Operating segments
Segmental information is presented in respect of the Group's segments and
reflects the Group's management and internal reporting structure, which is
used to assess both the performance of the business and to allocate resources
within the Group. The assessment of performance and allocation of resources is
focused on the category of customer for each type of activity.
The Board has determined an operating management structure aligned around the
four core activities of the Group. Following the acquisition of Auction
Mobility during the year, a fourth operating segment for Auction Services has
been separated from the previous three reported segments. The comparative
split of segmental revenue has been restated to separately analyse Auction
Services products previously incorporated into the A&A and I&C
segments. This change is an alignment of how the businesses are managed
internally.
The four operating segments are as follows:
- Arts & Antiques ("A&A") auction revenues: focused on offering
auction houses that specialise in the sale of arts and antiques access to the
platforms thesaleroom.com and lot-tissimo.com. A significant part of the
Group's services is provision of the platform as a marketplace for the A&A
auction houses to sell their goods. The segment also generates earnings
through additional services such as marketing income. The Group contracts with
customers predominantly under service agreements, where the number of auctions
to be held and the service offering differs from client to client.
- Industrial & Commercial ("I&C") auction revenues: focused on
offering auction houses that specialise in the sale of industrial and
commercial goods and machinery access to the platforms BidSpotter.com,
BidSpotter.co.uk and Proxibid.com, as well as i-bidder.com for consumer
surplus and retail returns. A significant part of our services is provision of
the platform as a marketplace for the I&C auction houses to sell their
goods. The segment also generates earnings through additional services such as
marketing income. The Group contracts with customers predominantly under
service agreements, where the number of auctions to be held and the service
offering differs from client to client.
- Auction Services: includes revenues from the Group's auction house
back-office products with Auction Mobility and other white label products
including Wavebid.com.
- Content: focused on the Antiques Trade Gazette paper and online magazine.
The business focuses on two streams of income: selling subscriptions to the
Gazette and also selling advertising space within the paper and online. The
Directors have disclosed information required by IFRS 8 for the Content
segment despite the segment not meeting the reporting threshold.
There are no undisclosed or other operating segments.
An analysis of the results for the year/period by reportable segment is as
follows:
Year ended 30 September 2021
A&A I&C Auction Services Content Centrally allocated Total
£000 £000 £000 £000 costs £000
£000
Revenue 16,203 43,695 7,129 3,053 - 70,080
Adjusted EBITDA (see note 2 for definition and reconciliation) 13,938 37,897 5,276 1,063 (26,375) 31,799
Amortisation of intangible assets (note 10) (4,307) (12,321) (1,167) - - (17,795)
Depreciation of property plant and equipment (53) (160) (6) (9) - (228)
Depreciation of right of use assets (note 12) (259) (410) (17) (57) - (743)
Share-based payment expense (note 15) (1,415) (3,276) (61) - (7,140) (11,892)
Exceptional items (note 2) - - (1,107) - (20,658) (21,765)
Operating profit/(loss) 7,904 21,730 2,918 997 (54,173) (20,624)
Net finance costs (note 6) - - - - (6,684) (6,684)
Profit/(loss) before tax 7,904 21,730 2,918 997 (60,857) (27,308)
8.5 months ended 30 September 2020
A&A I&C Auction Content Centrally Total
£000 £000 Services £000 allocated £000
£000 costs
£000
Revenue 8,352 24,684 840 1,602 - 35,478
Adjusted EBITDA (see note 2 for definition and reconciliation) 6,932 19,747 672 513 (11,979) 15,885
Amortisation of intangible assets (note 10) (2,686) (7,463) - - - (10,149)
Depreciation of property plant and equipment (36) (121) (5) (5) - (167)
Depreciation of right of use assets (note 12) (189) (244) (10) (40) - (483)
Share-based payment expense (note 15) - - - - (276) (276)
Exceptional items (note 2) - (4,767) - - (5,022) (9,789)
Operating profit/(loss) 4,021 7,152 657 468 (17,277) (4,979)
Net finance costs (note 6) - - - - (14,000) (14,000)
Profit/(loss) before tax 4,021 7,152 657 468 (31,277) (18,979)
Segment assets which exclude deferred tax assets are measured in the same way
as in the financial statements. These assets are allocated based on the
operations of the segment and the physical location of the asset.
30 September 2021 30 September 2020
Total Additions Total non-current Additions
non-current assets to non-current assets to non-current
£000 assets £000 assets
£000 £000
A&A 50,433 1,714 53,448 56,310
I&C 133,320 715 147,652 155,464
Auction Services 27,218 29,511 56 70
Content 131 10 187 219
211,102 31,950 201,343 212,063
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 8.5 months
ended ended
30 September 30 September
2021 2020
£000 £000
Product and customer types
A&A 16,203 8,352
I&C 43,695 24,684
Auction Services 7,129 840
Content 3,053 1,602
70,080 35,478
Primary geographical markets
United Kingdom 18,901 9,605
North America 47,773 24,116
Germany 3,406 1,757
70,080 35,478
Timing of transfer of goods and services
Point in time 62,142 32,886
Over time 7,938 2,592
70,080 35,478
The Group has recognised the following assets and liabilities related to
contracts with customers:
30 September 30 September
2021 2020
£000 £000
Contract assets 597 784
597 784
Contract liabilities 1,367 575
1,367 575
6. Net finance costs
Year 8.5 months
ended ended
30 September 30 September
2021 2020
£000 £000
Foreign exchange gain 8,923 -
Interest income 9 2
Movements in contingent consideration (note 9) 1,462 -
Finance income 10,394 2
Interest on loans and borrowings (8,071) (5,014)
Movements in contingent consideration - (31)
Interest on lease liabilities (65) (71)
Interest payable on preference shares (6,328) (8,886)
Amortisation of finance costs (2,614) -
Finance cost (17,078) (14,002)
Net finance costs (6,684) (14,000)
7. Taxation
Year 8.5 months
ended ended
30 September 30 September
2021 2020
£000 £000
Current tax
Current tax on loss for the year 4,566 2,174
Adjustments in respect of prior years (40) -
Total current tax 4,526 2,174
Deferred tax
Current year (3,039) (4,765)
Adjustments from change in tax rates 1,299 -
Adjustments in respect of prior years (464) -
Deferred tax (2,204) (4,765)
Tax expense/(credit) 2,322 (2,591)
The tax on the Group's loss before tax differs from the theoretical amount
that would arise using the standard tax rate applicable to profits of the
Group as follows:
Year 8.5 months
ended ended
30 September 30 September
2021 2020
£000 £000
Loss before tax (27,308) (18,979)
Tax at United Kingdom tax rate of 19% (2020: 19%) (5,189) (3,606)
Tax effect of:
Expenses not deductible for tax purposes 6,839 3,388
Differences in US tax rates 283 70
Deferred tax not recognised (381) 102
Adjustment to tax charge in respect of deferred tax arising on acquisition (25) (3,218)
Adjustments to tax charge in respect of current period deferred tax - 673
Adjustments in respect of change in tax rates 1,299 -
Adjustments in respect of prior years (504) -
Tax expense/(credit) 2,322 (2,591)
The Group's tax affairs are governed by complex local tax regulations in the
UK, US and Germany. Given the uncertainties that could arise in the
application of these regulations, judgements are often required in determining
the tax that is due. Where management is aware of potential uncertainties in
local jurisdictions, that are judged more likely than not to result in a
liability for additional tax, a provision is made for management's best
estimate of the liability, determined with reference to similar transactions
and third-party advice. This provision at 30 September 2021 amounted to
£1,392,000 (2020: £1,576,000).
Factors that may affect future tax charges
The UK Budget on 3 March 2021 announced an increase in the UK corporation tax
rate from 19% to 25% with effect from 1 April 2023. The effect of the rate
increase is reflected in the Consolidated Financial Statements as has been
substantively enacted at the balance sheet date. The current tax expense for
the year would have been £5,607,000 if the expected increased rate of
corporation tax at 25% for the UK entities had applied.
8. Loss per share
Basic loss per share is calculated by dividing the loss for the year
attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the year, after excluding the weighted
average number of non-vested ordinary shares.
Diluted earnings per share is calculated by dividing the loss for the year
attributable to ordinary shareholders by the weighted average number of
ordinary shares including non-vested/non-exercised ordinary shares. During the
year ended 30 September 2021, the Group awarded conditional share awards to
Directors and certain employees through an LTIP (see note 15). The
non-vested/non-exercised ordinary shares are anti-dilutive given the loss for
the year and are therefore excluded from the weighted average number of
ordinary shares for the purpose of diluted earnings per share calculation.
Year 8.5 months
ended ended
30 September 30 September
2021 2020
£000 £000
Loss attributable to equity shareholders of the Company (29,630) (16,388)
As set out in note 1, a reorganisation of the Group in February 2021 has
resulted in a significant change in the capital structure of the Company. This
is reflected in the weighted average numbers of shares used in the basic loss
per share calculations which are as follows:
Number Number
Weighted average number of shares 88,248,037 47,784,365
Weighted average number of shares held by the Employee Benefit Trust (622) -
Weighted average number of shares 88,247,415 47,784,365
Dilutive share options 128,106 -
Basic and diluted loss per share (in pence) (33.6)p (34.3)p
9. Acquisition of Auction Mobility LLC
On 16 October 2020, the Group acquired 100% of the equity share capital of
Auction Mobility LLC for a total maximum consideration of $43,308,000
(equivalent to £33,350,000), comprising upfront cash consideration of
$33,000,000 (equivalent to £25,424,000), deferred consideration of $305,000
(£234,000) and contingent consideration of up to a maximum $10,000,000
(equivalent to £7,692,000), subject to the performance of the acquired
company against certain targets. Auction Mobility provides a customised
auction software platform, a leading white label app and web developer, for
auction houses. The purpose of the acquisition was to further strengthen the
Group's presence in the US.
At acquisition, the Directors calculated the fair value of the contingent
consideration expected to be paid, based on a weighted average probability
model, resulting in a liability of £3,918,000. The key inputs to the model
were revenue growth assumptions and percentage probability weightings applied
to forecast earn-out cash flows.
At the date of acquisition, Auction Mobility LLC had net assets with a fair
value of US$13,786,000 (equivalent to £10,604,000). The acquisition
accounting is set out below.
At fair value
£000
Intangible assets - software 2,786
Intangible assets - customer relationships 6,094
Intangible assets - brand 371
Intangible assets - non-compete agreement 1,286
Trade receivables 462
Other debtors and prepayments 647
Cash and cash equivalents 476
Trade payables (129)
Accruals and contract liabilities (1,389)
Net assets on acquisition 10,604
Goodwill (note 10) 18,972
Total consideration 29,576
Consideration satisfied by:
Cash consideration 25,424
Contingent consideration 3,918
Deferred consideration 234
29,576
Net cash outflow arising on acquisition:
Cash consideration 25,424
Less: cash and cash equivalents balances acquired (476)
24,948
Goodwill arises as a result of the surplus of consideration over the fair
value of the separately identifiable assets acquired. The main reason leading
to the recognition of goodwill is the future economic benefits arising from
assets which are not capable of being individually identified and separately
recognised; these include the value of the assembled workforce within the
business acquired. All of the goodwill recognised is expected to be deductible
for income tax purposes.
Acquisition costs of £1,107,000 directly related to the business combination
have been immediately expensed to the Consolidated Statement of Profit or Loss
as part of administrative expenses and included within exceptional items (see
note 2).
The fair value of the assets acquired includes gross trade receivables of
£462,000 which are expected to be fully recoverable.
The Group's contingent consideration as at 30 September 2021 amounted to
£2,301,000. The Group regularly performs a review of the ongoing businesses
to assess the impact of the fair value of the contingent consideration. The
change of £1,462,000 (2020: £nil) in these fair values was reported as a
finance income in the Consolidated Statement of Profit or Loss. Exchange
differences to reserves were recorded within foreign exchange differences on
translation of foreign operations in the Consolidated Statement of
Comprehensive Profit or Loss.
Between 16 October 2020 and 30 September 2021, Auction Mobility LLC
contributed £5,801,000 to Group revenues and a profit of £246,000 for the
period ended 30 September 2021. If the acquisition had occurred on 1 October
2020, Group revenue would have been £70,326,000 and Group loss before tax
would have been £27,348,000.
10. Goodwill and other intangible assets
Software Customer relationships Brand Non-compete Total acquired Intangible assets Internally generated software Goodwill Total
£000 £000 £000 agreement £000 £000 £000 £000
£000
Cost
13 January 2020 - - - - - - - -
Acquisition of business 9,373 54,429 11,283 - 75,085 8,590 124,023 207,698
Additions - - - - - 1,304 - 1,304
1 October 2020 9,373 54,429 11,283 - 75,085 9,894 124,023 209,002
Acquisition of business (note 9) 2,786 6,094 371 1,286 10,537 - 18,972 29,509
Additions - - - - - 1,956 - 1,956
Exchange differences (214) (706) (228) (50) (1,198) (365) (1,835) (3,398)
30 September 2021 11,945 59,817 11,426 1,236 84,424 11,485 141,160 237,069
Amortisation and impairment
13 January 2020 - - - - - - - -
Amortisation 1,961 4,717 628 - 7,306 2,843 - 10,149
1 October 2020 1,961 4,717 628 - 7,306 2,843 - 10,149
Amortisation 3,422 8,246 1,258 293 13,219 4,576 - 17,795
Exchange differences (7) (16) (6) 4 (25) (87) - (112)
30 September 2021 5,376 12,947 1,880 297 20,500 7,332 - 27,832
Net book value
1 October 2020 7,412 49,712 10,655 - 67,779 7,051 124,023 198,853
30 September 2021 6,569 46,870 9,546 939 63,924 4,153 141,160 209,237
Impairment assessments for cash-generating units ("CGUs") containing goodwill
During the year, the goodwill in respect of each of the CGUs was tested for
impairment. The Group tests for impairment of goodwill at the operating
segment level (see note 4) representing an aggregation of CGUs reflecting the
level at which goodwill is monitored.
The recoverable amount for CGU groups has been determined on a value in use
basis ("VIU"). The key assumptions are those regarding the projected cash
flows, the long-term growth rate and the discount rates applied.
The carrying amount of goodwill recorded in the CGU groups and basis of
recoverable amounts are set out below:
30 September 30 September Valuation Long-term Discount
2021 2020 method growth rate rate
£000 £000
A&A 32,742 32,742 VIU 2.00% 9.07%
I&C 90,179 91,281 VIU 2.24% 10.12%
Auction Services 18,239 - VIU 2.24% 10.12%
Total goodwill 141,160 124,023
The Directors have determined the values assigned to each of the above key
assumptions as follows:
Assumption Approach
Estimated future cash flows are determined by reference to the budget for the year following the balance
sheet date and forecasts for the following two years, after which a long-term
perpetuity growth rate is applied. The most recent financial budget approved
by the Board has been prepared after considering the current economic
environment in each of the Group's markets. These projections represent the
Directors' best estimate of the future performance of these businesses.
Long-term 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 Group's benchmarked weighted average cost of capital
("WACC"). They represent the Group's assessment of the current market and
other risks specific to the CGUs.
Sensitivity analysis
Sensitivity analysis has been performed based on changes to key assumptions
considered to be reasonably possible by management. Sensitivity analysis has
been performed around the key assumptions including, reducing the long-term
growth rate, increasing the discount rates in isolation, reducing the
long-term growth rate and discount rate by 100 BPS and applying the long-term
growth rate to the FY21 cash flows which reduces the three-year CAGR. Results
for both goodwill and intangibles testing showed that the CGU was not impaired
when applying these reasonably possible sensitivity scenarios.
11. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and cash held in
escrow.
The carrying amount of these assets approximates to their fair value.
30 September 30 September
2021 2020
£000 £000
Cash in bank 173,675 14,193
Restricted cash 223,776 -
397,451 14,193
Cash in bank includes cash of £2,402,000 (2020: £nil) held by the Trustee of
the Group's Employee Benefit Trust relating to pre-IPO share awards for
employees. These funds are restricted and are not available to circulate
within the Group on demand.
As a result of the capital raising on 17 June 2021, the cash, net of
transaction fees associated with the acquisition and financing of
LiveAuctioneers (see note 17), was transferred to an escrow account. These
funds are restricted and are not available to circulate within the Group on
demand.
12. Leases
The Group leases assets including property, motor vehicles and computer
equipment.
The German office lease expired in July 2021 but included an option to extend
through to July 2027. For the year ended 30 September 2020, the Directors
concluded that it was reasonably certain that they would exercise the option
to extend the lease through July 2027 and had therefore accounted for the
lease cost over that period. However, during the year ended 30 September 2021
the Directors decided a more favourable location was better suited to the
business and therefore the associated right of use asset and lease liability
has been subject to modification. At 1 July 2021, the Group entered into a new
lease with an option to extend until July 2031 which is treated as an
addition. The Directors concluded that it was reasonably certain that they
would exercise their right to extend the lease through to July 2031.
The weighted average incremental borrowing rate contracted in 2021 was 5.2%
(2020: 4.2%).
Land and buildings leasehold Computer equipment Motor vehicles Total
£000 £000 £000 £000
Right of use assets
13 January 2020 - - - -
Acquisition of business 1,861 535 11 2,407
Depreciation charge for the period (342) (138) (3) (483)
1 October 2020 1,519 397 8 1,924
Additions 336 - - 336
Modification (79) - - (79)
Depreciation charge for the year (522) (214) (7) (743)
Exchange differences (17) (20) - (37)
30 September 2021 1,237 163 1 1,401
Lease liabilities
13 January 2020 - - - -
Acquisition of business 1,886 545 20 2,451
Interest charge for the period 57 13 1 71
Lease payments (416) (149) (15) (580)
Exchange differences 11 11 - 22
1 October 2020 1,538 420 6 1,964
Additions 336 - - 336
Modification (88) - - (88)
Interest charge for the year 60 13 1 74
Lease payments (575) (234) (7) (816)
Exchange differences (18) (20) - (38)
30 September 2021 1,253 179 - 1,432
Current 481 176 - 657
Non-current 772 3 - 775
30 September 2021 1,253 179 - 1,432
The charge recognised in the Consolidated Statement of Profit or Loss for the
year/period was as follows:
Year 8.5 months
ended ended
30 September 30 September
2021 2020
£000 £000
Depreciation charge (743) (483)
Interest charge including net gain on modification (65) (71)
(808) (554)
At 30 September 2021, there was £nil (2020: £nil) of non-cancellable
commitments relating to short-term leases. There were £nil (2020: £nil)
low-value lease commitments.
13. Loans and borrowings
The carrying amount of loan and borrowings classified as financial liabilities
at amortised cost approximates to their fair value.
30 September 30 September
2021 2020
£000 £000
Current
Secured bank loan - 789
Unsecured loan notes 353 370
353 1,159
Non-current
Secured bank loan 148,686 77,754
Preference shares - 125,414
Subordinated loan notes - 9,947
Unsecured loan notes - 329
148,686 213,444
149,039 214,603
On 13 October 2020, new parties added to the Old Senior Facilities Agreement,
were entered with Macquarie and Sixth Street for US$75.0m, of which US$33.5m
(equivalent of £25.7m) was drawn at this date. The loan carried an effective
rate of interest of EURIBOR+6.5% payable half yearly and was secured on the
assets of the Group.
Primary proceeds from the IPO were used to, amongst other things, repay all
outstanding liabilities with financing parties except for the Old Senior
Facilities Agreement and current unsecured loan notes.
An Amendment and Restatement Deed under the Old Senior Facilities Agreement
effective from 1 March 2021 resulted in £39.4m (US$43.2m and £8.0m)
available under the facility. The loan, net of loan arrangement fees of
£1.4m, was repayable on 10 February 2027.
The Group entered into a New Senior Facilities Agreement on 17 June 2021 which
included:
- a senior term loan facility (the "New Senior Term Facility") for US$204.0m
for the acquisition of LiveAuctioneers. The New Senior Term Facility was drawn
down in full on 30 September 2021 prior to completion of the acquisition of
LiveAuctioneers on 1 October 2021. The loan will be due for repayment on 17
June 2026.
- a multi-currency revolving credit working capital facility (the "New
Revolving Credit Facility") for US$49.0m. Any sums outstanding under the New
Revolving Credit Facility will be due for repayment on 17 June 2024, subject
to the optionality of two 12-month extensions. The facility had not been drawn
down as at 30 September 2021.
The New Senior Facilities Agreement contains an adjusted net leverage covenant
which tests the ratio of adjusted net debt against Adjusted EBITDA and an
interest cover ratio which tests the ratio of adjusted EBITDA against net
finance charges, in each case, as at the last date of each financial quarter,
commencing with the financial quarter ending 30 September 2021.
On 25 June 2021, the Group repaid all outstanding indebtedness in relation to
the Old Senior Facilities Agreement and all facilities thereunder were
cancelled. The security provided by the Group in connection with the Old
Senior Facilities Agreement was also released.
14. Share capital
30 September 30 September
2021 2020
£000 £000
Allotted, called up and fully paid
119,999,990 ordinary shares at 0.01p each (2020: 1,052,743 ordinary share at 12 11
0.1 p each)
12 11
As detailed in note 1, the Group completed a capital reorganisation during
February 2021. The issued share capital as at 30 September 2021 represents the
authorised share capital of Auction Technology Group plc. The Company was
incorporated on 18 January 2021 to act as the holding company for the Group
and issued one ordinary share of 0.1p at £1. On 25 January 2021 the Company
issued 50,000 non-voting redeemable preference shares with a nominal value of
£1.00 each. On 17 February 2021, the Company issued 1,083,793 ordinary shares
of 0.1p each with an aggregate nominal value of £10,838 following the share
for share exchange for the entire share capital of Auction Topco Limited.
The issued share capital as at 30 September 2020 represents the authorised
share capital of Auction Topco Limited and the share premium as at 30
September 2020 has been restated in the other reserve to reflect the
reorganisation as a result of the application of merger accounting.
The movements in share capital, share premium and other reserve are set out
below:
Number Share Share Other
of
capital
premium
reserve
shares £000 £000 £000
13 January 2020 1 - - -
Shares issued for grant of pre-IPO share awards 1,052,742 11 - 1,125
1 October 2020 1,052,743 11 - 1,125
Shares issued for grant of pre-IPO share awards and pre-admission awards 41,834 - - 402
Share buyback (10,783) - - -
Capital reorganisation
- Subdivision of shares creating 97,994,100 shares at 0.01p each 97,014,159 - - -
- Share buyback (39,337,210) (5) - -
- Shares issued for IPO 41,239,257 4 247,431 -
Shares issued for business combination 19,999,990 2 - 243,998
Share issue costs - - (11,528) (7,140)
30 September 2021 119,999,990 12 235,903 238,385
From 1 October 2020 to 17 February 2021, the Group issued 41,834 share awards.
On 17 February 2021 a purchase for cancellation of 10,783 ordinary shares of
£0.01p was cancelled. The aggregate nominal values of the shares cancelled
was £107.83.
On 26 February 2021, the capital reorganisation comprised:
- the ordinary shares were subdivided such that the number of ordinary
shares increased by 100 and the nominal value of shares decreased from 0.1p to
0.01p.
- the Company completed the purchase for cancellation of 39,233,357 ordinary
shares of 0.01p each and 103,853 ordinary shares of 0.1p for cash
consideration of £2. The aggregate nominal value of the shares cancelled was
£4,962.
- the Company repurchased and cancelled the 50,000 redeemable preference
shares of £1.00 at nominal value.
- in connection with the IPO, the Company issued 41,239,257 ordinary shares
of 0.01p each with an aggregate nominal value of £4,124 for a cash
consideration of £247,435,000.
On 17 June 2021, as part of a capital raising, the Company issued 19,999,990
ordinary shares of 0.01p each with an aggregate nominal value of £2,000 for a
cash consideration of £244,000,000.
Other reserve
The other reserve comprised:
- a merger reserve that arose on the Group reorganisation and is the
adjustment of the comparative and current year consolidated reserves of the
Group to reflect the statutory share capital and share premium of Auction
Technology Group plc as if it had always existed.
- share premium, net of share issue costs, was recognised in the other
reserve in accordance with section 612 of the Companies Act 2006 for the
equity raise on 17 June 2021 was via a cash-box placing.
15. Share-based payments
The Group had two share-based payment plans in effect in the 2021 financial
year, of which one was in place prior to Admission on the London Stock
Exchange. After Admission on the London Stock Exchange, the Company adopted a
discretionary share plan called the Auction Technology Group plc Long Term
Incentive Plan (the "LTIP").
Shares awards pre-IPO including pre-admission awards
From 1 October 2020 to 17 February 2021, the Group issued the following
pre-IPO share awards:
- 6,500 Auction Topco Limited B Ordinary shares to certain employees.
- 16,260 Auction Topco Limited A Ordinary shares to certain Non-Executive
Directors.
- 8,097 Auction Topco Limited B Ordinary shares to the ATG Employee Benefit
Trust for the benefit of certain employees as a staff gift and payment of
associated tax liabilities for share awards issued to employees and Executive
Directors.
From 1 October 2020 to 17 February 2021, the Group issued the following
pre-admission share awards:
- 10,977 Auction Topco Limited B Ordinary shares to the Executive Directors
and certain employees.
From 13 January 2020 to 17 February 2021, 231,293 ordinary shares in Auction
Topco Limited, including the share awards detailed above, have been issued to
its employees and Non-Executive Directors. As part of the Group reorganisation
described in note 1 and 14 the ordinary shares in Auction Topco Limited were
exchanged in a share for share exchange with Auction Technology Group plc,
subdivided such that the number of ordinary shares increased by 100 to
23,129,300 and reduced by 9,627,043 shares as part of the share buyback. This
resulted in 13,502,257 ordinary shares listed in the IPO.
The holders were subject to a service condition and, as such, the shares
represent remuneration for service thereby constituting an IFRS 2
equity-settled, share-based arrangement. In addition, the pre-admission awards
are subject to a three-year holding period subject to the recipient's
continued employment. In January 2021, the Group made an announcement to
pursue an IPO on the London Stock Exchange. As a result, a share-based payment
expense was recognised in the Statement of Profit or Loss, being the fair
value of the awards at their respective grant dates. The pre-IPO share awards
vested on the date of the IPO. The fair value charge in the year to 30
September 2021 for the pre-IPO awards is £10,124,000 (2020: £276,000) and
the pre-admission awards is £795,000 (2020: £nil).
LTIP options
On admission to the London Stock Exchange on 26 February 2021, the Company
granted conditional nil-cost share options over 437,665 shares through the
LTIP to the Executive Directors and other senior management. A further 59,859
and 4,720 were granted on 5 April 2021 and 5 July 2021 respectively to senior
management. It is expected that these awards will normally vest over a
three-year period subject to the recipient's continued employment at the date
of vesting and, for Executive Directors, the satisfaction of performance
conditions to be measured over three financial years. The fair value charge in
the period to 30 September 2021 is £973,000.
16. Related party transactions
The following related party transactions took place in FY21 and FY20:
On 13 February 2020 preference shares of £86,401,000 were issued to funds
advised by TA Associates Management LP. The preference shares including
interest amounting to £97,085,000 were repaid on 1 March 2021 (accrued
interest as at 30 September 2020: £6,562,000).
On 13 February 2020 preference shares of £26,093,000 were issued to funds
advised by ECI Partners LLP. The preference shares including interest
amounting to £29,377,000 were repaid on 1 March 2021 (accrued interest as at
30 September 2020: £1,982,000).
On 13 February 2020 preference shares of £4,508,000 were issued to members of
the management team. The preference shares including interest amounting to
£5,269,000 were repaid on 1 March 2021 (accrued interest as at 30 September
2020: £342,000).
On 13 February 2020 a loan note of £385,000 was issued to a member of the
management team. Interest of £49,000 (accrued interest as at 30 September
2020: £24,000) was waived on 26 February 2021 and the loan note repaid on 26
February 2021.
On 13 February 2020 a subordinated loan note of US$13,000,000 (equivalent of
£9,334,000) was issued to funds held by ECI Partners LLP and TA Associates
Management LP. The subordinated loan note and related accrued interest of
US$15,157,000 (equivalent of £10,883,000) (accrued interest as at 30
September 2020: £759,000) were repaid on 1 March 2021.
On 30 September 2020, Tom Hargreaves, a Director of the Company, received a
loan of £7,000; the full amount and related interest were repaid on 26
February 2021.
On 30 December 2020 preference shares of £272,000 were issued to Breon
Corcoran, a Non-Executive Director. On 15 January 2021 preference shares were
issued to Non-Executive Directors Scott Forbes and Penny Ladkin-Brand for
£221,000 each. The proceeds from the redemption of their preference shares
including interest amounting to £724,000 were used to apply for the
subscription of ordinary shares on IPO.
17. Events after the balance sheet date
On 17 June 2021, the Group announced the proposed purchase of LiveAuctioneers
by means of an acquisition of the entire issued and to be issued share capital
of Platinum Parent, Inc. The acquisition was based on an implied enterprise
value of US$525.0m.
Due to its size, the acquisition was classed as a Class 1 transaction under
the Listing Rules, and therefore required shareholder approval. The Group's
shareholders approved the acquisition on 20 August 2021. Prior to the
acquisition completing, approval by the relevant antitrust authorities,
including approval in the UK and US, had to be obtained. The acquisition
completed post the year end on 1 October 2021.
The consideration for the acquisition of US$525.0m was settled with US$500.0m
in cash on completion and earn-out consideration of up to US$25.0m. The
consideration was financed through the Group's new Senior Term Loan and the
equity raise.
Given the acquisition had not yet completed at 30 September 2021 no accounting
for the acquisition in accordance with IFRS 3 "Business Combinations" has been
included in the FY21 financial statements.
There were no other events after the balance sheet date.
Glossary
A&A Art & Antiques
Aggregate basis certain measures have been used as the acquisitions of Turner Topco Limited
and Proxibid Inc. on 13 February 2020 have affected the comparability of the
Group's results of operations for 2021. The measures are presented for the
Group to provide comparisons of the Group's results between 2020 and 2021 as
if the acquisitions had occurred on 1 October 2019
Auction Mobility Auction Mobility LLC
Bidder sessions web sessions on the Group's marketplaces online within a given time frame
BidSpotter the Group's marketplace operated via the www.BidSpotter.co.uk and
www.BidSpotter.com domain
Big 4 Christie's, Sotheby's, Phillips and Bonhams A&A auction houses
EBITDA earnings before interest, taxes, depreciation and amortisation
Enlarged Group the existing Group including the proposed acquisition of LiveAuctioneers Group
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 fee and auctioneers' commissions) and sales of
retail jewellery (being new, or nearly new, jewellery)
i-bidder the Group's marketplace operated by the www.i-bidder.com domain
I&C Industrial & Commercial
KPIs key performance indicators
LiveAuctioneers Group Platinum Parent, Inc. and its subsidiaries
Live auctions Live auctions typically feature a physical auction room (with bidders
participating in the room and by phone) supplemented by bids made online. Lots
are run consecutively and so apart from the first lot there is no fixed time
for specific lots to be called
Lot-tissimo the Group's marketplace operated via the www.lot-tissimo.com domain
LTIP Awards the Company's Long Term Incentive Plan
Marketplaces the online auction marketplaces operated by the Group
Online share represents GMV as a percentage of THV.
Proxibid the Group's marketplace operated via the www.proxibid.com domain
Proxibid Group the operations of Proxibid Inc. and its subsidiaries prior to acquisition by
Auction Topco Limited
The Saleroom the Group's marketplace operated via the www.the-saleroom.com domain
Standalone ATG the operations of Turner Topco Limited and its subsidiaries prior to
acquisition by Auction Topco Limited
Take rate represents the Group's marketplace revenue as a percentage of GMV. Marketplace
revenue is the Group's reported revenue excluding Content 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
fee and auctioneers' commissions) and sales of retail jewellery (being new, or
nearly new, jewellery)
Timed auctions auctions which are held entirely online (with no in-room or telephone bidders)
and where lots are only made available to online bidders for a specific,
pre-determined timeframe
Verticals like-for-like industry or inventory, for example, art and antiques, industrial
and construction, consumer surplus and returns and sub-verticals such as
equine, real estate and classic cars.
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