REG - Auction Technology - Half-year Report
16/05/2024 07:00
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RNS Number : 6279O Auction Technology Group PLC 16 May 2024
AUCTION TECHNOLOGY GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2024
London, United Kingdom, 16 May 2024 - Auction Technology Group plc ("ATG",
"the Company", "the Group") (LON: ATG), operator of world-leading marketplaces
for curated online auctions, today announces its unaudited financial results
for the six months ended 31 March 2024.
For FY24 and subsequent financial periods, the Group has changed the
presentational currency in which the Group presents its financial results from
pound sterling to US dollars.
Financial results
HY24 HY23 Movement Organic(2)
Revenue(1&2) $86.0m $80.8m +6% 1%
Adjusted EBITDA(1) $35.7m $37.8m (6)%
Adjusted EBITDA margin %(1) 42% 47% (5)ppt
Operating profit $10.5m $11.8m (11)%
Operating margin % 12% 15% (3)ppt
Adjusted diluted earnings per share(1) 16.6c 19.2c (14)%
Basic earnings per share 5.3c 11.6c (54)%
Adjusted net debt(1) $141.6m $163.7m $(22.1)m
Cash generated by operations $27.6m $29.4m (6)%
Financial highlights
· Revenue of $86.0m up 6%, driven by continued strong growth in
value-added services, event fees and the contribution from EstateSales.Net
("ESN"). Revenue up 1% on an organic basis, including marketplace revenue
growth of 2%.
· Adjusted EBITDA of $35.7m, down 6% and adjusted EBITDA margin of
42% down 5ppt, impacted by a higher mix of lower-margin shipping and payments
revenue, a lower mix of higher-margin commission revenue and the phasing of
costs in the year.
· Operating profit of $10.5m, down 11% year-on-year driven by the
change in revenue mix and phasing of costs through the year. 8% increase in
administrative costs includes a full period contribution from ESN.
· Adjusted diluted earnings per share of 16.6c, down 14% primarily
due to the decrease in adjusted EBITDA; basic earnings per share of 5.3c
compared to 11.6c, driven by lower operating profit and a lower tax credit,
partially offset by lower net finance costs.
· Strong adjusted free cash flow generation of $27.7m was offset by
the timing of payments, including the final consideration and bonuses for ESN
of $12m paid in the half. As a result, closing adjusted net debt of $141.6m
was in line with $141.2m at FY23 year-end and adjusted net debt/adjusted
EBITDA ratio slightly increased to 1.9x from 1.8x at FY23 year end.
Operational highlights
· Group take rate(3) excluding ESN up 0.7ppt to 3.9%, driven by
growth in value-added services, event fees and marketplace mix.
· Strong growth in value-added services, with revenue up 44% and
now accounting for 23% of the Group's revenue. Contribution across all three
services (Payments - "atgPay", shipping - "atgShip", Digital Marketing -
"atgAMP"): 59% of auctioneers use a paid-for auctioneer digital marketing
solution, 94% of US based LiveAuctioneers and 48% of Proxibid auctioneers
onboarded to atgPay by end of March, and around 10,000 lots shipped with
atgShip in the half.
· Gross Merchandise Value ("GMV") of $1.9bn down 17% year-on-year,
impacted by the previously highlighted normalisation of used Industrial &
Commercial ("I&C") asset prices, a lower conversion rate, and weaker end
markets in Art & Antiques ("A&A"). GMV down 9% when excluding the
impact from the rotated volume which had high service requirements but minimal
revenue contribution as described in our FY23 results. Improving momentum in
GMV on Proxibid in March and April.
· Positive results in the early stages of the rollout of atgXL, our
new cross-listing offering, combined with strong uptake of ATG's white label
solution. With limited distribution, atgXL has provided auctioneers with a 9%
uplift in GMV on average when an auction is cross-listed.
· Very strong period-on-period revenue growth at ESN with a
positive response to cross-listing ESN with other ATG marketplaces.
John-Paul Savant, Chief Executive Officer of Auction Technology Group plc,
said:
"ATG is executing against the investments we are making and where we've
invested, we are growing. Our focus in FY22 and FY23 was upgrading the
online auction user experience through the rollout and growth of value-added
services, and as outlined in December 2023, in FY24 we are now focused on
initiatives that drive GMV. We launched atgXL, our new cross-listing offering,
that further differentiates our proposition for auctioneers and bidders and
enhances our network effect. Since the launch of these new products, we have
been very pleased with the auctioneer response, the trends in bidder activity
as well as the differentiation this gives ATG's white label over competing
white labels . This differentiation hinges on an auctioneer's ability to run a
white label whilst simultaneously cross-listing onto multiple ATG
marketplaces, all from a single work flow, thus lowering operating costs and
giving the auctioneer greater exposure to bidders for minimal effort. The
strong momentum that we are seeing from our strategic programmes, as well as
the improved trajectory in Proxibid, gives us confidence in revenue
acceleration in the second half of FY24."
Current trading and outlook
Trading in the first six weeks of the second half has been in line with the
guidance communicated in our trading update on 16 April 2024. We are therefore
maintaining our full year outlook for Group revenue to be in the range of
$175m-$180m, implying a mid-point growth rate of 7%, including organic revenue
growth of 2% - 5%. We expect improvement in organic revenue growth in the
second half driven by continued strong growth from our strategic programmes
including atgXL, atgShip and atgPay, and improving GMV momentum on the
Proxibid marketplace, as seen in March and April, in conjunction with the
easing of year-on-year comparatives. We maintain our full year adjusted EBITDA
margin guidance of 46%, supported by the phasing of costs through the year and
a higher mix of high-margin commission revenue in the second half.
Webcast presentation
There will be a webcast presentation this morning at 9.30am. Please contact
ATG@teneo.com (mailto:ATG@teneo.com) if you would like to attend.
For further information, please contact:
ATG
For investor enquiries rebeccaedelman@auctiontechnologygroup.com
(mailto:rebeccaedelman@auctiontechnologygroup.com)
For media enquiries press@auctiontechnologygroup.com (mailto:press@auctiontechnologygroup.com)
Deutsche Numis +44 207 260 1000
(Joint corporate broker to ATG)
Nick Westlake, William Baunton, Tejas Padalkar
J.P. Morgan Cazenove +44 207 742 4000
(Joint corporate broker to ATG)
Bill Hutchings, James Summer, Will Vanderspar
Teneo Communications +44 207 353 4200
(Public relations advisor to ATG) ATG@teneo.com (mailto:ATG@teneo.com)
Tom Murray, Matt Low, Arthur Rogers
About Auction Technology Group plc
Auction Technology Group plc ("ATG") is the operator of world-leading
marketplaces and auction services for curated online auctions, seamlessly
connecting bidders from around the world to around 4,000 trusted auction
houses across two major sectors: Industrial & Commercial ("I&C") and
Art & Antiques ("A&A").
The Group powers eight online marketplaces and listing sites using its
proprietary auction platform technology, hosting in excess of 85,000 live and
timed auctions each year. ATG has been supporting the auction industry since
1971 and the Group has offices in the UK, US and Germany.
CAUTIONARY STATEMENT The announcement may contain forward-looking statements.
These statements may relate to (i) future capital expenditures, expenses,
revenues, earnings, synergies, economic performance, indebtedness, financial
condition, dividend policy, losses or future prospects, and (ii) developments,
expansion or business and management strategies of the Company.
Forward-looking statements are identified by the use of such terms as
"believe", "could", "should", "envisage", "anticipate", "aim", "estimate",
"potential", "intend", "may", "plan", "will" or variations or similar
expressions, or the negative thereof. Any forward-looking statements contained
in this announcement are based on current expectations and are subject to
known and unknown risks and uncertainties that could cause actual results to
differ materially from those expressed or implied by those statements. If one
or more of these risks or uncertainties materialise, or if underlying
assumptions prove incorrect, the Company's actual results may vary materially
from those expected, estimated or projected. No representation or warranty is
made that any forward-looking statement will come to pass. Any forward-looking
statements speak only as at the date of this announcement. The Company and its
directors expressly disclaim any obligation or undertaking to publicly release
any update or revisions to any forward-looking statements contained in this
announcement to reflect any change in events, conditions or circumstances on
which any such statements are based after the time they are made, other than
in accordance with its legal or regulatory obligations (including under the UK
Listing Rules and the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority). Nothing in this announcement shall exclude any
liability under applicable laws that cannot be excluded in accordance with
such laws.
LEI Number: 213800U8Q9K2XI3WRE39
1. The Group provides alternative performance measures ("APMs") which
are not defined or specified under the requirements of UK-adopted
International Accounting Standards. We believe these APMs provide readers with
important additional information on our business and aid comparability. We
have included a comprehensive list of the APMs in note 3 to the Condensed
Consolidated Interim Statements, with definitions, an explanation of how they
are calculated, why we use them and how they can be reconciled to a statutory
measure where relevant.
2. The Group has made certain acquisitions that have affected the
comparability of the Group's results. To aid comparisons between HY24 and
HY23, organic revenue has been presented to exclude the acquisition of
EstateSales.Net on 6 February 2023. Organic revenue is shown on a constant
currency basis using average exchange rates for the current financial period
applied to the comparative period and is used to eliminate the effects of
fluctuations in assessing performance.
3. Refer to glossary for full definition of the terms. GMV and Take
Rate exclude the impact of the acquisition of ESN.
CEO REVIEW
ATG's HY24 results highlight the progress we have made in diversifying revenue
and opening up new growth opportunities through execution against each of our
six strategic growth drivers. Value-added services have continued to grow
strongly and we are pleased with the early results from atgXL, which
differentiate ATG's offering to auction houses and bidders alike. As we
integrate our assets with atgXL, whilst improving the end-to-end user
experience by rolling out atgShip, atgPay and atgAMP, we are increasingly
differentiating our offering to provide a seamless experience that raises
online auctions to ecommerce standards. The success of these investments, as
well as the improving momentum in GMV in March and April gives us confidence
that our rate of revenue growth will accelerate in the second half and into
FY25. As we begin the second half of FY24, ATG is a stronger company with an
increasingly differentiated set of assets.
1. Expand the total addressable market
In the first half of FY24, both auctioneers and bidders continued to trust ATG
as the platform to deliver value for online auctions. The total number of
auctioneers on our marketplaces remains robust at just under 4,000, with the
number of auctions facilitated in the half increasing 3% to 44,000 and the
number of lots listed growing 7% to 12.6m. We hosted 185m bidding sessions, up
15%, benefiting from investments we had made into search engine optimisation
in FY23 as well as from promising initial results from new bidder loyalty
programmes.
Despite this positive volume backdrop, Total Hammer Value ("THV") continued to
be impacted by the macroeconomic environment with Group THV down 7% at
constant currency to $6.7bn. In A&A, THV was 5% lower at $2.8bn and
included the negative impact from the timing of Easter in HY24 which tends to
be a slower period for A&A auctions. In I&C, THV was 9% lower at
$3.9bn, which was largely expected given the impact of the low margin high
service volume we rotated and the normalisation of used asset prices following
a period of elevated prices in the prior year. In the second half, we expect
these factors to have a lower impact on the rate of our THV growth due to the
easing of asset price normalisation as well as the end of the year-on-year
impact from the rotated volume.
2. Grow the conversion rate
Our confidence in ATG's ability to grow the conversion rate is even stronger
off the back of the early results seen from atgXL and our integrated white
label. More bidders easily accessed by auctioneers drive an uplift in bidding,
GMV and thus conversion rate. As we make it even easier for auctioneers to
work with all of ATG's assets in a seamless way, as well as offering a
convenient and price competitive solution for bidders, we still see
significant potential to grow our conversion rate over the medium term. In the
first half, progress was impacted by short term factors, largely in the
I&C sector, and which we now see steadily reversing, benefiting also from
the promotion of our integrated white label product. Auctioneers representing
16% of Proxibid GMV have now taken up the ATG white label since the start of
January, demonstrating the attractiveness of our integrated cross-listing
solution and providing an incremental GMV opportunity. These strategic
actions, as well as the easing of year-on-year comparatives, are driving an
improvement in momentum on Proxibid GMV since the start of the second half.
For A&A, the conversion rate was flat at 15% having now stabilised post
the Covid-19 period. In the half, our new rate cards incentivise the adoption
of timed online-only auctions, where we have a 100% conversion rate, as well
as the adoption of ATG's value-add services. We have seen positive initial
results, including a 29% increase in THV derived from timed auctions for
TheSaleroom.
3. Enhance the network effect
In the first six months of HY24, we have made great progress in our strategy
to drive differentiated value from our unique network of multiple marketplaces
through the rollout of atgXL. atgXL enables an auctioneer to upload their
inventory on an ATG marketplace or an ATG white label and then to expose that
inventory across other ATG marketplaces. It gives auctioneers running timed
auctions exposure to a wider pool of bidders and it gives bidders access to a
great selection of inventory without having to hunt across multiple sites. Our
updated rate cards have provided a fixed fee incentive for auctions run with
atgXL. As noted above, this product also differentiates the ATG white label as
it is the only white label in the market that lets an auctioneer preserve
his/her own brand while also accessing the larger bidder base of an aggregator
marketplace. A common average commission rate between an ATG white label and
the cross-listed ATG marketplace makes bidders and ATG increasingly agnostic
between the different channels. Since launch, around 800 atgXL auctions have
been run, with over $100m of GMV generated from these events. Auctioneers are
seeing high value when they cross-list with an average 9% uplift in GMV for a
cross-listed event.
4. Expand operational leverage
We continue to improve on our hub and spoke operating model that provides ATG
with exceptional leverage. Following the retirement of our CPO in January, we
are delighted to welcome Megan Schoen to ATG, who was formerly CPO at
Shutterstock, and who brings with her deep product and marketing experience
from a two-sided global marketplace, leveraging data to create better
experiences for sellers and buyers. In HY24 we also reorganised our North
America product and marketing teams to ensure greater focus and more
streamlined decision making. With a view to retaining operating leverage in
the future, even as we scale our product and engineering capabilities, in
January we opened a new ATG Tech Hub international office in Mexico. Here,
we have high quality engineers at a cost that allows us to add capacity more
quickly and cost effectively. In the first half, focus within this project
was on the development and rollout of cross-listing products.
5. Grow the take rate via value-added services
In HY24, the Group take rate increased 0.7ppt to 3.9%, largely driven by
value-added services where revenue grew 44% on a constant currency basis and
which now accounts for 23% of total revenue.
atgAMP (paid-for digital marketing) revenue growth remained strong with 59% of
auctioneers having used a marketing solution in the half, up from 56% last
year, and 30% of auction events supported by atgAMP, up 3ppt year-on-year.
Average spend per marketing event increased, including by 14% on Proxibid and
31% on Bidspotter.com. In the half we introduced subscription packages for
advertising products as well as new self-serve features. The return on
investment on marketing spend for an auctioneer is compelling with auctions
supported by marketing delivering around 2x to 3x the number of browsers per
auction and 1.5x to 2x the number of auction registrations, versus an auction
without any atgAMP support.
atgPay revenue also grew in the period. On LiveAuctioneers, we reached 94% of
US auctioneers onboarded by the end of March, whilst the penetration of atgPay
in US Gross Transaction Value averaged 61% throughout the period. The
onboarding of Proxibid auctioneers to atgPay has progressed, reaching 48% by
the end of March, highlighting the significant future potential for payments
on I&C marketplaces. Our current atgPay product for Proxibid is suited for
lower value card payments and further expansion depends on additional feature
developments that we will work on in 2H24 and 1H25.
atgShip, our new integrated shipping solution on LiveAuctioneers, grew
strongly with over 270 auctioneers onboarded and with 9% of US listed items
eligible for shipping by the end of March. Around 10,000 lots were shipped
through atgShip in the half. Additional features to expand the addressable
market are being rolled out in June and July to help sustain momentum in this
exciting new product. Almost 40% of bidders in a survey listed integrated
shipping as the best thing that LiveAuctioneers could do to improve the
experience for them and ATG is pleased to have been able to respond and see
the early results. We are encouraged by the early signs of favourable
marketplace bidder dynamics when shipping is offered. Auction houses offering
shipping at the start of the programme saw on average an 10% increase in
auction registrations and a 9% increase in the number of bidders. These
auctions also saw a 6% improvement in the conversion rate for ATG
demonstrating the enhanced bidder experience offered on an ATG platform.
6. Pursue accretive M&A
ESN delivered another period of very strong performance, growing revenues 36%
in the half versus the same six month period a year ago. Improvements to the
subscription funnel, refinements to pricing, a more visible presence for ESN
in the estate sales community combined with excellent commercial execution by
the team to shift estate sellers to regional and national advertising features
versus lower priced local features, is driving these results. A key thesis
behind our ESN acquisition was the impact of cross-listing their 180m visitor
sessions on our other marketplaces. We have begun to cross-list ESN and
LiveAuctioneers, and as of March 2024, 12% of auctions on LiveAuctioneers were
cross-listed on ESN, with buyers originating from ESN driving on average a 9%
GMV uplift on the auctions they are participating in. Our successes in these
early days highlight the significant opportunity available to us to further
drive the network effect between ATG and ESN's complementary buyer bases.
Summary
We have demonstrated that executing the marketplace playbook works for the
auction industry. 44% growth in value-added services demonstrates both the
high return on investment we offer auctioneers and our ability to monetize
more around the core transaction. The initial success of atgXL, including the
9% uplift in GMV, differentiates ATG from all the competition and accelerates
our network effect, keeping the cost of customer acquisition low while driving
incremental performance. The strong revenue growth at ESN shows how
acquisitions add to ATG's scale and accelerate our network effect, whilst also
highlighting that ATG buyers can come from all sectors of the secondary goods
market, and not just from auctions. The strength of these initiatives,
combined with the improvement momentum we are seeing as we begin the second
half, gives us confidence in our outlook and builds excitement for ATG's
future.
John-Paul Savant
Chief Executive Officer
CFO REVIEW
Group presentation of results
The financial results for HY24 are presented for the six months ended 31 March
2024. The Group has changed the presentational currency from pound sterling to
US dollars for FY24 and future financial periods. Note 1 of the Condensed
Consolidated Interim Financial Statements provides further details on the
change in presentation currency.
On 6 February 2023, the Group completed its acquisition of Vintage Software
LLC., trading as EstateSales.NET ("ESN"), for a consideration of $40m. The
results for ESN are included within the A&A operating segment. The impact
of the acquisition affects the comparability of the Group's results.
Therefore, to aid comparisons between HY23 and HY24, organic revenue growth is
presented to exclude the acquisition of ESN on 6 February 2023. Organic
revenue is shown on a constant currency basis, using average exchange rates
for the current financial period applied to the comparative period and is used
to eliminate the effects of foreign exchange fluctuations in assessing
performance. Note 3 of the Condensed Consolidated Interim Financial Statements
includes a full reconciliation of all APMs presented to the reported results
for HY24 and HY23.
Revenue
HY24 HY23 Movement Movement
$m $m Reported Organic
Art & Antiques ("A&A") 44.6 38.2 17% 5%
Industrial & Commercial ("I&C") 35.2 35.8 (2)% (2)%
Total marketplace 79.8 74.0 8% 2%
Auction Services 4.4 5.0 (12)% (13)%
Content 1.8 1.8 - (4)%
Total 86.0 80.8 6% 1%
Group
Group revenue increased 6% year-on-year to $86.0m, driven by growth in
marketplace revenue and the acquisition of ESN. On an organic basis, revenue
grew 1%, with 2% growth in marketplace revenue partially offset by declines in
both Auction Services and Content. Marketplace revenue growth was primarily
driven from value-added services and event fees, which offset a decline in
commission revenue, down 9% on an organic basis. Commission revenue was driven
by a 17% decline in GMV across our marketplaces, partially offset by a
favourable mix of average commission rates including a higher contribution
from A&A.
Art & Antiques
A&A revenue increased 17% to $44.6m and includes the contribution from
ESN. On an organic basis, A&A revenue grew 5%, predominantly driven by the
continued strong adoption of value-added services, including atgPay and
atgShip. This growth in value-added services combined with the impact of
higher event fees, partly driven by new rate cards on A&A marketplaces,
resulted in a 1.2ppt increase in the take rate to 9.5% (excluding the ESN
acquisition). A&A marketplaces saw encouraging early signs from the
rollout of atgXL, which incentivises both the adoption of timed auctions as
well as the adoption of an ATG white label product. These strategic
initiatives partially offset GMV which declined 8%, largely driven by the
weaker market backdrop including the timing of Easter, with the conversion
rate broadly flat year-on-year. ESN continued to perform better than expected,
driven by robust activity levels on the platform as well as by strategic
initiatives to optimise pricing and marketing on the site.
Industrial & Commercial
I&C revenue declined 2% on a reported and on an organic basis to $35.2m.
Whilst the Bidspotter platforms delivered strong organic growth driven from
both stable GMV year-on-year and from the growth in value-added services, this
was offset by the performance on Proxibid. As expected, Proxibid, one of the
four operating units in I&C, was impacted by end market dynamics including
the normalisation of used asset prices in some I&C categories and
exceptional auction activity in the prior year. In addition, the conversion
rate on Proxibid declined year-on-year partly due to the impact from a new
rate card launched in April 2023. As we lap the impact of the rate card, we
are pleased with the auctioneer response to our cross-listing offering, which
is driving a strong adoption of ATG's white label by I&C auctioneers.
I&C commission revenue decreased 12% in the first half driven by a 19%
decline in I&C GMV, or 9% decline excluding the impact of the rotated
volume which had high service requirement but minimum revenue contribution.
Partially offsetting the decline in commission was the growth in both
value-added services and event fees, which drove a 0.5ppt increase in the
I&C take rate to 2.4%.
Auction Services
Auction Services revenue of $4.4m declined 12% on a reported and 13% on an
organic basis, impacted by the strategic decision to pause additions to our
existing white label solution as we develop a new cross-listing white label
product, which is now live and for which we have seen strong demand. Through
the rollout of cross-listing and the better integration of our white label
solutions, we would expect ATG to increasingly become the preferred provider
for white label solutions.
Content
Content revenue was broadly flat year-on-year as growing subscription revenue
offset declining advertising volumes.
Financial performance
Reported
HY24 HY23 Movement
$m $m
Revenue 86.0 80.8 6%
Cost of sales (28.1) (25.6) 10%
Gross profit 57.9 55.2 5%
Administrative expenses (47.4) (44.0) (8)%
Other operating income - 0.6 (100)%
Operating profit 10.5 11.8 (11)%
Adjusted EBITDA (as defined in note 3) 35.7 37.8 (6)%
Finance income 0.2 0.1 100%
Finance cost (7.6) (11.3) (33)%
Net finance costs (7.4) (11.2) 34%
Profit before tax 3.1 0.6 417%
Income tax credit 3.4 13.4 (75)%
Profit for the period attributable to the equity holders of the Company 6.5 14.0 (54)%
Operating profit
The Group reported an operating profit of $10.5m compared to $11.8m in the
prior period. The increase in revenue was offset by an increase in cost of
sales, largely related to the growth in lower margin value-added services, as
well as an increase in administrative expenses.
Gross profit increased 5% to $57.9m, with the gross profit margin down 1ppt
year-on-year impacted by the growth in lower margin value-added services.
Administrative expenses increased by $3.4m to $47.4m and include a share-based
payment expense of $4.6m which is broadly in line with the prior year (HY23:
$4.7m). It also includes $0.8m of exceptional costs related to the final costs
from the acquisition of ESN (HY23: $2.1m) and amortisation of acquired
intangible assets of $13.9m (HY23: $13.1m). Excluding the impact from the
one-off exceptional costs, amortisation of acquired assets and share-based
payments, administrative expenses increased $4.0m year-on-year reflecting a
full period cost contribution from ESN, annual pay increases and an increase
in the level of expected credit losses in the period. In HY24 there are costs
associated with the reorganisation of the product and marketing teams and the
establishment of the cost efficient technology hub in Mexico, which should not
repeat in the second half.
Adjusted EBITDA
Adjusted EBITDA definitions and reconciliations to the reported results are
presented in note 3 of the Condensed Consolidated Interim Financial
Statements.
Adjusted EBITDA decreased from $37.8m in HY23 to $35.7m and the adjusted
EBITDA margin declined 5ppt to 42%, impacted by an increase in low margin
value-added services revenue, the decline of high margin commission revenue in
addition to the phasing of costs in the year.
Net finance costs
Net finance costs were $7.4m compared to $11.2m in HY23. Costs include the
impact of a $0.6m non-cash foreign exchange loss versus a $4.8m non-cash
foreign exchange loss in HY23 related to intergroup balances. Excluding this
impact, finance costs increased to $7.0m (HY23: $6.5m). In the half the Group
paid $9.3m of the Senior Term Facility and drew down $9.5m on the Revolving
Credit Facility to fund the payments related to the ESN, of which $2.0m was
subsequently repaid, resulting in a decrease to our outstanding loan balance
to $147.2m as at 31 March 2024. The lower average loan balance was offset by a
higher average interest rate of 8%. Other finance costs of $0.6m (HY23: $0.4m)
include commitment fees and loan origination amortisation on our Senior
Facility, movement in the deferred consideration as well as interest on lease
liabilities. Finance income of $0.2m primarily relates to interest income in
the year (HY23: $0.1m).
Profit before tax
After the impact of lower net finance costs year-on-year, the Group reported a
profit before tax of $3.1m (HY23: $0.6m).
Taxation
The overall tax credit for the period was $3.4m (HY23: $13.4m credit), as tax
on profit in the year was offset by a $2.9m deferred tax credit on unrealised
foreign exchange differences (HY23: $9.1m) and a $1.2m credit from foreign
exchange differences on US dollar denominated intra-group balances which are
not taxable for US tax purposes (HY23: $3.8m). The unrealised foreign exchange
differences were not recognised in the Group's profit for the half year due to
differences in the functional currency basis under tax and accounting rules
for the US holding entities. This compares to a tax credit of $13.4m in HY23
largely driven by the deferred tax credit. The Group's effective tax rate for
HY24 of 109% (HY23: 138%) is higher than the UK tax rate due the deferred tax
credit on the foreign exchange movements in the period. The tax rate on
adjusted earnings of 19% reflects the increase in the UK corporate tax rate to
25% from 1 April 2023, our primary tax jurisdiction. The Group is committed to
paying its fair share of tax and manages tax matters in line with the Group's
Tax Strategy, which is approved by the Board and is published on our website
www.auctiontechnologygroup.com (http://www.auctiontechnologygroup.com) .
Earnings per share and adjusted earnings per share
Basic and diluted earnings per share was 5.3c compared to 11.6c and 11.4c
respectively in HY23, driven by the increase in profit before tax, offset by a
lower tax credit compared to HY23. The weighted average number of shares in
issue during the period was 121.6m (HY23: 120.8m shares), with the increase
year-on-year driven, as expected, by the impact of vested equity incentive
awards.
Adjusted diluted earnings per share was 16.6c compared to 19.2c in HY23 and is
based on profit after tax adjusted to exclude share-based payment expense,
exceptional items (operating and finance costs), amortisation of acquired
intangible assets and any related tax effects. The decrease year-on-year is
largely due to the decrease in adjusted EBITDA and an increase in the weighted
average number of ordinary shares and dilutive options.
A reconciliation of the Group's diluted earnings per share to adjusted diluted
earnings per share is set out in note 3.
Foreign currency impact
Although the Group has changed its presentational currency to US dollars, the
Group's reported performance is sensitive to movements in both the pound
sterling and the euro against the US dollar with a mix of revenues included in
the table below.
Revenue HY24 HY23
$m $m
United Kingdom 12.7 11.7
USA 70.4 66.6
Germany 2.8 2.5
Total 86.0 80.8
The average HY24 exchange rate of US dollar against the pound weakened by 4.2%
and by 1.9% against the euro compared to HY23, as shown in the table below.
Average rate Closing rate
HY24 HY23 Movement FY23 HY24 HY23 Movement FY23
Pound Sterling 1.25 1.20 4.2% 1.23 1.26 1.24 1.6% 1.22
Euro 1.08 1.06 1.9% 1.07 1.08 1.09 (0.9)% 1.06
The tax for the period was impacted by movements in foreign currency exchange
rates, resulting in a movement in the tax credit of $4.1m. The weakening of
the US dollar against the pound sterling over the six months has given rise to
a gain of $0.1m on assets held and $5.2m on the external dollar loan. A net
gain of $5.3m has been recognised in the foreign currency reserve.
Statement of financial position
Overall net assets at 31 March 2024 have increased by $15.3m to $661.8m since
30 September 2023. Total assets decreased by $14.1m, mainly driven by the
amortisation of intangible assets of $19.1m and additions to internally
developed software of $5.0m. There was also a $12.0m cash outflow related to
the payment of deferred consideration of $10.0m and retention bonus of $2.0m
for the ESN acquisition. At 31 March 2024, management undertook an impairment
indicator test and determined a full impairment assessment should be
performed. Based on the assessment it was concluded that no impairment was
required at 31 March 2024, however, both the A&A and Auction Services cash
generating units had limited headroom and were sensitive to a movement in any
one of the key assumptions. Refer to note 9 for further details.
Total liabilities decreased by $29.4m to $209.7m, primarily due to a decrease
in trade and other payables of $18.3m relating to the $12.0m payment of the
ESN deferred consideration and retention bonuses, the timing of supplier
payments and a decrease in deferred tax liabilities of $6.4m, largely driven
by the movement on the unrealised foreign exchange differences and the unwind
of the capitalised intangible assets.
Cash flow and adjusted net debt
The Group generated $27.6m cash from operations which was slightly lower than
the prior period (HY23: $29.4m), due to the decrease in high margin revenue
and a working capital outflow. $5.0m expenditure on additions to internally
generated software (HY23: $4.7m) primarily relates to investment in new
products such as atgPay and atgXL, spend on our search engine optimisation
programme, as well as our programme to migrate to a single technology platform
and is in line with our guidance provided in November 23. Excluding the impact
from working capital from exceptional and other items, working capital was an
outflow of $2.8m which relates to the timing and size of performance related
payments in the half. In the period the Group paid $10.0m in deferred
consideration and $2.0m in retention bonuses related to the ESN acquisition.
Adjusted net debt as at 31 March 2024 was $141.6m, a small increase from
$141.2m as at 30 September 2023 although down from $163.7m as at 31 March
2023. In the half, operating cash flow generation was offset by additions to
internally generated software, the timing of tax payments, in addition to the
deferred consideration related to ESN. The Group had cash and cash equivalents
excluding restricted cash of $5.6m and borrowings of $147.2m as at 31 March
2024 (31 March 2023: cash and cash equivalents excluding restricted cash $6.5m
and borrowings of $170.2m). Restricted cash reduced by $3.0m due to the
payment of restricted cash from the employee benefit trust as highlighted in
the FY23 Annual Report and Accounts. The Group paid $9.3m of its Senior Term
Facility during the period and there was a net $7.5m drawdown on the Revolving
Credit Facility to fund the ESN payments. The adjusted net debt/adjusted
EBITDA ratio was 1.9x as at 31 March 2024 versus 1.8x as at 30 September 2023,
reflecting the timing of payments in the first half. We expect to de-lever our
balance sheet over the remainder of FY24.
The Group's adjusted free cash flow was $27.7m (HY23: $26.0m) and had a
conversion rate of 77% (HY23: 69%). The increase in the adjusted free cash
flow conversion reflects a higher cash generated from operations when adjusted
for the impact from the working capital movement in exceptional items, offset
by a slightly higher spend on additions to internally generated software.
Reconciliation of cash generated from operations to adjusted free cash flow HY24 HY23
$m
$m
Cash generated from operations 27.6 29.4
Adjustments for:
Exceptional items 0.8 2.1
Working capital from exceptional and other items 4.4 (0.5)
Additions to internally generated software (5.0) (4.7)
Additions to property, plant & equipment (0.2) (0.3)
Adjusted free cash flow 27.7 26.0
Adjusted free cash flow conversion 77% 69%
Reconciliation of adjusted EBITDA to adjusted free cash flow
HY24 HY23
$m
$m
Adjusted EBITDA 35.7 37.8
Movement in working capital (7.3) (6.1)
Add back: working capital from exceptional and other times 4.4 (0.5)
Adjusted cash from operations 32.8 31.2
Additions to internally generated software (5.0) (4.7)
Additions to property, plant & equipment (0.2) (0.3)
Adjusted free cash flow 27.7 26.0
Adjusted free cash flow conversion 77% 69%
Risk and uncertainties
The Board retains ultimate responsibility for the Group's Risk Management
Framework and continues to undertake ongoing monitoring to review the
effectiveness of the Framework and ensure the principal risks of the Group are
being appropriately mitigated in line with its risk appetite. The principal
risks and uncertainties which could impact the Group for the remainder of the
current financial year remain those detailed on pages 30 to 33 of the 2023
Annual Report available at www.auctiontechnologygroup.com.
A summary of the risks is included as follows:
1. IT infrastructure - stability and business continuity of auction
platforms
2. IT infrastructure - inability to keep pace with innovation and
changes
3. Data security/data loss
4. Competition
5. Failure to deliver expected benefits from acquisitions and/or
integrate the business into the Group effectively
6. Attracting and retaining skills/capabilities and succession
planning
7. Regulatory compliance
8. Governance and internal control
9. Economic and geo-political uncertainty
The Directors note that the global geopolitical outlook suggests continuing
potential for short-term volatility and instability across markets. A number
of these risks and uncertainties could have an impact on the Group's
performance over the remaining six months of the financial year and could
cause actual results to differ from expected and historical results.
Post balance sheet events
There were no post balance sheet events.
Related parties
Related party disclosures are detailed in note 14.
Going concern
In assessing the appropriateness of the going concern assumption, the
Directors have considered the ability of the Group to meet the debt covenants
and maintain adequate liquidity through the forecast period. The Group's
forecasts and projections, taking account of reasonably possible changes in
trading performance, show that the Group is able to operate comfortably within
the level of its current facilities and meet its debt covenant obligations.
For further details see note 1.
Sensitivities have been modelled to understand the impact of the various risks
outlined above on the Group's performance and the Group's debt covenants/cash
headroom, including consideration of a reasonable downside scenario. Given
the current demand for services across the Group at the date of this report,
the assumptions in these sensitivities, when taking into account the factors
set out above, are considered to be unlikely to lead to a debt covenant breach
or liquidity issues under both scenarios.
After making enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence until at
least 30 June 2025 and therefore it remains appropriate to continue to adopt
the going concern basis in preparing the financial information.
Tom Hargreaves
Chief Financial Officer
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive
Income or Loss
for the six months ended 31 March 2024
Note Unaudited Restated Restated
six months Unaudited Audited
Year
ended six months
ended
31 March ended
30 September
2024 31 March
2023
$000 2023
$000
$000
Revenue 4,5 86,022 80,795 165,886
Cost of sales (28,128) (25,628) (53,301)
Gross profit 57,894 55,167 112,585
Administrative expenses (47,382) (43,989) (85,624)
Other operating income 12 612 666
Operating profit 4 10,524 11,790 27,627
Finance income 6 148 90 220
Finance cost 6 (7,562) (11,299) (19,183)
Net finance costs 6 (7,414) (11,209) (18,963)
Profit before tax 4 3,110 581 8,664
Income tax 7 3,392 13,445 11,879
Profit for the period attributable to the equity holders of the Company 6,502 14,026 20,543
Other comprehensive income/(loss) for the period attributable to the equity
holders of the Company
Items that may subsequently be transferred to profit and loss:
Foreign exchange differences on translation of foreign operations 115 1,852 3,826
Fair value gain arising on hedging instruments during the period 5,187 16,019 14,478
Tax relating to these items (1,296) (3,525) (3,186)
Other comprehensive income for the period, net of tax 4,006 14,346 15,118
Total comprehensive income for the period attributable to the equity holders 10,508 28,372 35,661
of the Company
Earnings per share cents cents cents
Basic 8 5.3 11.6 16.8
Diluted 8 5.3 11.4 16.7
The above results are derived from continuing operations.
The Consolidated Financial Statements for the six months ended 31 March 2023
and the year ended 30 September 2023 have been restated throughout to be
presented in US dollars, as detailed in note 1.
Condensed Consolidated Statement of Financial Position
as at 31 March 2024
Note Unaudited Restated Restated Audited
31 March Unaudited 30 September
2024 31 March 2023
$000 2023 $000
$000
Assets
Non-current assets
Goodwill 9 582,713 580,188 578,572
Other intangible assets 9 256,745 282,943 269,729
Property, plant and equipment 883 870 874
Right of use assets 3,524 2,629 3,941
Trade and other receivables 696 111 138
Total non-current assets 844,561 866,741 853,254
Current assets
Trade and other receivables 20,182 22,899 21,821
Tax asset 1,175 889 124
Cash and cash equivalents 10 5,606 9,428 10,416
Total current assets 26,963 33,216 32,361
Total assets 871,524 899,957 885,615
Liabilities
Non-current liabilities
Loans and borrowings 11 (123,231) (170,197) (132,923)
Tax liabilities (1,037) (1,320) (976)
Lease liabilities (2,908) (2,048) (3,240)
Deferred tax liabilities 12 (43,189) (58,917) (49,629)
Total non-current liabilities (170,365) (232,482) (186,768)
Current liabilities
Trade and other payables (13,934) (30,738) (32,194)
Loans and borrowings 11 (23,944) - (15,688)
Tax liabilities (736) (731) (3,779)
Lease liabilities (767) (749) (731)
Total current liabilities (39,381) (32,218) (52,392)
Total liabilities (209,746) (264,700) (239,160)
Net assets 661,778 635,257 646,455
Equity
Share capital 13 17 17 17
Share premium 13 334,458 334,099 334,458
Other reserve 13 330,310 330,310 330,310
Capital redemption reserve 7 7 7
Share option reserve 30,497 49,772 32,683
Foreign currency translation reserve (37,523) (43,258) (42,825)
Retained earnings/(losses) 4,012 (35,690) (8,195)
Total equity 661,778 635,257 646,455
Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 March 2024
Share capital Share premium Other reserve Capital Share option reserve Foreign currency translation reserve Retained earnings/(losses) Total
$000 $000 $000 redemption $000 $000 $000 equity
reserve $000
$000
1 October 2022 (restated see note 1) 17 334,045 330,310 7 46,313 (61,129) (47,162) 602,401
Profit for the year - - - - - - 20,543 20,543
Other comprehensive income/(loss) - - - - - 18,304 (3,186) 15,118
Total comprehensive income for the year - - - - - 18,304 17,357 35,661
Transactions with owners:
Shares issued - 413 - - - - - 413
Options exercised related to previous business combination - - - - (19,297) - 19,297 -
Share-based payments - - - - 5,667 - 2,313 7,980
30 September 2023 (restated see note 1) 17 334,458 330,310 7 32,683 (42,825) (8,195) 646,455
Profit for the period - - - - - - 6,502 6,502
Other comprehensive income/(loss) - - - - - 5,302 (1,296) 4,006
Total comprehensive income for the period - - - - - 5,302 5,206 10,508
Transactions with owners:
Share-based payments - - - - (2,186) - 7,001 4,815
31 March 2024 17 334,458 330,310 7 30,497 (37,523) 4,012 661,778
Restated (see note 1) for the six months ended 31 March 2023
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
1 October 2022 (restated see note 1) 17 334,045 330,310 7 46,313 (61,129) (47,162) 602,401
Profit for the period - - - - - - 14,026 14,026
Other comprehensive income/(loss) - - - - - 17,871 (3,525) 14,346
Total comprehensive income for the period - - - - - 17,871 10,501 28,372
Transactions with owners:
Shares issued - 54 - - - - - 54
Share-based payments - - - - 3,459 - 971 4,430
31 March 2023 (restated see note 1) 17 334,099 330,310 7 49,772 (43,258) (35,690) 635,257
Condensed Consolidated Statement of Cash Flows
for the six months ended 31 March 2024
Note Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Cash flows from operating activities
Profit before tax 3,110 581 8,664
Adjustments for:
Amortisation of acquired intangible assets 9 16,117 16,507 32,625
Amortisation of internally generated software 9 2,944 1,946 4,725
Depreciation of property, plant and equipment 203 193 391
Depreciation of right of use assets 487 571 1,099
Share-based payment expense 4,620 4,716 8,616
Finance income 6 (148) (90) (220)
Finance costs 6 7,562 11,299 19,183
Operating cash flows before movements in working capital 34,895 35,723 75,083
Decrease/(increase) in trade and other receivables 1,235 (4,809) (3,956)
Decrease in trade and other payables (8,491) (1,545) (450)
Cash generated by operations 27,639 29,369 70,677
Income taxes paid (8,894) (5,191) (10,120)
Net cash from operating activities 18,745 24,178 60,557
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired - (30,010) (30,004)
Additions to internally generated software 9 (4,970) (4,690) (10,765)
Payment for property, plant and equipment (205) (298) (503)
Payment for right of use assets - - (230)
Finance income received 148 90 220
Net cash used in investing activities (5,027) (34,908) (41,282)
Cash flows from financing activities
Payment of deferred consideration (10,000) - -
Repayment of loans and borrowings (11,300) (58,264) (80,014)
Proceeds from loans and borrowings 9,500 26,300 26,300
Interest element of lease payments (146) (73) (232)
Capital element of lease payments (361) (531) (964)
Issue of new share capital, net of share issue costs - 54 413
Interest paid (6,306) (6,044) (13,097)
Net cash used in financing activities (18,613) (38,558) (67,594)
Cash and cash equivalents at beginning of the period 10,416 57,876 57,876
Net decrease in cash and cash equivalents (4,895) (49,288) (48,319)
Effect of foreign exchange rate changes 85 840 859
Cash and cash equivalents at the end of the period 5,606 9,428 10,416
Notes to the Condensed Consolidated Interim Financial Statements
1. Accounting policies
General information
Auction Technology Group plc (the "Company") is a company incorporated in the
United Kingdom under the Companies Act. The Company is a public company
limited by shares and is registered in England and Wales.
These Condensed Consolidated Interim Financial Statements have been approved
on 15 May 2024.
These Condensed Consolidated Interim Financial Statements for the period do
not constitute statutory financial statements within the meaning of s434 of
the Companies Act 2006. Statutory accounts for the year ended
30 September 2023 have been delivered to the Registrar of Companies. They
are also available on the Group's website (www.auctiontechnologygroup.com).
The audit report for those accounts was unqualified, did not draw attention to
any matters by way of emphasis without qualifying the report and did not
contain a statement under 498(2) or (3) of the Companies Act 2006. These
Condensed Consolidated Interim Financial Statements have been reviewed and not
audited.
Basis of preparation
These Condensed Consolidated Interim Financial Statements have been prepared
in accordance with United Kingdom adopted International Accounting Standard
34, "Interim Financial Reporting". The Condensed Consolidated Interim
Financial Statements do not include all the information required for full
annual financial statements and should be read in conjunction with the Group's
Annual Report and Accounts for the year ended 30 September 2023 which have
been prepared in accordance with the requirements of the Companies Act 2006.
In determining the information to be disclosed in the notes to the Condensed
Consolidated Interim Financial statements in accordance with IAS 34, the Group
has taken into account its materiality in relation to these Condensed
Consolidated Interim Financial Statements.
The Condensed Consolidated Interim Financial Statements have been prepared
under the historical cost convention. There are no financial instruments
measured at fair value on a recurring basis.
The accounting policies applied in these Condensed Consolidated Interim
Financial Statements are the same as those applied in the most recent annual
financial statements except for the change in presentation currency and taxes
on income. Tax on income in the interim period is recognised by applying the
effective tax rate that would be applicable to the expected full year profit
or loss to the period's result.
Change in presentation currency
On 17 May 2023, the Group announced that from the beginning of the current
financial year, 1 October 2023, it would be changing the currency in which
it presents its financial results from pound sterling to US dollars. The
Group's US dollar denominated earnings account for over 80% of the Group's
revenues and profits. This change will reduce the impact of currency movements
on reported results. In accordance with IAS 8, Accounting Policies, Changes in
Accounting Estimates and Errors, this change in presentation currency will be
applied retrospectively.
In accordance with the provisions of IAS 21, "The Effects of Changes in
Foreign Exchange Rates", the historic consolidated financial information has
been re-presented from pound sterling to US dollars as follows:
· Items of income and expenditure, other than single material
identifiable transactions, denominated in non-US dollar currencies were
translated into US dollars at the average exchange rate (per month) of the
reporting period. Single material identifiable transactions, have been
translated at the exchange rate at the time of the transaction;
· assets and liabilities denominated in non-US dollar currencies were
translated into US dollars at the exchange rates at the relevant balance sheet
dates;
· share capital, share premium and other equity items have been
translated into US dollars at historical exchange rates on the date of each
relevant transaction;
· all resulting exchange differences have been recognised in other
comprehensive income and in the foreign currency translation reserve in
accordance with the Group's existing accounting policy; and
· there is no impact to the Condensed Consolidated Statement of Profit
or Loss as a result of the restatement.
The principal rates used for the translation of results, cash flows and
balance sheets in US Dollar were:
Average rate Closing rate
HY24 HY23 FY23 HY24 HY23 FY23
Sterling 1.25 1.20 1.23 1.26 1.24 1.22
Euro 1.08 1.06 1.07 1.08 1.09 1.06
New and amended accounting standards adopted by the Group
There were no new standards adopted by the Group in the period but the
following amendments became applicable during the current reporting period:
· Amendment to IFRS 17: Insurance contracts
· Amendments to IAS 8: Definition of accounting estimates
· Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of
accounting policies
· Amendments to IAS 12: Deferred Tax related to assets and
liabilities arising from a single transaction
These amendments did not have a material impact on the Group's accounting
policies and have therefore not resulted in any changes in these Condensed
Consolidated Interim Financial Statements.
Going concern
The Directors are required to assess going concern at each reporting period.
The Directors have undertaken the going concern assessment for the Group for
the period to 30 June 2025. The Directors have assessed the Group's prospects
and after considering the current financial projections, the bank facilities
available and then applying severe but plausible sensitivities. The Directors
of the Company are satisfied that the Group has sufficient resources for its
operational needs and will remain in compliance with the financial covenants
in its bank facilities until at least 30 June 2025. For this reason, the
Directors continue to adopt the going concern basis in preparing these
Condensed Consolidated Interim Financial Statements for the Group. The process
and key judgements in coming to this conclusion are set out below:
Liquidity: The Group entered into the Senior Facilities Agreement on 17 June
2021 which included the Senior Term Facility for $204.0m for the acquisition
of LiveAuctioneers. The Senior Term Facility was drawn down in full on 30
September 2021 prior to completion of the acquisition of LiveAuctioneers on 1
October 2021. During the period ended 31 March 2024, a payment of $9.3m was
paid on the Senior Term Facility. In the absence of any prepayments, the next
scheduled repayment would be $6.9m on 30 June 2024. The loan will be due for
repayment on 17 June 2026. At 31 March 2024 the loan was subject to interest
at a margin of 3.00% over US SOFR.
In addition, the Group has a multi-currency revolving credit working capital
facility (the "RCF") for $49.0m. Any sums outstanding under the RCF will be
due for repayment on 17 June 2026. On 6 February 2023, $9.5m was drawn down to
partly fund the deferred consideration and retention bonuses for the
acquisition of ESN in FY23, of which $2.0m has been repaid as at 31 March 2024
and a further $4.5m as at 30 April 2024. As at 31 March 2024 the Group has
adjusted net debt of $141.6m.
Covenants: The Group is subject to covenant tests on the Senior Term Facility,
with the most sensitive covenant being the net leverage ratio covenant
adjusted net debt: trailing 12-month adjusted EBITDA. The net leverage ratio
covenant was a maximum of 4.0x, which reduced to 3.5x in Q2 FY23, was 3.0x at
30 September 2023 and will reduce to 2.75x in Q4 FY24. Under the base case
forecasts and each of the downside scenarios, including the combined downside
scenario, the Group is forecast to be in compliance with the covenants and
have cash headroom, without applying mitigating actions which could be
implemented such as reducing capital expenditure spend. At 31 March 2024, the
net leverage ratio was 1.9x compared to the limit of 3.0x and therefore the
Group was comfortably within the covenant.
Scenario planning: The Directors have undertaken the going concern assessment
for the Group, taking into consideration the Group's business model, strategy,
and principal and emerging risks. As part of the going concern review the
Directors have reviewed the Group's forecasts and projections, assessed the
headroom on the Group's facilities and the banking covenants. This has been
considered under a base case and several severe but plausible downside
scenarios, taking into consideration the Group's principal risks and
uncertainties. These scenarios include significant reduction in commission
revenue due to THV reduction, significant reduction in commission revenue due
to conversion rate decline and lower revenue growth from value-added services
across the Group. None of these scenarios individually or collectively
threaten the Group's ability to continue as a going concern. Even in the
combined downside scenario modelled (the combination of all downside scenarios
occurring at once) the Group would be able to operate within the level of its
current available debt facilities and covenants.
2. Significant judgements and key sources of estimation uncertainty
The preparation of the Group's Condensed Consolidated Interim Financial
Statements requires the use of certain judgements, estimates and assumptions
that affect the reported amounts of assets, liabilities, income and expenses.
In preparing these Condensed Consolidated Interim Financial Statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the most recent annual financial statements for the year ended
30 September 2023, except for the following estimate:
Impairment of goodwill
At least on an annual basis, or if there is an impairment indicator,
management performs a review of the carrying values of goodwill and intangible
assets. This requires an estimate of the value in use of the cash-generating
unit ("CGU") to which the goodwill and intangible assets are allocated. To
estimate the value in use, management estimates the expected future cash flows
from the
CGU and discounts them to their present value at a determined discount rate,
which is appropriate for the country where the goodwill and intangible assets
are allocated to. Forecasting expected cash flows and selecting an appropriate
discount rate inherently requires estimation. Sensitivity analysis has been
performed over the estimates (see note 9). The resulting calculation is
sensitive to the assumptions in respect of future cash flows, the discount
rate and long-term growth rate applied. Management considers that the
assumptions made represent their best estimate of the future cash flows
generated by the CGUs, and that the discount rate and
long-term growth rate used are appropriate given the risks associated with the
specific cash flows.
3. Alternative performance measures
The Group uses a number of alternative performance measures ("APMs") in
addition to those measures reported in accordance with United Kingdom adopted
International Accounting Standards ("UK-adopted IAS"). Such APMs are not
defined terms under UK-adopted IAS and are not intended to be a substitute for
any UK-adopted IAS measure. The Directors believe that the APMs are important
when assessing the ongoing financial and operating performance of the Group
and do not consider them to be more important than, or superior to, their
equivalent IAS measure. The APMs improve the comparability of information
between reporting periods by adjusting for factors such as one-off items and
the timing of acquisitions.
The APMs are used internally in the management of the Group's business
performance, budgeting and forecasting, and for determining Executive
Directors' remuneration and that of other management throughout the business.
The APMs are also presented externally to meet investors' requirements for
further clarity and transparency of the Group's financial performance. Where
items of income or expense are being excluded in an APM, these are included
elsewhere in our reported financial information as they represent actual
income or costs of the Group.
Adjusted EBITDA
Adjusted EBITDA is the measure used by the Directors to assess the trading
performance of the Group's businesses and is the measure of segment profit.
Adjusted EBITDA represents profit/(loss) before taxation, finance costs,
depreciation and amortisation, share-based payment expense and exceptional
operating items. Adjusted EBITDA at segment level is consistently defined but
excludes central administration costs including Directors' salaries.
The following table provides a reconciliation from profit before tax to
adjusted EBITDA:
Unaudited Restated Restated
six months Unaudited Audited
ended six months Year
31 March ended ended
2024 31 March 30 September
$000 2023 2023
$000 $000
Profit before tax 3,110 581 8,664
Adjustments for:
Net finance costs (note 6) 7,414 11,209 18,963
Amortisation of acquired intangible assets (note 9) 16,117 16,507 32,625
Amortisation of internally generated software (note 9) 2,944 1,946 4,725
Depreciation of property, plant and equipment 203 193 391
Depreciation of right of use assets 487 571 1,099
Share-based payment expense 4,620 4,716 8,616
Exceptional operating items 828 2,101 3,311
Adjusted EBITDA 35,723 37,824 78,394
The following table provides the calculation of adjusted EBITDA margin which
represents adjusted EBITDA divided by revenue:
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Reported revenue (note 4,5) 86,022 80,795 165,886
Adjusted EBITDA 35,723 37,824 78,394
Adjusted EBITDA margin 42% 47% 47%
The basis for treating these items as adjusting is as follows:
Share-based payment expense
The Group has issued share awards to employees and Directors: at the time of
IPO; for the acquisition of LiveAuctioneers; and operates several employee
share schemes. The share-based payment expense is a significant non-cash
charge driven by a valuation model which references the Group's share price.
As the Group is still early in its life cycle as a newly listed business the
expense is distortive in the short term and is not representative of the cash
performance of the business. In addition, as the share-based payment expense
includes significant charges related to the IPO and LiveAuctioneers
acquisition, it is not representative of the Group's steady state operational
performance.
Exceptional operating items
The Group applies judgement in identifying significant items of income and
expenditure that are disclosed separately from other administrative expenses
as exceptional where, in the judgement of the Directors, they need to be
disclosed separately by virtue of their nature or size in order to obtain a
clear and consistent presentation of the Group's ongoing business performance.
Such items could include, but may not be limited to, costs associated with
business combinations, gains and losses on the disposal of businesses,
significant reorganisation or restructuring costs and impairment of goodwill
and acquired intangible assets. Any item classified as an exceptional item
will be significant and not attributable to ongoing operations and will be
subject to specific quantitative and qualitative thresholds set by and
approved by the Directors prior to being classified as exceptional.
The exceptional operating items are detailed below:
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Acquisition costs (828) (2,101) (3,311)
Exceptional operating items (828) (2,101) (3,311)
The Group's exceptional costs were in respect of the costs relating to the
acquisition of ESN on 6 February 2023.
The business has undertaken focused acquisitive activity which has been
strategically implemented to increase income, service range and critical mass
of the Group. Acquisition costs for ESN comprised of legal, professional,
other consultancy fees and retention bonuses for ESN employees payable one
year after the acquisition date. The retention bonus was subject to service
conditions and was accrued over the 12-month period, and paid in full in
February 2024. The net cash outflow related to exceptional operating items
in the period was $2.0m (HY23: $1.6m, FY23: $2.0m).
Adjusted earnings and adjusted diluted earnings per share
Adjusted earnings excludes share-based payment expense, exceptional items
(operating and finance), amortisation of acquired intangible assets, and any
related tax effects.
The following table provides a reconciliation from profit after tax to
adjusted earnings:
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Profit attributable to equity shareholders of the Company 6,502 14,026 20,543
Adjustments for:
Amortisation of acquired intangible assets 16,117 16,507 32,625
Exceptional finance items 685 4,823 5,258
Share-based payment expense 4,620 4,716 8,616
Exceptional operating items 828 2,101 3,311
Deferred tax on unrealised foreign exchange differences (2,942) (9,137) (8,810)
Tax on adjusted items (5,264) (9,459) (12,607)
Adjusted earnings 20,546 23,577 48,936
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Number Number Number
Weighted average number of shares in issue (note 8) 121,625,963 120,824,823 121,050,307
Diluted weighted average number of shares (note 8) 123,582,309 122,686,044 123,088,377
cents cents cents
Adjusted diluted earnings per share (in cents) 16.6 19.2 39.8
The basis for treating these items not already defined above as adjusting is
as follows:
Amortisation of acquired intangible assets acquired through business
combinations
The amortisation of acquired intangibles arises from the purchase
consideration of a number of separate acquisitions. These acquisitions are
portfolio investment decisions that took place at different times and are
items in the Consolidated Statement of Financial Position that relate to
M&A activity rather than the trading performance of the business.
Exceptional finance items
Exceptional finance items include foreign exchange differences arising on the
revaluation of the foreign currency loans, intercompany and restricted cash,
movements in contingent and deferred consideration and costs incurred on the
early repayment of loan costs. These exceptional finance items are excluded
from adjusted earnings to provide readers with helpful additional information
on the performance of the business across periods because it is consistent
with how the business performance is reported and assessed by the Board.
Deferred tax on unrealised foreign exchange differences
In calculating the adjusted tax rate, the Group excludes the potential future
impact of the deferred tax effects on unrealised foreign exchange differences
arising on intra-group balances. The unrealised foreign exchange differences
were not recognised in the Group's profit for the year due to differences in
the functional currency basis under tax and accounting rules for the US
holding entities.
Tax on adjusted items
Tax on adjusted items includes the tax effect of acquired intangible
amortisation, exceptional (operating and finance items) and share-based
payment expense. In calculating the adjusted tax rate, the Group excludes the
potential future impact of the deferred tax effects on deductible goodwill and
intangible amortisation (other than internally generated software), as
management provides users of its Group accounts a view of the tax charge based
on the current status of such items. Deferred tax would only crystallise on a
sale of the relevant businesses, which is not anticipated at the current time,
and such a sale, being an exceptional item, would result in an exceptional tax
impact.
Organic revenue
The Group has made certain acquisitions that have affected the comparability
of the Group's results. Organic revenue shows the current period results
excluding the acquisition of ESN on 6 February 2023. Organic revenue is shown
on a constant currency basis using average exchange rates for the current
financial period applied to the comparative period and is used to eliminate
the effects of fluctuations in assessing performance. Refer to the Glossary
for the full definition.
The following table provides a reconciliation of organic revenue from reported
results:
Unaudited Restated Unaudited
six months six months
ended ended
31 March 31 March
2024 2023
$000 $000
Reported revenue 86,022 80,795
Acquisition related adjustment (5,602) (1,506)
Constant currency adjustment - 585
Organic revenue 80,420 79,874
Increase in organic revenue % 1%
Adjusted net debt
Adjusted net debt comprises external borrowings net of arrangement fees, cash
and cash equivalents and allows management to monitor the indebtedness of the
Group. Adjusted net debt excludes lease liabilities and restricted cash (see
note 10).
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Cash at bank (note 10) 5,604 6,454 7,437
Current loans and borrowings (note 11) (23,944) - (15,688)
Non-current loans and borrowings (note 11) (123,231) (170,197) (132,923)
Total loans and borrowings (147,175) (170,197) (148,611)
Adjusted net debt (141,571) (163,743) (141,174)
Adjusted free cash flow and adjusted free cash flow conversion
Adjusted free cash flow represents cash flow from operations less additions to
internally generated software and property, plant and equipment. Internally
generated software includes development costs in relation to software that are
capitalised when the related projects meet the recognition criteria under
UK-adopted IAS for an internally generated intangible asset. Movement in
working capital is adjusted for balances relating to exceptional items. The
Group monitors its operational efficiency with reference to operational cash
conversion, defined as free cash flow as a percentage of adjusted EBITDA.
The Group uses adjusted cash flow measures for the same purpose as adjusted
profit measures, in order to assist readers of the accounts in understanding
the operational performance of the Group. The two measures used are free cash
flow and free cash flow conversion. A reported free cash flow and cash
conversion rate has not been provided as it would not give a fair indication
of the Group's free cash flow and conversion performance given the high value
of working capital from exceptional items.
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Adjusted EBITDA 35,723 37,824 78,394
Cash generated from operations 27,639 29,369 70,677
Adjustments for:
Exceptional operating items 828 2,101 3,311
Working capital from exceptional and other items 4,381 (459) (1,348)
Additions to internally generated software (note 9) (4,970) (4,690) (10,765)
Additions to property, plant and equipment (205) (298) (503)
Payments for right of use assets - - (230)
Adjusted free cash flow 27,673 26,023 61,142
Adjusted free cash flow conversion (%) 77% 69% 78%
4. Operating segments
The operating segments reflect the Group's management and internal reporting
structure, which is used to assess both the performance of the business and to
allocate resources within the Group. The assessment of performance and
allocation of resources is focused on the category of customer for each type
of activity.
The Board has determined an operating management structure aligned around the
four core operations of the Group.
The four operating segments are as follows:
· Art & Antiques ("A&A") marketplaces: focused on offering
auction houses that specialise in the sale of arts and antiques access to the
platforms thesaleroom.com, liveauctioneers.com, lot-tissimo.com and
EstateSales.NET. A significant part of the Group's services is provision of a
platform as a marketplace for the A&A auction houses to sell their goods.
The segment also generates earnings through additional services such as
listing subscriptions, marketing income, atgPay and atgShip. The Group
contracts with customers predominantly under service agreements, where the
number of auctions to be held and the service offering differs from client to
client.
· Industrial & Commercial ("I&C") marketplaces: focused on
offering auction houses that specialise in the sale of industrial and
commercial goods and machinery access to the platforms BidSpotter.com,
BidSpotter.co.uk and proxibid.com, as well as i-bidder.com for consumer
surplus and retail returns. A significant part of the Group's services is
provision of the platform as a marketplace for the I&C auction houses to
sell their goods. The segment also generates earnings through additional
services such as marketing income and atgPay. The Group contracts with
customers predominantly under service agreements, where the number of auctions
to be held and the service offering differs from client to client.
· Auction Services: includes revenues from the Group's auction house
back-office products 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
of the Gazette and selling advertising space within the paper and online. The
Directors have disclosed information required by IFRS 8 for the Content
segment despite the segment not meeting the reporting threshold.
· There are no undisclosed or other operating segments.
An analysis of the results for the period by reportable segment is as follows:
Unaudited six months ended 31 March 2024
A&A I&C Auction Services Content Centrally allocated Total
$000 $000 $000 $000 costs $000
$000
Revenue 44,575 35,235 4,364 1,848 - 86,022
Adjusted EBITDA (see note 3 for definition and reconciliation) 36,034 29,604 2,473 690 (33,078) 35,723
Amortisation of intangible assets (note 9) (12,674) (5,496) (891) - - (19,061)
Depreciation of property, plant and equipment (79) (110) (6) (8) - (203)
Depreciation of right of use assets (338) (116) (4) (29) (487)
Share-based payment expense (658) (889) (40) - (3,033) (4,620)
Exceptional operating items (note 3) (828) - - - - (828)
Operating profit/(loss) 21,457 22,993 1,532 653 (36,111) 10,524
Net finance costs (note 6) - - - - (7,414) (7,414)
Profit/(loss) before tax 21,457 22,993 1,532 653 (43,525) 3,110
Unaudited six months ended 31 March 2023 (restated)
A&A I&C Auction Services Content Centrally allocated Total
$000 $000 $000 $000 costs $000
$000
Revenue 38,218 35,709 5,032 1,836 - 80,795
Adjusted EBITDA (see note 3 for definition and reconciliation) 31,404 30,603 3,324 644 (28,151) 37,824
Amortisation of intangible assets (note 9) (11,746) (5,874) (833) - - (18,453)
Depreciation of property, plant and equipment (66) (117) (4) (6) - (193)
Depreciation of right of use assets (338) (189) (6) (38) (571)
Share-based payment expense (1,410) (475) (46) - (2,785) (4,716)
Exceptional operating items (note 3) (2,101) - - - - (2,101)
Operating profit/(loss) 15,743 23,948 2,435 600 (30,936) 11,790
Net finance costs (note 6) - - - - (11,209) (11,209)
Profit/(loss) before tax 15,743 23,948 2,435 600 (42,145) 581
Audited year ended 30 September 2023 (restated)
A&A I&C Auction Services Content Centrally allocated Total
$000 $000 $000 $000 costs $000
$000
Revenue 80,551 71,378 10,190 3,767 - 165,886
Adjusted EBITDA (see note 3 for definition and reconciliation) 66,211 61,171 6,403 1,366 (56,757) 78,394
Amortisation of intangible assets (note 9) (24,383) (11,235) (1,732) - - (37,350)
Depreciation of property, plant and equipment (129) (236) (10) (16) (391)
Depreciation of right of use assets (678) (342) (10) (69) (1,099)
Share-based payment expense (1,828) (2,163) (103) (4,522) (8,616)
Exceptional operating items (note 3) (3,311) (3,311)
Operating profit/(loss) 35,882 47,195 4,548 1,281 (61,279) 27,627
Net finance costs (note 6) - - - - (18,963) (18,963)
Profit/(loss) before tax 35,882 47,195 4,548 1,281 (80,242) 8,664
Segment assets are measured in the same way as in the financial statements.
These assets are allocated based on the operations of the segment and the
physical location of the asset.
Unaudited Restated Restated
31 March 2024
Unaudited
Audited
31 March 2023
30 September 2023
Total Additions Total Additions Total Additions
non-current assets to non-current non-current assets to non-current non-current assets to non-current
$000 assets $000 assets $000 assets
$000 $000 $000
A&A 580,554 2,209 599,947 42,541 589,956 46,142
I&C 230,304 2,896 231,705 3,213 228,752 7,374
Auction Services 33,390 64 35,024 327 34,212 423
Content 313 6 65 7 334 314
844,561 5,175 866,741 46,088 853,254 54,253
Unaudited Restated Restated
six months Unaudited Audited
ended six months Year
31 March ended ended
2024 31 March 30 September
$000 2023 2023
$000 $000
By geographical location
United Kingdom 153,632 158,283 153,003
USA 690,427 707,858 699,715
Germany 502 600 536
844,561 866,741 853,254
The Group has taken advantage of paragraph 23 of IFRS 8 "Operating Segments"
and does not provide segmental analysis of net assets as this information is
not used by the Directors in operational decision making or monitoring of
business performance.
5. Revenue
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Product and customer types
A&A 44,575 38,218 80,551
I&C 35,235 35,709 71,378
Auction Services 4,364 5,032 10,190
Content 1,848 1,836 3,767
86,022 80,795 165,886
Primary geographical markets
by location of operations
United Kingdom 12,732 11,655 24,096
USA 70,444 66,630 136,964
Germany 2,846 2,510 4,826
86,022 80,795 165,886
By location of customer
United Kingdom 13,096 11,886 24,557
USA 65,088 60,907 125,308
Europe 4,566 4,471 8,645
Rest of world 3,272 3,531 7,376
86,022 80,795 165,886
Timing of transfer of goods and services
Point in time 76,594 73,960 150,274
Over time 9,428 6,835 15,612
86,022 80,795 165,886
Due to the nature of the Group's business, it is not materially affected by
seasonal or cyclical trading.
6. Net finance costs
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Interest income 148 90 220
Finance income 148 90 220
Interest on loans and borrowings (6,399) (6,110) (12,985)
Amortisation of finance costs (332) (293) (612)
Movements in deferred consideration (131) (66) (263)
Foreign exchange loss (554) (4,757) (4,995)
Interest on lease liabilities (146) (73) (232)
Interest on tax - - (96)
Finance cost (7,562) (11,299) (19,183)
Net finance costs (7,414) (11,209) (18,963)
7. Taxation
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Current tax
Current tax on profit for the period 3,529 2,740 11,660
Adjustments in respect of prior years - - (205)
Total current tax 3,529 2,740 11,455
Deferred tax
Current year (6,921) (14,990) (22,368)
Adjustments from change in tax rates - (1,258) (629)
Adjustments in respect of prior years - 63 (337)
Deferred tax (6,921) (16,185) (23,334)
Tax credit (3,392) (13,445) (11,879)
The tax on the Group's profit before tax differs from the theoretical amount
that would arise using the standard tax rate applicable to the profits of the
Group as follows:
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Profit before tax 3,110 581 8,664
Tax at United Kingdom tax rate of 25% (2023: 22%) 777 128 1,907
Tax effect of:
Expenses not deductible for tax purposes 66 127 (729)
Differences in overseas tax rates (89) 476 1
Deferred tax on unrealised foreign exchange differences (2,942) (9,137) (8,810)
Foreign exchange differences not taxable for tax purposes (1,204) (3,844) (3,077)
Adjustments from change in tax rates - (1,258) (629)
Adjustments in respect of prior years - 63 (542)
Tax credit (3,392) (13,445) (11,879)
The total tax expense recognised based on management's best estimate of the
effective tax rate for the full year, excluding changes to US blended tax
rate, foreign exchange differences and exceptional operating items, is 25%
(HY23: 21%) applied to the profit before tax of the six-month period.
The deferred tax credit on unrealised foreign exchange differences of $2.9m
(HY23: $9.1m, FY23: $8.8m) arises from US holding companies with pound
sterling as their functional currency for the Condensed Consolidated Financial
Statements but US dollar functional currency under US tax rules. Per the US
tax basis these holding companies included an unrealised foreign exchange loss
of $10.6m on intra-group loans denominated in pound sterling totalling
£246.2m (HY23: $36.2m, FY23: $34.6m on intra-group loans of £295.6m).
Unrealised foreign exchange differences are not taxable until they are
realised, giving rise to deferred tax.
The Group's profit before tax includes foreign exchange gain of $4.8m from US
holding companies on their US dollar denominated intra-group balances (HY23:
$15.6m, FY23: $12.3m) which are not taxable for US tax purposes giving rise to
a permanent difference of $1.2m (HY23: $3.8m, FY23: $3.1m).
The Group's tax affairs are governed by local tax regulations in the UK, US
and Germany. Given the uncertainties that could arise in the application of
these regulations, judgements are often required in determining the tax that
is due. Where management is aware of potential uncertainties in local
jurisdictions, that are judged more likely than not to result in a liability
for additional tax, a provision is made for management's best estimate of the
liability, determined with reference to similar transactions and third-party
advice. This provision at 31 March 2024 amounted to $1.0m (HY23: $1.3m, FY23:
$1.0m).
Tax recognised in other comprehensive income:
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Current tax (1,296) (3,525) (3,186)
Tax recognised in other comprehensive income includes income tax on the
Group's net investment hedge.
8. Earnings per share
Basic earnings per share per share is calculated by dividing the profit for
the period attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period, after excluding the
weighted average number of non-vested ordinary shares.
Diluted earnings per share is calculated by dividing the profit for the period
attributable to ordinary shareholders by the weighted average number of
ordinary shares including non-vested/non-exercised ordinary shares. During the
period and prior period, the Group awarded conditional share awards to
Directors and certain employees through an LTIP.
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Profit attributable to equity shareholders of the Company 6,502 14,026 20,543
Number Number Number
Weighted average number of shares in issue 121,625,963 120,824,823 121,050,307
Weighted number of options vested not exercised 1,083,615 - 1,338,182
Weighted average number of shares held by the Employee Benefit Trust (108,509) (135,521) (162,934)
Weighted average number of shares 122,601,069 120,689,302 122,225,555
Dilutive share options 981,240 1,996,742 862,822
Diluted weighted average number of shares 123,582,309 122,686,044 123,088,377
cents cents cents
Basic earnings per share 5.3 11.6 16.8
Diluted earnings per share 5.3 11.4 16.7
9. 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
1 October 2022 (restated as detailed in note 1) 33,463 195,926 37,170 887 267,446 7,886 546,167 821,499
Acquisition of business 2,605 11,521 3,174 - 17,300 - 22,422 39,722
Additions - - - - - 10,765 - 10,765
Amortisation (5,626) (22,992) (3,589) (418) (32,625) (4,725) - (37,350)
Exchange differences 68 2,806 458 - 3,332 350 9,983 13,665
30 September 2023 (restated as detailed in note 1) 30,510 187,261 37,213 469 255,453 14,276 578,572 848,301
Additions - - - - - 4,970 - 4,970
Amortisation (2,185) (11,885) (1,838) (209) (16,117) (2,944) - (19,061)
Exchange differences - 852 158 - 1,010 97 4,141 5,248
31 March 2024 28,325 176,228 35,533 260 240,346 16,399 582,713 839,458
Software Customer relationships Brand Non-compete Total acquired intangible assets Internally generated software Goodwill Total
$000 $000 $000 agreement $000 $000 $000 $000
$000
1 October 2022 (restated as detailed in note 1) 33,463 195,926 37,170 887 267,446 7,886 546,167 821,499
Acquisition of business 2,605 11,521 3,174 - 17,300 - 22,382 39,682
Additions - - - - - 4,690 - 4,690
Amortisation (3,444) (11,103) (1,751) (209) (16,507) (1,946) - (18,453)
Exchange differences 68 3,105 521 - 3,694 380 11,639 15,713
31 March 2023 (restated as detailed in note 1) 32,692 199,449 39,114 678 271,933 11,010 580,188 863,131
At 31 March 2024, management have considered if any impairment indicators
exist and undertook an impairment assessment which concluded no impairment was
required. However, both the A&A marketplaces and Auction Services CGUs are
sensitive to a movement in any one of the key assumptions. Management have
therefore performed sensitivity analysis based on reasonably possible
scenarios including increasing the discount rates and reducing the CAGR on the
future forecast cash flows, both of which are feasible given the current
future uncertainty of macroeconomics. For the I&C marketplaces CGU, there
is no realistic change of assumption that would cause the CGU's carrying
amount to exceed its recoverable amount.
For the A&A marketplaces CGU, under the base case there is headroom of
$185.6m at 31 March 2024 (FY23: $302.6m). The year-on-year decrease in
headroom is driven by the reduction in five-year CAGR by five ppt following
the performance in the first six months of FY24 and the current market trends
which are being seen. This headroom reduction is net of the impact from the
reduction in the pre-tax discount rate from 12.7% to 11.9%. For the
recoverable amount to fall to the carrying value, the discount rate would need
to be increased to 14.7% from 11.9% (FY23: 17.4% from 12.7%), the long-term
growth rate reduced to a negative 0.9% from 3.0% (FY23: negative 4.5% from
3.0%), or the CAGR from FY24 on the latest five-year future forecast cash
flows reduced by six ppt (FY23: nine ppt). With an uncertain macroeconomic
outlook, it is difficult to model the precise impact on business performance
at this time. Should there be an economic downturn the A&A segment is
likely to be impacted in the short term due to reduced sales and margins, but
it would then be expected to return to higher growth in later years.
For Auction Services with a headroom of $4.0m (FY23: $7.4m) for the
recoverable amount to fall to the carrying value, the discount rate would need
to be increased to 11.4% from 10.5% (FY23: 13.4% from 11.4%), the long-term
growth rate reduced to 1.8% from 3.0% (FY23: 0.2% from 3.0%), or the CAGR on
the five-year future forecast cash flows reduced by three ppt (FY23: two ppt).
Auction Services is particularly sensitive to the long-term growth rate and
discount rate applied.
10. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and restricted
cash. The carrying amount of these assets approximates to their fair value.
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Cash at bank 5,604 6,454 7,437
Restricted cash 2 2,974 2,979
5,606 9,428 10,416
Restricted cash consists of cash held by the Trustee of the Group's Employee
Benefit Trust relating to share awards for employees. Prior to the IPO, the
EBT facilitated the making of pre-IPO equity awards to beneficiaries of the
sub-fund out of sweet equity that had been allocated to management by the
private equity investors. However, not all of the assets in the sub-fund were
allocated to beneficiaries on IPO. Given February 2024 was three years since
the Company's IPO it has been agreed that the legacy sub-fund should be wound
up by the trustee in February 2024 and the assets of the sub-fund be
distributed to its beneficiaries.
11. Loans and borrowings
The carrying amount of loan and borrowings classified as financial liabilities
at amortised cost approximates to their fair value.
Unaudited Restated Restated Audited
six months Unaudited Year
ended six months ended
31 March ended 30 September
2024 31 March 2023
$000 2023 $000
$000
Current
Senior Term Facility 23,944 - 15,688
23,944 - 15,688
Non-current
Senior Term Facility 115,731 148,438 132,923
Revolving Credit Facility 7,500 21,759 -
123,231 170,197 132,923
147,175 170,197 148,611
The Group entered into a Senior Facilities Agreement on 17 June 2021 which
included:
- A senior term loan facility (the "Senior Term Facility") for
$204.0m for the acquisition of LiveAuctioneers. The Senior Term Facility was
drawn down in full on 30 September 2021 prior to completion of the acquisition
of LiveAuctioneers on 1 October 2021. In HY24 a payment of $9.3m (HY23 and
FY23: $53.7m), was paid on the Senior Term Facility. In the absence of any
prepayments, the next scheduled repayment would be $6.9m on 30 June 2024. The
loan will be due for repayment on 17 June 2026.
- A multi-currency revolving credit working capital facility (the
"Revolving Credit Facility") for $49.0m. Any sums outstanding under the
Revolving Credit Facility will be due for repayment on 17 June 2025, subject
to the optionality of a further 12-month extension. On 6 February 2024, $9.5m
(HY23 and FY23: $26.3m) was drawn down to partly fund the payment of deferred
consideration and retention bonuses relating to the acquisition of ESN in
FY23, of which $2.0m has been repaid during the six months ended 31 March 2024
(HY23: $4.6m, FY23: $26.3m).
- The Senior Facilities Agreement contains an adjusted net leverage
covenant which tests the ratio of adjusted net debt against adjusted EBITDA
and an interest cover ratio which tests the ratio of adjusted EBITDA against
net finance charges, in each case as at the last date of each financial
quarter, commencing with the financial quarter ending 30 September 2021. The
Group has complied with the financial covenants of its borrowing facilities
during the six months ended 31 March 2024.
12. Deferred taxation
The movement in net deferred tax liabilities is as follows:
Unaudited Restated Restated Audited
31 March Unaudited 30 September
2024 31 March 2023
$000 2023 $000
$000
1 October (restated as detailed in note 1) (49,629) (72,175) (72,175)
Amount credited to Condensed Consolidated Statement of Profit or Loss 6,921 16,185 23,334
Exchange differences (481) (2,927) (788)
(43,189) (58,917) (49,629)
The net deferred tax liabilities include deferred tax asset of £nil at 31
March 2024 (HY23: £nil; FY23: £nil).
13. Share capital
Unaudited Restated Restated Audited
31 March Unaudited 30 September
2024 31 March 2023
$000 2023 $000
$000
Authorised, called up and fully paid
121,736,968 ordinary shares at 0.01p each 17 17 17
(HY23: 121,133,406, FY23: 121,491,412)
17 17 17
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
1 October 2023 (restated as detailed in note 1) 121,491,412 17 334,458 330,310
Share options exercised 245,556 - - -
31 March 2024 121,736,968 17 334,458 330,310
During the period, 245,556 ordinary shares of 0.01p each with an aggregate
nominal value of £25 ($31) were issued for options that vested for a cash
consideration of £nil. These included Long-term Incentive Plan Awards ("LTIP
Awards") and shares issued to the Trust for LTIP Awards that have vested in
the period.
14. Related party transactions
During the six months ended 31 March 2024, the Group paid rent of $60,600
(HY23: $20,000, FY23: $80,000) to McQuade Enterprises LLC, a company owned by
the previous owners of ESN. There were other no related party transactions.
The Group's related party transactions for FY23 are disclosed in the Group's
2023 Annual Report. There have been no material changes in the related party
transactions described in the last annual report except as detailed above.
15. Events after the balance sheet date
There were no events after the balance sheet date.
Responsibility Statement
The Directors confirm that to the best of our knowledge:
· these Condensed Consolidated Interim Financial Statements have
been prepared in accordance with United Kingdom adopted International
Accounting Standard 34 "Interim Financial Reporting",
· the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events and their
impact during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
· the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the Board,
John-Paul
Savant
Tom Hargreaves
Chief Executive
Officer
Chief Financial Officer
15 May
2024
15 May 2024
Glossary
A&A Art & Antiques
atgAMP the Group's auctioneer marketing programme
atgPay the Group's integrated payment solution
atgShip the Group's integrated shipping solution
atgXL the Group's cross-listing solution enabling auctioneers to simultaneously run
auctions across ATG marketplaces and ATG white label
Auction Mobility Auction Mobility LLC
Bidder sessions web sessions on the Group's marketplaces online within a given timeframe
BidSpotter the Group's marketplace operated via the www.BidSpotter.co.uk and
www.BidSpotter.com domain
EBITDA earnings before interest, taxes, depreciation and amortisation
ESN the Group's marketplace operated via the www.EstateSales.NET domain
GMV gross merchandise value, representing the total final sale value of all lots
sold via winning bids placed on the marketplaces or the platform, excluding
additional fees (such as online fees and auctioneers' commissions) and sales
of retail jewellery (being new, or nearly new, jewellery)
i-bidder the Group's marketplace operated by the www.i-bidder.com domain
I&C Industrial & Commercial
LiveAuctioneers the Group's marketplace operated via the www.liveauctioneers.com domain
Lot-tissimo the Group's marketplace operated via the www.lot-tissimo.com domain
LTIP Awards the Company's Long-term Incentive Plan
Marketplaces the online auction marketplaces operated by the Group
Conversion rate represents GMV as a percentage of THV; previously called 'online share'
Organic revenue Organic revenue shows the current period results excluding the acquisition of
ESN on 6 February 2023. Organic revenue is shown on a constant currency basis
using average exchange rates for the current financial period applied to the
comparative period and is used to eliminate the effects of fluctuations in
assessing performance.
Proxibid the Group's marketplace operated via the www.proxibid.com domain
The Saleroom the Group's marketplace operated via the www.the-saleroom.com domain
Take rate represents the Group's marketplace revenue, excluding EstateSales.NET, as a
percentage of GMV. Marketplace revenue is the Group's reported revenue
excluding Content and Auction Services revenue
THV total hammer value, representing the total final sale value of all lots listed
on the marketplaces or the platform, excluding additional fees (such as online
fees and auctioneers' commissions) and sales of retail jewellery (being new,
or nearly new, jewellery)
Timed auctions auctions which are held entirely online (with no in-room or telephone bidders)
and where lots are only made available to online bidders for a specific,
pre-determined timeframe
Independent Review Report to Auction Technology Group plc
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
March 2024 which comprises the Condensed Consolidated Statement of Profit or
Loss, Condensed Consolidated Other Comprehensive Income or Loss, the Condensed
Consolidated Statement of Financial Position, the Condensed Consolidated
Statement of Changes in Equity, the Condensed Consolidated Statement of Cash
Flow and related notes 1 to 15. We have read the other information contained
in the half yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the
condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 March 2024 is not prepared, in
all material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the Directors
The Directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the Directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
Reading
15 May 2024
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