No. 09/2017 Copenhagen, 9 May 2017
January - March 2017
- Auction Turnover amounted to DKK 191.5m (235.5), corresponding to a decrease of 19 percent.
- Revenue amounted to DKK 56.1m (45.6), corresponding to an increase of 23 percent of which DKK 18m relates to fees from new partnership agreements.
- Number of knockdowns excluding QXL was 78,030 (81,953) and average knockdown price amounted to DKK 2,333 (2,691).
- EBITDA amounted to DKK 15.0m (3.7), corresponding to an increase of 303 percent.
- Auction Turnover Margin 1 amounted to 7.8 (1.6) percent.
- Profit amounted to DKK 4.3m (-2.1), and earnings per share amounted to DKK 0.087 (-0.058)
- 2 partnership agreements were signed.
1 Auction Turnover Margin = EBITDA/Auction Turnover
Lauritz.com's revenue during the first quarter 2017 increased 23 percent to DKK 56.1m (45.6). DKK 38,1m of the revenue originates from auction turnover and DKK 18m from sales of partnership agreements in two of our auction houses. To transfer ownership of auction houses in the form of partnership agreements is a natural part of Lauritz.com's business model. It means that the buyers going forward will run the auction houses as partners in accordance with our franchise-like concept. EBITDA increased 278 percent to DKK 14.1m (3.7), mainly as a consequence of the fees these sales generated.
As to auction turnover, Q1 is always a weak quarter for Lauritz.com, although Q1 2017 turned out to be weaker than normal, following a stable development during 2016. Auction turnover amounted to DKK 191.5m and was 19% down compared to Q1 2016. There are several reasons for this development.
We are experiencing decreasing auction turnover on our two secondary business areas; our peer-to-peer platform QXL and new produced items on Lauritz.com. We have previously changed the commission- and cost structure of QXL, which has increased QXL's profitability as planned but also decreased the auction turnover.
Looking at our sales of new produced items, we are to some extent downgrading our focus in this area, since we want to concentrate on our core business of second-hand items online. This was reflected in a decrease of auction turnover within new produced items in Q1.
Lauritz.com has a strong position as the biggest auction house in the Nordics. Our online platforms perform well, with approximately 13.000 new customer registrations and 5,7 million online visits per month. This was also the case in Q1.
The basic challenge in the auction industry is continuously to secure a sufficient amount of items to sell to the buying customers. Therefore, Lauritz.com's growth potential is dependent on our capability to attract items to our auction houses from local sellers to expose these items online to our global buyers.
Our core business of selling second hands items online was stable during 2016. However, auction turnover also in this area decreased in Q1 2017. We are experiencing a shift in customer behaviour, where sellers of items gradually become less prepared to physically visit our auction houses to consign compared to before.
We believe this shift in behaviour to be one explanation to our drop in auction turnover in Q1.
Thus, convenience becomes more important than ever. We are implementing an action plan with different initiatives to upgrade convenience in our services towards our future sellers. We do for example now test a new service where we as a standard offer to visit any potential seller at the home address to pick up items and bring them to our auction houses free of charge. The test so far shows good potential.
Lauritz.com has had a first mover advantage in selling art, design and antiquities to a broader audience online. However, we do experience increasing competition from both old and new competitors. The competitors comprise online platforms and retail shops, bigger international or smaller local concepts and at fixed price or on auction. We believe that this development has a negative impact on our in-flow of items from sellers, who now have many alternatives. On the other hand, the increasing interest in second-hand items and the consumers' adaption to online channels create a growing online market. This development is promising and will give room for many online players. We follow the market carefully and will adapt and develop our market approach to secure our market leading position also in the future. At present, we are e.g. preparing improvements of our end-to-end customer experience such as a new payment solution and an enhanced desktop website interface to keep up to speed with our successfull apps and mobile website.
Finally, we are strengthening our commercial awareness and sales competences throughout the organisation. Our key competence is still our expertise within art, design and antiquities, but we must make sure that we are sufficiently proactive in our market approach. We have therefore in Q1 introduced two country manager positions, with responsibility to drive the action turnover development in the respective countries. We are furthermore recruiting new branch managers in a number of auction houses to take our local management to the next level, including a more outgoing commercial focus between our experts, which is expected to increase our sourcing of items, and in turn have a positive impact auction turnover.
As earlier communicated, a cost savings plan was initiated in January 2017 in order to optimize earnings in 2017. The plan comprises a reduction of 15% of headquarter costs. We expect to see positive financial effects from these measures over the year. We do also continue a program to optimize efficiency in the whole company. Lauritz.com is built on a proven concept and a strong international platform with an attractive position in the large middle-market segment. We expect the measures we now take to have a positive long-term impact with regards to both attracting more sellers and buyers and secure future growth and profitability. I feel confident that we will be well positioned to continue our journey in reaching out and democratizing the auction world.
Mette Rode Sundstrøm CEO
1 January - 31 March 2017
Auction turnover Auction turnover amounted to DKK 191.5m (235.5), corresponding to a decrease of 19 percent. The decrease was due to a lower number of items and lower average knockdown price in Q1 2017 compared to Q1 2016. The number of knockdowns excluding QXL amounted to 78,030 (81,953) and average knockdown price amounted to DKK 2,333 (2,691).
Revenue Revenue amounted to DKK 56.1m (45.6), corresponding to an increase of 23 percent. The increase was mainly explained by fees of DKK 18m from new partnership agreements. 2 partnership agreements were signed which means that as of 31 March 1 less auction house (net) was fully owned by Lauritz.com and 1 additional owned by partners compared to 31 December 2016.
EBITDA and Auction Turnover margin EBITDA amounted to DKK 14.1m (3.7), corresponding to an increase of 278 percent. The increase is mainly explained by the fees from new partnership agreements, amounting to DKK 18m. The Auction Turnover Margin amounted to 7.3 (1.6) percent. The increase is mainly explained by the increase in EBITDA combined with the lower auction turnover in Q1 2017.
Operating profit Operating profit for the period amounted to DKK 10.3m (0.5).
Net financials Net financials was DKK -5.6m (-5.4). Net financials mainly consist of interest on the issued bond. The currency exchange rate losses on the bond debt issued in SEK amounted to DKK 0.6m (1.9 gain).
Tax Tax amounted to DKK -1.2m (2.8), corresponding to an effective tax rate of 24.7 percent (-57.1).
Profit for the period and earnings per share Profit for the period was DKK 3.5m (-2.1). Earnings per share amounted to DKK 0.087 (-0.058).
Cash flow Cash flow from operating activities was DKK -26.5m (-0.5). The cash flow in Q1 2017 is affected by increased payments to sellers related to auctions in Q4 2016 and fees from new partnership agreements amounted to DKK 18m which will be received over the next four years in installments.
Financial position, cash and cash equivalents Equity at the end of the quarter was DKK 64.1m (62.0) and the group's total assets were DKK 430.0m (482.3). The equity/assets ratio increased to 14.9 percent (2.0). Cash and cash equivalents amounted to DKK 48.7m (30.0).
Investments Investments amounted to DKK 3.4m (1.8).
Human resources The average number of full-time employees in Lauritz.com Group A/S and its subsidiaries (FTE) was 194 (205) in the period.
Shares The number of shares registered is 40,666,667.
Risks and uncertainty factors Significant operating, external and financial risks and uncertainty factors are described in detail in the prospectus for Lauritz.com that was signed by the Board of Directors 14 June 2016 on page 48-49 and 54-65. Lauritz.com does not consider that any significant risks additional to those described in the prospectus have arisen.
Event after the end of the period On 25 April 2017, Lauritz.com entered into a five year partnership agreement with a partner for the Danish auction house in Esbjerg. The new partnership agreement will have a positive effect on EBITDA of approx. DKK 3m. No other events have occurred after the balance sheet date that could have a material influence on the company's financial position.
Future prospects In 2017, the Group expects to obtain an increased net revenue and an EBITDA margin between 20-25 percent.
Lauritz.com On occasion, Lauritz.com Group A/S is referred to as Lauritz.com. In this Report, such references are to Lauritz.com Group A/S's consolidated financial statements, unless clearly stated otherwise.
Finance The Group is partly funded by a bond debt, which amounted to DKK 242.9m (336.5). The bond is a senior secured bond of SEK 325m listed on Nasdaq in Stockholm with an 3M Stibor + 7.5 % interest 2014/2019. The conditions of the bond includes two covenants on Lauritz.com A/S financials. One covenant is Net interest bearing debt/EBITDA, which as at 31 March 2017 must not be greater than 4.00. The ratio was 2.69. The second covenant is EBITDA/Net finance charges, which as at 31 March 2017 must exceed 1.75. The ratio was 2.82. The covenants for the bonds are described in detail in the terms and conditions for the bond available on www.lauritz.com .
Seasonality Lauritz.com's net revenue and profitability are affected by the nature of operations, and accordingly, its seasonality where Q2 and Q4 are historically strong quarters.
Parent company Lauritz.com Group A/S, being the parent company, is listed on Nasdaq First North Premier in Stockholm and the company is a holding company owing 100 % of Lauritz.com A/S group whose operations primarily are online auctions.
The presentation can be viewed live from 9.05 am via https://www.facebook.com/Lauritzcom/
Best regards Lauritz.com Group A/S Mette Rode Sundström CEO
For press enquiries, please contact: Christina Riis Hansen christinar@lauritz.com +45-26891905
For other enquiries, please contact: Claus Boysen CFO Claus@lauritz.com
Certified advisor: Erik Penser Bank, Stockholm
This information is information that Lauritz.com Group A/S is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication through the agency of the contact person set out above, at 09.00 am CET on 9 May 2017.
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