No. 15/2017
Copenhagen, 7 November 2017

• Auction Turnover amounted to DKK 170.2m (188.2), corresponding to a decrease of 10 percent.
• Revenue amounted to DKK 32.1m (41.1), corresponding to a decrease of 22 percent. Revenue of DKK 0.7m (4.0) relates to fees from sales of partnership agreements.
• Number of knockdowns excluding QXL amounted to 69,861 (78,242) and average knockdown price to DKK 2,362 (2,294).
• EBITDA amounted to DKK -4.4m (2.9).
• Auction Turnover Margin amounted to -2.6 (1.5) percent.
• Profit amounted to DKK -11.5m (-4.7), and earnings per share amounted to DKK -0.284   (-0.129).
• Erik Norberg started as new CEO 4 September 2017.
• Claus Boysen is leaving his position as CFO effective 7 November, but remains in an advisory role.
• Vibeke Aggerholm has been appointed interim CFO from 7 November.
• Strategic and financial review initiated.

On September 4th, I took over as CEO. I have since then met a large number of customers, employees and partners to deepen my understanding of how we should develop our business. 
Consumers' buying patterns have during the last decade gone through a rapid change as a result of the digitalization. Lauritz.com has taken advantage of this development and created a unique position between online market places and traditional auction houses.

The core concept, being an international online auction marketplace for design, art and antiques - with a high degree of expertize and service - is a successful formula, also with great future potential. We do at the same time operate in an increasingly competitive landscape where traditional auction houses as well as new online platforms increase their efforts to reach Lauritz.coms unique position.

Auction turnover in Q3 decreased 10% compared to previous year. We did, however, see small signs of stabilization, following the decline in the first half year of 2017. This is partly an effect of several measures we have taken to improve the customer experience, among others improved valuation and transport services.

Revenue was 22 percent lower in Q3 2017 compared to last year, and amounted to DKK 32.1m. The decrease is mainly explained by the lower auction turnover, a negative net effect on revenue from sold and acquired auction houses, primarily as a result of one big auction house owned in Q3 2016 was not owned in Q3 2017, and that no new partnership agreements were signed in Q3.

EBITDA amounted to DKK -4.4m in Q3 compared to DKK 2.9m the same period last year. The difference is primarily explained by extraordinary costs and the lack of new partnership agreements, while the cost cutting plan that was initiated in the beginning of 2017 to some extent balanced the impact from the lower revenue.

Our dedicated employees and partners in combination with high user engagement among our customers, and a well functioning marketplace for online auctions, are true strengths for our business. Significant volumes of items are being sold at Lauritz.com every day and we do still have a strong position in the online auction industry. Yet, we cannot neglect the changing consumer behaviors and an increasing pace in the digital transformation.

We have therefore initiated a strategic review aiming at developing a long-term strategy that secures long-term growth and profitability. We need to develop our business model, value proposition and product experience, and define our future position on the digitized market for auctions. We will, in addition further develop our governance, efficiency and internal reporting.

Furthermore, we need to create a situation where we have suitable headroom to our financial obligations and  provides manoeuvrability for long-term growth. We will therefore initiate a financial analysis to evaluate different financing options.

We have as part of this effort appointed Vibeke Aggerholm to lead the financial department during the transformation phase as interim CFO, while current CFO Claus Boysen will leave his position but remain in an advisory role.

The transformation of Lauritz.com will not happen overnight, but I feel confident that the measures we now initiate are necessary to lay the foundation for Lauritz.coms future development.

Erik Norberg
CEO

Lauritz.com - a pioneer in the auction industry

Lauritz.com is the biggest auction group in the Nordics, with buyers in 200 countries that trade online.

Lauritz.com has created a paradigm shift in the auction industry. Our vision is to democratise the auction world by inspiring consumers to sell and buy on online auctions, making art, design and antiques accessible for everyone worldwide.

Our first mover advantage, combined with expertise and knowledge within valuations, secure payments services and distribution of sold items, has since the start constituted the foundation for sustainable and profitable expansion.

Lauritz.com registers around 6.2 million online visitors and around 2 million unique visitors each month. Approximately more than 13,000 new customers are registered every month.

We have shown a yearly average auction turnover growth of over 25% since the start in 1999 with an auction turnover in 2016 of over DKK 1,000m. During the same period, EBITDA has shown a strong and consistent development.

Business model

Lauritz.com capitalizes on the trend of digitalization and online trading by consolidating the fragmented and mainly physical auction house market in Europe and converting it into online auctions.

We focus on the large middle-market segment with a value between DKK 800 and 50,000. This segment positions Lauritz.com between peer-to-peer platforms with high volume at low prices and the fine art market with low volume and high prices.

Sourcing of items from local sellers is achieved through a combination of acquiring traditional physical auction houses, starting new auction houses and establishing partner-run auction houses within a franchise-like model.

Currently, Lauritz.com has 27 auction houses located in Denmark, Sweden, Norway, Germany and Belgium and further growth is expected to come from consolidation in current and new markets.

Revenue model

Lauritz.com charges buyers and sellers a commission and a fixed fee on the knockdown.

Owners

Lauritz.com Group A/S is since 22 June 2016 listed on Nasdaq First North Premier Stockholm with the ticker LAUR. The largest shareholders of Lauritz.com Group A/S are founder Bengt Sundström, Bure Equity AB, Swedbank Robur Fonder, Catella Fondförvaltning AB, Rite Internet Ventures Holdings AB and Mette Rode Sundstrøm.

1 July - 30 September 2017

Auction turnover

Auction turnover amounted to DKK 170.2m (188.2), corresponding to a decrease of 10 percent. The decrease was primarily due to a lower number of sold items in Q3 2017 compared to Q3 2016.

The number of knockdowns excluding QXL amounted to 69,861 (78,242) and the average knockdown price amounted to DKK 2,362 (2,294).

Revenue

Revenue amounted to DKK 32.1m (41.1), corresponding to a decrease of 22 percent. Approximately DKK 2.0m of the decrease is explained by the lower auction turnover during the period. The negative net effect on revenue from sold and acquired auction houses amounted to approximately DKK 3.7m. Furthermore, DKK 3.3m of the decrease is explained by lower fees from sales of partnership agreements compared to Q3 2016. No partnership agreements were signed during Q3 2017.
Two auction houses were taken over in Q3, which means that as of 30 September the number of auction houses owned by Lauritz.com had increased from 7 to 9 compared to 30 June 2017.

EBITDA and Auction Turnover margin

EBITDA amounted to DKK -4.4m (2.9). The decrease is partly explained by the lower revenue compared to the corresponding period in 2016. The decrease is furthermore explained by that no fees from sales of partnership agreements were received during Q3 2017.

In Q3 2016, fees amounting to DKK 3.3m were received from sales of partnership agreements. In addition, a severance payment of DKK 2.3m to Lauritz.com Group's previous CEO is included in the EBITDA for Q3 2017. The financial effects were partly offset by the positive effects of Lauritz.com's cost cutting plan initiated in January 2017.

The Auction Turnover Margin amounted to -2.6 (1.5) percent.

Operating profit

Operating profit for the period amounted to DKK -8.5m (-1.1).

Net financials

Net financials amounted to DKK -5.3m (-4.2). Net financials consists mainly of interest on the bond issued by Lauritz.com A/S. The currency exchange rate gains on the bond debt issued in SEK amounted to DKK 0.0m (5.1 gain). Net financials was affected by DKK 3.1m in July 2016 for costs related to the partial redemption of the bond.

Tax

Tax income amounted to DKK 2.2m (0.6), corresponding to an effective tax rate of 18.8 percent (11.8).

Profit for the period and earnings per share

Profit for the period was DKK -11.5m (-4.7).

Earnings per share amounted to DKK -0.284 (-0.129).

Cash flow

Cash flow from operating activities amounted to DKK -22.4m (-36.3). The cash flow in Q3 2017
was positively affected by the lower amount in settlements to sellers from auctions in June 2017 compared to June 2016.  Furthermore, Q3 2016 was affected by DKK 3.1m for financial costs related to the partial redemption of the bond.

Financial position, cash and cash equivalents

Equity at the end of the quarter amounted to DKK 56.2m (64.1) and the group's total assets were DKK 426.2m (412.5). The equity/assets ratio increased to 13.3 percent (12.9).
Cash and cash equivalents amounted to DKK 29.5m (52.9).    

Investments

Investments amounted to DKK 6.4m (3.2).

Human resources

The average number of full-time employees in Lauritz.com Group A/S and its subsidiaries (FTE) was 186 (204) in the period.

Other events

On 4 September 2017, Erik Norberg started as new CEO of Lauritz.com Group A/S.

1 January - 30 September 2017

Auction turnover

Auction turnover amounted to DKK 603.1m (710.1), corresponding to a decrease of 15 percent. The decrease was due to a lower number of sold items and lower average knockdown price during the period compared to the corresponding period 2016.

The number of knockdowns excluding QXL amounted to 227,256 (239,892) and the average knockdown price amounted to DKK 2,559 (2,809).

Revenue

Revenue amounted to DKK 135.8m (146.3), corresponding to a decrease of 7 percent. Approximately DKK 16.9m of the decrease is explained by the lower auction turnover during the period. Furthermore, the negative net effect from sold and acquired auction houses amounted to approximately DKK 8.4m. The decrease was partly offset by fees from sales of partnership agreements of DKK 21.7m (6.9).
Three partnership agreements were signed during the period and two auction houses were taken over in the third quarter, which means that as of 30 September the number of auction houses owned by Lauritz.com had increased from 8 to 9 compared to 1 January 2017.

EBITDA and Auction Turnover margin

EBITDA amounted to DKK 22.4m (18.7), corresponding to an increase of 20 percent. The increase is mainly explained by fees from sales of partnership agreements, amounting to DKK 21.7m (6.9) and a decrease in costs in line with Lauritz cost cutting plan initiated in January 2017. A severance pay to Lauritz.com Group's previous CEO had a negative impact on EBITDA of DKK 2.3m.
The Auction Turnover Margin amounted to 3.7 (2.6) percent.

Operating profit

Operating profit for the period amounted to DKK 10.7m (8.2).

Net financials

Net financials amounted to DKK -13.1m (-9.0). Net financials consists mainly of interest on the bond issued by Lauritz.com A/S. The currency exchange rate gains on the bond debt issued in SEK amounted to DKK 2.2m (14.6 gain).

Tax

Tax expenses amounted to DKK 0.4m (2.4 income), corresponding to an effective tax rate of 88.5 percent (308.7).

Profit for the period and earnings per share

Profit for the period amounted to DKK -2.9m (1.7).
Earnings per share amounted to DKK -0.071 (0.046).
Cash flow

Cash flow from operating activities was DKK -37.0m (-31.5). The high auction turnover in the end of 2016 compared to the end of 2015 lead to a higher amount of payments to sellers in the beginning of 2017, compared to the beginning of 2016. This had a negative impact on the cash flow for the period January-September 2017 compared to the same period previous year.  Furthermore, revenue related to fees from sales of partnership agreements amounted in 2017 to DKK 21.7m (DKK 6.9), that will be received over the next four years in installments.

Financial position, cash and cash equivalents

Equity at the end of the period amounted to DKK 56.2m (53.1) and the group's total assets were DKK 426.2m (412.5). The equity/assets ratio increased to 13.3 percent (12.9).
Cash and cash equivalents amounted to DKK 29.5m (52.3).

Investments

Investments amounted to DKK 12.1m (18.7).

Human resources

The average number of full-time employees in Lauritz.com Group A/S and its subsidiaries (FTE) was 174 (208) in the period.

Shares

The number of shares registered is 40,792,542.

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.

Events after the end of the period

On November 7th, the Board of Directors decided to initiate a strategic review aiming at developing a long-term strategy for Lauritz.com Group A/S. Furthermore, the Board of Directors decided to initiate a financial analysis to evaluate different financing options in order to create a situation with suitable headroom to the financial obligations, with manoeuvrability for long-term growth.
Claus Boysen is leaving his position as CFO effective 7 November, but will remain in an advisory role. Vibeke Aggerholm has been appointed as interim CFO from the same date.

Future prospects

In 2017, the Group expects a stable net revenue or a decrease in 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 241.2m (241.8). The bond is a senior secured bond of SEK 325m listed on Nasdaq in Stockholm with a 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 30 September 2017 must not be greater than 4.00. The ratio was 3.12.
The second covenant is EBITDA/Net finance charges, which as at 30 September 2017 must exceed 1.75. The ratio was 2.97.
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
Erik Norberg
CEO

For press enquiries, please contact:
Susanne Sandsberg Klubien,
E-mail press@lauritz.com,
Tel: +45 2689 1909

For other enquiries, please contact:
Claus Boysen
CFO
Claus@lauritz.com

Certified adviser: Erik Penser Bank, Stockholm
Market place: Nasdaq First North 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 9.00 am CET on 7 November 2017.