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ASIC Addresses Booktopia’s $10 Million Equity Raise

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By Published On: December 13, 20180 Comments

ASIC has addressed concerns over the online bookstore’s plans to raise $10 million in equity through crowdfunding - see Booktopia's response.

The Australian Financial Review reported today that the Australian Securities and Investment Commission (ASIC) has intervened with Booktopia’s crowdfunding campaign, with the corporate regulator asking the retailer to highlight “going concern” risks in its updated offer documents. This comes after the AFR printed an analysis of Booktopia’s plans earlier in the week, mentioning that “going concern” doubts were not mentioned until page 50 in the report that can be downloaded by potential investors.

According to auditor, PwC, Booktopia’s liabilities surpass its assets by $13.8 million as at June, 30 2018.  However, according to Tony Nash, CEO of Booktopia, ASIC has reviewed the 82-page investors’ document and asked for the auditor’s warning to be moved closer to the front of the publication. “We were in discussion with ASIC a week ago,” Nash told Power Retail. “We were happy to comply. A “going concern” clause has been included in every audit since PWC began auditing out accounts once our business grew to the scale requiring audited accounts.”

This isn’t the first time Booktopia has tried to raise funds, with the business also trying to raise $30 million through an initial public offering (IPO) two years ago.

“The IPO was postponed and ultimately terminated because the same month Amazon announced they were coming to Australia and fund managers did not have the confidence in Booktopia succeeding like we did,” says Nash. ” Two years on we have gone from $80m revenue to $99m to $113.9m in FY18.”

Nash is excited by the opportunity offered by the crowdfunding model, and encourages more business to look at this as an option. “To do an IPO, the cost to raise $30m was $8m. We believe that our $10 million equity raise will use $290,000 from the funds raised, leaving us more than enough capital to improve our warehouse automation and stock processes with the remaining funds.”

Nash initially announced the business’s plans to raise $10 million, offering shares for $1 a pop, with 8.1 percent of the company up for grabs. At the time, the CEO talked about Booktopia’s successes over the last decade, citing its substantial increase in sales and its good position for fending off the likes of Amazon.

“Booktopia’s number of website visits has increased approximately 33 percent per annum, from approximately five million in FY2011 to approximately 21 million in FY2018,” Nash said. “Booktopia started on a budget of $10 per day and it took three days to sell the first book,” he continued.

In the last decade, Booktopia Group’s revenue has grown at a CAGR of 31.9 percent per year, jumping from $9.4 million in FY2009 to $113.9 million in revenue in FY2018. In the last 12-months alone, the company increased sales from $99.8 million to the current figure of $113.9 million.

*This article earlier suggested that Booktopia withdrew its IPO due to the $8 million fee. This was not correct according to Booktopia, and the correct reason is outlined above.

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