Auction Technology shares tumble as profit before tax slides

(Sharecast News) - Shares in Auction Technology Group were well below the waterline on Thursday morning, falling below their IPO price, as its pre-tax profit fell amid increasing finance costs. The company said pre-tax profit came in at £7.1m for the 12 months ended 30 September, down 23% year-on-year.

That was despite a 13% increase in revenue to £135.2m.

Adjusted EBITDA was up 19% at £64m, while the adjusted EBITDA margin climbed two percentage points to 47%.

Its operating profit rocketed 34% to £22.5m, while adjusted diluted earnings per share increased 11% to 32.6p, although this was partly offset by higher net finance costs and a rise in effective tax rate.

Basic earnings per share turned around from a loss of 5.1p to a gain of 13.9p, buoyed by higher adjusted EBITDA and a deferred tax credit.

The company also improved its adjusted net debt-to-EBITDA ratio to 1.8x from 2.4x a year earlier, ending with an adjusted net debt of £115.7m, down from £131.4m.

Operationally, the company saw a 0.3 percentage point increase in its take rate to 3.6%, propelled by growth in event fees and value-added services.

Total hammer value rose 3% at constant currency to £10.8bn, though a slight decline was seen in the second half, affected by normalising industrial and commercial asset prices and a softening in art and antiques markets.

There was a 3% decline in gross merchandise value (GMV) at constant currency, impacted by the THV slowdown and a strategic decision to focus on more profitable volumes.

Adjustments for those factors would result in a flat GMV and a one percentage point decline in conversion rate year-on-year.

"Whilst the macroeconomic environment has become more challenging and impacted our rate of growth in the second half, we are strengthening our core proposition with the introduction of revenue streams that are less correlated with sector trends," said chief executive officer John-Paul Savant.

"The strength of our marketplace business leadership and traction in our value-added services such as atgPay and atgShip, provide long runways for growth."

At 0920 GMT, shares in Auction Technology Group were down 17.13% at 522.1p.

Reporting by Josh White for Sharecast.com.