Auction Tech directors put holdings under the hammer

Auction Technology Group (ATG) benefits from lockdowns and inflation. The online platform connects auction houses with potential bidders. Lockdowns boosted demand for digital auctions, but unlike other online commerce services, demand hasn’t dropped off. Rising inflation has pushed up prices of second-hand goods, meaning more turnover for ATG.

In the six months to the end of March, pro-forma revenue rose 16 per cent and 68 per cent on a reported basis to £57.7mn. This led to a 58 per cent jump in adjusted cash profit and a 68 per cent hike in adjusted cash flow. 

Other businesses have been crippled by supply chain issues, forcing them to increase prices. This has in turn increased prices of second-hand goods, but because they are still cheaper than new goods, it hasn’t hit demand. 

The market is aware of this high-margin, fast-growing business, which is why it is trading on a forward price/earnings ratio of 33. This high valuation may have been part of the reason why chief executive John-Paul Savant sold £1.3mn-worth of shares. Finance chief Tom Hargreaves also sold £2.6mn-worth, while chief operating officer Richard Lewis disposed of £3.94mn-worth and Daniel Pennington, senior vice-president of sales, sold £263,000.

While ATG is better placed than many businesses, the truth is that if we go into a recession there will be fewer transactions of any sort – even of the second-hand variety. Medium-term headwinds are coming, but the long-term prospects are still promising.