Auction Technology Group Stock

Well, look, firstly, welcome to our half year results presentation. We obviously appreciate your continued interest in ATG. And I am delighted to be here as the new CEO, and to clearly get the benefit of the team's great work on the reaction of the markets this morning, no better to be. What was it Napoleon said? Don't give me generals, give me lucky generals, right? So clearly, I was a lucky general this morning. So thank you to all of the team for making it very easy for me this morning.

And so I'm sure the question that's top of all your minds is why did I join ATG. And so what I can tell you it is very simple. Look, I completed my diligence. I was very excited about the growth potential of this business. I mean, great oaks from acorns they become. And so I'm very confident in the original hypothesis of the business. I accept maybe the path hasn't been quite as straight as you'd all liked it to be, but I'm pretty sure that the opportunity absolutely remains intact. And so I'm excited to take the business and achieve that growth.

The other key thing is, look, I think the strategy generally makes sense. So I've not turned up and thought, wow, we have to change the strategy here. The strategy, I think, is very clear. So what that really now allows me to do is just focus on improving and accelerating the execution of the business, and that's where the effort is going to go. Look, live formats remain a very strong growth format across global marketplaces. It's where the excitement is in any marketplace business. I've had the pleasure of working with the top 30 marketplaces globally for the last 15 years. So it's where all the action is, and we're ahead of the pack in that niche opportunity. And sometimes, I think that can get lost on people.

My immediate reflections on the company is, look, it's really clear today, probably demonstrating that more than anything, that we've strengthened the confidence over the last 6 months by improving the accuracy and predictability of our forecasting, reducing the risks of earnings surprises and being clear on our focused areas. And I think that goes with great credit to Sarah and her team and obviously, Chris and our IR team. So it's kind of -- that's a key milestone for us.

Look, we've grown single-digit top line in the first half, but we need to be realistic. We've done that supported by lower-margin VAS revenue. And so we're now going to be really starting to focus on strengthening the core fundamentals of the business to restore sustainable high-margin growth with live auctioneers, I think, being the best bellwether you can use to see how we can achieve that. And then finally, look, our continued strong free cash flow generation has enabled us to delever efficiently while increasing our balance sheet optionality. And so I think at the heart of every great business at the end of the day is great cash conversion. And that's a key element of this business and something we want to be very focused on.

Before I hand over to the team, I think it would be remiss of me not to acknowledge and thank on behalf of the Board, the company and all the shareholders through the journey, Jean-Paul's 10 years of leadership of the business. He, like all great CEOs, made good value for his shareholders on the journey, not all maybe, but the vast majority. And I think the reality is it's from his 10 years of hard work that we get the pleasure of taking that platform forward. So on behalf of the company, I thank him for that.

So now without further ado, it's my great pleasure to hand over to Sarah to present the main sections of the financial results. And then she's going to be supported by Meghan, who's our Chief Digital Officer, who will give you an update on our product progress. But thank you for coming.

The mic is only going to go up through the presentation. Okay. Thank you, Duncan. And it's great to have Meghan with us this morning as well. We've got a fair bit to get through or I personally have a fair bit to get through. So I have had an extra coffee this morning, you'll be glad to know. And I will be taking you through both the financial highlights and then the business and segment performance after that as well. Then Meghan will do a deep dive into our Arts & Antiques business, specifically LiveAuctioneers and Chairish. And then we'll wrap up and take questions. That's the order of play for this morning.

With no further ado, I'll go to the results highlights, which you will have seen over the last couple of hours. Summary being ATG delivered well in the first half of the year. We had strong revenue and profit growth. And in addition, we are announcing a modest upgrade to our full year expectations. A&A has good momentum. We saw GMV growth of 5% on a pro forma basis, and that was led by higher average item value, continued take rate expansion as a result of our work on LiveAuctioneers and the growth in shipping. And this has contributed to strong revenue growth in the segment of 12.5%.

In the I&C division, headwinds have impacted our performance in the form of cyclical agriculture market headwinds, which I think are well trailed externally and continued medium-term competitive trends. We do continue to work to drive progress in the segment with the Proxibid replatforming on track.

Cash conversion, as Duncan said, continues to be strong. We had good operating and free cash flow generation, and this has enabled us to delever significantly with leverage down 0.4 turns to 1.8x at the end of March. Our capital allocation policy remains unchanged, and the Board will consider best uses of excess capital towards the end of the year. I'll talk about that a bit more later in the presentation. And lastly, our levers are working. Organic investment across LiveAuctioneers and Chairish is delivering. We do continue to see take rate expansion driven by our value-added services. The Chairish integration is on track, and we are benefiting from cost savings that we executed across the group.

So with that, as you will be aware, and I think as I've well trailed over the last few months, we did say that we would be updating our KPIs to give a cleaner read that would be more aligned to how we run the business and will also simplify the ATG story and give you a foundation for consistent messaging and also consistent assessment of performance. And I should also say these new KPIs are much more aligned to industry standards.

So just to talk you through the headlines, items sold will be our volume metric going forward and will replace all of those previous scale metrics. The reason we talk about items rather than lots, which is what the language you'd be used to is that Chairish obviously can't have lots being a list price business. And so we will be talking about items going forward so we can encapsulate both parts of the business. Average item value is our measure of pricing. And what you'll effectively now be able to do is take items sold and average item value and that will get you to GMV. So it's a much cleaner kind of flow-through of the key KPIs. And then we've heard many times about exclusions from various metrics. And so GMV definition remains the same, but we've refined it to include Chairish and real estate and ATG white label. And that better aligns GMV to reported revenue.

And lastly, on take rate. We've refined the definition of take rate in the same way as I've just described for GMV. And again, that will provide a cleaner read on the monetization of our platforms. So with that, and I consciously did that upfront because we will use this terminology all the way through the presentation. I will move to the financial highlights.

Revenue was up 7.9% on a pro forma constant currency basis. And that was driven by a strong performance in A&A with a good contribution from Chairish. Adjusted EBITDA, up 9.9%, benefiting from commission growth on LiveAuctioneers, the operational synergies from Chairish and group-wide cost efficiencies. Our margin was 33.9%. And pleasingly, on a pro forma basis, margins were up 0.6 percentage points year-on-year. As expected, our half 1 margins are below our full year guidance. And to be clear, our margin expectations for the full year remain unchanged.

Adjusted EPS, $0.199, up 4.7% year-on-year, supported by the EBITDA expansion. Strong adjusted free cash flow of $26.5 million, significantly up year-on-year and a continued strong operating cash conversion of 85%. These benefited from the higher adjusted EBITDA and also strong cash management. And lastly, we saw rapid deleveraging with net debt to EBITDA down to 1.8x.

If I now move on to group performance. As I mentioned, revenue grew 7.9% on a pro forma basis despite a flat GMV performance. Two key drivers here, the strong performance on A&A, including Chairish, both of which have higher take rates than Industrial & Commercial. So we saw a mix benefit. And then value-added services, which on a pro forma basis grew 21.8% year-on-year. Items sold were up 2% on a pro forma basis, driven primarily by I&C, which also saw a corresponding lower average item value based on some of the headwinds that I've described, meaning that overall GMV remained flat.

Take rate continued to expand. So -- and that was led by the segment mix, as I said before, of A&A and Chairish having higher take rates, but also our growth in value-added services. And that meant that our take rate improved to 7.1% in the half. Just to remind you of what I mean when I say pro forma, this reflects the inclusion of Chairish in the prior year as well as this year. And we have got a reconciliation in the appendix, which reconciles to the reported numbers that we showed in the half year last year.

I'll turn to Arts & Antiques, and revenue grew ahead of expectations to 12.5%, with contributions from ATG Shipping, good growth in Chairish and importantly, commission growth on LiveAuctioneers from the actions that we've taken. Items sold were relatively flat with good growth in higher-value items, offset by volume decline in lower value items. And this helped to drive up the average item value in Arts & Antiques by 5%. And we talked about this a bit at the full year, but our investments in LiveAuctioneers have focused on surfacing items for buyers that have a higher value and a higher propensity to sell, and that has allowed us to increase our average item value. Chairish was also supportive.

Take rates up 5 percentage points on a reported basis and 1 percentage point on a pro forma basis; again, benefiting from the growth of shipping and the growth in Chairish, which, as I said, has a higher take rate. Pleasingly, the Chairish integration is on track, and we remain on track for a full year run rate of $8 million of synergies in FY '27 as we previously communicated. In addition to that, we will see $6 million of those operational synergies delivered in the P&L in fiscal '26 with circa $3 million in the first half. And accordingly, on the back of that, Chairish was profitable in the first half.

If I now turn to Industrial & Commercial. The performance was impacted by market headwinds, leading to a year-on-year revenue decline of 1.8%. This decline was driven by, first of all, the challenging agriculture markets with a significant decline in GMV on our green iron ore agriculture business. Secondly, competitive dynamics, including the ongoing adoption of third-party white label solutions by some of our auction houses and also the impact of auction house consolidation. I'll talk about those a little bit more in the segment performance later. Items sold on I&C grew 4% in the period. And as I said before, this was offset by a decline in average item value as a result of the headwinds that I've discussed. And that led to an overall decline in GMV of 2%. Take rate remained stable.

Turning to the group P&L. Gross profit was up 2.2% on a pro forma basis and gross margin diluted by 3.4 percentage points as a result of the revenue mix impacts from both Shipping and Chairish as we expected. Adjusted operating costs were pleasingly down 5.7% on a pro forma basis, which is primarily driven by the realization of Chairish synergies and the cost efficiency actions that we've taken. Adjusted EBITDA, as I said, up 9.9% with a 0.6 percentage point improvement on a pro forma basis, which really demonstrates some of our synergy captures. Finance costs up 40.4% on a reported basis as we expected as this reflects the increased net debt post the acquisition of Chairish. However, our leverage trajectory remains positive with leverage now at 1.8x. And then EPS up 4.7% on a reported basis with the expansion of EBITDA, partially offset by the increases in finance costs.

And then if I turn to cash flow. Cash generation remains a core strength of the business with working capital broadly flat and no significant shift in cycle from Chairish. CapEx was $6.3 million in the half versus $5.9 million last year. And that's as we continue to take, as I've said a few times on various calls in the past, continues to take a disciplined approach to capital allocation and targeting investments in the strongest returning areas. So we've seen no step change in run rate on capital as expected. Interest costs were higher year-on-year and in line with our expectations as a result of the higher net debt.

Tax significantly lower than the prior year. Timing of payments normalized in the first half versus the first half last year. And we've also seen benefits of being able to utilize U.S. Chairish tax losses and changes in the U.S. R&D policy changes. And then we continue to generate good cash flow. Adjusted free cash flow of $26.5 million, which is materially up year-on-year. And as I said, conversion rate at 85% versus 84% last year, so a really strong performance. The strong cash flow performance allows us to continue paying down debt and make strong progress against our guidance of well below 2x by the end of fiscal '26.

I'm now going to move and talk about cost savings as a lever for our business. So to improve efficiency and organizational effectiveness, we decided to implement an additional cost savings program at the end of the first half. These savings help support the path to delivery of the fiscal '27 numbers, provide us flexibility to focus on the highest returning investments and support fiscal '26 delivery. Just to be clear, this is in addition to the Chairish synergies that we've been talking about for some time and in addition to the cost savings that we communicated in November.

In terms of the differences this makes to the organization, practically, we have reorganized the business to have one global commercial and operating organization. And we now have global function owners with more accountability while we have localized teams who remain focused on delivery. In addition, we also have an ongoing review of costs to hone accountabilities and increase agility. Things included here will be use of AI for automation and cost reduction, eliminating duplicative leadership roles and refocusing our resources around the priority product areas, some of which Meghan is going to talk about a bit later.

The additional program will give us around a full year benefit of circa $4 million in FY '27 as well as a partial benefit this year, albeit less given the timing of the execution. And this supports our upgraded full year guidance and supports our targeted investments in Arts & Antiques. To enact these changes, there is a $2 million additional P&L charge in exceptionals that we took in the first half.

I'm going to move on to capital allocation. And I think the most important thing here is to say that our capital allocation framework remains unchanged. We set out our updated framework in November. It remains unchanged, and the significant delevering we've seen in the first half illustrates the optionality that we have ahead of us. Just to reiterate, our current focus is on, firstly, efficient and targeted organic investments, such as those Meghan is going to present today, which are supported by our ongoing cost efficiency program that I've mentioned. And then secondly, the continued focus on deleveraging the business.

The Board will consider the best use of excess capital, including shareholder returns closer to the end of the year once leverage reaches a range of around 1.5x. We will look forward to hearing investors' views on the options for returning capital to shareholders as we meet you over the next few weeks. And just for clarity, our view on M&A is also unchanged, is not required to deliver our strategy.

Okay. Moving on to the building blocks of fiscal '26 performance. You'll have seen this chart at the full year. So just to lay out of some of the key principles, and then I'll move on to the upgraded guidance. So in November, we set out the key building blocks for our guidance for fiscal '26. Our confidence in the full year delivery has increased following the good first half performance, and this is reflected in the upgraded guidance. Revenue growth for the year will be -- we've always said will be more weighted to the first half because of the rollout -- the timing of the rollout of atgShip, but we do still expect shipping to contribute positively to growth in the second half.

In addition, we do continue to develop AMP, our marketing program and have started leveraging our marketing playbook across Chairish. In the first half, we took fixed fee and targeted pricing actions to grow revenue, and we continue to see the benefit of the work and investment on LiveAuctioneers, which is driving GMV and commission revenue. Adjusted EBITDA will continue to be supported by the execution of synergies on Chairish and the cost efficiency actions, which I've already mentioned, which will have a fuller impact in fiscal '27. As expected and in line with our guidance, there is a dilutive impact to margin of the -- impact of the Chairish integration and the dilutive impact of value-added services, particularly shipping, as we've laid out before. We continue to expect to report full year margins in the range of 34.5% to 35.5% towards the bottom end of that range given the success of Chairish and Shipping, which were obviously lower margin is lower margin growth.

If I then turn to the updated fiscal '26 guidance, we are upgrading our guidance for the full year after the good first half. We now expect revenue growth of 5% to 6% on a pro forma constant currency basis, which, to be clear, is in the $248 million to $250 million range, with an adjusted EBITDA margin, as I said, of 34.5% to 35.5%. Exceptionals guidance for the full year will be $7 million, which is higher than we set out in November and that was due to the one-off costs of actioning the cost efficiencies that I've mentioned and also corporate project activity in the first half. To be clear, all other areas of guidance remain unchanged and remain in line with the expectations we set out in November.

And that completes the financial highlights. So I'm going to briefly change hats and move on to talk about operational formats and performance and our segments. Okay. So we do continue to invest in the business, and we remain focused on delivering our core objectives. Over the last 2 years, there have been a significant number of changes at the executive and Board levels, adding relevant operational marketplace, technology and finance depth, which obviously includes the appointment of Duncan, who has the experience to guide ATG through the next phase of our journey. And May is an important month for ATG because Duncan's obviously joined in May. I joined a week -- a year ago this week, 1 year ago and Meghan joined 2 years ago this week. So we have lots of change in May, it would seem. So we've done a lot of upgrade of the leadership team, as I've said, and I think that's important for future delivery.

On Industrial & Commercial, and I'm going to talk about this a bit more in a minute, we're managing headwinds, which I'll expand on very shortly. Despite this, we are focused on the modernization and the replatforming of Proxibid, and I'll take you through our phase plan for that. I've talked about value-added services a few times, so I won't elaborate further. But the key point here is that where we've invested, we have delivered significant benefits. Work continues on creating a modernized buying experience on LiveAuctioneers specifically. Meghan is going to talk about that in a bit more detail, and this is starting to generate positive momentum in our key financial KPIs. And lastly, as I've said previously, the integration of Chairish is on track. And additionally, it showed good growth in the period as it benefits from the scale of being part of the wider ATG network.

So I&C, we had a relatively soft first half on Industrial & Commercial as we saw the cyclical agriculture -- we saw cyclical agricultural market headwinds as well as the continuation of medium-term trends that have impacted the group. So taking those in turn, firstly, the well-documented macro headwinds impacting the agriculture market, which reduce -- have reduced value and activity. Secondly, we've seen continued adoption of third-party white labels. Importantly, these auction houses remain using our own marketplaces as well, but with a reduced share, so impacting GMV and revenue.

And thirdly, we've seen some auction house consolidation. These dynamics together mean that we have seen commission revenue under pressure as demonstrated by the chart on the top right. On the upside, in recent years, we have been able to grow the monetization of that GMV through our AMP marketing program. And you can see that in the chart on the bottom right. While not benefiting GMV, it has meant that the total revenue has remained stable. We also believe there's good upside from commercially trading the business harder.

So if I go now specifically into asset mix, you can -- and I think this is a chart we've shown previously showing GMV and revenue by the type of category we have within I&C. And you can see that we are in GMV growth on yellow and gray iron with the declines focused on green iron or agricultural equipment. The competitive dynamics of white label adoption and auction house consolidation, together with the broader macro challenges facing the agricultural market, which is well trailed externally, have led to a significant reduction in both GMV and revenue at 27% and 17%, respectively. Comparatively, we've seen a more stable performance on yellow and gray iron, which coincides with trends seen of U.S. heavy-duty inventory tightening and combined with marginally higher prices.

If I then move on to some cohort analysis showing the loyalty of our buyers and sellers on the platforms, we do still have very strong buyer and seller loyalty, and it's a key strength of the business. Consistently, over 80% of GMV on I&C is from buyers returning to our platforms, and this high level remains stable. In tandem, seller loyalty also remains high with more than 90% of GMV on Proxibid coming from sellers who've been on the platform for over 5 years.

Moving on to the Proxibid replatforming, which we've talked about a few times. That migration is on track, and it's important to our plans for Industrial & Commercial and is one of the foundations that will unlock better performance. We hit the milestone of going live with our first timed auction house in the first half for testing. In the second half, we will be focused -- second half of calendar '26, we'll be focused on adding live auction and value-added services functionality as well as working with a broader cohort of auction houses to expand our operational learnings. During calendar year '27, we will be rolling out the platform more broadly.

Before that happens, we can drive targeted fixed fee pricing and value-added services adoption on the platform. We can benefit from the operational discipline of having one joined-up commercial organization, and we were able to deepen our loyalty program with existing sellers. Once the migration is complete, we will additionally be able to develop and innovate, which will allow us to capture some exciting opportunities such as the work being done on the Arts & Antiques side of the business. We'll be able to apply the commercial benefits we've developed for A&A. So things like AI rankings, item categorization, price prediction and enhanced search capability. Importantly, we'll also be able to reduce OpEx, CapEx and cost to serve, which is important because much of our investment has gone into the Proxibid replatforming over the last years. And then finally and importantly, our white label solution as a result, will become more compelling as a choice to auctioneers.

So I'll now move on to Arts & Antiques. And in this segment, we're really pleased to be able to say that our targeted investment in testing is now moving the key metrics, directly contributing to GMV and revenue growth, up 5% and 12.5% in the first half. As you can see from the charts on the right-hand side, we're seeing pleasing growth in value-added services revenue and more recently in GMV and commission revenue growth. Meghan is going to talk about this in more detail shortly. So I won't say too much other than just to say we're focused on three things: converting demand into transactions by enhancing the user experience, maximizing price realization and sell-through using proprietary data that we have and driving higher revenue per transaction and deepening the value of the offer to customers through value-added services.

We are clearly proving out what drives performance and iterating quickly to capture the opportunity. To be clear, and I know this is something that we often discuss in smaller groups, we have focused our investment on LiveAuctioneers, which is our largest Arts & Antiques platform, and that's in alignment with our disciplined capital allocation approach. However, all the work is being done in such a way that the learnings can then be replicated across to our other platforms over time.

And with that, after hearing me for a long time, I will now hand over to Meghan to talk about LiveAuctioneers specifically.

Thanks, Sarah. As promised, I will adjust the mic to max high, so you can all hear me. Great. Good morning, everyone. I'm Meghan Schoen. I'm the Chief Digital Officer at ATG. That means I lead products, marketing, technology and data for the group. I joined ATG after leading product at large consumer marketplaces where the levers that grow a marketplace are very well understood, reduce friction, sharpen discovery and use data to match buyers and inventory better. When I arrived at ATG, what struck me and excited me was the scale of the opportunity to bring that same playbook to the ATG marketplaces. We have clear headroom in the buyer experience sitting on top of the unique inventory and seller relationships that no one else has.

As Sarah mentioned, we chose to start on LiveAuctioneers because it's our biggest A&A site and a logical starting point to prove out the playbook. Over the next few slides, I'm going to take you under the bonnet and showcase where we invested, what it's moving and where we still see a long runway ahead. So first, where we put the investment? We started by reweighting the A&A investment across three explicit fronts. First, trust and buyer experience. We're focused on driving more bidders, more bids and ultimately more items sold. Second, discovery and ranking. Better matches, higher sell-through and better price realization on our marketplace. And third, shared intelligence and platform leverage. We are building services and solutions that can be leveraged across multiple marketplaces to drive faster innovation, lower unit cost and higher ROI.

What we actually did in practice is simplify bidding and onboarding flows, fewer steps from when someone arrives to when they ultimately place their first bid. We've also been leaning in on AI to better understand our inventory through things like visual recognition and then implementing ranking models in our search and recommendations that learn from real user behavior and optimize sell-through. We've also looked at how we can standardize and highlight the most pertinent decision-making criteria for our buyers, cleaner item pages and clearer information hierarchy across our inventory. And we've seen the results on every dimension we've invested. In the first half, we improved GMV on LiveAuctioneers by over 8% and lots sold by over 9%, increasing take rate by 2 percentage points.

I'm going to take you through just a small sample of the successful experiments that we ran in the first half of the year to give you a sense of the type of work that we're doing on LiveAuctioneers and the results from those actions. It's important to note, every initiative was run as a controlled experiment with a holdout group. The lists I'm going to share are measured against control, not year-on-year.

So first, let's talk about trust and buyer experience. When I say trust and buyer experience, what I mean in practical terms is removing every unnecessary step, decision or moment of hesitation between a buyer landing on an item and ultimately bidding on it. This is important because every successful low effort bid increases the chance that buyers come back, that they opt into alerts and ultimately bid on the next item. So friction reduction here compounds over time.

Some examples of what we did. We auto approved returning bidders so that trusted buyers no longer have to wait for the auctioneer to reapprove them every time. We suggested bid amounts on our item detail pages. So every bidder now sees clear guidance on what is a good, strong and competitive bid rather than starting from a blank slate and having to guess. We reduced steps in the bidding flow, tightening the path from when someone is interested to when they actually place a bid. And we focused on getting more users to opt into notifications. Unlike traditional e-commerce, timing matters and it can be very confusing in auctions. When we get someone to opt in, we can prompt them at the right moment and guide them through the process.

Across a variety of these winning experiments, we saw a 9% growth in bidders, demonstrating that our friction reduction work measurably grows the active bidder base and a nearly 80% improvement in opted-in users. The reengagement pool we can talk to has grown substantially, which makes every future campaign and alert that much more effective.

Turning to our investment in discovery and ranking, our second pillar. Reducing friction drives more bids and bidders, but friction reduction only pays off if buyers are seeing the right items in the first place. The single biggest unlock in any two-sided marketplace is matching supply to demand, helping buyers find the item they want, helping sellers price and present it well and helping us prioritize the items most likely to sell. Doing this at ATG is harder than a typical marketplace. Every item is one of a kind. There's no set price. Value is decided by who shows up to bid. And every auction house has its own conventions for describing items. There simply isn't an off-the-shelf engine for this, so we built it ourselves on our own data.

That's where AI comes in for us. It sits behind discovery, ranking, recommendations and relevance. It's the layer that helps us turn an unstructured catalog of one-of-a-kind items into something a buyer can navigate. And every new buyer, new item, every new bid improves those models. So what does this actually look like in practice? Three proprietary models do most of the heavy lifting for us today, each one answering a different commercial question. Our price and sell-through model uses machine learning to help us understand what's likely to sell and for how much. Today, we are using this as an input into ranking. Items that are more likely to sell get more visibility.

Our similar items model helps us understand what else this buyer might want. Because we know one seller might list this as a Darth Vader action figure and the other might describe it as a plastic man with a breathing problem, the model has to go beyond keyword matching and seller descriptions using visual recognition to find comparable items in our inventory. We also use engagement and demand signals to understand what buyers are responding to right now. We take indicators like views, saves, bids and feed those signals into ranking so that the display of items reflects what buyers are actually responding to.

Our testing efforts this year have already driven a 2% improvement in search to bid rate. That means more of our searches are turning into actual bids and a 10% improvement in average item value, which means our buyers are finding better matched, higher-value items, so each transaction is worth more. We've made tremendous progress both in standing up the models and running a meaningful volume of controlled experiments. But every one of these models is still early in its testing curve. We have a long runway of experiments ahead. Crucially, as Sarah mentioned, these are platform models. The same models can be deployed across the rest of our marketplaces. So our investments here compound rather than duplicate.

Understanding the inventory is half the job. Presenting it consistently so a buyer can decide quickly and confidently is the other half. When a buyer lands on an item, they decide within seconds if it's what they're looking for. To do that confidently, they need three things in the same place every time: trust signals, so things like purchase protection or house ratings; logistics, so information about shipping and payments; and comparison detail, value estimates, condition reports. We redesigned item pages on LiveAuctioneers to surface all three, same information hierarchy regardless of which auction house listed the item.

Listings come in from thousands of sellers in every format imaginable. And just by normalizing them into one consistent format, we enable apples-to-apples comparison across sellers, which builds trust and supports more bids, which we saw in the results, a 20% increase in both bids and wins. We test these capabilities on LiveAuctioneers because that's where we can validate the impact the fastest, but we're building them with all of our marketplaces in mind. Chairish is where we're starting to see that intent show up in practice, which brings us to the next slide.

Chairish pro forma revenue grew healthily in the first half, and our synergies are on track. With 75% already delivered, we have high confidence in delivering the rest by the end of the year. But the synergy program isn't the headline of the Chairish story for me. The bigger opportunity is what happens when we take the LiveAuctioneers playbook to Chairish, and that's what we're now putting to work. We're still in early innings, but signals are encouraging. The similar items model is now matching inventory across marketplace, so a LiveAuctioneers buyer can be shown a relevant Chairish item and vice versa. Also, levers proven on LiveAuctioneers are being adapted for Chairish. We've added make and offer suggestions on item detail pages. We've updated our recommendations models to leverage engagement signals, and we have a queued pipeline of further experiments.

We've also launched Chairish Auctions, giving Chairish's existing sellers access to both fixed price and auction formats for the first time. Nascent, but it extends the playbook into a new format on the same supply base. We expect a lot of the learnings from LiveAuctioneers to translate to Chairish, but Chairish also opens up something our traditional auction-only marketplaces can't, an entirely new TAM in home and design, a fixed price format and a set of testing levers that come with it. In-cart upsells, urgency signals, add-ons, bundles and promotions, the conversion mechanics that retail e-commerce has been refining for 2 decades applied for the first time to our audience and our data. So Chairish doesn't just inherit our playbook, it lets us extend it into formats and levers that auction alone could not reach. And every learning we generate flows back into how we think about commerce across the rest of the group.

The H1 numbers start to validate the model. The experiments are working, the metrics that matter are moving and the playbook is starting to transfer to Chairish. But the headroom in front of us is materially larger than what we have captured to date. Here are just some of the areas that we are focused on. First, matching buyers to inventory across the network. What a LiveAuctioneers bidder is looking for might sit on Chairish and vice versa. We know what every buyer wants, including uniquely to auction, who bid and lost, and matching supply and demand wherever it sits across our network is largely ahead of us. Both sides win, more conversion from buyers we already have, more demand for inventory we already carry.

Second, pricing intelligence at the point of listing. Today, we use our pricing intelligence to rank live inventory in the marketplace. The bigger unlock is upstream, helping sellers price right at the point of listing before the item ever arrives in search. Same supply, more sold at better prices. Third, personalization and reengagement at scale. Most of how we engage buyers today is one size fits all. With real-time intent and cross-marketplace reach, we can talk to every buyer as an audience of one, right inventory, right moment, right channel. The unlock is more repeat bidding and greater lifetime value.

And last but certainly not least, catalog quality and data enrichment. This is the foundation underneath everything else. The cleaner and richer our catalog data, the better every other model on this slide performs. Discovery, pricing, matching, it's the multiplier on the rest of the runway. Each of these four levers acts on a different part of the funnel, so improvements compound rather than overlap. So to bring this together, focused investment, a validated playbook, capabilities built once for the whole network and a long runway of levers still ahead. We've made progress this year with real headroom still in front of us.

And with that, I'll hand it back to Sarah.

Thanks, Meghan. And hopefully, what you can hear from that and what is very clear is that there's a significant opportunity ahead of us, and we're fairly early in the journey. So just to summarize, we have delivered a positive first half. We're raising our guidance for the full year with well underpinned assumptions. We've been disciplined in our financial management, resulting in continued strong cash generation, and we've put in place a targeted cost reduction plan, which will support margins in fiscal '27 and beyond.

As you've just heard from Meghan, we have increasing confidence from the early results of our investment in Arts & Antiques and specifically LiveAuctioneers, which has delivered a good increase in GMV and take rate. Our Industrial & Commercial segment is managing both market headwinds in agriculture and medium-term competitive dynamics. We're focused on replatforming with the benefits that this provides as well as commercially trading the business harder.

To conclude, we have a significant opportunity ahead of us through executing our strategic plan with material value creation still to unlock. We've got an increasing number of levers to drive the business, and we're focused on delivery of our upgraded financial commitments.

And with that, thank you for your attention. I'm very happy to take questions. I think Duncan is going to chair the questions. In reality, I'm sure I will be answering most of them.

Yes. I have to do something this morning. Gareth, do you want to kick us off?

Gareth Davies from Deutsche Numis. Three for me to kick off. You made an interesting sort of almost throwaway comment about atgPay that you're seeing real benefits as atgShip is so successful. Can you just put a bit of kind of context on what the opportunity still is there and how sort of penetrated you are into that opportunity around atgPay?

The second one on the I&C business. You noted that customers are still on the platform, but they're choosing an alternative white label. What's compelling about someone else's white label if they're not actually churning off you? They are staying on the platform. And you also sort of mentioned that once Proxibid replatforming is done, you think that's going to sort of make your offering more compelling. Can you just elaborate a little bit on what that is?

And then the final one is maybe for Duncan, if he's allowed to answer questions at this stage. But just high level from a data perspective, I mean, I think of you, your background very, very heavily data-driven in terms of sort of the three businesses you've built and scaled as I think of them. When you think about ATG, I mean, I don't question the fact that data is theoretically there, but I couldn't tell you how good they are at collecting that data, using the data. What -- when you've gone through your diligence process, what's the opportunity there? How good are they? And what do you think the opportunity is on the data side?

Yes. Thank you, Gareth. So why don't we take the questions where I'll ask Sarah to go on atgPay? We'll then perhaps ask Meghan to take I&C between two of us, maybe I've got a comment there before Meghan answers and then happy to take the last one. So Sarah?

Yes, sure. So atgPay is something we've talked about for a while. To be clear, it's Arts & Antiques focused. And I think we said a few times from an industrial and commercial perspective, it's much harder to roll that out given some of the complexities around plated vehicles in the U.S. So we're very focused on that on Arts & Antiques. As you kind of said, Gareth, we are seeing when you take our shipping product, you also use our payments product.

And so on the back of that, we have seen improved uptake of pay and good growth in the first half. And so very much those two things come in tandem together. So we're pleased with the performance of atgPay on our A&A business. And as we continue to accelerate shipping because we will lap the mandation of shipping on LiveAuctioneers, but there is still an opportunity there for sure, which is for us to increase the penetration of the proportion of customers taking our own shipping product, and that's where our focus will move to. So I think we would expect to see continued growth in atgPay on the back of that, and it's very much an area that follows on from shipping. But again, no different from what we said before, it will be less of a focus on Industrial & Commercial.

So Meghan, do you want to quickly take I&C and then I'll have a comment at the end of that?

Yes, sure. So when we look at the white label providers in the market, there's not one large-scale player who's taking share, it's a bunch of fragmented smaller players in the ecosystem that I think a lot of our auction houses are trialing to some extent because they're offering, in some cases, reduced pricing. We think that we have a very interesting opportunity in the future as we get to the end of the Proxibid migration because we will have a very compelling white label product in market, one that happens to be very tightly integrated with the rest of our marketplaces. And so it will allow our auction houses to move seamlessly between having a branded website of their own that's fully featured and more featured than the competitors in the marketplace and also distribute their inventory to drive demand across our multiple marketplaces.

Yes. And I think just to finish on that point, I think we should just step back and think about also, everyone has sort of always got AI at the front of their mind, and I know the markets are always a little bit sort of unclear on that. But this is where AI, I think, is going to be very much to our favor. Small independent white labels producing platforms for small auction houses are going to really struggle to deliver futuristic AI-compliant environments that can give real reach and activity for those auction houses. So I think what you're going to start to see is our ability to deliver a more integrated three-way offer for our client base over the next couple of years should give us a very strong differentiation to bring back many of those clients back to our platform. So that's the -- I think those are the three opportunities for us on I&C.

And then on the data perspective, Gareth, and this is with a lot of respect to the team. So what I would say is Meghan and her team have done an unbelievably good job of starting to capture catalog, produce and put into a format, a shared service format, all of the data across the business. But I think everyone across the business, I think, would recognize have we really taken that information and being able to monetize that and get real hard competitive advantage on the buyer side of our ecosystem. I think the answer would be no, and that we have a real upside opportunity to drive the business, really informing and giving buyers a much greater insight and experience to, a, what they should or shouldn't be paying for things and more importantly, giving them a much more in-depth knowledge base for them to build from. And for many of you that remember the history, things like CAP and Black Book and other kind of formats that have worked effectively in other marketplaces are there for us to take.

So should we move to the next question in the room? Sarah, who do you think we should...

James and then to Alastair and Sean.

It's James Lockyer from Peel Hunt. Maybe a follow-up on the white label one. Historically, you said that one of the things that you think would make your white label more attractive, notwithstanding the investment you make to make it better by itself is the third-party network that you had previously been looking at. Wondering whether or not that still sits within the strategy going forward?

Second question, on the guidance, I know -- on the margin guidance, I know you said -- I think you said towards the bottom end of the margin range. But it would be good to understand what levers you've got to get you to the middle of the range or the top of the range -- to the top of the range. Obviously, I think it says around 37% margin for the second half. But it would be good to understand, are there levers you can pull to get yourself from the bottom and then up?

And then AI, not specifically the way you were talking about it earlier, but the -- you talked about AI in terms of efficiency gains. It would be good to understand specifically how it's being used in your dev team today around rolling out updates. Any metrics around hours saved or time to market would be useful, please.

So what we'll do then, if that's okay, James, is I'm going to ask Meghan to take the white label question and the AI one, and will ask Sarah to sort of separate that with the guidance. So Meghan, do you want to take the white label question?

So in general, our value proposition as we think about why someone would continue to -- or move into our white label, part of that is distribution. So it's distribution within our marketplaces and outside of our marketplaces. So we still have what we call APN, it's our third-party network where we are distributing that inventory across a broader set of demand than we even own internally. And that, of course, will be fully a part of our strategy as we roll out the new platform on Proxibid. So unchanged there.

Great. And Sarah, do you want to take the levers on guidance?

Yes, sure. So we've obviously upgraded the revenue guidance from 4% to 5% to 5% to 6%. And that comes across a range of areas, but includes -- we said good growth on Chairish, whereas previously, I think we've said we wouldn't expect a material amount of growth on Chairish this year because we were focused on the synergies. So we're pleased with the Chairish growth. And then secondly, Shipping was always going to be a big part of our business, but has actually been a little bit stronger. And therefore, as a result of those, you've got two areas of growth, which are on the lower end of the margin range. So that's why we said we're guiding towards the bottom of the range, albeit that's still obviously a significant an EBITDA total benefit.

In terms of opportunities to get to the middle of the range, and I would kind of extend that out into future -- kind of into future years. I think a couple of things. When you think about our margin overall, we're at a structural low point this year. we've had the full year impact of Shipping. We've had Chairish now integrated for 12 months. And so we believe we are at a structural low and we've got operating leverage benefits to come.

And so if I sort of think about the benefits more broadly, and then I'll maybe come back to '26, the things we are sort of thinking about in terms of drivers of that -- the improvements in margin going forward, it would be a combination of higher growth -- higher margin commission growth, which is what we've demonstrated in the first half on LiveAuctioneers, particularly and also on Chairish. So moving that growth to be more from high-margin commission. That would be the first thing.

The second would be around cost efficiencies. And we've -- I think I said when I joined that I thought there was a cost efficiency opportunity. We've done what I would call housekeeping changes at the beginning of the year, and we've done a bit more of an organization around a global structure in the last few weeks. We will continue to look at how we become more efficient, not just because it saves money, but also because it means you can be more effective and more agile as an organization and much clearer on accountabilities. So that's something we will definitely continue to look at, but there is a benefit of circa $4 million into next year from those activities that we've -- the changes we've just made.

And then the third thing is the margins around Chairish, which we said we'll have the full $8 million of operational synergies in '27. And we said we'll get 6 of those, 3 of which were in the first half this year. So we see that being a sort of continued improvement on the margins as well. So I guess if you step back from it there, sort of the elements of where we see kind of margin growth over time. I think if you say -- moved specifically to this year, again, it's probably the very similar themes, but we are very focused on the opportunity ahead of us on LiveAuctioneers.

Similarly, we're very focused on maintaining that good growth on Chairish. And then we have a small benefit, but a benefit of the cost actions. And the reason that's small is because of the timing of when we do it. So we are focused on all of the same levers for this financial year as well as in the future.

Just a quick follow-up before the last question, just your appetite for investing for growth. Historically, sort of margins have been where they are and you say they're structural now. But what's your appetite for going, you know what, let's invest more to grow revenue faster?

Yes. Go ahead, Sarah.

I'll get Duncan to add to it in a second. But as you know, we did have a step-up in capital 2 years ago. I think it was prior to my time. And so we feel the level of investment in the business right now is appropriate. What I would say, and we've been quite clear on this from a capital allocation perspective is efficiency around costs can help us accelerate that investment should we choose to.

Yes. And I think that's the key point. We will be self-helping ourselves to prioritize spend where we think we can get better gains. So that means we can live within our own world and our own cost base, but let's use that cost base more effectively. I mean, at the end of the day, chief executives really have two primary purposes in businesses. Number one is to absolutely make sure we're optimizing the capital and spend we put into the business to get the best results. And number two is get shareholders value creation, right? So that's it, right? It's not much more tricky than that. Easy to say, hard to do, but that's going to be the focus.

And then just before Meghan gives you the specifics on the AI, I've had the privilege over the last 2 years of working very closely with the Magnificent 7 on their AI developments. In fact, I've been co-working. In fact, I've had dedicated teams in with Amazon on building Rufus for the last 2 years, which is their GenAI platform. So I've had a very ringside seat to what's happening in the AI space. It's kind of classic that the markets are getting well ahead of themselves and where the actual progress is in some of that stuff, but that's normal.

But what I can tell you is I've joined the company and for what is a relatively small company when you compare it to the Magnificent 7. I've been really pleased with the engagement, certainly the more recent engagements with some of the way we're adopting AI for efficiency. But Meghan, do you want to give the scope on the developers specifically?

Yes. So as Duncan said, the ethos of how we're approaching AI is how we can leverage it to help us move faster and more efficiently. And we've implemented tools like Claude Code and Cursor within our development practices, and we are seeing that we are moving faster, which is great. And we have some experimentation coming up around how we can best leverage those tools. The other thing that's been very exciting for our organization outside of just development is we've started leveraging AI as a layer for us as we look at our business analytics.

So what used to take a very long time, relying on a human to write SQL could take multiple weeks to get insights. We're now leveraging tools that sit on top of our database that allow anyone in the business to actually ask in human language for questions about the business and get those insights in real time. We have realized an over 80% improvement in time to insight, which is a metric that we look at, which is very important, particularly for my teams because it helps us identify where we have opportunity areas and major friction pain points so we can go address those in real time.

Thanks, James. I think we're going to move to Alastair and then Sean and then Ross.

Alastair Reid from Investec. James had follow-up to my first question. So just two. You touched on sort of market share sort of trends in the context of white label a little bit. Can you sort of talk about market share trends perhaps more generally? We've seen sort of Ritchie Bros. talk about sort of share gains. Any sort of thoughts on what you're seeing on that front? And then secondly, on Chairish. You mentioned that there's similar items model. Any concerns that you're sort of seeing from auctioneer customers that potentially losing bidders might be being sort of sent away from the auction market rather than sort of coming back to them?

Yes. Great. Thank you. And I think we'll ask Sarah to take the first one, and then we'll come back to you, Meghan, for the second, if that's okay. So Sarah, do you want to take the question on market share trends more generally?

Yes, of course. Thanks, Alastair. So there isn't really a comparable -- directly comparable business that we can directly compare to. As well, you know, there's not a plethora of market data in this space. And each of our competitors are different from us. So you referenced Ritchie Bros., they have a very different business model to us. So they have a very big salvage business. They've done quite a lot of inorganic activity, and they're less exposed to some of the green iron headwinds. So there isn't a like-for-like comparator. Having said that, on green iron specifically, we think we're probably at the lower end of the market performance on green iron specifically. So that's kind of -- that's how I would think about the overall market.

What we have said in the -- is the performance between quarter 1 and quarter 2 has been pretty stable. And therefore, we -- you should expect something broadly similar in the second half. So what we are seeing is stability -- we certainly have seen in the first half stability in terms of the overall performance. So it's hard to say from a market perspective. But yes, I think one of the questions we get asked quite often is, how are you different from Ritchie Bros. and they are the primary reasons.

Yes. Look, I think just to add to that, what I'd say is that I was really delighted when I joined and through the diligence to see that Sarah has absolutely taken the front foot to change the measurement that we use across our business because what was very clear to me was total hammer value is just a totally unreliable measure to be trying to judge things by. And so it's -- if you look at the underlying -- I've spent my career looking at building market share indexes, and there was nothing in there that would give you the confidence to really use it as a reliable source.

So I think that's great that we'd already made the choice to move away from that because I just think it would give the wrong guide. And look, ultimately, with that basis, anyone can claim market share gains in a market where you can't measure it, right? So it's kind of a relatively easy number to target. But what I can tell you is, look, on our I&C business, no one's under any illusions that we need to get focused on the core fundamentals. -- of that business and the core fundamentals of our growth in there. So that's a very early message I've been able to help the team focus on. So yes, that's where I'd say there.

And then Meghan, would you like to take us on the Chairish similar items model?

Yes. So to be very clear, the similar items model is not a strategy to flood both marketplaces with all inventory. The similar items model allows us to understand what similar inventory exists across the network so that when someone, for example, bids and loses, we have a plethora of inventory that we can potentially target that person with. So it is not cannibalistic of our auction house is selling more inventory, but rather, it's an opportunity for us to showcase the best inventory we have based on the demand signals we have to the right person at the right time in a very, very targeted way, whether that's on site or via e-mail. But our strategy will not be to have all inventory exist in all places.

Sean Kealy from Panmure Liberum. James got my question on margin growth going forward. So I've got two questions, one of which is slightly related to that. I understand...

You guys clearly need to confer a bit more before you come into the room. You're not tag teaming enough, are you? Carry on, Sean, sorry.

I understand why Proxibid is going to take a little bit more time before you can move some of the features over from LiveAuctioneers. But what we haven't discussed is maybe EstateSales and The Saleroom. Obviously, it's a slightly different model there. But what are you doing there to grow that business and bring those two businesses forward? And when would be the time to start talking about that in a little more detail? And then secondly, you're changing around the rankings on LiveAuctioneers to sell it more effectively, which makes a lot of sense. Could you just talk a bit about where you see the opportunities for ad load, yield, et cetera, within that and how you think that can grow going forward?

Yes. Okay. Yes, two great questions, by the way, Sean. So perhaps, Sarah, you would now taking the first one, I think, because that makes sense. And then Meghan, I'm sure, will be delighted to talk to you about ad yield. So let's go that direction.

Yes. So I'll start with the sort of rollout to other platforms point that you've made. We have always focused our investment on LiveAuctioneers and Proxibid because they are by far our two largest sites. So on Proxibid, that's very much focused on the replatforming. On Arts & Antiques, it's all the things that Meghan has described today. That is not one big bang, it's lots of small things that we've been iterating, testing, understanding what works and what has the biggest impact to our GMV. And our view on that, both from a capital allocation perspective and really understanding what works once, we are doing all of that work on LiveAuctioneers, and we will not roll it out to other platforms until we've got the proven model that which we can then roll out more broadly.

So that's how we're sort of thinking about the investment on LiveAuctioneers as being almost like the bellwether of the remaining platforms, and we want to see that we can grow GMV and take rate as a result, which we're now starting to see on LiveAuctioneers. But that's the order of which we will think about it. And then we will look at it other platforms going forward. But for now, LiveAuctioneers and Proxibid remain the two that we're most focused on.

Yes. And look, Sean, just to slightly build on that, what I would say is it's not going to miss on me that we don't really have the greatest track record over the last 4 years of saying what we're going to do and then doing it. I don't think -- I think it's fair to say that, we might as well get that in the room. And look, my primary focus right now, as I mentioned right at the start is when we say this is what we're going to do, that we turn up and deliver it on that day. So that's the -- it's hard to be in the marketplace business where if you say you're going to deliver something by x that it doesn't turn up, people get a bit upset with that. So we need to live that dream in our core messaging and delivery as a company.

So on all of the Proxibid programs, we're not going to be really looking at how we accelerate them, but we're absolutely going to be focused on how we make sure we deliver on them. So that's the message I'd leave you with. And then Meghan, do you want to take the yield conversation, which I'm sure you could go from 2 minutes to 50 minutes depending on how you want to?

I'll keep it very, very brief for this audience. I think as I think about what we're doing in our marketplaces generally, it's bringing intelligence to how we are displaying the inventory that we have. And that is very, very true for organic search, right? So the things that show up that are not paid for. The same fundamental logic in most scaled marketplaces applies to advertising placements as well, which I think is largely an opportunity ahead of us, where we can get much more intelligent about how we're showing advertising that delivers value, that's measurable and how that sits within what we would call our organic search results or nonpaid placements. So opportunities bound.

Yes, without doubt, having just spent 14 years building or contributing probably 1/3 of the $60 billion that Amazon benefits in advertising each year, I think it's fair to say I think we've got a long way up. So -- but everyone's got to start somewhere. So Ross, would you like to go next?

Ross Broadfoot from RBC. Three, please. Obviously, you changed the KPI stack now. How should we think about whether there is a shift to online and indeed a shift to timed auctions without a functioning THV and conversion rate metric? Number two, you've obviously flagged, you're expecting I&C to continue on a similar trend for the rest of this year. What gives you comfort that the things you flagged in terms of agricultural pressures, white label adoption and client consolidation have stabilized? And then number three, you've called out $4 million of cost savings in FY '27 as a result of current actions. So given we're halfway through FY '26, is it fair to assume a $2 million benefit built into your upgraded guidance today?

Thank you, Ross. So on the KPI stack, Sarah, it's probably best for you to take that. I'm actually willing to touch on a little bit of the I&C similar trend because that's a big area that I did diligence coming in. So I'm happy to think about that a little more. And then we'll perhaps return back to Sarah for the $4 million, if that's okay, Ross?

Yes, sure. Thanks, Ross. So I guess in terms of KPIs, one of the questions I get asked quite often is, will there be another change? Are we going to keep changing? And I'm conscious we have made a number of changes in previous times. The reason I'm very comfortable with the changes that we've made more broadly are because it is how we run the business. It does focus on the things that drive the best financial outcome. And we are -- I know certainly in the past, we've had exclusions for things, and we're absolutely trying to remove some of those and make it much more relevant so you can actually take a number of items sold times average item value gives you GMV, times take rate gives you revenue. So I think that will help you model all of the various parts.

In terms of your question on online specifically, I think we probably talked to the point around is the market data relevant from a THV perspective? And I think we're clear that, that's not. Online is one of many factors that drive our success. And the way we think about it back to the KPIs is that fundamentally, the most important thing for us to be doing is driving GMV and then continuing to drive take rate, but fundamentally driving GMV is going to be our driver of success. And so yes, a shift between live and online and live is a part of that, but it's certainly not the only one. And we would probably be more -- you have to focus on the things in your control, right? And we are very focused on what I would call controlling the controllables and really driving home those things.

So I think the actions we are taking are around the opportunities on Chairish and continuing to make benefits of that acquisition, work on LiveAuctioneers, et cetera, which will drive GMV. And fundamentally, that's the outcome we're looking for. So shifts in the market between in the room and online are part of that, but certainly not the only part.

[indiscernible]

I mean the short answer is we haven't really used it internally historically in the same way as we've used externally. It is relevant for a small group of auctioneers where they have a certain set of characteristics, and so we might use it on a very micro basis, but it's not a measure that we have or will be using internally, which is why I'm very comfortable. And the reason we don't do that is for the same reasons as why we're moving away from THV externally. So absolutely, we are moving to the metrics we genuinely use day in and day out to run the business.

Yes. And just for the benefits of those who aren't in the room, that was around a follow-on question about are we continuing to use a refinement of THV within the business. And I think Sarah sort of summarized it fairly well that it's not, THV is really an outside-looking view. It's not really a core component of the internal activities. And then coming back, Ross, to your question around I&C and similar trends about how do we get comfort around white label. Look, the trend on white label has been very clear for the last couple of years. There has been the obvious movement. As the team outlined, it's relatively small players that are aggressive in trying to get their market position with auctioneers there.

It's obvious for auctioneers why they may choose to do that in the short term because they are saving money. I mean it's not exactly and perhaps allows a little bit more headroom for people to pay more for the product and therefore, ultimately give them more commission. So it's a kind of fairly clear position as to why they've considered white label. I think the scale of auctioneers left that could consider that kind of balance is now much smaller. So it's not 0, but it's a much smaller percentage risk that's been there before.

And I think what we would actually say is we're now much more on the front foot as an organization as we come through the back end of the half around our proposition to balance that. So it's not like we see that we've been -- that we've lost that opportunity to large entrenched credible big organization that's going to be hard to win back. We really do think -- I think what we can see through '27 and '28 is if we get the product mix right, we can have a very concerted effort of bringing that business back because there's -- it's not like we're sitting there worried that we've lost it to a Google or something. It lost it to a very credible hard-to-win back organization. So that's where I'd say on white label.

I'd actually say on balance, through my diligence, I'd actually say in terms of sort of trading impact, consolidation actually has as much impact as white label and it's probably we need to balance that in the way that we look. And clearly, we have absolutely no control on consolidation, but it's clearly a trend that's going to carry on. Our objective is to make sure that we're getting a really tight focus on those fundamentals of the I&C business and more importantly, getting a real focus on the buyer group because it's really the buyer group that are going to dictate how the seller group now behave. And we need to look, again, without being critical of team, we need to up our game on the buyer side of the house.

And then, Sarah, do you want to come back and just address the $4 million question of Ross, if that's okay?

Yes. So the way we've thought about cost efficiencies more generally is clearly, there's a cost saving, but also there's an organizational benefit of being much more agile. The $4 million next year is a full year benefit. We undertook the actions just before the end of the half. And so -- and a number of those changes will -- people won't actually leave until partway through the second half. So you would expect certainly less than $1 million of that benefit to come through in this financial year, probably significantly less than that. And then secondly, we've talked about quite a bit of executive change and that also comes with the cost. And so I would broadly think about it that there is a small benefit from the cost savings this year, but especially given that executive change, it will be immaterial for this year.

Lara just before that, do we have any from remote? No. Great. Okay. So Lara, the floor is yours.

It's Lara Simpson from JPMorgan. Maybe just two questions for me. Coming back again to the margin and profitability, I know we've spoken a lot about the optimization and savings. How are we thinking about VAS profitability? I know it's always a headwind. We spoke in the past about shipping and payments being dilutive. But what are you doing to improve the profitability of the VAS solutions, particularly shipping? And maybe you can give us a gauge on how that's progressed maybe over the last 12 to 18 months as you ramped up the role there?

And then maybe one for you, Duncan, if I may. You obviously spoke about I&C and a lot of work you did there around the due diligence. If we take a step back, how are you thinking about that business strategically going forward? What did you like about the asset? It feels like we're probably at an inflection there where maybe you need to reinvest a bit more to reignite growth or you could take lower growth and run it for cash. You also spoke about unlocking value for shareholders. So just interested on your first thoughts on the strategic positioning of that asset.

Great. Thank you, Laura. And do you want to start with the VAS services and how we think about margin in those, Sarah?

Yes, of course. So first of all, I would just say that each of our value-added services are profitable, which is an important point to make. Yes, they are lower margin, but they generate real dollars of EBITDA. That's the first thing I'd say. We have been very focused over the last 12 to 18 months on rollout and adoption, which has been -- for shipping, as you know, is the mandation of sellers offering our shipping product on LiveAuctioneers. And so it's been very much focused on rollout. We will be -- are and particularly as we're lapping the shipping, we are becoming much more focused on two things.

One is improving the penetration and customer usage and customer feedback around -- buyer feedback around those services. And the second then is to say these services are profitable, but how do we look at how we continue to optimize margins in the same way as we would do any other part of the business. So I'd say what you will see is a bit of a shift towards those two things, improving buyer penetration and customer -- and buyer feedback and then secondly, looking at optimization -- optimizing margins in the same way as you would any part of the business.

And then look, turning to the importance of I&C and the balance of that, I think it was really a question how we would think about it. What I would say is, look, firstly, it's very clear that there are real synergies between the two sides of the types of marketplace that we run, but there is definitely nuance in the way that they appeal to the end markets. So we get operational benefits, but fundamentally, they behave slightly differently. I do believe in fairness to Ritchie Bros., they have demonstrated that you can operate the I&C business successfully. And it's not when you sort of look at the recipe that they operate, okay, they are consolidating a little more and they get the benefit of that.

But beyond that, it's not clear to me why we can't operate and be as successful. And look, we have a very, very strong business there. And we just need to get some pride back in it and really focus on how we're going to get it back to believe that it can be a growth business. And it's not obvious to me with some focus why we can't achieve that. So I think the -- I think, again, if I was going to sort of say, look, where do I think we've been slightly out of balance, I think we've been slightly out of the balance where we've pivoted a bit too hard on VAS products and not enough on fundamentals. And I think as the business gets its head back into the world of fundamentals, VAS is there, the kind of hints in the name. It's meant to be value add. It's not the core of what our business is. And so we want the benefits of value-added products.

Of course, we do because they're there for our customers to get the benefit of what they do. I get the disappointment that you introduce things like atgShip and it dilutes margins. But at the end of the day, for a customer, it's a fairly fundamental hygiene service to provide to them. So you don't really get the choice of it. I accept we don't want to make our growth strategy linked to it. But at the end of the day, that's the balance we got. But I think what I see initially with I&C is if we can get back to core fundamentals, get really focused on the business, drive the market and the bidders, the customers that I've already spoken to and I've spoken to a lot directly, they really value this business. They really value Proxibid. We've just got to get slightly sharper in our game in helping that progress a bit better.

Yes. So look, thank you. I mean it's been an absolute privilege to be here as Chief Executive for the first time around. Hopefully, you've enjoyed the information we've been able to take you through today on the results. And look, again, I just want to thank Sarah and the team and of course, Meghan for here today, but all of ATG's people, we have had a strong set of first half results. The business is sort of getting its head where it needs to be. The team has done a good job in transitioning from pretty choppy waters a year ago. And look, we really are feeling and I'm here with a very clear message. This is a business that is going to be going up and going up pretty quick. So thank you very much.

First off, good morning, and welcome to the 2025 full year results presentation for ATG. I'll start off by taking you through our results highlights and then hand over to Sarah to detail our financial performance, then I'll be taking you through our strategic update.

First slide that we're going to move to is how ATG creates value. So before I get to the highlights, I'm just going to explain for those of you less familiar with the company, how ATG creates value. ATG creates -- ATG connects 16,000 professional sellers of unique and valuable items with buyers from around the world. We operate across 2 sectors, Arts & Antiques and Industrial & Commercial, facilitating the sale of goods worth over of $12 billion annually. In these sectors, we operate 10 curated online marketplaces using our proprietary tools and technology. Collectively, we list over 26 million items annually.

In fiscal year '25, we hosted over 99,000 auctions and generated 85 million bids. Our newly acquired Chairish business now adds an additional 1.3 million items available on a buy-it-now basis. The scale of our curated inventory, combined with the scale of our buyer reach creates a symbiotic cycle, often referred to as the network effect, whereby the inventory attracts more buyers, which in turn attracts more sellers, driving a positive flywheel effect that keeps customer acquisition and retention costs very low. We offer a full suite of value-added services around the core transaction, which enhanced the marketplace experience for sellers and buyers.

This includes digital marketing, atgXL for cross listing of inventory across multiple marketplaces simultaneously, ATG Partner Network, which gives reach beyond the ATG buyer network, atgShip for shipping and atgPay for payments. The combination creates value for buyers and sellers and increases the revenue per transaction for ATG.

With the acquisition of Chairish in August of 2025, ATG is now active across both the auction and listed curated markets for A&A, which expands choice for buyers, reach for sellers and commercial opportunity for the company.

Go to the next slide. I also thought it would be good at this point to give everyone a reminder of the investment case for ATG, a business that we believe is considerably stronger now than it was just 1 year ago. We operate within a large and growing secondary goods market, which is underpinned by a structural shift from offline to online and which has significant untapped mass consumer e-commerce appeal. We have a leading position in each of our verticals and geographic markets with significant room to grow the conversion rate and take rate in both auctions and list format as we execute our plan.

We have proprietary and scalable technology, which enables us to drive incremental volume at a very low marginal cost, which means we have potential for significant operational gearing. We have proven we can expand our take rate through the offering of value-added services, and there's still more to come on this front. We have a very cash-generative business model, which is underpinned by the high margins typical of 2-sided marketplaces.

And finally, we are a clear ESG winner as we play a key role in the acceleration of the circular economy, and benefit from growth in that economy due to rising demand for high-quality used goods. In terms of our results for the year, our year was characterized by good revenue growth, which was in line with guidance, combined with strong cash generation, but also by headwinds that impacted profitability.

Our revenue was up 9.2%, and excluding Chairish, on an organic basis, it was up 4.4%. We had strong growth again in value-added services, up 16%, excluding Chairish, and we increased our marketplace take rate again, growing from 4.5% to 4.8%. Our conversion rate was stable at 27% with both Arts & Antiques and Industrial & Commercial, holding that metric stable. Growth in this metric is an important focus for ATG. And while we've proven we can grow value-added services, what is more exciting now is the promising signs from the work we have been doing on LiveAuctioneers, where actions we took helped drive growth in bids and lots sold, both of which gradually should feed into conversion rate.

That said, across the year, we experienced headwinds that impacted profitability with our adjusted EBITDA down 4% to $77 million. This was due to a combination of revenue mix, the growth of lower-margin value-added services versus higher-margin services as well as the inclusion of Chairish for 2 months performance-related pay and investment in marketplace fundamentals. We flagged in our October trading statement that we would take a noncash goodwill impairment, and this is approximately $150 million, which related to prior acquisitions.

Our strong cash generation showed through with adjusted operating cash of $74 million and a 96% conversion rate, up from 82% in the prior year. We successfully executed on our product and technology road map, improving the bidding journey for LiveAuctioneers, changes here played a key role in driving a 10% increase in bids. The improvements focused on marketplace basics. We improved our search capability, added personalized alerts, rolled out an AI-driven recommendation model, helping buyers discover lots that better match their interest. We also used AI to take advantage of our new unified taxonomy, which now classifies over 99% of items accurately, powering even more relevant results.

I'm pleased to report that our plan for Chairish is on track. The addition of Chairish extends our opportunity into the listed market with an expanded inventory of 1.3 million items worth over $2.6 billion. It also increases the scale of the ATG audience, adding 4.5 million monthly buyer sessions and over 12,000 additional sellers. We are very confident in delivering the synergies we set out. We have already delivered $4 million in run rate operational synergies and are on track for the remainder.

And with that, I will pass over to Sarah to run you through our financial performance.

Thanks, John-Paul. Morning, everyone, and it's a pleasure to be with you for my first set of results at ATG, and I'm looking forward to catching it with many of you on our roadshow over the coming weeks. I'm pleased to report that ATG had a strong year end to the year on revenue, while, as John-Paul mentioned, we did experience some headwinds on profitability. Revenue was $190.2 million, up 9.2% on a reported basis and 4.4% on a reported organic basis.

Growth in the second half of the year accelerated over the first half due to momentum in value-added services, especially shipping. Adjusted EBITDA was down 4% to $76.8 million and our margin at 40.4%. These were impacted by revenue mix, the inclusion of Chairish for 2 months and performance-related pay. The margin of 40.4% was down 5.5 percentage points year-on-year. And excluding Chairish, our margin was 42.7%, so well within the recently revised guidance of 42% to 43%.

Adjusted diluted EPS was $0.379, down 2% due to the lower pretax profit. Our cash generation was strong with an adjusted operating cash flow up 12% to $73.7 million with a continued high conversion rate of 96% versus 82% last year, and that was supported by working capital. Our net free cash flow post interest and tax was up 15% to $45.5 million. And as we said in our trading statement, we came in slightly better on net debt than guided in August with net leverage at 2.2x and net debt at $174 million. And importantly, we do continue to expect leverage to be well below 2x by the end of '26.

If I now turn to group revenue. And the first point to note before I get into the numbers is some housekeeping around definitions. The first point to note is that we are now aggregating our operating segments into 2 reportable operating segments, A&A and I&C. And then secondly, the group has reviewed the Total Hammer Value metric known as THV in the ordinary course of business, which, as you know, is based on third-party reporting as it covers items not sold on our platforms. And that's resulted in a reduction in the overall market sizing. We'd be happy to take questions on either of those in more detail in the Q&A session.

If I go back to the numbers, we saw a slight growth in underlying THV at 1%, with GMV stable at $3.3 billion and conversion rates broadly stable at 27%. As I've already mentioned, we saw a growth rate of 9.2%, which reflects a successful execution on atgShip and continued momentum in other value-added services.

Looking at the components of growth in terms of contribution, 0.8% came from commission and fixed fees, 3.9% from value-added services, which saw almost 26% growth in the year and importantly, also $4 million of sequential growth in Half 2 over Half 1, which supported a stronger Half 2 for the group. 4.8% came from the consolidation of Chairish for 2 months, while the 2 months were broadly representative of average months from a revenue perspective. And real estate was a minor drag of 0.3%. And then finally, our marketplace take rate was up to 4.8%, driven by the growth in value-added services, which is increasing the monetization per transaction.

If I turn to our divisions now and starting with A&A, THV grew 3%, which was a modest improvement over the first half growth rate. GMV increased by 1%, and we had a broadly stable conversion rate of 16%. Take rate increased by 0.5 percentage points to 10.3%, breaking the 10% level for the first time. A&A revenue grew 5.4% on an organic reported basis including Chairish by 13.7%. The organic growth was mainly driven by value-added services, especially shipping with the successful mandating of offering shipping on LiveAuctioneers, and commission revenue grew modestly. We saw positive early lead indicators from our marketplace investment on LiveAuctioneers, with good growth in bids and lots sold. And in 2026, our focus has expanded to focus on actions to drive average lot value in addition. And John-Paul will talk about this a bit more shortly.

The integration -- sorry, on the previous side, the integration of Chairish is going well with around $4 million of synergies realized to date on a run rate basis and we're on track to deliver the full $8 million of operational synergies by the end of financial year '26, so that you have a full run rate in '27.

If I then turn to I&C. I&C continues to deliver consistent performance and strong seller loyalty. THV was broadly flat at $6.9 billion ex real estate, with the stabilization of used asset prices in many categories. GMV declined slightly by 1 percentage point to $2.5 billion, while conversion rate was broadly stable at 36%. Within this, we saw good performance on yellow and gray iron assets, which account for the majority of our GMV.

Revenue grew 2.9% on a reported basis, driven mainly by value-added services. That's primarily through increased marketing penetration. And as a reminder, shipping is concentrated in A&A. Commission was slightly positive. Seller loyalty continues to be strong with over 90% of our GMV on proxy bid coming from sellers who've been with the platform for more than 5 years.

If I now turn to the full P&L. As I previously covered, revenue up 9.2%, gross profit is up 1% and the gross margin down 5 percentage points to 62%, driven by that change in revenue mix as well as increases in software amortization, people and technology costs. Reported admin expenses were up almost 20%, and that included $10.2 million of exceptional costs relating to Chairish, $4.1 million of Chairish overheads for the 2 months and a $2.8 million increase in people-related costs. On an adjusted basis, adjusted admin expenses increased by 9.3%, which is far more aligned to the rate of revenue growth.

As we flagged previously in our recent trading update, there was a noncash goodwill impairment charge and this totaled $150.9 million, primarily relating to previous acquisitions in A&A $142.6 million, and then a smaller charge for auction services of $8.3 million. The impairment was driven by a higher discount rate, macroeconomic factors and the impact of lower profits announced in August, which have led to the group's market capitalization being well below its net asset value.

Net finance costs were down 17% due to interest rates post our refinancing and a lower debt balance partially offset by $1 million of related one-off costs for the refinancing. Tax, we saw a credit of $1.2 million, and the adjusted effective tax rate was 17% compared to 19% last year. And then as I've previously covered, our adjusted EBITDA was down 4% and adjusted diluted EPS down 1.8% due to the lower pretax profit.

Turning to cash flow. The ability to generate strong consistent cash flows is a key strength of the group. It provides flexibility, enables the funding of growth and importantly, enables the paying down of debt and deleveraging. Adjusted operating cash flow was up 12% to $73.7 million with another year of high conversion rate at 96% compared to 82% in the prior year.

Included a $12.1 million inflow from working capital, primarily due to accruals for exceptional costs and returning to more normal accrual levels for performance-related pay. Free cash flow generation post interest and tax was $45.5 million, up 15% year-on-year. We do expect a continuation of these positive trends and this puts us in a strong position to delever well below 2x by the end of financial year '26.

We wanted to help you with the key building blocks for our guidance for 2026, which, just to reiterate, is in line with current market expectations. And here on the slide, we've set out revenue and adjusted EBITDA margins and the key drivers. So taking revenue first. Organic revenue will be primarily driven by the continued rollout and uptake of atgShip on A&A as well as uptake from our AMP marketing program.

And just to come back to shipping to give you some numbers. In March, we had around 500 auctioneers onboarded on atgShip versus over 1,000 at the end of September. Revenue will also be supported by growth in fixed fees through targeted pricing actions and then by the continued investment in conversion rate on LiveAuctioneers, and we have good line of sight on all of these actions.

For the avoidance of doubt, the guidance is not reliant on market recovery or conversion rates outside of a very modest improvement in LiveAuctioneers. Other drivers only have a modest net contribution and weighted to half 2 rather than half 1. And of course, we remind you that Chairish will be consolidated for full year in FY '26 versus only 2 months in '25.

Turning to adjusted EBITDA and margins. The adjusted EBITDA will be driven by a few factors. Firstly, the benefits of operational synergies as the integration of Chairish continues. We've achieved $4 million of operational synergies to date and are on track to have a full $8 million run rate benefit in FY '27 as previously communicated. We will action cost savings identified across the group and have been doing so. These are largely housekeeping changes focused on operational efficiencies, such as third-party spend, restructuring of bonus costs and some head count savings.

Additionally, there are 2 areas which will be dilutive to margins whilst driving absolute EBITDA. They are the impact of consolidation of Chairish and the mix impact from the continued faster growth of value-added services, and to be clear, these are factored into our guidance.

I'm going to turn now to capital allocation. And we will carefully manage our balance sheet, including retaining a prudent and appropriate level of liquidity headroom and leverage. For 2026, our key focuses are twofold: firstly, organic investment, including targeted development spend where we believe it will give us the best return and drive conversion rates.

And then secondly, to delever the balance sheet. Our strong cash generation, as I've said, will allow us to delever to well below 2x by the end of fiscal '26. In the medium term and only when we reach circa 1.5x leverage, the Board will consider the best use of excess capital, including shareholder returns. And to be clear, further M&A is not required to deliver our strategy, although it could help accelerate it.

I've been with the business for 6 months now, and so I just wanted to share some thoughts with you on how I found the business and my priorities for financial year '26. I think I've discussed with many of you, I think there are some things we can do better, and I definitely believe there's an opportunity to simplify and improve our operational KPIs over time as well as focusing more on forward-looking metrics.

Currently, there are probably too many KPIs and some of which don't focus on areas we can control. A key strength of the business is the healthy level of free cash flow generation, which, as I mentioned, is important to provide flexibility to support investment and to enable the rapid paying down of debt. In addition, I'm impressed at the passionate capable team and the focus on collaboration and curiosity from a values perspective. Overall, I think the group has exciting prospects with the opportunity to improve the buyer experience and to, over time, drive GMV and conversion rate, which will flow into revenue and margin.

Turning to my immediate priorities for FY '26. Firstly, to prudently balance investment with cost control and to delever the business; to deliver on Chairish and extract full value from the acquisition; and then finally, to simplify the ATG story and messaging, and further develop KPIs underpinned by improved commercial finance, better insight and more data-driven decision-making. And all of this leads to an absolute focus on delivering the guidance for financial year '26.

So to summarize, just before we go into the guidance, we've got a good business with exciting prospects, which can be enhanced through the work that the team are doing, and this gives us confidence in the longer-term opportunity.

And then finally, I'll turn to outlook and the technical guidance for '26. So we are guiding to 4% to 5% revenue growth at constant currency and pro forma for a full year of Chairish. And this equates to growth of 28% to 29% on a constant currency reported basis, including the additional 10 months of Chairish. Given the importance of shipping to the top line this year, we do expect revenue growth to be more heavily weighted to half 1. We're guiding to an adjusted EBITDA margin of 34.5% to 35.5%. And to be clear, this guidance is in line with current market consensus for revenue, EBITDA margins and EBITDA.

In terms of the more technical areas, we expect an interest cost of around $12 million, non-acquired depreciation and amortization of circa $13 million and an effective tax rate of 19% to 20%. Share count is expected to be 123.4 million and CapEx guidance around $13 million. And then finally, we expect exceptionals in the region of $5 million relating to the remainder of Chairish integration costs.

And with that, thank you for your interest, and I'll hand back to John-Paul.

Thanks, Sarah. Now I'll run you through our strategic update and our priorities for the year ahead. And I just wanted to say at the beginning as well that we still believe ATG has an incredible opportunity ahead of us and the progress made this year makes realization of our ambition even more achievable.

So what is our ambition for ATG? For people less familiar, I wanted to quickly walk you through our strategy, which leverages a well-trodden marketplace playbook, which then enables us to benefit from a typical marketplace profile. Successful marketplaces have 3 key levers that they really focus on driving. It's scale of audience, both on the buyer and the seller side, conversion rate and take rate. ATG has scale in both seller audience and buyer audience in each market in which we operate.

In fiscal year '26, we will offer over $14 billion in inventory via 16,000 sellers to buyers around the world. With this as a base, we then are focused on driving conversion rate, which we improve through simplifying how sellers list and reach their target audiences and by making it easy, safe and familiar for bidders to explore, find and buy what they want. Around this core transaction, we then monetize further via value-added services. This is an area where we have executed well and which now generates $49 million of annual revenue ex Chairish, up from virtually zero 4 years ago.

The playbook in turn drives our marketplace profile, which is characterized by strong margins and cash generation and high drop-through. Additional structural drivers include favorable seller, buyer and regulatory trends around the circular economy.

If you go to the next slide. While we faced headwinds in 2025, we successfully executed against critical product and operational priorities. In fiscal year '25, our goal had been to execute a mandate of atgShip, to expand digital marketing sales and to grow commission revenue via GMV. In the year, we more than doubled atgShip revenue with especially strong growth in the second half after mandating it on LiveAuctioneers in April. We grew digital marketing as well with a focus on our I&C group. In the year, we launched new marketing package and acquired new sellers. We increased average marketing spend per auctioneer by 15% on proxy bid and by 16% on Bidspotter.

Headwinds from the broader macro economy impacted GMV. That said, we executed on key strategic product improvements that help drive critical KPIs that indicate we are increasing our relevance to both sellers and buyers alike. We also made progress on systems efficiency via consolidation and we continued the proxy bid upgrade.

If you move to the next slide. Key improvements to the LiveAuctioneers buying experience is something that we wanted to look at. So we took specific actions to enhance the buyer experience in LiveAuctioneers. Specifically, we upgraded our search capability and launched an AI recommendation model, which better surfaces the products buyers are looking for. We also reduced friction by implementing auto approvals for returning bidders, improving new user onboarding, introducing suggested bid amounts to improve the likelihood of one of our bidders winning and reducing the number of steps in the bidding and registration flow.

We also improved trust signals by launching purchase protection and by expanding insured shipping on atgShip. Additionally, we expanded the use of notifications, SMS alerts and e-mail prompts to tell bidders exactly what they need to know at the right moment, helping them stay in the buying flow, deepened commitment and increased likelihood they will follow through and participate in the auction.

If you go to the next slide. With regards to AI, we embrace the power of AI with a focus on how we could leverage it in search and recommendations. We launched an AI model to auto categorize lots, which increased lots categorized to 99%. We created an AI model, which identifies similar items to support more relevant recommendations. And recently, we launched an AI model, which estimate sell-through probability and expected price, which establishes the groundwork for potential use in inventory evaluation and more tailored lot recommendations.

If you go to the next slide. The goal of the different actions we've taken in the others is to drive a better experience and in so doing to increase our conversion rate. One of the things I wanted to show you, as you can see on this slide, is some of the promising early signs of our work on LiveAuctioneers. This includes the work I discussed previously on improving search relevance, reducing friction in the bidding journey, adding trust signals, such as reviews, enhancing notifications and recommendations to increase repeat buying and broadening shipping availability.

The result of this work has been positive. We increased bids in the year 10% year-over-year. We increased lots sold by 9% year-over-year. And we increased lots purchased per winner by 8% year-over-year. The reason this has not yet had its full effect on GMV is because of the pressure on average lot value, which has been impacted by the overall macro picture in the U.S. Driving bids, lots won and average lot value are a major focus for ATG in 2026, and we have a plan to execute against this.

Move on to Chairish. As you know, we completed the acquisition of Chairish in August. I wanted to set out the acquisition rationale and why it advances ATG's strategy. Marketplaces succeed, as I said before, based on the 3 drivers of audience expansion, conversion rate and take rate. Chairish expands our audience of sellers by over 12,000 and expands our audience -- buyers by over 4.5 million sessions per month.

It creates the potential for offering bidders, who lose at auction, a set of items that are available immediately, creating a truly differentiated product offering that we believe can drive conversion rate and provide additional growth for our take rate via value-added services.

We have robust high confidence operational synergies, combined with revenue opportunities, which make the acquisition accretive in fiscal year '27. In these first few months of ownership, we have already delivered an operational synergy run rate of $4 million against our $8 million target. On revenue synergies, we can now offer our technology and value-added services to Chairish, especially digital marketing, where Chairish is underdeveloped compared to ATG.

As noted at the start, Chairish expands our audience, it adds new buyers, and it enhances the network effect. Beyond this, it strengthens our competitive position, transforms the A&A value proposition and creates an additional lever to drive conversion rate on LiveAuctioneers. The combination creates a differentiated product relative to our competitors.

In terms of strategic priorities for fiscal year '26, we have a clear set of strategic priorities. We intend to build on areas where we already have momentum to hit the guidance for the year. We are also enhancing the ease of selling and buying on our marketplaces to gradually grow conversion rate and GMV and to further expand take rate.

Specifically, our priorities for the year are as follows; number one, we will drive atgShip with the benefit of the shipping mandate annualizing during the year; second, we will continue to drive AMP, which is digital marketing, on both Arts & Antiques and I&C as well as implementing modest fixed fee price rises. These areas drive the vast majority of our guidance for the year.

Beyond this, we will continue to focus on the conversion rate work we have been doing in the second half of '25 to drive further improvements in bids and lots won. We will address average lot value, and we will continue to integrate AI to improve the speed of innovation, our operational efficiency and the buyer experience.

And with Chairish, we will execute on the plan to generate $8 million of operational synergies by fiscal year '27. Beyond this, we will seek to expand our network effect by listing Chairish inventory on LiveAuctioneers, and by connecting Chairish and LiveAuctioneers bidders to both listed and auction inventory.

So to summarize what we've tried to say today, we have a well underpinned plan to deliver fiscal year '26, driven primarily by atgShip, further progress in AMP and modest listing fee increases. We'll continue to improve the experience for the marketplace users, focusing on enhanced discovery, trust and ease of use. We are already seeing an uplift of leading metrics, and we'll be focused on building on that in the year. We will be disciplined in our financial management and continue to generate strong free cash flow with a focus on reducing leverage to well below 2x by the end of fiscal year '26.

We'll deliver the Chairish operational synergies and develop the revenue synergies. We have already delivered meaningful operational synergies and are on track for our commitments in 2026. The revenue synergies are in development and are key to a differentiated ATG offering. The opportunity for ATG is an exciting one, to take advantage of an expanded addressable market, to improve on marketplace basics, to continue to grow value-added services and take rate, and to grow our buyer and seller audience. All of these opportunities increase the number of levers we have to drive our growth in the short, medium and long term.

Thank you for listening today, and we are now ready to take questions. Gareth?

Gareth Davies from Deutsche Numis. Kick off with 3, maybe from me. The first, on the current trading comments, you sort of mentioned October being in line with consensus. I wonder if you can just give us a little more granularity, particularly on I&C, because I know September was also an important month for I&C, just how that played out and how October started?

Secondly, you talked throughout about conversion and some of the specific initiatives on the A&A side that are going to help conversion there. On the I&C side, it doesn't feel as though there's as much focus on that at the moment. Is that simply a function of you continuing to move proxy bid onto a new platform? Or are there sort of puts and takes in there that we need to be aware of that just make it more difficult to have explicit influence, just understand that conversion point on I&C.

And then the final one, just from an AI perspective, you talked quite a bit about tools and efficiencies. Taking a step back, I just wondered if you can frame sort of how you feel you sit and the advantages you've got as the world sort of shifts to agentic AI and your positioning there and broader points?

Sure. So maybe Sarah can take the first one, and I'll do the next two.

Yes, sure. So in terms of current trading, we've obviously said that we've had a robust start to the year in the first month, and there's not a lot more color we would add, as you'd expect at this point other than to say that it doesn't change our consensus further. For our guidance for the year, and we remain comfortable with that. So I won't give any more detail on that, as you wouldn't expect, reading into one month. I&C, I let you talk and I'll maybe add.

Yes. So within I&C, as you kind of pointed out, the focus for I&C right now really is upgrading to the new technology, the upgraded version. And once we do that, then we do believe there's lots of innovation that we were going to be able to do, but we're not going to be innovating to try and change those things until that upgrade is complete because we'd be doing it on an old tech stack that we would be using in the future. So that would, we think, be an inefficient use of the money.

That being said, we've still made progress with atgXL, which is much on I&C and coverage there has grown, for instance, from about 10% of timed auctions to about 30%. So there are things that we can do. I think selling digital marketing as well is a way by which we reach more bidders, and I think we can continue to act to drive conversion rate there. But as you point out, the vast majority of our effort right now for driving conversion rate is focused on LiveAuctioneers. And until we've completed the upgraded Proxibid, there will not be significant efforts placed on that.

Just for reference, are you giving a sort of time line on when you hope to complete that migration?

We're still -- we've made good progress this year. There's certain customers that, we hope over the course of the year, will begin using the new seller portal in the new platform, but that's going to be something we communicate more over the course of the year as we see that.

In terms of AI, and I guess what you're saying is, is that in the grand scheme of AI, are we kind of a net winner in this? Or how will it play in our world? And we definitely believe AI is going to be a big positive for ATG. And we see it in a couple of different ways. So whether it be the operational efficiencies where our European operations team is already starting to use it to improve the way that we respond to customers, the speed and then it also reduces the number of people we need. So we haven't had to hire more people as we've improved that service quality.

On the Arts & Antiques side in LiveAuctioneers specifically, we've used a combination of open AI resources to create models that allow us to use text and image to recognize the lots that are being categorized within ATG and therefore, have higher coverage of our categorization. We used to have about 4 and 5 categories. Now it's about -- it's 99%. And that improvement in categorization is something that will power better search results.

We've also been able to create a digital footprint essentially by seeing both the image and the text that an auctioneer writes, and that will help us refine the search that we're able to present to a bidder. And those are really key. So for any business, that would be important. But when you look at ours and where you see 24 million unique SKUs and, say, 15 million, 16 million of those being in the Arts & Antiques side, no buyer, no matter how avid they are, is going to parse through that number.

So the better that we can recognize, not just the type of item they're looking at, but even the styling of it based on the image that AI is helping us to match to our results, the much more accurate search results we'll be able to present and that should lead, again, we believe, to gradually higher conversion rates.

And then where do we sit overall though, I think the other part is that there's lots of articles out there now that talk about how AI should benefit marketplace leaders. And the key reason for that being that when somebody starts typing in search results in the future around where can I find a unique or specialized item at auction or just simply a used curated item, there'll be the eBays that will show up, but we should be the marketplace that shows up for the category in which we operate.

And I think that's something that we're able to build on. We have the scale, we have the history, we have the relevance. And so we believe that from that as well, we should be a real winner from AIs with casual bidders particularly.

So next question. James?

It's James Lockyer from Peel Hunt. Just on Chairish, it looks from the outturn that maybe Chairish did a little bit better than you might have done. But it'd be good to understand, has it started to grow at the top line, given historical trends of being flat? And has it helped you drive those synergies quicker? And if you could breakdown what those $4 million of initial synergies were, people, marketing, et cetera?

And then secondly, on the capital allocation, given where your share price is, could you give a bit more color around why you are focused on debt repayments first versus share buyback? Is your cost of debt higher than your cost of equity, for example? And/or are you holding off committing to a share buyback to be more flexible around M&A in FY '26?

And then just as a follow-up on the AI question. A lot of investors are wary of people just using AI for AI washing terms. It would be good to understand in the initial stages if you're doing it, are buyers engaging with AI recommended items actually bidding more frequently? Or is it just increasing your page views at this moment?

Maybe Sarah can do the first two and I'll take the last.

Sure. So on Chairish, first of all, in terms of the $4 million of synergies delivered to date, they are mainly people-related synergies, which I think we said at the time, we had good line of sight to in the early stages of owning the business, so primarily people and sort of effectively people leverage across having a small-scale business.

In terms of run rate, I think we've said that the performance of Chairish has been in line with our expectations since acquisition. And to give you kind of roll forward into '26, we also said that we would expect the majority of the focus in the very short term to be on integrating the business and delivering those operational synergies as opposed to being overly confident on revenue synergies.

And so we actually said we were not building in revenue synergies until '27. So that does not mean we're not focusing on them. Of course, we are. But I think we've previously said that we will prioritize the operational synergies, and that was where we would expect the majority of the movement in the financials to be in '26.

If I can just follow-up on some of the key points you said. You think now it's a scale business. Can we assume that's back office people or is it including market people? How should we think about it?

It's primarily back office, primarily back office. And then you'll remember from when we talked in August, there's 3 real areas that, that $8 million relates to. A big chunk of that is people. There is some optimization of marketing costs, particularly where we know that there is low return on investment, and then there's some optimization of payments. So they are the three things we talked about. And we always said the first one to deliver would be on the people side.

In terms of your question on share buybacks, debt repayment. So I guess just to reconfirm on the capital allocation, we are saying that very clearly for '26, our focus is on organic investment, which generates the highest returns and on debt repayment. And we always run our capital allocation, clearly based on the data and the facts and the mathematics of it all. And we are confident they are the two right focus areas for '26.

Once we get below that 1.5x, as we've said, that's when we would then consider -- the Board will consider alternative options, and we would run the math on it at that point. But we are not expecting to do any M&A in the next 12 months.

In terms of your third question, the way that I kind of think of AI is it's one contributor to the overall strategic goal we have, which is to drive more bids and to drive conversion rate. And it's only one component of many that we are using to try and drive that metric. So for instance, one of the things we put in place this year is more personalized alerts. That wasn't AI-driven. But what it was key to doing was we used SMS. When someone saves a lot, we message them when the lot is approaching. We remind them that the auction is coming due. During the journey, we remind them of all the different things that they need to do to get ready to bid because buying at auction is not the same as buying through an e-commerce experience.

And so that was something we hadn't done before. Messaging buyers, when you're buying a secondary good, trust is a factor that comes into play. And one of the things we've been trying to do is drive the notion of trust more effectively, so talking about purchase protection where when you buy an auction, it's use goods. Well, auctions are kind of no right of return, typical. But what we have, on behalf of our bidders, is the ability to have leverage with auctioneers who either sell something that's not as described, or where there is a component that's missing like a certificate where it says, "Oh, this is certified. If they don't send the certificate, well, then the bidder can return it," or with atgShip, for instance, we provide insured shipping now. So if the item is damaged in transit, the bidder is covered, if they use atgShip.

So these are all elements that we're driving that are improving, we believe, trust and the readiness to bid. And then AI is another component of that. And the key part of that is, like I said, when you have as many items as we have and you have so many different price points from tens of dollars up through tens of thousands of dollars. Our ability to present the right item at the right time to the right bidder, not just based on the price point or they said they were looking for a table, but where they're looking for walnut Rococo style tables.

Well, if the auctioneer didn't put that description in and just put walnut table, in the past, we wouldn't have been able to do it. With AI, we now will say, "Oh, that's a Rococo table. We can actually show only Rococo tables to that person or in the future, people like Rococo tables also tend to like this type of table as well, so let's show that as an alternative on the page." So for us, we definitely don't think there's going to be any AI washing for ATG. It's going to be very much based on substance.

I think Alastair is next.

Alastair Reid from Investec. Just one for me, to follow up on sort of Chairish. You've obviously had it in the group a little while now. Interested in any sort of feedback from your auctioneers or customers on the acquisition, the impact on them? Any concerns around whether you're sending the underbidder away from auctions and the like? Just any color there.

Sure. So the reaction we've heard from auctioneers has been universally positive. And I think the key reason is that they see that Chairish operates at a slightly higher price point than the average sale that our auctioneers would be operating at. And on top of that, they see 4.5 million high-quality verified bidders or potential sessions that they can take advantage of. So for them, anytime they can get access to more buyers cost effectively, I think they're happy with that. And yes, so far, it's been all positive.

Will Larwood from Berenberg. Firstly, just maybe taking a longer sort of -- obviously, there's quite a lot of initiatives to drive conversion rate over the next year and into '27. Just wondering if you could lay out what you expect your conversion rate to increase potentially on a yearly basis from the investments that you're making, so slightly?

And then secondly, just if you could talk about atgShip and sort of the penetration across the A&A side and what you expect it to be by the end of FY '26? I'm just thinking about potential margin implications if that continues to go into '27.

So I'll let Sarah cover the second. But on the first, I guess what I'd say is, we're not giving midterm views on where our conversion rate is going to move. When you think about what our budget for this year is based on, what I tried to emphasize is that this year, it's based on shipping, digital marketing and modest fixed fee increases. That's where the growth is coming from for the year. If conversion kicks in based on the things we're doing, well, that would be better.

When you look at what we're doing within conversion, though, I'd like to kind of take a step back and look at the overall market and you think about it, I think most people in the room would probably agree that if you look out 3 years from now or 4 years from now, is the world going to be more online or less online for the types of things we sell on Arts & Antiques and Industrial & Commercial? And I think it's going to be more online. Most people would agree.

And let's say, in the Arts & Antiques, where we're focused on driving conversion right now, you can look at where are the places that, that conversion could go to. And it would either be an auctioneers white label, but auctioneers generally are relatively small businesses, and they can capture some, but they're not going to make -- they're not going to all of a sudden become a single site that takes all of the share. It would be a competing marketplace, but we're multiple times the size of the next marketplace. And we believe we can both out-invest them and bring more buyers in. So we don't think it's going to be another marketplace.

And then the third option you have is that it's a new entrant. But so far, we haven't seen a new entrant and there have been kind of 15 years of doing this. There's always a chance that it could be there. Part of the reason that we're constantly investing and leaning into everything from AI to anything else we can do to advance the experience as quickly as we can. But based on that kind of picture, we kind of feel that if we invest appropriately in the marketplace fundamentals, which in the past we've talked about, but we haven't been able to even show a lead KPI that we were able to move it.

In the past, we were able to say, look, we've invested in value-added services, and we know that where we've invested, it's moved. Now with the team that we have working on it for the past 6 months, being able to move bids placed and lots won as meaningfully as we have, we're feeling much more encouraged about our ability to drive conversion rate now that we're zeroing in on that.

And so while I can't give you kind of a midterm view of where we think it could go, we believe we should be the winner in this online structural shift, and we think we're investing against the right things. In terms of atgShip?

Yes, I can take that. I mean the majority of the growth in this year will be annualization of the mandate on LiveAuctioneers, that is where -- which is why we're saying that the growth will be weighted to the first half because that's the lapping of that. I think your question on -- there's 2 other places that we will be focused. One is around continued penetration within the auctioneer base, and then the second is actually making the product more and more attractive to consumers to actually use the product because the mandation is about having it available, not necessarily that the customer has to use it. And so they're the sort of other growth drivers. We think the majority of the growth in '26 will come from the annualization, and that would may be a -- we still think there's a runway on shipping, but those are the two growth factors, but they will take a longer period of time.

I think Lara was next and then Ross.

It's Lara Simpson from JPMorgan. I just wanted to also come back to shipping. Understand the mandate on LiveAuctioneers, obviously, ramping up quickly, so we are getting that margin dilution. Can you maybe just remind us of the financial characteristics of that product? I know you won't give us the margin, but interested on sort of average price or cost for the add-on. And then I suppose how much of that cost are you bearing? Because at some point, I would expect as you scale, could the margin of shipping improve and sort of be less dilutive.

And then the second question was just on the margin guidance, so it's 34.5% to 35.5%. Feels like the core margin is going to be in that 40% to 41% range. I know there's the mix dilution, but are you putting any more investment into the business and where exactly that might be going?

Maybe I'll take both of those, and John-Paul, feel free to add. I think on shipping, you're right, Lara, we don't give specifics either of the breakdown of value-added services or margins for each of those components. What we have said is that the margin for shipping by its nature is materially lower than the group average. So there's probably not a lot more I can say on that over time. Of course, as your business becomes bigger, you would expect to try and build some operational leverage through that. But I think structurally, it will remain a lower-margin part of our business, but an incredibly important part of it from a customer journey perspective.

I think in terms of the core margins, you're right that the ATG core margins will be just above the 40% mark. I think John-Paul has talked about and we've talked about in the building blocks for financial year '26 that we have been investing and we'll continue to invest in conversion rate in LiveAuctioneers, and that is a big area of focus for us as you've heard. We have said that offsetting that there are targeted cost savings that we're making, which are largely kind of housekeeping rather than anything more fundamental, but that allows us to have some flexibility from an investment perspective. So they are the sort of moving parts, if you like, within that.

Can I just do one follow-up? Was just also on the adjusted free cash flow metric. Obviously, you benefited from the $12 million working capital. How should we be thinking about the building blocks next year, assume that will reverse out and then just exceptional cash costs and how we should think about that?

So I think what you've seen in the current year, as you said, is partly exceptional working capital improvement, but also genuine underlying improvement in working capital that we would expect to be sustained. So we wouldn't be expecting a reversal of the benefit that you've seen in '25, but neither would we be expecting a material continued benefit from working capital, but you won't be seeing a reversal the other way.

Ross Broadfoot, RBC. A couple, maybe 3, maybe 4 if I can manage that. Just on THV alongside the macro being a driver of THV, obviously, important still is new auction houses and deeply existing relationships. So comments there will be helpful. I know you've said about reactivating lapsed sellers. So is that any indication you might have lost any market share?

Number two, could you give us some color on the proportion of commission revenue that's coming from timed auctions and the trajectory of how that has played out, obviously, with the view to more of the market trading online and atgXL having a greater impact?

Number three, could you give us any indication on the mix of value-added service growth over the last 12 months? And then finally, if you could just give us a quick update on average lot values for A&A and I&C?

Sarah, do you want to take, I guess, all of those except the new auction house for me, and I will do that.

Yes, do you want to go first and then the last ones.

Yes. So in terms of new auction houses, so we aren't losing auction houses, but what it is, is that there are auctioneers who -- sorry, every year, there are some actioners who don't end up working with us, but those are typically auctioneers who come into business for a period of time and then go out. So when you look across the group, we're retaining the vast, vast majority of the auctioneers who work with us. Over the history of log auctioneers, one of the things we looked at was saying, actually, we've never gone back to look at auctioneers who, even if they are one-offs, maybe they now are doing something else and they haven't thought to come back to us.

And there are, of course, there are some target auction houses who haven't worked with us before that spring up they're brand new. So the team, basically, we have an outbound sales team that's just out there finding those auction houses, reactivating and we'll see how that goes over the course of the year. That's not expected to be a big material part of what we do, but it's just we thought good practice and, again, continue to grow our presence in the market.

And reactivating lapsed sellers, I'll cover the VAS and the lot value and then you can maybe come back to any remaining. But in terms of the mix of value-added services, I think you will have inferred from what we said today that shipping is an increasing proportion of those value-added services. We don't break that out and don't intend to give that disclosure. But I think we've been quite clear that we have got growth in marketing, both in the year that we've just finished, and we would expect growth in marketing in the year ahead. That's obviously a very high-margin product for us.

We have seen some growth in payments, particularly linked to the shipping because when you take our shipping product, you also use our payments product. And then you've obviously got shipping, which is a big piece of the growth. So you can kind of infer the moving parts of the mix, but we do expect growth in the higher-margin marketing element as well.

In terms of lot values and average pricing, the data that we've shared with you in the LiveAuctioneers slide and talking about lot value, specifically, we have said that we have seen a decline in lot value. We don't give the numbers behind all of that. And at this point, that metric is the way we're using it with you externally, currently is around LiveAuctioneers specifically.

I think one of the things that I've talked about and would do more in the half year results is, what are the right metrics for us to use going forward particularly with our Arts & Antiques business. So you've heard us talk about lots list, lots sold. You've heard us talk about bids and lot value for the first time really today. And that's something we will continue to evaluate, what are the right KPIs to use. But at this point, what we're saying is we have seen some pressure on lot value on LiveAuctioneers, specifically, but we've been able to offset that through the growth in bids, et cetera, and lot sold. So that's probably what I'd say on the lot value.

Sorry, the proportion of commission revenue coming from timed auction, are you able to give any color on how that's trended?

We're not going to give any specifics on that.

So then just to follow up, how should we read that the market shifting online and the plan here has come to fruition?

So I think from a market perspective, as you know, there isn't a significant amount of market data out there that will allow us to be very clear on that, but we remain focused on the areas that drive at times. John, is there anything else you want to say?

Yes. I think to Sarah's point around the KPIs that we want to be focused on, I think what we're looking at is bids, lots sold ultimately whether you're selling in a timed or a live format. Ultimately, what we want are bids and lots sold and higher increasing average lot value. And so that's what we're focused on. And whether it's in a timed or a live format is less relevant. But obviously, if we can get more time, we're continuing to work on that. But again, we don't split that out right now. Let's see what happens when we look at the KPIs going forward.

James, round two?

A quick follow-up from Laura's question actually around shipping. I know you don't give specifics around that on the margin and things like that. But I wondered, is it an accounting reason why, for example, you have a GMV that isn't your revenue and you take a take rate as your revenue, but with shipping and payment, I guess, as well, where you're not doing it. Why can't you take -- why can't you recognize it net? So that's my main question. Why can't you recognize that net?

So we do recognize the growth, and that is appropriate under the accounting principles. So yes, that's the way we recognize it.

And in terms of the reason, I think it's because that's how other marketplaces do it.

So I think that will be all for the questions for now. As you know, we have lots of meetings coming up with investors as well. But thank you for taking the time to talk with us today. I think, hopefully, what you've gathered from the session that we have is we think we have a really well founded plan this year, very much bottoms up. We're not asking people to believe that we're going to do anything else than where we already have momentum this year. And that if we're successful or when, hopefully, we're successful on the other areas we're working on, well, then that will be something potentially on top of where we already are.

But really, the budget and the -- sorry, the guidance is based on the things that we talked about at shipping, digital marketing, modest fixed fee increases. And then the big focus for the year, though, is really continuing to drive bids, lots sold and ALV. And if we can do that, then we think we can have a very strong year. So thank you, and talk to you all soon.

Thank you.