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2016-11-28 A/S: A/S interim report January - September 2016

Company announcement no. 24/2016

To: NASDAQ Stockholm

Copenhagen, 28 November 2016

Announcement - A/S interim report January - September 2016

Our financial performance in the third quarter did not fully reach our
expectations. The decrease in revenue and EBITDA was however mainly a result
of normal fluctuations and strategic decisions, while our core business
continued to show a positive development.

Auction turnover in Q3

The auction turnover in Q3 2016 increased by 3.7 % (DKK 6.7m) and amounted to
DKK 188.2m (181.5).

The conversion from physical to online auctions to attract new customer groups
globally is in essence the strategy of In the light of this, it
is satisfying to conclude that our online auction turnover on used items
within art, design, antiques and collectibles showed an increase of 7.1 %
(DKK 11.1m) compared to the same period last year.

Brand new items on the platform experienced a fall of 39,3 % (DKK
8.4m). The decrease is the result of a change in valuation principle that was
introduced at the end of 2014, as the sellers (producers, wholesalers and
retailers) of e.g. branded goods have been concerned whether they can achieve
sufficiently high hammer prices. We expect the decrease to phase out during
the coming quarters.

Financial performance

Revenue in Q3 2016 amounted to DKK 41.1m compared to DKK 49.3m the same
quarter last year. The decrease in revenue for the quarter is mainly
explained by a lower fee level from new partnership agreements related to
transactions of existing auction houses and to a higher share of
partner-run auction houses compared to Q3 2015. In total the revenue for the
first nine months of the fiscal year, 1 January - 30 September 2016, has
decreased 8 % compared to the first nine months of 2015.

It is a part of our strategy to convert most of the auction
houses into partner-run auction houses. This results in an attractive mix of
one-off revenue fee from new partnership agreements related to transactions
of existing auction houses, lower commissions and fees compared
to auction houses but a higher EBITDA in relation to
auction turnover since there are no costs for related to
partner-run auction houses.

During Q3 2016 one auction house was converted to a
partner-run auctionhouse with a new partnership agreement which was signed on
23 September 2016. As of 30 September 2016, two additional auction houses
(net) are run by partners, whereas they were fully owned by as at
the end of Q3 2015. This event translates into a net decrease of

DKK 11.8m in revenue from new partnership agreements and the lower share of
owned auction houses compared to Q3 2015.

The acquisition of Karlstad-Hammarö Auktionsverk AB on 28 June 2016 has on the
other hand had a positive impact of DKK 2.1m in revenue on Group level.

The decrease in EBITDA from DKK 4.3m in 2015 to DKK 4.0m in 2016 is mainly
explained by the DKK 9m lower fees from new partnership agreements but was
partly compensated by the higher margins resulting from the higher share of
partner-run auction houses and reduction in costs.

New auction houses and partnership agreements

In 2015, acquired the traditional auction house Auktionshaus HERR
in Cologne with the aim of converting the traditional physical auction house
to online auctions at This plan has now been executed. Early in
2016 we employed a new branch manager, who quickly showed ambition with
respect to becoming a partner. In Q3, we decided to proceed with this
opportunity and signed a partnership agreement with the branch manager as a
new partner. It is a part of's expansion plan to spot talent and
develop local branch managers employed by HQ who display the
necessary strengths to move from employed manager to partner.
The integration of AB Stockholms Auktionsverk, which was acquired in September
2014, is in line with our expectations, showing positive trends both in
online auction turnover and cost optimization.
Karlstad Hammarö Auktionsverk AB, which was acquired in June 2016, performed
satisfactorily in Q3 both with regards to auction turnover and earnings. owns an approx. 7.000 m2 property in Rovsingsgade in Copenhagen.
Since we are outgrowing our premises in Herlev, Copenhagen, the plan has been
to refurbish the building on Rovsingsgade to establish a second
auction house in Copenhagen and a new headquarters. In May 2016
entered into a conditional sale-and-leaseback agreement with
Ejendomsselskabet Norden, which wanted to buy the building with
as tenant. However, Ejendomsselskabet Norden decided not to continue with the
sale-and-leaseback agreement with reference to the terms and conditions. As a
result we have not yet sold the property. There is now renewed interest in
the property and we are working on finding a new buyer.

Focus going forward's vision is to revolutionize the auction world by democratizing
the perception of auctions and inspire modern consumers to sell and buy on
online auctions. We are eager to take advantage of our first mover position
and continuing to drive the paradigm shift of the international industry, by
migrating traditional physical auctions to online auctions, and by presenting
a great diversity of objects within art, design and antiquities to a great
diversity of customers. The strategy is straight-forward: more auction
houses, more customers and more lots on auction at, in more
countries - in order to be accessible for our local sellers and global

Looking at Q4 2016, we expect to finalize the year with a strong quarter. On
15 November, we obtained very positive knockdowns in connection to the sales
of the complete Lundberg collection, which will influence both auction
turnover and earnings positively. In Q4 2016, we
furthermore have the regular seasonal fine art auctions at Stockholms
Auktionsverk within Contemporary and Classical art.

On 24 November, we entered into a five year partnership agreement with a new
partner, who has taken over the operation and activity of in
Herning in Denmark. This transaction will have a positive effect on EBITDA in
2016 of approx. DKK 5m.

Finishing off the year 2016, we are right now preparing for the opening of in Frankfurt, expected to take place in February 2017.

Finally, we continue negotiating with potential buyers of the property located
in Rovsingsgade in Copenhagen. The property will after refurbishment be used
as an auction house, in addition to the current one in Copenhagen, as well as
headquarter for the company.

As we expect a strong Q4 2016, the previously communicated revenue and EBITDA
guidelines remain unchanged.

Mette Rode Sundstrøm

About was launched in 1999 as a pioneer in online auctions with the
concept of combining the best elements from the traditional auction world
with modern technology. became the first traditional auction
house worldwide to convert from classical to online auctions. Ever since, we
have been on a mission to democratize the international auction world by
introducing 'Quality auctions online' within art, design, antiquities and
home luxury.

Over time, we have built up as a strong consumer brand in the
markets in which we are present with our auction houses. At present, has 27 auction houses located in Denmark, Sweden, Norway, Germany
and Belgium. Here sellers are able to consign items daily to our experts,
while bidders can examine items physically. All items are described, valued
and photographed objectively before being put on auction. All bidding is
carried out online with the exception of a small number of physical auctions
annually. operates through its own auction houses (currently 8)
and auction houses operated by partners under partnership agreements (a
variation of franchise).

While being accessible to potential sellers in 27 local auction houses, we are
also accessible online for global bidders. registers around 5.7
million online visitors and around 2 million unique visitors each month. The
visitors are truly global, coming from more than 200 countries on a quarterly
basis. Today we have in the region of 2.5 million customer registrations in
the Group.

Strategy for growth

Since the start in 1999, has grown from auction turnover of DKK
20m in 2000 to DKK 1,084m in 2015, and is now the biggest auction group in
the Nordics. During the same period, the revenue has shown a strong and
consistent development with an average growth since 2000 of 30.5 % per year.

To further expand the traditional auction business and create growth, focuses on three main measures; digitalization,
internationalization and industrialization. Today, we want to take advantage
of's international first mover position to further enhance our
leading status in the Nordic market and provide the appropriate platform for's future international development.

Geographical expansion through establishment of local auction
houses is our main growth driver, enabling us to attract local sellers to
consign items for our global bidders. When establishes new
auction houses, this can be done in one of three ways. Firstly, we can enter
into an agreement with a new partner, e.g. with a traditional auction house
converting to online auctions on or with a greenfield start-up.
Secondly, we can buy a traditional auction house, which is then completely or
partially converted to online auctions. Thirdly, can offer
traditional auction houses an associate model whereby the auction house can
sell items at auctions online at within its existing brand.

As part of our democratic approach, focuses on a broad assortment
of auction items within art, design, antiques and home luxury with a value
between DKK 800 and 50,000. We believe there to be considerable potential
internationally in this large middle-market segment. We therefore position between the classified peer-to-peer platforms with very high
volume at very low prices and the fine art market with very low volume and
very high prices.

Revenue model's revenue model is based on buyers and sellers paying for the
various services provided by

Depending on if the auction house, handling the lot, is owned by
or is a partner house, the contribution to Lau...

Författare Hugin

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