Ritchie Bros. Auctioneers Annual Report 2010

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FY2010 Annual Report · Ritchie Bros. Auctioneers

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RITCHIE BROS. AUCTIONEERS INCORPORATED

Annual Report
2010

Contents

Letter to Shareholders

Financial Information

Management’s Discussion and Analysis

Audited Consolidated Financial Statements

Supplemental Quarterly Data

Selected Financial and Operating Data

Shareholder Information

Forward-looking statements
The discussion in this Annual Report includes forward-looking statements, which involve risks and
uncertainties as to possible future outcomes. Readers should refer to the discussion concerning forward-
looking statements and risk factors included in our Management’s Discussion and Analysis of Financial
Condition and Results of Operations for the year ended December 31, 2010, which is included in the
Financial Information section of this Annual Report.

To Our Fellow Shareholders:

Every successful company shares two characteristics: a strong sense of what has
made them successful to date, and a willingness to evolve to ensure continued
success in the future. By remaining nimble and focusing on the needs of our
customers, Ritchie Bros. has enjoyed decades of growth; we intend to continue to
deliver compelling business solutions for our customers to help sustain that growth
into the future.

That’s why we invested the time and energy in 2010 to complete a thorough update
of our strategic plan and to renew our core values. We are not changing course or
losing sight of what makes us successful today; we are merely re-dedicating our
efforts to meet the needs of our current and future customers, while ramping up
innovation and ensuring we continue to have a top caliber team in place to help us
accomplish our ambitious objectives.

Our Mission:

We live to create compelling business solutions that enable the
world’s builders to easily and confidently exchange equipment.

OUR CORE VALUES:

 It's all about our customers
 We do what is right
 We are one team
 We have fun

We offer compelling business solutions to people who buy and sell equipment and
trucks, including the people who build our homes and offices, schools and community
centers, bridges and roads, as well as the people who grow our food and those who
support all of these activities, such as finance companies, transportation companies,
rental companies and equipment dealers, among others. Our customers are the
builders of the world. Our goal is to provide solutions that make it easy for them to
buy and sell equipment with confidence—solutions that include, but are not limited
to, unreserved public auctions.

For the last several years we pursued a strategic framework that focused
simultaneously on three core areas: our people; our places, including our auction site
network and geographical expansion; and our processes, including IT and non-IT
initiatives. This framework has evolved and matured into three strategic pillars that
incorporate many of the same concepts: GROW, ADD and PERFORM.

Our core values support our three strategic pillars, which in turn support our mission.
Our updated strategic pillars can be described as follows:

 GROW OUR CORE AUCTION BUSINESS

3while simultaneously doing more business with new customer groups and in
new markets. We intend to undertake deeper market research to understand
better why equipment owners do and do not use our services, and how to
address the needs of the large number of equipment owners who do not even
know about Ritchie Bros.

We expect that most of our near-term growth will come from our established
regions, primarily the United States and Western Europe, and believe that
emerging markets such as China, Brazil and other developing countries offer
significant potential for long-term growth. We have enhanced our process for
prioritizing new markets and are developing plans to enter high priority
markets in a more disciplined and methodical manner.

We also plan to add at least one new auction site to our network every year,
and will continue conducting off-site auctions to expand our presence in new
regions. We have reduced our targeted auction site additions to one site from
two in recognition of the fact that our accelerated capital expenditure
program over the last five years achieved our objectives and has left us with
a network that has significant capacity to grow our sales without significant
additional capital outlays. We are well positioned to serve the world’s builders.

In order to grow our core business, we intend to streamline and simplify our
auctions—to make them easy. Many of our new customers have little or no
experience buying or selling at auctions; we want to make the process as
easy and stress-free as possible, so they feel confident on auction day and
continue attending our auctions for years to come. We will be leveraging new
technologies and launching initiatives to improve our customers’ on-site and
online experience.

Starting July 1, 2011 we will be rolling out an enhanced equipment
information program, which is just one example of the types of initiatives we
intend to introduce to help accomplish our GROW objectives. We will be
offering enhanced information about the equipment to be sold in our auctions
to all customers free of charge. This information will contribute greatly to the
confidence of existing and new customers, and should make our auctions
more appealing to a broader range of equipment owners.

We also intend to simplify and expand our fee structure starting July 1, 2011.
We will eliminate certain fees, including our internet purchase fee, and
expand the scope of our administrative fee that we charge to buyers. The net
effect of these changes will be to increase our revenue for 2011 and future
years, and we expect the increased revenue will outweigh the cost of
implementing our planned initiatives.

 ADD new BUSINESS & INFORMATION SOLUTIONS

Technology and innovation have played significant roles at Ritchie Bros. in the
past decade, enabling us to enhance our auctions and deliver added value to
equipment owners around the world. We will continue to harness the latest
technology to supplement and enhance our auction services, and investigate
new services to meet the needs of equipment owners that aren’t being met by
our unreserved auctions.

4We intend to introduce a range of additional value-added services in 2011,
including a customer finance program, enhanced shipping services, a
customer insurance program and other ancillary services. We already do more
for our customers than any of our competitors, and we are now going to raise
the bar even higher.

We are investing in an enhanced business intelligence program to further
bolster our understanding of the equipment market. We want to reinforce
Ritchie Bros.’ position as the knowledge and information authority in the
equipment marketplace, so that when people are looking for equipment
information, they’ll turn to us—the experts. We will also continue to enhance
rbauction.com—making it easier to use, more powerful and more valuable to
equipment owners—with the goal of becoming the number one equipment
web site in the world.

 PERFORM BY BUILDING AN INSPIRED, HIGH-PERFORMANCE,

CUSTOMER-FOCUSED RITCHIE BROS. TEAM
Our main internal focus in the coming years will be ramping up sales force
productivity, increasing employee engagement and building our management
bench strength. We intend to be even more effective at growing future
leaders by focusing on enhanced development initiatives for our top talent,
which will also improve our ability to attract and retain key players. We are
also working to refine sales and operational management roles that will allow
us to focus more clearly on the foundation of our business—our customers.

Our GROW, ADD, PERFORM strategy provides a clear road map for Ritchie Bros. for
the future and gives our people a renewed sense of energy and purpose. We have a
big job in front of us, but with clearly defined objectives and a strong support
mechanism in place, we are well on our way.

2010: the year in review
We faced many headwinds in 2010, and this impacted our ability to grow our
business. These headwinds were particularly acute in the United States, which
accounts for approximately 55% of our business. Interest rates remained low and
creditors remained less aggressive with underperforming loans. Market values for
equipment improved in 2010, yet many equipment owners were still faced with
related debt on equipment that was higher than market values, and this restricted
the flow of that used equipment to market. Many owners chose to park their idle
equipment rather than sell it, in hopes that market values would improve or activity
would increase.

Market fundamentals showed signs of improvement in the latter part of 2010.
Equipment owners who had delayed replacing their equipment during the economic
turmoil of the last few years began replacing their fleets, which resulted in increased
demand for late model equipment in the latter part of 2010. Equipment
manufacturers began to increase production during the second half of 2010 but
demand outstripped supply and this created a very competitive market for late
model equipment.

In 2010, despite ongoing global economic challenges that made it harder to secure
equipment to sell at our auctions, we worked with a record number of consignors,
attracted record numbers of bidders and confirmed our position as the world’s largest

5industrial auctioneer—selling more equipment to on-site and online bidders than any
other company in the world. This tells us we were successful maintaining the
significant market share gains we believe we achieved in previous years.

2011: the year ahead
As we look forward to 2011 we see many signs of improving fundamentals in the
used equipment market, which appears to be returning to a more balanced state.
Equipment owners are more optimistic, OEM production is increasing to satisfy
growing demand, and values remain firm on most categories of equipment. Late
model, low hour equipment is in particular demand and is fetching strong prices,
mainly as a result of the void created in the market by the reduced production of
new equipment over the last several years. There is a lot of cash waiting to be
deployed in the economy, and some of that capital is likely to be invested in
equipment. For example, many rental companies are increasing capital spending and
the equipment replacement cycle appears to be taking hold. These are all positive
signs for the used equipment market and our ability to grow our business in 2011. It
remains difficult to predict precisely when momentum will turn positive, but the
success of our early auctions in 2011 and the flow of consignments for upcoming
auctions provide clues to a return to brighter days ahead.

Thanks to an updated strategic plan and some positive economic indicators, we have
entered 2011 with greater clarity, a feeling of optimism and a renewed sense of
purpose. The past year was difficult for Ritchie Bros. and our people worked harder
than ever to help sustain our business. We could not have succeeded without the
hard work and determination of all the men and women on the Ritchie Bros. team.
We are truly grateful for the energy, dedication and passion of our team, and look
forward to their continued contributions in the future as we help the world’s builders
to easily and confidently exchange equipment.

And finally, thanks to our shareholders for sticking with us through the challenging
times and believing in our ability to set an appropriate course for the future, and to
the ever-increasing number of equipment owners who are choosing to participate in
our unreserved auctions. We truly appreciate your support and loyalty and are proud
to be part of your investment portfolio.

Robert W. Murdoch
Chairman

Peter J. Blake
Chief Executive Officer

6RITCHIE BROS. AUCTIONEERS INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2010

7Overview

The following discussion summarizes significant factors affecting the consolidated
operating results and financial condition of Ritchie Bros. Auctioneers Incorporated
(“Ritchie Bros.”, the “Company”, “we” or “us”) for the year ended December 31,
2010 compared to the year ended December 31, 2009. This discussion should be
read in conjunction with our audited consolidated financial statements and notes
thereto for the year ended December 31, 2010, and with the disclosures below
regarding forward-looking statements and risk factors. The date of this discussion is
as of February 22, 2011. Additional information relating to our Company, including
our Annual Information Form, is available by accessing the SEDAR website at
www.sedar.com. None of the information on the SEDAR website is incorporated by
reference into this document by this or any other reference.

We prepare our consolidated financial statements in accordance with generally
accepted accounting principles in Canada, or Canadian GAAP. There are no material
measurement differences between those financial statements and the financial
position and results of operations reflected on those financial statements and the
financial position and results of operations that would be reported under generally
accepted accounting principles in the United States, or U.S. GAAP, except as
described in note 13 to our audited consolidated financial statements. Amounts
discussed below are based on our audited consolidated financial statements prepared
in accordance with Canadian GAAP and are presented in U.S. dollars. Unless
indicated otherwise, all tabular dollar amounts, including related footnotes,
presented below are expressed in thousands of dollars, except per share amounts.

Ritchie Bros. is the world’s largest auctioneer of industrial equipment, selling more
equipment to on-site and online bidders than any other company in the world. Our
world headquarters are located in Vancouver, British Columbia, Canada, and as of
the date of this discussion, we operated from over 110 locations in more than 25
countries, including 43 auction sites worldwide. Our purpose is to create compelling
business solutions that enable the world’s builders to easily and confidently exchange
equipment. We sell, through unreserved public auctions, a broad range of used and
unused industrial assets, including equipment, trucks and other assets used in the
construction, transportation, agricultural, material handling, mining, forestry,
petroleum and marine industries.

We operate mainly in the auction segment of the global industrial equipment
marketplace. Our primary target markets within that marketplace are the used
equipment and truck sectors, which are large and fragmented. The world market for
used equipment and trucks is driven by the cumulative supply of used equipment
and trucks, which is affected by the ongoing production of new equipment and trucks
and the motivation of equipment owners to realign and replace their fleets. Industry
analysts estimate that the world-wide value of used equipment and truck
transactions, of the type of equipment we sell at our auctions, is greater than $100
billion per year on average. Although we sell more used equipment than any other
company in the world, we estimate that our share of this fragmented market is in the
low to mid single digit range.

In recent periods, between 70 and 80% of the value of the items sold at our auctions
was purchased by end users of equipment and trucks (retail buyers), such as
contractors, with the remainder being purchased primarily by equipment and truck
dealers, rental companies and brokers (wholesale buyers). Consignors to our

8auctions represent a broad mix of equipment owners, the majority being end users
of equipment, with the balance being finance companies, truck and equipment
dealers and equipment rental companies, among others. Consignment volumes at
our auctions are affected by a number of factors, including regular fleet upgrades
and reconfigurations, financial pressure, retirements, and inventory reductions, as
well as by the timing of the completion of major construction and other projects.

We compete directly for potential purchasers of industrial assets with other auction
companies. Our indirect competitors include truck and equipment manufacturers,
other third party methods, and equipment rental companies that offer an alternative
to purchasing. When sourcing equipment to sell at our auctions, we compete with
other auction companies, other third party methods, and equipment owners that
have traditionally disposed of equipment through private sales. Private sales between
equipment owners are the dominant form of transaction in the used truck and
equipment sectors.

We have several key strengths that we believe provide distinct competitive
advantages and will enable us to grow and make our auctions more appealing to
both buyers and sellers of industrial assets. Some of our principal strengths include:



The power of our brand, which is supported by our reputation for conducting only
unreserved auctions and our widely recognized commitment to honesty, integrity
and fair dealing.

 Our ability to transcend local market conditions and create a global marketplace

for industrial assets by attracting diverse audiences of mainly end-user bidders
from around the world to our auctions.

 Our size, our financial strength and access to capital, the international scope of
our operations, our extensive network of auction sites, and our marketing skills.

 Our ability to respond to market changes with innovative solutions to enhance

our live auctions with technology such as our online bidding service, our
proprietary Virtual Ramp, our Timed Auction system, as well as our 21 language
website, to provide stakeholders in the equipment world with a compelling value
proposition to meet their needs.

 Our in-depth experience in the marketplace, including our ability to gather and

leverage equipment valuation expertise and proprietary customer and equipment
databases.

 Our dedicated and experienced workforce, which allows us to, among other

things, enter new geographic markets, structure deals to meet our customers’
needs, provide high quality and consistent service to consignors and bidders and
operate an international network of auction sites that creates value for our
customers.

Strict adherence to the unreserved auction process is one of our founding principles
and, we believe, one of our most significant competitive advantages. When we say
“unreserved” we mean that there are no minimum bids or reserve prices on anything
sold at a Ritchie Bros. auction – each item sells to the highest bidder on sale day,
regardless of the price. In addition, consignors (or their agents) are not allowed to
bid on or buy back or in any way influence the selling price of their own equipment.
We maintain this commitment to the unreserved auction process because we believe
that an unreserved auction is an efficient, effective and fair way to exchange
equipment.

9We attract a broad base of bidders from around the world to our auctions. Our
worldwide marketing efforts help to attract bidders, and they are willing to travel
long distances or participate online in part because of our reputation for conducting
fair auctions. These diverse multinational, mainly end user bidding audiences provide
a global marketplace that allows our auctions to transcend local market conditions,
which we believe is a significant competitive advantage. Evidence of this is the fact
that in recent periods an average of approximately 60% of the value of equipment
sold at our auctions left the region of the sale (which we define as the state or
province of sale for North American and Australian auctions, or the country for sales
occurring in other geographies).

We believe that our ability to consistently draw significant numbers of local and
international bidders from many different end markets to our auctions, most of
whom are end users rather than resellers, is appealing to sellers of used equipment
and trucks and helps us to attract consignments to our auctions. Higher consignment
volumes attract more bidders, which in turn attract more consignments, and so on in
a self-reinforcing process that has helped us to achieve a history of significant
growth and momentum in our business.

Our performance in 2010 reflected the challenging environment in which we
operated, like many companies in our industry, and the difficulties we faced securing
equipment consignments to sell at our auctions. The widely hoped-for recovery in the
used equipment market did not materialize. The challenging environment was
particularly acute in the U.S., where equipment owners chose not to sell idle
equipment, either because the values of used equipment were too low or there was
no catalyst to force them to sell. In the face of considerable uncertainty in the
market, mainly around market values and construction spending, many owners held
on to under-utilized assets. In addition, they did not deploy additional capital in
upgrading or replacing their fleets, which would have stimulated the sale of used
equipment.

We believe the used equipment market has contracted considerably of over the last
three years, mainly as a result of the reduction in the number of used equipment
transactions, the drop in market values for used equipment and the diminished
production of new equipment. We also believe that the biggest contributor to our
reduced gross auction proceeds performance in 2010 was the mix of equipment
available for sale, which tended to be older and lower value equipment than we
would normally expect.

We believe that the fundamentals in our market are improving, as demonstrated by
a renewed sense of optimism among equipment owners. New equipment production
is increasing in the face of strong demand and many participants in the industry are
starting to return to what most would consider more normal equipment buying and
selling behaviour. We believe our operating decisions over the last few years leave us
well positioned to capitalize on strengthening in the used equipment market in the
coming years and to meet the needs of our customers.

Despite the challenges we faced in 2010, our business model is generally well suited
for all economic conditions. We also believe that, over the long term, designing and
executing an appropriate growth strategy will continue to be a significant
determinant of our ability to grow our earnings, in part because our share of the
world market for used equipment and trucks is so small. We are focused on growing
our market share by ensuring that our auctions offer compelling value to meet the

10needs of current and potential customers to make the process of buying and selling
equipment easy and confidence inspiring.

Growth Strategies

For the last several years we pursued a strategic framework that focused
simultaneously on three core areas: our people, including our sales and support
teams; our places, including our auction site network and geographical expansion;
and our processes, including IT and non-IT initiatives. Highlights of our execution in
this regard for the year ended December 31, 2010 included:

People

In 2010 we grew our sales team to 314 people, a 4% increase compared to the end
of 2009. Because our business depends on trusting relationships with our customers
to generate consignments to our auctions, it can often take two to three years for a
sales person to achieve a suitable level of productivity. However, we expect that
investing in our sales force and giving them the tools and training to be more
productive will help us to achieve our longer-term growth objectives.

Places

During 2010 we added five auction sites to our network and replaced two regional
auction units and one permanent site with new permanent auction sites. During the
fourth quarter we decided to discontinue having auctions in India for the time being,
although we will continue to have personnel and maintain a sales office in the
country building relationships with equipment owners.

Processes

We introduced our new Timed Auction system to 23 of our sites during 2010. This
new technology is used to sell smaller items, such as consumer goods and
equipment attachments, in an online Timed Auction, without an auctioneer and
therefore with more flexibility and convenience for our bidders. In addition to offering
a higher level of service for our customers, this system enables us to sell lower-value
lots more efficiently and at lower cost. We also launched our new 21 language
website, www.rbauction.com, and experienced a 14% increase in unique visitors to
our website in 2010 compared to 2009.

Strategy update

In the fourth quarter of 2010 we completed a thorough update of our strategic plan,
identifying strategic initiatives to be undertaken over the next five years. We
continue to focus on our core unreserved auction model with a view to adding
solutions and streamlining processes to enhance the value we provide to our existing
customers, as well as make our auctions more appealing to new customers. In
addition, we want to extend our services where we can leverage our competitive
advantages. Our people, places and process framework has evolved and matured
into three strategic pillars that incorporate many of the same concepts: grow, add,
perform.

In 2010, we updated our core values and refined our mission statement to better
align with our updated strategy and guide our behaviour in the years ahead. Our

11mission is to provide compelling business solutions that enable the world’s builders
to easily and confidently exchange equipment. Our customers are the people who
buy and sell equipment and trucks, including the people who build our homes and
offices, schools and community centers, bridges and roads, as well as the people
who grow our food and those who support all of these activities, such as finance
companies, rental companies, transportation companies and equipment dealers,
among others.

Our core values support three strategic pillars, which are designed to help us achieve
our mission. An overview of our strategic pillars follows:

GROW our core auction business

We believe unreserved public auctions offer significant benefits over other sales
channels, including certainty, fairness and transparency. We intend to focus on
increasing our market share with our traditional customer groups, while
simultaneously doing more business with new customer groups and in new markets.
We plan to undertake deeper market research to understand more clearly why
equipment owners do and do not use our services, and to help us meet the needs of
the large number of equipment owners who do not even know about Ritchie Bros.

We believe that most of our near-term growth will come from our established
regions, primarily the United States and Western Europe, and that emerging markets
such as China, Brazil and other developing countries offer significant potential for
growth in the long-term.

In addition, we intend to add at least one new auction site to our network each year,
as well as replace a number of existing auction sites as necessary to provide capacity
for increased consignment volumes. Our auction site network supports our long-term
growth and is a critical strategic advantage, which helps us to sustain efficient and
scalable growth. We also intend to continue to hold offsite auctions in new regions to
expand the scope of our operations.

Another key focus of this pillar is to streamline and simplify our auctions, to make
them easy for our customers. Many of our new customers have little or no
experience buying or selling at unreserved auctions; we want to make the process as
easy and hassle-free as possible, so they feel confident on auction day and
throughout the whole process.

Beginning July 1, 2011 we plan to introduce our enhanced equipment information
program. We will be offering enhanced information about the equipment to be sold in
our auctions to all customers free of charge. We expect that this information will help
our customers feel more confident and should make our auctions more appealing to
a broader range of equipment owners.

To address the cost of our new initiatives, as well as the costs of other buyer-focused
initiatives launched in recent years, we plan to simplify and expand our fee structure
effective July 1, 2011. We will eliminate certain fees, including our internet purchase
fee, and expand the scope of our administrative fee that we charge to buyers. The
current 10% administrative fee will continue to be charged on all lots that sell for
$2,500 or less, and we intend to introduce a 2.5% administrative fee to be charged
on all lots that sell for more than $2,500, with a maximum fee of $950 per lot (or the
near equivalent amount in the currency of the auction). We anticipate an increase in

12both revenues and expenses in 2011 and future years as a result of the buyer-
focused initiatives, with an expected positive net benefit to earnings.

ADD new business and information solutions

Technology and innovation have played key roles in our business in the past,
allowing us to enhance our auctions and broaden their appeal to more equipment
owners. We will continue to harness the latest technology to supplement and
enhance our auction services, and investigate new services to meet the needs of
equipment owners that are not being met by our unreserved auctions.

We intend to introduce a range of additional value-added services in 2011, including
a customer finance program, enhanced shipping services, a customer insurance
program and other ancillary services.

We intend to invest in enhanced business intelligence and data analysis tools to
improve our understanding of the equipment market, and position Ritchie Bros. as a
knowledge and information authority. We also intend to continue to enhance
rbauction.com by making it easier to use, more powerful and more valuable to
equipment owners, with the goal of becoming the preferred global equipment
website.

PERFORM by building an inspired high-performance, customer-focused Ritchie Bros.
team

To maintain our high standards of customer service, we employ people who we
believe embody our core values, especially the value of putting our customers first.

Our primary focus areas in the coming years will be improving our sales force
productivity, employee engagement and management bench strength. We intend to
be even more effective in developing future managers and we intend to take steps to
improve our ability to attract, develop and retain key players. We also plan to take
steps to refine sales and operational management roles to better equip our sales
force for success. We are maintaining our long-term target of increasing our sales
force by an average of 5% to 10% per year.

Operations

The majority of our industrial auctions are held at our permanent auction sites,
where we own the land and facilities, or at regional auction units, where we usually
lease the land and typically have more modest facilities. We also hold off-site
auctions at temporary locations, often on land owned by one of the main consignors
to the particular auction. Most of our agricultural auctions are off-site auctions that
take place on the consignor’s farm. During 2010, 92% of our gross auction proceeds
was attributable to auctions held at our permanent auction sites and regional auction
units (2009 – 90%). Gross auction proceeds represent the total proceeds from all
items sold at our auctions (please see “Sources of Revenue and Revenue
Recognition” below).

During 2010, we had approximately 340,000 bidder registrations at our industrial
auctions, compared to approximately 336,000 in 2009. In 2010 we generated over
40,000 industrial asset consignments, which was 8% greater than the 37,000

13generated in 2009. We handled approximately 277,000 industrial lots in 2010
compared to 283,000 lots in 2009.

During 2010, we conducted 230 unreserved industrial auctions at locations in North
and Central America, Europe, the Middle East, Australia and India (2009 – 195
auctions). We also held 106 unreserved agricultural auctions during the year in
Canada (2009 – 132). Although our auctions varied in size, our average industrial
auction in 2010 attracted over 1,400 bidder registrations (2009 – over 1,700) and
featured over 1,200 lots (2009 – over 1,400) consigned by 175 consignors (2009 –
190), generating average gross auction proceeds of approximately $13.4 million per
auction, compared to approximately $17.3 million in 2009. Our agricultural auctions
in 2010 averaged gross auction proceeds of approximately $1.8 million compared to
$0.9 million in 2009.

We sold over $872 million of equipment, trucks and other assets to online bidders
during 2010, representing a 5% increase compared to 2009 (2009 – approximately
$830 million). Our online sales growth in 2010 cemented our position as the world’s
largest seller of industrial equipment to online buyers.

We launched our new website in April, 2010 to enable us to interact more effectively
with customers in the online environment. We experienced an increase of 14% in the
total number of unique visitors to the site during the year compared to 2009. We had
roughly 3.2 million unique visitors during 2010 and they performed nearly 35 million
equipment searches, plus an additional 3 million auction results searches. With its
additional language capabilities, we believe our new website has opened up our
auctions to previously untapped market of non-English speaking equipment buyers
and sellers. We have seen an increase in site visits of over 11% from non-English
speakers compared to 2009, who accounted for over 18% of traffic on the website.

In 2010, approximately 52% of our auction revenues were earned from operations in
the United States (2009 – 54%), 23% were generated from auctions in Canada
(2009 – 24%) and the remaining 25% were earned from operations in countries
other than the United States and Canada, primarily in Europe, the Middle East,
Australia, and Mexico (2009 – 22%). We had 1,162 full-time employees at December
31, 2010, including 314 sales representatives and 13 trainee territory managers,
compared to 1,148 full-time employees, 302 sales representatives and 19 trainee
territory managers at the end of 2009.

We are a public company and our common shares are listed under the symbol “RBA”
on the New York and Toronto Stock Exchanges. On February 22, 2011 we had
105,797,120 common shares issued and outstanding and stock options outstanding
to purchase a total of 3,085,697 common shares.

Sources of Revenue and Revenue Recognition

Gross auction proceeds represent the total proceeds from all items sold at our
auctions. Our definition of gross auction proceeds may differ from those used by
other participants in our industry. Gross auction proceeds is an important measure
we use in comparing and assessing our operating performance. It is not a measure
of our financial performance, liquidity or revenue and is not presented in our
consolidated financial statements. We believe that auction revenues, which is the
most directly comparable measure in our Statements of Operations, and certain
other line items, are best understood by considering their relationship to gross

14auction proceeds. Auction revenues represent the revenues we earn in the course of
conducting our auctions. The portion of gross auction proceeds that we do not retain
is remitted to our customers who consign the items we sell at our auctions.

Auction revenues are comprised of auction commissions earned from consignors
through straight commission and guarantee contracts, net profits or losses on the
sale of inventory items, administrative and documentation fees on the sale of certain
lots, auction advertising fees, and the fees applicable to purchases made through our
internet and proxy bidding systems. All revenue is recognized when the auction sale
is complete and we have determined that the auction proceeds are collectible.

Straight commissions are our most common type of auction revenues and are
generated by us when we act as agent for consignors and earn a pre-negotiated,
fixed commission rate on the gross sales price of the consigned equipment at
auction. In recent periods, straight commission sales have represented
approximately 75-80% of our gross auction proceeds volume on an annual basis.

In the normal course of business, we sometimes guarantee minimum sales proceeds
to the consignor and earn a commission based on the actual results of the auction,
typically including a pre-negotiated percentage of any sales proceeds in excess of the
guaranteed amount. The consigned equipment is sold on an unreserved basis in the
same manner as other consignments. If the actual auction proceeds are less than the
guaranteed amount, our commission is reduced, and if the proceeds are sufficiently
less, we can incur a loss on the sale. We factor in a higher rate of commission on
these sales to compensate for the increased risk we assume.

Our financial exposure from guarantee contracts fluctuates over time, but in recent
periods industrial and agricultural auction guarantees have had an average period of
exposure (days remaining until date of auction as at quarter-end) of approximately
30 days and 80 days, respectively. At December 31, 2010, our outstanding industrial
and agricultural guarantees totalled approximately $29 million, of which
approximately $1 million had already been sold at our auctions as of the date of this
discussion. The combined financial exposure from guarantee contracts at any period
end can fluctuate significantly depending on the timing of auctions; however the
quarter-end balances averaged approximately $44 million over the last 12 months.
Losses, if any, resulting from guarantee contracts are recorded in the period in which
the relevant auction is completed, unless the loss is incurred after the period end but
before the financial reporting date, in which case the loss is accrued in the financial
statements for the period end.

Auction revenues also include the net profit or loss on the sale of inventory in cases
where we acquire ownership of equipment for a short time prior to an auction sale.
We purchase equipment for specific auctions and sell it at those auctions in the same
manner as consigned equipment. During the period that we retain ownership, the
cost of the equipment is recorded as inventory on our balance sheet. The net gain or
loss on the sale is recorded as auction revenues.

We generally refer to our guarantee and outright purchase business as our at risk, or
underwritten, business. In recent periods, our at risk business represented
approximately 20% to 25% of gross auction proceeds on an annual basis.
Competition for equipment consignments has intensified in recent months, and this
will likely result in an increase in the relative proportion of our at risk business in
2011.

15The choice by consignors between straight commission, guarantee, or outright
purchase arrangements depends on many factors, including the consignor’s risk
tolerance and sale objectives. In addition, we do not have a target for the relative
mix of contracts. As a result, the mix of contracts in a particular quarter or year
fluctuates and is not necessarily indicative of the mix in future periods. The
composition of our auction revenues and our auction revenue rate (i.e. auction
revenues as a percentage of gross auction proceeds) are affected by the mix and
performance of contracts entered into with consignors in the particular period and
fluctuates from period to period. Our auction revenue rate performance is presented
in the table below. Our past experience has shown that our auction revenue rate is
difficult to estimate precisely, and over the past two years our quarterly rate has
ranged between 10.58% and 11.06%.

Quarterly Auction Revenue Rate and Trailing Twelve
Month Average Auction Revenue Rate - 5 Year History (1)

11.50%

11.00%

10.50%
10.00%

9.50%

9.00%
8.50%

8.00%

7.50%
7.00%

Trailing Twelve Month Average Auction Revenue Rate

Quarterly Auction Revenue Rate

(1) The average auction revenue rate for the first quarter in 2010 includes the

results of the auction of Apoise; had these been excluded the auction revenue
rate would have been 11.33%.

In general, the largest contributor to the variability of our auction revenue rate is the
performance, rather than the amount, of our at risk business. In a period when our
at risk business performs better than average, our auction revenue rate typically
exceeds the expected average rate. Conversely, if our at risk business performs
below average, our auction revenue rate will typically be below the expected average
rate. Our above trend auction revenue rate over the past two years has been due
primarily to the strong performance of our at risk business. We believe this strong
performance was related in part to the economic environment; as competition
increase in the future, the performance of our at risk business may deteriorate,
which will impact our auction revenue rate.

16The planned changes to our fee structure that will take effect July 1, 2011, as
discussed above, will have a positive impact on our auction revenues and therefore,
our auction revenue rate. The expected impact in 2011 on our auction revenue rate
will be an increase in the range of 0.7%. We expect this incremental revenue will
more than offset the incremental costs of our strategic initiatives discussed
previously.

Our gross auction proceeds and auction revenues are influenced by the seasonal
nature of the auction business, which is determined mainly by the seasonal nature of
the construction and natural resources industries. Gross auction proceeds and
auction revenues tend to be higher during the second and fourth calendar quarters,
during which time we generally conduct more business than in the first and third
calendar quarters. This seasonality contributes to quarterly variability in our net
earnings because a significant portion of our operating costs is relatively fixed.

Gross auction proceeds and auction revenues are also affected on a period-to-period
basis by the timing of major auctions. In newer markets where we are developing
operations, the number and size of auctions and, as a result, the level of gross
auction proceeds and auction revenues, are likely to vary more dramatically from
period to period than in our established markets where the number, size and
frequency of our auctions are more consistent. In addition, economies of scale are
achieved as our operations in a region evolve from conducting intermittent auctions,
to establishing a regional auction unit, and ultimately to developing a permanent
auction site. Economies of scale are also achieved when our auctions increase in size.

Because of these seasonal and period-to-period variations, we believe that our gross
auction proceeds, auction revenues and net earnings are best compared on an
annual basis, rather than on a quarterly basis.

Overall Performance

Our gross auction proceeds were $3.28 billion for the year ended 2010, which is a
decrease of 6% from 2009. The decrease is mainly attributable to the continuing
trend from 2009 where equipment owners have continued to hold onto otherwise idle
assets for various reasons, including low interest rates and uncertainty around
equipment values, construction spending and other factors. We believe that the
dramatic drop in the production and sale of new equipment over the last few years
has also affected our ability to grow our gross auction proceeds.

Foreign exchange fluctuations had a modest impact on our 2010 gross auction
proceeds. Applying the foreign exchange rates in effect in 2009 our reported gross
auction proceeds in 2010 would have been approximately $60 million lower.

For the year ended December 31 2010, we recorded auction revenues of $357.4
million and net earnings of $65.9 million, or $0.62 per diluted common share. This
performance compares to auction revenues of $377.2 million and net earnings of
$93.5 million, or $0.88 per diluted share, for the year ended December 31, 2009. We
ended 2010 with working capital of $45.3 million, compared to $30.5 million at
December 31, 2009. The increase in our working capital was a result of reduced
capital expenditures and positive operating cash flow, offset by higher dividend
payments during the year.

17Adjusted net earnings for the year ended December 31, 2010 were $65.2 million, or
$0.61 per diluted share, compared to adjusted net earnings of $92.0 million, or
$0.87 per diluted share for the year ended December 31, 2009. We define adjusted
net earnings as financial statement net earnings excluding the after-tax effects of
sales of excess properties and significant foreign exchange gains or losses resulting
from financing activities that we do not expect to recur in the future (please see our
reconciliation below).

Adjusted net earnings is a non-GAAP measure that does not have a standardized
meaning, and is therefore unlikely to be comparable to similar measures presented
by other companies. We believe that comparing adjusted net earnings as defined
above for different financial periods provides more useful information about the
growth or decline of our net earnings for the relevant financial period, and identifies
the impact of items which we do not consider to be part of our normal operating
results.

Our adjusted net earnings in 2010 decreased by approximately 29% compared to
2009, primarily as a result of decreased auction revenues and increased general and
administrative expenses and depreciation. Although our auction revenues decreased
during 2010, other measures of our business volume were increasing or being
maintained, including the number of consignments and the number of bidder
registrations at our auctions. Also, recent additions to our auction site network,
business systems, and sales team contributed to an increase in our overhead
expenditures and depreciation expense in 2010. Our investments in people, IT
infrastructure and our auction site network are long term in nature and we made a
conscious decision to maintain our model in the face of recent gross auction proceeds
growth challenges.

A reconciliation of our net earnings under Canadian GAAP to adjusted net earnings is
as follows:

Net earnings under Canadian GAAP ..
Gain on sale of excess property(1) .....
Net foreign exchange impact on
financing transactions(2) ..................
Tax relating to reconciling items.......
Adjusted net earnings .....................

Year ended December 31,

2010
65,913
(1,230)

474
65,157

2009
93,452
(1,097)
(759)

446
92,042

(1) During the year ended December 31, 2010, we completed the sale of our former

Houston, Texas, permanent auction site. In 2009, we sold our former Minneapolis,
Minnesota, permanent auction site.

(2) During the year ended December 31, 2009, we recorded a foreign exchange gain of

$759 ($664, or 0.01 per diluted share, after tax) on U.S. dollar denominated bank debt
held by a subsidiary that has the Canadian dollar as its functional currency. We have
highlighted this amount because in January 2009, the Canadian subsidiary assigned the
bank debt to an affiliate whose functional currency is the U.S. dollar to eliminate the
future impact of currency fluctuations. We did not settle any long-term intercompany
loans during 2010 that resulted in a significant foreign exchange adjustment. We do not
expect the foreign exchange gains or losses on these financing transactions to recur in
future periods.

18Selected Annual Information

The following selected consolidated financial information as at December 31, 2010,
2009 and 2008 and for each of the years in the three-year period ended December
31, 2010 has been derived from our audited consolidated financial statements. This
data should be read together with those financial statements and the risk factors
described below.

Our consolidated financial statements are prepared in U.S. dollars in accordance with
Canadian GAAP. As disclosed in note 13, Canadian GAAP differs in certain respects
from accounting principles generally accepted in the United States.

Year Ended December 31,
2009

2008

2010

Statement of Operations Data:

Auction revenues (1) ...................... $ 357,369
(47,021)
Direct expenses.............................
310,348
(218,345)
(1,157)
90,846
24,933
65,913

Operating expenses (2)....................
Other income (expense) (3) .............
Earnings before income taxes..........
Income taxes ...............................
Net earnings ................................. $

$ 377,211
(49,890)
327,321
(200,073)
4,275
131,523
38,071
93,452

$ 354,818
(49,750)
305,068
(189,320)
23,536
139,284
37,884
$ 101,400

Net earnings per share — basic ....... $
Net earnings per share — diluted .....

0.62
0.62

Cash dividends declared per share ... $

0.41(4) $

0.89
0.88

0.38

0.97
0.96

0.34

Balance Sheet Data (year end):

Working capital (including cash) ...... $
Capital assets................................
Total assets ..................................
Long-term liabilities .......................

45,333
627,230
870,818
155,556

30,510
597,945
857,821
145,213

$ 47,109
453,642
689,488
77,495

Statement of Cash Flows Data:
Capital asset additions.................... $

62,284

$ 157,416

$ 145,024

(1) Auction revenues are comprised of commissions earned from consignors through
straight commission and guarantee contracts, the net profit or loss on the sale of
inventory items, internet and proxy purchase fees, administrative and documentation
fees on the sale of certain lots, and auction advertising fees.

(2) Operating expenses include depreciation and amortization and general and

administrative expenses.

(3) Other income in 2009 included a $759 foreign exchange gain ($664, or $0.01 per diluted
share, after tax) on U.S. dollar denominated bank debt held by a subsidiary that has the
Canadian dollar as its functional currency. The equivalent amount in 2008 was a foreign
exchange loss of $5,835 ($4,989, or $0.05 per diluted share, after tax). We have
highlighted this amount because in January 2009, the Canadian subsidiary assigned the
bank debt to an affiliate whose functional currency is the U.S. dollar to eliminate the
future impact of these currency fluctuations. We did not settle any long-term
intercompany loans in 2010 that resulted in a significant foreign exchange adjustment.
In addition, other income in 2010 included gains of $1,230 ($756 or $0.01 per diluted

19share after tax) on the sale of our former Houston, Texas permanent auction site; other
income in 2009 included gains of $1,097 ($746, or $0.01 per diluted share after tax for
2009) on the sale of our Minneapolis, Minnesota, permanent auction site; other income
in 2008 included an $8,304 ($7,295, or $0.07 per diluted share, after tax) gain recorded
on the sale of our former headquarters property located in Richmond, British Columbia.

(4) In addition to the cash dividends declared and paid in 2010, we declared a cash dividend

of $0.105 per common share on January 24, 2011 relating to the quarter ended
December 31, 2010, which is not included in this amount.

Results of Operations

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

We conduct operations around the world in a number of different currencies, but our
reporting currency is the U.S. dollar. In 2010, approximately 40% of our revenues
and approximately 60% of our operating costs were denominated in currencies other
than the U.S. dollar.

The main currencies other than the U.S. dollar in which our revenues and operating
costs are denominated are the Canadian dollar and the Euro. In recent periods there
have been significant fluctuations in the value of the Canadian dollar and the Euro
relative to the U.S. dollar. These fluctuations affect our reported auction revenues
and operating expenses when non-U.S. dollar amounts are converted into U.S.
dollars for financial statement reporting purposes. It is difficult, if not impossible, to
quantify how foreign exchange rate movements affect such variables as the supply of
and demand for the assets we sell. However, excluding these impacts, the effect of
foreign exchange fluctuations on our translated auction revenues and operating
expenses in our consolidated financial statements has been largely offset, making
the impact of the currency fluctuation on our net earnings minimal.

United States Dollar Exchange Rate Comparison

Years ended
December 31,

2010

%
Change
in U.S.$

2009

%
Change
in U.S.$

2008

Value of one U.S. dollar:

Year-end exchange rate:

Canadian dollar ...................$0.9976
Euro ................................€0.7479

-5.1% $1.0513
€0.6985
7.1%

-13.6% $1.2168
-2.4% €0.7159

Average exchange rate:

Canadian dollar ...................$1.0301
Euro ................................€0.7549

-9.8% $1.1415
€0.7197
4.9%

7.0%
5.2%

$1.0671
€0.6839

20Auction Revenues

Years ended December 31,

2010

2009

Auction revenues – United States (1) ... $ 185,486
Auction revenues – Canada (1)............
82,894
Auction revenues – Europe (1) ............
51,428
Auction revenues – Other (1) ..............
37,561
Total auction revenues...................... $ 357,369

$ 202,415
90,148
57,714
26,934
$ 377,211

%
Change

-8%
-8%
-11%
39%
-5%

Gross auction proceeds ...................

$ 3,277,771

$3,492,021

-6%

Auction revenue rate ......................

10.90%

10.80%

(1) Information by geographic segment is based on auction location.

Our auction revenues decreased in 2010 compared to 2009 primarily as a result of
lower gross auction proceeds, but was partially offset by a higher auction revenue
rate. Our at risk business represented approximately 24% of total gross auction
proceeds for the year (2009 – 21%). The mix of contracts in 2010 was roughly
consistent with our experience in recent periods. Our gross auction proceeds in 2010
in local currency, primarily being the U.S., Canadian and Australian dollar and the
Euro, decreased by 9% compared to 2009.

Our auction revenue rate was 10.90% for 2010 (2009 – 10.80%). The increase was
primarily attributable to the improved performance of our straight commission
business and higher fee income in 2010.

Our auction revenues and our net earnings are influenced to a great extent by small
changes in our auction revenue rate. For example, a 10 basis point (0.1%) increase
or decrease in our auction revenue rate during 2010 would have decreased auction
revenues by approximately $3.3 million, of which approximately $2.4 million, or
$0.02 per diluted share, would have flowed through to net earnings after tax in our
Statement of Operations, assuming no other changes. This factor is important to
consider when evaluating our current and past performance, as well as when
assessing future prospects.

Direct Expenses

Years ended December 31,

2010

2009

%
Change

Direct expenses .............................
Direct expenses as a percentage of

gross auction proceeds .................

$ 47,021

$ 49,890

-6%

1.43%

Direct expenses are the costs we incur specifically to conduct an auction. Direct
expenses include the costs of hiring temporary personnel to work at the auction,
advertising costs directly related to the auction, travel costs for employees to attend
and work at the auction, security personnel hired to safeguard equipment at the

21auction site and rental expenses for temporary auction sites, among other costs. At
each quarter end, we estimate the direct expenses incurred with respect to auctions
completed near the end of the period. In the subsequent quarter, these accruals are
adjusted, to the extent necessary, to reflect actual costs incurred.

Our direct expense rate, which represents direct expenses as a percentage of gross
auction proceeds, fluctuates from period to period based in part on the size and
location of the auctions we hold during a particular period. The direct expense rate
generally decreases as the average size of our auctions increases. In addition, we
usually experience lower direct expense rates for auctions held at our permanent
auction sites compared to auctions held at offsite locations, mainly as a result of the
economies of scale and other efficiencies that we typically experience at permanent
auction sites. Our direct expense rate for 2010 was consistent with the rate we
experienced in 2009.

Depreciation and Amortization Expense

Years ended December 31,

2010

2009

%
Change

Depreciation and amortization expense .... $ 37,813

$ 31,761

19%

Depreciation is calculated on either a straight line or a declining balance basis on
capital assets employed in our business, including buildings, computer hardware and
software, automobiles and yard equipment.

During 2010 we determined that certain assets on which depreciation was charged
had an indefinite life and therefore should not have been depreciated. The
accumulated depreciation on these assets was $2.7 million which was reversed in the
first quarter of 2010 as an immaterial adjustment, decreasing depreciation expense
for the year.

Offsetting this reduction in depreciation expense was an increase relating to new
assets that we have put into service over the last two years, such as our 13 new and
replacement auction sites and new computer hardware and software, including our
new website and Timed Auction system. We expect our depreciation in future periods
to increase in line with the type and magnitude of our on-going capital expenditures.

General and Administrative Expenses

Years ended December 31,

2010

2009

%
Change

General and administrative expenses
G&A as a percentage of gross

auction proceeds .........................

$180,532

$168,312

5.5%

4.8%

General and administrative expenses, or G&A, include such expenditures as
personnel (salaries, wages, bonuses and benefits), information technology, non-
auction related travel, repairs and maintenance, leases and rentals and utilities, and
the resulting effects of foreign currency fluctuations. Personnel costs represent
approximately 60% of our G&A on an annual basis.

22The increase in our G&A for 2010 compared to 2009, was primarily a result of foreign
currency fluctuations as well as higher costs relating to our auction site network and
IT infrastructure.

Foreign currency fluctuations resulted in an increase in our G&A of approximately
$6.5 million in 2010, compared to 2009, in connection with the translation into U.S.
dollars for reporting purposes of our foreign operations’ G&A expenses.

The remaining increase in G&A expenses primarily resulted from higher
infrastructure costs related to our new and replacement auction sites and
administrative facilities put into use over the past 24 months. These costs included
rent, property tax and utilities, among others, and the increase in 2010 totalled $4.8
million.

Interest Expense

Years ended December 31,

2010

2009

%
Change

Interest expense ............................

$ 5,216

544

859%

Interest expense is comprised mainly of interest paid on long-term debt and
revolving credit facilities. Interest expense increased significantly in 2010 compared
to 2009 primarily due to a lower amount of interest capitalized to projects under
development in 2010, as well as full year of interest in connection with additional
debt taken on in the second and third quarters of 2009.

Interest expense varies depending on the amount of interest capitalized to auction
site development projects, which is driven by the number and size of projects that
the Company has in progress during a given period.

Interest Income

Years ended December 31,

2010

2009

%
Change

Interest income .............................

$ 2,035

$ 2,400

-15%

Interest income is earned on our excess cash and receivable balances. Our interest
income fluctuates from period to period depending on the timing of the receipt of
auction proceeds and may be affected by the timing, size, number and location of
auctions held during the period.

Foreign Exchange Gain (Loss)

Years ended December 31,

2010

2009

%
Change

Foreign exchange gain (loss) ...........

(49)

$ (1,085)

95%

23Foreign exchange gains or losses arise when foreign currency denominated monetary
items are revalued to the exchange rates in effect at the end of the reporting period.
Examples of these items include accounts receivable and accounts payable.

Gain on Disposition of Capital Assets

Years ended December 31,

2010

2009

%
Change

Gain on disposition of capital assets.......

250

647

-61%

The gain on disposition of capital assets in 2010 included a gain of $1.2 million ($0.7
million after tax) recorded on the sale of our former Houston, Texas, permanent
auction site, offset by losses on the disposal of other assets. The gain on disposition
of capital assets in 2009 included a $1.1 million gain ($0.7 million after tax) on the
sale of our former Minneapolis, Minnesota permanent auction site, which was offset
by losses on disposal of other assets.

Income Taxes

Years ended December 31,

2010

2009

%
Change

Income taxes.................................
Effective income tax rate.................

$ 24,933

$ 38,071

-35%

27.4%

28.9%

Income taxes have been calculated using the tax rates in effect in each of the tax
jurisdictions in which we earn our income. The effective tax rate for the year ended
December 31, 2010 was lower than the effective tax rate for the year ended
December 31, 2009 primarily due to a higher proportion of income being taxed in
jurisdictions with lower tax rates. Income taxes for the year ended December 31,
2009 included a favourable tax adjustment in the amount of $1.9 million relating to
uncertain tax positions. Income tax rates in future periods will fluctuate depending
upon the impact of unusual items and the level of earnings in the different tax
jurisdictions in which we earn our income.

Net Earnings

Years ended December 31,

2010

2009

%
Change

Net earnings before income taxes.....
Net earnings..................................
Net earnings per share – basic .........
Net earnings per share – diluted ......

$90,846
65,913
0.62
0.62

$ 131,523
93,452
0.89
0.88

-31%
-30%
-30%
-30%

Our net earnings decreased in 2010, compared to 2009 primarily as a result of lower
gross auction proceeds, increased G&A expenses and depreciation, offset in part by a
slightly increased auction revenue rate. Adjusted earnings for 2010 were $65.2
million, or $0.61 per diluted share, compared to adjusted net earnings of $92.0
million, or $0.87 per diluted share in 2009, representing a 30% decrease in 2010.

24Summary of Fourth Quarter Results

We earned auction revenues of $88.3 million and net earnings of $13.5 million, or
$0.13 per diluted share, during the fourth quarter of 2010. Adjusted net earnings for
the fourth quarter of 2010 were $13.5 million, or $0.13 per diluted share. This
compares to auction revenues of $97.1 million and net earnings of $21.8 million, or
$0.21 per diluted share, and adjusted net earnings $21.1 million, or $0.20 per
diluted share, in the fourth quarter of 2009.

A reconciliation of our net earnings under Canadian GAAP to adjusted net earnings
for each of the quarters ended December 31, 2010 and 2009 is as follows:

Net earnings under Canadian GAAP ......
Gain on sale of excess property(1) .........
Tax relating to reconciling items ...........
Adjusted net earnings .........................

Quarter ended
December 31,

2010
$ 13,517

–
–

$ 13,517

2009
$ 21,834
(1,097)
351
$ 21,088

(1) During the three months ended December 31, 2009, we recorded a gain of $1,097 ($746,

or $0.01 per diluted share, after tax) on the sale of our Minneapolis, Minnesota,
permanent auction site.

Our gross auction proceeds were $798.6 million for the quarter ended December 31,
2010, which is a decrease of 10% compared to the comparable period in 2009. We
believe that this decrease in our gross auction proceeds was mainly attributable to
the factors discussed above in Overall Performance. Had the foreign exchange rates
in effect in the fourth quarter of 2009 been applied to the gross auction proceeds
achieved in the fourth quarter of 2010, our reported gross auction proceeds would
have been approximately $2.1 million higher.

Our auction revenue rate increased to 11.06% in the fourth quarter of 2010, from
10.90% in the comparable period in 2009, mainly as a result of the stronger
performance of our at risk business in the fourth quarter of 2010.

Our G&A expenses increased to $46.3 million in the fourth quarter of 2010,
compared to $45.0 million in the comparable 2009 period. During the fourth quarter
of 2010, the translation into U.S. dollars of our non-U.S. operations’ G&A expenses
resulted in an increase in consolidated G&A expenses of approximately $0.4 million.

Adjusted net earnings in the fourth quarter of 2010 decreased by 36% compared to
2009, primarily due to lower auction revenues and higher operating expenses.

Capital asset additions were $16.1 million for the fourth quarter of 2010, compared
to $40.1 million in the fourth quarter of 2009. Our capital expenditures in the fourth
quarter of 2010 related primarily to acquisition of land in Phoenix, Arizona, as well as
construction at our existing regional auction units in Las Vegas, Nevada; Dubai,
United Arab Emirates; and our permanent auction site in Moerdijk, the Netherlands.

25Summary of Quarterly Results

The following tables present our unaudited consolidated quarterly results of
operations for each of our last eight fiscal quarters. This data has been derived from
our unaudited consolidated financial statements, which were prepared on the same
basis as our annual audited consolidated financial statements and, in our opinion,
include all normal recurring adjustments necessary for the fair presentation of such
information. These unaudited quarterly results should be read in conjunction with our
audited consolidated financial statements for the years ended December 31, 2010
and 2009, and our discussion above about the seasonality of our business.

Q4 2010

Q3 2010

Q2 2010

Q1 2010(2)

Gross auction proceeds (4) ...............$798,566

$ 750,912

$ 951,634

$ 776,659

Auction revenues ...........................$ 88,296
Net earnings................................13,517
Adjusted net earnings .....................13,517

82,229
13,478
13,478

$ 103,300
26,118
25,362

$ 83,544

12,800(1)
12,800(1)

Net earnings per share —
basic ............................................$
Net earnings per share —
diluted .......................................... 0.13
Adjusted net earnings per
share — diluted.............................. 0.13

0.13

0.25

0.12

0.13

0.25

0.24

0.12

Q4 2009

Q3 2009

Q2 2009

Q1 2009

Gross auction proceeds (4) ...............$891,111

$ 693,288

$1,109,331

$ 798,291

Auction revenues ...........................$ 97,143
Net earnings................................21,834
Adjusted net earnings .....................21,088

75,934
12,892
12,892

$ 120,459
38,847
38,847

83,675
19,879(3)
19,215

Net earnings per share —
basic ............................................$
Net earnings per share —
diluted .......................................... 0.21
Adjusted net earnings per
share — diluted.............................. 0.20

0.21

0.12

0.37

0.19

0.12

0.37

0.19

0.18

(1) In the first quarter of 2010, we determined that certain assets on which depreciation was

charged had an indefinite life and therefore should not have been depreciated. The
accumulated depreciation on these assets was $2,668, which was reversed in the period
as an immaterial adjustment, resulting in a $2,668 decrease to depreciation expense.

(2) Results for the first quarter of 2010 included $46.8 million of gross auction proceeds, $0.9
million of auction revenues and $0.2 million of direct expenses generated from the auction
of Apoise.

(3) Net earnings included the impact of foreign exchange rates on U.S. dollar denominated
bank debt held by a Canadian subsidiary, which was assigned in January 2009 to an

26affiliate whose functional currency is the U.S. dollar, to eliminate the impact of these
currency fluctuations on this debt in future periods. Please see further discussion above
under “Overall Performance”. The foreign exchange impact of this bank debt in the first
quarter of 2009 was a $759 gain ($664, or $0.01 per diluted share, after tax).

(4) Gross auction proceeds represents the total proceeds from all items sold at our auctions.

Gross auction proceeds is not a measure of revenue and is not presented in our
consolidated financial statements. Please see further discussion above under “Sources of
Revenue and Revenue Recognition.”

Liquidity and Capital Resources

December 31,

2010

2009

%
Change

Working capital ..............................

$ 45,333

$ 30,510

49%

Our cash position can fluctuate significantly from period to period, largely as a result
of differences in the timing, size and number of auctions, the timing of the receipt of
auction proceeds from buyers, and the timing of the payment of net amounts due to
consignors. We generally collect auction proceeds from buyers within seven days of
the auction and pay out auction proceeds to consignors approximately 21 days
following an auction. If auctions are conducted near a period end, we may hold cash
in respect of those auctions that will not be paid to consignors until after the period
end. Accordingly, we believe that working capital, including cash, is a more
meaningful measure of our liquidity than cash alone. For 2010, our working capital
increased by $14.8 million, primarily as a result of reduced capital expenditures and
positive operating cashflows, offset by higher dividend payments during the year.

There are a number of factors that could potentially impact our working capital, such
as the volume and profitability of our auctions and our capital expenditures.
However, we have sufficient borrowing capacity in the event of any temporary
working capital requirements.

As at December 31, 2010, we had $1.1 million of short term debt, which consisted of
draws on our revolving credit facilities with a weighted average interest rate of
2.58% per annum. This left $436 million of unused credit facilities, including a $148
million five-year committed credit facility expiring in January 2014, and a $190
million three-year uncommitted non-revolving credit facility expiring in November
2011. We believe our existing working capital and credit facilities are sufficient to
satisfy our present operating requirements, as well as to fund future growth
initiatives, such as property acquisitions and development. We continue to have
adequate access to capital resources; however, there can be no assurance that the
cost or availability of future borrowings under our credit facilities will not be
materially affected should there be another capital market disruption.

27Contractual Obligations

Total

In 2011

Payments Due by Period
In 2012
and
2013

In 2014
and
2015

After 2015

Long-term debt
obligations ........................$136,218
Interest on long-term
debt obligations ............... 24,379
Operating leases
obligations ......................173,083
Other long term
obligations ...................... 1,332

Total contractual
obligations ......................$335,012

$30,000

$15,000

$31,074

$60,144

5,369

9,957

7,730

1,323

10,653

18,299

16,879

127,252

321

656

355

$46,343

$43,912

$56,038

$188,719

Our long-term debt included in the table above is comprised mainly of term loans put
in place in 2005 with original terms to maturity of five years, which were
subsequently extended, a revolving loan drawn under a credit facility that is available
until January 2014, as well as a term loan put in place in 2009 with a term to
maturity of seven years. Our operating leases relate primarily to land on which we
operate regional auction units and administrative offices. These properties are
located in Canada, the United States, Spain, Germany, the Netherlands and the
United Arab Emirates.

In the normal course of our business, we will sometimes guarantee to a consignor a
minimum level of proceeds in connection with the sale at auction of that consignor’s
equipment. Our total exposure at December 31, 2010 from these guarantee
contracts was $28.9 million (compared to $21.6 million at December 31, 2009),
which we anticipate will be partially offset by the proceeds that we will receive from
the sale at auction of the related equipment. We do not record any liability in our
financial statements in respect of these guarantee contracts, and they are not
reflected in the contractual obligations table above.

Cash Flows

December 31,

2010

2009

% Change

Cash provided by (used in):

Operations.................................
Investing ...................................
Financing...................................

$ 40,165
(54,593)
(43,342)

$138,455
(164,656)
22,914

-71%
-67%
N/A

As discussed above regarding our cash position, our cash provided by operations can
fluctuate significantly from period to period, due to factors such as differences in the
timing, size and number of auctions during the period, the timing of the receipt of
auction proceeds from buyers, and the timing of the payment of net amounts due to
consignors. Therefore, we do not believe that the change in our cash position

28provided by operations during the year is indicative of a trend; it is primarily a result
of the decrease in our earnings in 2010 as well as the timing of sales before year end
and higher inventory purchases made in 2010 compared to 2009.

Capital asset additions were $62.3 million for 2010 compared to $157.4 million in
2009. Our capital expenditures in 2010 related primarily to the development of four
new and replacement permanent auction sites and three new regional auction units,
as well as preliminary costs related to the replacement of certain other permanent
auction sites that will be developed in the future. Capital asset additions also
included investments in computer software and hardware, including our new website.

Based on our most recent review of our auction site development plans and process
improvement initiatives, we expect that our annual capital expenditures will be in the
range of $70 million per year for the next several years. We plan to add an average
of one new permanent auction site or regional auction unit to our network per year,
and to make improvements to and replace older existing sites. Actual expenditures
will depend on the availability and cost of suitable expansion opportunities and
prevailing business and economic conditions. We also expect to undertake system
improvements, including expenditures on hardware, the development, purchase and
implementation of software, and related systems, in connection with our strategic
initiatives discussed above. We expect to fund future capital expenditures from
operating cash flows and borrowings under credit facilities.

We declared and paid regular cash dividends of $0.10 per share for each of the
quarters ended December 31, 2009 and March 31, 2010, and declared and paid
dividends of $0.105 per share for each of the quarters ended June 30, 2010 and
September 30, 2010. The payments of these dividends were made in 2010, and the
total dividend payments for 2010 were $43.3 million compared to $40.0 million in
2009. All dividends we pay are “eligible dividends” for Canadian income tax purposes
unless indicated otherwise.

29Long-term Debt and Credit Facilities

Our long-term debt and available credit facilities at December 31, 2010 and
December 31, 2009 were as follows:

December
31, 2010

December
31, 2009

%
Change

Long-term debt ....................... $ 135,887

$ 130,394

Committed:

Revolving credit facilities –
available: ................................$ 200,000
Revolving credit facilities –
unused: ................................

152,828

$ 210,000

180,513

Uncommitted: Revolving credit facilities –

available: ................................ 106,268
Revolving credit facilities –
unused: ................................
Non-revolving credit facilities

93,840

108,423

87,498

– available: ...............................250,000

250,000

Non-revolving credit facilities

– unused: ................................189,856

192,928

Total credit facilities

– available:................................$ 556,268

$ 568,423

Total credit facilities

– unused: ................................ 436,524

460,939

Our credit facilities are with financial institutions in the United States, Canada, the
Netherlands and the United Kingdom. Certain of the facilities include commitment
fees applicable to the unused credit amount. During 2010, we had fixed rate and
floating rate long-term debt bearing interest rates ranging from 1.8% to 6.4%. We
were in compliance with all financial covenants applicable to our debt at December
31, 2010.

Quantitative and Qualitative Disclosure about Market Risk

We conduct operations in local currencies in countries around the world, but we use
the U.S. dollar as our reporting currency. As a result we are exposed to currency
fluctuations and exchange rate risk. We cannot accurately predict the future effects
of foreign currency fluctuations on our financial condition or results of operations, or
quantify their effects on the macroeconomic environment. For the year ended
December 31, 2010, approximately 40% of our revenues were earned in currencies
other than the U.S. dollar and approximately 60% of our operating costs were
denominated in currencies other than the U.S. dollar. The proportion of revenues
denominated in currencies other than the U.S. dollar in a given period will differ from
the annual proportion depending on the size and location of auctions held during the
period. However, on an annual basis, we expect these amounts to largely offset and
generally act as a natural hedge against exposure to fluctuations in the value of the

30U.S. dollar. We have not adopted a long-term hedging strategy to protect against
foreign currency fluctuations associated with our operations denominated in
currencies other than the U.S. dollar, but we may consider hedging specific
transactions if we deem it appropriate in the future.

During 2010, we recorded a net increase in our foreign currency translation
adjustment balance of $4.5 million, compared to an increase of $18.4 million in
2009. Our foreign currency translation adjustment arises from the translation of our
net assets denominated in currencies other than the U.S. dollar.

We have not experienced significant interest rate exposure historically, as our long-
term debt generally bears fixed rates of interest. However, borrowings under our
global revolving credit facility are available at both fixed and floating rates of
interest. If we determine our exposure to short-term interest rates is too high, we
may consider fixing a larger portion of our portfolio. As at December 31, 2010 we
had a total of $31.0 million (December 31, 2009 - $29.5 million) in revolving loans
bearing floating rates of interest.

Although we cannot accurately anticipate the future effect of inflation on our financial
condition or results of operations, inflation historically has not had a material impact
on our operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future material effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources.

Legal and Other Proceedings

From time to time we have been, and expect to continue to be, subject to legal
proceedings and claims in the ordinary course of our business. Such claims, even if
lacking merit, could result in the expenditure of significant financial and managerial
resources. We are not aware of any legal proceedings or claims that we believe will
have, individually or in the aggregate, a material adverse effect on us or on our
financial condition or results of operations or that involve a claim for damages,
excluding interest and costs, in excess of 10% of our current assets.

Critical Accounting Policies and Estimates

In preparing our consolidated financial statements in conformity with Canadian
GAAP, we must make decisions that impact the reported amounts and related
disclosures. Such decisions include the selection of the appropriate accounting
principles to be applied and the assumptions on which to base accounting estimates.
In reaching such decisions, we apply judgments based on our understanding and
analysis of the relevant circumstances and historical experience. On an ongoing
basis, we evaluate these judgments and estimates, including consideration of
uncertainties relating to revenue recognition criteria, valuation of consignors’
equipment and other assets subject to guarantee contracts, recoverability of capital
assets, goodwill and future income tax assets, and the assessment of possible
contingent assets or liabilities that should be recognized or disclosed in our

31consolidated financial statements. Actual amounts could differ materially from those
estimated by us at the time our consolidated financial statements are prepared.

The following discussion of critical accounting policies and estimates is intended to
supplement the significant accounting policies presented as note 1 to our
consolidated financial statements, which summarizes the accounting policies and
methods used in the preparation of those consolidated financial statements. The
policies and the estimates discussed below are included here because they require
more significant judgments and estimates in the preparation and presentation of our
consolidated financial statements than other policies and estimates.

Accounting for Income Taxes

We record income taxes relating to our business in each of the jurisdictions in which
we operate. We estimate our actual current tax exposure and the temporary
differences resulting from differing treatment of items for tax and book accounting
purposes. These differences result in future income tax assets and liabilities, which
are included within our consolidated balance sheet. We must then assess the
likelihood that our future income tax assets will be recovered from future taxable
income. If recovery of these future tax assets is considered unlikely, we must
establish a valuation allowance. To the extent we either establish or increase a
valuation allowance in a period, we must include an expense within the tax provision
in the consolidated statement of operations. Significant management judgment is
required in determining our provision for income taxes, our measurement of future
tax assets and liabilities, and any valuation allowance recorded against our net future
tax assets. If actual results differ from these estimates or we adjust these estimates
in future periods, we may need to establish a valuation allowance that could
materially impact the presentation of our financial position and results of operations.

Valuation of Goodwill

We assess the possible impairment of goodwill in accordance with standards issued
by the Canadian Institute of Chartered Accountants in Canada (known as the CICA)
and the Financial Accounting Standards Board in the United States. The standards
stipulate that reporting entities test the carrying value of goodwill for impairment
annually at the reporting unit level using a two-step impairment test; if events or
changes in circumstances indicate that the asset might be impaired, the test is
conducted more frequently.

In the first step of the impairment test, the net book value of each reporting unit is
compared with its fair value. We operate as a single reporting unit, which is the
consolidated public company. As a result, we are able to refer to the stock market for
a third party indicator of our Company’s fair value. As long as the fair value of the
reporting unit exceeds its net book value, goodwill is considered not to be impaired
and the subsequent step of the impairment test is unnecessary. Changes in the
market value of our common shares may impact our assessment as to whether
goodwill has been impaired. These changes may result from changes in our business
plans or other factors, including those that are outside our control. We perform the
goodwill test each year as at September 30 or more frequently if events or changes
in circumstances indicate that goodwill might be impaired. We performed the test as
at September 30, 2010 and determined that no impairment had occurred.

32Changes in Accounting Policies

There have been no changes to our accounting policies during 2010.

Recent Accounting Pronouncements

There were no accounting pronouncements made during 2010 that impact our
accounting policies or the presentation of our consolidated financial position or
results of operations.

International Financial Reporting Standards

In February 2008, the Canadian Accounting Standards Board confirmed its strategy
of replacing Canadian GAAP with International Financial Reporting Standards (IFRS)
for Canadian publicly accountable enterprises. IFRS is issued by the International
Accounting Standards Board (IASB). IFRS became effective for our interim and
annual financial statements for periods commencing January 1, 2011. The conversion
to IFRS impacts our accounting policies, information technology and data systems,
internal control over financial reporting, and financial statement presentation and
disclosure. Our transition plans are on schedule, and comparative information for
the 2011 financial reporting has been prepared.

A review of the different areas affected by the transition to IFRS is made below.

Accounting Policies

We commenced our IFRS conversion project in 2007 and established a conversion
plan and an IFRS project team. We have identified the standards that have an
impact on our financial statements, business processes, key performance measures
and information systems. We have presented and discussed the following major
identified differences with the Audit Committee of our Board of Directors:



Property, Plant and Equipment (PP&E): We have chosen to use the cost
method under IFRS and will review annually depreciation methods and useful
lives. We have identified assets meeting the investment property criteria
under IAS 40: Investment Property; these will be shown separately on the
financial statements. We have also chosen to use the cost method of
accounting for these assets. Our annual impairment testing methodology will
change as we will be testing at the cash-generating unit level, rather than the
reporting unit level. We have not identified any indications of expected
impairment to either PP&E or goodwill on the date of transition to IFRS. We
have also tested goodwill for impairment under IFRS methodology at
September 30, 2010, and found no impairment.

 Business Combinations that occurred prior to January 1, 2010 will remain

unchanged, subject to the requirements of appendix C of IFRS 1 First Time
Adoption of International Financial Reporting Standards. From January 1,
2010 onwards we intend to account for all business combinations in line with
IFRS 3 Business Combinations for our IFRS financial reporting.



Leases will be assessed for classification as operating or finance leases under
IAS 17 Leases. Our preliminary assessment has not indicated any change to

33the classification of our leases currently recorded as operating leases and we
do not have any finance leases.



Income Taxes: Stock options issued which are tax deductible must be
revalued at each reporting date under IFRS. The temporary differences
created by this revaluation will be included in deferred tax. Furthermore, our
future tax assets and liabilities recorded in our consolidated balance sheets
will be reclassified to be entirely non-current and renamed “deferred tax
assets and liabilities”.

 Share Based Payment: Each instalment (representing the different annual
vesting periods of each grant of options) of share option awards will be
treated as a separate option grant, and the fair value of each instalment will
be amortized over each instalment’s vesting period.

The following IFRS 1 exemptions from retrospective application are available to us
and may be used on transition to IFRS:

 Business Combinations: At the date of transition to IFRS on January 1, 2010,
we will apply IFRS 3 prospectively and use the exemption in IFRS to treat
prior business combinations in a manner consistent with Canadian GAAP.

 Share Based Payments: We have not elected to apply IFRS 2: Share Based

Payments to options granted before November 7, 2002 and those options that
were granted after November 7, 2002 which were vested at January 1, 2010.

 Cumulative Translation Differences: We will “reset” cumulative translation

differences accumulated as at the date of transition to zero. The gain or loss
on a subsequent disposal of any foreign operation will then exclude
translation differences that arose before the date of transition, but include all
later translation differences.

As the IASB will continue to issue new accounting standards during our conversion
period, the final impact of IFRS on the presentation of our financial position and
results of operations and our financial statement disclosure will only be measured
once the IFRS applicable at our conversion date are known. In particular, we are
closely monitoring the IASB’s projects on: leases; provisions; financial statement
presentation – presentation of items of other comprehensive income; financial
instruments – classification and measurement; revenue recognition; and the annual
improvements process.

Financial Statement Presentation & Disclosure

We have completed the preparation of our opening balance sheet as at January 1,
2010 and year end 2010 balance sheet as at December 31, 2010 under IFRS. This
information is required to be disclosed in the notes to the consolidated financial
statements starting with the first quarter of 2011.

The impact on our 2010 net earnings on adopting IFRS is a reduction to our net
earnings under Canadian GAAP for the year ended December 31, 2010 of
approximately $0.5 million, due to the adjustment to share based payment expense
for treating each instalment as a separate option grant.

34We have determined that the impact to our retained earnings balance is limited to
the following areas:

 Share based payment revaluation of separate instalments; and

 Cumulative translation differences accumulated at the date of transition.

The estimated impact to retained earnings from pre-changeover Canadian GAAP to
IFRS is approximately as follows:

Retained earnings under Canadian GAAP .............. $
Share based payment revaluation of separate
instalments(1)....................................................
Cumulative translation differences set to nil ..........
Retained earnings under IFRS ............................. $

As at
January 1,
2010
411,300

As at
December
31, 2010

434,000

(500)
17,000
427,800

(1,000)
17,000
450,000

(1) This adjustment arises solely on the 2009 and 2010 grants of options vesting over

more than one year.

We have also determined that we will have changes to the 2010 opening balance
sheet and year end balance sheet approximately as follows:

Reclassifications Assets held for sale from non-

As at
January 1,
2010

As at
December
31, 2010

current to current classification ...........................

3,700

400

Current portion of deferred tax
from current to non-current
classification................................

Financial assets from other
assets to a new separate line
items:

700

200

Current .........................................................

100

Non-current................................

5,100

100

5,000

Revaluation

New line item

Revaluation of deferred tax on
share based payments that are
deductible for tax purposes
increasing deferred tax asset and
additional paid-in capital ................................
1,700

Investment properties from
property, plant and equipment to
a separate line item(1) ................................

8,500

$ 1,500

$ 9,000

(1) Note that there was no change in the investment properties identified from our 2010
opening balance sheet to our closing balance sheet; the change in reconciling item
relates solely to foreign exchange movement.

35During 2010, we substantially completed the preparation of our interim
reconciliations for the periods ending March 31, 2010, June 30, 2010 and September
30, 2010 under IFRS, as well as the annual reconciliation for the year ended
December 31, 2010. We determined that there is no material impact on net earnings
for those periods. We have also substantially completed our 2011 shell annual and
interim consolidated financial statements including explanatory notes under IFRS.

Internal Control over Financial Reporting

As the new accounting policies under IFRS are finalized, a review of the integrity of
our internal control over financial reporting and disclosure controls and procedures
has been completed. At this time, we believe that the current framework is
sufficiently robust to incorporate the changes to the financial reporting processes.

We have conducted training sessions targeted to employees at various levels of our
organization, including our Board of Directors. We also plan to continue to provide
training to other key employees. During 2010 we rolled out a training course to our
controllers in operations around the world.

Information Technology and Data Systems

We have tested our information systems’ integrity in a development environment to
ascertain the response to the adjustments discussed above, as well as the additional
account lines required in the consolidation, and no significant errors were found. We
will continue to monitor the impact of the IFRS transition on our information systems
as the transition is finalized.

Other Affected Areas

We continue to consider the impact of conversion on our business processes and
operations. Business processes and operations include contractual arrangements,
debt covenants, and compensation arrangements. We anticipate minimal impact of
the conversion project on our business processes and operations.

We have met our transition plans relating to IFRS for developing the opening balance
sheet and comparative information for 2011 financial reporting. We will present our
first interim consolidated financial statements in 2011 under IFRS.

Disclosure Controls and Procedures

We have established and maintained disclosure controls and procedures in order to
provide reasonable assurance that material information relating to our Company is
made known to the appropriate level of management in a timely manner.

Based on current securities legislation in Canada and the United States, our Chief
Executive Officer and Chief Financial Officer are required to certify that they have
assessed the effectiveness of our disclosure controls and procedures as at December
31, 2010.

We performed an evaluation under the supervision and with the participation of our
Chief Executive Officer and Chief Financial Officer, of the effectiveness of our

36disclosure controls and procedures as at December 31, 2010. Based on that
evaluation, we concluded that our disclosure controls and procedures were effective
as of that date to provide reasonable assurance that information required to be
disclosed by us in the reports that we file or submit is accumulated and
communicated to our management, including our principal executive and principal
financial officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure. Furthermore, we concluded that our
disclosure controls and procedures were effective to ensure that information required
to be disclosed in the reports filed under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified in
the U.S. Securities and Exchange Commission’s rules and forms.

Internal Control over Financial Reporting

Management is responsible for establishing and maintaining an adequate internal
control structure and procedures for financial reporting. Under the supervision and
with the participation of management, including our Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation of the effectiveness of our internal
control over financial reporting based on the framework in “Internal Control –
Integrated Framework” issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on our evaluation under the framework in “Internal
Control – Integrated Framework”, management concluded that our internal control
structure and procedures over financial reporting were effective as of December 31,
2010.

The effectiveness of our internal controls over financial reporting as of December 31,
2010 has been audited by KPMG LLP, the independent registered public accounting
firm that audited our December 31, 2010 consolidated annual financial statements,
as stated in their report, which is included in our consolidated financial statements.

Changes in Internal Controls Over Financial Reporting

There has been no change in our internal control over financial reporting during 2010
that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

Forward-Looking Statements

This Management’s Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements that involve risks and uncertainties.
These statements are based on current expectations and estimates about our
business, and include, among others, statements relating to:



our future performance;

growth of our operations;

growth of the world market for used equipment and trucks;

increases in the number of consignors and bidders participating in our
auctions;

the impact of the economic environment on our operations and capital
resources, and our customers, including the number of bidders and buyers
attending our auctions and consignment volumes at those auctions; the

37demand for our services; our bidders’ ability to access credit to fund their
purchases; the impact of the economic environment on equipment prices,
supply and demand, risk and our business model;

our principal operating strengths, our competitive advantages, and the appeal
of our auctions to buyers and sellers of industrial assets;

our ability to draw consistently significant numbers of local and international
end-user bidders to our auctions;

our ability to grow our core auction business, including our ability to increase
our market share with traditional market share and make our auctions easier,
and do more business with new customer groups in new markets, the
acquisition and development of auction facilities and the related impact on our
capital expenditures, and response by our customers to the new initiatives
being launched in 2011;

our ability to add new business and information solutions, including utilizing
technology to enhance our auction services and support additional value
added services, maximizing the use of business intelligence to enhance our
understanding of the equipment market and ability to make
www.rbauction.com the preferred equipment website;

our ability to perform by building an inspired high-performance customer
focused team, and to improve sales force productivity, employee engagement
and management bench strength;

the relative percentage of gross auction proceeds represented by straight
commission, guarantee and inventory contracts;

our auction revenue rates, the sustainability of those rates, the impact of our
commission rate and fee changes, and the seasonality of gross auction
proceeds and auction revenues;

our direct expense and income tax rates, depreciation expenses and general
and administrative expenses;

our future capital expenditures;

our internet initiatives and the level of participation in our auctions by internet
bidders;

the proportion of our revenues and operating costs denominated in currencies
other than the U.S. dollar or the effect of any currency exchange and interest
rate fluctuations on our results of operations; and

financing available to us and the sufficiency of our working capital to meet our
financial needs.



Forward-looking statements are typically identified by such words as “anticipate”,
“believe”, “could”, “feel”, “continue”, “estimate”, “expect”, “intend”, “may”,
“ongoing”, “plan”, “potential”, “predict”, “will”, “should”, “would”, “could”, “likely”,
“generally”, “future”, “period to period”, “long term”, or the negative of these terms,
and similar expressions intended to identify forward-looking statements. Our
forward-looking statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that are difficult to predict. While we have not
described all potential risks related to our business and owning our common shares,
the important factors listed under “Risk Factors” below are those that we consider
may affect our performance significantly or could cause our actual financial and

38operational results to differ significantly from our predictions. Except as required by
applicable securities law and regulations of relevant securities exchanges, we do not
intend to update publicly any forward-looking statements, even if our predictions
have been affected by new information, future events or other developments. You
should consider our forward-looking statements in light of these and other relevant
factors.

Risk Factors

Our business is subject to a number of risks and uncertainties, and our past
performance is no guarantee of our performance in future periods. Some of the
more important risks that we face are outlined below and holders of our common
shares should consider these risks. The risks and uncertainties described below are
not the only risks and uncertainties we face. Additional risks and uncertainties not
currently known to us or that we currently deem immaterial may also adversely
affect our financial condition or impair our business or results of operations. If any
of the following risks actually occur, our business, results of operations and financial
condition would suffer.

Damage to our reputation for fairness, integrity and conducting only
unreserved auctions could harm our business.

Strict adherence to the unreserved auction process is one of our founding principles
and, we believe, one of our most significant competitive advantages. Closely related
to this is our reputation for fairness and honesty in our dealings with our customers.
Our ability to attract new customers and continue to do business with existing
customers could be harmed if our reputation for fairness, integrity and conducting
only unreserved auctions was damaged. If we are unable to maintain our reputation
and enforce our unreserved auction policy we could lose business and our results of
operations would suffer.

Decreases in the supply of, demand for, or market values of industrial
assets, primarily used industrial equipment, could harm our business.

Our auction revenues could decrease if there was significant erosion in the supply of,
demand for, or market values of used industrial equipment, which could adversely
affect our financial condition and results of operations. We have no control over any
of the factors that affect the supply of, and demand for, used industrial equipment,
and the circumstances that cause market values for industrial equipment to fluctuate
– including, among other things, economic uncertainty, disruptions to credit and
financial markets, lower commodity prices, and our customers’ restricted access to
capital – are beyond our control. Recent economic conditions have caused
fluctuations in the supply, mix and market values of used equipment available for
sale, which has a direct impact on our auction revenues. In addition, price
competition and the availability of industrial equipment directly affect the supply of,
demand for, and market value of used industrial equipment. Climate change
initiatives, including significant changes to engine emission standards applicable to
industrial equipment, may also adversely affect the supply of, demand for or market
values of industrial equipment.

39We may incur losses as a result of our guarantee and outright purchase
contracts and advances to consignors.

In recent periods, approximately 75% of our business has been conducted on a
straight commission basis. In certain other situations we will either offer to:



guarantee a minimum level of sale proceeds to the consignor, regardless of
the ultimate selling price of the consignment at the auction; or

purchase the equipment outright from the consignor for sale in a particular
auction.

The level of guaranteed proceeds or inventory purchase price is based on appraisals
performed on equipment by our internal personnel. Inaccurate appraisals could
result in guarantees or inventory values that exceed the realizable auction proceeds.
If auction proceeds are less than the guaranteed amount, our commission will be
reduced and, in certain circumstances, we could incur a loss. If auction proceeds are
less than the purchase price we paid for equipment that we take into inventory
temporarily, we will incur a loss. Because all of our auctions are unreserved, there is
no way for us to protect against these types of losses by bidding on or acquiring any
of the items at the auction. We expect that competitive forces and supply imbalances
will likely encourage us to increase our exposure to at risk contracts. If our exposure
increases, this risk would be compounded.

Occasionally we advance to consignors a portion of the estimated auction proceeds
prior to the auction. We generally make these advances only after taking possession
of the assets to be auctioned and upon receipt of a security interest in the assets to
secure the obligation. If we were unable to auction the assets or if auction proceeds
were less than amounts advanced, we could incur a loss.

We may have difficulties sustaining and managing our growth.

One of the main elements of our strategy is to continue to grow our core auction
business, primarily by increasing our presence in markets in which we already
operate and by expanding into new geographic markets and market segments in
which we have not had a significant presence in the past. As part of this strategy, we
may from time to time acquire additional assets or businesses from third parties. We
may not be successful in growing our business or in managing this growth. For us to
grow our core auction business successfully, we need to accomplish a number of
objectives, including:



recruiting and retaining suitable sales and managerial personnel;

developing and enhancing an appropriate sales strategy;

identifying and developing new geographic markets and market sectors;

expanding awareness of our brand, including value proposition and
competitive advantages, in existing and new markets;

successfully executing the introduction of new ancillary services and enhanced
equipment information;

successfully executing the introduction of our revised and expanded
administrative fee;

40



identifying and acquiring, on terms favourable to us, suitable land on which to
build new auction facilities and, potentially, businesses that might be
appropriate acquisition targets;

obtaining necessary financing on terms favourable to us, and securing the
availability of our credit facilities to fund our growth initiatives;

receiving necessary authorizations and approvals from governments for
proposed development or expansion;

integrating successfully new facilities and any acquired businesses into our
existing operations;

achieving acceptance of the auction process in general by potential
consignors, bidders and buyers;

establishing and maintaining favourable relationships with and meeting the
needs of consignors, bidders and buyers in new markets and market sectors,
and maintaining these relationships in our existing markets;

capturing all relevant market data and utilizing it to generate insight and
understanding of key company and industry drivers and market trends;

developing appropriate responses based on data collected to meet the needs
of existing and potential customers to achieve customer retention targets;

succeeding against local and regional competitors in existing and new
geographic markets;

capitalizing on changes in the supply of and demand for industrial assets, and
understanding and responding to changing market dynamics, in our existing
and new markets; and

designing and implementing business processes and operating systems that
are able to support profitable growth.

We will likely need to hire additional employees to manage our growth. In addition,
growth may increase the geographic scope of our operations and increase demands
on both our operating and financial systems. These factors will increase our
operating complexity and the level of responsibility of existing and new management
personnel. It may be difficult for us to attract and retain qualified sales personnel,
managers and employees, and our existing operating and financial systems and
controls may not be adequate to support our growth. We may not be able to improve
our systems and controls as a result of increased costs, technological challenges, or
lack of qualified employees. Our past results and growth may not be indicative of our
future prospects or our ability to expand into new markets, many of which may have
different competitive conditions and demographic characteristics than our existing
markets.

We are pursuing a long-term growth strategy that requires upfront
investment.

We continue to pursue a long-term growth strategy that contemplates investments in
growing our core business, including investments in frontier markets that may not
generate profitable growth in the near term, adding new business and information
solutions, and developing our people. Planning for future growth requires
investments to be made now in anticipation of growth that may not materialize, and
if our strategies do not successfully address the needs of current and potential

41customers we may not be successful growing our gross auction proceeds and our
earnings may be adversely impacted. A large component of our G&A expenses is
considered fixed costs that we will incur regardless of gross auction proceeds growth.
There can be no assurances that our gross auction proceeds and auction revenues
will grow at a more rapid rate than our fixed costs, especially in the event of a deep
and prolonged recession, which would have a negative impact on our margins and
earnings per share.

Our future expenses may increase significantly or our operations, and ability
to expand may be limited as a result of environmental and other
regulations.

A variety of federal, provincial, state and local laws, rules and regulations throughout
the world, including local tax and accounting rules, apply to our business. These
relate to, among other things, the auction business, imports and exports of
equipment, worker safety, privacy of customer information, and the use, storage,
discharge and disposal of environmentally sensitive materials. Complying with
revisions to laws, rules and regulations could result in an increase in expenses and a
deterioration of our financial performance. Failure to comply with applicable laws,
rules and regulations could result in substantial liability to us, suspension or
cessation of some or all of our operations, restrictions on our ability to expand at
present locations or into new locations, requirements for the acquisition of additional
equipment or other significant expenses or restrictions.

The development or expansion of auction sites depends upon receipt of required
licenses, permits and other governmental authorizations. Our inability to obtain
these required items could harm our business. Additionally, changes or concessions
required by regulatory authorities could result in significant delays in, or prevent
completion of, such development or expansion.

Under some environmental laws, an owner or lessee of, or other person involved in,
real estate may be liable for the costs of removal or remediation of hazardous or
toxic substances located on or in, or emanating from, the real estate, and related
costs of investigation and property damage. These laws often impose liability without
regard to whether the owner, lessee or other person knew of, or was responsible for,
the presence of the hazardous or toxic substances. Environmental contamination
may exist at our owned or leased auction sites, or at other sites on which we may
conduct auctions, or properties that we may be selling by auction, from prior
activities at these locations or from neighbouring properties. In addition, auction
sites that we acquire or lease in the future may be contaminated, and future use of
or conditions on any of our properties or sites could result in contamination. The
costs related to claims arising from environmental contamination of any of these
properties could harm our financial condition and results of operations.

Climate change may not affect us directly, but government regulation in response to
this area of global concern may affect the ability of equipment owners to transport
certain equipment between specified jurisdictions or the saleability of older
equipment. One example of these restrictions is environmental certification
requirements in the United States, which prevent non-certified equipment from
entering into commerce in the United States. These restrictions, or changes to
environmental laws, could inhibit materially the ability of customers to ship
equipment to or from our auction sites, reducing our gross auction proceeds and
harming our business.

42International bidders and consignors could be deterred from participating in our
auctions if governmental bodies impose additional export or import regulations or
additional duties, taxes or other charges on exports or imports. Reduced
participation by international bidders and consignors could reduce gross auction
proceeds and harm our business, financial condition and results of operations.

Disruptions to credit and financial markets and economic uncertainty could
harm our operations.

Recent global economic and financial market events caused, among other things, a
general tightening in credit markets, lower levels of liquidity, increases in default
rates, and a level of uncertainty in the used equipment marketplace, all of which
may have a continuing negative impact on our operations, financial condition and
liquidity and ability to grow our business. Our operations and access to our cash
balances in the future are dependent upon the economic viability of our key suppliers
and the various financial institutions we utilize. Our future operations may be
disrupted if we cannot obtain products and services necessary for our auction
operations from our key suppliers, or if we lose access to our cash balances. In
addition, our future auction revenues may decrease if our consignors choose not to
sell their assets as a result of economic conditions, or if our buyers are unable to
obtain financing for asset purchases, or if any of our customers are in financial
distress. In addition, our lenders may be unable to advance funds to us under
existing credit facilities, which could harm our liquidity and ability to operate or grow
our business. Our customers may decide to delay the sale of excess assets due to
uncertainty about the used equipment market, market values, construction spending
or other factors, which could limit growth of our gross auction proceeds. The timing
and degree of a full recovery in credit and financial markets remain uncertain, and
there can be no assurance that market conditions will improve in the near future and
that our results of operations will not be adversely affected.

Competition in our core markets could result in reductions in our future
revenues and profitability.

The used truck and equipment sectors of the global industrial equipment market, and
the auction segment of those markets, are highly fragmented. We compete directly
for potential purchasers of industrial equipment with other auction companies. Our
indirect competitors include equipment manufacturers, other third party methods,
and equipment rental companies. When sourcing equipment to sell at our auctions,
we compete with other auction companies, other third party methods, and
equipment owners that have traditionally disposed of equipment in private sales.

Our direct competitors are primarily regional auction companies. Some of our indirect
competitors have significantly greater financial and marketing resources and name
recognition than we do. New competitors with greater financial and other resources
may enter the industrial equipment auction market in the future. Additionally,
existing or future competitors may succeed in entering and establishing successful
operations in new geographic markets prior to our entry into those markets. They
may also compete against us through internet-based services. If existing or future
competitors seek to gain or retain market share by reducing commission rates, or
our strategy to compete against them is not effective, we may also be required to
reduce commission rates, which may reduce our revenue and harm our operating
results and financial condition, or we may lose market share.

43We currently generate the majority of our revenues through unreserved auctions. We
may be susceptible to loss of business as a result of our restrictive service offering if
competing models become more appealing to customers. If our selling model
becomes undesirable or we are not successful adding services complimentary to our
existing selling model and business, we may not be successful increasing market
penetration over the long term, which could prevent us from achieving our long-term
earnings growth targets.

Our substantial international operations expose us to foreign exchange rate
fluctuations and political and economic instability that could harm our
results of operations.

We conduct business in many countries around the world and intend to continue to
expand our presence in international markets, including emerging markets.
Fluctuating currency exchange rates, acts of terrorism or war, and changing social,
economic and political conditions and regulations, including income tax and
accounting regulations, and political interference, may negatively affect our business
in international markets and our related results of operations. Currency exchange
rate fluctuations between the different countries in which we conduct our operations
impact the purchasing power of buyers, the motivation of consignors, asset values
and asset flows between various countries, including those in which we do not have
operations. These factors and other global economic conditions may harm our
business and our operating results.

Although we report our financial results in U.S. dollars, a significant portion of our
auction revenues is generated at auctions held outside the United States, mostly in
currencies other than the U.S. dollar. Currency exchange rate changes against the
U.S. dollar, particularly for the Canadian dollar and the Euro, could affect the
presentation of our results in our financial statements and cause our earnings to
fluctuate.

Our business could be harmed if we lost the services of one or more key
personnel.

The growth and performance of our business depends to a significant extent on the
efforts and abilities of our executive officers and senior managers. Our business
could be harmed if we lost the services of any of these individuals. We do not
maintain key man insurance on the lives of any of our executive officers. Our future
success largely depends on our ability to attract, develop and retain skilled
employees in all areas of our business, as well as to design an appropriate
organization structure and plan effectively for succession.

Our internet-related initiatives are subject to technological obsolescence
and potential service interruptions and may not contribute to improved
operating results over the long-term; in addition, we may not be able to
compete with technologies implemented by our competitors.

We have invested significant resources in the development of our internet platform,
including our online bidding service and website. We use and rely on intellectual
property owned by third parties, which we license for use in providing our online
bidding service. Our internet technologies may not result in any material long-term
improvement in our results of operations or financial condition and may require
further significant investment to avoid obsolescence. We may also not be able to

44continue to adapt our business to internet commerce and we may not be able to
compete effectively against internet auction services offered by our competitors.

The success of our online bidding service and other services that we offer over the
internet, including equipment-searching capabilities and historical price information,
will continue to depend largely on the performance and reliability of the hardware
and software we utilize, our ability to use suitable intellectual property licensed from
third parties, further development and maintenance of our information technology
infrastructure and the internet in general. Our ability to offer online services depends
on the performance of the internet, as well as our internal hardware and software
systems.

“Viruses”, “worms” and other similar programs, which have in the past caused
periodic outages and other internet access delays, may in the future interfere with
the performance of the internet and some of our internal systems. These outages
and delays could reduce the level of service we are able to offer over the internet.
We could lose customers and our reputation could be harmed if we were unable to
provide services over the internet at an acceptable level of performance or reliability.

Our business is subject to risks relating to our ability to safeguard the
security and privacy of our customers' confidential information.

We maintain proprietary databases containing confidential personal information
about our customers and the results of our auctions, and we must safeguard the
security and privacy of this information. Despite our efforts to protect this
information, we face the risk of inadvertent disclosure of this sensitive information or
an intentional breach of our security measures.

Security breaches could damage our reputation and expose us to a risk of loss or
litigation and possible liability for damages. We may be required to make significant
expenditures to protect against security breaches or to alleviate problems caused by
any breaches. Our insurance policies may not be adequate to reimburse us for losses
caused by security breaches.

The availability and performance of our internal technology infrastructure
are critical to our business.

The satisfactory performance, reliability and availability of our website, enterprise
resource planning system, processing systems and network infrastructure are
important to our reputation and our business. We will need to continue to expand
and upgrade our technology, transaction processing systems and network
infrastructure both to meet increased usage of our online bidding service and other
services offered on our website and to implement new features and functions. Our
business and results of operations could be harmed if we were unable to expand and
upgrade in a timely manner our systems and infrastructure to accommodate any
increases in the use of our internet services, or if we were to lose access to or the
functionality of our internet systems for any reason.

We use both internally developed and licensed systems for transaction processing
and accounting, including billings and collections processing. We have recently
improved these systems to accommodate growth in our business. If we are
unsuccessful in continuing to upgrade our technology, transaction processing

45systems or network infrastructure to accommodate increased transaction volumes, it
could harm our operations and interfere with our ability to expand our business.

We may incur losses as a result of legal and other claims.

We are subject to legal and other claims that arise in the ordinary course of our
business. While the results of these claims have not historically had a material effect
on our business, financial condition or results of operations, we may not be able to
defend ourselves adequately against these claims in the future and we may incur
losses. Aggregate losses from and the legal fees associated with these claims could
be material.

Our business continuity plan may not operate effectively in the event of a
significant interruption of our business.

We depend on our information and other systems and processes for the continuity
and effective operation of our business. We have recently implemented a formal
business continuity plan covering most significant aspects of our business that would
take effect in the event of a significant interruption to our business, or the loss of key
systems as a result of a natural or other disaster. Although we have tested our
business continuity plan as part of the implementation, there can be no assurance
that it will operate effectively or that our business, results of operations and financial
condition will not be materially affected in the event of a significant interruption of
our business.

We are in the process of implementing a formal disaster recovery plan, including a
data center co-location that went into effect in 2009. However, our disaster recovery
plan is not yet complete. If we were subject to a disaster or serious security breach,
it could materially damage our business, results of operations and financial condition.

Our insurance may be insufficient to cover losses that may occur as a result
of our operations.

We maintain property and general liability insurance. This insurance may not remain
available to us at commercially reasonable rates, and the amount of our coverage
may not be adequate to cover all liabilities that we may incur. Our auctions generally
involve the operation of large equipment close to a large number of people, and
despite our focus on safe work practices, an accident could damage our facilities or
injure auction attendees. Any major accident could harm our reputation and our
business. In addition, if we were held liable for amounts exceeding the limits of our
insurance coverage or for claims outside the scope of our coverage, the resulting
costs could harm our results of operations and financial condition.

Certain global conditions may affect our ability to conduct successful
auctions.

Like most businesses with global operations, we are subject to the risk of certain
global conditions, such as pandemics or other disease outbreaks or natural disasters
that could hinder our ability to conduct our scheduled auctions, or restrict our
customers’ travel patterns or their desire to attend auctions. If this situation were to
occur, we may not be able to generate sufficient equipment consignments to sustain
our business or to attract enough bidders to our auctions to achieve world fair

46market values for the items we sell. This could harm our results of operations and
financial condition.

Our operating results are subject to quarterly variations.

Historically, our revenues and operating results have fluctuated from quarter to
quarter. We expect to continue to experience these fluctuations as a result of the
following factors, among others:



the size, timing and frequency of our auctions;

the seasonal nature of the auction business in general, with peak activity
typically occurring in the second and fourth calendar quarters, mainly as a
result of the seasonal nature of the construction and natural resources
industries;

the performance of our underwritten business (guarantee and outright
purchase contracts);

general economic conditions in our markets; and

the timing of acquisitions and development of auction facilities and related
costs.

In addition, we usually incur substantial costs when entering new markets, and the
profitability of operations at new locations is uncertain as a result of the increased
variability in the number and size of auctions at new sites. These and other factors
may cause our future results to fall short of investor expectations or not to compare
favourably to our past results.

We may not continue to pay regular cash dividends.

We declared and paid total quarterly cash dividends of $0.41 per outstanding
common share in 2010. Any decision to declare and pay dividends in the future will
be made at the discretion of our Board of Directors, after taking into account our
operating results, financial condition, cash requirements, financing agreement
restrictions and other factors our Board may deem relevant. We may be unable or
may elect not to continue to declare and pay dividends, even if necessary financial
conditions are met and sufficient cash is available for distribution.

The impact of the adoption of International Financial Reporting Standards
IFRS in 2011 is uncertain.

We, as a publicly accountable Canadian enterprise, are required by the Canadian
Accounting Standards Board to adopt IFRS beginning January 1, 2011. We will not be
able to determine the full impact of the adoption of IFRS on our consolidated
financial statements until the completion of the first annual financial statements
under IFRS for the year ended December 31, 2011. This is due to the continually
changing IFRS and guidance issued by the IASB and Canadian Securities
Administrators.

47Consolidated Financial Statements of

RITCHIE BROS. AUCTIONEERS
INCORPORATED

Years ended December 31, 2010 and 2009

48KPMG LLP
Chartered Accountants
PO Box 10426 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Canada

Telephone (604) 691-3000
(604) 691-3031
Fax
www.kpmg.ca
Internet

INDEPENDENT AUDITORS’ REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Ritchie Bros. Auctioneers Incorporated

We have audited the accompanying consolidated financial statements of Ritchie Bros.
Auctioneers Incorporated and its subsidiaries, which comprise the consolidated balance sheets
as at December 31, 2010 and December 31, 2009, the consolidated statements of operations,
shareholders’ equity, comprehensive income and cash flows for each of the years in the
three-year period ended December 31, 2010, and notes, comprising a summary of significant
accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with Canadian generally accepted accounting principles, and
for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on
our audits. We conducted our audits in accordance with Canadian generally accepted auditing
standards and the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial statements are free
from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on our
judgment, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the entity's preparation and fair presentation of the
consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to
provide a basis for our audit opinion.

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
KPMG Canada provides services to KPMG LLP.

Ritchie Bros. Auctioneers Incorporated

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of Ritchie Bros. Auctioneers Incorporated and its subsidiaries as at
December 31, 2010 and December 31, 2009 and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 2010 in accordance with
Canadian generally accepted accounting principles.

Other Matter

We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Company's internal control over financial reporting as of
December 31, 2010, based on the criteria established in Internal Control – Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO),
and our report dated February 22, 2011 expressed an unmodified opinion on the effectiveness of
the Company’s internal control over financial reporting.

KPMG LLP
February 22, 2011
Vancouver, Canada

KPMG LLP
Chartered Accountants
PO Box 10426 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Canada

Telephone (604) 691-3000
(604) 691-3031
Fax
www.kpmg.ca
Internet

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Ritchie Bros. Auctioneers Incorporated

We have audited Ritchie Bros. Auctioneers Incorporated ("the Company")’s internal control over
financial reporting as of December 31, 2010, based on the criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The Company's management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting included in the section entitled Internal Control over
Financial Reporting included in Management’s Discussion and Analysis. Our responsibility is to
express an opinion the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed
risk. Our audit also included performing such other procedures as we considered necessary in
the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
company's internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's assets that could have
a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

Ritchie Bros. Auctioneers Incorporated

In our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2010, based on the criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).

We also have conducted our audits on the consolidated financial statements in accordance with
Canadian generally accepted auditing standards and the standards of the Public Company
Accounting Oversight Board (United States). Our report dated February 22, 2011 expressed an
unqualified opinion on those consolidated financial statements.

KPMG LLP
February 22, 2011
Vancouver, Canada

RITCHIE BROS. AUCTIONEERS INCORPORATED

Consolidated Statements of Operations
(Expressed in thousands of United States dollars, except share and per share amounts)

Years ended December 31,

2010

2009

2008

Auction revenues
Direct expenses

Expenses:

Depreciation and amortization
General and administrative

357,369
47,021
310,348

377,211
49,890
327,321

354,818
49,750
305,068

37,813
180,532
218,345

31,761
168,312
200,073

24,764
164,556
189,320

Earnings from operations

92,003

127,248

115,748

Other income (expense):
Interest expense
Interest income
Foreign exchange gain (loss)
Gain on disposition of capital assets
Other

(5,216)
2,035
(49)
250
1,823
(1,157)

(544)
2,400
(1,085)
647
2,857
4,275

(859)
4,994
11,656
6,370
1,375
23,536

Earnings before income taxes

90,846

131,523

139,284

Income tax expense (recovery) (note 9):

Current
Current
Future

Net earnings

Net earnings per share (note 7(e)):

Basic
Diluted

21,992
21,992
2,941
24,933

65,913

0.62
0.62

35,230
35,230
2,841
38,071

93,452

0.89
0.88

39,101
39,101
(1,217)
37,884

101,400

0.97
0.96

Weighted average number of shares outstanding 105,609,042

105,141,368

104,713,375

See accompanying notes to consolidated financial statements.

Approved on behalf of the Board:

Beverley A. Briscoe
Director

Peter J. Blake
Director and Chief Executive Officer

53RITCHIE BROS. AUCTIONEERS INCORPORATED
Consolidated Balance Sheets
(Expressed in thousands of United States dollars)

December 31,

Assets

Current assets:

Cash and cash equivalents
Accounts receivable
Inventory
Advances against auction contracts
Prepaid expenses and deposits
Other assets
Income taxes receivable
Future income tax asset (note 9)

Capital assets (note 3)
Other assets (note 4)
Goodwill
Future income tax asset (note 9)

Liabilities and Shareholders' Equity

Current liabilities:

Auction proceeds payable
Accounts payable and accrued liabilities
Income taxes payable
Short-term debt (note 5)

Long-term debt (note 6)
Other liabilities
Future income tax liability (note 9)

Shareholders' equity:

Share capital (note 7)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income

2010

2009

68,185
59,818
26,533
2,379
10,565
142
14,635
211
182,468

627,230
11,674
46,254
3,192
870,818

46,463
87,685
1,900
1,087
137,135

135,886
1,659
18,011
292,691

103,978
18,697
433,973
21,479
578,127

122,596
51,963
6,640
4,574
8,131
265
3,824
714
198,707

597,945
14,472
45,593
1,104
857,821

74,726
88,402
-
5,069
168,197

130,394
1,254
13,565
313,410

99,980
16,146
411,326
16,959
544,411

870,818

857,821

Commitments and contingencies (note 10)

See accompanying notes to consolidated financial statements.

54RITCHIE BROS. AUCTIONEERS INCORPORATED

Consolidated Statements of Shareholders' Equity
(Expressed in thousands of United States dollars)

Balance, December 31, 2007
Exercise of stock options
Stock compensation tax adjustment
Stock compensation expense
Net earnings
Cash dividends paid
Foreign currency translation adjustment
Reclassification to net earnings of

Share
Capital

90,223
4,143
-
-
-
-
-

Additional
Paid-In
Capital

12,471
(625)
198
2,311
-
-
-

Accumulated
Other
Comprehensive
Income (Loss)

Retained
Earnings

292,046

-
-
-

101,400
(35,601)
-

40,376
-
-
-
-
-
(26,896)

Total
Shareholders
' Equity

435,116
3,518
198
2,311
101,400
(35,601)
(26,896)

foreign currency translation gains

(14,884)

Balance, December 31, 2008
Exercise of stock options
Stock compensation tax adjustment
Stock compensation expense
Net earnings
Cash dividends paid
Foreign currency translation adjustment

Balance, December 31, 2009
Exercise of stock options
Stock compensation tax adjustment
Stock compensation expense
Net earnings
Cash dividends paid
Foreign currency translation adjustment

94,366
5,614
-
-
-
-
-

99,980
3,998
-
-
-
-
-

14,355
(917)
600
2,108
-
-
-

16,146
(719)
366
2,904
-
-
-

357,845

-
-
-
93,452
(39,971)
-

411,326

-
-
-
65,913
(43,266)
-

(1,404)
-
-
-
-
-
18,363

16,959
-
-
-
-
-
4,520

465,162
4,697
600
2,108
93,452
(39,971)
18,363

544,411
3,279
366
2,904
65,913
(43,266)
4,520

Balance, December 31, 2010

103,978

18,697

433,973

21,479

578,127

Consolidated Statements of Comprehensive Income
(Expressed in thousands of United States dollars)

Years ended December 31,

2010

2009

2008

Net earnings
Other comprehensive income (loss):

Foreign currency translation adjustment
Reclassification to net earnings of

foreign currency translation gains

65,913

93,452

101,400

4,520

18,363

(26,896)

(14,884)

Comprehensive income

70,433

111,815

59,620

See accompanying notes to consolidated financial statements.

55RITCHIE BROS. AUCTIONEERS INCORPORATED
Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)

Years ended December 31,

Cash provided by (used in):
Operating activities:

Net earnings
Items not involving cash:

Depreciation and amortization
Stock compensation expense
Future income taxes (recoveries)
Foreign exchange loss (gain)
Net gain on disposition of capital assets

Changes in non-cash working capital:

Accounts receivable
Inventory
Advances against auction contracts
Prepaid expenses and deposits
Income taxes receivable
Income taxes payable
Auction proceeds payable
Accounts payable and accrued liabilities
Other

Investing activities:

Acquisition of business
Capital asset additions
Proceeds on disposition of capital assets
Decrease (increase) in other assets

Financing activities:

Issuance of share capital
Dividends on common shares
Issuance of short-term debt
Repayment of short-term debt
Issuance of long-term debt
Repayment of long-term debt
Other

2010

2009

2008

65,913

93,452

101,400

37,813
2,904
2,941
49
(250)

(7,818)
(19,509)
2,273
(2,213)
(10,744)
2,154
(32,625)
(982)
259
40,165

-
(62,284)
8,479
(788)
(54,593)

3,279
(43,266)
31,636
(35,915)
15,000
(14,436)
360
(43,342)

31,761
2,108
2,841
1,085
(647)

15,646
3,856
(3,688)
1,026
(810)
-
(7,966)
(112)
(97)
138,455

(3,803)
(157,416)
4,201
(7,638)
(164,656)

4,697
(39,971)
6,241
(1,058)
66,408
(14,999)
1,596
22,914

24,764
2,311
(1,217)
(11,656)
(6,370)

(6,770)
(4,758)
100
(6,987)
3,420
-
8,355
(9,704)
(2,200)
90,688

-
(145,024)
33,813
1,000
(110,211)

3,518
(35,601)
37,077
(36,459)
25,566
(238)
(57)
(6,194)

Effect of changes in foreign currency rates on

cash and cash equivalents

3,359

18,608

(17,323)

Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year

Supplemental information:

Interest paid
Income taxes paid

(54,411)
122,596
68,185

5,506
26,898

15,321
107,275
122,596

5,593
35,569

(43,040)
150,315
107,275

3,476
34,629

See accompanying notes to consolidated financial statements.

56RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

1. Significant accounting policies:

(a) Basis of presentation:

These consolidated financial statements present

the financial position,

results of

operations, comprehensive income, changes in shareholders’ equity and cash flows of

Ritchie Bros. Auctioneers Incorporated (the “Company”), a company amalgamated in

December 1997 under the Canada Business Corporations Act, and its subsidiaries. All

significant intercompany balances and transactions have been eliminated.

The consolidated financial statements of the Company have been prepared in accordance

with generally accepted accounting principles in Canada (“Canadian GAAP”). As disclosed

in note 13, Canadian GAAP differs in certain material respects from accounting principles

generally accepted in the United States.

(b) Cash and cash equivalents:

Cash equivalents consist of highly liquid investments having an original term to maturity of

three months or less when acquired.

Inventory is primarily represented by goods held for auction and has been valued at the

lower of cost, determined by the specific identification method, and net realizable value.

(d) Capital assets:

All capital assets are stated at cost and include capitalized interest on assets under

development. Depreciation is provided to charge the cost of the assets to operations over

their estimated useful lives based on their usage as follows:

Asset

Basis

Rate/term

Improvements
Buildings

declining balance
straight-line

Yard equipment
Computer software
Automotive equipment
Office equipment
Computer equipment
Leasehold improvements

declining balance
straight-line
declining balance
declining balance
straight-line
straight-line

10%
over the shorter of the estimated useful
life or 30 years
20-30%
3 - 5 years
30%
20%
3 years
Terms of leases

Long-lived assets are reviewed for

impairment whenever events or changes in

circumstances indicate that the carrying amount of the asset may not be recoverable. In

such situations, long-lived assets are considered impaired when undiscounted estimated

future cash flows resulting from the use of the asset and its eventual disposition are less

than the asset’s carrying amount.

57RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

1. Significant accounting policies (continued):

(d) Capital assets (continued):

Legal obligations to retire tangible long-lived assets and assets under operating leases are

recorded at the fair value in the period in which they are incurred, if a reasonable estimate

of fair value can be made, with a corresponding increase in asset value. The liability is

accreted to face value over the life of the asset.

The Company does not have any

significant asset retirement obligations.

(e) Goodwill:

Goodwill represents non-identifiable intangible assets acquired on business combinations.

Goodwill

is not amortized and is tested for impairment annually, or more frequently if

events or changes in circumstances indicate that the asset might be impaired.

The

impairment test compares the carrying amount of the goodwill against its implied fair

value. To the extent that the carrying amount of goodwill exceeds its fair value, an

impairment loss is charged against earnings.

(f) Revenue recognition:

Auction revenues are comprised mostly of auction commissions, which are earned by the

Company acting as an agent for consignors of equipment and other assets, but also

include net profits on the sale of

inventory,

internet and proxy purchase fees,

administrative and documentation fees on the sale of certain lots, and auction advertising

fees. All revenue is recognized when the auction sale is complete and the Company has

determined that the auction proceeds are collectible.

Auction commissions represent the percentage earned by the Company on the gross

proceeds from equipment and other assets sold at auction.

The majority of auction

commissions is earned as a pre-negotiated fixed rate of the gross selling price. Other

commissions are earned when the Company guarantees a certain level of proceeds to a

consignor. This type of commission typically includes a pre-negotiated percentage of the

guaranteed gross proceeds plus a percentage of proceeds in excess of the guaranteed

amount.

If actual auction proceeds are less than the guaranteed amount, commission is

reduced; if proceeds are sufficiently lower, the Company can incur a loss on the sale.

Losses, if any, resulting from guarantee contracts are recorded in the period in which the

relevant auction is completed. If a loss relating to a guarantee contract to be sold after a

period end is known at the financial statement reporting date, the loss is accrued in the

financial statements for that period.

The Company’s exposure from these guarantee

contracts fluctuates over time (see note 10(b)).

Auction revenues also include net profit on the sale of inventory items.

In some cases,

incidental to its regular commission business, the Company temporarily acquires title to

items for a short time prior to a particular auction sale. The auction revenue recorded is

the net gain or loss on the sale of the items.

58RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

1. Significant accounting policies (continued):

(g) Income taxes:

Income taxes are accounted for using the asset and liability method, whereby future taxes

are recognized for

the tax consequences of

temporary differences by applying

substantively enacted or enacted statutory tax rates applicable to future years to

differences between the financial statement carrying amounts and the tax bases of

existing assets and liabilities. The effect on future taxes of a change in tax rates is

recognized in earnings in the period in which the new tax rate is substantively enacted.

Future tax benefits, such as non-capital loss carry forwards, are recognized to the extent

that realization of such benefits is considered more likely than not.

(h) Foreign currency translation:

The Company’s reporting currency is the United States dollar. The functional currency for

each of the Company’s operations is usually the currency of the country of residency; in

some cases it is the United States dollar. Each of the Company’s foreign operations is

considered to be self-sustaining. Accordingly, the financial statements of the Company’s

operations that are not denominated in United States dollars have been translated into

United States dollars using the exchange rate at the end of each reporting period for asset

and liability amounts and the average exchange rate for each reporting period for amounts

included in the determination of earnings. Any gains or losses from the translation of

asset and liability amounts have been included in accumulated other comprehensive

income, which is included as a separate component of shareholders’ equity. Monetary

assets and liabilities recorded in foreign currencies are translated into the appropriate

functional currency at the rate of exchange in effect at the balance sheet date. Foreign

currency denominated transactions are translated into the appropriate functional currency

at the exchange rate in effect on the date of the transaction.

(i) Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting

principles requires the Company to make estimates and assumptions that affect the

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities

at the date of the financial statements and the reported amounts of revenues and

expenses during the reporting periods. Significant financial statement items requiring the

use of estimates include the determination of useful lives for depreciation, the valuation of

goodwill and capital assets, the valuation of consignors’ equipment and other assets

subject to guarantee contracts, and the estimation of the utilization of future income tax

asset balances. Actual results could differ from such estimates and assumptions.

59RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

1. Significant accounting policies (continued):

(j) Financial instruments:

The Company classifies its cash and cash equivalents as held-for-trading, which is

measured at fair value with changes in fair value being recognized in net earnings.

Accounts receivable are classified as loans and receivables, which are measured at

amortized cost. Accounts payable and accrued liabilities, auction proceeds payable, and

long-term debt are classified as other financial liabilities, which are measured at amortized

cost.

Transaction costs are offset against the outstanding principal of the related debts and are

amortized using the effective interest rate method.

All derivative instruments, including embedded derivatives, are recorded in the financial

statements at fair value unless exempted from derivative treatment as a normal purchase

and sale. All changes in their fair value are recorded in income unless cash flow hedge

accounting is applied,

in which case changes in fair value are recorded in other

comprehensive income.

(k) Net earnings per share:

Net earnings per share has been calculated based on the weighted average number of

common shares outstanding. Diluted net earnings per share has been calculated after

giving effect to outstanding dilutive options calculated by the treasury stock method (note

7(e)).

(l) Stock-based compensation:

The Company has a stock-based compensation plan, which is described in note 7(c) and

(d). The Company uses the fair value based method to account for employee stock-based

compensation. Under the fair value based method, compensation cost attributable to

options granted to employees is measured at the fair value of the underlying option at the

grant date using the Black-Scholes option pricing model. Compensation expense is

recognized on a straight-line basis over the vesting period of the underlying option. Any

consideration paid by employees on exercise of stock options or purchase of stock is

credited to share capital.

(m) Comparative figures:

Certain comparative figures have been reclassified to conform with the presentation

adopted in the current year.

2. Future changes in accounting policies:

In February 2008, the Canadian Accounting Standards Board confirmed that International

Financial Reporting Standards (“IFRS”) will replace Canadian GAAP in 2011 for all publicly

accountable Canadian enterprises. The Company will report its financial results in accordance

with IFRS effective January 1, 2011.

60RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

3. Capital assets:

2010

Cost

Accumulated
depreciation

Net book
value

Land and improvements
Buildings
Land and buildings under development
Yard equipment
Computer software and equipment under
development
Computer software
Automotive equipment
Office equipment
Computer equipment
Leasehold improvements under development
Leasehold improvements

346,516
258,091
14,347
33,193

1,813
46,570
21,337
20,308
20,914
955
12,934

24,592
48,797
-
16,868

-
25,607
9,780
9,001
11,714
-
3,389

321,924
209,294
14,347
16,325

1,813
20,963
11,557
11,307
9,200
955
9,545

2009

776,978

149,748

627,230

Cost

Accumulated
depreciation

Net book
value

294,134
232,160
57,367
28,945

14,084
29,477
20,124
17,275
14,707
4,396

19,684
40,882
-
13,533

-
15,749
8,223
6,998
7,104
2,551

274,450
191,278
57,367
15,412

14,084
13,728
11,901
10,277
7,603
1,845

712,669

114,724

597,945

During the year, interest of $2,014,000 (2009 - $5,092,000; 2008 – $2,431,000;) was

capitalized to the cost of assets under development.

61RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

4. Other non-current assets:

Note receivable
Assets held for sale
Long-term prepaids
Other receivables

December 31,
2010

December 31,
2009

5,027
421
5,095
1,131

5,131
3,675
2,946
2,720

11,674

14,472

The note receivable is secured by a property the Company is leasing and a neighbouring

property. The note is repayable in monthly installments of principal plus interest, with final

payment due in 2014.

5. Short-term debt:

Short-term debt at December 31, 2010 consisted of draws on the Company’s revolving credit

facilities with a weighted average interest rate of 2.58% per annum.

62RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

6. Long-term debt:

Term loan, denominated in Canadian dollars, unsecured,

bearing interest at 6.385%, due in quarterly installments
of interest only, with full amount of the principal due in
2016.

Term loan, unsecured, bearing interest at 5.610%, due in

quarterly installments of interest only, with the full amount
of the principal due in 2011, which the Company intends to
refinance on a long-term basis by drawing on its available
credit facilities.

Revolving loan, denominated in Canadian dollars, unsecured,
bearing interest at Canadian bankers’ acceptance rate plus
a margin between 0.65% and 1.00%, due in monthly
installments of interest only. The revolving credit facility is
available until January 2014. As at December 31, 2010,
the effective rate of interest on this loan, including the
margin, was 2.071%.

Term loan, unsecured, bearing interest at 2.30%, due in

quarterly installments of interest only, with the full amount
of the principal due in 2013, drawn to refinance the
Canadian dollar term loan that fell due in 2010.

Term loan, denominated in Canadian dollars, secured by a
general security agreement, bearing interest at 4.429%,
due in monthly installments of interest only, with the full
amount of the principal due in 2010.

2010

2009

59,977

56,889

29,998

29,966

30,911

29,282

15,000

14,257

$ 135,886

$ 130,394

As at December 31, 2010, principal repayments for the remaining period to the contractual

maturity dates are as follows:

2011
2012
2013
2014
2015
2016

30,000
-
15,000
31,074
-
60,144

$ 136,218

63RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

6. Long-term debt (continued):

The following credit facilities are available to the Company:

Committed revolving credit facilities:

Total unused
Expires January 2014

Uncommitted credit facilities:

Total unused
Expires November 2011

December 31,
2010

December 31,
2009

152,828
147,828

283,696
189,856

180,513
165,513

280,426
192,928

Subsequent to December 31, 2010, the Company refinanced its $30,000,000 unsecured term

loan that fell due by borrowing $30,000,000 of term debt under its committed, revolving

credit facility. This 2-year term loan is denominated in United States dollars and bears a fixed

interest rate of 1.81%.

7. Share capital:

(a) Authorized:

Unlimited number of common shares, without par value.

Unlimited number of senior preferred shares, without par value, issuable in series.

Unlimited number of junior preferred shares, without par value, issuable in series.

(b) Issued:

No preferred shares have been issued.

Common shares issued and outstanding are as follows:

Issued and outstanding, December 31, 2007

Issued for cash, pursuant to stock options exercised

Issued and outstanding, December 31, 2008

Issued for cash, pursuant to stock options exercised

Issued and outstanding, December 31, 2009

Issued for cash, pursuant to stock options exercised

Issued and outstanding, December 31, 2010

104,438,550
449,170

104,887,720
490,900

105,378,620
269,415

105,648,035

64RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

7. Share capital (continued):

The Company’s common shares were subdivided on a three-for-one basis effective April

24, 2008. Shareholders of record at the close of business on April 24, 2008 received two

additional common shares for each common share held at that date. The stock split

effectively tripled the number of common shares and stock options outstanding on that

date. All share, stock option and per share information in these consolidated financial

statements have been restated to reflect the stock split on a retroactive basis.

The Company has a stock option plan that provides for the award of stock options to

selected employees, directors and officers of the Company and to other persons approved

by the Board of Directors. Stock options are granted at the fair market value of the

Company’s common shares at the grant date, with various vesting periods and a term not

exceeding 10 years. At December 31, 2010, there were 5,368,589 (2009 – 5,950,193;

2008 – 6,890,046) shares authorized and available for grants of options under the stock

option plan.

Stock option activity for 2010, 2009 and 2008 is presented below:

Outstanding, December 31, 2007

2,474,394

11.24

Granted
Exercised
Cancelled

Outstanding, December 31, 2008

Granted
Exercised
Cancelled

Outstanding, December 31, 2009

Granted
Exercised
Cancelled

Outstanding, December 31, 2010

Exercisable, December 31, 2010

460,710
(449,170)
(12,300)
2,473,634

942,053
(490,900)
(2,200)
2,922,587

591,704
(269,415)
(10,100)

3,234,776

2,256,031

24.35
7.83
24.39
14.23

14.61
9.57
24.39
15.13

21.79
12.17
24.39
16.57

15.55

The options outstanding at December 31, 2010 expire on dates ranging to September 8,
2020.

65RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

7. Share capital (continued):

The following is a summary of stock options outstanding and exercisable at December 31,
2010:

Options Outstanding

Options Exercisable

Weighted
Average
Remaining
Life (years)

Weighted
Average
Exercise Price

1.1
2.1
3.6
7.2
6.2
9.2
7.2

4.34
5.18
9.80
14.55
18.68
21.82
24.41

Weighted
Average
Exercise
Price

4.34
5.18
9.80
14.57
18.67
21.82
24.41

Number
Exercisable

51,500
167,124
331,300
887,944
376,200

441,963
2,256,031

Range of
Exercise Prices

Number
Outstanding

$ 3.89 - $ 4.35
$ 5.18
$ 8.82 - $ 10.80
$ 14.23 - $ 14.70
$ 18.67 - $19.23
$ 21.82
$ 24.39 - $ 25.76

51,500
167,124
331,300
1,274,285
383,104
581,000
446,463
3,234,776

(d) Stock-based compensation:

The Company uses the fair value based method to account for employee stock-based

compensation awards. During 2010, the Company recognized compensation cost of

$2,904,000 (2009 – $2,108,000; 2008 – $2,311,000) in respect of options granted under

its stock option plan.

For the purposes described above, the fair value of the stock option grants was estimated

on the date of the grant using the Black-Scholes option pricing model with the following

assumptions:

Risk free interest rate
Dividend yield
Expected lives of options
Volatility

2010

2009

2008

2.7%
1.84%
5 years
34.4%

2.5%
2.47%
5 years
31.8%

2.7%
1.31%
5 years
23.0%

The weighted average grant date fair value of options granted during the year ended

December 31, 2010 was $6.40 per option (2009 – $3.77; 2008 – $5.29). The fair value

method requires that this amount be amortized over the relevant vesting periods of the

underlying options.

66RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

(e) Net earnings per share:

Year ended December 31, 2010

Net earnings

Per share
amount

Basic net earnings per share
Effect of dilutive securities:

Stock options

Diluted net earnings per share

65,913

105,521,960

0.62

-
65,913

647,239
106,169,199

(0.00)
0.62

Year ended December 31, 2009

Net earnings

Per share
amount

Basic net earnings per share
Effect of dilutive securities:

Stock options

Diluted net earnings per share

93,452

105,141,368

0.89

-
93,452

632,438
105,773,806

(0.01)
0.88

Year ended December 31, 2008

Net earnings

Per share
amount

Basic net earnings per share
Effect of dilutive securities:

Stock options

Diluted net earnings per share

101,400

1,060,569
105,773,944

(0.01)
0.96

101,400

104,713,375

0.97

67RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

7. Share capital (continued):

(e) Net earnings per share (continued):

For the year ended December 31, 2010, stock options to purchase 1,027,463 common

shares (2009 –452,763; 2008 – 443,310) were outstanding but were excluded from the

calculation of diluted earnings per share as they were anti-dilutive.

8. Segmented information:

The Company’s principal business activity is the sale of consignment and self-owned

equipment and other assets at auctions.

This business represents a single reportable

segment.

The Company determines its activities by geographic segment based on the location of its

auctions. Summarized information by geographic segment is as follows:

United States

Canada

Europe

Other

Combined

Year ended December 31, 2010:
$

Auction revenues
Capital assets and goodwill

Year ended December 31, 2009:
$

Auction revenues
Capital assets and goodwill

Year ended December 31, 2008:
$

Auction revenues
Capital assets and goodwill

185,486
317,809

82,894
175,928

51,428
109,875

37,561
69,872

202,415
298,625

90,148
176,906

57,714
105,360

26,934
62,647

191,459
280,417

75,683
112,799

54,635
58,167

33,041
42,492

357,369
673,484

377,211
643,538

354,818
493,875

9. Income taxes:

Income tax expense differs from that determined by applying the United States statutory tax

rates to the Company’s results of operations as follows:

2010

2009

2008

Statutory federal and state tax rate in the United States 38.5%

38.5%

Expected income tax expense
Differences:

Earnings taxed in foreign jurisdictions
Settlement of intercompany loan
Non-deductible expenses
Change in valuation allowance
Other

Actual income tax expense

34,976

50,636

53,624

(14,518)
-
2,306
1,797
372
24,933

(12,958)
-
1,976
901
(2,484)
38,071

(12,846)
(3,612)
1,793
756
(1,831)
37,884

68RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

9. Income taxes (continued):

Temporary differences that give rise to future income taxes are as follows:

Future income tax asset:

Working capital
Capital assets
Stock-based compensation
Unused tax losses
Other

Valuation allowance
Total future income tax asset
Current future income tax asset
Non-current future income tax asset

Future income tax liability:

Capital assets
Goodwill
Other
Total future income tax liability
Current future income tax liability
Non-current future income tax liability

210
27
1,578
9,424
1,368
12,607
(4,773)
7,834
210
7,624

(11,057)
(9,044)
(2,341)
(22,442)
-
(22,442)

1,227
-
1,336
5,946
942
9,451
(2,921)
6,530
1,227
5,303

(6,684)
(8,224)
(3,369)
(18,277)
-
(18,277)

Net future income taxes

(14,608)

(11,747)

Presented on balance sheet as:

Future income tax asset - current
Future income tax asset - non-current
Future income tax liability - non-current

211
3,192
(18,011)
(14,608)

714
1,104
(13,565)
(11,747)

As at December 31, 2010, the Company has net operating and capital loss carryforwards of

approximately $38,750,000 available to reduce future taxable income, of which $13,122,000

expire through 2030, and $25,628,000 remain indefinitely. The Company has recorded a

valuation allowance against $19,155,000 of these losses.

69RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

10. Commitments and contingencies:

(a) Operating leases:

The Company is party to certain operating leases relating to auction sites and offices

located in Canada, the United States, the Netherlands, Spain, Germany and the United

Arab Emirates.

The future minimum lease payments as at December 31, 2010 are approximately as

follows:

2011
2012
2013
2014
2015
Thereafter

10,653
9,634
8,665
8,393
8,486
127,252

Total rent expense in respect of these leases for the year ended December 31, 2010 was

$11,112,000 (2009 – $6,211,000; 2008– $3,449,000).

(b) Contingencies:

The Company is subject to legal and other claims that arise in the ordinary course of its

business. The Company does not believe that the results of these claims will have a

material effect on the Company’s financial position or results of operations.

In the normal course of its business, the Company will in certain situations guarantee to a

consignor a minimum level of proceeds in connection with the sale at auction of that

consignor’s equipment. At December 31, 2010, outstanding guarantees under contract for

industrial equipment to be sold prior to the end of the second quarter of 2011 totaled

$7,860,000 (2009 – $13,553,000 sold prior to the end of the second quarter of 2010).

The Company also had guarantees under contract totaling $21,008,000 relating to

agricultural auctions to be held prior to the end of the second quarter of 2011 (2009 –

$8,070,000 to be sold prior to the end of the third quarter of 2010). All amounts are

undiscounted and do not reflect estimated proceeds from sale at auction. No liability has

been recorded with respect to these guarantee contracts.

70RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

11. Capital risk management:

The Company’s objectives when managing its capital are to maintain a financial position

suitable for providing financial capacity and flexibility to meet its growth strategies, to provide

an adequate return to shareholders, and to return excess cash through the payment of

dividends. The Company’s invested capital is defined as the sum of shareholders’ equity and

long-term debt.

The Company executes a planning and budgeting process to determine the funds required to

ensure the Company has appropriate liquidity to meets its operating and growth objectives.

The Company ensures that there are sufficient credit facilities to meet its current and future

business requirements, taking into account its anticipated cash flows from operations and its

holding of cash and cash equivalents.

The Company complies with covenant criteria established by its lenders.

These include

tangible net worth and leverage ratio measurements. As at December 31, 2010 and 2009, the

Company is in compliance with these covenants.

The Company is not subject to any statutory capital requirements, and has not made any

changes with respect to its overall capital management strategy during the year ended

December 31, 2010.

12. Financial instruments:

(a) Fair value:

Carrying amounts of certain of the Company’s financial

instruments, including accounts

receivable, auction proceeds payable, accounts payable and accrued liabilities, and short-

term debt approximate their fair values due to their short terms to maturity. Based on

lending rates currently available to the issuer of the note receivable for notes with similar

terms, the carrying amount of its note receivable approximates fair value as at December

31, 2010. The carrying amounts of the Company’s other non-current receivables carrying

values approximate their fair values. Based on borrowing rates currently available to the

Company for loans with similar terms, the fair value of its long-term debt as at December

31, 2010 was approximately $141,622,000 (2009 – $138,429,000). The other non-current

liability is a payable whose carrying value approximates fair value.

(b) Financial risk management:

The Company is exposed to a variety of financial risks by virtue of its activities, including

foreign exchange risk, interest rate risk, credit risk and liquidity risk.

The Board of

Directors has overall responsibility for the oversight of the Company’s risk management.

71RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

12. Financial instruments (continued):

(b) Financial risk management (continued):

Foreign exchange risk

The Company operates internationally and is exposed to currency risk, primarily relating

to the Canadian and U.S. dollars, and the Euro, arising from sales, purchases and loans

that are denominated in currencies other than the respective functional currencies of the

Company’s international operations. The Company also has various investments in non-

U.S. dollar self-sustaining operations. Upon translation of those operations’ net assets into

U.S. dollars, the Company is exposed to foreign exchange risk. The Company does not

have a formal program to manage this exposure at this time. Refer to further discussion

in the section entitled Quantitative and Qualitative Disclosure about Market Risk contained

in the Company’s Management Discussion and Analysis.

For the year ended December 31, 2010, the currently quantifiable effect, with other

variables unchanged, of a 1% strengthening (weakening) of the U.S. dollar against the

Canadian dollar and Euro on the Company’s financial statements is as follows:



decrease (increase) net earnings by approximately $142,000 due to the translation of

the foreign operations’ statements of operations into the Company’s reporting

currency, the U.S. dollar;

decrease (increase) net earnings by approximately $101,000 due to the revaluation of

significant foreign currency denominated monetary items; and

decrease (increase) other comprehensive income by approximately $3,097,000

Interest rate risk

The Company’s interest rate risk mainly arises from the interest rate impact on the

Company’s cash and cash equivalents and floating rate debt. Cash and cash equivalents

earn interest based on market interest rates. As at December 31, 2010, the Company is

not exposed to significant interest rate risk on its cash and cash equivalents.

The Company’s interest rate management policy is generally to borrow at fixed rates.

However, floating rate funding has been used if the terms of borrowings are favorable. The

Company will consider utilizing derivative instruments such as interest rate swaps to

minimize its exposure to interest rate risk. As at December 31, 2010, approximately 23%

(December 31, 2009 – 22%) of the Company’s borrowings are at floating rates of interest.

The weighted average interest rate paid by the Company on its outstanding floating rate

borrowings during the year was 1.44% (2009 – 2.12%). For the year ended December

31, 2010 and 2009, with other variables unchanged, a 100 basis points or 1% increase

(decrease) in interest rates would decrease (increase) net earnings by approximately

$210,000 (2009 - $176 ,000).

72RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

12. Financial instruments (continued):

(b) Financial risk management (continued):

Credit risk

Credit risk is the risk of financial loss to the Company arising from the non-performance by

counterparties of contractual

financial obligations.

The Company is not exposed to

significant credit risk on accounts receivable because it does not extend credit to buyers at

its auctions, and it has a large diversified customer base. In addition, assets purchased at

the Company’s auctions are not normally released to the buyers until the Company

receives payment in full. The Company’s maximum exposure to credit risk on accounts

receivable at the reporting date is the carrying value of its accounts receivable, less those

receivables relating to assets that have not been released to the buyers.

The Company’s credit risk exposure on liquid financial assets, being cash and cash

equivalents, is limited since it maintains its cash and cash equivalents in a range of large

financial institutions around the world.

The Company limited its credit risk on its note receivable by performing credit verification

procedures prior to the issuance of the note receivable. In addition, the note receivable is

secured by a property the Company is leasing and a neighbouring property, and is

monitored on an ongoing basis. To date, the counterparty has not failed to meet its

financial obligations to the Company.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations

as they fall due. The Company manages its liquidity risk by maintaining adequate cash

and cash equivalent balances, generally by releasing payments to consignors only after

receivables from buyers have been collected. The Company also utilizes its established

lines of credit (notes 5 and 6) for short-term borrowings on an as-needed basis. The

Company continuously monitors and reviews both actual and forecast cash flows to ensure

there is sufficient working capital to satisfy its operating requirements.

73RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

The consolidated financial statements are prepared in accordance with Canadian GAAP, which

differ, in certain respects, from accounting practices generally accepted in the United States

(“US GAAP”) and from requirements promulgated by the Securities and Exchange

Commission.

The amounts in the consolidated statements of operations and comprehensive income that

differ from those reported under Canadian GAAP are as follows:

2010

2009

2008

Net ea rnings under Canadian GAAP
Cumulative translation adjustment on settlement of

65,913

93,452

101,400

intercompany loans

(14,884)

Net ea rnings under US GA AP

65,913

93,452

86,516

Other comprehensive inco me (loss) under

Canadian GAAP

Cumulative translation adjustment
Other comprehensive inco me (loss) under US GAA P

Comprehensive income under US GAAP

Earnings per share in accordance with US GAAP:

Basic
Diluted

4,520
-
4,520

18,363
-
18,363

70,433

111,815

0.62
0.62

$
$

0.89
0.88

(41,780)
14,884
(26,896)

59,620

0.83
0.82

$
$

The amounts in the consolidated balance sheets that differ from those reported under

Canadian GAAP are as follows:

Retained earnings

433,973

419,089

411,326

396,442

2010
Canadian GAAP

US GAAP

2009
Canadian GAAP

US GAAP

Accumulated other
comprehensive income

21,479

36,363

16,959

31,843

74RITCHIE BROS. AUCTIONEERS INCORPORATED

Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of United
States dollars, except share and per share amounts)

Years ended December 31, 2010, 2009 and 2008
____________________________________________________________________________________

13. United States generally accepted accounting principles (continued):

The Company had a number of outstanding intercompany loan balances where settlement was

not planned or anticipated in the foreseeable future, which were considered part of net

investments in foreign operations. As such, foreign exchange gains or losses arising from

these intercompany loans were reported in the cumulative translation adjustment account. In

2008, a number of the intercompany loans were settled or planned to be settled, which

resulted in the reclassification to net earnings of

foreign currency translation gains of

$14,884,000, net of tax of $139,000. Under US GAAP, the reclassification of the pro rata

portion of foreign exchange gains or losses in accumulated other comprehensive income to net

earnings only occurs when the reduction in the net investment is the result of a complete sale,

or complete or substantially complete liquidation, which has not occurred in this case.

75SUPPLEMENTAL QUARTERLY DATA

(Unaudited; tabular dollar amounts expressed in thousands of United States dollars, except per share data)

2010

1st quarter
2nd quarter
3rd quarter
4th quarter

2009

1st quarter
2nd quarter
3rd quarter
4th quarter

2008

1st quarter
2nd quarter
3rd quarter
4th quarter

2007

1st quarter
2nd quarter
3rd quarter
4th quarter

2006

1st quarter
2nd quarter
3rd quarter
4th quarter

Gross
Auction Proceeds

Auction
Revenues

Net
Earnings

Net Earnings Per Share
Diluted

Basic

Closing
Stock Price

(2)

776,659
951,634
750,912
798,566
3,277,771

(2)

83,544
103,300
82,229
88,296
357,369

Gross
Auction Proceeds

Auction
Revenues

798,291
1,109,331
693,288
891,111
3,492,021

83,675
120,459
75,934
97,143
377,211

Gross
Auction Proceeds

Auction
Revenues

781,969
1,163,546
767,718
853,927
3,567,160

81,394
115,822
75,909
81,693
354,818

Gross
Auction Proceeds

Auction
Revenues (1)

700,368
945,256
667,553
873,306
3,186,483

68,549
94,054
67,174
82,129
311,906

Gross
Auction Proceeds

Auction
Revenues (1)

571,528
830,493
580,271
738,731
2,721,023

55,920
78,126
54,526
69,285
257,857

12,800
26,118
13,478
13,517
65,913

Net
Earnings

(3)

19,879
38,847
12,892
21,834 (3)
(3)
93,452

Net
Earnings

(4)

16,407
45,919 (4)
11,934 (4)
27,140 (4)
(4)

101,400

Net
Earnings

(5)

17,559
26,555 (5)
14,903 (5)
16,966 (5)
(5)
75,983

Net
Earnings

(6)

13,198
24,526 (6)
9,704 (6)
9,790 (6)
(6)

57,218

0.12
0.25
0.13
0.12
0.62

(2)

0.12
0.25
0.13
0.13
0.62

(2)

21.53
18.22
20.77
23.05

Net Earnings Per Share
Diluted

Basic

Closing
Stock Price

(3)

0.19
0.37
0.12
0.21 (3)
(3)
0.89

(3)

0.19
0.37
0.12
0.21 (3)
(3)
0.88

18.59
23.45
24.54
22.43

Net Earnings Per Share
Diluted

Basic

(7)

Closing
Stock Price (7)

(4)

0.16
0.44 (4)
0.11 (4)
0.26 (4)
(4)
0.97

(4)

0.16
0.43 (4)
0.11 (4)
0.26 (4)
(4)
0.96

27.37
27.13
23.36
21.42

Net Earnings Per Share
Diluted

Basic

(7)

Closing
Stock Price (7)

(5)

0.17
0.25 (5)
0.14 (5)
0.16 (5)
(5)
0.73

(5)

0.17
0.25 (5)
0.14 (5)
0.16 (5)
(5)
0.72

19.51
20.87
21.70
27.57

Net Earnings Per Share
Diluted

Basic

(7)

Closing
Stock Price (7)

(6)

0.13
0.24 (6)
0.09 (6)
0.09 (6)
(6)
0.55

(6)

0.13
0.23 (6)
0.09 (6)
0.09 (6)
(6)
0.55

16.50
17.73
17.87
17.85

(1)

(2)

(3)

(4)

(5)

Figures have been reclassified to conform with presentation adopted in 2008.

Net earnings in the first quarter of 2010 include $46.8 million of gross auction proceeds, $0.9 million of auction revenues and $0.2 million of direct expenses generated
from the auction of Apoise ($0.01 per share, basic and diluted).

Net earnings in the first quarter of 2009 included the impact of foreign exchange on U.S. dollar denominated bank debt held by a Canadian subsidiary, which was assigned
in January 2009 to an affiliate whose functional currency is the U.S. dollar to eliminate the impact of currency fluctuations on this debt in future periods. The foreign
exchange impact of this bank debt in the first quarter of 2009 was a $0.8 million gain ($0.7 million after tax). Excluding the impact of this item, net earnings for the first
quarter of 2009 would have been $19.2 million ($0.18 per share, basic and diluted).

Additionally, net earnings in the fourth quarter of 2009 included a gain of $1.1 million ($0.7 million after tax) recorded on the sale of excess property. Excluding the
impact of this item, net earnings for the fourth quarter of 2009 would have been $21.1 million ($0.20 per share, basic and diluted).

Net earnings in the first, second, third and fourth quarters of 2008 included the foreign exchange impact of the U.S. dollar denominated bank debt held by a Canadian
subsidiary. The foreign exchange impact of this bank debt in the first, second, third and fourth quarters of 2008 was a $1.0 million ($0.8 million after tax) loss, $0.2
million ($0.2 million after tax) gain, $1.3 million ($1.1 million after tax) loss, and $3.8 million ($3.2 million after tax) loss, respectively.
In addition, net earnings in the first, second and fourth quarters of 2008 included the reclassification of foreign currency translation gains relating to the settlement of
foreign currency denominated intercompany loans. The foreign exchange impact of this reclassification in the first, second and fourth quarters of 2008 was $2.1 million
($2.0 million after tax), $0.7 million ($0.5 million after tax) and $12.3 million ($11.1 million after tax), respectively.

Finally, net earnings in the second quarter of 2008 included a gain of $8.3 million ($7.3 million after tax) recorded on the sale of excess property.

Excluding the impact of all items above, net earnings for the first, second, third and fourth quarters of 2008 would have been $15.3 million ($0.15 per basic share and
$0.14 per diluted share), $37.9 million ($0.36 per share, basic and diluted), $13.0 million ($0.12 per share, basic and diluted) and $19.2 million ($0.18 per share, basic
and diluted), respectively. Net earnings for the full year 2008 would have been $85.5 million ($0.82 per basic share and $0.81 per diluted share).

Net earnings in 2007 included the foreign exchange impact of the U.S. dollar denominated bank debt held by a Canadian subsidiary. The foreign exchange impact of this
bank debt in the first, second, third and fourth quarters of 2007 was a gain of $0.3 million ($0.3 million after tax), $2.4 million ($2.1 million after tax), $2.0 million ($1.7
million after tax) and less than $0.1 million (less than $0.1 million after tax), respectively. Excluding the impact of these items, net earnings for the first, second, third and
fourth quarters of 2007 would have been $17.3 million ($0.17 per basic share and $0.16 per diluted share), $24.5 million ($0.23 per share, basic and diluted), $13.2
million ($0.13 per basic share and $0.12 per diluted share) and $16.9 million ($0.16 per share, basic and diluted), respectively. Net earnings for the full year 2007 would
have been $71.9 million ($0.69 per basic share and $0.68 per diluted share).

(6)

Net earnings in 2006 included the foreign exchange impact of the U.S. dollar denominated bank debt held by a Canadian subsidiary. The foreign exchange impact of this
bank debt in the first, second, third and fourth quarters of 2006 was a $0.1 million ($0.1 million after tax) loss, $1.4 million ($1.2 million after tax) gain, less than $0.1
million (less than $0.1 million after tax) loss, and $1.3 million ($1.1 million after tax) loss, respectively.

In addition, net earnings in the second and fourth quarters of 2006 included a gain of $1.8 million ($1.1 million after tax) recorded on the sale of excess property and a
write-down of $0.2 million ($0.1 million after tax) on land held for resale, respectively.

Excluding the impact of all items above, net earnings for the first, second, third and fourth quarters of 2006 would have been $13.3 million ($0.13 per share, basic and
diluted), $22.2 million ($0.21 per share, basic and diluted), $9.7 million ($0.09 per share, basic and diluted) and $11.0 million ($0.11 per share, basic and diluted),
respectively. Net earnings for the full year 2006 would have been $56.3 million ($0.54 per share, basic and diluted).

(7)

The Company's common shares split on a three-for one basis on April 24, 2008. All per share amounts in this table have been adjusted on a retroactive basis for the stock
split. As well, the closing stock prices presented in this table have been adjusted for ease of comparison.

76SELECTED FINANCIAL AND OPERATING DATA

(Tabular dollar amounts expressed in thousands of United States dollars, except per share and operating data)

Years ended December 31,

2010

2009

2008

2007

2006

Gross auction proceeds (unaudited)

3,277,771

3,492,021

3,567,160

3,186,483

2,721,023

Statement of operations data:

Auction revenues(1)
Direct expenses(1)

357,369
(47,021)
310,348

377,211
(49,890)
327,321

354,818
(49,750)
305,068

311,906
(46,481)
265,425

257,857
(40,457)
217,400

Depreciation and amortization
General and administrative(1)

(37,813)
(180,532)

(31,761)
(168,312)

(24,764)
(164,556)

(19,417)
(144,816)

(15,017)
(117,714)

Earnings from operations

92,003

127,248

115,748

101,192

84,669

Interest expense
Interest income(1)
Foreign exchange gain (loss)(1)(2)
Gain (loss) on disposition of capital assets(3)
Other income (loss)

Earnings before income taxes
Income taxes

Net earnings(2)(3)

Net earnings per share-diluted(4)

Balance sheet data (end of year):
Working capital (including cash)
Total assets
Long-term debt
Total shareholders' equity

Selected operating data (unaudited):

Auction revenues as percentage of gross

auction proceeds

Number of consignors at industrial auctions
Number of bidders at industrial auctions
Number of buyers at industrial auctions
Number of permanent auction

(5,216)
2,035
(49)
250
1,823

90,846
(24,933)

65,913

0.62

45,333
870,818
135,886
578,127

10.90%
40,323
339,555
95,346

(544)
2,400
(1,085)
647
2,857

131,523
(38,071)

93,452

0.88

30,510
857,821
130,394
544,411

10.80%
37,041
335,900
97,833

(859)
4,994
11,656
6,370
1,375

139,284
(37,884)

101,400

0.96

47,109
689,488
67,411
465,162

9.95%
36,595
277,560
84,005

(1,206)
7,393
2,802
243
1,471

111,895
(35,912)

75,983

0.72

58,207
672,887
44,844
435,116

9.79%
34,931
254,259
80,340

(1,172)
6,664
(451)
1,277
1,079

92,066
(34,848)

57,218

0.55

94,369
554,227
43,081
368,637

9.48%
32,075
241,132
73,967

sites (end of year)

(1)

(2)

Figures have been reclassified to conform with presentation adopted in 2008.

Net earnings for year ended December 31, 2009 included the impact of foreign exchange on U.S. dollar denominated bank debt held by a
Canadian subsidiary, which was assigned in January 2009 to an affiliate whose functional currency is the U.S. dollar to eliminate the
impact of currency fluctuations on this debt in future periods. The foreign exchange impact of this bank debt in the first quarter of 2009
was a $0.8 million gain ($0.7 million, or less than $0.01 per diluted share, after tax). The equivalent amount in 2008, 2007 and 2006 was
a foreign exchange loss of $5.8 million ($5.0 million after tax, or $0.05 per diluted share), a foreign exchange gain of $4.8 million ($4.1
million after tax, or $0.04 per diluted share), and a foreign exchange loss of less than $0.1 million (less than $0.1 million after tax, or less
than $0.1 per diluted share), respectively. Net earnings for the year ended December 31, 2008 also included the reclassification of $15.0
million ($13.6 million after tax, or $0.13 per diluted share) of foreign currency translation gains relating to the settlement of foreign
currency denominated intercompany loans.

(3)

(4)

The Company does not expect such foreign exchange gains or losses relating to financial transactions to recur in future periods.
Net earnings for 2009, 2008 and 2006 included net gains on sales of excess properties of $1.1 million ($0.7 million after tax, or $0.01 per
diluted share), $8.3 million ($7.3 million after tax, or $0.07 per diluted share) and $1.6 million ($1.0 million after tax, $0.01 per diluted
share), respectively.
Share and per share amounts have been adjusted on a retroactive basis to reflect the three-for-one stock split that occurred on April 24,
2008.

77SHAREHOLDER INFORMATION

Address

Ritchie Bros. Auctioneers Incorporated
9500 Glenlyon Parkway
Burnaby, BC
Canada, V5J 0C6
Telephone:
Canada (toll-free): 1.800.663.1739
1.800.663.8457
USA (toll-free):
778.331.5501
Facsimile:
www.rbauction.com
Web site:

778.331.5500

Board of Directors

Robert W. Murdoch

Chairman and Independent Director

Peter J. Blake

Director & Chief Executive Officer

Beverley A. Briscoe

Independent Director

Eric Patel

Independent Director

Edward B. Pitoniak

Independent Director

Christopher Zimmerman

Independent Director

James M. Micali

Independent Director

Shareholders wishing to speak to the Chairman should call
778.331.5500 or send an email to leaddirector@rbauction.com.

Management Advisory Committee

Peter J. Blake

Chief Executive Officer

Richard J. Aldersley

Divisional Manager – US South West

Robert S. Armstrong

Chief Operating Officer

Investor Relations

Analysts, portfolio managers, investors and representatives of financial
institutions seeking financial and operating information may contact:

Investor Relations Department
Ritchie Bros. Auctioneers
9500 Glenlyon Parkway
Burnaby, BC
Canada, V5J 0C6
Telephone:
Canada (toll-free):
USA (toll-free):
Email:

778.331.5500
1.800.663.1739
1.800.663.8457
ir@rbauction.com

Copies of the Company’s filings with the U.S. Securities & Exchange
Commission and with Canadian securities commissions are available to
shareholders and other interested parties on request or can be accessed
directly on the internet at www.rbauction.com.

Annual Meeting

The annual and special meeting of the Company’s shareholders will be
held at 11am on Thursday April 28, 2011 at the Company’s head office
located at 9500 Glenlyon Parkway, Burnaby, BC, V5J 0C6.

Stock Exchanges

Ritchie Bros. Auctioneers Incorporated is listed on the New York Stock
Exchange and the Toronto Stock Exchange and on both exchanges,
trades under the symbol “RBA”.

Bradley M. Bass

Senior Valuation Analyst – Europe

Transfer Agent

Jeremy M.T. Black

VP – Business Development; Corporate Secretary

Robert G. Blackadar

Divisional Manager – National & Major Accounts

Joseph P. Boyle

VP – North East USA

Stephen H. Branch

VP – Emerging Markets

Brian A. Butzelaar

VP – Northern Europe

R. Gary Caufield

Senior Director – Legal Affairs

William A. Cooksley

VP – Information Technology

Robert W. Giroux

Divisional Manager – US North West

Brian L. Glenn

Divisional Manager – Western Canada

Curtis C. Hinkelman

Senior VP – Eastern USA

David W. Hobbs

VP – South Central USA

Michael D. Johnston

Divisional Manager – US Central West

Kenton H. Low

VP - Marketing

Robert K. Mackay

President

Warwick N. Mackrell

VP – Australia & Asia

Robert A. McLeod

Chief Financial Officer

David D. Nicholson

Senior VP – Central USA

Doug W. Olive

Senior Director – Pricing & Valuations

Victor E. Pospiech

Senior VP – Administration & Human Resources

Jeroen L.J. Rijk

VP – Southern Europe

Gary L. Seybold

Divisional Manager – US South East

Steven C. Simpson

Senior VP – Western USA

Kevin R. Tink

Senior VP – Canada & Agriculture

Robert G. Thompson

Senior Director – Properties

Guylain Turgeon

Senior VP – Managing Director Europe & Middle East

Simon A. Wallan

VP – Agriculture

Karl W. Werner

VP – Auction Operations

Corporate Governance Information

Further Corporate Governance information, including our Report on
Corporate Governance, which is included in our Information Circular for
our annual meeting of Shareholders, is available on our website at
www.rbauction.com.

Communications concerning transfer requirements, address
changes and lost certificates should be directed to:

Computershare Trust Company of Canada
510 Burrard Street
2nd Floor
Vancouver, British Columbia
Canada, V6C 3B9
Telephone:
Canada and USA (toll-free): 1.800.564.6253
Facsimile:
Facsimile (toll-free):
Self-service:

604.661.0226

604.661.9401
1.800.249.7775
www.computershare.com

Co-agent in the United States:

Computershare Trust Company of New York
New York, NY

Auditors

KPMG LLP
Vancouver, Canada

Dividends

All dividends paid by Ritchie Bros. Auctioneers are eligible dividends,
unless indicated otherwise in the Company’s quarterly reports or by
press release.