REG - Auto Trader Grp - Full year results for the year ended 31 March 2024
30/05/2024 07:00
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RNS Number : 3546Q Auto Trader Group plc 30 May 2024
Embargoed until 7.00am, 30 May 2024
AUTO TRADER GROUP PLC
FULL YEAR RESULTS FOR THE YEAR ENDED 31 MARCH 2024
Auto Trader Group plc ('the Group'), the UK's largest automotive marketplace,
announces full year results for the year ended 31 March 2024
Strategic overview
- Group revenue increased by 14% and Group operating profit increased
by 26%. Core Auto Trader revenue grew 12% driven by double digit revenue
growth across all segments. Core Auto Trader operating profit grew by 14%,
with operating profit margins expanding to 71%.
- Average revenue per retailer ('ARPR') grew 12%, driven by continued
uptake of additional products and services and a successful annual pricing and
product event on 1 April 2023. As part of this event, we launched our second
Auto Trader Connect module enabling all retailers to benefit from our
market-leading retail valuations.
- Over the past 12 months both our marketplace and our competitive
position have strengthened, with record numbers of buyers and sellers using
Auto Trader. We were 10x larger than our nearest classified competitor and UK
retailer forecourt numbers were up 1%.
- The used car retail market has been robust throughout the financial
year, which we expect to continue. Demand is resilient with cars continuing to
sell faster than before the pandemic and used car supply has gradually
improved. Trade prices softened in the latter months of the calendar year,
which subsequently impacted retail prices, but monthly pricing movements have
since stabilised in line with typical seasonal trends.
- The new car retail market has been more challenging and
discounting has started to return. We are well placed to support the
structural changes in this market, which remains a significant opportunity. We
now have products to support franchise retailers, manufacturers and leasing
companies selling new cars directly to consumers on Auto Trader.
- Our Deal Builder product, which is part of our digital retailing
strategy, enables car buyers to value their part-exchange, apply for finance
and reserve a car on Auto Trader. The product is still in trial phase but
scaling well with c.1,100 retailers onboarded at the end of March 2024 (March
2023: c.50). During the year we have seen c.16,000 deals (2023: c.200) with at
least a reservation and continue to receive positive feedback from both buyers
and sellers. We commenced a small monetisation trial in January 2024.
Financial results
£m (unless otherwise specified) 2024 2023 Change
Auto Trader(1) 529.7 473.0 12%
Autorama(2) 41.2 27.2 51%
Group revenue 570.9 500.2 14%
Auto Trader(1) 378.6 332.9 14%
Autorama(2) (8.8) (11.2) 21%
Group central costs(3) - relating to Autorama acquisition (21.1) (44.1) 52%
Group operating profit 348.7 277.6 26%
Auto Trader operating profit margin 71% 70% 1% pts
Group operating profit margin 61% 55% 6% pts
Basic earnings per share (pence) 28.15 25.01 13%
Cash generated from operations(4) 379.0 327.4 16%
Adjusted EBITDA(5) 375.3 328.0 14%
Adjusted earnings per share (pence)(6) 29.37 27.12 8%
- We have returned £250.3 million to shareholders (2023: £225.0
million) through £169.9 million of share buybacks and dividends of £80.4
million.
- With a proposed final dividend of 6.4 pence per share (2023: 5.6
pence per share), total dividends for the year are 9.6 pence per share (2023:
8.4 pence per share).
Operational results
- Over 75% of all minutes spent on automotive classified sites were
spent on Auto Trader(7) (2023: over 75%). Cross platform visits(8,10) were up
11% to 77.5 million per month (2023: 69.6 million) and cross platform
minutes(8,10) were up 8% to 553 million per month (2023: 514 million).
- Like-for-like retailer numbers were up 1%, after removing the
impact of the Webzone Limited disposal in the prior year (a loss of 305
retailers), Without this adjustment, the average number of retailer
forecourts(8) in the year declined slightly to 13,783 (2023: 13,913).
- Average revenue per retailer(8) ('ARPR') was up 12% (or £284) to
£2,721 on average per month (2023: £2,437), driven by a positive
contribution across all three growth levers (price, stock and product).
- Live car stock(8,12) on site was up 2% to 445,000 cars (2023:
437,000), within which new car listings declined to 20,000 (2023: 25,000). We
delivered 7,847 new lease vehicles (2023: 6,895(2)) which continues to be
impacted by limited supply.
- The average number of employees(9) ('FTEs') in the Group increased
to 1,233 during the year (2023: 1,160).
Cultural KPIs
- 97% of employees are proud to work at Auto Trader(13) (March 2023:
91%).
- We continue to build a diverse and inclusive culture(14):
o Board: There were more women than men on our Board (March 2023: five women
and four men) and one ethnically diverse Board member (March 2023: one). From
the start of May, we increased to six women and two ethnically diverse Board
members.
o Leadership: The percentage of leaders that are women(15,17) was 42% (March
2023: 40%) and those who are ethnically diverse(15,16,17) was 6% (March 2023:
8%).
o Organisation: The percentage of employees who are women was 44%(17) (March
2023: 43%) and those who are ethnically diverse(16,17) was 17% (March 2023:
15%).
- We aim to achieve net zero across our value chain before 2040
(Scopes 1, 2 and 3) and to halve carbon emissions by the end of 2030. Total
Group emissions for the period were 98.9k tonnes of carbon dioxide
equivalent(18) (2023: 79.5k tonnes). Most of our CO(2) emissions are Scope 3,
attributable to both our suppliers and the emissions related to the small
number of vehicles sold by Autorama that pass through the balance sheet, which
were responsible for the year-on-year increase.
Nathan Coe, Chief Executive Officer of Auto Trader, said:
"This has been another year of strong financial, operational and strategic
progress for Auto Trader. More than 8 in 10 car buyers now use Auto Trader
during their car buying journey and two thirds of buyers only use Auto Trader.
Our data and technology continue to underpin the UK automotive industry and we
are constantly innovating to help our retailers access the very best tools to
achieve their business goals.
"We are confident in our prospects for the year ahead and, in the longer term,
we see significant opportunities to continue growing our marketplace and to
move more of the car buying process online, on Auto Trader.
"As ever, I would like to thank our people, customers and the UK's car buyers
for continuing to place their trust in us."
Outlook
The new financial year has started well.
We anticipate another good year of ARPR growth across all three levers. In
FY24 there was some positive ARPR benefit from the Webzone disposal, as on
average their retailers were lower yielding, which won't be replicated in
FY25. We expect ARPR price growth of £90-£100, product growth of £120-£130
and stock growth of £20-£40, with average retailer forecourts likely to be
marginally down year-on-year, as market conditions continue to return to
normal levels. Consumer Services and Manufacturer & Agency are expected to
grow at a rate of mid-to-high single digits.
We expect Autorama operating losses to reduce year-on-year, despite tight
supply conditions in the leasing channel for new vehicles continuing. Group
central costs, which relate to the amortisation of Autorama acquired
intangibles, will be c.£13m for the year.
As mentioned at our last results, in FY25 we will exceed the threshold for the
UK's digital services tax ('DST') which will be taken as an operating expense
in the core Auto Trader segment. We therefore expect FY25 operating profit
margins within this segment to be 69%, or 71% when excluding DST. However, at
a Group level we expect to see modest margin expansion.
Our capital policy remains unchanged, with most surplus cash generated by the
business being returned to shareholders through dividends and share buybacks.
Analyst presentation
A presentation for analysts will be held in person at the offices of Bank of
America Merrill Lynch and also via audio webcast and conference call at
9.30am, Thursday 30 May 2024. Details below:
Audio webcast: https://edge.media-server.com/mmc/p/vw8vywth
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Conference call registration:
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(https://register.vevent.com/register/BIdab284011b934097a5130184192bd492)
If you have any trouble registering or accessing either the conference call or
webcast, please contact Powerscourt on the details below.
For media enquiries
Please contact the team at Powerscourt on +44 (0)20 7250 1446 or email
autotrader@powerscourt-group.com (mailto:autotrader@powerscourt-group.com)
About Auto Trader
Auto Trader Group plc is the UK's largest automotive marketplace. It listed on
the London Stock Exchange in March 2015 and is a member of the FTSE 100 Index.
Auto Trader's purpose is Driving Change Together. Responsibly. Auto Trader is
committed to creating a diverse and inclusive culture, to build stronger
partnerships with customers and use its influence to drive more
environmentally friendly vehicle choices.
With the largest number of car buyers and the largest choice of trusted stock,
Auto Trader's marketplace sits at the heart of the UK car buying process. That
marketplace is built on an industry-leading technology and data platform,
which is increasingly used across the automotive industry. Auto Trader is
continuing to bring more of the car buying journey online, creating an
improved buying experience, whilst enabling all its retailer partners to sell
vehicles online.
Auto Trader publishes a monthly used car Retail Price Index which is based on
pricing analysis of circa 800,000 unique vehicles. This data is used by the
Bank of England to feed the broader UK economic indicators.
For more information, please visit https://plc.autotrader.co.uk/
(https://plc.autotrader.co.uk/)
Cautionary statement
Certain statements in this announcement constitute forward looking statements
(including beliefs or opinions). "Forward looking statements" are sometimes
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "aims", "anticipates", "expects", "intends", "plans",
"predicts", "may", "will", "could", "shall", "risk", "targets", "forecasts",
"should", "guidance", "continues", "assumes" or "positioned" or, in each case,
their negative or other variations or comparable terminology. Any statement in
this announcement that is not a statement of historical fact including,
without limitation, those regarding the Company's future expectations,
operations, financial performance, financial condition and business is a
forward looking statement. Such forward looking statements are subject to
known and unknown risks and uncertainties, because they relate to events that
may or may not occur in the future, that may cause actual results to differ
materially from those expressed or implied by such forward looking statements.
These risks and uncertainties include, among other factors, changing economic,
financial, business or other market conditions. These and other factors could
adversely affect the outcome and financial effects of the plans and events
described in this results announcement. As a result, you are cautioned not to
place reliance on such forward looking statements, which are not guarantees of
future performance and the actual results of operations, financial condition
and liquidity, and the development of the industry in which the Group
operates, may differ materially from those made in or suggested by the forward
looking statements set out in this announcement. Except as is required by
applicable laws and regulatory obligations, no undertaking is given to update
the forward looking statements contained in this announcement, whether as a
result of new information, future events or otherwise. Nothing in this
announcement should be construed as a profit forecast. This announcement has
been prepared for the Company's group as a whole and, therefore, gives greater
emphasis to those matters which are significant to the Company and its
subsidiary undertakings when viewed as a whole.
To the extent available, the industry and market data contained in this
announcement has come from third party sources. Third party industry
publications, studies and surveys generally state that the data contained
therein have been obtained from sources believed to be reliable, but that
there is no guarantee of the accuracy or completeness of such data. In
addition, certain parts of the industry and market data contained in this
announcement come from the Company's own internal research and estimates based
on the knowledge and experience of the Company's management in the market in
which the Company operates. While the Company believes that such research and
estimates are reasonable and reliable, they, and their underlying methodology
and assumptions, have not been verified by any independent source for accuracy
or completeness and are subject to change without notice. Accordingly, undue
reliance should not be placed on any of the industry or market data contained
in this announcement.
Summary financial performance
Group results Units 2024 2023 Change
Revenue £m 570.9 500.2 14%
Adjusted EBITDA(5) £m 375.3 328.0 14%
Operating profit £m 348.7 277.6 26%
Operating profit margin % 61% 55% 6% pts
Profit before tax £m 345.2 293.6 18%
Basic earnings per share Pence 28.15 25.01 13%
Adjusted earnings per share(6) Pence 29.37 27.12 8%
Dividend per share Pence 9.6 8.4 14%
Group cash flow
Cash generated from operations(4) £m 379.0 327.4 16%
Net bank debt(11) £m 11.3 43.4 (32.1m)
Auto Trader results(1)
Trade £m 475.7 427.4 11%
Consumer Services £m 39.6 34.5 15%
Manufacturer & Agency £m 14.4 11.1 30%
Revenue £m 529.7 473.0 12%
People costs £m 81.5 74.0 10%
Marketing £m 22.3 22.3 0%
Other costs £m 44.2 39.6 12%
Depreciation & amortisation £m 5.9 6.7 (12%)
Operating costs £m 153.9 142.6 8%
Share of profit from joint ventures £m 2.8 2.5 12%
Operating profit £m 378.6 332.9 14%
Operating profit margin % 71% 70% 1% pts
Autorama results(2)
Vehicle & Accessory Sales £m 28.4 16.0 78%
Commission & Ancillary £m 12.8 11.2 14%
Revenue £m 41.2 27.2 51%
Cost of goods sold £m 28.2 15.7 80%
People costs £m 10.9 10.5 4%
Marketing £m 4.0 4.7 (15%)
Other costs £m 4.5 5.4 (17%)
Depreciation & amortisation £m 2.4 2.1 14%
Operating costs £m 50.0 38.4 30%
Operating loss £m (8.8) (11.2) 21%
Group central costs(3) - relating to Autorama acquisition
Autorama deferred consideration £m 11.1 38.8 (71%)
Depreciation & amortisation £m 10.0 5.3 89%
Operating costs £m 21.1 44.1 (52%)
Operating loss £m (21.1) (44.1) 52%
1. Auto Trader includes the results of Auto Trader and AutoConvert (2023
also includes Webzone up to the date of disposal) in respect of online
classified advertising of motor vehicles and other related products and
services in the digital automotive marketplace, including the Dealer Auction
joint venture.
2. 2023 Autorama results are from acquisition date of 22 June 2022,
therefore include just over nine months of results.
3. Group central costs which are not allocated within either of the two
segmental operating profit/(loss) comprise an £11.1 million charge for the
Autorama deferred consideration settlement (2023: £38.8 million) and a £10.0
million amortisation expense (2023: £5.3 million) relating to the fair value
of intangible assets acquired in the Group's business combination of Autorama.
4. Cash generated from operations is defined as net cash generated from
operating activities, before corporation tax paid.
5. Adjusted EBITDA is earnings before interest, taxation, depreciation and
amortisation, share of profit from joint ventures, Autorama deferred
consideration and profit on the sale of subsidiary.
6. Adjusted earnings per share is calculated before Autorama deferred
consideration, profit on the sale of subsidiary, and net of the tax effect in
respect of these items.
7. Share of minutes is a custom metric based on Comscore minutes and is
calculated by dividing Auto Trader's total minutes volume by the entire
custom-defined competitive set's total minutes volume. The custom-defined list
includes: Auto Trader, Gumtree motors, Pistonheads, Motors.co.uk, eBay Motors
and CarGurus. Comscore MMX Multi-Platform, Total Digital Population, Total
Audience, Average Minutes, April 2023 - March 2024, UK
8. Average during the year.
9. Average during the year, including contractors.
10. As measured internally through Snowplow.
11. Net bank debt represents gross bank debt before amortised debt costs, less
cash and does not include amounts relating to leases, non-bank loans or
vehicle stocking loans.
12. Physical car stock advertised on autotrader.co.uk.
13. Based on a survey to all employees in April 2024 asking our people to rate
the statement "I am proud to work for Auto Trader". Answers were given on a
five-point scale from strongly disagree to strongly agree.
14. As at 31 March 2024.
15. We define leaders as those who are on our Operational Leadership Team
('OLT') and their direct reports.
16. Throughout the year we have asked our employees to voluntarily disclose
their ethnicity, at year end we had 130 employees (10%) who had not yet
disclosed.
17. We calculate all our diversity percentages using total group headcount,
1,255 (March 2023: 1,226) as at 31st March. At the period end, we had 548
employees who are women, 701 employees who are men and 6 who are non-binary.
18. The total amount of CO2 emissions includes Scope 1, 2 and 3. From the 15
different emission categories that fall within Scope 3, the following have
been identified as relevant to Auto Trader: Purchased goods and services;
Capital goods; Fuel and energy related activities (not included in Scope 1 and
Scope 2); Upstream transportation and distribution; Waste generated in
operations; Business travel; Employee commuting; Downstream transportation and
distribution; Use of sold products; End of life treatment of sold products;
and Investments. The methodology used to calculate emissions is based on the
financial control consolidation approach, as defined in the Greenhouse Gas
Protocol, A Corporate Accounting and Reporting Standard (Revised Edition).
Emission factors used are from the UK Government's GHG Conversion Factors for
Company Reporting, and selected other emissions factors datasets as
applicable, for the year reported. For Scope 3 Category 1, an Environmentally
Extended Input Output database methodology was used to calculate the GHG
footprint across total spend in the year. The methodology for calculating use
of sold goods has changed in 2024. We will recalculate 2023 on the same basis
in the coming year.
Strategic and operating review
With almost 10 years since our IPO in March 2015 and two years since our last
investor day we thought it worthwhile to look back at our performance over a
longer period. We believe many of the contributing factors are still equally
relevant to our future. Historically our results statements have focused
solely on what has happened in the previous financial year, which whilst
important, does not always highlight the key factors shareholders might
consider when thinking about our longer-term prospects. We will look to
supplement the usual full year detail with this forward-looking view each
year.
Revenue and operating profit (£m) Cash returned to shareholders (£m)
Financial year Revenue Operating Dividends Share buybacks/
(excl. vehicle sales) profit (equity raise) Total
2016 281.6 169.6 5.0 - 5.0
2017 311.4 203.1 26.6 102.1 128.7
2018 330.1 220.6 52.2 96.2 148.4
2019 355.1 243.7 57.6 93.5 151.1
2020 368.9 258.9 64.7 61.7 126.4
2021 262.8 161.2 - (183.2) (183.2)
2022 432.7 303.6 73.6 163.5 237.1
2023 484.2 277.6 77.7 147.3 225.0
2024 542.5 348.7 80.4 169.9 250.3
Total 3,369.3 2,187.0 437.8 651.0 1,088.8
Since Auto Trader's IPO the business has delivered consistent execution and
performance. During the first few years of being a public company, revenue
grew steadily whilst much of the focus was on transitioning to a pure digital
business and changing the cost base from a model that had remnants of our
magazine heritage. This transition yielded cost efficiencies and stronger
profit growth, which was largely a one-time opportunity. Since then, our
performance has been characterised by higher revenue growth, with a focus on
our core marketplace and product growth, coupled with investments in our
platform and adjacent opportunities. These revenues have driven profit growth
that is only slightly lower than the period during which margins expanded
significantly.
Our profits have been consistently distributed through a combination of
dividends and share buy backs, which is something we expect to continue.
During our history as a listed business, £1.1bn of surplus cash has been
returned to shareholders (net of the equity raise during COVID-19) and we have
delivered total shareholder returns of 225% versus 60% for the FTSE350
(excluding investment trusts). We don't always expect our performance to be
linear, with 2021 being a good example, but we do expect the drivers of our
historic and future value creation to remain reasonably consistent. These
drivers include: a growing automotive market; our market leading position; our
heritage of innovation; a focused and consistent strategy; and our purpose and
culture.
1. A growing automotive market
Today, most of our economics are linked to the number of used vehicle
retailers who choose to advertise on Auto Trader. Used vehicle supply is
determined by new vehicle sales (less scrappage) in preceding years, meaning
it does not meaningfully change with economic conditions and therefore our
business does not see significant cyclicality. When economic conditions or
consumer demand do change it is used vehicle prices that adjust, not supply.
Over the past 20 years the total size of the UK car parc has gradually
increased, growing on average by just over 250,000 cars per year. The COVID-19
pandemic broke this consistent trend, as new car production fell to levels
below even those of the Financial Crisis of 2007-09. From time to time there
will be these anomalies, but over the long term we expect the used car market
to grow as a result of population growth and stable trends in car usage.
At times there have been concerns about a material consolidation within our
customer base, although to date this has not materialised. We do expect the
biggest retailers to get bigger and we have seen consolidation in our very
largest customers, but not at a level that materially changes the overall
market fragmentation. At the time of our IPO, we had 13,452 retailers and
today we have 13,783, despite losing c.550 retailers when we sold our business
in the Republic of Ireland.
Finally, we expect the value of both new and used cars to increase over the
long term. During a short window of time, used car prices will adjust due to
supply and demand movements, but over longer time periods we expect used car
values to increase gradually due to GDP growth, population growth, inflation,
improved functionality, longer useful lives and the move towards more
expensive electric vehicles. In the period from 2011 to 2024, used car prices
have increased by an average of 4% per year.
These factors combine to provide an underlying market that is resilient and
likely to grow in both volume and value over the long term.
2. Our market leading position
As the automotive market increasingly embraces digital channels, technology
and data we are uniquely placed to help. In financial year 2016 Auto Trader
had visits of 47.9 million per month, last year that number had increased to
77.5 million. This past year we accounted for over 75% of all minutes spent on
automotive classified sites and were 10x larger than our nearest classified
competitor (2023: 7x). Over time we have seen 21 million downloads of our app
and currently see 89% prompted brand awareness with UK consumers. In addition
to this, third party data suggests that more than 8 in 10 car buyers use Auto
Trader during their shopping journey, and two thirds of buyers only use Auto
Trader. In order to ensure this position is maintained, we will continue to
invest in improving our site experience, maintaining high levels of trust,
evolving our brand, building our content and marketing capabilities, launching
new tools and functionality for retailers, and deepening our partnership with
customers.
Many of the changes we are currently developing are as significant as any in
our history in terms of deepening the experience we provide to car buyers.
These will improve our marketplace, enable our customers to power their
businesses with our technology and data platform, whilst moving us towards
digital retailing.
3. Our heritage of innovation
Almost every retail category has been impacted by the growing role of the
internet in how we purchase goods, and the car market is no exception. New
cars are still at a much earlier stage, but researching and shopping for used
cars online has been commonplace for many years. Today over 90% of car buyers
use the internet for some part of their car buying process. However, the
physical part of the shopping experience is and will remain important due to
the value and unique characteristics and condition of every used car.
Most car buyers will use the internet to find a used car, ensure they're
getting a good deal and to check the reputation of the retailer. This is
because the choice available is significant and platforms like Auto Trader
make navigating the car buying process much simpler than it would otherwise
be. Our trusted position and brand heritage in this area is significant, from
initially operating as a magazine to the fully digital business we are today,
leveraging technology to support more of the buying and selling journey. On
Auto Trader buyers are now using retailer reviews, seeing professionally
produced video content, benefitting from enriched data about the specification
and performance of the car, checking the history of the vehicle and whether it
has outstanding finance, seamlessly using artificial intelligence ('AI') to
get a market value for the car they're buying or selling, applying for finance
and reserving cars online. This continuous improvement in the way buyers use
Auto Trader has underpinned much of our past success and we know there are
significant opportunities to further enhance the consumer experience.
The shift to digital has also brought real benefits to retailers. It has meant
they can advertise their vehicles as quickly as it takes to photograph and
upload an advert. The insight they have on vehicle performance and what they
get for their advertising is detailed, real-time, and can be acted upon at the
click of a button. Over time retailers have also accessed our AI models for
pricing and demand metrics that use almost one million vehicle observations a
day. This helps customers decide which vehicles they should be buying for
their local area, what prices they can expect at retail and how long it is
likely to take to sell. These products might otherwise have been unattainable
or have required significant investment by our customers, and we have every
intention of continuing to use our brand, data and technology to enable any
retailer to access the very best tools and achieve their business goals. Over
time we will continue improving and building on these areas, strengthening the
partnership we have with customers and increasing their use of our software
products, and unlocking new revenue streams for the business.
All this innovation is delivered through our well-invested technology
platforms, built by Auto Trader people who have many years of experience
enabling infrastructure and products for our customers. This year we delivered
65,000 software releases (2023: 51,000) and saw 22.1 million API calls a week
(2023: 10.2 million).
4. A focused and consistent strategy
Our strategy as set out at our investor day in September 2022 outlined three
strategic focus areas: our marketplace; our platform; and digital retailing.
These areas are closely interconnected, as our platform and digital retailing
capabilities build on the strengths of our marketplace whilst also deepening
our relationships with customers and car buyers. These have all been
multi-year investments which have progressed over the past 12 months.
Marketplace
Our marketplace saw strong revenue and operating profit growth in the year,
with double digit growth across all three revenue segments for the first time
since our IPO in 2015. The largest area of revenue comes from retailer
customers, where forecourt numbers were broadly consistent and we increased
average revenue per retailer ('ARPR') by 12%. This growth came from all three
levers: price, stock and product. Our annual pricing and product event, which
took effect in April, included a further module of Auto Trader Connect as we
look to embed our data and insight into customers' businesses to enable them
to make better, faster decisions. Our advertising packages continue to perform
well with penetration above our standard package averaging 35% of retailer
stock over the year (2023: 32%, March 2024: 34%).
Within our marketplace we remain committed to building our new car experience.
Franchise customers have been able to advertise physical new cars for a number
of years, and we ended the year with c.2,100 paying retailers on this product
(March 2023: c.1,900). Alongside this, we have launched a product allowing
manufacturers operating an agency model to advertise new cars directly to
consumers nationally. This revenue is included in the Manufacturer and Agency
line. Critical to having the best new car buying experience is ensuring we are
the research destination for electric vehicles ('EVs'). To support this, we
have added new EV content, tools and evolved search. We have also actively
started to incorporate EVs into our marketing campaigns, launched new media
partnerships to promote EVs, hosted live events, and continued our successful
monthly EV giveaway.
We have continued to share our data and insight with retailers, the industry
and Government to help inform public policy and regulation to support the mass
adoption of EVs. During the period we continued our programme of political
engagement, which included giving evidence to a House of Lords Committee,
presenting our data to key ministers, and assisting Transport for London's
Ultra Low Emission Zone ('ULEZ') expansion and the associated scrappage
scheme.
Platform
In April 2023 we made our second module of Auto Trader Connect, Valuations,
available to customers as part of our annual pricing and product event. This
provides specification and condition adjusted valuations within our Retailer
Portal and via our Auto Trader Connect APIs, enabling third parties and
retailers to directly integrate these into their core systems. In April 2024
we launched a further module of Auto Trader Connect providing retailers with
Trended Valuations and enhanced Retail Check functionality. Combined, these
tools help retailers confidently understand the past and present trends in
terms of pricing and demand so they can make better decisions when buying or
retailing vehicles.
Making our platform accessible also enables our customers to benefit from the
multi-year investment we have made in our data platform and data science
capability. Over many years we have improved the quality of our data, most of
which is proprietary. We acquired Kee Resources for vehicle taxonomy, have
integrated build-level data from manufacturers, collated many observations on
our platform and more recently have sourced granular vehicle data to provide
our own provenance checks. As part of our platform strategy, we continue to
integrate with lenders to enable a full digital automotive finance journey on
Auto Trader. While we are not directly impacted by the current FCA
investigation into discretionary commission arrangements, we believe it should
lead to a more consistent and transparent car buying journey for consumers,
which we are well placed to provide on Auto Trader.
Digital retailing
To strengthen our marketplace, we are looking to provide a deeper car buying
and selling experience on Auto Trader, allowing car buyers and retailers to
extend beyond some of the constraints of a physical forecourt and sales
process.
Our main focus has been to develop and scale our Deal Builder product for used
cars, where car buyers can carry out as much of the journey as they want on
Auto Trader, completing the rest of the transaction on the forecourt, over the
phone or through a combination of channels. We launched Deal Builder last
year, which uses Auto Trader technology to enable car buyers to get a
part-exchange valuation, apply for finance and reserve a car online. Launched
as a trial, we have increased the volume of customers to c.1,100 retailers
(March 2023: c.50) with over 40,000 cars live at the end of March 2024. Over
the past 12 months, we have continued to improve the onsite experience and
generated 16,000 deals with a reservation in the period (2023: c.200).
Consumer feedback continues to be positive and deals are converting at roughly
double the rate of any other enquiry type, with many deals being completed
outside of retail hours. In January 2024, we trialled monetisation with a
small cohort of customers paying a transaction fee (0.25%) linked to the price
of the vehicle which is charged on submission of a deal.
In parallel to Deal Builder, we are working to enable a digital retailing
journey for new cars. Throughout the year we have further integrated leasing
deals for cars, vans and pickups into the core Auto Trader search experience.
Our car leasing tab consolidates all available deals and provides a full
checkout journey on Auto Trader. The personal leasing market has been
constrained by tight supply throughout the year, but in time we expect supply
through this channel to improve. Autorama delivered 7,847 vehicles across the
period (2023, from 22 June acquisition date: 6,895), with average commission
and ancillary revenue per vehicle delivered of £1,631 (2023: £1,624).
5. Our purpose and culture
Our purpose is Driving Change Together. Responsibly, which encompasses our
ways of working and our culture. Culture has been a fundamental part of the
changes we've made and the results we've achieved for at least 10 years. As an
organisation we aim to be purpose driven, principled, and values led. Whilst
it lacks precision, our culture is often described internally as 'doing the
right thing', described as 'Responsibly' in our purpose. Within this we're
looking to achieve a balance between investing in the future, performing today
and ensuring our customers and other stakeholders see the benefits of working
with us.
'Driving Change' runs deep within the organisation. We are restless,
self-critical and comfortable embracing new and disruptive technology, which
is something the organisation has done for decades. We launched our website
back in 1996, which went on to completely replace the magazines that were the
business for much of our 47-year history. When the mobile internet arrived, we
were quick to launch mobile sites and apps some 15 years ago. We embraced
server virtualisation, then private cloud, then public cloud which we
completed our full transition to last year. We invested in building out a new
data platform and data science capability 10 years ago, making artificial
intelligence available to the automotive industry. This history of innovation
is a core part of our culture and our results. These initiatives take a long
time to build at scale, but once operational they enable us to act fast
without the constraints of legacy systems and significant technical debt.
'Together' points to three aspects of our culture. The first is being 'One'
Auto Trader. This refers to working as a single team, not in silos, with trust
and collaboration over hierarchy and bureaucracy. We are one organisation
which means tech is tech for all of Auto Trader, finance is finance for all of
Auto Trader, product is product for all of Auto Trader, marketing is marketing
for all of Auto Trader. Therefore, to progress any piece of work or
initiative, our people have to talk, be aligned with our priorities, listen to
each other, and collaborate authentically.
The second important aspect of 'Together' is the way in which we work with
customers, retailers, manufacturers, leasing companies, finance companies and
other players in the automotive ecosystem. We aim for partnership. We believe
that there is a lot more we can bring to our customers than just the products
we sell. With our data, brand, people and technology we can help our customers
achieve their business goals, which makes them much more likely to understand
and use our products, advice, insight and services. We believe this will lead
to a much bigger and more influential business, not least because to be
successful in areas adjacent to our core we often need the advice and support
of customers.
The third aspect of 'Together' is an ownership mindset amongst our people
which strongly reinforces the two points above. In September 2023 we announced
our One Auto Treader all-employee share scheme that provides employees with an
extra 10% of their salary in shares each year, vesting over a three-year
period. This builds on an already strong ownership culture, aligns our people
with our shareholders and can be accommodated within our long-term Auto Trader
margin target of above 70%.
Finally, a big part of our culture and 'Responsibly' is creating an
environment that attracts diverse groups of people and enables them to fulfil
their potential for both the business and themselves. This requires long-term
commitment to structural changes that take years to come to fruition, but we
are making progress. As an example, like all technology companies we would
like more women engineers, but it is a career still under-represented by
women. To address this, we have a range of initiatives including outreach
programmes with universities and schools, graduate and apprenticeship schemes
(not requiring a computer science degree) and retraining. This is just one
example, but we apply the same thinking to other groups such as the
neurodivergent, those from ethnically diverse backgrounds, the LGBT+
community, those with disabilities and those that are later in their careers.
Our employee-driven networks have been instrumental in supporting these
efforts which represent women, ethnicity, LGBT+, early careers, disability and
neurodiversity, social mobility, parents and age.
This is by no means a complete view of our culture, but hopefully gives some
sense of how we work at Auto Trader and more importantly how it contributes to
both execution and the results we have achieved this year, this decade, and
that we aspire to in the years ahead.
Board changes
An important enabler for our success over the years has been a capable,
diligent and supportive Board. During the year Matt Davies joined the Board
and succeeded Ed Williams as Chair of the Board and Nomination Committee with
effect from the 2023 Annual General Meeting ('AGM'). Geeta Gopalan joined the
Board on 1 May 2024 and Amanda James will join the Board on 1 July 2024, both
as Non-Executive Directors and as members of the Audit, Remuneration,
Corporate Responsibility and Nomination Committees. With effect from the
conclusion of the 2024 AGM on 19 September 2024, Geeta will be appointed as
Senior Independent Director and Remuneration Committee Chair, and Amanda will
be appointed as Audit Committee Chair, both subject to shareholder approval.
These appointments replace David Keens and Jill Easterbrook who came to the
end of their third three-year terms in 2024, and therefore will not stand for
re-election at the 2024 AGM. We are deeply grateful for the contribution Ed,
David and Jill have made in their time at Auto Trader. Following this AGM, the
number of Independent Non-Executive Directors will reduce to five and our
Board will comply with the recommendation in the FTSE Women Leaders Review and
Listing Rules with respect to appointing a woman in one of the roles of Chair,
Senior Independent Director, Chief Executive or Chief Financial Officer.
Investor calendar
The Group's results for the half year ending 30 September 2024 will be
announced on 7 November 2024.
2024 financial performance
Group results
2024 2023 Change
£m £m %
Revenue 570.9 500.2 14%
Operating costs (225.0) (225.1) (0%)
Share of profit from joint ventures 2.8 2.5 12%
Group operating profit 348.7 277.6 26%
Group operating profit margin 61% 55% 6% pts
Group revenue increased by 14% to £570.9m (2023: £500.2m) driven by Auto
Trader revenue which increased by 12% to £529.7m (2023: £473.0m) with
Autorama contributing £41.2m (2023: £27.2m). Group operating profit grew by
26% to £348.7m (2023: £277.6m).
2024 2023 Change
£m £m %
Auto Trader 378.6 332.9 14%
Autorama (8.8) (11.2) 21%
Group central costs - relating to Autorama acquisition (21.1) (44.1) 52%
Group operating profit 348.7 277.6 26%
Auto Trader operating profit increased by 14% to £378.6m (2023: £332.9m),
which included £2.8m share of profit from joint ventures (2023: £2.5m).
Autorama had an operating loss of £8.8m (2023: £11.2m). Group central costs
included a charge of £11.1m (2023: £38.8m), which is the final charge of the
£49.9m deferred consideration relating to Autorama, which was fully settled
in the period, and an amortisation charge of £10.0m (2023: £5.3m) relating
to the Autorama intangible assets acquired. Having accelerated the integration
work between Autorama and Auto Trader, we have reviewed the useful economic
life of the intangible assets and in September 2023 we shortened the life of
the Vanarama brand to five years from the date of acquisition, which brings
forward the future amortisation charge.
2024 2023 Change
£m £m %
Operating profit 348.7 277.6 26%
Add back:
Depreciation & amortisation 18.3 14.1 30%
Share of profit from joint ventures (2.8) (2.5) 12%
Autorama deferred consideration 11.1 38.8 (71%)
Adjusted EBITDA 375.3 328.0 14%
Adjusted earnings before interest, taxation, depreciation and amortisation,
share of profit from joint ventures and Autorama deferred consideration
increased by 14% to £375.3m (2023: £328.0m). This adjusted measure of
EBITDA, and a similar adjusted measure of earnings per share, are calculated
principally to show the financial measures before the effect of acquisition
related expenses and disposal gains.
Group profit before tax increased by 18% to £345.2m (2023: £293.6m), despite
the prior year including a £19.1m profit on disposal of Webzone Limited
(trading as 'Carzone'). Cash generated from operations was £379.0m (2023:
£327.4m).
Auto Trader results
Revenue increased to £529.7m (2023: £473.0m), up 12% when compared to the
prior year. Trade revenue, which comprises revenue from Retailer, Home Trader
and other smaller revenue streams, increased by 11% to £475.7m (2023:
£427.4m).
2024 2023 Change
£m
£m
%
Retailer 450.0 406.8 11%
Home Trader 13.4 10.1 33%
Other 12.3 10.5 17%
Trade 475.7 427.4 11%
Consumer Services 39.6 34.5 15%
Manufacturer & Agency 14.4 11.1 30%
Auto Trader revenue 529.7 473.0 12%
Retailer revenue increased by 11% to £450.0m (2023: £406.8m). The average
number of retailer forecourts advertising on our platform slightly declined to
13,783 (2023: 13,913). However, excluding the Webzone Limited disposal in the
prior year (a negative impact of 305 retailers), like-for-like retailer
numbers grew by 1% year-on-year.
Average revenue per retailer ('ARPR') per month increased by 12% to £2,721
(2023: £2,437), with some positive impact from the Webzone disposal as on
average their retailers were lower yielding. The ARPR growth was predominantly
driven by the product and price levers, with smaller growth from the stock
lever.
· Price: Our price lever contributed growth of £114 (2023: £90)
to total ARPR as we delivered our annual pricing event for all customers on 1
April 2023, which included additional products alongside a like-for-like price
increase.
· Stock: Our stock lever contributed growth of £34 (2023: £nil).
The average number of live cars advertised on Auto Trader increased by 2% to
445,000 (2023: 437,000). Despite supply constraints easing, new car stock
declined to an average of 20,000 (2023: 25,000) as we evolved our new car
product, moving from an 'all you can eat' to a 'slot-based' model. Underlying
used car stock increased by 3% on average across the year to 426,000 (2023:
412,000), with much of this increase coming from a higher volume of private
listings. The stock lever is not impacted by private listings, but by the
number of retailer paid stock units which marginally increased.
· Product: Our product lever contributed growth of £136 (2023:
£137) to total ARPR. Just over half of this product growth was from our Auto
Trader Connect Valuations product, which was included in retailer packages as
part of our annual pricing and product event in April 2023. Much of the
remaining growth was as a result of seeing a continued increase in retailers
using our higher-level packages and market extension products. Despite the
reduction in new car stock, the higher number of paying retailers also
positively contributed to product lever growth.
Home Trader revenue increased by 33% to £13.4m (2023: £10.1m). Other
revenue increased by 17% to £12.3m (2023: £10.5m).
Consumer Services revenue increased by 15% in the year to £39.6m (2023:
£34.5m). Private revenue, which is largely generated from individual sellers
who pay to advertise their vehicle on the Auto Trader marketplace, increased
by 16% to £26.0m (2023: £22.4m). Motoring Services revenue increased 7% to
£13.0m (2023: £12.1m).
Revenue from Manufacturer and Agency customers increased 30% to £14.4m (2023:
£11.1m), with much of the increase a result of manufacturers who sell direct
to consumers using our recently launched new car market extension product,
allowing them to advertise and sell new cars on Auto Trader.
Total costs increased 8% to £153.9m (2023: £142.6m).
2024 2023 Change
£m £m %
People costs 81.5 74.0 10%
Marketing 22.3 22.3 0%
Other costs 44.2 39.6 12%
Depreciation & amortisation 5.9 6.7 (12%)
Auto Trader costs 153.9 142.6 8%
People costs increased by 10% to £81.5m (2023: £74.0m). The increase in
people costs was mainly due to an increase in the average number of full-time
equivalent employees ('FTEs') to 1,060 (2023: 996), as we continue to invest
in people to support the growth of the business. Underlying salary costs also
contributed to this increase as we continue to attract and retain the best
digital talent and supported employees with the higher cost of living. Within
people costs, share-based payments was £8.2m (2023: £6.6m), increasing 21%
largely due to the award of an all-employee share award in November 2023.
Marketing spend remained flat at £22.3m (2023: £22.3m).
Other costs, which include data services, property-related costs and other
overheads, increased by 12% to £44.2m (2023: £39.6m). The year-on-year
increase was primarily due to people-related costs, IT costs, legal &
professional costs and general inflationary increases. Depreciation and
amortisation declined by 12% to £5.9m (2023: £6.7m).
2024 2023 Change
£m £m %
Revenue 529.7 473.0 12%
Operating costs (153.9) (142.6) 8%
Share of profit from joint ventures 2.8 2.5 12%
Auto Trader operating profit 378.6 332.9 14%
Auto Trader operating profit margin 71% 70% 1% pts
Our share of profit generated by Dealer Auction, the Group's joint venture,
increased 12% to £2.8m (2023: £2.5m) as auction activity increased following
supply constraints in the prior year.
Autorama results
2024 2023 Change
£m £m %
Vehicle & Accessory Sales 28.4 16.0 78%
Commission & Ancillary 12.8 11.2 14%
Autorama revenue 41.2 27.2 51%
Autorama revenue was £41.2m (2023: £27.2m), with vehicle and accessory sales
contributing £28.4m (2023: £16.0m), and commission and ancillary revenue
contributing £12.8m (2023: £11.2m). The prior period included just over nine
months of results from acquisition date, compared to a full year this year.
Total deliveries amounted to 7,847 units (2023: 6,895), which comprised 2,646
cars (2023: 4,295), 4,616 vans (2023: 2,253) and 585 pickups (2023: 347).
Average commission and ancillary revenue per unit delivered was £1,631 (2023:
£1,624).
2024 2023 Change
£m £m %
Cost of goods sold 28.2 15.7 80%
People costs 10.9 10.5 4%
Marketing 4.0 4.7 (15%)
Other costs 4.5 5.4 (17%)
Depreciation & amortisation 2.4 2.1 14%
Autorama costs 50.0 38.4 30%
The Autorama business delivered c.1,200 (2023: c.700) vehicles which were
temporarily taken on balance sheet in the year to 31 March 2024. This
represented 15% (2023: 10%) of total vehicles delivered in the period. The
cost of these vehicles was taken through cost of goods sold, with the
corresponding revenue in vehicle and accessory sales. People costs of £10.9m
(2023: £10.5m) related to the 173 FTEs (2023: 209) employed on average
through the year. Marketing in the year was £4.0m (2023: £4.7m). Other costs
of £4.5m (2023: £5.4m) include IT services, property costs, people-related
costs and other overheads. Depreciation and amortisation totalled £2.4m
(2023: £2.1m).
2024 2023 Change
£m £m %
Revenue 41.2 27.2 51%
Costs (50.0) (38.4) 30%
Operating loss (8.8) (11.2) 21%
Group net finance costs
Group net finance costs increased to £3.5m (2023: £3.1m). Interest costs on
the Group's Syndicated Revolving Credit Facility ('Syndicated RCF') totalled
£3.0m (2023: £2.5m) with the year-on-year increase due to an increase in
underlying SONIA. At 31 March 2024, the Group had drawn £30.0m of its
available facility (31 March 2023: £60.0m). Other finance costs comprised
amortisation of debt issue costs of £0.6m (2023: £0.5m), vehicle stocking
loan interest of £0.3m (2023: £0.1m) and interest costs relating to leases
of £0.1m (2023: £0.2m). This was offset by interest receivable on cash and
cash equivalents of £0.5m (2023: £0.2m).
Extension of Syndicated RCF commitments
On 2 February 2024, the Group extended the term for its £200.0m Syndicated
RCF by one year, incurring additional associated debt transaction costs of
£0.3m. The facility has been extended to February 2029 and still has an
additional one-year extension option with no tranche terminations. There is no
change to the interest rate payable and there is no requirement to settle all,
or part of the debt earlier than the termination dates stated.
Taxation
Profit before taxation increased by 18% to £345.2m (2023: £293.6m). The
Group tax charge of £88.3m (2023: £59.7m) represents an effective tax rate
of 26% (2023: 20%). This is slightly higher than the average standard UK rate
of 25% (2023: 19%) due to non-deductible expenses.
We had previously stated that the Group was potentially in scope for the UK's
digital services tax ('DST') with revenues exceeding £500m. The UK Government
continues to work towards implementing a global two-pillar tax solution
addressing the tax challenges arising from the digitalisation of the economy.
Pillar Two came into effect for accounting periods beginning on or after 31
December 2023, but the timeline for finalising the multilateral convention
that would implement Pillar One is still not certain. The implementation of
Pillar One would see DST repealed and the Group liability would fall away. An
outcome statement was published in July 2023 which gave an expectation that
Pillar One would come into force during calendar year 2025. We are awaiting
further updates.
Our in-scope revenue did not exceed the threshold for UK DST in financial year
2024, but we expect the Group will exceed that threshold and pay DST in
financial year 2025. This would result in an additional operating expense
equivalent to c.2% of in-scope revenue, which will be deductible against
corporation tax payable.
Earnings per share
Basic earnings per share increased by 13% to 28.15 pence (2023: 25.01 pence)
based on a weighted average number of ordinary shares in issue of 912,582,172
(2023: 935,138,578). Diluted earnings per share of 28.07 pence (2023: 24.77
pence) also increased by 13%, based on 915,302,568 shares (2023: 944,144,242)
which takes into account the dilutive impact of outstanding share awards.
2024 2023 Change
£m
£m
%
Net income 256.9 233.9 10%
Autorama deferred consideration 11.1 38.8 (71%)
Profit on the sale of subsidiary - (19.1) 100%
Adjusted Net income 268.0 253.6 6%
Adjusted earnings per share (pence) 29.37 27.12 8%
Adjusted earnings per share, before Autorama deferred consideration and profit
on the sale of subsidiary in respect of the prior year, and net of the tax
effect in respect of these items, increased by 8% to 29.37 pence (2023: 27.12
pence).
Cash flow and net bank debt
Cash generated from operations increased to £379.0m (2023: £327.4m)
predominately due to the increase in operating profit. Corporation tax
payments increased to £91.5m (2023: £60.5m). Net cash generated from
operating activities was £287.5m (2023: £266.9m).
As at 31 March 2024, the Group had net bank debt of £11.3m (31 March 2023:
net bank debt of £43.4m), a decrease of £32.1m. At the year end, the Group
had drawn £30.0m of its Syndicated RCF (31 March 2023: £60.0m) and held cash
and cash equivalents of £18.7m (31 March 2023: £16.6m).
Leverage, defined as the ratio of Net bank debt to EBITDA (adjusted for the
Autorama deferred consideration), was 0.0 times (2023: 0.1 times) and interest
paid was £3.1m (2023: £3.2m).
Capital structure and dividends
During the year, a total of 25.2 million shares (2023: 25.3 million) were
purchased for a consideration of £169.9m (2023: £147.3m) before transaction
costs of £0.9m (2023: £0.7m). A further £80.4m (2023: £77.7m) was paid in
dividends, giving a total of £250.3m (2023: £225.0m) in cash returned to
shareholders. The Directors are recommending a final dividend of 6.4 pence per
share. Subject to shareholders' approval at the Annual General Meeting ('AGM')
on 19 September 2024, the final dividend will be paid on 27 September 2024 to
shareholders on the register of members at the close of business on 30 August
2024. The total dividend for the year is therefore 9.6 pence per share (2023:
8.4 pence per share).
The Group's long-term capital allocation policy remains unchanged: continuing
to invest in the business enabling it to grow while returning around one third
of net income to shareholders in the form of dividends. Following these
activities any surplus cash will be used to continue our share buyback
programme and steadily reduce gross indebtedness.
Going concern
The Group generated significant cash from operations during the year. At 31
March 2024 the Group had drawn £30.0m of its £200.0m unsecured Syndicated
RCF and had cash balances of £18.7m. The Group has a strong balance sheet and
flexibility in terms of uses of cash to manage increased economic uncertainty
and higher interest rates. The £200.0m Syndicated RCF is committed until
February 2029. Based on the facilities available and current financial
projections for the next 12 months the Directors have concluded that it is
appropriate to prepare the financial statements on a going concern basis.
Consolidated income statement
For the year ended 31 March 2024
Note 2024 2023
£m £m
Revenue 3 570.9 500.2
Operating costs (225.0) (225.1)
Share of profit from joint ventures, net of tax 11 2.8 2.5
Operating profit 4 348.7 277.6
Net finance costs 5 (3.5) (3.1)
Profit on disposal of subsidiary - 19.1
Profit before taxation 345.2 293.6
Taxation 6 (88.3) (59.7)
Profit for the year attributable to equity holders of the parent 256.9 233.9
Basic earnings per share (pence) 7 28.15 25.01
Diluted earnings per share (pence) 7 28.07 24.77
Consolidated statement of comprehensive income
For the year ended 31 March 2024
2024 2023
£m £m
Profit for the year 256.9 233.9
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Exchange differences on translation of foreign operations - (0.3)
Realisation of cumulative currency translation differences - 0.4
- 0.1
Items that will not be reclassified to profit or loss
Remeasurements of post-employment benefit obligations, net of tax (0.1) (0.4)
Other comprehensive income for the year, net of tax (0.1) (0.3)
Total comprehensive income for the year attributable to equity holders of the 256.8 233.6
parent
Consolidated balance sheet
At 31 March 2024
Note 2024 2023
£m £m
Assets
Non-current assets
Intangible assets 8 487.7 501.0
Property, plant and equipment 9 14.9 15.9
Retirement benefit surplus 0.6 0.5
Net investments in joint ventures 11 48.2 49.3
Other investments 1.3 2.3
552.7 569.0
Current assets
Inventory 2.6 3.6
Trade and other receivables 83.3 72.9
Current income tax assets 0.7 0.6
Cash and cash equivalents 18.7 16.6
105.3 93.7
Total assets 658.0 662.7
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital 13 9.2 9.3
Share premium 182.6 182.6
Retained earnings 1,420.5 1,390.3
Own shares held 14 (31.3) (26.0)
Capital reorganisation reserve (1,060.8) (1,060.8)
Capital redemption reserve 1.4 1.2
Other reserves 30.7 30.7
Total equity 552.3 527.3
Liabilities
Non-current liabilities
Borrowings 12 27.7 57.5
Provisions 1.6 1.3
Lease liabilities 10 2.4 4.6
Deferred income 7.8 8.3
Deferred taxation liabilities 2.9 5.8
42.4 77.5
Current liabilities
Trade and other payables 60.1 53.6
Provisions 0.8 0.7
Lease liabilities 10 2.4 2.5
Borrowings 12 - 1.1
63.3 57.9
Total liabilities 105.7 135.4
Total equity and liabilities 658.0 662.7
The financial statements were approved by the Board of Directors on 30 May
2024 and authorised for issue:
Jamie Warner
Chief Financial Officer
Auto Trader Group plc
Registered number: 09439967
30 May 2024
Consolidated statement of changes in equity
For the year ended 31 March 2024
Note Share Share Retained Own shares Capital Capital Other Total
capital premium earnings held reorganisation redemption reserves equity
£m £m £m £m reserve reserve £m £m
£m £m
Balance at 31 March 2022 9.5 182.6 1,332.4 (22.4) (1,060.8) 1.0 30.2 472.5
Profit for the year - - 233.9 - - - - 233.9
Other comprehensive income:
Currency translation differences - - - - - - (0.3) (0.3)
Realisation of cumulative currency translation differences - - - - - - 0.4 0.4
Remeasurements of post-employment benefit obligations, net of tax - - (0.4) - - - - (0.4)
Total comprehensive income, net of tax - - 233.5 - - - 0.1 233.6
Transactions with owners
Employee share schemes - value of employee services - - 44.6 - - - - 44.6
Exercise of employee share schemes - - (3.6) 5.1 - - 0.4 1.9
Tax impact of employee share schemes - - 0.4 - - - - 0.4
Purchase of own shares for treasury - - - (8.7) - - - (8.7)
Purchase of own shares for cancellation (0.2) - (139.3) - - 0.2 - (139.3)
Dividends paid - - (77.7) - - - - (77.7)
Total transactions with owners, recognised directly in equity (0.2) - (175.6) (3.6) - 0.2 0.4 (178.8)
Balance at 31 March 2023 9.3 182.6 1,390.3 (26.0) (1,060.8) 1.2 30.7 527.3
Profit for the year - - 256.9 - - - - 256.9
Other comprehensive income:
Remeasurements of post-employment benefit obligations, net of tax - - (0.1) - - - - (0.1)
Total comprehensive income, net of tax - - 256.8 - - - - 256.8
Transactions with owners
Employee share schemes - value of employee services - - 17.9 - - - - 17.9
Exercise of employee share schemes - - (4.0) 5.8 - - - 1.8
Tax impact of employee share schemes - - (0.3) - - - - (0.3)
Purchase of own shares for treasury - - - (11.1) - - - (11.1)
Purchase of own shares for cancellation (0.2) - (159.7) - - 0.2 - (159.7)
Issue of ordinary shares 0.1 - (0.1) - - - - -
Dividends paid - - (80.4) - - - - (80.4)
Total transactions with owners, recognised directly in equity (0.1) - (226.6) (5.3) - 0.2 - (231.8)
Balance at 31 March 2024 9.2 182.6 1,420.5 (31.3) (1,060.8) 1.4 30.7 552.3
Consolidated statement of cash flows
For the year ended 31 March 2024
Note 2024 2023
£m £m
Cash flows from operating activities
Cash generated from operations 16 379.0 327.4
Income taxes paid (91.5) (60.5)
Net cash generated from operating activities 287.5 266.9
Cash flows from investing activities
Purchases of intangible assets (0.2) (1.0)
Purchases of property, plant and equipment (3.6) (2.4)
Proceeds from sale of property, plant and equipment 0.2 1.8
Dividends received from joint ventures 3.9 2.9
Interest received on cash and cash equivalents 0.5 0.3
Payment for acquisition of subsidiary, net of cash acquired 17 - (144.2)
Payment of deferred consideration for acquisition of subsidiary 17 - (8.1)
Payment for acquisition of shares in investment entities - (1.3)
Proceeds on disposal of shares in investment entities 1.0 -
Proceeds on disposal of subsidiary, net of cash disposed - 25.6
Net cash used in investing activities 1.8 (126.4)
Cash flows from financing activities
Dividends paid to Company's shareholders 15 (80.4) (77.7)
Drawdown of Syndicated revolving credit facility 12 57.0 110.0
Repayment of Syndicated revolving credit facility 12 (87.0) (50.0)
Repayment of other debt (1.1) (4.0)
Proceeds from loan 12 - 1.1
Payment of refinancing fees 12 (0.5) (1.4)
Payment of interest on borrowings (3.4) (3.3)
Payment of lease liabilities 10 (2.7) (2.9)
Purchase of own shares for cancellation 13 (158.9) (138.6)
Purchase of own shares for treasury 14 (11.0) (8.7)
Payment of fees on purchase of own shares (0.9) (0.7)
Contributions to defined benefit pension scheme (0.1) (1.0)
Proceeds from exercise of share-based incentives 1.8 2.0
Net cash used in financing activities (287.2) (175.2)
Net increase/(decrease) in cash and cash equivalents 2.1 (34.7)
Cash and cash equivalents at beginning of year 16.6 51.3
Cash and cash equivalents at end of year 18.7 16.6
Notes to the consolidated financial statements
1. General information
Basis of preparation
The Consolidated financial statements have been prepared in accordance with
the requirements of the Companies Act 2006 and in accordance with UK-adopted
international accounting standards. The Consolidated financial statements have
been prepared on the going concern basis and under the historical cost
convention except for equity investments which are carried at fair value. The
Group's principal business is the operation of the Auto Trader platforms which
form the UK's largest automotive marketplace.
The following amendments to standards have been adopted by the Group for the
first time for the financial year beginning on 1 April 2023:
· IFRS 17 Insurance Contracts
· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2)
· Definition of Accounting Estimates (Amendments to IAS 8)
· Deferred Tax Related to Assets and Liabilities Arising from a Single
Transaction (Amendments to IAS 12 Income Taxes)
The adoption of these amendments has had no material effect on the Group's
Consolidated financial statements.
There are a number of amendments to IFRS that have been issued by the IASB
that, when endorsed in the UK, will become effective in a subsequent
accounting period including:
· Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
· Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
· Lack of Exchangeability (Amendments to IAS 21)
· Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture (Amendments to IFRS 10 and IAS 28)
The Group has evaluated these changes and none are expected to have a material
impact on the Consolidated financial statements.
The Group has early adopted the amendments to IAS 1 - Classification of
Liabilities as Current or Non-current and Non-current Liabilities with
Covenants, which are required to be effective from 1 January 2024. The
amendments do not have any material impact on the Group's financial
statements.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 March 2024 or 31 March 2023 but is
derived from those accounts. Statutory accounts for 31 March 2023 have been
delivered to the registrar of companies, and those for 31 March 2024 will be
delivered in due course. The auditor has reported on those accounts; their
reports were (i) unqualified, (ii) did not include a reference to any matters
to which the auditor drew attention by way of emphasis without qualifying
their report and (iii) did not contain a statement under section 498 (2) or
(3) of the Companies Act 2006.
Going concern
During the year ended 31 March 2024 the Group has continued to generate
significant cash from operations. The Group has an overall positive net asset
position and had cash balances of £18.7m at 31 March 2024 (2023: £16.6m).
During the year £250.3m was returned to shareholders through share buybacks
and dividends (2023: £225.0m).
The Group has access to a Syndicated revolving credit facility (the
'Syndicated RCF'). At 31 March 2024 the Group had £30.0m (2023: £60.0m)
drawn of its £200.0m Syndicated RCF. On 2 February 2024, the Group extended
the term for its Syndicated RCF by one year and the facility is now available
until February 2029.
Cash flow projections for a period of not less than 12 months from the date of
this report have been prepared. Stress case scenarios have been modelled to
make the assessment of going concern, taking into account severe but plausible
potential impacts of a severe economic downturn, ransomware attack and a new
market entrant within the next 12 months. The results of the stress testing
demonstrated that due to the Group's significant free cash flow, access to the
Syndicated RCF and the Board's ability to adjust the discretionary share
buyback programme, the Group would be able to withstand the impact and remain
cash generative. Following the year end, the Group has generated cash flows in
line with its forecast and there are no events that have adversely impacted
the Group's liquidity.
The Directors, after making enquiries and on the basis of current financial
projections and facilities available, believe that the Group has adequate
financial resources to continue in operation for a period not less than 12
months from the date of this report. For this reason, they continue to adopt
the going concern basis in preparing the financial statements.
Accounting estimates and judgements
The preparation of financial statements in conformity with UK-adopted
international accounting standards requires the use of certain accounting
estimates and assumptions. It also requires management to exercise its
judgement in the process of applying the Group's accounting policies.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
There are no accounting estimates or judgements at the financial year end
which have a significant risk of resulting in a material adjustment to the
carrying amounts of assets and liabilities within the next financial year.
Other accounting estimates and judgements include:
Carrying values of goodwill (judgement and estimate)
The Group tests annually whether goodwill held by the Group has suffered any
impairment in accordance with its accounting policy. The Group has two cash
generating units, Digital and Autorama. Estimation is required for the
assumptions used in the calculation of the recoverable amounts of each cash
generating unit.
2. Segmental information
IFRS 8 'Operating segments' requires the Group to determine its operating
segments based on information which is provided internally. Based on the
internal reporting information and management structures within the Group, it
has been determined that there are two operating segments (2023: two operating
segments). The Group's reportable operating segments have therefore been
identified as follows:
· Auto Trader - includes the results of Auto Trader and AutoConvert
(2023 also includes Webzone before it was disposed on 24 October 2022) in
respect of online classified advertising of motor vehicles and other related
products and services in the digital automotive marketplace including profit
from the Dealer Auction joint venture.
· Autorama - the results of Autorama in respect of a marketplace for
leasing new vehicles and other related products and services.
Management has determined that there are two operating segments in line with
the nature in which the Group is managed. The reports reviewed by the
Operational Leadership Team ('OLT'), which is the chief operating
decision-maker ('CODM') for both segments, splits out operating performance by
segment. The OLT is made up of the Executive Directors and Key Management and
is responsible for the strategic decision-making of the Group. Revenue and
cost streams for each operating segment are largely independent in the
reporting period.
The OLT primarily uses the measures of Revenue and Operating profit to assess
the performance of each operating segment. The revenue from external parties
reported to the OLT is measured in a manner consistent with that in the income
statement. There are no inter-segment revenues in the current or comparative
periods.
Analysis of the Group's revenue and results for both reportable segments, with
a reconciliation to Group profit before tax is shown below:
Year to March 2024 Auto Trader segment Autorama segment Group Group
central costs
£m £m
£m
£m
Total segment revenue 529.7 41.2 - 570.9
People costs (81.5) (10.9) (11.1) (103.5)
Marketing (22.3) (4.0) - (26.3)
Costs of goods sold - (28.2) - (28.2)
Other costs (44.2) (4.5) - (48.7)
Depreciation & amortisation (5.9) (2.4) (10.0) (18.3)
Total segment costs (153.9) (50.0) (21.1) (225.0)
Share of profit from joint ventures 2.8 - - 2.8
Total segment operating profit/(loss) 378.6 (8.8) (21.1) 348.7
Finance costs - net (3.5)
Profit before tax 345.2
Group central costs which are not allocated within either of the segment
operating profit/(loss) reported to the CODM comprise:
(i) People costs: £10.4m share-based payment expense relating to the Group
shares issued as part of the deferred consideration for Autorama, which was
fully settled in the period. A further £0.7m was settled in cash.
(ii) Depreciation and amortisation: £10.0m of amortisation expense relating
to the fair value of intangible brand and technology assets acquired in the
Group's business combination of Autorama.
Year to March 2023 Auto Trader segment Autorama segment Group Group
central costs
£m £m
£m
£m
Total segment revenue 473.0 27.2 - 500.2
People costs (74.0) (10.5) (38.8) (123.3)
Marketing (22.3) (4.7) - (27.0)
Costs of goods sold - (15.7) - (15.7)
Other costs (39.6) (5.4) - (45.0)
Depreciation & amortisation (6.7) (2.1) (5.3) (14.1)
Total segment costs (142.6) (38.4) (44.1) (225.1)
Share of profit from joint ventures 2.5 - - 2.5
Total segment operating profit/(loss) 332.9 (11.2) (44.1) 277.6
Finance costs - net (3.1)
Profit on disposal of subsidiary 19.1
Profit before tax 293.6
3. Revenue
The Group's revenue is derived from contracts with customers. All revenues
were earned from activities and customers in the United Kingdom.
In the following table, the Group's revenue is detailed by customer type. This
level of detail is consistent with that used by management to assist in the
analysis of the Group's revenue-generating trends.
Revenue 2024 2023
£m £m
Retailer 450.0 406.8
Home Trader 13.4 10.1
Other 12.3 10.5
Trade 475.7 427.4
Consumer Services 39.6 34.5
Manufacturer and Agency 14.4 11.1
Autorama 41.2 27.2
Total revenue 570.9 500.2
4.Operating profit
Operating profit is after (charging)/crediting the following:
Note 2024 2023
£m £m
Staff costs (92.2) (84.1)
Contractor costs (0.2) (0.4)
Depreciation of property, plant and equipment 9 (4.8) (4.9)
Amortisation of intangible assets 8 (13.5) (9.2)
(Loss)/profit on sale of property, plant and equipment (0.3) 0.7
5. Net finance costs
2024 2023
£m £m
On bank loans and overdrafts 3.0 2.5
Amortisation of debt issue costs 0.6 0.5
Interest unwind on lease liabilities 0.1 0.2
Interest on vehicle stocking loan 0.3 0.1
Interest receivable on cash and cash equivalents (0.5) (0.2)
Total 3.5 3.1
6. Taxation
2024 2023
£m £m
Current taxation
UK corporation taxation 91.7 61.2
Foreign taxation - 0.1
Adjustments in respect of prior years - (0.2)
Total current taxation 91.7 61.1
Deferred taxation
Origination and reversal of temporary differences (3.0) (1.3)
Adjustments in respect of prior years (0.4) (0.1)
Total deferred taxation (3.4) (1.4)
Total taxation charge 88.3 59.7
The taxation charge for the year is higher than (2023: higher than) the
effective rate of corporation tax in the UK of 25% (2023: 19%). The
differences are explained below:
2024 2023
£m £m
Profit before taxation 345.2 293.6
Tax on profit at the standard UK corporation tax rate of 25% (2023: 19%) 86.3 55.8
Expenses not deductible for taxation purposes 3.5 8.5
Income not taxable - gain on disposal of subsidiary - (3.6)
Share of joint venture taxation (0.7) (0.5)
Adjustments in respect of foreign taxation rates - (0.1)
Adjustments in respect of OCI group relief - (0.1)
Adjustments in respect of prior years (0.4) (0.3)
Adjustments in respect of losses not previously recognised (0.4) -
Total taxation charge 88.3 59.7
Expenses non-deductible for taxation purposes in the current year principally
includes the share-based payment expense relating to the deferred
consideration and amortisation of intangible assets arising on acquisition of
Autorama.
Adjustments in respect of losses not previously recognised in the current year
relates to brought forward tax losses within the Group which were previously
not recognised. Losses have been utilised in the period and a deferred tax
asset has been recognised in respect of the remaining balance on the basis
that it is deemed probable that future taxabale profit will be available to
utilise these against.
Taxation on items taken directly to equity was a debit of £0.3m (2023: credit
of £0.4m) relating to tax on share-based payments.
Taxation recorded in equity within the Consolidated statement of comprehensive
income was a release of £0.1m (2023: release of £0.4m) relating to
post-employment benefit obligations.
The taxation charge for the year is based on the standard rate of UK
corporation tax for the period of 25% (2023: 19%).
Deferred income taxes have been measured at the tax rate expected to be
applicable at the date the deferred income tax assets and liabilities are
realised.
We had previously stated that the Group was potentially in scope for the UK's
digital services tax ('DST') with the Group's revenues exceeding £500m. The
UK Government continues to work towards implementing a global two-pillar tax
solution addressing the tax challenges arising from the digitalisation of the
economy. Pillar Two came into effect for accounting periods beginning on or
after 31 December 2023, but the timeline for finalising the multilateral
convention that would implement Pillar One is still not certain. The
implementation of Pillar One would see the UK DST repealed and the Group
liability would fall away. An outcome statement was published in July 2023
which gave an expectation that Pillar One would come into force during
calendar year 2025. We are awaiting further updates.
Our in-scope revenue did not exceed the threshold for UK DST in financial year
2024, but we expect the Group will exceed that threshold and pay DST in
financial year 2025. This would result in an additional operating expense
equivalent to c.2% of in-scope revenue, which will be deductible against
corporation tax payable.
7. Earnings per share
Basic earnings per share is calculated using the weighted average number of
ordinary shares in issue during the year, excluding those held in treasury and
by the Employee Share Option Trust ('ESOT'), based on the profit for the year
attributable to shareholders.
Weighted average Total Pence
number of ordinary shares earnings per share
£m
Year ended 31 March 2024
Basic EPS 912,582,172 256.9 28.15
Diluted EPS 915,302,568 256.9 28.07
Year ended 31 March 2023
Basic EPS 935,138,578 233.9 25.01
Diluted EPS 944,144,242 233.9 24.77
The number of shares in issue at the start of the year is reconciled to the
basic and diluted weighted average number of shares below:
2024 2023
Issued ordinary shares at 1 April 923,074,657 946,892,976
Weighted effect of ordinary shares purchased for cancellation (11,835,430) (7,112,698)
Weighted effect of ordinary shares held in treasury (4,417,849) (4,304,401)
Weighted effect of shares held in the ESOT (330,294) (348,989)
Weighted effect of ordinary shares issued for share-based payments 6,091,088 11,690
Weighted average number of shares for basic EPS 912,582,172 935,138,578
Dilutive impact of share options outstanding 2,720,396 9,005,664
Weighted average number of shares for diluted EPS 915,302,568 944,144,242
For diluted earnings per share, the weighted average number of shares for
basic EPS is adjusted to assume conversion of all potentially dilutive
ordinary shares. The Group has potentially dilutive ordinary shares arising
from share options granted to employees. Options are dilutive where the
exercise price together with the future IFRS 2 charge is less than the average
market price of the ordinary shares during the year. Options under the
Performance Share Plan, the Single Incentive Plan Award for the Operational
Leadership Team and certain key employees, the Single Incentive Plan Award for
all employees, the Deferred Annual Bonus Plan and the Share Incentive Plan are
contingently issuable shares and are therefore only included within the
calculation of diluted EPS if the performance conditions are satisfied.
Dilutive share options outstanding at 31 March 2023 included shares to be
issued for the Autorama deferred consideration, which were issued in June
2023.
The average market value of the Group's shares for the purposes of calculating
the dilutive effect of share-based incentives was based on quoted market
prices for the period during which the share-based incentives were
outstanding.
8. Intangible assets
Goodwill Software Financial Brand Other Total
and website development costs
systems
£m
£m £m £m
£m £m
Cost
At 31 March 2022 457.9 14.4 13.1 1.2 25.3 511.9
Acquired through business combinations 92.5 13.7 - 47.6 5.6 159.4
Additions - 1.0 - - - 1.0
Disposals (5.7) (1.8) - (0.6) (1.2) (9.3)
Exchange differences (0.1) - - - - (0.1)
At 31 March 2023 544.6 27.3 13.1 48.2 29.7 662.9
Additions - 0.2 - - - 0.2
Disposals - (3.0) - - - (3.0)
At 31 March 2024 544.6 24.5 13.1 48.2 29.7 660.1
Accumulated amortisation and impairments
At 31 March 2022 117.0 9.2 13.1 0.7 16.3 156.3
Amortisation charge - 2.5 - 4.2 2.5 9.2
Disposals - (1.8) - (0.6) (1.2) (3.6)
At 31 March 2023 117.0 9.9 13.1 4.3 17.6 161.9
Amortisation charge - 3.0 - 7.9 2.6 13.5
Disposals - (3.0) - - - (3.0)
At 31 March 2024 117.0 9.9 13.1 12.2 20.2 172.4
Net book value at 31 March 2024 427.6 14.6 - 36.0 9.5 487.7
Net book value at 31 March 2023 427.6 17.4 - 43.9 12.1 501.0
Net book value at 31 March 2022 340.9 5.2 - 0.5 9.0 355.6
Other intangibles include customer relationships, technology, trade names,
trademarks and non-compete agreements. Intangible assets which have a finite
useful life are carried at cost less accumulated amortisation. Amortisation of
these intangible assets is calculated using the straight-line method to
allocate the cost of the assets over their estimated useful lives (principally
between 3 to 15 years). The longest estimated useful life remaining at 31
March 2024 is 11 years (31 March 2023: 12 years).
For the year to 31 March 2024, the amortisation charge of £13.5m (2023:
£9.2m) has been charged to operating costs in the Consolidated income
statement. As the integration of Autorama, our new car leasing proposition,
has accelerated at a faster rate than anticipated at acquisition, the useful
economic life of the 'Vanarama' brand has been reduced from ten years to five
years from the date of acquisition, effective from 1 October 2023.
At 31 March 2024, there were no software and website development costs
representing assets under construction (2023: £nil).
In accordance with UK-adopted international accounting standards, goodwill is
not amortised, but instead is tested annually for impairment, or more
frequently if there are indicators of impairment. Goodwill is carried at cost
less accumulated impairment losses.
9. Property, plant and equipment
Land, buildings and leasehold improvements Office Motor Total
vehicles
£m equipment
£m
£m
£m
Cost
At 31 March 2022 23.1 13.9 1.6 38.6
Acquired through business combinations 4.0 0.3 1.0 5.3
Additions 2.2 2.0 0.3 4.5
Disposals (7.6) (3.0) (0.9) (11.5)
At 31 March 2023 21.7 13.2 2.0 36.9
Additions 2.8 1.4 0.2 4.4
Disposals (1.5) (4.1) (0.6) (6.2)
At 31 March 2024 23.0 10.5 1.6 35.1
Accumulated depreciation
At 31 March 2022 11.5 11.1 1.3 23.9
Charge for the year 3.3 1.1 0.5 4.9
Disposals (4.4) (2.8) (0.6) (7.8)
At 31 March 2023 10.4 9.4 1.2 21.0
Charge for the year 2.9 1.5 0.4 4.8
Disposals (1.1) (4.1) (0.4) (5.6)
At 31 March 2024 12.2 6.8 1.2 20.2
Net book value at 31 March 2024 10.8 3.7 0.4 14.9
Net book value at 31 March 2023 11.3 3.8 0.8 15.9
Net book value at 31 March 2022 11.6 2.8 0.3 14.7
Included within property, plant and equipment are £5.0m (2023: £6.5m) of
assets recognised as leases under IFRS 16. The depreciation expense of £4.8m
for the year to 31 March 2024 (2023: £4.9m) has been recorded
in operating costs. During the year, £5.3m (2023: £2.6m) worth of property,
plant and equipment with £nil net book value was disposed of.
10. Leases
The Group's lease assets including land and buildings and motor vehicles are
held within property, plant and equipment. Information about leases for which
the Group is a lessee is presented below.
2024 2023
£m £m
Net book value property, plant and equipment owned 9.9 9.4
Net book value right of use assets 5.0 6.5
14.9 15.9
Net book value of right of use assets Land, buildings and leasehold improvements Office Motor Total
vehicles
£m equipment
£m
£m
£m
Balance at 31 March 2022 7.8 0.1 0.4 8.3
Acquired through business combination 0.1 - 0.3 0.4
Additions 1.5 0.1 0.3 1.9
Disposals (1.4) - (0.1) (1.5)
Depreciation charge (2.2) - (0.4) (2.6)
At 31 March 2023 5.8 0.2 0.5 6.5
Additions 0.5 0.1 0.2 0.8
Disposals (0.1) - - (0.1)
Depreciation charge (1.8) (0.1) (0.3) (2.2)
At 31 March 2024 4.4 0.2 0.4 5.0
Lease liabilities in the balance sheet at 31 March 2024 2023
£m £m
Current 2.4 2.5
Non-current 2.4 4.6
Total 4.8 7.1
The term recognised for certain leases has assumed lease break options are
exercised. Certain lease rentals are subject to periodic market rental
reviews.
During the year, the Group reassessed its dilapidations provision for its
leased properties which resulted in a £0.4m increase in the provision, and
corresponding increase in the right of use asset.
2024 2023
Amounts charged in the income statement £m £m
Depreciation charge of right of use assets 2.2 2.6
Interest on lease liabilities 0.1 0.2
Gain on disposal of right of use assets - (0.1)
Total amounts charged in the income statement 2.3 2.7
Cash outflow 2024 2023
£m £m
Total cash outflow for leases 2.7 2.9
11. Net investments in joint ventures
Joint ventures are contractual arrangements over which the Group exercises
joint control with partners and where the parties have rights to the net
assets of the arrangement, irrespective of the Group's shareholding in the
entity.
The Group owns 49% of the ordinary share capital of Dealer Auction Limited
(previously Dealer Auction (Holdings) Limited). The basis of the Group's joint
control is through a shareholder agreement and an assessment of the
substantive rights of each shareholder, including operational barriers or
incentives that would prevent or deter rights being exercised.
Net investments in joint ventures at the reporting date include the Group's
equity investment in joint ventures and the Group's share of the joint
ventures' post acquisition net assets. The table below reconciles the movement
in the Group's net investment in joint ventures in the year:
Equity investments in joint ventures Share of post acquisition net assets Net investments
in joint ventures
£m £m
£m
Carrying value
As at 31 March 2022 40.3 9.4 49.7
Share of result for the year taken to the income statement - 2.5 2.5
Dividends received in the year (2.9) - (2.9)
As at 31 March 2023 37.4 11.9 49.3
Share of result for the year taken to the income statement - 2.8 2.8
Dividends received in the year (3.9) - (3.9)
As at 31 March 2024 33.5 14.7 48.2
Set out below is the summarised financial information for the joint venture,
adjusted for differences in accounting policies between the Group and the
joint venture. The table also reconciles the summarised financial information
to the carrying amount of the Group's interest in the joint venture.
2024 2023
£m £m
Non-current assets 94.5 95.6
Current assets
Cash and cash equivalents 6.8 6.4
Other current assets 2.1 1.3
Total assets 103.4 103.3
Liabilities
Current liabilities 4.4 2.0
Total liabilities 4.4 2.0
Net assets 99.0 101.3
Group's share of net assets 48.2 49.3
2024 2023
£m £m
Revenues 13.2 10.5
Profit for the year 5.7 5.2
Total comprehensive income 5.7 5.2
Group's share of comprehensive income 2.8 2.5
Dividends received by the Group 3.9 2.9
12. Borrowings
Non-current 2024 2023
£m £m
Syndicated RCF gross of unamortised debt issue costs 30.0 60.0
Unamortised debt issue costs on Syndicated RCF (2.3) (2.5)
Total 27.7 57.5
2024 2023
Current £m £m
Loan from other investment - 1.1
Total - 1.1
Total borrowings 27.7 58.6
Unamortised debt issue costs on the Syndicated RCF decreased to £2.3m in the
year (2023: £2.5m).
Borrowings are repayable as follows:
2024 2023
£m £m
Less than one year - 1.1
Two to five years 30.0 60.0
Total 30.0 61.1
The carrying amounts of borrowings approximate their fair values.
Syndicated revolving credit facility ('Syndicated RCF')
The Group has access to an unsecured Syndicated RCF. Associated debt
transaction costs total £6.2m, with £3.3m being incurred at initiation and
£2.9m of additional costs associated with extension requests.
In the prior year, with effect from 1 February 2023, the Group entered into an
Amendment and Restatement Agreement to extend the term of the facility for
five years from the date of signing and to further reduce the capacity of the
facility to £200.0m. During the year, on 2 February 2024, the Group extended
the term of the Syndicated RCF by one year. The facility has been extended to
February 2029 and still has an additional one year extension option with no
tranche terminations. There is no change to the interest rate payable and
there is no requirement to settle all or part of the debt before the
termination date stated. The associated debt transaction costs of the
extension were £0.3m, which were paid in the period to 31 March 2024. The
remaining £0.2m debt transaction costs relating to the prior year Amendment
and Restatement were also paid in the period to 31 March 2024.
Individual tranches are drawn down, in sterling, for periods of up to six
months at the compounded reference rate (being the aggregate of SONIA for that
interest period) plus a margin of between 1.2% and 2.1% depending on the
consolidated leverage ratio of the Group. As part of the Amendment and
Restatement Agreement of the Syndicated RCF in 2023, three sustainability
performance targets were incorporated into the agreement. This will be tested
for the first time in 2024. The margin shall be increased or decreased between
-0.05% and 0.05% based on the number of sustainability performance targets
achieved in the reporting period. This will be reviewed annually. A commitment
fee of 35% of the margin applicable to the Syndicated RCF is payable quarterly
in arrears on unutilised amounts of the total facility.
The Syndicated RCF has financial covenants linked to interest cover and the
consolidated debt cover of the Group:
· Net bank debt to EBITDA must not exceed 3.5:1.
· EBITDA to Net Interest Payable must not be less than 3.0:1.
EBITDA is defined as earnings before interest, taxation, depreciation and
amortisation, share-based payments and associated NI, share of profit from
joint ventures and exceptional items.
All financial covenants of the facility have been complied with through the
period.
Loan from other investments
In the prior year, the Group's wholly owned subsidiary, Autorama Holding
(Malta) Limited, elected to transfer the insurance portfolio held in a
protected insurance cell with Advent Insurance PCC Limited to Atlas Insurance
PCC Limited. As part of this process, Advent Insurance PCC Limited issued a
loan to Autorama Holding (Malta) Limited to fund the investment in the new
protected insurance cell until the portfolio transfer was complete. This
process was completed during the year and the loan was repaid. As at 31 March
2024, £nil was recognised on the Consolidated balance sheet (2023: £1.1m).
Exposure to interest rate changes
The exposure of the Group's borrowings (excluding debt issue costs) to SONIA
rate changes and the contractual repricing dates at the balance sheet date are
as follows:
2024 2023
£m £m
One month or less 30.0 60.0
Total 30.0 60.0
13. Share capital
Share capital 2024 2023
Number Amount Number Amount
'000 £m '000 £m
Allotted, called-up and fully paid ordinary shares of 1p each
At 1 April 923,075 9.3 946,893 9.5
Purchase and cancellation of own shares (23,711) (0.2) (23,831) (0.2)
Issue of shares 7,850 0.1 13 0.0
Total 907,214 9.2 923,075 9.3
In the year ended 31 March 2017, the Company commenced a share buyback
programme. By resolutions passed at the 2023 AGM, the Company's shareholders
generally authorised the Company to make market purchases of up to 92,019,875
of its ordinary shares, subject to minimum and maximum price restrictions. In
the year ended 31 March 2024, a total of 25,207,430 ordinary shares of £0.01
were purchased. The average price paid was 673.0p with a total consideration
paid (including fees of £0.9m) of £170.8m. Of all shares purchased,
1,496,445 were held in treasury with 23,710,985 being cancelled. In the year
ended 31 March 2024, 7,849,782 ordinary shares were issued for the settlement
of share-based payments.
Included within shares in issue at 31 March 2024 are 312,831 (2023: 340,196)
shares held by the ESOT and 4,899,346 (2023: 4,371,505) shares held in
treasury, as detailed in note 14.
14. Own shares held
Own shares held - £m ESOT shares reserve Treasury Total
shares
£m
£m
£m
Own shares held as at 31 March 2022 (0.4) (22.0) (22.4)
Repurchase of own shares for treasury - (8.7) (8.7)
Share-based incentives exercised - 5.1 5.1
Own shares held as at 31 March 2023 (0.4) (25.6) (26.0)
Repurchase of own shares for treasury - (11.1) (11.1)
Share-based incentives exercised - 5.8 5.8
Own shares held as at 31 March 2024 (0.4) (30.9) (31.3)
Own shares held - number ESOT shares reserve Treasury Total
Number of shares shares Number of shares
Number of shares
Own shares held as at 31 March 2022 358,158 3,826,928 4,185,086
Transfer of shares from ESOT (17,962) - (17,962)
Repurchase of own shares for treasury - 1,430,372 1,430,372
Share-based incentives exercised - (885,795) (885,795)
Own shares held as at 31 March 2023 340,196 4,371,505 4,711,701
Transfer of shares from ESOT (27,365) - (27,365)
Purchase of own shares for treasury - 1,496,445 1,496,445
Share-based incentives exercised - (968,604) (968,604)
Own shares held as at 31 March 2024 312,831 4,899,346 5,212,177
15. Dividends
Dividends declared and paid by the Company were as follows:
2024 2023
Pence £m Pence £m
per share per share
2023 final dividend paid 5.6 51.3 5.5 51.7
2024 interim dividend paid 3.2 29.1 2.8 26.0
8.8 80.4 8.3 77.7
The proposed final dividend for the year ended 31 March 2024 of 6.4p per
share, totalling £58.4m, is subject to approval by shareholders at the Annual
General Meeting ('AGM') and hence has not been included as a liability in the
financial statements.
16. Cash generated from operations
2024 2023
£m £m
Profit after tax 256.9 233.9
Adjustments for:
Tax charge 88.3 59.7
Depreciation 4.8 4.9
Amortisation 13.5 9.2
Share-based payments charge (excluding associated NI) 7.5 5.8
Deferred contingent consideration 10.4 38.8
Share of profit from joint ventures (2.8) (2.5)
Loss/(profit) on sale of property, plant and equipment 0.3 (0.7)
Net lease disposals and modifications - (0.1)
Post employment expenses relating to the defined benefit scheme - 2.7
Finance costs 3.5 3.1
RDEC (0.1) (0.1)
Profit on disposal of a subsidiary - (19.1)
Changes in working capital (excluding the effects of exchange differences on
consolidation):
Trade and other receivables (10.4) (3.6)
Trade and other payables 6.0 (1.9)
Inventory 1.0 (2.7)
Provisions 0.1 -
Cash generated from operations 379.0 327.4
17 Business combinations in the prior year
Purchase of Autorama UK Limited
On 22 June 2022, the Group acquired the entire share capital of Autorama UK
Limited ('Autorama') for initial consideration of £150.0m, with an additional
£50.0m deferred until 22 June 2023 and settled in shares to the value of
£50.0m, subject to employment and customary performance conditions.
Autorama, one of the UK's largest marketplaces for leasing new vehicles, is a
leading end-to-end digital platform, which aggregates leasing deals from
multiple funders and OEMs (under its 'Vanarama' brand), enabling buyers to
transact online across a wide range of vehicles.
The total consideration of £150.0m excludes acquisition costs of £2.1m which
were recognised within costs in the Consolidated income statement. The
following table provides a reconciliation of the amounts included in the
Consolidated statement of cash flows for the period:
2023
£m
Cash paid for subsidiary 150.0
Less: cash acquired (5.8)
Payment for acquisition of subsidiary, net of cash acquired 144.2
As the settlement of the deferred consideration of £50.0m was subject to a
condition for continuing employment to 22 June 2023, the amount was not
included in the business combination but was recorded as a post-acquisition
income statement expense over the period of service, which extended to the
first anniversary of the acquisition. The deferred consideration was fully
settled at 31 March 2024 with the final settlement being reduced to £49.9m
due to the associated performance conditions not being met.
From the period of acquisition to 31 March 2023, Autorama contributed revenue
of £27.2m and a loss of £11.2m to the Group's results.
The purchase has been accounted for as a business combination under the
acquisition method in accordance with IFRS 3. The fair value of net assets
acquired was assessed and, other than in respect of the intangible assets and
related deferred tax, described below, no material adjustments from book value
were made to existing assets and liabilities. The period in which measurement
adjustments could be made is still open on this acquisition and the
provisional goodwill calculation is summarised below:
Fair value
£m
Intangible asset recognised on acquisition
Brand 47.6
Technology 13.7
Customer relationships 2.9
Order book 2.3
Deferred tax liability arising on intangible assets (16.3)
50.2
Other non-current assets
Investments 1.0
Property, plant and equipment 5.3
Intangible assets 0.4
Deferred tax asset 6.8
13.5
Current assets
Cash and cash equivalents 5.8
Trade and other receivables 4.5
Inventory 0.9
Other debtors 0.9
12.1
Current liabilities
Trade and other payables 11.6
Deferred income 2.3
13.9
Non-current liabilities
Borrowings 4.0
Lease liabilities 0.4
4.4
Total net assets acquired 57.5
Goodwill on acquisition 92.5
Total assets acquired 150.0
Fair value of cash consideration 150.0
The brand, technology, customer relationships and order book obtained through
the acquisition met the requirements to be separately identifiable under IFRS
3.
The business operates under the Vanarama brand name and is one of the UK's
longest running leasing e-commerce brands. This asset was valued using
Multi-period Excess Earnings Method and crosschecked using relief from
royalty. A useful economic life and obsolescence decline period of 10 years
was assumed. Revenue forecasts were discounted using a post-tax discount rate
of 14%. This discount rate is lower than that for Autorama as a whole at the
date of acquisition and reflects factors including the finite brand forecast
period, compared to cash flows into perpetuity used to support the goodwill.
The technology is Autorama's propriety technology which helps manage a complex
vehicle lease purchasing process into a streamlined online transaction via a
customer friendly user interface, which has been developed in-house. The asset
was valued using the cost approach specifically replacement costs and
crosschecked using relief from royalty. The order book is customer orders not
yet delivered, which is expected to unwind.
The goodwill recognised on acquisition principally relates to value arising
from intangible assets that are not separately identifiable under IFRS
3. Such assets include the value of the acquired workforce (including
technical experience), returning customers and future market growth
opportunities. Customer lists have not been valued separately on the basis
they are inseparable in their own right from the brand. Supplier relationships
are not separately valued on the basis that their terms are in line with
industry standards of what would be typically agreed with a market
participant.
The valuation of the Vanarama brand name is sensitive to a change in the
obsolescence rate assumption. An obsolescence profile has been assumed which
is considered to be a representative curve for a consumer asset in the absence
of continued marketing spend, showing a slow decline in the early years due to
the benefit of historic spend, then decline accelerating in the middle years
as consumer brand consciousness falls, before slowing in the final years to
reflect a slower drop off of residual awareness. Slowing or accelerating the
assumed rate of obsolescence by one year, with all other factors being
unchanged, would increase or decrease the valuation of the brand by £14m or
£16m respectively. Residual goodwill would be adjusted by an equal and
opposite amount, net of taxation. The discount rate used in the brand
valuation is less sensitive to change, reflecting the finite useful economic
life of ten years and the lower positive cash flows in the latter years due to
the obsolescence decline.
None of the acquired intangible assets or goodwill is expected to be
deductible for tax purposes. A deferred tax liability has been recorded on the
fair value of the intangible assets recognised, other than goodwill, measured
at the substantively enacted UK rate of corporation tax from April 2023 of
25%. This deferred tax liability has been debited against and increased the
value of goodwill recognised.
Settlement of deferred consideration in relation to BlueOwl Network Limited
In addition, in July 2022, the deferred consideration of £8.1m was settled in
respect of the acquisition of BlueOwl Network Limited ('BlueOwl'). On 31 July
2020, the Group acquired the entire share capital of BlueOwl for consideration
of £18.2m, of which £8.1m was deferred until 31 July 2022.
Principal risks and uncertainties
Risk POTENTIAL IMPACT CHANGES IN THE YEAR
1. Automotive economy, market and business environment An increase in the supply and/or a drop in consumer demand for new/used cars · The supply of both new and used vehicles increased in FY24, with new car
could lead to reduced vehicle prices and therefore reduced retailer registrations increasing 16% and used car transactions increasing 6%. Prices
profitability. Higher costs and interest rates could lower retailer have softened through the year, however continually strong levels of demand,
profitability and reduce their advertising spend with Auto Trader. Reduced fast speed of sale, and lower trade prices have lessened some of the impact
profitability could lead to consolidation of retailers. felt by retailers.
· Whilst the volume of fleet new car registrations has increased 38% year on
year, these vehicles have been sold into corporate and rental customers rather
High cost of living and interest rates could affect car buyers' ability to than feeding into the broker channel where supply remains tight.
afford a change of vehicle, affecting demand.
· Higher interest rates on stocking loans and general inflationary pressures
have increased retailer costs. In this context, we are working closer in
partnership with our retailers to help them get the most out of our
Mass adoption of the agency model, whereby manufacturers sell new vehicles advertising and data-led products.
directly to consumers with the retailer acting as an agent facilitating the
transaction, could lead to lower revenues for our retailer customers. Further, · The number of UK retailer forecourts working with Auto Trader increased in
manufacturers operating an agency model may not wish to use Auto Trader as an the year to its highest ever number.
advertising channel.
· Some manufacturers moved to an agency model in FY24, and many are using
Auto Trader for advertising.
A move towards agency, combined with other structural changes in the industry, · Some manufacturers have signalled their intention to remain with their
could lead to the consolidation of retailer forecourts. traditional franchise models.
2. Climate change The automotive industry is a high contributor to emissions, and so there is · The UK Government deferred the ban on new ICE vehicles from 2030 to 2035.
pressure from consumers and the Government for the industry to reduce its However, in mitigation the Zero Emissions Vehicle ('ZEV') mandate applies
impact on the environment. Failure to deliver on our environmental commitments between 2024 and 2035. New EV registrations are currently below the 22% ZEV
could negatively impact our brand as a responsible business or result in target for 2024, and so OEMs will need to take further steps in the coming
regulatory sanctions. years to incentivise buyers to switch to EVs.
· We continued to highlight on our website and throughout our content the
benefits of EVs.
Failure to overcome the challenges caused by the shift from internal
combustion engines ('ICE') to electric vehicles ('EVs') could inhibit their · Price disparity between new EVs and ICE vehicles remains a barrier to mass
take-up or lead to changes in buying behaviour. Factors include the purchase adoption, albeit it has begun to reduce in FY24 owing to OEMs reducing pricing
price of EVs, potential for improvements in public transport, new and expanded and offering other incentives to stimulate sales. Other barriers to widespread
emissions zones, increasing EV running costs, and consumer uncertainty over public adoption of EVs include:
the residual value of used EVs.
o Price inequality between public charging and those able to install private
charging.
Changing and more stringent regulatory requirements could increase our cost o Reliability and availability of public EV charging.
base. Increased frequency and severity of extreme weather events could lead to
heightened costs, including costs associated with heating/air conditioning, o Adverse and often inaccurate media coverage, which affects consumer
insurance and cloud infrastructure. Extreme weather events could also lead to perceptions of EVs, including about their safety and reliability.
short-term closure of retailer forecourts (for example, due to flooding).
o Uncertainty over future Government policy on EVs and incentives to make
the switch from ICE to EV.
· Regarding our own impacts on the environment, we continue to partner with
the Carbon Literacy Project to help provide carbon literacy training to
employees and to stakeholders within the automotive industry.
· We have introduced into our supplier selection processes an evaluation of
the 'green credentials' of potential suppliers, and we are evaluating the
environmental impacts of pre-registering vehicle inventory within Autorama.
· Our net zero targets have been revised to include Autorama UK Ltd in our
base year. Our revised net-zero plans have been validated and approved by the
SBTi.
· We have introduced an online marketplace for electric pedal-bikes, which
provides an alternative route for consumers to access green personal
transport.
3. External catastrophic and geo-political events In a connected, global industry, we are prone to the impacts of external · Over the coming year, we expect the uncertain geo-political landscape will
events around the globe, as are our customers and consumers. We consider there continue to pose risks to the global automotive industry, particularly with
to be a threat to the short-to-mid-term performance of our business regards to supply chain. The conflict in Ukraine has continued and, sadly,
posed by external, unpreventable, catastrophic and geo-political events. Such does not show signs of abating. Additionally, continued threats to shipping in
events could result in our customers being unable to trade, leading to loss of the Red Sea could affect global trade, and conflict in the Middle East has the
revenue, stock, audience and market share. potential to escalate to a regional-level conflict.
· The US has announced the introduction of increased tariffs on
Chinese-manufactured EVs and semiconductors, and similar measures are being
considered by the European Commission.
· We have taken learnings from previous 'black swan' events, such as the
COVID-19 pandemic, to inform our response plans should major incidents occur.
· We have maintained low leverage in FY24 and have extended our Syndicated
RCF to 2029 providing us access to short-term debt. We are well-positioned to
respond to short-term shocks and incidents.
4. Legal and regulatory compliance The Group operates in a complex regulatory environment. As we progress in · The FCA is investigating historic Discretionary Commission Arrangements
executing our strategy, we are likely to be exposed to increased legal and ('DCAs') on automotive finance deals. Whilst Auto Trader is not within the
regulatory risks, particularly those relating to financial services and data scope of the investigation, there is a risk that the outcomes could impact how
protection. automotive finance is bought and sold. This could potentially affect our
customers' profitability and, in the short-term, affect our aspirations in the
automotive finance market.
There is a risk that the Group, or its subsidiaries, fail to comply with legal · Almost every retailer has stopped selling GAP insurance owing to an FCA
and regulatory requirements. This could lead to reputational damage, financial investigation. GAP insurance has historically been a profitable product for
or criminal penalties and impact on our ability to do business. some segments of retailers.
· We adopted the FCA's Consumer Duty in advance of the July 2023 deadline.
This involved a review of our policies, products and processes to ensure that
we can demonstrate delivery of good consumer outcomes.
· We continuously 'horizon scan' to identify and prepare for changes to
regulations and legislation. Upcoming changes which may affect us to varying
degrees include the Competition and Consumers Bill, the Data Protection and
Digital Information Bill, and the Economic Crime and Corporate Transparency
Bill.
· Scaling up of Deal Builder and our leasing journey will heighten our
exposure to regulatory risks. These risks relate to GDPR, owing to the amount
of personal information we will need to collect, and the FCA, as a result of
the online finance application journey.
· In the last year we have refreshed our suite of compliance training.
This new training provides more engaging and tailored content to ensure that
all our employees are equipped with the necessary skills and knowledge of all
relevant laws and regulations. Our Risk Forum monitors the completion rates of
mandatory training.
5. Competition External measures show that we are maintaining our position as the largest and · Large technology companies such as Facebook, eBay and Amazon continue to
most engaged automotive marketplace. Nevertheless, we remain wary of the risk operate in segments of the automotive sector. However, to date, these
that competitors could develop superior consumer experiences or superior organisations have not gained notable market share over the last year.
retailer products. This could lead to a loss of market share.
· Google have recently launched Google Vehicle Ads and there is a risk that
this could gain traction as a consumer acquisition channel. We continuously
improve our products to avoid erosion of our market share.
· In the last year we maintained our position as the UK's largest and most
engaged automotive marketplace for new and used cars, with over 75% of all
minutes spent on automotive classified sites spent on Auto Trader.
6. IT systems and cyber security As a digital business, we rely on our IT infrastructure to provide our · The emergence of artificial intelligence ('AI') has prompted much debate
services. A disruptive cyber security and/or business continuity event could and speculation. Whilst Auto Trader has been using AI for over 10 years, for
lead to downtime of our systems and infrastructure. example in our valuations tools, generative AI creates additional
opportunities. Opportunities include improved customer and consumer experience
and improving the productivity of our employees. Our established data science
team are responsible for evolving our AI tools.
Execution of our strategy also relies on us making appropriate investments in
secure systems and technologies. Failure to invest in appropriate technology · Externally, we expect AI to be used by criminals for malicious purposes.
and safeguards could lead to us failing to achieve our objectives. Deepfake technology, for example, increases the risks of social engineering
against stakeholders, and we expect phishing to become more convincing. Our
mandatory compliance training has been updated to raise employee awareness of
these threats, and we perform regular simulated phishing tests.
Delivery of our strategic objectives also relies on us using data to provide
valuable insights to customers. A significant data breach, whether because of · In the last year our security teams have continued to monitor and enhance
our own failures or a malicious cyber-attack, would lead to a loss in our cyber defences. We have not experienced any major disruption owing to
confidence by the public, retailers and advertisers. cyber-attacks. Nevertheless, we continue to perform regular tests of our ITDRs
to ensure that we could recover in the event of major disruption.
· Security is central to the design of all our products and services. Our
software development process has continued to receive significant investment
which enables us to design, build, and deploy software quickly, efficiently,
and securely. In the last year we have deployed 65,000 software releases.
7. Employees To enable us to achieve our strategic objectives it is important that we · During the year, we refreshed our company values and held workshops with
continue to attract, retain and motivate a highly skilled workforce, including all employees to illustrate how the values inform our ways of working.
those with specialist skillsets in data and technology.
· Employee turnover has remained low and engagement levels remain high. Our
Glassdoor rating based on anonymous reviews is 4.5 out of 5.
Delivery of our strategy is also dependent on us building a diverse and · The cost of living and skills shortages in the market continue to affect
inclusive workforce, a supportive, collaborative culture, and a safe workforce costs. We monitor the market proactively to ensure that salaries are
environment, all of which will enable optimum performance from all our fair, proportionate and competitive. We introduced an annual all-employee
employees. share scheme in FY24, increasing all employees' total remuneration.
· Employees rightly have increasing expectations of their employers to act
fairly, responsibly and sustainably. We engage with networks and guilds to
ensure that we conduct our business in a responsible way. This year we added
sexual harassment awareness training to our suite of mandatory HR training.
· FY24 has brought about more 'day-1 rights' for employees. A general
election in FY25 could bring about further change. Whilst we support
heightened inclusion and equal opportunity, some changes are not without risk.
If, for example, employees receive a legal day-1 right to work remotely, it
could affect our innovative and collaborative culture.
8. Brand and reputation Our brand is one of our biggest assets. Our research shows that we are the · In the year we spent over £20m marketing our brand, with both
largest and most trusted automotive classified brand in the UK. Failure to the number of visits and minutes spent on Auto Trader increasing year-on-year.
maintain and protect our brand, and/or negative publicity affecting our
reputation could diminish the confidence that retailers, consumers, and · Our Trustpilot rating remains high at 4.7 out of 5 and there continues
advertisers have in our products and services. This could result in a to be a low level of fraudulent activity on our site owing to the monitoring
reduction in audience and revenue. performed by our security team. We estimate that each month we block around
450 stolen vehicles from being advertised and we have continued to work with
law enforcement to help protect the industry.
· We make use of a customer watchlist which enables us to identify and
remove those customers that are not delivering for consumers, other retailers,
or the Auto Trader brand.
· We have increased investment and headcount within our Governance, Risk and
Compliance team ('GRC'). GRC embed themselves into all major initiatives to
ensure that ethical, legal, and regulatory considerations are baked into the
design of all our products and services and all of our major initiatives.
· We have begun evolving our customer onboarding and identification
verification processes, which involves leveraging new specialist third party
tools.
9. Failure to innovate: disruptive technologies and changing consumer The automotive industry is changing. Should we fail to innovate our business · A high portion of our non-capitalised expenditure is from our software
behaviours and product offerings, we could lose relevance with our key stakeholders, development processes. The high level of spend demonstrates the significant
including consumers and customers. investments we continued to make in building new products, enhancing existing
products, and maintaining the security of our systems and services.
· Omni channel retailing is increasingly emerging as the preferred retailing
It is crucial that we develop and implement new products, services and journey for consumers. Our Deal Builder product which supports this journey
technologies, and adapt to changing consumer behaviour towards car buying and has begun to scale up with c.1,100 retailers on the product at year end FY24.
ownership.
· Leveraging Autorama's systems, we have launched a leasing check-out
journey on the Auto Trader website. Providing consumers with a leasing option
positions us to meet their needs as buying behaviours change.
Failure to provide both customers and consumers with the best possible
products and online journey, including an online buying experience, could lead · We have continued to develop our AT Connect solutions. This suite of APIs
to reduced website traffic and loss of revenue. (a series of messaging and data services) leverages our platform and data to
provide retailers with real-time connections to Auto Trader systems.
· Looking to FY25 and beyond, we are assessing how technology such as AI
could be used more widely across the business to make the complex car buying
process simpler for consumers. AI could also be used to improve the experience
of retailers, making the process for placing adverts more efficient and to
improve the productivity of our employees.
10. Reliance on third parties and partners To achieve our strategic objectives, we are reliant on partners to support · Many retailers use Auto Trader systems to access our data, products and
certain product initiatives, for example having lenders integrated with our technology services, whereas others use third party technology systems that we
Deal Builder journey is a key dependency. have integrated with. Over the last year we have made good progress working
with these technology partners. However, to fulfil our ambition to provide
these products and services to retailers, we are dependent on integrating
successfully with more technology partners. Building and maintaining good
We also rely on third parties to support our technology infrastructure, to relationships with partners is therefore critical to our growth plans.
supply vehicle data and financing, and in the fulfilment of some of our
revenue generating products. Consequently, it is important that we manage · The successful launch of the Deal Builder trial has seen us reach c.1,100
relationships with, and performance of, key suppliers and strategic partners. retailers on the product at the end of FY24. Further scale relies on us being
able to integrate with the finance lenders used by retailers so that consumers
can obtain finance via Deal Builder.
· We launched our Vehicle Check product in FY24. With this product we obtain
data direct from the source rather than a third-party supplier.
· In FY24 we have continued to regularly review our critical supplier list
and perform enhanced recurring due diligence over these suppliers. We have not
experienced any significant disruption over the last year.
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