REG - Auto Trader Grp - Half Year Results
09/11/2023 07:00
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RNS Number : 8565S Auto Trader Group plc 09 November 2023
AUTO TRADER GROUP PLC
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
Auto Trader Group plc ('the Group'), the UK's largest automotive marketplace,
announces half year results for the six months ended 30 September 2023
Strategic overview
- Auto Trader's core marketplace business grew revenue at 9% and
operating profit at 10%, with operating profit margins remaining above 70%.
Total Group revenue increased by 12% and Group operating profit increased by
10%.
- Average revenue per retailer ('ARPR') grew 12% due to continued strong
adoption of our additional products and services and a successful annual
pricing and product event in April 2023. This event was supported by our
second Auto Trader Connect module, Valuations, which makes our market leading
retail valuations available to all customers via API or within our Retailer
Portal.
- The used car market continues to be resilient. The volume of buyers
on Auto Trader is at record levels, supported by stable consumer sentiment
towards car buying and the continued availability of finance. The supply of
used cars has gradually improved as new car registrations grow; used car
pricing has remained robust; and vehicles continue to sell on Auto Trader
quicker than pre-pandemic levels.
- We are making good progress scaling our Deal Builder product, which
allows car buyers to value their part-exchange, apply for finance and reserve
the car online. We had c.500 retailers trialling the service at the end of
September 2023 (March 2023: c.50), have completed c.2,100 deals in the period
(FY 2023: c.200) and consumer feedback remains positive.
- Structural changes in the new car market are providing
opportunities for the Group. We have launched a new car market extension
product, allowing manufacturers operating an agency model to advertise new
cars directly to consumers. We continue to integrate our new car leasing
proposition, Autorama, which has yielded some cost savings and should benefit
from volume growth when supply returns to this channel.
Financial results
£m (unless otherwise specified) H1 2024 H1 2023 Change
Auto Trader(1) 259.4 238.2 9%
Autorama(2) 21.1 11.6 82%
Group revenue 280.5 249.8 12%
Auto Trader(1) 184.9 168.8 10%
Autorama(2) (5.6) (4.0) (40%)
Group central costs(3 -) relating to Autorama acquisition (14.7) (15.7) 6%
Group operating profit 164.6 149.1 10%
Auto Trader operating profit margin 71% 71% 0% pts
Group operating profit margin 59% 60% (1%) pts
Basic earnings per share (pence) 12.74p 12.23p 4%
Cash generated from operations(4) 184.2 164.6 12%
Adjusted EBITDA(5) 182.1 167.7 9%
Adjusted earnings per share (pence)(6) 13.96p 13.70p 2%
- £117.1 million was returned to shareholders (H1 2023: £82.3 million)
through £65.8 million of share buybacks and dividends paid of £51.3 million.
- Interim dividend declared of 3.2p (H1 2023: 2.8p).
- In July 2023, an outcome statement was published with an update to
the timeline for the replacement of the UK's digital services tax ('DST').
Currently we do not believe that our in-scope revenue will exceed £500m in
financial year 2024, but it is likely the Group will exceed this threshold and
have to pay DST in financial year 2025. It is currently envisaged that the
implementation of Pillar One, as part of the global two-pillar tax reform,
could occur during calendar year 2025, at which point the Group would fall
below a much higher qualifying threshold and cease to pay UK DST in financial
year 2026 and beyond.
Operational results
- Over 75% of all minutes spent on automotive classified sites were
spent on Auto Trader(7) (H1 2023: over 75%). Cross platform visits(8,9) were
up 14% to 77.0 million per month (H1 2023: 67.7 million). Cross platform
minutes(8,9) were up 11% to 555 million minutes per month (H1 2023: 498
million minutes).
- The average number of retailer forecourts(8) in the period was down
3% to 13,710 (H1 2023: 14,161). However, excluding the impact of the Webzone
Limited disposal in October 2022 (which meant a loss of 543 retailers over the
period), like-for-like retailer numbers were up 1%.
- Average Revenue Per Retailer(8) ('ARPR') per month was up 12% (or
£279) to £2,683 (H1 2023: £2,404). This was driven by the price and product
levers, with a slight decline in the stock lever.
- Live car stock(8,11) on site was broadly flat at 439,000 cars (H1
2023: 440,000) on average, within which our listings product for new cars was
23,000 on average (H1 2023: 22,000).
- The average number of employees(8) ('FTEs') in the Group increased
to 1,220 during the period (H1 2023: 1,112), with a net increase of 30 from
the acquisition of Autorama and the disposal of Webzone Limited.
Cultural KPIs
- Employees that are proud to work at Auto Trader(12) remained high
at 92% (March 2023: 91%).
- We believe diverse teams and an inclusive culture are key to
attracting, retaining and maximising the potential of our people and therefore
our business, which is broken down as follows:
o Board: We continue to have more women than men on our Board (March 2023:
five women and four men) and one ethnically diverse Board member (March 2023:
one).
o Leadership: The percentage of women leaders(13,15) was 42% (March 2023:
40%), and those who are ethnically diverse(13,14,15) was 7% (March 2023: 8%).
o Organisation: The percentage of employees who are women was at 43%(15)
(March 2023: 43%), and those who are ethnically diverse(14,15) was 16% (March
2023: 15%).
- We are aiming to achieve net zero across our entire value chain
(Scopes 1, 2 and 3) before 2040, and to halve our carbon emissions before the
end of 2030. We have recently amended our base year to financial year 2023 to
reflect the addition of Autorama to the Group. Total Group emissions for the
period are estimated at 37.3k tonnes of carbon dioxide equivalent(16) (FY
2023: 79.5k tonnes).
Nathan Coe, Chief Executive Officer of Auto Trader, said:
"It has been a strong start to the year with more buyers spending more time
and completing more of their car buying journey on Auto Trader. We are working
in partnership with record numbers of retailers and manufacturers, who are
turning to our platform as the most effective and efficient way to source,
price and sell their vehicles.
"We remain confident in our long-term prospects given the strength of our
business and the opportunities to deliver meaningful value for car buyers,
customers, our people and shareholders."
2024 Outlook
The Board is confident for the second half of the year. The majority of the
Group's revenues are recurring in nature and the major growth event for the
year has been successfully delivered in the first half.
We expect another good year of retailer revenue growth, which is by far the
largest part of our Auto Trader business. Both price and product levers were
inflated in H1 due to the Webzone Limited disposal. The price lever is
expected to be £110-£120 for the full year and the product lever should be
slightly better than the £137 achieved last year. The stock lever is likely
to be flat. We anticipate a modest decline in retailer numbers for the full
year from the number reported in the first half. The other smaller revenue
areas within the main Auto Trader business are likely to see mid-single to low
double-digit growth.
Auto Trader's operating profit margin is expected to be consistent with that
achieved in the first half. Group margins are expected to increase
year-on-year.
For Autorama, our 2024 outlook remains unchanged for the year. Group central
costs, which are non-cash charges relating to the acquisition of Autorama, are
expected to be c.£21 million.
Our capital policy remains unchanged, with the majority of surplus cash
generated by the business being returned to shareholders through dividends and
share buybacks.
Analyst presentation
A presentation for analysts will be held via audio webcast and conference call
at 9.30am, Thursday 9 November 2023. Details below:
Audio webcast:
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For media enquiries
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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 voice and 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 H1 2024 H1 2023 Change
Revenue £m 280.5 249.8 12%
Adjusted EBITDA(5) £m 182.1 167.7 9%
Operating profit £m 164.6 149.1 10%
Operating profit margin % 59% 60% (1%) pts
Profit before tax £m 162.8 148.0 10%
Basic earnings per share Pence 12.74 12.23 4%
Adjusted earnings per share(6) Pence 13.96 13.70 2%
Dividend per share Pence 3.2 2.8 14%
Group cash flow
Cash generated from operations(4) £m 184.2 164.6 12%
Net bank debt at September 2023/September 2022(10) £m 27.3 57.4 (30.1m)
Auto Trader results(1)
Trade £m 233.0 214.3 9%
Consumer Services £m 20.1 18.7 7%
Manufacturer & Agency £m 6.3 5.2 21%
Revenue £m 259.4 238.2 9%
People costs £m 39.3 36.9 7%
Marketing £m 12.3 11.4 8%
Other costs £m 21.4 18.9 13%
Depreciation & amortisation £m 2.8 3.3 (15%)
Operating costs £m 75.8 70.5 8%
Share of profit from joint ventures £m 1.3 1.1 18%
Operating profit £m 184.9 168.8 10%
Operating profit margin % 71% 71% 0% pts
Autorama results(2)
Vehicle & Accessory Sales £m 14.0 7.1 97%
Commission & Ancillary £m 7.1 4.5 58%
Revenue £m 21.1 11.6 82%
Cost of goods sold £m 14.0 7.0 100%
People costs £m 6.7 3.7 81%
Marketing £m 2.6 1.7 53%
Other costs £m 2.1 2.5 (16%)
Depreciation & amortisation £m 1.3 0.7 86%
Operating costs £m 26.7 15.6 71%
Operating loss £m (5.6) (4.0) (40%)
Group central costs - relating to Autorama acquisition
Autorama deferred consideration £m 11.1 13.8 (20%)
Depreciation & amortisation £m 3.6 1.9 89%
Operating costs £m 14.7 15.7 (6%)
Operating loss £m (14.7) (15.7) 6%
1. Auto Trader includes the results of Auto Trader and AutoConvert (H1 2023
also includes Carzone) 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. H1 2023 Autorama results are from acquisition date of 22 June 2022,
therefore include just over three months of results.
3. Group central costs which are not allocated within either of the
segments' operating profit/(loss) comprise a £11.1 million (H1 2023: £13.8
million) charge to settle the Autorama deferred consideration and a £3.6
million (H1 2023: £1.9 million) amortisation expense 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 and Autorama deferred
consideration.
6. Adjusted earnings per share is calculated before Autorama deferred
consideration.
7. Share of minutes is a custom metric based on Comscore minutes (MM) and
is calculated by dividing Auto Trader's total minutes volume by the entire
custom-defined competitive set's total minutes volume. Comscore MMX®
Multi-Platform, Total Audience, Custom-defined list includes: Auto Trader,
Gumtree.com - Motors, Pistonheads sites, Motors.co.uk & CarGurus,
April 2023 through September 2023, UK.
8. Average during the period.
9. As measured internally through Snowplow.
10. Net bank debt/(cash) 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.
11. Physical car stock advertised on autotrader.co.uk.
12. Based on a survey to all Auto Trader employees in October 2023 asking our
people to rate the statement "I am proud to work for Auto Trader". Answers are
given on a five-point scale from strongly disagree to strongly agree.
13. We define leaders as those who are on our Operational Leadership Team
('OLT')and their direct reports.
14. We have asked our employees to voluntarily disclose their ethnicity; at
the period end we had 230 employees (18% of total Group headcount) who had not
yet disclosed.
15. We calculate all our diversity percentages using total Group headcount of
1,066 as at 30 September (September 2023: 1,252, March 2023: 1,226). At the
period end, we had 541 employees who were women, 706 employees who were men
and 5 who were non-binary.
16. The total amount of CO(2) 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 (for
general procurement categories an Environmentally Extended Input Output
database methodology was used to calculate the GHG footprint across total
spend in the year. For vehicle purchases a bottom-up, life cycle
assessment-based approach has been used.); Capital goods; Fuel and energy
related activities (not included in Scope 1 and Scope 2); Upstream
transportation & distribution; Waste generated in operations; Business
travel; Employee commuting; Downstream transportation & distribution; Use
of sold products; End of life treatment of sold products; and Investments.
Summary of Group operating performance
Revenue in the core Auto Trader business grew by 9% to £259.4 million (H1
2023: £238.2 million) underpinned by a strong performance in retailer revenue
as customers continue to see value in advertising on our marketplace and
taking additional products. At a Group level, revenue increased by 12% to
£280.5 million (H1 2023: £249.8 million), with Autorama contributing £21.1
million (H1 2023: £11.6 million).
Operating profit in the core Auto Trader business increased by 10% to £184.9
million (H1 2023: £168.8 million), with a margin of 71% (H1 2023: 71%). The
strong revenue performance has led to a 10% increase in Group operating profit
of £164.6 million (H1 2023: £149.1 million), including Autorama's operating
loss of £5.6 million (H1 2023: £4.0 million). Group central costs of £14.7
million (H1 2023: £15.7 million) relate to the Autorama acquisition,
including £11.1 million of deferred consideration (H1 2023: £13.8 million)
and amortisation of acquired intangibles of £3.6 million (H1 2023: £1.9
million). Group operating profit margins were 59% (H1 2023: 60%).
Group profit before tax increased 10% to £162.8 million (H1 2023: £148.0
million) and basic earnings per share increased 4% to 12.74p (H1 2023:
12.23p). The lower earnings per share growth reflects the impact of an
increased corporation tax rate in April 2023. Cash generated from operations
increased 12% to £184.2 million (H1 2023: £164.6 million).
Despite concerns over the UK economy, consumer engagement remained strong and
we continue to have the UK's largest and most engaged audience for new and
used vehicles. Over 75% of all minutes spent on automotive classified sites
were spent on Auto Trader (H1 2023: over 75%) and we were 10x larger than our
nearest competitor (H1 2023: 6x). Our average monthly cross platform visits
increased by 14% to 77.0 million per month (H1 2023: 67.7 million).
Engagement, which is measured by total minutes spent onsite, increased by 11%
to 555 million minutes per month (H1 2023: 498 million minutes).
The average number of retailer forecourts advertising on our platform declined
by 3% to 13,710 (H1 2023: 14,161). However, excluding the Webzone Limited
disposal in October 2022 (an impact of 543 retailers in the prior period),
like-for-like retailer numbers grew by 1%.
Live car stock on site was broadly flat at an average of 439,000 cars (H1
2023: 440,000). New car stock was also flat at an average of 23,000 (H1 2023:
22,000), although this number declined towards the end of the half, as we
changed our commercial model from being 'all you can eat' to 'slot-based.'
Used car stock volumes improved slightly throughout the half, which was partly
driven by stronger private listings.
New car registrations were 21% above H1 2023 levels as supply chain challenges
have begun to ease. This growth has been in the fleet segment, with private
registrations up only 3%. Despite the year-on-year growth, new car
registrations remained 18% below pre-pandemic levels (April 2019 - September
2019).
Used car transactions were up 5% versus H1 2023 levels but remained 10% below
pre-pandemic levels. Whilst the amount of live car stock on Auto Trader has
been broadly flat year-on-year, cars are selling quicker than last year, which
has supported transaction volumes but has been a headwind to live stock on
site. Throughout the last six months, demand has remained robust which has
resulted in resilient used car prices. Our used car Retail Price Index
recorded average price growth of 2% across the six-month period, with the
average price of a used car across the period at £17,800.
We have continued to see constrained supply in the leasing segment, with
Autorama delivering 4,593 vehicles (H1 2023: 2,747). Due to the timing of the
acquisition in the prior period, comparators are not like-for-like, with just
over three months being reported in H1 2023. Average commission and ancillary
revenue per vehicle delivered was £1,546 (H1 2023: £1,635), with lower
volumes over the past 12 months resulting in tiered commission thresholds also
being lower.
Our strategy
Our purpose continues to be "Driving Change Together. Responsibly", which
guides the strategy and decision-making across the organisation. Our strategy
comprises three areas of focus: our marketplace; our platform; and digital
retailing. These areas are closely interconnected, as our platform and our
digital retailing capabilities build on the strengths of our marketplace and
deepen our relationships with customers and car buyers.
Marketplace
The Auto Trader marketplace is the foundation of our business, where we
provide UK car buyers with the best choice of vehicles and tools to navigate
their buying journey, including valuations, price flags, reviews and the best
search experience across all devices and channels.
Our marketplace saw strong operating profit and revenue growth, which was
underpinned by our retailer revenue performance. Retailer numbers have been
resilient, reflecting robust trading conditions, but with a slightly more
challenging backdrop than the prior year. As part of our annual pricing and
product event in April, we have gone further to embed our data into our
customers' processes to enable them to make better, faster decisions. Our
advertising packages continue to perform well for retailers looking to
increase their speed of sale, with penetration of packages above standard
increasing from 32% of retailer stock (September 2022) to 37% at September
2023. We held the number of retailers on our new car stock product with
c.1,900 paying retailers at the end of September 2023 (September 2022:
c.1,900). Alongside this new car stock product, we have launched a new car
market extension product, allowing manufacturers operating an agency model to
advertise new cars directly to consumers, the revenue for which comes through
Manufacturer & Agency.
Despite the government delaying the ban on the sale of new petrol and diesel
vehicles, we remain committed to ensuring our marketplace evolves as electric
vehicles ('EV') make up a greater percentage of the UK car parc. We continue
to invest in developing EV content, evolving our search filters and site
experience to ensure we are the destination people use to find their first,
and every subsequent EV. During the period, we have actively started to
incorporate EVs into our above the line campaigns as well as broader consumer
marketing activity, including live events where consumers could test drive EVs
and our monthly EV giveaway on social media. We also launched a new E-Bike
platform to support consumers to make more environmentally friendly vehicle
choices.
Platform
We continue to invest in our technology and data platform which supports both
our marketplace and digital retailing strategy. Over time we have increasingly
made these solutions available to the industry, enabling them to benefit from
the services that power Auto Trader. These might otherwise be unattainable or
require a significant reallocation of investment. We have supported our
customers in reaching car buyers for many years, but more recently we have
become as recognised for our data that supports them sourcing, pricing and
driving sales performance of their vehicles.
As mentioned above, we launched the second module of Auto Trader Connect,
Valuations, which makes specification and condition adjusted valuations
available within our Retailer Portal, where many of our retailers manage their
inventory. This data can also be accessed through an API via our platform,
enabling third parties and retailers to directly integrate valuations into the
core systems they use to manage their businesses. The next development of our
Auto Trader Connect offering will see us provide retailers with Trended
Valuations and enhanced Retail Check functionality. Combined, this powerful
new layer of intelligence will help retailers confidently adapt and respond to
changes in today's fast paced market, enabling them to make quicker and more
profitable sourcing, advertising, and pricing decisions.
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. Valuations was one of our first use cases for machine learning
back in 2014. The combination of our capability, platform and unique data sets
presents future opportunities for AI-related products. Beyond valuations, we
utilise AI technology in many areas, including: creating a retail rating for
every vehicle on Auto Trader, ordering our search listings using a relevancy
algorithm, ranking relative advert performance and more recently starting to
personalise our search experience.
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 those 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 small trial, we have increased the volume of customers with the product
from c.50 at the end of March 2023 to just over 500 retailers with over 20,000
cars live at the end of September 2023. In the six-month period we have
generated c.2,100 deals compared with c.200 in the last full financial year.
Consumer feedback has continued to be positive and deals are converting at a
significantly higher rate into a sale than any other enquiry type, with many
deals being completed out of retail hours.
Alongside scaling retailer numbers on Deal Builder, we are working with a
number of platform providers to enable Deal Builder through APIs leveraging
retailers' existing systems and processes. We are also testing and iterating
the front-end user experience to drive greater engagement from car buyers and
thereby the share of a retailer's transactions supported by Deal Builder. The
goal is still to monetise a number of retailers by the end of financial year
2024.
A key constraint to growth for retailers is their sales reach due to their
physical location. We are looking to enable retailers to expand this reach
through our Market Extension product. Retailer stock on Market Extension at
the end of September 2023 declined slightly to 5% (September 2022: 6%).
In parallel to Deal Builder, following our acquisition of Autorama, we are
looking to enable digital retailing on new cars. While near term supply has
been constrained, we believe we are well placed to provide services as the new
car market undergoes fundamental structural changes, including: the growth in
electric vehicles; new market entrants; a move to more direct and digital
sales channels; and the implementation of agency agreements by a number of
manufacturers. We believe we can provide a compelling proposition for
manufacturers, retailers and funders, with an opportunity to drive direct
sales, reduce customer acquisition costs and grow their businesses
profitability.
Throughout the first half we have further integrated leasing into the Auto
Trader search experience. Leasing deals appear within relevant searches, our
car leasing tab consolidates all available deals, and a full checkout journey
is available on all leasing adverts on Auto Trader. The personal leasing
market has seen continued tight supply throughout H1, although we expect some
improvement in H2 due to improved monthly prices, further consumer experience
changes and the ability to lease a van and pickup on Auto Trader.
Being a responsible business
Being a responsible business is central to our purpose and strategy. Our
Corporate Responsibility Committee has oversight of our numerous
environmental, social and governance ('ESG') work-streams. We have identified
key areas and created a range of initiatives which are monitored regularly and
reported on externally through our cultural KPIs.
In September we announced an all-employee share scheme that rewards employees
with an extra 10% of their salary in shares each year, vesting over a
three-year period. This builds on our already strong ownership culture, aligns
all our people with our shareholders and can be accommodated within our
long-term Auto Trader margin target of remaining above 70%. The proportion of
employees that are proud to work at Auto Trader remained high at 92% (March
2023: 91%). At the end of September, women represented 43% of our organisation
(March 2023: 43%) and 42% (March 2023: 40%) of leadership roles as defined by
the FTSE Women Leaders Review. We are committed to increasing the percentage
of ethnically diverse employees, who currently represent 16% of our
organisation (March 2023: 15%), with 18% of employees not disclosing their
ethnicity. The percentage of ethnically diverse employees in leadership
decreased to 7% (March 2023: 8%), using the Parker Review definition, which
highlights the work still to be done in this area.
Our employee-driven networks (representing women, ethnicity, LGBT+, early
careers, disability & neurodiversity, social mobility, family and age)
have continued their impressive work with high engagement and are key to
creating a culture in which people feel they belong and can achieve their full
potential. Our ethnicity network helped Auto Trader to achieve Bronze
Trailblazer Status with Race Equality Matters, which highlights organisations
that have made progress tackling race inequality.
There are three strands to our environmental commitment: achieving net zero
carbon emissions by 2040, helping consumers to make more environmentally
friendly vehicle choices and supporting retailers and the broader industry
with the transition to the mass adoption of electric vehicles.
We have committed to being net zero by 2040 and halving our carbon emissions
by 2030 - targets which were validated by the Science Based Targets initiative
('SBTi') in January 2023. Due to the acquisition of Autorama and changes that
the SBTi have made, we have rebased our comparator year to financial year 2023
and resubmitted our net zero plans to the SBTi for secondary validation.
Initial calculations of our GHG emissions during the six-month period to
September 2023 total 37.3k tonnes of CO(2) across Scopes 1, 2 and 3 (FY 2023:
79.5k tonnes). The majority of our emissions are Scope 3, predominantly
attributable to our suppliers and emissions relating to the small number of
vehicles sold by Autorama that pass through their balance sheet.
Our consumer-centric strand has been focused on developing the content and
user journeys on Auto Trader that consumers need for them to make more
environmentally friendly vehicle choices. We also launched a new platform for
E-Bikes as another means for consumers to decarbonise their transport
choices.
Our work in the third strand is focused on us sharing our data and insights
with retailers, the industry and government to help inform public policy and
regulation to support the mass adoption of electric vehicles. 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 supporting Transport for London's ULEZ expansion and the
associated scrappage scheme.
The Board
At our AGM in September, Ed Williams did not stand for re-election having
served his third three-year term. Matt Davies succeeded him as Chair of the
Board and Chair of the Nomination Committee, as announced on 1 June 2023. We
continue to work on our succession plan for both David Keens, Audit Committee
Chair and Senior Independent Director, and Jill Easterbrook, Remuneration
Committee Chair, as both will reach the end of their third three-year term
within the next 12 months.
Investor calendar
The Group's full year results for the year ending 31 March 2024 will be
announced on 30 May 2024.
Financial review
Group Results
H1 2024 H1 2023 Change
£m
£m
%
Revenue 280.5 249.8 12%
Operating costs 117.2 101.8 15%
Share of profit from joint ventures 1.3 1.1 18%
Operating profit 164.6 149.1 10%
Group revenue increased by 12% to £280.5m (H1 2023: £249.8m) driven by Auto
Trader revenue which increased by 9% to £259.4m (H1 2023: £238.2m). Autorama
contributed £21.1m (H1 2023: £11.6m). Group operating profit increased by
10% to £164.6m (H1 2023: £149.1m). Auto Trader operating profit increased by
10% to £184.9m (H1 2023: £168.8m) which included £1.3m share of profit from
joint ventures (H1 2023: £1.1m). Autorama had an operating loss of £5.6m (H1
2023: £4.0m).
Group central costs included a charge of £11.1m (H1 2023: £13.8m) which was
part of the £49.9m share-based payment expense relating to the deferred
consideration for Autorama, which was fully settled in the period, and an
amortisation charge of £3.6m (H1 2023: £1.9m) relating to the Autorama
intangible assets recognised. Having accelerated the integration work between
Autorama and Auto Trader, we have reviewed the useful economic life of the
intangible assets and have shortened the life of the Vanarama brand to five
years from the date of acquisition, which brings forward the future
amortisation charge. The full year amortisation charge in relation to all
Autorama intangibles is expected to be £10.0m for financial year 2024 and
c.£13.0m for each of the following three financial years.
Group operating profit margin declined slightly to 59% (H1 2023: 60%).
H1 2024 H1 2023 Change
£m
£m %
Operating profit 164.6 149.1 10%
Add back:
Depreciation & amortisation 7.7 5.9 31%
Share of profit from joint ventures (1.3) (1.1) (18%)
Autorama deferred consideration 11.1 13.8 (20%)
Adjusted EBITDA 182.1 167.7 9%
Adjusted earnings before interest, taxation, depreciation and amortisation,
share of profit from joint ventures and Autorama deferred consideration
increased by 9% to £182.1m (H1 2023: £167.7m).
Group profit before tax was £162.8m (H1 2023: £148.0m) and cash generated
from operations was £184.2m (H1 2023: £164.6m).
Auto Trader Results
Revenue increased to £259.4m (H1 2023: £238.2m), up 9% when compared to the
prior year. Trade revenue, which comprises revenue from Retailers, Home
Traders and other smaller revenue streams, increased by 9% to £233.0m (H1
2023: £214.3m).
H1 2024 H1 2023 Change
£m
£m
%
Retailer 220.7 204.2 8%
Home Trader 6.2 5.2 19%
Other 6.1 4.9 24%
Trade 233.0 214.3 9%
Consumer Services 20.1 18.7 7%
Manufacturer & Agency 6.3 5.2 21%
Auto Trader revenue 259.4 238.2 9%
Retailer revenue increased by 8% to £220.7m (H1 2023: £204.2m). The average
number of retailer forecourts advertising on our platform declined 3% to
13,710 (H1 2023: 14,161). However, after adjusting for the disposal of Webzone
limited in October 2022 (an impact of 543 fewer retailers), like-for-like
retailer numbers increased by 1% on average over the period.
Average Revenue per Retailer ('ARPR') per month increased by 12% to £2,683
(H1 2023: £2,404). This was driven by both the product and price levers, with
the stock lever declining slightly.
· Price: Our price lever increased £146 (H1 2023: £72) as we
delivered our annual pricing and product event for all customers on 1 April
2023, which included additional products but also a like-for-like price
increase.
· Stock: Our stock lever decreased £32 (H1 2023: £nil). The number
of live cars advertised on Auto Trader was broadly flat at 439,000 (H1 2023:
440,000), made up of 23,000 new car stock (H1 2023: 22,000) and 416,000 used
car stock (H1 2023: 418,000). Within the used car stock number, private
listings grew year-on-year whilst underlying trade used car stock, which is
correlated to the stock lever, saw a small decline.
· Product: Our product lever increased £165 (H1 2023: £133). 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. The remaining product lever growth was
largely a result of seeing a continued increase in retailers who use our
prominence products. Penetration of our higher yielding Enhanced, Super and
Ultra packages increased to 37% (September 2022: 32%).
Home Trader revenue increased by 19% to £6.2m (H1 2023: £5.2m). Other
revenue increased by 24% to £6.1m (H1 2023: £4.9m).
Consumer Services revenue increased by 7% in the period to £20.1m (H1 2023:
£18.7m). Private revenue, which is largely generated from individual sellers
who pay to advertise their vehicle on the Auto Trader marketplace, increased
by 11% to £13.6m (H1 2023: £12.3m). Motoring Services revenue increased 2%
to £6.5m (H1 2023: 6.4m).
Revenue from Manufacturer & Agency customers increased 21% to £6.3m (H1
2023: £5.2m) largely as a result of manufacturers moving to an agency model
using our recently launched new car market extension product, allowing them to
advertise and sell new cars directly to consumers.
Total costs increased 8% to £75.8m (H1 2023: £70.5m).
H1 2024 H1 2023 Change
£m
£m
%
People costs 39.3 36.9 7%
Marketing 12.3 11.4 8%
Other costs 21.4 18.9 13%
Depreciation & amortisation 2.8 3.3 (15%)
Auto Trader costs 75.8 70.5 8%
People costs increased by 7% to £39.3m (H1 2023: £36.9m). The increase in
people costs was primarily driven by an increase in the average number of
full-time equivalent employees to 1,032 (H1 2023: 990) as we continue to
invest in people to support the growth of the business. In addition to the
increased headcount, underlying salary costs have increased as we invest in
the best digital talent and ensure we are taking account of the current
increases in cost of living. Marketing spend increased by 8% in H1 2024 to
£12.3m (H1 2023: £11.4m).
Other costs, which include data services, property-related costs and other
overheads, increased by 13% to £21.4m (H1 2023: £18.9m). The increase was
primarily due to people-related costs, disposal of fixed assets relating to
the head office refurbishment and general inflationary increases. Depreciation
and amortisation decreased to £2.8m (H1 2023: £3.3m).
H1 2024 H1 2023 Change
£m
£m
%
Revenue 259.4 238.2 9%
Operating costs (75.8) (70.5) 8%
Share of profit from joint ventures 1.3 1.1 18%
Auto Trader operating profit 184.9 168.8 10%
Group central costs - relating to Autorama acquisition (14.7) (15.7) (6%)
Autorama operating loss (5.6) (4.0) (40%)
Group operating profit 164.6 149.1 10%
Auto Trader operating profit increased by 10% to £184.9m during the period
(H1 2023: £168.8m), with Auto Trader operating profit margin remaining flat
at 71% (H1 2023: 71%).
Our share of profit generated by Dealer Auction, the Group's joint venture,
increased 18% to £1.3m (H1 2023: £1.1m) in the period due to higher levels
of auction activity as supply improved slightly.
Autorama Results
H1 2024 H1 2023 Change
£m
£m
%
Vehicle & Accessory Sales 14.0 7.1 97%
Commission & Ancillary 7.1 4.5 58%
Autorama revenue 21.1 11.6 82%
Autorama revenue was £21.1m (H1 2023: £11.6m), with vehicle & accessory
sales contributing £14.0m (H1 2023: £7.1m) and commission and ancillary
revenue contributing £7.1m (H1 2023: £4.5m). Due to the timing of the
acquisition in the prior period, comparators are not like-for-like as H1 2023
includes just over three months of results.
Total deliveries amounted to 4,593 units (H1 2023: 2,747) which comprised
1,572 cars (H1 2023: 1,887), 2,793 vans (H1 2023: 627) and 228 pickups (H1
2023: 233). Average commission and ancillary revenue per unit delivered was
£1,546 (H1 2023: £1,635).
H1 2024 H1 2023 Change
£m
£m
%
Cost of goods sold 14.0 7.0 100%
People costs 6.7 3.7 81%
Marketing 2.6 1.7 53%
Other costs 2.1 2.5 (16%)
Depreciation & amortisation 1.3 0.7 86%
Autorama costs 26.7 15.6 71%
The Autorama business delivered 565 vehicles which were taken on balance sheet
in the period (270 vehicles in the period from 22 June to 30 September 2022).
This represented 12% (H1 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 £6.7m
(H1 2023: £3.7m) was through the 188 FTEs (H1 2023: 218) which were employed
on average through the period. Marketing in the period was £2.6m (H1 2023:
£1.7m). Other costs of £2.1m (H1 2023: £2.5m) related to IT services,
property, people-related costs and other overheads. Depreciation and
amortisation totalled £1.3m (H1 2023: £0.7m).
The Autorama operating segment made an operating loss of £5.6m (H1 2023:
£4.0m).
H1 2024 H1 2023 Change
£m
£m
%
Revenue 21.1 11.6 82%
Costs 26.7 15.6 71%
Operating loss (5.6) (4.0) (40%)
Group net finance costs
Group net finance costs increased to £1.8m (H1 2023: £1.1m). Interest costs
on the Group's RCF totalled £1.5m (H1 2023: £0.8m), with the year-on-year
movement due to an increase in underlying SONIA. At 30 September 2023, the
Group had drawn £52.0m of its available facility (30 September 2022:
£75.0m). Other finance costs comprised amortisation of debt issue costs of
£0.3m (H1 2023: £0.3m), vehicle stocking loan interest of £0.1m (H1 2023:
£0.1m) and interest costs relating to leases of £0.1m (H1 2023: £0.1m).
This was offset by interest receivable on cash and cash equivalents of £0.2m
(H1 2023: £0.2m).
Taxation
Profit before taxation increased by 10% to £162.8m (H1 2023: £148.0m). The
Group tax charge of £46.0m (H1 2023: £32.8m) represents an effective tax
rate of 28.1% (H1 2023: 22.2%). This is higher than the average standard UK
rate of 25% (H1 2023: 19%) due to the Autorama deferred consideration charge
being non-deductible.
At our full year results in June 2023, we 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. In July, an outcome statement was published
which gave an updated timeline and an expectation that Pillar One would come
into force during calendar year 2025. We do not believe that our in-scope
revenue will exceed £500m in financial year 2024, but it is likely that the
Group will exceed that threshold and have to pay DST in financial year 2025.
This would result in an additional operating expense equivalent to 2% of
in-scope revenue. Once Pillar One is implemented the Group would cease to pay
UK DST on the basis that the UK Government have committed to repeal the UK DST
on the implementation of Pillar One and the Group falls significantly below
the Pillar One thresholds. We therefore currently only expect to pay DST in
financial year 2025.
Earnings per share
Basic earnings per share increased by 4% to 12.74 pence (H1 2023 12.23 pence)
based on a weighted average number of ordinary shares in issue of 916,651,179
(H1 2023: 942,056,280). Diluted earnings per share of 12.71 pence (H1 2023:
12.17 pence) increased by 4%, based on 918,647,739 shares (H1 2023:
946,494,793) which takes into account the dilutive impact of outstanding share
awards.
H1 2024 H1 2023 Change
£m
£m
%
Net income 116.8 115.2 1%
Autorama deferred consideration 11.1 13.8 (20%)
Adjusted Net income 127.9 129.0 (1%)
Adjusted earnings per share (pence) 13.96 13.70 2%
Adjusted earnings per share, before Autorama deferred consideration (net of
tax), increased by 2% to 13.96 pence (H1 2023: 13.70 pence).
Cash flow and net bank debt
Cash generated from operations increased to £184.2m (H1 2023: £164.6m) as a
result of the increase in operating profit and movements in working capital.
Corporation tax payments increased to £45.1m (H1 2023: £31.4m). Cash
generated from operating activities was £139.1m (H1 2023: £133.2m).
As at 30 September 2023, the Group had net bank debt of £27.3m (30 September
2022: net bank debt of £57.4m), a decrease of £30.1m. At 30 September 2023,
the Group had drawn £52.0m of its Syndicated RCF (30 September 2022: £75.0m)
and held cash and cash equivalents of £24.7m (30 September 2022: £17.6m).
Capital structure and dividends
The final dividend for the year ended 31 March 2023 of 5.6 pence per share (H1
2023: 5.5 pence per share) was paid on 19 September 2023, totaling £51.3m (H1
2023: £51.7m). The Board continued its share buyback programme with a total
of 10.4m shares repurchased in the period (H1 2023: 4.9m shares). The average
price per share was 632.6p (H1 2023: 619.5p) for a total consideration of
£65.8m (H1 2023: £30.6m) before transaction costs of £0.3m (H1 2023
£0.2m).
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. It is the Board's intention
that the Group will return to a net cash position.
For H1 2024, the Board has declared an interim dividend of 3.2 pence per
share. The interim dividend will be paid on 26 January 2024 to members on the
register on 5 January 2024.
Going concern
The Group generated significant cash from operations during the period. At 30
September 2023 the Group had drawn £52.0m of its £200.0m unsecured
Syndicated RCF and had cash balances of £24.7m. 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 2028. Based on the facilities available and current
financial projections for the next twelve months the Directors have concluded
that it is appropriate to prepare the financial statements on a going concern
basis.
Responsibility statement of the directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted for use in the
UK;
· the interim management report includes a fair review of the
information required by:
(a) DTR 4.2.7R
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of the Disclosure Guidance and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
(b) DTR 4.2.8R
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of the Disclosure Guidance and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so
Nathan Coe Jamie Warner
Chief Executive Officer Chief Financial Officer
9 November 2023 9 November 2023
Consolidated interim income statement
For the six months ended 30 September 2023
Year to
March
6 months to September 6 months to September 2023
2023 2022 £m
£m £m
Note
Revenue 3 280.5 249.8 500.2
Operating costs (117.2) (101.8) (225.1)
Share of profit from joint ventures, net of tax 1.3 1.1 2.5
Operating profit 2 164.6 149.1 277.6
Net finance costs 4 (1.8) (1.1) (3.1)
Profit on disposal of subsidiary - - 19.1
Profit before taxation 162.8 148.0 293.6
Taxation 5 (46.0) (32.8) (59.7)
Profit for the period attributable to equity holders of the 116.8 115.2 233.9
parent
Earnings per share:
Basic EPS (pence) 6 12.74 12.23 25.01
Diluted EPS (pence) 6 12.71 12.17 24.77
Consolidated interim statement of comprehensive income
For the six months ended 30 September 2023
Year to
March
6 months to September 6 months to September 2023
2023 2022 £m
£m £m
Profit for the period 116.8 115.2 233.9
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations - (0.3) (0.3)
Realisation of cumulative currency translation differences - - 0.4
Items that will not be reclassified to profit or loss:
Remeasurements of post-employment benefit obligations, net of tax (0.1) (0.6) (0.4)
Other comprehensive income for the period, net of tax (0.1) (0.9) (0.3)
Total comprehensive income for the period attributable to 116.7 114.3 233.6
equity holders of the parent
Consolidated interim balance sheet
As at 30 September 2023
September March
September 2022 2023
2023
Note £m £m £m
Assets
Non-current assets
Intangible assets 7 496.1 512.1 501.0
Property, plant and equipment 8 15.9 18.4 15.9
Retirement benefit surplus 11 0.5 2.0 0.5
Net investments in joint ventures 50.6 50.8 49.3
Other investments 2.3 1.0 2.3
565.4 584.3 569.0
Current assets
Inventory 4.2 1.9 3.6
Trade and other receivables 9 79.7 72.9 72.9
Current income tax assets - - 0.6
Cash and cash equivalents 24.7 17.6 16.6
108.6 92.4 93.7
Total assets 674.0 676.7 662.7
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital 15 9.3 9.4 9.3
Share premium 182.6 182.6 182.6
Retained earnings 1,400.8 1,387.9 1,390.3
Own shares held 16 (23.7) (27.5) (26.0)
Capital reorganisation reserve (1,060.8) (1,060.8) (1,060.8)
Capital redemption reserve 1.3 1.1 1.2
Other reserves 30.6 30.3 30.7
Total equity 540.1 523.0 527.3
Liabilities
Non-current liabilities
Borrowings 14 49.8 73.9 57.5
Provisions 1.2 1.3 1.3
Lease liabilities 8 3.6 5.4 4.6
Deferred income 8.0 8.6 8.3
Deferred taxation liabilities 5.0 7.2 5.8
67.6 96.4 77.5
Current liabilities
Trade and other payables 10 60.4 52.6 53.6
Current income tax liabilities 1.7 0.9 -
Provisions 0.7 0.7 0.7
Lease liabilities 8 2.4 3.1 2.5
Borrowings 1.1 - 1.1
66.3 57.3 57.9
Total liabilities 133.9 153.7 135.4
Total equity and liabilities 674.0 676.7 662.7
Consolidated interim statement of changes in shareholders' equity
For the six months ended 30 September 2023
Share Share Retained Own shares Capital Capital redem reserve Other Total
Capital premium earnings held reorg reserves Equity
reserve
£m £m £m £m £m £m £m £m
Balance at March 2022 9.5 182.6 1,332.4 (22.4) (1,060.8) 1.0 30.2 472.5
Profit for the period - - 115.2 - - - - 115.2
Other comprehensive income:
Currency translation differences - - - - - - (0.3) (0.3)
Remeasurements of post-employment - - (0.6) - - - - (0.6)
benefit obligations, net of tax
Total comprehensive income, net of tax - - 114.6 - - - (0.3) 114.3
Transactions with owners:
Employee share schemes, value of employee services - - 17.3 - - - - 17.3
Purchase of own shares for cancellation (0.1) - (22.0) - - 0.1 - (22.0)
Purchase of own shares for treasury - - - (8.7) - - - (8.7)
Tax impact of employee share schemes - - 0.2 - - - - 0.2
Exercise of employee share schemes - - (2.9) 3.6 - - 0.4 1.1
Dividends paid - - (51.7) - - - - (51.7)
Total transactions with owners, recognised directly in equity (0.1) - (59.1) (5.1) - 0.1 0.4 (63.8)
Balance at September 2022 9.4 182.6 1,387.9 (27.5) (1,060.8) 1.1 30.3 523.0
Profit for the period - - 118.7 - - - - 118.7
Other comprehensive income:
Realisation of cumulative currency translation difference - - - - - - 0.4 0.4
Remeasurements of post-employment - - 0.2 -- -- -- - 0.2
benefit obligations
Total comprehensive income, net of tax - - 118.9 - - - 0.4 119.3
Transactions with owners:
Employee share schemes, value of employee services - - 27.3 - - - - 27.3
Tax impact of employee share schemes - - 0.2 - - - - 0.2
Purchase of own shares for cancellation (0.1) - (117.3) - - 0.1 - (117.3)
Exercise of share-based incentives - - (0.7) 1.5 - - - 0.8
Dividends paid - - (26.0) - - - - (26.0)
Total transactions with owners, recognised directly in equity (0.1) - (116.5) 1.5 - 0.1 - (115.0)
Balance at March 2023 9.3 182.6 1,390.3 (26.0) (1,060.8) 1.2 30.7 527.3
Profit for the period - - 116.8 - - - - 116.8
Other comprehensive income:
Remeasurements of post-employment - - (0.1) - - - - (0.1)
benefit obligations
Total comprehensive income, net of tax - - 116.7 - - - - 116.7
Transactions with owners:
Employee share schemes, value of employee services - - 14.0 - - - - 14.0
Tax impact of employee share schemes - - (0.7) - - - - (0.7)
Purchase of own shares for cancellation (0.1) - (66.1) - - 0.1 - (66.1)
Exercise of share-based incentives - - (2.1) 2.3 - - - 0.2
Issue of ordinary shares 0.1 - - - - - (0.1) -
Dividends paid - - (51.3) - - - - (51.3)
Total transactions with owners, recognised directly in equity - - (106.2) 2.3 - 0.1 (0.1) (103.9)
Balance at September 2023 9.3 182.6 1,400.8 (23.7) (1,060.8) 1.3 30.6 540.1
Consolidated interim statement of cash flows
For the six months ended 30 September 2023
Year to
March
6 months to September 6 months to September 2023
2023 2022
Note £m £m £m
Cash flows from operating activities
Cash generated from operations 13 184.2 164.6 327.4
Income taxes paid (45.1) (31.4) (60.5)
Net cash generated from operating activities 139.1 133.2 266.9
Cash flows from investing activities
Purchases of intangible assets (0.6) - (1.0)
Purchases of property, plant and equipment (2.4) (1.1) (2.4)
Dividends received from joint ventures - - 2.9
Proceeds from sale of property, plant and equipment - - 1.8
Payment for acquisition of subsidiary, net of cash acquired - (144.2) (144.2)
Payment of deferred consideration for acquisition of subsidiary - (8.1) (8.1)
Payment for acquisition of shares in investment entities - - (1.3)
Proceeds on disposal of subsidiary, net of cash disposed - - 25.6
Net cash used in investing activities (3.0) (153.4) (126.7)
Cash flows from financing activities
Dividends paid to Company's shareholders 12 (51.3) (51.7) (77.7)
Drawdown of Syndicated revolving credit facility 14 29.0 75.0 110.0
Repayment of Syndicated revolving credit facility 14 (37.0) - (50.0)
Repayment of other debt - (3.9) (4.0)
Proceeds from loan - - 1.1
Payment of refinancing fees (0.2) - (1.4)
Payment of interest on borrowings (1.2) (1.6) (3.0)
Payment of lease liabilities (1.4) (1.6) (2.9)
Purchase of own shares for cancellation 15 (65.8) (21.9) (138.6)
Purchase of own shares for treasury 16 - (8.7) (8.7)
Payment of fees on purchase of own shares 15 (0.3) (0.2) (0.7)
Contributions to defined benefit pension scheme 11 - - (1.0)
Proceeds from exercise of share-based incentives 0.2 1.1 2.0
Net cash used in financing activities (128.0) (13.5) (174.9)
Net increase/(decrease) in cash and cash equivalents 8.1 (33.7) (34.7)
Cash and cash equivalents at beginning of period 16.6 51.3 51.3
Cash and cash equivalents at end of period 24.7 17.6 16.6
Notes to the Condensed Consolidated interim financial statements
1 General information
Auto Trader Group plc ('the Company') is a company incorporated in the United
Kingdom and its registered office is 4(th) Floor, 1 Tony Wilson Place,
Manchester, M15 4FN.
These condensed Consolidated interim financial statements have been prepared
as at, and for the six months ended, 30 September 2023. The comparative
financial information presented has been prepared as at, and for the six
months ended, 30 September 2022.
The condensed Consolidated interim financial information presented as at, and
for the six months ended, 30 September 2023 comprise the Company and its
subsidiaries (together referred to as the Group). The Consolidated financial
statements of the Group as at, and for the year ended, 31 March 2023 are
available on request from the Company's registered office and via the
Company's website.
These condensed Consolidated interim financial statements are unaudited but
have been reviewed by the Auditor whose report is set out on pages 40-41. They
have been prepared in accordance with the Disclosure and Transparency Rules of
the Financial Conduct Authority and with IAS 34, "Interim Financial Reporting"
issued by the IASB and adopted for use in the UK. They do not include all of
the information required for full annual financial statements and should be
read in conjunction with the Consolidated financial statements of the Group as
at and for the year ended 31 March 2023 which were prepared in accordance with
UK-adopted international accounting standards, in conformity with the
requirements of the Companies Act 2006 and applicable law.
As required by the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority, the condensed set of financial statements has been prepared
applying the accounting policies and presentation that were applied in the
preparation of the company's published Consolidated financial statements for
the year ended 31 March 2023.
The comparative financial information for the year ended 31 March 2023
included in this interim statement of results does not constitute statutory
accounts within the meaning of Section 434 of the Companies Act 2006 (the
'Act'). The statutory accounts for the year ended 31 March 2023 have been
reported on by the Company's Auditor and were delivered to the Registrar of
Companies following the Company's Annual General Meeting. The auditor's report
was (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.
Judgements and estimates
The preparation of the condensed Consolidated interim financial statements
requires management to make judgements, estimates and assumptions that affect
the application of policies and reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.
In preparing these condensed Consolidated interim financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the Consolidated financial statements for the year ended 31
March 2023 with the exception that judgments and estimates relating to
acquisition accounting do not apply.
Going concern
The Group generated significant cash from operations during the period. At 30
September 2023, the Group had £52.0m drawn of its £200.0m unsecured
revolving credit facility ('RCF') and had cash balances of £24.7m. The
£200.0m Syndicated RCF is committed through to maturity in February 2028.
The combination of significant free cash flow and the discretionary nature of
dividend payments and share buybacks provide the Group with significant
liquidity and ability to comply with the RCF's financial covenants. On the
basis of facilities available and current financial projections for the next
twelve months, the Directors have concluded that it is appropriate to prepare
the condensed interim financial statements on a going concern basis.
Changes in accounting policies
There are no material changes in accounting policies applied in these interim
financial statements to those accounting policies applied in the Group's
Consolidated financial statements as at and for the year ended 31 March 2023.
Taxes on income in the interim periods are accrued using the effective tax
rate that would be applicable to expected total annual profit or loss.
The Group is required to comply with the requirements of IFRS 17 Insurance
Contracts for reporting periods beginning on or after 1 April 2023. The new
accounting standard sets out the requirements that the Group should apply in
reporting information about insurance contracts it issues and reinsurance
contracts it holds. The Group has undertaken an assessment of its third party
contracts which meet the definition of an insurance contract. The impact of
the accounting standard does not have any 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 financial statements.
Amendments to other existing standards do not have a material impact on the
Group's financial statements.
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 (September 2022: two
operating segments):
· Auto Trader - includes the results of Auto Trader and AutoConvert
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.
· Autorama - the results of Autorama in respect of advertising new
leasing 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.
The OLT primarily uses the measures of revenue and operating profit to assess
the performance of each operating segment. Segment revenue comprises revenue
from external customers. The revenue from external parties reported to the
OLT is measured in a manner consistent with that in the income statement.
Inter-segment revenue and costs are not reported to the OLT. In the period
to 30 September 2023, inter-segment revenue earned by Auto Trader from
Autorama for vehicles leased via a journey initiated on the Auto Trader
platform was not material (£nil in both comparative periods reported).
Analysis of the Group's revenue and results for both reportable segments, with
a reconciliation to Group profit before tax is shown below:
6 months to September 2023 Autotrader segment Autorama segment Group Group
central costs
£m £m
£m
£m
Total segment revenue 259.4 21.1 - 280.5
People costs (39.3) (6.7) (11.1) (57.1)
Marketing (12.3) (2.6) - (14.9)
Costs of goods sold - (14.0) - (14.0)
Other costs (21.4) (2.1) - (23.5)
Depreciation & amortisation (2.8) (1.3) (3.6) (7.7)
Total segment costs (75.8) (26.7) (14.7) (117.2)
Share of profit from joint ventures 1.3 - - 1.3
Total segment operating profit/(loss) 184.9 (5.6) (14.7) 164.6
Finance costs - net (1.8)
Profit before tax 162.8
Group central costs which are not allocated within either of the segment
operating profit/(loss) reported to the CODM comprise:
(i) People costs: £11.1 million charge for the settlement of the Autorama
deferred consideration (note 18).
(ii) Depreciation & amortisation: £3.6 million of amortisation expense
relating to the fair value of intangible brand, technology and other
intangible assets acquired in the Group's business combination of Autorama.
6 months to September 2022 Autotrader segment Autorama segment Group Group
central costs
£m £m
£m
£m
Total segment revenue 238.2 11.6 - 249.8
People costs (36.9) (3.7) (13.8) (54.4)
Marketing (11.4) (1.7) - (13.1)
Costs of goods sold - (7.0) - (7.0)
Other costs (18.9) (2.5) - (21.4)
Depreciation & amortisation (3.3) (0.7) (1.9) (5.9)
Total segment costs (70.5) (15.6) (15.7) (101.8)
Share of profit from joint ventures 1.1 - - 1.1
Total segment operating profit/(loss) 168.8 (4.0) (15.7) 149.1
Finance costs - net (1.1)
Profit before tax 148.0
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.
September September March
2023 2022 2023
£m £m £m
Retailer 220.7 204.2 406.8
Home Trader 6.2 5.2 10.1
Other 6.1 4.9 10.5
Trade 233.0 214.3 427.4
Consumer Services 20.1 18.7 34.5
Manufacturer and Agency 6.3 5.2 11.1
Autorama 21.1 11.6 27.2
Total revenue 280.5 249.8 500.2
4 Net finance costs
September September March
2023 2022 2023
£m £m £m
On bank loans and overdrafts 1.5 0.8 2.5
Amortisation of debt issue costs 0.3 0.3 0.5
Interest unwind on lease liabilities 0.1 0.1 0.2
Interest on vehicle stocking loan 0.1 0.1 0.1
Interest receivable on cash and cash equivalents (0.2) (0.2) (0.2)
Total net finance costs 1.8 1.1 3.1
5 Income taxes
September September March
2023 2022 2023
£m £m £m
Total income tax expense 46.0 32.8 59.7
The taxation charge recognised is based on management's best estimate of the
effective tax rate for the full year of 28.1% (September 2022: 22.2%) applied
to the profit before taxation of the interim period. The taxation charge for
the period is higher than (2022: higher than) the standard rate of UK
corporation tax of 25% (September 2022: 19%) primarily due to the deferred
consideration relating to the acquisition of Autorama being a non-deductible
expense for tax.
6 Earnings per share
Weighted average number Total Pence
of ordinary shares earnings per share
£m
Six months ended September 2023
Basic EPS 916,651,179 116.8 12.74
Diluted EPS 918,647,739 116.8 12.71
Six months ended September 2022
Basic EPS 942,056,280 115.2 12.23
Diluted EPS 946,494,793 115.2 12.17
Year ended March 2023
Basic EPS 935,138,578 233.9 25.01
Diluted EPS 944,144,242 233.9 24.77
The difference between the basic and diluted weighted average number of shares
represents the dilutive impact of the Share Incentive Plan, Performance Share
Plan, Deferred Annual Bonus, Single Incentive Plan Award and Sharesave scheme,
which are conditional on a service condition and, in the comparative periods,
the dilutive impact of shares issued as deferred consideration for the
acquisition of Autorama, which were conditional on a service condition.
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:
6 months ended September 2023
Number of shares
Weighted average ordinary shares in issue 921,172,753
Less weighted effect of shares held by the ESOT (338,014)
Less weighted effect of shares held in treasury (4,183,560)
Weighted average number of shares for basic EPS 916,651,179
Dilutive impact of share options outstanding 1,996,560
Weighted average number of shares for diluted EPS 918,647,739
The average market value for the Group's shares for the purpose 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.
7 Intangible assets
Goodwill Software & website Brand Other Total
development costs
£m £m £m £m £m
Opening balance at 1 April 2023 427.6 17.4 43.9 12.1 501.0
Additions - 0.6 - - 0.6
Amortisation charge - (1.6) (2.4) (1.5) (5.5)
Closing balance at 30 September 2023 427.6 16.4 41.5 10.6 496.1
Goodwill Software & website Brand Other Total
development costs
£m £m £m £m £m
Opening balance at 1 April 2022 340.9 5.2 0.5 9.0 355.6
Acquired through business combinations 92.5 13.7 47.6 5.6 159.4
Additions - 0.3 - - 0.3
Amortisation charge - (1.0) (1.3) (1.1) (3.4)
Exchange differences 0.2 - - - 0.2
Closing balance at 30 September 2022 433.6 18.2 46.8 13.5 512.1
At 30 September 2023, the Group assessed indicators over the impairment of
goodwill relating to its Digital and Autorama cash generating units. No
indicators were identified at this date. A full annual impairment test will
be carried out by the financial year end in line with IAS 36: Impairment of
non-financial assets.
During the last six months, the integration of Autorama, our new car leasing
proposition, has accelerated at a faster rate than originally anticipated at
acquisition. As a result, the useful economic life of the 'Vanarama' brand has
been reduced from ten years to five years from the date of acquisition. This
change in accounting estimate will be applied prospectively from 1 October
2023 in line with IAS 38: Intangible assets. The integration of Autorama has
yielded some cost savings and should benefit from volume growth when new car
supply returns to this channel. Despite the government delaying the ban on the
sale of new petrol and diesel vehicles in October 2023, the pace of structural
changes impacting the new vehicle market in the UK continues and we remain
committed to ensuring our marketplace evolves as electric vehicles ('EVs')
make up a greater percentage of the UK car parc.
8 Leases and property, plant and equipment
The Group has right-of-use assets which comprise of property and motor
vehicles which are held within property, plant and equipment. Information
about leases for which the Group is a lessee is presented below.
Analysis of property, plant and equipment between owned and leased assets September September March
2023 2022 2023
£m £m £m
Property plant and equipment owned 10.4 10.9 9.4
Right-of-use assets 5.5 7.5 6.5
15.9 18.4 15.9
Right-of-use assets
Property Vehicles Total
Office equipment
£m £m £m £m
Opening balance at 1 April 2023 5.8 0.5 0.2 6.5
Additions - 0.1 - 0.1
Depreciation (0.9) (0.2) - (1.1)
Closing balance at 30 September 2023 4.9 0.4 0.2 5.5
Property Vehicles Office equipment Total
£m £m £m £m
Opening balance at 1 April 2022 7.8 0.4 0.1 8.3
Acquired through business combinations 0.1 0.3 - 0.4
Additions - 0.1 - 0.1
Depreciation (1.1) (0.2) - (1.3)
Closing balance at 30 September 2022 6.8 0.6 0.1 7.5
Lease liabilities September September March
2023 2022 2023
£m £m £m
Current 2.4 3.1 2.5
Non-current 3.6 5.4 4.6
Total 6.0 8.5 7.1
9 Trade and other receivables
September September March
2023 2022 2023
£m £m £m
Trade receivables (invoiced) 31.1 29.4 28.5
Net accrued income 42.7 38.3 38.7
Trade receivables (total) 73.8 67.7 67.2
Prepayments 5.6 4.8 5.4
Other receivables 0.3 0.4 0.3
Total 79.7 72.9 72.9
10 Trade and other payables
September September March
2023 2022 2023
£m £m £m
Trade payables 3.6 5.1 8.0
Accruals 20.7 15.7 15.8
Other taxes and social security 20.4 18.5 16.9
Deferred income 6.5 5.6 5.7
Vehicle stocking loan 4.3 1.0 3.0
Other payables 4.6 6.6 3.9
Accrued interest payable 0.3 0.1 0.3
Total 60.4 52.6 53.6
11 Retirement benefit obligations
The Group operates several pension schemes in the UK. All except one are
defined contribution schemes.
Defined contribution scheme
In the period, the pension contributions to the Group's defined contribution
scheme amounted to £1.9m (September 2022: £1.7m; March 2023: £3.5m). At 30
September 2023, £0.7m (September 2022: £0.6m; March 2023: £0.6m) of pension
contributions were outstanding relating to the Group's defined contribution
scheme.
Defined benefit scheme
The defined benefit pension scheme provides benefits based on final
pensionable pay and this scheme was closed to new joiners with effect from May
2002. New employees after that date have been offered membership of the
Group's defined contribution scheme.
In October 2022, the Scheme purchased a bulk annuity policy (known as a
buy-in) from Just Retirement Limited ('Just Retirement') for £15.4m, which
was funded by a £1.0m contribution by the Company along with existing Scheme
assets. This policy secured the full benefits of all Scheme members, which as
at the remeasurement date amounted to £13.7m. Given the financial strength of
Just Retirement, this buy-in substantively removes the risk of further
contributions being required from the Company to provide benefits to members,
beyond those noted below.
The most recent actuarial valuation of the defined benefit obligations was
performed as at 30 September 2023 by a qualified independent actuary. The
amounts recognised in the Consolidated balance sheet are determined as
follows:
September September March
2023 2022 2023
£m £m £m
Present value of funded obligations 12.4 12.8 13.6
Fair value of plan assets (12.9) (14.8) (14.1)
Net asset recognised in the Consolidated balance sheet (0.5) (2.0) (0.5)
During the year ending 31 March 2020, the Trustees of the Scheme sought legal
advice which concluded that the Company has an unconditional right to a refund
of surplus from the Scheme, if the Scheme were to be run-off until the final
beneficiary died. As a result, the Group has concluded that the recognition
restrictions of IFRIC14 do not apply, and therefore has recognised the
accounting surplus of £0.5m and an associated deferred tax liability of
£0.2m in the Consolidated balance sheet.
The amounts charged to the Consolidated income statement are set out below:
September September March
2023 2022 2023
£m £m £m
Past service cost - 0.5 0.5
Settlement cost - - 2.2
Total amounts charged to the Consolidated income statement - 0.5 2.7
The amounts recognised in the Consolidated statement of comprehensive income
are as follows:
September September March
2023 2022 2023
£m £m £m
Return on Scheme assets recognised in net interest 1.3 6.3 5.9
Actuarial gains due to changes in assumptions (1.7) (5.3) (4.8)
Actuarial losses due to liability experience 0.5 0.2 0.4
Deferred tax on surplus - (0.6) (1.1)
Total amounts recognised within the Consolidated statement of 0.1 0.6 0.4
comprehensive income
Movements during the period in the post-employment defined benefit obligations
are set out as below:
September September March
2023 2022 2023
£m £m £m
At beginning of period (0.5) (3.7) (3.7)
Past service cost - 0.5 0.5
Settlement cost - - 2.2
Contributions paid to scheme - - (1.0)
Remeasurement and experience losses - 1.2 1.5
Closing post-employment benefit obligation (0.5) (2.0) (0.5)
12 Dividends
Dividends declared and paid in the period were as follows:
September 2023 September 2022
Pence per share £m Pence per share £m
2023 final dividend paid 5.6 51.3 - -
2022 final dividend paid - - 5.5 51.7
Total 5.6 51.3 5.5 51.7
An interim dividend of 3.2 pence per share for the six months to September
2023 (September 2022: 2.8 pence per share) has been declared by the Directors,
totalling £29.5m (September 2022: £26.3m) based on the number of shares
eligible for the distribution as at 30 September 2023. The interim dividend is
payable on 26 January 2024 to shareholders on the register at the close of
business on 5 January 2024. No provision has been made for the interim
dividend and there are no income tax consequences.
13 Cash generated from operations
6 months to September 6 months to September Year to March
2023 2022 2023
£m £m £m
Profit after taxation 116.8 115.2 233.9
Adjustments for:
Taxation 46.0 32.8 59.7
Depreciation 2.2 2.5 4.9
Amortisation 5.5 3.4 9.2
Share-based payments charge (excluding associated NI) 3.6 3.5 5.8
Deferred contingent consideration 10.4 13.8 38.8
Post-employment expenses relating to the defined benefit scheme - 0.4 2.7
Share of profit in joint ventures (1.3) (1.1) (2.5)
Loss/(profit) on sale of property, plant and equipment 0.2 - (0.7)
Net lease disposals and modifications - - (0.1)
Net finance costs 1.8 1.1 3.1
Research and Development Expenditure Credit - - (0.1)
Profit on disposal of a subsidiary - - (19.1)
Changes in working capital:
Trade and other receivables (6.8) (3.0) (3.6)
Trade and other payables 6.4 (3.9) (1.9)
Inventory (0.6) (0.1) (2.7)
Cash generated from operations 184.2 164.6 327.4
14 Borrowings
September September March
2023 2022 2023
Non-current £m £m £m
Syndicated RCF gross of unamortised debt issue cost 52.0 75.0 60.0
Unamortised debt issue costs on Syndicated RCF (2.2) (1.1) (2.5)
Total borrowings 49.8 73.9 57.5
September September March
2023 2022 2023
Current £m £m £m
Loan from other investment 1.1 - 1.1
Total 1.1 - 1.1
Total borrowings 50.9 73.9 58.6
Borrowings are repayable as follows:
September September March
2023 2022 2023
£m £m £m
Less than one year 1.1 - 1.1
Within two to five years 52.0 75.0 60.0
Total 53.1 75.0 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 £5.9m, with £3.3m being incurred at initiation and
£2.6m of additional costs associated with extension requests.
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. There is no requirement to settle all or part of the facility before
the termination date of February 2028. The associated debt transaction costs
were £1.6m, of which £1.4m was paid in the period to 31 March 2023, and the
remaining £0.2m was paid in the six month period to 30 September 2023.
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. 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 investment
During the year ended 31 March 2023, 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 is likely to be completed within the next twelve months. As at 30
September 2023, £1.1m was recognised on the Consolidated balance sheet
(September 2022: £nil; March 2023: £1.1m).
15 Share capital
As at 30 September 2023 As at 30 September 2022 As at 31 March 2023
Number Amount Number Amount Number Amount
'000 £m '000 £m '000 £m
Allotted, called-up and fully paid ordinary shares of 1p each
At beginning of period 923,075 9.3 946,893 9.5 946,893 9.5
Purchase and cancellation of own shares (10,404) (0.1) (3,512) (0.1) (23,831) (0.2)
Issue of ordinary shares 7,850 0.1 13 - 13 -
Total 920,521 9.3 943,394 9.4 923,075 9.3
During the period, 10.4m shares were purchased for cancellation (September
2022: 3.5m; March 2023: 23.8m) and no shares were purchased for treasury
(September 2022: 1.4m; March 2023: 1.4m). The average price per share was
632.6p (H1 2023: 619.5p) for a total consideration of £65.8m (H1 2023:
£30.6m) before transaction costs of £0.3m (H1 2023: £0.2m). During the
period, 7.8m shares were purchased to settle the deferred consideration
relating to the Autorama acquisition in the prior period as detailed in note
18.
Included within shares in issue at 30 September 2023 are 336,195 (September
2022: 348,034; March 2023: 340,196) shares held by the ESOT and 3,970,907
(September 2022: 4,629,543; March 2023: 4,371,505) shares held in treasury, as
detailed in note 16.
16 Own shares held
ESOT shares reserve Treasury shares Total
Own shares held £m £m £m £m
Own shares held as at 1 April 2022 (0.4) (22.0) (22.4)
Repurchase of own shares for treasury - (8.7) (8.7)
Share-based incentives exercised in the period - 3.6 3.6
Own shares held as at 30 September 2022 (0.4) (27.1) (27.5)
Own shares held as at 1 October 2022 (0.4) (27.1) (27.5)
Share-based incentives exercised in the period - 1.5 1.5
Own shares held as at 31 March 2023 (0.4) (25.6) (26.0)
Own shares held as at 1 April 2023 (0.4) (25.6) (26.0)
Share-based incentives exercised in the period - 2.3 2.3
Own shares held as at 30 September 2023 (0.4) (23.3) (23.7)
ESOT shares reserve Treasury shares Total
Own shares held - number Number of shares Number of shares Number of shares
Own shares held as at 1 April 2022 358,158 3,826,928 4,185,086
Transfer of shares from ESOT (10,124) - (10,124)
Repurchase of own shares for treasury - 1,430,372 1,430,372
Share-based incentives exercised in the period - (627,757) (627,757)
Own shares held as at 30 September 2022 348,034 4,629,543 4,977,577
Own shares held as at 1 October 2022 348,034 4,629,543 4,977,577
Transfer of shares from ESOT (7,838) - (7,838)
Share-based incentives exercised in the period - (258,038) (258,038)
Own shares held as at 31 March 2023 340,196 4,371,505 4,711,701
Own shares held as at 1 April 2023 340,196 4,371,505 4,711,701
Transfer of shares from ESOT (4,001) - (4,001)
Share-based incentives exercised in the period - (400,598) (400,598)
Own shares held as at 30 September 2023 336,195 3,970,907 4,307,102
17 Share-based payments
The Group currently operates five share plans: the Share Incentive Plan,
Performance Share Plan, Deferred Annual Bonus, Single Incentive Plan Award and
the Sharesave scheme.
All share-based incentives are subject to a service condition. Such conditions
are not taken into account in the fair value of the service received. The fair
value of services received in return for share-based incentives is measured by
reference to the fair value of share-based incentives granted. Black-Scholes
and Monte Carlo models have been used where appropriate to calculate the fair
value of share-based incentives with market conditions.
The total charge in the period relating to the five schemes was £3.5m
(September 2022: £3.6m; March 2023: £6.6m). This included associated
national insurance ('NI') at the rate at which management expects to be
effective when the awards are exercised (13.80%), and apprenticeship levy at
0.5%, based on the share price at the reporting date.
In addition to this charge, the share-based payment charge reported this
period includes £10.4m (September 2022: £13.8m; March 2023: £38.8m)
relating to deferred share-based payment consideration relating to the
acquisition of Autorama, making a total combined charge of £14.0m (excluding
associated NI).
September September March
2023 2022 2023
£m £m £m
Share Incentive Plan ('SIP') - - -
Performance Share Plan ('PSP') 1.1 1.0 1.9
Deferred Annual Bonus Plan and Single Incentive Plan Award 2.1 2.2 3.4
Sharesave scheme ('SAYE') 0.4 0.3 0.5
NI and apprenticeship levy on applicable schemes (0.1) 0.1 0.8
Total charge from ongoing share schemes 3.5 3.6 6.6
Share-based payments relating to Autorama acquisition 10.4 13.8 38.8
Total charge 13.9 17.4 45.4
Total charge excluding NI 14.0 17.3 44.6
Share Incentive Plan
In 2015, the Group established a Share Incentive Plan ('SIP'). All eligible
employees were awarded free shares (or nil-cost options in the case of
employees in Ireland) valued at £3,600 each based on the share price at the
time of the Company's admission to the Stock Exchange in March 2015. Shares
issued to satisfy the SIP were purchased by the Employee Share Option Trust
('ESOT').
September September March
2023 2022 2023
UK SIP Number Number Number
Outstanding at beginning of period 96,315 116,808 116,808
Options exercised in the period (4,001) (10,270) (18,108)
Options forfeited in the period - (2,385) (2,385)
Outstanding at period ending 92,314 104,153 96,315
Performance Share Plan
The Group operates a Performance Share Plan ('PSP') for Executive Directors
and the extent to which awards vest will depend upon the Group's performance
over the three-year period following the award date. Both market based and
non-market based performance conditions may be attached to the options, for
which an appropriate adjustment is made when calculating the fair value of an
option. If the options remain unexercised after a period of 10 years from the
date of grant, the options expire. Furthermore, options are forfeited if the
employee leaves the Group before the options vest, unless under exceptional
circumstances.
On 22 June 2023, the Group awarded 355,183 nil cost options under the PSP
scheme. For the 2023 awards, the Group's performance is measured by reference
to growth in Operating profit (70% of the award), Revenue (20% of the award)
and Carbon Reduction (10% of the award) over a three-year period to March
2026.
September September March
2023 2022 2023
Number Number Number
Outstanding at beginning of period 1,399,984 1,401,701 1,401,701
Options granted in the period 355,183 360,695 360,695
Dividend shares awarded - 8,319 8,319
Options exercised in the period (9,130) (241,047) (241,047)
Options forfeited in the period (591,580) (129,684) (129,684)
Outstanding at period ending 1,154,457 1,399,984 1,399,984
Deferred Annual Bonus and Single Incentive Plan Award
The Group operates the Deferred Annual Bonus and Single Incentive Plan Award
for the Executive Directors, the Operational Leadership Team and certain key
employees. The Plan consists of two schemes, the Deferred Annual Bonus Plan
('DABP') and the Single Incentive Plan Award ('SIPA').
Deferred Annual Bonus Plan
The Group operates a Deferred Annual Bonus Plan ('DABP') for Executive
Directors. Awards under the plan are contingent on the satisfaction of pre-set
internal targets relating to financial and operational objectives. The extent
to which the awards vest will depend upon the satisfaction of the Group's
financial and operational performance in the financial year of the award date
(the 'Performance Conditions'). The awards will vest on the second anniversary
of the date the Remuneration Committee determines that the Performance
Conditions have been satisfied (the 'Vesting Period'). Awards are potentially
forfeitable during that period should the employee leave employment. The DABP
awards have been valued using the Black-Scholes method where appropriate and
the resulting share-based payments charge is being spread evenly over the
combined Performance Period and Vesting Period of the shares, being three
years.
On 22 June 2023, the Group awarded 103,330 nil cost options under the DABP.
September September March
2023 2022 2023
Number Number Number
Outstanding at beginning of period 108,704 - -
Options granted in the period 103,330 108,704 108,704
Outstanding at period ending 212,034 108,704 108,704
Single Incentive Plan Award
The Group operates a Single Incentive Plan Award ('SIPA') for the Operational
Leadership Team and certain key employees. The extent to which awards vest
will depend upon the satisfaction of the Group's financial and operational
performance in the financial year of the award date (the "Performance
Conditions"). The awards will vest in tranches, with the first tranche vesting
on the date on which the Remuneration Committee determines that the
Performance Conditions have been satisfied, and subsequent tranches vesting on
the first and second anniversary of this date, subject to continuing
employment.
On 22 June 2023, the Group awarded 618,497 nil cost options under the SIPA
scheme. The fair value of the 2023 award was determined to be £6.22 per
option, being the share price at grant date. The resulting share-based
payments charge is being spread evenly over the period between the grant date
and the vesting date. SIPA award holders are entitled to receive dividends
accruing between the grant date and the vesting date and this value will be
delivered in shares.
September September March
2023 2022 2023
Number Number Number
Outstanding at beginning of period 1,517,766 1,291,868 1,291,868
Options granted in the period 618,497 681,586 681,586
Dividend shares awarded 10,180 5,710 5,710
Options exercised in the period (337,214) (177,183) (214,290)
Options forfeited in the period (142,859) (205,153) (247,108)
Outstanding at period ending 1,666,370 1,596,828 1,517,766
Sharesave scheme
The Group operates a Sharesave ('SAYE') scheme for all employees under which
employees are granted an option to purchase ordinary shares in the Company at
up to 20% less than the market price at invitation, in three years' time,
dependent on their entering into a contract to make monthly contributions into
a savings account over the relevant period. Options are granted and are linked
to a savings contract with a term of three years. These funds are used to fund
the option exercise. No performance criteria are applied to the exercise of
Sharesave options.
Expected volatility is estimated by considering historic average share price
volatility at the grant date. The requirement that an employee has to save in
order to purchase shares under the Sharesave plan is a non-vesting condition.
This feature has been incorporated into the fair value at grant date by
applying a discount to the valuation obtained from the Black-Scholes pricing
model.
September September March
2023 2022 2023
Number Number Number
Outstanding at beginning of period 1,366,352 1,446,582 1,446,582
Options granted in the period - - 688,115
Options exercised in the period (54,254) (235,323) (406,060)
Options lapsed in the period -(57,304)- -(89,878)- -(362,285)-
Outstanding at period ending 1,254,794 1,121,381 1,366,352
18 Prior period business combination
In the prior period, 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 subject
to employment and 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 Manufacturers (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 in the prior
period. The following table provides a reconciliation of the amounts included
in the Consolidated statement of cash flows for the prior period:
September 2022
£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 £50.0m consideration was subject to
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 30 September 2023 and the final settlement was reduced to £49.9m
due to the associated performance conditions not being met.
The purchase was 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 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 brand operates under the Vanarama brand name and is one of the UK's
longest running e-commerce brands; the asset was valued using Multi-period
Excess Earnings Method and crosschecked using relief from royalty. The
technology is Autorama's propriety technology which helps manage a complex
vehicle lease purchasing process into a seamless 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 asset was valued using
Multi-period Excess Earnings Method.
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.
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.
19 Related party transactions
The Company is the ultimate parent entity of the Group. Intercompany
transactions with wholly owned subsidiaries have been excluded from this note,
as per the exemption offered in IAS 24.
Dealer Auction Limited
The Group transacted the following related party transactions with its joint
venture, Dealer Auction Limited (previously Dealer Auction (Holdings) Limited)
and its subsidiaries (together 'Dealer Auction'), during the period.
The Group provided data services to Dealer Auction under a license agreement
established as part of the formation of the joint venture in January 2019. The
value of services provided to Dealer Auction was £0.3m (September 2022:
£0.3m) and has been recognised within revenue. At 30 September 2023, deferred
income outstanding in relation to the license agreement was £8.6m (September
2022: £9.2m).
Key management personnel
Key management personnel share plan awards have been outlined in note 17.
20 Forward looking statements
This report includes statements that are forward looking in nature. Forward
looking statements involve known and unknown risks, assumptions, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Group to be materially different from any future results,
performance or achievements expressed or implied by such forward looking
statements. Except as required by the Listing Rules and applicable law, the
Company undertakes no obligation to update, revise or change any
forward-looking statements to reflect events or developments occurring after
the date of this report.
Principal risks and uncertainties
Risk POTENTIAL IMPACT CHANGES IN THE peRIOD
1. An adverse change in supply and demand in the new/used car market could lead New car supply has improved with registration volumes up 21% year-on-year in
to reduced retailer profitability and reduced retailer wallets, resulting in the six month period. New car supply has implications for our Autorama
Automotive economy, market and business environment reduced advertising spend. Adverse movements in supply and demand of vehicles segment and impacts the wider automotive market. Low new car supply since 2020
could also lead to a contraction in the number of retailers. has led to low availability of 3-5 year old cars.
In addition, we continue to see the movement towards an agency model whereby Demand for vehicles remains high with used cars in H1 2024 selling on average
Manufacturers' sell new vehicles directly to consumers, with the retailer 1 day faster than 2023 and 2 days faster than 2019. However, sourcing remains
acting as an agent to facilitate the transaction. This could lead to a loss of a challenge for some retailers.
revenue from our retailer customers.
Used vehicle pricing trends varied across age cohorts, due to differing supply
and demand. September 2023 saw the first fall in used car prices in 41 months,
when overall prices fell by 0.4%, however older vehicles continued to see
prices rise year-on-year.
The move to agency in 2023 from some Manufacturers has coincided with the
successful launch of our National New Car product, enabling Manufacturers to
advertise stock on Auto Trader for the first time.
Higher rates of inflation, as well as rises in interest rates, has led to
increased finance costs and higher overall purchase costs for consumers and
retailers.
2. The automotive industry is intrinsically linked with climate change and there In May 2023, through our partnership with the Carbon Literacy Project, we
is pressure from consumers and government for the industry to reduce its reached the milestone of 1,000 employees and employees from 100 businesses
Climate change impact on the climate. Failure to deliver on our environmental commitments having received Carbon Literacy training.
could negatively impact our brand as a responsible business or result in
regulatory sanctions. In our emissions reporting, we have amended our base year to 2023 to reflect
the addition of Autorama to the Group and we continue to work towards our
Failure to overcome the changes caused by the shift from internal combustion carbon reduction commitments. We have engaged with a 3(rd) party to support
engines ('ICE') to electric vehicles ('EVs') could inhibit their take-up or us with these plans.
lead to changes in buying behaviour. Factors include the high purchase price
of most EVs, potential for improvements in public transport, new and expanded The announcement in September 2023 to delay the ban on new ICE cars to 2035
emissions zones, increasing EV running costs, and consumer uncertainty over was unexpected, however we do not expect significant adverse impacts or
the residual value of used EVs. changes to Manufacturers strategies. The Zero Emissions Vehicle ("ZEV")
Mandate will require Manufacturers to continue to increase the proportion of
Changing and more stringent regulatory requirements could increase our cost their sales made from ZEV up until 2035. At Auto Trader, our strategy is
base. Increased frequency and severity of extreme weather events could lead to unchanged: we are continuing to establish our site as the go-to destination
heightened costs, including costs associated with heating/air-conditioning, for consumers looking to obtain an EV.
insurance, and cloud infrastructure. Extreme weather events could also lead to
short-term closure of retailer forecourts (for example, due to flooding). There are early indications that "barriers" to EV adoption are lessening. The
price disparity between EV and ICE equivalents has begun to reduce both for
new and used vehicles.
Private demand has slightly reduced for new EVs, with 14.2% of leads sent to
retailers on new cars in September being electric, down from 15.5% one year
ago. However, in contrast, demand for new EVs via fleet and salary sacrifice
lease schemes is high, where consumers look to take advantage of low
benefit-in-kind taxes on salary sacrifice leases.
3. To enable us to achieve our strategic objectives it is important that we We continued to operate our Connected Working model where employees are in the
Employees continue to attract, retain and motivate a highly skilled workforce, including office for two 'fixed' days per week plus an additional 'flex' day per week on
those with specialist skillsets in data and technology. a day of their choice, increasing efficiency, collaboration and innovation
whilst also allowing flexibility and maximising inclusion. Connected Working
Delivery of our strategy is also dependent on us building a diverse and has also included a 'remote first' policy. For periods in July, August, and
inclusive workforce; a supportive, collaborative culture, and a safe December, employees can work from anywhere, including overseas subject to
environment, all of which will enable optimum performance from all our consideration of relevant risks including taxation, work permits/visas,
employees. productivity, cyber security, and inclusion.
In September 2023 we held our annual all-employee virtual conference. Two
major announcements were made: the evolution of our company values; and a new
all-employee share scheme.
Our Glassdoor rating based on anonymous reviews remains high at 4.6/5 in
October 2023.
Autorama people policies, rewards / benefits, and contracts are in the process
of being aligned to Auto Trader's. Some teams across Auto Trader and
Autorama have been merged, including product and technology, consumer
marketing, risk & compliance and finance.
We received 'Role model' accreditation from Manchester Pride's All Equals
Charter, the highest award available. The programme aims to ensure
organisations understand, recognise, and challenge discrimination in the
workplace.
4. To achieve our strategic objectives, we are reliant on partners to support Despite the threats posed to our suppliers in the external environment, we
certain product initiatives, for example having lenders integrated with our have experienced no material disruptions to our critical suppliers. Our
Reliance on third parties Deal Builder journey is a key dependency. business continuity and IT disaster recovery processes require monitoring of
critical suppliers regularly to ensure the impact, should they fail, is as low
We also rely on third parties to support our technology infrastructure, supply as possible.
of data about vehicles and their financing, and in the fulfilment of some of
our revenue generating products. Consequently, it is important that we manage As we work towards digitising the automotive retail market we are increasingly
relationships with, and performance of, key suppliers and key strategic reliant on 3rd parties and partners who support retailers with developing the
partners. necessary technology to integrate with our systems. Working collaboratively
with these partners is therefore essential and we have continued to do so in
the first half of this financial year.
5. As a digital business, we rely on our IT infrastructure to provide our We have completed a multi-year project to migrate all of Auto Trader's key
services. A disruptive cyber security and/or business continuity event could applications to the cloud, which increases the resilience, security, and
IT systems and lead to downtime of our systems and infrastructure. reliability of our systems. It also enhances our IT disaster recovery
cyber security
arrangements with the ability to fail-over to alternative data centres in the
Execution of our strategy also relies on us making appropriate investments in event of a major incident.
secure systems and technologies. Failure to invest in appropriate technology
and safeguards could lead to us failing to achieve our objectives. We have migrated all Autorama employees to the Auto Trader environment,
providing enhanced enterprise-wide security protections as well as improving
Delivery of our strategic objectives also relies on us using data to provide efficiency and collaboration across the Auto Trader business.
valuable insights to customers. A significant data breach, whether because of
our own failures or a malicious cyber-attack, would lead to a loss in As previously mentioned, our cyber security teams were involved in the
confidence by the public, retailers and advertisers. planning of the "remote first" period and this passed without incident.
6. The automotive industry is changing at pace. Should we fail to innovate our After initial trials during 2023, we are now scaling Deal Builder, with over
business and product offerings, we could lose relevance with our key 500 retailers onboard compared to c.50 as at March 2023. c.2,100 deals were
Failure to innovate: disruptive technologies and changing consumer behaviours stakeholders, including consumers and customers. submitted via Deal Builder in H1 2024. We are continuing to test and refine
this product as it scales up.
It is crucial that we develop and implement new products, services and
technologies, and adapt to changing consumer behaviour towards car buying and Autorama's leasing journey can now be completed on autotrader.co.uk.
ownership.
Senior leadership and Board strategy days focused on changing consumer buying
Failure to provide both customers and consumers with the best possible behaviours and on how advancements in artificial intelligence can impact Auto
products and online journey, including an online buying experience, could lead Trader.
to reduced website traffic and loss of revenue.
7. The Group operates in a complex regulatory environment. As we progress in We have had no reportable data breaches across the Auto Trader Group during H1
executing our strategy, we are likely to be exposed to increased legal and 2024. We have continued to work to mitigate GDPR risks brought about by the
Regulatory risks regulatory risks, particularly those relating to FCA and GDPR. acquisition of Autorama and growth of Deal Builder, both of which require us
to collect and store more consumer personal data.
There is a risk that the Group, or its subsidiaries, fail to comply with legal
and regulatory requirements. This could lead to reputational damage, financial We adopted the FCA's Consumer Duty in advance of the July 2023 deadline. This
or criminal penalties and impact on our ability to do business. involved a review of our policies, products and processes to ensure that we
can demonstrate delivery of good outcomes to consumers. We have also refreshed
our mandatory all-employee compliance training to capture the requirements of
Consumer Duty with specific, tailored training provided to those with
day-to-day responsibilities under the regulation.
8. Our data continues to show that there is a low competitive threat to our We remain the UK's largest and most engaged digital automotive marketplace
classified marketplace. Nevertheless, we remain wary of the risk that with over 75% of all minutes spent on automotive classified sites spent on
Competition competitors could develop superior consumer experience or superior retailer Auto Trader. Consumer audience increased, with each month's audience higher in
products. This could lead to a loss of market share. H1 2024 than the corresponding month in 2023. Nevertheless, competitive threat
is a perpetual risk which we monitor continuously.
Further, as the automotive industry evolves, an agency model could change the
way that vehicles are bought and sold. Under an agency model, cars are sold by
Manufacturers directly to consumers via retailers. As we progress with our own
objectives surrounding digital retailing, an agency model could mean that
Manufacturers themselves emerge as a direct competitor in the vehicle retail
industry. Failure to manage this emerging threat could inhibit our ability to
achieve our objectives.
9. Our brand is one of our biggest assets. Our research shows that we are the Our Trustpilot rating remains high at 4.7 out of 5 and there continues to be a
largest and most trusted automotive classified brand in the UK. Failure to low level of fraudulent activity on our site owing to the monitoring performed
Brand and reputation maintain and protect our brand, and/or negative publicity affecting our by our security team. We also make use of a customer watchlist which enables
reputation could diminish the confidence that retailers, consumers and us to identify and remove from those customers bringing harm to consumers,
advertisers have in our products and services. This could result in a other retailers, or the Auto Trader brand.
reduction in audience and revenue.
In H1 2024 we have embarked on new consumer marketing campaigns across various
media, including traditional formats such as television, but also podcasts and
social media.
10. In a connected, global industry, we are increasingly prone to the impacts of It is important to respond quickly to the impacts of external events,
external events around the globe on our business, as are our customers. We particularly those which impact on our customers adversely. We regularly
External catastrophic and geo-political events consider there to be a threat to the short-to-mid-term performance of our review our critical suppliers and business continuity and crisis management
business posed by external, unpreventable, catastrophic and geo-political arrangements to ensure that they consider the impacts of external events.
events. Such events could result in our customers being unable to trade,
leading to loss of revenue, stock, audience, and loss of market share. There remains uncertainty within our customer base over a potential recession
with inflation and interest rates remaining high throughout H1 2024. This is
largely attributed to recent events such as Covid-19 and Brexit.
Additionally, a UK general election in c.12 months could lead to new
political policies which we and our customers need to respond to.
The impacts of economic conditions and political policies are assessed
continuously to ensure that we are well positioned to support our customers.
INDEPENDENT REVIEW REPORT TO AUTO TRADER GROUP PLC
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2023 which comprises the consolidated interim income statement,
consolidated interim statement of comprehensive income, consolidated interim
balance sheet, consolidated interim statement of changes in shareholders'
equity and consolidated interim statement of cash flows and the related
explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2023 is not prepared,
in all material respects, in accordance with IAS 34 Interim Financial
Reporting as adopted for use in the UK and the Disclosure Guidance and
Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the
UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the
UK. A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other
information contained in the half-yearly financial report and consider whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company for our review work, for this
report, or for the conclusions we have reached.
David Derbyshire
for and on behalf of KPMG LLP
Chartered Accountants
1 St Peter's Square
Manchester
M2 3AE
9 November 2023
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