TIDMAUTO
RNS Number : 8393M
Auto Trader Group plc
26 May 2022
Embargoed until 7.00am, 26 May 2022
AUTO TRADER GROUP PLC
FULL YEAR RESULTS FOR THE YEARED 31 MARCH 2022
Auto Trader Group plc ('Auto Trader', 'the Group'), the UK's
largest digital automotive marketplace, announces full year results
for the year ended 31 March 2022
Strategic overview
- Our financial performance, customer numbers, consumer
engagement and product uptake are at record levels. Throughout the
year we have also further strengthened our competitive position.
Paid stock was up year-on-year for the first time in four years,
despite the challenging market conditions.
- We successfully executed our annual pricing event in April
2021, including the launch of Retailer Stores, which provide
retailers their own dedicated, customisable location on Auto
Trader.
- We saw strong levels of product uptake which was partly driven
by upsell to our new higher-level advertising packages, which now
give a consistent cross-platform search experience and our newly
launched Market Extension product, which allows our retailers to
reach car buyers outside their local area.
- We launched Auto Trader Connect as part of our April 2022
pricing event, which has gone well. This gives customers access to
our most fundamental and powerful data, including our taxonomy,
which improves advert quality, pricing decisions and enables stock
to be updated on Auto Trader in real-time.
- We continue to focus on supporting an increasingly online car
buying journey and have made good progress in developing both the
component parts which will form our end-to-end deal builder journey
and scaling some of the key enablers to support digital retailing.
There has been no erosion in Operating profit margin as we continue
to invest in future revenue streams.
- In March 2022, we announced that we have agreed to acquire all
the share capital of Autorama (UK) Limited, subject to regulatory
approvals. Autorama's online marketplace and fulfilment
capabilities will transform Auto Trader's existing leasing
proposition helping meet the demands of the growing number of
consumers who might consider leasing their next new vehicle.
Financial results
- Revenue up 65% to GBP432.7 million (2021: GBP262.8 million),
and up 17% on 2020 (GBP368.9 million). Trade revenue up 72% to
GBP388.3 million (2021: GBP225.2 million) and up 20% on 2020
(GBP324.3 million). Revenue in the prior year was impacted by our
decision to provide free advertising to retailer customers in April
2020, May 2020, December 2020 and February 2021, as well as at a
discounted rate in June 2020.
- Operating profit up 88% to GBP303.6 million (2021: GBP161.2
million) and up 17% on 2020 (GBP258.9 million). Operating profit
margin increased to 70% (2021: 61%), consistent with 2020 levels.
Costs increased by 27% to GBP132.0 million (2021: GBP104.0
million).
- Profit before tax up 91% to GBP301.0 million (2021: GBP157.4
million) and up 20% on 2020 (GBP251.5 million).
- Basic EPS up 93% to 25.61p per share (2021: 13.24p) and up 15% on 2020 (22.19p).
- Cash generated from operations(1) up 115% to GBP328.1 million
(2021: GBP152.9 million), and up 24% on 2020 (GBP265.5
million).
- GBP237.1 million returned to shareholders (2021: Nil) through
GBP163.5 million of share buybacks and dividends paid of GBP73.6
million.
- Proposed final dividend of 5.5 pence per share (2021: 5.0
pence per share) giving total dividends of 8.2 pence per share for
the year (2021: 5.0 pence per share).
Operational results
- Cross platform visits(3,4) up 9% to 63.8 million per month on average (2021: 58.3 million).
- Cross platform minutes(3,4) up 5% to 588.1 million per month
on average (2021: 561.1 million). Our share of cross platform
minutes(3,5) remains strong at over 75% (2021: over 75%) and we
grew to be 8x larger than our nearest competitor (2021: 7x).
- The average number of retailer forecourts(3) in the period was
up 5% to 13,964 (2021: 13,336), due to both our strong position and
favourable market conditions.
- Average Revenue Per Retailer(3) (ARPR) per month was up GBP886
to GBP2,210 on average per month (2021: GBP1,324). Excluding
COVID-19 discounts in the prior year, underlying ARPR increased by
GBP247 per month, with growth from all three ARPR levers.
- Physical car stock(3,6) on site was down 11% to 430,000 (2021:
485,000) on average, of which our listings product for new cars
declined to 29,000 on average (2021: 47,000).
- Number of employees (FTEs(3) ) increased to 960 on average during the period (2021: 909).
Cultural KPIs
- Employees that are proud to work at Auto Trader(7) remained high at 95% (March 2021: 93%).
- Diverse teams and an inclusive culture are critical to
attracting, identifying and maximising the potential of our people
and therefore our business:
o Board: We now have a greater percentage of women than men on
our Board (March 2021: 50:50), following the appointment of
Jasvinder Gakhal as an Independent Non-Executive Director to the
Board, with effect from 1 January 2022.
o Leadership: The percentage of women leaders(8) was 38% (March
2021: 34%), and those who are ethnically diverse (9) was 6% (March
2021: 6%).
o Organisation: The percentage of employees who are women was
40%(10) (March 2021: 39%), and those who are ethnically diverse
(9,10) was 14% (March 2021: 11%).
- In June 2021, we signed up to the Science Based Target
initiative Business Ambition for 1.5degC, which committed us to
achieving net zero before 2050. We are aiming to achieve net zero
across our entire value chain (Scopes 1, 2 and 3) before 2040,
having halved our carbon emissions before the end of 2030. The
total amount of our CO(2) emissions increased in the year by 16% to
11.7k tonnes of carbon dioxide equivalent(11) versus our benchmark
of 2020 (10.1k tonnes), which was due to an increase in our cost
base and higher capital expenditure. During the year we offset
these emissions across all scopes using an accredited scheme and
were therefore carbon neutral . This year, for the first time the
reduction in emissions will form part of our remuneration
policy.
Nathan Coe, Chief Executive Officer of Auto Trader Group plc,
said:
"This year marks the best financial and operational performance
in our history, which is credit to our people and the partnerships
we have with our customers.
"We are well placed to continue growing our core business while
establishing the products that retailers will need to shift more of
the car buying journey online, on Auto Trader.
"Despite the current high levels of economic uncertainty and
industry change, we enter the year with good reason for both
confidence and optimism."
Outlook
The new financial year has started well. In April this year, we
successfully executed our annual pricing event which included the
launch of our Auto Trader Connect product.
We are anticipating another good year of ARPR growth,
underpinned by our product lever. We expect growth in the product
lever to be greater than 2021, but less than the exceptional
performance achieved in 2022. We expect the price lever to be
broadly consistent with last year, and the stock lever to be flat.
We anticipate average retailer forecourts to be marginally down
year-on-year, as market conditions start to toughen.
Consumer Services is expected to increase at a rate of low-mid
single digits year-on-year, while Manufacturer and Agency remains
unclear due to well documented supply chain issues. These two areas
only represent c.10% of total Group revenue.
Despite pressure on costs, we anticipate Operating profit
margins to be consistent year-on-year at 70%.
This outlook does not include the acquisition of Autorama, which
will be provided upon completion. The completion date is not yet
known as not all regulatory approvals have been received.
Despite growing economic uncertainty, the Board is confident of
meeting its growth expectations for the year.
Analyst presentation
A presentation for analysts will be held via audio webcast and
conference call at 9.30am, Thursday 26 May 2022. Details below.
Audio webcast: https://edge.media-server.com/mmc/p/2i7eqkti
Conference call details :
Location Purpose Phone Type Number
United Kingdom, London Participant Local +44 (0) 2071 928338
============ ===================== ===================
United Kingdom Participant Tollfree / Freephone 08002796619
============ ===================== ===================
United States, New York Participant Local 16467413167
============ ===================== ===================
United States Participant Tollfree / Freephone 18778709135
============ ===================== ===================
Passcode: 8375612
Please note: Questions will only be taken from in the room at
Bank of America. Participants on the conference call who plan on
following the slides via the webcast should switch the webcast to
phone mode using the cogwheel icon located on the bottom right
corner of the webcast screen to ensure the slides are synced to the
phone audio rather than the webcast audio.
If you have any trouble registering or accessing either the
conference call or webcast, please contact Powerscourt on the
details below.
For media enquiries
Please contact the team at Powerscourt on +44 (0) 20 7324 0490
or email autotrader@powerscourt-group.com
About Auto Trader
Auto Trader Group plc is the UK and Ireland's largest automotive
marketplace. Our marketplace sits at the heart of the vehicle
buying process, with the largest number of car buyers and the
largest choice of trusted stock. Auto Trader exists to grow both
its car buying audience and core advertising business. It will
change how the UK shops for cars by providing the best online car
buying experience, enabling all retailers to sell online. We aim to
build stronger partnerships with our customers, use our voice and
influence to drive more environmentally friendly vehicle choices
and create an inclusive and diverse culture. Auto Trader listed on
the London Stock Exchange in March 2015 and is now a member of the
FTSE 100 Index.
For more information, please visit
https://plc.autotrader.co.uk/who-we-are/about-us/
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 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
Units 2022 2021 Change
------------------------------------------------ -------- -------- ---------
Income statement
------------------------------------------------- -------- -------- ---------
Trade GBPm 388.3 225.2 72%
Consumer Services GBPm 33.3 26.6 25%
Manufacturer and Agency GBPm 11.1 11.0 1%
----------------------------------- ------------ -------- -------- ---------
Revenue GBPm 432.7 262.8 65%
----------------------------------- ------------ -------- -------- ---------
Operating profit GBPm 303.6 161.2 88%
----------------------------------- ------------ -------- -------- ---------
Operating profit margin % 70% 61% 9% pts
----------------------------------- ------------ -------- -------- ---------
Profit before tax GBPm 301.0 157.4 91%
----------------------------------- ------------ -------- -------- ---------
Basic earnings per share Pence 25.61 13.24 93%
----------------------------------- ------------ -------- -------- ---------
Dividend per share Pence 8.2 5.0 64%
----------------------------------- ------------ -------- -------- ---------
Cash flow
------------------------------------------------- -------- -------- ---------
Cash generated from operations(1) GBPm 328.1 152.9 115%
----------------------------------- ------------ -------- -------- ---------
Net bank debt/(cash) at
March(2) GBPm (51.3) (15.7)
----------------------------------- ------------ -------- -------- ---------
Selected key performance
indicators
------------------------------------------------- -------- -------- ---------
GBP per
Average Revenue Per Retailer(3) month 2,210 1,324 67%
----------------------------------- ------------ -------- -------- ---------
Physical car stock on site(3,6) Number 430,000 485,000 (11%)
----------------------------------- ------------ -------- -------- ---------
Retailer forecourts(3) Number 13,964 13,336 5%
----------------------------------- ------------ -------- -------- ---------
million
Cross platform visits(,3,4) per month 63.8 58.3 9%
----------------------------------- ------------ -------- -------- ---------
million
Cross platform minutes(3,4) per month 588.1 561.1 5%
----------------------------------- ------------ -------- -------- ---------
Full-time equivalent employees
(including contractors)(3) Number 960 909 6%
----------------------------------- ------------ -------- -------- ---------
1. Cash generated from operations is defined as net cash
generated from operating activities, before corporation tax
paid.
2. Net bank debt is Net debt before amortised debt fees and
excluding accrued interest and amounts owed under lease
arrangements.
3. Average during the year.
4. Measured by Google analytics.
5. Share of minutes is a custom metric based on Comscore minutes
and is calculated by dividing Auto Trader's total minutes volume by
the entire custom-defined competitive set's total minutes volume.
The custom-defined list includes: Auto Trader, Gumtree motors,
Pistonheads, Motors.co.uk, eBay Motors & CarGurus.
6. Physical car stock advertised on autotrader.co.uk.
7. Based on a survey to all Auto Trader employees in April 2022
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.
8. We define leaders as those who are on our Operational
Leadership Team ('OLT'), three divisional leaders and their direct
reports.
9. Throughout 2022 we have asked our employees to voluntarily
disclose their ethnicity, at year end we had 124 employees (12%)
who had not yet disclosed.
10. We calculate all our diversity percentages using total group
headcount (March 2022: 1,002, March 2021: 953) as at 31 March.
11. 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 (an Environmentally Extended Input
Output (EEIO) database methodology was used to calculate the GHG
footprint across total spend for the financial year); Capital
goods; Fuel and energy related activities (not included in Scope 1
and Scope 2); Waste generated in operations; Business travel;
Employee commuting and Investments.
Summary of FY22 operating performance
Supported by a strong car market and seeing a meaningful
increase in the amount of time car buyers have spent online, Auto
Trader has had a strong year. Revenue grew by 65% to GBP432.7
million (2021: GBP262.8 million). The abnormally high rate of
growth principally reflects the COVID-related discounts we gave to
our retailer customers throughout the pandemic. A better comparison
is that of two years ago, against which revenue grew by 17% (2020:
GBP368.9 million), with a greater number of customers using Auto
Trader and choosing to spend more on our platform. Operating profit
grew 88% to GBP303.6 million (2021: GBP161.2 million), again with a
better comparison being 2020 where growth was also 17% (2020:
GBP258.9 million). Operating profit margin grew to 70% (2021: 61%)
and was consistent with the level achieved in 2020.
Our audience performance has strengthened with average monthly
cross platform visits increasing by 9% to 63.8 million per month
(2021: 58.3 million). Engagement, which we measure by total minutes
spent on site, was also strong with an increase of 5% to an average
of 588 million minutes per month (2021: 561 million minutes). We
have maintained our position as the UK's largest and most engaged
automotive marketplace for new and used cars, with over 75% of all
minutes spent on automotive classified sites spent on Auto Trader
(2021: over 75%) and grew to be 8x larger than our nearest
competitor (2021: 7x).
Demand for both new and used cars has been particularly strong
for much of this last financial year. This demand has been fuelled
by a catch up in transactions that didn't happen in 2020 due to
COVID-related lockdowns, increased consumer interest in car
ownership and good levels of consumer confidence. New car
registrations, whilst seeing year-on-year growth of 4% versus 2021,
were still 22% below 2020 levels, with the well documented new car
supply constraints due to semi-conductor shortages. These trends
fed through to live stock on site, which decreased by 11% to an
average of 430,000 cars (2021: 485,000). Part of this decline was
due to a fall in the volume of new car stock, which averaged 29,000
(2021: 47,000) for the year. These constraints also impacted used
cars, particularly for our larger customers, as lower new car sales
have meant fewer part-exchanges and a lower volume of cars sent to
auction from wholesalers, with overall transactions being 2% lower
than 2020, although were up 15% on 2021. The year-on- year decline
in live used stock was also partly impacted by a stock offer in the
previous year, where customers could advertise more than their
contracted amounts without charge, which was not repeated this
year.
High levels of demand combined with constrained supply have led
to significant levels of used car price growth, with our used car
price index seeing a 22% year-on-year increase in prices across the
period. This contributed to very good trading conditions for our
customers, with some of them achieving record profit levels.
The average number of retailer forecourts advertising on our
platform increased by 5% to 13,964 (2021: 13,336). The increase in
the number of forecourts was due to lower levels of cancellation,
partly due to favourable market conditions but also driven by the
current strength of our position and standing with customers.
Levels of new customer acquisition were largely consistent with the
prior year.
Strategic developments
We strive to be the best place to find, buy and sell a car in
the UK on a platform that enables data-driven digital retailing for
our customers. We think about our strategy in terms of four
strategic pillars: our core marketplace, digital retailing, our
data platform, all of which sit alongside our make a difference
strategy. We have made good progress across all areas throughout
the year.
Our core marketplace
In April 2021, we successfully executed our annual pricing event
including the launch of Retailer Stores, which offers retailers
their own dedicated, customisable location on Auto Trader. This
allows retailers to bring their brand to life, driving consumer
confidence and standing out to buyers. As we build our digital
retailing capabilities, we envisage these pages becoming an area
that customers can use as part of their own e-commerce journey.
At the start of the year, we also evolved our advertising
package structure and changed the sort order for listings. We have
now created a consistent cross platform experience with adverts
appearing in search based on a relevancy algorithm. As part of this
change, we have discontinued our Basic package, introduced a higher
level and re-branded our top three levels to Enhanced, Super and
Ultra. We have increased the penetration of these higher yielding
packages with 31% of retailer stock on a package above Standard in
March 2022 (March 2021: 26%). Whilst the supply and demand dynamics
during the past six months have not created the best environment
for upselling, we have nonetheless seen customers continue to
invest further in our suite of prominence products.
The number of customers paying for our new car product has been
robust despite the challenges of sourcing stock due to the shortage
of semi-conductors. We ended the year with over 1,800 retailers
(2021: over 2,000) paying to advertise new cars on our site.
Digital retailing - bringing more of the car buying journey
online
With car buyers continuing to do more online, our focus is to
build an end-to-end deal builder journey on Auto Trader, which
leverages the three individual components of guaranteed
part-exchange, reservations and finance applications, all of which
have been trialled individually. Whilst we believe that the
physical showroom will continue to play a role in the car buying
process for a number of years, there are several components which
can be brought online which will drive sales and efficiencies for
our retailer customers, provide a better consumer experience, and
provide significant long-term growth opportunities for our
business.
Having last year acquired AutoConvert, a finance, insurance and
compliance platform, we have recently launched a small trial
enabling the application and approval of a finance proposal on Auto
Trader. This product is expected to drive greater transparency for
buyers, with an upfront understanding of their finance options,
including a soft-check and full application journey which will
drive efficiencies on the forecourt. The trial is working with a
couple of lenders and if the buyer is not eligible for the
retailer's first choice of lender, the journey presents an
alternative lender via a broker, Carmoney. While enabling each
retailer to use their choice of lender dramatically increases the
complexity of the product and onboarding, we believe it will
ultimately result in much greater take-up and engagement from our
customers, thereby giving us the best chance of seamlessly bridging
the offline and online experiences.
We have also continued to evolve our trial for vehicle
reservations during the year, with the introduction of Auto
Trader's Seller Promise, which is currently offered by a subset of
trial customers. Seller Promise is designed to give buyers greater
peace of mind when completing more of the buying journey online and
includes certain features offered by the retailer, such as
warranties, a 14-day moneyback guarantee and 12-month minimum MOT
and service. In the year we have seen over 400 reservations convert
into a successful transaction, which give us good levels of
confidence as we evolve the proposition to be incorporated into our
full deal builder journey.
As referenced in our half year results, we have improved our
offering for consumers who want to conveniently sell their car for
cash through our Instant Offer product, which uses the same
consumer journey as our Guaranteed Part-Exchange ('GPX') product,
and is the final component in our deal builder journey. These
products enable consumers to get an accurate and guaranteed price
for their existing vehicle whilst shopping on Auto Trader,
eliminating either the need to haggle over a part-exchange or look
for other disposal routes for their current vehicle. Over the past
12 months, we have provided c.1.2 million guaranteed valuations and
purchased over 10,000 vehicles on Instant Offer, through our
partner Cox Automotive.
During the year we launched a new product, Market Extension,
that allows customers to sell vehicles outside their local area.
This digital retailing product enables customers to sell beyond the
physical constraints of their forecourt. Initial uptake has been
strong with over 6% of retailer stock on this product at year end,
with the product being most relevant for those customers with
either delivery capability or multiple forecourt locations. We are
also continuing to evolve our logistics marketplace to support an
increasing volume of vehicle moves direct to consumers. Over the
year, our platform facilitated c.122,000 (2021: c.98,000) moves of
which c.15% were delivered directly to the consumer.
In March 2022, we announced that we have agreed to acquire all
of the share capital of Autorama (UK) Limited, subject to
regulatory approvals. Autorama's online marketplace and fulfilment
capabilities will transform Auto Trader's existing leasing
proposition and help meet the demands of the growing number of
consumers who might consider leasing their next new vehicle, while
providing an efficient and professional channel to market for
manufacturers and leasing companies. In time, Autorama will be able
to leverage Auto Trader's brand to accelerate its recent expansion,
beyond light commercial vehicles, into new cars. There is a
significant structural opportunity for a new car leasing
marketplace driven by the growth of electric cars, new
manufacturers entering the UK market, lower take up of company car
schemes and a shift towards new digital distribution models.
Leasing provides consumers with a cost-effective way to access a
new car with a model that is consistent with any future move
towards usership.
Auto Trader as a data platform
Since the acquisition of Kee Resources in 2019, where we took
ownership of our underlying vehicle taxonomy, we have been looking
to both increase the volume of data bought and used by our retailer
customers but also to extend the use of our data to other customer
sets. From a retailer perspective we have launched a sales insight
tool, increased the volume of paying retail check and retail
accelerator customers, and offered direct integration via APIs. We
have entered into data sharing agreements with a number of OEMs,
which has improved the quality of our data sets, and we now power
Experian's iCache product which provides insurance companies with
enriched data to provide more accurate consumer quotes. The
integration of a new data partner is often a long process, but we
are making meaningful progress in providing the industry's leading
data platform.
The next big milestone in this journey was the launch of Auto
Trader Connect which was included in retailer packages in April
2022, alongside our annual pricing event. Auto Trader Connect gives
customers access to our taxonomy, which improves advert quality and
introduces real-time updates between our systems and those of our
customers. This removes the inefficiencies of daily data feeds and
we currently have integration with c.40% of third-party software
providers with Auto Trader Connect. We see this product as a key
enabler to support digital retailing.
We have made substantial progress during the year in migrating
our platform and technology infrastructure to the cloud. This has
enabled us to take advantage of improved performance, enhanced
security and delivered a quicker product release cycle. We expect
to have migrated all of our services to the cloud by the end of the
current financial year. We saw an increase in the number of product
releases to 46,000 (2021: 41,000).
Make a difference
Within our overall strategy we aim to 'make a difference' to our
people, our communities, our industry, and to the wider
environment, whilst holding ourselves to the highest standards when
it comes to acting responsibly. We have a Corporate Responsibility
Committee with oversight for Auto Trader's focus on the
environmental, social and governance aspects of our business. Over
the past 18 months we have identified focus areas around which we
have created initiatives. These are monitored regularly and
reported on using our cultural KPIs. While many of these changes
take time, we are committed to making meaningful progress across
all measures.
We will continue to improve the levels of diversity and
inclusion within our organisation as we believe this improves
individual and team performance and will allow us to identify and
attract talent that we may not otherwise access. We are making
progress, but there remains room for improvement. Our Board has
marginally more women than men and as of the start of this calendar
year we meet the recommendations of the Parker Review. At year end,
women represented 40% of our organisation (March 2021: 39%) and in
leadership roles, as defined by FTSE Women Leaders, there was
meaningful improvement to 38% (March 2021: 34%). We are committed
to increasing the percentage of ethnically diverse employees, who
currently represent 14% of the organisation (March 2021: 11%), with
12% of employees not disclosing their ethnicity. The percentage of
ethnically diverse employees in leadership, again using the FTSE
Women Leaders definition, remained at 6% (March 2021: 6%),
highlighting the work we still have to do in this area. Much of our
work around creating an inclusive culture and environment has been
driven, supported and informed by our many employee networks and
guilds representing women, BAME, LGBT+, disability &
neurodiversity, families and age.
The UK Government has a target to become net zero by 2050 and
Auto Trader has a role to play in reaching this goal. There are two
strands to our commitments around the environment which includes
achieving net zero carbon emissions by 2040 and supporting
consumers in making more sustainable vehicle choices.
We have signed up to the Science Based Target initiative and are
committed to delivering a strategy to ensure we are Net Zero by
2040. As part of this commitment we are reporting our Scope 1, 2
and 3 emissions against a base year of 2020. Our emissions during
the year increased against the base year, largely due to an
increase in our cost base and higher capital expenditure. In the
year, we offset these emissions using an accredited scheme and were
therefore carbon neutral. Longer-term, we have committed to reduce
absolute Scope 1 and 2 emissions by 50% and absolute Scope 3
emissions by 46% before the end of financial year 2031 and have
included these reduction plans in our remuneration targets for the
first time. Alongside the reduction in emissions, we are working on
a carbon removal plan to help us achieve our long-term net zero
goal.
In terms of helping consumers make more sustainable vehicle
choices we have engaged over 2.1 million consumers in our monthly
EV giveaway campaign, launched an electric car hub on Auto Trader,
are working proactively with a number of government departments and
industry bodies and have been educating both employees and
customers through our carbon literacy training, where we have
achieved gold status.
During the year we have adapted our working policies to better
reflect the way in which we will work in the future. Our new
Connected Working policy looks to retain important aspects of our
culture, such as collaboration, relationships, low-bureaucracy,
agility and empowerment, while enabling people to better balance
their work/life commitments. We are proud that our employee
engagement score has remained high despite such challenging
circumstances over the past two years, with 95% of employees saying
they are proud to work at Auto Trader (March 2021: 93%).
The Board
We welcomed Jasvinder Gakhal as a new Board member from 1
January 2022. Jasvinder is currently Managing Director of Motor at
Direct Line Group. She sits on our Nomination, Audit, Remuneration
and Corporate Responsibility Committees. There were no other
changes to the Board.
Investor calendar
The Group will hold an investor day on Tuesday 6(th) September
2022.
Financial review
Revenue increased to GBP432.7m (2021: GBP262.8m), up 65% when
compared to the prior year. Trade revenue, which comprises revenue
from Retailers, Home Traders and other smaller revenue streams,
increased by 72% to GBP388.3m (2021: GBP225.2m).
2022 2021 Change
GBPm GBPm %
------------------------- ------ ------ -------
Retailer 370.4 211.9 75%
Home Trader 8.8 6.3 40%
Other 9.1 7.0 30%
-------------------------- ------ ------ -------
Trade 388.3 225.2 72%
Consumer Services 33.3 26.6 25%
Manufacturer and Agency 11.1 11.0 1%
-------------------------- ------ ------ -------
Total 432.7 262.8 65%
-------------------------- ------ ------ -------
Retailer revenue increased by 75% to GBP370.4m (2021:
GBP211.9m). Revenue in the prior year was impacted by our decision
to provide free advertising to our retailer customers in April
2020, May 2020, December 2020 and February 2021, and at a 25%
discount in June 2020, due to the closure of retailer forecourts
given COVID-19 lockdown restrictions. There have been no discounts
in relation to COVID-19 in 2022.
The average number of retailer forecourts advertising on Auto
Trader was up 5% to 13,964 (2021: 13,336). We saw a steady increase
in the number of retailers advertising on our platform throughout
2022 with lower cancellations in the period, and levels of
acquisition remaining broadly flat.
Average Revenue per Retailer ('ARPR') increased by 67% to
GBP2,210 (2021: GBP1,324). The GBP886 increase was heavily impacted
by the COVID-19 related discounts in the prior year which made a
positive contribution of GBP639 due to their absence in 2022.
Excluding these discounts, there was an underlying increase in ARPR
of GBP247 spread across our price, stock and product levers:
-- Price: Our price lever contributed an increase of GBP74
(2021: GBP50) to total ARPR as we executed our annual pricing event
for the majority of customers on 1 April 2021.
-- Stock: The number of live cars advertised on Auto Trader
decreased by 11% to 430,000 (2021: 485,000). This was partially
driven by a decline of 18,000 new cars on Auto Trader due to well
documented supply shortages. It is important to note though that
the stock lever is not driven by live stock but by the number of
paid stock units. Last year live used stock was impacted by a stock
offer which allowed customers to double their stock for free from
late March to mid-July 2020, which did not impact paid for stock.
Whilst we did see some downgrades in paid stock during the first
half, as a result of faster stock turn and limited supply, much
came from our larger Franchise customers who generally have a lower
cost per car and paid stock levels partially recovered in the
second half. These dynamics resulted in a GBP52 increase in the
stock lever (2021: decline of GBP52).
-- Product: Our product lever contributed an increase of GBP121
(2021: GBP89) to total ARPR. Most of this came from retailers
choosing to purchase prominence products, including our higher
yielding Enhanced, Super and Ultra packages with penetration
increasing to 31% of retailer stock (March 2021 (Advanced and
Premium): 26%). In addition to packages, retailers sought
prominence through greater use of our Pay Per Click product. We
also introduced a new digital retailing product called Market
Extension, allowing retailers to sell outside of their local area,
which also contributed to the product lever, with over 6% of
retailer stock on the product by the end of the year. Finally,
there was also some contribution from our Retailer Stores product,
which was launched in April 2021 as part of our pricing event and
other additional standalone products.
Home Trader revenue increased by 40% to GBP8.8m (2021: GBP6.3m).
Other revenue increased by GBP2.1m to GBP9.1m (2021: GBP7.0m) with
AutoConvert increasing GBP1.0m to GBP2.1m (2021: GBP1.1m).
Consumer Services revenue increased by 25% in the year to
GBP33.3m (2021: GBP26.6m). Private revenue, which is generated from
individual sellers who pay to advertise their vehicle on the Auto
Trader marketplace, increased to GBP19.3m (2021: GBP16.6m).
Motoring Services revenue also increased, up 32% to GBP13.1m (2021:
GBP9.9m) as a result of strong growth in both our insurance and
finance offerings. After launching in 2021, Instant Offer
contributed GBP0.9m to Consumer Services revenue (2021:
GBP0.1m).
Revenue from Manufacturer and Agency customers was effectively
flat at GBP11.1m (2021: GBP11.0m). The pandemic had a significant
impact on this revenue line in both 2021 and 2022. Manufacturers
have lowered their marketing spend due to semi-conductor supply
issues and the resulting lack of clarity on new car supply.
Costs
In 2021, the Group made the decision to reduce costs, mainly
through the reduction of discretionary marketing spend, whilst our
retail customers were closed due to COVID-19 restrictions. With a
return to more normal levels in 2022, costs increased 27% to
GBP132.0m (2021: GBP104.0m).
2022 2021 Change
GBPm GBPm %
------------------------------- ------- ------- ---------
People costs 69.8 60.0 16%
Marketing 20.5 9.8 109%
Other costs 34.5 27.9 24%
Depreciation & amortisation 7.2 6.3 14%
Total administrative expenses 132.0 104.0 27%
------------------------------- ------- ------- ---------
People costs, which comprise all staff costs and third-party
contractor costs, increased by 16% to GBP69.8m (2021: GBP60.0m).
The increase in people costs was primarily driven by an increase in
the average number of full-time equivalent employees (including
contractors) to 960 (2021: 909) as we invested in our people to
support the growth areas of the business. The prior year was
impacted by Executive Directors and the Board foregoing 50% or more
of their salary and fees for the period of April to June 2020.
Performance related pay increased in 2022, in addition to the
resumption of annual pay reviews. Underlying salary costs continue
to increase as we invest in the best digital talent.
Marketing spend increased by 109% to GBP20.5m (2021: GBP9.8m).
The increase was driven by discretionary spend being reduced in the
prior year in response to the pandemic as previously mentioned.
Other costs, which include data services, property related costs
and other overheads, increased by 24% to GBP34.5m (2021: GBP27.9m).
The increase was primarily due to higher overhead costs, including
the return of travel, office & people related costs, as well as
higher IT spend as we continue to move more of our services and
applications to the cloud . Depreciation and amortisation increased
to GBP7.2m (2021: GBP6.3m) mainly as a result of an additional
office lease and office improvements.
Operating profit
2022 2021 Change
GBPm GBPm %
-------------------------------------- -------- -------- ---------
Revenue 432.7 262.8 65%
Administrative expenses (132.0) (104.0) 27%
Share of profits from joint ventures 2.9 2.4 21%
Operating profit 303.6 161.2 88%
-------------------------------------- -------- -------- ---------
During the year Operating profit increased by 88% to GBP303.6m
(2021: GBP161.2m). Operating profit margin increased by nine
percentage points to 70% (2021: 61%), back in line with 2020
levels. Our share of profit generated by Dealer Auction, the
Group's joint venture with Cox Automotive, increased to GBP2.9m
(2021: GBP2.4m) as auction activity saw improved levels following a
reduction during periods of lockdown in the prior year.
Net finance costs
Net finance costs decreased to GBP2.6m (2021: GBP3.8m). The
decrease was driven by lower interest payable of GBP1.4m (2021:
GBP2.9m). Amortisation of debt issue costs increased to GBP1.0m due
to accelerated amortisation following the reduction of the
Syndicated revolving credit facility ('Syndicated RCF') commitments
as referenced below (2021: GBP0.6m). Interest on lease liabilities
totalled GBP0.2m (2021: GBP0.3m) and interest relating to deferred
consideration was GBP0.1m (2021: GBP0.1m). Interest receivable on
cash was GBP0.1m (2021: GBP0.1m).
Reduction of RCF commitments
With effect from 24 September 2021, the Company reduced the
total commitments of its Syndicated revolving credit facility
('Syndicated RCF') by GBP150m from GBP400m to GBP250m. The facility
will terminate in two tranches: GBP52.2m will mature in June 2023
and GBP197.8m will mature in June 2025. Additionally, there was an
amendment to the Senior Facilities Agreement to reflect the
discontinuation of LIBOR and the transition to SONIA (in respect of
sterling loans); Loan Market Association updates; and to include
the effect of IFRS 16 for the purposes of calculating financial
covenants. There is no requirement to settle all, or part, of the
debt earlier than the termination dates stated.
Profit before taxation
Profit before taxation increased by 91% to GBP301.0m (2021:
GBP157.4m). The increase resulted from the Operating profit
performance, with a further benefit from lower net finance costs of
GBP2.6m (2021: GBP3.8m).
Taxation
The Group tax charge increased 90% to GBP56.3m (2021: GBP29.6m)
which represents an effective tax rate of 19% (2021: 19%), in line
with the average standard UK rate.
Earnings per share
Basic earnings per share increased by 93% to 25.61 pence (2021:
13.24 pence) based on a weighted average number of ordinary shares
in issue of 955,532,888 (2021: 965,175,677). Diluted earnings per
share of 25.56 pence (2021: 13.21 pence) increased by 93%, based on
957,534,145 shares (2021: 967,404,812) which takes into account the
dilutive impact of outstanding share awards. The reduction in
shares is due to the share buyback programme throughout 2022.
Cash flow and net cash
Cash generated from operations increased by 115% to GBP328.1m
(2021: GBP152.9m) primarily due to the increase in Operating profit
but also a positive working capital movement, driven by VAT.
Corporation tax payments increased to GBP56.2m (2021: GBP28.2m),
due to higher profit before taxation. Net cash generated from
operating activities was GBP271.9m (2021: GBP124.7m).
As at 31 March 2022 the Group had net cash of GBP41.7m (31 March
2021: GBP10.3m), representing an increase of GBP31.4m. At the year
end, the Group had drawn GBPnil of the Syndicated revolving credit
facility (31 March 2021: GBP30.0m) and held cash and cash
equivalents of GBP51.3m (2021: GBP45.7m).
Leverage, defined as the ratio of Net bank debt to EBITDA,
remained at zero as we exit the year in a net cash position.
Interest paid on these financing arrangements was GBP1.5m (2021:
GBP3.0m).
Capital structure and dividends
During the year, a total of 24.9m shares (2021: nil) were
purchased for a total consideration of GBP163.5m (2021: nil) before
transaction costs of GBP0.8m (2021: nil). A further GBP73.6m (2021:
nil) was paid in dividends, giving a total of GBP237.1m (2021: nil)
in cash returned to shareholders. The Directors are recommending a
final dividend of 5.5 pence per share. Subject to shareholders'
approval at the Annual General Meeting ('AGM') on 15 September
2022, the final dividend will be paid on 23 September 2022 to
shareholders on the register of members at the close of business on
25 August 2022 . The total dividend for the year is therefore 8.2
pence per share (2021: 5.0 pence per share).
In the coming year, it is expected that the Group will draw on
its revolving credit facility to fund part of the initial
consideration relating to the Autorama acquisition. The Group's
long-term capital allocation policy remains broadly unchanged:
continuing to invest in the business, enabling it to grow whilst
returning around one third of net income to shareholders in the
form of dividends. Any surplus cash following these activities will
be used to continue our share buy-back programme and steadily
reduce gross indebtedness. It is the Board's long-term intention
that over time the Group will return to a net cash position.
Going concern
The Group generated significant cash from operations during the
period. At 31 March 2022 the Group had drawn GBPnil of its GBP250m
(previously GBP400m) unsecured Syndicated revolving credit facility
('Syndicated RCF') and had cash balances of GBP51.3m. The GBP250m
Syndicated RCF is committed until June 2023, when it reduces to
GBP197.8m through to maturity in June 2025. Financial projections
for the next 12 months include the capital commitment to acquire
Autorama (UK) Limited given the likelihood of the event. On the
basis of facilities available and current financial projections for
the next 12 months, the Directors have concluded that it is
appropriate to prepare these financial statements on a going
concern basis.
Commitment to acquire Autorama (UK) Limited
The Group has agreed to acquire, subject to regulatory approvals
which at the date of this report had not all been received, the
share capital of Autorama (UK) Limited. The transaction is expected
to complete in the first half of financial year 2023. Auto Trader
will pay initial consideration of GBP150m in cash, with a further
GBP50m of deferred consideration to be settled in shares subject to
customary performance conditions 12 months after the completion
date. Once issued, the shares will vest over a period of two years
in two 12-month instalments. At 31 December 2021, Autorama had
GBP27m of gross assets and for the calendar year 2021, made net
revenue of GBP26m, selling c.14,500 vehicles, and had an EBITDA
loss of GBP6m, which included marketing costs of over GBP9m.
Consolidated income statement
For the year ended 31 March 2022
2022 2021
Note GBPm GBPm
------------------------------------------- ---- ------- -------
Revenue 3 432.7 262.8
Administrative expenses (132.0) (104.0)
Share of profit from joint ventures 11 2.9 2.4
------------------------------------------- ---- ------- -------
Operating profit 4 303.6 161.2
Net finance costs 5 (2.6) (3.8)
------------------------------------------- ---- ------- -------
Profit before taxation 301.0 157.4
Taxation 6 (56.3) (29.6)
------------------------------------------- ---- ------- -------
Profit for the year attributable to equity
holders of the parent 244.7 127.8
------------------------------------------- ---- ------- -------
Basic earnings per share (pence) 7 25.61 13.24
------------------------------------------- ---- ------- -------
Diluted earnings per share (pence) 7 25.56 13.21
------------------------------------------- ---- ------- -------
Consolidated statement of comprehensive income
For the year ended 31 March 2022
2022 2021
GBPm GBPm
------------------------------------------------------- ----- -----
Profit for the year 244.7 127.8
Other comprehensive income
Items that may be subsequently reclassified
to profit or loss
Exchange differences on translation of foreign
operations 0.2 (0.2)
-------------------------------------------------------- ----- -----
Items that will not be reclassified to profit
or loss
Remeasurements of post-employment benefit obligations,
net of tax 0.2 1.6
-------------------------------------------------------- ----- -----
Other comprehensive income for the year, net
of tax 0.4 1.4
-------------------------------------------------------- ----- -----
Total comprehensive income for the year attributable
to equity holders of the parent 245.1 129.2
-------------------------------------------------------- ----- -----
Consolidated balance sheet
At 31 March 2022
2022 2021
Note GBPm GBPm
--------------------------------------------- ---- --------- ---------
Assets
Non-current assets
Intangible assets 8 355.6 358.2
Property, plant and equipment 9 14.7 11.2
Deferred taxation assets 1.4 1.7
Retirement benefit surplus 3.7 3.2
Net investments in joint ventures 11 49.7 54.6
--------------------------------------------- ---- --------- ---------
425.1 428.9
Current assets
Trade and other receivables 65.9 59.6
Current income tax assets 0.6 0.3
Cash and cash equivalents 51.3 45.7
--------------------------------------------- ---- --------- ---------
117.8 105.6
--------------------------------------------- ---- --------- ---------
Total assets 542.9 534.5
--------------------------------------------- ---- --------- ---------
Equity and liabilities
Equity attributable to equity holders of the
parent
Share capital 13 9.5 9.7
Share premium 13 182.6 182.4
Retained earnings 1,332.4 1,307.3
Own shares held 14 (22.4) (10.7)
Capital reorganisation reserve (1,060.8) (1,060.8)
Capital redemption reserve 1.0 0.8
Other reserves 30.2 30.0
--------------------------------------------- ---- --------- ---------
Total equity 472.5 458.7
--------------------------------------------- ---- --------- ---------
Liabilities
Non-current liabilities
Borrowings 12 - 27.6
Provisions for other liabilities and charges 1.3 1.1
Lease liabilities 6.5 5.0
Deferred income 8.9 9.4
Deferred consideration - 7.9
--------------------------------------------- ---- --------- ---------
16.7 51.0
Current liabilities
Trade and other payables 42.0 21.8
Provisions for other liabilities and charges 0.7 0.5
Lease liabilities 3.0 2.5
Deferred consideration 8.0 -
--------------------------------------------- ---- --------- ---------
53.7 24.8
--------------------------------------------- ---- --------- ---------
Total liabilities 70.4 75.8
--------------------------------------------- ---- --------- ---------
Total equity and liabilities 542.9 534.5
--------------------------------------------- ---- --------- ---------
The financial statements were approved by the Board of Directors
on 26 May 2022 and authorised for issue:
Jamie Warner
Chief Financial Officer
Auto Trader Group plc
Registered number: 09439967
Consolidated statement of changes in equity
For the year ended 31 March 2022
Own Capital Capital
Share Share Retained shares reorganisation redemption Other Total
capital premium earnings held reserve reserve reserves equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Balance at 31 March
2020 9.2 - 1,180.1 (17.9) (1,060.8) 0.8 30.2 141.6
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Profit for the year - - 127.8 - - - - 127.8
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Other comprehensive
income:
Currency translation
differences - - - - - - (0.2) (0.2)
Remeasurements of
post-employment
benefit obligations,
net of tax - - 1.6 - - - - 1.6
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Total comprehensive
income,
net of tax - - 129.4 - - - (0.2) 129.2
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Transactions with
owners
Employee share schemes
- value of employee
services - - 3.3 - - - - 3.3
Exercise of employee
share schemes - - (6.0) 7.0 - - - 1.0
Transfer of shares
from
ESOT - - (0.2) 0.2 - - - -
Tax impact of employee
share schemes - - 0.7 - - - - 0.7
Issue of ordinary
shares 13 0.5 182.4 - - - - - 182.9
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Total transactions
with
owners, recognised
directly
in equity 0.5 182.4 (2.2) 7.2 - - - 187.9
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Balance at 31 March
2021 9.7 182.4 1,307.3 (10.7) (1,060.8) 0.8 30.0 458.7
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Profit for the year - - 244.7 - - - - 244.7
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Other comprehensive
income:
Currency translation
differences - - - - - - 0.2 0.2
Remeasurements of
post-employment
benefit obligations,
net of tax - - 0.2 - - - - 0.2
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Total comprehensive
income,
net of tax - - 244.9 - - - 0.2 245.1
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Transactions with
owners
Employee share schemes
- value of employee
services - - 5.1 - - - - 5.1
Exercise of employee
share schemes - - (4.8) 6.0 - - - 1.2
Transfer of shares
from
ESOT - - (0.1) 0.1 - - - -
Tax impact of employee
share schemes - - 0.1 - - - - 0.1
Purchase of own shares
for treasury - - - (17.8) - - - (17.8)
Purchase of own shares
for cancellation (0.2) - (146.5) - - 0.2 - (146.5)
Issue of ordinary
shares 13 - 0.2 - - - - - 0.2
Dividends paid - - (73.6) - - - - (73.6)
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Total transactions
with
owners, recognised
directly
in equity (0.2) 0.2 (219.8) (11.7) - 0.2 - (231.3)
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Balance at 31 March
2022 9.5 182.6 1,332.4 (22.4) (1,060.8) 1.0 30.2 472.5
---------------------- ---- -------- -------- --------- ------- --------------- ----------- --------- -------
Consolidated statement of cash flows
For the year ended 31 March 2022
2022 2021
Note GBPm GBPm
---------------------------------------------------- ---- ------- -------
Cash flows from operating activities
Cash generated from operations 16 328.1 152.9
Income taxes paid (56.2) (28.2)
---------------------------------------------------- ---- ------- -------
Net cash generated from operating activities 271.9 124.7
Cash flows from investing activities
Purchases of intangible assets - software - (0.1)
Purchases of property, plant and equipment (2.8) (1.3)
Dividends received from joint ventures 7.8 -
Payment for acquisition of subsidiary, net of
cash acquired - (10.0)
---------------------------------------------------- ---- ------- -------
Net cash used in investing activities 5.0 (11.4)
Cash flows from financing activities
Dividends paid to Company's shareholders (73.6) -
Drawdown of Syndicated revolving credit facility - 64.5
Repayment of Syndicated revolving credit facility (30.0) (347.5)
Payment of refinancing fees - (0.5)
Payment of interest on borrowings (1.5) (3.0)
Payment of lease liabilities (3.2) (2.5)
Purchase of own shares for cancellation 13 (145.8) -
Purchase of own shares for treasury 14 (17.7) -
Payment of fees on purchase of own shares (0.8) -
Proceeds from the issue of shares net of bookrunner
fees 13 - 183.2
Payment of fees on issue of own shares 13 - (0.3)
Contributions to defined benefit pension scheme (0.1) (0.1)
Proceeds from exercise of share-based incentives 1.4 1.0
---------------------------------------------------- ---- ------- -------
Net cash used in financing activities (271.3) (105.2)
Net increase in cash and cash equivalents 5.6 8.1
Cash and cash equivalents at beginning of year 45.7 37.6
Cash and cash equivalents at end of year 51.3 45.7
---------------------------------------------------- ---- ------- -------
Notes to the consolidated financial statements
1. General information
Basis of preparation
The consolidated financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006, and in accordance
with UK-adopted international accounting standards. The
consolidated financial statements have been prepared on the going
concern basis and under the historical cost convention.
The following amendments to standards have been adopted by the
Group for the first time for the financial year beginning on 1
April 2021:
-- COVID-19-Related Rent Concessions (Amendment to IFRS 16)
-- Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
-- COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)
The adoption of these amendments has had no material effect on
the Group's consolidated financial statements.
There are a number of amendments to IFRS that have been issued
by the IASB that become mandatory in a subsequent accounting period
including:
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
-- Annual Improvements to IFRS Standards 2018-2020
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
-- Reference to the Conceptual Framework (Amendments to IFRS 3)
-- IFRS 17 Insurance Contracts
-- Classification of liabilities as current or non-current (Amendments to IAS 1)
-- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
-- Definition of Accounting Estimate (Amendments to IAS 8)
-- Deferred Tax Related to Assets and Liabilities Arising from a
Single Transaction - Amendments to IAS 12 Income Taxes
-- Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
The Group has evaluated these changes and none are expected to
have a significant impact on these consolidated financial
statements.
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 March 2022 or
31 March 2021 but is derived from those accounts. Statutory
accounts for 31 March 2021 have been delivered to the registrar of
companies, and those for 31 March 2022 will be delivered in due
course. The auditor has reported on those accounts; their reports
were (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
Going concern
During the year ended 31 March 2022 the Group has continued to
generate significant cash from operations. The Group has an overall
positive net asset position and had cash balances of GBP51.3m at 31
March 2022 (2021: GBP45.7m). During the year GBP237.1m was returned
to shareholders through share buybacks and dividends (2021:
nil).
The Group has access to a Syndicated revolving credit facility
(the 'Syndicated RCF'). At 31 March 2022 the Group had nil (2021:
GBP30m) drawn of its GBP250m Syndicated RCF. The GBP250m Syndicated
RCF is committed until June 2023, when it reduces to GBP197.8m
through to maturity in June 2025.
Cash flow projections for a period of not less than 12 months
from the date of this report have been prepared and include the
capital commitment to acquire Autorama (UK) Limited given the
likelihood of the event. Stress case scenarios have been modelled
to make the assessment of going concern, taking into account severe
but plausible potential impacts of a returning pandemic, a data
breach and banning the sale of diesel cars. The results of the
stress testing demonstrated that due to the Group's significant
free cash flow, access to the Syndicated RCF and the Board's
ability to adjust the discretionary share buyback programme, the
Group would be able to withstand the impact and remain cash
generative. Subsequent to the year end, the Group has generated
cash flows in line with its forecast and there are no events that
have adversely impacted the Group's liquidity.
The Directors, after making enquiries and on the basis of
current financial projections and facilities available, believe
that the Group has adequate financial resources to continue in
operation for a period not less than 12 months from the date of
this report. For this reason, they continue to adopt the going
concern basis in preparing the financial statements.
Accounting estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the use of certain accounting estimates and assumptions.
It also requires management to exercise its judgement in the
process of applying the Group's accounting policies. Estimates and
judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future
events that are believed to be reasonable under the
circumstances.
There are no accounting estimates or judgements which are
critical to the reporting of results of operations and financial
position.
The accounting estimates and judgements believed to require the
most subjectivity or complexity are as follows:
Carrying values of goodwill
The Group tests annually whether goodwill, held by the group or
its joint venture, has suffered any impairment. Judgement is
required in the identification and allocation of goodwill to
cash-generating units. The recoverable amounts of cash-generating
units have been determined based on value-in-use calculations,
which require the use of estimates.
Recoverability of financial assets
IFRS 9 prescribes that historical expected credit losses should
be adjusted for forward-looking information to reflect
macro-economic and market conditions. Used car pricing could
potentially decline after significant price growth throughout the
financial year ended 31 March 2022; this may have an adverse effect
on the cash flows of retailers and is likely to increase credit
risk looking forward as less profit is made per vehicle sold.
Adjustments were made to the expected credit losses on financial
assets to reflect this.
Share-based payments
Share-based payment arrangements in which the Group receives
goods or services as consideration for its own equity instruments
are accounted for as equity-settled share-based payment
transactions. The fair value of services received in return for
share options is calculated with reference to the fair value of the
award on the date of grant. Black-Scholes and Monte Carlo models
have been used where appropriate to calculate the fair value and
the Directors have therefore made estimates with regard to the
inputs to that model. Estimation also arises over the number of
share awards that are expected to vest, which is based whether
non-market conditions are expected to be met.
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 in the year, it has been
determined that there is only one operating segment being the
Group, as the information reported includes operating results at a
consolidated Group level only. This reflects the nature of the
business, where the major cost is to support the IT platforms upon
which all of the Group's customers are serviced. These costs are
borne centrally and are not attributable to any specific customer
type or revenue stream. There is also considered to be only one
reportable segment, which is the Group, the results of which are
shown in the Consolidated income statement.
Management has determined that there is one operating and
reporting segment based on the reports reviewed by the Operational
Leadership Team ('OLT') which is the chief operating decision-maker
('CODM'). The OLT is made up of the Executive Directors and Key
Management and is responsible for the strategic decision-making of
the Group.
The OLT primarily uses the statutory measures of Revenue and
Operating profit to assess the performance of the one operating
segment. To assist in the analysis of the Group's
revenue-generating trends, the OLT reviews revenue at a
disaggregated level as detailed within note 3. The revenue from
external parties reported to the OLT is measured in a manner
consistent with that in the income statement.
A reconciliation of the segment's Operating profit to Profit
before tax is shown below.
2022 2021
GBPm GBPm
Total segment Revenue 432.7 262.8
-------------------------- ----- -----
Total segment Operating
profit 303.6 161.2
Finance costs - net (2.6) (3.8)
-------------------------- ----- -----
Profit before tax 301.0 157.4
-------------------------- ----- -----
Geographic information
The Group is domiciled in the UK and the following tables detail
external revenue by location of customers, trade receivables and
non-current assets (excluding deferred tax) by geographic area:
2022 2021
Revenue GBPm GBPm
-------------- ----- -----
UK 427.8 259.0
Ireland 4.9 3.8
-------------- ----- -----
Total revenue 432.7 262.8
-------------- ----- -----
2022 2021
Trade receivables GBPm GBPm
---------------------------- ----- -----
UK 25.3 23.1
Ireland 0.4 0.2
---------------------------- ----- -----
Total net trade receivables 25.7 23.3
---------------------------- ----- -----
2022 2021
Non-current assets (excluding deferred tax) GBPm GBPm
-------------------------------------------------- ----- -----
UK 417.5 420.9
Ireland 6.2 6.3
-------------------------------------------------- ----- -----
Total non-current assets (excluding deferred tax) 423.7 427.2
-------------------------------------------------- ----- -----
Due to the large number of customers the Group serves, there are
no individual customers whose revenue is greater than 10% of the
Group's total revenue in all periods presented in these financial
statements.
3. Revenue
The Group's operations and main revenue streams are those
described in these annual financial statements. The Group's revenue
is derived from contracts with customers.
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.
2022 2021
Revenue GBPm GBPm
------------------------ ----- -----
Retailer 370.4 211.9
Home Trader 8.8 6.3
Other 9.1 7.0
Trade 388.3 225.2
Consumer Services 33.3 26.6
Manufacturer and Agency 11.1 11.0
------------------------ ----- -----
Total revenue 432.7 262.8
------------------------ ----- -----
4. Operating profit
Operating profit is after charging the following:
2022 2021
Note GBPm GBPm
----------------------------------------------- ---- ------ --------------------
Staff costs (69.8) (59.9)
Contractor costs - (0.1)
Depreciation of property, plant and equipment 9 (4.6) (3.7)
Amortisation of intangible assets 8 (2.6) (2.6)
(Loss) / Profit on sale of property, plant and
equipment - (0.2)
----------------------------------------------- ---- ------ --------------------
5. Net finance costs
2022 2021
GBPm GBPm
------------------------------------------------- ----- -----
On bank loans and overdrafts 1.4 2.9
Amortisation of debt issue costs 1.0 0.6
Interest unwind on lease liabilities 0.2 0.3
Interest charged on deferred consideration 0.1 0.1
Interest receivable on cash and cash equivalents (0.1) (0.1)
------------------------------------------------- ----- -----
Total 2.6 3.8
------------------------------------------------- ----- -----
6. Taxation
2022 2021
GBPm GBPm
-------------------------------------------------- ----- -----
Current taxation
UK corporation taxation 56.5 28.8
Foreign taxation 0.2 -
Adjustments in respect of prior years (0.4) -
-------------------------------------------------- ----- -----
Total current taxation 56.3 28.8
-------------------------------------------------- ----- -----
Deferred taxation
Origination and reversal of temporary differences 0.3 0.5
Effect of rate changes on opening balance 0.2 -
Adjustments in respect of prior years (0.5) 0.3
-------------------------------------------------- ----- -----
Total deferred taxation - 0.8
-------------------------------------------------- ----- -----
Total taxation charge 56.3 29.6
-------------------------------------------------- ----- -----
The taxation charge for the year is lower than (2021: lower
than) the effective rate of corporation tax in the UK of 19% (2021:
19%). The differences are explained below:
2022 2021
GBPm GBPm
------------------------------------------------------ ----- -----
Profit before taxation 301.0 157.4
------------------------------------------------------ ----- -----
Tax on profit at the standard UK corporation tax rate
of 19% (2021: 19%) 57.2 29.9
Expenses not deductible for taxation purposes 0.2 0.1
Income not taxable - (0.7)
Adjustments in respect of foreign tax rates (0.1) -
Effect of rate change on deferred tax 0.1 -
Adjustments in respect of OCI group relief (0.2) -
Adjustments in respect of prior years (0.9) 0.3
------------------------------------------------------ ----- -----
Total taxation charge 56.3 29.6
------------------------------------------------------ ----- -----
Taxation on items taken directly to equity was a credit of
GBP0.1m (2021: GBP0.7m) relating to tax on share-based
payments.
Tax recorded in equity within the Consolidated statement of
comprehensive income was a charge of GBP0.2m (2021: GBP0.8m)
relating to post-employment benefit obligations.
The tax charge for the year is based on the standard rate of UK
corporation tax for the period of 19% (2021: 19%). Deferred income
taxes have been measured at the tax rate expected to be applicable
at the date the deferred income tax assets and liabilities are
realised.
On 10 June 2021, Royal Assent to the Finance Act was given to
increase the UK corporation tax from 19% to 25% from 1 April 2023.
Management has performed an assessment, for all material deferred
income tax assets and liabilities, to determine the period over
which the deferred income tax assets and liabilities are forecast
to be realised, which has resulted in an average deferred income
tax rate of 20% being used to measure all deferred tax balances as
at 31 March 2022 (2021: 19%).
7. Earnings per share
Basic earnings per share is calculated using the weighted
average number of ordinary shares in issue during the year,
excluding those held in treasury and by the Employee Share Option
Trust ('ESOT'), based on the profit for the year attributable to
shareholders.
Weighted
average
number Total
of ordinary earnings Pence
shares GBPm per share
------------------------- ------------ --------- ----------
Year ended 31 March 2022
Basic EPS 955,532,888 244.7 25.61
Diluted EPS 957,534,145 244.7 25.56
------------------------- ------------ --------- ----------
Year ended 31 March 2021
Basic EPS 965,175,677 127.8 13.24
Diluted EPS 967,404,812 127.8 13.21
------------------------- ------------ --------- ----------
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:
2022 2021
---------------------------------------------------------- ----------- -----------
Issued ordinary shares at 1 April 969,024,186 922,540,474
Weighted effect of ordinary shares purchased for
cancellation (9,573,664) -
Weighted effect of ordinary shares held in treasury (3,572,833) (3,123,323)
Weighted effect of shares held in the ESOT (371,316) (455,995)
Weighted effect of ordinary shares issued for share-based
payments 26,515 842
Weighted effect of shares issued on 3 April 2020
equity raise - 46,213,679
Weighted average number of shares for basic EPS 955,532,888 965,175,677
---------------------------------------------------------- ----------- -----------
Dilutive impact of share options outstanding 2,001,257 2,229,135
---------------------------------------------------------- ----------- -----------
Weighted average number of shares for diluted EPS 957,534,145 967,404,812
---------------------------------------------------------- ----------- -----------
For diluted earnings per share, the weighted average number of
shares for basic EPS is adjusted to assume conversion of all
potentially dilutive ordinary shares. The Group has potentially
dilutive ordinary shares arising from share options granted to
employees. Options are dilutive under the Sharesave scheme where
the exercise price together with the future IFRS 2 charge is less
than the average market price of the ordinary shares during the
year. Options under the Performance Share Plan, Single Incentive
Plan Award, the Deferred Annual Bonus Plan and the Share Incentive
Plan are contingently issuable shares and are therefore only
included within the calculation of diluted EPS if the performance
conditions are satisfied.
The average market value of the Group's shares for the purposes
of calculating the dilutive effect of share-based incentives was
based on quoted market prices for the period during which the
share-based incentives were outstanding.
8. Intangible assets
Software
and website
development Financial
Goodwill costs systems Database Other Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- -------- ------------ --------- -------- ----- -----
Cost
At 31 March 2020 444.5 9.3 13.1 8.5 18.1 493.5
Acquired through business
combinations 13.6 5.5 - - - 19.1
Additions - 0.1 - - - 0.1
Disposals - (0.4) - - - (0.4)
Exchange differences (0.2) (0.1) - - (0.1) (0.4)
-------------------------- -------- ------------ --------- -------- ----- -----
At 31 March 2021 457.9 14.4 13.1 8.5 18.0 511.9
-------------------------- -------- ------------ --------- -------- ----- -----
At 31 March 2022 457.9 14.4 13.1 8.5 18.0 511.9
-------------------------- -------- ------------ --------- -------- ----- -----
Accumulated amortisation and
impairments
------------------------------------ ------------ --------- -------- ----- -----
At 31 March 2020 117.0 7.5 12.2 0.3 14.6 151.6
Amortisation charge - 1.3 0.6 0.6 0.1 2.6
Disposals - (0.4) - - - (0.4)
Exchange differences - (0.1) - - - (0.1)
-------------------------- -------- ------------ --------- -------- ----- -----
At 31 March 2021 117.0 8.3 12.8 0.9 14.7 153.7
Amortisation charge - 0.9 0.3 0.6 0.8 2.6
At 31 March 2022 117.0 9.2 13.1 1.5 15.5 156.3
-------------------------- -------- ------------ --------- -------- ----- -----
Net book value at 31
March 2022 340.9 5.2 - 7.0 2.5 355.6
Net book value at 31
March 2021 340.9 6.1 0.3 7.6 3.3 358.2
Net book value at 31
March 2020 327.5 1.8 0.9 8.2 3.5 341.9
-------------------------- -------- ------------ --------- -------- ----- -----
Other intangibles include customer relationships, technology,
trade names, trademarks, non-compete agreements and brand assets.
Intangible assets which have a finite useful life are carried at
cost less accumulated amortisation. Amortisation of these
intangible assets is calculated using the straight-line method to
allocate the cost of the assets over their estimated useful lives
(3 to 15 years). The longest estimated useful life remaining at 31
March 2022 is 13 years (31 March 2021: 14 years).
For the year to 31 March 2022, the amortisation charge of
GBP2.6m (2021: GBP2.6m) has been charged to administrative expenses
in the income statement. At 31 March 2022, there were no software
and website development costs representing assets under
construction (2021: GBPnil).
In accordance with International Financial Reporting Standards,
goodwill is not amortised, but instead is tested annually for
impairment, or more frequently if there are indicators of
impairment. Goodwill is carried at cost less accumulated impairment
losses.
9. Property, plant and equipment
Land,
buildings
and leasehold Office Motor
improvements equipment vehicles Total
GBPm GBPm GBPm GBPm
-------------------------------- -------------- ---------- --------- -----
Cost
At 31 March 2020 16.5 15.1 1.3 32.9
Additions 0.6 0.7 0.7 2.0
Disposals and modifications (0.6) (2.8) (0.1) (3.5)
-------------------------------- -------------- ---------- --------- -----
At 31 March 2021 16.5 13.0 1.9 31.4
Additions 6.6 1.3 0.2 8.1
Disposals and modifications - (0.4) (0.5) (0.9)
-------------------------------- -------------- ---------- --------- -----
At 31 March 2022 23.1 13.9 1.6 38.6
-------------------------------- -------------- ---------- --------- -----
Accumulated depreciation
-------------------------------- -------------- ---------- --------- -----
At 31 March 2020 6.2 12.5 1.1 19.8
Charge for the year 2.5 0.9 0.3 3.7
Disposals (0.5) (2.8) - (3.3)
-------------------------------- -------------- ---------- --------- -----
At 31 March 2021 8.2 10.6 1.4 20.2
Charge for the year 3.3 0.9 0.4 4.6
Disposals - (0.4) (0.5) (0.9)
-------------------------------- -------------- ---------- --------- -----
At 31 March 2022 11.5 11.1 1.3 23.9
-------------------------------- -------------- ---------- --------- -----
Net book value at 31 March 2022 11.6 2.8 0.3 14.7
Net book value at 31 March 2021 8.3 2.4 0.5 11.2
Net book value at 31 March 2020 10.3 2.6 0.2 13.1
-------------------------------- -------------- ---------- --------- -----
Included within property, plant and equipment are GBP8.3m (2021:
GBP5.6m) of assets recognised as leases under IFRS 16. The
depreciation expense of GBP4.6m for the year to 31 March 2022
(2021: GBP3.7m) has been recorded
in administrative expenses.
During the year, GBP0.4m (2021: GBP3.3m) worth of property,
plant and equipment with GBPnil net book value was disposed of.
10. Leases
The Group leases assets including land and buildings and motor
vehicles that are held within property, plant and equipment.
Information about leases for which the Group is a lessee is
presented below.
2022 2021
GBPm GBPm
--------------------------------------------------- ----- -----
Net book value property, plant and equipment owned 6.4 5.6
Net book value right of use assets 8.3 5.6
--------------------------------------------------- ----- -----
14.7 11.2
--------------------------------------------------- ----- -----
Land,
buildings
and leasehold Office Motor
improvements equipment vehicles Total
Net book value of right of use assets GBPm GBPm GBPm GBPm
-------------------------------------- -------------- ---------- --------- -----
Balance at 31 March 2020 6.5 0.1 0.2 6.8
-------------------------------------- -------------- ---------- --------- -----
Additions - - 0.7 0.7
Depreciation charge (1.6) - (0.3) (1.9)
-------------------------------------- -------------- ---------- --------- -----
At 31 March 2021 4.9 0.1 0.6 5.6
-------------------------------------- -------------- ---------- --------- -----
Additions 5.1 - 0.2 5.3
Depreciation charge (2.2) - (0.4) (2.6)
-------------------------------------- -------------- ---------- --------- -----
At 31 March 2022 7.8 0.1 0.4 8.3
-------------------------------------- -------------- ---------- --------- -----
2022 2021
Lease liabilities in the balance sheet at 31 March GBPm GBPm
--------------------------------------------------- ----- -----
Current 3.0 2.5
Non-current 6.5 5.0
--------------------------------------------------- ----- -----
Total 9.5 7.5
--------------------------------------------------- ----- -----
The term recognised for certain leases has assumed lease break
options are exercised. Certain lease rentals are subject to
periodic market rental reviews.
On 14 April 2021, the Group entered into a new lease arrangement
to rent an additional 16,000 square feet in our Manchester office
to support the needs of our growing workforce. The Group also
extended the term of the existing lease of our Manchester office
space. These changes resulted in a lease modification under IFRS
16. The right of use assets were increased by GBP5.1m with
corresponding adjustments to the lease liability and dilapidations
provision.
2022 2021
Amounts charged in the income statement GBPm GBPm
---------------------------------------------- ----- -----
Depreciation charge of right-of-use assets 2.6 1.9
Interest on lease liabilities 0.2 0.3
Gain on disposal of right-of-use assets - -
---------------------------------------------- ----- -----
Total amounts charged in the income statement 2.8 2.2
---------------------------------------------- ----- -----
2022 2021
Cash outflow GBPm GBPm
------------------------------ ----- -----
Total cash outflow for leases 3.2 2.5
------------------------------ ----- -----
11. Net investments in joint ventures
Joint ventures are contractual arrangements over which the Group
exercises joint control with partners and where the parties have
rights to the net assets of the arrangement, irrespective of the
Group's shareholding in the entity.
The Group owns 49% of the ordinary share capital of Dealer
Auction Limited (previously Dealer Auction (Holdings) Limited). Net
investments in joint ventures at the reporting date include the
Group's equity investment in joint ventures and the Group's share
of the joint ventures' post acquisition net assets.
The table below reconciles the movement in the Group's net
investment in joint ventures in the year:
Group's
share Net investments
Equity investments of net in joint
in joint ventures assets ventures
GBPm GBPm GBPm
------------------------------------------ ------------------ ------- ---------------
Carrying value
As at 1 April 2020 48.1 4.1 52.2
Share of result for the year taken to the
income statement - 2.4 2.4
------------------------------------------ ------------------ ------- ---------------
As at 31 March 2021 48.1 6.5 54.6
Share of result for the year taken to the
income statement - 2.9 2.9
Dividends received in the year (7.8) - (7.8)
------------------------------------------ ------------------ ------- ---------------
As at 31 March 2022 40.3 9.4 49.7
------------------------------------------ ------------------ ------- ---------------
2022 2021
GBPm GBPm
--------------------------- ----- -----
Revenues 12.0 10.9
Profit for the year 6.0 4.9
--------------------------- ----- -----
Total comprehensive income 6.0 4.9
--------------------------- ----- -----
The above information reflects the amounts presented in the
financial statements of the joint venture and not the Group's share
of those amounts. They have been amended for differences in
accounting policies between the Group and the joint venture.
Dealer Auction Limited declared a dividend of GBP10.0m on 29
April 2021. The Group owns 49% of the ordinary share capital of
Dealer Auction Limited and therefore received payment of GBP4.9m on
14 May 2021. Dealer Auction Limited also declared a dividend of
GBP6.0m on 3 February 2022 and therefore GBP2.9m was received on 23
March 2022.
12. Borrowings
2022 2021
Non-current GBPm GBPm
----------------------------------------------------- ----- -----
Syndicated RCF gross of unamortised debt issue costs - 30.0
Unamortised debt issue costs on Syndicated RCF - (2.4)
----------------------------------------------------- ----- -----
Total - 27.6
----------------------------------------------------- ----- -----
Unamortised debt issue costs on the Syndicated RCF, which are
now within Prepayments in 2022, reduced to GBP1.4m in the year
(2021: GBP2.4m) partly due to accelerated amortisation following
the reduction of the Syndicated RCF commitments.
The Syndicated RCF is repayable as follows:
2022 2021
GBPm GBPm
------------------ ----- -----
Two to five years - 30.0
------------------ ----- -----
Total - 30.0
------------------ ----- -----
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 GBP4.3m, with GBP3.3m being incurred
at initiation and GBP1.0m of additional costs associated with
extension requests. The Syndicated RCF will terminate in two
tranches as follows:
-- GBP52.2m will mature at the original termination date of June 2023; and
-- GBP197.8m will mature in June 2025.
With effect from 24 September 2021 the Group entered into an
Amendment and Restatement Agreement to amend and restate the
original Senior Facilities Agreement. The primary purpose of the
Amended and Restated Senior Facilities Agreement is to incorporate
LIBOR transition language to reflect the discontinuation of LIBOR
and the transition to SONIA (in respect of sterling loans); Loan
Market Association updates; and to include the effect of IFRS 16
for the purposes of calculating financial covenants.
The Group continues to be highly cash generative and remains in
a net cash position, such that the size of the original GBP400m
facility is not required. Therefore, the Group served notice to
cancel GBP150m of the GBP400m total commitments under the Senior
Facilities Agreement, such cancellation being pro-rated between the
lenders. The Amended and Restated Senior Facilities Agreement
incorporates the reduced total commitments of GBP250m.
Individual tranches are drawn down, in sterling, for periods of
up to six months at the compounded reference rate (being the
aggregate of SONIA and the applicable baseline credit adjustment
spread 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.
Exposure to interest rate changes
The exposure of the Group's borrowings (excluding debt issue
costs) to SONIA rate changes and the contractual repricing dates at
the balance sheet date are as follows:
2022 2021
GBPm GBPm
------------------ ----- -----
One month or less - 30.0
------------------ ----- -----
Total - 30.0
------------------ ----- -----
13. Share capital
2022 2021
-------------------------------------------- ----------------- ---------------
Number Amount Number Amount
Share capital '000 GBPm '000 GBPm
-------------------------------------------- --------- ------ ------- ------
Allotted, called-up and fully paid ordinary
shares of 1p each
At 1 April 969,024 9.7 922,541 9.2
Purchase and cancellation of own shares (22,198) (0.2) - -
Issue of shares 67 0.0 46,483 0.5
-------------------------------------------- --------- ------ ------- ------
Total 946,893 9.5 969,024 9.7
-------------------------------------------- --------- ------ ------- ------
In the year ended 31 March 2017, the Company commenced a share
buyback programme. By resolutions passed at the 2021 AGM, the
Company's shareholders generally authorised the Company to make
market purchases of up to 96,678,535 of its ordinary shares,
subject to minimum and maximum price restrictions. In the year
ended 31 March 2022, a total of 24,915,813 ordinary shares of
GBP0.01 were purchased. The average price paid was 656.3p with a
total consideration paid (inclusive of all costs) of GBP164.3m. Of
all shares purchased, 2,718,193 were held in treasury with
22,197,620 being cancelled. In the year ended 31 March 2022, 66,410
ordinary shares were issued for the settlement of share-based
payments.
Included within shares in issue at 31 March 2022 are 358,158
(2021: 404,653) shares held by the ESOT and 3,826,928 (2021:
2,422,659) shares held in treasury, as detailed in note 14.
On 1 April 2020 the Company announced its intention to conduct a
non-pre-emptive placing of up to 5% of its issued share capital. On
3 April 2020 the placing was completed, and a total of 46,468,300
new ordinary shares were allotted for a consideration of 400.00
pence per Placing Share, a discount of 8.9% to the closing share
price of 439.1 pence on 31 March 2020. The placing raised gross
proceeds of GBP185.9m for the Company, or GBP182.9m net of all fees
incurred. An additional GBP0.3m of other fees were incurred as a
result of the placing. Share premium of GBP182.4m has been
recorded. On 3 April 2020, the Placing Shares were admitted to the
premium listing segment of the Official List of the Financial
Conduct Authority and to trading on the main market for listed
securities of London Stock Exchange plc (together,
'Admission').
14. Own shares held
ESOT shares Treasury
reserve shares Total
Own shares held - GBPm GBPm GBPm GBPm
------------------------------------ ----------- ----------- -----------
Own shares held as at 1 April 2020 (0.7) (17.2) (17.9)
Transfer of shares from ESOT 0.2 - 0.2
Share-based incentives exercised - 7.0 7.0
------------------------------------ ----------- ----------- -----------
Own shares held as at 31 March 2021 (0.5) (10.2) (10.7)
------------------------------------ ----------- ----------- -----------
Own shares held as at 1 April 2021 (0.5) (10.2) (10.7)
Transfer of shares from ESOT 0.1 - 0.1
Purchase of own shares for treasury - (17.8) (17.8)
Share-based incentives exercised - 6.0 6.0
------------------------------------ ----------- ----------- -----------
Own shares held as at 31 March 2022 (0.4) (22.0) (22.4)
------------------------------------ ----------- ----------- -----------
Total
ESOT shares Treasury number
reserve shares of
Number Number own shares
Own shares held - number of shares of shares held
------------------------------------ ----------- ----------- -----------
Own shares held as at 1 April 2020 523,955 4,090,996 4,614,951
Transfer of shares from ESOT (119,302) - (119,302)
Share-based incentives exercised - (1,668,337) (1,668,337)
------------------------------------ ----------- ----------- -----------
Own shares held as at 31 March 2021 404,653 2,422,659 2,827,312
------------------------------------ ----------- ----------- -----------
Total
ESOT shares Treasury number
reserve shares of
Number Number own shares
Own shares held - number of shares of shares held
------------------------------------ ----------- ----------- -----------
Own shares held as at 1 April 2021 404,653 2,422,659 2,827,312
Transfer of shares from ESOT (46,495) - (46,495)
Purchase of own shares for treasury - 2,718,193 2,718,193
Share-based incentives exercised - (1,313,924) (1,313,924)
------------------------------------ ----------- ----------- -----------
Own shares held as at 31 March 2022 358,158 3,826,928 4,185,086
------------------------------------ ----------- ----------- -----------
15. Dividends
Dividends declared and paid by the Company were as follows:
2022 2021
--------------------------- ---------------- ----------------
Pence Pence
per share GBPm per share GBPm
--------------------------- ---------- ---- ---------- ----
2021 final dividend paid 5.0 48.0 - -
2022 interim dividend paid 2.7 25.6 - -
--------------------------- ---------- ---- ---------- ----
7.7 73.6 - -
--------------------------- ---------- ---- ---------- ----
The proposed final dividend for the year ended 31 March 2022 of
5.5p per share, totalling GBP51.9m, is subject to approval by
shareholders at the Annual General Meeting ('AGM') and hence has
not been included as a liability in the financial statements.
16. Cash generated from operations
2022 2021
GBPm GBPm
----------------------------------------------------------- ----- ------
Profit after tax 244.7 127.8
Adjustments for:
Tax charge 56.3 29.6
Depreciation 4.6 3.7
Amortisation 2.6 2.6
Share-based payments charge (excluding associated NI) 5.1 3.3
Share of profit from joint ventures (2.9) (2.4)
Loss / (profit) on sale of property, plant and equipment - 0.2
Difference between pension charge and cash contributions - 0.2
Finance costs 2.6 3.8
RDEC (0.1) (0.1)
Changes in working capital (excluding the effects of
exchange differences on consolidation):
Trade and other receivables (5.3) (3.6)
Trade and other payables 20.5 (12.3)
Provisions - 0.1
----------------------------------------------------------- ----- ------
Cash generated from operations 328.1 152.9
----------------------------------------------------------- ----- ------
17. Commitment to acquire Autorama (UK) Limited
The Group has agreed to acquire, subject to regulatory approvals
which at the date of this report had not all been received, the
share capital of Autorama (UK) Limited. The transaction is expected
to complete in the first half of financial year 2023. Auto Trader
will pay initial consideration of GBP150m in cash, with a further
GBP50m of deferred consideration to be settled in shares subject to
customary performance conditions 12 months after the completion
date. Once issued, the shares will vest over a period of two years
in two 12-month instalments. At 31 December 2021, Autorama had
GBP27m of gross assets and for the calendar year 2021, made net
revenue of GBP26m, selling c.14,500 vehicles and had an EBITDA loss
of GBP6m, which included marketing costs of over GBP9m.
Principal risks and uncertainties
Risk POTENTIAL IMPACT CHANGES IN THE YEAR
-------------------------- -------------------------------------------------------------
1. Adverse economic There remains a global shortage of semi-conductors which is
Economy, market and conditions could lead to having an adverse impact on production
business environment shrinking of the used for many vehicle brands. This has resulted in a shortage of
and/or new car market, new car stock which dealers have
available available to advertise. Furthermore, the current new car
used car stock, and shortage is likely to result, in
reduction in retailer the coming years, in a reduction in used car stock.
wallets. Nevertheless, during the last year, we
saw that consumer sentiment towards vehicle ownership remains
These could result in strong, and we saw the average
reduced retailer price of a used car increase 22% year-on-year.
profitability, leading to
a fall in advertising In the wake of COVID-19 and other ongoing events (including
spend the conflict in Ukraine), inflation
or a contraction in the is resulting in a sharp rise in the cost of living. This
number of retailers. It increase in the cost of living has
could also lead to a the potential to be a catalyst for changes in the ownership
reduction in model of vehicles, potentially
manufacturers' with a lower volume of vehicles per household.
spend on digital display
advertising. We have been proactive in mitigating the threat of changes in
how consumers might look to
In addition, we are buy a new car. Most notably, our acquisition of Autorama
seeing an increasing (subject to regulatory approval)
appetite by OEMS to move will help us remain relevant if more buyers opt for a lease.
to an agency model
whereby As previously noted, we are making significant progress with
sales are made direct to our digital retailing strategy
consumers, rather than which aims to bring more of the car buying journey online by
via retailers. This could allowing consumers to reserve,
lead to a loss of part exchange, and access finance via our website.
revenue from retailers.
The ongoing challenges in the supply chain, the global and UK
economy, and customer and consumer
sentiment have all contributed to increased risk in this
area, which we expect to continue
in the coming year.
-------------------------- -------------------------------------------------------------
2. Climate change The impacts of climate We have seen over the last year an accelerated demand for EVs
change are emerging as a which can be attributed, at
significant threat to the least in part, to the Government ban on new petrol and diesel
long-term resilience cars by 2030, as well as increased
of our business and awareness of climate change amongst the general public,
execution of our spikes in fuel prices during 2021
strategy. and 2022, and improved EV charging infrastructure.
Externally, regulatory We believe that further regulation and legislation relating
and legislative changes, to climate and the environment
and consumers' are likely, as are changes in consumer demand. Key to our
environmental concerns, strategic objectives is positioning
are Auto Trader as front-runners in industry-wide changes
having an impact on the prompted by climate change.
automotive market,
including an accelerated A move to EVs could mean that OEMs alter their business model
demand for electric to sell direct to consumers.
vehicles As the second-hand market moves steadily towards newer
(EVs). Additionally, the electric models, our customers will
impacts of climate change have to evolve their forecourt mix accordingly.
on key stakeholders,
including our employees, The growing demand for electric vehicles and the continued
suppliers, and customers, advancement of technology and improved
pose a threat to our infrastructure could change the vehicle ownership model.
business resilience (see Consumer demand for short-term access
"External catastrophic to cars as and when they need them could increase, including
events" for details). through subscription deals and
car-sharing apps.
Internally, risks arising
from our own impact on Subject to regulatory approval, our acquisition of Autorama
the climate are growing. adds digital retailing and leasing
Our strategic objectives capabilities on new cars, including EVs.
include a move towards
net-zero emissions, and Overall, we consider the risks associated with climate change
failure to achieve this to be increasing, and managing
in a timely manner these risks effectively is one of our key strategic pillars.
could impact adversely on
our ability to operate
and/or remain relevant to
our customers and
consumers. Failure to
deliver our environmental
commitments would
undermine our reputation
as a responsible business
and may result in legal
exposure or regulatory
sanctions.
-------------------------- -------------------------------------------------------------
3. To enable us to achieve Our Glassdoor rating based on anonymous reviews is 4.5 out of
Employees our strategic objectives 5.
it is important that we
attract, retain, In 2021 our workforce was mostly working remotely, although
and motivate a highly our offices remained open at a
skilled workforce, reduced capacity for those who were unable to work at home
including those with safely and effectively. We adhered
specialist skillsets in to all relevant government guidance regarding COVID-19
data protocols and kept employees updated
and technology. on any changes to the guidance during the year.
Delivery of our strategy In March 2022 we began Connected Working where guidance to
is also dependent on us employees was to be "in more than
building a diverse and you are out". This aimed to bring our employees into the
inclusive workforce, office to increase collaboration
and a supportive, and innovation. We continue to monitor the impact connected
collaborative culture, in working is having on engagement,
a safe environment, all inclusion, employee safety, and productivity, with reference
of which will enable to both pandemic and pre-pandemic
optimum levels.
performance from all our
employees. The recent increases in costs of living, and skills shortages
in the market, could expose
Risks relating to us to the risk of heightened workforce costs. We are
employees could result in monitoring the market proactively to
reduced employee ensure that our salaries are fair, proportionate, and aligned
engagement, reduced to market rates.
productivity,
and loss of key talent, In the marketplace, we are also seeing employees having
all of which could higher expectations of their employers
adversely impact on to act in a fair, responsible and sustainable manner, and we
business performance. too are committed to ensuring
that we conduct our business in a morally responsible way.
--------------------------- -------------------------- -------------------------------------------------------------
4. We rely on third parties We have performed a review of our critical suppliers and have
Reliance on third parties to support our technology revised our processes for supplier
infrastructure, supply of onboarding and monitoring thereafter. Despite the threats
data about vehicles posed to our suppliers in the external
and their financing, and environment, we have not experienced any material
in the fulfilment of some disruptions.
of our revenue generating
products. Consequently, As we progress further into digital retailing we are likely
it is important that we to see an increased reliance on
manage relationships third parties, including physical services to support our
with, and performance of, online journeys. Ensuring that we
key suppliers. If these manage these third parties appropriately will be crucial.
suppliers were to suffer
significant downtime or Within our crisis management and business continuity
fail, this could lead to arrangements, we have identified key
a loss of revenue suppliers and have plans in place to respond to disruption.
from retailer customers
and a loss of audience Whilst we have not experienced any material risks crystallise
due to impaired consumer in respect of our reliance on
experience. third parties, we consider there to be an increasing trend in
the risks associated with them
as we progress towards achieving our strategic objectives.
--------------------------- -------------------------- -------------------------------------------------------------
5. As a digital business, we We have made significant progress in migrating our
IT systems and rely on our IT applications to the cloud, which increases
cyber security infrastructure to the resilience of our systems and the security of our data.
continue to operate. A Our aim is to get all applications
disruptive migrated to the cloud in the next year.
event leading to
significant downtime of Our connected working policy began in March 2022, where
our existing systems and employees are working both on- and
IT infrastructure would off-site. Under this policy, we are still exposed to data and
cause a major cyber-security risks associated
interruption to the with remote working. We continue to monitor the level of risk
services we provide. and implement mitigations.
As we progress through As we move further along the digital retailing journey, our
delivery of our digital exposure to a cyber attack and
retailing strategy, it is the impact of a data breach is likely to increase. As part of
crucial that we invest our plans for digital retailing
in appropriate IT systems we are identifying the systems which will provide the best
to enable us to deliver customer and consumer experience,
the services needed, as as well as ensuring that there is all necessary security over
well as ensuring these systems to ensure they
that there is appropriate are resilient to the threats of cyber-attack.
IT and cyber security
safeguards over these The constantly evolving threat of a cyber-attack means that
systems. Failure to overall the risk level is unchanged.
invest in appropriate IT
and safeguards could lead We have adopted the NIST Cybersecurity Framework with the aim
to us failing to achieve of reducing our exposure to
our objectives cyberattacks, and to identify the area's most at risk for
relating to digital data breaches and other compromising
retailing. activity perpetrated by cyber criminals.
Delivery of our strategic
objectives also relies on
us using data to provide
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 confidence
by the public, car
retailers and
advertisers.
This could result in
reputational damage, loss
of audience, loss of
revenue and potential
financial losses in the
form of penalties.
--------------------------- -------------------------- -------------------------------------------------------------
6. Failure to develop and We continue to focus on developing new products in both our
Failure to innovate: implement new products, core business and in respect of
disruptive technologies services, and our digital retailing strategy. Doing so will enable more of
and changing consumer technologies, and/or the car-buying process to be
behaviours failure completed online.
to adapt to changing
consumer behaviour Central to our strategy is launching digital retailing on our
towards car buying and platform and we are continuing
ownership, could lead to to develop and test new products to ensure that they maximise
us value for customers and consumers.
failing to deliver our
strategic objectives. Our acquisition of Autorama (subject to regulatory approval)
Failure to provide both will enable us to respond to
customers and consumers changing consumer behaviours, including in respect of an
with the best possible increasing trend towards leasing
products and online of new EVs.
journey, including an
online buying experience, In the last year we have launched new innovations including
could lead to reduced Market Extension, which enhances
website traffic and loss the reach of retailers whereby they can advertise stock
of revenue. within selected locations in the UK,
meaning they no longer need to be constrained by their
geographical location.
We also enhanced our package offerings with two new package
levels which focussed on providing
customers with new ways of gaining prominence in the search
listings.
Our existing products were enhanced through our Retailer
Stores innovation, which enabled
retailers to create a bespoke brand destination on the Auto
Trader platform, helping to drive
buyer engagement around both the retailer's stock and their
brand.
--------------------------- -------------------------- -------------------------------------------------------------
7. The Group operates in a Our strategic focus area to bring more of the car buying
Regulatory risks complex regulatory journey online has the potential
environment. There is a to increase the Group's exposure to regulatory risks, in
risk that the Group, or particular the amount of personal
its subsidiaries, fail to information that will be collected and in the execution of
comply with these the online finance application
requirements or to journey.
respond to changes in
regulations, As we move further into digital retailing and following the
including GDPR and the acquisition of Autorama (subject
Financial Conduct to approvals), in the future we are likely to be exposed to
Authority's rules and increased risks in relation to
guidance. This could lead FCA and GDPR.
to
reputational damage, In the last year, in both response to, and anticipation of,
financial or criminal changes in regulatory risk, we
penalties and impact on have increased our resource in relation to risk and
our ability to do compliance monitoring, and increased headcount
business. in our Governance Risk and Compliance tribe. Overall, we
consider the level of risk unchanged.
--------------------------- -------------------------- -------------------------------------------------------------
8. There are several online Data insights suggest that competitors are not taking
Competition competitors in the significant market share. For example,
automotive classified our data shows that we have c.90% prompted brand awareness
market, and alternative with consumers. We also maintained
routes for consumers to our position as the UK's largest and most engaged automotive
sell cars, such as car marketplace for new and used
buying services or cars, with over 75% of all minutes spent on automotive
part-exchange. If classified sites spent on Auto Trader.
competitors Nevertheless, the competitive landscape continues to develop,
develop a superior with low barriers to entry to
consumer experience or the market. Previous concerns, however, over big players
superior retailer entering the market, such as Facebook,
products, we may lose our have not led to any notable decrease in our market share over
market the last year, albeit we do
share. Competitors could still consider this to be a threat. It therefore remains
also influence change in imperative that we are innovative
consumer focus, expand in both our strategic initiatives as well as improving our
their range of stock existing, core advertising business.
and provide
products/services we are We continue to see retailers and manufacturers evolving their
unable to compete with. online offerings, and as we
diversify our own product offering we broaden our competitive
landscape, potentially leading
to exposure to increased competition.
--------------------------- -------------------------- -------------------------------------------------------------
9. Brand and reputation Our brand is one of our Our research shows that Auto Trader has c.90% prompted brand
biggest assets. Our awareness with consumers. We
research shows that we are also voted regularly as the most influential automotive
are the most trusted website by consumers in the car
automotive buying process.
classified brand in the As we venture further with our digital retailing strategy, we
UK. will need to ensure that our
branding positions us as the most suitable place to transact
Failure to maintain and online.
protect our brand, or
negative publicity We continue to see very low levels of fraudulent and
affecting our reputation, misleading adverts, due to additional
such as from a data measures and monitoring techniques used by our security team.
breach, could diminish We also make use of a customer
the confidence that watch list which aims to manage our platforms proactively in
retailers, consumers and line with our values and relevant
advertisers regulations, to identify and stop customer behaviour that
have in our products and could harm consumers, retailers
services, and result in a or the Auto Trader brand.
reduction in audience and
revenue. Overall, we consider there to be a decreasing risk to our
brand and reputation.
--------------------------- -------------------------- -------------------------------------------------------------
10. External catastrophic In a connected, global The impacts of unpreventable external catastrophic and
and geo-political events industry, we are geo-political events can be widespread
increasingly prone to the and long-lasting for us and our customers. We consider
impacts of external the increasingly connected world to
events be more susceptible than ever to the knock-on impacts
around the globe on our of these events.
business, as are our
customers. We consider Examples of some external events in recent times which
there to be a threat to have, and continue to, impact adversely
the short-to-mid-term on our business include the following:
performance of our * COVID-19 pandemic;
business posed by
external, unpreventable,
catastrophic * Supply shortages from the Suez Canal obstruction;
and geo-political events.
Such events could result
in our customers being * Brexit;
unable to trade,
leading to loss of
revenue, stock, audience, * Military conflict in Ukraine;
and loss of market share.
* Extreme weather events; and
* Global semi-conductor shortage.
It is of paramount importance to the resilience of our
business that we can anticipate, and
respond quickly to, the impacts of external events,
particularly those which impact on our
customers adversely. We are therefore continuously
reviewing our business continuity and crisis
management arrangements to ensure that they consider
the impacts of external events.
We have responded well to the impacts of COVID-19 and
the government has removed most restrictions.
We therefore consider that the threat posed by external
catastrophic and geo-political events
to be decreasing compared to last year. Nevertheless,
we remain wary of the threats posed
by external events and we continue to review our crisis
and business continuity arrangements
regularly.
--------------------------- -------------------------- -------------------------------------------------------------
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