TIDMAUTO
RNS Number : 9084F
Auto Trader Group plc
10 November 2022
Embargoed until 7.00am, 10 November 2022
AUTO TRADER GROUP PLC
HALF YEAR RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER 2022
Auto Trader Group plc ('the Group'), the UK's largest automotive
marketplace, announces half year results for the six months ended
30 September 2022
Strategic overview
- The performance of our core Auto Trader(1) marketplace has
strengthened over the last six months, achieving double digit
revenue and operating profit growth year-on-year. Our customer
numbers and product uptake have exceeded expectations, and our
competitive position continues to be strong
- We successfully executed our annual pricing event in April
2022, which included the launch of Retail Essentials, part of our
Auto Trader Connect platform. Retail Essentials 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 are
increasingly using our platform to power our retailers' businesses,
and provide services across the wider automotive ecosystem, which
strengthens our core and is a key enabler for digital retailing
- We saw strong levels of product growth driven by further
uptake of our prominence products. Prominence includes upsell to
our new higher-level advertising packages, our Market Extension
product (allowing customers to sell vehicles outside their local
area) and our pay-per-click product which appears at the top of the
search listings. More customers bought our data products in the
period, making use of our real-time pricing data
- We launched a small-scale trial for our Deal Builder journey
on Auto Trader which combines the component parts of part-exchange,
reservations and finance applications, forming an end-to-end
transaction journey. Initial feedback to date has been positive
- In June 2022, we completed the acquisition of Autorama (UK)
Limited, one of the UK's largest marketplaces for leasing new
vehicles. Autorama's online marketplace and fulfilment capabilities
will transform Auto Trader's existing leasing proposition. The
acquisition positions the Group to better take advantage of
significant disruption taking place within the new car market,
particularly the growing penetration of electric vehicles and
likely changes to distribution models
Financial results
GBPm (unless otherwise specified) H1 2023 H1 2022 Change
------------------------------------ -------- -------- -------
Auto Trader (1) 238.2 215.4 11%
Autorama 11.6 - -
------------------------------------ -------- -------- -------
Group revenue 249.8 215.4 16%
------------------------------------ -------- -------- -------
Auto Trader (1) 168.8 151.7 11%
Autorama (4.0) - -
Group central costs (2) (15.7) - -
------------------------------------ -------- -------- -------
Group operating profit/(loss) 149.1 151.7 (2%)
------------------------------------ -------- -------- -------
Auto Trader 71% 70% 1%
------------------------------------ -------- -------- -------
Group operating profit margin 60% 70% (10%)
------------------------------------ -------- -------- -------
Basic earnings per share (pence) 12.23p 12.63p (3%)
Interim dividend per share (pence) 2.8p 2.7p 4%
------------------------------------ -------- -------- -------
Cash generated from operations (3) 164.6 169.9 (3%)
------------------------------------ -------- -------- -------
- Excluding the Autorama deferred consideration charge for the
period of GBP13.8 million, which was included in Group central
costs, Group operating profit was up 7% and basic EPS was up 8% on
H1 2022
- GBP82.3 million returned to shareholders (H1 2022: GBP148.4
million) through GBP30.6 million of share buy-backs and dividends
paid of GBP51.7 million
Operational results
- Cross platform visits(5,6) were down 10% to 67.7 million per
month (H1 2022: 74.9 million). Cross platform minutes(5,6) were
down 14% to 498 million minutes per month on average (H1 2022: 579
million minutes). However, both visits and minutes were up
significantly versus pre-pandemic levels (57.5 million and 447
million minutes respectively in H1 2020)
- Our share of cross platform minutes remained strong at over 75%(7) (H1 2022: over 75%)
- The average number of retailer forecourts(5) in the period was
up 2% to 14,161 (H1 2022: 13,892)
- Average Revenue Per Retailer(5) (ARPR) per month was up GBP205
to GBP2,404 on average per month (H1 2022: GBP2,199) . This was
driven by both price and product levers, with the stock lever
broadly flat
- Physical car stock(5,8) on site was up 1% to 440,000 cars (H1
2022: 436,000) on average, within which our listings product for
new cars declined to 22,000 on average (H1 2022: 39,000)
- Number of employees (FTE(5) ) in the Group increased to 1,112
on average during the period ( H1 2022: 941 ), with the acquisition
of Autorama contributing 122 of the increase
Cultural KPIs (excluding Autorama)
- Employees that are proud to work at Auto Trader(9) remained high at 93% (March 2022: 95%)
- Diverse teams and an inclusive culture are critical to
attracting, retaining and maximising the potential of our people
and therefore our business:
o Board: We have more women than men on our Board (March 2022:
five women and four men) and one ethnically diverse Board
member
o Leadership: The percentage of women leaders(10) was 40% (March
2022: 38%), and those who are ethnically diverse(11) was 5% (March
2022: 6%)
o Organisation: The percentage of employees who are women was at
40%(12) (March 2022: 40%), and those who are ethnically
diverse(11,12) was 15% (March 2022: 14%)
- The majority of our CO2 emissions are Scope 3 emissions
attributable to our suppliers and we have been working through
their respective carbon reduction plans. This work has influenced
the calculation of CO2 emissions for the six month period, as we
have adjusted our emissions according to those plans, giving total
emissions for the period of 3.8k tonnes of carbon dioxide
equivalent(13) (FY22 11.7k tonnes). We are aiming to achieve net
zero across our entire value chain (Scopes 1, 2 and 3) before 2040,
and to halve our carbon emissions before the end of 2030.
Nathan Coe, Chief Executive Officer of Auto Trader, said:
"Our first half results demonstrate the strength of our position
with car buyers and the depth of partnership we are building with
customers. Achieving this in a period impacted by high levels of
economic uncertainty is a credit to both our people and customers,
and provides confidence in navigating the rest of the year.
"Longer-term we are well placed to grow as we further develop
the core Auto Trader business, extend it to enable car buyers to
complete more of their purchase online, and provide the
industry-leading data and technology platform for our
customers."
Outlook
The Board has confidence for the second half of the year due
to:
- consistent trading throughout October;
- the recurring nature of our revenue and delivering our main
growth initiatives in the first half of the year;
- the fact that our financial performance in the first half was
achieved despite changing economic circumstances, resulting in
lower audience, continued low live stock volumes and weak used car
transactions; and
- a belief that Auto Trader margins can be maintained at 70%,
despite high inflation, particularly given we have delivered the
core components of digital retailing.
As per our previous outlook statement, we still anticipate
average retailer forecourts to be marginally down year-on-year.
However, we now expect stronger ARPR, with the full year growth
rate likely to be slightly above that achieved in H1, with the
stock lever flat for the full year. Auto Trader's operating profit
margin for the full year is expected to be in line with financial
year 2022. This outlook takes account of the Webzone disposal (see
post balance sheet events). Autorama is likely to make an operating
loss of c.GBP11m for the full year, with continued supply
challenges across all vehicle types resulting in lower delivery
volumes. Group central costs will be c.GBP45m, largely made up of
the Autorama deferred consideration.
The outlook for future years is necessarily more uncertain,
however the used car market is far less cyclical than the new car
market and new car registrations are expected to recover, currently
being at their lowest level in 30 years. We believe that there are
significant opportunities for Auto Trader to grow revenue at high
margins through our price and product levers and will continue to
bring more of the car buying journey online through Deal Builder
and Autorama. We will be disciplined on priorities, costs and
capital allocation ensuring we continue to manage the business
responsibly.
Analyst presentation
A presentation for analysts will be held via audio webcast and
conference call at 9.30am, Thursday 10 November 2022. Details
below:
Audio webcast: https://edge.media-server.com/mmc/p/yy63s5fq
Conference call registration:
https://register.vevent.com/register/BI008115ae4d664356a7cedbf4c0651a85
Please note: Questions will only be taken from the conference
call line. Please use the above conference call registration link
to access the relevant dial-in number and your personal PIN. Please
do not share your passcode with others as only one person can use
this PIN at a time. Participants on the conference call who also
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 7250 1446 or
email autotrader@powerscourt-group.com
About Auto Trader
Auto Trader Group plc is the UK's largest digital 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 parts of the
industry and market data contained in this announcement come from
the Company's own internal research and estimates based on the
knowledge and experience of the Company's management in the market
in which the Company operates. While the Company believes that such
research and estimates are reasonable and reliable, they, and their
underlying methodology and assumptions, have not been verified by
any independent source for accuracy or completeness and are subject
to change without notice. Accordingly, undue reliance should not be
placed on any of the industry or market data contained in this
announcement.
Summary financial performance
Group results Units H1 2023 H1 2022 Change
------------------------------------ ------------ -------- -------- -------
Revenue GBPm 249.8 215.4 16%
------------------------------------ ------------ -------- -------- -------
Operating profit GBPm 149.1 151.7 (2%)
------------------------------------ ------------ -------- -------- -------
Operating profit margin % 60% 70% (10%)
------------------------------------ ------------ -------- -------- -------
Profit before tax GBPm 148.0 150.0 (1%)
------------------------------------ ------------ -------- -------- -------
Basic earnings per share Pence 12.23 12.63 (3%)
------------------------------------ ------------ -------- -------- -------
Dividend per share Pence 2.8 2.7 4%
------------------------------------ ------------ -------- -------- -------
Group cash flow
------------------------------------ ------------ -------- -------- -------
Cash generated from operations(3) GBPm 164.6 169.9 (3%)
------------------------------------ ------------ -------- -------- -------
Net bank debt/(cash) at September
2022/March 2022(4) GBPm 57.4 (51.3)
------------------------------------ ------------ -------- -------- -------
Auto Trader results
------------------------------------ ------------ -------- -------- -------
Trade GBPm 214.3 192.3 11%
Consumer GBPm 18.7 18.0 4%
Manufacturer & Agency GBPm 5.2 5.1 2%
------------------------------------ ------------ -------- -------- -------
Revenue GBPm 238.2 215.4 11%
------------------------------------ ------------ -------- -------- -------
People costs GBPm 36.9 35.0 5%
Marketing GBPm 11.4 10.6 8%
Other costs GBPm 18.9 16.2 17%
Depreciation & Amortisation GBPm 3.3 3.6 (8%)
------------------------------------ ------------ -------- -------- -------
Operating costs GBPm 70.5 65.4 8%
------------------------------------ ------------ -------- -------- -------
Share of profit from joint
ventures GBPm 1.1 1.7 (35%)
------------------------------------ ------------ -------- -------- -------
Operating profit GBPm 168.8 151.7 11%
------------------------------------ ------------ -------- -------- -------
Operating profit margin % 71% 70% 1%
------------------------------------ ------------ -------- -------- -------
Autorama results
------------------------------------ ------------ -------- -------- -------
Vehicle & Accessory Sales GBPm 7.1 - -
Commission & Ancillary GBPm 4.5 - -
------------------------------------ ------------ -------- -------- -------
Revenue GBPm 11.6 - -
------------------------------------ ------------ -------- -------- -------
Cost of goods sold GBPm 7.0 - -
People costs GBPm 3.7 - -
Marketing GBPm 1.7 - -
Other costs GBPm 2.5 - -
Depreciation & Amortisation GBPm 0.7 - -
------------------------------------ ------------ -------- -------- -------
Operating costs GBPm 15.6 - -
------------------------------------ ------------ -------- -------- -------
Operating (loss) GBPm (4.0) - -
------------------------------------ ------------ -------- -------- -------
Group central costs
-------------------------------------------------- -------- -------- -------
Autorama deferred consideration GBPm (13.8) - -
Depreciation & Amortisation GBPm (1.9) - -
----------------------------------- ------------- -------- -------- -------
Operating costs GBPm (15.7) - -
----------------------------------- ------------- -------- -------- -------
Operating (loss) GBPm (15.7) - -
----------------------------------- ------------- -------- -------- -------
1. Auto Trader includes the results of Auto Trader, AutoConvert
& Carzone in respect of online classified advertising of motor
vehicles and other related products and services in the digital
automotive marketplace including the Dealer Auction joint
venture.
2. Group central costs which are not allocated within either of
the segment operating profit/(loss) comprise a GBP13.8 million
charge for the expense of group shares expected to be issued to
settle the Autorama deferred consideration and a GBP1.9 million
amortisation expense relating to the fair value of intangible
assets acquired in the Group's business combination of
Autorama.
3. Cash generated from operations is defined as net cash
generated from operating activities, before corporation tax
paid.
4. Net bank debt/(cash) represents gross bank debt before
amortised debt costs less cash and does not include amounts
relating to leases
5. Average during the period.
6. Measured by Snowplow.
7. Share of minutes is a custom metric based on Comscore minutes
and is calculated by dividing Auto Trader's total minutes volume by
the entire custom-defined competitive set's total minutes volume.
The custom-defined list includes: Auto Trader, Gumtree motors,
Pistonheads, Motors.co.uk, eBay Motors & CarGurus.
8. Physical car stock advertised on autotrader.co.uk.
9. Based on a survey to all Auto Trader employees in October
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.
10. We define leaders as those who are on our Operational
Leadership Team ('OLT'), one divisional leader and their direct
reports.
11. Throughout 2022 we have asked our employees to voluntarily
disclose their ethnicity, at the period end we had 89 employees
(9%) who had not yet disclosed.
12. We calculate all our diversity percentages using total group
headcount excluding Autorama (September 2022: 1,032, March 2022:
1,002) as at 30th September. At the period end, we had 412
employees who were women, 615 employees who were men and 5 who were
non-binary.
13. The total amount of CO2 emissions includes Scope 1, 2 and 3.
From the 15 different emission categories that fall within Scope 3,
the following have been identified as relevant to Auto Trader:
Purchased goods and services (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.
Operating performance in H1 2023
Group operating performance
Group revenue increased by 16% to GBP249.8 million (H1 2022:
GBP215.4 million). Auto Trader revenue increased by 11% to GBP238.2
million (H1 2022: GBP215.4 million), and Autorama contributed
GBP11.6 million following the completion of the acquisition on 22
June 2022.
Group operating profit declined by 2% to GBP149.1 million (H1
2022: GBP151.7 million). Auto Trader operating profit increased by
11% to GBP168.8 million (H1 2022: GBP151.7 million) which includes
GBP1.1 million share of profit from our joint venture, Dealer
Auction (H1 2022: GBP1.7 million). Autorama had an operating loss
of GBP4.0 million.
Group central costs included the Autorama deferred consideration
charge for the period of GBP13.8 million and an amortisation charge
of GBP1.9 million relating to the Autorama intangible assets
recognised under IFRS 3 business combinations. This resulted in
Group operating profit margin declining to 60% (H1 2022: 70%).
Group profit before tax was GBP148.0 million (H1 2022: GBP150.0
million) and cash generated from operations was GBP164.6 million
(H1 2022: GBP169.9 million).
Auto Trader operating performance
Auto Trader revenue grew by 11% to GBP238.2 million (H1 2022:
GBP215.4 million) underpinned by a strong performance in our
retailer revenue line as customers continue to see value in
advertising on our marketplace and taking additional products. Auto
Trader operating profit grew 11% to GBP168.8 million (H1 2022:
GBP151.7 million), and operating profit margin was broadly flat at
71% (H1 2022: 70%).
Our audience performance remains strong; 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 (H1 2022:
over 75%). Our average monthly cross platform visits decreased by
10% to 67.7 million per month (H1 2022: 74.9 million) but were 18%
above pre-pandemic levels recorded in H1 2020 (57.5 million).
Engagement, which we measure by total minutes spent onsite,
decreased by 14% to an average of 498 million minutes per month (H1
2022: 579 million minutes) although were 11% ahead of pre-pandemic
levels (H1 2020: 447 million minutes). For both visits and minutes,
we have changed the data source from Google analytics to
Snowplow.
The average number of retailer forecourts advertising on our
platform increased by 2% to 14,161 (H1 2022: 13,892). We continued
to see lower levels of cancellation, as market conditions were
broadly stable and the current strength of our position and
standing with customers has been maintained.
Total live stock on site increased by 1% to an average of
440,000 cars (H1 2022: 436,000). New car stock declined to an
average of 22,000 (H1 2022: 39,000) due to the continued shortage
of new car supply. Used car stock was also impacted by supply
shortages, although not as severely as seen in the previous
financial year with used car live stock increasing 5% on average
across the period.
Autorama operating performance
Autorama revenue was GBP11.6 million, with vehicle &
accessory sales contributing GBP7.1 million and commission and
ancillary revenue contributing GBP4.5 million. The operating loss
for the period since acquisition on 22 June to the end of September
was GBP4.0 million .
Total deliveries amounted to 2,747 vehicles, which comprised of
1,887 cars, 627 vans and 233 pickups. Both vans and pickups were
particularly impacted by supply challenges in the period. Average
commission and ancillary revenue per vehicle delivered was
GBP1,635.
The UK car market
New car registrations were 11% below H1 2022 (March - September)
with semiconductor shortages and supply chain challenges continuing
to impact the volume of new cars available for sale in the UK. New
car registrations were weaker within the fleet segment which was
down 17% year-on-year and new light commercial vehicle ("LCV")
registrations were down 28% year-on-year over the same period. Used
car transactions were 16% below H1 2022 levels, as transactions
continued to feel the knock-on impact of low volumes of new car
supply, which has fed into the availability of younger cars
impacting our Franchise segment.
The average length of time that a person owns a car has reduced
to 3.8 years in calendar year 2022 (2021: 4.2 years) due to the
impact of enforced COVID-related showroom closures in 2021,
although it remains above pre-COVID levels due to supply issues.
Despite declining throughout the period, used car prices remain
strong with our retail price index seeing a 22% year-on-year
increase in prices.
Strategic overview
Our strategy has three focus areas: Firstly, we remain committed
to investing and growing our core classified marketplace, which we
believe has a long runway for growth. Secondly our marketplace has
been built on a platform, which we have made available to the whole
industry, enabling them to access the full benefit of our
technology and data. This has embedded our services in our
customers' workflows which is a key enabler to support the final
area of our strategy, digital retailing. Digital retailing adds a
transactional capability allowing our trade customers to sell
vehicles to car buyers on Auto Trader.
Classified marketplace
Our core classified marketplace continues to grow. We evolved
our advertising package structure in May 2021 and created a
consistent cross platform experience with adverts appearing in
search, based on a relevancy algorithm, enhancing the value we
deliver to our customers. Penetration of our higher yielding
packages continues to increase, with 32% of retailer stock now on a
package above Standard as at September 2022 (September 2021: 25%).
Our pay-per-click prominence product, which enables customers to
promote a specific vehicle, also saw further uptake during the half
. Our new car proposition has been impacted by continued supply
shortages which has seen the number of new cars advertised decrease
to 22,000 (H1 2022: 39,000). However, the number of customers on
our new car product remains robust with c.1,900 paying for the
product at the end of the half (September 2021: c.2,100).
We continue to invest in our electric vehicle (EV) content to
ensure that we are the number one destination for car buyers
interested in purchasing an EV. We continue to help consumers make
more informed vehicle choices with EV charging information now on
full page adverts; increased content in our electric vehicle hub,
which attracted over 1 million views in the period and the launch
of our 'electric sceptics campaign', which saw our YouTube Director
Rory Reid challenge sceptical consumers about EVs in a series of
videos. Engagement on our monthly EV giveaway also remains strong
with over 1.4 million entries in the period.
Platform
We continue to invest in our technology, data and product
platform which supports our classified marketplace and we have
extended the use of this platform to our customers, which we
believe will be a key enabler for digital retailing. In October
2021, we launched Auto Trader Connect which is the product through
which our services are integrated with third parties. The Retail
Essentials module which gives customers access to our taxonomy,
improving advert quality, and introduces real-time updates between
our systems and those of our customers was included in our retailer
packages from April 2022. We currently have integration with 90+
third-party software providers with Auto Trader Connect.
Following the successful launch of Retail Essentials, we have
recently launched a Valuations module of Auto Trader Connect. The
product combines our detailed vehicle specification data with our
valuations, which benefit from millions of vehicle observations.
This gives improved pricing information to customers, enabling
better sourcing and retailing decision-making, as well as giving
enhanced price transparency for consumers. The valuations appear
within our Dealer Portal software against every vehicle record, as
well as being made available via an API.
We have now migrated all our services to Google's Cloud, which
has enabled us to benefit from scalability, improved performance,
enhanced security and a quicker product release cycle. We saw an
increase in the number of product releases in the period to 24,000
(H1 2022: 20,500).
Digital retailing
Building on both our platform and strong classified marketplace,
we are bringing more of the car buying journey online. We remain
committed to being 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. Our approach to digital retailing is to be "car
first" and to enable any retailer to sell their cars online. With
this goal in mind, we will initially offer two digital retailing
consumer journeys; an end-to-end deal builder journey on Auto
Trader; and a new vehicle leasing proposition through Autorama.
In the last six months, we continued to make progress building
an end-to-end deal builder journey on Auto Trader, which leverages
the three individual components of part-exchange, reservations and
finance applications which we have previously piloted individually.
Whilst we believe that the physical forecourt will continue to play
a role in the car buying process for a number of years, there are
several components that 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. Deal builder went live with one
single site customer in August 2022, resulting in our first
completed online deal only days after the car had been reserved.
Over the coming months and into next year we aim to onboard further
retailers onto the product, including larger groups who use our
Dealer Portal software and over time through integrations with
dealer management systems using Auto Trader Connect.
Last year, we launched a new product, Market Extension, which
allows customers to sell vehicles outside their local area, beyond
the physical constraints of their forecourt. Uptake remains strong
with over 6% of retailer stock on this product in September 2022
(September 2021: 4%), with the product being most relevant for
those customers with either delivery capability or multiple
forecourt locations.
On 22 June 2022, we completed the acquisition of Autorama (UK)
Limited, one of the UK's largest marketplaces for leasing new
vehicles . 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. 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. Through leveraging Auto Trader's
platform, we believe we have a compelling proposition for
manufacturers, retailers, and funders, with an opportunity to
reduce existing customer acquisition costs and grow the business
profitability.
Making a difference
Our purpose is "Driving Change Together. Responsibly" and we aim
to 'make a difference' to our people, our communities, our
industry, and to the wider environment. We have a Corporate
Responsibility Committee with oversight for Auto Trader's focus on
the environmental, social and governance aspects of our business.
We are currently assessing the equivalent measures for Autorama and
will include them in our cultural KPIs that will be reported at
full year. All the measures below are for our Auto Trader operating
segment.
Employees who are proud to work at Auto Trader(9) remained high
at 93% (March 2022: 95%). We believe creating a diverse workforce
and an inclusive culture within our organisation improves
individual and team performance and will allow us to identify and
attract talent that we may not otherwise access. Much of our work
around creating an inclusive culture and environment has been
supported and informed by our many employee networks representing
women, parents & carers, LGBT+, disabled & neurodiverse,
multicultural and multigenerational colleagues. These groups are
instrumental to supporting our overall diversity and inclusion
strategy.
Over half of the Board is represented by women and at a total
Group level our representation of women has remained consistent at
40% as of September 2022 (March 2022: 40%). At a leadership level,
as defined by the FTSE Women Leaders Review, there was a small
increase with 40% of women in leadership roles as of September 2022
(March 2022 38%). We have continued with our focus on ethnic
diversity and we are committed to increasing the percentage of
employees from an ethnically diverse background. We have met the
Parker Review recommendation that all FTSE100 Boards should have at
least one director from an ethnically diverse background by the end
of 2021. The percentage of the Group's employees who are from an
ethnically diverse background has increased to 15% as of September
2022 (March 2022: 14%), with the percentage of those from an
ethnically diverse background in leadership reducing slightly to 5%
as of September 2022 (March 2022: 6%).
Reducing the impact our business has on the environment is
embedded into our strategy and we are committed to being a net zero
business by 2040. Our near-term Science Based Targets have already
been validated by the SBTi and form a core component of our net
zero strategy. We have also submitted our net zero target for
validation by the SBTi. Initial calculations of our GHG emissions
during the first half of the year total 3.8k tonnes of Co2e across
Scopes 1, 2 and 3 (March 2022: 11.7k). We have undertaken further
analysis of our supplier base within our Scope 3 emissions and have
calculated the half year emissions using this more accurate data.
We are in the process of understanding the impact of Autorama's
activities and aim to include their GHG emissions in our year end
reporting.
Our environmental commitments also encompass initiatives to
ensure our business continues to be relevant as the vehicle parc
becomes increasingly electric and to raise environmental awareness
with our employees and customers and support them in reducing their
environmental impact. As our consumers increasingly look for and
buy electric vehicles, we are supporting them in making the switch
through increasing the coverage and exposure we give electric
vehicles across all our platforms. As part of this commitment, we
have entered into a partnership with Green.TV Media, the
multi-platform sustainability media company, to be the headline
partner for a series of electric themed events for the next three
years. Green.TV Media host World EV Day, the EV Summit and EV Live
all of which are aimed at furthering the adoption of electric
vehicles. Earlier this year we worked with Carbon Literacy to
launch the Carbon Literacy automotive toolkit and we are pleased to
see increasing engagement with the toolkit with 75 companies
already participating with it.
The Board
Two Non-Executive Directors and our Chair will have completed
their third three-year term in 2024, the ninth anniversary of Auto
Trader Group plc's admission to the London Stock Exchange's
official list. The board ensures it has in place and is
implementing a comprehensive succession plan for all directors.
This process is underway and being led by the Senior Independent
Director, in the case of the Chair and the Nomination Committee
with regards to Non-Executive Directors. The Board will report on
its progress at the appropriate time.
Investor calendar
The Group's full year results for the year ending 31 March 2023
will be announced on 01 June 2023.
Financial review
Group Results
H1 2023 H1 2022 Change
GBPm GBPm %
------------------------------------- -------- -------- -------
Revenue 249.8 215.4 16%
------------------------------------- -------- -------- -------
Operating costs 101.8 65.4 56%
Share of profit from joint ventures 1.1 1.7 (35%)
Operating profit 149.1 151.7 (2%)
------------------------------------- -------- -------- -------
Group revenue increased by 16% to GBP249.8m (H1 2022: GBP215.4m)
driven by Auto Trader revenue which increased by 11% to GBP238.2m
(H1 2022: GBP215.4m), and a contribution of GBP11.6m from Autorama
as a result of the acquisition which completed on 22 June 2022.
Group operating profit declined by 2% to GBP149.1m (H1 2022:
GBP151.7m). Auto Trader operating profit increased by 11% to
GBP168.8m (H1 2022: GBP151.7m) which included GBP1.1m share of
profit from joint ventures (H1 2022: GBP1.7m). Autorama had an
operating loss of GBP4.0m.
Group central costs included a charge of GBP13.8m driven by the
cost for the period of the Autorama deferred consideration of
GBP50m, which will be settled in shares, 12 months after the
completion date, and an amortisation charge of GBP1.9m relating to
the Autorama intangible assets recognised under IFRS 3 business
combinations. Group operating profit margin declined to 60% (H1
2022: 70%).
Group profit before tax was GBP148.0m (H1 2022: GBP150.0m) and
cash generated from operations was GBP164.6m (H1 2022:
GBP169.9m).
Auto Trader Results
Revenue increased to GBP238.2m (H1 2022: GBP215.4m), up 11% when
compared to the prior year. Trade revenue, which comprises revenue
from Retailers, Home Traders and other smaller revenue streams,
increased by 11% to GBP214.3m (H1 2022: GBP192.3m).
H1 2023 H1 2022 Change
GBPm GBPm %
----------------------- -------- -------- -------
Retailer 204.2 183.3 11%
Home Trader 5.2 4.5 16%
Other 4.9 4.5 9%
----------------------- -------- -------- -------
Trade 214.3 192.3 11%
Consumer Services 18.7 18.0 4%
Manufacturer & Agency 5.2 5.1 2%
----------------------- -------- -------- -------
Total 238.2 215.4 11%
----------------------- -------- -------- -------
Retailer revenue increased by 11% to GBP204.2m (H1 2022:
GBP183.3m). The average number of retailer forecourts advertising
on our platform increased 2% to 14,161 (H1 2022: 13,892), with
lower levels of cancellations in the period.
Average Revenue per Retailer ('ARPR') per month increased by 9%
to GBP2,404 (H1 2022: GBP2,199). This was driven by both the
product and price levers, with the stock lever broadly flat.
-- Price: Our price lever contributed an increase of GBP72 (H1
2022: GBP74) to total ARPR as we delivered our annual pricing event
for all customers on 1 April 2022, which included additional
products but also a like-for-like price increase.
-- Stock: The number of live cars advertised on Auto Trader
increased by 1% to 440,000 (H1 2022: 436,000). New car stock
declined, averaging 22,000 (H1 2022: 39,000) due to the well
documented shortage of new car supply. Underlying used car stock
increased by 5% in the period as we saw supply improve slightly
from the previous year and higher levels of private listings. It is
important to note that the stock lever is not driven by live stock
but by the number of paid stock units , which were broadly flat in
the period (H1 2022: increase GBP160).
-- Product: Our product lever contributed an increase of GBP133
(H1 2022: GBP119) to total ARPR. Half of this product growth was
the result of seeing an increase in retailers purchasing more of
our prominence products. These products include our higher yielding
Enhanced, Super and Ultra packages with their penetration
increasing to 32% (September 2021: 25%); Our new Market Extension
product, allowing retailers to sell outside of their local area,
also contributed to the product lever with 6% (September 2021: 4%)
of retailer stock on the product by the end of the period; Finally
there was also some contribution from our AT PPC product, where
retailers can boost visibility of their stock in search through
pay-per-click campaigns. The other half of the product lever was
largely made up from our Auto Trader Connect: Retail Essentials
product, which was included in retailer packages as part of our
annual pricing event in April 2022 and smaller product
contributions such as Auto Convert finance and further uptake of
our data products.
Home Trader revenue increased by 16% to GBP5.2m (H1 2022:
GBP4.5m). Other revenue increased by 9% to GBP4.9m (H1 2022:
GBP4.5m).
Consumer Services revenue increased by 4% in the period to
GBP18.7m (H1 2022: GBP18.0m). Private revenue, which is generated
from individual sellers who pay to advertise their vehicle on the
Auto Trader marketplace, increased by 12% to GBP12.3m (H1 2022:
GBP11.0m) which was partially offset by Motoring Services revenue,
which decreased 9% to GBP6.4m (H1 2022: GBP7.0m). Instant Offer
contributed GBP0.4m to Consumer Services (H1 2022: GBP0.4m), which
is included in Private revenue.
Revenue from Manufacturer & Agency customers increased
marginally to GBP5.2m (H1 2022: GBP5.1m). New car advertising in H1
2023 continues to be impacted by semi-conductor supply issues, with
Manufacturers lowering their marketing spend until there is more
clarity on the supply of new cars into the market.
Total costs increased 8% to GBP70.5m (H1 2022: GBP65.4m).
H1 2023 H1 2022 Change
GBPm GBPm %
----------------------------- --------- --------- --------
People costs 36.9 35.0 5%
Marketing 11.4 10.6 8%
Other costs 18.9 16.2 17%
Depreciation & amortisation 3.3 3.6 (8%)
Total costs 70.5 65.4 8%
----------------------------- --------- --------- --------
People costs, which comprise all staff costs and third-party
contractor costs, increased by 5% to GBP36.9m (H2 2021: GBP35.0m).
The increase in people costs was primarily driven by an increase in
the average number of full-time equivalent employees to 990 (H1
2022: 941) as we continue to invest in people to support the growth
of the business. In addition to the increased headcount, underlying
salary costs have increased as we invest in the best digital talent
and review all salaries on an annual basis.
Marketing spend increased by 8% in H1 2022 to GBP11.4m (H1 2022:
GBP10.6m).
Other costs, which include data services, property related costs
and other overheads, increased by 17% to GBP18.9m (H1 2022:
GBP16.2m). The increase was primarily due to increased overhead
costs; including the return of travel, office & people related
costs, as well as higher IT spend as we completed the move for all
our services and applications to be in the cloud. Depreciation and
amortisation decreased marginally to GBP3.3m (H1 2022:
GBP3.6m).
H1 2023 H1 2022 Change
GBPm GBPm %
------------------------------------- --------- --------- --------
Revenue 238.2 215.4 11%
Administrative expenses (70.5) (65.4) (8%)
Share of profit from joint ventures 1.1 1.7 (35%)
Operating profit 168.8 151.7 11%
------------------------------------- --------- --------- --------
Operating profit increased by 11% to GBP168.8m during the period
(H1 2022: GBP151.7m). Operating profit margin remained broadly flat
at 71% (H1 2022: 70%).
Our share of profit generated by Dealer Auction, the Group's
joint venture, decreased 35% to GBP1.1m (H1 2022: GBP1.7m) in the
period due to lower levels of auction activity as a result of
tighter supply.
Autorama Results
H1 2023
GBPm
--------------------------- ---------
Vehicle & Accessory Sales 7.1
Commission & Ancillary 4.5
Total 11.6
--------------------------- ---------
Autorama revenue was GBP11.6m, with vehicle & accessory
sales contributing GBP7.1m and commission and ancillary revenue
contributing GBP4.5m.
Total deliveries amounted to 2,747 units, which comprised of
1,887 cars, 627 vans and 233 pickups. Average commission and
ancillary revenue per unit delivered was GBP1,635.
H1 2023
GBPm
----------------------------- ---------
Cost of goods sold 7.0
People costs 3.7
Marketing 1.7
Other Costs 2.5
Depreciation & Amortisation 0.7
Total costs 15.6
----------------------------- ---------
The Autorama business delivered 270 vehicles which were taken on
balance sheet in the period from 22 June to 30 September. This
represented 10% of total vehicles delivered in the period. The cost
of these vehicles was taken through cost of goods sold, with the
corresponding revenue in vehicle and accessory sales. People costs
of GBP3.7m, was through the 218 number of FTEs which were employed
on average through the period. As a result of the acquisition being
on 22 June 2022, the contribution to the Group's average number of
FTEs in the period was 122. Marketing in the period was GBP1.7m.
Other costs related to IT services, property, people-related costs
and other overheads. There was depreciation of fixed assets and
some amortisation of developed software.
The Autorama operating segment made an operating loss of
GBP4.0m
H1 2023
GBPm
---------------- ---------
Revenue 11.6
Costs 15.6
Operating loss (4.0)
---------------- ---------
Group net finance costs
Group net finance costs decreased to GBP1.1m (H1 2022: GBP1.7m).
Interest costs on the Group's RCF totaled GBP0.9m (H1 2022:
GBP0.9m), with the year on year decline coming from lower amortised
debt issue costs. At 30 September 2022 the Group had drawn GBP75m
of its available facility (30 September 2021: GBPnil). Amortisation
of debt issue costs amounted to GBP0.3m (H1 2022: GBP0.8m) with the
decrease driven by an acceleration of amortisation following the
reduction of the Syndicated Revolving Credit Facility ('RCF')
commitments, as referenced below, in the prior year. Interest costs
relating to leases totaled GBP0.1m (H1 2022: GBP0.1m). This was
offset by interest receivable on cash and cash equivalents of
GBP0.2m (H1 2022: GBP0.1m).
Reduction of RCF commitments
With effect from 24 September 2021, the Group reduced the total
commitments of its Syndicated Revolving Credit Facility ('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 in 2021, 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.
Taxation
Profit before taxation decreased by 1% to GBP148.0m (H1 2022:
GBP150.0m). The Group tax charge of GBP32.8m (H1 2022: GBP28.3m)
represents an effective tax rate of 22.2% (H1 2022: 18.9%). This is
higher than the average standard UK rate due to the Autorama
deferred consideration charge being non-deductible.
Earnings per share
Basic earnings per share decreased by 3% to 12.23 pence (H1 2022
12.63 pence) based on a weighted average number of ordinary shares
in issue of 942,056,280 (H1 2022: 963,162,476). Diluted earnings
per share of 12.17 pence (H1 2022: 12.61 pence) decreased by 3%,
based on 946,494,793 shares (H1 2022: 965,070,560) which takes into
account the dilutive impact of outstanding share awards.
Earnings per share, excluding the charge in the period for
Autorama's deferred consideration in relation to the acquisition,
increased by 8% to 13.70 pence (H1 2022: 12.63 pence).
Cash flow
Cash generated from operations decreased to GBP164.6m (H1 2022:
GBP169.9m) as a result of the decline in Operating profit and
movements in working capital largely driven by an increase in trade
debtors and a decrease in VAT payable. Corporation tax payments
increased to GBP31.4m (H1 2022: GBP27.8m). Cash generated from
operating activities was GBP133.2m (H1 2022: GBP142.1m).
Capital structure and dividends
The final dividend for the year ended 31 March 2022 of 5.5 pence
per share (H1 2022: 5.0 pence per share) was paid on 23 September
2022, totaling GBP51.7m (H1 2022: GBP48.0m). The Board continued
its share-buyback programme with a total of 4.9m shares repurchased
in the period (H1 2021: 15.8m shares). The average price per share
was 619.5p (H1 2022: 636.1p) for a total consideration of GBP30.6m
(H1 2022: GBP100.4m) before transaction costs of GBP0.2m (H1 2022
GBP0.5m).
The Group's long-term capital allocation policy remains broadly
unchanged: continuing to invest in the business enabling it to grow
while returning around one third of net income to shareholders in
the form of dividends. Following these activities any surplus cash,
such as that received from the disposal of Webzone, will be used to
continue our share buy-back programme and steadily reduce gross
indebtedness. It is the Board's long-term intention that the Group
will return to a net cash position.
For H1 2023, the Board has declared an interim dividend of 2.8
pence per share. The interim dividend will be paid on 27 January
2023 to members on the register on 6 January 2023.
Going concern
The Group generated significant cash from operations during the
period. At 30 September 2022 the Group had drawn GBP75m of its
GBP250m unsecured revolving credit facility ('RCF') and had cash
balances of GBP17.6m. The Group has a strong balance sheet and
flexibility in terms of uses of cash to potentially manage
increased economic uncertainty and higher interest rates. The
GBP250m RCF is committed until June 2023, when it reduces to
GBP197.8m through to maturity in June 2025. On the basis of
facilities available and current financial projections for the next
twelve months, the Directors have concluded that it is appropriate
to prepare the condensed interim financial statements on a going
concern basis.
Post balance sheet events
Sale of Webzone Limited
On 24 October 2022, Auto Trader announced the sale of one of its
subsidiaries, Webzone Limited, which trades in the Republic of
Ireland under the Carzone brand. The business was sold to Mediahuis
Ireland, Ireland's leading print and digital media publisher which
also owns CarsIreland.ie and Cartell.ie, for consideration of EUR30
million.
At 31 March 2022, Webzone Limited had GBP451k of net assets. The
table below shows the P&L, which consolidates into the Group
results for the last two reporting periods:
2022 H1 2023
Average Retailer Forecourts (#) 551 543
------- --------
ARPR (GBPpcm) GBP605 GBP645
------- --------
Retailer Revenue (GBPm) 4.1 2.1
------- --------
Average FTEs (#) 36 36
------- --------
Trade (GBPm) 4.1 2.1
------- --------
Consumer Services (GBPm) 0.1 0.1
------- --------
Manufacturer & Agency (GBPm) 0.7 0.3
------- --------
Revenue (GBPm) 4.9 2.5
------- --------
Operating profit (GBPm) 1.3 0.7
------- --------
The estimated profit on disposal of Webzone Limited, after
disposal of related goodwill, for the Group is estimated to be
c.GBP19m.
Defined Benefit Pension Scheme
The Company sponsors a funded defined benefit pension scheme for
qualifying UK employees, the Wiltshire (Bristol) Limited Retirement
Benefits Scheme ('the Scheme'). In October 2022 the Scheme
purchased a bulk annuity policy (known as a buy-in) from Just
Retirement Limited ('Just Retirement') for GBP15.4 million, which
was funded by a GBP1.0m contribution by the Company along with
existing Scheme assets. This policy secured the full benefits of
all scheme members, which as at 30 September 2022 amounted to
GBP12.8 million. Given the financial strength of Just Retirement,
this buy-in substantively removes the risk of further contributions
being required from the Company to provide benefits to members,
beyond those noted below.
Following the buy-in, the Scheme's assets largely comprise the
bulk annuity policy held with Just Retirement, along with a small
amount of additional assets currently held with LGIM. The Scheme
trustees are now working to progress towards a full buy out, which
will involve various data and benefits exercises. In relation to
these, it is likely that there will be further contributions from
the Company, the amounts for which are estimated to be c.GBP1
million. It is anticipated that the Scheme buy-out will be
completed in 2024. Once the buy-out is complete, the Scheme has no
further purpose and will be wound up.
Responsibility statement of the directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted
for use in the UK
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the condensed set of financial statements; and a description of
the principal risks and uncertainties for the remaining six months
of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
entity during that period; and any changes in the related party
transactions described in the last annual report that could do
so
Nathan Coe Jamie Warner
Chief Executive Officer Chief Financial Officer
10 November 2022 10 November 2022
Consolidated interim income statement
For the six months ended 30 September 2022
6 months to September 6 months to September Year to
2022 2021 March
GBPm GBPm 2022
Note GBPm
----------------------------------------------- ------- ------------------------ ------------------------ --------
Revenue 3 249.8 215.4 432.7
Operating costs (101.8) (65.4) (132.0)
Share of profit from joint ventures 1.1 1.7 2.9
----------------------------------------------- ------- ------------------------ ------------------------ --------
Operating profit 2 149.1 151.7 303.6
Net finance costs 4 (1.1) (1.7) (2.6)
----------------------------------------------- ------- ------------------------ ------------------------ --------
Profit before taxation 148.0 150.0 301.0
Income tax expense 5 (32.8) (28.3) (56.3)
----------------------------------------------- ------- ------------------------ ------------------------ --------
Profit for the period attributable to equity
holders of the parent 115.2 121.7 244.7
Earnings per share:
Basic EPS (pence) 6 12.23 12.63 25.61
Diluted EPS (pence) 6 12.17 12.61 25.56
----------------------------------------------- ------- ------------------------ ------------------------ --------
Consolidated interim statement of comprehensive income
For the six months ended 30 September 2022
Year to
6 months to September 6 months to September March
2022 2021 2022
GBPm GBPm GBPm
-------------------------------------------------------- ------------------------ ------------------------ --------
Profit for the period 115.2 121.7 244.7
Items that may be subsequently reclassified to profit
or loss:
Currency translation differences (0.3) 0.1 0.2
Items that will not be reclassified to profit or loss:
Remeasurements of post-employment benefit obligations (0.6) 0.6 0.2
-------------------------------------------------------- ------------------------ ------------------------ --------
Other comprehensive income for the period, net of tax (0.9) 0.7 0.4
-------------------------------------------------------- ------------------------ ------------------------ --------
Total comprehensive income for the period attributable
to
equity holders of the parent 114.3 122.4 245.1
-------------------------------------------------------- ------------------------ ------------------------ --------
Consolidated interim balance sheet
As at 30 September 2022
September September March
2022 2021 2022
Note GBPm GBPm GBPm
------------------------------------------------------- ----- ----------- ---------- ----------
Assets
Non-current assets
Intangible assets 7 512.1 357.0 355.6
Property, plant and equipment 8 18.4 16.2 14.7
Deferred taxation assets - 1.7 1.4
Retirement benefit surplus 11 2.0 4.4 3.7
Net investments in joint ventures 50.8 51.4 49.7
Other investments 1.0 - -
584.3 430.7 425.1
Current assets
Inventory 1.9 - -
Trade and other receivables 9 72.9 63.9 65.9
Current income tax assets - - 0.6
Cash and cash equivalents 17.6 9.2 51.3
92.4 73.1 117.8
Total assets 676.7 503.8 542.9
------------------------------------------------------- ----- ----------- ---------- ----------
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital 15 9.4 9.6 9.5
Share premium 182.6 182.5 182.6
Retained earnings 1,387.9 1,297.5 1,332.4
Capital reorganisation reserve (1,060.8) (1,060.8) (1,060.8)
Own shares held 16 (27.5) (24.1) (22.4)
Capital redemption reserve 1.1 0.9 1.0
Other reserves 30.3 30.1 30.2
------------------------------------------------------- ----- ----------- ---------- ----------
Total equity 523.0 435.7 472.5
------------------------------------------------------- ----- ----------- ---------- ----------
Liabilities
Non-current liabilities
Borrowings 14 73.9 - -
Deferred taxation liabilities 7.2 - -
Lease liabilities 8 5.4 7.8 6.5
Deferred income 8.6 9.7 8.9
Deferred consideration - 8.0 -
Provisions 1.3 1.3 1.3
96.4 26.8 16.7
Current liabilities
Trade and other payables 10 52.6 36.9 42.0
Current income tax liabilities 0.9 0.8 -
Lease liabilities 8 3.1 3.1 3.0
Provisions for other liabilities and charges 0.7 0.5 0.7
Deferred consideration - - 8.0
------------------------------------------------------- ----- ----------- ---------- ----------
57.3 41.3 53.7
------------------------------------------------------- ----- ----------- ---------- ----------
Total liabilities 153.7 68.1 70.4
------------------------------------------------------- ----- ----------- ---------- ----------
Total equity and liabilities 676.7 503.8 542.9
------------------------------------------------------- ----- ----------- ---------- ----------
Consolidated interim statement of changes in shareholders'
equity
For the six months ended 30 September 2022
Share Share Retained Own Capital Capital Other Total
Capital premium earnings shares reorg redem reserves equity
held reserve reserve
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Balance at March 2021 9.7 182.4 1,307.3 (10.7) (1,060.8) 0.8 30.0 458.7
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Profit for the period - - 121.7 - - - - 121.7
Other comprehensive income:
Currency translation differences - - - - - - 0.1 0.1
Remeasurements of post-employment
benefit obligations - - 0.6 - - - - 0.6
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Total comprehensive income,
net of tax - - 122.3 - - - 0.1 122.4
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Transactions with owners:
Share-based payments (note
17) - - 3.2 - - - - 3.2
Cancellation of shares
(note 15) (0.1) - (83.1) - - 0.1 - (83.1)
Purchase of own shares
for treasury (note 16) - - - (17.8) - - - (17.8)
Tax impact of employee
share schemes - - (0.1) - - - - (0.1)
Exercise of share-based
incentives (note 17) - - (4.0) 4.3 - - - 0.3
Issue of ordinary shares
(note 15) - 0.1 - - - - - 0.1
Transfer of shares from
ESOT - - (0.1) 0.1 - - - -
Dividends paid (note 12) - - (48.0) - - - - (48.0)
Total transactions with
owners, recognised directly
in equity (0.1) 0.1 (132.1) (13.4) - 0.1 - (145.4)
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Balance at September
2021 9.6 182.5 1,297.5 (24.1) (1,060.8) 0.9 30.1 435.7
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Profit for the period - - 123.0 - - - - 123.0
Other comprehensive income:
Currency translation differences - - - - - - 0.1 0.1
Remeasurements of post-employment
benefit obligations - - (0.4) - - - - (0.4)
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Total comprehensive income,
net of tax - - 122.6 - - - 0.1 122.7
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Transactions with owners:
Share-based payments (note
17) - - 1.9 - - - - 1.9
Tax impact of employee
share schemes - - 0.2 - - - - 0.2
Cancellation of shares
(note 15) (0.1) - (63.4) - - 0.1 - (63.4)
Exercise of share-based
incentives - - (0.8) 1.7 - - - 0.9
Issue of ordinary shares
(note 15) - 0.1 - - - - - 0.1
Dividends paid (note 12) - - (25.6) - - - - (25.6)
---------------------------------- -------- --------
Total transactions with
owners, recognised directly
in equity (0.1) 0.1 (87.7) 1.7 - 0.1 - (85.9)
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Balance at March 2022 9.5 182.6 1,332.4 (22.4) (1,060.8) 1.0 30.2 472.5
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Profit for the period - - 115.2 - - - - 115.2
Other comprehensive income:
Currency translation differences - - - - - - (0.3) (0.3)
Remeasurements of post-employment
benefit obligations - - (0.6) - - - - (0.6)
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Total comprehensive income,
net of tax - - 114.6 - - - (0.3) 114.3
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Transactions with owners:
Share-based payments (note
17) - - 17.3 - - - - 17.3
Cancellation of shares
(note 15) (0.1) - (22.0) - - 0.1 - (22.0)
Purchase of own shares
for treasury (note 16) - - - (8.7) - - - (8.7)
Deferred tax on share-based
payments - - 0.2 - - - - 0.2
Exercise of share-based
incentives (note 17) - - (2.9) 3.6 - - 0.4 1.1
Dividends paid (note 12) - - (51.7) - - - - (51.7)
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Total transactions with
owners, recognised directly
in equity (0.1) - (59.1) (5.1) - 0.1 0.4 (63.8)
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Balance at September
2022 9.4 182.6 1,387.9 (27.5) (1,060.8) 1.1 30.3 523.0
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Consolidated interim statement of cash flows
For the six months ended 30 September 2022
Year to
6 months to September 6 months to September March
2022 2021 2022
Note GBPm GBPm GBPm
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Cash flows from operating activities
Cash generated from operations 13 164.6 169.9 328.1
Income taxes paid (31.4) (27.8) (56.2)
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Net cash generated from operating activities 133.2 142.1 271.9
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Cash flows from investing activities
Purchases of property, plant and equipment (1.1) (2.2) (2.8)
Payment for acquisition of su bsidiary, net of
cash acquired 18 (152.3) - -
Dividends received from Joint Ventures - 4.9 7.8
Net cash used in investing activities (153.4) 2.7 5.0
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Cash flows from financing activities
Dividends paid to Company's shareholders 12 (51.7) (48.0) (73.6)
D rawdown/( Repayment) of revolving credit
facility 14 75.0 (30.0) (30.0)
D rawdown/( Repayment) of other debt (3.9) - -
Payment of lease liabilities ( 1.6) ( 1.6) (3.2)
Payment of interest on borrowings (1 .6) (1 .0) (1.5)
Purchase of own shares for cancellation 15 (21 .9) (82 .7) (145.8)
Purchase of own shares for treasury 16 (8.7) (17.7) (17.7)
Payment of fees on repurchase of own shares 15 (0.2) (0.5) (0.8)
Proceeds from exercise of share-based incentives 1.1 0.3 1.4
Contributions to defined benefit pension scheme 11 - (0 .1) (0 .1)
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Net cash used in financing activities (13 .5) (181 .3) (271.3)
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Net (decrease)/increase in cash and cash
equivalents (33.7) (36.5) 5.6
Cash and cash equivalents at beginning of period 51.3 45.7 45.7
Cash and cash equivalents at end of period 17.6 9.2 51.3
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Notes to the Condensed Consolidated interim financial
statements
1 General information
Auto Trader Group plc ('the Company') is a company incorporated
in the United Kingdom and its registered office is 4(th) Floor, 1
Tony Wilson Place, Manchester, M15 4FN.
These condensed consolidated interim financial statements have
been prepared as at, and for the six months ended, 30 September
2022. The comparative financial information presented has been
prepared as at, and for the six months ended, 30 September
2021.
The condensed consolidated interim financial information
presented as at, and for the six months ended, 30 September 2022
comprise the Company and its subsidiaries (together referred to as
the Group). The consolidated financial statements of the Group as
at, and for the year ended, 31 March 2022 are available on request
from the Company's registered office and via the Company's
website.
These condensed consolidated interim financial statements are
unaudited but have been reviewed by the Auditor whose report is set
out on pages 45-46. They have been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS 34, "Interim Financial Reporting" issued by
the IASB and adopted for use in the UK. They do not include all of
the information required for full annual financial statements, and
should be read in conjunction with the consolidated financial
statements of the Group as at and for the year ended 31 March 2022
which were prepared in accordance with UK-adopted international
accounting standards, in conformity with the requirements of the
Companies Act 2006 and applicable law.
As required by the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority, the condensed set of financial
statements has been prepared applying the accounting policies and
presentation that were applied in the preparation of the company's
published consolidated financial statements for the year ended 31
March 2022.
The comparative financial information for the year ended 31
March 2022 included in this interim statement of results does not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006 (the 'Act'). The statutory accounts for the
year ended 31 March 2022 have been reported on by the Company's
Auditor and were delivered to the Registrar of Companies following
the Company's Annual General Meeting. The auditor's report was (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
Judgements and estimates
The preparation of the condensed consolidated interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial
statements, judgement was required in the identification of
acquired intangible assets and their measurement is a key source of
estimation uncertainty. The other judgements made by management in
applying the Group's accounting policies and the other key sources
of estimation uncertainty were the same as those that applied to
the consolidated financial statements for the year ended 31 March
2022.
Going concern
The Group generated significant cash from operations during the
period. At 30 September 2022 the Group had GBP75m drawn of its
GBP250m unsecured revolving credit facility ('RCF') and had cash
balances of GBP17.6m. The GBP250m Revolving Credit Facility ('RCF')
is committed until June 2023, when it reduces to GBP197.8m through
to maturity in June 2025.
The combination of significant free cash flow and the
discretionary nature of dividend payments and share buybacks
provide the Group with significant liquidity and ability to comply
with the RCF's financial covenants. On the basis of facilities
available and current financial projections for the next twelve
months, the Directors have concluded that it is appropriate to
prepare the condensed interim financial statements on a going
concern basis.
Changes in accounting policies
The accounting policies applied in these interim financial
statements are the same as those applied in the Group's
consolidated financial statements as at and for the year ended 31
March 2022. Taxes on income in the interim periods are accrued
using the effective tax rate that would be applicable to expected
total annual profit or loss.
2 Segmental information
IFRS 8 'Operating segments' requires the Group to determine its
operating segments based on information which is provided
internally. Based on the internal reporting information and
management structures within the Group, it has been determined that
there are two operating segments (2022: one operating segment). A
result of the acquisition of Autorama in June 2022 has led to
Autorama being reported as a separate segment during the period.
The Group's reportable operating segments have therefore been
identified as follows:
-- Auto Trader - includes the results of Auto Trader,
AutoConvert & Carzone in respect of online classified
advertising of motor vehicles and other related products and
services in the digital automotive marketplace including the Dealer
Auction joint venture.
-- Autorama - the results of Autorama in respect of advertising
new leasing vehicles and other related products and services.
Management has determined that there are two operating segments
in line with the nature in which the Group is managed. The reports
reviewed by the Operational Leadership Team ('OLT'), which is the
chief operating decision-maker ('CODM') for both segments, splits
out operating performance by segment. The OLT is made up of the
Executive Directors and Key Management and is responsible for the
strategic decision-making of the Group. Revenue and cost streams
for each operating segment are largely independent.
The OLT primarily uses the statutory measures of Revenue and
Operating profit to assess the performance of each operating
segment. The revenue from external parties reported to the OLT is
measured in a manner consistent with that in the income statement.
There are no inter-segment revenues in the current or comparative
periods.
Analysis of the Groups' revenue and results for both reportable
segments, with a reconciliation to Group profit before tax is shown
below:
Group
Autotrader segment Autorama segment central costs Group
6 months to September 2022 GBPm GBPm GBPm GBPm
Total segment revenue 238.2 11.6 - 249.8
--------------------------------------- ------------------- ----------------- --------------- --------
People costs (36.9) (3.7) (13.8) (54.4)
Marketing (11.4) (1.7) - (13.1)
Costs of goods sold - (7.0) - (7.0)
Other costs (18.9) (2.5) - (21.4)
Depreciation & amortisation (3.3) (0.7) (1.9) (5.9)
--------------------------------------- ------------------- ----------------- --------------- --------
Total segment costs (70.5) (15.6) (15.7) (101.8)
Share of profit from joint ventures 1.1 - - 1.1
--------------------------------------- ------------------- ----------------- --------------- --------
Total segment operating profit/(loss) 168.8 (4.0) (15.7) 149.1
Finance costs - net - - (1.1) (1.1)
--------------------------------------- ------------------- ----------------- --------------- --------
Profit before tax/(loss) 168.8 (4.0) (16.8) 148.0
--------------------------------------- ------------------- ----------------- --------------- --------
Group central costs which are not allocated within either of the
segment operating profit/(loss) reported to the CODM comprise:
(i) People costs: A GBP13.8 million charge for the expense of
group shares expected to be issued to settle the Autorama deferred
consideration (note 18).
(ii) Depreciation & amortisation: GBP1.9 million of
amortisation expense relating to the fair value of intangible brand
and technology assets acquired in the Group's business combination
of Autorama.
Group
Autotrader segment Autorama segment central costs Group
6 months to September 2021 GBPm GBPm GBPm GBPm
Total segment revenue 215.4 - - 215.4
--------------------------------------- ------------------- ----------------- --------------- -------
People costs (35.0) - - (35.0)
Marketing (10.6) - - (10.6)
Costs of goods sold - -
Other costs (16.2) - - (16.2)
Depreciation & amortisation (3.6) - - (3.6)
--------------------------------------- ------------------- ----------------- --------------- -------
Total segment costs (65.4) - - (65.4)
Share of profit from joint ventures 1.7 - - 1.7
--------------------------------------- ------------------- ----------------- --------------- -------
Total segment operating profit/(loss) 151.7 - - 151.7
Finance costs - net - - (1.7) (1.7)
--------------------------------------- ------------------- ----------------- --------------- -------
Profit before tax/(loss) 151.7 - (1.7) 150.0
--------------------------------------- ------------------- ----------------- --------------- -------
Group
Autotrader segment Autorama segment central costs Group
Year to March 2022 GBPm GBPm GBPm GBPm
Total segment revenue 432.7 - - 432.7
--------------------------------------- ------------------- ----------------- --------------- --------
People costs (69.8) - - (69.8)
Marketing (20.5) - - (20.5)
Costs of goods sold - -
Other costs (34.5) - - (34.5)
Depreciation & amortisation (7.2) - - (7.2)
--------------------------------------- ------------------- ----------------- --------------- --------
Total segment costs (132.0) - - (132.0)
Share of profit from joint ventures 2.9 - - 2.9
--------------------------------------- ------------------- ----------------- --------------- --------
Total segment operating profit/(loss) 303.6 - - 303.6
Finance costs - net - - (2.6) (2.6)
--------------------------------------- ------------------- ----------------- --------------- --------
Profit before tax/(loss) 303.6 - (2.6) 301.0
--------------------------------------- ------------------- ----------------- --------------- --------
3 Revenue
In the following table Auto Trader's revenue is disaggregated by
customer type and Autorama's revenue is shown separately. This
level of disaggregation is consistent with that used by the OLT to
assist in the analysis of the Group's revenue-generating
trends.
September September March
2022 2021 2022
GBPm GBPm GBPm
--------------------------- --------- ---------- ------
Trade 214.3 192.3 388.3
Consumer services 18.7 18.0 33.3
Manufacturer & Agency 5.2 5.1 11.1
---------------------------- --------- ---------- ------
Auto Trader revenue 238.2 215.4 432.7
---------------------------- --------- ---------- ------
Vehicle & Accessory Sales 7.1 - -
Commission & Ancillary 4.5 - -
Autorama revenue 11.6 - -
--------------------------- --------- ---------- ------
Total Group revenue 249.8 215.4 432.7
---------------------------- --------- ---------- ------
4 Net finance costs
September September March
2022 2021 2022
GBPm GBPm GBPm
-------------------------------------------------- --------- ---------- ------
Interest payable on borrowings 0.9 0.9 1.4
Amortised debt issue costs 0.3 0.8 1.0
Interest charge on lease liabilities 0.1 0.1 0.2
Interest charged on deferred consideration - - 0.1
Interest receivable on cash and cash equivalents (0.2) (0.1) (0.1)
Total net finance costs 1.1 1.7 2.6
--------------------------------------------------- --------- ---------- ------
5 Income taxes
September September March
2022 2021 2022
GBPm GBPm GBPm
-------------------------- --------- ---------- ------
Total income tax expense 32.8 28.3 56.3
--------------------------- --------- ---------- ------
The taxation charge for the period is based on the standard rate
of UK corporation tax for the period of 19% (March 2022: 19%). The
taxation charge recognised is based on management's best estimate
of the effective tax rate for the full year of 22.2% (September
2021: 18.9%) applied to the profit before taxation of the interim
period. The increase in the effective tax rate is due to the
deferred consideration relating to the acquisition of Autorama
being a non tax-deductible expense.
6 Earnings per share
Total
Weighted average number earnings Pence
of ordinary shares GBPm per share
--------------------------------- ------------------------ ---------- -----------
Six months ended September 2022
Basic EPS 942,056,280 115.2 12.23
Diluted EPS 946,494,793 115.2 12.17
Six months ended September 2021
Basic EPS 963,162,476 121.7 12.63
Diluted EPS 965,070,560 121.7 12.61
Year ended March 2022
Basic EPS 955,532,888 244.7 25.61
Diluted EPS 957,543,145 244.7 25.56
--------------------------------- ------------------------ ---------- -----------
The difference between the basic and diluted weighted average
number of shares represents the dilutive impact of the Share
Incentive Plan, Performance Share Plan, Deferred Annual Bonus,
Single Incentive Plan Award, Sharesave scheme and the dilutive
impact of shares issued as deferred consideration for the
acquisition of Autorama, which are conditional on a service
condition. Shares issued to satisfy the Share Incentive Plan were
purchased by the Employee Share Option Trust ('ESOT').
The number of shares in issue at the start of the year is
reconciled to the basic and diluted weighted average number of
shares below:
6 months ended September 2022
Number of shares
------------------------------------------------------------------ ------------------------------
Weighted average ordinary shares in issue 946,487,740
Less weighted effect of shares held by the ESOT (352,773)
Less weighted effect of shares held in treasury (4,078,687)
Weighted average number of shares for basic EPS 942,056,280
Dilutive impact of share options outstanding 2,050,310
Dilutive impact of shares to be issued as deferred consideration 2,388,203
Weighted average number of shares for diluted EPS 946,494,793
------------------------------------------------------------------ ------------------------------
The average market value for 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.
7 Intangible assets
Software & website
Goodwill development costs Financial systems Brand Other Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- --------- ------------------- ------------------ ------ ------- ------
Opening balance at 1 April 2021 340.9 6.1 0.3 0.6 10.3 358.2
Amortisation charge - (0.3) (0.3) (0.1) (0.6) (1.3)
Exchange differences 0.1 - - - - 0.1
Closing balance at 30 September 2021 341.0 5.8 - 0.5 9.7 357.0
-------------------------------------- --------- ------------------- ------------------ ------ ------- ------
Software & website
Goodwill development costs Financial systems Brand Other Total
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------------- --------- ------------------- ------------------ ------ ------- ------
Opening balance at 1 April 2022 340.9 5.2 - 0.5 9.0 355.6
Acquired through business combinations 92.5 13.7 - 47.6 5.6 159.4
Additions - 0.3 - - - 0.3
Amortisation charge - (1.0) --- (1.3) (1.1) (3.4)
Exchange differences 0.2 - - - - 0.2
------
Closing balance at 30 September 2022 433.6 18.2 -- 46.8 13.5 512.1
---------------------------------------- --------- ------------------- ------------------ ------ ------- ------
8 Leases and property, plant and equipment
The Group has right-of-use assets which comprise of property and
motor vehicles which are held within property, plant and equipment.
Information about leases for which the Group is a lessee is
presented below.
Analysis of property, plant and equipment between owned and leased September September March
assets 2022 2021 2022
GBPm GBPm GBPm
-------------------------------------------------------------------- --------- --------- ---------- --------
Property plant and equipment owned 10.9 6.7 6.4
Right-of-use assets 7.5 9.5 8.3
18.4 16.2 14.7
-------------------------------------------------------------------- --------- --------- ---------- --------
Right-of-use assets Property Vehicles Other Total
GBPm GBPm GBPm GBPm
-------------------------------------------------------------------- --------- --------- ---------- ------
Opening balance at 1 April 2021 4.9 0.6 0.1 5.6
Additions 5.1 0.1 - 5.2
Depreciation (1.1) (0.1) (0.1) (1.3)
Closing balance at 30 September 2021 8.9 0.6 - 9.5
-------------------------------------------------------------------- --------- --------- ---------- ------
Property Vehicles Other Total
GBPm GBPm GBPm GBPm
-------------------------------------------------------------------- --------- --------- ---------- ------
Opening balance at 1 April 2022 7.8 0.4 0.1 8.3
Acquired through business combinations 0.1 0.3 - 0.4
Additions - 0.1 - 0.1
Depreciation (1.1) (0.2) - (1.3)
Closing balance at 30 September 2022 6.8 0.6 0.1 7.5
-------------------------------------------------------------------- --------- --------- ---------- ------
Lease liabilities September September March
2022 2021 2022
GBPm GBPm GBPm
------------------- --------- ---------- ------
Current 3.1 3.1 3.0
Non-current 5.4 7.8 6.5
Total 8.5 10.9 9.5
-------------------- --------- ---------- ------
9 Trade and other receivables
September September March
2022 2021 2022
GBPm GBPm GBPm
------------------------------ --------- ---------- ------
Trade receivables (invoiced) 29.4 25.6 25.7
Net accrued income 38.3 33.4 34.6
------------------------------- --------- ---------- ------
Trade receivables (total) 67.7 59.0 60.3
Prepayments 4.8 4.9 5.5
Other receivables 0.4 - 0.1
Total 72.9 63.9 65.9
------------------------------- --------- ---------- ------
10 Trade and other payables
September September March
2022 2021 2022
GBPm GBPm GBPm
--------------------------------- --------- ---------- ------
Trade payables 5.1 4.5 2.7
Accruals 15.7 11.3 14.4
Other taxes and social security 18.5 18.1 21.3
Deferred income 5.6 2.6 3.0
Other payables 7.6 0.3 0.5
Accrued interest payable 0.1 0.1 0.1
Total 52.6 36.9 42.0
---------------------------------- --------- ---------- ------
11 Retirement benefit obligations
Across the UK and Ireland, the Group operates several pension
schemes. All except one are defined contribution schemes.
Defined contribution scheme
In the period the pension contributions to the Group's defined
contribution scheme amounted to GBP1.7m (September 2021: GBP1.6m;
March 2022: GBP3.1m). At 30 September 2022, there were GBP0.6m
(September 2021: GBP0.5m; March 2022: GBP0.5m) of pension
contributions outstanding relating to the Group's defined
contribution scheme.
Defined benefit scheme
The defined benefit pension scheme provides benefits based on
final pensionable pay and this scheme was closed to new joiners
with effect from May 2002. New employees after that date have been
offered membership of the Group's defined contribution scheme.
The most recent actuarial valuation of the defined benefit
obligations was performed as at 30 September 2022 by a qualified
independent actuary. The amounts recognised in the balance sheet
are determined as follows:
September September March
2022 2021 2021
GBPm GBPm GBPm
--------------------------------------------- --------- ---------- -------
Present value of funded obligations 12.8 19.6 17.5
Fair value of plan assets (14.8) (24.0) (21.2)
Net (asset) recognised in the balance sheet (2.0) (4.4) (3.7)
---------------------------------------------- --------- ---------- -------
During the year ending 31 March 2020, the Trustees of the Scheme
sought legal advice which concluded that the Company has an
unconditional right to a refund of surplus from the Scheme, if the
Scheme were to be run-off until the final beneficiary died. As a
result, the Group has concluded that the recognition restrictions
of IFRIC14 do not apply, and therefore has recognised the
accounting surplus of GBP2.0m and an associated deferred tax
liability of GBP0.7m in the Consolidated balance sheet.
The amounts charged to the Consolidated income statement are set
out below:
September September March
2022 2021 2022
GBPm GBPm GBPm
---------------------------------------------- --------- ---------- ------
Past service cost 0.5 - -
Settlement cost - - -
Total amounts charged to the income statement 0.5 - -
---------------------------------------------- --------- ---------- ------
The amounts recognised in the statement of other comprehensive
income are as follows:
September September March
2022 2021 2022
GBPm GBPm GBPm
-------------------------------------------------------------------------------- --------- ---------- ------
Return on Scheme assets (in excess of) / below that recognised in net interest 6.3 (1.1) 1.6
Actuarial losses/(gains) due to changes in assumptions (5.3) 0.2 (1.8)
Actuarial (gains)/losses due to liability experience 0.2 (0.1) (0.2)
Deferred tax on surplus (0.6) 0.4 0.2
Total amounts recognised in the statement of other
comprehensive income 0.6 (0.6) (0.2)
--------------------------------------------------------------------------------- --------- ---------- ------
Movements during the period in the post-employment defined
benefit obligations are set out as below:
September September March
2022 2021 2022
GBPm GBPm GBPm
--------------------------------------------- --------- ---------- ------
At beginning of period (3.7) (3.2) (3.2)
Past service cost 0.5 - -
Contributions paid to scheme - (0.1) (0.1)
Remeasurement and experience (gains)/losses 1.2 (1.1) (0.4)
Closing post-employment benefit obligation (2.0) (4.4) (3.7)
---------------------------------------------- --------- ---------- ------
12 Dividends
Dividends declared and paid in the period were as follows:
September 2022 September 2021
-------------------------- ----------------------- ----------------------
Pence per share GBPm Pence per share GBPm
-------------------------- --------------- ------ ---------------- ----
2022 final dividend paid 5.5 51.7 - -
2021 final dividend paid - - 5.0 48.0
-------------------------- --------------- ------ ---------------- ----
Total 5.5 51.7 5.0 48.0
-------------------------- --------------- ------ ---------------- ----
An interim dividend of 2.8 pence per share for the six months to
September 2022 (September 2021: 2.7 pence per share) has been
declared by the Directors', totaling GBP26.3m (September 2021:
GBP25.7m) based on the number of shares eligible for the
distribution as at 30 September 2022. The interim dividend is
payable on 27 January 2023 to shareholders on the register at the
close of business on 6 January 2023. No provision has been made for
the interim dividend and there are no income tax consequences.
13 Cash generated from operations
6 months to September 6 months to September Year to March
2022 2021 2022
GBPm GBPm GBPm
---------------------------------------------------- --------------------- ---------------------- --------------
Profit before taxation 148.0 150.0 301.0
Adjustments for:
Depreciation 2.5 2.3 4.6
Amortisation 3.4 1.3 2.6
Share-based payments charge (excluding associated
NI) 3.5 3.2 5.1
Deferred contingent consideration 13.8 - -
Post-employment expense relating to defined
benefit pension 0.4 0.1 -
Share of profit in joint ventures (1.1) (1.7) (2.9)
Net finance costs 1.1 1.7 2.6
Research and Development Expenditure Credit - - (0.1)
Changes in working capital:
Trade and other receivables (3.0) (2.5) (5.3)
Trade and other payables (3.9) 15.5 20.5
Inventory (0.1) - -
Cash generated from operations 164.6 169.9 328.1
----------------------------------------------------- --------------------- ---------------------- --------------
14 Borrowings
September September March
2022 2021 2022
Non-current GBPm GBPm GBPm
-------------------------------------------------------------------------- --------- ---------- ------
Syndicated revolving credit facility gross of unamortised debt issue cost 75.0 - -
Unamortised debt issue costs on Syndicated revolving credit facility (1.1) - -
Total borrowings 73.9 - -
-------------------------------------------------------------------------- --------- ---------- ------
The Syndicated revolving credit facility is repayable as
follows:
September September March
2022 2021 2022
GBPm GBPm GBPm
------------------------- --------- ---------- ------
Within two to five years 75.0 - -
Total 75.0 - -
------------------------- --------- ---------- ------
The carrying amounts of borrowings approximate their fair
values.
Syndicated revolving credit facility
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 was not required. Therefore on 21 September 2021, 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.
The Group has access to an unsecured Syndicated revolving credit
facility (the '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
Group has extended the termination date of the Syndicated RCF by
two years and it 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.
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 Consolidated 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.
15 Share capital
As at 30 September 2022 As at 30 September 2021 As at 31 March 2022
------------------------------------- ------------------------- ------------------------- ---------------------
Number Amount Number Amount Number Amount
'000 GBPm '000 GBPm '000 GBPm
------------------------------------- ----------- ------------ ------------ ----------- ----------- --------
Allotted, called-up and fully paid
ordinary shares of 1p each
At beginning of period 946,893 9.5 969,024 9.7 969,024 9.7
Purchase and cancellation of own
shares (3,512) (0.1) (13,071) (0.1) (22,198) (0.2)
Issue of ordinary shares 13 0.0 34 0.0 67 0.0
------------------------------------- ----------- ------------ ------------ ----------- ----------- --------
Total 943,394 9.4 955,987 9.6 946,893 9.5
------------------------------------- ----------- ------------ ------------ ----------- ----------- --------
During the period, 3.5m shares were purchased for cancellation
(September 2021: 13.1m; March 2022: 22.2m) and 1.4m shares were
purchased for treasury (September 2021: 2.7m; March 2022: 2.7m).
The average price per share was 619.5p (H1 2022: 636.1p) for a
total consideration of GBP30.6m (H1 2022: GBP100.4m) before
transaction costs of GBP0.2m (H1 2022: GBP0.5m).
Included within shares in issue at 30 September 2022 are 348,034
(September 2021: 365,068; March 2022: 358,158) shares held by the
ESOT and 4,629,543 (September 2021: 4,125,530; March 2022:
3,826,928) shares held in treasury, as detailed in note 16.
16 Own shares held
ESOT shares reserve Treasury shares Total
Own shares held GBPm GBPm GBPm GBPm
------------------------------------------------ ------------------- ---------------- -------
Own shares held as at 1 April 2021 (0.5) (10.2) (10.7)
Transfer of shares from ESOT 0.1 - 0.1
Repurchase of own shares for treasury - (17.8) (17.8)
Share-based incentives exercised in the period - 4.3 4.3
Own shares held as at 30 September 2021 (0.4) (23.7) (24.1)
------------------------------------------------- ------------------- ---------------- -------
Own shares held as at 1 October 2021 (0.4) (23.7) (24.1)
Transfer of shares from ESOT - - -
Share-based incentives exercised in the period - 1.7 1.7
Own shares held as at 31 March 2022 (0.4) (22.0) (22.4)
------------------------------------------------- ------------------- ---------------- -------
Own shares held as at 1 April 2022 (0.4) (22.0) (22.4)
Transfer of shares from ESOT - - -
Repurchase of own shares for treasury - (8.7) (8.7)
Share-based incentives exercised in the period - 3.6 3.6
Own shares held as at 30 September 2022 (0.4) (27.1) (27.5)
------------------------------------------------- ------------------- ---------------- -------
ESOT shares reserve Treasury shares Total
Own shares held - number number of shares number of shares number of shares
------------------------------------------------ ------------------- ----------------- -----------------
Own shares held as at 1 April 2021 404,653 2,422,659 2,827,312
Transfer of shares from ESOT (39,585) - (39,585)
Repurchase of own shares for treasury - 2,718,193 2,718,193
Share-based incentives exercised in the period - (1,015,322) (1,015,322)
------------------------------------------------- ------------------- ----------------- -----------------
Own shares held as at 30 September 2021 365,068 4,125,530 4,490,598
------------------------------------------------- ------------------- ----------------- -----------------
Own shares held as at 1 October 2021 365,068 4,125,530 4,490,598
Transfer of shares from ESOT (6,910) - (6,910)
Share-based incentives exercised in the period - (298,602) (298,602)
Own shares held as at 31 March 2022 358,158 3,826,928 4,185,086
------------------------------------------------- ------------------- ----------------- -----------------
Own shares held as at 1 April 2022 358,158 3,826,928 4,185,086
Transfer of shares from ESOT (10,124) - (10,124)
Repurchase of own shares for treasury - 1,430,372 1,430,372
Share-based incentives exercised in the period - (627,757) (627,757)
Own shares held as at 30 September 2022 348,034 4,629,543 4,977,577
------------------------------------------------- ------------------- ----------------- -----------------
17 Share-based payments
The Group currently operates five share plans: the Share
Incentive Plan, Performance Share Plan, Deferred Annual Bonus,
Single Incentive Plan Award and the Sharesave scheme.
All share-based incentives are subject to a service condition.
Such conditions are not taken into account in the fair value of the
service received. The fair value of services received in return for
share-based incentives is measured by reference to the fair value
of share-based incentives granted. Black-Scholes and Monte Carlo
models have been used where appropriate to calculate the fair value
of share-based incentives with market conditions.
The total charge in the period relating to the five schemes was
GBP3.6m (September 2021: GBP3.9m; March 2022: GBP6.1m). This
included associated national insurance ('NI') at the rate at which
management expects to be effective when the awards are exercised
(15.05% up until November 2022 and 13.80% thereafter), and
apprenticeship levy at 0.5%, based on the share price at the
reporting date.
In addition to this charge, the share based payment charge
reported this period includes GBP13.8m relating to deferred share
based payment consideration relating to the acquisition of Autorama
(note 18), making a total combined charge of GBP17.3m (excluding
associated NI).
September September March
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------------------- --------- ---------- ------
Share Incentive Plan - - -
Sharesave scheme 0.3 0.3 0.7
Performance Share Plan 1.0 0.8 1.3
Deferred Annual Bonus and Single Incentive Plan Award 2.2 2.1 3.1
Total share-based payment charge 3.5 3.2 5.1
-------------------------------------------------------- --------- ---------- ------
NI and apprenticeship levy on applicable schemes 0.1 0.7 1.0
Total charge 3.6 3.9 6.1
-------------------------------------------------------- --------- ---------- ------
Share Incentive Plan
In 2015, the Group established a Share Incentive Plan ('SIP').
All eligible employees were awarded free shares (or nil-cost
options in the case of employees in Ireland) valued at GBP3,600
each based on the share price at the time of the Company's
admission to the Stock Exchange in March 2015, subject to a
three-year service period ('Vesting Period'). The SIP shareholders
are entitled to dividends over the Vesting Period. There are no
performance conditions applicable to the vesting of SIP shares. The
fair value of the SIP awards at the grant date was measured to be
GBP2.72 using the Black-Scholes model. The resulting share-based
payments charge was spread evenly over the Vesting Period.
UK SIP September September March
2022 2021 2022
Number Number Number
------------------------------------ --------- ---------- ---------
Outstanding at beginning of period 116,808 163,157 163,157
Options exercised in the period (10,270) (36,445) (46,349)
Options forfeited in the period (2,385) - -
Outstanding at period ending 104,153 126,712 116,808
------------------------------------- --------- ---------- ---------
Irish SIP September September March
2022 2021 2022
Number Number Number
------------------------------------ --------- ---------- --------
Outstanding at beginning of period - 1,354 1,354
Options lapsed in the period - - (1,354)
------------------------------------- --------- ---------- --------
Outstanding at period ending - 1,354 -
------------------------------------- --------- ---------- --------
Performance Share Plan
The Group operates a Performance Share Plan ('PSP') for
Executive Directors, the Operating Leadership Team and certain key
employees. The extent to which awards vest will depend upon the
Group's performance over the three-year period following the award
date. Both market based and non-market based performance conditions
may be attached to the options, for which an appropriate adjustment
is made when calculating the fair value of an option. If the
options remain unexercised after a period of 10 years from the date
of grant, the options expire. Furthermore, options are forfeited if
the employee leaves the Group before the options vest, unless under
exceptional circumstances.
On 23 June 2022, the Group awarded 360,695 nil cost options
under the PSP scheme. For the 2022 awards, the Group's performance
is measured by reference to growth in Operating profit (70% of the
award), Revenue (20% of the award) and Carbon Reduction (10% of the
award) over a three-year period to March 2025.
September September March
2022 2021 2022
Number Number Number
------------------------------------ --------- ---------- ----------
Outstanding at beginning of period 1,401,701 1,741,829 1,741,829
Options granted in the period 360,695 368,361 368,361
Dividend shares awarded 8,319 2,916 2,916
Options exercised in the period (241,047) (366,639) (366,639)
Options forfeited in the period (129,684) (344,766) (344,766)
Outstanding at period ending 1,399,984 1,401,701 1,401,701
------------------------------------- --------- ---------- ----------
Deferred Annual Bonus and Single Incentive Plan Award
The Group operates the Deferred Annual Bonus and Single
Incentive Plan Award for the Executive Directors, the Operational
Leadership Team and certain key employees. The Plan consists of two
schemes, the Deferred Annual Bonus ('DAB') and the Single Incentive
Plan Award ('SIPA').
Deferred Annual Bonus
The Group operates a Deferred Annual Bonus Plan ('DABP') for
Executive Directors. Awards under the plan are contingent on the
satisfaction of pre-set internal targets relating to financial and
operational objectives. The extent to which the awards vest will
depend upon the satisfaction of the Group's financial and
operational performance in the financial year of the award date
(the 'Performance Conditions'). The awards will vest on the second
anniversary of the date the Remuneration Committee determines that
the Performance Conditions have been satisfied (the 'Vesting
Period'). Awards are potentially forfeitable during that period
should the employee leave employment. The DABP awards have been
valued using the Black-Scholes method where appropriate and the
resulting share-based payments charge is being spread evenly over
the combined Performance Period and Vesting Period of the shares,
being three years.
On 23 June 2022, the Group awarded 108,704 nil cost options
under the DABP.
September September March
2022 2021 2022
Number Number Number
------------------------------------ --------- ---------- ----------
Outstanding at beginning of period - 121,289 121,289
Options granted in the period 108,704 - -
Dividend shares awarded - 1,211 1,211
Options exercised in the period - (122,500) (122,500)
Outstanding at period ending 108,704 - -
------------------------------------ --------- ---------- ----------
Single Incentive Plan Award
The Group operates a Single Incentive Plan Award ('SIPA') for
the Operational Leadership Team and certain key employees. The
extent to which awards vest will depend upon the satisfaction of
the Group's financial and operational performance in the financial
year of the award date (the "Performance Conditions"). The awards
will vest in tranches, with the first tranche vesting on the date
on which the Remuneration Committee determines that the Performance
Conditions have been satisfied, and subsequent tranches vesting on
the first and second anniversary of this date, subject to
continuing employment.
On 23 June 2022, the Group awarded 681,586 nil cost options
under the SIPA scheme.
The fair value of the 2022 award was determined to be GBP5.31
per option, being the share price at grant date. The resulting
share-based payments charge is being spread evenly over the period
between the grant date and the vesting date. SIPA award holders are
entitled to receive dividends accruing between the grant date and
the vesting date and this value will be delivered in shares.
September September March
2022 2021 2022
Number Number Number
------------------------------------ --------- ---------- ----------
Outstanding at beginning of period 1,291,868 1,012,199 1,012,199
Options granted in the period 681,586 718,634 718,634
Dividend shares awarded 5,710 5,440 5,440
Options exercised in the period (177,183) (427,816) (429,283)
Options forfeited in the period (205,153) (10,406) (15,122)
Outstanding at period ending 1,596,828 1,298,051 1,291,868
------------------------------------- --------- ---------- ----------
Sharesave scheme
The Group operates a Sharesave ('SAYE') scheme for all employees
under which employees are granted an option to purchase ordinary
shares in the Company at up to 20% less than the market price at
invitation, in three years' time, dependent on their entering into
a contract to make monthly contributions into a savings account
over the relevant period. Options are granted and are linked to a
savings contract with a term of three years. These funds are used
to fund the option exercise. No performance criteria are applied to
the exercise of Sharesave options.
Fair value is measured by use of a Black-Scholes model and the
resulting share-based payments charge is being spread evenly over
the period between the grant date and the vesting date.
September September March
2022 2021 2022
Number Number Number
------------------------------------- ---------- ----------------- ----------
Outstanding at beginning of period 1,446,582 1,505,816 1,505,816
Options granted in the period - - 482,325
Options exercised in the period (235,323) (122,710) (446,884)
Options lapsed in the period -(89,878)- * (35,936)- (94,675)
Outstanding at period ending 1,121,381 1,347,170 1,446,582
------------------------------------- ---------- ----------------- ----------
18 Business combinations
On 22 June 2022, the Group acquired the entire share capital of
Autorama (UK) Limited ('Autorama') for initial consideration of
GBP150.0m, with an additional GBP50.0m which will be deferred until
22 June 2023 and settled in shares subject to employment and
performance conditions.
Autorama (UK) Limited, one of the UK's largest marketplaces for
leasing new vehicles, is a leading end-to-end digital platform,
which aggregates leasing deals from multiple funders and OEMs
(under its "Vanarama" brand), enabling buyers to transact online
across a wide range of vehicles.
The total consideration of GBP150.0m excludes acquisition costs
of GBP2.1m which were recognised within costs in the Consolidated
income statement. The following table provides a reconciliation of
the amounts included in the Consolidated statement of cash flows
for the period:
September 2022
GBPm
------------------------------------------------------------- ---------------
Cash paid for subsidiary 150.0
Less: cash acquired (5.8)
Payment for acquisition of subsidiary, net of cash acquired 144.2
---------------------------------------------------------------- ---------------
As the settlement of the deferred GBP50.0m consideration is
subject to condition for continuing employment to 22 June 2023, the
amount is not included in the business combination but is recorded
as a post-acquisition income statement expense over the period of
service, which extends to the first anniversary of the acquisition.
A charge of GBP13.8m has been recorded in the period from
acquisition to 30 September 2022.
From the period of acquisition to 30 September 2022, Autorama
contributed revenue of GBP11.6m, and a loss of GBP4.0m to the
Group's results. Further analysis is within note 2.
The purchase has been accounted for as a business combination
under the acquisition method in accordance with IFRS 3. The fair
value of net assets acquired was assessed and, other than in
respect of the intangible assets and related deferred tax,
described below, no material adjustments from book value were made
to existing assets and liabilities. The period in which measurement
adjustments could be made is still open on this acquisition and the
provisional goodwill calculation is summarised below:
Fair value
GBPm
----------------------------------------------------- -----------
Intangible asset recognised on acquisition
Brand 47.6
Technology 13.7
Customer relationships 2.9
Order book 2.3
Deferred tax liability arising on intangible assets (13.3)
53.2
Other non-current assets
Investments 1.0
Property, plant and equipment 5.3
Intangible assets 0.4
Deferred tax asset 3.8
-------------------------------------------------------- -----------
10.5
Current assets
Cash and cash equivalents 5.8
Trade and other receivables 2.1
Inventory 0.9
Other debtors 3.3
-------------------------------------------------------- -----------
12.1
Current liabilities
Trade and other payables 11.6
Deferred income 2.3
-------------------------------------------------------- -----------
13.9
Non-current liabilities
Borrowings 4.0
Lease liabilities 0.4
-------------------------------------------------------- -----------
4.4
Total net assets acquired 57.5
Goodwill on acquisition 92.5
Total assets acquired 150.0
-------------------------------------------------------- -----------
Fair value of cash consideration 150.0
The brand, technology, customer relationships and order book
obtained through the acquisition met the requirements to be
separately identifiable under IFRS 3. The brand operates under the
Vanarama brand name and is one of the UK's longest running
e-commerce brands; the asset was valued using Multi-period Excess
Earnings Method and crosschecked using relief from royalty. The
technology is Autorama's propriety technology which helps manage a
complex vehicle lease purchasing process into a seamline online
transaction via a customer friendly user interface, which has been
developed in house; the asset was valued using the cost approach
specifically replacement costs and crosschecked using relief from
royalty. The order book is customer orders not yet delivered, which
is expected to unwind; the asset was valued using Multi-period
Excess Earnings Method.
The goodwill recognised on acquisition principally relates to
value arising from intangible assets that are not separately
identifiable under IFRS 3. Such assets include the value of the
acquired workforce (including technical experience); returning
customers and future market growth opportunities.
None of the acquired intangible assets or goodwill is expected
to be deductible for tax purposes. A deferred tax liability has
been recorded on the fair value of the intangible assets
recognised, other than goodwill, measured at the substantively
enacted UK rate of corporation tax from April 2023 of 25%. This
deferred tax liability has been debited against and increased the
value of goodwill recognised.
In addition, in July 2022, the deferred consideration of GBP8.1m
was settled in respect of the acquisition of BlueOwl Network
Limited ('BlueOwl'). On 31 July 2020, the Group acquired the entire
share capital of BlueOwl for consideration of GBP18.2m, of which
GBP8.1m was deferred until 31 July 2022.
19 Related party transactions
The Company is the ultimate parent entity of the Group.
Intercompany transactions with wholly owned subsidiaries have been
excluded from this note, as per the exemption offered in IAS
24.
Dealer Auction Limited
The Group transacted the following related party transactions
with its joint venture, Dealer Auction Limited (previously Dealer
Auction (Holdings) Limited) and its subsidiaries (together 'Dealer
Auction'), during the period.
The Group provided data services to Dealer Auction under a
license agreement established as part of the formation of the joint
venture in January 2019. The value of services provided to Dealer
Auction was GBP0.3m and has been recognised within revenue. At 30
September 2022, deferred income outstanding in relation to the
license agreement was GBP9.2m.
The Group has recharged Dealer Auction for an employee
secondment as well as use of office space and services per the
service agreement effective from 1 July 2021, the total value
during the period was less than GBP0.1m.
The Group had a creditor of GBP0.0m (September 2021: GBP0.7m)
outstanding with Dealer Auction as at 30 September 2022.
Key management personnel
Key management personnel share plan awards have been outlined in
note 17 above.
20 Post balance sheet events
Sale of Webzone Limited
On 24 October 2022, Auto Trader announced the sale of one of its
subsidiaries, Webzone Limited, which trades in the Republic of
Ireland under the Carzone brand. The business was sold to Mediahuis
Ireland, Ireland's leading print and digital media publisher which
also owns CarsIreland.ie and Cartell.ie, for consideration of EUR30
million.
At 31 March 2022, Webzone Limited had GBP451k of net assets. The
table below shows the P&L, which consolidates into the Group
results for the last two reporting periods:
2022 H1 2023
Average Retailer Forecourts (#) 551 543
------- --------
ARPR (GBPpcm) GBP605 GBP645
------- --------
Retailer Revenue (GBPm) 4.1 2.1
------- --------
Average FTEs (#) 36 36
------- --------
Trade (GBPm) 4.1 2.1
------- --------
Consumer Services (GBPm) 0.1 0.1
------- --------
Manufacturer & Agency (GBPm) 0.7 0.3
------- --------
Revenue (GBPm) 4.9 2.5
------- --------
Operating profit (GBPm) 1.3 0.7
------- --------
The estimated profit on disposal of Webzone Limited, after
disposal of related goodwill, for the Group is estimated to be
c.GBP19m.
Defined Benefit Pension Scheme
The Company sponsors a funded defined benefit pension scheme for
qualifying UK employees, the Wiltshire (Bristol) Limited Retirement
Benefits Scheme ('the Scheme'). In October 2022 the Scheme
purchased a bulk annuity policy (known as a buy-in) from Just
Retirement Limited ('Just Retirement') for GBP15.4 million, which
was funded by a GBP1.0m contribution by the Company along with
existing Scheme assets. This policy secured the full benefits of
all scheme members, which as at 30 September 2022 amounted to
GBP12.8 million. Given the financial strength of Just Retirement,
this buy-in substantively removes the risk of further contributions
being required from the Company to provide benefits to members,
beyond those noted below.
Following the buy-in, the Scheme's assets largely comprise the
bulk annuity policy held with Just Retirement, along with a small
amount of additional assets currently held with LGIM. The Scheme
trustees are now working to progress towards a full buy out, which
will involve various data and benefits exercises. In relation to
these, it is likely that there will be further contributions from
the Company, the amounts for which are estimated to be c.GBP1
million. It is anticipated that the Scheme buy-out will be
completed in 2024. Once the buy-out is complete, the Scheme has no
further purpose and will be wound up.
21 Forward looking statements
This report includes statements that are forward looking in
nature. Forward looking statements involve known and unknown risks,
assumptions, uncertainties and other factors which may cause the
actual results, performance or achievements of the Group to be
materially different from any future results, performance or
achievements expressed or implied by such forward looking
statements. Except as required by the Listing Rules and applicable
law, the Company undertakes no obligation to update, revise or
change any forward-looking statements to reflect events or
developments occurring after the date of this report.
Principal risks and uncertainties
Risk POTENTIAL IMPACT CHANGES IN THE peRIOD
-------------------------------------- --------------------------------------
1. Adverse economic conditions could There are supply chain challenges
Economy, market and business lead to a smaller used and/or new car which continue to have an adverse
environment market, less available impact on production for
used car stock, and a reduction in many vehicle brands. This has
retailer gross profit. resulted in a shortage of new car
stock which dealers have available
These could result in reduced to advertise. Furthermore, the new
retailer profitability, leading to a car shortage since 2020 will result
fall in advertising spend in a reduction in used
or a contraction in the number of car stock in the coming years.
retailers. It could also lead to a
reduction in manufacturer Despite recent economic uncertainty
spend on digital display advertising. and the continued low supply of new
vehicles in the UK,
In addition, we are seeing an OEMS continue to see the UK as a key
increasing appetite by OEMs to move market and demand greatly outweighs
to an agency model whereby supply. The high
sales are made direct to consumers demand, low supply market is causing
and facilitated by retailers. This vehicle prices to remain high.
could lead to a loss
of revenue from our retailer The extent to which the shortage of
customers. new and used cars is affecting
retailers is varied. Generally,
it has been larger customers who
have held less stock over the last
two years, with small
Independent customers managing to
source vehicles through a number of
different channels.
The cost of living, and in
particular energy costs, began to
rise to unprecedented levels
in early 2022. This has created
another cause of uncertainty in the
industry. Whilst vehicle
prices remain strong, a continued
increase in retailer cost base may
lead to a reduction in
vehicle advertising by retailers as
they attempt to cut overheads, and
in extreme cases we
may see the number of retailers
reduce. If interest rates continue
to rise, this could also
increase the cost pressure for those
customers who use finance to source
and hold vehicles
for sale.
With regards to consumers, high
interest rates, inflation, and low
supply of vehicles have
increased uncertainty. Going
forward, increased interest rates
could be passed onto consumers
through higher rates on car finance,
and/or that consumers may downgrade
to less expensive
models.
It is possible that the changes in
the economy and in particular the
increase in cost of living
could be a catalyst for fundamental
changes in the ownership model of
vehicles, potentially
with a lower volume of vehicles per
household. There is significant
opportunity to respond
to these changes. We have been
proactive in mitigating the threat
of changes in how consumers
might look to buy a new car. Most
notably, our acquisition of Autorama
will help us remain
relevant if more buyers opt for a
lease. Early indications are that
the lease market has seen
increased prices for consumers (as
previously noted), however so far
the impacts of interest
rate increases are countered by the
high demand/low supply market.
Furthermore, we are making
significant progress with our
digital retailing strategy which
aims to bring more of the car buying
journey online by allowing consumers
to reserve, part
exchange, and access finance via our
website. We have been successful in
launching the first
iteration of our digital retailing
products. We are capturing feedback
and learning as we
look to scale digital retailing in
the future.
Overall, 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. The impacts of climate change We have seen continued high demand
Climate change presents an emerging risk to the for EVs which can be attributed, at
long-term resilience of our least in part, to the
business and execution of our Government's ban on new petrol and
strategy. diesel cars by 2030, as well as
increased awareness of
Regulatory and legislative changes, climate change amongst the public,
and consumers' environmental spikes in fuel prices during 2021
concerns, are having an impact and 2022, and improved
on the automotive market, including EV charging infrastructure.
an accelerated demand for electric
vehicles (EVs). Additionally, One of the key factors in EV demand
the impacts of climate change on key historically has been their lower
stakeholders, including our running costs compared
employees, suppliers, and to ICE equivalents. However, as
customers, pose a threat to our economic uncertainty continues,
business resilience (see "External including increases in the
catastrophic events" for cost of electricity, we may see
details). demand for EVs soften in the short
term. However, demand for
Internally, risks arising from our EVs has been strong in the year to
own impact on the climate are date and we believe that demand for
growing. Our strategic objectives EVs in the long term
include a move towards net-zero will likely remain strong.
emissions, and failure to achieve
this in a timely manner Further regulation and legislation
could impact adversely on our ability relating to climate and the
to remain relevant to our customers environment are likely, as
and consumers. Failure are changes in consumer demand. Key
to deliver our environmental to our strategic objectives is
commitments would undermine our positioning Auto Trader
reputation as a responsible business as a front-runner in industry-wide
and may result in legal exposure or changes prompted by climate change.
regulatory sanctions.
A move to EVs could be a catalyst
for OEMs altering their business
model to sell direct to
consumers via an agency model. As
the second-hand market moves
steadily towards electric models,
our customers will have to evolve
their forecourt mix accordingly.
The high demand for electric
vehicles, continued high prices
compared to ICE equivalents,
and the continued advancement of
technology and improved
infrastructure could change the
vehicle
ownership model. Consumer demand for
short-term access to cars as and
when they need them
could increase, including through
subscription deals and car-sharing
apps.
Our acquisition of Autorama adds
digital retailing and leasing
capabilities on new cars, including
EVs.
-------------------------------------- --------------------------------------
3. To enable us to achieve our strategic Our Glassdoor rating based on
Employees objectives it is important that we anonymous reviews is 4.5 out of 5.
attract, retain,
and motivate a highly skilled In March 2022 we began Connected
workforce, including those with Working where guidance to employees
specialist skillsets in data was to be "in more than
and technology. you are out". This aimed to bring
our employees into the office to
Delivery of our strategy is also increase collaboration,
dependent on us building a diverse inclusion, and innovation. We
and inclusive workforce, continue to monitor the impact
and a supportive, collaborative connected working is having on
culture, in a safe environment, all engagement, inclusion, employee
of which will enable optimum safety, and productivity, with
performance from all our employees. reference to both pandemic
and pre-pandemic levels.
Risks relating to employees could
result in reduced employee The recent increases in costs of
engagement, reduced productivity, living, and skills shortages in the
and loss of key talent, all of which market, could expose
could adversely impact on business us to the risk of heightened
performance. workforce costs and reduced
engagement. We are monitoring the
market proactively to ensure that
our employee-value-propositions are
fair, proportionate,
and aligned to market rates.
In the marketplace, we are also
seeing employees having higher
expectations of their employers
to act in a fair, responsible and
sustainable manner, and we too are
committed to ensuring
that we conduct our business in a
morally responsible way.
-------------------------------------- -------------------------------------- --------------------------------------
4. We rely on third parties to support Our refreshed processes around
Reliance on third parties our technology infrastructure, supply supplier due diligence have
of data about vehicles continued to operate successfully.
and their financing, and in the Despite the threats posed to our
fulfilment of some of our revenue suppliers in the external
generating products. Consequently, environment, we have not experienced
it is important that we manage any material disruptions.
relationships with, and performance
of, key suppliers. If these As we progress further into digital
suppliers were to suffer significant retailing, we are likely to see an
downtime or fail, this could lead to increased reliance
a loss of revenue on third parties, including physical
from retailer customers and a loss of services to support our online
audience due to impaired consumer journeys. Ensuring that
experience. we manage these third parties
appropriately will be crucial.
Within our crisis management and
business continuity arrangements, we
have identified key
suppliers and have plans in place to
respond to disruption.
-------------------------------------- -------------------------------------- --------------------------------------
5. As a digital business, we rely on our We have made significant progress in
IT systems and IT infrastructure to continue to migrating our applications to the
cyber security operate. A disruptive cloud, which increases
event leading to significant downtime the resilience of our systems and
of our existing systems and IT the security of our data.
infrastructure would
cause a major interruption to the As we move further along the digital
services we provide. retailing journey, our exposure to a
cyber attack and
As we progress through delivery of the impact of a data breach is
our digital retailing strategy, it is likely to increase. As part of our
crucial that we invest plans for digital retailing
in appropriate IT systems to enable we are identifying the systems which
us to deliver the services needed, as will provide the best customer and
well as ensuring consumer experience,
that there is appropriate IT and as well as ensuring that there is
cyber security safeguards over these all necessary security over these
systems. systems to ensure they
are resilient to the threats of
Delivery of our strategic objectives cyber-attack.
also relies on us using data to
provide valuable insights The constantly evolving threat of a
to customers. A significant data cyber-attack means that overall the
breach, whether because of our own risk level is unchanged.
failures or a malicious
cyber-attack, would lead to a loss in We have adopted the NIST
confidence by the public, retailers Cybersecurity Framework with the aim
and advertisers. of reducing our exposure to
cyberattacks, and to identify the
This could result in reputational area's most at risk for data
damage, loss of audience, loss of breaches and other compromising
revenue and potential activity perpetrated by cyber
financial losses in the form of criminals.
penalties.
The IT and Cyber Security landscape
has changed with the acquisition of
Autorama. Integration
of Autorama's leasing deals on the
Auto Trader platform is complex, and
we are mindful of
IT and Cyber Security threats during
the integration. We are also aware
of the need to ensure
that Autorama has best-in-class IT
disaster recovery and business
continuity arrangements
and are committed to continuously
reviewing, testing, and updating
them.
-------------------------------------- -------------------------------------- --------------------------------------
6. Failure to develop and implement new We continue to focus on developing
Failure to innovate: disruptive products, services, and technologies, new products in our core business,
technologies and changing consumer and/or failure in respect of our digital
behaviours to adapt to changing consumer retailing strategy, and our platform
behaviour towards car buying and aspirations. Doing so will enable
ownership, could lead to us more of the car-buying
failing to deliver our strategic process to be completed online and
objectives. Failure to provide both more informed decision making by our
customers and consumers key stakeholders.
with the best possible products and
online journey, including an online Central to our strategy is launching
buying experience, digital retailing on our platform
could lead to reduced website traffic and we are continuing
and loss of revenue. to develop and test new products to
ensure that they maximise value for
customers and consumers.
The first iteration of Digital
Retailing has been successful and we
are taking learnings from
this to inform future iterations.
Our acquisition of Autorama will
enable us to respond to changing
consumer behaviours, including
an increasing trend towards leasing
of new EVs.
We have continued to improve our
data analysis and data science
propositions to ensure that
we are able to provide valuable
insights to retailers. Our data
insights have also been recognised
nationally, through the provision of
our market pricing data to the ONS.
We are also working
with Government to provide
insightful information over EV
demand to help inform potential
locations for EV chargers.
-------------------------------------- -------------------------------------- --------------------------------------
7. The Group operates in a complex Our strategic focus to bring more of
Regulatory risks regulatory environment. There is a the car buying journey online has
risk that the Group, or the potential to increase
its subsidiaries, fail to comply with the Group's exposure to regulatory
these requirements or to respond to risks, in particular the amount of
changes in regulations, personal information
including GDPR and the Financial that will be collected and in the
Conduct Authority's rules and execution of the online finance
guidance. This could lead to application journey.
reputational damage, financial or
criminal penalties and impact on our As we move further into digital
ability to do business. retailing and following the
acquisition of Autorama we are
likely to be exposed to increased
risks in relation to FCA and GDPR.
The regulators themselves may also
introduce new or amended guidance.
Recently, for example,
we have begun work to ensure
compliance with the FCA's new
Consumer Duty rules.
In the last year, in both response
to, and anticipation of changes in
regulatory risk, we
have increased our resource in
relation to risk and compliance
monitoring, and increased headcount
in our Governance Risk and
Compliance team.
-------------------------------------- -------------------------------------- --------------------------------------
8. There are several online competitors External data suggest that
Competition in the automotive classified market, competitors are not taking
and alternative significant market share. For
routes for consumers to sell cars, example,
such as car buying services or our data shows that we have c.90%
part-exchange. If competitors prompted brand awareness with
develop a superior consumer consumers. We also maintained
experience or superior retailer our position as the UK's largest and
products, we may lose market share. most engaged automotive marketplace
Competitors could also influence for new and used
change in consumer focus, expand cars, with over 75% of all minutes
their range of stock and spent on automotive classified sites
provide products/services we are spent on Auto Trader.
unable to compete with. Nevertheless, the threat of new
competitors poses a continuous
threat. Previous concerns,
however, over big players entering
the market, such as Facebook, have
not led to any notable
decrease in our market share in
recent times, albeit we do still
consider this to be a threat.
It therefore remains imperative that
we are innovative in both our
strategic initiatives as
well as improving our existing, core
advertising business.
We continue to see retailers and
manufacturers evolving their online
offerings, and as we
diversify our own product offering
we broaden our competitive
landscape, potentially leading
to exposure to increased
competition.
-------------------------------------- -------------------------------------- --------------------------------------
9. Our brand is one of our biggest Our research shows that Auto Trader
Brand and reputation assets. Our research shows that we has c.90% prompted brand awareness
are the most trusted automotive with consumers. We
classified brand in the UK. are also voted regularly as the most
influential automotive website by
Failure to maintain and protect our consumers in the car
brand, or negative publicity buying process.
affecting our reputation,
such as from a data breach, could As we venture further with our
diminish the confidence that digital retailing strategy, we will
retailers, consumers and advertisers need to ensure that our
have in our products and services, branding positions us as the most
and result in a reduction in audience suitable place to transact online.
and revenue.
We continue to see very low levels
of fraudulent and misleading
adverts, due to additional
measures and monitoring techniques
used by our security team. We also
make use of a customer
watch list which aims to manage our
platforms proactively in line with
our values and relevant
regulations, to identify and stop
customer behaviour that could harm
consumers, other retailers
or the Auto Trader brand.
Our acquisition of Autorama carries
an existing sponsorship arrangement
with the National
League and our marketing teams are
continuously reviewing media
attention and publicity with
our partners which could affect the
Auto Trader brand adversely.
-------------------------------------- -------------------------------------- --------------------------------------
10. In a connected, global industry, we The impacts of unpreventable
External catastrophic and are increasingly prone to the impacts external catastrophic and
geo-political events of external events geo-political events can be
around the globe on our business, as widespread
are our customers. We consider there and highly impactful for us and our
to be a threat to customers. We consider the
the short-to-mid-term performance of increasingly connected world
our business posed by external, to be more susceptible than ever to
unpreventable, catastrophic the knock-on impacts of these
and geo-political events. Such events events.
could result in our customers being
unable to trade, Examples of some external events in
leading to loss of revenue, stock, recent times which have, and
audience, and loss of market share. continue to, impact adversely
on our business include the
following:
-- COVID-19 pandemic;
-- Supply shortages from the Suez
Canal obstruction;
-- Brexit;
-- Military conflict in Ukraine;
-- Extreme weather events; and
-- Global semi-conductor shortage.
It is of paramount importance to the
resilience of our business that we
can 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 responded well to the impacts of
COVID-19 and Brexit. Most recently
there has been a sharp
increase in energy costs, inflation,
interest rates, and adverse currency
movements of the
Pound against the Dollar and Euro.
There is growing uncertainty over a
possible recession
and the impacts it could have on
Auto Trader, our customers, and the
wider industry. The Group
carries a low level of debt and is
highly cash-generative, meaning that
the threats posed
by adverse interest rate movements
are relatively low.
We remain wary of the threats posed
by external events and we continue
to review our crisis
and business continuity arrangements
regularly.
-------------------------------------- -------------------------------------- --------------------------------------
INDEPENDENT REVIEW REPORT TO AUTO TRADER GROUP PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2022 which comprises the consolidated
interim income statement, consolidated interim statement of
comprehensive income, consolidated interim balance sheet,
consolidated interim statement of changes in shareholders' equity
and consolidated interim statement of cash flows and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2022 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted for
use in the UK and the Disclosure Guidance and Transparency Rules
("the DTR") of the UK's Financial Conduct Authority ("the UK
FCA").
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE (UK) 2410") issued for use in the UK. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. We
read the other information contained in the half-yearly financial
report and consider whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed
set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of conclusion
section of this report, nothing has come to our attention that
causes us to believe that the directors have inappropriately
adopted the going concern basis of accounting, or that the
directors have identified material uncertainties relating to going
concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with UK-adopted international
accounting standards.
The directors are responsible for preparing the condensed set of
financial statements included in the half-yearly financial report
in accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the
directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. Our conclusion, including our
conclusions relating to going concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion section of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
David Derbyshire
for and on behalf of KPMG LLP
Chartered Accountants
1 St Peter's Square
Manchester
M2 3AE
10 November 2022
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END
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