TIDMAUTO
RNS Number : 8565S
Auto Trader Group plc
09 November 2023
AUTO TRADER GROUP PLC
HALF YEAR RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER 2023
Auto Trader Group plc ('the Group'), the UK's largest automotive
marketplace, announces half year results for the six months ended
30 September 2023
Strategic overview
- Auto Trader's core marketplace business grew revenue at 9% and
operating profit at 10%, with operating profit margins remaining
above 70%. Total Group revenue increased by 12% and Group operating
profit increased by 10%.
- Average revenue per retailer ('ARPR') grew 12% due to
continued strong adoption of our additional products and services
and a successful annual pricing and product event in April 2023.
This event was supported by our second Auto Trader Connect module,
Valuations, which makes our market leading retail valuations
available to all customers via API or within our Retailer
Portal.
- The used car market continues to be resilient. The volume of
buyers on Auto Trader is at record levels, supported by stable
consumer sentiment towards car buying and the continued
availability of finance. The supply of used cars has gradually
improved as new car registrations grow; used car pricing has
remained robust; and vehicles continue to sell on Auto Trader
quicker than pre-pandemic levels.
- We are making good progress scaling our Deal Builder product,
which allows car buyers to value their part-exchange, apply for
finance and reserve the car online. We had c.500 retailers
trialling the service at the end of September 2023 (March 2023:
c.50), have completed c.2,100 deals in the period (FY 2023: c.200)
and consumer feedback remains positive.
- Structural changes in the new car market are providing
opportunities for the Group. We have launched a new car market
extension product, allowing manufacturers operating an agency model
to advertise new cars directly to consumers. We continue to
integrate our new car leasing proposition, Autorama, which has
yielded some cost savings and should benefit from volume growth
when supply returns to this channel.
Financial results
GBPm (unless otherwise specified) H1 2024 H1 2023 Change
----------------------------------------- -------- -------- -------
Auto Trader (1) 259.4 238.2 9%
Autorama (2) 21.1 11.6 82%
----------------------------------------- -------- -------- -------
Group revenue 280.5 249.8 12%
----------------------------------------- -------- -------- -------
Auto Trader (1) 184.9 168.8 10%
Autorama (2) (5.6) (4.0) (40%)
Group central costs (3 -) relating to
Autorama acquisition (14.7) (15.7) 6%
----------------------------------------- -------- -------- -------
Group operating profit 164.6 149.1 10%
----------------------------------------- -------- -------- -------
Auto Trader operating profit margin 71% 71% 0% pts
----------------------------------------- -------- -------- -------
(1%)
Group operating profit margin 59% 60% pts
----------------------------------------- -------- -------- -------
Basic earnings per share (pence) 12.74p 12.23p 4%
Cash generated from operations (4) 184.2 164.6 12%
----------------------------------------- -------- -------- -------
Adjusted EBITDA (5) 182.1 167.7 9%
Adjusted earnings per share (pence) (6) 13.96p 13.70p 2%
----------------------------------------- -------- -------- -------
- GBP117.1 million was returned to shareholders (H1 2023:
GBP82.3 million) through GBP65.8 million of share buybacks and
dividends paid of GBP51.3 million.
- Interim dividend declared of 3.2p (H1 2023: 2.8p).
- In July 2023, an outcome statement was published with an
update to the timeline for the replacement of the UK's digital
services tax ('DST'). Currently we do not believe that our in-scope
revenue will exceed GBP500m in financial year 2024, but it is
likely the Group will exceed this threshold and have to pay DST in
financial year 2025. It is currently envisaged that the
implementation of Pillar One, as part of the global two-pillar tax
reform, could occur during calendar year 2025, at which point the
Group would fall below a much higher qualifying threshold and cease
to pay UK DST in financial year 2026 and beyond.
Operational results
- Over 75% of all minutes spent on automotive classified sites
were spent on Auto Trader(7) (H1 2023: over 75%). Cross platform
visits(8,9) were up 14% to 77.0 million per month (H1 2023: 67.7
million). Cross platform minutes(8,9) were up 11% to 555 million
minutes per month (H1 2023: 498 million minutes).
- The average number of retailer forecourts(8) in the period was
down 3% to 13,710 (H1 2023: 14,161). However, excluding the impact
of the Webzone Limited disposal in October 2022 (which meant a loss
of 543 retailers over the period), like-for-like retailer numbers
were up 1%.
- Average Revenue Per Retailer(8) ('ARPR') per month was up 12%
(or GBP279) to GBP2,683 (H1 2023: GBP2,404). This was driven by the
price and product levers, with a slight decline in the stock
lever.
- Live car stock(8,11) on site was broadly flat at 439,000 cars
(H1 2023: 440,000) on average, within which our listings product
for new cars was 23,000 on average (H1 2023 : 22,000).
- The average number of employees(8) ('FTEs') in the Group
increased to 1,220 during the period ( H1 2023: 1,112 ), with a net
increase of 30 from the acquisition of Autorama and the disposal of
Webzone Limited.
Cultural KPIs
- Employees that are proud to work at Auto Trader(12) remained high at 92% (March 2023: 91%).
- We believe diverse teams and an inclusive culture are key to
attracting, retaining and maximising the potential of our people
and therefore our business, which is broken down as follows:
o Board: We continue to have more women than men on our Board
(March 2023: five women and four men) and one ethnically diverse
Board member (March 2023: one).
o Leadership: The percentage of women leaders(13,15) was 42%
(March 2023: 40%), and those who are ethnically diverse(13,14,15)
was 7% (March 2023: 8%).
o Organisation: The percentage of employees who are women was at
43%(15) (March 2023: 43%), and those who are ethnically
diverse(14,15) was 16% (March 2023: 15%).
- We are aiming to achieve net zero across our entire value
chain (Scopes 1, 2 and 3) before 2040, and to halve our carbon
emissions before the end of 2030. We have recently amended our base
year to financial year 2023 to reflect the addition of Autorama to
the Group. Total Group emissions for the period are estimated at
37.3k tonnes of carbon dioxide equivalent(16) (FY 2023: 79.5k
tonnes).
Nathan Coe, Chief Executive Officer of Auto Trader, said:
"It has been a strong start to the year with more buyers
spending more time and completing more of their car buying journey
on Auto Trader. We are working in partnership with record numbers
of retailers and manufacturers, who are turning to our platform as
the most effective and efficient way to source, price and sell
their vehicles.
"We remain confident in our long-term prospects given the
strength of our business and the opportunities to deliver
meaningful value for car buyers, customers, our people and
shareholders."
2024 Outlook
The Board is confident for the second half of the year. The
majority of the Group's revenues are recurring in nature and the
major growth event for the year has been successfully delivered in
the first half.
We expect another good year of retailer revenue growth, which is
by far the largest part of our Auto Trader business. Both price and
product levers were inflated in H1 due to the Webzone Limited
disposal. The price lever is expected to be GBP110-GBP120 for the
full year and the product lever should be slightly better than the
GBP137 achieved last year. The stock lever is likely to be flat. We
anticipate a modest decline in retailer numbers for the full year
from the number reported in the first half. The other smaller
revenue areas within the main Auto Trader business are likely to
see mid-single to low double-digit growth.
Auto Trader's operating profit margin is expected to be
consistent with that achieved in the first half. Group margins are
expected to increase year-on-year.
For Autorama, our 2024 outlook remains unchanged for the year.
Group central costs, which are non-cash charges relating to the
acquisition of Autorama, are expected to be c.GBP21 million.
Our capital policy remains unchanged, with the majority of
surplus cash generated by the business being returned to
shareholders through dividends and share buybacks.
Analyst presentation
A presentation for analysts will be held via audio webcast and
conference call at 9.30am, Thursday 9 November 2023. Details
below:
Audio webcast:
https://edge.media-server.com/mmc/p/ccpe6iam
Conference call registration:
https://register.vevent.com/register/BI1bd4c988d2da4b4a9d6e8fc2317c72b2
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 automotive
marketplace. It listed on the London Stock Exchange in March 2015
and is a member of the FTSE 100 Index.
Auto Trader's purpose is Driving Change Together. Responsibly.
Auto Trader is committed to creating a diverse and inclusive
culture, to build stronger partnerships with customers and use its
voice and influence to drive more environmentally friendly vehicle
choices.
With the largest number of car buyers and the largest choice of
trusted stock, Auto Trader's marketplace sits at the heart of the
UK car buying process. That marketplace is built on an
industry-leading technology and data platform, which is
increasingly used across the automotive industry. Auto Trader is
continuing to bring more of the car buying journey online, creating
an improved buying experience, whilst enabling all its retailer
partners to sell vehicles online.
Auto Trader publishes a monthly used car Retail Price Index
which is based on pricing analysis of circa 800,000 unique
vehicles. This data is used by the Bank of England to feed the
broader UK economic indicators.
For more information, please visit
https://plc.autotrader.co.uk/
Cautionary statement
Certain statements in this announcement constitute
forward-looking statements (including beliefs or opinions).
"Forward looking statements" are sometimes identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "aims", "anticipates", "expects", "intends", "plans",
"predicts", "may", "will", "could", "shall", "risk", "targets",
"forecasts", "should", "guidance", "continues", "assumes" or
"positioned" or, in each case, their negative or other variations
or comparable terminology. Any statement in this announcement that
is not a statement of historical fact including, without
limitation, those regarding the Company's future expectations,
operations, financial performance, financial condition and business
is a forward-looking statement. Such forward looking statements are
subject to known and unknown risks and uncertainties, because they
relate to events that may or may not occur in the future, that may
cause actual results to differ materially from those expressed or
implied by such forward looking statements. These risks and
uncertainties include, among other factors, changing economic,
financial, business or other market conditions. These and other
factors could adversely affect the outcome and financial effects of
the plans and events described in this results announcement. As a
result, you are cautioned not to place reliance on such
forward-looking statements, which are not guarantees of future
performance and the actual results of operations, financial
condition and liquidity, and the development of the industry in
which the Group operates, may differ materially from those made in
or suggested by the forward-looking statements set out in this
announcement. Except as is required by applicable laws and
regulatory obligations, no undertaking is given to update the
forward-looking statements contained in this announcement, whether
as a result of new information, future events or otherwise. Nothing
in this announcement should be construed as a profit forecast. This
announcement has been prepared for the Company's group as a whole
and, therefore, gives greater emphasis to those matters which are
significant to the Company and its subsidiary undertakings when
viewed as a whole.
To the extent available, the industry and market data contained
in this announcement has come from third party sources. Third party
industry publications, studies and surveys generally state that the
data contained therein have been obtained from sources believed to
be reliable, but that there is no guarantee of the accuracy or
completeness of such data. In addition, certain parts of the
industry and market data contained in this announcement come from
the Company's own internal research and estimates based on the
knowledge and experience of the Company's management in the market
in which the Company operates. While the Company believes that such
research and estimates are reasonable and reliable, they, and their
underlying methodology and assumptions, have not been verified by
any independent source for accuracy or completeness and are subject
to change without notice. Accordingly, undue reliance should not be
placed on any of the industry or market data contained in this
announcement.
Summary financial performance
Group results Units H1 2024 H1 2023 Change
------------------------------------ ------------ -------- -------- ---------
Revenue GBPm 280.5 249.8 12%
------------------------------------ ------------ -------- -------- ---------
Adjusted EBITDA(5) GBPm 182.1 167.7 9%
------------------------------------ ------------ -------- -------- ---------
Operating profit GBPm 164.6 149.1 10%
------------------------------------ ------------ -------- -------- ---------
Operating profit margin % 59% 60% (1%) pts
------------------------------------ ------------ -------- -------- ---------
Profit before tax GBPm 162.8 148.0 10%
------------------------------------ ------------ -------- -------- ---------
Basic earnings per share Pence 12.74 12.23 4%
------------------------------------ ------------ -------- -------- ---------
Adjusted earnings per share(6) Pence 13.96 13.70 2%
------------------------------------ ------------ -------- -------- ---------
Dividend per share Pence 3.2 2.8 14%
------------------------------------ ------------ -------- -------- ---------
Group cash flow
------------------------------------ ------------ -------- -------- ---------
Cash generated from operations(4) GBPm 184.2 164.6 12%
------------------------------------ ------------ -------- -------- ---------
Net bank debt at September
2023/September 2022(10) GBPm 27.3 57.4 (30.1m)
------------------------------------ ------------ -------- -------- ---------
Auto Trader results (1)
------------------------------------ ------------ -------- -------- ---------
Trade GBPm 233.0 214.3 9%
Consumer Services GBPm 20.1 18.7 7%
Manufacturer & Agency GBPm 6.3 5.2 21%
------------------------------------ ------------ -------- -------- ---------
Revenue GBPm 259.4 238.2 9%
------------------------------------ ------------ -------- -------- ---------
People costs GBPm 39.3 36.9 7%
Marketing GBPm 12.3 11.4 8%
Other costs GBPm 21.4 18.9 13%
Depreciation & amortisation GBPm 2.8 3.3 (15%)
------------------------------------ ------------ -------- -------- ---------
Operating costs GBPm 75.8 70.5 8%
------------------------------------ ------------ -------- -------- ---------
Share of profit from joint
ventures GBPm 1.3 1.1 18%
------------------------------------ ------------ -------- -------- ---------
Operating profit GBPm 184.9 168.8 10%
------------------------------------ ------------ -------- -------- ---------
Operating profit margin % 71% 71% 0% pts
------------------------------------ ------------ -------- -------- ---------
Autorama results (2)
------------------------------------ ------------ -------- -------- ---------
Vehicle & Accessory Sales GBPm 14.0 7.1 97%
Commission & Ancillary GBPm 7.1 4.5 58%
------------------------------------ ------------ -------- -------- ---------
Revenue GBPm 21.1 11.6 82%
------------------------------------ ------------ -------- -------- ---------
Cost of goods sold GBPm 14.0 7.0 100%
People costs GBPm 6.7 3.7 81%
Marketing GBPm 2.6 1.7 53%
Other costs GBPm 2.1 2.5 (16%)
Depreciation & amortisation GBPm 1.3 0.7 86%
------------------------------------ ------------ -------- -------- ---------
Operating costs GBPm 26.7 15.6 71%
------------------------------------ ------------ -------- -------- ---------
Operating loss GBPm (5.6) (4.0) (40%)
------------------------------------ ------------ -------- -------- ---------
Group central costs - relating to Autorama acquisition
---------------------------------------------------------------------------------
Autorama deferred consideration GBPm 11.1 13.8 (20%)
Depreciation & amortisation GBPm 3.6 1.9 89%
----------------------------------- ------------- -------- -------- ---------
Operating costs GBPm 14.7 15.7 (6%)
----------------------------------- ------------- -------- -------- ---------
Operating loss GBPm (14.7) (15.7) 6%
----------------------------------- ------------- -------- -------- ---------
1. Auto Trader includes the results of Auto Trader and
AutoConvert (H1 2023 also includes Carzone) in respect of online
classified advertising of motor vehicles and other related products
and services in the digital automotive marketplace, including the
Dealer Auction joint venture.
2. H1 2023 Autorama results are from acquisition date of 22 June
2022, therefore include just over three months of results.
3. Group central costs which are not allocated within either of
the segments' operating profit/(loss) comprise a GBP11.1 million
(H1 2023: GBP13.8 million) charge to settle the Autorama deferred
consideration and a GBP3.6 million (H1 2023: GBP1.9 million)
amortisation expense relating to the fair value of intangible
assets acquired in the Group's business combination of
Autorama.
4. Cash generated from operations is defined as net cash
generated from operating activities, before corporation tax
paid.
5. Adjusted EBITDA is earnings before interest, taxation,
depreciation and amortisation, share of profit from joint ventures
and Autorama deferred consideration.
6. Adjusted earnings per share is calculated before Autorama deferred consideration.
7. Share of minutes is a custom metric based on Comscore minutes
(MM) and is calculated by dividing Auto Trader's total minutes
volume by the entire custom-defined competitive set's total minutes
volume. Comscore MMX(R) Multi-Platform, Total Audience,
Custom-defined list includes: Auto Trader, Gumtree.com - Motors,
Pistonheads sites, Motors.co.uk & CarGurus, April 2023 through
September 2023, UK.
8. Average during the period.
9. As measured internally through Snowplow.
10. Net bank debt/(cash) represents gross bank debt before
amortised debt costs, less cash and does not include amounts
relating to leases, non-bank loans or vehicle stocking loans.
11. Physical car stock advertised on autotrader.co.uk.
12. Based on a survey to all Auto Trader employees in October
2023 asking our people to rate the statement "I am proud to work
for Auto Trader". Answers are given on a five-point scale from
strongly disagree to strongly agree.
13. We define leaders as those who are on our Operational
Leadership Team ('OLT')and their direct reports.
14. We have asked our employees to voluntarily disclose their
ethnicity; at the period end we had 230 employees (18% of total
Group headcount) who had not yet disclosed.
15. We calculate all our diversity percentages using total Group
headcount of 1,066 as at 30 September (September 2023: 1,252, March
2023: 1,226). At the period end, we had 541 employees who were
women, 706 employees who were men and 5 who were non-binary.
16. The total amount of CO(2) emissions includes Scope 1, 2 and
3. From the 15 different emission categories that fall within Scope
3, the following have been identified as relevant to Auto Trader:
Purchased goods and services (for general procurement categories an
Environmentally Extended Input Output database methodology was used
to calculate the GHG footprint across total spend in the year. For
vehicle purchases a bottom-up, life cycle assessment-based approach
has been used.); Capital goods; Fuel and energy related activities
(not included in Scope 1 and Scope 2); Upstream transportation
& distribution; Waste generated in operations; Business travel;
Employee commuting; Downstream transportation & distribution;
Use of sold products; End of life treatment of sold products; and
Investments.
Summary of Group operating performance
Revenue in the core Auto Trader business grew by 9% to GBP259.4
million (H1 2023: GBP238.2 million) underpinned by a strong
performance in retailer revenue as customers continue to see value
in advertising on our marketplace and taking additional products.
At a Group level, revenue increased by 12% to GBP280.5 million (H1
2023: GBP249.8 million), with Autorama contributing GBP21.1 million
(H1 2023: GBP11.6 million).
Operating profit in the core Auto Trader business increased by
10% to GBP184.9 million (H1 2023: GBP168.8 million), with a margin
of 71% (H1 2023: 71%). The strong revenue performance has led to a
10% increase in Group operating profit of GBP164.6 million (H1
2023: GBP149.1 million), including Autorama's operating loss of
GBP5.6 million (H1 2023: GBP4.0 million). Group central costs of
GBP14.7 million (H1 2023: GBP15.7 million) relate to the Autorama
acquisition, including GBP11.1 million of deferred consideration
(H1 2023: GBP13.8 million) and amortisation of acquired intangibles
of GBP3.6 million (H1 2023: GBP1.9 million). Group operating profit
margins were 59% (H1 2023: 60%).
Group profit before tax increased 10% to GBP162.8 million (H1
2023: GBP148.0 million) and basic earnings per share increased 4%
to 12.74p (H1 2023: 12.23p). The lower earnings per share growth
reflects the impact of an increased corporation tax rate in April
2023. Cash generated from operations increased 12% to GBP184.2
million (H1 2023: GBP164.6 million).
Despite concerns over the UK economy, consumer engagement
remained strong and we continue to have the UK's largest and most
engaged audience for new and used vehicles. Over 75% of all minutes
spent on automotive classified sites were spent on Auto Trader (H1
2023: over 75%) and we were 10x larger than our nearest competitor
(H1 2023: 6x). Our average monthly cross platform visits increased
by 14% to 77.0 million per month (H1 2023: 67.7 million).
Engagement, which is measured by total minutes spent onsite,
increased by 11% to 555 million minutes per month (H1 2023: 498
million minutes).
The average number of retailer forecourts advertising on our
platform declined by 3% to 13,710 (H1 2023: 14,161). However,
excluding the Webzone Limited disposal in October 2022 (an impact
of 543 retailers in the prior period), like-for-like retailer
numbers grew by 1%.
Live car stock on site was broadly flat at an average of 439,000
cars (H1 2023: 440,000). New car stock was also flat at an average
of 23,000 (H1 2023: 22,000), although this number declined towards
the end of the half, as we changed our commercial model from being
'all you can eat' to 'slot-based.' Used car stock volumes improved
slightly throughout the half, which was partly driven by stronger
private listings.
New car registrations were 21% above H1 2023 levels as supply
chain challenges have begun to ease. This growth has been in the
fleet segment, with private registrations up only 3%. Despite the
year-on-year growth, new car registrations remained 18% below
pre-pandemic levels (April 2019 - September 2019).
Used car transactions were up 5% versus H1 2023 levels but
remained 10% below pre-pandemic levels. Whilst the amount of live
car stock on Auto Trader has been broadly flat year-on-year, cars
are selling quicker than last year, which has supported transaction
volumes but has been a headwind to live stock on site. Throughout
the last six months, demand has remained robust which has resulted
in resilient used car prices. Our used car Retail Price Index
recorded average price growth of 2% across the six-month period,
with the average price of a used car across the period at
GBP17,800.
We have continued to see constrained supply in the leasing
segment, with Autorama delivering 4,593 vehicles (H1 2023: 2,747).
Due to the timing of the acquisition in the prior period,
comparators are not like-for-like, with just over three months
being reported in H1 2023. Average commission and ancillary revenue
per vehicle delivered was GBP1,546 (H1 2023: GBP1,635), with lower
volumes over the past 12 months resulting in tiered commission
thresholds also being lower.
Our strategy
Our purpose continues to be "Driving Change Together.
Responsibly", which guides the strategy and decision-making across
the organisation. Our strategy comprises three areas of focus: our
marketplace; our platform; and digital retailing. These areas are
closely interconnected, as our platform and our digital retailing
capabilities build on the strengths of our marketplace and deepen
our relationships with customers and car buyers.
Marketplace
The Auto Trader marketplace is the foundation of our business,
where we provide UK car buyers with the best choice of vehicles and
tools to navigate their buying journey, including valuations, price
flags, reviews and the best search experience across all devices
and channels.
Our marketplace saw strong operating profit and revenue growth,
which was underpinned by our retailer revenue performance. Retailer
numbers have been resilient, reflecting robust trading conditions,
but with a slightly more challenging backdrop than the prior year.
As part of our annual pricing and product event in April, we have
gone further to embed our data into our customers' processes to
enable them to make better, faster decisions. Our advertising
packages continue to perform well for retailers looking to increase
their speed of sale, with penetration of packages above standard
increasing from 32% of retailer stock (September 2022) to 37% at
September 2023. We held the number of retailers on our new car
stock product with c.1,900 paying retailers at the end of September
2023 (September 2022: c.1,900). Alongside this new car stock
product, we have launched a new car market extension product,
allowing manufacturers operating an agency model to advertise new
cars directly to consumers, the revenue for which comes through
Manufacturer & Agency.
Despite the government delaying the ban on the sale of new
petrol and diesel vehicles, we remain committed to ensuring our
marketplace evolves as electric vehicles ('EV') make up a greater
percentage of the UK car parc. We continue to invest in developing
EV content, evolving our search filters and site experience to
ensure we are the destination people use to find their first, and
every subsequent EV. During the period, we have actively started to
incorporate EVs into our above the line campaigns as well as
broader consumer marketing activity, including live events where
consumers could test drive EVs and our monthly EV giveaway on
social media. We also launched a new E-Bike platform to support
consumers to make more environmentally friendly vehicle
choices.
Platform
We continue to invest in our technology and data platform which
supports both our marketplace and digital retailing strategy. Over
time we have increasingly made these solutions available to the
industry, enabling them to benefit from the services that power
Auto Trader. These might otherwise be unattainable or require a
significant reallocation of investment. We have supported our
customers in reaching car buyers for many years, but more recently
we have become as recognised for our data that supports them
sourcing, pricing and driving sales performance of their
vehicles.
As mentioned above, we launched the second module of Auto Trader
Connect, Valuations, which makes specification and condition
adjusted valuations available within our Retailer Portal, where
many of our retailers manage their inventory. This data can also be
accessed through an API via our platform, enabling third parties
and retailers to directly integrate valuations into the core
systems they use to manage their businesses. The next development
of our Auto Trader Connect offering will see us provide retailers
with Trended Valuations and enhanced Retail Check functionality.
Combined, this powerful new layer of intelligence will help
retailers confidently adapt and respond to changes in today's fast
paced market, enabling them to make quicker and more profitable
sourcing, advertising, and pricing decisions.
Making our platform accessible also enables our customers to
benefit from the multi-year investment we have made in our data
platform and data science capability. Valuations was one of our
first use cases for machine learning back in 2014. The combination
of our capability, platform and unique data sets presents future
opportunities for AI-related products. Beyond valuations, we
utilise AI technology in many areas, including: creating a retail
rating for every vehicle on Auto Trader, ordering our search
listings using a relevancy algorithm, ranking relative advert
performance and more recently starting to personalise our search
experience.
Digital retailing
To strengthen our marketplace, we are looking to provide a
deeper car buying and selling experience on Auto Trader, allowing
car buyers and retailers to extend beyond some of the constraints
of a physical forecourt and sales process.
Our main focus has been to develop and scale our Deal Builder
product for used cars, where car buyers can carry out as much of
the journey as they want on Auto Trader, completing the rest of the
transaction on the forecourt, over the phone or through a
combination of those channels. We launched Deal Builder last year,
which uses Auto Trader technology to enable car buyers to get a
part-exchange valuation, apply for finance and reserve a car
online. Launched as a small trial, we have increased the volume of
customers with the product from c.50 at the end of March 2023 to
just over 500 retailers with over 20,000 cars live at the end of
September 2023. In the six-month period we have generated c.2,100
deals compared with c.200 in the last full financial year. Consumer
feedback has continued to be positive and deals are converting at a
significantly higher rate into a sale than any other enquiry type,
with many deals being completed out of retail hours.
Alongside scaling retailer numbers on Deal Builder, we are
working with a number of platform providers to enable Deal Builder
through APIs leveraging retailers' existing systems and processes.
We are also testing and iterating the front-end user experience to
drive greater engagement from car buyers and thereby the share of a
retailer's transactions supported by Deal Builder. The goal is
still to monetise a number of retailers by the end of financial
year 2024.
A key constraint to growth for retailers is their sales reach
due to their physical location. We are looking to enable retailers
to expand this reach through our Market Extension product. Retailer
stock on Market Extension at the end of September 2023 declined
slightly to 5% (September 2022: 6%).
In parallel to Deal Builder, following our acquisition of
Autorama, we are looking to enable digital retailing on new cars.
While near term supply has been constrained, we believe we are well
placed to provide services as the new car market undergoes
fundamental structural changes, including: the growth in electric
vehicles; new market entrants; a move to more direct and digital
sales channels; and the implementation of agency agreements by a
number of manufacturers. We believe we can provide a compelling
proposition for manufacturers, retailers and funders, with an
opportunity to drive direct sales, reduce customer acquisition
costs and grow their businesses profitability.
Throughout the first half we have further integrated leasing
into the Auto Trader search experience. Leasing deals appear within
relevant searches, our car leasing tab consolidates all available
deals, and a full checkout journey is available on all leasing
adverts on Auto Trader. The personal leasing market has seen
continued tight supply throughout H1, although we expect some
improvement in H2 due to improved monthly prices, further consumer
experience changes and the ability to lease a van and pickup on
Auto Trader.
Being a responsible business
Being a responsible business is central to our purpose and
strategy. Our Corporate Responsibility Committee has oversight of
our numerous environmental, social and governance ('ESG')
work-streams. We have identified key areas and created a range of
initiatives which are monitored regularly and reported on
externally through our cultural KPIs.
In September we announced an all-employee share scheme that
rewards employees with an extra 10% of their salary in shares each
year, vesting over a three-year period. This builds on our already
strong ownership culture, aligns all our people with our
shareholders and can be accommodated within our long-term Auto
Trader margin target of remaining above 70%. The proportion of
employees that are proud to work at Auto Trader remained high at
92% (March 2023: 91%). At the end of September, women represented
43% of our organisation (March 2023: 43%) and 42% (March 2023: 40%)
of leadership roles as defined by the FTSE Women Leaders Review. We
are committed to increasing the percentage of ethnically diverse
employees, who currently represent 16% of our organisation (March
2023: 15%), with 18% of employees not disclosing their ethnicity.
The percentage of ethnically diverse employees in leadership
decreased to 7% (March 2023: 8%), using the Parker Review
definition, which highlights the work still to be done in this
area.
Our employee-driven networks (representing women, ethnicity,
LGBT+, early careers, disability & neurodiversity, social
mobility, family and age) have continued their impressive work with
high engagement and are key to creating a culture in which people
feel they belong and can achieve their full potential. Our
ethnicity network helped Auto Trader to achieve Bronze Trailblazer
Status with Race Equality Matters, which highlights organisations
that have made progress tackling race inequality.
There are three strands to our environmental commitment:
achieving net zero carbon emissions by 2040, helping consumers to
make more environmentally friendly vehicle choices and supporting
retailers and the broader industry with the transition to the mass
adoption of electric vehicles.
We have committed to being net zero by 2040 and halving our
carbon emissions by 2030 - targets which were validated by the
Science Based Targets initiative ('SBTi') in January 2023. Due to
the acquisition of Autorama and changes that the SBTi have made, we
have rebased our comparator year to financial year 2023 and
resubmitted our net zero plans to the SBTi for secondary
validation. I nitial calculations of our GHG emissions during the
six-month period to September 2023 total 37.3k tonnes of CO(2)
across Scopes 1, 2 and 3 (FY 2023: 79.5k tonnes). The majority of
our emissions are Scope 3, predominantly attributable to our
suppliers and emissions relating to the small number of vehicles
sold by Autorama that pass through their balance sheet.
Our consumer-centric strand has been focused on developing the
content and user journeys on Auto Trader that consumers need for
them to make more environmentally friendly vehicle choices. We also
launched a new platform for E-Bikes as another means for consumers
to decarbonise their transport choices.
Our work in the third strand is focused on us sharing our data
and insights with retailers, the industry and government to help
inform public policy and regulation to support the mass adoption of
electric vehicles. During the period we continued our programme of
political engagement, which included giving evidence to a House of
Lords Committee, presenting our data to key ministers, and
supporting Transport for London's ULEZ expansion and the associated
scrappage scheme.
The Board
At our AGM in September, Ed Williams did not stand for
re-election having served his third three-year term. Matt Davies
succeeded him as Chair of the Board and Chair of the Nomination
Committee, as announced on 1 June 2023. We continue to work on our
succession plan for both David Keens, Audit Committee Chair and
Senior Independent Director, and Jill Easterbrook, Remuneration
Committee Chair, as both will reach the end of their third
three-year term within the next 12 months.
Investor calendar
The Group's full year results for the year ending 31 March 2024
will be announced on 30 May 2024.
Financial review
Group Results
H1 2024 H1 2023 Change
GBPm GBPm %
------------------------------------- -------- -------- -------
Revenue 280.5 249.8 12%
------------------------------------- -------- -------- -------
Operating costs 117.2 101.8 15%
Share of profit from joint ventures 1.3 1.1 18%
Operating profit 164.6 149.1 10%
------------------------------------- -------- -------- -------
Group revenue increased by 12% to GBP280.5m (H1 2023: GBP249.8m)
driven by Auto Trader revenue which increased by 9% to GBP259.4m
(H1 2023: GBP238.2m). Autorama contributed GBP21.1m (H1 2023:
GBP11.6m). Group operating profit increased by 10% to GBP164.6m (H1
2023: GBP149.1m). Auto Trader operating profit increased by 10% to
GBP184.9m (H1 2023: GBP168.8m) which included GBP1.3m share of
profit from joint ventures (H1 2023: GBP1.1m). Autorama had an
operating loss of GBP5.6m (H1 2023: GBP4.0m).
Group central costs included a charge of GBP11.1m (H1 2023:
GBP13.8m) which was part of the GBP49.9m share-based payment
expense relating to the deferred consideration for Autorama, which
was fully settled in the period, and an amortisation charge of
GBP3.6m (H1 2023: GBP1.9m) relating to the Autorama intangible
assets recognised. Having accelerated the integration work between
Autorama and Auto Trader, we have reviewed the useful economic life
of the intangible assets and have shortened the life of the
Vanarama brand to five years from the date of acquisition, which
brings forward the future amortisation charge. The full year
amortisation charge in relation to all Autorama intangibles is
expected to be GBP10.0m for financial year 2024 and c.GBP13.0m for
each of the following three financial years.
Group operating profit margin declined slightly to 59% (H1 2023:
60%).
H1 2024 H1 2023 Change
GBPm GBPm %
------------------------------------- -------- -------- -------
Operating profit 164.6 149.1 10%
------------------------------------- -------- -------- -------
Add back:
Depreciation & amortisation 7.7 5.9 31%
Share of profit from joint ventures (1.3) (1.1) (18%)
Autorama deferred consideration 11.1 13.8 (20%)
Adjusted EBITDA 182.1 167.7 9%
------------------------------------- -------- -------- -------
Adjusted earnings before interest, taxation, depreciation and
amortisation, share of profit from joint ventures and Autorama
deferred consideration increased by 9% to GBP182.1m (H1 2023:
GBP167.7m).
Group profit before tax was GBP162.8m (H1 2023: GBP148.0m) and
cash generated from operations was GBP184.2m (H1 2023:
GBP164.6m).
Auto Trader Results
Revenue increased to GBP259.4m (H1 2023: GBP238.2m), up 9% when
compared to the prior year. Trade revenue, which comprises revenue
from Retailers, Home Traders and other smaller revenue streams,
increased by 9% to GBP233.0m (H1 2023: GBP214.3m).
H1 2024 H1 2023 Change
GBPm GBPm %
----------------------- -------- -------- -------
Retailer 220.7 204.2 8%
Home Trader 6.2 5.2 19%
Other 6.1 4.9 24%
----------------------- -------- -------- -------
Trade 233.0 214.3 9%
Consumer Services 20.1 18.7 7%
Manufacturer & Agency 6.3 5.2 21%
----------------------- -------- -------- -------
Auto Trader revenue 259.4 238.2 9%
----------------------- -------- -------- -------
Retailer revenue increased by 8% to GBP220.7m (H1 2023:
GBP204.2m). The average number of retailer forecourts advertising
on our platform declined 3% to 13,710 (H1 2023: 14,161). However,
after adjusting for the disposal of Webzone limited in October 2022
(an impact of 543 fewer retailers), like-for-like retailer numbers
increased by 1% on average over the period.
Average Revenue per Retailer ('ARPR') per month increased by 12%
to GBP2,683 (H1 2023: GBP2,404). This was driven by both the
product and price levers, with the stock lever declining
slightly.
-- Price: Our price lever increased GBP146 (H1 2023: GBP72) as
we delivered our annual pricing and product event for all customers
on 1 April 2023, which included additional products but also a
like-for-like price increase.
-- Stock: Our stock lever decreased GBP32 (H1 2023: GBPnil). The
number of live cars advertised on Auto Trader was broadly flat at
439,000 (H1 2023: 440,000), made up of 23,000 new car stock (H1
2023: 22,000) and 416,000 used car stock (H1 2023: 418,000). Within
the used car stock number, private listings grew year-on-year
whilst underlying trade used car stock, which is correlated to the
stock lever, saw a small decline.
-- Product: Our product lever increased GBP165 (H1 2023:
GBP133). Just over half of this product growth was from our Auto
Trader Connect: Valuations product, which was included in retailer
packages as part of our annual pricing and product event in April
2023. The remaining product lever growth was largely a result of
seeing a continued increase in retailers who use our prominence
products. Penetration of our higher yielding Enhanced, Super and
Ultra packages increased to 37% (September 2022: 32%).
Home Trader revenue increased by 19% to GBP6.2m (H1 2023:
GBP5.2m). Other revenue increased by 24% to GBP6.1m (H1 2023:
GBP4.9m).
Consumer Services revenue increased by 7% in the period to
GBP20.1m (H1 2023: GBP18.7m). Private revenue, which is largely
generated from individual sellers who pay to advertise their
vehicle on the Auto Trader marketplace, increased by 11% to
GBP13.6m (H1 2023: GBP12.3m). Motoring Services revenue increased
2% to GBP6.5m (H1 2023: 6.4m).
Revenue from Manufacturer & Agency customers increased 21%
to GBP6.3m (H1 2023: GBP5.2m) largely as a result of manufacturers
moving to an agency model using our recently launched new car
market extension product, allowing them to advertise and sell new
cars directly to consumers.
Total costs increased 8% to GBP75.8m (H1 2023: GBP70.5m).
H1 2024 H1 2023 Change
GBPm GBPm %
----------------------------- ---------- ---------- ---------
People costs 39.3 36.9 7%
Marketing 12.3 11.4 8%
Other costs 21.4 18.9 13%
Depreciation & amortisation 2.8 3.3 (15%)
Auto Trader costs 75.8 70.5 8%
----------------------------- ---------- ---------- ---------
People costs increased by 7% to GBP39.3m (H1 2023: GBP36.9m).
The increase in people costs was primarily driven by an increase in
the average number of full-time equivalent employees to 1,032 (H1
2023: 990) as we continue to invest in people to support the growth
of the business. In addition to the increased headcount, underlying
salary costs have increased as we invest in the best digital talent
and ensure we are taking account of the current increases in cost
of living. Marketing spend increased by 8% in H1 2024 to GBP12.3m
(H1 2023: GBP11.4m).
Other costs, which include data services, property-related costs
and other overheads, increased by 13% to GBP21.4m (H1 2023:
GBP18.9m). The increase was primarily due to people-related costs,
disposal of fixed assets relating to the head office refurbishment
and general inflationary increases. Depreciation and amortisation
decreased to GBP2.8m (H1 2023: GBP3.3m).
H1 2024 H1 2023 Change
GBPm GBPm %
-------------------------------------------------------- ---------- ---------- ---------
Revenue 259.4 238.2 9%
Operating costs (75.8) (70.5) 8%
Share of profit from joint ventures 1.3 1.1 18%
Auto Trader operating profit 184.9 168.8 10%
-------------------------------------------------------- ---------- ---------- ---------
Group central costs - relating to Autorama acquisition (14.7) (15.7) (6%)
Autorama operating loss (5.6) (4.0) (40%)
-------------------------------------------------------- ---------- ---------- ---------
Group operating profit 164.6 149.1 10%
-------------------------------------------------------- ---------- ---------- ---------
Auto Trader operating profit increased by 10% to GBP184.9m
during the period (H1 2023: GBP168.8m), with Auto Trader operating
profit margin remaining flat at 71% (H1 2023: 71%).
Our share of profit generated by Dealer Auction, the Group's
joint venture, increased 18% to GBP1.3m (H1 2023: GBP1.1m) in the
period due to higher levels of auction activity as supply improved
slightly.
Autorama Results
H1 2024 H1 2023 Change
GBPm GBPm %
--------------------------- ---------- ---------- ---------
Vehicle & Accessory Sales 14.0 7.1 97%
Commission & Ancillary 7.1 4.5 58%
Autorama revenue 21.1 11.6 82%
--------------------------- ---------- ---------- ---------
Autorama revenue was GBP21.1m (H1 2023: GBP11.6m), with vehicle
& accessory sales contributing GBP14.0m (H1 2023: GBP7.1m) and
commission and ancillary revenue contributing GBP7.1m (H1 2023:
GBP4.5m). Due to the timing of the acquisition in the prior period,
comparators are not like-for-like as H1 2023 includes just over
three months of results.
Total deliveries amounted to 4,593 units (H1 2023: 2,747) which
comprised 1,572 cars (H1 2023: 1,887), 2,793 vans (H1 2023: 627)
and 228 pickups (H1 2023: 233). Average commission and ancillary
revenue per unit delivered was GBP1,546 (H1 2023: GBP1,635).
H1 2024 H1 2023 Change
GBPm GBPm %
----------------------------- ---------- ---------- ---------
Cost of goods sold 14.0 7.0 100%
People costs 6.7 3.7 81%
Marketing 2.6 1.7 53%
Other costs 2.1 2.5 (16%)
Depreciation & amortisation 1.3 0.7 86%
Autorama costs 26.7 15.6 71%
----------------------------- ---------- ---------- ---------
The Autorama business delivered 565 vehicles which were taken on
balance sheet in the period (270 vehicles in the period from 22
June to 30 September 2022). This represented 12% (H1 2023: 10%) of
total vehicles delivered in the period. The cost of these vehicles
was taken through cost of goods sold, with the corresponding
revenue in vehicle and accessory sales. People costs of GBP6.7m (H1
2023: GBP3.7m) was through the 188 FTEs (H1 2023: 218) which were
employed on average through the period. Marketing in the period was
GBP2.6m (H1 2023: GBP1.7m). Other costs of GBP2.1m (H1 2023:
GBP2.5m) related to IT services, property, people-related costs and
other overheads. Depreciation and amortisation totalled GBP1.3m (H1
2023: GBP0.7m).
The Autorama operating segment made an operating loss of GBP5.6m
(H1 2023: GBP4.0m).
H1 2024 H1 2023 Change
GBPm GBPm %
---------------- ---------- ---------- ---------
Revenue 21.1 11.6 82%
Costs 26.7 15.6 71%
Operating loss (5.6) (4.0) (40%)
---------------- ---------- ---------- ---------
Group net finance costs
Group net finance costs increased to GBP1.8m (H1 2023: GBP1.1m).
Interest costs on the Group's RCF totalled GBP1.5m (H1 2023:
GBP0.8m), with the year-on-year movement due to an increase in
underlying SONIA. At 30 September 2023, the Group had drawn
GBP52.0m of its available facility (30 September 2022: GBP75.0m).
Other finance costs comprised amortisation of debt issue costs of
GBP0.3m (H1 2023: GBP0.3m), vehicle stocking loan interest of
GBP0.1m (H1 2023: GBP0.1m) and interest costs relating to leases of
GBP0.1m (H1 2023: GBP0.1m). This was offset by interest receivable
on cash and cash equivalents of GBP0.2m (H1 2023: GBP0.2m).
Taxation
Profit before taxation increased by 10% to GBP162.8m (H1 2023:
GBP148.0m). The Group tax charge of GBP46.0m (H1 2023: GBP32.8m)
represents an effective tax rate of 28.1% (H1 2023: 22.2%). This is
higher than the average standard UK rate of 25% (H1 2023: 19%) due
to the Autorama deferred consideration charge being
non-deductible.
At our full year results in June 2023, we stated that the Group
was potentially in scope for the UK's digital services tax ('DST')
with revenues exceeding GBP500m. The UK government continues to
work towards implementing a global two-pillar tax solution
addressing the tax challenges arising from the digitalisation of
the economy. In July, an outcome statement was published which gave
an updated timeline and an expectation that Pillar One would come
into force during calendar year 2025. We do not believe that our
in-scope revenue will exceed GBP500m in financial year 2024, but it
is likely that the Group will exceed that threshold and have to pay
DST in financial year 2025. This would result in an additional
operating expense equivalent to 2% of in-scope revenue. Once Pillar
One is implemented the Group would cease to pay UK DST on the basis
that the UK Government have committed to repeal the UK DST on the
implementation of Pillar One and the Group falls significantly
below the Pillar One thresholds. We therefore currently only expect
to pay DST in financial year 2025.
Earnings per share
Basic earnings per share increased by 4% to 12.74 pence (H1 2023
12.23 pence) based on a weighted average number of ordinary shares
in issue of 916,651,179 (H1 2023: 942,056,280). Diluted earnings
per share of 12.71 pence (H1 2023: 12.17 pence) increased by 4%,
based on 918,647,739 shares (H1 2023: 946,494,793) which takes into
account the dilutive impact of outstanding share awards.
H1 2024 H1 2023 Change
GBPm GBPm %
------------------------------------- -------- -------- -------
Net income 116.8 115.2 1%
------------------------------------- -------- -------- -------
Autorama deferred consideration 11.1 13.8 (20%)
Adjusted Net income 127.9 129.0 (1%)
------------------------------------- -------- -------- -------
Adjusted earnings per share (pence) 13.96 13.70 2%
------------------------------------- -------- -------- -------
Adjusted earnings per share, before Autorama deferred
consideration (net of tax), increased by 2% to 13.96 pence (H1
2023: 13.70 pence).
Cash flow and net bank debt
Cash generated from operations increased to GBP184.2m (H1 2023:
GBP164.6m) as a result of the increase in operating profit and
movements in working capital. Corporation tax payments increased to
GBP45.1m (H1 2023: GBP31.4m). Cash generated from operating
activities was GBP139.1m (H1 2023: GBP133.2m).
As at 30 September 2023, the Group had net bank debt of GBP27.3m
(30 September 2022: net bank debt of GBP57.4m), a decrease of
GBP30.1m. At 30 September 2023, the Group had drawn GBP52.0m of its
Syndicated RCF (30 September 2022: GBP75.0m) and held cash and cash
equivalents of GBP24.7m (30 September 2022: GBP17.6m).
Capital structure and dividends
The final dividend for the year ended 31 March 2023 of 5.6 pence
per share (H1 2023: 5.5 pence per share) was paid on 19 September
2023, totaling GBP51.3m (H1 2023: GBP51.7m). The Board continued
its share buyback programme with a total of 10.4m shares
repurchased in the period (H1 2023: 4.9m shares). The average price
per share was 632.6p (H1 2023: 619.5p) for a total consideration of
GBP65.8m (H1 2023: GBP30.6m) before transaction costs of GBP0.3m
(H1 2023 GBP0.2m).
The Group's long-term capital allocation policy remains
unchanged: continuing to invest in the business enabling it to grow
while returning around one third of net income to shareholders in
the form of dividends. Following these activities any surplus cash
will be used to continue our share buyback programme and steadily
reduce gross indebtedness. It is the Board's intention that the
Group will return to a net cash position.
For H1 2024, the Board has declared an interim dividend of 3.2
pence per share. The interim dividend will be paid on 26 January
2024 to members on the register on 5 January 2024.
Going concern
The Group generated significant cash from operations during the
period. At 30 September 2023 the Group had drawn GBP52.0m of its
GBP200.0m unsecured Syndicated RCF and had cash balances of
GBP24.7m. The Group has a strong balance sheet and flexibility in
terms of uses of cash to manage increased economic uncertainty and
higher interest rates. The GBP200.0m Syndicated RCF is committed
until February 2028. Based on the facilities available and current
financial projections for the next twelve months the Directors have
concluded that it is appropriate to prepare the financial
statements on a going concern basis.
Responsibility statement of the directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted
for use in the UK;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R 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
9 November 2023 9 November 2023
Consolidated interim income statement
For the six months ended 30 September 2023
6 months to September 6 months to September Year to
2023 2022 March
GBPm GBPm 2023
Note GBPm
----------------------------------------------- ------- ------------------------ ------------------------ --------
Revenue 3 280.5 249.8 500.2
Operating costs (117.2) (101.8) (225.1)
Share of profit from joint ventures, net of
tax 1.3 1.1 2.5
----------------------------------------------- ------- ------------------------ ------------------------ --------
Operating profit 2 164.6 149.1 277.6
Net finance costs 4 (1.8) (1.1) (3.1)
Profit on disposal of subsidiary - - 19.1
----------------------------------------------- ------- ------------------------ ------------------------ --------
Profit before taxation 162.8 148.0 293.6
Taxation 5 (46.0) (32.8) (59.7)
----------------------------------------------- ------- ------------------------ ------------------------ --------
Profit for the period attributable to equity
holders of the parent 116.8 115.2 233.9
Earnings per share:
Basic EPS (pence) 6 12.74 12.23 25.01
Diluted EPS (pence) 6 12.71 12.17 24.77
----------------------------------------------- ------- ------------------------ ------------------------ --------
Consolidated interim statement of comprehensive income
For the six months ended 30 September 2023
Year to
6 months to September 6 months to September March
2023 2022 2023
GBPm GBPm GBPm
-------------------------------------------------------- ------------------------ ------------------------ --------
Profit for the period 116.8 115.2 233.9
Other comprehensive income
Items that may be subsequently reclassified to profit
or loss:
Exchange differences on translation of foreign
operations - (0.3) (0.3)
Realisation of cumulative currency translation
differences - - 0.4
Items that will not be reclassified to profit or loss:
Remeasurements of post-employment benefit obligations,
net of tax (0.1) (0.6) (0.4)
-------------------------------------------------------- ------------------------ ------------------------ --------
Other comprehensive income for the period, net of tax (0.1) (0.9) (0.3)
-------------------------------------------------------- ------------------------ ------------------------ --------
Total comprehensive income for the period attributable
to
equity holders of the parent 116.7 114.3 233.6
-------------------------------------------------------- ------------------------ ------------------------ --------
Consolidated interim balance sheet
As at 30 September 2023
September September March
2023 2022 2023
Note GBPm GBPm GBPm
------------------------------------------------------- ----- ----------- ---------- ----------
Assets
Non-current assets
Intangible assets 7 496.1 512.1 501.0
Property, plant and equipment 8 15.9 18.4 15.9
Retirement benefit surplus 11 0.5 2.0 0.5
Net investments in joint ventures 50.6 50.8 49.3
Other investments 2.3 1.0 2.3
565.4 584.3 569.0
Current assets
Inventory 4.2 1.9 3.6
Trade and other receivables 9 79.7 72.9 72.9
Current income tax assets - - 0.6
Cash and cash equivalents 24.7 17.6 16.6
108.6 92.4 93.7
Total assets 674.0 676.7 662.7
------------------------------------------------------- ----- ----------- ---------- ----------
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital 15 9.3 9.4 9.3
Share premium 182.6 182.6 182.6
Retained earnings 1,400.8 1,387.9 1,390.3
Own shares held 16 (23.7) (27.5) (26.0)
Capital reorganisation reserve (1,060.8) (1,060.8) (1,060.8)
Capital redemption reserve 1.3 1.1 1.2
Other reserves 30.6 30.3 30.7
------------------------------------------------------- ----- ----------- ---------- ----------
Total equity 540.1 523.0 527.3
------------------------------------------------------- ----- ----------- ---------- ----------
Liabilities
Non-current liabilities
Borrowings 14 49.8 73.9 57.5
Provisions 1.2 1.3 1.3
Lease liabilities 8 3.6 5.4 4.6
Deferred income 8.0 8.6 8.3
Deferred taxation liabilities 5.0 7.2 5.8
67.6 96.4 77.5
Current liabilities
Trade and other payables 10 60.4 52.6 53.6
Current income tax liabilities 1.7 0.9 -
Provisions 0.7 0.7 0.7
Lease liabilities 8 2.4 3.1 2.5
Borrowings 1.1 - 1.1
------------------------------------------------------- ----- ----------- ---------- ----------
66.3 57.3 57.9
------------------------------------------------------- ----- ----------- ---------- ----------
Total liabilities 133.9 153.7 135.4
------------------------------------------------------- ----- ----------- ---------- ----------
Total equity and liabilities 674.0 676.7 662.7
------------------------------------------------------- ----- ----------- ---------- ----------
Consolidated interim statement of changes in shareholders'
equity
For the six months ended 30 September 2023
Share Share Retained Own 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 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, net
of tax - - (0.6) - - - - (0.6)
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Total comprehensive income,
net of tax - - 114.6 - - - (0.3) 114.3
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Transactions with owners:
Employee share schemes,
value of employee services - - 17.3 - - - - 17.3
Purchase of own shares
for cancellation (0.1) - (22.0) - - 0.1 - (22.0)
Purchase of own shares
for treasury - - - (8.7) - - - (8.7)
Tax impact of employee
share schemes - - 0.2 - - - - 0.2
Exercise of employee share
schemes - - (2.9) 3.6 - - 0.4 1.1
Dividends paid - - (51.7) - - - - (51.7)
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Total transactions with
owners, recognised directly
in equity (0.1) - (59.1) (5.1) - 0.1 0.4 (63.8)
Balance at September
2022 9.4 182.6 1,387.9 (27.5) (1,060.8) 1.1 30.3 523.0
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Profit for the period - - 118.7 - - - - 118.7
Other comprehensive income:
Realisation of cumulative
currency translation difference - - - - - - 0.4 0.4
Remeasurements of post-employment
benefit obligations - - 0.2 -- -- -- - 0.2
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Total comprehensive income,
net of tax - - 118.9 - - - 0.4 119.3
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Transactions with owners:
Employee share schemes,
value of employee services - - 27.3 - - - - 27.3
Tax impact of employee
share schemes - - 0.2 - - - - 0.2
Purchase of own shares
for cancellation (0.1) - (117.3) - - 0.1 - (117.3)
Exercise of share-based
incentives - - (0.7) 1.5 - - - 0.8
Dividends paid - - (26.0) - - - - (26.0)
---------------------------------- -------- --------
Total transactions with
owners, recognised directly
in equity (0.1) - (116.5) 1.5 - 0.1 - (115.0)
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Balance at March 2023 9.3 182.6 1,390.3 (26.0) (1,060.8) 1.2 30.7 527.3
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Profit for the period - - 116.8 - - - - 116.8
Other comprehensive income:
Remeasurements of post-employment
benefit obligations - - (0.1) - - - - (0.1)
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Total comprehensive income,
net of tax - - 116.7 - - - - 116.7
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Transactions with owners:
Employee share schemes,
value of employee services - - 14.0 - - - - 14.0
Tax impact of employee
share schemes - - (0.7) - - - - (0.7)
Purchase of own shares
for cancellation (0.1) - (66.1) - - 0.1 - (66.1)
Exercise of share-based
incentives - - (2.1) 2.3 - - - 0.2
Issue of ordinary shares 0.1 - - - - - (0.1) -
Dividends paid - - (51.3) - - - - (51.3)
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Total transactions with
owners, recognised directly
in equity - - (106.2) 2.3 - 0.1 (0.1) (103.9)
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Balance at September
2023 9.3 182.6 1,400.8 (23.7) (1,060.8) 1.3 30.6 540.1
---------------------------------- -------- -------- --------- ------- --------- -------- --------- -------
Consolidated interim statement of cash flows
For the six months ended 30 September 2023
Year to
6 months to September 6 months to September March
2023 2022 2023
Note GBPm GBPm GBPm
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Cash flows from operating activities
Cash generated from operations 13 184.2 164.6 327.4
Income taxes paid (45.1) (31.4) (60.5)
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Net cash generated from operating activities 139.1 133.2 266.9
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Cash flows from investing activities
Purchases of intangible assets (0.6) - (1.0)
Purchases of property, plant and equipment (2.4) (1.1) (2.4)
Dividends received from joint ventures - - 2.9
Proceeds from sale of property, plant and
equipment - - 1.8
Payment for acquisition of subsidiary, net of
cash acquired - (144.2) (144.2)
Payment of deferred consideration for acquisition
of subsidiary - (8.1) (8.1)
Payment for acquisition of shares in investment
entities - - (1.3)
Proceeds on disposal of subsidiary, net of cash
disposed - - 25.6
Net cash used in investing activities (3.0) (153.4) (126.7)
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Cash flows from financing activities
Dividends paid to Company's shareholders 12 (51.3) (51.7) (77.7)
Drawdown of Syndicated revolving credit facility 14 29.0 75.0 110.0
Repayment of Syndicated revolving credit facility 14 (37.0) - (50.0)
Repayment of other debt - (3.9) (4.0)
Proceeds from loan - - 1.1
Payment of refinancing fees (0.2 ) - (1.4)
Payment of interest on borrowings (1.2) (1.6) (3.0)
Payment of lease liabilities (1 .4) (1 .6) (2.9)
Purchase of own shares for cancellation 15 (65.8) (21.9) (138.6)
Purchase of own shares for treasury 16 - (8.7) (8.7)
Payment of fees on purchase of own shares 15 (0.3) (0.2) (0.7)
Contributions to defined benefit pension scheme 11 - - (1.0)
Proceeds from exercise of share-based incentives 0.2 1.1 2.0
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Net cash used in financing activities (128.0) (13.5) (174.9)
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Net increase/(decrease) in cash and cash
equivalents 8.1 (33.7) (34.7)
Cash and cash equivalents at beginning of period 16.6 51.3 51.3
Cash and cash equivalents at end of period 24.7 17.6 16.6
-------------------------------------------------- ----- ----------------------- ------------------------ --------
Notes to the Condensed Consolidated interim financial
statements
1 General information
Auto Trader Group plc ('the Company') is a company incorporated
in the United Kingdom and its registered office is 4(th) Floor, 1
Tony Wilson Place, Manchester, M15 4FN.
These condensed Consolidated interim financial statements have
been prepared as at, and for the six months ended, 30 September
2023. The comparative financial information presented has been
prepared as at, and for the six months ended, 30 September
2022.
The condensed Consolidated interim financial information
presented as at, and for the six months ended, 30 September 2023
comprise the Company and its subsidiaries (together referred to as
the Group). The Consolidated financial statements of the Group as
at, and for the year ended, 31 March 2023 are available on request
from the Company's registered office and via the Company's
website.
These condensed Consolidated interim financial statements are
unaudited but have been reviewed by the Auditor whose report is set
out on pages 40-41. They have been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS 34, "Interim Financial Reporting" issued by
the IASB and adopted for use in the UK. They do not include all of
the information required for full annual financial statements and
should be read in conjunction with the Consolidated financial
statements of the Group as at and for the year ended 31 March 2023
which were prepared in accordance with UK-adopted international
accounting standards, in conformity with the requirements of the
Companies Act 2006 and applicable law.
As required by the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority, the condensed set of financial
statements has been prepared applying the accounting policies and
presentation that were applied in the preparation of the company's
published Consolidated financial statements for the year ended 31
March 2023.
The comparative financial information for the year ended 31
March 2023 included in this interim statement of results does not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006 (the 'Act'). The statutory accounts for the
year ended 31 March 2023 have been reported on by the Company's
Auditor and were delivered to the Registrar of Companies following
the Company's Annual General Meeting. The auditor's report was (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
Judgements and estimates
The preparation of the condensed Consolidated interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
In preparing these condensed Consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
Consolidated financial statements for the year ended 31 March 2023
with the exception that judgments and estimates relating to
acquisition accounting do not apply.
Going concern
The Group generated significant cash from operations during the
period. At 30 September 2023, the Group had GBP52.0m drawn of its
GBP200.0m unsecured revolving credit facility ('RCF') and had cash
balances of GBP24.7m. The GBP200.0m Syndicated RCF is committed
through to maturity in February 2028.
The combination of significant free cash flow and the
discretionary nature of dividend payments and share buybacks
provide the Group with significant liquidity and ability to comply
with the RCF's financial covenants. On the basis of facilities
available and current financial projections for the next twelve
months, the Directors have concluded that it is appropriate to
prepare the condensed interim financial statements on a going
concern basis.
Changes in accounting policies
There are no material changes in accounting policies applied in
these interim financial statements to those accounting policies
applied in the Group's Consolidated financial statements as at and
for the year ended 31 March 2023. Taxes on income in the interim
periods are accrued using the effective tax rate that would be
applicable to expected total annual profit or loss.
The Group is required to comply with the requirements of IFRS 17
Insurance Contracts for reporting periods beginning on or after 1
April 2023. The new accounting standard sets out the requirements
that the Group should apply in reporting information about
insurance contracts it issues and reinsurance contracts it holds.
The Group has undertaken an assessment of its third party contracts
which meet the definition of an insurance contract. The impact of
the accounting standard does not have any material impact on the
Consolidated financial statements.
The Group has early adopted the amendments to IAS 1 -
Classification of Liabilities as Current or Non-current and
Non-current Liabilities with Covenants, which are required to be
effective from 1 January 2024. The amendments do not have any
material impact on the financial statements. Amendments to other
existing standards do not have a material impact on the Group's
financial statements.
2 Segmental information
IFRS 8 'Operating segments' requires the Group to determine its
operating segments based on information which is provided
internally. Based on the internal reporting information and
management structures within the Group, it has been determined that
there are two operating segments (September 2022: two operating
segments):
-- Auto Trader - includes the results of Auto Trader and
AutoConvert in respect of online classified advertising of motor
vehicles and other related products and services in the digital
automotive marketplace including the Dealer Auction joint
venture.
-- Autorama - the results of Autorama in respect of advertising
new leasing vehicles and other related products and services.
Management has determined that there are two operating segments
in line with the nature in which the Group is managed. The reports
reviewed by the Operational Leadership Team ('OLT'), which is the
chief operating decision-maker ('CODM') for both segments, splits
out operating performance by segment. The OLT is made up of the
Executive Directors and key management and is responsible for the
strategic decision-making of the Group. Revenue and cost streams
for each operating segment are largely independent.
The OLT primarily uses the measures of revenue and operating
profit to assess the performance of each operating segment. Segment
revenue comprises revenue from external customers. The revenue from
external parties reported to the OLT is measured in a manner
consistent with that in the income statement. Inter-segment revenue
and costs are not reported to the OLT. In the period to 30
September 2023, inter-segment revenue earned by Auto Trader from
Autorama for vehicles leased via a journey initiated on the Auto
Trader platform was not material (GBPnil in both comparative
periods reported).
Analysis of the Group's revenue and results for both reportable
segments, with a reconciliation to Group profit before tax is shown
below:
Group
Autotrader segment Autorama segment central costs Group
6 months to September 2023 GBPm GBPm GBPm GBPm
Total segment revenue 259.4 21.1 - 280.5
--------------------------------------- ------------------- ----------------- --------------- --------
People costs (39.3) (6.7) (11.1) (57.1)
Marketing (12.3) (2.6) - (14.9)
Costs of goods sold - (14.0) - (14.0)
Other costs (21.4) (2.1) - (23.5)
Depreciation & amortisation (2.8) (1.3) (3.6) (7.7)
--------------------------------------- ------------------- ----------------- --------------- --------
Total segment costs (75.8) (26.7) (14.7) (117.2)
Share of profit from joint ventures 1.3 - - 1.3
--------------------------------------- ------------------- ----------------- --------------- --------
Total segment operating profit/(loss) 184.9 (5.6) (14.7) 164.6
Finance costs - net (1.8)
--------------------------------------- ------------------- ----------------- --------------- --------
Profit before tax 162.8
--------------------------------------- ------------------- ----------------- --------------- --------
Group central costs which are not allocated within either of the
segment operating profit/(loss) reported to the CODM comprise:
(i) People costs: GBP11.1 million charge for the settlement of
the Autorama deferred consideration (note 18).
(ii) Depreciation & amortisation: GBP3.6 million of
amortisation expense relating to the fair value of intangible
brand, technology and other intangible assets acquired in the
Group's business combination of Autorama.
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)
--------------------------------------- ------------------- ----------------- --------------- --------
Profit before tax 148.0
--------------------------------------- ------------------- ----------------- --------------- --------
Group
Auto Trader segment Autorama segment central costs Group
Year to March 2023 GBPm GBPm GBPm GBPm
Total segment revenue 473.0 27.2 - 500.2
--------------------------------------- -------------------- ----------------- --------------- --------
People costs (74.0) (10.5) (38.8) (123.3)
Marketing (22.3) (4.7) - (27.0)
Costs of goods sold - (15.7) - (15.7)
Other costs (39.6) (5.4) - (45.0)
Depreciation & amortisation (6.7) (2.1) (5.3) (14.1)
--------------------------------------- -------------------- ----------------- --------------- --------
Total segment costs (142.6) (38.4) (44.1) (225.1)
Share of profit from joint ventures 2.5 - - 2.5
--------------------------------------- -------------------- ----------------- --------------- --------
Total segment operating profit/(loss) 332.9 (11.2) (44.1) 277.6
Finance costs - net (3.1)
Profit on disposal of subsidiary 19.1
--------------------------------------- -------------------- ----------------- --------------- --------
Profit before tax 293.6
--------------------------------------- -------------------- ----------------- --------------- --------
3 Revenue
The Group's revenue is derived from contracts with customers.
All revenues were earned from activities and customers in the
United Kingdom.
In the following table, the Group's revenue is detailed by
customer type. This level of detail is consistent with that used by
management to assist in the analysis of the Group's
revenue-generating trends.
September September March
2023 2022 2023
GBPm GBPm GBPm
------------------------- --------- ---------- ------
Retailer 220.7 204.2 406.8
Home Trader 6.2 5.2 10.1
Other 6.1 4.9 10.5
-------------------------- --------- ---------- ------
Trade 233.0 214.3 427.4
Consumer Services 20.1 18.7 34.5
Manufacturer and Agency 6.3 5.2 11.1
Autorama 21.1 11.6 27.2
Total revenue 280.5 249.8 500.2
-------------------------- --------- ---------- ------
4 Net finance costs
September September March
2023 2022 2023
GBPm GBPm GBPm
-------------------------------------------------- --------- ---------- ------
On bank loans and overdrafts 1.5 0.8 2.5
Amortisation of debt issue costs 0.3 0.3 0.5
Interest unwind on lease liabilities 0.1 0.1 0.2
Interest on vehicle stocking loan 0.1 0.1 0.1
Interest receivable on cash and cash equivalents (0.2) (0.2) (0.2)
Total net finance costs 1.8 1.1 3.1
--------------------------------------------------- --------- ---------- ------
5 Income taxes
September September March
2023 2022 2023
GBPm GBPm GBPm
-------------------------- --------- ---------- ------
Total income tax expense 46.0 32.8 59.7
--------------------------- --------- ---------- ------
The taxation charge recognised is based on management's best
estimate of the effective tax rate for the full year of 28.1%
(September 2022: 22.2%) applied to the profit before taxation of
the interim period. The taxation charge for the period is higher
than (2022: higher than) the standard rate of UK corporation tax of
25% (September 2022: 19%) primarily due to the deferred
consideration relating to the acquisition of Autorama being a
non-deductible expense for tax.
6 Earnings per share
Total
Weighted average number earnings Pence
of ordinary shares GBPm per share
--------------------------------- ------------------------ ---------- -----------
Six months ended September 2023
Basic EPS 916,651,179 116.8 12.74
Diluted EPS 918,647,739 116.8 12.71
Six months ended September 2022
Basic EPS 942,056,280 115.2 12.23
Diluted EPS 946,494,793 115.2 12.17
Year ended March 2023
Basic EPS 935,138,578 233.9 25.01
Diluted EPS 944,144,242 233.9 24.77
--------------------------------- ------------------------ ---------- -----------
The difference between the basic and diluted weighted average
number of shares represents the dilutive impact of the Share
Incentive Plan, Performance Share Plan, Deferred Annual Bonus,
Single Incentive Plan Award and Sharesave scheme, which are
conditional on a service condition and, in the comparative periods,
the dilutive impact of shares issued as deferred consideration for
the acquisition of Autorama, which were conditional on a service
condition.
The number of shares in issue at the start of the year is
reconciled to the basic and diluted weighted average number of
shares below:
6 months ended September 2023
Number of shares
--------------------------------------------------- ------------------------------
Weighted average ordinary shares in issue 921,172,753
Less weighted effect of shares held by the ESOT (338,014)
Less weighted effect of shares held in treasury (4,183,560)
Weighted average number of shares for basic EPS 916,651,179
Dilutive impact of share options outstanding 1,996,560
Weighted average number of shares for diluted EPS 918,647,739
--------------------------------------------------- ------------------------------
The average market value for the Group's shares for the purpose
of calculating the dilutive effect of share-based incentives was
based on quoted market prices for the period during which the
share-based incentives were outstanding.
7 Intangible assets
Software & website
Goodwill development costs Brand Other Total
GBPm GBPm GBPm GBPm GBPm
-------------------------------------- --------- ------------------- ------ ------- ------
Opening balance at 1 April 2023 427.6 17.4 43.9 12.1 501.0
Additions - 0.6 - - 0.6
Amortisation charge - (1.6) (2.4) (1.5) (5.5)
------- ------
Closing balance at 30 September 2023 427.6 16.4 41.5 10.6 496.1
-------------------------------------- --------- ------------------- ------ ------- ------
Software & website
Goodwill development costs Brand Other Total
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
---------------------------------------- --------- ------------------- ------ ------- ------
At 30 September 2023, the Group assessed indicators over the
impairment of goodwill relating to its Digital and Autorama cash
generating units. No indicators were identified at this date. A
full annual impairment test will be carried out by the financial
year end in line with IAS 36: Impairment of non-financial
assets.
During the last six months, the integration of Autorama, our new
car leasing proposition, has accelerated at a faster rate than
originally anticipated at acquisition. As a result, the useful
economic life of the 'Vanarama' brand has been reduced from ten
years to five years from the date of acquisition. This change in
accounting estimate will be applied prospectively from 1 October
2023 in line with IAS 38: Intangible assets. The integration of
Autorama has yielded some cost savings and should benefit from
volume growth when new car supply returns to this channel. Despite
the government delaying the ban on the sale of new petrol and
diesel vehicles in October 2023, the pace of structural changes
impacting the new vehicle market in the UK continues and we remain
committed to ensuring our marketplace evolves as electric vehicles
('EVs') make up a greater percentage of the UK car parc.
8 Leases and property, plant and equipment
The Group has right-of-use assets which comprise of property and
motor vehicles which are held within property, plant and equipment.
Information about leases for which the Group is a lessee is
presented below.
Analysis of property, plant and equipment between owned and leased assets September September March
2023 2022 2023
GBPm GBPm GBPm
---------------------------------------------------------------------------- --------- ---------- ------
Property plant and equipment owned 10.4 10.9 9.4
Right-of-use assets 5.5 7.5 6.5
15.9 18.4 15.9
---------------------------------------------------------------------------- --------- ---------- ------
Right-of-use assets Property Vehicles Office equipment Total
GBPm GBPm GBPm GBPm
-------------------------------------- ----------- ----------- ------------------- --------
Opening balance at 1 April 2023 5.8 0.5 0.2 6.5
Additions - 0.1 - 0.1
Depreciation (0.9) (0.2) - (1.1)
Closing balance at 30 September 2023 4.9 0.4 0.2 5.5
-------------------------------------- ----------- ----------- ------------------- --------
Property Vehicles Office equipment Total
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
2023 2022 2023
GBPm GBPm GBPm
------------------- --------- ---------- ------
Current 2.4 3.1 2.5
Non-current 3.6 5.4 4.6
Total 6.0 8.5 7.1
-------------------- --------- ---------- ------
9 Trade and other receivables
September September March
2023 2022 2023
GBPm GBPm GBPm
------------------------------ --------- ---------- ------
Trade receivables (invoiced) 31.1 29.4 28.5
Net accrued income 42.7 38.3 38.7
------------------------------- --------- ---------- ------
Trade receivables (total) 73.8 67.7 67.2
Prepayments 5.6 4.8 5.4
Other receivables 0.3 0.4 0.3
Total 79.7 72.9 72.9
------------------------------- --------- ---------- ------
10 Trade and other payables
September September March
2023 2022 2023
GBPm GBPm GBPm
--------------------------------- --------- ---------- ------
Trade payables 3.6 5.1 8.0
Accruals 20.7 15.7 15.8
Other taxes and social security 20.4 18.5 16.9
Deferred income 6.5 5.6 5.7
Vehicle stocking loan 4.3 1.0 3.0
Other payables 4.6 6.6 3.9
Accrued interest payable 0.3 0.1 0.3
Total 60.4 52.6 53.6
---------------------------------- --------- ---------- ------
11 Retirement benefit obligations
The Group operates several pension schemes in the UK. All except
one are defined contribution schemes.
Defined contribution scheme
In the period, the pension contributions to the Group's defined
contribution scheme amounted to GBP1.9m (September 2022: GBP1.7m;
March 2023: GBP3.5m). At 30 September 2023, GBP0.7m (September
2022: GBP0.6m; March 2023: GBP0.6m) of pension contributions were
outstanding relating to the Group's defined contribution
scheme.
Defined benefit scheme
The defined benefit pension scheme provides benefits based on
final pensionable pay and this scheme was closed to new joiners
with effect from May 2002. New employees after that date have been
offered membership of the Group's defined contribution scheme.
In October 2022, the Scheme purchased a bulk annuity policy
(known as a buy-in) from Just Retirement Limited ('Just
Retirement') for GBP15.4m, 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
the remeasurement date amounted to GBP13.7m. Given the financial
strength of Just Retirement, this buy-in substantively removes the
risk of further contributions being required from the Company to
provide benefits to members, beyond those noted below.
The most recent actuarial valuation of the defined benefit
obligations was performed as at 30 September 2023 by a qualified
independent actuary. The amounts recognised in the Consolidated
balance sheet are determined as follows:
September September March
2023 2022 2023
GBPm GBPm GBPm
-------------------------------------------------------- --------- ---------- -------
Present value of funded obligations 12.4 12.8 13.6
Fair value of plan assets (12.9) (14.8) (14.1)
Net asset recognised in the Consolidated balance sheet (0.5) (2.0) (0.5)
--------------------------------------------------------- --------- ---------- -------
During the year ending 31 March 2020, the Trustees of the Scheme
sought legal advice which concluded that the Company has an
unconditional right to a refund of surplus from the Scheme, if the
Scheme were to be run-off until the final beneficiary died. As a
result, the Group has concluded that the recognition restrictions
of IFRIC14 do not apply, and therefore has recognised the
accounting surplus of GBP0.5m and an associated deferred tax
liability of GBP0.2m in the Consolidated balance sheet.
The amounts charged to the Consolidated income statement are set
out below:
September September March
2023 2022 2023
GBPm GBPm GBPm
------------------------------------------------------------ ---------- ---------- ------
Past service cost - 0.5 0.5
Settlement cost - - 2.2
Total amounts charged to the Consolidated income statement - 0.5 2.7
------------------------------------------------------------- --------- ---------- ------
The amounts recognised in the Consolidated statement of
comprehensive income are as follows:
September September March
2023 2022 2023
GBPm GBPm GBPm
--------------------------------------------------------------- --------- ---------- ------
Return on Scheme assets recognised in net interest 1.3 6.3 5.9
Actuarial gains due to changes in assumptions (1.7) (5.3) (4.8)
Actuarial losses due to liability experience 0.5 0.2 0.4
Deferred tax on surplus - (0.6) (1.1)
Total amounts recognised within the Consolidated statement of
comprehensive income 0.1 0.6 0.4
---------------------------------------------------------------- --------- ---------- ------
Movements during the period in the post-employment defined
benefit obligations are set out as below:
September September March
2023 2022 2023
GBPm GBPm GBPm
-------------------------------------------- --------- ---------- ------
At beginning of period (0.5) (3.7) (3.7)
Past service cost - 0.5 0.5
Settlement cost - - 2.2
Contributions paid to scheme - - (1.0)
Remeasurement and experience losses - 1.2 1.5
Closing post-employment benefit obligation (0.5) (2.0) (0.5)
--------------------------------------------- --------- ---------- ------
12 Dividends
Dividends declared and paid in the period were as follows:
September 2023 September 2022
-------------------------- ----------------------- ----------------------
Pence per share GBPm Pence per share GBPm
-------------------------- --------------- ------ ---------------- ----
2023 final dividend paid 5.6 51.3 - -
2022 final dividend paid - - 5.5 51.7
-------------------------- --------------- ------ ---------------- ----
Total 5.6 51.3 5.5 51.7
-------------------------- --------------- ------ ---------------- ----
An interim dividend of 3.2 pence per share for the six months to
September 2023 (September 2022: 2.8 pence per share) has been
declared by the Directors, totalling GBP29.5m (September 2022:
GBP26.3m) based on the number of shares eligible for the
distribution as at 30 September 2023. The interim dividend is
payable on 26 January 2024 to shareholders on the register at the
close of business on 5 January 2024. No provision has been made for
the interim dividend and there are no income tax consequences.
13 Cash generated from operations
6 months to September 6 months to September Year to March
2023 2022 2023
GBPm GBPm GBPm
---------------------------------------------------- --------------------- ---------------------- --------------
Profit after taxation 116.8 115.2 233.9
Adjustments for:
Taxation 46.0 32.8 59.7
Depreciation 2.2 2.5 4.9
Amortisation 5.5 3.4 9.2
Share-based payments charge (excluding associated
NI) 3.6 3.5 5.8
Deferred contingent consideration 10.4 13.8 38.8
Post-employment expenses relating to the defined
benefit scheme - 0.4 2.7
Share of profit in joint ventures (1.3) (1.1) (2.5)
Loss/(profit) on sale of property, plant and
equipment 0.2 - (0.7)
Net lease disposals and modifications - - (0.1)
Net finance costs 1.8 1.1 3.1
Research and Development Expenditure Credit - - (0.1)
Profit on disposal of a subsidiary - - (19.1)
Changes in working capital:
Trade and other receivables (6.8) (3.0) (3.6)
Trade and other payables 6.4 (3.9) (1.9)
Inventory (0.6) (0.1) (2.7)
Cash generated from operations 184.2 164.6 327.4
----------------------------------------------------- --------------------- ---------------------- --------------
14 Borrowings
September September March
2023 2022 2023
Non-current GBPm GBPm GBPm
----------------------------------------------------- --------- ---------- ------
Syndicated RCF gross of unamortised debt issue cost 52.0 75.0 60.0
Unamortised debt issue costs on Syndicated RCF (2.2) (1.1) (2.5)
Total borrowings 49.8 73.9 57.5
------------------------------------------------------ --------- ---------- ------
September September March
2023 2022 2023
Current GBPm GBPm GBPm
---------------------------- --------- ----------- ------
Loan from other investment 1.1 - 1.1
Total 1.1 - 1.1
----------------------------- --------- ----------- ------
Total borrowings 50.9 73.9 58.6
----------------------------- --------- ----------- ------
Borrowings are repayable as follows:
September September March
2023 2022 2023
GBPm GBPm GBPm
-------------------------- --------- ---------- ------
Less than one year 1.1 - 1.1
Within two to five years 52.0 75.0 60.0
Total 53.1 75.0 61.1
--------------------------- --------- ---------- ------
The carrying amounts of borrowings approximate their fair
values.
Syndicated revolving credit facility ('Syndicated RCF')
The Group has access to an unsecured Syndicated RCF. Associated
debt transaction costs total GBP5.9m, with GBP3.3m being incurred
at initiation and GBP2.6m of additional costs associated with
extension requests.
With effect from 1 February 2023 the Group entered into an
Amendment and Restatement Agreement to extend the term of the
facility for five years from the date of signing and to further
reduce the capacity of the facility to GBP200.0m. There is no
requirement to settle all or part of the facility before the
termination date of February 2028. The associated debt transaction
costs were GBP1.6m, of which GBP1.4m was paid in the period to 31
March 2023, and the remaining GBP0.2m was paid in the six month
period to 30 September 2023.
Individual tranches are drawn down, in sterling, for periods of
up to six months at the compounded reference rate (being the
aggregate of SONIA for that interest period) plus a margin of
between 1.2% and 2.1% depending on the consolidated leverage ratio
of the Group. A commitment fee of 35% of the margin applicable to
the Syndicated RCF is payable quarterly in arrears on unutilised
amounts of the total facility.
The Syndicated RCF has financial covenants linked to interest
cover and the consolidated debt cover of the Group:
-- Net bank debt to EBITDA must not exceed 3.5:1.
-- EBITDA to Net Interest Payable must not be less than 3.0:1.
EBITDA is defined as earnings before interest, taxation,
depreciation and amortisation, share-based payments and associated
NI, share of profit from joint ventures and exceptional items.
All financial covenants of the facility have been complied with
through the period.
Loan from other investment
During the year ended 31 March 2023, the Group's wholly owned
subsidiary, Autorama Holding (Malta) Limited, elected to transfer
the insurance portfolio held in a protected insurance cell with
Advent Insurance PCC Limited to Atlas Insurance PCC Limited. As
part of this process, Advent Insurance PCC Limited issued a loan to
Autorama Holding (Malta) Limited to fund the investment in the new
protected insurance cell until the portfolio transfer was complete.
This process is likely to be completed within the next twelve
months. As at 30 September 2023, GBP1.1m was recognised on the
Consolidated balance sheet (September 2022: GBPnil; March 2023:
GBP1.1m).
15 Share capital
As at 30 September 2023 As at 30 September 2022 As at 31 March 2023
------------------------------------- ------------------------- ------------------------- ---------------------
Number Amount Number Amount Number Amount
'000 GBPm '000 GBPm '000 GBPm
------------------------------------- ------------ ----------- ------------ ----------- ---------- ---------
Allotted, called-up and fully paid
ordinary shares of 1p each
At beginning of period 923,075 9.3 946,893 9.5 946,893 9.5
Purchase and cancellation of own
shares (10,404) (0.1) (3,512) (0.1) (23,831) (0.2)
Issue of ordinary shares 7,850 0.1 13 - 13 -
------------------------------------- ------------ ----------- ------------ ----------- ---------- ---------
Total 920,521 9.3 943,394 9.4 923,075 9.3
------------------------------------- ------------ ----------- ------------ ----------- ---------- ---------
During the period, 10.4m shares were purchased for cancellation
(September 2022: 3.5m; March 2023: 23.8m) and no shares were
purchased for treasury (September 2022: 1.4m; March 2023: 1.4m).
The average price per share was 632.6p (H1 2023: 619.5p) for a
total consideration of GBP65.8m (H1 2023: GBP30.6m) before
transaction costs of GBP0.3m (H1 2023: GBP0.2m). During the period,
7.8m shares were purchased to settle the deferred consideration
relating to the Autorama acquisition in the prior period as
detailed in note 18.
Included within shares in issue at 30 September 2023 are 336,195
(September 2022: 348,034; March 2023: 340,196) shares held by the
ESOT and 3,970,907 (September 2022: 4,629,543; March 2023:
4,371,505) shares held in treasury, as detailed in note 16.
16 Own shares held
ESOT shares reserve Treasury shares Total
Own shares held GBPm GBPm GBPm GBPm
------------------------------------------------ ------------------- ---------------- -------
Own shares held as at 1 April 2022 (0.4) (22.0) (22.4)
Repurchase of own shares for treasury - (8.7) (8.7)
Share-based incentives exercised in the period - 3.6 3.6
Own shares held as at 30 September 2022 (0.4) (27.1) (27.5)
------------------------------------------------- ------------------- ---------------- -------
Own shares held as at 1 October 2022 (0.4) (27.1) (27.5)
Share-based incentives exercised in the period - 1.5 1.5
Own shares held as at 31 March 2023 (0.4) (25.6) (26.0)
------------------------------------------------- ------------------- ---------------- -------
Own shares held as at 1 April 2023 (0.4) (25.6) (26.0)
Share-based incentives exercised in the period - 2.3 2.3
Own shares held as at 30 September 2023 (0.4) (23.3) (23.7)
------------------------------------------------- ------------------- ---------------- -------
ESOT shares reserve Treasury shares Total
Own shares held - number Number of shares Number of shares Number of shares
------------------------------------------------ ------------------- ----------------- -----------------
Own shares held as at 1 April 2022 358,158 3,826,928 4,185,086
Transfer of shares from ESOT (10,124) - (10,124)
Repurchase of own shares for treasury - 1,430,372 1,430,372
Share-based incentives exercised in the period - (627,757) (627,757)
------------------------------------------------- ------------------- ----------------- -----------------
Own shares held as at 30 September 2022 348,034 4,629,543 4,977,577
------------------------------------------------- ------------------- ----------------- -----------------
Own shares held as at 1 October 2022 348,034 4,629,543 4,977,577
Transfer of shares from ESOT (7,838) - (7,838)
Share-based incentives exercised in the period - (258,038) (258,038)
Own shares held as at 31 March 2023 340,196 4,371,505 4,711,701
------------------------------------------------- ------------------- ----------------- -----------------
Own shares held as at 1 April 2023 340,196 4,371,505 4,711,701
Transfer of shares from ESOT (4,001) - (4,001)
Share-based incentives exercised in the period - (400,598) (400,598)
Own shares held as at 30 September 2023 336,195 3,970,907 4,307,102
------------------------------------------------- ------------------- ----------------- -----------------
17 Share-based payments
The Group currently operates five share plans: the Share
Incentive Plan, Performance Share Plan, Deferred Annual Bonus,
Single Incentive Plan Award and the Sharesave scheme.
All share-based incentives are subject to a service condition.
Such conditions are not taken into account in the fair value of the
service received. The fair value of services received in return for
share-based incentives is measured by reference to the fair value
of share-based incentives granted. Black-Scholes and Monte Carlo
models have been used where appropriate to calculate the fair value
of share-based incentives with market conditions.
The total charge in the period relating to the five schemes was
GBP3.5m (September 2022: GBP3.6m; March 2023: GBP6.6m). This
included associated national insurance ('NI') at the rate at which
management expects to be effective when the awards are exercised
(13.80%), and apprenticeship levy at 0.5%, based on the share price
at the reporting date.
In addition to this charge, the share-based payment charge
reported this period includes GBP10.4m (September 2022: GBP13.8m;
March 2023: GBP38.8m) relating to deferred share-based payment
consideration relating to the acquisition of Autorama, making a
total combined charge of GBP14.0m (excluding associated NI).
September September March
2023 2022 2023
GBPm GBPm GBPm
------------------------------------------------------------ --------- ---------- ------
Share Incentive Plan ('SIP') - - -
Performance Share Plan ('PSP') 1.1 1.0 1.9
Deferred Annual Bonus Plan and Single Incentive Plan Award 2.1 2.2 3.4
Sharesave scheme ('SAYE') 0.4 0.3 0.5
NI and apprenticeship levy on applicable schemes (0.1) 0.1 0.8
------------------------------------------------------------- --------- ---------- ------
Total charge from ongoing share schemes 3.5 3.6 6.6
Share-based payments relating to Autorama acquisition 10.4 13.8 38.8
Total charge 13.9 17.4 45.4
------------------------------------------------------------- --------- ---------- ------
Total charge excluding NI 14.0 17.3 44.6
------------------------------------------------------------- --------- ---------- ------
Share Incentive Plan
In 2015, the Group established a Share Incentive Plan ('SIP').
All eligible employees were awarded free shares (or nil-cost
options in the case of employees in Ireland) valued at GBP3,600
each based on the share price at the time of the Company's
admission to the Stock Exchange in March 2015. Shares issued to
satisfy the SIP were purchased by the Employee Share Option Trust
('ESOT').
September September March
2023 2022 2023
UK SIP Number Number Number
------------------------------------ --------- ---------- ---------
Outstanding at beginning of period 96,315 116,808 116,808
Options exercised in the period (4,001) (10,270) (18,108)
Options forfeited in the period - (2,385) (2,385)
Outstanding at period ending 92,314 104,153 96,315
------------------------------------- --------- ---------- ---------
Performance Share Plan
The Group operates a Performance Share Plan ('PSP') for
Executive Directors and the extent to which awards vest will depend
upon the Group's performance over the three-year period following
the award date. Both market based and non-market based performance
conditions may be attached to the options, for which an appropriate
adjustment is made when calculating the fair value of an option. If
the options remain unexercised after a period of 10 years from the
date of grant, the options expire. Furthermore, options are
forfeited if the employee leaves the Group before the options vest,
unless under exceptional circumstances.
On 22 June 2023, the Group awarded 355,183 nil cost options
under the PSP scheme. For the 2023 awards, the Group's performance
is measured by reference to growth in Operating profit (70% of the
award), Revenue (20% of the award) and Carbon Reduction (10% of the
award) over a three-year period to March 2026.
September September March
2023 2022 2023
Number Number Number
------------------------------------ --------- ---------- ----------
Outstanding at beginning of period 1,399,984 1,401,701 1,401,701
Options granted in the period 355,183 360,695 360,695
Dividend shares awarded - 8,319 8,319
Options exercised in the period (9,130) (241,047) (241,047)
Options forfeited in the period (591,580) (129,684) (129,684)
Outstanding at period ending 1,154,457 1,399,984 1,399,984
------------------------------------- --------- ---------- ----------
Deferred Annual Bonus and Single Incentive Plan Award
The Group operates the Deferred Annual Bonus and Single
Incentive Plan Award for the Executive Directors, the Operational
Leadership Team and certain key employees. The Plan consists of two
schemes, the Deferred Annual Bonus Plan ('DABP') and the Single
Incentive Plan Award ('SIPA').
Deferred Annual Bonus Plan
The Group operates a Deferred Annual Bonus Plan ('DABP') for
Executive Directors. Awards under the plan are contingent on the
satisfaction of pre-set internal targets relating to financial and
operational objectives. The extent to which the awards vest will
depend upon the satisfaction of the Group's financial and
operational performance in the financial year of the award date
(the 'Performance Conditions'). The awards will vest on the second
anniversary of the date the Remuneration Committee determines that
the Performance Conditions have been satisfied (the 'Vesting
Period'). Awards are potentially forfeitable during that period
should the employee leave employment. The DABP awards have been
valued using the Black-Scholes method where appropriate and the
resulting share-based payments charge is being spread evenly over
the combined Performance Period and Vesting Period of the shares,
being three years.
On 22 June 2023, the Group awarded 103,330 nil cost options
under the DABP.
September September March
2023 2022 2023
Number Number Number
------------------------------------ --------- ---------- --------
Outstanding at beginning of period 108,704 - -
Options granted in the period 103,330 108,704 108,704
Outstanding at period ending 212,034 108,704 108,704
------------------------------------ --------- ---------- --------
Single Incentive Plan Award
The Group operates a Single Incentive Plan Award ('SIPA') for
the Operational Leadership Team and certain key employees. The
extent to which awards vest will depend upon the satisfaction of
the Group's financial and operational performance in the financial
year of the award date (the "Performance Conditions"). The awards
will vest in tranches, with the first tranche vesting on the date
on which the Remuneration Committee determines that the Performance
Conditions have been satisfied, and subsequent tranches vesting on
the first and second anniversary of this date, subject to
continuing employment.
On 22 June 2023, the Group awarded 618,497 nil cost options
under the SIPA scheme. The fair value of the 2023 award was
determined to be GBP6.22 per option, being the share price at grant
date. The resulting share-based payments charge is being spread
evenly over the period between the grant date and the vesting date.
SIPA award holders are entitled to receive dividends accruing
between the grant date and the vesting date and this value will be
delivered in shares.
September September March
2023 2022 2023
Number Number Number
------------------------------------ --------- ---------- ----------
Outstanding at beginning of period 1,517,766 1,291,868 1,291,868
Options granted in the period 618,497 681,586 681,586
Dividend shares awarded 10,180 5,710 5,710
Options exercised in the period (337,214) (177,183) (214,290)
Options forfeited in the period (142,859) (205,153) (247,108)
Outstanding at period ending 1,666,370 1,596,828 1,517,766
------------------------------------- --------- ---------- ----------
Sharesave scheme
The Group operates a Sharesave ('SAYE') scheme for all employees
under which employees are granted an option to purchase ordinary
shares in the Company at up to 20% less than the market price at
invitation, in three years' time, dependent on their entering into
a contract to make monthly contributions into a savings account
over the relevant period. Options are granted and are linked to a
savings contract with a term of three years. These funds are used
to fund the option exercise. No performance criteria are applied to
the exercise of Sharesave options.
Expected volatility is estimated by considering historic average
share price volatility at the grant date. The requirement that an
employee has to save in order to purchase shares under the
Sharesave plan is a non-vesting condition. This feature has been
incorporated into the fair value at grant date by applying a
discount to the valuation obtained from the Black-Scholes pricing
model.
September September March
2023 2022 2023
Number Number Number
------------------------------------- ---------- ----------------- ------------------
Outstanding at beginning of period 1,366,352 1,446,582 1,446,582
Options granted in the period - - 688,115
Options exercised in the period (54,254) (235,323) (406,060)
Options lapsed in the period
-(57,304)- * (89,878)- * (362,285)-
Outstanding at period ending 1,254,794 1,121,381 1,366,352
------------------------------------- ---------- ----------------- ------------------
18 Prior period business combination
In the prior period, the Group acquired the entire share capital
of Autorama UK Limited ('Autorama') for initial consideration of
GBP150.0m, with an additional GBP50.0m deferred until 22 June 2023
and settled in shares subject to employment and performance
conditions.
Autorama, one of the UK's largest marketplaces for leasing new
vehicles, is a leading end-to-end digital platform, which
aggregates leasing deals from multiple funders and Manufacturers
(under its 'Vanarama' brand), enabling buyers to transact online
across a wide range of vehicles.
The total consideration of GBP150.0m excludes acquisition costs
of GBP2.1m which were recognised within costs in the Consolidated
income statement in the prior period. The following table provides
a reconciliation of the amounts included in the Consolidated
statement of cash flows for the prior period:
September 2022
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 was
subject to condition for continuing employment to 22 June 2023, the
amount was not included in the business combination but was
recorded as a post-acquisition income statement expense over the
period of service, which extended to the first anniversary of the
acquisition. The deferred consideration was fully settled at 30
September 2023 and the final settlement was reduced to GBP49.9m due
to the associated performance conditions not being met.
The purchase was accounted for as a business combination under
the acquisition method in accordance with IFRS 3. The fair value of
net assets acquired was assessed and, other than in respect of the
intangible assets and related deferred tax, described below, no
material adjustments from book value were made to existing assets
and liabilities. The goodwill calculation is summarised below:
Fair value
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 (16.3)
50.2
Other non-current assets
Investments 1.0
Property, plant and equipment 5.3
Intangible assets 0.4
Deferred tax asset 6.8
-------------------------------------------------------- -----------
13.5
Current assets
Cash and cash equivalents 5.8
Trade and other receivables 4.5
Inventory 0.9
Other debtors 0.9
-------------------------------------------------------- -----------
12.1
Current liabilities
Trade and other payables 11.6
Deferred income 2.3
-------------------------------------------------------- -----------
13.9
Non-current liabilities
Borrowings 4.0
Lease liabilities 0.4
-------------------------------------------------------- -----------
4.4
Total net assets acquired 57.5
Goodwill on acquisition 92.5
Total assets acquired 150.0
-------------------------------------------------------- -----------
Fair value of cash consideration 150.0
The brand, technology, customer relationships and order book
obtained through the acquisition met the requirements to be
separately identifiable under IFRS 3. The brand operates under the
Vanarama brand name and is one of the UK's longest running
e-commerce brands; the asset was valued using Multi-period Excess
Earnings Method and crosschecked using relief from royalty. The
technology is Autorama's propriety technology which helps manage a
complex vehicle lease purchasing process into a seamless online
transaction via a customer friendly user interface, which has been
developed in house; the asset was valued using the cost approach
specifically replacement costs and crosschecked using relief from
royalty. The order book is customer orders not yet delivered, which
is expected to unwind; the asset was valued using Multi-period
Excess Earnings Method.
The goodwill recognised on acquisition principally relates to
value arising from intangible assets that are not separately
identifiable under IFRS 3. Such assets include the value of the
acquired workforce (including technical experience); returning
customers and future market growth opportunities.
None of the acquired intangible assets or goodwill is expected
to be deductible for tax purposes. A deferred tax liability has
been recorded on the fair value of the intangible assets
recognised, other than goodwill, measured at the substantively
enacted UK rate of corporation tax from April 2023 of 25%. This
deferred tax liability has been debited against and increased the
value of goodwill recognised.
19 Related party transactions
The Company is the ultimate parent entity of the Group.
Intercompany transactions with wholly owned subsidiaries have been
excluded from this note, as per the exemption offered in IAS
24.
Dealer Auction Limited
The Group transacted the following related party transactions
with its joint venture, Dealer Auction Limited (previously Dealer
Auction (Holdings) Limited) and its subsidiaries (together 'Dealer
Auction'), during the period.
The Group provided data services to Dealer Auction under a
license agreement established as part of the formation of the joint
venture in January 2019. The value of services provided to Dealer
Auction was GBP0.3m (September 2022: GBP0.3m) and has been
recognised within revenue. At 30 September 2023, deferred income
outstanding in relation to the license agreement was GBP8.6m
(September 2022: GBP9.2m).
Key management personnel
Key management personnel share plan awards have been outlined in
note 17.
20 Forward looking statements
This report includes statements that are forward looking in
nature. Forward looking statements involve known and unknown risks,
assumptions, uncertainties and other factors which may cause the
actual results, performance or achievements of the Group to be
materially different from any future results, performance or
achievements expressed or implied by such forward looking
statements. Except as required by the Listing Rules and applicable
law, the Company undertakes no obligation to update, revise or
change any forward-looking statements to reflect events or
developments occurring after the date of this report.
Principal risks and uncertainties
Risk POTENTIAL IMPACT CHANGES IN THE peRIOD
1. An adverse change in supply and New car supply has improved with
Automotive economy, market and demand in the new/used car market registration volumes up 21%
business environment could lead to reduced retailer year-on-year in the six month
profitability and reduced retailer period. New car supply has
wallets, resulting in reduced implications for our Autorama segment
advertising spend. Adverse and impacts the wider automotive
movements in supply and demand of market. Low new car supply since 2020
vehicles could also lead to a has led to low availability of 3-5
contraction in the number year old cars.
of retailers. Demand for vehicles remains high with
In addition, we continue to see the used cars in H1 2024 selling on
movement towards an agency model average 1 day faster
whereby Manufacturers' than 2023 and 2 days faster than
sell new vehicles directly to 2019. However, sourcing remains a
consumers, with the retailer acting challenge for some retailers.
as an agent to facilitate Used vehicle pricing trends varied
the transaction. This could lead to a across age cohorts, due to differing
loss of revenue from our retailer supply and demand.
customers. September 2023 saw the first fall in
used car prices in 41 months, when
overall prices fell
by 0.4%, however older vehicles
continued to see prices rise
year-on-year.
The move to agency in 2023 from some
Manufacturers has coincided with the
successful launch
of our National New Car product,
enabling Manufacturers to advertise
stock on Auto Trader
for the first time.
Higher rates of inflation, as well as
rises in interest rates, has led to
increased finance
costs and higher overall purchase
costs for consumers and retailers.
-------------------------------------- --------------------------------------
2. The automotive industry is In May 2023, through our partnership
Climate change intrinsically linked with climate with the Carbon Literacy Project, we
change and there is pressure reached the milestone
from consumers and government for the of 1,000 employees and employees from
industry to reduce its impact on the 100 businesses having received Carbon
climate. Failure Literacy training.
to deliver on our environmental In our emissions reporting, we have
commitments could negatively impact amended our base year to 2023 to
our brand as a responsible reflect the addition
business or result in regulatory of Autorama to the Group and we
sanctions. continue to work towards our carbon
Failure to overcome the changes reduction commitments.
caused by the shift from internal We have engaged with a 3(rd) party to
combustion engines ('ICE') support us with these plans.
to electric vehicles ('EVs') could The announcement in September 2023 to
inhibit their take-up or lead to delay the ban on new ICE cars to 2035
changes in buying behaviour. was unexpected,
Factors include the high purchase however we do not expect significant
price of most EVs, potential for adverse impacts or changes to
improvements in public Manufacturers strategies.
transport, new and expanded emissions The Zero Emissions Vehicle ("ZEV")
zones, increasing EV running costs, Mandate will require Manufacturers to
and consumer uncertainty continue to increase
over the residual value of used EVs. the proportion of their sales made
Changing and more stringent from ZEV up until 2035. At Auto
regulatory requirements could Trader, our strategy is
increase our cost base. Increased unchanged: we are continuing to
frequency and severity of extreme establish our site as the go-to
weather events could lead to destination for consumers
heightened costs, including looking to obtain an EV.
costs associated with There are early indications that
heating/air-conditioning, insurance, "barriers" to EV adoption are
and cloud infrastructure. Extreme lessening. The price disparity
weather events could also lead to between EV and ICE equivalents has
short-term closure of retailer begun to reduce both for new and used
forecourts (for example, vehicles.
due to flooding). Private demand has slightly reduced
for new EVs, with 14.2% of leads sent
to retailers on
new cars in September being electric,
down from 15.5% one year ago.
However, in contrast,
demand for new EVs via fleet and
salary sacrifice lease schemes is
high, where consumers look
to take advantage of low
benefit-in-kind taxes on salary
sacrifice leases.
-------------------------------------- --------------------------------------
3. To enable us to achieve our strategic We continued to operate our Connected
Employees objectives it is important that we Working model where employees are in
continue to attract, the office for
retain and motivate a highly skilled two 'fixed' days per week plus an
workforce, including those with additional 'flex' day per week on a
specialist skillsets day of their choice,
in data and technology. increasing efficiency, collaboration
Delivery of our strategy is also and innovation whilst also allowing
dependent on us building a diverse flexibility and maximising
and inclusive workforce; inclusion. Connected Working has also
a supportive, collaborative culture, included a 'remote first' policy. For
and a safe environment, all of which periods in July,
will enable optimum August, and December, employees can
performance from all our employees. work from anywhere, including
overseas subject to consideration
of relevant risks including taxation,
work permits/visas, productivity,
cyber security, and
inclusion.
In September 2023 we held our annual
all-employee virtual conference. Two
major announcements
were made: the evolution of our
company values; and a new
all-employee share scheme.
Our Glassdoor rating based on
anonymous reviews remains high at
4.6/5 in October 2023.
Autorama people policies, rewards /
benefits, and contracts are in the
process of being aligned
to Auto Trader's. Some teams across
Auto Trader and Autorama have been
merged, including product
and technology, consumer marketing,
risk & compliance and finance.
We received 'Role model'
accreditation from Manchester Pride's
All Equals Charter, the highest
award available. The programme aims
to ensure organisations understand,
recognise, and challenge
discrimination in the workplace.
-------------------------------------- --------------------------------------
4. To achieve our strategic objectives, Despite the threats posed to our
Reliance on third parties we are reliant on partners to support suppliers in the external
certain product environment, we have experienced
initiatives, for example having no material disruptions to our
lenders integrated with our Deal critical suppliers. Our business
Builder journey is a key continuity and IT disaster
dependency. recovery processes require monitoring
We also rely on third parties to of critical suppliers regularly to
support our technology ensure the impact,
infrastructure, supply of data about should they fail, is as low as
vehicles and their financing, and in possible.
the fulfilment of some of our revenue As we work towards digitising the
generating products. automotive retail market we are
Consequently, it is important that we increasingly reliant on
manage relationships with, and 3rd parties and partners who support
performance of, key suppliers retailers with developing the
and key strategic partners. necessary technology to
integrate with our systems. Working
collaboratively with these partners
is therefore essential
and we have continued to do so in the
first half of this financial year.
-------------------------------------- --------------------------------------
5. As a digital business, we rely on our We have completed a multi-year
IT systems and IT infrastructure to provide our project to migrate all of Auto
cyber security services. A disruptive Trader's key applications to
cyber security and/or business the cloud, which increases the
continuity event could lead to resilience, security, and reliability
downtime of our systems and of our systems. It also
infrastructure. enhances our IT disaster recovery
Execution of our strategy also relies arrangements with the ability to
on us making appropriate investments fail-over to alternative
in secure systems data centres in the event of a major
and technologies. Failure to invest incident.
in appropriate technology and We have migrated all Autorama
safeguards could lead to employees to the Auto Trader
us failing to achieve our objectives. environment, providing enhanced
Delivery of our strategic objectives enterprise-wide security protections
also relies on us using data to as well as improving efficiency and
provide valuable insights collaboration across
to customers. A significant data the Auto Trader business.
breach, whether because of our own As previously mentioned, our cyber
failures or a malicious security teams were involved in the
cyber-attack, would lead to a loss in planning of the "remote
confidence by the public, retailers first" period and this passed without
and advertisers. incident.
-------------------------------------- --------------------------------------
6. The automotive industry is changing After initial trials during 2023, we
Failure to innovate: disruptive at pace. Should we fail to innovate are now scaling Deal Builder, with
technologies and changing consumer our business and product over 500 retailers
behaviours offerings, we could lose relevance onboard compared to c.50 as at March
with our key stakeholders, including 2023. c.2,100 deals were submitted
consumers and customers. via Deal Builder in
It is crucial that we develop and H1 2024. We are continuing to test
implement new products, services and and refine this product as it scales
technologies, and adapt up.
to changing consumer behaviour Autorama's leasing journey can now be
towards car buying and ownership. completed on autotrader.co.uk.
Failure to provide both customers and Senior leadership and Board strategy
consumers with the best possible days focused on changing consumer
products and online buying behaviours and
journey, including an online buying on how advancements in artificial
experience, could lead to reduced intelligence can impact Auto Trader.
website traffic and
loss of revenue.
-------------------------------------- --------------------------------------
7. The Group operates in a complex We have had no reportable data
Regulatory risks regulatory environment. As we breaches across the Auto Trader Group
progress in executing our strategy, during H1 2024. We have
we are likely to be exposed to continued to work to mitigate GDPR
increased legal and regulatory risks, risks brought about by the
particularly those relating acquisition of Autorama and
to FCA and GDPR. growth of Deal Builder, both of which
There is a risk that the Group, or require us to collect and store more
its subsidiaries, fail to comply with consumer personal
legal and regulatory data.
requirements. This could lead to We adopted the FCA's Consumer Duty in
reputational damage, financial or advance of the July 2023 deadline.
criminal penalties and This involved a review
impact on our ability to do business. of our policies, products and
processes to ensure that we can
demonstrate delivery of good
outcomes to consumers. We have also
refreshed our mandatory all-employee
compliance training
to capture the requirements of
Consumer Duty with specific, tailored
training provided to
those with day-to-day
responsibilities under the
regulation.
-------------------------------------- --------------------------------------
8. Our data continues to show that there We remain the UK's largest and most
Competition is a low competitive threat to our engaged digital automotive
classified marketplace. marketplace with over 75% of
Nevertheless, we remain wary of the all minutes spent on automotive
risk that competitors could develop classified sites spent on Auto
superior consumer Trader. Consumer audience increased,
experience or superior retailer with each month's audience higher in
products. This could lead to a loss H1 2024 than the corresponding month
of market share. in 2023. Nevertheless,
Further, as the automotive industry competitive threat is a perpetual
evolves, an agency model could change risk which we monitor continuously.
the way that vehicles
are bought and sold. Under an agency
model, cars are sold by Manufacturers
directly to consumers
via retailers. As we progress with
our own objectives surrounding
digital retailing, an agency
model could mean that Manufacturers
themselves emerge as a direct
competitor in the vehicle
retail industry. Failure to manage
this emerging threat could inhibit
our ability to achieve
our objectives.
-------------------------------------- --------------------------------------
9. Our brand is one of our biggest Our Trustpilot rating remains high at
Brand and reputation assets. Our research shows that we 4.7 out of 5 and there continues to
are the largest and most be a low level of
trusted automotive classified brand fraudulent activity on our site owing
in the UK. Failure to maintain and to the monitoring performed by our
protect our brand, security team. We
and/or negative publicity affecting also make use of a customer watchlist
our reputation could diminish the which enables us to identify and
confidence that retailers, remove from those customers
consumers and advertisers have in our bringing harm to consumers, other
products and services. This could retailers, or the Auto Trader brand.
result in a reduction
in audience and revenue. In H1 2024 we have embarked on new
consumer marketing campaigns across
various media, including
traditional formats such as
television, but also podcasts and
social media.
-------------------------------------- --------------------------------------
10. In a connected, global industry, we It is important to respond quickly to
External catastrophic and are increasingly prone to the impacts the impacts of external events,
geo-political events of external events particularly those which
around the globe on our business, as impact on our customers adversely. We
are our customers. We consider there regularly review our critical
to be a threat to suppliers and business
the short-to-mid-term performance of continuity and crisis management
our business posed by external, arrangements to ensure that they
unpreventable, catastrophic consider the impacts of
and geo-political events. Such events external events.
could result in our customers being There remains uncertainty within our
unable to trade, customer base over a potential
leading to loss of revenue, stock, recession with inflation
audience, and loss of market share. and interest rates remaining high
throughout H1 2024. This is largely
attributed to recent
events such as Covid-19 and Brexit.
Additionally, a UK general election
in c.12 months could
lead to new political policies which
we and our customers need to respond
to.
The impacts of economic conditions
and political policies are assessed
continuously to ensure
that we are well positioned to
support our customers.
-------------------------------------- --------------------------------------
INDEPENDENT REVIEW REPORT TO AUTO TRADER GROUP PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2023 which comprises the consolidated
interim income statement, consolidated interim statement of
comprehensive income, consolidated interim balance sheet,
consolidated interim statement of changes in shareholders' equity
and consolidated interim statement of cash flows and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2023 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted for
use in the UK and the Disclosure Guidance and Transparency Rules
("the DTR") of the UK's Financial Conduct Authority ("the UK
FCA").
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE (UK) 2410") issued for use in the UK. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. We
read the other information contained in the half-yearly financial
report and consider whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed
set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of conclusion
section of this report, nothing has come to our attention that
causes us to believe that the directors have inappropriately
adopted the going concern basis of accounting, or that the
directors have identified material uncertainties relating to going
concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with UK-adopted international
accounting standards.
The directors are responsible for preparing the condensed set of
financial statements included in the half-yearly financial report
in accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the
directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. Our conclusion, including our
conclusions relating to going concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion section of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
David Derbyshire
for and on behalf of KPMG LLP
Chartered Accountants
1 St Peter's Square
Manchester
M2 3AE
9 November 2023
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END
IR FSLFAAEDSEEF
(END) Dow Jones Newswires
November 09, 2023 02:00 ET (07:00 GMT)
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