Auto Trader Group plc
Annual Report and Financial Statements 2023
Driving Change Together.
Responsibly.
Auto Trader’s purpose is Driving Change Together.
Responsibly. Auto Trader is committed to creating a
diverse and inclusive culture, it aims to build stronger
partnerships with its 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.
2
Strategic report
2
Chair’s statement
3
CEO’s statement
6
Market overview
8
How we create value
10
Our purpose-driven strategy
14
Section 172(1) statement
18
Key performance indicators
21
Non-financial information statement
22
Operational review
24
Financial review
26
Being a responsible business
48
How we manage risk
50
Principal risks and uncertainties
58
Governance
58
Governance overview
60
Board of Directors
62
Corporate governance statement
66
Report of the Nomination Committee
70
Report of the Audit Committee
76
Report of the Corporate
Responsibility Committee
80
Directors’ remuneration report
94
Directors’ report
plc.autotrader.co.uk
Auto Trader Insight
@ATInsight
98
Financial statements
98
Independent auditor’s report to the
members of Auto Trader Group plc
109
Consolidated income statement
110
Consolidated statement of
comprehensive income
111
Consolidated balance sheet
112
Consolidated statement of changes in equity
113
Consolidated statement of cash flows
114
Notes to the consolidated
financial statements
156
Company balance sheet
157
Company statement of changes in equity
158
Notes to the Company financial statements
163
Unaudited five-year record
164
Shareholder information
Our purpose-driven strategy
Being a responsible business P26
Our purpose-driven strategy P10
CLASSIFIED
MARKETPLACE
PLATFORM
BEING A RESPONSIBLE
BUSINESS
DIGITAL RETAILING
13,913
average retailer forecourts
advertising with Auto Trader
(2022: 13,964)
69.6m
average monthly visits
to autotrader.co.uk
(2022: 68.9m)
c.50
retailers on Deal Builder
trial at end of March 2023
(2022: N/A)
91%
of employees are proud
to work for Auto Trader
(March 2022: 95%)
19
lenders integrated with
our finance platform
(2022: 9)
c.90
software partners integrated
with our Auto Trader Connect
platform
(2022: 40)
Net zero
our targets have been
validated by the Science
Based Targets initiative
c.7k
new vehicle leases
delivered in 2023
(2022: N/A)
We have a clear focus on our three strategic priorities, alongside
a commitment to always being a responsible business.
DIGITAL RETAILING
PLATFORM
CLASSIFIED
MARKETPLACE
B
E
I
N
G
A
R
E
S
P
O
N
S
I
B
L
E
B
U
S
I
N
E
S
S
Auto Trader Group plc
Annual Report and Financial Statements 2023
1
Chair’s statement
This is my ninth and final statement
as Chair of Auto Trader Group plc.
As such, rather than focus on the
year just gone, I would like to offer
a longer perspective regarding
Auto Trader’s history and future.
It has been my privilege to
serve as the Auto Trader Chair
throughout our eight years
as a public company.
A reflection on my tenure as Chair
I first got to know Auto Trader around 15
years ago when I was chief executive of
Rightmove Plc. I first attended an Auto Trader
Board meeting as a guest. That meeting
decided to sell Auto Trader’s last remaining
print plant, though Auto Trader would
continue to publish weekly magazines for
a few years after that. Auto Trader had a
successful website but it contributed a small
amount to our overall revenues. Our online
product offering was simple and focused
on tools to help car retailers get their adverts
online and monitor their success. We had
a number of small wholly owned or partly
owned businesses in other countries.
We operated out of a number of physical
offices spread around the UK.
Today, we operate a sophisticated online
automotive marketplace, with our car
retailers able to select from a range of
advertising options and data products
that not only help them sell vehicles but
manage the effectiveness of their operations
including the stock they hold. We operate
in a single country with the considerable
majority of our office-based staff in a single
office in Manchester.
During the previous year we took a number
of steps to complete the simplification of
our business, including the sale of Webzone
Limited (trading as ‘Carzone’), our Irish
business, reducing and simplifying our
property holdings and starting the process
to exit our legacy defined benefit pension
scheme. I would particularly like to thank
Warren Cray and his team at Carzone in
Ireland for their contribution to the Group
over many years.
2023 saw the completion of one of the
largest product development projects in
the Company’s history, enabling our car
retailer customers to provide a complete
transactional service to car buyers on the
Auto Trader platform. This includes the
ability to reserve a car online with a deposit,
arrange finance, obtain a trade-in valuation
on an existing car and delivery to a buyer’s
home or other convenient location.
2023 also saw the purchase of Autorama,
which offers new vehicles on leases to
the public. This gives us a substantial
potential position in the online transactional
market for new cars. A current priority is the
integration of the Autorama offering into
our existing new car proposition and further
developments to that combined offering.
So not only have we successfully transitioned
from a print to digital, advertising-only to
data business, but we have also embarked
on the journey from a used car advertising
service to a platform for advertising and
transacting in both used and new cars. It will
take time for all these businesses to realise
their potential and if the past is any guide,
we will be both pleasantly surprised in the
long term and sometimes disappointed at
the speed of adoption and the path to full
commercial value being realised.
It is unhelpful for outgoing Chairs to seek
to tie the hands of their successors. It is the
job of future Auto Trader Board members
to exercise their judgement in pursuing the
course that makes most sense to them at the
time in the knowledge of the marketplace as
they then see it. I hope, though, that they will
come to the view that the current Board has
left the business stronger, simpler and with
a wider range of opportunities open to them
than when they first became involved.
Board succession
As announced on 1 June 2023, the Board has
approved the appointment of Matt Davies
as Chair Designate with effect from 1 July 2023,
to succeed me as Chair at the conclusion of
the 2023 Annual General Meeting, prior to
me becoming non-independent and in line
with good corporate governance. Therefore,
I will not be standing for re-election at our
September 2023 AGM and expect a smooth
transition to the new Chair.
As a result of the Company becoming
public in 2015 we put in place a new Board;
as such over the next two years, three further
Non-Executive Directors will be deemed
to have become non-independent under
the nine-year rule. We have plans in place
to recruit new Non-Executives, staggering
renewal dates to mitigate against large
changes in the Board and to preserve and
build on diversity and experience which will
best serve the business moving forward.
This is covered in more detail in the
Nomination Committee report.
Dividend and capital return strategy
We are recommending to shareholders a
final dividend of 5.6p, bringing the total
dividend for the year to 8.4p. The value of
dividends paid in respect of the 2023 financial
year totals c.£77.7m, with a further £147.3m
returned through share buybacks at an
average share price of 582.1p.
Annual General Meeting
Our Annual General Meeting (‘AGM’) will be
held at our Manchester office on 14 September
2023 at 10am.
A big thank you
As this is my last statement as Chair, it remains
for me to say a big thank you to everyone
involved with Auto Trader over the last eight
years, including car buyers and sellers,
our business customers, past and present
employees, the current and previous
executive teams, our Board of Directors
and our shareholders, many of whom have
held our shares continuously since the
Company went public in 2015.
In particular, I would like to thank those
with whom I have worked closely, including
a large number of executives outside the
Board. From the start of my involvement
with Auto Trader one thing was obvious:
an enormous commitment and enthusiasm
to simply “get stuff done”. I am sure the new
Board members, who will replace those of
us reaching the end of our Board service,
will value this as much as we have. It has
allowed us to focus a huge proportion of our
time and attention on opportunities and not
problems, making it critical to our success
and such a pleasure to be part of.
Ed Williams
Chair
1 June 2023
Auto Trader Group plc
Annual Report and Financial Statements 2023
2
CEO’s statement
There are two strands to our commitment
around the environment: achieving net zero
carbon emissions by 2040, and supporting
consumers in making more environmentally
friendly vehicle choices.
Outlook
The new financial year has started well and
the Board is therefore confident of meeting
its growth expectations for the year.
We expect another good year of retailer
revenue growth, by far the largest part of
our Auto Trader business. This will come from
a similar ARPR growth rate to that achieved
in financial year 2023. We expect the product
lever to be consistent with the £137 achieved
last year and the price lever to be slightly
higher than last year’s £90. The stock lever
is likely to remain flat. We anticipate a slight
decline in retailer numbers, mostly due
to the full year impact of the disposal of
Webzone Limited.
Over time we aim to grow share in the
new car leasing market through our new
Autorama segment. Our short-term focus
is on significantly reducing the current
annualised operating losses of £15 million
through deeper integration with Auto Trader
and being disciplined on costs. Group
central costs, which are non-cash and
relate to the acquisition of Autorama,
will be c.£18 million for the year.
Auto Trader operating profit margins
should be consistent year on year at 70%,
despite continued investment in product
development and inflationary pressures.
Group margins are expected to increase
year on year.
Nathan Coe
CEO
1 June 2023
The UK car market
New car registrations at 1.7 million were 3%
above financial year 2022 (2022: 1.6 million)
but 19% lower than financial year 2020 with
supply chain challenges continuing to impact
the volume of new cars available for sale
in the UK. New light commercial vehicle
(‘LCV’) registrations were down 11% year on
year. Used car transactions at 6.9 million
were 8% below financial year 2022 levels
(2022: 7.5 million) due to the knock-on impact
of low volumes of new car supply, which has
reduced the availability of younger cars.
Despite the weakness seen in supply
throughout the period, demand has been
resilient and used car prices have remained
strong. Our used car Retail Price Index saw
a 12% like for like, year on year increase in
prices over the past 12 months, which has
contributed to favourable trading conditions
for our customers.
Being a responsible business
We hold ourselves to the highest standards
when it comes to acting responsibly. We
have a Corporate Responsibility Committee
with oversight of Auto Trader’s focus on the
environmental, social and governance (‘ESG’)
aspects of our business. We have identified
focus areas and created a range of initiatives
which are monitored regularly, and reported
on externally with our cultural KPIs. While
recognising that many of these changes
take time, we remain committed to making
meaningful progress across all measures.
We continue to focus on our people, ensuring
that those from all backgrounds can fully
realise their potential. We have carefully
constructed learning and development
programmes focusing on supporting early
careers, mid-management and a continuous
leadership programme for senior leaders.
All of these programmes are specifically
designed to recruit, support and develop
diverse talent in our business.
I’m pleased to report that our
business is in as strong a position
as it has ever been, and we are
embarking on a journey where
used and new car buyers can not
only complete their research on
Auto Trader, but complete more
of the transaction too.
Summary of Group financial performance
Revenue in the core Auto Trader business
increased by 9% to £473.0 million as
customers are increasingly using our
data, platform and advertising products
to support their businesses. At a Group
level revenue grew 16% to £500.2 million
(2022: £432.7 million), the difference being
the inclusion of the Autorama business,
acquired in June 2022, with revenue of
£27.2 million. Auto Trader growth was ahead
of expectations and has been achieved
despite both the new and used car markets
experiencing low transaction volumes,
although this headwind has been somewhat
offset by robust levels of retailer profitability.
The brilliant work of our people continues
to strengthen our position with car buyers,
build true partnerships with our customers
and support an industry-leading data and
technology platform.
Operating profit in the core Auto Trader
business was £332.9 million, up 10% on last
year, with a continued margin of 70% as
a result of careful management of costs
despite inflationary pressures. Group
operating profit declined by 9% to £277.6 million
(2022: £303.6 million), due to an operating
loss of £11.2 million from Autorama, and
£44.1 million of Group central costs relating
to the acquisition of Autorama, which were
£38.8 million of deferred consideration and
amortisation of acquired intangibles of
£5.3 million. Group operating profit margin
was 55% (2022: 70%).
Strategy and purpose
Our purpose continues to be “Driving Change
Together. Responsibly” which guides strategy
and decisions across the organisation. At our
2022 Investor Day, we outlined our strategy
using three concentric circles to illustrate
that they are all elements of Auto Trader’s
central business strategy, rather than three
distinct opportunities. Our technology and
data platform and digital retailing build
on the strengths of our core marketplace
business. As an example, our platform
strategy embeds our technology and data
into retailers’ businesses enabling them to
make quicker decisions, which ultimately
improves the value they get from advertising
on Auto Trader. Digital retailing provides a
deeper buying experience on Auto Trader
that is more efficient for retailers and harder
for others to replicate.
Auto Trader Group plc
Annual Report and Financial Statements 2023
3
Strategic report
Governance
Financial statements