Driving Change
Together.
Responsibly.
Auto Trader Group plc
Annual Report and Financial Statements 2024
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 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.
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The following symbols indicate that
further supporting information can
be found elsewhere in this report or
on our PLC website:
plc.autotrader.co.uk
01
Strategic report
01
At a glance
02
Chair’s statement
03
CEO’s statement
06
Market overview
09
How we create value
10
Strategic progress
14
Section 172(1) statement
18
Key performance indicators
21
Non-financial and sustainability information statement
22
Financial review
25
Working responsibly
50
How we manage risk
53
Principal risks and uncertainties
61
Governance
61
Governance overview
63
Board of Directors
66
Corporate governance statement
70
Report of the Nomination Committee
73
Report of the Audit Committee
78
Report of the Corporate Responsibility Committee
81
Directors’ remuneration report
100
Directors’ report
104
Financial statements
104
Independent auditor’s report to the members
of Auto Trader Group plc
116
Consolidated income statement
117
Consolidated statement of comprehensive income
118
Consolidated balance sheet
119
Consolidated statement of changes in equity
120
Consolidated statement of cash flows
121
Notes to the consolidated financial statements
155
Company balance sheet
156
Company statement of changes in equity
157
Notes to the Company financial statements
161
Unaudited five-year record
162
Shareholder information
Our company purpose explains why we exist, our strategy is what we do,
and we have clear ways of working, with a strong values-led culture.
The pillars below are strongly interconnected and together they influence whether we’re successful
in the execution of our strategy. Over the past 12 months our marketplace has continued to strengthen,
with growing numbers of both buyers and sellers. We are supporting more of the industry using our platform
and data to power their businesses, at the same time as bringing more of the new and used car buying
experience online, on Auto Trader. We’ve introduced an all-employee share scheme, underpinning the sense
of ownership that already exists amongst our employees, and have evolved our company values.
OUR PURPOSE-DRIVEN STRATEGY P10
WORKING RESPONSIBLY P25
WHY WE EXIST
Driving Change Together.
Responsibly.
Our purpose of “Driving Change
Together. Responsibly”
encompasses our strategic
approach, ways of working
and culture. As an organisation
we aim to be purpose driven,
principled, and values led.
HOW WE WORK
Working responsibly,
working together
Whilst it lacks precision, our
culture is often described
internally as ‘doing the right
thing’, which comes through as
‘Responsibly’ in our purpose:
• Working as one Auto Trader
• Working in partnership
• Thinking as owners
WHO WE ARE
Our values define
who we are
Our values are the guiding
characteristics that underpin
our culture. They are embedded
into our ways of working and
core to our success:
• Community
• Curious
• Humble
• Determined
• Decisive
• Adaptable
At a glance
OUR VALUES P41
WHAT WE DO
Delivering on our
strategic focus areas
Alongside working
responsibly, we have three
strategic focus areas:
• Marketplace: be the best
place to buy a car
• Platform: be the industry’s
data and technology
platform
• Digital retailing: be the
enabler for all retailers
to sell online
Strategic report
Governance
Financial statements
01
Auto Trader Group plc
Annual Report and Financial Statements 2024
Chair’s statement
“It’s a privilege to
succeed Ed Williams as
Chair of Auto Trader.”
INTRODUCTION
It’s a privilege to succeed Ed Williams as Chair
of Auto Trader and I would like to thank him
for the support he has provided to me in taking
on this role and acknowledge the immense
contribution he has made over his tenure.
As Nathan summarises on the subsequent
pages, we believe that the drivers of our
future performance are likely to be reasonably
consistent and I am clear as to the value
creation opportunity that lies ahead from
pursuing the strategy that is outlined below.
RESULTS OVERVIEW
This year marks another strong financial and
operational performance for Auto Trader.
Whilst parts of the automotive market have
seen some softening, the market has generally
been robust and more customers than ever
have opted to partner with us. We continue
to improve our product offering, enabling
customers to compete on our marketplace
through greater access to our data-driven
insight and enabling more of the buying journey
to be completed online, all yielding greater
efficiencies for customers. We continue to
grow and invest in our people, creating an
environment where there is increasing
alignment between employees, customers
and shareholders. Excluding the pandemic
recovery year, the business achieved record
revenue growth in the core Auto Trader
business, increasing 12% to £529.7m.
At a Group level, Autorama revenue was £41.2m
(2023: £27.2m) and therefore Group revenue
was £570.9m (2023: £500.2m). Operating profit
in the core Auto Trader business was £378.6m
(2023: £332.9m), up 14% on last year, with an
operating profit margin of 71% (2023: 70%).
Autorama recorded a reduced operating loss
of £8.8m (2023: £11.2m). Group operating profit
increased by 26% to £348.7m (2023: £277.6m),
reflecting the increase in revenue and the
£23.0m reduction in Group central costs to
£21.1m (2023: £44.1m). Group operating profit
margin was 61% (2023: 55%). Basic earnings per
share increased 13% to 28.15p (2023: 25.01p).
BOARD CHANGES
An important enabler for our success over
the years has been a capable, diligent and
supportive Board. Following my appointment
as Chair with effect from the 2023 Annual
General Meeting (‘AGM’), much of my focus has
been on succession planning. Geeta Gopalan
joined the Board on 1 May 2024 and Amanda
James will join the Board on 1 July 2024, both
as Non-Executive Directors and as members
of the Audit, Remuneration, Corporate
Responsibility and Nomination Committees.
With effect from the conclusion of the 2024
AGM on 19 September 2024, Geeta will be
appointed as Senior Independent Director and
Remuneration Committee Chair, and Amanda
will be appointed as Audit Committee Chair,
both subject to shareholder approval. These
appointments replace David Keens and Jill
Easterbrook who came to the end of their third
three-year terms in 2024, and therefore will not
stand for re-election at the 2024 AGM. We are
deeply grateful for the contribution Ed, David
and Jill have made in their time at Auto Trader.
Following this AGM, the number of Independent
Non-Executive Directors will reduce to five and
our Board will comply with the recommendation
in the FTSE Women Leaders Review and Listing
Rules with respect to appointing a woman in one
of the roles of Chair, Senior Independent Director,
Chief Executive or Chief Financial Officer.
CAPITAL STRUCTURE AND DIVIDENDS
The Directors are recommending a final dividend
of 6.4 pence per share. Subject to shareholders’
approval at the AGM on 19 September 2024, the
final dividend will be paid on 27 September 2024
to shareholders on the register of members at
the close of business on 30 August 2024. The total
dividend for the year is therefore 9.6 pence per
share (2023: 8.4 pence per share).
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.
ANNUAL GENERAL MEETING
The AGM will be held in our Manchester office
on 19 September 2024 at 11am.
Matt Davies
Chair
30 May 2024
Matt Davies
Chair
Strategic report
Governance
Financial statements
02
Auto Trader Group plc
Annual Report and Financial Statements 2024
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CEO’s statement
“This has been another
year of strong financial,
operational and strategic
progress for Auto Trader.”
STRATEGIC AND OPERATING REVIEW
With almost 10 years since IPO in March 2015 and
two years since our last investor day we thought
it worthwhile to look back at our performance
over this longer period. We believe many of the
contributing factors are still equally relevant to
our future. Historically our results statements
have focused solely on what has happened in the
previous financial year, which whilst important,
does not always highlight the key factors
shareholders might consider when thinking
about our longer-term prospects. We will look
to supplement the usual full year detail
with this forward-looking view each year.
Since Auto Trader’s IPO the business has
delivered consistent execution and
performance. During the first few years of being
a public company, revenue grew steadily whilst
much of the focus was on transitioning to a pure
digital business and changing the cost base from
a model that had remnants of our magazine
heritage. This transition yielded cost efficiencies
and stronger profit growth, which was largely
a one-time opportunity. Since then, our
performance has been characterised by higher
revenue growth, with a focus on our core
marketplace and product growth, coupled with
investments in our platform and adjacent
opportunities. These revenues have driven profit
growth that is only slightly lower than the period
during which margins expanded significantly.
Our profits have been consistently distributed
through a combination of dividends and share
buybacks, which is something we expect
to continue. During our history as a listed
business, £1.1bn of surplus cash has been
returned to shareholders (net of the equity raise
during COVID-19) and we have delivered total
shareholder returns of 225% versus 60% for the
FTSE 350 (excluding investment trusts). We don’t
always expect our performance to be linear, with
2021 being a good example, but we do expect the
drivers of our historic and future value creation
to remain reasonably consistent. These drivers
include: a growing automotive market; our
market leading position; our heritage of
innovation; a focused and consistent strategy;
and our purpose and culture.
Nathan Coe
CEO
1. A GROWING AUTOMOTIVE MARKET
Today, most of our economics are linked to the
number of used vehicle retailers who choose
to advertise on Auto Trader. Used vehicle supply
is determined by new vehicle sales (less
scrappage) in preceding years, meaning it
does not meaningfully change with economic
conditions and therefore our business does
not see significant cyclicality. When economic
conditions or consumer demand do change
it is used vehicle prices that adjust, not supply.
Over the past 20 years, the total size of the UK
car parc has gradually increased, growing on
average by just over 250,000 cars per year. The
COVID-19 pandemic broke this consistent trend, as
new car production fell to levels below even those
of the Financial Crisis in 2007-09. From time to time
there will be these anomalies, but over the long
term we expect the used car market to grow as
a result of population growth and stable trends
in car usage.
At times there have been concerns about a
material consolidation within our customer base,
although to date this has not materialised. We
do expect the biggest retailers to get bigger and
we have seen consolidation in our very largest
customers, but not at a level that materially
changes the overall market fragmentation. At the
time of our IPO, we had 13,452 retailers and today
we have 13,783, despite losing c.550 retailers when
we sold our business in the Republic of Ireland.
Finally, we expect the value of both new and
used cars to increase over the long term. During
a short window of time, used car prices will
adjust due to supply and demand movements,
but over longer time periods we expect used
car values to increase gradually due to GDP
growth, population growth, inflation, improved
functionality, longer useful lives and the move
towards more expensive electric vehicles. In
the period from 2011 to 2024, used car prices
have increased by an average of 4% per year.
These factors combine to provide an underlying
market that is resilient and likely to grow in both
volume and value over the long term.
Group revenue and operating profit
Cash returned to shareholders
Strategic report
Governance
Financial statements
03
Auto Trader Group plc
Annual Report and Financial Statements 2024
CEO’s statement
continued
2. OUR MARKET LEADING POSITION
As the automotive market increasingly embraces
digital channels, technology and data we are
uniquely placed to help. In financial year 2016
Auto Trader had visits of 47.9 million per month,
last year that number had increased to 77.5
million. This past year we accounted for over 75%
of all minutes spent on automotive classified
sites and were 10x larger than our nearest
classified competitor (2023: 7x). Over time we
have seen 21 million downloads of our app and
currently see 89% prompted brand awareness
with UK consumers. In addition to this, third-party
data suggests that more than 8 in 10 car buyers
use Auto Trader during their shopping journey,
and two thirds of buyers only use Auto Trader.
In order to ensure this position is maintained,
we will continue to invest in improving our site
experience, maintaining high levels of trust,
evolving our brand, building our content and
marketing capabilities, launching new tools
and functionality for retailers, and deepening
our partnership with customers.
Many of the changes we are currently
developing are as significant as any in our
history in terms of deepening the experience
we provide to car buyers. These will improve
our marketplace, enable our customers to
power their businesses with our technology
and data platform, whilst moving us towards
digital retailing.
3. OUR HERITAGE OF INNOVATION
Almost every retail category has been impacted
by the growing role of the internet in how
we purchase goods, and the car market is no
exception. New cars are still at a much earlier
stage, but researching and shopping for used
cars online has been commonplace for many
years. Today over 90% of car buyers use the
internet for some part of their car buying
process. However, the physical part of the
shopping experience is and will remain important
due to the value and unique characteristics
and condition of every used car.
Most car buyers will use the internet to find a
used car, ensure they’re getting a good deal and
to check the reputation of the retailer. This is
because the choice available is significant and
platforms like Auto Trader make navigating
the car buying process much simpler than it
otherwise would be. Our trusted position and
brand heritage in this area is significant, from
initially operating as a magazine to the fully
digital business we are today, leveraging
technology to support more of the buying and
selling journey. On Auto Trader buyers are now
using retailer reviews, seeing professionally
produced video content, benefitting from
enriched data about the specification and
performance of the car, checking the history
of the vehicle and whether it has outstanding
finance, seamlessly using artificial intelligence
(‘AI’) to get a market value for the car they’re
buying or selling, applying for finance and
reserving cars online. This continuous
improvement in the way buyers use Auto Trader
has underpinned much of our past success and
we know there are significant opportunities
to further enhance the consumer experience.
The shift to digital has also brought real benefits
to retailers. It has meant they can advertise
their vehicles as quickly as it takes to photograph
and upload an advert. The insight they have on
vehicle performance and what they get for their
advertising is detailed, real-time, and can be acted
upon at the click of a button. Over time retailers
have also accessed our AI models for pricing and
demand metrics that use almost one million
vehicle observations a day. This helps customers
decide which vehicles they should be buying for
their local area, what prices they can expect at
retail and how long it is likely to take to sell. These
products might otherwise have been unattainable
or have required significant investment by our
customers, and we have every intention of
continuing to use our brand, data and technology
to enable any retailer to access the very best
tools and achieve their business goals.
Over time we will continue improving and building
on these areas, strengthening the partnership we
have with customers and increasing their use of
our software products, and unlocking new revenue
streams for the business.
All this innovation is delivered through our
well-invested technology platforms, built
by Auto Trader people who have many years
of experience enabling infrastructure and
products for our customers. This year we
delivered 65,000 software releases (2023:
51,000) and saw 22.1 million API calls a week
(2023: 10.2 million).
4. A FOCUSED AND CONSISTENT STRATEGY
Our strategy as set out at our investor day in
September 2022 outlined three strategic focus
areas: our marketplace; our platform; and digital
retailing. These areas are closely interconnected,
as our platform and digital retailing capabilities
build on the strengths of our marketplace whilst
also deepening our relationships with customers
and car buyers. These have all been multi-year
investments which have progressed over the
past 12 months and are covered in more detail in
Catherine’s update on our strategic progress.
5. OUR PURPOSE AND CULTURE
Our purpose is Driving Change Together.
Responsibly, which encompasses our ways of
working and our culture. Culture has been a
fundamental part of the changes we’ve made
and the results we’ve achieved for at least 10
years. As an organisation we aim to be purpose
driven, principled, and values led. Whilst it
lacks precision, our culture is often described
internally as ‘doing the right thing’, described as
‘Responsibly’ in our purpose. Within this we’re
looking to achieve a balance between investing
in the future, performing today and ensuring
our customers and other stakeholders see the
benefits of working with us.
‘Driving Change’ runs deep within the
organisation. We are restless, self-critical and
comfortable embracing new and disruptive
technology, which is something the organisation
has done for decades. We launched our website
Strategic report
Governance
Financial statements
04
Auto Trader Group plc
Annual Report and Financial Statements 2024
CEO’s statement
continued
back in 1996, which went on to completely
replace the magazines that were the business
for much of our 47-year history. When the mobile
internet arrived, we were quick to launch mobile
sites and apps some 15 years ago. We embraced
server virtualisation, then private cloud, then
public cloud which we completed our full
transition to last year. We invested in building out
a new data platform and data science capability
10 years ago, making artificial intelligence
available to the automotive industry. This history
of innovation is a core part of our culture and our
results. These initiatives take a long time to build
at scale, but once operational they enable us
to act fast without the constraints of legacy
systems and significant technical debt.
‘Together’ points to three aspects of our
culture. The first is being ‘One’ Auto Trader.
This refers to working as a single team, not
in silos, with trust and collaboration over
hierarchy and bureaucracy. We are one
organisation which means tech is tech for all
of Auto Trader, finance is finance for all of
Auto Trader, product is product for all of
Auto Trader, marketing is marketing for all of
Auto Trader. Therefore to progress any piece
of work or initiative, our people have to talk,
be aligned with our priorities, listen to each
other, and collaborate authentically.
The second important aspect of ‘Together’
is the way in which we work with customers,
retailers, manufacturers, leasing companies,
finance companies and other players in the
automotive ecosystem. We aim for partnership.
We believe that there is a lot more we can bring
to our customers than just the products we sell.
With our data, brand, people and technology we
can help our customers achieve their business
goals, which makes them much more likely
to understand and use our products, advice,
insight and services. We believe this will lead
to a much bigger and more influential business,
not least because to be successful in areas
adjacent to our core we often need the advice
and support of customers.
The third aspect of ‘Together’ is an ownership
mindset amongst our people which strongly
reinforces the two points above. In September
2023 we announced our One Auto Trader
all-employee share scheme that provides
employees with an extra 10% of their salary
in shares each year, vesting over a three-year
period. This builds on an already strong
ownership culture, aligns our people with our
shareholders and can be accommodated
within our long-term Auto Trader margin
target of above 70%.
Finally, a big part of our culture and ‘Responsibly’
is creating an environment that attracts diverse
groups of people and enables them to fulfil their
potential for both the business and themselves.
This requires long-term commitment to structural
changes that take years to come to fruition,
but we are making progress. As an example, like
all technology companies we would like more
women engineers, but it is a career still under-
represented by women. To address this, we
have a range of initiatives including outreach
programmes with universities and schools,
graduate and apprenticeship schemes (not
requiring a computer science degree) and
retraining. This is just one example, but we apply
the same thinking to other groups such as the
neurodivergent, those from ethnically diverse
backgrounds, the LGBT+ community, those
with disabilities and those that are later in their
careers. Our employee-driven networks have
been instrumental in supporting these efforts
which represent women, ethnicity, LGBT+, early
careers, disability and neurodiversity, social
mobility, parents and age.
This is by no means a complete view of our
culture, but hopefully gives some sense of how
we work at Auto Trader and more importantly
how it contributes to both execution and the
results we have achieved this year, this decade,
and that we aspire to in the years ahead.
OUTLOOK
The new financial year has started well.
We anticipate another good year of average
revenue per retailer (‘ARPR’) growth across all
three levers. In FY24 there was some positive
ARPR benefit from the Webzone disposal, as
on average their retailers were lower yielding,
which won’t be replicated in FY25. We expect
ARPR price growth of £90-£100, product growth
of £120-£130 and stock growth of £20-£40,
with average retailer forecourts likely to be
marginally down year-on-year, as market
conditions continue to return to normal levels.
Consumer Services and Manufacturer and
Agency are expected to grow at a rate of
mid-to-high single digits.
We expect Autorama operating losses to reduce
year-on-year, despite tight supply conditions in
the leasing channel for new vehicles continuing.
Group central costs, which relate to the
amortisation of Autorama acquired intangibles,
will be c.£13m for the year.
As mentioned at our last results, in FY25 we will
exceed the threshold for the UK’s digital services
tax (‘DST’) which will be taken as an operating
expense in the core Auto Trader segment. We
therefore expect FY25 operating profit margins
within this segment to be 69%, or 71% when
excluding DST. However, at a Group level we
expect to see modest margin expansion.
Our capital policy remains unchanged, with most
surplus cash generated by the business being
returned to shareholders through dividends and
share buybacks.
Nathan Coe
CEO
30 May 2024
Strategic report
Governance
Financial statements
05
Auto Trader Group plc
Annual Report and Financial Statements 2024
-10%
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FY22
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Market overview
A changing new and used car market
We are continually adapting our onsite experience to meet the
changing needs of both consumers and customers. This is core
to remaining the UK’s largest automotive marketplace.
NEW CAR REGISTRATIONS
The new car retail market has been
challenging and discounting has started
to return. We are well placed to support
structural changes in this market, which
remains a significant opportunity. We
now have products in market supporting
franchise retailers, manufacturers and
leasing companies selling new cars
directly to consumers on Auto Trader.
The supply constraints that impacted new
car registrations over a number of years
following the pandemic have continued
to ease over the past 12 months. Total new
car registrations for financial year 2024
increased 18% to 2.0 million (2023: 1.7 million),
with most of the growth coming from the
fleet segment which has seen low volumes
over much of the previous three years.
Despite the Government delaying the ban on
the sale of new petrol and diesel vehicles, the
penetration of electric vehicles was stable,
making up 17% of all registrations (2023: 17%).
USED CAR TRANSACTIONS
The used car retail market has been robust
throughout the financial year, which we
expect to continue. Demand is resilient
with cars continuing to sell faster than
before the pandemic, and used car
supply has gradually improved. Trade
prices softened in the latter months of
the calendar year, which subsequently
impacted retail prices, but monthly pricing
movements have since stabilised.
There were 7.3 million used car
transactions in the 12 months to March
2024, up 6% year on year (2023: 6.9 million).
Supply has gradually improved through the
year as new car registrations have grown
through the fleet channel, which has in turn
increased the availability of ex-fleet stock
for franchise and independent customers.
The growth in used car transactions is
larger than our increase in live car stock on
site as the speed at which cars have been
sold has continued to be quicker.
2.0m
2
new car registrations in the
12 months to March 2024,
+16% year on year (2023: 1.7m)
7.3m
3
used car transactions in the
12 months to March 2024,
+6% year on year (2023: 6.9m)
RETAIL PRICE INDEX
The Auto Trader Retail Price Index tracks the
average retail price of used cars based on
c.800,000 daily pricing observations. Despite
strong levels of demand on Auto Trader, like-
for-like average retail prices have softened
over the past 12 months. This has been due
to increasing supply of both new and used
vehicles impacting trade prices which have
then fed into the retail market, coupled with
an increasing level of discounts on new
£17,833
1
average price of a used car advertised
on Auto Trader for the 12 months ending
March 2024, a decline of 1.3% year on
year on a like-for-like basis (2023: £17,544)
1.
Auto Trader internal data.
2.
Society of Motor Manufacturers & Traders (‘SMMT’).
3. DVLA transaction data.
VIEW THE FULL INDEX
plc.autotrader.co.uk/news-views/retail-price-index
electric vehicles. The average price of a used
car on Auto Trader for the 12 months ending
March 2024 was £17,833, a like-for-like decline
of 1.3% year on year (2023: £17,544).
Governance
Financial statements
06
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Market overview
continued
KEY TREND
Consumer appetite to do more of the car
buying journey online continues to be strong.
Our internal research showed that around 7 in
10 car buyers either have completed or want to
complete more of their car buying jobs online.
It’s worth noting though that whilst this desire
to do more online exists, the forecourt
experience remains an important part of the
process for buyers and we expect the car
buying journey, particularly for used cars, to be
omnichannel for a number of years to come.
AUTO TRADER PROGRESS
Building on both our marketplace and
platform strategic focus areas, we are
bringing more of the car buying journey
online through our digital retailing solutions.
Our approach to digital retailing is to be ‘car
first’ and to enable any retailer (including
manufacturers and leasing companies) to
combine an exceptional digital journey with
a great physical experience. During the last
financial year, we have further scaled our
Deal Builder trial to end the year with c.1,100
retailers on the product and over 40,000 cars.
Consumer feedback continues to be positive
and deals are converting at roughly double
the rate of any other enquiry type, with many
deals being completed outside of retail
hours. We also now have a new car leasing
journey available on Auto Trader.
STAKEHOLDER PERSPECTIVE
“We’ve started to get reservations
coming in after hours, which has made it
as if we have a 24-hour forecourt, which
has been really good for us. We wake up in
the morning and we’ve sold a couple of
cars, which has been absolutely fantastic.
It’s really given us the confidence to grow
our business.”
NIAZ KANJI
General Manager, SR Motors
FUTURE OPPORTUNITIES
Looking ahead, we will continue scaling
Deal Builder and building out the functionality
for new vehicle leasing on Auto Trader. For
Deal Builder we expect to integrate further
with technology partners and increase
our penetration with lenders to extend the
offering to more customer segments.
We have started to monetise a small cohort
of customers which we also expect to
increase over the next 12 months.
KEY TREND
Changes in supply dynamics, electric vehicle
demand and wholesale trends are driving
complexity and volatility in the used car
market. In turn, it’s creating uncertainty for
retailers and making forecourt strategies
harder to manage.
AUTO TRADER PROGRESS
Up until the end of financial year 2024,
we had launched two modules of our
Auto Trader Connect strategy. The first
gave customers access to our taxonomy,
improving advert quality, and introduced
real-time updates between our systems
and those of our customers. The second
module gave access to our market leading,
specification adjusted valuations, enabling
customers to make quicker and more
profitable sourcing, advertising and pricing
decisions. Both these data sets were made
available in our Retailer Portal or via API.
STAKEHOLDER PERSPECTIVE
“I think Trended Valuations is
essential. As retail and trade markets
don’t always move in sync, a point in time
trade valuation only tells part of the story
when sourcing and puts margin at risk
when you hit the retail market. Trended
Valuations will provide us with a broader
view of retail pricing over time, to chart
the trajectory of a vehicle’s past
performance and, crucially, where it’s
forecast to go.”
ANDREW MUFFETT
Group Used Car Buyer, Allen Motor Group
FUTURE OPPORTUNITIES
From 1 April 2024, we made a further module
of Auto Trader Connect available which
included Trended Valuations and enhanced
Retail Check functionality. Combined, this
powerful new layer of intelligence helps
retailers confidently understand the past and
present trends in terms of pricing and demand
so they can make better decisions when
buying or retailing vehicles.
More of the buying
journey moving online
The increasing
importance of data
Key trends shaping the future of our industry
Governance
Financial statements
07
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Annual Report and Financial Statements 2024
Strategic report
Market overview
continued
KEY TREND
The new car market has seen increased levels
of supply throughout the last 12 months, which
has resulted in growing levels of discounting
and price reductions. These changes in the
balance of demand and supply are on top
of significant structural changes. These
changes are 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.
AUTO TRADER PROGRESS
Within our marketplace we continue to invest in
our new car experience. Franchise customers
have been able to advertise physical new cars
for a number of years, and we ended the year
with c.2,100 paying retailers on this product.
Alongside this, we have launched a new car
product allowing manufacturers operating
an agency model to advertise new cars
directly to consumers nationally.
STAKEHOLDER PERSPECTIVE
“As the availability of new cars
improves and the pressure from the
manufacturers to drive volume increases,
the franchise networks are under
increasing pressure to drive volume.
Given the need to drive EV sales as a
percentage of all new car sales, it is really
important that we maximise our
opportunities to showcase our product to
as many potential customers as possible.
Auto Trader gives us the perfect platform
to showcase the Hyundai range to a
wider audience and to let people know
that we are a retailer that can look after
them regarding their new car purchase.”
PAUL SHARP
Retailer Principal of Hyundai Stockport
FUTURE OPPORTUNITIES
With the level of structural change and
volatile market dynamics likely to continue,
we believe we can continue to scale the
products we have available to customers.
The penetration of franchise customers is
currently only 50%, which we expect to
increase over the next 12 months, and as a
growing number of manufacturers move
to a more direct sales channel, we expect
to have them advertising on Auto Trader.
KEY TREND
The introduction of the Government’s Zero
Emission Vehicle mandate is the defining
feature of the electric market in 2024. As
pressure from Government targets impacts
the market, price and affordability will likely
be a key factor in generating consumer
demand. This has already been seen with
average new car discount levels increasing
on electric cars, which has also weighed on
used electric pricing. As certain brands reach
price parity in the used market, many buyers
are considering switching to electric for their
next purchase.
AUTO TRADER PROGRESS
Auto Trader’s response to the transition to
electric focuses on three key stakeholder
groups: our customers, consumers and partners
& suppliers, which includes the Government.
Actions include leveraging our unique market
position by sharing data and insights on the
electric transition to assist our customers and
Government as well as position Auto Trader
as the voice on the industry in the national
media. We’re also ensuring our products and
tools are built to show vital information about
electric vehicles so that our consumers and
retailers have the information they need
when making buying and selling decisions.
STAKEHOLDER PERSPECTIVE
“Auto Trader is a key stakeholder
for the UK Government’s Office for
Zero Emission Vehicles (‘OZEV’) and a
workstream lead in OZEV’s Used EV
Market Steering Group. Auto Trader’s
engagement and content is fundamental
to OZEV’s policy making process and
monitoring the health of the market. Their
outputs are visual and highly engaging,
represented by presenters who are clear
and very well informed. Auto Trader
content is used in monthly dashboards
for Department for Transport directors
and regularly in ministerial briefings.”
ABDUL CHOWDHURY
Head of Vehicle Policy, Office for Zero Emission Vehicles
FUTURE OPPORTUNITIES
As the electric market matures and
Government actions continue to impact,
Auto Trader has a significant opportunity and
responsibility to support the development
of a successful electric market in the UK.
With demand for electric cars stagnating
and the second-hand market on the verge
of substantial supply growth, Auto Trader
can use its market position and insight
to guide and support its partners, the
Government and consumers through
this once in a lifetime transition.
Significant changes
within the new car market
Supporting the
transition to electric
Key trends shaping the future of our industry
continued
Governance
Financial statements
08
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Annual Report and Financial Statements 2024
Strategic report
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MARKETPLACE
P
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How we create value
Our unique network effect
The drivers that set us apart
The core activities we undertake to create value
The value created for our stakeholders
WORKING RESPONSIBLY
Our ESG ethos runs through all
elements of value creation and
everything we do as a business.
BRAND & AUDIENCE
Auto Trader has been trusted for over 45
years by UK car buyers and sellers, giving
it the largest UK car buying audience.
TECHNOLOGY
We have a scaleable, cloud-based
technology platform which enables
many iterative changes to be made.
DATA
Our proprietary data is increasingly
embedded across the automotive
value chain.
PEOPLE & CULTURE
Our values-led culture underpins
a fast-moving, collaborative and
community-minded environment.
INVESTMENT
We have a high return, capital light
business model, which enables us
to invest in the business.
LONG-TERM FOCUS
The strength of our business model
enables us to take a long-term approach
to our products and technology.
FOR CONSUMERS
Our marketplace offers consumers the
widest choice of vehicles in the UK, with
tools that increase trust and transparency
in the buying process.
FOR CUSTOMERS
We offer the most effective sales channel
for retailers, and are the industry leading
technology and data platform for our wider
pool of partners.
FOR OUR PEOPLE
We continue to evolve our unique culture to
ensure everyone can develop and achieve
their career aspirations.
FOR PARTNERS & SUPPLIERS
We work collaboratively in partnership, increasing
revenue from shared opportunities whilst ensuring
we have fair trading and robust terms and conditions.
FOR THE COMMUNITY & THE ENVIRONMENT
Every employee is provided up to two volunteering
days each year, within local communities. The
environment is a key consideration for our business.
We have a clear plan for net zero and helping
consumers shift to electric vehicles.
FOR INVESTORS
Given our strong cash generation, a high proportion
of our profit is returned to shareholders in the form
of dividends and share buybacks.
Governance
Financial statements
09
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Annual Report and Financial Statements 2024
Strategic report
W
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READ MORE P25
A key part of our purpose is responsibly. Whilst it
lacks precision, our culture is often described
internally as ‘doing the right thing’.
This ensures we strive to make a positive difference to
our people, the automotive industry, our communities
and the wider environment.
Marketplace
Be the best place to buy a car
Platform
Be the industry’s data and technology platform
Digital retailing
Be the enabler for all retailers to sell online
Working responsibly
Driving Change Together.
Responsibly.
Our purpose continues to be Driving Change Together.
Responsibly. We deliver on this through our three
strategic focus areas, alongside our commitment
to working responsibly.
INTRODUCTION
Our strategy as set out at our investor day in
September 2022 outlined three strategic focus
areas: our marketplace; our platform; and
digital retailing. These areas are closely
interconnected, as our platform and digital
retailing capabilities build on the strengths of
our marketplace whilst also deepening our
relationships with customers and car buyers.
Our marketplace has grown in the number of
both buyers and sellers using Auto Trader. We’ve
continued to develop our technology platform
which has allowed us to launch further modules
of Auto Trader Connect. On digital retailing, we
have scaled our Deal Builder proposition which
continues to receive positive feedback.
“We’ve made significant
progress this year across all three
of our strategic focus areas.”
Strategic progress
Catherine Faiers
Chief Operating Officer
DIGITAL RETAILING
PLATFORM
MARKETPLACE
Governance
Financial statements
10
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Marketplace
KPIS P18
RISKS P53
2024 PROGRESS
Our marketplace saw strong revenue and
operating profit growth in the year, with double
digit growth across all three revenue segments
for the first time since our IPO in 2015. The
largest area of revenue comes from retailer
customers, where forecourt numbers were
broadly consistent and we increased average
revenue per retailer (‘ARPR’) by 12%. This growth
came from all three levers: price, stock and
product. Our annual pricing and product event,
which took effect in April, included a further
module of Auto Trader Connect as we look to
embed our data and insight into customers’
businesses to enable them to make better,
faster decisions. Our advertising packages
continue to perform well with penetration
above our standard package averaging 35%
of retailer stock over the year (2023: 32%,
March 2024: 34%).
Within our marketplace we remain committed
to building our new car experience. Franchise
customers have been able to advertise
physical new cars for a number of years,
and we ended the year with c.2,100 paying
retailers on this product (March 2023: c.1,900).
Alongside this, we have launched a product
allowing manufacturers operating an agency
model to advertise new cars directly to
consumers nationally.
This revenue is included in the Manufacturer
and Agency line. Critical to having the best new
car buying experience is ensuring we are the
research destination for electric vehicles
(‘EVs’). To support this, we have added new EV
content, tools and evolved search. We have
also actively started to incorporate EVs into
our marketing campaigns, launched new media
partnerships to promote EVs, hosted live
events, and continued our successful monthly
EV giveaway.
We have continued to share our data
and insight with retailers, the industry and
Government to help inform public policy
and regulation to support the mass adoption
of EVs. 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 Ultra Low Emission Zone
(‘ULEZ’) expansion and the associated
scrappage scheme.
FUTURE OPPORTUNITIES
We continue to consider ways in which
we can build consumer trust in our core
marketplace. We also see an opportunity
to improve our search experience,
particularly in the ways we use data
to create a more personalised search
experience for consumers.
Whilst we have made good progress on
new cars in the year, there is still much
work to do. The penetration of franchise
customers is currently only 50%, which
we expect to increase over the next 12
months, and as a growing number of
manufacturers move to a more direct
sales channel, we expect to have them
advertising on Auto Trader.
HOW WE MEASURE PROGRESS
• Revenue
• Average revenue per retailer (‘ARPR’)
• Operating profit (and margin)
• Basic EPS
• Cash generated from operations
• Cross platform visits
• Cross platform minutes
• Number of retailer forecourts
• Live car stock
• Employee engagement
ASSOCIATED RISKS
• Automotive economy, market and business
environment
• Climate change
• Employees
• Reliance on third parties and partners
• IT systems and cyber security
• Failure to innovate: disruptive technologies
and changing consumer behaviours
• Legal and regulatory compliance
• Competition
• Brand and reputation
Strategic progress
continued
12%
ARPR growth in the year, with
positive contribution from all
3 levers (2023: 10%)
35%
of retailer stock above our standard
package level (2023: 32%)
Governance
Financial statements
11
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Platform
2024 PROGRESS
In April 2023 we made our second module of
Auto Trader Connect, Valuations, available to
customers as part of our annual pricing and
product event. This provides specification
and condition adjusted valuations within
our Retailer Portal and via our Auto Trader
Connect APIs, enabling third parties and
retailers to directly integrate these into their
core systems. In April 2024 we launched a
further module of Auto Trader Connect
providing retailers with Trended Valuations
and enhanced Retail Check functionality.
Combined, these tools help retailers
confidently understand the past and present
trends in terms of pricing and demand so
they can make better decisions when buying
or retailing vehicles.
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.
Over many years we have improved the
quality of our data, most of which is
proprietary. We acquired Kee Resources for
vehicle taxonomy, have integrated build-
level data from manufacturers, collated
FUTURE OPPORTUNITIES
We plan to further embed our data
and usage of Auto Trader Connect with
retailers. We will also continue to deepen
relationships with third-party software
providers, OEMs and lenders to further
develop our proposition.
Strategic progress
continued
many observations on our platform and more
recently have sourced granular vehicle data to
provide our own provenance checks. As part of
our platform strategy, we continue to integrate
with lenders to enable a full digital automotive
finance journey on Auto Trader. While we are
not directly impacted by the current FCA
investigation into discretionary commission
arrangements, we believe it should lead to a
more consistent and transparent car buying
journey for consumers, which we are well
placed to provide on Auto Trader.
HOW WE MEASURE PROGRESS
• Auto Trader Connect integrations
• Number of lender integrations
• Number of product releases
ASSOCIATED RISKS
• Reliance on third parties and partners
• IT systems and cyber security
• Failure to innovate: disruptive technologies
and changing consumer behaviours
65,000
software releases over the year
(2023: 51,000)
>75%
of retailers benefitting from our
Auto Trader Connect modules:
Retail Essentials and Valuations
KPIS P18
RISKS P53
Governance
Financial statements
12
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Annual Report and Financial Statements 2024
Strategic report
Strategic progress
continued
KPIS P18
RISKS P53
2024 PROGRESS
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 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 trial, we have
increased the volume of customers to c.1,100
retailers (March 2023: c.50) with over 40,000 cars
live at the end of March 2024. Over the past 12
months, we have continued to improve the onsite
experience and generated 16,000 deals with a
reservation in the period (2023: c.200). Consumer
feedback continues to be positive and deals
are converting at roughly double the rate of
any other enquiry type, with many deals being
completed outside of retail hours. In January
FUTURE OPPORTUNITIES
Looking ahead, we will continue scaling
Deal Builder and building out the
functionality for new vehicle leasing on
Auto Trader. For Deal Builder we expect
to integrate further with technology
partners and increase our penetration
with lenders to extend the offering to
more customer segments. We have
started to monetise a small cohort
of customers which we also expect
to increase over the next 12 months.
2024, we trialled monetisation with a small
cohort of customers paying a transaction fee
(0.25%) linked to the price of the vehicle which
is charged on submission of a deal.
In parallel to Deal Builder, we are working to
enable a digital retailing journey for new cars.
Throughout the year we have further integrated
leasing deals for cars, vans and pickups into
the core Auto Trader search experience. Our car
leasing tab consolidates all available deals and
provides a full checkout journey on Auto Trader.
The personal leasing market has been
constrained by tight supply throughout the year,
but in time we expect supply through this channel
to improve. Autorama delivered 7,847 vehicles
across the period (2023, from 22 June acquisition
date: 6,895), with average commission and
ancillary revenue per vehicle delivered of £1,631
(2023: £1,624).
HOW WE MEASURE PROGRESS
• Number of Deal Builder customers
• Number of Deal Builder live stock
• Number of submitted deals
• Number of leasing vehicles delivered
ASSOCIATED RISKS
• Reliance on third parties and partners
• IT systems and cyber security
• Failure to innovate: disruptive technologies
and changing consumer behaviours
• Legal and regulatory compliance
Catherine Faiers
COO
30 May 2024
c.1,100
Deal Builder customers live in
March 2024 (March 2023: c.50)
Digital retailing
c.16,000
deals in the period (2023: c.200)
Governance
Financial statements
13
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Strategic report
Section 172(1) statement
Considering our stakeholders
WORKING RESPONSIBLY P25
HOW WE CREATE VALUE P09
MARKET OVERVIEW P06
The Directors of the Company have acted in the way that they consider,
in good faith, would be most likely to promote the success of the Company
for the benefit of its members as a whole, having due regard in doing so
for the matters set out in section 172 (1) (a) to (f) of the Companies Act 2006.
In order to achieve our purpose and to
continue to deliver long-term success,
we understand the importance of
building and maintaining meaningful
and mutually beneficial relationships
with our stakeholders, identifying what
is important to them and understanding
the long-term impact of our business
on the industry and the environment.
The Board and Operational Leadership
Team lead the business in maintaining
our high standards of business conduct.
A well established stakeholder
framework is applied to all papers
submitted to the Board and is at
the centre of discussions in the
boardroom. This enables the decision-
makers to do the right thing whilst
considering the balance of interests
of affected stakeholders. The Board
acknowledges that not every decision
it makes will necessarily result in
a positive outcome for all of our
stakeholders. But by understanding
our stakeholders, and by considering
their diverse needs, the Board
factors into boardroom discussions
the potential impact of our decisions
on each stakeholder group, and of
the other matters required by S172(1).
We are
driving change
in an
industry that needs to evolve
to adapt to changing consumer
needs, and the impact of
electric vehicles.
Our business model results in
bringing
together
a diverse set
of stakeholders – consumers,
customers (including retailers,
manufacturers and other
customers), suppliers and
partners – underpinned by our
collaborative, people-led culture.
We are committed to act
responsibly
through our focus
on diversity and inclusion,
environmental sustainability
and maintaining high levels
of ethical conduct, trust and
transparency.
SECTION 172 MATTERS
Our purpose is
Driving Change Together. Responsibly.
CONSIDERING THE LONG-TERM CONSEQUENCES OF OUR DECISIONS
Material decisions
made
P15
How we create value
P09
Strategic progress
P10
CONSIDERING THE INTERESTS OF OUR EMPLOYEES
Our people
& communities
P40
How we create value
P09
Our stakeholders
P16
THE NEED TO FOSTER GOOD RELATIONSHIPS WITH OUR STAKEHOLDERS
How we create value
P09
Our stakeholders
P16
CONSIDERING OUR IMPACT ON THE ENVIRONMENT AND OUR COMMUNITY
TCFD disclosures
P29
Report of the Corporate
Responsibility Committee
P78
Our ESG strategy
P25
MAINTAINING HIGH STANDARDS OF CONDUCT
Our governance &
compliance
P46
Governance
P61
How we manage risk
P50
ACTING FAIRLY BETWEEN STAKEHOLDERS
How we create value
P09
Our stakeholders
P16
Governance
Financial statements
14
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Section 172(1) statement
continued
OUR PURPOSE-DRIVEN STRATEGY P10
CONTEXT
Our people are one of our most valuable assets and
we continuously work towards enhancing the overall
employee experience. We take a holistic approach
towards employee remuneration, to ensure that it
remains fair, competitive and transparent. We have
made improvements over recent years around
pension arrangements, salary benchmarking and
ensuring the application of a Real Living Wage,
as set by the Real Living Wage Foundation, is our
minimum salary level across the business.
Over a number of years, the Board has considered
how best to enable our people to participate in the
success of their efforts and encourage a culture of
shared ownership, to align employees’ interests with
that of shareholders, to enhance attraction and
retention, and to improve the overall total reward
package for employees. During 2023, the Board
considered and approved a new all-employee
scheme which we believe will achieve these aims.
BOARD CONSIDERATIONS
As outlined above, the Board considered the impact on
employees, and concluded that a new share scheme
which aimed to increase a culture of ownership would
benefit employees, as an enhancement of the current
employee remuneration package.
Given the significant financial commitment, the Board
devoted considerable time to reviewing the financial
impact on the business. The awards are to be granted
annually to employees, based on a value of 10% of
base salary, vesting over a three-year period, and
therefore the cost would increase in each subsequent
year before reaching a stable ongoing cost.
The Board considered that the scheme would have
a positive impact on employee engagement,
retention and attraction, and would strengthen
our overall proposition in a competitive market.
From an investor perspective, although the awards
do carry a financial cost and will be dilutive, this
is within the limits prescribed by the Investment
Association. The awards are intended to further
align employees’ interest with that of shareholders.
OUTCOME
Overall, the Board agreed that the all-employee
share award was in the best long-term interests of the
business, and would provide a fair, transparent and
inclusive way to enable our people to benefit from the
business success they have helped to create, and a
cost-effective way of providing long-term reward.
RELEVANT STAKEHOLDERS
• Our people
• Investors
CONTEXT
Over the past 24 months the new car market has
seen increased structural changes. These include
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. Part of our strategy
is to ensure Auto Trader is as relevant to new car
buyers as it is for used cars.
BOARD CONSIDERATIONS
In light of these ongoing structural changes the
Board has had to consider a number of new product
launches and their impact on different stakeholder
groups. When buying an electric car for the first time,
the considerations are different to when buying a
combustion engine. It became clear that the content
and search experience available on Auto Trader to
purchase an electric car needed further investment
to support consumers making more environmentally
friendly vehicle choices.
With changing distribution models, the Board had to
consider the competing nature of franchise customers,
manufacturers selling direct and personal leasing as
different methods by which new cars can potentially
be sold. As well as the sellers, the Board also had to
consider car buyers and ensuring that Auto Trader
continues to offer the best range of choice.
OUTCOME
Whilst further work is still required, we have added
new EV content, tools and evolved search. We
have also actively started to incorporate EVs into
our marketing campaigns, launched new media
partnerships to promote EVs, hosted live events,
and continued our successful monthly EV giveaway.
The number of franchise customers advertising
new cars on Auto Trader grew in the year, despite
a change to our commercial model.
We have launched a new car product allowing
manufacturers operating an agency model to
advertise new cars directly to consumers nationally.
Importantly, this product is not available to
manufacturers operating a franchise model.
Throughout the year we have further integrated
leasing deals for cars, vans and pickups into the core
Auto Trader search experience. Our car leasing tab
consolidates all available deals and provides a full
checkout journey on Auto Trader.
RELEVANT STAKEHOLDERS
• Customers
• Consumers
•
The community & the environment
ALL-EMPLOYEE SHARE AWARD
RELEVANT STRATEGIC PRIORITIES:
NEW CAR PRODUCTS ON AUTO TRADER
RELEVANT STRATEGIC PRIORITIES:
Material decisions taken by the Board
We set out below two examples of material decisions made during the financial year
with an explanation of how we considered the needs of our stakeholders in each.
An extra
10%
of salary awarded in
shares each year
c.2,100
paying new car retailers in
March 2024 (March 2023: c.1,900)
Marketplace
OUR STRATEGIC PRIORITIES
Digital retailing
Platform
Working responsibly
Governance
Financial statements
15
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Annual Report and Financial Statements 2024
Strategic report
Section 172(1) statement
continued
Maintaining stakeholder relationships
OUR MATERIALITY ASSESSMENT P26
We highlight below some of our key stakeholders, and we discuss why they are important
to us, what matters to them and, crucially, the ways in which we as an organisation,
and the Board, effectively engage with them and what actions we take as a result.
Our environment
MATERIAL ISSUES
Our people & communities
Our governance & compliance
CONSUMERS
WHY ARE OUR CONSUMERS
IMPORTANT TO US?
Maintaining a large, engaged
consumer base of in-market car
buyers, sellers and researchers
who have high levels of trust
and confidence in Auto Trader,
underpins the success of our
business model.
WHAT MATTERS TO OUR
CONSUMERS?
• Comprehensive choice
of vehicles.
•
Ease of buying or selling
a vehicle.
•
Clear and transparent
information about the vehicle,
seller and payment options.
•
Ever present service, offering
good levels of consumer
support and responsive
communication.
HOW DO WE ENGAGE WITH THEM?
•
Speaking to consumers regularly
for research and insight.
•
Continual feedback on our user
experience through on and
offsite surveys.
•
Regular consumer user testing
of new products, services and
brand designs of our website.
•
Consumer facing teams
operating seven days a week.
•
Social media and marketing
channels.
WHAT ACTIONS DID WE TAKE?
•
Holding workshops with people
who are neurodiverse and
potentially vulnerable
consumers, which feeds into
our consumer facing products
(for example, their thoughts
on how we display finance).
•
Outputs of consumer research
shared with Operational
Leadership Team (‘OLT’)
and Board to factor into
decision-making.
MATERIAL ISSUES
2
Data privacy and security
4
Product innovation
5
Customer satisfaction
11
Driving transparency
CUSTOMERS
(retailers, manufacturers and other customers)
WHY ARE OUR CUSTOMERS
IMPORTANT TO US?
Our partnerships with almost 14,000
vehicle retailers, with manufacturers
and other customers (such as
leasing companies) mean that
we continue to have the greatest
choice of vehicles for consumers.
The majority of our revenue is
generated from our customers.
WHAT MATTERS TO OUR
CUSTOMERS?
•
High-quality access to a large
volume of car buyers.
•
Making the car selling process
more efficient.
• Sourcing vehicles.
•
Access to trusted data to make
informed sourcing and disposing
decisions.
•
Receiving value for money from
Auto Trader, product quality
and cost.
•
Building strong partnerships.
HOW DO WE ENGAGE WITH THEM?
•
Retailer sentiment surveys,
evaluating product
improvements and value.
•
OLT engages in a business
partnering programme.
•
Sales teams, both telesales and
field sales, are in constant
dialogue with all our customers.
•
Customers attend select
Board meetings.
•
Regular thought leadership
and insight-driven reports, such
as the Road to 2030 Report.
•
Hosting regular forums with
CEOs of big and mid-tier retailers,
OEMs, car supermarkets and
automotive finance companies
to share latest data and insight.
WHAT ACTIONS DID WE TAKE?
•
Hosting industry insight events,
masterclasses and webinars
to support our retailers on
topical issues.
•
Beta testing product launches
such as Deal Builder to optimise
performance.
•
Expanding the provision of data
to retailers with products such
as ATConnect.
MATERIAL ISSUES
2
Data privacy and security
4
Product innovation
5
Customer satisfaction
6
Pricing fairness
8
Advocacy
OUR PEOPLE
WHY ARE OUR PEOPLE
IMPORTANT TO US?
Our people are fundamental to our
continued success. This requires us
to attract new talent and to nurture,
motivate and inspire a highly skilled
workforce. We commit to ensuring
that we continue to build a diverse
and inclusive culture where
everyone feels valued and able
to achieve their full potential.
WHAT MATTERS TO OUR PEOPLE?
•
Fair reward, recognition
and benefits.
•
Training, career development
and progression.
•
Working conditions, environment
and wellbeing.
•
An inclusive values-led culture.
HOW DO WE ENGAGE WITH THEM?
•
Board Engagement Guild
engages directly with the Board
(without management present)
on matters which are important
to our people or topics which
are current and relevant.
•
Regular employee check-
in surveys.
•
Health and safety assessments.
• Wellbeing forums.
• Independent whistleblowing
service.
•
Hosting biannual all-
employee conferences, and
regular CEO and OLT virtual
business updates.
WHAT ACTIONS DID WE TAKE?
• Inclusive Leadership
Programme and Diverse Talent
Accelerator, which focuses
on developing diverse talent
across the business.
•
Continual review and refresh
of annual employee benefits.
•
Regular benchmarking of
salary and benefits in line
with the market.
•
Launch of new all-employee
share award and continuing
with annual Save As You Earn
share scheme.
•
Refreshed values and embedded
through workshops.
MATERIAL ISSUES
2
Data privacy and security
3
Employee wellbeing,
engagement and safety
7
Investment in talent
10
Diversity and inclusion
16
Ethics and integrity
17
Remuneration
Governance
Financial statements
16
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Section 172(1) statement
continued
Where engagement doesn’t take place directly with the Board,
the output of this engagement is fed back to the Board and/or
a Board Committee via comprehensive reports throughout the
year detailing stakeholder views, which informs their decisions.
A deeper understanding of our stakeholders and their
diverse areas of interest enables us to factor into boardroom
discussions the potential impact and long-term consequences
of our decisions on each stakeholder group.
PARTNERS & SUPPLIERS
WHY ARE OUR PARTNERS AND
SUPPLIERS IMPORTANT TO US?
We rely on our suppliers and
partners to provide technology
infrastructure, supply of data
about vehicles and their financing,
and in the fulfilment of some of our
revenue generating products.
Building trusted partnerships helps
us to work better together and
continue to provide the highest
quality products and services.
WHAT MATTERS TO OUR
PARTNERS AND SUPPLIERS?
• Working collaboratively
on innovations.
•
Increasing revenue from
shared opportunities.
•
Fair trading and terms
and conditions.
• Building long-term
relationships.
HOW DO WE ENGAGE WITH THEM?
• Maintaining regular
engagement with suppliers
and partners at senior level.
•
Procurement processes in
place to onboard new suppliers
into our business, as well as
arranging regular check-ins
for ongoing relationships.
•
Agreeing ways of working with
new suppliers or partners and
providing feedback during
ongoing projects.
•
Encouraging an open dialogue to
ensure we work collaboratively
and share learnings.
WHAT ACTIONS DID WE TAKE?
•
Regular monitoring and review
of financial and operating
resilience.
•
Analyse the time taken to pay
suppliers via regular reporting.
•
Applying our Ethical
Procurement Policy which helps
us to take a holistic view based
on cultural alignment when
deciding which suppliers and
partners we should work with.
MATERIAL ISSUES
4
Product innovation
13
Responsible supply chain
16
Ethics and integrity
THE COMMUNITY & THE ENVIRONMENT
WHY OUR COMMUNITY
AND OUR ENVIRONMENT
ARE IMPORTANT TO US?
We aim to give back more to the
planet than we take out and protect
our business from the impact of
climate change. We also strive
to create stronger communities
and have a positive social and
environmental impact.
WHAT MATTERS TO OUR
COMMUNITY AND OUR
ENVIRONMENT?
•
Energy usage and carbon
emissions.
•
The transition to electric vehicles.
•
Supporting and working with,
and in, the local communities
in which we operate.
•
Environmental, Social and
Governance (‘ESG’) factors.
HOW DO WE ENGAGE WITH THEM?
•
Employee networks managing
our charitable support including
our Auto Trader Community Fund
and our sustainability strategy.
•
Supporting organisations such
as Manchester Digital and the
Automotive 30% Club, and local
schools and colleges through
our STEM ambassadors.
•
Sharing data and insight with
industry bodies and Government
departments to support policy
required to enable the mass
adoption of electric vehicles.
WHAT ACTIONS DID WE TAKE?
• Corporate Responsibility
Committee holds the business
to account on its cultural KPIs.
•
Carbon Literacy training for
all employees and funding an
automotive toolkit for industry use.
•
Environmental Strategy working
group, responsible for leading
our carbon reduction plans
and reporting in line with the
TCFD framework.
•
Conduct regular consumer
research and user testing to
understand what information
is most helpful when buying
an electric vehicle.
•
Charitable donations of £621k.
•
719 volunteering days.
MATERIAL ISSUES
1
Climate
9
Making a difference to our local communities and industries
10
Diversity and inclusion
INVESTORS
WHY ARE OUR INVESTORS
IMPORTANT TO US?
Maintaining a continuous transparent
dialogue with current and potential
investors promotes confidence,
resulting in continued access to
capital to enable us to invest in the
long-term success of the business.
WHAT MATTERS TO OUR INVESTORS?
•
Financial performance including
a balanced and fair
representation of financial
results and future prospects.
•
Share price performance
and return.
•
Reasonable Executive and
workforce remuneration practices.
•
High governance standards.
•
A continued focus on
environmental and social issues.
HOW DO WE ENGAGE WITH THEM?
•
Open, honest and balanced
communication available to
all shareholders.
•
Private shareholders encouraged
to communicate with the Board
through ir@autotrader.co.uk.
• Comprehensive investor
relations programme.
•
Annual Report, AGM, corporate
website and regulatory news
announcements.
•
Dialogue with proxy advisors
and other agencies.
•
The Chair and the Chair of the
Remuneration Committee made
contact and corresponded with
investors throughout the year.
• Governance-related meetings
attended by the Chair or another
Non-Executive Director.
•
Feedback regularly provided
to the Board.
•
Relevant industry-related data
and internally produced market
reports shared with analysts.
WHAT ACTIONS DID WE TAKE?
•
Continuing our capital policy
and share buyback programme.
•
Presenting a Remuneration
Policy that is aligned with
investors’ interests following
a successful consultation.
•
Extended our debt facility.
• Implementing succession
planning to maintain
independence on the Board.
•
Continued focus on enhancing
transparency and usefulness
of information.
MATERIAL ISSUES
4
Product innovation
12
Digital infrastructure
14
Responsible tax strategy
and total tax contribution
15
Corporate governance
16
Ethics and integrity
17
Remuneration
OUR MATERIALITY ASSESSMENT P26
Our environment
MATERIAL ISSUES
Our people & communities
Our governance & compliance
Governance
Financial statements
17
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
2
024
2
023
2
022
570.9
500.2
432.7
2
024
2
023
2
022
2,721
2,437
2,210
2
024
2
023
2
022
348.7
277.6
Margin 61%
Margin 55%
303.6
Margin 70%
2
024
2
023
2
022
28.15
25.01
25.61
2
024
2
023
2
022
379.0
327.4
328.1
Key performance indicators
We measure our performance
through a defined set of financial,
operational and cultural KPIs.
Measuring
our performance
OUR STRATEGIC PRIORITIES
OUR PRINCIPAL RISKS AND UNCERTAINTIES
1.
Automotive economy, market and
business environment
2.
Climate change
3.
Employees
4.
Reliance on third parties and partners
5.
IT systems and cyber security
6.
Failure to innovate: disruptive technologies
and changing consumer behaviours
7.
Legal and regulatory compliance
8.
Competition
9.
Brand and reputation
10.
External catastrophic and geo-political events
1-10.
All principal risks could impact this KPI
FINANCIAL
DEFINITION
The Group generates revenue from Auto Trader and
Autorama. There are three streams within Auto Trader:
Trade, Consumer Services and Manufacturer and
Agency. Trade revenue is broken down into three
categories: Retailer, Home Trader and Other, with
Consumer Services similarly split into Private and
Motoring Services. Autorama revenue is split into Vehicle
and Accessory Sales, and Commission and Ancillary.
PROGRESS
Group revenue increased 14% year on year, with the
main driver of growth being Retailer revenue, supported
by all other revenue lines.
Revenue
£m
DEFINITION
Average revenue per retailer (‘ARPR’) is calculated by
taking the average monthly revenue generated from
retailer customers and dividing by the average monthly
number of retailer forecourts who subscribe to an
Auto Trader advertising package.
PROGRESS
ARPR grew £284 in the year to £2,721, largely driven by
our product lever, with over half of this growth coming
from our Auto Trader Connect: Valuations product.
Prominence packages also contributed to this growth.
Overall ARPR growth was further supported by a price
increase and smaller growth in the stock lever.
Average revenue per retailer (‘ARPR’)
£ per month
DEFINITION
Operating profit is as reported in the Consolidated
income statement on page 116. This is defined as
revenue less operating costs, plus share of profit from
joint ventures. Operating profit margin is operating
profit as a percentage of revenue.
PROGRESS
Group operating profit increased by 26% to £348.7m
(2023: £277.6m), reflecting the increase in revenue and
the £23.0m reduction in Group central costs. Operating
profit in the core Auto Trader business was £378.6m, up
14% on last year and Autorama had an operating loss
of £8.8m. Group operating profit margin increased to
61% (2023: 55%).
Linked to remuneration?
Yes
Linked to remuneration?
Yes
Linked to remuneration?
No
Linked to remuneration?
No
Linked to remuneration?
No
Operating profit
£m
DEFINITION
Basic earnings per share is defined as profit for the year
attributable to equity holders of the parent divided by
the weighted average number of shares in issue during
the year.
PROGRESS
Basic EPS increased by 13%, which was slightly better
than net income which increased 10%, because of
fewer shares in issue following our share buyback
programme. The weighted average number of
shares in issue decreased by 2% as we purchased
and cancelled 25.2 million shares.
Basic EPS
Pence per share
DEFINITION
Cash generated from operations is as reported in the
Consolidated statement of cash flows on page 120.
It comprises net cash generated from operating
activities, before income taxes paid.
PROGRESS
Cash generated from operations increased to £379.0m
in the year due to the increase in Group operating profit.
The majority of cash was returned to shareholders
through our share buyback programme of £169.9m and
dividends of £80.4m. £30.0m of debt was also repaid.
Cash generated from operations
£m
Link to risks:
1-10
Link to risks:
1-10
Link to risks:
1-10
Link to risks:
1-10
Link to risks:
1-10
Marketplace
Digital retailing
Platform
Working responsibly
Governance
Financial statements
18
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
2
024
2
023
2
022
77.5m
69.6m
68.9m
2
024
2
023
2
022
553m
514m
556m
2
024
2
023
2
022
13,783
13,913
13,964
2
024
2
023
2
022
1,233
1,160
960
2
024
2
023
2
022
445,000
437,000
430,000
Key performance indicators
continued
OUR STRATEGIC PRIORITIES
OUR PRINCIPAL RISKS AND UNCERTAINTIES
1.
Automotive economy, market and
business environment
2.
Climate change
3.
Employees
4.
Reliance on third parties and partners
5.
IT systems and cyber security
6.
Failure to innovate: disruptive technologies
and changing consumer behaviours
7.
Legal and regulatory compliance
8.
Competition
9.
Brand and reputation
10.
External catastrophic and geo-political events
1-10.
All principal risks could impact this KPI
DEFINITION
Monthly average visits across all our platforms, as
measured internally by Snowplow. 2022 has been
restated as visits were previously measured by
Google Analytics.
PROGRESS
Our average monthly cross platform visits increased
by 11% to 77.5 million per month (2023: 69.6 million).
Continued strong demand from car buyers, despite
economic uncertainty and higher cost of living,
underpinned good visit numbers across the year.
Cross platform visits
Monthly average visits spent across all platforms
DEFINITION
Monthly average minutes spent across all our
platforms, as measured internally by Snowplow.
2022 has been restated as minutes were previously
measured by Google Analytics.
PROGRESS
Engagement, measured by total minutes spent onsite,
increased by 8% to an average of 553 million minutes per
month (2023: 514 million minutes). We continue to use
Comscore for a comparison to competitors and our
share of minutes remained at over 75% across our
competitor set.
Cross platform minutes
Monthly average minutes spent across all platforms
DEFINITION
The average number of retailer forecourts per month
that subscribe to an Auto Trader advertising package
during the financial year.
PROGRESS
The average number of retailer forecourts advertising
on our platform slightly declined to 13,783 (2023: 13,913).
However, excluding the Webzone Limited disposal in
the prior year (negative impact of 305 retailers over
the period), like-for-like retailer numbers grew by 1%
year on year.
Number of retailer forecourts
Average number per month
DEFINITION
Full-time equivalent employees (‘FTEs’), which includes
contractors, are measured on the basis of the number
of hours worked by full-time employees, with part-time
employees included on a pro-rata basis. Number of
FTEs is reported internally each calendar month; the
full-year number is the average of those 12 periods.
PROGRESS
FTEs have increased by 6% year on year to 1,233 (2023:
1,160), as we continue to invest in people to support the
growth of the business.
Number of full-time equivalent
employees (‘FTEs’)
Average number (including contractors)
DEFINITION
The average number of physical cars (either new or
used) that are advertised on autotrader.co.uk per month.
Live stock is an important component of our network
effect business model. For used cars, we charge our
retailer customers on a cost per advertised slot basis
for their advertising package, meaning the stock on our
website has some correlation to our Retailer revenue.
PROGRESS
Total live stock on site increased by 2% to an average of
445,000 cars (2023: 437,000). New car stock declined to an
average of 20,000 (2023: 25,000) as we evolved our new car
product. Used car live stock increased 3% on average
across the year, however we continued to see some
supply shortages from our franchise customers.
Live car stock
Average number per month
Linked to remuneration?
No
Linked to remuneration?
No
Linked to remuneration?
No
Linked to remuneration?
No
Linked to remuneration?
No
Link to risks:
1, 6, 8, 9
Link to risks:
3
Link to risks:
1, 6, 8, 9
Link to risks:
1, 6, 8, 9
Link to risks:
1, 6, 8, 9
OPERATIONAL
Marketplace
Digital retailing
Platform
Working responsibly
Governance
Financial statements
19
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
2
024
2
023
2
022
97
91
95
2
024
2
023
2
022
44
43
40
2
024
2
023
2
022
42
40
38
2
024
2
023
2
022
17
15
14
2
024
2
023
2
022
6
8
6
2
024
2
023
2
022
98,941
79,540
129,419
Key performance indicators
continued
OUR STRATEGIC PRIORITIES
Marketplace
Digital retailing
Platform
Working responsibly
OUR PRINCIPAL RISKS AND UNCERTAINTIES
1.
Automotive economy, market and
business environment
2.
Climate change
3.
Employees
4.
Reliance on third parties and partners
5.
IT systems and cyber security
6.
Failure to innovate: disruptive technologies
and changing consumer behaviours
7.
Legal and regulatory compliance
8.
Competition
9.
Brand and reputation
10.
External catastrophic and geo-political events
1-10.
All principal risks could impact this KPI
CULTURAL
DEFINITION
We define employee engagement by measuring the
percentage of people who say they are proud to work for
Auto Trader. Based on a survey to all employees in April
2024 asking our people to rate the statement “I am proud
to work for Auto Trader”. Answers were given on a
five-point scale from strongly disagree to strongly agree.
PROGRESS
We are pleased that we have been able to maintain
high levels of engagement from employees, with 97%
of employees saying they are proud to work for
Auto Trader. We continue to survey employees regularly
and seek to improve the employee experience.
Employee engagement
% of employees who are proud to work at Auto Trader
DEFINITION
1
Based on the percentage of employees who are women
(both cis and trans) at the end of March. In calculating
this percentage we include all gender identities,
including non-binary.
PROGRESS
We are committed to having a representative workforce
across all levels of our business and recognise the
importance of gender diversity. Over the past 12 months,
the percentage of our employees who are women
increased to 44% (2023: 43%). We remain committed to
improving gender diversity across our organisation.
Women as a % of total staff
% as at March each year
DEFINITION
2
Based on the percentage of those in leadership
positions who are women (both cis and trans) at
the end of March. In calculating this percentage we
include all gender identities, including non-binary.
PROGRESS
The percentage of employees who are women in
leadership roles increased to 42% (2023: 40%). Of the
81 people in leadership positions who define their
gender when asked, 34 are women. Our Diverse Talent
Accelerator and Continuous Leadership Development
programmes are aimed at supporting and developing
employees into leadership roles.
Women as a % of leadership
% as at March each year
DEFINITION
1
Based on the percentage of our headcount that define
themselves as ethnically diverse as at the end of March.
In calculating this percentage we include those who have
chosen not to specify their ethnicity in our headcount.
PROGRESS
Over the past 12 months we have increased the
percentage of our employees who define themselves
as ethnically diverse to 17% (2023: 15%). Of the 1,125
people who disclose their ethnicity when asked, 216 are
ethnically diverse. There were 130 employees (10%) who
have not disclosed their ethnicity or opted not to do so.
Ethnically diverse representation
as a % of total staff
(% as at March each year)
DEFINITION
2
Based on the percentage of those in leadership
positions that define themselves as ethnically diverse
at the end of March.
PROGRESS
The percentage of ethnically diverse employees in
leadership roles decreased in the year to 6%. Of the 81
people in leadership positions who define their ethnicity
when asked, 5 are ethnically diverse. We recognise there
is a lot to do in this area. Our Diverse Talent Accelerator
and Continuous Leadership Development programmes
are aimed at supporting and developing employees into
leadership roles.
Ethnically diverse representation
as a % of leadership
(% as at March each year)
1.
We calculate our diversity percentages using total
Group headcount, and since 2023 this has included
Autorama (2024: 1,255, 2023: 1,226, 2022: 1,002).
2.
We define leaders as those who are on our Operational
Leadership Team (‘OLT’) and their direct reports.
3.
Emissions include Autorama. The base year has
been restated to include Autorama.
This KPI has been subject to limited assurance –
see plc.autotrader.co.uk/esg/policies-reports
for a copy of the report and methodology.
DEFINITION
The total amount of CO
2
emissions includes Scope 1, 2 and
3 across all relevant categories.
PROGRESS
GHG emissions during the year total 98.9k tonnes of CO
2
across Scopes 1, 2 and 3 (March 2023: 79.5k tonnes). Most
of our CO
2
emissions are Scope 3, attributable to both
our suppliers and the emissions related to the small
number of vehicles sold by Autorama that pass through
the balance sheet. This was the main driver for the
year-on-year increase with a higher volume of these
vehicles being sold.
Total CO
2
emissions
3
Tonnes of carbon dioxide equivalent
Linked to remuneration?
No
Linked to remuneration?
Yes
Linked to remuneration?
Yes
Linked to remuneration?
Yes
Linked to remuneration?
Yes
Linked to remuneration?
Yes
Link to risks:
3, 9
Link to risks:
3, 9
Link to risks:
3, 9
Link to risks:
3, 9
Link to risks:
2, 4, 7
Link to risks:
3, 9
Governance
Financial statements
20
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Non-financial and sustainability information statement
We aim to comply with all areas of the UK’s Non-Financial Reporting Directive.
The table below sets out where stakeholders can find further information for each area.
NON-FINANCIAL RISK
POLICIES AND PROCEDURES
WHERE TO READ MORE WITHIN
THIS ANNUAL REPORT
EMPLOYEE GUILDS, NETWORKS
AND WORKING GROUPS
ENVIRONMENTAL
•
Environmental Policy
More information on our impact on the
environment can be found in the Environmental
sustainability section, pages 29 to 39, which
also sets out our statutory carbon emissions
and energy data (page 35).
•
Environmental Strategy working group
• Sustainability Network
OUR PEOPLE
• Whistleblowing Policy
•
Equality & Diversity Policy
• Inclusive Recruitment
•
Disability Confident leader
•
Health & safety
•
HR policies including adoption leave,
parental leave, flexible working
•
Gender Pay Gap reports
•
Diversity and inclusion: pages 41 to 45
•
Section 172(1) statement: pages 14 to 17
• Stakeholder engagement
•
Board Engagement Guild
• Ethnicity Network
• Women’s Network
• LGBT+ Network
• Age Network
• Parents’ Network
•
Disability & Neurodiversity Network
•
Social Mobility Network
•
Career Kickstart Network
• Wellbeing Guild
SOCIAL AND
COMMUNITY
•
Ethical Procurement Policy
• Customer Charter
• Volunteering days
• Environmental Policy
•
Diversity and inclusion: pages 41 to 45
•
Environmental sustainability: pages 29 to 39
•
Make a Difference Guild
• Age Network
• Parents’ Network
•
Disability & Neurodiversity Network
•
Social Mobility Network
• Wellbeing Guild
HUMAN RIGHTS
•
Modern Slavery Policy
•
Data Privacy Policy
•
Data Retention and Destruction Policy
•
Data Handling and Data Quality Policy
•
Governance & compliance: pages 46 to 49
—
ANTI-BRIBERY AND
ANTI-CORRUPTION
•
Anti-bribery, Gifts and Hospitality Policy
• Whistleblowing Policy
•
Governance & compliance: pages 46 to 49
—
BUSINESS MODEL
—
•
How we create value: page 09
—
PRINCIPAL RISKS
—
•
Principal risks and uncertainties: pages 53 to 58
—
NON-FINANCIAL
KEY PERFORMANCE
INDICATORS
—
•
Operational and cultural KPIs: pages 19 to 20
—
Please note, certain Group policies are not published externally.
Governance
Financial statements
21
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Strategic report
“We achieved double digit
growth across all three Auto Trader
revenue segments for the first time
since our IPO in 2015.”
GROUP RESULTS
2024
£m
2023
£m
Change
%
Revenue
570.9
500.2
14%
Operating costs
(225.0)
(225.1)
(0%)
Share of profit from
joint ventures
2.8
2.5
12%
Group operating profit
348.7
277.6
26%
Group operating
profit margin
61%
55%
6% pts
Group revenue increased by 14% to £570.9m (2023:
£500.2m), driven by Auto Trader revenue which
increased by 12% to £529.7m (2023: £473.0m) with
Autorama contributing £41.2m (2023: £27.2m).
Group operating profit grew by 26% to £348.7m
(2023: £277.6m). Within this, Auto Trader
operating profit increased by 14% to £378.6m
(2023: £332.9m), which included £2.8m share of
profit from joint ventures (2023: £2.5m). Autorama
had an operating loss of £8.8m (2023: £11.2m).
2024
£m
2023
£m
Change
%
Auto Trader
378.6
332.9
14%
Autorama
(8.8)
(11.2)
21%
Group central costs
– relating to Autorama
acquisition
(21.1)
(44.1)
52%
Group operating profit
348.7
277.6
26%
£571m
Group revenue
(2023: £500m)
£349m
Group operating profit
(2023: £278m)
Jamie Warner
Chief Financial Officer
Financial review
Group central costs included a charge of £11.1m
(2023: £38.8m), which is the final charge of the
£49.9m deferred consideration relating to
Autorama, which was fully settled in the period,
and an amortisation charge of £10.0m (2023:
£5.3m) relating to the Autorama intangible assets
acquired. Having accelerated the integration
work between Autorama and Auto Trader, we
have reviewed the useful economic life of the
intangible assets and in September 2023 we
shortened the life of the Vanarama brand to five
years from the date of acquisition, which brings
forward the future amortisation charge.
2024
£m
2023
£m
Change
%
Operating profit
348.7
277.6
26%
Add back:
Depreciation &
amortisation
18.3
14.1
30%
Share of profit from
joint ventures
(2.8)
(2.5)
12%
Autorama deferred
consideration
11.1
38.8
(71%)
Adjusted EBITDA
375.3
328.0
14%
Adjusted earnings before interest, taxation,
depreciation and amortisation, share of profit
from joint ventures and Autorama deferred
consideration increased by 14% to £375.3m (2023:
£328.0m). This adjusted measure of EBITDA, and
a similar adjusted measure of earnings per share,
are calculated principally to show the financial
measures before the effect of acquisition
related expenses and disposal gains.
Group profit before tax increased by 18% to
£345.2m (2023: £293.6m), despite the prior year
including a £19.1m profit on disposal of Webzone
Limited (trading as ‘Carzone’). Cash generated
from operations was £379.0m (2023: £327.4m).
AUTO TRADER RESULTS
Revenue increased to £529.7m (2023: £473.0m),
up 12% when compared to the prior year. Trade
revenue, which comprises revenue from Retailer,
Home Trader and other smaller revenue streams,
increased by 11% to £475.7m (2023: £427.4m).
2024
£m
2023
£m
Change
%
Retailer
450.0
406.8
11%
Home Trader
13.4
10.1
33%
Other
12.3
10.5
17%
Trade
475.7
427.4
11%
Consumer Services
39.6
34.5
15%
Manufacturer &
Agency
14.4
11.1
30%
Auto Trader revenue
529.7
473.0
12%
Retailer revenue increased by 11% to £450.0m
(2023: £406.8m). The average number of retailer
forecourts advertising on our platform slightly
declined to 13,783 (2023: 13,913). However,
excluding the Webzone Limited disposal in the
prior year (a negative impact of 305 retailers),
like-for-like retailer numbers grew by 1%
year-on-year.
Governance
Financial statements
22
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Consumer Services revenue increased by 15%
in the year to £39.6m (2023: £34.5m). Private
revenue, which is largely generated from
individual sellers who pay to advertise their
vehicle on the Auto Trader marketplace,
increased by 16% to £26.0m (2023: £22.4m).
Motoring Services revenue increased 7%
to £13.0m (2023: £12.1m).
Revenue from Manufacturer and Agency
customers increased 30% to £14.4m (2023:
£11.1m), with much of the increase a result of
manufacturers who sell direct to consumers
using our recently launched new car market
extension product, allowing them to
advertise and sell new cars on Auto Trader.
Total costs increased 8% to £153.9m (2023: £142.6m).
2024
£m
2023
£m
Change
%
People costs
81.5
74.0
10%
Marketing
22.3
22.3
0%
Other costs
44.2
39.6
12%
Depreciation &
amortisation
5.9
6.7
(12%)
Auto Trader costs
153.9
142.6
8%
People costs increased by 10% to £81.5m (2023:
£74.0m). The increase in people costs was mainly
due to an increase in the average number of
full-time equivalent employees (‘FTEs’) to 1,060
(2023: 996), as we continue to invest in people to
support the growth of the business. Underlying
salary costs also contributed to this increase as
we continue to attract and retain the best digital
talent and supported employees with the higher
cost of living. Within people costs, share-based
payments was £8.2m (2023: £6.6m), increasing
21% largely due to the award of an all-employee
share award in November 2023.
Marketing spend remained flat at £22.3m
(2023: £22.3m).
Other costs, which include data services, property-
related costs and other overheads, increased
by 12% to £44.2m (2023: £39.6m). The year-on-year
increase was primarily due to people-related
costs, IT costs, legal & professional costs and
general inflationary increases. Depreciation and
amortisation declined by 12% to £5.9m (2023: £6.7m).
2024
£m
2023
£m
Change
%
Revenue
529.7
473.0
12%
Operating costs
(153.9)
(142.6)
8%
Share of profit from
joint ventures
2.8
2.5
12%
Auto Trader
operating profit
378.6
332.9
14%
Auto Trader operating
profit margin
71%
70%
1% pts
Our share of profit generated by Dealer Auction,
the Group’s joint venture, increased 12% to £2.8m
(2023: £2.5m) as auction activity increased
following supply constraints in the prior year.
AUTORAMA RESULTS
2024
£m
2023
£m
Change
%
Vehicle &
Accessory Sales
28.4
16.0
78%
Commission &
Ancillary
12.8
11.2
14%
Autorama revenue
41.2
27.2
51%
Autorama revenue was £41.2m (2023: £27.2m),
with vehicle and accessory sales contributing
£28.4m (2023: £16.0m), and commission and
ancillary revenue contributing £12.8m (2023:
£11.2m). The prior period included just over
nine months of results from acquisition date,
compared to a full year this year.
Financial review
continued
Average revenue per retailer (‘ARPR’) per month
increased by 12% to £2,721 (2023: £2,437), with
some positive impact from the Webzone disposal
as on average their retailers were lower yielding.
The ARPR growth was predominantly driven by
the product and price levers, with smaller growth
from the stock lever.
•
Price: Our price lever contributed growth of £114
(2023: £90) to total ARPR as we delivered our
annual pricing event for all customers on 1 April
2023, which included additional products
alongside a like-for-like price increase.
•
Stock: Our stock lever contributed growth of
£34 (2023: £nil). The average number of live
cars advertised on Auto Trader increased by
2% to 445,000 (2023: 437,000). Despite supply
constraints easing, new car stock declined
to an average of 20,000 (2023: 25,000) as we
evolved our new car product, moving from
an ‘all you can eat’ to a ‘slot-based’ model.
Underlying used car stock increased by 3%
on average across the year to 426,000 (2023:
412,000), with much of this increase coming
from a higher volume of private listings. The
stock lever is not impacted by private listings,
but by the number of retailer paid stock units
which marginally increased.
• Product: Our product lever contributed growth
of £136 (2023: £137) to total ARPR. 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. Much of the remaining growth
was as a result of seeing a continued increase
in retailers using our higher level packages
and market extension products. Despite the
reduction in new car stock, the higher number
of paying retailers also positively contributed
to product lever growth.
Home Trader revenue increased by 33% to
£13.4m (2023: £10.1m). Other revenue increased
by 17% to £12.3m (2023: £10.5m).
Total deliveries amounted to 7,847 units (2023:
6,895), which comprised 2,646 cars (2023: 4,295),
4,616 vans (2023: 2,253) and 585 pickups (2023:
347). Average commission and ancillary revenue
per unit delivered was £1,631 (2023: £1,624).
2024
£m
2023
£m
Change
%
Cost of goods sold
28.2
15.7
80%
People costs
10.9
10.5
4%
Marketing
4.0
4.7
(15%)
Other costs
4.5
5.4
(17%)
Depreciation &
amortisation
2.4
2.1
14%
Autorama costs
50.0
38.4
30%
The Autorama business delivered c.1,200 (2023:
c.700) vehicles which were temporarily taken
on balance sheet in the year to 31 March 2024.
This represented 15% (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 £10.9m (2023: £10.5m) related
to the 173 FTEs (2023: 209) employed on average
through the year. Marketing in the year was £4.0m
(2023: £4.7m). Other costs of £4.5m (2023: £5.4m)
include IT services, property costs, people-related
costs and other overheads. Depreciation and
amortisation totalled £2.4m (2023: £2.1m).
2024
£m
2023
£m
Change
%
Revenue
41.2
27.2
51%
Operating costs
(50.0)
(38.4)
30%
Autorama operating
loss
(8.8)
(11.2)
21%
Governance
Financial statements
23
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
GOING CONCERN
The Group generated significant cash from
operations during the year. At 31 March 2024
the Group had drawn £30.0m of its £200.0m
unsecured Syndicated RCF and had cash
balances of £18.7m. The Group has a strong
balance sheet and flexibility in terms of
uses of cash to manage increased economic
uncertainty and higher interest rates. The
£200.0m Syndicated RCF is committed until
February 2029. Based on the facilities available
and current financial projections for the next
12 months the Directors have concluded
that it is appropriate to prepare the financial
statements on a going concern basis.
Jamie Warner
Chief Financial Officer
30 May 2024
Financial review
continued
The implementation of Pillar One would see
DST repealed and the Group liability would fall
away. An outcome statement was published in
July 2023 which gave an expectation that Pillar
One would come into force during calendar
year 2025. We are awaiting further updates.
Our in-scope revenue did not exceed the
threshold for UK DST in financial year 2024, but
we expect the Group will exceed that threshold
and pay DST in financial year 2025. This would
result in an additional operating expense
equivalent to c.2% of in-scope revenue, which will
be deductible against corporation tax payable.
EARNINGS PER SHARE
Basic earnings per share increased by 13% to 28.15
pence (2023: 25.01 pence) based on a weighted
average number of ordinary shares in issue of
912,582,172 (2023: 935,138,578). Diluted earnings
per share of 28.07 pence (2023: 24.77 pence) also
increased by 13%, based on 915,302,568 shares
(2023: 944,144,242) which takes into account the
dilutive impact of outstanding share awards.
2024
£m
2023
£m
Change
%
Net income
256.9
233.9
10%
Autorama deferred
consideration
11.1
38.8
(71%)
Profit on the sale of
subsidiary
–
(19.1)
100%
Adjusted Net income
268.0
253.6
6%
Adjusted earnings
per share (pence)
29.37
27.12
8%
Adjusted earnings per share, before Autorama
deferred consideration and profit on the sale of
subsidiary in respect of the prior year, and net of
the tax effect in respect of these items, increased
by 8% to 29.37 pence (2023: 27.12 pence).
CASH FLOW AND NET BANK DEBT
Cash generated from operations increased to
£379.0m (2023: £327.4m) predominately due to
the increase in operating profit. Corporation tax
payments increased to £91.5m (2023: £60.5m).
Net cash generated from operating activities
was £287.5m (2023: £266.9m).
As at 31 March 2024, the Group had net bank debt
of £11.3m (31 March 2023: net bank debt of £43.4m),
a decrease of £32.1m. At the year end, the
Group had drawn £30.0m of its Syndicated RCF
(31 March 2023: £60.0m) and held cash and cash
equivalents of £18.7m (31 March 2023: £16.6m).
Leverage, defined as the ratio of Net bank debt
to EBITDA (adjusted for the Autorama deferred
consideration), was 0.0 times (2023: 0.1 times)
and interest paid was £3.1m (2023: £3.2m).
CAPITAL STRUCTURE AND DIVIDENDS
During the year, a total of 25.2 million shares (2023:
25.3 million) were purchased for a consideration
of £169.9m (2023: £147.3m) before transaction
costs of £0.9m (2023: £0.7m). A further £80.4m
(2023: £77.7m) was paid in dividends, giving a total
of £250.3m (2023: £225.0m) in cash returned to
shareholders. The Directors are recommending
a final dividend of 6.4 pence per share. Subject
to shareholders’ approval at the Annual General
Meeting (‘AGM’) on 19 September 2024, the final
dividend will be paid on 27 September 2024 to
shareholders on the register of members at the
close of business on 30 August 2024. The total
dividend for the year is therefore 9.6 pence per
share (2023: 8.4 pence per share).
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.
GROUP NET FINANCE COSTS
Group net finance costs increased to £3.5m
(2023: £3.1m). Interest costs on the Group’s
Syndicated Revolving Credit Facility (‘Syndicated
RCF’) totalled £3.0m (2023: £2.5m) with the
year-on-year increase due to an increase in
underlying SONIA. At 31 March 2024, the Group
had drawn £30.0m of its available facility
(31 March 2023: £60.0m). Other finance costs
comprised amortisation of debt issue costs
of £0.6m (2023: £0.5m), vehicle stocking loan
interest of £0.3m (2023: £0.1m) and interest
costs relating to leases of £0.1m (2023: £0.2m).
This was offset by interest receivable on cash
and cash equivalents of £0.5m (2023: £0.2m).
EXTENSION OF SYNDICATED RCF
COMMITMENTS
On 2 February 2024, the Group extended the
term for its £200.0m Syndicated RCF by one year,
incurring additional associated debt transaction
costs of £0.3m. The facility has been extended to
February 2029 and still has an additional one-year
extension option with no tranche terminations.
There is no change to the interest rate payable
and there is no requirement to settle all or part of
the debt earlier than the termination dates stated.
TAXATION
Profit before taxation increased by 18% to
£345.2m (2023: £293.6m). The Group tax charge
of £88.3m (2023: £59.7m) represents an effective
tax rate of 26% (2023: 20%). This is slightly higher
than the average standard UK rate of 25% (2023:
19%) due to non-deductible expenses.
We had previously stated that the Group was
potentially in scope for the UK’s digital services
tax (‘DST’) with revenues exceeding £500m.
The UK Government continues to work towards
implementing a global two-pillar tax solution
addressing the tax challenges arising from the
digitalisation of the economy. Pillar Two came
into effect for accounting periods beginning
on or after 31 December 2023, but the timeline
for finalising the multilateral convention that
would implement Pillar One is still not certain.
Governance
Financial statements
24
Auto Trader Group plc
Annual Report and Financial Statements 2024
Our ESG strategy focuses on the
material issues that have the
greatest impact on our business
whilst considering the
expectations of our stakeholders.
We also recognise that our
activities, and the way in which
we carry them out, impact well
beyond our financial performance
and so our ESG strategy considers
the impact our decisions have
more widely on the environment,
our people and society. Our many
ESG initiatives are focused
on ensuring we do business
responsibly and as the UK’s largest
automotive marketplace that
we play our role in creating a
more accessible, equitable and
sustainable future. Our ESG
strategy supports this purpose
over the long term.
Our trusted brand has been built
over more than 40 years and we
remain committed to being the
best place to find, buy and sell
vehicles in the UK on a platform
that enables data-driven digital
retailing for our customers.
OUR GOVERNANCE & COMPLIANCE
Uphold the values of good
corporate governance and risk
management and consider the
needs of all our stakeholders in
our strategic decision-making.
Comply with our legal and regulatory
obligations and behave ethically
and with integrity at all times.
Maintain a trusted marketplace
for our customers and consumers
to find, buy and sell vehicles.
OUR PEOPLE & COMMUNITIES
Build diverse teams and evolve
our inclusive culture.
Maintain high levels of employee
engagement, supporting positive
health and wellbeing.
Partner with charities, community
groups and industry bodies to make
a difference to the communities
where we work and live.
OUR ENVIRONMENT
Minimise our impact on the
environment, thereby protecting
our business from the impact
of climate change.
Drive change across our own
operations and supply chain,
and also use our capabilities and
voice to influence the automotive
and technology industries and
Government to support urgent
action to tackle the climate crisis.
Report comprehensively in line
with TCFD recommendations.
Our ESG strategy is underpinned by our purpose,
Driving Change Together. Responsibly.
We can play a positive role in making a difference to our people, our communities,
our industry and the wider environment to create a more accessible,
equitable and sustainable future.
Working responsibly
Ensuring we make
a positive impact
Working responsibly is central to our
purpose and strategy. Our purpose is driven
by our commitment to doing the right thing,
measuring and reporting transparently
and always acting with integrity.
In a rapidly changing world, we
know that we will only succeed
as a business if we use our
technology, expertise and data
to help solve the challenges our
customers, our consumers and
our industry face. This involves
ensuring platform resilience
whilst remaining innovative and
changing how the UK shops for
vehicles by providing the best
online buying experience and
supporting all our retailers to
sell online.
We use our cultural KPIs (see
page 20) to help us monitor and
measure progress against our
strategy. In 2022, we undertook
our first materiality assessment
to consider what ESG issues
matter most to our stakeholders
and the impact of these on
our business.
READ MORE P29
READ MORE P40
READ MORE P46
Governance
Financial statements
Strategic report
25
Auto Trader Group plc
Annual Report and Financial Statements 2024
Moderate
Very high
Importance to our stakeholders
Impact on the business
Moderate
Very high
Working responsibly
continued
Our materiality assessment
Conducting business responsibly, with stakeholders
at the heart of our decisions, is core to our strategy
and success, and therefore an understanding
of what ESG topics matter most to our key
stakeholders is essential to remaining successful
in the long term. We believe that the 17 issues
identified in our materiality assessment (initially
undertaken in 2022) remain relevant to our business
and our stakeholders today. The materiality
assessment helps us capture our impacts in a
non-financial manner and the findings continue
to guide the focus areas of our ESG strategy.
Alongside our aim to have high standards
of governance, we have focused most of
our activities and initiatives on the following
issues: diversity and inclusion; data privacy
and security; product innovation; digital
infrastructure; and customer satisfaction,
all of which our stakeholders placed in the
higher priority category.
We have also chosen to actively focus on
climate. Although climate did not place in the
highest category at the time the assessment
was undertaken, we believe we should be doing
what we can to positively impact the world in
which we live and recognise that initiatives in
this area take time to deliver results.
Product innovation, digital infrastructure and
customer satisfaction are key to our business
strategy. Our focus on digital retailing is to bring
more of the buying and selling journeys online,
realising both an improved consumer experience
and efficiencies for our retailer customers.
OUR MATERIALITY ASSESSMENT
THE MATERIAL ISSUES THAT MATTER MOST
The size of the bubbles on our materiality assessment highlights where our activities
for this financial year have been focused.
plc.autotrader.co.uk/esg
Our environment
1
Climate
Our people & communities
2
Data privacy and security
3
Employee wellbeing, engagement and safety
4
Product innovation
5
Customer satisfaction
6
Pricing fairness
7
Investment in talent
8
Advocacy
9
Making a difference to our local communities
and industries
10
Diversity and inclusion
Our governance & compliance
11
Driving transparency
12
Digital infrastructure
13
Responsible supply chain
14
Responsible tax strategy and total tax contribution
15
Corporate governance
16
Ethics and integrity
17
Remuneration
Want to know how we define each material
issue? Head online:
OUR FUTURE FOCUS
We will refresh our materiality assessment
in full during the next financial year to
ensure that the focus of our ESG strategy
remains relevant.
Governance
Financial statements
26
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
2
7
9
10
11
14
15
16
17
12
13
8
3
6
5
4
1
Working responsibly
continued
ESG at a glance
OUR ENVIRONMENT
OUR PEOPLE & COMMUNITIES
OUR GOVERNANCE & COMPLIANCE
OUR AMBITIONS
•
Achieve net zero in our own business as well as support our customers
and suppliers as they also transition to net zero.
•
Ensure the majority of our employees have completed Carbon
Literacy training.
•
Help our customers to confidently sell more electric vehicles.
•
Support our customers in making their workforce environmentally
aware with the Carbon Literacy Toolkit.
•
Help car buyers make more environmentally friendly vehicle choices.
•
Use our data and insight to support and influence the Government’s
policies related to supporting the adoption of electric vehicles.
•
Have a representative workforce across all levels of our business.
•
Foster an environment where everyone feels included.
•
Continue to make progress on our gender & ethnicity pay gaps.
•
Maintain high levels of employee engagement.
•
Support the physical, mental and financial wellbeing of all
our employees.
•
Positively contribute to the communities we operate in
through local and national charities.
•
Fully adopt the NIST Framework for cyber security.
•
Going beyond the requirements of both GDPR and FCA compliance
and embracing the spirit and principles.
•
Integrate sustainability into all aspects and decision-making
processes of our business.
•
Embed our Ethical Procurement Policy within the business and adopt
a socially responsible sourcing model.
•
Report comprehensively in line with recommended reporting
frameworks, including TCFD and SASB.
HIGHLIGHTS OF OUR PROGRESS DURING FINANCIAL YEAR 2024
•
Our long-term target to be net zero by 2040 has been resubmitted to
the Science Based Targets initiative (‘SBTi’) and has been validated
and approved.
•
208 customers and partners have engaged with the Automotive Carbon
Literacy Toolkit, with over 3,200 people completing their accreditation.
•
Climate contribution strategy – over £350k supporting carbon removal
projects and environmental initiatives.
•
Launched e-bikes on the Auto Trader marketplace.
•
Expanded the audience of our Government briefings on the progress
of the UK’s electric transition and was invited to give evidence at the
House of Lords Committee looking at the EV transition.
•
Over 10.8 million people have engaged with our monthly electric
vehicle (‘EV’) giveaway since the campaign started, increasing
brand awareness and association of Auto Trader with EVs.
•
Three more cohorts (26 employees) completed our Diverse Talent
Accelerator programme during the year, developing our next level
of leadership talent.
•
Launch of our all-employee share award.
•
Awarded The Race Equality Matters Bronze Trailblazer status.
•
Manchester Pride’s All Equals Charter granted us ‘Role Model’
accreditation.
•
Alison Ross, MBE, our Chief People & Operations Officer, was awarded
the Automotive 30% Club’s Inspiring Woman of the Year Award.
•
Hosted the second Mind the Gap event in Parliament, campaigning
for Ethnicity Pay Gap reporting alongside other FTSE 100 companies.
•
We were once again named as one of the Inclusive Top 50 companies
in the UK.
•
Launched the No Driver Left Behind report which highlights the gender
gap in the electric transition.
•
Refreshed our policies for retirement and long service recognition.
•
Fully migrated our technology infrastructure to the cloud and
exited from our two main data centres in June 2023.
•
92% of our employees have completed our new Consumer Duty
compliance training.
•
Established and implemented new guidance, policies and
frameworks to ensure we meet the requirements of Consumer Duty,
and put the consumer at the heart of our business.
•
Integration of Autorama into the Group governance framework.
•
Continued improvement of ethical procurement information gathered.
•
Successful transition to BDO as internal auditors, with reviews of FCA
Consumer Duty, cyber security over AT Connect, software
development lifecycle and IT Disaster recovery being completed
in the year.
•
Refreshed our comprehensive fraud risk assessment in the light
of new regulations.
OUR FOCUS FOR FINANCIAL YEAR 2025
•
Finalising and communicating our Climate Transition plan.
•
Roll out of the Tech Carbon Literacy Toolkit.
•
Continuing to work with ministers to share our data and insight to
help shape policies needed to support mass adoption of used EVs.
•
Continued internal focus on our development programmes.
•
Work with key industry bodies and partners to support the broader goals
around ensuring the automotive industry is gender balanced and that it
is an inclusive place for all who work in it.
•
Guidance and policy over the use of AI.
•
Implementation of NIST across all subsidiary companies.
•
Continuing to assess the requirements of the Corporate Governance
Code around the effectiveness of material internal controls.
SUPPORTING THE UN SDGS MOST RELEVANT TO OUR STRATEGY
Governance
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We have established our Corporate
Responsibility Committee to sit
alongside our Audit, Remuneration
and Nomination Committees.
Whilst ESG-related topics are covered in all
Committees, this is a formal Committee of the
Board with the overarching goal of monitoring
our corporate responsibility initiatives and
sustainability targets. The Committee, chaired
by Jeni Mundy, plays a crucial role in overseeing
the progress towards fulfilling our ESG strategy
and ensuring that our targets and goals remain
ambitious and realistic. Responsibility for
putting our ESG strategy into action spans
across the business through specific functions
and through our individual guilds and networks,
which are empowered to drive change within
the organisation.
Governance of
our ESG strategy
Working responsibly
continued
REPORT OF THE CORPORATE RESPONSIBILITY COMMITTEE P78
GOVERNANCE OVERVIEW P61
HOW WE MANAGE RISK P50
•
Career Kickstart Network
• Parents’ Network
• Ethnicity Network
• LGBT+ Network
•
Disability & Neurodiversity
Network
•
Make a Difference Guild
• Women’s Network
• Wellbeing Guild
• Age Network
•
Social Mobility Network
• Sustainability Network
• Environmental Strategy
working group
• Risk management
• Internal control
• FCA compliance
• GDPR compliance
• Legal team
• Procurement
•
Cyber security team
• Risk management
• Internal control
• FCA compliance
• GDPR compliance
• Legal team
• Procurement
•
Cyber security team
ENVIRONMENTAL STRATEGY
OPERATIONAL LEADERSHIP TEAM & SENIOR LEADERS
SUBSIDIARY BOARDS
AUTO TRADER GROUP PLC BOARD
SECOND LINE FUNCTIONS
SECOND LINE FORUMS
AND COMMITTEES
Driving Change Together.
Responsibly.
BOARD
ENGAGEMENT
GUILD
DISCLOSURE
COMMITTEE
REMUNERATION
COMMITTEE
NOMINATION
COMMITTEE
AUDIT
COMMITTEE
CORPORATE
RESPONSIBILITY
COMMITTEE
EMPLOYEE GUILDS
& NETWORKS
• External auditors
• Internal auditors
• Other external
assurance
THIRD LINE
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RISK
FORUM
EXECUTIVE
RESPONSIBILITY
BOARD
RESPONSIBILITY
REMUNERATION
COMMITTEE
THIRD-PARTY
ASSURANCE
ENVIRONMENTAL
WORKING GROUPS
7
EMPLOYEE
GUILDS &
NETWORKS
1
2
6
3
4
5
Our environment
Minimise our impact on the environment,
thereby protecting our business
from the impact of climate change.
Drive change across our own operations
and supply chain, and also use our
capabilities and voice to influence the
automotive and technology industries
and Government to support urgent
action to tackle the climate crisis.
Report comprehensively in line with
TCFD recommendations.
Working responsibly
continued
1. BOARD RESPONSIBILITY
The Corporate Responsibility Committee is
responsible for holding the Executive Directors
to account with respect to climate risks and
opportunities and their impacts on both the
business and the wider environment. Our
environmental strategy is a standing agenda
item for all Committee meetings.
2. EXECUTIVE RESPONSIBILITY
The responsibility for assessing and managing
climate related risks and opportunities sits at both
executive and Board level. Executive responsibility
for our impact on climate change is held by all
our Executive Directors, who have responsibility
for overseeing our environmental strategy.
Responsibility for the consideration of climate related
risks and opportunities on the financial performance
of the Group and compliance with environmental
reporting sits with our CFO, Jamie Warner.
3. RISK FORUM
Our Risk Forum undertakes a review of climate related
risks with our Operational Leadership Team (‘OLT’).
Environmental risks are also reviewed at least twice
a year as part of the overall risk review process.
HOW WE GOVERN THIS AREA
4. REMUNERATION COMMITTEE
The Committee introduced ESG-related targets
into the Performance Share Plan (‘PSP’) for
the first time in 2021. The PSP includes a specific
performance target linked to a reduction of
our GHG emissions.
5. THIRD-PARTY ASSURANCE
Our GHG emissions have been independently
assured by EcoAct using ISO 14064-3 for all
scopes of our carbon footprint.
6. ENVIRONMENTAL WORKING GROUPS
Our environmental strategy not only focuses
on our own environmental impact, but also aims
to support our customers, consumers and the
industries in which we operate and, as a result,
various parts of the business play a part in
delivering our ambitions. Different parts of the
business are brought together through our
Environmental Strategy working group, which is
sponsored by members of our OLT. Key activities
and milestones are set for each financial year
and these are shared with the Corporate
Responsibility Committee. The Environmental
Strategy working group is responsible for our
commitment to net zero, which is in line with our
SBTi targets. This group also identifies ways in
which we can support the tech and automotive
industries, alongside helping consumers make
more environmentally friendly vehicle choices.
7. EMPLOYEE GUILDS & NETWORKS
Our employees play a fundamental role in the
success of our environmental strategy. Our
Sustainability Network comprises passionate
individuals from across the business who are
focused on making life at Auto Trader more
sustainable. They do this through increasing
employee awareness and driving impactful
changes for both individuals and our business,
supporting our overall goal of reducing our
carbon emissions.
TASK FORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES (‘TCFD’)
COMPLIANCE STATEMENT
The Group has prepared its TCFD disclosures
in line with guidance from the 2021 updates to
the TCFD Final Report and Annex, including the
supplementary guidance for all sectors. At the
time of publication, in accordance with the
UK’s Financial Conduct Authority (‘FCA’) Listing
Rule 9.8.6R(8), the Group has made climate
related financial disclosures consistent
with the TCFD recommendations and
recommended disclosures set out on pages 29
to 39. The table included in the Corporate
Responsibility Committee report (page 79)
summarises where the relevant disclosures
are addressed. We continue to develop our
net zero strategy and to identify the risks and
opportunities to our business as a result of
climate change and the potential financial
impact. The climate related financial
disclosures made by the Group comply with
the requirements of the Companies Act 2006
as amended by the Companies (Strategic
Report) (Climate-related Financial Disclosure)
Regulations 2022.
GOVERNANCE
METRICS AND TARGETS
RISK MANAGEMENT
STRATEGY
TCFD: GOVERNANCE
We have integrated climate governance into
our existing governance processes and sought
to embed responsibility for the risks associated
with climate change throughout our business,
adopting a climate change focused mindset.
There is a clear commitment from the Board
to deliver on our environmental commitments
and ensure relevant accountability across
the business. Our environmental strategy
was initiated to ensure a joined up approach
across the business considering the risks and
opportunities climate issues pose and how
we are responding to them.
We submitted our annual CDP questionnaire and
received a B rating in December 2023 (December
2022: C). The rating is on a scale from A (best
possible score) to D-. Our B rating indicates
that Auto Trader has knowledge of impacts on,
and of, climate issues and that we are taking
coordinated action on climate issues.
TCFD REPORTING
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TCFD REPORTING
We want to minimise our impact
on the environment, thereby
protecting our business from
the impact of climate change.
Our net zero
commitment
– our operations
c.80%
of Auto Trader employees have
completed the Carbon Literacy
training, putting us at Platinum
award level
We have signed up to the Science
Based Targets initiative (‘SBTi’)
Business Ambition for 1.5°C. By doing
so, we are committed to achieving
net zero by 2040 and to reducing
emissions in line with the Paris
Agreement goals.
Working responsibly
continued
PUTTING THE BRAKES ON CARBON
Supporting the
automotive
industry
>22,500
average electric vehicle adverts on
Auto Trader as at March 2024
(2023: >23,000)
Our aim is to support the industry
in its transition towards the mass
adoption of electric vehicles (‘EVs’).
Supporting
consumers
>105m
advert views of electric cars on
Auto Trader in financial year 2024
(2023: >68m)
Our aim is to support consumers
to make more environmentally
friendly vehicle choices and to
be the number one electric vehicle
destination in the UK.
1
2
3
GOVERNANCE
METRICS AND TARGETS
RISK MANAGEMENT
STRATEGY
Our strategy is to put the brakes on carbon, not only
across
our own operations and supply chain, but also
by using our capabilities and voice to influence the
automotive industry
to support others in the transition
to a low carbon economy
and take urgent action to
tackle climate change.
As the world transitions to a low carbon economy,
regulatory change and changes in consumer behaviour
will have an impact on the automotive and technology
industries, meaning we need to continue to develop
and adapt our business strategy to incorporate climate
resilience. Reducing the impact our business has on
the environment is embedded into our wider business
strategy of acting responsibly and we are committed
to being a net zero business by 2040.
As well as reducing our own emissions, we are also raising
environmental awareness with both our customers
and consumers, encouraging them to reduce their own
environmental impact. We use our breadth of expertise,
data and market insight to accelerate the transition to
low carbon transport. We continue to focus on 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.
Failure to deliver on our environmental commitments
could negatively impact our brand as a responsible
business or result in regulatory sanctions.
TCFD: STRATEGY
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TCFD REPORTING
Working responsibly
continued
CLIMATE RELATED RISKS AND
OPPORTUNITIES
To build climate resilience into our business
strategy we identify climate related risks
and opportunities. Environmental risks are
reviewed regularly as part of our overall
risk review process and we maintain an
environmental risk register which monitors
key changes and actions taken to manage
the risks identified.
As an online marketplace, we have a
relatively small carbon footprint and our
business model is sustainable in a low carbon
environment. However, the automotive
industry is intrinsically linked with climate
change and there is pressure from consumers
and Government for the industry to reduce its
impact on the environment. The nature of the
risks and opportunities that we face depends
not just on the physical aspects of climate
change, but also on transition risks. These
are driven by the trajectory of our customers
and consumers in responding to climate
change and the regulations applied to the
market we operate in.
Our climate related assessment of the risks
and opportunities posed by climate change
and how they might impact our business has
provided a firm foundation on which to build
our environmental strategy and resilience.
We considered the transitional and physical
climate risks and opportunities presented by
rising temperatures, climate related policy
and emerging technologies.
We agreed the methodology for assessing
and quantifying financial impacts. For
the purposes of our assessment, the time
horizons we used were aligned to our
business planning cycle as follows:
• Short term: 0–5 years
• Medium term: 5-10 years
• Long term: 10 years +
In each case, the likely impact on costs or
revenues was reviewed. We have assessed
how the risks can be better managed,
reduced or mitigated in line with the Group’s
risk management framework and business
strategy. The risks identified during our
analysis are more likely to present themselves
in the medium or long term.
Having assessed and modelled the risks, we
believe that there is no immediate material
financial risk or threat to our business model.
Even though there is uncertainty around the
time horizon over which climate risks will
materialise, stakeholder expectations and
regulatory attention could develop at pace,
impacting the rate at which the business may
need to cut carbon emissions.
We recognise that we will need to keep abreast
of future climate change legislation as well as
consumer preferences and retailers’ ability to
adapt. However, we have a strong track record
of quickly evolving.
CLIMATE RELATED SCENARIO ANALYSIS
To further understand and explore how
potential climate risks and opportunities could
evolve and impact our business over the
medium to longer term, the TCFD recommends
undertaking climate scenario analysis, which
includes a ‘2°C or lower scenario’ in line with
the 2015 Paris Agreement.
We examined two climate scenarios against
our three time horizons for the purposes of our
analysis. The results are set out in the table on
the following pages. The results of our scenario
analysis showed that based on our strategic
plans and capabilities, we remain well
positioned to mitigate the risks and seize the
opportunities related to climate change.
KEY TRANSITION RISKS:
Regulatory changes:
Stricter emissions
regulations and Government policies favouring
EV adoption may impact manufacturers’
production strategies which will impact supply
and therefore stock available to list on
Auto Trader’s platform.
Supply chain disruptions:
Dependency on
complex global supply chains exposes the
industry to risks related to geo-political tensions,
natural disasters, pandemics and risks delaying
new cars entering the UK, which can impact
supply for retailers and therefore impact
Auto Trader.
Consumer preferences:
Changes in consumer
preferences towards sustainable transportation
options and shared mobility services could
impact the desire to own a car outright
challenging the number of new and used car
transactions made each year.
KEY PHYSICAL RISKS:
Extreme weather and climate related natural
disasters
: Extreme weather could impact our
cloud providers which could impact platform
performance. We could also see customers’
ability to open their showrooms impacted,
which risks their ability to sell vehicles.
Resource scarcity:
Shortages of critical
materials like rare earth metals and lithium
could disrupt production of electric vehicles
and their components, impacting supply of
the vehicles into the UK and available stock
on Auto Trader’s platform.
Geo-political instability:
Political unrest, trade
tensions and sanctions can disrupt international
supply chains and increase production costs
for automotive manufacturers, which risks the
amount of vehicles they’ll choose to sell in the
UK and therefore impacts Auto Trader’s new car
stock offering.
Navigating these risks will require adaptation, innovation and strategic planning as well as robust risk
management strategies and contingency planning.
GOVERNANCE
METRICS AND TARGETS
RISK MANAGEMENT
STRATEGY
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TCFD REPORTING
Impact
Mitigation/response
Financial impact
Inherent likelihood
Minor
Moderate
Major
PHYSICAL RISK – Increased frequency/severity of extreme weather and climate related natural disasters
Short term
0-5 years
Medium term
5-10 years
Long term
10+ years
• Offices closed
•
Data centre disruption
•
Customers cannot open their showrooms
All technology infrastructure is cloud based. Disaster recovery/business continuity
planning in place, including tools and guidance to support our people in emergency
situations. COVID-19 proved the sales process can be completed without physical
showrooms, plus development of digital retailing will enable all retailers to compete
on our digital market.
>2°C
Low
1.5°C
•
Weather has the potential to disrupt the supply chain
and limit vehicles entering the UK car parc
We have experienced the impact of disrupted supply chains as a result of recent
external catastrophic and geo-political events. These significant supply side
challenges have constrained new and used car transactions for much of the past four
years. However, our business has remained healthy as market dynamics have adjusted
and OEMs and retailers learnt to adapt their business models. We would anticipate
weather related disruption to be more intermittent and comparatively less severe
than the disruption caused by recent events.
>2°C
Low
1.5°C
•
Costs – increased operational costs such as
heating/aircon, insurance, cloud costs
In order to have a significant impact on our business, costs would need to increase
significantly. We are continually reviewing our cost base such that any increases can
be managed and profit margins retained.
>2°C
Medium
1.5°C
TRANSITION RISK – Increased regulation relating to climate change
•
Regulation banning the sale of new internal combustion
engine (‘ICE’) vehicles from 2035 is existing UK regulation
and the industry is already working towards this milestone
We already closely monitor the implementation of policies related to our core business.
We will continue to monitor policies with a view to identifying potential risks and
opportunities and related financial impacts. We are already evolving our product
offering and provision of information to support the effectiveness of EVs on our
marketplace and will continue to meet changing preferences of car buyers.
>2°C
High
1.5°C
•
Increased regulatory scrutiny and introduction of new
legislation could result in increased reputational risk but
also increased compliance costs. Failure to deliver against
our environmental commitments would undermine our
reputation as a responsible business and may result in loss
of revenue, legal exposure or regulatory sanctions
We have formed a Corporate Responsibility Committee to oversee our environmental
strategy and commitments. We will report in line with the TCFD recommendations and
report progress towards our net zero ambitions against our science based targets.
>2°C
Low
1.5°C
Working responsibly
continued
Climate related scenario analysis
Scenario
Description
Orderly transition
Additional policy and legislation introduced to limit climate change – UK does not take immediate and substantial action – gradual and deliberate shift towards a low carbon economy.
Hot house world
Business as usual – no change in climate policy and legislation – UK takes limited or no action – continuation of current projection of carbon emissions without any significant abatement or mitigation.
GOVERNANCE
METRICS AND TARGETS
RISK MANAGEMENT
STRATEGY
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TCFD REPORTING
Working responsibly
continued
GOVERNANCE
METRICS AND TARGETS
RISK MANAGEMENT
STRATEGY
OUR FUTURE FOCUS
We intend to periodically review the scenarios and timeframes we choose
to apply in our analysis and refine them as needed. The risk management
recommendations arising from our climate change scenario analysis were:
•
Policy/regulation: It is likely that increased policy and regulation will have
the most significant financial impact on Auto Trader over the longer term.
Impact
Mitigation/response
Financial impact
Inherent likelihood
Minor
Moderate
Major
TRANSITION RISK – Regulation discouraging the use of internal combustion engine (‘ICE’) vehicles
Short term
0-5 years
Medium term
5-10 years
Long term
10+ years
•
Cost of ownership increases, making ICE vehicles
less appealing
•
Consumers stop buying petrol or diesel vehicles,
demand switches over to electric
•
If EVs remain expensive some consumers could be
priced out of the market presenting a risk to demand
We will continue with our strategy to adapt our marketplace to meet changing
preferences of all car buyers. It is likely that used car prices will continue to move
in line with supply and demand dynamics such that lower demand will make
vehicles more affordable.
>2°C
Low/Medium
1.5°C
TRANSITION RISK – Demand for sustainable products & services
•
Consumers’ preferences shift away from ICE vehicles;
steep decline in purchase of petrol or diesel vehicles in
favour of EVs
•
Potential opportunity: Support our audience to find the
sustainable options they are seeking
We will continue with our strategy to adapt our marketplace to meet changing
preferences of all car buyers and continue to be the largest marketplace for EVs.
>2°C
Low/Medium
1.5°C
TRANSITION RISK – Increased reputational risk associated with the automotive industry and misrepresenting environmental claims
•
As consumer consciousness around climate change
rises, there is increased scrutiny on our industry’s role
on the environment
•
Failure to appropriately demonstrate that as a business
we are committed and moving towards net zero carbon
emissions could negatively impact our brand and also
impact our ability to operate and/or remain relevant to
our customers and consumers
As part of our goal to be net zero by 2040 we will focus on our own operational footprint
and also on how we can positively support our industry. We have set clear reduction
targets for our own operations and report progress to stakeholders. We work with
customers, suppliers and the industry on education and policy.
>2°C
Low
1.5°C
TRANSITION RISK – Achieving resource efficiency through cutting our carbon footprint and improving energy efficiency
•
Reduced costs associated with energy use and avoid
increased costs associated with carbon taxation
Reduction initiatives to reduce our absolute usage, including successfully moving
our technology infrastructure to the cloud.
>2°C
Medium
1.5°C
TRANSITION RISK – Increased reputational risk associated with the automotive industry and misrepresenting environmental claims
•
Consumers may stop buying vehicles if they no longer
require one
•
Potential opportunity: Consumers’ desire/need to switch
to EV
Likely the risk and opportunity would be taken together, and stock/demand would
be maintained as the desire for personal transportation/vehicle ownership remains
strong. We will continue with our strategy to adapt our marketplace to meet changing
preferences for all car buyers and continue to be the largest marketplace for EVs.
>2°C
Low/Medium
1.5°C
The most significant action we can take is to reduce our exposure to this
risk and continue with our strategy to adapt our marketplace to meet the
changing preferences of all car buyers. We also need to make sure we
continue to remain abreast of regulatory requirements to ensure we are
compliant with all relevant reporting obligations.
•
Market: Driven by its net zero ambitions, the Government announced
the ban on the sale of new petrol and diesel vehicles by 2035, and this
is already changing the make up of the car parc as consumers begin
to buy electric vehicles as an alternative.
Auto Trader can mitigate this risk by continuing to develop its strategy
to be the destination of choice for consumers searching for a more
environmentally friendly vehicle.
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TCFD REPORTING
Working responsibly
continued
EFFECTIVE RISK MANAGEMENT
IDENTIFY
A top-down and bottom-up approach is used to identify key risks across
the business. Primarily, risks are identified via three key mechanisms:
•
The Board, OLT, senior managers, and GRC perform continuous horizon
scanning as part of day-to-day operations.
• Our 2
nd
Line Functions are embedded into the teams responsible for
executing key strategic initiatives to help them identify potential risks.
•
GRC facilitate regular risk workshops with OLT and senior managers
within the business.
All new risks are captured on the Group Risk Register which is reviewed
by the Board at least half-yearly.
MONITOR, REVIEW & ASSURE
The effectiveness of key controls is monitored via numerous mechanisms within
our governance structure. These include:
•
Ongoing monitoring by 2
nd
Line Functions.
•
Monthly and quarterly 2
nd
Line Forums and Committees, including Risk Forum,
FCA Compliance, and Trust Forum.
•
A risk-based Internal Audit plan which captures 4-5 assignments per year.
•
Other third-party and specialist monitoring and assurance.
The Board reviews the outcomes of assurance activities on an as-needed basis.
The Board also reviews the Group’s risk register at least half-yearly and assesses
the adequacy and effectiveness of mitigating actions in line with our risk appetite.
ASSESS & QUANTIFY
All risks are evaluated to establish their root causes, the impact, and the likelihood
of occurrence. When assessing risks, consideration is given to the financial,
reputational, and regulatory impacts, as well as impacts on customers/consumers,
and impacts on day-to-day operations. Risks are then categorised as:
•
Existential risks: those with the potential to cause fundamental change within
our organisation and wider industry.
•
Operational risks: those arising out of the existing business activities.
•
Emerging risks: those which relate to new initiatives, new products, and new
laws and regulations.
RESPOND & MITIGATE
Risk owners consider whether existing controls and mitigations reduce the
risk to an acceptable level. On an ongoing basis and following identification
of a new risk, 2
nd
Line Functions provide specialist support to ensure that the
response is consistent with our Group risk appetite. Additionally, independent
challenge on risk response is provided from 2
nd
Line Functions, Forums,
and Committees.
If the residual level of risk after mitigation remains above our risk appetite,
then further mitigating actions are implemented.
CLIMATE CHANGE IS A PRINCIPAL RISK FOR THE GROUP
RISK AND POTENTIAL IMPACT
The automotive industry is a high contributor to emissions, and so there is pressure
from consumers and Government for the industry to reduce its impact on the
environment. Failure to deliver on our environmental commitments could negatively
impact our brand as a responsible business or result in regulatory sanctions.
Failure to overcome the challenges caused by the shift from internal combustion
engines (‘ICE’) to electric vehicles (‘EVs’) could inhibit their takeup or lead to
changes in buying behaviour. Factors include the purchase price of EVs, potential
for improvements in public transport, new and expanded emissions zones,
increasing EV running costs, and consumer uncertainty over the residual value
of used EVs.
Changing and more stringent regulatory requirements could increase our cost
base. Increased frequency and severity of extreme weather events could lead
to heightened costs, including costs associated with heating/air conditioning,
insurance and cloud infrastructure. Extreme weather events could also lead to
short-term closure of retailer forecourts (for example, due to flooding).
HOW WE MANAGE THE RISK
•
We are evolving our product offering and marketplace to provide consumers
with more information about EVs. A cross-functional working group is focusing
on helping consumers make more environmentally friendly vehicle choices.
•
We lobby Government and share our data and insights to help guide policy
on how to decarbonise the automotive industry.
•
Leasing is a viable option to consumers making the switch to EVs, many of whom
are anxious about making outright purchases. The Autorama checkout journey
on the Autotrader.co.uk site provides our audience with access to leasing.
•
As part of our climate commitments, we are focusing not just on our own carbon
footprint, but positively supporting the industry. Our partnership with the
Carbon Literacy Project provides training and insights to employees and
external stakeholders.
•
Our Corporate Responsibility Committee oversees our environmental commitments
and work is ongoing to reduce our carbon emissions across all scopes.
•
We evaluate the carbon records and commitments of suppliers within our
procurement processes.
•
By digitising the automotive retail sector, we provide customers and consumers
with purchasing options should extreme weather events lead to short-term
retailer forecourt closures.
GOVERNANCE
METRICS AND TARGETS
RISK MANAGEMENT
STRATEGY
TCFD: RISK MANAGEMENT
The Board is collectively responsible for
determining the nature and extent of the
principal risks which may impact the business
as it seeks to achieve its strategic objectives.
Our risk management framework, including
the processes for identifying, assessing and
managing risk, is described on pages 50 to 52
and the Board recognises climate change as one
of Auto Trader’s principal risks (see page 54).
Auto Trader plays an important role within the
UK automotive ecosystem and climate change
is a catalyst for unprecedented change within
industry. This mainly relates to the transition from
ICE vehicles to Zero Emission Vehicles (‘ZEVs’)
which could result in significant changes to
automotive retail. We are working hard to
support the industry with this transition, from
providing content to help consumers ‘demystify’
EVs, to lobbying Government to incentivise the
transition and sharing our data and insights to
inform Government policy over EVs.
Internally, climate change also poses a threat to
our business and to our supply chain, including
via regulatory change. It is therefore critical that
our risk management process considers climate
change if we are to understand its impacts both
on our business and on the automotive industry
as a whole.
Our risk management process approach
allows for the continual identification and
assessment of climate related risks. We maintain
an environment/climate risk register which is
reviewed regularly by the risk register owner,
their delegates, and our risk management team.
Each climate related risk is assigned an owner
and controls and/or mitigating actions are
recorded against each risk.
HOW WE MANAGE RISK P50
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TCFD REPORTING
TCFD: METRICS AND TARGETS
To monitor progress against our environmental
strategy, we have key metrics and targets. We
also disclose our Scope 1, 2 and 3 GHG emissions.
The Group is required to report its energy use
and measure and report its direct and indirect
greenhouse gas (‘GHG’) emissions by the
Companies (Directors’ Report) and Limited
Liability Partnerships (Energy and Carbon
Report) Regulations 2018. The GHG reporting
period is aligned to the financial reporting year.
Reported energy and GHG emissions data is
compliant with SECR requirements and has been
calculated in accordance with the GHG Protocol
and SECR guidelines.
METHODOLOGY
The methodology used to calculate emissions
is based on the financial control consolidation
approach, as defined in the Greenhouse Gas
Protocol, A Corporate Accounting and Reporting
Standard (Revised Edition).
Emission factors used are from the UK
Government’s GHG Conversion Factors for
Company Reporting, and selected other
emissions factors datasets as applicable, for
the year reported. For Scope 3 Category 1, an
Environmentally Extended Input Output database
methodology was used to calculate the
GHG footprint across total spend in the year.
INDEPENDENT VERIFICATION OF OUR GHG
EMISSIONS
EcoAct has independently assessed and verified
Auto Trader’s GHG emissions following verification
standard ISO 14064-3:2019. Based on the data
and information provided by Auto Trader and the
processes and procedures followed, nothing has
come to EcoAct’s attention to indicate that the
GHG emissions totals for all years reported are
not fairly stated and free from material error.
ENERGY AND EMISSIONS REPORTING
Working responsibly
continued
OUR TOTAL CO
2
EMISSIONS
1
2024
2023 (base year)
2022
UK
Global
UK
Global
UK
Global
Scope 1
258
258
342
363
276
294
Scope 2 (location based)
205
205
297
310
368
385
Total (Scopes 1 and 2)
463
463
639
673
644
679
KwH (‘000s)
2,473
2,473
2,714
2,775
2,618
2,767
Purchased goods & services
22,949
19,537
23,562
Capital goods
2,262
498
794
Fuel and energy-related activities
74
133
196
Upstream transportation & distribution
–
72
115
Waste generated in operations
107
5
16
Business travel
1,041
365
63
Employee commuting (inc. working from home)
982
1,746
1,004
Upstream leased assets
–
129
106
Use of sold products
2
70,643
56,323
102,807
End of life treatment of sold products
383
31
50
Investments
37
26
27
Scope 3 (total)
98,478
78,865
128,740
Total (Scopes 1, 2 and 3)
98,941
79,538
129,419
Revenue
3
£570.9m
£510.4m
£491.1m
Tonnes of CO
2
equivalent per FTE
4
80.2
68.5
107.9
Tonnes of CO
2
equivalent per £million turnover
3
173.3
155.8
263.5
Scope 2 (market based)
10
3
91
% renewable
95%
99%
76%
1.
Scopes 1, 2 & 3 are reported in tonnes of CO
2
equivalent.
2.
The methodology for calculating use of sold goods has changed in 2024. We will recalculate 2023 on the same basis in the coming year.
3.
This includes Autorama revenue for the period 1 April to 31 March for each period reported.
4.
Based on average number of employees in the Group throughout the year 2024: 1,233 (2023: 1,160, 2022: 1,199). The average number of employees included Autorama FTEs
for the period 1 April to 31 March for each period reported.
GOVERNANCE
METRICS AND TARGETS
RISK MANAGEMENT
STRATEGY
Governance
Financial statements
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TCFD REPORTING
Working responsibly
continued
1
Our net zero
commitment –
our operations
We have signed up to the Science
Based Targets initiative (‘SBTi’) Business
Ambition for 1.5°C. By doing so, we are
committed to achieving net zero before
2040 and to reducing emissions in line
with the Paris Agreement goals.
2040
is the year we are committed
to achieving net zero
Net zero refers to the balance between the
amount of greenhouse gas produced and the
amount removed from the atmosphere. We
reach net zero when the amount we add is no
more than the amount taken away. Our near
and long-term net zero targets have both been
validated and approved by the SBTi.
Our greenhouse gas emissions and carbon
intensity ratios are disclosed on page 35 and
these form part of our key metrics. We have
committed to reach net zero greenhouse gas
emissions across our value chain by 2040,
committing to:
• Reduce absolute Scope 1 and 2 GHG emissions
by 50% before 2030 from a 2023 base year.
• Reduce absolute Scope 3 GHG emissions
by 46.2% over the same timeframe.
• Reduce absolute Scope 1, 2 and 3 GHG emissions
by 90% by 2040 from a 2023 base year.
Although our direct environmental impact is
relatively small we are committed to reducing
our emissions. The main risk surrounding our
operational emissions is our indirect Scope 3
emissions relating to purchased goods and
services and use of sold goods. With the
acquisition of Autorama, our emissions have
increased significantly in these categories
due to the vehicles sold by Autorama that
temporarily pass through their balance sheet.
The spend we have with our suppliers is also a big
contributor to purchased goods and services.
HOW WE’RE TAKING ACTION
To meet the SBTi’s definition of net zero, we need
to reduce our emissions by at least 90% and then
use carbon removal initiatives to neutralise any
limited emissions that cannot yet be eliminated.
It is therefore essential that we fully understand
the source of our emissions and undertake
targeted actions. We resubmitted our targets
to the SBTi to revalidate them to include the
Autorama acquisition and to rebase our baseline
year to 2023. Our emission reduction targets
have been incorporated within executive
remuneration policies (page 81 onwards).
The make up of our carbon emissions is heavily
weighted towards Scope 3, and within that,
purchased goods and services and use of sold
goods are the biggest contributors. During the
year, our GHG emissions totalled 98.9ktCO
2
.
This was an increase on 2023 (2023: 79.5ktCO)
and is primarily due to an increase in the volume
of cars passing through Autorama’s balance
sheet. In respect of our other emissions, we have
a committed climate action plan and our targets
and progress are set out on the next page.
Our Sustainability Network comprises
passionate individuals from across the business
who are focused on making life at Auto Trader
more sustainable through increased employee
awareness and driving impactful changes for both
individuals and our business, supporting our overall
goal of reducing our carbon emissions. We want
to foster an environmentally responsible culture
through awareness and by encouraging employee-
led environmental actions and initiatives.
We have rolled out Carbon Literacy training for
all employees and have a c.80% completion rate.
During the year we completed the migration of our
data centres to the cloud and also started work on
installing solar panels at our Hemel Hempstead office.
GOVERNANCE
METRICS AND TARGETS
RISK MANAGEMENT
STRATEGY
Governance
Financial statements
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TCFD REPORTING
Working responsibly
continued
Metric
Emission type
Target year
Our progress
Current status
Switch 100% of our fleet vehicles
(Auto Trader and Autorama
fleet) to be EV or low emission.
SCOPE
1
2030
Base year
353 tCO
2
e
Current year
221 tCO
2
e
•
Any newly ordered vehicles must be fully electric or hybrid with emissions 75g/km or less.
•
60% of the Auto Trader and Autorama fleet is now an EV or ULEV.
ON TRACK
Auto Trader data centres to
be fully migrated to the cloud.
SCOPE
2
2024
Base year
67 tCO
2
e
Current year
15 tCO
2
e
•
100% of our data centres have been migrated to the cloud.
COMPLETE
Energy: reduce overall
electricity usage by 50% (against
a 2023 baseline) and procure
100% renewable energy for
our remaining needs.
SCOPE
2
2030
Base year
1,602 KwH (‘000s)
Current year
920 KwH(‘000s)
•
Work has started on the installation of solar panels at our Hemel Hempstead office.
•
Started a programme of switching employee laptops to more energy efficient tech.
ON TRACK
Business travel emissions:
achieve a 50% reduction
(against a 2023 baseline).
SCOPE
3
2030
Base year
374 tCO
2
e
Current year
1,041 tCO
2
e
•
Updated our travel policy to make flights as a mode of travel by exception.
•
Travel system now displays carbon emissions.
MORE WORK
NEEDED
Commuting emissions
(including emissions generated
from working from home):
achieve a 50% reduction
(against a 2023 baseline).
SCOPE
3
2030
Base year
1,746 tCO
2
e
Current year
982 tCO
2
e
•
Continued with Connected Working which offers all employees greater flexibility in where and when they work, resulting
in less commuting.
•
6% of eligible employees are now participating in salary sacrifice to lease an electric vehicle.
ON TRACK
Suppliers: require 50% of
suppliers, by spend, to
have meaningful carbon
reduction targets.
SCOPE
3
2030
•
One of the Group’s strategic objectives is to transition our value chain to net zero emissions, bringing suppliers on the journey
and embedding sustainability within our procurement processes.
•
We are improving our data quality so we can start taking action to address our Scope 3 emissions relating to purchased goods and services.
•
Ethical procurement questionnaires completed covering 75% of our supplier spend.
MORE WORK
NEEDED
Autorama Scope 3 emissions.
SCOPE
3
2030
•
A significant part of the Group’s Scope 3 emissions relate to the purchased vehicles that temporarily pass through Autorama’s balance sheet.
•
During the year, vehicles taken on balance sheet increased. As supply improves we expect to become less reliant on vehicles where we are
required to take them on balance sheet.
MORE WORK
NEEDED
Climate contribution strategy.
NET
ZERO
2030
•
Taking responsibility for our carbon emissions by contributing to climate action.
•
Partnered with the Greater Manchester Environmental Fund to support community projects that make big improvements to green spaces
across Greater Manchester.
•
Worked with a third party to identify suitable projects for investment during the year – more work is needed to identify further projects
for us to support.
•
Further work needed to adopt an appropriate internal carbon price and implementation within the business.
ON TRACK
GOVERNANCE
METRICS AND TARGETS
RISK MANAGEMENT
STRATEGY
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TCFD REPORTING
SUPPORTING THE TRANSITION TO EVS
The Zero Emission Vehicle mandate came into
force in 2024, causing significant levels of change
in the industry for manufacturers and retailers as
the mandate began to dictate the number of EVs
each brand needs to sell each year or risk paying
fines. A lot needs to happen in the coming years to
ensure the successful mass adoption of electric
vehicles. We have been regularly meeting with
various Government departments to share our
data and insights to help guide policy for a
number of years now and in the past 12 months,
the number of Government departments
receiving these insights has expanded, showing
the value and impact of our work. Additionally, this
year we were invited to present oral and written
evidence at the House of Lords Environment and
Climate Change Committee Electric Vehicles
inquiry, with our research playing a key part in the
summary document of the inquiry.
Our wealth of data and insight gives us a unique
view of consumer car buying intentions, and
particularly consumer EV buying intentions. This
data forms the basis of our award winning ‘Road
to 2035’ Reports, which are extremely valuable to
not only the Government, but also to media and
the industries involved in the electric transition.
This year, the Report, as well as our press activity
tracking the impact of London’s Ultra Low
Emission Zone expansion, resulted in a request
from Transport for London’s press team who had
seen our data analysis and commentary in the
media and wanted our input on the scrappage
scheme expansion, demonstrating the impact
and influence of our data and reputation.
CARBON LITERACY TOOLKIT
The automotive industry is under enormous
pressure to reduce its carbon emissions and whilst
many of our industry partners have clear and bold
plans to reduce emissions, many are still very early
on in their sustainability journeys and require
support to help them develop a carbon reduction
plan. Through our partnership with the Carbon
Literacy Trust, we have created and fund the
Automotive Carbon Literacy Toolkit which has
gone from strength to strength. We’re now looking
to launch a Technology Sector Toolkit with a new
Working responsibly
continued
set of sector partners. In the automotive space, 208
organisations have now completed the training (as
at 31 March 2024) which our customers view as an
important step in their sustainability journey, as well
as a key employee engagement initiative. Once an
individual in a business has been accredited as
‘carbon literate’, the business is then provided with
training content and trainer manuals that enable
them to run their own one-day Carbon Literacy
training. After a significant jump this year, over 3,200
people in these businesses have now completed the
training (2023: over 1,000).
In addition to the training, we continued our Building
a Sustainable Automotive Industry event series which
aims to inspire action and motivate businesses to
be more sustainable by gathering industry partners
and sustainability experts together. This year,
we partnered with Capgemini to deliver an event
focused on creating carbon reduction plans.
We also conducted research on retailer attitudes to
sustainability to gain a deeper understanding of the
current situation and found that whilst the majority
of retailers understand sustainability is key to
future-proofing their businesses, few know how to
get started. As a result, we are looking to make this
an always-on offering for our industry partners and
so will be launching a Sustainability Hub in the next
financial year. This will comprise two elements –
one, a content hub with case studies and key
environmental information and two, a community
space where those working on sustainability can
come together, ask questions and share experiences.
METRICS
Metric
Our progress
Current status
Number of electric
vehicles advertised
on Auto Trader
22,536
(average as at
March 2024)
ON TRACK
Share of electric vehicles
advertised on Auto Trader
4.5%
during FY24
ON TRACK
Number of electric
vehicles delivered
by Autorama
876
during FY24
MORE WORK
NEEDED
Number of videos
produced covering
electric vehicles
56
during FY24
ON TRACK
OUR ‘ELECTRIC VEHICLE HUB’
Further to launching our EV ‘Retailer Performance Module’ last
year, we now also have an ‘Electric Vehicle Hub’ for our retailer
customers which provides a one-stop-shop for all things EV
with live market data and electric retailing advice. When the
Government moved the ban on the sale of new petrol and diesel
cars to 2035, we rapidly responded with supporting materials
and webinars for our retailer partners and the EV Hub allows us
to provide this level of detailed support all year round.
2
Supporting
the automotive
industry
Our aim is to support the industry in
the transition to the mass adoption
of electric vehicles (‘EVs’).
>3,200
people in the automotive
community have completed
Carbon Literacy training
GOVERNANCE
METRICS AND TARGETS
RISK MANAGEMENT
STRATEGY
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Financial statements
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TCFD REPORTING
We continue to increase the coverage and
exposure we give electric vehicles (‘EVs’) across
all our platforms, making it easier for car buyers to
search for and find information on EVs. Our goal is
to ensure the electric vehicle transition is fair and
equitable and, with this in mind, we conducted
research on the gender gap in electric vehicles
and found a significant difference between how
men and women think about and consider electric
vehicles. We used this research to create the
‘No Driver Left Behind: Women and the journey
to electric’ report which outlines reasons for the
gender gap as well as potential solutions. The
report was very well received, featuring on BBC
Women’s Hour and with multiple Government
departments and manufacturer partners
requesting sessions on the topic.
Working responsibly
continued
>10.8m
entries to our EV monthly giveaway
since the campaign started
Last year we launched an EV Hub on site and this
year the focus has been on driving traffic to the
hub, with multiple paid marketing activities being
dedicated to this. From partnerships with the
Guardian, the Evening Standard and Hearst
Media titles such as Good Housekeeping and
Cosmo to Spotify podcast and TikTok adverts,
the goal has been to expand our reach and
engage new audiences on the topic of electric
vehicles. The EV monthly giveaway continued
and has now amassed more than 10 million
entries, giving away over £1 million worth of
prizes since the campaign started.
LAUNCH OF A NEW E-BIKE PLATFORM
A step change development in our mission to support
consumers to make more environmentally friendly
choices has been the launch of new e-bikes on our
platform in May 2023. The e-bike community
welcomed this launch and viewed it as a key sign
of maturation of the e-bike market and were excited
by the impact Auto Trader’s size and reach can have
on the sector. On-site interest in e-bikes has been
rapidly increasing and we’ve had great success with
Black Friday promotions and editorial e-bike content.
“We need to address
the specific concerns of
women around EVs. Prioritise
what women will get for their
money rather than extolling
the virtues of going green.
Explain what lower running
costs mean rather than
advertising the benefits
of new technology. Women
have different points of
engagement.”
ERIN BAKER
Editorial Director, Auto Trader
NO DRIVER LEFT BEHIND
To progress our work to
ensure No Driver is Left Behind
in the electric transition,
we’ve executed multiple
campaigns in the consumer
lifestyle space.
By launching multiple
media partnerships with
titles including the Guardian,
Cosmopolitan and Good
Housekeeping, we surfaced
Auto Trader’s electric content
to new audiences, specifically
in the lifestyle and women’s
press. By establishing
relationships in these sectors,
we have also increased
the volume of PR coverage
in women’s lifestyle titles,
a key goal of our electric
communications strategy.
We also launched new
podcast adverts that directed
listeners to Auto Trader’s EV
Hub; these adverts appeared
on Parenting Hell and The
Receipts, bringing electric
vehicles into the conversation
in a lifestyle environment.
3
Supporting
consumers
Our aim is to support consumers to make
more environmentally friendly vehicle
choices and to be the number one
electric vehicle destination in the UK.
METRICS
Metric
Our progress
Current status
Number of electric
vehicle advert views
on Auto Trader
105m
during FY24
ON TRACK
Share of electric
vehicle advert views
on Auto Trader
3.7%
during FY24
ON TRACK
Number of electric
car giveaway entries
10.8m
since the campaign
started
ON TRACK
Number of video views
covering electric vehicles
7.9m
during FY24
ON TRACK
GOVERNANCE
METRICS AND TARGETS
RISK MANAGEMENT
STRATEGY
Governance
Financial statements
39
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Strategic report
OPERATIONAL
LEADERSHIP
TEAM
EXECUTIVE
RESPONSIBILITY
BOARD
RESPONSIBILITY
REMUNERATION
COMMITTEE
EMPLOYEE GUILDS
& NETWORKS
THIRD-PARTY
CHARTERS &
ACCREDITATIONS
1
2
6
3
4
5
Working responsibly
continued
Our people &
communities
Continue to build diverse teams
and evolve our inclusive culture.
Maintain high levels of employee
engagement, supporting positive
health and wellbeing.
Partner with charities, community
groups and industry bodies to make
a difference to the communities
where we work and live.
ENGAGING OUR EMPLOYEES
We recognise the importance of having the
right mix of communication and engagement
channels for our employees and this is
something that we continuously review and
develop based on employee feedback and
best practice. We welcome open and honest
feedback from our employees and surveys
are conducted on a regular basis. We run an
anonymous survey twice a year to measure
employee engagement, understand job
satisfaction and understand where changes
may be necessary. In our most recent survey
we were pleased that 97% (2023: 91%) of our
employees agreed or strongly agreed with
the statement “I am proud to work for
Auto Trader”, a measure which we view as
a proxy for engagement. Our engagement
survey is supplemented with pulse and
post-event surveys where relevant.
We have continued to embrace Connected
Working which offers all employees greater
flexibility in where and how they work whilst
still maintaining collaboration with their
teams and the wider Auto Trader community.
We have strengthened our internal
communications through our regular ‘OLTV’
sessions, led by our CEO and wider leadership
team. These sessions, together with our
annual all-employee conference, provide
opportunities for our employees to stay
connected to our business priorities and
hear about key business updates.
Our Board Engagement Guild is the primary
mechanism for our Board to engage with our
employees and for them to understand their
experiences and views, as well as providing
the opportunity for employees to ask
questions directly of Non-Executive Directors.
The Guild has representatives from across
different parts of the business who canvass
views and opinions from their colleagues to
share with the Board. This year the Guild met
four times and discussed topics including
wellbeing, Directors’ remuneration, our new
values, consumer engagement and
Connected Working.
1. BOARD RESPONSIBILITY
Material ESG topics discussed by the Board include
diversity and inclusion, employee engagement and
talent development. The Corporate Responsibility
Committee is responsible for holding the Executive
Directors to account and on a quarterly basis our
people scorecard is reviewed and progress against
our cultural KPIs is monitored. The Board plays an
important role in ensuring our culture is aligned with
our long-term strategy.
2. EXECUTIVE RESPONSIBILITY
The responsibility for assessing and managing our
people and culture sits at both Executive and Board
level. Our Executive Directors have responsibility for
oversight of our diversity and inclusion agenda and
are responsible for ensuring that our values are
embedded into all parts of our business.
3. OPERATIONAL LEADERSHIP TEAM
Our Operational Leadership Team (‘OLT’) is
responsible for driving our culture that is values-led,
customer-centric and data driven, underpinned by
a diverse and inclusive team. Having a progressive
culture and environment ensures the attraction,
development and retention of a talented, engaged
and diverse workforce.
HOW WE GOVERN THIS AREA
4. REMUNERATION COMMITTEE
The Committee introduced diversity-related metrics
into the Performance Share Plan (‘PSP’) targets for
the 2021 PSP award. From 2022 onwards, PSP award
performance will be measured against our diversity
ambitions as part of an underpin rather than as a
standalone target. The Committee also has remit
over material changes to package and benefits
and approved the all-employee share scheme.
5. EMPLOYEE GUILDS & NETWORKS
Our employees play a fundamental role in the
success of our ESG strategy. Through our thriving
networks and guilds, our ESG priorities and
ambitions are championed and driven forward by
our employees. See page 45 for more information
about our networks. These networks feed into a
wider Diversity and Inclusion Guild which oversees
the various networks to ensure they drive real
change across our organisation.
Our Board Engagement Guild is the primary
mechanism for our Board to engage with our
employees and meetings are not attended by the
Executive Directors. Employees are able to share
their experiences and views, as well as providing the
opportunity for them to ask questions directly of Non-
Executive Directors. The Board Engagement Guild
has representatives from across different parts of
the business and canvasses views and opinions
from their colleagues to share with the Board.
6. THIRD-PARTY CHARTERS & ACCREDITATIONS
We have signed up to various third-party charters
and have received a number of accreditations,
most notably:
•
Race at Work Charter
•
Change the Race Ratio
•
Disability Confident Leader
•
Social Mobility Top 75
• Inclusive Companies
•
Living Wage employer
Governance
Financial statements
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Strategic report
Determined
Curious
Community
Decisive
Humble
Adaptable
Community
We connect and understand each other, respect
our differences and focus on finding common
ground. We are committed to making a
difference in the communities around us.
Curious
We look up, listen, think beyond the obvious
and find the Auto Trader way. We’re restless
and always thinking about what’s next.
Humble
We share in our failures as well as our successes.
We earn our place and take nothing for granted.
Determined
We get stuck in and have the conviction to
make big things happen. We persevere and
aren’t scared to do the hard thing.
Decisive
We crack on, trusting our instincts, data and
experience. We sometimes disagree, but we
always commit and deliver together.
Adaptable
Our ability to change and change again is our
greatest strength. We act for the long term,
accept uncertainty and challenge everything.
Working responsibly
continued
Our values underpin
everything we do
Periodically we review our values alongside
our strategy, purpose and priorities.
Whilst they don’t often change, this year we did evolve them slightly, replacing
‘courageous’ with ‘decisive’ and ‘reliable’ with ‘adaptable’. We’ve made these
changes to align with the values we already see within the organisation but
also recognise values which we believe will be important in helping us meet
our future aspirations.
Reflecting our culture and commitment to making
a positive impact
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Financial statements
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Working responsibly
continued
WELLBEING AND SAFETY OF OUR EMPLOYEES
We are committed to supporting our employees
in all aspects of their health and wellbeing. We
provide a comprehensive range of healthcare
benefits as well as access to tools and education,
mental health support and supportive pathways
to empower our employees to have more good
days. During the year, people leaders attended
refresher courses in mental health awareness to
assist them in identifying and supporting issues
that relate to people’s mental health, and learn
practical skills that can be used every day to help
support team members. Access to mental health
support and services is made available to all
employees via trained Mental Health First Aiders
and our Employee Assistance Programme.
We also provide access to tools and resources
to support employees with their financial
wellbeing. A Group personal pension plan is
offered to all employees, under which they can
contribute between 3% and 5% (or higher) of their
salary and Auto Trader contributes between 5%
and 7%. All employees can join the Group’s Save
As You Earn scheme, with 563 of our employees
participating in at least one of the current
schemes. In September 2023 we announced
an all-employee share award that rewards
employees with an extra 10% of their salary
in shares each year, vesting over a three-year
INVESTING IN AND SUPPORTING OUR TALENT
period. This builds on our already strong
ownership culture and aligns our people
with our shareholders.
We are committed to creating a safe office
environment and to achieving high standards
of health and safety, committed to protecting
our staff and others affected by our operations.
Our principal objective is to prevent or minimise
accidents, injury and ill health to staff,
contractors and others, who work at or visit our
premises. We have a fully compliant Health and
Safety Policy and appropriate insurance for all
employees. We can report that we have had
no fatalities or serious injuries during the year,
and there was no impact to our operations
due to work-related incidents or work-related
occupational disease. We have had one
accident reportable to RIDDOR this past
financial year with no further action required.
Following the introduction of our Connected
Working approach, we remain committed to our
people’s health and wellbeing. To support our
colleagues we make sure that their workstations
are safe by completing a risk assessment of
both office and home-based workstations and
environments. This assessment is designed
to ensure compliance with health and safety
regulations and will help to identify and minimise
risks while working from home or the office.
Our learning academy is the platform that
provides a range of learning opportunities
for all employees (including part-time and
contractors). We provide sponsorship for
professional qualifications and access to
continuing professional development for
our people. Mandatory training covers our
compliance essentials to ensure compliance
with our legislative and regulatory
requirements. Our non-mandatory training
covers a broad range of learning and
development that provide role-specific
technical skills and soft skills that support
being successful at Auto Trader. Our
mentoring and coaching programmes are
available to all employees and we continue
to build internal coaching, mentoring and
sponsorship capability.
We have a dedicated Early Careers team
which plays a vital role in nurturing the future
success of our company. We take immense
pride in our exceptional pipeline of talented
individuals who are carefully developed to
assume key roles across various departments
in the business. Our team is committed to
identifying opportunities, crafting innovative
programmes, and delivering comprehensive
support to facilitate the growth and success
of early careers, retraining and professional
development for colleagues at Auto Trader.
Our ambition is to make sure that
everyone has the time and opportunity for
development at Auto Trader. We support this
through personal development plans and
opportunities, coaching and mentoring,
structured programmes and self-learning.
We underpin this through our cultural and
inclusive initiatives, including values-based
training, inclusive leadership and an
inclusive talent development programme.
We pride ourselves on having a community
focused on development where everyone
can be successful. We still retain a
strong level of retention and employee
engagement and our attrition rate remains
low at 11% (2023: 11%) when compared to
industry and national averages.
Year
2024
2023
Hours of mandatory training (see page 49 for more detail)
1,113
2,286
Hours of non-mandatory training
27,363
27,316
Annual cost of training
1
£633k
£494k
Average cost per employee
2
£513
£487
Employees studying for professional qualification
8
8
Employees on an apprenticeship/early careers
3
71
78
1.
This includes external trainer and platform costs, but excludes the employment costs of our in-house
Learning & Development team.
2.
Based on average number of employees in the Group throughout the year 2024: 1,233.
3.
As at 31 March – this excludes individuals who completed their programme during the reporting period.
Governance
Financial statements
42
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Working responsibly
continued
GENDER AND ETHNICITY DIVERSITY
As at 31 March 2024, at a Board level, over half
of our Board are women, exceeding the FTSE
Women Leaders Review recommendations and
FCA Listing Rules requirements, which have a
target of 40% women’s representation. We
acknowledge that at the time of reporting we
do not have a woman holding one of the four
senior Board roles but will do after the AGM.
We satisfied the recommendation of the Parker
Review that at least one Director should be
from an ethnically diverse background.
After the AGM (scheduled for 19 September
2024) the Board membership will comprise
six women and three men, with two from an
ethnically diverse background and a woman
as Senior Independent Director.
The percentage of the total company who are
from an ethnically diverse background has
increased from 15% to 17% during the year, with
the percentage of those from an ethnically
diverse background in leadership decreasing
from 8% to 6%. We remain committed to
increasing ethnically diverse representation in
leadership. As was the case with women, we
are focused on our recruitment processes, the
majority of which are in lower level roles, and
how we develop and promote a diverse group
of individuals through the organisation.
Last year, the Parker Review announced
that it was extending its scope to senior
management, asking the FTSE 350 to set a
percentage target for senior management
positions that will be occupied by ethnic
minority executives in December 2027.
We have set a target of 10% ethnically diverse
senior management (OLT and OLT-1) to
be achieved by March 2027 in line with the
Parker Review.
As at 31 March 2024
As at 31 March 2023
Board
Executive
management
OLT
2
OLT
direct reports
Total company
Board
Executive
management
OLT
2
OLT
direct reports
Total company
Number
%
Number
of senior
positions
1
Number
%
Number
%
Number
%
Number
%
Number
of senior
positions
1
OLT
2
%
Number
%
Number
%
Men
4
44%
4
4
44%
41
59%
701
57%
4
44%
4
4
44%
45
62%
696
57%
Women
5
56%
–
5
56%
28
41%
548
43%
5
56%
–
5
56%
28
38%
524
43%
Non binary/
other
–
–
–
–
–
–
–
6
–
–
–
–
–
–
–
–
6
–
As at 31 March 2024
As at 31 March 2023
Board
Executive
management
OLT
2
OLT
direct reports
Total company
Board
Executive
management
OLT
2
OLT
direct reports
Total company
Number
%
Number
of senior
positions
1
Number
%
Number
%
Number
%
Number
%
Number
of senior
positions
1
OLT
2
%
Number
%
Number
%
White
British
or other
White
8
89%
4
9
100%
59
86%
909
72%
8
78%
3
9
100%
62
85%
876
72%
Mixed
ethnic
groups
–
–
–
–
–
–
–
26
2%
–
–
–
–
–
1
1%
29
2%
Asian
/Asian
British
1
11%
–
–
–
4
6%
129
10%
1
11%
–
–
–
4
6%
103
8%
Black/
African
/Caribbean
/Black
British
–
–
–
–
–
1
1%
42
3%
–
–
–
–
–
2
3%
37
3%
Other
–
–
–
–
–
–
–
19
2%
–
–
–
–
–
–
–
15
1%
Not
disclosed
–
–
–
–
–
5
7%
130
11%
–
–
–
–
–
4
6%
166
14%
1.
Senior positions defined as CEO, CFO, SID and Chair of the Board.
2.
Excludes CEO, COO and CFO who are included in the Board numbers.
Governance
Financial statements
43
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Working responsibly
continued
GENDER AND ETHNICITY PAY GAP
We released our fourth combined Gender and
Ethnicity Pay Gap Report 2023 (published in
December 2023, reporting the pay gap as at 5
April 2023). We have joined forces with other FTSE
100 companies to encourage more companies to
report and to campaign to make ethnicity pay
gap reporting mandatory in the same way that it
is for gender. You can read more about our work
to ensure gender equality in our UK workforce in
our Gender and Ethnicity Pay Gap Report on our
corporate website, plc.autotrader.co.uk.
We continue to make progress in reducing our
gender pay gap. Our mean gender pay gap
decreased by 2.3% (2022: 0.3% decrease), and our
median pay gap decreased by 3.3% (2022: 0.4%
increase). During the reporting period, we
performed well in retaining women in our upper
quartiles (30% women leavers compared to 63%
for men). Our overall gender split when looking at
people who left Auto Trader during the reporting
period was also more favourable to women; they
accounted for 30% of leavers compared to 70%
for men. Of the new hires included in the report,
46% were women (2022: 43% women). Our goal
is to get to a 50/50 gender split across all our
recruitment campaigns. We have also continued
with our focus on hiring early career roles,
with 31% of total hires joining an early career
programme. Of the technology based roles, 64%
of them went to women as part of our continued
strategy to increase the number of women
in technology by hiring at entry level and
progressing them through their careers. Between
April 2022 and March 2023, we were pleased
to see that women accounted for 41% of all
promotions, and we continue to strive to
increase this further.
During the reporting period, the mean and
median ethnicity pay gaps have decreased
by 1.2% and 5.5% respectively (2022: decreased
by 0.8% and 1.2% respectively). We have also
increased ethnically diverse representation
across all quartiles, with the upper middle
quartiles showing the largest increase at 3.4%.
We have again focused on three primary areas
when exploring what led to the decrease:
retention; changes in circumstances for our
existing colleagues; and new hires. The retention
of ethnically diverse employees, particularly in
more senior roles, has had an important impact
on reducing our ethnicity pay gap. Of those
who left during the reporting period, 8% of our
ethnically diverse leavers were in the upper
quartile compared to 28% of white leavers.
We have always been transparent in
acknowledging that the key to reducing our
ethnicity pay gap is to increase representation
of ethnically diverse individuals in senior roles
(and therefore the upper quartiles), so we are
pleased to see positive movement in this area.
During the reporting period, 27.5% of our hires
were ethnically diverse – nearly 10% more than
our actual representation at the time of
reporting (18%). We can see the positive impact
of this with the representation of ethnically
diverse colleagues increasing across all
quartiles which has been successful due to
our continued efforts to hire diverse talent
across all levels of the business.
DIVERSITY AND INCLUSION
At Auto Trader, we are committed to creating
a diverse and inclusive work community that
enhances our culture and improves our business
through our ability to attract, identify and
develop talent. People are one of our business’s
greatest assets, so ensuring we have a diverse
workforce and a culture where everyone feels
included is critical to unlock the full potential of
our people therefore unlocking the full potential
of our business; only with a mix of different ideas
and perspectives can we come up with the
most exciting new ideas and create the best
experience for our customers and consumers.
We define diversity as any classification
that can be used to differentiate groups or
individuals from one another, including:
gender; sex; age; sexual orientation; disability
& neurodiversity; race & ethnic origin; religion &
faith; marital status; and social/educational
background and way of thinking. We define
inclusion as a state of being valued, respected
and supported for who you are. We, and our
people, strongly believe in pursuing this aim
authentically and systemically, which we
expect in time to be evidenced in our metrics.
We are committed to driving long-term change
in both the technology and automotive
industries. Our focus is on developing diverse
leaders as well as representative workforces in
these industries. We invest heavily in our early
careers programmes, as well as supporting
several initiatives and partnerships, including
DigitalHer with Manchester Digital, the
Automotive 30% Club and our STEM
Ambassador Programme.
Our representation of women at a total company
level increased from 43% to 44%. During the year,
the percentage of women on our Operational
Leadership Team (‘OLT’) remained at 50%.
We also increased the percentage of women
in leadership roles to 42% as at 31 March 2024
(March 2023: 40%), as defined by the FTSE
Women Leaders Review.
To increase our representation across all levels
of the organisation, we aim to stimulate the flow
of diverse talent from early careers through to
senior leadership by both targeted development
programmes and equipping our leaders to
get the very best out of everyone on their team
and support their development through the
organisation. Our Continuous Leadership
Development programme, made up of a range
of training interventions, supports our senior
leaders and people managers. We have also
continued with our Diverse Talent Accelerator
programme designed to support the progression
of mid-career colleagues.
DEVELOPMENT PROGRAMMES
This year we have introduced the first Black
Experience workshops for all people leaders
of black colleagues. The workshops were
designed and are being delivered by the
People team in collaboration with our black
colleagues and aim to increase awareness
and appreciation of the challenges black
colleagues face in and out of the workplace.
Through the workshops we also aim to
highlight the behaviours that people
leaders can utilise in order to enhance
black inclusion.
We remain committed to supporting disabled
and neurodiverse employees and those who
become disabled during their employment with
us. Recognising that everyone is unique, we
provide the right support to ensure they continue
to realise their full potential and develop their
careers with us. Selection for employment,
promotion, training and development (as well as
other benefits and awards) is made based on
merit, aptitude and ability and the Group does
not tolerate discrimination in any form, including
in relation to disabled candidates.
Governance
Financial statements
44
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Working responsibly
continued
MAKING A DIFFERENCE TO OUR COMMUNITIES
AND THE INDUSTRIES WE OPERATE IN
Our Auto Trader community shapes our culture
and we are committed to making a difference
and having a positive impact on the communities
we operate in.
Our Make a Difference Guild is committed to
empowering our employees to support national
and local charities and communities, supporting
the causes that are close to their hearts and
delivering real and visible change to our
communities. Employees can take up to two days
a year to volunteer in the community and our
Auto Trader Community Funds aim to deliver
financial support to local community groups and
charities in our homes of Manchester, London,
Hemel Hempstead and across the UK. Through
our AT Sponsorships we continue to support
employees’ and customers’ fundraising efforts
and we also provide sports equipment and kit
sponsorship for our employees and their families.
With Auto Trader operating in both the
automotive and technology industries, we
continue to partner with the charity BEN, making
a significant contribution to the charity on behalf
of our customers and partners. BEN is a key
charity supporting the automotive industry with
the aim to offer life-changing support which
empowers people to take control of their mental
and physical health. This year, we are pleased to
announce a two-year partnership with Speed
of Sight, a local charity that gives life-changing
driving experiences for the blind and disabled,
running track events for people of all ages
regardless of ability or disability.
To help tackle digital exclusion, we work with a
local charity, Community Computers, to repurpose
laptops. The charity distributes the devices into
the local community for those who don’t have easy
access to tech. By partnering with Community
Computers not only are we making a difference to
promote digital inclusion, but we can repurpose
our old tech efficiently and sustainably.
We also work with organisations such as
DigitalHer, MentorHer and DigitalFutures to
support insight days, career talks, sponsorship
and development workshops. We offer work
experience and we are a Cornerstone Employer
in the GM network: careersandenterprise.co.uk/
employers/become-a-cornerstone-employer.
We encourage colleagues to register to be
STEM Ambassadors and have colleagues who
volunteer to be mentors with the Social Mobility
Foundation as well as running various workshops
to support code reviews and hacks.
DRIVING OUR D&I STRATEGY THROUGH OUR INTERNAL EMPLOYEE-DRIVEN NETWORKS
A core part of our people and culture strategy is centred around our employee-driven networks.
Everyone at Auto Trader is encouraged to join one of our employee-driven networks that help to
champion: wellbeing, women, ethnicity, LGBT+, disability and neurodiversity, parents, social mobility,
and a multigenerational workforce. The networks and their leaders are a core part of our culture,
helping to welcome employees when they join our organisation, empowering team members to thrive
and spearheading outreach programmes that support our local communities. We ensure each
network has a senior leadership sponsor to help drive change and champion network initiatives.
Our Age Network was launched last year and focuses on creating an inclusive
environment for the multigenerational workforce of Auto Trader.
The Career Kickstart Network brings together colleagues from across the business
to learn and grow together through shared experiences, resources and discussion.
Our Disability & Neurodiversity Network continues to create a more accessible and
inclusive environment for our colleagues. 13.5% (2023: 13.5%) of our colleagues have
disclosed a disability or neurodiverse condition. The network partners with various
charities including Leonard Cheshire, the Royal National Institute for Deaf People
and the Business Disability Forum to educate colleagues and raise awareness.
The Ethnicity Network brings together colleagues from across the business to
aise awareness and drive positive change for our colleagues, customers and
communities who are currently underrepresented ethnically. With an aim to create
an even more inclusive workplace where everyone feels valued, respected and
empowered to contribute to their fullest potential.
Our LGBT+ Network representation is currently 10.0% (2023: 9.1%) and the network
has continued to support our colleagues and connect with local LGBT+ charities,
including The Proud Trust and the George House Trust.
Through building an internal community within the business, the Parents’ Network
helps create an environment for colleagues to support each other in navigating
the challenges of being working parents.
Our Social Mobility Network is focused on understanding how socio-economic
background can influence individuals in the workplace and working to remove
barriers and open opportunities. Auto Trader has signed the Social Mobility Pledge,
committing to putting social mobility at the heart of what we do with 71% of our
people sharing social mobility data.
Our Women’s Network is focused on improving and evolving representation
of women at all levels in Auto Trader, the automotive industry and the digital
communities within which we operate, by recruiting, retaining and developing
female talent.
FURTHER INFORMATION
To find out more about how we support our DE&I
strategy, culture and communities, please go online:
careers.autotrader.co.uk/how-we-hire
Governance
Financial statements
45
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
OPERATIONAL
LEADERSHIP
TEAM
EXECUTIVE
RESPONSIBILITY
BOARD
RESPONSIBILITY
AUDIT
COMMITTEE
SECOND LINE
FORUMS &
COMMITTEES
INTERNAL AUDIT
PROGRAMME
1
2
6
3
4
5
Working responsibly
continued
Our governance
& compliance
Uphold the values of good corporate
governance and risk management
and consider the needs of all
our stakeholders in our strategic
decision-making.
Comply with our legal and regulatory
obligations and behave ethically
and with integrity at all times.
Maintain a trusted marketplace
for our customers and consumers
to find, buy and sell vehicles.
OVERVIEW
To ensure that high standards are embedded
across the business and form part of our
culture, we have a compliance framework in
place, consisting of policies, processes,
guidance and training focused on a number
of core compliance topics. Details of our
Board governance framework and policies
can be found in the Governance section
(page 61 onwards).
As an online marketplace, cyber security and
protecting customer and consumer data are
primary areas of focus. They are fundamental
to our future success and to build trust with our
customers and consumers. As we shift to an
accelerated adoption of digital retailing it is
paramount that our cyber and data security and
infrastructure evolve with our business priorities.
CYBER SECURITY
Trust is core to our business. We are committed
to the security of our services and protecting
our customers from cybercrime and fraud.
Attempts to breach our systems to access
our data and the threat of an unauthorised
malicious attack on our systems pose a
significant and perpetual threat. The volume
and sophistication of cyber attacks has
continued to evolve and increase, and
changes in ways of working have created more
opportunities for cyber criminals. A successful
breach could lead to significant impairment of
our reputation with customers and regulators
and could be costly in terms of fraud losses,
regulatory sanction or remediation activity
– one of our viability scenarios reflects the risk
of a ransomware attack (see page 59).
Whilst cyber security risks cannot be fully
mitigated, having an effective cyber security
risk and governance framework can help to
significantly reduce the impact of such events.
We have a robust security programme in place
that covers both our corporate systems and
the Auto Trader platform which includes a
defined security governance framework,
overseen by our Chief Technology Officer.
1. BOARD RESPONSIBILITY
Material ESG topics are discussed by the Board
including cyber security and GDPR.
The Corporate Responsibility Committee assists
the Board in fulfilling its oversight responsibilities
in respect of governance and compliance, where
topics have not been covered by the Board.
2. EXECUTIVE RESPONSIBILITY
Responsibility for assessing and managing our
governance and compliance sits at both Executive
and Board level. Our Executive Directors have
responsibility for ensuring we conduct ourselves
with the highest standards of honesty and integrity.
3. OPERATIONAL LEADERSHIP TEAM
The Group’s Chief Technology Officer, Chris Kelly,
is responsible for setting the Group technology
strategy, including our cyber security framework.
The Group’s Director of Governance, Claire Baty, is
responsible for regulatory compliance, procurement,
legal services and risk management. Her remit
includes compliance with GDPR and FCA regulation.
HOW WE GOVERN THIS AREA
4. AUDIT COMMITTEE
Internal audit reports and assessments of the
effectiveness of risk management and internal
control frameworks are presented to the
Audit Committee and monitored to ensure
recommendations are actioned.
5. SECOND LINE FORUMS & COMMITTEES
We operate the following second line forums
and committees:
• Risk Forum
•
FCA Governance Committee
• GDPR Steering
•
Cyber security working group
• Trust forum
•
Health & Safety Committee
6. INTERNAL AUDIT PROGRAMME
We operate a rolling internal audit programme
which provides independent and objective
assurance activities relating to the Group’s
governance, risk management and internal
control processes. The programme includes
regular reviews of cyber security, enterprise
risk management, GDPR compliance and
FCA compliance.
Governance
Financial statements
46
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
I
D
E
N
T
I
F
Y
R
E
C
O
V
E
R
P
R
O
T
E
C
T
D
E
T
E
C
T
R
E
S
P
O
N
D
NIST Cyber Security Framework
We have adopted the NIST Cyber Security
Framework (‘NIST CSF’) to help us understand
and define our existing policies, processes and
technical measures in place with the aim to
better govern our cyber security position. It
enables us to identify areas of improvement and
focus our efforts by agreeing and setting a target
state, with the understanding that the NIST CSF
is designed to complement and enhance existing
business and cyber security operations.
We operate a rolling internal audit programme
(outsourced to a third-party) which includes
annual reviews of cyber security. As part of this
programme, a review of our NIST Framework was
carried out in 2023 in relation to our main trading
entity to validate the status and perform an
operating effectiveness review, the purpose
of which was to provide confidence that the
framework is robust, appropriate and effective.
We have successfully adopted the practical
elements of the NIST CSF effectively. A similar
review will be undertaken for our subsidiaries
in the coming financial year.
Working responsibly
continued
Policies and procedures
Our policies and procedures are designed
to detect and respond to pre-emptive cyber
attacks, risks and threats:
• A proactive awareness programme to
educate all employees on cyber security risks.
• A dedicated security operations team to
monitor, detect and respond to security
incidents in line with our cyber security
incident management procedures.
• Enhanced data protection solutions have
been implemented across consumer facing
and internal systems, to guard against the
increasing threat of ransomware.
• All employee accounts are protected by
multi-factor authentication (‘MFA’) regardless
of device and location, providing enhanced
authentication protection.
• Major incident response simulations and
business continuity tests are carried out
periodically.
• System vulnerability and penetration testing
is carried out regularly by both external and
internal resources, including: application
vulnerability testing; penetration testing of
our platform and infrastructure; and Red
team testing to ensure our processes for
responding to a cyber incident are robust
and fit for purpose.
• All aspects of our applications are designed
and deployed with security in mind so that
Auto Trader can deliver a secure and trusted
platform for our customers.
PROTECTING OUR CUSTOMER AND
CONSUMER DATA
Data is at the heart of everything we do and
data compliance and protection is of critical
importance to Auto Trader. We operate a
structured framework which supports us in
meeting our compliance obligations, the
expectations of customers and clients, fulfil
privacy rights and mitigate the risks of a data
breach. We comply with the Data Protection
Act 2018 (‘DPA 2018’), and the UK General Data
Protection Regulation (‘UK GDPR’) as our
benchmark for data protection.
When it comes to collecting and storing personal
data for consumers, customers or our employees,
we have a comprehensive set of policies which
reflect the applicable privacy legislation. We act
as data processor for our customers and a data
controller for the personal data of our people.
We are committed to ensuring that the personal
information we collect is used for the
appropriate purpose, which does not constitute
an invasion of privacy and is held securely,
responsibly and transparently in accordance
with our privacy notices which govern all our
platforms and subsidiaries.
We have a dedicated team that is responsible
for data privacy, data breach prevention and
reporting, policy compliance, record keeping
and data subject rights. We have an assurance
framework in place to monitor compliance with
data privacy laws and to ensure any breaches
are dealt with in a robust manner.
We hold GDPR Steering meetings monthly,
attended by data owners from all business
areas. The meeting is a central point of
communication and coordination and provides
guidance on the governance of our data
strategy and ongoing compliance with relevant
data security and privacy regulations.
All Auto Trader employees, including part-time
employees, contractors and all Board members,
are required to complete annual data privacy
and information security training and we have
established processes to cover all aspects of
the UK GDPR including: Data Protection Impact
Assessments (‘DPIAs’) to help identify and
minimise any data protection risks for new or
changed products or services where personal
data is collected, processed, stored or shared.
All processes are recorded and records of
processing activity (‘ROPAs’) are reviewed
quarterly by data owners. These include the
lawful basis for processing and data retention
periods; our privacy notices are reviewed and
updated regularly. We have separate notices
for consumers, employees and retailers; and we
have processes in place to respond to Subject
Access Requests (‘SAR’) and Erasure requests.
Where required, Auto Trader obtains consent from
consumers to gather personal data to service
their enquiries for products, services or vehicles
advertised on the site. Explicit consent (gathered
separately) is also obtained to contact consumers
for marketing purposes. Where we pass personal
data to third-party service providers contracted
to Auto Trader in the course of dealing with
customers or employees, we carefully vet any
third parties that we share data with, and they are
obliged to keep it securely, and use it only to fulfil
the service they provide on our behalf.
We record all instances of data loss and have
a rigorous incident management process in
the unlikely event a breach occurs. This includes
reporting notifiable breaches to the relevant
regulatory authorities without undue delay and
within stipulated deadlines. Where required we
take remedial action as soon as possible.
FCA COMPLIANCE
Auto Trader Limited, the main trading subsidiary of
the Group, is authorised by the FCA for consumer
credit and insurance intermediary activities. Our
activities primarily relate to providing finance and
insurance introductions to consumers for third
parties (retailers or commercial partners). We
have introduced consumer journeys for some
of our regulated activities as part of our digital
retailing proposition using the technology of
Blue Owl Limited (trading as ‘AutoConvert’), a
wholly owned subsidiary which is an Appointed
Representative of Auto Trader Limited in respect
of consumer credit activities.
NIST CYBERSECURITY FRAMEWORK
Governance
Financial statements
47
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Working responsibly
continued
Autorama UK Limited (trading as ‘Vanarama’)
is authorised by the FCA for consumer credit
activities relating to brokering leases to retail
and trade customers. Autorama UK Ltd also
maintains the required FCA permissions to
support a managed exit from providing
Guaranteed Asset Protection (GAP) and motor
insurance in accordance with its previous
distribution model. We have introduced, and
are developing, consumer journeys where
consumers start their journey on Auto Trader and
complete an onward journey with Vanarama.
We have specialist internal resource within our
Governance, Risk and Compliance team across
Auto Trader Limited and Autorama UK Limited
with significant experience of working in FCA
regulated businesses, and we have developed
a detailed governance framework to ensure
that we comply with the principles, rules and
guidance applicable to our activities.
During the year, we established and
implemented new guidance, policies and
frameworks to ensure we meet the requirements
of Consumer Duty, and put the consumer at the
heart of our business (see below).
We apply the FCA’s Senior Managers &
Certification Regime. Senior Managers at
Auto Trader are Nathan Coe, Catherine Faiers,
Jamie Warner and Claire Baty. Certain members
of the Operational Leadership Team hold
Certified Functions. Senior Managers at
Vanarama are members of the Company’s
Board and other members of the senior
leadership team. All of these individuals have
been assessed and certified as Fit and Proper.
All employees are subject to the Conduct Rules
and have received appropriate training and
guidance. We have a comprehensive suite of
policies, training and monitoring procedures to
ensure awareness of and compliance with the
requirements, including financial promotions,
product change management, complaint
handling, vulnerable customers and
transparency. Our Customer Charter outlines
our commitment to delivering good outcomes
for consumers.
MAINTAINING A TRUSTED MARKETPLACE
As a leading online marketplace, we strive to provide a marketplace
that is relevant, reliable and fair. It is important to our customers and our
consumer audience that adverts displayed on Auto Trader are accurate
and genuine. Our goal is to provide a valuable service for our customers
and consumers and provide an engaging user experience.
RETAILER FEEDBACK
We actively seek retailer feedback in all
aspects of product and service development
to ensure that we continue to provide market
leading solutions and support to our retailer
partners. We also actively monitor consumer
sentiment across our various products and
channels, and our teams review thousands
of items of feedback a week.
PRODUCT RESEARCH AND TESTING
When we bring a product to market, we go
through a rigorous process of discovery to
ensure solutions meet the varied needs of
both our retailer partners and consumers.
Retailers are involved at all stages of
product development, including beta
testing prior to scaling solutions.
SENTIMENT TRACKING
We survey retailers on a monthly basis
through marketing channels to capture
structured feedback on our relationship
with retailers to ensure we’re meeting their
needs and gauge sentiment towards our
brand. This ensures we can keep an eye
on overall satisfaction, value for money
and the partnership we aim to foster.
VOICE OF THE CUSTOMER
We actively monitor feedback which our
Retailer Development and Support teams
capture from retailers during the course of
the thousands of inbound and outbound
calls we field each week, ensuring we keep
a good gauge on retailer sentiment and
can react to market challenges facing our
retailers quickly.
CONSUMER SENTIMENT
We’ve maintained extremely positive
feedback scores across external review
platforms including Trustpilot (4.7/5 based
on 91.0k reviews), iOS App Store (4.8/5
based on 219.6k reviews) and Android Play
Store (4.7/5 based on 87.3k reviews).
TAG VERIFICATION
We have achieved verification by TAG
(‘Trustworthy Accountability Group’),
achieving the Brand Safety Recognition seal.
TAG is the world’s leading programme to fight
criminal activity and protect brand safety in
digital advertising. They have established
best in class global standards that protect
the industry from potentially harmful threats
around fraud, malware and brand safety.
Obtaining our TAG status is recognition that
we meet the high standards required by
TAG and our contribution towards fighting
criminal activity and increasing trust and
transparency in digital advertising.
VSTAG FORUM
We continue to actively lead the Vehicle
Safe Trading Advisory Group (‘VSTAG’), an
industry forum we founded in 2006. The
forum brings together the UK’s leading online
automotive advertising companies, advisors
from the Metropolitan Police, Get Safe
Online and Action Fraud to work together to
reduce online vehicle crime and help protect
buyers and sellers of pre-owned vehicles
from fraud.
IMPLEMENTING CONSUMER DUTY
The FCA’s new Consumer Duty came into effect
from 31 July 2023, setting higher standards of
consumer protection across financial services.
The Duty is well aligned with our objectives of
driving transparency in the car buying process,
and so we were already well placed to meet
the new requirements.
We established a cross-functional steering
group and developed an implementation plan
which was approved by the relevant governing
body for each regulated entity. Some of the
key activities included appointing a Senior
Manager as Consumer Duty champion;
defining the nature and target market for each
of our regulated products; engaging with other
firms in our distribution chain; carrying out
product reviews to ensure that they deliver
demonstrable good outcomes for consumers;
reviewing and improving the transparency of
information within our consumer journeys and
the support we offer to consumers; refreshing
our policies and procedures; training and
embedding within the business; review of
management information and metrics for
ongoing monitoring; and integration with
existing governance frameworks. We engaged
our internal audit partners to carry out both
a readiness review in early 2023, and an
effectiveness review in March 2024. We are
confident that we have successfully
implemented and embedded the Duty and are
well set up to meet the ongoing requirements.
Governance
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BUSINESS ETHICS AND COMPLIANCE
We have a zero tolerance approach to bribery,
corruption and other financial crime within
our business and/or in any dealings with our
customers, suppliers and other third parties
who we deal with. All Auto Trader employees
and contractors, including all Board members,
undertake at least annual online training
covering areas related to: information security,
GDPR, anti-bribery and corruption, the
corporate criminal offence of facilitating tax
evasion, anti-money laundering, modern slavery
and whistleblowing. In addition, our company
values were refreshed during the last year
and they continue to put ethical standards at
the heart of our day-to-day decision-making
and actions. We are committed to taking all
reasonable steps to prevent unethical practices
and potential risks to our consumers or
customers. We do not conduct business with
any service provider, customer or supplier which
does not align to our values in these areas.
HUMAN RIGHTS
We have zero tolerance towards modern slavery,
human trafficking, forced or compulsory labour
and child labour, in our business and our supply
chain. We are committed to supporting human
rights through our compliance with national laws
and through our internal policies which adhere
to internationally recognised human rights
principles. In line with our commitment to creating
a diverse and inclusive culture, our internal policies
require respect and equitable and fair treatment
of all persons we come into contact with. All
employees are paid above the Real Living Wage.
We are an accredited Living Wage Employer. We
safeguard our employees through a framework
of policies and statements including Modern
Slavery, Gender Pay, Flexible Working, Equal
Opportunities and Inclusion Policies. All
employees receive training to ensure they can
identify the different types of modern slavery and
the action they can take if they have any concerns.
MODERN SLAVERY
We are committed to preventing slavery and
human trafficking in our business and supply
chains. We require the highest standards of
honesty and integrity in all our business dealings
and relationships. We will not tolerate the
mistreatment of people in our employment
and employed in our supply chain.
TAX TRANSPARENCY
Auto Trader is committed to being a
responsible taxpayer. Our tax policy was
reviewed and approved by the Audit
Committee in 2024 and it sets out our approach
to tax risk management and governance.
In 2024 our total tax contribution was £213.9m
(2023: £175.4m). Taxes borne by the Group
totalled £100.9m (2023: £69.4m) and consist
of corporation tax, employer’s NICs and
stamp duty. Taxes collected by the Group
totalled £113.0m (2023: £106.0m) and consist
of PAYE deductions, employees’ NICs and
net VAT collected.
PAYMENT PRACTICES REPORTING
We publish information about our supplier
payment practices and performance. On
average, Auto Trader takes 36 days (2023:
35 days) to pay our supplier invoices, with
99% (2023: 98%) paid within agreed terms
during the reporting period.
SUPPLIER ESG ENGAGEMENT
We hold ourselves and our suppliers to the
highest standards of behaviour. We want to
engage suppliers that share our values and
collaborate with them to build a stronger,
more responsible supply chain. We have an
established supplier engagement strategy
and the information we collect through our
supplier engagement/onboarding process,
complemented with our Ethical Procurement
Questionnaires, provides us with greater insight
into numerous aspects of our suppliers’
performance, including community and charity
works and Environmental, Social and
Governance practices such as: how they are
engaging the communities they are based in;
what charitable activities they are undertaking;
how they identify and improve diversity and
inclusion; what governance they have in place
to ensure good practice and limit instances of
modern slavery, bribery or breaches of other
relevant legislation; and sustainability. As part of
our environmental strategy, we have expanded
our discussions on sustainability with those
suppliers who account for our highest carbon
emissions to deep dive into understanding where
our suppliers are on their own sustainability
journey. Additionally, this year we have launched
our own internal Supplier Sustainability Ratings,
which use simple criteria to establish which
of our suppliers are at the beginning of their
sustainability journeys and which are advanced
and a leader in terms of targets, actions,
initiatives and reducing their own emissions.
We have published a supplier code of conduct
which outlines Auto Trader’s stance on important
matters and our expectations of our suppliers.
GRIEVANCE REPORTING OR ESCALATION
PROCEDURES
We aim to create a working environment in which
all individuals enjoy coming to work, where
they can perform at their best, and where they
are free from discrimination or harassment.
Working responsibly
continued
We foster a culture of open and healthy
conversations, mutual appreciation and
respect. We do not tolerate any behaviour that
undermines this aim. We are committed to a
culture where staff can freely report any issue or
concern, and access support via the escalation
procedures we have in place. Our grievance
policy sets out both informal and formal
avenues for addressing concerns.
WHISTLEBLOWING
We are committed to carrying out all business
activities in an honest and open manner and
strive to apply high ethical standards in all
our business dealings. We actively cultivate
a transparent and open culture, encouraging
our employees to speak up whenever they
have concerns, if they suspect anything
inappropriate, or experience any serious
malpractice or wrongdoing in our business.
We believe this contributes to a fairer and
more transparent marketplace where
customers and consumers know that we can
be trusted. We have an internal reporting
facility for employees to discuss concerns
and we also operate an anonymous and
confidential whistleblowing helpline through
an independent organisation. Reports
are directed to the Audit Committee Chair
and the Company Secretary or via the
independent hotline.
FURTHER INFORMATION
To find out more about all of our governance
& compliance policies, please go online:
To find out more about how we are protecting our
customer and consumer data, please go online:
plc.autotrader.co.uk/esg/policies-reports
autotrader.co.uk/privacy-notice
plc.autotrader.co.uk/privacy-and-cookies
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How we manage risk
Effective risk management helps us to
achieve sustainable long-term growth
in a manner which is consistent with our
purpose of Driving Change Together.
Responsibly.
The Board is collectively responsible for
determining the nature and extent of the risks
the Group is willing to take in order to achieve
its strategic objectives. The Board is also
responsible for establishing and maintaining
effective risk and internal controls frameworks
and the Audit Committee is responsible for
independently monitoring effectiveness of
the framework.
Our risk
management
arrangements
GOVERNANCE OVERVIEW P61
WORKING RESPONSIBLY P25
•
Career Kickstart Network
• Parents’ Network
• Ethnicity Network
• LGBT+ Network
•
Disability & Neurodiversity
Network
•
Make a Difference Guild
• Women’s Network
• Wellbeing Guild
• Age Network
•
Social Mobility Network
• Sustainability Network
• Environmental Strategy
working group
• Risk management
• Internal control
• FCA compliance
• GDPR compliance
• Legal team
• Procurement
•
Cyber security team
• Risk management
• Internal control
• FCA compliance
• GDPR compliance
• Legal team
• Procurement
•
Cyber security team
ENVIRONMENTAL STRATEGY
OPERATIONAL LEADERSHIP TEAM & SENIOR LEADERS
SUBSIDIARY BOARDS
AUTO TRADER GROUP PLC BOARD
SECOND LINE FUNCTIONS
Driving Change Together.
Responsibly.
BOARD
ENGAGEMENT
GUILD
DISCLOSURE
COMMITTEE
REMUNERATION
COMMITTEE
NOMINATION
COMMITTEE
AUDIT
COMMITTEE
CORPORATE
RESPONSIBILITY
COMMITTEE
EMPLOYEE GUILDS
& NETWORKS
• External auditors
• Internal auditors
• Other external
assurance
THIRD LINE
SECOND LINE FORUMS
AND COMMITTEES
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How we manage risk
continued
OUR RISK MANAGEMENT PROCESS
A four-step process is used to manage our
principal risks. OLT and risk owners within the 1st
Line of Defence are delegated the responsibility
for identifying, assessing, mitigating, and
monitoring risks. OLT and risk owners report to
the PLC Board on whether our risks are being
managed to an acceptable level through the
Governance Structure, illustrated opposite.
The risk management process can be
summarised as follows:
PRINCIPAL RISKS AND UNCERTAINTIES P53
EFFECTIVE RISK MANAGEMENT
IDENTIFY
A top-down and bottom-up approach is used to identify key risks across
the business. Primarily, risks are identified via three key mechanisms:
•
The Board, OLT, senior managers, and GRC perform continuous horizon
scanning as part of day-to-day operations.
• Our 2
nd
Line Functions are embedded into the teams responsible for
executing key strategic initiatives to help them identify potential risks.
•
GRC facilitate regular risk workshops with OLT and senior managers
within the business.
All new risks are captured on the Group Risk Register which is reviewed
by the Board at least half-yearly.
MONITOR, REVIEW & ASSURE
The effectiveness of key controls is monitored via numerous mechanisms
within our governance structure. These include:
•
Ongoing monitoring by 2
nd
Line Functions.
•
Monthly and quarterly 2
nd
Line Forums and Committees, including Risk
Forum, FCA Compliance, and Trust Forum.
•
A risk-based Internal Audit plan which captures 4-5 assignments per year.
•
Other third-party and specialist monitoring and assurance.
The Board reviews the outcomes of assurance activities on an as-needed
basis. The Board also reviews the Group’s risk register at least half-yearly
and assesses the adequacy and effectiveness of mitigating actions in line
with our risk appetite.
ASSESS & QUANTIFY
All risks are evaluated to establish their root causes, the impact, and the
likelihood of occurrence. When assessing risks, consideration is given to
the financial, reputational, and regulatory impacts, as well as impacts on
customers/consumers, and impacts on day-to-day operations. Risks are
then categorised as:
•
Existential risks: those with the potential to cause fundamental change
within our organisation and wider industry.
•
Operational risks: those arising out of the existing business activities.
•
Emerging risks: those which relate to new initiatives, new products, and
new laws and regulations.
RESPOND & MITIGATE
Risk owners consider whether existing controls and mitigations reduce the
risk to an acceptable level. On an ongoing basis and following identification
of a new risk, 2
nd
Line Functions provide specialist support to ensure that the
response is consistent with our Group risk appetite. Additionally,
independent challenge on risk response is provided from 2
nd
Line Functions,
Forums, and Committees.
If the residual level of risk after mitigation remains above our risk appetite,
then further mitigating actions are implemented.
RISK APPETITE
The Board has considered the nature and extent of the principal risks Auto Trader currently faces, the potential risks we expose ourselves to as we proceed with our
strategy, and the wider market, economy and business environment. The Board has set its risk appetite accordingly and this risk appetite informs how we respond to
risks. Our risk appetite can be summarised as follows:
FLEXIBLE
Auto Trader acknowledges that, in some
circumstances, fast-paced and innovative
development of new products within the
technology space presents significant
opportunities and taking advantage of these
opportunities may result in financial loss. We
consider the opportunities can outweigh the
downside risks, and therefore, in pursuit of our
strategic objectives, we are flexible about
taking risks which relate to product innovation,
addressing competitive threats, and/or
making the most of market opportunities.
CAUTIOUS
As we pursue our strategic objectives, we must
remain cognisant of the potential for them to have
conflicting impacts on our stakeholders, including
employees, suppliers and third parties, and the
environment. Owing to the potential for these risks
to have significant knock-on impacts across a
wide range of categories, we are cautious about
taking risks in relation to such areas.
AVERSE
We are averse to taking risks which conflict
with our values; risks which could damage our
reputation; risks which threaten the security of our
systems and technology; risks leading to a breach
of laws, regulations or financial covenants; and/or
risks which could compromise the organisation’s
going concern status. Across these categories we
take all reasonable steps to ensure our business
activities do not give rise to significant risk of
damage to our stakeholders, and in pursuing our
strategic objectives we are averse to exposing
ourselves to higher levels of risk knowingly.
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7
2
8
1
6
4
5
9
10
3
IMPACT (AFTER MITIGATIONS)
LIKELIHOOD (AFTER MITIGATIONS)
How we manage risk
continued
PRINCIPAL RISKS AND UNCERTAINTIES P53
OUR VIEW IN 2024
The evolving risk landscape & emerging risks
Central to our risk management process is the
identification of new and emerging risks, the identification
of changes to existing risks, and the continual assessment
of how risks could impact the organisation.
The risk landscape has continued to evolve in FY24.
Details of each of our principal risks can be found in the
following pages 53 to 58, and material emerging risks
can be summarised as follows:
The risk landscape has continued to evolve over the
last 12 months, and we expect it to continue to evolve
in the coming years. Our strategy is linked intrinsically
to our principal risks and our principal risks can be
categorised into three themes:
1.
Risks to Auto Trader and the automotive retail
industry as a whole;
2.
Risks arising from external sources; and
3.
Risks arising from internal sources.
Our risk management process continues to work
hand-in-hand with our strategy, and we have taken
crucial steps this year to manage new and emerging
risks. Examples include refreshing our processes to
ensure adherence to the FCA Consumer Duty, scaling
up of Deal Builder to over 1,000 retailers, and evolving
our company values. The matrix below summarises
our view for FY24 of the extent to which the Group
is exposed to each of our principal risks:
EXTERNAL RISKS
•
The rapid changes in artificial intelligence could result
in heightened cyber security threats, for example via
deepfake scams and more sophisticated phishing.
•
With a UK general election in FY25, there is a risk that
political policy could affect Auto Trader as well as
the wider automotive industry, including the
transition to EVs.
•
There is a risk that large technology businesses such
as Amazon and Google see value in the automotive
retail market. Google, for example, recently launched
their Google Vehicle Ads product and there is a risk
that this could gain traction.
•
The FCA investigation into historic commissions
on automotive finance deals could result in costly
redress schemes, which could affect retailers and
lenders. It could also disrupt how automotive finance
is sold in future. Conversely, there is an opportunity
for Auto Trader to provide a platform for automotive
finance lenders to engage with our audience.
RISKS AFFECTING THE AUTOMOTIVE INDUSTRY
•
With the improved supply of new vehicles in FY24, and
new OEM entrants in the UK market, it is important
that we continue to build relationships with OEMs,
as well as their retailer networks, to mitigate the risks
of the agency model.
•
There continues to be a risk to the automotive industry
centred around the transition to EVs. There is risk to
mass-adoption of EVs if the charging infrastructure
does not develop. Further, there remains price
inequality within the EV market which could inhibit
mass adoption, for example prices of charging for
those with home chargers compared to those relying
on public infrastructure.
•
There is increasing concern over the global political
landscape and potential for escalation of military
conflicts. With the automotive industry dependent
on global trade, there is a risk to the industry should
conflicts and sanctions escalate.
Risks which could affect
the wider industry:
1.
Automotive economy, market
and business environment
2.
Climate change
3.
External catastrophic and
geo-political events
Risks we face from
external sources:
4.
Legal and regulatory
compliance
5.
Competition
6.
IT systems and cyber security
Risks we face from
internal sources:
7.
Employees
8.
Brand and reputation
9.
Failure to innovate
10.
Reliance on third parties
and partners
INTERNAL RISKS
•
Whilst Auto Trader has been using AI for over 10 years, the emergence of generative AI could create new
opportunities for us to introduce new products and services, making the complex car buying process simpler
for consumers. AI could also be leveraged to improve the efficiency and productivity of both our retail customers
and our employees.
•
Our business is becoming more complex. Deal Builder means we are closer to the transaction than before,
and our ambitions to grow leasing expose us to complex revenue streams. It therefore is crucial that we embed
effective controls across all emerging risk areas.
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Principal risks and uncertainties
How we mitigate our emerging
and principal risks
IDENTIFYING, ASSESSING, RESPONDING TO, AND MONITORING
THE GROUP’S PRINCIPAL RISKS
The Board has carried out a robust assessment of the emerging and principal
risks facing the Group, including those that would threaten its business
model, future performance, solvency or liquidity.
The emerging and principal risks and uncertainties are detailed in this
section. Additional risks and uncertainties to the Group, including those
that are not currently known or that the Group currently deems immaterial,
may individually or cumulatively also have a material effect on the Group’s
business, results of operations and/or financial condition.
STRATEGIC PROGRESS P10
KPIS P18
Marketplace
OUR STRATEGIC PRIORITIES
Digital retailing
Platform
Working responsibly
1. AUTOMOTIVE ECONOMY, MARKET AND BUSINESS ENVIRONMENT
RISK AND POTENTIAL IMPACT
An increase in the supply and/or a drop in consumer demand for new/used cars could lead to reduced
vehicle prices and therefore reduced retailer profitability. Higher costs and interest rates could lower
retailer profitability and reduce their advertising spend with Auto Trader. Reduced profitability could lead
to consolidation of retailers.
High cost of living and interest rates could affect car buyers’ ability to afford a change of vehicle,
affecting demand.
Mass adoption of the agency model, whereby manufacturers sell new vehicles directly to consumers with the
retailer acting as an agent facilitating the transaction, could lead to lower revenues for our retailer customers.
Further, manufacturers operating an agency model may not wish to use Auto Trader as an advertising channel.
A move towards agency, combined with other structural changes in the industry, could lead to the
consolidation of retailer forecourts.
KEY CHANGES AND OUTLOOK
•
The supply of both new and used vehicles increased in FY24, with new car registrations increasing 16% and
used car transactions increasing 6%. Prices have softened through the year, however continually strong
levels of demand, fast speed of sale, and lower trade prices have lessened some of the impact felt by retailers.
•
Whilst the volume of fleet new car registrations has increased 38% year on year, these vehicles have been sold
into corporate and rental customers rather than feeding into the broker channel where supply remains tight.
•
Higher interest rates on stocking loans and general inflationary pressures have increased retailer costs.
In this context, we are working closer in partnership with our retailers to help them get the most out of our
advertising and data-led products.
•
The number of UK retailer forecourts working with Auto Trader increased in the year to its highest ever number.
•
Some manufacturers moved to an agency model in FY24 and many are using Auto Trader for advertising.
•
Some manufacturers have signalled their intention to remain with their traditional franchise models.
HOW WE MANAGE THE RISK
•
We monitor new and used car transactions closely, using data from SMMT and DVLA. We also monitor
behaviour on our marketplace and engage closely with our customers and consumers to assess market health.
•
We use our own Auto Trader Retail Price Index and valuations data to monitor the pricing trends of used cars
by trade sellers.
•
We publish reports containing data and insights to help retailers understand the state of the automotive market.
•
We adopt a partnership approach to support our customers in getting value from our products. By
democratising our data, we provide retailers with the tools to enable them to inform their stock sourcing and
pricing strategies.
•
We continuously enhance existing products and seek opportunities to develop new products to support
our customers.
•
Our culture of agility and innovation enables us to respond quickly to new and emerging threats
and opportunities.
Increasing
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Principal risks and uncertainties
continued
2. CLIMATE CHANGE
Unchanged
RISK AND POTENTIAL IMPACT
The automotive industry is a high contributor to emissions, and so there is
pressure from consumers and the Government for the industry to reduce
its impact on the environment. Failure to deliver on our environmental
commitments could negatively impact our brand as a responsible
business or result in regulatory sanctions.
Failure to overcome the challenges caused by the shift from internal
combustion engines (‘ICE’) to electric vehicles (‘EVs’) could inhibit their
takeup or lead to changes in buying behaviour. Factors include the
purchase price of EVs, potential for improvements in public transport,
new and expanded emissions zones, increasing EV running costs, and
consumer uncertainty over the residual value of used EVs.
Changing and more stringent regulatory requirements could increase
our cost base. Increased frequency and severity of extreme weather
events could lead to heightened costs, including costs associated with
heating/air conditioning, insurance and cloud infrastructure. Extreme
weather events could also lead to short-term closure of retailer
forecourts (for example, due to flooding).
KEY CHANGES AND OUTLOOK
•
The UK Government deferred the ban on new ICE vehicles from 2030 to
2035. However, in mitigation the Zero Emissions Vehicle (‘ZEV’) mandate
applies between 2024 and 2035. New EV registrations are currently below
the 22% ZEV target for 2024, and so OEMs will need to take further steps
in the coming years to incentivise buyers to switch to EVs.
•
We continued to highlight on our website and throughout our content
the benefits of EVs.
•
Price disparity between new EVs and ICE vehicles remains a barrier
to mass adoption, albeit it has begun to reduce in FY24 owing to OEMs
reducing pricing and offering other incentives to stimulate sales.
Other barriers to widespread public adoption of EVs include:
–
Price inequality between public charging and those able to install
private charging.
–
Reliability and availability of public EV charging.
–
Adverse and often inaccurate media coverage, which affects consumer
perceptions of EVs, including about their safety and reliability.
–
Uncertainty over future Government policy on EVs and incentives
to make the switch from ICE to EV.
•
Regarding our own impacts on the environment, we continue to partner
with the Carbon Literacy Project to help provide carbon literacy training
to employees and to stakeholders within the automotive industry.
•
We have introduced into our supplier selection processes an
evaluation of the ‘green credentials’ of potential suppliers, and we
are evaluating the environmental impacts of pre-registering vehicle
inventory within Autorama.
•
Our net zero targets have been revised to include Autorama UK Ltd in our
base year. Our revised net zero plans have been validated and approved
by the SBTi.
•
We have introduced an online marketplace for electric pedal-bikes,
which provides an alternative route for consumers to access green
personal transport.
HOW WE MANAGE THE RISK
•
We are evolving our product offering and marketplace to provide
consumers with more information about EVs. A cross-functional
working group is focusing on helping consumers make more
environmentally friendly vehicle choices.
•
We lobby Government and share our data and insights to help guide
policy on how to decarbonise the automotive industry.
•
Leasing is a viable option to consumers making the switch to EVs, many
of whom are anxious about making outright purchases. The Autorama
checkout journey on the Autotrader.co.uk site provides our audience
with access to leasing.
•
As part of our climate commitments, we are focusing not just on our
own carbon footprint, but positively supporting the industry. Our
partnership with the Carbon Literacy Project provides training and
insights to employees and external stakeholders.
•
Our Corporate Responsibility Committee oversees our environmental
commitments and work is ongoing to reduce our carbon emissions
across all scopes.
•
We evaluate the carbon records and commitments of suppliers within
our procurement processes.
•
By digitising the automotive retail sector, we provide customers and
consumers with purchasing options should extreme weather events
lead to short-term retailer forecourt closures.
Marketplace
OUR STRATEGIC PRIORITIES
Digital retailing
Platform
Working responsibly
Governance
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Strategic report
Principal risks and uncertainties
continued
3. EXTERNAL CATASTROPHIC AND GEO-POLITICAL EVENTS
RISK AND POTENTIAL IMPACT
In a connected, global industry, we are prone to the impacts of external events around the globe, as are our
customers and consumers. We consider there to be a threat to the short-to-mid-term performance of our
business posed by external, unpreventable, catastrophic and geo-political events. Such events could result
in our customers being unable to trade, leading to loss of revenue, stock, audience and market share.
KEY CHANGES AND OUTLOOK
•
Over the coming year, we expect the uncertain geo-political landscape will continue to pose risks to the
global automotive industry, particularly with regards to supply chain. The conflict in Ukraine has continued
and, sadly, does not show signs of abating. Additionally, continued threats to shipping in the Red Sea could
affect global trade, and conflict in the Middle East has the potential to escalate to a regional-level conflict.
•
The US has announced the introduction of increased tariffs on Chinese-manufactured EVs and
semiconductors, and similar measures are being considered by the European Commission.
•
We have taken learnings from previous ‘black swan’ events, such as the COVID-19 pandemic, to inform our
response plans should major incidents occur in future.
•
We have maintained low leverage in FY24 and have extended our Syndicated RCF to 2029 providing
us access to short-term debt. We are well-positioned to respond to short-term shocks and incidents.
HOW WE MANAGE THE RISK
•
We monitor external events continuously. The OLT and the Risk Forum both evaluate the ways in which
our business could be impacted from external events, both in the short term and in the longer term.
•
We continuously review our business continuity and crisis management arrangements to ensure that they
consider the impacts of external events, including those which might affect our customers.
•
Our business continuity plan (‘BCP’), IT disaster recovery plan (‘ITDR’), and wider crisis management
arrangements all set out the key steps required for us to respond to major events and restore operations
in the event of downtime.
•
We continuously review our BCP and crisis management arrangements to ensure that they consider the
impacts of external events, including those which might affect our customers.
•
Our crisis response team includes senior leadership and internal experts. Nominated delegates minimises
single person dependencies. Where necessary we also have external advisors available to support us in
our response.
•
Our crisis management arrangements are tested regularly via simulated crisis scenarios. All key
stakeholders within the organisation are involved and we capture lessons learned to continually improve
our crisis management arrangements.
•
Our low leverage enables us to access cash in the event of major threats crystallising. It also means
we are not significantly affected by shocks to interest rates.
4. LEGAL AND REGULATORY COMPLIANCE
RISK AND POTENTIAL IMPACT
The Group operates in a complex regulatory environment. As we progress in executing our strategy, we are
likely to be exposed to increased legal and regulatory risks, particularly those relating to financial services
and data protection.
There is a risk that the Group, or its subsidiaries, fail to comply with legal and regulatory requirements. This
could lead to reputational damage, financial or criminal penalties and impact on our ability to do business.
KEY CHANGES AND OUTLOOK
•
The FCA is investigating historic Discretionary Commission Arrangements (‘DCAs’) on automotive finance
deals. Whilst Auto Trader is not within the scope of the investigation, there is a risk that the outcomes could
impact how automotive finance is bought and sold. This could potentially affect our customers’ profitability
and, in the short term, affect our aspirations in the automotive finance market.
•
Almost every retailer has stopped selling GAP insurance owing to an FCA investigation. GAP insurance has
historically been a profitable product for some segments of retailers.
•
We adopted the FCA’s Consumer Duty in advance of the July 2023 deadline. This involved a review of our
policies, products and processes to ensure that we can demonstrate delivery of good consumer outcomes.
•
We continuously ‘horizon scan’ to identify and prepare for changes to regulations and legislation. Upcoming
changes which may affect us to varying degrees include the Competition and Consumers Bill, the Data
Protection and Digital Information Bill, and the Economic Crime and Corporate Transparency Bill.
•
Scaling up of Deal Builder and our leasing journey will heighten our exposure to regulatory risks. These risks
relate to GDPR, owing to the amount of personal information we will need to collect, and the FCA, as a result
of the online finance application journey.
•
In the last year we have refreshed our suite of compliance training. This new training provides more engaging
and tailored content to ensure that all our employees are equipped with the necessary skills and knowledge
of all relevant laws and regulations. Our Risk Forum monitors the completion rates of mandatory training.
HOW WE MANAGE THE RISK
•
We continuously monitor the legal and regulatory landscape to identify and evaluate potential changes
in laws and regulations. We utilise external specialists for specialist advice where needed.
•
We have a mature governance framework to oversee our legal and regulatory risks. Governance forums
receive regular internal reporting on our compliance with the principles, rules, and guidance applicable
to our regulated activities. These forums then report to the Risk Forum.
•
Our Governance, Risk, and Compliance team (‘GRC’) consists of legal and regulatory expertise. GRC are
embedded within the product development process to ensure that legal & regulatory compliance is built
into the design of products.
•
Regular ‘product reviews’ are performed by GRC to assess compliance with the FCA Consumer Duty.
•
A comprehensive suite of policies is reviewed regularly. Additionally, mandatory training and monitoring
ensures awareness of, and compliance with, regulatory requirements. These include information security,
data protection, financial promotions, product change management, and complaints handling.
•
The regulated entities within the Group continue to comply with the FCA’s Senior Managers & Certification
Regime. The relevant individuals have been assessed and certified as Fit and Proper. All employees are
subject to the FCA’s Conduct Rules and have received appropriate training and guidance.
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Principal risks and uncertainties
continued
6. IT SYSTEMS AND CYBER SECURITY
RISK AND POTENTIAL IMPACT
As a digital business, we rely on our IT infrastructure to provide our services. A disruptive cyber security
and/or business continuity event could lead to downtime of our systems and infrastructure.
Execution of our strategy also relies on us making appropriate investments in secure systems and
technologies. Failure to invest in appropriate technology and safeguards could lead to us failing to achieve
our objectives.
Delivery of our strategic objectives relies on us using data to provide valuable insights to customers.
A significant data breach, whether because of our own failures or a malicious cyber-attack, would lead
to a loss in confidence by the public, retailers and advertisers.
KEY CHANGES AND OUTLOOK
•
The emergence of artificial intelligence (‘AI’) has prompted much debate and speculation. Whilst
Auto Trader has been using AI for over 10 years, for example in our valuations tools, generative AI creates
additional opportunities. Opportunities include improved customer and consumer experience and
improving the productivity of our employees. Our established data science team are responsible for
evolving our AI tools.
•
Externally, we expect AI to be used by criminals for malicious purposes. Deepfake technology, for example,
increases the risks of social engineering against stakeholders, and we expect phishing to become more
convincing. Our mandatory compliance training has been updated to raise employee awareness of these
threats, and we perform regular simulated phishing tests.
•
In the last year our security teams have continued to monitor and enhance our cyber defences. We have
not experienced any major disruption owing to cyber-attacks. Nevertheless, we continue to perform regular
tests of our ITDRs to ensure that we could recover in the event of major disruption.
•
Security is central to the design of all our products and services. Our software development process has
continued to receive significant investment which enables us to design, build, and deploy software quickly,
efficiently, and securely. In the last year we have deployed 65,000 software releases.
HOW WE MANAGE THE RISK
•
We have a BCP and ITDR which are regularly reviewed and tested, both for Auto Trader and Autorama.
•
We continuously monitor the availability and resilience of processing systems and services. The migration
to the cloud has improved the efficiency of our systems and improved our ability to respond to an incident
in a timely manner.
•
We have dedicated security teams, including white hat hackers, who carry out regular penetration testing
of our systems to identify and fix potential vulnerabilities.
•
All employees undergo IT security awareness training on at least an annual basis.
•
All our systems are now cloud-based which heightens both our resilience to cyber threats, and our ability
to recover from incidents.
•
We have embarked upon a multi-year project to upgrade our internal systems used by our customer and
consumer support teams.
•
We adopt the National Institute of Standards and Technology (‘NIST’) Cybersecurity Framework to manage
and reduce cyber security risks. Our cyber security framework includes control activities such as two-factor
authentication, conditional access, third-party application security, regular application penetration
testing, and data minimisation and retention policies.
5. COMPETITION
RISK AND POTENTIAL IMPACT
External measures show that we are maintaining our position as the largest and most engaged automotive
marketplace. Nevertheless, we remain wary of the risk that competitors could develop superior consumer
experiences or superior retailer products. This could lead to a loss of market share.
KEY CHANGES AND OUTLOOK
•
Large technology companies such as Facebook, eBay and Amazon continue to operate in segments of the
automotive sector. However, to date, these organisations have not gained notable market share over the
last year.
•
Google have recently launched Google Vehicle Ads and there is a risk that this could gain traction as a
consumer acquisition channel. We continuously improve our products to avoid erosion of our market share.
•
In the last year we maintained our position as the UK’s largest and most engaged automotive marketplace
for new and used cars, with over 75% of all minutes spent on automotive classified sites spent on Auto Trader.
HOW WE MANAGE THE RISK
•
Continued investment in our branding and marketing helps us to protect and grow our audience. This aims
to maintain our position as the most influential website for consumers when purchasing a vehicle.
•
We monitor competitor activity closely through monthly reporting and formal quarterly competitor reviews,
and regularly review this at OLT and Board level.
•
We continue to invest in and develop our product offerings to ensure we offer value to consumers, retailers,
and manufacturers.
•
We work in an agile way which enables us to respond quickly to emerging competitive threats.
•
Working with OEMs to develop solutions to enable them to advertise their new car pipeline stock on our website.
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Principal risks and uncertainties
continued
7. EMPLOYEES
RISK AND POTENTIAL IMPACT
To enable us to achieve our strategic objectives it is important that we continue to attract, retain and motivate
a highly skilled workforce, including those with specialist skillsets in data and technology.
Delivery of our strategy is also dependent on us building a diverse and inclusive workforce, a supportive,
collaborative culture, and a safe environment, all of which will enable optimum performance from all our employees.
KEY CHANGES AND OUTLOOK
•
During the year, we refreshed our company values and held workshops with all employees to illustrate
how the values inform our ways of working.
•
Employee turnover has remained low and engagement levels remain high. Our Glassdoor rating based
on anonymous reviews is 4.5 out of 5.
•
The cost of living and skills shortages in the market continue to affect workforce costs. We monitor the
market proactively to ensure that salaries are fair, proportionate and competitive. We introduced an annual
all-employee share scheme in FY24, increasing all employees’ total remuneration.
•
Employees rightly have increasing expectations of their employers to act fairly, responsibly and sustainably.
We engage with networks and guilds to ensure that we conduct our business in a responsible way. This year
we added sexual harassment awareness training to our suite of mandatory HR training.
•
We have trained additional mental health first aiders to ensure that all employees have access to support.
•
FY24 has brought about more ‘day-1 rights’ for employees. A general election in FY25 could bring about
further change. Whilst we support heightened inclusion and equal opportunity, some changes are not
without risk. If, for example, employees receive a legal day-1 right to work remotely, it could affect our
innovative and collaborative culture.
HOW WE MANAGE THE RISK
•
A values-led culture is embedded throughout the organisation and is central to our recruitment, induction,
training, and development processes.
•
Active succession planning and career development for key roles and senior executives. These are coupled with
long-term incentive plans for senior staff, including incentives linked to diversity, inclusion, and sustainability.
•
Regular employee engagement surveys and monitoring of Glassdoor ratings, coupled with an all-employee
share award, aim to heighten retention and engagement of all employees.
•
We have regular business updates, networks, guilds, and all-employee conferences to maintain engagement.
•
Career development plans aimed at developing all employees, especially those with ambitions to reach
senior leadership. Talent development is part of the Terms of Reference of the Nomination Committee.
•
Diverse Talent Accelerator, Inclusive Leadership, and Continuous Leadership Development programmes
equip our employees, people leaders, and future leaders with the skills to lead diverse teams.
•
Health and Safety Committee reporting to Risk Forum to ensure that all employees are working
in a safe environment.
•
Monitoring how Connected Working affects engagement, inclusion, employee safety and productivity.
Any overseas working must be approved by People Operations to ensure the safety of our employees,
security of our systems and compliance with all relevant laws and regulations.
8. BRAND AND REPUTATION
RISK AND POTENTIAL IMPACT
Our brand is one of our biggest assets. Our research shows that we are the largest and most trusted
automotive classified brand in the UK. Failure to maintain and protect our brand, and/or negative publicity
affecting our reputation could diminish the confidence that retailers, consumers, and advertisers have
in our products and services. This could result in a reduction in audience and revenue.
KEY CHANGES AND OUTLOOK
•
In the year we spent over £20m marketing our brand, with both the number of visits and minutes spent
on Auto Trader increasing year-on-year.
•
Our Trustpilot rating remains high at 4.7 out of 5 and there continues to be a low level of fraudulent activity
on our site owing to the monitoring performed by our security team. We estimate that each month we block
around 450 stolen vehicles from being advertised and we have continued to work with law enforcement to
help protect the industry.
•
We make use of a customer watchlist which enables us to identify and remove those customers that are not
delivering for consumers, other retailers, or the Auto Trader brand.
•
We have increased investment and headcount within GRC. GRC embed themselves into all major initiatives
to ensure that ethical, legal, and regulatory considerations are baked into the design of all our products and
services and all of our major initiatives.
•
We have begun evolving our customer onboarding and identification verification processes, which involves
leveraging new specialist third-party tools.
HOW WE MANAGE THE RISK
•
We invest in new and innovative marketing campaigns and new ways of engaging car buyers to continue
to maintain brand awareness, and to change perceptions of Auto Trader to be a destination for new cars
as well as used.
•
To get access to Deal Builder, retailers are required to sign up to and adhere to a Seller Promise. Seller
Promise prescribes minimum levels of consumer service and advertising.
•
We have a clear and open culture with a focus on trust and transparency and Community is at the heart
of our values.
•
Our Customer Security team closely monitors our website to identify and quickly remove fraudulent
or misleading adverts. Customer Security also works proactively with retailers, the authorities, and the
wider industry to highlight potential security concerns.
•
Our approach to cyber security and data protection helps to protect us from the adverse impact of a
significant data breach or cyber-attack. We also have mature breach reporting and crisis management
programmes that enable us to identify, escalate and appropriately handle any emerging issues that
could result in reputational damage.
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Principal risks and uncertainties
continued
9. FAILURE TO INNOVATE: DISRUPTIVE TECHNOLOGIES
AND CHANGING CONSUMER BEHAVIOURS
RISK AND POTENTIAL IMPACT
The automotive industry is changing. Should we fail to innovate our business and product offerings, we could
lose relevance with our key stakeholders, including consumers and customers.
It is crucial that we develop and implement new products, services and technologies, and adapt to changing
consumer behaviour towards car buying and ownership.
Failure to provide both customers and consumers with the best possible products and online journey, including
an online buying experience, could lead to reduced website traffic and loss of revenue.
KEY CHANGES AND OUTLOOK
•
A high portion of our non-capitalised expenditure is from our software development processes. The high
level of spend demonstrates the significant investments we continued to make in building new products,
enhancing existing products, and maintaining the security of our systems and services.
•
Omnichannel retailing is increasingly emerging as the preferred retailing journey for consumers. Our Deal
Builder product which supports the journey has begun to scale up with c.1,100 retailers on the product at year
end FY24.
•
Leveraging Autorama’s systems, we have launched a leasing check-out journey on the Auto Trader website.
Providing consumers with a leasing option positions us to meet their needs as buying behaviours change.
•
We have continued to develop our AT Connect solutions. This suite of API (a series of messaging and
data services) leverages our platform and data to provide retailers with real-time connections to
Auto Trader systems.
•
Looking to FY25 and beyond, we are assessing how technology such as AI could be used more widely across
our business to make the complex car buying process simpler for consumers. AI could also be used to
improve the experience of retailers, making the process for placing adverts more efficient and to improve
the productivity of our employees.
HOW WE MANAGE THE RISK
•
Continuous research into changing consumer behaviour, regular horizon scanning of competitive threats,
monitoring of emerging trends, use of external resources when needed.
•
We engage and maintain regular contact with digital marketplaces around the world, both automotive and
non-automotive, to enable peer-to-peer sharing of good practice.
•
We continuously work collaboratively with all key stakeholders to ensure that we are aware of their needs
and challenges. Doing so helps us to identify the best possible solutions for them.
•
An inclusive and diverse workforce enables us to maximise creativity and performance, leading to innovation.
•
An agile and collaborative culture, as well as continuous investment in technology, maximises innovation.
•
Dedicated workstreams as part of all our strategic priorities. These workstreams are aimed at developing
the best products to meet the needs of the consumer and customer.
10. RELIANCE ON THIRD PARTIES AND PARTNERS
RISK AND POTENTIAL IMPACT
To achieve our strategic objectives, we are reliant on partners to support certain product initiatives,
for example having lenders integrated with our Deal Builder journey is a key dependency.
We also rely on third parties to support our technology infrastructure, to supply vehicle data and financing,
and in the fulfilment of some of our revenue generating products. Consequently, it is important that we
manage relationships with, and performance of, key suppliers and strategic partners.
KEY CHANGES AND OUTLOOK
•
Many retailers use Auto Trader systems to access our data, products and technology services, whereas
others use third-party technology systems that we have integrated with. Over the last year we have made
good progress working with these technology partners. However, to fulfil our ambition to provide these
products and services to all retailers, we are dependent on integrating successfully with more technology
partners. Building and maintaining good relationships with partners is therefore critical to our growth plans.
•
The successful launch of the Deal Builder trial has seen us reach c.1,100 retailers on the product at the end of
FY24. Further scale relies on us being able to integrate with the finance lenders used by retailers so that
consumers can obtain finance via Deal Builder.
•
We launched our Vehicle Check product in FY24. With this product we obtain data direct from the source
rather than a third-party supplier.
•
In FY24 we have continued to regularly review our critical supplier list and perform enhanced recurring
due diligence over these suppliers. We have not experienced any significant disruption over the last year.
HOW WE MANAGE THE RISK
•
Our strategic approach is to build and develop tools and systems ourselves, rather than rely on outsourcing.
•
Where possible, we limit reliance on single suppliers to reduce single points of failure.
•
We maintain a list of critical suppliers and have contingency plans to respond quickly in the event of disruption.
•
Contracts and service level agreements are in place with all key suppliers. New relationships go through
a robust procurement and legal review process and are subject to regular review.
•
We carry out due diligence on our key suppliers and partners at the onset of the relationship and
throughout the life of these relationships. This includes financial viability, resilience and alignment
with our values and culture.
•
We seek to develop strong commercial relationships with our partners and regularly explore ways
of working together even more effectively. We monitor the performance of partners and suppliers
to ensure continued quality and uptime.
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Principal risks and uncertainties
continued
Viability statement
ASSESSMENT OF PROSPECTS
The Group’s overall strategy and business
model, as set out on pages 9 to 10, are central to
assessing its future prospects. The Group’s aim
is to continue growing its marketplace, which
includes playing a larger role in new car sales
and advertising, to surface the power of
artificial intelligence (‘AI’) which will enhance
our existing data products, and to move more
of the car buying process online.
As such, key factors likely to affect the future
development, performance and position of
the Group are:
• data and technology: continuous investment
is made in developing platform technologies
which lead to improvements for consumers,
retailers and manufacturers;
• market position: the Group is the UK’s largest
and most engaged digital automotive
marketplace, with the largest volume of
in-market car buyers and the most influential
website a consumer visits when purchasing
a vehicle; and
• people: continued success and growth are
dependent on the ability to attract, retain
and motivate a highly skilled workforce,
including those with specialist skillsets in
data and technology.
The Board has determined that a period of five
years to March 2029 is the most appropriate
period to provide its viability statement as:
• it allows consideration of the longer-term
viability of the Group;
• it being more aligned with the Group’s
strategic planning process; and
• it reflects reasonable expectations
in terms of the reliability and accuracy
of operational forecasts.
The Group’s prospects are assessed primarily
through its strategic planning process. This
process includes an annual review of the
ongoing plan, led by the Group CEO and CFO
through the Operational Leadership Team (‘OLT’)
and in conjunction with relevant functions. The
Board participates fully in the annual process
and has the task of considering whether the plan
continues to take appropriate account of the
external environment including technological,
social and macro-economic changes.
The output of the annual review process is a set
of objectives which collectively form our three
strategic focus areas and our Environmental,
Social and Governance (‘ESG’) strategy, an
analysis of the risks that could prevent the plan
being delivered, and the annual financial budget.
The latest updates to the plan were finalised in
March 2024, which considered the Group’s current
position and its prospects over the forthcoming
years. Progress against these plans is reviewed
monthly by both the OLT and the Board.
Detailed financial forecasts that consider
customer numbers, stock levels, ARPR, revenue,
profit, cash flow and key financial ratios have
been prepared for the five-year period to March
2029. Funding requirements have also been
considered, with particular focus on the ongoing
compliance with covenants attached to the
Group’s Syndicated Revolving Credit Facility
(‘Syndicated RCF’). The first year of the financial
forecasts is based off the Group’s 2025 annual
financial budget. The following years are
prepared in detail and are flexed based on the
actual results in year one.
The key assumptions in the financial forecasts,
reflecting the overall strategy, include:
• continued growth in our marketplace, as
we develop our advertising platform and we
continue to invest in our search experience;
• growth in the use of our data, being the
industry standard platform and further
embedding our data into the industry, giving
buyers and retailers up-to-date insight;
• growth in digital retailing, as we continue
to evolve both our products and consumer
experience, bringing more of the car buying
journey online; and
• increase in costs through salaries as the
Group continues to grow, supporting and
developing new products.
These key assumptions are reflected in the
Group’s principal risks and uncertainties, which
are set out on pages 53 to 58. The purpose
of the principal risks is primarily to summarise
those matters that could prevent the Group
from delivering on its strategy. A number of
other aspects of the principal risks – because
of their nature or potential impact – could
also threaten the Group’s ability to continue
in business in its current form if they were
to occur. This was considered as part of
the assessment of the Group’s viability,
as explained on the following page.
In accordance with the UK Corporate Governance Code 2018 (the ‘Code’), the Directors have assessed the prospects and
viability of the Group over a period significantly longer than 12 months from the approval of these financial statements.
Governance
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Principal risks and uncertainties
continued
ASSESSMENT OF VIABILITY
The output of the Group’s strategic and financial planning process detailed previously reflects the
Board’s best estimate of the future prospects of the business. To make the assessment of viability,
however, additional scenarios have been modelled over and above those in the ongoing plan, based
upon a number of the Group’s principal risks and uncertainties which are documented on pages 53 to
58. These scenarios were overlaid into the plan to quantify the potential impact of one or more of
these crystallising over the assessment period.
While each of the Group’s principal risks has a potential impact and has therefore been considered as
part of the assessment, only those that represent severe but plausible scenarios have been modelled
through the plan. These were as follows:
Scenario modelled
Links to principal risks
Scenario 1: Severe economic downturn
Given the continued uncertainty created by macro-economic factors such as
persistent inflation, high interest rates and the upcoming UK general election,
the impact of a severe economic downturn has been considered. We assume
a severe suppression of consumer confidence, pressuring the used and new
car markets, with retailers impacted due to significantly reduced demand
from consumers and a collapse in vehicle prices.
Revenue assumptions:
Approximately one third of retailers are lost, with
underlying average revenue per retailer (‘ARPR’) reducing through a loss
of stock resulting in a c.40% decrease in Trade revenue. A c.30% decrease
in all other revenue streams, including Autorama, was assumed due to
reduced demand. Modest recovery was assumed for the financial year
ended March 2027.
Cost assumptions:
Cost of sales and marketing decreased in line with revenue.
Risk 1:
Automotive economy,
market and business environment
Risk 3:
External catastrophic and
geo-political events
Scenario 2: Ransomware attack
A ransomware attack could result in the loss of data and downtime of the Group’s
systems and infrastructure. This would result in reduced revenue and associated
additional costs of regulatory fines, remediation and reputational damage.
This scenario assumes a ransomware attack resulting in the maximum General
Data Protection Regulation (‘GDPR’) fine (4% of Group revenue), coupled with a
significant level of reputational damage to the Group’s brand. This diminishes
confidence in the Group’s products and services, resulting in a reduction in
audience and revenue.
Revenue assumptions:
A severe reduction was modelled through Trade revenue,
resulting in an initial c.45% decrease in revenue driven by lost retailers. A c.30%
decrease in Consumer Services, Manufacturer and Agency and Autorama
revenue was also assumed through the loss of consumer and partner confidence.
Slow recovery was assumed from the financial year ended March 2027.
Cost assumptions:
Cost of sales decreased in line with revenue. Overheads
increased due to the regulatory fine for the data breach, consultancy costs
and remediation costs. Marketing spend increased as a percentage of
revenue in earlier years to counter reputational damage.
Risk 4:
Legal and regulatory
compliance
Risk 6:
IT systems and
cyber security
Risk 8:
Brand and reputation
Scenario modelled
Links to principal risks
Scenario 3: Increased competition
This scenario assumes a change in the competitive landscape as a result of the
takeover of a competitor by a well-capitalised third party or the entry of a new
player. The competitor could develop a superior consumer experience or retailer
products. This could disrupt the Group’s total market share and change retailer
behaviour, impacting the Group’s ability to grow revenues due to a reduction in
retailer numbers and/or impact underlying ARPR due to a loss of pricing power.
Revenue assumptions:
Approximately 25% of retailers are lost, with underlying
ARPR reducing through a loss of stock and pricing power, resulting in a c.40%
decrease in Trade revenue. A c.25% decrease in all other revenue streams,
including Autorama, was also assumed through the loss of market share and
pricing power. Recovery was assumed through retailers for the financial year
ended March 2027 and beyond.
Cost assumptions:
Marketing spend increased as a percentage of revenue in a
bid to counter competitive threat. Cost of sales decreased in line with revenue.
Risk 1:
Automotive economy,
market and business environment
Risk 5:
Competition
Risk 9:
Failure to innovate
Scenario 4: Combination of all three scenarios as above
This is seen as a worst-case scenario, and highly unlikely.
All of those listed in other
scenarios
SYNDICATED REVOLVING CREDIT FACILITY (‘SYNDICATED RCF’)
The above scenarios consider the bi-annual covenants attached to the Group’s Syndicated RCF,
ensuring thresholds are met. The scenarios are hypothetical and severe for the purpose of creating
outcomes that have the ability to threaten the viability of the Group.
The results of the stress testing demonstrated that due to the Group’s significant free cash flow,
access to the Syndicated RCF and the Board’s ability to adjust the discretionary share buyback
programme, it would be able to withstand the impact of any of these scenarios, remain cash
generative and meet the obligations of its debt facility.
VIABILITY STATEMENT
Based on their assessment of prospects and viability above, the Directors confirm that they have
a reasonable expectation that the Group will be able to continue in operation and meet its liabilities
as they fall due over the five-year period ending March 2029.
GOING CONCERN
The Directors also considered it appropriate to prepare the financial statements on the going concern
basis, as explained in the Basis of preparation paragraph in note 1 to the financial statements.
The Company’s Strategic report, set out on pages 1 to 60, was approved by the Board
on 30 May 2024 and signed on its behalf by:
Nathan Coe
Chief Executive Officer
30 May 2024
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8
1
7
2
3
4
2
3
4
2
Independent
Executive
Chair
5
5
3
3
1
1
Women
Men
5
6
4
3
These reports explain our governance
policies and procedures in detail and
describe how we have applied the
principles contained in the UK Corporate
Governance Code 2018 (the ‘Code’).
COMPLIANCE WITH THE UK CORPORATE
GOVERNANCE CODE
The Board considers that during the year the
Company was fully compliant with all provisions
set out in the UK Corporate Governance Code
2018. The reports on the following pages,
including the Committee reports, set out the
governance arrangements we have in place, and
detail how we have met the Code requirements.
BOARD SUCCESSION PLANNING
Succession planning has continued to be a major
focus area during the year, given David Keens
and Jill Easterbrook will come to the end of their
third three-year terms in 2024, and therefore will
not stand for re-election at the 2024 AGM.
Dear shareholders,
Governance overview
OPERATIONAL LEADERSHIP TEAM & SENIOR LEADERS
SUBSIDIARY BOARDS
AUTO TRADER GROUP PLC BOARD
Driving Change Together.
Responsibly.
As announced on 22 March 2024, Geeta Gopalan
has been appointed to the Board with effect from
1 May 2024 and Amanda James with effect from
1 July 2024. Following the 2024 AGM, Geeta will be
appointed as Senior Independent Director and
Remuneration Committee Chair, and Amanda
will be appointed as Audit Committee Chair,
subject to shareholder approval. The Nomination
Committee report on page 70 sets out these
changes in more detail, including the process to
identify and appoint the successful candidates.
ANNUAL GENERAL MEETING
Our Annual General Meeting (‘AGM’) will be held
at 11:00am on Thursday 19 September 2024 at 4
th
Floor, 1 Tony Wilson Place, Manchester, M15 4FN.
The other Directors and I will join the meeting
either in person or by telephone. We strongly
encourage all shareholders to cast their votes
by proxy, and to send any questions in respect
of AGM business to ir@autotrader.co.uk.
Matt Davies
Chair
30 May 2024
DISCLOSURE
COMMITTEE
REMUNERATION
COMMITTEE
NOMINATION
COMMITTEE
AUDIT
COMMITTEE
CORPORATE
RESPONSIBILITY
COMMITTEE
A ROBUST CORPORATE GOVERNANCE FRAMEWORK
Ethnic diversity
1
Number of ethnically diverse Directors
as at 31 March 2024/following the 2024 AGM
Number of white Directors
as at 31 March 2024/following the 2024 AGM
Length of tenure
2
Independence
Gender diversity
1.
As per the Parker Review, a Director was defined as being ethnically diverse if they identified as Asian, Black, Mixed or Other.
2.
Refers to the period since appointment to the PLC Board.
Number of Directors as at 31 March 2024
Number of Directors following the 2024 AGM
Number of Directors as at 31 March 2024/
following the 2024 AGM
0-3 years
3-6 years
6-9 years
Strategic report
Governance
Financial statements
61
Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance overview
continued
COMPLIANCE WITH THE 2018 CODE
The Company has complied in full with all provisions of the 2018 Corporate
Governance Code during the year as referenced below:
BOARD LEADERSHIP AND COMPANY PURPOSE
The Board is responsible for setting the
Group’s purpose, for determining the basis
on which the Group generates value over
the long term and developing a strategy
for delivering the objectives of the Group.
The Strategic report, which can be found on
pages 1 to 60, sets out the Group’s purpose,
strategy, objectives and business model.
Details of how the Board assesses and
monitors culture can be found on page 66.
The Board’s engagement with employees,
shareholders and other stakeholders is
described in detail on pages 14 to 17 and
page 66.
COMPOSITION, SUCCESSION AND EVALUATION
The Board has established a Nomination
Committee, chaired by Matt Davies, with
all other members comprising Independent
Non-Executive Directors. The main
responsibilities of this Committee are
to keep under review the structure, size
and composition of the Board and its
Committees; to identify and nominate
candidates for appointment to the Board;
and to ensure that there are formal and
orderly succession plans in place. During the
year, the Committee also arranged an
externally facilitated evaluation of the Board,
its Committees and individual Directors.
The work of the Committee is described
on pages 70 to 72.
DIVISION OF RESPONSIBILITIES
The responsibilities of the Chair, Chief
Executive Officer, Senior Independent
Director, Non-Executive Directors and
Company Secretary are set out on page 67.
The Board has adopted a formal schedule
of matters reserved for its approval and has
delegated other specific responsibilities to
its Committees. The schedule sets out key
aspects of the affairs of the Company which
the Board does not delegate and is reviewed
at least annually. Each Committee has
formally approved Terms of Reference which
are reviewed and approved at least annually,
or more frequently as circumstances require.
Details are published on our website at
plc.autotrader.co.uk/investors.
At 31 March 2024, the Board consisted of
the Non-Executive Chair, five Independent
Non-Executive Directors and three Executive
Directors. As part of our long-term
succession planning, two new Independent
Non-Executive Directors have been
appointed, Geeta Gopalan (from 1 May 2024)
and Amanda James (from 1 July 2024); and two
of the existing Independent Non-Executive
Directors, David Keens and Jill Easterbrook, will
not stand for re-election at the 2024 AGM.
Therefore the Board will continue to comprise
majority Independent Non-Executive Directors.
The Board and its Committees have an
appropriate balance of skills, experience
and knowledge of the Group to enable them
to discharge their respective duties and
responsibilities effectively.
Refer to page 68 for details of Board and
Committee meetings and attendance, and to
the biographies on pages 63 to 65 for details
of Board members’ external commitments,
all of which were approved by the Board.
AUDIT, RISK AND INTERNAL CONTROL
The Board has established an Audit
Committee, chaired by David Keens and
comprised entirely of Independent Non-
Executive Directors. The Chair is not a
member of the Committee. The Committee
has defined Terms of Reference which
include assisting the Board in discharging
many of its responsibilities with respect
to financial and business reporting, risk
management, internal control, internal
audit and external audit.
The work of the Committee is described
on pages 73 to 77.
The Company does not have a separate
Risk Committee; the Board is collectively
responsible for determining risk appetite, and
the nature and extent of the principal risks
it is willing to take in achieving its strategic
objectives. Refer to page 75 for details of the
evaluation of the risk management and
internal control framework, and to pages 50
to 53 for details of risk management and the
principal risks facing the Company.
REMUNERATION
The Board has established a Remuneration
Committee, chaired by Jill Easterbrook and
comprised entirely of Independent Non-
Executive Directors. The Remuneration
Committee is responsible for determining
the Remuneration Policy, and for setting
remuneration for the Executive Directors, the
Chair and senior employees; for monitoring
the remuneration policies for the wider
organisation; and for ensuring the
alignment of reward with the culture of the
organisation. During the year the Committee
conducted a comprehensive review of the
Remuneration Policy and incentive structures.
The work of the Committee is described on
pages 81 to 99.
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Governance
Financial statements
62
Auto Trader Group plc
Annual Report and Financial Statements 2024
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Audit
COMMITTEE MEMBERSHIPS
Corporate Responsibility
Disclosure
Nomination
Remuneration
Chair
BIOGRAPHY
Matt joined Auto Trader as Chair Designate
with effect from 1 July 2023, and was appointed
as Chair with effect from the 2023 AGM.
Matt brings a wealth of UK retail, digital and
brand experience. He is currently Chair at Greggs
plc where he was appointed in August 2022, and
Chair of privately owned businesses Hobbycraft
and Travel Counsellors.
Matt was formerly the Chair of N Brown Group plc
and a Non-Executive Director of Dunelm Group
plc. In his executive career, Matt was previously
the CEO of Tesco UK & ROI from 2015 to 2018,
before which he held CEO positions at Pets
at Home and Halfords. Matt is a qualified
Chartered Accountant and had early career
corporate finance experience with Rothschild.
APPOINTED TO PLC BOARD
July 2023
INDEPENDENT ON APPOINTMENT?
Yes
EXTERNAL APPOINTMENTS
• Greggs plc
• Hobbycraft Group Limited
• Travel Counsellors Limited
Matt Davies
Chair
BIOGRAPHY
Nathan was first appointed to the Board as
Chief Operating Officer (‘COO’) in April 2017 and
as Chief Financial Officer (‘CFO’) in July 2017.
Nathan was appointed Chief Executive Officer
(‘CEO’) in March 2020. Prior to his appointment
to the Board, Nathan was the joint Operations
Director, sharing responsibility for the day-to-
day operations of the business.
Nathan joined Auto Trader in 2007 to support
the transition from a magazine business to a
digital business.
Prior to joining Auto Trader, Nathan was at
Telstra, Australia’s leading telecommunications
company, where he led Mergers and Acquisitions
and Corporate Development for its media and
internet businesses. He was previously a
consultant at PwC, having graduated from the
University of Sydney with a B.Com (Hons).
APPOINTED TO PLC BOARD
April 2017
INDEPENDENT ON APPOINTMENT?
N/A
EXTERNAL APPOINTMENTS
None
Nathan Coe
Chief Executive Officer
BIOGRAPHY
Catherine joined Auto Trader in August 2017 and
was appointed as Chief Operating Officer in May
2019. Catherine is responsible for the day-to-day
operations of Auto Trader’s business. She is
also focused on guiding the Group’s strategy
and development.
Prior to this, Catherine was Chief Operating
Officer at Addison Lee, Corporate Development
Director at Trainline and a Director at Close
Brothers Corporate Finance.
Catherine graduated from the University of
Durham with a BA in Economics and is a qualified
Chartered Accountant, training at PwC.
APPOINTED TO PLC BOARD
May 2019
INDEPENDENT ON APPOINTMENT?
N/A
EXTERNAL APPOINTMENTS
• Allegro.eu Group
Catherine Faiers
Chief Operating Officer
BIOGRAPHY
Jamie was appointed CFO in March 2020. Prior
to this he was Auto Trader’s CFO-Designate and
Deputy CFO. During his time at Auto Trader, Jamie
has worked in a variety of different roles across
finance, covering commercial finance, financial
reporting, pricing and investor relations.
Jamie initially worked as a freight derivatives broker
for inter-dealer broker GFI. Jamie left to join a
start-up company, Swapit, developing a children’s
online swapping and trading community, that
was subsequently acquired by Superawesome.
He then joined Auto Trader in 2012.
Jamie graduated from Bristol University with a
BSc in economics and economic history and is a
qualified Chartered Management Accountant.
APPOINTED TO PLC BOARD
March 2020
INDEPENDENT ON APPOINTMENT?
N/A
EXTERNAL APPOINTMENTS
None
Jamie Warner
Chief Financial Officer
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Financial statements
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Board of Directors
continued
Audit
COMMITTEE MEMBERSHIPS
Corporate Responsibility
Disclosure
Nomination
Remuneration
Chair
BIOGRAPHY
David was appointed as a Non-Executive
Director on 1 May 2015.
David was previously Group Finance Director
of NEXT plc (1991 to 2015) and its Group Treasurer
(1986 to 1991). He was a Non-Executive Director
and Audit Chair of J Sainsbury plc (2015 to 2021),
and most recently has taken up the role as Senior
Independent Non-Executive Director and Audit
Chair of Moonpig Group plc. Previous management
experience includes nine years in the UK and
overseas operations of multinational food
manufacturer Nabisco (1977 to 1986) and prior to
that seven years in the accountancy profession.
David is a member of the Association of
Chartered Certified Accountants and of
the Association of Corporate Treasurers.
APPOINTED TO PLC BOARD
May 2015
INDEPENDENT ON APPOINTMENT?
Yes
EXTERNAL APPOINTMENTS
• Moonpig Group plc
David Keens
Senior Independent Non-Executive Director
BIOGRAPHY
Jill was appointed as a Non-Executive Director
to the Board on 1 July 2015.
Jill is also Chair of Tracsis, a leading provider
of software, hardware, data analytics/GIS and
services for the transport industries; a Non-
Executive Director of Ashtead Group plc, the
FTSE 100 international equipment rental company;
a Non-Executive Director of UP Global Sourcing
Holdings plc, a FTSE small cap consumer goods
business; and is Chair of Headland Consultancy,
a PR and Communications agency.
Jill brings strong digital experience within retail
environments to the Board. Previously, Jill was a
member of the Executive Committee at Tesco plc
where she held a variety of senior roles, and was
the Chief Executive Officer of JP Boden & Co. She
also spent time as a management consultant
having started her career at Marks & Spencer.
APPOINTED TO PLC BOARD
July 2015
INDEPENDENT ON APPOINTMENT?
Yes
EXTERNAL APPOINTMENTS
• Ashtead Group plc
• UP Global Sourcing Holdings plc
• Verde Bidco Limited (Headland)
• Tracsis plc
Jill Easterbrook
Independent Non-Executive Director
BIOGRAPHY
Jasvinder was appointed as a Non-Executive
Director on 1 January 2022.
Jasvinder is currently Managing Director of
Motor & Rescue at Direct Line Group, leading
motor insurance strategy and business delivery
across household names such as Direct Line,
Churchill and Privilege. She is a member of the
Direct Line Group Executive Team and is also
sponsor of the Group’s Diversity & Inclusion
strands. Prior to this, she held a number of roles
within Direct Line including most recently Chief
Strategy Officer and before that, Managing
Director of Direct Line for Business.
Jasvinder is a champion of gender diversity and
women in top positions in business. She has been
named on Green Park’s BAME 100 Board Talent
Index, on the Cranfield University Top 100 women to
watch in 2018 list and also featured on the Northern
Power Women list of ‘Top 50 Women to Watch’.
APPOINTED TO PLC BOARD
January 2022
INDEPENDENT ON APPOINTMENT?
Yes
EXTERNAL APPOINTMENTS
• UK Insurance Business Solutions Limited
• By Miles Ltd
Jasvinder Gakhal
Independent Non-Executive Director
BIOGRAPHY
Jeni was appointed as a Non-Executive Director
on 1 March 2016.
Jeni is currently Visa Inc’s SVP Global Head of
Merchant Sales and Acquirers responsible for
driving the growth of digital commerce for the
world’s sellers. She joined Visa in 2018 as the
Managing Director for UK and Ireland. Jeni was
previously at Vodafone plc (1998 to 2017). Most
recently she held Group Director roles across
product management and sales. Prior to that
she was Chief Technology Officer on the UK and
New Zealand Executive Boards.
Jeni started her career as a Telecommunications
Engineer in New Zealand and holds an MSc in
Electronic Engineering from Cardiff University.
APPOINTED TO PLC BOARD
March 2016
INDEPENDENT ON APPOINTMENT?
Yes
EXTERNAL APPOINTMENTS
None
Jeni Mundy
Independent Non-Executive Director
NOT STANDING FOR RE-ELECTION
NOT STANDING FOR RE-ELECTION
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Board of Directors
continued
Audit
COMMITTEE MEMBERSHIPS
Corporate Responsibility
Disclosure
Nomination
Remuneration
Chair
BIOGRAPHY
Sigga was appointed as a Non-Executive
Director to the Board effective 1 November 2019.
Sigga is currently part of the UK executive
team at Experian, responsible for their direct to
consumer business. Sigga has worked in the
financial services industry since 2001 driving
customer-led digital transformation and change
in Fortune 500 and FTSE 100 companies, including
Chief Customer and Banking Officer at Tesco
Bank; Chief Customer and Innovation Officer at
Santander UK; and various customer and digital
roles at American Express around the world.
Sigga holds a doctorate in Leadership and
Innovation from Manchester Business School,
an MBA from IESE Business School and a BS
degree in Marketing from the University of
South Carolina.
APPOINTED TO PLC BOARD
November 2019
INDEPENDENT ON APPOINTMENT?
Yes
EXTERNAL APPOINTMENTS
• Frumtak Ventures
Sigga Sigurdardottir
Independent Non-Executive Director
BIOGRAPHY
Claire joined Auto Trader in July 2015
and is Company Secretary and Director
of Governance. She is responsible for
corporate governance; legal services;
regulatory compliance; procurement;
and risk management.
Claire was previously Deputy Company
Secretary at Betfair Group plc and prior to that
was Company Secretary at Centaur Media plc.
Claire is a qualified accountant, a member
of The Chartered Governance Institute UK &
Ireland and holds an MBA from Manchester
Business School.
Claire Baty
Company Secretary
BIOGRAPHY
Geeta was appointed as a Non-Executive
Director to the Board effective 1 May 2024. She
will be appointed as Senior Independent Director
and Remuneration Committee Chair with effect
from the 2024 AGM.
Geeta currently serves as a Non-Executive Director
of Funding Circle plc, Intrum S.A. and as a Trustee of
The Old Vic Theatre. She is also a Non-Executive
Director of Virgin Money UK plc, and will step down
from this role on 30 June 2024 at the end of her term.
She has been appointed as Non-Executive Director
at NatWest Group plc effective 1 July 2024. She
previously served as a Non-Executive Director of
Dechra Pharmaceuticals Ltd, Ultra Electronics plc,
Wizink Bank SA, and Vocalink. She has over 25 years
of experience in financial services and retail banking,
particularly payments and digital innovation.
APPOINTED TO PLC BOARD
May 2024
INDEPENDENT ON APPOINTMENT?
Yes
EXTERNAL APPOINTMENTS
• Funding Circle plc
• Virgin Money UK PLC (until 30 June 2024)
• NatWest Group plc (from 1 July 2024)
Geeta Gopalan
Independent Non-Executive Director
APPOINTED 1 MAY 2024
BIOGRAPHY
Amanda will be appointed as a Non-Executive
Director to the Board effective 1 July 2024. She
will be appointed as Audit Committee Chair with
effect from the 2024 AGM.
Amanda is currently the Chief Financial Officer of
NEXT plc, one of the UK’s largest FTSE 100 fashion,
footwear, and home retailers. She has an
extensive background in finance, having joined
the NEXT finance team over 28 years ago. She has
held various roles within the finance department,
including leading the management accounting,
commercial finance, and operational finance
teams since 2005. Amanda joined the NEXT plc
Board in 2015. Amanda brings not only deep
expertise in finance but also strong consumer,
retail and multi-channel experience. Amanda
will retire from the NEXT plc Board in July 2024
and will leave NEXT in September 2024.
APPOINTED TO PLC BOARD
July 2024
INDEPENDENT ON APPOINTMENT?
Yes
EXTERNAL APPOINTMENTS
• NEXT plc (until 26 July 2024)
• British Land plc (from 1 July 2024)
Amanda James
Independent Non-Executive Director
APPOINTED 1 JULY 2024
REPORT OF THE NOMINATION COMMITTEE P70
Strategic report
Governance
Financial statements
65
Auto Trader Group plc
Annual Report and Financial Statements 2024
Corporate governance statement
This statement also includes items required by
the Listing Rules and the Disclosure Guidance
and Transparency Rules (‘DTRs’). The UK
Corporate Governance Code (the ‘Code’) is
available on the Financial Reporting Council
website at frc.org.uk.
CULTURE
Auto Trader has a distinctive culture that is
values-led and underpinned by a diverse
and inclusive workforce. The Board plays an
important role in ensuring that this culture
remains aligned with our long-term strategy,
in setting values, demonstrating behaviours
consistent with these values, and in monitoring
the culture and behaviours of the organisation.
Our organisational values have evolved over
time and the Board, along with our people,
redefined our values during the year to better
reflect the people we are today.
The Board receives a quarterly Cultural
Scorecard, designed to allow monitoring
of various cultural indicators such as staff
retention, diversity, investment in training,
absences, employee engagement, customer
feedback and complaints.
WORKFORCE ENGAGEMENT
A Board Engagement Guild has been established
as the core mechanism by which the Board
engages with the workforce. The Board
Engagement Guild comprises members from
across different parts of the business, all of
whom are members of the Company’s other
existing guilds covering areas such as family &
wellbeing, diversity & inclusion, sustainability,
remuneration and our purpose and values.
Each member canvasses views and opinions
from their colleagues to share with the Board.
This Corporate governance statement explains key features of the Company’s
governance framework. The Company has complied in full with all provisions
of the 2018 UK Corporate Governance Code during the year.
The Board has decided that it is not appropriate
to designate a specific Non-Executive Director
to carry out this role and instead shares this role
across all Non-Executive Directors, and so the
Guild meets with the Chair and all Non-Executive
Directors (without Executive Directors or any
members of senior management present).
Additionally there are a number of well
established ways in which the Company engages
with the workforce, for example, regular check-in
surveys; an annual employee engagement survey;
attendance by Non-Executive Directors at some
of our Diversity and Inclusion Guild events;
an annual conference and quarterly virtual
conferences and updates; regular sharing of
information from the CEO via emails and videos;
and informal open forums.
WHISTLEBLOWING
A whistleblowing policy has been adopted which
includes access to a whistleblowing telephone
service run by an independent organisation,
allowing employees to raise concerns on an
entirely confidential basis. Reports are directed
to the Audit Committee Chair and the Company
Secretary. The Audit Committee receives regular
reports on the use of the service, any significant
reports that have been received, the investigations
carried out and any actions arising as a result.
ENGAGEMENT WITH SHAREHOLDERS
The Board has a comprehensive investor
relations programme to ensure that existing and
potential investors understand the Company’s
strategy and performance. As part of this
programme, the Executive Directors give formal
presentations to investors and analysts on the
half-year and full-year results. These updates
are webcast live and posted on the Group’s
investor relations website.
The results presentations are followed by
formal investor roadshows covering UK and
overseas shareholders.
There is also an ongoing programme of
attendance at conferences, one-to-one and
group meetings with institutional investors, fund
managers and analysts. These meetings cover
a wide range of topics, but care is exercised to
ensure that any price-sensitive information is
released to all shareholders, institutional and
private, at the same time. Meetings which relate to
governance are attended by the Chair or another
Non-Executive Director and the Company
Secretary as appropriate. Private shareholders are
encouraged to give feedback and communicate
with the Board through ir@autotrader.co.uk.
The Board receives regular reports on
issues relating to share price, trading activity
and movements in institutional investor
shareholdings. The Board is also provided with
current analyst opinions, forecasts and feedback
from its joint corporate brokers, Bank of America
and Deutsche Numis, on the views of institutional
investors on a non-attributed and attributed
basis, and on the views of analysts from its
financial PR agency, Powerscourt. Any major
shareholders’ concerns are communicated
to the Board by the Executive Directors.
The newly appointed Chair contacted major
shareholders to offer an introductory meeting
after having spent time initially building an
understanding of the business and meeting
Auto Trader colleagues and customers. The
Chair went on to speak directly with a number of
shareholders and welcomed their questions.
During the year the Remuneration Committee
Chair wrote to major shareholders as part of a
consultation to outline the proposed changes to
our Directors’ Remuneration Policy which will be
voted upon at the 2024 AGM. The Remuneration
Committee Chair welcomed the opportunity
to speak with shareholders and hear different
views on our approach to executive
remuneration and our proposals.
The Chair, the Senior Independent Director and
other Non-Executive Directors are available to
meet with shareholders and arrangements can
be made through the Company Secretary.
ANNUAL GENERAL MEETING
At the 2023 AGM, all resolutions were passed
with votes in support ranging from 84.02% to
100%. The 2024 AGM will take place at 11:00am on
Thursday 19 September 2024 at the Company’s
registered office: 4
th
Floor, 1 Tony Wilson Place,
Manchester, M15 4FN. The other Directors and
I will join the meeting.
All proxy votes received in respect of each
resolution at the AGM are counted and the
balance for and against, and any votes withheld,
are indicated. At the meeting itself, voting on all
the proposed resolutions is conducted on a poll
rather than a show of hands, in line with
recommended best practice. We encourage
shareholders to cast their votes by proxy, and to
send any questions in respect of AGM business
to ir@autotrader.co.uk. Following the meeting,
responses to questions will be published on the
website at plc.autotrader.co.uk/investors.
The Notice of the AGM can be found in a booklet
which is being mailed out at the same time as this
Annual Report. The Notice of the AGM sets out
the business of the meeting and an explanatory
note on all resolutions. Separate resolutions are
proposed in respect of each substantive issue.
Results of resolutions proposed at the AGM
will be published on the Company’s website:
plc.autotrader.co.uk/investors following the AGM.
Strategic report
Governance
Financial statements
66
Auto Trader Group plc
Annual Report and Financial Statements 2024
Corporate governance statement
continued
DIVISION OF RESPONSIBILITIES
THE BOARD
BOARD ROLES
COMMITTEES
Main responsibilities include:
•
Providing leadership for the long-term success of the Group.
•
Monitoring delivery of business strategy and objectives; responsibility
for any necessary corrective action.
•
Overall authority for the management of the Group’s business, strategy,
objectives and development.
•
Oversight of operations including effectiveness of systems of internal control
and risk management and high standards of business conduct.
•
Approval of the Annual Report and Financial Statements, equitable engagement
with shareholders and the wider investment community.
•
Approval of changes to the capital, corporate and/or management structure
of the Group, the dividend policy and capital policy.
•
Engagement with and consideration of the interests of employees and other
stakeholders.
•
Consideration of the business’s impact on the community and the environment,
and oversight of climate related risks and opportunities.
Nomination Committee
Reviews the structure, size and
composition of the Board and
its Committees, evaluates
their performance and makes
recommendations to the
Board. Also covers diversity,
talent development and
succession planning.
Read more P70
Audit Committee
Reviews and reports to the
Board on the Group’s financial
reporting, internal control,
whistleblowing, internal audit
and the independence
and effectiveness of the
external auditor.
Read more P73
Corporate Responsibility
Committee
Assists the Board in fulfilling
its oversight responsibilities
in respect of corporate
responsibility and sustainability
for the Company and the Group
as a whole.
Read more P78
Remuneration Committee
Responsible for all elements
of the remuneration of the
Executive Directors, the Chair
and senior employees.
Read more P81
Disclosure Committee
Assists the Board in discharging
its responsibilities relating
to monitoring the existence
of inside information and
its disclosure to the market.
Read more online
Chair
•
Leadership and governance of the Board.
•
Creating and managing constructive relationships
between the Executive and Non-Executive Directors.
•
Ensuring ongoing and effective communication
between the Board and its key stakeholders.
•
Setting the Board’s agenda and ensuring that
adequate time is available for discussions.
•
Ensuring the Board receives sufficient, pertinent,
timely and clear information.
Chief Executive Officer
•
Responsible for the day-to-day operations
and results of the Group.
•
Developing the Group’s objectives, strategy
and successful execution of strategy.
•
Responsible for the effective and ongoing
communication with stakeholders.
•
Delegates authority for the day-to-day
management of the business to the Operational
Leadership Team (comprising the Executive
Directors and senior management) who have
responsibility for all areas of the business.
Non-Executive Directors
•
Scrutinise and monitor the performance
of management.
•
Constructively challenge the Executive Directors.
•
Monitor the integrity of financial information,
financial controls and systems of risk management.
Senior Independent Director
•
Acts as a sounding board for the Chair.
•
Available to shareholders if they have concerns which
the normal channels through the Chair, Chief Executive
Officer or other Directors have failed to resolve.
•
Meets with the other Non-Executive Directors
without Executive Directors present.
•
Leads the annual evaluation of the Chair’s performance.
The full schedule of matters reserved for the
Board and the Terms of Reference of each
Committee are published on the Company’s
website at plc.autotrader.co.uk/investors.
To ensure a clear division of responsibility at the
head of the Company, the positions of Chair and
Chief Executive Officer are separate and not
held by the same person. The division of roles
and responsibilities between the Chair and the
Chief Executive Officer is set out in writing and
has been approved by the Board. David Keens
is the Senior Independent Director.
As part of our long-term succession planning,
two new Independent Non-Executive Directors
have been appointed, Geeta Gopalan (from 1
May 2024) and Amanda James (from 1 July 2024);
and two of the existing Independent
Non-Executive Directors, David Keens and
Jill Easterbrook, will not stand for re-election
at the 2024 AGM.
At the date of this report, the Board consists of the
Non-Executive Chair, six Independent Non-
Executive Directors and three Executive Directors.
Matt Davies was considered to be independent
on appointment. All of the Non-Executive
Directors (David Keens, Jill Easterbrook, Jeni
Mundy, Sigga Sigurdardottir, Jasvinder Gakhal,
Geeta Gopalan, Amanda James) are considered
to be independent in character and judgement,
and free of any business or other relationship
which could materially influence their judgement.
The Chair’s fees and the Non-Executive Directors’
fees are disclosed on page 93, and they received
no additional remuneration from the Company
during the year.
Therefore, at 31 March 2024 and to the date
of this report, the Company is compliant with
the Code provision that at least half the
Board, excluding the Chair, should comprise
Independent Non-Executive Directors.
Company Secretary
•
Available to all Directors to provide advice and assistance.
•
Responsible for providing governance advice.
•
Ensures compliance with the Board’s procedures, and with applicable rules and regulations.
•
Acts as secretary to the Board and its Committees.
Strategic report
Governance
Financial statements
67
Auto Trader Group plc
Annual Report and Financial Statements 2024
Corporate governance statement
continued
ATTENDANCE AT MEETINGS
Board
Nomination
Committee
Audit
Committee
Corporate
Responsibility
Committee
Remuneration
Committee
Number of scheduled meetings held
9
6
5
4
7
DIRECTOR
Ed Williams
1
4/4
1/1
N/A
N/A
N/A
Matt Davies
2
8/8
5/5
N/A
N/A
N/A
Nathan Coe
11/11
6/6
N/A
N/A
N/A
Catherine Faiers
11/11
6/6
N/A
N/A
N/A
Jamie Warner
11/11
6/6
N/A
N/A
N/A
David Keens
11/11
6/6
5/5
4/4
7/7
Jill Easterbrook
11/11
6/6
5/5
4/4
7/7
Jeni Mundy
11/11
6/6
5/5
4/4
7/7
Sigga Sigurdardottir
3
11/11
6/6
5/5
4/4
6/7
Jasvinder Gakhal
11/11
6/6
5/5
4/4
7/7
1.
Ed Williams retired from the Board at the 2023 AGM on 14 September 2023.
2.
Matt Davies was appointed to the Board on 1 July 2023.
3.
Where Directors were unable to attend a meeting date, this was either due to unavoidable personal circumstances
or work commitments. Directors all received the meeting papers and had an opportunity to feed comments in to the
Board and Committee Chairs prior to the meetings.
In addition to the scheduled Board meetings
detailed above, ad hoc calls took place throughout
the year relating to various financial and
transactional decisions.
BOARD AND COMMITTEE MEETINGS ATTENDANCE
Board meetings are planned around the key
events in the corporate calendar, including the
half-yearly and final results, and the Annual
General Meeting (‘AGM’), and a strategy meeting
is held each year.
A monthly financial update call is also held
at which the Board discusses results with
operational management. Once a year the
Directors spend a day visiting customers.
During the year, the Chair and Non-Executive
Directors have met without Executive Directors
present. In addition, the Non-Executive Directors
have met without the Chair and the Executive
Directors present, and the Senior Independent
Director has met with the Executive Directors.
BOARD AND COMMITTEE ACTIVITIES IN 2024
The Board makes decisions in order to ensure the
long-term success of the Group whilst taking into
consideration the interests of wider stakeholders,
such as employees, consumers, customers and
suppliers, and other factors as required of it under
s172 of the Companies Act 2006. Board meetings
are one of the mechanisms through which the
Board discharges this duty, and in order to
formalise this process, a stakeholder framework
has been established which is applied to all Board
papers and discussions. Further information
about engagement with the Group’s stakeholders
is included on pages 14 to 17.
The Board’s activities are structured through the
year to develop and monitor the delivery of the
Group’s strategy and financial results; to receive
feedback from and engage with stakeholder
groups such as employees, customers and
suppliers; and to maintain a robust governance
and risk management framework. Some of the
key activities during the year are shown in the
diagram opposite.
•
Review and approve the
mid-term financial plan
for viability scenarios.
•
Approve the strategic priorities
for FY25.
•
Strategy session focused
on consumer experience and
value proposition.
•
Teach in focused on artificial
intelligence and emerging
technology.
•
Annual review of the
technology strategy with
a focus on cyber and risk.
KEY ACTIVITIES OF THE BOARD AND COMMITTEES DURING 2024
•
Updates on Digital Retailing
and associated Value Metrics.
•
Deep dive into New Car and
Leasing.
•
Overview of competitive
landscape.
•
Reviewed audience and
marketing plans.
•
Deep dive into the core
advertising business and
main revenue drivers.
•
Review and approve FY25 Plan.
•
Approval of half-yearly report,
Annual Report and Preliminary
Results.
•
Extension of debt facility,
extending the term to
February 2029.
•
Review of tax compliance
including Digital Services Tax.
•
Approval of an all-employee
share plan.
•
Board Engagement Guild
meetings covering topics
including: wellbeing,
consumer engagement,
remote first period and
Connected Working,
Directors’ remuneration,
our purpose and values.
•
Review of people changes,
recruitment, resourcing needs
and employee engagement.
•
Review of Directors’
Remuneration Policy and
target setting.
•
Approval of FY23 bonus outturn
and Single Incentive Plan
vesting for senior management.
•
FY24 PSP and Single Incentive
Plan targets and grants.
•
Succession planning for senior
management.
•
Director and senior
management salary reviews.
•
Gender and ethnicity pay
gap reporting.
•
Review of cultural KPIs.
•
ESG rating agencies update.
•
Resubmitted science based
targets for approval and continued
progress on net zero strategy.
•
Quarterly shareholder analysis.
•
Review of feedback from
analysts and investors from
results roadshows.
•
Review of dividend policy and
capital structure.
•
Review of feedback from
investors and proxy advisory
agencies in advance of Annual
General Meeting (‘AGM’).
•
Review of feedback from
investors in relation to the
Remuneration Policy review.
•
Governance and regulatory
updates including ESG corporate
reporting and regulatory
developments and a general
legal and regulatory update.
•
Review and approval of Group
risk register.
•
Internal audit update including
reviews of IT disaster recovery,
assurance mapping, software
development lifecycle, cyber
security and FCA Consumer Duty.
•
Review of insurance programme.
•
Review and approval of
modern slavery statement.
•
Review of internal and risk
management framework and
internal controls.
•
Review of external audit
effectiveness.
•
External Board evaluation
feedback and action plan.
•
Review of succession plans.
•
Review of crisis management
framework.
•
Business continuity planning.
•
Approval of material contracts.
GOVERNANCE,
RISK MANAGEMENT
& INTERNAL CONTROL
STRATEGY & GROWTH
OPERATIONAL
FINANCIAL
PEOPLE & CULTURE
SHAREHOLDERS &
OTHER STAKEHOLDERS
Strategic report
Governance
Financial statements
68
Auto Trader Group plc
Annual Report and Financial Statements 2024
Corporate governance statement
continued
CONFLICTS OF INTEREST
In accordance with the Company’s Articles of
Association, the Board has a formal system in
place for Directors to declare conflicts of interest
and for such conflicts to be considered for
authorisation.
Any external appointments or other significant
commitments of the Directors require the prior
approval of the Board. We recognise that our
Executive Directors may be invited to become
non-executive directors of other companies.
Such non-executive duties can broaden a
Director’s experience and knowledge which
can benefit Auto Trader. Catherine Faiers
currently serves as a Non-Executive Director of
Allegro.eu Group. None of the other Executive
Directors has any external directorships as at
the date of this report.
The Board is comfortable that external
appointments of the Chair, the Chief Operating
Officer and the Non-Executive Directors do not
create any conflict of interest that, if required,
cannot be sufficiently managed.
TIME COMMITMENT
Any external appointments or other significant
commitments of the Directors require the prior
approval of the Board. The Chief Operating
Officer holds one external directorship as at the
date of this report. The Board is comfortable
that external appointments of the Chair, the
Non-Executive Directors and the Chief Operating
Officer do not impact on the time that any
Director devotes to the Company.
ELECTION OF DIRECTORS
The Board can appoint any person to be a
Director, either to fill a vacancy or as an addition
to the existing Board. Any Director so appointed
by the Board shall hold office only until the next
AGM and shall then be eligible for election by
the shareholders. The AGM Notice sets out the
specific reasons for reappointing each Director.
RISK MANAGEMENT AND INTERNAL CONTROL
The Board acknowledges its responsibility for
establishing and maintaining the Group’s system
of risk management and internal controls and
it receives regular reports from management
identifying, evaluating and managing the risks
within the business. The system of internal
controls is designed to manage, rather than
eliminate, the risk of failure to achieve business
objectives and can provide only reasonable,
and not absolute, assurance against material
misstatement or loss.
The processes in place for assessment,
management and monitoring of risks are
described in Principal risks and uncertainties
on pages 53 to 58.
The Board, assisted by the Audit Committee, has
carried out a review of the effectiveness of the
system of risk management and internal controls
during the year ended 31 March 2024 and for
the period up to the date of approval of the
Consolidated financial statements contained
in the Annual Report. The review covered all
material controls, including financial, operational
and compliance controls and risk management
systems. The Board considered the weaknesses
identified and reviewed the developing actions,
plans and programmes that it considered
necessary. The Board confirms that no significant
weaknesses or failings were identified as a result
of the review of effectiveness.
FINANCIAL AND BUSINESS REPORTING
Assisted by the Audit Committee, the Board has
carried out a review of the 2024 Annual Report
and considers that, in its opinion, the report is
fair, balanced and understandable and provides
the information necessary for shareholders
to assess the Company’s position and
performance, business model and strategy.
Refer to the Report of the Audit Committee on
pages 73 to 77 for details of the review process.
See pages 59 to 60 for the Board’s statement
on going concern and the viability statement.
INDUCTION AND DEVELOPMENT
All newly appointed Directors receive
an induction briefing on their duties and
responsibilities as Directors of a publicly quoted
company. There is a formal induction programme
to ensure that newly appointed Directors
familiarise themselves with the Group and its
activities, either through reading, meetings
with the relevant member of senior management
or through sessions in the Board meetings.
Specific focus areas in the induction schedule
include: statutory and regulatory information,
Board and Committee specific information,
business overview and deep dives into people
and culture, technology and digital retailing.
The majority of Board meetings contain a
presentation from senior management on one
of the strategic priorities for the year. Specific
business-related presentations are given to
the Board by senior management and external
advisors when appropriate.
All Directors are offered the opportunity to meet
with customers and take part in sales calls to
understand the business from a customer’s
perspective, or to take part or observe focus
groups with consumers who use our website.
Directors receive regular feedback from our sales
and service team to ensure they are kept informed
of the latest customer dialogue and sentiment.
The Board as a whole is updated, as necessary,
in light of any governance developments as and
when they occur, and there is an annual legal and
regulatory update provided as part of the Board
meeting. All Directors are required to complete
our annual compliance training modules covering
anti-bribery, anti-money laundering, data
protection, information security and other
relevant subjects. As part of the Board evaluation,
the Chair meets with each Director to discuss
any individual training and development needs.
INFORMATION AND SUPPORT AVAILABLE
TO DIRECTORS
Full and timely access to all relevant information
is given to the Board. For Board meetings, this
consists of a formal agenda, minutes of previous
meetings and a comprehensive set of papers
including regular operational and financial
reports, provided to Directors in a timely manner
in advance of meetings.
All Directors have access to the advice and
services of the Company Secretary, Claire Baty.
The appointment or removal of the Company
Secretary is a matter for the whole Board.
CONCERNS OVER OPERATION OF THE BOARD
All of the Directors have the right to have their
opposition to, or concerns over, any Board
decision noted in the minutes. Directors are
entitled to take independent professional advice
at the Company’s expense in the furtherance
of their duties, where considered necessary.
LETTERS OF APPOINTMENT
The Chair and the Non-Executive Directors
have letters of appointment which are available
for inspection at the registered office of the
Company during normal business hours and at
the place of the AGM from at least 15 minutes
before and until the end of the meeting; or on
request from ir@autotrader.co.uk. These letters
set out the expected time commitment from
each Director. Non-Executive appointments
to the Board are for an initial term of up to three
years. Non-Executive Directors are typically
expected to serve two three-year terms,
although the Board may invite the Director
to serve for an additional period.
Strategic report
Governance
Financial statements
69
Auto Trader Group plc
Annual Report and Financial Statements 2024
3
4
2
4
Previous public
company experience
Recent and relevant
financial experience
Risk management
ESG
4
4
2
3
Digital and technology
Retail and consumer
businesses
Financial services
Remuneration
and people
Report of the Nomination Committee
Matt Davies
Chair of the Committee
Dear shareholders,
I am pleased to present the Report of
the Nomination Committee for 2024.
ROLE OF THE COMMITTEE
The Committee’s main role is to keep under
constant review the size and composition of the
Board and its Committees including its gender
and ethnic diversity, its independence, and the
skills, knowledge and experience required for the
effective oversight of the Group. The Committee
is also responsible for ensuring that there are
formal and orderly succession plans in place for
the members of the Board.
HOW THE COMMITTEE OPERATES
All members of the Committee are Independent
Non-Executive Directors. The Chair of the Board
chairs all meetings of the Committee unless they
relate to the appointment of his successor or
such other matters in which he may have a
potential conflict of interest. For those meetings,
the Senior Independent Director (‘SID’) takes the
Chair unless the SID is in contention for the role
or also has a potential conflict of interest.
The Committee meets at least once a year, and
on an ad hoc basis as required. Only members
of the Committee have the right to attend
meetings; however, the Chief Executive Officer
attends for all or part of meetings so that the
Committee can understand his views,
particularly on key talent within the business.
SUCCESSION PLANNING
The focus of the Committee’s work during the
year was on developing and implementing a plan
for renewal of Non-Executive Directors. As the
Corporate Governance Code provides that there
is a deemed loss of independence after nine
years’ service, David Keens (Senior Independent
Director and Audit Committee Chair) and Jill
Easterbrook (Remuneration Committee Chair)
will not stand for re-election at the 2024 AGM
and therefore there is a requirement to appoint
successors into these three roles in good time to
allow for an orderly transition. The Committee
was open about whether and how the roles would
be combined, and on whether two or three
appointments would be required.
Jeni Mundy will reach the end of her third
three-year term during 2025. Her replacement as
Chair of the Corporate Responsibility Committee
may either be an existing Board member or be a
new Director, should the Committee decide to
appoint an additional Director in 2025.
With regards to Executive succession, the
Committee is satisfied that the succession plans
remain appropriate, and that there is a strong
pipeline of talent within the business for future
leadership needs.
AT A GLANCE
Reviewing the Board’s size and
composition, and ensuring effective
succession planning for the business.
OVERVIEW
•
Composed of the Chair and five Independent
Non-Executive Directors.
•
At least one meeting held per year.
A significantly higher number of meetings held
this year due to increased activity levels.
•
Meetings are attended by the Chief
Executive Officer and other relevant
attendees by invitation.
BOARD OF DIRECTORS P63
TERMS OF REFERENCE
plc.autotrader.co.uk/investors
OUR PROGRESS IN 2024
•
Concluding the selection process for the Senior
Independent Director, Audit Committee Chair
and Remuneration Committee Chair.
•
Continuing to monitor succession plans for
other Board members and senior management
succession.
•
Held an externally facilitated Board evaluation
and reviewed the results.
FOCUS AREAS FOR 2025
•
Following up on the Board evaluation
recommendations.
•
Continuing to monitor Board and senior
management succession in the context
of the Company’s long-term strategy.
NON EXECUTIVE DIRECTORS’ SKILLS AND EXPERIENCE
1
We have been progressing in our succession planning by ensuring we select the right people with the
right skills.
1.
Refers to the period post the AGM (19 September 2024).
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Financial statements
70
Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Report of the Nomination Committee
continued
APPOINTMENTS TO THE BOARD
The process was led by the Chair and overseen
by the Committee, with input from the Executive
Directors. Detailed role specifications were
drawn up, identifying the skills and experience
required, taking into account the Company’s
long-term strategy, including prior public
company experience, financial experience,
digital and retail industry experience.
A wide search was conducted, taking into
consideration the requirements of the roles, and
with due regard to the benefits of diversity, and
the targets set by the Listing Rules, including
gender and ethnicity. Ivy Street, a recruitment
consultancy who has no other connection with
the Company, were used to identify candidates.
Extensive interviews were conducted, including
with all Executive and Non-Executive Directors.
Following this process, the Committee selected
the successful candidates as announced on
22 March 2024:
Geeta Gopalan joined the Board with effect
from 1 May 2024, and also became a member
of the Audit, Remuneration, Corporate
Responsibility and Nomination Committees.
Geeta will be appointed as Senior Independent
Director and Remuneration Committee Chair
with effect from the conclusion of the 2024
AGM. Geeta has over 25 years of experience
in financial services and retail banking,
particularly payments and digital innovation,
and she has served as a Senior Independent
Director and as a Remuneration Committee
Chair for at least 12 months on other public
company boards.
Amanda James will join the Board with
effect from 1 July 2024, and will join the Audit,
Remuneration, Corporate Responsibility and
Nomination Committees. With effect from the
conclusion of the 2024 AGM, Amanda will be
appointed as Audit Committee Chair. The
Committee is satisfied that Amanda has recent
and relevant financial experience through
her extensive background in finance and her
current position as the Chief Financial Officer
of NEXT plc. Amanda also has strong consumer,
retail and multi-channel experience.
Both Geeta and Amanda are considered to
be Independent.
BOARD EVALUATION
We engaged Independent Audit Limited to
facilitate an external evaluation of the Board,
Committees and individual Directors during
the year. This included interviews with each
of the Board Directors and members of senior
management, observation of Board and
Committee meetings and review of Board
and Committee papers. The draft findings
were discussed with the Chairman and then
presented to the Board in March 2024 as per
the table on page 72.
In addition, an assessment of the Chairman’s
performance was carried out, led by the Senior
Independent Director, and feedback was
provided to him individually. Overall, the results
showed that the Board and its Committees
continue to operate well, and that each
individual Director continues to make an
effective contribution.
ELECTION AND RE-ELECTION OF DIRECTORS
In accordance with the UK Corporate Governance
Code, all Directors will retire and offer themselves
for election or re-election to the Board. Following
confirmation by the Committee and Board that
they are satisfied that all Directors continue to be
effective in, and demonstrate commitment to,
their respective roles on the Board and that each
makes a valuable contribution to the leadership
of the Company, the Board recommends that
shareholders approve the resolutions to be
proposed at the 2024 AGM relating to the election
and re-election of the Directors.
I welcome any questions in respect of the work
of the Committee, which can be submitted to
ir@autotrader.co.uk, or in person at our Annual
General Meeting.
Matt Davies
Chair of the Committee
30 May 2024
POLICY ON APPOINTMENTS TO THE BOARD
Appointments are made on merit, against
objective criteria and with due regard to the
benefits of diversity on the Board. The Committee
takes account of a variety of factors before
recommending any new appointments to the
Board, including relevant skills to perform the role,
experience, knowledge and diversity, including
gender and ethnic diversity.
The Committee also considered the targets set
out in LR 9.8.6(9)(a). At year end, the Board
comprised 56% woman; and had one Director from
a minority ethnic background but did not have a
woman appointed in one of the roles specified by
the Listing Rules, however we do have a female
Executive Director, Catherine Faiers, in the role of
COO, which we believe to be of equal status to
those roles. Following the AGM, our Board will fully
meet the targets, with 67% women on the Board;
the role of Senior Independent Director being held
by a woman; and two Directors being from a
minority ethnic background.
At a leadership level, 56% of the Operational
Leadership Team (‘OLT’) and 41% of the OLT’s
direct reports were women, a combined total of
42%. However, no OLT members and only 7% of the
OLT’s direct reports were ethnically diverse, and
improvement of this remains a focus area for the
Committee and the business.
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Financial statements
71
Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Report of the Nomination Committee
continued
BOARD EVALUATION
Areas of strength
Areas for improvement
BOARD LEADERSHIP AND PURPOSE:
A well-established, collaborative approach to
development of purpose, strategy and strategic
objectives, with a clear and consistent view across
the Board.
An active understanding of organisational culture
and values, including through the use of a Cultural
Scorecard and regular engagement with the
Employee Guild.
Full awareness and involvement in overseeing the
numerous initiatives around ESG issues through the
CSR Committee and the Board.
Evident focus on major shareholder changes and
attitudes. Constant emphasis on other stakeholders
including customers, consumers and employees.
Whilst decisions are generally well-aligned with
Auto Trader’s purpose of ‘Driving Change Together.
Responsibly’, this could be used more actively to
frame discussions.
The Cultural Scorecard should be reviewed to include
additional indicators of culture such as internal audit
findings, control weaknesses, customer feedback,
complaints handling and media coverage to give a
broader picture.
DIVISION OF RESPONSIBILITIES:
Ability to monitor performance is strengthened by close
contact and open culture, with continuous review in
place as well as more structured mechanisms.
Openness of interaction between the Executive and
the Non-Executive Directors, and an appropriate level
of challenge and contribution.
Support for the Board and Committees from the
company secretarial function is felt to be highly
effective and responsive with well-honed processes.
Now that the NED succession plan has been executed,
there could be a greater focus on longer-term Executive
and senior management succession planning.
COMPOSITION AND SUCCESSION:
The Board has a good balance of skills around brand,
retail and regulatory (including financial reporting,
internal control and risk management).
The Nomination Committee has led the process for
implementation of the succession plan for NEDs,
and has actively involved the rest of the Board.
The Board needs to keep under review the mix of Board
experience to ensure this reflects Auto Trader’s position
as a technology company and its strategic goals.
Although generally well done, the Committee should
consider whether the induction process should evolve,
especially as the new NEDs will join over the next
few months.
The Board felt that they had appropriate training and
development in relevant areas, including ESG, but should
consider structured training on technology including AI.
Areas of strength
Areas for improvement
AUDIT, RISK AND INTERNAL CONTROL:
Financial performance information is effective in
enabling the Board to maintain a clear picture of
performance, with frequent updates and discussions.
There is a mature risk management framework which
has developed well in line with business growth and
change, with good support from a well-respected
Risk Management function.
Deep financial expertise and experience in the
Audit Committee.
Effective relationship between the Audit Committee
and the CFO, with trust and confidence sitting
alongside a willingness and ability to challenge.
Risk-related Board reports could be evolved, to focus
on key questions, enable more effective probing and
challenge, and to take into consideration the forthcoming
requirements of the 2024 Corporate Governance Code
with respect to material internal controls.
The Board should plan ahead for a smooth transition to
the new Audit Committee Chair role after the September
2024 AGM.
Consider whether it is appropriate and necessary for
continued attendance at Audit Committee meetings
by non-Committee members, including the CEO and
Board Chair.
REMUNERATION:
There is a constructive relationship with the Executive.
The Committee is well supported internally and by
the remuneration consultants.
The Committee actively looks at wider employee
remuneration policies and is attuned to the critical
importance people related matters.
Consider whether it is appropriate and necessary for
continued attendance at meetings by non-Committee
members, including the Executive Directors.
Strategic report
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72
Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Report of the Audit Committee
David Keens
Chair of the Committee
Dear shareholders,
I am pleased to present the Report
of the Audit Committee for 2024.
This will be my last on behalf of Auto Trader as I
will come to the end of my tenure on the Board at
our AGM in September. It is therefore appropriate
that this letter to shareholders is backward
looking and that I leave forward looking
comments to my successor in due course.
I joined Auto Trader in 2015, at the time of the IPO.
Over the past nine years we have navigated
the transition of Executive Directors, financial
managers, internal and external Auditors.
I have the privilege of working for a business which
has a deep and positive culture, a strong customer
franchise and which delivers strong financial
results. It has been said that good numbers are
easier to add up than bad numbers. True, but
good results have to be earned and the Audit
Committee’s work has been made easier by the
honesty and integrity of the Auto Trader team.
Audit Committee meetings are very open, they
are attended by all Non-Executive Directors
and by the internal and external auditors.
I have regular conversations outside of formal
meetings with the CFO and those responsible
for financial and risk management. I take this
opportunity to thank all those at Auto Trader
who have engaged with the Committee and
delivered on our combined responsibilities.
Our Internal Audit function is provided on an
outsourced basis. This allows us to access a
broad level of skills that would not be possible
to maintain internally on a cost or effectiveness
basis. Independence and best practice are
ensured and it also provides access to additional
industry and specialist knowledge.
Our external Auditors have provided excellent
challenge and independent assurance over
our annual and interim financial statements.
Timelines and deadlines have been consistently
met, without drama or delay. I make direct
enquiries annually of our external audit firm
to obtain positive affirmation of the wider
independence and performance of the Partners
and Managers engaged on our audit. We have
periodically rotated internal and external
Auditors, their Partners and team members.
My appreciation goes to Deloitte, BDO, PwC and
KPMG who have provided these services during
my tenure. Auto Trader’s 2023 external audit was
part of the FRC’s annual inspection of audit firms
and I was pleased to note that a best practice
observation was noted.
Whilst this Report of the Audit Committee
contains some of the matters addressed during
the year, it should be read in conjunction with
the external auditor’s report starting on page
104 and the Auto Trader Group plc financial
statements in general.
At the 2023 AGM, shareholders approved the
re-appointment of KPMG as our external auditor.
The Committee has recommended to the Board
that they are re-appointed at the 2024 AGM.
David Keens
Chair of the Committee
30 May 2024
AT A GLANCE
Monitoring the integrity of financial
reporting, internal controls and
the effectiveness of internal and
external audit.
OVERVIEW
•
Five Independent Non-Executive Directors.
•
David Keens is considered by the Board to have
recent and relevant experience. All members
have significant commercial and operating
experience in consumer and digital businesses.
•
At least three meetings held per year.
•
Meetings are attended by the Chair of the
Board, CEO, COO, CFO, internal auditor and
external auditor by invitation.
OUR PROGRESS IN 2024
•
Assess the Group’s going concern and
viability statements.
•
Discuss key areas of financial judgement.
•
Evaluate the quality, effectiveness and
independence of external audit, in accordance
with the FRC Audit Committees and the
External Audit: Minimum Standard.
•
Review the effectiveness of internal audit,
internal controls and risk management,
including approval of assurance map and policy.
FOCUS AREAS FOR 2025
•
Agree with external auditor any changes for their
2025 audit.
•
Consider the impact and timing of the
Corporate Governance Code 2024 and other
regulatory changes or implications.
FINANCIAL REPORTING
The primary role of the Committee in relation to
financial reporting is to review and monitor the
integrity of the financial statements, including
annual and half-year reports, results
announcements, dividend proposals and any
other formal announcement relating to the
Group’s financial performance.
The Committee assessed the accounting
principles and policies adopted, and whether
management had made appropriate estimates
and judgements. In doing so, the Committee
considered management reports and the basis
of judgements made. The Committee reviewed
external audit reports on the 2024 half-year
statement and 2024 Annual Report.
The Committee, with assistance from
management and KPMG, identified areas of
financial statement risk and judgement as
described opposite:
Description of significant area
Audit Committee action
Carrying value of goodwill
Following the acquisition of Autorama,
the Group has two cash-generating units
(‘CGUs’), being the Digital CGU and Autorama
CGU, which require annual impairment
testing. Management’s assessment of
the recoverability of the goodwill is based
on future cash flow forecasts. Forecast
estimation is most significant for the
growth in market share of Autorama,
which was acquired in June 2022.
The Committee reviewed the assumptions made by
management, in particular the market and market
share growth estimates that underpin the value in
use of the Autorama CGU recoverable amount.
The Committee concluded that the judgements
and estimates applied were appropriate. The
Committee challenged and was satisfied with the
assumptions and forecasts used, the results of
the reviews and the sensitivities disclosed.
Revenue recognition
Revenue recognition for the Group’s revenue
streams is not complex. However this remained
an area of focus due to the large volume of
transactions and as revenue is the largest
figure in the income statement.
The Committee was satisfied with the explanations
provided and conclusions reached in relation to the
Group’s revenue recognition.
HOW WE MANAGE RISK P50
TERMS OF REFERENCE
plc.autotrader.co.uk/investors
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Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Report of the Audit Committee
continued
Other areas of focus
Audit Committee action
Going concern and viability statement
The Directors must satisfy themselves as to
the Group’s viability and confirm that they have
a reasonable expectation that it will continue
to operate and meet its liabilities as they fall
due. The period over which the Directors have
determined it is appropriate to assess the
prospects of the Group has been defined as five
years. In addition, the Directors must consider
if the going concern assumption is appropriate.
The Committee reviewed management’s work
supporting the going concern assessment and
viability statements. These included the Group’s
Medium Term Plan and cash flow forecasts for the
period to March 2029. The Committee discussed
with management the appropriateness of the
five-year period, and discussed the correlation
with the Group’s principal risks and uncertainties
as disclosed on pages 53 to 60. The feasibility of
mitigating actions and the potential speed of
implementation to achieve any flexibility required
were discussed. Scenarios covering events that
could adversely impact the Group were considered.
The Committee evaluated the conclusions over
going concern and viability and the proposed
disclosures in the financial statements and
satisfied itself that the financial statements
appropriately reflect the conclusions.
Useful economic life of Vanarama brand
The carrying value of the Autorama
‘Vanarama’ brand was fair valued based on
a market participant assumption of a 10 year
useful economic life. At each period end,
including half year, management are required
to estimate the useful economic life of the
asset and determine if the amortisation
period should be prospectively adjusted.
During the year, management has reassessed
the useful life to be five years (from date of
acquisition in June 2022).
The Committee reviewed management’s useful
economic life assessment against current and
future expectations of the Autorama business and
was satisfied that the reassessment of the useful
economic life is appropriate.
Investment value in joint venture
The Group has a joint venture with Cox
Automotive UK, Dealer Auction. Management’s
assessment of the recoverability of the
investment value, including goodwill, is based
on future cash flow forecasts.
The Committee reviewed the assumptions made
by management, particularly in relation to cash
flow forecasts to support the carrying value, and
was satisfied that these were appropriately
accounted for.
FAIR, BALANCED AND UNDERSTANDABLE
At the request of the Board, the Committee has reviewed the content of the 2024 Annual Report
and considered whether, taken as a whole, in its opinion it is fair, balanced and understandable and
provides the information necessary for shareholders to assess the Group’s position, performance,
business model and strategy. The Committee was provided with a draft of the Annual Report and the
opportunity to comment where further clarity or information should be added. The final draft was
then recommended for approval by the Board. When forming its opinion, the Committee had regard
to discussions held with management and reports received from internal and external auditors.
In particular, the Committee considered:
Is the report fair?
•
Is a complete picture presented and has any sensitive material been omitted
that should have been included?
•
Are key messages in the narrative aligned with the KPIs and are they reflected
in the financial reporting?
•
Are the revenue streams described in the narrative consistent with those used
for financial reporting in the financial statements?
Is the report
balanced?
•
Is there a good level of consistency between the reports in the front and
the reporting in the back of the Annual Report?
•
Do you get the same messages when reading the front end and the back
end independently?
•
Is there an appropriate balance between statutory and adjusted measures
and are any adjustments explained clearly with appropriate prominence?
•
Are the key judgements referred to in the narrative reporting and significant
issues reported in the Report of the Audit Committee consistent with
disclosures of key estimation uncertainties and critical judgements set out
in the financial statements?
•
How do these compare with the risks that KPMG include in their report?
Is the report
understandable?
•
Is there a clear and cohesive framework for the Annual Report?
• Are the important messages highlighted and appropriately themed
throughout the document?
•
Is the report written in accessible language and are the messages clearly
drawn out?
Following the Committee’s review, the Directors confirm that, in their opinion, the 2024 Annual Report,
taken as a whole, is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Group’s position and performance, business model and strategy.
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Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Report of the Audit Committee
continued
RISK MANAGEMENT AND INTERNAL CONTROL
The Committee’s responsibilities include a review of Auto Trader’s risk management and internal
controls frameworks to ensure that they are effective and that any identified weaknesses are
remediated in a timely manner. During 2024 the Audit Committee reviewed the effectiveness of
the Group’s risk management and internal control framework and concluded that it is effective.
The processes adopted for monitoring the frameworks included the following:
•
Evaluation of the processes applied by Management to identify and assess risks, including
new and emerging risks.
•
Evaluation of the process for designing mitigations and controls and how the Group’s risk
appetite is used to inform responses to risk.
•
Reviewing the Group Assurance Map and Assurance Policy. Together, these documents provide
additional transparency to the Audit Committee about how Auto Trader’s risk and governance
structure has overseen and evaluated whether our material risks are being managed
appropriately. The Audit Committee concluded that our principal risks are being managed
effectively and to a level consistent with our risk appetite.
•
Reviewing reports from Management summarising how the Group’s material controls and
mitigations are monitored, reviewed, and assured across Auto Trader’s risk and governance
structure, and how these activities map to each principal risk. In 2024 no material internal control
weaknesses were identified.
•
Reviewing cultural and ethical indicators to ensure that Auto Trader’s culture continues to set a
solid foundation for effective risk management. The review included reporting from Management
confirming that during 2024 there have not been any known instances of fraud, bribery or
whistleblowing complaints. The Committee has also reviewed information on whether there have
been any employee cases, grievances, settlements, legal disputes, disciplinary action, conduct
rule breaches, or regulatory penalties.
•
Receiving reports from the Group’s co-sourced Internal Audit function and monitoring the
completion of internal audit actions.
•
Reviewing reports from the external auditor on any issues identified in the course of their work,
including any internal control reports highlighting control weaknesses. The Audit Committee
also ensured that there were appropriate responses from management.
•
In addition to reviewing the risk, controls and assurance framework holistically, the Committee
also performed ‘deep dives’ into Auto Trader’s response to specific areas of risk, including cyber
security, ransomware, FCA Consumer Duty, and treasury & cash management.
The Group has internal controls and risk management arrangements in place in relation to its financial
reporting processes and preparation of consolidated accounts. These systems include policies and
procedures to ensure that adequate accounting records are maintained, and transactions are
recorded accurately and fairly to permit the preparation of financial statements in accordance with
IFRS. The internal control systems include the elements described opposite and on the following page:
Element
Approach and basis for assurance
Risk
management
Details of our governance structure and risk management arrangements can be
found in the Risk management section of this Annual Report. Risk management
operates throughout all levels of our governance structure.
The Board as a whole is accountable for risk management. The day-to-day
responsibility for managing risk resides with the Operational Leadership Team
(‘OLT’). Assurance over the effectiveness of risk management activity is provided
under the three lines of defence model as described below.
Reports on the effectiveness of risk management and internal controls are
presented to executive management at the Risk Forum (which meets monthly)
to Non-Executive Directors via the Audit Committee, and to the Board.
The Risk Forum agenda includes risk-based ‘deep dives’ into key risk areas and in
the last year these have included: crisis management; cyber security penetration
testing; cyber security ransomware; corporate governance reform; FCA Consumer
Duty; IT disaster recovery; customer onboarding; and supplier net zero.
Key risks and controls are documented in a Group risk register with OLT members
designated as risk owners. A review of the Group risk register is undertaken on
a quarterly basis. The process for reviewing and updating the risk register is
facilitated by the Governance, Risk and Compliance function and overseen by
the Board.
A risk-based internal audit programme provides independent, third-line
assurance over the effectiveness of the risk management arrangements and
this year’s internal audit plan included reviews of the following areas: IT disaster
recovery, assurance mapping, software development lifecycle, cybersecurity
and FCA Consumer Duty.
Financial
reporting
Group consolidation is performed on a monthly basis with a month-end pack
produced that includes an income statement, balance sheet, cash flow and
detailed analysis. The pack also includes KPIs and these are reviewed by the
OLT and the Board. Results are compared against the Plan or re-forecast and
narrative is provided by management to explain significant variances.
The effectiveness of the controls within the financial reporting and consolidation
process is reviewed on an ongoing basis by the Governance, Risk and Compliance
function. The Risk Forum and the Audit Committee review and oversee these
reports and there were no significant or material control weaknesses identified
during 2024.
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Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Report of the Audit Committee
continued
Element
Approach and basis for assurance
Budgeting and
forecasting
An annual Plan is produced and monthly results are reported against this.
The Plan is prepared using a bottom-up approach, informed by a high-level
assessment of market and economic conditions. Reviews are performed by the
OLT and the Board. The Plan is also compared to the top-down Medium Term
Plan (‘MTP’) as a sense check. The Plan is approved by the OLT and the Board.
A detailed monthly rolling forecast is produced, with inputs provided from
all business owners. The rolling forecast is then used to help identify potential
risks and opportunities by comparison to the original budget. A monthly
business review then takes place with the relevant OLT member, COO and CFO
to agree actions.
Delegation of
authority and
approval limits
A documented structure of delegated authorities and approval for transactions
is maintained within the Board’s Terms of Reference. This is reviewed regularly
by management to ensure it remains appropriate for the business.
Segregation
of duties
Procedures are defined to segregate duties over significant transactions,
including: procurement, payments to suppliers, payroll, discounts and refunds.
Regular reviews of IT system access take place to ensure that segregated duties
remain enforced. Key reconciliations are prepared and reviewed on a monthly
basis to ensure accurate reporting.
INTERNAL AUDIT
BDO are the Group’s co-sourced Internal Audit function. The Internal Audit function is accountable
to the Audit Committee and uses a risk-based approach to provide independent assurance over
the adequacy and effectiveness of the control environment. The internal audit work plan for 2024
included internal audit assignments in relation to the following areas of risk:
• Risk management reporting and assurance mapping
• IT disaster recovery
• Software development lifecycle
• Cyber security third-party risk management
• FCA Consumer Duty
The risk-based internal audit plan for 2025 was approved by the Audit Committee and covers a broad
range of core financial and operational processes and controls, focusing on specific risk areas. Whilst
the plan has been approved, the Audit Committee will continue to review it regularly to ensure that
any new and emerging areas of risk are considered.
Management actions that are recommended following the internal audits are tracked to completion
and reviewed by the Risk Forum and then by the Audit Committee to ensure that identified risks are
mitigated in a timely manner.
The Committee had closed sessions with BDO and the Committee also met with management without
the presence of BDO. There were no significant issues raised during these meetings.
A risk-based programme of key controls testing takes place on a quarterly basis. We continue to
monitor the resource within our Governance, Risk and Compliance function to ensure that we are
able to efficiently monitor the effectiveness of our material internal controls.
EXTERNAL AUDITOR
The Committee oversees the relationship with the external auditor, KPMG, and reviews their findings
in respect of audit and review work. The Committee received and discussed KPMG’s review of the
half-year report to 30 September 2023 and their audit of the financial statements for the year to
31 March 2024. The Committee met with KPMG without management present and with management
without KPMG present, to ensure that there were no issues in the relationship between management
and the external auditor to be addressed, and no issues were raised.
One of the Committee’s roles is to evaluate the quality and effectiveness of audit services provided,
and the level of professional scepticism applied. The Committee has carried out a review in
accordance with the FRC Audit Committees and the External Audit: Minimum Standard, based on
discussion of audit scope and plans, materiality assessments, review of auditor’s reports and
feedback from management on the effectiveness of the audit process. The review concluded that
the external auditor remained effective and applied professional scepticism throughout. The review
of the audit report and feedback from management also confirmed that the external auditor
challenged management’s judgements and estimates where necessary.
As part of the annual inspection of audit firms, the Audit Quality Review (‘AQR’) team of the Financial
Reporting Council (‘FRC’) reviewed KPMG’s audit of the Group accounts for the year ended 31 March
2023. The AQR routinely monitors the quality of audit work of certain UK audit firms through
inspections of sample audits and related procedures at individual audit firms. The Committee and
KPMG LLP have discussed the report, which included a good practice observation relating to the audit
team’s use of internal valuation specialists. Overall, the result of the review raised no issues which
cause doubt on the quality of Auto Trader’s external audit and the Committee remains satisfied with
the efficiency and effectiveness of the external audit.
The Committee is also responsible for ensuring the external auditor remains independent. The
Committee has reviewed, and is satisfied with, the independence of KPMG as the external auditor.
In particular, discussions have been held with KPMG’s senior management to verify the Group’s
audit partner’s performance and standing within KPMG. There were no conflicts or matters of
concern conveyed. The year ended 31 March 2024 was the fourth year the Group’s audit partner
has been involved in the audit of the Group.
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Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Report of the Audit Committee
continued
NON-AUDIT SERVICES PROVIDED BY THE EXTERNAL AUDITOR
The external auditor is primarily engaged to carry out statutory audit work. There may be other
services where the external auditor is considered to be the most suitable supplier by reference to their
skills and experience. It is the Group’s practice that it will seek quotes from more than one firm, which
may include KPMG, before engagements for non-audit projects are awarded. Contracts are awarded
based on individual merits. A policy is in place for the provision of non-audit services by the external
auditor, to ensure that the provision of such services does not impair the external auditor’s
independence or objectivity, and will be assessed in line with FRC Ethical and Auditing Standards.
Non-audit service
Policy
Audit-related services directly related
to the audit
For example, the review of interim financial
statements, compliance certificates and
reports to regulators.
Pre-approval by the Committee is required for
all non-audit services. Permissible services may
be approved to a maximum of £100,000 for each
individual engagement, and to a maximum
aggregate in any financial year of 70% of the
average audit fees paid to the audit firm in the
last three consecutive years.
In addition, services relating to issue of compliance
certificates in relation to banking facilities, loan
agreements or covenants are considered to be
pre-approved by the Audit Committee to a level
of £50,000 for each individual engagement.
Prohibited services
In line with the EU Audit Reform, services where
the auditor’s objectivity and independence
may be compromised. Prohibited services are
detailed in the FRC Revised Ethical Standard
2019 and include tax services, accounting
services, internal audit services, valuation
services and financial systems consultancy.
Prohibited.
Refer to plc.Autotrader.Co.Uk/investors for full details of the policy
During the year, KPMG charged the Group £52,000 (2023: £48,000) for audit-related assurance
services directly relating to the review of the Group’s interim report for the six months ended
30 September 2023 and £15,000 for the provision of an annual limited assurance report which
is published on the Group’s website and used for the Sustainability Compliance Certificate
required under the Company’s Syndicated Revolving Credit Facility.
THE STATUTORY AUDIT SERVICES FOR LARGE COMPANIES MARKET INVESTIGATION (MANDATORY
USE OF COMPETITIVE TENDER PROCESSES AND AUDIT COMMITTEE RESPONSIBILITIES) ORDER 2014
– STATEMENT OF COMPLIANCE
A competitive tender was carried out in 2016 and KPMG LLP were first appointed as statutory auditor
for the year to March 2017. We have therefore complied with the requirement that the external audit
contract is tendered within the 10 years prescribed by UK legislation and the Code’s recommendation.
The next competitive tender is required to be held for the external audit for financial years ending
after 31 March 2027. The Group confirms that it complied with the provisions of the Competition and
Markets Authority’s Order for the financial year under review.
David Keens
Chair of the Committee
30 May 2024
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77
Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Report of the Corporate Responsibility Committee
Jeni Mundy
Chair of the Committee
Dear shareholders,
I am pleased to present the Report of
the Corporate Responsibility Committee
for 2024.
The Committee has continued to guide and oversee
progress in the delivery of our Environmental,
Social and Governance (‘ESG’) strategy,
providing oversight, scrutiny and challenge
across a wide range of topics.
We recognise that our operations – and the way
we carry them out – have impacts that reach well
beyond our financial performance. Our business
activities impact a wide range of stakeholders
and we strive to make this impact a positive one.
OUR PROGRESS IN 2024
We continue to make good progress with our ESG
strategy and the majority of our cultural KPIs as
outlined below:
Environmental strategy
Throughout the year, the Committee has reviewed
the Group’s progress against its environmental
strategy. Key achievements during the year
include driving further operational efficiencies,
such as fully migrating our data centres to the
cloud and starting the process for installing
solar panels at our Hemel Hempstead office.
We also continue to reach new and wider
audiences with our content, and have continued
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.
We report consistently with the recommendations
of the Task Force on Climate-related Financial
Disclosures (‘TCFD’) and have continued to review
the risks and opportunities posed by climate change
and how they might impact our business. Following
the restatement of prior year GHG emissions to take
into account the impact of Autorama on the Group’s
footprint, the Group resubmitted its long-term
targets to the SBTi and these have been validated
and approved. The Group’s GHG emissions have
been audited by a third party, EcoAct, providing
an assurance over emissions reporting.
Looking ahead to next year, the Committee
looks forward to seeing the Group’s progress
with its Climate Transition plan. With the Group’s
commitment to net zero and the increased
volume of emissions as a result of the Autorama
acquisition, a clear and focused action plan will
be required to achieve the Group’s ambitious
target to be net zero by 2040.
Diversity and inclusion
There has been a growing emphasis on the
‘Social’ pillar within ESG. The Group has
continued to focus on and make progress to
improve the diversity and inclusion within the
organisation through well established training
and development programmes. I am pleased
that the Group has set a new diversity target in
line with the Parker Review recommendations.
In September, an all-employee share award was
announced, which builds on the Group’s strong
ownership culture.
Ongoing ESG training
During the year we engaged an advisory team
to deliver annual ESG specific training to the
Corporate Responsibility Committee and the
Group’s Executive Directors. The main objective of
the session was to ensure the Board is up to date
with key ESG corporate regulatory and reporting
developments and what these mean for
Auto Trader. ESG continues to receive heightened
stakeholder focus and disclosure requirements
for companies to continue to evolve, requiring
companies to enhance and standardise their
disclosures, particularly in relation to climate. The
training also provided insight to the Board on the
ESG landscape for investors, their key areas of
interest and how these may impact Auto Trader.
To assist the Committee in successfully overseeing
the Group’s ESG strategy, the Committee will
continue to receive regular training and education
as new ESG challenges and regulations emerge.
Materiality assessment
Conducting business responsibly, with
stakeholders at the heart of our decisions, is core
to our strategy and success. Our materiality
assessment identifies the topics that matter most
to our key stakeholders and where our ESG activities
should focus. The Committee continues to support
the areas identified by management as areas of
focus. To ensure that the topics identified in our last
materiality assessment (2022) remain relevant
to our business we will refresh our materiality
assessment in full in the next financial year.
Measuring progress
It is important to assess the progress being made
across the Group’s ESG commitments and goals
and we use our cultural KPIs for this purpose. I am
pleased to see that there has been positive
progress with the majority of our diversity and
inclusion KPIs and recognise that more work needs
to be done to improve our percentage of leaders
from an ethnically diverse background. Our
employee engagement score remained high at 97%.
Progress towards our net zero target will
continue to be monitored throughout the
coming year to ensure that the Group is on
target to reach its goals.
Over the next year the Committee will continue
to oversee and monitor the business’s
commitments in relation to ESG and continue
to push forward its strategy.
Jeni Mundy
Chair of the Committee
30 May 2024
AT A GLANCE
Providing oversight, scrutiny and
challenge on matters relating
to the Group’s ESG strategy.
OVERVIEW
•
Composed of five Independent
Non-Executive Directors.
•
The Chair of the Board, Executive Directors and
other relevant individuals attend the meetings
when appropriate by invitation.
•
The Assistant Company Secretary acts as
secretary to the Committee.
•
At least three meetings held per year.
OUR PROGRESS IN 2024
•
Target set in line with Parker Review
recommendations.
•
Resubmitted long-term net zero targets which
have been validated and approved by the SBTi.
•
Launch of our all-employee share award.
FOCUS AREAS FOR 2025
•
Complete refresh of our materiality assessment
to ensure focus on the priority issues.
•
Finalise our Climate Transition plan.
•
Carbon Literacy Technology Toolkit
partnership.
WORKING RESPONSIBLY P25
NON-FINANCIAL REPORTING FRAMEWORKS
We continue to evolve our Environmental, Social
and Governance (‘ESG’) reporting to meet the
requirements of leading industry frameworks
and our stakeholders’ expectations. Our
reporting focuses on the Task Force on
Climate-related Financial Disclosures (‘TCFD’)
and the Sustainability Accounting Standards
Board (‘SASB’) standards referencing the SASB’s
reporting framework for the Internet and Media
Services and Media & Entertainment industries.
We have also identified the UN Sustainable
Development Goals (‘SDGs’) which we believe
Auto Trader can make a meaningful contribution to.
TERMS OF REFERENCE
plc.autotrader.co.uk/investors
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Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Report of the Corporate Responsibility Committee
continued
TCFD recommended disclosure
Group progress
Governance
1.
Describe the Board’s oversight of climate related risks
and opportunities.
2.
Describe management’s role in assessing and managing
climate related risks and opportunities.
We have integrated climate governance into our existing governance processes and sought to embed responsibility
for the risks associated with climate change throughout our business.
Oversight of climate risks and opportunities is described in ‘Our environment’ in the Working Responsibly section on page 29.
Strategy
3.
Describe the climate related risks and opportunities the
organisation has identified over the short, medium and long term.
4.
Describe the impact of climate related risks and opportunities on
the organisation’s businesses, strategy and financial planning.
5.
Describe the resilience of the organisation’s strategy, taking
into consideration different climate scenarios.
The global threat of climate change and the Paris Agreement are forcing action and car buyers want to make the shift to more
environmentally friendly vehicles. Public policy is pushing de-carbonisation of vehicles with the ban on the sale of new petrol
and diesel vehicles before 2035. We have also strengthened our environmental strategy to focus on the following areas:
(i)
Auto Trader’s net zero commitments;
(ii)
supporting the automotive and technology industries; and
(iii)
supporting our consumers.
We have undertaken climate scenario analysis and refined its assessment of the risks and opportunities posed by climate
change and how they might impact our business, including consideration of the resilience of our business strategy.
See pages 30 to 33 for more information.
Risk management
6.
Describe the organisation’s processes for identifying
and assessing climate related risks.
7.
Describe the organisation’s processes for managing
climate related risks.
8.
Describe how processes for identifying, assessing and
managing climate related risks are integrated into the
organisation’s overall risk management.
We have a well-established risk management framework that separates responsibilities into three lines of defence – our OLT
and senior leadership; oversight functions, forums and committees; and independent assurance.
The Group risk register includes the risk of climate change as a principal risk.
We have considered various risks and opportunities, which includes both physical and transition factors. We are looking to take
advantage of the opportunities presented by a shift towards electric vehicles and mitigate risks. We have undertaken climate
scenario risk analysis.
See page 34 for more information.
Metrics and targets
9.
Disclose the metrics used by the organisation to assess
climate related risks and opportunities in line with its
strategy and risk management process.
10.
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (‘GHG’) emissions, and the related risks.
11.
Describe the targets used by the organisation to manage
climate related risks and opportunities and performance
against targets.
To help us accurately assess and develop strategies to reach our net zero target, we have broadened the reporting of our GHG
emissions to include a full inventory of Scope 3. We have updated our reporting to include the impact of Autorama.
We are committed to the Science Based Targets initiative and our near-term (2030) and long-term (2040) targets have both been
validated by the SBTi. We are committed to:
(i)
reduce absolute Scope 1 and 2 GHG emissions 50% by FY2030/31 from a FY2022/23 base year;
(ii)
reduce absolute Scope 3 GHG emissions 46.2% over the same timeframe; and
(iii)
reduce absolute Scope 1, 2 and 3 GHG emissions 90% by FY2040/41 from a FY2022/23 base year.
Our GHG emissions have been audited by a third party, EcoAct, providing an assurance over our emissions reporting.
See pages 35 to 39 for more information.
TCFD ALIGNMENT AT A GLANCE
The Task Force on Climate-related Financial Disclosures (‘TCFD’) recommendations are structured around four thematic
areas that represent core elements of how organisations operate: governance, strategy, risk management, and metrics
and targets. We have summarised our progress below and on pages 29 to 39 in our Working Responsibly section, which
includes disclosures consistent with the recommendations of the TCFD.
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Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Report of the Corporate Responsibility Committee
continued
Topic
Accounting metric
Group progress
Environmental footprint of
hardware infrastructure
1.
Total energy consumed.
2. Percentage grid electricity.
3. Percentage renewable.
Scope 1, 2 and 3 GHG emissions disclosed. See page 35 for further information.
Discussion of the integration of environmental considerations
into strategic planning for data centre needs.
We have completed the migration of our data centres to the cloud.
Data privacy, advertising standards
and freedom of expression
Description of policies and practices relating to behavioural
advertising and user privacy.
See page 47 for more information on our approach to data privacy.
List of countries where core products or services are subject
to Government-required monitoring, blocking, content filtering
or censoring.
None, Auto Trader is a UK based company with a predominantly UK based
target audience.
Data security
1.
Number of data breaches.
2.
Percentage involving personally identifiable information (‘PII’).
3. Number of users affected.
We report qualifying incidents to the relevant regulators (for example, the
Information Commissioner’s Office (‘ICO’) in the UK) and impacted individuals,
where we are legally required to do so and within the mandated timeframes.
To the extent that the relevant regulators ever find fault with our data breach
management and/or data security practices, they publish their findings/sanctions
on their websites. There were no such sanctions in 2023/24.
Description of approach to identifying and addressing data security
risks, including use of third-party cyber security standards.
See page 47 for our approach to data security and privacy. We have adopted the
National Institute of Standards and Technology (‘NIST’) Cybersecurity Framework
to manage and reduce cyber security risks.
Employee recruitment, inclusion
and performance
Percentage of employees that are foreign nationals.
The Group has a total of 121 foreign nationals, representing 9.6% of total employees
as at 31 March 2024.
Employee engagement as a percentage.
97% of employees stated they are proud to work for Auto Trader, see page 20 for
further information.
Percentage of gender and racial/ethnic group representation for:
1.
Management.
2. All other employees.
See pages 43 to 44 for further information.
Intellectual property protection
and competitive behaviour
Total amount of monetary losses as a result of legal proceedings
associated with anti-competitive behaviour regulations.
No monetary losses as a result of legal proceedings.
SASB DISCLOSURE TOPICS AND ACCOUNTING METRICS
SASB standards enable businesses around the world to identify, manage and communicate financially material sustainability
information to their investors. The SASB standards are industry specific and identify the minimum set of financially material sustainability
topics and their associated metrics for the typical company in an industry. SASB assigns Auto Trader to Internet & Media Services and the
following disclosure sets out our progress according to the SASB standard for that sector.
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Governance
Directors’ remuneration report
Jill Easterbrook
Chair of the Committee
Dear shareholders,
I am pleased to present, on behalf of the
Board, the Report of the Remuneration
Committee (the ‘Committee’) for the year
ended 31 March 2024.
PERFORMANCE AND REWARD IN 2024
Both financial and operational performance has
been strong during the year. Revenue growth in the
core Auto Trader business was 12% to £529.7 million
(2023: £473.0m); and at a Group level, revenue
grew 14% to £570.9 million (2023: £500.2 million).
Operating profit in the core Auto Trader business
was up 14% at £378.6 million (2023: £332.9 million),
with an operating profit margin of 71% (2023: 70%).
Group operating profit increased by 26% to
£348.7 million (2023: £277.6 million), Group
operating profit margin was 61% (2023: 55%). Basic
earnings per share increased 13% to 28.15p (2023:
25.01p). Adjusted earnings per share increased by
8% to 29.37 pence (2023: 27.12 pence). There have
been continued improvements in the product
offering, enabling customers to compete on
our marketplace through greater access to
data-driven insight and enabling more of the
buying journey to be completed online, all
yielding greater efficiencies for customers. We
have continued to invest in our people, creating an
environment where there is increasing alignment
between employees, customers and shareholders.
Annual bonus
As detailed in last year’s Directors’ remuneration
report, the FY24 annual bonus was based 75%
on adjusted operating profit (adjusted for the
impact of the deferred consideration charge
in relation to the acquisition of Autorama) and
25% on strategic milestones linked to our digital
retailing strategic priority.
The adjusted operating profit outcome was
£359.8m (2023: £316.4m, an increase of +14%),
compared to the stretch target of £365m.
This resulted in a pay-out of 67.2% out of a
maximum of 75% for this element. The Committee
assessed the progress on meeting our digital
retailing strategy milestones and determined that
performance has been excellent and that the
maximum of 25% should pay out for this element.
The overall bonus pay-out is therefore 92.2%
of maximum. Half of this bonus will be deferred
into shares for a two-year period.
Performance Share Plan (‘PSP’)
PSP awards granted in 2021 will vest in August 2024
based on performance over the three years
to 31 March 2024. The award was based 75% on
operating profit growth, 12.5% on revenue growth
and 12.5% on diversity progress, assessed in the
round including the following basket of measures:
• The proportion of women employees in the
Group being 40%.
• The proportion of leadership who are women
being 38%.
• The proportion of ethnically diverse employees
in the Group being 14%.
•
The proportion of leadership who are ethnically
diverse being 10%.
Operating profit growth of 13.8% and revenue
growth of 13.4% over the performance period
were above the set stretch targets, resulting
in the maximum pay-out for these elements.
The Committee assessed that three of the four
diversity targets were met, resulting in a pay-out
of 9.4% of a maximum of 12.5%. The overall PSP
pay-out is therefore 96.9% of maximum. Under
the terms of the PSP holding period, the Directors
will retain the net vested shares received for at
least two years from the point of vesting.
The Committee carefully considered the annual
bonus outcome and the level of PSP award
vesting and concluded that these were a fair
reflection of the underlying performance during
the year and over the past three years against
the stretching targets set and that these
outcomes are appropriate in the context of
the broader shareholder and stakeholder
experience. No discretion has therefore been
exercised in relation to these outcomes.
AT A GLANCE
Core responsibilities – Determining
all elements of remuneration for the
Chair, Executive Directors and senior
management and overseeing reward
arrangements for the wider workforce.
OVERVIEW
•
Composed of five Independent Non-Executive
Directors.
•
The Chair of the Board, Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer
and other relevant individuals including external
advisors are invited to attend the meetings when
appropriate — no person is present during any
discussion relating to their own remuneration.
•
Matt Davies joined Auto Trader as Chair Designate
with effect from 1 July 2023, and following
conclusion of the AGM on 14 September 2023,
has now assumed the role of Company Chair,
succeeding Ed Williams who stepped down from
the Board from this date. He was in attendance at
all meetings since his appointment by invitation.
OUR PROGRESS IN 2024
•
Introduced The One Auto Trader Share Award
as part of our commitment to enhancing
wider workforce reward and extending the
opportunity to be shareholders in the business
to all our employees.
•
Conducted a comprehensive review of our
approach to remuneration ahead of submitting
our revised Directors’ Remuneration Policy to a
shareholder vote at the 2024 AGM. This included
an assessment of overall compensation
opportunities for Executive Directors given the
significant growth the business has experienced
since IPO.
•
Consulted with shareholders on the proposed
changes to the Remuneration Policy and its
implementation and operation in 2025. The
updated Remuneration Policy to be put to vote
at the 2024 AGM is outlined on page 85 of the
Directors’ Remuneration Report.
•
Assessed the achievement of targets for the
FY24 annual bonus and 2021 PSP awards.
•
Set appropriate targets for the FY25 annual
bonus and the PSP awards to be granted in 2024.
•
Approved new share plan rules which will be put
to shareholders for approval at the 2024 AGM.
FOCUS AREAS FOR 2025
•
Appointment of Geeta Gopalan as Remuneration
Committee Chair at the 2024 AGM.
•
Assess the achievement of targets for the FY25
bonus and 2022 PSP awards.
•
Continue to engage with shareholders on
remuneration matters, ensuring sustained
alignment with shareholder interests.
•
Continue to monitor our remuneration
arrangements in the context of our approach to
the wider workforce, executive pay environment,
governance developments and market practice.
Annual statement by the Chair
of the Remuneration Committee
KPIS P18
TERMS OF REFERENCE
plc.autotrader.co.uk/investors
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Governance
£0
£300,000
£600,000
£900,000
£1,200,000
£1,500,000
£0
£100,000
£200,000
£300,000
£400,000
£500,000
£600,000
£700,000
£800,000
£0m
£3.00m
£6.00m
£9.00m
£12.00m
£15.00m
£0m
£500m
£1.00m
£1.50m
£2.00m
£2.50m
£3.00m
£3.50m
£4.00m
Directors’ remuneration report
continued
REMUNERATION POLICY REVIEW
In line with the normal three-year renewal cycle,
our updated Directors’ Remuneration Policy will
be put to a shareholder vote at the 2024 AGM. As
part of this process the Committee undertook a
thorough review of our remuneration framework
and approach during the year.
The review of our existing approach was
conducted based on a number of core principles:
• Remuneration should be consistent with
Auto Trader’s culture, purpose and values,
and should take into account the approach
to pay for all employees.
• Remuneration should align with our strategy
and the interests of shareholders.
• Remuneration should be fair and
appropriately motivating for Executive
Directors, without being excessive.
• Remuneration should be appropriately
positioned for the size and complexity
of the organisation and the role the
executive undertakes.
Approach to reward since IPO
Since our IPO in 2015 Auto Trader has grown
significantly, with the execution of our strategy
alongside a disciplined focus on operations and
cost management resulting in revenues growing
from £255.9m to £570.9m (+123%), operating profit
growing from £133.1m to £348.7m (+162%), and
our market capitalisation increasing from
£2.35bn to more than £6bn, and £1.1bn (net of
the equity raise during COVID-19) being returned
to shareholders through dividends and share
buybacks. The brilliant work of our people has
built a strong position with car buyers, true
partnerships with our customers, and supports an
industry-leading data and technology platform.
Workforce reward
In the context of the growing size and
performance of the Company, we have continued
to invest in our broader employee reward to
support recruitment and retention and to ensure
that we pay colleagues fairly. For our wider
workforce, remuneration is intended to be
positioned around the market median for the
relevant role and in recent years, we have
continued to align pay positioning with market,
we have enhanced our pension offering,
introduced our new all-employee share award,
‘One Auto Trader Share Award’, which provides
colleagues with a share award of 10% of salary to
allow them to share in the success of the business
alongside shareholders (further details below),
and enhanced our broader employee value
proposition through the provision of innovative
benefits and working practices.
Executive Director reward
The current approach to executive pay has
been in place since IPO in 2015. The strong
performance outlined above, however, has not
been accompanied with significant change in
remuneration levels for our Executive Directors.
Incentive opportunities have remained
unchanged since IPO, and base salary increases
over recent years have been behind those for the
wider workforce over this period. The Committee
had been mindful of this growing disparity, and
had intended to address this earlier, but due
to the impact of COVID-19, followed shortly by
the cost-of-living crisis, it was not considered
appropriate to make changes sooner. The
Committee now feels that it is an appropriate
time to review base salaries and incentive
opportunities to ensure that they better reflect
the current size and complexity of Auto Trader.
Current positioning
Revised positioning
SALARY
TOTAL MAXIMUM REMUNERATION
CEO
CFO
CEO
CFO
Market positioning for the CEO and CFO roles compared to FTSE companies
of similar market capitalisation
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Governance
Directors’ remuneration report
continued
To determine what appropriate revised reward
opportunities might be, the Committee undertook
a market data review to help inform our decisions.
The Committee is mindful that market data should
be used with caution and should be thoughtfully
applied. To ensure that it considered a broad
perspective on the market data taking into account
the Company’s size and value to shareholders, as
well as the underlying complexity of its operations,
the Committee reviewed a number of different
peer groups. These groups included FTSE
companies of similar market capitalisation,
companies of similar revenues as well as
companies of similar scale and complexity and
geographical reach. When considering market
positioning against the data, the Committee
took into account the UK-focused nature of our
business, and the number of colleagues in the
business compared to other FTSE listed companies
with a similar market capitalisation.
Taking into account the findings from this review,
the Committee concluded that remuneration
levels for our Executive Directors are significantly
behind market practice, and have not kept pace
with our growth since IPO. As an illustration, the
charts on page 82 show that the current salary
and total remuneration opportunities for the CEO
and CFO are towards the bottom end of practice
compared to companies of similar market
capitalisation (range of £3.9bn to £7.3bn). Although
there was limited data available for the COO role,
based on market examples and the scope of the
role, the Committee believes that this role is
equivalent to that of the CFO, and that internal
parity between these roles would be appropriate.
Workforce context
As noted above for our wider workforce,
remuneration is intended to be positioned around
the market median for the relevant role. Salary
increases for our Executive Directors in recent
years have been lower than the average
Company-wide increases. For the period
between 2019 and 2024 (excluding 2021 when
no increases were made due to COVID-19), the
average annual increase for Executive Directors
was 2.8% while the average annual Company-
wide increase was 4.85%.
The Committee is therefore comfortable that
taking steps to address the current positioning
for the Executive Directors would be consistent
with the approach to remuneration for the wider
workforce and continues to be in line with the
culture of Auto Trader. This market positioning
was also discussed with our Board Engagement
Guild as part of our employee engagement
process, and their feedback was taken into
consideration when determining proposed
changes to remuneration.
AMENDMENTS TO DIRECTORS’ REMUNERATION
Given the market and workforce context
provided above, the significant growth in
scale of Auto Trader, and the Committee’s
commitment to good practice principles,
the Committee concluded that the following
changes to Directors’ remuneration are
necessary in order to provide a fair opportunity
to our senior executives that recognises the
scale of their roles, the talent market we
operate in, and the views of and pay practices
for our wider workforce:
Proposed amendments to Remuneration Policy
• Increase in Performance Share Plan (‘PSP’)
maximum opportunity:
–
As part of moving to a more market
competitive package, reflecting the growth
in Auto Trader since IPO, the Committee
believes it is appropriate for the emphasis
to remain on performance-based pay
over the long term, and on ensuring strong
alignment between executive pay and
shareholder interests. Therefore, it is
proposed that PSP award opportunities
are increased by 50% of salary. The CEO’s
normal award would be set at 250% of salary
and the CFO’s and COO’s awards would be
set at 200% of salary.
–
These proposed PSP opportunities,
alongside the increases to salary levels
discussed below, would result in total
maximum remuneration opportunities for
Executive Directors still being between
lower quartile and median versus the market
capitalisation peer group (illustrated in
charts on page 82).
No other material changes are proposed to the
Directors’ Remuneration Policy including to
annual bonus opportunities which remain at 150%
of base salary for the CEO and 130% of base
salary for the CFO and COO.
Salary review
As discussed above, one of the findings of the
remuneration review was that the salaries for our
Executive Directors were positioned towards the
bottom end of market practice. Given salaries
are the main driver for the positioning of total
remuneration opportunities, this was impacting
the overall positioning of total compensation.
Recognising the growth of Auto Trader since IPO,
the Committee decided it was appropriate to
increase salaries for the Executive Directors with
effect from 1 July 2024. The CEO salary will
increase by 11.7% to £700,000, the COO salary will
increase by 12.7% to £435,000 (on a FTE basis), and
the CFO salary will increase by 19.5% to £435,000.
These increases are ahead of the planned average
Company-wide increase of c.4.5%. However, as
noted above, salary increases for our Executive
Directors have historically been below the average
annual increase for the wider workforce, and
their current salary positioning at the bottom end
of the market is inconsistent with the targeted
positioning we apply for the rest of the workforce.
The Committee believes that this salary
positioning is a fairer refection of the scope of
these roles and the current scale of Auto Trader.
The current positioning versus the market means
that, even after these increases are applied, base
salaries would still be placed below the lower
quartile of the market capitalisation peer group
as shown in the charts on the previous page.
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Governance
Directors’ remuneration report
continued
The proposed increase for the CFO is larger than
for the other Executive Directors as when Jamie
Warner was appointed to the role in March 2020,
his salary was positioned towards the lower end
to reflect his status as a newly promoted CFO.
Since appointment, Jamie has gained experience
and has demonstrated strong performance in
the role. Auto Trader has also grown significantly
in this period, which has resulted in Jamie’s
current salary being the lowest in the market
capitalisation peer group.
Going forward, the current intention is for salary
increases to normally be in line with those for the
wider workforce for the duration of the Policy.
The Committee believes that the changes
outlined above are appropriate to reflect the
growth of the organisation and the contribution
of the Executives to delivering this growth. They
are consistent with our values and culture, our
approach to reward throughout the organisation
and they better position the Company in terms of
the future recruitment and retention of talent.
Performance measures for 2024/5 incentives
In recent years, the primary financial performance
measure used for both annual bonus and PSP
awards has been operating profit. Although this
is a key performance indicator of the business,
the Committee is aware that it is good practice
to assess performance across a wider number
of metrics. For the 2024 PSP awards, the
operating profit growth measure will be replaced
with Earnings Per Share (EPS) growth. EPS is also
a KPI for the business and will further strengthen
the alignment between PSP outcomes and
shareholder interests.
Therefore, PSP awards granted in 2024 will be
based on 70% EPS growth, 20% revenue growth,
and 10% carbon reduction targets, with an
underpin linked to progress on our diversity
ambitions. The PSP targets are disclosed in
full on page 95 onwards.
For the FY25 annual bonus, the bonus will
continue to be weighted as 75% on operating
profit and 25% on strategic measures linked to
the achievement of stretching strategic and
operational milestones against our digital
retailing strategy.
Engagement with shareholders
During the remuneration review process, we
engaged with our top 20 shareholders as well as
the major proxy bodies to explain our proposed
approach for the renewal of our Policy. We were
pleased with the feedback and level of support
for the proposals put forward, and the final
proposals reflect the feedback provided during
this process. The Committee is grateful to
shareholders for the time they have given to
the consultation process and the feedback
provided, both of which have helped facilitate
a more robust decision-making process.
All-employee share award for wider workforce
As part of our commitment to our wider
workforce reward, our One Auto Trader culture,
and to align employees with shareholder
interests, in November 2023 we introduced The
One Auto Trader Share Award under which
eligible colleagues will receive an annual award
of shares worth 10% of salary which will vest over
three years subject to continued employment.
Executive Directors are not eligible to receive
these awards. We have been delighted with how
these awards have been received by colleagues
and believe that this scheme will help encourage
share ownership within the organisation, and will
act as a powerful tool to attract and retain the
talent we need to continue to grow.
Share plan rules
Our current share plans, which were adopted
at the IPO in 2015, are due to expire soon.
Therefore at the 2024 AGM we will also be
asking shareholders to approve the adoption
of new share plan rules including a Long Term
Incentive Plan under which LTIP awards and The
One Auto Trader Share Awards will be made, a
Deferred Bonus Share Plan, a Save As You Earn
(SAYE) plan and a Share Incentive Plan. Details
of the terms of these new plans have been
included as part of the Notice of AGM.
LOOKING AHEAD
I hope that you will support our 2024 Remuneration
Policy and 2024 Directors’ remuneration report at
the AGM in September. As I will reach the end of
my third three-year term at the 2024 AGM I will be
standing down as a Non-Executive Director and
as Chair of the Remuneration Committee.
As outlined in the Nomination Committee
Report, Geeta Gopalan has been appointed
as a Non-Executive Director and member of the
Remuneration Committee from 1 May 2024, and
Amanda James will join the Board as a Non-
Executive Director with effect from 1 July 2024
and will join the Remuneration Committee at that
time. Geeta will be appointed as Remuneration
Committee Chair following the 2024 AGM.
Both Geeta and I will be in attendance at the
AGM, and I will continue to be available prior
to the AGM to answer any questions.
I am proud to have served on the Board since
IPO. The business has gone from strength to
strength under the stewardship of its
exceptional management team and I wish the
Company every success for the future. I would
also like to particularly thank our investors who
have engaged with us and supported us in the
design and implementation of our remuneration
arrangements during my period as Remuneration
Committee Chair.
In the meantime, I welcome any feedback
that you may have, which can be submitted
to ir@autotrader.co.uk.
Jill Easterbrook
Chair of the Committee
30 May 2024
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Governance
75%
Operating profit
25%
Strategic:
milestones linked
to our digital
retailing strategic
priority
Maximum
opportunity
CEO:
150% of salary
COO and CFO:
130% of salary
50%
of bonus
paid in cash
50%
of bonus deferred
into shares for two years
Malus and clawback
provisions apply.
FY25 bonus metrics
Maximum
opportunity
CEO:
250% of salary
COO and CFO:
200% of salary
3-year
performance period
70%
Earnings
Per Share (EPS)
growth
1
20%
Revenue
growth
2
10%
Carbon
reduction
Awards subject to a
diversity underpin.
2-year
holding period
Malus and clawback
provisions apply.
2024 PSP metrics
Directors’ remuneration report
continued
REMUNERATION AT A GLANCE: HOW EXECUTIVES WILL BE PAID IN FUTURE YEARS
ANNUAL BONUS
To incentivise and reward the achievement of annual financial and operational objectives
which are closely linked to the corporate strategy.
FIXED PAY: TO RECRUIT AND REWARD EXECUTIVES OF A HIGH CALIBRE
Remuneration for the year ending 31 March 2025
Salary
CEO: £700,000
COO: £391,500
CFO: £435,000
As outlined above in the Chair’s statement, recognising the growth of Auto Trader since IPO, the Committee decided it was appropriate to increase salaries 11.7%
for the CEO, 19.5% for the CFO and 12.7% for the COO. This is above the planned average Company-wide increase of c.4.5%. The salary review date is 1 July 2024.
The COO’s salary has been pro-rated to reflect that she works 4.5 days per week. Her full-time equivalent salary is £435,000, in line with that of the CFO.
Pension
7% of salary
Aligned with the maximum pension opportunity for the wider workforce.
Benefits
Includes private medical cover, life assurance and income protection insurance.
We are seeking shareholder approval for a revised Policy at the 2024 AGM. An overview of our Policy and how it is proposed to apply in 2024/5 is set out below:
PERFORMANCE SHARE PLAN
To incentivise and recognise successful execution of the business strategy over the longer term.
To align the long-term interests of Executive Directors with those of shareholders.
SHAREHOLDING GUIDELINES
GUIDELINES APPLY IN-POST, AND EXTEND BEYOND TENURE IN-POST GUIDELINES
200% of salary.
POST-EMPLOYMENT GUIDELINES
100% of in-post shareholding guideline (or actual shareholding if lower)
for a period of two years following departure.
1.
Compound annual growth rate targets have been set as three-year growth targets with reference to performance for 31 March 2024 as the base year. Earnings Per Share will be based on Group Earnings Per Share, but excluding the impact of the
deferred consideration charges in relation to the acquisition of Autorama, which are being spread over FY23 and FY24. This approach provides a like-for-like comparison for assessing performance across the three-year performance period.
2.
Revenue will be based on Group revenue, but excluding Vehicle & Accessory Sales attributable to Autorama, as this revenue does not generate any profit.
To incentivise and reward the achievement of
long-term financial and ESG objectives which
are aligned to our corporate strategy and our
ESG ambitions.
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Governance
This Remuneration Policy will be put to
shareholders for approval in a binding vote at
the AGM on 19 September 2024 and if approved
will be effective from this date.
POLICY OVERVIEW
As outlined in the Remuneration Committee
Chair’s statement, in light of the requirement
to seek shareholder approval for a new
Remuneration Policy, the Committee undertook
a thorough review of the current remuneration
arrangements for Executive Directors,
considering a range of potential approaches.
The findings of our review which also considered
current market positioning indicated our current
Executive Director remuneration levels
considerably lag market practice. Given this
market context, the significant growth in scale of
the business since the IPO, and the Committee’s
commitment to good practice principles, the
Committee concluded that the following
changes are necessary to the previous policy
approved at the 2021 AGM:
• Under the Policy, the PSP maximum award
will be increased to 250% of base salary
(up to 300% of base salary in exceptional
circumstances).
• Other minor changes have been made to the
Policy to simplify and/or align with typical
market practice.
The Policy is structured so as to ensure that the
main elements of remuneration are linked to
Company strategy, in line with best practice and
aligned with shareholders’ interests. The Policy
is designed to reward Executive Directors by
offering competitive remuneration packages,
which are prudently constructed, sufficiently
stretching and linked to long-term profitability.
In promoting these objectives, the Policy aims
to be simple in design, transparent and
structured so as to adhere to the principles of
good corporate governance and appropriate
risk management.
This Policy has been prepared in accordance
with the Companies Act 2006, Schedule 8 of the
Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (as
amended in 2013) and the UKLA’s Listing Rules.
This Policy is subject to a binding shareholder
vote at the AGM on 19 September 2024.
In reaching its decisions, the Committee also
considered the following principles as
recommended in the revised 2018 UK Corporate
Governance Code.
Clarity:
The Policy is designed to allow our
remuneration arrangements to be structured
such that they clearly support, in a sustainable
way, the financial and strategic objectives of the
Company. The Committee remains committed
to reporting on its remuneration practices in a
transparent, balanced and understandable way.
Simplicity:
The Policy consists of three main
elements: fixed pay (salary, benefits and
pension), an annual bonus and a long-term
incentive award. The metrics used in our incentive
plans directly link back to our key strategic
ambitions and values and provide a clear link to
the shareholder experience. The Committee
may change measures for future years to ensure
they continue to be aligned with our strategy.
Risk:
The Policy is in line with our risk appetite.
A robust malus and clawback policy is in place,
and the Committee has the discretion to reduce
pay outcomes where these are not considered
to represent overall Company performance or
the shareholder experience. Furthermore, our
bonus deferral, post-cessation shareholding
requirement and PSP holding period ensure
that Executive Directors are motivated to deliver
sustainable performance.
Predictability:
The Committee considers the
impact of various performance outcomes on
incentive levels when determining quantum. These
can be seen in the scenario charts on page 90.
Proportionality:
A substantial portion of the
package comprises performance-based
reward, which is linked to our strategic priorities
and underpinned by a robust target-setting
process. We are mindful of the alignment with
our workforce, the shareholder experience and
our values and culture when considering the
right and proportional approach to pay.
Alignment to culture:
When developing our
Policy, the Committee reviewed our approach
to remuneration throughout the organisation
to ensure that arrangements are appropriate in
the context of the wider workforce. The themes
considered include workforce demographics,
engagement levels and diversity to ensure that
executive remuneration is appropriate from a
cultural perspective. Our FY25 PSP award includes
carbon reduction objectives with the vesting
of the award subject to a diversity underpin.
Directors’ remuneration report
continued
Directors’ Remuneration Policy
HOW THE VIEWS OF SHAREHOLDERS AND
EMPLOYEES ARE TAKEN INTO ACCOUNT
The Committee engages with the wider
workforce through a Board Engagement Guild,
which all Non-Executive Directors attend. This is
the primary mechanism through which our Board
engages with employees, creating a platform for
employees to share their experiences, views, and
questions directly with Non-Executive Directors.
The Board Engagement Guild has representatives
from across different parts of the business and
canvasses views and opinions from colleagues to
share with the Board, covering topics including
potential changes to the executive Remuneration
Policy, as well as gender and ethnicity pay gap,
navigating the cost-of-living crisis, Connected
Working and our annual employee engagement
survey results.
Additionally, the Company regularly undertakes
an employee engagement survey which includes
questions to understand employees’ views on
their own remuneration and benefits, which the
Committee also reviews. The Committee aims to
understand job satisfaction, measure opinion,
and identify where changes may be necessary.
In our most recent survey in April 2024 we are
pleased that 97% of our employees are proud
to work at Auto Trader (2023: 91%).
As demonstrated in our decision-making
process behind our Policy review this year, the
Committee is committed to a constructive
dialogue with shareholders in order to ensure
that our Remuneration Policy is aligned with
their views. The Committee consulted with
shareholders in advance of submitting our
revised Policy to the shareholder vote, and
carefully considered the feedback received
from each shareholder ahead of time. In
conjunction with any additional feedback
received from time to time, this will be
considered as part of the Committee’s annual
review of how we intend to implement our
Remuneration Policy.
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Governance
REMUNERATION POLICY FOR EXECUTIVE DIRECTORS
Our Policy is designed to offer competitive but not excessive remuneration, so that there is a significant weighting towards performance-based elements. A significant proportion of our variable pay is
delivered in shares with deferral and holding periods being mandatory, and with appropriate recovery and withholding provisions in place to safeguard against any overpayments in the event of certain
negative events occurring. The table below provides a full summary of the Policy elements for the Executive Directors.
Element
Purpose and
link to strategy
Operation and performance conditions
Maximum opportunity
Performance assessment
Salary
To recruit and
reward executives
of high calibre.
Recognises individual’s
experience,
responsibility and
performance.
Salaries are normally reviewed annually with changes
effective from 1 July but may be reviewed at other times
if considered appropriate.
Salary reviews will consider:
• personal performance;
• Group performance;
•
the nature and scope of the role;
•
the individual’s experience;
•
increases elsewhere in the Company; and
•
market practice at other companies of a similar
size and complexity.
Periodic reviews of market practice (for example, in
comparable companies in terms of size and complexity)
will also be undertaken.
The Committee considers the impact of any salary
increase on the total remuneration package.
There is no prescribed maximum salary level or salary
increase; however, any base salary increases will normally
be in line with the percentage increases awarded to other
employees of the Group.
However, increases may be made outside of this policy
in appropriate circumstances, such as:
•
Where a Director is appointed on a salary that is at the
lower end of the market practice range, larger increases
may be awarded as the executive gains experience to
move the salary closer to a more typical market level.
•
Where there has been a change in the nature and scope
of the role.
•
Where there has been a significant and sustained
change in the size and complexity of the business.
•
Where there has been a significant change in
market practice.
The Committee reviews the salaries of Executive Directors
each year taking due account of all the factors described
in how the salary policy operates.
Benefits
To provide competitive
benefits to ensure the
wellbeing of employees.
Executive Directors are entitled to the following benefits:
• life assurance;
•
income protection insurance; and
•
private medical insurance.
The Committee may determine that Executive Directors
should receive additional reasonable benefits if
appropriate, taking into account typical market practice
and practice throughout the Group.
Executive Directors may be reimbursed for all reasonable
expenses and the Company may settle any tax incurred
in relation to these.
Where an Executive Director is required to relocate to
perform their role, they may be provided with reasonable
benefits as determined by the Committee in connection
with this relocation (on either a one-off or ongoing basis),
including any benefits such as housing, travel or
education allowances.
The value of benefits is not capped as it is determined
by the cost to the Company, which may vary.
N/A
Pension
To provide retirement
benefits for employees.
Directors are eligible to receive employer contributions to
the Company’s pension plan (which is a defined contribution
plan), a salary supplement in lieu of pension benefits
(or combination of the above) or similar arrangement.
Maximum contribution in line with the contribution of
other employees in the Group, currently 7% of salary.
N/A
Directors’ remuneration report
continued
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Governance
Element
Purpose and
link to strategy
Operation and performance conditions
Maximum opportunity
Performance assessment
Annual bonus
To incentivise and
reward the achievement
of annual financial
and operational
objectives which are
closely linked to the
corporate strategy.
The annual bonus is based predominantly on stretching
financial and operational objectives set at the beginning
of the year and assessed by the Committee following the
year end.
Half of any bonus earned is normally subject to deferral
into shares, typically for a period of two years from the
date of award. The deferred shares will vest subject to
continued employment, but there are no further
performance targets.
A dividend equivalent provision applies, as described below.
Recovery and withholding provisions apply, as described
on page 89.
Participation in the bonus plan, and all bonus payments,
are at the discretion of the Committee.
Maximum of 150% of salary as determined
by the Committee.
Financial measures will normally represent the majority of
bonus measures, with strategic or operational or personal
non-financial targets representing the balance (if any).
Not more than 20% of each part of the bonus will be payable
for achieving the relevant threshold hurdle.
Measures and weightings may change each year to reflect
any year-on-year changes to business priorities.
The Committee has the discretion to adjust targets in
appropriate circumstances for any exceptional events
(including acquisitions or disposals) that may arise during
the year.
The Committee also has the discretion to adjust the bonus
outcome if it is not considered to be reflective of underlying
financial or non-financial performance of the business or the
performance of the individual over the performance period or
where the outcome is not considered appropriate in the context
of the experience of shareholders or other stakeholders.
Performance Share
Plan (‘PSP’)
To incentivise and
recognise successful
execution of the
business strategy
over the longer term.
To align the long-term
interests of Executive
Directors with those
of shareholders.
Awards will normally be made annually under the PSP,
and will take the form of nil-cost options or conditional
share awards. Participation and individual award levels
will be determined at the discretion of the Committee
within the Policy.
Awards normally vest after three years subject to the
extent to which the performance conditions specified
for the awards are satisfied, and continued service.
Recovery and withholding provisions apply, as described
on page 89.
Executive Directors are required to retain vested shares
delivered under the PSP for at least two years from the
point of vesting, subject to the terms of the holding period
described below.
A dividend equivalent provision applies, as
described below.
Normal: maximum of 250% of salary as determined
by the Committee.
Exceptional circumstances: maximum of 300% of salary
as determined by the Committee.
The vesting of awards will be subject to the achievement
of performance metrics which may be financial, share price
or strategic in nature.
The metrics and weightings for each award will be set
out in the Annual Report on Remuneration. Any strategic
measure(s) will account for no more than 25% of the award.
No more than 25% of the award vests for achieving
threshold performance.
The Committee has the discretion to adjust targets in
appropriate circumstances for any exceptional events
(including acquisitions and disposals) that arise during
the performance period.
The Committee retains the discretion to adjust the vesting
outcome if it is not considered to be reflective of underlying
financial or non-financial performance of the business or the
performance of the individual over the performance period or
where the outcome is not considered appropriate in the context
of the experience of shareholders or other stakeholders.
All-employee
Share Plans
To encourage
Group-wide equity
ownership across all
employees, and create
a culture of ownership.
The Company operates two all-employee tax-advantaged
plans, namely a Save As You Earn (‘SAYE’), and a Share
Incentive Plan (‘SIP’) for the benefit of Group employees.
The operation of these plans will be at the discretion of
the Committee, and Executive Directors will be eligible
to participate on the same basis as other employees.
SAYE and SIP – Maximum permitted based on HMRC
limits from time to time.
N/A
Directors’ remuneration report
continued
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Governance
Element
Purpose and
link to strategy
Operation and performance conditions
Maximum opportunity
Performance assessment
Share ownership
guidelines
To increase alignment
between executives and
shareholders.
In-post:
Executive Directors are expected to build and
maintain a holding of shares in the Company. This is
expected to be built through retaining a minimum of 50%
of the net of tax vested PSP and DABP shares, until the
guideline level is met.
The minimum share ownership guideline is 200% of salary
for current Executive Directors.
Post-cessation:
Following stepping down from the Board,
Executive Directors will normally be expected to maintain
a minimum shareholding of 200% of salary (or actual
shareholding if lower) for two years. The Committee
retains discretion to waive this guideline or disapply the
guideline from certain shares (for example purchased
shares) if it is not considered to be appropriate in the
specific circumstance.
Not applicable.
N/A
Directors’ remuneration report
continued
NOTES TO THE POLICY TABLE
Share plan rules
Deferred awards have previously been granted under
the Deferred Annual Bonus Plan (‘DABP’) and from the
2024 AGM onwards are intended to be granted under the
new Deferred Bonus Plan. In this Policy, where relevant,
references to the DABP include the new Deferred Bonus
Plan or any similar plan adopted in the future.
PSP awards have previously been granted under the
Performance Share Plan. From the 2024 AGM onwards
awards are intended to be granted under the new Long
Term Incentive Plan. In this Policy, where relevant,
references to the PSP include the new Long Term
Incentive Plan or any similar plan adopted in the future.
Recovery and withholding provisions
Recovery and withholding provisions apply to variable
pay, to enable the Company to recover amounts paid
under the annual bonus and PSP awards. For bonuses
payable in respect of 2024/25 and PSP awards granted
in respect of 2024/25, the provisions may be applied in
the circumstances described below for a period of
three years from payment of any cash bonus, three
years from grant in the case of any DABP award and
six years from grant in the case of any PSP award:
•
a material misstatement of the audited financial
statements;
•
an error in assessing a performance condition or
in the information or assumptions on which a PSP
award or DABP award was granted or vests;
•
a material failure of risk management;
•
individual gross misconduct;
•
serious reputational damage;
•
a material corporate failure; or
•
any other circumstances which the Committee
considers is similar in nature or effect.
Should such an event be suspected, the Committee
may extend the timeline to allow for an investigation
of the event. Recovery may be satisfied in a variety of
ways including through the reduction of outstanding
deferred awards, reduction of net bonus or PSP vesting
and seeking cash repayment.
Dividend equivalents
DABP and PSP awards may, at the Committee’s
discretion, also include the right to receive an
additional benefit (in cash or shares) determined by
reference to the value of dividends paid on vested
shares, which may assume the reinvestment of
dividends on a cumulative basis.
Discretion available under the Policy
In order to ensure that the Remuneration Policy is
capable of achieving its intended aims, the Committee
retains certain discretions over the operation of the
variable pay policy. These include the ability to vary the
operation of the plans in certain circumstances (such as
change of control, rights issue, corporate restructuring
event, special dividend or acquisition or disposal)
including the timing and determination of pay-outs/
vesting; and making appropriate adjustments to
performance measures or targets as necessary to
ensure that performance conditions remain
appropriate. However, it should be noted that in the
event that the measures or targets are varied for
outstanding awards in the light of a corporate event,
the revised targets would not normally be materially
less difficult to satisfy.
In line with best practice and shareholder expectations,
the Committee retains the discretion to adjust the
vesting outcome if it is not considered to be reflective
of underlying financial or non-financial performance
of the business or the performance of the individual
over the performance period or where the outcome
is not considered appropriate in the context of the
experience of shareholders or other stakeholders.
Should these discretions be used, they would be
explained in the Annual Report on Remuneration
and may be subject to consultation with shareholders
as appropriate.
Operation of the PSP holding period
Executive Directors are required to retain vested shares
delivered under the PSP (on a net of tax basis, where
applicable) for at least two years from the point of
vesting. In exceptional circumstances, the Committee
may at its discretion allow participants to sell, transfer,
assign or dispose of some or all of the PSP shares before
the end of the holding period.
Previously agreed payment
The Committee reserves the right to make any
remuneration payments and/or payments for loss of
office (including exercising any discretions available to
it in connection with such payments) notwithstanding
that they are not in line with the Policy set out above
where the terms of the payment were agreed (i) before
17 September 2015 (the date the Company’s first
shareholder-approved Directors’ Remuneration Policy
came into effect); (ii) before the Policy set out above
came into effect, provided that the terms of the payment
were consistent with the shareholder-approved
Directors’ Remuneration Policy in force at the time they
were agreed; or (iii) at a time when the relevant individual
was not a Director of the Company and, in the opinion of
the Committee, the payment was not in consideration
for the individual becoming a Director of the Company.
For these purposes, ‘payments’ includes the Committee
satisfying awards of variable remuneration and, in
relation to an award over shares, the terms of the
payment are ‘agreed’ at the time the award is granted.
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Governance
Minimu
m
On-target
Maximum
Maximum + share price appreciation
£0k
£1,000k
£2,000k
£3,000k
£4,000k
£5,000k
100%
35%
21%
17%
£749k
£2,149k
£3,549k
£4,494k
24%
30%
24%
41%
49%
39%
20%
Minimu
m
On-target
Maximum
Maximum + share price appreciation
£0k
£500k
£1,000k
£1,500k
£2,000k
£2,500k
100%
39%
24%
20%
£419k
£1,065k
£1,711k
£2,102k
24%
30%
24%
37%
46%
37%
19%
Minimu
m
On-target
Maximum
Maximum + share price appreciation
£0k
£500k
£1,000k
£1,500k
£2,000k
£2,500k
100%
39%
24%
20%
£465k
£1,183k
£1,901k
£2,336k
24%
30%
24%
37%
46%
37%
19%
SELECTION OF PERFORMANCE MEASURES
Annual bonus performance measures are
selected annually to reflect the Group’s key
strategic initiatives for the year and include both
financial and strategic or operational non-
financial objectives. A majority weighting will be
placed on financial performance, ensuring that
pay-outs are closely linked to the Group’s
performance and the execution of strategy.
PSP awards to be granted in 2024 will be subject
to the achievement of Earnings Per Share (EPS)
growth, total Group revenue growth and a
carbon reduction measure. The Committee
believes this combination of measures ensures
that rewards are linked to long-term shareholder
value creation and the culture and values of the
business. The performance metrics used and
their weighting may differ for future awards to
ensure they continue to support the Company’s
long-term growth strategy.
DIFFERENCES IN REMUNERATION
POLICY BETWEEN EXECUTIVE DIRECTORS
AND OTHER EMPLOYEES
Whilst the Policy described above applies
specifically to the Company’s Executive
Directors, the Policy principles are designed
with due regard to employees across the Group.
‘At risk, performance-linked pay’ is restricted to
the most senior employees in the Company, as
it is this group that is most influential in driving
corporate performance.
The Committee is committed to promoting a
culture of widespread share ownership across
all levels of the organisation. At senior levels
this has predominantly been achieved through
participation in performance-based incentive
plans, whilst across the rest of the workforce
this has been supported via all-employee share
plans. In 2023 the Company introduced The
One Auto Trader Share Award for the wider
workforce under which all employees were
granted an award equivalent to 10% of base
salary. Executive Directors are not eligible to
be granted The One Auto Trader Share Award.
Directors’ remuneration report
continued
ILLUSTRATION OF APPLICATION OF REMUNERATION POLICY
The charts below illustrate how the composition of Executive Directors’ remuneration
packages varies under three different performance scenarios: threshold, on-target and
maximum, both as a percentage of total remuneration opportunity and as a total value.
It should be noted that these scenarios are for illustrative purposes only and have been
determined using the approach specified in the regulations. They should not be
construed as profit forecasts or a prediction of share price movements.
CEO
COO
CFO
Fixed pay
Annual bonus
PSP
Share price appreciation
Assumptions
• Minimum = fixed pay (base salary, benefits
and pension).
• Target = fixed pay plus 50% of maximum bonus
pay-out, 50% vesting under the PSP.
• Maximum = fixed pay plus 100% of bonus
pay-out, 100% vesting under the PSP.
• Maximum + share price growth = fixed pay
plus 100% of bonus pay-out, 100% vesting under
the PSP with a 50% increase in share price
applied to the PSP award.
Salary levels are based on and reflect pay
increases applying from 1 July 2024. Annual variable
remuneration is based on the salary applying from
1 July 2024. Long-term variable remuneration is
based on the salary at expected date of grant.
The value of taxable benefits is as disclosed in the
single figure for the year ending 31 March 2024.
Aside from the maximum + share price growth
scenario, no share price increase is assumed and
any dividend equivalents payable are not included.
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Governance
Directors’ remuneration report
continued
SERVICE CONTRACTS AND POLICY FOR
PAYMENTS ON LOSS OF OFFICE
The service contracts for the Executive Directors
are terminable by either the Company or the
Executive Director on 12 months’ notice and make
provision for early termination by way of payment of
a cash sum equal to 12 months’ salary and pension.
The Company may continue to provide benefits until
the end of the notice period or may make a payment
to the value of 12 months’ contractual benefits.
Payment in lieu of notice can be paid either as a
lump sum or in equal monthly instalments over
the notice period and will normally be subject
to mitigation. The Committee will consider the
particular circumstances of each leaver and
retains flexibility as to at what point, and the
extent to which, payments are reduced.
The Committee reserves the right to make any
other payments in connection with a Director’s
cessation of office or employment where the
payments are made in good faith in discharge
Annual bonus on termination
There is no automatic or contractual right
to bonus payment. At the discretion of the
Committee, for certain leavers, a bonus may
become payable at the normal payment date
based on performance. Such bonus would
normally be pro-rated for time in employment
unless the Committee determines otherwise. At
its discretion the Committee may also pay such
bonus at the time of cessation of employment
based on performance to that date. Any bonus
paid may be paid 100% in cash for the year of
departure or preceding financial year if the
bonus for that year has not yet been awarded
at the date of cessation of employment. Should
the Committee decide to make a payment in
such circumstances, the rationale would be fully
disclosed in the Annual Report on Remuneration.
DABP awards on termination
Normally, any existing unvested awards under
the DABP will lapse on termination. However,
under the rules of the DABP, in certain prescribed
circumstances (namely death, sale of employing
company from the business or otherwise at the
discretion of the Committee), ‘good leaver’ status
applies. In exercising its discretion as to whether
an Executive Director should be treated as a good
leaver, the Committee will take into account the
performance of the individual and the reasons
for their departure and, in the event of this
determination being made, will set out its rationale
in the following Annual Report on Remuneration.
Where an award does not lapse it will vest on
cessation (or on such later date as the Committee
determines). Awards will normally vest in full,
unless the Committee determines otherwise.
PSP on termination
Normally, unvested PSP awards will lapse upon
a participant ceasing to hold employment.
However, under the rules of the PSP, in certain
prescribed circumstances (namely death, sale
of employing company from the business or
otherwise at the discretion of the Committee),
‘good leaver’ status applies.
In exercising its discretion as to whether an
Executive Director should be treated as a good
leaver, the Committee will take into account the
performance of the individual and the reasons
for their departure and, in the event of this
determination being made, will set out its
rationale in the following Annual Report on
Remuneration. Awards will typically vest on
the originally anticipated date, although the
Committee has discretion to vest awards
sooner (and to assess performance conditions
accordingly if vesting occurs before the end
of the performance period).
The extent to which PSP awards will vest in good
leaver circumstances will depend on:
(i)
the extent to which the performance
conditions have been satisfied at the end of
the performance period (or such other relevant
time as the Committee determines); and
(ii)
unless the Committee determines otherwise,
the pro-rating of the award determined by
the period of time served in employment
during the performance period.
Change of control
In the event of a change of control of the
Company or other relevant event, PSP awards,
DABP awards, SIP awards, and options under
the SAYE scheme will vest early. Vesting of PSP
awards will be determined taking into account
any relevant performance condition and,
unless the Committee determines otherwise,
the pro-rating of the award by reference to the
proportion of the performance period that has
elapsed at the date of the relevant event.
DABP awards shall vest in full. SIP awards and
SAYE options will vest in accordance with the
rules of the relevant plan on the same basis as
for other employees.
of an existing legal obligation (or by way of
damages for breach of such an obligation) or
by way of settlement of any claim arising in
connection with the cessation of a Director’s
office or employment or for any fees for
outplacement assistance and/or the Director’s
legal and/or professional advice fees in
connection with his/her cessation of office or
employment. In the event of cessation of
employment incentive plan awards will be
treated in accordance with the relevant plan
rules. SAYE options will become exercisable
on cessation of employment to the extent
permitted in accordance with the rules of
the SAYE scheme, which does not provide for
the exercise of discretion by the Committee.
On cessation, a payment may be made in
respect of accrued but untaken holiday.
Relevant details will be provided in the
Annual Report on Remuneration should
such circumstances apply.
In summary, the contractual provisions on termination where the Company elects to make a
payment in lieu of notice are as follows:
Performance measures
Detailed terms
Notice period
12 months by either party.
Termination payments
over the notice period
100% of salary and pension contribution for the relevant period.
The Company may continue to provide benefits until the end of the notice period or may
make a payment to the value of contractual benefits for the relevant period.
Change of control
No enhanced provisions on a change of control.
The Executive Directors are subject to annual re-election at the AGM. Service contracts are available
for inspection at the Company’s registered office or on request from ir@autotrader.co.uk. The CEO’s
service contract date is 1 April 2017, the CFO’s service contract date is 1 March 2020, and the COO’s
service contract date is 1 May 2019.
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Governance
Directors’ remuneration report
continued
APPROACH TO RECRUITMENT AND PROMOTIONS
The recruitment package for a new Executive
Director would normally be set in accordance
with the terms of the Company’s approved
Remuneration Policy. Currently, this would
include an annual bonus opportunity of up
to 150% of salary and policy PSP award of up
to 250% of salary (other than in exceptional
circumstances where up to 300% of salary may
be made).The Committee, however, retains
discretion to include any other remuneration
component or award which it feels is
appropriate taking into account the specific
circumstances of the recruitment, subject to the
limit on variable remuneration of 400% of salary
(450% of salary in exceptional circumstances).
This limit does not include any payment(s)
or award(s) made to ‘buy out’ remuneration
forfeited on leaving a previous employer. The
key terms and rationale for any such component
would be disclosed as appropriate in that year’s
Annual Report on Remuneration.
On recruitment, salary will be set so as to reflect
the individual’s experience and skills. It may be set
at a level below the normal market rate, with
phased increases greater than those received by
others as the Executive Director gains experience.
Where an individual forfeits outstanding variable
pay opportunities or contractual rights at a
previous employer as a result of appointment, the
Committee may offer compensatory payments or
awards, in such form as the Committee considers
appropriate taking into account relevant factors
which may include the form of awards, expected
value and vesting timeframe of forfeited
opportunities. When determining any such ‘buyout’,
the principle would be that awards would be on a
‘like-for-like’ basis unless this is considered by the
Committee not to be practical or appropriate.
Where an Executive Director is required to
relocate from their home location to take up their
role, the Committee may provide assistance with
relocation (either via one-off or ongoing
payments or benefits).
If an internal candidate is promoted to the Board,
legacy terms and conditions would normally be
honoured, including pension entitlements and
any outstanding incentive awards.
In the event of recruitment, the Committee may
grant awards to a new Executive Director relying
on the exemption in the Listing Rules which allows
for the grant of awards, to facilitate, in unusual
circumstances, the recruitment of an Executive
Director, without seeking prior shareholder
approval or under any other appropriate Company
incentive plan.
POLICY ON EXTERNAL APPOINTMENTS
Subject to Board approval, Executive Directors
are permitted to take on one non-executive
position with another company and to retain
their fees in respect of such position.
Additional appointments may be undertaken
in exceptional circumstances.
REMUNERATION POLICY FOR THE CHAIR AND NON-EXECUTIVE DIRECTORS
The Non-Executive Directors do not have service contracts with the Company, but instead have
letters of appointment.
Element
Purpose and link to strategy
Overview of operation
Maximum opportunity
Fees
To attract and retain a
high-calibre Chairman and
Non-Executive Directors
by offering a market
competitive fee level.
Fees are reviewed periodically and approved
by the Board with Non-Executive Directors
abstaining from any discussion in relation to
their fees. Both the Chair and the Non-Executive
Directors are paid annual fees and do not
participate in any of the Company’s incentive
arrangements, or receive any pension provision
or other benefits.
The Chair receives a single fee covering all
of their duties.
The Non-Executive Directors receive a basic
Board fee, with additional fees payable for
chairing the Audit, Remuneration and Corporate
Responsibility Committees and for performing
the Senior Independent Director role.
Additional fees may be paid to reflect additional
Board or Committee responsibilities or an
increased time commitment as appropriate.
The Chair and Non-Executive Directors shall be
entitled to have reimbursed all expenses that
they reasonably incur in the performance of
their duties. The Company may meet any tax
liabilities that may arise on such expenses.
The Board may introduce benefits for the
Chairman or Non-Executive Directors if it
is considered appropriate to do so.
There is no prescribed
maximum annual
increase or fee level.
The fee levels are
reviewed on a periodic
basis, with reference to
the time commitment
of the role and market
levels (for example
in companies of
comparable size
and complexity).
Letters of appointment
All Non-Executive Directors have letters of appointment with the Company for an initial period
of three years, subject to annual re-appointment at the AGM. Appointment is terminable on six
months’ written notice. The appointment letters for the Non-Executive Directors provide that
no compensation is payable upon termination of employment. The letters of appointment are
available for inspection at the Company’s registered office.
APPROACH TO RECRUITMENT
For the appointment of a new Chairman or Non-Executive Director, the fee arrangement would be set
in accordance with the approved Remuneration Policy in force at that time.
Strategic report
Financial statements
92
Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Directors’ remuneration report
continued
This report has been prepared in accordance with Companies Act 2006, Schedule 8 of the Large
and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended
in 2013) and the UKLA’s Listing Rules. This report is subject to an advisory shareholder vote at the
AGM on 19 September 2024.
SINGLE FIGURE OF REMUNERATION FOR THE YEAR ENDED 31 MARCH 2024 (AUDITED)
The table below shows the aggregate emoluments earned by the Directors of the Company in the
year ended 31 March 2024.
£’000
Salary
and fees
Benefits
Other
Annual
bonus
1
Long-term
incentives
2
Pension
Total fixed
remuneration
Total variable
remuneration
Total
Executive
Nathan Coe
619
1
–
867
1,455
43
663
2,322
2,985
Catherine Faiers
3
343
1
–
416
605
24
368
1,021
1,389
Jamie Warner
360
1
–
436
634
25
386
1,070
1,456
Non-Executive
Ed Williams
4
92
–
–
–
–
–
92
–
92
Matt Davies
5
190
–
–
–
–
–
190
–
190
David Keens
85
–
–
–
–
–
85
–
85
Jill Easterbrook
74
–
–
–
–
–
74
–
74
Jeni Mundy
74
–
–
–
–
–
74
–
74
Sigga Sigurdardottir
63
–
–
–
–
–
63
–
63
Jasvinder Gakhal
63
–
–
–
–
–
63
–
63
Total
1,963
3
-
1,719
2,694
92
2,058
4,413
6,471
1.
Performance against annual bonus targets resulted in an overall outcome of 92.2% of maximum. Half of the bonus is
deferred into shares for a two-year period.
2.
96.9% of PSP awards granted in 2021 will vest in 2024 for performance over the three-year period to 31 March 2024. The
award was based 75% on Operating profit compound annual growth rate for three years ended 31 March 2024 (with 2020
as the base year), 12.5% revenue compound growth rate for the three years ended 31 March 2024 and 12.5% in relation to
progress made in respect of a basket of diversity measures. The value of these awards has been calculated based on the
three-month average share price to 31 March 2024 of £7.258. Of the value reported, the following is attributable to share
price growth from grant: Nathan Coe – £305,987; Catherine Faiers – £127,266; Jamie Warner – £133,325.
3.
Catherine Faiers works a 4.5 day working week and her salary has been pro-rated accordingly.
4.
Ed Williams retired from the Board on 14 September 2023.
5.
Matt Davies was appointed to the Board on 1 July 2023 as a Non-Executive Director, and assumed the role of Chair
on 14 September 2023.
Annual Report on Remuneration
SINGLE FIGURE OF REMUNERATION FOR THE YEAR ENDED 31 MARCH 2023 (AUDITED)
The table below shows the aggregate emoluments earned by the Directors of the Company in the
year ended 31 March 2023.
£’000
Salary
and fees
Benefits
Other
Annual
bonus
1
Long-term
incentives
2
Pension
Total fixed
remuneration
Total variable
remuneration
Total
Executive
Nathan Coe
592
1
–
648
–
40
633
648
1,281
Catherine Faiers
3
329
1
–
311
–
21
351
311
662
Jamie Warner
4
344
1
2
326
–
22
369
326
695
Non-Executive
Ed Williams
195
–
–
–
–
–
195
–
195
David Keens
81
–
–
–
–
–
81
–
81
Jill Easterbrook
70
–
–
–
–
–
70
–
70
Jeni Mundy
70
–
–
–
–
–
70
–
70
Sigga Sigurdardottir
60
–
–
–
–
–
60
–
60
Jasvinder Gakhal
60
–
–
–
–
–
60
–
60
Total
1,801
3
2
1,285
–
83
1,889
1,285
3,174
1.
Performance against annual bonus targets resulted in an overall outcome of 72.4% of maximum. Half of the bonus is
deferred into shares for a two-year period.
2.
0% of PSP awards granted in 2020 vested in 2023 for performance over the three-year period to 31 March 2023. The
award was based 100% on Relative Total Shareholder Return (‘TSR’) compared to the FTSE 350 (excluding investment
trusts). These awards were granted during the COVID-19 pandemic and due to the uncertainty at the time it was
considered very challenging to set robust and fair financial targets for the PSP and therefore the awards were based
solely on TSR to ensure our focus on long-term recovery rather than short to medium-term performance.
3.
Catherine Faiers worked a 4.5 day working week and her salary was pro-rated accordingly.
4.
Jamie Warner was granted 1,341 shares under the Company’s Save As You Earn scheme, at a discount of 20% to the
market price. The total value of the discount was £1,529 and has been included in the ‘Other’ column above.
ADDITIONAL INFORMATION TO SUPPORT THE SINGLE FIGURE
Benefits
Benefits included in the single figure relate to private healthcare. Directors also receive life
assurance and income protection insurance, the cost of which is not disclosed within Benefits
above as these are non-taxable benefits.
The value of life assurance and income protection insurance comprised: Nathan Coe £2,714
(2023: £2,406); Catherine Faiers £1,930 (2023: £1,838); and Jamie Warner £2,022 (2023: £1,926).
Pension
Employer’s pension contributions of 7% of salary were paid in respect of Executive Directors in line
with those received for the wider UK employee population. Once Executive Directors have reached
their annual pension limit, a salary supplement of 7% is paid in lieu of pension benefits.
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Annual Report and Financial Statements 2024
Governance
Directors’ remuneration report
continued
Annual bonus for the year ended 31 March 2024 (AUDITED)
The performance measures, targets and performance outcomes for the annual bonus for the year
ended 31 March 2024 are shown in the following table:
Performance
measures
Weighting
Threshold
Stretch
Actual
performance
Payout (as a %
of maximum)
Financial
Operating profit
for year ending
31 March 2024
1
75%
Below or
equal to
£315m
Equal to
or above
£365m
£359.8m
89.6%
Strategic
targets
Milestones linked to our
digital retailing strategy
25%
–
–
See below
100%
Total pay-out
–
–
–
–
92.2%
1.
Operating profit targets were set based on Group operating profit excluding the impact of the deferred consideration
charge in relation to the acquisition of Autorama of £11.1m.
Operating profit remains a key performance indicator of the business and the Board believes
continuing to deliver Operating profit performance will generate long-term value for shareholders.
The Committee reviewed the formulaic outcome and was comfortable that this was consistent
with the overall performance of the Company, and did not exercise discretion.
In 2023, the Committee decided that 25% of the annual bonus would be determined based on
progress relating to our digital retailing strategy which would involve consideration of a range of
quantitative and qualitative indicators, the achievement of stretching strategic and operational
milestones against our digital retailing pillar and measures relating to engagement of car buyers
and retailer customers. These milestones have been assessed based on the Committee’s holistic
assessment of progress made. In reviewing performance in 2024, the Committee reviewed progress
against established milestones in relation to our digital detailing strategy. The main focus during
FY24 was to develop and scale the Deal Builder product for used cars. The Committee assessed the
performance in relation to the achievement of technical milestones, the improvements to the onsite
experience and conversation rates, and the scaling of the product (with c.1,100 retailers and over
40,000 cars live on the product at the end of March 2024, and monetisation plans on track), and
considered this to be at a level that results in the maximum pay-out of 25% for this element.
The overall bonus pay-out is therefore 92.2%.
PERFORMANCE SHARE PLAN VESTING FOR YEAR ENDED 31 MARCH 2024 (AUDITED)
The PSP award granted in 2021 was based on performance to 31 March 2024. The performance conditions
this award was based on and the targets and performance delivered are set out in the table below:
Measure
Weighting
Threshold
(25% vesting)
Stretch
(100% vesting)
Actual
performance
Payout (as a %
of maximum)
Operating profit
75%
5.5%
11%
13.8%
100%
Revenue growth
12.5%
5%
9%
13.4%
100%
Diversity
12.5%
Progress made in respect of a basket of diversity objectives
by March 2024, including:
•
Proportion of women employees in the Group being 40%.
•
Proportion of leadership who are women being 38%.
•
Proportion of ethnically diverse employees in the Group
being 14%.
•
Proportion of leadership who are ethnically diverse
being 10%.
See below
75%
Total vesting
96.9%
In line with the Committee’s decision for 2020 awards as reported in the 2023 DRR, targets set before
the Autorama acquisition in relation to Operating Profit and Revenue are based on Auto Trader
performance, with the contribution of Autorama and the associated transaction costs excluded from
performance achieved to provide a like-for-like comparison with the original targets set.
The growth targets for the operating profit and revenue targets use 2020 as the base year. This
2020 performance excludes the contribution of Webzone following the disposal in 2022 to provide
a like-for-like comparison with 2024 performance.
In relation to our four diversity objectives, at the end of March 2024, women represented 44% of our
organisation (March 2023: 43%) and 42% (March 2023: 40%) of leadership roles as defined by the FTSE
Women Leaders Review. Ethnically diverse employees currently represent 17% of our organisation
(March 2023: 15%), with 14% of employees not disclosing their ethnicity. The percentage of ethnically
diverse employees in leadership decreased to 6% (March 2023: 8%), using the Parker Review definition,
highlighting the work still to be done in this area. Therefore, the Committee assessed that three of the
four diversity targets were met, resulting in a pay-out of 9.4% of a maximum of 12.5%.
Overall, the Committee considers that the Remuneration Policy has operated as it was intended
during 2023/24. The performance-driven focus of our total remuneration directly supports the
sustainable long-term success of the business.
SCHEME INTERESTS AWARDED DURING THE YEAR (AUDITED)
Awards granted in the year under the PSP are shown below. Awards are granted as nil-cost options.
Executive Director
Number of
shares awarded
Multiple of
salary
Face value
of awards
2
% award vesting
at threshold
(% maximum)
Performance period
PSP awards
1
Nathan Coe
191,818
200%
£1,193,079
25%
1 April 2023 to 31 March 2026
Catherine Faiers
79,783
150%
£496,238
25%
1 April 2023 to 31 March 2026
Jamie Warner
83,582
150%
£519,867
25%
1 April 2023 to 31 March 2026
1.
PSP awards will normally be eligible to vest three years from grant (22 June 2023) based on performance over the three years
to 31 March 2026 and continued employment. The net value of the vested awards is subject to a two-year holding period.
2.
As disclosed last year, face value was calculated based on the three-month average share price to the day before
grant date (22 June 2023) of 622.0p. This approach has been used to smooth out share price volatility and ensure that
the number of shares awarded is not overly impacted by short-term changes in the share price.
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Financial statements
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Annual Report and Financial Statements 2024
Governance
Directors’ remuneration report
continued
The performance conditions applying to the 2023 PSP awards shown in the table on the previous
page are set out below:
Measure
Weighting
Basis
Threshold
(25% vesting)
Stretch
(100% vesting)
Operating profit
70%
Operating profit compound annual growth rate
for the three years ended 31 March 2026.
1
5.5%
11%
Revenue growth
20%
Revenue compound annual growth rate for the
three years ended 31 March 2026.
2
6%
11%
Carbon reduction
10%
Reduction of carbon emissions over the three years
to 31 March 2026.
3
13%
20%
Diversity underpin
N/A
The vesting under any of the performance conditions will be subject to a diversity
underpin.
The Committee will determine whether there has been acceptable progress made
against the key gender and ethnic diversity objectives, including considering the
proportion of our staff who are women and who are ethnically diverse as well as
the proportion of leadership
4
who are women and who are ethnically diverse.
In assessing whether the underpin has been satisfied, the Committee will consider
a range of quantitative and qualitative benchmarks to inform its decision,
including ‘how’ performance has been achieved and ‘what’ performance has
been achieved over the performance period.
Should the Committee consider that the underpin has not been met, it would consider
whether a discretionary reduction in the number of shares vesting was required.
1.
Compound annual growth rate targets were set as three-year growth targets with reference to performance for
31 March 2023 as the base year. Operating profit will be based on Group operating profit, but excluding the impact of the
deferred consideration charges in relation to the acquisition of Autorama, which are being spread over FY23 and FY24.
This approach provides a like-for-like comparison for assessing performance across the three-year performance period.
2.
Revenue was based on Group revenue, but excluding Vehicle & Accessory Sales attributable to Autorama, as this revenue
does not generate any profit.
3.
Carbon emissions are calculated based on the financial consolidation approach as defined in the Greenhouse Gas
Protocol, and include emissions from Scopes 1, 2 and 3. Our total carbon emissions for the year to 31 March 2023 (the base
year) have been independently verified. Refer to page 35 for further details.
4.
Leadership is defined as the Operational Leadership Team (‘OLT’) and their direct reports (‘OLT-1’).
When determining vesting the Committee will consider the overall experience of shareholders
and wider stakeholders over the performance period.
2024 PSP TARGETS
Subject to receiving shareholder approval for our revised Policy at the 2024 AGM, PSP awards for
the CEO will be made at the level of 250% of base salary and PSP awards for the COO and CFO will
be made at the level of 200% of base salary. Awards will be subject to the following performance
measures and targets:
Measure
Weighting
Basis
Threshold
(25% vesting)
Stretch
(100% vesting)
Earnings per share
(EPS) growth
70%
EPS growth for the three years ended 31 March 2027.
1
8%
14%
Revenue growth
20%
Revenue compound annual growth rate for the three
years ended 31 March 2027.
2
6%
11%
Carbon reduction
10%
Reduction of carbon emissions by 31 March 2027.
3
33%
43%
Diversity underpin
N/A
The vesting under any of the performance conditions will be subject to a
diversity underpin.
The Committee will determine whether there has been acceptable progress made
against the key gender and ethnic diversity objectives, including considering the
proportion of our staff who are women and who are ethnically diverse as well as
the proportion of leadership
4
who are women and who are ethnically diverse.
In assessing whether the underpin has been satisfied, the Committee will consider
a range of quantitative and qualitative benchmarks to inform its decision,
including ‘how’ performance has been achieved and ‘what’ performance has
been achieved over the performance period.
Should the Committee consider that the underpin has not been met, it would consider
whether a discretionary reduction in the number of shares vesting was required.
1.
EPS growth rate targets have been set as three-year growth targets with reference to performance for 31 March 2024
as the base year. EPS will be based on Group Earnings Per Share, but excluding the impact of the deferred
consideration charges in relation to the acquisition of Autorama, which are being spread over FY23 and FY24. This
approach provides a like-for-like comparison for assessing performance across the three-year performance period.
2.
Revenue will be based on Group revenue, excluding Vehicle & Accessory Sales attributable to Autorama, as this
revenue does not generate any profit.
3.
Carbon emissions are calculated based on the financial consolidation approach as defined in the Greenhouse Gas
Protocol, and include emissions from Scopes 1, 2 and our total carbon emissions for the year to 31 March 2024 (the base
year) have been independently verified. Refer to page 35 for further details.
4.
Leadership is defined as the Operational Leadership Team (‘OLT’) and their direct reports (‘OLT-1’).
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Auto Trader Group plc
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Governance
Directors’ remuneration report
continued
DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS (AUDITED)
Executive Directors are required to maintain a shareholding in the Company equivalent in value to 200%
of salary. If an Executive Director does not meet the guideline, they will be expected to retain at least
half of the net shares vesting under the Company’s discretionary share-based employee incentive
schemes until the guideline is met. Non-Executive Directors do not have shareholding guidelines.
The table below sets out the number of shares held or potentially held by Directors (including their
connected persons where relevant) as at 31 March 2024. There have been no changes in these
interests up until 30 May 2024.
Director
Beneficially
owned
shares
1
Number of
awards held
under the PSP
conditional on
performance
Number of
awards held
under the
DABP
conditional
on continued
employment
Number of
unvested
Sharesave
options and
Share
Incentive
Plan shares
Number of
vested but
unexercised
nil cost
options
Number of
vested
Sharesave
options and
Share
Incentive
Plan shares
Target
shareholding
guideline (as a
% of salary)
Percentage
of salary
held in
shares as at
31 March
2024
2
Executive
Directors
Nathan Coe
3,186,555
585,548
106,864
–
–
–
200%
3561%
Catherine Faiers
76,106
243,547
51,362
–
–
–
200%
153%
Jamie Warner
41,011
255,144
53,808
2,350
–
1,392
200%
79%
Non-Executive
Directors
Matt Davies
7,936
–
–
–
–
–
N/A
N/A
David Keens
50,000
–
–
–
–
–
N/A
N/A
Jill Easterbrook
–
–
–
–
–
–
N/A
N/A
Jeni Mundy
–
–
–
–
–
–
N/A
N/A
Sigga
Sigurdardottir
–
–
–
–
–
–
N/A
N/A
Jasvinder Gakhal
–
–
–
–
–
–
N/A
N/A
1.
Includes shares owned by connected persons. Only beneficially owned shares count towards the shareholding guideline.
2.
Based on the Director’s salary and the mid-market price at close of business on 31 March 2024 of 700.2p. Includes net
(after tax) of options vested but not exercised.
There were no exercises by Directors of share options in relation to long-term incentive plans during the year.
PAYMENTS TO FORMER DIRECTORS (AUDITED)
There were no payments made to former Directors during the year.
PAYMENTS FOR LOSS OF OFFICE (AUDITED)
There were no payments for loss of office during the year.
PERFORMANCE GRAPH AND CEO REMUNERATION TABLE
The graph below illustrates the Company’s TSR performance relative to the FTSE 350 Index
(excluding investment trusts) from the start of conditional share dealing on 18 March 2015. This index
has been selected as it is a broad all-sector group of which the Company is a constituent. The graph
shows the performance over that period of a hypothetical £100 invested.
0
50
100
150
200
250
300
350
FTSE 350 (excluding investment trusts)
Auto Trader Group plc
31 March
2024
31 March
2023
31 March
2022
31 March
2021
31 March
2020
29 March
2019
30 March
2018
31 March
2017
31 March
2016
31 March
2015
18 March
2015
Total shareholder return (£)
(rebased)
Source: Datastream (Thomson Reuters)
CEO REMUNERATION
The table below sets out the CEO’s single figure of total remuneration together with the percentage
of maximum annual bonus awarded over the same period.
2024
2023
2022
2021
2020
1
2019
1
2018
1
2017
1
2016
1
2015
1,2
CEO total remuneration (£’000)
2,985
1,281
1,673
523
1,659
2,052
2,929
980
1,339
20
Annual bonus (% of maximum)
92.2%
72.4%
75.0%
N/A
3
N/A
4
76.75%
50.3%
51.8%
100%
N/A
5
PSP vesting (% of maximum)
96.9%
0%
6
50.1%
0%
7
73.6%
51.2%
100%
N/A
8
N/A
8
N/A
8
1.
2015 to 2019 figures reflect Trevor Mather’s service as CEO. The 2020 figures reflect Trevor Mather’s service as CEO to
29 February 2020, and Nathan Coe’s service as CEO from 1 March 2020.
2.
From the date of Admission in March 2015.
3.
No bonus plan operated in 2020/21.
4.
The CEO elected to waive his bonus in respect of 2019/20.
5.
Private company when bonus plan implemented in 2015.
6.
PSP award vesting in 2023 was based solely on Relative Total Shareholder Return (‘TSR’) compared to the FTSE 350
(excluding investment trusts) due to the impact of COVID-19 on our business. As threshold was not met so the award lapsed.
7.
PSP awards lapsed in 2020/21 as performance conditions were not met.
8.
No awards were eligible to vest in respect of long-term performance ending in 2015, 2016 or 2017.
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Governance
Directors’ remuneration report
continued
CEO PAY RATIO
The table below shows the ratio between the CEO’s total single figure (as calculated on the previous
page) and the median, lower and upper quartile total remuneration for our UK-based workforce. Our
median all-employee to CEO pay ratio is 55.1:1.
A significant proportion of the CEO’s pay is in the form of variable pay through the annual bonus and
the PSP. CEO pay will therefore vary year on year based on Company and share price performance.
The CEO to all-employee pay ratio will therefore also fluctuate taking this into account.
It should be noted that the pay ratio when comparing 2023 to 2024 has increased, which is driven by
the increase in variable pay, as the Annual Bonus pay-out has increased from 72.4% to 92.2%, and the
PSP has vested at 96.9% whereas in the previous year, PSP awards did not vest.
The Board has confirmed that the ratio is consistent with the Company’s wider policies on employee
pay, reward and progression, and is appropriate for the Company’s size and structure.
Year
Method
25
th
percentile pay ratio
Median pay ratio
75
th
percentile pay ratio
FY24
A
76:1
55.1:1
38.2:1
FY23
A
36.6:1
26.9:1
18.2:1
FY22
A
46.6:1
33.5:1
23.7:1
FY21
A
15.9:1
10.9:1
7.8:1
FY20
A
50.4:1
34.2:1
24.8:1
–
Method A has been used to determine the relevant employees on the basis that this approach is in line with the
approach used to calculate the single total figure for the CEO and therefore is the most robust.
–
For 2024, the salary for the P25 employee was £32,487.50 and total remuneration was £39,283.34. The salary for the P50
employee was £45,240 and total remuneration was £54,173.34. The salary for the P75 employee was £65,000 and total
remuneration was £78,143.19.
–
The P25, P50 and P75 employees were determined as at 31 March 2024 based on full-time equivalent remuneration.
Only employees who were employed as at the end of the financial year were included; salaries were annualised,
taking account of mid-year increases. The total remuneration includes salary, allowances, taxable benefits,
pension contributions, bonus, commission and share-based payments. Taxable benefits are based on the previous
tax year (2022–2023) for company cars and the latest tax year (2023–2024) for healthcare benefits. Options under
the SAYE scheme are included as at the date of grant, based on the difference between the market value at grant
date and the exercise price. Options under discretionary plans (PSP and Single Incentive Plan Award) are based on
the date that the performance conditions were achieved, and valued using the three-month average share price to
31 March 2024 of £7.258.
–
For 2020, the CEO single figure reflects amounts to Trevor Mather (stepped down 29 February 2020) and Nathan Coe
(appointed CEO 1 March 2020) for their respective time in service.
–
The 2023 CEO pay ratio figures have been updated to reflect the change to the CEO total single figure of remuneration
for the year ended 31 March 2023, following the revalued PSP award based on share price on date of vesting.
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Governance
Directors’ remuneration report
continued
YEAR-ON-YEAR CHANGE IN PAY FOR DIRECTORS COMPARED TO THE AVERAGE EMPLOYEE
In accordance with the requirement under The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, the table below shows the increase in each Director’s pay
(salary, benefits and bonus) between 2020 to 2021, 2021 to 2022, 2022 to 2023 and 2023 to 2024 compared to the average increase for the employees of the Group.
2024-2023
2023–2022
2022–2021
2021–2020
Base
salary/fees
Benefits
Annual
bonus
Base
salary/fees
Benefits
Annual
bonus
Base
salary/fees
Benefits
Annual
bonus
Base
salary/fees
Benefits
Annual
bonus
Executive Directors
Nathan Coe
1,2
5%
(4%)
34%
3%
(8%)
(1%)
16%
(7%)
100%
8
26%
31%
(100%)
Catherine Faiers
1,3
5%
(4%)
34%
3%
(8%)
(1%)
12%
(7%)
100%
8
(11%)
43%
(100%)
Jamie Warner
1,4
5%
(4%)
34%
3%
(8%)
(1%)
16%
(7%)
100%
8
932%
1,477%
(100%)
Non-Executive Directors
Matt Davies
11
–
–
–
–
–
–
–
–
–
–
–
–
Ed Williams
1, 12
(45%)
–
–
4%
–
–
36%
–
–
(25%)
–
–
David Keens
1
5%
–
–
4%
–
–
35%
–
–
(25%)
–
–
Jill Easterbrook
1
5%
–
–
4%
–
–
17%
–
–
(13%)
–
–
Jeni Mundy
1,5
5%
–
–
4%
–
–
31%
–
–
(9%)
–
–
Sigga Sigurdardottir
1,6
5%
–
–
4%
–
–
16%
–
–
108%
–
–
Jasvinder Gakhal
7
5%
–
–
315%
–
–
N/A
N/A
N/A
N/A
N/A
N/A
Average employee
7%
(4%)
–
6.4%
(8%)
9
–
10
5.5%
37%
–
0%
27%
–
1.
Ed Williams and David Keens voluntarily waived their entire fees from 1 April 2020 to 30 June 2020. The remaining Board members voluntarily waived 50% of their salaries and fees from 1 April 2020 to 30 June 2020.
2.
Nathan Coe was appointed as CEO on 1 March 2020 and his base salary increased on that date from £377,000 to £568,000.
3.
Catherine Faiers was appointed to the Board on 1 May 2020 and therefore her reported salary for 2020 represents only 11 months. Further, Catherine became part-time from 1 September 2020 and therefore her salary was pro-rated from that date
to reflect her 4.5 day working week.
4.
Jamie Warner was appointed to the Board on 1 March 2020 and therefore his reported salary for 2020 represents only one month.
5.
Jeni Mundy was appointed Chair of the Corporate Responsibility Committee from 1 January 2021 and received an additional fee of £9,742 per annum from that date.
6.
Sigga Sigurdardottir was appointed to the Board on 1 November 2019 and therefore her reported fee for 2020 represents only five months.
7.
Jasvinder Gakhal was appointed to the Board on 1 January 2022.
8.
100% value shown as no bonus was paid for 2021.
9.
The decrease in benefits in 2023 relates to a reduction in our private medical insurance premiums.
10. For the purpose of the annual bonus this relates to performance related schemes only and therefore figures exclude any cost of living payments made to all employees during the year.
11.
Matt Davies was appointed to the Board on 1 July 2023 as Chair Designate, and assumed the role of Chair following shareholder approval at the 14 September 2023 AGM.
12. Ed Williams retired from the Board on 14 September 2023.
RELATIVE IMPORTANCE OF THE SPEND ON PAY
The following table shows the Group’s actual spend on pay for all employees compared to distributions to shareholders. The average number of employees has also been included for context. Revenue and
Operating profit have also been disclosed as these are two key measures of Group performance.
2024
£m
2023
£m
%
change
Employee costs (see note 7 to the Consolidated financial statements)
92.4
84.1
10%
Average number of employees (see note 7 to the Consolidated financial statements)
1,233
1,160
6%
Revenue (see Consolidated income statement)
570.9
500.2
14%
Operating profit
348.7
277.6
26%
Share buybacks and Dividends paid (see notes 26 and 28 to the Consolidated financial statements)
250.3
225.0
11%
Strategic report
Financial statements
98
Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Directors’ remuneration report
continued
FEES FOR THE CHAIR AND NON-EXECUTIVE DIRECTORS
As set out last year in the 2023 Nomination Committee report, the Board appointed Matt Davies as a
Non-Executive Director and Chair Designate. Following shareholder approval at the 14 September
2023 AGM, he has been appointed as Chair of the Board, replacing Ed Williams. A wide search was
conducted, taking into consideration the requirements of the role. As disclosed last year, it was
agreed that the fee for Matt Davies as Chair would be set at £325,000.
Fees for the Chair and Non-Executive Directors were reviewed in March 2024 and will be increased by
3% with effect from 1 July 2024, which is below the average increase for the workforce, but in line with
the increase for senior leaders.
As was also disclosed last year, to support the succession plan for NEDs that were on the Board at IPO,
NED fees were reviewed and it was decided that when the next new Non-Executive Directors are
appointed into the relevant roles, the Committee Chair fees will be increased to £18,500, and the SID
fee will be increased to £12,500 at the same time.
The following table sets out the fees in financial year 2025 compared to those which applied in
financial year 2024, and the new fees to be applied following the 2024 AGM in line with the disclosed
approach to support succession:
Base fees
2024
Percentage
change
2025
Fees to be
applied
post AGM
Chair
£325,000
3%
£334,750
£334,750
Non-Executive Director
£63,904
3%
£65,821
£65,821
Additional fees
Senior Independent Director
£10,954
3%
£11,283
£12,500
Audit Committee Chair
£10,954
3%
£11,283
£18,500
Remuneration Committee Chair
£10,954
3%
£11,283
£18,500
Corporate Responsibility Committee Chair
£10,954
3%
£11,283
£18,500
All Non-Executive Directors have letters of appointment with the Company for an initial period of three
years, subject to annual re-appointment at the AGM. Appointment is terminable on six months’ written
notice. The appointment letters for the Non-Executive Directors provide that no compensation is
payable upon termination of employment. The letters of appointment are available for inspection at
the Company’s registered office.
Details of the appointment terms of the Non-Executive Directors are as follows:
Start of
current term
Expiry of
current term
Matt Davies
1 July 2023
30 June 2026
David Keens
1
1 May 2021
30 April 2024
Jill Easterbrook
1
1 July 2021
30 June 2024
Jeni Mundy
1 March 2022
28 February 2025
Sigga Sigurdardottir
1 November 2022
31 October 2025
Jasvinder Gakhal
1 January 2022
31 December 2024
Geeta Gopalan
1 May 2024
30 April 2027
1.
David Keens and Jill Easterbrook will remain on the Board until the AGM on 19 September 2024.
In addition, Amanda James will join the Board as a Non-Executive Director on 1 July 2024, and her letter
of appointment will include a three-year term to 30 June 2027.
FUNDING OF EQUITY AWARDS
Share awards may be funded by a combination of newly issued shares, treasury shares and shares
purchased in the market. Where shares are newly issued or from treasury, the Company complies with
Investment Association dilution guidelines on their issue. The current dilution usage of all share plans
is c.1.29% of shares in issue.
Where shares are purchased in the market, these will be held by a trust, in which case the voting
rights relating to the shares are exercisable by the Trustees in accordance with their fiduciary
duties. At 31 March 2024, the trust held 312,831 shares in respect of the Share Incentive Plan.
EXTERNAL DIRECTORSHIPS
Auto Trader recognises that its Executive Directors may be invited to become non-executive directors
of other companies. Such non-executive duties can broaden a Director’s experience and knowledge
which can benefit Auto Trader. On 12 May 2023, Catherine Faiers was appointed as a Non-Executive
Director of Allegro.eu Group. The Board approved the directorship in advance to ensure that there
was no conflict of interest, and the Remuneration Committee approved that Catherine will retain the
remuneration from the appointment.
MEMBERSHIP OF THE COMMITTEE
Jill Easterbrook is the Committee Chair, and its other members are David Keens, Jeni Mundy, Sigga
Sigurdardottir and Jasvinder Gakhal. Geeta Gopalan joined the Committee on 1 May 2024. Amanda
James will join the Committee on 1 July 2024. Refer to pages 68 and 81 for further details of the
membership of the Committee, the Terms of Reference, the meetings held and activities during the year.
EXTERNAL ADVISORS
During the year the Committee received advice from Deloitte who were appointed in October 2017 following
a competitive tender process. Deloitte are founding members of the Remuneration Consultants Code of
Conduct and adhere to this Code in their dealings with the Committee. The Committee is satisfied that the
advice provided by Deloitte is objective and independent. The Committee is comfortable that the members
of the Deloitte team that provide remuneration advice to the Committee do not have connections with
the Company or its Directors that may impair their independence. The Committee reviewed the potential
for conflicts of interest and judged that there were appropriate safeguards against such conflicts.
Fees are charged on a time and materials basis. During the year Deloitte was paid £111,900 excluding
VAT for advice provided to the Committee. Deloitte provided additional services to the Company in
relation to internal audit, debt advisory and tax services.
STATEMENT OF SHAREHOLDER VOTING
Shareholder voting in relation to recent AGM resolutions is as follows:
Votes
for
% of votes
cast for
Votes
against
% of votes
cast against
Abstentions
2023 AGM: Annual Report on Remuneration (advisory)
706,110,308
95.91%
30,101,147
4.09%
296,896
2021 AGM: Remuneration Policy (binding)
758,040,974
99.69%
2,355,178
0.31%
7,406,699
APPROVAL
This Directors’ remuneration report has been approved by the Board of Directors.
Signed on behalf of the Board of Directors.
Jill Easterbrook
Chair of the Remuneration Committee
30 May 2024
Strategic report
Financial statements
99
Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Directors’ report
STATUTORY INFORMATION
Information required to be part of the Directors’ report can be found elsewhere in this document,
as indicated in the table below, and is incorporated into this report by reference:
Section of Annual Report
Page reference
Employee engagement
• Strategic report: Working responsibly (page 40)
• Strategic report: Section 172(1) statement (page 16)
Employees with disabilities
• Strategic report: Working responsibly (page 44)
Engagement with suppliers,
customers and other stakeholders
• Strategic report: Section 172(1) statement (pages 16 to 17)
Financial instruments
• Financial statements: Note 32 to the Consolidated financial
statements (page 149)
Future developments of
the business
• Strategic report: COO’s strategic review (page 10)
Greenhouse gas emissions
• Strategic report: Working responsibly (page 40)
Non-financial reporting
• Strategic report: Non-financial and sustainability
information statement (page 21)
The Directors have pleasure in submitting their report and the audited financial
statements of Auto Trader Group plc (the ‘Company’) and its subsidiaries
(together the ‘Group’) for the financial year to 31 March 2024.
INFORMATION REQUIRED BY LR 9.8
Information required to be included in the Annual Report by LR 9.8 can be found in this document
as indicated in the table below:
Section of Annual Report
Page reference
Allotment of shares during
the year
• Financial statements: Note 26 to the Consolidated financial
statements (page 142)
Corporate Governance
Code Compliance
• Governance: Governance overview (page 61)
Directors’ interests
• Governance: Directors’ remuneration report (page 81)
Directors’ Service Contracts
• Governance: Directors’ remuneration report (page 81)
Gender and ethnicity targets
• Strategic report: Working responsibly (page 40)
Going Concern and Viability
• Strategic report: Principal risks and uncertainties (page 53)
Long-term incentive schemes
• Governance: Directors’ remuneration report (page 81)
Powers for the Company
to buyback its shares
• Governance: Directors’ report (page 101)
Significant contracts
• Governance: Directors’ report (page 102)
Significant related party
agreements
• Governance: Directors’ report (page 102)
Significant shareholders
• Governance: Directors’ report (page 102)
TCFD Disclosures
• Strategic report: Working responsibly (page 29)
Waiver of Dividends
• Governance: Directors’ report (page 101)
Strategic report
Financial statements
100
Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
BOARD OF DIRECTORS
The following individuals were Directors of
the Company for the whole of the financial
year ending 31 March 2024, and to the date of
approving this report unless otherwise stated:
• Matthew Davies (from 1 July 2023).
• Nathan Coe.
• Catherine Faiers.
• Jamie Warner.
• David Keens.
• Jill Easterbrook.
• Jeni Mundy.
• Sigga Sigurdardottir.
• Jasvinder Gakhal.
• Geeta Gopalan (from 1 May 2024).
As previously announced on 22 March 2024,
the Board approved the appointment of Geeta
Gopalan with effect from 1 May 2024 and Amanda
James with effect from 1 July 2024. Geeta will be
appointed as Senior Independent Director and
Remuneration Committee Chair and Amanda will
be appointed as Audit Committee Chair at the
conclusion of the 2024 AGM. David Keens and
Jill Easterbrook will not stand for re-election at
the 2024 AGM. All other Directors will stand for
election or re-election at the 2024 AGM in line
with the recommendations of the Code.
APPOINTMENT AND REPLACEMENT OF DIRECTORS
At each AGM each Director then in office shall retire
from office with effect from the conclusion of the
meeting. When a Director retires at an AGM in
accordance with the Articles of Association of the
Company, the Company may, by ordinary resolution
at the meeting, fill the office being vacated by
re-electing the retiring Director. In the absence
of such a resolution, the retiring Director shall
nevertheless be deemed to have been re-elected,
except in the cases identified by the Articles.
RESULTS AND DIVIDENDS
The Group’s and Company’s audited financial
statements for the year are set out on pages 116
to 160.
The Company declared an interim dividend on
9 November 2023 of 3.2 pence per share which
was paid on 26 January 2024.
The Directors recommend payment of a final
dividend of 6.4 pence per share ( 2023: 5.6 pence)
to be paid on 27 September 2024 to shareholders
on the register of members at the close of
business on 30 August 2024, subject to approval
at the 2024 AGM.
SHARE CAPITAL AND CONTROL
The Company’s issued share capital comprises
ordinary shares of £0.01 each which are listed
on the London Stock Exchange (LSE: AUTO.L).
The ISIN of the shares is GB00BVYVFW23.
On 22 June 2023, 7,849,782 ordinary shares
of £0.01 each were allotted to the vendors of
Autorama UK Limited as satisfaction of the
deferred consideration payable as detailed
further in notes 26 and 31 to the Consolidated
financial statements. The market price on
the date of allotment was 589.2p per share.
The issued share capital of the Company as at
31 March 2024 comprised 907,213,454 shares of
£0.01 each, and 4,899,346 shares were held in
treasury. As at 30 May 2024, the issued share
capital of the Company comprises 903,009,190
shares of £0.01 each, and 4,849,326 shares held
in treasury.
Further information regarding the Company’s
issued share capital and details of the
movements in issued share capital during the
year are provided in note 26 to the Consolidated
financial statements. All the information
detailed in note 26 forms part of this Directors’
report and is incorporated into it by reference.
Details of employee share schemes are provided in
note 30 to the Consolidated financial statements.
AUTHORITY TO ALLOT SHARES
Under the 2006 Act, the Directors may only allot
shares if authorised to do so by shareholders
in a general meeting. At the 2023 AGM, special
resolution 16 conferred upon Directors the
authority to allot ordinary shares up to a
maximum nominal amount of £920,199 (92,019,900
shares), for cash, on a non-pre-emptive basis.
In the Notice of the 2024 AGM (the ‘AGM Notice’),
ordinary resolution 16 seeks a new authority to
allow the Directors to allot ordinary shares
representing approximately two thirds of the
Company’s existing share capital as at the date of
the AGM Notice, of which approximately one third
of the Company’s issued ordinary share capital
can only be allotted pursuant to a rights issue.
Special resolutions 21 and 22 seek a new authority
to allow the Directors to allot ordinary shares on
a non-pre-emptive basis up to a maximum of
approximately 5% of the Company’s existing share
capital and special resolutions 21 and 22 seek
a new authority to allow the Directors to allot
ordinary shares on a non-pre-emptive basis
in connection with an acquisition or specified
capital investment, up to a further maximum
of approximately 5% of the Company’s existing
share capital at the date of the AGM Notice.
AUTHORITY TO PURCHASE OWN SHARES
As described on page 24, the Company intends
to continue its share buyback programme, under
the authority passed at the 2023 AGM under
which the Company is authorised to make market
purchases of up to a maximum of 10% ( 92,019,875
shares) of its own ordinary shares (excluding
shares held in treasury), subject to minimum
and maximum price restrictions, either to be
cancelled or retained as treasury shares. The
Directors will seek to renew this authority at
the forthcoming AGM.
RIGHTS ATTACHING TO SHARES
All shares have the same rights (including voting
and dividend rights and rights on a return of
capital) and restrictions as set out in the Articles,
described below. Except in relation to dividends
which have been declared and rights on a
liquidation of the Company, the shareholders
have no rights to share in the profits of the
Company. The Company’s shares are not
redeemable. However, following any grant of
authority from shareholders, the Company may
purchase or contract to purchase any of the
shares on or off market, subject to the Companies
Act 2006 and the requirements of the Listing Rules.
MANAGEMENT REPORT
This Directors’ report, on pages 100 to 103, together
with the Strategic report on pages 1 to 60, form the
Management Report for the purposes of DTR 4.1.5R.
STRATEGIC REPORT
The Strategic report, which can be found on
pages 1 to 60, sets out the Group’s strategy,
objectives and business model; the development,
performance and position of the Group’s business
(including financial, operating and cultural
key performance indicators); a description of
the principal risks and uncertainties; the main
trends and factors likely to affect the future
development, performance and position of the
Group’s business; and contains the non-financial
and sustainability information statement.
UK CORPORATE GOVERNANCE CODE
The Company’s statement on corporate
governance can be found in the Corporate
governance statement, the Report of the
Nomination Committee, the Report of the
Audit Committee, the Report of the Corporate
Responsibility Committee and the Directors’
remuneration report and policy report on pages
66 to 99; all of which form part of this Directors’
report and are incorporated into it by reference.
2024 ANNUAL GENERAL MEETING
The 2024 AGM will take place at 11:00am on
Thursday 19 September 2024 at the Company’s
registered office: 4
th
Floor, 1 Tony Wilson Place,
Manchester, M15 4FN. We intend to hold the
AGM as a physical meeting.
We encourage all shareholders to cast their
votes by proxy, and to send any questions in
respect of AGM business to ir@autotrader.co.uk.
The AGM Notice sets out the resolutions to
be proposed and specifies the deadlines for
exercising voting rights and appointing a proxy
or proxies to vote in relation to resolutions to be
passed at the AGM. All proxy votes will be counted
and the numbers for, against or withheld in relation
to each resolution will be announced at the
AGM and published on the Company’s website.
Directors’ report
continued
Strategic report
Financial statements
101
Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Directors’ report
continued
regulations (such as insider trading and
marketing requirements relating to close
periods) and requirements of the Company’s
share dealing code whereby Directors and
certain employees of the Company require
approval to deal in the Company’s securities.
CHANGE OF CONTROL
Save in respect of a provision of the Company’s
share schemes which may cause options and
awards granted to employees under such schemes
to vest on takeover, there are no agreements
between the Company and its Directors or
employees providing for compensation for loss
of office or employment (whether through
resignation, purported redundancy or otherwise)
because of a takeover bid.
Our current employee share plans were adopted
at the time of the Company’s IPO in 2015 and expire
for the purposes of new awards in 2025. We are
seeking shareholder approval for certain new
plans and to renew other plans at the 2024 AGM.
SIGNIFICANT CONTRACTS
The only significant agreement to which the
Company is a party that takes effect, alters
or terminates upon a change of control of the
Company following a takeover bid, and the
effect thereof, is the revolving credit facility
agreement, which contains customary
prepayment, cancellation and default
provisions including, if required by a lender,
mandatory prepayment of all utilisations
provided by that lender upon the sale of
all or substantially all of the business and
assets of the Group or a change of control.
TRANSACTIONS WITH RELATED PARTIES
Compensation paid to Directors and Key
Management is as disclosed in note 8 to
the Consolidated financial statements.
RESEARCH AND DEVELOPMENT
Innovation, specifically in software, is a critical
element of Auto Trader’s strategy and therefore
of the future success of the Group. Accordingly,
the majority of the Group’s research and
development expenditure is predominantly
related to this area. The Group’s approach to
technology development continues to be such
that the Group develops its core infrastructure
through small-scale, maintenance-like
incremental improvements. As a result the
amount of capitalised internal development
costs is of a low value, reflecting the level of
expenditure which meets the requirements
of IAS 38, Intangible Assets.
INDEMNITIES AND INSURANCE
The Company maintains appropriate insurance
to cover Directors’ and officers’ liability for itself
and its subsidiaries and such insurance was in
force for the whole of the financial year ending
31 March 2024. The Company also indemnifies
the Directors under a qualifying indemnity for the
purposes of Section 236 of the Companies Act
2006: in the case of the Non-Executive Directors
in their respective letters of appointment and in
the case of the Executive Directors in a separate
deed of indemnity. Such indemnities contain
provisions that are permitted by the Director
Liability provisions of the Companies Act and the
Company’s Articles.
ENVIRONMENTAL
Information on the Group’s greenhouse gas
emissions is set out in the Working responsibly
section on page 35 and forms part of this report
by reference.
POLITICAL DONATIONS
There were no political donations made during
the year or the previous year.
EXTERNAL BRANCHES
The Group had no active registered external
branches during the reporting period.
FINANCIAL INSTRUMENTS
Details of the financial risk management
objectives and policies of the Group, including
hedging policies and exposure of the entity to
price risk, credit risk, liquidity risk and cash flow
risk, are given in note 32 to the Consolidated
financial statements.
No shareholder holds shares in the Company
which carry special rights with regard to control
of the Company. There are no shares relating to
an employee share scheme which have rights
with regard to control of the Company that
are not exercisable directly and solely by the
employees, other than in the case of the
Auto Trader Group Share Incentive Plan, where
share interests of a participant in such scheme
can be exercised by the personal representatives
of a deceased participant in accordance with
the Scheme rules.
VOTING RIGHTS
Each ordinary share entitles the holder to vote at
general meetings of the Company. A resolution
put to the vote of the meeting shall be decided on
a show of hands, unless the Directors decide in
advance that a poll will be conducted, or unless
a poll is demanded at the meeting. On a show of
hands, every member who is present in person or
by proxy at a general meeting of the Company
shall have one vote. On a poll, every member who
is present in person or by proxy shall have one
vote for every share of which they are a holder.
The Articles provide a deadline for submission of
proxy forms of not less than 48 hours before the
time appointed for the holding of the meeting or
adjourned meeting. No member shall be entitled
to vote at any general meeting either in person
or by proxy, in respect of any share held by the
member, unless all amounts presently payable
by the member in respect of that share have
been paid. Save as noted, there are no
restrictions on voting rights nor any agreement
that may result in such restrictions.
RESTRICTIONS ON TRANSFER OF SECURITIES
The Articles do not contain any restrictions on
the transfer of ordinary shares in the Company
other than the usual restrictions applicable
where any amount is unpaid on a share. Certain
restrictions are also imposed by laws and
INTERESTS IN VOTING RIGHTS
At the year end the Company had been notified, in accordance with Chapter 5 of the Financial
Conduct Authority’s Disclosure Guidance and Transparency Rules, of the following significant
interests in the issued ordinary share capital of the Company:
At 31 March 2024
At 30 May 2024
Shareholder
Number of ordinary
shares/voting
rights notified
Percentage of
voting rights over
ordinary shares of
£0.01 each
Number of ordinary
shares/voting
rights notified
Percentage of
voting rights over
ordinary shares of
£0.01 each
BlackRock Inc.
100,394,491
10.97%
100,394,491
10.97%
Baillie Gifford & Co.
47,482,549
5.01%
47,482,549
5.01%
Kayne Anderson Rudnick
Investment Management LLC.
45,209,540
4.94%
45,209,540
4.94%
Strategic report
Financial statements
102
Auto Trader Group plc
Annual Report and Financial Statements 2024
Governance
Under company law the Directors must not
approve the financial statements unless they are
satisfied that they give a true and fair view of the
state of affairs of the Group and parent company
and of their profit or loss for that period. In
preparing each of the Group and parent company
financial statements, the Directors are required to:
• select suitable accounting policies and then
apply them consistently;
•
make judgements and accounting estimates that
are reasonable, relevant, reliable and prudent;
• for the Group financial statements, state
whether they have been prepared in
accordance with UK-adopted international
accounting standards;
• for the parent company financial statements,
state whether applicable UK accounting
standards have been followed, subject to any
material departures disclosed and explained
in the parent company financial statements;
• assess the Group and parent company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern; and
•
use the going concern basis of accounting
unless they either intend to liquidate the Group
or the parent company or to cease operations,
or have no realistic alternative but to do so.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the parent
company’s transactions and disclose with
reasonable accuracy at any time the financial
position of the parent company and enable
them to ensure that its financial statements
comply with the Companies Act 2006. They
are responsible for such internal control as
they determine is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether
due to fraud or error, and have general
responsibility for taking such steps as are
reasonably open to them to safeguard the
assets of the Group and to prevent and
detect fraud and other irregularities.
Under applicable law and regulations, the
Directors are also responsible for preparing
a Strategic report, Directors’ report,
Directors’ remuneration report and Corporate
governance statement that complies with
that law and those regulations.
The Directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Company’s website.
Legislation in the UK governing the preparation
and dissemination of financial statements may
differ from legislation in other jurisdictions.
In accordance with Disclosure Guidance and
Transparency Rule (‘DTR’) 4.1.16R, the financial
statements will form part of the annual financial
report prepared under DTR 4.1.17R and 4.1.18R. The
auditor’s report on these financial statements
provides no assurance over whether the annual
financial report has been prepared in accordance
with those requirements.
RESPONSIBILITY STATEMENT OF THE
DIRECTORS IN RESPECT OF THE ANNUAL
FINANCIAL REPORT
We confirm, to the best of our knowledge:
• the financial statements, prepared in
accordance with the applicable set of
accounting standards, give a true and fair
view of the assets, liabilities, financial position
and profit or loss of the Company and the
undertakings included in the consolidation
taken as a whole; and
• the Strategic report includes a fair review
of the development and performance of the
business and the position of the issuer and the
undertakings included in the consolidation
taken as a whole, together with a description
of the principal risks and uncertainties that
they face.
We consider that the Annual Report and
Accounts, taken as a whole, is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Group’s position and performance, business
model and strategy.
APPROVAL OF THE ANNUAL REPORT
The Strategic Report and the Corporate
Governance Report were approved by the
Board on 30 May 2024.
Approved by the Board and signed on its behalf:
Claire Baty
Company Secretary
30 May 2024
DISCLOSURE OF INFORMATION TO AUDITOR
Each of the Directors has confirmed that:
•
so far as the Director is aware, there is no
relevant audit information of which the
Company’s auditor is unaware; and
•
the Director has taken all the steps that he/she
ought to have taken as a Director to make him/
herself aware of any relevant audit information
and to establish that the Company’s auditor is
aware of that information.
This confirmation is given and should be
interpreted in accordance with the provisions
of Section 418 of the Companies Act 2006.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE ANNUAL REPORT AND
FINANCIAL STATEMENTS
The Directors are responsible for preparing the
Annual Report and Financial Statements and the
Group and parent company financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare
Group and parent company financial statements
for each financial year. Under that law they
are required to prepare the Group financial
statements in accordance with UK-adopted
international accounting standards and
applicable law and have elected to prepare
the parent company financial statements in
accordance with United Kingdom Accounting
Standards and applicable law, including
Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’.
Directors’ report
continued
Strategic report
Financial statements
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1. OUR OPINION IS UNMODIFIED
In our opinion:
•
the financial statements of Auto Trader Group plc give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2024, and of the Group’s profit for the year then ended;
•
the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
•
the Parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS 101 Reduced Disclosure Framework; and
•
the Group and Parent Company financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
What our opinion covers
We have audited the Group and Parent Company financial statements of Auto Trader Group plc (‘the Company’) for the year ended 31 March 2024 (FY24) included in the Annual Report and Financial Statements,
which comprise:
Group
Parent Company (Auto Trader Group plc)
Consolidated income statement
Company balance sheet
Consolidated statement of comprehensive income
Company statement of changes in equity
Consolidated balance sheet
Notes 1 to 12 to the Parent Company financial statements, including the accounting policies in note 1
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes 1 to 35 to the Consolidated financial statements, including the accounting policies in note 2
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities are described below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our opinion. Our audit opinion and matters included in this report are consistent with those discussed and included in our reporting to the Audit Committee (‘AC’).
We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public
interest entities.
2. OVERVIEW OF OUR AUDIT
FACTORS DRIVING OUR VIEW OF RISKS
On 22 June 2022 the Company acquired Autorama UK Limited (‘Autorama’). The identification and valuation of acquired intangible
assets was a significant audit risk of error and a key audit matter in FY23 only. This financial year, for the consolidated financial
statements, recoverability of goodwill relating to Autorama is a significant risk for our audit, and a key audit matter. This reflects
this being the first full year since the acquisition and the judgement required to estimate forecast growth in revenue cash flows,
particularly the future number of new car leases transacted.
In the Parent Company financial statements, consistent with the reasons for the consolidated goodwill impairment risk described
above, we have identified a significant audit risk and a key audit matter over the recoverable amount of the Parent Company’s
investment in its Autorama subsidiary.
We have also identified a key audit matter relating to revenue recognition over Trade Retailer revenue. This is the main driver of
the Group’s results and its size is reflected in the allocation of our resources in planning and executing the audit. Consistent with
the prior year, we do not consider this to be a significant audit risk of material misstatement, as based on our cumulative audit
experience, we have concluded that there is no material judgement or estimation in Trade Retailer revenue recognition and low
risk of fraudulent material misstatement, given the low value and high volume of individual transactions.
Key audit matters
Vs prior
year
Item
Recoverability of goodwill relating to Autorama
4.1
Recoverability of the Parent Company’s investment
in Autorama subsidiary
4.2
Revenue recognition (Trade Retailer)
4.3
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AUDIT COMMITTEE INTERACTION
During the year, the Audit Committee met 5 times. KPMG are invited to attend all Audit Committee meetings and are provided with an opportunity to meet with the Audit Committee in private sessions without
the Executive Directors being present. For each Key Audit Matter, we have set out communications with the AC in section 4, including matters that required particular judgement for each.
The matters included in the Audit Committee Chair’s report on pages 73 to 77 are materially consistent with our observations of those meetings.
OUR INDEPENDENCE
We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to listed public interest entities.
We have not performed any non-audit services during FY24 or subsequently which are prohibited by the FRC Ethical Standard.
We were first appointed as auditor by the shareholders for the year ended 31 March 2017. The period of total uninterrupted
engagement is for the eight financial years ended 31 March 2024.
The Group engagement partner is required to rotate every 5 years. As these are the fourth set of the Group’s financial statements
signed by David Derbyshire, he will be required to rotate off after the FY25 audit.
The Group engagement partner is also responsible for component audits as set out in section 7 and has had a tenure of 4 years.
Total audit fee
£531,000
Audit related fees (including interim review)
£52,000
Other services
£15,000
Non-audit fee (excluding interim review) as a % of
total audit and audit related fee %
2.6%
Date first appointed
22 September 2016
Uninterrupted audit tenure
8 years
Next financial period which requires a tender
2027
Tenure of Group engagement partner
4 years
Average tenure of component signing partners
4 years
MATERIALITY (ITEM 6 BELOW)
The scope of our work is influenced by our view of materiality and our assessed risk of material misstatement.
We have determined overall materiality for the Group financial statements as a whole at £16.5m (FY23: £14.0m) and for the
Parent Company financial statements as a whole at £12.8m (FY23: £13.0m).
Consistent with FY23, we determined that profit before tax remains the benchmark for the Group as it is the metric which best
reflects the focus of the financial statements’ users. As such, we based our Group materiality on profit before tax, of which it
represents 4.8% (FY23: 4.8%).
Materiality for the Parent Company financial statements was determined with reference to a benchmark of Parent Company
total assets of which it represents 0.75% (FY23: 0.75%).
£12.3m
£10.5m
£15.5m
£13.3m
£12.8m
£13.0m
£0.8m
£0.7m
£14.0m
£16.5m
Group materiality
Group performance
materiality
Component
materiality
Parent Company
materiality
Audit misstatement
posting threshold
FY24
FY23
Materiality levels used in our audit
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continued
GROUP SCOPE (ITEM 7 BELOW)
We have performed risk assessment and planning procedures to determine which of the Group’s components are likely to include
risks of material misstatement to the Group financial statements and the type of procedures to be performed at these components.
Of the Group’s 6 (FY23: 6) reporting components, we subjected 1 (FY23: 1) to a full scope audit. We subjected 1 (FY23: 1) to specified
audit procedures. The audit of these components and the audit of the Parent Company was performed by the Group team.
The components within the scope of our work accounted for the percentages illustrated opposite.
In addition, we have performed Group level analysis on the remaining components to determine whether further risks of material
misstatement exist in those components.
We consider the scope of our audit, as communicated to the Audit Committee, to be an appropriate basis for our audit opinion.
Full scope audits
Specified audit procedures
Remaining components
Profit before tax
Total assets
Revenue
3%
3%
8%
92%
97%
97%
Coverage of Group financial statements
THE IMPACT OF CLIMATE CHANGE ON OUR AUDIT
In planning our audit, we have considered the potential impact of risks arising from climate change on the Group’s business and its financial statements. The Group has set out its commitments under
the Paris Agreement to achieve net zero carbon emissions by 2040. Further information is provided in the Group’s Task Force on Climate-related Financial Disclosures (‘TCFD’) recommended disclosures
on pages 29 to 39.
As a part of our audit we have performed a risk assessment, including making enquiries of management, reading board meeting minutes and applying our knowledge of the Group and sector in which it
operates to understand the extent of the potential impact of climate change risk on the Group’s financial statements and to consider the impact of climate change on our audit.
Our risk assessment focused on the risk climate change may pose to the determination of future cash flows used in assessments such as impairment risk. We held discussions with our own climate change
professionals to challenge our risk assessment. On the basis of our risk assessment, we determined that goodwill impairment and the recoverability of the Parent Company investment in Autorama are the
areas which will be the most impacted.
As explained in note 13 of the financial statements, in preparing the value-in-use calculations management has projected sales growth in the Autorama Cash Generating Unit (‘CGU’), based on forecast
growth in new car leases. This growth is in part driven by the transition to electric vehicles and how these vehicles are sold and distributed.
Our audit response to the key audit matter of the recoverability of goodwill and Parent Company investment in Autorama therefore considers climate change factors, such as UK regulations affecting
transition to new electric vehicles. Please refer to those key audit matter responses for further details.
Taking into account the relatively short-term nature of other assets we have not identified any other impacts of climate change on our key audit matters.
We have read the Group’s TCFD in the front half of the Annual Report and considered consistency with the financial statements and our audit knowledge. We have not been engaged to provide assurance
over the accuracy of the climate risk disclosures set out on pages 29 to 39 in the Annual Report.
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3. GOING CONCERN, VIABILITY AND PRINCIPAL RISKS AND UNCERTAINTIES
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the Parent Company or to cease their operations, and as they have concluded
that the Group’s and the Parent Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their
ability to continue as a going concern for at least a year from the date of approval of the financial statements (‘the going concern period’).
GOING CONCERN
We used our knowledge of the Group, its industry, and the general economic environment to identify the inherent risks to
its business model and analysed how those risks might affect the Group’s and Company’s financial resources or ability
to continue operations over the going concern period. The risks that we considered most likely to adversely affect the
Group’s and Company’s available financial resources and metrics relevant to financial covenants over this period were
lower than forecast revenues arising from reduced customer demand in the automotive market. We also considered
less predictable but realistic second order impacts, such as reputational risk arising from a ransomware attack and a
consequential erosion of customer confidence, which could result in a rapid reduction of available financial resources.
We considered whether these risks could plausibly affect the Group’s liquidity or covenant compliance in the going
concern period by assessing the degree of downside assumptions that, individually and collectively, could result in
a liquidity shortfall, taking into account the Group’s current and projected cash and borrowing facilities (a reverse
stress test). We also assessed the completeness of the going concern disclosure.
Accordingly, based on those procedures, we found the directors’ use of the going concern basis of accounting without
any material uncertainty for the Group and Parent Company to be acceptable. However, as we cannot predict all future
events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the Parent
Company will continue in operation.
Our conclusions
•
We consider that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate;
•
We have not identified, and concur with the directors’ assessment that there
is not, a material uncertainty related to events or conditions that, individually
or collectively, may cast significant doubt on the Group’s or Parent Company’s
ability to continue as a going concern for the going concern period;
•
We have nothing material to add or draw attention to in relation to the directors’
statement in note 1 to the financial statements on the use of the going concern
basis of accounting with no material uncertainties that may cast significant
doubt over the Group and Parent Company’s use of that basis for the going
concern period, and we found the going concern disclosure in note 1 to be
acceptable; and
•
The related statement under the Listing Rules set out on page 60 is materially
consistent with the financial statements and our audit knowledge.
DISCLOSURES OF EMERGING AND PRINCIPAL RISKS AND LONGER-TERM VIABILITY
Our responsibility
We are required to perform procedures to identify whether there is a material inconsistency between the directors’
disclosures in respect of emerging and principal risks and the viability statement, and the financial statements and
our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in relation to:
•
the directors’ confirmation within the viability statement on pages 59 to 60 that they have carried out a robust
assessment of the emerging and principal risks facing the Group, including those that would threaten its business
model, future performance, solvency and liquidity;
•
the principal risks and uncertainties disclosures describing these risks and how emerging risks are identified and
explaining how they are being managed and mitigated; and
•
the directors’ explanation in the viability statement of how they have assessed the prospects of the Group, over
what period they have done so and why they considered that period to be appropriate, and their statement as
to whether they have a reasonable expectation that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention
to any necessary qualifications or assumptions.
We are also required to review the viability statement set out on page 59 to 60 under the Listing Rules.
Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial
statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes
that are inconsistent with judgements that were reasonable at the time they were made, the absence of anything to
report on these statements is not a guarantee as to the Group’s and Parent Company’s longer-term viability.
Our reporting
We have nothing material to add or draw attention to in relation to these disclosures.
We have concluded that these disclosures are materially consistent with the
financial statements and our audit knowledge.
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4. KEY AUDIT MATTERS
WHAT WE MEAN
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on:
• the overall audit strategy;
• the allocation of resources in the audit; and
• directing the efforts of the engagement team.
We include below the Key Audit Matters in decreasing order of audit significance together with our key audit procedures to address those matters and our results from those procedures. These matters were
addressed, and our results are based on procedures undertaken, for the purpose of our audit of the financial statements as a whole. We do not provide a separate opinion on these matters.
4.1 Recoverability of goodwill relating to Autorama
Financial Statement Elements
Our assessment of risk vs FY23
Our results
FY24
FY23
Recoverability of group Autorama goodwill
Our risk assessment reflects FY24 being the first full year since
the Autorama acquisition and the judgement required to
estimate forecast growth in revenue cash flows.
FY24: Acceptable
Goodwill
£92.5m
£92.5m
Description of the Key Audit Matter
Our response to the risk
Autorama goodwill represents a material asset in the consolidated balance sheet for which
an annual impairment test is required to assess its recoverable amount. The consolidated
Autorama cash generating unit book value, including other intangible assets and property,
was £144.0m at 31 March 2024 (31 March 2023: £152.8m).
Recoverable amount is the higher of fair value less cost to sell and value in use. The Group
has estimated the recoverable amount of the cash generating unit at 31 March 2024 based
on value in use.
We have identified a significant audit risk, and a key audit matter, over the recoverability of
Autorama goodwill due to the judgement required to estimate forecast revenue cash flows,
particularly the future number of new car leases transacted by Autorama. The new car
market, including leasing, is impacted by changes in new car supply and the transition to
electric vehicles.
The effect of these matters is that, as part of our risk assessment for audit planning purposes,
we determined that value in use of the Autorama cash generating unit (‘CGU’) had a high
degree of estimation uncertainty, with a potential range of reasonable outcomes greater than
our materiality for the financial statements as a whole. In conducting our final audit work, we
concluded that reasonably possible changes to the value in use of the Autorama CGU would
not be expected to result in material impairment.
The consolidated financial statements (Note 13) disclose the sensitivity estimated by the Group.
We performed the tests below rather than seeking to rely on any of the group’s controls because the nature
of the balance is such that we would expect to obtain audit evidence primarily through the detailed
procedures described.
Our procedures to address the risk included:
•
Historical comparisons: we assessed the ability of the Group to forecast accurately, by comparing prior
period forecasts of revenue growth assumptions to the actual outcomes.
•
Benchmarking assumptions: we challenged the revenue growth assumptions in the value in use calculation
by comparing management’s assumption of growth in market share against external data (such as new car
and leasing market data which reflect market expectations of the impact of climate change regulations).
•
Benchmarking assumptions: we compared the inputs for the long term growth rate and discount rate used
in the value in use calculations to comparable market data.
•
Sensitivity analysis: we performed our own sensitivity analysis, including a reasonably possible reduction
in the value and timing of forecast revenue growth and an alternative long term growth rate to assess the
level of sensitivity to these assumptions.
•
Assessing transparency: we assessed whether the Group’s disclosures relating to the sensitivity of the
outcome of the impairment assessment to a reasonably possible adverse changes in forecast revenue
growth and long-term growth rate sufficiently reflected the risks inherent in estimating the recoverable
amount of goodwill.
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Communications with the Auto Trader Group Plc’s Audit Committee
Our discussions with and reporting to the Audit Committee included:
•
Our approach and conclusion on the appropriateness of the impairment assessment performed by management, and of the key assumptions made in determining the recoverable amount based
on value in use; and
•
the adequacy of the consolidated financial statement disclosures, particularly as they relate to the sensitivity of the key assumptions.
Areas of particular auditor judgement
•
The appropriateness of the model and in particular the key assumptions used in the model, including forecast revenue market share, the forecast period and the long term growth rate.
Our results
•
We found the Group’s conclusion that there is no impairment of Autorama goodwill to be acceptable (2023: acceptable).
Further information in the Annual Report and Accounts: See the Audit Committee Report on page 73 for details on how the Audit Committee considered the recoverable amount of Autorama goodwill
as an area of financial statement risk and judgement, page 126 for the accounting policy on Impairment, and note 13 for the financial disclosures.
4.2 Recoverability of the Parent Company’s investment in Autorama (Parent Company)
Financial Statement Elements
Our assessment of risk vs FY23
Our results
FY24
FY23
Investment in Autorama UK Limited
£170.9m
£198.8m
↑
Our assessment is that the risk is higher than FY23. This reflects
FY24 being the first full year since the Autorama acquisition and
the judgement required to estimate growth in forecast revenue
cash flows.
FY24: Acceptable
FY23: Acceptable
Description of the Key Audit Matter
Our response to the risk
The carrying value of the Parent Company’s investment in Autorama at 31 March 2024 was £170.9m
(31 March 2023: £198.8m).
Recoverable amount is the higher of fair value less cost to sell and value in use. The Parent Company
has estimated the recoverable amount of the cash generating unit investment at 31 March 2024 based
on value in use.
We have identified a significant audit risk, and a key audit matter, over the recoverable amount of
the investment in Autorama due to the judgement required to estimate forecast revenue cash flows,
particularly the future number of new car leases transacted by Autorama. The new car market,
including leasing, is impacted by changes in new car supply and the transition to electric vehicles.
The effect of these matters is that, as part of our risk assessment, we determined that the recoverable
amount of the investment in Autorama has a high degree of estimation uncertainty, with a potential
range of reasonable outcomes greater than our materiality for the parent company financial
statements as a whole.
The Parent Company financial statements (Note 3) disclose the sensitivity estimated by the Company.
Last year our key audit matter related to all of the company’s investments in subsidiaries. For the
reasons above, our key audit matter in the current year relates only to the company’s investment
in Autorama. We continue to perform procedures over the other investment in subsidiary.
We performed the tests below rather than seeking to rely on any of the company’s controls because
the nature of the balance is such that we would expect to obtain audit evidence primarily through the
detailed procedures described.
Our procedures to address the risk included:
•
Assessing methodology: assessing management’s identification of whether there are any
qualitative or quantitative impairment indicators in respect of the investments held.
• Historical comparisons: we assessed the ability of the Group to forecast accurately, by
comparing prior period forecasts of revenue growth assumptions to the actual outcomes.
•
Benchmarking assumptions: we challenged the revenue growth assumptions in the value in use
calculation by comparing management’s assumption of growth in market share against external
data (such as new car and leasing market data which reflect market expectations of the impact
of climate change regulations).
•
Benchmarking assumptions: we compared the inputs for the long term growth rate and discount
rate used in the value in use calculations to comparable market data.
•
Sensitivity analysis: we performed our own sensitivity analysis, including a reasonably possible
reduction in the value and timing of forecast revenue growth and an alternative long term growth
rate to assess the level of sensitivity to these assumptions.
•
Assessing transparency: we assessed the Parent Company’s disclosures relating to the
sensitivity of the outcome of the impairment assessment to a reasonably possible adverse
changes in forecast revenue growth and long-term growth rate.
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Description of the Key Audit Matter
Our response to the risk
Communications with the Auto Trader Group plc’s Audit Committee
Our discussions with and reporting to the Audit Committee included:
•
Our approach and conclusion on the appropriateness of the impairment assessment performed by management, and of the key assumptions made in determining the recoverable amount based
on value in use; and
•
the adequacy of the Parent Company financial statement disclosures, particularly as they relate to the sensitivity of the key assumptions.
Areas of particular auditor judgement
•
The appropriateness of the model and in particular the key assumptions used in the model, including forecast revenue market share, the forecast period and the long term growth rate.
Our results
•
As a result of our work, we considered the quantum of the impairment provision recognised in the year to be acceptable (2023: no impairment recognised – acceptable).
4.3 Revenue recognition (Group)
Financial Statement Elements
Our assessment of risk vs FY23
Our results
FY24
FY23
Trade Retailer revenue
£450.0m
£406.8m
Our assessment is that the risk is similar to FY23, reflecting how
the majority of the Group’s revenue processing is performed
and recognised on a consistent basis in both years.
FY24: Acceptable
FY23: Acceptable
Description of the Key Audit Matter
Our response to the risk
Trade Retailer revenue primarily consists of fees for advertising on the Group’s website and related
data and access services. There are a high volume of transactions, no significant concentration
of customers and a variety of set packages. Retailers have the ability to select the combination
of products they receive.
Based on our cumulative audit experience, we have concluded that there is no material judgement
or estimation in Trade Retailer revenue recognition and low risk of fraudulent material misstatement,
given the low value and high volume of individual transactions.
We continue to consider Trade Retailer revenue recognition to be a key audit matter as it is the main
driver of the Group’s results and its size is reflected in the allocation of our resources in planning and
executing the audit.
Our procedures to address the risk included:
•
Control design and operation: testing the design, implementation and operating effectiveness of
bank reconciliation controls, to provide evidence over reliability of cash data used in our tests of detail.
•
Accounting analysis: inspecting contractual terms, including modifications to standard terms agreed
in the year, to identify performance obligations and determine the timing of revenue recognition.
•
Data comparisons: using computer assisted audit techniques to match sales information from
the billing system to the accounting records.
•
Tests of detail: using computer assisted audit techniques to match the entire population of Trade
Retailer sales transactions recorded in the accounts to the billing system and from the billing system
to cash received and trade receivables (including accrued income) outstanding at the year end.
•
Tests of detail: using computer assisted AI transaction scoring to identify high and medium risk
Trade Retailer sales transactions, for testing using statistical sampling techniques.
Communications with the Auto Trader Group Plc’s Audit Committee
Our discussions with and reporting to the Audit Committee included:
•
Our planned audit approach for revenue testing, including our rebuttal of the presumed risk of material misstatement of revenue as a result of fraud and our use of computer assisted audit techniques.
•
Our findings from our computer assisted audit techniques, which matched sales transactions between the accounts, the billing system, and cash received and trade receivables outstanding at year end.
•
Our findings from our AI transactional scoring procedure, which identified high or medium risk revenue transactions for substantive testing.
Areas of particular auditor judgement
• We identified no areas of particular auditor judgement.
Our results
•
We considered the amount of Trade Retailer revenue recognised in the year to be acceptable (2023: acceptable).
Further information in the Annual Report and Accounts: See the Audit Committee Report on page 73 for details on how the Audit Committee considered revenue recognition as an area of financial statement
risk and judgement, pages 122 to 123 for the accounting policy on Revenue, and note 5 for the financial disclosures.
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4.4 Identification and valuation of acquired intangible assets (Group)
The identification and valuation of acquired intangible assets was a key audit matter for the year ended 31 March 2023, following the Company’s acquisition of Autorama UK Limited (‘Autorama’) in that year.
As there were no business combinations in the current year, we have not identified this key audit matter in our report this year.
5. OUR ABILITY TO DETECT IRREGULARITIES, AND OUR RESPONSE
FRAUD – IDENTIFYING AND RESPONDING TO RISKS OF MATERIAL MISSTATEMENT DUE TO FRAUD
Fraud risk
assessment
To identify risks of material misstatement due to fraud (‘fraud risks’) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide
an opportunity to commit fraud. Our risk assessment procedures included:
• Enquiring of directors, the Audit Committee, internal audit and the company secretary and inspection of policy documentation as to the Group’s high-level policies and
procedures to prevent and detect fraud, including the outsourced internal audit function, and the Group’s channel for ‘whistleblowing’, as well as whether they have knowledge
of any actual, suspected or alleged fraud;
• Reading Board and other committee meeting minutes;
•
Considering remuneration incentive schemes and performance targets for management and directors, including the Group’s share based incentive schemes, comprising
the Performance Share Plan, the Deferred Annual Bonus and the Single Incentive Plan Award; and
•
Using analytical procedures to identify any unusual or unexpected relationships.
Risk communications
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit.
Fraud risks
As required by auditing standards and taking into account our overall knowledge of the control environment, we perform procedures to address the risk of management override
of controls, in particular the risk that Group management may be in a position to make inappropriate accounting entries, and the risk of bias in accounting estimates and judgements
such as goodwill impairment assumptions.
On this audit we do not believe there is a fraud risk related to revenue recognition because there is no material judgement or estimation in revenue recognition and a low risk
of fraudulent material misstatement, given the low value and high volume of individual transactions.
We did not identify any additional fraud risks.
Procedures to
address fraud risks
We performed procedures including:
•
Identifying journal entries to test for all full scope components based on risk criteria and comparing the identified entries to supporting documentation. These included those
posted to unexpected accounts and those posted with unusual descriptions; and
•
Assessing whether the judgements made in making accounting estimates, including goodwill impairment, are indicative of a potential bias.
LAWS AND REGULATIONS – IDENTIFYING AND RESPONDING TO RISKS OF MATERIAL MISSTATEMENT RELATING TO COMPLIANCE WITH LAWS AND REGULATIONS
Laws and
regulations risk
assessment
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector
experience and through discussion with the directors and other management (as required by auditing standards), and discussed with the directors and other management the policies
and procedures regarding compliance with laws and regulations. As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment
including the entity’s procedures for complying with regulatory requirements.
Risk communications
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
Direct laws context
and link to audit
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation),
distributable profits legislation, taxation legislation, and pensions legislation in respect of defined benefit pension schemes and we assessed the extent of compliance with these
laws and regulations as part of our procedures on the related financial statement items.
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LAWS AND REGULATIONS – IDENTIFYING AND RESPONDING TO RISKS OF MATERIAL MISSTATEMENT RELATING TO COMPLIANCE WITH LAWS AND REGULATIONS
Most significant
indirect law/
regulation areas
Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: General Data Protection Regulation,
FCA compliance, competition law, employment law, anti-bribery and anti-corruption and money laundering legislation.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management and inspection
of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not
detect that breach.
CONTEXT
Context of the ability
of the audit to detect
fraud or breaches of
law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we
have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit,
there remained a higher risk of non-detection of fraud, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit
procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all
laws and regulations.
6. OUR DETERMINATION OF MATERIALITY
The scope of our audit was influenced by our application of materiality. We set quantitative thresholds and overlay qualitative considerations to help us determine the scope of our audit and the nature,
timing and extent of our procedures, and in evaluating the effect of misstatements, both individually and in the aggregate, on the financial statements as a whole.
£16.5m
(FY23: £14.0m)
Materiality for the
group financial
statements as a
whole
What we mean
A quantitative reference for the purpose of planning and performing our audit.
Basis for determining materiality and judgements applied
Materiality for the Group financial statements as a whole was set at £16.5m (FY23: £14.0m). This was determined with reference to a benchmark of profit before tax.
Consistent with FY23, we determined that profit before tax remains the main benchmark for the Group as it is the metric in the primary statements which best reflects the focus
of the financial statements’ users.
Our Group materiality of £16.5m was determined by applying a percentage to profit before tax. When using a benchmark of profit before tax to determine overall materiality, KPMG’s
approach for listed entities considers a guideline range of 3% – 5% of the measure. In setting overall Group materiality, we applied a percentage of 4.8% (FY23: 4.8%) to the benchmark.
Materiality for the Parent Company financial statements as a whole was set at £12.8m (FY23: £13.0m), determined with reference to a benchmark of Parent Company total assets,
of which it represents 0.75% (FY23: 0.75%).
£12.3m
(FY23: £10.5m)
Performance
materiality
What we mean
Our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk
that individually immaterial misstatements in individual account balances add up to a material amount across the financial statements as a whole.
Basis for determining performance materiality and judgements applied
We have considered performance materiality at a level of 75% (FY23: 75%) of materiality for Auto Trader Group plc financial statements as a whole to be appropriate.
The Parent Company performance materiality was set at £9.6m (FY23: £9.8m), which equates to 75% (FY23: 75%) of materiality for the Parent Company financial statements as a whole.
We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk.
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continued
£0.8m
(FY23: £0.7m)
Audit misstatement
posting threshold
What we mean
This is the amount below which identified misstatements are considered to be clearly trivial from a quantitative point of view. We may become aware of misstatements below
this threshold which could alter the nature, timing and scope of our audit procedures, for example if we identify smaller misstatements which are indicators of fraud.
This is also the amount above which all misstatements identified are communicated to Auto Trader Group plc’s Audit Committee.
Basis for determining the audit misstatement posting threshold and judgements applied
We set our audit misstatement posting threshold at 5% (FY23: 5%) of our materiality for the Group financial statements. We also report to the Audit Committee any other identified
misstatements that warrant reporting on qualitative grounds.
The overall materiality for the Group financial statements of £16.5m (FY23: £14.0m) compares as follows to the main financial statement caption amounts:
Total Group revenue
Group profit before tax
Total Group assets
FY24
FY23
FY24
FY23
FY24
FY25
Financial statement Caption
£570.9m
£500.2m
£345.2m
£293.6m
£658.0m
£662.7m
Group Materiality as % of caption
2.9%
2.8%
4.8%
4.8%
2.5%
2.1%
7. THE SCOPE OF OUR AUDIT
Group scope
What we mean
How the Group audit team determined the procedures to be performed across the Group.
Of the Group’s 6 (FY23: 6) reporting components, we subjected 1 (FY23: 1) to a full scope audit. We subjected 1 (FY23: 1) to specified audit procedures for Group purposes.
The audit of these components and the audit of the Parent Company was performed by the Group team.
Scope
Number of components
Materiality applied
Full scope audit
1
£15.5m
Specified audit procedures
1
£12.8m
In addition, we have performed Group level analysis on the remaining components to determine whether further risks of material misstatement exist in those components.
The scope of the audit work performed was predominately substantive as we placed limited reliance upon the Group’s internal control over financial reporting.
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Independent auditor’s report to the members of Auto Trader Group plc
continued
8. OTHER INFORMATION IN THE ANNUAL REPORT
The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information
and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
ALL OTHER INFORMATION
Our responsibility
Our responsibility is to read the other information and, in doing so, consider whether, based on our
financial statements audit work, the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge.
Our reporting
Based solely on that work we have not identified material misstatements or inconsistencies in the
other information.
STRATEGIC REPORT AND DIRECTORS’ REPORT
Our responsibility and reporting
Based solely on our work on the other information described above we report to you as follows:
•
we have not identified material misstatements in the strategic report and the directors’ report;
•
in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
•
in our opinion those reports have been prepared in accordance with the Companies Act 2006.
DIRECTORS’ REMUNERATION REPORT
Our responsibility
We are required to form an opinion as to whether the part of the Directors’ Remuneration Report
to be audited has been properly prepared in accordance with the Companies Act 2006.
Our reporting
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared
in accordance with the Companies Act 2006.
CORPORATE GOVERNANCE DISCLOSURES
Our responsibility
We are required to perform procedures to identify whether there is a material inconsistency between
the financial statements and our audit knowledge, and:
•
the directors’ statement that they consider that the annual report and financial statements taken
as a whole is fair, balanced and understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance, business model and strategy;
•
the section of the annual report describing the work of the Audit Committee, including the
significant issues that the Audit Committee considered in relation to the financial statements,
and how these issues were addressed; and
•
the section of the annual report that describes the review of the effectiveness of the Group’s
risk management and internal control systems.
Our reporting
Based on those procedures, we have concluded that each of these disclosures is materially consistent
with the financial statements and our audit knowledge.
We are also required to review the part of the Corporate Governance Statement relating to the
Group’s compliance with the provisions of the UK Corporate Governance Code specified by the
Listing Rules for our review.
We have nothing to report in this respect.
OTHER MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
Our responsibility
Under the Companies Act 2006, we are required to report to you if, in our opinion:
•
adequate accounting records have not been kept by the Parent Company, or returns adequate
for our audit have not been received from branches not visited by us; or
•
the Parent Company financial statements and the part of the Directors’ Remuneration Report
to be audited are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Our reporting
We have nothing to report in these respects.
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continued
9. RESPECTIVE RESPONSIBILITIES
Directors’ responsibilities
As explained more fully in their statement set out on page 103, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such
internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and Parent
Company’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 they either intend to liquidate the
Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an
auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis
of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in an annual financial report prepared under Disclosure Guidance and Transparency Rule 4.1.17R and 4.1.18R. This auditor’s report provides
no assurance over whether the annual financial report has been prepared in accordance with those requirements.
10. THE PURPOSE OF OUR AUDIT WORK AND TO WHOM WE OWE OUR RESPONSIBILITIES
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s 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 and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
David Derbyshire (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
1 St Peter’s Square
Manchester
M2 3AE
30 May 2024
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Financial statements
Consolidated income statement
For the year ended 31 March 2024
Note
2024
£m
2023
£m
Revenue
5
Operating costs
4
(225.0 )
(225.1 )
Share of profit from joint ventures, net of tax
16
Operating profit
6
Net finance costs
9
(3.5 )
(3.1 )
Profit on disposal of subsidiary
10
Profit before taxation
Taxation
11
(88.3 )
(59.7 )
Profit for the year attributable to equity holders of the parent
Basic earnings per share (pence)
12
Diluted earnings per share (pence)
12
The accompanying notes form part of these financial statements.
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Financial statements
Consolidated statement of comprehensive income
For the year ended 31 March 2024
Note
2024
£m
2023
£m
Profit for the year
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Exchange differences on translation of foreign operations
(0.3 )
Realisation of cumulative currency translation differences
Items that will not be reclassified to profit or loss
Remeasurements of post-employment benefit obligations, net of tax
25
(0.1 )
(0.4 )
Other comprehensive income for the year, net of tax
(0.1 )
(0.3 )
Total comprehensive income for the year attributable to equity holders of the parent
The accompanying notes form part of these financial statements.
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Governance
Financial statements
Consolidated balance sheet
At 31 March 2024
Note
2024
£m
2023
£m
Assets
Non-current assets
Intangible assets
13
Property, plant and equipment
14
Retirement benefit surplus
25
Net investments in joint ventures
16
Other investments
17
Current assets
Inventory
19
Trade and other receivables
18
Current income tax assets
Cash and cash equivalents
20
Total assets
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital
26
Share premium
Retained earnings
Own shares held
27
(31.3 )
(26.0 )
Capital reorganisation reserve
(1,060.8 )
(1,060.8 )
Capital redemption reserve
Other reserves
Total equity
Liabilities
Non-current liabilities
Borrowings
22
Provisions
23
Lease liabilities
15
Deferred income
5
Deferred taxation liabilities
24
Note
2024
£m
2023
£m
Current liabilities
Trade and other payables
21
Provisions
23
Lease liabilities
15
Borrowings
22
Total liabilities
Total equity and liabilities
The accompanying notes form part of these financial statements. The financial statements were
approved by the Board of Directors on 30 May 2024 and authorised for issue:
Jamie Warner
Chief Financial Officer
Auto Trader Group plc
Registered number: 09439967
30 May 2024
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Financial statements
Consolidated statement of changes in equity
For the year ended 31 March 2024
Note
Share
capital
£m
Share
premium
£m
Retained
earnings
£m
Own shares
held
£m
Capital
reorganisation reserve
£m
Capital
redemption reserve
£m
Other
reserves
£m
Total
equity
£m
Balance at 31 March 2022
(22.4 )
(1,060.8 )
Profit for the year
Other comprehensive income:
Currency translation differences
(0.3 )
(0.3 )
Realisation of cumulative currency translation differences
Remeasurements of post-employment benefit obligations, net of tax
25
(0.4 )
(0.4 )
Total comprehensive income, net of tax
Transactions with owners
Employee share schemes – value of employee services
30
Exercise of employee share schemes
(3.6 )
Tax impact of employee share schemes
Purchase of own shares for treasury
(8.7 )
(8.7 )
Purchase of own shares for cancellation
(0.2 )
(139.3 )
(139.3 )
Dividends paid
(77.7 )
(77.7 )
Total transactions with owners, recognised directly in equity
(0.2 )
(175.6 )
(3.6 )
(178.8 )
Balance at 31 March 2023
(26.0 )
(1,060.8 )
Profit for the year
Other comprehensive income:
Remeasurements of post-employment benefit obligations, net of tax
25
(0.1 )
(0.1 )
Total comprehensive income, net of tax
Transactions with owners
Employee share schemes – value of employee services
30
Exercise of employee share schemes
(4.0 )
Tax impact of employee share schemes
(0.3 )
(0.3 )
Purchase of own shares for treasury
(11.1 )
(11.1 )
Purchase of own shares for cancellation
(0.2 )
(159.7 )
(159.7 )
Issue of ordinary shares
(0.1 )
Dividends paid
(80.4 )
(80.4 )
Total transactions with owners, recognised directly in equity
(0.1 )
(226.6 )
(5.3 )
(231.8 )
Balance at 31 March 2024
(31.3 )
(1,060.8 )
The accompanying notes form part of these financial statements.
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Governance
Financial statements
Consolidated statement of cash flows
For the year ended 31 March 2024
Note
2024
£m
2023
£m
Cash flows from operating activities
Cash generated from operations
29
Income taxes paid
(91.5 )
(60.5 )
Net cash generated from operating activities
Cash flows from investing activities
Purchases of intangible assets
(0.2 )
(1.0 )
Purchases of property, plant and equipment
(3.6 )
(2.4 )
Proceeds from sale of property, plant and equipment
Dividends received from joint ventures
16
Interest received on cash and cash equivalents
Payment for acquisition of subsidiary, net of cash acquired
31
(144.2 )
Payment of deferred consideration for acquisition of subsidiary
31
(8.1 )
Payment for acquisition of shares in investment entities
(1.3 )
Proceeds on disposal of shares in investment entities
Proceeds on disposal of subsidiary, net of cash disposed
10
Net cash used in investing activities
(126.4 )
Cash flows from financing activities
Dividends paid to Company’s shareholders
28
(80.4 )
(77.7 )
Drawdown of Syndicated revolving credit facility
22
Repayment of Syndicated revolving credit facility
22
(87.0 )
(50.0 )
Repayment of other debt
22
(1.1 )
(4.0 )
Proceeds from loan
22
Payment of refinancing fees
22
(0.5 )
(1.4 )
Payment of interest on borrowings
33
(3.4 )
(3.3 )
Payment of lease liabilities
15
(2.7 )
(2.9 )
Purchase of own shares for cancellation
26
(158.9 )
(138.6 )
Purchase of own shares for treasury
27
(11.0 )
(8.7 )
Payment of fees on purchase of own shares
(0.9 )
(0.7 )
Contributions to defined benefit pension scheme
25
(0.1 )
(1.0 )
Proceeds from exercise of share-based incentives
Net cash used in financing activities
(287.2 )
(175.2 )
Net increase/(decrease) in cash and cash equivalents
(34.7 )
Cash and cash equivalents at beginning of year
20
Cash and cash equivalents at end of year
20
The accompanying notes form part of these financial statements.
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Notes to the consolidated financial statements
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and is domiciled and incorporated in the United Kingdom
Consolidated financial statements of the Company as at and for the year ended 31 March 2024
comprise the Company and its interest in subsidiaries (together referred to as ‘the Group’).
The Group’s principal business is the operation of the Auto Trader platforms which form the UK’s
largest automotive marketplace.
The Consolidated financial statements of the Group as at and for the year ended 31 March 2024
are available upon request to the Company Secretary from the Company’s registered office at
th
The Consolidated financial statements have been prepared in accordance with the requirements
of the Companies Act 2006 and in accordance with UK-adopted international accounting standards.
The Consolidated financial statements have been prepared on the going concern basis and under the
historical cost convention, except for equity investments and defined benefit pension scheme assets,
The Consolidated financial statements are presented in sterling (£), which is the Group’s presentation
Subsidiaries are all entities over which the Group has control. Control exists when the Group has
existing rights that give it the ability to direct the relevant activities of an entity and has the ability
to affect the returns the Group will receive as a result of its involvement with the entity. In assessing
control, potential voting rights that are currently exercisable or convertible are taken into account.
The financial statements of subsidiaries are included in the Consolidated financial statements from
the date that control commences until the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by
the Group. The cost of an acquisition is measured as the fair value of the assets given, equity
instruments issued, and liabilities incurred or assumed at the date of exchange. Costs directly
attributable to the acquisition are expensed. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values
at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of
the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the
identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred,
non-controlling interest recognised and previously held interest measured is less than the fair
value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference
is recognised directly in the income statement.
When the Group disposes of a subsidiary, it derecognises the assets and liabilities of the subsidiary.
Any resulting gain or loss is recognised in the income statement.
Intercompany transactions and balances between Group companies are eliminated on consolidation.
A joint arrangement is an arrangement over which the Group and one or more third parties have joint
control. These joint arrangements are in turn classified as: joint ventures whereby the Group has rights
to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities;
and joint operations whereby the Group has rights to the assets and obligations for the liabilities
relating to the arrangement.
Associates are all entities over which the Group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Where significant
influence is not demonstrated but the shareholding is between 20% and 50%, the Group would account
for its interest as an investment. All investments are initially recognised at cost and the carrying value
During the year ended 31 March 2024 the Group has continued to generate significant cash from
operations. The Group has an overall positive net asset position and had cash balances of £18.7m
at 31 March 2024 (2023: £16.6m). During the year £250.3m was returned to shareholders through share
buybacks and dividends (2023: £225.0m).
The Group has access to a Syndicated revolving credit facility (the ‘Syndicated RCF’). At 31 March 2024
the Group had £30.0m (2023: £60.0m) drawn of its £200.0m Syndicated RCF. On 2 February 2024,
the Group extended the term of its Syndicated RCF for one year and it is therefore now available until
February 2029.
Cash flow projections for a period of not less than 12 months from the date of this report have been
prepared. Stress case scenarios have been modelled to make the assessment of going concern,
taking into account severe but plausible potential impacts of a severe economic downturn,
ransomware attack and a new market entrant within the next 12 months. The results of the stress
testing demonstrated that due to the Group’s significant free cash flow, access to the Syndicated
RCF and the Board’s ability to adjust the discretionary share buyback programme, the Group would
be able to withstand the impact and remain cash generative. Subsequent to the year end, the
Group has generated cash flows in line with its forecast and there are no events that have adversely
impacted the Group’s liquidity.
The Directors, after making enquiries and on the basis of current financial projections and facilities
available, believe that the Group has adequate financial resources to continue in operation for
a period not less than 12 months from the date of this report. For this reason, they continue to adopt
The preparation of financial statements in conformity with UK-adopted international accounting
standards requires the use of certain accounting estimates and assumptions. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies.
Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under
the circumstances.
There are no accounting estimates or judgements at the financial year end which have a significant
risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the
next financial year. Other accounting estimates and judgements include:
Strategic report
Governance
Financial statements
Notes to the consolidated financial statements
continued
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1. GENERAL INFORMATION
CONTINUED
Carrying values of goodwill (judgement and estimate)
The Group tests annually whether goodwill held by the Group has suffered any impairment in
accordance with the accounting policy stated within note 2. The Group has two cash-generating
units, Digital and Autorama. Estimation is required for the assumptions used in the calculation of
the recoverable amounts of each cash-generating unit, the most significant assumptions relating
New and amended standards adopted by the Group
The following amendments to standards have been adopted by the Group for the first time for the
financial year beginning on 1 April 2023:
• IFRS 17 Insurance Contracts
•
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
• Definition of Accounting Estimates (Amendments to IAS 8)
•
Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments
to IAS 12)
The adoption of these amendments has had no material effect on the Group’s Consolidated
financial statements.
Standards, amendments and interpretations to existing standards that are not yet effective
There are a number of amendments to IFRS that have been issued by the IASB that, when endorsed
in the UK, will become effective in a subsequent accounting period including:
•
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
•
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
• Lack of Exchangeability (Amendments to IAS 21)
•
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(Amendments to IFRS 10 and IAS 28)
The Group has evaluated these changes and none are expected to have a 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 Group’s financial
Existing significant accounting policies
The following accounting policies applied by the Group have been applied consistently to all periods
presented in the Consolidated financial statements.
Revenue is measured based on the consideration specified in a contract with a customer and is
recognised when a customer obtains control of the services. Revenue is stated net of discounts,
rebates, refunds and value-added tax.
Revenue principally represents the amounts receivable from customers for advertising on the Group’s
platforms but also includes non-advertising services such as vehicle leasing transactions and data
services. The different types of products and services offered to customers along with the nature and
timing of satisfaction of performance obligations are set out as follows:
(i) Trade revenue
Trade revenue comprises fees from retailers, Home Traders and logistics customers for advertising
on the Group’s platforms and customers utilising the Group’s other services.
Retailer revenue
Retailer customers pay a monthly subscription fee to advertise their stock on the Group’s platforms.
Control is obtained by customers across the life of the contract as their stock is continually listed.
Contracts for these services are agreed at a retailer or retailer group level and are ongoing subject
to a 30-day notice period. Revenue is invoiced monthly in arrears.
Retailers have the option to enhance their presence on the platform through additional products,
each of which has a distinct performance obligation. For products that provide enhanced exposure
across the life of the product, control is passed to the customer over time. Revenue is only recognised
at a point in time for additional advertising products where the customer does not receive the benefit
until they choose to apply the product. Additional advertising products are principally billed on a
monthly subscription basis in line with their core advertising package, however certain products are
billed on an individual charge basis.
The Group also generates revenue from retailers for data and valuation services under a variety of
contractual arrangements, with each service being a separate performance obligation. Control is
obtained by customers either across the life of the contract where customers are licensed to use the
Group’s services or at a point in time when a one-off data service is provided. Digital retailing revenue
is generated from retailers who pay a percentage of the vehicle list price when a consumer submits
a deal. Each deal is a separate performance obligation and control is obtained at a point in time.
Contract modifications occur on a regular basis as customers change their stock levels or add or
remove additional advertising products from their contracts. Following a contract modification, the
customer is billed in line with the delivery of the remaining performance obligations. A receivable is
recognised only when the Group’s right to consideration is only conditional on the passage of time.
Home Trader revenue
Home Trader customers pay a fee in advance to advertise a vehicle on the Group’s platform for a
specified period of time. Revenue is deferred until the customer obtains control over the services.
Control is obtained by customers across the life of the contract as their vehicle is continually listed.
Contracts for these services are typically entered into for a period of between two and six weeks.
Logistics revenue
Logistics customers pay a monthly subscription fee for access to the Group’s AT Moves platform.
Control is obtained by customers across the life of the contract as their access is continuous.
Contracts for these services are agreed at a customer level and are ongoing subject to a 30-day
notice period. Logistics customers have the option to bid on vehicle moves advertised by retailers
on the platform. The logistics customer pays a fee if they are successful in obtaining business from
retailers through the Group’s marketplace. Revenue is recognised at the point in time when the vehicle
move has been completed. A receivable is recognised only when the Group’s right to consideration
is only conditional on the passage of time.
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Financial statements
Notes to the consolidated financial statements
continued
123
Auto Trader Group plc
Annual Report and Financial Statements 2024
2. SIGNIFICANT ACCOUNTING POLICIES
CONTINUED
Data revenue
Data customers pay a subscription fee to access elements of Auto Trader’s vehicle database or to
access the Fleetware software. Control is transferred to customers across the life of the contract
where customers have continuous access to the database or the software.
AutoConvert revenue
AutoConvert customers pay a monthly subscription fee to access the AutoConvert platform. Control
is transferred to customers across the life of the contract where customers have continuous access
to the platform and revenue is recognised across this period. Ancillary AutoConvert revenues are
charged on a per transaction basis and revenue is recognised at the point in time that these services
are provided.
(ii) Consumer Services revenue
Consumer Services comprises fees from private sellers for vehicle advertisements on the Group’s
websites, and third-party partners who provide services to consumers relating to their motoring needs,
such as insurance and loan finance. Private customers pay a fee in advance to advertise a vehicle on the
Group’s platform for a specified period of time. Control is obtained by customers across the life of the
contract as their stock is continually listed. Contracts for these services are typically entered into for
a period of between two and six weeks and revenue is recognised over this time.
Revenue is also generated from third-party partners who utilise the Group’s platforms to advertise
their products under a variety of contractual arrangements, with each service being a separate
performance obligation. Control is obtained by customers at a point in time when the service is
provided. Revenue is also generated through Instant Offer, providing consumers with a guaranteed
price for their vehicle offered by a third-party buyer. The Group’s fee is recognised as revenue when
the consumer’s vehicle is collected by the third-party buyer. Similarly, a small amount of revenue
is generated via an agreement with Dealer Auction (our joint venture), when retailers purchase a
consumer’s vehicle via Dealer Auction’s platform. Revenue is recognised when the vehicle is listed
as sold.
(iii) Manufacturer and Agency revenue
Revenue is generated from manufacturers and their advertising agencies for placing display
advertising for their brand or vehicle on the Group’s websites under a variety of contractual
arrangements, with each service being a separate performance obligation. Control is obtained by
customers across the life of the contract as their advertising is displayed on the different platforms.
Rebates are present in the contractual arrangements with customers and are awarded either in cash
or value of services based upon annual spend; an estimate of the annualised spend is made at the
reporting date to determine the amount of revenue to be recognised. A small proportion of revenue
relates to manufacturers who sell direct to consumers using our new car market extension product.
Manufacturers pay a monthly subscription fee to advertise their stock on the Group’s platforms.
Control is obtained by manufacturers across the life of the contract as their stock is continually listed.
Contracts for these services are agreed at a manufacturer or manufacturer group level and are
ongoing subject to a 30-day notice period. Revenue is invoiced monthly in arrears.
(iv) Autorama revenue
Autorama revenue comprises consideration received from the sale of new vehicles and accessories
as well as commission received for facilitating the lease of new vehicles.
Vehicle & Accessory sales revenue
Vehicle & Accessory sales revenue is generated from new vehicles which are purchased from
an original equipment manufacturer (‘OEM’) or retailer and then sold to a lease funder. Control is
obtained by the funder at a point in time when the vehicle is delivered and revenue is only recognised
at this point. Additional accessories can be added to vehicles at extra cost upon the request of
the funder, and control is once again obtained by the funder at a point in time when the vehicle is
delivered. Where the Group obtains control of vehicles or accessories in advance of selling those
goods to a funder, including holding inventory risk, then the Group is acting as principal and revenue
and cost of sales are reported on a gross basis. Where the Group does not obtain control of vehicles,
revenue is recorded as the value of the related commission and recognised as described below.
Commission & Ancillary revenue
Commission & Ancillary revenue is generated from commission received from lease funders for
facilitating the lease of new vehicles via advertisement on the Company online marketplaces. Control
is obtained by the funder at a point in time when the lease is live and revenue is only recognised at this
point. Ancillary Autorama revenues are charged on a per transaction basis and revenue is recognised
at the point in time that these services are provided.
Rebates are present in the contractual arrangements with funders and are awarded in cash based
upon the quarterly number of vehicles provided. Similarly, rebates are present in the contractual
arrangements with OEMs and are awarded in cash based upon the quarterly number of vehicles
The Group operates several pension schemes and all except one are defined contribution schemes.
Within the UK all pension schemes set up prior to 2001 have been closed to new members and only
one defined contribution scheme is now open to new employees.
a) Defined contribution scheme
The assets of the defined contribution scheme are held separately from those of the Group in
independently administered funds. The costs in respect of this Scheme are charged to the income
statement as incurred.
b) Defined benefit scheme
The Group operates one defined benefit pension scheme that is closed to new members. The asset
or liability recognised in the balance sheet in respect of the defined benefit scheme is the present
value of the defined benefit obligation at the balance sheet date less the fair value of the Scheme’s
assets. The defined benefit obligation is calculated annually by independent actuaries using the
projected unit credit method. The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates of high-quality corporate bonds
that are denominated in the currency in which the benefits will be paid, and that have terms to
maturity approximating those of the related pension liability. Remeasurement gains and losses
arising from experience adjustments and changes in actuarial assumptions are charged or credited
to equity in other comprehensive income in the period in which they arise. Any Scheme surplus (to the
extent it can be recovered) or deficit is recognised in full on the balance sheet. Contributions paid to
the Scheme by the Group have been classified as financing activities in the Consolidated statement
of cash flows as there are no remaining active members within the Scheme.
Strategic report
Governance
Financial statements
Notes to the consolidated financial statements
continued
Equity-settled awards are valued at the grant date, and the fair value is charged as an expense in the
income statement spread over the vesting period. Fair value of the awards is measured using Black-
Scholes and Monte Carlo pricing models. The credit side of the entry is recorded in equity. Cash-settled
awards are revalued at each reporting date with the fair value of the award charged to the profit and
Research and development expenditure is charged against profits in the year in which it is incurred,
Operating profit
Operating profit is the profit of the Group (including the Group’s share of profit from joint ventures)
before finance income, finance costs, profit on disposal of subsidiaries which do not meet the
definition of a discontinued operation, and taxation.
Finance income is earned on bank deposits and finance costs are incurred on bank borrowings and vehicle
The tax expense for the period comprises current and deferred taxation. Tax is recognised in the
income statement, except to the extent that it relates to items recognised in ‘other comprehensive
income’ or directly in equity. In this case the tax is also recognised in other comprehensive income or
directly in equity, respectively. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities.
Current taxation is provided at amounts expected to be paid (or recovered) calculated using the rates
of tax and laws that have been enacted or substantively enacted at the balance sheet date in the
countries where the Group operates and generates taxable income.
between the tax base of assets and liabilities and their carrying amounts are included in the
Consolidated financial statements. Deferred taxation is determined using tax rates and laws that
have been enacted or substantively enacted by the balance sheet date and are expected to apply
when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred taxation assets are recognised only to the extent that it is probable that future taxable
profit will be available against which the temporary differences can be utilised.
Deferred taxation is provided on temporary differences arising on investments in subsidiaries and
interests in joint ventures, except where the timing of the reversal of the temporary difference
is controlled by the Group and it is probable that the temporary difference will not reverse in the
foreseeable future. Deferred taxation assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities and when the deferred
taxation assets and liabilities relate to taxes levied by the same taxation authority on either the taxable
The Group has determined that the global minimum top-up tax, which is a liability under Pillar Two
legislation, is an income tax in the scope of IAS 12. The Group does not expect a liability to Pillar
Two top-up tax based on its effective rate of corporation tax paid and because its consolidated
At inception of a contract, the Group assesses whether or not a contract is, or contains, a lease. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period
of time in exchange for consideration. When a lease is recognised in a contract the Group recognises
a right of use asset and a lease liability at the lease commencement date other than as noted below.
The right of use asset is initially measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease prepayments made at or before the commencement date, plus any
initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset
or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right of use asset is subsequently depreciated using the straight-line method from the
commencement date to the earlier of the end of the useful life of the right of use asset or the end
of the lease term. The estimated useful lives of right of use assets are determined on the same basis
as those of property, plant and equipment. In addition, the right of use asset is periodically reduced
by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at
the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot
be readily determined, the Group’s incremental borrowing rate.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured
when there is a change in future lease payments arising from a change in an index or rate, or if the
Group changes its assessment of whether it will exercise a purchase, extension or termination option.
The Group presents right of use assets in property, plant and equipment and leased liabilities in lease
liabilities in the balance sheet.
The Group has applied the recognition exemption of low value leases. For these leases, the lease
A financial asset (unless it is a trade receivable without a significant financing component) or financial
liability is initially measured at fair value plus, for an item not at fair value through profit or loss,
transaction costs that are directly attributable to its acquisition or issue. A trade receivable without
a significant financing component is initially measured at the transaction price.
Under IFRS 9, trade receivables including accrued income, without a significant financing component,
are classified and held at amortised cost, being initially measured at the transaction price and
subsequently measured at amortised cost less any impairment loss.
The Group recognises lifetime expected credit losses (‘ECLs’) for trade receivables and accrued
income. The expected credit losses are estimated using a provision matrix based on the Group’s
historical credit loss experience, adjusted for any macro-economic factors. At 31 March 2023, ECLs
were adjusted for the macro-economic uncertainty around retailer profitability driven by used car
price volatility. At 31 March 2024, ECLs continue to reflect macro-economic uncertainty around retailer
profitability due to persistent high inflation, high interest rates and the upcoming UK general election
which could lead to new political policies to which we would need to respond.
Auto Trader Group plc
Annual Report and Financial Statements 2024
Strategic report
Governance
Financial statements
Notes to the consolidated financial statements
continued
125
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Annual Report and Financial Statements 2024
2. SIGNIFICANT ACCOUNTING POLICIES
CONTINUED
The Group assesses whether a financial asset is in default on a case by case basis when it becomes
probable that the customer is unlikely to pay its credit obligations. The gross carrying amount of a
financial asset is written off when the Group has no reasonable expectations of recovering a financial
asset in its entirety or a portion thereof. For all customers, the Group individually makes an assessment
with respect to the timing and amount of write-off based on whether there is a reasonable expectation
of recovery. The Group expects no significant recovery from the amount written off. However, financial
assets that are written off could still be subject to enforcement activities in order to comply with
the Group’s procedures for recovery of amounts due.
At each reporting date, the Group assesses whether financial assets carried at amortised cost
are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset have occurred.
Financial liabilities are classified as measured at amortised cost or fair value through profit and loss.
A financial liability is classified as at fair value through profit and loss if it is classified as held-for-
trading, it is a derivative, or it is designated as such on initial recognition and measured at fair value
and net gains and losses, including any interest expense, are recognised in profit or loss. Other
financial liabilities, including trade payables, are subsequently measured at amortised cost using
the effective interest method. Interest expense and foreign exchange gains and losses are
Goodwill represents the excess cost of an acquisition over the fair value of the Group’s share of
the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is tested
annually for impairment and is carried at cost less accumulated impairment losses. Impairment
losses are charged to the income statement and are not reversed. The gain or loss on the disposal
of an entity includes the carrying amount of goodwill relating to the entity sold. Goodwill is allocated
to cash-generating units for the purpose of impairment testing. The allocation is made to those
cash-generating units that are expected to benefit from the business combination in which the
franchise buybacks, brands and databases
Separately acquired trademarks, trade names, technology and customer relationships are recognised
at historical cost. They have a finite useful life and are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line method to allocate the cost over their estimated useful
lives of between one and 15 years. Trademarks, trade names, technology, non-compete agreements,
customer relationships, franchise buybacks, brands and databases acquired in a business combination
are recognised at fair value at the acquisition date and subsequently amortised.
c) Software
Acquired computer software controlled by the Group is capitalised at cost, including any costs to
bring it into use, and is carried at cost less accumulated amortisation. Amortisation is calculated
using the straight-line method to allocate the cost over the estimated useful life of three to five years.
d) Software and website development costs and financial systems
Development costs that are directly attributable to the design and testing of identifiable and unique
software products, websites and systems controlled by the Group are recognised as intangible
assets when the following criteria are met:
•
it is technically feasible to complete the software product or website so that it will be available
for use;
•
management intends to complete the software product or website and use or sell it;
•
there is an ability to use or sell the software product or website;
•
it can be demonstrated how the software product or website will generate probable future
economic benefits;
•
adequate technical, financial and other resources to complete the development and to use
or sell the software product or website are available; and
•
the expenditure attributable to the software product or website during its development can
be reliably measured.
Directly attributable costs that are capitalised as part of the software product, website or system
include employee and contractor costs. Other development expenditures that do not meet these
criteria, as well as ongoing maintenance and costs associated with routine upgrades and
enhancements, are recognised as an expense as incurred. Development costs for software, websites
and systems are carried at cost less accumulated amortisation and are amortised over their useful
lives (not exceeding 10 years) at the point at which they come into use.
Outside of acquired software, the Group develops its core infrastructure through small-scale,
maintenance-like incremental improvements and as a result, a low proportion of internal expenditure
meets the requirements of IAS 38, Intangible Assets. By their innovative nature, there may also be
uncertainty over the technical feasibility of new development projects and, if successful, how they
may be commercially monetised.
Licence agreements to use cloud software provided as a service are treated as service contracts
and expensed in the Group income statement, unless the Group has both a contractual right to take
possession of the software at any time without significant penalty, and the ability to run the software
independently of the host vendor. In such cases the licence agreement is capitalised as software
within intangible assets. Implementation costs are expensed unless implementation is a distinct
All property, plant and equipment is stated at historical cost less accumulated depreciation and
impairment losses. Historical cost comprises the purchase price of the asset and expenditure directly
attributable to the acquisition of the item.
method to allocate their cost less their estimated residual values over the estimated useful lives
as follows:
Land, buildings and leasehold improvements:
• Leasehold land and buildings
life of lease
• Leasehold improvements
life of lease
• Plant and equipment
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Notes to the consolidated financial statements
continued
126
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Annual Report and Financial Statements 2024
2. SIGNIFICANT ACCOUNTING POLICIES
CONTINUED
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance
sheet date. The carrying value of assets is reviewed for impairment if events or changes in circumstances
suggest that the carrying value may not be recoverable. Assets will be written down to their recoverable
amount if lower than the carrying value, and any impairment is charged to the income statement.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and
are tested annually for impairment. Assets that are subject to amortisation and depreciation are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating
units). Non-financial assets other than goodwill that have suffered an impairment are reviewed for
possible reversal of the impairment at each reporting date.
In assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. For an asset that does not generate largely independent cash flows, the
recoverable amount is determined for the cash-generating unit to which the asset belongs.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then
The Group accounts for business combinations using the acquisition method under IFRS 3 – Business
Under IFRS 11, investments in joint arrangements are classified as either joint operations or joint ventures
depending on the contractual rights and obligations of each investor. Auto Trader Group plc has
assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures
are accounted for using the equity method. Under the equity method of accounting, interests in joint
ventures are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the
Inventory is measured at the lower of cost and net realisable value, being the estimated selling price
Borrowings are recognised initially at fair value, net of transaction costs incurred, and are
subsequently carried at amortised cost, with any difference between the proceeds (net of
transaction costs) and the redemption value being recognised in the income statement over
the period of the borrowings using the effective interest method. Finance and issue costs associated
with the borrowings are charged to the income statement using the effective interest rate method
from the date of issue over the estimated life of the borrowings to which the costs relate.
Borrowings are derecognised when the contractual obligation is discharged, cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new liability,
such that the difference in respective carrying amounts together with any costs or fees incurred are
recognised in the income statement.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
Vehicle financing
A vehicle stocking loan is a financing arrangement which is used to purchase new and used vehicles
prior to re-sale. This financing arrangement can only be used for this purpose, typically has a maturity
of 180 days or less and is repayable on the earliest of the vehicle delivery date or the maturity date.
Based on these factors, the Group recognises these arrangements as financial liabilities within trade
and other payables as part of its operating cycle.
A provision is recognised when a present legal or constructive obligation exists at the balance sheet
date as a result of a past event, it is probable that an outflow of resources will be required to settle the
obligation and a reliable estimate of that obligation can be made. Where there are a number of similar
obligations, the likelihood that an outflow will be required in settlement is determined by considering
the class of obligations as a whole. If the effect is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the obligation.
Contingent liabilities are not recognised but are disclosed unless an outflow of resources is remote.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction from the proceeds.
Where the Group purchases its own equity share capital, the consideration paid is deducted from
equity attributable to the Group’s shareholders. Where such shares are subsequently cancelled, the
nominal value of the shares repurchased is deducted from share capital and transferred to a capital
redemption reserve. Where the Group purchases its own equity share capital to hold in treasury, the
Shares held by Employee Share Option Trust
The Employee Share Option Trust (‘ESOT’) provides for the issue of shares to Group employees principally
under share option schemes. The Group has control of the ESOT and therefore consolidates the ESOT in
the Group financial statements. Accordingly, shares in the Company held by the ESOT are included in the
balance sheet at cost as a deduction from equity.
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Financial statements
Notes to the consolidated financial statements
continued
127
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2. SIGNIFICANT ACCOUNTING POLICIES
CONTINUED
Share premium
The amount subscribed for the ordinary shares in excess of the nominal value of these new shares
is recorded in share premium. Costs that directly relate to the issue of ordinary shares are deducted
from share premium net of corporation tax.
Capital reorganisation reserve
The capital reorganisation reserve arose on consolidation as a result of the share-for-share exchange
on 24 March 2015. It represents the difference between the nominal value of shares issued by Auto Trader
Group plc in this transaction and the share capital and reserves of Auto Trader Holding Limited.
Capital redemption reserve
The capital redemption reserve arises from the purchase and subsequent cancellation of the Group’s
own equity share capital.
Other reserves
Other reserves include the currency translation reserve on the consolidation of entities whose
functional currency is other than sterling, and other amounts which arose on the initial common
control transaction that formed the Group.
The Group presents basic and diluted earnings per share (‘EPS’) for its ordinary shares. Basic EPS
is calculated by dividing the profit attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period. For diluted EPS, the weighted average
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s
financial statements in the period in which the dividend is approved by the Company’s shareholders
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the
a) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at the period end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement within administrative expenses.
b) Foreign operations
The results and financial position of all Group entities (none of which has the currency of a hyper-inflationary
economy) that have a functional currency other than sterling are translated into sterling as follows:
•
assets and liabilities for each balance sheet presented are translated at the closing rate at the
date of that balance sheet; and
•
income and expenses for each income statement are translated at average exchange rates.
These foreign currency differences are recognised in other comprehensive income and the
translation reserve within other reserves.
On the disposal of a foreign operation, the cumulative exchange differences that were recorded in
equity are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair
value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities
‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date in the principal or, in its absence,
the most advantageous market to which the Group has access at that date. The fair value of a liability
reflects its non-performance risk. A number of the Group’s accounting policies and disclosures
require the measurement of fair values, for both financial and non-financial assets and liabilities.
When one is available, the Group measures the fair value of an instrument using the quoted price in an
active market for that instrument. If there is no quoted price in an active market, then the Group uses
valuation techniques that maximise the use of relevant observable outputs and minimise the use of
unobservable outputs. The chosen valuation technique incorporates all of the factors that market
Overview
In the course of its business the Group is exposed to market risk, credit risk and liquidity risk from its
use of financial instruments. This note presents information about the Group’s exposure to each of
the below risks, the Group’s objectives, policies and processes for measuring and managing risk and
the Group’s management of capital. Further quantitative disclosures are included throughout these
Consolidated financial statements.
The Group’s overall risk management strategy is to minimise potential adverse effects on the financial
performance and net assets of the Group. These policies are set and reviewed by senior finance
management and all significant financing transactions are authorised by the Board of Directors.
The Group has no significant foreign exchange risk as 100% of the Group’s revenue and 98% of costs are
sterling-denominated. As the amounts are not significant, no sensitivity analysis has been presented.
During the prior year the Group sold one of its subsidiaries, Webzone Limited, which traded in the
Republic of Ireland under the Carzone brand. Following the sale of Webzone Limited, all of the Group’s
ii. Interest rate risk
The Group’s interest rate risk arises from vehicle stocking loans which have floating rates of interest
linked to the Bank of England Base Rate and long-term borrowings under the Syndicated RCF with
floating rates of interest linked to SONIA. The Group monitors interest rates on an ongoing basis but
does not currently hedge interest rate risk. The variation of 100 basis points in the interest rate of
floating rate financial liabilities (with all other variables held constant) will increase or decrease
Strategic report
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Financial statements
Notes to the consolidated financial statements
continued
128
Auto Trader Group plc
Annual Report and Financial Statements 2024
3. RISK AND CAPITAL MANAGEMENT
CONTINUED
Credit risk is the risk of financial loss to the Group if a customer or banking institution fails to meet
its contractual obligations.
i. Trade receivables
Credit risk relating to trade receivables is managed centrally and the credit risk for new Auto Trader
customers is analysed before standard payment terms and conditions are offered. Policies and
procedures exist to ensure that Auto Trader’s existing customers have an appropriate credit history
and a significant number of balances are collected via direct debit. In March, more than 87.4%
(2023: 87.4%) of Auto Trader’s retailer customers paid via monthly direct debit, minimising the risk of
non-payment. Sales to private individuals using Auto Trader are primarily settled in advance using
major debit or credit cards which removes the risk in this area.
Autorama’s main customers are funders who do not change regularly, so the risk in this area
is also minimal.
The Group establishes an expected credit loss that represents its estimate of losses in respect
of trade and other receivables. Further details of these are given in note 32.
Overall, the Group considers that it is not exposed to a significant amount of either customer credit
or bad debt risk, due to the fragmented nature of the customer base and the robust nature of the
used car market.
ii. Cash and cash equivalents
As at 31 March 2024, the Group held cash and cash equivalents of £18.7m (2023: £16.6m). The cash and
cash equivalents are held with bank and financial institution counterparties, which are rated between
P-1 and P-2 based on Moody’s ratings. The Group’s treasury policy is to monitor cash, and when
applicable deposit balances, on a daily basis and to manage counterparty risk, whilst also ensuring
Liquidity risk is the risk that the Group will encounter difficulties in meeting the obligations associated
with its financial liabilities that are settled by delivering cash. The Group’s approach to managing
liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Group’s reputation.
Cash flow forecasting is performed centrally by the Director of Group Finance. Rolling forecasts of
the Group’s liquidity requirements are monitored to ensure it has sufficient cash to meet operational
needs. The Group’s revenue model is largely subscription-based, which results in a regular level of
cash conversion allowing it to service working capital requirements.
The Group has access to a Syndicated RCF which has total commitments of £200.0m. The £200.0m
Syndicated RCF is committed through to maturity in February 2029. The facility allows the Group
access to cash at one working day’s notice. At 31 March 2024, £30.0m was drawn under the
Syndicated RCF (2023: £60.0m).
The Group has access to a vehicle stocking loan, with a limit of £12.0m. This financing arrangement
can only be used to fund the purchase of new and used vehicles prior to re-sale and has a maturity of
180 days or less. The loan is repayable on the earliest of the vehicle delivery date or the maturity date.
Capital management
The Group considers capital to be net debt plus total equity. Net debt is calculated as total bank debt,
other loans and lease financing, less cash and cash equivalents as shown in note 20. Total equity is as
shown in the Consolidated balance sheet.
The calculation of total capital is shown in the table below:
2024 | 2023 | |
£m | £m | |
Total net debt | 14.0 | 52.4 |
Total equity | 552.3 | 527.3 |
Total capital | 566.3 | 579.7 |
The objectives for managing capital are to safeguard the Group’s ability to continue as a going
concern, in order to provide returns for shareholders and benefits for other stakeholders and to
maintain an efficient cost of capital structure. To maintain or adjust the capital structure, the Group
may pay dividends, return capital through share buybacks, issue new shares or take other steps to
increase share capital and reduce or increase debt facilities.
As at 31 March 2024, the Group had borrowings of £30.0m (2023: £60.0m) through its Syndicated RCF.
Interest is payable on this facility at a rate of SONIA plus a margin of between 1.2% and 2.1% depending
on the consolidated leverage ratio of Auto Trader Group plc and its subsidiaries, which is calculated
and reviewed on a biannual basis. As part of the amendment and extension of its Syndicated RCF in
2023, three sustainability performance targets were incorporated into the agreement. This will be
tested for the first time in 2024. The margin shall be increased or decreased between -0.05% and 0.05%
based on the number of sustainability performance targets achieved in the reporting period. This will
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 (2023: two operating segments), being:
•
Auto Trader: includes the results of Auto Trader and AutoConvert (prior year includes Webzone
before it was disposed of on 24 October 2022) in respect of online classified advertising of motor
vehicles and other related products and services in the digital automotive marketplace including
share of profit from the Dealer Auction joint venture.
•
Autorama: the results of Autorama in respect of a marketplace for leasing new 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, split 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 presented for each
operating segment are largely independent in the reporting period with certain costs recharged
between segments.
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4. SEGMENTAL INFORMATION
CONTINUED
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 year to 31 March 2024,
inter-segment revenue earned by Auto Trader from Autorama for vehicles leased via a journey
initiated on the Auto Trader platform was not material (2023: £nil).
Analysis of the Group’s revenue and results for both reportable segments, with a reconciliation to
Group profit before tax, is shown below:
Group | ||||
Auto Trader | Autorama | central | ||
segment | segment | costs | Group | |
Year to 31 March 2024 | £m | £m | £m | £m |
Total segment revenue | 529.7 | 41.2 | – | 570.9 |
People costs | (81.5) | (10.9) | (11.1) | (103.5) |
Marketing | (22.3) | (4.0) | – | (26.3) |
Costs of goods sold | – | (28.2) | – | (28.2) |
Other costs | (44.2) | (4.5) | – | (48.7) |
Depreciation & amortisation | (5.9) | (2.4) | (10.0) | (18.3) |
Total segment costs | (153.9) | (50.0) | (21.1) | (225.0) |
Share of profit from joint ventures | 2.8 | – | – | 2.8 |
Total segment operating profit/(loss) | 378.6 | (8.8) | (21.1) | 348.7 |
Finance costs – net | (3.5) | |||
Profit before tax | 345.2 |
Group central costs which are not allocated within either of the segment operating profit/(loss)
reported to the CODM comprise:
(i)
People costs: £10.4m share-based payment expense relating to the Group shares issued
as part of the deferred consideration for Autorama (note 31), which was fully settled in the period.
A further £0.7m was settled in cash.
(ii)
Depreciation & amortisation: £10.0m of amortisation expense relating to the fair value of
intangible brand, technology and other assets acquired in the Group’s business combination
of Autorama.
Group | ||||
Auto Trader | Autorama | central | ||
segment | segment | costs | Group | |
Year to 31 March 2023 | £m | £m | £m | £m |
Total segment revenue | 473.0 | 27.2 | – | 500.2 |
People costs | (74.0) | (10.5) | (38.8) | (123.3) |
Marketing | (22.3) | (4.7) | – | (27.0) |
Costs of goods sold | – | (15.7) | – | (15.7) |
Other costs | (39.6) | (5.4) | – | (45.0) |
Depreciation & amortisation | (6.7) | (2.1) | (5.3) | (14.1) |
Total segment costs | (142.6) | (38.4) | (44.1) | (225.1) |
Share of profit from joint ventures | 2.5 | – | – | 2.5 |
Total segment operating profit/(loss) | 332.9 | (11.2) | (44.1) | 277.6 |
Profit on disposal of subsidiary | 19.1 | |||
Finance costs – net | (3.1) | |||
Profit before tax | 293.6 |
The Group’s operations and main revenue streams are those described in these annual financial
statements. The Group’s revenue is derived from contracts with customers.
Other than disclosed in note 10, 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.
Revenue
2024 | 2023 | |
£m | £m | |
Retailer | 450.0 | 406.8 |
Home Trader | 13.4 | 10.1 |
Other | 12.3 | 10.5 |
Trade | 475.7 | 427.4 |
Consumer Services | 39.6 | 34.5 |
Manufacturer & Agency | 14.4 | 11.1 |
Autorama | 41.2 | 27.2 |
Total revenue | 570.9 | 500.2 |
Revenue is largely recognised over time, other than Autorama revenue which is recognised at a point
in time when related sales commission or fees are earned. The Group has no major customers to
disclose in either the current or prior year.
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5. REVENUE
CONTINUED
Contract balances
The following table provides information about receivables and contract assets and liabilities from
contracts with customers.
2024 | 2023 | |
£m | £m | |
Receivables, which are included in trade and other receivables | 36.0 | 31.5 |
Accrued income | 44.5 | 40.2 |
Deferred income | (15.1) | (14.0) |
Accrued income relates to the Group’s unconditional rights to consideration for services provided but
not invoiced at the reporting date. Accrued income is transferred to trade receivables when invoiced.
Deferred income relates to advanced consideration received for which revenue is recognised as or
when services are provided. £7.3m (2023: £5.7m) of the deferred income balance is classified as a current
liability within trade and other payables (note 21). Included within deferred income is £8.3m (2023:
£8.9m) relating to consideration received from Dealer Auction Limited (joint venture) for the provision of
data services to Dealer Auction (note 16). Revenue relating to this service is recognised on a straight-
line basis over a period of 20 years to 31 December 2038; given this time period the liability has been split
Operating profit is after (charging)/crediting the following:
2024 | 2023 | ||
Note | £m | £m | |
Staff costs | 7 | (92.2) | (84.1) |
Contractor costs | (0.2) | (0.4) | |
Depreciation of property, plant and equipment | 14 | (4.8) | (4.9) |
Amortisation of intangible assets | 13 | (13.5) | (9.2) |
(Loss)/profit on sale of property, plant and equipment | (0.3) | 0.7 |
During the year, the Group (including overseas subsidiaries) obtained the following services from the
operating company’s auditor:
2024 | 2023 | |
£m | £m | |
Fees payable for the audit of the Company and Consolidated | ||
financial statements | 0.2 | 0.2 |
Fees payable for other services | ||
The audit of the subsidiary undertakings pursuant to legislation | 0.3 | 0.3 |
Total | 0.5 | 0.5 |
Fees payable for audit-related assurance services in the year were £52,000 (2023: £48,000) for the
half-year review of the condensed financial statements. Fees payable for other non-audit services
in the year were £15,000 (2023: £nil) for limited assurance over certain information included within or
The average monthly number of employees (including Executive Directors and contractors) employed
by the Group was as follows:
2024 | 2023 | |
Number | Number | |
Customer operations | 646 | 566 |
Product and technology | 394 | 403 |
Corporate | 193 | 191 |
Total | 1,233 | 1,160 |
The aggregate payroll costs of these persons were as follows:
2024 | 2023 | ||
Note | £m | £m | |
Wages and salaries | 72.6 | 66.7 | |
Social security costs | 7.5 | 7.3 | |
Defined contribution pension costs | 25 | 4.1 | 3.5 |
84.2 | 77.5 | ||
Share-based payments and associated NI | 30 | 8.2 | 6.6 |
Total | 92.4 | 84.1 |
Wages and salaries include £28.1m (2023: £27.7m) relating to the product and technology teams;
these teams spend a significant proportion of their time on innovation of our product proposition and
incremental enhancements to the Group’s platforms.
In addition to the share-based payments disclosed above, a share-based payment charge of £10.4m
(2023: £38.8m) has been recorded in the income statement for the year, relating to deferred
The remuneration of Directors is disclosed in the Directors’ remuneration report on pages 81 to 99:
Key Management compensation
During the year to 31 March 2024, Key Management comprised the members of the OLT (who are
defined in note 4) and the Non-Executive Directors (2023: OLT and the Non-Executive Directors).
The remuneration of all Key Management (including all Directors) was as follows:
2024 | 2023 | |
£m | £m | |
Short-term employee benefits | 4.6 | 4.2 |
Share-based payments | 2.1 | 2.1 |
Pension contributions | 0.2 | 0.2 |
Total excluding NI | 6.9 | 6.5 |
Employer NI | 0.8 | 0.8 |
Total | 7.7 | 7.3 |
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2024 | 2023 | |
£m | £m | |
On bank loans and overdrafts | 3.0 | 2.5 |
Amortisation of debt issue costs | 0.6 | 0.5 |
Interest unwind on lease liabilities | 0.1 | 0.2 |
Interest on vehicle stocking loan | 0.3 | 0.1 |
Interest receivable on cash and cash equivalents | (0.5) | (0.2) |
Total | 3.5 | 3.1 |
Sale of Webzone Limited
In the prior period, the Group announced the sale of one of its subsidiaries, Webzone Limited, which
trades in the Republic of Ireland under the Carzone brand. The business was sold to Mediahuis Ireland
for a consideration of €30.0m on 22 October 2022.
The disposal of Webzone Limited did not represent a discontinued operation under IFRS 5 as the entity
was neither a separate major line of business or a material geographical area of operation.
A profit on disposal was recognised in the Group’s Consolidated income statement for the year ended
31 March 2023:
24 October | |
2022 | |
£m | |
Goodwill | 5.7 |
Property, plant and equipment | 0.6 |
Deferred taxation assets | 0.1 |
Trade and other receivables | 0.9 |
Cash and cash equivalents | 0.8 |
Lease liabilities | (0.7) |
Trade and other payables | (0.5) |
Net identifiable assets/(liabilities) disposed of | 6.9 |
Cash consideration received | 26.4 |
Net identifiable assets disposed of | (6.9) |
Realisation of cumulative currency translation difference | (0.4) |
Gain on disposal of subsidiary | 19.1 |
2024 | 2023 | |
£m | £m | |
Current taxation | ||
UK corporation taxation | 91.7 | 61.2 |
Foreign taxation | – | 0.1 |
Adjustments in respect of prior years | – | (0.2) |
Total current taxation | 91.7 | 61.1 |
Deferred taxation | ||
Origination and reversal of temporary differences | (3.0) | (1.3) |
Adjustments in respect of prior years | (0.4) | (0.1) |
Total deferred taxation | (3.4) | (1.4) |
Total taxation charge | 88.3 | 59.7 |
The taxation charge for the year is higher than (2023: higher than) the effective rate of corporation tax
in the UK of 25% (2023: 19%). The differences are explained below:
2024 | 2023 | |
£m | £m | |
Profit before taxation | 345.2 | 293.6 |
Tax on profit at the standard UK corporation tax rate of 25% (2023: 19%) | 86.3 | 55.8 |
Expenses not deductible for taxation purposes | 3.5 | 8.5 |
Income not taxable – gain on disposal of subsidiary | – | (3.6) |
Share of joint venture taxation | (0.7) | (0.5) |
Adjustments in respect of foreign taxation rates | – | (0.1) |
Adjustments in respect of losses not previously recognised | (0.4) | – |
Adjustments in respect of OCI group relief | – | (0.1) |
Adjustments in respect of prior years | (0.4) | (0.3) |
Total taxation charge | 88.3 | 59.7 |
Expenses non-deductible for taxation purposes in the current period principally includes the
share-based payment expense relating to the deferred consideration arising on acquisition of
Autorama (note 4).
Adjustments in respect of losses not previously recognised in the current year relates to brought
forward tax losses within the Group which were previously not recognised. Losses have been utilised
in the period and a deferred tax asset has been recognised in respect of the remaining balance on the
basis that it is deemed probable that future taxable profit will be available to utilise these against.
Taxation on items taken directly to equity was a debit of £0.3m (2023: credit of £0.4m) relating to tax
on share-based payments.
Taxation recorded in equity within the Consolidated statement of comprehensive income was
a release of £0.1m (2023: release of £0.4m) relating to post-employment benefit obligations.
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11. TAXATION
CONTINUED
The taxation charge for the year is based on the standard rate of UK corporation tax for the period
of 25% (2023: 19%).
Deferred income taxes have been measured at the tax rate expected to be applicable at the date
the deferred income tax assets and liabilities are realised.
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.
Pillar Two came into effect for accounting periods beginning on or after 31 December 2023, but the
timeline for finalising the multilateral convention that would implement Pillar One is still not certain.
The implementation of Pillar One would see UK digital services tax (‘DST’) repealed and the Group
liability would fall away. An outcome statement was published in July 2023 which gave an expectation
that Pillar One would come into force during calendar year 2025. We are awaiting further updates.
Our in-scope revenue did not exceed the threshold for UK DST in financial year 2024, but we expect
that the Group will exceed that threshold and pay DST in financial year 2025. This would result in an
additional operating expense equivalent to c.2% of in-scope revenue, which will be deductible against
corporation tax payable.
The UK DST is calculated using a gross measure of revenue and therefore does not meet the
definition of an income tax under IAS 12 – Income taxes. Any amounts payable will therefore
be accounted for as a pre-tax operating expense which, on the basis it is incurred wholly and
exclusively for the purposes of the company’s trade, will be included as a deductible expense
Basic earnings per share is calculated using the weighted average number of ordinary shares in issue
during the year, excluding those held in treasury and by the Employee Share Option Trust (‘ESOT’),
based on the profit for the year attributable to shareholders.
Weighted average | Total | ||
number of | earnings | Pence | |
ordinary shares | £m | per share | |
Year ended 31 March 2024 | |||
Basic EPS | 912,582,172 | 256.9 | 28.15 |
Diluted EPS | 915,302,568 | 256.9 | 28.07 |
Year ended 31 March 2023 | |||
Basic EPS | 935,138,578 | 233.9 | 25.01 |
Diluted EPS | 944,144,242 | 233.9 | 24.77 |
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:
2024 | 2023 | |
Issued ordinary shares at 1 April | 923,074,657 | 946,892,976 |
Weighted effect of ordinary shares purchased for cancellation | (11,835,430) | (7,112,698) |
Weighted effect of ordinary shares held in treasury | (4,417,849) | (4,304,401) |
Weighted effect of shares held in the ESOT | (330,294) | (348,989) |
Weighted effect of ordinary shares issued for share-based payments | 6,091,088 | 11,690 |
Weighted average number of shares for basic EPS | 912,582,172 | 935,138,578 |
Dilutive impact of share options outstanding | 2,720,396 | 9,005,664 |
Weighted average number of shares for diluted EPS | 915,302,568 | 944,144,242 |
For diluted earnings per share, the weighted average number of shares for basic EPS is adjusted
to assume conversion of all potentially dilutive ordinary shares. The Group has potentially dilutive
ordinary shares arising from share options granted to employees. Options are dilutive where the
exercise price together with the future IFRS 2 charge is less than the average market price of the
ordinary shares during the year. Options under the Performance Share Plan, the Single Incentive
Plan Award for the Operational Leadership Team and certain key employees, the Single Incentive
Plan Award for all employees, the Deferred Annual Bonus Plan and the Share Incentive Plan are
contingently issuable shares and are therefore only included within the calculation of diluted EPS
if the performance conditions are satisfied. Dilutive share options outstanding at 31 March 2023
included shares to be issued for the Autorama deferred consideration, which were issued in
June 2023.
The average market value of the Group’s shares for the purposes of calculating the dilutive effect
of share-based incentives was based on quoted market prices for the period during which the
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Software and | ||||||
website | ||||||
development | Financial | |||||
Goodwill | costs | systems | Brand | Other | Total | |
£m | £m | £m | £m | £m | £m | |
Cost | ||||||
At 31 March 2022 | 457.9 | 14.4 | 13.1 | 1.2 | 25.3 | 511.9 |
Acquired through business combinations | 92.5 | 13.7 | – | 47.6 | 5.6 | 159.4 |
Additions | – | 1.0 | – | – | – | 1.0 |
Disposals | (5.7) | (1.8) | – | (0.6) | (1.2) | (9.3) |
Exchange differences | (0.1) | – | – | – | – | (0.1) |
At 31 March 2023 | 544.6 | 27.3 | 13.1 | 48.2 | 29.7 | 662.9 |
Additions | – | 0.2 | – | – | – | 0.2 |
Disposals | – | (3.0) | – | – | – | (3.0) |
At 31 March 2024 | 544.6 | 24.5 | 13.1 | 48.2 | 29.7 | 660.1 |
Accumulated amortisation and impairments | ||||||
At 31 March 2022 | 117.0 | 9.2 | 13.1 | 0.7 | 16.3 | 156.3 |
Amortisation charge | – | 2.5 | – | 4.2 | 2.5 | 9.2 |
Disposals | – | (1.8) | – | (0.6) | (1.2) | (3.6) |
At 31 March 2023 | 117.0 | 9.9 | 13.1 | 4.3 | 17.6 | 161.9 |
Amortisation charge | – | 3.0 | – | 7.9 | 2.6 | 13.5 |
Disposals | – | (3.0) | – | – | – | (3.0) |
At 31 March 2024 | 117.0 | 9.9 | 13.1 | 12.2 | 20.2 | 172.4 |
Net book value at 31 March 2024 | 427.6 | 14.6 | – | 36.0 | 9.5 | 487.7 |
Net book value at 31 March 2023 | 427.6 | 17.4 | – | 43.9 | 12.1 | 501.0 |
Net book value at 31 March 2022 | 340.9 | 5.2 | – | 0.5 | 9.0 | 355.6 |
Other intangibles include customer relationships, technology, trade names, trademarks and non-compete agreements. Intangible assets which have a finite useful life are carried at cost less accumulated
amortisation. Amortisation of these intangible assets is calculated using the straight-line method to allocate the cost of the assets over their estimated useful lives (principally between 3 to 15 years).
The longest estimated useful life remaining at 31 March 2024 is 11 years (31 March 2023: 12 years).
For the year to 31 March 2024, the amortisation charge of £13.5m (2023: £9.2m) has been charged to operating costs in the Consolidated income statement. As the integration of Autorama, our new car leasing
proposition, has accelerated at a faster pace than anticipated at acquisition, the useful economic life of the ‘Vanarama’ brand has been reduced from ten years to five years from the date of acquisition,
effective from 1 October 2023.
At 31 March 2024, there were no software and website development costs representing assets under construction (2023: £nil).
In accordance with UK-adopted international accounting standards, goodwill is not amortised, but instead is tested annually for impairment, or more frequently if there are indicators of impairment.
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13. INTANGIBLE ASSETS
CONTINUED
Goodwill is allocated to the appropriate cash-generating unit (‘CGU’) based on the smallest
identifiable group of assets that generates cash inflows independently in relation to the specific
goodwill. There are two CGUs that exist in the Group, being the Digital CGU and the Autorama CGU.
The carrying value of the CGUs is principally the sum of goodwill, property, plant and equipment
(including lease assets), intangibles and lease liabilities, and related deferred tax, as follows:
2024 | 2023 | |
£m | £m | |
Digital | 352.3 | 351.1 |
Autorama | 144.0 | 152.8 |
Digital
The recoverable amount of the Digital CGU is determined from value-in-use calculations that use
discounted cash flow projections from the latest business plan. The carrying value is forecast to be
recovered based on less than two years of forecasted cash flows from this mature operating business.
Income and costs within the budget are derived on a detailed ‘bottom up’ basis – all income streams
and cost lines are considered and appropriate growth, or decline, rates are assumed. Income and cost
growth forecasts are risk adjusted to reflect specific risks facing the CGU and take into account the
market in which it operates. Assumptions, which are not sensitive to change, include revenue growth
rates, associated levels of marketing support and directly associated overheads. All assumptions are
based on past performance and management’s expectation of market development. Cash flows
beyond the forecast period of five years (2023: five years) are extrapolated using the estimated
growth rate stated into perpetuity; a rate of 2.5% (2023: 2.0%) has been used. This is lower than the
current rate of inflation in the UK but takes account of longer-term considerations.
The pre-tax discount rate used within the recoverable amount calculation is based upon the weighted
average cost of capital. The discount rate takes into account the risk-free rate of return, the market
risk premium and beta factor reflecting the average beta for the Group and comparator companies
which are used in deriving the cost of equity. Other than as included in the financial budget, it is
assumed that there are no material adverse changes in legislation that would affect the forecast
cash flows.
The key assumptions used for the value-in-use calculation are as follows:
2024 | 2023 | |
Terminal value growth rate | 2.5% | 2.0% |
Discount rate (pre-tax) | 12.5% | 12.8% |
The recoverable amount of goodwill shows significant headroom compared with its carrying value.
The level of headroom may change if different growth rate assumptions or a different pre-tax
discount rate were used in the cash flow projections. There are no changes to the key assumptions
of growth rate or discount rate that are considered by the Directors to be reasonably possible,
which give rise to an impairment of goodwill relating to the Digital CGU.
Having completed the 2024 impairment review, no impairment has been recognised in relation to the
Digital CGU (2023: no impairment).
Autorama
The recoverable amount of the Autorama CGU is based on a value-in-use methodology following
the integration of the business in the current year. In the prior year, the recoverable amount was
assessed and disclosed using fair value less cost to sell due to the proximity of the acquisition
and the pre-integration phase of the business as at 31 March 2023.
Goodwill amounting to £92.5m in the Autorama CGU arose on the acquisition of Autorama UK Limited
in June 2022. The acquisition was undertaken to enable Auto Trader to establish itself as a leading
marketplace for leasing new cars which, over time, is set to benefit from: the growth of electric cars,
new manufacturers entering the UK market and a shift towards new digital distribution models.
Leasing provides consumers a cost-effective way to access a new car with a model that is consistent
with any future move towards usership rather than ownership. These factors are expected to result
in an opportunity for consolidation in the leasing market.
Value-in-use reflects the present value of the future cash flows the Group expects to be derived from
the cash-generating unit.
The key assumptions used in the estimation of the CGU’s recoverable amount are as follows:
2024 | |
Forecast period | 6 years |
Compound annual growth rate for revenue (from lease commissions and ancillary sales) | 32% |
Terminal value growth rate | 2.5% |
Discount rate (pre-tax) | 12.8% |
A six-year forecast period is consistent with the period of regulatory and commercial change
expected in the new vehicle market described above. The forecast in year six only includes growth
in respect of the market rather than growth in the Group’s market share.
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13. INTANGIBLE ASSETS
CONTINUED
Assessment of the CGU’s value-in-use reflects long-term assumptions around changing distribution
models for new car sales, including new electric vehicles, and an increased proportion of vehicles
being leased. Management have used historic market data published by The Society of Motor
Manufacturers & Traders (‘SMMT’) and British Vehicle Rental & Leasing Association (‘BVRLA’) to
inform their estimate of the number of new vehicles to be sold each year, the proportion of new
vehicles which are expected to be leased and the number of leases forecast to be transacted
through brokers. The forecasts in any year do not assume a larger new car or van registration
market than in 2019, before the disruption to supply that commenced during the COVID-19 pandemic.
The key driver of the forecast is the number of new vehicles transacted by the Group onto lease plans,
with revenues, including ancillary sales, consequent on each vehicle lease transaction completed.
Growth, particularly for cars, is dependent upon a significant increase in the Group’s market share,
driven by a consolidation of the broker market. This is principally expected to be achieved by further
developing the capability for lease transactions to originate on the established Auto Trader
marketplace, under the Auto Trader brand, as well as Vanarama. Growth assumptions are lower
for the van leasing business which has an established market share.
In the year to 31 March 2024, Autorama has delivered 7,847 vehicles (2023: 6,895 vehicles). The personal
leasing market has been constrained by tight supply in the current and prior year, but supply is
expected to improve. In response, in the current year, the Group has accelerated integration of
Autorama onto Auto Trader and focused on realising post-acquisition cost synergies in advance
of market growth.
The risk arising from growth assumptions for new vehicles transacted in this period not being
achieved is reflected in the base forecast cash flows rather than the pre-tax discount rate applied.
The pre-tax discount rate disclosed has been derived using a weighted average cost of capital
and using the Capital Asset Pricing Model, reflecting UK-based assumptions for the risk-free rate.
The sensitivity of the impairment calculation as at 31 March 2024 is reduced due to the accounting
requirement to expense the £49.9m share-based payment charge relating to deferred consideration
(note 31). All of this charge has been expensed as at 31 March 2024, together with further cumulative
£17.7m of acquired intangible amortisation. However, the headroom is dependent on achieving the
planned volume growth over the forecast period.
No impairment charge, albeit with limited headroom, would arise under the following
sensitivity scenarios:
• The forecast period is restricted to five years;
•
A 10% reduction in new vehicles delivered in year six as this is the financial period in which revenue
has the greatest impact on the estimation of recoverable amount;
•
Delay in timing: Forecast cash flows are deferred by one year from financial year 2025 to reflect
the risk of possible factors such as, a slower transition to electric vehicles and delays in new car
and van supply;
• The discount rate is increased by 1%; and
Land, buildings and leasehold improvements | ||||
Office equipment | Motor vehicles | |||
Total | ||||
£m | £m | £m | £m | |
Cost | ||||
At 31 March 2022 | 23.1 | 13.9 | 1.6 | 38.6 |
Acquired through business combinations | 4.0 | 0.3 | 1.0 | 5.3 |
Additions | 2.2 | 2.0 | 0.3 | 4.5 |
Disposals | (7.6) | (3.0) | (0.9) | (11.5) |
At 31 March 2023 | 21.7 | 13.2 | 2.0 | 36.9 |
Additions | 2.8 | 1.4 | 0.2 | 4.4 |
Disposals | (1.5) | (4.1) | (0.6) | (6.2) |
At 31 March 2024 | 23.0 | 10.5 | 1.6 | 35.1 |
Accumulated depreciation | ||||
At 31 March 2022 | 11.5 | 11.1 | 1.3 | 23.9 |
Charge for the year | 3.3 | 1.1 | 0.5 | 4.9 |
Disposals | (4.4) | (2.8) | (0.6) | (7.8) |
At 31 March 2023 | 10.4 | 9.4 | 1.2 | 21.0 |
Charge for the year | 2.9 | 1.5 | 0.4 | 4.8 |
Disposals | (1.1) | (4.1) | (0.4) | (5.6) |
At 31 March 2024 | 12.2 | 6.8 | 1.2 | 20.2 |
Net book value at 31 March 2024 | 10.8 | 3.7 | 0.4 | 14.9 |
Net book value at 31 March 2023 | 11.3 | 3.8 | 0.8 | 15.9 |
Net book value at 31 March 2022 | 11.6 | 2.8 | 0.3 | 14.7 |
Included within property, plant and equipment are £5.0m (2023: £6.5m) of assets recognised as
leases under IFRS 16. Further details of these leases are disclosed in note 15. The depreciation
expense of £4.8m for the year to 31 March 2024 (2023: £4.9m) has been recorded in operating costs
in the Consolidated income statement. During the year, £5.3m (2023: £2.6m) worth of property,
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Financial statements
Notes to the consolidated financial statements
continued
136
Auto Trader Group plc
Annual Report and Financial Statements 2024
The Group’s lease assets including land and buildings and motor vehicles are held within property,
plant and equipment. Information about leases for which the Group is a lessee is presented below:
2024 | 2023 | |
£m | £m | |
Net book value of property, plant and equipment owned | 9.9 | 9.4 |
Net book value of right of use assets | 5.0 | 6.5 |
14.9 | 15.9 |
Land, buildings | ||||
and leasehold | Office | Motor | ||
improvements | equipment | vehicles | Total | |
Net book value of right of use assets | £m | £m | £m | £m |
Balance at 31 March 2022 | 7.8 | 0.1 | 0.4 | 8.3 |
Acquired through business combination | 0.1 | – | 0.3 | 0.4 |
Additions | 1.5 | 0.1 | 0.3 | 1.9 |
Disposals | (1.4) | – | (0.1) | (1.5) |
Depreciation charge | (2.2) | – | (0.4) | (2.6) |
Balance at 31 March 2023 | 5.8 | 0.2 | 0.5 | 6.5 |
Additions | 0.5 | 0.1 | 0.2 | 0.8 |
Disposals | (0.1) | – | – | (0.1) |
Depreciation charge | (1.8) | (0.1) | (0.3) | (2.2) |
At 31 March 2024 | 4.4 | 0.2 | 0.4 | 5.0 |
2024 | 2023 | |
Lease liabilities in the balance sheet at 31 March | £m | £m |
Current | 2.4 | 2.5 |
Non-current | 2.4 | 4.6 |
Total | 4.8 | 7.1 |
A maturity analysis of contractual undiscounted cash flows relating to lease liabilities is presented
within note 32. The term recognised for certain leases has assumed lease break options are exercised.
Certain lease rentals are subject to periodic market rental reviews.
During the year, the Group reassessed its dilapidations provision for its leased properties which
resulted in a £0.4m increase in the provision, and corresponding increase in the right of use asset.
2024 | 2023 | |
Amounts charged in the income statement | £m | £m |
Depreciation charge of right of use assets | 2.2 | 2.6 |
Interest on lease liabilities | 0.1 | 0.2 |
Gain on disposal of right of use assets | – | (0.1) |
Total amounts charged in the income statement | 2.3 | 2.7 |
2024 | 2023 | |
Cash outflow | £m | £m |
Total cash outflow for leases | 2.7 | 2.9 |
Joint ventures are contractual arrangements over which the Group exercises joint control with
partners and where the parties have rights to the net assets of the arrangement, irrespective of
the Group’s shareholding in the entity.
The Group owns 49% of the ordinary share capital of Dealer Auction Limited (previously Dealer Auction
(Holdings) Limited). The basis of the Group’s joint control is through a shareholder agreement and an
assessment of the substantive rights of each shareholder, including operational barriers or incentives
that would prevent or deter rights being exercised.
Net investments in joint ventures at the reporting date include the Group’s equity investment in joint
ventures and the Group’s share of the joint ventures’ post acquisition net assets. The table below
reconciles the movement in the Group’s net investment in joint ventures in the year:
Equity | Share of post | Net investments | |
investments in | acquisition net | in joint | |
joint ventures | assets | ventures | |
£m | £m | £m | |
Carrying value | |||
As at 31 March 2022 | 40.3 | 9.4 | 49.7 |
Share of result for the year taken to the income statement | – | 2.5 | 2.5 |
Dividends received in the year | (2.9) | – | (2.9) |
As at 31 March 2023 | 37.4 | 11.9 | 49.3 |
Share of result for the year taken to the income statement | – | 2.8 | 2.8 |
Dividends received in the year | (3.9) | – | (3.9) |
As at 31 March 2024 | 33.5 | 14.7 | 48.2 |
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Financial statements
Notes to the consolidated financial statements
continued
137
Auto Trader Group plc
Annual Report and Financial Statements 2024
16. NET INVESTMENTS IN JOINT VENTURES
CONTINUED
Set out below is the summarised financial information for the joint venture, adjusted for differences
in accounting policies between the Group and the joint venture. The table also reconciles the
summarised financial information to the carrying amount of the Group’s interest in the joint venture.
2024 | 2023 | |
£m | £m | |
Non-current assets | 94.5 | 95.6 |
Current assets | ||
Cash and cash equivalents | 6.8 | 6.4 |
Other current assets | 2.1 | 1.3 |
Total assets | 103.4 | 103.3 |
Liabilities | ||
Current liabilities | 4.4 | 2.0 |
Total liabilities | 4.4 | 2.0 |
Net assets | 99.0 | 101.3 |
Group’s share of net assets | 48.2 | 49.3 |
2024 | 2023 | |
£m | £m | |
Revenues | 13.2 | 10.5 |
Profit for the year | 5.7 | 5.2 |
Total comprehensive income | 5.7 | 5.2 |
Group’s share of comprehensive income | 2.8 | 2.5 |
Dividends received by the Group | 3.9 | 2.9 |
Non-current assets principally comprise goodwill and other intangible assets. The carrying value
is assessed annually using a methodology consistent with the Auto Trader cash-generating unit
disclosed in note 13.
A list of the investments in joint ventures, including the name, country of incorporation and proportion
Shares in other undertakings
2024 | 2023 | |
£m | £m | |
Investment in iAUTOS Company Limited | – | – |
Investment in protected insurance cell (Advent Insurance PCC Limited) | – | 1.1 |
Investment in protected insurance cell (Atlas Insurance PCC Limited) | 1.3 | 1.2 |
Total comprehensive income | 1.3 | 2.3 |
The Group designated the investment in iAUTOS Company Limited as an equity security at FVOCI
as the Group intends to hold the shares for long-term purposes. iAUTOS Company Limited is an
intermediate holding company through which trading companies incorporated in the People’s
Republic of China are held. The fair value of the investment has been valued at £nil since 2014 as
the Chinese trading companies are marginally loss-making with forecast future cash outflows.
As at 31 March 2023, the Group’s wholly owned subsidiary, Autorama Holding (Malta) Limited, had an
interest in two protected insurance cells. During the year, the Group exited the legacy cell with Advent
Insurance PCC Limited following the completion of the portfolio transfer to the new cell. It has
designated the investment in the new protected insurance cell as an equity security at FVOCI as the
Group intends to hold the investment for long-term purposes.
The protected insurance cell’s activity was the writing of insurance business relating to Guaranteed
Asset Protection insurance and business equipment in transit. The writing of new insurance business
ceased during the current year, therefore the cell will wind up once all existing policies terminate.
The interest in the protected insurance cell is not consolidated in these financial statements as a silo,
as the cell company has retained residual obligations in respect of the cell’s liabilities. Autorama UK
Limited is listed as a guarantor to an agreement between the cell company and Autorama Holding
(Malta) Limited. No liability has been recognised for this guarantee by the Group under IFRS 17 –
Insurance Contracts on the basis that its fair value is not material, reflecting the size and activity
2024 | 2023 | |
£m | £m | |
Trade receivables (invoiced) | 32.7 | 28.5 |
Net accrued income | 42.8 | 38.7 |
Trade receivables (total) | 75.5 | 67.2 |
Prepayments | 6.8 | 5.4 |
Other receivables | 1.0 | 0.3 |
Total | 83.3 | 72.9 |
Trade receivables are amounts due from customers for services performed in the ordinary course of
business. They are generally due for settlement within 30 days and therefore are all classified as current.
Trade receivables are recognised initially at the amount of consideration that is unconditional and has
been invoiced at the reporting date. The Group holds the trade receivables with the objective to collect
the contractual cash flows and therefore measures them subsequently at amortised cost using the
effective interest method. Included within trade receivables (invoiced) is a provision for the impairment
of financial assets of £3.3m (2023: £3.0m).
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Financial statements
Notes to the consolidated financial statements
continued
138
Auto Trader Group plc
Annual Report and Financial Statements 2024
18. TRADE AND OTHER RECEIVABLES
CONTINUED
Accrued income relates to the Group’s rights to consideration for services provided but not invoiced
at the reporting date. Accrued income is transferred to receivables when invoiced. Included within
net accrued income is provision for the impairment of financial assets of £1.7m (2023: £1.5m).
Exposure to credit risk and expected credit losses relating to trade and other receivables are
In Autorama, the Group temporarily takes a small proportion of new vehicle deliveries on balance
sheet as principal, which are held within inventory.
2024 | 2023 | |
£m | £m | |
Finished goods | 2.6 | 3.6 |
Inventories | 2.6 | 3.6 |
Cash at bank and in hand is denominated in sterling:
2024 | 2023 | |
£m | £m | |
Cash at bank and in hand | 18.7 | 16.6 |
Cash and cash equivalents | 18.7 | 16.6 |
Cash balances with an original maturity of less than three months were held in current accounts
2024 | 2023 | |
£m | £m | |
Trade payables | 3.9 | 8.0 |
Accruals | 17.7 | 15.8 |
Other taxes and social security | 25.2 | 16.9 |
Deferred income | 7.3 | 5.7 |
Vehicle stocking loan | 2.1 | 3.0 |
Other payables | 3.7 | 3.9 |
Accrued interest payable | 0.2 | 0.3 |
Total | 60.1 | 53.6 |
Trade payables are unsecured and are usually paid within 30 days of recognition. The carrying
amounts of trade and other payables are considered to be the same as their fair values, due to
2024 | 2023 | |
Non-current | £m | £m |
Syndicated RCF gross of unamortised debt issue costs | 30.0 | 60.0 |
Unamortised debt issue costs on Syndicated RCF | (2.3) | (2.5) |
Total | 27.7 | 57.5 |
2024 | 2023 | |
Current | £m | £m |
Loan from other investment | – | 1.1 |
Total | – | 1.1 |
Total borrowings | 27.7 | 58.6 |
Unamortised debt issue costs on the Syndicated RCF decreased to £2.3m in the year (2023: £2.5m).
Borrowings are repayable as follows:
2024 | 2023 | |
£m | £m | |
Less than one year | – | 1.1 |
Two to five years | 30.0 | 60.0 |
Total | 30.0 | 61.1 |
The carrying amounts of borrowings approximates to their fair values.
Syndicated revolving credit facility (‘Syndicated RCF’)
The Group has access to an unsecured Syndicated revolving credit facility (the ‘Syndicated RCF’).
Associated debt transaction costs total £6.2m, with £3.3m being incurred at initiation and £2.9m of
additional costs associated with extension requests.
In the prior year, 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 reduce the capacity of the facility to £200.0m. During the year, on 2 February 2024, the Group
extended the term of its Syndicated RCF by one year. The facility has been extended to February 2029
and still has an additional one year extension option with no tranche terminations. There is no change
to the interest rate payable and there is no requirement to settle all or part of the debt earlier than the
termination date stated. The associated debt transaction costs of the extension were £0.3m, which
were paid in the period to 31 March 2024. The remaining £0.2m debt transaction costs relating to the
prior year Amendment and Restatement were also paid in the period to 31 March 2024.
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. As part of the Amendment and
Restatement Agreement of the Syndicated RCF in 2023, three sustainability performance targets
were incorporated into the agreement. The margin shall be increased or decreased between -0.05%
and 0.05% based on the number of sustainability performance targets achieved in the reporting
period. 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.
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Financial statements
Notes to the consolidated financial statements
continued
139
Auto Trader Group plc
Annual Report and Financial Statements 2024
22. BORROWINGS
CONTINUED
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 investments
In the prior period, 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 was completed during the current period and the loan
was repaid. As at 31 March 2024, £nil was recognised on the Consolidated balance sheet (2023: £1.1m).
Exposure to interest rate changes
The exposure of the Group’s borrowings (excluding debt issue costs) to SONIA rate changes and the
contractual repricing dates at the balance sheet date are as follows:
2024 | 2023 | |
£m | £m | |
One month or less | 30.0 | 60.0 |
Total | 30.0 | 60.0 |
Dilapidations | Holiday pay | ||
provision | provision | Total | |
£m | £m | £m | |
At 31 March 2023 | 1.3 | 0.7 | 2.0 |
Charged to the income statement | – | 0.8 | 0.8 |
Utilised in the year | – | (0.7) | (0.7) |
Recognised under IFRS 16 | 0.4 | – | 0.4 |
Released in the year | (0.1) | – | (0.1) |
At 31 March 2024 | 1.6 | 0.8 | 2.4 |
2024 | 2023 | |
£m | £m | |
Current | 0.8 | 0.7 |
Non-current | 1.6 | 1.3 |
Total | 2.4 | 2.0 |
During the year, the Group reassessed its dilapidations provision for its leased properties which resulted
A net deferred tax liability of £2.9m has been recognised in the balance sheet at 31 March 2024 (2023:
deferred tax liability of £5.8m). The movement in deferred taxation assets and liabilities during the
year, without taking into consideration the offsetting of balances within the same tax jurisdiction,
is as follows:
Accelerated | Other | |||
Share-based | capital | temporary | ||
payments | allowances | differences | Total | |
Deferred taxation assets | £m | £m | £m | £m |
At 31 March 2022 | 2.8 | 2.8 | 0.8 | 6.4 |
(Debited)/credited to the income statement | 1.1 | (0.9) | (0.5) | (0.3) |
Debited directly to equity | (0.2) | – | – | (0 . 2) |
Acquired through business combinations | – | – | 6.8 | 6.8 |
At 31 March 2023 | 3.7 | 1.9 | 7.1 | 12.7 |
(Debited)/credited to the income statement | 1.1 | (0.8) | (0.3) | – |
Debited directly to equity | (0.5) | – | – | (0.5) |
At 31 March 2024 4.3 | 1.1 | 6.8 | 12.2 |
Acquired | Other | ||
intangible | temporary | ||
assets | differences | Total | |
Deferred taxation liabilities | £m | £m | £m |
At 31 March 2022 | – | 5.0 | 5.0 |
Credited to the income statement | (1.2) | (0.5) | (1.7) |
Debited to the statement of comprehensive income | – | (1.1) | (1.1) |
Acquired through business combinations | 16.3 | – | 16.3 |
At 31 March 2023 | 15.1 | 3.4 | 18.5 |
Credited to the income statement | (3.4) | – | (3.4) |
At 31 March 2024 | 11.7 | 3.4 | 15.1 |
Net deferred tax liability at 31 March 2023 | 5.8 | ||
Net deferred tax liability at 31 March 2024 | 2.9 |
The Group has estimated that £2.5m (2023: £1.5m) of the Group’s net deferred income tax liability will
be realised in the next 12 months. This is management’s current best estimate and may not reflect the
actual outcome in the next 12 months.
In the prior period, deferred tax assets acquired through business combinations totalled £6.8m,
which included £7.7m relating to tax losses offset by a £0.9m deferred tax liability linked to a fair value
adjustment on freehold property. This was recognised on the basis that there are sufficient taxable
temporary liability differences at the balance sheet date arising from acquired intangibles which are
Strategic report
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Financial statements
Notes to the consolidated financial statements
continued
140
Auto Trader Group plc
Annual Report and Financial Statements 2024
(i) Defined contribution scheme
The Group operates a number of defined contribution schemes. In the year to 31 March 2024, the
pension contributions to the Group’s defined contribution schemes amounted to £4.1m (2023: £3.5m).
At 31 March 2024, there were £0.7m (31 March 2023: £0.6m) of pension contributions outstanding
relating to the Group’s defined contribution schemes.
(ii) Defined benefit scheme
The Company sponsors a funded defined benefit pension scheme for qualifying UK employees, the
Wiltshire (Bristol) Limited Retirement Benefits Scheme (‘the Scheme’). The Scheme is administered by a
separate board of Trustees, which is legally separate from the Company. The Trustees are composed
of representatives of both the Company and members. The Trustees are required by law to act in the
interest of all relevant beneficiaries and are responsible for the investment policy for the assets and
the day-to-day administration of the benefits.
The Scheme has been closed to future members since 30 April 2006 and there are no remaining active
members within the Scheme. No other post-retirement benefits are provided to these employees.
Profile of the Scheme
As at 31 March 2024, approximately 40% of the defined benefit obligation (‘DBO’) is attributable
to former employees who have yet to reach retirement (2023: 42%) and 60% to current pensioners
(2023: 58%). The Scheme duration is an indicator of the weighted-average time until benefit payments
are made. For the Scheme as a whole, the duration is approximately 15 years (2023: 16 years).
Buy-in
In the prior year, the Scheme purchased a bulk annuity policy (known as a buy-in) from Just Retirement
Limited (‘Just Retirement’) for £15.4m, which was funded by a £1.0m contribution by the Company along
with existing Scheme assets. This policy secured the full benefits of all Scheme members, which as
at the remeasurement date amounted to £13.7m. Given the financial strength of Just Retirement, this
buy-in substantively removes the risk of further contributions being required from the Company to
provide benefits to members, beyond those noted below.
Following the buy-in, the Scheme’s assets largely comprise the bulk annuity policy held with Just
Retirement, along with a small amount of additional assets currently held with LGIM. The Scheme
trustees are now working to progress towards a full buy-out, which will involve various data and
benefits exercises. It is anticipated that the Scheme buy-out will be completed in 2025. Once the
buy-out is complete, the Scheme has no further purpose and will be wound up.
Funding requirements
UK legislation requires that pension schemes are funded prudently. The last funding valuation of the
Scheme was carried out by a qualified actuary as at 30 April 2021 and showed a surplus of £1.5m. The
Company paid deficit contributions of £140k pa to 31 January 2022, plus an additional £1.0m in October
2022 in respect of the shortfall versus the buy-in premium. The next funding valuation is due as at
30 April 2024, although it is anticipated that the wind-up of the scheme will have commenced before
the statutory deadline for completion of this valuation, therefore this requirement will no longer apply.
The Company expects that a further contribution may be required in the year ending 31 March 2025 in
respect of the balancing premium, once the data cleansing and benefit rectification is completed.
The Company also pays expenses and PPF levies incurred by the Scheme.
Risks associated with the Scheme
The Scheme exposes the Company to some risks, although the purchase of a buy-in policy
substantially mitigates these.
Asset volatility | The liabilities are calculated using a discount rate set with reference to corporate |
bond yields. If assets underperform this yield, this will create a deficit. The Scheme | |
previously held a significant proportion of gilt and bond assets which limits volatility | |
and risk in the short term. The allocation of assets is monitored to ensure it remains | |
appropriate given the Scheme’s long-term objectives. | |
Inflation risk | A proportion of the Scheme’s benefit obligations are linked to inflation, and higher |
inflation leads to higher liabilities (although, in most cases, caps on the level of | |
inflationary increases are in place to protect against extreme inflation). The | |
majority of the assets are either unaffected by or only loosely correlated with | |
inflation, meaning that an increase in inflation will also increase the deficit. | |
Change in | A decrease in corporate bond yields will increase the value placed on the Scheme’s |
bond yields | |
liabilities for accounting purposes, although this will be partially offset by an | |
increase in the value of the Scheme’s bond holdings. | |
Life expectancy | The majority of the Scheme’s obligations are to provide benefits for the lifetime of |
the member, so increases in life expectancy will result in an increase in the liabilities. |
Assumptions used
The results of the latest funding valuation at 30 April 2021 have been adjusted to the new balance
sheet date, taking account of experience over the period since 30 April 2021, changes in market
conditions, and differences in the financial and demographic assumptions. The present value of the
defined benefit obligation, and the related current service cost, were measured using the projected
unit credit method.
The principal assumptions used to calculate the liabilities under IAS 19 are as follows:
2024 | 2023 | |
% | % | |
Discount rate for scheme liabilities | 4.80 | 4.70 |
CPI inflation | 2.80 | 2.85 |
RPI inflation | 3.40 | 3.55 |
Pension increases | ||
Post 1988 GMP | 2.20 | 2.20 |
Pre 2004 non GMP | 5.00 | 5.00 |
Post 2004 | 3.15 | 3.25 |
The financial assumptions reflect the nature and term of the Scheme’s liabilities. The weighted
average duration of the Scheme liabilities at the year end is 15 years (2023: 16 years). This reduction is
due to the discount rate increase which is the principal reason for the decrease in the value of Scheme
liabilities compared with the prior year.
The Group has assumed that mortality will be in line with nationally published mortality table SAPS S3
Heavy tables with CMI 2021 projections related to members’ years of birth with long-term rate of
improvement of 1.5% per annum. No adjustment has been made for the possible effects of COVID-19.
Strategic report
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Financial statements
Notes to the consolidated financial statements
continued
141
Auto Trader Group plc
Annual Report and Financial Statements 2024
25. RETIREMENT BENEFIT OBLIGATIONS
CONTINUED
These tables translate into an average life expectancy for a pensioner retiring at age 65 as follows:
2024 | 2023 | |||
Men | Women | Men | Women | |
Years | Years | Years | Years | |
Member aged 65 (current life expectancy) | 86.1 | 88.6 | 86.7 | 89.0 |
Member aged 45 (life expectancy at age 65) | 87.9 | 90.4 | 88.4 | 90.8 |
It is assumed that 50% of non-retired members of the Scheme will commute the maximum amount
of cash at retirement (2023: 50% ).
Post-employment benefit obligations disclosures
The amounts charged to the Consolidated income statement are set out below:
| 2024 | 2023 | |
£m | £m | |
Past service cost | – | 0.5 |
Settlement cost | – | 2.2 |
Total amounts charged to the Consolidated income statement | – | 2.7 |
Past service cost
In the prior year, as part of the data cleansing exercise ahead of the Scheme’s buy-in, two items
relating to the Barber window in relation to transferred in assets and a slightly later effective date
for pension increases were identified. As a result, a £0.5m past service cost was recognised in the
Consolidated income statement.
Current service costs and past service costs are charged to the income statement in arriving at
operating profit. Interest income on Scheme assets and the interest cost on Scheme liabilities are
included within finance costs.
Settlement cost
Given the intention is to convert the buy-in policy purchased during the prior year to a buy-out as soon
as possible, a settlement cost of £2.2m was recognised in the Consolidated income statement for the
year ended 31 March 2023. The settlement cost represented the difference between the value of the
liabilities under IAS 19 at the remeasurement date, 31 October 2022, (£13.2m) and the price paid to settle
the liabilities (£15.4m).
The following amounts have been recognised in the Consolidated statement of comprehensive income:
2024 | 2023 | |
£m | £m | |
Return on Scheme assets below that recognised in net interest | 0.5 | 5.9 |
Actuarial gains due to changes in assumptions | (0.7) | (4.8) |
Actuarial losses due to liability experience | 0.3 | 0.4 |
Effect of the surplus cap | – | – |
Deferred tax on surplus | – | (1.1) |
Total amounts recognised within the Consolidated statement | ||
of comprehensive income | 0.1 | 0.4 |
Amounts recognised in the balance sheet are as follows:
2024 | 2023 | |
£m | £m | |
Present value of funded obligations | 13.4 | 13.6 |
Fair value of plan assets | (14.0) | (14.1) |
Net asset recognised in the Consolidated balance sheet | (0.6) | (0.5) |
The Trustees of the Scheme sought legal advice which concluded that the Group 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 IFRIC 14 does not apply, and therefore has recognised
the accounting surplus of £0.6m (2023: £0.5m) and an associated deferred tax liability of £0.2m (2023:
£0.2m) in the Consolidated balance sheet.
Movements in the fair value of Scheme assets were as follows:
2024 | 2023 | |
£m | £m | |
Fair value of Scheme assets at the beginning of the year | 14.1 | 21.2 |
Interest income on Scheme assets | 0.7 | 0.5 |
Remeasurement losses on Scheme assets | (0.5) | (5.9) |
Contributions by the employer | 0.1 | 1.0 |
Settlements | – | (2.2) |
Net benefits paid | (0.4) | (0.5) |
Fair value of Scheme assets at the end of the year | 14.0 | 14.1 |
Movements in the fair value of Scheme liabilities were as follows:
2024 | 2023 | |
£m | £m | |
Fair value of Scheme liabilities at the beginning of the year | 13.6 | 17.5 |
Past service cost | – | 0.5 |
Interest expense | 0.6 | 0.5 |
Actuarial gains on Scheme liabilities arising from changes in assumptions | (0.7) | (4.8) |
Actuarial losses on Scheme liabilities arising from experience | 0.3 | 0.4 |
Net benefits paid | (0.4) | (0.5) |
Fair value of Scheme liabilities at the end of the year | 13.4 | 13.6 |
Movements in post-employment benefit net obligations were as follows:
2024 | 2023 | |
£m | £m | |
Opening post-employment benefit surplus | (0.5) | (3.7) |
Past service cost | – | 0.5 |
Settlement cost | – | 2.2 |
Contributions by the employer | (0.1) | (1.0) |
Remeasurement and experience losses | – | 1.5 |
Closing post-employment benefit surplus | (0.6) | (0.5) |
Strategic report
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Financial statements
Notes to the consolidated financial statements
continued
142
Auto Trader Group plc
Annual Report and Financial Statements 2024
25. RETIREMENT BENEFIT OBLIGATIONS
CONTINUED
Plan assets are comprised as follows:
2024 | 2023 | |||
£m | % | £m | % | |
Gilts | 0.4 | 2.9 | 0.4 | 2.8 |
Cash | 0.2 | 1.4 | 0.1 | 0.7 |
Buy-in policy | 13.4 | 95.7 | 13.6 | 96.5 |
Total | 14.0 | 100.0 | 14.1 | 100.0 |
All plan assets have a quoted market price.
Sensitivity to key assumptions
The key financial assumptions used for IAS 19 are the discount and inflation rates. Given that the
Scheme’s buy-in policy is valued exactly equal to the DBO, changes in the key assumptions no longer
Share capital
2024 | 2023 | |||
Number | Amount | Number | Amount | |
’000 | £m | ’000 | £m | |
Allotted, called-up and fully paid ordinary shares | ||||
of 1p each | ||||
At 1 April | 923,075 | 9.3 | 946,893 | 9.5 |
Purchase and cancellation of own shares | (23,711) | (0.2) | (23,831) | (0.2) |
Issue of shares | 7,850 | 0.1 | 13 | 0.0 |
Total | 907,214 | 9.2 | 923,075 | 9.3 |
In the year ended 31 March 2017, the Company commenced a share buyback programme. By
resolutions passed at the 2023 AGM, the Company’s shareholders generally authorised the Company
to make market purchases of up to 92,019,875 of its ordinary shares, subject to minimum and maximum
price restrictions. In the year ended 31 March 2024, a total of 25,207,430 ordinary shares of £0.01 were
purchased. The average price paid was 673.0p with a total consideration paid (including fees of
£0.9m) of £170.8m. Of all shares purchased, 1,496,445 were held in treasury with 23,710,985 being
cancelled. In the year ended 31 March 2024, 7,849,782 ordinary shares were issued for the settlement
of share-based payments.
Included within shares in issue at 31 March 2024 are 312,831 (2023: 340,196) shares held by the ESOT
ESOT shares | Treasury | ||
reserve | shares | Total | |
Own shares held – £m | £m | £m | £m |
Own shares held as at 31 March 2022 | (0.4) | (22.0) | (22.4) |
Repurchase of own shares for treasury | – | (8.7) | (8.7) |
Share-based incentives exercised | – | 5.1 | 5.1 |
Own shares held as at 31 March 2023 | (0.4) | (25.6) | (26.0) |
Repurchase of own shares for treasury | – | (11.1) | (11.1) |
Share-based incentives exercised | – | 5.8 | 5.8 |
Own shares held as at 31 March 2024 | (0.4) | (30.9) | (31.3) |
ESOT shares | Treasury | ||
reserve | shares | Total | |
Number of | Number of | Number of | |
Own shares held – number | shares | shares | shares |
Own shares held as at 31 March 2022 | 358,158 | 3,826,928 | 4,185,086 |
Transfer of shares from ESOT | (17,962) | – | (17,962) |
Repurchase of own shares for treasury | – | 1,430,372 | 1,430,372 |
Share-based incentives exercised | – | (885,795) | (885,795) |
Own shares held as at 31 March 2023 | 340,196 | 4,371,505 | 4,711,701 |
Transfer of shares from ESOT | (27,365) | – | (27,365) |
Repurchase of own shares for treasury | – | 1,496,445 | 1,496,445 |
Share-based incentives exercised | – | (968,604) | (968,604) |
Own shares held as at 31 March 2024 | 312,831 | 4,899,346 | 5,212,177 |
Dividends declared and paid by the Company were as follows:
2024 | 2023 | |||
Pence | Pence | |||
per share | £m | per share | £m | |
2023 final dividend paid | 5.6 | 51.3 | 5.5 | 51.7 |
2024 interim dividend paid | 3.2 | 29.1 | 2.8 | 26.0 |
8.8 | 80.4 | 8.3 | 77.7 |
The proposed final dividend for the year ended 31 March 2024 of 6.4p per share, totalling £58.4m, is
subject to approval by shareholders at the Annual General Meeting (‘AGM’) and hence has not been
included as a liability in the financial statements.
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Financial statements
Notes to the consolidated financial statements
continued
143
Auto Trader Group plc
Annual Report and Financial Statements 2024
2024 | 2023 | |
£m | £m | |
Profit after tax | 256.9 | 233.9 |
Adjustments for: | ||
Tax charge | 88.3 | 59.7 |
Depreciation | 4.8 | 4.9 |
Amortisation | 13.5 | 9.2 |
Share-based payments charge (excluding associated NI) | 7.5 | 5.8 |
Deferred contingent consideration | 10.4 | 38.8 |
Share of profit from joint ventures | (2.8) | (2.5) |
Profit on sale of property, plant and equipment | 0.3 | (0.7) |
Net lease disposals and modifications | – | (0.1) |
Post employment expenses relating to the defined benefit scheme | – | 2.7 |
Finance costs | 3.5 | 3.1 |
R&D expenditure credit | (0.1) | (0.1) |
Profit on disposal of a subsidiary | – | (19.1) |
Changes in working capital (excluding the effects of exchange differences | ||
on consolidation): | ||
Trade and other receivables | (10.4) | (3.6) |
Trade and other payables | 6.0 | (1.9) |
Provisions | 0.1 | – |
Inventory | 1.0 | (2.7) |
Cash generated from operations | 379.0 | 327.4 |
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 £8.2m (2023: £6.6m). This included
associated national insurance (‘NI’) at the rate at which management expects to be effective when
the awards are exercised (13.80%), and apprenticeship levy at 0.5%, based on the share price at the
reporting date.
In addition to this charge, the share-based payment charge reported in this period includes £10.4m
relating to deferred share-based payment consideration relating to the acquisition of Autorama
(see note 31), making a total combined charge of £17.9m (excluding associated NI).
Group | Company | |||
2024 | 2023 | 2024 | 2023 | |
£m | £m | £m | £m | |
Share Incentive Plan (‘SIP’) | – | – | – | – |
Sharesave scheme (‘SAYE’) | 0.7 | 0.5 | – | – |
Performance Share Plan (‘PSP’) | 2.1 | 1.9 | 2.1 | 1.9 |
Deferred Annual Bonus and Single Incentive Plan | 4.7 | 3.4 | 0.6 | 0.4 |
NI and apprenticeship levy on applicable schemes | 0.7 | 0.8 | 0.3 | 0.3 |
Total charge from ongoing share schemes | 8.2 | 6.6 | 3.0 | 2.6 |
Share-based payments relating to Autorama | ||||
acquisition | 10.4 | 38.8 | – | – |
Total charge | 18.6 | 45.4 | 3.0 | 2.6 |
During the year, the Directors in office in total had nil gains (2023: £1.4m) arising on the exercise
of share-based incentive awards.
Share Incentive Plan
In 2015, the Group established a Share Incentive Plan (‘SIP’). All eligible employees were awarded
free shares (or nil-cost options in the case of employees in Ireland) valued at £3,600 each based
on the share price at the time of the Company’s admission to the Stock Exchange in March 2015.
Strategic report
Governance
Financial statements
Notes to the consolidated financial statements
continued
144
Auto Trader Group plc
Annual Report and Financial Statements 2024
30. SHARE-BASED PAYMENTS
CONTINUED
UK SIP
2024 | 2023 | |
Number | Number | |
Outstanding at 1 April | 96,315 | 116,808 |
Released | (27,365) | (20,493) |
Outstanding at 31 March | 68,950 | 96,315 |
Vested and outstanding at 31 March | 68,950 | 96,315 |
The weighted average market value per ordinary share for SIP awards released was 695.0p
(2023: 578.0p). The SIP shares outstanding at 31 March 2024 have fully vested (2023: fully vested).
Shares released prior to the vesting date relate to those attributable to good leavers as defined
by the Scheme rules.
Performance Share Plan
The Group operates a Performance Share Plan (‘PSP’) for Executive Directors, the Operational
Leadership Team and certain key employees. The extent to which awards vest will depend upon
the Group’s performance over the three-year period following the award date. Both market-based
and non-market-based performance conditions may be attached to the options. An appropriate
adjustment is made for market-based performance conditions 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 (2023: 360,695).
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.
For other previous awards, the Group’s performance had been measured by reference to growth
in operating profit and revenue over a three-year period, total shareholder return relative to
the FTSE 350 share index (2017 and 2020 awards), diversity progress (2021 award) and carbon
reduction (2022 award).
The fair value of the 2023 award was determined to be the share price at grant date. In previous years,
the total shareholder return element was valued using the Monte Carlo model. The resulting share-
based payments charge is being spread evenly over the period between the grant date and the
vesting date.
Strategic report
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Financial statements
Notes to the consolidated financial statements
continued
145
Auto Trader Group plc
Annual Report and Financial Statements 2024
30. SHARE-BASED PAYMENTS
CONTINUED
PSP award holders are entitled to receive dividends accruing between the grant date and the vesting date and this value will be delivered in shares. The assumptions used in the measurement of the fair value
at grant date of the PSP awards are as follows:
Share price at | Exercise | Expected | Option life | Risk-free | Dividend | Non-vesting | Fair value per | ||
Grant date | Condition | grant date £ | price £ | volatility % | years | rate % | yield % | condition % | option £ |
16 June 2017 | TSR dependent | 4.00 | Nil | 31 | 3.0 | 0.2 | 0.0 | 0.0 | 2.17 |
16 June 2017 | OP dependent | 4.00 | Nil | N/A | 3.0 | 0.2 | 0.0 | 0.0 | 4.00 |
30 August 2017 | TSR dependent | 3.42 | Nil | 31 | 3.0 | 0.2 | 0.0 | 0.0 | 2.17 |
30 August 2017 | OP dependent | 3.42 | Nil | N/A | 3.0 | 0.2 | 0.0 | 0.0 | 3.42 |
17 August 2018 | OP dependent | 4.48 | Nil | N/A | 3.0 | 0.7 | 1.7 | 0.0 | 4.48 |
17 August 2018 | Revenue dependent | 4.48 | Nil | N/A | 3.0 | 0.7 | 1.7 | 0.0 | 4.48 |
17 June 2019 | OP dependent | 5.65 | Nil | N/A | 3.0 | 0.6 | 1.3 | 0.0 | 5.65 |
17 June 2019 | Revenue dependent | 5.65 | Nil | N/A | 3.0 | 0.6 | 1.3 | 0.0 | 5.65 |
8 July 2020 | TSR dependent | 5.27 | Nil | 32 | 3.0 | (0.1) | 0.0 | 0.0 | 2.83 |
17 June 2021 | OP dependent | 6.29 | Nil | N/A | 3.0 | 0.2 | 0.9 | 0.0 | 6.29 |
17 June 2021 | Revenue dependent | 6.29 | Nil | N/A | 3.0 | 0.2 | 0.9 | 0.0 | 6.29 |
17 June 2021 | Diversity progress dependent | 6.29 | Nil | N/A | 3.0 | 0.2 | 0.9 | 0.0 | 6.29 |
23 June 2022 | OP dependent | 5.31 | Nil | N/A | 3.0 | 2.0 | 1.3 | 0.0 | 5.31 |
23 June 2022 | Revenue dependent | 5.31 | Nil | N/A | 3.0 | 2.0 | 1.3 | 0.0 | 5.31 |
23 June 2022 | Carbon reduction dependent | 5.31 | Nil | N/A | 3.0 | 2.0 | 1.3 | 0.0 | 5.31 |
22 June 2023 | OP dependent | 6.22 | Nil | N/A | 3.0 | 4.9 | 1.4 | 0.0 | 6.22 |
22 June 2023 | Revenue dependent | 6.22 | Nil | N/A | 3.0 | 4.9 | 1.4 | 0.0 | 6.22 |
22 June 2023 | Carbon reduction dependent | 6.22 | Nil | N/A | 3.0 | 4.9 | 1.4 | 0.0 | 6.22 |
Strategic report
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Financial statements
Notes to the consolidated financial statements
continued
146
Auto Trader Group plc
Annual Report and Financial Statements 2024
30. SHARE-BASED PAYMENTS
CONTINUED
Expected volatility is estimated by considering historic average share price volatility at the
grant date.
The number of options outstanding and exercisable as at 31 March 2024 was as follows:
2024 | 2023 | |
Number | Number | |
Outstanding at 1 April | 1,399,984 | 1,401,701 |
Options granted in the year | 355,183 | 360,695 |
Dividend shares awarded | – | 8,319 |
Options forfeited in the year | (591,580) | (129,684) |
Options exercised in the year | (47,547) | (241,047) |
Outstanding at 31 March | 1,116,040 | 1,399,984 |
Exercisable at 31 March | 31,801 | 79,348 |
The weighted average market value per ordinary share for PSP options exercised in 2024 was 714.0p
(2023: 587.2p). The PSP awards outstanding at 31 March 2024 have a weighted average remaining
vesting period of 1.2 years (2023: 1.0 years) and a weighted average contractual life of 8.1 years
(2023: 7.9 years).
Deferred Annual Bonus and Single Incentive Plan Award
The Group operates the Deferred Annual Bonus and Single Incentive Plan Award for 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’).
In addition, in the current period the Group announced a new Single Incentive Plan Award for all
employees under the existing scheme rules.
Deferred Annual Bonus
The Group operates a Deferred Annual Bonus Plan (‘DABP’) for Executive Directors. Awards under
the plan are contingent on the satisfaction of pre-set internal targets relating to financial and
operational objectives. The extent to which the awards vest will depend upon the satisfaction
of the Group’s financial and operational performance in the financial year of the award date
(the ‘Performance Conditions’). The awards will vest on the second anniversary of the date the
Remuneration Committee determines that the Performance Conditions have been satisfied
(the ‘Vesting Period’). Awards are potentially forfeitable during that period should the employee
leave employment. The DABP awards have been valued using the Black-Scholes method where
appropriate and the resulting share-based payments charge is being spread evenly over the
combined Performance Period and Vesting Period of the shares, being three years.
On 22 June 2023, the Group awarded 103,330 nil cost options under the DABP scheme (2023: 108,704).
DABP award holders are entitled to receive dividends accruing between the grant date and the
vesting date and this value will be delivered in shares. The assumptions used in the measurement
of the fair value at grant date of the DABP awards are as follows:
Share price | Non- | ||||||
at grant | Exercise | Risk-free | Dividend | vesting | Fair value | ||
date | price | Option life | rate | yield | condition | per option | |
Grant date £ | £ | years | % | % | % | £ | |
17 August 2018 | 4.48 | Nil | 2.0 | 0.7 | 1.7 | 0.0 | 4.48 |
17 June 2019 | 5.65 | Nil | 2.0 | 0.6 | 1.3 | 0.0 | 5.65 |
23 June 2022 | 5.31 | Nil | 2.0 | 2.0 | 1.3 | 0.0 | 5.31 |
22 June 2023 | 6.22 | Nil | 2.0 | 4.9 | 1.4 | 0.0 | 6.22 |
The number of options outstanding and exercisable as at 31 March was as follows:
2024 | 2023 | |
Number | Number | |
Outstanding at 1 April | 108,704 | – |
Options granted in the year | 103,330 | 108,704 |
Outstanding at 31 March | 212,034 | 108,704 |
Exercisable at 31 March | – | – |
No DABP options were exercised in 2024 (2023: No DABP options exercised).
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 for the
Operational Leadership Team and certain key employees (2023: 681,586). For the 2023 awards, 75% of
the award value is dependent on FY24 operating profit and the remaining 25% is subject to successful
implementation of digital retailing related products by 31 March 2024. The fair value of the 2023 award
was determined to be £6.22 per option, being the share price at grant date.
During the year, the Group announced a new All-Employee Single Incentive Plan Award (‘All-Employee
SIPA’) that rewards employees with an extra 10% of their salary in shares. The awards will vest in
tranches, with the first tranche vesting on the first anniversary of the grant date and subsequent
tranches vesting on the first and second anniversary of this date, subject to continuing employment.
On 21 November 2023, the Group awarded 1,049,495 nil cost options under the SIPA scheme for
all employees (2023: nil). The fair value of the 2023 award was determined to be £6.25 per option,
being the average of the mid-market price for the three months leading up to the grant date.
The resulting share-based payments charge is being spread evenly over the period between the
grant date and the vesting date. SIPA holders are entitled to receive dividends accruing between
the grant date and the vesting date and this value will be delivered in shares.
Strategic report
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Financial statements
Notes to the consolidated financial statements
continued
147
Auto Trader Group plc
Annual Report and Financial Statements 2024
30. SHARE-BASED PAYMENTS
CONTINUED
The assumptions used in the measurement of the fair value at grant date of the SIPA awards are
as follows:
Share price | Non- | |||||||
at grant | Exercise | Expected | Dividend | vesting | Fair value | |||
date | price | volatility | Option life | Risk-free | yield | condition | per option | |
Grant date | £ | £ | % | years | rate % | % | % | £ |
17 August 2018 | 4.48 | Nil | N/A | 3.0 | 0.7 | 1.7 | 0.0 | 4.48 |
17 June 2019 | 5.65 | Nil | N/A | 3.0 | 0.6 | 1.3 | 0.0 | 5.65 |
8 July 2020 | 5.27 | Nil | N/A | 3.0 | (0.1) | 0.0 | 0.0 | 5.27 |
24 November 2020 | 5.52 | Nil | N/A | 3.0 | (0.1) | 0.0 | 0.0 | 5.52 |
17 June 2021 | 6.29 | Nil | N/A | 3.0 | 0.2 | 0.9 | 0.0 | 6.29 |
23 June 2022 | 5.31 | Nil | N/A | 3.0 | 2.0 | 1.3 | 0.0 | 5.31 |
22 June 2023 | 6.22 | Nil | N/A | 3.0 | 4.9 | 1.4 | 0.0 | 6.22 |
21 November 2023 | 6.25 | Nil | N/A | 3.0 | 4.5 | 1.4 | 0.0 | 6.25 |
The number of options outstanding and exercisable as at 31 March was as follows:
2024 | 2023 | |
Number | Number | |
Outstanding at 1 April | 1,517,766 | 1,291,868 |
Options granted in the year | 1,667,992 | 681,586 |
Dividend shares awarded | 10,239 | 5,710 |
Options exercised in the year | (515,383) | (214,290) |
Options forfeited in the year | (167,296) | (247,108) |
Outstanding at 31 March | 2,513,318 | 1,517,766 |
Exercisable at 31 March | 473,755 | 412,346 |
The weighted average market value per ordinary share for SIPA options exercised in 2024 was 680.4p
(2023: 601.1p). The SIPA awards outstanding at 31 March 2024 have a weighted average remaining
vesting period of 2.9 years (2023: 1.2 years) and a weighted average contractual life of 8.7 years
(2023: 8.2 years). The charge for the year includes an estimate of the awards to be granted after
the balance sheet date in respect of achievement of 2022 targets.
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.
The assumptions used in the measurement of the fair value at grant date of the Sharesave plan are
as follows:
Share price | ||||||||
at grant | Exercise | Expected | Dividend | Non-vesting | Fair value | |||
date | price | volatility | Option life | Risk-free | yield | condition | per option | |
Grant date | £ | £ | % | years | rate % | % | % | £ |
14 December 2018 | 4.48 | 3.49 | 29 | 3.0 | 0.7 | 1.7 | 16 | 1.29 |
13 December 2019 | 5.74 | 4.32 | 25 | 3.0 | 0.6 | 1.3 | 10 | 1.63 |
16 December 2020 | 5.75 | 4.41 | 32 | 3.0 | 0.0 | 0.5 | 10 | 1.86 |
16 December 2021 | 7.13 | 5.88 | 32 | 3.0 | 0.5 | 0.5 | 10 | 2.05 |
14 December 2022 | 5.64 | 4.56 | 34 | 3.0 | 3.2 | 1.3 | 10 | 1.87 |
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.
2024 | 2023 | |||
Weighted average | Weighted average | |||
Number of share | exercise price | Number of share | exercise price | |
options | £ | options | £ | |
Outstanding at 1 April | 1,366,352 | 4.72 | 1,446,582 | 4.72 |
Options granted in the year | – | – | 688,115 | 4.56 |
Options exercised in the year | (407,221) | 4.40 | (406,060) | 3.86 |
Options lapsed in the year | (102,173) | 4.92 | (362,285) | 5.39 |
Outstanding at 31 March | 856,958 | 4.84 | 1,366,352 | 4.72 |
Exercisable at 31 March | 54,288 | 4.41 | 53,892 | 4.32 |
The weighted average market value per ordinary share for Sharesave options exercised in 2024 was
711.8p (2023: 597.4p). The Sharesave options outstanding at 31 March 2024 have a weighted average
remaining vesting period of 1.5 years (2023: 2.0 years) and a weighted average contractual life of 2.0
Strategic report
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Financial statements
Notes to the consolidated financial statements
continued
148
Auto Trader Group plc
Annual Report and Financial Statements 2024
Purchase of Autorama UK Limited
In the prior period, on 22 June 2022, the Group acquired the entire share capital of Autorama UK
Limited (‘Autorama’) for initial consideration of £150.0m, with an additional £50.0m deferred until
22 June 2023 and settled in shares subject to employment and performance conditions.
Autorama, one of the UK’s largest marketplaces for leasing new vehicles, is a leading end-to-end
digital platform, which aggregates leasing deals from multiple funders and manufacturers (under
its ‘Vanarama’ brand), enabling buyers to transact online across a wide range of vehicles.
The total consideration of £150.0m excludes acquisition costs of £2.1m which were recognised within
costs in the Consolidated income statement in the prior period. The following table provides a
reconciliation of the amounts included in the Consolidated statement of cash flows for the prior period:
2023 | |
£m | |
Cash paid for subsidiary | 150 |
Less: cash acquired | (5.8) |
Payment for acquisition of subsidiary, net of cash acquired | 144.2 |
As the settlement of the deferred consideration of £50.0m was subject to a 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
31 March 2024 with the final settlement being reduced to £49.9m due to the associated performance
conditions not being met.
From the period of acquisition to 31 March 2023, Autorama contributed revenue of £27.2m, and a loss
of £11.2m to the Group’s results. Further analysis is within note 4.
The purchase was accounted for as a business combination under the acquisition method in
accordance with IFRS 3. The fair value of net assets acquired was assessed and, other than in respect
of the intangible assets and related deferred tax, described below, no material adjustments from
book value were made to existing assets and liabilities. The goodwill calculation is summarised below:
Fair value | |
£m | |
Intangible asset recognised on acquisition | |
Brand | 47.6 |
Technology | 13.7 |
Customer relationships | 2.9 |
Order book | 2.3 |
Deferred tax liability arising on intangible assets | (16.3) |
50.2 | |
Other non-current assets | |
Investments | 1.0 |
Property, plant and equipment | 5.3 |
Intangible assets | 0.4 |
Deferred tax asset | 6.8 |
13.5 | |
Current assets | |
Cash and cash equivalents | 5.8 |
Trade and other receivables | 4.5 |
Inventory | 0.9 |
Other debtors | 0.9 |
12.1 | |
Current liabilities | |
Trade and other payables | 11.6 |
Deferred income | 2.3 |
13.9 | |
Non-current liabilities | |
Borrowings | 4.0 |
Lease liabilities | 0.4 |
4.4 | |
Total net assets acquired | |
Goodwill on acquisition | 57.5 |
Total assets acquired | 92.5 |
Fair value of cash consideration | 150.0 |
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31. PRIOR PERIOD BUSINESS COMBINATIONS
CONTINUED
The brand, technology, customer relationships and order book obtained through the acquisition met
the requirements to be separately identifiable under IFRS 3. Refer to note 2 for further details on fair
value techniques for valuing intangibles.
The business operates under the Vanarama brand name and is one of the UK’s longest running
e-commerce brands. The asset was valued using the Multi-period Excess Earnings Method and
cross-checked using relief from royalty. A useful economic life and obsolescence decline period of 10
years was assumed. A post-tax discount rate of 14% was applied. This discount rate is lower than that
for Autorama as a whole at the date of acquisition and reflects factors including the finite brand
forecast period, compared to cash flows into perpetuity used to support the goodwill.
During the period ended 31 March 2024, the integration of Autorama accelerated at a faster rate than
originally anticipated at acquisition. As a result, the useful economic life of the ‘Vanarama’ brand was
reduced from ten years to five years from the date of acquisition. This change in accounting estimate
was applied prospectively from 1 October 2023 in line with IAS 38 – Intangible assets.
The technology is Autorama’s propriety technology which helps manage a complex vehicle lease
purchasing process into a streamlined 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 cross-checked using relief from royalty. The order book is customer orders
not yet delivered, which is expected to unwind.
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, supplier relationships with funders and car
manufacturers and future market growth opportunities. Customer lists were not valued separately
on the basis they are inseparable in their own right from the brand. Supplier relationships were not
separately valued on the basis that their terms are in line with industry standards of what would be
typically agreed with a market participant.
The valuation of the Vanarama brand name is sensitive to a change in the obsolescence rate
assumption. An obsolescence profile was assumed which is considered to be a representative curve
for a consumer asset in the absence of continued marketing spend, showing a slow decline in the
early years due to the benefit of historic spend, the decline then accelerating in the middle years as
consumer brand consciousness falls, before slowing in the final years to reflect a slower drop off of
residual awareness. Slowing or accelerating the assumed rate of obsolescence by one year, with all
other factors being unchanged, would increase or decrease the valuation of the brand by £14m or
£16m respectively. Residual goodwill would be adjusted by an equal and opposite amount, net of
taxation. The discount rate used in the brand valuation is less sensitive to change, reflecting the finite
useful economic life of 10 years and the lower positive cash flows in the latter years due to the
obsolescence decline.
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 was debited against and increased the value of goodwill recognised.
Settlement of deferred consideration in relation to Blue Owl Network Limited
In addition, in July 2022, the deferred consideration of £8.1m was settled in respect of the acquisition
of Blue Owl Network Limited (‘Blue Owl’). On 31 July 2020, the Group acquired the entire share capital
Financial assets
2024 | 2023 | ||
Note | £m | £m | |
Net trade receivables (invoiced) | 18 | 32.7 | 28.5 |
Net accrued income | 18 | 42.8 | 38.7 |
Net trade receivables (total) | 18 | 75.5 | 67.2 |
Other receivables | 18 | 1.0 | 0.3 |
Cash and cash equivalents | 20 | 18.7 | 16.6 |
Total | 95.2 | 84.1 |
The carrying amount of financial assets represents the maximum credit exposure. The maximum
exposure to credit risk at 31 March 2024 was £95.2m (2023: £84.1m). The maximum exposure to credit
risk for trade receivables and accrued income at the reporting date by geographic region was:
2024 | 2023 | |
£m | £m | |
UK | 75.5 | 67.2 |
Total | 75.5 | 67.2 |
The maximum exposure to credit risk for trade receivables and accrued income at the reporting date
by type of customer was:
2024 | 2023 | |
£m | £m | |
Retailers | 58.0 | 52.7 |
Manufacturer and Agency | 6.6 | 5.1 |
Other | 4.7 | 5.3 |
Autorama | 6.2 | 4.1 |
Total | 75.5 | 67.2 |
The Group’s most significant customer accounts for £1.8m (2023: £1.2m) of net trade receivables as at
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32. FINANCIAL INSTRUMENTS
CONTINUED
Expected credit losses are measured using a provisioning matrix based on actual credit loss
experience over the past three years and adjusted, when required, to take into account current
macro-economic factors. For certain customers the Group applies experienced credit judgement
that is determined to be predictive of the risk of loss to assess the expected credit loss, taking into
account external ratings, financial statements and other available information. The following
table provides information about the exposure to credit risk and expected credit losses for trade
receivables and accrued income from individual customers as at 31 March 2024.
Gross | ||||
Expected | carrying | Loss | ||
credit loss | amount | allowance | Credit- | |
rate | £m | £m | impaired | |
Accrued income | 3.7% | 44.5 | (1.7) | No |
Current | 3.5% | 27.8 | (1.0) | No |
Past due 1–30 days | 9.5% | 6.0 | (0.6) | No |
Past due 31–60 days | 36.0% | 0.3 | (0.1) | No |
Past due 61–90 days | 92.8% | 0.2 | (0.2) | No |
More than 91 days past due | 81.6% | 1.7 | (1.4) | No |
80.5 | (5.0) |
At 31 March 2023, ECLs were adjusted for the macro-economic uncertainty around retailer profitability
driven by used car price volatility. At 31 March 2024, ECLs continue to reflect macro-economic
uncertainty around retailer profitability due to persistent high inflation, high interest rates and the
upcoming UK general election which could lead to new political policies to which we would need to
respond. Sensitivity analysis has been performed in assessing the expected credit loss rate. There
are no changes to the rate that are considered by the Directors to be reasonably possible, which
give rise to a material difference in the loss allowance.
Comparative information about the exposure to credit risk and expected credit losses for trade
receivables from individual customers as at 31 March 2023 is set out below:
Gross | ||||
Expected | carrying | Loss | ||
credit loss | amount | allowance | Credit- | |
rate | £m | £m | impaired | |
Accrued income | 3.7% | 40.2 | (1.5) | No |
Current | 2.8% | 25.4 | (0.7) | No |
Past due 1–30 days | 8.8% | 3.4 | (0.3) | No |
Past due 31–60 days | 27.8% | 0.4 | (0.1) | No |
Past due 61–90 days | 83.3% | 0.1 | (0.1) | No |
More than 91 days past due | 81.1% | 2.2 | (1.8) | No |
71.7 | (4.5) |
The Group has identified specific balances for which it has provided an impairment allowance on
a line-by-line basis across all ledgers, in both years. The allowance accounts in respect of trade
receivables are used to record impairment losses unless the Group is satisfied that no recovery
of the amount owing is possible; at that point the amounts considered irrecoverable are written
off against the financial asset directly.
The movement in the allowance for impairment in respect of trade receivables during the year was
as follows.
2024 | 2023 | ||
Note | £m | £m | |
At 1 April | 18 | 3.0 | 2.5 |
Charged during the year | 1.9 | 1.0 | |
Acquired through business combinations | – | 0.3 | |
Utilised during the year | (1.6) | (0.8) | |
At 31 March | 18 | 3.3 | 3.0 |
The movement in the allowance for impairment in respect of accrued income during the year was
as follows.
2024 | 2023 | ||
Note | £m | £m | |
At 1 April | 18 | 1.5 | 1.2 |
Charged during the year | 0.2 | 0.5 | |
Utilised during the year | – | (0.2) | |
At 31 March | 18 | 1.7 | 1.5 |
Cash and cash equivalents
The cash and cash equivalents are held with bank and financial institution counterparties, which are
rated between P-1 and P-2 based on Moody’s ratings. The Directors do not consider deposits at these
institutions to be at risk.
2024 | 2023 | |||||
As per | Future | Total | As per | Future | Total | |
balance | interest | cash | balance | interest | cash | |
sheet | cost | flows | sheet | cost | flows | |
£m | £m | £m | £m | £m | £m | |
Trade and other payables | 25.5 | – | 25.5 | 27.9 | – | 27.9 |
Vehicle stocking loan | 2.1 | – | 2.1 | 3.0 | – | 3.0 |
Borrowings (gross of debt issue costs) | 30.0 | – | 30.0 | 58.6 | – | 58.6 |
Leases | 4.8 | 0.1 | 4.9 | 7.1 | 0.3 | 7.4 |
Total | 62.4 | 0.1 | 62.5 | 96.6 | 0.3 | 96.9 |
Trade and other payables are as disclosed within note 21, excluding vehicle stocking loan, other taxation
and social security liabilities and deferred income.
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32. FINANCIAL INSTRUMENTS
CONTINUED
IFRS 7 requires the contractual future interest cost of a financial liability to be included within the
above table. As disclosed in note 22 of these Consolidated financial statements, borrowings are
currently drawn under a syndicated debt arrangement and repayments can be made at any time
without penalty. As such there is no contractual future interest cost. Interest is payable on borrowings’
drawn amounts at a rate of SONIA prevailing at the time of drawdown plus the applicable margin,
which ranges from 1.2% to 2.1%, excluding the potential beneficial impact of sustainability performance
targets. Interest paid in the year in relation to borrowings amounted to £3.1m (2023: £3.2m).
Similarly, repayments can be made at any time without penalty on the vehicle stocking loan. As such
there is no contractual future interest cost. Interest is payable on the loan balance at the prevailing
Bank of England Base Rate plus a 2% margin. Interest paid in the year in relation to the vehicle stocking
loan amounted to £0.3m (2023: £0.1m).
The Company had no derivative financial liabilities in either year. It is not expected that the cash flows
included in the maturity analysis could occur earlier or at significantly different amounts.
The maturity of financial liabilities based on contracted cash flows is shown in the table below.
This table has been drawn up using the undiscounted cash flows of financial liabilities based on the
earliest date on which the Group is obliged to pay. The table includes both interest and principal
cash flows. Floating rate interest payments have been calculated using the relevant interest rates
prevailing at the year end, where applicable.
Trade and | |||||
other | Vehicle | ||||
payables | stocking loan | Borrowings | Leases | Total | |
As at 31 March 2024 | £m | £m | £m | £m | £m |
Due within one year | 25.5 | 2.1 | – | 2.4 | 30.0 |
Due within one to two years | – | – | – | 2.0 | 2.0 |
Due within two to five years | – | – | 30.0 | 0.5 | 30.5 |
Due after more than five years | – | – | – | – | – |
Total | 25.5 | 2.1 | 30.0 | 4.9 | 62.5 |
Trade and | |||||
other | Vehicle | ||||
payables | stocking loan | Borrowings | Leases | Total | |
As at 31 March 2023 | £m | £m | £m | £m | £m |
Due within one year | 27.9 | 3.0 | 1.1 | 2.5 | 34.5 |
Due within one to two years | – | – | – | 2.4 | 2.4 |
Due within two to five years | – | – | 57.5 | 2.5 | 60.0 |
Due after more than five years | – | – | – | – | – |
Total | 27.9 | 3.0 | 58.6 | 7.4 | 96.9 |
Analysis of net debt
Net debt is calculated as total borrowings, vehicle stocking loan and lease liabilities, less cash and
cash equivalents. Non-cash changes represent the effects of the recognition and subsequent
amortisation of fees relating to the bank facility, changing maturity profiles, acquisition of debt and
new leases entered into during the year.
At | At | |||
1 April | Cash | Non-cash | 31 March | |
2023 | flow | changes | 2024 | |
March 2024 | £m | £m | £m | £m |
Debt due within one year | 1.1 | (1.1) | – | – |
Debt due after more than one year | 57.5 | (30.5) | 0.7 | 27.7 |
Vehicle stocking loan | 3.0 | – | (3.0) | – |
Accrued interest | 0.3 | (3.4) | 3.3 | 0.2 |
Lease liabilities | 7.1 | (2.7) | 0.4 | 4.8 |
Total debt and lease financing | 69.0 | (37.7) | 1.4 | 32.7 |
Cash and cash equivalents | (16.6) | (2.1) | – | (18.7) |
Net debt/(cash) | 52.4 | (39.8) | 1.4 | 14.0 |
In the current year, the vehicle stocking loan is not presented within net debt to be consistent
with the presentation of this balance, together with the related inventory, as part of the Group’s
operating cycle.
Non-cash changes on debt due after more than one year relates to amortisation of debt issue costs.
At | At | |||
1 April | Cash | Non-cash | 31 March | |
2022 | flow | changes | 2023 | |
March 2023 | £m | £m | £m | £m |
Debt due within one year | – | 1.1 | – | 1.1 |
Debt due after more than one year | – | 54.6 | 2.9 | 57.5 |
Vehicle stocking loan | – | – | 3.0 | 3.0 |
Accrued interest | 0.1 | (3.0) | 3.2 | 0.3 |
Lease liabilities | 9.5 | (2.9) | 0.5 | 7.1 |
Total debt and lease financing | 9.6 | 49.8 | 9.6 | 69.0 |
Cash and cash equivalents | (51.3) | 34.7 | – | (16.6) |
Net debt/(cash) | (41.7) | 84.5 | 9.6 | 52.4 |
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33. NET DEBT
CONTINUED
Reconciliation of movements in liabilities to cash flows arising from financing activities
Liabilities/(Assets) | Equity | |||||||
Borrowings | Vehicle | |||||||
and accrued | stocking | Lease | Share | Retained | Own | Other | ||
interest | loan | liabilities | capital | earnings | shares held | reserves | Total | |
Balance as of 1 April 2023 | 58.9 | 3.0 | 7.1 | 9.3 | 1,390.3 | (26.0) | (846.3) | 596.3 |
Changes from financing cash flows | ||||||||
Dividends paid to Company shareholders | – | – | – | – | (80.4) | – | – | (80.4) |
Drawdown of Syndicated RCF | 57.0 | – | – | – | – | – | – | 57.0 |
Repayment of Syndicated RCF | (87.0) | – | – | – | – | – | – | (87.0) |
Repayment of other debt | (1.1) | – | – | – | – | – | – | (1.1) |
Payment of refinancing fees | (0.5) | – | – | – | – | – | – | (0.5) |
Payment of interest on borrowings | (3.4) | – | – | – | – | – | – | (3.4) |
Payment of lease liabilities | – | – | (2.7) | – | – | – | – | (2.7) |
Purchase of own shares for cancellation | – | – | – | (0.2) | (158.9) | – | 0.2 | (158.9) |
Purchase of own shares for treasury | – | – | – | – | – | (11.0) | – | (11.0) |
Fees on repurchase of own shares | – | – | – | – | (0.9) | – | – | (0.9) |
Issue of ordinary shares | – | – | – | 0.1 | – | – | – | 0.1 |
Proceeds from exercise of share-based incentives | – | – | – | – | 1.8 | – | – | 1.8 |
Total changes from financing cash flows | (35.0) | – | (2.7) | (0.1) | (238.4) | (11.0) | 0.2 | (287.0) |
Other changes – liability related | ||||||||
Interest expense | 3.0 | – | 0.1 | – | – | – | – | 3.1 |
Other | 1.0 | (3.0) | 0.3 | – | – | – | – | (1.7) |
Total liability-related other changes | 4.0 | (3.0) | 0.4 | – | – | – | – | 1.4 |
Total equity-related other changes | – | – | – | – | 268.6 | 5.7 | - | 274.3 |
Balance as of 31 March 2024 | 27.9 | – | 4.8 | 9.2 | 1420.5 | (31.3) | (846.1) | 585.0 |
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33. NET DEBT
CONTINUED
Liabilities/(Assets) | Equity | |||||||
Borrowings | Vehicle | |||||||
and accrued | stocking | Lease | Share | Retained | Own | Other | ||
interest | loan | liabilities | capital | earnings | shares held | reserves | Total | |
Balance as of 1 April 2022 | (1.2) | – | 9.5 | 9.5 | 1,332.4 | (22.4) | (847.0) | 480.8 |
Changes from financing cash flows | ||||||||
Dividends paid to Company shareholders | – | – | – | – | (77.7) | – | – | (77.7) |
Drawdown of Syndicated RCF | 110.0 | – | – | – | – | – | – | 110.0 |
Repayment of Syndicated RCF | (50.0) | – | – | – | – | – | – | (50.0) |
Repayment of other debt | (4.0) | – | – | – | – | – | – | (4.0) |
Proceeds from loan | 1.1 | – | – | – | – | – | – | 1.1 |
Payment of refinancing fees | (1.4) | – | – | – | – | – | – | (1.4) |
Payment of interest on borrowings | (3.0) | – | – | – | – | – | – | (3.0) |
Payment of lease liabilities | – | – | (2.9) | – | – | – | – | (2.9) |
Purchase of own shares for cancellation | – | – | – | (0.2) | (138.6) | – | 0.2 | (138.6) |
Purchase of own shares for treasury | – | – | – | – | – | (8.7) | – | (8.7) |
Fees on repurchase of own shares | – | – | – | – | (0.7) | – | – | (0.7) |
Proceeds from exercise of share-based incentives | – | – | – | – | 2.0 | – | – | 2.0 |
Total changes from financing cash flows | 52.7 | – | (2.9) | (0.2) | (215.0) | (8.7) | 0.2 | (173.9) |
Other changes – liability related | ||||||||
Interest expense | 3.1 | – | 0.2 | – | – | – | – | 3.3 |
Other | 4.3 | 3.0 | 0.3 | – | – | – | – | 7.6 |
Total liability-related other changes | 7.4 | 3.0 | 0.5 | – | – | – | – | 10.9 |
Total equity-related other changes | – | – | – | – | 272.9 | 5.1 | 0.5 | 278.5 |
Balance as of 31 March 2023 | 58.9 | 3.0 | 7.1 | 9.3 | 1,390.3 | (26.0) | (846.3) | 596.3 |
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Dealer Auction Limited
The Group transacted the following related party transactions with its joint venture, Dealer Auction
Limited, during the period.
The Group provided data services to Dealer Auction under a licence agreement established as part
of the formation of the joint venture in January 2019. The value of services provided to Dealer Auction
was £0.6m (2023: £0.6m) and has been recognised within revenue. At 31 March 2024, deferred income
outstanding in relation to the licence agreement was £8.3m (2023: £8.9m).
The Group recharged Dealer Auction for the provision of office space and laptops during the period, the
total value of which was £32,900 (2023: £31,500). The service was provided to Dealer Auction at an arm’s
length basis and recorded within administrative expenses within the Consolidated income statement.
Other related party transactions
Key Management personnel compensation has been disclosed in note 8.
The Group sponsors a funded defined benefit pension scheme. Details of transactions with the
Subsidiaries
At 31 March 2024 the Group’s subsidiaries were:
Percentage | Percentage | ||||
Subsidiary | Country of registration | Class of | owned by the | owned by the | |
undertakings | or incorporation | Principal activity | shares held | parent | Group |
Auto Trader | England and Wales | Intermediary holding | Ordinary | 100% | 100% |
Holding Limited 1 | company | ||||
Auto Trader | England and Wales | Online marketplace | Ordinary | – | 100% |
Limited 1 | |||||
Trader Licensing | England and Wales | Dormant company | Ordinary | – | 100% |
Limited 1 | |||||
Autorama UK | England and Wales | Online marketplace | Ordinary | 100% | 100% |
Limited 2 | |||||
Vanarama Limited 2 | England and Wales | Dormant company | Ordinary | – | 100% |
Autorama Holding | Malta | Investment company | Ordinary | – | 100% |
(Malta) Limited 3 | for a protected cell | ||||
company | |||||
Blue Owl Network | England and Wales | Finance platform | Ordinary | – | 100% |
Limited 1 |
1.
Registered office address is 4
th
Floor, 1 Tony Wilson Place, Manchester, M15 4FN.
2.
Registered office address is Maylands Avenue, Hemel Hempstead, Hertfordshire, HP2 7DE.
3.
Registered office address is The Landmark, Level 2, Suite 1, Triq L-Iljun, Qormi, Malta.
Vanarama USA Inc, a subsidiary undertaking of the Group, was dissolved on 24 October 2023.
All subsidiaries have a year end of 31 March, apart from Autorama Holding (Malta) Limited, which
has a year end of 31 December.
Joint ventures
At 31 March 2024 the Group’s interests in joint ventures were:
Percentage | Percentage | ||||
Country of registration | Class of | owned by the | owned by the | ||
Joint ventures | or incorporation | Principal activity | shares held | parent | Group |
Dealer Auction | |||||
Limited 1 | England and Wales | Online marketplace | Ordinary | – | 49% |
Dealer Auction | |||||
(Operations) | |||||
Limited 1 | England and Wales | Dormant company | Ordinary | – | 49% |
Auto Trader | |||||
Autostock Limited 1 | England and Wales | Dormant company | Ordinary | – | 49% |
Dealer Auction | |||||
Services Limited 1 | England and Wales | Dormant company | Ordinary | – | 49% |
1.
Registered office address is Central House, Leeds Road, Rothwell, Leeds, West Yorkshire, England, LS26 0JE.
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Financial statements
Auto Trader Group plc
Annual Report and Financial Statements 2024
At 31 March 2024
2024 | 2023 | ||
Note | £m | £m | |
Fixed assets | |||
Investments | 3 | 1,403.9 | 1,427.2 |
1,403.9 | 1,427.2 | ||
Current assets | |||
Debtors | 4 | 303.1 | 338.1 |
Cash and cash equivalents | 5 | 0.1 | 0.3 |
303.2 | 338.4 | ||
Creditors: amounts falling due within one year | 6 | (1,118.3) | (905.5) |
Net current assets | (815.1) | (567.1) | |
Net assets | 588.8 | 860.1 | |
Capital and reserves | |||
Called-up share capital | 9 | 9.2 | 9.3 |
Share premium | 182.6 | 182.6 | |
Own shares held | 10 | (31.3) | (26.0) |
Capital redemption reserve | 1.4 | 1.2 | |
Retained earnings | 426.9 | 693.0 | |
Total equity | 588.8 | 860.1 |
The loss for the year of the Company was £39.7m (2023: loss £9.0m). The accompanying notes form part of these financial statements. The financial statements were approved by the Board of Directors
on 30 May 2024 and authorised for issue:
Jamie Warner
Chief Financial Officer
Auto Trader Group plc
Registered number: 09439967
30 May 2024
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Financial statements
Company statement of changes in equity
Auto Trader Group plc
Annual Report and Financial Statements 2024
For the year ended 31 March 2024
Capital | ||||||
Share | Share | Retained | Own shares | redemption | Total | |
capital | premium | earnings | held | reserve | equity | |
£m | £m | £m | £m | £m | £m | |
Balance at 31 March 2022 | 9.5 | 182.6 | 877.8 | (22.4) | 1.0 | 1,048.5 |
Loss for the year | – | – | (9.0) | – | – | (9.0) |
Total comprehensive expense, net of tax | – | – | (9.0) | – | – | (9.0) |
Transactions with owners: | ||||||
Employee share schemes – value of employee services | – | – | 44.6 | – | – | 44.6 |
Exercise of employee share schemes | – | – | (3.6) | 5.1 | – | 1.5 |
Tax impact of employee share schemes | – | – | 0.2 | – | – | 0.2 |
Purchase of own shares for treasury | – | – | – | (8.7) | – | (8.7) |
Purchase of own shares for cancellation | (0.2) | – | (139.3) | – | 0.2 | (139.3) |
Dividends paid | – | – | (77.7) | – | – | (77.7) |
Total transactions with owners recognised directly in equity | (0.2) | – | (175.8) | (3.6) | 0.2 | (179.4) |
Balance at 31 March 2023 | 9.3 | 182.6 | 693.0 | (26.0) | 1.2 | 860.1 |
Loss for the year | – | – | (39.7) | – | – | (39.7) |
Total comprehensive expense, net of tax | – | – | (39.7) | – | – | (39.7) |
Transactions with owners: | ||||||
Employee share schemes – value of employee services | – | – | 17.9 | – | – | 17.9 |
Exercise of employee share schemes | – | – | (4.0) | 5.8 | – | 1.8 |
Tax impact of employee share schemes | – | – | (0.1) | – | – | (0.1) |
Purchase of own shares for treasury | – | – | – | (11.1) | – | (11.1) |
Purchase of own shares for cancellation | (0.2) | – | (159.7) | – | 0.2 | (159.7) |
Issue of ordinary shares | 0.1 | – | (0.1) | – | – | – |
Dividends paid | – | – | (80.4) | – | – | (80.4) |
Total transactions with owners recognised directly in equity | (0.1) | – | (226.4) | (5.3) | 0.2 | (231.6) |
Balance at 31 March 2024 | 9.2 | 182.6 | 426.9 | (31.3) | 1.4 | 588.8 |
Notes to the Company financial statements
1. ACCOUNTING POLICIES
Auto Trader Group plc is a public limited company which is listed on the London Stock Exchange and
is domiciled and incorporated in the United Kingdom under the Companies Act 2006. The Company
was incorporated on 13 February 2015.
Statement of compliance and basis of preparation
The Company financial statements of Auto Trader Group plc have been prepared in compliance
with United Kingdom Accounting Standards, including Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ applicable in the United Kingdom and the Republic of Ireland (‘FRS 101’) and
the Companies Act 2006.
In preparing these financial statements, the Company applies recognition, measurement and
disclosure requirements of UK-adopted international accounting standards (‘Adopted IFRSs’),
but makes amendments where necessary in order to comply with the Companies Act 2006 and
has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
The Company has applied the exemptions available under FRS 101 in respect of the following
disclosures:
•
no separate parent company cash flow statement with related notes has been included;
•
no separate parent company statement of comprehensive income with related notes has
been included; and
•
Key Management personnel compensation has not been included a second time.
As the Group financial statements include the equivalent disclosures, the Company has also taken
the exemptions under FRS 101 available in respect of the certain disclosures required by IFRS 2 – Share-
Based Payments in respect of group settled share-based payments, IFRS 13 – Fair Value Measurement
and the disclosures required by IFRS 7 – Financial Instruments: Disclosures.
The Company financial statements have been prepared under the historical cost convention,
as modified for the revaluation of certain financial assets and liabilities through profit or loss.
The current year financial information presented is at and for the year ended 31 March 2024.
The comparative financial information presented is at and for the year ended 31 March 2023.
The Company’s accounting policies are the same as those set out in note 1 to the Consolidated
financial statements.
The adoption of IFRS 17 – Insurance Contracts in the year has had no material effect on the Company
financial statements in the current or prior period. Please also see note 12.
The Directors have used the going concern principle on the basis that the current profitable financial
projections and facilities of the consolidated Group will continue in operation for a period not less
than 12 months from the date of this report.
The Company financial statements have been prepared in sterling (£), which is the functional and
presentational currency of the Company, and have been rounded to the nearest hundred thousand
(£0.1m) except where otherwise indicated.
As permitted by Section 408 of the Companies Act 2006, an entity profit and loss account is not
included as part of the published Consolidated financial statements of Auto Trader Group plc.
The loss for the financial period dealt with in the financial statements of the parent company was
£39.7m (2023: loss of £9.0m).
Amounts paid to the Company’s auditor in respect of the statutory audit were £228,500 (2023: £200,000).
The charge was borne by a subsidiary company and not recharged.
Estimation techniques
The preparation of financial statements in conformity with FRS 101 requires the use of certain critical
accounting estimates. It also requires management to exercise their judgement in the process of
applying the Company’s accounting policies. The area involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements,
is the carrying value of investments.
The Group considers annually whether there is an indicator that the carrying value of investments
may have suffered an impairment, in accordance with the accounting policy stated. Where an
indicator is identified, the recoverable amounts of investments are determined based on value-in-use
calculations, which require the use of estimates. Following an impairment being recorded in the year,
the carrying value of the investment in Autorama is sensitive to change, as disclosed in note 3.
Share-based payments
The Company grants equity-settled share-based payments to certain employees, who are employed
directly by subsidiary Group undertakings. The equity-settled share-based payments granted to
employees across the Group are in respect of ordinary shares in the Company. The accounting policy
covering the fair value calculation of these equity-settled share-based payments can be found in
note 2 to the Consolidated financial statements. The Company is not reimbursed for the expense
relating to equity-settled share-based payments granted to employees of its subsidiaries and
therefore recognises an increase in investment in subsidiaries.
Investments in subsidiaries
Investments in subsidiaries are held at cost, less any provision for impairment. Annually, the Directors
consider whether any events or circumstances have occurred that could indicate that the carrying
amount of fixed asset investments may not be recoverable. If such circumstances do exist, a full
impairment review is undertaken to establish whether the carrying amount exceeds the higher of
net realisable value or value in use. If this is the case, an impairment charge is recorded to reduce
the carrying value of the related investment.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction from the proceeds.
Where the Group purchases its own equity share capital, the consideration paid is deducted from
equity attributable to the Group’s shareholders. Where such shares are subsequently cancelled, the
nominal value of the shares repurchased is deducted from share capital and transferred to a capital
redemption reserve. Where the Group purchases its own equity share capital to hold in treasury, the
consideration paid for the shares is shown as own shares held within equity.
Shares held by the Employee Share Option Trust
Shares in the Company held by the Employee Share Option Trust (‘ESOT’) are included in the balance
sheet at cost as a deduction from equity.
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Strategic report
Governance
Financial statements
Notes to the Company financial statements
continued
1. ACCOUNTING POLICIES
CONTINUED
Taxation
UK corporation tax is provided at amounts expected to be paid or recovered using the tax rates
and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all temporary differences that have originated but not
reversed at the balance sheet date, where transactions or events that result in an obligation to pay
more tax in the future or a right to pay less tax in the future have occurred on the balance sheet date.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis
of all evidence available, it can be regarded as more likely than not that there will be suitable taxable
profits against which to recover carried-forward tax losses and from which the future reversal of
underlying temporary differences can be deducted.
Deferred tax is measured at the average rates that are expected to apply in the periods in which the
temporary differences are expected to reverse based on the tax rates and laws that have been
enacted or substantively enacted by the balance sheet date. Deferred tax is measured on an
undiscounted basis.
Financial instruments
A financial asset (unless it is a trade receivable without a significant financing component) or financial
liability is initially measured at fair value plus, for an item not at fair value through profit or loss,
transaction costs that are directly attributable to its acquisition or issue. A trade receivable without
a significant financing component is initially measured at the transaction price.
Under IFRS 9, trade receivables including accrued income, without a significant financing component,
are classified and held at amortised cost, being initially measured at the transaction price and
subsequently measured at amortised cost less any impairment loss.
The Company recognises lifetime expected credit losses (‘ECLs’) for trade receivables and accrued
income. The expected credit losses are estimated using a provision matrix based on the Company’s
historical credit loss experience, adjusted for any macro-economic factors. At 31 March 2023, ECLs
were adjusted for the macro-economic uncertainty around retailer profitability driven by used car
price volatility. At 31 March 2024, ECLs continue to reflect macro-economic uncertainty around retailer
profitability due to persistent high inflation, high interest rates and the upcoming UK general election
which could lead to new political policies to which we would need to respond.
The Company assesses whether a financial asset is in default on a case-by-case basis when it
becomes probable that the customer is unlikely to pay its credit obligations. The gross carrying
amount of a financial asset is written off when the Company has no reasonable expectations of
recovering a financial asset in its entirety or a portion thereof. For all customers, the Company
individually makes an assessment with respect to the timing and amount of write-off based on
whether there is a reasonable expectation of recovery. The Company expects no significant
recovery from the amount written off. However, financial assets that are written off could still
be subject to enforcement activities in order to comply with the Company’s procedures for
recovery of amounts due.
At each reporting date, the Company assesses whether financial assets carried at amortised cost
are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset have occurred.
Financial liabilities are classified as measured at amortised cost or fair value through profit and loss.
A financial liability is classified as at fair value through profit and loss if it is classified as held-for-
trading, it is a derivative, or it is designated as such on initial recognition and measured at fair value
and net gains and losses, including any interest expense, are recognised in profit or loss. Other
financial liabilities, including trade payables, are subsequently measured at amortised cost using
the effective interest method. Interest expense and foreign exchange gains and losses are
recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
Dividend distribution
Dividends to the Company’s shareholders are recognised as a liability in the Company’s financial
statements in the period in which the dividends are approved by the Company’s shareholders in
the case of final dividends. In respect of interim dividends, these are recognised once paid.
2. DIRECTORS’ EMOLUMENTS
The Company has no employees other than the Directors. Full details of the Directors’ remuneration
and interests are set out in the Directors’ remuneration report on pages 81 to 99.
3. INVESTMENTS IN SUBSIDIARIES
2024
£m
2023
£m
At beginning of the period
1,427.2
1,224.9
Additions – acquisition of subsidiary
–
150.0
Additions – investment in subsidiary
–
10.0
Additions – share-based payments
4.7
3.5
Additions – share-based payments relating to acquisition
10.4
38.8
Additions – cash settlement of deferred consideration
0.7
–
Cost of investments
1,443.0
1,427.2
Impairment – investment in subsidiary
(39.1)
–
Net book value at end of the year
1,403.9
1,427.2
Subsidiary undertakings are disclosed within note 35 to the Consolidated financial statements. The
Company directly owns shares in two subsidiaries, Auto Trader Holding Limited and Autorama UK Limited.
The £10.4m and £0.7m additions in the current period relate to the remaining deferred consideration
which was fully settled in the year. The remaining additions relate to equity-settled share-based
payments granted to the employees of subsidiary companies. The majority of additions in the prior
year relate to the acquisition of a subsidiary, being the purchase of 100% of the share capital of
Autorama UK Limited (‘Autorama’) of £150.0m, and a further investment of £10.0m.
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Governance
Financial statements
Notes to the Company financial statements
continued
3. INVESTMENTS IN SUBSIDIARIES
CONTINUED
As disclosed in the prior year financial statements, there was limited headroom between the
recoverable amount and the carrying value of the Autorama investment in the parent company at
31 March 2023, principally due to the requirement in the parent company to capitalise the £49.9m
share-based payment charge relating to deferred consideration.
The recoverable amount of the investment in Autorama at 31 March 2024 has been determined using
the methodology and assumptions disclosed in note 13 to the Consolidated financial statements,
adjusted to include intercompany debt to reflect equity rather than enterprise value. This has resulted
in an impairment charge of £39.1m (2023: £nil). The impairment charge reflects current assumptions
about short term tighter supply in the new car market which, though expected to improve over time,
impact the longer term forecast period. The sensitivities disclosed in note 13 to the Consolidated
financial statements would, when applied to the recoverable amount of the investment in Autorama
at 31 March 2024, increase the recorded impairment charge by a range of £18.5m to £41.6m.
No impairment indicators were identified for the investment in Auto Trader Holding Limited.
4. DEBTORS
2024
£m
2023
£m
Amounts owed by Group undertakings
301.1
336.8
Other receivables
0.3
0.2
Deferred tax asset
1.7
1.1
Total
303.1
338.1
Amounts owed by Group undertakings are non-interest-bearing, unsecured and have no fixed date
of repayment. These amounts are not expected to be settled in the next 12 months. All amounts are
owed by Auto Trader Holding Limited. No expected credit loss has been recognised on the basis
of immateriality.
5. CASH AND CASH EQUIVALENTS
2024
£m
2023
£m
Cash at bank and in hand
0.1
0.3
6. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2024
£m
2023
£m
Amounts owed to Group undertakings
(1,115.8)
903.3
Accruals and deferred income
(2.5)
2.2
Total
(1,118.3)
905.5
Amounts owed to Group undertakings are non-interest-bearing, unsecured and have no fixed date
of repayment.
7. FINANCIAL INSTRUMENTS
Financial instruments utilised by the Company during the year ended 31 March 2024 and the year
ended 31 March 2023 may be analysed as follows:
Financial assets
2024
£m
2023
£m
Financial assets measured at amortised cost
301.4
337.0
Financial liabilities
2024
£m
2023
£m
Financial liabilities measured at amortised cost
1,118.3
905.5
Current assets and liabilities
Financial instruments included within current assets and liabilities (excluding cash and borrowings)
are generally short term in nature and accordingly their fair values approximate to their book values.
8. DIVIDENDS
Dividends declared and paid by the Company were as follows:
2024
2023
Pence
per share
£m
Pence
per share
£m
2023 final dividend paid
5.6
51.3
5.5
51.7
2024 interim dividend paid
3.2
29.1
2.8
26.0
8.8
80.4
8.3
77.7
The proposed final dividend for the year ended 31 March 2024 of 6.4p per share, totalling £58.4m, is
subject to approval by shareholders at the Annual General Meeting (‘AGM’) and hence has not been
included as a liability in the financial statements.
The 2023 final dividend paid on 22 September 2023 was £51.3m. The 2024 interim dividend paid
on 26 January 2024 was £29.1m.
The Directors’ policy with regard to future dividends is set out in the Financial review on page 24.
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Governance
Financial statements
Notes to the Company financial statements
continued
9. CALLED-UP SHARE CAPITAL
Share capital
2024
2023
Number
’000
Amount
£m
Number
’000
Amount
£m
Allotted, called-up and fully paid ordinary shares
of 1p each
At 1 April
923,075
9.3
946,893
9.5
Purchase and cancellation of own shares
(23,711)
(0.2)
(23,831)
(0.2)
Issue of shares
7,850
0.1
13
0.0
Total
907,214
9.2
923,075
9.3
In the year ended 31 March 2017, the Company commenced a share buyback programme. By resolutions
passed at the 2023 AGM, the Company’s shareholders generally authorised the Company to make market
purchases of up to 92,019,875 of its ordinary shares, subject to minimum and maximum price restrictions.
In the year ended 31 March 2024, a total of 25,207,430 ordinary shares of £0.01 were purchased. The
average price paid was 673.0p with a total consideration paid (including fees of £0.9m) of £170.8m. Of
all shares purchased, 1,496,445 were held in treasury with 23,710,985 being cancelled. In the year ended
31 March 2024, 7,849,782 ordinary shares were issued for the settlement of share-based payments.
Included within shares in issue at 31 March 2024 are 312,831 (2023: 340,196) shares held by the ESOT
and 4,899,346 (2023: 4,371,505) shares held in treasury, as detailed in note 10.
10. OWN SHARES HELD
Own shares held – £m
ESOT shares
reserve
£m
Treasury
shares
£m
Total
£m
Own shares held as at 31 March 2022
(0.4)
(22.0)
(22.4)
Repurchase of own shares for treasury
–
(8.7)
(8.7)
Share-based incentives
–
5.1
5.1
Own shares held as at 31 March 2023
(0.4)
(25.6)
(26.0)
Repurchase of own shares for treasury
–
(11.1)
(11.1)
Share-based incentives
–
5.8
5.8
Own shares held as at 31 March 2024
(0.4)
(30.9)
(31.3)
Own shares held – number
ESOT shares
reserve
Number of
shares
Treasury
shares
Number of
shares
Total
number of
own shares
held
Own shares held as at 31 March 2022
358,158
3,826,928
4,185,086
Transfer of shares from ESOT
(17,962)
–
(17,962)
Repurchase of own shares for treasury
–
1,430,372
1,430,372
Share-based incentives exercised in the year
–
(885,795)
(885,795)
Own shares held as at 31 March 2023
340,196
4,371,505
4,711,701
Transfer of shares from ESOT
(27,365)
–
(27,365)
Repurchase of own shares for treasury
–
1,496,445
1,496,445
Share-based incentives exercised in the year
–
(968,604)
(968,604)
Own shares held as at 31 March 2024
312,831
4,899,346
5,212,177
11. RELATED PARTIES
During the year, a management charge of £6.7m (2023: £5.9m) was received from Auto Trader Limited
in respect of services rendered.
At the year end, balances outstanding with other Group undertakings were £301.2m and £1,115.8m
respectively for debtors and creditors (2023: £336.8m and £903.3m) as set out in notes 4 and 6.
12. FINANCIAL GUARANTEES
In the prior period the Company became a financial guarantor for the arrangement between
Autorama UK Limited and its vehicle stocking loan provider, Lombard North Central PLC. As at
31 March 2024, the maximum amount the Company would be required to pay if called upon is £3.6m,
plus interest (2023: £3.6m).
The Company is also a guarantor for borrowings by its subsidiaries under the Senior Revolving Facility.
As at 31 March 2024, the maximum amount the Company would be required to pay if called upon is the
amount drawn of £30.0m plus accrued interest (2023: £60.0m).
The fair value of the above intra-group guarantees has not been recorded as a liability in the
Company’s balance sheet as they are not considered to be a material liability.
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Financial statements
Unaudited five-year record
2024
£m
2023
£m
2022
£m
2021
£m
2020
£m
Trade
475.7
427.4
388.3
225.2
324.3
Consumer Services
39.6
34.5
33.3
26.6
28.3
Manufacturer and Agency
14.4
11.1
11.1
11.0
16.3
Autorama
41.2
27.2
–
–
–
Revenue
570.9
500.2
432.7
262.8
368.9
Operating costs
(225.0)
(225.1)
(132.0)
(104.0)
(113.2)
Share of profit from joint ventures
2.8
2.5
2.9
2.4
3.2
Operating profit
348.7
277.6
303.6
161.2
258.9
Net interest expense
(3.5)
(3.1)
(2.6)
(3.8)
(7.4)
Profit on disposal of subsidiary
–
19.1
–
–
–
Profit before taxation
345.2
293.6
301.0
157.4
251.5
Taxation
(88.3)
(59.7)
(56.3)
(29.6)
(46.4)
Profit after taxation
256.9
233.9
244.7
127.8
205.1
Net assets
552.3
527.3
472.5
458.7
141.6
Net bank debt/(cash) (gross bank debt less cash)
11.3
43.4
(51.3)
(15.7)
275.4
Cash generated from operations
379.0
327.4
328.1
152.9
265.5
Basic EPS (pence)
28.2
25.0
25.6
13.2
22.2
Diluted EPS (pence)
28.1
24.8
25.6
13.2
22.1
Dividends declared per share (pence)
9.6
8.4
8.2
5.0
2.4
161
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Strategic report
Governance
Financial statements
Shareholder information
REGISTERED OFFICE AND HEADQUARTERS
Auto Trader Group plc
4
th
Floor, 1 Tony Wilson Place
Manchester
M15 4FN
United Kingdom
Registered number: 09439967
Tel: +44 (0)345 111 0006
Web: autotrader.co.uk
Web: plc.autotrader.co.uk
Investor relations: ir@autotrader.co.uk
COMPANY SECRETARY
Claire Baty
SHAREHOLDER ENQUIRIES
Our registrar will be pleased to deal with any
questions regarding your shareholdings (see
contact details in the opposite column).
Alternatively, if you have internet access, you
can access shareview.co.uk where you can view
and manage all aspects of your shareholding
securely including electronic communications,
account enquiries or amendment to address.
INVESTOR RELATIONS WEBSITE
The investor relations section of our website,
plc.autotrader.co.uk/investors, provides further
information for anyone interested in Auto Trader.
In addition to the Annual Report and Financial
Statements and share price, Company
announcements including the full-year results
announcements and associated presentations
are also published there.
CAUTIONARY NOTE REGARDING
FORWARD LOOKING STATEMENTS
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
JOINT STOCKBROKERS
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INDEPENDENT AUDITOR
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Chartered Accountants
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REGISTRAR
Equiniti Limited
Aspect House
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Please check with your telephone provider
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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.
FINANCIAL CALENDAR 2024–2025
Annual General Meeting
19 September 2024
2025 half-year results
7 November 2024
2025 full-year results
May 2025
162
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REGISTERED OFFICE AND HEADQUARTERS
Auto Trader Group plc
4
th
Floor, 1 Tony Wilson Place
Manchester
M15 4FN
United Kingdom
+44 (0)345 111 0006
ir@autotrader.co.uk
plc.autotrader.co.uk
Auto Trader Insight
@ATInsight