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Share Name Share Symbol Market Type Share ISIN Share Description
Auto Trader Group Plc LSE:AUTO London Ordinary Share GB00BVYVFW23 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  12.60 2.28% 566.00 567.40 567.80 570.40 553.80 558.60 3,332,894 16:35:22
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Media 262.8 157.4 13.2 42.7 5,357

Auto Trader Group plc Half Year Results

11/11/2021 7:00am

UK Regulatory (RNS & others)


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RNS Number : 0147S

Auto Trader Group plc

11 November 2021

AUTO TRADER GROUP PLC

HALF YEAR RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER 2021

Auto Trader Group plc ('Auto Trader', 'the Group'), the UK's largest digital automotive marketplace, announces half year results for the six months ended 30 September 2021

Strategic overview

   -      We have achieved our highest ever six-monthly revenue and profits 

- Consumer engagement and retailer numbers are at record levels, our competitive position has strengthened and product uptake by customers has been strong

- In April 2021, we launched our Retailer Stores product as part of our successful annual pricing event, these have seen strong traffic volumes throughout H1

- We implemented a new higher-level advertising package and a product that allows our retailers to reach car buyers outside their local area (Market Extension). Both have seen good levels of adoption, contributing to a record level of spending by our retailer customers (Average Revenue Per Retailer)

- Our strategic focus on supporting an increasingly online car buying journey continues to gather pace. Vehicles can be advertised nationally for local delivery (Market Extension and Motor Trade Delivery); car owners are able to get a guaranteed trade-in price (through Guaranteed Part-Exchange and Instant Offer); online reservations are being trialled with a small number of customers; and our online finance solution, offering finance collaboratively with car retailers (Retailer Finance), is scheduled for trial later this financial year

Financial results

- Revenue of GBP215.4 million up 82% (H1 2021: GBP118.2 million), and up 15% on H1 2020 (GBP186.7 million). Trade revenue of GBP192.3 million up 92% (H1 2021: GBP100.2 million) and up 19% on H1 2020 (GBP161.8 million). In H1 2021, we provided free advertising to retailer customers in April and May 2020, as well as at a discounted rate in June 2020

- Operating profit of GBP151.7 million up 121% (H1 2021: GBP68.5 million) and up 15% on H1 2020 (GBP131.4 million). Operating profit margin increased to 70%, up from 58% in H1 2021, and was consistent with H1 2020

   -      Basic EPS of 12.63p up 126% (H1 2021: 5.58p) and up 13% on H1 2020 (11.13p) 

- Cash generated from operations up(1) 157% to GBP169.9 million (H1 2021: GBP66.1 million), and up 28% on H1 2020 (GBP132.7 million)

- GBP148.4 million returned to shareholders (H1 2021: Nil) through GBP100.4 million of share buy-backs and dividends paid of GBP48.0 million

   -      Interim dividend declared of 2.7p (H1 2021: no interim dividend declared) 

Operational results

- Cross platform visits(3,4) increased by 20% to 68.7 million per month on average (H1 2021: 57.3 million)

- Cross platform minutes(3,4) increased by 14% to 633 million per month on average (H1 2021: 557 million). Our share of cross platform minutes(3,5) remains strong at over 75% (H1 2021: over 75%) and we grew to be almost 9x larger than our nearest competitor (H1 2021: 7x)

- Continued growth in retailer forecourts(3) from the end of FY21 due to both our strong position and favorable market conditions, up 6% to 13,892 (H1 2021: 13,056)

- Average Revenue Per Retailer(3) (ARPR) per month of GBP2,199 up GBP993 (H1 2021: GBP1,206) and up 13% on H1 2020. Excluding COVID-19 discounts in the prior year, underlying ARPR increased by GBP353 per month, with good growth from all three ARPR levers

- Physical car stock(3,6) on site down 9% to 436,000 (H1 2021 478,000) on average. Our listings product for new cars declined to 39,000 on average (H1 2021: 46,000). The remaining decline was due to stock offers in the prior year, where customers were able to advertise more cars than their contracted amounts without charge

- Number of employees (FTEs)(3) increased to 941 on average during the period (H1 2021: 893) partly due to the acquisition of Auto Convert in July 2020

Cultural KPIs

   -      Employees that are proud to work at Auto Trader(7) remained high at 92% (March 2021: 93%) 

- Diverse teams and an inclusive culture are critical to attracting, identifying and maximising the potential of our people and therefore our business:

o Board: The proportion of women on the board continued to be 50% (March 2021: 50%). We announced the appointment of Jasvinder Gakhal as an Independent Non-Executive Director to the Board, with effect from 1 January 2022

o Leadership: The percentage of women leaders(8) was 36% (March 2021: 34%), and those who are BAME(9) were 5% (March 2021: 6%)

o Organisation: The percentage of employees who are women was at 39%(10) (March 2021: 39%), and those who are BAME(9,10) were 12% (March 2021: 11%)

- In June 2021, we signed up to the Science Based Target Initiative Business Ambition for 1.5degC. By doing so we have committed to achieving net zero before 2050 and to reduce emissions in line with the Paris Agreement goals. Our near term targets, which have been validated, are to halve carbon emissions before the end of 2030 and we continue to work on the initiatives to help us achieve our longer term targets

Nathan Coe, Chief Executive Officer of Auto Trader, said:

"Early in the pandemic we acted decisively to protect our people, customers, and business. As a result of these actions, we have emerged as a stronger business which can be seen in our results for the first half of this financial year.

"The number of people using Auto Trader to buy their next car is at record levels, more retailers are choosing to partner with us, and our competitive position has strengthened.

"This positions us well as we look to partner with retailers to bring more of the car buying journey online, which we believe will provide significant long term growth opportunities."

Outlook

The Board is confident for the second half of the year. The majority of revenues are recurring in nature and most of the significant growth events for the year have been successfully delivered in the first half. Notable events were our annual pricing event, the launch and initial uptake of new products, which have occurred alongside low levels of retailer churn.

For the full year, we now expect modest year on year growth in retailer forecourt numbers and low double-digit ARPR growth on FY20 levels. The stock lever, which shows the year on year movement, is likely to represent a small headwind for the full year, as we lap a strong second half last year.

Operating profit margins for the full year are expected to be in line with FY20 levels.

Analyst presentation

A presentation for analysts will be held at the offices of Numis at 9.30am, Thursday 11 November 2021. If you wish to attend, please contact Powerscourt on the details below. Alternatively, you can listen to the presentation via audio webcast at the following link:

Audio webcast: https://edge.media-server.com/mmc/p/uk4tziry

Conference call details :

 
Location                  Purpose       Phone Type             Number 
United Kingdom, London    Participant   Local                  +44 (0) 2071 928338 
                          ============  =====================  =================== 
United Kingdom            Participant   Tollfree / Freephone   08002796619 
                          ============  =====================  =================== 
United States, New York   Participant   Local                  16467413167 
                          ============  =====================  =================== 
United States             Participant   Tollfree / Freephone   18778709135 
                          ============  =====================  =================== 
 

Passcode: 4095590

Please note: Questions will only be taken from in the room at Numis. Participants on the conference call who plan on following the slides via the webcast should switch the webcast to Phone mode using the cogwheel icon located on the bottom right corner of the webcast screen to ensure the slides are synced to the phone audio rather than the webcast audio.

If you have any trouble registering or accessing either the conference call or webcast, please contact Powerscourt on the details below.

For media enquiries

Please contact the team at Powerscourt on +44 (0)20 7250 1446 or email autotrader@powerscourt-group.com

About Auto Trader

Auto Trader Group plc is the UK and Ireland's largest digital automotive marketplace. Our marketplace sits at the heart of the vehicle buying process, with the largest number of car buyers and the largest choice of trusted stock. Auto Trader exists to grow both its car buying audience and core advertising business. It will change how the UK shops for cars by providing the best online car buying experience, enabling all retailers to sell online. We aim to build stronger partnerships with our customers, use our voice and influence to drive more environmentally friendly vehicle choices and create an inclusive and diverse culture. Auto Trader listed on the London Stock Exchange in March 2015 and is now a member of the FTSE 100 Index.

For more information, please visit https://plc.autotrader.co.uk/who-we-are/about-us/

Cautionary statement

Certain statements in this announcement constitute forward looking statements (including beliefs or opinions). "Forward looking statements" are sometimes identified by the use of forward-looking terminology, including the terms "believes", "estimates", "aims" "anticipates", "expects", "intends", "plans", "predicts", "may", "will", "could", "shall", "risk", "targets", forecasts", "should", "guidance", "continues", "assumes" or "positioned" or, in each case, their negative or other variations or comparable terminology. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is a forward looking statement. Such forward looking statements are subject to known and unknown risks and uncertainties, because they relate to events that may or may not occur in the future, that may cause actual results to differ materially from those expressed or implied by such forward looking statements. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this results announcement. As a result, you are cautioned not to place reliance on such forward looking statements, which are not guarantees of future performance and the actual results of operations, financial condition and liquidity, and the development of the industry in which the Group operates, may differ materially from those made in or suggested by the forward looking statements set out in this announcement. Except as is required by applicable laws and regulatory obligations, no undertaking is given to update the forward looking statements contained in this announcement, whether as a result of new information, future events or otherwise. Nothing in this announcement should be construed as a profit forecast. This announcement has been prepared for the Company's group as a whole and, therefore, gives greater emphasis to those matters which are significant to the Company and its subsidiary undertakings when viewed as a whole.

To the extent available, the industry and market data contained in this announcement has come from third party sources. Third party industry publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. In addition, certain industry and market data contained in this announcement come from the Company's own internal research and estimates based on the knowledge and experience of the Company's management in the market in which the Company operates. While the Company believes that such research and estimates are reasonable and reliable, they, and their underlying methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change without notice. Accordingly, undue reliance should not be placed on any of the industry or market data contained in this announcement.

Summary financial performance

 
 
                                         Units      H1 2022   H1 2021     Change 
-----------------------------------  ------------  --------  --------  --------- 
 Income statement 
-----------------------------------  ------------  --------  --------  --------- 
 Trade                                   GBPm         192.3     100.2        92% 
 Consumer services                       GBPm          18.0      12.9        40% 
 Manufacturer & Agency                   GBPm           5.1       5.1         0% 
-----------------------------------  ------------  --------  --------  --------- 
 Revenue                                 GBPm         215.4     118.2        82% 
-----------------------------------  ------------  --------  --------  --------- 
 Operating profit                        GBPm         151.7      68.5       121% 
-----------------------------------  ------------  --------  --------  --------- 
 Operating profit margin                   %            70%       58%    12% pts 
-----------------------------------  ------------  --------  --------  --------- 
 Profit before tax                       GBPm         150.0      66.2       127% 
-----------------------------------  ------------  --------  --------  --------- 
 Basic earnings per share                Pence        12.63      5.58       126% 
-----------------------------------  ------------  --------  --------  --------- 
 Dividend per share                      Pence         2.7p         -          - 
-----------------------------------  ------------  --------  --------  --------- 
 
 Cash flow 
-----------------------------------  ------------  --------  --------  --------- 
 Cash generated from operations(1)       GBPm         169.9      66.1       157% 
-----------------------------------  ------------  --------  --------  --------- 
 Net bank debt/(cash) at September 
  2021/March 2021(2)                     GBPm         (9.2)    (15.7)      (41%) 
-----------------------------------  ------------  --------  --------  --------- 
 
 Selected key performance 
  indicators 
-----------------------------------  ------------  --------  --------  --------- 
                                        GBP per 
 Average Revenue Per Retailer(3)         month        2,199     1,206        82% 
-----------------------------------  ------------  --------  --------  --------- 
 Physical car stock on site(3,6)        Number      436,000   478,000       (9%) 
-----------------------------------  ------------  --------  --------  --------- 
 Retailer forecourts(3)                 Number       13,892    13,056         6% 
-----------------------------------  ------------  --------  --------  --------- 
                                        million 
 Cross platform visits(3,4)            per month       68.7      57.3        20% 
-----------------------------------  ------------  --------  --------  --------- 
                                        million 
 Cross platform minutes(3,4)           per month      633.0     556.6        14% 
-----------------------------------  ------------  --------  --------  --------- 
 Full-time equivalent employees 
  (including contractors)(3)            Number          941       893         5% 
-----------------------------------  ------------  --------  --------  --------- 
 

1. Cash generated from operations is defined as net cash generated from operating activities, before corporation tax paid.

2. Net bank debt/(cash) is Net debt before amortised debt fees and excluding accrued interest and amounts owed under lease arrangements.

   3.   Average during the period. 
   4.   Measured by Google analytics. 

5. Share of minutes is a custom metric based on Comscore minutes and is calculated by dividing Auto Trader's total minutes volume by the entire custom-defined competitive set's total minutes volume. The custom-defined list includes: Auto Trader, Gumtree motors, Pistonheads, Motors.co.uk & CarGurus.

   6.   Physical car stock advertised on autotrader.co.uk. 

7. Based on a survey to all Auto Trader employees in October 2021 asking our people to rate the statement "I am proud to work for Auto Trader?". Answers are given on a five-point scale from strongly disagree to strongly agree.

8. We define leaders as those who are on our Operational Leadership Team ('OLT'), three divisional leaders and their direct reports.

9. Throughout 2021 we have asked our employees to voluntarily disclose their ethnicity, at the period end we had 141 employees (14%) who had not yet disclosed.

10. We calculate all our diversity percentages using total group headcount (September 2021: 980, March 2021: 953) as at 30(th) September.

Summary of operating performance in H1 2022

Revenue grew by 82% to GBP215.4 million (H1 2021: GBP118.2 million). The abnormally high rate of growth principally reflects the COVID-related discounts we gave to our retailer customers during the first wave of the pandemic early in calendar year 2020. A better comparison is that of two years ago, against which revenue grew by 15% (H1 2020: GBP186.7 million), with a greater number of customers using Auto Trader and choosing to spend more on our platform. Operating profit grew 121% to GBP151.7 million (H1 2021: GBP68.5 million), again with a better comparison being H1 2020 where growth was 15% (H1 2020: GBP131.4 million). Operating profit margin grew to 70% (H1 2021: 58%) and was consistent with the level seen in H1 2020.

Our audience performance has strengthened with average monthly cross platform visits increasing by 20% to 68.7 million per month (H1 2021: 57.3 million). Engagement, which we measure by total minutes spent on site, was also strong with an increase of 14% to an average of 633 million minutes per month (H1 2021: 557 million minutes). We have maintained our position as the UK's largest and most engaged automotive marketplace for new and used cars, with over 75% of all minutes spent on automotive classified sites spent on Auto Trader (H1 2021: over 75%) and grew to be almost 9x larger than our nearest competitor (H1 2021: 7x).

The average number of retailer forecourts advertising on our platform increased by 6% to 13,892 (H1 2021: 13,056). The increase in the number of forecourts was due to lower levels of cancellation, partly due to favourable market conditions and the current strength of our position and standing with customers. Levels of new customer acquisition were largely consistent with prior periods.

Total live stock on site decreased by 9% to an average of 436,000 cars (H1 2021: 478,000). Part of the decline was due to a fall in the volume of new car stock, which averaged 39,000 (H1 2021: 46,000) due to the well documented shortage of new car supply. Used car stock was also impacted by supply shortages, particularly amongst our larger, lower yielding customers. Despite this supply pressure, the year on year decline in used car live stock was due to a stock offer in the previous year, where customers could advertise more than their contracted amounts without charge, which wasn't repeated this year.

The UK car market

As the UK emerged from the most recent national lockdown in June 2021, demand for both new and used cars has been particularly strong. This demand has been fuelled by a catch up in transactions that didn't happen in 2020 due to COVID-related lockdowns, increased consumer interest in car ownership and good levels of consumer confidence. These factors, combined with limited supply, give us confidence that favourable market conditions are likely to remain for some time to come.

New car registrations, whilst seeing year on year growth of 17% versus H1 2021, were still 23% below H1 2020 levels as semi-conductor shortages impacted the supply of new cars. These constraints have also impacted used cars, particularly for our larger customers, as lower new car sales have meant fewer part-exchanges and a lower volume of cars sent to auction from wholesalers. High levels of demand combined with constrained supply have led to significant levels of price growth, with our used car price index seeing an 11% year on year increase in prices across the period.

Despite these unusual conditions most of our customers have been able to trade profitably, with some customers at record levels, making significantly more profit per vehicle and selling those vehicles significantly faster. In the medium to long term the financial health of our customers is clearly important, however short-term these conditions have been less favourable for Auto Trader given the direct impact on our business model of fewer cars being advertised for less time.

Our core marketplace

In April 2021, we successfully executed our annual pricing event including the launch of Retailer Stores, which offers retailers their own dedicated, customisable location on Auto Trader. We have seen over 28m visits to these pages in H1 2022. As we build our digital retailing journey, we envisage these becoming an area that customers can use as part of their own e-commerce journey.

In the first half, we have evolved our advertising package structure and changed the sort order for listings. Our packages previously promoted adverts depending on the device a consumer was searching on, we have now created a consistent cross platform experience with adverts appearing in search based on a relevancy algorithm, which takes package level into account. As part of this change, we have discontinued our Basic package, introduced a higher level and re-branded our top three levels Enhanced, Super and Ultra. We have increased the penetration of our higher yielding packages with 25% of retailer stock on a package above Standard in September 2021 (September 2020: 22%). We also launched a new product, Market Extension, that allows customers to sell vehicles outside their local area, which has seen some initial uptake from our larger Independent customers, exiting the period with over 4% of retailer stock on this product. Whilst the supply and demand dynamics during the past six months have not been the best catalyst for upselling, we have nonetheless seen customers continue to invest further in our prominence products.

Our new car proposition has been impacted by supply shortages created by the challenge sourcing semi-conductors. This has seen the number of new cars advertised decrease to 39,000 (H1 2021: 46,000). However due to our "all you can eat" charging model we have not seen this directly impact revenue and the number of paying dealers ended the half at c.2,100 (H1 2021: over 1,500). Despite lower stock levels, awareness that Auto Trader is a destination for new cars continues to grow with 1.5m unique visitors viewing a new car on average each month across the period.

Investing in the future

We remain committed to being the best place to find, buy and sell a car in the UK on a platform that enables data-driven digital retailing for our customers. This involves changing how the UK shops for cars by providing the best online car buying experience and enabling all retailers to sell online. With this goal in mind, we continue to make good progress in developing the most important components of the online car buying journey, all built on our trusted, industry leading marketplace.

In the last six months, we have improved our offering for consumers who want to conveniently sell their car for cash through our Instant Offer product and connected it with our Guaranteed Part-Exchange ('GPX') product. Customers who subscribe to GPX have access to our B2B auction platform, Dealer Auction, where the vehicles acquired through Instant Offer are sold to dealers. The ability to source more stock from consumers is a key differentiator for online car retailers and this innovation enables our customers the same benefit by leveraging Auto Trader's brand and technology. These products enable consumers to get an accurate and guaranteed price for their existing vehicle whilst shopping on Auto Trader, eliminating either the need to haggle over a part-exchange or look for other disposal routes for their current vehicle. Over the past six months, we have provided c.520,000 guaranteed valuations and purchased c.5,000 vehicles on Instant Offer. At the reporting date we had c.500 customers using GPX, with 20% of them paying for the product.

Having last year acquired AutoConvert, a finance, insurance and compliance software platform, we continue to work towards having both a point-of-sale finance system and a finance application journey live on Auto Trader. We expect to have both products live and in trial during the second half of this financial year. This is by some distance the most complex product we have ever built and we expect it to continuously evolve and form a key component of facilitating an online transaction. Currently, the existing finance process is somewhat opaque and can be a time-consuming experience when completed on the forecourt. These products aim to improve that process by driving greater transparency and self-service for consumers, as well as realising improved efficiencies for our retailers.

As mentioned at our full year results, we have launched a trial for vehicle reservations during the first half, completing over 100 successful transactions and will continue to make progress building on that functionality to make the product scalable. We believe the willingness of consumers to complete more of the car buying process online has meaningfully changed. Having the three critical components of GPX, reservations and finance, either live or close to being live, our focus is now on optimising these products, adapting them for larger customers and bringing them together into an end to end journey on Auto Trader that compliments the forecourt experience.

Making a difference

Within our overall strategy we aim to 'make a difference' to our people, our communities, our industry, and to the wider environment, whilst holding ourselves to the highest standards when it comes to acting responsibl y . We have a Corporate Responsibility Committee with oversight for Auto Trader's focus on the environmental, social and governance aspects of our business. Over the past 12 months we have identified focus areas around which we have created initiatives. These are monitored regularly and reported on using our cultural KPIs. Whil e many of these changes take time, we are committed to making meaningful progress across all measures.

We want to continue to improve the diversity and inclusion within our organisation as we believe this improves individual and team performance and will allow us to identify and attract talent that we may not otherwise access. We are making progress, but there remains significant room for improvement. We are pleased to have a 50:50 gender parity on the Board and have announced the appointment of Jasvinder Gakhal as an Independent Non-Executive Director, with effect from 1 January 2022. Women represented 39% of our organisation (March 2021: 39%) and in leadership roles, as defined by Hampton-Alexander, there was some improvement to 36% (March 2021: 34%). We are committed to increasing the percentage of BAME employees, who currently represent 12% of the organisation (March 2021: 11%), with 14% of employees not disclos ing their ethnicity . The percentage of BAME employees in leadership, again using the Hampton-Alexander definition, was 5% (March 2021: 6%). Much of our work around creating an inclusive culture and environment has been supported and informed by our many employee networks and guilds representing women, BAME, LGBT+, disability & neurodiversity and age.

The UK government has a target to become net zero by 2050 and Auto Trader has a role to play in reaching this goal. There are two strands to our commitments around the environment which include working towards achieving net zero carbon emissions and supporting consumers in making more sustainable vehicle choices.

In June 2021, we signed up to the Science Based Target initiative (SBTi) Business Ambition for 1.5degC. By doing so, we have committed to achieving net zero before 2050 and to reduce emissions in line with the Paris Agreement goals. We have built on the work we completed in the last financial year to understand our full Scope 3 emissions, in addition to our Scope 1 and 2 emissions, such that we can form science-based emission reduction targets. These near term targets, which have been validated, form a core component of our net zero strategy. We have committed to reduce absolute scope 1 and 2 emissions by 50% and absolute Scope 3 emissions by 46% before the end of financial year 2031, using financial year 2020 as the base year. Alongside the reduction in emissions, we are working on a carbon removal plan to help us achieve our long term net zero goal. In terms of helping consumers make more sustainable vehicle choices we have engaged 1.2 million consumers in our monthly EV giveaway campaign, launched an electric car hub on Auto Trader and have been educating both employees and customers with our carbon literacy training.

As lockdown restrictions began to ease in the UK at the beginning of the financial year, we decided to adapt our working policies to reflect the way in which we will work in future. Our people have been able to better balance their work and home life and we aim to see our employees retain some of these benefits as we transition back to a hybrid working environment. Employee engagement remains high, with 92% of employees who say they are proud to work at Auto Trader (March 2021: 93%).

The Board

In September, we announced the appointment of Jasvinder Gakhal to the Board as an Independent Non-Executive Director, with effect from 1 January 2022. Following Jasvinder's appointment, the Board will comprise five Independent Non-Executive Directors, three Executive Directors and a Non-Executive Chairman.

Investor calendar

The Group's full year results for the year ending 31 March 2022 will be announced on 26 May 2022.

Financial review

Revenue increased to GBP215.4m (H1 2021: GBP118.2m), up 82% when compared to the prior year. Trade revenue, which comprises revenue from Retailers, Home Traders and other smaller revenue streams, increased by 92% to GBP192.3m (H1 2021: GBP100.2m).

 
                          H1 2022   H1 2021   Change 
                             GBPm      GBPm        % 
-----------------------  --------  --------  ------- 
 Retailer                   183.3      94.5      94% 
 Home Trader                  4.5       2.7      67% 
 Other                        4.5       3.0      50% 
-----------------------  --------  --------  ------- 
 Trade                      192.3     100.2      92% 
 Consumer Services           18.0      12.9      40% 
 Manufacturer & Agency        5.1       5.1        - 
-----------------------  --------  --------  ------- 
 Total                      215.4     118.2      82% 
-----------------------  --------  --------  ------- 
 

Retailer revenue increased by 94% to GBP183.3m (H1 2021: GBP94.5m). Revenue in H1 2021 was impacted by a 100% discount for retailers in April 2020 and May 2020 as we supported customers who were required to close their forecourts due to COVID-19. This was followed by a 25% discount for customers in June 2020 as initial restrictions were lifted. There have been no discounts in relation to COVID-19 in H1 2022.

The average number of retailer forecourts advertising on our platform increased 6% to 13,892 (H1 2021: 13,056), with lower cancellations in the period. Average Revenue Per Retailer ('ARPR') increased by 82% to GBP2,199 (H1 2021: GBP1,206). Much of the increase came from COVID related discounts which were offered to customers in the prior year and due to their absence in 2022 contributed GBP640 of growth. Taking account of those discounts there was an underlying increase in ARPR of GBP353 which was spread across our price, stock and product levers:

-- Price: Our price lever contributed an increase of GBP74 (H1 2021: GBP49) to total ARPR as we delivered our annual pricing event for all customers on 1 April 2021, which included additional products but also a like-for-like price increase.

-- Stock: The number of live cars advertised on Auto Trader decreased by 9% to 436,000 (H1 2021 478,000). It is important to note though that the stock lever is not driven by live stock but by the number of paid stock units. Last year live stock was impacted by a stock offer which allowed customers to double their stock for free from late March to mid-July 2020, which did not impact paid for stock. We saw the full conversion of that stock offer in September 2020, which was followed by strong growth in paid for stock units throughout H2 2021, meaning we entered this financial year with a very strong run rate. Whilst we have seen some downgrades in paid stock during the first half, as a result of faster stock turn and limited supply, much has come from our larger Franchise customers who generally have a lower cost per car and overall paid for stock units have averaged above prior year levels. These dynamics resulted in a GBP160 increase in the stock lever (H1 2021: decline of GBP156). There have been no stock offers in H1 2022.

-- Product: Our product lever contributed an increase of GBP119 (H1 2021: GBP57) to total ARPR. Part of this product growth was as a result of seeing an increase in retailers purchasing prominence products including our higher yielding Enhanced, Super and Ultra packages with penetration increasing to 25% (September 2020 (Advanced and Premium): 22%). We also introduced a new Market Extension product, allowing retailers to sell outside of their local area, which also contributed to the product lever with 4% of retailer stock on the product by the end of the period. There was also some contribution from our Retailer Stores product, which was launched in April 2021 as part of our pricing event. Finally, there was a positive contribution from our New Car product, with c.2,100 Franchise retailers paying for the product (September 2020: over 1,500 retailers).

Home Trader revenue increased by 67% to GBP4.5m (H1 2021: GBP2.7m). Other revenue increased by 50% to GBP4.5m (H1 2021: GBP3.0m).

Consumer Services revenue increased by 40% in the period to GBP18.0m (H1 2021: GBP12.9m) and we now expect 10-20% growth versus FY21 for the full year . Private revenue, which is generated from individual sellers who pay to advertise their vehicle on the Auto Trader marketplace, increased by 33% to GBP11.0m (H1 2021: GBP8.3m) with a further increase in Motoring Services revenue, up 52% to GBP7.0m (H1 2021: GBP4.6m) as a result of strong growth in both our insurance and finance offerings.

Revenue from Manufacturer & Agency customers was flat at GBP5.1m (H1 2021: GBP5.1m). The pandemic had a significant impact on this revenue line in H1 2021, as did the removal of standard format display advertising to improve our onsite experience. New car advertising in H1 2022 has been impacted by semi-conductor supply issues, with Manufacturers lowering their marketing spend until there is more clarity on the supply of new cars into the market. We expect full year revenue to be in line with FY21.

Costs

In H1 2021, the Group made the decision to reduce costs, mainly through discretionary marketing spend, whilst our retailer customers were closed in the first quarter of 2021. With a return to more normal levels in 2022, total costs increased by 29% to GBP65.4m (H1 2021: GBP50.8m), which was a 15% increase versus H1 2020.

 
                                   H1 2022    H1 2021    Change 
                                      GBPm       GBPm         % 
-------------------------------  ---------  ---------  -------- 
 People costs                         35.0       30.2       16% 
 Marketing                            10.6        3.5      203% 
 Other costs                          16.2       14.0       16% 
 Depreciation & amortisation           3.6        3.1       16% 
 Total administrative expenses        65.4       50.8       29% 
-------------------------------  ---------  ---------  -------- 
 

People costs, which comprise all staff costs and third-party contractor costs, increased by 16% to GBP35.0m (H1 2021: GBP30.2m). The increase in people costs was primarily driven by an increase in the average number of full-time equivalent employees (including contractors) to 941 (H1 2021: 893). This increase was partly driven by the acquisition of AutoConvert in July 2020 accounting for an increase of 18. The average cost per employee increased by 10% due to an increase in performance related pay and as a result of the Executive Directors and the Board foregoing 50% or more of their salary and fees for the period of April to June 2020, as well as annual pay reviews resuming in July 2021 having not occurred last financial year. Underlying salary costs continue to increase as we invest in the best digital talent.

Marketing spend increased by 203% in H1 2022 to GBP10.6m (H1 2021: GBP3.5m) as discretionary spend was reduced in response to the pandemic in H1 2021 but has since resumed. However, as a percentage of revenue at 4.9%, it remains below the 5.4% seen in H1 2020.

Other costs, which include data services, property related costs and other overheads, increased by 16% to GBP16.2m (H1 2021: GBP14.0m). The increase was primarily due to increased overhead costs; including the return of travel, office & people related costs, as well as higher IT spend as we continue to move more of our services and applications to the cloud. Depreciation and amortisation increased to GBP3.6m (H1 2021: GBP3.1m) mainly driven by office improvements and an additional office lease.

Profit from the share in joint ventures

Our share of profit generated by Dealer Auction, the Group's joint venture, increased 55% to GBP1.7m (H1 2021: GBP1.1m) in the period as a result of higher auction activity following a reduction through H1 2021 due to lockdown restrictions.

Operating profit

 
                                         H1 2022    H1 2021    Change 
                                            GBPm       GBPm         % 
-------------------------------------  ---------  ---------  -------- 
 Revenue                                   215.4      118.2       82% 
 Administrative expenses                  (65.4)     (50.8)     (29%) 
 Share of profit from joint ventures         1.7        1.1       55% 
 Operating profit                          151.7       68.5      121% 
-------------------------------------  ---------  ---------  -------- 
 

During the period, Operating profit increased by 121% to GBP151.7m (H1 2021: GBP68.5m). Operating profit margin increased by twelve percentage points to 70% (H1 2021: 58%) and is back in line with H1 2020 levels.

Net finance costs

Net finance costs decreased to GBP1.7m (H1 2021: GBP2.3m). Interest costs on the Group's RCF totalled GBP0.9m (H1 2021: GBP2.0m), with a reduction in interest payable being offset by higher amortised debt issue costs. At 30 September 2021 the Group had drawn GBPnil of its available facility (30 September 2020: GBP89.5m). Amortisation of debt issue costs amounted to GBP0.8m (H1 2021: GBP0.3m) with the increase driven by an acceleration of amortisation following the reduction of the Syndicated Revolving Credit Facility ('RCF') commitments as referenced below. Interest costs relating to leases totalled GBP0.1m (H1 2021: GBP0.1m). This was offset by interest receivable on cash and cash equivalents of GBP0.1m (H1 2021: GBP0.1m).

Reduction of RCF commitments

With effect from 24 September 2021, the Company reduced the total commitments of the Syndicated Revolving Credit Facility ('RCF') by GBP150m from GBP400m to GBP250m. The facility will terminate in two tranches: GBP52.2m will mature in June 2023 and GBP197.8m will mature in June 2025. Additionally, there was an amendment to the Senior Facilities Agreement to reflect the discontinuation of LIBOR and the transition to SONIA (in respect of sterling loans); Loan Market Association updates; and to include the effect of IFRS 16 for the purposes of calculating financial covenants. There is no requirement to settle all, or part, of the debt earlier than the termination dates stated.

Taxation

Profit before taxation increased by 127% to GBP150.0m (H1 2021: GBP66.2m). The Group tax charge of GBP28.3m (H1 2021: GBP12.4m) represents an effective tax rate of 18.9% (H1 2021: 18.7%) in line with the average standard UK rate.

Earnings per share

Basic earnings per share increased by 126% to 12.63 pence (H1 2021 5.58 pence) based on a weighted average number of ordinary shares in issue of 963,162,476 (H1 2021: 964,532,317). Diluted earnings per share of 12.61 pence (H1 2021: 5.55 pence) increased by 127%, based on 965,070,560 shares (H1 2021: 969,927,775) which takes into account the dilutive impact of outstanding share awards.

Cash flow

Cash generated from operations increased to GBP169.9m (H1 2021: GBP66.1m) as a result of the growth in Operating profit. Corporation tax payments increased to GBP27.8m (H1 2021: GBP18.0m). Cash generated from operating activities was GBP142.1m (H1 2021: GBP48.1m).

Capital structure and dividends

The final dividend for the year ended 31 March 2021 of 5.0 pence per share (H1 2021: GBPnil) was paid on 24 September 2021, totaling GBP48.0m (H1 2021: GBPnil). The Board resumed its share-buyback programme in July 2021 following the suspension of share-buybacks in response to the COVID-19 outbreak. During the period, a total of 15.8m shares were repurchased in the period (H1 2021: nil). The average price per share was 636.1p (H1 2021: GBPnil) for a total consideration of GBP100.4m (H1 2021: GBPnil) before transaction costs of GBP0.5m (H1 2021: GBPnil).

The Group's long-term capital allocation policy remains broadly unchanged: continuing to invest in the business enabling it to grow while returning around one third of net income to shareholders in the form of dividends. Any surplus cash following these activities will be used to continue our share buyback programme.

For H1 2022, the Board has declared an interim dividend of 2.7 pence per share. The interim dividend will be paid on 28 January 2022 to members on the register on 7 January 2022.

Going concern

The Group generated significant cash from operations during the period. At 30 September 2021 the Group had drawn GBPnil of its GBP250m (previously GBP400m) unsecured revolving credit facility ('RCF') and had cash balances of GBP9m. The GBP250m RCF is committed until June 2023, when it reduces to GBP197.8m through to maturity in June 2025. On the basis of facilities available and current financial projections for the next twelve months, the Directors have concluded that it is appropriate to prepare the condensed interim financial statements on a going concern basis.

Responsibility statement of the directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge:

-- the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the IASB and adopted for use in the UK;

   --      the interim management report includes a fair review of the information required by: 

(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so .

 
 Nathan Coe                 Jamie Warner 
  Chief Executive Officer    Chief Financial Officer 
  11 November 2021           11 November 2021 
 

Consolidated interim income statement

For the six months ended 30 September 2021

 
 
 
                                                             6 months to September     6 months to September   Year to 
                                                                              2021                      2020     March 
                                                                              GBPm                      GBPm      2021 
                                                    Note                                                          GBPm 
-----------------------------------------------  -------  ------------------------  ------------------------  -------- 
 Revenue                                            3                        215.4                     118.2     262.8 
 Administrative expenses                                                    (65.4)                    (50.8)   (104.0) 
 Share of profit from joint ventures                                           1.7                       1.1       2.4 
-----------------------------------------------  -------  ------------------------  ------------------------  -------- 
 Operating profit                                   2                        151.7                      68.5     161.2 
 Net finance costs                                  4                        (1.7)                     (2.3)     (3.8) 
-----------------------------------------------  -------  ------------------------  ------------------------  -------- 
 Profit before taxation                                                      150.0                      66.2     157.4 
 Income tax expense                                 5                       (28.3)                    (12.4)    (29.6) 
-----------------------------------------------  -------  ------------------------  ------------------------  -------- 
 Profit for the period attributable to equity 
  holders of the parent                                                      121.7                      53.8     127.8 
 
   Earnings per share: 
 Basic EPS (pence)                                  6                        12.63                      5.58     13.24 
 Diluted EPS (pence)                                6                        12.61                      5.55     13.21 
-----------------------------------------------  -------  ------------------------  ------------------------  -------- 
 

Consolidated interim statement of comprehensive income

For the six months ended 30 September 2021

 
 
                                                                                                               Year to 
                                                             6 months to September     6 months to September     March 
                                                                              2021                      2020      2021 
                                                                              GBPm                      GBPm      GBPm 
--------------------------------------------------------  ------------------------  ------------------------  -------- 
 Profit for the period                                                       121.7                      53.8     127.8 
 
 Items that may be subsequently reclassified to profit 
 or loss: 
 Currency translation differences                                              0.1                       0.2     (0.2) 
 Items that will not be reclassified to profit or loss: 
 Remeasurements of post-employment benefit obligations                         0.6                     (0.2)       1.6 
--------------------------------------------------------  ------------------------  ------------------------  -------- 
 Other comprehensive income for the period, net of tax                         0.7                         -       1.4 
--------------------------------------------------------  ------------------------  ------------------------  -------- 
 Total comprehensive income for the period attributable 
  to 
  equity holders of the parent                                               122.4                      53.8     129.2 
--------------------------------------------------------  ------------------------  ------------------------  -------- 
 

Consolidated interim balance sheet

As at 30 September 2021

 
 
                                                         September   September       March 
                                                              2021        2020        2021 
                                                 Note         GBPm        GBPm        GBPm 
----------------------------------------------  -----  -----------  ----------  ---------- 
 Assets 
 Non-current assets 
 Intangible assets                                7          357.0       359.9       358.2 
 Property, plant and equipment                    8           16.2        11.8        11.2 
 Deferred taxation assets                                      1.7         7.1         1.7 
 Retirement benefit surplus                       11           4.4         0.4         3.2 
 Net investments in joint ventures                            51.4        53.3        54.6 
                                                             430.7       432.5       428.9 
 Current assets 
 Trade and other receivables                      9           63.9        57.2        59.6 
 Current income tax assets                                       -         6.1         0.3 
 Cash and cash equivalents                                     9.2        31.4        45.7 
                                                              73.1        94.7       105.6 
 Total assets                                                503.8       527.2       534.5 
----------------------------------------------  -----  -----------  ----------  ---------- 
 
 Equity and liabilities 
 
   Equity attributable to equity holders 
   of the parent 
 Share capital                                    15           9.6         9.7         9.7 
 Share premium                                               182.5       182.4       182.4 
 Retained earnings                                         1,297.5     1,231.0     1,307.3 
 Capital reorganisation reserve                          (1,060.8)   (1,060.8)   (1,060.8) 
 Own shares held                                  16        (24.1)      (12.9)      (10.7) 
 Capital redemption reserve                                    0.9         0.8         0.8 
 Other reserves                                               30.1        30.4        30.0 
----------------------------------------------  -----  -----------  ----------  ---------- 
 Total equity                                                435.7       380.6       458.7 
----------------------------------------------  -----  -----------  ----------  ---------- 
 
 Liabilities 
 Non-current liabilities 
 Borrowings                                       14             -        86.8        27.6 
 Deferred taxation liabilities                                   -         3.6           - 
 Lease liabilities                                8            7.8         6.1         5.0 
 Deferred income                                               9.7         9.7         9.4 
 Deferred consideration                           18           8.0         7.8         7.9 
 Provisions for other liabilities and charges                  1.3         1.1         1.1 
                                                              26.8       115.1        51.0 
 
 Current liabilities 
 Trade and other payables                         10          36.9        28.7        21.8 
 Current income tax liabilities                                0.8           -           - 
 Lease liabilities                                8            3.1         2.4         2.5 
 Provisions for other liabilities and charges                  0.5         0.4         0.5 
----------------------------------------------  -----  -----------  ----------  ---------- 
                                                              41.3        31.5        24.8 
----------------------------------------------  -----  -----------  ----------  ---------- 
 Total liabilities                                            68.1       146.6        75.8 
----------------------------------------------  -----  -----------  ----------  ---------- 
 
 Total equity and liabilities                                503.8       527.2       534.5 
----------------------------------------------  -----  -----------  ----------  ---------- 
 

Consolidated interim statement of changes in shareholders' equity

For the six months ended 30 September 2021

 
                                       Share     Share   Retained  Own shares    Capital   Capital      Other    Total 
                                     Capital   premium   earnings        held      reorg     redem   reserves   equity 
                                                                                 reserve   reserve 
                                        GBPm      GBPm       GBPm        GBPm       GBPm      GBPm       GBPm     GBPm 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
Balance at March 2020                    9.2         -    1,180.1      (17.9)  (1,060.8)       0.8       30.2    141.6 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
 
Profit for the period                      -         -       53.8           -          -         -          -     53.8 
 
Other comprehensive income: 
Currency translation differences           -         -          -           -          -         -        0.2      0.2 
Remeasurements of post-employment 
 benefit obligations                       -         -      (0.2)           -          -         -          -    (0.2) 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
Total comprehensive income, 
 net of tax                                -         -       53.6           -          -         -        0.2     53.8 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
 
Transactions with owners: 
Share-based payments (note 
 17)                                       -         -        1.8           -          -         -          -      1.8 
Deferred tax on share-based 
 payments                                  -         -        0.5           -          -         -          -      0.5 
Exercise of share-based 
 incentives (note 17)                      -         -      (4.9)         4.9          -         -          -        - 
Issue of ordinary shares 
 (note 15)                               0.5     182.4          -           -          -         -          -    182.9 
Transfer of shares from 
 ESOT                                      -         -      (0.1)         0.1          -         -          -        - 
Total transactions with 
 owners, recognised directly 
 in equity                               0.5     182.4      (2.7)         5.0          -         -          -    185.2 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
 
Balance at September 2020                9.7     182.4    1,231.0      (12.9)  (1,060.8)       0.8       30.4    380.6 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
 
Profit for the period                      -         -       74.0           -          -         -          -     74.0 
 
Other comprehensive income: 
Currency translation differences           -         -          -           -          -         -      (0.4)    (0.4) 
Remeasurements of post-employment 
 benefit obligations                       -         -        1.8           -          -         -          -      1.8 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
Total comprehensive income, 
 net of tax                                -         -       75.8           -          -         -      (0.4)     75.4 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
 
Transactions with owners: 
Share-based payments (note 
 17)                                       -         -        1.5           -          -         -          -      1.5 
Tax credit in respect of 
 share-based payments                      -         -        0.2           -          -         -          -      0.2 
Cancellation of shares (note               -         -          -           -          -         -          -        - 
 15) 
Exercise of share-based 
 incentives                                -         -      (1.1)         2.1          -         -          -      1.0 
Transfer of shares from 
 ESOT                                      -         -      (0.1)         0.1          -         -          -        - 
Dividends paid (note 12)                   -         -          -           -          -         -          -        - 
----------------------------------  --------  -------- 
Total transactions with 
 owners, recognised directly 
 in equity                                 -         -        0.5         2.2          -         -          -      2.7 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
 
Balance at March 2021                    9.7     182.4    1,307.3      (10.7)  (1,060.8)       0.8       30.0    458.7 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
 
Profit for the period                      -         -      121.7           -          -         -          -    121.7 
 
Other comprehensive income: 
Currency translation differences           -         -          -           -          -         -        0.1      0.1 
Remeasurements of post-employment 
 benefit obligations                       -         -        0.6           -          -         -          -      0.6 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
Total comprehensive income, 
 net of tax                                -         -      122.3           -          -         -        0.1    122.4 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
 
Transactions with owners: 
Share-based payments (note 
 17)                                       -         -        3.2           -          -         -          -      3.2 
Cancellation of shares (note 
 15)                                   (0.1)         -     (83.1)           -          -       0.1          -   (83.1) 
Purchase of own shares for 
 treasury (note 16)                        -         -          -      (17.8)          -         -          -   (17.8) 
Deferred tax on share-based 
 payments                                  -         -      (0.1)           -          -         -          -    (0.1) 
Exercise of share-based 
 incentives (note 17)                      -         -      (4.0)         4.3          -         -          -      0.3 
Issue of ordinary shares 
 (note 15)                                 -       0.1          -           -          -         -          -      0.1 
Transfer of shares from 
 ESOT                                      -         -      (0.1)         0.1          -         -          -        - 
Dividends paid (note 12)                   -         -     (48.0)           -          -         -          -   (48.0) 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
Total transactions with 
 owners, recognised directly 
 in equity                             (0.1)       0.1    (132.1)      (13.4)          -       0.1          -  (145.4) 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
 
Balance at September 2021                9.6     182.5    1,297.5      (24.1)  (1,060.8)       0.9       30.1    435.7 
----------------------------------  --------  --------  ---------  ----------  ---------  --------  ---------  ------- 
 

Consolidated interim statement of cash flows

For the six months ended 30 September 2021

 
 
                                                                                                               Year to 
                                                             6 months to September     6 months to September     March 
                                                                              2021                      2020      2021 
                                                     Note                     GBPm                      GBPm      GBPm 
--------------------------------------------------  -----  -----------------------  ------------------------  -------- 
 Cash flows from operating activities 
 Cash generated from operations                       13                     169.9                      66.1     152.9 
 Income taxes paid                                                          (27.8)                    (18.0)    (28.2) 
--------------------------------------------------  -----  -----------------------  ------------------------  -------- 
 Net cash generated from operating activities                                142.1                      48.1     124.7 
--------------------------------------------------  -----  -----------------------  ------------------------  -------- 
 
 Cash flows from investing activities 
 Purchases of intangible assets - software                                       -                         -     (0.1) 
 Purchases of property, plant and equipment                                  (2.2)                     (0.2)     (1.3) 
 Proceeds from interest on cash and cash                                                                             - 
 equivalents                                                                     -                       0.1 
 Payment for acquisition of su bsidiary, net of 
  cash acquired                                       18                         -                    (10.0)    (10.0) 
 Dividends received from Joint Ventures                                        4.9                         -         - 
 Net cash used in investing activities                                         2.7                    (10.1)    (11.4) 
--------------------------------------------------  -----  -----------------------  ------------------------  -------- 
 
 Cash flows from financing activities 
 Dividends paid to Company's shareholders             12                    (48.0)                         -         - 
 D rawdown/( Repayment) of revolving credit 
  facility                                            14                    (30.0)                   (223.5)   (283.0) 
 Payment of lease liabilities                                               ( 1.6)                    ( 1.2)     (2.5) 
 Payment of refinancing f ees                         14                         -                    ( 0.5)     (0.5) 
 Payment of interest on borrowings                                          (1 .0)                    (1 .8)     (3.0) 
 Purchase of own shares for cancellation              15                   (82 .7)                         -         - 
 Purchase of own shares for treasury                  16                    (17.7)                         -         - 
 Payment of fees on repurchase of own shares          15                     (0.5)                         -         - 
 Proceeds from exercise of share-based incentives                              0.3                         -       1.0 
 Proceeds from issue of ordinary shares net of 
  bookrunner fees                                     15                         -                    1 83.2     183.2 
 Payment of other fees on issue of ordinary shares                               -                    ( 0.3)     (0.3) 
 Contributions to defined benefit pension scheme      11                    (0 .1)                    (0 .1)    (0 .1) 
--------------------------------------------------  -----  -----------------------  ------------------------  -------- 
 Net cash used in financing activities                                    (181 .3)                   ( 44.2)   (105.2) 
--------------------------------------------------  -----  -----------------------  ------------------------  -------- 
 
 Net (decrease)/increase in cash and cash 
  equivalents                                                               (36.5)                    ( 6.2)       8.1 
 Cash and cash equivalents at beginning of period                             45.7                      37.6      37.6 
 Cash and cash equivalents at end of period                                    9.2                      31.4      45.7 
--------------------------------------------------  -----  -----------------------  ------------------------  -------- 
 

Notes to the Condensed Consolidated interim financial statements

   1              General information 

Auto Trader Group plc ('the Company') is a company incorporated in the United Kingdom and its registered office is 4(th) Floor, 1 Tony Wilson Place, Manchester, M15 4FN.

These condensed consolidated interim financial statements have been prepared as at, and for the six months ended, 30 September 2021. The comparative financial information presented has been prepared as at, and for the six months ended, 30 September 2020.

The condensed consolidated interim financial information presented as at, and for the six months ended, 30 September 2021 comprise the Company and its subsidiaries (together referred to as the Group). The consolidated financial statements of the Group as at, and for the year ended, 31 March 2021 are available on request from the Company's registered office and via the Company's website.

These condensed consolidated interim financial statements are unaudited but have been reviewed by the Auditor whose report is set out on page 35. They have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, "Interim Financial Reporting" issued by the IASB and adopted for use in the UK. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 March 2021 which were prepared in accordance with international Financial Reporting Standards (IFRSs) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.

The comparative financial information for the year ended 31 March 2021 included in this interim statement of results does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 (the 'Act'). The statutory accounts for the year ended 31 March 2021 have been reported on by the Company's Auditor and were delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditor's report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Act.

Judgements and estimates

The preparation of the condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March 2021.

   Going   concern 

The Group generated significant cash from operations during the period. At 30 September 2021 the Group had nil drawn of its GBP250m unsecured revolving credit facility ('RCF') and had cash balances of GBP9m. The GBP250m Revolving Credit Facility ('RCF') is committed until June 2023, when it reduces to GBP197.8m through to maturity in June 2025.

In making their assessment of going concern, the Directors reviewed financial projections for a period of 12 months from the date of this report. Stress cases were modelled to take into account severe but plausible scenarios including impacts of COVID-19. The results of stress testing demonstrated that the combination of significant free cash flow, existing cash resources and the discretionary nature of dividend payments and share buybacks were sufficient for the Group to withstand such impacts and continue to comply with the RCF's financial covenants with significant headroom. For these reasons, the Directors continue to adopt the going concern basis in preparing these financial statements.

Changes in accounting policies

The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 March 2021. Taxes on income in the interim periods are accrued using the effective tax rate that would be applicable to expected total annual profit or loss.

   2              Segmental information 

IFRS 8 'Operating segments' requires the Group to determine its operating segments based on information which is provided internally. Based on the internal reporting information and management structures within the Group in the period, it has been determined that there is only one operating segment being the Group, as the information reported includes operating results at a consolidated Group level only. This reflects the nature of the business, where the major cost is to support the IT platforms upon which all of the Group's customers are serviced. These costs are borne centrally and are not attributable to any specific customer type or revenue stream. There is also considered to be only one reportable segment, which is the Group, the results of which are shown in the Consolidated income statement. This assessment was determined at 31 March 2021 and is a change from the H1 2021 where Auto Trader, Webzone, KeeResources and AutoConvert were reported as separate Operating segments. The Group has restated the corresponding items for the prior six-month period.

Management has determined that there is one operating and reporting segment based on the reports reviewed by the Operational Leadership Team ('OLT') which is the chief operating decision-maker ('CODM'). The OLT is made up of the Executive Directors and Key Management and is responsible for the strategic decision-making of the Group.

The OLT primarily uses the statutory measures of Revenue and Operating profit to assess the performance of the one operating segment. To assist in the analysis of the Group's revenue-generating trends, the OLT reviews revenue at a disaggregated level as detailed within note 3. The revenue from external parties reported to the OLT is measured in a manner consistent with that in the income statement.

A reconciliation of the one segment's Operating profit to Profit before tax is shown below.

 
 
                                           September   September   March 
                                                2021        2020    2021 
                                   Note         GBPm        GBPm    GBPm 
--------------------------------  -----  -----------  ----------  ------ 
 Total segment operating profit                151.7        68.5   161.2 
 Finance costs - net                4          (1.7)       (2.3)   (3.8) 
 Profit before tax                             150.0        66.2   157.4 
--------------------------------  -----  -----------  ----------  ------ 
 

Group adjustments which are borne centrally and are not attributable to any specific operating segment include finance costs on the Group's RCF, share of profit from joint ventures, the elimination of transactions and consolidation adjustments. Consolidation adjustments include the amortisation of intangible assets recognised under IFRS 3 business combinations.

   3              Revenue 

In the following table the Group's revenue is disaggregated by customer type. This level of disaggregation is consistent with that used by the OLT to assist in the analysis of the Group's revenue-generating trends.

 
                          September   September   March 
                               2021        2020    2021 
                               GBPm        GBPm    GBPm 
-----------------------   ---------  ----------  ------ 
 Trade                        192.3       100.2   225.2 
 Consumer services             18.0        12.9    26.6 
 Manufacturer & Agency          5.1         5.1    11.0 
------------------------  ---------  ----------  ------ 
 Total revenue                215.4       118.2   262.8 
------------------------  ---------  ----------  ------ 
 
   4              Net finance costs 
 
                                                     September   September   March 
                                                          2021        2020    2021 
                                                          GBPm        GBPm    GBPm 
--------------------------------------------------   ---------  ----------  ------ 
 Interest payable on borrowings                            0.9         2.0     2.9 
 Amortised debt issue costs                                0.8         0.3     0.6 
 Interest charge on lease liabilities                      0.1         0.1     0.3 
 Interest charged on deferred consideration                  -           -     0.1 
 Interest receivable on cash and cash equivalents        (0.1)       (0.1)   (0.1) 
 Total net finance costs                                   1.7         2.3     3.8 
---------------------------------------------------  ---------  ----------  ------ 
 
   5              Income taxes 
 
                             September   September   March 
                                  2021        2020    2021 
                                  GBPm        GBPm    GBPm 
--------------------------   ---------  ----------  ------ 
 Total income tax expense         28.3        12.4    29.6 
---------------------------  ---------  ----------  ------ 
 

The taxation charge for the period is based on the standard rate of UK corporation tax for the period of 19% (March 2021: 19%). The taxation charge recognised is based on management's best estimate of the effective tax rate for the full year of 18.9% (September 2020: 18.7%) applied to the profit before taxation of the interim period.

   6              Earnings per share 
 
                                                                  Total 
                                    Weighted average number    earnings        Pence 
                                         of ordinary shares        GBPm    per share 
---------------------------------  ------------------------  ----------  ----------- 
 Six months ended September 2021 
 Basic EPS                                      963,162,476       121.7        12.63 
 Diluted EPS                                    965,070,560       121.7        12.61 
 
 Six months ended September 2020 
 Basic EPS                                      964,532,317        53.8         5.58 
 Diluted EPS                                    969,927,775        53.8         5.55 
 
 Year ended March 2021 
 Basic EPS                                      965,175,677       127.8        13.24 
 Diluted EPS                                    967,404,812       127.8        13.21 
---------------------------------  ------------------------  ----------  ----------- 
 

The difference between the basic and diluted weighted average number of shares represents the dilutive impact of the Share Incentive Plan, Performance Share Plan, Deferred Annual Bonus, Single Incentive Plan Award and the Sharesave scheme. Shares issued to satisfy the Share Incentive Plan were purchased by the Employee Share Option Trust ('ESOT').

   6              Earnings per share 

The number of shares in issue at the start of the year is reconciled to the basic and diluted weighted average number of shares below:

 
                                                      6 months ended September 2021 
                                                                   Number of shares 
---------------------------------------------------  ------------------------------ 
 Weighted average ordinary shares in issue                              966,653,052 
 Less weighted effect of shares held by the ESOT                          (382,554) 
 Less weighted effect of shares held in treasury                        (3,108,022) 
 Weighted average number of shares for basic EPS                        963,162,476 
 Dilutive impact of share options outstanding                             1,908,084 
 Weighted average number of shares for diluted EPS                      965,070,560 
---------------------------------------------------  ------------------------------ 
 

The average market value for the Group's shares for the purposes of calculating the dilutive effect of share-based incentives was based on quoted market prices for the period during which the share-based incentives were outstanding.

   7              Intangible assets 
 
                                                    Software & website 
                                         Goodwill    development costs   Financial systems   Database    Other   Total 
                                             GBPm                 GBPm                GBPm       GBPm     GBPm    GBPm 
--------------------------------------  ---------  -------------------  ------------------  ---------  -------  ------ 
 Opening balance at 1 April 2020            327.5                  2.1                 0.9        8.2      3.2   341.9 
 Additions                                   13.6                  5.5                   -          -        -    19.1 
 Amortisation charge                            -                (0.3)               (0.2)      (0.3)    (0.4)   (1.2) 
 Exchange differences                         0.1                    -                   -          -        -     0.1 
 Closing balance at 30 September 2020       341.2                  7.3                 0.7        7.9      2.8   359.9 
--------------------------------------  ---------  -------------------  ------------------  ---------  -------  ------ 
 
 
                                                    Software & website 
                                         Goodwill    development costs   Financial systems   Database    Other   Total 
                                             GBPm                 GBPm                GBPm       GBPm     GBPm    GBPm 
--------------------------------------  ---------  -------------------  ------------------  ---------  -------  ------ 
 Opening balance at 1 April 2021            340.9                  6.1                 0.3        7.6      3.3   358.2 
 Amortisation charge                            -                (0.3)               (0.3)      (0.3)    (0.4)   (1.3) 
 Exchange differences                         0.1                    -                   -          -        -     0.1 
                                                                                                                ------ 
 Closing balance at 30 September 2021       341.0                  5.8                 0.0        7.3      2.9   357.0 
--------------------------------------  ---------  -------------------  ------------------  ---------  -------  ------ 
 
   8              Leases and property, plant and equipment 

The Group has right-of-use assets which comprise of property and motor vehicles which are held within property, plant and equipment. Information about leases for which the Group is a lessee is presented below.

 
  Analysis of property, plant and equipment between owned and leased             September   September     March 
  assets                                                                              2021        2020      2021 
                                                                                      GBPm        GBPm      GBPm 
--------------------------------------------------------------------  ---------  ---------  ----------  -------- 
 Property plant and equipment owned                                                    6.7         5.5       5.6 
 Right-of-use assets                                                                   9.5         6.3       5.6 
                                                                                      16.2        11.8      11.2 
--------------------------------------------------------------------  ---------  ---------  ----------  -------- 
 
 
 Right-of-use assets                                                   Property   Vehicles       Other   Total 
                                                                           GBPm       GBPm        GBPm    GBPm 
--------------------------------------------------------------------  ---------  ---------  ----------  ------ 
 Opening balance at 1 April 2020                                            6.5        0.2         0.1     6.8 
 Additions                                                                    -        0.5           -     0.5 
 Depreciation                                                             (0.8)      (0.2)           -   (1.0) 
 Closing balance at 30 September 2020                                       5.7        0.5         0.1     6.3 
--------------------------------------------------------------------  ---------  ---------  ----------  ------ 
 
 Opening balance at 1 April 2021                                            4.9        0.6         0.1     5.6 
 Additions                                                                  5.1        0.1           -     5.2 
 Depreciation                                                             (1.1)      (0.1)       (0.1)   (1.3) 
 Closing balance at 30 September 2021                                       8.9        0.6           -     9.5 
--------------------------------------------------------------------  ---------  ---------  ----------  ------ 
 
 
 
 Lease liabilities    September   September   March 
                           2021        2020    2021 
                           GBPm        GBPm    GBPm 
-------------------   ---------  ----------  ------ 
 Current                    3.1         2.4     2.5 
 Non-current                7.8         6.1     5.0 
 Total                     10.9         8.5     7.5 
--------------------  ---------  ----------  ------ 
 
   9              Trade and other receivables 
 
                                         September   September   March 
                                              2021        2020    2021 
                                              GBPm        GBPm    GBPm 
--------------------------------------   ---------  ----------  ------ 
 Trade receivables (net of provision)         25.6        24.9    23.3 
 Accrued income (net of provision)            33.4        28.9    33.1 
 Prepayments                                   4.9         3.4     2.9 
 Other receivables                               -           -     0.3 
 Total                                        63.9        57.2    59.6 
---------------------------------------  ---------  ----------  ------ 
 
   10           Trade and other payables 
 
                                    September   September   March 
                                         2021        2020    2021 
                                         GBPm        GBPm    GBPm 
---------------------------------   ---------  ----------  ------ 
 Trade payables                           4.5         4.7     5.0 
 Accruals                                11.3         7.4     7.7 
 Other taxes and social security         18.1        12.7     5.1 
 Deferred income                          2.6         3.0     3.3 
 Other payables                           0.3         0.4     0.4 
 Accrued interest payable                 0.1         0.5     0.3 
 Total                                   36.9        28.7    21.8 
----------------------------------  ---------  ----------  ------ 
 
   11           Retirement benefit obligations 

Across the UK and Ireland the Group operates several pension schemes. All except one are defined contribution schemes.

Defined contribution scheme

In the period the pension contributions to the Group's defined contribution scheme amounted to GBP1.6m (September 2020: GBP1.1m; March 2021: GBP2.3m). At 30 September 2021, there were GBP0.5m (September 2020: GBP0.3m; March 2021: GBP0.4m) of pension contributions outstanding relating to the Group's defined contribution scheme.

Defined benefit scheme

The defined benefit pension scheme provides benefits based on final pensionable pay and this scheme was closed to new joiners with effect from May 2002. New employees after that date have been offered membership of the Group's defined contribution scheme.

The most recent actuarial valuation of the defined benefit obligations was performed as at 30 September 2021 by a qualified independent actuary. The amounts recognised in the balance sheet are determined as follows:

 
                                                September   September    March 
                                                     2021        2020     2021 
                                                     GBPm        GBPm     GBPm 
---------------------------------------------   ---------  ----------  ------- 
 Present value of funded obligations                 19.6        20.9     19.6 
 Fair value of plan assets                         (24.0)      (21.3)   (22.8) 
 Net (asset) recognised in the balance sheet        (4.4)       (0.4)    (3.2) 
----------------------------------------------  ---------  ----------  ------- 
 

During the year ending 31 March 2020, the Trustees of the Scheme sought legal advice which concluded that the Company has an unconditional right to a refund of surplus from the Scheme, if the Scheme were to be run-off until the final beneficiary died. As a result, the Group has concluded that IFRIC14 does not apply, and therefore has recognised the accounting surplus of GBP4.4m and an associated deferred tax liability of GBP1.5m in the Consolidated balance sheet.

The amounts charged to the Consolidated income statement are set out below:

 
                                                  September   September   March 
                                                       2021        2020    2021 
                                                       GBPm        GBPm    GBPm 
-----------------------------------------------   ---------  ----------  ------ 
 Past service cost                                        -           -     0.1 
 Settlement cost                                          -         0.1     0.1 
 Total amounts charged to the income statement            -         0.1     0.2 
------------------------------------------------  ---------  ----------  ------ 
 

The amounts recognised in the statement of other comprehensive income are as follows:

 
                                                                                   September   September   March 
                                                                                        2021        2020    2021 
                                                                                        GBPm        GBPm    GBPm 
--------------------------------------------------------------------------------   ---------  ----------  ------ 
 Return on Scheme assets (in excess of) / below that recognised in net interest        (1.1)       (2.3)   (3.6) 
 Actuarial losses/(gains) due to changes in assumptions                                  0.2         2.8     1.4 
 Actuarial (gains)/losses due to liability experience                                  (0.1)       (0.1)   (0.2) 
 Deferred tax on surplus                                                                 0.4       (0.2)     0.8 
 Total amounts recognised in the statement of other 
  comprehensive income                                                                 (0.6)         0.2   (1.6) 
---------------------------------------------------------------------------------  ---------  ----------  ------ 
 

Movements during the period in the post-employment defined benefit obligations are set out as below:

 
                                                September   September   March 
                                                     2021        2020    2021 
                                                     GBPm        GBPm    GBPm 
---------------------------------------------   ---------  ----------  ------ 
 At beginning of period                             (3.2)       (0.9)   (0.9) 
 Expense recognised in the income statement             -         0.1     0.1 
 Past service cost                                      -           -     0.1 
 Contributions paid to scheme                       (0.1)       (0.1)   (0.1) 
 Remeasurement and experience (gains)/losses        (1.1)         0.5   (2.4) 
 Closing post-employment benefit obligation         (4.4)       (0.4)   (3.2) 
----------------------------------------------  ---------  ----------  ------ 
 
   12           Dividends 

Dividends declared and paid in the period were as follows:

 
                                September 2021           September 2020 
--------------------------  -----------------------  ---------------------- 
                            Pence per share    GBPm   Pence per share  GBPm 
--------------------------  ---------------  ------  ----------------  ---- 
 2021 final dividend paid               5.0    48.0                 -     - 
--------------------------  ---------------  ------  ----------------  ---- 
 Total                                  5.0    48.0                 -     - 
--------------------------  ---------------  ------  ----------------  ---- 
 

An interim dividend of 2.7p per share for the six months to September 2021 (September 2020: nil) has been declared by the Directors', totaling GBP25.7m (September 2020: GBPnil) based on the number of shares eligible for the distribution as at 30 September 2021. The interim dividend is payable on 28 January 2022 to shareholders on the register at the close of business on 7 January 2022. No provision has been made for the interim dividend and there are no income tax consequences.

     13             Cash generated from operations 
 
                                                       6 months to September   6 months to September   Year to March 
                                                                        2021                    2020            2021 
                                                                        GBPm                    GBPm            GBPm 
----------------------------------------------------   ---------------------  ----------------------  -------------- 
 Profit before taxation                                                150.0                    66.2           157.4 
 Adjustments for: 
  Depreciation                                                           2.3                     1.9             3.7 
  Amortisation                                                           1.3                     1.2             2.6 
  Share-based payments charge (excluding associated 
   NI)                                                                   3.2                     1.8             3.3 
   Profit on sale of property, plant and equipment                         -                       -             0.2 
   Difference between pension charge and cash 
    contributions                                                          -                       -             0.2 
   Post-employment expense relating to defined 
    benefit pension                                                      0.1                     0.1               - 
   Share of profit in joint ventures                                   (1.7)                   (1.1)           (2.4) 
   Net finance costs                                                     1.7                     2.3             3.8 
   RDEC                                                                    -                       -           (0.1) 
 
 Changes in working capital: 
  Trade and other receivables                                          (2.5)                   (0.9)           (3.6) 
  Trade and other payables                                              15.5                   (5.4)          (12.3) 
  Provisions                                                               -                       -             0.1 
 Cash generated from operations                                        169.9                    66.1           152.9 
-----------------------------------------------------  ---------------------  ----------------------  -------------- 
 
   14           Borrowings 
 
                                                                              September   September   March 
                                                                                   2021        2020    2021 
 Non-current                                                                       GBPm        GBPm    GBPm 
---------------------------------------------------------------------------   ---------  ----------  ------ 
 Syndicated revolving credit facility gross of unamortised debt issue cost            -        89.5    30.0 
 Unamortised debt issue costs on Syndicated revolving credit facility                 -       (2.7)   (2.4) 
 Total borrowings                                                                     -        86.8    27.6 
----------------------------------------------------------------------------  ---------  ----------  ------ 
 

The Syndicated revolving credit facility is repayable as follows:

 
                             September   September   March 
                                  2021        2020    2021 
                                  GBPm        GBPm    GBPm 
--------------------------   ---------  ----------  ------ 
 Within two to five years            -        89.5    30.0 
 Total                               -        89.5    30.0 
---------------------------  ---------  ----------  ------ 
 

The carrying amounts of borrowings approximate their fair values.

Syndicated revolving credit facility

With effect from 24 September 2021 the Group entered into an Amendment and Restatement Agreement to amend and restate the original Senior Facilities Agreement. The primary purpose of the Amended and Restated Senior Facilities Agreement is to incorporate LIBOR transition language to reflect the discontinuation of LIBOR and the transition to SONIA (in respect of sterling loans); Loan Market Association updates; and to include the effect of IFRS 16 for the purposes of calculating financial covenants.

The Group continues to be highly cash generative and remains in a net cash position, such that the size of the original GBP400m facility is not required. Therefore, the Group served notice to cancel GBP150m of the GBP400m total commitments under the Senior Facilities Agreement, such cancellation being pro-rated between the lenders. The Amended and Restated Senior Facilities Agreement incorporates the reduced total commitments of GBP250m.

The Group has access to an unsecured Syndicated revolving credit facility (the 'Syndicated RCF'). Associated debt transaction costs total GBP4.3m, with GBP3.3m being incurred at initiation and GBP1.0m of additional costs associated with extension requests. The Group has extended the termination date of the Syndicated RCF by two years and it will terminate in two tranches as follows:

   --       GBP52.2m will mature at the original termination date of June 2023; and 
   --       GBP197.8m will mature in June 2025. 

Individual tranches are drawn down, in sterling, for periods of up to six months at the compounded reference rate (being the aggregate of SONIA and the applicable baseline credit adjustment spread for that interest period) plus a margin of between 1.2% and 2.1% depending on the consolidated leverage ratio of the Group. A commitment fee of 35% of the margin applicable to the Syndicated RCF is payable quarterly in arrears on unutilised amounts of the total facility.

The Syndicated RCF has financial covenants linked to interest cover and the consolidated debt cover of the Group:

   --       Net bank Debt to Consolidated EBITDA must not exceed 3.5:1. 
   --       EBITDA to Net Interest Payable must not be less than 3.0:1. 

EBITDA is defined as earnings before interest, taxation, depreciation and amortisation, share-based payments and associated NI, share of profit from joint ventures and exceptional items.

All financial covenants of the facility have been complied with through the period.

   15           Share capital 
 
                              As at 30 September 2021    As at 30 September 2020   As at 31 March 2021 
---------------------------  -------------------------  -------------------------  -------------------  -------- 
                                   Number       Amount        Number       Amount               Number    Amount 
                                     '000         GBPm          '000         GBPm                 '000      GBPm 
---------------------------  ------------  -----------  ------------  -----------  -------------------  -------- 
 Allotted, called-up and 
 fully paid ordinary shares 
 of 1p each 
 At beginning of period           969,024          9.7       922,541          9.2              922,541       9.2 
 Purchase and cancellation 
  of own shares                  (13,071)        (0.1)             -            -                    -         - 
 Issue of ordinary shares              34          0.0        46,468          0.5               46,483       0.5 
---------------------------  ------------  -----------  ------------  -----------  -------------------  -------- 
 Total                            955,987          9.6       969,009          9.7              969,024       9.7 
---------------------------  ------------  -----------  ------------  -----------  -------------------  -------- 
 
 

During the period, 13.1m shares were purchased for cancellation (September 2020: nil; March 2021: nil) and 2.7m shares were purchased for treasury (September 2020: nil; March 2021: nil). The average price per share was 636.1p (H1 2021: GBPnil) for a total consideration of GBP100.4m (H1 2021: GBPnil) before transaction costs of GBP0.5m (H1 2021: GBPnil).

Included within shares in issue at 30 September 2021 are 365,068 (September 2020: 445,319; March 2021: 404,653) shares held by the ESOT and 4,125,530 (September 2020: 2,930,542; March 2021: 2,422,659) shares held in treasury, as detailed in note 16.

   16           Own shares held 
 
                                                   ESOT shares reserve   Treasury shares    Total 
 Own shares held GBPm                                             GBPm              GBPm     GBPm 
------------------------------------------------   -------------------  ----------------  ------- 
 Own shares held as at 1 April 2020                              (0.7)            (17.2)   (17.9) 
 Transfer of shares from ESOT                                      0.1                 -      0.1 
 Share-based incentives exercised in the period                      -               4.9      4.9 
 Own shares held as at 30 September 2020                         (0.6)            (12.3)   (12.9) 
-------------------------------------------------  -------------------  ----------------  ------- 
 
 Own shares held as at 1 October 2020                            (0.6)            (12.3)   (12.9) 
 Transfer of shares from ESOT                                      0.1                 -      0.1 
 Share-based incentives exercised in the period                      -               2.1      2.1 
 Own shares held as at 31 March 2021                             (0.5)            (10.2)   (10.7) 
-------------------------------------------------  -------------------  ----------------  ------- 
 
 Own shares held as at 1 April 2021                              (0.5)            (10.2)   (10.7) 
 Transfer of shares from ESOT                                      0.1                 -      0.1 
 Repurchase of own shares for treasury                               -            (17.8)   (17.8) 
 Share-based incentives exercised in the period                      -               4.3      4.3 
 Own shares held as at 30 September 2021                         (0.4)            (23.7)   (24.1) 
-------------------------------------------------  -------------------  ----------------  ------- 
 
 
                                                   ESOT shares reserve    Treasury shares              Total 
 Own shares held - number                             number of shares   number of shares   number of shares 
------------------------------------------------   -------------------  -----------------  ----------------- 
 Own shares held as at 1 April 2020                            523,955          4,090,996          4,614,951 
 Transfer of shares from ESOT                                 (78,636)                  -           (78,636) 
 Share-based incentives exercised in the period                      -        (1,160,454)        (1,160,454) 
-------------------------------------------------  -------------------  -----------------  ----------------- 
 Own shares held as at 30 September 2020                       445,319          2,930,542          3,375,861 
-------------------------------------------------  -------------------  -----------------  ----------------- 
 
 Own shares held as at 1 October 2020                          445,319          2,930,542          3,375,861 
 Transfer of shares from ESOT                                 (40,666)                  -           (40,666) 
 Share-based incentives exercised in the period                      -          (507,883)          (507,883) 
 Own shares held as at 31 March 2021                           404,653          2,422,659          2,827,312 
-------------------------------------------------  -------------------  -----------------  ----------------- 
 
 Own shares held as at 1 April 2021                            404,653          2,422,659          2,827,312 
 Transfer of shares from ESOT                                 (39,585)                  -           (39,585) 
 Repurchase of own shares for treasury                               -          2,718,193          2,718,193 
 Share-based incentives exercised in the period                      -        (1,015,322)        (1,015,322) 
 Own shares held as at 30 September 2021                       365,068          4,125,530          4,490,598 
-------------------------------------------------  -------------------  -----------------  ----------------- 
 
   17           Share-based payments 

The Group currently operates five share plans: the Share Incentive Plan, Performance Share Plan, Deferred Annual Bonus, Single Incentive Plan Award and the Sharesave scheme.

All share-based incentives are subject to a service condition. Such conditions are not taken into account in the fair value of the service received. The fair value of services received in return for share-based incentives is measured by reference to the fair value of share-based incentives granted. Black-Scholes and Monte Carlo models have been used where appropriate to calculate the fair value of share-based incentives with market conditions.

The total charge in the period relating to the five schemes was GBP3.9m (September 2020: GBP2.6m; March 2021: GBP4.3m). This included associated national insurance ('NI') at the rate at which management expects to be effective when the awards are exercised (13.8% up until April 2022 and 15.05% thereafter), and apprenticeship levy at 0.5%, based on the share price at the reporting date.

 
                                                          September   September   March 
                                                               2021        2020    2021 
                                                               GBPm        GBPm    GBPm 
-------------------------------------------------------   ---------  ----------  ------ 
 Share Incentive Plan                                             -           -       - 
 Sharesave scheme                                               0.3         0.3     0.7 
 Performance Share Plan                                         0.8         0.3     0.3 
 Deferred Annual Bonus and Single Incentive Plan Award          2.1         1.2     2.3 
 Total share-based payment charge                               3.2         1.8     3.3 
--------------------------------------------------------  ---------  ----------  ------ 
 NI and apprenticeship levy on applicable schemes               0.7         0.8     1.0 
 Total charge                                                   3.9         2.6     4.3 
--------------------------------------------------------  ---------  ----------  ------ 
 

Share Incentive Plan

In 2015, the Group established a Share Incentive Plan ('SIP'). All eligible employees were awarded free shares (or nil-cost options in the case of employees in Ireland) valued at GBP3,600 each based on the share price at the time of the Company's admission to the Stock Exchange in March 2015, subject to a three-year service period ('Vesting Period'). The SIP shareholders are entitled to dividends over the Vesting Period. There are no performance conditions applicable to the vesting of SIP shares. The fair value of the SIP awards at the grant date was measured to be GBP2.72 using the Black-Scholes model. The resulting share-based payments charge was spread evenly over the Vesting Period.

 
 UK SIP                                September   September       March 
                                            2021        2020        2021 
                                          Number      Number      Number 
------------------------------------   ---------  ----------  ---------- 
 Outstanding at beginning of period      163,157     282,459     282,459 
 Exercised in the period                (36,445)    (78,636)   (119,302) 
 Outstanding at period ending            126,712     203,823     163,157 
-------------------------------------  ---------  ----------  ---------- 
 
 
 Irish SIP                             September   September    March 
                                            2021        2020     2021 
                                          Number      Number   Number 
------------------------------------   ---------  ----------  ------- 
 Outstanding at beginning of period        1,354       1,354    1,354 
 Outstanding at period ending              1,354       1,354    1,354 
-------------------------------------  ---------  ----------  ------- 
 

Performance Share Plan

The Group operates a Performance Share Plan ('PSP') for Executive Directors, the Operating Leadership Team and certain key employees. The extent to which awards vest will depend upon the Group's performance over the three-year period following the award date. Both market based and non-market based performance conditions may be attached to the options, for which an appropriate adjustment is made when calculating the fair value of an option. If the options remain unexercised after a period of 10 years from the date of grant, the options expire. Furthermore, options are forfeited if the employee leaves the Group before the options vest, unless under exceptional circumstances.

On 8 July 2021, the Group awarded 368,361 nil cost options under the PSP scheme. For the 2021 awards, the Group's performance is measured by reference to growth in Operating profit (75% of the award), Revenue (12.5% of the award) and progress in Diversity (12.5% of the award) over a three-year period to March 2024. The Operating profit and Revenue will be measured using FY20 as the base year, rather than FY21, due to the impact of COVID-19 on last year's financial performance.

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, the cumulative profit measure (Underlying operating profit for 2015 and 2016 awards, and Operating profit for 2017 awards) and total shareholder return relative to the FTSE 250 share index. For the 2020 awards the Group's performance is measured by reference to total shareholder return relative

to the FTSE 350 share index   over the three-year period April 2020 - March 2023. 
 
                                       September   September         March 
                                            2021        2020          2021 
                                          Number      Number        Number 
------------------------------------   ---------  ----------  ------------ 
 Outstanding at beginning of period    1,741,829   2,380,589     2,380,589 
 Options granted in the period           368,361     591,580       591,580 
 Dividend shares awarded                   2,916      63,826        63,826 
 Options exercised in the period       (366,639)   (985,745)   (1,055,926) 
 Options forfeited in the period       (344,766)   (238,240)     (238,240) 
 Outstanding at period ending          1,401,701   1,812,010     1,741,829 
-------------------------------------  ---------  ----------  ------------ 
 

Deferred Annual Bonus and Single Incentive Plan Award

The Group operates the Deferred Annual Bonus and Single Incentive Plan Award for the Executive Directors, the Operational Leadership Team and certain key employees. The Plan consists of two schemes, the Deferred Annual Bonus ('DAB') and the Single Incentive Plan Award ('SIPA').

Deferred Annual Bonus

The Group operates a Deferred Annual scheme for Executive Directors and certain key senior executives. Awards under the plan are contingent on the satisfaction of pre-set internal targets relating to financial and operational objectives. Awards have a vesting period of two years from the date of the award (the 'Vesting Period') and are potentially forfeitable during that period should the employee leave employment. The DAB awards' fair value have been calculated 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.

 
                                       September   September      March 
                                            2021        2020       2021 
                                          Number      Number     Number 
------------------------------------   ---------  ----------  --------- 
 Outstanding at beginning of period      121,289     166,614    166,614 
 Dividend shares awarded                   1,211       1,902      1,902 
 Options exercised in the period       (122,500)    (47,227)   (47,227) 
 Outstanding at period ending                  -     121,289    121,289 
-------------------------------------  ---------  ----------  --------- 
 

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 17 June 2021, the Group awarded 718,634 nil cost options under the SIPA scheme. For the 2021 awards, the Group's performance is measured by reference to growth in Operating profit (75% of the award) and the success within digital retailing (25% of the award) by 31 March 2022.

The fair value of the 2021 award was determined to be GBP6.29 per option, being the share price at grant date. The resulting share-based payments charge is being spread evenly over the period between the grant date and the vesting date. SIPA award holders are entitled to receive dividends accruing between the grant date and the vesting date and this value will be delivered in shares.

 
                                       September   September       March 
                                            2021        2020        2021 
                                          Number      Number      Number 
------------------------------------   ---------  ----------  ---------- 
 Outstanding at beginning of period    1,012,199   1,136,660   1,136,660 
 Options granted in the period           718,634     436,891     568,891 
 Dividend shares awarded                   5,440       4,930       4,930 
 Options forfeited in the year          (10,406)   (124,267)   (530,121) 
 Options exercised in the year         (427,816)   (530,121)   (168,161) 
 Outstanding at period ending          1,298,051     924,093   1,012,199 
-------------------------------------  ---------  ----------  ---------- 
 

Sharesave scheme

The Group operates a Sharesave ('SAYE') scheme for all employees under which employees are granted an option to purchase ordinary shares in the Company at up to 20% less than the market price at invitation, in three years' time, dependent on their entering into a contract to make monthly contributions into a savings account over the relevant period. Options are granted and are linked to a savings contract with a term of three years. These funds are used to fund the option exercise. No performance criteria are applied to the exercise of Sharesave options.

Fair value is measured by use of a Black-Scholes model and the resulting share-based payments charge is being spread evenly over the period between the grant date and the vesting date.

 
                                              September   September       March 
                                                   2021        2020        2021 
                                                 Number      Number      Number 
------------------------------------   ----------------  ----------  ---------- 
 Outstanding at beginning of period           1,505,816   1,440,757   1,440,757 
 Options granted in the period                        -           -     542,982 
 Options exercised in the period              (122,710)     (3,215)   (415,050) 
 
 Options lapsed in the period            *    (35,936)-    (19,432)    (62,873) 
 Outstanding at period ending                 1,347,170   1,418,110   1,505,816 
-------------------------------------  ----------------  ----------  ---------- 
 
   18           Business combinations 

On 31 July 2020, the Group acquired the entire share capital of BlueOwl Network Limited ('BlueOwl') for consideration of GBP18.2m, of which GBP8.1m will be deferred until 31 July 2022. The deferred consideration has been discounted using a rate of 1.7% and recognised on the balance sheet at GBP8.0m.

BlueOwl owns 'AutoConvert', a finance, insurance and compliance software platform with integrated customer relationship management solutions for the automotive sector.

The total consideration paid of GBP18.2m excludes acquisition costs of GBP0.4m which were recognised within administrative expenses in the Consolidated income statement.

The following table provides a reconciliation of the amounts included in the Consolidated statement of cash flows for the period:

 
                                September 2020 
                                          GBPm 
--------------------------     --------------- 
 Cash paid for subsidiary                 10.1 
 Less: cash acquired                     (0.1) 
 Net cash outflow                         10.0 
-----------------------------  --------------- 
 

From the acquisition date to 30 September 2020, BlueOwl contributed GBPnil to the Group's operating profit and revenue of GBP0.4 million.

The purchase has been accounted for as a business combination under the acquisition method in accordance with IFRS 3. The fair value of net assets acquired was assessed resulting in a fair value adjustment to recognise intangible software assets acquired and related deferred tax. No other material adjustments from book value were made to existing assets and liabilities.

 
                                                             Fair value 
                                                                   GBPm 
-------------------------------------------------------     ----------- 
 Intangible asset recognised on acquisition: 
 Software                                                           5.5 
 Deferred tax liability arising on intangible assets              (1.0) 
 Intangible assets recognised and related deferred tax              4.5 
----------------------------------------------------------  ----------- 
 
 Current assets 
 Trade and other receivables                                        0.3 
 Cash and cash equivalents                                          0.1 
----------------------------------------------------------  ----------- 
                                                                    0.4 
   -------------------------------------------------------  ----------- 
 
 Current liabilities 
 Trade and other payables                                           0.6 
----------------------------------------------------------  ----------- 
 
 Total net assets acquired                                          4.3 
----------------------------------------------------------  ----------- 
 
 Goodwill                                                          13.6 
----------------------------------------------------------  ----------- 
 Total assets acquired                                             17.9 
----------------------------------------------------------  ----------- 
 
 Fair value of cash and deferred consideration                     17.9 
----------------------------------------------------------  ----------- 
 

The goodwill recognised on acquisition relates to value arising from revenue, cost synergies and intangible assets that are not separately identifiable under IFRS 3, including non-contractual relationships and the acquired workforce. None of the acquired intangible assets or goodwill is expected to be deductible for tax purposes.

In addition to the goodwill recognised, the software asset obtained through the acquisition met the requirements to be separately identifiable under IFRS 3. The asset represents the 'AutoConvert' finance, insurance and compliance software platform that enables automotive dealers and brokers to connect with multiple lenders. The fair value is based on the estimated present value of the cost to recreate the asset, allowing for a developer's margin.

   19           Related party transactions 

The Company is the ultimate parent entity of the Group. Intercompany transactions with wholly owned subsidiaries have been excluded from this note, as per the exemption offered in IAS 24.

Dealer Auction Limited

The Group transacted the following related party transactions with its joint venture, Dealer Auction Limited (previously Dealer Auction (Holdings) Limited) and its subsidiaries (together 'Dealer Auction'), during the period.

The Group provided data services to Dealer Auction under a license agreement established as part of the formation of the joint venture in January 2019. The value of services provided to Dealer Auction was GBP0.3m and has been recognised within revenue. At 30 September 2021, deferred income outstanding in relation to the license agreement was GBP9.7m.

The Group provided services to Dealer Auction as per the Transitional Services Agreement entered into on its formation. The Group did not recharge Dealer Auction for the provision of these services, the total value of which is estimated to be GBP0.1m.

The Group has recharged Dealer Auction for development time spent on the SingleView billing system as well as use of office space and services per the service agreement effective from 1 July 2021, the total value during the period was GBP0.1m.

The Group also provided invoicing and collection services for Dealer Auction. Cash is collected by the Group and passed through to Dealer Auction. The total amount invoiced on behalf of Dealer Auction during the period was GBP3.7m.

The Group had a creditor of GBP0.7m outstanding with Dealer Auction as at 30 September 2021.

Key management personnel

Key management personnel share plan awards have been outlined in note 17 above.

   20           Forward looking statements 

This report includes statements that are forward looking in nature. Forward looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Except as required by the Listing Rules and applicable law, the Company undertakes no obligation to update, revise or change any forward-looking statements to reflect events or developments occurring after the date of this report.

Principal risks and uncertainties

 
 Risk                                    POTENTIAL IMPACT                       CHANGES IN THE peRIOD 
                                        --------------------------------------  -------------------------------------- 
 1.                                      Over the previous 18 months, the             All non-essential retailers were 
  COVID-19                               COVID-19 pandemic caused                     able to reopen from 12 April 
                                         unprecedented levels of disruption           2021, and our employees began 
                                         to every aspect of the UK economy,           to return to the office in 
                                         the automotive market, our customers,        accordance with government 
                                         our consumers, our                           guidance, on a hybrid basis. In 
                                         suppliers, our employees and the way         the 
                                         we operate our business. There is a          event of a future lockdown, we 
                                         risk that further                            are well prepared to be able to 
                                         disruption may be experienced over           continue to operate the business 
                                         future months, despite the ongoing           seamlessly. 
                                         vaccination programme                        Overall, the risk level on all 
                                         and the lifting of restrictions.             COVID-19 related risks has 
                                                                                      decreased during the year, and 
                                                                                      up to the date of this report. 
                                        --------------------------------------  -------------------------------------- 
 2. Economy, market and business         There are a number of scenarios which  New car registrations, whilst seeing 
 environment                             could lead to a contraction in the     year on year growth of 17% versus H1 
                                         number of new or                       2021, was still 
                                         used car transactions. These could     23% below H1 2020 levels as 
                                         result in reduced levels of stock and  semi-conductor shortages impacted the 
                                         lower retailer profitability,          supply of new cars. These 
                                         leading to a fall in advertising       supply constraints have also impacted 
                                         spend or a contraction in the number   used cars, particularly for our larger 
                                         of retailers. It could                 customers, as 
                                         also lead to a reduction in            lower new car sales have meant fewer 
                                         manufacturers' spend on digital        part-exchanges and a lower volume of 
                                         display advertising.                   cars sent to auction 
                                                                                from wholesalers. However, high levels 
                                                                                of consumer demand combined with 
                                                                                constrained supply 
                                                                                have led to significant levels of 
                                                                                price growth, with our used car price 
                                                                                index seeing an 11% 
                                                                                year on year increase in prices across 
                                                                                the period. 
 
                                                                                We have not seen material evidence of 
                                                                                consolidation by retailers during the 
                                                                                period. 
 
                                                                                The final Trade and Cooperation 
                                                                                Agreement between the UK and the EU 
                                                                                removed significant levels 
                                                                                of uncertainty, as vehicles will be 
                                                                                able to be freely traded without 
                                                                                tariffs applying (although 
                                                                                with an increased administration 
                                                                                burden). However, the requirements 
                                                                                around the Rules of Origin 
                                                                                have the potential to create a barrier 
                                                                                to trade, particularly in respect to 
                                                                                the manufacture 
                                                                                of batteries, where there is a lack of 
                                                                                domestic production facilities. 
                                        --------------------------------------  -------------------------------------- 
 3.                                      Our brand is one of our biggest        Our research shows that Auto Trader 
  Brand and reputation                   assets. Our research shows that we     has over 90% prompted brand awareness 
                                         are the most trusted automotive        with consumers for 
                                         classified brand in the UK.            new and used cars and is consistently 
                                                                                voted as the most influential 
                                         Failure to maintain and protect our    automotive website by 
                                         brand, or negative publicity that      consumers in the car buying process. 
                                         affects our reputation 
                                         (for example, a data breach), could    We continue to see very low levels of 
                                         diminish the confidence that           fraudulent and misleading adverts, due 
                                         retailers, consumers and               to additional 
                                         advertisers have in our products and   measures and monitoring techniques 
                                         services, and result in a reduction    used by our security team. 
                                         in audience and revenue. 
                                                                                We have strengthened our processes 
                                                                                around crisis management, complaints 
                                                                                handling and monitoring 
                                                                                techniques. 
--------------------------------------  --------------------------------------  -------------------------------------- 
 4.                                      There are several online competitors   The competitive landscape continues to 
  Increased competition                  in the automotive classified market,   develop, with new business models 
                                         and alternative                        emerging. Big media 
                                         routes for consumers to sell cars,     players, such as Facebook, have 
                                         such as car buying services or         entered the marketplace, mostly 
                                         part-exchange. Competitors             competing for lower-value 
                                         could develop a superior consumer      private sales. Retailers and 
                                         experience or retailer products that   manufacturers are also evolving their 
                                         we are unable to replicate;            online offerings. Our diversification 
                                         or change focus to try to expand       into other adjacent activities also 
                                         their range of stock and disrupt our   results in a wider competitor set. 
                                         market position. 
                                                                                During the period, we held more than a 
                                         This could impact our ability to grow  75% share of minutes spent on 
                                         revenue due to the loss of audience    automotive classified 
                                         or customers, or                       sites, and our cross platform visits 
                                         erosion of our paid-for business       grew by over 20% as measured by Google 
                                         model.                                 Analytics. 
--------------------------------------  --------------------------------------  -------------------------------------- 
 5.                                      Failure to develop and launch new      We remain at the forefront of 
 Failure to innovate: disruptive         products or technologies, or to adapt  innovation in the digital automotive 
 technologies                            to changing consumer                   marketplace. 
 and changing consumer behaviours        behaviour towards car buying, or 
                                         ownership, could have an adverse       We are developing products to enable 
                                         impact. For example, this              more of the car-buying journey to be 
                                         could lead to missed opportunities     done online, including 
                                         should we fail to be at the forefront  Guaranteed Part-Exchange, Reservations 
                                         of industry developments.              and online finance agreements. 
--------------------------------------  --------------------------------------  -------------------------------------- 
 6.                                      As a digital business, we are reliant  We continue to make significant 
  IT systems and cyber security          on our IT infrastructure to continue   progress in migrating our applications 
                                         to operate.                            to the cloud, which 
                                                                                increases the resilience of our 
                                         Any significant downtime of our        systems and the security of our data. 
                                         systems would result in an             Our aim is to get all 
                                         interruption to the services we        applications migrated to the cloud in 
                                         provide.                               the next year. 
 
                                         A significant data breach, whether as  As we move further along the digital 
                                         a result of our own failures or a      retailing journey, our exposure to a 
                                         malicious cyber attack,                cyber attack and 
                                         would lead to a loss in confidence by  the impact of a breach will increase. 
                                         the public, car retailers and 
                                         advertisers. 
 
                                         This could result in reputational 
                                         damage, loss of audience, loss of 
                                         revenue and potential 
                                         financial losses in the form of 
                                         penalties. 
--------------------------------------  --------------------------------------  -------------------------------------- 
 7.                                      Our continued success requires us to   As we return to the office, we are 
  Employees                              attract, recruit, motivate and retain  implementing a hybrid approach, 
                                         our highly skilled                     working partly remotely 
                                         workforce, with a particular focus on  and partly in our offices, with a 
                                         specialist technological and data      focus on protecting our collaborative 
                                         skills whilst also                     culture and remaining 
                                         ensuring that we continue to build a   connected. 
                                         diverse and inclusive culture. 
                                         Failure to do so could                 Employee engagement remains high, with 
                                         result in a reduction in employee      92% of employees completing our 
                                         engagement and the loss of key         engagement survey saying 
                                         talent, and could also have            they are proud to work at Auto Trader. 
                                         a negative impact on business          Our Glassdoor rating based on 
                                         performance.                           anonymous reviews is 
                                                                                4.5 out of 5. 
 
                                                                                We continued to focus on investing in 
                                                                                the personal and professional 
                                                                                development of our colleagues 
                                                                                during the year, and adapted our 
                                                                                induction, learning and development 
                                                                                programmes to be delivered 
                                                                                virtually. We have two main talent 
                                                                                programmes; one focusing on Inclusive 
                                                                                Leadership for all 
                                                                                leaders across our organisation and 
                                                                                the second a Diverse Talent 
                                                                                Accelerator programme designed 
                                                                                to support the progression of 
                                                                                mid-career colleagues. 
 
                                                                                Trends towards more remote working 
                                                                                across the technology industry has 
                                                                                offered more flexibility, 
                                                                                increasing the recruitment pool, which 
                                                                                presents both an opportunity and a 
                                                                                risk. 
--------------------------------------  --------------------------------------  -------------------------------------- 
 8.                                      We rely on third parties with regard   Our reliance on third parties has 
  Reliance on                            to technology infrastructure, supply   increased as we continue to develop 
  third parties                          of data about vehicles                 partnerships to support 
                                         and their financing, and in the        our digital retailing journeys and to 
                                         fulfilment of some of our revenue      provide physical elements of the 
                                         generating products, so                buying journey. We 
                                         it is important that we manage         have well established risk monitoring 
                                         relationships with, and performance    processes over critical and material 
                                         of, key suppliers. If these            suppliers and partners 
                                         suppliers were to suffer significant   and have not experienced any material 
                                         downtime or fail, this could lead to   disruptions. 
                                         a loss of revenue 
                                         from retailer customers and a loss of 
                                         audience due to impaired consumer 
                                         experience. 
--------------------------------------  --------------------------------------  -------------------------------------- 
 9. Response to climate change           Risks associated with climate change   Consumer and societal expectations for 
                                         are emerging as a major factor         low carbon transport are increasing at 
                                         affecting the long-term                a faster pace, 
                                         resilience of our businesses and       as we move towards the ban on the sale 
                                         could impact the execution of our      of new petrol and diesel cars from 
                                         strategy. Regulatory change            2030. A move to 
                                         and environmental concerns from car    EVs could mean that OEMs shift more 
                                         buyers could significantly impact the  quickly to a business model of selling 
                                         automotive market,                     direct to consumers 
                                         with demand shifting away from         and as the second hand market steadily 
                                         internal combustion engine ('ICE')     moves towards newer electric models, 
                                         vehicles towards electric              our customers 
                                         vehicles ('EV'). These changes         will have to evolve their forecourt 
                                         present a risk to the continuing       mix accordingly. The speed at which 
                                         relevance of both our existing         this change takes 
                                         customer base and car buyers, if we    place will also dictate whether there 
                                         do not adapt for these changing        is an impact on the residual value of 
                                         preferences.                           ICE vehicles being 
                                                                                held by our customers. The growing 
                                         Failure to appropriately demonstrate   penetration of electric vehicles and 
                                         that as a business we are committed    the continued advancement 
                                         and moving towards                     of technology has the potential to 
                                         net zero carbon emissions could        change the future of vehicle 
                                         negatively impact our brand and also   ownership, with the possibility 
                                         impact our ability to                  that people pay for short-term access 
                                         operate and/or remain relevant to our  to cars as and when they need them, 
                                         customers and consumers. Failure to    including through 
                                         deliver against                        subscription deals and car-sharing 
                                         our environmental commitments would    apps. 
                                         undermine our reputation as a 
                                         responsible business and               In June 2021, we signed up to the 
                                         may result in legal exposure or        Science Based Target initiative (SBTi) 
                                         regulatory sanctions. We are at risk   Business Ambition 
                                         of new policies that                   for 1.5degC. By doing so, we are 
                                         seek to mitigate climate change or     committed to achieving net zero before 
                                         promote climate change adaptation,     2050 and to reduce 
                                         all the more so now                    emissions in line with the Paris 
                                         that governments are starting to       Agreement goals. We have built on the 
                                         legislate for net zero by 2050.        work we completed in 
                                                                                the last financial year to understand 
                                                                                our full Scope 3 emissions, in 
                                                                                addition to our Scope 
                                                                                1 & 2 emissions, such that we can form 
                                                                                science-based emission reduction 
                                                                                targets. These near 
                                                                                term targets, which have been 
                                                                                validated, form a core component of 
                                                                                our net zero strategy. We 
                                                                                have committed to reduce absolute 
                                                                                scope 1 and 2 emissions by 50% and 
                                                                                absolute Scope 3 emissions 
                                                                                by 46% before the end of financial 
                                                                                year 2031, using financial year 2020 
                                                                                as the base year. 
                                                                                Alongside the reduction in emissions, 
                                                                                we are working on a carbon removal 
                                                                                plan to help us achieve 
                                                                                our long term net zero goal. In terms 
                                                                                of helping consumers make more 
                                                                                sustainable vehicle choices 
                                                                                we have engaged 1.2 million consumers 
                                                                                in our monthly EV giveaway campaign, 
                                                                                launched an electric 
                                                                                car hub on Auto Trader and have been 
                                                                                educating both employees and customers 
                                                                                with our carbon 
                                                                                literacy training. 
--------------------------------------  --------------------------------------  -------------------------------------- 
 10. Regulatory and compliance           The Group operates in a constantly     Our strategic focus of bringing more 
                                         changing and complex regulatory        of the car buying journey online has 
                                         environment. There is a                the potential to 
                                         risk that the Group, or its            increase the Group's exposure to 
                                         subsidiaries, fail to comply with      regulatory risks, in particular the 
                                         these requirements or to respond       nature and extent of 
                                         to changes in regulations, including   personal information that will be 
                                         GDPR and the Financial Conduct         collected and in the execution of the 
                                         Authority's rules and                  online finance application 
                                         guidance. This could lead to           journey. We continue to mitigate these 
                                         reputational damage, financial or      risks as we develop products. 
                                         criminal penalties and impact 
                                         on our ability to do business. 
--------------------------------------  --------------------------------------  -------------------------------------- 
 

INDEPENDENT REVIEW REPORT TO AUTO TRADER GROUP PLC

Conclusion

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2021 which comprises the consolidated interim income statement, consolidated interim statement of comprehensive income, consolidated interim balance sheet, consolidated interim statement of changes in shareholders' equity and consolidated interim statement of cash flows and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2021 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 1, the latest annual financial statements of the group were prepared in accordance with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and the next annual financial statements will be prepared in accordance with UK-adopted international accounting standards. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted for use in the UK.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

David Derbyshire

for and on behalf of KPMG LLP

Chartered Accountants

1 St Peter's Square

Manchester

M2 3AE

11 November 2021

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