TIDMAUTO
RNS Number : 2931B
Auto Trader Group plc
06 June 2019
AUTO TRADER GROUP PLC
FULL YEAR RESULTS FOR THE YEARED 31 MARCH 2019
Auto Trader Group plc ('Auto Trader', 'the Group'), the UK's
largest digital automotive marketplace, announces full year results
for the year ended 31 March 2019.
Financial highlights*
- Revenue up 8% to GBP355.1 million (2018: GBP330.1 million)
- Operating profit up 10% to GBP243.7 million (2018 restated:
GBP221.3 million) with Operating profit margin increasing to 69%
(2018 restated: 67%)
- Profit before tax up 15% to GBP242.2 million (2018 restated:
GBP210.7 million); including GBP8.7 million profit recognised on
disposal of Smart Buying to our joint venture with Cox
Automotive
- Basic EPS up 18% to 21.00p per share (2018 restated: 17.74p)
- Cash generated from operations(1) up 13% to GBP258.5 million
(2018 restated: GBP228.4 million)
- GBP151.1 million returned to shareholders through GBP93.5
million of share buy-backs (2018: GBP96.2 million) plus dividends
paid of GBP57.6 million (2018: GBP52.2 million)
- Gross external bank debt(2) down to GBP313.0 million (2018:
GBP343.0 million) with leverage(3) at 1.2x (2018: 1.5x)
- Proposed final dividend of 4.6 pence per share (2018: 4.0
pence per share) totalling 6.7 pence per share (2018: 5.9 pence per
share)
*Certain prior year comparatives have been restated following
the implementation of IFRS 16 'Leases' from 1 April 2018 using the
fully retrospective approach.
Operational highlights
- Average Revenue Per Retailer forecourt(4) ('ARPR') per month
up 9% or GBP149 to GBP1,844 (2018: GBP1,695), with growth from
product and price offsetting the expected reduction from stock
- Physical car stock on site(4,5) up 2% to 461,000 cars (2018:
453,000). Retailer forecourts were stable(4) , increasing slightly
to 13,240 (2018: 13,213)
- Audience engagement remains strong. Cross platform visits(4,6)
per month increased by 1% to 49.1 million (2018: 48.7 million) and
our share of time spent by consumers on automotive platforms(4,7)
increased slightly to 76%, growing to almost 5x larger than our
nearest competitor. Full page advert views per month(4,8) decreased
3% to 239 million (2018: 246 million)
Strategic highlights
- Physical new car stock on site, currently listed on a free
trial basis, reached over 30,000 by the year end with increasing
engagement from consumers looking to acquire a new car at
competitive prices
- Stock penetration of our Advanced and Premium packages reached
19% (2018: 12%) as retailers see the benefits of paying more to
appear with a greater level of prominence on our marketplace(9)
- Monetisation of our Dealer Finance product achieved 70%
penetration amongst eligible retailers. Over 5,000 retailers are
paying to advertise their own finance offers with another 3,500
opting to show finance deals from our finance partner on their
adverts
- Relaunched our Managing products, including a substantial
upgrade to Retail Accelerator (formerly i-Control), our most
comprehensive tool. The year ended with 3,200 retailers purchasing
one of our Managing products
- Formed a joint venture with Cox Automotive called Dealer
Auction. The new business provides a platform enabling vehicles to
be bought and sold in the B2B market, through offering lower
transaction costs and market-leading analytics powered by Auto
Trader
Trevor Mather, Chief Executive Officer of Auto Trader Group plc,
said:
"We have achieved another strong year of revenue and profit
growth driven by a line-up of products that are proven to improve
the business performance of our retailer and manufacturer
customers.
"We remain the most trusted marketplace for car buyers and offer
the largest choice of both new and used cars following the recent
addition of brand-new cars on Auto Trader, which are available
immediately and at competitive prices.
"The new financial year has started well, and despite the
continued wider market uncertainty, the Board is confident of
meeting its growth expectations for the year."
Outlook
The financial year has started well with the success of our
annual pricing event and the launch of a new Vehicle Check product
for independent retailers.
We expect another strong year of ARPR growth. This will be
underpinned by our product lever, albeit the growth in product is
not likely to reach the exceptional levels seen in 2019. The price
lever will be broadly consistent and the stock lever is likely to
be slightly down in line with market trends.
We anticipate average retailer forecourts to be flat year on
year.
Consumer services improved in the second half of last year which
we expect to continue.
Due to the challenges facing Manufacturers and their agencies,
we expect revenue from these customers to decline in the first half
of the year.
We do not foresee any issues with Brexit affecting our ability
to provide our services, or to materially change our cost base.
We anticipate total operating costs for the year to increase at
a rate of low to mid-single digit.
The Board is confident of meeting its growth expectations for
the year.
Analyst presentation
A presentation for analysts will be held at the offices of Numis
Securities at 9.30am, Thursday 6 June 2019. 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: https://edge.media-server.com/m6/p/vcgz34im
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. Auto Trader sits at the heart of the UK's
vehicle buying process and its primary activity is to help vehicle
retailers compete effectively on the marketplace in order to sell
more vehicles, faster. Auto Trader listed on the London Stock
Exchange in March 2015 and is now a member of the FTSE 100
Index.
The marketplace brings together the largest and most engaged
consumer audience. Auto Trader has over 90% prompted brand
awareness and attracts circa 50 million monthly cross platform
visits each month, with over 70% of visits coming through mobile
devices.
The marketplace also has the largest pool of vehicle sellers
(listing around 450,000 cars each day). Around 80% of UK automotive
retailers advertise on autotrader.co.uk.
For more information, please visit
http://about-us.autotrader.co.uk
Cautionary statement
This announcement of annual results does not constitute or form
part of and should not be construed as an invitation to underwrite,
subscribe for, or otherwise acquire or dispose of any Auto Trader
Group plc (the "Company") shares or other securities in any
jurisdiction nor is it an inducement to enter into investment
activity nor should it form the basis of, or be relied on in
connection with, any contract or commitment or investment decision
whatsoever. It does not constitute a recommendation regarding any
securities. Past performance, including the price at which the
Company's securities have been bought or sold in the past, is no
guide to future performance and persons needing advice should
consult an independent financial advisor. Certain statements in
this announcement constitute forward looking statements (including
beliefs or opinions). 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 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. 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.
Summary financial performance
Units 2019 2018 Change
----------------------------------- ------------ -------- -------- ---------
Income statement
----------------------------------- ------------ -------- -------- ---------
Trade GBPm 304.6 281.2 8%
Consumer services GBPm 28.0 29.8 (6%)
Manufacturer & Agency GBPm 22.5 19.1 18%
----------------------------------- ------------ -------- -------- ---------
Revenue GBPm 355.1 330.1 8%
----------------------------------- ------------ -------- -------- ---------
Operating profit GBPm 243.7 221.3 10%*
----------------------------------- ------------ -------- -------- ---------
Operating profit margin % 69% 67% 2% pts*
----------------------------------- ------------ -------- -------- ---------
Profit before tax GBPm 242.2 210.7 15%*
----------------------------------- ------------ -------- -------- ---------
Basic earnings per share pence 21.00 17.74 18%*
----------------------------------- ------------ -------- -------- ---------
Dividend per share pence 6.7 5.9 14%
----------------------------------- ------------ -------- -------- ---------
Cash flow
----------------------------------- ------------ -------- -------- ---------
Cash generated from operations(1) GBPm 258.5 228.4 13%
----------------------------------- ------------ -------- -------- ---------
Gross external bank debt
at March(2) GBPm 313.0 343.0 (9%)
----------------------------------- ------------ -------- -------- ---------
Leverage(3) at March times 1.2x 1.5x
----------------------------------- ------------ -------- -------- ---------
Key performance indicators
----------------------------------- ------------ -------- -------- ---------
Average Revenue Per Retailer GBP per
forecourt(4) month 1,844 1,695 GBP149
----------------------------------- ------------ -------- -------- ---------
Physical car stock on site(4,5) number 461,000 453,000 2%
----------------------------------- ------------ -------- -------- ---------
Number of retailer forecourts(4) number 13,240 13,213 0%
----------------------------------- ------------ -------- -------- ---------
million
Cross platform visits(,4,6) per month 49.1 48.7 1%
----------------------------------- ------------ -------- -------- ---------
Share of time spent on
site(4,7) % 76% 75% 1% pt
----------------------------------- ------------ -------- -------- ---------
million
Full page advert views(4,8) per month 239 246 (3%)
----------------------------------- ------------ -------- -------- ---------
Full-time equivalent employees
and contractors(1) (FTEs) number 804 824 (2%)
----------------------------------- ------------ -------- -------- ---------
1. Cash generated from operations is defined as net cash
generated from operating activities, before corporation tax
paid.
2. Gross external bank debt is Borrowings less unamortised debt issue costs.
3. Leverage is external bank debt less cash as a multiple of
adjusted underlying EBITDA (earnings before interest, taxation,
depreciation and amortisation, share-based payments and associated
NI and exceptional items which includes profit on disposal of
subsidiaries).
4. Average during the year.
5. Physical car stock advertised on autotrader.co.uk.
6. Cross platform visits measured by Google analytics.
7. Share of minutes is a custom metric based on comScore minutes
(m) 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.
8. Company measure of the number of inspections of individual
vehicle advertisements on the UK marketplace.
9. Average stock volume for retailers on Advanced and Premium car packages in March 2019.
*Restatement due to the implementation of IFRS 16 Leases
The year ended 31 March 2018 has been restated for the impact of
IFRS 16 'Leases' which has been adopted using the fully
retrospective approach. For further information on the impact of
the change in accounting policies, see note 2 of the consolidated
financial statements.
Summary of operating performance
We are focused on our purpose to lead the future of the UK
digital automotive marketplace. Our strategy is centred on
improving car buying and selling in the UK, evolving the wider
automotive ecosystem and maintaining a continued focus on building
a culture that enables us to realise this opportunity.
Despite continued tough wider market conditions, we have had a
great year. Revenue grew by 8% to GBP355.1m as retailers and
manufacturers recognise the value in our core marketplace and our
products. Operating profit grew by 10% with our Operating profit
margin increasing to 69%.
We continue to operate the UK's largest digital automotive
marketplace and we have maintained our market leading audience
position by a significant margin. A large proportion of our
audience is unique to Auto Trader, and consumers are more engaged
with our platforms compared to any other automotive site.
Average monthly cross platform visits increased by 1% to 49.1
million (2018: 48.7 million). We will now report, where possible,
our own internal data as measured by Google Analytics to ensure an
accurate picture of the cross platform traffic driven to our
marketplace. We have grown our market share of time spent on
automotive portals as measured by Comscore to 76% (2018: 75%),
which is more than five times that of our nearest competitor.
Advert views saw a modest decline in line with broader market
trends.
The level of live stock on our site has increased by 2% in the
year, as the average number of cars on the marketplace rose to
461,000 (2018: 453,000). The growth was driven by new cars, through
our newly launched product, with a small decline in used car
volumes which were impacted by supply side tightening at the
beginning of the financial year. The average number of retailer
forecourts using our marketplace remained stable, increasing
slightly to 13,240 (2018: 13,213).
The UK car market
Both the new and used car markets declined in the financial
year, although the size of the overall UK car parc continues to
grow which benefits our stock-based business model. Predictions
suggest that both markets will continue to decline for the calendar
year 2019, albeit at a slower rate than in 2018. Economic and
political uncertainty plus factors unique to the new car market,
for example the continued impact of the Worldwide Harmonised Light
Vehicle Test Procedure, continue to impact both new and used car
sales.
The Auto Trader Retail Price Index, which tracks the average
trade retail price of a used car on a like-for-like basis,
stripping out the impact of changes in the mix of cars being sold,
shows that prices remain buoyant across the market, increasing over
the 12-month period to March 2019 by 3.5%. Petrol and alternatively
fuelled vehicles increased by 4.9% and 3.6% respectively, and
diesel increased by 2.5%. The average price of a used car
throughout the period was GBP12,520.
Maintaining leadership with car buyers
Consumers are carrying out more of their car buying research
online. We commissioned some independent research which found that
52% of consumers who had already started their car buying process
claimed to consider the cost of a car as a monthly price, rather
than the full retail price. We therefore offer functionality so
that consumers can search by monthly payment whilst allowing
retailers the option to display their finance pricing to the UK's
largest car buying audience earlier in their car buying journey.
This Dealer Finance product was monetised with retailers as part of
our annual pricing event with over 5,000 retailers now paying to
advertise their finance offers. In addition to this, over 3,500
retailers chose to appear in monthly search by advertising finance
rates provided by our third-party partner.
This year we have also made a significant step forward in new
cars, launching a stock-based product allowing retailers to upload
physically available new cars at current retail prices, much the
same way as they have been doing for decades with their used car
stock. We had over 30,000 of these physical new cars onsite at the
end of the financial year, and there's still room for growth as we
estimate that there are an additional 90,000 of these cars that
exist today but are not actively being advertised anywhere. Both
consumers and retailers are showing strong appetite for the new car
offering, however the technical and operational challenges to get
these cars online have proven to be high. At present we are
offering this product on a free trial basis. We intend to commence
charging for the product during the course of this financial
year.
We continue to invest in marketing to keep our brand front of
mind with consumers, ensuring they are fully aware of all our
available products to help make their purchase of a new or used car
easier and a more enjoyable experience. An independent brand
tracker currently suggests that 78% of consumers would use Auto
Trader to help them buy a used car and 70% would use Auto Trader to
help them buy a brand-new car. One of this year's campaign
highlights was a social campaign called ATGoals which ran during
the Football World Cup and gave fans a chance to win a car every
time England scored a goal in the tournament. The award-winning
campaign culminated in a live TV screening of the semi-final game
in our home city of Manchester and was viewed by over 27 million
people.
Enhancing the businesses of our retailer and manufacturer
customers
Our highest two levels of advertising packages, Advanced and
Premium, continue to gain recognition from retailers. These higher
yielding packages allow retailers to pay for greater prominence on
our marketplace, which drives a higher volume of advert views,
enabling those cars to sell faster.
Despite a tougher new car market, manufacturers and agencies
continue to see the value in our marketplace to advertise their new
cars to consumers, with spend up by 18%. However the short-term
challenges faced by both of these customer types did impact our
growth in the second half of the year. Our fastest growing product
is InSearch which allows manufacturers to reach and influence car
buyers in a highly targeted fashion.
We continue to invest in our data products and during the year
we completely relaunched new 'Managing' products, Retail Check and
Retail Accelerator (formerly known as i-Control). The new products
represent a significant enhancement with new and improved data,
analytics, design, reporting and goal setting. The number of
retailer forecourts using one of these products at the end of the
year was 3,200 (2018: 3,000). Over 39% of trade stock is managed
using one of these data intelligence solutions, which are now
hosted on mobile-friendly platforms. We now provide richer
valuation data and a proprietary Retail Rating which takes account
of supply and demand, enabling retailers to get a more accurate
view of how their stock will perform on the live retail market.
Building on the success of its predecessor, i-Control, Retail
Accelerator takes a retailer's business goals and creates a daily
action plan aligned to their desired stock turn and margin. It
enables them to manage their inventory more effectively by
constantly tracking changing market conditions and delivering
alerts on valuation changes, incorrect pricing and ageing stock, as
well as dynamic performance reporting to improve retailers'
competitive position.
Investing in our core platform
As a technology business we are constantly improving our core
platform and infrastructure which are key enablers of our approach
to software and product development. This year we have invested in
new public cloud-based solutions enabling security, resilience and
importantly speed when it comes to releasing software. Over the
last year we have released three times as many software updates,
achieving 15,000 in the year. Using the public cloud has also
enabled us to increase the visibility of application performance
enabling us to highlight and rectify issues in applications quickly
to avoid customer impacts.
Joint venture
On 1 January we formed a Joint Venture with Cox Automotive,
creating a business called Dealer Auction. The new business
provides a platform enabling vehicles to be bought and sold in the
B2B market, offering lower transaction costs and market-leading
analytics powered by Auto Trader. Since formation, Dealer Auction
has transacted over 30,000 vehicles and advertised an additional
58,000 vehicles through the Smart Buying platform.
People and culture
People are our greatest asset, so fostering a culture that is
truly values-led, principles-driven and agile and responsive to
change, is a fundamental part of our strategy. We work hard to
ensure our people are proud to work for the business, and
brilliantly 92% said that they were proud to work at Auto Trader in
this year's annual employee engagement survey.
Our ambition to become the most admired digital business can
only be fulfilled by having a diverse workforce, as well as a
deep-rooted desire to make a difference to wider society. We are
making progress on our diversity and inclusion strategy and
continue to develop initiatives to drive greater gender balance
across all levels in the organisation. Our Gender Pay Gap Report
showed an improvement this year, but there is still more work to be
done.
The Board
In April 2019, Trevor Mather announced his intention to retire
as CEO from the Company and step down from the Board on 31st March
2020. Nathan Coe, previously COO and CFO, will replace Trevor
Mather as CEO and Jamie Warner, previously Deputy CFO, is intended
to be promoted to CFO and join the board in due course. Catherine
Faiers has been promoted to the role of COO, having previously been
the Company's Operations Director, and joined the Board from May
2019.
Financial Review
Revenue
In 2019, we saw another strong year of revenue growth at 8%,
climbing to GBP355.1m (2018: GBP330.1m), predominantly through
Trade revenue, and more specifically Retailer revenue, as our core
business continued to grow.
2019 2018 Change
GBPm GBPm %
------------------------- ------ ------ -------------
Retailer 293.0 268.7 9%
Home Trader 10.2 11.4 (11%)
Other 1.4 1.1 27%
------------------------- ------ ------ -------------
Trade 304.6 281.2 8%
Consumer Services 28.0 29.8 (6%)
Manufacturer and Agency 22.5 19.1 18%
------------------------- ------ ------ -------------
Total 355.1 330.1 8%
------------------------- ------ ------ -------------
Trade revenue-comprising Retailers, Home Traders and other
revenue-increased by 8% to GBP304.6m (2018: GBP281.2m). Retailer
revenue grew 9% to GBP293.0m (2018: GBP268.7m), driven by the
launch of new products, our annual pricing event and further
penetration of higher yielding advertising packages. Average
Revenue Per Retailer ('ARPR') improved by GBP149 to GBP1,844 per
month (2018: GBP1,695). Average retailer forecourts were stable,
with a marginal increase in the year to 13,240 (2018: 13,213).
ARPR growth of GBP149 per month was broken down as follows into
our three levers: price, stock and product.
-- Price: Our price lever contributed GBP50 (2018: GBP43) and
34% (2018: 29%) of total ARPR growth. We executed our annual event
for the vast majority of customers on 1 April 2018 which included a
like-for-like price increase.
-- Stock: A small contraction in stock had a negative effect on
ARPR growth of GBP22 (2018: positive effect of GBP20) and was -15%
(2018: +13%) of total ARPR growth. A reduction in the number of new
cars registered, lower volumes of pre-registration and some
consumer uncertainty led to a lack of used car supply in the market
during the first half of the year. Retailer stock has seen some
level of recovery through the second half of the year although the
market is still challenging.
-- Product: Our product lever contributed GBP121 (2018: GBP86)
and 81% (2018: 58%) of total ARPR growth. Our annual event allowed
us to introduce two new products, stock exports and profile pages,
into all package levels and we also monetised our Dealer Finance
product following a trial period. Since 1 April 2018, over 5,000
retailers have opted to pay for the opportunity to advertise their
finance offers against their cars, representing 70% of all eligible
retailers. In addition, the penetration of our higher yielding
Advanced and Premium advertising packages has continued to grow as
retailers recognise the value of receiving greater prominence
within our search listings. At the end of March 2019, 19% of
retailer cars advertised were on one of these levels (March 2018:
12%). There was also a small contribution from our Managing
products, which despite re-platforming and continued development in
the year, still saw growth to 3,200 customers (2018: 3,000).
Home Trader had a challenging year declining 11% to GBP10.2m
(2018: GBP11.4m), as volumes were impacted by supply constraints,
particularly in older, less expensive vehicles which are often
traded in this segment and we saw some of these customers move to
take up subscription packages. Other revenue increased 27% to
GBP1.4m (2018: GBP1.1m).
Consumer Services revenue decreased 6% in the year to GBP28.0m
(2018: GBP29.8m). Private revenue, generated from individual
sellers who pay to advertise their vehicle on the Group's website,
declined 7% to GBP20.1m (2018: GBP21.6m), impacted by a lack of
supply in older vehicles, a greater propensity to part-exchange
(influenced by the transparency we have enabled for part-exchange
values), and increased competition. Motoring Services revenue
decreased 4% to GBP7.9m (2018: GBP8.2m), as we discontinued a low
yielding display product, the impact of which outweighed growth
from our finance and insurance third-party partners.
Manufacturer and Agency revenue grew 18% to GBP22.5m (2018:
GBP19.1m). The level of growth, which was skewed towards the first
half of the year, was largely driven by InSearch; our native
performance product which allows manufacturers to advertise new
cars directly within our main search, providing a highly targeted
way to influence in-market car buyers. In the second half of the
year we have seen what we believe to be a transient impact as a
result of the well documented uncertainties resulting from Brexit
and cost pressures facing both car manufacturers and their
advertising agencies.
Administrative expenses
The Group has adopted IFRS 16 'Leases' in the period, which
impacts Other costs and Depreciation & amortisation within
Operating profit. Property and vehicle rental charges are no longer
included in other costs, and depreciation now includes depreciation
on leased assets. Prior period comparatives have been restated to
reflect these changes as the fully retrospective approach has been
used.
Operating costs continue to be well controlled, with
administrative expenses increasing by 3% to GBP112.3m (2018
restated: GBP108.8m).
Costs (Restated)
2019 2018 Change
GBPm GBPm %
------------------------------- -------- ----------- --------
People costs 56.4 54.8 3%
Marketing 17.6 16.3 8%
Other costs 29.4 28.7 2%
Depreciation & amortisation 8.9 9.0 (1%)
Total administrative expenses 112.3 108.8 3%
------------------------------- -------- ----------- --------
People costs, which comprise all staff costs including
third-party contractor costs, increased by 3% in the year to
GBP56.4m (2018: GBP54.8m). The increase in people costs was driven
primarily by underlying salary costs which increased due to strong
competition for digital talent, however this has been partially
offset by a reduction in average full-time equivalent employees
('FTEs') (including contractors) to 804 (2018: 824). The number of
FTEs was particularly impacted in the fourth quarter by the
transfer of 15 staff to Dealer Auction, our joint venture with Cox
Automotive UK. Share-based payments, including applicable national
insurance costs of GBP5.9m (2018: GBP3.7m), have been included
within people costs. The year-on-year increase in the share-based
payment charge was due to leavers under the Performance Share Plan
in 2018 for which a credit was recognised in the prior year, and a
change in the way senior management are remunerated. The Group now
settles a greater proportion of the senior management incentive
scheme in shares which increases the share-based payment charge
with an offset realised within cash bonuses.
Marketing spend increased in line with revenue by 8% to GBP17.6m
(2018: GBP16.3m), as we look to maintain and enhance our audience
position and educate consumers on new products such as new car
offerings and search by monthly payment.
Other costs, which include data services, property related costs
and other overheads, remain well controlled and increased by 2% on
a like-for-like basis to GBP29.4m (2018 restated: GBP28.7m).
Depreciation & amortisation remained broadly flat at GBP8.9m
(2018 restated: GBP9.0m). Within this was depreciation of GBP2.0m
in relation to lease assets (2018 restated: GBP1.9m).
Operating profit
In the year, Operating profit grew 10% to GBP243.7m (2018
restated: GBP221.3m). Operating profit margin increased by two
percentage points to 69% (2018: 67%).
(Restated)
2019 2018 Change
GBPm GBPm %
-------------------------------------- -------- ----------- --------
Revenue 355.1 330.1 8%
Administrative expenses (112.3) (108.8) (3%)
Share of profits from joint ventures 0.9 - n.m
Operating profit 243.7 221.3 10%
-------------------------------------- -------- ----------- --------
On 31 December 2018, following clearance from the Competition
and Markets Authority, the Group completed its joint venture
agreement with Cox Automotive UK Limited. The new combined
business, called Dealer Auction, provides a leading digital
marketplace for B2B transactions in the UK. The Group transferred
Smart Buying (formally known as Autotrade-mail), its
retailer-to-retailer platform, to the joint venture and paid Cox
Automotive UK Limited GBP19.7m to hold 49% of the new entity. The
transfer of the business, combined with the recognition of profits
generated by Dealer Auction from the point of completion, had the
following impact on Operating profit:
-- a reduction in Average Revenue Per Retailer ('ARPR') of GBP3;
-- no effect on costs overall. People costs reduced by GBP0.4
million, but were offset by increased overheads resulting from
amounts payable to the joint venture for continued access to Smart
Buying for Auto Trader i-Control customers; and
-- the share of the profit from the joint venture at GBP0.9 million.
Profit before taxation
Profit before taxation increased by 15% to GBP242.2m (2018
restated: GBP210.7m) following the Operating profit performance, a
small reduction in net finance costs at GBP10.2m (2018 restated:
GBP10.6m) and a one-off profit on disposal of subsidiary of GBP8.7m
created by the transfer of our Smart Buying business to the joint
venture, Dealer Auction.
In June 2018, the Group signed into a five-year GBP400m
Syndicated revolving credit facility (the 'Syndicated RCF') to
replace the Syndicated Term Loan and the former revolving credit
facility. The new facility allows the Group greater flexibility to
manage cash flows and allows for further reduction on margin
payable as the Group's leverage decreases further. Following the
year end the Group extended the term for GBP316.5m of the facility
for an additional year.
Interest costs on the new Syndicated RCF, the Syndicated Term
Loan and the former revolving credit facility were GBP6.5m (2018:
GBP6.8m) reflecting a lower level of drawn debt offset by a small
increase in both LIBOR and the margin payable given the increased
level of debt flexibility. Amortisation of debt issue costs of
GBP2.8m (2018: GBP3.0m) included GBP2.2m of accelerated costs
relating to the previous facility following the decision to
refinance before the termination date of March 2020. Following the
adoption of IFRS 16, finance costs relating to leases were GBP0.9m
(2018 restated: GBP0.8m).
As part of the joint venture entered into with Cox Automotive
UK, the Group disposed of its Smart Buying business, Auto Trader
Auto Stock Limited, for which it recognised a profit on disposal of
GBP8.7m. The profit recognised on the disposal has no cash impact
as consideration was in the form of shares in the newly formed
Dealer Auction business.
Taxation
The Group tax charge of GBP44.5m (2018 restated: GBP39.6m)
represents an effective tax rate of 18% (2018: 19%) which, when
allowing for the profit on disposal above which was non-taxable, is
in line with the average standard UK rate and a reflection of our
taxation policy to act in a responsible and transparent manner in
all tax matters.
Earnings per share
Basic earnings per share rose by 18% to 21.00 pence (2018
restated: 17.74 pence) based on a weighted average number of
ordinary shares in issue of 941,506,424 (2018: 964,516,212).
Diluted earnings per share of 20.94 pence (2018 restated: 17.68
pence) increased by 18%, based on 944,254,998 shares (2018:
967,912,689) which takes into account the dilutive impact of
outstanding share awards.
Cash flow and net external debt
Cash generated from operations increased by 13% to GBP258.5m
(2018 restated: GBP228.4m) and was achieved as a result of strong
Operating profit with low working capital requirements and a high
level of cash conversion driven by a particularly strong
performance in terms of customer payments and collections.
Corporation tax payments totalled GBP42.2m (2018: GBP39.4m). Net
cash generated from operating activities was GBP216.3m (2018
restated: GBP189.0m).
At 31 March 2019 the Group had GBP313.0m of the Syndicated
revolving credit facility drawn (31 March 2018: GBP343.0m borrowed
under the former Syndicated Term Loan), representing a net
repayment of GBP30.0m (2018: GBP20.0m repayment). Leverage, defined
as the ratio of gross borrowings less cash to Adjusted underlying
EBITDA, decreased to 1.19x (2018: 1.46x). Interest paid on these
financing arrangements was GBP6.6m (2018: GBP6.7m).
Capital structure and dividends
During the year, a total of 20.2m shares (2018: 26.8m) were
repurchased for a total consideration of GBP93.5m (2018: GBP96.2m)
before transaction costs of GBP0.5m (2018: GBP0.5m). A further
GBP57.6m (2018: GBP52.2m) was paid in dividends, giving a total of
GBP151.1m (2018: GBP148.4m) in cash returned to shareholders.
The Directors are recommending a final dividend for the year of
4.6 pence per share, which together with the interim dividend makes
a total dividend of 6.7 pence per share, amounting to GBP62.4m, in
line with our policy of distributing approximately one third of net
income. Subject to shareholders' approval at the Annual General
Meeting ('AGM') on 19 September 2019, the final dividend will be
paid on 27 September 2019 to shareholders on the register of
members at the close of business on 30 August 2019.
The Group's capital allocation policy remains unchanged:
continuing to invest in the business enabling it to grow whilst
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 and to steadily
reduce gross indebtedness.
At the 2018 AGM, the Company's shareholders generally authorised
the Company to make market purchases of up to 94,802,631 of its
ordinary shares, subject to minimum and maximum price
restrictions.
This authority will expire at the conclusion of the 2019 AGM and
the Directors intend to seek a similar general authority from
shareholders at the 2019 AGM. The share buy-back programme will be
ongoing, and any purchases of its shares made by the Company under
the programme will be affected in accordance with the Company's
general authority to repurchase shares, Chapter 12 of the UKLA
Listing Rules and relevant conditions for trading restrictions
regarding time and volume, disclosure and reporting obligations and
price conditions.
Contingent liability
The Group previously reported a contingent liability in respect
of the rate of VAT applicable to our insurance intermediary revenue
within Consumer services, dating back from 2013 onwards. As
reported at the half year, in July 2018 HMRC confirmed the Group's
treatment of insurance intermediary revenue for VAT purposes was
appropriate. The Group did not incur any liability and the enquiry
in respect of this matter is now closed.
Post balance sheet event
On 5 June 2019, the Group extended the term for GBP316.5m of the
Syndicated revolving credit facility for one year. The facility
will now terminate in two tranches: GBP316.5m will mature in June
2024; and GBP83.5.0m will mature at the original termination date
of June 2023. There is no change to the interest rate payable and
there is no requirement to settle all, or part, of the debt earlier
than the termination dates stated.
.Trevor Mather Nathan Coe
Chief Executive Officer Chief Financial Officer & Chief Executive
6 June 2019 Officer-designate
6 June 2019
Consolidated income statement
For the year ended 31 March 2019
Note 2019 (Restated)
GBPm 2018
GBPm
------------------------------------------------------------ ----- ------- ----------
Revenue 3 355.1 330.1
Administrative expenses (112.3) (108.8)
Share of profit from joint ventures 11 0.9 -
------------------------------------------------------------ ----- ------- ----------
Operating profit 4 243.7 221.3
Finance costs 5 (10.2) (10.6)
Profit on the sale of subsidiary 6 8.7 -
------------------------------------------------------------ ----- ------- ----------
Profit before taxation 242.2 210.7
Taxation 7 (44.5) (39.6)
------------------------------------------------------------ ----- ------- ----------
Profit for the year attributable to equity holders of the parent 197.7 171.1
------------------------------------------------------------------- ------- ----------
Basic earnings per share
From profit for the year (pence per share) 8 21.00 17.74
------------------------------------------------------------ ----- ------- ----------
Diluted earnings per share
From profit for the year (pence per share) 8 20.94 17.68
------------------------------------------------------------ ----- ------- ----------
The Group has adopted IFRS 9 'Financial Instruments', IFRS 15
'Revenue from Contracts with Customers', and IFRS 16 'Leases' from
1 April 2018. The year ended 31 March 2018 has been restated for
IFRS 16 which was implemented using the fully retrospective method.
For further information on the impact of the change in accounting
policies, see note 2 of these consolidated financial
statements.
Consolidated statement of comprehensive income
For the year ended 31 March 2019
(Restated)
2019 2018
GBPm GBPm
------------------------------------------------------------------------------------- ------ ----------
Profit for the year 197.7 171.1
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations (0.1) 0.2
------------------------------------------------------------------------------------- ------ ----------
Items that will not be reclassified to profit or loss:
Remeasurements of post-employment benefit obligations 0.2 -
------------------------------------------------------------------------------------- ------ ----------
Other comprehensive income for the year, net of tax 0.1 0.2
------------------------------------------------------------------------------------- ------ ----------
Total comprehensive income for the year attributable to equity holders of the parent 197.8 171.3
------------------------------------------------------------------------------------- ------ ----------
Currency translation differences arise on the consolidation of
the Group's subsidiaries that have a functional currency other than
sterling.
The Group has adopted IFRS 9 'Financial Instruments', IFRS 15
'Revenue from Contracts with Customers', and IFRS 16 'Leases' from
1 April 2018. The year ended 31 March 2018 has been restated for
IFRS 16 which was implemented using the fully retrospective method.
For further information on the impact of the change in accounting
policies, see note 2 of these consolidated financial
statements.
Consolidated balance sheet
At 31 March 2019
(Restated)
2019 2018
Note GBPm GBPm
------------------------------------------ --------- -----------
Assets
Non-current assets
Intangible assets 317.5 329.8
Property, plant and equipment 9 16.7 19.7
Deferred taxation assets 6.2 5.3
Net investments in joint ventures 11 49.0 -
-------------------------------------- --------- -----------
389.4 354.8
Current assets
Trade and other receivables 56.1 54.9
Cash and cash equivalents 5.9 4.3
-------------------------------------- --------- -----------
62.0 59.2
------------------------------------------ --------- -----------
Total assets 451.4 414.0
------------------------------------------ --------- -----------
Equity and liabilities
Equity attributable to equity holders
of the parent
Share capital 13 9.3 9.5
Retained earnings 1,095.8 1,042.7
Capital reorganisation reserve (1,060.8) (1,060.8)
Own shares held 14 (16.5) (16.9)
Capital redemption reserve 0.7 0.5
Other reserves 30.5 30.6
-------------------------------------- --------- -----------
Total equity 59.0 5.6
------------------------------------------ --------- -----------
Liabilities
Non-current liabilities
Borrowings 12 310.3 340.8
Deferred taxation liabilities 0.5 0.7
Retirement benefit obligations - -
Provisions for other liabilities and
charges 1.0 -
Lease liabilities 14.3 16.0
-------------------------------------- --------- -----------
326.1 357.5
Current liabilities
Trade and other payables 41.8 28.5
Current income tax liabilities 22.4 19.9
Lease liabilities 1.8 2.2
Provisions for other liabilities and
charges 0.3 0.3
-------------------------------------- --------- -----------
66.3 50.9
------------------------------------------ --------- -----------
Total liabilities 392.4 408.4
------------------------------------------ --------- -----------
Total equity and liabilities 451.4 414.0
------------------------------------------ --------- -----------
The Group has adopted IFRS 9 'Financial Instruments', IFRS 15
'Revenue from Contracts with Customers', and IFRS 16 'Leases' from
1 April 2018. The year ended 31 March 2018 has been restated for
IFRS 16 which was implemented using the fully retrospective method.
For further information on the impact of the change in accounting
policies, see note 2 of these consolidated financial
statements.
The financial statements were approved by the Board of Directors
and authorised for issue.
Nathan Coe
Chief Financial Officer & Chief Executive Officer-designate
6 June 2019
Auto Trader Group plc Registered number 09439967
Consolidated statement of changes in equity
For the year ended 31 March 2019
Capital Capital
Share Retained Own reorg redemption Other Total
capital earnings shares reserve reserve reserves equity
held
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
Balance at March
2017 as
previously
reported 9.8 1,015.9 (16.9) (1,060.8) 0.2 30.4 (21.4)
Impact in change
of accounting
policy - 1.2 - - - - 1.2
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
Restated balance
at 31 March
2017 9.8 1,017.1 (16.9) (1,060.8) 0.2 30.4 (20.2)
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
Profit for the
year (restated) - 171.1 - - - - 171.1
Other
comprehensive
income:
Currency
translation
differences - - - - - 0.2 0.2
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
Total
comprehensive
income, net of
tax - 171.1 - - - 0.2 171.3
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
Transactions
with owners:
Employee share
schemes - value
of employee
services - 3.3 - - - - 3.3
Tax impact of
employee share
schemes - 0.1 - - - - 0.1
Cancellation of
shares (0.3) (96.7) - - 0.3 - (96.7)
Dividends paid - (52.2) - - - - (52.2)
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
Total
transactions
with owners,
recognised
directly in
equity (0.3) (145.5) - - 0.3 - (145.5)
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
Balance at March
2018 (restated) 9.5 1,042.7 (16.9) (1,060.8) 0.5 30.6 5.6
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
Profit for the
year - 197.7 - - - - 197.7
Other
comprehensive
income:
Currency
translation
differences - - - - - (0.1) (0.1)
Remeasurements
of
post-employment
benefit
obligations - 0.2 - - - - 0.2
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
Total
comprehensive
income, net of
tax - 197.9 - - - (0.1) 197.8
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
Transactions
with owners:
Employee share
schemes - value
of employee
services - 4.7 - - - - 4.7
Exercise of
employee share
schemes - (3.7) 5.6 - - - 1.9
Transfer of
shares from
ESOT - (0.6) 0.6 - - - -
Tax impact of
employee share
schemes - 0.6 - - - - 0.6
Cancellation of
shares (0.2) (88.2) - - 0.2 - (88.2)
Acquisition of
treasury shares - - (5.8) - - - (5.8)
Dividends paid - (57.6) - - - - (57.6)
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
Total
transactions
with owners,
recognised
directly in
equity (0.2) (144.8) 0.4 - 0.2 - (144.4)
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
Balance at March
2019 9.3 1,095.8 (16.5) (1,060.8) 0.7 30.5 59.0
---------------- ------------ ------------ ---------------- ------------- ----------- --------------- ---------
The Group has adopted IFRS 9 'Financial Instruments', IFRS 15
'Revenue from Contracts with Customers', and IFRS 16 'Leases' from
1 April 2018. The year ended 31 March 2018 has been restated for
IFRS 16 which was implemented using the fully retrospective method.
For further information on the impact of the change in accounting
policies, see note 2 of these consolidated financial
statements.
Consolidated statement of cash flows
For the year ended 31 March 2019
(Restated)
2019 2018
Note GBPm GBPm
---------------------------------------------------------------- ------- ----------
Cash flows from operating activities
Cash generated from operations 16 258.5 228.4
Income taxes paid (42.2) (39.4)
------------------------------------------------------------ ------- ----------
Net cash generated from operating activities 216.3 189.0
Cash flows from investing activities
Purchases of intangible assets - financial systems (0.3) (0.3)
Purchases of intangible assets - other (0.3) (0.3)
Purchases of property, plant and equipment (1.7) (2.3)
Payment for acquisition of shares in joint ventures (19.7) -
Payment for acquisition of subsidiary, net of cash acquired - (11.9)
------------------------------------------------------------ ------- ----------
Net cash used in investing activities (22.0) (14.8)
Cash flows from financing activities
Dividends paid to Company's shareholders (57.6) (52.2)
Repayment of Syndicated Term Loan (343.0) (20.0)
Drawdown of Syndicated revolving credit facility 447.1 -
Repayment of Syndicated revolving credit facility (134.1) -
Payment of refinancing fees (3.3) -
Payment of interest on borrowings (6.6) (6.7)
Payment of lease liabilities (3.1) (2.3)
Purchase of own shares for cancellation (87.7) (96.2)
Purchase of own shares for treasury (5.8) -
Payment of fees on repurchase of own shares (0.5) (0.5)
Proceeds from exercise of share-based incentives 1.9 -
------------------------------------------------------------ ------- ----------
Net cash used in financing activities (192.7) (177.9)
Net decrease in cash and cash equivalents 1.6 (3.7)
Cash and cash equivalents at beginning of year 4.3 8.0
Cash and cash equivalents at end of year 5.9 4.3
------------------------------------------------------------ ------- ----------
The Group has adopted IFRS 9 'Financial Instruments', IFRS 15
'Revenue from Contracts with Customers', and IFRS 16 'Leases' from
1 April 2018. The year ended 31 March 2018 has been restated for
IFRS 16 which was implemented using the fully retrospective method.
For further information on the impact of the change in accounting
policies, see note 2 of these consolidated financial
statements.
Notes to the consolidated financial statements
1. General information
Basis of preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRS') as adopted by the European Union ('EU'), IFRS
Interpretation Committee ('IFRS IC'), certain interpretations as
adopted by the EU, and the Companies Act 2006 applicable to
companies reporting under IFRS.
The following new standards, and amendments to standards, have
been adopted by the Group for the first time for the financial year
beginning on 1 April 2018:
- IFRS 9, Financial Instruments;
- IFRS 15, Revenue from Contracts with Customers;
- IFRS 16 Leases;
- Classification and Measurement of Share-Based Payment
Transactions - Amendments to IFRS 2;
- Annual Improvements to IFRS Standards 2014-2016 Cycle; and
- Interpretation 22, Foreign Currency Transactions and Advance
Consideration
The impacts of adopting IFRS 9, IFRS 15 and IFRS 16 have been
detailed in note 2. The adoption of the remaining standards have
had no material effect on the Group's consolidated financial
statements.
Certain new accounting standards and interpretations have been
published that are not mandatory for 31 March 2019 reporting
periods and have not been early adopted by the Group:
- IFRIC 23, Uncertainty over income tax treatments was issued in
June 2017. IFRIC 23 explains how to recognise and measure deferred
and current income tax assets and liabilities where there is
uncertainty over a tax treatment. Mandatory for financial years
commencing on or after 1 January 2019. The Group has not adopted
IFRIC 23 before its mandatory date. This standard is not expected
to have a significant effect on the Group's financial
statements.
The consolidated financial statements have been prepared on the
going concern basis and under the historical cost convention.
The financial information set out in this document does not
constitute the statutory accounts of the Group for the financial
years ended 31 March 2019 or 31 March 2018 but is derived from the
2019 Annual Report and Financial Statements. The Annual Report and
Financial Statements for 2019 will be delivered to the Registrar of
Companies in due course. The auditors have reported on those
accounts and have given an unqualified report, which does not
contain a statement under Section 498 of the Companies Act
2006.
Going concern
The Directors, after making enquiries and on the basis of
current financial projections and facilities available, believe
that the Group has adequate financial resources to continue in
operation for a period not less than 12 months from the date of
this report. For this reason, they continue to adopt the going
concern basis in preparing the financial statements.
2. Significant accounting policies
a) Changes in significant accounting policies
The following new standards, and amendments to standards, have
been adopted by the Group for the first time for the financial year
beginning on 1 April 2018:
- IFRS 9, Financial Instruments;
- IFRS 15, Revenue from Contracts with Customers;
- IFRS 16 Leases;
- Classification and Measurement of Share-Based Payment
Transactions - Amendments to IFRS 2;
- Annual Improvements to IFRS Standards 2014-2016 Cycle; and
- Interpretation 22, Foreign Currency Transactions and Advance
Consideration
b) Impact of adoption of IFRS 9, 15 and 16 on the Group's
consolidated financial statements
IFRS 15 Revenue from contracts with customers
IFRS 15 establishes a comprehensive framework for determining
whether, how much and when revenue is recognised. It replaced IAS
18 Revenue and related interpretations. The Group has adopted IFRS
15 using the retrospective method and therefore the effect of
applying IFRS 15 to the comparative period has been considered.
Under IAS 18 revenue was recognised either over time where there
was continuing service provided by the Group to the customer or at
the point in time when the risks and rewards of ownership
transferred to the customer. Under IFRS 15 revenue is recognised
when performance obligations are satisfied. For the Group the
transfer of control under IFRS 15 and satisfaction of performance
obligations remains consistent with the transfer of risks and
rewards to the customer under IAS 18. Consequently, there were no
adjustments required on application of IFRS 15.
Accounting policy for revenue
Revenue is measured based on the consideration specified in a
contract with a customer and is recognised when a customer obtains
control of the services. Revenue is stated net of discounts,
rebates, refunds and value-added tax.
Revenue principally represents the amounts receivable from
customers for advertising on the Group's platforms but also
includes non-advertising services such as data services. The
different types of products and services offered to customers along
with the nature and timing of satisfaction of performance
obligations are set out below:
(i) Trade revenue
Trade revenue comprises fees from Retailers, Home Traders and
logistics customers for advertising on the Group's platforms and
utilising the Group's services.
Retailer revenue
Retailer customers pay a monthly subscription fee to advertise
their stock on the Group's platforms. Control is obtained by
customers across the life of the contract as their stock is
continually listed. Contracts for these services are agreed at a
retailer or retailer group level and are ongoing subject to a
30-day notice period.
Retailers have the option to enhance their presence on the
platform through additional products, each of which has a distinct
performance obligation. For products that provide enhanced exposure
across the life of the product, control is passed to the customer
over time. Revenue is only recognised at a point in time for
additional advertising products where the customer does not receive
the benefit until they choose to apply the product. Additional
advertising products are principally billed on a monthly
subscription basis in line with their core advertising package,
however certain products are billed on an individual charge
basis.
The Group also generates revenue from retailers for data and
valuation services under a variety of contractual arrangements,
with each service being a separate performance obligation. Control
is obtained by customers either across the life of the contract
where customers are licensed to use the Group's services or at a
point in time when a one-off data service is provided.
Contract modifications occur on a regular basis as customers
change their stock levels or add or remove additional advertising
products from their contracts. Following a contract modification,
the customer is billed in line with the delivery of the remaining
performance obligations. A receivable is recognised only when the
Group's right to consideration is only conditional on the passage
of time.
Home Trader revenue
Home Trader customers pay a fee in advance to advertise a
vehicle on the Group's platform for a specified period of time.
Revenue is deferred until the customer obtains control over the
services. Control is obtained by customers across the life of the
contract as their vehicle is continually listed. Contracts for
these services are entered into for a period of between two and
three weeks.
Logistics revenue
Logistics customers pay a monthly subscription fee for access to
the Group's Motor Trade Delivery platform. Control is obtained by
customers across the life of the contract as their access is
continuous. Contracts for these services are agreed at a customer
level and are ongoing subject to a 30-day notice period.
Logistics customers have the option to bid on vehicle moves
advertised by retailers on the platform. The logistics customer
pays a fee if they are successful in obtaining business from
retailers through the Group's marketplace. Revenue is recognised at
the point in time when the vehicle move has been completed. A
receivable is recognised only when the Group's right to
consideration is only conditional on the passage of time.
(ii) Consumer Services revenue
Consumer Services comprises fees from private sellers for
vehicle advertisements on the Group's websites, and third-party
partners who provide services to consumers relating to their
motoring needs, such as insurance and loan finance. Private
customers pay a fee in advance to advertise a vehicle on the
Group's platform for a specified period of time. Control is
obtained by customers across the life of the contract as their
stock is continually listed. Contracts for these services are
entered into for a period of between two and six weeks. Revenue is
generated from third-party partners who utilise the Group's
platforms to advertise their products under a variety of
contractual arrangements, with each service being a separate
performance obligation. Control is obtained by customers at a point
in time when the service is provided.
(iii) Manufacturer and Agency revenue
Revenue is generated from manufacturers and their advertising
agencies for placing display advertising for their brand or vehicle
on the Group's websites under a variety of contractual
arrangements, with each service being a separate performance
obligation. Control is obtained by customers across the life of the
contract as their advertising is displayed on the different
platforms. A receivable is recognised only when the Group's right
to consideration is only conditional on the passage of time.
IFRS 16 Leases
IFRS 16 Leases was issued in January 2016, and was endorsed by
the EU in 2017. IFRS 16 replaces existing leases guidance including
IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains
a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating
the Substance of Transactions Involving the Legal Form of a Lease.
The standard is effective for annual periods beginning on or after
1 January 2019. The Group has elected to early adopt IFRS 16, with
a date of initial application of 1 April 2018, using the fully
retrospective approach. Comparative information has therefore been
restated.
The adoption of IFRS 16 had a material impact on the Group's
financial statements with the recognition of new right of use
assets and lease liabilities on the Group's Consolidated balance
sheet. The nature of expenses related to those leases has also
changed as the straight-line operating lease expense has been
replaced with a depreciation charge for right of use assets and
interest expense on lease liabilities.
Accounting policy for leases
At inception of a contract, the Group assesses whether or not a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. When a lease is recognised in a contract the Group
recognises a right of use asset and a lease liability at the lease
commencement date.
The right of use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease prepayments made at or before the commencement date, plus
any initial direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to restore the
underlying asset or the site on which it is located, less any lease
incentives received. The right of use asset is subsequently
depreciated using the straight-line method from the commencement
date to the earlier of the end of the useful life of the right of
use asset or the end of the lease term. The estimated useful lives
of right of use assets are determined on the same basis as those of
property, plant and equipment. In addition, the right of use asset
is periodically reduced by impairment losses, if any, and adjusted
for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. The weighted average incremental borrowing rate
used to measure the lease liability at initial application was
4.9%.
The lease liability is measured at amortised cost using the
effective interest method. It is re-measured when there is a change
in future lease payments arising from a change in an index or rate,
or if the Group changes its assessment of whether it will exercise
a purchase, extension or termination option.
The Group presents right of use assets in property, plant and
equipment and leased liabilities in lease liabilities in the
Consolidated balance sheet.
The Group has applied the recognition exemption of low value
leases. For these leases, the lease payments are charged to the
income statement on a straight-line basis over the term of the
lease.
Adopting this standard using the fully retrospective approach
resulted in a GBP0.7m credit to Operating profit for the year ended
31 March 2019 (2018: GBP0.7m credit to Operating profit).
IFRS 9 Financial instruments
IFRS 9 sets out requirements for recognising and measuring
financial assets, financial liabilities and some contracts to buy
or sell non-financial items. This standard replaces IAS 39
Financial Instruments: Recognition and Measurement. IFRS 9 is
effective for annual periods beginning on or after 1 January 2018
and simplifies the classification of financial assets for
measurement purposes. Comparative information has not been restated
and continues to be reported under IAS 39.
The Group has applied IFRS 9 from 1 April 2018 with the
measurement of financial assets, and in particular the provision
for trade receivables, being considered. There has been no impact
on the Consolidated income statement or Consolidated balance sheet
following the adoption of IFRS 9.
Accounting policy for financial instruments
IFRS 9 eliminates the previous IAS 39 category for financial
assets of loans and receivables. Under IFRS 9, on initial
recognition, a financial asset is classified as measured at:
amortised cost, fair value through profit or loss or fair value
though other comprehensive income.
A financial asset is measured at amortised cost if it meets both
of the following conditions: it is held within a business model
whose objective is to hold assets to collect contractual cash
flows; and its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and interest on
the principal amount outstanding.
Under IFRS 9, trade receivables, without a significant financing
component, are classified and held at amortised cost, being
initially measured at the transaction price and subsequently
measured at amortised cost less any impairment loss.
IFRS 9 introduces an 'expected credit loss' model ('ECL') for
recognising impairment of financial assets held at amortised cost.
The Group has elected to measure loss allowances for trade
receivables at an amount equal to lifetime ECLs. Credit losses are
measured as the present value of all cash shortfalls (i.e. the
difference between the cash flows due to the entity in accordance
with the contract and the cash flows that the Group expects to
receive).
The Group assumes that the credit risk on a financial asset has
increased significantly if it is more than 30 days past due. The
Group assesses whether a financial asset is in default on a case by
case basis when it becomes probable that the customer is unlikely
to pay its credit obligations. The gross carrying amount of a
financial asset is written off when the Group has no reasonable
expectations of recovering a financial asset in its entirety or a
portion thereof. For all customers, the Group individually makes an
assessment with respect to the timing and amount of write-off based
on whether there is a reasonable expectation of recovery. The Group
expects no significant recovery from the amount written off.
However, financial assets that are written off could still be
subject to enforcement activities in order to comply with the
Group's procedures for recovery of amounts due.
At each reporting date, the Group assesses whether financial
assets carried at amortised cost are credit-impaired. A financial
asset is 'credit-impaired' when one or more events that have a
detrimental impact on the estimated future cash flows of the
financial asset have occurred.
The adoption of IFRS 9 has not had a significant effect on the
Group's accounting policies related to financial liabilities.
Accounting policy for financial instruments in 2018
The Group classifies its financial assets in the categories of
loans and receivables and at fair value through profit or loss. The
classification depends on the purpose for which the financial
assets were acquired. Management determines the classification of
its financial assets at initial recognition. The Group assesses at
the end of each reporting period whether there is objective
evidence that a financial asset or group of financial assets is
impaired. A financial asset is impaired only if there is objective
evidence of impairment as a result of one or more events that
occurred after the initial recognition of the asset and that this
event has an impact on the estimated future cash flows of the
financial asset that can be reliably estimated. The amount of the
loss is measured as the difference between the asset's carrying
amount and the present value of estimated future cash flows
discounted at the financial asset's original effective interest
rate. The carrying amount of the asset is reduced and the amount of
the loss is recognised in the income statement. If, in a subsequent
period, the amount of the impairment loss decreased and the
decrease can be related objectively to an event occurring after the
impairment was recognised, the reversal of the previously
recognised impairment loss is credited to the income statement.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the balance sheet date which are
classified as non-current assets. The Group's loans and receivables
comprise trade and other receivables and cash and cash equivalents
in the Consolidated balance sheet.
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. A provision for
impairment of trade receivables is established when there is
objective evidence that the Group will not be able to collect all
amounts due according to the original terms of the receivables.
Trade and other payables are recognised initially at fair value
and subsequently measured at amortised cost using the effective
interest method. Trade payables are classified as current
liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the
reporting date.
Financial assets and liabilities are offset and the net amount
reported in the balance sheet when there is a legally enforceable
right to offset the recognised amounts and there is an intention to
settle on a net basis, or realise the asset and settle the
liability simultaneously.
Impact of adoption of IFRS 9, 15 and 16 on the financial
statements
The following statements summarise the impacts of adopting IFRS
16 on the Group's Consolidated statement of comprehensive income,
Consolidated balance sheet and its Consolidated statement of cash
flows as at and for the year ended 31 March 2019 and the
comparative year. The adoption of IFRS 9 and IFRS 15 have had no
material effect on the Group's Consolidated statement of
comprehensive income, Consolidated balance sheet and its
Consolidated statement of cash flows.
Impact on the Consolidated statement of comprehensive income
2019 2018
----------- --------------------- --------- -------------------- --------------------- ----------
Under As
previous IFRS 16 2019 previously IFRS 16 2018
policy adjustments Reported reported adjustments Restated
GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ----------- --------------------- --------- -------------------- --------------------- ----------
Revenue 355.1 - 355.1 330.1 - 330.1
Administrative
expenses (113.0) 0.7 (112.3) (109.5) 0.7 (108.8)
Share of profit
from joint
ventures 0.9 - 0.9 - - -
----------------- ----------- --------------------- --------- -------------------- --------------------- ----------
Operating profit 243.0 0.7 243.7 220.6 0.7 221.3
Finance costs (9.3) (0.9) (10.2) (9.8) (0.8) (10.6)
Profit on
disposal of
subsidiary,
net of tax 8.7 - 8.7 - - -
----------------- ----------- --------------------- --------- -------------------- --------------------- ----------
Profit before
taxation 242.4 (0.2) 242.2 210.8 (0.1) 210.7
Taxation (44.5) - (44.5) (39.5) (0.1) (39.6)
----------------- ----------- --------------------- --------- -------------------- --------------------- ----------
Profit for the
year 197.9 (0.2) 197.7 171.3 (0.2) 171.1
Other
comprehensive
income for
the year, net of
tax 0.1 - 0.1 0.2 - 0.2
----------------- ----------- --------------------- --------- -------------------- --------------------- ----------
Total
comprehensive
income for
the year
attributable to
equity
holders of the
parent 198.0 (0.2) 197.8 171.5 (0.2) 171.3
----------------- ----------- --------------------- --------- -------------------- --------------------- ----------
Basic earnings
per share
(pence) 21.02 (0.02) 21.00 17.76 (0.02) 17.74
Diluted earnings
per share
(pence) 20.96 (0.02) 20.94 17.70 (0.02) 17.68
----------------- ----------- --------------------- --------- -------------------- --------------------- ----------
Impact on the Consolidated balance sheet
2019 2018
GBPm GBPm
---------------- -------------- ---------------------- ---------- --------------------- ---------------------------------
Under
previous IFRS 16 2019 As IFRS 16 2018
policy adjustments Reported previously adjustments Restated
GBPm GBPm GBPm reported GBPm GBPm
GBPm
--------------- -------------- ---------------------- ---------- --------------------- --------------------- ----------
Assets
Non-current
assets
Intangible
assets 317.5 - 317.5 329.8 - 329.8
Property, plant
and equipment 4.8 11.9 16.7 6.0 13.7 19.7
Deferred
taxation assets 5.9 0.3 6.2 5.1 0.2 5.3
Net investments
in joint
ventures 49.0 - 49.0 - - -
---------------- -------------- ---------------------- ---------- --------------------- --------------------- ----------
377.2 12.2 389.4 340.9 13.9 354.8
Current assets
Trade and other
receivables 56.7 (0.6) 56.1 55.5 (0.6) 54.9
Cash and cash
equivalents 5.9 - 5.9 4.3 - 4.3
---------------- -------------- ---------------------- ---------- --------------------- --------------------- ----------
62.6 (0.6) 62.0 59.8 (0.6) 59.2
---------------- -------------- ---------------------- ---------- --------------------- --------------------- ----------
Total assets 439.8 11.6 451.4 400.7 13.3 414.0
---------------- -------------- ---------------------- ---------- --------------------- --------------------- ----------
Equity and
liabilities
Equity
attributable to
equity holders
of the parent
Share capital 9.3 - 9.3 9.5 - 9.5
Retained
earnings 1,094.9 0.9 1,095.8 1,041.7 1.0 1,042.7
Capital
reorganisation
reserve (1,060.8) - (1,060.8) (1,060.8) - (1,060.8)
Own shares held (16.5) - (16.5) (16.9) - (16.9)
Capital
redemption
reserve 0.7 - 0.7 0.5 - 0.5
Other reserves 30.5 - 30.5 30.6 - 30.6
---------------- -------------- ---------------------- ---------- --------------------- --------------------- ----------
Total equity 58.1 0.9 59.0 4.6 1.0 5.6
---------------- -------------- ---------------------- ---------- --------------------- --------------------- ----------
Liabilities
Non-current
liabilities
Borrowings 310.3 - 310.3 340.8 - 340.8
Deferred
taxation
liabilities 0.5 - 0.5 0.7 - 0.7
Retirement - - - - - -
benefit
obligations
Provisions for
other
liabilities and
charges 1.1 (0.1) 1.0 1.1 (1.1) -
Lease
liabilities - 14.3 14.3 - 16.0 16.0
---------------- -------------- ---------------------- ---------- --------------------- --------------------- ----------
311.9 14.2 326.1 342.6 14.9 357.5
Current
liabilities
Trade and other
payables 47.1 (5.3) 41.8 33.3 (4.8) 28.5
Current income
tax liabilities 22.4 - 22.4 19.9 - 19.9
Lease
liabilities - 1.8 1.8 - 2.2 2.2
Provisions for
other
liabilities and
charges 0.3 - 0.3 0.3 - 0.3
---------------- -------------- ---------------------- ---------- --------------------- --------------------- ----------
69.8 (3.5) 66.3 53.5 (2.6) 50.9
---------------- -------------- ---------------------- ---------- --------------------- --------------------- ----------
Total
liabilities 381.7 10.7 392.4 396.1 12.3 408.4
---------------- -------------- ---------------------- ---------- --------------------- --------------------- ----------
Total equity and
liabilities 439.8 11.6 451.4 400.7 13.3 414.0
---------------- -------------- ---------------------- ---------- --------------------- --------------------- ----------
Impact on the Consolidated statement of cash flows
2019 2018
GBPm GBPm
----------------------- -------------- ---------------------- ---------------- --------------------- ----------------------------------------
Under
previous IFRS 16 2019 As IFRS 16 2018
policy adjustments Reported previously adjustments Restated
GBPm GBPm GBPm reported GBPm GBPm
GBPm
---------------------- -------------- ---------------------- ---------------- --------------------- --------------------- -----------------
Profit for the year 242.4 (0.2) 242.2 210.8 (0.1) 210.7
Adjustments for:
Depreciation 2.9 2.0 4.9 3.0 1.9 4.9
Amortisation 4.0 - 4.0 4.1 - 4.1
Share-based payments
charge
(excluding associated
NI) 4.7 - 4.7 3.3 - 3.3
Share of profit in
joint ventures (0.9) - (0.9) - - -
Profit on sale of fixed
assets 0.1 - 0.1 - - -
Difference between
pension charge
and cash contributions 0.3 - 0.3 - - -
Finance costs 9.3 0.9 10.2 9.8 0.8 10.6
Profit on disposal of
subsidiary (8.7) - (8.7) - - -
Changes in working
capital (excluding
the effects of
exchange differences
on consolidation):
Trade and other
receivables (1.5) - (1.5) (3.5) 0.6 (2.9)
Trade and other
payables 1.8 0.4 2.2 (1.5) (0.8) (2.3)
Provisions 1.0 - 1.0 0.1 (0.1) -
----------------------- -------------- ---------------------- ---------------- --------------------- --------------------- -----------------
Cash generated from
operations 255.4 3.1 258.5 226.1 2.3 228.4
Tax paid (42.2) - (42.2) (39.4) - (39.4)
----------------------- -------------- ---------------------- ---------------- --------------------- --------------------- -----------------
Net cash generated from
operating
activities 213.2 3.1 216.3 186.7 2.3 189.0
Cash flows from
investing activities
Purchases of intangible
assets
- financial systems (0.3) - (0.3) (0.3) - (0.3)
Purchases of intangible
assets
- other (0.3) - (0.3) (0.3) - (0.3)
Purchases of property,
plant and
equipment (1.7) - (1.7) (2.3) - (2.3)
----------------------- -------------- ---------------------- ---------------- --------------------- --------------------- -----------------
Payment for acquisition
of shares
in joint ventures (19.7) - (19.7) - - -
Payment for acquisition
of subsidiary,
net of cash acquired - - - (11.9) - (11.9)
----------------------- -------------- ---------------------- ---------------- --------------------- --------------------- -----------------
Net cash used in
investing activities (22.0) - (22.0) (14.8) - (14.8)
Cash flows from
financing activities
Dividends paid to
Company's
shareholders (57.6) - (57.6) (52.2) - (52.2)
Repayment of Syndicated
Term
Loan (343.0) - (343.0) (20.0) - (20.0)
Drawdown of Syndicated
revolving
credit facility 447.1 - 447.1 - - -
Repayment of Syndicated
revolving
credit facility (134.1) - (134.1) - - -
Payment of refinancing
fees (3.3) - (3.3) - - -
Payment of interest on
borrowings (6.6) - (6.6) (6.7) - (6.7)
Payment of lease
liabilities - (3.1) (3.1) - (2.3) (2.3)
Purchase of own shares
for cancellation (87.7) - (87.7) (96.2) - (96.2)
Purchase of own shares
for treasury (5.8) - (5.8) - - -
Payment of fees on
repurchase
of own shares (0.5) - (0.5) (0.5) - (0.5)
Proceeds from exercise
of share-based
payments 1.9 - 1.9 - - -
----------------------- -------------- ---------------------- ---------------- --------------------- --------------------- -----------------
Net cash used in
financing activities (189.6) (3.1) (192.7) (175.6) (2.3) (177.9)
----------------------- -------------- ---------------------- ---------------- --------------------- --------------------- -----------------
Net decrease in cash
and cash
equivalents 1.6 - 1.6 (3.7) - (3.7)
Cash and cash
equivalents at
beginning of year 4.3 - 4.3 8.0 - 8.0
Cash and cash
equivalents at
end of year 5.9 - 5.9 4.3 - 4.3
----------------------- -------------- ---------------------- ---------------- --------------------- --------------------- -----------------
3. Revenue
The Group's operations and main revenue streams are those
described in these annual financial statements. The Group's revenue
is derived from contracts with customers. The nature and effect of
initially applying IFRS 15 on the Group's financial statements is
disclosed in note 2.
In the following table the Group's revenue is disaggregated by
customer type. This level of disaggregation is consistent with that
used by the Operational Leadership Team (the 'OLT'), which is the
chief operating decision-maker, to assist in the analysis of the
Group's revenue-generating trends.
2019 2018
Revenue GBPm GBPm
------------------------ ----- -----
Retailer 293.0 268.7
Home Traders 10.2 11.4
Other 1.4 1.1
Trade 304.6 281.2
Consumer Services 28.0 29.8
Manufacturer and Agency 22.5 19.1
------------------------ ----- -----
Total revenue 355.1 330.1
------------------------ ----- -----
4. Operating profit
Operating profit is stated after charging:
(Restated)
2019 2018
Note GBPm GBPm
------------------------------------------------- ------ ----------
Staff costs (56.0) (54.5)
Contractor costs (0.4) (0.4)
Depreciation of property, plant and equipment 9 (4.9) (4.9)
Amortisation of intangible assets (4.0) (4.1)
Profit on sale of property, plant and equipment 0.1 -
------------------------------------------------ ------ ----------
5. Finance costs
(Restated)
2019 2018
GBPm GBPm
------------------------------------------- ----------
On bank loans and overdrafts 6.5 6.8
Amortisation of debt issue costs 2.8 3.0
Interest unwind on lease liabilities 0.9 0.8
------------------------------------- ---- ----------
Total 10.2 10.6
------------------------------------- ---- ----------
6. Disposal of subsidiary
On 31 December 2018, the Group disposed of a subsidiary
undertaking, Auto Trader Auto Stock Limited, as part of the
consideration for shares in Dealer Auction (Holdings) Limited, a
newly formed joint venture (note 11).
Auto Trader Auto Stock Limited was a subsidiary incorporated on
3 August 2018 by another Group subsidiary, Auto Trader Limited. The
trade and assets of Auto Trader Limited's 'Smart Buying' product
line, its retailer-to-retailer marketplace, were transferred to
Auto Trader Auto Stock Limited on 1 November 2018.
Revenue generated from the Smart Buying product in the
nine-month period to 31 December 2018 was GBP1.3m (year ended 31
March 2018: GBP2.0m). The disposal of the Smart Buying product line
does not represent a discontinued operation under IFRS 5 as the
product was not either a separate major line of business or
geographical area of operations.
A profit on disposal has been recognised in the Group's
Consolidated income statement:
GBPm
--------------------------------------- -------
Proceeds from disposals 28.4
Intangible assets - Goodwill (8.4)
Intangible assets - Licence agreement (11.3)
Profit on disposal of subsidiary 8.7
--------------------------------------- -------
7. Taxation
(Restated)
2019 2018
GBPm GBPm
--------------------------------------------------------- ----------
Current taxation
UK corporation taxation 44.9 40.7
Foreign taxation 0.2 0.2
Adjustments in respect of prior years (0.1) (0.9)
-------------------------------------------------- ----- ----------
Total current taxation 45.0 40.0
-------------------------------------------------- ----- ----------
Deferred taxation
Origination and reversal of temporary differences (0.6) (0.2)
Adjustments in respect of prior years 0.1 (0.2)
-------------------------------------------------- ----- ----------
Total deferred taxation (0.5) (0.4)
-------------------------------------------------- ----- ----------
Total taxation charge 44.5 39.6
-------------------------------------------------- ----- ----------
The taxation charge for the year is lower than (2018: the same
as) the effective rate of corporation tax in the UK of 19% (2018:
19%). The differences are explained below:
(Restated)
2019 2018
GBPm GBPm
----------------------------------------------------------------------------------------------------- ----------
Profit before taxation 242.2 210.7
--------------------------------------------------------------------------------------------- ------ ----------
Tax on profit on ordinary activities at the standard UK corporation tax rate of 19% (2018:
19%) 46.0 40.0
Expenses not deductible for taxation purposes 0.3 0.8
Income not taxable (1.7) -
Adjustments in respect of foreign tax rates (0.1) (0.1)
Adjustments in respect of prior years - (1.1)
--------------------------------------------------------------------------------------------- ------ ----------
Total taxation charge 44.5 39.6
--------------------------------------------------------------------------------------------- ------ ----------
Taxation on items taken directly to equity was a credit of
GBP0.6m (2018: GBP0.1m) relating to tax on share-based
payments.
The tax charge for the year is based on the standard rate of UK
corporation tax for the period of 19% (2018: 19%). Deferred income
taxes have been measured at the tax rate expected to be applicable
at the date the deferred income tax assets and liabilities are
realised. Management has performed an assessment, for all material
deferred income tax assets and liabilities, to determine the period
over which the deferred income tax assets and liabilities are
forecast to be realised, which has resulted in an average deferred
income tax rate of 17% being used to measure all deferred tax
balances as at 31 March 2019 (2018: 17%).
8. Earnings per share
Basic earnings per share is calculated using the weighted
average number of ordinary shares in issue during the year,
excluding those held by the Employee Share Option Trust ('ESOT'),
based on the profit for the year attributable to shareholders.
Weighted
average Total
number of earnings Pence per
ordinary GBPm share
shares
------------------------------------------------------------------------------------------------------------------- ---------------------- ----------------------
Year ended 31 March 2019
Basic EPS 941,506,424 197.7 21.00
Diluted EPS 944,254,998 197.7 20.94
Year ended 31 March 2019
Basic EPS 964,516,212 171.1 17.74
Diluted EPS 967,912,689 171.1 17.68
-------------------------------------------- --------------------------------------------------------------------- ---------------------- ----------------------
Following the application of IFRS 16, total earnings for the
year ended 31 March 2018 has been restated (refer note 2).
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:
Weighted average
Year ended 31 March 2019 number of shares
-------------------------------------------------------------- ------------------
Issued ordinary shares at 31 March 2018 952,161,444
Weighted effect of ordinary shares purchased for cancellation (6,001,643)
Weighted effect of ordinary shares held in treasury (4,009,411)
Weighted effect of shares held by the ESOT (643,966)
-------------------------------------------------------------- ------------------
Weighted average number of shares for basic EPS 941,506,424
-------------------------------------------------------------- ------------------
Dilutive impact of share options outstanding 2,748,574
Weighted average number of shares for diluted EPS 944,254,998
-------------------------------------------------------------- ------------------
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
potentially dilutive ordinary shares. The Group has potentially
dilutive ordinary shares arising from share options granted to
employees. Options are dilutive under the Sharesave scheme where
the exercise price together with the future IFRS 2 charge is less
than the average market price of the ordinary shares during the
year. Options under the Performance Share Plan, the Deferred Annual
Bonus and Single Incentive Plan and the Share Incentive Plan are
contingently issuable shares and are therefore only included within
the calculation of diluted EPS if the performance conditions are
satisfied.
The average market value of the Group's shares for the purposes
of calculating the dilutive effect of share-based incentives was
based on quoted market prices for the period during which the
share-based incentives were outstanding.
9. Property, plant and equipment
Land, buildings
and leasehold
improvements Office equipment Motor vehicles Total
GBPm GBPm GBPm GBPm
----------------------------------------------------------------------------------------------------------- ------------------ ------------------ -------
Cost
At 31 March 2017 (restated) 18.3 20.5 1.1 39.9
Additions - 2.3 - 2.3
Disposals - (6.0) - (6.0)
----------------------------------------------------------------------- ---------------------------------- ------------------ ------------------ -------
At 31 March 2018 (restated) 18.3 16.8 1.1 36.2
Additions 0.8 0.9 0.2 1.9
Disposals (1.3) (3.7) (0.1) (5.1)
----------------------------------------------------------------------- ---------------------------------- ------------------ ------------------ -------
At 31 March 2019 17.8 14.0 1.2 33.0
----------------------------------------------------------------------- ---------------------------------- ------------------ ------------------ -------
Accumulated depreciation
--------------------------------------------------------------------------------------------------------------------------------------------------- -------
At 31 March 2017 (restated) 1.4 16.2 - 17.6
Charge for the year 1.7 2.7 0.5 4.9
Disposals - (6.0) - (6.0)
----------------------------------------------------------------------- ---------------------------------- ------------------ ------------------ -------
At 31 March 2018 (restated) 3.1 12.9 0.5 16.5
Charge for the year 2.5 1.9 0.5 4.9
Disposals (1.3) (3.7) (0.1) (5.1)
----------------------------------------------------------------------- ---------------------------------- ------------------ ------------------ -------
At 31 March 2019 4.3 11.1 0.9 16.3
----------------------------------------------------------------------- ---------------------------------- ------------------ ------------------ -------
Net book value at 31 March 2019 13.5 2.9 0.3 16.7
Net book value at 31 March 2018 (restated) 15.2 3.9 0.6 19.7
Net book value at 31 March 2017 (restated) 16.9 4.3 1.1 22.3
----------------------------------------------------------------------- ---------------------------------- ------------------ ------------------ -------
Included within property, plant and equipment are GBP11.9m
(2018: GBP13.7m) of assets recognised as leases under IFRS 16.
Further details of these leases are disclosed in note 10.
The depreciation expense of GBP4.9m for the year to 31 March
2019 (2018 restated: GBP4.9m) has been recorded in administrative
expenses. During the year, GBP5.1m (2018: GBP6.0m) worth of
property, plant and equipment with GBPnil net book values were
disposed of.
10. Leases
The Group leases assets including land and buildings and motor
vehicles that are held within property, plant and equipment.
Information about leases for which the Group is a lessee is
presented below.
(Restated)
2019 2018
GBPm GBPm
-----------------------------------------------------------------
Net book value property, plant and equipment owned 4.8 6.0
Net book value right of use assets 11.9 13.7
--------------------------------------------------- ----- -----
16.7 19.7
--------------------------------------------------- ----- -----
Land,
buildings Office equipment Motor vehicles
and GBPm GBPm Total
leasehold GBPm
Net book value of right of improvements
use assets GBPm
---------------------------------- -------------------------------- ------------------- ------------------ -------
Balance at 1 April 2017 (restated) 14.4 0.1 1.1 15.6
---------------------------------- -------------------------------- ------------------- ------------------ -------
Depreciation charge (1.4) - (0.5) (1.9)
---------------------------------- -------------------------------- ------------------- ------------------ -------
Balance at 31 March 2018
(restated) 13.0 0.1 0.6 13.7
---------------------------------- -------------------------------- ------------------- ------------------ -------
Additions - - 0.2 0.2
Depreciation charge (1.5) - (0.5) (2.0)
---------------------------------- -------------------------------- ------------------- ------------------ -------
At 31 March 2019 11.5 0.1 0.3 11.9
---------------------------------- -------------------------------- ------------------- ------------------ -------
(Restated)
2019 2018
Lease liabilities in the balance sheet at 31 March GBPm GBPm
--------------------------------------------------- ----- ----------
Current 1.8 2.2
Non-current 14.3 16.0
--------------------------------------------------- ----- ----------
Total 16.1 18.2
--------------------------------------------------- ----- ----------
(Restated)
2019 2018
Amounts charged in the income statement GBPm GBPm
---------------------------------------------- ----- ----------
Depreciation charge of right-of-use assets 2.0 1.9
Interest on lease liabilities 0.9 0.8
---------------------------------------------- ----- ----------
Total amounts charged in the income statement 2.9 2.7
---------------------------------------------- ----- ----------
(Restated)
2019 2018
Cash outflow GBPm GBPm
------------------------------ ----- ----------
Total cash outflow for leases 3.1 2.3
------------------------------ ----- ----------
11. Net investments in joint ventures
Joint ventures are contractual arrangements over which the Group
exercises joint control with partners and
where the parties have rights to the net assets of the
arrangement, irrespective of the Group's
shareholding in the entity.
On 31 December 2018, the Group acquired 49% of the ordinary
share capital of Dealer Auction (Holdings)
Limited for consideration of GBP48.1m. Consideration consisted
of:
GBPm
----------------------------------------------------- --- ------
Cash consideration 19.7
100% of the share capital of Auto Trader Auto Stock 28.4
Limited
----------------------------------------------------- --- ------
Total consideration 48.1
---------------------------------------------------------- ------
Net investments in joint ventures at the reporting date include
the Group's equity investment in joint ventures and the Group's
share of the joint ventures' post acquisition net assets. The table
below reconciles the movement in the Group's net investment in
joint ventures in the year:
Net
Equity Groups share of net investments
investment assets in joint
in joint ventures
ventures
--------------------------
GBPm GBPm GBPm
-------------------------- ----------------------------------- -------------------------- -------------------------
Carrying value
At 1 April 2017 and 31 - - -
March 2018
Investment in joint
venture 48.1 - 48.1
Share of result for the
year taken to the income
statement - 0.9 0.9
-------------------------- ----------------------------------- -------------------------- -------------------------
As at 31 March 2019 48.1 0.9 49.0
-------------------------- ----------------------------------- -------------------------- -------------------------
Set out below is the summarised financial information for the
consolidated Dealer Auction ventures, including Dealer Auction
(Holdings) Limited, Dealer Auction Limited, Auto Trader Auto Stock
Limited and Dealer Auction Services Limited, which are accounted
for using the equity method:
GBPm
--------------------------- --- ------
Revenue 3.5
Profit for the year 1.8
--------------------------- --- ------
Total comprehensive income 1.8
-------------------------------- ------
The above information reflects the amounts presented in the
Financial Statements of the joint venture and not the Group's share
of those amounts. They have been amended for differences in
accounting policies between the Group and the joint venture.
12. Borrowings
2019 2018
Non-current GBPm GBPm
------------------------------------------------------------------ ----- -----
Syndicated RCF gross of unamortised debt issue costs 313.0 -
Unamortised debt issue costs on Syndicated RCF (2.7) -
Former Syndicated Term Loan gross of unamortised debt issue costs - 343.0
Unamortised debt issue costs on former Syndicated Term Loan - (2.2)
------------------------------------------------------------------ ----- -----
Total 310.3 340.8
------------------------------------------------------------------ ----- -----
The Syndicated RCF (2018: Syndicated Term Loan) is repayable as
follows:
2019 2018
GBPm GBPm
---------------------------------------------------------
One to two years - 343.0
Two to five years 313.0 -
------------------- ----------------- -----------------
Total 313.0 343.0
------------------- ----------------- -----------------
The carrying amounts of borrowings approximate their fair
values.
Syndicated revolving credit facility ('Syndicated RCF')
On 6 June 2018, the Company and a subsidiary undertaking, Auto
Trader Holding Limited, signed a new Syndicated revolving credit
facility (the 'Syndicated RCF') to replace the former Syndicated
Term Loan and former revolving credit facility. The Syndicated RCF,
which is unsecured, has total commitments of GBP400.0m and a
termination date of June 2023. The associated debt transaction
costs were GBP3.3m.
Individual tranches are drawn down, in sterling, for periods of
up to six months at LIBOR rates 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. There is no requirement to repay all or part of the
facility prior to the termination date.
The first utilisation was made on 8 June 2018 when GBP303.1m was
drawn.
The Syndicated revolving credit facility has financial covenants
linked to interest cover and the consolidated leverage ratio of the
Group. All financial covenants of the facility have been complied
with through the year.
Senior Facilities Agreement ('former Syndicated Term Loan' and
'Former revolving credit facility')
On 24 March 2015, the Company and a subsidiary undertaking, Auto
Trader Holding Limited, entered into a GBP550.0m Senior Facilities
Agreement. Interest on the former Syndicated Term Loan was charged
at LIBOR plus a margin of between 1.5% and 3.25% depending on the
consolidated leverage ratio of the Group. Under the agreement, the
lenders had also made available to the Group a GBP30.0m revolving
credit facility.
Cash drawings under the RCF incurred interest at LIBOR plus a
margin of between 1.25% and 3.0% depending on the consolidated
leverage of the Group. A commitment fee of 35% of the margin
applicable to the former revolving credit facility was payable
quarterly in arrears on the unutilised amounts of the former
revolving credit facility.
On 6 June 2018, the Group refinanced the Senior Facilities
Agreement which included the former Syndicated Term Loan and Former
revolving credit facility. On 8 June 2018 the Group repaid the full
GBP343.0m outstanding, together with accrued interest and other
costs payable under the terms of the Senior Facilities
Agreement.
The former Senior Facilities Agreement had financial covenants
linked to the consolidated leverage ratio of the Group. All
financial covenants of the facility have been complied with through
the years ended 31 March 2019 and 31 March 2018.
The exposure of the Group's borrowings (excluding debt issue
costs) to LIBOR rate changes and the contractual repricing dates at
the balance sheet date are as follows:
2019 2018
GBPm GBPm
--------------------------------
One month or less 313.0 343.0
------------------ ----- -----
Total 313.0 343.0
------------------ ----- -----
13. Share capital
2019 2018
----------------------------------------------------- -------------------- ------------ ---------------------------
Number Amount Number Amount
Share capital '000 GBPm '000 GBPm
----------------------------------------------------- -------------------- ------------ ------------------- ------
Allotted, called-up and fully paid ordinary shares of
1p each
At 1 April 952,161 9.5 978,971 9.8
Purchase and cancellation of own shares (18,963) (0.2) (26,810) (0.3)
----------------------------------------------------- -------------------- ------------ ------------------- ------
Total 933,198 9.3 952,161 9.5
----------------------------------------------------- -------------------- ------------ ------------------- ------
In the year ended 31 March 2017, the Company commenced a share
buyback programme. By resolutions passed at the 2018 AGM, the
Company was authorised to make market purchases of up to 94,802,631
of its ordinary shares, subject to minimum and maximum price
restrictions.
A total of 20,229,881 ordinary shares of GBP0.01 were purchased
in the year (2018: 26,809,702). The average price paid per share
was 461.5p (2018: 358.5p), with a total consideration paid
(inclusive of all costs) of GBP94.0m (2018: GBP96.7m). 1,266,000
shares were purchased to be held in treasury (2018: nil), with
18,963,881 being cancelled.
Included within shares in issue at 31 March 2019 are 565,555
(2018: 932,761) shares held by the ESOT and 3,996,041 (2018:
4,194,989) shares held in treasury, as detailed in note 14.
14. Own shares held
ESOT shares Treasury shares
reserve Total
Own shares held - GBPm GBPm GBPm GBPm
-------------------------------------- ------------------------------------- ------------------------- ------------
Own shares held as at 1 April 2017 and
31 March 2018 (1.4) (15.5) (16.9)
Own shares held as at 1 April 2018 (1.4) (15.5) (16.9)
Transfer of shares from ESOT 0.6 - 0.6
Repurchase of own shares for treasury - (5.8) (5.8)
Share-based incentives - 5.6 5.6
-------------------------------------- ------------------------------------- ------------------------- ------------
Own shares held as at 31 March 2019 (0.8) (15.7) (16.5)
-------------------------------------- ------------------------------------- ------------------------- ------------
ESOT Treasury shares
Own shares held - number shares Total
reserve
-------------------------------------- ------------------------------------- ------------------------- ------------
Own shares held as at 1 April 2017 948,924 4,203,277 5,152,201
Transfer of shares from ESOT (16,163) - (16,163)
Share-based incentives exercised in
the year - (8,288) (8,288)
-------------------------------------- ------------------------------------- ------------------------- ------------
Own shares held as at 31 March 2018 932,761 4,194,989 5,127,750
-------------------------------------- ------------------------------------- ------------------------- ------------
Own shares held as at 1 April 2018 932,761 4,194,989 5,127,750
Transfer of shares from ESOT (367,206) - (367,206)
Repurchase of own shares for treasury - 1,266,000 1,266,000
Share-based incentives exercised in
the year - (1,464,948) (1,464,948)
-------------------------------------- ------------------------------------- ------------------------- ------------
Own shares held as at 31 March 2019 565,555 3,996,041 4,561,596
-------------------------------------- ------------------------------------- ------------------------- ------------
15. Dividends
Dividends declared and paid by the Company were as follows:
2019 2018
--------------------------- --------------------------- ------ -----------------------------------
Pence per share Pence per share
GBPm GBPm
--------------------------- --------------------------- ------ --------------------------- ------
2017 final dividend paid - - 3.5 34.0
2018 interim dividend paid - - 1.9 18.2
2018 final dividend paid 4.0 37.9 - -
2019 interim dividend paid 2.1 19.7 - -
--------------------------- --------------------------- ------ --------------------------- ------
6.1 57.6 5.4 52.2
--------------------------- --------------------------- ------ --------------------------- ------
The proposed final dividend for the year ended 31 March 2019 of
4.6p per share, totalling GBP42.7m, is subject to approval by
shareholders at the Annual General Meeting ('AGM') and hence has
not been included as a liability in the financial statements.
The 2019 interim dividend paid on 25 January 2019 was GBP19.7m.
The 2018 final dividend paid on 28 September 2018 was GBP37.9m.
16. Cash generated from operations
(Restated)
2019 2018
GBPm GBPm
------------------------------------------------------------------ ----------
Profit before taxation 242.2 210.7
Adjustments for:
Depreciation 4.9 4.9
Amortisation 4.0 4.1
Share-based payments charge (excluding associated NI) 4.7 3.3
Share of profit from joint ventures (0.9) -
Profit on sale of property, plant and equipment 0.1 -
Difference between pension charge and cash contributions 0.3 -
Finance costs 10.2 10.6
Profit on disposal of subsidiary (8.7) -
Changes in working capital (excluding the effects of
exchange differences on consolidation):
Trade and other receivables (1.5) (2.9)
Trade and other payables 2.2 (2.3)
Provisions 1.0 -
----------------------------------------------------------- ----- ----------
Cash generated from operations 258.5 228.4
----------------------------------------------------------- ----- ----------
17. Contingent liabilities
The Group previously reported a contingent liability in respect
of the rate of VAT applicable to our insurance intermediary revenue
within Consumer Services, dating back from 2013 onwards. In July
2018 HMRC confirmed the Group's treatment of insurance intermediary
revenue for VAT purposes was appropriate. The Group did not incur
any liability and the enquiry in respect of this matter is now
closed.
18. Post balance sheet event
On 5 June 2019, the Group extended the term for GBP316.5m of the
Syndicated revolving credit facility for one year. The facility
will now terminate in two tranches:
- GBP316.5m will mature in June 2024; and
- GBP83.5m will mature at the original termination date of June 2023.
There is no change to the interest rate payable and there is no
requirement to settle all, or part, of the debt earlier than the
termination dates started.
Principal risks and uncertainties
Principal risk Impact
-------------------------- --------------------------------------------------------------
1. Economy, market A contraction in the number of new or used car transactions
and business environment could lead to reduced retailer profitability, leading
to a fall in advertising spend or a contraction
in the number of retailers. It could also lead to
a reduction in manufacturers' spend on digital display
advertising.
There continues to be concerns about the implications
surrounding the UK's departure from the EU. Economic
conditions, currency volatility and consumer confidence
levels could all be adversely affected, with the
impact likely to be greater in a no-deal scenario.
If the prices of cars increase, as tariffs are introduced,
and consumer confidence levels decrease, manufacturers'
appetite to supply cars to the UK market reduces,
this could have an adverse impact on our business.
========================== ==============================================================
2. Brand Our brand is one of our biggest assets. Our research
shows that we are the most trusted automotive classified
brand in the UK.
Failure to maintain and protect our brand, or negative
publicity that affects our reputation (for example,
a data breach), could diminish the confidence that
retailers, consumers and advertisers have in our
products and services, and result in a reduction
in audience and revenue.
========================== ==============================================================
3. Increased competition There are several online competitors in the automotive
classified market, and alternative routes for consumers
to sell cars, such as car buying services or part-exchange.
Competitors could develop superior consumer experiences
or retailer products that we are unable to replicate;
or change focus to try to expand their range of
stock and disrupt our market position.
This could impact our ability to grow revenue due
to the loss of audience or customers, or erosion
of our paid-for business model.
========================== ==============================================================
4. Failure to innovate: Failure to develop and execute new products or technologies,
disruptive technologies or to adapt to changing consumer behaviour towards
and changing consumer car buying, or ownership, could have an adverse
behaviours impact. For example, this could lead to missed opportunities
should we fail to be at the forefront of industry
developments.
========================== ==============================================================
5. IT systems and As a digital business, we are reliant on our IT
Cyber Security infrastructure to continue to operate.
Any significant downtime of our systems would result
in an interruption to the services we provide.
A significant data breach, whether as a result of
our own failures or a malicious cyber-attack, would
lead to a loss in confidence by 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.
========================== ==============================================================
6. Employees Our continued success requires us to attract, recruit,
motivate and retain our highly skilled workforce,
with a particular focus on specialist technological
and data skills. Failure to do so could result in
the loss of key talent.
========================== ==============================================================
7. Reliance on third We rely on third parties particularly with regard
parties to supply of data about vehicles and their financing,
so it is important that we manage relationships
with, and performance of, key suppliers. If these
suppliers were to suffer significant downtime or
fail, this could lead to a loss of revenue from
dealer customers and a loss of audience due to impaired
consumer experience.
========================== ==============================================================
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UGUWCQUPBGQA
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