Carsales com : Appendix 4D and FY22 Half Year Report

For personal use only

Appendix 4D carsales.com Ltd

ABN 91 074 444 018

Results for Announcement to the Market

Half-year ended 31 December 2021

(Previous corresponding period: Half-year ended 31 December 2020)

1. The Directors believe the presentation of adjusted net profit provides the best measure to assess the performance of the Group. Adjusted net profit excludes COVID-19 support rebate provided to dealers, is post non-controlling interests and excludes certain non-recurring or non-cash items. Refer to Note 3(b) of the half-year report for a reconciliation to reported net profit under IFRS measures.
2. Net tangible assets exclude all right-of-use assets leased by the Group.
3. Net tangible assets at 30 June 2021 was restated for a small reallocation of assets between intangible assets and property, plant and equipment.

Other information required by Listing Rule 4.2A

Other information requiring disclosure to comply with Listing Rule 4.2A is contained in the 31 December 2021 Financial Report.

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C O N T E N T S

Directors' Report

Auditor's Independence Declaration

Consolidated Financial Statements

Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Basis of preparation

Corporate Information

Key performance measures

1. Segment information
2. Revenue from contracts with customers
3. Earnings per share

Financing and risk management

1. Borrowings
2. Financial assets and liabilities and fair value measurement

Equity

1. Contributed equity
2. Dividends

Group Structure

1. Business combination
2. Interests in other entities

Items not recognised

10. Events occurring after the reporting period

Directors' Declaration

Independent auditor's review report to the members of carsales.com Ltd

Corporate Directory

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Lodged with the ASX under Listing Rule 4.2A.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2021 and any public announcements made by carsales.com Ltd during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

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Your Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of carsales.com Ltd and the entities it controlled at the end of, or during, the half-year ended 31 December 2021.

Directors

The following persons were Directors of carsales.com Ltd during the half-year ended 31 December 2021 and up to the date of this report:

Pat O'Sullivan (Non-Executive Chair)

Cameron McIntyre (Managing Director

and Chief Executive Officer)

Wal Pisciotta OAM (Non-Executive Director)

Kim Anderson (Non-Executive Director)

Edwina Gilbert (Non-Executive Director)

Kee Wong (Non-Executive Director)

David Wiadrowski (Non-Executive Director)

Steve Kloss (Alternate Non-Executive Director)

Use of non-IFRS measures

The Directors believe the inclusion of non-International Financial Reporting Standards (IFRS) measures (in particular, the presentation of `Adjusted Revenue', `Adjusted EBITDA' and `Adjusted NPAT') included in this report are relevant and useful in measuring the financial performance of the Group.

The key operational matters for the Group were:

Online Advertising

• Dealer - Adjusted Revenue growth of 1%, reflecting a resilient Dealer result given lockdowns in NSW and VIC and strong H1 FY21 comparative result.
• Private - Revenue growth of 38% which was an outstanding result, reflecting strong increases in private ad volume, private ad yield and Instant Offer.
• Media - Revenue was up 11%, reflecting a reinvigorated go-to-market strategy and improved advertising conditions, supported by new car sales growth.
• Adjusted EBITDA growth of 4% (11% excluding wage subsidies) was supported by the good revenue performance detailed above and continued diligent cost control.

Data, Research & Services

• Adjusted Revenue was up 1% on pcp which was a resilient result given the impact of prolonged lockdowns and continued inventory challenges for dealers, which puts pressure on the ability to increase the penetration of our key dealer services products. This translated into Adjusted EBITDA decline of 2% on pcp.

carsales' Investments

• Adjusted Revenue was up 120% on pcp which largely reflected the inclusion of the acquisition of Tyreconnect, a wholesale tyre business, for the first time this half-year. Adjusted EBITDA was down $1.3m on pcp, reflecting investment in Placie and wage subsidies
  in pcp.

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Operational and Financial Review

The Group delivered an excellent result despite the challenges of COVID-19, highlighting the resilience and diversification of the Group's business model.

The Group reported total operating revenue from continuing operations of $241.9m up 22% on the prior corresponding period ("pcp") in FY21. Adjusted Revenue (excluding the COVID-19 support rebate provided to dealers) was up 16% on pcp.

Earnings before interest, tax, depreciation and amortisation ("EBITDA") was $125.3m up 10% on pcp, whilst Adjusted EBITDA (excluding one-off,non-cash and abnormal items) was up 1% on pcp. Excluding the impact of wage subsidies received last year, Adjusted EBITDA was up 7%. This solid earnings result reflects a good revenue performance and a continued focus on cost management. This translated to strong growth in Adjusted net profit after tax ("NPAT") of 20% which was supported by the inclusion of Trader Interactive's profit for the first time this half-year. Reported NPAT was also up 22% on pcp.

Asia

• Revenue growth of 16% reflects excellent performance from our Encar business in South Korea. The key growth drivers have been the Guarantee Inspection Service and Dealer Direct products. This translated into EBITDA growth of 4%, which reflects continued investment in
  Dealer Direct brand advertising.

Americas

• Chile and Mexico - Revenue was down 11% on pcp which reflects the challenges associated with COVID-19 in the region and the negative impact on dealer inventory.
• US and Brazil - Our 49% stake in Trader Interactive and 30% stake in Webmotors (Brazil) are equity accounted and not included in EBITDA. Trader Interactive delivered an excellent result with revenue up 13% and EBITDA up 20% for the last six months on pcp. Webmotors also demonstrated strong growth with revenue growth of 18% and EBITDA growth of 17%.

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DIRECTORS' REPORT continued

Outlook

Excluding recent acquisitions

We expect to deliver solid growth in Group Adjusted revenue, Adjusted EBITDA and Adjusted NPAT in FY22.

Including recent acquisitions

We expect to deliver strong growth in Group Adjusted revenue, solid growth in Group Adjusted EBITDA and strong growth in Group Adjusted NPAT in FY22.

carsales Domestic Observations

• Dealer
• • Underlying market conditions are solid and lead volumes have recovered significantly since the lockdown period in the first half of FY22. We expect performance in the second half of FY22 to improve considerably on the first half of FY22 supported by improved volumes, higher yield and growth
    in key products
• Private
• • Anticipate good revenue growth in H2 supported by continued strength in private ad volume, private ad yield and Instant Offer. Also planning some investment in marketing to support future Instant Offer growth
• Media and new car market
• • The new car advertising market continues to demonstrate signs of improvement, providing confidence that we can deliver good growth on pcp in the second half
• carsales' investments
• • Expecting higher revenue and EBITDA performance in the second half compared with the first half, primarily due to improved volumes and profitability in the Tyres business

carsales International Observations

• Korea
• • We expect strong growth in revenue and good growth in EBITDA in FY22
• Brazil
• • We expect strong growth in revenue and EBITDA in FY22
• United States
• • We expect good growth in revenue and strong growth in Adjusted EBITDA in FY22

Matters subsequent to the end of reporting period

There are no matters or circumstances which have occurred subsequent to period end that have significantly affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group or economic entity in subsequent financial years.

Dividends - carsales.com Ltd

Dividends paid to members during the half-year were as follows:

On 13 February 2022, the Directors declared an interim dividend of 25.5 cents fully franked. The dividend will be paid on 19 April 2022.

Auditor's Independence Declaration

A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 3.

Rounding of amounts

The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to the 'rounding off'

of amounts in the Directors' Report. Amounts in the Directors' Report have been rounded off in accordance with that Class Order to the nearest thousand dollars or, in certain cases, to the nearest dollar.

Declaration

This report is made in accordance with a resolution of Directors.

Cameron McIntyre

Managing Director and CEO

Melbourne

13 February 2022