Driving Change Together. Responsibly.

Chairman’s statementI hope and believe Auto Trader haslooked after its shareholders, notat the expense of stakeholders,but precisely by focusing on doingthe right thing for all stakeholders.Ed WilliamsChairmanWe have responded tothe pandemic and are wellpositioned for the futureOverviewIn this year’s annual statement, I wanted topose and attempt to answer two questions:1. How has Auto Trader responded to theCOVID-19 pandemic?2. Is it possible that, following our biggestever decline in revenues and profits,Auto Trader might be stronger than ever?In doing so I may neglect other topics which,under normal circumstances, I might havefocused on. In particular there is much Icould have said regarding our focus on ESGmatters, covered in detail elsewhere in thisAnnual Report.COVID-19 and our stakeholdersOn 1 April 2020, Auto Trader made use of thepowers explicitly granted to the Board throughour annual shareholder resolutions to issue newequity up to 5% of the total issued sharecapital of the Company. We raised 182.9mnet of all fees. I thank our shareholders whosupported this equity raise.We used the proceeds of the equity raise topay down the majority of our outstandingdebt. Thereby we eliminated for all practicalpurposes the possibility of breaching ourbanking covenants. We suspended ourdividend to conserve cash, as well as ourshare buyback programme, but also toprotect our shareholders from the perceptionof their benefiting at a time when otherstakeholders were suffering.6We provided our advertising services toall retailer customers for free in April, May,December and February and at a discountin June. We also extended payment terms inrelation to invoices falling due during certainperiods of lockdown. To the best of ourknowledge this level of support from a marketleading portal to its customers during theCOVID-19 crisis is unprecedented anywherein the world. Our ability to do this was madesignificantly easier as a result of removingthe risk of breaching our banking covenants.At the start of the crisis we furloughed around25% of our employees, as retailers essentiallyclosed their businesses. Towards the end ofMay and as soon as it seemed likely that thebusiness could survive even the worst scenarios,all of our people placed on furlough returnedto work and in September we voluntarilyrepaid all amounts to the Governmentclaimed under the furlough scheme.These have been challenging times forall our employees and continue to be so. Noneof our employees have to my knowledgesuffered serious medical problems as a resultof COVID-19, nor been infected with COVID-19through work. But inevitably, given the numberof deaths and the knock-on consequences toother healthcare, to mental health and to therestrictions imposed on us and our families,these have been challenging times. I wouldlike to thank all our employees.AUTO TRADER GROUP PLCAnnual Report and Financial Statements 2021I hope our employees feel that the decisionnot to charge our customers helped maketheir working life a bit easier. I know the manymessages of thanks from our customershave been greatly appreciated. I also hopethat the financial strength of our businesshas given comfort about job security whenso many have lost theirs or worry aboutthe prospect.Another stakeholder in our business is ourGovernment. Our business benefits fromso many things provided by the state andwhich we sometimes barely acknowledge.Education, healthcare, transportation andthe rule of law, that allows increasinglysophisticated and “virtual” business toflourish. All things that benefit Auto Trader.We appreciate the support offered. We feltit essential to return the furlough moneyin full at the very earliest prudent time aswell as paying our taxes when they wouldnormally fall due rather than take advantageof further deferrals.Auto Trader’s rate of taxation is directlyin line with the corporation tax rate of 19%.It is a source of pride to us that we make thiscontribution to our society; not a source ofembarrassment that our approach to tax is lesssophisticated than those of many companies.Like every company, we have many otherstakeholders. I hope they all feel fairlytreated and respected by Auto Trader.

STRATEGIC REPORTIt is our intention to reinstate our dividendwith our next dividend payable in September2021. The money we raised from shareholdersin April 2020, together with remaining cashgenerated during the last year, allows us tomove forward free of debt.Coming full circle, I hope and believe AutoTrader has looked after its shareholders, notat the expense of stakeholders, but preciselyby focusing on doing the right thing for allstakeholders.Auto Trader stronger than everAuto Trader is the place where the mostprospective car buyers come to view thelargest selection of vehicles for sale from thelargest number and widest range of sellers.We have ended the year with more carretailers advertising with Auto Trader thanprior to the pandemic. Our audience ofprospective car buyers is at a record level.At times, as we moved out of the lockdowns,we experienced audience levels and activityon the site which far exceeded anything inour history. I believe that the bold decisionto offer our advertising services for free toour retailer customers has been instrumentalin retaining them, in making it attractiveto them to advertise as many vehicles aspossible and therefore for us to deliverthe widest choice to consumers.Many of our competitors responded to ourlead by reducing their charges, but nonedid so both as completely as we did andin advance of our public statements. Ascompetitors reduced marketing spend, ouraudience share grew more rapidly than everbefore, reflecting the underlying loyaltyto Auto Trader amongst the British public.The pandemic has clearly benefited manyonline businesses, especially in the retail andentertainment sectors. As an advertisingplatform for our customers, with many of ourcustomers closed for business for long periodsof time, it would be wrong to assume that thepandemic has in any sense directly “beengood for business”. It is clear though, to ourcustomers, just how important the internetnow is to them generally and specificallythe important role Auto Trader plays.For a number of years Auto Trader hasbelieved we would see a gradual migrationonline of more and more aspects of carbuying, not just the activity of finding thenext car. Our strategy had been to build andto acquire, through modest acquisitions ofbusinesses with capabilities we wanted,a series of building blocks. These buildingblocks aim to be, virtually from the start,profitable additions to the Auto Traderbusiness. But the end point of our journeyused to seem like it might be many years off.In part this was because consumerbehaviour usually takes time to change,but more because some in the automotiveindustry have been relatively slow toembrace change.The last year has altered things, forever.During the pandemic, we have redeployedour resources to accelerate our plans formoving the car buying process online.This has included the launch of our “clickand collect/home delivery” search functionallowing our retailer customers to tradeeven during the second and third lockdownswhen their “non-essential retail” premiseshave been closed. We have launched ourGuaranteed Part-Exchange product andmade a number of advances in the complexand regulated environment for car finance.We have more in the pipeline.Our strategic direction is unchanged.Our approach has changed from “buildingblocks” to the early provision of an integratedsolution for our customers who want tocome on this journey. Our pace of executionhas accelerated.In a year in which we have delivered our worstfinancial performance ever: Our core business of online classifiedadvertising is at the strongest levels in ourhistory across a wide range of metrics. We are positioned to pursue changesin how cars are bought and sold. Theopportunity arising could exceed theopportunities presented to Auto Traderas a result of the move from print to digitalduring the early years of this century.Our people, their talents, energy andcommitment have been key to the successof our traditional business. They will be vitalto our success in this new world. After aroundtwo decades of reductions in the total sizeof workforce, we are now seeing a modestgrowth in numbers. I hope that, particularlyin this environment, Auto Trader will offer allour increasingly diverse people outstandingopportunities to develop their working lives.And to change the mix between work andpersonal lives away from the currentconstraints, forward to new ways of working.Concluding remarksI have focused on stakeholders, butneglected one specific group. That groupis the one with the responsibility for lookingafter and weighing the interests of allstakeholders: our Board, and in particularour Executive Directors.Nathan Coe became CEO and Jamie WarnerCFO on 1 March 2020. The responsibilitiesof Catherine Faiers, our COO, significantlyexpanded on that date.I believe they have been responsible forcontributing more to the wellbeing of everysingle stakeholder group in our business, intheir first year, than any executive team in ourmore than 40-year history. I believe there isa high chance that their time as leaders willmark another reinventing of Auto Trader aswe lead the transformation of how cars arebought and sold.I know they would want me to share thatpraise far more widely within the business.That includes calling out our Non-ExecutiveDirectors, for their speed in recognising thenature of the challenge COVID-19 created,for their strong support for what, on paper,were difficult decisions, for their insights andshared experiences, and for their support,good spirits and enthusiasm even in thebleakest times.In recent years there has been much talk aboutcompanies focusing on all their stakeholders.The language of that debate is frequentlyframed in terms of considering conflictingpriorities and balancing different interests.At no time in the last year has it felt to myselfor my colleagues that our decision-makingwas about resolving conflicts or seekingbalance. Our best answer to the question“what should we do?” has been to answer thequestion “what is best for our stakeholders?”.Ed WilliamsChairman10 June 2021In the meantime I would like to expresspersonal thanks to all our employees overthe last year and particularly to note manypersonal experiences of interacting withindividuals and smaller groups at a time when Ihave not had the normal face-to-face contact.AUTO TRADER GROUP PLCAnnual Report and Financial Statements 20217

Chief Executive Officer’s statementSupportingstakeholdershas never beenmore importantNathan CoeChief Executive OfficerOverviewThe past year has been like no other. Thecoronavirus pandemic (‘COVID-19’) has hada significant impact on all aspects of our livesand posed unforeseen challenges for allbusinesses, including our own. The automotiveindustry has had to face these challenges at atime when underlying pressures already existed,whether due to Brexit, increased regulationor the shift away from internal combustionpowered vehicles. The way our customers dobusiness is changing and following COVID-19is set to change even quicker.Throughout this year, we have consistentlylooked to support our stakeholders. Early in thecrisis we looked to move quickly and decisively,which we believe has served us well. We havesupported our employees and focused ontheir mental and physical wellbeing; we haveadapted our marketplace to help consumersshop safely for their next vehicle; and we havesupported the industry with offers anddiscounts at a time when our customersneeded us. We have done all of this whilemaking continued investments in our priorityareas of putting more data in the handsof our customers, part-exchange andsupporting a move towards selling online.The support we provided, most notably toour customers, has had a material impact onour results for this financial year. Throughoutthe crisis we focused on three priorities: Protecting our people. Protecting our standing with customers. Ensuring we exit the crisis quickly and in astronger position than before the pandemic.We believe we have delivered on all threeof these priorities. As the pandemic passesand restrictions are eased, we are in the bestpossible position to prosper and we arecommitted to taking a leadership positionto bring the benefits of new technologiesto car retailers and the car buying public.Summary of operating performanceCOVID-19 has had a significant impact over thelast year. To support our customers throughthe various periods of national lockdown,8we offered four months of free advertisingand one month with a 25% discount. Thiswas the primary contributing factor to ourrevenue decline of 29% to 262.8m which,due to our high operating leverage, resultedin an Operating profit decline of 38% to 161.2m. Despite this we feel confident in ourstrengthened audience position, our strongvolumes of both stock and retailers at yearend, and our opportunity to bring more ofthe car buying journey online.Our purpose and strategic focusOur purpose is encapsulated by ‘Drivingchange together. Responsibly’. We aimto be at the forefront of helping the wholeautomotive industry to change. We will lookto help retailers to digitise their businesses,move more of the car buying process onlineand assist consumers when making moreenvironmentally friendly vehicle choices.We strive to be the best place to find, buyand sell a car in the UK on a platform thatenables data-driven digital retailing forour customers. We continue to think aboutour strategy in terms of three commercialgrowth horizons: core; adjacent; and future,which sits alongside our make a differencestrategy. We have made good progressacross all areas through the year.The COVID-19 pandemic has changedconsumers’ buying behaviour with moretransactions being done remotely awayfrom the retailer’s physical showroom.Whilst we believe that the physicalshowroom will continue to play a role in thecar buying process for some time to come,many of the processes that currently takeplace offline will be digitised, enabling moreof the car buying journey to be done online.This is our key strategic focus and alongsidecontinued growth in our core forms thebasis of our growth aspirations.Over the past year, we have developedand launched a Guaranteed Part-Exchangeproduct that provides consumers with aconvenient way to dispose of their vehicle,and digitises a core component of the buyingjourney. We also acquired AutoConvert,AUTO TRADER GROUP PLCAnnual Report and Financial Statements 2021a finance, insurance and compliance softwareplatform. The business’s core functionalitywill underpin our future finance producton Auto Trader, which will enable financeagreements to be completed online. Finally,we are developing a way for consumers toreserve a car with a retailer on Auto Trader.Fundamental to our core growth horizon is ourability to innovate and deliver continuousproduct development and user improvementsfor consumers, retailers and manufacturers.We adapted our marketplace to further helpretailers advertise their stock during thepandemic. We increased the size of retaileradverts in search listings, added COVID-19secure flags for retailers who adoptedsafety measures and provided detail ofhome delivery and collection options.In April 2020, we successfully executed ourannual pricing event which included anupgraded Performance Dashboard, ourentry level pricing tool Retail Check and a newMarket Insight tool. These tools give retailersaccess to up-to-date market intelligenceso they can identify key market trends,understand how they impact performance,and inform business decisions. Embeddingour data into the industry has long been afocus area, and with the recent acquisitionof KeeResources and increased levels ofonline selling, there remains significantfuture opportunity.Following year end, we have evolved ouradvertising package structure and changedthe sort order for listings. Where our packagespreviously promoted adverts based on thedevice a consumer was searching on, wehave created a consistent cross platformexperience with adverts appearing in searchbased on a relevancy algorithm, which takespackage level into account. As part of thischange, we have discontinued our Basicpackage, introduced a higher level andre-branded our top three levels Enhanced,Super and Ultra. Towards the end of theyear, we also launched a new product,Market Extension, that allows customersto sell vehicles outside their local area.

STRATEGIC REPORTThis product works for both centrally heldvehicles and vehicles on physical forecourtswhere the retailer is prepared to either deliverto the buyer or move the vehicle to a closerlocation. Recently we have seen an increasein the average distance car buyers are willingto consider purchasing their next vehicle,making Market Extension a key product forthe increasing number of retailers lookingto sell online.Within our adjacent horizon we continue tomake progress with our new car advertisingproduct. Network effects are beginning totake hold and we have grown both the numberof retailers advertising their new car stockwith us and the level of consumer engagementsignificantly over the past 12 months.Maintaining our competitive positionOur audience performance has strengthenedover the year, as consumers have lookedto do more of the car buying journey onlinewhilst forecourts have been closed. Afteran initial decline in visits through April andMay 2020, audience rebounded strongly.Over the financial year the number of visitsto our platforms increased by 15% to 58.3mon average per month (2020: 50.8m), andengagement, which we measure by totalminutes spent on site, increased by 14% to561m on average per month (2020: 492m).ESGWe do not see ESG as a box ticking exerciseor something tacked onto the side of ourbusiness. It is implicit in our purpose of‘Driving change together. Responsibly’. Tooversee these efforts we have established aCorporate Responsibility Board Committeeand a collection of KPIs and targets. We areon a path to setting a carbon net zero targetfor our business and have signed up to the1.5C Science Based Targets initiative. Wethink about our environmental commitmentsin three ways: the impact we can have onconsumers to make more environmentallyfriendly vehicle choices; the impact we canhave on the industry to support the transitionto electric vehicles; and the impact our ownbusiness has on the environment.After five years of concerted effort, diversityand inclusion has become an important partof our culture. I am proud to report thatdespite the turbulent nature of the past year,we have launched new talent and leadershipprogrammes with a significant focus onachieving diverse representation in theseprogrammes. We published our ethnicity paygap for the first time this year, and much likeour gender pay gap, it has highlighted boththe success of our efforts and the fact thatthere remains more to do.Our peopleI am both proud and incredibly grateful forthe resilience all our people have shown inwhat has been a very tough year. Not onlyhave they adapted seamlessly to workingfrom home, but their collective efforts havemeant we are in a stronger position todaythan at any point in recent history. It’s veryencouraging to report that 93% of ouremployees are proud to work at Auto Trader,up 4% from a year before.Finally, I want to thank our people, ourBoard, our customer partners and our widerstakeholders for continuing to trust us todo the right thing. As Ed highlighted in hisstatement, we believe that doing the rightthing does and will ultimately deliver betteroutcomes for all stakeholders. We remainconfident that with a vaccine programmenow firmly in place the industry can moveforwards and capitalise on the opportunitieswe now have to enable cars to be boughtand sold online.OutlookAuto Trader has started the new financialyear in a strong position as a result of theactions taken in the last year. This is reflectedin our recent trading performance, a strongpipeline of product innovations andimproved relationships with customers.In the longer term, we will be beneficiariesof the major changes underway in the carretailing market, where more of the buyingjourney is moving online.Despite unusually strong demand and tightsupply, COVID-19 is currently having littleimpact on the financial performa

insurance and compliance software platform with integrated customer relationship management; which will help us deliver future finance products on Auto Trader. Guaranteed Part-Exchange We launched our Guaranteed Part-Exchange ('GPX') and Instant Offer products. GPX enables the consumer to get a guaranteed price for their part-exchange,