Appendix 4E
carsales.com Ltd
ABN 91 074 444 018
Results for Announcement to the Market
Full-year ended 30 June 2023
(Previous corresponding period: Full-year ended 30 June 2022)
Revenue from continuing operations
Profit for the year after tax
Net profit for the period attributable to members
Adjusted net profit1 for the period attributable to members
Up
Up
Up
Up
53%
302%
301%
43%
to
to
to
to
A$’000
781,236
648,317
645,617
278,224
Dividends/Distribution
2022 Final Dividend paid
2023 Interim Dividend paid
2023 Final Dividend declared
2023 Final Dividend dates
Record date for determining entitlements to the dividends
Latest date for dividend reinvestment plan participation
Dividend payable
Net tangible assets backing per ordinary share2
Amount per
security
24.50 cents
28.50 cents
32.50 cents
Franked
amount per
security
24.50 cents
28.50 cents
16.25 cents
18 September 2023
19 September 2023
16 October 2023
30 June 2023
(295.9 cents)
30 June 2022
125.0 cents
For growth vs the previous corresponding period on a constant currency basis, please refer to the Full Year Results
Presentation for the year ended 30 June 2023 at https://shareholder.carsales.com.au/
1. The Directors believe the presentation of adjusted net profit provides a useful measure to assess the performance of the Group. Adjusted net profit excludes certain non-recurring
or non-cash items. Refer to Note 4(b) of the 30 June 2023 Financial Report
2. Net tangible assets exclude all right-of-use assets leased by the Group.
Other information required by Listing Rule 4.3A
Other information requiring disclosure to comply with Listing Rule 4.3A is contained in the 30 June 2023 Financial Report.
Annual Report
2023
Contents
Overview
Our Operational Highlights
Our Strategy
The Evolution of our Strategy
Chair and CEO Letter
What we do
Our Markets
Our Brand Portfolio
Our Marketplace Ecosystem
Our Growth Engine
FY23 Key Highlights
People and Culture
Governance
Directors’ Report
Corporate Governance
Sustainability Report
Taskforce on Climate-Related Financial
Disclosures (TCFD) Report 2023
Our Board
Our People and Culture Chair’s Message
Remuneration Report
Other Directors’ Report Disclosures
Auditor’s Independence Declaration
Financial Report
Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information
Shareholder Information
Corporate Directory
02
04
05
06
10
10
11
12
13
14
18
28
32
32
34
54
56
58
78
81
82
154
155
160
162
carsales acknowledges the
Traditional Custodians of Country
throughout Australia and their
connections to land, sea and
community. We pay our respect
to their Elders past and present
and extend that respect to all
Aboriginal and Torres Strait
Islander peoples today.
Globally, carsales recognises
the significance of indigenous
peoples’ communities, consistent
with our efforts to build a culture
that embraces diversity, equality
and inclusion.
carsales Annual Report 2023 INTRODUCTION AND
CHAIR/CEO LETTER
carsales.com Ltd (ASX:CAR) is one of the largest digital marketplace business in the world. In Australia it has market-
leading positions in automotive, motorcycle, caravan, marine, truck and equipment industries. The carsales network
extends across the United States, South Korea and Latin America, employing more than 1,800 people, developing world
class technology and advertising solutions that drive its businesses.
In the US, Trader Interactive is a leading integrated platform of non-automotive marketplaces across the RV,
powersports, truck and equipment industries. Encar.com in South Korea is the leading automotive digital marketplace
and carsales’ Latin American businesses are the leading automotive digital marketplaces in Brazil and Chile.
01
carsales Annual Report 2023WHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Our Operational Highlights
42 million
18 billion
Unique audience per month
Page views
22 million
Dealer leads delivered
7x
In Digital Retailing
car de-listings
Great Place
to Work®
Awarded for the sixth
consecutive year
410,000
Cars inspected by Encar
02
carsales Annual Report 2023
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
1.2b
48,000
2.2m
Total sessions globally
Subscribed dealers globally
Vehicles online globally
48% increase
Reconciliation
Carbon neutral
In instant offer transactions
in Australia
Our Reconciliation Action
Plan was endorsed by
Reconciliation Australia
in our Australian business
operations
carsales Annual Report 2023
03
Our Strategy
Our Vision
To create #1 digital marketplaces for vehicles around the world
Our Purpose
Make Buying and Selling a Great Experience
Our Strategic Pillars
Our
Customers
Our
People
Deliver seamless,
simple and personalised
digital retail experiences
Build a world-class
culture to attract and
retain the best talent
Sustainable
Growth
Generate consistent
long-term growth
and nurture a business
which future
generations will
be proud of
Future
Horizons
Foster innovation
to create new
ideas, products
and businesses
04
carsales Annual Report 2023 INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
The Evolution of Our Strategy
1997
carsales domain name
registered
2005
carsales acquires
PBL Media’s websites
2006
carsales hits
100,000
cars online
2009
carsales lists
on the ASX
2010
carsales hits
200,000
cars online
2015
Launched in
Australia, digital
trade-in product
Instant Offer
2014
Acquired 49.9% stake
in Encar (South Korea)
2013
Launched
ecommerce platform
tyresales.com.au
2013
Acquired 30% stake
in webmotors (Brazil)
2016
Launched vehicle
inspection service
RedBook Inspect
2016
Acquired controlling
stake in chileautos (Chile)
and soloautos (Mexico)
2017
Acquired remaining
stake in Encar
2021
Acquired 49%
stake in non-auto
marketplace
group Trader
Interactive (US)
2023
Acquired further
40% of webmotors
2022
Acquired remaining
stake in Trader
Interactive
2021
Launched buy
online service Select,
in Australia
2021
Acquired digital tyre
wholesaler tyreconnect
carsales Annual Report 2023
05
Chair and CEO Letter
Pat O’Sullivan
Non-Executive Chair
Cameron McIntyre
Managing Director and CEO
It has been a great year for the business and we are incredibly proud of what our
teams at carsales have accomplished. We have delivered excellent financial results,
made good progress executing our strategy and completed transformational
acquisitions. We acquired controlling stakes in Trader Interactive and webmotors,
which is a key milestone for the business as more than 50% of our revenue now
comes from outside of Australia.
We have built an incredible Australian business over the
last 25 years and it is now complemented by an enviable
portfolio of international assets. We see substantial
growth opportunities in these large addressable markets
over many years. This growth will continue to be powered
by our passion for delivering the most frictionless buying
and selling experience for our customers around the
world. We remain constantly alert to competitors and
sharply focused on execution heading into FY24. Our goal
is to solidify and extend our market leadership positions
in all our markets.
Industry Context
Industry conditions have started to normalise after a long
period of volatility due to supply chain constraints and
COVID-19-related conditions. As a result, automotive and
non-automotive vehicle inventory levels have increased
over the last 12 months, albeit they remain below
pre-pandemic levels. Both new and used car prices have
risen materially since the pandemic, but have stabilised
since the second quarter of 2022. Despite these changes,
as well as the impact of inflation and rising interest rates,
we have continued to see robust levels of demand in all
our key markets, reflecting the resilience of our business
models through economic cycles.
Acquisitions and Capital Raising
It has been another very active year from an acquisition
perspective. In September, we acquired the remaining 51%
of Trader Interactive (now owning 100%) and have seen the
business prosper since then. In March we were incredibly
excited to acquire a further 40% stake in webmotors, the
leading Brazilian automotive digital marketplace, to
become the 70% majority owner. Santander bank retains
a 30% equity stake and will continue their valuable
contractual commercial relationship with the business.
webmotors presents a compelling growth opportunity for
carsales given Brazil is one of the largest and fastest-
growing automotive markets in the world. webmotors has
significant future growth opportunities through customer
acquisition, national expansion, new product development
and increasing finance penetration. Culturally, there is
strong alignment between the carsales and webmotors
teams, and we have demonstrated an excellent track
record of delivering shareholder value by investing into
international markets. Moving to 70% ownership will
enable shareholders to capture the significant upside
potential in the webmotors business.
We successfully executed a A$0.5b renounceable
entitlement offer to fund the webmotors transaction,
which was very well supported by our retail and institutional
shareholders. We chose this structure as it promotes
fairness for our retail shareholders and it was pleasing to
see we have been able to create value for the shareholders
who participated in the raising. In July 2022, we successfully
executed a A$1.2b non-renounceable entitlement
offer to fund the Trader Interactive transaction,
which was also very well supported
by our shareholders.
06
carsales Annual Report 2023
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
Financial Performance and
Capital Management
carsales has delivered an outstanding financial
performance in FY23 and enters the new year with
strong momentum. The Group delivered excellent growth
across our three primary financial metrics of Proforma
Revenue, Proforma EBITDA and Adjusted NPAT in FY23.
Proforma revenue was up 18% on pcp to $942m,
driven by double-digit growth across all our key markets.
This reflects the strong value we continue to provide
for our customers with growth coming from new
customers and increasing adoption rates of new and
existing products. Proforma Earnings before interest, tax
and depreciation/amortisation (EBITDA) was up
19% to $496m with EBITDA margins of 53%. The strong
earnings and margin performance are complemented by
our continued investment in key projects and innovation
to drive future growth.
Adjusted Net Profit After Tax (NPAT) increased 43% to
$278m driven by our strong underlying earnings growth
and the contribution from new acquisitions. EPS was up
17% to 78.1¢ reflecting strong earnings growth partly
offset by the additional shares on issue from recent capital
raisings. The Board has declared a final FY23 dividend
of 32.5¢ per share, bringing total dividends paid to
shareholders for FY23 to 61¢ per share for the year.
From a balance sheet perspective, $132m of the webmotors
capital raise was used to strengthen carsales’ balance sheet,
reducing leverage to 1.96x net debt to EBITDA ratio, which
provides us with ongoing funding flexibility heading into FY24.
We have retained our existing dividend payout policy of 80%
of Adjusted net profit after tax.
Operational Highlights
We are very pleased with the progress of the Trader
Interactive business since acquiring the remaining 51%
in September (bringing our ownership to 100%). We are
ahead of expectations in terms of executing on our
investment thesis and delivering against the synergies
we identified as part of the transaction. This has included
delivery of new product, acquiring customers and
investing in technology to drive future growth.
Growth has accelerated in our Australian business,
as we continue to invest in building an increasingly online
buying and selling experience. We have extended our
carsales Annual Report 2023
07
Chair and CEO Letter continued
market leadership from both an audience and inventory
perspective, reflected in the very strong performance
of our private seller advertising segment over the last
12 months. Our ‘instant offer’ selling option continues
to scale, which demonstrates the benefits of continued
user improvements, better pricing, adding more dealers
to the platform and developing consumer awareness
through advertising campaigns. We only see continued
upside potential over the next few years for this area
of our business.
In Brazil, the business has performed very strongly
over the last 12 months. We have increased our market
share in large areas outside of São Paulo and Rio de
Janeiro, through acquiring new dealers, growing our
audience and adding more private sellers. webmotors
is uniquely positioned to capture market share with
exceptional buyer and seller engagement metrics
and a sophisticated suite of digital products.
Encar in South Korea delivered another excellent
performance this year, driven by the continued expansion
of the Guarantee inspection product. Encar continues to
make strong progress on its mission to facilitate online car
transactions. This was reflected in the continued strong
growth of its Encar Home digital retailing service.
Looking towards FY24, each of our companies has a
significant roadmap of both product and initiatives to
continue delivering in line with our organisational strategy,
and we are well positioned as we move into the new
financial year.
Our People
We have an amazing team of passionate, committed
and innovative people at carsales who are the driving
force of our success. The team is driven by our purpose,
which is to make buying and selling a great experience.
As we add new geographies and businesses to our
portfolio, it is incredibly important that we maintain and
enhance our culture – there is great alignment and
compatibility with the Trader Interactive and webmotors
teams, which has resulted in a smooth integration of
those businesses thus far.
We hold hackathon events at carsales each year – a
hackathon is an event where people and teams get to
step away from their day-to-day roles and build out a
new product, solve customer problems, improve the way
we do something, learn new skills and collaborate with
new people. There were some amazing ideas and
products that stemmed from the hackathon, which had
42 teams and 300 participants from our businesses
around the world, with particular focus on use cases for
Artificial Intelligence. It was a good reminder of how
08
carsales Annual Report 2023
inventive our people are and it will be very exciting to see
some of these ideas come to life over the next 12 months.
These hackathons are just one example of how we
embrace innovation at every level of the Company and
our relentless focus on improving customer experience.
We are principally operating a hybrid working model
across our global business, which encourages people to
collaborate physically in the office, but also allows people
the freedom to work remotely if they choose. This model
is working well, reflected in the speed of execution and
delivery occurring across our global businesses, our very
strong employee engagement scores, staff retention rates
and job fill times. There is so much going on across our
global business and this broad array of initiatives is only
possible because our large team of talented people is
executing strongly every day.
Governance
The Board is dedicating more focus to Environmental,
Social and Governance (‘ESG’) issues, particularly given
the growth in the Group’s global footprint.
We are focused on reducing carsales’ impact on the
environment and responding to risks associated with
climate change. Last year we achieved carbon neutral
status in our Australian business operations, and now
our focus turns to achieving this in our international
businesses in the next 12 months. The Task Force on
Climate-related Financial Disclosures (TCFD) is a leading
framework under which companies assess their climate-
related risks and opportunities. In FY23, we have reported
against this framework for this first time which is a good
step forward for the Company.
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
In Brazil, the business has performed very strongly over the last 12
months. We have increased our market share in large areas outside
of São Paulo and Rio de Janeiro, through acquiring new dealers,
growing our audience and adding more private sellers.
The carsales business has an important role to play in the
education of consumers to support the world’s transition
to an electric vehicle future.
From a risk management perspective, cybersecurity and
protecting customer and consumer data is a critical focus
area for carsales particularly given threats are increasing
in this space. We continue to invest heavily in our security
infrastructure to ensure the integrity of our customer data
and provide policies, training and education to our
employees on responsible data use and cybersecurity. We
cannot become complacent in this area and will continue
to invest to ensure we keep pace with the changing risk
management and security landscape. Whilst we cannot
fully mitigate these risks, an effective risk and governance
framework can help to reduce the impact of any event.
Given our continued international expansion, we have also
implemented subsidiary Boards with independent
Directors in each of our key geographies of Australia, the
US, South Korea and Brazil. This subsidiary governance
framework allows the business to dedicate appropriate
focus to local country risks in each of our jurisdictions.
Diversity and inclusion are very important to carsales
as we want all our people to feel valued, respected and
have equal access to opportunities. We are a Workplace
Gender Equality Agency (WGEA) Employer of Choice,
and we are passionate about trying to correct the
underrepresentation of females in technology roles.
Towards a Successful FY24
Finally we would like to thank our customers for their
partnership, our wonderful employees for their hard
work and our shareholders for their support and
encouragement. We look forward to working with
you all in FY24.
Pat O’Sullivan
Non-Executive Chair
Cameron McIntyre
Managing Director and CEO
carsales Annual Report 2023
09
What We Do
carsales.com Ltd (ASX: CAR) is one of
the largest online vehicle marketplace
businesses in the world.
We seek to empower our customers,
making buying and selling vehicles as
frictionless as possible. carsales employs
more than 1,800 people across the world.
Our Markets
carsales built its name in Australia, but over the last
10 years we have increasingly become a global player.
Our global markets have a combined population of 750
million people and car sales volumes of approximately
25 million per annum. The markets we have entered
have been carefully selected based on criteria including
macroeconomic attractiveness, digital maturity and market
dynamics. We leverage our world-class technology and
intellectual property to accelerate the growth in these
businesses and have a strong track record of delivery.
Our recent acquisitions of incremental stakes in Trader
Interactive and webmotors have allowed us to deepen
our exposure to the very attractive US (primarily caravans,
powersports and trucks) and Brazil (auto) markets.
10
carsales Annual Report 2023
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
Our Brand Portfolio
28m Monthly
visits
212k Published
inventory
In Australia, we are market leaders in online classifieds in a number of industries including cars,
motorbikes, boats, trucks and commercial equipment. More than one in five Australians visit our
group of websites every month.
We are still increasing our market share by digitising elements of the car buying journey and
removing friction points to make it easier for consumers to buy and sell.
18m Monthly
visits
1.3m Published
inventory
Market-leading platform of non-automotive marketplaces across RV, powersports, truck and
equipment industries in the US.
Non-automotive classifieds are less digitally mature than automotive markets meaning the
business is well positioned to capture upside from further dealer penetration and monetisation
across its key verticals.
25m Monthly
visits
165k Published
inventory
Clear market leader in automotive classifieds in South Korea with a strong growth track record
over the last 8 years.
Strategy is to increase the penetration of premium services for dealers, consumers and OEMs.
Key growth drivers include the Guaranteed inspection, Dealer Direct and Home Delivery products.
28m Monthly
visits
407k Published
inventory
No.1 position in the large but competitive Brazil automotive market. Achieved very strong
growth over the last 5 years since the major recession in Brazil ended.
Substantial growth opportunity given the size and immaturity of the market. Key growth
drivers include increased dealer and consumer penetration particularly in areas outside
São Paulo and Rio de Janeiro. Dealer Finance is also a significant revenue opportunity.
6m Monthly
visits
175k Published
inventory
Chileautos is a profitable and strong No.1 player in the Chile market with a strong growth
trajectory through increased penetration and monetisation of dealers.
Mexico is an earlier-stage investment. The focus for these assets is to grow market leadership
with longer term monetisation upside.
Sessions for websites in Australia, South Korea, United States, Brazil, Mexico and Chile for period 1 Jul 22 – 30 Jun 23. Google Analytics. Inventory published for
websites in Australia, South Korea, United States, Brazil, Mexico, and Chile as at 30 Jun 23.
carsales Annual Report 2023
11
Our Marketplace Ecosystem
Dealers
48,000 dealers
Dealer
Tech Platforms
Leads
Ads
Marketplaces
Sell
Buy
42 million
unique audience/month
Advertise
1.5 billion
page views/month
Consumers
OEMs
Instant
Sale
Digital trade-in
12
carsales Annual Report 2023 INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
Our Growth Engine
Brand
Key Segment
Description
Business Model
Dealer
Dealer vehicle listing
Subscription and pay per lead
Private
Private seller listing
Pay up-front until sold
Media
Digital advertising
on websites
Cost per view
Data Research
and Services
Vehicle specification data
Periodic subscription
Dealer
Marketplace
Dealer vehicle listing
Monthly subscription based on
inventory
Private
Private seller listing
Pay up-front
Standard Ads
Dealer vehicle listing
Pay up-front until sold
Guarantee
Encar inspects and certifies car
Pay per car inspected
Dealer Direct
Digital trade-in
24hr dealer auction, winning
dealer pays
Dealer
Dealer vehicle listing
Pay per lead
Finance
Finance application on vehicle ads
Up-front commission on loan
commencement
Private
Private seller listing
Pay up-front until sold
carsales Annual Report 2023
13
FY23 Key Highlights
Continued growth in market leadership position resulted in
strong performance in key dealer, private and media segments.
Marketplaces
Private Seller
• Our focus on a strong value proposition, trust and
safety features and achieving outcomes for sellers
has further increased our position as the most
preferred website to buy and sell cars
• Increasing market share helped to drive private
ad volume to the highest level in our history,
reaching 100,000 listings
• We are better aligning our value with price
through our dynamic pricing engine, which
increased private ad yield 16% vs. FY22
Most Preferred Website1
#2
carsales
Private Listing and Yield
Listings (left, 000)
Yield (right)
$200
52%
40%
31%
10.4x
2.6x
12%
FY21
#2
carsales
6.7x
6%
FY22
52%
5%
FY23
40%
31%
6.7x
6%
FY22
2.6x
12%
FY21
10.4x
Media and
Membership
5%
FY23
100
50
0
$150
$100
$50
$0
FY19
FY20
FY21
FY22
FY23
Listings (left, 000)
Yield (right)
$200
100
50
0
Dealer Depth
FY19
FY20
FY21
FY22
FY23
$150
$100
$50
$0
• The media segement delivered the fourth
• Depth products promote dealers’ cars to the top
consecutive half of double digit growth. This was
supported through the continued execution of
new products and diversification into non-
automotive categories
of search results
• Growth has increased as dealers look to optimise
return on investment on our site and move
inventory faster
Revenue
Media Revenue ($m)
35
Growth vs pcp
+11%
30
25
20
15
10
5
0
35
30
+19%
+10%
+11%
H1 21
H2 21
H1 22
H2 22
H1 23
H2 23
Revenue
Growth vs pcp
+19%
+10%
+11%
+11%
Depth Growth By Half
15%
10%
5%
0%
-5%
12%
7%
-2%
0%
H1 FY22
H2 FY22
H1 FY23
H2 FY23
25
1. Study conducted by independent research agency, Nature Pty Ltd, “market brand health tracker Jun 23”. If you had to choose one tomorrow, which one would you most
20
prefer for buying or selling a new / used car? carsales.com.au vs. competitors.
15
10
14
5
0
H1 21
H2 21
H1 22
H2 22
H1 23
H2 23
carsales Annual Report 2023 INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
Outstanding performance in first year of full ownership,
with strong synergy execution driving growth.
• Completed the acquisition of the remaining 51% of
• Increased dealer subscription volumes by 7%
Trader Interactive in October 2022
• Grew inventory levels by 22% vs. pcp with very strong
• Implemented key new dealer products including Lead
growth in Powersports and Commercial truck industries
Amplifier and Premium Select
• Executed on Dynamic Pricing driving good growth in
dealer and private ad yield
• Executed price rises across all industries in March 2023
Published Inventory (000)
Subscribed Dealers (000)
400
300
200
100
0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
RV
Powersports
Trucks
Equipment
RV
Powersports
Trucks
Equipment
Jun–22
Jun–23
Jun–22
Jun–23
carsales Annual Report 2023
15
FY23 Key Highlights continued
Good FY23 performance supported by strong execution
on Guarantee inspection product.
• Strong growth in Guarantee
Visits (M)1
Guarantee Penetration
penetration driven by increasing
volumes at existing inspection
branches and the addition of
four new sites
• Good traffic and lead volume
growth supported by improving
market conditions in the second
half of the year
• Encar Home volumes grew strongly,
up 43% on pcp with total eligible
listings reaching 20,000
1. Google Analytics, sessions for
period 1 Jul 22 – 30 Jun 23.
400
300
200
100
0
+10%
FY22
FY23
50%
40%
30%
20%
10%
0%
+15%
Jun–22
Jun–23
16
carsales Annual Report 2023
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
Excellent FY23 performance with strong operating metrics leading
to double-digit revenue and EBITDA growth with margin expansion.
Completed the acquisition of a further
40% of webmotors in April 2023,
increasing ownership from 30% to 70%
• Outstanding revenue and EBITDA
growth driven by:
- Double-digit lead volume growth
- Increase in revenue per dealer (yield)
through an increase in premium
products and the proportion of
chargeable leads
- 4% increase in inventory with supply
conditions normalising
• Dynamic pricing engine implemented in
June 2023 increasing private ad yield
Inventory
Dealer Leads
500
400
300
200
100
0
+4%
Jun–22
Jun–23
FY22
FY23
carsales Annual Report 2023
17
People and Culture
A place where you are truly a big part of something big.
85%
of our global team
members recommend
carsales as a great
place to work*
carsales is a values-driven business fuelled by a strong,
purpose-led employer brand. We are passionate about
building a world-class culture where our team can be
their authentic selves and do their best work.
Our competitive advantage lies in our people and our
culture, and both of these elements allow us to build and
nurture a sustainable company that future generations
will be proud of.
Our people are our greatest asset and providing them
with a supportive, equitable and inclusive working
environment ensures that we continue to attract,
develop and retain the best talent.
18
carsales Annual Report 2023
* Average score based on aggregated results of all Employee Opinion Surveys run
across our global businesses (1,558 respondents).
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
We are proud to have been recognised for the sustained effort that we have placed
into building our first-class culture and being a leader in digital careers.
Awarded to carsales Australia
Awarded to webmotors
Awarded to Chileautos
Awarded to Encar
Many of these accolades have been
achieved through our people being
surveyed by independent third parties
and sharing feedback on their lived
working experience at carsales:
• Great Place to Work® - eight consecutive years in Brazil and six
consecutive years in Australia.
• Workplace Gender Equality Agency (WGEA) Employer of Choice and
certified Breastfeeding Friendly Workplace for nine consecutive years.
• Australian Association of Graduate Employers (AAGE) Top Graduate
Employer for four of the past five years, and Top Intern Employer for
the past two years.
carsales Annual Report 2023
19
People and Culture continued
When it comes to career growth, we provide our people with big
opportunities to make a big impact. One of the ways we do this is
through our Global Talent Exchange Program, a unique opportunity
for our team members to spend four weeks working in one of our
businesses around the globe.
No matter which marketplace business our people work in
or where they are located around the globe, every member
of our team gets to be a big part of something big.
When it comes to career growth, we provide our people
with big opportunities to make a big impact. One of the
ways we do this is through our Global Talent Exchange
Program. This is an intensive, on-the-job equivalent of
a student exchange program whereby our people have
the chance to build their professional network in one of
our global businesses, experience a new culture, language,
way of working and business environment, and develop
a deeper understanding of how another one of our
international businesses operates. We also offer many
other learning and development opportunities both
locally and globally including mentoring, hackathons,
leadership development, web code academies and other
soft and technical skills workshops.
Whilst our Group continues to experience significant
global growth, we always strive to feel small. Small enough
to quickly change tack, learn from different departments,
and connect authentically with leadership. We want
everyone to be heard, have the opportunity to contribute
meaningfully, and grow with the business.
20
carsales Annual Report 2023 INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
We value feedback from our teams and have multiple mechanisms in place to understand what’s important to them.
This includes our global Employee Opinion Survey (EOS), which we run twice per year. We also run regular in-country
town halls hosted by the local leadership team as well as quarterly global catch-ups hosted by the global Executive
Leadership Team (ELT). These catch-ups take place on Zoom and always have the chat and Q&A functionality enabled,
which allows any participant to ask a question or raise anything that may be on their mind.
carsales Annual Report 2023
21
People and Culture continued
Global Connection
Keeping our teams connected across the globe is
important to us. In April, several of our Australia-based
global ELT members visited Trader Interactive (US),
Chileautos (Chile) and webmotors (Brazil) to hear their
thoughts, gain insights and share more about our global
business and strategy.
This trip was an opportunity for those teams to connect
with our leaders and learn more about the wider carsales
group, and the ELT enjoyed seeing the growth opportunities
and energy in each of the businesses. The feedback from
the trip was overwhelmingly positive, with many comments
from team members highlighting our strong people focus.
It truly reinforced that we are collectively a big part of
something big.
In July we also welcomed our global People, Product and
Technology leaders to Melbourne. For many, this was their
first time meeting their peers from other businesses across
the Group in person, and it was the perfect opportunity
to build social connection and collaborate as collective
leadership teams. A key theme that ran through each
of these teams’ offsites was how we continue to work
together to grow even bigger and scale.
22
carsales Annual Report 2023 INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
An Engaged Global Team
An important way for us to understand what drives
our people is by seeking out feedback via our Employee
Opinion Survey (EOS). We have had a robust engagement
framework in place for our Australian business for over
a decade. This year, we took that framework global and
ran our EOS in each of our international businesses.
This represented over 1500 employees, and for the
first time we have an aggregated global view on
employee sentiment.
Our Australian engagement score remains high at
77%, which is 3% above the New Tech Australia industry
benchmark. This benchmark is provided to us by Culture
Amp, our survey platform provider, and represents ~1.4
million questions answered by 35,000 employees across
277 Australian organisations. These are highly valuable
insights for us as it gives us an indication of how we
are performing against the wider technology industry
in Australia.
Our global engagement score for the Group is currently
sitting at 73%, which is a positive result for our first year
of global reporting. We view this score as an opportunity
and look forward to seeing it grow as we continue to build
on our global employee experience, roll out additional
initiatives, and bring our businesses closer together.
The highest scoring factors for the Group were: Diversity
(91% favourable), Management (83% favourable) and
Work & Life Blend (82% favourable).
We are passionate about providing our people with the
flexibility they need to balance their work and personal
commitments, and in many of our markets, including
Australia, Chile and the US our teams are given the
autonomy to choose to work from whichever location
they feel they will do their best work in – whether this be
one of our offices, their home, or a blend of the two. Our
teams greatly appreciate this flexibility, as evidenced by
our survey results. We were also pleased to see
management score so highly, as providing our people
leaders with learning and development opportunities to
hone their skills has been a focus across all our markets.
carsales Annual Report 2023
23
People and Culture continued
Global EOS Highlights (1,558 Respondents, 78% Response Rate)
Statement
In my organisation gender-based harassment and sexual
harassment is not tolerated
I have the flexibility I need to manage work and other commitments
My immediate supervisor/manager genuinely supports
equality between genders
I know how my work contributes to the goals of my Company
My manager genuinely cares about my wellbeing
I feel I am part of a team
We hold ourselves and our team members accountable for results
I would recommend carsales as a great place to work
I am able to arrange time out from work when I need to
We have enough autonomy to perform our jobs effectively
I am proud to work for carsales
Average
favourable result
93%
91%
88%
88%
86%
86%
86%
85%
85%
84%
83%
24
carsales Annual Report 2023
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
Diversity, Equity and Inclusion (DEI)
We have long been committed to fostering an inclusive
work environment where all our people feel valued,
respected and have equal access to opportunities.
We embrace and celebrate all the diverse qualities of our
team, and remaining focused on this forms part of our
3-year global strategy. Our diverse workforce provides a
wide range of perspectives, which allows us to innovate,
attract and retain top talent, and better understand and
represent our diverse customer base. We tailor our
approach to diversity, equity and inclusion to suit the
various markets in which we operate. We regularly
discuss DEI with our global businesses to gain insights
about which groups are currently underrepresented in
their communities or facing societal challenges – and as
things change, we evolve our strategy accordingly. For
carsales Australia, gender diversity remains a challenge
and this is why we put much of our focus into initiatives
such as our internal Women in Tech program and
supporting community organisations including
Go Girl Go For IT and CS in Schools.
The feedback from our global EOS results indicate that our DEI efforts
are well received, with Diversity being the highest scoring factor across
the Group, scoring 91% favourable.
carsales Annual Report 2023
25
People and Culture continued
In 2023 we were ranked # 24 in the top 100 companies globally for
gender equality by Equileap, a leading provider of gender equality
data and insights. Equileap reviewed 3,787 companies that are listed
on a major index or in one of 23 developed markets, representing 102
million employees globally. Their Gender Equality Scorecard™ consists
of 19 criteria including gender balance across the workforce, the gender
pay gap, paid parental leave and anti-sexual harassment policies.
This year, the Australian business is proud to have
published its first Reflect Reconciliation Action Plan
(RAP) (available on our shareholder website), endorsed
by Reconciliation Australia. This RAP lays the foundations
for implementing meaningful, long term reconciliation
initiatives throughout the business and strengthening
relationships with Aboriginal and Torres Strait
Islander peoples, with the hope that it will assist
with growing representation of First Nations peoples
within the Company.
The custom artwork created for our RAP and shared here is titled ‘Travelling on Country’ and tells the story of carsales.
This piece was created for us by Riki Salam from We are 27 Creative.
26
carsales Annual Report 2023 INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
Our webmotors team elevates the voices of minorities
within their business through the support of several affinity
groups – also known as employee resource groups –
including Pride Motors (LGBTIQA+), Black Motors (afro
descendants) and Web Girls (females). Anyone in the
business can join one or more of these groups that they
feel connected to and, with the support of a team leader,
meet monthly to discuss topics related to the community
that they represent. These groups come up with ideas and
initiatives that the business can implement to further
support them and build awareness. These affinity groups
also play a key role in creating community, fostering a sense
of belonging and creating a sense of understanding and
allyship across the wider business.
Our people build and deliver our products, provide
outstanding service to our customers, and help us to
achieve our purpose and deliver on our vision. Our people-
focused culture is something that we continually iterate and
grow, to ensure it remains our competitive advantage.
Most importantly, we are never done – we recognise we
have so much opportunity across our market-leading
businesses around the globe, and our people are
instrumental in achieving and executing on those
opportunities. We are proud to have delivered another
stellar year with our highly engaged team supporting
us and driving our success every step of the way.
carsales Annual Report 2023
27
Directors’ Report
Your directors present their report on the consolidated entity
(referred to hereafter as the Group or carsales) consisting of
carsales.com Ltd and the entities it controlled at the end of,
or during, the year ended 30 June 2023 (FY23).
Asia
• South Korea – Encar.com. This is our major business
in this segment. Encar.com is the market leading digital
automotive classified business in South Korea
• Redbook Asia – provides automotive data services in
New Zealand, Malaysia, Thailand and China.
North America
carsales operates digital non-automotive marketplaces
in the United States and Canada through its subsidiary
Trader Interactive. Carsales moved from 49% ownership
to 100% of Trader Interactive in September 2022 and
now consolidated the financial performance accordingly.
Latin America
carsales also operates digital automotive marketplaces
in Brazil, Mexico and Chile. carsales’ operating entity
in Brazil is webmotors. carsales increased its ownership
stake from 30% of webmotors to 70% in April 2023 and
now consolidates the financial performance accordingly.
carsales owns 100% of its operating entities in Mexico
and Chile.
Investments
This segment comprises the Group’s standalone
investments in the consumer and wholesale tyre
markets and vehicle inspections. The subsidiaries
included in this group are tyresales.com.au,
tyreconnect and Redbook Inspect.
In addition the Group has investment stakes in
PromisePay Pte Ltd and MX51 Pty Ltd, which are
accounted for as financial asset investments. These
businesses provide innovative fintech products.
Operational and Financial Review
Principal Activities
carsales is one of the largest online vehicle marketplace
businesses in the world. In Australia, carsales has market
leading positions in the automotive, motorcycle, caravan,
marine, truck and equipment industries. carsales also
has a growing global presence with market leading
positions in the US, South Korea, Brazil and Chile. Please
refer to Our Strategy and Our Brand Portfolio sections for
further information on our strategy and portfolio of
businesses.
Our key services, customers and geographies for
continuing operations include:
Australia - Online Advertising Services
carsales’ Online Advertising Services can be broken into
two key product sets – classified advertising and media
advertising services.
• Classified advertising allows our private and dealer
customers to advertise automotive and non-automotive
goods and services for sale across the carsales Network.
This segment includes products such as subscriptions,
lead fees, listing fees and priority placement services
(depth products).
• Media advertising involves carsales’ corporate
customers, such as automotive manufacturers and
finance companies, placing display advertising for their
brand or vehicle on carsales’ websites. These
advertisements typically display the product or service
offerings of the corporate advertiser as banner
advertisements, video content or other sponsored links.
Australia - Data, Research and Services
This segment comprises a diverse range of solutions for
our customers including software as a service, research
and reporting, valuations, appraisals, website development
and hosting and photography services.
28
carsales Annual Report 2023
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
Review of Results and Operation
Pro-forma Revenue
Pro-forma EBITDA
Adjusted Revenue
Adjusted EBITDA
Adjusted NPAT
Reported Revenue
Reported EBITDA
Reported NPAT attributable to owners of carsales.com Ltd
Adjusted Earnings Per Share (Cents)
Reported Earnings Per Share (Cents)
Final Dividend Per Share (Cents)
Financial Summary
In FY23, the Group achieved Reported Revenue growth
of 53%, Reported EBITDA growth of 49% and Reported
Net Profit After Tax (Reported NPAT) growth of 301%
compared to the year ended 30 June 2022 (FY22 or
the prior comparative period (pcp)). In FY23, the Group
achieved Proforma Revenue growth of 18%, Proforma
EBITDA growth of 19% and Adjusted Net Profit After Tax
(Adjusted NPAT) growth of 43% compared to FY22.
The Directors believe the additional information on
International Financial Reporting Standards (IFRS)
measures included in this report is relevant and useful
in measuring the financial performance of the Group.
In particular, the presentation of ‘Proforma Revenue’
‘Proforma EBITDA’, ‘adjusted net profit’ and ‘adjusted
earnings per share’ provides the best measure to assess
the performance of the Group by excluding certain
non-recurring or non-cash items relating to rebates, M&A
costs, restructuring, financing, investments and acquired
intangible amortisation from the reported IFRS measures.
A reconciliation of reported net profit to adjusted net
profit is set out in Note 4(b). Proforma metrics show the
business on a like for like basis by normalising for
acquisitions made through the period.
$A Millions
Growth
FY22
FY23
798
416
510
271
195
509
269
161
66.5
54.9
24.5
942
496
781
425
278
781
400
646
78.1
181.3
32.5
$’s
144
80
271
154
83
272
131
485
11.6
126.4
8.0
%
18
19
53
57
43
53
49
301
17
230
33
Key drivers
Proforma revenue growth of 18% reflects an excellent
performance across the Group’s portfolio of high quality
marketplace businesses. Proforma EBITDA growth of 19%
reflects this excellent revenue performance combined
with a good balance of investing in key strategic growth
areas while sensibly managing discretionary costs.
Adjusted net profit after tax was up 43% which reflects
the EBITDA growth as well as the contribution from the
acquisitions of additional stakes in Trader Interactive
and webmotors throughout the year.
$942m 18%
$496m 19%
Proforma revenue
Proforma EBITDA
$278m 43%
78.1¢ 17%
Adjusted NPAT
Adjusted EPS
% comparisons show growth vs the prior corresponding period
carsales Annual Report 2023
29
Directors’ Report continued
Segment Review
Dealer
Private
Media
Online Advertising
Data, Research and Services
Australia
Asia
North America
Latin America
Investments
Pro-forma Revenue
Online Advertising
Data, Research and Services
Australia
Asia
North America
Latin America
Investments
Pro-forma EBITDA
A$ Millions
Growth
FY22
183.8
69.4
54.5
307.7
44.1
351.7
95.4
195.5
99.0
56.5
798.1
197.8
28.8
226.6
48.1
111.2
31.8
(1.9)
415.8
FY23
203.0
89.9
60.6
353.4
45.6
399.1
103.9
239.4
138.9
60.9
942.2
229.0
29.6
258.6
52.5
140.0
47.7
(3.0)
495.7
$m’s
19.2
20.5
6.1
45.8
1.6
47.3
8.5
43.9
39.9
4.4
144.1
31.2
0.8
32.0
4.4
28.8
15.9
(1.2)
80.0
%
10
30
11
15
4
13
9
22
40
8
18
16
3
14
9
26
50
n.m.
19
Australia – Online Advertising Services
• Overall Revenue for the segment was up 15%, reflecting the extension of the Group’s
market leadership position in Australia, recording double digit revenue growth in each
key customer area of Dealer, Private and Media. EBITDA grew 16% with an EBITDA
margin of 65%, which reflects good cost management whilst continuing to invest in
key growth projects.
• Dealer revenue was up 10% on pcp to $203m reflecting solid growth in revenue from
leads, inventory promotion and other value added products. We have continued to
provide a compelling return on investment for our dealer customers throughout FY23.
• Private revenue was up 30% on pcp to $89.9m reflecting strong growth in private ad
volumes and yield and increasing penetration of our Instant Offer product.
• Media revenue was up 11% to $60.6m which is testament to the execution of our
strategy to diversify our product and customer portfolio.
Australia – Data, Research and Services
Data, Research and Services revenue was up 4% to $45.6m, reflecting the continued demand
for our Data, Research and Services from OEMs, dealers and corporate customers. There was
solid growth from our core Redbook data business which continued to grow volume and
yield. Segment Adjusted EBITDA was up 3% on pcp reflecting continued prudent cost
management and operating cost leverage.
30
carsales Annual Report 2023
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
Asia
carsales Asia revenue was up 9% to $103.9m primarily reflecting the performance of the
Encar.com business in South Korea. Revenue growth in South Korea was driven by the
increased uptake of the Guarantee vehicle inspection service, more vehicles listed on the
site and increasing penetration of the Encar Home (online buying) product. Good growth
in Adjusted EBITDA of 9% reflects the good growth in revenue combined with continued
investment in key growth initiatives, including expanding the guarantee and online trade
in services.
North America
Trader Interactive revenue was up 22% to $239.4m primarily reflecting the excellent
growth in dealer volume, dealer yield and private ads. Revenue growth has accelerated
since carsales moved to 100% ownership, reflecting the execution of planned product
and technology synergies. All verticals are consistently delivering audience traffic growth
on pre COVID levels. Excellent growth in Adjusted EBITDA of 26% reflects the strong
operating leverage potential of the business as it continues to build scale.
Latin America
Latin America revenue was up 40% on pcp largely reflecting the performance of webmotors
in Brazil, where revenue was up 41% on pcp. This resulted from the continued execution
of the national expansion plan, which produced a strong increase in dealer numbers and
yield volumes. EBITDA growth of 50% reflects this strong revenue growth combined with
continued marketing and product investment to support the future growth of the business.
The Chile business also performed strongly throughout FY23.
carsales Annual Report 2023
31
Corporate Governance
Sustainability Report
carsales is committed to being ethical, transparent and
accountable in everything we do.
At carsales, we take our ability to have a positive impact
on society extremely seriously.
We believe this is essential for the long-term performance
and sustainability of our Company and supports the
interests of our shareholders and other stakeholders.
The Board of Directors is responsible for ensuring that
the Company has an appropriate corporate governance
framework to protect and enhance Company performance
and build sustainable value for shareholders.
carsales is pleased that many of its shareholders are
interested to learn more about the Company’s approach
to governance, and its social and environmental impact.
To this end, carsales has published its 2023 Sustainability
Report, available on our Corporate Governance page of
our investor website at https://shareholder.carsales.com.
au/governance/.
This corporate governance framework acknowledges
the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (ASX
Principles and Recommendations) and is designed to
support our business operations, deliver on our strategy,
monitor performance and manage risk. Our FY23 Corporate
Governance Statement addresses the recommendations
contained in the fourth edition of the ASX Principles and
Recommendations and is available on our website at
https://shareholder.carsales.com.au/governance/.
This report outlines the Company’s approach to assessing,
mitigating and managing a range of social, environmental
and governance ESG risks, which is overseen by the
Company’s Board and managed by the carsales’ Executive
Leadership Team. It provides insight into our unique
culture, how we attract and retain the very best talent,
and seek to have a positive impact on our industry and
community. Finally, while we have a low environmental
impact as an online business, it addresses the Company’s
environmental efforts.
32
carsales Annual Report 2023
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
At carsales, we take our
ability to have a positive
impact on society extremely
seriously. carsales is
pleased that many of its
shareholders are interested
to learn more about the
Company’s approach to
governance, and its social
and environmental impact.
carsales Annual Report 2023
33
Taskforce on Climate-Related
Financial Disclosures (TCFD) Report 2023
In this Report
Section 1.
Introduction
Section 2. Governance
Section 3. Strategy
Section 4. Risk management
Section 5. Metrics and targets
34
36
39
48
49
Section 1. Introduction
Climate change is one of the greatest challenges facing
our world today. It continues to pose significant risks to
our environment, economy and society more broadly.
We believe that all companies have an obligation to do
what they can to protect the environment and we intend
to remain accountable and take responsibility for
implementing positive change.
As a digital business that does not extract or process any
materials, we recognise that our environmental impact is
low compared to many other companies. However, we
acknowledge that our marketplaces facilitate the buying
and selling of vehicles which contribute to greenhouse
gas emissions.
Our commitment to the environment and a more
sustainable future is unwavering, with Sustainable
growth being a key pillar of carsales’ global strategy.
We have implemented a climate strategy which is linked
to this and goes beyond addressing our own direct
environmental footprint, by also aiming to provide
support to our customers, the industries we operate
in, and the broader community.
In order to safeguard our business from the effects of
climate change, it is vital that our strategy takes into account
the potential risks and opportunities, and that we build
resilience to withstand the impact of this global issue.
In 2022, our Australian business operations became
certified carbon neutral under the Australian Government’s
carbon-neutral certification program Climate Active.
We have continued to take steps to achieve our climate-
related targets throughout 2023, and we continue towards
our goal of achieving carbon neutrality across our global
operations by 2024.
With growing pressure from investors, emerging focus
from regulators and continued social pressure, it is
increasingly expected that companies provide meaningful
and useful disclosure about climate-related risks that
could impact their business and how management are
responding to these risks. In response, the Taskforce
on Climate-Related Financial Disclosures (TCFD) released
climate-related financial disclosure recommendations
in 2017 designed to help companies provide better
information on the above, for greater transparency
and to support informed capital allocation.
carsales is committed to the transparent reporting and
continuous improvement of its climate-related practices,
performance and progress and as such, we have
voluntarily adopted reporting against TCFD’s
recommendations in 2023.
We have prepared this report with reference to the
guidance per the TCFD’s latest publication ‘Implementing
the Recommendations of the Task Force on Climate-related
Financial Disclosures’. This is the first-time adoption of these
recommendations by carsales. Whilst we have made good
progress in our climate-related reporting, we acknowledge
that further work is required to enhance our reporting,
particularly in relation to our international businesses.
This report is structured in line with the four pillars of the
TCFD, specifically: Governance, Strategy, Risk management
and Metrics and targets.
34
carsales Annual Report 2023 CORPORATE GOVERNANCE
AND SUSTAINABILITY
Governance
The organisation’s governance around
climate-related risks and opportunities.
Strategy
The actual and potential impacts
of climate-related risks and opportunities
on the organisation’s businesses, strategy
and financial planning.
Risk management
The process used by the organisation
to identify, assess and manage
climate-related risks.
Metrics and targets
The metrics and targets used to assess
and manage relevant climate-related
risks and opportunities.
These four pillars are supported by 11 recommended disclosures intended to assist users in understanding how the
organisation considers and assesses climate-related risks and opportunities.
Summary of the TCFD recommendations and how they have been addressed
Recommendation
Supporting recommended disclosure
Governance
• Describe the Board’s oversight of climate-related risks and opportunities
Disclose the organisation’s
governance around climate-
related risks and opportunities.
• Describe management’s role in assessing and managing climate-related
risks and opportunities
Strategy
• Describe the climate-related risks and opportunities the organisation
Disclose the actual and
potential impacts of climate-
related risks and opportunities
on the organisation’s
businesses, strategy, and
financial planning where such
information is material.
has identified over the short, medium, and long-term
• Describe the impact of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial planning
• Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a 2°C
or lower scenario
Where this
is discussed
in our report
Section 2:
Governance
Section 3:
Strategy
Risk management
• Describe the organisation’s processes for identifying and assessing
Disclose how the organisation
identifies, assesses, and
manages climate-related risks.
climate-related risks
• Describe the organisation’s processes for managing climate-related risks
• Describe how processes for identifying, assessing and managing
climate-related risks are integrated into the organisation’s overall risk
management.
Section 4:
Risk
management
Metrics and targets
Disclose the metrics and targets
used to assess and manage
relevant climate-related risks
and opportunities where such
information is material.
• Disclose the metrics used by the organisation to assess climate-related
risks and opportunities in line with its strategy and risk management
process
Section 5:
Metrics
and targets
• Disclose Scope 1 and 2 (and Scope 3 if appropriate) greenhouse gas
(GHG) emissions and the related risks
• Describe the targets used by the organisation to manage climate-related
risks and opportunities and performance against targets
35
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Taskforce on Climate-Related
Financial Disclosures (TCFD) Report 2023 continued
Section 2: Governance
Board
carsales is committed to strong corporate governance,
which we believe underpins sustainable value creation for
investors and other stakeholders. We have incorporated
climate governance into our existing governance
framework and are continuing to instill accountability for
climate change related risks throughout our business
and value chain.
For our Board and Global Executive Leadership Team
(Global ELT), the environment remains an important
consideration when developing and implementing our
strategy, operational plans and objectives.
The key environmental areas of focus which underpin
our climate strategy are:
Environmental, social and governance (ESG) matters
form part of the Company’s general risk framework and
are often discussed and considered in Board meetings.
In addition, to ensure this important area receives the
focus it requires, the Board established a Sustainability
Committee, chaired by Kee Wong, to provide specialist
oversight over ESG matters which may impact on our
business, reputation and ongoing sustainability.
All members of the Sustainability Committee are
independent of the business and can challenge
management on its progress in the area. The Sustainability
Committee meets three times per year and operates in
accordance with its charter, which is publicly available on
the carsales shareholder website at https://shareholder.
carsales.com.au/charters/.
Reducing our emissions, energy
management and carbon neutrality
The committee plays a vital role in assisting the Board in
developing carsales’ climate-related strategies, which are
aimed at minimising our impact on the environment.
Waste management
Customer and other
stakeholder influence
The actions we have taken in relation to the above are
detailed further in Section 3 of this report.
We have set climate-related targets that support and give
direction to our efforts and provide motivation and
accountability towards their achievement. These are
detailed further in Section 5 of this report.
carsales has formulated specific action plans to ensure
that the necessary measures are implemented in order to
achieve each target effectively. The Sustainability
Committee reports to the Board on the progress towards
achievement of these climate-related targets.
The Committee also monitors and reports to the Board on
environmental trends and views of external stakeholders,
to ensure that we address the important issues as part of
our climate strategy.
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carsales Annual Report 2023
CORPORATE GOVERNANCE
AND SUSTAINABILITY
The following diagram provides an outline of our organisational structure and how climate change is embedded within:
Managing Director
and CEO
Global ELT
Senior Leadership
Team
Responsible for the
successful implementation
of climate-related
strategies and plans and
assisting in identifying
climate related risks
carsales Board
Oversees approach to ESG,
approves climate strategy and
targets, monitors progress
toward achievement
Audit Committee
Consideration of impact of
climate change on financial
performance, financial position
and reporting obligations
Sustainability Committee
Specialist oversight of ESG
matters, formulation of climate
strategy, development and
monitoring of climate targets
Risk Management
Committee
Discuss key risks facing
our business, including
climate-related risks
People & Culture
Committee
Consideration of ESG related
metrics for inclusion in carsales’
incentive plans
Third party
assurance and
specialist
advice
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carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Taskforce on Climate-Related
Financial Disclosures (TCFD) Report 2023 continued
Management
Climate change is a key strategic and operational
consideration for our business. As outlined above,
accountability for climate change related risks is
embedded throughout our business and as such, all
members of the Global ELT and Senior Leadership Team
have a level of responsibility for the successful
The below table illustrates some examples of this:
implementation of climate-related strategies and plans
and assisting in identifying climate-related risks.
Each of our senior leaders provides insight into their areas
of expertise and identify climate change related issues that
present the greatest risks and opportunities for carsales.
Department
Sustainability
Finance
Product /
Editorial
Corporate
development
All departments
Person
in charge
Executive General
Manager of
Corporate Affairs,
Employer Brand and
Sustainability,
General Counsel and
Company Secretary
Responsibility • Monitoring
emerging climate
issues
• Ensuring
compliance with
our environmental
reporting
obligations
• Monitoring and
calculation of our
carbon footprint
• Overseeing the
implementation of
emission reduction
initiatives
Chief Financial
Officer
Chief Product and
Data Officer
Chief Strategy
Officer
Various
• Identification and
assessment of
how climate-
related risks and
opportunities
could impact
on the financial
performance and
financial position
of carsales
• Research and
monitoring of
issues/trends in
the electric vehicle
market, to
develop products
or content related
to electric, hybrid
and other low
emission vehicles
for our customers
and wider
community
• Assessment of
• Meeting assigned
emissions
reduction
objectives*
whether
investments are
strategically and
culturally aligned
with carsales and
share our
commitment to
climate change
and ESG more
broadly
*Our climate strategy, which is detailed further in Section 3, is accompanied by the formulation of specific objectives and the delegation of responsibility for these to
key members of our Global ELT and Senior Leadership Team. These objectives are designed to reduce emissions and waste or implement sustainable products/
services and those responsible report on the progress toward achieving them on a regular basis.
Management and the Board also engage external
specialists as required, to assist in formulating carbon
reduction strategies, evaluating our carbon footprint and
to provide third party assurance over the associated
emissions data.
Various formal and informal channels are used to share
information on climate change and to discuss climate-
related risks within the business, including in the regular
Global ELT and Senior Leadership Team meetings.
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carsales Annual Report 2023 CORPORATE GOVERNANCE
AND SUSTAINABILITY
Section 3: Strategy
Our strategic response to climate change
We have continued to progress and build upon our
climate strategy throughout 2023, which focuses on what
we can do as an organisation to support the transition
to a low carbon economy.
This is underpinned by 3 key focus areas:
Reducing our emissions, energy management
and carbon neutrality
carsales supports the transition to a low-carbon economy
and we are committed to playing our part in reducing
greenhouse gas (GHG) emissions and minimising our
environmental impact. We believe this is essential for
the long-term performance and success of our company.
Our Australian business operations are certified carbon
neutral under the Australian Government’s carbon
neutral certification program Climate Active.
Climate Active curates what is considered one of the world’s
most rigorous carbon neutrality certifications programs and
this achievement solidifies our commitment to minimising
environmental impact, reducing emissions, and championing
positive climate action. Attaining this certification forms a
key part of our broader climate strategy.
The certification was achieved through initiatives aimed
at reducing our energy consumption, which includes the
energy used to heat, light and power our work premises.
An outline of some of these energy reducing initiatives
is provided below:
• Installing low wattage, low energy, power efficient globes
in all our offices and using lighting sensors to ensure
lights are turned off when not in use;
• Employing zoned air conditioning to reduce power
and switch off outside office hours;
• Condensing our utilised office space; and
• Moving storage of all carsales data to the cloud.
Further, our Melbourne head office is certified as carbon
neutral through the National Australian Built Environment
Rating System (NABERS) and has achieved a 4.5-star
NABERS energy rating and a 6-star NABERS water rating.
The achievement of carbon neutrality was supported by
carbon offsetting initiatives, whereby we offset 100% of
our Australian carbon emissions through investment in
community, conservation and renewable energy projects,
both locally and internationally. During the FY22 year, we
offset 7,776 tonnes of CO2 to neutralise our Scope 1, 2
and 3 emissions.
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carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Taskforce on Climate-Related
Financial Disclosures (TCFD) Report 2023 continued
Looking ahead
We have implemented an emissions reduction strategy whereby we have committed to reducing our Australian
business operations’ emissions intensity by 30% per FTE by 2030 compared to our FY2022 baseline. We plan to
achieve this through reducing Scope 1 and 2 emissions intensity by 100% and Scope 3 intensity by 20%.
Scope 1 emissions
will be reduced by:
Scope 2 emissions
will be reduced by:
Scope 3 emissions will be reduced by:
• Working with our
landlords around
Australia to explore
continued ways to
reduce our energy
consumption –
including installation of
solar, where possible.
In addition, we are
currently investigating
the feasibility of
switching to green
energy and/or carbon
neutral electricity in
our offices across
Australia and hope to
commence
transitioning to this
over the next 1-3
years, in a phased
approach.
• Installation of energy
reduction systems e.g.
LED lighting.
• Investigating moving
fleet vehicles from
internal combustion
engine to hybrid or
electric vehicles over
the next 5–7 years.
This will reduce
scope 1 emissions
by approximately 90%.
• In the interim, we will
transition the fuel
usage of our fleet from
gasoline and diesel to
unleaded gasoline with
E10 blend. The fuel
transition will be as
follows: in the next two
years, 30% of our fleet
will use E10 blend.
In the next five years,
50% of our fleet will
use E10 blend.
In the next 5–7 years,
80% of our fleet will
use E10 blend. This
will decrease our
scope 1 emissions by
approximately 80%.
Travel
• Employee educational campaign around the environmental impact of travel.
• Review of travel policies and, where possible, continue to use technology to
connect, thus avoiding unnecessary travel and associated environmental
impacts. We estimate this will reduce travel by 20%.
• Work with our external travel management provider to ascertain where and
how we can travel sustainability and offset emissions at the time of travel.
Offsetting our flights will reduce 3.9% of our scope 3 emissions.
Data centres and cloud operations
• Continue to store 100% of our data in the cloud.
• Work with our cloud provider, Amazon Web Services, to determine how we can
function in a more sustainable manner in the cloud to reduce our emission
footprint as they work towards their own target of being powered by 100%
renewable energy by 2025. This will reduce 2.6% of our scope 3 emissions.
Employee commute
• Employee commute is difficult to influence, as it is in the hands of our
employees. Where possible, we will encourage our people to switch to public
transport, car-pooling, cycling or walking. At our head office in Melbourne, we
have end of trip facilities for our team and our location is well connected to
many bike paths, making riding to work an attractive option. We also offer our
Victorian team the ability to buy discounted 365-day myki passes through the
myki Commuter Club, to further encourage our employees to use public
transport. This will reduce 20% of emissions from employee commute.
Working from home
• Offer employees educational opportunities on how to save energy in their
home office such as considering switching to Greenpower or installing solar
panels. This, alongside educating staff on how to improve their waste
management practices when working from home, will reduce working from
home emissions by 20%.
Postage and Couriers
• Seek out green suppliers that are Climate Active certified and that report on
their emissions and/or work with suppliers that have an electric or hybrid fleet.
This will reduce 15% of our postage and courier emissions by 2030.
IT equipment
• Seek out green suppliers that are Climate Active certified and report on their
emissions.
• Invest in high quality items that do not need to be replaced regularly. We have
recently implemented hot-desking in our Melbourne office due to a large
proportion of our team now working from home permanently. This will reduce IT
equipment emissions by 20%.
Telecommunications
• Seek out green suppliers that are Climate Active and report on their emissions.
This will reduce telecommunication emissions by 30%.
Food and Beverage
• For a more accurate measure of emissions, we will investigate a more accurate
data capture method in the next three years, to breakdown spend across food
types. This will allow carsales to identify the food and beverage types being
purchased with the highest emission footprint. From here, we can enforce a
policy to phase out these high emitting food and beverage types. This will
reduce food emissions by 50%.
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carsales Annual Report 2023
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
carsales Annual Report 2023
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Taskforce on Climate-Related
Financial Disclosures (TCFD) Report 2023 continued
Customer and other stakeholder influence
Our customers are the reason we exist and their
expectations regarding climate-related issues are critical
to us.
As a marketplace business, we recognise our role as a
facilitator in the buying and selling of cars as well as
non-automotive leisure, industry and lifestyle assets such
as motorbikes, boats, caravans, trucks and the like. All of
these assets contribute to greenhouse gas emissions.
The rapid onset of climate change has focused attention
on the potential for vehicle choice to play an active role in
reducing emissions. The evolution from largely internal
combustion engine (ICE) vehicles to battery electric and
other low emission vehicles is a significant step change in
the industry and carsales has an important role to play in
assisting to facilitate this change through the education of
our consumers. While it will always be the buyer’s right to
choose, we believe that buyers should be equipped do so
from an informed position.
carsales is already one of the leaders in the provision of
independent content related to electric, hybrid and other
low emission vehicles in the Australian marketplace. We
continuously build out this content to help educate
consumers, offer advice, and improve understanding
around electric vehicle (EV) adoption.
Our website features an Electric Hub (available at https://
www.carsales.com.au/electric-cars/) which is a one-stop
shop for all things electric – from the latest EV news and
buying advice to expert reviews on all the key EV brands.
This includes EV Ready, a short questionnaire which helps
the consumer to determine whether they are “ready” to
purchase an EV, then recommends brand new EVs which
are best suited to them based on their current set up,
budget and driving habits.
We will continue to look for ways to reduce our greenhouse
gas emissions going forward.
carsales is currently progressing in the independent
evaluation of its carbon emissions across its international
businesses as part of our target to achieve carbon
neutrality on a global scale. We are also updating our
emissions reduction strategy to include international
operations.
Waste management
The major forms of waste generated in our offices include:
• Items such as paper, cans and bottles, which are sorted
and recycled;
• Personal waste and non-recyclable materials, mostly
going to landfill; and
• E-waste, such as computers, laptops, mobile phones,
monitors etc.
We have employed various waste management initiatives
to reduce our waste as much as possible, such as:
• Employed sustainable cleaning, waste and
recycling practices;
• Purchased 100% recycled paper, where possible;
• Re-used or recycled 85% of redundant electronic
equipment, where possible, including donating to
charitable organisations.
We have partnered with Tyre Stewardship Australia, which
seeks to effectively reduce the environmental, health and
safety impacts of passenger tyres which reach the end of
their life in Australia each year and develop viable markets
for these end-of life (worn out) tyres, including those sold
by our tyres business.
Looking ahead
• We are committed to achieving our recycling target
of 40% by 2025, for our Australian business.
• We plan to audit our landfill waste to identify
if anything else could be recycled. To go further,
we will implement circular economy principles
and targets to not only recycle waste, but also
reuse and repair what we can to avoid e-waste
where possible. This will reduce our waste
emissions by 50% by 2030.
• We will continue to identify ways to reduce our
waste generation and investigate additional
ways to divert e-waste from landfill.
• We will share waste avoidance practices via
companywide newsletters and will investigate
implementing an internal sustainability policy.
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CORPORATE GOVERNANCE
AND SUSTAINABILITY
We also launched a podcast series called ‘Watts Under the
Bonnet’ aimed at keeping listeners up to date with the latest
developments in the world of EVs.
carsales is a member of the Electric Vehicle Council.
As a member, we intend to play an active role in driving
EV facilitation in Australia. We believe carsales has an
important role to play in facilitating this change, whether
by providing clear, easy to understand and independent
information on new automotive technologies or as a
path to reduce emissions.
The number of EVs advertised on carsales.com.au
continues to grow, with over 2,000 electric and over
4,000 hybrid vehicle advertisements now appearing on
our website1. We have also improved our EV search filters
to include battery range, capacity and plug type, making
it easier for consumers to search for EVs.
Globally, there are over 6,000 electric and over 13,000
hybrid vehicle advertisements appearing across our
marketplaces1.
1. Data as of 30 June 2023.
Key climate risks and opportunities
In developing our broader climate strategy, we have
performed a qualitative assessment whereby we
considered the most material climate-related risks affecting
our business, the potential impact and how we plan to
manage these risks. We understand that climate change
also poses an opportunity for our business and as such
the relevant opportunities have also been considered as
part of our assessment.
The principle of ‘materiality’ helps us to prioritise the issues
of greatest importance to our company. By focusing on the
most material issues, we aim to maximise our contribution
towards a greener future and create meaningful and
sustainable value for our business and stakeholders.
Management is responsible for determining the risks
which are considered material in line with the carsales
risk management framework and proposing the risk rating
assigned to each, for consideration of the Board and
Sustainability Committee. The level of inherent risk and
also the presence of any mitigating factors and controls
are considered when determining the risk rating (low,
medium or high). The risk rating and timeframe allows the
Board and Global ELT to prioritise each risk accordingly.
Risks are also categorised dependent on whether they are
risks related to the transition to a lower-carbon economy
(Transition Risks) or risks related to the physical impacts
of climate change (Physical Risks).
We considered the potential impacts of each material
risk and opportunity on the business and its operations
across various time horizons – short (1-5 years), medium
(5-15 years) and long term (15+ years), as well as under
three climate change scenarios aligned to those of the
Intergovernmental Panel on Climate Change (IPCC),
being global warming of 1.5°C, 2.0°C and 4.0°C
above pre-industrial levels by 2100.
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carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Taskforce on Climate-Related
Financial Disclosures (TCFD) Report 2023 continued
Key climate risks and opportunities facing carsales
Time-
frame
Short
term
Relevant
scenarios
All
scenarios
(1.5°C,
2°C, 4°C)
Is it also an
opportunity?
Yes - if we can adapt
our business model
and product
offerings globally to
suit the change in
consumer
preferences and
OEM operating
models, this also
presents an
opportunity for our
business to
strengthen our
market position.
carsales’ response
We aim to be a market
leading digital
marketplace for EVs and
fuel-efficient vehicles.
We will continue to
adapt to the changing
landscape and
consumer preferences
and seek to capitalise
on opportunities
presented by
electrification.
We will also continue to
help educate
consumers and explore
new ways to improve
understanding around
EV adoption.
Risk
type
Risk
rating
Transition High
Risk
Increased
environmental
awareness
and demand
for sustainable
products
and services
Potential strategic,
business and
financial impact
With increased
awareness of the
environmental impact
of ICE vehicles,
consumer preferences
may continue to shift
towards EVs or more
fuel-efficient vehicles.
This presents a risk
that demand for our
online marketplaces
declines, thus
adversely impacting
our financial
performance, if we do
not adapt accordingly.
As EV OEMs continue
to penetrate the
vehicle market, there is
a further risk for our
business given that
many EV
manufacturers operate
via direct selling
models instead of via
dealerships and online
marketplaces. In
addition, there is a risk
that dealerships (our
primary customers)
become less profitable
as EVs require less
servicing.
Transition Medium Awareness of the
environmental impact
of our tyres business is
increasing, specifically
in relation to the
disposal of worn-out
tyres and the diesel
emissions caused by
freight to customers.
There is a risk that
demand for our tyre
products will decline if
we cannot
demonstrate a
commitment to
reducing the carbon
footprint of our tyres
business.
Short
term
All
scenarios
(1.5°C,
2°C, 4°C)
Yes - optimising
freight to customers
and therefore diesel
consumption
represents an
opportunity to
reduce freight costs
and therefore
increase profitability.
Our tyres business has
partnered with Tyre
Stewardship Australia,
which seeks to
responsibly dispose of
or develop viable
markets for end-of life
tyres.
We are working on
optimising our freight to
customers to reduce
the frequency of
deliveries and therefore
reduce diesel
emissions.
Environmental
impact of the
Online Tyre
Retail and
Wholesale
business
44
carsales Annual Report 2023 CORPORATE GOVERNANCE
AND SUSTAINABILITY
Risk
Reputational
risk due to
connection with
the automotive
industry
Risk
type
Risk
rating
Potential strategic,
business and
financial impact
Is it also an
opportunity?
Yes - this presents
an opportunity if we
can meet the
expectations of our
consumers, investors
and other
stakeholders and
present ourselves as
a leading company
with respect to our
climate response.
Transition Medium The automotive
industry is subject to
public scrutiny due to
its impact on the
environment.
Given our role in
facilitating the buying
and selling of vehicles,
there is a risk of brand
impact and reduced
demand for our
products and services
if we fail to
demonstrate a
contribution towards
climate change
mitigation.
There is also a risk that
we do not meet the
ESG criteria of
investors, limiting
access to capital
required to fund
projects and expansion
plans, given the
increasing focus placed
on ESG factors when
making investment
decisions.
Time-
frame
Relevant
scenarios
Short to
medium
term
All
scenarios
(1.5°C,
2°C, 4°C)
carsales’ response
We are certified carbon
neutral in respect of our
Australian business
operations and have
committed to achieving
carbon neutrality
globally.
Clear and time bound
emissions and waste
reduction targets have
been set and reporting
on the progress
towards these targets
to the market will take
place annually. Refer to
Section 5 of this report.
In addition, we continue
to help educate
consumers, offer advice,
and improve
understanding around
EV adoption.
The appropriate
structures and
processes are in place
to allow for continuous
monitoring of emerging
climate-related issues,
so they can be
addressed promptly
and appropriately. Refer
to Section 2 of this
report.
We continue to make
progress in our
climate-related
reporting, including
adopting the TCFD
recommended
disclosures in FY23.
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carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Taskforce on Climate-Related
Financial Disclosures (TCFD) Report 2023 continued
Risk
Acquired
businesses not
operating in
accordance with
carsales’
sustainable
growth strategy
Risk
type
Risk
rating
Potential strategic,
business and
financial impact
Is it also an
opportunity?
Transition Medium A key pillar of carsales’
No
global strategy is to
deliver long term
growth through early
stage investments and
to continue to invest in
inorganic growth that
extends or deepens
our core business
globally.
There is a risk that
businesses we acquire
are not operating in an
environmentally
conscious manner,
representing an
inconsistency with our
sustainable values.
This could result in
damage to our brand
and reputation.
Increased costs
associated with
climate action
Transition Low
Climate action poses
a financial risk to our
business in the form
of increased costs,
including:
• Those to ensure
adherence to any
newly introduced
climate regulations,
or monetary
penalties and further
legal proceedings
for non-compliance.
• Those involved in
implementing
resource efficient
and sustainable
practices.
Yes - implementing
sustainable practices
presents an
opportunity to
enhance our
reputation as a
climate conscious
organisation,
improve employee
satisfaction,
retention and
attraction, achieve
energy efficiency and
reduce exposure to
future fossil fuel
price increases in
the long term.
Time-
frame
Relevant
scenarios
Short to
medium
term
All
scenarios
(1.5°C,
2°C, 4°C)
Short to
medium
term
All
scenarios
(1.5°C,
2°C, 4°C)
carsales’ response
Detailed due diligence
processes are
undertaken prior to the
completion of any
acquisition or early
stage investment. All
investments must be
strategically and
culturally aligned with
carsales and share our
commitment to ESG.
We are currently
working with our
international businesses
to achieve carbon
neutrality globally by
2024.
Knowledge sharing on
environmentally friendly
practices as well as
opportunities presented
by electrification takes
place across our global
business.
We are continuously
monitoring for changes
to or introduction of
new climate-related
regulations which
impact our business.
Implementing
sustainable practices is
key to achieving our
climate strategy and
demonstrating our
commitment to the
environment. While we
acknowledge that the
implementation of
these practices will
require considerable
investment, the
associated cost is lower
on a relative basis given
carsales’ emission
intensity is low when
compared to other
companies.
Further, we believe that
the long-term benefits
to our company and
society more broadly
greatly outweigh the
costs.
46
carsales Annual Report 2023 Risk
type
Risk
rating
Transition Low
Risk
Increase in cost
of resources
due to scarcity
concerns
Is it also an
opportunity?
No
Potential strategic,
business and
financial impact
As resources such as
fossil fuels become
more scarce, the cost
of producing electricity
may increase, meaning
higher utility costs for
our business and our
consumers.
Further, if the price of
crude oil and battery
metals increase due to
limited supply, the cost
of purchasing and
operating a vehicle may
increase.
Physical
High
Increased
frequency/
severity of
extreme
weather and
climate-related
natural
disasters.
No
Major weather events
such as floods and
bushfires could
present a disruption to
our operations. It also
poses a risk to the
safety of our staff and
customers and a risk of
increased operational
and insurance costs.
Such weather events
could also impact
automotive and
recreational vehicle
dealers, who are our
key customer segment,
resulting in them being
unable to operate for a
period of time and
impacting on our
revenue generating
ability.
CORPORATE GOVERNANCE
AND SUSTAINABILITY
carsales’ response
We believe that our
energy reduction
initiatives (outlined
earlier in this section)
will work to reduce our
exposure to electricity
price increases. We
continue to explore ways
to further reduce our
energy consumption.
Our digital marketplaces
offer a wide range of
vehicles for all budgets
and also include fuel
efficient vehicles, thus
providing options for
consumers looking
for a vehicle which
costs less to purchase
and operate.
While the cost of
resources required for
EV batteries may
increase due to scarcity
concerns, we expect the
overall cost of EVs to
decline as technology
advances and
production scales up.
Our crisis management
plan is reviewed
regularly to ensure it
remains up-to-date and
relevant in order to
respond to extreme
weather events.
Further, we ensure our
office staff are equipped
to work from remote
locations.
The risk of natural
disasters impacting our
dealer network is
mitigated given dealers
are dispersed across
the countries we
operate in. As
demonstrated during
the COVID-19 pandemic
and other recent
extreme weather
events, we are able to
support our customers
where possible in the
occurrence of such
events.
Time-
frame
Relevant
scenarios
Medium
term
All
scenarios
(1.5°C,
2°C, 4°C)
Medium
to long
term
2°C and
4°C
scenarios
47
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Taskforce on Climate-Related
Financial Disclosures (TCFD) Report 2023 continued
Resilience of carsales’ strategy
At carsales, our vision is to create #1 digital marketplaces
for vehicles around the world and we are passionate
about exceeding the needs of our customers,
achieving sustainable growth and building a world-class
working culture.
The completion of the above analysis has helped to
strengthen our understanding of the climate-related
risks faced by our business, our response to those risks,
the associated mitigating factors and thus the resilience
of our strategy.
Overall, we consider that our exposure to both physical
and transitional risks is lower relative to other companies.
Nonetheless, we have the appropriate structures and
processes in place to respond to these risks and are
well-positioned to navigate a range of possible climate
outcomes. We will continue to test the resiliency of our
strategy to emerging climate risks and against each
climate change scenario.
As the world continues to adapt and respond to climate
change, opportunities for our business will emerge
and evolve. We will adapt and build upon our climate and
broader company strategy in order to capitalise on these
opportunities as appropriate.
We aim to continue investing in emission reduction
initiatives and the development of new products and
services that support the transition to a low carbon
economy, as well as further educating our employees
and consumers.
Section 4: Risk management
We view climate change as a risk for carsales as it poses a
threat to many facets of our business, while also presenting
various opportunities. Climate-related risk management is
integrated with our existing risk management framework.
Environmental and climate-related risks continue to gain
increasing attention and visibility, and are constantly
evolving. Therefore, it is essential to monitor and respond
to emerging trends, regulatory changes and potential
for disruption across the industry and we believe that
we have the appropriate structures in place to do so.
carsales has a comprehensive risk management process
to identify, assess, mitigate, control and monitor business,
financial and climate-related risks.
1
Identification
3
Monitoring
Risk
management
process
2
Assessment
3
Control
48
carsales Annual Report 2023
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
carsales’ Board is responsible for ensuring that there is
an appropriate corporate governance framework in place
to protect and enhance our performance and build
sustainable value for our shareholders. The Board Charter
states that it is the responsibility of the Board to ensure
that the significant risks facing the company have been
identified and that adequate control, monitoring and
reporting mechanisms are in place. This includes climate-
related risks.
The Risk Management Committee (RMC) was set up
to assist the Board in carrying out its risk management
responsibilities. The RMC approaches its risk oversight
based on the company’s level of ownership of operations
locally and offshore. Climate-related risks are also
managed by our Sustainability Committee.
We recognise that managing risk is a continual process
and an integral part of the management of the business.
In addition to the RMC, the company has a separate
management committee comprising Global ELT and
Senior Leadership Team members, to assist in tracking
and escalating risks.
carsales maintains a formal risk register which captures
material and other potential risks to the business and
assesses the nature, likelihood and materiality of the
impact of each risk. carsales uses the results of the
assessment to inform its risk management strategy.
A review and update of its formal risk register is
conducted at least twice a year.
Each risk on the company’s risk register has at least two
owners – including at least one Global ELT member and
at least one senior manager. The risk owners are tasked
with monitoring the risks by reference to agreed metrics
and reporting on these metrics periodically to the Board,
as well as formulating appropriate responses and
control measures.
Our Risk Management Policy demonstrates commitment
to the principles of risk management and ensuring a
consistent and effective approach to managing risk
within the workplace, including climate-related risks.
Further, we maintain good working relationships with
external advisers, who provide insight into specialist
areas such climate change risk and carbon management.
Please refer back to Section 3 for climate risks identified
and our response to each.
Our approach to risk management is detailed further
in carsales’ 2023 Sustainability Report:
https://shareholder.carsales.com.au/governance/
Section 5: Metrics and targets
Climate-related targets: Managing our
climate impact
We have set targets that support and give direction to
our efforts and provide momentum, motivation and
accountability towards their achievement.
We have also linked each target to the United Nations (UN)
Sustainable Development Goals (SDG), to demonstrate
how our efforts contribute towards a global common
goal of addressing the world’s most urgent sustainability
challenges and creating a better future for all.
carsales Annual Report 2023
49
Taskforce on Climate-Related
Financial Disclosures (TCFD) Report 2023 continued
The table below details our climate-related targets, how we are progressing against each and the next steps to
be taken:
Target
Status
Next steps
Relevant SDG goal
Relevant SDG target
Existing from FY22
Carbon neutrality
of AU business
operations
Achieved
and ongoing
We will maintain
carbon neutrality by:
7.3) By 2030, double
the global rate of
improvement in energy
efficiency.
12.2) By 2030, achieve
the sustainable
management and
efficient use of natural
resources.
7) Ensure access to
affordable, reliable,
sustainable and
modern energy for all.
12) Ensure sustainable
consumption and
production patterns.
12) Ensure sustainable
consumption and
production patterns.
12.6) Encourage
companies, especially
large and transnational
companies, to adopt
sustainable practices
and to integrate
sustainability
information into their
reporting cycle.
• Continuing to invest
in carbon offset
projects that align to
our business strategy.
• Progressing the
emissions reduction
strategy for our
Australian business.
See below for
timebound targets
which have been set to
assist in achieving our
emissions reduction
strategy.
The next step will
involve completing the
baseline greenhouse
gas (GHG) inventory
assessment for our
international
operations.
This will allow us to
commence investment
in projects to offset our
global carbon footprint
and implement a
carbon emissions
reduction strategy for
our international
businesses.
This report has been
prepared with reference
to the
recommendations of
the TCFD.
We will continue to
evolve our
environmental reporting
to meet the
requirements of the
relevant frameworks
and our stakeholders’
expectations.
Achieved
(see below)
In progress
Implement carbon
emissions
reduction strategy
with timebound
targets for the
Australian business
Achieve carbon
neutrality across
controlled global
operations with
emission reduction
strategy, by 2024
Report against
TCFD
Achieved
and ongoing
50
carsales Annual Report 2023
CORPORATE GOVERNANCE
AND SUSTAINABILITY
Target
Status
Next steps
Relevant SDG goal
Relevant SDG target
New in FY23
Reduction in our
emissions intensity
per FTE by 30%
by 2030 compared
to a FY22 baseline,
for our Australian
business operations
Implement
carbon emissions
reduction strategy
with timebound
targets for our
international
businesses by 2025
Recycling target for
2025 of 40% for our
Australian business
In progress
In progress
To achieve this target,
Scope 1 and 2 intensity
will be reduced by 100%
and Scope 3 intensity
emissions reduced
by 20%.
Our emissions
reduction strategy
is detailed further
in Section 3.
Future activity To be commenced
following completion
of GHG inventory
assessment.
This will also be
informed by the
learnings from our
Australian emission
reduction strategy.
To achieve this,
we will audit landfill
waste monthly to
identify if anything could
have been recycled.
Further, we will
investigate additional
ways to divert e-waste
from landfill and
educate our staff on
recycling and waste
avoidance practices.
7.3) By 2030, double
the global rate of
improvement in
energy efficiency.
12.2) By 2030, achieve
the sustainable
management and
efficient use of
natural resources.
7) Ensure access to
affordable, reliable,
sustainable and
modern energy for all.
12) Ensure sustainable
consumption and
production patterns.
12.5) By 2030,
substantially reduce
waste generation
through prevention,
reduction, recycling
and reuse.
12) Ensure sustainable
consumption and
production patterns.
Our current emissions reduction strategy outlines
our commitment to reducing our Australian business
operations’ emissions intensity by 30% per FTE by 2030
compared to our FY22 baseline. The Science Based
Targets initiative (SBTi) advises that a company’s targets
should be determined on a baseline that uses the same
methodology that an organisation is currently using to
establish its footprint. As we are currently in the process
of determining our global emissions footprint. carsales
intends to release revised targets in FY24 once we have
a clear understanding of what our global footprint looks
like. We will provide further information on this once the
project has been completed, along with a global emission
reduction plan to achieve these targets.
51
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT
Taskforce on Climate-Related
Financial Disclosures (TCFD) Report 2023 continued
Climate-related metrics: Measuring our
climate impact
Our total greenhouse gas emissions
Pangolin Associates Pty Ltd were engaged to conduct
a comprehensive assessment of the GHG emissions
accountable to the Australian operations of carsales in
FY22 during our Climate Active data collection process.
This included the subsidiaries of Automotive Data Services
Pty Ltd, Automotive Exchange Pty Ltd, Tyresales Pty Ltd,
Tyreconnect Pty Ltd, CS Motion Australia Pty Ltd, CS
Motion Technologies Pty Ltd, CS Motion Development
Pty Ltd, Lformation Pty Ltd, i-Motor Pty Ltd and Redbook
Inspect Pty Ltd.
Based on best available data, the estimated total carbon
emissions for carsales was 7,689.5 tonnes of carbon
dioxide equivalents (tCO2-e). This total includes indirect
contributions along the supply chain (scope 3 emissions).
Excluding scope 3 emissions, our carbon emissions were
672.6 tCO2-e.
The results of our assessment are summarised below:
Operational Boundary
Associated Inventory/Service
Scope 1
Scope 2
Scope 3
Total
Scope 1 & 2
Transport fuels (land and sea), Refrigerants
Purchased electricity
Accommodation and facilities, Cleaning and chemicals,
Food and beverage, Flights, ICT services and equipment, Office
equipment and supplies, Postage, courier and freight, Products,
Professional Services, Waste, Water, Working from home.
(tCO2-e/yr)
2022
(tCO2-e/yr)
2021
185.6
487.0
194.3
622.3
7,016.9
3,324.6
7,689.5
4,141.1
672.6
816.6
Emissions by Scope
Emissions by Type
6.3%
2.4%
Scope 1
Scope 2
Scope 3
91.3%
Methodology
Accommodation
and facilities
Postage, courier
and freight
Cleaning and
chemicals
Electricity
Flights
Food and beverage
ICT services
and equipment
Office equipment
and supplies
Products
Professional Services
Refrigerants
Transport
(Land and Sea)
Waste
Water
Working from home
The GHG assessment and the calculation of emissions
was prepared in accordance with The GHG Protocol:
A Corporate Accounting and Reporting Standard
(Revised Edition), as per the TCFD’s recommendations,
as well as the following guidelines:
Our assessment includes all GHGs covered by the Kyoto
Protocol, in addition to carbon dioxide. These are then
multiplied by their relative Global Warming Potential
(GWP), which is an index used to convert the non-carbon
dioxide gases to a carbon dioxide equivalent.
• Corporate Value Chain (Scope 3) Standard published
by the World Resource Institute (WRI) and World
Business Council for Sustainable Development (WBCSD)
• International Standards Organisation ISO 14064-1:2018
Greenhouse gases - Part 1: Specification with guidance
at the organisation level for quantification and reporting
of greenhouse gas emissions and removals
• Australian National Greenhouse Accounts Factors (https://
www.dcceew.gov.au/sites/default/files/documents/
national-greenhouse-accounts-factors-2022.pdf)
52
The GHG reporting period is aligned to the previous
financial reporting year. As mentioned above, the emissions
reported currently only include our Australian operations.
The completeness and timeliness of our GHG reporting
will improve each year as we revisit and refine the
methodology and underlying dataset.
Our GHG emissions data has been verified by GPP Audit
Pty Limited, an independent 3rd party.
carsales Annual Report 2023 INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
carsales Annual Report 2023
53
Our Board
Patrick O’Sullivan
Non-Executive Chair
Cameron McIntyre
Chief Executive Officer
and Managing Director
Wal Pisciotta OAM
Non-Executive Director
and Co-Founder
Pat is the Chair of the carsales Board of Directors, a
position he has held since 2019, having been a
Director of the Company since 2007.
Pat is a member of The Institute of Chartered
Accountants in Ireland and Australia, and a graduate
of the Harvard Business School’s Advanced
Management Program.
Pat is currently the Chair of the Board of Technology
One Limited and SiteMinder Ltd.
Previously Pat was the Chief Operating Officer
and Finance Director of Nine Entertainment Co Pty
Limited (formerly PBL Media Pty Ltd), a position he
held from February 2006 until June 2012. He also
served as a Director and Company Secretary of
Nine Entertainment Co Pty Limited and was Chair
of Ninemsn.
Pat brings immense financial, regulatory and
governance expertise to the Board, and was the
Chair of the Audit and Risk Management Committee
prior to being appointed as Chair of the Board.
Pat also provides the Board with valuable insights
relating to operations of global companies.
Cameron was appointed Managing Director and
CEO of carsales.com Ltd in 2017. Prior to this,
Cameron held the positions of Chief Operating
Officer (from October 2014), and Chief Financial
Officer and Company Secretary for the previous
seven years, including for the IPO of the Company in
2009. Cameron has over 29 years’ of finance and
operational experience.
Cameron holds a degree in Economics from La
Trobe University, Melbourne, is a graduate of the
General Management Program at Harvard Business
School and is a Fellow Certified Practising
Accountant (FCPA).
Cameron brings unparalleled knowledge of the
business and significant experience in strategy,
mergers and acquisitions and management to
the Board.
Wal has more than 35 years’ experience in supplying
computer services to the automotive industry and
was Chair of the Company’s Board from its inception
until August 2015.
Wal holds a Bachelor of Science degree in Business
Administration from the University of Alabama
(United States). He was recognised with the Medal
of the Order of Australia for his services to the
Australian Automotive Industry in the 2016 Queen’s
Birthday Honours.
Wal brings to the Board consummate knowledge of
the IT needs of the automotive industry as well as
his extensive knowledge of the business, having
been a driving force from its founding.
Kim has more than 30 years’ of experience as a
CEO and senior executive in a range of marketing
and media companies including Southern Star
Entertainment, PBL and Ninemsn and Reading
Room Inc (bookstr.com) of which she was CEO
and founder.
Kim is currently a Non-Executive Director of
InvoCare Limited, Infomedia Limited, SiteMinder
Limited and the Sax Institute, a national not-for
profit leader in promoting the use of research
evidence in health policy. She was formerly a
Non-Executive Director
of Marley Spoon AG and WPP AUNZ until the
completion of its takeover by WPP PLC in April
2021. She has also served as a Fellow of the
University of Sydney Senate.
Kim holds a Bachelor of Arts from the University
of Sydney and a Graduate Diploma in Library
Information Science from UTS.
Kim provides an abundance of experience and
knowledge in the marketing, media and
entertainment industries. Kim also has extensive
experience on ASX listed boards, including as Chair
of Remuneration Committees and is the Chair of the
Company’s People and Culture Committee.
Kim Anderson
Non-Executive
Director
54
carsales Annual Report 2023
INTRODUCTION AND
CHAIR/CEO LETTER
WHAT WE DO AND
OUR OPERATIONS
OUR PEOPLE
AND CULTURE
DIRECTOR’S REPORT
CORPORATE GOVERNANCE
AND SUSTAINABILITY
OUR BOARD AND
REMUNERATION REPORT
FINANCIAL REPORT
Edwina holds a Bachelor of Laws and Bachelor of Arts
from Sydney University, practising commercial law
before transitioning into the automotive industry.
Edwina has worked in the automotive industry since
2003 as Managing Director until 2020 and is currently
the Chair of the Phil Gilbert Motor Group.
Edwina has held numerous Industry Advisory
positions including NSW Chair of the Hyundai Dealer
Council from 2010 to 2015. She is currently on the
board of the peak industry body representing
franchised new car dealers in Australia, the
Australian Automotive Dealer’s Association.
Edwina brings significant OEM knowledge along with
executive experience operating dealerships with a
digital first marketing approach and has deep
operational and commercial acumen. Edwina has
chaired the Company’s Risk Committee since it was
established in January 2019.
Edwina Gilbert
Non-Executive Director
Kee is an entrepreneur with a Bachelor of
Engineering (Hons.), a Graduate Diploma in
Computing and an MBA. Kee was awarded a Fellow
of Monash University in 2010 and Distinguished
Alumni in 2014. He has started several businesses
and has made investments across a number of
industries, which include technology services, retail,
food and beverage, trading and property.
Kee Wong
Non-Executive Director
Kee was a senior executive at IBM running part of its
e-business group in the Asia-Pacific region, including
Australia and New Zealand. He is founder and
Managing Director of e-Centric Innovations, an IT/
Management consulting firm operating in Australia,
Malaysia and Singapore. Kee is currently a Non-
Executive Director of the Australian Energy Market
Operator and InvoCare Limited and is the Chair of
the Company’s Sustainability Committee.
Kee expands the Board’s knowledge of technology
and product, and enhances the entrepreneurial
spirit of the Board, as well as providing valuable
insight into markets outside of Australia in which
the Company operates.
David has over 25 years’ experience as a partner of
PwC, including 5 years as the Chief Operating Officer
of PwC Assurance where he was responsible for
managing the firm’s largest business unit, and 5
years practicing in the firm’s Indonesian office,
where in addition to his responsibility as an audit
partner he was responsible for the firm’s IT platform.
David has extensive experience working with
companies in the technology, infocoms and
entertainment and media industries, having been
the lead audit partner for clients including Network
Ten, APN News and Media and Yahoo during his
time with PwC.
David holds a Bachelor of Commerce from the
University of NSW and is currently a Non-Executive
Director of oOh!Media Ltd and Life 360 Inc and
Chair of WageSplitter Pty Ltd.
In addition to his outstanding financial credentials,
David brings strong commercial acumen to the
Board, derived from his extensive experience at
PwC and board roles.
David Wiadrowski
Non-Executive Director
Susan has over 25 years’ experience focused on
both strategy and operations for brand-led
businesses in transformative scale-up or turnaround
growth with multi-product, multi-channel portfolios
across diverse international markets.
More recently Susan was the Chief Growth and
Brand Officer for The a2 Milk Company. In that role,
she had responsibility for all aspects of customer
experience, brand development and innovation;
co-led the company’s ASX listing; and had shared
responsibility for the global P&L, business growth
strategy, and crisis and risk management programs.
Susan is currently a Non-Executive Director and
member of the remuneration committee for Made
Group, Deputy Chair and member of the Audit,
Finance and Risk Committee of St Aloysius College
and Managing Partner of reThink | Massasso
Advisory Group, where she advises a diverse range
of brand-led organisations, early stage founders
and emerging leaders.
Susan holds a Bachelor of Commerce (Accounting
and Marketing) from the University of Sydney
and is a graduate of the Australian Institute of
Company Directors.
Susan Massasso
Non-Executive Director
Nicole is an experienced General Counsel and
Company Secretary with 20 years’ experience in the
law, primarily working with online businesses.
Nicole holds a Bachelor of Laws (Hons) and
Bachelor of Arts from Monash University, and a
certificate in corporate governance from INSEAD
Business School. Before joining carsales, Nicole was
in-house legal counsel for Medibank Private Ltd and
REA Group Ltd. Prior to this Nicole worked for
Minter Ellison, one of Australia’s premier legal firms,
with a focus practice area of intellectual property.
Nicole Birman
Company Secretary
carsales Annual Report 2023
55
Our People and Culture Chair’s Message
Dear Shareholders,
On behalf of the Board, I am pleased to present carsales’
FY23 Remuneration Report.
This year the business has delivered strong double-digit
revenue and EBITDA growth, whilst continuing the
Company’s expansion into international markets with
the acquisition of Trader Interactive and increasing our
ownership of webmotors.
These investments are the result of a very well-executed
growth and acquisition strategy, leveraging the Company’s
core expertise while showcasing the business’s ability to
successfully integrate and realise the benefits of
transformative acquisitions.
This strong performance has again delivered positive
outcomes for shareholders this financial year, including
maintaining our attractive dividend policy.
Company Performance
The Company has again produced strong results
in FY23, summarised as follows:
• 18% proforma revenue growth, 19% EBITDA growth
and 43% Adjusted NPAT growth.
• 78.1 cents Adjusted Earnings Per Share (EPS) from
continuing operations, reflecting a CAGR of 11.5% from
FY21–23.
• Ranked in the 73rd percentile for Relative TSR from FY21
to FY23.
Executive KMP Changes in FY23
To support the Company’s international expansion and
to reflect the importance of the contribution that these
businesses make, in March 2023 the Executive Leadership
Team restructured to include the CEO’s of each of our
international businesses.
This change was designed to support the ongoing
growth within each business, ensuring a Group focus
where competitive advantage through intellectual
property and synergies can be achieved. This was a
well-timed and executed strategic change and is
already seeding the strong performance outcomes
that you can see in this Annual Report.
As a result of this change, Paul Barlow, Managing Director of
carsales Australia, is no longer classified as a KMP, effective 1
March 2023. Paul’s role has primary accountability for the
Company’s Australian operations, which by design, has
less focus on the broader carsales Group. This is consistent
with the approach to the Company’s CEOs in each country.
The Board is pleased to see the depth of talent that the
Company has in all its international businesses. The
evolution of the ELT structure to a global leadership group
is reflective of where the business is today, and pleasingly
56
provides additional pipelines for succession planning and
career paths within the organisation.
Remuneration Outcomes
All FY23 remuneration outcomes align with the strategic
objectives and performance outcomes of the Company
for the fiscal year. The Board’s approach to remuneration
ensures alignment between employee and shareholder
outcomes.
Below is a summary of Fixed Remuneration, STI
and LTI outcomes:
FY23 Remuneration Changes
• Managing Director & Chief Executive Officer Cameron
McIntyre’s fixed remuneration increased by 10% in FY23.
With Cameron’s last fixed remuneration change being in
FY21, this increase was important to continue to align his
role with market benchmarks, to reflect the growth in
the size and accountability of his role and to reward
Cameron’s continued strong performance.
• Chief Financial Officer, William Elliott, received an
increase of 16.7%, which is to continue to align his
role to market benchmarks as well as in recognition
of his strong performance.
FY23 STI
• Financial (70% of the plan) – The Company delivered
a strong result for shareholders, exceeding proforma
Revenue and EBITDA targets, resulting in a 105%
achievement against the 70% weighting allocated
to the financial objectives.
• Strategic (30% of the plan) – All strategic objectives
were achieved against a balanced scorecard, which led
to 30% achievement of the 30% weighting allocated to
the strategic objectives.
• A total outcome of 135% was achieved compared to the
FY22 STI outcome of 103%.
FY21-23 LTI
• Financial (70% of the plan) – The team achieved a
ranking in the 73rd percentile for Relative TSR and
achieved solid performance for Adjusted EPS, resulting
in a 58.9% vesting outcome of the 70% weighting
allocated to the financial objectives.
As noted on page 8 of the 2020 Notice of Annual
General Meeting, due to the exceptional circumstances
of COVID-19, the Board vested the FY18–20 LTI financial
objectives at the mid-target. To ensure executive KMPs
did not gain material advantage from that discretion,
the Adjusted EPS outcome implied by mid-target
vesting was used as the starting point for the
FY21–23 LTI’s base year calculation.
carsales Annual Report 2023 OUR BOARD AND
REMUNERATION REPORT
This year has seen significant business growth. This has been achieved
by the exceptional talent the Company has throughout all levels of the
business, and the strong leadership of our Executive team.
• Strategic (30% of the plan) – All strategic objectives were
achieved against a balanced scorecard, which led to a
30% achievement of the 30% weighting allocated to the
strategic objectives.
• A total vested outcome of 88.9% was achieved
compared to the FY20-22 outcome of 75.7%.
When assessing strategic objectives in both the LTI and STI
plans, the Board uses a scorecard of three key measures:
on-time delivery, on budget, and a positive contribution to
the bottom line.
We believe this approach fairly recognises the outcomes
and value creation that our Executive KMP’s and
leadership team have delivered for the business and
shareholders.
Non-Executive Director Fees
A review of Non-executive Directors fees was also
conducted in FY23, taking into consideration the market
benchmarking for positions at relevant ASX listed
organisations of comparable size and complexity. As part
of this review, it was determined that an increase of 2.5%
to the Chair fee, base director fees, Chair of Committee
fees and Member of Committee fees was required to fairly
compensate Non-Executive Directors for their services.
Board Structure
As part of our Board renewal plan, we were pleased
to welcome Susan Massasso to the Board in June 2023.
Susan is an experienced Non-Executive Director, advisor
and executive with a strong track record in strategy, growth
and international market development. Susan will become
a member of the Sustainability Committee and the People
and Culture Committee.
The Board took the opportunity to review Board
Committee membership, which has resulted in some
changes. Further details can be found in the Corporate
Governance statement in this Annual Report.
Company Culture
This year has seen significant business growth. This has
been achieved by the exceptional talent the Company
has throughout all levels of the business, and the strong
leadership of our Executive team.
The Company’s culture continues to evolve with an
increasing global view. The Board was delighted to see
employee engagement being measured globally and the
ELT’s continued focus on creating a strong Company
culture. It was pleasing to see that as a result of that focus,
85% of our people see the Company as a great place to
work; 83% of our team are proud to work for the business;
and 91% of our people believe in the Company’s
commitment to diversity.
This year we were again proud to be recognised as a
Workforce Gender Equality Agency Employer of Choice,
a certified Great Place to Work® in Australia, AFR Best
Places to Work, an AAGE Top Intern program employer,
Top Graduate Employer and we remain an accredited
Family Friendly Workplace. This recognition is
acknowledgement of the Company’s strong culture
and continued ability to attract and retain top talent.
Committee Priorities for FY24
The People and Culture Committee will continue to closely
monitor the effectiveness of the Executive KMP remuneration
framework. Our focus remains on continuing to engage,
motivate and retain Executives in a highly competitive talent
market, whilst aligning with shareholder interests.
As always, we welcome your feedback on our
Remuneration Report and look forward to discussions
with many of you over the coming year.
Yours sincerely
Kim Anderson
Chair of the People and
Culture Committee
57
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYFINANCIAL REPORT Remuneration Report 2023
In this Report
1. Who is Covered in this Report
2. Summary of the Executive KMP Remuneration Framework
3. Remuneration Outcomes and Link to Performance
4. Remuneration Governance
5. Executive KMP Statutory Remuneration Disclosure
6. Executive KMP Service Agreements
7. Executive KMP Equity Disclosures
8. Non-Executive Director Fees
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Independent Audit of the Report
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001.
1. Who is Covered in this Report
This remuneration report details the performance and remuneration of Key Management Personnel (KMP), comprising
Non-Executive Directors and members of the Executive Leadership Team (herein referred to as Executive KMP) who had
the authority and responsibility for planning, directing, and controlling the activities of the Company during FY23.
1.1 Key Management Personnel
The Company’s KMP in FY23 are listed in the table below:
Name
Non-Executive Directors
Patrick O’Sullivan
Walter Pisciotta
Kim Anderson
Edwina Gilbert
Kee Wong
David Wiadrowski
Susan Massasso
Steve Kloss
Executive KMP
Cameron McIntyre
William Elliott
Paul Barlow
Position
Term as KMP
Non-Executive Chair
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (from 14 June 2023)
Non-Executive Director (Alternate until 4 November 2022)
Full year
Full year
Full year
Full year
Full year
Full year
Part year
Part year
Managing Director (MD) and Chief Executive Officer (CEO)
Chief Financial Officer (CFO)
Managing Director – carsales Australia (KMP until 28 February 2023)
Full year
Full year
Part year
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2. Summary of the Executive KMP Remuneration Framework
2.1 Executive remuneration strategy and link to Company performance
When designing remuneration plans and making decisions within our remuneration framework, we are guided by our
remuneration principles which support the execution of our business strategy.
The strategic measures for our Company’s remuneration plans are taken from areas of focus from our Company strategy.
This ensures we align priorities across the wider Company in both remuneration and strategy.
Our vision: create #1 digital marketplaces around the world
Customer
Sustainable Growth
People
Our Voyager
Underpinned by our remuneration principles
Market competitive
Ensure the Company has the flexibility to attract, motivate and retain high calibre talent in a competitive market.
Alignment
Link to Company
strategy
Reward the
right outcomes
The alignment of Executive KMP interests with those of shareholders and our customers are paramount to
business success. We believe in a pay for performance culture and through this encourage Senior Executives
to build and maintain a reasonable shareholding.
Our focus is on value-add objectives that contribute to achieving our purpose so that we reward what truly
impacts business growth.
We encourage responsible decision making that is made in the best interests of our customers and shareholders
and align reward outcomes accordingly.
Reinforcing business goals and objectives via our Remuneration Framework
Remuneration Component
Alignment to performance
Alignment to principles and strategy
Fixed Remuneration (FR)
Comprises base salary
and superannuation.
Set at a market competitive level in relation to
the scope, complexity, capabilities and individual
performance in the role.
Provides recognition for day to day, operational
activities in the role.
Set to attract, retain, and engage the best people
to design and lead the delivery of our strategy.
Short-term Incentive (STI)
Annual incentive opportunity.
Delivered as 75% cash and 25%
deferred performance rights for
a 12-month period, subject to
continued service.
Performance assessed using a Company Performance
scorecard against:
• Financial measures (70%) – Proforma Revenue1
and Proforma EBITDA1, weighted equally.
• Strategic measures (30%) – Pre-determined projects,
business and people objectives.
Linked to the Company’s key strategic priorities
which directly contribute towards the execution
of long-term strategy.
The 25% of the award that is deferred into equity
supports Executives’ alignment with shareholder
interests, as well as Executive retention.
Long-term Incentive (LTI)
Performance assessed against:
Granted in 100% performance
rights with a three-year
vesting period.
• Financial measures (70%) comprising Adjusted
Earnings Per Share (Adjusted EPS) and Relative Total
Shareholder Return (Relative TSR), weighted equally.
• Non-financial strategic milestone measures (30%)
including international business performance
metrics; trust and brand metrics and domestic
business milestones.
Targeting sustained growth in profitability and
shareholder wealth creation.
The three-year vesting period encourages consideration
of long-term decision making and value creation,
as well as operating as a retention tool.
With a significant portion of potential remuneration
based on carsales equity, the Board provides
alignment between the interests of Executives and
shareholders.
Non-monetary benefits: Employees are provided with salary continuance insurance cover. It is not allocated on an individual basis.
1. Proforma revenue reflects ordinary revenue in accordance with IFRS, adjusted to reflect 100% ownership of Trader Interactive and 30% ownership of webmotors
in both the current and historical comparative periods. Proforma EBITDA reflects Earnings before Interest, Tax, Depreciation and Amortisation on a consistent
ownership basis with proforma revenue. It also excludes certain non-operating and non-recurring items as outlined on page 96 of the annual report to best
reflect the underlying performance of the business.
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To ensure remuneration is market competitive, the Company will seek advice from external remuneration consultants on
an as needs basis to benchmark Executive KMP remuneration against relevant peers, being ASX listed companies that
are relative in size, structure and industry to that of carsales. The Company accepts that while this peer group is small, it is
the most relevant group from which the competition for talent arises. Increasingly, the Company also considers global
competitors for talent to be relevant, but remains focused on Australian listed companies with a global presence for the
purpose of benchmarking.
In FY23, the Board engaged Ernst & Young (EY) and Mercer Consulting as its independent remuneration advisors.
While carsales sought input from EY and Mercer Consulting, no remuneration recommendations, as defined by the
Corporations Act 2001, were provided. External advice is used as a guide only and does not serve as a substitute for
Directors’ thorough consideration of remuneration outcomes.
2.2 Remuneration Mix (percentage of total remuneration)
Within the remuneration framework, a key focus has been on strengthening performance-based remuneration.
As such, our remuneration mix (at maximum) includes at least 50% in the form of variable remuneration.
The figure below shows the remuneration mix at maximum opportunity for FY23, comprising Fixed Remuneration,
STI cash, STI deferred and LTI granted.
The actual remuneration mix will vary based on Company and individual performance each year.
2.3 Timeline for Delivery of Remuneration
The diagram below provides a summarised timeline of when the FY23 remuneration opportunity is delivered.
Fixed Remuneration
Base salary/Super (100%)
Short-term Incentive
Cash (75%)
Deferred performance
rights (25%)
Long-term Incentive
Performance rights
(100%)
Performance Year
Year 1
Year 2
Year 3
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Fixed RemunerationMD & CEOSTI CashSTI DeferredLTI31%32%11%27%CFO48%27%9%16%carsales Annual Report 2023
OUR BOARD AND
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3. Remuneration Outcomes and Link to Performance
One of the key principles of the Company’s remuneration framework is to align Executive KMP remuneration outcomes
with Company performance. This section provides a summary of the Company’s five-year financial performance outcomes
and the link to remuneration outcomes over this period.
3.1 Company Five-year Financial Performance
The Company’s financial performance over the past five years along with how that performance has translated to shareholders
in the form of earnings per share (EPS) and total shareholder return (TSR) is demonstrated in the graphs below.
Remuneration Performance Measures
Proforma Revenue1 ($m)
Proforma EBITDA1 ($m)
Adjusted EPS2
1000
900
800
700
600
500
400
300
200
100
0
CAGR 10%
851
749
647
581
595
FY19
FY20
FY21
FY22
FY23
600
500
400
300
200
100
0
CAGR 12%
100
CAGR 11%
462
402
363
296
311
FY19
FY20
FY21
FY22
FY23
)
s
t
n
e
c
(
S
P
E
d
e
t
s
u
d
A
j
75
50
25
0
78.1
66.5
58.4
53.6
50.6
FY19
FY20
FY21
FY22
FY23
Dividend and payout ratio
Share price year end ($)
Cumulative TSR (last 5 years)
Other Performance Metrics
)
s
t
n
e
c
(
S
P
D
70
60
50
40
30
20
10
0
61.0
50.0
45.5
47.0
47.0
47.5
47.5
50.0
44.2
45.5
FY19
FY20
FY21
FY22
FY23
100
%
o
i
t
a
R
90
80
70
60
30
25
20
15
10
5
0
23.8
19.8
18.4
17.5
13.5
80%
60%
40%
20%
0%
-20%
73%
26%
FY19
FY20
FY21
FY22
FY23
FY19
FY20
FY21
FY22
FY23
Dividend
per share
Dividend payout
ratio (%)
Share price
carsales
ASX200 Total Returns
Five-year Incentive Outcomes
Executive KMP Remuneration Outcomes
STI outcome (average % of maximum)
LTI vesting outcome (% of maximum)
FY19
31.9%
49.4%
FY20
FY21
FY22
FY23
28.0%
100.0%
103.0%
135.0%
76.0%
30.0%
75.7%
88.9%
1. Proforma revenue reflects ordinary revenue in accordance with IFRS, adjusted to reflect 100% ownership of Trader Interactive and 30% ownership of webmotors in
both the current and historical comparative periods. Proforma EBITDA reflects Earnings before Interest, Tax, Depreciation and Amortisation on a consistent
ownership basis with proforma revenue. It also excludes certain non-operating and non-recurring items as outlined on page 96 of the annual report to best reflect the
underlying performance of the business.
2. In accordance with AASB133, historical EPS has been restated based on an adjustment factor to take into account the new shares issued in connection with the
Trader Interactive and webmotors acquisitions.
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Remuneration Report 2023 continued
3.2 Executive KMP Realised Remuneration Snapshot – FY23
The table below provides actual amounts received by the Executive KMP for FY23. This table is an additional disclosure
to those required under the Australian Accounting Standards and the Corporations Act 2001. It has been provided to assist
shareholders in understanding realised outcomes.
Name
Executive Director
Cameron McIntyre
Other Senior Executives
William Elliott
Paul Barlow1
Total FY23
Total FY22
Year
FY23
FY22
FY23
FY22
FY23
FY22
Fixed
remun-
eration2
$
1,650,000
1,500,000
700,000
562,500
533,333
685,000
2,883,333
2,747,500
Other
$
Cash STI
earned3
$
Vested
deferred
STI4
$
Vested
LTI5
$
Total
$
–
–
–
–
–
–
–
–
1,676,093
1,280,348
539,594
389,202
1,675,977
1,556,227
5,541,664
4,725,777
393,750
278,223
412,500
385,731
2,482,343
1,944,302
117,266
76,425
108,381
108,467
765,241
574,094
265,559
–
157,371
207,931
2,098,907
1,764,158
1,476,575
917,148
1,211,585
1,387,129
8,229,824
7,030,054
1. Paul Barlow ceased being a KMP from 1 March 2023 due to the business restructure that resulted in Paul being responsible for the Australian business in the same
way as the Company CEOs across the globe run their respective businesses. With that change, his role has increased accountability for the Company’s Australian
operations, it also means the role has less influence in the planning, directing, and controlling activities across the wider carsales Group and is therefore no longer
classified as KMP. FY23 amounts represent the period 1 July 2022 to 28 February 2023 for fixed remuneration, with STI and LTI outcomes disclosed being pro-rated
over the same period.
2. Fixed remuneration earned in the financial year (base salary and superannuation).
3. Cash STI earned in relation to performance under the STI plan during the financial year.
4. Vested deferred STI is the value of deferred STI earned as a result of performance in the prior financial year, subject to a restriction period that ends in August 2023.
The STI value is calculated as the number of rights that vested multiplied by the 30 June 2023 closing share price (30 June 2022 closing share price for the FY22 financial
year).
5. Vested LTI is the value of performance rights that vest in August 2023. Values are calculated as the number of rights received multiplied by the 30 June 2023
closing share price (30 June 2022 closing share price for the FY22 financial year). For example, FY23 is reported as the FY21 LTI grant which vest in August 2023.
3.3 Fixed Remuneration Outcomes
Fixed remuneration is generally positioned between the median and the 75th percentile of the relevant market, which allows
the flexibility required to attract and retain high calibre Executives.
Name
Cameron McIntyre
William Elliott
Paul Barlow1
1. Represents annual fixed remuneration for the FY23 year.
$
1,650,000
700,000
800,000
Actual fixed remuneration paid to members of the Executive KMP is shown in the remuneration tables in section 3.2
of this report.
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A benchmarking exercise was undertaken in FY23. Mercer Consulting was engaged to extract market data based on
outcomes from an agreed ASX-listed peer group. This peer group consisted of 23 ASX-listed companies that were selected
with consideration to organisation size and industry. Market data was presented in accordance with appropriate job size
of each role, allowing for a relevant market review to be undertaken.
Within the FY23 annual review, effective 1 July 2022, Cameron McIntyre received a fixed remuneration increase of 10%,
recognising his continued strong performance, the increase in the size and accountability of his role in line with business
growth as well as better aligning him to the market. William Elliott received an increase of 16.7% to continue to better align
his fixed remuneration to market in accordance with his continued strong performance in the Company’s CFO role.
There were no changes in fixed remuneration for Paul Barlow.
3.4 Short-term Incentive Plan – Key Features and Outcomes
The key features of the STI plan for the year ended 30 June 2023 are detailed in the table below.
Feature
Description
Performance
period
STI Opportunity
Approach
Eligible Executive KMPs participate in the annual STI plan with an earning opportunity that is ‘at
risk’ subject to specific pre-determined Group measures being met. All performance measures
chosen support the delivery of our strategy and create sustainable value for all stakeholders.
Aligned with the financial year, 1 July 2022 to 30 June 2023.
The STI opportunity varies in accordance with role size, complexity and direct accountability.
Market benchmarking references are also taken into consideration. The STI Target opportunity
represents expected performance for the Group. The maximum (capped) opportunity represents
outstanding levels of performance. Executive KMP capped levels, referenced as a percentage of
Fixed Remuneration (FR) are:
Role
CEO
CFO
Target STI1
100%
55.6%
Maximum STI2
135%
75%
Delivery of
award
Performance
measures and
weightings
The STI award is delivered 75% in cash and 25% in equity (performance rights) that is deferred for
an additional 12 months subject to a continued service condition. No dividends are payable until
the performance rights vest into ordinary shares at the conclusion of the 12-month hold period.
The STI plan incorporates both financial and non-financial performance measures. The performance
measures and their relative weightings are:
Category
Financial
Non-financial
Measures
Proforma revenue
Proforma EBITDA
Strategic objectives
Weighting
35%
35%
30%
Performance
threshold and
maximum
These measures are calculated on a constant currency basis to remove the effect of fluctuations
in FX rates when assessing performance outcomes.
A minimum performance threshold must be achieved in the performance period prior to any
award vesting. The threshold and maximum performance for FY23 have been set as follows:
Measure
Proforma revenue
Proforma EBITDA
Threshold
3.0% growth
3.0% growth
Maximum
12.0% growth
12.0% growth
For FY24 the proforma revenue and EBITDA thresholds have been raised from 3.0% growth
to 5.0% growth.
1. The Target STI opportunity is represented as a percentage of fixed remuneration.
2. FY23 maximum STI is capped at 135% of the target opportunity.
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Feature
Selection of
Performance
Measures
Approach
Financial Measures:
Proforma revenue
Proforma revenue reflects ordinary revenue
in accordance with IFRS, adjusted to reflect
100% ownership of Trader Interactive and 30%
ownership of webmotors in both the current
and historical comparative periods.
Proforma Earnings Before Interest, Tax,
Depreciation and, Amortisation (EBITDA)
Proforma EBITDA reflects Earnings before
Interest, Tax, Depreciation and Amortisation
on a consistent ownership basis with Proforma
revenue. It also excludes certain non-operating
and non-recurring items as outlined on page 96
of the annual report to best reflect the
underlying performance of the business.
Link of
performance
and reward
Non-financial measures within the plan recognise the importance of key strategic priorities and
employee engagement in achieving business transformation. The Board decides on pre-determined
strategic performance objective targets at the beginning of the performance period, which are
linked to our longer-term strategy and value creation for our shareholders. The strategic objective
outcomes are provided within the STI outcomes section of the report.
For each measure, there is a minimum threshold of performance required which needs to be met
before any pay-out is awarded for that portion of the STI.
An incremental scale applies in accordance with achievement of financial measures, with the
intention to motivate and fairly reward exceptional performance outcomes. The achievement
of non-financial performance measures is assessed through a rating scale, with Partial Achievement
allocated 75% and Full Achievement allocated 100%. Strategic objectives are capped at 100%.
Maximum 150%
(Financial)
Maximum 100%
(Non-financial)
Target 100%
(Financial)
Threshold 75%
(Non-financial)
Threshold 30%
(Financial)
Minimum 0%
Threshold
Stretch
Financial
Non-financial
Cessation of
employment
If an Executive KMP ceases employment with the Company prior to any awards being paid,
unless the Board determines otherwise, the Executive KMP will forfeit any awards to be paid
for the performance period.
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Performance outcomes against STI Measures for FY23
STI outcomes are calculated using a performance scorecard with 70% weighting on financial measures and 30% weighting
on non-financial measures. All outcomes are measured on Group performance.
The Board’s assessment of the Executive KMP’s performance in the 2023 financial year is outlined below.
Measure
Weighting Threshold
Actual
Performance
Payout %
Commentary
Proforma revenue
35%
$771m
$851m
52.5%
• Strong performance achieved, well
above threshold.
Proforma EBITDA
35%
$414m
$462m
52.5%
• Strong performance achieved, well
Strategic
Create and
implement an
enhanced
ecosystem for
innovation to
continue to
achieve growth
and maintain
a culture of
innovation.
Deliver short-term
synergies from
recent acquisitions
that deliver
shareholder value.
Engagement
and Sentiment
10%
Achieved
10%
10%
Achieved
10%
above threshold.
• Successfully delivered a program to
structure innovation internally and
externally – examples include the
creation of an Early Stage
Investments program that has
already delivered several minor
investment opportunities, an
internal innovation kickstart
platform that has seen innovation
ideas enter the funnel each quarter
since its inception, the creation of
carsales Next which launches
adjacent innovations to our core
business, and successful delivery of
the Group’s first global hackathon.
• Synergies were delivered on time
and in accordance with acquisition
business cases, delivering good
growth in revenue, earnings and
shareholder value.
10%
Achieved
10%
• A consistent global view of employee
engagement was established
across the Group achieving a global
engagement rating of 73% which
was a strong result compared to
global technology benchmarks.
Total
100%
135%
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Overall STI Financial Outcomes
The following table provides the FY23 STI outcomes awarded to Executive KMP. Under the FY23 STI plan, 25% of the
awarded STI is provided in equity with vesting deferred for an additional 12 months, subject to a continued service condition.
FY2023
Cameron McIntyre
William Elliott
Paul Barlow2
Actual STI
awarded
$
2,234,790
525,000
550,000
75%
Cash
$
1,676,093
393,750
412,500
25%
Deferred
in Equity
$
558,697
131,250
137,500
Number of
performance
rights awarded1
23,465
5,512
5,775
STI
Target
$
1,655,400
388,889
407,407
STI actual
as a %
of STI
Target
%
135%
135%
135%
1. Number of performance rights to be awarded is based on the 20 trading day VWAP up to and including 30 June 23.
2. The actual STI awarded for Paul Barlow represents the full year STI award pro-rated for the period that he was KMP period from 1 July 2022 to 28 February 2023.
2022 Deferred STI Outcome
The 2022 deferred STI will qualify to vest upon release of this Annual Report to the ASX by the Board. The table below
provides the award value based on the accounting Black Scholes valuations, as well as the cash value to each Executive
KMP of their STI based on the 30 June 2023 share price.
2022
Cameron McIntyre
William Elliott
Paul Barlow
DSTI value
(Black Scholes)
Vested
$
512,184
111,309
154,313
Vested
%
100%
100%
100%
DSTI value
(30 June 2023 share price)
Vested
%
100%
100%
100%
Vested
$
539,594
117,266
162,572
3.5 FY21-23 Long-term Incentive Plan – Key Features
Feature
Approach
Description
Opportunity
Eligible Executive KMPs participate in the LTI plan, with an opportunity that is ‘at risk’ subject
to specific pre-determined Group performance measures being met over a three-year period.
The plan is designed to align Executive KMP’s interests with those of shareholders.
The LTI opportunity reflects accountabilities and influence over the Company’s long-term
performance within each role. Market benchmarks are also referenced in determining the LTI
opportunity. The maximum face value of LTI that can be granted, referenced as a percentage
of Fixed Remuneration (FR) is:
Role
CEO
CFO
Maximum (cap)
94.7% of FY21 Fixed Remuneration
50.0% of FY21 Fixed Remuneration
Performance
and vesting
period
Performance is measured over three financial years. Any performance rights that do not vest
following testing will lapse.
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Feature
Approach
Delivery
Allocation
approach
Performance
measures and
weightings
In FY21 the Board decided to simplify the FY21-23 LTI plan to have only one equity vehicle,
rather than two. As such, one hundred percent (100%) of the opportunity in FY23 will be granted
as performance rights (PRs), with vesting subject to financial metrics and strategic objectives being
met as well as an ongoing service condition. No dividends are paid during the performance period,
until the rights vest.
The number of performance rights granted are calculated as follows:
$ Fixed
Remuneration
(FR)
x
Award
face value
(% FR)
÷
$ Share price
(Performance
rights)
=
Number of PRs
(100% of Award)
The share price used was the Volume Weighted Average Price of the Company’s ordinary shares
for the 20 trading days up to and including 30 June 2020.
The performance measures and their relative weightings are:
Category
Financial
Strategic
Measures
Adjusted EPS
Relative TSR
Growth in international business performance metrics that
reflect the strategic importance of this segment to the Group
as a whole
Trust and brand metrics that represent the importance
of reputation to the Group’s success
Domestic business milestones that indicate successful
implementation of the Group’s strategic roadmap
Weighting
35%
35%
10%
10%
10%
Performance
Threshold and
Maximum
A minimum performance threshold must be achieved in the performance period prior to any award
vesting. The threshold and maximum performance for FY21–23 and other currently operating
LTI plans (for further information) have been set as follows:
Year
FY21–23
FY22–24
FY23–25
Measure
Relative TSR
Adjusted EPS
Relative TSR
Adjusted EPS
Relative TSR
Adjusted EPS
Threshold
50th percentile
3.0% CAGR
50th percentile
3.0% CAGR
50th percentile
3.0% CAGR
Maximum
75th percentile
10.0% CAGR
75th percentile
10.0% CAGR
75th percentile
10.0% CAGR
Financial metrics used exclude corporate activity (such as acquisitions) made after the AGM notice
date, with the exception of any disposal of businesses or acquisitions of additional equity stakes
in any existing businesses, where the CAGR targets will be altered to maintain the underlying CAGR
growth rates targeted for the financial year. The Board retains discretion to adjust the CAGR growth
rates to include the impact of any strategically important acquisitions made during the performance
period, such that management is not materially advantaged or disadvantaged from entering into
further acquisitions when it is in shareholders’ interests to do so.
This discretion was applied by the Board where the acquisition of Trader Interactive was added to
the FY21-23 LTI base year EPS to ensure there was no material advantage to Executives as a result
of the acquisition.
For FY24, the Board intends to increase the Adjusted EPS Threshold from 3.0% to 5.0% growth.
Strategic Targets: The release of targets that were used to assess performance will be provided
upon completion of each three-year performance period, due to competitive advantage information
being withheld.
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Feature
Approach
Performance Level
Financial
Below Threshold
Between Threshold and Maximum:
Adjusted EPS
Relative TSR
Strategic
Not achieved
Partial achievement
Full achievement
Financial Measures:
Vesting %
0%
From 30% to 100%
From 50% to 100%
0%
50%
100%
Adjusted EPS
Adjusted EPS is defined as earnings per share
calculated by dividing the Adjusted NPAT
attributable to equity holders of the Company
during the relevant period by the weighted
average number of ordinary shares outstanding
during the relevant period. The Board also
retains discretion to alter the Adjusted EPS
hurdle in exceptional circumstances to ensure
there is no material advantage or disadvantage
due to matters outside management’s influence
that would materially affect Adjusted EPS.
Relative TSR
TSR calculates the return Shareholders would
earn if they held a notional number of Shares
over a period of time. It measures the change
in the Company’s Share price, together with
the value of dividends during the relevant period,
assuming that the dividends are re-invested into
new Shares. Relative TSR compares the Company’s
TSR performance against the TSR of a bespoke
peer group of companies.
The Board believes that the chosen measures ensure alignment of LTI vesting outcomes to
shareholder interests. In determining the financial measures’ targets, the Board considers the
earnings performance of the Company, forward looking market consensus earnings expectations,
the overall purpose of the award and the long-term best interests of the Company. Based on
these factors, the Board believes that the growth targets that have been set are appropriate
in all the circumstances.
Non-financial measures within the plan recognise the importance that key strategic priorities and
people engagement have in achieving ongoing business transformation and evolution. The Board
has selected pre-determined strategic performance objectives which are linked to the Company’s
long-term strategy and are therefore key in improving long-term financial performance and value
for our shareholders. Key factors in determining these outcomes are delivery on time, on budget
and contribution to the bottom line.
The Board has retained Adjusted EPS as a performance measure to support alignment with
Company specific financial outcomes, whilst introducing Relative Total Shareholder Return (RTSR)
as a new market based performance measure, to enhance alignment of Executive remuneration
outcomes with that of shareholders. The peer group chosen comprises of ASX200 companies in
the media and entertainment, retailing and information technology sectors. In addition, there are
three international peer companies in the peer group reflecting the Company’s global footprint.
A full listing of the peer group was provided in the 2020 Notice of Annual General Meeting
documentation on the ASX web page.
Vesting
Schedule
Selection of
Performance
Measures
68
carsales Annual Report 2023 OUR BOARD AND
REMUNERATION REPORT
Feature
Approach
Malus and
Clawback
If the Board, in its reasonable opinion, determines that a plan participant has engaged in any
of the following conduct, the Board may declare that all, or some, of the participant’s options
or performance rights held under the plan are forfeited:
Ceasing
Employment
Hedging Policy
Change of
Control
(a) Cessation of employment, other than for special circumstances, redundancy or by mutual
agreement between the Board and the participant;
(b) Material breach of the participant’s obligations to the Company or a Subsidiary;
(c) Behaviour that brings the Company or Group into disrepute.
Executive KMPs who leave the Company have 30 days from their date of departure to exercise any
vested options they may have, unless such departure is under adverse conditions. In exceptional
circumstances, and at the Board’s discretion, Executive KMPs may be allowed to retain unvested
options (from current or prior year operating LTI plans) and performance rights in a future period
when they vest. This would be subject to testing against performance criteria.
The Company’s Equity Plan specifically prohibits a plan participant from entering into any scheme,
arrangement, agreement (including options and derivative products) or other hedging transaction
under which the participant may alter or limit the economic benefit or risk to be derived from
options, irrespective of future changes in the market price of any Company shares. Where a plan
participant enters, or purports to enter, into any such scheme, arrangement or agreement without
prior authorisation from the Company, such options will immediately lapse.
While the Board maintains discretion in relation to unvested options and performance rights, the
default treatment for unvested options subject to performance conditions is that a pro-rata number
will vest based on the extent to which applicable performance conditions have been satisfied.
For unvested options and performance rights subject to only continuing service conditions, the pro-rata
number will vest based on the proportion of the period that has lapsed.
There are currently three years of unvested LTI awards with performance periods that include the 2023 financial year.
Financial year of grant
FY21-23
FY22-24
FY23-25
Performance period
1 July 2020 – 30 June 2023
1 July 2021 – 30 June 2024
1 July 2022 – 30 June 2025
Performance year to
determine vesting
FY23
FY24
FY25
Vesting dates
August 2023
August 2024
August 2025
69
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYFINANCIAL REPORT Remuneration Report 2023 continued
FY21-23 Performance outcomes against LTI Measures
LTI performance and awarded outcomes
The Board’s assessment of performance against the FY21-23 LTI performance measures is outlined below.
Measure
Financial
Relative TSR
Weighting
Performance
outcome
Vesting
outcome Commentary
35%
Achieved
25.6% • This outcome reflects a ranking in the
73rd percentile over 3 years compared
to our peer group.
Adjusted EPS1
35%
Achieved
33.3% • Solid actual performance of 11.5% CAGR
Strategic
International revenue
growth
10%
Full
Achievement
Deliver a compelling
reason for more users to
log in to mitigate the 3rd
party cookie elimination.
10%
Full
Achievement
Deliver the globalisation
of our trade capability.
10%
Full
Achievement
in Adjusted EPS. Achievement for the
purpose of this plan was adjusted down to
9% due to the increased base year starting
point and TI acquisition adjustment. See
footnote below for further details.
10% • Strong double digit revenue growth across
the international portfolio supported by
excellent performance in South Korea and
Brazil over the last three years.
10% • Doubled the proportion of logged-in users
through simplifying the log-in process and
launching member-only products such as
additional pricing insights. Delivering our
Customer Data Platform (CDP) further
mitigates 3rd party cookie risk.
10% • Successfully applied our trade IP in multiple
markets, with all our markets now having
functional dealer lead and inventory
management.
Total
100%
88.9%
1. As noted on page 8 of the 2020 Notice of Annual General Meeting, due to the exceptional circumstances of COVID-19, the Board vested the FY18-20 LTI financial
objectives at the mid-target. To ensure executive KMPs did not gain material advantage from that discretion, the Adjusted EPS outcome implied by mid-target vesting
was used as the starting point for the FY21-23 EPS base year calculation. The acquisition of Trader Interactive was built into the base year EPS to ensure there was
no material advantage to executives as a result of the acquisition.
70
carsales Annual Report 2023
OUR BOARD AND
REMUNERATION REPORT
4. Remuneration Governance
The Board has ensured robust governance processes are in place for remuneration matters within the Company.
The below diagram provides a summary of the remuneration governance framework.
Board
The Board takes guidance and reviews recommendations from the People and Culture Committee and makes
decisions on remuneration strategy and outcomes for Executive KMP and Non-Executive Directors.
People and Culture Committee
The People and Culture Committee reviews recommendations made by management where appropriate and
makes recommendations to the Board on remuneration and other terms of employment applicable to Executive
KMP and Non-Executive Directors. In addition, the People and Culture Committee will facilitate an efficient
mechanism for examination of the selection and appointment practices of the Company as well as cultural,
diversity and inclusion practices.
Management
The CEO makes recommendations
to the People and Culture
Committee on performance and
remuneration outcomes
for direct reports.
Management may attend Committee
meetings as required, however do
not participate in formal discussions
or decision making involving their
own remuneration.
Independent remuneration
advisors
The People and Culture Committee
may engage independent
remuneration advisors if needed
to assist the Board in making
remuneration decisions.
Other Board committees
The Risk Management
Committee and Audit Committee
may advise the People and Culture
Committee on relevant risk and
reputation or relevant financial
outcome matters that arise.
Any advice is used as one of many
factors taken into consideration by
the Board.
Further information on the purpose and duties of the People and Culture Committee is contained in its Charter,
which is available from the Company’s investor website: https://shareholder.carsales.com.au/charters.
4.1 Engagement with shareholders and proxy advisors
Members of the Board have proactively engaged with several of its largest Shareholders throughout the year.
Proxy advisors are invited to meet with representatives of the Board throughout the year to ensure they have a
good understanding of the Company’s remuneration structure and decisions, and are in a position to provide insightful
advice to their clients. The Company views these meetings as an opportunity to receive valuable feedback on issues
of importance to its Shareholders and to ensure it is across the trends being seen in the market.
Over the course of FY23, representatives of the Company met with the following proxy advisors:
• Ownership Matters;
• CGI Glass Lewis; and
• ACSI – Australian Council of Superannuation Investors.
71
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYFINANCIAL REPORT Remuneration Report 2023 continued
5. Executive KMP Statutory Remuneration Disclosure
5.1 Accounting based benefits
The table below has been prepared in accordance with the requirements of the Corporations Act 2001 and relevant
Australian Accounting Standards. The figures provided under the share-based payments columns are based on
accounting values and do not reflect actual cash amounts received by members of the Executive KMP in FY23.
Short-term benefits
Post
Employ-
ment
Long-
term
benefits
Share-based payments
Salary
and fees
$
Cash STI
$
Super-
annu-
ation
Long
Service
Leave
$
Deferred
STI
$
LTI
perfor-
mance
rights
$
LTI
options
$
Other
$
Total
$
1,624,708 1,676,093
1,280,348
1,476,432
25,292
23,568
68,678
23,595
556,164 1,873,951
296,893
416,269
238,376
4,645
– 6,063,262
– 3,521,750
674,708
538,932
514,364
661,432
393,750
278,223
412,500
385,731
2,813,780 2,482,343
1,944,302
2,676,796
25,292
23,568
18,969
23,568
69,553
70,704
30,512
27,300
9,255
50,387
108,445
101,282
244,023
125,660
44,961
85,878
210,978
101,677
120,473
43,566
783,501 2,328,952
385,420
622,620
–
355
18,667
1,036
257,043
6,036
– 1,493,945
999,217
–
– 1,286,410
– 1,286,193
– 8,843,617
– 5,807,160
Year
Name
Executive Director
Cameron
McIntyre
Other Senior Executives
William Elliott
FY23
FY22
FY23
FY22
FY23
FY22
Paul Barlow
Total KMP FY23
Total KMP FY22
Paul Barlow ceased being a KMP from 1 March 2023 due to the business restructure that resulted in Paul being responsible
for the Australian business in the same way as the Company CEOs across the globe run their respective businesses.
With this change, his role has increased accountability for the Company’s Australian operations, it also means the role
has less influence in the planning, directing, and controlling activities across the wider carsales Group and is therefore
no longer classified as KMP. FY23 amounts represent the period 1 July 2022 to 28 February 2023 for fixed remuneration,
with full year STI and LTI outcomes disclosed being pro-rated over the same period.
6. Executive KMP Service Agreements
All Executive KMP have service agreements determining fixed remuneration (cash salary and superannuation),
and performance based variable reward, comprising STI opportunity and participation in the Company’s LTI Plan.
They have no fixed employment terms and no special termination payment conditions. All agreements provide for
dismissal due to gross misconduct. The termination notice period is six months by either party and there is a six month
non-compete period.
7. Executive KMP Equity Disclosures
7.1 STI and LTI payments (cash, options and performance rights) achievement against
maximum entitlement
All Executive KMP received grants that were equal to or less than their maximum potential STI entitlements. The relative
proportions of remuneration which are linked to performance and those that are fixed based on the accounting values
table in section 5.1 are as follows:
Name
Executive Director
Cameron McIntyre
Other Senior Executives
William Elliott
Paul Barlow
Cash salary and
superannuation
2023
%
2022
%
At risk – STI
2023
%
2022
%
At risk – DSTI
2023
%
2022
%
At risk – LTI
2023
%
2022
%
28
49
42
43
58
57
28
26
32
36
28
30
9
9
8
12
9
9
35
16
18
9
5
4
72
carsales Annual Report 2023 OUR BOARD AND
REMUNERATION REPORT
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73
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYFINANCIAL REPORT
Remuneration Report 2023 continued
Notes to table on previous page:
1. $0.00 exercise price represents performance rights.
2. Percentage of the available grant that vested in the financial year.
3. Percentage of the available grant that was forfeited due to not meeting the service and performance criteria set.
4. When exercisable, each option is convertible into one ordinary Share upon payment of the exercise price by the option holder, provided that the option holder
complies with the rules of the carsales.com Ltd Employee Option Plan. Performance rights will automatically be converted to one ordinary share upon the vesting date
provided the holder complies with the rules of carsales.com Ltd Employee Option Plan.
5. No options and performance rights will vest if the conditions are not satisfied, hence the minimum value of the options and performance rights yet to vest is nil.
The value of the options and performance rights yet to vest has been determined as the amount of the grant date fair value of the options and performance rights that
is yet to be expensed. Options and performance rights not exercised expire at the earliest of (a) the expiry date applicable to the option or performance rights, (b) 30
days post the employee ceasing to be employed by carsales.com Ltd, (c) where EPS or RTSR vesting conditions are not met at the relevant date, or (d) where there has
been a special circumstance, then within 90 days after that special circumstance has occurred or as specified by the Board.
Further information on the options and performance rights is set out in Note 26 to the financial statements.
7.3 Shares provided on exercise of options and performance rights
Details of ordinary Shares in the Company provided as a result of the exercise of options by each member of the
Executive KMP are set out below.
Number of
ordinary Shares
issued on
exercise of
options and
performance
rights during
the year
Value at
exercise date*
$
Cost to exercise
options
$
Net benefit
Date of exercise
of options and
performance
rights
Aug-22
79,600
1,774,279
–
1,774,279
Aug-22
Aug-22
Sep-22
4,156
14,129
11,658
92,632
314,938
253,445
–
–
(157,849)
92,632
314,938
95,596
Name
Executive Director
Cameron McIntyre
Other Senior Executives
William Elliott
Paul Barlow
Paul Barlow
* The value at the exercise date of options and performance rights that were granted as part of remuneration and were exercised during the year has been determined
as the intrinsic value of the options and performance rights at that date.
7.4 Equity holdings
The number of Shares in the Company held during the financial year by Executive KMP, including their personally related
parties, are set out below. There were no Shares granted during the reporting period as compensation.
Name
Executive Director
Cameron McIntyre
Other Senior Executives
William Elliott
Paul Barlow
Received during
the year on the
exercise of
options/rights
Balance
1 July 22
Other changes
during the year
Balance
30 June 23
333,294
79,600
(20,000)
392,894
7,287
103,811
4,156
25,787
2,694
1,552
14,137
131,150
74
carsales Annual Report 2023 OUR BOARD AND
REMUNERATION REPORT
7.5 Shares under option and performance rights
Unissued ordinary Shares of carsales.com Ltd under option at the date of this report are as follows:
Date options/rights granted
Oct-16
Oct-17
Oct-18
Oct-19
Oct-19
Oct-20
Oct-21
Feb-22
Dec-22
Dec-22
Expiry date
Oct-31
Oct-32
Aug-36
Oct-34
Oct-35
n/a
n/a
n/a
n/a
n/a
Issue price of
Shares
$
$12.23
$11.41
$14.87
$13.54
$13.54
$0.00
$0.00
$0.00
$0.00
$0.00
Number under
options
60,332
25,353
45,066
21,027
99,248
–
–
–
–
–
251,026
Number under
performance
rights
–
–
–
–
–
159,601
93,095
83,821
52,877
255,477
644,871
No option or performance rights holder has any right under the options or performance rights to participate in any other
Share issue of the Company. No options or performance rights have been issued post 30 June 2023.
7.6 Shares issued on the exercise of options and performance rights
The following ordinary Shares of carsales.com Ltd were issued during the year ended 30 June 2023 on the exercise
of options and performance rights granted under the carsales.com Ltd Employee Option Plan. No amounts are unpaid
on any of the Shares.
Date options and performance rights exercised
Aug-22
Aug-22
Sep-22
Oct-22
Dec-22
Feb-23
Mar-23
Jun-23
Issue price
of Shares
$
$0.00
$11.41 – $14.87
$13.54
$14.87
$14.87
$13.54
$14.87
$13.54
Number
of Shares
$
176,655
20,757
45,788
1,974
1,974
8,744
1,974
1,166
75
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYFINANCIAL REPORT Remuneration Report 2023 continued
8. Non-Executive Director Fees
Non-Executive Directors receive fees within an aggregate Directors’ fee pool limit, which is periodically proposed for
approval by Shareholders. The maximum payable to be shared by all Non-Executive Directors currently stands at
$2,000,000 per annum. The current base remuneration pool was approved by Shareholders at the Annual General
Meeting held on 29 October 2021.
Fees and payments to Non-Executive Directors are determined by the demands that are made on their time, as well
as their responsibilities. The annualised fees paid to the Board are below the $2,000,000 pool approved by Shareholders.
The following fee table applies:
Appointment
Chair fee
Base Director fee
Committee Chair fee
Committee Member fee
1 January 2022
fee table
$
370,000
147,000
35,000
15,000
1 January 2023
fee table
$
379,250
150,675
35,875
15,375
Minimum Shareholding Requirements
The Company requires all Board members to hold the equivalent of one year’s base Director’s fees in equity after 24
months’ Board membership. All Board members currently meet this requirement.
8.1 Accounting based benefits
The table below has been prepared in accordance with the requirements of the Corporations Act 2001 and relevant
Australian Accounting Standards. The figures provided under the share-based payments columns are based on accounting
values and do not reflect actual cash amounts received by Non-Executive Directors in FY23.
Short-term
benefits
Post
Employ-
ment
Salary
and fees
$
Cash STI
$
Super-
annuation
$
Long-
term
benefits
Long
Service
Leave
$
Share based payments
LTI
perfor-
mance
rights
Deferred
STI
LTI
options
Other
$
Total
$
Name
Non-Executive Directors
Patrick O’Sullivan
Year
Kim Anderson
Edwina Gilbert
Walter Pisciotta
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
David Wiadrowski FY23
FY22
FY23
FY22
Susan Massaso
Kee Wong
Total FY23
Total FY22
349,333
346,432
148,439
147,273
194,253
183,584
194,253
192,727
194,253
171,393
194,253
183,584
6,715
–
1,281,499
1,224,993
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25,292
23,568
15,586
14,727
20,397
18,358
20,397
19,273
20,397
17,139
20,397
18,358
705
–
123,171
111,423
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 374,625
– 370,000
– 164,025
– 162,000
– 214,650
– 201,942
– 214,650
– 212,000
– 214,650
– 188,532
– 214,650
– 201,942
7,420
–
–
–
– 1,404,670
– 1,336,416
Table reflects the Non-Executive Director fee increase effective 1 January 2023.
76
carsales Annual Report 2023 OUR BOARD AND
REMUNERATION REPORT
8.2 Share holdings
The number of Shares in the Company held during the financial year by each Director of carsales.com Ltd, including their
personally related parties, are set out below.
Name
Non-Executive Directors
Ordinary shares
P O’Sullivan
W Pisciotta
K Anderson
E Gilbert
K Wong
D Wiadrowski
S Massasso
8.3 Other transactions
Balance
1 July 22
Other changes
during the year
Balance
30 June 23
26,597
8,278,919
18,229
32,060
14,626
10,102
–
8,749
625,064
5,996
11,592
4,811
3,485
–
35,346
8,903,983
24,225
43,652
19,437
13,587
–
Conflicts and transactions with KMP are handled in accordance with the Board Charter available at
http://shareholder.carsales.com.au/Investor-Centre/.
(i) Directors of carsales.com Ltd
W Pisciotta is a shareholder of Pentana Solutions Pty Ltd, which has a commercial relationship with the Company.
Mr Pisciotta was absent from all Board discussions related to any commercial arrangement with Pentana Solutions.
The total amount paid by carsales to Pentana Solutions Pty Ltd in FY23 was approximately $1,844,613. The total amount
paid to carsales by Pentana Solutions Pty Ltd in FY23 was approximately $78,023.
E Gilbert is a Director of automotive dealerships which utilised the Group’s services under terms and conditions no
more favourable than dealing with other customers at arm’s length in the same circumstances. The total amount paid
to carsales by automotive dealerships of which E Gilbert is a Director in FY23 was approximately $1,444,736. E Gilbert
did not receive any additional benefits to her dealerships from her participation on the Company Board.
77
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYFINANCIAL REPORT Other Directors’ Report Disclosures
Directors
The following persons were Directors of carsales.com Ltd during the financial year and up to the date of this report
unless indicated otherwise:
Pat O’Sullivan
Non-Executive Chair
Cameron McIntyre Managing Director
Wal Pisciotta
Non-Executive Director
Kim Anderson
Non-Executive Director
Edwina Gilbert
Non-Executive Director
Kee Wong
Non-Executive Director
David Wiadrowski
Non-Executive Director
Susan Massasso
Non-Executive Director (from 14 June 2023)
Steve Kloss
Alternate Non-Executive Director (until 4 November 2022)
The number of full Board meetings attended, and sub-committee meetings attended where a Board member is a
member of that sub-committee are set out below:
Director name
Pat O’Sullivan
Cameron McIntyre
Wal Piscotta
Kim Anderson
Edwina Gilbert
Kee Wong
David Wiadrowski
Susan Massasso
Steve Kloss (alternate director)
A = Number of meetings held during the time the director held office during the year.
B = Number of meetings attended.
Full scheduled meetings
of directors
Short teleconference
meetings of directors
A
13
13
13
13
13
13
13
1
5
B
13
13
11
13
13
13
13
1
3
A
1
1
1
1
1
1
1
-
-
B
1
1
-
1
1
1
1
-
-
Director name
David Wiadrowski (Chair)
Kim Anderson
Edwina Gilbert
Number of Audit Committee
meetings during tenure
5
5
5
Number of Audit Committee
meetings attended
5
5
5
Number of Risk Management
Committee meetings during tenure
3
3
3
Number of Risk Management
Committee meetings attended
3
3
3
Number of People and Culture
Committee meetings during tenure
4
4
4
4
Number of People and Culture
Committee meetings attended
4
4
4
2
Director name
Edwina Gilbert (Chair)
David Wiadrowski
Kee Wong
Director name
Kim Anderson (Chair)
Edwina Gilbert
Kee Wong
Wal Pisciotta
78
carsales Annual Report 2023
OUR BOARD AND
REMUNERATION REPORT
Director name
Kee Wong (Chair)
Kim Anderson
David Wiadrowski
Sustainability Committee meetings
during tenure
3
3
3
Number of Sustainability Committee
meetings attended
3
3
3
Dividends – carsales.com Ltd
Dividends paid to members during the financial year were as follows:
Final fully franked dividend for the year ended 30 June 2022 of 24.5 cents (2021: 22.5 cents)
per fully paid ordinary share paid on 17 October 2022 (2021: 18 October 2021).
Interim fully franked dividend for the year ended 30 June 2023 of 28.5 cents (2022: 25.5 cents)
per fully paid share paid on 18 April 2023 (2022: 19 April 2022)
2023
$’000
86,019
2022
$’000
63,527
100,132
72,068
186,151
135,595
At the end of the financial year the Directors have recommended the payment of a 50% franked final ordinary dividend
of $122,508,000 (32.5 cents per share) to be paid on 16 October 2023 out of retained earnings at 30 June 2023.
Significant changes in the state of affairs
During the financial year the Company continued to deliver on its strategy both domestically and internationally. Further
details are set out in the Operational and Financial Review on page 28.
Matters subsequent to the end of the financial year
No matters or circumstances 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.
Insurance of officers
During the financial year, carsales.com Ltd paid a premium to insure the Directors and officers of the Company and its
Australian-based controlled entities. The contract of insurance prohibits disclosure of the nature of the liability and the
amount of the premium.
Indemnification of Directors and officers
All current Directors and officers are indemnified under a deed of indemnity, insurance and access.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the Company are important. Details of the amounts paid or payable to the
auditor (PwC) for non-audit services provided during the year are set out below.
79
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYFINANCIAL REPORT Other Directors’ Report Disclosures continued
The Board of Directors has considered the position and, in accordance with advice received from the Audit Committee,
is satisfied that the provision of the non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by
the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001
for the following reasons:
• all non-audit services have been reviewed by the Audit and Risk Management Committees to ensure they do not
impact the impartiality and objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants.
During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity:
Other assurance services
Due diligence services
Other assurance services
Total remuneration for other assurance services
Taxation services
Tax compliance services, including review of Company income tax returns
Total remuneration for taxation services
Total remuneration for non-audit services
2023
$
2022
$
607,500
–
607,500
250,700
126,498
377,198
153,000
153,000
149,004
149,004
760,500
526,202
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 81.
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 Director’s Report. Amounts in the Director’s Report have been rounded off in accordance with that Class Order to the
nearest thousand dollars or, in certain cases, to the nearest dollar.
Auditor
PwC continues in office in accordance with section 327 of the Corporations Act 2001.
Corporate governance report
As allowed under the ASX Corporate Governance Principles and Recommendations (Fourth Edition) the Company has
included its report on compliance with the principles in the year to 30 June 2023 in the Corporate Governance section of
the Investor Centre on the carsales website. The full report can be found at the following URL: https://shareholder.
carsales.com.au/governance/.
This report is made in accordance with a resolution of Directors.
Pat O’Sullivan
Chair
Melbourne
13 August 2023
80
Cameron McIntyre
Managing Director and CEO
carsales Annual Report 2023
Auditor’s Independence Declaration
OUR BOARD AND
REMUNERATION REPORT
Auditor’s Independence Declaration
As lead auditor for the audit of carsales.com Limited for the year ended 30 June 2023, I declare that to
the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of carsales.com Limited and the entities it controlled during the period.
Sam Lobley
Partner
PricewaterhouseCoopers
Melbourne
13 August 2023
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331 MELBOURNE VIC 3001
T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
81
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYFINANCIAL REPORT
Financial Statement Contents
Consolidated Financial Statements
Other Assets And Liabilities
Consolidated statement of comprehensive income 83
14. Trade and other receivables
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
Key estimates and judgements
Corporate information
Key Performance
1. Segment information
2. Revenue from contracts with customers
3. Other income and expenses
4. Earnings per share
5.
Income tax
84
85
87
88
88
88
89
92
94
95
97
6. Reconciliation of cash flows
103
15. Property, plant and equipment
16. Leases
17. Intangible assets
18. Payables and provisions
Group Structure
19. Interests in other entities
20. Business combination
21. Parent entity financial information
22. Deed of cross guarantee
23. Related party transactions
Items Not Recognised
24. Events occurring after the reporting period
148
Other
25. Remuneration of auditors
26. Share-based payments
Financing and Risk Management
27. Other significant accounting policies
7. Borrowings
8. Cash and cash equivalents
9. Financial assets and liabilities and fair
value management
10. Financial risk management
Equity
11. Contributed equity
12. Reserves
13. Dividends
105
106
107
110
115
116
119
Directors’ Declaration
Independent Auditor’s Report to
the Members of carsales.com Ltd
Shareholder Information
Corporate Directory
82
carsales Annual Report 2023
120
121
123
126
130
131
139
144
145
147
149
150
152
154
155
160
162
Consolidated Statement of Comprehensive Income
For the Year Ended 30 June 2023
Notes
2023
$’000
2022
$’000
Continuing operations
Revenue from contracts with customers
Total revenue from continuing operations
Expenses
Costs of sale
Sales and marketing expenses
Service development and maintenance
Operations and administration
Earnings before interest, taxes, depreciation and amortisation*
Depreciation and amortisation expense
Finance income
Finance costs
Changes in fair value of put options
Impairment loss and business closure expenses
Net gain on step acquisition of associates
Share of net profit from associates accounted for using the equity method
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Reclassification of exchange differences on step acquisition of associates
Remeasurement of post-employment benefit obligations
Movement in net investment hedge (net of tax)
Movement in cash flow hedge (net of tax)
2
3
17,18,19(c)
20
19(c)
5(a)
20
9
781,236
781,236
(60,538)
(127,552)
(62,793)
(129,990)
400,363
(107,018)
8,103
(55,947)
–
(37,642)
486,528
5,307
699,694
(51,377)
648,317
15,770
(83,110)
239
(10,433)
1,820
509,077
509,077
(50,026)
(87,794)
(34,849)
(67,459)
268,949
(46,691)
477
(16,730)
289
–
–
17,176
223,470
(62,016)
161,454
30,105
–
(919)
–
(14,004)
Items that will not be reclassified to profit or loss:
Changes in financial assets at fair value (net of tax)
through other comprehensive income
Other comprehensive income for the year
Total comprehensive income for the year
Profit for the year is attributable to:
Owners of carsales.com Ltd
Non-controlling interests
Total comprehensive income for the year is attributable to:
Owners of carsales.com Ltd
Non-controlling interests
Earnings per share for profit from continuing operations,
attributable to the ordinary equity holders of the parent entity:
Basic earnings per share
Diluted earnings per share
(6,257)
(81,971)
12,372
27,554
566,346
189,008
645,617
2,700
648,317
562,501
3,845
566,346
160,816
638
161,454
188,370
638
189,008
Notes
2023
Cents
Restated
2022**
Cents
4
4
181.3
181.1
54.9
54.8
*
**
EBITDA noted above is profit before interest income, interest expense, income taxes, depreciation, amortisation, impairment loss and business closure expenses,
net gain on step acquisition of associates and share of net profit from associates accounted for using the equity method.
Earnings per share for the year ended 30 June 2022 has been restated, in accordance with AASB 133, for the effects of the capital raises executed during the
current financial year to fund the purchase of the remaining 51% in Trader Interactive and the additional 40% stake in webmotors. Refer to Note 4 for details.
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
83
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Consolidated Statement of Financial Position
As at 30 June 2023
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Derivative assets
Inventory
Total current assets
Non-current assets
Investments accounted for using the equity method
Financial assets at fair value through other comprehensive income
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Intangible assets
Other receivables
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Current tax liabilities
Other financial liabilities
Provisions
Contract liabilities – deferred revenue
Total current liabilities
Non-current liabilities
Other payables
Lease liabilities
Borrowings
Other financial liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Non-controlling interests
Total equity
Notes
2023
$’000
2022
$’000
8
14
9
19(c)
9,19(d)
15
16
5
17
14
18
16
7
9
18
16
7
9
5
18
198,709
136,629
–
2,475
337,813
–
25,354
21,313
58,583
39,330
4,180,985
21,280
4,346,845
4,684,658
91,313
11,173
26,098
12,683
1,136
27,576
14,814
184,793
108
59,299
1,145,999
8,991
155,136
5,703
1,375,236
1,560,029
3,124,629
117,452
74,741
5,526
3,222
200,941
917,648
36,896
14,654
56,475
17,215
603,320
13,968
1,660,176
1,861,117
48,758
8,061
113
36,717
–
10,996
11,022
115,667
1,241
56,370
649,626
1,153
18,994
4,657
732,041
847,708
1,013,409
11
12
19(b)
2,451,802
(83,530)
700,736
55,621
3,124,629
769,959
(1,865)
243,466
1,849
1,013,409
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
84
carsales Annual Report 2023 Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2023
Attributable to owners
of carsales.com Ltd
Notes
Contributed
equity
$’000
769,959
–
Reserves
$’000
(1,865)
–
Retained
earnings
$’000
243,466
645,617
Non-
Total
controlling
equity
interests
$’000
$’000
1,849 1,013,409
648,317
2,700
Balance at 1 July 2022
Profit for the year
Items that may be reclassified to profit or loss
Exchange differences on translation
of foreign operations
Reclassification of exchange differences
on step acquisition of associates
Remeasurement of post-employment
benefit obligations
Movement in net investment hedge (net of tax)
Movement in cash flow hedge (net of tax)
Items that will not be reclassified to profit or loss
Changes in financial assets at fair value (net
of tax) through other comprehensive income
Total comprehensive income for the year
Transfer of loss on disposal of equity
investment at fair value through other
comprehensive income to retained earnings
Transactions with owners in their
capacity as owners:
Contributions of equity upon exercise
of employee share options
Contributions of equity net of transaction
costs and tax
Increase in share-based payment reserve
inclusive of tax
Dividends paid to company shareholders
net of transaction costs
Dividends paid to non-controlling interests
Non-controlling interest on acquisition
of subsidiary
Transactions with non-controlling interests
Balance at 30 June 2023
20
9
11
11
12
–
–
–
–
–
–
–
–
14,625
–
1,145
15,770
(83,110)
239
(10,433)
1,820
–
–
–
–
–
–
–
–
(83,110)
239
(10,433)
1,820
(6,257)
(83,116)
–
645,617
–
3,845
(6,257)
566,346
2,196
(2,196)
–
–
–
1,295
– 1,669,587
–
4,874
1,295
1,669,587
–
–
–
4,874
–
–
–
10,961
–
–
–
(186,151)
–
–
(568)
(175,190)
(568)
–
–
2,451,802
–
(5,619)
(83,530)
–
–
700,736
46,690
46,690
3,805
(1,814)
55,621 3,124,629
85
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Consolidated Statement of Changes in Equity cont.
For the Year Ended 30 June 2023
Balance at 1 July 2021
Profit for the year
Items that may be reclassified to profit or loss
Exchange differences on translation
of foreign operations
Remeasurement of post-employment
benefit obligations
Movement in cash flow hedge (net of tax)
Items that will not be reclassified to profit or loss
Changes in financial assets at fair value (net
of tax) through other comprehensive income
Total comprehensive income for the year
Transfer of gain on disposal of equity
investment at fair value through other
comprehensive income to retained earnings
Transactions with owners in their
capacity as owners:
Contributions of equity upon exercise
of employee share options
Contributions of equity net of transaction
costs and tax
Increase in share-based payment reserve
inclusive of tax
Dividends paid to company shareholders
Dividends paid to non-controlling interests
Transactions with non-controlling interests
Balance at 30 June 2022
Attributable to owners
of carsales.com Ltd
Notes
Contributed
equity
$’000
755,357
–
Reserves
$’000
(21,440)
–
Retained
earnings
$’000
204,819
160,816
Non-
controlling
interests
$’000
1,765
638
Total
equity
$’000
940,501
161,454
9
11
11
12
–
–
–
–
–
–
6,120
(1,436)
–
9,918
–
–
769,959
30,105
(919)
(14,004)
–
–
–
–
–
–
30,105
(919)
(14,004)
12,372
27,554
–
160,816
–
638
12,372
189,008
(13,426)
13,426
–
–
–
–
–
–
–
–
6,120
(1,436)
5,690
–
–
(243)
(1,865)
–
(135,595)
–
–
243,466
–
–
(549)
(5)
1,849
5,690
(125,677)
(549)
(248)
1,013,409
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
86
carsales Annual Report 2023 Consolidated Statement of Cash Flows
For the Year Ended 30 June 2023
Cash flows from operating activities
Receipts from customers (including GST)
Payments to suppliers and employees (including GST)
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Payment for investment in non-controlling interests, associates
and subsidiaries (net of cash acquired and loans to associate)
Proceeds from/(investment in) term deposits with maturity
greater than 90 days
Proceeds from financial instruments held for investing activities
Proceeds from sale of financial assets at fair value through other
comprehensive income
Payments for property, plant and equipment
Payments for intangible assets
Interest received
Proceeds from sale of property, plant and equipment
Dividends received from associates
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
(net of transaction costs)
Proceeds from borrowings
Repayment of borrowings
Payment of loan establishment fees
Principal elements of lease payments
Deposits paid for leases
Payment of Trader Interactive external debt on acquisition
Dividends paid to company shareholders
Dividends paid to non-controlling interests
Interest paid
Net cash inflow from financing activities
Effects of exchange rates on cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Notes
2023
$’000
2022
$’000
827,551
(432,348)
(95,941)
299,262
549,461
(282,938)
(62,880)
203,643
6(a)
(1,584,586)
(849,036)
19(c)
20(a)(vii)
19(b)
14,252
85,191
4,634
(8,942)
(78,064)
8,279
329
5,334
(1,553,573)
1,686,587
2,814,182
(2,325,447)
(5,475)
(10,137)
(2,250)
(597,256)
(186,151)
(568)
(58,492)
1,314,993
20,575
81,257
117,452
198,709
(14,593)
54,472
25,385
(7,882)
(40,391)
477
511
–
(831,057)
4,930
716,403
(112,141)
(699)
(7,836)
(2,166)
–
(125,677)
(549)
(10,175)
462,090
(1,228)
(166,552)
284,004
117,452
87
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Notes to the Consolidated Financial Statements
30 June 2023
Basis of preparation
carsales.com Ltd is a for-profit entity for the purpose of preparing the financial statements. The consolidated financial
statements incorporate the assets and liabilities of all subsidiaries of carsales.com Ltd (‘Company’ or ‘parent entity’)
as at 30 June 2023 and the results of all subsidiaries for the year then ended. carsales.com Ltd and its subsidiaries
together are referred to in this Financial Report as ‘the Group’ or ‘the consolidated entity’.
These general purpose financial statements:
(i) Have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board and the Corporations Act 2001.
(ii) Comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB).
(iii) Have been prepared on a going concern basis.
(iv) Have been prepared under the historical cost convention except for the revaluation of financial assets and liabilities
(including derivative instruments) measured at fair value through other comprehensive income.
Amounts in the financial statements are presented in Australian dollars with all values rounded to the nearest thousand
dollars, or in certain cases, the nearest dollar, in accordance with the Australian Securities and Investments Commission
Corporations Instrument 2016/191.
Key estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.
The estimation uncertainty is predominantly related to the fair value on acquisition of the additional equity interests in
webmotors and Trader Interactive (Note 20), fair value measurement and recoverable amount assessments for intangible
assets (Note 17), financial assets and liabilities at fair value through other comprehensive income (Note 9), as well as
deferred tax assets relating to tax losses and uncertain tax positions (Note 5).
Other areas with a level of estimation include trade receivables (Note 14) and research and development (R&D) claims
(Note 5).
Corporate Information
carsales.com Ltd (the ‘Company’) is a company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
carsales.com Ltd
Level 4, 449 Punt Road
Richmond Vic 3121
The Financial Report was authorised for issue by the Directors on 13 August 2023. The Directors have the power to amend
and reissue the Financial Report.
All press releases, Financial Reports and other information are available at our shareholders’ centre on our website:
shareholder.carsales.com.au. For queries in relation to our reporting, please call +61 (3) 9093 8600.
These financial statements have been streamlined where key information is grouped together for ease of understanding
and readability. The notes include information which is required to understand the financial statements and is material
and relevant to the operations, financial position and performance of the Group. Information is considered material
and relevant if, for example:
• the amount in question is significant because of its size or nature;
• it is important for understanding the results of the Group;
• it helps to explain the impact of significant changes in the Group’s business – for example, acquisitions; or
• it relates to an aspect of the Group’s operations that is important to its future performance.
88
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 KEY PERFORMANCE
This section provides information that the Directors consider most relevant to understanding performance and shareholder
returns for the year and summarises the accounting policies, judgements and estimates relevant to understanding these
line items.
1. Segment information
Accounting policy
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker has been identified as the Chief Executive Officer (‘CEO’).
Management has determined the operating segments based on the reports reviewed by the CEO that are used
to make strategic decisions.
The Group’s operating segments are determined firstly based on location, and secondly by function, of the
Group’s operations.
Effective for the year ended 30 June 2023, the Group has disaggregated the Americas segment into two separate
segments called “North America” which comprises of Trader Interactive and “Latin America” which comprises
of webmotors, Chileautos and Soloautos. The rationale behind changing the operating and reporting segments
is to better align with the operating group structure and the manner in which financial information is reported
to the chief operating decision maker internally.
The prior year comparatives have also been restated to reflect this.
The Group principally operates in six business segments which are described below:
Operating segment
Australia – Online
Advertising Services
Australia – Data,
Research and Services
Nature of operations and primary source of revenue
Online Automotive Classifieds, Display Advertising services
and Finance Commission.
Automotive Data Services including software, analysis, research
and reporting, valuation services, website development, hosting
and photography services.
Geographical
location
Australia
Australia
Australia – carsales
investments
North America
Latin America
Asia
This segment also includes display and consumer advertising
related to these divisions.
Online Tyre Retail and Wholesale and Inspection Services.
Australia
Online Automotive Classifieds, Display Advertising services
and Automotive Data Services.
Online Automotive Classifieds, Display Advertising
services, Automotive Data Services and Finance Commission.
Online Automotive Classifieds, Display Advertising services
and Automotive Data Services.
United States of
America, Canada
Brazil, Chile
and Mexico
South Korea,
Malaysia, Thailand,
China and Indonesia
89
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT
1. Segment information continued
Segment analysis
Australia
– Online
Advertising
Services
$’000
353,428
214,133
Australia
– Data,
Research
and
Services
$’000
45,641
29,629
Australia
– carsales
investments
$’000
60,894
(6,825)
North
America
$’000
183,016
100,809
Latin
America
$’000
34,377
10,111
Asia
$’000
103,880
52,506
Total
$’000
781,236
400,363
(107,018)
(37,642)
(47,844)
(100)
–
–
(721)
6,128
–
5,307
228,662
17,132
10,621 2,816,935
778,716
486,528
(51,377)
(2,700)
645,617
464,844 4,316,910
39,330
198,709
129,709
4,684,658
2023
Segment revenue
EBITDA*
Depreciation and
amortisation expense
Impairment loss and
business closure expenses**
Net finance costs
Share of net profit/(loss)
from associates accounted
for using the equity method
Net gain on step
acquisition of associates
Income tax expense
Non-controlling interests
Profit for the year
attributable to owners
of carsales.com Ltd
Segment assets
Deferred tax assets
Cash and cash equivalents
Unallocated assets
Total assets
*
**
EBITDA noted above is profit before interest income, interest expense, income taxes, depreciation, amortisation, impairment loss and business closure expenses,
net gain on step acquisition of associates and share of net profit from associates accounted for using the equity method.
Relates to the impairment of goodwill and intangible assets allocated to the Tyres CGU (refer to Note 17(a)), the write down of the intangible assets attributed
to the Placie business which ceased operations during the period, provision for costs associated with the closure of the Mexico business as well as the write down
of the investment in Skedgo which was classified as an associate. Refer to Note 17 and 19(c).
The contributions of Placie and related businesses up to the date of closure and the comparative period are not considered material to the Group’s consolidated
results and therefore are not reclassified to discontinued operations. As the applicable assets of Placie and related businesses were written-off or sold during the
year they are no longer included in the Statement of Financial Position. Remaining liabilities relating to Placie and related businesses are not material to the Group
as at 30 June 2023.
90
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023
RESTATED**
2022
Segment revenue
EBITDA*
Depreciation and
amortisation expense
Net finance costs
Changes in fair value
of put options
Share of net profit/(loss)
from associates accounted
for using the equity method
Income tax expense
Non-controlling interests
Profit for the year
attributable to owners
of carsales.com Ltd
Segment assets
Deferred tax assets
Cash and cash equivalents
Unallocated assets
Total assets
Australia
– Online
Advertising
Services
$’000
307,208
194,888
Australia
– Data,
Research
and
Services
$’000
44,068
28,792
Australia
– carsales
investments
$’000
56,489
(1,877)
North
America
$’000
–
–
Latin
America
$’000
5,957
(1,640)
Asia
$’000
95,355
48,786
Total
$’000
509,077
268,949
(14)
–
–
12,100
5,090
–
(46,691)
(16,253)
289
17,176
(62,016)
(638)
204,495
17,013
30,852
857,099
82,952
160,816
446,973 1,639,384
17,215
117,452
87,066
1,861,117
*
EBITDA noted above is profit before interest income, interest expense, income taxes, depreciation, amortisation, impairment loss and business closure expenses,
net gain on step acquisition of associates and share of net profit from associates accounted for using the equity method.
** Balances for the year ended 30 June 2022 have been restated with the change to operating segments.
Segment assets are measured in the same way as in the financial statements. Segment assets include goodwill, trade and
other receivables, brands, customer relationships, property, plant and equipment, right-of-use assets, financial assets at
fair value through other comprehensive income and investments accounted for using equity method. Unallocated assets
include intangible and other assets utilised across multiple segments. All unallocated assets are assessed by the chief
operating decision maker at a consolidated entity level.
Liabilities are not reported to the chief operating decision maker by segment. All liabilities are assessed at a consolidated
entity level.
91
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 2. Revenue from contracts with customers
Accounting policy
The Group derives revenue from the transfer of goods and services over time and at a point in time in the
following product and reporting segment. Amounts disclosed as revenue are net of returns, agency commissions,
trade allowances, rebates and amounts collected on behalf of third parties. Where services have not been
provided but the Group is obligated to provide the services in the future, a contract liability is recognised.
Type of revenue
Dealer leads
Reporting segment
Online Advertising/Latin
America/Asia
Dealer listings
Online Advertising/North
America/Latin America/Asia
Listing depth
products
Online Advertising/North
America/Latin America/Asia
Private listing
Online Advertising /North
America/Latin America/Asia
Instant offer
Online Advertising
Bundled products
Online Advertising/North
America/Latin America/Asia
Sponsorship
advertising
Online Advertising/North
America/Latin America/Asia
Performance
advertising and
contracts
Subscription services
Sale of goods
Online Advertising /North
America/Latin America/Asia
Online Advertising/Data,
Research and Services/North
America/Latin America/Asia
carsales investments
Inspection services
carsales investments/Asia
Finance commission
Online Advertising/Latin
America
Recognition criteria
Lead revenues are recognised at a point in time
upon delivery of the lead to the dealers’ lead
management system.
Dealer listings usually have a definite end date to the
advertisement and where they do not, an average
duration is calculated. Revenues are recognised over the
period during which the listing is displayed on
the carsales network.
Transaction value is allocated to customer service
obligations based on the fair value and revenue is
recognised over the period during which the product
is displayed on the carsales network.
Private listings remain effective until the consumer
removes the advertisement. Revenues are recognised
over the average number of days advertisements are
displayed (based on historical trends).
Revenue is recognised at a point in time upon satisfaction
of the performance obligation, that being the acceptance
of the instant offer by the seller and thus the facilitation
of the successful sale by the seller to an official buyer.
Includes the combination of dealer advertising products
and corporate media services under one single contractual
price. Whilst the products are bundled, each individual
service has its own distinct performance obligations
and stand-alone selling prices (used to determine the fair
value of each service). Revenue is recognised over time as
performance obligations are fulfilled.
Revenues from sponsorship advertising are recognised in
the period over which the advertisements are placed or
displayed, depending on the type of contract.
Revenues from performance advertising and performance
contracts are recognised when the performance measure
occurs and is generated (e.g. cost per click).
Subscription revenues are recognised over the
subscription period.
Revenues are recognised at a point in time when
goods have been provided to a customer.
Revenue from vehicle inspection services are recognised
when the inspection service is performed.
Commission revenue is recognised at a point in time
when a customer finances the purchase of a vehicle with
a 3rd party through the carsales network.
Contracts with customers do not include a significant financing component.
As a practical expedient, the Group recognises any incremental costs of obtaining a contract, which mainly
consist of sales commissions, as an expense when incurred given the amortisation period of the asset that
would have been recognised is one year or less.
92
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 Disaggregation of revenue from contracts with customers
The Group derives revenue from the transfer of goods and services over time and at a point in time in the following
major segments:
Australia
– Online
Advertising
Services
$’000
Australia
– Data,
Research
and
Services
$’000
Australia
– carsales
investments
$’000
North
America
$’000
Latin
America
$’000
Asia
$’000
Total
$’000
353,428
45,641
60,894
183,016
34,377
103,880
781,236
188,032
165,396
9,452
36,189
60,894
–
18,986
164,030
18,028
16,349
47,050
56,830
342,442
438,794
Australia
– Online
Advertising
Services
$’000
Australia
– Data,
Research
and
Services
$’000
Australia
– carsales
investments
$’000
North
America
$’000
Latin
America
$’000
Asia
$’000
Total
$’000
307,208
44,068
56,489
170,664
136,544
7,807
36,261
56,489
–
–
–
–
5,957
95,355
509,077
345
5,612
35,599
59,756
270,904
238,173
2023
Total revenue from
external customers
Revenue is recognised
At a point in time
Over time
RESTATED*
2022
Total revenue from
external customers
Revenue is recognised
At a point in time
Over time
*
The allocation of revenues for the year ended 30 June 2022 between the Group’s operating segments have been restated to align with the new operating segments.
93
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 3. Other income and expenses
Accounting Policy
(i) Defined benefit obligations
ENCARSALES.COM Ltd, the Group’s subsidiary in South Korea, operates a defined benefit plan, under which
amounts to be paid as retirement benefits are determined by reference to a formula based on employee’s
earnings and years of service. The defined benefit asset or liability comprises the present value of the defined
benefit obligations, past service costs and actuarial gains and losses not yet realised, less the fair value of plan
assets out of which the obligations are to be settled. The cost of providing benefits under the defined benefit
plan is determined using the projected unit credit method. The discount rate used in calculating the present
value of defined benefit obligations is determined by reference to market yields at the end of the reporting
period on high quality corporate bonds of a term consistent with the term of the post-employment benefit
obligations. Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling,
net interest and the return on plan assets, are recognised immediately in the statement of financial position.
Actuarial gains and losses result in a corresponding debit or credit to reserves through OCI in the period in
which they occur. Net interest and the return on plan assets are recognised in the Consolidated Statement of
Comprehensive Income.
(ii) Finance costs
Fees paid on the establishment of loan facilities are recognised net against the loan and amortised on a straight-
line basis over the term of the facility. Borrowing costs incurred for the construction of any qualifying asset are
capitalised during the period of time that is required to complete and prepare the asset for its intended use or
sale. Other borrowing costs are expensed. The unwinding of the discount on put option liabilities are recognised
as a finance expense.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the
liability for each period.
Total profit before income tax includes the following specific expenses:
Employee benefits
Defined contribution superannuation expense
Defined benefit expense – ENCARSALES.COM, Ltd.
Interest – borrowings
Interest – leases
Other finance costs
Hedging costs
Amounts reclassified to income statement from Cash Flow Hedge Reserve
Total finance costs
2023
$’000
162,609
15,610
2,101
49,312
2,066
1,897
(3,016)
5,688
55,947
2022
$’000
96,174
12,081
1,562
9,378
1,563
2,129
(2,028)
5,688
16,730
94
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 4. Earnings per share
Accounting Policy
Basic earnings per share is calculated by dividing:
• the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than
ordinary shares;
• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take
into account:
• the post income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares; and
• the weighted average number of additional ordinary shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
Options and performance rights granted to employees under the carsales.com Ltd Employee Option Plan are
considered to be potential ordinary shares and have been included in the determination of diluted earnings
per share to the extent to which they are dilutive. The options and performance rights have not been included
in the determination of basic earnings per share. Details relating to the options are set out in Note 26.
(a) Reported earnings per share
Earnings per share for profit attributable
to the ordinary equity holders of the Company:
Reported profit attributable to equity holders
of the Company
Weighted average number of ordinary shares
Dilutive impact of options
Dilutive impact of performance rights
Dilutive impact of renounceable entitlement offer
Total weighted average number of ordinary shares
used in EPS calculation
Reported earnings per share/cents
Basic earnings
per share
Diluted earnings
per share
2023
Restated
2022
2023
Restated
2022
645,617,000
356,175,047
–
–
–
160,816,000
282,482,797
–
–
10,304,524
645,617,000
356,175,047
108,630
241,679
–
160,816,000
282,482,797
85,592
336,695
10,304,524
356,175,047
181.3
292,787,321
54.9
356,525,356
181.1
293,209,608
54.8
95
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 4. Earnings per share continued
(b) Adjusted earnings per share*
Basic earnings
per share
Diluted earnings
per share
2023
2022
Restated
2023
Restated
2022
Reported profit attributable to equity holders
of the Company
Add: Dealer Support Package (net of tax)
Add: M&A and Restructuring costs (net of tax)
Less: Financing Cost, Hedge and FX (net of tax)
Add: Acquired intangible amortisation (net of tax)
Less: Net gain on step acquisition of associates
Add: Impairment of investments and business closure costs
Add: Trader Interactive non-recurring costs
Adjusted profit attributable to equity holders
of the Company for continuing operations
Adjusted earnings per share/cents
for continuing operations*
645,617,000
–
20,576,000
(291,000)
48,952,000
(486,528,000)
37,642,000
12,256,000
160,816,000
321,000
1,416,000
2,882,000
22,962,000
–
–
6,431,000
645,617,000
–
20,576,000
(291,000)
48,952,000
(486,528,000)
37,642,000
12,256,000
160,816,000
321,000
1,416,000
2,882,000
22,962,000
–
–
6,431,000
278,224,000
194,828,000
278,224,000
194,828,000
78.1
66.5
78.0
66.4
*
The Directors believe the presentation of “adjusted earnings per share” provides a useful measure to assess the performance of the Group by excluding
significant one-off items of income and expense to arrive at an adjusted profit measure which reflects the underlying financial performance of the Group.
The tax benefit associated with the other deductible amortisation (included in Note 5(b)) arising from the Trader acquisition is included within adjusted profit.
Earnings per share for the year ended 30 June 2022 has been restated, in accordance with AASB 133, for the effects of
the capital raises executed during the current financial year to fund the purchase of the remaining 51% in Trader Interactive
and the additional 40% stake in webmotors.
96
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023
5. Income tax
Accounting Policy
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income
based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge
is calculated on the basis of the tax laws in the countries where the Company’s subsidiaries and associates
operate and generate taxable income. The Group establishes provisions where appropriate on the basis
of amounts expected to be paid to tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that at the time of the transaction affects neither accounting
nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it
is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount
and tax bases of investments in controlled entities where the Company is able to control the timing of the reversal
of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Where there are current and deferred tax balances attributable to amounts recognised directly in equity,
they are also recognised directly in equity.
The Group parent entity, carsales.com Ltd, and the controlled entities in the tax consolidated group account
for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax
consolidated group continues to be a standalone taxpayer in its own right.
On 8 October 2021, 136 countries reached an agreement for a two-pillar approach to international tax reform
(“the OECD agreement”). Among other things, Pillar One proposes a reallocation of a proportion of tax to market
jurisdictions, while Pillar Two seeks to apply a global minimum effective tax rate of 15%. The tax reform is not
applicable for the Group, as carsales does not meet the relevant threshold.
Adoption of Voluntary Tax Transparency Code
On 3 May 2016, the Australian Treasurer released a Voluntary Tax Transparency Code (the TTC). The TTC
recommends additional tax information be publicly disclosed to help educate the public about large corporate
compliance with Australia’s tax laws. The Group fully supports the TTC and signed up to it from the financial year
ended 30 June 2019. Accordingly, the income tax disclosures in this Note include all relevant recommended
additional disclosures of Part A of the Code.
97
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 5. Income Tax continued
Key Assumption/Accounting Estimates
Deferred tax assets relating to tax losses
The Group recognises deferred tax assets relating to carry forward tax losses to the extent there are sufficient
taxable temporary differences relating to the same taxable authority and the same subsidiary against which the
unused tax losses can be utilised. However, utilisation of the tax losses also depends on the ability of the entity
to satisfy certain tests at the time the losses are recouped.
Uncertain tax positions
The Group applies its current understanding of the tax law to estimate tax liabilities where the ultimate tax
position is uncertain. When the tax position is ultimately determined or tax laws change, the actual tax liability
may differ from this current estimate.
Research and development (R&D) claim
The research and development claim available to the Company is estimated in the accounts because a full
assessment of the position cannot be made by the year end. It is the policy of the Company to only bring
to account that preliminary portion of expenses that is reasonably expected to be claimable at period end.
(a) Income tax expense
Current tax
Adjustments for current tax of prior periods
Deferred tax
Adjustments for deferred tax of prior periods
Deferred income tax expenses included in income tax expense comprises:
Increase in deferred tax assets
Decrease in deferred tax liabilities
2023
$’000
62,565
(2,019)
(8,776)
(393)
51,377
(765)
(8,011)
(8,776)
2022
$’000
65,120
(684)
(2,517)
97
62,016
(678)
(1,839)
(2,517)
98
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 (b) Numerical reconciliation of income tax expense
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30.0% (2022 – 30.0%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Non-assessable income (R&D tax offset) (a)
Share options (b)
Sundry items
Non-deductible amortisation
Adjustment for prior periods
Current year losses for which no deferred tax has been recognised or tax losses written off (c)
Tax relating to net profit from associates (d)
Income tax differential (effect of foreign tax rates) (e)
Net gain on step acquisition of associates (non-assessable) (f)
Non-deductible impairment (g)
Other deductible amortisation
Income tax expense
2023
$’000
699,694
209,908
(475)
(1,557)
(968)
789
(2,412)
5,917
(1,592)
(27,130)
(126,102)
7,548
(12,549)
51,377
2022
$’000
223,470
67,041
(395)
(1,523)
3,084
1,098
(587)
1,591
(5,153)
(3,140)
–
–
–
62,016
(c) Amounts recognised directly into equity
Aggregate current and deferred tax arising in the reporting period and not recognised in the income statement or other
comprehensive income but directly (credited) or debited to equity:
Current tax – (credited) directly to equity
Net deferred tax – debited/(credited) directly to equity
2023
$’000
(681)
3,330
2,649
2022
$’000
(31)
9,913
9,882
Explanation of key tax items:
(a) The Group’s utilisation of research and development tax incentives.
(b) Amount relating to the provision of equity incentives.
(c) Amount relating to tax losses for which a deferred tax asset has not been recognised. The majority of these
losses may be carried forward for between 5 and 10 years. Also includes amount relating to the write-off
of tax losses for which a deferred tax asset had previously been recognised.
(d) The Group’s share of associates’ results taken up in Group results, net of tax expense.
(e) The Group’s profits are taxed at prevailing statutory rates which vary to the Australian statutory tax rate
(as noted in the table below).
(f) Non-assessable gain on step acquisition of webmotors and Trader Interactive.
(g) Relates to impairment of Tyres business and Placie business as well as business closure costs expected
for Mexico.
99
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 5. Income Tax continued
Statutory tax rates:
Country
Australia
New Zealand
Malaysia
China
Thailand
South Korea
USA
Brazil
Chile
Mexico
(d) Effective tax rate
Profit before income tax expense (A)
Income tax expense (B)
Effective tax rate (B/A)
2023
30%
28%
24%
25%
20%
21%
21%
34%
27%
30%
2022
30%
28%
24%
25%
20%
22%
21%
34%
27%
30%
2023
$’000
699,694
51,377
7%
2022
$’000
223,470
62,016
28%
The effective tax rate of the Group for 2023 was affected by non-taxable gains on step acquisition of associates, without
which the effective tax rate for the year would have been 25%.
The effective tax rate of the Group for 2022 was affected by tax relating to net profit from associates, without which the
effective tax rate for the year would have been 30%.
Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit
2023
$’000
14,339
4,241
2022
$’000
29,287
9,203
The unrecognised tax losses were incurred by loss making subsidiaries that are not likely to generate taxable income
in the foreseeable future. They will be carried forward for at least five years.
100
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 (e) Deferred tax assets
The balance comprises temporary differences attributable to:
Employee
benefits
$’000
3,466
Employee
Share
Trust
$’000
2,155
Doubtful
debts
$’000
295
Expense
accruals
$’000
2,751
Intan-
gibles
$’000
(2,539)
Tax
losses
$’000
2,163
Other
$’000
8,924
Total
$’000
17,215
(1,157)
742
921
1,669
(2,326)
(104)
1,020
765
–
–
(11)
–
–
–
–
–
–
–
–
(506)
(517)
21,787
–
21,787
12
2,321
–
2,886
–
1,216
–
4,420
–
(4,865)
68
23,914
–
9,438
80
39,330
3,328
2,109
658
4,511
(3,079)
2,219
8,095
17,841
219
965
(363)
(1,760)
540
–
–
–
–
1,077
678
(246)
(1,165)
–
(919)
(81)
3,466
–
2,155
–
–
295
–
2,751
–
(2,539)
(56)
2,163
(2)
8,924
(139)
17,215
At 1 July 2022
(Charged)/credited
to profit or loss
Credited/(charged)
directly to equity
Acquired tax
losses
Exchange
differences
At 30 June 2023
At 1 July 2021
(Charged)/credited
to profit or loss
Credited/(charged)
directly to equity
Exchange
differences
At 30 June 2022
Deferred tax assets expected to be recovered within 12 months
Deferred tax assets expected to be recovered after more than 12 months
2023
$’000
13,456
25,874
39,330
2022
$’000
10,375
6,840
17,215
Certain liability balances are shown as part of deferred tax assets, as they originate in the same jurisdiction as, and can
be offset against, other deferred tax assets. The liability balance for intangibles shown as part of deferred tax assets relates
to in-house developed and capitalised software in Australia.
101
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Intangibles
$’000
12,734
(8,011)
–
146,521
444
151,688
Fair Value
Investment
$’000
4,602
–
(1,154)
–
–
3,448
Derivatives
$’000
1,658
–
(1,658)
–
–
–
16,766
(1,839)
–
(1,366)
(827)
12,734
4,911
–
(309)
–
–
4,602
10,098
–
(8,440)
–
–
1,658
2023
$’000
8,011
147,125
155,136
Total
$’000
18,994
(8,011)
(2,812)
146,521
444
155,136
31,775
(1,839)
(8,749)
(1,366)
(827)
18,994
2022
$’000
3,498
15,496
18,994
5. Income Tax continued
(f) Deferred tax liabilities
The balance comprises temporary differences attributable to:
At 1 July 2022
Charged/(credited) to the profit or loss
Charged/(credited) directly to equity
Acquired intangibles
Exchange differences
At 30 June 2023
At 1 July 2021
Charged/(credited) to the profit or loss
Charged directly to equity
Acquired intangibles
Exchange differences
At 30 June 2022
Deferred tax liabilities expected to be settled within 12 months
Deferred tax liabilities expected to be settled after more than 12 months
102
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 6. Reconciliation of cash flows
(a) Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the year
Depreciation and amortisation
Impairment loss and business closure expenses
Non-cash employee benefits expense – share-based payments
Gain on disposal of assets
Net finance related costs
Share of net profit from associates accounted for using the equity method
Bad debts written-off
Changes in fair value of put options
Building refurbishment incentive income
Net gain on step acquisition of associates
Other
Change in operating assets and liabilities:
(Increase) in trade debtors
Decrease/(Increase) in inventory
Decrease in deferred tax assets
(Decrease)/Increase in trade creditors and other liabilities
Increase in contract liabilities – deferred revenue
(Decrease)/Increase in provision for income taxes payable
(Decrease) in deferred tax liabilities
Increase in other provisions
Net cash inflow from operating activities
2023
$’000
648,317
107,018
37,642
2,683
(168)
47,844
(5,307)
1,287
(257)
(584)
(486,528)
2,202
(8,644)
849
504
(1,648)
37
(46,077)
(643)
735
299,262
2022
$’000
161,454
46,691
–
2,098
(145)
17,240
(17,176)
185
(289)
(584)
–
4,089
(10,219)
(2,256)
129
3,321
395
596
(2,903)
1,017
203,643
103
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 6. Reconciliation of cash flows continued
(b) Changes in assets and liabilities arising from financing activities
The table below shows cash and non-cash changes in assets and liabilities for which cash flows were, or will be,
classified as financing activities in the Consolidated Statement of Cash Flows.
Liabilities from
financing activities
Other financial
liabilities/assets
Borrowings
$’000
(649,739)
Lease
liabilities
$’000
(64,431)
Other
financial
liabilities
$’000
(1,153)
Derivative
(liabilities)/
assets
$’000
–
Lease
deposits
$’000
12,125
(488,734)
–
–
–
(29,814)
–
–
10,137
(15,298)
(1,989)
316
–
–
–
–
(85,191)
–
–
–
–
–
–
(8,790)
–
–
(257)
85,191
–
2,250
–
–
–
–
–
–
Total
$’000
(703,198)
(561,538)
(15,298)
(1,989)
316
(38,604)
85,191
(257)
(6,459)
2,649
(1,172,097)
793
–
(70,472)
–
73
(10,127)
–
–
–
166
–
14,541
(5,500)
2,722
(1,238,155)
Liabilities from
financing activities
Other financial
liabilities/assets
Borrowings
$’000
(43,230)
Lease
liabilities
$’000
(63,352)
Other
financial
liabilities
$’000
(1,172)
Derivative
(liabilities)/
assets
$’000
33,658
Lease
deposits
$’000
10,464
(604,262)
–
–
–
–
–
(2,247)
(649,739)
7,836
(7,617)
(1,652)
–
–
354
–
(64,431)
–
–
–
(243)
289
–
(27)
(1,153)
–
–
–
(33,658)
–
–
–
–
2,166
–
–
–
–
(505)
–
12,125
Total
$’000
(63,632)
(594,260)
(7,617)
(1,652)
(33,901)
289
(151)
(2,274)
(703,198)
2023
Opening balance
Net cash flows from
financing activities
Acquisitions – leases
Modification – leases
Termination – leases
Acquisitions and
NCI transactions
Fair value through OCI
(net of tax)
Fair value through P&L
Foreign exchange
adjustments
Other changes
Closing balance
2022
Opening balance
Net cash flows from
financing activities
Acquisitions – leases
Modification – leases
Fair value through OCI
(net of tax)
Fair value through P&L
Foreign exchange
adjustments
Other changes
Closing balance
104
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 FINANCING AND RISK MANAGEMENT
This section provides information about the capital management practices of the Group, the Group’s exposure and
management of various financial risks and explains how these affect the Group’s financial position and performance.
When managing capital, the Group aims to optimise the capital structure in order to maximise returns to shareholders,
reduce the cost of capital and provide flexibility for strategic investment.
7. Borrowings
Accounting policy
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in the profit or loss over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised net against the loan and amortised on a
straight-line basis over the term of the facility.
Borrowings are derecognised from the consolidated statement of financial position when the obligation specified
in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial
liability that has been extinguished or transferred to another party and the consideration paid, including any
non-cash assets transferred or liabilities assumed, is recognised in other income or other expenses.
Borrowings 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 balance sheet date.
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time
that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are
expensed in the period in which the expense is incurred.
Current borrowings
Non-current borrowings
2023
$’000
26,098
1,145,999
1,172,097
2022
$’000
113
649,626
649,739
(a) Bank debt
At 30 June 2023 carsales.com Ltd had a syndicated revolving loan facility and established a $1,100.0 million debt facility
under a Common Terms Deed (CTD) documentation structure, as follows:
Tranche B
Tranche C
Total
Commitment
$’000
850,000
250,000
1,100,000
Drawn
at close
$’000
586,100
100,000
686,100
Maturity date
14 September 2025
14 September 2027
Ten financiers are part of the syndicate and each of these financiers entered into a bilateral facility agreement with
the Company under the CTD documentation structure. The syndicate comprises National Australia Bank Limited (NAB),
Australia and New Zealand Banking Group Limited (ANZ), Hongkong and Shanghai Banking Corporation Limited (HSBC),
Westpac Banking Corporation (WBC), Commonwealth Bank of Australia (CBA), MUFG Bank Limited, Bank of China (BOC),
Sumitomo Mitsui Banking Corporation (SMBC), Mizuho Bank, Ltd and BNP Paribas.
Borrowings under this loan facility bear interest at a floating rate of BBSY Bid plus a margin, with margin based
on a net leverage ratio of the Group. The Group has complied with all debt covenants throughout the reporting period.
105
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT The Group has access to the following undrawn bank facilities at the end of the reporting period:
Floating rate
– Expiring within one year
– Expiring within two to five years
2023
$’000
–
413,900
413,900
2022
$’000
–
249,000
249,000
In addition, the Group had bank loan facilities denominated in Brazilian Real (BRL), of which $25.7 million is due in the
next 12 months and $10.2 million is due later than 12 months.
(b) US Private Placement debt
At 30 June 2023, the Group had long-term, fixed rate notes on issue to investors in the US Private Placement market.
The notes are denominated in US dollars and are issued in three tranches, as follows:
Series A – 7 year
Series B – 8 year
Series C – 9 year
Total
Face value
USD$’000
100,000
100,000
100,000
300,000
Carrying
value
$’000
150,921
150,921
150,921
452,763
Interest
rate
5.88%
5.92%
5.96%
Maturity
date
2 July 2030
2 July 2031
2 July 2032
Interest is payable semi-annually to noteholders.
(c) Bank guarantee facility
Guarantees in respect of bank facilities drawn down but not included in the accounts of the Group are $4.0 million
(2022: $4.0 million).
8. Cash and cash equivalents
Accounting Policy
For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held
at call with financial institutions, other short-term highly liquid investments with original maturities of three months
or less that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes
in value and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities on the consolidated statement of financial position.
Cash at bank
Short-term deposits and other liquid investments*
Total cash and cash equivalents
2023
$’000
161,013
37,696
198,709
2022
$’000
117,387
65
117,452
* Other liquid investments comprise cash allocated to investment funds, where the funds are readily available for withdrawal upon request.
106
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 9. Financial assets and liabilities and fair value measurement
Accounting Policy
Derivatives
Classification of derivatives
The Company designates derivatives as hedging instruments in respect of foreign currency risk and interest rate
risk in fair value hedges, cash flow hedges, or hedges of net investments in foreign operations as appropriate.
Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.
Derivatives are only used for economic hedging purposes and not as speculative investments. However,
where derivatives do not meet the hedge accounting criteria, they are classified as ‘held for trading’ for accounting
purposes and are accounted for at fair value through profit or loss. The hedges are presented as current assets
or liabilities to the extent they are expected to be settled within 12 months after the end of the reporting period.
Cash flow hedges
Cash flow hedges are accounted for as follows: the fair value gain or loss associated with the effective portion
of the derivative is recognised initially in other comprehensive income (cash flow hedge reserve – CFHR) and then
recycled to the income statement in the same period that the hedged item affects the income statement. Any
ineffective portion of the gain or loss on the hedging instrument is recognised in the income statement immediately.
Hedges of net investments in foreign operations
The Company uses net investment hedges to mitigate the foreign exchange risk arising from the Group’s net
investments in foreign operations. Net investment hedges are accounted for similar to cash flow hedges, in that
the effective portion of the gain or loss on the hedging instrument shall be recognised in other comprehensive
income (in the foreign currency translation reserve – FCTR) while the ineffective portion shall be recognised in profit
or loss. The cumulative gain or loss on the hedging instrument that has been accumulated in the FCTR shall
be reclassified from equity to profit or loss as a reclassification adjustment on the disposal or partial disposal
of the foreign operation.
Hedge effectiveness
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective
effectiveness assessments to ensure that an economic relationship exists between the hedged item and
hedging instrument.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost,
less the loss allowance. Due to the short-term nature of the receivables, the carrying amount is assumed to
approximate their fair value. The balance of trade and other receivables are disclosed in Note 14.
Financial assets at fair value through other comprehensive income
Refer Note 19(d) for the accounting policy on financial assets at fair value through other comprehensive income.
107
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT
9. Financial assets and liabilities and fair value measurement continued
Financial assets and liabilities that are carried at fair value are measured by the following fair value measurement hierarchy:
Level 1: the fair value of financial instruments traded in active markets (such as publicly traded derivatives and equity
securities) is based on quoted market prices at the end of the reporting period;
Level 2: the fair value of financial instruments that are not traded in an active market is determined using valuation
techniques which maximise the use of observable market data and rely as little as possible on entity specific
estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included
in level 2; and
Level 3: if one or more of the significant inputs is not based on observable market data, the instrument is included
in level 3.
Financial asset/liability
Financial assets measured at fair value through OCI
Quoted equity instruments which are listed on the
Australian Securities Exchange (“ASX”)(i)
Derivative financial assets(ii)
Unquoted financial assets(iii)
Financial liabilities measured at fair value through profit or loss
Other financial liabilities – current(iv)
Other financial liabilities – non-current(iv)
Level
2023
$’000
2022
$’000
1
2
3
3
3
–
–
25,354
(1,136)
(8,991)
10,455
5,526
26,441
–
(1,153)
(i)
(ii)
(iii)
During the year, the Group sold its investment in Plenti Group Ltd. The sale resulted in cash received of $7.0 million and the $2.2 million loss on disposal was recycled
from the Financial Asset FVOCI reserve to retained earnings. Refer to Note 19(d) for more details.
The balance at 30 June 2022 represents forward foreign exchange contracts which were held for the purpose of hedging the Trader Interactive purchase.
The forward exchange contracts were valued at the present value of future cash flows based on the forward exchange rates at the balance sheet date. There are
no forward contracts outstanding as at 30 June 2023.
Investments in unquoted financial assets are measured at fair value through other comprehensive income and includes PromisePay Pte Ltd, mx51 Group Pty Ltd,
Adfixus Pty Ltd and other equity investments, refer to Note 19(d). The fair value of the investments in PromisePay Pte Ltd and mx51 Group Pty Ltd have been
calculated either with reference to the latest capital raise or based on an independent valuation performed during the year. The fair value of other equity
investments is based on capital contributions and adjusted for independent valuation performed by the fund managers on a quarterly basis.
(iv)
Other financial liabilities are mainly put option and contingent consideration liabilities which are based on the future earnings of an acquired subsidiary for a defined
period and were valued at financial year end based on the forecast of earnings for the acquired subsidiary.
108
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 (a) Derivative assets and liabilities
During FY23, the Group held hedging instruments used to hedge the exposure to variability in cash flows attributable
to highly probable forecast transactions. Specifically, the Group held forward foreign exchange contracts which matured
and were closed out prior to 30 June 2023. These were entered to protect against foreign exchange fluctuations relating
to the acquisition of the remaining 51% interest in Trader Interactive and the additional 40% interest in webmotors,
which were completed in FY23. Refer to Note 20(a) and (b) for further details.
The Group also has a net investment hedge (NIH) in place using debt instruments, to protect against the variability
in cash flows from its investment in Trader Interactive, which has a USD functional currency. Refer to Note 10 (a).
The Group previously held cross-currency interest rate swaps which were closed out in a prior period. During the year,
$5.7 million (2022: $5.7 million) was recycled from the cash flow hedge reserve to the income statement as a finance cost
with no amount remaining in reserves at 30 June 2023.
The following tables detail information regarding forward foreign exchange (FX) contracts and the cross-currency interest
rate swaps designated in cash flow hedge or net investment hedge relationships at the end of the reporting period and
their related hedged items. All derivative assets and liabilities were closed out as at 30 June 2023.
Movement in cash flow hedge reserve
Balance at 1 July 2022
Add: Change in fair value of hedging instrument
recognised in OCI
Less: Reclassified to purchase consideration for
acquisitions
Less: Reclassified from OCI to profit or loss
Less: Deferred tax/current tax liability
Balance at 30 June 2023
Movement in cash flow hedge reserve
Balance at 1 July 2021
Add: Change in fair value of hedging instrument
recognised in OCI
Less: Reclassified to equity accounted investment
Less: Reclassified from OCI to profit or loss
Less: Deferred tax/current tax liability
Balance at 30 June 2022
CCIRS $’000
(5,688)
Forward
Exchange
Contracts $’000
3,868
Total Cashflow
Hedge Reserve
$’000
(1,820)
-
84,658
84,658
-
5,688
-
-
(60,113)
(3,016)
(25,397)
-
(60,113)
2,672
(25,397)
-
CCIRS $’000
(11,376)
Forward
Exchange
Contracts $’000
23,560
Total Cashflow
Hedge Reserve
$’000
12,184
-
-
5,688
-
(5,688)
26,339
(36,101)
(2,028)
(7,902)
3,868
26,339
(36,101)
3,660
(7,902)
(1,820)
109
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 10. Financial risk management
The Group’s activities expose it to a variety of financial risks: foreign exchange risk, price risk, credit risk, interest rate risk
and liquidity risk. The Group’s overall risk management program focusses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods
to measure different types of risk to which it is exposed.
Risk management is the responsibility of the Executive General Manager of Tax, Treasury, Risk and Systems and the
Chief Financial Officer (CFO) and follows approved policies of the Board of Directors. They identify, evaluate and hedge
financial risks in close cooperation with the Group’s operating leaders.
(a) Market risk
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the Brazilian Real (BRL), the South Korean Won (KRW), the Mexican Peso (MXP), the US Dollar
(USD) and the Chilean Peso (CLP). Foreign exchange risk arises from future commercial transactions and recognised
assets and liabilities denominated in a currency that is not the functional currency of the relevant group entity.
Risk management policy
Hedging contracts are sometimes used to manage foreign currency exchange risk. The Company has a treasury
strategy and a treasury policy and will actively hedge any major known commitments using forward exchange contracts.
Trading and dividend cash flows between associates, subsidiaries and the Group are not hedged unless the cash flows
are significant and the amount and future payment date are certain.
Material arrangements in place at reporting date
carsales.com Ltd has an investment in Trader Interactive, which has a USD functional currency. As a result of the difference
in functional currencies, the Group is exposed to foreign exchange risk upon translation of cash flows from USD to AUD.
To protect against this risk, the Group has taken out USD denominated debt via the issuance of $US300.0 million in US
private placement notes (refer to Note 7).
This has been designated as a NIH for accounting purposes. The hedge has been assessed as effective given there is a
clear economic relationship as both the hedging instrument (USD debt) and hedged item (investment in Trader Interactive)
are referenced to the same foreign exchange rate (AUD/USD), credit risk is not expected to dominate the value changes
that result from the economic relationship and the hedge ratio is 1:1. The effective portion of the gain or loss on the
hedging instrument is recognised in other comprehensive income (in the foreign currency translation reserve – FCTR)
while any ineffective portion is recognised in profit or loss. Ineffectiveness may arise due to differences in the fair value of
the hedged item and the hedging instrument.
Prior to this, the Group had denominated a portion ($US365.0 million) of its syndicated debt facility in USD, which was
also designated as a NIH for accounting purposes. This debt was settled upon the issue of the USPP notes in June 2023.
The Group also entered into and closed out forward foreign exchange contracts (FECs) to sell USD for AUD during
June 2023. The FECs had a notional value of $US365.0 million and were held from 13 June 2023 until they matured
and were settled on 27 June 2023. The FECs were also designated as a NIH for accounting purposes.
For details of movements in NIH taken to FCTR, please refer to Note 12. There was no hedge ineffectiveness for the NIH
recognised in the profit or loss for the year ended 30 June 2023.
No other material hedging arrangements are in place at reporting date.
110
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 Material exposures and sensitivity
The analysis below reflects management’s view of possible movements in relevant foreign currencies against the Australian
dollar. The table summarises the range of possible outcomes that would affect the Group’s net profit and equity as a result
of foreign currency movements (excluding derivatives):
Impact on profit:
AUD to KRW
AUD to BRL
AUD to MXP
AUD to CLP
AUD to USD
Net Movement
Impact on equity:
AUD to KRW
AUD to BRL
AUD to MXP
AUD to CLP
AUD to USD
Net Movement
Hedge Sensitivity
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
(+5% to -5%)
2023
$’000
-5%
1,230
498
(140)
65
3,310
4,963
22,889
7,134
(1,296)
285
19,567
48,579
2022
$’000
-5%
1,096
261
(123)
69
417
1,720
21,333
2,771
(1,048)
201
40,814
64,071
2023
$’000
+5%
(1,230)
(498)
140
(65)
(3,310)
(4,963)
(22,889)
(7,134)
1,296
(285)
(19,567)
(48,579)
2022
$’000
+5%
(1,096)
(261)
123
(69)
(417)
(1,720)
(21,333)
(2,771)
1,048
(201)
(40,814)
(64,071)
There are no active cash flow or fair value hedges at 30 June 2023.
(ii) Price risk
During the year, the Group sold its investment in Plenti Group Ltd (see Note 19(d)). As such, the Group is no longer
exposed to significant equity securities price risk.
(b) Credit risk
Credit risk of the Group arises predominantly from outstanding receivables from customers and from its financing activities,
including deposits with financial institutions.
Risk management policy
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures,
which may include an assessment of their financial position, past experience and industry reputation, depending on the
amount of credit to be granted.
Receivables balances are monitored on an ongoing basis. The Group applies the AASB 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected
credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due.
The expected loss rates are based on the payment profiles of sales over a period of 24 months before reporting date
and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to
reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle
the receivables.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and
financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted by carsales.com Ltd.
111
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT
10. Financial risk management continued
Material arrangements in place at the reporting date
The net trade receivables balance at 30 June 2023 was $107.8 million (2022: $44.3 million). See below for the aging profile
of net trade receivables.
2023
$’000
2022
$’000
Note
Gross
Receiv-
ables*
84,259
Expected
loss rate
0-0.5%
Loss
allowance**
66
Gross
Receiv-
ables*
35,163
Expected
loss rate
0-0.5%
Loss
allowance**
68
9,762
1%
5,889
2.5-5%
3,123
7.5-10%
3,896
50-80%
58
148
72
636
8,378
1%
798
2.5-5%
298
7.5-10%
58
31
38
427
50-80%
100
4,718
111,647
14
60-100%
2,749
3,729
461
45,525
80-100%
950
1,245
Current
More than
30 days past due
More than
60 days past due
More than
90 days past due
More than
120 days past due
More than
180 days past due
Total
* Gross receivables include unapplied credits.
** Loss allowance is calculated on gross receivables balance excluding unapplied credits.
The loss allowance for trade receivables as at 30 June reconciles to the opening loss allowance as follows:
Opening loss allowance as at 1 July
Increase in loss allowance recognised in profit or loss during the year
Allowance recognised on receivables acquired through business combinations
Receivables written off during the year as uncollectible
Closing loss allowance at 30 June
2023
$’000
1,245
1,219
1,378
(113)
3,729
2022
$’000
2,633
576
–
(1,964)
1,245
Trade receivables are written-off when there is no reasonable expectation of debt recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with
the Group, and a failure to make contractual payments for a period greater than 180 days past due. Impairment losses
on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts
previously written-off are credited against the same line.
Material exposures and sensitivity
The Group’s maximum exposures to credit risk at balance date in relation to each class of recognised financial assets
is the carrying amount of those assets.
112
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 (c) Interest rate risk
The consolidated entity’s exposure to the cash flow risk of changes in market interest rates relates primarily to cash
at bank and long-term borrowings. Cash and cash equivalents draw interest at variable interest rates.
Risk management policy
carsales.com Ltd has a Board-approved treasury policy and treasury strategy for the management of interest rate risk.
The Board keeps the decision to actively hedge interest rate risk under regular review. Any derivative contracts will be
entered into solely for interest rate risk and currency risk management and no speculative hedging is permitted under
the policy.
Material arrangements in place at the reporting date
The Group has $718.4 million (2022: $649.5 million) variable rate borrowings at a weighted average interest rate of
6.58% (2022: 1.8%). The borrowings are contractually repriced every three months and to that extent are also exposed
to the risk of future changes in market interest rates.
Material exposures and sensitivity
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk.
At 30 June 2023
Financial assets
Cash and cash equivalents
Financial liabilities
Variable rate borrowings
Total increase/(decrease)
At 30 June 2022
Financial assets
Cash and cash equivalents
Financial liabilities
Variable rate borrowings
Total increase/(decrease)
Interest rate risk
-100 bps
+100 bps
Carrying
amount
$’000
Note
Profit
$’000
Other
equity
$’000
Profit
$’000
Other
equity
$’000
198,709
(2,960)
(2,960)
2,960
2,960
7
(718,364)
9,866
6,906
9,866
6,906
(9,866)
(6,906)
(9,866)
(6,906)
117,452
(1,261)
(1,261)
1,261
1,261
7
(649,532)
5,973
4,712
5,973
4,712
(5,973)
(4,712)
(5,973)
(4,712)
113
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 10. Financial risk management continued
(d) Liquidity risk
Prudent liquidity risk management entails maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close out market positions.
Risk management policy
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities. The Group maintains borrowing facilities to enable the Group to borrow funds
when necessary.
Material arrangements in place at reporting date
Borrowings
Less: cash and cash equivalents
Less: term deposits
Net debt
Note
7
8
14
2023
$’000
1,172,097
(198,709)
(856)
972,532
2022
$’000
649,739
(117,452)
(14,593)
517,694
Material exposures – Contractual maturities of financial liabilities
The following table sets out the Group’s exposure to liquidity risk. The amounts disclosed in the table are the contractual
undiscounted cash flows and include expected future interest payments.
At 30 June 2023
Non-derivatives
Non-interest bearing payables
Variable rate borrowings
Fixed rate borrowings
Lease liabilities
Other financial liabilities
Total non-derivatives
At 30 June 2022
Non-derivatives
Non-interest bearing payables
Variable rate borrowings
Fixed rate borrowings
Lease liabilities
Other financial liabilities
Total non-derivatives
0–12
Months
$’000
91,313
26,800
382
14,426
1,136
134,057
Between
1 and 2
years
$’000
Between
2 and 5
years
$’000
Over
5 Years
$’000
Total
contractual
cash flows
$’000
Carrying
amount
liabilities
$’000
108
8,887
607
18,655
5,982
34,239
–
729,693
–
18,513
4,686
752,892
–
–
479,567
31,986
–
511,553
91,421
765,380
480,556
83,580
11,804
1,432,741
91,421
718,364
453,733
70,472
10,127
1,344,117
0–12
Months
$’000
Between
1 and 2
years
$’000
Between
2 and 5
years
$’000
Over
5 Years
$’000
Total
contractual
cash flows
$’000
Carrying
amount
liabilities
$’000
48,758
–
119
9,379
–
58,256
1,241
213,400
98
8,655
1,153
224,547
–
449,233
–
20,820
–
470,053
–
–
–
34,576
–
34,576
49,999
662,633
217
73,430
1,153
787,432
49,999
649,532
207
64,431
1,153
765,322
Net fair value of financial assets and liabilities
The net fair value of cash and cash equivalents, non-interest bearing monetary financial assets and non-interest bearing
financial liabilities of the consolidated entity approximates their carrying amounts. There are no off-balance sheet financial
instruments in place.
114
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 EQUITY
This section provides information about the capital management practices of the business.
11. Contributed equity
Accounting Policy
Ordinary shares are classified as equity.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company
in proportion to the number of, and amounts paid on, the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy is entitled
to one vote, and upon a poll, each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Incremental costs directly attributable to the issue of new shares, options or performance rights are shown
in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue
of new shares or options or performance rights for the acquisition of a business are not included in the cost
of the acquisition as part of the purchase consideration.
Movement in ordinary fully paid shares during the period
Balance at 1 July 2022
Issue of shares and exercise of options and performance rights under
the carsales.com Ltd Employee Option and Share Plan
Dividend Reinvestment Plan (DRP)
Capital raised
Less: transaction costs arising on share issues, including via DRP
Deferred tax recognised directly in equity
Balance at 30 June 2023
Balance at 1 July 2021
Exercise of options and performance rights under the
carsales.com Ltd Employee Option Plan
Dividend Reinvestment Plan (DRP)
Capital raised
Less: transaction costs arising on share issues, including via DRP
Deferred tax recognised directly in equity
Balance at 30 June 2022
Number
of shares
282,845,469
275,202
522,457
93,090,419
–
–
376,733,547
$’000
769,959
1,295
10,992
1,715,485
(45,423)
(506)
2,451,802
281,966,582
755,357
450,847
428,040
–
–
–
282,845,469
6,120
9,918
–
(1,190)
(246)
769,959
Information relating to the carsales.com Ltd Employee Option Plan, including details of options and performance rights
issued, exercised and lapsed during the financial year and options and performance rights outstanding at the end of the
financial year, is set out in Note 26.
115
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 12. Reserves
Nature and purpose of reserves
The share-based payments reserve is used to recognise the movement in the fair value of options and
performance rights issued and vested.
Exchange differences arising on translation of the foreign operations are taken to the foreign currency
translation reserve, as described in Note 27 and accumulated within a separate reserve within equity.
The reserve is recognised in profit or loss when the net investment is disposed of.
The Group holds put options over some of its non-controlling interests. The amount that may become payable
under the option on exercise is initially recognised at the present value of the redemption amount within other
financial liabilities with a corresponding charge directly to equity in the NCI acquisition reserve. The liability
is subsequently accreted through finance charges up to the redemption amount that is payable at the date
at which the option first becomes exercisable.
The Group also had a cash flow hedge reserve. Refer to Note 9 and 10 for more details on current
hedging arrangements.
116
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 Share-
based
payment
$’000
39,157
Foreign
currency
translation
$’000
5,060
Post-
employment
benefits
$’000
(1,044)
Financial
Asset
FVOCI
$’000
2,732
NCI
acquisition
$’000
(40,929)
Cash flow
hedge
$’000
(1,820)
Other
Reserves
$’000
(5,021)
Total
Reserves
$’000
(1,865)
–
–
–
–
–
–
–
–
4,874
14,625
(83,110)
–
–
(10,433)
–
–
239
–
–
–
–
–
–
–
–
–
(6,257)
(78,918)
239
(6,257)
–
–
–
–
2,196
–
–
–
–
–
–
–
–
–
–
–
44,031
–
(73,858)
–
(805)
–
(1,329)
(5,619)
(46,548)
–
–
–
1,820
–
–
1,820
–
–
–
–
–
–
–
–
–
–
–
14,625
(83,110)
239
1,820
(10,433)
(6,257)
(83,116)
–
2,196
–
4,874
–
(5,021)
(5,619)
(83,530)
Balance at 1 July 2022
Items that may be
classified to profit or loss
Exchange differences
on translation of
foreign operations
Reclassification of
exchange differences
on step acquisition
of associates
Remeasurement of
post-employment
benefit obligations
Movement in cash flow
hedge (net of tax)
Movement in net
investment hedge
(net of tax)
Items that will not
be reclassified to profit
or loss
Changes in financial
assets at fair value (net
of tax) through other
comprehensive income
Total comprehensive
income for the year
Transfer of gain on
disposal of equity
investment at fair value
through other
comprehensive income
to retained earnings
Transactions with
owners in their
capacity as owners:
Increase in share-based
payment reserve
inclusive of tax
Transaction with non-
controlling interests
Balance at 30 June 2023
117
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 12. Reserves continued
Share-
based
payment
$’000
33,467
Foreign
currency
translation
$’000
(25,045)
Post-
employment
benefits
$’000
(125)
Financial
Asset
FVOCI
$’000
3,786
NCI
acquisition
$’000
(40,686)
Cash flow
hedge
$’000
12,184
Other
Reserves
$’000
(5,021)
Total
Reserves
$’000
(21,440)
–
–
–
–
–
–
5,690
–
39,157
–
–
–
30,105
–
–
–
–
(919)
–
–
12,372
30,105
(919)
12,372
–
–
–
(13,426)
–
–
–
–
–
–
–
–
–
–
–
(14,004)
–
(14,004)
–
–
–
–
–
–
–
30,105
(919)
(14,004)
12,372
27,554
–
(13,426)
–
5,690
–
5,060
–
(1,044)
–
2,732
(243)
(40,929)
–
(1,820)
–
(5,021)
(243)
(1,865)
Balance at 1 July 2021
Items that may be
classified to profit or loss
Exchange differences
on translation of
foreign operations
Remeasurement of
post-employment
benefit obligations
Movement in cash flow
hedge (net of tax)
Items that will not
be reclassified to profit
or loss
Changes in financial
assets at fair value (net
of tax) through other
comprehensive income
Total comprehensive
income for the year
Transfer of gain on
disposal of equity
investment at fair value
through other
comprehensive income
to retained earnings
Transactions with
owners in their
capacity as owners:
Increase in share-based
payment reserve
inclusive of tax
Transaction with non-
controlling interests
Balance at 30 June 2022
118
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023
13. Dividends
Accounting Policy
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of the financial year but not distributed at balance date.
The dividends were proposed/payable as follows:
Interim dividend paid for the half year ended 31 December
– fully franked at the tax rate of 30%
Final dividend proposed/paid for the year ended 30 June
– 50% franked (2022: fully franked) at the tax rate of 30%
Dividends paid in cash or satisfied by the issue of shares
under the dividend reinvestment plan
Paid in cash
Satisfied by issue of shares
Proposed but not yet paid or issued
Interim dividend paid for the half year 31 December
Final dividend declared/paid for the year ended 30 June
2023
$’000
2022
$’000
100,132
72,068
122,508
222,640
86,019
158,087
93,899
6,233
122,508
222,640
67,764
4,304
86,019
158,087
Cents per
share
28.5
32.5
Cents per
share
25.5
24.5
The Group has $20.6 million of franking credits as at 30 June 2023 (2022: $15.7 million).
The impact on the franking account of the dividend recommended by the Directors since year end, but not recognised
as a liability at year end is $26.3 million.
Dividend Reinvestment Plan (DRP)
The carsales.com Ltd DRP will be maintained for the 2023 final dividend, offering shareholders the opportunity to acquire
further ordinary shares in carsales. The DRP will not be offered at a discount and the price will be calculated using the daily
volume weighted average sale price of carsales.com Ltd shares sold in the ordinary course of trading on the ASX during
the five days after, but not including, the Record Date 18 September 2023. The last date for shareholders to nominate
their participation in the DRP is 5:00pm (AEST) on 19 September 2023. Shares issued under the DRP will rank equally with
carsales.com Ltd existing fully paid ordinary shares. Shareholders eligible to participate in the DRP are currently limited
to those whose registered address on the carsales.com Ltd share registry is in Australia or New Zealand.
Eligible shareholders who wish to participate in the DRP can make their elections online at www.computershare.com.au/
easyupdate/CAR or complete the DRP form, which will be sent to shareholders for completion and submission to
Computershare Investor Services Pty Ltd (carsales share registry). Further information can be obtained from
Computershare on 1300 850 505.
119
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT OTHER ASSETS AND LIABILITIES
This section provides information on other balance sheet assets and liabilities that do not materially affect performance
or give rise to material financial risk.
14. Trade and other receivables
Accounting Policy
(a) Classification of trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course
of business. They are generally due for settlement within 30 to 45 days following the provision of advertising,
data services and sale of goods and therefore are all classified as current.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less the
loss allowance. Details about the Group’s impairment policies and the calculation of the loss allowance are
provided in Note 10.
(b) Accrued income
Services provided in the current reporting period are recognised on an accrual basis. Settlement is generally
within 30 days.
(c) Other receivables
These amounts generally arise from transactions outside the usual operating activities of the Group.
Interest is not charged and collateral is not normally obtained.
The other classes within trade and other receivables do not contain impaired assets and are not past due.
Based on the credit history of these other classes, it is expected that these amounts will be received when due.
Other non-current receivables include deposits paid in relation to long-term property leases by
ENCARSALES.COM Ltd.
(d) Fair value and credit risk
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their
fair value. Information about the impairment of trade receivables and the Group’s exposure to credit risk,
foreign currency risk and interest rate risk can be found in Note 10.
Current assets
Trade receivables
Loss allowance (see Note 10)
Trade receivables
Accrued income
Other receivables
Term deposits*
Prepayments
Trade and other receivables
Lease deposits
Other
Non-current assets – Other receivables
*
Term deposits are short term in nature with the average period being 12 months.
120
2023
$’000
111,647
(3,729)
107,918
877
10,338
856
16,640
136,629
14,451
6,829
21,280
2022
$’000
45,525
(1,245)
44,280
955
5,585
14,593
9,328
74,741
12,125
1,843
13,968
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 15. Property, plant and equipment
Accounting Policy
Property, plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other repairs and maintenance expenses are charged to the profit
or loss during the financial period in which they are incurred.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included
in the consolidated statement of comprehensive income.
Depreciation on assets is calculated using the straight-line method to allocate their cost, net of their residual
values, over their estimated useful lives, as follows:
• Motor vehicles
• Plant and equipment
3 – 5 years
3 – 10 years
• Leasehold improvements
3 – 10 years or minimum lease period if shorter
121
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Total
$’000
14,654
8,940
4,265
(117)
(6,531)
102
21,313
10,500
4,822
806
–
(4,041)
81
12,168
35,820
(23,652)
12,168
64,347
(43,034)
21,313
8,886
5,170
24
(145)
(3,252)
(183)
10,500
27,878
(17,378)
10,500
12,815
7,882
291
(362)
(5,744)
(228)
14,654
45,393
(30,739)
14,654
15. Property, plant and equipment continued
Plant and
equipment
$’000
Motor
vehicles
$’000
Leasehold
improvements
$’000
Year ended 30 June 2023
Opening net book amount
Additions
Acquired through business combination
Disposals
Depreciation charge
Exchange differences
Closing net book amount
At 30 June 2023
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2022
Opening net book amount
Additions
Acquired through business combination
Disposals
Depreciation charge
Exchange differences
Closing net book amount
At 30 June 2022
Cost
Accumulated depreciation
Net book amount
3,409
2,710
3,137
(66)
(2,092)
17
7,115
25,084
(17,969)
7,115
3,401
1,847
236
(29)
(2,012)
(34)
3,409
745
1,408
322
(51)
(398)
4
2,030
3,443
(1,413)
2,030
528
865
31
(188)
(480)
(11)
745
15,434
(12,025)
3,409
2,081
(1,336)
745
122
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 16. Leases
The Group leases properties (commercial office premises and retail properties), motor vehicles and equipment.
The Group’s leases are typically for fixed periods between two to fifteen years and may include extension options.
Lease terms are negotiated on an individual lease basis and may contain a wide range of different terms and
conditions. None of the Group’s lease agreements impose any covenants, however leased assets may not be
used as security for borrowing purposes.
Payments made under operating leases, less any incentives received from the lessor, were previously charged
to profit or loss on a straight-line basis over the period of the lease pursuant to the requirements of AASB 117.
In applying AASB 16, a right-of-use asset representing the right to use the underlying asset and a corresponding
lease liability representing the obligation to make lease payments are recognised at the date at which the leased
asset is available for use by the Group.
Right-of-use assets are measured at cost comprising the following:
• the initial measurement of the lease liability;
• any lease payments made in advance of the lease commencement date less any incentives received;
• any initial direct costs; and
• an estimate of any costs to dismantle and remove the asset at the end of the lease.
The Group depreciates the right-of-use assets on a straight-line basis from the lease 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 Group also
assesses the right-of-use assets for impairment when such indicators exist.
At the lease commencement date, the Group measures the lease liability at the present value of the lease
payments unpaid at that date, discounted using the interest rate implicit in the lease where that rate is readily
available or using the Group’s incremental borrowing rate at the time the lease was entered into.
Lease payments included in the measurement of the lease liability consist:
• fixed payments less any incentives receivable;
• variable payments based on an index or rate;
• amounts expected to be payable under a residual value guarantee; and
• payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability is reduced for payments made and increased for interest incurred.
The liability is remeasured to reflect any reassessment or modification, or if there are changes to in-substance
fixed payments. When the lease liability is remeasured, a corresponding adjustment is made to the value of
the right-of-use asset.
The Group recognises the lease payments associated with short-term and low-value leases as an expense
on a straight-line basis over the lease term.
Deferred tax accounting
Lease payments are generally deductible whilst interest and depreciation expenses on these leases remain
non-deductible. As a result, a net deferred tax asset has been recognised in relation to the temporary
differences arising from the right-of-use assets and lease liabilities.
Depreciation on assets is calculated using the straight-line method to allocate their cost, net of their residual
values, over their estimated useful lives, as follows:
• Properties
• Motor vehicles
Expected lease period
Contractual lease period
• Leased plant and equipment
Contractual lease period
123
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 16. Leases continued
Key Assumption/Accounting Estimates
Extension and termination options are included in a number of the Group’s property leases. The extension
and termination options are exercisable only by the Group and not by the respective lessor. In determining the
lease term, which forms part of the initial measurement of the right-of-use asset and lease liability, management
considers all facts and circumstances that create an economic incentive to exercise an extension option, or not
exercise a termination option. Extension options (or periods after termination options) are only included in the
lease term if the lease is reasonably certain to be extended (or not terminated).
The following factors are normally the most relevant when assessing the extension options on the property lease:
• If there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to
extend (or not terminate).
• If any leasehold improvements are expected to have a significant remaining value, the Group is typically
reasonably certain to extend (or not terminate).
• Otherwise, the Group considers other factors including historical lease duration and the costs and business
disruption required to replace the leased properties.
Most extension options in properties have been included in the lease liability because the Group could not
replace the assets without significant cost or business disruption.
The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged
to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or
change in circumstances occurs, which affects this assessment and that is within the control of the lessee Group.
Right-of-use
Properties
$’000
Right-of-
use Motor
vehicle and
Equipment
$’000
Total
$’000
56,475
11,634
(340)
2,250
(10,882)
(554)
58,583
384
1,611
–
–
(361)
(66)
1,568
4,582
(3,014)
1,568
111,562
(52,979)
58,583
56,091
10,023
(340)
2,250
(10,521)
(488)
57,015
106,980
(49,965)
57,015
(a) Right-of-use assets:
Year ended 30 June 2023
Opening net book amount
Additions and acquired through business combination
Terminations
Remeasurement of lease modification
Depreciation charge
Exchange differences
Closing net book amount
At 30 June 2023
Cost
Accumulated depreciation
Net book amount
124
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 Right-of-use
Properties
$’000
Right-of-
use Motor
vehicle and
Equipment
$’000
55,080
8,017
2,190
(8,838)
(358)
56,091
96,541
(40,450)
56,091
Year ended 30 June 2022
Opening net book amount
Additions
Remeasurement on lease modification
Depreciation charge
Exchange differences
Closing net book amount
At 30 June 2022
Cost
Accumulated depreciation
Net book amount
(b) Lease Liabilities:
Year ended 30 June
Opening lease liabilities
Additions and assumed through business combination
Terminations
Remeasurement of lease modification
Lease payments
Interest charge
Exchange differences
Closing lease liabilities
At 30 June
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
Total
$’000
55,614
8,304
2,202
(9,289)
(356)
56,475
534
287
12
(451)
2
384
2,985
(2,601)
384
99,526
(43,051)
56,475
2023
$’000
64,431
15,298
(316)
1,989
(12,196)
2,059
(793)
70,472
11,173
59,299
70,472
2022
$’000
63,352
7,617
–
1,652
(9,399)
1,563
(354)
64,431
8,061
56,370
64,431
125
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 17. Intangible assets
Accounting Policy
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries
is included in intangible assets. Goodwill is not amortised. Instead, goodwill is tested for impairment annually,
or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at
cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold. Goodwill is allocated to cash generating units for the purpose
of impairment testing.
Computer software
Software includes capitalised development costs being an internally generated intangible asset.
Capitalised development costs are recorded as an intangible asset and amortised from the point at which
the asset is ready for use on a straight-line basis over four to five years. Internally capitalised labour costs
are treated as an investing cash outflow in the consolidated statement of cash flows.
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating
to the design and testing of new or improved services) are recognised as intangible assets when it is probable
that the project will, after considering its commercial and technical feasibility, be completed and generate future
economic benefits and its costs can be measured reliably. The expenditure capitalised comprises all directly
attributable costs, including costs of materials, services, direct labour and an appropriate proportion of overheads.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Brands, trademarks and customer relationships
Acquired brands and trademarks represent the value of brands in acquired subsidiaries and businesses that
are separately fair valued at the date of acquisition from the remaining goodwill. Acquired brands are amortised
over a period of between 10 and 15 years.
Acquired customer relationships have a finite useful life and are carried at fair value at acquisition date less
accumulated amortisation and impairment losses. Amortisation is calculated using the straight-line method
to allocate the cost of the asset over its estimated useful life, which is between 7–20 years.
The following intangible assets have finite lives and are subject to amortisation on a straight-line basis. The useful
lives for these assets are as follows:
• Computer software
• Brands and trademarks
• Customer relationships
4-5 years
10-15 years
7–20 years
• Other (domain names and database)
5–10 years
126
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 Year ended 30 June 2023
Opening net book amount
Additions
Acquired through business combination
Transfer/measurement period adjustments
Disposals
Amortisation charge
Impairment charge
Exchange differences
Closing net book amount
At 30 June 2023
Cost
Accumulated amortisation and impairment
Net book amount
Goodwill*
$’000
Computer
software**
$’000
Brands,
trademarks
and
customer
relationships
$’000
Other
intangible
assets
$’000
483,934
–
2,716,044
–
–
–
(19,240)
(46,710)
3,134,028
66,750
64,074
29,820
–
–
(33,926)
(7,033)
1,236
120,921
52,468
13,765
938,291
–
–
(55,683)
(1,172)
(22,077)
925,592
168
225
51
–
–
–
–
–
444
Total
$’000
603,320
78,064
3,684,206
–
–
(89,609)
(27,445)
(67,551)
4,180,985
3,153,789
(19,761)
3,134,028
282,778
(161,857)
120,921
1,027,008
(101,416)
925,592
1,858
(1,414)
444
4,465,433
(284,448)
4,180,985
*
**
For impairment of goodwill, refer to Note 17(a)
During the period, a strategic decision was made to discontinue the operations of Placie, carsales’ digital mobility platform. The assets associated with this
platform largely consist of software assets which have been written down to nil and an impairment loss has been recognised in the consolidated statement
of comprehensive income.
Year ended 30 June 2022
Opening net book amount
Additions
Acquired through business combination
Transfer/measurement period adjustments
Disposals
Amortisation charge
Exchange differences
Closing net book amount
At 30 June 2022
Cost
Accumulated amortisation and impairment
Net book amount
Goodwill
$’000
Computer
software
$’000
Brands,
trademarks
and
customer
relationships
$’000
Other
intangible
Assets
$’000
480,008
–
19,240
3,868
–
–
(19,182)
483,934
484,454
(520)
483,934
49,410
40,385
1,105
(498)
(4)
(23,272)
(376)
66,750
159,917
(93,167)
66,750
66,390
6
1,182
(3,909)
–
(8,437)
(2,764)
52,468
91,726
(39,258)
52,468
1,297
–
2
(1,122)
–
–
(9)
168
1,358
(1,190)
168
Total
$’000
597,105
40,391
21,529
(1,661)
(4)
(31,709)
(22,331)
603,320
737,455
(134,135)
603,320
127
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 17. Intangible assets continued
(a) Impairment testing
Key Assumption/Accounting Estimates
Goodwill and intangible assets that have an indefinite useful life are allocated to a cash-generating unit (‘CGU’)
or a group of CGUs and are tested annually for impairment. Other assets are tested for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable, which includes
carsales’ interests in associates. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount.
Both value in use and fair value less cost to sell valuation methods have been employed in determining the
recoverable amounts of CGUs. Both methods are predicated on cash flow projections which necessitates the
adoption of assumptions and estimates. The method adopted in estimating the fair value is considered to be
level 3 in the fair value hierarchy (refer to Note 9 for explanation of the valuation hierarchy).
The key assumptions and estimates used in management’s calculations primarily relate to:
(a) Five or 10-year cash flow forecasts sourced from internal budgets and long-term forecasts
(b) terminal value growth rates applied to the period beyond the five to 10-year cash flow forecasts; and
(c) post-tax discount rates, used to discount the cash flows to present value.
The cash flow projections have been:
(d) derived from management forecasts based on next year’s board approved budgeted result, with the
remaining years based on management forecasts; and
(e) compiled using a combination of past experience, current performance and market position as well as
structural changes and economic factors which have been derived based on external data and internal analysis.
Each of these assumptions and estimates are based on a ‘best estimate’ at the time of performing the valuation.
However, increases in discount rates or changes in other key assumptions, such as operating conditions or financial
performance, may cause the recoverable amount of CGUs to fall below their carrying amounts, resulting in an
impairment loss being recognised.
Cash generating units
Goodwill is allocated to the Group’s cash generating units (CGUs) which are then tested annually to determine whether
they have suffered any impairment. For the purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other
assets or groups of assets (cash generating units).
A segment and CGU-level summary of the goodwill allocation is presented below.
Australia – Online Advertising Services Segment
Australia – Data, Research and Services Segment
Tyres CGU (Australia – carsales investments)
Redbook Inspect CGU (Australia – carsales investments)
North America
Brazil
LATAM*
Latin America Segment
South Korea
RedBook International
Asia Segment
2023
$’000
111,008
15,941
–
818
2,101,499
527,128
21,529
548,657
355,705
400
356,105
3,134,028
2022
$’000
86,421
15,941
19,240
818
–
–
18,026
18,026
343,089
400
343,489
483,935
*
Due to an internal restructure and a change in the way that goodwill is monitored for internal management purposes effective 1 July 2022, the Group has aggregated
the Chile and Mexico CGUs to form a new CGU called “LATAM”. Any goodwill which was previously allocated to the Chile and Mexico CGUs has been reallocated
to the LATAM CGU in FY23. The prior year comparative has also been restated to reflect this.
128
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 Key assumptions
As well as management cash flow projections (including revenue growth and margin assumptions), other key assumptions
for each significant CGU are detailed as follows:
Terminal growth rate
Post-tax discount rate
Valuation method
Value in use
CGU
Australia – Online
Advertising Services
Australia – Data,
Research and Services Value in use
Tyres CGU (Australia
– carsales investments) Value in use
Brazil
North America
LATAM
South Korea
Fair value less costs to sell*
Fair value less costs to sell
Value in use
Fair value less costs to sell
Years of
cash flow
projection
5
5
5
n/a
10
5
10
2023
2.5%
2.5%
2.3%
n/a
2.5%
2.9%
2.3%
2022
2.3%
2.3%
2.3%
–
–
2.7%
2.0%
2023
8.3%
8.3%
9.8%
n/a
9.0%
11.6%
10.0%
2022
8.8%
8.8%
10.7%
–
–
11.3%
10.7%
*
Given the recent nature of the acquisition of the additional 40% stake in webmotors S.A in Brazil on 28 April 2023, the recoverable amount for the Brazil CGU
has been based on fair value less costs to sell supported with reference to the transaction price.
Tyres CGU impairment
During the year, the Group recognised a non-cash impairment charge against the carrying value of the Tyres CGU.
As at 30 June 2023, the carrying value of the Tyres CGU was compared with the value in use determined via a discounted
cash flow model. The carrying value exceeded its value in use by $22.2 million and an impairment loss of this amount
has been recognised in the consolidated statement of comprehensive income. The carrying value of the remaining
goodwill in the Tyres CGU post impairment is nil. The current economic environment has resulted in the Tyres business
experiencing softer demand for its products, as well as higher freight and warehousing costs, which has adversely affected
the performance and outlook for this CGU.
The key assumptions used in determining the Tyres CGU impairment charge are outlined above.
Impact of reasonable possible changes in key assumptions
The remaining 51% of the Trader Interactive (North America CGU) business was acquired on 30 September 2022 and
the Group has only owned 100% of this business for 9 months at balance date. As such the North America CGU has
minimal headroom at 30 June 2023. The North America CGU impairment model is sensitive to changes in the compound
annual revenue growth rate assumption across the 10 year cash flow projection period. A moderate reduction to the
forecast compound annual revenue growth rate across the projection period would, with all other assumptions remaining
unchanged, reduce the headroom to nil.
The Directors and management have considered and assessed reasonably possible changes for the key assumptions
and have not identified any instances that could cause the carrying amount of the other CGUs to exceed their
recoverable amount.
129
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 18. Payables and provisions
Accounting Policy
Trade and other payables
These amounts include liabilities for goods and services provided to the Group prior to the end of financial year
that are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
The Group recognises a liability in accrued expenses and an expense for bonuses based on a formula that takes
into consideration the profit attributable to the Company’s shareholders after certain adjustments as well as other
metrics set out in the Remuneration Report. The Company recognises a liability where contractually obliged or
where there is a past practice that has created a constructive obligation.
Employee benefits provisions
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled
within 12 months after the end of the period in which the employees render the related service. They are
recognised in respect of employees’ service up to the end of the reporting period and are measured at the
amount expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the
provision for employee benefits. All other short-term employee benefit obligations are presented as payables.
The liability for long service leave and annual leave that is not expected to be settled within 12 months after
the end of the period in which the employees render the related services is recognised in the provision for
employee benefits and measured as the present value of expected future payments to be made in respect of
services provided by employees up to the end of the reporting period using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures and
period of service.
Expected future payments are discounted using market yields at the end of the reporting period on high-quality
corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future
cash outflows.
Trade and other payables
Trade payables
Accrued expenses
Other payables
Total trade and other payables
Provisions
Employee benefits – current
Employee benefits – non-current
Other provisions – current*
Other provisions – non-current
Total provisions
2023
$’000
23,763
40,651
26,899
91,313
12,764
1,257
14,812
4,446
33,279
2022
$’000
10,986
34,010
3,762
48,758
9,879
1,269
1,117
3,388
15,653
*
Other provisions includes estimated costs associated with the planned closure of the Mexican business, legal costs and other. The costs associated with the planned
closure of the Mexican business are included in the impairment loss and business closure expenses in the Consolidated Statement of Comprehensive Income.
Contingent liabilities
The Group and the parent entity from time to time may incur obligations arising from litigation or other contracts entered
into in the normal course of business. Neither the Group nor the parent entity have any material contingent liabilities
where the probability of outflow in any settlement is greater than remote as at 30 June 2023 or 30 June 2022.
Other commitments
The Group has other contractual commitments of $2.5 million at 30 June 2023 (2022: $3.1 million).
130
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 GROUP STRUCTURE
This section explains aspects of the group structure, such as our portfolio of associate accounted investments
and acquisitions and how these have affected the financial position and performance of the Group.
19. Interests in other entities
(a) Material subsidiaries
(i) Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies,
generally accompanying a shareholding of more than half of the voting rights. The existence and effect of
potential voting rights that are currently exercisable or convertible are considered when assessing whether
the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. The purchase
method of accounting is used to account for the acquisition of subsidiaries by the Company. Subsidiaries disposed
of are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Company.
Non-controlling interests in the results and equity of subsidiaries are presented separately in the consolidated
statement of comprehensive income, consolidated statement of changes in equity and consolidated statement
of financial position respectively.
(ii) Employee Share Trust
The Group has formed a trust to administer the Group’s employee share scheme. This trust is consolidated,
as the substance of the relationship is that the trust is controlled by the Group.
The Group’s principal subsidiaries at 30 June 2023 are set out on the next page. Unless otherwise stated, they have share
capital consisting solely of ordinary shares that are held directly by the Group and the proportion of ownership interests
held equals the voting rights held by the Group. The country of incorporation or registration is also their principal place
of business.
131
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 19. Interests in other entities continued
Ownership
interest held
by the Group*
Ownership
interest held
by non-
controlling
interests
Place of
business/
country of
incorporation
Australia
Australia
Australia
Australia
New Zealand
Malaysia
2023
%
100.0
100.0
100.0
100.0
100.0
100.0
2022
%
100.0
100.0
100.0
100.0
100.0
100.0
2023
%
–
–
–
–
–
–
2022
%
–
–
–
–
–
–
Principal
activities
(1)
(2)
(1)
(2)
(2)
(2)
Operating
Segment
(i)
(ii)
(i)
(ii)
(vi)
(vi)
China
100.0
100.0
Thailand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Mexico
Mexico
Chile
Chile
Australia
Australia
United States
of America
Chile
Argentina
Colombia
South Korea
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
of America
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
92.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.2
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
80.0
100.0
-
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.2
100.0
100.0
100.0
97.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
–
–
–
–
–
–
–
–
–
8.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.8
–
–
–
2.7
–
–
–
–
–
–
(2)
(2)
(3)
(4)
(1)
(4)
(4)
(5)
(4)
(6)
(1)
(4)
(7)
(4)
(1)
(1)
(4)
(1)
(7)
(4)
(4)
(1)
(1)
(1)
(1)
(4)
(2)
(1)
(1)
(1)
(1)
(3)
(4)
(4)
(4)
(vi)
(vi)
(iii)
(i)
(i)
(v)
(vi)
n/a
(iv)
(iii)
(i)
n/a
n/a
(v)
(v)
(v)
(v)
(v)
n/a
(v)
(v)
(v)
(v)
(v)
(vi)
(i)
(ii)
(iii)
(iii)
(iii)
(iii)
(iii)
(iii)
(iii)
(iv)
Name of entity
Webpointclassifieds Pty Ltd
Equipment Research Group Pty Ltd
Discount Vehicles Australia Pty Ltd
Automotive Data Services Pty Ltd
Auto Information Limited
RedBook Automotive Services (M) Sdn Bhd
RedBook Automotive Data Services
(Beijing) Limited
Automotive Data Services (Thailand) Company
Limited
tyresales Pty Ltd
Auto Exchange Holdings Pty Ltd
Automotive Exchange Pty Ltd
carsales.com Investments Pty Ltd
carsales Holdings Pty Ltd
carsales.com Ltd Employee Share Trust
carsales North America Holdings Pty Ltd
(formerly “carsales Finance Pty Ltd”)
RedBook Inspect Pty Ltd
Programmatic Solutions Pty Ltd
carsales Treasury Pty Ltd
carsales Foundation
carsales Latam Pty Ltd
carsales Mexico SAPI de CV
Promotora de Servicio y Ventas
Especializadas, S. de R.L. de C.V.
carsales Chile SpA
Chileautos SpA
carsales Foundation Pty Ltd
carsales Argentina Pty Ltd
Demotores Holdings LLC
Demotores Chile SpA
Demotores S.A.
Demotores Colombia S.A.S
ENCARSALES.COM, Ltd
AS1 Holdings Pty Ltd
Appraisal Solutions Pty Ltd
carsales ESI Pty Ltd
CS Motion Technologies Pty Ltd
CS Motion Development Pty Ltd
CS Motion Australia Pty Ltd
Tyreconnect Pty Ltd
Transport Ventures Pty Ltd
carsales Tyre Holding Pty Ltd
carsales Holding US, LLC (USA)
132
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 Trader Interactive, LLC
SSI, LLC
Trader Canada Holdings, Inc.
Trader Interactive Holdings Canada, ULC
NatCo Trading Corporation
Webmotors S.A.
LOOP Gestao de Patios S.A.
Car10 Tecnologia e Informacao S.A.
United States
of America
United States
of America
Canada
Canada
United States
of America
Brazil
Brazil
Brazil
100.0
49.0
100.0
100.0
100.0
100.0
70.0
51.0**
66.7**
49.0
49.0
49.0
49.0
30.0
–
–
–
–
–
–
–
30.0
49.0
33.3
–
–
–
–
–
n/a
n/a
n/a
(4)
(4)
(4)
(4)
(4)
(1)
(8)
(8)
(iv)
(iv)
(iv)
(iv)
(iv)
(v)
(v)
(v)
*
**
The proportion of ownership interest is equal to the proportion of voting power held.
The proportion of ownership interest is equal to the proportion of voting power held by webmotors (a subsidiary of the Group). The Group’s indirect ownership
in Car10 and LOOP is 46.7% and 35.7% respectively.
Principal activities
(1) Classified advertising
(2) Data and research
(3) Online retail
(4) Holding company
(5) Share trust company
(6) Vehicle inspection services
(7) Trustee company
Operating segment
(i) Australia – Online Advertising Services
(ii) Australia – Data, Research and Services
(iii) Australia – carsales investments
(iv) North America
(v) Latin America
(vi) Asia
(8) Digital automotive and payment technology products
(b) Non–controlling interests (NCI) for continuing operations
Set out below is summarised financial information for each subsidiary that has a material non-controlling interest.
The amounts disclosed for each subsidiary include balances payable to and receivable from other Group subsidiaries.
Control was obtained over Webmotors S.A during the current year, refer to Note 20(b). Prior to this, the investment in
this entity was classified as an associate and as such NCI was not previously recognised. There were no non-controlling
interests in the prior period that were material to the Group.
The summarised statement of comprehensive income and net increase in cash and cash equivalents below for
webmotors is for the period from the date of acquisition to 30 June 2023.
Summarised balance sheet
For the year ended 30 June 2023
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Accumulated NCI
Summarised statement of comprehensive income
For the period 28 April 2023 to 30 June 2023
Profit for the period
Other comprehensive income
Total comprehensive income
Profit for the period allocated to NCI
Total comprehensive income allocated to NCI
Dividends paid to NCI
For the period 28 April 2023 to 30 June 2023
Net increase/(decrease) in cash and cash equivalents
webmotors
$’000
96,055
687,973
(49,307)
(66,940)
667,781
48,653
webmotors
$’000
3,748
25,740
29,488
1,687
2,832
-
webmotors
$’000
8,264
133
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 19. Interests in other entities continued
Name of Entity
Webmotors S.A.
Other
Total
(c) Interests in Associates
Accumulated
NCI
$’000
48,653
6,968
55,621
Profit for the year
allocated to NCI
$’000
1,687
1,013
2,700
Total
comprehensive
income allocated
to NCI
$’000
2,832
1,013
3,845
Accounting Policy
Associates are all entities over which the Group has significant influence but no control or joint control,
generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates
are accounted for using the equity method of accounting, after initially being recognised at cost. The Group’s
investment in associates includes goodwill identified on acquisition. Acquisition-related costs of acquiring an
interest in an associate are capitalised.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share
of post-acquisition other comprehensive income is recognised in other comprehensive income. The cumulative
post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable
from associates are recognised as reduction in the carrying amount of the investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any
other unsecured long-term receivables, the Group does not recognise further losses unless it has incurred
obligations or made payments on behalf of the associate.
At each reporting date, the Group determines whether there is objective evidence that the investment in the
associate or joint venture is impaired. If there is such evidence, the Group recognises the loss as share of profit
of an associate or joint venture in the Consolidated Statement of Comprehensive Income.
134
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 The Group holds interests in the following associates:
Name of entity
Webmotors S.A.
Skedgo Pty Ltd
Trader Interactive LLC
Place of business/
country of incorporation
Brazil
Australia
United States of America
2023
%
–
–
–
2022
%
Nature of
relationship
30.0 Associate
20.6 Associate
49.0 Associate
Measurement
method
Equity method
Equity method
Equity method
% of ownership interest
Name of entity
Webmotors S.A.(i)
Skedgo Pty Ltd(ii)
Trader Interactive LLC(i)
Total equity accounted
investments
Quoted fair value
Carrying amount
Share of profit/(loss)
2023
$’000
–
–
–
2022
$’000
–
–
–
2023
$’000
–
–
–
2022
$’000
58,191
2,358
857,099
2023
$’000
6,127
(99)
(721)
2022
$’000
5,090
(14)
12,100
–
–
–
917,648
5,307
17,176
(i)
(ii)
During the year, control was obtained over Trader Interactive LLC and Webmotors S.A (refer to Note 20) and as such the investments in these entities were reclassified
from associates to consolidated subsidiaries.
The investment in Skedgo Pty Ltd was disposed of in June 2023 for non-cash consideration of $1.3 million and a $0.9 million loss on disposal was recognised within
impairment loss and business closure expenses in the Consolidated Statement of Comprehensive Income.
(i) Movement in the carrying amount of significant equity accounted investments
For the year ended 30 June 2023
Carrying amount at 1 July 2022
Share of profit for the year
Amortisation expense relating to fair value adjustments (net of tax)
Foreign exchange impact – other comprehensive income
Dividends received
Reclassification to consolidated subsidiary
Reclassification of promissory notes receivable
Carrying amount at 30 June 2023
Trader
Interactive
LLC 49%
ownership*
$’000
857,099
Webmotors
S.A. 30%
ownership**
$’000
58,191
2,877
(3,600)
63,214
–
(897,891)
(21,699)
–
6,475
(348)
4,606
(3,078)
(65,846)
–
–
*
**
As of 30 September 2022, Trader Interactive LLC is now 100% owned and controlled by the Group. Refer to Note 20 for details. As a result, the investment
was reclassified from an associate to a consolidated subsidiary.
As of 28 April 2023, webmotors S.A. is now 70% owned and controlled by the Group. Refer to Note 20 for details. As a result, the investment was reclassified from
an associate to a consolidated subsidiary.
135
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 19. Interests in other entities continued
For the year ended 30 June 2022
Carrying amount at 1 July 2021
Acquisition of investment using equity method (cash)
Acquisition of promissory notes receivable (cash)*
Transaction costs capitalised
Gain on acquisition hedge (net of tax)
Share of profit for the year
Amortisation expense relating to fair value adjustments (net of tax)
Foreign exchange impact – other comprehensive income
Dividends receivable
Carrying amount at 30 June 2022
Trader
Interactive
LLC 49%
ownership
$’000
–
Webmotors
S.A. 30%
ownership
$’000
53,581
794,708
19,084
15,849
(36,101)
28,092
(15,992)
51,459
–
857,099
–
–
–
–
5,478
(388)
1,776
(2,256)
58,191
*
The Group acquired 49% of interest bearing promissory notes in the entity to the value of $19.0 million at the acquisition date, which were extinguished upon
completion of the acquisition of the 51% remaining interest in Trader Interactive.
(ii) Summarised financial information for significant associates
The tables below provide summarised financial information for the associates that are material to the Group.
The information disclosed reflects the amounts presented in the financial statements of the relevant associate
and not the Company’s share of those amounts.
For the year ended 30 June 2023
Revenue
Profit/(loss) from continuing operations
Other comprehensive income
Total comprehensive income/(loss)
Group’s share
Profit/(loss) from continuing operations
Foreign exchange impacts – other comprehensive income*
Total comprehensive income
*
Relates to translation of the equity accounted investment.
Trader Interactive LLC
1 July 2022 to
30 September 2022
$’000
56,664
(1,471)
–
(1,471)
(721)
63,214
62,493
Webmotors S.A.
1 July 2022 to
28 April 2023
$’000
104,747
20,424
–
20,424
6,127
4,606
10,733
136
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 For the year ended 30 June 2022
Total current assets
Total non-current assets
Total current liabilities
Total non-current liabilities
Net assets
Group’s share in %
Group’s share in $
Goodwill and capitalised transaction costs
Acquired intangibles (net of tax)
Share-based payments recognised directly in equity
Promissory notes receivable acquired
Foreign exchange impacts
Carrying amount
Revenue
Profit from continuing operations
Other comprehensive income
Total comprehensive income
Group’s share
Profit from continuing operations
Foreign exchange impacts – other comprehensive income
Total comprehensive income
(iii) Contingent liabilities in respect of associates
Contingent liabilities – associates
Contingent liabilities relating to liabilities of Webmotors S.A. for which the Company
is severally liable
Contingent liabilities relating to liabilities of Trader Interactive LLC for which the Company
is severally liable
Trader
Interactive
LLC 49%
ownership
$’000
52,604
17,192
(18,018)
(606,717)
(554,939)
49.0%
(271,920)
902,424
207,900
(3,300)
20,267
1,728
857,099
Webmotors
S.A. 30%
ownership
$’000
62,150
63,123
(45,064)
(198)
80,011
30.0%
24,003
31,001
3,187
–
–
–
58,191
158,639
92,726
24,695
24,695
12,100
51,459
63,559
16,966
16,966
5,090
1,776
6,866
2023
$’000
2022
$’000
n/a
n/a
186
–
137
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 19. Interests in other entities continued
(d) Financial assets at fair value through other comprehensive income
Accounting Policy
Investments are designated as financial assets at fair value through other comprehensive income if they do not
have fixed maturities and fixed or determinable payments, and management intends to hold them for the medium
to long-term. The Group has irrevocably elected to account for investments which are not held for trading at
fair value through other comprehensive income. These are strategic investments and the Group considers this
classification to be more relevant. Financial assets that are carried at fair value are measured by the fair value
measurement hierarchy referred to in Note 9.
On disposal of these equity investments, any related balance with the FVOCI reserve is reclassified to
retained earnings.
Key Assumption/Accounting Estimates
The fair value of financial instruments that are not traded in an active market is determined using valuation
techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions
existing at each balance date. Refer to Note 9 for details of the valuation techniques used to value the investment.
% of ownership
Carrying amount
Name of entity
Quoted financial assets
Plenti Group Ltd (formerly ‘RateSetter Australia Pty Ltd’) (i)
Unquoted financial assets
PromisePay Pte Ltd (ii)
mx51 Group Pty Ltd (ii)
Adfixus Pty Ltd (ii)
Other equity investments (iii)
Total financial assets at fair value
through other comprehensive income
2023
%
–
18.4
2.5
9.9
n/a
2022
%
9.5
18.4
3.3
–
n/a
At 1 July
Acquisition of financial assets at fair value through other comprehensive income
Sale of financial assets at fair value through other comprehensive income
Exchange differences recognised through other comprehensive income
Gain/(loss) recognised through other comprehensive income
At 30 June
2023
$’000
2022
$’000
–
10,455
4,255
2,589
1,500
17,010
4,101
4,409
–
17,931
25,354
36,896
2023
$’000
36,896
2,363
(6,997)
503
(7,411)
25,354
2022
$’000
49,529
1,313
(26,698)
698
12,054
36,896
(i) Plenti Group Ltd
During the year, the Group sold its investment in Plenti Group Ltd. The sale resulted in cash received of $7.0 million
and the $2.2 million loss on disposal was recycled from the Financial Asset FVOCI reserve to retained earnings.
(ii) PromisePay, mx51 Group and Adfixus
The Group holds equity interests in the following entities which are not publicly listed: PromisePay Pte Ltd, mx51 Group
Pty Ltd and Adfixus Pty Ltd. The Group reviewed the valuation of its interest in these entities. Refer to Note 9 for details
of the valuation approach.
(iii) Other equity investments
This balance relates to investments in unlisted US based venture capital fund assets.
138
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 20. Business combination
Accounting Policy
The acquisition method of accounting is used to account for all business combinations, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises the:
• fair values of the assets transferred
• liabilities incurred to the former owners of the acquired business
• equity interests issued by the Group
• fair value of any asset or liability resulting from a contingent consideration arrangement, and
• fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are,
with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any
non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the:
• consideration transferred,
• amount of any non-controlling interest in the acquired entity, and
• acquisition-date fair value of any previous equity interest in the acquired entity
over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than
the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit
or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate,
being the rate at which a similar borrowing could be obtained from an independent financier under comparable
terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value, with changes in fair value recognised in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously
held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising
from such remeasurement are recognised in profit or loss.
139
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 20. Business combination continued
(a) Trader Interactive
On 27 June 2022, carsales.com Ltd announced that it had exercised its call option to acquire the remaining 51% in
Trader Interactive LLC. On 30 September 2022, the acquisition of the remaining stake in Trader Interactive was completed
for $1,183.2 million (excluding transaction costs), resulting in the Group gaining control over Trader Interactive.
The acquisition was funded via a $1,207.0 million accelerated non-renounceable entitlement offer and an upsize of the
Group’s existing debt facilities.
Pursuant to AASB 3 Business Combinations, the transaction is treated as a step-acquisition which occurs when the buyer
in a business combination has a previously held equity interest in a target and acquires an additional interest in the target
that results in the buyer obtaining control. In a step acquisition scenario, the acquirer is required to revalue its existing
stake to ‘fair value’ and recognise a gain for the excess over the previously held equity interest. The details of the
acquisition are below:
(i) Purchase consideration
Cash paid for the additional interest acquired
Working capital adjustment
Fair value of pre-existing interest held
Hedge gain (net of tax)
Total purchase consideration
(ii) Net gain on revaluation
$’000
1,238,736
(259)
1,120,527
(55,567)
2,303,437
In accordance with the accounting policy above, the Group has re-measured its previously held equity interest in Trader
Interactive at the acquisition date fair value immediately prior to the business combination. The Group has recognised
a net gain on the step acquisition of $337.9 million, being the difference between the acquisition-date fair value of its
existing ownership in Trader Interactive ($1,120.5 million), the carrying value of its investment in Trader Interactive
as an associate ($897.9 million) and the impact of historical foreign exchange movements on the investment balance
($115.3 million).
This gain has been recognised within ‘Net gain on step acquisition of associates’ in the Consolidated Statement
of Comprehensive Income.
Fair value of previously held interest
Less: carrying value of Trader Interactive investment as an associate
Add: reclassification of exchange differences
Net gain on step acquisition of associate
(iii) Cash flow hedge
$’000
1,120,527
(897,891)
115,269
337,905
In June 2022, the Group entered into forward foreign exchange contracts for USD with a total notional value of
$1,213.4 million and a maturity of September 2022. These contracts were designated as a cash flow hedge to protect
against foreign exchange fluctuations relating to purchase of the remaining 51% of Trader Interactive. Unrealised hedge
gains and losses were recognised in the cash flow hedge reserve net of tax. In September 2022, the forward contracts
were settled resulting in a net cash inflow of $83.7 million. The net gain was recycled from the cash flow hedge reserve
and the effective portion of $55.6 million formed part of the consideration paid for Trader Interactive. The ineffective
portion ($3.0 million) was recognised in the Consolidated Statement of Comprehensive Income within finance costs.
140
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023
(iv) Details of net assets and liabilities acquired
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Right-of-use assets
Other receivables
Other financial assets
Trade and other payables
Contract liabilities – deferred revenue
Lease liabilities (C)
Provisions
Current tax liabilities
Lease liabilities (NC)
Net identifiable assets acquired
Customer relationships
Trade names
Software
Goodwill
Deferred tax liability recognised on intangible assets acquired
Identifiable intangible assets acquired
Deferred tax assets relating to tax losses
Net assets acquired
Initial accounting
Fair value
recognised
on
acquisition
$’000
31,365
12,315
1,228
2,257
3,446
171
(628,949)
(3,755)
(1,922)
(2,252)
(232)
(5,630)
(591,958)
617,226
152,363
8,396
2,179,377
(84,540)
2,872,822
22,573
2,303,437
Both the net asset value and the allocation of the purchase price to acquired assets is still preliminary. In particular,
the fair values assigned to intangible assets and deferred taxes are still being assessed and may be subject to change.
The acquisition accounting including tax related impacts will be finalised within 12 months of the acquisition date.
The goodwill is attributable to the workforce and synergistic benefits that are expected to be created by this acquisition.
(v) Acquired receivables
The fair value of trade and other receivables is equal to the gross contractual amount. Trade receivables are expected
to be collected in full.
(vi) Revenue and profit before tax from continuing operations
From the date of acquisition, the additional 51% investment in Trader Interactive contributed $182.6 million of revenue
and $69.5 million to the profit from continuing operations of the Group. If the acquisition had occurred on 1 July 2022,
the contribution to consolidated revenue and consolidated profit for the Group would have been $239.4 million
and $68.0 million respectively. Profit has been calculated based on the subsidiary results and includes the additional
amortisation that would have been charged from 1 July in relation to acquired intangible assets, together with the
consequential tax effects.
(vii) Borrowings
Immediately prior to the completion of the acquisition, Trader Interactive had $570.5 million in external borrowings
with Credit Suisse and a further $48.5 million in promissory notes payable held by the shareholders of Trader Interactive,
including carsales.com Ltd. The Group had previously acquired 49% ($21.7 million) of the promissory notes in September 2021
as part of its initial investment in Trader Interactive. On 30 September 2022, as part of the transaction to acquire the
remaining share of Trader Interactive, the Group paid $570.5 million to settle the debt with Credit Suisse including
associated fees. A further $26.8 million was paid to the former shareholders of Trader Interactive to fully acquire the
promissory notes. At 30 June 2023, intercompany loans to the same value have been recognised between carsales
and Trader Interactive. These loans are eliminated upon consolidation of Trader Interactive into the Group’s results.
141
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 20. Business combination continued
(b) webmotors
On 28 April 2023 carsales.com Ltd acquired an additional 40% of Webmotors S.A. (“webmotors”) for $368.7 million
(excluding transaction costs), increasing the Group’s interest from 30% to 70% and resulting in the Group gaining control
over this business. The acquisition was funded via a $508.4 million pro-rata accelerated renounceable entitlement offer.
Pursuant to AASB 3 Business Combinations, the transaction is treated as a step-acquisition which occurs when the buyer
in a business combination has a previously held equity interest in a target and acquires an additional interest in the target
that results in the buyer obtaining control. In a step acquisition scenario, the acquirer is required to revalue its existing
stake to ‘fair value’ and recognise a gain for the excess over the previously held equity interest. The details of the acquisition
are below:
(i) Purchase consideration
Cash paid for the 40% interest acquired
Working capital adjustment
Fair value of pre-existing 30% interest held
Hedge gain (net of tax)
Total purchase consideration
(ii) Net gain on revaluation
$’000
373,231
–
246,628
(4,546)
615,313
In accordance with the accounting policy above, the Group has re-measured its previously held equity interest in
webmotors at the acquisition date fair value immediately prior to the business combination. The Group has recognised
a net gain on the step acquisition of $148.6 million, being the difference between the acquisition-date fair value of its
existing 30% ownership in webmotors ($246.6 million), the carrying value of its investment in webmotors as an associate
($65.8 million) and the impact of historical foreign exchange movements on the investment balance ($32.2 million loss).
In calculating the net gain on the step acquisition, the Group applied a control premium of 13.5%. This gain has been
recognised within ‘Net gain on step acquisition of associates’ in the Consolidated Statement of Comprehensive Income.
Fair value of previously held interest
Less: carrying value of webmotors investment as an associate
Less: reclassification of exchange differences
Net gain on step acquisition of associate
(iii) Cash flow hedge
$’000
246,628
(65,846)
(32,159)
148,623
In March 2023 the Group entered into a foreign currency forward exchange contracts to swap AUD for USD with a total
notional value of USD$239.5m and a maturity of 28 April 2023. The Group then entered into a non-deliverable foreign
currency forward contract to swap USD equal to BRL$1,240.0m (USD$239.5m), with a maturity of 2 May 2023.
These contracts were designated as a cash flow hedge to protect against foreign exchange fluctuations relating to
purchase of the additional 40% stake in webmotors. Unrealised hedge gains and losses were recognised in the cashflow
hedge reserve net of tax. In May 2023, the forward contracts were settled resulting in a net cash inflow of $6.4 million.
The hedge was 100% effective and the net gain of $4.5 million was recycled from the cashflow hedge reserve and formed
part of the consideration paid for webmotors.
142
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 (iv) Details of net assets and liabilities acquired
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Right-of-use assets
Other receivables
Current tax asset
Trade and other payables
Borrowings
Lease liabilities (C)
Provisions
Lease liabilities (NC)
Net identifiable assets
Customer relationships
Trade names
Software
Deferred tax liability recognised on intangible assets acquired
Identifiable intangible assets
Non-controlling shareholder interest in net assets
Goodwill
Net assets acquired
Initial accounting
Fair value
recognised
on
acquisition
$’000
28,785
40,635
2,919
1,277
11,211
7,249
(23,081)
(29,815)
(363)
(2,786)
(1,147)
34,884
118,473
39,936
21,425
(57,547)
122,287
(45,820)
503,962
615,313
Both the net asset value and the allocation of the purchase price to acquired assets is still preliminary. In particular,
the fair values assigned to intangible assets and deferred taxes are still being assessed and may be subject to change.
The acquisition accounting including tax related impacts will be finalised within 12 months of the acquisition date.
The goodwill is attributable to the workforce and synergistic benefits that are expected to be created by this acquisition
and is not expected to be deductible for tax purposes.
(v) Acquired receivables
The fair value of trade and other receivables is $40.6 million. The gross contractual amount for trade receivables due is
$42.0 million, with a loss allowance of $1.4 million recognised on acquisition.
(vi) Revenue and profit before tax from continuing operations
From the date of acquisition, the additional 40% investment in webmotors contributed $26.4 million of revenue and
$3.7 million to the profit from continuing operations of the Group.
If the acquisition had occurred on 1 July 2022, the contribution to consolidated revenue and consolidated profit for the
Group would have been $131.1 million and $27.3 million respectively. Profit has been calculated based on the subsidiary
results and includes the additional amortisation that would have been charged from 1 July in relation to acquired intangible
assets, together with the consequential tax effects.
(vii) Non-controlling interests
The Group elected to recognise the non-controlling interests at its proportionate share of the acquired net identifiable assets.
143
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 21. Parent entity financial information
Accounting Policy
The financial information for the parent entity, carsales.com Ltd, has been prepared on the same basis as the
consolidated financial statements, except as set out below:
Investments in subsidiaries are accounted for at cost in the financial statements of carsales.com Ltd. Dividends
received from subsidiaries are recognised in the parent entity’s profit or loss, rather than being deducted from
the carrying amount of these investments. Investments in subsidiaries are tested for impairment whenever
changes in events or circumstances indicate that the carrying amount may not be recoverable. Such events
may include receipt of dividends. Refer to Note 17 for details of impairment accounting policies.
In addition to its own current and deferred tax amounts, carsales.com Ltd also recognises the current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed
from controlled entities in the tax consolidated group.
The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate
the company for any current tax payable assumed and are compensated by the Company for any current tax
receivable and deferred taxes relating to unused tax losses or unused tax credits that are transferred to
carsales.com Ltd under the tax consolidation legislation.
The funding amounts are determined by reference to the amounts recognised in the wholly owned entities’
financial statements. Assets or liabilities arising under tax funding agreements with the tax consolidated entities
are recognised as amounts receivable or payable to other entities in the Group. Any difference between the
amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as
a contribution to (or distribution from) wholly owned tax consolidated entities.
Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries
for no compensation, the fair values of these guarantees are accounted for as contributions and recognised
as part of the cost of the investment.
(a) Summary financial information
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Issued capital
Reserves
Retained earnings
Total equity
Profit for the year
Total comprehensive income
2023
$’000
2022
$’000
76,684
3,478,658
3,555,342
64,396
813,147
877,543
2,677,799
2,451,802
27,773
198,224
2,677,799
279,198
274,761
91,222
1,660,157
1,751,379
76,517
771,242
847,759
903,620
769,959
26,289
107,372
903,620
113,067
111,434
(b) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2023 or 30 June 2022.
144
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 22. Deed of cross guarantee
The following controlled entities have entered into a Deed of Cross Guarantee:
Company
carsales.com Ltd
carsales Holdings Pty Ltd
carsales North America Holdings Pty Ltd (formerly carsales Finance Pty Ltd)
Auto Exchange Holdings Pty Ltd
Automotive Data Services Pty Ltd
carsales.com Investments Pty Ltd
Discount Vehicles Australia Pty Ltd
Equipment Research Group Pty Ltd
Webpointclassifieds Pty Ltd
carsales Latam Pty Ltd
carsales Foundation Pty Ltd
carsales Argentina Pty Ltd
Automotive Exchange Pty Ltd
AS1 Holdings Pty Ltd
Tyresales Pty Ltd
Appraisal Solutions Pty Ltd
carsales Tyre Holding Pty Ltd
Transport Ventures Pty Ltd
Tyreconnect Pty Ltd
Programmatic Holdings Pty Ltd
CS Motion Holdings Pty Ltd
CS Motion Development Pty Ltd
Financial year entered
into agreement
30 June 2015
30 June 2015
30 June 2015
30 June 2015
30 June 2015
30 June 2015
30 June 2015
30 June 2015
30 June 2015
30 June 2016
30 June 2016
30 June 2017
30 June 2018
30 June 2018
30 June 2021
30 June 2021
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
The companies that are party to this deed guarantee the debts of the others and represent the ‘Closed Group’ from the
date of entering into the agreement. These wholly-owned entities have been relieved from the requirement to prepare
a Financial Report and Directors’ Report under Class Order 98/1418 (as amended) issued by the Australian Securities
and Investments Commission.
(a) Consolidated statement of comprehensive income
Revenue from continuing operations
Revenue from contracts with customers
Revenue from continuing operations
Expenses
Operating expenses
Earnings before interest, taxes, depreciation and amortisation
Depreciation and amortisation expense
Finance income
Finance costs
Fair value in put options
Share of net profit from associates accounted for using the equity method
Net gain on step acquisition of associate
Impairment loss and business closure expenses
Dividends income
Profit before income tax
Income tax expense
Profit from continuing operations
Total comprehensive income for the year
2023
$’000
2022
$’000
436,818
436,818
391,568
391,568
(145,124)
291,694
(32,199)
5,860
(54,305)
–
6,027
148,623
(28,024)
7,639
345,315
(43,896)
301,419
299,178
(173,043)
218,525
(25,331)
996
(18,193)
289
–
–
–
4,371
180,657
(52,906)
127,751
140,426
145
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT
22. Deed of cross guarantee continued
(b) Consolidated statement of financial position
Set out below is a consolidated statement of financial position as at 30 June 2023 of the Closed Group.
Consolidated statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Derivative assets
Inventory
Total current assets
Non-current assets
Investments accounted for using the equity method and subsidiaries
Financial assets at fair value through other comprehensive income
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Intangible assets
Other receivables
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Current tax liabilities
Other financial liabilities
Provisions
Contract liabilities – deferred revenue
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Deferred tax liabilities
Other financial liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
146
2023
$’000
2022
$’000
35,311
76,943
–
2,065
114,319
3,098,881
25,354
3,205
36,015
15,766
149,312
16,579
3,345,112
3,459,431
35,179
3,885
14,936
1,136
9,063
4,663
68,862
–
681,983
42,677
5,899
5,333
1,165
737,057
805,919
2,653,512
2,451,802
(28,533)
230,243
2,653,512
42,075
56,833
5,526
3,222
107,656
537,689
36,896
4,349
38,076
15,226
158,734
793,072
1,584,042
1,691,698
37,142
3,303
29,560
–
9,036
4,216
83,257
–
649,533
45,017
6,615
1,153
1,069
703,387
786,644
905,054
769,959
27,021
108,074
905,054
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 23. Related party transactions
The Group has identified the parties it considers to be related and the transactions conducted with those parties.
Other than those disclosed below, no other related party transactions have been identified.
(a) Key Management Personnel compensation
Short-term employee benefits
Deferred short-term employee benefits
Post-employment benefits
Long-term employment benefits
Share-based payments
(b) Transactions with other related parties
The following transactions occurred with related parties:
Sale of goods and services to related parties
Purchase of goods and services from related parties
2023
$
6,578,402
783,500
191,944
108,445
2,585,996
10,248,287
2022
$
7,593,015
715,083
199,803
89,729
78,466
8,676,096
2023
$
1,417,354
1,914,982
2022
$
1,282,428
1,741,001
All transactions were made at arms-length, on normal commercial terms and conditions and at market rates. This also
includes transactions with associates.
(c) Outstanding balances arising from sales/purchases of goods and services
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
Current receivables (sale of goods and services)
Other related parties
Current payables (purchase of goods and services)
Other related parties
2023
$
2022
$
43,585
83,115
145,366
12,718
There is no allowance accounted for impaired receivables in relation to any outstanding balances, and no expense
has been recognised in respect of impaired receivables due from related parties.
147
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT ITEMS NOT RECOGNISED
This section of the notes provides information about material items that are not recognised in the financial statements
as they do not yet satisfy the recognition criteria.
24. Events occurring after the reporting period
No matters or circumstances 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.
148
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 OTHER
This section provides information on items which require disclosure to comply with Australian Accounting Standards
and other regulatory pronouncements, however, are not considered critical in understanding the financial performance
or position of the Group.
25. Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
(a) PricewaterhouseCoopers Australia
Audit and other assurance services
Audit and review of Financial Reports
Due diligence services
Other assurance services
Total remuneration for audit and other assurance services
Taxation services
2023
$
2022
$
1,142,545
607,500
–
1,750,045
820,590
250,700
126,498
1,197,788
Tax compliance services, including review of Company income tax returns
Total remuneration for taxation services
Total remuneration of PricewaterhouseCoopers Australia
153,000
153,000
1,903,045
149,004
149,004
1,346,792
(b) Network firms of PricewaterhouseCoopers Australia
Audit and other assurance services
Audit and review of Financial Reports
Total remuneration for audit and other assurance services
Total remuneration of network firms of PricewaterhouseCoopers Australia
313,356
313,356
313,356
217,014
217,014
217,014
Total remuneration for PricewaterhouseCoopers
2,216,401
1,563,806
(c) Non-PwC audit firms
Audit and review of Financial Reports
Tax compliance services
Total remuneration for Non-PwC audit firms
Total auditors’ remuneration
306,579
–
306,579
296,529
22,382
318,911
2,522,980
1,882,717
It is the Company’s policy to employ PwC on assignments additional to their statutory audit duties where PwC’s expertise
and experience with the Company are important. These assignments are principally tax compliance services and due
diligence reporting on acquisitions, or where PwC is awarded assignments on a competitive basis. It is the Company’s policy
to seek competitive tenders for all major consulting projects.
149
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 26. Share-based payments
Share-based compensation benefits are provided to employees via the carsales.com Ltd Employee Option Plan.
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit
expense were $2,683,334 (2022: $2,097,675).
Employee Option Plan
Set out below are summaries of options and performance rights granted under the plan:
2023
Opening
balance
Granted
during
the year
Exercised
during
the year
Expired or
lapsed
during
the year
Closing
balance
Vested and
exercisable
at 30 June
69,961
28,442
51,449
244,714
394,566
$13.33
–
130,084
161,491
58,697
190,727
–
540,999
$0.00
935,565
$5.62
–
–
–
–
–
–
(9,629)
(3,089)
(6,383)
(63,276)
(82,377)
$13.41
–
–
–
(61,163)
(61,163)
$13.54
60,332
25,353
45,066
120,275
251,026
$13.25
60,332
25,353
45,066
120,275
251,026
$13.25
–
–
–
–
316,847
316,847
$0.00
316,847
$0.00
(117,958)
–
(58,697)
–
–
(176,655)
$0.00
(259,032)
$4.26
(12,126)
(1,890)
–
(13,811)
(8,493)
(36,320)
$0.00
(97,483)
$8.50
–
159,601
–
176,916
308,354
644,871
$0.00
895,897
$3.71
–
–
–
–
–
–
$0.00
251,026
$13.25
Exercise
price
Grant date
Options
Oct 2016
Oct 2017
Oct 2018
Oct 2019
Total options
Weighted average exercise price
$12.23
$11.41
$14.87
$13.54
Performance rights
Oct 2018
Oct 2019
Oct 2020
Aug 2021
Feb 2022
Dec 2022
Total performance rights
Weighted average exercise price
Total of plan
Weighted average exercise price
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
150
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 2022
Exercise
price
Grant date
Options
Oct 2016
Oct 2017
Oct 2018
Oct 2019
Total options
Weighted average exercise price
$12.23
$11.41
$14.87
$13.54
Performance rights
Oct 2018
Oct 2019
Aug 2020
Oct 2020
Aug 2021
Feb 2022
Total performance rights
Weighted average exercise price
Total of plan
Weighted average exercise price
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Opening
balance
Granted
during
the year
Exercised
during
the year
Expired or
lapsed
during
the year
Closing
balance
Vested and
exercisable
at 30 June
88,221
51,491
426,452
285,056
851,220
$13.94
152,563
153,938
14,461
201,820
–
–
522,782
$0.00
1,374,002
$8.64
–
–
–
–
–
–
–
–
–
–
58,697
226,533
285,230
$0.00
285,230
$0.00
(18,260)
(22,588)
(369,739)
–
(410,587)
$14.56
(8,519)
–
(14,461)
–
–
–
(22,980)
$0.00
(433,567)
$13.79
–
(461)
(5,264)
(40,342)
(46,067)
$13.67
(144,044)
(23,854)
–
(40,329)
–
(35,806)
(244,033)
$0.00
(290,100)
$2.17
69,961
28,442
51,449
244,714
394,566
$13.33
–
130,084
–
161,491
58,697
190,727
540,999
$0.00
935,565
$5.62
69,961
28,442
51,449
–
149,852
$12.98
–
–
–
–
–
–
–
$0.00
149,852
$12.98
The estimate of the weighted average share price at the date of exercise of options exercised regularly during the year
ended 30 June 2023 is estimated to be approximately $22.16 (2022: approximately $24.92).
The weighted average remaining contractual life of share options and rights outstanding at the end of the period was
6.41 years (2022: 9.72 years).
The establishment of the carsales.com Ltd Employee Option Plan was undertaken under a prospectus lodged with
ASIC in 2000. Staff eligible to participate in the plan are those invited by the Board of Directors.
Options and performance rights are granted under the plan for no consideration with conditions including a vesting period
and expiry date. Senior Executives’ vesting conditions, including EPS targets, are noted in the Remuneration Report on
page 58.
Options and performance rights granted under the plan carry no dividend or voting rights. When exercisable, each
option is convertible into one ordinary share in return for payment of the option’s exercise price. Each performance
right is convertible into one ordinary share for $0.00 exercise price, upon satisfaction of all vesting requirements.
151
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT 26. Share-based payments continued
Fair value of options and performance rights granted
The fair value of the performance rights was determined using a Black Scholes model for those rights with non-market
based vesting conditions and using the Monte Carlo method for those rights with market-based vesting conditions.
The model inputs for performance rights granted during the year ended 30 June 2023 included:
Grant date
Share price at grant date
Fair value
Term
Expected price volatility of the Company’s shares
Expected dividend yield
Risk-free interest rate
15 Aug 22 Non-
Market Based
$22.90
$22.61
1.00
33.0%
2.5%
3.6%
8 Dec 22 Market
Based (35%)
$21.71
$13.57
2.70
32.6%
2.3%
3.1%
8 Dec 22
Non-Market
Based (65%)
$21.71
$20.40
2.70
32.6%
2.3%
3.1%
The expected price volatility is based on historical volatility adjusted for any expected changes to future volatility due
to publicly available information. No performance rights have a cost to exercise.
27. Other significant accounting policies
(a) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Australian dollars, which is carsales.com Ltd’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the consolidated statement of comprehensive income.
(iii) Group companies
The results and financial position of foreign operations (none of which has been restated for a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency
as follows:
• assets and liabilities for each consolidated statement of financial position presented are translated at the closing rate
at the date of that balance sheet;
• income and expenses for each consolidated statement of comprehensive income are translated at average exchange
rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the dates of the transactions); and
• all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities and of
borrowings are recognised as other comprehensive income. When a foreign operation is sold or any borrowings forming
part of the net investment are repaid, a proportionate share of such exchange differences are recognised in the consolidated
statement of comprehensive income as part of the gain or loss on sale where applicable.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities
of the foreign operation and translated at the closing rate.
152
Notes to the Consolidated Financial Statements cont.30 June 2023carsales Annual Report 2023 (b) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case, it is recognised as part of the cost of acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included with other receivables or payables in the consolidated
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flow.
(c) New and amended Accounting Standards and Interpretations
(i) New and amended Accounting Standards and Interpretations issued and effective
The Group has not adopted any new or amended Accounting Standards and Interpretations this year that have had
a material impact on the Group or the Company.
(ii) Accounting standards and Interpretations issued but not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2023
reporting periods and have not been early adopted by the Group. These standards are not expected to have a material
impact on the entity in the current or future reporting periods and on foreseeable future transactions.
153
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Directors’ Declaration
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 83 to 153 as it stands now are in accordance with the
Corporations Act 2001, including:
(i) Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements.
(ii) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2023 and of its performance
for the financial year ended on that date.
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
The basis of preparation confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Managing Director and CEO, and Chief Financial Officer required
by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors.
Cameron McIntyre
Managing Director and CEO
Melbourne
13 August 2023
154
carsales Annual Report 2023 Independent Auditor’s Report
to the Members of Carsales.com Ltd
Independent auditor’s report
To the members of carsales.com Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of carsales.com Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2023 and of its financial
performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
●
●
●
●
●
●
the consolidated statement of financial position as at 30 June 2023
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies and
other explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial report
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331 MELBOURNE VIC 3001
T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
155
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Independent Auditor’s Report
to the Members of Carsales.com Ltd cont.
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion
on the financial report as a whole, taking into account the geographic and management structure of the
Group, its accounting processes and controls and the industry in which it operates.
The Group operates in the online automotive classifieds markets and is headquartered in Australia. It has
operations in Australia, North America, Asia, and Latin America.
Materiality
● For the purpose of our audit we used overall Group materiality of $12.5m, which represents
approximately 5% of the Group’s profit before tax from continuing operations, excluding the net
gain on step acquisition of associates and impairment loss and business closure expenses.
● We applied this threshold, together with qualitative considerations, to determine the scope of our
audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements on the financial report as a whole.
● We chose adjusted profit before tax because, in our view, it is the benchmark against which the
performance of the Group is most commonly measured. We adjusted for the net gain on step
acquisition of associates and impairment loss and business closure expenses because these are
one off in nature.
● We utilised a 5% threshold based on our professional judgement, noting it is within the range of
commonly acceptable thresholds.
Audit Scope
● Our audit focused on where the Group made subjective judgements; for example, significant
accounting estimates involving assumptions and inherently uncertain future events.
● We tailored the scope of our audit to ensure that we performed sufficient work to give an opinion
on the financial report as a whole, taking into account the geographic structure of the Group, the
significance and risk profile of each business, the accounting processes and controls and the
industry in which the Group operates.
● Component auditors in the United States, South Korea and Brazil performed procedures over the
Trader Interactive, Encar and Webmotors businesses respectively. The component auditors
performed their work under our instruction and supervision. Our involvement included visiting
certain locations, meeting with the component audit teams, issuing written instructions and
reviewing a selection of component auditor workpapers.
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carsales Annual Report 2023
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. The key audit matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. Further, any commentary on the outcomes of a particular audit
procedure is made in that context. We communicated the key audit matters to the Audit Committee.
Key audit matter
How our audit addressed the key audit matter
Carrying value of goodwill, brands, trademarks and
customer relationships for South Korea and North
America CGUs
(Refer to note 17)
At 30 June 2023, the Group has:
We performed the following procedures, amongst
others:
●
Tested the mathematical accuracy of key
underlying calculations in the impairment
models.
●
●
$3,134.0m of goodwill, of which $355.7m
relates to the South Korea CGU and
$2,101.5m million relates to the North
America CGU
$925.6m of brands, trademarks and
customer relationships, which include those
assets within the South Korea and North
America CGUs.
The Group tests these intangible assets for impairment
on an annual basis. The recoverability is assessed on
a fair value less costs to sell basis, using impairment
models prepared using discounted cash flows. This
requires the Group to make significant judgements and
assumptions, including estimation of forecast cash
flows, terminal value growth rates and discount rates.
The carrying value of intangible assets in the North
America and South Korea CGUs is a key audit matter
due to both the significance of the balances and the
degree of subjectivity in the judgements and
assumptions.
● Compared the forecast cash flows used in the
impairment models with the most recent
budgets approved by the Board.
●
Assessed the historical accuracy of the
Group’s cash flow forecasts by comparing
prior budgets to actual performance.
● Compared growth rate assumptions used in
the impairment models to historical results,
external data sources such as economic and
industry forecasts and similar established
businesses within the carsales portfolio.
● With the assistance of our internal valuation
experts, we assessed the discount rates and
terminal growth rates used in the impairment
models by comparing them to external market
data and comparable companies.
● Considered the disclosures made in note 17,
in light of the requirements of Australian
Accounting Standards.
Step-acquisition accounting for Trader Interactive
and webmotors
(Refer to note 20)
On 30 September 2022, the Group completed the
acquisition of the remaining 51% of Trader Interactive
for $1,183.2m. The initial 49% equity accounted
investment in Trader Interactive was disposed of on
this date resulting in a net gain of $337.9m.
On 28 April 2023, the Group completed the acquisition
of an additional 40% shareholding in webmotors for
$368.7m having previously acquired a 30%
We performed the following procedures, amongst
others for both acquisitions:
● Read the purchase agreements and other
selected key documents associated with the
transactions and evaluated the Group’s
accounting against Australian Accounting
Standards.
● With the assistance of our internal valuation
experts, we assessed the provisional values
of the acquired identifiable intangible assets
recognised by:
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carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT
Independent Auditor’s Report
to the Members of Carsales.com Ltd cont.
Key audit matter
How our audit addressed the key audit matter
shareholding. The initial 30% equity accounted
investment was disposed of on this date resulting in a
net gain of $148.6m.
The Group undertook a purchase price allocation
exercise for both acquisitions in order to calculate the
provisional values of identifiable intangible assets. The
accounting for the acquisitions is provisional at the time
of authorisation of the financial report.
The accounting for these acquisitions is a key audit
matter due to the significance of the gain to the
Group’s result for the year and the judgements made
by the Group to determine the fair value of the
additional interests acquired.
○ Considering the valuation
methodology in light of the
requirements of Australian
Accounting Standards.
○
Assessing key assumptions used in
the valuation by comparing them to
external market data and
comparable companies.
●
●
Tested the mathematical accuracy of the
underlying calculations.
Assessed if Group’s gain on disposal of the
previously held equity accounted investments
was appropriately recognised in the
consolidated statement of comprehensive
income in accordance with Australian
Accounting Standards.
● Considered the disclosures made in note 20,
in light of the requirements of Australian
Accounting Standards.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report for the year ended 30 June 2023, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
158
carsales Annual Report 2023
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 58 to 77 of the directors’ report for the year
ended 30 June 2023.
In our opinion, the remuneration report of carsales.com Limited for the year ended 30 June 2023
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing
Standards.
PricewaterhouseCoopers
Sam Lobley
Partner
Melbourne
13 August 2023
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carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT
Shareholder Information
The shareholder information set out below was applicable as at 30 June 2023.
A. Distribution of equity securities
Class of equity security
Ordinary shares
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Convertible
notes
No. of holders No. of holders No. of holders No. of holders
Shares
Options and
performance
rights
Redeemable
preference
shares
14,349
6,960
974
584
79
22,946
1
11
4
12
1
29
–
–
–
–
–
–
–
–
–
–
–
–
There were 404 holders of less than a marketable parcel of ordinary shares. There were no redeemable preference
shares or convertible notes outstanding.
B. Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Ordinary shares
Number
held
128,665,157
63,054,566
49,117,522
14,133,690
13,321,331
9,052,513
7,415,810
6,777,680
4,336,087
3,305,427
3,126,261
3,025,000
2,393,551
2,351,277
2,143,704
2,029,521
1,876,758
1,875,000
1,260,500
1,200,000
320,461,355
Percentage
of issued
shares
34.15
16.74
13.04
3.75
3.54
2.40
1.97
1.80
1.15
0.88
0.83
0.80
0.64
0.62
0.57
0.54
0.50
0.50
0.33
0.32
85.07
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
BNP Paribas Nominees Pty Ltd (DRP)
National Nominees Limited
BNP Paribas Nominees Pty Ltd (AGENCY LENDING DRP A/C)
Netwealth Investments Limited (WRAP SERVICES A/C)
Australian Foundation Investment Company Limited
Clear-Way Investments Pty Ltd (JAMES FAMILY A/C)
Washington H Soul Pattinson & Company Limited
BNP Paribas Nominees Pty Ltd (HUB24 CUSTODIAL SERV LTD DRP)
Essena Pty Ltd
UBS Nominees Pty Limited
Steven Kloss Pty Ltd (KLOSS FAMILY A/C)
Mutual Trust Pty Ltd
Four Us Pty Ltd (GREG & KAREN ROEBUCK FAMILY)
Citicorp Nominees Pty Limited (COLONIAL FIRST STATE INV A/C)
Billkaren Pty Ltd (ROBINSON FAMILY A/C)
Mr Andrew Gajtan Curmi
Balfour Pines Pty Ltd (DUX FAMILY A/C)
160
carsales Annual Report 2023
Shareholder Information cont.
Options and performance rights issued under the carsales.com Ltd
Employee Option Plan to take up ordinary shares
C. Substantial holders
Substantial holders in the Company are set out below:
Bennelong Funds Management Group Pty Ltd
D. Voting rights
The voting rights attaching to each class of equity securities are set out below:
Number
on issue
Number
of holders
895,897
29
Number
held
24,778,228
Percentage
6.58
(a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
(b) Options
No voting rights.
161
carsales Annual Report 2023INTRODUCTION AND CHAIR/CEO LETTERWHAT WE DO AND OUR OPERATIONSOUR PEOPLE AND CULTUREDIRECTOR’S REPORTCORPORATE GOVERNANCE AND SUSTAINABILITYOUR BOARD AND REMUNERATION REPORTFINANCIAL REPORT Corporate Directory
Directors
Pat O’Sullivan
(Non-Executive Chair)
Cameron McIntyre
(Managing Director and CEO)
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)
Susan Massasso
(Non-Executive Director)
(Appointed as a Director on 14 June 2023)
Steve Kloss
(Alternate Non-Executive Director)
(Retired as a Director on 4 November 2022)
Company secretary
Nicole Birman
Registered office
Level 4, 449 Punt Road Richmond Vic 3121
T +61 3 9093 8600
F +61 3 9093 8697
carsales.com.au
Share registry
Computershare Ltd
452 Johnston Street Abbotsford Vic 3067
T +61 3 9415 4000
F +61 3 9473 2500
computershare.com
External auditor
PricewaterhouseCoopers
2 Riverside Quay Southbank Vic 3006
Stock Exchange
carsales.com Ltd is a public company listed
with the Australian Securities Exchange Limited
ASX: CAR
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163
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