Auto Trader’s board will forego at least half of their wages as many staff become “furloughed workers” as part of its COVID-19 coronavirus impact mitigation measures.
The online classified advertising specialist announced detail of temporary salary cuts as it launched a non-pre-emptive placing of new ordinary shares representing approximately 5% of the Company's current issued share capital in a bid to secure its financial resilience during the current crisis.
Th announcement follows a statement issued via the London Stock Exchange last month that revealed the business expected to lose £6 million to £7 million in profits during April as it axed car retailer’s fees for the month and extended its March payment terms for 30 days.
Nathan Coe, Auto Trader's chief executive, said: "I would like to thank everyone at Auto Trader for their commitment through these challenging times.
“We believe our actions to support our employees and customers, to reduce our costs and to strengthen our balance sheet will provide greater flexibility to act in the long-term interests of shareholders, employees, customers and other stakeholders."
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In a statement issued via the London Stock Exchange, Auto Trader said that its entire board of directors has voluntarily offered to forego at least half of their salaries or board fees “for the foreseeable future”.
The executive directors have also requested that their annual FY20 bonus be waived, it said, adding: “The board believes that acting in this way is the clearest indication that we stand together with all our stakeholders, whether employees, customers, shareholders or suppliers.”
The business also announced an employee furlough programme, as part of the Government’s Job Retention scheme, but said that it intended to “fully top up salaries for the large majority of those who are impacted”.
Car retail sector employees have begun a campaign, led by a change.org petition set-up by the Independent Motor Dealers Association (IMDA), in a bid to force changes to the Government’s Job Retention Scheme.
Concerns centre on the scheme’s omission of commission payments from its calculations of the 80% of an employee’s salary – up to a maximum of £2,500 a month – which it will cover.
Four days after the petition's launch, it has attracted over 16,000 signatures.
Auto Trader said in its statement that it was supportive of the government's goal of trying to keep as many people as possible in work.
It added: “We believe our use of the furlough programme will be in the long-term interest of shareholders as well as other stakeholders. The Company has also received indications of support for this approach from some of our major investors.”
Also in today’s statement, Auto Trader revealed that its offer of fee-free advertising during April had led to a record number of vehicles being displayed on its website.
The total volume of vehicles on the platform rose to around 540,000 on March 31, compared to around 480,000 at the end of March 2019, it said.
Auto Trader said: “Car retailers are currently closed for business, at least in relation to the selling and buying of cars, with many staff furloughed under the government's scheme.
“We remain committed to supporting our industry through these difficult times and would expect our next major communication to customers to occur at an appropriate point in April.”
Auto Trader asserted that its balance sheet remains strong.
At the end of February, it had drawings of £289m on a £400m revolving credit facility, with a net debt/EBITDA ratio of 1.1x which is well below its covenant level of 3.5x.
“We expect to meet the March 2020 test with significant headroom available,” it said.