AUTO1 : Standalone Annual report AUTO1 Group SE 2021

01	COMBINED MANAGEMENT REPORT
3
3	Group Profile
6	Economic Report
11	Forecast, Opportunities and Risks
22	Supplementary Business Situation Reporting
25	Takeover-Related Disclosures
26	Corporate Governance Statement
26	Non-Financial Statement
02	BALANCE SHEET
27
as at 31 December 2021
03	INCOME STATEMENT
29
for the period from 1 January to 31 December 2021
04	NOTES TO THE ANNUAL FINANCIAL STATEMENTS
30
for the financial year from 1 January to 31 December 2021
05	MOVEMENTS IN FIXED ASSETS
39
during the 2021 financial year
40	RESPONSIBILITY STATEMENT
41	INDEPENDENT AUDITOR'S REPORT
46	CONTACT

01

Combined Management Report

Group profile

a. Business Model

We are Europe's leading buyer and seller of used cars. Our digital products are based on a unique vertically integrated platform. With more than 596,000 used cars sold in 2021, we are one of Europe's leading partners for buying and selling used cars.

Sales of used cars, including business-to-business (B2B) comes to approx. EUR 600 billion in Europe. However, the online share of this market is still at a very early stage of development. We firmly believe this constitutes a very strong market opportunity for us.

Our business activities are based on a vertically integrated, proprietary technology platform that has been specifically developed for the purchase, sale, portfolio management and delivery of used cars in Europe.

b. Objectives and Strategies

We are convinced that the following competitive strengths are the key drivers of our success and distinguish us from our competitors:

our leading market position with a high volume and great va- riety in purchasing and sales

the growing awareness of our brand in Europe and the uni- que customer experience we offer, both when buying and selling to customers.

Our leading market position is due to our broad purchasing channels, which allowed us to purchase an average of approx. 2,400 used cars per working day in 2021. Via our consumer brands such as "wirkaufendeinauto.de", we offer consumers in ten European countries an online platform to sell their used cars to AUTO1. In addition, fleet operators and commercial dealers can market their vehicles using our remarketing solutions.

We sell the cars through two additional sales channels: Our B2B brand "AUTO1" is Europe's largest wholesale platform for the sale of used cars. We sell these cars to more than 80,000 commercial dealers in Europe via online auctions. Under our trademark "Autohero", we have created an offer for consumers to sell used cars online. We offer end customers in nine European countries used cars at fixed prices.

To continue our success, we have identified the following key factors of our strategy:

We want to become Europe's leading retailer for used cars under our "Autohero" brand;

We are pushing to increase gross profit per vehicle sold in the

Retail segment and

We are continuing to scale our business to promote growth and future profitability.

c. Group Structure

AUTO1 Group SE is the Parent Company of the AUTO1 Group, which comprises 60 directly or indirectly controlled and fully consolidated subsidiaries as at the reporting date. We also consolidate a financing company, AUTO1 Funding B.V. For further information, please see Note 14 in the consolidated financial statements.

The Group's direct and indirect subsidiaries perform all our business activities in Europe.

The Group's only financial liabilities are held through our financing company AUTO1 Funding B.V. as part of an asset-backed securitisation facility. As at the reporting date, we had issued debt securities of EUR 330 million secured by a used car inventory of EUR 584 million and that did not allow any further recourse to the Group. To simplify our pan-European business activities and financing, all vehicles are held via our subsidiaries AUTO1 European Cars B.V. and Auto1 Italia Commercio.

We founded another financing company, Autohero Funding 1 B.V., after the end of the reporting period to facilitate the further development of instalment purchases for Autohero customers. This company will refinance our instalment purchase receivables. As at the reporting date, we had receivables from instalment purchases totalling EUR 49 million (thereof EUR 41 million non-current) that were not offset by financial liabilities.

Merchant

In the Merchant segment, used cars are sold to commercial car dealers via our own brand AUTO1.com. Merchant revenue also includes auction fees, fees for logistics services and all other fees in connection with the provision of vehicles to the dealers.

Revenue from Merchant business is differentiated based on how the vehicles are procured. All cars purchased through the Group's network of private individuals are classified as "C2B". Meanwhile, cars purchased from commercial fleet operators and dealers and not via the branch network are classified as "remarketing". As there are no operations that result in standalone revenue in the two categories, C2B and remarketing merely represent different purchase channels. Sales are made to the same customer base through an identical distribution channel.

Retail

The Retail segment is focused on the sale of used cars to private customers under the Autohero brand. This also includes revenue from financing and other products such as services for used vehicle purchasing. Vehicles for the "Retail" business are mostly purchased through C2B in some cases through remarketing.

e. Management Systems

The shares of the AUTO1 Group SE have been traded on the regulated market (Prime Standard) of the Frankfurt Stock Exchange since 4 February 2021. Proceeds from the IPO raised considerable amounts of cash and enabled us to significantly strengthen our equity base. As a result, the Group had cash and liquid investments of EUR 720 million as at the reporting date.

d. Segments

The Group is structured in two segments: Merchant and Retail. The segments offer products for various customer groups and are managed separately as they require different technologies (use of different sales platforms) and marketing strategies. Both segments purchase vehicles from both of the Group's purchasing channels. The purchasing channels encompass the purchase of vehicles from private individuals (C2B channel) and from commercial dealers in the context of remarketing (Remarketing channel).

The most important financial indicators used for managing business activities are revenue, gross profit (i.e. revenue less cost of materials) and adjusted EBITDA margin (AEBITDA margin), with revenue and gross profit being used at the segment level and adjusted EBITDA at the group level. These performance indicators reflect the Group's clear growth target and together with the non-financial performance indicators are used to measure success and performance.

Besides financial performance indicators, the AUTO1 Group also uses non-financial performance indicators to manage the business at the segment level:

Number of cars sold

GPU (gross profit per unit)

The following non-operating effects are not reflected in adjusted EBITDA: (i) share-based payment, (ii) expenses for strategic products, (iii) expenses for capital structuring, (iv) adjustment of previous year liabilities and (v) other non-operating expenses. Other non-operating expenses comprise consulting expenses in connection with financing, expenses for litigation and other non-operating expenses.

f. Research and Development

We see AUTO1 first and foremost as a technology company with the goal of continuously improving our tech platform to make it as pleasant for dealers and private individuals to use as possible. To overcome the associated challenges such as the design of the websites and apps as well as the automation of process workflows, forecasting supply and demand and customer service challenges, AUTO1 primarily invests in qualified staff. More than 515 tech employees from 63 countries (of whom approx. 72% are software engineers) work at 15 locations on cross-platform innovations, as well as on ensuring smooth processes.

We believe that the investments in this area give us a critical competitive edge. When using our products, dealers, customers and external partners are connected via a central IT network. Thanks to the use of a microservice architecture, cloud technologies and the integration of data collection and analytics (by our Data Science Team), we are in a position to manage all AUTO1's corporate functions via our tech platform. Examples of these functional areas are shown below:

Digital inspection of cars Pricing algorithm

Order processing

Real-time auction platform, portfolio management and operating performance indicators

Invoice and payment processing

Logistics and fleet management Marketing and CRM

In 2021, technology expenses amounted to KEUR 34,339, which includes salaries for several hundred IT developers and software engineers as well as IT expenses. Expenses in our technology platforms were not capitalised.