Warrants

12 Months Ended

Dec. 31, 2021

Warrants [Abstract]

Warrants

23. Warrants

As at December 31, 2021 there were 41,254,566 warrants outstanding. The warrants entitle the holder to purchase one Class A ordinary share of Cazoo Group Ltd at an exercise price of $11.50 per share. Until warrant holders acquire the Class A Shares upon exercise of such warrants, they have no rights with respect to the Class A Shares.

	Public Number	Private placement Number	Total Number
At December 31, 2019	—	—	—
At December 31, 2020	—	—	—
At December 31, 2021	20,124,748	21,129,818	41,254,566

Public warrants are classified as Level 1 due to the use of an observable market quote in an active market. Private placement warrants are classified as Level 3 due to the use of unobservable inputs. The fair value is determined using a Black-Scholes model for the private placement warrants.

At December 31, 2021	Level 1	Level 2	Level 3	Total
	£’000	£’000	£’000	£’000
Warrants	13,418	—	29,274	42,692

The following information is relevant in the determination of fair value of the private placement warrants at December 31, 2021:

	Private placement
Number of warrants		21,129,818
Exercise price	$	11.50
Expected term (years)		7
Expected volatility		47.1	%
Dividend yield		Nil
Risk free interest rate		1.40	%

Reconciliation of fair values

The fair value movements are set out as follows:

	Public		Private placement		Total
	£’000		£’000		£’000
At December 31, 2019	—		—		—
At December 31, 2020	—		—		—
Warrants issued upon acquisition of Drover	—		6,566		6,566
Fair value movement	—		102		102
Exercise of warrants	—		(6,667	)	(6,667	)
Warrants issued in the Transaction	22,475		46,887		69,362
Fair value movement	(9,057	)	(17,614	)	(26,671	)
At December 31, 2021	13,418		29,274		42,692

Sensitivity analysis

For the private placement warrants, a 100 basis point increase in the expected volatility rate would increase the fair value per warrant by £0.05.