Trader Media Group - Digital Revenues up 11% and Digital EBITDA up 20%
2 July 2012
Trader Media Group Limited ("TMG" or "the Group"), Europe's
largest digital vehicle marketplace, has published its full year
results for the year ended 1 April 2012.
Highlights
- Underlying revenue* £257.2 million (2011: £254.4m)
- Digital revenue up 11% to £202.0 million
- Underlying EBITDA* up 10% to £142.9 million (2011:
£129.8m)
- Digital EBITDA up by 20%; now contributing 85% (2011: 77%) of
Group EBITDA
- Underlying operating profit* up 9% to £128.7 million (2011:
£118.6 million)
- Cash flow from operations remained strong at £129.3 million
(2011: £134.0 million)
- Average monthly number of vehicles on autotrader.co.uk up 4% to
380,000 (2011: 367,000)
- Doubling of Auto Trader Mobile users to 2.3 million unique
users at March 2012 (March 2011: 1.1 million) (Source:
Omniture)
- Auto Trader now largest provider of websites to dealer
community
- Raised additional £150.0 million of debt in June 2011
- Distribution of £210.0 million to shareholders
* Underlying excludes discontinued businesses and exceptional
items principally made up of impairments on carrying values and
cancellation of accrued preference share interest
John King, Chief Executive of Trader Media Group, said:
"We delivered another year of double digit EBITDA growth despite
the tough economic conditions - a clear demonstration of not only
the business' resilience but the quality of our brands, products
and services.
We are now seeing 1.1 billion monthly page views of
autotrader.co.uk, on average reviewing 380,000 vehicles - a 4%
increase on last year.
Although we do not expect a pick-up in the economic environment,
our increasing range of products and services - such as mobile and
embedded digital marketing services - together with our
considerable data capabilities, provide us with confidence that we
will continue to grow profits and generate cash."
Contacts
College Hill
Adrian Duffield/Kay Larsen
t 020 7457 2020
Note to Editors
Trader Media Group is Europe's largest digital marketplace for
vehicles and the UK's leading publisher of automotive classified
advertising through market-leading websites and iconic print
titles.
The Group's leading brand, Auto Trader, is the UK's no. 1
motoring website, with 10.2 million unique users in March 2012 and
1.1 billion page views (source: Omniture March 2012).
Trader Media Group's success is built by providing trade
customers with the ability to choose effective channels to market;
building the service and relationship with dealers and
manufacturers; and connecting them with consumers through multiple
and easy-to-use channels including web sites and mobile
devices.
Trader Media Group employs approximately 1,500 people and
operates in the UK, Ireland, and South Africa. It is jointly owned
by Guardian Media Group and Apax Partners.
Strategic overview
TMG delivered another strong performance with solid revenue
growth in its Digital business including a range of new products,
despite the economic environment. TMG recorded year-on-year
improvements in both revenue and profit from continuing operations
with double digit EBITDA growth for the year as a whole. The more
difficult trading climate in the second half of the year has meant
that both dealers and private customers have been more considered
in their spending.
Underlying revenue for the year to 1 April 2012 was £257.2
million, with digital revenue up 11% to £202.0 million. Underlying
EBITDA grew 10% to £142.9 million (2011: £129.8 million).
Underlying operating profit rose 9% to £128.7 million (2011: £118.6
million). Cash flow from operating activities remained strong at
£129.3 million (2011: £134.0 million).
Throughout the year, the used car market in the UK was impacted
by a shortage of used vehicles, as a result of the significantly
reduced output by manufacturers for three years during the economic
downturn of 2008. Despite these factors, the Group maintained its
strong, market-leading position by providing the best response and
value for money across its product range.
The Group estimates that some 90% of dealers take one or more of
TMG's services or products. TMG continues to reach more consumers
across all digital platforms with autotrader.co.uk, which remains
one of the most searched for websites in the United Kingdom
(Source: Hitwise).
As the recognised route to market for individuals and vehicle
dealerships in almost all of the areas in which it operates, TMG's
focus this year has been on developing its products and services to
create a deeper partnership with dealers by using the Group's data
to provide increased levels of customer and markets insight. This
has led directly to an overall increase in customer satisfaction
scores and underpinned the Group's strong performance.
TMG launched Digital Marketing Solutions ("DMS"), bringing
together the RAZSOR, 2nd Byte and Autotrade-mail brands under one
business unit to provide products and services to dealers and
manufacturers, to enable them to design and develop their own
digital marketing strategies with TMG as their partner.
A notable success has been the growth of RAZSOR websites. The
Group now hosts over 3,000 websites, achieving 18 million page
views across all RAZSOR websites.
In August 2011 TMG launched a new quarterly Auto Trader Index -
an industry reference index which tracks changes in UK advertised
used car prices. It provides dealers with an unmatched level of
market data. This initiative has reinforced Auto Trader's position
as the authoritative voice on trends in the used car market and has
gained considerable media exposure.
The Group is also now sharing its enhanced data and information
capacity with dealers in its monthly Pulse reports, which are being
used by dealers and customers to make better informed buying and
selling decisions.
In November 2011 TMG sold its low-margin, low-growth
magazine-focused Italian subsidiary, Edizeta. Also in November, the
Group increased its stake in IAUTOS Company, which operates a
Chinese automotive classified advertiser, to 22.7%.
The Group successfully raised an additional £150.0 million of
debt from a new term loan in June 2011, and extended the term of
the majority of its existing facilities.
During the year the Group also made a distribution of £210.0
million to its shareholders.
Financial review
TMG continued to grow the business amid an increasingly tough
trading environment, posting underlying revenues of £257.2 million
(2011: £254.4 million).
Underlying EBITDA grew by 10% £142.9 million (2011: £129.8
million). The contribution from the Digital UK division increased
to 85% of the Group's underlying EBITDA.
EBITDA margins grew to 56% (2011: 51%) excluding discontinued
operations as a result of the combination of a reduced contribution
from the lower margin print business, an increase from the margin
rich digital business and a general improvement in efficiencies
across the Group.
Underlying operating profit, before impairments and exceptional
items, was up 9% to £128.7 million (2011: £118.6 million). Actual
operating profit was lower at £105.9 million (2011: £107.5
million), including exceptional items for impairments of £18.2
million (2011: £9.6 million) and the restructuring of Group
operations of £4.6 million (2011: £1.5 million).
Finance costs increased by 4% to £89.2 million (2011: £86.0
million) following the refinancing and subsequent increase in the
margins payable on the Group's syndicated debt.
TMG's taxation charge has increased to £14.7 million (2011:
£12.0 million), reflecting the increased profitability of the
Group.
TMG continues to have a high level of operating cash conversion,
which has allowed the group to generate cash of £129.3 million
(2011: £134.0 million) from operating activities.
The Group successfully raised an additional £150.0 million of
debt from a new term loan in June 2011 and extended the term of the
majority of its previous facilities. The Group also made a
distribution to shareholders of £210.0 million. Excluding the
impact of the refinancing and dividend, the Group generated £36.4
million of cash for the year ended 1 April 2012 (2011: £19.4
million).
Operational review
During the year the Group was restructured into three business
divisions to reflect the changing priorities of the business.
Digital
The Digtial division encompasses the Group's UK car and non-car
websites including: online classified automotive advertising
(listings), principally through the autotrader.co.uk website; Auto
Trader Mobile; and its DMS services provided to automotive dealers
and manufacturers such as RASZOR and 2nd Byte.
This division contributes the majority of the Group's revenue
(79%) and EBITDA (85%). It has shown growth despite the economic
backdrop with revenue and EBITDA increasing by 11% and 20% year-
on-year respectively.
TMG continued to invest in developing both content and search
functionality in its flagship autotrader.co.uk web site. This
resulted in improved consumer satisfaction scores from buyers,
sellers and casual browsers alike. The investment has also
benefitted monthly page views of autotrader.co.uk, which averaged
1.1 billion in March 2012 (Source: Omniture) and peaked at 1.5
billion page impressions during February 2012.
The Group also continued to develop its mobile device offerings
to provide search and targeted advertising wherever and whenever
needed. Unique visitors using the Auto Trader mobile app grew by
over 100% to 2.3 million in March 2012 (source: Omniture). TMG is
the clear market leader in mobile solutions to the automotive
classified sector and usage is expected to continue to grow at a
rapid rate in the current year.
TMG has also leveraged its role as an integral provider of tools
and data to expand its offering beyond the autotrader.co.uk website
into digital marketing solutions for dealers. This includes RAZSOR,
which provides the automotive industry with websites powered by an
unparalleled search engine. RAZSOR is the market leader, hosting
over 3,000 dealer websites and it generates over 400,000 leads on
average for dealers. TMG is now expanding the product, offering
dealers the opportunity to develop their own mobile RAZSOR sites as
well.
In 2011, TMG began operating in the £900 million new car
advertising market with the launch of a digital marketplace for new
cars, highlighting great deals and featuring rich editorial content
including reviews to help consumers to make informed decisions on
new, nearly new and used purchases. The Group has 602,000 unique
users on its New Car market place.
Magazines
This division, which encompasses the classified automotive
advertising in magazine titles in UK and Ireland, has continued to
manage the decline in its print publishing businesses by bringing
all its titles under a single management team, focused on
maximising profitability and cash generation.
With the classified automotive advertising market migrating
online, the Group's published titles nevertheless retain a strong
presence on shelves throughout the United Kingdom and Ireland with
circulation figures averaging over 87,000 copies per week across
all magazines (including Auto Trader, AdTrader and national titles)
throughout the year. This circulation keeps the Auto Trader
magazine in the number one spot in the classified automotive
market, with divisional revenues of £27.8 million, down £16.3
million on last year.
International
The International division includes South African online and
print classified advertising and "carzone.ie" the online business
in the Republic of Ireland. The managerial focus for both these
markets is to replicate the successful UK model. The division had
flat revenue growth at £27.4 million year-on-year.
In South Africa, TMG is a clear market leader through its Auto
Trader and Commercial Trader magazines and has initiated the
transition to online operations with the launch of an improved
website in January 2012. Use of mobile is also growing rapidly and
TMG is seeking to capitalise on this initiative.
In Ireland, TMG maintained its number one brand and market
penetration via carzone.ie. Revenues improved through the
development of new online product opportunities with display
advertising, mobile listings and website hosting. These products
have all grown over the last year and position the business well
for when the economy recovers.
Outlook
As a digital business embedded into its customers work flow,
TMG's focus is on maximising revenue by delivering a compelling
range of enhanced services, data and functionality with a greater
choice of products and services, particularly in DMS, moving
further up the value chain. However, the Group is expecting used
car transactions to be largely flat in the current financial year
with a slow recovery in calendar 2013.
The Group will continue to invest in developing new products to
leverage its leading market position and fully utilise the data
that results from this position. Increasingly TMG is using social
media and real time market information to further enhance its
market position. In digital advertising, TMG aims to increase
advertising yields through delivering improved service, flexibility
and functionality, which will in turn boost dealer usage. The Group
will also seek to capitalise on new, fast-growing markets,
including the new car advertising market, digital marketing and
mobile.
Despite a sluggish UK economy, a combination of new products and
services plus the Group's market position means that TMG is
confident that the business will continue to grow profits and
generate cash.