Interim result: Trade Me hits prospectus forecast

22 February 2012

Interim result: Trade Me hits prospectus forecast

• First set of IPO prospectus targets achieved
• EBITDA of $52 million (up 9% on prior year, up 2% on forecast, and a new record) (1)
• NPAT of $36.4 million (up 5% on prior year) (2)
• Revenue slightly ahead of expectations (and up 13.2% on prior year), expenses slightly below expectations
• Earnings and dividend guidance remain unchanged from the prospectus

Online marketplace and classified advertising business Trade Me Group Ltd released its interim financial results for the six months to 31 December 2011 this morning.

Trade Me CEO Jon Macdonald said the results were pleasing. “It’s good to deliver on the numbers we forecast in the IPO offer documents, especially given the backdrop of broader economic uncertainty over the past few months. Now it’s back to business and delivering on the rest of our prospectus numbers, doing a great job for our members, partners and clients, and best positioning Trade Me for long-term growth.”

Revenue

Mr Macdonald said there were “no big surprises” in revenue across Trade Me’s various business lines. “The core general items marketplace performed in line with expectations, while in the classified businesses, the results were a little stronger than we’d anticipated.”

Mr Macdonald said display advertising had been impacted by the distraction of the Rugby World Cup, and a weak retail environment. He said group-buying website Treat Me was growing, but is in “a tough, highly competitive industry”. The travel businesses and online dating website FindSomeone both exceeded expectations.

Expenses

Trade Me’s expenses increased broadly in line with expectations. “We’re continuing to build the business to make the most of the opportunities in front of us, as well as investing in safe and trusted marketplaces for our members,” Mr Macdonald said.

Priorities

Mobile remained a key focus area. “The number of people accessing our sites to buy and sell from their smartphones is increasing. We’ve completed a number of mobile projects in the past half-year and there are more to come.”

Growing new goods sales was also a priority. “Already over 40% of the items sold on Trade Me are brand new. We’re working on arrangements with several partners to help integration with retailers, and we’ll continue to make the website a better place to buy new goods.”

Looking ahead

Mr Macdonald said the expectation was that New Zealand would remain a “challenging but passable trading environment” over the next 12 months. “Trade Me collects numbers on many of the key categories underpinning consumer and business sentiment – job listings, houses for sale and rent, motor vehicle volumes – and we also have a lens on general retail. When we look across all our categories, we expect a slow and hesitant recovery over the remainder of 2012. Despite this, the business is on track to deliver good revenue growth, and our earnings and dividend guidance remain unchanged from prospectus time.”

Notes:

1. All figures are from statutory financials. Continuing the pro forma basis used in the prospectus, EBITDA is $51.3m (up 0.7% on forecast and up 10.2% YoY).

2. No NPAT forecast included in prospectus. NPAT at lower YoY growth primarily due to Trade Me’s change in capital structure (less interest income in H1 FY12, and some interest expense since IPO).

More info: Trade Me investor website: http://investors.trademe.co.nz/

ENDS

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