The Scheme of Arrangement with Titan (Apax) is progressing to plan. Shareholders will receive full information in March, to vote at a Scheme Meeting in early April.
Revenue up 7.3% YoY to a record $132.2m
Classifieds businesses continue to shine with revenue up 12.9% YoY to $77.1m, including an excellent result from Trade Me Property.
Operating* net profit after tax up 8.1% year-on-year to $50.2m. (Reported profit fell to $44.4m due to a one-off non-operating items of $5.8m related to the recent private equity offers and Scheme of Arrangement).
General Items revenue has improved up 4.6% YoY to $37.1m
Operating* EBITDA was 85.3m, up 8.0% YoY
Earnings per share of 11.19 cents
Outlook: we remain confident of the momentum in the business, and we reiterate the expectation we stated at our Annual Shareholder Meeting in November: we aim to be in the top half of the 5 - 8% range for both revenue and operating profit growth for the year to 30 June 2019.
Online marketplace and classified advertising business Trade Me Group Ltd (“Trade Me”) released its interim financial results for the six months to 31 December 2018 this morning.
Chairman David Kirk said Trade Me had delivered a “great result” to investors. “We’re pleased to report record revenue and a result in line with the guidance provided to investors in August and November last year. The highlight is the stellar result from Trade Me Property in our Classifieds segment.
“This year is a bit different for Trade Me with a Scheme Implementation Agreement in place with Apax (through its company Titan AcquisitionCo New Zealand Limited (“Titan”)), which means this may be our last interim results announcement.”
Titan (Apax) Scheme progressing
Trade Me is working on the Scheme of Arrangement agreed with Titan on 12 December 2018.
Mr Kirk said shareholders can expect to receive a Notice of Meeting and Scheme booklet in March, including an Independent Adviser’s Report. “The Scheme booklet will outline the Board’s reasons for supporting the Scheme of Arrangement for Titan to purchase Trade Me, subject to there being no superior proposal.”
After the Scheme booklet lands with shareholders, there will be a Scheme meeting in early April for shareholders to vote on the Titan offer.
“We’ll be sending information to shareholders in the coming weeks and we hope the Scheme booklet will answer any questions they have before they vote. They will also have the opportunity to speak to the Board either in person or online at the Scheme meeting.”
As well as a positive shareholder vote, Overseas Investment Office (OIO) approvals and High Court orders are required before the Scheme can be implemented.
“At this time we have no reason to believe the OIO condition will not be met, and we will keep shareholders informed when we know more.”
Mr Kirk said Trade Me will not pay an interim dividend in March.
“Under the Scheme Implementation Agreement we need Titan’s approval for an interim dividend, and any dividend would reduce the price per share paid to shareholders.
“We carefully considered what is best for our shareholders, and while payment of an interim dividend would benefit some, it would also negatively impact others due to individual tax circumstances. After carefully considering the pros and cons, we don’t believe it’s in the best interests of our shareholders to pay a dividend at this time.”
“If the Scheme does not proceed, the Board will consider a special dividend payment at the earliest opportunity,” said Mr Kirk.
CEO Jon Macdonald said Trade Me had delivered another record revenue result of $132.2m in the first half of F19, up 7.3 per cent on last year. “The underlying performance of Trade Me was very strong, operating* net profit after tax was up 8.1 per cent year-on-year to $50.2m and operating* EBITDA was up 8.0 per cent to $85.3m.”
There was further success for the Classifieds businesses, delivering another “superb” result with revenue up 12.9 per cent year-on-year to $77.1m. All three businesses reported increased revenue, with a continued focus on depth products.
Mr Macdonald said Trade Me Property reported an “outstanding result”, headlined by a revenue increase of 26.3 per cent year-on-year. “Property’s new ‘Premium listing’ product has been extremely well-received by our real estate agent clients. It gives their listings greater exposure in search results, better branding and increased prominence.”
Trade Me Motors, the largest classified vertical, had another solid half-year with revenue increasing by 8.8 per cent year-on-year, underpinned by excellent growth in depth products.
Trade Me Jobs also had a good half with a 7.0 per cent increase in revenue year-on-year.
“Trade Me Jobs continues to improve its offering to our recruitment clients - over the last six months we’ve released an Application Tracking System to help our small business customers hire faster and easier,” Mr Macdonald said.
“We’ve also continued to develop our candidate database product. This helps our clients find job seekers who aren’t actively searching and allows our job seekers to have suitable roles come to them.”
Mr Macdonald said revenue in the General Items marketplace business had “increased comfortably” on recent reporting periods, and was up 4.6 per cent year-on-year. “Our work to stimulate stronger growth in our marketplace is paying off but there’s more to do.
“We’ve continued to to experiment with discounts and special offers for sellers contemplating selling their secondhand items. We’ve run over 150 targeted promotions this year, generating $6.5m in GMS and 300,000 additional listings onsite.”
There were two changes to the Trade Me Executive team in the first half of F19. Chief Product & Technology Officer Mark Rees left in August 2018 and was replaced by Simon Young. Simon has been at Trade Me for over seven years and has worked in several roles, most recently as our Head of Product.
Chief Customer Officer, Trent Mankelow left Trade Me in January 2019, and Marketing Director Regan Savage has assumed responsibility for the Customer team in an acting capacity until a new CEO is appointed.
“I’d like to thank Trent and Mark for their contributions to Trade Me - they’ve left a lasting impact on our business.”
Mr Macdonald also announced in December 2018 that he would delay his expected departure from Trade Me while the Scheme of Arrangement was in play.
In November’s Annual Shareholder Meeting Paul McCarney and Katrina Johnson were re-elected as independent directors to the Trade Me Board.
Mr Macdonald said Trade Me reaffirmed its expectations for F19 from the November AGM. “We anticipate revenue growth of between 5-8 per cent above F18, and operating profit after tax to grow at a similar rate (in percentage terms).”
“We noted in November that we expected to be in the top half of this range for both measures. The performance of Trade Me Property - driven by our new ‘Premium Listing’ product - is exceptional and should continue into the second half of F19. However motor vehicle market activity was weak between November and January, and this may impact listing volumes for Trade Me Motors.
“We remain confident of the momentum in the Trade Me business, and should the business continue in its current form, we still anticipate that we will be in top half of the 5-8 per cent range for growth in both revenue and operating profit for the year to 30 June 2019.”
*Operating excludes one-off non-operating items relating to the Titan (Apax) acquisition.