Trader Media Group Annual Report 2012-13

Transcription

Telephone +44 (0)20 8544 7000
www.tradermediagroup.com
Annual report and financial statements 2013 Trader Media Group
Trader Media Group
Hartfield House
41-47 Hartfield Road
Wimbledon
London SW19 3RQ
Driving benefits
for customers
and consumers
Annual report and financial statements 2013
Customers
The franchise dealer’s story
The independent dealer’s story
Consumers
The private buyer’s story
The private seller’s story
Trader Media Group is at the heart of the
UK motor trade. Our brands are constantly
evolving, and represent the leading digital
automotive marketplace.
We empower both buyers and sellers, driving
benefits for customers and consumers alike.
OV
BR
Overview
01 How we performed
02 The private buyer’s story
04 The independent dealer’s story
06 The franchise dealer’s story
08 The private seller’s story
10 We’ve been innovating for more than 35 years...
12...our brand vision is to be the most valuable
companion for buying and selling vehicles...
14...and our products have evolved to reflect
this strategy.
16 A deep understanding of our markets
18 Chairman’s statement
Business review
20
22
28
30
32
34
36
Q&A with Zillah Byng-Maddick
Operating review
Segmental commentary
Key performance indicators
Financial review
Principal risks and uncertainties
Corporate social responsibility
GO
FIN
Governance
38
40
42
44
45
Executive Committee
Corporate governance
Directors’ report
Statement of directors’ responsibilities
Independent auditors’ report
Financial statements
46
47
48
49
50
51
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
Notes to the consolidated financial statements
Company financial statements
85 Independent auditors’ report
86 Company balance sheet
87 Notes to the financial statements
You can view our
2013 annual report
online at
tradermedia
group.com
The cover and pages 1 to 40 are printed on paper made from virgin wood
fibre with pulp which is bleached using a mixture of Total Chlorine Free and
Elemental Chlorine Free processes. Pages 41 to 92 are printed on paper
made from 100% de-inked post consumer waste. Both papers are
certified by the Forest Stewardship Council, which supports the responsible
use of forest resources. The printer and paper mills are both accredited
with ISO14001, the environmental management system.
Photography by Edward Tyler.
Designed and produced by The College www.the-college.com
Trader Media Group
Financial highlights
Revenue
continuing operations (£m)
Operational highlights
EBITDA
International
UK
251.8
2011
2012
2013
129.8
Annual Average (’000)
142.9
143.9
367
380
364
2012
2013
2011
2012
2013
Overview
257.2
Stock of vehicles on website
International
UK
254.4
01
2011
OV
2013
2013
2013
The group’s revenues declined by 2% as
the growth in the Digital business was offset
by the fall in magazine revenues. Stronger
sterling also impacted overseas revenue.
EBITDA** growth of 1% was achieved as
the group benefited from a higher margin
and growing Digital business. Record levels
of marketing spend boosted audience
levels to new highs but tempered the
EBITDA improvement.
In line with expectation that 2012/13 would
be the year when the supply of quality used
cars into the market would be restricted, the
average stock on the website declined.
Digital UK revenue
Covenant net debt
Average monthly digital visits
-2%
+1%
(£m)
182.8
2011
202.0
(£m)
637.1
212.8
511.2
2012
-4%
2013
2011
(million)
37.3
562.0
26.1
2012
2013
2011
30.0
2012
2013
2013
2013
2013
A good performance from the Digital division
as revenues grew by 5% over last year.
This achievement was delivered despite the
lack of vehicles in the market and was the
result of growth in the core dealer offering
from a new package approach coupled with
the success of Razsor.
Strong operating cash flow of £130.1 million
reduced net debt following the refinancing
and distribution to shareholders in 2011/12.
Leverage* fell to below four times EBITDA.
The digital visits metric allows us to measure
the overall growth of our digital presence
(traffic), tracking engagement over time
across all platforms. Our average monthly
digital visits grew by 24% this year to over
37 million visits.
+5%
-12%
as defined by the group’s Senior Facilities Agreement.
as defined on page 30.
*
**
+24%
02
Trader Media Group
“Auto Trader is so easy to use. I normally
use it on my mobile or tablet and I think
this makes it quicker and easier. I have
bought at least four cars now through
Auto Trader and it is my number one
choice when looking for a new car”
Philippa from Colchester Private buyer
Providing buyers with all the information they need
to make informed choices when purchasing a car
The most choice
We have more cars on our website compared
to our competitors, averaging over 360,000
cars a month, giving buyers the widest range
of vehicles to choose from in one place.
Multi-platform searches
With mobile unique users reaching 3.5 million,
the ability for our buyers to access Auto Trader
across multiple platforms is essential. This year
we also introduced ‘My Garage’, enabling
regular users of our website to save and access
their searches across different platforms,
providing them with a seamless user experience.
Vehicle reviews
Our website users can also add their own
Owner Reviews alongside our expert car
reviews, helping users to decide which vehicle
to purchase with confidence. We currently
have 825 expert reviews and 36,000 owner
reviews live on our website.
Quarterly Owners’ Guides
Our Quarterly Owners’ Guide reports were
launched in August 2012 and provide key
insights into the UK automotive marketplace.
They give buyers access to our Auto Trader
Retail Price Index, providing them with valuable
intelligence on the price of used cars.
Trader Media Group
03
Overview
Consumer
OV
04
Trader Media Group
“Flexible Packages have given us the
opportunity to really showcase our
stock online. It’s given Chelmerbridge
the edge over other dealers locally,
even the main dealers”
Tony from Chelmerbridge Independent dealer
Constantly innovating to enable our customers to stay
one step ahead of the marketplace
Flexible Packages
Flexible Packages represent a key part of
our commitment to work harder for dealers,
providing products and support that embrace
technology and recognise the independent
dealer’s needs. Simply put, we have given our
package structure an MOT by looking at
what dealers pay for and aligning it more
closely to what they need.
Built around our core products, Flexible Packages
offer wider choice, more flexibility and better
value to make it even easier for dealers to work
with us. In addition, it enables them to be
more confident in terms of visibility and can be
specifically tailored to local and individual needs.
Dealer Seminars
We have an enormous amount of data that we
can break down to a dealer’s local area in terms
of what car buyers are looking for. Consequently
we run a full programme of seminars, which are
designed to help dealers reach more people,
network with other dealers and ultimately
convert more leads into sales.
Live Chat
Live Chat is an online messaging service that
instantly connects potential customers with
dealerships, giving dealers the best chance of
converting a warm lead to a hot prospect by
allowing dealers to interact directly with
customers at an early stage.
Buyer
Dealer
“Let’s make
a deal”
Trader Media Group
05
Overview
Customer
OV
06
Trader Media Group
“Package Builder couldn’t have come at a
better time for us. I really see this as a
refreshing new approach which gives us
real tangible value and I’m looking forward
to seeing the improvement to our response”
Jason from All Electric Garages Group PLC Franchise dealer
Enhancing dealers’ ability to expand successfully
by providing support and products that match
their needs
Package Builder
Package Builder is an innovative way for dealers
to do business. It is our new way of structuring
the products we have available for franchise
dealers in a way that enables them to build the
package that is exactly right for their business.
It gives control through simplicity, transparency
and flexibility, and provides dealers with
greater choice.
The benefits to dealers are higher response
generation, better conversion rates and increased
profit through greater understanding of markets
and buyers, combined with tools that enable
quicker action.
i-Control
Through harnessing the insight
that we have of dealers’ workflow,
accessing the unique data from
searches on our site, links with
the DVLA and leading car
auction houses, we have created
an innovative software
application.
i-Control allows dealers to use
data gathered from Auto Trader
searches and other industry
leading sources, to recommend
what stock a dealer should buy,
where to find it, how much to pay
for it and how much to sell it for.
Next Generation
Dealer Portal
This is an enhanced online
platform that enables dealers
to manage their advertising in
one place. It gives complete
control over building, managing
and tracking advertisements,
and provides easy access to
sales and market data.
Trader Media Group
07
Overview
Customer
OV
08
Trader Media Group
Consumer
Trader Media Group
09
“Simple all round – easy, safe and
most importantly, a trusted place
to sell your car”
Lee from Long Eaton Private seller
Overview
OV
Giving our private sellers the best tools and biggest
marketplace to sell their vehicles
Attracting the most buyers
We have over three times more visitors to our
website than our nearest competitors, that’s
over 11.5 million unique users a month. With
that many people looking at our site, our private
sellers are giving themselves the best possible
chance of selling their vehicle – and are twice
as likely to sell their car within the first week with
Auto Trader in comparison to our competitors.
Our partnerships help
sellers reach an even
wider audience
When sellers advertise with Auto Trader, their
ad will also appear on our partner sites, including
Yahoo!, msn cars and Top Gear. Auto Trader’s
online partner network helps sellers reach seven
out of ten UK online consumers, strengthening
its position as the leading motoring marketplace.
New ways to connect
with our brand
We know we are operating in a challenging
marketplace so we are committed to finding
new ways for our consumers to connect
with our branding using integrated marketing
from conventional TV and radio advertising to
social media and digital channels. Spontaneous
brand awareness is at an all-time high of 60%.
Free recommended sale price
On average we know that people can sell their
cars on Auto Trader for more – now we can
demonstrate that to them. Our new free
recommended sale price tool offers sellers the
chance to find out what cars like theirs could sell
for on Auto Trader: we recommend a sale price
for their car, based on market information such
as current trade and retail values.
Sellers’ Guides
From how to create an advert to dealing with
buyers and staying safe online, we have created
a suite of guides for private sellers to support
them in their car selling journey.
10
Trader Media Group
We’ve been innovating
for more than 35 years...
The business is forward thinking,
leading the industry into online
and mobile.
Auto Trader is founded and
produces its first ever trade
magazine by the name of
Thames Valley Trader, where
consumers can buy and sell
anything from clocks, to
boats and cars.
1977
Launch of
autotrader.co.uk
The company formally takes
on the name Auto Trader,
and renames all titles.
Auto Trader
launches
in Ireland
1988
1995
Th
e
1996
Auto Trader
reveals new logo
Auto Trader
launches online
consumer
reviews
2008
g
nin
gin
be
10M
Auto Trader
joins Twitter
and Facebook
Auto Trader
magazine covers
(1980s and
1990s)
Thames Valley
Trader cover
(1977)
Unique visitors per month
at autotrader.co.uk
reaches 10 million
2010
Speed of change
Launch of Auto Trader
mobile advertising and
iPhone app
Magazine weekly
circulation
Average monthly
Mobile page views
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Average monthly
Desktop page views
11
Overview
Trader Media Group
Auto Trader
launches ‘New
Car’ for buyers
of brand new
vehicles
Insurance estimates
introduced into
Auto Trader used
car search
Unique visitors
per month at
autotrader.co.uk
reaches 11.5M
2013
e
The
fu
tu
r
2011
OV
3.5M people use
Auto Trader on a
mobile device
Auto Trader iPad
app launched
2011
2M
Nearly half of
Auto Trader mobile
users access the site
when on a dealer
forecourt
Over 2 million people
use Auto Trader
on their mobile
2012
2013
Auto Trader UK Facebook
page hits 100,000 likes
Auto Trader launches
My Garage enabling
users to save searches
and access them across
different devices
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
45%
Tablet visits
Dec 12
Oct 12
Nov 12
Sep 12
Jul 12
Aug 12
Jun 12
Apr 12
May 12
Mar 12
Jan 12
Feb 12
Dec 11
Oct 11
Nov 11
Sep 11
Jul 11
Aug 11
Jun 11
Apr 11
May 11
Mar 11
Jan 11
Feb 11
Dec 10
Oct 10
Nov 10
Sep 10
Jul 10
Aug 10
Jun 10
Apr 10
May 10
Mar 10
Jan 10
Mobile visits
Feb 10
Cross platform
usage
35 years
of Auto Trader
Desktop visits
12
Trader Media Group
...our brand vision is to
be the most valuable
companion for buying
and selling vehicles...
Giving our consumers
what they want...
We are moving away from being seen as “just a used
car market” – the place consumers only visit when
they have decided which car they want – towards
being seen as a destination for motorists whatever
stage of the buying or selling process they are at for
new or used cars.
I need a new
car big enough
for the family
Which is
best for me?
1
• E xpert Video
Reviews
• Owner Reviews
1
Can I afford
the insurance?
What will my
friends think?
How much
could I get
for my old car?
2
3
4
• Insurance
estimates shown
in search results
2
• Social sharing
3
• Recommended
Price Checker
for free
What
about deals
on new cars?
5
• New Car section
and results
in search
4
Journey towards buying a new car
5
Trader Media Group
09:33PM
50MPH
0.35
MILES
13
3X
10:19PM
00:45HRS
Overview
We have 3 times more
visitors to our website than
our nearest competitors
OV
...when they want it!
We understand how consumers search and make
sure dealers are prepared to respond according to
the range of consumers’ demands, such as desktop,
tablet and mobile usage.
Desktop
Tablet
Mobile
Peak
usage
9.30pm
Peak usage
Peak usage
12.30pm
12am
3am
6am
9am
12pm
9pm
3pm
6pm
Innovate on all channels to reach potential buyers
9pm
12am
14
Trader Media Group
...and our products have
evolved to reflect this
strategy.
Our vision is to be
the partner of choice
for automotive
Our strategy
1.
Focus on our
customers
2.
Migration to
digital platforms
3.
Investing in innovation
and technology
1. Focus on our customers
The success of our business is dependent on
the success of our customers. A priority for
us is therefore to ensure that we keep the
customer at the heart of our organisation.
We want to be the automotive partner of
choice for both consumers and our trade
customers. What this means in practice is a
clear and consistent focus on ensuring that
we consider the customer at all levels of
decision-making.
For our consumers, this means a focus on
innovation to meet their ever-changing needs.
Ensuring they can access the information they
want, wherever and whenever they need it is
vital to maintaining their brand loyalty.
For our dealers, this means an unrelenting
focus on driving the best response and
return on investment for their advertising.
We invest considerable time and effort in
providing new tools to demonstrate value,
new products which enable dealers to
manage their businesses more effectively,
and new platforms for them to reach all
consumer segments.
2. Migration to digital platforms
The transition to a digital business has been
a major part of our strategy in recent years.
We have now successfully completed the
transition and delivered on this strategy in
the UK. Although our magazines reached
31,0001 car buyers a week on average during
2012/13, our main focus, and that of our
customers, has been to embrace and develop
our digital platforms. Our website, for
example, now attracts over 11.5 million
unique users a month2, making it by far the
UK’s largest automotive classified website
(with a 68% share of page views3).
Auto Trader was the first classified brand
to launch as a website (in 1996) and is now
truly a digital business, with a strong history
of delivering innovation. Our commitment
to digital innovation ensures that we
maintain our market leading position.
Our determination ensures we drive the
greatest amount of high-quality leads to
our dealers and provide the best return
on investment for their advertising.
Our digital platforms continue to evolve
at a rapid pace, the mobile sites and apps
that we offer across all devices continue
to drive new opportunities for the business.
The mobile site alone generates just over
3.5 million unique users4, providing dealers
and consumers with an effective search tool
designed both for general use and for use
closer to the point of purchase (much of
our mobile usage is driven by consumers
refining their searches on dealer forecourts).
1 Source: COMAG
2 Source: Omniture
3 Source: Hitwise
4 Source: Omniture
3. Investing in innovation
and technology
We continue to invest in innovation and
technology to drive the core of our business –
the customer. The products we develop focus
on generating more response for dealers. We
continually strive to provide the best consumer
search experience, enabling consumers to
make more informed choices about the cars
they want to purchase and the dealers they
visit. Our goal is to make the buying and
selling of vehicles as easy as possible for
both consumers and dealer customers.
Our investment and innovation encompasses
all aspects of our multi-platform digital
business. We have invested in back office
solutions that support the core business
and strengthen our relationship with our
customers. We acquired Delta Point Associates
Ltd (“Deltapoint”), an industry leading data
analytics provider, to bolster our data
intelligence products. We continue to develop
our digital marketing services, with RAZSOR
websites focusing on providing dealers with
the best website to gain direct consumer
traffic. All of this ensures our consumers can
come to Trader Media Group for all their
vehicle buying needs.
3.5m+
unique users accessing
the mobile site monthly
Trader Media Group
15
Driving benefits for customers and consumers
Jonathan Williams
Consumer Marketing Director
Overview
“Auto Trader is on a journey to build lasting
relationships with motorists through more
emotive advertising and products that facilitate
an on-going dialogue. As ownership amongst
motorists extends and people are holding onto
their cars for longer, appealing to a broader
range of motorists, whether buying, selling or
owning, is more important than ever.”
OV
Transforming our brand position
from transactional to emotional
We are on a journey to move the brand from being one that is
thought of as transactional to one which consumers can create a
strong emotional affinity and deeper relationship with. In 2012/13
we re-established the brand by firstly building consumer involvement
through nostalgia in an online only campaign – one of the highlights
of which was our YouTube video achieving the highest level of
engagement for any automotive brand. In September 2012, we
developed a marketing approach to ‘announce’ the brand through
a fully integrated campaign that reinforced our heritage and trust.
This campaign, which ran until January 2013, saw the group
reach its highest ever levels of brand awareness. Our March 2013
campaign capitalised on this platform to deliver more response for
our dealers by demonstrating our unique selling points to our
consumer audience.
16
Trader Media Group
A deep understanding
of our markets
Through embracing and leading technological
change in the industry we have channelled
our market leading data intelligence to drive
benefits for both customers and consumers.
DATA
3.5M
monthly
mobile users
364,000
37.3M
monthly
stock of vehicles
on website
digital visits
11.5M
unique users
per month visit
our website
FLEXIBLE PACKAGES
LIVE CHAT
10,500
dealers
90%
dealer penetration
I-CONTROL
DEALER SEMINAR
NEXT GEN PORTAL
PACKAGE BUILDER
DRIVING
BENEFITS
DRIVING
BENEFITS
DRIVING
BENEFITS
Trader Media Group
17
Auto Trader market share of the top four
competitors, measured by page views
Impact of new
car registration
Auto Trader
84.35%
Pistonheads
14.16%
Motors.co.uk
1.48%
eBay Motors
0.01%
Source: Hitwise, March 2013
1-3 year old Car Parc hit a long time low in 2012. There were over 20%
fewer young vehicles in the Car Parc compared to pre-recessionary levels
in 2007, impacting supply of those cars available for sale. Throughout
2012 dealers have been struggling with sourcing young stock and trade
prices were high largely as a result of the constricted supply.
2007
2008
2.40
2.13
2009*
2010*
1.71
1.92
2011
2012
1.94
2.04
Overview
New car
registration
(million)
Car Parc
(million)
1 year old
2.35
2.40
2.13
1.71
1.92
1.94
OV
2 year old
2.44
2.35
2.40
2.13
1.71
1.92
2.57
2.44
2.35
2.40
2.13
1.71
7.35
7.19
6.88
6.24
5.76
5.57
3 year old
1-3 years old
* Excluding Scrappage Incentive Scheme (SIS).
10.0
32
28
24
20
16
12
8
4
0
-4
7.0
5.5
4.0
2.5
Percentage
8.5
Flat Car Parc
UK Car Parc has been flat at 30 million
for the last six years. An uplift in new car
registrations is expected to positively impact
the volume of cars in the Car Parc – 1%
increase in 2013 and 2014.
1.0
-0.5
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013f
2014f
Number of cars (m)
UK Car Parc
-2.0
Car Parc
YOY %
Source: SMMT and TMG Analysis
Auto Trader price index
£9,500
Auto Trader Average asking prices
An increase
in older vehicles in the UK Car
Parc is also reflected in the stock mix on
Auto Trader and the average price of vehicles
advertised, with the average price in the last
two years being significantly lower than in
previous years.
£9,300
£9,100
£8,900
£8,700
Jan 10
Feb 10
Mar 10
Apr 10
May 10
Jun 10
Jul 10
Aug 10
Sep 10
Oct 10
Nov 10
Dec 10
Jan 11
Feb 11
Mar 11
Apr 11
May 11
Jun 11
Jul 11
Aug 11
Sep 11
Oct 11
Nov 11
Dec 11
Jan 12
Feb 12
Mar 12
Apr 12
May 12
Jun 12
Jul 12
Aug 12
Sep 12
Oct 12
Nov 12
Dec 12
£8,500
Source: TMG Analysis
18
Trader Media Group
Chairman’s statement
“Not only was 2012/13
a year for breaking records
but also a milestone for
the company. The group
celebrated helping people
buy and sell vehicles for
more than 35 years.”
Tom Hall
Chairman
Summary
•The fundamentals of the
business remain extremely
healthy with the core business
metrics going from strength
to strength.
•The core Digital business
delivered solid growth
through the success of its
product offerings.
•The transition to a digital
business is now complete
in the UK and Ireland.
•We want our employees to feel
proud to work for a company
that values its customers.
•The Board remains confident
the business can continue to
perform strongly.
Progress
I am pleased to present TMG’s results for the
year ended 31 March 2013. These results
reflect the success of the group’s efforts to
become the partner of choice for car buyers
and sellers in the UK. Through the products
and services TMG provides, we want to make
our independent and franchise dealer
customers more successful. We also want to
help private buyers and sellers find the right
vehicle as quickly and efficiently as possible, or
dispose of their vehicle easily, with confidence
and at a great price. Only through the skill,
enterprise and hard work of our employees
can we achieve this and we want our
employees to feel proud of the values and
achievements of the company they work for.
The core Digital business delivered solid
revenue growth through the success of its
product offerings to customers. The
marketplace was challenging for the group
with 2012 recognised as being a low point in
the used car market, with supply of good
quality cars restricted. Given these challenging
conditions the core business results represent
an impressive achievement.
Overall, group revenue and EBITDA remained
broadly flat year on year. This results from a
combination of factors. The Magazine
business continued to decline in line with our
expectations. This decline, compounded by
tougher trading in our international
operations, offset the growth we achieved in
the core UK Digital business. In the current
financial year to March 2014, we will no
longer be impacted by declines in the
Magazine business and expect, consequently,
to see a return to overall group growth.
However, the fundamentals of the business
remain extremely healthy with the core
business metrics going from strength to
strength. This year has been a year of breaking
records with monthly website unique visitors
reaching levels of over 11.5 million during the
year and mobile growing impressively beyond
3.5 million monthly uniques in less than three
years. In February the autotrader.co.uk website
registered over 50 million page views in a single
day for the first time. On the same day we also
had the busiest ever hour with 4.2 million page
views and registered new page view records
on our mobile, iPhone and iPad sites5.
These achievements are the result of the work
of our 1,368 employees, who each day apply
their talents to make TMG the UK’s market
leading multi-platform automotive digital
business. I want to take this opportunity to
say thank you to each of them.
Not only was 2012 a year for breaking records
but also a milestone for the company. The
group celebrated helping people buy and sell
5 Source: TMG internal analysis.
Trader Media Group
The year has seen the group focus on its core
business fundamentals of putting the dealer
and consumer at the heart of what we do.
Our customers’ success is our business. We
have listened to and responded to the needs
of both the dealer and consumer. As a result
we have seen the successful launch of new
products for customers during the course of
the year, continued to improve the consumer
experience and generated excitement in the
marketplace with the future offerings that
have been trialled.
Strategic activity
The transition to a digital business is now
complete in the UK and Ireland. TMG is
one of the very few consumer publishing
businesses in the world to have migrated itself
so successfully online. Car buyers and sellers,
whether private individuals or dealers, have
benefited enormously from this transition,
with access by them to more accurate and
more timely information than ever before.
This transition, has also reduced demand for
our print publications and as a consequence
the Board made the decision to cease our
publishing titles and close the Magazine
division at the end of June 2013. We reflect
with great fondness upon the heritage of the
business and, on behalf of the Board, I would
like to thank all our employees involved in the
achievements and success of the Auto Trader
magazines and its sister publications.
Over the course of the year we also saw
significant changes in the leadership of the
group with Chief Executive, John King, leaving
the business. John was instrumental in
transitioning TMG from print to digital and he
has left the company in good shape. I would
personally like to thank John for his leadership
and insight at the helm of TMG for the last
five years and wish him every success for the
future. Zillah Byng-Maddick was appointed
as the interim CEO whilst a search for a new
Chief Executive was undertaken. On behalf
of TMG and the Board, I would like to thank
Zillah for the tremendous job she has done in
leading the business through this period of
change. The Board has now appointed a new
Chief Executive for TMG, Trevor Mather, who
will be responsible for leading the next phase
of TMG’s growth.
We are very excited about the future of the
business and during 2012 we successfully
launched an innovative new way to take our
products to market. Flexible Packages were
launched offering the dealer more choice,
flexibility and better value. This has introduced
a new way of working with the independent
dealer making it easier for the dealer to work
with us. Flexible Packages offer dealers a
bundle of hand-picked products built around
an advertising subscription.
Given the success of Flexible Packages
we are in the process of refining a similar
approach for franchise dealers called Package
Builder. Package Builder is built around four
key fundamentals of control, simplicity,
transparency and flexibility. The initial
feedback from the pilot phase of the launch
is encouraging and we look forward to the
full launch later in 2013.
Overview
vehicles for over 35 years. This achievement
was recognised in part through a TV campaign
that reinforced the commitment to both
dealers and consumers and referenced the
strength of the brand and market leading
position with the underlying message:
“we offer more stock and more buyers
than anyone else.” As part of this celebration,
we also took time to acknowledge the
success of, and take pride in, the Magazine
business whose solid foundations the Digital
business we know today was built on.
19
OV
We also continue to innovate through data;
in June 2012 we acquired Deltapoint to
bolster the group’s automotive data analytics
capabilities. The team at Deltapoint has
recently launched i-Control. This is a new tool
that uses data gathered from Auto Trader
searches and other industry leading sources,
to recommend what stock a dealer should
buy, where to find it, how much to pay for
it and how much to sell it for. This innovation
reflects the group’s ambition and
commitment to invest and innovate
for the benefit of our customers.
Outlook
The Board remains confident the business can
continue to perform strongly. The difficult
market conditions over the previous 18
months look set to continue in the short-term.
However, with 2012 new car registrations
confirmed at over 2 million units6, the highest
recorded for four years and representing
annual growth of 5%, we remain optimistic
about the future as the supply of stock into
the industry improves.
Throughout 2012/13 the group has continued
to innovate and invest in the products and
services offered. These developments have
enhanced the dealer offering and further
improved the consumer experience.
Marketing activities throughout the year have
further strengthened the brand and bolstered
our market position. The group will continue
in this direction as the Board recognises
constant innovation and thought leadership
is essential in delivering our longer term plan
for the business.
Tom Hall
Chairman of the Board
Trader Media Group
3.5m+
monthly unique mobile visitors
reached in less than three years
11.5m+
nique website visitors
u
a month reached
6 Source: SMMT.
20
Trader Media Group
Q&A with
Zillah Byng-Maddick
Trader Media Group has
migrated its operations
to digital platforms and
continues to be the clear
market leader in the UK’s
automotive classifieds
market, with its flagship
brand autotrader.co.uk
Trader Media Group operates the UK’s
leading website and digital marketplace
for motorists. Trader Media Group
brands include: Auto Trader, Deltapoint,
RAZSOR, 2nd Byte and Autotrade-mail.
Auto Trader is the UK’s number one
motoring digital marketplace with over
11.5 million monthly unique users,
carrying out over 139 million searches
on more than 360,000 new and used
vehicles. Over 3.5 million people access
Auto Trader via mobile devices every
month through the mobile-optimised
site and apps developed for iPhone,
iPad and Android.
In this section, Zillah responds to questions
about the business and its prospects.
7 Source: COMAG and TMG Analysis
8 Source: TMG Analysis
Q. The group has successfully
transitioned to digital and the
shape of the business is very
different from the TMG of 35 years
ago. How would you describe the
business today?
A. We are very proud of our 35 year
heritage, which dates back to publication
of the first edition of Thames Valley Trader
magazine in 1977. Circulation of the
magazine(s) peaked at 368,000 a week
in January 20007 and at one point in our
history we owned three printing presses.
Recognising that social media and online
retailing also offered revenue potential,
we created the RAZSOR brand in October
2010, to support dealers’ digital marketing
strategies. With RAZSOR, we build websites
for dealers to further support their marketing
efforts, putting the needs and requirements
of our customer at the very heart of
everything we do. Today we run and maintain
4,000 websites8 for dealers through our
Razsor product.
As a result, we are a market leading, multiplatform digital organisation, and we continue
to innovate with our pricing models and
But the advent of the internet had a significant product offering to both the dealer and the
consumer to ensure that we remain the
impact on publishing and we were quick to
partner of choice for the automotive sector
spot the online opportunity, launching our
across the board.
first website in 1996. Our online offering has
shown rapid growth ever since. Today we
get over 11.5 million unique users a month
on the autotrader.co.uk website.
Q. With the migration to digital
now complete, how will the group
Desktop computers were just the first step,
continue to grow the business in
however, and technology is constantly and
the years ahead?
rapidly evolving with the introduction of
mobiles, smartphones and tablets into
mainstream usage. Again, we identified the
opportunity early and have devised a range
of products that allow us to successfully
monetise mobile as both customers and
consumers increasingly utilise mobile apps
in all areas of life. We have now achieved
3.5 million monthly unique users on mobile in
three years – which is three times faster than
the rate of growth on the desktop computer.
A. We are continually improving our
business to deliver value to our customers,
consumers, shareholders and staff. We will
continue to invest in innovation, marketing
and technology to improve our business and
assist our customers’ efforts to maximise
theirs. We were quick to identify the digital
opportunity, as we have explained above, and
we remain committed to undertaking projects
Trader Media Group
21
that will result in value. The digital universe
offers massive potential and we are actively
exploring ways of offering additional products
that sit adjacent to the car buying experience,
to maximise the service we provide and the
revenue we can generate.
Q. How has the business weathered
the recession over the past few
years? Has it had an impact on
your profits?
As a result, earnings for the group were
flat this year. However we saw a strong
performance by the Digital business which was
offset by the structural decline in magazines.
The core Digital business has continued
to drive growth for the group, posting
a 7% increase in EBITDA over last year.
Whilst the economic environment remains
challenging, we have continued to invest in
innovation. We have successfully delivered
Flexible Packages to independent dealers,
offering greater choice and value. Other new
products include Live Chat, a direct, real time
interactive messaging service that provides
both the dealer and the consumer with
another channel of communication to
facilitate and accelerate transactions.
Q. What impact have recent
changes in the automotive market
had on the business of TMG?
A. The customer has always been at the
core of all we do at TMG. Across our 35 year
history, we have seen a number of changes
in customer profile with the consolidation
of smaller independent dealers and the
emergence of big car supermarkets. The
current breed of dealers has embraced
technological change as evidenced in the
uptake of our mobile and tablet products,
which provide data driven information that
can add value to their digital forecourt.
Q. Are you seeing any signs of
recovery in the used car market?
A. The market conditions that have
prevailed over the previous 18 months look
set to continue in the short-term. However,
with 2012 new car registrations confirmed at
over 2 million units, the highest recorded for
four years and 5% higher than the previous
year, stock supply will start to improve and we
are optimistic about the future.
Q. You operate in a competitive
marketplace. How have you
managed to maintain your leading
market position?
A. The market has proved challenging
with restricted supply of good quality cars
impacting our business. In particular the
consumer market has continued to prove
challenging as competitive pressure remained
high and resulted in declining volumes of
private stock on our website. During this
period we have maintained a steadfast focus
on innovation, with continuous investment in
new ways of serving the constantly evolving
requirements of our customers and
consumers. This approach, combined with
demonstrating value, has enabled us to hold
on to a market leading position in terms of
volume of total stock and in the size and
breadth of the audience we address.
Q. There has been rapid growth in
customers and consumers accessing
TMG’s products via smartphone
and tablet. What in particular has
driven this?
A. Mobile technology has evolved
exponentially in recent years and smartphone
penetration in the UK is amongst the highest
in the world. This has had a profound impact
on all our daily habits and routines and that
includes the behaviour of consumers seeking
to buy a car. Potential car buyers are no
longer willing to wait for information and
are active at anytime and anywhere, as
evidenced by the increasing volume of
enquiries made out of standard business
hours. As a result, dealers need to be
responsive to consumers’ demands. At TMG,
we have undertaken comprehensive analysis
of smartphone and tablet usage and have
developed a clear understanding of how
and when these devices are used, which
informs our product development approach
in this burgeoning area.
Q. What do the next 35 years hold
for TMG?
A. Over the coming years, our aim is to
invest further in innovation and technology
to maintain and strengthen our relationship
with dealers and consumers through the
quality and effectiveness of the products we
offer and the services we provide. TMG has a
strong track record of embracing change and
for being at the vanguard of innovation. This
approach guides all our business decisions
and will continue to do so in the years ahead.
Q. Why do your staff choose to
work at TMG?
A. The culture of TMG promotes
entrepreneurial spirit, creativity, flexibility and
strategic thinking. We put the dealer and
consumer at the heart of everything we do
because their success is our success. This can
only be achieved if we nurture the qualities
of the people we employ.
Business review
A. The economic environment over the
past few years has undoubtedly been tough
– not just for the automotive sector – and
TMG has not escaped the impact of these
challenging market conditions. 2012 was
recognised as a low point in the supply of
good quality, used cars, a direct result of big
reductions in new car registrations in 2009.
This market dynamic, coupled with a more
cautious approach to spending by consumers,
has put additional pressure on the car dealer.
BR
22
Trader Media Group
Operating review
Auto Trader is the UK’s
number one motoring
digital marketplace
offering unrivalled
response to customers’
advertisements with over
11.5 million monthly
unique users, carrying out
over 139 million searches
on more than 360,000
new and used vehicles.
Summary
•This year has been about
focusing on the core of our
business – the customer.
•The difficult market conditions
were anticipated in the
approach we took to this year.
•TMG continues to invest in
innovation and technology.
•We will continually improve
our business to deliver value
to our customers, our
shareholders and our people.
Overview
Trader Media Group operates the UK’s
leading website and digital marketplace
for motorists. For vehicle dealerships we are
the recognised route to market, providing
industry leading digital products and services
to our customers. Brands within Trader Media
Group include: Auto Trader, Deltapoint,
RAZSOR, 2nd Byte and Autotrade-mail.
The group monetises the consumer usage of
its websites, mobile and tablet platforms and
printed publications principally through the
sale of classified advertising for motor
vehicles. It operates primarily in the UK, with
subsidiaries located in the Republic of Ireland
and in South Africa.
Auto Trader is the UK’s number one motoring
digital marketplace offering unrivalled
response to customers’ advertisements with
over 11.5 million monthly unique users,
carrying out over 139 million searches on
more than 360,000 new and used vehicles9.
Over 3.5 million people access Auto Trader via
their mobile devices every month through the
mobile-optimised site and apps developed for
iPhone, iPad and Android.
The difficult market conditions were
anticipated in the approach we took to this
year. Consumer spend was expected to be
more measured, putting increased pressure
on the dealer and in turn our trade business.
The competitive consumer market was also
expected to impact our private seller’s market.
In this climate we recognised the importance
of providing dealers with greater choice,
flexibility and value, which we met through
the launch of Flexible Packages. To support
the consumer we focused on providing a
seamless cross platform user experience that
offered great value and the audience to drive
response for their advertising spend.
This year has been about focusing on the core
of our business – the customer. We continue
to put them at the heart of what we do.
Our efforts resulted in a respectable group
result, underpinned by solid growth in the
core Digital business. Digital achieved 5%
revenue uplift through the success of Flexible
Packages, growth in our complimentary
product offerings and the marketing solutions
we provide. With costs well managed the
revenue improvement translated to 7%
EBITDA growth for the Digital business.
The group recognised that the 2012/13
financial year would be challenging.
The recovery in new car sales is critical for
the used car market, which is suffering from
a reduced supply of good quality cars
following a depressed new car market since
2008. In 2012 the availability of 1-3 year old
cars hit a long-time low, making sourcing
very challenging for dealers and constraining
the volume of used car sales. However, new
car registrations in 2012 were the highest in
four years, raising optimism for the future
supply of used cars in the medium term.
The metrics by which we measure the
performance of the business and that
underpin our success exceeded expectations
and we finished the year in great shape.
Increased investment in marketing has further
strengthened our market leading position.
In terms of consumer experience, our monthly
unique users on the website hit 11.5 million,
the highest ever and up 13% year-on-year,
while mobile monthly unique users grew to
over 3.5 million in an astounding three years.
The channels by which a consumer can access
our websites or apps cover an increasingly
vast range of devices and platforms. To fully
understand and track consumer engagement
across this digital landscape means we have
started to track digital visits. This metric allows
us to measure the overall growth of our
digital presence (traffic), tracking usage across
all platforms. Our average monthly digital
visits grew by 24% this year to over 37 million
visits10. This is a great endorsement from our
consumers that they like what we are doing.
10 Source: Omniture
37M+
average monthly digital visits
Trader Media Group
Digital UK – Encompassing UK digital online
classified automotive advertising and other
digital marketing services provided to dealers
and manufacturers. The division’s focus is on
growing the core autotrader.co.uk business
by adding more quality and functionality to
its product offerings. The division continues
to innovate through developing further
complementary products.
Magazines – Encompassing classified
automotive advertising in magazine titles in
Great Britain and Ireland. Prior to its planned
closure at the end of June 2013, the division
sought to manage the decline in the
publishing businesses by maximising
profitability and cash generation through
consolidation of all of its magazine titles
under a single management team.
International – Encompassing both
online and magazine automotive classified
advertising in South Africa and online in
Ireland. Given the different dynamics of
operating in the South African and Irish
geographies, the division seeks to
complement local management by
leveraging the successful UK model.
Strategy
Focus on our customers
Over the course of the year TMG has
continued to adapt and respond to its
customers’ needs, helping them do business in
a more efficient and profitable way. The vision
is to be the partner of choice for automotive;
our customers’ success is our business.
Investing in innovation and technology
TMG continues to invest in innovation and
technology, constantly introducing new
products focused on generating more
response for dealers, providing a better search
experience for our consumers and further
strengthening the company’s market leading
brand. Our goal is to make the buying and
selling of vehicles as easy as possible for both
consumers and dealer customers.
Migration to digital platforms
TMG is constantly reviewing its activities
to ensure it continues to provide a quality
and efficient service to all its customers.
As communicated in last year’s annual report,
the Magazines division has been focused on
managing the structural decline in the UK
publishing sector. This year has seen the group
fully transition in the UK to a multi-platform
digital business and as a consequence the
decision was made to close the division at
the end of June 2013, ceasing to print the
Auto Trader magazines and sister publications.
Group Resource
Staff
The success of TMG is driven by the 1,368
employees, who each day apply their talents
to make TMG the UK’s market leading
multi-platform automotive digital business.
We aim to attract and develop the best talent
and we want employees to feel proud and
highly motivated to work for TMG. Our
people, coupled with our industry leading
digital capabilities, combine to offer our dealer
customers and consumers what they need
now and in the future.
Customers
Customers are core to TMG, they are at the
heart of what we do. To build strong, long
lasting relationships we continually listen
and respond to their needs. The data and
intelligence we provide enables the customer
to do business more efficiently and profitably.
The fully integrated solutions we offer
connect people to all their automotive needs,
making the customer experience easier and
ultimately more successful.
Business review
Group Structure
During 2012/13 the business operated
through three distinct divisions. Each of these
divisions is at a different stage in its operating
life cycle and is structured to best manage the
assets of the business. The divisions are:
23
BR
Flexible Packages
Flexible Packages were the most
fundamental change to our independent
dealer offerings in the last five years. We
spoke to over 2,500 independent dealers
and based on this feedback we designed
an offering that allows dealers to fulfil all of
their classified advertising needs through
one package – product options can be
flexed in line with seasonality and the
evolving needs of their business.
Louise Dudfield
Pricing Manager
24
Trader Media Group
Operating review
continued
Products and Innovation
TMG continually asks its customers how we
are doing, what we could do better and how
we could work smarter to support their
businesses. This has resulted in a number
of initiatives including:
•honouring our Customer Value Promise
for our independent customers, which puts
the customer at the heart of all we do;
•monitoring customer satisfaction;
•the introduction of Report This Ad,
helping to keep our site safe and secure,
ensuring only quality adverts are viewed
by our customers;
•free PULSE reports showing dealer’s specific
data on the leads and conversion of those
leads they receive from Auto Trader;
•Flexible Packages where independent
dealers can tailor their product choices to
suit their business;
•and now Package Builder, a new package
on offer to the franchise market to help
generate more response, better conversion
and more profit.
These are all examples of how Auto Trader
not only listens but also responds to our
dealer customers and demonstrates our
commitment to work smarter for them.
Flexible Packages
Simply put, we have given our packaging
structure an MOT by looking at what dealers
pay for and aligning it more closely to what
they need.
Flexible Packages were launched during this
financial year and provide independent dealer
customers with more choice, with a range of
options designed to suit specific needs, more
flexibility around payments, quicker stock
changes and more value than ever before.
Ultimately, Flexible Packages not only allow
dealers to market their cars on the UK’s
largest motoring marketplace, but do so
in a way that fits their own business.
Package Builder
The success of Flexible Packages for the
independent dealer has naturally progressed
into a similar offering for the franchise dealer.
The Franchise team at TMG worked with the
dealers to really understand how we can
make their business more successful. The
feedback has led us to develop Package
Builder for our franchise customers. Package
Builder provides the franchise dealer with the
tools to generate more response, better
conversion and more profit. The four
fundamentals of Package Builder are:
Flexibility – Providing stock and product
flexibility so customers can change products
quickly and easily to reflect market and
business needs.
Transparency – Making sure that customers
know what they are paying for and what
performance their investment is returning.
Simplicity – Building rate structures that
reflect the customer’s organisation and
way of operating.
Choice – Providing the flexibility to easily
choose the right product at the right time,
that is right for the customer.
Mobile
Mobile continues to grow throughout the
world and is an increasingly popular method
of accessing the internet. Smartphone
penetration in the UK is one of the highest in
the world. This has had an impact on Auto
Trader and the way people search for a car as
we have seen dramatic changes in consumer
behaviour. Gone are the days where the
consumer is willing to wait; they want to
see something now. At TMG we believe it
to be vital that we help dealers understand
that mobile and tablets grow digital access
but more importantly do not replace their
website presence.
TMG now offers a range of successful mobile
applications across iPhone, iPad and Android
devices. The innovation is underpinned by the
fundamentals of: easy to read content, simple
navigation and accessible dealer contact and
location details resulting in the optimal
browsing experience.
Consumer Insight
Understanding what our consumers want
is essential if we are to carry on attracting
growing numbers of users. That’s why we
have set up our consumer research panel,
which regularly surveys around 30,000
Auto Trader users.
“We survey our consumer
panel several times a month
to understand their views
on new products we are
developing, as well as their
satisfaction with our existing
platforms and products. We
have run around 70 surveys
over the year, helping to
ensure the voice of our
consumers is represented
throughout the business.”
Stuart Bluck
Insight Manager
3.5M+
eople accessing Auto Trader
p
via mobile devices per month
Trader Media Group
RAZSOR websites
Our RAZSOR digital marketing services
continue to provide dealers with a great value
for money website package. We now provide
and support over 4,000 RAZSOR websites,
representing annual growth of over 30%.
This success endorses our belief and provides
an ideal platform for further growth and
development. RAZSOR websites work
alongside the dealer’s presence on autotrader.
co.uk. This allows potential buyers to click
through to the dealer site from the originating
advert on Auto Trader, automatically seeing
relevant content and ensuring that buyers
obtain relevant information to maximise
their options.
Online partnerships
The buying process has changed radically and
TMG is at the heart of this, whether it is via
the autotrader.co.uk websites, a Razsor
Investment in marketing
Our marketing activities throughout the year
have reinforced the brand’s position as the
leading digital destination for buying and
selling new and used motor vehicles. Whilst
the campaigns appeal to Auto Trader’s
existing core audiences through TV
We have partnerships with Yahoo!, MSN Cars advertising, they also attract a younger
and Top Gear. These partnerships allow
audience via digital channels such as YouTube
consumers to search the widest range of new and Twitter. The success of our marketing
and used cars available. It ensures that our
campaigns has played an instrumental role in
dealer customers are at the forefront of
the growth of our website and mobile traffic,
consumer searches. A strong pay-per-click
providing buyers with the greatest choice of
(PPC) strategy is essential as part of an overall vehicles and sellers with the largest audience.
digital marketing strategy and these new
partnerships support the delivery of this and,
Free recommended sale price
in addition, the delivery of best response.
To support the consumer’s decision making
process when selling a car on Auto Trader we
Auto Trader Owners’ Guide
introduced a free tool, recommended sale
In August 2012 we launched the Auto Trader price. This feature serves as a guide for the
Owners’ Guide, this was designed to provide consumer and provides a comparison of the
the consumer with up to date advice on
price at which their car could be offered
buying, selling and everything in between
privately on Auto Trader with a trade in value
when it comes to the ownership of a motor
that a dealer may offer using the specification
vehicle. The guide provides an in-depth
of the car and its mileage. This tool
examination of the automotive marketplace
complements the quick and easy ad
as well as an analysis of motorists’ buying
placement process on Auto Trader, putting
and selling behaviour. The guide also contains our sellers’ cars in front of the largest
the Auto Trader Retail Price Index sharing the
audience of car buyers in the UK.
business’ knowledge and expertise about
the price of new and used cars.
designed dealer website or our mobile and
tablet apps, the customer buying journey
starts via a search engine. Online partnerships
play a significant role in ensuring that we are
providing our customers with maximum reach
and response.
Business review
TMG delivers a seamless consumer experience
across multiple platforms. The success of our
mobile offerings is evident in the growth we
have seen in our metrics. In only three years
we now have over 3.5 million unique users on
mobile, with 45% of total searches now via a
mobile device compared to only 5% three
years ago11.
25
BR
What keeps us
in front
Knowledge and experience
Our market is ever-changing; whether it’s the over-arching economic
climate or how the pace of technological change impacts, we have decades
of experience in our field. This makes us a trusted name for our customers
and consumers to rely on. Another year of achievement proves this.
TMG is the market leader in
automotive classified advertising
and continues to be so year after
year. This continues because of
the successful blend of qualities
we have.
Trust and brand recognition
Our brands are highly recognised and are go-to choices for our customers.
They have been built on the back of proven response which, in turn, has led
to a larger market share.
£
Value
We asked our customers what they wanted from us. Key amongst the
answers was value and we can prove that, by spending their money with
us, we will generate money for them through wide exposure of their
vehicles and a high number of leads.
Innovation
Our commitment to our customers continues into the future and
this means being at the forefront of new technology to maximise
opportunities to connect buyers and sellers in a digital world.
26
Trader Media Group
Operating review
continued
Live Chat
Consumers are more demanding and if a
dealer does not respond to them quickly, they
will go elsewhere. Consumers are ready to
browse at all times of the day, not just when
the forecourt is open. By harnessing the
developments in social media we have
developed tools like Live Chat where a dealer
can chat directly to consumers online. Live
Chat is an online messaging service that
instantly connects potential customers, who
are ready to talk, with sales staff at a click of
a button, giving dealers the best chance of
converting a warm lead to a hot prospect.
Since its launch in January 2012 Live Chat
has already hosted over 150,000 consumer
conversations with 420 dealers resulting
in 34,000 leads12.
This direct real-time interaction allows dealers
to influence consumers by engaging in a
dialogue at the earliest possible opportunity
in the buying process. It provides the
opportunity for a dealer to fully engage with
consumers and develop a relationship in a
way that static online web pages or social
media alone cannot achieve. And unlike
telephone calls and face-to-face conversations,
which can only occur individually, Live Chat
enables dealers to have several ‘conversations’
at the same time and at any time of the day.
Next Generation Dealer Portal
As part of our strategy to focus on the core
business and strengthen our relationship
with our dealer customers we have invested
in the Next Generation Dealer Portal, a
re-launch of the portal dealers use to manage
their adverts. The new portal is designed
to make the process of creating great online
adverts easier, ensuring dealers have all of
the information and tools they need to stay
on top of an ever changing digital
marketplace. It allows dealers to make fast
and effective decisions that ensure they
generate a better response with higher quality
adverts. Dealers can track their performance
with ease, anytime and anywhere with Dealer
Portal Mobile. In addition, they can also use
the 24/7 online help and support tools.
SingleView
We are also investing in a new billing system
SingleView which is designed to simplify how
we do business and ultimately to improve our
customers’ experiences with us. This back
office system (covering the order to cash
end-to-end process) will impact all trade
customers, meaning SingleView is a far
reaching project across TMG. It is not just
a system change – it will deliver a business
change making our processes and reporting
smoother and more efficient.
Corporate activity
In June 2012 TMG acquired Deltapoint,
an industry leading data analytics provider.
Deltapoint has assisted the development of
the group’s industry-leading market insight
and innovative automotive intelligence
products. The team at Deltapoint has
recently launched i-Control, realising our
data monetisation plan. i-Control uses data
gathered from autotrader.co.uk searches and
auction houses, as well as from fleet and
lease companies, to recommend what stock
a dealer should buy, where to find it, how
much to pay for it and how much to sell it
for – a revolutionary step. This investment
demonstrates our commitment to our
customers, in providing them with more
tools to support and drive the success
of their business.
12 Source: Contact At Once!
“I’ve been with TMG for over
two years now and really
love my job! Know your
stuff, love what you do and
you can deliver the best
possible value to your
dealers – everyone’s happy!”
Claire McIver
Franchise Account Manager
Trader Media Group
The improvement in new car registrations
bodes well for the used car sector but it
remains a challenging time for our market
and our business. Flat to moderate growth
expectations coupled with reduced stock
availability continues to put pressure on dealer
margins. Consumers are more cautious,
have more choice and are spending less.
All of these factors have led to a consolidation
in the number of automotive dealers.
TMG faces these challenges with confidence
and a competitive advantage. We have a
history of robust financial performance
and leading strategies. We have the No 1
consumer brand and strong digital marketing
brands. The business is forward thinking,
leading the industry into online and mobile.
We have a great talent pool of highly engaged
people and know that when we focus and
work together we deliver excellence.
We will continually improve our business
to deliver value to our customers, our
shareholders and our people. We do not
rely on what has worked in the past, we
invest in new ways of working and ideas that
keep us ahead. We will continue to define our
customer proposition and support projects
that will deliver an unrivalled end
to end experience.
We remain committed to completing
projects that will deliver value. We continually
strive to improve communication and
education for our people. We will continue
to invest in innovation, marketing and
technology to improve our business and
that of our customers.
13 Source: SMMT
“The great thing about being
a mobile user experience
designer is having that direct
connection with our
consumers. Our team are
very good at taking on board
the users’ needs and, by
creating the mobile site and
apps on various platforms,
I’m able to engage with
them on a personal level.”
Daniel Giscombe
Mobile UX Designer
Business review
Outlook
TMG expect to see a modest increase in new
car sales in 2013/14. This increase is expected
to come from continued growth in the private
sector driven by consumers looking for more
fuel efficient, newer cars as they look to
reduce their overall monthly outgoings. Fleet
registrations are also expected to improve
following a pick up towards the end of 2012.
However, for growth over the next few years
to be consistent, the economy needs to
recover further and begin to stabilise before
we would expect new car registrations to
return to 2008 pre-recession levels of over
2.4 million units13.
27
BR
28
Trader Media Group
01
Digital UK
Digital UK has continued to perform
well growing revenue by 5% and
EBITDA by 7% year-on-year, defying
the uncertain economic conditions
in the UK. Significant strides have
also been achieved in boosting
the audience of the website as
TMG has improved its reach, quality
and functionality.
The Digital division continues to generate
value and response for dealers. The success
of the products, packages and services
offered across the multiple digital platforms
is evidence of this, with revenue from dealers
up 8% on prior year. The progress of the
digital business is achieved at a time when
the supply of stock is limited and the dealer
universe is flat to declining. The growth
is being driven by product and package
penetration as dealers recognise the benefits
of embracing the innovative offerings TMG
continues to bring to the market.
Flexible Packages were launched as part of
TMG’s drive to work closely and better for
dealers. This provides customers with the
opportunity to tailor products to their exact
needs and also enables TMG to demonstrate
Digital UK revenue
(£m)
182.8
2011
2013
202.0
2012
+5%
greater value. Flexible Packages have been
well received by independent dealers,
surpassing all expectations and when
combined with the related classified listings
revenue, comprised 76% of total dealer
revenue in 2012/13.
TMG has continued to enrich the product
range to ensure customers have the best
possible search functionality, content and user
experience. This was evident following the
introduction of Live Chat, which consumers
can use as a mode of direct online interaction
with dealers. These innovations helped TMG
to further develop its prominent market
leading brand and increase dealer penetration
with product revenues growing by 5%
compared to the previous year.
TMG continues to harness the growth in the
mobile market, further developing its mobile
device offerings to provide a seamless user
experience. In only three years, the number
of unique users using the Auto Trader Mobile
app has grown to over 3.5 million, 1.3 million
greater than the same month the year before.
Successful digital businesses respond quickly
to changes in the technological environment,
Annual Average (’000)
212.8
367
380
364
2013
2011
2012
2013
2013
-4%
so in line with this TMG has also adapted
both existing sites and the product range to
tablet devices, providing a truly multi-platform
digital offering.
Our Digital Marketing Services continue
to gain traction and deliver growth for the
group despite operating in a challenging
lower margin market. RAZSOR, which was
introduced to the market in 2011, provides
websites using unparalleled search engine
optimisation to the automotive industry.
RAZSOR has progressed well throughout
the year and we now support over 4,000
dealer websites showing the genuine value
dealers see in entrusting TMG to build,
maintain and market their own ‘online
forecourt,’ which also links seamlessly
to the main Auto Trader website.
In continuing to build on the value
of data, TMG acquired Deltapoint with
a clear plan to utilise the company’s expertise
in automotive analytics to launch the new
i-Control product. This provides dealers with
a suite of information relating to their specific
forecourt and potential stock, including
guidance on the ideal price when pursuing
different strategies from maximising response
to setting competitive prices.
The difficult economic conditions and
increased competitive pressures have had
an adverse impact on revenues from private
sellers. Private volumes have fallen 17%
year-on-year contributing 36% to the overall
decline in stock, resulting in a 9% fall in
consumer revenue from the previous year.
Display revenues have also suffered, as
revenue from third party trading desks
(agencies buying our unsold inventory via an
auction/ bidding model) was down 3% year
on year, whilst revenues from automotive
manufacturers (booked via Advertising
Agencies) remained flat.
Trader Media Group
03
Digital UK continued
Magazines
International
The drive to improve the customer experience
has also been extended to TMG’s back office
systems, which are largely a legacy from
previous years as a magazines business.
SingleView is a new billing system that will
cover the order to cash end-to-end processes,
and will be far more able to adjust to changes
in a rapidly evolving digital business such
as TMG.
The decline in the traditional
publishing industry in the UK and
Ireland saw Magazine’s EBITDA shrink
46% year-on-year. The journey for
both TMG and its customers to fully
transition online is now complete
with the Magazines division closing
at the end of June 2013.
The two components of the
International division faced different
challenges with South Africa driving
the move of dealers onto new digital
offerings, whereas Ireland continued
to trade in difficult conditions as the
local economy remains challenging.
Whilst continuing to demonstrate value for
The division has also kept its cost base under
money for magazine customers the division
close control. Costs increased by £2.7 million
has focused on transitioning the remaining
(3%) over last year, but this included an
spend online whilst maintaining the quality of
additional £3 million of marketing expenditure the printed offering in a cost effective manner.
to support and develop the brand, with
underlying costs therefore reduced. The
Revenues from the print publications were
success of the marketing campaigns was
£11.8 million down on the previous year.
evident in the number of unique visitors to
Despite this decline the margin only dropped
autotrader.co.uk, which exceeded a record
by 3% pts to 35% as the division continued
11.5 million in March 2013.
to proactively manage the cost base in line
with the declining revenue trend.
Moving forward, the division will look to
strengthen its market leading position by
continuing to focus on the core business –
the customer. Empowering them via selfservice tools, providing transparency both
in pricing and our products and through
working with them to make the process of
buying and selling vehicles as seamless as
possible. By always looking to innovate
and explore new markets, Digital will strive
Saving of costs compared
to ensure that dealers have access to the
to 2011/12
most complete, relevant and up to date
information to effectively drive their own
sales and response. Innovation will also help
to expand on the strong products already
on offer, whilst helping existing offerings to
remain ahead of the curve; aligned to industry
tastes and trends as they change and develop.
£7M
24%
Year-on-year growth in
digital visits
In South Africa, TMG has focused on
transitioning existing print dealers onto digital
and multi-media packages, in line with the
trend of increasing mobile broadband users
which are expected to exceed 10 million by
the end of 201314. This has resulted in strong
online revenue growth, with initiatives in the
latter part of the year boosting the number
of dealers choosing digital products. The
increased focus on digital offerings has led
to the opportunity to improve operational
efficiency which has been realised through
lower print costs and headcount.
Ireland has continued to experience a
challenging trading environment, with
many dealers ceasing to trade as a result.
This means revenue and EBITDA have
declined by 14% and 35% year on year
respectively. Despite these difficult conditions
the underlying metrics that drive the digital
business remain healthy with website unique
users growing by 2% and mobile uniques
up over 50% on the previous year.
14 Source: PWC South Africa
Business review
02
29
BR
30
Trader Media Group
Key performance
indicators
The Board and Executive Committee have
set operational KPIs which are tracked,
and reviewed at each meeting in order
to assess performance.
Revenue
UK
254.4
2011
International
257.2
2012
EBITDA
2013
129.8
2011
(£m)
International
UK
251.8
Covenant Net Debt
142.9
637.1
143.9
511.2
2012
2013
2011
2012
562.0
2013
2013
2013
2013
Measures the level of continuing operating
activity and growth of the business.
Revenue for the year is as stated in note 3
to the financial statements.
Measures earnings before interest, tax,
amortisation, depreciation, impairments
and exceptional costs and provides a
measure of the underlying profitability
of the business. EBITDA a non-GAAP
measure as defined above is as stated in
note 3 to the financial statements.
Measures the indebtedness of the business
and when compared with EBITDA provides a
measure of balance sheet leverage. Defined as
syndicated bank loans gross of unamortised
debt issue costs less cash. The balances
constituting covenant net debt are as
reported in notes 18 and 19.
-2%
+1%
-12%
Trader Media Group
31
Average monthly desktop unique users
Average monthly mobile unique users
This KPI represents the number of unique users that log onto
autotrader.co.uk on a monthly basis.
This represents the number of unique users that access Auto Trader
mobile sites and apps on a monthly basis.
2013
2013
(million)
(million)
10.0
2012
2012
9.4
2011
2.7
2011
8.8
1.6
0.8
2013
2013
Source: Omniture
Source: Omniture
Average monthly digital visits
This metric measures the overall growth of our digital presence
(traffic) across all platforms on a monthly basis.
This provides a KPI that illustrates the number of vehicles being
advertised on autotrader.co.uk on average through each year.
2013
2013
+6%
+69%
(‘000)
37.3
2012
30.0
2011
364
2012
380
2011
26.1
Business review
(million)
367
2013
2013
Source: Omniture
Average weekly circulation
Headcount
This provides a measure of the average circulation of the Auto Trader
magazine in the UK and Ireland.
This represents the average number of full time equivalent employees
during each financial year.
2013
2013
+24%
-4%
(‘000)
2012
2011
31
2012
52
89
2011
2013
2013
Source: COMAG
-40%
-10%
1,368
1,514
1,640
BR
32
Trader Media Group
Financial review
A key feature of the group is its ability
to generate strong cash flows regardless
of the economic backdrop.
Overview
Steady revenue growth, in unsettled market
conditions, from the Digital division of
£10.8 million could not compensate for the
£11.8 million structural led decline in the
Magazines business to leave UK revenue
£1.0 million lower at £228.8 million. Group
revenue was £5.4 million lower than the
previous year as stronger sterling combined
with the depressed economy in Ireland and
ongoing transition to online in South Africa
led to a £4.4 million fall in sales within the
International division. The 2% revenue
decline was limited to a 1% fall in like-for-like
operating profit once one-off costs are
removed (as the table, right, shows). This
reflected a 4% reduction in operating costs
as cost efficiencies continued to be sought
throughout the group, but in particular
within the Magazines division where
operating margins were broadly maintained.
This was balanced with further investment in
the online business to develop new products
and record levels of marketing expenditure
to promote the group’s brand.
Continuing activities
2013
£m
2012 Change
£m
+/(-)
Revenue
251.8 257.2
(2%)
Operating profit
Impairment
charges and
exceptional items
(note 4)
Like-for-like
operating profit
117.8 105.9
11%
9.9
22.8
127.7 128.7
(1%)
The closure of the Magazines division at the
end of June 2013 means the group will
operate as a purely online business in the UK
and Ireland, and is therefore well positioned
to focus on its core business and benefit
from any improvement in market conditions.
The group builds on its reputation in the
automotive market through:
•Growing core revenues by becoming a
trusted partner of dealers, generating
greater response than competitors through
attracting the largest audience due to
brand strength;
•Creating additional revenue streams
from new products and industry leading
innovation;
•Leveraging the spend in marketing and
investment in a seamless cross platform
consumer experience to grow in a
competitive consumer market;
•Optimising revenue growth through
efficient operations to preserve margins
whilst investing where required in
technology, people and promotion
of the group’s current and future
product offerings.
Restructuring
Restructuring costs in the group relate
primarily to the closure of the Magazines
division and other redundancies required
to re-shape the organisation into a digital
media business that is structured to best
support and respond to its customers’ needs.
Acquisitions
On 22 June 2012 TMG acquired 100%
of Delta Point Associates Ltd, an industry
leading data analytics provider. Deltapoint
has assisted the development of the
group’s industry-leading market insight
and innovative automotive intelligence
products. The business has been integrated
into the group enabling it to draw on the
resources and expertise of the wider group,
whilst strengthening the group’s data
intelligence capabilities.
Impairment
The group has incurred an impairment
charge of £0.9 million in the year against
some of its remaining publishing related
business units. The impairment reflects the
write-down of the remaining goodwill and
other assets in the Magazines business
that will close at the end of June 2013.
Trader Media Group
Non-exceptional finance income of
£0.3 million (2012: £0.5 million) was
generated in the year from cash deposits
and remained consistent with past years
due to the prevailing low LIBOR rate.
The group’s sensitivity to fluctuations in
LIBOR has been considered in note 2
to the financial statements.
The group has a strategy of buying back its
syndicated debt at below par value. This has
led to exceptional gains through the interest
line of only £0.3 million compared to
£4.5 million in the previous year, reflecting
the close to par price of the group’s debt and
illiquid market. The group will continue to
explore suitable opportunities to repurchase
its own debt in the future.
The group’s taxation charge decreased
to £11.2 million during the year (2012:
£14.7 million). This decline stems from the
reduction in the UK corporation tax rate
to 24% (2012: 26%) which applies to the
majority of the group’s profits. The effective
tax rate of 36% is higher than the standard
corporation tax rates in the countries
in which the group operates due to the
non-taxable nature of certain costs,
particularly amortisation and impairment
of intangible assets.
The group’s syndicated debt arrangement
has no mandated covenant tests and the
margin payable steps down as the group
de-levers. Covenant net debt fell £75.1 million
(2012: increase of £125.9 million) in the year,
due mainly to strong cash generation with
leverage* falling to 3.88 times EBITDA
(2012: 4.43 times), enacting a 0.25%
reduction in margin for the year ahead.
£m
Covenant net debt
at 3 April 2011
Cash flow and debt
Repurchase of syndicate debt
A key feature of the group is its ability to
Repayment of syndicate debt
generate strong cash flows regardless of the
Refinancing of syndicate debt
economic backdrop and when combined
Increase in cash and cash equivalents
with a “covenant-lite” debt package that
and other financial assets
does not call for repayment of any borrowings Exchange loss on cash
before June 2015, the business operates
Covenant net debt
with a solid funding position that means
at 1 April 2012
the directors are confident that the group
Repurchase of syndicate debt
remains as a going concern.
Increase in cash and
cash equivalents
Cash from operating activities rose to
Exchange loss on cash
£130.1 million (2012: £129.3 million) in the
year, reflecting a consistent underlying EBITDA Covenant net debt
at 31 March 2013
performance. The cash was used to service
syndicated debt (£32.5 million) and pay down
Sean Glithero
or repurchase debt (£13.2 million) thus
Interim Chief Financial Officer
reducing future interest commitments.
A further £16.7 million (2012: £14.7 million)
was used to acquire tangible and intangible
fixed assets to underpin the online growth
aspirations of the business, representing a
record level of investment.
(511.2)
4.5
584.2
(734.2)
20.3
(0.7)
(637.1)
0.3
75.0
(0.2)
(562.0)
“Consumer access of the
internet is growing and
changing rapidly with tablets
and mobile. Our team focuses
on what consumers need so
that we can provide the best
cross platform experience
possible for Auto Trader.”
Nick Gee
Consumer Audience and
Mobile Director
£130.1m
cash generated from
operating activities
* as defined by the group’s Senior Facilities Agreement
Business review
Interest and taxation
Finance costs decreased by 3% to £86.9
million (2012: £89.2 million) as last year’s
expense included the £7.5 million cost of
refinancing. Excluding this incremental
charge, finance costs have risen as a
result of greater gross borrowing during
the year through a full year impact of the
refinancing and the annual roll up of
shareholder loan interest into the principal.
To mitigate its exposure to interest rate risk,
the group continues to hedge its exposure
to fluctuations in LIBOR on its borrowings by
interest rate swaps as detailed in note 14.
33
BR
34
Trader Media Group
Principal risks
and uncertainties
The principal risks and uncertainties facing
the business that could have a material impact
on the group include the items noted below.
More detail relating to the financial risks
in particular is contained within note 2 to
the financial statements.
Market risk
The group operates primarily in the UK
automotive marketplace which has
experienced a difficult trading environment
over most of the last few years. Consumer
demand for vehicles and new car production
has been low leading to a restricted supply
of good quality used cars and dealers cutting
back on volumes of stock, thereby impacting
on advertising spend. The group also holds a
similar market position in Ireland where the
market has contracted and the economic
factors may lead to further decline. The South
African automotive advertising market is in an
earlier stage of transition from magazine to
online advertising spend, and the online
market is highly competitive with retention of
customers being key to a successful transition.
The group’s share of total advertising spend
in the automotive market is under constant
threat from new and incumbent competitors,
especially as the business is predominantly
online where barriers to entry are lowest.
These risks are mitigated by continual
monitoring of overall market conditions and
investment in products and marketing to
ensure the group not only delivers the best
response to advertisers, but better value for
money than its competitors. Even in declining
markets, this allows the group to maximise its
return and maintain strong market share.
The group is exposed to the rapid pace of
change in the online market. To mitigate
this, the group has allocated extra investment
and people to the development of online
services and products and continues to
monitor its own and competitor performance
closely. Consumer protection is also crucial
and the group continues to play a leading
role in this area.
Interest rate risk
The group’s interest rate risk arises from long
term borrowings with the syndicated bank
loan and shareholder loans subject to floating
rates of interest linked to LIBOR. The group
manages its cash flow interest rate risk on the
bank borrowings by using interest rate swaps
to convert a proportion of the debt from
floating to fixed rates.
Under the interest rate swaps the group
agrees with the other party to exchange
on a monthly basis the difference between
the fixed contract rate and the floating rate
interest amounts calculated by reference
to the agreed notional amounts.
Credit risk
Credit risk arises from deposits with banks
and financial institutions and the risk is
minimised by dealing with only a limited
range of financial institutions with secure
credit ratings.
Credit risk relating to trade receivables is
managed on a local basis. Each entity is
responsible for managing and analysing the
credit risk for new customers before standard
payment terms and conditions are offered.
With the slowdown in the automotive
marketplace, dealer margins have been placed
under pressure and the risk to the group of
non-payment of invoices increases. The bad
debt risk also rises with customers who
provide financial services, for example vehicle
loans, and are unable to obtain funding for
their products. Policies and procedures exist
to ensure that existing customers have an
appropriate credit history and a significant
number of balances are prepaid or collected
via direct debit. Sales to private customers are
primarily settled using major debit or credit
cards which reduces the risk in this area.
Overall the group considers that it is not
exposed to a significant amount of either
customer credit or bad debt risk due to the
diversified and fragmented nature of the
customer base. A single customer services
team is in place in the UK to give the group
focus on debt collection. The cost of bad
debts remain at a low 1.2% of revenue
(2012: 1.1%).
Trader Media Group
Whilst repayments can be made without
penalty under the shareholder loan
agreements and the SFA, there is no
requirement to settle all or part of these debt
instruments earlier than their termination
dates between 2015 and 2017. Restrictions
exist to limit the level of additional
indebtedness incurred and the extent of
dividends payable and other payments to
shareholders and there is a requirement to
repay a proportion of any excess cash flow
but these are not expected to materially
impact the planned growth of the group.
This structure, when taken in conjunction
with the projected cash flows, is considered
sufficiently flexible to ensure that the group
can continue to service its obligations as
they fall due even if the group suffered a
significant reduction in trading performance.
Technology risk
The group is exposed to technological risks to
its websites which could manifest themselves
in a variety of ways such as:
•Malicious intrusion for theft of data;
•Virus infection to cause disruption;
•Bogus advertisers using the site for criminal
activities; and
•Attempts to harvest customer credit
card data.
Through effective use of technology solutions
and strict adherence to industry standards the
group deploys tools and processes that
automatically intercept, identify and effectively
mitigate the vast majority of the threats
above. In order to provide the group with
additional assurance a small team of security
experts are employed who are continually
monitoring these activities outside the group
to ensure new known threats are mitigated
before they attempt to approach our
infrastructure. In addition the group has
established external relationships with
acknowledged experts in this field to ensure
where there is improved best practice we are
ready to adopt it.
Business review
Capital risk management
The group’s objectives when managing
capital are to safeguard its ability to continue
as a going concern. The risk that the
leveraged nature of the group affects
the future development and going concern
has been mitigated through the structure
of its financing. Neither the cumulative
irredeemable £1 preference shares nor the
shareholder loans require performance
conditions to be met. Likewise the terms of
the Senior Facilities Agreement (“SFA”) are
such that the borrower group is not required
to adhere to performance related leverage or
interest cover ratios or to restrict capital
expenditure. The margin payable on the
syndicated bank loan interest is dependent
on the consolidated leverage ratio of Trader
Media Corporation (2003) Limited and its
subsidiaries and this is calculated and reviewed
on a quarterly basis. This leverage ratio also
determines whether mandatory excess cash
flow payments are required each year.
35
BR
36
Trader Media Group
Corporate
social responsibility
In conducting business the Board recognises
its responsibility to deliver quality to
customers, recruit and reward people on
merit alone, minimise health and safety risks,
maintain stringent environmental protection
standards and honour agreements with
partners and suppliers.
At TMG we view these responsibilities as
things that should be embedded in how
we operate our business on a daily basis.
Our CSR framework covers four areas:
Each quadrant of the framework is owned
by the relevant part of the business, with
reports feeding into the Executive
Committee on a regular basis.
tailor our services and sales approach to meet
each segment’s needs; developing innovative
solutions for our customers to help them get
the most from our services.
•The Customer: to do business fairly
and with integrity
•People: To treat our people with dignity
and respect
•The Community: to be a responsible
neighbour
•The Environment and Workplace:
to protect it for future generations
The Customer
All TMG employees are guided by the
group’s vision to be the partner of choice for
automotive – our customers’ success is our
business. We are committed to putting our
customers first and being a customer-led
organisation. With the number of different
customer segments we have, we aim to
We value our customers’ opinions and
regularly measure their satisfaction with
our Customer Satisfaction Index survey.
This feedback helps us to ensure that our
investment in innovation and resources is
focused on providing better solutions for
our customers.
How does TMG manage CSR?
To treat our
people with
dignity and
respect
op
t
&
w
le
To protect it
for future
generations
en
– Waste and recycling
– Reduction of
environmental impact
(carbon, energy
consumption and green
facilities management)
– Workplace health & safety
To be a
responsible
neighbour
m
E
nvironment
& Workplace
Co
m
m
er
To do business
fairly and with
integrity
on
Envir
– Charity partnership
– E mployee fundraising
through sponsorship and
match funding
– Employee volunteering
– Employee giving
– Charity challenges
m
ity
un
Community
People
– Training, development
and talent management
– Employee wellbeing
– Employee communications
(including employee
opinion survey)
– Employee reward
and recognition
– Employee policies
and procedures
Cu
st
o
Customer
– Customer value promise
–C
ustomer satisfaction
measurement
–C
ustomer safety
and security
or
kp
Pe
la c e
We also have a consumer research panel of
c.30,000 Auto Trader users that we survey
several times a month to understand their
views on new products and their satisfaction
in using existing ones. We have run c.70
surveys over the year to ensure the voice
of our consumers is represented throughout
the business.
People
People are the group’s most valuable resource
and the success of the group is to the credit
of all our employees. The continued success
of TMG and its brands is something of
which everyone associated with the business
can be enormously proud. In recognition of
the diverse needs of TMG’s employees, our
flexible benefits scheme, My Benefits, enables
employees to tailor their benefits package to
meet their own specific needs. As well as our
company funded benefits, we offer a wide
Trader Media Group
The group is committed to treating all its
employees and job applicants fairly and
equally. It is our policy not to discriminate on
the basis of their gender, sexual orientation,
marital or civil partner status, gender
reassignment, race, religion or belief, colour,
nationality, ethnic or national origin, disability
or age, pregnancy or trade union membership
or the fact that they are a part-time worker
or a fixed-term employee. The equal
opportunities policy operated by the group
ensures all workers have a duty to act in
accordance with this.
The average number of staff employed by the
group on a full time equivalent basis during
the year was 1,368 (2012: 1,514).
The Community
The group is committed to being a good
neighbour and contributing positively to the
communities in which we operate.
We continue to have a company-wide charity
partnership with Help the Hospices, which
gives staff the benefit of working with a
national charity with national resources
while directly supporting hospices in the
communities where employees live and
work. The relationships developed with local
hospices have been very rewarding, with local
fundraising efforts (from bake sales to band
nights) going straight to the hospice matched
to that office, keeping it in the community.
Being a good neighbour is not just about
fundraising, however, and we also encourage
employees to get involved with other
causes that matter to them with the support
of our community involvement and match
sponsorship policies. The community
involvement policy supports employees
who wish to work with communities across
the UK, either as private individuals or as
employees of TMG (for team volunteering
days, for example). We also have a successful
community sponsorship programme,
providing employees with a bursary to
support local initiatives or clubs that they
are involved with.
Donations to Help the Hospices and other
charities during the year totalled £0.1 million
(2012: £0.1 million).
The Environment and Workplace
The group continues to operate a policy
of ensuring safe and pleasant working
conditions for all employees, as far as possible
within the constraints imposed by the
working environment. A health and safety
team is employed by the group and continues
to promote a healthy and safe working
environment. During the year there were no
major injuries reported under the Reporting
of Injuries, Diseases and Dangerous
Occurrences Regulations.
Paper for the group’s magazines was sourced
responsibly from sustainable resources.
Through its arrangement with COMAG, the
group benefited from COMAG’s contracts
that had strict guidelines for the secure
disposal and recycling of returned copies in
accordance with agreed industry wide
standards in the Periodical Publishers
Association (“PPA”) Best Practice Guidelines
for Wholesale Stock Control and Returns
Systems Document. The PPA, via its magazine
publisher members, has in conjunction with
the Government entered into a Producer
Responsibility Agreement with DEFRA (the
Department of Environment, Food and Rural
Affairs). This agreement commits the
magazine industry to encourage the final
consumer to put purchased magazines into
the recycling process that ends up with copies
being recycled as newsprint and not landfill.
TMG has a group-wide, environmental remit
with a primary focus on carbon management.
The Fleet Management processes have
been improved with the provision of monthly
fuel data for review by the Executive team.
The group has worked with the Carbon Trust
to identify energy efficiency measures that
can be implemented at all office locations
and used fuel efficiency data to help drive
both carbon emission reduction and improve
health and safety as the group worked with
drivers to review their driving habits. TMG’s
environmental impact has also reduced
through the group rationalising the number
of properties it maintains.
In the current financial year TMG has used
this data to manage its emissions, substantially
reducing its total to 2,002 (2012: 2,161)
tonnes of carbon from its premises’ use of
electricity, gas and car fleet fuel.
Carbon footprint of TMG’s car fleet,
offices and print sites
Tonnes CO2
2013
2012
Offices (gas)
Offices (electricity)
Fleet fuel
Tonnes CO2
101
801
1,100
2,002
103
923
1,135
2,161
Business review
range of voluntary benefits, including
Childcare Vouchers, Cycle to Work and Critical
Illness Insurance, that are proving popular
amongst our employees. We are also
committed to pursuing training programmes
which equip all employees with the necessary
skills to help them perform to the best of their
ability. This investment in people is core to our
aim to motivate and retain employees.
37
BR
38
Trader Media Group
Executive Committee
Zillah Byng-Maddick
Interim Chief Executive Officer
L otus Elan – £6,250
I have always liked the
look of this car and to
find one for under
£9,000 is amazing.
The Auto Trader Retail
Price Index provides
insight into used car prices.
The average price for 2012/13
was £9,000.
Sean Glithero
L ancia Delta 2.0 16v
Integrale, 5 door
– £7,995
The early 90’s left
hand drive legend,
I always wanted one.
Zillah joined as CFO three years ago. During this
time she has been closely involved in the digital
transformation. She was appointed Interim CEO in
September 2012. She has held a number of financial
and operational roles within a range of consumer
focused groups. Before Trader Media, she was CFO
at Fitness First Group for just over three years, during
which time she was also the managing director of
its German operation. She was CFO at First
Quench/Thresher Group for two years and has held
roles at General Electric, Waterstones, HMV and
Nestlé. She is currently a non-executive director of
Mecom Group plc and was a non-executive director
of Gondola Holdings plc for four and a half years.
After qualifying as a chartered accountant with
Ernst & Young, Sean worked in the telecoms
industry and for BPB plc before joining TMG as
Group Financial Controller in 2006. He has since
held various group and divisional roles in the
business, helping the business reshape through
acquisitions and disposals as well as aiding
the transition online. Sean was appointed Interim
CFO in September 2012 and is currently leading
the re-engineering of the group’s back office
billing systems.
Tim Jones
Chief Information Officer
Joanne Walker
Group Human Resources Director
If we gave you £9,000 today
what would you buy on
Auto Trader?
iger Avon
T
Super Six 2002 –
£5,650
What a fantastic car
and great to drive on
a summer’s day.
A chartered engineer by trade, Tim has held
numerous technology and business roles in
organisations such as IBM, BT and ICI/Astra Zeneca
prior to joining TMG in 1996 to lead the launch of
autotrader.co.uk. With a broad spectrum of
hands-on technology experience incorporating
virtually all technology disciplines at some point
in his career, in his role as CIO he provides the
leadership of TMG’s technology capability with
a firm focus on the commercial outcome.
ercedes-Benz SLK
M
– £9,000
A SLK convertible for
£9,000! It had to be
my first pick.
Joanne joined TMG as HR Director in 2000, just
after the formation of the group. Prior to this
she held various HR positions at ExxonMobil and
had spent six years at British Airways. During her
time in the role she has helped transition TMG
to a truly digital business through continued
business transformation. All this has been achieved
alongside increased profitability and business
performance, whilst driving higher employee
productivity and engagement.
Trader Media Group
David McMinn
Group Sales & Service Director
Land Rover Defender
110 – £7,995
12 seater! It’s the
perfect car to get
around in if you
have a large family.
Nathan Coe
Group Director, Auto Trader
olkswagen
V
California 2.0
– £8,000
Everyone dreams
of owning a VW
campervan, don’t they!
Nathan is responsible for the Auto Trader Digital
business, overseeing the continual evolution of
our consumer and trade platforms, products and
marketing. Nathan joined the business in 2007
as the Managing Director of Strategy & Business
Transformation to manage the strategy and
implementation of TMG’s digital transformation
and overseas businesses, later leading the launch
of TMG’s growth initiatives in mobile and digital
marketing. Prior to joining TMG Nathan held roles
as the Head of Corporate Development at Sensis,
Telstra Mergers and Acquisitions and
PricewaterhouseCoopers.
Governance
David joined TMG in 2008 as Group Operations
Director. In 2009 he was appointed Managing
Director of Publishing. In 2011 he was appointed
Group Sales Director assuming responsibility
for Service in 2012. Prior to joining TMG, David
worked at Sensis, Grant Thornton and Tabcorp
in operations/financial capacities. He is a member
of the Institute of Chartered Accountants (Australia).
39
GO
Tim Peake
Group Strategy and New Business Director
Austin Healey Sprite
– £6,750
Such a great, fun,
classic car.
Tim is responsible for building and developing
new businesses outside of our core classified
proposition. He joined TMG in August 2005 and
has held several director level roles including Group
Strategy Director, focused on M&A, new business
initiatives and digital trends, MD of the overseas
businesses and Head of Pricing for the UK, where
he helped transition the business into a leading
online player. Prior to joining TMG, Tim worked at
Cadbury’s as Commercial Strategy Manager and
was a Management Consultant with A.T. Kearney
working across the automotive sector. Tim started
his career at Goldman Sachs.
40
Trader Media Group
Compliance
The group is committed to principles of good corporate governance
and the values of transparency contained in the Walker Report.
This statement describes how the principles of corporate governance
are applied to the business.
Board constitution and procedures
During the year, the Board comprised the following members:
John KingChief Executive Officer of TMG
(resigned 14 September 2012)
Zillah Byng-MaddickChief Executive Officer of TMG
(interim)
Sean GlitheroChief Financial Officer of TMG (interim)
(appointed 14 September 2012)
Apax Representative (Chairman)
Tom Hall
Apax Representative
Irina Hemmers
GMG15 Representative
Andrew Miller
Darren Singer
GMG Representative
Ed Williams
Non-executive Director
The Chief Executive is responsible for the day-to-day operations
of the group and the development of strategic plans for consideration
by the Board.
The company is jointly controlled by Guardian Media Group plc
(indirectly holding 50.1% of the ordinary shares), Crystal A TopCo Sàrl
(indirectly holding 18.5% of the ordinary shares) and Crystal B TopCo
Sàrl (indirectly holding 30.19% of the ordinary shares). Crystal A
TopCo Sàrl and Crystal B TopCo Sàrl are companies operated by Apax
Partners, a private equity firm.
The group has in place appropriate insurance cover in respect of legal
action against its directors and officers.
In the year ended 31 March 2013 the Board met 11 times. All Board
members were present except as follows: July 2012 – Tom Hall,
Andrew Miller; September 2012 – Sean Glithero, Darren Singer, Irina
Hemmers and Ed Williams; October 2012 – Andrew Miller; November
2012 – Sean Glithero; December 2012 – Darren Singer. To enable the
Board to discharge its duties, all directors receive appropriate and
timely information. Briefing papers are distributed to all directors in
advance of Board meetings.
The Board has two principal committees: an Audit Committee and
a Remuneration Committee, whose terms of reference are approved
by the Board.
Audit Committee
The Audit Committee is chaired by Darren Singer, an accountant
with relevant financial experience. Its other member is Tom Hall.
The Chief Financial Officer and the external auditors are invitees
at all meetings of the Committee which meets at least twice a year.
The Audit Committee met twice during this financial year with all
members in attendance.
15
Guardian Media Group Plc and its subsidiary undertakings (“GMG”).
In addition to monitoring the integrity of the financial statements and
the effectiveness of internal controls (including determining relevant
action in respect of any control issues raised by the internal and
external auditors) the Committee is also responsible for considering
the need for an internal audit function, monitoring the external
auditors, approving their terms of engagement and remuneration,
and advising the Board on the appointment of the external auditors.
Remuneration Committee
The Remuneration Committee is chaired by Andrew Miller. Its other
member is Irina Hemmers. The HR directors from TMG and GMG are
invitees of all meetings of the Committee which meets at least twice
a year. The Remuneration Committee met three times during this
financial year with all members in attendance.
The Committee is responsible for monitoring and approving the
remuneration of senior executives and Board members.
Whistle blowing policy
The group has a whistle blowing policy which seeks to establish an
open environment in which serious concerns about malpractice within
the group may be dealt with in a constructive manner with the aim
of providing a rapid means under which genuine concerns made in
good faith can be raised internally without fear of repercussions to
the individual. The policy is designed to comply with the provisions
of the Public Interest Disclosure Act 1998.
Internal Control
The directors acknowledge that they are responsible for the
group’s system of internal control and for reviewing its effectiveness.
The system is designed to manage rather than eliminate the risk
of failure to achieve the group’s stated objectives, and can only
provide reasonable, and not absolute, assurances against material
(including financial) misstatement or loss.
The procedures used to review the effectiveness of the system
of internal (including financial) control are reviewed by the Board.
Key features of the procedures are as follows:
•Business risks are managed to minimise probability of occurrence
and impact, and the actions taken are reported regularly to the
Board. The group maintains a risk register which is used to regularly
identify and evaluate risks as well as documenting controls and
responses to these risks.
•Purchasing is conducted in accordance with published procedures
and authority limits. Authority for entering into contracts is controlled
by seniority, and must be approved by the Board above a certain level.
•Budgets are set annually and reviewed and approved by the Board.
Reporting of results includes a comparison to budget.
Trader Media Group
41
•Management accounts are reviewed by the Board and Executive
Committee on a monthly basis. The management accounts contain
detailed trading financial information, KPIs and economic data as
well as the group’s cash and debt position.
•Duties are segregated, so that one person does not perform
processing from beginning to end of financial transactions.
Preparation of documentation is separated from authorisation
and execution of a transaction.
•Investments and capital expenditure above a certain level must
be approved by the Board.
•Appointment of external advisors must be approved by the
Board where fees are above a certain level.
•The Audit Committee considers and determines relevant action
in respect of any significant control issues raised by management
or the external auditors.
The Board is committed to ensuring that the group’s data and
information, and its information technology systems, are as secure
as practicable. Security controls and procedures are in place to
prevent unauthorised access to the group’s premises. Regular
backups of electronic information are taken with copies securely
stored. Management has established disaster recovery plans which
would be implemented in the event that facilities were unavailable
for prolonged periods.
Identification and evaluation of business risk
The Board regularly reviews and evaluates significant risk areas in terms
of probability of occurrence and likely impact. The Board is responsible
for assessing these risks and for implementing control and reporting
procedures to ensure the risks are properly managed, again in terms
of minimisation of probability of occurrence and impact. The Board
receives regular updates on the key risks and the related controls.
Going concern
The directors, after making enquiries and on the basis of current
financial projections and the facilities available, believe that the
group has adequate financial resources to continue in operation
for the foreseeable future. For this reason, they continue to adopt
the going concern basis in preparing the financial statements.
Governance
The group is committed to attracting and retaining people of high
calibre, and a culture of integrity and honesty is promoted by the
Board which permeates through every level of the organisation.
GO
42
Trader Media Group
Directors’ report
For the year ended 31 March 2013
The directors present their report and the audited consolidated
financial statements of the group and parent company for the year
ended 31 March 2013.
Principal activities
The principal activity of the group is the classified advertising
of motor vehicles and other related products, through online,
mobile and magazines.
The Operating Review, Financial Review, principal risks and
uncertainties, KPIs, future developments, charitable donations and
financial risk management objectives are considered in the previous
pages of the Annual Report.
Trader Media Group Limited is a private limited company registered
in the UK. Its registered office is Auto Trader House, Cutbush Park
Industrial Estate, Danehill, Lower Earley, Reading, Berkshire, RG6 4UT.
The group operates primarily in the UK, with a branch located in the
Republic of Ireland and subsidiary companies in the Republic of Ireland
and South Africa.
Results and dividends
The group’s profit for the financial year was £20.3 million (2012:
£7.5 million). The future developments of the group are considered
within the Operating Review on pages 22 to 27.
The group’s profit before taxation included exceptional items for
impairments of £0.9 million (2012: £18.2 million), the restructuring
of group operations of £9.0 million (2012: £4.6 million), profit on
purchase of debt of £0.3 million (2012: £4.5 million) and debt
refinancing fees of £nil (2012: £7.5 million).
Ordinary dividends of £nil in respect of the year ended 31 March 2013
(2012: £100.4 million) were paid during the year (note 27). In 2012,
£73.0 million of rolled up interest on the preference shares and
£26.6 million of preference shares were also paid to shareholders
for total consideration of £36.6 million and subsequently cancelled.
During the year the group repurchased 255 (2012: 968) 10p
ordinary C shares from leavers for aggregate consideration of £1.
This represented 0.03% of the total ordinary issued share capital.
The group also issued 1,296 (2012: nil) of 10p ordinary D shares
to 8 senior managers for aggregate cash consideration of
£0.3 million. This represented 0.13% of the total ordinary issued
share capital.
Directors
The directors who served during the year and up to the date of the
signing of the financial statements were, unless otherwise stated,
as follows:
Zillah Byng-Maddick Interim Chief Executive Officer
Sean GlitheroInterim Chief Financial Officer
(appointed 14 September 2012)
John KingChief Executive Officer
(resigned 14 September 2012)
Andrew Miller
Non-executive
Darren Singer
Non-executive
Non-executive
Tom Hall
Irina Hemmers
Non-executive
Ed Williams
Non-executive
Andrew Miller and Darren Singer are representatives of Guardian
Media Group plc. Tom Hall and Irina Hemmers are representatives
of Apax Partners, a private equity firm, who manage and advise
funds controlling 48.69% of the shares in the group. Ed Williams
holds 0.09% of the shares of the group.
Management Executive Committee at 31 March 2013
Zillah Byng-Maddick Interim Chief Executive Officer
Sean Glithero
David McMinn
Group Sales and Service Director
Nathan Coe
Group Director Autotrader
Tim Jones
Chief Information Officer
Joanne Walker
Group HR Director
Tim Peake
Group Strategy Director
Trader Media Group
Creditor payment policy
The group’s policy is to settle terms of payment with all suppliers
when agreeing the terms of each transaction, ensure that suppliers
are made aware of the terms of payment and abide by the terms
of payment. Trade payables of the group at 31 March 2013 were
equivalent to 36 (2012: 33) days’ purchases, based on the average
daily amount invoiced by suppliers during the year.
Key suppliers
The company works closely with a number of key suppliers. The
majority of the company’s websites, equipment and networks are
hosted in datacentres managed by Getronics UK Limited and Telecity
Group UK Limited. The contracts for these sites run until June 2014.
43
Land and buildings
The market value of land and buildings is estimated by the directors
to be approximately £0.1 million greater than its balance sheet value
of £3.0 million (2012: £1.3 million greater than balance sheet value of
£3.1 million). Land and buildings exclude leasehold improvements.
Directors indemnities
The group maintains an appropriate level of directors’ and officers’
insurance in respect of legal action against the directors. This policy
does not provide cover in the event that a director or officer has
acted fraudulently.
Employee consultation
The group places considerable value on the involvement of its
employees and has continued to keep them informed on matters
affecting them as employees and on the various factors affecting the
performance of the group. Employee representatives are consulted on
a wide range of matters affecting their current and future interest.
Information relevant to employees and the wider business is posted on
the group intranet. TMG sees the relationship with its employees as key
to its success. The group also has a universal employee development
scheme, focused on developing the potential of all staff members.
Health and safety
The group’s policy of ensuring safe and pleasant working conditions
for all employees as far as possible within the constraints imposed by
the working environment, has continued to operate. Health and safety
representatives are present at each property from which the company
operates, are managed centrally and meet on a regular basis. Over the
past decade the group has created a solid health and safety
framework and culture within the group.
Governance
Independent auditors
The auditors, PricewaterhouseCoopers LLP, have indicated their
Disabled employees
willingness to continue in office and have confirmed their
Applications for employment by disabled persons are always fully
independence. The appointment of auditors is considered annually
considered, bearing in mind the aptitudes of the applicant concerned. by the Audit Committee. Although PricewaterhouseCoopers LLP
In the event of members of staff becoming disabled every effort is
have been the group’s auditors for 10 years, the Committee is satisfied
made to ensure that their employment within the group continues and with their effectiveness and independence. The Committee did not
that appropriate training is arranged. It is the policy of the group that
consider it necessary this year to conduct a tender process for the
the training, career development and promotion of disabled persons
appointment of auditors.
should, as far as possible, be identical with that of other employees.
GO
44
Trader Media Group
The directors are responsible for preparing the annual report and the
Disclosure of information to auditors
financial statements in accordance with applicable law and regulations. In the case of each director in office at the date the directors’ report
is approved, the directors confirm that:
Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors have prepared the a) so far as the director is aware, there is no relevant audit information
group financial statements in accordance with International Financial
of which the company’s auditors are unaware; and
Reporting Standards (IFRSs) as adopted by the European Union, and
the parent company financial statements in accordance with United
b) he/she has taken all the steps that he/she ought to have taken as a
Kingdom Generally Accepted Accounting Practice (United Kingdom
director in order to make himself/herself aware of any relevant audit
Accounting Standards and applicable law). Under company law the
information and to establish that the company’s auditors are aware
directors must not approve the financial statements unless they are
of that information.
satisfied that they give a true and fair view of the state of affairs of
the group and the company and of the profit or loss of the group for
On behalf of the Board,
that period. In preparing these financial statements, the directors are
required to:
•select suitable accounting policies and then apply them consistently;
•make judgements and accounting estimates that are reasonable
and prudent;
•state whether IFRSs as adopted by the European Union and
applicable UK Accounting Standards have been followed, subject
to any material departures disclosed and explained in the group
and parent company financial statements respectively;
•prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the group and company will
continue in business.
The directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the company’s transactions
and disclose with reasonable accuracy at any time the financial
position of the company and the group and enable them to ensure
that the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the company
and the group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the
group’s websites. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
S Glithero
Director
10 June 2013
Registered address:
Auto Trader House
Cutbush Park Industrial Estate
Danehill
Lower Earley
Reading
Berkshire
RG6 4UT
Trader Media Group
45
to the members of Trader Media Group Limited
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities
set out on page 44 the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a
true and fair view. Our responsibility is to audit and express an opinion
on the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
This report, including the opinions, has been prepared for and only
for the company’s members as a body in accordance with Chapter 3
of Part 16 of the Companies Act 2006 and for no other purpose.
We do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate
to the group’s circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant accounting
estimates made by the directors; and the overall presentation of
the financial statements. In addition, we read all the financial and
non-financial information in the annual report to identify material
inconsistencies with the audited financial statements. If we become
aware of any apparent material misstatements or inconsistencies
we consider the implications for our report.
Opinion on financial statements
In our opinion the group financial statements:
•give a true and fair view of the state of the group’s affairs as at
31 March 2013 and of its profit and cash flows for the year
then ended;
•have been properly prepared in accordance with IFRSs as adopted
by the European Union; and
•have been prepared in accordance with the requirements of the
Companies Act 2006.
Opinion on other matter prescribed by the Companies
Act 2006
In our opinion the information given in the Directors’ report for the
financial year for which the group financial statements are prepared
is consistent with the group financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where
the Companies Act 2006 requires us to report to you if, in our opinion:
•certain disclosures of directors’ remuneration specified by law are not
made; or
•we have not received all the information and explanations we
require for our audit.
Other matter
We have reported separately on the parent company financial
statements of Trader Media Group Limited for the year ended
31 March 2013.
Alan Kinnear (Senior Statutory Auditor)
For and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Reading
10 June 2013
Governance
We have audited the group financial statements of Trader Media
Group Limited for the year ended 31 March 2013 which comprise
the consolidated income statement, the consolidated statement
of comprehensive income, the consolidated balance sheet, the
consolidated statement of changes in equity, the consolidated
cash flow statement and the related notes. The financial reporting
framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards (IFRSs) as adopted
by the European Union.
GO
46
Trader Media Group
Note
Continuing operations:
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit/(loss)
Finance income
Finance costs
Finance costs – net
Profit before taxation
Income tax expense
Profit for the year from
continuing operations
Discontinued operations:
Profit for the year from
discontinued operations
3
3,4
8
8
Before
exceptional
items
2013
£m
Exceptional
items
2013
£m
Exceptional
items
2012
£m
Total
2012
£m
251.8
(29.6)
222.2
(94.5)
127.7
–
–
–
(9.9)
(9.9)
251.8
(29.6)
222.2
(104.4)
117.8
257.2
(30.2)
227.0
(98.3)
128.7
–
–
–
(22.8)
(22.8)
257.2
(30.2)
227.0
(121.1)
105.9
0.3
(86.9)
(86.6)
0.3
–
0.3
0.6
(86.9)
(86.3)
0.5
(81.7)
(81.2)
4.5
(7.5)
(3.0)
5.0
(89.2)
(84.2)
9
7
Total
2013
£m
Before
exceptional
items
2012
£m
–
–
Profit for the year attributable
to equity shareholders
of the company
The notes on pages 51 to 84 are an integral part of these consolidated financial statements.
31.5
(11.2)
21.7
(14.7)
20.3
7.0
–
20.3
0.3
0.2
0.5
7.5
Trader Media Group
47
Consolidated statement of
comprehensive income
Note
Profit for the year
Other comprehensive income:
Actuarial gain/(loss) on post employment benefit obligations, net of tax
Cash flow hedges, net of tax
IFRS2 – share based payments (charge)/credit
Currency translation differences
Other comprehensive loss for the year, net of tax
Total comprehensive income for the year attributable
to equity shareholders of the company
9, 23
9
9, 26
2013
£m
2012
£m
20.3
7.5
0.4
–
(0.2)
(0.3)
(0.1)
(0.7)
0.6
0.1
(1.6)
(1.6)
20.2
5.9
Items in the statement above are disclosed net of tax. The taxation relating to each component of other comprehensive income is disclosed
in note 9.
Financial Statements
FIN
48
Trader Media Group
As at 31 March 2013
Note
2013
£m
2012
£m
Assets:
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Deferred taxation assets
Financial assets at fair value through profit or loss
10
11
12
22
15
373.6
4.8
3.2
5.6
0.6
387.8
366.8
5.5
3.2
4.9
1.4
381.8
Current assets
Trade and other receivables
Cash and cash equivalents
16
18
Assets of disposal group classified as held for sale
17
34.9
110.3
145.2
2.0
147.2
35.8
48.7
84.5
1.8
86.3
Liabilities:
Current liabilities
Trade and other payables
Current taxation liabilities
Provisions for other liabilities and charges
20
(79.8)
(8.5)
(4.6)
(92.9)
54.3
(74.4)
(6.3)
(1.6)
(82.3)
4.0
19
20
14
22
23
21
(1,193.8)
–
(2.1)
(1.3)
–
(4.9)
(1,202.1)
(760.0)
(1,157.3)
(0.9)
(2.4)
(1.0)
(0.8)
(3.9)
(1,166.3)
(780.5)
24
24
24
25
26
0.1
177.4
1.5
(1,033.6)
94.6
(760.0)
0.1
177.3
1.2
(1,054.0)
94.9
(780.5)
21
Net current assets
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred taxation liabilities
Retirement benefit obligations
Provisions for other liabilities and charges
Net liabilities
Equity attributable to equity holders of the company
Ordinary shares
Preference shares
Share premium account
Retained deficit
Other reserves
Total equity deficit
The financial statements on pages 46 to 84 were authorised for issue by the Board of Directors on 10 June 2013 and were signed on its behalf by:
S Glithero
Director
Registered number: 4768833
Trader Media Group
49
Balance at 3 April 2011
Comprehensive income:
Profit for the year
Actuarial loss on post employment
benefit obligations, net of tax
IFRS2 – share based payments credit
Total other comprehensive loss
9
9
9
9, 26
Total comprehensive income/(loss)
Transactions with owners:
Bonus issue of deferred shares
Reduction in value of deferred shares
Roll up and waiver of preference share dividend
Payment of principal and dividend on preference shares
Reserves transfer
Dividends paid to equity holders of the company
Balance at 1 April 2012
24
24
24
24,25,26
24,25,26
25, 27
Comprehensive income:
Profit for the year
Actuarial gain on post employment
benefit obligations, net of tax
IFRS2 – share based payments charge
Total other comprehensive gain/(loss)
9
9
9, 26
Total comprehensive income
Transactions with owners:
Roll up of preference share dividend
Proceeds from shares issued
Balance at 31 March 2013
24
24
Share
premium
account
£m
363.7
1.2
–
–
7.5
–
7.5
–
–
–
–
–
–
–
–
–
–
(0.7)
0.6
0.1
–
–
–
–
–
(1.6)
(1.6)
(0.7)
0.6
0.1
(1.6)
(1.6)
–
–
7.5
(1.6)
5.9
430.0
(430.0)
(10.7)
(99.6)
(76.0)
–
177.4
–
–
–
–
–
–
1.2
–
–
20.3
–
20.3
–
–
–
–
–
–
–
–
0.4
(0.2)
–
0.2
–
–
(0.3)
(0.3)
0.4
(0.2)
(0.3)
(0.1)
–
–
20.5
(0.3)
20.2
0.1
–
177.5
–
0.3
1.5
–
–
94.6
–
0.3
(760.0)
Retained
deficit
£m
(945.3)
–
–
10.8
(36.6)
10.0
(100.4)
(1,054.0)
(0.1)
–
(1,033.6)
Other
reserves
£m
3.9
–
–
–
26.6
66.0
–
94.9
Total
£m
(576.5)
430.0
(430.0)
0.1
(109.6)
–
(100.4)
(780.5)
Note
Share
capital
£m
FIN
50
Trader Media Group
2013
£m
2012
£m
141.0
(10.9)
130.1
138.9
(9.6)
129.3
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired
Investment in shares of overseas company
Proceeds from disposal of subsidiary, net of cash disposed
Purchases of property, plant and equipment
Purchases of intangible assets
Proceeds from sale of property, plant and equipment
Receipt of deferred consideration
Bank deposit and other interest received
Net cash used in investing activities
(6.8)
–
–
(1.9)
(14.8)
–
0.4
0.3
(22.8)
–
(1.3)
1.1
(2.5)
(12.2)
1.7
0.3
0.5
(12.4)
Cash flows from financing activities
Proceeds from issue of ordinary shares
Repayment of syndicated bank debt
Drawdown of syndicated bank debt
Purchase of own syndicated bank debt
Payment of refinancing fees
Payment of interest on syndicated bank debt and hedging instruments
Ordinary dividends paid to company’s shareholders
Preference dividends and capital paid to company’s shareholders
Redemption of Shareholder loan A
Issue of Shareholder loan C
Payment of other interest
Net cash used in financing activities
0.3
(2.1)
–
(11.1)
–
(32.5)
–
–
–
–
(0.1)
(45.5)
–
(584.2)
734.2
(43.9)
(7.5)
(29.0)
(100.4)
(109.6)
(0.5)
0.5
(0.1)
(140.5)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange losses on cash
Cash and cash equivalents at end of year
61.8
48.7
(0.2)
110.3
(23.6)
73.0
(0.7)
48.7
Note
Cash flows from operating activities
Cash generated from operations
Tax paid
Net cash generated from operating activities
28
18
Trader Media Group
51
1 Accounting policies
Basis of preparation
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the
European Union (IFRS), IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated
financial statements have been prepared on the going concern basis and under the historical cost convention, as modified by the revaluation
of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and assumptions.
It also requires management to exercise its judgement in the process of applying the group’s accounting policies. Estimates and judgements
are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed
to be reasonable under the circumstances.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying value of assets within the next
financial year relate to goodwill. The group tests annually whether goodwill has suffered any impairment in accordance with the accounting
policy stated on page 55. The recoverable amounts of cash generating units have been determined based on value in use calculations. These
calculations require the use of estimates (note 10).
New accounting standards and IFRS IC interpretations
(a) New and amended standards adopted by the group
There are no IFRSs or IFRS IC interpretations that are effective for the first time for the financial year beginning on 2 April 2012 that would be
expected to have a material impact on the group.
(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 2 April 2012 and not early adopted
•IAS 1 (amendment) Financial statement presentation
•IAS 19 (amendment) Employee benefits
•IAS 27 Separate financial statements
•IAS 28 Associates and joint ventures
•IFRS 1 First time adoption
•IFRS 7 Financial instruments: disclosures
•IFRS 9 Financial instruments
•IFRS 10 Consolidated financial statements
•IFRS 11 Joint arrangements
•IFRS 12 Disclosures of interest in other entities
•IFRS 13 Fair value measurement
Basis of consolidation
The group financial statements consolidate the financial statements of Trader Media Group Limited (the company) and all of its subsidiary
undertakings for the year ended 31 March 2013. The company is domiciled and incorporated in the United Kingdom. The consolidated financial
statements are based on financial statements which are coterminous with those of the parent company and accounting policies have been
applied consistently across the group.
Subsidiaries are all entities over which the group has the power to govern the financial and operating policies generally accompanying a
shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to
the group. They are de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is measured as
the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Costs directly attributable
to the acquisition are expensed. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition
over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair
value of the net assets of the subsidiary acquired, the difference is recognised immediately in the income statement.
There are no other IFRSs or IFRS IC interpretations that are not yet effective that would be expected to have a material impact on the group.
FIN
52
Trader Media Group
Notes to the consolidated
financial statements continued
1 Accounting policies continued
Intercompany transactions and balances between group companies are eliminated on consolidation.
Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between
20% and 50% of the voting rights. Where significant influence is not demonstrated but the shareholding is between 20% and 50% the
group would account for its interest as an investment. Investments in associates are accounted for using the equity method of accounting
and are initially recognised at cost. The group’s investment in associates includes goodwill identified on acquisition, net of any accumulated
impairment loss. The group’s share of post acquisition profits or losses is recognised in the income statement, and its share of post acquisition
movements in reserves is recognised in reserves. The cumulative post acquisition movements are adjusted against the carrying amount of the
investment. When the group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured
receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
All other investments are initially recognised at cost and the carrying value is reviewed for impairment.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief
operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified
as the Executive Committee that makes strategic decisions.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the
group’s activities. Revenue is stated net of discounts, returns and value added tax and after eliminating sales within the group.
The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow
to the group and when specific criteria have been met for each of the group’s activities as described below. The group bases its estimates on
historical results, taking into consideration the type of customer, the type of transactions and the specifics of each arrangement.
Revenue comprises:
•fees for advertising on the group’s websites and web related activities, which are recognised as the service is provided;
•fees for advertising in the group’s publishing titles and the sale of the publications, which are recognised on the date of publication; and
•dealer website build and hosting subscription fees, maintenance contracts and other subscription fees, which where invoiced in advance
are deferred and recognised on a straight line basis over the period to which they relate.
Dividend distribution
Dividend distribution to the company’s shareholders is recognised as a liability in the group’s financial statements in the period in which the
dividends are approved by the company’s shareholders.
Employee benefits
The group operates several pension schemes and all except one are defined contribution schemes. Within the UK all pension schemes set up
prior to 2001 have been closed to new members and only one defined contribution scheme is now open to new employees.
(a) Defined contribution scheme
The assets of the defined contribution scheme are held separately from those of the group in independently administered funds. The costs in
respect of this scheme are charged to the income statement as incurred.
(b) Defined benefit scheme
The group operates one closed defined benefit pension scheme.
The liability recognised in the balance sheet in respect of the defined benefit scheme is the present value of the defined benefit obligation at
the balance sheet date less the fair value of the scheme’s assets. The defined benefit obligation is calculated annually by independent actuaries
using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future
cash outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will be paid, and
that have terms to maturity approximating those of the related pension liability. Actuarial gains and losses arising from experience adjustments
and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.
Trader Media Group
53
(c) Share based payments
Equity settled awards are valued at grant date, and the difference between the grant date fair value and the consideration paid by the employee
is charged as an expense in the income statement spread over the vesting period. The credit side of the entry is recorded in equity. Cash settled
awards are revalued at each reporting date with the fair value of the award charged to the profit and loss account over the vesting period and
the credit side of the entry recognised as a liability. Movements in provisions for bad leavers are taken through reserves.
Exceptional items
Significant non-recurring items of income and expense are disclosed in the income statement as “exceptional items”. Examples of items that
may give rise to disclosure as exceptional items include costs of restructuring and reorganisation of the business, corporate refinancing and
restructuring costs, gains on the early extinguishment of borrowings or impairments of intangible assets, property, plant and equipment, as
well as the reversal of such write downs or impairments, material disposals of property, plant and equipment and litigation settlements. A full
analysis of exceptional items is provided in note 4.
Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment
in which the entity operates (the functional currency). The consolidated financial statements are presented in sterling (£) which is the group’s
functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the income statement within administrative expenses.
(c) Group companies
The results and financial position of all group entities (none of which has the currency of a hyper-inflationary economy) that have a functional
currency other than sterling are translated into sterling as follows:
•assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
•income and expenses for each income statement are translated at average exchange rates; and
•all resulting exchange differences are recognised as a separate component of equity.
On the disposal of a foreign operation, the cumulative exchange differences that were recorded in equity are recognised in the income
statement as part of the gain or loss on sale.
Intangible assets
(a) Goodwill
Goodwill represents the excess cost of an acquisition over the fair value of the group’s share of the net identifiable assets of the acquired
subsidiary at the date of acquisition. In respect of acquisitions prior to 29 March 2004 goodwill is included on the basis of its deemed cost,
which represents the amount recorded under previous GAAP.
Goodwill is tested annually for impairment and is carried at cost less accumulated impairment losses. Impairment losses are charged to the
income statement and are not reversed. The gain or loss on the disposal of an entity includes the carrying amount of goodwill relating to
the entity sold.
Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash generating units
that are expected to benefit from the business combination in which the goodwill arose identified according to operating segment.
(b) Trademarks, trade names, technology and customer relationships
Separately acquired trademarks, trade names, technology and customer relationships are shown at historical cost. They have a finite useful life
and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight line method to allocate the cost over their
estimated useful lives of between 1 and 15 years.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate.
FIN
54
Trader Media Group
(c) Software
Acquired computer software is capitalised at cost, including any costs to bring it into use, and is carried at cost less accumulated amortisation.
Amortisation is calculated using the straight line method to allocate the cost over the estimated useful life of 3 to 5 years.
(d) Software and website development costs
Development costs that are directly attributable to the design and testing of identifiable and unique software products and websites controlled
by the group are recognised as intangible assets when the following criteria are met:
•it is technically feasible to complete the software product or website so that it will be available for use;
•management intends to complete the software product or website and use or sell it;
•there is an ability to use or sell the software product or website;
•it can be demonstrated how the software product or website will generate probable future economic benefits;
•adequate technical, financial and other resources to complete the development and to use or sell the software product or website are
available; and
•the expenditure attributable to the software product or website during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software product or website include employee and contractor costs.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred.
Development costs for software and websites are carried at cost less accumulated amortisation and are amortised over their useful lives not
exceeding five years at the point in which they come into use.
All property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses. Historical cost comprises
the purchase price of the asset and expenditure directly attributable to the acquisition of the item.
Freehold land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost less their
estimated residual values over the estimated useful lives as follows:
Land, buildings and leasehold improvements:
Freehold buildings
50 years
Leasehold land and buildings
life of lease
Leasehold improvements
life of lease
Motor vehicles
Plant and equipment
5 years
3 – 10 years
Assets in the course of construction are recorded within property, plant and equipment and are transferred to the appropriate classification
when complete and depreciated from the date they are brought into use.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. The carrying value of assets is
reviewed for impairment if events or changes in circumstances suggest that the carrying value may not be recoverable. Assets will be written
down to their recoverable amount, if lower than the carrying value, and the impairment is charged to the income statement.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the income statement
within administrative expenses.
Trader Media Group
55
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets
that are subject to amortisation and depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial
assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash
flows, the recoverable amount is determined for the cash generating unit to which the asset belongs.
Impairment losses recognised in respect of cash generating units are allocated first to reduce the carrying amount of any goodwill allocated to the
cash generating unit (or group of units) and then to reduce the carrying amount of other assets in the unit (or group of units) on a pro rata basis.
In respect of assets other than goodwill an impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Assets and liabilities (or disposal groups) held for sale
Assets and liabilities (or disposal groups) are classified as held for sale when their carrying amount is to be recovered principally through a sale
transaction and a sale is considered highly probable. On classification as held for sale, they are stated at the lower of carrying amount and fair
value less costs to sell. Impairment losses are included in the income statement, as are any gains and losses on subsequent re-measurement.
Financial assets
The group classifies its financial assets in the categories of loans and receivables and at fair value through profit or loss. The classification depends
on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are
included in current assets, except for maturities greater than 12 months after the balance sheet date which are classified as non-current assets.
The group’s loans and receivables comprise trade and other receivables and cash and cash equivalents in the balance sheet. Loans and
receivables are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.
Financial assets at fair value through the profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired
principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges.
Assets in this category are classified as current assets. Financial assets carried at fair value through the profit or loss are initially recognised at fair
value, and transaction costs are expensed in the income statement. They are subsequently re-measured to fair value and gains or losses arising
from changes in the fair value are recognised in the income statement in the period in which they arise.
The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is
impaired. A financial asset is impaired only if there is objective evidence of impairment as a result of one of more events that occurred after the
initial recognition of the asset and that this event has an impact on the estimated future cash flows of the financial asset that can be reliably
estimated. The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future
cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the
loss is recognised in the income statement. If, in a subsequent period, the amount of the impairment loss decreased and the decrease can be
related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is
credited to the income statement.
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the
recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
FIN
56
Trader Media Group
Derivative financial instruments and hedging
The group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational,
financing and investment activities. The group does not use derivative financial instruments for speculative purposes.
Derivatives are initially recognised at fair value on the contract date and are subsequently re-measured at their fair value. Changes in the fair
value of instruments that do not qualify for hedge accounting are recognised in the income statement as they arise.
The group documents at the inception of the transactions the relationship between the hedging instrument and the hedged item. The group
also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivative used in the hedging transactions is
highly effective in offsetting changes in the cash flows of the hedged item. The fair value of the derivative instrument used for hedging purposes
is disclosed in note 14. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the
hedged item is more than 12 months, and a current asset or liability when the remaining maturity of the hedged item is less than 12 months.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in other
comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within finance
costs. Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item affects the profit or loss.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less
provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the group will not
be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability
that the debtor will enter bankruptcy and the instigation of legal proceedings against the debtor are considered to be indicators that a trade
receivable is impaired.
Cash and cash equivalents include cash in hand, short term deposits held at call with banks and bank overdrafts. Bank overdrafts are shown
within borrowings in current liabilities on the balance sheet.
Trade payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred and are subsequently stated at amortised cost with any
difference between the proceeds (net of transaction costs) and the redemption value being recognised in the income statement over the period
of the borrowings using the effective interest method.
Finance and issue costs associated with the borrowings are charged to the income statement using the effective interest rate method from the
date of issue over the estimated life of the borrowings to which the costs relate.
The buy back of bank borrowings represents the discharge of the obligation to repay the debt. The difference between the carrying amount of
the financial liability extinguished and the consideration paid is recognised as an exceptional gain in the income statement, as it is a significant
non-recurring item.
Preference shares are treated as borrowings where in substance they have the features of debt instruments, otherwise they are classified as
equity. The related dividends are recognised as an interest expense for debt instruments and as dividends for equity instruments.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least
12 months after the balance sheet date.
Provisions
A provision is recognised when a present legal or constructive obligation exists at the balance sheet date as a result of a past event; it is probable
that an outflow of resources will be required to settle the obligation and a reliable estimate of that obligation can be made. Where there are a
number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations
as a whole. If the effect is material provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and where appropriate the risks specific to the obligation.
Trader Media Group
57
Contingent liabilities are not recognised but are disclosed unless an outflow of resources is remote. Contingent assets are not recognised but
are disclosed where an inflow of economic benefits is probable.
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments
made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight line basis over
the period of the lease.
Taxation
The tax expense for the period comprises current and deferred taxation. Tax is recognised in the income statement, except to the extent that
it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive
income or directly in equity, respectively.
Current taxation is provided at amounts expected to be paid (or recovered) calculated using the rates of tax and laws that have been enacted
or substantively enacted at the balance sheet date in the countries where the group operates and generates taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax base of assets and liabilities
and their carrying amounts in the consolidated financial statements. Deferred taxation is determined using tax rates and laws that have been
enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the
deferred tax liability is settled.
Deferred taxation assets are recognised only to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred taxation is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the
temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred taxation assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities
and when the deferred taxation assets and liabilities relate to taxes levied by the same taxation authority on either the taxable entity or different
taxable entities where there is an intention to settle the balance on a net basis.
Share capital
Ordinary shares are classified as equity. Preference shares are classified as liabilities where in substance they have features of debt instruments,
otherwise they are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction
from the proceeds.
2 Financial risk management
(a) Financial risk factors
In the course of its business the group is exposed to market risk (including foreign exchange risk and interest rate risk), credit risk, liquidity
risk, price risk and technology risk. The group’s overall risk management strategy is to minimise potential adverse effects on the financial
performance and net assets of the group. These policies are set and reviewed by senior finance management and all significant financing
transactions are authorised by the board of directors.
Where the company purchases its own equity share capital, the consideration paid is deducted from equity attributable to the company’s equity
holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received is included in equity
attributable to the company’s equity holders.
FIN
58
Trader Media Group
2 Financial risk management continued
Market risk
The group operates primarily in the UK automotive market place which has experienced a difficult trading environment over most of the last
few years. Consumer demand for vehicles and new car production have been low leading to a restricted supply of good quality used cars and
dealers cutting back on volumes of stock, thereby impacting on advertising spend. The group also holds a similar market position in Ireland
where the market has contracted and the economic factors may lead to further decline. The South African automotive advertising market
is in an earlier stage of transition from magazine to online advertising spend, and the online market is highly competitive with retention of
customers being key to a successful transition.
The group’s share of total advertising spend in the automotive market is under constant threat from new and incumbent competitors, especially
as the business is predominantly online where barriers to entry are lowest. These risks are mitigated by continual monitoring of overall market
conditions and investment in products and marketing to ensure the group not only delivers the best response to advertisers, but better value for
money than its competitors. Even in declining markets, this allows the group to maximise its return and maintain strong market share.
The group is exposed to the rapid pace of change in the online market. To mitigate this, the group has allocated extra investment and people to
the development of online services and products and continues to monitor its own and competitor performance closely. Consumer protection is
also crucial and the group continues to play a leading role in this area.
i) Foreign exchange risk
The group operates in overseas regions being Ireland and South Africa. Foreign currency denominated net assets of overseas operations are
not hedged as they represent a relatively small proportion of the group’s net assets. The group operates a dividend policy across these regions
ensuring any surplus cash is remitted to the UK thereby minimising the impact of exchange volatility. Forward currency contracts are entered
into when appropriate to eliminate exposures on this dividend income.
At 31 March 2013, if the Pound had weakened/strengthened by 20% against the Euro with all other variables held constant, post-tax profit
for the year would have been £0.0 million higher/£0.0 million lower (2012: £0.1 million higher/£0.1 million lower). There is no impact to other
elements of equity as a result of changes to the exchange rate with the Euro. There is no significant exposure to foreign exchange risk for the
group on amounts being held in South African Rand.
ii) Interest rate risk
The group’s interest rate risk arises from long term borrowings with the syndicated bank loan and shareholder loans subject to floating rates
of interest linked to LIBOR. The group manages its cash flow interest rate risk on the bank borrowings by using interest rate swaps to convert
a proportion of the debt from floating to fixed rates (note 14).
Under the interest rate swaps the group agrees with the other party to exchange on a monthly basis the difference between the fixed contract
rate and the floating rate interest amounts calculated by reference to the agreed notional amounts.
At 31 March 2013, if the interest rates affecting the group had varied as shown below with all other variables held constant, post-tax profit
for the year would have been higher by £4.2 million or lower by £26.4 million (2012: £1.9 million higher/£27.6 million lower). The continuance
of low global interest rates has had a positive impact on the interest accruing on the syndicated bank loans and shareholder loans (note 19).
The impact of variances in interest rates on closing cash balances would have been £3.4 million higher/£14.7 million lower (2012: £0.9 million
higher/£13.5 million lower).
Other components of equity would have been £0.0 million higher/£0.1 million lower (2012: £0.0 million higher/£0.1 million lower) as a result
of the increase/decrease in the fair value of the interest rate swap (note 14).
Interest rate
Potential
variance in
interest rate
2013
(basis points)
UK LIBOR
- 20 / + 300
Potential
variance in
interest rate
2012
(basis points)
- 20 / + 300
Trader Media Group
59
Credit risk
Credit risk arises from deposits with banks and financial institutions and the risk is minimised by dealing with only a limited range of financial
institutions with secure credit ratings (note 18).
Credit risk relating to trade receivables is managed on a local basis. Each entity is responsible for managing and analysing the credit risk for new
customers before standard payment terms and conditions are offered. With the slowdown in the automotive market place, dealer margins have
been placed under pressure and the risk to the group of non-payment of invoices increases. The bad debt risk also rises with customers who
provide financial services, for example vehicle loans, and are unable to obtain funding for their products. Policies and procedures exist to ensure
that existing customers have an appropriate credit history and a significant number of balances are prepaid or collected via direct debit. Sales to
private customers are primarily settled using major debit or credit cards which reduces the risk in this area. Overall the group considers that it is
not exposed to a significant amount of either customer credit or bad debt risk due to the diversified and fragmented nature of the customer
base. A single customer services team is in place in the UK to give the group focus on debt collection. The cost of bad debts remain at a low
1.2% of revenue (2012: 1.1%). The group does not consider its exposure to credit risk as high beyond the cost of bad debts.
Liquidity risk
Cash flow forecasting is performed centrally by group treasury. Rolling forecasts of the group’s liquidity requirements are monitored to ensure
it has sufficient cash to meet operational needs. Such forecasting takes into consideration the group’s debt financing plans and minimising the
need to carry significant external net debt over the medium term.
Surplus cash held by operating entities over and above the balance required for working capital management is invested centrally in interest
bearing current accounts and money market deposits with appropriate maturities or sufficient liquidity as required by the above mentioned
forecasts. At the balance sheet date the group held money market deposits of £104.5 million (2012: £32.0 million) that are expected to
generate cash inflows for managing liquidity risk.
The table below analyses the group’s financial liabilities and undrawn commitments into relevant maturity groupings based on the remaining
period at the balance sheet date to contractual maturity date. Derivative financial instruments are included in the analysis if their contractual
maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the contractual
undiscounted cash flows.
Borrowings
Trade payables
Undrawn revolving credit and other facilities
At 1 April 2012
Borrowings
Trade payables
Undrawn revolving credit and other facilities
Over
5 years
£m
–
1.4
71.4
–
–
0.7
–
3.5
1,193.8
–
–
31.5
–
–
–
–
Less than
1 year
£m
Between
1 and 2 years
£m
Between
2 and 5 years
£m
Over
5 years
£m
–
1.3
65.5
–
–
0.9
0.9
–
721.7
0.2
–
35.0
435.6
–
–
–
Derivative financial instruments comprise the interest rate swap used by the group to manage the interest rate profile.
Price risk
The group is exposed to commodity risk as a result of its operations. However given the size and nature of the group’s operations, the cost of
managing exposure to commodity risk exceeds any potential benefits. The directors will revisit the appropriateness of this policy should the
group’s operations change in the future. The group has no exposure to equity securities as it holds no significant listed or other equity
investments.
An internal procurement team continually reviews all significant contracts and renegotiates where applicable.
At 31 March 2013
Less than
Between
Between
1 year 1 and 2 years 2 and 5 years
£m
£m
£m
FIN
60
Trader Media Group
Technology risk
The group is exposed to technological risks to its websites which could manifest themselves in a variety of ways such as:
•Malicious intrusion for theft of data;
•Virus infection to cause disruption;
•Bogus advertisers using the site for criminal activities; and
•Attempts to harvest customer credit card data.
Through effective use of technology solutions and strict adherence to industry standards the group deploys tools and processes that
automatically intercept, identify and effectively mitigate the vast majority of the threats above. In order to provide the group with additional
assurance a small team of security experts are employed who are continually monitoring these activities outside the group to ensure new
known threats are mitigated before they attempt to approach our infrastructure. In addition the group has established external relationships
with acknowledged experts in this field to ensure where there is improved best practice we are ready to adopt it.
(b) Capital risk management
The directors consider the group’s capital to include its share capital and long term debt. The group’s objectives when managing capital are
to safeguard its ability to continue as a going concern. The risk that the leveraged nature of the group affects the future development and
going concern has been mitigated through the structure of its financing. Neither the cumulative irredeemable £1 preference shares nor the
shareholder loans require performance conditions to be met. Likewise the terms of the £985 million Senior Facilities Agreement (“SFA”) are
such that the borrower group is not required to adhere to performance related leverage or interest cover ratios or to restrict capital expenditure.
The margin payable on the syndicated bank loan interest is dependent on the consolidated leverage ratio of Trader Media Corporation (2003)
Limited and its subsidiaries and this is calculated and reviewed on a quarterly basis. This leverage ratio also determines whether mandatory
excess cash flow payments are required each year.
Whilst repayments can be made without penalty under the shareholder loan agreements and the SFA, there is no requirement to settle all
or part of these debt instruments earlier than their termination dates in 2016 for the shareholder loan and 2015 and 2017 under the SFA.
Restrictions do exist to limit the level of additional indebtedness incurred, the extent of dividends payable and other payments to shareholders
and there is a requirement to repay a proportion of any excess cash flow but these are not expected to materially impact the planned growth
of the group.
This structure, when taken in conjunction with the projected cash flows and undrawn revolving credit facility, is considered sufficiently flexible
to ensure that the group can continue to service its obligations as they fall due even if the group suffered a significant reduction in trading
performance. Over the last few years the group has utilised some of its excess cash to buy back its syndicated debt at below par to help
effectively manage its capital risk.
(c) Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
•Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
•Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) (level 2).
•Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The following table presents the group’s assets and liabilities that are measured at fair value:
Level 2
£m
Total
£m
Assets
Financial assets at fair value through profit and loss
0.6
0.6
Liabilities
Derivative financial instruments (used for hedging)
(2.1)
(2.1)
As at 31 March 2013
Trader Media Group
61
Level 2
£m
Total
£m
Assets
Financial assets at fair value through profit and loss
1.4
1.4
Liabilities
Derivative financial instruments (used for hedging)
(2.4)
(2.4)
As at 1 April 2012
Specific valuation techniques used to value financial instruments include:
•The fair values of the interest rate swaps (derivative financial instruments) are calculated at the present value of the estimated future cash flows.
•A specific contractual rate is used to determine the fair value of the financial asset at fair value through profit or loss.
3 Segmental information
Management has determined the operating segments based on the reports reviewed by its Chief Operating Decision Maker (the Executive
Committee) that are used to make strategic decisions. The segments are as detailed below:
•Digital UK – UK digital online classified automotive advertising principally through the multi-platform autotrader.co.uk website. In addition
other digital marketing services are provided to dealers and manufacturers.
•Magazines – classified automotive advertising principally in magazine titles in Great Britain and Ireland as follows: regional Auto Trader and
AdTrader publications and the national titles Top Marques, Truck and Plant Trader, Farmers Trader and Bike Trader. This segment also includes
the online elements of AdTrader.
•International – automotive classified advertising online and in magazines in South Africa and online automotive classified advertising in Ireland.
Digital UK and Magazines have been combined into the one reportable segment of UK Titles as they both have the following characteristics
with the only difference being the route to market:
•provide classified automotive advertising through photographs and adverts that have the same look and feel;
•sell within the same geographic markets and therefore operate in an economic climate with the same risks;
•sell to the same trade and private customers, through the same sales team; and
•use the same Trader branding.
The group disposed of its Italian subsidiary, Edizeta srl, during the previous year and it has been classified within discontinued operations in the
income statement and is excluded from the segmental information.
The Executive Committee evaluates the performance of the operating segments based on revenue and EBITDA (earnings before interest, tax,
depreciation and amortisation). The measurement basis excludes the effects of goodwill impairments and other exceptional items however
these items have been included separately in the segmental information.
UK Titles
£m
2013
International
£m
Total
£m
Total segment revenue
228.8
23.0
251.8
EBITDA
Depreciation and amortisation
Exceptional items: impairments
Exceptional items: restructuring
Segment operating profit
134.3
(15.7)
(0.9)
(8.7)
109.0
9.6
(0.5)
–
(0.3)
8.8
143.9
(16.2)
(0.9)
(9.0)
117.8
Segment assets
382.6
36.5
419.1
The segment information provided to the Executive Committee for the reportable segments is as follows:
FIN
62
Trader Media Group
3 Segmental information continued
UK Titles
£m
2012
International
£m
Total
£m
Total segment revenue
229.8
27.4
257.2
EBITDA
Depreciation and amortisation
Exceptional items: impairments
Exceptional items: restructuring
Segment operating profit
131.4
(13.7)
(18.2)
(4.5)
95.0
11.5
(0.5)
–
(0.1)
10.9
142.9
(14.2)
(18.2)
(4.6)
105.9
Segment assets
383.3
31.2
414.5
The revenue from external parties reported to the Executive Committee is measured in a manner consistent with that in the income statement.
Where costs are incurred by one segment on behalf of another, the costs are recharged.
A reconciliation of the total segment operating profit to the profit before tax and discontinued operations is provided as follows:
Total segment operating profit
Finance costs – net
Profit before tax and discontinued operations
2013
£m
2012
£m
117.8
(86.3)
31.5
105.9
(84.2)
21.7
Finance income and finance costs are not allocated to segments as this type of activity is driven by the central treasury function which manages
the cash and borrowings position of the group.
The Executive Committee do not review any balance sheet information by segment and as such only segment assets as required by IFRS 8 are
disclosed in the segmental information. Segment assets are presented in a manner consistent with that of the financial statements and are
allocated based on the operations of the segment and the physical location of the assets. Cash and cash equivalents and deferred tax assets are
excluded from the segments as these are managed and calculated centrally.
Reportable segments’ assets are reconciled to total assets per the consolidated balance sheet as follows:
Segment assets
Unallocated:
Deferred taxation assets
Total assets per the consolidated balance sheet
2013
£m
2012
£m
419.1
414.5
5.6
110.3
535.0
4.9
48.7
468.1
Trader Media Group
63
3 Segmental information continued
The group is domiciled in the UK and the following table details external sales by location of customers and non-current assets (excluding
deferred tax) by geographic area.
2013
£m
2012
£m
Revenue:
UK
Rest of world
Total
230.2
21.6
251.8
228.6
28.6
257.2
Non-current assets:
UK
Rest of world
Total
347.4
34.8
382.2
369.4
7.5
376.9
Due to the large number of customers the group serves, there are no individual customers whose revenue is material compared to the group’s
total revenue in either year.
Staff costs (note 5)*
Depreciation of property, plant and equipment (note 11)
Amortisation of intangibles (note 10)
Impairment charges (note 10 and 11)
Operating lease payments
Net foreign exchange losses
Marketing costs
Other cost of sales
IT and communication costs
Other expenses
Total cost of sales and administrative expenses
Exceptional items:
Impairment charges: goodwill (note 10)
Impairment charges: property, plant and equipment and software (note 10 and 11)
Restructuring of group operations:
– Digital
– Magazines
– International
Total exceptional items
2013
£m
2012
£m
56.8
2.3
13.9
0.9
3.9
–
14.0
13.4
8.4
20.4
134.0
57.2
2.3
11.9
18.2
2.9
0.2
11.3
16.1
9.2
22.0
151.3
0.7
0.2
18.2
–
6.1
2.6
0.3
9.9
3.3
1.2
0.1
22.8
Restructuring of group operations relates to redundancy and other costs concerning the closure of the Magazines division, the reorganisation
of the sales and service functions in the UK and other key reorganisations and relocations. In addition the group incurred costs relating to
changes made to the corporate structure in the current and previous year and costs associated with completed and proposed acquisitions.
* revised prior year comparative to reflect capitalised salary costs (see note 5).
4 Operating profit/(loss)
Expenses by nature including exceptional items:
FIN
64
Trader Media Group
4 Operating profit/(loss) continued
Services provided by the company’s auditor
During the year the group (including overseas subsidiaries) obtained the following services from the company’s auditors:
Fees payable for the audit of the company and consolidated financial statements
Fees payable for other services:
– The audit of the company’s subsidiaries pursuant to legislation
– Tax advisory services
– Services relating to completed and proposed corporate finance transactions
– Other non-audit services
Total
2013
£m
2012
£m
0.1
0.1
0.2
0.1
0.3
0.2
0.9
0.2
0.1
1.0
–
1.4
2013
£m
2012
£m
56.6
5.6
1.9
–
64.1
55.4
5.8
1.9
(0.1)
63.0
5 Employees and directors
Wages and salaries
Social security costs
Pension costs – defined contribution schemes (note 23)
Pension costs – defined benefit scheme (note 23)
Total
Within restructuring of group operations in note 4 is £4.1 million (2012: £1.5 million) of redundancy costs which has been included in wages
and salaries. Staff costs in note 4 excludes employee costs of £7.3 million (2012: £5.8 million) capitalised as part of developed software.
The average monthly number of employees (including executive directors) employed by the group was as follows:
Full time equivalent
2013
2012
Number
Number
Administration
Sales and service
Technology
Total
498
614
256
1,368
541
727
246
1,514
2013
£m
2012
£m
1.1
0.8
0.1
2.0
1.3
–
0.1
1.4
6 Directors and key management remuneration
Directors’ emoluments
Aggregate directors’ emoluments
Compensation for loss of office
Pension contributions
Total
2 directors (2012: 1) were members of the group’s defined contribution scheme.
All the above remuneration was paid by Trader Publishing Limited.
Trader Media Group
65
6 Directors and key management remuneration continued
The remuneration of the highest paid director was as follows:
Aggregate emoluments
Pension contributions
Total
2013
£m
2012
£m
0.3
0.8
–
1.1
0.8
–
–
0.8
Zillah Byng-Maddick, Sean Glithero and John King received remuneration in respect of their services as directors of the company and subsidiary
undertakings. Ed Williams received remuneration in respect of his services as a director of the company.
Andrew Miller, Darren Singer, Tom Hall and Irina Hemmers received no remuneration in respect of their services as directors of the company.
Guardian Media Group plc and Apax Partners received a total of £0.1 million (2012: £0.1 million) for the provision of directors’ services to the
group (note 31).
Zillah Byng-Maddick, Sean Glithero, John King and Ed Williams hold shares in the company. Tom Hall and Irina Hemmers each have an indirect
economic interest in the shares of the company held by funds managed by Apax Partners.
Key management compensation
Key management comprises the members of the Executive Committee.
The aggregate emoluments of all key management (including directors) were as follows:
Salaries and short term employee benefits
Post employment benefits
Total
2013
£m
2012
£m
2.9
1.1
0.3
4.3
3.9
–
0.2
4.1
2013
£m
2012
£m
Revenue
Expenses
Profit before tax of discontinued operations
Taxation charge
Profit after tax of discontinued operations
–
–
–
–
–
3.2
(2.8)
0.4
(0.1)
0.3
Profit on disposal of discontinued operations
–
0.2
Profit for the year from discontinued operations
–
0.5
The profit on sale of subsidiary undertakings relates to the sale of wholly owned subsidiaries and business units as detailed below:
Date disposed
Edizeta srl
7 November 2011
2013
Net
proceeds
£m
2013
Gain
on sale
£m
2012
Net
proceeds
£m
2012
Gain
on sale
£m
–
–
1.4
0.2
7 Discontinued operations
The analysis of the result of discontinued operations is as follows:
FIN
66
Trader Media Group
8 Finance income and finance costs
Finance income
On bank balances
Exceptional: net gain on debt buy back
Total
Finance costs
On bank loans and overdrafts
On shareholders’ loans
Net losses on derivative financial instruments
Ineffectiveness on derivatives designated as cash flow hedges
Other interest payable
Exceptional: debt issue costs
Total
2013
£m
2012
£m
0.3
0.3
0.6
0.5
4.5
5.0
30.2
55.1
1.5
–
0.1
–
86.9
29.0
48.7
3.1
0.8
0.1
7.5
89.2
At various times during the financial year, the group purchased part of the debt issued by Trader Media Corporation Limited, a subsidiary
undertaking. The purchase of this debt, while an arms length transaction with parties external to the group, was at a discount to the debt’s
nominal value and resulted in a profit to the group of £0.3 million (2012: £4.5 million). Transaction costs associated with the purchase of this
debt were £nil (2012: £0.4 million).
Debt issue costs incurred during the previous year relate to the extinguishment of the Syndicated Term Loan and subsequent refinancing
(note 19).
9 Income tax expense
2013
£m
2012
£m
Current taxation
UK corporation taxation
Foreign taxation
Relief for overseas taxation
Adjustments in respect of prior years
Total current taxation
10.9
2.4
(0.3)
(0.3)
12.7
11.9
3.4
–
0.5
15.8
Deferred taxation
Origination and reversal of temporary differences
Effect of rate changes on deferred taxation
Total deferred taxation
(1.9)
0.2
0.2
(1.5)
(0.9)
(0.5)
0.3
(1.1)
Total taxation charge
11.2
14.7
Trader Media Group
67
9 Income tax expense continued
The differences between the total taxation shown above and the amount calculated by applying the standard rate of UK corporation taxation
to the profit before taxation on continuing operations are as follows:
2013
£m
2012
£m
Profit before taxation
31.5
21.7
Tax on profit on ordinary activities at the standard
UK corporation tax rate of 24% (2012: 26%)
Expenses not deductible for taxation purposes
Adjustments in respect of foreign tax rates
Other temporary differences
Effect of rate changes on deferred taxation
Total taxation charge
7.6
3.3
0.2
–
0.2
(0.1)
11.2
5.6
8.4
(0.1)
0.5
0.3
–
14.7
The group earns its profits primarily in the UK, therefore the rate used for taxation is the standard rate for UK corporation tax.
The group’s overseas tax rates are higher than those in the UK, primarily because the profits earned in South Africa are taxed at a rate of 28%.
The tax charge relating to components of other comprehensive income is as follows:
Note
Actuarial gain/(loss) on post employment
benefit obligations
Cash flow hedges
IFRS 2 – share based payments (charge)/
credit
Other comprehensive income/(loss)
23
26
Before tax
£m
2013
Tax charge
£m
After tax
£m
Before tax
£m
2012
Tax credit/
(charge)
£m
After tax
£m
0.6
–
(0.2)
–
0.4
–
(0.9)
0.9
0.2
(0.3)
(0.7)
0.6
(0.2)
(0.3)
0.1
–
–
(0.2)
(0.2)
(0.3)
(0.1)
0.1
(1.6)
(1.5)
–
–
(0.1)
0.1
(1.6)
(1.6)
Note
Deferred taxation
22
2013
£m
2012
£m
(0.2)
(0.1)
The income tax charged directly to equity during the year is as follows:
FIN
68
Trader Media Group
10 Intangible assets
Goodwill
£m
Cost
At 3 April 2011
Additions
Disposals
Reclassification
Exchange differences
At 1 April 2012
Additions
Disposals
At 31 March 2013
Software &
website
development
costs
£m
Customer
relationships
£m
Technology
£m
Trade
names and
trademarks
£m
Total
£m
1,087.6
–
(22.2)
–
(0.4)
1,065.0
3.9
–
1,068.9
37.4
11.4
(0.4)
0.5
–
48.9
13.9
(2.6)
60.2
7.5
–
(0.3)
–
(0.1)
7.1
–
(0.6)
6.5
1.9
–
–
–
–
1.9
3.7
–
5.6
2.1
–
(0.2)
–
–
1.9
–
–
1.9
1,136.5
11.4
(23.1)
0.5
(0.5)
1,124.8
21.5
(3.2)
1,143.1
Accumulated amortisation and impairments
At 3 April 2011
Amortisation charge
Impairment
Disposals
At 1 April 2012
Amortisation charge
Impairment
Disposals
At 31 March 2013
725.4
–
18.2
(20.9)
722.7
–
0.7
–
723.4
17.6
10.7
–
(0.2)
28.1
12.2
0.1
(2.6)
37.8
4.4
0.8
–
(0.2)
5.0
0.8
–
(0.6)
5.2
1.4
0.2
–
–
1.6
0.7
–
–
2.3
0.6
0.2
–
(0.2)
0.6
0.2
–
–
0.8
749.4
11.9
18.2
(21.5)
758.0
13.9
0.8
(3.2)
769.5
Net book value at 31 March 2013
Net book value at 1 April 2012
345.5
342.3
22.4
20.8
1.3
2.1
3.3
0.3
1.1
1.3
373.6
366.8
Within software and website development costs is £7.0 million (2012: £1.2 million) of assets under construction. Amortisation of these assets
will commence when they are brought into use which is expected to be within the next year.
On 22 June 2012 the group acquired 100% of the ordinary share capital of Delta Point Associates Limited for cash consideration of £6.8 million.
Goodwill of £3.9 million resulted on the acquisition as follows:
Non-current assets
Intangible assets
Net current assets
Deferred income tax liability (note 22)
Fair value of net assets acquired
Goodwill
Total consideration
Book value
£m
Fair value
adjustment
£m
Fair value
acquired
£m
–
3.7
3.7
0.1
0.1
–
–
0.1
0.1
–
(0.9)
(0.9)
2.9
3.9
6.8
Trader Media Group
69
10 Intangible assets continued
The amortisation charge of £13.9 million (2012: £11.9 million) has been charged in administrative expenses in the income statement.
The software and website development costs impairment of £0.1 million relates to certain assets in the Magazines business.
Goodwill is allocated to the group’s cash generating units (“CGUs”) identified according to the operating segment.
An operating segment-level summary of the goodwill allocation is presented below.
UK Titles
International
2013
£m
2012
£m
318.2
27.3
345.5
315.1
27.2
342.3
An impairment loss of £0.7 million (2012: £18.2 million) was charged in the year after an impairment review. The impairment loss was
measured by reference to the calculated value in use of each CGU based on pre-tax cash flow projections in the most recent three year plan
approved by the directors. Cash flows beyond the three year period were extrapolated using the growth rates shown below, which have been
applied to the individual CGUs. Although the UK growth rate used of 2.7% exceeds the current UK long-term average growth rate, the
directors consider the higher rate to be appropriate for the digital market in which the group operates. The growth rates which have been
applied to the CGUs are as follows:
UK Titles
International
2013
%
2012
%
0.0 to 2.7
0.0 to 2.5
0.0 to 0.5
0.0 to 0.5
Goodwill has been allocated to CGUs using an earnings before interest, tax, depreciation and amortisation weighting except where new CGUs
arise as a result of an acquisition, in which case the goodwill arising on that acquisition is allocated to the CGU. Accordingly, CGUs relate to
separate business operations. The pre-tax discount rates which have been applied in determining value in use for individual CGUs for potential
impairments are as follows:
UK Titles
International
2013
%
2012
%
13.2 to 18.5
16.5 to 18.3
13.7 to 18.0
17.0 to 18.3
There are no reasonable possible changes to these assumptions that would result in any further impairments being recorded in the year.
Impairment charges arose in the UK Titles segment of £0.7 million (2012: £18.2 million).
FIN
70
Trader Media Group
11 Property, plant and equipment
Assets Land, buildings
under and leasehold
construction improvements
£m
£m
Plant and
equipment
£m
Motor
vehicles
£m
Total
£m
Cost
At 3 April 2011
Additions
Disposals
Reclassification
At 1 April 2012
Additions
Disposals
Transfer to disposal group held for sale (note 17)
At 31 March 2013
0.5
–
–
(0.5)
–
–
–
–
–
–
–
6.1
–
(1.8)
–
–
4.3
–
(0.2)
(0.6)
–
3.5
18.9
2.5
(1.0)
–
(0.2)
20.2
1.9
(3.8)
–
(0.1)
18.2
0.1
–
–
–
–
0.1
–
–
–
–
0.1
25.6
2.5
(2.8)
(0.5)
(0.2)
24.6
1.9
(4.0)
(0.6)
(0.1)
21.8
Accumulated depreciation
At 3 April 2011
Charge for the year
Disposals
At 1 April 2012
Charge for the year
Impairment
Transfer to disposal group held for sale (note 17)
Disposals
At 31 March 2013
–
–
–
–
–
–
–
–
–
–
2.5
0.2
(0.2)
2.5
0.2
0.1
(0.4)
(0.2)
–
2.2
15.3
2.1
(0.9)
16.5
2.1
–
–
(3.8)
(0.1)
14.7
0.1
–
–
0.1
–
–
–
–
–
0.1
17.9
2.3
(1.1)
19.1
2.3
0.1
(0.4)
(4.0)
(0.1)
17.0
Net book value at 31 March 2013
Net book value at 1 April 2012
–
1.3
1.8
3.5
3.7
–
–
4.8
5.5
Depreciation expense of £0.3 million (2012: £0.3 million) has been charged in cost of sales and £2.0 million (2012: £2.0 million) has been
charged in administrative expenses in continuing operations.
An impairment of £0.1 million (2012: £nil) has been recorded against certain assets in the Magazines business.
12 Investments
Shares in other undertakings
Group
£m
Cost and net book value
At beginning and end of year
The group holds a 22.7% interest in the preferred share capital of IAUTOS Company Limited. IAUTOS Company Limited is an intermediate
holding company through which are held trading companies incorporated in the People’s Republic of China.
3.2
Trader Media Group
71
12 Investments continued
Subsidiary undertakings
The principal trading and holding subsidiaries of the group are as follows:
Country of
registration or
incorporation
Principal
Activity
The Car Trader (Pty) Limited
Trader Finance (2009) Limited
Trader Media Corporation Limited
Trader Publishing Limited
Delta Point Associates Limited
Webzone Limited
South Africa
England and Wales
England and Wales
England and Wales
England and Wales
Republic of Ireland
Classified advertising
Financing company
Holding company
Data and intelligence
Class of
shares held
Percentage
owned
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
Delta Point Associates Limited was acquired on 22 June 2012 (note 10) and the trade and assets of the company were divisionalised into Trader
Publishing Limited on 28 March 2013, at which point the company became dormant.
The directors consider the value of the investments to be supported by their underlying assets and the discounted present value of their future
cash flows.
A guarantee exists in respect of the three wholly owned subsidiaries that are incorporated in the Republic of Ireland (Webzone Limited, Trader
Media Ireland and Trader Media (Holdings) Ireland Limited) and consolidated within these financial statements. They have availed themselves
of an exemption from filing their individual financial statements as set out in Section 17 of the Companies (Amendment) Act, 1986, Ireland.
2013
Financial assets as per balance sheet:
Total
2013
Financial liabilities as per balance sheet:
Borrowings
Total
2012
Financial assets as per balance sheet:
Total
Loans and
receivables
£m
Fair value
through profit
and loss
£m
Non financial
assets
£m
Total
£m
–
29.1
110.3
139.4
0.6
–
–
0.6
–
5.8
–
5.8
0.6
34.9
110.3
145.8
Other
financial
liabilities
£m
Derivatives
used for
hedging
£m
Non financial
liabilities
£m
Total
£m
(1,193.8)
(71.4)
–
(1,265.2)
–
–
(2.1)
(2.1)
–
(8.4)
–
(8.4)
(1,193.8)
(79.8)
(2.1)
(1,275.7)
Loans and
receivables
£m
Fair value
through profit
and loss
£m
Non financial
assets
£m
Total
£m
–
28.8
48.7
77.5
1.4
–
–
1.4
–
7.0
–
7.0
1.4
35.8
48.7
85.9
13 Financial instruments by category
The accounting policies for financial instruments have been applied to the line items below:
FIN
72
Trader Media Group
13 Financial instruments by category continued
2012
Financial liabilities as per balance sheet:
Borrowings
Total
Other
financial
liabilities
£m
(1,157.3)
(66.4)
–
(1,223.7)
Derivatives
used for
hedging
£m
–
–
(2.4)
(2.4)
Non financial
liabilities
£m
Total
£m
–
(8.9)
–
(8.9)
(1,157.3)
(75.3)
(2.4)
(1,235.0)
14 Derivative financial instruments
2013
Interest rate swap – cash flow hedge
Total non-current portion
2012
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
–
–
2.1
2.1
–
–
2.4
2.4
The fair values of derivative interest rate contracts are estimated by discounting expected future cash flows using current market interest rates
and yield curves over the remaining term of the instrument.
The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than
12 months, and as a current asset or liability, if the maturity of the hedged item is less than 12 months.
The ineffective portion recognised in the income statement that arises from the cash flow hedges amounts to a loss of £nil (2012: £0.8 million).
The notional principal amount of the outstanding interest rate swap contracts at 31 March 2013 was £165.0 million (2012: £190.0 million).
The fixed interest rate was 1.35% (2012: 1.35%) and the floating rate is based on 1 month LIBOR (2012: 1 month LIBOR). The gain or loss
recognised in equity on the interest rate swap contracts as of 31 March 2013 will be released to the income statement over the remaining life
of the instrument.
15 Financial assets at fair value through profit or loss
Customer list
2013
£m
2012
£m
0.6
1.4
Changes in fair values of customer lists are presented within operating activities and are recorded in administrative expenses in the income
statement.
The customer list represents the right to purchase the customer list and is valued based on the number of customers in place at the end of the
financial year, valued at a contractual rate.
16 Trade and other receivables
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Amounts owed by related undertakings (note 31)
Other receivables
Prepayments and accrued income
Total
2013
£m
2012
£m
32.0
(3.2)
28.8
0.1
0.2
5.8
34.9
30.8
(2.8)
28.0
0.2
0.6
7.0
35.8
Trader Media Group
73
16 Trade and other receivables continued
As of 31 March 2013, trade receivables of £22.7 million (2012: £22.4 million) were fully performing.
As of 31 March 2013 trade receivables of £5.7 million (2012: £5.2 million) were past due but not impaired. These relate to customers for whom
there is no history of default but market factors are causing late payment. The ageing analysis of these trade receivables is as follows:
Up to 30 days
Between 31 and 60 days
Between 61 and 90 days
Over 90 days
Total
2013
£m
2012
£m
5.0
0.7
–
–
5.7
4.1
0.9
0.1
0.1
5.2
Trade receivables are only classified as impaired when the debt meets one or more of a specific list of criteria. Otherwise all debts are deemed to
be collectible. These criteria are:
•The debt has been handed over to lawyers for legal action;
•A final letter of demand has been sent to the customer;
•The customer has gone into liquidation or receivership;
•The customer’s cheque has not cleared.
As at 31 March 2013 trade receivables of £3.6 million (2012: £3.2 million) were impaired. It was assessed that a portion of the receivables is
expected to be recovered.
Movements on the provision for impairment of trade receivables are as follows:
At beginning of year
Provision for receivables impairment
Receivables written off during the year as uncollectible
Total
2013
£m
2012
£m
2.8
3.0
(2.6)
3.2
1.7
2.6
(1.5)
2.8
The creation and release of the provision for impaired receivables is included in administrative expenses in the income statement.
The other classes within trade and other receivables do not contain impaired assets, except where indicated.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable included within trade and other
receivables. The group does not hold any collateral as security. Due to the large number of customers the group services, the credit quality of
trade receivables is not deemed a significant risk.
UK pound
Euro
South African rand
Total
2013
£m
2012
£m
29.9
1.0
1.1
32.0
28.5
1.3
1.0
30.8
The carrying amount of the group’s trade receivables is denominated in the following currencies:
FIN
74
Trader Media Group
17 Assets of disposal group classified as held for sale
A property formerly used by the Wiltshire printing division was placed for sale at its open market value in 2008 and an additional property no
longer used by the Magazines business was placed for sale during the year.
Non-current assets held for sale:
2013
£m
2012
£m
2.0
1.8
2013
£m
2012
£m
5.8
104.5
110.3
16.7
32.0
48.7
18 Cash and cash equivalents
Cash at bank and in hand
Short-term bank deposits
Total
The group’s credit risk on cash and cash equivalents is limited as the counterparties are well established banks with high credit ratings.
19 Borrowings
Non-current
Syndicated bank loans
Series A, B and C shareholder loan notes
Total
2013
£m
2012
£m
672.3
521.5
1,193.8
685.8
471.5
1,157.3
2013
£m
2012
£m
1,193.8
–
1,193.8
721.7
435.6
1,157.3
Syndicated bank loans and shareholder loan notes are repayable as follows:
Two to five years
More than five years
Total
The carrying amounts of borrowings approximate their fair values.
On 23 March 2007, the subsidiary undertakings Trader Media Corporation (2003) Limited and Trader Media Corporation Limited, entered into
an £835 million Senior Facilities Agreement. This agreement was amended and restated on 29 May 2007 and the first utilisation was made
on 8 June 2007 when £800 million was drawn to repay in full the previous bank borrowings and fund the financial restructuring of the group.
On 20 June 2011 the group refinanced and raised an additional £150 million of debt from a new term loan B3 which will expire in December
2017. As well as this additional funding, the maturities of part of the new £985 million Senior Facilities Agreement have been extended by
24 months to June 2017.
Interest is charged at LIBOR plus a margin of between 2% and 4.75% (2012: 2% and 5%) depending on the consolidated leverage ratio of
Trader Media Corporation (2003) Limited and its subsidiaries.
Trader Media Group
75
19 Borrowings continued
During the year a subsidiary undertaking purchased £11.4 million (2012: £48.4 million) of the syndicated bank loans. The purchase of this debt,
while an arms length transaction from parties external to the group, was at a discount to the debt’s nominal value and a gain of £0.3 million
(2012: £4.5 million) after transaction costs has been recognised in the income statement (note 8).
A £35.0 million revolving credit and other facilities are available but undrawn at the balance sheet date. If utilised it would incur interest at LIBOR
plus a margin of between 1.25% and 3% (2012: 1.25% and 3%).
The group has elected to hedge a proportion of the interest obligation relating to the bank borrowings and details are set out in note 14.
On 8 June 2007 the company issued to GMG (TMG) Limited:
•Unsecured Series A shareholder loan notes falling due 7 June 2016 with consideration of a dividend in specie of £283.5 million; and
•204 million cumulative irredeemable £1 preference shares with a nominal value of £204.0 million through the reclassification of existing
ordinary shares with a nominal value of £52.0 million and the bonus issue out of profit and loss and capital contribution reserves of
£152.0 million.
The preferences shares were initially recorded at their fair value on the date of issue of £280.0 million. All 204 million of the preference shares
are authorised, allotted, called up and fully paid. Since June 2010 the preference shares have been classified as equity (note 24).
On 8 June 2007 GMG (TMG) Limited sold 49.9% of its interest in the ordinary shares, preference shares and Series A shareholder loan notes to
Crystal A Holdco Sàrl and Crystal B Holdco Sàrl. Unsecured Series B shareholder loan notes totalling £6.5 million falling due 7 June 2016 were
issued to GMG (TMG) Limited, Crystal A Holdco Sàrl and Crystal B Holdco Sàrl for cash consideration.
On 26 March 2012, £0.5 million of the Series A shareholder loan notes were repaid to the shareholders. On the same day Series C shareholder
loan notes of £0.5 million were issued to Ed Williams, a non-executive director of the company. The Series C shareholder loan notes have the
same terms and interest rate as the Series A and Series B shareholder loan notes.
Interest is charged at LIBOR plus a margin of 9% on the Series A, B and C shareholder loan notes. Interest is payable annually in arrears on the
anniversary of the issue date however the interest has been rolled up into the principal every year since issue.
The exposure of the group’s borrowings (excluding debt issue costs) to interest rate changes and the contractual repricing dates at the balance
sheet date are as follows:
1 month or less
1 to 3 months
Total
2013
£m
2012
£m
672.3
521.5
1,193.8
685.8
471.5
1,157.3
2013
£m
2012
£m
7.0
0.1
7.9
0.5
64.3
79.8
–
79.8
6.1
–
8.4
0.5
59.4
74.4
0.9
75.3
Trade payables
Amount owed to related undertakings (note 31)
Other taxes and social security
Other payables
Accruals and deferred income
Current liabilities
Non-current liabilities: trade payables
Total
20 Trade and other payables
FIN
76
Trader Media Group
21 Provisions for other liabilities and charges
Current
At 1 April 2012
Charged to the income statement
Utilised in the year
Released in the year
Reclassification from non-current
At 31 March 2013
Non-current
At 1 April 2012
Charged to the income statement
Charged to other comprehensive income
Reclassification to current
At 31 March 2013
Onerous
lease and
dilapidations
provision
£m
0.5
0.2
(0.3)
–
0.4
0.8
Onerous
lease and
dilapidations
provision
£m
1.8
0.3
–
(0.4)
1.7
Restructuring
provision
£m
0.7
3.3
(0.5)
(0.1)
–
3.4
Holiday pay
provision
£m
0.4
0.4
–
(0.4)
–
0.4
Restructuring
provision
£m
Share based
payments
and employee
incentive
provision
£m
–
0.3
–
–
0.3
2.1
0.6
0.2
–
2.9
Total
£m
1.6
3.9
(0.8)
(0.5)
0.4
4.6
Total
£m
3.9
1.2
0.2
(0.4)
4.9
The onerous lease provision has provided for future payments under property leases in respect of unoccupied properties no longer suitable for
the group’s use. Dilapidations have been provided for on all United Kingdom and Ireland properties based on the estimate of costs at the end
of the lease. The restructuring provision relates to redundancy and other costs concerning the closure of the Magazines division, other key
reorganisations in the UK and costs associated with completed and proposed corporate finance transactions.
The holiday pay provision relates to liabilities for statutory holiday pay in South Africa, and a provision in relation to the UK and Ireland
operations for leave days accrued and not yet taken at the end of the financial year. These provisions are expected to reverse in the short term
and have not been discounted.
22 Deferred taxation
Deferred taxation assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities
and when the deferred taxation relates to the same fiscal authorities.
The recoverability of deferred tax assets and liabilities are as follows:
2013
£m
2012
£m
Deferred tax asset to be recovered after more than 12 months
Deferred tax asset to be recovered within 12 months
Total deferred tax assets
5.5
0.1
5.6
4.6
0.3
4.9
Deferred tax liability to be recovered after more than 12 months
Deferred tax liability to be recovered within 12 months
Total deferred tax liabilities
1.0
0.3
1.3
0.7
0.3
1.0
Trader Media Group
77
22 Deferred taxation continued
The movement in deferred taxation assets and liabilities during the year, without taking into consideration the offsetting of balances within the
same tax jurisdiction, is as follows:
Deferred tax assets
At 3 April 2011
Credited/(charged) to the income statement
On disposal of subsidiary undertaking
Charged directly to equity
At 1 April 2012
Credited/(charged) to the income statement
Charged directly to equity
At 31 March 2013
Deferred tax liabilities
At 3 April 2011
Credited to the income statement
At 1 April 2012
Acquisition of subsidiary (note 10)
Credited to the income statement
At 31 March 2013
Accelerated
capital
allowances
£m
3.9
(0.1)
–
–
3.8
1.0
–
4.8
Accelerated
capital
allowances
£m
–
–
–
–
–
–
Other
temporary
differences
£m
1.0
0.4
(0.2)
(0.1)
1.1
(0.1)
(0.2)
0.8
Other
temporary
differences
£m
1.8
(0.8)
1.0
0.9
(0.6)
1.3
Total
£m
4.9
0.3
(0.2)
(0.1)
4.9
0.9
(0.2)
5.6
Total
£m
1.8
(0.8)
1.0
0.9
(0.6)
1.3
Deferred taxation liabilities are not recognised on unremitted earnings of overseas group companies as the dividends by which these are
remitted are expected to be tax exempt. Unremitted earnings totalled £3.4 million (2012: £3.6 million).
During the year, the relevant deferred tax balances have been re-measured as a result of a change in the UK main corporation tax rate to 23%
which will be effective from 1 April 2013.
Further reductions to the UK corporation tax rate were announced in the March 2013 Budget. The changes, which are expected to be enacted
separately each year, propose to reduce the rate by 2% to 21% on 1 April 2014 and a further 1% to 20% on 1 April 2015. The changes had
not been substantively enacted at the balance sheet date and are therefore not recognised in these financial statements.
The pension contributions to the group defined contribution scheme for the year amounted to £1.9 million (2012: £1.9 million). There are
£0.3 million (2012: £0.2 million) pension contributions outstanding relating to the group defined contribution scheme.
The defined benefit pension scheme provides benefits based on final pensionable pay and this scheme was closed to new joiners with effect
from May 2002. New employees after that date have been offered membership of the group’s defined contribution scheme.
The most recent actuarial valuation was performed as at 1 May 2012 and updated to 31 March 2013 by a qualified independent actuary.
23 Retirement benefit obligations
Across the UK and overseas the group operates several pension schemes. All, except one, are defined contribution schemes. Within the UK,
all pension schemes set up prior to 2001 have been closed to new members and only one defined contribution scheme is now open to
new employees.
FIN
78
Trader Media Group
23 Retirement benefit obligations continued
The amounts recognised in the balance sheet are determined as follows:
Present value of defined benefit obligation – fully funded
Fair value of plan assets
Effect of surplus cap
Net liability recognised in the balance sheet
2013
£m
2012
£m
15.8
(16.3)
0.5
–
15.2
(14.4)
–
0.8
2013
£m
2012
£m
0.7
(0.7)
–
0.7
(0.8)
(0.1)
2013
£m
2012
£m
1.1
(0.5)
0.6
(0.9)
–
(0.9)
The surplus of £0.5 million has not been recognised as an asset as it is not deemed to be recoverable by the group.
The amounts recognised in the income statement within administrative expenses (note 5) are as follows:
Interest cost
Expected return on plan assets
Total
The amounts recognised in the statement of other comprehensive income are as follows:
Actuarial gains/(losses) recognised in the year (before tax)
Reversal of surplus cap
Total
The cumulative actuarial losses recognised in the statement of other comprehensive income (before tax) amount to £1.3 million
(2012: £2.4 million).
The movement in the defined benefit obligation over the year is as follows:
Interest cost
Actuarial losses
Benefits paid
At end of year
2013
£m
2012
£m
15.2
0.7
0.4
(0.5)
15.8
13.9
0.7
0.8
(0.2)
15.2
2013
£m
2012
£m
14.4
0.7
1.5
0.2
(0.5)
16.3
14.0
0.8
(0.2)
–
(0.2)
14.4
The movement in the fair value of plan assets over the year is as follows:
Expected return on plan assets
Actuarial gains/(losses)
Employer contribution
Benefits paid
At end of year
The actual return on plan assets was a gain of £2.2 million (2012: £0.6 million).
Trader Media Group
79
23 Retirement benefit obligations continued
The principal actuarial assumptions used were as follows:
2013
2012
Discount rate
Rate of increase in deferred pensions
Inflation rate
4.40%
2.85%
3.65%
4.90%
2.60%
3.40%
Expected return on plan assets:
Equities
Property
Corporate bonds
Gilts
Cash
5.50%
5.50%
4.40%
3.50%
3.50%
5.30%
5.30%
4.90%
3.30%
3.30%
The group has assumed that mortality will be in line with nationally published mortality table S1NA related to members’ years of birth with a long
term rate of improvement of 1.5% per annum. These tables translate into an average life expectancy for a pensioner retiring at age 65 as follows:
2013
2012
Male
Female
Male
Female
Years
Years
Years
Years
88
90
Member age 65 (current life expectancy)
Member age 45 (life expectancy at age 65)
90
93
88
90
91
93
The group does not expect to contribute to this defined benefit scheme in the next financial year.
The scheme’s assets are comprised as follows:
2013
£m
9.3
6.2
0.8
16.3
Equities
Corporate bonds
Real estate
Total
%
56.9
38.3
4.8
100.0
2012
£m
9.6
4.8
–
14.4
%
66.7
33.3
–
100.0
The expected return on assets is determined by considering the current level of expected returns on risk free investments (primarily government
bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for
future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop
the expected long-term rate of return on assets assumption for the portfolio.
2013
£m
2012
£m
2011
£m
2010
£m
Present value of defined benefit obligation
Fair value of plan assets
(Surplus)/deficit
15.8
(16.3)
(0.5)
15.2
(14.4)
0.8
13.9
(14.0)
(0.1)
12.6
(13.0)
(0.4)
9.7
(9.5)
0.2
Experience adjustments on scheme liabilities
Experience adjustments on scheme assets
1.2
1.5
(0.2)
(0.2)
(0.1)
0.1
0.3
3.3
–
(3.2)
2009
£m
FIN
80
Trader Media Group
24 Shares and share premium account
Allotted, called up and fully paid
501,000 A ordinary shares of 10p each (2012: 501,000)
487,755 B ordinary shares of 10p each (2012: 488,796)
9,949 C ordinary shares of 10p each (2012: 10,204)
1,296 D ordinary shares of 10p each (2012: nil)
11,245 deferred B ordinary shares of 10p each (2012: 10,204)
430,000,000 deferred shares of £0.0001 each (2012: 430,000,000)
177,287,048 cumulative irredeemable preference shares
of £1 each (2012: 177,287,048)
Total
2013
Share
capital
£m
2013
Share
premium
account
£m
2012
Share
capital
£m
2012
Share
premium
account
£m
0.1
–
–
–
–
–
–
–
1.2
0.3
–
–
0.1
–
–
–
–
–
–
–
1.2
–
–
–
177.4
177.5
–
1.5
177.3
177.4
–
1.2
During the year the company issued nil (2012: 80) of the 10p ordinary C shares for cash consideration (note 29). These were issued at a
premium of £99.90 per share, all of which had been received by the year end. The group repurchased 255 (2012: 968) 10p ordinary C shares
for aggregate consideration of £1. These shares are within those issued above.
During the year the company issued 1,296 (2012: nil) of the 10p ordinary D shares for cash consideration (note 29). These were issued at
a premium of £194.90 per share, all of which had been received by the year end.
Simultaneously to these C and D share issues and repurchases, the company converted 1,041 10p ordinary B shares into 10p deferred B ordinary
shares. The deferred shares have no voting rights and hence do not impact control of the company.
Dividends on the preference shares are charged at 0.05% of their fair value at their date of issue and rolled up into the principal twice a year
in December and June.
During the previous year, £73.0 million of the rolled up interest on the preference shares was paid to the shareholders and £26.6 million
preference shares were repurchased for total consideration of £36.6 million and subsequently cancelled. £26.6 million relating to the
cancellation of the nominal value of preference share capital has led to the creation of a capital redemption reserve (note 26). The premium
on repurchase of £10.0 million was recorded against preference shares and the £26.6 million nominal value was recorded against profit
and loss reserves. Simultaneously £10.8 million of the rolled up interest was waived.
Preference share capital was reclassified in a prior year from liabilities to equity and the fair value uplift previously recognised on issue was
reversed and transferred through reserves (note 26).
Trader Media Group
81
25 Retained deficit
£m
At 3 April 2011
Profit for the year
Actuarial loss on post employment benefit obligations, net of tax
IFRS2 – share based payments credit
Dividends paid to equity holders of the company
Transfer to other reserve – premium on preference shares repurchased
Payment of preference share capital
Preference dividend waived
At 1 April 2012
Profit for the year
Actuarial gain on post employment benefit obligations, net of tax
IFRS2 – share based payments charge
Preference dividends payable for the year
At 31 March 2013
(945.3)
7.5
(0.7)
0.6
0.1
(100.4)
10.0
(36.6)
10.8
(1,054.0)
20.3
0.4
(0.2)
(0.1)
(1,033.6)
26 Other reserves
Other
reserve
£m
At 3 April 2011
Currency translation differences on foreign currency net investments
Currency translation differences on sale of foreign subsidiary
Transfer to capital redemption reserve
Transfer of fair value uplift on preference shares
Premium on preference shares repurchased
At 1 April 2012
Currency translation differences on foreign currency net investments
At 31 March 2013
–
–
–
–
76.0
(10.0)
66.0
–
66.0
Capital
redemption
reserve
£m
–
–
–
26.6
–
–
26.6
–
26.6
Translation
reserve
£m
3.9
(1.0)
(0.6)
–
–
–
2.3
(0.3)
2.0
The capital redemption reserve has been created to maintain capital for the nominal value of preference shares.
27 Dividends
Ordinary dividends of £nil (2012: £100.4 million) were paid in respect of the year ended 31 March 2013. Rolled up preference dividends and
preference share capital, including premium, of £nil (2012: £109.6 million) were also paid during the year (note 24).
The other reserve relates to the premium payable on redemption of the preference shares.
FIN
82
Trader Media Group
28 Cash generated from operations
Profit before taxation including discontinued operations
Adjustments for:
Depreciation
Amortisation
Goodwill and other impairment charges
Loss on sale of businesses
Increase in retirement benefit obligations
Fair value loss on customer list asset
Finance costs
Finance income
Gain on debt buy back
Foreign exchange losses
Changes in working capital (excluding the effects of acquisitions,
disposals and exchange differences on consolidation):
Inventories
Provisions
Cash generated from operations
2013
£m
2012
£m
31.5
22.3
2.3
13.9
0.9
–
–
0.8
86.9
(0.3)
(0.3)
–
2.3
11.9
18.2
(0.2)
(0.1)
0.8
89.2
(0.5)
(4.5)
0.2
–
0.5
1.3
3.5
141.0
0.2
(0.1)
(1.1)
0.3
138.9
The cash flows of discontinued operations are as follows:
2013
£m
Operating cash flows
Financing cash flows
Total cash flows
–
–
–
2012
£m
0.5
(0.6)
(0.1)
29 Share based payments
A number of the group’s senior managers have been invited to become shareholders in the company and during the year nil (2012: 80)
ordinary C shares and 1,296 (2012: nil) ordinary D shares were issued for cash consideration at fair value.
The Articles of Association of the company define “Good Leavers” and “Bad Leavers” where a Bad Leaver is an employee-shareholder leaving
the business because of voluntary resignation, summary dismissal or breach of restrictive covenants within 12 months of leaving. All other
employee-shareholders leaving the business are Good Leavers.
On leaving the business, the Articles require that C and D shareholders sell their shares to such persons as may be nominated by the Board
of Directors. A Bad Leaver receives the lower of fair value and the cost for which the shares were acquired. A Good Leaver receives a value
determined as follows:
(a) if the Good Leaver leaves within eighteen months of acquiring the shares, they will receive the lower of fair value and the cost for which the
shares were acquired;
(b) if the Good Leaver leaves between eighteen months and four years of acquiring the shares, they will receive the lower of fair value and cost
between 62.5% and 0% of their shares, determined on a straight line basis by reference to the period of months before leaving. They will
receive fair value for the remainder of their shares;
(c) if the Good Leaver leaves after four years from acquiring the shares, they will receive fair value for their total shareholding.
Trader Media Group
83
29 Share based payment continued
During the year, the group has repurchased shares from 1 leaver (2012: 5). This repurchase is considered to be cash settled. The remaining
shares are deemed to be equity settled and the shares are deemed to have vested on issue.
No expense was recognised in the year as the consideration received for the ordinary D shares (2012: C shares) was equal to or greater than the
fair value of the shares.
30 Commitments and contingencies
Capital expenditure contracted for at the end of the reporting year but not yet incurred is as follows:
Intangible assets
Total
2013
£m
2012
£m
0.1
–
0.1
–
0.5
0.5
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Land and buildings
2013
2012
£m
£m
No later than 1 year
Later than 1 year and no later than 5 years
Total
2.4
3.8
6.2
2.3
5.9
8.2
Other
2013
£m
2012
£m
1.2
1.2
2.4
1.2
2.3
3.5
31 Related party transactions
The group is jointly owned by GMG (TMG) Limited, Crystal A Holdco Sàrl and Crystal B Holdco Sàrl. These companies have made shareholder
loans to, and hold preference shares in, the group. Ed Williams, a director of the company, has also made a shareholder loan to and holds
preference shares in the group. The balances at the end of the year including accrued interest, dividends payable on these debt and equity
instruments and the premium on the preference shares are disclosed below:
2012
£m
Shareholder loans and accrued interest
GMG (TMG) Limited
Crystal A Holdco Sàrl
Crystal B Holdco Sàrl
Ed Williams
(284.1)
(107.5)
(175.4)
(0.5)
(256.4)
(97.1)
(158.4)
(0.5)
Preference shares and accrued dividends
GMG (TMG) Limited
Ed Williams
(122.0)
(46.1)
(75.1)
(0.2)
(121.9)
(46.1)
(75.1)
(0.2)
Interest charged to the income statement
GMG (TMG) Limited
Ed Williams
(27.6)
(10.4)
(17.0)
(0.1)
(24.4)
(9.2)
(15.1)
–
2013
£m
FIN
84
Trader Media Group
31 Related party transactions continued
Guardian Media Group plc and Apax Partners received £0.1 million for the provision of directors’ services to the group (2012: £0.1 million).
The balance outstanding at the end of the year was £nil (2012: £nil).
During the course of the year certain group companies have traded with companies in which Guardian Media Group plc and Apax have an
interest. Trading was in the normal course of operations and on an arm’s length basis. Transactions during the year and balances outstanding
at the year end are as follows:
2013
£m
Guardian Media Group plc and subsidiary undertakings
Recharges from – salaries and other costs
2012
£m
(0.1)
–
0.1
–
2013
£m
2012
£m
Apax
Sales – advertising and other
Purchases
Recharges (from)/to – salaries and other costs
–
–
(0.1)
0.2
(0.5)
0.2
Net balance outstanding at the year end
(0.1)
0.2
Net balance outstanding at the year end
Transactions with directors and key management
Loans were made in a previous year to certain directors and key management on an arms’ length basis. The balance outstanding at the
year end was £16,791 (2012: £53,958).
During the year the group repurchased 255 (2012: 669) ordinary C shares of 10p each held by senior management, for aggregate cash
consideration of £1 (note 29).
During the year the group issued 926 (2012: nil) ordinary D shares of 10p each to certain directors and members of key management for
aggregate cash consideration of £0.2 million (note 29).
The following key management who have served during the year hold ordinary C and ordinary D shares:
Zillah Byng-Maddick
Sean Glithero
John King
Other key management
2013
No of C and
D shares
2012
No of C and
D shares
1,000
300
3,000
4,261
1,000
230
3,000
3,660
32 Ultimate controlling parties
The company is jointly controlled by Guardian Media Group plc (indirectly holding 50.1% of the ordinary shares), Crystal A TopCo Sàrl (indirectly
holding 18.5% of the ordinary shares) and Crystal B TopCo Sàrl (indirectly holding 30.19% of the ordinary shares). Crystal A TopCo Sàrl and
Crystal B TopCo Sàrl (companies operated by Apax Partners, a private equity firm) are incorporated under the laws of Luxembourg and
Guardian Media Group plc is incorporated in Great Britain.
Trader Media Group
85
to the members of Trader Media Group Limited
We have audited the parent company financial statements of Trader
Media Group Limited for the year ended 31 March 2013 which
comprise the balance sheet and the related notes. The financial
reporting framework that has been applied in their preparation is
applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice).
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities
set out on page 44 the directors are responsible for the preparation of
the parent company financial statements and for being satisfied that
they give a true and fair view. Our responsibility is to audit and express
an opinion on the parent company financial statements in accordance
with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing
Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for
the company’s members as a body in accordance with Chapter 3 of
Part 16 of the Companies Act 2006 and for no other purpose. We do
not, in giving these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed by our
prior consent in writing.
Opinion on financial statements
In our opinion the parent company financial statements:
•give a true and fair view of the state of the company’s affairs as at
31 March 2013;
•have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
•have been prepared in accordance with the requirements of the
Companies Act 2006.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion the information given in the Directors’ report for the
financial year for which the parent company financial statements are
prepared is consistent with the parent company financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if,
in our opinion:
•adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
•the parent company financial statements are not in agreement with
the accounting records and returns; or
•certain disclosures of directors’ remuneration specified by law are not
made; or
•we have not received all the information and explanations we
require for our audit.
10 June 2013
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the
parent company’s circumstances and have been consistently applied
Other matter
and adequately disclosed; the reasonableness of significant accounting We have reported separately on the group financial statements of
estimates made by the directors; and the overall presentation of the
Trader Media Group Limited for the year ended 31 March 2013.
financial statements. In addition, we read all the financial and nonfinancial information in the Annual report to identify material
inconsistencies with the audited financial statements. If we become
aware of any apparent material misstatements or inconsistencies we
consider the implications for our report.
Alan Kinnear (Senior Statutory Auditor)
For and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Reading
FIN
86
Trader Media Group
Company balance sheet
As at 31 March 2013
Note
2013
£m
2012
£m
4
997.9
997.9
Current assets
Debtors
Cash at bank and in hand
5
23.9
0.3
24.2
11.9
–
11.9
Creditors: Amounts falling due within one year
6
(46.1)
(42.1)
Net current liabilities
(21.9)
(30.2)
Total assets less current liabilities
976.0
967.7
(521.5)
(471.5)
454.5
496.2
177.5
1.5
26.6
68.5
180.4
454.5
177.4
1.2
26.6
68.5
222.5
496.2
Fixed assets
Investments
Creditors: Amounts falling due after more than one year
7
Net assets
Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Revaluation reserve
Profit and loss account
Total equity shareholders’ funds
8
9
9
9
9
10
The financial statements on pages 86 to 91 were approved by the board of directors on 10 June 2013 and were signed on its behalf by:
S Glithero
Director
Trader Media Group
87
Notes to the financial statements
1 Accounting policies
Basis of preparation
These financial statements are prepared on the going concern basis, under the historical cost convention, in accordance with the Companies
Act 2006 and applicable accounting standards in the United Kingdom. The directors consider this is appropriate based on current financial
projections and facilities of the consolidated group to continue in operation for the forseeable future.
The principal accounting policies are set out below all of which have been applied consistently throughout the year and the preceding year
except for the change to the investments policy. The company changed its accounting policy for investments in the previous year from one
of historic cost to revaluation once every three years. This change means the company’s investments are carried at an amount more closely
related to their market value.
In accordance with Section 408 of the Companies Act 2006, the company is exempt from the requirement to present its own profit and loss
account. The result of the company for the financial year is disclosed in note 9.
Cash flow statement
The cash flows of the company are included in the consolidated statements of the group, which are publicly available. Consequently the
company has taken advantage of the exemption available under paragraph 5 of Financial Reporting Standard 1 Cash Flow Statements
(revised 1996) from preparing a cash flow statement.
Debt
Debt is initially stated at the amount of the net proceeds after deduction of issue costs. The carrying amount is increased by the interest cost in
respect of the accounting period and reduced by payments made in the year. Interest and issue costs associated with debt are charged to the
profit and loss account at a constant rate over the period from the date of issue to the point where there is a genuine commercial possibility
that the commercial life of the instrument will expire.
Preference shares are treated as debt where in substance they have the features of debt instruments, otherwise they are classified as equity.
The related dividends are recognised as an interest expense for debt instruments and as dividends for equity instruments.
Investments
Fixed asset investments are shown at revalued cost less any provision for impairment. Dividends received are credited to the profit and loss
account in the period in which they are approved by shareholders.
The directors have a policy of revaluing investments every 3 years. Where a revaluation occurs, the amounts are taken to a revaluation reserve.
Annually, the directors consider whether any events or circumstances have occurred that could indicate that the carrying amount of fixed asset
investments may not be recoverable. If such circumstances do exist, a full impairment review is undertaken to establish whether the carrying
amount exceeds the higher of net realisable value or value in use. If this is the case, an impairment charge is recorded to reduce the carrying
value of the related investment.
The company is exempt from the requirements to disclose details of other related party transactions as these are disclosed in the consolidated
financial statements of the group.
Taxation
UK corporation tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or
substantially enacted by the balance sheet date.
Related party transactions
Under the provisions of Financial Reporting Standards 8 Related Party Disclosures, the company is exempt from the requirement to disclose
details of related party transactions with entities that are part of Trader Media Group Limited group.
FIN
88
Trader Media Group
Notes to the financial statements continued
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where transactions
or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred on the balance sheet date.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all evidence available, it can be regarded
as more likely than not that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future
reversal of underlying timing differences can be deducted.
Deferred tax is measured at the average rates that are expected to apply in the periods in which the timing differences are expected to reverse
based on the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on an
undiscounted basis.
Share based payments
Equity settled awards are valued at grant date, and the difference between the grant date fair value and the consideration paid by the employee
is charged as an expense in the profit and loss account spread over the vesting period. The credit side of the entry is recorded in equity. Cash
settled awards are revalued at each reporting date with the fair value of the award charged to the profit and loss account over the vesting
period and the credit side of the entry recognised as liability.
Where awards are granted to employees of subsidiary companies, instead of a charge being recognised as an expense in the company’s
individual financial statements, it is debited to investments as the award represents a further investment in the company’s subsidiaries.
2 Employee information and directors remuneration
The average number of persons (excluding directors) employed during the year was nil (2012: nil). As such, no staff costs arose during either year.
Director’s remuneration is disclosed in the consolidated financial statements of Trader Media Group Limited.
The remuneration of the directors was paid by Trader Publishing Limited and not recharged. The allocation of this remuneration in relation to
their services as directors of the company is £0.2 million (2012: £0.1 million).
3 Services provided by the company’s auditor
Fees payable for the audit of the company and consolidated financial statements are £0.1 million (2012: £0.1 million).
4 Fixed asset investments
Shares in
subsidiary
undertakings
£m
Cost/revalued cost
1,208.1
Impairment
210.2
Net book value at beginning and end of year
997.9
Trader Media Group
89
4 Fixed asset investments continued
The company owns 100% of the ordinary share capital of Trader Media Group (2003) Limited, a holding company registered in England
and Wales.
The company holds the following principal subsidiaries through its interest in Trader Media Group (2003) Limited:
Country of registration
or incorporation
Principal
Activity
Class of
shares held
Percentage
owned
The Car Trader (Pty) Limited
Trader Finance (2009) Limited
Trader Media Corporation Limited
Trader Publishing Limited
Delta Point Associates Limited
Webzone Limited
South Africa
England and Wales
England and Wales
England and Wales
England and Wales
Republic of Ireland
Financing
Holding company
Data and intelligence
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
Delta Point Associates Limited was acquired on 22 June 2012 and the trade and assets were divisionalised into Trader Publishing Limited on
28 March 2013, at which point the company became dormant.
The directors consider the value of the investments to be supported by their underlying assets and the discounted present value of their future
cash flows.
5 Debtors
Amounts owed by group undertakings
2013
£m
2012
£m
23.9
11.9
Amounts owed by group undertakings are subordinated, unsecured, non-interest bearing and have no fixed repayment date.
6 Creditors: Amounts falling due within one year
Amounts owed to group undertakings
Accruals
Total
2013
£m
2012
£m
–
46.1
46.1
1.2
40.9
42.1
2013
£m
2012
£m
521.5
471.5
Amounts owed to group undertakings are unsecured, non-interest bearing and are repayable on demand.
Series A, B and C Shareholder loan notes
On 8 June 2007, the company issued to GMG (TMG) Limited:
•Unsecured Series A Shareholder loan notes falling due 7 June 2016 with consideration of a dividend in specie of £283.5 million; and
•204 million cumulative irredeemable £1 preference shares with a nominal value of £204.0 million through the reclassification of existing ordinary
shares with a nominal value of £52.0 million and the bonus issue out of profit and loss and capital contribution reserves of £152.0 million.
The preference shares were initially recorded at their nominal value. The fair value of the preference shares at the date of issue was £280.0
million. All 204 million of the preference shares are authorised, allotted, called up and fully paid. Since June 2010 the preference shares have
been reclassified as equity (note 8).
7 Creditors: Amounts falling due after more than one year
FIN
90
Trader Media Group
Notes to the financial statements continued
7 Creditors: Amounts falling due after more than one year continued
On the same day GMG (TMG) Limited sold 49.9% of its interest in the ordinary shares, preference shares and Series A Shareholder loan notes
to Crystal A Holdco Sàrl and Crystal B Holdco Sàrl. Unsecured Series B Shareholder loan notes totalling £6.5 million falling due 7 June 2016
were issued to GMG (TMG) Limited, Crystal A Holdco Sàrl and Crystal B Holdco Sàrl for cash consideration.
On 23 March 2011, £0.5 million of the Series A shareholder loan notes were repaid to the shareholders. On the same day Series C shareholder
loan notes of £0.5 million were issued to Ed Williams, a non-executive director of the group. The Series C shareholder loan notes have the same
terms and interest rate as the Series A and Series B shareholder loan notes.
Interest is charged at LIBOR plus a margin of 9% on the Series A, Series B and Series C shareholder loan notes. Interest is payable annually in
arrears on the anniversary of the issue date however the interest has been rolled up into the principal every year since issue.
8 Called up share capital
Allotted, called-up and fully-paid
501,000 A ordinary shares of 10p each (2012: 501,000)
487,755 B ordinary shares of 10p each (2012: 488,796)
9,949 C ordinary shares of 10p each (2012: 10,204)
1,296 D ordinary shares of 10p each (2012: nil)
11,245 deferred B ordinary shares of 10p each (2012: 10,204)
430,000,000 deferred shares of £0.0001 each (2012: 430,000,000)
177,287,048 cumulative irredeemable preference share of £1 each (2012: 177,287,048)
Total
2013
£m
2012
£m
0.1
–
–
–
–
–
177.4
177.5
0.1
–
–
–
–
–
177.3
177.4
During the year the company issued nil (2012: 80) of the 10p ordinary C shares for cash consideration. These were issued at a premium of
£99.90 per share, all of which had been received by the year end. The group repurchased 255 (2012: 968) 10p ordinary C shares for aggregate
consideration of £1. These shares are within those issued above.
During the year the company issued 1,296 (2012: nil) of the 10p ordinary D shares for cash consideration. These were issued at a premium of
£194.90 per share, all of which had been received by the year end.
Simultaneously to these C and D share issues and repurchases, the company converted 1,041 10p ordinary B shares into 10p deferred B ordinary
shares. The deferred shares have no voting rights and hence do not impact control of the company.
Dividends on the preference shares are charged at 0.05% of their fair value at their date of issue and rolled up into the principal twice a year in
December and June. During the previous year, £73.0 million of the rolled up interest on the preference shares was paid to the shareholders and
£26.6 million preference shares were repurchased for total consideration of £36.6 million and subsequently cancelled. £26.6 million relating to
the cancellation of the nominal value of preference share capital has led to the creation of a capital redemption reserve (note 9). The premium
on repurchase of £10.0 million was recorded against profit and loss reserves together with the nominal value of the preference shares.
Simultaneously £10.8 million of the rolled up interest was waived.
9 Reserves
Premium on ordinary shares issued
Loss for the financial year
At end of year
Capital
redemption
reserve
£m
Revaluation
reserve
£m
Share
premium
account
£m
26.6
–
–
26.6
68.5
–
–
68.5
1.2
0.3
–
1.5
The capital redemption reserve has been created to maintain capital for the nominal value of preference shares.
Profit and
loss account
£m
222.5
–
(42.1)
180.4
Trader Media Group
91
10 Reconciliation of movements in total equity shareholders’ funds
2013
£m
Opening total equity shareholders’ funds
Revaluation and impairment of fixed asset investment
Premium on ordinary shares issued
Bonus issue of deferred shares
Reduction in value of deferred shares
(Loss) / profit for the financial year
Dividend paid
Preference share capital and dividend paid
Preference share dividend rolled up
Closing total equity shareholders’ funds
496.2
–
0.3
–
–
(42.1)
–
–
0.1
454.5
2012
£m
46.5
498.5
–
(430.0)
430.0
161.1
(100.4)
(109.6)
0.1
496.2
11 Share based payments
A number of the group’s senior managers have been invited to become shareholders in the company and during the year nil (2012: 80)
ordinary C shares and 1,296 (2012: nil) ordinary D shares were issued for cash consideration at fair value.
The Articles of Association of the company define “Good Leavers” and “Bad Leavers” where a Bad Leaver is an employee-shareholder leaving
the business because of voluntary resignation, summary dismissal or breach of restrictive covenants within 12 months of leaving. All other
employee-shareholders leaving the business are Good Leavers.
On leaving the business, the Articles require that C and D shareholders sell their shares to such persons as may be nominated by the Board
of Directors. A Bad Leaver receives the lower of fair value and the cost for which the shares were acquired. A Good Leaver receives a value
determined as follows:
(a) if the Good Leaver leaves within eighteen months of acquiring the shares, they will receive the lower of fair value and the cost for which the
shares were acquired;
(b) if the Good Leaver leaves between eighteen months and four years of acquiring the shares, they will receive the lower of fair value and cost
between 62.5% and 0% of their shares, determined on a straight line basis by reference to the period of months before leaving. They will
receive fair value for the remainder of their shares;
(c) if the Good Leaver leaves after four years from acquiring the shares, they will receive fair value for their total shareholding.
During the year, the company has repurchased shares from 1 leaver (2012: 5). This repurchase is considered to be cash settled as the value paid
for the shares was less than or equal to fair value. The remaining shares are deemed to be equity settled and the shares are deemed to have
vested on issue.
No expense was recognised in the year as the consideration received for the ordinary D shares (2012: C shares) was equal to or greater than the
fair value of the shares.
FIN
92
Trader Media Group
Notes
Trader Media Group is at the heart of the
UK motor trade. Our brands are constantly
evolving, and represent the leading digital
automotive marketplace.
We empower both buyers and sellers, driving
benefits for customers and consumers alike.
OV
BR
Overview
01 How we performed
02 The private buyer’s story
04 The independent dealer’s story
06 The franchise dealer’s story
08 The private seller’s story
10 We’ve been innovating for more than 35 years...
12...our brand vision is to be the most valuable
companion for buying and selling vehicles...
14...and our products have evolved to reflect
this strategy.
16 A deep understanding of our markets
18 Chairman’s statement
Business review
20
22
28
30
32
34
36
Operating review
Key performance indicators
Financial review
Principal risks and uncertainties
Corporate social responsibility
GO
FIN
Governance
38
40
42
44
45
Executive Committee
Directors’ report
Financial statements
46
47
48
49
50
51
Consolidated statement of comprehensive income
Company financial statements
85 Independent auditors’ report
86 Company balance sheet
87 Notes to the financial statements
You can view our
2013 annual report
online at
tradermedia
group.com
The cover and pages 1 to 40 are printed on paper made from virgin wood
fibre with pulp which is bleached using a mixture of Total Chlorine Free and
Elemental Chlorine Free processes. Pages 41 to 92 are printed on paper
made from 100% de-inked post consumer waste. Both papers are
certified by the Forest Stewardship Council, which supports the responsible
use of forest resources. The printer and paper mills are both accredited
with ISO14001, the environmental management system.
Photography by Edward Tyler.
Designed and produced by The College www.the-college.com
Telephone +44 (0)20 8544 7000
www.tradermediagroup.com
Annual report and financial statements 2013 Trader Media Group
Trader Media Group
Hartfield House
41-47 Hartfield Road
Wimbledon
London SW19 3RQ
Driving benefits
for customers
and consumers
Customers
Consumers

Trader Media Group Annual Report 2012-13

Transcription

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