1. business and industrial
2. company
3. annual report

Trader Media Group
3rd and 4th Floor
41-47 Hartfield Road
Wimbledon
London SW19 3RQ
Telephone +44 (0)20 8544 7000
www.tradermediagroup.com
Annual report and financial statements 2012 Trader Media Group
Annual report and financial statements 2012
Driving Innovation
through data
and peoplE
You can view our 2012
annual report online at
tradermediagroup.com
Overview
01
02
04
06
08
10
12
14
16
How we performed
Leading digital
What we’ve done with our data
Using data responsibly
Our people
What we’re planning on doing
A deep understanding of our markets
What keeps us in front
Chairman’s statement
Business review
18
20
24
26
28
30
32
34
36
Year of achievement
Operating review
Goodwood motor show
Segmental commentary
Q&A with the Chief Executive Officer
Key performance indicators
Financial review
Principal risks and uncertainties
Corporate social responsibility
Against the economic backdrop,
the group has had another
successful year with strong digital
growth in the UK driving revenue
growth and margin improvements.
This can be seen by the 10%
EBITDA growth the group has
achieved over last year.
Governance
38 Executive Committee
40 Corporate governance
42 Directors’ report
44Statement of directors’ responsibilities
45 Independent auditors’ report
Financial statements
46 Consolidated income statement
47Consolidated statement
of comprehensive income
48 Consolidated balance sheet
49Consolidated statement of changes
in equity
50 Consolidated cash flow statement
51Notes to the consolidated financial
statements
Company financial statements
86
87
88
Independent auditors’ report
Company balance sheet
Notes to the financial statements
Note: car images are for information purposes only.
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.
Designed and produced by The College www.the-college.com
Trader Media Group
how we performed
Financial highlights
Operational highlights
Revenue
Digital UK revenue
Stock of vehicles on website
(continuing operations) £ million
£ million
(average through the year) ‘000
233.7
254.4
257.2
182.8
202.0
344
367
380
2010
2011
2012
UK
International
2010
Overview
147.9
2011
2012
2010
2011
2012
2012
2012
2012
The group’s revenue has grown 1% over
last year which is a fantastic achievement
in the economic environment.
The Digital division has driven revenue
growth of 11%. Behind this is the group’s
strategy of continued investment in its
market-leading website, autotrader.co.uk
and generating growth through the new car,
RAZSOR and mobile products.
The group has also grown the average stock
of vehicles held on autotrader.co.uk,
up 4% over last year showing the group’s
resilience despite the tough economy.
EBITDA
Covenant net debt
(continuing operations) £ million
(defined on page 30) £ million
+1%
111.1
2010
129.8
2011
+11%
142.9
2012
605.7
UK
International
2010
+4%
637.1
511.2
2011
2012
2012
2012
EBITDA has grown by 10% year-on-year.
With revenue growth at 1%, this has been
driven by an improved margin and focus
on the group’s cost-base.
Operating cash conversion (cash generated
from operations before tax over EBITDA)
remained strong at 90% (2011: 103%).
+10%
+25%
External net debt has increased following the
successful refinancing during the year when
an additional £150 million was raised.
Annual report and financial statements 2012 01
Trader Media Group
leading digital
We’re a leader in the digital world and
our brands are available on every platform.
10m
Unique users per month (WEBSITE)
autotrader.co.uk is the UK’s leading motoring website with unique users of up to
10 million per month. With an average of 833,000,000 p
age views per month
we offer the UK’s leading online route to market and the largest audience for used
vehicle advertising.
90%
DEALER PENETRATION
Serving the online, print and mobile markets, we help our consumers
buy and sell vehicles on multiple platforms. It’s no wonder that the
vast majority of UK dealers choose Auto Trader.
602,000
Our New Car marketplace reached
602,000 unique users in its first year.
02 Annual report and financial statements 2012
Trader Media Group
2.2m
Unique users per month (Mobile)
Increasingly, buyers and sellers come together on mobile platforms
– up from 0.4 million in January 2010 to 2.2 million in January 2012.
(Source: Omniture)
non-car
Growth of online revenue
year-on-year.
5,000
Over
websites hosted
Our expertise in the automotive industry means we can provide high
quality websites to dealers of all sizes using cutting edge search engine
optimisation tools to drive response.
70,000
Friends
We have a well-defined social media strategy,
directing high levels of traffic to Auto Trader
from Facebook, Twitter and Open Web.
380,000
Average stock of vehicles listed
each month.
Annual report and financial statements 2012 03
Overview
+43%
Trader Media Group
What WE’VE DONE
WITH OUR DATA
We’ve been using our data to build a resilient and innovative
business – a market leading digital marketplace for the
automotive industry which consistently delivers results.
>400,000
LEADS GENERATED FOR
DEALERS EACH MONTH
RAZSOR
EMPOWERING DEALERS
RAZSOR provides dealers with
manageable car dealer marketing
packages created specifically for the
automotive industry.
Built upon extensive consumer, dealer
and competitor research, RAZSOR
websites help dealers sell more cars by
generating and converting leads.
All of the cost-effective web-build
packages offer simple, effective design
aimed at increasing sales and boosting
profitability through greater stock
visibility across search engines and
improved online conversion rates.
RAZSOR websites are powered by
Auto Trader and work alongside the
dealer’s presence on autotrader.co.uk.
This allows potential buyers to click
through to the dealer site from the
originating advertisement on Auto
Trader, automatically seeing relevant
content and ensuring that buyers
obtain relevant information to increase
lead generation.
The Auto Trader
used car price
index helps
provide additional
insight into the
used car market
for buyers and
sellers alike.”
Tim Peake
Group Strategy Director
04 Annual report and financial statements 2012
Trader Media Group
AUTO TRADER
PRICE INDEX
The Index highlights opportunities to improve UK
dealers’ performance, pinpointing sectors of the
used car market which offer profits and even price
increases in an otherwise squeezed British economy.
PULSE
REPORTS
PULSE is a regular report that
provides a snapshot of a dealer’s
response from Auto Trader
advertising in the previous month.
It can be used to highlight
opportunities for the dealer to
increase lead generation by using
data on advert response through
the internet, mobile, vehicle
pricing and stock turnover.
9,500
DEALERS
The Dealer Portal is an Auto Trader tool
which provides dealers with online access
to a range of products and services that
help them manage and maintain their
stock on both autotrader.co.uk and their
dealer website.
Annual report and financial statements 2012 05
Overview
In August 2011, Auto Trader launched its new
Quarterly Price Index which monitors the
movement in advertised prices for second hand
cars on autotrader.co.uk. The report has been
designed to help dealers compete in a busy
marketplace and to keep ahead of the market
conditions.
Trader Media Group
USING DATA RESPONSIBLY
Our people have been using our data to empower both buyers
and sellers and to add value to our business – and they will
continue to do so. However we use our data in the future you
can be sure we will continue to use it responsibly.
Empowering
buyers
• Stock volumes – Simply put, we have more vehicle stock
than anybody else. Our range of vehicles to suit all needs
gives unparalleled choice to the buyer.
• Price comparison – This volume of stock gives a good
yardstick for buyers to use when comparing vehicles and
making a purchase.
• Owner reviews – With over 35,000 owner reviews on
autotrader.co.uk, buyers can get independent opinions
on their potential purchases.
>35,000
owner reviews
Empowering
sellers
•P
rice Index – The Auto Trader Price Index was launched in
August 2011 and equips sellers with data to make better
informed decisions about what type of stock to sell.
• Pulse reports – Help sellers decide which Auto Trader products
they can use to give them the most effective response.
•D
ealer Portal – Gives dealers online access to all information
relating to their Auto Trader relationship, be it reporting,
invoicing or product information, at their fingertips.
06 Annual report and financial statements 2012
Responsible
Use of data
• Security – We are founding members of industry forum VSTAG.co.uk
that focuses on reducing online crime. We also work directly with the
National Fraud Intelligence Bureau (“NFIB”) and the Metropolitan police.
• Support – We offer buying and selling advice to consumers and have
a dedicated team working seven days a week to offer support and advice.
• Compliance – We have a direct relationship with Trading Standards
to ensure that we are aware of and act on relevant regulations and
legislation. We monitor changes in legislation in DPA (“Data Protection
Act”) or consumer rights via OFT (“Office of Fair Trading”) or ICO
(“Information Commissioner’s Office”) and communicate and action
accordingly. Where appropriate we offer advice to customers, both
Private and Trade, to ensure they are aware of their responsibilities.
• Risk – We have an established Risk Management Policy and framework
that is reviewed annually. We are fully compliant with PCI DSS
(“Payment Card Industry Data Security Standards”) and conduct
mid-year and annual audits to continually check this.
Annual report and financial statements 2012 07
Overview
Trader Media Group
Trader Media Group
OUR PEOPLE
PASSIONATE
“I’m a really demanding consumer myself
and believe that good service is a
differentiator when it comes to choosing
who to buy from. TMG1 is like no other
company I’ve worked for – we genuinely
believe in putting the customer at the heart
of our business. Our Customer Value Promise
is testament to that and the culture of our
employees supports it. We are passionate
about helping our customers – their success
is our business.”
Vicki Wells
Operations Director – Service
First car: Fiat 128, canary yellow
My first car:
The first car that I owned was a very old
canary yellow Fiat 128. My then boyfriend
– now husband – bought it for me for my
18th birthday and it cost about £100. It was
a wreck to be honest! The passenger
window wouldn’t open and neither would
the boot but it did get me from A to B! I had
it for about a year before backing it into a skip
– it was dark and I was trying to turn around
in a narrow street. This did force the boot
open, which I thought was great until the
garage told me that the damage was so
bad it would have to be scrapped!
Proud
“I have worked for TMG for almost ten years
now and have seen at first-hand what an
incredibly successful transition the business
has made to our online and mobile platforms.
I take pride in my job because I truly believe
I am adding value to our dealers. By helping
them to identify the best stock to buy,
assisting them to price and manage their
stock better and providing credible sources
for them to purchase good quality stock
from, I can help drive more response to their
business and make them more successful.”
Wahid Hussain
Area Sales Manager
First car: Vauxhall Astra 1.6, F Reg
1 Trader Media Group Ltd and subsidiary undertakings (“TMG”)
08 Annual report and financial statements 2012
My first car:
I had just passed my driving test (first time!)
and was keen on getting a souped-up
Vauxhall Astra GTE as I quite fancied turning
heads with a car that I could drive fast! After
trying hard to convince my father I ended
up meeting him in the middle and agreeing
to a more “sensible” version of the car with
a smaller engine and cheaper insurance –
which my father paid for – what a great guy!
I loved driving it and was the envy of all of my
friends who were at the time either queuing
up for buses to and from College or trying
to blag a lift!
Trader Media Group
Talented
“We know that having the right talent in the
business is vital if we are going to achieve our
business goals. It’s important that we recruit
the right people but also that we focus on
developing and retaining the people we
have. That’s why we’ve put a big focus on
promoting career opportunities internally
– giving our employees the chance to apply
for new roles or promotions to further their
careers. In total, we made 56 promotions last
year and 36% of our vacancies were filled
internally.”
My first car:
I was 20 when I got my mini and I absolutely
loved it! I actually found it through the Auto
Trader magazine, having saved up so that
I could pay for it in full. My Dad made me
change every tyre on it before he’d let me
drive it anywhere just in case I got a flat tyre!
Overview
Jayne Dummer
Resourcing Manager
First car: Original flame red Mini
Innovative
“One of the best things about working
at TMG is the continual ambition to innovate
and find new ways to deliver for our
customers and consumers. I’ve been lucky
to be involved in the Dealer Portal Mobile
project – it’s an iPhone app that allows
dealers to upload and edit stock, including
photos, from their iPhone. They can manage
their advertising and pricing wherever they
are using “Profit Indicator”, a global first,
which uses real-time, market based
intelligence that indicates potential margin,
suggested price and average number of
days to sell a particular car.”
Polly Littlewood
Product Manager
First car: Ford Ka 2001 series
My first car:
My first car is the one I currently share with
my fiancé – I only learned to drive at 28!
Living in a city most of my life has meant
that I’ve always used public transport, but
I thought it was about time that I joined all
the other motorists on the road. It’s a very
sympathetic car – little and nippy, and great
for parking easily. Until I started driving I never
thought I needed to but I wouldn’t go back
because of the freedom it gives me.
Annual report and financial statements 2012 09
Trader Media Group
What we’re planning
on doing
We continue to innovate and invest for growth.
We have a dynamic business model and talented
people who are dedicated to delivering results.
>400,000
leads generated
each month
Trust
The group has built trusted brands that consumers and
customers alike turn to across our markets and they’ve
being doing so for more than 30 years. We will build on
this trust by being the single most useful, professional,
reliable and financially vital supplier our customers have.
Value
Our aim is to give value back to our customers, both
B2C and B2B. The group’s products will continue to
offer unrivalled response rates and be as easy to use
as we can make them. In this way we will drive more
car buyers to our customers.
10 Annual report and financial statements 2012
Trader Media Group
The best
solutions
Overview
We constantly research the market to enable us to deliver
the best solutions possible to our customers. Following
the launch of New Car, Video reviews, Owner reviews
and the mobile platform products we will seek to
capitalise on new technologies and ever-evolving
markets as quickly as they change.
Staying
ahead
Combining our trusted brands with proven response
and innovation means we are ahead of the competition.
By continuing the group’s focus on all these things
we will stay at the forefront of what we do.
More than
30 years
of industry experience
and innovation
Annual report and financial statements 2012 11
Trader Media Group
a deep understanding
of our markets
Squeezed margins
Auto Trader Market Share of the Top four
Competitors, measured by Page Views
There is clear evidence of recessionary effects on the used car market.
Following a general historical trend of an increasingly younger vehicle
parc, the latest figures suggest that the ageing of the car parc that
began in 2009 has continued through 2011. A reduction in the
volume of 0-3 year old vehicles available for sale, led to an increase
in prices. This contrasted with a fall in the prices for cars aged over
10 years old. Lack of new car registrations and a desire by consumers,
driven by pressures on household budgets, to hold onto vehicles for
longer have been major contributory factors in this ageing process.
With trade car prices also increasing significantly in Q4 2011, as
reported by British Car Auctions (“BCA”), and likely to continue to
rise through 2012, the potential impact of these dynamics on dealers
is the triple effect32
of less natural consumer demand, less quality stock
coming into the market
and, when it does, higher trade prices that
28
reduce profit margins.
24
8.5
Number of cars (m)
20
Parc16
12
8
4
0
-4
Auto Trader
76%
Pistonheads 21%
eBay Motors
2%
Motors.co.uk 1%
Source: Hitwise, March 2012
7.0
5.5
4.0
10.0
8.5
7.0
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
2011e
2012f
Percentage
2013f
32
28
24
20
16
12
8
4
0
-4
10.0
5.5
2.5
Car Parc Car Parc
YOY %
Source: SMMT
and
TMGand
Analysis
Source:
SMMT
TMG Analysis
1.0YOY %
-0.5
-2.0
4.0
2.5
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
2011e
2012f
2013f
Number of cars (m)
UK Car
Auto Trader
76%
Pistonheads 21%
eBay Motors
2%
Motors.co.uk 1%
Source: Hitwise, March 2012
Flat Car Parc
Declining new car registrations in the last few years have had
a knock-on-effect on the size of the Car Parc.
-2.0
Low registrations in 2009-2011 have an impact on the size of the
UK Car Parc for vehicles 1-3 years old in 2012 as the reduced supply
of good quality, young stock makes sourcing vehicles more difficult
to dealers.
Auto Trader asking prices vs. bca auction prices
Jan 2010
Jan 2010
Feb 2010
Feb 2010
Mar 2010
Mar 2010
Apr 2010
Apr 2010
May 2010
May 2010
Jun 2010
Jun 2010
Jul 2010
Jul 2010
Aug 2010
Aug 2010
Sep 2010
Sep 2010
Oct 2010
Oct 2010
Nov 2010
Nov 2010
Dec 2010
Dec 2010
Jan 2011
Jan 2011
Feb 2011
Feb 2011
Mar 2011
Mar 2011
Apr 2011
Apr 2011
May 2011
May 2011
Jun 2011
Jun 2011
Jul 2011
Jul 2011
Aug 2011
Aug 2011
Sep 2011
Sep 2011
Oct 2011
Oct 2011
Nov 2011
Nov 2011
Dec 2011
Dec 2011
Jan 2012
Jan 2012
Feb 2012
Feb 2012
Mar 2012
Mar 2012
£9,500
£9,500
£9,000
£9,000
£8,500
£8,500
£8,000
£8,000
£7,500
£7,500
£7,000
£7,000
£6,500
£6,500
£6,000
£6,000
£5,500
£5,500
12 Annual report and financial statements 2012
Auto
Trader
Average
asking
prices
Auto
Trader
Average
asking
prices
BCA
Auction
Values
BCA
Auction
Values
Linear
(Auto
Trader
Average
asking
prices)
Linear (Auto Trader Average asking
prices)
Linear
(BCA
Auction
Values)
Linear
(BCA
Auction
Values)
Source:
Auto
Trader
Price
Index,
BCA
Source: Auto Trader Price Index, BCA
Trader Media Group
Truck, Plant & Farm CSI Score
Used car transactions
Million
6.8
2011
6.7
2010
6.7
2009
6.7
2008
This year we measured our Customer Satisfaction Index (“CSI”)
in the Truck, Plant and Farm sectors for the first time and we
achieved some excellent results.
7.1
2007
7.5
Current situation – flat market
As the economy entered recession, new car registrations and
used car transactions declined to settle at c. 2 million for new
and 6.7 million used.
Source: SMMT, DVLA (supplied by CallCredit Group) and TMG Analysis
New car registrations
Million
2012f
2011
1.9
2.0
2009
2.0
2008
2007
Business area
Farmers
Trader
CSI score
Truck &
Plant Trader
CSI score
83
78
80
78
71
74
75
75
78
77
67
72
Overall experience
Recommendation
Loyalty
Sales rep/Account manager
Products and services
Brand
Continually striving to improve our customer service will ensure
that we increase these scores in the future.
2.0
2010
For industry standard CSI scores, anything over 70 is good and
anything over 80 is great, so to achieve an overall experience of
83 and 75 in the two sectors is superb and proves that we put
the customer at the heart of our business and look after their
needs. This is reflected in the high loyalty scores of 80 and 78,
indicating our customers believe in our products and will continue
to use them.
83%
2.1
2.4
Future – slow recovery
A modest growth of the UK economy as well as pent up demand
in the market are expected to lead to slow recovery in new car
registrations and used car transactions.
overall experience
farmers trader
80%
loyalty
farmers trader
Annual report and financial statements 2012 13
Overview
2012f
Trader Media Group
what keeps us in front
TMG is the market leader in automotive classified
advertising in all its markets and continues to be so
year after year. This continues because of the successful
blend of qualities we have.
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.
Find out more page 18
Heritage 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.
Find out more page 12
Value
This year we made the Customer Value Promise which we started by asking 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.
Find out more page 22
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.
Find out more page 10
14 Annual report and financial statements 2012
Trader Media Group
This TMG solution
helped Jaguar sell all
of their excess stock.”
Your success is our business:
Overview
putting it into practice with Jaguar
Our customer value promise is not just lip service – adding value
to our customers’ businesses is central to our success, as proven
by our relationship with Jaguar. Our work with Jaguar helped to
identify areas of their used car stock where the introduction of
newer models had slowed down turnover. The manufacturer
decided to hold a used car event in February 2012 to help sell these
vehicles and this is where the TMG Account team came into play.
The Groups and Manufacturers team recognised that bringing
together the various departments and products offered by TMG
could help make this event a success: we could support this specific
requirement via promotion on the Used Vehicle Locator (“UVL”)
managed by 2nd Byte and through display advertising in our
magazines and on our website.
Key to this was our ability to target key customer types through the
use of TMG data so that Jaguar’s budget was optimised in order
to generate the best return on investment.
The result was a front cover takeover on the Auto Trader and
Top Marques magazines, online display activity and UVL content.
This TMG solution, supported by radio and press activity, helped
Jaguar sell all of their excess stock.
Jaguar were also struggling to measure the impact of their
investment in terms of the ultimate measure of “Dealer Sales”.
However through the data generated through 2nd Byte’s UVL
we were able to show them not only the uplift in vehicles purchased
by dealers from the manufacturer but also vehicles purchased by
the consumer.
Our contribution has further cemented our position as a partner
with Jaguar and they continue to use our solutions to help drive their
used car strategy.
Annual report and financial statements 2012 15
Trader Media Group
Chairman’s Statement
We have focused
on creating a deeper
partnership with dealers
through sharing the data
we have with them.”
Tom Hall
Chairman
Progress
The group has delivered another year of
strong performance, recording double digit
organic growth in both revenue and EBITDA
in its core Digital business. This performance,
in a tough economic climate, is great
testimony to the strength and resilience of
the business, the value that the group’s
products provide to its customers, and to
the talent and commitment of TMG’s
management and employees. On behalf
of the Board, I would like to thank the team
for their hard work through the year and
to congratulate them on what they have
achieved. Following this, TMG has recorded
year-on-year improvement in both revenue
and profit from continuing operations with
double digit EBITDA growth for the second
successive year. The tougher trading climate
due to market conditions in the second half
of the year meant dealers and private
customers have been more considered in
their spending and this has led to a slowdown in the group’s performance through
the latter half of 2011 and into 2012.
16 Annual report and financial statements 2012
Trader Media Group
18 million
Throughout the 2011/12 financial year, the
used car market in the UK was impacted
by a shortage of used vehicles, following
significantly reduced output by car
manufacturers three years previously in
response to the economic crisis of 2008.
Alongside this owners are holding onto their
cars for longer, moving from an average of
five to eight years of ownership. This delay
in used cars entering into the market means
less stock is being advertised. In spite of the
current economic conditions the group
continues to be in a strong, market leading
position by demonstrating to its customers
that it offers the best response and the
best value for money across its products
generating more than 400,000 leads for
UK dealers each month.
The investment in products, customer
relationships and brands has continued to
make us the number one choice amongst
consumers and customers. The group has
continued to improve the car and non-car
websites in the UK, Ireland and South Africa,
notably in the latter as the country migrates
its advertising online from a traditional
magazine base. Continued investment in
the group’s brands through marketing
campaigns across all media means that we
are the consumer’s first choice whenever
they are making automotive decisions.
There has been increased investment in
developing the group’s products to give
vehicle dealers access to our knowledge and
technology. With this in mind we launched
Digital Marketing Solutions (“DMS”) in the
The group has focused on its customers’
UK this year bringing together the RAZSOR,
needs and therefore innovated by building on 2nd Byte and Autotrade-mail brands
the wide range of products it offers. We have and offering products to dealers and
also focused on creating a deeper partnership manufacturers that mean they can design
with dealers through sharing the data we
their own digital marketing strategy with
have with them, for example through Pulse
us as their partner. A key success during the
reports and the Auto Trader Price Index.
year has been the growth of RAZSOR
websites with the group now hosting over
Through this we have seen an increase in
3,000 additional websites since RAZSOR
customer satisfaction scores. We continue to began and achieving 18 million page views
reach more consumers across all platforms
across all RAZSOR websites3.
compared to our competition and autotrader.
Part of the group’s reorganisation has been
co.uk remains one of the most searched for
the sale in November 2011 of its magazinewebsites in the United Kingdom2.
focused Italian subsidiary, Edizeta srl in order to
Strategic activity
better focus on its online offerings. Meanwhile,
The group reorganised towards the end of
the group has increased its stake in IAUTOS
2011 into three new divisions recognising
Company Limited, which operates Chinese
the on-going changes the business faces as
automotive classified advertising, to 22.7%.
it continues to win in its marketplace. It has
restructured its divisions to support its digital
and offline product offerings in the most
effective and efficient way with separate
Digital, Magazines and International divisions.
2 Source: Hitwise
The group is always looking for new ways to
drive value for its customers and consumers.
In line with this, TMG has launched in the
UK its quarterly Price Index which tracks
changes in advertised used car prices and
gives the level of detailed information that
only the market leader can provide. We have
also leveraged the information we have on
response rates by product, by sharing this
information with dealers in the form of
monthly branded Pulse reports which we use
together with our customers to help them
make the right buying and selling decisions.
The group continues to have excellent cash
conversion and used its increased EBITDA
and operating cash to deliver a successful
refinancing during the summer that
incorporated amending existing facilities and
raising £150 million from a new term loan.
Cash raised from the refinancing was used
to part fund a £210 million distribution to
the shareholders.
Outlook
The Board is proud of the group’s
achievements during the year. TMG enters
the new financial year facing further uncertain
trading conditions having experienced some
slow-down in growth in the second half of
the last fiscal year. Nonetheless given its
strong suite of products, a dedicated
workforce and a market leading position,
we are very confident of continued strong
performance. We will continue to provide
data and assistance to our customers which
will help them make the right decisions in
challenging times. Continued investment in
innovation to create products and service will
allow the group to grow into the future and
remain the number one choice for motorists
and dealers alike.
Tom Hall
Chairman of the Board
Trader Media Group
3 April 2012; source – TMG management data
Annual report and financial statements 2012 17
Overview
page views
across razsor
Trader Media Group
Year of Achievement
Revolutionising
Digital Marketing
Paul O’Donoghue
Director of Product and
Strategy, Digital Marketing
First car: Nissan 100 NX Targa
My first car:
I didn’t buy a car until I was 27 –
I was a late starter, having had
company cars until then. It cost
me £4,800 and I chose it as it was
the closest thing to a Porsche
I could afford – and it had Targa
in its name! Sadly it wasn’t as
exciting a choice as I’d hoped –
it was a dull driving experience
with heavy steering and girls
didn’t dig it!
Price Index
The Price Index report is a quarterly report
generated from the wealth of data TMG
holds. It positions us as the authority on the
used car market to both consumers and
the trade. It is also a key deliverable of our
Customer Value Promise, working smarter
for our dealer customers (see page 22
for more information).
The Price Index report looks at the state
of the market and identifies current trends
over a three month period including what’s
hot and what’s not. Ultimately it provides
dealers with an insight as to what to stock
to maximise profit.
18 Annual report and financial statements 2012
Research demonstrates that increasing
numbers of buyers are using the internet to
research and find cars. Buyers have reduced
the number of dealer forecourts they visit
from seven in 2000 to one or two in 2010.
This provides us with a significant opportunity
to deliver high quality digital marketing
solutions while evolving the overall TMG
proposition.
Digital marketing services are delivered
through RAZSOR, Autotrade-mail and
2nd Byte. These services include a range of
dealer websites, best in class search engine
optimisation, live chat to stimulate customer
dialogue at the earliest opportunity, user
friendly used car locators and management
systems. Social Media solutions will be
launched in 2012 to help dealer customers
harness the opportunities of social networks.
Leading
“Introduced in August 2011,
we have seen strong coverage
in both national and trade press
and, importantly, we have
seen the report downloaded
by dealers.”
“We service over 3,400
dealer website customers
through RAZSOR and are
currently making great strides
in providing SEO support to
our franchised dealers.”
Perran Moon
B2B Marketing Director
First car: Holden Kingswood
My first car:
My first car was a dark brown
Holden Kingswood circa 1978
bought for $120AUD from a
New Zealander late one night in
a pub in Sydney. I was 19 and had
gone to Australia for a six month
back-packing trip. I was going to
take a Greyhound bus, but I met
a Kiwi who was flying home
and wanted to get rid of his car.
I travelled for six months around
Oz in it. It had no reverse gear
so each time I wanted to go
backwards, I had to get out and
push it – not good in 45 degree
heat! Even now, when I think
of Oz, I think of that car.
Trader Media Group
Supporting
dealers
Dealer Seminars
We have a huge amount of research and
data and we can break this down at a local
level – we know what car buyers are looking
for in each area. Attending a seminar helps
dealers improve their understanding of their
local market, makes the money they spend
with us work harder for them, helps them
reach more customers and, ultimately, helps
them to convert more leads into sales.
Nick King
Market Research Director
First car: Mini Clubman
My first car:
My mum and dad bought me
my first car for my 18th birthday.
It cost £800 and was the single
most exciting thing in my life.
It had a racing chunky steering
wheel and wood trim on the
windows. I drove it to art college
for three years. At one point
I had six friends in it with me,
all crammed in the boot.
New
products
New Car
Tom White
Head of New Product
Development Auto Trader
First car: Mini Park Lane
My first car:
I used to love this car, not only
was it great for nipping around
London, it had sentimental value
too as it was my grandma’s old
mini. I remember driving it back
non-stop from Cornwall once,
what an epic journey that was,
and it must have cost all of £5!
“We currently have more demand
than supply for our display
formats, and consistently have
more than 8,000 deals for new
and nearly new cars. We have
the perfect platform for
customers to promote their latest
offers and sell more new cars.”
The Auto Trader brand is synonymous with
used cars with up to 10 million unique users
per month. Implementing our new cars
strategy helps us extend beyond this core,
shift the perception of our brand to all cars,
and reduce our reliance on growth coming
from used dealer revenues.
Our aim was to launch a unique new car
showroom with market leading content and
functionality, aiding decision making and
providing the most new car deals in the UK.
Auto Trader New Cars launched in March
2011, and since then we’ve signed up over
1,400 dealers to the New Cars package,
with over half a million unique users a month
engaging with the site.
Annual report and financial statements 2012 19
Business review
“So far we have presented to over
180 dealers across the country.
The feedback has been glowing
– dealers like the advice and the
chance to network with other
dealers – and we have a full
schedule of seminars planned
for the year ahead.”
Trader Media Group
Operating review
Overview
The group provides classified advertising
of motor vehicles and an expanding list of
related products within the automotive
value chain, primarily through its websites,
mobile platforms and magazines. It operates
primarily in the UK, with a branch and
subsidiary company located in the Republic
of Ireland and a subsidiary company in
South Africa.
This strong position means TMG operates the
number one UK marketplace for motorists
and offers unrivalled response to customers’
advertisements.
The group operates through similar market
leading brands in Ireland and South Africa.
We are the recognised route to market for
vehicle dealerships in almost all of the areas
in which we operate and have continued to
offer market leading quality, information and
The Auto Trader branded website sits at the
services to our customers. We have created
core of the group’s business; autotrader.co.uk brands recognised by tens of millions of
is the UK’s leading motoring website with
consumers and both vehicle dealers and
unique users of up to 10 million per month4.
private sellers benefit from our expanding set
Auto Trader is also one of the most
of tools to help them access those in market,
recognised online brands in the UK5.
car shopping consumers.
As shown below, autotrader.co.uk has over
half of the page views of all automotive
classified sites and by far the largest market
share of used vehicle stock and unique
visitors6:
The group entered the 2011/12 financial year
benefitting from increasing advertising spend
across the UK economy. As the year
progressed it became clear that the global
recovery was incomplete and we were still
operating in uncertain times. The used car
market in the UK was hit by a shortage of
vehicles during the second half of the year,
following reduced output by car
manufacturers three years previously in
response to the economic crisis of 2008. In
2011 used car transactions in the UK were flat
year-on-year at c. 6.7 million units and this is
set to continue through 2012 into 2013 with
modest growth of c. 1% expected over the
year ahead7. Despite this the average number
of vehicles on autotrader.co.uk increased 4%
on the prior year to 380,000 and was some
93% ahead of the nearest competitor. This
further demonstrates a “flight to quality” in
tough times and yet another example of our
business resilience. Given this background,
TMG delivered impressive 10% EBITDA
growth over last year, reporting double digit
earning progression in a tough climate for a
second successive year.
Stock,
unique visitors and PAGE VIEWS
8,000
Average unique visitors
7,000
Auto Trader
6,000
5,000
4,000
3,000
2,000
1,000
0
Pistonheads
Vcars
100,000
eBay Motors
Motors
200,000
4 Source: Hitwise
5 Source: Hitwise
6 Source: ComScore March 2012, TMG data
20 Annual report and financial statements 2012
300,000
Stock
400,000
500,000
7 Source: SMMT, DVLA (supplied by CallCredit Group)
and TMG Analysis
Trader Media Group
John King
Chief Executive Officer
First car: Datsun 200B, canary yellow
Digital UK – We have brought the non-car and
car websites under the same management
for the first time, bringing all the group’s UK
digital assets together encompassing online
classified automotive advertising, principally
through the autotrader.co.uk website, Auto
Trader Mobile and other digital marketing
services provided to automotive dealers and
manufacturers. The division’s focus is on
growing the core autotrader.co.uk business
by adding more quality and functionality
to its market-leading website. The division
continues to innovate through developing
further complementary products for UK
digital customers. In this way, the division
will build on its virtuous circle (see below).
Magazines – Encompassing classified
automotive advertising in magazine titles in
Great Britain and Ireland. The division seeks
to manage the decline in its UK and Irish
publishing businesses by maximising
profitability and cash generation through
consolidation of all its UK and Irish magazine
titles under a single management team.
International – Encompassing both online
and magazines automotive classified
advertising in South Africa and online only in
the Republic of 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.
Our Virtuous circle
Reach
Brand
Enhanced
Brand
& Position
Trust
Advertiser
1st Choice
Stock
Usage
Leading
Market
Share
Consumer
1st Choice
The reorganisation means Digital UK will
continue to lead TMG’s growth through
further strengthening our digital presence
and developing innovative products. The
Magazines division focuses on managing the
structural decline in the UK publishing sector
and is increasingly immaterial to the group,
whilst the International business is positioned
to maximise available opportunities for
growth in its relevant markets.
Group resources
The group keeps delivering outstanding
results because of the strength of our brand
and the amazing talent of our people. It’s our
people who are behind the brilliant ideas
that create and improve our products,
they provide the fantastic service that our
customers see, and they strive to do it better
every day. I’m proud to say TMG’s employees
are more engaged than ever before – our
employee opinion survey was responded
to by 93% of all UK staff with an industryleading engagement score of 86%. I’d like
to thank our people across the group for
another successful year. Well done team!
We know our valued customers receive the
best marketing solutions from us and that we
have consistently offered them the best route
to market for classified automotive
advertising. We provide more response,
generate more leads and move more cars
than anyone else in the UK. We continue to
strive to be more helpful and deliver more
value to our customers so we canvass our
customer’s needs through ongoing surveys.
It helps us put the customers’ needs at the
heart of our business. They’re always
engaged in developing our new products
and, this year we are offering them more
choice as we introduced Flexible Packages
to market. The new Flexible Packages allow
dealers to build on our core stock advertising
products by selecting the additional products
they want to complement them at the best
prices with an inherent discount for volume
built in.
Response
Annual report and financial statements 2012 21
Business review
Group structure and strategy
During the year the management team
restructured the group into three divisions
to ensure that each part of the business
is managed in the most effective way.
The new divisions are:
Trader Media Group
Operating review continued
As well as providing quality products, at TMG
we make sure we have a deep understanding
of our markets and customers and we have
leveraged this by providing insight to our
customers more than ever before. The
group’s innovations over the last year include:
Customer Value Promise – The Customer
Value Promise is central to our ambitions of
putting our customers at the heart of our
business. Our starting point was simple – ask
our customers what is important to them and
what they expect from us and then deliver
this to them. This research also underpins our
regular Customer Satisfaction Index survey.
Customers told us that they expect us to:
...be a trusted business partner – where
we take the time to understand their needs
so that we can provide them with robust
solutions that add value to their business.
We also have to provide a safe environment
in which they can trade and ensure that
our brand is trusted and front of mind for
all consumers. And, as the market leader
we’re expected to know most about
consumers’ needs;
...drive valuable response – advertising with
us will give them high levels of exposure
and give them quality leads that they can
then convert into sales, regardless of the
platform used;
...innovate to help them do business – they
expect us to be at the forefront of relevant
technology and invest in new developments
so that they can maximise the opportunities
that exist in connecting them with
consumers in a digital world without them
having to make the initial investment;
...have a flexible approach – where we give
them options, solutions and flexibility so
that they can differentiate themselves from
their competition. And also want more
flexibility in how they do business with us;
As a result of this feedback we created our
Customer Value Promise. This is core to
how we design our business: our products,
services and technology and how we work
with our customers. It will evolve as our
customers’ expectations do. For example,
we’ve extended access to our customer
service desk to seven days a week.
Auto Trader Price Index – This quarterly index
started in August 2011 and offers in depth
information on the market place utilising the
unique data the group has at its fingertips.
The data includes the pricing and trends of
used cars in the current marketplace, the
impact of economic conditions and the
pricing differentials throughout different
regions of the UK.
Pulse reports – Throughout the year the
group has offered branded Pulse reports to
its UK dealers. The free report provides
dealers with data specific and relevant to
them on lead generation, lead conversion
and return on investment for all the TMG
products the dealer purchases. The group
utilises tracking data and consumer usage
statistics to demonstrate high response rates
which are well in excess of those offered
by TMG’s competitors.
Owner reviews – this year anybody who visits
autotrader.co.uk has been able to submit a
review of a vehicle they’ve owned. We had a
target of reaching 35,000 reviews by the end
of March to put us on a par with Parker’s for
user generated content and achieved this
ahead of schedule by February.
90% of UK vehicle dealers advertise vehicles
on autotrader.co.uk, with high levels of
customer satisfaction. This level of
penetration has provided a robust platform
for significant growth opportunities within
those relationships. As a result, TMG’s Dealer
Portal is now being used by c. 75% of dealers
across the UK every month, the most used
dealer desktop application in the UK
automotive industry. Through its advertising
platforms (autotrader.co.uk, RAZSOR, mobile
and magazines), market intelligence tools
and extended audience reach via its
syndication partnerships with Facebook and
MSN, TMG helps dealers sell cars more
profitably; source the right cars at the right
price; sell their cars faster, and turnover stock
as soon as possible.
The group has continued to invest in its
brands with high profile television, online and
radio campaigns complemented by social
media throughout the year. Auto Trader is
also the sole sponsor of the Moving Motor
Show at the Goodwood Festival of Speed for
the second year running. This has helped
keep Auto Trader among the most searched
for brands on the internet in the UK8. This
exposure ensures the group’s core Auto
Trader brand is widely recognised and means
our customers have access to the largest
audience and response for their
advertisements.
All of these things together have made the
last year the success it was. With all of them
in place, we have been able to help our
customers reach millions of their customers,
and quickly and easily complete millions of
vehicle transactions. Through all of these
things, we will continue to support our
customers and consumers to do business
over the years ahead.
...be easy to work with, easy to use – our
people and ways of doing business are
straightforward and easy, and our
technology is easy for them and their
potential customers to use.
8 Source: Hitwise
22 Annual report and financial statements 2012
Trader Media Group
Trader Media Group has further invested
overseas, increasing its minority stake in
IAUTOS Company Limited, a business that
offers online classified automotive advertising
in China. The increased investment means
the group is well positioned to be part of the
growing Chinese automotive market and
support the business in its growth via our
years of experience and expertise in
automotive classified advertising.
During the year, the group has refinanced its
syndicated debt which has meant amending
and extending the majority of the existing
facilities from maturity at June 2015 to June
2017 and raising £150 million of additional
borrowings. As the group continues to
generate high levels of cash, this has enabled
a shareholder distribution of £210 million.
Using further cash, TMG repurchased
£48.4 million of debt at below par value
which shows its ability to manage its liabilities
while offering a great return to its investors.
Outlook
The year ahead will hold challenges for many
businesses, and, given the projected shortage
of new and used vehicle stock in the market,
ours is no exception. We are expecting used
car transactions to be largely flat in the
year ahead, with a slow recovery in calendar
year 2013.
TMG will continue its strategy of increasing
profitability by maximising its revenue
through partnering with its customers. We
will deliver to our customers a compelling
proposition through improved service,
information and functionality and by offering
them greater choice via Flexible Packages.
Responding to the needs of our customers
sits at the heart of our business and will
continue to do so.
By leveraging its capability, brand and digital
experience, the group will consolidate its
position in existing international businesses.
We will continue to use social media such as
Facebook and Twitter effectively by using it to
generate leads and act as a marketing tool.
We have proven how well the group can
capitalise on new technologies by the
continued growth of our mobile products,
now representing c. £9 million of revenues
this year, and we will continue to keep an eye
on new technology and social developments
so that we can move quickly to make the
most of these opportunities.
Business review
Corporate activity
On 7 November 2011, the group sold its
interest in Edizeta srl, a subsidiary trading in
the Italian automotive classified sector. The
business is largely magazine-focused and
does not have a significant online presence
and the sale reflects TMG’s strategy of being
a primarily digital group. The sale was for
a profit of £0.2 million.
Management will keep a watchful eye on its
costs throughout. While choosing to invest in
its customers, products, people and brand,
TMG remains committed to controlling its
cost base. The group has proven its ability
to do this by another year of EBITDA margin
growth, from 51% to 56%9.
Overall the group will focus on customer
needs, building on its customer satisfaction
scores and partnering with our customers
to help them perform. In this way we will
continue to drive good results in a challenging
environment.
John King
Chief Executive Officer
9 For its continuing operations
Annual report and financial statements 2012 23
Trader Media Group
Innovative marketing at Goodwood motor show
Auto Trader at the
goodwood
motor show
June 2011 saw us sponsor Goodwood’s
Moving Motor Show, the preview day
to its well established Festival of Speed.
More and more frequently, car manufacturers
were using the Goodwood Festival of Speed
to showcase new products as well as
celebrate the old. In response to this the
Moving Motor Show was launched in 2010
to give manufacturers an opportunity to
showcase their new models in a stunning
setting and allow car buyers to see and
experience the latest cars first hand. It is fast
becoming recognised as one of the best new
car events on the international motoring
calendar – and provided us with a fantastic
opportunity to showcase our brand and
promote the New Car area on our website.
The stats:
• 181,000 visitors attended Goodwood
across the four days of the Moving Motor
Show and Festival of Speed
• T he Goodwood hub on our website
received 47,075 monthly unique visitors
•1
1,500 consumers entered our competition
to win tickets to the Moving Motor Show
and 2,000 pairs of tickets were won
•O
ur Goodwood iPhone App achieved
3,000 downloads over the four days it
was available
• 2,280 visitors completed an owner review
while visiting the Auto Trader stand
• The Auto Trader Cars section of our website
received an additional +12% year on year
weekly unique visitors right after the
Goodwood festival, as well as an increase
of +25% year on year in car searches.
24 Annual report and financial statements 2012
Trader Media Group
Business review
After last year’s
success, we are once
again sponsoring the
Goodwood Moving
Motor Show.”
Annual report and financial statements 2012 25
Trader Media Group
Segmental commentary
1
Digital UK
Following the successful
migration of the UK business
online for all vehicle types, this
division now contributes the
majority of the group’s revenue
(79%) and EBITDA (85%).
The Digital division has shown growth
despite the economic backdrop with revenue
and EBITDA increasing by 11% and 20%
year-on-year respectively. With used vehicle
stock reducing in the second half of the year,
much of the growth has come through the
Spring and Summer of 2011 but the division’s
newer products, primarily Mobile, RAZSOR,
New Car and the non-car websites have
also driven much of this with £9.6 million
of incremental revenue over the last financial
year and continued growth throughout
the year.
TMG has invested in autotrader.co.uk during
the year to provide the best possible search
functionality and content as evidenced by the
improved consumer satisfaction scores this
year from buyers, sellers and browsers.
The investment has also benefitted monthly
page views of autotrader.co.uk which
averaged 1.1 billion in March 201210 and
peaked at 1.5 billion page impressions
during February 2012.
Consumer revenues for private customers
have suffered from the same declines seen
amongst the division’s dealer customers due
to economic pressures with volumes down
year-on-year. Despite this, primarily following
the strong first half of the year, private
revenues showed growth of £1.2 million
(4%) for the year.
10 Source: Omniture
11 Source: Omniture
26 Annual report and financial statements 2012
TMG continues to develop its mobile device
offerings to provide search and targeted
advertising wherever and whenever needed.
Following this investment, unique visitors
using the Auto Trader mobile app grew over
100% through the year to 2.3 million in
March 201211. We are the clear market leader
in mobile solutions to the automotive
classified sector and usage will continue to
grow at a rapid rate, delivering even more,
highly qualified leads for our customers.
TMG has also leveraged its role as an integral
provider of tools and data to expand its
offering beyond the autotrader.co.uk website
into digital marketing solutions including
RAZSOR, which provides websites using
unparalleled search engine optimisation
to the automotive industry. RAZSOR is the
market leader with TMG hosting over
3,000 RAZSOR dealer websites and now
expanding into offering dealers the
opportunity to develop their own mobile
RAZSOR sites as well.
In 2011, TMG began operating in the
£900 million new car advertising market by
building a digital marketplace for new cars
where great deals are highlighted and richer
editorial content and reviews provided.
Through this they have empowered
consumers to make informed decisions
on new, nearly new and used purchases.
With £0.8 million of incremental revenue
generated during the year it remains
an exciting area of future growth.
With a tough trading environment,
the division has controlled its cost base
accordingly. The Digital cost base is
£1.6 million (2%) lower than last year despite
developing new products and investing
in the data and customer service we provide.
Looking forward, the business will continue
to keep doing what it does well; provide a
suite of market leading products that offer
unrivalled response complemented by
fantastic service. The Digital UK division is
focused on developing new products that
will enable it to leverage its leading position
and fully utilise the data that results from this.
In digital advertising, we will look to boost
advertising yields through improved service,
flexibility and functionality, which will in turn
boost dealer usage. Digital continues to
capitalise on new, fast-growing markets,
including the new car advertising market,
digital marketing and mobile. We will also
continue to use all platforms and
opportunities to drive traffic and revenue
using social media platforms and real time
information, as the routes to market continue
to expand.
Digital UK revenue
£ million
182.8
202.0
147.9
2010
2011
2012
2012
+11%
Stock of vehicles on website
(average through the year) ‘000
344
2010
2012
367
2011
+4%
380
2012
Trader Media Group
Magazines
With the classified automotive
advertising market migrating
online, the group’s published
titles retain a strong presence
on shelves throughout the
United Kingdom and Ireland with
circulation figures averaging over
87,000 copies per week across all
magazines12 throughout the year.
This keeps the Auto Trader magazine as
number one in the classified automotive
market albeit with divisional revenues of
£27.8 million, down £16.3 million on last year.
With rigorous focus on its cost base, the
division has restricted the decline in EBITDA
to £6.6 million. Examples include reducing
print costs by removing glossy pages and
editorial from the magazines with no
detriment in product quality as well as
constantly challenging the working practices
and schedules as demand falls.
The focus for Magazines is to slow the
decline in its trade and private advertising
by continuing to demonstrate value for
money and maintaining quality products
for its customers. In addition, the division will
continue to promote its AdTrader website
thereby increasing traffic and facilitating the
transition online.
3
International
Despite the difficult global
trading environment also
impacting South Africa and
Ireland, the division as a whole
has revenues flat at £27.4 million
year-on-year. The division has
invested in the future growth of
both countries’ digital operations
and this has led to a decline in the
division’s EBITDA of 8% over last
year as we have looked to drive
long term growth in the business.
In South Africa, TMG is a clear market leader
through its Auto Trader and Commercial
Trader magazines and has initiated the
transition to online operations with the
launch of an improved website in January
2012. Use of mobile is also growing rapidly
in South Africa and TMG is seeking to
capitalise on this as it seeks to grow revenues
and profit. The digital launch and the
already successful magazine business are
performing well in a declining market with
revenues down only £0.6 million over the
previous year.
In Ireland, TMG has faced a difficult
economic environment with vehicle stock
much reduced in the marketplace but has
nevertheless maintained its number one
brand and market penetration via carzone.ie.
In this climate, revenues were up £0.4 million
over 2011 through developing new online
product opportunities with display
advertising, mobile listings and website
hosting. These products have all grown over
the last year and Ireland is well placed for
further growth when the economy recovers.
Business review
2
International
revenue of
£27.4
million
Results were impacted by unfavourable
foreign exchange translation effects of
£0.5 million as the South African Rand
weakened against Sterling. There was
no gain or loss as a result of fluctuations
in the Euro-Sterling rate.
12 Including Auto Trader, AdTrader and national
magazines
Annual report and financial statements 2012 27
Trader Media Group
Q&A with the Chief Executive
officer, john king
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
TMG brings automotive buyers and sellers
together via its digital platforms providing
the most comprehensive choice of vehicles,
delivering a great consumer experience and
generating more leads to dealers than any
of its competitors. At TMG, innovation is
key to success with a wide range of products
and services across the automotive value
chain being provided to dealers.
In this section John King, the Chief
Executive Officer of Trader Media Group,
responds to questions about the business
and its prospects.
Watch the video at
www.ar2012.tradermediagroup.com
Q. How has the business been
performing over the past year?
A. Our on-going strategy of revenue
diversification has resulted in another strong
performance in the year to 1 April 2012.
Despite the tough economic climate revenues
have grown 1% year-on-year, with double
digit EBITDA growth of 10% as we have
focused on the cost base of the business and
benefited from higher margins as Digital
revenues represent 83% of TMG. Operating
cash conversion has remained high at 90%.
Find out more on page 20
Q. Has TMG been hit by the
economic uncertainty we’ve been
seeing across Europe over the past
few years?
A. The used car market in the UK was hard
hit by a shortage of vehicles during the
second half of the year. This was the result of
reduced output by car manufacturers three
years previously in response to the economic
crisis of 2008. Used car transactions were flat
year-on-year at around 6.7 million units and
this trend of low growth is set to continue
into 2013. Despite this, the average number
of vehicles on autotrader.co.uk increased 4%
on the prior year to 380,000 and was some
93% ahead of the nearest competitor.
Find out more on page 12
28 Annual report and financial statements 2012
Q. You have a decisive lead over all
your rivals. How have you managed to
do that?
A. The 35-year history of the Auto Trader
brand – both online and offline – means
it has a strong reputation and is considered
trustworthy by consumers and customers
alike. The core website autotrader.co.uk
is the UK’s busiest online vehicle marketplace
helping sellers reach more buyers than
anywhere else – with up to 10 million visitors
per month. As market leaders, we continue
to invest and innovate in our products and
services. We constantly monitor the buying
and selling needs of consumers and are
always first to market with products that
respond to their evolving requirements.
Trader Media Group
83%
of group
revenue comes
from digital
A. TMG first embarked on its migration to
digital platforms some 15 years ago. While
our magazines have shown the expected
decline in circulation, it has followed the
successful migration online of the car site by
profitably transitioning the non-car magazine
titles online. We have also invested in
autotrader.co.uk during the year to provide
the best possible search functionality and
content as evidenced by the improved
consumer satisfaction scores this year from
buyers, sellers and browsers. Monthly page
views of autotrader.co.uk averaged 1.1 billion
in March 2012 (Omniture) and peaked at
1.5 billion page impressions during February.
Q. What benefits have you seen
from the process of taking the
business digital?
A. Around 90% of UK vehicle dealers
advertise vehicles on autotrader.co.uk, with
high levels of customer satisfaction. This level
of penetration has provided a robust platform
for significant growth opportunities. As a
result, our Dealer Portal is now being used by
around 75% of dealers across the UK every
month, the most used dealer desktop
application in the UK automotive industry.
We help dealers sell cars more profitably,
providing market intelligence tools, helping
them source the right cars at the right price,
sell their car faster, and turn over stock as
soon as possible on our advertising platforms,
such as autotrader.co.uk, RAZSOR, Mobile
and magazines, and reach extended
audiences through our syndication
partnerships with Facebook and MSN.
Q. Smartphone and tablet
penetration has exploded in the past
year. What have you been doing to
capitalise on this phenomenon?
A. We are continuing to develop mobile
products to provide search and targeted
advertising wherever and whenever needed.
Following our investment in this area, unique
visitors using the Auto Trader mobile app
grew 100% to 2.3 million13 in March 2012.
To date 28 million vehicles have been viewed
on our mobile app.
Q. What other products and services
have you introduced?
A. We have leveraged our role as an
integral provider of tools and data to expand
our offering beyond the autotrader.co.uk
website into digital marketing solutions
including RAZSOR, which provides websites
using unparalleled search engine optimisation
to the automotive industry. RAZSOR has
quickly become the market leader with
TMG hosting over 3,000 dealer websites.
Q. Have you considered a new car
offering?
A. Yes we have and in fact we started to do
this last year. In 2011, we began operating in
the £900 million new car advertising market
by building a digital marketplace for new cars
where we highlight great deals with richer
editorial content and reviews. Through this
we have empowered consumers to make
informed decisions on new, nearly new and
used purchases. It remains an exciting area
of future growth.
Q. How are the overseas divisions
performing?
A. In South Africa, TMG is a clear market
leader in magazines and we have initiated
the transition to online operations with the
launch of an improved website in January
2012. Use of mobile is also growing rapidly
in South Africa and we are seeking to
capitalise on this as we continue to grow
revenues and profit.
In Ireland, we have faced a difficult economic
environment but have nevertheless
maintained our number one brand and
market penetration via carzone.ie and
developed new online product opportunities
with display advertising, mobile listings and
website hosting products all growing over
the last year.
In China, we increased our stake in
IAUTOS Company Limited to 22.7% and
see significant market potential as the used
car market continues to grow rapidly.
Find out more on page 27
Q. What’s coming next for TMG?
A. We are focused on developing new
products that will enable us to leverage
our leading position and fully utilise the data
that results from this. In digital advertising,
we will look to boost advertising yields
through improved service and functionality,
which will in turn boost dealer usage. We
have also moved into new, fast-growing
markets, including the new car advertising
market, digital marketing and mobile.
We also continue to use all platforms and
opportunities to drive traffic and revenue
using social media platforms and real time
information, as we continue to expand.
13 Source: Omniture
Annual report and financial statements 2012 29
Business review
Q. You have been moving your
operations on to digital platforms. Has
that process now been completed?
Trader Media Group
Key Performance Indicators
The Board and Executive Committee team have set operational
KPIs which are tracked, and reviewed, at each Board and
Executive meeting in order to assess performance.
Revenue
£ million
233.7
254.4
257.2
2011
2012
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.
2012
+1%
2010
EBITDA
£ million
Measures earnings before interest, tax, amortisation,
depreciation, impairments and exceptional costs and
provides a measure of the underlying profitability of the
business. EBITDA is as stated in note 3 to the financial
statements.
111.1
2010
129.8
2011
142.9
2012
2012
+10%
Covenant net debt
£ million
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 and other financial
assets. The balances constituting covenant net debt are
as reported in notes 18 and 19.
2012
+25%
30 Annual report and financial statements 2012
605.7
2010
637.1
511.2
2011
2012
UK
International
Trader Media Group
Average monthly unique users
million
This KPI represents the number of unique
users* that log onto autotrader.co.uk
on a monthly basis.
2012
2012
2010
+7%
9.4
8.8
2011
8.1
* Source: Omniture
Stock of vehicles on website
‘000
This provides a KPI that illustrates the
number of vehicles being advertised
on autotrader.co.uk on average through
each year.
2012
2012
380
2011
367
2010
344
+4%
Page views
million
(Average page views in the year)
2012
This provides a KPI to indicate how many
pages within the website are being accessed
by the users of autotrader.co.uk
2011
914
833
2010
667
+10%
Business review
2012
* Source: Omniture
Average weekly circulation
‘000
This provides a measure of the average
circulation of the Auto Trader magazine
in the UK and Ireland.
2012
2012
2010
-42%
2011
52
89
136
Headcount
This represents the average number
of full time equivalent employees during
each financial year.
2012
2012
2010
-8%
2011
1,514
1,640
1,980
Annual report and financial statements 2012 31
Trader Media Group
Financial Review
Overview
The group has achieved revenue growth of
£2.8 million (1%) through a tough trading
environment across all of its markets during
the year. The management team has also
reacted to the difficult market by driving
efficiencies and has sought to balance the
investment in staff and technology required
for development of new products,
restructuring and removal of costs from
non-core activities. The benefit of this activity
can be seen in the group’s operating profit.
The table below shows this growth when the
impact of restructuring and other one-off
costs is removed:
Continuing activities
Revenue
2012
£m
2011 Change
£m
+/(-)
257.2 254.4
Operating profit
105.9 107.5
Impairment charges and exceptional items (note 4)
22.8 11.1
Like-for-like operating
profit
128.7 118.6
1%
9%
The group has built on its reputation as the
leader in its market during the year by:
• maintaining revenues well ahead of its
competition through depth of stock, brand
strength and successful new products;
•p
roviding data to its customers to help
them make timely and well-informed
decisions during difficult trading times; and
• proving the response delivered by its
advertising products and thereby remaining
a trusted partner of dealers.
32 Annual report and financial statements 2012
Discontinued activities and
restructuring
During the year, the group sold its interest
in Edizeta srl, its Italian subsidiary for
£0.2 million profit (note 7). Restructuring
costs in the group relate primarily to the
refinancing conducted during the year
and related group restructuring. Other
restructuring relates mainly to redundancies
and property exit costs as the group
continues to refine its cost base and
realise efficiencies.
Acquisitions
TMG has continued to invest in growth,
increasing its minority stake to 22.7% in
IAUTOS Company Limited, which operates
a Chinese company offering online classified
automotive advertising similar to that
provided by TMG in the UK. The additional
investment will further enable the group
to capitalise on a huge used car market in
the world’s fastest growing economy with
a well-established partner. The business
operates as a standalone entity but is able
to draw on the resources and expertise
of the wider group.
Impairment
The group has incurred an impairment
charge of £18.2 million (2011: £18.1 million)
in the year against some of its publishing
related business units. As goodwill does not
amortise under IFRS, the impairment reflects
the ongoing decline in the profitability
of its magazines businesses and therefore
effectively represents the amortisation
of the magazine division.
Interest and taxation
Following several years of growth and proven
cash generation the group was successfully
refinanced during the year, increasing its
syndicated bank debt by £150 million.
Finance costs have increased by 4% to
£89.2 million (2011: £86.0 million) in the year
following the refinancing and subsequent
increase in the margins payable on the
group’s syndicated debt (note 19). To
mitigate its exposure to interest rate risk,
the group continues to hedge its exposure
to fluctuations in LIBOR on its borrowings
through an interest rate cap and interest rate
swaps as detailed in note 14.
A relatively low level of non-exceptional
finance income of £0.5 million was primarily
generated from cash deposits, consistent
with 2011 levels (£0.6 million) due to the low
LIBOR rate throughout both years. The
group’s sensitivity to fluctuations in LIBOR has
been considered in note 2 to the financial
statements.
The group has continued its strategy of
buying back its syndicated debt at below par
value. This has led to exceptional gains
through finance income of £4.5 million
(2011: £3.5 million). The group will continue
to explore suitable opportunities to
repurchase its own debt in the future.
The group’s taxation charge has increased
to £14.7 million during the year
(2011: £12.0 million). This increase stems
from the increased profitability of the
group. The effective tax rate of 68% is higher
than the standard corporation tax rates
in the group’s operating countries due
to the non-taxable nature of certain costs,
mainly amortisation and impairments
on intangible assets.
Trader Media Group
The group continues to have strong
operating cash conversion (>90%) which
has allowed it to generate £129.3 million
(2011: £134.0 million) cash from operating
activities. It has used this cash to service its
syndicated debt (£29.0 million) and pay
down or repurchase debt (£43.9 million)
thus reducing its future interest commitment.
There is continued investment in the future
with £14.7 million (2011: £12.2 million)
spent to acquire tangible and intangible
fixed assets.
Following the successful refinancing during
the year the group has made a distribution of
£210 million to its shareholders in the form of
dividends and repayment of capital. This has
been enabled by the consistently strong cash
generation seen every year. The high level of
operating cash and free cash flow conversion
enables the group to cover its debt interest
repayments as well as being able to
deleverage where possible (as shown in the
table) reducing the margin on the group’s
syndicated debt. The terms of the group’s
borrowings are such that repayment is
required between June 2015 and December
2017 and as a “covenant-lite” debt package
the group has no mandated covenant tests
until this point. The group ended the year
in a strong position and the directors are
therefore confident that the group should
be accounted for as a going concern.
£m
Covenant net debt
at 28 March 2010
Repurchase of syndicated debt
Repayment of syndicated debt
Increase in cash and cash
equivalents and other
financial assets
Exchange loss on cash
Covenant net debt
at 3 April 2011
Repurchase of syndicated debt
Repayment of syndicated debt
Refinancing of syndicated debt
Increase in cash and cash equivalents and other
financial assets14
Exchange loss on cash
Covenant net debt
at 1 April 2012
(605.7)
5.3
13.7
75.6
(0.1)
(511.2)
4.5
584.2
(734.2)
20.3
(0.7)
Business review
Cash flow and debt
On 20 June 2011 the group completed
a financial restructuring with its syndicated
debt providers. The refinancing gave
a £150 million cash injection to the business,
amended certain terms and extended the
term of much of the debt to 2017. The group
maintained its “covenant-lite” terms on the
syndicated debt through the refinancing.
(637.1)
Zillah Byng-Maddick
Chief Financial Officer
operating
cash
conversion
>90%
14 Excluding the cash used to repurchase and repay debt
Annual report and financial statements 2012 33
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 accounts.
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 dealers cutting
back on volumes of stock, thereby impacting
on advertising spend. The group also holds
a similar market position in Ireland and
South Africa, whose markets have also
contracted and where the economic factors
may lead to further decline.
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.
All group products have been impacted by
the shift to the online delivery channel and
the group is therefore exposed to the rapid
pace of change in this area. To mitigate this,
the group has allocated extra investment
and people to this channel and continues to
monitor its own and competitor performance
closely.
34 Annual report and financial statements 2012
Interest rate risk
The group has interest bearing assets,
primarily cash, which are at risk of fluctuations
in interest rates. Cash levels and market
interest rates available are monitored by
the group treasury function to ensure risks
are minimised.
The group’s interest rate risk also 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 swap and a cap agreements 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.
On the cap agreements the group received
the difference between the cap rate and the
current floating rate should the latter be
higher in the month in question, again
calculated with reference to agreed notional
amounts. When the floating rate is lower
than the cap rate, no cash flows arise under
this agreement.
Credit risk
Credit risk arises from deposits with banks
and financial institutions, as well as credit
exposure to customers.
The group minimises its risk by dealing with
only a limited range of financial institutions
with secure credit ratings.
A reduction in the amount of credit provided
to those purchasing vehicles has reduced
activity in the market and over the longer
term will continue to adversely impact dealer
profitability. This combined with the current
global economic climate is expected to
impact all areas of the business.
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 and are
unable to obtain funding for their products.
Policies and procedures exist to ensure that
customers have an appropriate credit history
and a significant number of balances are
prepaid or collected via direct debit. 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 UK customer services team is in place
to give focus on debt collection. The cost of
bad debts remains at a low 1.1% of revenue
(2011: 0.7%).
Trader Media 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.
Employee engagement
Each year we ask all of our employees in the UK, Ireland and
South Africa to complete an employee opinion survey. We listen
to the feedback our employees give us in this survey and work
with them to produce action plans to continually improve their
working experience at TMG. We take the results very seriously
and managers are measured against their results as part of our
annual performance review process.
We value and act on employee feedback; in response to the
survey results we have launched a flexible benefits package
for all employees, made big improvements to our internal
communications plan and also enhanced our maternity/paternity
policy. Year on year we have seen good improvement in these
results, both in terms of participation and the feedback received.
In 2009, 70% of employees completed the survey. This grew
to 89% in 2010 and reached 91% in 2011.
In 2011 we also achieved an employee engagement score of
86%. This is 10% higher than the benchmark score for other
organisations in the survey group and an increase of 6% on our
score from 2010.
Annual report and financial statements 2012 35
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. 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 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.
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. The CSR Steering
Committee, which is chaired by the Chief
Executive Officer, has a remit that includes
health, safety and environment, sustainability,
financial governance (information covered
in the Corporate Governance section on
pages 40 to 41), community, customer and
people within its terms of reference. This
report outlines the group’s progress during
the year ended 1 April 2012.
The TMG vision
All TMG employees are guided by the group’s
vision to be the Number 1 marketplace for
motorists. This objective is embodied in the
group’s Top 5 Priorities which are:
• Put the consumer at the heart of everything
the group does;
• Accelerate growth through new and
existing products and services;
• Maximise and demonstrate value to
customers;
• Defend the group’s market leading
position; and
• Attract, develop and retain talent.
As an integral part of achieving this vision
the group works to standards that promote
integrity, fairness and honesty. The group
focuses on the needs of its customers
respects its suppliers, respects the
environment, interacts within the community
and promotes and rewards solely on merit.
needs. As well as our company funded
benefits, we offer a wide range of voluntary
benefits including childcare vouchers, cycle
to work schemes and critical illness insurance
that are proving popular amongst our
employees. We are always looking to evolve
our package of benefits and therefore this
year we have introduced travel season ticket
loans, pension salary sacrifice and a wine club.
Occupational Health & Safety and Managing
Occupational Road Risk (MORR) for five and
three years respectively, in recognition for
the continued excellence in this area.
The group is committed to pursuing training
programmes which equip all employees with
the necessary skills to help them perform
to the best of their ability and this investment
in people is core to our aim to motivate and
retain employees.
Community
A key focus for the group within its
community-based activities is charity
partnership initiatives. Each year the group
selects a designated charity and encourages
fund-raising and sponsorship events to
support them. The charity is supported
through a corporate donation, staff
fundraising and volunteer efforts.
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 1,514 (2011: 1,640).
Health, safety and environment
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. A full time health and
The group’s people
safety team is employed by the group and
People are the group’s most valuable
is managed through a sub-committee
resource and the success of the group is to
of the CSR Steering Committee which
the credit of all our employees. The continued meets three times a year and is chaired
success of TMG and its brands is something
by the Chief Executive Officer. The group
of which everyone associated with the
regularly benchmarks its health and safety
business can be enormously proud. In
performance against similar organisations in
recognition of the diverse needs of TMG’s
order to help maintain an environment that
employees, our flexible benefits scheme, My continues to promote a healthy and safe
Benefits, enables employees to tailor their
working environment. The group has
benefits package to meet their own specific
received gold awards from RoSPA for
36 Annual report and financial statements 2012
During the year there were no major injuries
(2011: none) reported under the Reporting of
Injuries, Diseases and Dangerous Occurrences
Regulations.
TMG’s charity partner for the last two years
has been Help the Hospices. The partnership
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, which can be very rewarding.
The group has also endorsed a Community
Involvement Policy which supports its
employees who wish to work with
communities across the UK both as private
individuals and also as employees of TMG.
Beyond these initiatives TMG supports other
national and local charities through a
corporate match funding bursary provided
for individual employee charitable
commitments.
Donations to Help the Hospices and other
charities during the year totalled £0.1 million
(2011: £0.1 million).
Customer
We are committed to putting our customers
at the heart of everything we do and in
July 2011 we carried out an extensive piece of
customer research, interviewing over 2,000
customers. Our starting point was simple –
ask our customers what is important to them
and what they expect from us. This research
also underpins our regular Customer
Satisfaction Index survey.
Trader Media Group
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
Sustainability
processes have been improved with the
Paper for the group’s magazines is sourced
provision of monthly fuel data for review by
responsibly from sustainable resources.
the Executive Team. The group has worked
Through its arrangement with COMAG, the
with the Carbon Trust to identify energy
group benefits from COMAG’s contracts that efficiency measures that can be implemented
have strict guidelines for the secure disposal
at all office locations and used fuel efficiency
and recycling of returned copies in
data to help drive both carbon emission
accordance with agreed industry wide
reduction and improve health and safety as
standards in the Periodical Publishers
the group worked with drivers to review their
Association (“PPA”) Best Practice Guidelines
driving habits. TMG’s environmental impact
for Wholesale Stock Control and Returns
has also reduced through the group
Systems Document. The PPA, via its magazine rationalising the number of properties it
publisher members, has in conjunction with
maintains and through the printing of less
the Government entered into a Producer
magazines.
In the current financial year TMG has
used this data to manage its emissions,
substantially reducing its total to 2,161
(2011: 5,909) 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
Print (gas)
Print (electricity)
Offices (gas)
Offices (electricity)
Fleet fuel
Tonnes CO2
Tonnes CO2
2012
2011
–
–
103
923
1,135
2,161
1,147
2,287
135
1,172
1,168
5,909
Hadrian’s wall challenge
TMG is extremely proud to have sponsored
38 TMG employees to take part in the
Hadrian’s Wall challenge in April 2012 in
support of Help the Hospices. The walk
took in 25 miles over two days alongside
the remaining sections of the wall. The
team has raised £30,000 for the charity.
Annual report and financial statements 2012 37
Business review
This research resulted in the development
of our “Customer Value Promise” – our
promise to work harder and smarter for our
customers going forward (see page 22 for
more information). The promise is not just
a pledge on a piece of paper; it is core to
how we design our business – our products,
services and technology – and work with
our customers. It will evolve as our customers’
expectations do.
Trader Media Group
executive Committee
John King
Chief Executive Officer
First car: Datsun 200B, canary yellow
Zillah Byng-Maddick
Chief Financial Officer
First car: Peugeot 1.0L 106, red
Craig Stevens
Group Director (Digital Marketing)
First car: Ford Cortina 1.6L, brown
John O’Connell
MD International
First car: 1981 Renault 14
Tim Peake
Group Strategy Director
First car: MG Maestro, red
Tim Jones
Chief Information Officer
First car: Peugeot 205 1.9GTI, graphite grey
Nathan Coe
Group Director (Auto Trader)
First car: 1987 Nissan Pulsar, white
David McMinn
Group Sales Director
First car: Ford Cortina TE 1979, white
Joanne Walker
Group HR Director
First car: Ford Fiesta 1.1L
38 Annual report and financial statements 2012
Trader Media Group
John King
Chief Executive Officer
Zillah Byng-Maddick
Chief Financial Officer
Craig Stevens
Group Director (Digital Marketing)
John O’Connell
MD International
Tim Peake
Group Strategy Director
Tim Jones
Chief Information Officer
Nathan Coe
Group Director (Auto Trader)
David McMinn
Group Sales Director
Joanne Walker
Group HR Director
Since joining in 2004, John has had
responsibility for TMG’s digital and publishing
businesses in South Africa, Ireland and Italy.
He was initially appointed as Regional
Managing Director for Ireland, where he
oversaw strong growth of the business and
its successful migration from publishing to
digital. Previously, he was CEO of a magazine/
print-based communications group and held
senior roles with leading Irish newspapers.
My first car: 1981 Renault 14
I bought this car for £2,400 in 1985. It was an
odd shape – like a pear – and for some reason
I took a liking to it. The original advertising
campaign for it in France was a disaster due
to this comparison – in France, the Renault 14
is still known as “la Poire”.
Nathan joined TMG in 2007 as Managing
Director of Strategy & Business Transformation.
Currently Nathan is responsible for the Auto
Trader digital business. Prior to this he was
responsible for developing growth initiatives
in Mobile and Automotive Digital Marketing.
Previous roles include Corporate Development
at Sensis, M&A at Telstra Corporation and
consulting at PriceWaterhouseCoopers.
My first car: 1987 Nissan Pulsar, white
My most memorable moment in it was the
first time I met my future in-laws. I was driving
them along when the engine blew up. I tried
to fix it by wrapping some cloth around the
leaking part – I’m no mechanic but I wanted
to make a good impression! Unfortunately that
backfired too – a short way down the road,
we saw smoke coming out of the bonnet – the
cloth had caught alight and the whole engine
was on fire!
A qualified accountant, Zillah joined TMG in
2009. She currently has responsibility for the
finance, business change and service functions
and is passionate about delivering best in
class service to all customers, be they internal
or external. She also has a non-executive role
at Mecom PLC, a European Media business.
Prior to joining TMG she held executive roles
at Fitness First Group (as CFO, MD Germany
and Group Commercial Director) and Thresher
Group (CFO), and a non-executive role at
Pizza Express.
My first car: Peugeot 1.0L 106, red
I was 18 when I bought this car. It was brand
new and had denim interior seats. I paid
£5,000 for it – it was on a deal (I’m always
looking for a deal) – and paid it off on finance.
I took it to France once and managed to get
it towed away!
Tim 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.
My first car: MG Maestro, red
I was 17 and it was given to me by my
grandfather. Unfortunately I only had the
one trip in it – the first day I received it, I went
to see my friends, only to crash it after I had
picked them up... Turned out it didn’t go round
bends as fast as I thought it would, and goes
to show that passing your test doesn’t mean
you can necessarily drive!
David joined TMG in 2008 as Group Operations
Director responsible for overseeing the
transformation of the Auto Trader Publishing
Business and its approach to the market, as
well as steering TMG Operations and Change
Management. In 2009, David was appointed
Managing Director (Trader Publishing), and
then became Group Sales Director in October
2011. Prior to joining TMG, David was CFO
and then National Sales Director at Sensis.
My first car: Ford Cortina TE 1979, white
I bought this car for $3,000AUD from a mate
I played football with. I was 19 and chose it as
it had a bullet proof engine, 4.1L. As my first
set of wheels, it meant I was mobile and could
do what I wanted. I had many memorable
times in it – including being stuck in a traffic jam
listening to Meatloaf for seven hours and
a 360 degree spin on an oil patch.
Craig joined TMG in 1996 as a General
Manager for the National Magazine division.
He has worked for eleven years at
management and directorial level, with
responsibility for the development of TMG’s
digital strategy and consumer digital products
and services. Craig is now the Director of
Digital Marketing Solutions and sits on the
board of our Chinese investment, IAUTOS
Company Limited.
My first car: Ford Cortina 1.6L, brown
I bought this car for £400 and learnt to drive
in it when I was 17. I might not have chosen
brown but it was in the family and the only
car I could afford. Despite the colour, it still
seemed to have a positive effect on my
attractiveness to the girls!
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 this role as
CIO he provides the leadership of TMG’s
technology capability with a firm focus on
the commercial outcome.
My first car: Peugeot 205 1.9GTI,
graphite grey
I got this car when I was 18 years old. It cost
me £4,600. I chose it as it was the iconic
“hot hatch” of its time. It was a great car –
I had a lot of good times in it, from terrorising
my local streets to a Scotland to South of France
road trip.
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.
After a two year career break, Joanne returned
to TMG in January 2009. During her time in
the role, Joanne has helped to restructure the
business and drive increased employee
productivity and engagement.
My first car: Ford Fiesta 1.1L
I was 21 when I bought my first car, a 1.1L Ford
Fiesta and only 3 years old. I remember my
Dad having sleepless nights, as I’d only just
passed my test and had to set off on my own
to my first job after university. The trip from
Warrington, where I lived, to work – on an
oil refinery in Essex – was both terrifying and
exhilarating. That trusty car set me on my way
in life and I’ll never forget it!
Annual report and financial statements 2012 39
Governance
John joined Trader Media Group (TMG)
as CEO in 2007. Previously, he was CEO of
Australia’s leading specialist classifieds
business, Trading Post, where he developed
a strategy to grow simultaneously the core
print business and online classified verticals.
John’s previous roles have included Chief
Operating Officer of Sensis Classifieds and
General Manager of Online Advertising at
Sensis Pty Ltd. John is also Executive Chairman
of Trader Corporation (Canada), since 2011.
My first car: Datsun 200B, canary yellow
I was 17 when I bought it and I paid
$2,000AUD – but it always broke down.
It was the most unreliable car ever, canary
yellow, but it inspired me to make more money
so I could buy better cars in the future. I can
honestly say it was the first and worst car
of my life.
Trader Media Group
Corporate Governance
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 King
Chief Executive Officer of TMG
Zillah Byng-Maddick
Chief Financial Officer of TMG
Tom Hall
Apax Representative
Irina Hemmers
Apax Representative
Andrew Miller
GMG15 Representative
Darren Singer
GMG Representative
(appointed 6 May 2011)
Ed Williams
Non-executive Director
The Chief Executive Officer is responsible for the day-to-day
operations of the group and the development of strategic plans for
consideration by the Board.
The group has in place appropriate insurance cover in respect
of legal action against its directors and officers.
In the year ended 1 April 2012 the Board met 11 times. All Board
members were present except as follows: August 2011 – Tom Hall,
Andrew Miller and Ed Williams; November 2011 – John King,
Andrew Miller and Ed Williams; December 2011 – Ed Williams;
January 2012 – Andrew Miller. 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.
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.
15 Guardian Media Group plc and its subsidiary undertakings (“GMG”)
40 Annual report and financial statements 2012
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 twice 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.
• Management accounts are reviewed by the Board and Executive
Committee on a monthly basis. The management accounts contain
detailed trading financial information, KPI’s and economic data
as well as the group’s cash and debt position.
•D
uties 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 the internal
or external auditors.
Trader Media Group
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.
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.
These procedures are reinforced by reports from internal and
external auditors submitted to the Audit Committee.
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.
Governance
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.
Annual report and financial statements 2012 41
Trader Media Group
Directors’ report
For the year ended 1 April 2012
The directors present their report and the audited financial
statements of the group and parent company for the year ended
1 April 2012.
Principal activities
The principal activity of the group is the classified advertising of
motor vehicles and other related products, both online and through
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 £7.5 million
(2011: £71.5 million). The future developments of the group are
considered within the Operating Review on pages 20 to 23.
The group’s profit before taxation included exceptional items for
impairments of £18.2 million (2011: £9.6 million), the restructuring of
group operations of £4.6 million (2011: £1.5 million) the cancellation
of accrued preference share interest of £nil (2011: £68.0 million
credit), profit on purchase of debt of £4.5 million (2011: £3.5 million)
and debt refinancing fees of £7.5 million (2011: £nil).
Ordinary dividends of £100.4 million in respect of the year ended
1 April 2012 (2011: £nil) were paid during the year (note 27).
£73.0 million of rolled up interest on the preference shares and
£26.6 million of preference shares was also paid to shareholders
in the year for total consideration of £36.6 million and subsequently
cancelled (2011: £nil).
During the year the group repurchased 968 (2011: 1,734) 10p
ordinary C shares from leavers for aggregate consideration of £5.
This represented 0.1% 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:
John King
Chief Executive Officer
Zillah Byng-Maddick
Chief Financial Officer
Andrew Miller
Non-executive
Darren Singer
Non-executive
Tom HallNon-executive
Irina Hemmers
Non-executive
Ed Williams
Non-executive
42 Annual report and financial statements 2012
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 48.79% of the shares in the group. Ed Williams holds
0.09% of the shares of the group.
Management executive committee at 1 April 2012
John King Chief Executive Officer
Zillah Byng-Maddick
Chief Financial Officer
David McMinn
Group Sales Director
Nathan Coe
Group Director Autotrader
Craig Stevens
Group Director Digital Marketing
Tim Jones
Chief Information Officer
Joanne Walker
Group HR Director
John O’Connell
MD International
Tim Peake
Group Strategy Director
Post balance sheet events
On 18 May 2012 the company issued 1,296 ordinary D shares of
10p each for cash consideration at fair value of £0.3 million.
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 1 April 2012 were equivalent
to 33 (2011: 33) days’ purchases, based on the average daily amount
invoiced by suppliers during the year.
Key suppliers
The group works closely with a number of key suppliers. The majority
of the group’s websites, equipment and networks are hosted in
data centres managed by Getronics UK Limited and Telecity Group
UK Limited. The contracts for these sites run until December 2013
and July 2014 respectively. NWIX Group Limited provide the internet
connection for the majority of the group’s hosting environment and
resilient connectivity between the data centres. This contract runs
until April 2014.
Condé Nast and National Magazine Distributors Limited (“COMAG”)
manages the flow of all the group’s magazines through the magazine
supply chain in the UK and Ireland. In addition to the contract that
extends to 2013, TMG and COMAG operate a service level
agreement (“SLA”) that addresses in detail each element of the
supply agreement. The provision of services under the SLA is formally
evaluated each year but joint monthly and quarterly business reviews
are also conducted.
Following the sale of Apple Web Offset, the group has contracted
with a subsidiary of the buyer, Walstead Investments Limited, to
provide the magazine print services for the group up to 2014.
Trader Media Group
Disabled employees
Applications for employment by disabled persons are always fully
considered, bearing in mind the aptitudes of the applicant concerned.
In the event of members of staff becoming disabled every effort is
made to ensure that their employment within the group continues
and that appropriate training is arranged. It is the policy of the group
that the training, career development and promotion of disabled
persons should, as far as possible, be identical with that of other
employees.
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. A full time
health and safety team is employed by the group and is managed
through a sub-committee of the Executive team which meets three
times a year and is chaired by the Chief Executive Officer. This team
was established ten years ago and has created a solid health and
safety framework and culture within TMG.
Land and buildings
The market value of land and buildings is estimated by the directors
to be approximately £1.3 million greater than its balance sheet value
of £3.6 million (2011: £1.9 million greater than balance sheet value
of £5.4 million).
Governance
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.
Independent auditors
The auditors, PricewaterhouseCoopers LLP, have indicated their
willingness to continue in office and have confirmed their
independence. The appointment of auditors is considered annually
by the Audit Committee. Although PricewaterhouseCoopers LLP
have been the group’s auditors for a number of years, the
Committee is satisfied with their effectiveness and independence.
The Committee did not consider it necessary this year to conduct
a tender process for the appointment of auditors.
Annual report and financial statements 2012 43
Trader Media Group
Statement of directors’ responsibilities
For the year ended 1 April 2012
The directors are responsible for preparing the annual report and
the financial statements in accordance with applicable law
and regulations.
Statement of disclosure of information to auditors
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 group financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union, and the parent company financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable law). Under
company law the directors must not approve the financial statements
unless they are 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 that period. In preparing these financial statements,
the directors are required to:
a) so far as the director is aware, there is no relevant audit information
of which the company’s auditors are unaware; and
b) he/she has taken all the steps that he/she ought to have taken as
a director in order to make himself/herself aware of any relevant
audit information and to establish that the company’s auditors are
aware of that information.
• 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.
44 Annual report and financial statements 2012
On behalf of the Board,
Z Byng-Maddick
Director
15 June 2012 Registered address:
Auto Trader House
Cutbush Park Industrial Estate
Danehill
Lower Earley
Reading
Berkshire
RG6 4UT
Trader Media Group
Independent auditors’ report
to the members of Trader Media Group Limited
We have audited the group financial statements of Trader Media
Group Limited for the year ended 1 April 2012 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.
Opinion on financial statements
In our opinion the group financial statements:
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.
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.
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.
• c ertain disclosures of directors’ remuneration specified by law are
not made; or
•w
e have not received all the information and explanations we
require for our audit.
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:
Other matter
We have reported separately on the parent company financial
statements of Trader Media Group Limited for the year ended
1 April 2012.
Alan Kinnear (Senior Statutory Auditor)
For and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Reading
15 June 2012
Governance
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.
• give a true and fair view of the state of the group’s affairs as at
1 April 2012 and of its profit and cash flows for the year then ended;
•h
ave been properly prepared in accordance with IFRSs as adopted
by the European Union; and
•h
ave been prepared in accordance with the requirements of the
Companies Act 2006.
Annual report and financial statements 2012 45
Trader Media Group
Consolidated income statement
For the year ended 1 April 2012
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/(loss) for the year from discontinued operations
3
3, 4
8
8
Before
exceptional
items
2012
£m
Exceptional
items
2012
£m
Total
2011
£m
–
–
–
(22.8)
(22.8)
257.2
(30.2)
227.0
(121.1)
105.9
254.4
(39.5)
214.9
(96.3)
118.6
–
–
–
(11.1)
(11.1)
254.4
(39.5)
214.9
(107.4)
107.5
0.5
(81.7)
(81.2)
4.5
(7.5)
(3.0)
5.0
(89.2)
(84.2)
0.6
(86.0)
(85.4)
71.5
–
71.5
72.1
(86.0)
(13.9)
0.3
21.7
(14.7)
93.6
(12.0)
7.0
81.6
0.2
Profit for the year attributable
to equity shareholders
of the company
The notes on pages 51 to 85 are an integral part of these consolidated financial statements.
46 Annual report and financial statements 2012
Exceptional
items
2011
£m
257.2
(30.2)
227.0
(98.3)
128.7
9
7
Total
2012
£m
Before
exceptional
items
2011
£m
0.5
7.5
1.0
(11.1)
(10.1)
71.5
Trader Media Group
Consolidated statement
of comprehensive income
For the year ended 1 April 2012
Note
Profit for the year
Other comprehensive income:
Actuarial loss on post employment benefit obligations, net of tax
Cash flow hedges, net of tax
IFRS 2 – share based payments credit/(charge)
Currency translation differences
Other comprehensive (loss)/income for the year, net of tax
Total comprehensive income for the year attributable
to equity shareholders of the company
9, 23
9
29
9, 26
2012
£m
2011
£m
7.5
71.5
(0.7)
0.6
0.1
(1.6)
(1.6)
(0.5)
8.3
(1.1)
0.1
6.8
5.9
78.3
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
The notes on pages 51 to 85 are an integral part of these consolidated financial statements.
Annual report and financial statements 2012 47
Trader Media Group
Consolidated balance sheet
As at 1 April 2012
2012
£m
2011
£m
366.8
5.5
3.2
4.9
1.4
381.8
387.1
7.7
1.9
4.9
2.2
403.8
–
35.8
48.7
84.5
1.8
86.3
0.3
36.9
73.0
110.2
1.8
112.0
(74.4)
(6.3)
–
(1.6)
(82.3)
4.0
(70.8)
(0.4)
(2.6)
(1.9)
(75.7)
36.3
19
20
14
22
23
21
(1,157.3)
(0.9)
(2.4)
(1.0)
(0.8)
(3.9)
(1,166.3)
(780.5)
(1,011.3)
(1.8)
–
(1.8)
–
(1.7)
(1,016.6)
(576.5)
24
24
24
25
26
0.1
177.3
1.2
(1,054.0)
94.9
(780.5)
0.1
363.6
1.2
(945.3)
3.9
(576.5)
Note
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
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
16
18
Assets of disposal group classified as held for sale
17
Liabilities:
Current liabilities
Trade and other payables
Current taxation liabilities
Derivative financial instruments
Provisions for other liabilities and charges
20
14
21
Net current assets
Non-current liabilities
Borrowings
Trade and other payables
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 notes on pages 51 to 85 are an integral part of these consolidated financial statements.
The financial statements on pages 46 to 85 were authorised for issue by the Board of Directors on 15 June 2012 and were signed on its behalf by:
Z Byng-Maddick
Director
Registered number: 4768833
48 Annual report and financial statements 2012
Trader Media Group
Consolidated statement
of changes in equity
For the year ended 1 April 2012
Share
capital
£m
Share
premium
£m
0.1
0.9
–
–
71.5
–
71.5
–
–
–
–
–
–
–
–
–
–
(0.5)
8.3
(1.1)
–
6.7
–
–
–
0.1
0.1
(0.5)
8.3
(1.1)
0.1
6.8
–
–
78.2
0.1
78.3
–
363.6
363.7
0.3
–
1.2
–
–
3.9
0.3
363.6
(576.5)
–
–
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
24
24
24
430.0
(430.0)
(10.7)
–
–
–
–
–
10.8
24, 25, 26
24, 25, 26
25, 27
(99.6)
(76.0)
–
177.4
–
–
–
1.2
Note
Balance at 28 March 2010
Comprehensive income:
Profit for the year
Other comprehensive income:
Actuarial loss on post employment
benefit obligations, net of tax
Cash flow hedges, net of tax
IFRS 2 – share based payments charge
Currency translation differences
Total other comprehensive income
9
9
9, 29
9, 26
Total comprehensive income
Transactions with owners
Issue of share capital
Reclassification of preference shares
Balance at 3 April 2011
24
24
Comprehensive income:
Profit for the year
Other comprehensive income:
Actuarial loss on post employment
benefit obligations, net of tax
Cash flow hedges, net of tax
IFRS 2 – share based payments credit
Currency translation differences
Total other comprehensive loss
9
9
9, 29
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
Retained
deficit
£m
(1,023.5)
–
–
(945.3)
(36.6)
10.0
(100.4)
(1,054.0)
Other
reserves
£m
3.8
Total
£m
(1,018.7)
–
–
–
430.0
(430.0)
0.1
26.6
66.0
–
94.9
(109.6)
–
(100.4)
(780.5)
Financial statements
The notes on pages 51 to 85 are an integral part of these consolidated financial statements.
Annual report and financial statements 2012 49
Trader Media Group
Consolidated cash flow statement
For the year ended 1 April 2012
Note
Cash flows from operating activities
Cash generated from operations
Tax paid
Net cash generated from operating activities
28
Cash flows from investing activities
Investment in shares of overseas company
Proceeds from/(payment on) disposal of subsidiaries
and business units, 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
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
Investment in other financial assets
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
Net (decrease)/increase 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
The notes on pages 51 to 85 are an integral part of these consolidated financial statements.
50 Annual report and financial statements 2012
18
2012
£m
2011
£m
138.9
(9.6)
129.3
141.3
(7.3)
134.0
(1.3)
(1.9)
1.1
(2.5)
(12.2)
1.7
0.3
0.5
(12.4)
(2.4)
(1.2)
(11.0)
0.6
–
0.6
(15.3)
–
(584.2)
734.2
(43.9)
(7.5)
–
(29.0)
(100.4)
(109.6)
(0.5)
0.5
(0.1)
(140.5)
0.3
(13.7)
–
(77.6)
–
21.4
(29.7)
–
–
–
–
–
(99.3)
(23.6)
73.0
(0.7)
48.7
19.4
53.7
(0.1)
73.0
Trader Media Group
Notes to the consolidated
financial statements
For the year ended 1 April 2012
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 54. 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 IFRIC interpretations
(a) New and amended standards adopted by the group
There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on 4 April 2011 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 4 April 2011 and not early adopted
• IAS 19 (amendment) Employee benefits
• IFRS 9 Financial instruments
• IFRS 10 Consolidated financial statements
• IFRS 12 Disclosures of interests in other entities
• IFRS 13 Fair value measurement
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the group.
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 1 April 2012. 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.
Financial statements
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.
Annual report and financial statements 2012 51
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
1. Accounting policies continued
Basis of consolidation continued
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.
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 entity 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 publication, which are recognised on publication date;
• amounts invoiced for print services provided which are recognised on dispatch of the goods to the customer;
• fees for the supply of computer software, which are recognised on the date of supply; and
• maintenance contracts, subscription and licence fees, which are recognised on a straight line basis over the period to which they relate.
Barter transactions are recognised when there is an exchange of dissimilar goods or services, and the transaction is measured at the fair value
of the goods or services received in accordance with the recognition policies above.
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.
52 Annual report and financial statements 2012
Trader Media Group
1. Accounting policies continued
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.
(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, gains on the early
extinguishment of borrowings, writing down inventories by material amounts to net realisable value, 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.
• 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.
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.
Annual report and financial statements 2012 53
Financial statements
(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:
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
1. Accounting policies continued
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 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.
(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 came into use.
Property, plant and equipment
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
54 Annual report and financial statements 2012
Trader Media Group
1. Accounting policies continued
Property, plant and equipment continued
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.
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.
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.
Annual report and financial statements 2012 55
Financial statements
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.
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
1. Accounting policies continued
Financial assets continued
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.
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.
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.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. For work
in progress and finished goods manufactured by the group, cost is taken as production cost which includes an appropriate portion of
attributable overheads based on normal levels of activity.
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
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.
56 Annual report and financial statements 2012
Trader Media Group
1. Accounting policies continued
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.
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.
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.
Annual report and financial statements 2012 57
Financial statements
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.
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
1. Accounting policies continued
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.
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.
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.
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 dealers cutting back on volumes of stock,
thereby impacting on advertising spend. The group also holds a similar market position in Ireland and South Africa, whose markets have also
contracted and where the economic factors may lead to further decline.
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 predominately 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.
All group products have been impacted by the shift to the online delivery channel and the group is therefore exposed to the rapid pace of
change in this area. To mitigate this, the group has allocated extra investment and people to this channel 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 1 April 2012, if the Pound had weakened/strengthened by 20% against the Euro with all other variables held constant, post-tax profit/(loss)
for the year would have been £0.1 million higher/£0.1 million lower (2011: £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.
58 Annual report and financial statements 2012
Trader Media Group
2. Financial risk management continued
ii) Interest rate risk
The group has interest bearing assets, primarily cash, which are at risk of fluctuations in interest rates. Cash levels and market interest rates
available are monitored by the group treasury function to ensure risks are minimised.
The group’s interest rate risk also 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 and
a cap agreement 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.
On the cap agreement the group received the difference between the cap rate and the current floating rate should the latter be higher in the
month in question, again calculated with reference to agreed notional amounts. When the floating rate is lower than the cap rate, no cash
flows arise under this agreement.
At 1 April 2012, 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 £1.9 million or lower by £27.6 million (2011: £3.6 million higher/£18.4 million lower). Significant
fluctuations in global interest rates have impacted the interest accruing on the syndicated bank loans and shareholder loans (note 19). Interest
rate fluctuations on loans are offset by fluctuations on interest on cash balances (note 18) held largely in the UK at both balance sheet dates.
The cash impact of these fluctuations would have been £1.4 million higher/£0.1 million lower (2011: £1.8 million higher/£0.5 million lower).
Other components of equity would have been £0.0 million higher/£0.1 million lower (2011: £0.1 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
2012
(basis points)
UK LIBOR
Euro LIBOR
South African Central Bank rate
+ 300/- 20
+ 80/- 80
+ 170/- 170
Potential
variance in
interest rate
2011
(basis points)
+ 270/- 50
+ 60/- 60
+ 170/- 170
Credit risk
Credit risk arises from deposits with banks and financial institutions, as well as credit exposure to customers. The group minimises its risk
by dealing with only a limited range of financial institutions with secure credit ratings (note 18).
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 customers have an appropriate credit history
and a significant number of balances are prepaid or collected via direct debit. 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 1.1% of revenue
(2011: 0.7%). The group does not consider its exposure to credit risk as high beyond the cost of bad debts.
Annual report and financial statements 2012 59
Financial statements
A reduction in the amount of credit provided to those purchasing vehicles has reduced activity in the market and over the longer term
will continue to adversely impact dealer profitability. This combined with the current economic environment is expected to impact all areas
of the business.
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
2. Financial risk management continued
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 £32.0 million (2011: £46.9 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.
At 1 April 2012
Borrowings
Derivative financial instruments
Trade payables
Undrawn revolving credit facility
At 3 April 2011
Borrowings
Derivative financial instruments
Trade payables
Undrawn revolving credit facility
Less than
Between
Between
1 year 1 and 2 years 2 and 5 years
£m
£m
£m
–
1.3
65.5
35.0
–
0.9
0.9
–
721.7
0.2
–
–
Over
5 years
£m
435.6
–
–
–
Less than
1 year
£m
Between
1 and 2 years
£m
Between
2 and 5 years
£m
Over
5 years
£m
–
2.6
59.5
35.0
–
–
0.9
–
584.2
–
0.9
–
427.1
–
–
–
Of the £721.7 million disclosed in the 1 April 2012 borrowings payable between 2 and 5 years, the group has repurchased £1.9 million of its
own debt in the first quarter of the next financial year.
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.
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.
60 Annual report and financial statements 2012
Trader Media Group
2. Financial risk management continued
(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. 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 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 group has applied the amendment to IFRS 7 for financial instruments that are measured in the balance sheet at fair value. This requires
disclosure of fair value measurements by level of the following fair value measurement hierarchy:
• 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
1.4
1.4
Liabilities
Derivative financial instruments (used for hedging)
(2.4)
(2.4)
As at 1 April 2012
Level 2
£m
Total
£m
Assets
Financial assets at fair value through profit and loss
2.2
2.2
Liabilities
Derivative financial instruments (used for hedging)
(2.6)
(2.6)
As at 3 April 2011
• The fair values of the interest rate swap and cap agreements (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.
Annual report and financial statements 2012 61
Financial statements
Specific valuation techniques used to value financial instruments include:
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
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. Following internal restructuring the group has changed its segmental structure with
the major change to prior year being a move of the printed magazine titles in Ireland from International to Magazines. The segments have also
been renamed as detailed below:
• Digital UK (previously Trader Digital) – classified automotive advertising online for cars and other vehicles, principally through the
autotrader.co.uk website, Auto Trader Mobile and other digital services provided to car and non-car automotive dealers and manufacturers.
• Magazines (previously Trader Publishing) – 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,
Bike Trader and Motorhome and Caravan Trader. This segment also includes the online elements of AdTrader.
• International (previously Trader 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 Trader branding.
The segmental information in the prior year has been restated to reflect the current segmental structure of the business.
The group disposed of its Italian subsidiary, Edizeta srl, during the year and it has been classified within discontinued operations in the income
statement and is excluded from the segmental information.
The trade and assets of Apple Web Offset, the printing business, were sold in the prior year. It has been classified within discontinued
operations in the income statement as it primarily performed printing for external customers. This printing business 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.
The segment information provided to the Executive Committee for the reportable segments is as follows:
2012
UK Titles International
£m
£m
Total
£m
Total segment revenue
229.8
27.4
257.2
Underlying EBITDA
Restructuring costs
132.5
(1.1)
11.5
–
144.0
(1.1)
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
62 Annual report and financial statements 2012
Trader Media Group
3. Segmental information continued
UK Titles
£m
2011
International
£m
Total
£m
Total segment revenue
226.9
27.5
254.4
Underlying EBITDA
Restructuring costs
118.7
(2.0)
13.1
–
131.8
(2.0)
EBITDA
Depreciation and amortisation
Exceptional items: impairments
Exceptional items: restructuring
Segment operating profit
116.7
(10.7)
(9.6)
(1.4)
95.0
13.1
(0.5)
–
(0.1)
12.5
129.8
(11.2)
(9.6)
(1.5)
107.5
Segment assets
403.4
31.4
434.8
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
2012
£m
2011
£m
105.9
(84.2)
21.7
107.5
(13.9)
93.6
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, certain financial assets
at fair value through profit or loss 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:
2011
£m
414.5
434.8
–
4.9
48.7
468.1
3.1
4.9
73.0
515.8
Financial statements
Segment assets
Unallocated:
Segment assets – discontinued operations
Deferred taxation assets
Cash and cash equivalents
Total assets per the consolidated balance sheet
2012
£m
Annual report and financial statements 2012 63
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
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:
2012
£m
2011
£m
Revenue:
UK
Rest of world
Total
228.6
28.6
257.2
226.3
28.1
254.4
Non-current assets:
UK
Rest of world
Total
369.4
7.5
376.9
357.9
39.4
397.3
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.
4. Operating profit/(loss)
The following items have been included in arriving at operating profit/(loss):
2012
£m
2011
£m
Staff costs (note 5)
Depreciation of property, plant and equipment (note 11)
Amortisation of intangibles (note 10)
Operating lease payments
Net foreign exchange losses
63.0
2.3
11.9
2.9
0.2
67.3
3.0
8.3
4.0
0.2
Exceptional items:
Impairment charges: goodwill (note 10)
Restructuring of group operations
Total exceptional items
18.2
4.6
22.8
9.6
1.5
11.1
Restructuring of group operations relates to costs incurred on the capital structure and financing of the group, back office consolidation in the
UK and overseas and the continued development of a single sales structure.
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 services
– Services relating to corporate finance transactions entered into by the company
or any of its associates
Total
Fees for the audit of the group’s circulation statistics were paid to Audit Bureau of Circulation of £11,000 (2011: £13,000).
64 Annual report and financial statements 2012
2012
£m
2011
£m
0.1
0.1
0.2
0.1
0.2
0.2
1.0
1.4
0.1
0.6
Trader Media Group
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
2012
£m
2011
£m
55.4
5.8
1.9
(0.1)
63.0
61.7
5.6
1.8
–
69.1
Within restructuring of group operations in note 4 is £1.5 million (2011: £1.5 million) of redundancy costs which has been included in wages
and salaries.
The average monthly number of employees (including executive directors) employed by the group was as follows:
Administration
Sales
Production
Total
Full time equivalent
2012
2011
Number
Number
532
803
179
1,514
517
831
292
1,640
2012
£m
2011
£m
1.3
0.1
1.4
1.2
0.1
1.3
2012
£m
2011
£m
0.8
–
0.8
0.7
–
0.7
6. Directors and key management remuneration
Directors’ emoluments
Aggregate directors’ emoluments
Pension contributions
Total
1 director (2011: 1) was a member of the group’s defined contribution scheme.
All the above remuneration was paid by Trader Publishing Limited.
The remuneration of the highest paid director was as follows:
Aggregate emoluments
Pension contributions
Total
Andrew Miller, Darren Singer, Carolyn McCall (resigned 30 June 2010), 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 (2011: £0.1 million)
for the provision of directors’ services to the group (note 31).
John King, Zillah Byng-Maddick 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.
Annual report and financial statements 2012 65
Financial statements
John King and Zillah Byng-Maddick 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.
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
6. Directors and key management remuneration continued
Key management compensation
Key management comprises the members of the Executive Committee.
The aggregate emoluments of all key management (including directors) were as follows:
2012
£m
2011
£m
3.9
0.2
4.1
3.3
0.1
3.4
2012
£m
2011
£m
3.2
(2.8)
–
–
0.4
(0.1)
0.3
11.1
(7.7)
(10.7)
(0.3)
(7.6)
(0.6)
(8.2)
Profit/(loss) on disposal of discontinued operations
0.2
(1.9)
Profit/(loss) for the year from discontinued operations
0.5
(10.1)
Salaries and short term employee benefits
Post employment benefits
Total
7. Discontinued operations
The analysis of the result of discontinued operations is as follows:
Revenue
Expenses
Expenses: exceptional items – impairment charges: property, plant and equipment and goodwill
Expenses: exceptional items – restructuring
Profit/(loss) before tax of discontinued operations
Taxation charge
Profit/(loss) after tax of discontinued operations
The profit/(loss) on sale of subsidiary undertakings relates to the sale of wholly owned subsidiaries and business units as detailed below:
Date disposed
Trader Media (TNT) Limited
Acorn Web Offset Limited
Apple Web Offset
Edizeta srl
Total
66 Annual report and financial statements 2012
26 February 2008
28 August 2009
28 October 2010
7 November 2011
2012
Net
proceeds
£m
2012
Gain
on sale
£m
2011
Net
proceeds
£m
2011
Gain/(loss)
on sale
£m
–
–
–
1.4
1.4
–
–
–
0.2
0.2
0.1
0.3
1.8
–
2.2
0.1
0.3
(2.3)
–
(1.9)
Trader Media Group
8. Finance income and finance costs
2012
£m
2011
£m
Finance income
On bank balances
Exceptional: net gain on debt buy back
Exceptional: cancellation of accrued preference share interest
Total
0.5
4.5
–
5.0
0.6
3.5
68.0
72.1
Finance costs
On bank loans and overdrafts
On shareholders’ loans
Dividend on preference shares
Net losses on derivative financial instruments
Ineffectiveness on derivatives designated as cash flow hedges
Unwinding of discount on provisions
Other interest payable
Exceptional: debt issue costs
Total
29.0
48.7
–
3.1
0.8
–
0.1
7.5
89.2
17.4
44.8
11.3
12.4
–
0.1
–
–
86.0
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 from parties external to the group, was at a discount to the debt’s
nominal value and resulted in a profit to the group of £4.5 million (2011: £3.5 million). Transaction costs associated with the purchase of this
debt were £0.4 million (2011: £0.2 million).
Debt issue costs incurred during the year ended 1 April 2012 relate to the extinguishment of the Syndicated Term Loan and subsequent
refinancing (note 19).
9. Income tax expense
2011
£m
Current taxation
UK corporation taxation
Foreign taxation
Relief for double taxation
Adjustments in respect of prior years
Total current taxation
11.9
3.4
–
0.5
15.8
3.4
3.3
(0.1)
(0.4)
6.2
Deferred taxation
Origination and reversal of temporary differences
Adjustments in respect of prior years
Effect of rate changes on deferred taxation
Total deferred taxation
(0.9)
(0.5)
0.3
(1.1)
6.0
(0.2)
–
5.8
Total taxation charge
14.7
12.0
Financial statements
2012
£m
Annual report and financial statements 2012 67
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
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:
2012
£m
2011
£m
Profit before taxation
21.7
93.6
Tax on profit on ordinary activities at the standard
UK corporation tax rate of 26% (2011: 28%)
Expenses not deductible for taxation purposes
Income not included for taxation purposes
Adjustments in respect of foreign tax rates
Temporary differences
Effect of rate changes on deferred taxation
Adjustments to taxation charge in respect of prior years
Total taxation charge
5.6
8.4
–
(0.1)
0.5
0.3
–
14.7
26.2
5.3
(19.1)
0.2
–
–
(0.6)
12.0
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 lower than those in the UK, primarily because the profits earned in Ireland are taxed at a rate of 12.5%.
The tax charge relating to components of other comprehensive income is as follows:
Note
Actuarial loss on post employment
benefit obligations
Cash flow hedges
IFRS 2 – share based payments credit/(charge)
Currency translation differences
Other comprehensive income
Before tax
£m
23
29
26
(0.9)
0.9
0.1
(1.6)
(1.5)
2012
Tax
(charge)/
credit
£m
0.2
(0.3)
–
–
(0.1)
After tax
£m
(0.7)
0.6
0.1
(1.6)
(1.6)
Before tax
£m
(0.5)
11.5
(1.1)
0.1
10.0
2011
Tax credit
£m
–
(3.2)
–
–
(3.2)
After tax
£m
(0.5)
8.3
(1.1)
0.1
6.8
The income tax charged directly to equity during the year is as follows:
Note
Deferred taxation
68 Annual report and financial statements 2012
22
2012
£m
2011
£m
(0.1)
(3.2)
Trader Media Group
10. Intangible assets
Goodwill
£m
Cost
At 28 March 2010
Additions
Disposals
Reclassification
Exchange differences
At 3 April 2011
Additions
Disposals
Reclassification
Exchange differences
At 1 April 2012
Software &
website
development
costs
£m
Customer
relationships
£m
Technology
£m
Trade
names and
trademarks
£m
Total
£m
1,107.1
–
(19.4)
–
(0.1)
1,087.6
–
(22.2)
–
(0.4)
1,065.0
28.7
10.4
(1.4)
(0.3)
–
37.4
11.4
(0.4)
0.5
–
48.9
7.5
–
–
–
–
7.5
–
(0.3)
–
(0.1)
7.1
1.9
–
–
–
–
1.9
–
–
–
–
1.9
2.1
–
–
–
–
2.1
–
(0.2)
–
–
1.9
1,147.3
10.4
(20.8)
(0.3)
(0.1)
1,136.5
11.4
(23.1)
0.5
(0.5)
1,124.8
Accumulated amortisation and impairments
At 28 March 2010
Amortisation charge
Impairment
Reclassification
Disposals
At 3 April 2011
Amortisation charge
Impairment
Disposals
At 1 April 2012
726.7
–
18.1
–
(19.4)
725.4
–
18.2
(20.9)
722.7
11.3
7.2
–
0.3
(1.2)
17.6
10.7
–
(0.2)
28.1
3.6
0.8
–
–
–
4.4
0.8
–
(0.2)
5.0
1.1
0.3
–
–
–
1.4
0.2
–
–
1.6
0.4
0.2
–
–
–
0.6
0.2
–
(0.2)
0.6
743.1
8.5
18.1
0.3
(20.6)
749.4
11.9
18.2
(21.5)
758.0
Net book value at 1 April 2012
Net book value at 3 April 2011
342.3
362.2
20.8
19.8
2.1
3.1
0.3
0.5
1.3
1.5
366.8
387.1
The amortisation charge of £11.9 million (2011: £8.5 million) has been charged in administrative expenses in the income statement.
Goodwill is allocated to the group’s cash generating units (“CGUs”) identified according to the operating segment.
UK Titles
International
2012
£m
2011
£m
315.1
27.2
342.3
323.8
38.4
362.2
An impairment loss of £18.2 million (2011: £18.1 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. These growth rates do not exceed the long term average growth rates for the sectors in which the CGUs
operate. The growth rates which have been applied to the CGUs are as follows:
UK Titles
International
2012
%
2011
%
0.0 to 0.5
0.0 to 0.5
0.0 to 2.0
0.0 to 2.0
Annual report and financial statements 2012 69
Financial statements
An operating segment-level summary of the goodwill allocation is presented below.
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
10. Intangible assets continued
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:
2012
%
2011
%
13.7 to 18.0 13.0 to 13.7
17.0 to 18.3 13.0 to 18.3
UK Titles
International
Impairment charges arose in the UK Titles segment of £18.2 million (2011: £9.6 million) and the International segment of £nil (2011: £8.5 million).
11. Property, plant and equipment
Land,
Assets
buildings
under and leasehold
construction improvements
£m
£m
Cost
At 28 March 2010
Additions
Disposals
Assets brought into use
Reclassification
At 3 April 2011
Additions
Disposals
Reclassification
Exchange differences
At 1 April 2012
Depreciation
At 28 March 2010
Charge for the year
Impairment
Disposals
Reclassification
At 3 April 2011
Charge for the year
Disposals
At 1 April 2012
Net book value at 1 April 2012
Net book value at 3 April 2011
Plant and
equipment
£m
Motor
vehicles
£m
Total
£m
0.7
–
–
(0.2)
–
0.5
–
–
(0.5)
–
–
11.0
–
(4.9)
–
–
6.1
–
(1.8)
–
–
4.3
53.5
0.9
(36.0)
0.2
0.3
18.9
2.5
(1.0)
–
(0.2)
20.2
0.5
–
(0.4)
–
–
0.1
–
–
–
–
0.1
65.7
0.9
(41.3)
–
0.3
25.6
2.5
(2.8)
(0.5)
(0.2)
24.6
–
–
–
–
–
–
–
–
–
5.1
0.2
0.9
(3.7)
–
2.5
0.2
(0.2)
2.5
47.4
2.9
1.3
(36.0)
(0.3)
15.3
2.1
(0.9)
16.5
0.4
–
–
(0.3)
–
0.1
–
–
0.1
52.9
3.1
2.2
(40.0)
(0.3)
17.9
2.3
(1.1)
19.1
–
0.5
1.8
3.6
3.7
3.6
–
–
5.5
7.7
Depreciation expense of £0.3 million (2011: £0.6 million) has been charged in cost of sales and £2.0 million (2011: £2.5 million) charged in
administrative expenses in continuing operations.
An impairment of £nil (2011: £2.2 million) has been recorded against certain assets in the print business based on recent valuations obtained.
70 Annual report and financial statements 2012
Trader Media Group
12. Investments
Shares in other undertakings
Cost and net book value
At beginning of year
Additions
At end of year
2012
£m
2011
£m
1.9
1.3
3.2
–
1.9
1.9
In November 2011, the group increased its 14.9% interest in the preferred share capital of IAUTOS Company Limited to 22.7%. IAUTOS
Company Limited is an intermediate holding company through which are held trading companies incorporated in the People’s Republic
of China.
Subsidiary undertakings
The principal trading and holding subsidiaries of the group are as follows:
Subsidiary undertakings
Country of registration
or incorporation
Principal activity
The Car Trader (Pty) Limited
Trader Finance (2009) Limited
Trader Media Corporation Limited
Trader Publishing Limited
Webzone Limited
South Africa
England and Wales
England and Wales
England and Wales
Republic of Ireland
Publishing
Financing company
Holding company
Publishing
Publishing
Class of
shares held
Percentage
owned
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
Edizeta srl was sold on 7 November 2011. The trade and assets of Auto Trade-mail Limited were divisionalised into Trader Publishing Limited
during the year and Trademail Holdings Limited became dormant in the year.
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.
2012
Financial assets as per balance sheet:
Financial assets at fair value through profit or loss
Trade and other receivables
Cash and cash equivalents
Total
2012
Financial liabilities as per balance sheet:
Borrowings
Trade and other payables
Derivative financial instruments
Total
Fair value
Loans and through profit
receivables
and loss
£m
£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
Other financial
liabilities
£m
Derivatives
used for
hedging
£m
Non financial
liabilities
£m
Total
£m
(1,157.3)
(66.4)
–
(1,223.7)
–
–
(2.4)
(2.4)
–
(8.9)
–
(8.9)
(1,157.3)
(75.3)
(2.4)
(1,235.0)
Annual report and financial statements 2012 71
Financial statements
13. Financial instruments by category
The accounting policies for financial instruments have been applied to the line items below:
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
13. Financial instruments by category continued
Fair value
Loans and through profit
receivables
and loss
£m
£m
2011
Financial assets as per balance sheet:
Financial assets at fair value through profit or loss
Trade and other receivables
Cash and cash equivalents
Total
2011
Financial liabilities as per balance sheet:
Borrowings
Trade and other payables
Derivative financial instruments
Total
Non financial
assets
£m
Total
£m
–
30.3
73.0
103.3
2.2
–
–
2.2
–
6.6
–
6.6
2.2
36.9
73.0
112.1
Other financial
liabilities
£m
Derivatives
used for
hedging
£m
Non financial
liabilities
£m
Total
£m
(1,011.3)
(61.3)
–
(1,072.6)
–
–
(2.6)
(2.6)
–
(11.3)
–
(11.3)
(1,011.3)
(72.6)
(2.6)
(1,086.5)
14. Derivative financial instruments
2012
2011
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Interest rate swap – cash flow hedge
Total current portion
–
–
–
–
–
–
2.6
2.6
Interest rate swap – cash flow hedge
Total non-current portion
–
–
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 £0.8 million (2011: £nil).
The notional principal amount of the outstanding interest rate swap contracts at 1 April 2012 was £190.0 million (2011: £191.2 million).
The fixed interest rate was 1.35% (2011: 6.187%) and the floating rate is based on 1 month LIBOR (2011: 1 month LIBOR). The gain or loss
recognised in equity on the interest rate swap contracts as of 1 April 2012 will be released to the income statement over the remaining life of
the instrument.
The interest rate cap contract expired in June 2011 and the cap rate was 6.3%.
15. Financial assets at fair value through profit or loss
Customer list
2012
£m
2011
£m
1.4
2.2
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.
72 Annual report and financial statements 2012
Trader Media Group
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
2012
£m
2011
£m
30.8
(2.8)
28.0
0.2
0.6
7.0
35.8
29.9
(1.7)
28.2
0.1
2.0
6.6
36.9
As of 1 April 2012, trade receivables of £22.4 million (2011: £25.8 million) were fully performing.
As of 1 April 2012 trade receivables of £5.2 million (2011: £2.0 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
2012
£m
2011
£m
4.1
0.9
0.1
0.1
5.2
1.1
0.2
0.6
0.1
2.0
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 1 April 2012 trade receivables of £3.2 million (2011: £2.1 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
2012
£m
2011
£m
1.7
2.6
(1.5)
2.8
3.2
1.8
(3.3)
1.7
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.
Annual report and financial statements 2012 73
Financial statements
The creation and release of the provision for impaired receivables is included in administrative expenses in the income statement.
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
16. Trade and other receivables continued
The carrying amount of the group’s trade receivables is denominated in the following currencies:
UK pound
Euro
South African rand
Total
2012
£m
2011
£m
28.5
1.3
1.0
30.8
26.7
3.0
0.2
29.9
2012
£m
2011
£m
1.8
1.8
2012
£m
2011
£m
16.7
32.0
48.7
26.1
46.9
73.0
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.
Non-current assets held for sale:
Property, plant and equipment
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
2012
£m
2011
£m
685.8
471.5
1,157.3
584.2
427.1
1,011.3
2012
£m
2011
£m
721.7
435.6
1,157.3
584.2
427.1
1,011.3
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. This refinancing resulted in the extinguishment of the original borrowings.
Interest is charged at LIBOR plus a margin of between 2% and 5% (2011: 2% and 2.125%) depending on the consolidated leverage ratio
of Trader Media Corporation (2003) Limited and its subsidiaries. The margins changed during the current year as a result of the refinancing
detailed above.
74 Annual report and financial statements 2012
Trader Media Group
19. Borrowings continued
During the year a subsidiary undertaking purchased £48.4 million (2011: £82.9 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 £4.5 million
(2011: £3.5 million) after transaction costs has been recognised in the income statement (note 8).
A £35.0 million Revolving Credit Facility is 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% (2011: 2% and 2.125%).
Debt issue costs of £7.5 million were incurred in connection with the refinancing in 2011. These costs have been charged to the income
statement (note 8).
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 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 was 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 both 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
2012
£m
2011
£m
471.5
685.8
1,157.3
584.2
427.1
1,011.3
2012
£m
2011
£m
6.1
8.4
0.5
59.4
74.4
0.9
75.3
4.7
10.9
0.4
54.8
70.8
1.8
72.6
Trade payables
Other taxes and social security
Other payables
Accruals and deferred income
Current liabilities
Non-current liabilities: trade payables
Total
Annual report and financial statements 2012 75
Financial statements
20. Trade and other payables
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
21. Provisions for other liabilities and charges
Current
At 3 April 2011
Charged to the income statement
Utilised in the year
Released in the year
Disposal in the year
At 1 April 2012
Non-current
At 3 April 2011
Reclassification from accruals
Charged to the income statement
Credited to other comprehensive income
Utilised in the year
Released in the year
At 1 April 2012
Onerous
lease and
dilapidations
provision
£m
0.8
0.1
(0.4)
–
–
0.5
Restructuring
provision
£m
0.7
1.1
(0.7)
(0.4)
–
0.7
Onerous
lease and
dilapidations
provision
£m
1.7
–
0.4
–
(0.2)
(0.1)
1.8
Holiday pay
provision
£m
0.4
0.4
(0.2)
–
(0.2)
0.4
Restructuring
provision
£m
–
1.7
0.5
(0.1)
–
–
2.1
Total
£m
1.9
1.6
(1.3)
(0.4)
(0.2)
1.6
Total
£m
1.7
1.7
0.9
(0.1)
(0.2)
(0.1)
3.9
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 the reorganisation of the group’s business in the United Kingdom.
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:
2012
£m
2011
£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
4.6
0.3
4.9
1.7
3.2
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
0.7
0.3
1.0
0.7
1.1
1.8
76 Annual report and financial statements 2012
Trader Media Group
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 28 March 2010
Credited/(charged) to the income statement
Charged directly to equity
At 3 April 2011
Credited/(charged) to the income statement
On disposal of subsidiary undertaking
Charged directly to equity
At 1 April 2012
Deferred tax liabilities
At 28 March 2010 and 3 April 2011
Credited to the income statement
At 1 April 2012
Accelerated
capital
allowances
£m
3.3
0.6
–
3.9
(0.1)
–
–
3.8
Accelerated
capital
allowances
£m
–
–
–
Other
temporary
differences
£m
10.7
(6.5)
(3.2)
1.0
0.4
(0.2)
(0.1)
1.1
Other
temporary
differences
£m
1.8
(0.8)
1.0
Total
£m
14.0
(5.9)
(3.2)
4.9
0.3
(0.2)
(0.1)
4.9
Total
£m
1.8
(0.8)
1.0
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 £3.6 million (2011: £9.6 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 24%
which was substantively enacted on 26 March 2012 and will be effective from 1 April 2012.
Further reductions to the UK corporation tax rate were announced in the March 2012 Budget. The changes, which are expected to be enacted
separately each year, propose to reduce the rate by 1% per annum to 22% by 1 April 2014. The changes had not been substantively enacted
at the balance sheet rate and therefore not recognised in these financial statements.
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.
The pension contributions to the group defined contribution scheme for the year amounted to £1.9 million (2011: £1.8 million). There are
£0.2 million (2011: £nil) 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.
Financial statements
The most recent actuarial valuation was performed as at 1 May 2009 and updated to 1 April 2012 by a qualified independent actuary.
Annual report and financial statements 2012 77
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
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
2012
£m
2011
£m
15.2
(14.4)
–
0.8
13.9
(14.0)
0.1
–
2012
£m
2011
£m
0.7
(0.8)
(0.1)
0.7
(0.8)
(0.1)
2012
£m
2011
£m
(0.9)
–
(0.9)
(0.8)
0.3
(0.5)
The amounts recognised in the income statement within administrative expenses (note 4) 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 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 £2.4 million
(2011: £1.5 million).
The movement in the defined benefit obligation over the year is as follows:
At beginning of year
Interest cost
Actuarial losses
Benefits paid
At end of year
2012
£m
2011
£m
13.9
0.7
0.8
(0.2)
15.2
12.6
0.7
0.9
(0.3)
13.9
2012
£m
2011
£m
14.0
0.8
(0.2)
–
(0.2)
14.4
13.0
0.8
0.1
0.4
(0.3)
14.0
The movement in the fair value of plan assets over the year is as follows:
At beginning of year
Expected return on plan assets
Actuarial (losses)/gains
Employer contribution
Benefits paid
At end of year
The actual return on plan assets was a gain of £0.6 million (2011: £0.9 million).
78 Annual report and financial statements 2012
Trader Media Group
23. Retirement benefit obligations continued
The principal actuarial assumptions used were as follows:
2012
2011
Discount rate
Rate of increase in deferred pensions
Inflation rate
4.90%
2.60%
3.40%
5.50%
3.75%
3.75%
Expected return on plan assets:
Equities
Property
Corporate bonds
Gilts
Cash
5.30%
5.30%
4.90%
3.30%
3.30%
6.40%
6.40%
5.50%
4.40%
4.00%
The group has assumed that mortality will be in line with nationally published PMA92 and PFA92 mortality tables related to members’ years
of birth and incorporating projected medium-term improvements to life expectancy. The average life expectancies in years of members
are as follows:
Member age 65 (current life expectancy)
Member age 45 (life expectancy at age 65)
2012
2011
Male
Years
Female
Years
Male
Years
Female
Years
88
90
91
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:
Equities
Corporate bonds
Total
2012
2011
£m
%
£m
%
9.6
4.8
14.4
66.7
33.3
100.0
9.1
4.9
14.0
65.4
34.6
100.0
Present value of defined benefit obligation
Fair value of plan assets
Deficit/(surplus)
Experience adjustments on scheme liabilities
Experience adjustments on scheme assets
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
15.2
(14.4)
0.8
13.9
(14.0)
(0.1)
12.6
(13.0)
(0.4)
9.7
(9.5)
0.2
11.5
(12.2)
(0.7)
(0.2)
(0.2)
(0.1)
0.1
0.3
3.3
–
(3.2)
(2.0)
(1.3)
Annual report and financial statements 2012 79
Financial statements
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.
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
24. Shares and share premium account
Allotted, called up and fully paid
501,000 A ordinary shares of 10p each (2011: 501,000)
488,796 B ordinary shares of 10p each (2011: 487,908)
10,204 C ordinary shares of 10p each (2011: 11,092)
10,204 deferred B ordinary shares of 10p each (2011: 11,092)
430,000,000 deferred shares of £0.0001 each (2011: nil)
177,287,048 cumulative irredeemable preference shares of £1 each
(2011: 204,000,000)
Total
2012
Share
capital
£m
2012
Share
premium
account
£m
2011
Share
capital
£m
2011
Share
premium
account
£m
0.1
–
–
–
–
–
–
1.2
–
–
0.1
–
–
–
–
–
–
1.2
–
–
177.3
177.4
–
1.2
363.6
363.7
–
1.2
During the year the company issued 80 (2011: 2,826) 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 968 (2011: 1,734) 10p ordinary
C shares for aggregate consideration of £5. These shares are within those issued above.
Until 7 June 2010 interest on the preference shares was charged at 15% of their fair value at their date of issue and rolled up into the principal
twice a year in December and June. From 8 June 2010 interest has been charged at 0.05% and the preference shares have been reclassified
as equity. During the 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 has been recorded against profit and loss reserves. Simultaneously £10.8 million of the rolled up interest
was waived.
Following the reclassification of preference share capital from liabilities to equity, the fair value uplift previously recognised on issue has been
reversed and transferred through reserves (note 26).
On 5 July 2011 the company issued 430,000,000 deferred shares of £1 each for £nil consideration. On 3 August 2011 in the High Court of
Justice, the deferred share capital was reduced by the cancellation of £0.9999 per share issued.
25. Retained deficit
£m
At 28 March 2010
Profit for the year
Actuarial loss on post employment benefit obligations, net of tax
Cash flow hedges, net of tax
IFRS 2 – share based payments charge
At 3 April 2011
Profit for the year
Actuarial loss on post employment benefit obligations, net of tax
Cash flow hedges, net of tax
IFRS 2 – 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
80 Annual report and financial statements 2012
(1,023.5)
71.5
(0.5)
8.3
(1.1)
(945.3)
7.5
(0.7)
0.6
0.1
(100.4)
10.0
(36.6)
10.8
(1,054.0)
Trader Media Group
26. Other reserves
Other
reserve
£m
At 28 March 2010
Currency translation differences on foreign currency net investments
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
Capital
redemption
reserve
£m
–
–
–
–
–
–
76.0
(10.0)
66.0
–
–
–
–
–
26.6
–
–
26.6
Translation
reserve
£m
3.8
0.1
3.9
(1.0)
(0.6)
–
–
–
2.3
The capital redemption reserve has been created to maintain capital for the nominal value of preference shares cancelled.
The other reserve relates to the premium payable on redemption of the preference shares.
27. Dividends
Ordinary dividends of £100.4 million (2011: £nil) were paid in respect of the year ended 1 April 2012 (£100.26 per ordinary 10p share).
Rolled up preference dividends and preference share capital, including premium, of £109.6 million (2011: £nil) were also paid during the year
(note 24).
Profit before taxation including discontinued operations
Adjustments for:
Depreciation
Amortisation
Goodwill and other impairment charges
Loss on disposal of property, plant and equipment
(Profit)/loss on sale of businesses
Increase in retirement benefit obligations
Fair value loss on customer list asset
Cancellation of preference share interest
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
Trade and other receivables
Trade and other payables
Provisions
Cash generated from operations
2012
£m
2011
£m
22.3
84.1
2.3
11.9
18.2
–
(0.2)
(0.1)
0.8
–
89.2
(0.5)
(4.5)
0.2
3.1
8.5
20.3
0.2
1.9
–
0.5
(68.0)
86.0
(0.6)
(3.5)
0.2
0.2
(0.1)
(1.1)
0.3
138.9
(0.4)
6.6
3.9
(1.5)
141.3
Annual report and financial statements 2012 81
Financial statements
28. Cash generated from operations
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
28. Cash generated from operations continued
The cash flows of discontinued operations are as follows:
Operating cash flows
Financing cash flows
Total cash flows
2012
£m
2011
£m
0.5
(0.6)
(0.1)
0.3
–
0.3
The aggregate cash flows arising on the disposal of Edizeta srl are as follows:
2012
£m
Intangible assets
Property, plant and equipment
Current assets
Current liabilities
Net assets disposed of
Currency translation differences (note 26)
Net gain on disposal
Sales proceeds (net of fees)
Less: cash and cash equivalents
Net cash inflow on sale (net of disposal costs)
1.4
0.3
1.7
(1.6)
1.8
(0.6)
0.2
1.4
(0.3)
1.1
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 80 (2011: 2,826)
ordinary C 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 a C shareholder 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 group has repurchased shares from 5 leavers (2011: nil). 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 C shares was equal to or greater than the fair value
of the shares.
During the previous year, the group recorded a bad leaver provision of £1.1 million through reserves. During the current year the provision
reduced by £0.1 million.
82 Annual report and financial statements 2012
Trader Media Group
30. Commitments and contingencies
Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:
Property, plant and equipment
Intangible assets
Total
2012
£m
2011
£m
–
0.5
0.5
0.6
2.0
2.6
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years
Total
Land and buildings Other
2012
2011
2012
£m
£m
£m
2.3
5.9
–
8.2
2.6
7.5
0.6
10.7
1.2
2.3
3.5
2011
£m
0.7
1.0
–
1.7
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 and dividends payable on these debt instruments
are disclosed below:
2012
£m
2011
£m
Shareholder loans and accrued interest
GMG (TMG) Limited
Crystal A Holdco Sàrl
Crystal B Holdco Sàrl
Ed Williams
(256.4)
(97.1)
(158.4)
(0.5)
(232.3)
(87.9)
(143.4)
–
Preference shares and accrued dividends
GMG (TMG) Limited
Crystal A Holdco Sàrl
Crystal B Holdco Sàrl
Ed Williams
(121.9)
(46.1)
(75.1)
(0.2)
(182.2)
(69.0)
(112.5)
–
(24.4)
(9.2)
(15.1)
–
6.0
2.3
3.7
–
Interest (charged)/credited to the income statement (2011: interest and dividends payable)
GMG (TMG) Limited
Crystal A Holdco Sàrl
Crystal B Holdco Sàrl
Ed Williams
Financial statements
Guardian Media Group plc and Apax Partners received £0.1 million each for the provision of directors’ services to the group (2011: £0.1 million).
The balance outstanding at the end of the year was £nil (2011: £0.1 million).
Annual report and financial statements 2012 83
Trader Media Group
Notes to the consolidated
financial statements CONTINUED
For the year ended 1 April 2012
31. Related party transactions continued
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:
2012
£m
2011
£m
Guardian Media Group plc and subsidiary undertakings
Sales – printing
Purchases – advertising and other purchases
Recharges from – salaries and other costs
–
–
–
2.8
(0.1)
(0.1)
Net balance outstanding at the year end
–
0.1
2012
£m
2011
£m
0.2
(0.5)
0.2
0.3
–
–
Apax
Sales – advertising and other
Purchases
Recharges to – salaries and other costs
Net balance outstanding at the year end
0.2
–
Transactions with directors and key management
On 5 July 2011 the company issued 3,293,800 deferred shares of £1 each for £nil consideration to directors and key management.
On 3 August 2011 in the High Court of Justice, the deferred share capital was reduced by the cancellation of £0.9999 per share issued
(note 24).
During the previous year, the company issued loans to certain directors and key management on an arms’ length basis. The balance
outstanding at the year end was £53,958 (2011: £54,852).
During the year the group repurchased 669 (2011: nil) ordinary C shares of 10p each held by senior management, for aggregate cash
consideration of £3 (note 29).
The following key management hold ordinary C shares:
2012
2011
No of C shares No of C shares
Directors:
Zillah Byng-Maddick
John King
1,000
3,000
1,000
3,000
Other key management
3,660
3,660
84 Annual report and financial statements 2012
Trader Media Group
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 18.54% of the ordinary shares) and Crystal B TopCo Sàrl (indirectly holding 30.25% 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.
Financial statements
33. Post balance sheet events
On 18 May 2012 the company issued 1,296 ordinary D shares of 10p each for cash consideration at fair value of £0.3 million.
Annual report and financial statements 2012 85
Trader Media Group
Independent auditors’ report
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 1 April 2012 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.
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 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 parent company financial statements:
• give a true and fair view of the state of the company’s affairs as at 1 April 2012;
• 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.
Other matter
We have reported separately on the group financial statements of Trader Media Group Limited for the year ended 1 April 2012.
Alan Kinnear (Senior Statutory Auditor)
For and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Reading
15 June 2012
86 Annual report and financial statements 2012
Trader Media Group
Company balance sheet
As at 1 April 2012
Note
2012
£m
2011
£m
4
997.9
499.4
Current assets
Debtors
Cash at bank and in hand
5
11.9
–
11.9
10.6
0.3
10.9
Creditors: Amounts falling due within one year
6
(42.1)
(36.7)
Net current liabilities
(30.2)
(25.8)
Total assets less current liabilities
967.7
473.6
(471.5)
(427.1)
496.2
46.5
177.4
1.2
26.6
68.5
222.5
496.2
287.7
1.2
–
–
(242.4)
46.5
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 87 to 92 were approved by the board of directors on 15 June 2012 and were signed on its behalf by:
Financial statements
Z Byng-Maddick
Director
Annual report and financial statements 2012 87
Trader Media Group
Notes to the financial statements
For the year ended 1 April 2012
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. This is deemed appropriate due to status of the consolidated group
as a going concern.
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. During the year, the company has changed its accounting policy for investments 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. As the revaluation exercise is conducted once every three years there is no adjustment required to previous years.
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.
Related party transactions
The company is exempt from the requirements to disclose details of 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.
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.
88 Annual report and financial statements 2012
Trader Media Group
1. Accounting policies continued
Share based payments
Equity settled awards are valued at grant date, and the grant date fair value 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 (2011: nil). As such, no staff costs arose during
either year.
Directors 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 £0.1 million (2011: £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 (2011: £0.1 million).
4. Fixed asset investments
Shares
in subsidiary
undertakings
£m
Cost/revalued cost
At beginning of year
Revaluation
At end of year
499.4
708.7
1,208.1
Impairment
At beginning of year
Charge for year
At end of year
–
210.2
210.2
Net book value at end of year
Net book value at beginning of year
997.9
499.4
The company owns 100% of the ordinary share capital of Trader Media Group (2003) Limited, a holding company registered in England
and Wales.
Subsidiary undertakings
Country of registration
or incorporation
Principal activity
The Car Trader (Pty) Limited
Trader Finance (2009) Limited
Trader Media Corporation Limited
Trader Publishing Limited
Webzone Limited
South Africa
England and Wales
England and Wales
England and Wales
Republic of Ireland
Publishing
Financing
Holding company
Publishing
Publishing
Class of
shares held
Percentage
owned
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
Edizeta srl was sold on 7 November 2011. The trade and assets of Auto Trade-mail Limited were divisionalised into Trader Publishing Limited
on 30 March 2012.
The directors consider the value of the investments to be supported by the value of their future cash flows.
Annual report and financial statements 2012 89
Financial statements
The company holds the following principal subsidiaries through its interest in Trader Media Group (2003) Limited:
Trader Media Group
Notes to the financial statements
CONTINUED
For the year ended 1 April 2012
5. Debtors
Amounts owed by group undertakings
2012
£m
2011
£m
11.9
10.6
2012
£m
2011
£m
Amounts owed by group undertakings are unsecured, non-interest bearing and are repayable on demand.
Deferred taxation is provided as follows:
Other timing differences
At beginning of year
Charged to the profit and loss account
At end of year
–
–
–
8.1
(8.1)
–
6. Creditors: Amounts falling due within one year
Amounts owed to group undertakings
Accruals
Total
2012
£m
2011
£m
1.2
40.9
42.1
–
36.7
36.7
2012
£m
2011
£m
471.5
427.1
Amounts owed to group undertakings are unsecured, non-interest bearing and are repayable on demand.
7. Creditors: Amounts falling due after more than one year
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).
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 2012, £0.5 million of the Series A shareholder loan notes was 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.
90 Annual report and financial statements 2012
Trader Media Group
8. Called up share capital
Allotted, called-up and fully-paid
501,000 A ordinary shares of 10p each (2011: 501,000)
488,796 B ordinary shares of 10p each (2011: 487,908)
10,204 C ordinary shares of 10p each (2011: 11,092)
10,204 deferred B ordinary shares of 10p each (2011: 11,092)
430,000,000 deferred shares of £0.0001 each (2011: nil)
177,287,048 (2011: 204,000,000) cumulative irredeemable preference share of £1 each
Total
2012
£m
2011
£m
0.1
–
–
–
–
177.3
177.4
0.1
–
–
–
–
287.6
287.7
During the year the company issued 80 (2011: 2,826) 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 968 (2011: 1,734) 10p ordinary C shares for
aggregate consideration of £5. These shares are within those issued above.
Until 7 June 2010 interest on the preference shares was charged at 15% of their fair value at their date of issue and rolled up into the principal
twice a year in December and June. From 8 June 2010 interest has been charged at 0.05% and the preference shares have been reclassified
as equity. During the 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 has been 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.
On 5 July 2011 the company issued 430,000,000 deferred shares of £1 each for £nil consideration. On 3 August 2011 in the High Court of
Justice, the deferred share capital was reduced by the cancellation of £0.9999 per share issued.
9. Reserves
Capital
redemption
reserve
£m
At beginning of year
Revaluation of fixed asset investment
Impairment of fixed asset investment
Bonus issue of deferred shares
Cancellation of deferred shares
Profit for the financial year
Dividend paid
Preference capital redeemed and cancelled
Preference dividend waived
At end of year
–
–
–
–
–
–
–
26.6
–
26.6
Revaluation
reserve
£m
Share
premium
account
£m
–
708.7
(210.2)
(430.0)
–
–
–
–
–
68.5
1.2
–
–
–
–
–
–
–
–
1.2
Profit and
loss account
£m
(242.4)
–
–
–
430.0
161.1
(100.4)
(36.6)
10.8
222.5
Financial statements
The capital redemption reserve has been created to maintain capital for the nominal value of preference shares cancelled.
Annual report and financial statements 2012 91
Trader Media Group
Notes to the financial statements
CONTINUED
For the year ended 1 April 2012
10. Reconciliation of movements in total equity shareholders’ funds/(deficit)
2012
£m
Opening total equity shareholders’ funds/(deficit)
Premium on shares issued in the financial year
Reclassification of preference shares
Revaluation and impairment of fixed asset investment
Bonus issue of deferred shares
Reduction in value of deferred shares
Profit for the financial year
Dividend paid
Preference share capital and dividend paid
Preference share dividend rolled up
Closing total equity shareholders’ funds
46.5
–
–
498.5
(430.0)
430.0
161.1
(100.4)
(109.6)
0.1
496.2
2011
£m
(245.1)
0.3
287.6
–
–
–
3.7
–
–
46.5
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 80 (2011: 2,826)
ordinary C 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 a C shareholder 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 5 leavers (2011: nil). 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 C shares was equal to or greater than the fair value
of the shares.
12. Post balance sheet events
On 18 May 2012 the company issued 1,296 ordinary D shares of 10p each for cash consideration at fair value of £0.3 million.
92 Annual report and financial statements 2012
You can view our 2012
annual report online at
tradermediagroup.com
Overview
01
02
04
06
08
10
12
14
16
How we performed
Leading digital
What we’ve done with our data
Using data responsibly
Our people
What we’re planning on doing
A deep understanding of our markets
What keeps us in front
Chairman’s statement
Business review
18
20
24
26
28
30
32
34
36
Year of achievement
Operating review
Goodwood motor show
Segmental commentary
Q&A with the Chief Executive Officer
Key performance indicators
Financial review
Principal risks and uncertainties
Corporate social responsibility
Against the economic backdrop,
the group has had another
successful year with strong digital
growth in the UK driving revenue
growth and margin improvements.
This can be seen by the 10%
EBITDA growth the group has
achieved over last year.
Governance
38 Executive Committee
40 Corporate governance
42 Directors’ report
44Statement of directors’ responsibilities
45 Independent auditors’ report
Financial statements
46 Consolidated income statement
47Consolidated statement
of comprehensive income
48 Consolidated balance sheet
49Consolidated statement of changes
in equity
50 Consolidated cash flow statement
51Notes to the consolidated financial
statements
Company financial statements
86
87
88
Independent auditors’ report
Company balance sheet
Notes to the financial statements
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Trader Media Group
3rd and 4th Floor
41-47 Hartfield Road
Wimbledon
London SW19 3RQ
Telephone +44 (0)20 8544 7000
www.tradermediagroup.com
Annual report and financial statements 2012 Trader Media Group
Annual report and financial statements 2012
Driving Innovation
through data
and peoplE