Annual Report 2014

CEO's Report

Dear Shareholders,

Thank you for your continued support. We've had an acceptable year on the financial front. We delivered record revenue and profit, but the focus this year has been on reinvestment and hard work to ensure Trade Me's long-term growth.

We've been careful with our investment and have continued to hire strongly and develop additional products across the business – especially in General Items, mobile and Property.

We are firm in our belief that this investment now will result in a better business, stronger market positions and greater growth opportunities for Trade Me in the future.

The numbers

We intend to pay a fully imputed final dividend of 8.4 cents per share to shareholders on 23 September 2014.

In F14, Trade Me grew its revenue to $180.1m, a rise of 10% on F13. Our net profit after tax was $80.1m, an increase of 2% year-on-year as we continued to invest in our business. The resulting earnings per share increased to 20.2 cents (up from 19.8 cents in F13).

We intend to pay a fully imputed final dividend of 8.4 cents per share to shareholders on 23 September 2014. This follows on from the interim dividend of 7.6 cents per share we paid to investors on 25 March 2014.

Operating performance

We are continuing our work to restore our General Items marketplace to growth. We have a buyer-centric overhaul under way with significant development including the streamlining of Buy Now, the release of a shopping cart and a category makeover for Trade Me Fashion.

We are also starting to gain traction with onboarding international suppliers to enhance the range of goods for sale on Trade Me. Revenue was down 1% on the previous year, and flat if the one-off adjustment made in F13 is excluded.

The form from our half-year results continues and the Classifieds turned in a very strong result with revenue up 23% on F13 to $85.6m.

Trade Me Motors retains an extremely strong market position. The acquisition of MotorWeb has gone very well and we're looking forward to introducing 'bundled products' to make the most of the broad services we offer to dealers in particular.

Trade Me Jobs continues to make inroads against its main rival in terms of market share and is benefiting from the recovering New Zealand economy.

Trade Me Property remains the most popular means for New Zealanders to find houses, with approximately three times the audience of our nearest competitor.

In July 2014 we modified the approach to agent pricing that we'd rolled out from November 2013 and opted to provide agents with more choice and flexibility. We've also been busy improving the utility we offer over the past year, and have added valuable features like school zones and boundary information.

In our Other segment, revenue grew 3% year-on-year. On a like-for-like basis (excluding both Treat Me and LifeDirect), revenue in this segment grew by 5% over the corresponding period in F13. We've been especially happy with our LifeDirect acquisition, which has written 69% more insurance policies than last year.

Our expenses were up 26% year-on-year. This is a substantial increase in costs, but necessary for us to convert on opportunities and ensure we position Trade Me for the longer term. The main contributors to this increase included new staff costs (primarily to speed up our product development, plus the additions of the LifeDirect and MotorWeb teams) and advertising.


In September 2013 we finalised the acquisition of LifeDirect, an online aggregator of life and health insurance. As noted above, the business has performed very well.

In December 2013 we acquired MotorWeb, an online business that packages and sells motor vehicle information and reports to finance companies, insurers, car dealers and the general public. MotorWeb has also lived up to our expectations, has great growth prospects and is also contributing to our Trade Me Motors business.

Most recently we announced the acquisition of Paystation in September 2014. This Wellington-based online credit card processing and payments gateway was founded by Gerard Creamer in 2002 and was initially run from an old army barracks in the backyard of his Palmerston North house. It is now based in Wellington and has 17 staff and more than 2,500 customers. We believe Paystation’s payments expertise will help us make trading on Trade Me faster and easier.


We've continued to build our suite of mobile offerings to ensure we deliver our members a great mobile experience.

Mobile and tablet usage continue to be huge for Trade Me. In July 2014, for the first time ever, more sessions on Trade Me took place via our touch site and native applications than via our 'main' desktop site. This follows on from the January 2014 milestone when more than half of all sessions on Trade Me's official pages and apps were via a mobile device.

We've continued to build our suite of mobile offerings to ensure we deliver our members a great mobile experience. Major releases in F14 included:

  • new iPhone app for Trade Me Jobs;
  • overhauled iPhone and Android apps for Trade Me; and
  • improved iPhone and iPad apps, plus a new Windows 8 app for Trade Me Property.

People and places

Our new building is an architectural representation of our informal but serious culture, with a hat-tip to Kiwiana.

We've strengthened the senior management team in F14 with several new hires including Head of Design, Head of Analytics, Head of Trade Me Jobs, Head of FindSomeone and Head of Advertising.

Nigel Jeffries took the reins of Trade Me Property in April 2014, and has recently joined the Executive team.

Mike O'Donnell (COO and responsible for our General Items marketplace) departed Trade Me in August 2014, to take up a role at a new Government agency. We wish him all the best after a huge, effulgent contribution to Trade Me over the past decade. We have a search under way for a new leader for this part of our business.

In July 2014, we consolidated our presence in Wellington with a move to a new building in Market Lane – previously we had teams in four different locations. The new building is an architectural representation of our informal but serious culture, with a hat-tip to Kiwiana. It's excellent having all our people together across three levels yet in a shared space.

We also have offices in the Christchurch CBD, and in Parnell, Auckland. As at 1 August, we had 357 staff (334 FTEs).


The period of reinvestment we signalled in our previous results will continue in F15. We expect to grow both revenue and EBITDA over the coming year, but our focus will be on improving the products that we offer, and strengthening our sales and account management.

We're investing to ensure stronger growth in the medium to long-term.

jon macdonald signature

Jon Macdonald
Trade Me Group Limited