Chief executive's review of operations

Trader Media Group

tradermediagroup.com autotrader.co.uk

Difficult economic circumstances did not prevent Trader Media Group from building on its leading position in the motors classified market and delivering another strong profit performance.

2008/09 was characterised by a severe slowdown in the automotive sector in the UK and Ireland, affecting consumers and customers in all parts of the industry – from manufacturers and motoring brands to local dealers and private advertisers.

There was a decline in the number of dealers, and drops of 11% and 5% respectively in new and used car registrations. Competition increased with the arrival of new sites and increased activity from existing players.

Despite these challenging trading conditions TMG finished 2008/09 in a position of strength. Total operating profit before exceptional items, restructuring costs and amortisation of intangible assets was £110.8 million (2008 £119.8 million) on total turnover of £296.0 million (2008 £309.9 million).

The main brand, Auto Trader, continued its successful transition from print to online, with profit contribution from digital growing to more than 85%, compared to 70% a year ago.

Unique users of autotrader.co.uk were in the region of 10 million each month. Auto Trader was recognised in the 2008 Hitwise Online Performance Awards as the tenth most searched-for brand in the UK.

The mobile platform saw a ten-fold increase in traffic while a still-successful magazine continued to be available through 40,000 retailers across the UK, driving incremental response.

The overall Auto Trader brand audience grew by more than 14%, translating directly into response for advertisers.

For the consumer, Auto Trader was a busier, more effective marketplace. This was supported by continued work to refine the used car search. In line with the campaign promise of “the world of cars made easy” the breadth of the editorial offering was expanded, with over 100 new car models reviewed by Auto Trader’s expert motoring journalists. There was a further leap forward with the launch of an upgraded new Auto Trader website in June 2009.

All this was supported by the continuation of the Auto Trader campaign to consumers through TV, online, radio, petrol station forecourts, retail and press. This proved a great success, increasing brand awareness, propensity to use, unique users and return on investment.

TMG as a whole reinforced its clear leadership of the UK automotive classified sector, with over 90% of UK car retailers doing business with the Group. This was underpinned by the launch of a range of new products and services for the trade.

These results were achieved in the teeth of not only challenging economic conditions for the motors industry but also the continued shift by motorists from paper-based products to online.

As a result the business had to evolve rapidly, setting out a clear vision, strategy and new priorities. This asked a lot of staff and it is to their credit that TMG has been able to adapt, grow and move forward.

Regrettably, as in other areas of the Group, restructuring led to a significant number of redundancies.

As the rapid transition from print to online continued TMG reduced its publishing cost base accordingly. Further reductions are planned in the coming year. Overall headcount fell by 500 (16%).

The UK and Ireland publishing business streamlined back office operations with the creation of production hubs for Auto Trader and Ad Trader, and reduced production centres to three locations. A number of titles were combined, reducing the total number of Auto Trader magazines from 12 to nine, but retaining the national footprint and reach for advertisers.

Similar circumstances faced TMG’s other automotive classified magazines, including Bike Trader and Top Marques. Stronger performance from the business-to-business brands – Truck Trader in particular – limited declines.

Ad Trader, like all players in the “general classified” sector, had a challenging year. The focus going forward is on innovation through the website to bring new advertising revenue to the brand.

In the overseas divisions the year saw the sale of the Dutch business and a strong performance in Ireland before the country’s economic problems halted growth. South Africa and Italy had difficult years but increased revenue nonetheless.

Revenues from the printing division fell by more than 25%, reflecting the decline in the print magazine sector. An extensive restructuring process, including the closure of the Wiltshire plant, kept the division profitable.

Despite difficult motors and media markets, TMG remains on track to deliver sustainable, profitable growth. By all key measures Auto Trader beat the competition and gained market share in 2008/09.

We continue to work closely and well with our partners, Apax, in overseeing the business. With a strong strategy in place alongside the TMG tradition of efficiency, innovation, customer insight and service, the future promises continued financial outperformance.

Auto Trader: an online success story
The world of cars made easy