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Trading Update for the 9 months to 28th December 2008

The Directors of Trader Media Group Limited present their summary trading update for the company and its subsidiaries (“the Group”) for the nine months ended 28th December 2008. The information contained in this summary is extracted from the unaudited management accounts and is based on underlying financial information which ensures a like for like comparison between periods.

Group Overview

The Group has continued to successfully manage the transition to an on-line product offering through the period. Revenue for the nine month period to 28th December 2008 was £231m (2007: £231m) with underlying EBITDA (1) margins remaining consistent at 42%. Conversion of profit into cash remained strong with the Group’s net debt at the 28th December 2008 being £16.5m lower than budget.

Key Highlights

  • Total Group revenue flat on prior year in a period of economic volatility
  • Auto Trader UK Digital revenue 25% above prior year, offsetting a 28% decline in Auto Trader UK Publishing
  • Auto Trader UK Digital market share has grown by 21% from the end of the same period last year whilst the market share of the Group’s nearest competitor has declined by 42% (2) during the same period
  • Year on year yield for Digital customers has increased by 30%
  • Unique users have increased by 12% from the same period last year
  • Net Proceeds of £17.1m from the sale of the Group’s Dutch businessAuto TraderThe impact of the current recession on the UK car market is such that the industry is experiencing the toughest conditions for over 40 years. The Society of Motor Manufacturers and Traders shows that new car production in December 2008 was down in excess of 57% compared to December 2007 in response to lower consumer demand. As a result Auto Trader has seen a decline in core trade advertising revenue as dealers have cut back on the volumes of stock that are advertised. However, despite the difficult economic environment Auto Trader has continued to grow its consumer market share during the period.Total revenue from the Auto Trader brand is 4% up on the same period for the prior year.

    The restructuring of the Group to reflect the move to on-line media has continued through the period and the actions taken to realign the cost base have meant that the increased revenue has flowed through to deliver an equivalent increase in EBITDA for the period.

    National Magazines

    The National Magazines within the Group have reported a decline in revenue of 8% against the same period last year, but with strong cost activity have delivered a 2% increase in EBITDA for the same period. The trends in trade and circulation within Auto Trader are also exhibited within this division.

    AdTrader

    AdTrader has experienced a year on year decline in revenue of 9% which is driven by declines in the trade and circulation revenue stream more than offsetting strong performance from private and digital revenue.

    Overseas

    The Group’s overseas businesses reported a year on year growth in revenue of 4% and EBITDA growth of 7%, with improved yield in the South African business driving the increase in revenue.

    Print

    The Group continues to proactively review its print operations to ensure that the division is sized appropriately in the context of the business transitioning to online.

    Restructuring

    To support a profitable transition on-line the Group continues to restructure its publishing business and increase investment in its digital business. The Group incurred restructuring costs of £11.2m in the period to 28 December 2008, including £3.0m relating to property. In response to the economic recession further deeper restructuring was announced in Q4 resulting in the closure of non-core magazine sites and consolidation of production.

    Cash and debt

    At 28 December 2008 the Group’s consolidated total net borrowings was £694.9m, an improvement of £45.6m since the start of the financial year. Operating cash conversion remains strong at 84% compared with 77% for the same period last year.

    Outlook

    Market conditions have continued to be challenging since 28 December 2008. In response to this the Group has maintained its focus on implementing its restructuring programme. The Group’s focus remains to be the number one website for motorists and to position itself so that it is well placed to benefit from improved market conditions in the future.

    19th March 2009

    (1) earnings from continuing operations before interest, tax, depreciation, amortisation and exceptional items

    (2) External date provided by Hitwise

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