Trade Me Full year results For the 12 months ended 30 June 2014 Jon Macdonald CEO Jonathan Klouwens CFO trade me Trade Me Group Limited Presentation agenda Overview Jon Macdonald Divisional performance Jon Macdonald Financials Jonathan Klouwens Trading and outlook Jon Macdonald Questions Jon Macdonald and Jonathan Klouwens trade me Trade Me Group Limited Overall results: Financials H2 F14 F14 +43% YOY NZD 3000 Actual Priqyear Actual Priqyear 140 vanance vanance Revenue 94,453 10,719 12.8% 180,104 15,990 9.7% 120 Expenses 26,165 6,681 34.3% 51,385 10,733 26.4% 100 EBITDA 68,288 4,038 6.3% 128,719 5,257 4.3% E) EBITDA margin 72.3% 71.5% 8O - Depreciation 6,974 2,563 58.1% 12,313 3,578 41.0% 60 EBIT 61,314 1,475 2.5% 116,406 1,679 1.5% EBIT margin 64.9% 64.6% a 40 - Finance costs 2,908 582 25.0% 4,924 (335) 20 Income tax 16,315 30 0.2% 31,371 499 1.6% NPAT 42,091 863 2.1% 80,111 1,515 1.9% - FY10 FY11 FY12 FY13 FY14 Final dividend of 8.4cps, fully imputed, up 1.2% - H1 H2 Note: all figures are derived from the statutory financial statements and should be read in conjunction with the accompanying notes trade me 3 Trade Me Group Limited Business overview visits to Trade Me 90 70% 8 8O - Mobile majority: mobile growth continues; 70 60% 61% of all sessions on Trade Me web pages 8 50% apps are now via a mobile device. Up 11%pts in 60 6 months. 50 40/" - In July, for the first time, more sessions took 40 30% place on our apps (51.5% across Touch, 30 20% Android 8 iPhone) than on 20 107 10 0% - Total sessions to Trade Me increased from 5 O. O. O. 5? - Android usage grew strongly Android 2011 2012 2013 2014 sessions up 94% in the last 12 months Desktop Sessions Mobile Sessions - Major releases in F14 included a new iPhone app for Trade Me Jobs, overhauled iPhone and DESKTOP SITE VS MOBILE APPS (NATIVE TOUCH) Android apps for Trade Me, and upgraded iPhone and iPad apps for Trade Me Property. my?; a m? - A Significant investment in mobile focused teams is planned in F15 (11 to 23 mobile dedicated people) trade ?19 48.5% 51.5% Trade Me Group Limited Business overview brand and engagement Brand connection very strong1 Trade Me 29% . . . Air New Zealand 22% - Brand connection outranks other Iconic NZ brands favourability also strong, with 83% of respondents rating The Waremuse 19% their reaction to Trade Me very or somewhat favourable. KiWibahk 11% - Awareness in online purchases significantly stronger than Energy 6% any local or international player. 5% - Trade Me Property the main channel for house hunters (61% Figher 8 Paykel 5% 0- For eaCh 01? the tottOWihg please . . . 2 0 select the brand that you feel best rate It their primary channel and more buyers (384) found 2/0 applies to each statement. the their house on Trade Me Property than anywhere else. Xero 1% brand feel the closest connection to?. 46% . 1 . . Leadlhg awareness for Ohllhe Buyers find their house on Trade Me Property2 Jun-13 Trade Me Property 38What websrte do you think of first when. pr Real estate agent 20% you go to buy something (excluding travel, event tickets, accommodation 8 Newspaper 7% groceries) Unprompted Awareness 160/ Realestate.co.nz 7% 0- For the property that you purchased, can you Property Press 5% recall how you first discovered the property Other/ can't recall 15% was on the market? Sources: ?0 a? 1. Perceptive independent market research April 2014 <29 2. Perceptive independent market research of recent home buyers June 2014 trade me 5 Trade Me Group Limited Business overview plans and priorities Purpose We provide online marketplaces that connect people to undertake a transaction or form a relationship in a way that is trusted, great value, and empowers the consumer. Priorities Make our products better to further improve our value to our customers, and to further cement our market positions. n- Mobile in all our products and plans. - Capture the opportunity in our classifieds businesses, through new products and great account management. 0 Build a great marketplace experience for our users in both new and used goods. 0 Enter new businesses and grow new revenue streams. Product Man-gar - Man-god Funds Job type Investment Selection of mobile products developed in H2 F14 nu We've continued to hire strongly and develop additional products, especially in our marketplace and property businesses, and across mobile. This investment is aimed at building a better business, improving our market positions and setting Trade Me up for growth opportunities. trade me 6 Trade Me Group Limited Divisional performance trade x? Trade Me Group Limited Revenue good growth despite flat General Items H2 F14 F14 NZD Actual Prior year variance Actual Prior year variance Var$ Var% Var$ Var% General Items 32,163 (184) 64,792 (704) Classifieds 47,028 10,414 28.4% 85,591 15,883 22.8% Other 15,262 489 3.3% 29,721 811 2.8% Total 94,453 10,719 12.8% 180,104 15,990 9.7% - General Items: Declining with revenue down REVENUE GROWTH $704k but flat excluding one?off S800k upside in F13 F14 - Classifieds: Strong revenue growth of $15.9m F13 All businesses delivering. Motors maintains its F12 strong market position, Jobs again an over?performer, F11 and despite a transitional challenge we've seen Property growing we? F10 - Other: revenue growth of S811k On a like?for? F09 like basis (excluding Treat Me and LifeDirect), revenue is F08 Up Sl'zm $0 $50 $100 $150 $200 trade me 8 Trade Me Group Limited • 96 • Non-tech roles Tech roles 279 429 +34 54 333 +62 +28 +26 • • F13 Additional Headcount F14 Additional Headcount F15 General Items Growth H2 F14 Gross sales value H2 performance deteriorated Items sold Fewer items sold aligned with shift to ecommerce .. .. .. Product investment Focus on improving the buyer experience. An end?to?end overhaul is underway. Good progress made including shopping cart, combined shipping, attribute boxes, and Supergrid. 0 Fashion has upgraded with personalisation and brand presence. 0 Upgrading seller tool for 8,000 big sellers and new seller site. Snapsnot of international sellers Sourcing supply - Pleasing progress on targeted international vendors to meet unrequited . . demand. Highly targeted and efficient. Recent sellers include mytools, surfstitch, cosmeticsnow, apparelsave Generating >$1m per month in (EMS: up from $200k per month a year ago. . On?boarding does take longer than we would like, but is improving; ~50% . of new sellers are live within 2?8 weeks trade me 10 Trade Me Group Limited General Items: Supergrid upgrade CURRENT VIEW SUPERGRID UPGRADE trade me trade me Where BW and Se? Browse My Trade ME Commumty Where Kiwis Buy and Sell Browse Sell My Trade Me Community Dea'm "1 ?was watChIISt . Favoumes Search in shoes - Watchlist . Favourites gCait "Edam" trademo women Men Gills BOYS 1: Women Men Girls Boys Men Home cunning 8? Fasmon men Shoes Men Home Clothing 5. Fashion Men Shoes Shoes hoes Shoes hoes 0. Add to Favourites Size 7 Size Colour Sort Condition Filter View calm" so" Condition Finer mew :2 DD . . Featured ?m New Free Sh'ppmg BUY Now pay NOW Featured ?rst All New Used Free BUY NOW Pay NOW Brand Brand 3'9. arms 14153 listings. 451m SUU 14173 "stings. showing 1 to 50 Price Reebok ZQuickTR Gray Shoes 10:3; $81.39 10% 05+ Free Shipping Buy Now' End: 18August' How Pnce $0 $220+ United States $0 $220+ Closes in 3 35 mins Location Witchlisl Location All locations Iocauons Dr. Martens Pendleton Tan Boots UK 7' 1:6; $118.19 Converse Tayl?" Vans Amhem'c Spec"- KEVWDFU i Elu.- l?low Keyword $85.00 $69.00 10% 05+ Free Shipping. Buy Now Ends .18 August' United States Clear 37mins Witchlisi Vans Authentic Canvas Maroon Shoes Size 11 Reebok Sub Lite Duo Running Shoe - U310 $99.00 $99.00\ Taranaki. NZ Closes in 3 3? mins $35.00 Reserve Met 9 ll' KEEN Newport Sandal-U810 $119.00 $119.00\ New Plymouth Taranaki, NZ Bl? ClosesinEhrs 3Tinins Chuck Taylors a Witchlisi Dickies Men's Work Dr Martens 1461 35030 $99.99 $20000 Reserve Met - New layout for a substantially improved buyer experience. In final stage development, for trial release in some categories soon. Asics Gel?Fierce Running Reebok Classic Running Adidas Rh Instinct $105.99 $95.99 $98.99 6 Buy Now Buy Now Buy New Trade Me Group Limited Classifieds: Property performance Revenue up 12.0% and 9.4% H2 fewer homes for sale in NZ, and dip in listings after shift to pay?per?listing model. Direct for?sale listings decreased 9% in H2 and 9.1% for the full year. Significant mix impact given the H2 avg yield of $340 vs $123 for agents. Agent revenue grew 20.4% with listing revenue up 12% and premium revenue up 42%. Volumes in for-sale H2 decreased 29.6%, resulting in full year decline of 15%. Map View This property's location Secondary,r All zones Sec-:mdaryir St Cuthoert's College {Epsom} 1.3km Marcellin Diocesan School For Girls 2.1km Dilworth School 2.1 km Onehunga High School 2.4 km Epsom Girls' Grammar School 2.4 km Auckland Seethe neighbourhood SCHOOL ZONE INFORMATION Street View Schools heartilyl .Allzones provided Birkenhead Map data a2o1d snugl-e . 2 km I?l $5 Bayswater Map 7 3 Chalswond . LT Noatarrnoa war-remm AUCKFANEI I Harbour Mountain Road. Epsom. Auckland Cll?y? 1149 I Year 9-15 {Secondary}. State i 241? boys school 9' In Zone 13? 3.2 km from property Decile rating ?10 SaimHE'i'er: Point Gle Cha?ng Grey Draml Basin Norway?aw? Meadnwbank ?a Saint Johns lb Pnint A Ell 3: England Bax 1? Waratarua Reserve k_ Avondale 5'31}; I ama I i. i Ellerslie El I Mount Panrrlure Wintjtor Roam? a F?enrosel Mount "ermsoste Report a map error 0 Product enhancements in the last 6 months: school zone and boundary information, multi-suburb and map- based search, iPad and iPhone upgrade (strong downloads) 0 Promotional support to demonstrate the strength of audience and ecosystem (audience triple nearest competitor), and #1 source of property buyers (more than five times nearest online competitor). trade me property? Classifieds: Property pricing update New head of property (Nigel Jeffries) started in April. Solicited feedback from the industry. - Pay?per?listing is working for many agents, but not for everyone. - Reviewed pricing structure and added options (for regional 8 non?vendor funding areas) in August. Acknowledge that one size does not fit all: different locations 8 PAY PER LISTING ALL you CAN EAT Circumstances - Added a subscription model for agents to pay a fee for unlimited listings. Have also differentiated the listing price with the introduction of a lower tiered listing price for houses below $450,000. - See a clear path to pay?per?listing via vendor funding, which is working for many offices trade me propertyg 13 Classifieds: Property outlook - Maintained strong audience lead: approx 3 times the number of visitors per day, and more than 300,000 visitors per month more than any other real estate website in NZ at >500k per month. - Added functionality and features and committed to being the most popular and functional property portal in NZ. Increasing tech resources by 150%. - Adding the subscription option is a genuine conciliatory move. Will continue to listen to the real estate industry, vendors and buyers. - Working with agents and offices to help them decide best model. We know we help them sell houses. - Ramping up our account servicing capacity. - We are committed to our long?term vision. trade me Trade Me Group Limited We have the highest number of daily 140,000 120,000 100,000 80,000 60,000 40,000 20000 Property Average Daily UBs wiProperty Source: Nielsen Online July 2014 Have amended our pricing model to recoup 70000 60,000 50,000 40,000 30,000 20,000 10,000 For Sale Live to Site Listings Jul?13 Aug?13 Sep 13 Oct?13 Nov 13 Dec?13 Jan?14 Jun?14 Jul 14 Feb 14 Mar?14 Apr?14 May?14 Property realestate.co.nz Classifieds: Motors dominant market position Revenue for F14 up 28.9% led by dealer revenue, premium uptake, 8 MotorWeb in H2. (Excluding MotorWeb: revenue up 14%) Listings grew in H2: directs dealer subscriptions Yield also increasing in H2: Direct Dealers +15.7% Premium spend: dealer premiums up 44% for F14, and up 41% in H2. Performance vs competitor: listings, audience 8 time on site (65 mins TME vs 37 mins AT) all improving MotorWeb: integrating account management and site tools; site traffic has doubled New functionality: List by licence plate: decreases listing friction 8 improves data quality (search/data options). Car Details Please enter your number plate or VIN. We use this information to make it seminar to list your car. Enter your number plate or VIN Cl Or enter your car details manually Motors strengthens its market 200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 Motors Average Daily UBs Motors Autotrader Source: Nielsen Online July 2014 30,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Motors Live to Site Listings I ro l'lMotors ?Autotrader Apr?14 May?14 Jun?14 Jul?14 Classifieds: Jobs continues to deliver revenue growth Revenue in F14 up 26.4% based on both volume and yield, with H2 up 30.7%. - Listings: Total listing growth of 18.2% full year, and 21.1% for H2. Listings volumes steady versus Seek. - Yield: H2 direct yields increased 8.9% whilstjob packs and volume plans increased we will not actively drive yields given listing growth. - New products: Talent Chaser now live on site (in beta) leveraging our audience. - Longer term opportunity to continue to leverage our wider audience and data. - Investment: we continue to build capability with new product and marketing managers. OPPORTUNITIES f?H Increasing the tech team solely focussed on Jobs. Looking to drive incremental listing growth Wadi-V in low share segments Jobs Live to Site Listings Jobs Average Daily UBs 25,000 100% 80,000 Index (RHS) 90% 70,000 I 20,000 30% 50,000 T096 50,000 15,000 60% 50% 40,000 10,000 40% 30,000 30% 20,000 5,000 20% 10,000 102002 2000 2005 2010 2011 2012 2013 2014 _seek,co,nz TME Jobs Index Source: Nielsen OnlineJu/y 2014 16 Other: Recent acquisitions LifeDirect Motor by trademe itIehiCIe Information .?tuthority - LifeDirect continues to deliver ahead of the acquisition case. Policy numbers up 69% on last year Performing ahead of the acquisition case - Integration into TME listings has begun? more to come - Expansion into the new product lines of income Traffic has increased (100%) via integration protection and mortgage insurance - Product enhancement around public Vle and website to improve conversion rates and provide additional information Life Direct Policies Issued 300 - Australian presence growing adding additional products 250 (Web ID), and signed contracts with insurers (now 4 out of 8) 200 - Integrating customer service and account management 150 Visits 100 in last Emonths 50 I CarJam Fv13 FY14 on I _a"i 1: Poi: Va? 1: nor 1-4 Mary in Source: Goog/e Analytics trade me Trade Me Group Limited Financials : Financials: Full year and H2 recap NZD $000's H2 F14 variance F14 variance General Items 32,163 (184) 64,792 (704) Classifieds 47,028 10,414 28.4% 85,591 15,883 22.8% Other 15,262 489 3.3% 29,721 811 2.8% Total revenue 94,453 10,719 12.8% 180,104 15,990 9.7% Employee benefit expense 11,625 1,833 18.7% 24,629 3,426 16.2% Web infrastructure expense 1,568 164 11.7% 3,176 160 5.3% Promotion expense 4,154 2,672 180.3% 7,360 4,610 167.6% Other expenses 8,818 2,012 29.6% 16,220 2,537 18.5% Total expenses 26,165 6,681 34.3% 51,385 10,733 26.4% EBITDA 68,288 4,038 6.3% 128,719 5,257 4.3% Depreciation and amortisation 6,974 2,563 58.1% 12,313 3,578 41.0% EBIT 61,314 1,475 2.5% 116,406 1,679 1.5% Net finance costs 2,908 582 25.0% 4,924 (335) Income tax expense 16,315 30 0.2% 31,371 499 1.6% NPAT 42,091 863 2.1% 80,111 1,515 1.9% EPS 10.62 0.21 2.0% 20.20 0.36 1.8% Note: all figures are derived from the statutory financial statements and should be read in conjunction with the accompanying notes trade me 19 Trade Me Group Limited Financials: Net finance costs F14 Net Finance Costs - Finance income decreases in H2 due to lower funds $000, Finance Finance Net finance on hand, primarily due to $20m MotorWeb acquisition 5 income costs costs F14 in December 2013 1,915 6,839 4,924 - Finance costs increase in H2 due to the increase in OCR on the non?fixed portion of debt F13 1,926 7,185 5,259 - Net finance costs Increased $0.6m in H2 full Val, (11) (346) (335) year costs decreased $0.3m - Continue to fix approx. 50% of our net debt H2 F14 Net Finance Costs $000.5 Finance Finance Net finance income costs costs 863 H2 F14 3,771 2,908 H2 F13 987 3,313 2,326 Var (124) 458 582 13.8% 25.0% trade me 20 Trade Me Group Limited Financials: Capex spend (including software acquisition) - Total F14 capex including software component of acquisitions: $26.0m. F14 core capex was $138 up $3.8m - F15 core capex is estimated to be ~821m with on?going investment in infrastructure to 54m (core platform) and capitalised software development +60% to ~$14m (operating capability, including mobile) Continue to look for relevant acquisitions 8 investing in capital development F13 vs. F14 CAPEX MotorWeb and $26_Om Life Direct acquisitions H2 F14 Core ca ex 4.new building fit?out and increased cap dev F14 increase in capital development of +38% $2.6m vs. F13. as focus shifts to Software growth improvmg functionality and mobile component of two unplanned acquisitions F14 core Capex was $13.8 up $3.8m Cap Dev +$2.6m and fit?out +51.8m. F13 F14 trade me 21 Trade Me Group Limited Financials: Acquisitions impact on depreciation 8 amortisation - increase in D8A of $3.6m in F14: $2.6m driven by acquisition activity, $1m from core capex - Acquisitions: Life Direct, MotorWeb, AutoBase, Tradevine and Holiday Homes - D8A will continue to increase as we invest more in capital development Depreciation 8 H1 H2 F14 . . F13 F14 Amortlsatlon (Sm) F14 F14 var $5.1 $6.1 Core Capex D8A $2.6 $3.5 19.6% F15 D8A Will be approx. $17m D8A on acquired businesses $3.6 $2.7 $3.5 $6.2 72.2% Total $8.7 $5.3 $7.0 $12.3 41.0% trade me 22 Trade Me Group Limited Financials: Cash flow - Operating cash flow increasing faster than profit before tax due to higher supplementary dividends (and consequently lower tax) and the increasing D8A. - $23.5m spent on business acquisitions in F14 - Cash held decreases despite increased operating cash flow, due to MotorWeb and LifeDirect acquisitions. trade me Trade Me Group Limited Profit before tax Non cash adjustments Depreciation and Amortisation Share?based payment expense Finance costs Loss/(Gain) on disposal of property Other Working capital adjustments: Increase in trade and other receivables Increase in trade and other payables Income tax paid Cash flows from operating Purchase of property, plant and equipment Payment for purchase of intangibles Business acquisition Proceeds from disposal of business Cash flows used in investing Dividends paid Interest paid on borrowings Cash flows used in financing Net increase (decrease) in cash F14 F13 Var 111,482 109,468 2,014 12,313 8,735 3,578 639 776 ?137 6,839 7,185 ?346 29 ?890 919 380 24 356 (2,251) (3,098) 847 920 489 431 (22,514) (27,525) 5,011 107,837 95,164 12,673 (4,087) (3,490) (597) (9,350) (5,964) (3,386) (23,500) (3,327) (20,173) 400 350 50 (36,537) (12,431) (24,106) (71,192) (66,000) (5,192) (7,312) (7,011) (301) (78,504) (73,011) (5,493) (7,204) 9,722 (16,926) 23 Financials: Balance sheet Trade Me Group Limited 30 Jun 14 31 Dec 13 Var Cash 8 cash equivalents 41,653 25,985 15,668 Cash iUCieased With operating performance Trade and other receivables 11,775 10,217 1,558 Extended debt faCIlity from Property, plant 8 equipment 6,807 5,167 1,640 Dec 2014 to Sept 2016 Goodwill 8 Intangibles 804,515 804,219 296 Continue to fix ~50% of net Other assets 1,920 2,635 (715) debt to secure certamty Total Assets 866,670 848,223 18,447 other L'ab'llt'e.5 '?Crease due to the timing of provisional tax payments Trade and other payables 14,169 15,447 722 Significant head room in all debt covenants Long Term Debt 165,784 165,734 50 I Net debt below 1x times Other Liabilities 12,245 6,633 5,612 EBITDA Total Liabilities 192,198 185,814 6,384 Net Assets 674,472 662,409 12,063 trade me 24 Financials: Proposed dividend - Fully imputed final dividend of 8.4Cps. Supplementary dividend for non?residents of 1.4824cps. - Dividend record date: 5pm Friday 12 September 2014 and payment date of Tuesday 23 September 2014. Dividends paid 15-8 16-0 CPS I Final Dividend H2F14 +12% I Interim Dividend H1F14 +13% 7.30ps relates to 1/1/12 to 30/6/12 0.5cps relates to 13/12/11 to 31/12/11 F12 F13 F14 trade me 25 Trade Me Group Limited trade me Trade Me Group Limited Outlook - A year ago we signalled our intention to invest strongly in the business. In F14 this resulted in an expense increase of Slim We have seen the benefit of this in Jobs and Motors, but do not yet have good traction in our General Items marketplace business. We are confident in Property, but there is some risk and still a lot of work to do. - In F15 we have already made significant changes to the way the businesses are structured and will be run. Jobs, Motors, Property and General Items are now self?contained business units, with tech responsibility in each business. Each will fill out its respective resourcing requirements over the coming months. - Coupled with the need to continue to build competitive advantage into each business, we will continue to invest heavily in those parts of the business where we see material opportunity. - Revenue is forecast to grow at low double?digits (percentage growth), but F15 will be another year of significant investment as we position the business for the longer term. Expense growth will come from: people costs (as we build products and manage our BZB relationships); promotional expenses (to defend and grow our commercial businesses); COGS increases for MotorWeb, Jobs and Advertising; and general expenses associated with the growth in FTEs. - We forecast another year of subdued EBITDA growth. - Through this investment we will build a better business improving the products we offer, strengthening our sales and account management, and ensuring our return to stronger growth in the medium to long term. trade me 27 Trade Me Group Limited Questions? Email investors?trademe.co.nz Web trade me Trade Me Group Limited