Trade Me Group (ASX:TME)

Trade Me is the leading online marketplace and classified advertising platform in New Zealand. Trade Me includes auctions and fixed-priced sales for new and used goods, with automotive, real estate and employment businesses. The Company has web businesses specialising in accommodation and online dating. Trade Me Group Limited was founded in 1999 and is headquartered in Wellington, New Zealand.

Its segments include General Items, Classifieds and Other. The General Items segment is its online marketplace business. The Classifieds segment represents advertising revenue from each of its three classified advertising sites: Motors, Property, and Jobs. Its revenue is generated from basic and premium listing fees. The Other segment reflects all other businesses, including advertising, travel, dating, life, and health insurance comparison and general insurance.

The Group operates the following divisions:^[1]

Key strategies include:^[3]

• More deeply ingrained in Kiwis’ lives through lovable online experiences
• Know our customers more intimately than any competitor and provide a relevant, engaging and personalised experience
• Be quick experimenters, expert in growing new things
• A brand that outshines all others in NZ as the most loved and trusted
• The workplace of choice – a magnet for top local and offshore talent

Strengthening core proposition

• The group existing customers and existing markets

Expanding offers

• Adding new products or services for its existing customers to enter adjacent markets

Growing ecosystem

• New offerings to new and existing customers to fuel long-term growth

The Company operates in the following markets:^[4]

Major competitors include:^[5]

• Smartpay Holdings Ltd (ASX: SMP)
• CyberAgent, Inc. (TYO: 4751)
• JcbNext Bhd (KLSE: JCBNEXT)
• Sli Systems Ltd (NZE: SLI)

1999^[6]  

Trade Me established by Sam Morgan

2000  

Success fees introduced

2001  

FindSomeone launched

2002  

OldFriends launched

2003  

Trade Me Motors launched

100,000 concurrent listings achieved

Staff count: 100

2004  

NZ's fastest-growing company in 'Deloitte Fast 50'  

2005  

Trade Me Property launched

2006  

Trade Me Jobs launched

#1 most viewed auction: Hurricanes handbag & cell phone

2007  

Travel Bug launched

Pay Now launched

1 billion page impressions/month

2008  

1 million concurrent listings achieved

2009  

Acquisition of Holiday Houses

Popular auction: Roofless the Toyota Townace Interisland van

2010  

Trade Me daily deals launched

Acquisition of Book It

iPhone app launched

2011  

Treat Me launched

1 million members logging in each month

Staff count: 200

2012  

Trade Me listed as a public company

Popular auction: Radio Network building implosion

Acquisition of Holiday Homes, AutoBase and Tradevine

Trade Me made it into the NZX 50 Index

2013  

Treat Me sold

Daily deals finished

Acquisition of Life Direct and Motorweb

2015  

Trade Me acquired stake in peer-to-peer lender Harmoney

2016  

Old Friends closed

Book a courier launched

2017  

Safetrader closed

Launched Buyer Protection

2018  

Trade Me's acquisition of Motorcentral declined by Commerce Commission

Board of Directors^[7]

David Kirk – Independent, non-executive chairman

Katrina Johnson – Independent, non-executive director

Paul McCarney – Independent, non-executive director

Joanna Perry – Independent, non-executive director

Simon West – Independent Director (appointed 15 December 2016)

Management Team

Jon Macdonald – Interim Chief Executive Officer^[8]

Caroline Rawlinson – Chief Financial Officer

Annie Brown – Chief People Officer

Nigel Jeffries – Head of Trade Me Property

Trent Mankelow – Chief Customer Officer

Stuart McLean – Head of Marketplace

Mark Rees – Chief Product and Technology Officer

Alan Clark – Head of Motors

Jeremy Wade – Head of Jobs

2018 Full Year Results Presentation

Financial Year 2017/2018 (ended 30 June):^[9]

Major risks include:^[10]

Privacy and data security issues

Trade Me is dependent on the technology systems, servers, networks, hardware and software, including cloud services, that it has in place. The systems could be vulnerable to unauthorised access, viruses, human error, natural disasters, communications failure, sabotage or terrorism. To defend against those risks the Group has implemented extensive security measures, disaster recovery, systems redundancy, and backup procedures.

Health and safety risk

Trade Me is a relatively low-risk, office-based business – its most common risk is trips or falls in the office or during work team sports. Lost-time injury in the business has historically been a very rare occurrence. Trade Me Group Ltd conscious thought that stress may affect some employees and its provide access to a free, entirely confidential counselling service outside Trade Me.

GHG emissions and energy consumption

The majority of the Company’s impact arises from energy consumption in its offices and data centres, and emissions from travel. As employee numbers have grown, offices have grown. More travel has been required between New Zealand and the markets where suppliers are based, between the Company’s offices in Wellington, Christchurch, and Auckland, and locally to maintain communication with key customers. The Group controls travel requests to ensure its use video conferencing effectively rather than travelling, and overseas travel is very limited. As a technology business, the Company uses very low amounts of paper and toner, and the Company has been working with its landlords and energy consultants to improve the efficiency of office power consumption, and produce very little waste.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Market risk

Interest rate risk

The Group’s primary interest rate risk arises from bank borrowings which are reset every 90 days to market rates. The Group’s treasury policy requires the use of derivative financial instruments to manage interest rate risk. In order to protect against rising interest rates the Group has entered into interest rate swap contracts under which it has a right to receive interest at floating rates and pay interest at fixed rates, where cumulative net settlement of interest is payable or receivable quarterly.

Credit risk

Exposure to credit risk arises from the potential default of the counterparty, with the maximum exposure equal to the carrying amount of the financial assets. The Group’s credit risk arises from the Group’s financial assets, which include cash and cash equivalents, loans and trade and other receivables.

Liquidity risk

Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability to meet its obligation to repay its financial liabilities as and when they fall due.