CAR GROUP LIMITED — Annual Report 2011

Oct 24, 2011

==> picture [800 x 134] intentionally omitted <==

==> picture [800 x 135] intentionally omitted <==

----- Start of picture text -----

Annual General Meeting – 26 [th] October 2011
----- End of picture text -----

==> picture [800 x 134] intentionally omitted <==

==> picture [800 x 135] intentionally omitted <==

Motoring To Be Inserted

==> picture [800 x 140] intentionally omitted <==

----- Start of picture text -----

Organisational Structure
----- End of picture text -----

==> picture [800 x 281] intentionally omitted <==

==> picture [5 x 4] intentionally omitted <==

----- Start of picture text -----


----- End of picture text -----*

• Denotes new brands since 30 June 2010

Mobi sites

Our iPhone and iPad Apps Motoring App for Apple iPad

==> picture [40 x 40] intentionally omitted <==

==> picture [42 x 42] intentionally omitted <==

==> picture [41 x 41] intentionally omitted <==

==> picture [41 x 41] intentionally omitted <==

==> picture [40 x 40] intentionally omitted <==

==> picture [41 x 41] intentionally omitted <==

==> picture [41 x 41] intentionally omitted <==

==> picture [40 x 40] intentionally omitted <==

==> picture [41 x 40] intentionally omitted <==

==> picture [40 x 40] intentionally omitted <==

==> picture [42 x 42] intentionally omitted <==

==> picture [41 x 41] intentionally omitted <==

==> picture [39 x 40] intentionally omitted <==

==> picture [42 x 42] intentionally omitted <==

Page 2

==> picture [800 x 132] intentionally omitted <==

FY2011 Performance Update

==> picture [800 x 133] intentionally omitted <==

==> picture [800 x 133] intentionally omitted <==

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

FY2011 Operational Overview
----- End of picture text -----

Operational

Performance

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

Continued strong growth in automotive enquiry volumes up 15% on pcp.

• Enquiry volumes on new cars up 29% on pcp. New car inventory levels in line with the same time last year.

Overall automotive inventory remained over 200,000 cars online.

Strong double digit growth in private ad volumes on pcp .

Strong ongoing growth in display advertising sales. Mediamotive revenue growing 51% on pcp.

Non automotive verticals all performed well, with bikes; caravan & camping highlights.

==> picture [16 x 15] intentionally omitted <==

==> picture [16 x 15] intentionally omitted <==

Livemarket customer acquisition continues to grow.

• On Market share buy back program commenced with 670,578 shares acquired and cancelled by the company in early July.

==> picture [16 x 15] intentionally omitted <==

Many significant new product releases completed throughout the year with many planned for coming months.

Market

Dynamics

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 15] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

• Automotive industry has had to deal with the natural disasters in both Japan and Queensland earlier in the year, to date these have had minimal financial impact on the company, which we expect to remain the case.

Mobile continuing to grow as a channel again registering +300% growth in page impressions on pcp in automotive. Mobile now accounts for 13% of carsales automotive traffic and larger than competitors desktop sites based on page impressions.

carsales once again continued its growth in market leadership .

Page 4

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

FY2011 Financial Overview
----- End of picture text -----

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 15] intentionally omitted <==

==> picture [16 x 15] intentionally omitted <==

==> picture [16 x 15] intentionally omitted <==

==> picture [16 x 15] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

• Continued solid growth in Operating Revenue to $152.5m, up 26% on pcp.

• EBITDA up 30% on pcp to $83.8m and EBITDA margins at 55%.

Operating cashflow of $60.1m, up 19% on pcp.

• EPS of 25.0 cents per share, up 34% on prior full year (H2 FY2011 13.2 cents per share, up 27% on prior H2).

• Final FY2011 dividend of 10.5 cents per share declared (Interim FY2011 dividend of 9.4 cents per share).

• Capex spend of $1.4m, down 33% on pcp, *excluding the $1.0m acquisition of Oztion assets and $1.5m in multiple domain name acquisitions.

• Headcount rose to 366 full time equivalents up 22% on pcp

• The profit impact to the group of the September acquisition of Oztion assets was negligible.

		$A Millions	$A Millions	Growth	Growth
	Year Ending 30 June 2011	FY2010	FY2011	$'s	%
	Operating Revenue(Excluding Interest Revenue)
	Online Advertising	105.2	133.5	28.3	27%
	Data & Research	15.4	19.0	3.6	23%
	Total Operating Revenue	120.6	152.5	31.9	26%
	Operating Expenses(Before Interest and D&A)	56.1	68.7	12.6	22%
	EBITDA	64.5	83.8	19.3	30%
	EBITDA Margin	53%	55%
	D&A	2.3	2.7	0.4	17%
	EBIT	62.2	81.1	18.9	30%
	Net Interest Expense	0.2	(1.0)	(1.2)	(600%)
	Profit Before Tax	62.0	82.1	20.1	32%
	Income Tax Expense	18.8	23.8	5.0	27%
	Net Profit After Tax	43.2	58.3	15.1	35%
	Earnings Per Share (cents)	18.6	25.0	6.4	34%
	Net Operating Cashflow (Before Capex)	50.4	60.1	9.7	19%
	Capex*	2.1	1.4	(0.7)	(33%)

==> picture [123 x 9] intentionally omitted <==

----- Start of picture text -----

OPERATING REVENUE
----- End of picture text -----

==> picture [260 x 140] intentionally omitted <==

----- Start of picture text -----

Millions
$152.5
$120.6
$95.9
$71.9
$46.2
----- End of picture text -----

CAGR 34.8%

==> picture [42 x 9] intentionally omitted <==

----- Start of picture text -----

EBITDA
----- End of picture text -----

==> picture [31 x 7] intentionally omitted <==

----- Start of picture text -----

Millions
----- End of picture text -----

==> picture [240 x 127] intentionally omitted <==

----- Start of picture text -----

$83.8
$64.5
$43.7
$28.3
$17.1
----- End of picture text -----

CAGR 48.9%

==> picture [31 x 9] intentionally omitted <==

----- Start of picture text -----

NPAT
----- End of picture text -----

==> picture [31 x 7] intentionally omitted <==

----- Start of picture text -----

Millions
----- End of picture text -----

==> picture [238 x 124] intentionally omitted <==

----- Start of picture text -----

$58.3
$43.2
$30.7
$18.7
$11.8
----- End of picture text -----

CAGR 49.1%

Page 5

Source: Carsales

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

FY2011 Revenue Segment Performance
----- End of picture text -----

	$A	Millions	Growth
Year Ending 30 June 2011	FY2010	FY2011	$'s	%
Operating Revenue
Dealer	61.8	71.5	9.7	16%
Private	23.6	32.2	8.6	36%
Display*	19.8	29.8	10.0	51%
Dealer & Data Services	15.4	19.0	3.6	23%
Total Operating Revenue	120.6	152.5	31.9	26%

• FY2010 revenue re stated to reflect a change in accounting policy, in relation to revenue recognition where certain agency commissions paid are now reflected as reduction in revenue as opposed to an expense. Refer to Annual Report for further details

==> picture [16 x 15] intentionally omitted <==

• Dealer again delivered a sturdy performance, with used vehicle enquiries growing steadily throughout the year. New vehicle enquiries on both in stock and generic new vehicles both grew strongly throughout H2 FY2011. Customer acquisition continued to rise at a steady rate, with automotive customers now comfortably in excess of 2,800.

==> picture [16 x 14] intentionally omitted <==

• Private performed exceptionally well with a combination of strong ad volume growth throughout the year across all verticals and price rises in particular in automotive (standard ad price rose from $50 to $60 from the 2[nd] of September 2010) being major growth drivers.

==> picture [16 x 15] intentionally omitted <==

• Mediamotive continued the rapid growth seen in H1 FY2011, growing 37% in H2 FY2011 on pcp.

==> picture [16 x 14] intentionally omitted <==

• Dealer and Data services once again performed strongly throughout the year and grew 23% in H2 FY2011 lead largely by the continued growth in Livemarket

FY2011 SEGMENT REVENUE

==> picture [184 x 183] intentionally omitted <==

==> picture [234 x 14] intentionally omitted <==

FY2010 SEGMENT REVENUE

==> picture [180 x 177] intentionally omitted <==

==> picture [234 x 13] intentionally omitted <==

Source: Carsales

Note - Dealer includes Cars, Bikes, Marine, Industry and Caravan camping

Page 6

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

FY2011 Cashflow
----- End of picture text -----

==> picture [728 x 381] intentionally omitted <==

----- Start of picture text -----

$ Millions
$84.3m
$25.2m
$4.4m $0.9m $32.8m
$41.3m
$3.9m
$13.6m
----- End of picture text -----

Final FY2010 Dividend of 8.3c paid in October 2010 and an interim FY2011 Dividend of 9.4c paid in April 2011 both fully franked.

Page 7

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

FY2011 Operational Metrics
----- End of picture text -----

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 15] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

Automotive enquiry volumes grew 15% on pcp

• Dealer enquiry volumes remained robust growing 11% overall on pcp, with new enquiry volumes particularly on in-stock new cars up 54% on pcp.

• Private vehicle enquiry volumes continued to grow steadily throughout the year.

Automotive inventory volumes remained at around 200,000 vehicles.

New car inventory volumes remained stable at around 40,000 cars throughout the year, somewhat impacted by shortages as a result of Japanese tsunami. Dealer used inventory continued to track at around 80,000 cars.

• Private inventory continued to grow at a steady rate up 6% on pcp to over 80,000 cars.

Automotive Enquiry Volumes

==> picture [388 x 191] intentionally omitted <==

==> picture [183 x 18] intentionally omitted <==

Automotive Inventory

==> picture [376 x 186] intentionally omitted <==

==> picture [183 x 18] intentionally omitted <==

Source: Carsales

Page 8

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

Industry Landscape
----- End of picture text -----

==> picture [16 x 14] intentionally omitted <==

Continued to acquire market share in traffic throughout the year*.

Traffic Metrics – September 2011

==> picture [16 x 15] intentionally omitted <==

• 80% of all time spent looking at automotive classifieds websites around Australia was done on a carsales owned site.

==> picture [16 x 15] intentionally omitted <==

• Page Impressions generated in September 2011 on the .mobi and iPhone applications were higher than those generated by the Fairfax, News Corp and Telstra Automotive Ad Networks desktop sites combined (see the chart below), which highlights the speed in which this market is continuing to evolving.

==> picture [16 x 14] intentionally omitted <==

• Consumers have downloaded more than 468,000 carsales iPhone/iPad/Android applications and approaching 70,000 downloads of our bike and marine applications since their launches.

==> picture [204 x 19] intentionally omitted <==

Page Impressions – Mobi & iPhone Apps v Competitor Desktop Sites**

==> picture [430 x 186] intentionally omitted <==

==> picture [391 x 18] intentionally omitted <==

----- Start of picture text -----

Carsales Mobi and iphone Apps Telstra – Sep 11 Fairfax – Sep 11 News – Sep 11
----- End of picture text -----

Traffic Metrics – September 2010

==> picture [326 x 167] intentionally omitted <==

==> picture [203 x 19] intentionally omitted <==

• Source: Nielsen Online Market Intelligence, Automotive Ad Networks, Sep 2010 & Sep 2011

** Source: carsales Mobi, carsales Mobi, iPhone & Android app: Nielsen Site Census, Mobile Aggregate, August 2009 to September 2011; Drive, Trading Post & Carsguide (Fairfax, Telstra & News) desktop sites: Nielsen Market Intelligance, Domestic Traffic for audited sites, Australia, September, 2011

Page 9

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

Performance Outlook
----- End of picture text -----

Mediamotive continues to perform very strongly throughout the first quarter and we again expect to see strong H1 pcp Trading growth. Conditions Update

Private overall is performing well, with good opportunity to grow yield through new product offsetting some choppier ad volumes experienced over the first quarter of FY2012.

==> picture [16 x 15] intentionally omitted <==

Dealer and Data services has shown solid growth throughout the first quarter with Livemarket and Datamotive business units both performing well through customer acquisition and new product releases.

==> picture [15 x 14] intentionally omitted <==

Dealer continues to perform closely in line with market conditions. New car dealer customer acquisition is continuing to go well.

==> picture [16 x 14] intentionally omitted <==

A number of new products being worked on with expected releases throughout the financial year.

==> picture [16 x 15] intentionally omitted <==

Competitive market conditions remain unchanged.

==> picture [16 x 14] intentionally omitted <==

We remain comfortable with where we currently sit against consensus.

==> picture [16 x 15] intentionally omitted <==

Buy back of carsales shares announced in May to date totals 1.27 million shares bought and cancelled.

Trading Areas of

Operational Focus in FY2012

==> picture [16 x 14] intentionally omitted <==

==> picture [16 x 14] intentionally omitted <==

==> picture [15 x 15] intentionally omitted <==

Capex spend for FY2012 forecast to be ~$6.0m, largely to cater for a planned relocation of the Melbourne Head Office in December this year.

Mobile is continuing to be an area of strong focus within the business and we anticipate this to continue.

We are continuing to look for new opportunities in appropriate markets that will enhance, leverage or complement current capabilities.

Page 10

==> picture [800 x 87] intentionally omitted <==

----- Start of picture text -----

Our Network of Sites is First Class
Our Network of Sites is First Class
----- End of picture text -----

==> picture [348 x 225] intentionally omitted <==

==> picture [348 x 225] intentionally omitted <==

----- Start of picture text -----

Areas of
Operational
Focus in
FY2010
----- End of picture text -----

9 of the top 20 Automotive websites are part of carsales.com Ltd!

Market intelligence Ranking Report (01/09/11 – 30/09/11) Nielson Online

Page 11

==> picture [800 x 132] intentionally omitted <==

New Products Released

==> picture [800 x 133] intentionally omitted <==

==> picture [800 x 133] intentionally omitted <==

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

Motoring
----- End of picture text -----

==> picture [294 x 375] intentionally omitted <==

==> picture [373 x 398] intentionally omitted <==

==> picture [294 x 82] intentionally omitted <==

Page 13

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

Video
----- End of picture text -----

==> picture [529 x 491] intentionally omitted <==

Page 14 Page 13

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

Autogate Mobile
----- End of picture text -----

==> picture [633 x 478] intentionally omitted <==

Page 15

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

Livemarket Continued Development
----- End of picture text -----

==> picture [725 x 369] intentionally omitted <==

----- Start of picture text -----

Trading
Conditions
Outlook
----- End of picture text -----

Page 16

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

Quicksales.com.au Continued Development
----- End of picture text -----

==> picture [749 x 345] intentionally omitted <==

----- Start of picture text -----

Trading
Conditions
Outlook
----- End of picture text -----

==> picture [749 x 116] intentionally omitted <==

Page 17

==> picture [800 x 87] intentionally omitted <==

----- Start of picture text -----

Membership
----- End of picture text -----

==> picture [622 x 491] intentionally omitted <==

Page 18

==> picture [800 x 80] intentionally omitted <==

----- Start of picture text -----

ROI Calculator
----- End of picture text -----

==> picture [457 x 497] intentionally omitted <==

Page 19

==> picture [800 x 110] intentionally omitted <==

----- Start of picture text -----

Reputation
Social Networking
----- End of picture text -----

==> picture [459 x 220] intentionally omitted <==

Page 20