Trade Me accounts reveal parent company loans

Online auction company Trade Me lent its Australian parent Fairfax Media $192.7 million in 2010 and paid out $220 million in dividends in 2011, according to just-released financial statements.

Trade Me is about to file a prospectus for an initial public offering that will pull in $529.5 million with Fairfax netting about $363 million with $166 million of new debt applied to Trade Me.

The financial statements show Trade Me had receivables due from Fairfax of $192.7 million in 2010, which reduced to $39.15 million in the year to June 2011.

Trade Me recorded a profit of $69.7 million in 2011, up from $63.6 million in 2010.

Total revenue came in at $128.8 million, compared to $114.4 million in 2010.

Total assets, including the $39.15 million due from Fairfax, were $61.97 million, with liabilities of $42.1 million.

Total equity as June 30 was $19.8 million after paying out $220 million in dividends to Fairfax.

Fairfax Media made an after tax loss of $A400.9 million in the year to June 2011 after writing down the value of its mastheads, customer relationships and goodwill by $A650.7 million.

Fairfax bought Trade Me in 2006 for $750 million.

Returns from the IPO and the dividend will give Fairfax a full carry on its investment and still retain 66% of Trade Me.

Fairfax announced yesterday an offer price of $2.70 per share had been set, with 134.6 million, or 34%, of Trade Me's shares to be sold.

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5 Comments & Questions

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So who is recommending buying the shares?

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not me... I suspect the price has being set too high?

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I thought the FMA under the guidance of hughes was supposed to protect the public from wide boys. A classic case of fools and their money parting company ASAP. Why would anyone want to bail out fairfax . Put your money in the bank ,or buy some farmland.

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this one is too low..

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Having a loan back to your overseas parent is very normal for a Subsidiary with good positive cashflows. Much simpler than paying a dividend and provides much more flexibility.

The Dividend just tidied it up pre-IPO.

It is surprising however that they didn't clean it up entirely. To me, that is an indication that Fairfax will continue to operate Trademe in its own interests, even though it only holds 66% - A listed internet business should not be in the business of providing loans to overseas businesses, even if they are a majority shareholder.

I wonder what the terms of the loan are and whether it will be paid down from the future dividend stream.

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