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Carsales rich list

Cash machine: Carsales revenue continues to grow, as does the wealth of its shareholders.

Online juggernaut making many people wealthy

General News logo8 Sep 2010

AUSTRALIAN car dealers continue to underpin the extraordinarily-successful automotive millionaires’ factory at leading website Carsales, according to the latest accounts from the company, which also includes details of the main beneficiaries of the listed cash cow.

In the financial year to June 2010, Carsales managed to generate an extra $12.4 million from its dealer clients.

This takes dealer contributions to the company to an all-time record $61.8 million – a 25 per cent increase in just 12 months. The revenue is sourced predominantly from car dealers, but also includes motor cycle, marine and other dealers.

Dealers also contributed to revenues through services such as Autogate, Red Book and Datamotive, which grew $2.4 million in the 12 months to $15.2 million – an 18 per cent increase.

Private sellers provided the company with the greatest percentage growth in revenue with an increase of $7.1 million to $23.6 million in FY2010 – a 43 per cent increase.

 center imageLeft: Carsales CEO Greg Roebuck.

Carsales has also seen a 31 per cent growth in online display advertising. This is mostly booked by car-makers and car importers, which are increasingly turning to the internet and away from newspapers to reach new car buyers.

Carsales said that display advertising increased by 9 per cent in the first half of the year, but in the second half it grew by 50 per cent. Total display for the year was $22.3 million – an increase of $5.3 million.

Total revenue for FY2010 was $123.1 million, up $27.2 million on the previous year – some 28 per cent.

On the expenses side, Carsales added $3.1 million to its adverting spending at $37 million and now spends as much on advertising as many car companies operating in the Australian market.

People costs continued to rise, with the company increasing its operations and administrative expenses by $2.1 million to $11.7 million.

The company nevertheless continues to drive profit to the bottom line, with a 41 per cent increase in after-tax profit to $43.2 million for the year – up $12.5 million.

Income tax was $18.8 million, up $8.6 million or 84 per cent. In percentage growth terms, the taxman did best.

Carsales earnings of 18.6 cents a share in FY 2010 are not far away from the 20 cents a share that original shareholders paid for their Carsales investment in 1999.

Meanwhile, the people most associated with the birth and development of Carsales have been collectively rewarded for their involvement to the tune of more than $250 million at the current share price of around $5.18.

Wal Pisciotta, who was the driving force in developing Carsales out of its incubator inside the then Reynolds & Reynolds structure (now Pentana Solutions), now has almost $100 million in share value, which would have generated around $2.8 million in dividends in the past 12 months.

CEO Greg Roebuck, a Reynolds & Reynolds director in the mid-1990s whose idea it was to link dealers’ used car stock listings directly into an auto classifieds website, has shares to the value of around $38 million, while former Reynolds director Grant Taylor, who stepped in and turned Carsales around when the company was terminally bleeding in 2001, has shares to the value $22 million.

Long-time Reynolds/Pentana board member Rod Dux has Carsales holdings worth $16 million at current values and another long-time Reynolds/Pentana executive and board member, Peter Aitken, has $14.3 million worth of shares.

Pentana Solutions CEO Steve Kloss is holding $14.1 million in Carsales shares.

Bill Robinson, who was involved in the early days at Carsales as a partner in Reynolds & Reynolds, has shares worth $12.8 million at current prices and one-time Carsales company secretary Garry Hoover (now running Red Book) has shares worth more than $9 million.

Carsales COO Shane Pettiona holds shares worth $6.5 million. Mr Pettiona was the founder of the website discountnewcars.com.au, which he sold to Carsales for $22 million - $19 million in cash and $3 million in Carsales shares. At the time, the shares were valued at around $2 each.

The two dealer shareholders who were most actively involved in turning around and driving the ultimate success of the company are board members Geoff Brady (the biggest initial dealer investor, who stumped up $1 million) and Ric Collins, who have been rewarded with shareholdings worth $18.6 million and $10 million respectively.

Andrew Curmi – whose father, the late Brian Curmi, was a member of the Carsales board following a cash injection by the Victorian Automobile Chamber of Commerce – holds $7 million in shares.

Disclosure: John Mellor no longer holds shares in Carsales.

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