How To Grow Your Business

Transcription

1 Investor Presentation Helsinki, Stockholm, Vienna, Frankfurt February 18-20;

2 Notice This presentation does not constitute an offer or invitation to purchase or subscription for any securities and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. The information contained in this document has not been independently verified. No representation or warranty express or implied is made as to and no reliance should be placed on, the accuracy, completeness, correctness or fairness of the information or opinions contained herein. Neither the company nor any of its affiliates, advisors or representatives shall have any liability whatsoever (for negligence or otherwise) with respect to any loss howsoever arising from any use by third parties of this presentation or its contents or otherwise arising in connection with it. Turkish ad market figures are estimates of DYH; based on currently available data. Ad market statistics may show inconsistency with IFRS figures. TME P&L figures were consolidated starting from 2Q07. Therefore 9M consolidated results include only 2Q and 3Q results of TME. Balance sheet figures include TME. 2

3 Contents Corporate Overview 4 Ad Market Trends Business Overview. 14 Publishing 16 Printing 23 Online.. 25 TME Outlook After the Acquisition Guidance for Hurriyet domestic operations M Financial Review Back up slides. 47 3

4 Corporate Overview 4

5 Corporate Structure 60% Doğan Yayın Holding (DYH) Major shareholder of Hurriyet. Largest Turkish media conglomerate, with core businesses of publishing and broadcasting. Total ad market share of 42%. Listed in Istanbul Stock Exchange. Hürriyet #1 publishing & printing group in Turkey. 41% ad market share among newspapers. #1 Turkish news website. Listed in ISE since 1992 with a free float of 40% and market capitalization of around $ 1 bn. 67.3% 100% Trader Media East (TME) #1 print & online classified company in Russia and Eastern Europe. Listed in London Stock Exchange with a free float of 32.7% Printing Assets 7 newspaper and ofset printing plants in Turkey and 1 printing plant Germany. 5

6 # 1 media company of Turkey # 1 classified advertising company of Russia, CIS, Baltics and Eastern Europe Do you know that Hürriyet is unique Do you know that Hürriyet is unique in the sense that it is the only in the sense that it is the only newspaper in the world with: newspaper in the world with: increasing circulation; increasing circulation; highest market share in newspaper ad market; highest market share in newspaper ad market; a newsportal being the most visited local website, all at the same time a newsportal being the most visited local website, all at the same time 6

7 Milestones in Hürriyet s history Started classifieds, still leading with 65% market share IPO of 10% in ISE (at 70 mn $ market cap.) Ad revenues reached $ 100 mn 6 printing plants were structured under DPC Business title Referans was launched Ad revenues reached $ 250 mn Established Operations in Germany started Shares acquired by Doğan Group First online move Printing plant in Frankfurt opened. Free float reached 40% Online classifieds started TME acquisition 7

8 Milestones in TME history The first issue of Iz Ruk v Ruki came out in Moscow Pronto Moscow acquired by Trader Classified Media Online operations started TME s IPO in London Stock Exchange Do Do you you know know that that we we are are currently currently operating operating in in cities cities in in Russia? Russia? Iz Ruk v Ruki started to coming out in regions Croatia joined the group TME established, comprising former operations of Trader Classified Media TME acquisition by Hurriyet 8

9 10 countries, 350 mn population and over US$ 10 bn ad market Russia CIS & Baltics Population (mn) 2006 revenue (US$m) 2006 EBITDA (US$m) EBITDA Margin % Population (mn) 2006 revenue (US$m) 2006 EBITDA (US$m) EBITDA Margin % Eastern Europe Population (mn) 2006 revenue (US$m) 2006 EBITDA (US$m) EBITDA Margin % Russia Lithuania Belarus Turkey Population (mn) 2006 revenue (US$m) 2006 EBITDA (US$m) EBITDA Margin % Poland Hungary Slovenia Croatia Ukraine Kazakhstan Turkey 9

10 Ad Market Trends 10

11 A region with high growth media landscape, and with further high potential of growth CAGR of advertising spend 36% 32% 30% Countries where Hurriyet & TME are present Some Western European countries 20% 10% 9% 4% 4% 2% 2% Very high growth in the region we are operating Ukraine Russia Turkey Croatia Hungary Spain UK Italy France Germany Source: ZenithOptimedia. Classified Spend per capita ($) 13,3 15,6 16,3 3,6 3,7 4,7 But still very big potential for growth 1,2 1,4 1 Ukraine Russia Turkey Poland Croatia Hungary Spain France UK 11

12 Potential of EU triggered growth 2,5% Ad spend / GDP 2,0% 1,5% 1,0% 0,5% 0,0% Hungary Czech Rep. Poland Bulgaria Turkey Source: ZenithOptimedia For the new EU members, ad spending gained considerable momentum after the initiation of membership negotiations. Hence, the EU membership prospect offers great potential to growth for Turkish ad market. 12

13 Do Do you you know know that that Hürriyet Hürriyet has has the the highest highest power power ratio ratio among among other other newspapers in newspapers in the the world? world? ,56% 0,52% ,50% ,40% 0,47% 0,42% 0,46% ,37% 0,37% Ad spend (YTL mn) Ad spend/gdp Turkish advertising market Ad spend (YTL mn) Ad spend/gdp E 2008F The share of Hürriyet in Turkish advertising market* Outdoor; 5,6% Cinema; 1,2% TV; 51,5% New spapers ; 33,9% Radio; 3,9% *As of 9M07. Magazine; 3,9% 13 0,65% 0,55% 0,45% 0,35% 0,25% 0,15% 0,05% -0,05% Hürriyet; 40,7% Others; 59,3%

14 Business Overview 14

15 Business Structure Publishing (82%)* Printing (15%)* Online (3%)* Hürriyet Germany * As of 9M07. 15

16 Publishing 16

17 Circulation in Turkey Avg. daily circulation (mn) Total 1 0 Total Hürriyet ,7 0,6 0,5 Do you know Do you know that Turkey is the 5th largest circulation that Turkey is the 5th largest Hurriyet 0,4 circulation market market in in Europe? Europe? 0,3 0,2 Turkey is one of the few markets with increasing circulation (10% average growth in last 5 years). Cover prices are low compared to Europe. Hürriyet cover price is Ykr in weekdays, 50 Ykr in weekends. 17

18 Hürriyet growth model Main title Periodic Supplements Regional Editions & Inserts Internet Economics Differentiators Core business - high growth, high margin Penetrate into new reader and advertiser base Diversify the product portfolio Strong brand with high brand awareness Most influential Attractive reader profile Premium ad price strategy Flexible cost base Leverage a proven brand into new revenue streams 18

19 Hürriyet: Supplements and Regional Editions w nnoow k k of f yyoouu4% od o DDo t 444% a dmss t a t iyeet a e th a t s thurrrriy ess stem HHuenuue en rreevvm nntsts l e o m eonaal frfrom le m p e p l p egiion su sunpddrrengs?? aan tio ns o eeddiiti 19

20 Main publications of TME Russia & CIS 4 CIS countries and 122 cities Main titles: Iz Ruk v Ruki and Aviso Main verticals: Rabota, Photo Nedvizhimost, Avto Iz Ruk v Ruki: Daily generalist newspaper Annual circulation of 53 million copies One of the most well known brands 89% Brand recognition in Russia Eastern Europe 3 Eastern Europe countries: Hungary, Croatia, Poland 17 publications Main title: Expressz, Oglasnik, Auto Bit Expressz: Daily generalist newspaper & 5 weekly verticals Undoubtely market leader Oglasnik: The leading daily generalist newspaper with over 60% share Five editions each week 20

21 TME revenue model Vehicles Real Estate Jobs Household Goods Sellers Side Buyers Side Classified Ads (31%) Display Ads (45%) Services & ONLINE (17%) Circulation & Paid Access (7%) Basic line advertisements Pay for prominence Run til it sells Priority/visibility products Inventory advertising Brand advertising Online banners Powerpages Inserts Paid lines/call centre priority (premium line) Paid SMS (for ad placement/ renewal) Prepaid cards Cover price Home delivery/ subscription Sponsored text links Display and classified ads are the major revenue generators 21

22 TME growth model Generalist Verticals Online New Markets Economics Differentiators Core business - high growth, high margin High cash flow generation Low capital intensity Strong brands with high brand awareness Local markets and rich local content Strong local sales force Leveraging the same content through different types of media Do Do you you know know that that editions editions of of Pronto Pronto Moscow Moscow are are distributed distributed in in cities cities in in Russia, Russia, CIS CIS and and Baltics? Baltics? Leverage a proven business model for high growth markets 22

23 Printing 23

24 Printing Leading commercial printing company in Turkey, printing mainly magazines and inserts Signature Breakdown Other 9% Day print capacity of 5 mn signatures; capacity utilization of 75% Revenues of $ 40 mn; EBITDA margin of 15%. Insert 40% Magazines 51% Mn YTL FY06 9M06 9M07 Revenues %16.9 EBITDA %19.3 EBITDA margin 15% 17% 17% - 24

25 Online 25

26 Our region is immature in internet From... the leading print classified company to become... the leading online community and classified player of the Eastern Europe and CIS region 2006 internet penetration rates 58% 33% 32% 27% 21% 18% Right time to invest in online Great content advantage through leveraging print Target is to achieve clear leadership position in all markets Croatia Hungary Russia Poland Turkey West Europe 26

27 Online business: #1 newsportal in Turkey, as well as a wide range of classifieds and community websites in the whole Classifieds News Portals Generalist Community Turkey Russia & CIS 1Q 08 1Q 08 Hungary Poland 2Q 08 2Q 08 1Q 08 Croatia Slovenia, Serbia, Bosnia 19 leading classified websites in real estate, auto, recruitment and general classifieds New launches are planned in Russia and Hungary. 27

28 Leading online classified brands Russia Leader in generalist classifieds 1.2 mn ads 1.9 mn UMVs Croatia Top classifieds site in Croatia 106 K ads 214 K UMVs Poland Hungary *2007 September figures Top jobs site in Russia 186 K ads 2,6 mn UMVs One of the biggest generalist website in Poland 239 K ads 248 K UMVs One of the biggest auto verticals in Poland 81 K ads 920 K UMVs Leading property site in Poland 411 K ads 702 K UMVs One of the biggest machine site in Poland 16 K ads 47 K UMVs Top classifieds website in Hungary 336 K ads 1,1 mn UMVs Warsaw Competency Center Centralized software development 28 Slovenia Turkey Top recruitment site in Croatia 4 K ads 87 K UMVs One of the biggest real estate site in Croatia 16 K ads 42 K UMVs Top auto site in Croatia 10 K ads 97 K UMVs Leading jobs portal in Slovenia 730 ads 93 K UMVs A leading job portal in Turkey 2.2 mn UMVs, 5,5 K ads Leading property site in Turkey 820 K UMVs, 290 K ads Recently launched auto web site 425 K UMVs, 9 K ads

29 hurriyet.com A success story Leading news portal which is one of the most visited websites in Turkey and the 10 th mostly visited newsportal in the world. Not only a news portal, a platform having extensive user originated content 1000 mn page views & 14 mn unique visitors as of 2007 year-end. Ad revenue growth of around 200% Communities under hurriyet.com.tr Video & photo sharing websites Magazine news Economic and stock market news including charts & financial information Tourism classifieds including useful information about hotels and holiday sites BLOG editorial content sharing websites Sport news Top ten places social website Tv & Cinema guide Independent community websites 29

30 Hurriyet.com.tr reached 14 mn UMV PAGE VIEW UNIQUE VISITOR mn. Page View Unique visitor 13,71 mn. 14,5 13, ,5 11, Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 mn 10,5 9,5 mn 8,5 7,5 6,5 5,5 4,5 newsportal started in reached 14 mn UMV as of the end of began to yield positive EBITDA in

31 HURRIYET EMLAK.COM & OTO.COM Hurriyet emlak.com revenue growth 72% 17% 86% 26% 23% 22% real estate website started in March K UMV as of 2007 year-end. began to yield positive EBITDA in Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 E : vehicle website started in May K UMV. job website 1,3 mn UMV 36% revenue increase in

32 Rapid growth in online Online 1,7% Online 4,0% Online 7% E 2008E Reach 20% by 2012, although strong organic growth continues in newspaper segment Print 98,3% Print 96,0% Print 93% Online 5,3% Online 8,0% Online 10,5% E Print 94,7% Print 92,0% 2008E Print 89,5% Reach 20% by 2012, although strong organic growth continues in print 32

33 Hurriyet online revenues will continue to grow substantially Hürriyet online revenue growth* 100% 150% 34% CAGR E 2008E Do Do you you know know that that hurriyet.com hurriyet.com is is Turkey s Turkey s most most visited visited Turkish Turkish website website with with million million UMVs. UMVs. Moreover, Moreover, this this makes makes Turkey Turkey the the only only country country with with a newsportal newsportal making making the the highest traffic. highest traffic. * Excludes TME data. 33

34 TME Outlook After the Acquisition 34

35 Efficiency enhancing measures in TME Paris headquarters are moving to İstanbul. This is expected to save around 40% in corporate expenses. New senior management in place. New CEO will be appointed soon. The loan restructuring has been completed, which is expected to save taxes by USD 2 mn per year. Legal restructuring is still continuing. The effective tax rate will decline from around 50% to around 35%. Synergy in newsprint purchases: Negotiations with newsprint suppliers to combine TME purchases with Dogan Group s contracts are continuing. New launches on internet continues. Job.ru was commercially launched as of February 6th; domaina.ru and automania.ru are expected to be commercial in 1Q08. Software development center in Warsow will be relocated in Istanbul progressively. 35

36 Revenue growth exceeded guidances IPO at 13 $ per share Acquisition announced at 10 $ per share 18,8% 17,7% 13,9% 15,9% 6,5% 8,2% 2,9% Q1 Q2 Q3 Q4 Q1 Q2 Q % growth guidance of TME management for 2007 Do Do you you know know that that Iz Iz Ruk Ruk v v Ruki Ruki is is the most the most popular popular ads paper ads paper with with 89% 89% brand brand recognition recognition in in Russia Russia and and 94% 94% brand brand recognition in recognition in Moscow? Moscow?

37 What about 2008? Mn USD 2006FY 9M06 9M07 Growth in USD terms (9M07 vs 9M06) Organic Growth (9M07 vs 9M06) 2008 guidance Revenues Online share in total revenues 211,4 4,3% 152,0 4,2% 200,4 5,9% % % - 18% - 22% organic growth 9% Operational EBITDA 65,2 45,0 56,3 + 25,1% - - Operational EBITDA margin 30,9% 29,6% 28,1% Consolidated EBITDA 57,3 39,6 47,4 + 20,0% - - Consolidated EBITDA margin 27,1% 26,0% 23,7% - - Unchanged compared to growth guidance was set as 12-14%; which was largely exceeded, as the organic growth was as high as 17.5% in 9M07 and there was no major change in the growth outlook in the last quarter of

38 2008 Guidance for Hurriyet domestic operations 38

39 Hürriyet domestic operations in 2008 Mn YTL 2006FY 9M06 Ad revenues Online/total ad revenue 1,7% 2,0% EBITDA margin 23,1% 24,7% 39 Growth 9M guidance (9M07 vs 9M06) 292 5,2% 15% 4,0% - 7% 19,2% 3-4 pp increase compared to 2007 Do Do you you know know that that Aviso, our Aviso, our publication publication in in Ukraine, Ukraine, is is the the biggest biggest classified classified ad ad paper paper in in the the world, world, in in terms terms of of size size and and ad ad volume. volume.

40 2008 outlook for Hurriyet domestic operations There has been a recovery in Turkey s ad market in the last quarter of 2007, driven by CB rate cuts. The CB is expected to continue to reduce interest rates in 2008 as well, though not excessively. Hurriyet s ad revenues are expected to benefit from the rate cuts in Online revenues in domestic operations are targeted to grow by around 100% in Promotion activities are expected to diminish considerably in 2008, alleviating the pressure on the cost side. High growth in ad revenues, together with lower promotions are expected to lead to improved margins in

41 Our Strategy is To keep our 40% print market share position. To develop our internet both organically and through acquisitions; strengthen our leading position in both classifieds and news. Our Strategy is To be the leading community and classified website in the 10 countries we are operating. Consolidate the market share and become clear market leaders in every segment and every country we operate. 41

42 9M Financial Review 42

43 9M07 Consolidated IFRS Results %Ch. %Ch. FY06 1Q07 2Q07 3Q07 3Q06 9M07 9M06 (YTL mn) (3Q 07/06) (9M 07/06) Total Revenues % % Ad Revenues (print)* % % Ad Revenues (online) % % Circulation Revenues % % Printing Revenues % % Other Revenues % % Total Costs % % Raw material % % Personnel % % Sales and marketing % % Depreciation % % Other % % Operating Profit % % O.Operating Income (Net) % % Financial Expense* Minority Profit Before Tax % % Tax Net Profit % % Depreciation % % Amortised cost valuation % % Adj.EBITDA % % EBITDA Margin 23,1% 12,2% 23,9% 22,4% 24,2% 20,8% 24,7% Net Profit Margin 16,5% 4,4% 13,0% 17,5% 16,4% 12,9% 19,0% * Excludes amortized cost valuation income, which is part of ad revenues classified under interest income according to IFRS regulations. 43

44 Net Cash Position (000 YTL) M06 9M07 Cash and Equivalents 164,9 146,2 162,3 S.T Bank Borrowings 7,1 13,9 27,2 L.T Bank Borrowings 39,0 34,0 545,4 Net Cash 118,8 98,3-410,3 Investments 124,1 61,8 46,4 Supplier Loans 93,5 56,6 103,5 Net debt position of YTL 410 mn includes TME s net debt of YTL 134 mn. Hürriyet s capex budget for 2007 is fully realized in the first nine months. 44

45 Revenue Growth by Regions TME standalone Mn USD 9M06 9M07 Growth in USD terms (9M07 vs 9M06) Russia 95,4 132, % Moscow 50,0 60, % Other Russia 45,4 72, % CIS 16,4 24, % CEE 40,1 43, % Total 152,0 200, % Revenue Breakdown by Regions CEE 26% Moscow 33% CEE 22% Moscow 30% CIS 11% 9M06 Other Russia 30% CIS 12% 9M07 Other Russia 36% 45

46 EBITDA by Regions TME standalone Mn USD 9M06 9M07 Growth in USD terms (9M07 vs 9M06) Russia % Moscow % Other Russia % CIS 4, % CEE % Operational EBITDA % Consolidated EBITDA % EBITDA Breakdown by Regions CIS 9% CEE 19% CIS 9% CEE 12% Moscow 45% Moscow 54% Other Russia 18% 9M06 Other Russia 34% 9M07 46

47 Back up slides 47

48 4,50 4,00 3,50 3,00 2,50 2,00 HURGZ * as of Max:4.36 Relative Performance (12-months) Min: Valuation HURGZ ISE-100

49 Corporate Governance & Credit Rating Proven track record of shareholder value and corporate governance principles since 1992 Fitch rating for Hürriyet as of July 2007: Foreign Currency BB (stable outlook) Local Currency Long term BB (stable outlook) National AA- Corporate governance rating of 8.0 (on a scale of 10) by ISS Corporate Services, on September Moody s corporate rating is expected to be announced soon. 49

50 Newsprint prices Average Newsprint Costs (US$) Newsprint prices reached the last 6 years highest. However, prices has been declining in 3Q M07 * Including all costs and expenses like custom duties, transportation etc. 50

51 Hürriyet s major advertisers Sectors 2006FY 9M06 9M07 Classifieds (incl. HR) Real Estate Automotive Finance Tourism 15% 13% 14% 7% 7% 16% 13% 14% 6% 7% 16% 13% 11% 8% 8% Weakness in the automotive sector was reflected as a considerable decline in ad spending of this sector. Retail 6% 7% 6% Social Education Communication 5% 3% 2% 5% 3% 2% 5% 4% 3% Real estate, finance, tourism were the strongest sectors in terms of ad spending. State Enterprises & Political Parties 1% 1% 3% First 10 Total 73% 74% 75% Others 27% 26% 25% 51

52 Contact Information Investor Contact tel: (90)