Investor Presentation April 2008

Transcription

1 Investor Presentation April

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. Balance sheet figures include TME. TME P&L figures were consolidated starting from 2Q07. Therefore the consolidated results include only 2Q; 3Q and 4Q results of TME. 2

3 Contents Corporate Overview 4 Business Overview. 11 I. Publishing.. 13 II. Printing.. 21 III. Online.. 23 FY 2007 Financial Review. 31 Outlook and Strategy Back up slides. 50 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 $ 700 mn. 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 Eastern Europe Population (mn) 2007 revenue (US$m) 2007 EBITDA (US$m) EBITDA Margin % Population (mn) 2007 revenue (US$m) 2007 EBITDA (US$m) EBITDA Margin % Population (mn) 2007 revenue (US$m) 2007 EBITDA (US$m) EBITDA Margin % Russia Lithuania Belarus Turkey Population (mn) 2007 revenue (US$m) 2007 EBITDA (US$m) EBITDA Margin % Poland Hungary Slovenia Croatia Ukraine Kazakhstan Turkey 9

10 resulting in revenue and EBITDA generation in a wider geography Revenue breakdown Germany 5% YTL 632 mn Russia 21% CIS 4% CEE 7% YTL 914 mn 2006 Turkey 95% Germany 3% 2007 Turkey 65% EBITDA breakdown Germany 5% YTL 146 mn Russia 25% CIS 4% CEE 3% YTL 201 mn 2006 Turkey 95% Germany 4% 2007 Turkey 64% 10

11 Business Overwiew 11

12 Business Structure Publishing (82%)* Printing (14%)* Online (4%)* Hürriyet Germany * As of FY

13 I. Publishing 13

14 Operating in a high growth media region CAGR of advertising spend Countries where Hurriyet & TME are present Some Western European countries Ukraine Russia Turkey Croatia Hungary Spain UK Italy France Germany Very high growth in the region we are operating Classified Spend per capita ($) Countries where Hurriyet & TME are present Some Western European countries But still very big potential for growth Ukraine Russia Turkey Poland Croatia Hungary Spain France Source: ZenithOptimedia. 14 UK

15 Turkish advertising market 6000 Ad spend (YTL mn) 0,50% ,42% Ad spend/gdp 0,38% 0,40% 0,45% 0,40% Ad spend (YTL mn) ,27% ,31% ,29% ,32% ,36% 0,34% ,35% 0,30% 0,25% 0,20% 0,15% 0,10% 0,05% Ad spend/gdp Do Do you you know that know 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? F 0,00% The share of Hürriyet in Turkish advertising market (FY2007) TV; 50,80% Newspaper; 31,20% Hürriyet; 41,40% Others; 58,60% Magazine; Outdoor; 3,90% 5,40% Cinema; Internet; 1,10% 4,30% Radio; 3,30% 15

16 Circulation in Turkey 6 Average Circulation in Turkey (mn) 0,7 5 4 Do you know Do you know that Turkey is the 5th largest circulation 3 that Turkey is the 5th largest 2 circulation market market in in Europe? Europe? 1 0 0,6 0,5 0,4 0,3 0, Total (mn) Hürriyet (mn) 0,1 0 Total Hürriyet Turkey is one of the few markets with increasing circulation (9% average growth in last 5 years). Cover prices are low compared to Europe. Hürriyet cover price is Ykr in weekdays, 50 Ykr in weekends. 16

17 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 Do Do you you know know that that 44% 44% of of Leverage a proven brand into new revenue streams Hurriyet Hurriyet ad ad revenues revenues stems from stems from supplements supplements and and regional editions? regional editions? 17

18 TME revenue model Vehicles Real Estate Jobs Household Goods Sellers Side Buyers Side Classified Ads (31%) Display Ads (46%) Services & ONLINE (13%) Circulation & Paid Access (10%) 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 18

19 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 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 II. Printing 21

22 Printing Leading commercial printing company in Turkey, printing mainly magazines and inserts Signature Breakdown Other 7% Day print capacity of 5 mn signatures. Insert 48% Magazine 45% 2007 Revenues of $ 64.5 mn; EBITDA margin of 15%. Mn YTL FY Revenues %14.0 EBITDA %10.6 EBITDA margin 15% 15% - 22

23 III. Online 23

24 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 Internet household penetration rates 65% 35% 35% 30% 24% 20% 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 Source: Global Entertainment and Media Outlook: Price Waterhouse Coopers 24

25 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 Hungary Poland 2Q 08 2Q 08 2Q 08 Croatia Slovenia, Serbia, Bosnia 19 leading classified websites in real estate, auto, recruitment and general classifieds New launches are planned in Hungary in 2Q08. 25

26 Leading online classified brands Turkey Poland Hungary A leading job portal in Turkey 1.9 mn UMVs, 4,4 K ads Leading property site in Turkey 965 K UMVs, 349 K ads Recently launched auto web site 754 K UMVs, 12 K ads One of the biggest generalist website in Poland 230 K ads 194 K UMVs One of the biggest auto verticals in Poland 75 K ads 894 K UMVs Leading property site in Poland 475 K ads 669 K UMVs One of the biggest machine site in Poland 20 K ads 76 K UMVs Top classifieds website in Hungary 319 K ads 509 K UMVs Warsaw Competency Center Centralized software development 26 Russia Leader in generalist classifieds 1.3 mn ads 1.8 mn UMVs Top jobs site in Russia 289 K ads 2,8 mn UMVs Croatia Slovenia Top classifieds site in Croatia 79 K ads 213 K UMVs Top recruitment site in Croatia 2 K ads 81 K UMVs One of the biggest real estate site in Croatia 16 K ads 40 K UMVs Top auto site in Croatia 12 K ads 103 K UMVs Leading jobs portal in Slovenia 730 ads 93 K UMVs

27 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 27

28 Hurriyet.com.tr: 14 mn UMV and high growth in revenues Hurriyet.com.tr: Unique monthly visitors Hurriyet.com.tr newsportal started in reached 14 mn UMV as of the end of began to yield positive EBITDA in Revenue growth in hurriyet.com.tr (mn YTL) * Do you know that hurriyet.com is Turkey s most visited Turkish Do you know that hurriyet.com is Turkey s most visited Turkish website with 14 million UMVs. Moreover, this makes Turkey the only country with a newsportal making the highest 0,3 1,2 0,6 1,6 0,5 1,7 0,6 1Q 2Q 3Q 4Q 1,7 website with 14 million UMVs. Moreover, this makes Turkey the only country with a newsportal making the highest traffic. traffic * Source. Management reports 28

29 High growth in classifieds websites as well Revenue growth in classified websites (mn YTL) * : 2,6 3,3 3,5 3,3 real estate website 1,6 1,8 1,7 started in March ,8 1Q 2Q 3Q 4Q K UMV as of 2007 year-end. began to yield positive EBITDA in vehicle website started in May K UMV. job website 1,3 mn UMV 36% revenue increase in * Source. Management reports. The data differs with the IFRS based data, due to the adjustments in yenibiris.com required by IFRS accounting principles. 29

30 hence, the share of online in revenues is increasing rapidly. Online 1,7% Online 4,3% Online 7% E Reach 20% by 2012, although strong organic growth continues in newspaper segment Print 98,3% Print 95,7% Print 93% Online 5,2% Online 7,9% Online 10,5% E Print 94,8% Print 92,1% 30 Print 89,5% Reach 20% by 2012, although strong organic growth continues in print

31 FY2007 Financial Review 31

32 2007 Financial Results: Summary Revenues increased by 44%, to YTL 914 million. Revenues (YTL mn) Hürriyet stand-alone ad revenues increased by 7%. Meanwhile, total revenues remained almost flat, due to discontinued operations. 8% 44% TME s revenues, in US$, increased by 32% in Internet revenues grew very strong both in Hürriyet and TME. In 2007, 6% of ad revenues stemmed from online, up from 1.6% in proforma * EBITDA (YTL mn) EBITDA rose by 37%, to YTL 201 million. EBITDA margin at 22.0% in 2007, compared to 23.1% in % 37% Hürriyet stand-alone margin is 21.5%, while TME margin is 23.1% Net income declined by 10%, to YTL 94 million. * Proforma figures consists of the 12-months consolidation of TME proforma*

33 2007 Consolidated IFRS Results %Ch. %Ch. 1Q07 2Q07 3Q07 4Q07 4Q06 FY07 FY06 (YTL mn) (4Q 07/06) (FY 07/06) Total Revenues % % Ad Revenues (print) (1) % % Ad Revenues (online) % % Circulation Revenues % % Printing Revenues % % Other Revenues (2) % % Cost of Sales (3) % % Operating Expense (3) % % Operating Profit % % O.Operating Income (Net) % % Financial Expense* Minority Profit Before Tax % % Tax Net Profit % % Depreciation % % Amortised cost valuation % % Adj.EBITDA % % EBITDA Margin 12,2% 23,9% 22,4% 25,0% 18,3% - 22,0% 23,1% Net Profit Margin 4,4% 13,0% 17,5% 3,6% 8,8% - 10,3% 16,5% (1) Excludes amortized cost valuation income, which is part of ad revenues classified under interest income according to IFRS regulations. (2) Reversal of scrap sales recorded within other revenues in previous quarters. The same amount was reversed from cost of sales, the net effect being 0. (3) There has been a reclassification of TME costs in FY2007 financials. Agency commissions, which were previously registered under the operating expenses, were reclassified under cost of sales in year-end audit report. The previous quarters were not 33 adjusted accordingly.

34 2007 IFRS Results: Hürriyet excluding TME %Ch. %Ch. 1Q07 2Q07 3Q07 4Q07 4Q06 FY07 FY06 (YTL mn) (4Q 07/06) (FY 07/06) Total Revenues (1) % % Ad Revenues (print) (2) % % Ad Revenues (online) % % Circulation Revenues % % Printing Revenues % % Other Revenues (3) % % Cost of Sales % % Operating Expense % % Operating Profit % % Profit Before Tax % % Tax % Net Profit % % Depreciation % % Amortised cost valuation % % Adj.EBITDA % % EBITDA Margin 12,2% 24,3% 20,0% 28,2% 18,3% - 21,5% 23,1% Net Profit Margin 4,4% 18,7% 19,8% 9,8% 8,8% - 13,5% 16,5% (1) Excluding discontinued operations, the revenue growth in 2007 is 4%. (2) Excludes amortized cost valuation income, which is part of ad revenues classified under interest income according to IFRS regulations. (3) Reversal of scrap sales recorded within other revenues in previous quarters. The same amount was reversed from cost 34 of sales, the net effect being 0.

35 Total Revenue Growth * Total Revenue (4Q) Total Revenue (Full year) 61% 94 44% 0% % Q06 4Q Revenue breakdown Printing 19% Other 8% YTL 632 mn Circulation 12% Printing 14% Other 4% YTL 914 mn Circulation 13% * Figures are YTL mn. Ad. 60% Ad. 70%

36 Ad growth Turkish market Total Ad Market (YTL mn) Newspaper Advertising (YTL mn) 19% 13% TV Advertising (YTL mn) Hürriyet Ad Growth (YTL mn) 17% 8% Ad market figures are based on management reports for market comparisons and includes internet ad revenues. Hürriyet ad revenue figures include Referans, Daily News and36 internet ad revenues; excluding TME.

37 Ad revenue growth * Ad Revenue (Full year) ** Ad Revenue: Hürriyet stand-alone 0.7% 12.9% 69% 7% % % Online revenue 6,3 488% 179% * Figures are YTL mn. ** Print and online ad revenues. 19,5 17, Q07 2Q07 3Q07 4Q07 Note: indicates the yoy increase. Hürriyet s ad revenues began to recover in the second half, following a weak first half. 4Q was the strongest quarter of the year. The contruction in automotive advertising was the main reason behind poor ad revenue growth in the beginning of the year. There has been a recovery in automotive adverising in 4Q07. Real estate, finance, tourism and telecoms were the main drivers behind the ad revenue growth in Ad revenue growth was price driven; whereas ad volumes declined. Ad revenues through supplements and regional editions registered high growth. Rapid growth in online revenues: Online reached 6% of total ad revenues in 2007, up from 2% in Online business is starting to yield positive EBITDA margins in Turkish operations as well. 37

38 Circulation market * Hürriyet Circulation Revenues (YTL mn) 33.0% -0.3% Hürriyet s circulation increased by 5% in Average cover prices of Hürriyet increased by 13% in Despite the circulation increase and price increase, circulation revenues of Hürriyet excluding TME declined slightly due to two major factors: The close down of Gözcü The lack of add-on type of promotions in National Circulation (000) Hürriyet Circulation (000) 0.4% 5.0% * Circulation figures are daily averages for related period. Total 38 circulation figures are Yaysat estimates.

39 Cost analysis * Promotion expenses (YTL mn) 12,0 10,0 7,8 4,0 Personel costs (Full Year) 79% 15% Q07 2Q07 3Q07 4Q07 * Source: Management reports Hürriyet Ch. Raw material costs (Full Year) Average number of pages Main paper * Figures are YTL mn. 30% -3% Supplements Newsprint prices increased by 3% in USD terms. However, the appreciation of YTL helped to contain the rise in newsprint costs. The close down of Gozcu was another factor behind the decline in raw material costs. Promotions slowed down in the 4Q07. Promotion expenditures are even lower in 1Q08, according to management reports

40 EBITDA * EBITDA (Full Year) EBITDA Margin 37.3% -7.2% 65 23,1% 12,2% 23,9% 22,4% 25,0% 22,0% FY 1Q07 2Q07 3Q07 4Q FY EBITDA margin, which was considerably low in the beginning of the year, began to improve after the second quarter. Throughout the year, promotions pressurized EBITDA margins. In 4Q07, on the other hand, the costs associated with the close down of TME Paris Headquarters reduced margins. Despite this, the last quarter was the strongest quarter in terms of EBITDA margin, thanks to the 28.2% margin in Hürriyet stand alone***. * Figures are YTL mn. ** Hürriyet excluding TME operations. 40

41 Net Cash Position (000 YTL) Cash and Equivalents S.T Bank Borrowings L.T Bank Borrowings Net Cash Investments Supplier Loans ,9 7,1 39,0 118,8 124,1 93, ,0 41,4 516,7-418,1 64,6 99,1 Net debt position of YTL 418 mn includes TME s net debt of YTL 132 mn. 41

42 TME: Consolidated statements of operations (US GAAP) mn USD Total Revenues 211,4 279,1 Print 202,4 260,8 Online 9,0 18,3 Costs -165,1-237,6 Cost of sales -98,4-133,8 General and administrative -55,7-83,0 Stock based compensation expense -3,4-3,5 Depreciation and amortization -6,2-8,4 Other operating costs -1,4-8,9 Operating profit 46,3 41,5 Interest and financing fees -12,4-13,6 FX gain and other 0,9 8,8 Net financial result -11,5-4,8 Income before income tax and minority interest 34,8 36,7 Income tax net -17,2-25,7 Income before minority interest 17,6 11,0 Minority interest -4,3-7,1 Net income from continuing operations 13,3 3,9 Net income from discontinued operations -16,4 0,6 Net income -3,1 4,5 Operation EBITDA 65,2 76,3 Margin 30,8% 27,3% Consolidated EBITDA 42 57,3 62,3 Margin 27,1% 22,3%

43 Revenue Growth by Regions TME standalone Mn USD Growth in USD terms Russia % Moscow % Other Russia % CIS % CEE % Total % Revenue Breakdown by Regions CEE 25% Moscow 34% CEE 22% Moscow 30% CIS 11% Other Russia 30% 43 CIS 12% Other Russia 36%

44 EBITDA by Regions TME standalone Mn USD Growth EBITDA margin 2006 EBITDA margin 2007 Russia % 35.4% 31.3% Moscow % 49.5% 40.6% Other Russia % 20.0% 23.5% CIS % 26.8% 29.8% CEE % 21.4% 14.1% Operational EBITDA % 30.9% 27.3% Consolidated EBITDA % 27.1% 22.3% EBITDA Breakdown by Regions CIS 10% CEE 18% Moscow 52% CIS 13% CEE 11% Moscow 45% Other Russia 20% 44 Other Russia 31%

45 Outlook and Strategy 45

46 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 70% in 2007 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. New job, real estate and auto verticals were launched in Russia in 1Q08. Real estate, job and auto verticals will be launched in Hungary in 2Q08 and in Ukraine in 3Q08. Software development center in Warsow will be relocated in Istanbul progressively. 46

47 TME revenue growth per quarter * IPO at 13 $ per share Acquisition announced at 10 $ per share 2007 Growth Organic: +16,5% LC: +22.6% USD: 32.0% 19,1% 25,5% 23,5% 22,1% Organic growth guidance for 2008: % ,5% 8,2% 13,9% 12-14% 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? 2,9% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Organic Acquisition impact * in local currency 47

48 Outlook Ad revenues of Hürriyet in domestic market, including online, is expected to grow by 15% in The turmoil in the financial markets did no have a significant effect in the ad market in 1Q08. Ad revenues of Hürriyet increased by 10% in 1Q08, according to management reports. We launched the free paper 20 dk in February. Promotions in the first quarter of 2008 slowed down significantly. In the rest of the year, promotions are expected to remain lower compared to last year. Newsprint prices declined in 1Q08, but the average newsprint price in 2008 is expected to be around 2% higher than With the recovery in the ad market and lower promotions, EBITDA margin in domestic market is expected to improve in The strong revenue growth in TME is expected to continue in Financial and organizational restructuring in TME is expected to provide considerable tax benefits. The ongoing restructuring process in TME especially the headquarter relocation- and the marketing costs necessitated by the competition in Moscow will result the EBITDA margin of TME to remain flat in

49 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. 49

50 Back up slides 50

51 Valuation 4,5 4,0 3,5 3,0 2,5 2,0 1,5 * as of HURGZ Max:4.20 Relative Performance (12-months) Min: HURGZ ISE

52 Newsprint prices Average Newsprint Costs (US$) * Including all costs and expenses like custom duties, transportation etc.

53 Hürriyet s major advertisers Sectors Classifieds (incl. HR) Real Estate Automotive Finance Tourism Retail Social Textile Communication State Enterprises & Political Parties First 10 Total Others % 13% 14% 7% 7% 6% 5% 3% 2% 1% 73% 27% % 14% 12% 9% 7% 6% 4% 3% 3% 2% 75% 25% 53

54 Appendix to FY 2007 financials There has been a few reclassifications in FY 2007 report notes, which are summarized below: Some costs of TME, such as agency commissions, were previously classified as operating expenses. After further analysis, these costs were associated with sales and therefore they have been reclassified as cost of sales. The amount reclassified as such was YTL 43 mn. Promotion costs under the operating expenses has been reclassified. Some portion of promotion product costs related to paper purchases, which was previously included in other item of operating costs has been reclassified as promotion costs. The amount of this reclassification was around YTL 12 mn. This reclassification has no effect on total operating costs. Scrap sales recorded within other revenues, as well as cost of sales in previous quarters was reversed from both revenue and cost sides, the net effect being 0. The effect of all the three reclassifications on EBITDA is 0. 54

55 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

56 Investor Contact tel: (90)