Hürriyet Investor Presentation. July 2007

Transcription

1 Hürriyet Investor Presentation July

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. Ad market figures are estimates of DYH; based on currently available data. Ad market statistics may show inconsistency with IFRS figures. P&L figures in 1Q07 update do not include TME, as the consolidation of TME s P&L will take place starting from 2Q, whereas balance sheet figures in 1Q07 update include TME. 2

3 Content 1 2 Corporate Overview Business Overview A. Publishing B. Printing C. Online 3 Operations & Financials 4 Quarterly Review 5 Outlook 3

4 Content 1 2 Corporate Overview Business Overview A. Publishing B. Printing C. Online 3 Operations & Financials 4 Quarterly Review 5 Outlook 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 Leading publishing & printing group in Turkey Total ad market share of 14% Listed in ISE since 1992 with a free float of 40% and market capitalization of around $1.3 bn 67.3% 100% Trader Media East (TME) Leading print & online classified company in Russia and Eastern Europe Listed in London Stock Exchange with a free float of 32.7% Printing Assets Newspaper and ofset printing plants in Turkey and Germany 5

6 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 6

7 Content 1 2 Corporate Overview Business Overview A. Publishing B. Printing C. Online 3 Operations & Financials 4 Quarterly Review 5 Outlook 7

8 A regional media company operating in 10 countries 350 mn population and over US$ 10 bn ad. market Poland 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 % Population (mn) 2006 revenue (US$m) 2006 EBITDA (US$m) EBITDA Margin % Hungary Population (mn) 2006 revenue (US$m) 2006 EBITDA (US$m) EBITDA Margin % Croatia Population (mn) 2006 revenue (US$m) 2006 EBITDA (US$m) EBITDA Margin % Slovenia Russia Population (mn) 2.1 Lithuania *New Acquisition Poland Belarus Turkey Population (mn) 2006 revenue (US$m) 2006 EBITDA (US$m) EBITDA Margin % Hungary Slovenia Croatia Ukraine Turkey Kazakhstan 8

9 Strong brands in 3 main businesses Publishing (85%)* Printing (12%)* Online (3%)* *Share of proforma consolidated revenues 9

10 Content 1 2 Corporate Overview Business Overview A. Publishing B. Printing C. Online 3 Operations & Financials 4 Quarterly Review 5 Outlook 10

11 Highlights Publishing Group Leading newspaper group in Turkey and the leading print and online advertising publisher in Russia, CIS and Eastern Europe 650,000 average daily sales throughout Turkey Publishing 3 dailies, including the country s most well known and influential media brand Hürriyet Leading ad medium with app 14% overall ad market share and 40% newspaper ad market share 65% market share in print classifieds Supplements, regional editions and inserts are dominating the growth Strong distribution network, strong printing infrastructure Operating in Russia, Hungary, Ukraine, Croatia, Poland, Belarus, Kazakhstan, Lithuania and Slovenia Over 200 print titles under 23 strong brands with 5 mn readers per week Well diversified operations (ex: products in ~100 Russian cities) App employees, of which in sales 11

12 Operating in high growth media region 37% 32% 27% CAGR of advertising spend 17% 15% 12% 2,5% Ukraine Russia Turkey Poland Croatia Hungary West Europe Turkish advertising market (1.9 billion US$) TV; 52,9% Outdoor; 5,1% Cinema; 1,1% Newspapers; 33,4% Hürriyet; 42,80% Doğan Gazetecilik; 17,50% Sabah; 18,50% Structural triggers (EU and economic improvement are expected to further fuel ad growth. Radio; 3,6% Magazine; 3,9% Others; 21,20% 12

13 Circulation in Turkey Avg. daily circulation (mn) 6 5 Total Hürriyet Total Hurriyet Turkey, 5th largest circulation market in Europe One of the few markets with increasing circulation (avg. 10% growth in last 5 years) Cover prices are low compared to Europe. Hürriyet cover price is Ykr in weekdays, 50 Ykr in weekends 13

14 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 14

15 TME revenue model Vehicles Real Estate Jobs Household Goods Sellers Side Buyers Side Classified Ads Display Ads Services & ONLINE Circulation & Paid Access 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 15

16 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 Leverage a proven business model for high growth markets 16

17 TME acquisition strategy Facilitation of the model shift Performance enhancement Online migration Verticalization Acquisition of new technologies Access to new markets Establishing early leaderships TME Acquisition Strategy EBITDA accretion Growth accretion Increasing market reach (traffic etc.) Providing scale Contributing to company valuation Recent acquisitions: Impress Media, Posao.hr, Mojedelo.com 17

18 Content 1 2 Corporate Overview Business Overview A. Publishing B. Printing C. Online 3 Operations & Financials 4 Quarterly Review 5 Outlook 18

19 Printing Leading commercial printing company in Turkey, printing mainly magazines and inserts Day print capacity of 5 mn signatures; capacity utilization of 75%. Main customers: Carrefour, Teknosa, Bauhaus, Avon, Metro 2006 Revenues of $ 40 mn; EBITDA margin of 15% Investments mainly on insert machinery to capture booming Turkish insert market (~25% growth in 2007) Capex of 9 mn$ is expected in 2007; Regular Capex is 2 mn$ Leveraging the knowhow - growth potential in Eastern Europe and Russia 2006 Signature Breakdown Insert 40% Other 9% Magazines 51% Mn YTL FY06 1Q06 1Q07 Revenues % EBITDA % 19

20 Content 1 2 Corporate Overview Business Overview A. Publishing B. Printing C. Online 3 Operations & Financials 4 Quarterly Review 5 Outlook 20

21 Our region is immature in internet From... the leading print classified company to become... the leading online classified and community player of the Eastern Europe and CIS region 55% 2006 internet penetration rates 33% 30% 30% 22% 17% Right time to invest in online Great content advantage through leveraging print Target is to achieve clear leadership position in all markets Croatia Hungary Poland Turkey Russia West Europe 21

22 Leading online classified brands Hungary Top classifieds website in Hungary 1 mn UMV Real estate vertical will be launched in August Auto vertical will be launched in October Recruitment vertical will be launched in October Poland Leading generalist classifieds site 450,000 UMVs One of the biggest auto verticals in Poland Leading property site in Poland 280,000 ads Truck vertical will be launched in August 2007 Warsaw Competency Center Centralized software development Russia Slovenia Turkey Leader in generalist classifieds 1.2 million ads 2.1 mn UMV Top jobs site in Russia 120,000 CVs, 150,000 listing 1.4 mn UMV Real estate vertical will be launched in August Auto vertical will be launched in September Leading jobs portal in Slovenia 100,000 UMV Croatia Top classifieds site in Croatia 100,000 ads 200,000 UMVs Top recruitment site in Croatia A leading job portal in Turkey 1.2 mn UMV, 3mn CVs Leading property site in Turkey 800,000 UMV, 250K listings Recently launched auto web site 22

23 Investing in Communities Leading news portal which is one of the most visited websites in Turkey Not only a news portal, a platform having extensive user originated content 700 mn page views & 11 mn unique visitors as of June 2007 Ad revenue growth of over 300% Communities under hurriyet.com.tr Independent community websites 23

24 Rapid growth in online Ad revenue breakdown (E) Online 2,0% Print 98,0% Online growth >150% Online 5,0% Print 95,0% Reach 12% by 2011, although strong organic growth continues in newspaper segment Online 5,2% Print 94,8% Online growth >100% Online 8,0% Print 92,0% Reach 20% by 2011, although strong organic growth continues in print 24

25 Content 1 2 Corporate Overview Business Overview A. Publishing B. Printing C. Online 3 Operations & Financials 4 Quarterly Review 5 Outlook 25

26 Geographical revenue & EBITDA breakdown Revenue EBITDA Croatia 2% Other 8% Croatia 2% Other 7% Russia 20% Hungary 5% Turkey 65% Russia 28% Hungary 4% Turkey 59% *2006 figures 26

27 Financials Hürriyet Income Statement (mn YTL)* Total Revenues Cost of Sales Operating Expense Operating Profit EBITDA Net Profit TME Income Statement (mn $) Total Revenues Cost of Sales Operating Profit EBITDA Net Income from continuing operations * TME financials will be consolidated in Hürriyet starting from 2Q07 27

28 Financials Hürriyet Balance Sheet (mn YTL)* Assets Current Assets Long Term Assets Liabilities Current Liabilities Long Term Liabilities Minority Interests 4 Shareholders' Equity Long Term Liabilities & Shareholders' Equity TME Balance Sheet (mn $) Assets Current Assets Long Term Assets Liabilities Current Liabilities Long Term Liabilities Minority Interests 8 3 Shareholders' Equity Long Term Liabilities & Shareholders' Equity * TME financials will be consolidated in Hürriyet starting from 1Q07 28

29 Content 1 2 Corporate Overview Business Overview A. Publishing B. Printing C. Online 3 Operations & Financials 4 Quarterly Review 5 Outlook 29

30 Ad Growth 1Q07 Total Ad Growth (YTL mn) % 610 Newspaper Ad Growth (YTL mn) % 195 Q1 06 Q1 07 TV Ad Growth (YTL mn) Q1 06 Q1 07 Hurriyet* Ad Growth (YTL mn) 17.0% 7.3% Q1 06 Q1 07 Q1 06 Q1 07 Ad market figures are based on management reports for market comparisons. Hürriyet ad revenue figures include Referans, Daily News and internet ad revenues; exclude TME. 30

31 Hürriyet Ad Revenue Growth Rates (YoY) 19.5% 23.9% 12.5% 3.4% 7.3% Q1 06 Q2 06 Q3 06 Q4 06 Q

32 Circulation National Circulation Growth (000) Hürriyet Circulation Growth (000) 5, % 5, % 618 Q1 06 Q1 07 Share Q1 06 Q % 11.8% * Circulation figures are daily averages for related period. Total circulation figures are Yaysat estimates. 32

33 1Q07 IFRS Results (YTL mn) FY06 1Q06 1Q07 %Ch. Ad Revenues (print)* ,9 77,9 2,7% Ad Revenues (online) 6 1,1 4,0 244,3% Circulation Revenues 81 22,2 22,8 2,8% Printing Revenues ,2 31,2 10,6% Other Revenues 53 14,1 4,7-66,7% Total Revenues ,5 140,5-0,7% Cost of Sales (423) (94.2) (103.9) 10,4% Operating Expense (122) (31.1) (34.5) 11,1% Operating Profit 87 16,3 2,1-87,2% Depreciation 49 12,0 12,2 1,5% Amortised cost valuation 10 2,3 2,8 20,3% Adj.EBITDA ,6 17,1-44,2% Net Profit ,2 6,2-64,1% Operating Margin 13,8% 11,5% 1,5% EBITDA Margin 23,1% 21,7% 12,2% Net Profit Margin 16,5% 12,1% 4,4% * Excludes amortized cost valuation account 33

34 Margin Analysis Promotions (Product cost); 5.9% Promotions (Marketing); 2.0% Promotions (Circulation impact); 1.0% Gözcü; 0.2% Proforma margin for regular operations; 21.3% Q1 07 EBITDA margin; 12.2% 34

35 Proforma Figures Combining TME* (1Q07 vs. 1Q06) Revenues 10.1% EBITDA -25.7% Hürriyet TME *mn YTL Q 06 1Q 07 1Q 06 1Q 07 1Q07 Hürriyet Hürriyet + TME EBITDA Margin 12.2% 15.1% Ad Revenue Growth 7.3% 19.7% Online Share of Ad Rev. 4.8% 5.4% * Figures are proforma. TME figures are based on 35 TME s 1st quarter trading update announcement dated 21.06

36 TME revenue growth 2Q07 Org.:+17.4% USD: +31.1% Org.:+15.9% USD: +27.3% Org.:+18.8% USD: +34.4% Q Q Q Q H H Q Q (E) H (E) Organic revenue growth % % % Acquisition Impact % + 3.2% + 6.6% + 5.0% Growth % (at constant exchange rate) % % % Currency Impact % + 8.3% + 9.0% + 8.7% Growth % % % % 36

37 TME organic revenue growth per quarter Date acquisition announced 18,8% 13,9% 15,9% 12-14% growth guidance of TME management for ,9% 6,5% 8,2% 1 Value enhancement proposition Achieve high growth, improve margins Q1 Q2 Q3 Q4 Q1 Q2 E Improve multiples through successfully migrate to online 37

38 Content 1 2 Corporate Overview Business Overview A. Publishing B. Printing C. Online 3 Operations & Financials 4 Quarterly Review 5 Outlook 38

39 Recent Developments Restructuring of TME legal/financial structure is completed, with new loan facility in place (April 07) Hürriyet cover price increase by 15% in İstanbul weekday edition - 6% on average overall (May 07) Continuing to invest in regions - a new launch covering the mid-anatolian region (June 07) TME acquired Slovenia s career web site Moje Delo (June 07) 39

40 Outlook Ad growth is expected to accelerate after the favorable postelection environment will be a high growth year. Online businesses are delivering positive EBITDA starting from 2Q. Promotions slowed down, but still pressuring margins. A new cost saving program has been initiated, effects of which will be seen on the 2nd half. Investments for FY07 is expected to be 30 mn$. TME s growth is expected to beat its guidance. 40

41 160 Relative Performance Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Valuation HURGZ HURGZ IMKB Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Min:3.16 Max:4.50 Now:4.20 Turkish ad market conditions and TME concerns

42 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- Moody s corporate rating is expected to be announced soon. 42

43 Contact Information Investor Contact tel: (90)