Investor Presentation 0707 - Hürriyetimagehk.hurriyet.com.tr/.../InvestorPresentation0707.pdf•...

1

HürriyetInvestor Presentation

July 2007

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.

3

Corporate OverviewCorporate Overview1

B. PrintingPrinting

A. PublishingPublishing

C. OnlineOnline

Content

4 Quarterly ReviewQuarterly Review

3 Operations & FinancialsOperations & Financials

5 OutlookOutlook

Business OverviewBusiness Overview2

4


B. PrintingPrinting


C. OnlineOnline

Content



5 OutlookOutlook


5

Corporate Structure

60%

67.3%

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

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

100%

6

Milestones in Hürriyet’s history

Established

1948 19921954

Started classifieds, still leading with 65% market share

IPO of 10% in ISE (at 70 mn $ market cap.)

2002 2004 20071994

Sharesacquired by

Doğan Group

1996

6 printing plants were structured under DPC

1997

First online move Free float

reached 40%

Printing plant in Frankfurt

opened.

1969

Operations in Germany

started

Business title “Referans”

was launched

Online classifieds

started

2005

Ad revenues reached $

100 mn

Ad revenues reached $

250 mn

TME acquisition

7


B. PrintingPrinting


C. OnlineOnline

Content



5 OutlookOutlook


8

Russia

Lithuania

Belarus

Poland

Ukraine

Turkey

Kazakhstan

HungarySlovenia

Croatia

Population (mn)2006 revenue (US$m)2006 EBITDA (US$m)EBITDA Margin


Croatia

4.612.43.6

29%


Hungary

10.134.57.2

21%

Poland

38.16.80.69%

Russia

142.4133.747.335%


CIS & Baltics

72246.4

27%


Turkey

72.5442102

23.1%


Slovenia

2.1Population (mn)

A regional media company operating in 10 countries350 mn population and over US$ 10 bn ad. market

*New Acquisition

9

Strong brands in 3 main businesses

Publishing(85%)*

Printing(12%)*

Online(3%)*

*Share of proforma consolidated revenues

10


B. PrintingPrinting


C. OnlineOnline

Content



5 OutlookOutlook


11

• 650,000 average daily sales throughout Turkey

• Publishing 3 dailies, including the country’s most well known and influentialmedia 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

Leading newspaper group in Turkey and the leading print and online advertising publisher in Russia, CIS and Eastern Europe

• 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. 5.500 employees, of which 2.500 in sales

Highlights – Publishing Group

12

Operating in “high growth” media region

37%

32%

27%

17%15%

12%

2,5%

Ukraine Russia Turkey Poland Croatia Hungary West

Europe

2003 – 2006 CAGR of advertising spend

Hürriyet;

42,80%

Doğan

Gazetecilik;

17,50%

Sabah;

18,50%

Others;

21,20%

TV; 52,9%

Outdoor; 5,1%Cinema; 1,1%

Newspapers;

33,4%

Radio; 3,6%Magazine;

3,9%

Turkish advertising market (1.9 billion US$)

Structural triggers (EU and economic improvement are expected to further fuel ad growth.

13

Circulation in Turkey

• 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 35-40 Ykr in weekdays, 50 Ykr in weekends

Avg. daily circulation (mn)

0

1

2

3

4

5

6

99 00 01 02 03 04 05 06

To

tal

0.2

0.3

0.4

0.5

0.6

0.7

Hu

rriy

et

Total Hürriyet

14

Hürriyet growth model

• Core business - high growth, high margin

• Penetrate into new reader and advertiser base

• Diversify the product portfolio

Leverage a proven brand into new revenue streams

Economics Differentiators

• Strong brand with high brand awareness• Most influential• Attractive reader profile • Premium ad price strategy• Flexible cost base

Main titlePeriodicSupplements

RegionalEditions &Inserts

Internet

15

TME revenue model

Display and classified ads are the major revenue generators

Sellers’ Side Buyers’ Side

Circulation & Paid Access

Display Ads Services & ONLINEClassified Ads

• Cover price

• Home delivery/ subscription

• Inventory advertising

• Brand advertising

• Online banners

• Powerpages

• Inserts

• Sponsored text links

• Paid lines/call centre priority (premium line)

• Paid SMS (for ad placement/ renewal)

• Prepaid cards

• Basic line advertisements

• Pay for prominence

• Run ‘til it sells

• Priority/visibility products

Vehicles JobsReal

EstateHousehold

Goods

16

TME growth model

• Core business - high growth, high margin• High cash flow generation• Low capital intensity

Leverage a proven business model for high growth markets

Economics Differentiators

• 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

Generalist Verticals OnlineNew

Markets

17

TME acquisition strategy

TME AcquisitionStrategy

Facilitation of the model shift

Performance enhancement

• Online migration

• Verticalization

• Acquisition of new

technologies

• Access to new

markets

• Establishing early

leaderships

• EBITDA accretion

• Growth accretion

• Increasing market

reach (traffic etc.)

• Providing scale

• Contributing to

company valuation

Recent acquisitions: Impress Media, Posao.hr, Mojedelo.com

18


B. PrintingPrinting


C. OnlineOnline

Content



5 OutlookOutlook


19

• 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

Magazines

51%Insert

40%

Other

9%

Printing

18%3.93.38.5EBITDA

3%16.015.656.6Revenues

1Q071Q06FY06Mn YTL

20


B. PrintingPrinting


C. OnlineOnline

Content



5 OutlookOutlook


21

Our region is immature in internet

33%30% 30%

22%

17%

55%

Croatia Hungary Poland Turkey Russia West Europe

2006 internet penetration rates

• Right time to invest in online• Great “content” advantage through leveraging print• Target is to achieve “clear leadership position” in all markets

the leading print classified company

the leading online classified and community player

From... to become...

of the Eastern Europe and CIS

region

22

Russia

♦ 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

Turkey

♦ A leading job portal in Turkey

♦ 1.2 mn UMV, 3mn CVs

♦ Leading property site in Turkey

♦ 800,000 UMV, 250K listings

Croatia

♦ Top classifieds site in Croatia

♦ 100,000 ads

♦ 200,000 UMVs

♦ Top recruitment site in Croatia

Slovenia

♦ Leading jobs portal in Slovenia

♦ 100,000 UMV

Leading online classified brands

♦ Recently launched auto web site

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

Hungary

♦ Top classifieds website in Hungary

♦ 1 mn UMV

♦ Real estate vertical will be launched in August 2007.

♦ Auto vertical will be launched in October 2007.

♦ Recruitment vertical will be launched in October 2007.

♦ Real estate vertical will be launched in August 2007.

♦ Auto vertical will be launched in September 2007.

Warsaw Competency Center

Centralized software development

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

24

Rapid growth in online

Print

94,8%

Online

5,2%

Print

98,0%

Online

2,0%

Print

92,0%

Online

8,0%

Print

95,0%

Online

5,0%

Online growth>100%

Online growth>150%

2006 2007(E)

Reach 20% by 2011, although strong organic growth

continues in print

Reach 12% by 2011, although strong organic growth

continues in newspaper segment

Ad revenue breakdown

25


B. PrintingPrinting


C. OnlineOnline

Content



5 OutlookOutlook


26

*2006 figures*2006 figures*2006 figures*2006 figures

Geographical revenue & EBITDA breakdown

Turkey

59%

Hungary

4%

Russia

28%

Croatia

2%

Other

7%

Turkey

65%Hungary

5%

Russia

20%

Croatia

2%

Other

8%

Revenue EBITDA

27

Financials

Hürriyet Income Statement (mn YTL)* 2005 2006

Total Revenues 585 632

Cost of Sales 376 423

Operating Expense 106 122

Operating Profit 104 87

EBITDA 161 147

Net Profit 87 104

TME Income Statement (mn $) 2005 2006

Total Revenues 192 211

Cost of Sales 79 98

Operating Profit 57 56

EBITDA 66 57

Net Income from continuing operations 34 13

* TME financials will be consolidated in Hürriyet starting from 2Q07

28

Financials

Hürriyet Balance Sheet (mn YTL)* 2005 2006

Assets 936 969

Current Assets 428 407

Long Term Assets 507 563

Liabilities 262 267

Current Liabilities 158 106

Long Term Liabilities 104 161

Minority Interests 4

Shareholders' Equity 670 703

Long Term Liabilities & Shareholders' Equity 936 969

TME Balance Sheet (mn $) 2005 2006

Assets 176 331

Current Assets 41 75

Long Term Assets 135 256

Liabilities 63 204

Current Liabilities 19 174

Long Term Liabilities 44 30

Minority Interests 8 3

Shareholders' Equity 105 124

Long Term Liabilities & Shareholders' Equity 176 331

* TME financials will be consolidated in Hürriyet starting from 1Q07

29


B. PrintingPrinting


C. OnlineOnline

Content



5 OutlookOutlook


30

Hurriyet* Ad Growth

(YTL mn)

84

.3

78

.6

Q1 06 Q1 07

TV Ad Growth (YTL mn)3

28

28

0

Q1 06 Q1 07

Newspaper Ad Growth

(YTL mn)

17

9 19

5

Q1 06 Q1 07

Total Ad Growth (YTL mn)

61

0

53

0

Q1 06 Q1 07

15.1%

� 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.

Ad Growth 1Q07

9.1%

17.0% 7.3%

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 Q1 07

32

National Circulation Growth

(000)

5,0

72

5,2

35

Q1 06 Q1 07

Hürriyet Circulation Growth

(000)

54

0

61

8

Q1 06 Q1 07

* Circulation figures are daily averages for related period. Total circulation figures are Yaysat estimates.

Circulation

3.2%

14.4%

10.6% 11.8% Share

33

(YTL mn) FY06 1Q06 1Q07 %Ch.

Ad Revenues (print)* 374 75,9 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 118 28,2 31,2 10,6%

Other Revenues 53 14,1 4,7 -66,7%

Total Revenues 632 141,5 140,5 -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 146 30,6 17,1 -44,2%

Net Profit 104 17,2 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%

1Q07 IFRS Results

* Excludes amortized cost valuation account

34

Proforma margin

for regular

operations; 21.3%

Q1 07 EBITDA

margin; 12.2%

Gözcü; 0.2%

Promotions

(Circulation

impact); 1.0%Promotions

(Marketing); 2.0%Promotions

(Product cost);

5.9%

Margin Analysis

35

Proforma Figures Combining TME* (1Q07 vs. 1Q06)

*mn YTL

Hürriyet

TME

* Figures are proforma. TME figures are based on TME’s 1st quarter trading update

announcement dated 21.06

Revenues EBITDA

141.5

59.0200.5

140.5

80.3220.8

17.1

16.430.6

14.5

45.1

33.5

1Q 06 1Q 07 1Q 06 1Q 07

-25.7%10.1%

1Q07

EBITDA Margin 12.2% 15.1%

Ad Revenue Growth 7.3% 19.7%

Online Share of Ad Rev. 4.8% 5.4%

Hürriyet Hürriyet + TME

36

TME revenue growth 2Q07

+ 27.3%

+ 8.3%

+ 19.1%

+ 3.2%

+ 15.9%

Q1 2007

+ 8.7%+ 9.0%Currency Impact %

+ 22.4%+ 25.4%Growth %

(at constant exchange rate)

+ 5.0%+ 6.6%Acquisition Impact %

+ 17.4%+ 18.8%Organic revenue growth

+ 31.1%+ 34.4%Growth %

H1 2007 (E)Q2 2007 (E)

Q1 2006 Q1 2007

Org.:+15.9%USD: +27.3%

Q2 2006 Q2 2007

Org.:+18.8%USD: +34.4%

H1 2006 H1 2007

Org.:+17.4%USD: +31.1%

37

TME organic revenue growth per quarter

2,9%

6,5%

8,2%

13,9%

15,9%

18,8%

Q1 Q2 Q3 Q4 Q1 Q2 E

2006 2007

12-14% growth guidance of TME

management for 2007

Date acquisition announced

Value enhancement proposition

Achieve high growth, improve margins

Improve multiples through successfully migrate to online

1

2

38


B. PrintingPrinting


C. OnlineOnline

Content



5 OutlookOutlook


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)

40

Outlook

• Ad growth is expected to accelerate after the favorable post-election environment. 2008 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.

41

Relative Performance

90

100

110

120

130

140

150

160

Jul-06

Aug-0

6

Sep-0

6

Oct-

06

Nov-0

6

Dec-0

6

Jan-0

7

Feb-0

7

Mar-

07

Apr-

07

May-0

7

Jun-0

7

HURGZ IMKB 100

Valuation

159

133

HURGZ

3.0

3.2

3.4

3.6

3.8

4.0

4.2

4.4

4.6

Ju

l-0

6

Au

g-0

6

Se

p-0

6

Oct

-06

No

v-0

6

De

c-0

6

Ja

n-0

7

Fe

b-0

7

Ma

r-0

7

Ap

r-0

7

Ma

y-0

7

Ju

n-0

7

Max:4.50

Min:3.16

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.

43

Contact Information

Investor Contact

http://www.hurriyetcorporate.com

http://www.dyh.com.tr

http://www.tmeast.com

e-mail: [email protected]

tel: (90) 212 677 0850

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