Review of 1H10 Results 31 August 2010

Review of 1H10 Results
31 August 2010
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.
2
1H10 Financial Results: Summary
•
Consolidated revenues increased by 3%, to TL
397 mn.
Revenues (TL mn)
• Revenues
from
Hürriyet
domestic
operations increased by 10%, led by the
recovery in the ad market.
• TME
operating markets remained weak in
1H10, resulting to 12% decline in TME
revenues. Though, the pace of decline in
TME revenues slowed down in 2Q10.
+2.8%
506
406
386
397
1H09
1H10
323
273
1H05
1H06
1H07
1H08
• Online
revenues made 10% of total ad
revenues in 1H10, compared to 8% in 1H09.
•
•
EBITDA (TL mn)
Consolidated EBITDA increased to TL 78 mn in
1H10, compared to TL 73 mn in 1H09.
Consolidated EBITDA margin amounted to 19.6%,
up from 18.8% in 1H09.
114
74
81
81
1H06
1H07
+7.2%
73
78
1H09
1H10
• EBITDA margin for Hürriyet
excluding TME
reached 22.7% (22.2% in 1H09).
• EBITDA margin of TME was 11.3% (11.5% in
1H05
1H08
1H09).
•
TL 3.9 mn of net profit has been realized in 1H10,
compared to a net loss of TL 14.5 mn in 1H09.
3
1H10 Consolidated IFRS Results
mn TL
Total revenues
Ad revenues (print) 1
Ad revenues (online)
Circulation revenues
Printing revenues
Other revenues
Cost of sales
Operating expenses
Marketing, sales and distribution
General administrative
Operating profit
Other operating expenses (net)
Income/loss from investments
Financial expense (net)
Profit before tax
Tax
Net profit before minority
Minority Interest
Net profit
Depreciation
Amortised cost valuation
Impairment of goodwill and intangible assets
Adj.EBITDA
EBITDA Margin
1Q10
177,6
100,0
11,3
29,9
26,4
10,0
-112,8
-65,3
-30,0
-35,2
-0,5
-3,4
-2,5
6,1
-0,2
-2,4
-2,6
1,3
-1,3
21,4
2,5
0,0
23,4
13,2%
2Q10
219,4
135,4
14,2
28,6
28,7
12,5
-121,2
-66,6
-30,6
-36,0
31,6
-6,1
-2,5
-14,1
9,0
-7,2
1,7
3,4
5,2
21,2
1,7
0,0
54,5
24,9%
2Q09 YoY % Ch.
212,2
3,4%
5,7%
128,1
11,3
25,9%
30,4
-5,8%
30,7
-6,3%
11,9
5,0%
-129,0
-6,0%
-59,2
12,5%
-20,3
50,9%
-38,9
-7,5%
24,1
31,2%
-22,2
-72,7%
-1,0
141,6%
51,2
-127,5%
52,1
-82,8%
-14,8
-50,9%
37,3
-95,4%
-2,1
35,3
-85,3%
21,6
-2,1%
1,9
-10,5%
0,0
47,7
14,4%
22,5%
-
1H10
397,0
235,4
25,5
58,5
55,1
22,5
-234,0
-131,9
-60,6
-71,2
31,1
-9,4
-5,0
-7,9
8,8
-9,7
-0,9
4,8
3,9
42,6
4,2
0,0
77,9
19,6%
1H09 YoY % Ch.
386,2
2,8%
3,9%
226,6
19,6
30,2%
56,7
3,1%
59,3
-7,1%
24,1
-6,7%
-251,8
-7,1%
-111,1
18,7%
-36,6
65,6%
-74,5
-4,4%
23,3
33,4%
-23,0
-59,0%
-4,3
14,2%
-11,3
-29,7%
-15,3
-5,5
75,4%
-20,8
6,3
-23,9%
-14,5
43,1
-1,3%
6,2
-31,7%
0,0
72,7
7,2%
18,8%
-
(1) Excludes amortized cost valuation income, which is part of ad revenues classified under interest income according
to IFRS regulations.
4
1H10 IFRS Results: Hürriyet excluding TME
mn TL
1Q10
2Q10
2Q09 YoY % Ch. 1H10
1H09
YoY % Ch.
Total revenues
Ad revenues (print) 1
Ad revenues (online)
Circulation revenues
Printing revenues
Other revenues
Cost of sales
Operating expenses
Marketing, sales and distribution
General administrative
Operating profit
Other operating expenses (net)
Depreciation
Amortised cost valuation
Impairment of goodwill and intangible assets
Adj.EBITDA
EBITDA Margin
129.3
68.7
5.4
23.8
26.2
5.2
-87.5
-38.2
-26.1
-12.1
3.6
-2.5
13.7
2.5
0.0
19.8
15.3%
161.4
97.5
7.0
22.5
28.3
6.1
-92.6
-37.9
-24.7
-13.2
30.9
-3.5
13.6
1.7
0.0
46.2
28.6%
148.9
84.3
5.1
23.4
30.4
5.7
-97.1
-27.4
-15.5
-11.9
24.5
-17.4
14.2
1.9
0.0
40.6
27.3%
265.2
142.2
9.0
42.9
58.9
12.4
-191.4
-49.4
-27.3
-22.0
24.5
-18.0
28.1
6.2
0.0
58.8
22.2%
9.6%
16.9%
38.0%
7.9%
-7.3%
-8.4%
-5.9%
54.3%
85.9%
15.1%
40.4%
-67.0%
-2.8%
-31.7%
12.2%
-
8.4%
15.7%
36.3%
-3.9%
-6.9%
7.7%
-4.6%
38.5%
59.4%
11.4%
26.2%
-80.1%
-4.5%
-10.5%
13.7%
-
290.7
166.2
12.4
46.3
54.5
11.4
-180.1
-76.2
-50.8
-25.3
34.4
-5.9
27.3
4.2
0.0
66.0
22.7%
(1) Excludes amortized cost valuation income, which is part of ad revenues classified under interest income according
to IFRS regulations.
5
Ad market in Turkey*
Total Ad Market (TL mn)
+36.8%
1,916
1,401
1H09
TV Advertising (TL mn)
+52.0%
1H10
Newspaper Advertising (TL mn)
+16.7%
1,008
449
384
663
1H09
1H10
1H09
1H10
* Ad market statistics are estimates compiled by DYH ad platform . Newspaper ad market size is estimated based on 28 national
newspapers.
6
Print advertising revenue
Print Ad Revenue (TL mn)
+6%
128
135
38
44
-13%
84
+16%
2Q09
• Strong ad market
227
+4%
235
69
84
-18%
98
142
2Q10
1H09
+17%
166
1H10
growth in Turkey reflected as strong ad revenue growth for Hürriyet
newspaper.
• Almost all the sectors increased ad spending, the strongest growth coming from finance,
human resources, automotive and retail sectors.
• The
slow economic recovery in TME countries led to declining ad revenues in TME.
However, the pace of contraction slowed-down in 2Q10.
7
Online revenue
Online Revenue (TL mn)
+26%
14.2
+17%
7.2
+30%
11.3
19.6
+24%
6.2
2Q09
13.1
10.6
+36%
5.1
25.5
+38%
7.0
9.0
2Q10
1H09
12.4
1H10
Online Share in ad revenue
5%
2007
6%
2008
8%
2009
10%
1H10
8
Circulation market *
National Circulation (000)
Hürriyet Circulation (000)
-3.8%
4,894
483
4,709
1H09
1H10
-4.4%
1H09
462
1H10
Circulation Revenue (TL mn)
• Cover
+3%
57
14
43
1H09
59
12
-12%
price adjustments, initiated in
November 2008, continued until the
beginning of April 2009.
• Hence, 2Q10 average cover price was at
the same level as 2Q09.
46
+8%
• Average
cover prices in 1H10, on the
other hand, was around 11% higher
compared to 1H09.
1H10
9
* Circulation figures are daily averages for related period. Total circulation figures are Dogan Dagitim estimates.
Cost analysis: cash costs
Cash costs (TL mn)*
165
+0%
56
165
313
50
107
-12%
108
2Q09
+2%
319
94
-12%
115
+6%
2Q10
206
225
+9%
1H09
1H10
• Increase in cash costs remained very limited, on a consolidated basis.
• The expansion in cash costs for Hürriyet domestic operations was 9%, mainly due to the
increase in marketing expenditures.
• Further reduction in TME’s cash costs, as revenues continued to decline.
10
* Defined as EBITDA - Revenues
Cost analysis: operating expenses
Sales, marketing and
distribution costs (TL mn)
+66%
61
General administrative
costs (TL mn)
74
-4%
71
-13%
46
+15%
25
10
37
9
27
1H09
52
+6%
51
+86%
22
1H10
1H09
1H10
• Increase in sales, marketing and distribution costs stemmed from higher promotion and
advertising expenditures for Hürriyet newspaper.
• 1H09, being the period with the highest uncertainty for all markets, marketing expenditures
were kept at a very low level, which makes 1H09 a very weak base period. This base effect also
plays a role in the high growth registered in 1H10.
11
Cost analysis: cost of sales
Cost of Sales (TL mn)
252
-7%
Raw material costs (TL mn)
114
234
60
-18%
93
24
54
-11%
191
-6%
1H09
-15%
89
180
-18%
1H09
1H10
Hürriyet
73
1H10
1H09
1H10
YoY (Ch.)
72
83
11
Main paper
38
40
2
Supplements
34
43
10
Average number of pages
21
12
Cost analysis: personel cost
Personel costs (TL mn)
55
-4%
24
53
105
20
46
2Q09
+7%
105
40
-13%
-17%
31
+0%
33
59
2Q10
1H09
+11%
66
1H10
• Hürriyet :
• wage adjustment in the beginning of 2010, leading to 11% increase in personel costs.
• 2.2% decline in the headcount as of June 2010, versus December 2009.
• TME:
• the headcount reduced by 190 in 1H10 (around 4.4%), leading to 13% decline in personel
costs.
• no wage increase in 2010.
13
1Q
2Q
3Q
+7%
59
1H09
4Q
2010
+14%
14,5%
+18%
2009
16,6%
73
14
2008
2Q10
25,0%
46
2007
55
8
2010
22,5%
22,1%
2008
2009
22,4%
22,5%
2007
2010
2009
24,0%
2Q09
2008
41
23,9%
13,2%
20,7%
+14%
2007
2010
14,4%
12,2%
48
7
2009
2008
2007
EBITDA
EBITDA (TL mn)
78
12
-14%
66
+12%
1H10
EBITDA Margin
24,9%
14
Net Debt Position
mn TL
Cash and Equivalents
S.T Bank Borrowings
L.T Bank Borrowings
Net Cash / (Net Debt)
Investments
Supplier Loans
31.12.2009
297
292
251
-246
70
103
30.06.2010
165
203
285
-323
20
87
mn $
Cash and Equivalents
S.T Bank Borrowings
L.T Bank Borrowings
Net Cash / (Net Debt)
Investments
Supplier Loans
31.12.2009
197
194
167
-163
45
69
30.06.2010
105
129
181
-205
13
55
• Net debt position of TL 323 mn (USD 205 mn) includes TME’s net debt of TL 86 mn (USD 55 mn).
• The investment figure of TL 20 mn includes around TL 4 mn of assets (buildings) held for sale. The
remaining TL 16 mn is capex.
15
Loan repayment schedule
Loan repayment schedule (principal payment, mn USD) *
Bank Loans
Supplier Loans
Total
*as of 30 June 2010.
Jul - Dec 2010
Hürriyet
TME
Toplam Hürriyet
53.1
0
53.1
92.0
8.5
0
8.5
17.4
61.6
0
61.6
109.4
2011
TME
12.4
0
12.4
Toplam
104.4
17.4
121.7
16
TME: Consolidated statements of operations (IFRS)
mn $
Sales
Cost of sales
Marketing, selling and distribution expenses
General administrative expenses
Other income / expense, net
Operating profit
Financial income / expense, net
(Loss)/profit before income taxes
Income tax expense
Net (loss)/profit for the year from continuing operations
Attributable to:
Equity holders of the parent
Minority interest
1H10
70.1
-35.5
-6.9
-26.8
0.5
1.4
-5.2
-3.8
-2.3
-6.1
1H09
75.3
-37.6
-8.4
-27.5
-0.5
1.3
-9.8
-8.5
0.0
-8.5
YoY (%)
-6.9%
-5.6%
-17.9%
-2.5%
7.7%
-
-6.8
0.8
-9.4
0.9
-
17
Revenue Growth by Regions – TME standalone
mn $
2Q09
2Q10
Russia
Moscow
Other Russia
CIS
CEE
Total
28.6
12.8
15.8
5.5
6.3
40.3
28.4
13.2
15.1
5.6
4.0
37.9
% Ch.
(USD)
-1%
3%
-4%
1%
-36%
-6%
% Ch.
(LCY)
-6%
-2%
-9%
3%
-31%
-8%
1H09
1H10
52.4
23.8
28.6
10.5
12.5
75.3
51.8
24.4
27.4
10.1
8.2
70.1
% Ch.
(USD)
-1%
3%
-4%
-4%
-34%
-7%
% Ch.
(LCY)
-10%
-6%
-12%
-1%
-35%
-13%
Revenue Breakdown by Regions
CEE
12%
5 pp
CIS
14%
Moscow
35%
1 pp
3 pp
1H10
Other Russia
39%
1 pp
pp and % change, YoY
18
EBITDA by Regions – TME standalone
mn $
Russia
Moscow
Other Russia
CIS
CEE
Operational EBITDA
Corporate Costs
Consolidated EBITDA
2Q09
2Q10
5.8
3.8
2.0
1.2
0.3
7.3
-2.5
4.8
5.4
2.9
2.5
1.5
0.0
6.8
-1.4
5.4
% Ch.
(USD)
-7%
-24%
24%
23%
N.A
-6%
-44%
13%
1H09
1H10
10.4
7.4
3.0
2.1
0.6
13.1
-4.3
8.8
8.4
4.7
3.8
2.3
-0.2
10.5
-2.6
7.9
% Ch.
(USD)
-19%
-37%
24%
8%
N.A
-20%
-40%
-10%
EBITDA Breakdown by Regions
CIS
21%
6 pp
Moscow
44%
1H10
12 pp
Other Russia
35%
13 pp
pp and % change, YoY
19
EBITDA Margins by Regions – TME standalone
mn $
Russia
Moscow
Other Russia
CIS
CEE
O. EBITDA Margin
C. EBITDA Margin
2Q09
20.2%
29.3%
12.8%
21.7%
4.7%
18.0%
11.8%
2Q10
18.9%
21.7%
16.5%
26.3%
-0.7%
17.9%
14.3%
pp ch.
-1%
-8%
4%
5%
-5%
0%
2%
1H09
19.9%
31.0%
10.6%
20.2%
4.5%
17.4%
11.6%
1H10
16.3%
19.1%
13.8%
22.5%
-2.9%
15.0%
11.3%
pp ch.
-4%
-12%
3%
2%
-7%
-2%
0%
20
Outlook
1
Ad revenue for Hürriyet excluding TME is expected to be 15% in 2010, revised from the
previous 13%
2
Online revenue for Hürriyet excluding TME is expected to increase 40% in 2010.
3
TME revenues and EBITDA are expected to remain flat in 2010, compared to 2009.
4
EBITDA margin for Hürriyet domestic operations is expected to be around 22-23%.
5
Newsprint prices are expected to average out at 630 $/ton in 2010, which is 15% lower
versus a year ago.
6
Continous strenghtening in our online division, through new applications and new
launches for both Hurriyet and TME.
* The guidances for the year does not include the takeover of Radikal newspaper.
21
Online business
New lauches: Hurriyet fırsat (discounted price deals, coupons), Hurriyet seri ilanlar (secure
payment e-commerce, classifieds, with new categories) to be launched as of January 2011.
Hurriyet.com.tr: ipad application is being tested and will be released soon.
Hurriyetoto.com: Renewal of the site and change in the business model with more emphasis to
banner advertising.
JV with autoscout24.de, to jointly establish autoscout24.ru in Russia. The site is ready for
commercial launch in September.
Irr.ru: a new development plan in regions of Russia which is starting to pay back with increasing
revenues.
Re-launches : Job.ru in Russia and auto segment of Expressz.hu.
22
Newsprint prices
Average Newsprint Costs (US$) *
* Including all costs and expenses like custom duties, transportation etc.
23
Hürriyet’s major advertisers
Sectors
Real Estate
Classifieds (incl. HR)
Retail
Automotive
Social
Tourism
Finance
Entertainment, Culture, art & sports
Textile
Education
First 10 Total
Others
1H09
18%
11%
8%
8%
7%
9%
6%
3%
3%
3%
76%
24%
1H10
17%
11%
9%
8%
7%
7%
7%
4%
3%
3%
76%
24%
24
Investor Contact
http://www.hurriyetcorporate.com
http://www.dyh.com.tr
http://www.tmeast.com
[email protected]
(90) 212 449 6030
25