Auckland Final Presentation

7/27/2019 Auckland Final Presentation

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How to ensure Schibsted remains the most

attractive media company in Europe?

How to expand the SCM division in line with Schibsteds

current strategic vision?

Critical Mass TargetImitability

Race to the Top

Places People


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Introduction Analysis Strategy Financials Implementation

Net Present Value will Increase by 51%

0

2

4

6

8

10

12

14

16

18

20

Current Proposed


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But beyond the financials

Leader Geographical Reach User Reach andExperience


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Key Issues

Critical Mass Imitability Target


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Key Issues

Critical Mass

##

You need to be the leader

Users Sellers

Ads


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Your Ultimate Goal

To be the leader...

Be First Marketing Knowledge Innovate + Imitate

+*


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Key Issues

Imitability

Anyones idea can be taken elsewhere


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Key Issues

Target

Other segmentation methods


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Places Geographic reach

Russia China Germany Hungary Ukraine

Population

Location

Low

competition

Internet

penetration


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People

Customer reach

Research squad

Imitability


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New Sites

Student site Womens site Price Spy

Imitability , Innovation, Need to be first


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New Features

MyPage EU General Goods Forums

Innovation, Need to be first


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Analysis Strategy Financials Implementation Backup

Overview

CurrentValuation

CashFlows

FinancialImpact


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Current Valuation

DiscountedCashFlows

CAGR = 3%Margin =

8.7%Capex = 3%of Revenues

MultiplesApproach

EV to EBITA,adjusted

8.2 in 2009

= $11.6b NOK

WACC =13%

= 13.6b NOK

= 9.7b NOK


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Valuation of SCM

Revcontribution

= 14%

CAGR =15%

Margin =20%

= 7.9b NOK


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Russia

Assumptions

Population 140m

Internetpenetration

14%

Growth 27%

Ave. rev pp 5-10 NOK

0

200

400

600

800

1000

1200

2009 2010 2011 2012 2013 2014

Infojobs

Finn

Blocket


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Hungary

0

20

40

60

80

100

120

140

2009 2010 2011 2012 2013 2014

Infojobs

Finn

Blocket

Assumptions

Population 9.9m

Internetpenetration

35%

Growth 22%

Ave. rev pp 5-10 NOK


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Breakdown of major expenses

Expenses

HR expenses

100,000 per person

Marketing40% in year 1, 3% thereafter

Office space

40 sqm at 5600/sqm

Other expenses

20% of revenue


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Breakdown of major expenses

Expenses

HR expenses

100,000 per person

Marketing40% in year 1, 3% thereafter

Office space

40 sqm at 5600/sqm

Other expenses

20% of revenue

Value 5.5b NOK


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People - Students

Assumptions

Student

population

20%

Usage rate 30%

Trade rate 20%

Ave. rev 5 NOK

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 2014

RevenueStudent


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People - Female

Assumptions

Female

population

50%

Usage rate 20%

Trade rate 10%

Ave. rev 5 NOK

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 2014

RevenueFemale

RevenueStudent


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Financial Impact

0

20004000

6000

8000

10000

12000

14000

16000

18000

20000

Current Places People Proposed

5.5b 17.6b

11.6b

0.48b


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Places

Short-term

Local market research

Local contacts

Mid-term

Hire 20 people

10 FINN, 5 Blocket, 5 InfoJobs

Long-term

Marketing

Russia

Hungary


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People Research squad

Centralised team

10 people

Role monitor internetdevelopments

Implement in newmarkets


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Customer reach


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Student

6 initial countries Spain, Norway,Sweden, Italy, Belgium, NetherlandsWhere?

Jobs, accommodation, text books,

furniture, cars, specifically aimed atstudentsWhat?

Team of 5 employees for each country

University contacts

MarketingHow?

Advertisers

Job listingsMoney?


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Student

Country Universities

Spain University of Barcelona University of Madrid

Norway University of Oslo Nowegian University of

Science and Technology

Sweden Stockholm University Lund University

Italy University of Rome University of Bologna

Belgium Katholieke UniversiteitLeuven University of Basel

Netherlands University of Amsterdam Maastricht University


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Customer Research

MyPage

Profile page where user canlist interests

User receives updates onproducts listed under interests


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Customer Reach

General EU inquiries

User can choose to searchregionally or EU-wide

Listings from other nationstranslated into native

language Applicable to all Blocket

model sites


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Forum

Allow answers to questions tobe shown to all users

Enables all users to benefitfrom

Customer Reach


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Introduction Analysis Strategy Implementation Financials Back-UpIntroduction Analysis Strategy Implementation Financials Back-Up

Risks, Mitigation and Contingency

Risk: Mitigation: Contingency:Cannot attract top research

squad

Strong culture, higher

salaries.

Outsource

Low uptake of your

websites in Russia and

Hungary

Research into what these

users require

Aggressively market your

websites and the services

they offer

A competitor enters Russia

and/or Hungary before you

Acquire the competitor if

viable

Do not enter Russia and/or

Hungary

A competitor copies your

MyPage innovation and

provides a better service

Copy their improvements Innovate to provide

something different

No one uses your forums Market the availability and

benefits of forum usage

Remove the forum function

No one uses the EU Blocket

function

Market the benefits of the

function

Remove the EU Blocket

function


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How to ensure Schibsted remains the most

attractive media company in Europe?

How to expand the SCM division in line with Schibsteds

current strategic vision?

Critical Mass TargetImitability

Race to the Top

Places People


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Current vs. Proposed Strategy

Current Proposed

Expand geographically

based on certain criteria

Expand geographically based on modified

criteria

Target users by region Enter the Russian and Hungarian market

Target users by occupation, gender and pricesensitivity

Introduce a research squad

Create a student website, a female tab in Blocket

and a price spy website

Create a customized My Page

Add an option where Blocket can be sorted by

the EU region as a whole.

Add forums to classified ads


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Other Strategies Considered


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What do Schibsted Classified Media do?

SCM set up and run localized websites that facilitate the

placing and viewing of classified advertisements for real-

estate, cars, jobs and general goods in 14 countries


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Key Stakeholders

Buyers Sellers Advertisers Employees Shareholders Other Websites

Competitors

Concerns Find

goods

Quick,easy

search

Find buyer

Be able to

easilycommunicate

and update

information

Want

advertisements

to be seen byas many

people as

possible

Appropriate

advertisement

placement

Job security

Fun and

innovativeworkplace

Required rate

of return

Web traffic Ideas

Users


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How does our proposed strategy address

the Key Issues SCM is facing?

Expand geographic reach by enteringthe Russian and Hungarian markets

Reach customers through new siteideas, My Page and Blocket EU wide

Critical Mass

Research squad

New site ideasImitability

Introduce sites that specifically target

particular groups e.g. students,females and price sensitiveconsumers

Target


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How do the Key Issues link to the Strategy?


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SCMs Competitive Advantages

Dont simply transferprint advertisements

online

Family-friendlywebsites

Advertisements areregularly reviewed

Multi-brand strategy


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Knowledge

Knowledge

Regional Knowledge Contacts Users

Global

AND

Local


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Customer and Competitor Response

More advertisers will wantto advertise on you sites,

more classifiedadvertisements will also

appear. More buyers willuse your sites.

Will enter the market andcopy your business model

Customer Response Competitor Response


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User Profile


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Where does the money flow?

SCM

Classified

Advertisements

(business and

individuals)

Fixed Costs

Research, Innovation

and Imitation

M & A

SEM e.g. Google

Marketing

Third party

advertisements

Adsense

Users (Sweden)


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Schibsted Structure

Print Newspapers Online Newspapers Online Classifieds & Directories (SCM) Live Pictures


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Expansion Criteria

Geographic (5m+ occupants)

Areas (3 vertical, 1 horizontal)

Online Movement Young market or viable M&A target


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Competition

Customised Standardised


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What about Print?

Current

Print is making 8%EBITA margin

People still require

newspapers

Future

Divest if the EBITAmargin becomes

negative


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What about cannibalization of other sites?

This is what your current business model is based on.

Student, females and price-sensitive sites will enable you to better targetyour users, and will attract new users.

Overall some cannibalisation is acceptable.


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Price Spy

Automatically indexes prices of

new identical general goods.

Presents a range of prices from

low to high and the retailer whostocks each product.

Enables a user to search for a product and find the cheapest retailer of that product.

This ensures a quick and easy search for the price sensitive consumer.


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Current Economic Situation

Short-termExpand geographic and user reach

Be selective of what geographic regions you expand into (Russia and Hungary)

Protect knowledge base research squad

Long-termBenefit from expansion

Lead the pack

Expand further

Continue to protect knowledge base


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Facebook and Google

Cant prevent these players from entering the market.

Can protect SCMs position:

Maximise users Offer innovative services

Monitor changes in user behaviour

Monitor changes in competitors service offerings


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Current Valuation - DCF

2004 2005 2008 2009 2010 2011 2012 2013 2014Revenue (consolidate) 0 0 13760 13607 14063 14485 14919 15367 15828

Margin 9% 9% 9% 9% 9% 9%

EBITA 0 0 0 1184 1223 1260 1298 1337 1377

Depreciation 402 402 505 742 767 790 814 838 863

Capex 0 1032 408 422 435 448 461 475

Change in WC 0 -8 23 21 22 22 23

Tax 296 306 315 324 334 344

FCF 402 -527 1229 1240 1280 1318 1358 1398

PV 1229 1097 1001 913 832 758

PV of TV 7778

NPV 13608

Tax rate 25%

WACC 13%

growth 3%


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Russia Assumptions

Russia

Population 140000000

Penetration rate 14%

Internet pop 19600000

Growth 25%


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Russia Blocket Revenues

(NOK Mil) 0 1 2 3 4 5

Revenue 2009 2010 2011 2012 2013 2014

Blocket

Russia Pop 19600000 24500000 30625000 38281250 47851563 59814453

Active pop 2352000 2940000 3675000 4593750 5742188 717773430% use, 40% buy/sell

Ave rev 5 5 5 5 5 10(20-90)

Rev from ppl 24 29 37 46 57 144(2/yr)

Display rev 47 59 74 92 115 287

Total rev 71 88 110 138 172 431


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Russia Finn Revenue

Finn

Pop 19600000 24500000 30625000 38281250 47851563 59814453

Active pop 2744000 3430000 4287500 5359375 6699219 837402335% use, 40% buy/sell

Ave rev 10 10 10 10 10 10

Rev from ppl 110 137 172 214 268 335(4/yr)

Display rev 55 69 86 107 134 167

Total rev 165 206 257 322 402 502


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Russia Infojobs Revenue

Infojobs

Pop 19600000 24500000 30625000 38281250 47851563 59814453

Active pop 1176000 1470000 1837500 2296875 2871094 358886740% use, 15% sell

Ave rev 10 10 10 10 10 10

Rev from ppl 24 29 37 46 57 72(2/yr)

Display rev 2 3 4 5 6 7

Total rev 26 32 40 51 63 79


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Russia Blocket Expenses

Expenses 0 1 2 3 4 5

2009 2010 2011 2012 2013 2014

Russia Blocket

Staff salary 100000 103000 106090 109273 112551 115927

# staff 5 5 5 5 5 5

HR expenses 0.50 0.52 0.53 0.55 0.56 0.58

Marketing 28 3 3 4 5 13(40% rev in 1st yr, 3% later)

Office space 0.23 0.23 0.24 0.25 0.25 0.26

Other expenses 7 9 11 14 17 4310% rev

Total expenses 36 12 15 19 23 57


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Russia Finn Expenses

FINN

Staff salary 100000 103000 106090 109273 112551 115927

# staff 10 12 12 12 12 12

HR expenses 1.0 1.2 1.3 1.3 1.4 1.4

Marketing 82 6 8 10 12 15(50%, 3%)

Office space 0.50 0.52 0.53 0.55 0.56 0.58


Total expenses 100 29 35 44 54 67


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Russia Infojobs Expenses

InfojobsStaff salary 100000 103000 106090 109273 112551 115927

# staff 5 5 5 5 5 5

HR expenses 0.50 0.52 0.53 0.55 0.56 0.58

Marketing 10 1 1 2 2 2

Office space 0.23 0.23 0.24 0.25 0.25 0.26


Total expenses 14 5 6 7 9 11


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Hungary Assumptions

Hungary

Population 9930915



Growth 22%


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People Valuation

0 1 2 3 4 52009 2010 2011 2012 2013 2014

Revenue Student 28 32 36 41 47 54

Expenses Student 21 9 9 10 11 11

Revenue Female 23 26 30 34 39 45

Expenses Female 8 6 7 7 8 8

EBITDA 0 0 0 23 43 50 59 68 80

Capex 0 0 1.0 1.0 1.1 1.1 1.1 1.2

Change in WC 0 1 0 0 0 0 0

Tax 6 11 13 15 17 20

FCF 0 0 15 31 36 43 50 58

PV 15 27 28 30 31 32

PV of TV 325

NPV 488

A ti


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Assumptions

SpainPopulation 40,491,051



Growth 20%

Norway

Populatio

n 4644457

Penetrati

on rate 87%

Internet

pop 4040678

Growth 6%

Sweden

Populatio

n 9045389

Penetrati

on rate 77%

Internet

pop 6964950

Growth 7%

Italy

Populatio

n 58145321

Penetrati

on rate 59%

Internet

pop 34305739Growth 9%

Belgium

Populatio

n 10403951

Penetrati

on rate 67%

Internet

pop 6970647

Growth 15%

Netherlands

Populatio

n 16645313

Penetrati

on rate 90%Internet

pop 14980782

Growth 19%


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Back-up Index

1. Cover Page2. Waterfall Slide

3. Financial Impact Overview

4. Beyond the Financials

5. Key Issues

6. Key Issues

7. Your Ultimate Goal

8. Key Issues

9. Key Issues10. Places

11. People

12. New Sites

13. New Features

14. Financial Overview

15. Current Valuation

16. Valuation SCM

17. Russia18. Hungary

19. Major Expenses

20. Major Expenses cont.

21. People Students

22. People Females

23. Overall Financial Impact24. Places

25. People

26. Customer Reach

27. Student

28. Student

29. Customer Research

30. Customer Reach

31. Customer Reach32. Risks, Mitigation and

Contingency

33. Waterfall

34. Cover Page

35. Current vs. Proposed

Strategy

36. Other Strategies

Considered

37. WDWD

38. Key Stakeholders

39. Key Issues and Strategy

40. Key Issues and Strategy

Diagram

41. Competitive Advantage42. Knowledge Diagram

43. Customer and Competitor

Response

44. User Profi le

45. Money Flow

46. Schibsted Structure

47. Expansion Criteria

48. Competition49. Print

50. Cannibalisation

51. Price Spy

52. Current Economic Climate

53. Facebook and Google

54. Current Valuation DCF

55. Current Valuation DCF

56. Russia Blocket Revenue57. Russia FINN Revenue

58. Info Jobs Revenue

59. Russia Blocket Expenses

60. Russia FINN Expenses

61. Russia Info Jobs

Expenses62. Hungary Assumptions

63. People Valuation

64. Assumptions

Documents

Auckland Final Presentation