Regulatory filing
In reference to the current report dated May 14, 2008 concerning the sale of 100% of shares of Trader.com (Polska) Sp. z o.o. (hereinafter referred to as "Trader.com (Polska)"), Agora informs that all the conditions, determined in the aforementioned current report and required to conclude the transaction, have been fulfilled. Due to the foregoing, on June 25, 2008 Agora purchased all the shares of Trader.com (Polska) from Pronto Invest B.V with its registered seat in Amsterdam, the Netherlands (hereinafter referred to as "Pronto Invest") a group company of Trader Media East Limited with its registered seat on Jersey Island, Great Britain (hereinafter referred to as "TME") controlled by the leading Turkish media group Hurriyet. The purchase concerns 35,637 shares of Trader.com (Polska) of PLN 1,00 nominal value each which constitutes a total nominal value of PLN 35,637,000,00. The purchase price was US$ 54,350,000 (PLN 116,852,500 according to the average exchange rate of the National Bank of Poland published on June 25, 2008). The book value of the shares purchased on the day of preparing this current report amounts to PLN 117,059,030. As a result of this transaction Pronto Invest disposed of all its shares of Trader.com (Polska).
The acquisition of Trader.com (Polska) constitutes a long-term investment and was financed by means of Agora's own funds. Its implementation will allow Agora to develop in the fastest growing sectors of the advertising market and will also secure its basic revenue sources from classifieds in the most significant sectors. The investment decision was preceded by the precise analysis of the Polish classifieds market in the Internet and in press, competitiveness and also the world trends on the classifieds market and especially in the countries where Internet advertising seems most developed.
Recently a conspicuous trend of shifting advertising budgets, including classifieds, into the Internet is to be observed. One of the markets where this trend is most observable is the United States where the value of the classifieds market in the newspapers fell from the highest level of US$19.6 billion in 2000 to US$14.1 billion in 2007 (according to the Newspapers Association of America). The value of real-eastate in American newspapers fell to US$ 4 billion (from US$ 5.1 billion in 2006) and the automotive advertisements in turn fell to US$ 3.3 billion from US$ 5.2 billion in 2003. According to the Borrell Associates (the leading company dealing with the local advertising market analysis in the USA) in 2010 the expenditures for real-estate classifieds online will be higher than the level of the corresponding ones in newspapers and in 2012 will amount to US$ 3.4 billion.
Similar trends are to be observed in developed European countries. In Poland, due to the dynamic economic development , there is still income increase from classifieds in daily newspapers, yet Internet services revenue growth seems to be most dynamic. According to the Company's estimation the total value of the Internet and newspapers classifieds market in Poland (excluding small ads) reached in 2007 the level of nearly PLN 1 million, where PLN 158 million derived from the Internet. According to the IAB report within next three years the aforementioned amount is to double. In the same period revenues of Agora's dailies from classifieds amounted to over PLN 300 million (including PLN 50 million from small ads).
Home/real-estate, automotive and recruitment belong to the biggest advertising segments both in press and in the Internet. Last year Polish advertisers donated on this purpose ca. PLN 360 million (excluding small ads) where nearly the half was put into automotive and real-estate sectors (PLN 123 million). In the comparable period the share of Agora's Internet services and dailies in the aforementioned categories was 40% and 21% respectively, mostly because of the strong advertising position of Gazeta Wyborcza.
One of Agora's strategic goals is to be among the leaders in each most significant sector of classifieds in Poland. In the respect of fast developing Internet market and of the trend to shift classifieds to the Internet , the Company cannot take the liberty of loosing the revenues from these strategic fields of activity and also of obstructing the possibility of further growth in this significant advertising sector. Acquisition of Trader.com (Polska) is a special transaction the implementation of which concerns the basic business activity of the Company, also in the dailies sector. Agora is aware of the fact that due to this the transaction price comprises substantial bonus which is paid by the Company for the control over the assets of Trader.com (Polska). The evaluation of the transaction as the separate item, excluding additional profits stemming from the close integration with the Agora Group, would be much lower. Significant value in terms of this transaction will be generated through retaining in the Group a vital part of current revenues of Agora from classifieds in press, which otherwise would be taken over by the Internet entities from beyond the Group. In the opinion of the Company combining Agora's strong position in press classifieds with leading Internet advertising services of Trader.com (Polska), technology and wide data base of clients owned by the Company is crucial for the implementation of the long-term strategic goal.
Due to the cooperation in terms of sale and promotion between the brands and offers of both companies, incorporating Trader.com (Polska) into the structures of the Agora Group will contribute to the value increase of its assets. The Company estimates that in next three years EBITDA of Trader.com (Polska) will reach the level of ca. 20% and the revenue dynamics of the Company from the Internet activity will be equivalent to the dynamics of the Polish Internet market. The final margin EBITDA of the Company is to rise up to 30%.
Selected positions of Profit and Loss Account of Trader.com (Polska) for the year 2007
| - | 2007 (thousand zlotych) |
| Sales revenues, incl.: | 18 482 |
| - Press | 8 902 |
| - Internet | 9 580 |
| (EBITDA)* | 432 |
*After rectifying by single costs (allocation of transactional costs connected with the purchase of the Trader Media East by the companies from the Hurriyet Group in 2007) and by costs covering management ("management fees") incurred by the Company for the entities from Trader Media East Group.
Source: Trader.com (Polska) Sp. z o.o.
