Agora Group report for 1Q 2010

13-05-2010

Press release

PLN milion	1Q 2010	1Q 2009	yoy % change
Revenue	248.1	274.4	(9.6%)
Cost	(231.4)	(268.7)	(13.9%)
Net profit	21.8	1.0	2080%
EBIT	16.7	5.7	193%
EBIT margin	6.7%	2.1%	4.6pp
EBITDA	36.4	25.7	41.6%
Operating EBITDA (1)	39.5	29.3	34.8%
Operating EBITDA margin (1)	15.9%	10.7%	5.2pp

Figures for 1q 2010 (yoy comparison):

•  According to Agora's estimates, advertising spending for all media amounted to PLN 1.6 billion (down 1.5%).

•  Agora Group significantly increased its net profit to PLN 21.8 million (up 2080%) and improved profitability, increasing operating EBITDA margin1 to 15.9% (up 5.2pp).

•  Revenues of the Group amounted to PLN 248.1 million (down 9.6%). Advertising sales reached PLN 159.3 million (down 11.2%), revenues from copy sales PLN 53.3 million (down 19.2%) and other sales brought PLN 35.5 million (up 22.4%).

•  Total net operating cost of the Group reached PLN 231.4 million and decreased by 13.9% yoy. The decrease in operating cost results, inter alia, from the implementation of the operating efficiency improvement plan within the Group since December 2008, entailing further reductions in marketing expense (down by 32.2% yoy) and staff cost (excluding non-cash expense relating to share-based payments) down by 4.9% yoy. Moreover, lower cost of raw materials, energy and consumables (by 18.4%) resulting from lower cost of paper consumption and launching less expensive book collections within Special Projects, contributed to the decrease in total net operating cost.

•  The Group's headcount, at the end of March 2010, was 3,120 employees and decreased by 385 FTEs versus the end of March 2009. It was possible due to execution of one of the components of the operating efficiency improvement plan, which entailed delivering 393 dismissal notices to employees till the end of October 2009.

•  Operating EBITDA margin (1,2) of the Newspapers segment (including Gazeta Wyborcza , Metro , Special Projects, Agora's Printing Department and Agora Poligrafia Sp. z o.o.) grew to the level of 30.2%. Gazeta's advertising sales reached PLN 73.2 million (down 15%) and its copy sales generated PLN 37.3 million (down 2.6%). Gazeta sold 340 thou. copies on average and maintained its share in the display advertising in dailies at the same level as in 1q09.

•  Metro maintained its share in advertising expenditure in dailies at the level of ca. 4%. Ad revenues of Metro amounted to PLN 7.3 million and declined by 13.1%, while total ad spend in dailies dropped by 16%.

•  Revenues of Agora Internet segment (3) grew to PLN 21.2 million (up 8.7%), including revenues from the display ad sales (4), which grew by 27.9%, while total ad spend in display ads and e-mail marketing grew by almost 13%. In February 2010, total reach of online services from Gazeta.pl Group reached 64.4% (5) and positioned Gazeta.pl Group as the second player among Internet portals, after Onet.pl Group and before Wirtualna Polska Group.

•  AMS Group (6) maintained its share in outdoor advertising expenditure at the level of 27.8%. Ad revenues of AMS Group amounted to PLN 34.5 million and dropped by 8.7%, while the advertising expenditure in outdoor dropped by over 11%.

•  Magazines improved its operating EBITDA margin (1,2) to the level of 18.5% (up 5.3pp). Revenues of Magazines reached PLN 20.5 million and decreased by 12.4%.

•  Radio operations of Agora improved its operating EBITDA margin (1) to the level of 11.9% (up 3.3pp). Ad revenues of Agora's radio stations amounted to PLN 15.8 million (down 12.7%).

•  On 30 March, 2010 Agora Group signed a preliminary agreement to purchase 84% of shares of Centrum Filmowe Helios S.A. as an execution of the objective to enrich the Group's portfolio of assets.

1q2010 market performance and financial results of Agora's major lines of business (yoy comparison):

NEWSPAPER MARKET / GAZETA WYBORCZA

Operating EBITDA margin (1, 2) of the Newspapers segment (including Gazeta Wyborcza, Metro, Special Projects, Agora's Printing Department and Agora Poligrafia Sp. z o.o.) grew by 7.2pp and reached 30.2%. Gazeta Wyborcza maintained its leadership position among quality newspapers. It sold 340 thou. copies on average (down 14.2%). Paid circulation of Rzeczpospolita reached 143 thou. copies (down 4.2%), Fakt sold 422 thou. copies (down 9.3%) and Super Express decreased paid circulation by 12.1% to 181 thou. copies. Dziennik Gazeta Prawna sold 107 thou. copies on average. Gazeta Wyborcza was the most read quality daily and reached 4.5 million readers (14.9% reach, CCS - weekly readership index). Gazeta's advertising revenues (7) amounted to PLN 73.2 million (down 15%). The title's share in dailies display ad expenditure maintained its level from 1q09, while the title's share in ad expenditure in national dailies increased by almost 1.5pp yoy.

INTERNET (3)

Operating EBITDA margin (1,2) of Agora's Internet segment grew by 11.6pp to the level of 8.5%. Revenues from Agora's Internet segment grew by 8.7% to PLN 21.2 million, including increase of the revenues from display ad sales (4) by 27.9% to PLN 13.3 million, while total ad spend in display ads and e-mail marketing grew by almost 13%. The decrease of Agora's Internet segment operating cost to PLN 21.3 million stems from the reduction of staff cost by 3.6% (excluding non-cash cost of share-based payments) and drop in marketing spending (down by 18.6%). In February 2010 total reach of online services from Gazeta.pl Group reached 64.4% and the number of its users reached 11.2 million (up 47.4%) (5). In 1q10 Agora launched two new online services which take advantage of the synergy between different media of Agora Group - Tokfm.pl (in cooperation with the radio station TOK FM) and Avanti24.pl - a new website of Agora's monthly Avanti .