Save! +

Remove!

August 14, 2015 / 07:15

Agora Group's financial results for 2Q2015

Press release

Agora Group noted an explicit improvement of operating results in 2Q2015. Revenues from ad sales in the Internet and Radio segments grew faster than the market and the revenues from copy sales increased also. This was once again the reason for the Group's significant growth of revenues and operating profit. The Group's success was mainly the result of systematic improvement of profitability of most businesses and stabilization of revenues of the Press segment.

- 2Q2015 is yet another splendid quarter of Agora Group and a confirmation of the business development path we have chosen. Systematic actions of all of our business teams as well as successful co-operation with our business partners allows us not only to develop our current profitability improvement projects, but also engage in new ones. We would like to strengthen Agora's position on the television market that's why we will take part in the concession procedure for min. 2 channels on the MUX-8 platform. What is more, this year we shall launch a "Business Insider" licensed business and technological service and we shall further broaden the scale of our radio activity - says Bartosz Hojka, President of the Management Board of Agora.

Financial results and market performance of the Agora Group in 2Q2015 (yoy comparison):

Revenues of the Group amounted to PLN 292.8 million and were higher by 8.1%. Agora Group noted growth of most categories of revenues. The Group's growth of revenues was most impacted by revenues from the co-production and distribution of the game The Witcher 3: Wild Hunt. Revenues from ad sales were higher by 3.6% and amounted to PLN 151.5 million. Revenues from copy sales went up by 10.5% to PLN 35.9 million, whereas revenues from sales of printing services for external clients amounted to PLN 37.7 million. Higher attendance in Helios cinemas resulted in higher by 6.1% revenues from ticket sales which amounted to PLN 26.1 million.

The net operating cost of Agora Group increased by 6.8% to PLN 289.2 million. The growth was mainly the result of higher depreciation and external services costs related to co-production and distribution of the game The Witcher 3: Wild Hunt. Factors that contributed also to the growth of external services cost include higher costs of advertising brokerage and payment for film copies. Staff costs increased by 4.0% due to the implementation of development projects within the Group. Advertising and promotion costs went up by 14.4% to the amount of PLN 20.6 million, which was influenced by extensive advertising activity in the Press and the Internet segments. The costs of raw materials, energy and consumables decreased by 7.8%, mainly as a result of lower yoy volume of orders for printing services in coldset technology.

Due to the noted growth in most of the sources of revenues, the Group's EBITDA increased to PLN 33.7 million. The Group's operating result at the EBIT level improved significantly, amounting to PLN 3.6 million, whereas the net profit amounted to PLN 3.5 million.

ADDITIONAL INFORMATION:

Financial results and market performance of Agora's major lines of business in 2Q2015 (yoy comparison):

PRESS - increase of revenues from copy sales and new initiatives

The results of the Press segment were under pressure of reduction in the press advertising expenditure as well as lower yoy copy sales.

Advertising revenues^1,2 in Gazeta Wyborcza decreased by 2.3%, in Metro by 15.3%, and in the magazines by 5.9%. As a result, advertising revenues of the segment amounted to PLN 46.7 million.

Revenues from copy sales of the segment went up by 5.8% to PLN 32.6 million in spite of the continuing downward trend in paper copy sales. This growth results from greater number of higher-priced editions of the daily, revenues from digital subscriptions as well as the increase of cover price of Gazeta Wyborcza in 2014.

The segment continued investment in digital development. At the beginning of June, 2015, Gazeta Wyborcza's digital team introduced its own sales platform, which is the next stage in the process of transformation of the press business model.

Due to the dynamic development of portals and mobile applications, the segment was able to offer its clients new digital advertising solutions in Gazeta Wyborcza's mobile application for iOS, Android and Windows Phone devices.

MOVIES AND BOOKS³ - increase of revenues of the segment due to new initiatives

Revenues of the Movies and Books segment increased by 30.9% and amounted to PLN 71.1 million. This was mainly due to co-production and distribution of the game The Witcher 3: Wild Hunt contributing PLN 14.9 million of revenues. This, in turn, supported Agora's Publishing House revenues at the level of PLN 24.2 million. The segment's revenues were positively influenced by higher by 5.7% revenues from ticket sales in Helios cinemas (which amounted to PLN 26.0 million), as well as higher revenues from concession sales. Lower revenues from Agora's film activity is the result of fewer projects undertaken by the Group within the period discussed. Revenues from ad sales in Helios cinemas amounted to PLN 6.1 million.

Operating costs of the segment increased by 32.6% to PLN 75.2 million, mainly as a result of higher costs of Agora's Publishing House which amounted to PLN 22.5 million. This growth was mainly the result of depreciation costs related to co-production and distribution of the game Witcher 3: Wild Hunt. Due to lower number of film projects undertaken, the segment limited its advertising and promotion costs. Growth of staff cost was the result of Helios' network expansion.

In result, the segment noted loss on the level of EBIT⁴ amounting to PLN 4.1 million, whereas the segment's EBITDA⁴ grew to PLN 9.7 million.

Helios cinema attendance in 2Q2015 amounted to 1.5 million viewers and was higher yoy by 1.6%. At the same time, the total number of tickets sold all over Poland went up by 3.3%.

In 2Q2015, Helios opened a new cinema in Jelenia Gora, south-western Poland. It is the 35th modern cinema in Helios' portfolio. In the meantime, Helios is working on three new localizations in shopping malls which shall be opened before the end of 2015.

For the first time, NEXT FILM introduced to Polish cinemas a foreign production - a French film entitled De toutes nos forces (The Finishers; Polish title: Ze wszystkich sil).

In 2Q2015, Agora's Publishing House (which operates within the Special Projects division) introduced 21 new publishing projects. As a result, Agora sold 0.2 million books and books with CDs/DVDs.

OUTDOOR⁵ - reduction of operating costs and improvement of the operating result

In 2Q2015, revenues from advertising sales⁵ in AMS amounted to PLN 41.5 million. At the same time, thanks to consistent optimization measures, the segment reduced its operating costs by 9.7% and improved its operating result on the level of EBIT to PLN 8.9 million, and on the level of EBITDA - to PLN 12.0 million. The position of the company on the outdoor advertising market is strong and its share in the expenses for outdoor advertising is now over 34%.

In 2Q2015, AMS continued working on building bus shelters in Warsaw. As at the beginning of August, 2015, almost 500 new bus shelters can been seen in the streets of Warsaw. Part of them, together with the Warsaw Premium Citylight panel, is included into AMS sales.

INTERNET⁶ - faster than market revenue increase

In 2Q2015, the segment noted increase of revenues^7,8 to the amount of PLN 39.9 million (up by 17.4%), mainly due to increasing advertising sales. Growth could be also observed in revenues from advertising sales brokerage. Due to the dynamic growth of revenues the segment improved its operating result which on the level of EBIT⁴ amounted to PLN 7.7 million, and on the level of EBITDA⁴ amounted to PLN 9.1 million.

Agora's Internet segment continues to develop its products and services. In 2Q2015 it launched Epic Makers, a studio which produces its own video formats with YouTube network partner. This is yet another stage of expanding Agora's video offer.

RADIO - increase of revenue and improvement of operating result

Revenues of the Radio segment^9,10 amounted to PLN 27.2 million (up by 17.2%). Its operating costs grew by 15.6%, mainly due to higher external costs (including advertising brokerage in other broadcasting stations). Due to dynamic increase of revenues, including advertising brokerage, the EBIT operating result of the Radio segment improved and amounted to PLN 4.2 million, whereas EBITDA - to PLN 4.9 million.

The segment develops its current activity and pursues new frequencies. In June, 2015 Agora's Radio Group launched Radio Pogoda in three cities: Krakow, Poznan and Opole. At the beginning of July, 2015 Agora's portfolio has been expanded by Radio Nostalgia. At the end of July, this radio station changed its name, thus becoming the fourth radio station under the brand Radio Pogoda.

PRINT¹¹ - reduction of costs and improvement of the operating result

Revenues from sales of printing services to external clients amounted to PLN 37,7 million. Due to the reduction of operating cost, the segment noted improvement of operating results. EBITDA⁴ amounted to PLN 4.1 million and EBIT⁴ to PLN 0.2 million.

Notes:

¹ the amounts do not include revenues and total cost of cross-promotion of Agora's different media (only direct variable cost of outdoor panels) if such promotion is executed without prior reservation between segments of the Agora Group.

² the amounts refer only to a portion of total revenues from dual media offers (published both in Gazeta Wyborcza, as well as on GazetaPraca.pl, Domiporta.pl, Komunikaty.pl verticals and Nekrologi.Wyborcza.pl website), which is allocated to the print edition of Gazeta Wyborcza.

³ the Movies and Books segment includes the pro-forma consolidated financials of Helios S.A. and NEXT FILM Sp. z o.o., which form the Helios group and Agora's Special Projects division.

⁴ EBIT and EBITDA of Press, Movies and Films, Internet as well as Print segments are calculated on the basis of cost directly attributable to the appropriate operating segment of the Agora Group and excludes allocations of all Company's overheads (such as: cost of Agora's Management Board and a majority of cost of the Company`s supporting divisions), which are included in reconciling positions.

⁵ the Outdoor segment consists of the pro-forma consolidated data of companies constituting the AMS group (AMS S.A., Adpol Sp. z o.o.).

⁶ the Internet segment includes the pro-forma consolidated financials of Agora's Internet Department, Trader.com (Polska) Sp. z o.o., AdTaily Sp. z o.o. and Sport4People Sp. z o.o. and Sir Local Sp. z o.o.

⁷ data include inter-company sales between Agora's Internet Department, Trader.com (Polska) Sp. z o.o., AdTaily Sp. z o.o., Sport4People Sp. z o.o. and Sir Local Sp. z o.o.

⁸ including, among others, allocated revenues from the dual media offer (i.e. published both in Gazeta Wyborcza, as well as on GazetaPraca.pl, Domiporta.pl, Komunikaty.pl verticals and Nekrologi.Wyborcza.pl website).

⁹ the Radio segment includes the pro-forma consolidated financials of Agora's Radio Department, all local radio stations and a super-regional TOK FM Radio, being parts of the Agora Group. This includes: 24 Golden Hits (Zlote Przeboje) local radio stations, 7 Rock Radio local radio stations, 3 Radio Pogoda local radio stations (since June 12, 2015), one CHR format (Contemporary Hit Radio) local station and a super-regional news radio TOK FM broadcasting in 17 metropolitan areas.

¹⁰ advertising revenues include revenues from brokerage services of proprietary and third-party air time and brokerage services in cinemas.

¹¹ The Print segment includes the pro-forma financials of Agora's Print division and Agora Poligrafia Sp. z o.o.

Sources:

Advertising market: the data refer to advertising expenditures in six media (print, radio, TV, outdoor, Internet, cinema). Agora has corrected the numbers for TV advertising market in the second quarter of 2014 and and Internet advertising market in the first quarter of 2015.

Unless explicitly stated otherwise, print and radio advertising market data are based on Agora's estimates adjusted for average discount rate and are stated in current prices. Given the discount pressure and advertising time and space sell-offs, these figures may not be fully reliable and will be adjusted in the consecutive reporting periods. The data for print exclude classifieds, inserts and obituaries. The estimates are based on rate card data obtained from Kantar Media monitoring and Agora S.A. monitoring. TV, Internet and cinema figures are based on Starlink media house estimates. TV estimates include regular ad emissions and sponsoring, but exclude teleshopping, product placement and other advertising forms. Internet ad spend estimates include display, search engines (Search Engine Marketing), e-mail marketing and video (since 1Q2012). Outdoor advertising figures are based on Izba Gospodarcza Reklamy Zewnetrznej (IGRZ) estimates.

Outdoor: the data based on the report on sales of outdoor prepared by IGRZ, which include: AMS S.A., Business Consulting, Cityboard Media, Clear Channel Poland, Defi Poland, Gigaboard Polska, JETline, Megaboard, Mini Media, Ströer Out of home and Warexpo. The report is prepared on the basis of the financials provided by those companies to IGRZ. The reports for the outdoor market (defined by IGRZ as 'the out-of-home market') include immovable, mobile and digital outdoor advertising.

The Internet offer reach: data regarding real users, page views and mobile page views is based on Megapanel PBI/Gemius, which covers Internet users age 7 years and above, connecting to Internet from the territory of Poland, and include only Internet domains registered on Agora S.A. in Gemius S.A. Registry of Service Providers. Real users data of the Gazeta.pl group services are audited by Gemius SA. Since April 2013 new rules apply combining sites in a group of publishers. According to the new rules Gazeta.pl group covers only websites assigned to Agora S.A. by the Gemius S.A. in the Registry of Service Providers and thus the results are not comparable with previous periods. Since April 2013 the method of calculating the rate of users (real users) has changed - the cookies from the mobile devices have been deducted from the basis of estimation. New User Index (real users) correspond to new page views indicators and new spent time indicators (from non-mobile devices), not found in the study prior to April 2013.

Cinema tickets sales: the data on ticket sales in the cinemas comprising Helios group come from the accounting data of Helios reported in accordance with full calendar periods. The data on cinema ticket sales are estimates of Helios group prepared on the basis of data received from Boxoffice.pl (based on reports submitted by distributors of film copies). Cinema ticket sales are reported for periods, which do not cover a calendar month, quarter or year. The number of tickets sold in the given period is calculated from the first Friday of a given month, quarter or year until the first Thursday of the next reporting month, quarter or year.

Radio audience share: the data based on Radio Track surveys carried out by MillwardBrown SMG/KRC (all places, all days and all quarters): for Agora Group music radio stations: in cities of broadcasting of Agora's radio stations and in the age group of 15+, from April to June (sample for 2014: 21,057; sample for 2015: 21,048), and from January to June (sample for 2014: 42,115; sample for 2015: 41,955).

Advertising in monthlies: rate card data on magazines obtained from Kantar Media monitoring; commercial brand advertising, excluding specialized monthlies; accounted 117 monthlies and 79 other magazines; in total 196 magazines for the period of April - June 2015.

Go back

Breaking news

Contact us

Phone: 22 555 60 00

Phone: 22 555 60 01

press@agora.pl

Info box

Quotations

AGO

11,04 zł

0,36%

Download

Company data

Agora Group's financial results for 2Q2015

NEWSLETTER