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WYNIKI FINANSOWE GRUPY AGORA  W 3. KWARTALE 2023 R.

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AGORA S.A.
Czerska 8/10 Street
00-732 Warszawa

AGO -1,69%
mWIG40 0,13%
WIG-MEDIA 1,02%

Regon: 11559486
Numer KRS: 59944
NIP: 526-030-56-44

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May 13, 2016 / 07:45

Financial results of Agora Group in 1Q2016

Press release

Revenue growth of Agora Group in the first quarter of 2016 was the result of record high cinema attendance and faster than the market growth of advertising revenues of the Outdoor, Internet and Radio segments.

- We are glad to see the Group's revenues growing for the consecutive quarter; what's more in selected business segments their dynamics is even higher than that observed on the market. This dynamic growth made us verify our objectives in selected businesses. We believe that due to the increased scale our radio business may achieve higher EBIT margin, and our Internet segment may further improve its EBIT result preserving high dynamics of revenue growth - says Bartosz Hojka, President of the Management Board of Agora.

Financial results and market performance of the Agora Group in 1Q2016 (yoy comparison):

Revenues of the Group amounted to PLN 288.5 million and were higher yoy by 2.0%. This was mainly the result of record high attendance in Helios cinemas and higher than the market growth rate of advertising revenues in Agora Group.

High attendance in Helios cinemas resulted in higher revenues of the Movies and Books segment. Revenues from ticket sales grew by 13.7% to PLN 58.0 million, whereas revenues from concession sales were higher by 12.6% and amounted to PLN 19.6 million. Within the discussed period Agora Group was less active in the film distribution market, which resulted in lower revenues from the Group's film activity and, in turn, lower revenues from other sales (PLN 37.2 million).

Revenues from advertising sales were higher by 5.4% and amounted to PLN 121.7 million. This was the result of higher than the market growth of revenues from advertising sales in the Outdoor, Internet and Radio segments. Revenues from copy sales decreased by 7.7% to PLN 34.7 million. It must be remembered, though, that this position was influenced yoy by the sales of the film Bogowie on DVD - both as a dual priced edition of Gazeta Wyborcza , as well as a separate publication of Agora's Publishing House. Revenues from print sales to external clients decreased to PLN 37.0 million.

Net operating costs of Agora Group increased only by 1.9% to PLN 285.5 million. This growth was influenced by higher by 7.0% external costs related to the development of Helios cinemas, greater number of advertising panels in the Outdoor segment, higher payments for film copies and higher cost of advertising brokerage services. Staff costs grew by 3.9% as a result of development plans in the Group, whereas marketing and representation costs decreased by 14.8% to PLN 16.1 million, which was mainly the result of Agora Group's lower activity in the field of film distribution. Costs of raw materials, energy and consumables were lower (by 2.3%), mainly as a result of lower volume of Agora's own titles, as well as lower volume of orders from external clients.

Due to growth of revenues EBITDA of the Agora Group increased to PLN 28.0 million. The operating result and the net result of the Group were influenced by the settlement of acquisition of majority stake in GoldenLine Sp. z o.o. ("GoldenLine"). The total negative impact of this transaction amounted to PLN 3.3 million.

As a result, operating result of the Group on the EBIT level in 1Q2016 amounted to PLN 3.0 million and was higher yoy. Net loss of the Group was at the level of PLN 5.6 million, whereas net loss attributable to the equity holders of the parent company amounted to PLN 7.2 million.

ADDITIONAL INFORMATION - RESULTS OF AGORA'S SEGMENTS IN THE FIRST QUARTER OF 2016 (yoy comparison)

PRESS - result of the segment under pressure of market trends

Results of the Press segment were under pressure of limited advertising expenditure in press, as well as lower yoy copy sales.

Advertising revenues1,2 decreased by 21.5% in Gazeta Wyborcza , and by 24.4% in Metrocafe.pl 3,4. It is worth noting that Agora's magazines increased advertising revenues by 13.3%. This was the result of new monthly Pogoda na życie , published in co-operation with the Radio segment, as well as the transfer of custom publishing offer from Metrocafe.pl to the Magazines division.

Revenues from copy sales of the segment decreased by 6.4% to PLN 30.9 million. This was the result of continued downward trend in sales of paper publications. It must also be remembered that the revenues from copy sales of Gazeta Wyborcza 5 was yoy influenced by the sales of the film Bogowie on DVD in the double-priced offer.

Operating costs of the segment decreased by 4.1% to PLN 64.7 million, mainly as a result of lower costs of energy, raw materials, consumables, print services, as well as lower staff costs.

In 1Q2016 the Press segment introduced Pogoda na życie in co-operation with Radio Pogoda, a brand of Agora Radio Group. The segments portfolio was complemented by the quarterly Dziecko Extra , whereas the price of Dziecko itself was lowered.

Within the discussed period the segment launched Avanti24, a new internet shopping service. It is a merger of Avanti24 and Groszki.pl, offering lifestyle tips and aggregating online shops with a convenient product search engine.

Since February 2016, paper versions of Gazeta Wyborcza on Thursdays, Fridays and Saturdays are available at a new price. Changes also occurred in the offer of digital subscriptions of Gazeta Wyborcza - readers have the possibility to choose one of two packages offered in new prices.

In February 2016, Gazeta Wyborcza and BIQdata.pl's project received financial support of Google's Digital News Initiative in the category 'Large Projects'. It is aimed at helping Poles to understand the influence of both, small and big politics on their everyday life, including home budget, education and the national health service. In all, 7 projects from Poland received financial funding, including 2 from Agora - Gazeta Wyborcza's and Radio TOK FM's.

MOVIES AND BOOKS6 - increase of revenues and improvement of operating result

Revenues of the Movies and Books segment grew by 2.1% to PLN 98.4 million. This was mainly the result of higher cinema attendance, which, in turn, resulted in higher revenues from ticket sales (up by 13.7% to PLN 58.0 million). The segment noted higher concession sales by 12.6% which amounted to PLN 19.6 million, as well as higher (by 14.5%) revenues from advertising sales in cinemas which amounted to PLN 7.1 million. Revenues of Agora's Publishing House were at the level of 8.6 million and were lower yoy, mainly as a result of sales success of the film Bogowie on DVD in 2015. The segment also noted lower revenues from its film operations due to lower activity in the field of film distribution. In 1Q2016 NEXT FILM introduced to Polish cinemas only one film production, whereas in 1Q2015 it was three films.

The operating costs of the segment grew only by 0.9% to PLN 82.2 million, mainly due to higher costs of external services. This was the result of higher payments for film copies in Helios cinemas and greater number of cinema locations, which was, in turn, the result of higher costs of energy, raw materials, consumables, as well as higher staff costs and lower depreciation. Lower costs of marketing and representation stem from NEXT FILM's lower activity in the field of film distribution.

As a result, the Movies and Books segment significantly improved its operating results. EBIT7 grew to PLN 16.2 million, whereas EBITDA7 increased to PLN 24.1 million.

Attendance in Helios cinemas in 1Q2016 reached as high as 3.2 million viewers and grew by 11.7%, whereas the total number of tickets sold in Poland at that time was higher by almost 9.5%.

Agora's Publishing House offered in 1Q2016 18 new projects, and sold 0.3 million books and books with CDs.

OUTDOOR8 - higher than the market growth of revenues and improvement of operating result

In 1Q2016 revenues from advertising sales9 on panel's from AMS portfolio increased to PLN 35.0 million. Operating costs of the segment grew by 2.9%.

As a result, the segment significantly improved its operating result on the EBIT level (to PLN 3.5 million) and its EBITDA operating result (to PLN 7.4 million). The company's position on the outdoor market is strong and its share in outdoor advertising expenditure grew to over 38%.

In 1Q2016 AMS continued on with working intensively on the construction of new bus shelters in Warsaw and in Cracow.

INTERNET10 - faster than the market growth of revenues

In 1Q2016 the Internet segment noted growth of revenues11,12 to PLN 36.3 million (by 14.2%) due to increased revenues from internet advertising sales, higher revenues from ad sales in verticals, as well as due to consolidation of GoldenLine in the segment's results.

Due to significant growth of operating costs, to PLN 34.5 million, the EBIT7 operating result amounted to PLN 1.8 million, whereas EBITDA7 to PLN 3.1 million.

The Internet segment develops its activity. In 1Q2016 Agora acquired majority stake in GoldenLine Sp. z o.o. for PLN 8.48 million. With this transaction, Agora will strengthen its market position in the category "Recruitment" and will provide comprehensive solutions in the rapidly growing market of recruitment services in Poland.

As the same time, the Internet segment strengthens its position on the mobile market. Within the discussed period it offered its users new versions of popular applications. In February, 2016 Sport.pl LIVE for iOS, and in March, 2016 - "Moja ciąża z eDziecko.pl" for Android.

The Internet segment also expanded its offer with new websites. In February 2016 Gazeta.pl launched Weekend.Gazeta.pl which is the extension of a weekend magazine of the service. Long texts appear now also from Monday to Friday. Also in February 2016 Gazeta.pl launched Wideonews.Gazeta.pl with news in a short, attractive video form tailored for social network sites.

In March 2016 business and technological service Next.Gazeta.pl premiered. This project combines a unique high-quality content with an attractive form. Gazeta.pl launched also Haps which is a new online culinary format, created specifically for social media. Video recipes presented on Haps can be viewed comfortably on any device and on various social platforms.

RADIO13 - increase of revenues and improvement of operating result

Revenues of the Radio segment14 amounted to PLN 25.4 million which is a growth by 18.1%. Operating costs of the segment grew by 11.3%. Due to dynamic increase of revenues, including higher revenues from sales of ads in own radio stations and advertising brokerage in cinemas, the EBIT operating result of the segment increased significantly and amounted to PLN 1.7 million, whereas EBITDA amounted to PLN 2.5 million.

Agora's radio stations achieved good audience results: 3.8% for music radio stations (down by 0.3 pp), and 1.9% for Radio TOK FM (up by 0.7 pp).

The Radio segment develops current activity and solicits new frequencies. Since March 2016 listeners in Bydgoszcz, Wroclaw and the Silesian agglomeration can listen to Radio Pogoda which is the newest radio station in Agora Radio Group's portfolio. Radio Pogoda is now available in 7 Polish cities. Launch of new frequencies was made possible by changing the names of three of Agora's radio station, previously under the name Rock Radio. Nevertheless, Rock Radio can be still listened to in Warsaw, Poznan, Opole and Krakow.

Agora's project "Mikrofon TOK FM" received support from the Google's Digital News Initiative project in the "Prototype Projects" category. "Mikrofon TOK FM" is designed to create an online platform and an application allowing listeners to share their opinions in audio versions and co-creating TOK FM's content.

PRINT15 - positive operating result EBITDA

Revenues of the Print segment from the sales of printing services for external clients amounted to PLN 37.0 million. Operating costs of the segment increased, which, in turn, resulted in EBIT7 loss of PLN 1.0 million. The EBITDA7 result amounted to PLN 3.0 million.

Notes:

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

2 in 2015 the presented amounts refer to only 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. Since 2016 total revenues from dual media offers are presented in the advertising revenues of Gazeta Wyborcza.

3 in 2016 custom publishing activities, which till the end of 2015 were reported together with the results of Metrocafe.pl, were offered by the Magazines division. The data for 2015 was not corrected in this respect.

4 the amounts refer to total revenues of the Free Press including revenues from Metrocafe.pl's display advertising (previously Metro), classifieds and inserts as well as from metroBTL services and Metrocafe.pl's special activities.

5 since the first quarter of 2016 the sales from copy sales of Gazeta Wyborcza include the revenues from the sales of digital subscriptions of the daily. The data for previous periods was adjusted accordingly.In previous reporting periods the revenues from the sales of digital subscriptions were presented in other revenues.

6 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.

7 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.

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

9 the amounts do not include revenues, direct and variable cost of cross-promotion of Agora's other media on AMS panels if such promotion was executed without prior reservation.

10 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., Sport4People Sp. z o.o., Sir Local Sp. z o.o. and since January 2016 - GoldenLine Sp. z o.o. Since March 2016 SearchLab agency was transformed into a company - Optimizers Sp.z o.o. (previously SerchLab Sp. z o.o.).

11 the amounts do not include total revenues and cost of cross-promotion of Agora's different media (only direct variable cost of campaigns carried out on advertising panels) if such promotion is executed without prior reservation, as well as 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., Sir Local Sp. z o.o. GoldenLine Sp. z o.o. and Optimizers Sp. z o.o.

12 in 2015 presented amounts include, 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). Since 2016 the revenues from dual media offers as well as revenues from listings in verticals Komunikaty.pl and NekrologiWyborcza.pl are not allocated to Internet division.

13 the Radio segment includes the pro-forma consolidated financials of Agora's Radio Department, all local radio stations and a super-regional radio TOK FM, which are parts of the Agora Group. These include: 23 Golden Hits (Zlote Przeboje) local radio stations, 4 local radio stations Rock Radio (since March, 2016; in 2015 and in January and February 2016 7 radio stations bradcast under the Rock Radio brand), 7 local stations broadcasting under the brand Radio Pogoda (three of them broadcasting since June 12th, 2015; four since July 31st, 2015 and 7 since March 2016) and a super-regional news radio TOK FM broadcasting in 20 metropolitan areas.

14 advertising revenues include revenues from brokerage services of proprietary and third-party air time. The amounts do not include revenues and total cost of cross-promotion of Agora's different media (only the direct variable cost of campaigns carried out on advertising panels) if such a promotion was executed without prior reservation.

15 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 (press, radio, TV, outdoor, Internet, cinema). In this MD&A Agora has corrected the numbers: for advertising in dailies, TV advertising and cinema advertising in the first quarter of 2015.

Unless explicitly stated otherwise, press and radio advertising market data referred to herein are based on Agora's estimates adjusted for average discount rate and are stated in current prices. Given the discount pressure as well as advertising time and space sell-offs, these figures may not be fully reliable and will be adjusted in the consecutive reporting periods. In case of press, the data include only display advertising, excluding classifieds, inserts and obituaries. The estimates are based on rate card data obtained from the following sources: Kantar Media monitoring, Agora S.A. monitoring.

Presented TV, Internet and cinema figures are based on Starlink media house estimates; TV estimates include regular ad broadcast and sponsoring with product placement, exclude teleshopping and other advertising forms.

Internet ad spend estimates include display, search engines (Search Engine Marketing), e-mail marketing and video advertising.

Outdoor advertising figures are based on Izba Gospodarcza Reklamy Zewnetrznej estimates prepared in cooperation with Starlink company.

Cinema ticket 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.


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