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November 10, 2016 / 08:13

Agora Group's financial results for 3Q2016

Press release

Agora Group in yet another quarter noted growth of revenues thanks to record high revenues from ticket sales in Helios cinemas as well as dynamic revenue growth of the Internet and the Outdoor segments. Consistent execution of development plans in those businesses brought about improvement of their operating results, which partially compensated weaker results of the Press, Radio and Print segments.

'For many months now Agora has been successfully executing development plans in the Group's non-press segments, including expansion of our cinema chain and participation in concession processes to build modern bus shelters', says Bartosz Hojka, CEO of Agora SA. 'We are rebuilding the business model of the Company's press activity in which revenues from both paper and digital sales of content are becoming a more essential source of revenues. Thus, we have concentrated our press ventures on Gazeta Wyborcza by introducing changes in its publishing formula and the editorial team's work. Such changes combined with price increase, change in the way of printing the daily and further step in digital development of the newspaper, are aimed at stabilizing the result of the Press segment', adds Hojka.

Financial results and market performance of the Agora Group in 3Q2016 (yoy comparison):

Revenues of the Group grew to PLN 273.4 million. This was mainly the result of high attendance in Helios cinemas, which resulted in higher by 49.0% revenues from ticket sales in the amount of PLN 44.7 million and higher by 49.2% revenues from concession sales in the amount of PLN 17.6 million, as well as higher revenues of the Internet and Outdoor segments.

Revenues from advertising sales in the Group decreased by 1.7% to PLN 123.2 million. Lower revenues in the Press and Radio segments were partially compensated by a significant growth of revenues in the Internet, Outdoor as well as Movies and Books segments.

Revenues from copy sales amounted to PLN 31.1 million and were lower by 8.3% yoy, which was mainly the result of lower revenues from sales of Agora Publishing House publications and decrease of newspaper copy sales.

Net operating costs of Agora Group grew by 7.2% to PLN 283.1 million, as a result of new initiatives and development plans implemented in the Group, especially in the Movies and Books as well as Internet segments.

Growth of costs of external services by 11.7% was mainly the result of higher payments for film copies and rental fees in the Movies and Books segment as well as advertising brokerage costs and higher computer services costs in the Internet segment. Staff costs grew by 3.5%, due to the execution of development plans and growth of employment in some businesses. Lower staff costs were noted in the Press and the Print segments, which was the result of lower level of full-time employment and lower rate of sales budget execution. Costs of energy and raw materials dropped by 0.6%, which was the result of lower volume of production and lower costs of materials.

ADDITIONAL INFORMATION - RESULTS OF AGORA'S SEGMENTS IN 3Q2016

PRESS - reduction of operating costs

Limited advertising expenditure in the whole market resulted in a drop of advertising revenues in the Press segment.

Advertising revenues^1,2 in Gazeta Wyborcza decreased by 25.1% to PLN 17.9 million, and in Metrocafe.pl^3,4 the drop amounted to 26.1%. Agora's magazines increased advertising revenues by 7.5% to PLN 5.7 million, due to dynamic development of their websites and higher advertising revenues from Ladny Dom magazine.

Revenues from copy sales in the Press segment dropped by 3.2% to PLN 30.4 million as a result of an ongoing market trend of copy sales drop.

Operating costs of the segment⁵ were limited by 1.5% to PLN 64.7 million. This was mainly the result of lower costs of energy, raw materials and print services due to lower volume of production of own titles. Staff costs were also lower, mainly due to lower level of full-time employment and lower yoy level of execution rate of sales budgets.

Gazeta Wyborcza's editorial team worked on digital content and new video offer of Wyborcza.pl which features new programs and video cycles since September, 2016. The video department of Gazeta Wyborcza also did custom-made special projects and those in close co-operation with advertising clients.

MOVIES AND BOOKS⁶ - record high cinema attendance and improvement of operating result

In 3Q2016 revenues of the Movies and Books segment grew by 27.1% to PLN 83.4 million. Operating results of the segment improved significantly. EBITDA amounted to PLN 12.9 million, whereas operating result on EBIT level grew to PLN 5.3 million.

Financial results of the segment were mostly influenced by high attendance in Helios cinemas. In 3Q2016 the number of viewers grew by 37.5% yoy and amounted to 2.4 million. In addition to higher average ticket price and concession sales, this resulted in higher revenues from ticket sales and concession sales by 49.0% and 49.2%, respectively.

In 3Q2016 revenues of Agora Publishing House which operates within the Special Projects division decreased by 15.9% yoy to PLN 9.5 million. This result was positively influenced by revenues from sales of the game Witcher 3: Wild Hunt and its extensions.

In 3Q2016 Agora Publishing House release 7 new books, 2 new music albums and 2 new film albums. As a result, within the discussed period around 0.1 million books and books with CDs and DVDs had been sold.

Operating costs of the Movies and Books segment were higher by 20.2% yoy and amounted to PLN 78.1 million, which was mainly the result of development plans, i.e. higher rental costs in Helios cinemas and higher costs of copy purchase resulting from higher cinema attendance.

OUTDOOR⁸ - higher than the market growth of advertising revenues

In 3Q2016 revenues from advertising sales⁹ on AMS panels grew to PLN 37.7 million. This was mainly influenced by sales of campaigns on citylight panels. The dynamics of advertising revenue growth of the segment was significantly higher than observed in the whole OOH market and amounted to 7.7%.

Operating costs of the segment increased by 1.2%, mainly as a result of higher costs of campaign execution and staff costs.

Due to significant revenues growth in 3Q2016, operating result of the segment on the EBIT level grew by 115.8% yoy and amounted to PLN 4.1 million. The segment improved its EBITDA result, whereas EBITDA margin grew to 20.9%.

Within the period under discussion AMS continued on with building more bus shelters in Warsaw. There are already more than 1,150 bus shelters completed, most of them already available for ad sales. AMS also built 51 bus shelters in Sosnowiec.

INTERNET¹⁰ - dynamic growth of revenues

In 3Q2016 Agora's Internet segment noted growth of revenues^11,12 by 15.6% to PLN 38.6 million, mainly as a result of higher level of internet advertising sales and sales of other internet services, i.e. access to search profiles of candidates and employers via GoldenLine.pl. Operating result of the segment on the EBIT level grew to PLN 5.1 million, whereas EBITDA⁷ grew to PLN 6.4 million.

Operating costs of the Internet segment increased by 18.0% to PLN 33.5 million, mainly as a result of growth of external services and staff costs as well as the costs of marketing and promotion.

In September, 2016, the total reach of Gazeta.pl websites among Polish Internet users stood at 60.6%, while the number of users reached 15.4 million. They have done 624.6 million page views and spent an average of 57 minutes at Gazeta.pl's sites. The number of page views generated on mobile devices totaled 233.7 million, and the percentage of mobile page views on Gazeta.pl's websites reached 37.4% and was the highest among Polish horizontal portals.

Websites created within Gazeta.pl group are highly ranked. According to Gemius/PBI survey, in September, 2016 Gazeta.pl websites are leading in the category of 'Work' (GazetaPraca.pl, GoldenLine.pl), they are ranked third in the categories "Information and journalism" and "Sport" (i.a. Sport.pl), and fourth - in the categories "Social media" (Forum.Gazeta.pl, Blox.pl) and "Kitchen and cooking" (Ugotuj.to).

RADIO¹³ - operating result under the pressure of market slowdown

In 3Q2016 revenues of the Radio segment were lower by 6.2% and amounted to PLN 21.2 million, whereas revenues from radio advertising sales¹⁴ decreased by 8.0%. This was mainly the result of lower revenues from airtime sales in Agora's radio stations and lower revenues from advertising brokerage sales in third party radio stations.

Within the period under discussion Agora's radio stations improved their audience results: 0.4pp for music radio stations to the level of 4.2%, and Radio TOK FM by 0.5pp to the level of 1.9%.

In July, 2016 Agora Radio Group launched Premium version of online radio Tuba.FM which allows users to remove audio and video ads.

Since July, 2016 residents of Bydgoszcz and Rzeszow can listen to Radio TOK FM, with its news and programs. With the launch of transmitters in these locations TOK FM is present in 22 urban areas.

PRINT¹⁵ - drop of revenues

Revenues of the Print segment were lower by 5.0% and amounted to PLN 36.0 million. Operating costs remained unchanged yoy. The segment noted positive operating result on the EBITDA level which was nevertheless lower yoy and amounted to PLN 1.9 million.

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Agora Group's financial results for 3Q2016

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