Save! +

Remove!

May 12, 2017 / 07:54

Financial results of Agora Group for 1Q 2017

Press release

Growth of revenue and improvement of Agora Group results

Higher revenues and operating result of the Agora Group in 1Q2017 are among others the result of its record high revenues from film activity and growing cinema attendance. Positive impact on the Group's result had also significant improvement in the profitability of the Outdoor segment, coming from the growing importance of citylight panels in the company's portfolio. Addiditionally the Group's result was supported by the decrease in the operating loss of the Press segment achieved due to persistently undertaken restructuring measures.

"The results achieved in the first quarter of 2017 are a very good prognostic for the rest of the year. The Group has managed to maintain an upward trend in revenue and improve its operating result.. This was achieved through consistent implementation of a relevant development plan and restructuring measures what is an effect of significant reduction of the operating loss of the Press segment and a further change in the Group's revenue and profit structure. In 1Q2017, more than 80% of Agora Group's revenue came from non-press activities, while 60% from sources other than the advertising market." says Bartosz Hojka, President of the Management Board of Agora.

The financial performance and results achieved by Agora Group's businesses in 1Q 2017 (YoY comparison):

The Group's revenue increased by 4.3% to PLN 301.0 million. This was largely due to dynamic revenue growth in the Movies and Books segment, that increased by 29.0% to PLN 126.9 million. This was largely driven by record revenues from film activity and growing cinema attendance. Higher revenues were also reported for the Internet and Radio segments: PLN 38.3 million and PLN 25.8 million, respectively. The revenue growth in the Internet segment was the result of higher sales revenue from advertising services, including sales via the Yieldbird network. The improvement performance of the Radio segment was mainly due to higher revenues from brokerage services for the Helios cinema network and higher revenues from air time sales in own radio stations.

The Outdoor segment reported revenue of PLN 35.3 million, which was similar to that recorded for the corresponding period last year. However, the Press and the Print segments' revenue was lower than last year, amounting to PLN 53.5 million and PLN 29.7 million respectively. As regards the Press segment, the revenue decline is mainly the result of negative market trends and the decision not to publish certain press titles. The decisive factor for the level of revenue in the Print segment was reduction in production volume.

Agora Group's operating costs increased by 4.2% to PLN 297.4 million. The costs were higher in the operating segments that recorded revenue growth, i.e. Movies and Books, Internet and Radio. The increase in operating costs in the Movies and Book segment by 29.7% to PLN 106.6 million was largely driven by higher costs of external services associated with film activity and higher number of cinemas. Another important factor was higher staff costs caused mainly by changes to minimum hourly wage and employment growth due to higher number of cinemas. The reported increase in operating costs (to PLN 38.0 million) for the Internet segment was largely due to higher costs of external services, promotion and marketing activities. Higher costs of external services were mainly driven by brokerage services for ad sales and marketing services. Higher promotion and marketing costs were achieved through the image campaign conducted by Gazeta.pl and GoldenLine.pl. Another edition of the Radio Złote Przeboje advertising campaign was a major factor behind the increase in operating costs to PLN 25.5 million in the Radio segment.

This was accompanied by reductions in operating costs in the Print, Press and Outdoor segments. Due to the decline in production volume, the operating costs in the Print segment decreased by 19.5% to PLN 32.2 million. The operating costs for the Press segment decreased by 15.8% to PLN 54.5 million. This was mainly due to lower spending on promotion and marketing, materials, energy, printing goods and services following the decision to discontinue the publication of the Metrocafe.pl daily, as well as due to lower printing volumes and changes to the printing layout of the Gazeta Wyborcza daily. The operating costs in the Outdoor segment declined by 8.1% to PLN 29.6 million, which was mainly due to reductions in system maintenance costs following changes to the media portfolio structure and the decision to discontinue media service and maintenance services in the Warsaw subway.

The Group's EBITDA result increased by 3.2% to PLN 28.9 million, with its operating profit (EBIT) rising by 20.0% to PLN 3.6 million. The Group recorded a net loss of PLN 6.1 million, with the net less attributable to equity holders of the parent company amounting to PLN 8.2 million.

ADDITIONAL NOTES - RESULTS OF AGORA'S SEGMENTS IN THE FIRST QUARTER OF 2017 (YoY comparison)

MOVIES AND BOOKS¹ - higher revenues and improved operating result

The Movies and Books segment revenue increased by 29.0% to PLN 126.9 million. This was mainly the result of higher revenues from Group's film activity due to high popularity of the film productions released to cinemas by NEXT FILM in the first quarter of 2017. There was also a noticeable increase in revenue from cinema ticket sales, i.e. by 11.4% to PLN 64.6 million, accompanied by a 13.3% increase in revenue from concession sales (to PLN 22.2 million). This was accompanied by a double-digit increase in revenue from ad sales in cinemas, i.e. by 19.7% to PLN 8.5 million. Total revenue from film co-production and distribution services for the segment reached a record high of PLN 20.1 million. During that period, NEXT FILM released three Polish productions for cinema distribution: Po prostu przyjaźń, Sztuka Kochania. Historia Michaliny Wisłockiej and Pokot. Due to their enormous popularity, tickets for the film productions released to cinemas by NEXT FILM accounted for more than 50% of total ticket sales for Polish films in the first quarter of 2017. Agora's Publishing House's revenue was similar to that reported for the first quarter of 2016.

The operating costs for the segment were reported at PLN 106.6 million, an increase of 29.7%. This was largely driven by a 36.4% increase in costs of external services due to higher payments to film producers to account for high cinema attendance figures in the first quarter of 2017 and higher rental costs for the Helios cinema network.

Similarly, an increase in promotion and advertising costs to PLN 7.0 million was due to higher y/y activity in the area of film distribution. There was also a significant increase in staff costs, which were reported at PLN 12.9 million. This was mainly due to increased minimum hourly rates and higher number of Helios network cinemas.

Due to dynamic revenue growth in the period under review, the Movies and Books segment recorded a higher y/y operating result at EBIT and EBITDA levels. The operating result for the segment was recorded at PLN 20.3 million, with EBITDA amounting to PLN 28.8 million.

The attendance figures for the Helios cinema network in the first quarter of 2017 were reported at 3.6 million, a year-on-year increase of 11.3%.

In the first quarter of 2017, the Helios cinema network was extended to include the Wolomin facility. Currently, the network comprises a total of 42 cinemas, which makes it the largest multiplex operator in Poland with respect to the number of facilities.

In the first quarter of 2017, Agora's Publishing House released a total of 14 new book publications, 6 music albums and 5 film publications. This led to Agora selling about 0.4 million books and books with CDs and DVDs , in the period under review and achieving a year-on-year increase in revenue from these sales. One of the best-selling titles in the book publishing section was the new edition of Sztuka Kochania by Michalina Wisłocka.

Due to the increased scale of its film activity, the production section of Agora was be transferred on April 1st of the current year to NEXT FILM - one of the largest distributors of Polish film productions. Thus, Agora's film activity will be, in its entirety, integrated into one organisational structure.

PRESS - lower operating costs and lower operating loss

The total revenue of the Press segment amounted to PLN 53.5 million, a year-on-year decrease. This was primarily the result of lower revenues from ad sales in the Gazeta Wyborcza daily^2,3and the decision to discontinue the publication of the Metrocafe.pl free daily and the Pogoda na zycie monthly. It should also be noted that due to dynamic development of magazine web services and higher revenues from custom publishing projects and Logo magazine the advertising revenue of the magazines published by the Company were the same as in the previous year and amounted to PLN 5.1 million.

The segment revenues from copy sales amounted to PLN 28.0 million. A factor negatively affecting the above figures was the reduced levels of copy sales of printed press and lower number of dual-priced editions of the Gazeta Wyborcza daily. Whereas, increased revenues from digital subscriptions to the Gazeta Wyborcza daily and higher proceeds from selling special editions of magazines created by the editorial staff of the daily have positively contributed to this trend in revenues.

It should be noted that in the first quarter of 2017 the segment reported a 15.8% decrease in operating costs to PLN 54.5 million. Major contributing factors were lower costs of materials, energy, printing goods and services due to lower printing volumes of the Gazeta Wyborcza daily and the decision to discontinue the publication of the Metrocafe.pl free daily (in mid-October 2016) and the Pogoda na zycie monthly (at the end of 2016). Another factor was lower promotion and advertising costs for both the Gazeta Wyborcza daily and Agora's magazines. This was accompanied by reduced staff costs, mainly as a result of collective redundancy in the segment in the fourth quarter of 2016.

Due to significantly lower operating costs, the segment reduced losses at EBIT and EBITDA levels. This was achieved through the restructuring measures implemented in the segment in 2016, involving changes to product structure, collective redundancy process, reductions in press title volumes and discontinuation of publication of selected titles.

In January 2017, the latest promotional campaign was launched for the Wyborcza.pl web portal - a digital version of the Gazeta Wyborcza daily - under the slogan Swiat, ktorym zyjemy (The World We Live By). The new refreshed version of the web portal offers high-quality original content developed by Gazeta Wyborcza's journalists, made available for viewing and reading in October 2016.

In addition, in the first quarter of 2017 the segment continued to post new content on the Wyborcza.pl web portal on technology, lifestyle and health.

On 20 March 2017, the Gazeta Wyborcza daily started to work with EURACTIV - a leading European web portal featuring Union-related content - within a formal framework of cooperation. This is another international project by the Gazeta Wyborcza daily.

In the first quarter of 2017, the Gazeta Wyborcza's team also prepared the special editions of the Psychologia Extra and Tylko Zdrowie Extra magazines, contributing to increased revenues from copy sales and ad sales for the Press segment.

Avanti24's editorial team prepared a new thematic web portal, Avanti24 Plus Size, to meet the needs of plus size women.

OUTDOOR⁴- lower costs and improved operating result

In the first quarter of 2017, the revenue from AMS media ad sales5 was similar to that recorded for the first quarter of 2016 and amounted to PLN 34.7 million. This was due to discontinuation of advertising activity in Warsaw subway cars reported as transit advertising, while boosting revenues from other media.

It should also be noted that the operating costs for the segment declined by 8.1% to PLN 29.6 million. This was mainly achieved through reductions in system maintenance costs, promotion and marketing costs and positive result from other operating activities.

As a result of the operating costs having been reduced to PLN 29.6 million, the operating result for the segment rose to PLN 5.7 million at the EBIT level and to PLN 10.0 million at the EBITDA level.

The operating result for the segment was further increased by a profit earned from other operating activities following the sale of a media system for Warsaw subway cards after termination of a relevant contract for media service and maintenance in the end of 2016.

In the first quarter of 2017, due to time of year, the segment did not carry out any construction work related to bus shelters. One of the priorities was to obtain relevant administrative permits.

The segment also won a tender for providing service and maintenance of bus shelters in Gdańsk, resulting in the renewal of a contract for the service and maintenance of 191 bus shelters in the city for another 3 years. The project involves no capital expenditure.

INTERNET⁶ - revenue growth in the segment

The total Internet segment revenues^7,8 increased by 5.5% to PLN 38.3 million in the first quarter of 2017. The segment revenue growth was driven by increased sales of web display advertising and on-line ads. Proceeds from the sale of web display advertising increased by 6.7% to PLN 30.1 million. This was largely due to higher sales of web display adversing via the Yieldbird network and affiliated networks, and to revenues generated by the GoldenLine.pl recruitment ad website.

This was accompanied by a 8.6% increase in revenue from the sale of on-line ads, which was reported at PLN 3.8 million. Higher revenues of the Goldenline.pl recruitment ad web service and the Domiporta.pl real estate ad web service are the main contributing factor.

During that period, the operating costs of the Internet segment increased to PLN 38.0 million. The increase in operating costs was largely driven by higher spending on external services (including rental costs of advertising space), promotion and marketing.

Higher rental costs of advertising space, including in the Yieldbird advertising network, the affiliate network and Trader.com (Poland) Sp. z o.o., were a major factor behind the increase in costs of external services. The cost increase was offset by higher revenues from brokerage services for web display advertising and on-line ad sales. Apart from higher rental costs of advertising space, the Internet segment also recorded an increase in costs of other external services - especially those of marketing services of the Gazeta.pl portal and the Yieldbird advertising network.

This was accompanied by higher spending on marketing and promotion. This was mainly due to a large-scale image campaign for the Gazeta.pl web portal and higher promotion costs of the Goldenline.pl. advertising web portal.

The latest image campaign of the Gazeta.pl website was launched on 1 March 2017 under the slogan Dzień dobry emocje (Hello emotions) to highlight the website's greatest advantage, i.e. engaging content shown in the right context. This is the first advertising campaign of this kind implemented by the Internet segment over the last 10 years.

The editorial staff of Next.Gazeta.pl created a new magazine format devoted to such topics as business and successful people - Next+. Each Tuesday, new exclusive content, in text and video format, developed by experienced economic journalists, is added to the Gazeta.pl homepage.

RADIO - higher revenues and positive operating result

The Radio^9,10 segment revenues increased by 1.6% to PLN 25.8 million, primarily due to higher revenues from brokerage services for Helios cinemas and higher proceeds from air time sales in the radio stations of Agora Radio Group. The operating costs for the segment rose by 7.6%, mainly due to higher promotion and marketing costs, following the implementation of another edition of the advertising campaign for the Radio Złote Przeboje radio station. This was accompanied by reductions in staff costs and costs of external services.

The stations that belong to Agora Radio Group have gained popularity and increased technical coverage, leading to a steady increase in audience share.

During the period under review, Agora Radio Group launched an innovative application - Mikrofon TOK FM - which allows TOK FM Radio listeners to record and submit their own audio commentary. The application, which was developed as part of the Google Digital News Initiative Innovation Fund, can be downloaded from Google Play and AppStore.

PRINT¹¹ - positive operating result at the EBITDA level

Total revenues of the segment decreased to PLN 29.7 million, mainly due to lower volume of orders and increased share of production involving customer-provided paper. The operating costs were reduced significantly to PLN 32.2 million. The operating result for the segment at the EBITDA level was positive, standing at PLN 2.9 million.

Notes

Go back

Breaking news

Contact us

Phone: 22 555 60 00

Phone: 22 555 60 01

press@agora.pl

Info box

Quotations

AGO

11,38 zł

-0,7%

Download

Company data

Financial results of Agora Group for 1Q 2017

NEWSLETTER