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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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March 3, 2014 / 07:48

The financial results of the Agora Group in 4q 2013

Komunikat prasowy

In 4q 2013 the Agora Group improved its operating result and grew net profit. This is the result of consistent execution of cost cutting strategy, mild drop in revenues and lack of any serious one-offs in 2013.

4q2013 market performance and financial results of Agora's major lines of business (yoy comparison):

FINANCIAL RESULTS OF THE GROUP


In 4q2013, the Group's total revenues amounted to PLN 300.3 million (down by 3.0% yoy). The level of Group's revenues resulted from lower yoy advertising revenues which amounted to PLN 150.2 million (down by 11.2% yoy) and copy sales revenues of PLN 33.1 million (down by 10.5% yoy). Growing revenues from cinema admissions of PLN 39.1 million (up by 2.1% yoy), despite lower yoy ticket sales, positively contributed to the level of the revenues. A 19.7% yoy growth (to PLN 77.9 million) in other sales resulted mainly from higher yoy revenues from the sales of printing services for external clients, cinema distribution revenues and concession sales in cinemas.

In total net operating cost of the Group, decreased by 8.9% yoy to PLN 285.0 million. The largest cost saving was observed in the cost of external services (down by 1.7% yoy) and in promotional and marketing expenditure (down by 6.5% yoy).

Thanks to lower level of operating cost the Group recorded an improvement in its operating result on all levels. Operating EBITDA1 of the Group reached PLN 39.0 million (up by 80.6% yoy), EBIT amounted to PLN 15.3 million. The Group's net profit amounted to PLN 12.2 million and net profit attributable to the equity holders of the parent amounted to PLN 10.4 million. Analyzing the data above one should remember that the yoy comparability of data was disturbed by one-off costs in 2012 of PLN 17.6 million.

At the end of December 2013, the Group's cash and short-term monetary assets amounted to PLN 171.4 million, out of which PLN 99.6 million in cash and cash equivalents and PLN 71.8 million in short-term securities. Additionally, PLN 40.0 million provided by the subsidiary AMS S.A. is treated as a cash collateral securing the bank guarantee issued in relation to the concession contract for construction of bus shelters in Warsaw.

GAZETA WYBORCZA - a consecutive step in the digital transformation of the Group's print media operations

Gazeta Wyborcza maintained its leading position among the quality newspapers with weekly readership at 9.7% (2.9 million readers; CCS, weekly readership index. The daily sold 215 thousand copies on average (down by 13.8% yoy). Gazeta's revenues from copy sales amounted to PLN 24.7 million (down by 5.0% yoy). That was possible mainly due to the increase in the basic price of daily issues of Gazeta Wyborcza twice in 2013. Advertising revenue2,3 amounted to PLN 38.7 million (down by 21.7% yoy) and Gazeta's share in display ad spend in dailies stood 35.0%.

Additionaly, growing by 9.2% yoy sales of Gazeta Wyborcza magazines (m.in. Wysokie Obcasy Extra, Książki. Magazyn do czytania) positively affected the level of the Group's revenues.

Gazeta Wyborcza consistently digitalizes its content and the number of the number of readers interested in its digital grow. A new phase in digital transformation of business model of Gazeta Wyborcza is introduction of metered paywall on February 4, 2014 with digital subscription offer.

The Group constantly develops in offer both in print and in digital form. In order to strengthen the ad offer of all press titles the decision to combine sales forces of the Company's press brands had been made in November 2013. As a result, one commercial team develops advertising offer of all Agora's press titles (Gazeta Wyborcza, several magazines and the daily Metro, their digital versions and website MetroMSN.pl).

CINEMA5 - growth of revenues and operating result

Thanks to higher yoy revenues and decrease in operating cost by 2.1% yoy, the Cinema segment improved its operating results. EBITDA and operating EBITDA amounted to PLN 17.4 million.

Total sales of the Helios group increased by 7.9% yoy to PLN 66.9 million. The admission revenue grew by 2.1% yoy, despite lower yoy number of ticket sales in Polish cinemas. The concession sales grew by 12.9% yoy and revenues from other sales increased by 29.2% yoy mainly due to the distribution activities of Next Film.The number of visitors in Helios network reached 2.2 million people and was lower by 5.7% yoy. At that time, the number of tickets sold in all Polish cinemas decreased by 4.9% yoy. In 4q 2013, Helios cinema network opened new cinemas in Gdynia and Nowy Sacz and closed a cinema in Katowice. As a result, at the of December 2013, Helios network consisted of 31 multi screen cinemas.

Next Film, the subsidiary company of Helios group received a Platinum Ticket- an award granted to film producers and distributors whose movies attracted the largest audience to the cinemas. Next Film was awarded for film Drogowka, which gathered in Polish cinemas more than 1 million people and is the only Polish film production with such a result in 2013. Agora was a co-producer of this movie.

OUTDOOR6 - decrease in operating cost and improvement of operating result

Thanks to 9.2% yoy decrease in operating cost the segment improved its operating result significantly. Its operating EBITDA1 reached PLN 9.2 million (up by 3.4% yoy).

Ad revenues6 of AMS group6 amounted to PLN 41.0 million (down by 7.0% yoy) and its estimated share in outdoor advertising stood 33%.

The most important event for AMS group was signing by a consortium of AMS SA - Ströer Poland Sp. z o.o. on December 18, 2013, a concession contract with the City of Warsaw for the construction and operation of bus shelters in Warsaw. Parties of the consortium decided that AMS shall accrue all the outlays related to the investment process, the maintenance cost related to bus shelters and future revenue from the utilization of bus shelters. The subject of the concession contract is construction of 1,580 bus shelters in Warsaw. The investment process shall last 3 years and shall commence in 2014. The estimated cost of the bus shelters' construction amounts to ca PLN 80 million. The duration of the contract is nearly 9 years.

INTERNET7 - the highest ever operating result

In 4q 2013 the segment achieved the best operating result ever of PLN 6.8 million, mainly as a result of the decrease in the operating cost (down by 17.7%yoy). The segment improved significantly its operating EBITDA1,4 to PLN 7.9 million and operating EBITDA margin increased by 11.9pp to 26.3%. The revenues of Internet segment7 decreased by 4.2% yoy to PLN 30.0 million due to lower yoy revenues from display advertising (down by 4.3% yoy) and lower sales in vortals (down by 4.9% yoy).

In December 2013, the reach of Gazeta.pl group websites among Polish Internet users (connecting from non-mobile devices) stood at 58.5%, which made Gazeta.pl group the third player among Internet portals.

In 4q 2013, Agora has launched a new local services website - Sir Local. It's a consecutive step in building Agora's position in lead generation.

RADIO - growth of revenues and improvement of operating result

Advertising revenues2,11 of Radio segment10 amounted to PLN 25.2 million (up by 5.4%yoy), its operating result EBIT reached PLN 4.3 million (up by 38.7% yoy) and operating EBITDA1 PLN 4.9 million (up by 28.9% yoy).

Agora's music stations audience share amounted to 3.9% (down by 0.5pp yoy).

At the end of 2013, the segment made the decision to change the music format of Radio Roxy for rock. On January 31, 2014 the radio station changed also its name for Rock Radio.

MAGAZINES - improvement of operating result

The segment decreased its operating loss on EBIT4 and operating EBITDA1,4 level to PLN 1.2 million.

Revenues of the Magazines segment12 reached PLN 10.3 million (down 30.9%), including copy sales revenues of PLN 4.4 million and ad revenues2 of PLN 5.9 million. Agora's magazines share in ad spend in monthlies reached 6.5%.

It should be noticed that the comparability of the segment's data is disturbed by the cost of impairment loss on several press titles which amounted to PLN 12.4 million which burdened the segment's results in 4q 2013. Additionally, the segment's results were impacted by the changes in the segment's portfolio of titles (sales of Poradnik Domowy and purchase of Dom & Wnetrze).

In 4q 2013, in line with the readers' expectations, new versions of: Cztery Katy, Avanti, Logo and Dom & Wnetrze were introduced. The purpose of those changes is to increase the copy sales and ad revenues of the titles.

SPECIAL PROJECTS - growth of revenues and improvement of operating result

In the fourth quarter of 2013, Agora published 23 books and sold 0.2 million books and books with CDs and DVDs. The revenues of the division amounted to PLN 10.6 million (up by 5.0% yoy) and were positively influenced, inter alia, by Publio.pl revenues. The operating result (EBIT4) grew to PLN 1.3 million (up by PLN 3.4 million yoy.

METRO - positive operating result and new revenue generating initiatives

Ad revenues2 of the Free Press division13 of Agora amounted to PLN 6.5 million (down 9.7% yoy) and Metro's revenues from display ad sales decreased by 26.5% yoy. The title's share in the total ad spend in dailies grew to 5.5%. Metro noted a positive result on the level of operating EBITDA1,4 of PLN 1.0 million.

Metro Custom Publishing prepared special winter edition of sports magazine for one of largest shopping chains in Poland. Application of new technologies allowed the use of interactive materials.



The Agora Group in 2013

Financial results in 2013 (yoy comparison):


Thanks to the cost decline in 2013, the Group improved its operating result - operating EBITDA of the Group increased by 26.1% yoy to PLN 104.9 million. EBIT grew to PLN 7.4 million. Net profit amounted to PLN 1.2 million and the net profit attributable to the equity holders of the parent amounted to PLN 0.5 million.

Total net operating cost of the Group decreased by 7.4% yoy and reached PLN 1 066.5 million. This is a positive result of restructuring measures implemented in 2012, including group lay-offs in Agora S.A. Cost savings result mainly from lower staff cost (down by 7.1% yoy). The marketing and promotion expenditure was lower by 19.5% yoy - the largest cuts were observed in the Newspapers and Magazines segments. A 4.5% yoy drop in external services contributed positively to the decrease of the Group's operating cost and resulted mainly from lower yoy production cost in the Magazine segment and lower maintenance cost of outdoor panels in AMS due to matching of panel portfolio to market needs and lower maintenance expenditures.

The revenues of the Agora Group decreased by 5.7% yoy to PLN 1 073.9 million. The main reasons are lower by 14.5% yoy advertising revenues at PLN 544.3 million and copy sales revenues at PLN 134.0 million (down by 12.2% yoy). Due to the drop in admissions, the Group's revenue from ticket sales decreased by 3.7% yoy to PLN 129.1 million. Growing by 23.6% yoy to PLN 266.5 million revenues from other sales positively influenced the level of the Group's revenues. The growth of other sales results mainly from higher by 25.5% yoy sales of printing services to external clients and revenues generated from film distribution and co-production in the amount of PLN 12.7 million.

The Company would like to underline that in 2012 the operating cost of the Group was burdened with the cost of group lay-offs in the amount of PLN 9.5 million. Additionally, in the fourth quarter of 2012, the Group suffered asset impairment losses in the amount of PLN 17.6 million. It influences the comparability of selected entries in the Group's profit and loss account.



Prospects



ADVERTISING MARKET IN 2014




According to the Agora's estimates, based on public data sources, in the fourth quarter of 2013, total advertising spending in Poland amounted to ca PLN 2.1 billion and decreased by almost 2.0% yoy. This is was the lowest drop dynamics in advertising expenditure in Poland in the last two years.

Taking into account positive signals from Polish economy, the Company estimates the growth by 0-2% yoy of advertising expenditure in Poland. The largest beneficiary of the expected growth in advertising expenditure will be TV. The Company is of the opinion that the value of TV advertising shall grow by ca 1-4% yoy. The second medium to benefit most from the uplift in the advertising market shall be internet. The Company estimates that online advertising may grow by ca 5-8%. The value of radio advertising may grow by ca 0-3% yoy and cinema advertising by ca 2-5% yoy. The value of outdoor advertising may range from possible drop of 1% yoy to growth of 2% yoy. According to the Company's estimates, advertisers shall further limit their budgets dedicated to press. The value of advertising expenditure in dailies will decrease by ca 20-24% and by ca 9-13% yoy.



COPY SALES IN 2014

In 2014, negative trends relating to copy sales of dailies and magazines shall continue. The Company believes that the copy price increase of Gazeta Wyborcza, introduced in the beginning of 2014 partially offset the decline in revenue from copy sales of the daily. Simultaneously, the Company develops the sales of its digital content. In the beginning of 2014 it implemented metered paywall and digital subscription offer. In the long term perspective these actions should result in the growth of digital subscription sales.

CINEMA TICKET SALES IN 2014

The most important factor influencing the level of admissions in Poland is film repertoire in a given year. Having analysed available data the Company is of the opinion that the number of cinema tickets sold in Poland in 2014 should grow yoy.



OPERATING COST IN 2014

In 2014, the Group plans to introduce development projects in selected business segments which may influence the level of the Group's operating cost. The segments with largest projects include Press, Internet and Cinema segments.

The digital transformation of the business model of the Group's print media operations, including implementation of metered paywall and development of digital subscription offer may result in the growth of employment and staff cost. Due to expected uptake in advertising market the Group may strengthen the sales teams in order to maximize revenues.



The cost of external services shall be dependent on the cost of film copies for the cinema business related directly to ticket sales revenues, EUR/PLN exchange rate and cost of brokerage services. Additionally, this cost position may increase due to the openings of two new cinemas in the first half of 2014 and execution of other development projects.



NOTICE: The above financial data comes from Management Discussion and Analysis of the Group's results for 4q 2013. All data presented herein represent the period of October - December and January - December 2013 while comparisons refer to the same period of 2012.

Notes:

1 excluding non-cash cost of share-based payment.

2 the data do not include revenues from 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.

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

4 EBIT, EBITDA, operating EBITDA of Newspapers, Internet and Magazines 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 supporting divisions), which are included in matching positions.

5 the Cinema segment consists of the pro-forma consolidated data of companies Helios S.A. and Next Film Sp. z o.o. (since September 14, 2012) constituting Helios group.

the Outdoor segment consists of the pro-forma consolidated data of companies constituting the AMS group: AMS S.A. and Adpol Sp. z o.o.

7 the Internet segment includes the pro-forma consolidated financials of Agora's Internet Department, LLC Agora Ukraine, 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 the data do not include inter-company sales between Agora's Internet Department, LLC Agora Ukraine, Trader.com (Polska) Sp. z o.o., AdTaily Sp. z o.o.,Sport4People Sp. z o.o.and Sir Local Sp. z o.o.

9 the data includes, 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).

10 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, being parts of the Agora Group. This includes: 20 Golden Oldies local radio stations (Zlote Przeboje), 7 local radio stations under Roxy FM brand, one CHR format (Contemporary Hit Radio) local station and a super-regional news Radio TOK FM broadcasting in 16 largest metropolitan areas.

11 ad revenues include revenues from brokerage services of the proprietary and the third-party air time.

12 The Magazines segment presents the financials of Agora's Magazines.

13 the data refer to total revenues of the Free Press division, including revenues from Metro's display advertising, classifieds and inserts as well as from mTarget services and Metro's special activities. Sources:

Advertising market: The data refer to advertising expenditures in six media (print, radio, TV, outdoor, Internet, cinema). Agora has corrected the TV and Internet advertising market figures for 4q 2012 and the data relating to TV ad market in 3q 2013. 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. Outdoor advertising figures are based on Izba Gospodarcza Reklamy Zewnetrznej (IGRZ) estimates.

Copy sales of dailies: the data on the number of copies sold of daily newspapers are derived from the National Circulation Audit Office (ZKDP). The term "copy sales" used in this press release is consistent with the sales declarations of publishers to ZKDP. Readership of dailies: the data based on PBC General, research carried out by MillwardBrown on a random, nationwide sample of Poles over 15 years of age. The CCS index (weekly readership index) was used, which indicates percentage of respondents reading at least one edition of the title within 7 days of the week. Size of the sample: nationwide PBC General for January-December 2013: N = 42,109 October - December 2013 N =10,527; Warsaw (Masovian district and cities of over 500 thousand inhabitants): January-December 2013: N =1,752, October - December 2013: N = 440.

Outdoor: the data based on the report on sales of outdoor prepared by IGRZ, which include: AMS S.A., Business Consulting, CAM Media, Cityboard Media, Clear Channel Poland, Defi Poland, Gigaboard Polska, JETline, Liftboards, Mini Media, Ströer Out of home and Warexpo. The report for the outdoor market (defined by IGRZ as 'the out-of-home market'), is prepared on the basis of the financials provided by member companies of IGRZ and includes immovable (traditional), 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. From 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. From April 2013 changed the method for calculating the rate of users (real users) - 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 (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+, October to December (sample for 2012: 21,048; sample for 2013: 21,069.); from January to December (sample for 2012: 84,219; sample for 2013: 84,194).

Advertising in monthlies: rate card data on magazines obtained from Kantar Media monitoring; commercial brand advertising, excluding specialized monthlies; accounted for 116 monthlies for the period of January-December 2013.


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