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September 6, 2018 / 16:35

26/2018 Termination of long-term permanent cooperation agreements with RUCH S.A.

Regulatory filing

The Management Board of Agora S.A. with its registered office in Warsaw ("Company", "Agora") informs that on September 6, 2018, the Company decided to withdraw with immediate effect from long-term, permanent press distribution agreements concluded between the Company and RUCH S.A: (i) contract no. 636/853-E of December 31, 2007 (regarding the distribution of "Gazeta Wyborcza" in the form of copy sales), (ii) contract no. 636/853-PT of December 31, 2007 (regarding the distribution of "Gazeta Wyborcza" in the form of a file subscription), (iii) contract no. 636/853-P of December 31, 2007 (regarding the distribution of "Gazeta Wyborcza" in the form of subscriptions), (iv) contract no. 636/8403/E of August 1, 2003 (regarding the distribution of magazines in the form of copy sales). At the same time, the Company expressed to RUCH S.A. its readiness for further cooperation based on current bilateral arrangements.

The Management Board of the Company decided to take this step in connection with the debt problem of RUCH S.A. towards the Company. The information on the application for the declaration of the bankruptcy of RUCH S.A. submitted by creditors of RUCH S.A., the application for the initiation of rehabilitation proceedings in relation to RUCH S.A., as well as the application submitted by RUCH S.A. for the opening of accelerated arrangement proceedings indicate that this situation can not be expected to improve in the rational time perspective.

In the period from January to the end of August 2018, an average of less then 30% of the circulation of the printed press was sold by RUCH S.A. accordingly to the contracts that were terminated today. Simultaneously, for a long time the Company has been undertaking system activities aimed at attracting new press distribution channels and limiting the volume of press printing. For this reason the impact of the termination of the above agreements with RUCH S.A. on the revenues and result of the Company in subsequent periods should not be significant, but is currently difficult to estimate.

On July 13, 2018, the Company decided to write off the overdue receivables of RUCH SA, which are at risk of being uncollectible, as announced by the Company in its regulatory filing no. 24/2018 dated July 13, 2018. The final value of this write-off in the first half of 2018 amounted to PLN 16.3 million. At the same time, it may not be fully excluded that another write-off will be necessary with respect to remaining receivables of RUCH S.A. due to the likelihood of their irrecoverability. However, according to the Company’s estimates, these amounts should not be high. Due to uncertainty regarding future events, these estimates may represent some margin of error.

Simultaneously, the Company undertakes further actions to recover its due payments, as well as ensure the optimal level of distribution of its press titles and the transformation of the business model of the Company's press operations.

Legal basis: Article 17, paragraph 1 of Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Market Abuse Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission directive 2003/124/EC, 2003/125/EC and 2004/72/EC.

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26/2018 Termination of long-term permanent cooperation agreements with RUCH S.A.

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