3Q 2012 - Agora SA
AGORA GROUP
Report for
3Q 2012
November 9, 2012
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Management Discussion and Analysis for the third quarter of 2012
TABLE OF CONTENTS translation only
MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) OF THE GROUP’S RESULTS FOR THE THIRD QUARTER OF 2012. 4
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Management Discussion and Analysis for the third quarter of 2012 translation only
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Management Discussion and Analysis for the third quarter of 2012 translation only
AGORA GROUP
MANAGEMENT DISCUSSION AND ANALYSIS
(MD&A) OF THE GROUP’S RESULTS
FOR THE THIRD QUARTER OF 2012
REVENUE PLN 829.0 MILLION
NET LOSS PLN 8.7 MILLION
OPERATING EBITDA PLN 61.6 MILLION
OPERATING CASH FLOW PLN 59.4 MILLION
Unless indicated otherwise, all data presented herein represent the period of January - September 2012, while comparisons refer to the same period of 2011. All data sources are presented in part IV of this MD&A.
I. IMPORTANT EVENTS AND FACTORS WHICH INFLUENCE THE FINANCIALS OF THE
GROUP
According to the Agora Group (‘the Group’) estimates, in the period from January to September of 2012, advertising spending for all media in Poland amounted to ca PLN 5.3 billion and decreased by over 4.5% yoy. At that time, advertisers increased their advertising expenditure in Internet (up by almost 10% yoy), and in cinemas
(up by 11.5% yoy). Advertisers decreased their spending in television by 5.5% yoy. Advertising expenditure in outdoor decreased by over 6% yoy. Advertising budgets in press decreased by almost 14.5% yoy. Advertisers spent almost 19.5% less yoy in dailies and 10.5% less yoy in magazines. The value of advertising market in
Poland in the discussed period of time and especially in the second quarter of 2012 was significantly influenced by European Football Championship taking place in Poland and in Ukraine, which resulted in limited scale of advertising campaigns on outdoor panels and in radio stations. Moreover, in the third quarter of 2012, the value of advertising expenditure in Poland decreased by over 6.5% yoy.
The Group’s revenues, from January to September of 2012, decreased by 7.8% yoy and amounted to PLN 829.0 million. The Group’s ticket sales amounted to PLN 95.7 million and decreased by 8.2% yoy largely due to a 23.5% yoy drop in ticket sales revenues in the second quarter of 2012, as a result of lower number of tickets sold at that time due to European Footbal Championship taking place in Poland at that time. The Group’s advertising revenues, during the first three quarters of 2012, decreased by 9.2% yoy to PLN 467.1 million. The revenues from copy sales stood at PLN 115.7 million (down by 18.9% yoy), mainly as a result of lower copy sales of Gazeta
Wyborcza and books published by Special Projects division. The revenues from other sales increased by 9.7% yoy to PLN 150.5 million, mainly as a result of higher sales of printing services for external clients.
In the period from January to September of 2012, Gazeta’s advertising sales reached PLN 153.5 million (down by
19.0% yoy). Gazeta’s copy sales revenues decreased by 17.0% yoy to PLN 80.8 million. After nine months of
2012, Gazeta sold 258.8 thousand copies on average and its share in the advertising expenditure in dailies amounted to over 37%. In the third quarter of 2012, it amounted to over 36% and remained flat yoy [4].
In the period from January to September of 2012, the advertising sales in the Free Press division amounted to
PLN 20.1 million and decreased by 8.2% yoy, mainly as a result of 21.6% yoy decrease in the third quarter of
2012. The share of Agora’s free newspaper in dailies ad spend after the first three quarters of 2012 increased by over 0.5 pp and reached almost 5% [3]. During the discussed period of time, the division achieved a positive result (EBIT) of PLN 1.8 million, which was lower than in the same period of 2011 [1]. This is a consequence of good results achieved by the division in the first quarter of 2012 and cost savings measures implemented in the second quarter of 2012.
In the first three quarters of 2012, revenues of the Internet segment amounted to PLN 82.7 million and increased by 1.6% yoy, mainly due to their growth by 8.5% yoy in the second quarter of 2012. In the period
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Management Discussion and Analysis for the third quarter of 2012 translation only from January to September of 2012, due to the revenue growth and cost saving measures, segment improved its operating result EBIT to PLN 4.3 million [1], despite the cost related to group lay-offs which burdened the segment’s results in the third quarter of 2012 with the amount of PLN 1.2 million. If the effect of lay-off cost was excluded, the operating result of the segment would be even better and it would amount to PLN 5.5 million [1].
In September 2012, the reach of online services from Gazeta.pl group amounted to 58.7% and made it the third most popular Internet portal. The number of its users reached 11.4 million people [6].
In the period from January to September of 2012, the revenues of the cinema segment decreased by 0.4% yoy and amounted to PLN 143.1 million. In the discussed period of time, the segment’s results were negatively affected by European Football Championship due to which lower number of tickets to the cinemas were sold in the second quarter of 2012. The number of tickets sold in Helios cinemas after the first three quarters of 2012 decreased by nearly 8.1% yoy to 5.4 million tickets, which resulted in lower revenues from ticket sales and from food and beverages sales in bars operated in cinemas. Segment noted an operating result EBIT of PLN 1.2 million which was lower yoy. In the third quarter of 2012, due to the dynamic growth of revenues, the segment improved its operating results EBIT to PLN 3.6 million and operating EBITDA to PLN 8.7 million.
After nine months of 2012, revenues of the AMS group decreased by 8.4% yoy to PLN 115.4 million, mainly as a result of 20.2% yoy decrease noted in the second quarter of 2012 due to the European Football Championship organized in Poland and in Ukraine. The segment noted an operating loss on the EBIT level of PLN 0.2 million. In the period of January-September 2012, AMS group’s share in outdoor advertising market decreased slightly
(down by 0.5pp) to almost 29.0% and it reached over 31.5% in the third quarter of 2012 [8]. In the period of
January – September 2012, the value of outdoor advertising market in Poland decreased by over 6% yoy [8].
In the period from January to September of 2012, the Radio segment revenues grew by 2.4% yoy to PLN 63.5 million. The segment’s operating cost increased by 6.7% yoy, mainly due to higher outlays for air time purchase in the third party radio stations. The segment noted an operating loss (EBIT) of PLN 0.3 million, mainly as a result of the operating loss in the amount of PLN 0.9 million in the third quarter of 2012 [1].
In the first three quarters of 2012, revenues of the magazine business reached PLN 50.1 million and dropped by
11.2% yoy. The segment achieved a positive result at the level of EBIT and operating EBITDA of PLN 2.7 million and PLN 2.9 million [1].
After the first three quarters of 2012, total net operating cost of the Group decreased by 1.8% yoy and reached
PLN 839.0 million, despite the cost of group lay-offs in Agora S.A., which burdened the Group’s results with the amount of PLN 9.2 million. This cost decline results mainly from 26.8% yoy drop in marketing and promotion expenditure and lower yoy non-cash expense relating to share-based payments. Cost reductions were also observed in the cost of raw materials, energy and consumables as well as in the cost of amortization and depreciation, mainly due to the drops in these cost categories in the second quarter of 2012.
In the period from January to September of 2012, operating EBITDA of the Group decreased yoy to PLN 61.6 million. As a result of operating loss booked in the third quarter of 2012, in the amount of PLN 10.1 million, the
Group noted an operating loss (EBIT) of PLN 10.0 and net loss of PLN 8.7 million after the first three quarters of
2012. At that time, the operating loss attributable to the equity holders of the parent amounted to PLN 8.9 million. In the third quarter of 2012, the net loss of the Group amounted to PLN 8.3 million and the Group’s net profit attributable to the equity holders of the parent amounted to PLN 8.7 million. These results were also affected by, inter alia, cost related to group lay-offs in Agora S.A. in the amount of PLN 9.2 million, which burdened the Group’s results in the third quarter of 2012.
Excluding the cost of the group lay-offs, which burdened the Group’s result in the third quarter of 2012 with the amount of PLN 9.2 million, operating EBITDA of the Group, after the first three quarters of 2012, would amount to PLN 70.8 million and the operating loss (EBIT) would be at the level of PLN 0.8 million. The Group would note a net loss of PLN 1.2 million after the first three quarters of 2012 and of PLN 0.8 million in the third quarter of
2012.
At the end of September 2012, the Group’s cash and short-term monetary assets amounted to PLN 219.1 million, out of which PLN 96.6 million in cash and cash equivalents and PLN 122.5 million in short-term securities.
At the end of September 2012, the Group’s debt amounted to PLN 194.6 million (including: bank credits, loans and finance lease liabilities in Helios group amounting to PLN 107.7 million).
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Management Discussion and Analysis for the third quarter of 2012 translation only
II. EXTERNAL AND INTERNAL FACTORS IMPORTANT FOR THE DEVELOPMENT
OF THE GROUP
1. EXTERNAL FACTORS
1.1 Advertising market [3]
According to the Agora’s estimates, based on public data sources, in the third quarter of 2012, total advertising spending in Poland amounted to ca PLN 1.55 billion and decreased by over 6.5% yoy.
At that time advertisers limited their expenditure in all media except for Internet and cinema.
The largest drops of advertising expenditure were visible in dailies (down by over 21.5% yoy), whereas in magazines these drops were on the level of almost 14% yoy.
Advertisers limited their advertising budgets in outdoor by over 17.5% yoy in the third quarter of 2012. It has been the largest reduction of advertising budgets observed in this medium this year.
In radio, advertisers limited their expenditure by over 10% yoy and it has been also the worst quarter for radio advertising expenditure this year.
Moreover, advertisers cut their advertising expenditure in TV by over 6% yoy.
Advertising expenditure in Internet grew by almost 11% yoy, mainly as a result of growing expenditure in search engines. In the third quarter of 2012, advertisers increased their expenditure in cinemas by over 6% yoy.
As a result of limited advertising expenditure in all three quarters of 2012, the value of total advertising expenditure in Poland in the period from January to September 2012 decreased by over 4.5% yoy.
The only segments that noted a growth of advertising expenditure in the first three quarters of 2012 in Poland were
Internet and cinema. Advertising expenditure in cinema grew by 11.5% yoy and in Internet by almost 10% yoy. The third quarter of 2012 brought about further cuts in advertising outlays in press and in TV. Due to these trends, in the period of January – September 2012, the value of advertising budgets in dailies decreased by almost 19.5% yoy, in magazines by 10.5% yoy and in TV by nearly 5.5% yoy.
A consecutive quarter of limited advertising expenditure in outdoor advertising resulted in over 6% yoy drop in the value of outdoor advertising in Poland after the first three quarters of 2012.
As a result of deepening reductions of advertising expenditure in radio stations the value of total radio advertising expenditure decreased in the first three quarters of 2012 by over 5.5% yoy.
The Company would like to stress that one should bear in mind that these advertising market estimations may represent some margin of error due to significant discount pressure on the market and lack of reliable data on average market discount rates. Once the Company has a more reliable market data in consecutive quarters, it may correct the ad spending estimations in particular media in subsequent reports.
2. INTERNAL FACTORS
2.1. Revenue
In the third quarter of 2012, the Group recorded a 6.7% yoy decrease of sales revenues to PLN 264.6 million. Cinema segment was the only one to record revenue growth.
At that time, the Group’s advertising sales decreased by 12.6% yoy and amounted to PLN 142.0 million. This drop results mainly from lower, by PLN 11.9 million, yoy advertising revenues in Gazeta Wyborcza. Lower advertising revenues were also observed in Radio, Magazine and Outdoor segments.
In the third quarter of 2012, the segments that noted a growth in advertising revenue included Internet and Cinema.
Advertising revenues in Internet segment grew by 7.8% yoy. In the Cinema segment the value of advertising sales increased to PLN 3.7 million.
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Management Discussion and Analysis for the third quarter of 2012 translation only
In the third quarter of 2012, the Group’s total revenues from the copy sales amounted to PLN 34.7 million and went down by 18.0% yoy. The main reason for this decrease are lower revenues from the copy sales of Gazeta Wyborcza
(down by 20.3% yoy) resulting from the lower number of newspaper copies sold and lower sales of more expensive editions (so-called dual pricing offer). In the Magazine segment, the revenues from the copies sold decreased by
6.8% yoy to PLN 6.9 million as a result of lower number of copies sold and cover price decrease in selected magazines.
In the third quarter of 2012, the revenues from tickets sold in the cinemas composing the Helios network increased by 5.2% yoy and amounted to PLN 36.6 million. In the discussed period of time, people bought nearly 2.1 million cinema tickets in the Helios network, i.e. 12.5% more than in the third quarter of 2011.
Other revenues amounted to PLN 51.3 million and increased by 16.3% yoy. The main contributor were higher by
21.1% yoy revenues from the sales of printing services to external clients and higher sales of food and beverages in the cinemas from Helios network.
After the first three quarters of 2012, the Group’s total revenues decreased by 7.8% yoy to PLN 829.0 million, mainly as a result of 11.3% yoy drop noted in the second quarter of 2012.
In the period of January – September 2012, advertising sales of the Group decreased by 9.2% yoy and amounted to
PLN 467.1 million with the largest drops observed in Newspapers and Outdoor segments.
At the same time, advertising revenue grew in Internet segment by 12.0% yoy to PLN 64.3 million, in Radio segment by 1.5% yoy to PLN 61.9 million, mainly due to higher revenues from brokerage services in the third party radio stations and in Cinema segment due to the cooperation with other business segments in the Group.
In the period of January – September 2012, the Group’s total revenues from the copy sales decreased by 18.9% yoy to PLN 115.7 million. The main reasons for this decrease include lower copy sales of press titles, smaller number of more expensive editions (dual pricing offer), lower number of book collections published by Special Projects division and price decrease of selected press titles. In the discussed period of time, the revenues from the copy sales in
Gazeta Wyborcza decreased by 17.0% yoy and in the Magazine segment by 10.7% yoy.
In the period of January - September 2012, the revenues from tickets sold in the cinemas composing the Helios network amounted to PLN 95.7 million and decreased by 8.2% yoy. In the discussed period of time people bought
5.4 million cinema tickets in the Helios network, i.e. 8.1% yoy less than at the same time of 2011.
In the first three quarters of 2012, other revenues increased by 9.7% yoy to PLN 150.5 million, mainly as a result of growth observed in the first and third quarter of 2012 related to the increase in the sales of printing services to external clients. Revenues from the sales of book collections published by Special Projects division and from the sales of food and beverages in the cinemas from Helios network were lower yoy.
2.2. Operating cost
Total net operating cost of the Group, in the first three quarters of 2012, reached PLN 839.0 million and decreased by 1.8% yoy, despite the cost related to group lay-offs, which burdened the Group’s results in the third quarter of
2012 with the amount of PLN 9.2 million. This was possible due to its methodical decrease in each of previously reported quarters of 2012. In the third quarter of 2012, after excluding the cost related to group lay-offs, the
Group’s net operating cost would decrease by 3.7% yoy and would amount to PLN 265.5 million.
The Group’s staff cost (excluding non-cash cost of share-based payments and cost related to group lay-offs in Agora
S.A. which burdened the Group’s results in the third quarter of 2012 with the amount of PLN 9.2 million) increased by 0.6% yoy in the first three quarters of 2012. In the third quarter of 2012, the staff cost decreased by 2.1% yoy.
The largest drop of staff cost was observed in the Newspapers segment.
The Group’s headcount, at the end of September 2012, was 3,347 employees and was lower by 145 FTEs than at the end of September 2011.
Total non – cash expense relating to share - based payments (described in note 5A to the condensed interim consolidated financial statements of the Agora Group) charged to the Group’s profit and loss account after the first three quarters of 2012 amounted to PLN 1.8 million.
The Group offers its employees other incentive plans (for example: cash motivation plans, incentive plans in sales departments etc.), which cost is charged to the Group’s staff cost. Since the fourth quarter of 2010, the Group’s operating result is burdened quarterly by the cost of Three-Year-Long Incentive Plan for the Management Board
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Management Discussion and Analysis for the third quarter of 2012 translation only members and higher managerial personnel (described in note 5B to the condensed interim consolidated financial statements of the Agora Group). In the period January - September of 2012, this cost amounted to PLN 0.7 million and in the third quarter of 2012 to PLN 0.2 million.
The cost of external services in the first three quarters of 2012 increased by 1.5% yoy and amounted to PLN 260.1 million. This growth results, inter alia, from the higher cost of purchased aerial time in the third party radio stations and higher cost of sales of brokerage services. Higher cost of space rental for outdoor panels and cinema space rentals also contributed to the growth of this cost position. In the third quarter of 2012, this cost position increased by 1.8% yoy mainly due to higher rental cost for outdoor panels and cost of film copies purchase. In the period
January - September 2012, the cost of film copies purchase was lower due to smaller number of film premiers in the cinemas, mainly in the second quarter of 2012, due to the European Football Championship in Poland.
In the first three quarters of 2012, cost of raw materials, energy and consumables decreased by 2.5% yoy to PLN
179.5 million, as a result of 8.2% yoy decrease in the second quarter and 4.0% yoy decrease in the third quarter of
2012. The drop in this cost position in the second and in the third quarter of 2012 stems mainly from the decrease in the cost of consumables due to lower production cost of book series in Special Projects division as a result of lower number of projects yoy.
In the first three quarters of 2012, promotion and marketing expense was PLN 59.8 million and decreased by 26.8% yoy. In the third quarter of 2012, the Group’s advertising expenditure decreased by 35.4% yoy to PLN 17.3 million.
The largest decrease in promotion and marketing expense took place in Newspapers’ segment in each of - so far - reported quarters of 2012. In the period of January – September 2012, the increase of promotion and marketing expenditure was observed in Cinema, Magazines and Outdoor segments.
3. PROSPECTS
3.1. Advertising market
Taking into account deteriorating conditions in macroeconomic and advertising environments, the Company decided to verify again its estimates of the advertising market in Poland in 2012. Having conducted a thourough analysis of the Polish advertising market after the first three quarters of 2012 and till the date of publication of this report, the
Company estimates that the value of the Polish advertising market may decrease by 3-6% yoy in 2012.
One of the reasons to decrease the estimates of advertising expenditure in Poland in 2012 was, inter alia, a large decrease, by over 17.5% yoy, in outdoor advertising in the third quarter of 2012. This also forced the Company to review its estimates for total outdoor advertising expenditure in 2012. Currently, the Company estimates that the value of outdoor advertising in Poland in 2012 shall decrease by 4-7% yoy.
Other medium that noted, larger than estimated by the Company, drop of advertising expenditure was radio. Due to over 10% yoy decrease in radio advertising expenditure in the third quarter of 2012, the Company verified its estimates of advertising expenditure in this medium in 2012. Currently, the Company is of the opinion that the value of radio advertising shall decrease by 5-8% yoy.
Moreover, based on the available data, the Company decided to verify its estimates of TV advertising. According to the Company’s opinion the value of TV advertising shall decrease by ca. 5-8% yoy.
Cinema advertising performed better than expected. After the first three quarters of 2012, the value of cinema advertising grew by almost 11.5% yoy. As a result, the Company increased its estimates of cinema advertising expenditure in 2012 and right now according to the Company’s estimates, advertisers will spend 3-6% yoy more on the cinema advertising.
According to the Company’s estimates advertisers shall further reduce their advertising expenditure in Press. The value of advertising expenditure in dailies shall decrease by ca 17-20% yoy. In magazines, the reduction of advertising budgets may be deeper than previously estimated and reach ca 9-12% yoy.
In case of Internet, the Company decided to preserve its estimates of advertising expenditure growth in 2012 at the level of 8-11%.
The Company would like to stress that one should bear in mind that these advertising market estimations may represent some margin of error due to significant discount pressure on the market, lack of reliable data on the
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Management Discussion and Analysis for the third quarter of 2012 translation only average market discount rate and ongoing change in the way of media consumption and short span of time in planning advertising campaigns.
3.2. Operating cost
In the last quarter of 2012, the Group plans to further decrease its operating cost base, inter alia, through group layoffs executed in Agora S.A. and strict cost control policy. Due to the worsening situation on the advertising market, the Group manages its operating cost base in a flexible manner in order to be able to meet the market conditions in its business segments.
3.2.1 Cost of external services
The cost of external services shall be dependent on the cost of film copies for the cinema business, EUR/PLN exchange rate and cost of brokerage services. Additionally, this cost position may increase due to the planned openings of new cinemas in the fourth quarter of 2012.
3.2.2 Staff cost
Taking into account weakening condition of the advertising market and dynamic changes in media environment, the
Group adapts its scale of operation to market conditions in particular business segments. Since September 10th,
2012, Agora S.A. has been in the process of group lay-offs, which will affect up to 250 people and will last till January
31st, 2013. Due to this process, the cost of PLN 9.2 million was charged to the Company’s and the Group’s profit and loss account in the third quarter of 2012.
It should be also remembered that the staff cost can be influenced by the execution of development projects within the Group (including openings of new cinemas) and provisions for motivation plans (described in note 5 to the condensed interim consolidated financial statements of the Agora Group).
3.2.3 Non – cash expense relating to share - based payments
Estimated total cost related to share – based incentive plans to be charged to the Group’s 2012 profit and loss account shall amount to PLN 2.6 million. It should be noted, however, that this amount includes estimated cost of execution of incentive plan but the Company does not in fact know the number of certificates to be purchased by employees pursuant to the future plan, or the stock price of Agora’s shares at that accounting period. Hence, for purposes of providing an estimate, the Company assumed that these values will be equivalent to those on which the fourth quarter 2011 calculations were based. The cost of incentive plans are reflected in the Group’s P&L according to the accounting rules referred to in note 5A to the condensed interim consolidated financial statements in this report. Pursuant to these rules, share‐based compensation cost will be charged unevenly throughout the year. In the first half of 2012, the Group’s P&L was affected by PLN 1.8 million of outstanding non‐cash incentive compensation.
The cost of new incentive plan of PLN 0.8 million will be reflected in the Group’s P&L in the fourth quarter of 2012.
3.2.4 Promotion and marketing cost
Due to the market situation and limited number of promotional campaigns within the Agora Group’s segments, the promotion and marketing cost decreased from January to September of 2012 by 26.8% yoy and in the third quarter of 2012 by 35.4% yoy. The Group does not intend to intensify its promotional and marketing activities in the last quarter of 2012. However, it should be remembered that the level of promotion and marketing expense depends on the dynamics of particular media development, as well as the number of projects (including book series) and the market activities and projects of the Group’s competitors.
3.2.5 Cost of raw materials and energy
In the first three quarters of 2012, the cost of materials and energy increased, mainly as a result of growth noted in the first quarter of 2012. This cost category was influenced, inter alia, by the increased volume of production for external clients and growing prices of energy. In the third quarter of 2012 this cost decreased. The level of this cost in the fourth quarter of 2012 will be dependent mainly on the price of newsprint, the volume of production and
EUR/PLN exchange rate.
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Management Discussion and Analysis for the third quarter of 2012
3.3. The Group’s main objectives in 2012
translation only
Due to the worsening condition of the advertising market, in the fourth quarter of 2012, the Group shall concentrate its efforts on decreasing the operating cost base in order to adapt the Group’s mode of operation and structure to the market situation and changes taking place in media.
Additionally, the Group activities shall focus on continuation of its main objectives for 2012 including, inter alia:
(i) intensification of actions strengthening the synergies among different segments from the Group’s portfolio as well as actions taking advantage of the Internet to develop new forms and scope of activities in the so – called traditional media segments;
(ii) intense growth of both Internet segment and widely understood Internet in the Agora Group;
(iii) developing in the cinema business by opening new cinemas;
(iv) increasing the scale of the Group’s operations, also, through further acquisitions strengthening the Group’s position and/or diversifying the sources of the Group’s revenues.
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Management Discussion and Analysis for the third quarter of 2012
III. FINANCIAL RESULTS
translation only
1. THE AGORA GROUP
The consolidated financial statements of the Agora Group for the third quarter of 2012 include: Agora S.A., Agora
Poligrafia Sp. z o.o., AMS S.A. group (“AMS group”), Agora TC Sp. z o.o., Trader.com (Polska) Sp. z o.o., AdTaily Sp. z o.o., Sport4People Sp. z o.o., 4 subsidiaries of the radio business, Helios S.A. and Next Film Sp. z o.o. operating in the cinema business, the Ukrainian company LLC Agora Ukraine, jointly controlled entity Business Ad Network Sp. z o.o. as well as two associated companies A2 Multimedia (till January 31, 2012) and GoldenLine Sp. z o.o.
A detailed list of companies of the Agora Group is presented in the note 12 and selected financial data together with translation into EURO are presented in notes 18 and 20 to the financial statements in this report.
2. PROFIT AND LOSS ACCOUNT OF THE AGORA GROUP
Tab. 1 in PLN million 3Q 2012 3Q 2011
% change yoy
1-3Q
2012
1-3Q
2011
% change yoy
Total sales (1)
Advertising revenue
Copy sales
Ticket sales
Other
Operating cost net, including:
Raw materials, energy and consumables
D&A
External services
Staff cost (2)
Non-cash expense relating to share-based payments
264.6
142.0
34.7
36.6
(55.2)
(23.1)
(86.0)
(75.0)
-
283.6
(57.5)
-
(6.7%)
162.4 (12.6%)
42.3
34.8
51.3 44.1
(274.7) (275.7)
(22.4)
(84.5)
(76.6)
(18.0%)
5.2%
16.3%
(0.4%)
(4.0%)
829.0
467.1
115.7
95.7
150.5
(839.0)
(179.5)
3.1% (69.8)
1.8% (260.1)
(2.1%) (234.2)
- (1.8)
Promotion and marketing
Cost of group lay-offs
Operating result - EBIT
Finance cost, net, incl.:
Revenue from short-term investment
Interest on bank loans, borrowings, finance lease and similar items
Foreign exchange (losses) / gains
Share of results of equity accounted investees
Profit/(loss) before income tax
Income tax
Net profit/(loss) for the period
Attributable to:
Equity holders of the parent
Non - controlling interest
(17.3)
(9.2)
(10.1)
0.5
3.3
(3.2)
0.5
(0.1)
(9.7)
1.4
(8.3)
(8.7)
0.3
(26.8) (35.4%)
- -
7.9
(0.3)
3.2
-
-
3.1%
(3.9) (17.9%)
- -
(0.1) -
7.5 -
(2.0)
5.5
-
-
-
5.4
0.1 200.0%
(59.8)
(9.2)
(10.0)
1.3
9.7
(9.8)
0.7
(0.2)
(8.9)
0.2
(8.7)
(8.9)
0.2
898.7
514.5
(7.8%)
(9.2%)
142.7 (18.9%)
104.3 (8.2%)
137.2
(854.2)
9.7%
(1.8%)
(184.1)
(70.3)
(256.2)
(232.7)
(2.5%)
(0.7%)
1.5%
0.6%
(8.8)
(81.7)
-
(79.5%)
(26.8%)
-
44.5
(0.5)
10.8 (10.2%)
-
-
(11.6) (15.5%)
(0.3) -
(0.1) 100.0%
43.9 -
(9.8)
34.1
33.2
0.9 (77.8%)
-
-
-
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Management Discussion and Analysis for the third quarter of 2012 translation only in PLN million 3Q 2012 3Q 2011
% change yoy
1-3Q
2012
1-3Q
2011
% change yoy
EBIT margin (EBIT/Sales)
EBITDA
EBITDA margin (EBITDA/Sales)
Operating EBITDA (3)
Operating EBITDA margin (Operating
EBITDA/Sales)
EBIT excluding cost of group lay-offs
EBIT margin excluding group lay-offs
EBITDA excluding group lay-offs
(3.8%)
13.0
4.9%
13.0
4.9%
(0.9)
(0.3%)
22.2
2.8% (6.6pp) (1.21%)
30.3 (57.1%) 59.8
10.7% (5.8pp)
30.3 (57.1%)
7.2%
61.6
10.7% (5.8pp) 7.4%
7.9
2.8% (3.1pp)
-
30.3 (26.7%)
(0.8)
(0.1%)
69.0
5.0% (6.2pp)
114.8 (47.9%)
12.8% (5.6pp)
123.6 (50.2%)
13.8% (6.4pp)
44.5
5.0% (5.1pp)
114.8
-
(39.9%)
EBITDA margin excluding group lay-offs 8.4% 10.7% (2.3pp) 8.3% 12.8% (4.5pp)
Operating EBITDA (3) excluding group layoffs
Operating EBITDA margin (3) excluding group lay-offs
22.2
8.4%
30.3 (26.7%)
10.7% (2.3pp)
70.8
8.5%
123.6 (42.7%)
13.8% (5.3pp)
Net profit / (loss) for the period excluding group lay-offs (0.8) 5.5 - (1.2) 34.1
(1) particular sales positions include sales of Special Projects (with book collections), described in details in point IV.A in this report;
(2) excluding non-cash cost of share-based payments and cost related to group lay-offs in Agora S.A.;
(3) excluding non-cash cost of share-based payments.
-
[ w w w . a g o r a . p l ] Page 12
Management Discussion and Analysis for the third quarter of 2012 translation only
2.1. Financial results presented according to major segments of the Agora Group for the first three quarters of 2012
Major products and services, as well as operating revenue and cost of the Agora Group are presented in detail in part IV of this MD&A (“Operating review – major segments of the Agora Group”).
Tab. 2 in PLN million
News- papers
Internet Cinema Outdoor Radio Magazines
Matching positions
(3)
Total
(consoli- dated)
1-3Q 2012
Total sales (4)
% share
Operating cost net
(4)
EBIT
Finance cost, net
Share of results of equity accounted investees
Income tax
Net loss
Attributable to:
Equity holders of the parent
Non-controlling interest
EBITDA
Operating EBITDA (1)
388.7
46.9%
(342.9)
45.8
82.7
10.0%
(78.4)
4.3
144.0
17.4%
(142.2)
1.8
115.4
13.9%
(115.6)
(0.2)
63.5
7.7%
(63.8)
(0.3)
50.1
6.0%
(47.4)
2.7
(15.4)
(1.9%)
(48.7)
(64.1)
829.0
100.0%
(839.0)
(10.0)
1.3
(0.2)
0.2
(8.7)
(8.9)
66.7
67.5
8.5
8.6
16.2
16.2
13.4
13.5
1.7
1.8
2.8
2.9
(49.5)
(48.9)
0.2
59.8
61.6
CAPEX (2) (14.1) (5.0) (40.4) (7.3) (3.2) (0.2) (3.3) (73.5)
(1) excluding non-cash cost of share-based payments;
(2) based on invoices booked in the period; in the Cinema segment includes also PLN 11.9 million of non-current assets in lease;
(3) matching positions show data not included in particular segments, inter alia: other revenues and costs of Agora’s support divisions and the Management Board of Agora S.A., Agora TC Sp. z o.o., intercompany eliminations and other matching adjustments which reconcile the data presented in the management reports to the consolidated financials of the Agora Group;
(4) the amounts do not include revenues and total cost of cross-promotion of Agora’s different media if such promotion is executed without prior reservation between segments of the Agora Group; the direct variable cost of campaigns carried out on advertising panels is the only cost that is included above; it is allocated from the Outdoor segment to other segments.
[ w w w . a g o r a . p l ] Page 13
Management Discussion and Analysis for the third quarter of 2012
2.2. Finance cost, net
translation only
Net financial activities of the Group in the first three quarters of 2012 were affected mainly by income from investing short-term monetary assets, foreign exchange gains and losses as well as bank commissions and interest on the bank loans and lease liabilities.
3. BALANCE SHEET OF THE AGORA GROUP
Tab. 3 in PLN million 30-09-2012 30-06-2012
% change to
30-06-2012
31-12-2011 30-09-2011
Non-current assets share in balance sheet total
Current assets share in balance sheet total
TOTAL ASSETS
Equity holders of the parent share in balance sheet total
Non-controlling interest share in balance sheet total
Non-current liabilities and provisions share in balance sheet total
Current liabilities and provisions share in balance sheet total
TOTAL LIABILITIES AND EQUITY
3.1. Non-current assets
1,215.3
71.8%
476.9
28.2%
1,692.2
1,187.7
70.1%
17.0
1.0%
183.7
10.9%
303.8
18.0%
1,692.2
1,206.2 0.8%
68.5% 3.3pp
554.8 (14.0%)
31.5% (3.3pp)
1,761.0 (3.9%)
1,196.6 (0.74%)
68.0% 2.1pp
16.6 2.4%
0.9% 0.1pp
193.7 (5.2%)
11.0% (0.1pp)
354.1 (14.2%)
20.1% (2.1pp)
1,761.0 (3.9%)
1,203.3
66.7%
600.4
33.3%
1,803.7
1,246.1
69.1%
17.3
1.0%
221.3
12.3%
319.0
17.6%
1,803.7
The increase in non-current assets versus 30 June 2012 stems mainly from investments in property, plant and equipment and intangibles (mainly new cinemas in Helios network).
3.2. Current assets
The decrease in current assets versus 30 June 2012 results mainly from the decrease in short-term securities, cash and cash equivalents.
3.3. Non-current liabilities and provisions
The decrease of non-current liabilities and provisions versus 30 June 2012 stems mainly from the decrease of bank and other borrowings, including financial lease liabilities, by PLN 5.4 million (where PLN 8.7 million stems from the decrease in borrowings of Agora S.A.).
3.4. Current liabilities and provisions
The decrease in current liabilities and provisions versus 30 June 2012 was caused mainly by the decrease of dividend liability (PLN 50.9 million).
1,193.1
67.2%
581.2
32.8%
1,774.3
1,237.7
69.8%
16.0
0.9%
226.0
12.7%
294.6
16.6%
1,774.3
[ w w w . a g o r a . p l ] Page 14
Management Discussion and Analysis for the third quarter of 2012
4. CASH FLOW STATEMENT OF THE AGORA GROUP
translation only in PLN million 3Q 2012 3Q 2011
% change yoy
1-3Q
2012
1-3Q
2011
Tab. 4
% change yoy
Net cash from operating activities 21.3 50.0 (57.4%) 59.4 106.0 (44.0%)
Net cash from investment activities 29.4 (21.4) - 12.9 (89.3) -
Net cash from financing activities (59.8) (43.9) 36.2% (101.2) (82.1) 23.3%
Total movement of cash and cash equivalents
Cash and cash equivalents at the end of period
(9.1)
96.6
(15.3)
117.0
(40.5%)
(17.4%)
(28.9)
96.6
(65.4)
117.0
(55.8%)
(17.4%)
As at 30 September 2012, the Agora Group had PLN 219.1 million in cash and in short-term monetary assets, of which PLN 96.6 million was in cash and cash equivalents (cash, bank accounts and bank deposits) and PLN 122.5 million in short-term securities.
Agora S.A. has not been in the first three quarters of 2012 engaged in any currency option instruments or other derivatives (used for hedging or speculative ones).
On May 25, 2012, the Company executed annex no. 13 (the “Annex 13”) to the loan agreement with the Bank Pekao
S.A. On the basis of the Annex 13 signed, the Company has the credit line in the amount of PLN 150 million, which may be used by May 31, 2012. In the first three quarters of 2012, Agora S.A. repaid three installments of the credit line used in previous years.
As at the date of this consolidated quarterly report, considering the cash position and available credit facility, the
Agora Group does not anticipate any liquidity problems with regards to its further investment plans (including capital investments).
4.1. Operating activities
In the first three quarters of 2012, the net cash inflows from operating activities were lower yoy mainly due to operating loss noted in the described period in the amount of PLN 10.0 million.
4.2. Investment activities
Net inflow from investing activities in the first three quarters of 2012 results mainly from the sale of short-term securities.
4.3. Financing activities
In the first three quarters of 2012, the net cash from financing activities included mainly repayments and drawings of bank loans by Helios S.A., financial lease payments and repayments of the credit line by Agora S.A. Additionallly,
Agora S.A. paid a dividend to its shareholders in the amount of PLN 50.9 million.
[ w w w . a g o r a . p l ] Page 15
Management Discussion and Analysis for the third quarter of 2012
5. SELECTED FINANCIAL RATIOS [5]
translation only
3Q 2012 3Q 2011
% change yoy
1-3Q
2012
Tab. 5
1-3Q
2011
% change yoy
Profitability ratios
Net profit margin
Gross profit margin
Return on equity
Efficiency ratios
Inventory turnover
Debtors days
Creditors days
Liquidity ratio
Current ratio
(3.3%)
26.8%
(2.9%)
1.9% (5.2pp) (1.10%)
11 days 12 days
70 days 66 days
41 days 44 days
1.6
34.0% (7.2pp)
1.8% (4.7pp)
29.2%
(1.00%)
3.7% (4.8pp)
35.6% (6.4pp)
3.6% (4.6pp)
(8.3%) 12 days 12 days
6.1% 66 days 61 days
(6.8%)
2.0 (20.0%)
43 days
1.6
Financing ratios
Gearing ratio (1)
Interest cover
-
(3.3)
-
2.3
-
-
-
(1.1)
Free cash flow interest cover (0.8) 7.5 -
(1) as at 30 September 2012 and 30 September 2011 the Group had net cash position.
(2.0)
46 days
2.0
-
4.2
5.2
-
8.2%
(6.5%)
(20.0%)
-
-
-
Definitions of financial ratios [5] are presented at the end of part IV of this MD&A ("Operating review – major segments of the Agora Group").
[ w w w . a g o r a . p l ] Page 16
Management Discussion and Analysis for the third quarter of 2012 translation only
IV. OPERATING REVIEW - MAJOR SEGMENTS OF THE AGORA GROUP
IV.A. NEWSPAPERS [1]
The Newspapers segment includes the pro-forma consolidated financials of Gazeta Wyborcza, Metro, Special
Projects, Agora’s Printing Department and Agora Poligrafia Sp. z o.o.
Tab. 6 in PLN million 3Q 2012 3Q 2011
% change yoy
1-3Q
2012
1-3Q
2011
% change yoy
Total sales
Copy sales (1) incl. Gazeta Wyborcza
Advertising revenue (1), (2)
incl. Gazeta Wyborcza (3) incl. Metro (4)
Special Projects (including book collections)
Other revenue
Total operating cost, including
Raw materials, energy, consumables and printing services
Staff cost (5)
Non-cash expense relating to share-based payments
D&A
Promotion and marketing (2) (6)
Cost of group lay-offs
EBIT
EBIT margin
EBITDA
EBITDA margin
Operating EBITDA (7)
Operating EBITDA margin
EBIT excluding cost of group lay-offs
EBIT margin excluding group lay-offs
EBITDA excluding group lay-offs
EBITDA margin excluding group lay-offs
Operating EBITDA (7) excluding group layoffs
Operating EBITDA margin excluding group lay-offs
116.7
26.2
25.2
53.8
45.4
5.8
5.6
31.1
(109.5)
(43.2)
(31.4)
-
(6.6)
(9.6)
(6.0)
7.2
6.2%
13.8
11.8%
13.8
11.8%
13.2
11.3%
19.8
17.0%
19.8
17.0%
132.9
32.3
31.6
67.8
57.3
7.4
6.1
26.7
(113.7)
(46.0)
(33.1)
-
(12.2%)
(18.9%)
(20.3%)
(20.6%)
(20.8%)
(21.6%)
(8.2%)
16.5%
(3.7%)
(6.1%)
(5.1%)
-
(6.6) -
(14.9) (35.6%)
- -
19.2 (62.5%)
14.4% (8.2pp)
25.8 (46.5%)
19.4% (7.6pp)
25.8 (46.5%)
19.4% (7.6pp)
19.2 (31.3%)
14.4% (3.1pp)
25.8 (23.3%)
19.4% (2.4pp)
25.8 (23.3%)
19.4% (2.4pp)
388.7
84.1
80.8
183.8
153.5
20.1
21.9
98.9
(342.9)
(147.1)
(98.1)
(0.8)
(20.9)
(32.6)
(6.0)
45.8
11.8%
66.7
17.2%
67.5
17.4%
51.8
13.3%
72.7
18.7%
73.5
18.9%
436.8 (11.0%)
100.5 (16.3%)
97.3 (17.0%)
220.0 (16.5%)
189.5
21.9
38.2
78.1
(366.4)
(150.5)
(100.1)
(3.9)
(22.5)
-
70.4
(19.0%)
(8.2%)
(42.7%)
26.6%
(6.4%)
(2.3%)
(2.0%)
(79.5%)
(7.1%)
(48.2) (32.4%)
-
(34.9%)
16.1% (4.3pp)
92.9 (28.2%)
21.3% (4.1pp)
96.8 (30.3%)
22.2% (4.8pp)
70.4 (26.4%)
16.1% (2.8pp)
92.9 (21.7%)
21.3% (2.6pp)
96.8 (24.1%)
22.2% (3.3pp)
(1) excluding revenues from Special Projects;
(2) 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;
[ w w w . a g o r a . p l ] Page 17
Management Discussion and Analysis for the third quarter of 2012 translation only
(3) the amounts refer to only a portion of total revenues from dual media offers (published both in Gazeta Wyborcza, as well as on GazetaPraca.pl, GazetaDom.pl, Domiporta.pl, Komunikaty.pl verticals and Nekrologi.Wyborcza.pl website), which is allocated to the print edition of Gazeta;
(4) the amounts refer to total revenues of the Free Press Department, including revenues from Metro’s display advertising, classifieds and inserts as well as from mTarget services and Metro’s special activities;
(5) excluding non-cash cost of share-based payments and cost related to group lay-offs in Agora S.A.;
(6) the amounts include inter alia the start-up cost of new book collections (i.e. initial promotional cost in the media) and the production and promotional cost of gadgets offered with Gazeta;
(7) excluding non-cash cost of share-based payments.
In the third quarter of 2012, as a result of the diminishing expenditure in newspaper advertising and a decrease in copy sales, the operating EBITDA of the segment decreased yoy to PLN 13.8 million. The operating EBITDA margin reached 11.8% [1]. Additionally, costs related to group lay-offs in Agora S.A. burdened the segment’s results by PLN
6.0 million. Excluding these costs, the segment achieved an operating EBITDA of PLN 19.8 million and operating
EBITDA margin of 17.0% .
1. GAZETA WYBORCZA
1.1. Revenue
1.1.1. Copy sales [4]
In the third quarter of 2012, Gazeta Wyborcza maintained its leading position among the opinion-making newspapers.
In the third quarter of 2012, Gazeta sold 247 thousand copies on average (down by 16.8% yoy). In the discussed period of time, Gazeta’s revenues from copy sales decreased by 20.3% yoy.
In the third quarter of 2012, total average paid circulation of Dziennik Gazeta Prawna amounted to 73.1 thousand copies (down by 15.0% yoy). In the discussed period, total average paid circulation of Rzeczpospolita amounted to
103 thousand copies (down by 16.9% yoy), that of Fakt to 365 thousand copies (down by 8.0% yoy) and that of Super
Express to 157 thousand copies (down by 7.6% yoy).
In the third quarter of 2012, all titles of Polskapresse under Polska brand were distributed in 204 thousand copies on average (down by 13.0% yoy) [4].
1.1.2. Readership [4]
In the third quarter of 2012, the weekly readership of Gazeta Wyborcza stood at 11.4% (3.4 million readers; CCS, weekly readership index). The readership of the tabloid Fakt stood at 10.9% (3.3 million readers). Both titles held, ex aequo, the first position among nationwide dailies. During this period, Metro was read by 1.4 million people (CCS, weekly readership 4.8%) and Super Express reached on average 4.8% (1.4 million readers). This means, that as far as readership is concerned Metro and Super Express were preceded only by Gazeta Wyborcza and Fakt among national dailies. In the third quarter of 2012, the readership rate of Rzeczpospolita stood at 2.8% (nearly 0.9 million readers) and of Dziennik Gazeta Prawna at 1.8% (0.6 million readers).
1.1.3. Advertising sales [3]
In the third quarter of 2012, Gazeta’s net advertising revenue (including display advertising, classifieds and inserts) amounted to PLN 45.4 million (down by 20.8% yoy). The above figures include a portion of revenues from dualmedia advertising offers (published both in print as well as on GazetaPraca.pl, GazetaDom.pl, Domiporta.pl,
Komunikaty.pl verticals and Nekrologi.Wyborcza.pl website), which is allocated to the print edition of Gazeta
Wyborcza.
In the third quarter of 2012, the ad spend in dailies in Poland decreased by over 21.5% yoy. In the discussed period of time, Gazeta’s revenues from display advertising decreased by 22% yoy, and its estimated share in display ad spend in dailies stood at over 36% (flat yoy). In the third quarter of 2012, the share of Agora’s dailies (Gazeta and
Metro) in display ad spend in dailies remained at the same level yoy.
[ w w w . a g o r a . p l ] Page 18
Management Discussion and Analysis for the third quarter of 2012 translation only
In the third quarter of 2012, the estimated share of Dziennik Gazeta Prawna in dailies ad expenditure stood at over
3.5% (flat yoy) and that of Rzeczpospolita stood at almost 7% (down by nearly 1pp yoy). In the discussed period of time, the estimated share of Fakt in display ad spend in dailies stood at over 9.5% (up by 1pp yoy) and that of Super
Express at ca 3.5% (flat yoy).
In the third quarter of 2012, Gazeta’s share in the national newspaper ad spend amounted to over 42% (up by nearly
0.5pp yoy). During this period of time, Gazeta maintained its share in Warsaw ad spend in newspapers while the joint share of Gazeta and Metro was up by nearly 3pp yoy. At the same time, Gazeta’s share in local dailies
(excluding Warsaw) decreased by almost 0.5pp yoy, while the joint share of Gazeta and Metro remained at the same level yoy.
One should bear in mind that these advertising market estimations may represent some margin of error due to significant discount pressure on the market. Once the Company has more reliable market data, it may correct the ad spending estimations in the consecutive reporting periods.
In the third quarter of 2012, the share of ad pages in Gazeta’s total pagecount amounted to ca 30.3% (down by ca.3.7pp yoy), while the average number of paid-for ad pages published daily in all local and national editions reached ca 122 (down by ca 14% yoy).
1.1.4. Other revenues
In the third quarter of 2012, the Company’s revenues from the sales of printing services to external clients rose by
21.1% yoy, mainly due to an increase in the volume of orders.
In the first three quarters of 2012, the Company’s revenues from the sales of printing services to external clients rose by 32.6% yoy, mainly due to an increase in the volume of orders.
1.2. Cost
1.2.1 Printing cost of Gazeta Wyborcza
Tab. 7 in PLN million 3Q 2012 3Q 2011
% change yoy
1-3Q
2012
1-3Q
2011
% change yoy
Fixed cost 7.2 9.1 (20.9%) 24.7 28.5 (13.3%) incl. D&A
Variable cost, incl.
2.3
14.2
3.0 (23.3%)
19.9 (28.6%)
7.8
50.1
9.5 (17.9%)
61.4 (18.4%)
newsprint 11.5 17.1 (32.7%) 41.3 52.4 (21.2%)
TOTAL fixed and variable cost 21.4 29.0 (26.2%) 74.8 89.9 (16.8%)
In the third quarter of 2012, fixed cost attributed to Gazeta Wyborcza was lower by 20.9% yoy as a result of a decrease in the number of copies and pagecount printed as well as the decrease in Gazeta’s share in the entire volume of print. The 28.6% yoy decrease in Gazeta’s variable cost as well as the 32.7% yoy decrease in newsprint cost were due to the lower number of copies and pagecount printed.
In the first three quarters of 2012, fixed cost attributed to Gazeta Wyborcza was 13.3% yoy lower as a result of a decrease in the number of copies and pagecount printed as well as the decrease in Gazeta’s share in the entire volume of print. In the period of January-September 2012, the 18.4% yoy decrease in Gazeta’s variable cost
(including the 21.2% yoy decrease in newsprint cost) was due to the lower number of copies and pagecount printed.
1.2.2. Promotion and marketing cost
In the third quarter of 2012, promotion and marketing cost of the Newspapers segment was down by 35.6% yoy.
This decrease results mainly from the reduced scope of Gazeta Wyborcza’s promotional activities.
[ w w w . a g o r a . p l ] Page 19
Management Discussion and Analysis for the third quarter of 2012
2. FREE PRESS [3], [4]
translation only
In the third quarter of 2012, 4,8% of Poles read Metro throughout the week (1.4 million readers; CCS, weekly readership index). As a result, Metro had nearly 0.9 million more readers than Dziennik Gazeta Prawna and almost
0.6 million readers more than Rzeczpospolita. Similar readership results noted Super Express, which had 1.4 million readers and a readership rate of 4.8%. This means, that as far as readership is concerned Metro and Super Express were preceded only by Gazeta Wyborcza and Fakt among national dailies. Metro, together with Gazeta Wyborcza, was the most popular daily in Warsaw (Metro: weekly readership 30.3%, 0.4 million readers).
In the third quarter of 2012, Metro’s total ad revenues decreased by 21.6% yoy, including a 22.6% yoy decrease in display advertising. In this period of time, the total display ad spend in all daily newspapers decreased by over 21.5% yoy. As a result, Metro maintained its share in advertising spending in dailies at the level of ca. 4.5%. In the discussed period of time, Metro’s share in national dailies decreased by 1pp yoy to 3.5%. In Warsaw dailies, Metro’s share increased by ca. 3pp yoy to over 18.5% and in local dailies by 0.5pp yoy to 3.5%.
In the third quarter of 2012, the operating EBITDA of the Free Press division decreased yoy to PLN 0.5 million [1].
3. SPECIAL PROJECTS
Tab. 8 in PLN million 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012
Revenue from Special Projects
(including collections)
16.0 16.1 6.1 11.2 8.2 8.1
In the third quarter of 2012, Agora decreased the number of publishing projects. During this period, Agora continued only 1 collection: Miasta marzen 2 and no new collections were launched.
In the third quarter of 2012, Agora ran 8 publishing projects and 1 music album. As a result, during this period of time, Special Projects division sold 0.2
million books and books with CDs and DVDs.
In the third quarter of 2012, Special Projects were expanding the online bookstore Publio.pl, which also influenced the operating results of the division.
As a results, in the third quarter of 2012, Special Projects recorded a negative EBIT of PLN 0.5 million [1].
5.6
[ w w w . a g o r a . p l ] Page 20
Management Discussion and Analysis for the third quarter of 2012
IV.B INTERNET [1] [6]
translation only
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. and Sport4People Sp. z o.o. (since November 30, 2011).
Tab. 9 in PLN million
Total sales , including
Display ad sales (1)
3Q 2012 3Q 2011
24.9
19.4
26.0
18.0
% change yoy
(4.2%)
7.8%
1-3Q
2012
82.7
64.3
1-3Q
2011
81.4
57.4
% change yoy
1.6%
12.0%
Ad sales in verticals (2) 4.2 6.0 (30.0%) 13.6 18.6 (26.9%)
Total operating cost, including
IT and network maintenance
Staff cost (3)
Non-cash expense relating to sharebased payments
D&A
Promotion and marketing (1)
Cost of group lay-offs
EBIT
EBIT margin
EBITDA
EBITDA margin
Operating EBITDA (4)
Operating EBITDA margin
EBIT excluding cost of group lay-offs
EBIT margin excluding group lay-offs
EBITDA excluding group lay-offs
(25.0)
(0.8)
(11.9)
-
(1.4)
(2.5)
(1.2)
(0.1)
(0.4%)
1.3
5.2%
1.3
5.2%
(24.6)
(0.7)
(12.5)
-
1.6%
14.3%
(4.8%)
-
(1.4) -
(3.2) (21.9%)
- -
1.4 -
5.4% (5.8pp)
2.8 (53.6%)
10.8% (5.6pp)
2.8 (53.6%)
10.8% (5.6pp)
1.4 (21.4%)
5.4% (1.0pp)
2.8 (10.7%)
(78.4)
(2.3)
(36.9)
(0.1)
(4.2)
(10.3)
(1.2)
4.3
5.2%
8.5
10.3%
8.6
10.4%
(78.5)
(2.2)
(36.2)
(0.6)
(0.1%)
4.5%
1.9%
(83.3%)
(4.6) (8.7%)
(13.3) (22.6%)
- -
2.9 48.3%
3.6% 1.6pp
7.5 13.3%
9.2% 1.1pp
8.1 6.2%
10.0% 0.4pp
2.9 89.7%
3.6% 3.1pp
7.5 29.3%
1.1
4.4%
2.5
5.5
6.7%
9.7
EBITDA margin excluding group lay-offs
Operating EBITDA (4) excluding group layoffs
10.0%
2.5
10.8% (0.8pp)
2.8 (10.7%)
11.7%
9.8
9.2% 2.5pp
8.1 21.0%
Operating EBITDA margin excluding group lay-offs
10.0% 10.8% (0.8pp) 11.9% 10.0% 1.9pp
(1) 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, LLC Agora Ukraine, Trader.com (Polska)
Sp. z o.o. and AdTaily Sp. z o.o., and Sport4People Sp. z o.o.;
(2) including, among others, allocated revenues from the dual media offer (i.e. published both in Gazeta Wyborcza, as well as on GazetaPraca.pl, GazetaDom.pl, Domiporta.pl, Komunikaty.pl verticals and Nekrologi.Wyborcza.pl website);
(3) excluding non-cash cost of share-based payments and cost related to group lay-offs in Agora S.A.;
(4) excluding non-cash cost of share-based payments.
[ w w w . a g o r a . p l ] Page 21
Management Discussion and Analysis for the third quarter of 2012 translation only
In the third quarter of 2012, the operating result (EBIT) of the Internet segment was lower yoy, mainly due to the costs of group lay-offs and the decrease of the ad sales in verticals. In the first three quarters of 2012, the operating result (EBIT) of the Internet segment increased by nearly a half as compared to the the same period in 2011.
1. REVENUE
In the third quarter of 2012, the total sales of the Internet segment decreased by 4.2% yoy to the level of PLN 24.9 million, mainly due to the 30.0% yoy drop in ad sales in verticals.
In the third quarter of 2012, the display advertising sales maintained growth and increased by 7.8% yoy to the level of PLN 19.4 million, while in the same period, the total expenditure for Internet display advertising and e-mail marketing in Poland grew by ca 5% yoy.
In the third quarter of 2012, the ad sales in verticals decreased by 30.0% yoy, mainly as a result of a lower allocation from the dual media offer in print edition of Gazeta Wyborcza and Internet as well as lower ad sales in verticals dedicated to recruitment and real estate.
In the third quarter of 2012, total revenue of Trader.com (Polska) Sp. z o.o. amounted to PLN 4.4 million (down by
13.7% yoy). Revenues from the company’s Internet activities amounted to PLN 3.9 million and from its press activities to PLN 0.5 million (down by 28.6% yoy). In the third quarter of 2012, the company reported positive operating result (EBIT) of PLN 0.8 million.
2. COST
In the third quarter of 2012, the operating costs of the Internet segment increased by 1.6% yoy, mainly due to the costs of group lay-offs which amounted to PLN 1.2 million.
The staff cost (excluding non-cash cost of share-based payments and cost of group lay-offs) went down by 4.8% yoy in the third quarter of 2012 as a result of the reduction of number of FTEs in Agora’s Internet Department and in
Trader.com (Polska) Sp. z o.o.
In the third quarter of 2012, the promotion and marketing costs decreased by 21.9% yoy, mainly due to the reduction of promotion and marketing cost of Gazeta.pl portal.
3. IMPORTANT INFORMATION ON INTERNET ACTIVITIES
In September 2012, the reach of Gazeta.pl group services among Polish Internet users stood at 58.7%, which made
Gazeta.pl group the third player among Internet portals, after Onet.pl and Wirtualna Polska - Orange groups. The number of users reached 11.4 million (down by 1.9% yoy). In the same month, the total number of page views from
Polish users reached 1,073 million (up by 2.3% yoy), with an average viewing time of 2 hours and 2 minutes per user
(1 minute less than in September 2011).
In September 2012, the number of page views generated by mobile devices on the websites of Gazeta.pl group reached 80 million (up by 187% yoy), which made Gazeta.pl group the second player according to Megapanel
PBI/Gemius data. The share of mobile page views on the websites of Gazeta.pl group stood at 7.5% and was the highest among Polish horizontal portals.
The websites of Gazeta.pl group are ranked among top thematic market players. According to Megapanel
PBI/Gemius data from September 2012, Gazeta.pl is the leader in the Forums & Discussion Groups category (inter alia Forum.Gazeta.pl). Gazeta.pl group is ranked second in the Building & real estate category and Gazeta.pl’s parenting sites (i.a. eDziecko.pl) are ranked second in Children, Family category and Gazeta.pl’s community sites are ranked second in Blogs category. The third places are held by: Gazeta.pl’s sport sites (i.a. Sport.pl) in Sport category,
Gazeta.pl’s information sites in the Information & journalism category, Gazeta.pl’s education sites (i.a.
Edukacja.Gazeta.pl) in Education category and Gazeta.pl’s youth sites (i.a. Kotek.pl) in Student & Youth category.
[ w w w . a g o r a . p l ] Page 22
Management Discussion and Analysis for the third quarter of 2012
IV.C. CINEMA
translation only
The Cinema segment includes the pro-forma consolidated data of Helios S.A. (on August 31, 2011 Helios S.A. merged with Kinoplex Sp. z o.o.) and Next Film Sp. z o.o. (since September 14, 2012), which form the Helios group.
Tab. 10 in PLN million
Total sales, including :
Tickets sales
Sales from foods & beverages
Advertising revenues (2)
Other sales
Total cost, including:
External services
3Q 2012 3Q 2011
55.0
36.6
11.9
3.7
2.8
(51.4)
(29.4)
% change yoy
1-3Q
2012
48.9
34.8
10.3
3.2
12.5%
5.2%
15.5%
15.6%
0.6 366.7%
(45.9)
143.1
95.7
28.7
12.9
5.8
12.0% (141.9)
(26.2) 12.2% (79.0)
1-3Q
2011
% change yoy
143.7
104.3
30.5
7.7
(0.4%)
(8.2%)
(5.9%)
67.5%
1.2 383.3%
(133.5) 6.3%
(75.5) 4.6%
Raw materials, energy and consumables (6.4) (6.3) 1.6% (18.0) (18.3) (1.6%)
Staff cost
D&A
Promotion and marketing (2)
Other net operating cost
EBIT
EBIT margin
EBITDA
EBITDA margin
Operating EBITDA (1)
Operating EBITDA margin (1)
(6.2)
(5.1)
(2.0)
(2.3)
3.6
6.5%
8.7
15.8%
8.7
15.8%
(6.0)
(4.5)
(1.2)
(1.7)
3.0
6.1% 0.4pp
7.5
15.3% 0.5pp
7.5
3.3%
13.3%
66.7%
35.3%
20.0%
16.0%
16.0%
15.3% 0.5pp
(19.1)
(14.4)
(6.1)
(5.3)
1.2
0.8%
15.6
10.9%
15.6
10.9%
(18.1)
(13.3)
(2.7)
(5.6)
10.2
5.5%
8.3%
125.9%
(5.4%)
(88.2%)
7.1% (6.3pp)
23.5 (33.6%)
16.4% (5.5pp)
23.5 (33.6%)
16.4% (5.5pp)
(1) as far as the Helios group is concerned EBITDA and operating EBITDA ratios are equal as in the period referred to in the table there was not any non-cash cost of share-based payments incurred;
(2) 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.
In the third quarter of 2012, due to a significant increase in the revenues, the operating result (EBIT) of the Helios group increased yoy to PLN 3.6 million. EBITDA and operating EBITDA of the segment increased as well, while the
EBITDA margin reached 15.8% (up by 0.5 pp yoy).
1. REVENUE [3]
In the third quarter of 2012, total revenue of the Cinema segment amounted to PLN 55.0 million (up by 12.5% yoy).
The increase resulted from higher revenues from ticket sales (up by 5.2% yoy) and higher revenues from food and beverages (up by 15.5% yoy). The number of visitors in Helios cinemas reached nearly 2.1 million [11] and increased by 12.5% yoy.
In the third quarter of 2012, the growth of Helios’ advertising revenues resulted mainly from the cooperation with other segments from the Agora Group.
In the third quarter of 2012, out of the total number of tickets sold, nearly 56% constituted tickets for 3D films
(down by over 3pp yoy).
[ w w w . a g o r a . p l ] Page 23
Management Discussion and Analysis for the third quarter of 2012
2. COST
translation only
In the third quarter of 2012, the operating cost of the segment reached PLN 51.4 million (up by 12.0% yoy). Higher marketing and promotion cost reflects the increased scope of cooperation with other segments from the Agora
Group. It should be remembered that this cost is compensated by higher advertising revenues.
In the third quarter of 2012, staff cost and D&A cost increased yoy, mainly due to the opening of a new cinemas by
Helios in 2012.
3. OTHER EVENTS
In September 2012, Helios opened a successive multiplex - a four-screen cinema in Kedzierzyn-Kozle, which is the the only multiplex in this city. This is the third multiplex opened this year, after the cinemas in Grudziadz and Tczew launched by Helios in 2012.
On July 19, 2012, Next Film Sp. z o.o., a wholly-owned subsidiary of Helios was founded, which core activity is film distribution in cinemas. On September 14, 2012 the company was registered by the National Court Register in Lodz.
The digitalization process of Helios cinemas is completed – all Helios cinemas are fully digitalized.
[ w w w . a g o r a . p l ] Page 24
Management Discussion and Analysis for the third quarter of 2012
IV.D. OUTDOOR (AMS GROUP)
translation only
The Outdoor segment consists of the pro-forma consolidated data of companies constituting the AMS group
(AMS S.A., Adpol Sp. z o.o.).
Tab. 11 in PLN million
Total sales, including:
Advertising revenue (1)
Total operating cost, including:
Execution of campaigns
Maintenance cost
Staff cost (2)
3Q 2012 3Q 2011
38.8
37.9
(38.8)
(6.3)
(18.7)
(4.9)
40.1
39.3
(39.1)
(6.0)
(18.1)
(5.0)
% change yoy
(3.2%)
(3.6%)
(0.8%)
5.0%
3.3%
(2.0%)
1-3Q
2012
115.4
113.0
(115.6)
(18.7)
(55.8)
(14.5)
1-3Q
2011
126.0
123.2
(117.0)
(19.7)
(55.0)
(15.0)
% change yoy
(8.4%)
(8.3%)
(1.2%)
(5.1%)
1.5%
(3.3%)
Non-cash expense relating to share-based payments
- - - (0.1) (0.7) (85.7%)
Promotion and marketing
D&A
EBIT
EBIT margin
EBITDA (4)
EBITDA margin
Operating EBITDA (2) (4)
Operating EBITDA margin
Number of advertising spaces (3)
(1.5)
(4.5)
0.0
0.0%
4.4
(1.1)
(4.5)
1.0
36.4%
-
-
2.5% (2.5pp)
5.5 (20.0%)
(4.2)
(13.7)
(0.2)
(0.2%)
13.4
(3.4)
(13.7)
9.0
23.5%
-
-
7.1% (7.3pp)
22.7 (41.0%)
11.3%
4.4
13.7% (2.4pp)
5.5 (20.0%)
11.6%
13.5
18.0% (6.4pp)
23.4 (42.3%)
11.3% 13.7% (2.4pp)
24,397 23,831 2.4%
11.7%
24,397
18.6% (6.9pp)
23,831 2.4%
(1) 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;
(2) excluding non-cash cost of share-based payments;
(3) excluding advertising panels of AMS group installed on petrol stations, small panels on bus shelters and in the
Warsaw subway, as well as advertising panels on buses and trams;
(4) the amounts include a reclassification adjustment of D&A, resulting from financing sources of fixed assets owned by AMS group.
In the third quarter of 2012, the operating EBITDA of the Outdoor segment was lower yoy and amounted to PLN 4.4 million. The operating EBITDA margin reached 11.3% and was lower yoy.
1. REVENUE [8]
In the third quarter of 2012, the total amount of outdoor market expenditure, according to IGRZ estimates, decreased by over 17.5% yoy. In the third quarter of 2012, the drop in advertising sales recorded by the AMS group was significantly lower compared to the market and amounted 3.6%. As a result, the estimated share of AMS in outdoor ad spending increased by over 4.5pp and amounted to over 31.5%.
[ w w w . a g o r a . p l ] Page 25
Management Discussion and Analysis for the third quarter of 2012
2. COST
translation only
In the third quarter of 2012, the AMS group reduced its operating cost by 0.8% yoy to the level of 38.8 million, mainly by the decrease of general fixed cost in AMS group.
The cost of campaign execution increased by 5.0% yoy, due to a higher rental cost of advertising space on buses and higher cost of non-standard campaigns execution on advertising panels. This growth results from higher number of advertising campaigns on buses and non-standard campaigns on outdoor panels.
The increase in maintenance cost (up by 3.3% yoy) was related to the higher number of advertising panels, such as
18 sqm billboards and citylights.
In the third quarter of 2012, the decrease in staff cost (down by 2.0% yoy) reflected lower variable remuneration components resulting from lower advertising sales of the segment.
Higher promotion and marketing cost (up by 36.4% yoy) results from a higher yoy total cost of social campaigns.
3. OTHER EVENTS
In the third quarter of 2012, AMS won the concession procedure for placing 34 shelters in new locations in Cracow.
Further investment in urban furniture reflects a consistent development strategy of the AMS group.
[ w w w . a g o r a . p l ] Page 26
Management Discussion and Analysis for the third quarter of 2012
IV.E. RADIO
translation only
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 Hits (Złote
Przeboje) local radio stations, 7 local radio stations (Radio Roxy FM), one AC format (Adult Contemporary) local station and a super-regional news radio TOK FM broadcasting in nine largest metropolitan areas.
Tab. 12 in PLN million 3Q 2012 3Q 2011
% change yoy
1-3Q
2012
1-3Q
2011
% change yoy
Total sales, including :
Advertising revenue (1) (3)
Total operating cost, including: (3)
Staff cost (2)
18.2
17.6
(19.1)
(6.3)
21.4 (15.0%)
21.1 (16.6%)
(21.7) (12.0%)
(6.1) 3.3%
63.5
61.9
(63.8)
(19.4)
62.0
61.0
(59.8)
(18.7)
2.4%
1.5%
6.7%
3.7%
Non-cash expense relating to share-based payments
- - - (0.1) (0.5) (80.0%)
Licenses, rental and telecommunication costs
D&A
Promotion and marketing (3)
EBIT
EBIT margin
EBITDA
EBITDA margin
(1.9)
(0.7)
(2.8)
(0.9)
(4.9%)
(0.2)
(1.1%)
(2.0)
(0.6)
(5.9)
(0.3)
(5.0%)
16.7%
(52.5%)
(200.0%)
(1.4%) (3.5pp)
0.3 -
1.4% (2.5pp)
(6.2)
(2.0)
(10.0)
(0.3)
(0.5%)
1.7
2.7%
(6.2)
(1.9)
(12.7)
2.2
-
5.3%
(21.3%)
-
3.5% (4.0pp)
4.1 (58.5%)
6.6% (3.9pp)
Operating EBITDA (2)
Operating EBITDA margin
(0.2)
(1.1%)
0.3 -
1.4% (2.5pp)
1.8
2.8%
4.6 (60.9%)
7.4% (4.6pp)
(1) advertising revenues include revenues from brokerage services of proprietary and third-party air time;
(2) excluding non-cash cost of share-based payments;
(3) 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.
In the third quarter of 2012, mainly as a result of drop in revenues the operating EBITDA of Agora’s Radio segment decreased yoy and was negative at the level of PLN 0.2 million.
1. REVENUE [3]
In the third quarter of 2012, the sales revenue of the Radio segment amounted to PLN 18.2 million (down by 15.0% yoy) and were affected by the decrease of the total radio advertising expenditure by more than 10% yoy.
Additionally, in the third quarter of 2011, segment revenues included a barter transaction related to the ARTPOP
Festival Zlote Przeboje Bydgoszcz 2011. Excluding this transaction, the dynamics of the revenue decrease of the
Radio segment in the third quarter of 2012 would be lower than that of the entire radio advertising market.
2. COST
In the third quarter of 2012, the operating cost of the Radio segment decreased by 12.0% yoy, mainly as a result of lower promotion and marketing cost. This cost was lower due to a barter transaction related to the ARTPOP Festival
Zlote Przeboje Bydgoszcz 2011 which was held in the third quarter of 2012. Excluding this transaction, promotion and marketing costs would be at the similar level as in the third quarter of 2011..
[ w w w . a g o r a . p l ] Page 27
Management Discussion and Analysis for the third quarter of 2012
3. AUDIENCE SHARES [9]
translation only
In the third quarter of 2012, the audience share of Agora’s music radio stations reached a five-year record.
In the third quarter of 2012, the audience share of Agora’s music radio stations increased by 1.6pp yoy and reached
8.6%. In the same period of time, the audience share of TOK FM in all the cities of broadcasting reached 4.0% (in the third quarter of 2011: 4.2%). In the third quarter of 2012, the audience share of TOK FM in Warsaw reached 6.2%
(up by 0.4pp yoy).
In the first three quarters of 2012, the audience share of Agora’s music local radio stations increased by 1.2pp yoy and reached 8.2%. In the same period of time, the audience share of TOK FM in all the cities of broadcasting amounted to 4.5% (in the first three quarters of 2011: 4.8%). In the first three quarters of 2012, the audience share of TOK FM in Warsaw amounted to 7.3% share (up by 0.5pp yoy).
4. OTHER EVENTS
In July 2012, Agora Radio group launched Tuba.FM for computers and tablets with Windows 8. The application offers the same functionalities that are available on the website, but with a very modern, attractive layout and userfriendly form. The application quickly gained the status of the best music application available on the Windows 8 platform.
In August 2012, Agora Radio group launched Tuba.FM for television decoders of the operator Netia. As a result, users of Netia decoders can benefit from a wide range of Tuba FM music offer, including FM stations as well as thousands of Internet radio stations.
Radiowe Doradztwo Reklamowe Sp. z o.o. signed a cooperation agreement expanding its advertising portfolio by the
In-Store Radio offer in major shopping galleries and retail chains such as Tesco, Carrefour, Real, Makro, Alma,
Selgros, Piotr and Pawel.
[ w w w . a g o r a . p l ] Page 28
Management Discussion and Analysis for the third quarter of 2012
IV.F. THE MAGAZINES [1] [7]
The Magazines segment presents the financials of Agora’s Magazines. translation only in PLN million
Total sales, including
Copy sales
Advertising revenue (1)
Total operating cost, including
Raw materials, energy, consumables and printing services
Staff cost (2)
3Q 2012 3Q 2011
% change yoy
15.5
6.9
8.5
(14.6)
(6.0)
17.6 (11.9%)
7.4 (6.8%)
10.1 (15.8%)
(14.7) (0.7%)
(6.2) (3.2%)
(4.4) (4.3) 2.3%
1-3Q
2012
50.1
20.8
29.0
(47.4)
(19.9)
(13.5)
Tab. 13
1-3Q
2011
% change yoy
56.4 (11.2%)
23.3 (10.7%)
32.6 (11.0%)
(45.2) 4.9%
(19.4) 2.6%
(13.0) 3.8%
Non-cash expense relating to share-based payments
- - - (0.1) (0.4) (75.0%)
D&A
Promotion and marketing (1)
Cost of lay-offs
-
(2.7)
(0.5)
-
(3.1)
-
-
(12.9%)
-
(0.1)
(9.9)
(0.5)
(0.1)
(8.9)
-
-
11.2%
-
EBIT
EBIT margin
EBITDA
EBITDA margin
Operating EBITDA (3)
Operating EBITDA margin
EBIT excluding cost of group lay-offs
EBIT margin excluding group lay-offs
EBITDA excluding group lay-offs
EBITDA margin excluding group lay-offs
Operating EBITDA (3) excluding group layoffs
0.9
5.8%
0.9
5.8%
0.9
5.8%
1.4
9.0%
1.4
9.0%
1.4
2.9 (69.0%)
16.5% (10.7pp)
2.9 (69.0%)
16.5% (10.7pp)
2.9 (69.0%)
16.5% (10.7pp)
2.9 (51.7%)
16.5% (7.5pp)
2.9 (51.7%)
16.5% (7.5pp)
2.9 (51.7%)
2.7
5.4%
2.8
5.6%
2.9
5.8%
3.2
3.3
6.6%
3.4
6.4%
11.2
11.7
(75.9%)
19.9% (14.5pp)
11.3 (75.2%)
20.0% (14.4pp)
11.7 (75.2%)
20.7% (14.9pp)
11.2 (71.4%)
19.9% (13.5pp)
11.3 (70.8%)
20.0% (13.4pp)
(70.9%)
Operating EBITDA margin excluding group lay-offs
9.0% 16.5% (7.5pp) 6.8% 20.7% (13.9pp)
(1) the amounts do not include revenues and total 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;
(2) excluding non-cash cost of share-based payments and cost related to group lay-offs in Agora S.A.;
(3) excluding non-cash cost of share-based payments.
In the third quarter of 2012, despite the lower revenues and additional costs related to group lay-offs in Agora S.A., which burdened the segment’s results with PLN 0.5 million, the Magazines segment achieved a positive EBIT and operating EBITDA of PLN 0.9 million PLN each [1].
[ w w w . a g o r a . p l ] Page 29
Management Discussion and Analysis for the third quarter of 2012
1. REVENUE
translation only
In the third quarter of 2012, the revenue of the Magazines segment decreased by 11.9% yoy, mainly as a result of lower advertising sales (down by 15.8% yoy) and copy sales (down by 6.8% yoy). Advertising sales were down mainly as a result of reduced advertising expenditure in interior decoration, construction, hygiene & beauty and food &
drink categories. The 6.8% yoy decrease in revenue from copy sales results mainly from the 5.6% yoy decline of the average number of monthlies copies sold and the reduction of some editions’ cover prices.
1.1. Copy sales
Tab. 14 in thousand of copies 3Q 2012 3Q 2011
% change yoy
1-3Q
2012
1-3Q
2011
% change yoy
Average copy sales of monthlies 852.1 902.7 (5.6%) 896.0 921.5 (2.8%)
In the third quarter of 2012, the average number of copies sold by Agora’s monthlies was down by 5.6% yoy.
1.2. Advertising sales
The advertising sales of the Magazines segment decreased by 15.8% yoy in the third quarter of 2012. In the third quarter of 2012, Agora had a 5.4% share in the total national magazines ad spend and a 11.6% share in monthlies
(based on rate card data [7]).
2. COST
In the third quarter of 2012, the operating cost of the Magazines segment was reduced to PLN 14.6 million (down by
0.7% yoy) despite the costs of group lay-offs which burdened the segment’s result by PLN 0.5 million. In the same period of time, the staff cost increased by 2.3% yoy mainly due to the launch of new titles. Despite the above, the reductions in promotion and marketing cost (down by 12.9% yoy), as well as in raw materials, energy, consumables and priting services (down by 3.2% yoy) resulted in the overall reduction of the segment’s operating cost.
3. OTHER EVENTS
In July 2012, Agora launched new applications enabling iPad users to download digital editions of Logo and Cztery
Katy with exclusive audiovisual content. In September 2012, segment launched iPad applications for Dziecko and
Ladny Dom . Additionally, magazine Dziecko is also available on iPhone.
Since July 2012, the most important articles from Poradnik Domowy, Cztery Katy, Ladny Dom, Magnolia, Logo and
Kuchnia are also available for the internet users via the Piano Media payment system.
[ w w w . a g o r a . p l ] Page 30
Management Discussion and Analysis for the third quarter of 2012
NOTES
translation only
[1] Operating EBITDA = EBITDA + non-cash expenses relating to share-based payments.
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 reconciling positions.
[2] The Group’s net result refers to “net result attributable to equity holders of the parent”.
[3] The data refer to advertising expenditures in six media (print, radio, TV, outdoor, Internet, cinema ). In this MD&A
Agora has corrected the TV and magazine advertising market figures for the third quarter of 2011.
Unless explicitly stated otherwise, print 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, lack of reliable data on average market discount rate and 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 print, 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 (previously Expert Monitor), 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, exclude teleshopping, product placement and other advertising forms.
Internet ad spend estimates include display, search engines (Search Engine Marketing), e-mail marketing and affiliated marketing.
Outdoor advertising figures are based on Izba Gospodarcza Reklamy Zewnetrznej estimates [8]
[4] The data on the number of copies sold (total paid circulation) of daily newspapers is derived from the National
Circulation Audit Office (ZKDP). The term "copy sales" used in this MD&A is consistent with the sales declarations of
publishers to the National Circulation Audit Office.
The data on dailies readership are based on PBC General, research carried out by MillwardBrown SMG/KRC on a random, nationwide sample of Poles over 15 years of age. The CCS index was used (weekly readership index) - percentage of respondents reading at least one edition of the title within 7 days of the week or preceding research.
Size of the sample: nationwide PBC General for July – September 2012: N = 12,030; Warsaw: N = 497.
[ w w w . a g o r a . p l ] Page 31
Management Discussion and Analysis for the third quarter of 2012
[5] Definition of ratios: translation only
Net profit margin =
Net profit /(loss) attributable to equity holders of the parent
Sales of finished products, merchandise and materials
Gross profit margin =
Gross profit / (loss) on sales
Sales of finished products, merchandise and materials
Return on equity =
Net profit / (loss) attributable to equity holders of the parent
(Equity attributable to equity holders of the parent at the beginning of the period
+ Equity attributable to equity holders of the parent at the end of the period)
/ 2 / (1,33 for the first three quarters and 4 for quarterly results)
Debtors days =
(Trade receivables gross at the beginning of the period
+ Trade receivables gross at the end of the period) / 2
Sales of finished products, merchandise and materials / no. of days
Creditors days =
(Trade creditors at the beginning of the period
+ Trade creditors at the end of the period) / 2
Cost of sales / no. of days
Inventory turnover =
(Inventories at the beginning of the period + Inventories at the end of the period) / 2
Cost of sales / no. of days
Current ratio I =
Current Assets
Current liabilities
Gearing ratio =
Current and non-current liabilities from loans – cash and cash equivalents
– highly liquid short-term monetary assets
Total equity and liabilities
Interest cover =
Operating profit / (loss)
Interest charge
Free cash flow interest cover =
Free cash flow *
Interest charge
* Free cash flow =Net cash from operating activities + Purchase of property plant and equipment and intangibles.
[ w w w . a g o r a . p l ] Page 32
Management Discussion and Analysis for the third quarter of 2012 translation only
[6] The Gazeta.pl Group include online services (including partnership services), which domains are subscribed by
Agora. Real users, page views and spent time on the basis of Megapanel PBI/Gemius, cover 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. Real users data of the Gazeta.pl group services are audited by Gemius SA.
[7] Average paid circulation of monthlies is based on the Agora’s own data. Rate card data on magazines obtained from Kantar Media monitoring (previously Expert Monitor); commercial brand advertising, excluding specialized monthlies; accounted for 121 titles for the period of July - September 2012.
[8] Source: report on sales of outdoor companies prepared by Izba Gospodarcza Reklamy Zewnetrznej (IGRZ) which include: AMS S.A., BP Media, Business Consulting, CAM Media, Cityboard Media, Clear Channel Poland, Defi Poland,
Gigaboard Polska, Mini Media, Ströer Out of Home and Warexpo. The report is prepared on the basis of the financials provided by member companies of IGRZ. The reports for the outdoor market (defined by IGRZ as ‘the outof-home market’), include immovable, mobile and digital outdoor advertising.
[9] Audience market data referred herein are based on Radio Track surveys, carried out by MillwardBrown SMG/KRC
(all places, all days and all quarters):
- for local radio stations: in cities of broadcasting of Agora Group’s music radio stations and in the age group of 15+, from July to September (sample for 2011: 10,493; sample for 2012: 10,452); from January to September (sample for
2011: 31,505; sample for 2012: 31,454);
- for TOK FM: in cities of broadcasting and in the age group of 15+, from July to September (sample for 2011: 7,747; sample for 2012: 7,718); from January to September (sample for 2011: 23,295; sample for 2012: 23,263);
- for TOK FM: Warsaw and in the age group of 15+, from July to September (sample for 2011: 1,268; sample for 2012:
1,259); from January to September (sample for 2011: 3,816; sample for 2012: 3,800).
[10] Total paid circulation of Polskapresse titles associated under Polska brand = a sum of all copies sold of the titles
/number of days of publishing.
[11] the data on ticket sales in the cinemas comprising Helios group come from the financial data of Helios reported
according to the accounting standards and financial reports timetable.
[ w w w . a g o r a . p l ] Page 33
Management Discussion and Analysis for the third quarter of 2012
V. ADDITIONAL INFORMATION
translation only
1. IMPORTANT EVENTS
Changes in subsidiaries
On July 5, 2012 the Court in Ukraine registered the increase of the share capital of LLC Agora Ukraine by the amount of UAH 352,273.43 which was covered through contribution in cash by Agora S.A. After the increase the share capital of LLC Agora Ukraine amounts to UAH 517,901.91. As a result of the above transaction Agora S.A. still has
100% of the share capital and has right to 100% votes at shareholders’ meeting.
On August 29, 2012 the District Court for Szczecin - Centrum in Szczecin, XIII KRS Commercial Division registered the company: Online Technologies HR Sp. z o.o. with its registered seat in Szczecin. The share capital amounts to PLN 5.4 thousand. In the new company, Agora S.A. has 17.6% of the share capital and 17.6% of votes at shareholders’ meeting.
On September 14, 2012 the District Court for Lodz - Srodmiescie in Lodz, XX KRS Commercial Division registered the company: Next Film Sp. z o.o. with its registered seat in Lodz. The share capital amounts to PLN 500 thousand. In the new company Helios S.A., a subsidiary of Agora S.A., has 100% of the share capital and 100% of the votes at shareholders’ meeting.
.On October 4, 2012, the shareholders of Online Technologies HR Sp. z o.o. resolved to increase the share capital of the company by 12 new shares with nominal value of PLN 80 per share (in total PLN 960). Agora S.A. covered new shares with PLN 200 thousand contribution. After the share capital increase it amounts to PLN 6.4 thousand and is divided into 80 shares with nominal value of PLN 80 per share. After the share capital increase, Agora S.A. owns 24 shares which translates into 30% of the company’s share capital and 30% of votes at shareholders’ meeting. The share capital increase has not been registered by the court till the date of the publication of this report.
Reduction of employment in Agora S.A.
On August 13, 2012 the Management Board of Agora S.A. resolved to initiate the consultation on group lay-offs with the trade unions operating at Agora S.A. and with the Company's works council.
On September 6, 2012 the Management Board of Agora S.A. concluded a trilateral agreement with trade unions operating at Agora S.A. and with works council in the Company and adopted the resolution to execute group lay-offs in accordance with the provisions of the agreement. The group lay-offs shall be executed from September 10, 2012 till January 31, 2013 and shall affect up to 250 employees of the Company, i.e. ca 10% of all employees of the
Company.
2. CHANGES IN OWNERSHIP OF SHARES OR OTHER RIGHTS TO SHARES (OPTIONS) BY
MANAGEMENT BOARD MEMBERS IN THE THIRD QUARTER OF 2012 AND UNTIL THE DATE OF
PUBLICATION OF THE REPORT
Tab. 15 a. shares
Piotr Niemczycki
Zbigniew Bak
Marek Jackiewicz
Grzegorz Kossakowski
Stanislaw Turnau as of
30 September
2012
1,548,373
68,006
100,000
44,451
119,292 decrease
0
0
0
0
0 increase
0
0
0
0
0 as of
30 June 2012
1,548,373
68,006
100,000
44,451
119,292
[ w w w . a g o r a . p l ] Page 34
Management Discussion and Analysis for the third quarter of 2012 b. shares as of
9 November 2012 decrease translation only
Piotr Niemczycki
Zbigniew Bak
Marek Jackiewicz
Grzegorz Kossakowski
1,548,373
68,006
100,000
44,451
0
0
0
0 increase
0
0
0
0 as of
30 September 2012
1,548,373
68,006
100,000
44,451
Stanislaw Turnau 119,292 0 0 119,292
In the described periods, the members of the Management Board did not have any other rights to shares (e.g. options).
The members of the Management Board participate in the incentive plan described in the note 5 of the condensed interim consolidated financial statements.
3. CHANGES IN OWNERSHIP OF SHARES OR OTHER RIGHTS TO SHARES (OPTIONS) BY
SUPERVISORY BOARD MEMBERS IN THE THIRD QUARTER OF 2012 AND UNTIL THE DATE OF
PUBLICATION OF THE REPORT
Tab. 16 a. shares
Slawomir S. Sikora
Tomasz Sielicki
Andrzej Szlezak
Marcin Hejka
Wanda Rapaczynski as of
30 September
2012
0
33
0
0
924,616 decrease
0
0
0
0
0 increase
0
0
0
0
0 as of
30 June 2012
0
33
0
0
924,616 b. shares
Slawomir S. Sikora
Tomasz Sielicki
Andrzej Szlezak
Marcin Hejka as of
9 November 2012
0
33
0
0 decrease
0
0
0
0 increase
0
0
0
0 as of
30 September 2012
0
33
0
0
Wanda Rapaczynski 924,616 0 0 924,616
In the described periods, the members of the Supervisory Board did not have any other rights to shares (e.g. options).
4. SHAREHOLDERS ENTITLED TO EXERCISE OVER 5% OF TOTAL VOTING RIGHTS AT THE
GENERAL MEETING OF AGORA S.A., EITHER DIRECTLY OR THROUGH AFFILIATES AS OF THE
DATE OF PUBLICATION OF THE QUARTERLY REPORT
Data update is performed on the basis of the official notifications from Shareholders entitled to over 5% of total voting rights at the General Meeting of the Company.
According to the formal notifications received from the Company’s shareholders, particularly on the basis of art. 69 of Act on Public Offer and the Conditions of Introducing Financial Instruments to the Organized Trading System and on Public Companies dated July 29, 2005, as of the day of publication of previous quarterly report (i.e. August 10
2012), the shareholding structure has changed significantly until the day of publication of this quarterly report.
[ w w w . a g o r a . p l ] Page 35
Management Discussion and Analysis for the third quarter of 2012 translation only
According to the above-mentioned notifications, as at August 10, 2012, the following shareholders were entitled to exercise over 5% of total voting rights at the General Meeting of the Company: no. of shares
% of share capital no. of votes
Tab. 17
% of voting rights
Agora-Holding Sp. z o.o.
(in accordance with the last notification
obtained on January 3, 2012)
5,692,420 11.18 22,818,820 33.53
ING Otwarty Fundusz Emerytalny
(in accordance with the last notification
obtained on September 29, 2011)
3,758,637 7.38 3,758,637 5.52
Significant changes in the shareholders’ structure
In the current report published on October 10, 2012 the Management Board of Agora S.A. announced that the
Company obtained a notification, that as a result of share purchase on October 5, 2012, ING Otwarty Fundusz
Emerytalny (hereinafter referred to as the Fund ING) became the owner of the shares entitling the Fund ING to over
10% of votes during a General Meeting of Shareholders of Agora S.A. As a result of transactions mentioned above on
October 10, 2012 the Fund ING held 6,811,517 Company's shares constituting 13.37% of the Company's share capital. These shares entitle the Fund ING to 6,811,517 votes at the General Meeting of Shareholders of Agora S.A. constituting 10.008% of the total number of votes at a General Meeting of Shareholders of Agora S.A.
In the current report published on November 6, 2012 the Management Board of Agora S.A. announced that the
Company obtained a notification from Powszechne Towarzystwo Emerytalne PZU S.A. (Towarzystwo) acting on behalf of Otwarty Fundusz Emerytalny PZU Zlota Jesien (OFE) and Dobrowolny Fundusz Emerytalny PZU, that as a result of share purchase transactions, executed by OFE on the Warsaw Stock Exchange on October 26, 2012, the number of shares owned by OFE, as well as the number of shares controlled by Towarzystwo, exceed 5% of votes at a General Meeting of Shareholders of Agora S.A.
According to the formal notifications received from the Company’s shareholders, particularly on the basis of art. 69 of Act on Public Offer and the Conditions of Introducing Financial Instruments to the Organized Trading System and on Public Companies dated July 29, 2005, as of the day of publication of this quarterly report the following shareholders were entitled to exercise over 5% of voting rights at the General Meeting of Shareholders of the
Company:
Tab. 18
No. of shares
% of share capital no. of votes
% of voting rights
Agora-Holding Sp. z o.o.
(in accordance with the last notification
obtained on January 3, 2012)
ING Otwarty Fundusz Emerytalny
(in accordance with the last notification
obtained on October 10, 2012)
Powszechne Towarzystwo Emerytalne PZU S.A.
(Otwarty Fundusz Emerytalny PZU Zlota Jesien
and Dobrowolny Fundusz Emerytalny PZU)
(in accordance with the last notification obtained on November 6, 2012)
5,692,420
6,811,517
3,809,527
11.18
13.37
7.48
22,818,820
6,811,517
3,809,527
3.53
10.008
5.60 incl. Otwarty Fundusz Emerytalny PZU Zlota
Jesien (in accordance with the last
notification obtained on November 6, 2012)
3,802,477 7.47 3,802,477 5.59
[ w w w . a g o r a . p l ] Page 36
Management Discussion and Analysis for the third quarter of 2012
5. OTHER INFORMATION
The Management Board’s statement of the possible realization of forecasts translation only
The Management Board did not publish any forecasts of the Company’s financial results and because of that this report does not present any Management Board’s statement of the possible realization of them.
Changes in contingencies
Any changes in contingencies since the date of the last financial year were described in note 8 to the condensed interim consolidated financial statements presented in this report.
Related party transactions
Transactions with related parties with the Agora Group are described in note 11 to the condensed interim consolidated financial statements presented in this report. All transactions carried out between related parties are of routine nature.
[ w w w . a g o r a . p l ] Page 37
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
AGORA GROUP
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS as at 30 September 2012 and for 3 and 9 month period ended thereon
CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2012
As at 30
September
2012 unaudited
As at 30 June
2012 unaudited
Assets
Non-current assets:
Intangible assets
Property, plant and equipment
Investments
Investments in equity accounted investees
Receivables and prepayments
Deferred tax assets
413,832
779,427
451
11,649
6,397
3,556
415,456
767,396
251
11,827
7,559
3,712
As at 31
December
2011 audited
419,236
760,157
251
11,881
7,934
3,840
Current assets:
Inventories
Accounts receivable and prepayments
Income tax receivable
Short-term securities and other financial assets
Cash and cash equivalents
As at 30
September
2011 unaudited
424,174
755,488
251
170
10,043
2,967
1,215,312 1,206,201 1,203,299 1,193,093
21,968 23,354 29,209 27,620
231,872
4,008
122,452
96,628
251,624
3,011
171,183
105,614
246,411
1,424
197,872
125,505
236,580
531
199,488
117,001
Total assets
476,928 554,786 600,421 581,220
1,692,240 1,760,987 1,803,720 1,774,313
[ w w w . a g o r a . p l ] Page 38
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
Accompanying notes are an integral part of these condensed interim consolidated financial statements.
[ w w w . a g o r a . p l ] Page 39
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2012 (CONTINUED)
Equity and liabilities
Equity attributable to equity holders of the parent:
Share capital
Share premium
Translation reserve
Retained earnings and other reserves
Non-controlling interest
Total equity
Non-current liabilities:
Note
As at 30
September
2012 unaudited
As at 30 June
2012 unaudited
As at 31
December
2011 audited
As at 30
September
2011 unaudited
50,937
147,192
(287)
989,908
(225)
998,638
(114)
1,048,049
(65)
1,039,598
1,187,750 1,196,542 1,246,064 1,237,662
16,971
50,937
147,192
16,610
50,937
147,192
17,253
50,937
147,192
16,010
1,204,721 1,213,152 1,263,317 1,253,672
Deferred tax liabilities
Long-term borrowings
Other financial liabilities
Retirement severance provision
Deferred revenues and accruals
Current liabilities:
Retirement severance provision
Accounts payable
Income tax liabilities
Short-term borrowings
Provisions
Deferred revenues and accruals
3
3
43,784
108,623
27,608
2,091
1,586
183,692
162
140,531
180
86,019
15,169
61,766
303,827
45,384
113,958
27,613
2,091
4,665
193,711
162
215,630
78
77,700
5,960
54,594
354,124
45,270
142,459
27,691
1,914
4,007
221,341
195
182,729
3,222
70,527
6,786
55,603
319,062
49,699
140,250
29,888
2,079
4,125
Total equity and liabilities 1,692,240 1,760,987 1,803,720 1,774,313
Accompanying notes are an integral part of these condensed interim consolidated financial statements.
226,041
68
150,938
2,437
79,085
7,190
54,882
294,600
[ w w w . a g o r a . p l ] Page 40
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
CONSOLIDATED INCOME STATEMENT FOR THREE AND NINE MONTHS ENDED
30 SEPTEMBER 2012
Note
Three months ended
As at 30
September
2012 unaudited
Nine months ended
As at 30
September
2012 unaudited
Three months ended
As at 30
September
2011 unaudited
Nine months ended
As at 30
September
2011 audited
Sales 4 264,635 829,043 283,596 898,704
Cost of sales
Gross profit
Selling expenses
Administrative expenses
Other operating income
Other operating expenses
Operating profit /(loss)
Finance income
Finance costs
Share of results of equity accounted investees
Profit/(loss) before income taxes
Income tax
Net profit/(loss) for the period
Attributable to:
Equity holders of the parent
Non-controlling interest
(193,694)
70,941
(52,780)
(26,602)
4,383
(6,053)
(10,111)
3,926
(3,424)
(178)
(9,787)
1,418
(8,369)
(8,730)
361
(8,369)
4
(587,336)
241,707
(165,786)
(84,306)
14,669
(16,269)
(9,985)
11,509
(10,215)
(232)
(8,923)
253
(8,670)
(8,892)
222
(8,670)
(187,310)
96,286
(59,759)
(27,376)
3,142
(4,314)
7,979
3,790
(4,170)
(71)
7,528
(2,031)
5,497
5,440
57
5,497
(65)
43,954
(9,817)
34,137
33,281
856
34,137
(579,022)
319,682
(186,273)
(87,948)
13,076
(14,004)
44,533
12,018
(12,532)
Basic/diluted earnings per share (in PLN) (0.17) (0.17) 0.11
Accompanying notes are an integral part of these condensed interim consolidated financial statements.
0.65
[ w w w . a g o r a . p l ] Page 41
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THREE AND NINE
MONTHS ENDED 30 SEPTEMBER 2012
Net profit/(loss) for the period
Three months ended
As at 30
September
2012 unaudited
(8,369)
Nine months ended
As at 30
September
2012 unaudited
(8,670)
Three months ended
As at 30
September
2011 unaudited
5,497
Nine months ended
As at 30
September
2011 unaudited
34,137
Foreign currency translation differences for foreign companies
Other comprehensive income for the period
(62)
(62)
(173)
(173)
22
22
65
65
Total comprehensive income for the period
Attributable to:
Equity holders of the parent
Non-controlling interest
(8,431)
(8,792)
361
(8,431)
(8,843)
(9,065)
222
(8,843)
5,519
5,462
57
5,519
Accompanying notes are an integral part of these condensed interim consolidated financial statements.
34,202
33,346
856
34,202
[ w w w . a g o r a . p l ] Page 42
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2012
Attributable to equity holders of the parent
Three months ended 30 September 2012
As at 30 June 2012 unaudited
Total comprehensive income for the period
Net profit/(loss) for the period
Share capital
50,937
-
Share premium
147,192
-
Foreign currency translation reserve
(225)
-
Retained earnings and other reserves Total
998,638 1,196,542
(8,730) (8,730)
Other comprehensive income - - (62)
Total comprehensive income for the period
Total transactions with owners
-
-
-
-
(62)
-
As at 30 September 2012 unaudited 50,937 147,192 (287)
Accompanying notes are an integral part of these condensed interim consolidated financial statements.
-
(8,730)
-
(62)
(8,792)
-
989,908 1,187,750
Noncontrolling interest Total equity
16,610
361
1,213,152
(8,369)
-
361
-
16,971
(62)
(8,431)
-
1,204,721
[ w w w . a g o r a . p l ] Page 43
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2012 (CONTINUED)
Attributable to equity holders of the parent
Nine months ended 30 September 2012
As at 31 December 2011 audited
Total comprehensive income for the period
Net profit / (loss) for the period
Other comprehensive income
Total comprehensive income for the period
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Share capital
50,937
-
-
-
Share premium
Translation reserve
147,192
-
-
-
(114)
-
(173)
(173)
Retained earnings and other reserves
1,048,049
(8,892)
-
(8,892)
Total
1,246,064
(8,892)
(173)
(9,065)
Non-controlling interest
17,253
222
-
222
Total equity
1,263,317
(8,670)
(173)
(8,843)
Equity-settled share-based payments
Dividends declared
Dividends of subsidiaries
Total contributions by and distribtutions to owners
Changes in ownership interests in subsidiaries
Acquisition of non-controlling interests
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,761
(50,937)
1,761
(50,937)
- -
(49,176) (49,176)
(73) (73)
-
-
(504)
(504)
-
1,761
(50,937)
(504)
(49,680)
(73)
Total changes in ownership interests in subsidiaries - - -
Total transactions with owners - - -
As at 30 September 2012 unaudited 50,937 147,192 (287)
Accompanying notes are an integral part of these condensed interim consolidated financial statements.
(73) (73)
(49,249) (49,249)
989,908 1,187,750
-
(504)
16,971
(73)
(49,753)
1,204,721
[ w w w . a g o r a . p l ] Page 44
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2012 (CONTINUED)
Attributable to equity holders of the parent
Twelve months ended 31 December 2011
As at 31 December 2010 audited
Total comprehensive income for the period
Net profit for the period
Other comprehensive income
Total comprehensive income for the period
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Equity-settled share-based payments
Dividends declared
Dividends of subsidiaries
Total contributions by and distribtutions to owners
Changes in ownership interests in subsidiaries
Acquisition of non-controlling interests
Acquisition of subsidiary
Recognition of put option granted to noncontrolling interests
Additional contribution of non-controlling shareholder
Share capital
50,937
-
-
-
-
-
-
-
-
-
-
-
Share premium
Translation reserve
147,192
-
-
(130)
-
16
Retained earnings and other reserves Total
1,023,053 1,221,052
42,171
-
42,171
16
Non-controlling interest
15,500
1,618
-
-
-
-
-
-
-
-
-
-
16
-
-
-
-
-
-
-
-
Total changes in ownership interests in subsidiaries
Total transactions with owners
-
-
-
-
-
-
As at 31 December 2011 audited 50,937 147,192 (114)
Accompanying notes are an integral part of these condensed interim consolidated financial statements.
42,171
9,706
(25,469)
-
(15,763)
(286)
-
(1,126)
-
(1,412)
(17,175)
42,187
9,706
(25,469)
-
(15,763)
(286)
-
(1,126)
-
(1,412)
(17,175)
1,048,049 1,246,064
1,618
-
-
(404)
(404)
286
252
-
1
Total equity
539
135
17,253
1,236,552
43,789
16
43,805
9,706
(25,469)
(404)
(16,167)
-
252
(1,126)
1
(873)
(17,040)
1,263,317
[ w w w . a g o r a . p l ] Page 45
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2012 (CONTINUED)
Attributable to equity holders of the parent
Nine months ended 30 September 2011
As at 31 December 2010 audited
Total comprehensive income for the period
Net profit for the period
Other comprehensive income
Total comprehensive income for the period
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Share capital
50,937
-
-
Share premium
147,192
-
-
Translation reserve
(130)
-
65
Retained earnings and other reserves Total
1,023,053 1,221,052
33,281
-
33,281
65
- - 65 33,281 33,346
Noncontrolling interest Total equity
15,500
856
-
1,236,552
34,137
65
856 34,202
Equity-settled share-based payments
Dividends declared
Dividends of subsidiaries
Total contributions by and distribtutions to owners
Changes in ownership interests in subsidiaries
Acquisition of non-controlling interests
Other
Total changes in ownership interests in subsidiaries
-
-
-
-
-
-
-
-
-
-
-
-
- - -
Total transactions with owners - - -
As at 30 September 2011 unaudited 50,937 147,192 (65)
Accompanying notes are an integral part of these condensed interim consolidated financial statements.
-
-
-
-
-
-
8,789 8,789
(25,469) (25,469)
- -
(16,680) (16,680)
(56)
-
(56)
-
(56) (56)
(16,736) (16,736)
1,039,598 1,237,662
-
-
(404)
(404)
56
2
58
(346)
16,010
8,789
(25,469)
(404)
(17,084)
-
2
2
(17,082)
1,253,672
[ w w w . a g o r a . p l ] Page 46
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
CONSOLIDATED CASH FLOW STATEMENT FOR THREE AND NINE MONTHS ENDED
30 SEPTEMBER 2012
Three months ended
Nine months ended
Three months ended
Nine months ended
Cash flows from operating activities
Profit/ (loss) before income taxes
Adjustments for:
Share of results of equity accounted investees
Depreciation of property, plant and equipment
Amortization of intangible assets
Foreign exchange (gain) /loss
Interest, net
(Profit) / loss on investing activities
(Decrease) / increase in provisions
(Increase) / decrease in inventories
(Increase) / decrease in receivables and prepayments
(Decrease) / increase in payables
(Decrease) / increase in deferred revenues and accruals
Other adjustments (1)
Cash generated from operations
Income taxes paid
As at 30
September
2012 unaudited
(9,787)
178
19,804
3,374
(278)
3,069
(1,946)
9,208
1,387
18,518
(25,382)
3,829
12
21,986
(685)
As at 30
September
2012 unaudited
(8,923)
232
58,889
10,952
(470)
9,226
(5,487)
8,526
7,241
12,709
(33,549)
3,288
1,660
64,294
(4,908)
As at 30
September
2011 unaudited
7,528
71
18,984
3,316
-
3,573
(1,522)
75
(4,178)
16,186
7,873
(634)
67
51,339
(1,372)
As at 30
September
2011 unaudited
43,954
65
57,188
13,062
(5)
10,737
(5,580)
(2,809)
(5,068)
(1,855)
(9,022)
1,923
9,302
111,892
(5,874)
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment and intangibles
Disposal of subsidiaries (net of cash disposed) and associates and jointly controlled entities
Interest received
Disposal of short-term securities
Other
Purchase of property plant and equipment and intangibles
Acquisition of subsidiary (net of cash acquired) associates and jointly controlled entities
Acquisition of short-term securities
Loans granted
Net cash used in investing activities
21,301
2,224
-
799
50,202
68
(23,673)
(200)
-
-
29,420
59,386
8,450
238
2,878
185,984
68
(77,499)
(200)
(107,029)
-
12,890
49,967
118
-
638
19,411
-
(23,542)
-
(18,014)
-
(21,389)
106,018
384
-
1,441
80,084
-
(51,574)
(50)
(119,344)
(200)
(89,259)
[ w w w . a g o r a . p l ] Page 47
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
Cash flows from financing activities
Proceeds from borrowings
Acquisition of non-controlling interest
Dividends paid to equity holders of the parent
Dividends paid to non-controlling shareholders
Repayment of borrowings
Payment of finance lease liabilities
Interest paid
Other
Three months ended
Nine months ended
As at 30
September
2012 unaudited
10,420
-
(50,937)
-
(11,777)
(4,285)
(3,007)
(121)
As at 30
September
2012 unaudited
20,121
(73)
(50,937)
(504)
(49,377)
(10,595)
(9,311)
(477)
Three months ended
Nine months ended
As at 30
September
2011 unaudited
2,100
-
(25,469)
-
(14,002)
(2,876)
(3,519)
(90)
As at 30
September
2011 unaudited
4,600
-
(25,469)
(404)
(41,964)
(7,658)
(10,649)
(572)
Net cash used in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents
At start of period
At end of period
(59,707)
(8,986)
105,614
96,628
(101,153)
(28,877)
125,505
96,628
(43,856)
(15,278)
132,279
117,001
(1) “other adjustments” include mainly non-cash share-based payment costs.
Accompanying notes are an integral part of these condensed interim consolidated financial statements.
(82,116)
(65,357)
182,358
117,001
[ w w w . a g o r a . p l ] Page 48
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS AT
30 SEPTEMBER 2012 AND FOR 3 AND 9 MONTH PERIOD ENDED THEREON
1. GENERAL INFORMATION
Agora S.A. with its registered seat in Warsaw, Czerska 8/10 street (“the Company”) principally produces, sells and promotes daily newspapers (including Gazeta Wyborcza), magazines as well as other periodicals and carries out the Internet activity. The Company also controls 5 radio broadcasting companies and is active in the outdoor segment through an acquired subsidiary, AMS S.A. (“AMS”) as well as in the cinema segment through its subsidiaries
Helios S.A. and Next Film Sp. z o.o. (“Helios group”).
As at 30 September 2012 the Agora Group (“the Group”) comprised Agora S.A., 14 subsidiaries, a one jointly controlled entity Business Ad Network Sp. z o.o. and a one associate GoldenLine Sp. z o.o. The Group carries out activity in all major cities of Poland and in Ukraine – through LLC Agora Ukraine. Financial statements were prepared as at and for three and nine months ended 30 September 2012, with comparative figures presented as at and for three and nine months ended 30 September 2011.
The financial statements were authorized for issue by the Management Board of Agora S.A. on November 9, 2012.
2. STATEMENT OF COMPLIANCE
The Consolidated Balance Sheet as of 30 September 2012, the Consolidated Income Statement, the Consolidated
Statement of Comprehensive Income, the Consolidated Cash Flow Statement and the Consolidated Statement of
Changes in Equity for three and nine months ended 30 September 2012 have not been audited. The Consolidated
Financial Statements for twelve months ended 31 December 2011 have been audited by an independent auditor who issued an unqualified opinion.
The Condensed Interim Financial Statements have been prepared under International Accounting Standard 34
“Interim Financial Reporting”, according to art. 55 point 5 and art. 45 point 1a-1c of Accounting Act (Official Journal from 2009, No 152, item 1,223 with subsequent amendments), regulations issued based on that Act and the Decree of
Minister of Finance dated 19 February 2009 on current and periodic information provided by issuers of securities and the conditions for recognition as equivalent information required by the law of a non-Member State (Official Journal from 2009, No 33, item 259 with subsequent amendments).
In the preparation of these condensed interim consolidated financial statements, the Group has followed the same accounting policies as used in the Consolidated Financial Statements as at December 31, 2011, except for the changes described below. The condensed interim consolidated financial statements as for September 30, 2012 should be read together with the audited consolidated financial statements as at December 31, 2011.
For the Group’s financial statements for the year started with January 1, 2012, the following amendments to existing standards, which were endorsed by the European Union, are effective:
1) Changes to IFRS 7 Financial instruments: Disclosures ‐ Transfer of Financial Assets.
The revised standards have not had any significant impact on the financial statements presented up till now.
[ w w w . a g o r a . p l ] Page 49
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
3. LONG-TERM AND SHORT-TERM BORROWINGS
As at 30 September 2012, the Company had up a long-term loan facility on the basis of the credit line agreement dated 5 April 2002 available from Bank Pekao S.A. (with subsequent annexes). In accordance with the Annex no. 13, the amount of loan facility has changed and is equal to PLN 297,817 thousand. On October 5, 2010 the Company drew a PLN 104,900 thousand to refinance the acquisition of Helios S.A. As at September 30, 2012, the loan liability amounted to PLN 86,915 thousand, including PLN 51,804 thousand presented in the non-current part. The Company is able to use the open credit line up to PLN 150,000 thousand till May 31, 2013.
As at 30 September 2012, loans and borrowings of the Helios group (Helios S.A. and from September 14, 2012 Next
Film Sp. z o.o.) amounted to PLN 107,728 thousand. This amount consisted of:
PLN 60,830 thousand of bank loans (including PLN 21,820 thousand presented in non-current part);
PLN 46,898 thousand of finance lease payables (including PLN 35,000 thousand presented in non-current part) - connected mainly with finance leasing of the cinema equipment and cars.
4. SALES AND SEGMENT INFORMATION
In these condensed interim consolidated financial statements, in accordance with IFRS 8 Operating segments, information on operating segments are presented on the basis of components of the entity that management monitors in making decisions about operating matters. Operating segments are components of an entity, about which separate financial information is available, that is evaluated regularly by the chief operating decision maker in the process of decision making regarding allocation of resources and assessing the performance of the Group.
For management purposes, the Group is organized into business units based on their products and services, and has six reportable operating segments as follows:
1) the Newspapers segment includes the Group’s following activities: Special Projects (including book collections) and publishing of Gazeta Wyborcza as well as Metro (including operating activities of the Agora’s Printing Department and
Agora Poligrafia Sp. z o.o., which print also these two newspapers),
2) the Internet segment includes the following Group’s activities: the Internet and multi-media products and services,
(the Agora’s Internet department, Trader.com (Polska) Sp. z o.o., LLC Agora Ukraine, AdTaily Sp. z o.o. and from
November 30, 2011 Sport4People Sp. z o.o.),
3) the Cinema segment includes the Group’s activities within the cinema management of Helios S.A. and film distribution activities of Next Film Sp. z o.o. (till August 31, 2011 consolidated financial statements of two companies:
Helios S.A. and Kinoplex Sp. z o.o.) comprising multiplexes as well as traditional cinemas.
4) the Outdoor segment includes the activities within the AMS Group, which provides advertising services on different forms of outdoor advertising panels,
5) the Radio segment includes the Group’s activities within local radio stations, super-regional TOK FM radio and
Agora’s Radio Department,
6) the Magazines segment comprises the Group’s activities on publishing the magazines within Agora’s Magazine
Department,
Accounting policies for operating segments are the same as followed by the Agora Group, besides some issues described below.
Data within each reportable segment are consolidated pro-forma. The Management Board monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss.
Operating results of reportable segments do not include: a) revenues and total cost of cross-promotion of Agora’s different media if such promotion is executed without prior reservation between segments of the Agora Group; the direct variable cost of campaigns carried out on advertising panels is the only cost that is included above; it is allocated from the Outdoor segment to other segments, b) amortisation recognised on consolidation (described below).
[ w w w . a g o r a . p l ] Page 50
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
Group financing (including finance costs and finance revenue) and income tax are managed on a Group level and are not allocated to operating segments.
Transfer prices between operating segments are set on the market basis in the manner similar to transactions with third parties.
Reconciling positions show data not included in particular segments, inter alia: other revenues and costs of Agora’s support divisions and the Management Board, Agora TC Sp. z o.o., intercompany eliminations and other matching adjustments which reconcile the data presented in the management reports to the consolidated financials of the
Agora Group.
Operating depreciation and amortisation includes amortisation of intangible assets and fixed assets of each segment.
Amortisation recognised on consolidation can be defined as consolidation adjustments, inter alia: the amortisation of intangible assets and adjustments to property, plant and equipment recognised directly on consolidation.
Impairment losses and reversals of impairment losses show impairment losses and their reversals presented in other operating expenses and income.
Amount of investment in associates and joint ventures accounted for by the equity method include the amounts of loans granted in the reported period, paid-in capital, acquired and contributed shares by Agora S.A. The financials presented for three and NINE months ended 30 September 2012 and 30 September 2011 relate to A2 Multimedia Sp. z o.o. (till January 31, 2012), Business Ad Network Sp. z o.o. and also to GoldenLine Sp. z o.o. (from 29 December
2011).
Capital expenditure consists of additions based on the invoices booked in the reported period (purchases of intangible and fixed assets).
The Agora Group does not present geographical reporting segments, because the business activities in the Ukraine do not have material impact on the financial statements of the Group as a whole.
[ w w w . a g o r a . p l ] Page 51
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated)
4. SALES AND SEGMENT INFORMATION (CONTINUED)
Three months ended 30 September 2012
Newspapers Internet Cinema Outdoor Radio translation only
Magazines
Reconciling positions Total
Revenues from external customers
Intersegment revenues (2)
Total revenues
Total operating cost (1), (2), (3)
Operating profit/ (loss) (1)
Net finance income and cost
114,680
2,090
116,770
(109,540)
7,230
24,088
821
24,909
(24,983)
(74)
53,728
1,194
54,922
(51,330)
3,592
38,376
447
38,823
(38,852)
(29)
17,056
1,089
18,145
(19,018)
(873)
15,434
35
15,469
(14,533)
936
1,273
(5,676)
(4,403)
(16,490)
(20,893)
502
264,635
-
264,635
(274,746)
(10,111)
502
Share of results of equity accounted investees
Income tax expense
(178)
1,418
(178)
1,418
Net loss (8,369)
(1) segments do not include amortisation recognised on consolidation, which is presented in reconciling positions;
(2) the amounts do not include revenues and total cost of cross-promotion of Agora’s different media if such promotion is executed without prior reservation between segments of the
Agora Group; the direct variable cost of campaigns carried out on advertising panels is the only cost that is included above; it is allocated from the Outdoor segment to other segments;
(3) reconciling positions show data not included in particular segments, inter alia: other cost and the result on other operating activities of Agora’s support divisions and the Management
Board and Agora TC Sp. z o.o. (PLN 22,552 thousand), intercompany eliminations and other matching adjustments which reconcile the data presented in the management reports to the consolidated financials of the Agora Group.
[ w w w . a g o r a . p l ] Page 52
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated)
4. SALES AND SEGMENT INFORMATION (CONTINUED)
Three months ended 30 September 2012
Operating depreciation and amortisation
Amortisation recognised on consolidation (1)
Impairment losses
Reversals of impairment losses
Newspapers
(6,646)
-
(2,188)
1,307
Internet
(1,339)
(709)
(525)
54
Cinema (3)
(5,060)
(135)
(1)
3
Outdoor
(4,481)
-
(1,656)
1,350
Radio
(649)
-
(402)
242 translation only
Magazines
(39)
-
(23)
42
Reconciling positions
(4,184)
64
(29)
1
Equity-settled share-based payments
Capital expenditure (2)
-
4,860
-
2,764
-
21,635
(1) is not presented in operating result of the Group’s segments;
(2) based on invoices booked in the period;
(3) capital expenditure include lease property, plant and equipment in the amount of PLN 4,531 thousand.
-
3,296
-
2,133
-
125
-
(946)
Total
(22,398)
(780)
(4,824)
2,999
-
33,867
[ w w w . a g o r a . p l ] Page 53
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated)
4. SALES AND SEGMENT INFORMATION (CONTINUED)
Nine months ended 30 September 2012
Newspapers Internet Cinema Outdoor Radio translation only
Magazines
Reconciling positions Total
Revenues from external customers
Intersegment revenues (2)
Total revenues
Total operating cost (1), (2), (3)
Operating profit / (loss) (1)
Net finance income and cost
382,540
6,205
388,745
(342,891)
45,854
80,102
2,578
82,680
(78,415)
4,265
137,784
5,279
143,063
(141,870)
1,193
114,082
1,305
115,387
(115,623)
(236)
60,440
3,031
63,471
(63,727)
(256)
49,950
159
50,109
(47,385)
2,724
4,145
(18,557)
(14,412)
(49,117)
(63,529)
1,294
829,043
-
829,043
(839,028)
(9,985)
1,294
Share of results of equity accounted investees
Income tax
(232)
253
(232)
253
Net loss (8,670)
(1) segments do not include amortisation recognised on consolidation, which is presented in reconciling positions;
(2) the amounts do not include revenues and total cost of cross-promotion of Agora’s different media if such promotion is executed without prior reservation between segments of the
Agora Group; the direct variable cost of campaigns carried out on advertising panels is the only cost that is included above; it is allocated from the Outdoor segment to other segments;
(3) reconciling positions show data not included in particular segments, inter alia: other cost and the result on other operating activities of Agora’s support divisions and the Management
Board and Agora TC Sp. z o.o. (PLN 69,053 thousand), intercompany eliminations and other matching adjustments which reconcile the data presented in the management reports to the consolidated financials of the Agora Group.
[ w w w . a g o r a . p l ] Page 54
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated)
4. SALES AND SEGMENT INFORMATION (CONTINUED)
Nine months ended 30 September 2012 translation only
Operating depreciation and amortisation
Amortisation recognised on consolidation (1)
Impairment losses
Reversals of impairment losses
Equity-settled share-based payments
Capital expenditure (2)
Newspapers
(20,938)
-
(5,534)
4,359
(777)
14,056
Internet
(4,174)
(2,126)
(1,440)
971
(130)
4,979
Cinema (3)
(14,392)
(404)
(26)
47
-
40,351
Outdoor
(13,663)
Radio
(1,969)
-
(3,097)
1,917
(137)
7,331
As at 30 September 2012
-
(1,000)
765
(102)
3,236
Magazines
(365)
258
(67)
246
Reconciling
(103)
- positions
(12,262)
190
(318)
76
(548)
3,300
Total
(67,501)
(2,340)
(11,780)
8,393
(1,761)
73,499
Property, plant and equipment and intangible assets (4)
Newspapers Internet Cinema (3) Outdoor Radio Magazines
Reconciling positions Total
285,452 72,468 258,705 255,439 66,350 62,295 192,550 1,193,259
Investments in associates and joint ventures accounted for by the equity method -
(1) is not presented in operating result of the Group’s segments;
11,649 - - - - - 11,649
(2) based on invoices booked in the period;
(3) capital expenditure include lease property, plant and equipment in the amount of PLN 11,931 thousand;
(4) reconciling positions include mainly Company’s headquarter (PLN 131,830 thousand) and other property, plant and equipment and intangible assets of Agora’s support divisions and
Agora TC Sp. z o.o. not included in particular segments and intercompany eliminations.
[ w w w . a g o r a . p l ] Page 55
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated)
4. SALES AND SEGMENT INFORMATION (CONTINUED)
Three months ended 30 September 2011
Newspapers Internet Cinema Outdoor Radio translation only
Magazines
Reconciling positions Total
Revenues from external customers
Intersegment revenues (2)
Total revenues
Total operating cost (1), (2), (3)
Operating profit/ (loss) (1)
Net finance income and cost
131,647
1,308
132,955
(113,726)
19,229
24,784
1,163
25,947
(24,607)
1,340
47,919
992
48,911
(45,949)
2,962
38,928
1,181
40,109
(39,124)
985
20,744
750
21,494
(21,817)
(323)
17,536
57
17,593
(14,654)
2,939
2,038
(5,451)
(3,413)
(15,740)
(19,153)
(380)
283,596
-
283,596
(275,617)
7,979
(380)
Share of results of equity accounted investees
Income tax expense
(71)
(2,031)
(71)
(2,031)
Net profit 5,497
(1) segments do not include amortisation recognised on consolidation, which is presented in matching positions;
(2) the amounts do not include revenues and total cost of cross-promotion of Agora’s different media if such promotion is executed without prior reservation between segments of the
Agora Group; the direct variable cost of campaigns carried out on advertising panels is the only cost that is included above; it is allocated from the Outdoor segment to other segments;
(3) reconciling positions show data not included in particular segments, inter alia: other cost and the result on other operating activities of Agora’s support divisions and the Management
Board and Agora TC Sp. z o.o. (PLN 34,495 thousand), intercompany eliminations and other matching adjustments which reconcile the data presented in the management reports to the consolidated financials of the Agora Group.
[ w w w . a g o r a . p l ] Page 56
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated)
4. SALES AND SEGMENT INFORMATION (CONTINUED)
Three months ended 30 September 2011
Newspapers Internet Cinema (3) Outdoor Radio
Operating depreciation and amortisation (6,607) (1,338) (4,524) (4,522) (633) translation only
Magazines
(29)
Reconciling positions
(3,900)
Amortisation recognised on consolidation (1)
Impairment losses
Reversals of impairment losses
-
(1,493)
751
(664)
(174)
63
(134)
(15)
17
-
(895)
193
Equity-settled share-based payments - - -
Capital expenditure (2) 7,338
(1) is not presented in operating result of the Group’s segments;
(2) based on invoices booked in the period;
1,278 4,982
(3) capital expenditure include lease property, plant and equipment in the amount of PLN 659 thousand.
-
2,218
(12)
(407)
266
-
1,496
-
(209)
103
-
2
62
(50)
(141)
-
3,916
Total
(21,553)
(748)
(3,243)
1,252
-
21,230
[ w w w . a g o r a . p l ] Page 57
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated)
4. SALES AND SEGMENT INFORMATION (CONTINUED)
Newspapers Internet Cinema translation only
Nine months ended 30 September 2011
Outdoor Radio Magazines
Reconciling positions Total
Revenues from external customers
Intersegment revenues (2)
Total revenues
Total operating cost (1), (2), (3)
Operating profit/ (loss) (1)
Net finance income and cost
432,862
3,952
436,814
(366,394)
70,420
79,317
2,036
81,353
(78,478)
2,875
142,211
1,521
143,732
(133,525)
10,207
123,136
2,871
126,007
(117,024)
8,983
60,017
2,030
62,047
(59,853)
2,194
56,277
150
56,427
(45,199)
11,228
4,884
(12,560)
(7,676)
(53,698)
(61,374)
(514)
898,704
-
898,704
(854,171)
44,533
(514)
Share of results of equity accounted investees
Income tax
(65)
(9,817)
(65)
(9,817)
Net profit 34,137
(1) segments do not include amortisation recognised on consolidation, which is presented in matching positions;
(2) the amounts do not include revenues and total cost of cross-promotion of Agora’s different media if such promotion is executed without prior reservation between segments of the
Agora Group; the direct variable cost of campaigns carried out on advertising panels is the only cost that is included above; it is allocated from the Outdoor segment to other segments;
(3) reconciling positions show data not included in particular segments, inter alia: other cost and the result on other operating activities of Agora’s support divisions and the Management
Board and Agora TC Sp. z o.o. (PLN 80,414 thousand), intercompany eliminations and other matching adjustments which reconcile the data presented in the management reports to the consolidated financials of the Agora Group.
[ w w w . a g o r a . p l ] Page 58
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 and 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated)
4. SALES AND SEGMENT INFORMATION (CONTINUED)
Nine months ended 30 September 2011
Newspapers Internet Cinema(4) Outdoor Radio
Operating depreciation and amortisation
Amortisation recognised on consolidation (1)
Impairment losses
Reversals of impairment losses
(22,472)
-
(3,447)
2,085
(4,574)
(1,990)
(617)
242
(13,321)
(403)
(107)
99
(13,690)
-
(3,463)
2,009
(1,914)
(118)
(931)
640 translation only
Magazines
(106)
-
(329)
178
Reconciling positions
191
(93)
26
(11,853)
Total
(67,930)
(2,320)
(8,987)
5,279
Equity-settled share-based payments
Capital expenditure (2)
(3,934)
15,246
(561)
3,785
-
20,568
(735)
8,942
(493)
1,731
As at 30 September 2011
(385)
125
(2,681)
12,363
(8,789)
62,760
Property, plant and equipment and intangible assets (3)
Newspapers Internet Cinema(4) Outdoor Radio Magazines
Reconciling positions Total
289,039 72,931 238,679 263,135 64,455 73,313 178,110 1,179,662
Investments in associates and joint ventures accounted for by the equity method - 170 - - - - - 170
(1) is not presented in operating result of the Group’s segments;
(2) based on invoices booked in the period.
(3) reconciling positions include mainly Company’s headquarter (PLN 137,539 thousand) and other property, plant and equipment and intangible assets of Agora’s support divisions and
Agora TC Sp. z o.o. not included in particular segments and intercompany eliminations;
(4) capital expenditure include lease property, plant and equipment in the amount of PLN 8,723 thousand.
[ w w w . a g o r a . p l ] Page 59
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
5. INCENTIVE PLANS BASED ON FINANCIAL INSTRUMENTS
During periods covered by these financial statements, the following incentive plans were carried out in the Group:
A. Incentive Plan based on equity-settled share-based payments,
B. Incentive Plan based on realization on operating result goal and share price increase (from 2010).
A. Incentive plan based on equity-settled share-based payments (carried out from 2005)
Eligible employees participate in an incentive plan based on investment certificates in a closed end mutual fund designated to service the plan and managed by Towarzystwo Funduszy Inwestycyjnych Skarbiec SA.
The number of certificates granted depends on meeting performance criteria, not on market conditions.
Detailed information on Incentive Plans for 2010 and 2011 were presented in the consolidated financial statements for the year of 2010 and 2011 respectively.
Detailed information on new Incentive Plan for 2012, which will be measured and will affect results of Agora Group in future periods, will be presented in the fourth quarter of 2012.
The impact of share-based payments on the financial statements of the Agora Group:
Three months ended 30
September
2012
Nine months ended 30
September
2012
Income statement – staff cost
Equity
-
-
1,761
1,761
Three months ended 30
September
2011
-
-
Nine months ended 30
September
2011
8,789
8,789
The impact on the financial statements of the Group described above, results in 2011 from the recognition of the plan carried out in 2010; in 2012 – from the recognition of the plans carried out in 2011.
The table below shows the number of certificates purchased by the employees of the Group in incentive schemes
(in number of certificates, including certificates purchased by the Management Board of Agora S.A.):
Three months ended 30
September
2012
Nine months ended 30
September
2012
Three months ended 30
September
2011
Nine months ended 30
September
2011
At the beginning of the period
Granted
Forfeited
Vested
-
-
-
-
333,101
-
(2,884)
(330,217)
-
-
-
-
680,355
-
(3,300)
(677,055)
At the end of the period - - - -
[ w w w . a g o r a . p l ] Page 60
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
Investment certificates acquired by the Management Board of Agora S.A. (number of certificates):
As at 30
September
2012
Incentive plan 2011 ( M series)
Piotr Niemczycki
Zbigniew Bak
Tomasz Jozefacki (1)
Marek Jackiewicz (2)
Stanisław Turnau (3)
Grzegorz Kossakowski
-
-
-
-
-
-
-
Vested in
2012
(8,569)
(9,997)
(6,855)
(3,124)
(3,535)
(6,855)
(38,935)
Forfeited in
2012
-
-
-
-
-
-
-
Granted in
2012
-
-
-
-
-
-
-
(1) Tomasz Jozefacki held his post as Management Board member until January 31, 2012;
(2) Marek Jackiewicz was appointed to the Management Board on January 4, 2012;
(3) Stanisław Turnau was appointed to the Management Board on January 4, 2012.
Vesting date and vesting period for purchased certificates:
Certificates
K
M
Vesting date
25 June 2011
25 June 2012
Vesting period
9 months
9 months
Time interval
October 2010
– June 2011
October 2011
– June 2012
As at 31
December
2011
8,569
9,997
6,855
3,124
3,535
6,855
38,935
No. of certificates
67,176
38,935
In the third quarter of 2012 and in the third quarter of 2011, there was no non-cash expense of the investment certificates acquired by the Management Board, recognised according to IFRS 2. Accumulatively, the non-cash expense amounted to PLN 210 thousand (in the first three quarters of 2011: PLN 876 thousand).
B. Incentive plan based on realization on operating result goal and share price increase (from
2010)
Eligible employees of the Company (the Management Board and top managers) participate in incentive program (“3-
Year-Long Incentive Plan”) based on two components: the stage of realisation of the target based on the operating
EBITDA of the Agora Group (“the EBITDA target”) and the percent of Company’s share price increase (“the Target of
Share Price Increase”), which are described in consolidated financial statements as at December 31, 2011.
The fair value of potential reward from the fulfillment of the EBITDA target has been calculated on the basis of the best estimate of the expected fulfillment value of the EBITDA target. The fair value of the provision for the cost of potencial reward concerning the realization of the Target of Share Price Increase, was estimated on the basis of the
Binomial Option Price Model (Cox, Ross, Rubinstein model).
The basic parameters of the Binomial Option Price Model used for calculation of the fair value of the potential reward from the realization of the Target of Share Price Increase and the cost to the Income statement of the Agora Group for the period, are described below: the share price of Agora S.A. as at the present balance sheet date volatility of the share price of Agora S.A. during the last 12 months the Basic Share Price
Risk-free rate
PLN
%
PLN
%
7.49
39.92
23.09
4.18-4.75
(at the maturity date)
[ w w w . a g o r a . p l ] Page 61
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
To estimate the fair values above, the probability ratio of the fullfilment by eligible employees of the non-market conditions mentioned above is equal to 92.5%.
Total impact of the 3-Year-Long Incentive Plan on the current financial statements of the Agora Group:
Three months ended 30
September
2012
194
Nine months ended 30
September
2012
738
Three months ended 30
September
2011
118 Income statement – staff cost
Income statement - deferred income tax
Current liabilities - accruals - as at the end of the period
(37)
3,519
(140)
3,519
(22)
2,883
Deferred tax asset - as at the end of the period 669 669
The cost of 3-year-long Incentive Program concerning the Management Board of Agora S.A.:
548
Nine months ended 30
September
2011
1,154
(219)
2,883
548
Piotr Niemczycki
Zbigniew Bak
Tomasz Jozefacki (1)
Grzegorz Kossakowski
Marek Jackiewicz (2)
Stanisław Turnau (3)
Three months ended 30
September
2012
70
81
-
64
42
37
Nine months ended 30
September
2012
123
146
-
144
204
177
Three months ended 30
September
2011
17
26
11
11
-
-
Total 294 794
(1) Tomasz Jozefacki held his post as Management Board member until January 31, 2012;
65
Nine months ended 30
September
2011
153
181
125
125
-
-
584
(2) Marek Jackiewicz was appointed to the Management Board on January 4, 2012;
(3) Stanisław Turnau was appointed to the Management Board on January 4, 2012.
6. PROVISIONS AND IMPAIRMENT LOSSES
In the period from January 1, 2012 to September 30, 2012 the following impairment losses were accounted (in brackets the amounts for the third quarter of 2012):
impairment loss for receivables: decrease by PLN 56 thousand (increase by PLN 485 thousand),
impairment loss for inventory: decrease by PLN 3,908 thousand (decrease by PLN 2,301 thousand),
impairment loss for tangible assets and intangible assets: decrease by PLN 63 thousand (decrease by PLN 186 thousand).
Additionally in the period from January 1, 2012 to September 30, 2012 the following provisions were changed (in brackets the amounts for the third quarter of 2012):
provision for penalties, interests and similar: decrease by PLN 761 thousand (no change),
provision for legal claims and other: increase by PLN 285 thousand (increase by PLN 113 thousand),
[ w w w . a g o r a . p l ] Page 62
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
provision for the remuneration and severances for the former Management Board Members: used in the amount of PLN 305 thousand (used in the amount of PLN 68 thousand)
retirement severance provision: increase by PLN 143 thousand (no change),
- provision for restructurisation of advertising panels – decrease by PLN 29 thousand (decrease by PLN 29 thousand),
provision for group lay-offs: set up in the amount of PLN 9,192 thousand (increase by PLN 9,192 thousand).
7. EQUITY
According to IAS 29 "Financial Reporting in Hyperinflationary Economies", the Polish economy was regarded as hyperinflationary up to 1996.
IAS 29 requires the share capital of the Group to be restated by applying the general price index.
Retrospective application of IAS 29 with regard to equity would result in an increase of share capital of the Group with corresponding decrease of retained earnings by the same amount.
Consequently, the restatement of equity due to hyperinflation does not affect the value of equity of the Group, only the structure of the equity is affected.
Polish regulations, commercial code in particular, do not rule the way how this type of adjustment should be carried out (especially adjustments to equity of companies).
Consequently, due to lack of impact on equity of the Group following the hyperinflationary adjustment and lack of regulations in Polish law, the Group did not post any adjustment to equity as a consequence of IAS 29 application.
8. CONTINGENCIES, GUARANTEES AND OTHER COLLATERALS
As of 30 September 2012, the Company had contingencies, guarantees and other collaterals arising in the ordinary course of business from which it is anticipated that no material liabilities will arise, other than those noted below:
Benefiting party Debtor Valid till
Amount
30 Sep 2012 31 Dec
2011
Provisions booked
Guarantees provided by Agora S.A.
521 623 - Bank Pekao S.A. Agora’s employees
Bills of exchange issued by AMS S.A.
30 Oct 2012 -
30 Oct 2014
Gmina Wroclaw AMS S.A. 31 Dec 2012 156 156 -
Gmina Miasto Szczecin AMS S.A. indefinite period
90 90
BRE Bank S.A. AMS S.A. 16 Dec 2015 5,000 5,000
The total amount of the contingencies, guarantees and other collaterals is smaller than 10% of the Group’s equity.
-
-
Additionally, Helios S.A. issued blank promissory notes as collaterals for bank loan agreements and finance lease agreements and guarantees on rent agreements.
Advertising panels of the AMS group situated near the side of a road
AMS S.A. finished in Warsaw the process of moving its large format advertising panels to localizations outside the side of the road. Mounting the panels of the type Backlight 18 square meters, Backlight 32 square meters, Billboard 18 square meters and Cityscroll 9 square allowed to increase the sales potential of Premium and Superpremium segments and enabled to become entirely independent from the city policy regarding the side of the road.
[ w w w . a g o r a . p l ] Page 63
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
AMS received many administrative fines for using the waysides for its panels. The appeal procedures are conducted in front of the Local Self-government Appeal Committee (Samorzadowe Kolegium Odwolawcze) or in front of the
Voivodeship Administrative Court (Wojewodzki Sad Administracyjny). In accordance with the resolution taken by the
Management Board of AMS on March 31, 2007, the company set up provisions for possible administrative fines. As at
September 30, 2012 they were equal to PLN 2,837 thousand (December 31, 2011: PLN 3,598 thusand, September 30,
2011: PLN 3,883 thousand). Bearing in mind the up-to-date results of the appeal procedures and a possible occurrence of them in the future, the Management Board of AMS does not see a need to change the current procedure for the set-up of this provision.
9. COURT CASES
As at 30 September 2012 the Group has not entered into litigation for claims or liabilities that in total exceed 10% of the Group’s equity.
10. SEASONALITY
Advertising revenues are subject to seasonality – revenues earned in the first and third quarters are lower than in the second and fourth quarters.
Cinema revenues are subject to seasonality – revenues earned in the second and third quarters are usually lower than in the first and fourth quarters.
11. RELATED-PARTY TRANSACTIONS
(a) Management Board and Supervisory Board remuneration
The remuneration of Management Board members of Agora SA amounted to PLN 2,348 thousand (nine months ended
30 September 2011: PLN 2,148 thousand), but the number of the Management Board Members has increased to start with January 4, 2012.
The remuneration of Supervisory Board members of Agora S.A. amounted to PLN 297 thousand (nine months ended
30 September 2011: PLN 297 thousand).
In the third quarter of 2012, Agora SA have paid a dividend to members of the Management Board and to members to the Supervisory Board of Agora SA, respectively in the amount of PLN 1,880 thousand (in the third quarter of 2011:
PLN 830 thousand) and in the amount of PLN 925 thousand (in the third quarter of 2011: PLN 462 thousand).
A former Management Board Member purchased shares in the third quarter of 2011. Other Management Board members and Supervisory Board members did not acquire shares in the period of three and nine months ended 30
September 2012 and 30 September 2011 respectively.
(b) Other related parties
There were no material transactions and balances with entities other that disclosed below:
Three months ended 30
September
2012
Nine months ended 30
September
2012
Three months ended 30
September
2011
Related companies
Sales
Purchases of goods and services
Interest on loans payable
502
(157)
-
2,275
(633)
-
313
(146)
-
Nine months ended 30
September
2011
2 113
(731)
8
[ w w w . a g o r a . p l ] Page 64
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
Related companies
Short-term receivables
Dividends payable
Short-term liabilities
Loans granted
As at 30
September
2012
As at 30 June
2012
504
-
80
-
All transactions carried out between related parties are of routine nature.
888
5,692
124
-
12. DESCRIPTION OF THE GROUP
The list of companies from the Group:
As at 31
December
2011
1,006
-
316
-
As at 30
September
2011
454
-
55
208
Subsidiaries consolidated
1 Agora Poligrafia Sp. z o.o., Tychy
2 AMS S.A., Warsaw
3 IM 40 Sp. z o.o., Warsaw (1)
4 Grupa Radiowa Agory Sp. z o.o. (GRA), Warsaw
5 Adpol Sp. z o.o., Warsaw (2)
6 Inforadio Sp. z o.o., Warsaw (1)
7 Agora TC Sp. z o.o., Warsaw
8 Radiowe Doradztwo Reklamowe Sp. z o.o. (RDR), Warsaw (1)
9 LLC Agora Ukraine, Kiev, Ukraine
10 Trader.com (Polska) Sp. z o.o., Warsaw
11 AdTaily Sp. z o.o., Cracow
12 Helios S.A., Lodz
13 Sport4People Sp. z o.o., Cracow
14 Next Film Sp. z o.o., Lodz (3)
Jointly controlled entities and associates accounted for the equity method
15 Business Ad Network Sp. z o.o., Wroclaw
16 GoldenLine Sp. z o.o., Warsaw
Companies excluded from consolidation and equity accounting
17 Online Technologies HR Sp. z o.o., Szczecin (4)
18 Polskie Badania Internetu Sp. z o.o., Warsaw
19 Projekt Inwestycyjny Sp. z o.o., Warsaw (1)
20 Polskie Badania Outdooru Sp. z o.o., Warsaw (2)
(1) indirectly through GRA Sp. z o.o.;
(2) indirectly through AMS S.A.
(3) indirectly through Helios S.A.
(4)company registered on August 29, 2012.
13. BUSINESS COMBINATIONS
% of shares held (effectively)
30 September 2012
100.0%
100.0%
72.0%
100.0%
100.0%
66.1%
100.0%
100.0%
100.0%
100.0%
76.7%
82.8%
51.7%
82.8%
50.0%
36.0%
17.6%
15.8%
100.0%
41.0%
30 June 2012
100.0%
100.0%
72.0%
100.0%
100.0%
66.1%
100.0%
100.0%
100.0%
100.0%
76.7%
82.8%
51.7%
-
50.0%
36.0%
-
15.8%
100.0%
41.0%
On July 5, 2012 the Court in Ukraine registered the increase of the share capital of LLC Agora Ukraine by the amount of UAH 352,273.43 which was covered through contribution in cash by Agora S.A. After the increase the share capital of LLC Agora Ukraine amounts to UAH 517,901.91. As a result of the above transaction Agora S.A. still has 100% of the share capital and has right to 100% votes at shareholders’ meeting.
[ w w w . a g o r a . p l ] Page 65
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
On August 29, 2012 the District Court for Szczecin – Centrum in Szczecin, XIII KRS Commercial Division registered the company: Online Technologies HR Sp. z o.o. with its registered seat in Szczecin. The share capital amounts to PLN 5.4 thousand. In the new company, Agora S.A. has 17.6% of the share capital and 17.6% of votes at shareholders’ meeting.
On September 14, 2012 the District Court for Lodz - Srodmiescie in Lodz, XX KRS Commercial Division registered the company: Next Film Sp. z o.o. with its registered seat in Lodz. The share capital amounts to PLN 500 thousand. In the new company Helios S.A., a subsidiary of Agora S.A., has 100% of the share capital and 100% of the votes at shareholders’ meeting.
.
14. FUNCTIONAL CURRENCY AND PRESENTATION CURRENCY FOR THE CONDENSED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS AND CONDENSED UNCONSOLIDATED FINANCIAL
STATEMENTS OF AGORA S.A. AND THE TRANSLATION METHOD OF FINANCIAL DATA
The functional and presentation currency for Agora S.A. and other companies as well as for the presented consolidated financial statements is Polish zloty. As at September 30, 2012 there is one foreign company within the
Agora Group – LLC Agora Ukraine, for which functional currency is hryvnia (UAH). Its financial statements for the purpose of consolidation was translated into Polish zloty.
Selected financial data presented in the financial statements has been translated into EURO in the following way:
income statement and cash flow statement figures for the first three quarters of 2012 (first three quarters of 2011) using the arithmetic average of exchange rates published by NBP and ruling on the last day of each month for three quarters quarters. For the first three quarters 2012 EURO 1 = PLN 4.1948 (EURO 1 = PLN 4.0414).
balance sheet figures using the average exchange rates published by NBP and ruling as at the balance sheet date.
The exchange rate as at 30 September 2012 – EURO 1 = PLN 4.1138; as at 31 December 2011 – EURO 1 = PLN
4.4168 ; as at 30 September 2011 - EURO 1 = PLN 4.4112.
15. PROFIT DISTRIBUTION FOR THE YEAR 2011
For the financial year of 2011, Agora S.A. made a net profit of PLN 20,246 thousand, which was distributed in accordance with the resolution taken by the General Meeting of Shareholders (on June 22, 2012) in the form of dividend (PLN 50,937 thousand) – the additional amount was taken from the reserve capital. The dividend amounted to PLN 1 per share. Shareholders of record on 16 July 2012 were eligible to participate in the dividend payment.
The dividend payment was made on August 3, 2012.
16. PROPERTY, PLANT AND EQUIPMENT
In the period from January 1, 2012 to September 30, 2012, the Group purchased property, plant and equipment in the amount of PLN 90,459 thousand (in the period of January 1, 2011 to September 30, 2011: PLN 50,955 thousand).
As at September 30, 2012, the commitments for the purchase of property, plant and equipment amounted to
PLN 13,817 thousand.
17. GROUP LAY - OFFS IN AGORA S.A.
The Management Board of Agora S.A. ("the Company") with its registered seat in Warsaw, in relation to a regulatory filing no. 26/2012 dated August 13, 2012, on September 6, 2012 informed about:
(i) concluding on September 6, 2012 a trilateral agreement ("Agreement") with trade unions operating at Agora
S.A. (which fulfills the provisions of article 3 Section 1 of the Act of 13 March 2003 on Special Rules for
Termination of Employment for Reasons Not Attributable to Employees) and with works council in the Company
[ w w w . a g o r a . p l ] Page 66
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
(which constitutes an agreement in accordance with the Act of 7 April 2006 on informing and consulting employees),
(ii) adopting by the Management Board of the Company, on September 6, 2012, the resolution to execute group layoffs in accordance with the provisions of the Agreement.
The group layoffs shall be executed from September 10, 2012 till January 31, 2013 and shall affect up to 250 employees of the Company, i.e. ca 10% of all employees of the Company.
The Management Board of the Company feels responsible for all its employees, also for those who will have to be dismissed. The laid-off employees will be provided by the Company with a wider range of supportive measures than it is required by law.
On September 7, 2012 the Company, in accordance with law requirements, submitted an appropriate set of information, together with the signed Agreement, to a relevant Labor Office.
As at September 30, 2012 , the amount of provision set up for cost of group lay-offs equalled to PLN 9,192 thousand.
The Company shall provide its estimates of savings related to the process of group layoffs in the Management
Discussion and Analysis for the fourth quarter of 2012.
[ w w w . a g o r a . p l ] Page 67
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
18. SELECTED CONSOLIDATED FINANCIAL DATA TOGETHER WITH TRANSLATION INTO EURO
in PLN thousand in EUR thousand
Nine months ended 30
September
2012 unaudited
As at 31
December
2011 audited
Nine months ended 30
September
2011 unaudited
Nine months ended 30
September
2012 unaudited
As at 31
December
2011 audited
Nine months ended 30
September
2011 unaudited
Sales
Operating profit
Profit/(loss) before income taxes
Net profit/(loss) for the period attributable to equity holders of the parent
829,043
(9,985)
(8,923)
(8,892)
898,704
44,533
43,954
33,281
197,636
(2,380)
(2,127)
(2,120)
222,374
11,019
10,876
8,235
Net cash from operating activities
59,386 106,018 14,157 26,233
Net cash used in investing activities
12,890 (89,259) 3,073 (22,086)
Net cash used in financing activities
Net increase /
(decrease) in cash and cash equivalents
Total assets
Non-current liabilities
Current liabilities
Equity attributable to equity holders of the parent
Share capital
Weighted average number of shares
Earnings per share (in
PLN / in EURO)
Book value per share (in
PLN / in EURO)
(101,153) (82,116) (24,114) (20,319)
(28,877) (65,357) (6,884) (16,172)
1,692,240 1,803,720 1,774,313 411,357 408,377 402,229
183,692 221,341 226,041 44,653 50,113 51,243
303,827 319,062 294,600 73,856 72,238 66,785
1,187,750 1,246,064 1,237,662 288,723 282,119 280,573
50,937 50,937 50,937 12,382 11,533 11,547
50,937,386 50,937,386 50,937,386 50,937,386 50,937,386 50,937,386
(0.17) 0.65 (0.04) 0.16
23.32 24.46 24.30 5.67 5.54 5.51
[ w w w . a g o r a . p l ] Page 68
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
19. POST BALANCE-SHEET EVENTS
On October 4, 2012, the shareholders of Online Technologies HR Sp. z o.o. resolved to increase the share capital of the company by 12 new shares with nominal value of PLN 80 per share (in total PLN 960). Agora S.A. covered new shares with PLN 200 thousand contribution. After the share capital increase it amounts to PLN 6.4 thousand and is divided into 80 shares with nominal value of PLN 80 per share. After the share capital increase, Agora S.A. owns 24 shares which translates into 30% of the company’s share capital and 30% of votes at shareholders’ meeting. The share capital increase has not been registered by the court till the date of the publication of this report.
20. CONDENSED INTERIM UNCONSOLIDATED FINANCIAL STATEMENTS OF AGORA S.A.
Unconsolidated balance sheet as at 30 September 2012
Assets
Non-current assets:
Intangible assets
Property, plant and equipment
Investments
Receivables and prepayments
Current assets:
Inventories
Accounts receivable and prepayments
Income tax receivable
Short-term securities and other financial assets
Cash and cash equivalents
Total assets
As at 30
September
2012 unaudited
75,962
375,990
512,949
33,493
As at 30 June
2012 unaudited
77,632
376,624
512,666
40,116
998,394
14,204
187,428
2,244
121,249
14,732
1,007,038
14,864
207,273
1,894
170,100
27,310
339,857
1,338,251
421,441
1,428,479
As at 31
December
2011 audited
80,027
370,074
512,429
46,431
1,008,961
17,072
184,597
-
206,035
39,918
447,622
1,456,583
As at 30
September
2011 unaudited
86,437
361,043
498,657
47,025
993,162
17,546
178,292
-
215,071
30,628
441,537
1,434,699
[ w w w . a g o r a . p l ] Page 69
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
Unconsolidated balance sheet as at 30 September 2012 (continued)
Equity and liabilities
Equity:
Share capital
Share premium
Other reserves
Retained earnings
Non-current liabilities:
Deferred tax liabilities
Long-term borrowings
Retirement severance provision
Deferred revenues and accruals
Other
Current liabilities:
Retirement severance provision
Accounts payable
Income tax liabilities
Short-term borrowings
Provisions
Deferred revenues and accruals
Total equity and liabilities
As at 30
September
2012 unaudited
As at 30 June
2012 unaudited
50,937
147,192
114,406
50,937
147,192
114,406
775,427 791,179
1,087,962
30,561
51,804
1,712
11
61
1,103,714
33,521
60,448
1,712
2,894
61
84,149
105
87,846
-
35,111
11,365
31,713
166,140
1,338,251
98,636
105
159,472
-
35,147
2,297
29,108
226,129
1,428,479
As at 31
December
2011 audited
50,937
147,192
112,904
823,796
1,134,829
33,551
77,869
1,569
2,512
62
115,563
140
120,712
1,849
47,954
2,361
33,175
206,191
1,456,583
As at 30
September
2011 unaudited
50,937
147,192
112,117
820,971
1,131,217
36,624
86,521
1,682
2,611
62
127,500
42
99,980
1,681
38,497
2,265
33,517
175,982
1,434,699
[ w w w . a g o r a . p l ] Page 70
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
Unconsolidated income statement for three and nine months ended 30 September 2012
Three months ended
Nine months ended
Three months ended
Sales
Cost of sales
Gross profit
Selling expenses
Administrative expenses
Other operating income
Other operating expenses
Operating profit/(loss)
Finance income
Finance costs
Profit / (loss) before income taxes
Income tax
Net profit / (loss) for the period
As at 30
September
2012 unaudited
152,150
(102,192)
49,958
(48,242)
(17,836)
1,699
(3,105)
(17,526)
3,086
(4,622)
(19,062)
3,310
(15,752)
As at 30
September
2012 unaudited
504,963
(313,711)
191,252
(156,424)
(55,579)
7,216
(8,778)
(22,313)
30,993
(9,105)
(425)
2,994
2,569
As at 30
September
2011 unaudited
172,921
(100,768)
72,153
(52,090)
(18,434)
1,448
(2,342)
735
13,027
(3,873)
9,889
(2,040)
7,849
Nine months ended
As at 30
September
2011 unaudited
562,247
(320,218)
242,029
(171,245)
(58,284)
3,704
(5,450)
10,754
19,115
(7,135)
22,734
(5,313)
17,421
Basic/diluted earnings per share (in PLN) (0.31) 0.05 0.15
Unconsolidated statement of comprehensive income for three and nine months ended
30 September 2012
Three months ended
Nine months ended
Three months ended
Nine months ended
0.34
Net profit/ (loss) for the period
Other comprehensive income for the period
Total comprehensive income for the period
As at 30
September
2012 unaudited
(15,752)
-
(15,752)
As at 30
September
2012 unaudited
2,569
-
2,569
As at 30
September
2011 unaudited
7,849
-
7,849
As at 30
September
2011 unaudited
17,421
-
17,421
[ w w w . a g o r a . p l ] Page 71
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) only
Unconsolidated statement of changes in equity for three and nine months ended 30 September 2012
translation
Three months ended 30 September 2012
As at 30 June 2012 unaudited
Share capital
Total comprehensive income for the period
Net loss
Total comprehensive income for the period
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Equity-settled share-based payments
Dividends declared
50,937
-
-
-
-
Treasury shares
-
-
-
-
-
Share premium Other reserves Retained earnings
147,192 114,406 791,179
- - (15,752)
-
-
-
-
-
-
(15,752)
-
-
Total equity
1,103,714
(15,752)
(15,752)
-
-
Total transactions with owners
As at 30 September 2012 unaudited
-
50,937
-
-
-
147,192
-
114,406
-
775,427
-
1,087,962
[ w w w . a g o r a . p l ] Page 72
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) only
Unconsolidated statement of changes in equity for three and nine months ended 30 September 2012 (continued)
translation
Nine months ended 30 September 2012
As at 31 December 2011 audited
Total comprehensive income for the period
Net profit
Total comprehensive income for the period
Share capital
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
50,937
-
-
Treasury shares
-
-
Share premium Other reserves Retained earnings
147,192 112,904 823,796
- - 2,569
- - - 2,569
Equity-settled share-based payments
Dividends declared
Other
-
-
-
-
-
-
-
-
-
1,502
-
-
-
(50,937)
(1)
Total equity
1,134,829
2,569
2,569
1,502
(50,937)
(1)
Total transactions with owners
As at 30 September 2012 unaudited
-
50,937
-
-
-
147,192
1,502
114,406
(50,938)
775,427
(49,436)
1,087,962
[ w w w . a g o r a . p l ] Page 73
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) only
Unconsolidated statement of changes in equity for three and nine months ended 30 September 2012 (continued)
translation
Twelve months ended 31 December 2011
As at 31 December 2010 audited
Total comprehensive income for the period
Net profit
Total comprehensive income for the period
Share capital
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
50,937
-
-
Treasury shares
-
-
Share premium Other reserves Retained earnings
147,192
-
104,669
- 20,246
829,018
- - - 20,246
Equity-settled share-based payments
Dividends declared
Other
-
-
-
-
-
-
-
-
-
8,235
-
-
-
(25,469)
1
Total equity
1,131,816
20,246
20,246
8,235
(25,469)
1
Total transactions with owners
As at 31 December 2011 audited
-
50,937
-
-
-
147,192
8,235
112,904
(25,468)
823,796
(17,233)
1,134,829
[ w w w . a g o r a . p l ] Page 74
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) only
Unconsolidated statement of changes in equity for three and nine months ended 30 September 2012 (continued)
translation
Nine months ended 30 September 2011
As at 31 December 2010 audited
Total comprehensive income for the period
Net profit
Total comprehensive income for the period
Share capital
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Equity-settled share-based payments
Dividends declared
Other
-
-
-
-
-
Treasury shares
50,937 -
-
Share premium Other reserves Retained earnings
147,192
-
104,669
-
829,018
17,421
-
-
-
-
-
-
-
-
-
7,448
-
-
17,421
-
(25,469)
1
Total equity
1,131,816
17,421
17,421
7,448
(25,469)
1
Total transactions with owners
As at 30 September 2011 unaudited
-
50,937
-
-
-
147,192
7,448
112,117
(25,468)
820,971
(18,020)
1,131,217
[ w w w . a g o r a . p l ] Page 75
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
Unconsolidated cash flow statement for three and nine months ended 30 September 2012
Three months ended
As at 30
September
2012 unaudited
(19,062)
Nine months ended
As at 30
September
2012 unaudited
(425)
Three months ended
As at 30
September
2011 unaudited
9,889
Nine months ended
As at 30
September
2011 unaudited
22,734
Cash flows from operating activities
Profit/(loss) before income taxes
Adjustments for:
Depreciation of property, plant and equipment
Amortization of intangible assets
Foreign exchange (gain) /loss
Interest, net
(Profit) / loss on investing activities
Dividend income
(Decrease) / increase in provisions
(Increase) / decrease in inventories
(Increase) / decrease in receivables and prepayments
(Decrease) / increase in payables
(Decrease) / increase in deferred revenues and accruals
Other adjustments (1)
Cash generated from operations
Income taxes paid
8,227
1,939
3,552
834
(2,624)
-
9,068
660
19,414
(19,468)
(278)
70
2,332
-
24,505
6,691
4,113
1,762
(5,368)
(21,292)
9,112
2,868
16,632
(21,425)
(3,964)
1,726
14,935
(4,085)
7,877
2,033
(9,958)
752
344
-
199
(328)
10,038
5,911
(1,666)
87
25,178
(1,952)
23,986
9,129
(4,700)
2,656
(5,206)
(3,880)
301
(1,950)
2,669
(9,831)
(510)
8,081
43,479
(5,205)
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment, and intangibles
Disposal of subsidiaries, associates and jointly controlled entities
Dividends received
Repayment of loans granted
Interest received
Disposal of short-term securities
Repayment of finance lease receivables
Purchase of property plant and equipment, and intangibles
Acquisition of subsidiaries, associates and jointly controlled entities
Acquisition of short-term securities
Loans granted
2,332
22
-
1,423
-
1,278
50,200
2,829
(9,125)
(347)
-
-
10,850
42
238
1,723
50,000
11,794
134,721
8,437
(43,500)
(420)
(104,029)
(163)
23,226
10
-
1,880
-
926
19,411
2,370
(15,898)
-
(1,014)
(585)
38,274
104
-
2,880
-
2,301
80,084
6,817
(32,528)
(252)
(82,344)
(1,546)
Net cash used in investing activities 46,280 58,843
7,100
(24,484)
[ w w w . a g o r a . p l ] Page 76
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
Cash flows from financing activities
Dividends paid
Repayment of borrowings
Interest paid
Other
Three months ended
As at 30
September
2012 unaudited
(50,937)
(8,742)
(1,397)
(114)
Nine months ended
As at 30
September
2012 unaudited
(50,937)
(38,942)
(4,505)
(495)
Three months ended
As at 30
September
2011 unaudited
(25,469)
(10,730)
(1,835)
(122)
Nine months ended
As at 30
September
2011 unaudited
(25,469)
(32,188)
(5,697)
(553)
Net cash used in financing activities
Net increase / (decrease) in cash and cash equivalents
(61,190) (94,879)
Cash and cash equivalents
At start of period
At end of period
(12,578)
27,310
14,732
(25,186)
39,918
14,732
(1) “other adjustments” include mainly non-cash share-based payment costs.
Additional information to unconsolidated financial statements of Agora S.A.
(38,156)
(7,830)
38,458
30,628
(63,907)
(50,117)
80,745
30,628
In the period from January 1, 2012 to September 30, 2012 the following impairment losses and provisions were changed in the unconsolidated financial statements of Agora S.A. (in brackets the amounts for the third quarter of
2012):
impairment loss for receivables: decrease by PLN 177 thousand (increase by PLN 661 thousand),
impairment loss for financial assets: decrease by PLN 2,019 thousand (decrease by PLN 539 thousand),
impairment loss for inventory: decrease by PLN 3,894 thousand (decrease by PLN 2,258 thousand),
impairment loss for tangible assets and intangible assets: increase by PLN 191 thousand (no change),
provision for legal claims: increase by PLN 116 thousand (decrease by PLN 57 thousand),
provision for the remuneration and severances for the former Management Board Members: used in the amount of PLN 305 thousand (used in the amount of PLN 68 thousand),
retirement severance provision: increase by PLN 108 thousand (no change),
provision for group lay-offs: set up in the amount of PLN 9,192 thousand (increase by PLN 9,192 thousand).
In the period from January 1, 2012 to September 30, 2012, the Company purchased property, plant and equipment in the amount of PLN 31 933 thousand (in the period of January 1, 2011 to September 30, 2011: PLN 23 819 thousand).
As at September 30, 2012, the commitments for the purchase of property, plant and equipment did not occur.
[ w w w . a g o r a . p l ] Page 77
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
Selected unconsolidated financial data together with translation into EURO
in PLN thousand in EUR thousand
Sales
Operating profit/(loss)
Profit/(loss) before income taxes
Net profit / (loss) for the period
Nine months ended 30
September
2012 unaudited
As at 31
December
2011 audited
Nine months ended 30
September
2011 unaudited
Nine months ended 30
September
2012 unaudited
As at 31
December
2011 audited
Nine months ended 30
September
2011 unaudited
504,963 562,247 120,378 139,122
(22,313)
(425)
2,569
10,754
22,734
17,421
(5,319)
(101)
612
2,661
5,625
4,311
Net cash from operating activities
Net cash used in investing activities
10,850
58,843
38,274
(24,484)
2,587
14,028
9,470
(6,058)
Net cash used in financing activities
(94,879) (63,907) (22,618) (15,813)
Net increase /
(decrease) in cash and cash equivalents
Total assets
Non-current liabilities
Current liabilities
Equity
Share capital
Weighted average number of shares
Earnings per share (in
PLN / in EURO)
Book value per share (in
PLN / in EURO)
(25,186) (50,117) (6,004) (12,401)
1,338,251 1,456,583 1,434,699 325,308 329,782 325,240
84,149 115,563 127,500 20,455 26,164 28,904
166,140 206,191 175,982 40,386 46,683 39,894
1,087,962
50,937
1,134,829
50,937
1,131,217
50,937
264,466
12,382
256,935
11,533
256,442
11,547
50,937,386 50,937,386 50,937,386 50,937,386 50,937,386 50,937,386
0.05
21.36 22.28
0.34
22.21
0.01
5.19 5.04
0.08
5.03
[ w w w . a g o r a . p l ] Page 78
AGORA GROUP
Condensed interim consolidated financial statements as at 30 September 2012 and for 3 nad 9 month period ended thereon
(all amounts in PLN thousands unless otherwise indicated) translation only
Warsaw, November 9, 2012
Piotr Niemczycki – President of the Management Board Signed on the Polish original
Zbigniew Bak – Deputy President of the Management Board Signed on the Polish original
Marek Jackiewicz – Member of the Management Board Signed on the Polish original
Grzegorz Kossakowski – Member of the Management Board Signed on the Polish original
Stanislaw Turnau – Member of the Management Board Signed on the Polish original
[ w w w . a g o r a . p l ] Page 79
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