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    AGO   PLAGORA00067


Delayed Warsaw Stock Exchange  -  11:55 2022-06-28 am EDT
5.250 PLN   -1.13%
06/23Agora S.A. Announces Resignation of Agnieszka Siuzdak-Zyga as Management Board Member
05/20AGORA S A : Financial results of the Agora Group in the 1Q2022
05/20Agora S.A. Reports Earnings Results for the First Quarter Ended March 31, 2022
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Agora S A : Financial results of the Agora Group in the 1Q2022

05/20/2022 | 02:15am EDT

May 20, 2022 / 07:55

Financial results of the Agora Group in the 1Q2022

In the period of January-March 2022, the Agora Group significantly increased its revenues - mainly thanks to the proceeds from operations of cinemas, which are intensively rebuilding their position after the pandemic, as well as from advertising services, growing much faster than on the market. Despite the increase in costs related to the return to full operating activity and macroeconomic conditions, the Group has been successfully working on improving its results - it closed 1Q2022 with a profit at the EBITDA level and reduced the loss at the EBIT level by more than half.

- In the 1Q this year, we bid farewell to pandemic restrictions, which was particularly important for our largest business segment - the Movies and Books, and we thought we wuld be able to focus only on improving the financial results. However, the shock caused by Russia's attack on Ukraine delayed the return to normal operations. In addition, the conflict intensified the symptoms of the economic downturn, which were already visible before its outbreak, and the uncertainty for conducting business activity increased. Despite this, the Agora Group is flexibly adjusting to changing conditions and focuses on rebuilding its financial performance - comments Bartosz Hojka, President of the Management Board of Agora.

The total revenues of the Agora Group in the 1Q2022 amounted to PLN 253.1 million and were more than 73% higher than in the previous year. This was mainly due to proceeds from cinema operations, which in the same period of 2021 were suspended by an administrative decision, and from advertising sales, which increased with the lifting of pandemic restrictions limiting activities of many entrepreneurs in Poland.

Advertising sales of the Agora Group increased more than twice as fast as on the market - by over 15% to PLN 104.5 million, accounting for over 41% of the total revenues of the Group. The Outdoor and the Radio segments recorded a more dynamic growth in advertising revenues as compared to the market. This category of inflows also increased in the cinema business thanks to a smaller scale of restrictions in their operations than in the corresponding period of 2021. The significantly higher than market dynamics of AMS revenues was mainly due to proceeds from campaigns carried out on premium citylight, backlight and digital panels. In turn, in the Radio such growth was driven by higher inflows from the brokerage services for the sale of air time. Revenues from the cinema operations of the Helios network amounted to PLN 69.7 million. However, it should be remembered that until the end of February 2022, cinemas in Poland could only offer 30% of seats in their screening rooms for sale1, and only in March the remaining restrictions on their operation were lifted. Additionally, the outbreak of the war in Ukraine slowed down the return of viewers to the big screens. As a result, in the 1Q2022, almost 2.5 million tickets were sold in the Helios network - revenues from this title amounted to PLN 47.3 million, and from concession sales to PLN 22.4 million. Importantly, the sale of tickets for screenings via the Internet accounted for nearly 46% of total revenues from this category. In the same period of 2021, there were no revenues from the Group's cinema operations, as all the Helios facilities were closed at that time. From 12 February to 20 March 2021, pursuant to the decision of the government, cinemas in Poland could resume their operations - only some small cinemas took advantage of this opportunity. At the time they operated, the number of tickets sold in the country for screenings amounted to 533.2 thousand. On the other hand, in the 1Q2022, according to Helios' estimates, nearly 10.4 million tickets were sold in cinemas in Poland2. In addition, in the discussed period, the revenues from the Agora Group's film activities significantly increased, which a year ago were at a very low level - in the period January-March 2022, NEXT FILM prepared 3 premieres for Polish cinema fans and received remuneration for the production of a film for the Netflix platform.

Copy sales of the Group were slightly lower than in the 1Q2021 and amounted to PLN 33.0 million. This was mainly due to the decrease in revenues from the sale of Agora Publishing House publications, with higher proceeds from the digital subscription of Gazeta Wyborcza. The number of Wyborcza.pl subscriptions at the end of March 2022 exceeded 290 thousand, i.e. it was almost 13% higher than last year. The share of digital inflows in the total copy sales of the Agora Group stood at almost 41% at the end of March 2022, growing by over 11pp compared to the corresponding period of 2021. Total sales of the Group's digital publications, including the offer of other publishers and other content, i.a. podcasts, is raising dynamically - the share of revenues from this title in January-March this year, accounted for 41% and increased by over 6pp y/y. The number of Premium TOK FM accesses sold was nearly 26.2 thousand, and income from this title was higher by nearly 23% y/y. Radio TOK FM also notes records in subsequent waves of the Radio Track survey - in the period February-April 2022, the station's share in listening was already at 3.2%, thanks to which TOK FM was placed 4th in this category among national radio stations and on the 6th place among all radio broadcasters in Poland. The popularity of Agora's media is determined by, among others, growing demand of readers and listeners for quality, reliable journalistic content, especially in the face of increasing economic uncertainty and a difficult geopolitical situation.

In addition, the Agora Group increased revenues from food business thanks to lifting the restrictions in the operation of premises and the expansion of the Pasibus restaurant chain, as well as from other sales.

The net operating costs of the Agora Group in the 1Q2022 amounted to PLN 275.8 million. Their increase by over 41% was mainly related to the gradual return of Agora's businesses to operation without pandemic restrictions, including fuller staffing and promotional activities, as well as market conditions related to general price increases, inflation and wage pressure. Traditionally, the highest growth in operating expenditure was recorded in the cost of external services; Other items in the cost account, apart from depreciation, also increased. Employment in the Agora Group at the end of March 2022 amounted to 2,356 FTEs and was higher by over 100 FTEs compared to the end of March last year.

Ultimately, the Agora Group ended the 1Q2022 with an improvement in operating results - mainly with a profit at the EBITDA level of PLN 17.6 million compared to a loss of PLN 8.1 million in the corresponding period of 2021. At the same time, the Group reduced the loss at the EBIT level by over 54% up to PLN 22.7 million3. The net loss stood at PLN 33.1 million, and the net loss attributable to the shareholders of the parent company was PLN 31.8 million.

In the period January-March 2022, the value of advertising expenditure in Poland increased by 7.0% compared to the 1Q20214. This value was also higher compared to the 1Q2019. Therefore, based on the available market data, the Agora's Management Board estimates that the value of the advertising market in Poland in 2022 will increase in comparison to 2021 by approximately 3-6%. Advertising expenditure in the cinema will increase by 65-75%, and on outdoor advertising by 15-18%. The growth of the value of advertising expenses will also continue on the Internet - by 5-8%, while on the radio they will increase by 1-4%. The market segments where advertising expenditure may shrink in 2022 are the press and television. The value of expenditure in these areas may fluctuate between a decrease of 1% and an increase of 2%, respectively. However, these estimates may change due to unstable market conditions, mainly related to the armed conflict in Ukraine and the condition of the Polish economy, including, in particular, the high level of inflation.

For the company's Management Board, the key project for 2022 is work on the development strategy of the entire Agora Group for 2023 - 2027. The organization's development potential, business portfolio and market environment are being analyzed, which is to be finalized later this year.

Data source: consolidated financial statements for 1Q2022 according to IFRS.

1 Cinema seating sales limits did not apply to the vaccinated persons.
2 Cinema attendance: Helios S.A. estimates - from November 2019, the UIP distributor does not report attendance data on its films in Poland. According to Boxoffice data, the attendance in Poland amounted to over 7.2 million tickets; this figure does not include film productions introduced to cinemas by UIP.
3 The loss of the Agora Group at the EBITDA level presented without the impact of IFRS 16 in 1Q2022 amounted to PLN 4.3 million, while the loss at the EBIT level in this approach amounted to PLN 28.0 million.
4 Advertising market - Agora's estimates (press based on Kantar Media and Agora's monitoring, radio based on Kantar Media), IGRZ (outdoor advertising, since January 2014 the number of entities reporting revenues to IGRZ has decreased), as well as preliminary data from Publicis Media (TV, cinema, internet).

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Agora SA published this content on 20 May 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 May 2022 06:14:01 UTC.

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Sales 2022 1 118 M 251 M 251 M
Net income 2022 -14,8 M -3,32 M -3,32 M
Net cash 2022 46,6 M 10,5 M 10,5 M
P/E ratio 2022 -17,5x
Yield 2022 -
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EV / Sales 2023 0,13x
Nbr of Employees 2 356
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Adam Falk Head-Finance
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