mid-term growth directions Agora Group: -1-
Agenda Key challenges 3-7 Growth directions of the Agora Group 8 TASK 1: Transformation of print media 9-11 TASK 2: Building a position in the TV market 12-13 TASK 3: Improving contribution of main businesses 14-15 – INTERNET 16-17 – CINEMA & FILM 18-19 – RADIO & MUSIC 20-21 – OUTDOOR PRINTING SERVICES – effective utilization of production capacity 22 TASK 4: Cost optimization of shared support functions 23 Summary: Development within the frame of mission 24 -2-
Key challenges DETERIORATING REVENUE AND PROFITABILITY REVENUE (PLN million) EBIT (PLN million) 1500 300 1250 250 1000 200 750 150 500 100 250 50 0 0 -250 -50 2008 2009 2010 2011 2012 2013 COST (PLN million) 1500 PURCHASE OF HELIOS 1250 CINEMA NETWORK 1000 750 500 250 0 2008 2009 2010 2011 2012 2013 259 FTEs (AVERAGE) 304 FTEs (AVERAGE) Source: consolidated financial statements according to IFRS, 2008-2013 -3-
Key challenges EVOLUTION OF THE GROUP’S EBIT STRUCTURE EBIT (PLN million) 200 160 120 80 40 0 -40 2008 2009 2010 2011 2012 2013 dailies magazines internet outdoor radio cinema Group Source: consolidated financial statements according to IFRS, 2008-2013 -4-
Key challenges ADVERTISING MARKET: STRUCTURAL CHANGES AND RECESSION 11.6% 15% 10% 4.7% 1.5% 5% In the past 5 years ad spend in 0% -5% (3.8%) (5.0%) Poland shrank by PLN 1 billion -10% (10.3%) -15% -20% 2008 2009 2010 2011 2012 2013 9 000 internet 8 000 magazines Stable share of TV 7 000 (50%) dailies 6 000 Shrinking share 5 000 outdoor of print media 4 000 cinema (ad spend down by PLN 1.1 billion) 3 000 radio Growth of digital media 2 000 despite recession television 1 000 (ad spend up by PLN 700 million) 0 2008 2009 2010 2011 2012 2013 Source: ad spend estimates by: Agora (press based on Kantar Media and Agora’s monitoring, radio based on Kantar Media), IGRZ (outdoor) Starlink (TV, cinema, Internet – comprise revenues from e-mail marketing, display, search engine marketing and since 1Q2012 revenues from video advertising. -5-
Key challenges CHANGES IN THE STRUCTURE OF THE GROUP’S REVENUES 15% 10.6% 10% Revenues decreased 5% 0.4% 0.6% 0% by PLN 204 million -5% (5.7%) -10% in the past 5 years (7.8%) -15% (13.1%) 2008 2009 2010 2011 2012 2013 1 400 cinema 1 200 radio Deap erosion of print media revenues outdoor 1 000 – down by PLN 394 million internet 800 magazines Positive impact of 600 the Helios acquisition dailies 400 Recession inhibits growth of other 200 businesses (down by PLN 6.3 million) 0 2008 2009 2010 2011 2012 2013 Source: consolidated financial statements according to IFRS, 2008-2013 -6-
Key challenges CHANGES IN THE STRUCTURE OF THE GROUP’S REVENUES % share 100% 90% 27.9% 33.9% 35.9% 80% 42.8% 44.1% 49.3% 70% 60% 50% 40% 72.1% 66.1% 64.1% 30% 57.2% 55.9% 50.7% 20% 10% 0% 2008 2009 2010 2011 2012 2013 % share Advertis ing revenues Non-advertis ing revenues 100% 6.3% 7.9% 9.8% 10.3% 11.4% 12.5% 90% 80% 70% 60% 50% 93.7% 92.1% 90.2% 89.7% 88.6% 87.5% 40% 30% 20% 10% 0% 2008 2009 2010 2011 2012 2013 Traditional revenues Digital revenues Source: consolidated financial statements according to IFRS, 2008-2013 -7-
Growth directions of the Agora Group MID-TERM PRIORITIES OF THE AGORA GROUP REVENUE GROWTH PROFITABILITY IMPROVEMENT STRATEGIC TASKS FOR THE COMING YEARS 1. Digital transformation of print media 2. Building a position in the TV market 3. Improve contribution from core businesses 4. Cost optimization of shared support functions 8
TASK 1: Transformation of print media No. 1 quality newspaper in Poland Pioneer of digital transformation Owner of online bookstore Publio Respected publishing house SUCCESSES CHALLENGES COPY SALES (thou. copies) REVENUE (PLN million) 600 600 500 500 Copy price increases 400 400 slow down the drop 300 300 in revenue from copy sales Agora’s publishing house 200 200 - 600 thousand sold books 100 100 Investment in the quality of content Publio.pl – over 430 thousand digital publications 0 0 distributed in different models Launch of metered paywall 2008 2009 2010 2011 2012 2013 Total revenue: PLN 18.6 million in 2013 advertising revenues (PLN mln) copy sales revenues (PLN mln) no of copies sold (thou.) Source: consolidated financial statements according to IFRS, 2008-2013; data regarding copy sales and revenues of Publio.pl have not been published in the Group’s financial statements. -9-
TASK 1: Transformation of print media Quality journalism PRIORITIES slowing down the pace of building a significant base print revenue decline of paying digital subscribers PLN 17.9 PACKAGE: WYBORCZA monthly START PROMOTIONAL 04.02.2014 PRICE PLN 29.90 PLN 0.99 PACKAGE: WYBORCZA PLUS monthly per first month PLN 39.9 PACKAGE: WYBORCZA PREMIUM monthly 47 000 digital subscriptions BENCHMARKS 227 248 paper copy sales REVENUE (USD million) REVENUE (USD million) 600 600 500 500 400 400 300 300 200 200 100 100 0 0 3Q06 3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 3Q06 3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 Digital ads Print ads Copy sales Other Digital ads Digital subscriptions Print ads Copy sales Other Source: Agora’s own estimates based on „The NYT paywall plugs the hole”, 06.11.2013, Columbia Journalism Review published by Ryana Chittuma . ; -10- Die Welt: June 2013, after 6 months of paywall
TASK 1: Transformation of print media NEW REVENUE STREAMS REVENUE STREAMS BUSINESS MODEL 2008 2016 PRINT DIGITAL COPY SALES SUBSCRIPTIONS DIGITAL ADVERTISING PRINT PRINT COPY SALES ADVERTISING PRINT ADVERTISING paid subscriptions: 40 thou. thru 2014 OBJECTIVES 75 thou. thru 2016 CAPEX negligible; project phase entails growth of operating cost ASPIRATIONS Stabilization of the segment’s profitability by 2016 -11-
TASK 2: Building a position in the TV market Agora’s entry into TV business Specialised movie channel START 15.03.2014 Joint project with Kino Polska TV S.A. (41% share) Resolution granting concession 09.09.2013 An opportunity to combine the potential of TV and the new technologies Adding the TV segment to the portfolio of businesses PRIORITIES Growth of scale Gaining the share of revenues from the largest segment of ad market TV AD MARKET TRENDS The largest ad market segment Growing strength with stable share of thematic channels Radio Magazines 7.5% 9.0% Thematic Main Dailies stations channels 5.0% 27% 73% Cinema 19% 10% 1.5% 2013 2013 Internet PLN 7.2 billion 21.0% PLN 3,53 billion Television 49.5% Outdoor 6.5% Source: ad spend estimates by: Agora (press based on Kantar Media and Agora’s monitoring, radio based on Kantar Media), IGRZ (outdoor) -12- Starlink (TV, cinema, Internet – comprise revenues from e-mail marketing, display, search engine marketing and since 1Q2012 revenues from video advertising.
TASK 2: Building a position in the TV market STRONG START Technical reach 90% START MUX - 1 15.03.2014 CABLE NETWORKS SATELLITE PLATFORMS audience share: 1% thru 2014 OBJECTIVES 2% thru 2016 profitability: 2015 CAPEX PLN 10 million thru 2016 ASPIRATIONS broadening TV presence -13-
TASK 3: Improving contribution of main businesses - INTE RNE T Among 3 TOP portals in Poland 12.4 million real users Innovative mobile apps REVENUE 2013 REVENUE 2001 GROWTH PLN 111.4 MILLION PLN 3.8 MILLION E-COMMERCE PAID CONTENT VIDEO & MOBILE ADVERTISING B2B PERFORMANCE MARKETING VORTALS VORTALS DISPLAY ADVERTISING DISPLAY ADVERTISING BROADENING THE SCALE OF OPERATIONS STRONG MARKET POSITION Source: financials: consolidated financial statements according to IFRS, 4Q2013. Internet division, Agora Ukraine, AdTaily, Trader.com (Polska) including print revenues, Sport4People; Megapanel PBI/Gemius, reach, real users, December 2012, December 2013; selected online publishers. -14-
TASK 3: Improving contribution of main businesses - INTE RNE T Maintaining reach and increasing engagement of users PRIORITIES DEVELOPMENT OF MOBILE APPS DEVELOPEMENT OF ATTRACTIVE CONTENT AND VIDEO CONTENT Strengthening advertising offer DEVELOPMENT OF ADVERTISING OFFER MOBILE ADVERTISING VIDEO ADVERTISING CONTENT MARKETING IMPLEMENTATION OF NEW SOLUTIONS REAL TIME BIDDING NEW REVENUE STREAMS SELECTION OF LEAD GENERATION E-COMMERCE PROJECTS OBJECTIVES EBIT MARGIN: 15.5% in 2013 20% in 2018 CAPEX PLN 20 million by 2018 Expand portfolio of attractive offerings by means of organic growth ASPIRATION and via selective acquisitions -15-
TASK 3: Improving contribution of main businesses - CINE MA & FILM One of the largest cinema operators in Poland Film co-producer and distributor „Traffic department” the most popular Polish movie in 2013 PRIORITIES Growth of Helios network Growth of cinema distribution operations Openings in 2014: Plans for 2014: Siedlce, Kalisz 1H2014 Powstanie Warszawskie 1H2014 Karuzela 1H2014 Bogowie 2H2014 Serce, serduszko i wyprawa na koniec swiata 2H2014 Starachowice, Bialystok, Jelenia Gora 2H2014 OBJECTIVES EBIT MARGIN: 3% in 2013 9-10% in 2018 -16-
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