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Agora S.A. (AGOD)

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Thursday 13 August, 2009

Agora S.A.

2nd Quarter Results


AGORA GROUP

Report for

2Q 2009

 

August 13, 2009

 

                                  AGORA GROUP                                  

MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) OF THE GROUP'S RESULTS
FOR THE SECOND QUARTER OF 2009

 

REVENUE PLN 572.2 MILLION

NET PROFIT PLN 12.8 MILLION

OPERATING EBITDA PLN 68.0 MILLION

OPERATING CASH FLOW PLN 65.8 MILLION

FREE CASH FLOW PLN 28.4 MILLION

 

 

Unless indicated otherwise, all data presented herein represent the period of
January-June 2009, while comparisons refer to the same period of 2008. All data
sources are presented in part IV of this MD&A.

As IFRS 8 Operating segments has become effective, the Group has adjusted its
operating segments presentation in MD&A and financial statements to the
requirements of this standard (details are presented in a part IV of this MD&A
and in note 4 to condensed interim consolidated financial statements). Due to
this change, The Management Board would like to point out that the amounts
concerning major business lines presented in the quarterly reports for previous
reporting periods may not be comparable in full with the present data prepared
under the management approach.

I. IMPORTANT EVENTS AND FACTORS WHICH INFLUENCE THE FINANCIALS OF THE GROUP

According to the Agora Group ('the Group') estimates, in the second quarter of
2009, advertising spending for all media amounted to PLN 1.89 billion, i.e. 17%
less than a year before, whereas in the first half of 2009 it amounted to PLN
3.5 billion, i.e. 13 % less than a year before. Television ad market
experienced the largest drop in value of ad spending (by PLN 244 million, i.e.
13% less). Internet was the only growing medium and it grew by 10%. The
steepest decrease in ad spending was observed in dailies (down by 28%). Ad
spending in radio dropped by 13%, in magazines and outdoor by 17% and 9%
respectively.

Revenues of the Group amounted to PLN 572.2 million and decreased by 12.9%.
Advertising sales stood at PLN 372.9 million (down by 21.2%), revenues from
copy sales at PLN 97.0 million (down by 5.6%) and Special Projects sales,
including sales of collections, reached PLN 52.1 million (up by 56.5%).  

Gazeta'sadvertising sales reached PLN 174.8 million (down by 33.7%). Only in
the second of quarter 2009, Gazeta's advertising sales amounted to PLN 88.7
million and increased by 3% compared to the first quarter of 2009. Its copy
sales decreased by 4.8% yoy and amounted to PLN 75.4 million (in the second
quarter of 2009 copy sales decreased by 2.9%). During the period, Gazeta sold
388 thousand copies on average and its share in total newspaper advertising
expenditure stood at nearly 39% and it dropped by almost 4pp yoy.

Free daily Metro decreased its advertising revenues by 10.9% to PLN 16.3
million, while the advertising expenditure in dailies was down by 28%. The
lower dynamics of advertising revenue decrease in Metro resulted in its
increased share in advertising expenditure in dailies by almost 1pp to 4%.

In the first half of 2009, Internet revenues amounted to PLN 38.6 million and
increased by 13.9% yoy. In May 2009, reach of online services from Gazeta.pl
Group increased to 59.5% and the number of its users reached  9.9 million.[6] 

Revenues of AMS group dropped by 7.5% yoy and amounted to PLN 86.4 million. In
the second quarter of 2009 revenues of AMS group amounted to PLN 48 million and
decreased in by 10.3% yoy. Despite the revenues decrease, AMS increased its
share in outdoor advertising expenditure by 1.4 pp to 26.8% in the first half
of 2009. 

Revenues of the magazine business reached PLN 47.6 million and dropped by 16%
yoy, while its operating EBITDA stood at PLN 8.9 million. [1]

The Radio segment revenues dropped by 4.9% yoy to PLN 40.4 million and posted
operating EBITDA of PLN 1.4 million.

Total net operating cost of the Group reached PLN 551.6 million and decreased
by PLN 52.7 million (i.e. by 8.7%) yoy. In the second quarter of 2009, total
operating cost of the Group amounted to PLN 282.9 million and decreased by 9.8%
yoy. The decrease in operating cost results, inter alia, from the
implementation of the operating efficiency improvement plan within the Group
since December 2008. The largest expenditure reductions were observed in
marketing expense (down by 32.6%) and staff cost (excluding non-cash expense
relating to share-based payments) (down by 3.2%). Moreover, cost of printing
services, lower by PLN 3.3 million (i.e. 9.1%), contributed to the decrease in
total net operating cost.  

Operating EBITDA of the Group stood at PLN 68.0 million, while its operating
EBITDA margin reached 11.9%. In the second quarter of 2009 operating EBITDA
amounted to PLN 38.7 million, which means growth by
PLN 9.4 million as compared to the first quarter of 2009. Operating EBITDA
margin amounted to 13.0% in the second quarter of 2009 and grew by 2.3pp to the
first quarter of 2009. The Group's net profit attributable to the equity
holders of the parent amounted to PLN 13.3 million.

At the end of June 2009, the Group's cash and short-term monetary
assetsamounted to PLN 246.6 million, out of which PLN 155.1 million in cash and
cash equivalents and PLN 91.5 million in safe short -term securities.

The Group's debt amounted to PLN 131.8 million and accessible credit line for
further drawing down was PLN 200 million. 

In line with the operating efficiency improvement plan, announced in December
2008, the Group on the daily basis undertakes cost curtailment measures,
including the group lay-offs in the Company. 337 employees received dismissal
notices in the first half of 2009 and the headcount as of June 30, 2009
amounted to 3,317 FTEs and was decreased by 356 FTEs as compared to December
31, 2008. 


 

II. EXTERNAL AND INTERNAL FACTORS IMPORTANT FOR THE DEVELOPMENT OF THE GROUP

1. EXTERNAL FACTORS

Advertising market

According to Agora's estimates based on public data sources, in the second
quarter of 2009 total advertising spending amounted to PLN 1.89 billion, i.e.
17% less than in the second quarter of 2008.  In the first half of 2009 total
advertising spending amounted to PLN 3.5 billion, i.e. 13% less yoy. Internet
was the only growing medium and ad spending grew in Internet by 10% (i.e. ca
PLN 424 million) as compared to the first half of 2008.  In the second quarter
of 2009 advertising spending in the Internet increased by 5% yoy. In the second
quarter of 2009, the expenditure on display ads decreased by 12% that resulted
in a 3% decline in the first half of 2009.

In the discussed period, television noted an unexpectedly large drop in ad
revenues by almost 13%. The main reason was the decrease in TV ad spend by
almost three times versus the first quarter of 2009 (down by almost 18% yoy).
The policy of large discounts in TV ad spot prices to impede the lowering
demand for TV advertising contributed negatively to that situation.

In the first half of 2009, advertisers reduced their advertising expenditure in
newspapers by almost 28% to
PLN 391 million. The largest drop was noticeable in the following categories:
telecom (down by over 30%), auto moto (down by ca 40%) real estate (down by
over 40%), finance (down by ca 50%), and mainly in recruitment were the
decrease deepened even further and amounted to 68%.

In the second quarter of 2009 advertising spending in magazines fell by 20%
which caused the contraction of ad revenues in the first half of 2009 to PLN
463 million, i.e. by nearly 17% yoy.

In the first half of 2009, outdoor ad spend decreased by 9%, whereas in the
second quarter of 2009 the ad spend contraction in outdoor reached 10%.

In the second quarter of 2009 the radio ad market noted 18% decrease in ad
expenditure. This situation resulted in 13% decrease in radio ad expenditure in
the first half of 2009.

One should bear in mind that these market estimations may represent some margin
of error due to significant discount pressure on the market. Once the Company
has a more reliable market data, it may correct the market share estimations in
the consecutive reporting quarters.

1.2. Newspaper competition

1.2.1 Copy sales

In the first half of 2009, Gazeta Wyborcza sold 388 thousand copies on average
(down by 7% yoy) and in the second quarter of 2009 - 379 thousand copies on
average (i.e. 6.7% less yoy). In the discussed period, average paid circulation
of number five national player, Dziennik reached 144 thousand copies (in the
second quarter of 2009
140 thousand). It should be noted that since 2009 the data about dailies
average paid circulation are prepared according to new ZKDP Audit Rules. The
amendments concern, inter alia, package subscription (for example Dziennik and
Gazeta Prawna).Currently, after fulfilling requirements set in the ZKDP Audit
Rules, all titles from the package can be classified as a subscription. In the
first half of 2009, 42% i.e. 61 thousand copies, out of 144 thousand copies of
Dziennik's paid circulation were distributed through 'other paid forms of
distribution' (in the second quarter of 2009: 44% i.e. 61 thousand copies, out
of 140 thousand copies).

In the second quarter of 2009, Rzeczpospolita sold 143 thousand copies on
average (12% fewer than last year), Fakt
462 thousand copies (6% fewer than last year) and Super Express 189 thousand
copies (6% fewer than last year). In the first half of 2009, Rzeczpospolita
sold 147 thousand copies on average (9% fewer than last year), Fakt
475 thousand copies (7% fewer than last year) and Super Express 197 thousand
copies (5% fewer than last year). 

Since March 2009 the number of titles under Polska brand was reduced. Due to
the publisher's decision 9 out of 18 titles were closed. The titles which were
closed include: Polska Bialystok, Polska Gazeta Opolska, Polska Kielce, Polska
Koszalin, Polska Kujawy, Polska Lubuskie, Polska Olsztyn, Polska Rzeszow and
Polska Szczecin. In the first half of 2009, all titles of Polskapresse under
Polska brand sold 314 thousand copies on average. [4]

On June 1, 2009, Axel Springer Polska Sp. z o.o., publisher of Dziennik Polska
Europa Swiat, and INFOR PL SA, publisher of Gazeta Prawna, signed an agreement
giving Axel Springer Polska Sp. z o.o. 49% stake in the company INFOR Biznes
Sp. z o.o. Axel Springer will contribute, inter alia, its title Dziennik Polska
Europa Swiat.  The publishers declare that from the blend of the two titles a
new daily will appear on the Polish newspaper market in the autumn this year.

In comparison to 2008, the prices of dailies changed. Due to two - stage price
increase Dziennik currently sells for PLN 2.0 from Monday to Thursday and for
PLN 2.5 on Fridays and Saturdays. The titles united under Polska brand cost
from PLN 1.4 to PLN 1.7 on weekdays, while Rzeczpospolita sells for PLN 3.4. In
2009 Gazeta's price changed twice. Since January 2.0 to April 9, 2009, Gazeta
sold for PLN 1.8 from Monday to Thursday. Since April 10, 2009, Gazeta can be
bought for PLN 2 on weekdays and for PLN 2.5 on Fridays and Saturdays. Gazeta
in kiosk subscription costs PLN 1.6.

In the second quarter of 2009 ca 44% of Dziennik' s and 19% of Rzeczpospolita's
paid circulation was sold through 'other paid forms of distribution' (inter
alia bartering or the like methods that can neither be described as paid copy
sales nor the subscriptions). 'Other paid forms of distribution' constituted
only ca 11% of Gazeta's total paid circulation.

On average, in the first half of 2009 ca 42% of Dziennik' s and 17% of
Rzeczpospolita's paid circulation was sold through 'other paid forms of
distribution'. Such forms constituted only ca 9% of Gazeta's total paid
circulation.

1.2.2 Readership

In the first half of 2009, Gazeta's weekly readership reached 14.8% (almost
4.5 million readers; CCS, weekly readership index) and in the second quarter of
2009 - 14.2% (almost 4.3 million of readers, CCS). Fakt's readership stood at
15% (in the second quarter of 2009 - 14.6%) and that of Super Express reached
7.2% (in the second quarter of 2009 - 6.8%). Metro recorded good readership
results of 7.6% i.e. almost 2.3 million people (in the second quarter of 2009 -
7.8%, i.e. over 2.3 million people). In the first half of 2009, readership
rates of other national dailies, Rzeczpospolita and Dziennik stood at 4.1% and
3.8% (in the second quarter of 2009 at 3.7% and 3.3%), respectively. In the
first half of 2009, Gazeta Wyborcza had on average three times more readers
than Rzeczpospolita and almost four times more than Dziennik.

 

1.2.3 Ad revenue

In the first half of 2009, Gazeta's share in total newspaper ad spend dropped
by ca 4 pp yoy to nearly 39%. The decline of Gazeta's share in dailies ad
expenditure results mainly from the drop in number of recruitment ads yoy. The
number of recruitment ads declined by 59% in the first quarter of 2009, and in
the second quarter the declining trend even deepened - drop by 64% (display
advertising, excluding classifieds and inserts). [3] Once the influence of the
drop in the recruitment ads is factored out Gazeta's share in ad expenditure in
dailies for the first half of 2009, remains on the same level as in the first
half of 2008.

In the first quarter of 2009, ad expenditure in dailies dropped by over 24%. In
the second quarter the declining tendency deepened to almost 31%. In total, in
the first half of 2009 the ad expenditure in dailies dropped by nearly 28%.

Gazeta's revenues from display advertising decreased by nearly 34% and its
share in total newspaper ad spend stood at nearly 39% (down by ca 4 pp yoy).
Fakt's and Dziennik's shares stood at 6-7%, while in the second quarter of 2009
at ca 7%. Dynamics of ad revenues decrease in Metro (down by 13% yoy) was
slower than that of ad spend in dailies. Due to that fact Metro expanded its ad
market share to 4% (up nearly 1 pp yoy).In sum, in the first half of 2009 share
of all Agora' s newspaper titles in total dailies ad spend amounted to over
42.5% and decreased by 3 pp yoy.

 

2. INTERNAL FACTORS

2.1. Revenue

In the second quarter of 2009, the Group recorded a 13.4% drop of sales
revenues to PLN 297.8 million. In comparison to the first quarter of 2009 the
sales revenues increased by PLN 23.4 million, whereas in the first half of 2009
they amounted to PLN 572.2 million. The largest component of Agora's sales
(65.2%) was advertising revenue of PLN 372.9 million which dropped by 21.2%. Ad
sales decline in Gazeta and magazines in the first half of 2009 reflects
negative trend in the print ad market during the period. The drop of ad
revenues in AMS (by 8% yoy) is less dynamic than the total ad expenditure
decline in outdoor.

In the second quarter of 2009, Special Projects, including collections,
generated PLN 29.2 million in revenues (up by 167.9% yoy), which means also
growth by 27.5% in comparison to the first quarter of 2009.  In the first half
of 2009, revenues of Special Projects, including collections, amounted to PLN
52.1 million (growth by 56.5%) Operating profit of the business amounted to PLN
12.3 million. [1]

Total revenues from copy sales decreased by 5.6% yoy. The decline results from
lower number and effectiveness of dual-pricing offers and general trend of copy
sales decrease in newspapers.

In the first half of 2009, Group's total Internet revenues (including services
and publications of Trader.com (Polska) Sp. z o.o.) amounted to PLN 38.6
million and increased by 13.9% yoy. The share of Trader.com (Polska) Sp. z o.o.
in the aforementioned revenues was PLN 8.3 million.

 

2.2. Operating cost

Total net operating costof the Group, in the second quarter of 2009, reached
PLN 282.9 million and dropped by 9.8%, i.e. PLN 30.6 million. In the first half
of 2009, total net operating cost amounted to PLN 551.6 million (drop by 8.7%).
In the second quarter of 2009 staff cost (excluding non-cash cost of
share-based payments) amounted to PLN 67.7 million and dropped by 14%. In the
first half of 2009 staff cost amounted to PLN 139.8 million (drop by 3.2%).
This decrease results mainly from the implementation of operating efficiency
improvement plan in Agora Group since December 2008, which entails staff
reductions in the whole Group by about 400 employees till the end of October
2009. Due to the fact that in May 2009, the Company decided to increase the
initially declared staff reductions, created additional provision for the cost
of lay-offs execution in the amount of about PLN 2.3 million, which cost
affected Agora's financial result for the second quarter of 2009 and is visible
in the Company's operating segments.

Full effects of the plan should be visible partly in the Company's financial
results published in the second half of the year but for the full effect one
must wait till 2010.

The Group's headcount at the end of the second quarter of 2009 was 3,317
employees and decreased by 188 FTEs versus the first quarter of 2009.

Marketing expensein the second quarter of 2009 was PLN 40.8 million and was
down by 36.2% yoy. In the first half of 2009, the marketing expense amounted to
PLN 79.0 million, i.e., PLN 38.2 million less yoy. The decrease results mainly
from the reduced number of Gazeta's editions with dual-pricing offers (in the
first half of 2009, 83 editions of Gazeta versus 142 editions in the first half
of 2008) and reduced prices for purchase of advertsing services in media and
reduction in intensity of promotional campaigns.

The increase in cost of raw materials, energy and consumables by 7.3% yoy to
PLN 120.5 million results mainly from launching new, more expensive collections
(Special Projects) with higher volume and production cost.

 

3. PROSPECTS

3.1. Advertising market

In the first half of 2009, the effects of the slowdown did not spare any
segments of ad spend market. The dynamics of ad spend decrease in dailies
deepened from quarter to quarter, mainly due to decreasing number of
advertisements in recruitment, real estate and financial services categories. 
TV stations noted the decrease of ad revenue by almost 13%. The ad spend in
radio decreased by 13%. The outdoor ad spend decreased by 9%. The ad revenues
in magazines were lower by 17% yoy. The only medium that noted ad revenues
growth was Internet, which grew by 10% yoy.

Ad market performance in the second half of 2009 and estimates for consecutive
years depend, by and large, on GDP forecasts for Poland which, despite positive
signals regarding GDP, are still inconsistent.

Therefore, the Company cannot, in a responsible way, estimate the development
of ad market situation in 2009. Bearing in mind the sensitivity of ad market
performance to GDP changes, as well as the high volatility of the correlation
change between the two and unpredictability of that change in the crisis time,
any estimates of the ad spend market value would bear a significant margin of
error. In Company's view no signs of improvement on the Polish ad market can be
visible yet.

3.2. Operating cost

3.2.1 Staff cost

In December 2008, the Company adopted the operating efficiency improvement plan
within the Group. The aim of the plan is to adjust the Group to worse market
conditions. The aforementioned plan assumed staff redundancies of 400 in the
whole Group executed till October 31, 2009. In the Company the redundancies are
executed as group lay - offs. 

Due to additional employment reductions in the Group, the Company created
additional provision for the cost of lay-offs execution in the amount of PLN
2.3 million, which affected Group's consolidated financial result for the
second quarter of 2009.

Total number of people who received dismissal notices in the first half of 2009
amounts to 337.

3.2.2 Promotion and marketing cost

In the first half of 2009, as a result of market situation and due to
production volume decline and lower number of products (primarily connected
with dual - pricing offers), the marketing expenditure dropped by almost 33%.
It should be noted, however, that the level of marketing expense depends on the
growth dynamics of particular businesses, as well as the market activities and
projects of their competitors planned for the autumn 2009.

 

3.2.3 Cost of raw materials and energy

In the first half of 2009, the cost of materials and energy grew by 0.8%. This
cost category is, by and large, dependent on EUR/PLN exchange rate, the
production volume and cost of energy. The increase in energy cost by almost 31%
was the main reason of increase in this cost category. Due to decrease in
production volume, despite price increase and unfavorable EUR/PLN exchange
rate, paper cost decreased by 2.2%, i.e. PLN 1.4 million. 


 

III. FINANCIAL RESULTS

1. THE AGORA GROUP

The consolidated financial statements of the Agora Group for the second quarter
of 2009 include: Agora SA, Agora Poligrafia Sp. z o.o., Art Marketing Syndicate
SA Group ("AMS Group"), Agora TC Sp. z o.o., Trader.com (Polska) Sp. z o.o.,
5 subsidiaries of the radio business, the Ukrainian companies: LLC Agora
Ukraine, Agora Press Ltd. and jointly controlled entity A2 Multimedia
Sp. z o.o. A detailed list of companies of the Agora Group is presented
in the note 14 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                     2Q      2Q % change     1 H      1H  change 
                                 2009    2008      yoy    2009    2008     yoy 
                                                                               
                                                                               
Total sales                    297.8   343.7  (13.4%)   572.2   657.1  (12.9%) 
                                                                               
Advertising revenue (1)        194.1   259.6   (25.2%)  372.9   473.3  (21.2%) 
                                                                               
Copy sales (1)                  47.5    49.5    (4.0%)   97.0   102.8   (5.6%) 
                                                                               
Special Projects (including     29.2    10.9    167.9%   52.1    33.3    56.5% 
book collections)                                                              
                                                                               
Other                           27.0    23.7     13.9%   50.2    47.7     5.2% 
                                                                               
Operating cost net,           (282.9) (313.5) (9.8%)   (551.6) (604.3) (8.7%)  
including:                                                                     
                                                                               
Raw materials, energy and      (65.1)  (51.8)    25.7% (120.5) (112.3)    7.3% 
consumables                                                                    
                                                                               
D&A                            (20.5)  (20.4)     0.5%  (40.6)  (40.2)    1.0% 
                                                                               
Staff cost (2)                 (67.7)  (78.7)  (14.0%) (139.8) (144.4)  (3.2%) 
                                                                               
Non-cash expense relating to    (3.5)  (11.6)  (69.8%)   (7.1)  (23.6) (69.9%) 
share-based payments                                                           
                                                                               
Promotion and marketing        (40.8)  (63.9)  (36.2%)  (79.0) (117.2) (32.6%) 
                                                                               
Operating efficiency            (2.3)      -         -   (2.3)      -        - 
improvement plan                                                               
                                                                               
Operating result - EBIT         14.9    30.2  (50.7%)    20.6    52.8  (61.0%) 
                                                                               
Finance  cost, net, incl.:      (0.0)   (0.5) (100.0%)    0.8     2.8  (71.4%) 
                                                                               
Revenue from short-term          2.6     5.6   (53.6%)    5.7    11.4  (50.0%) 
investment                                                                     
                                                                               
Interest on loans and similar   (2.1)   (2.6)  (19.2%)   (4.6)   (4.8)  (4.2%) 
costs                                                                          
                                                                               
Foreign exchange (losses) /     (0.5)   (3.2)  (84.4%)      -    (3.3)       - 
gains                                                                          
                                                                               
Share of results of equity      (0.2)   (0.5) (60.0%)    (0.4)   (0.7) (42.9%) 
accounted investees                                                            
                                                                               
Profit before income tax        14.7    29.2  (49.7%)    21.0    54.9  (61.7%) 
                                                                               
Income tax expense              (2.9)   (7.6)  (61.8%)   (8.2)  (14.8) (44.6%) 
                                                                               
Net profit for the period       11.8    21.6  (45.4%)    12.8    40.1  (68.1%) 
                                                                               
Attributable to:                                                               
                                                                               
Equity holders of the parent    12.2    21.5   (43.3%)   13.3    40.2  (66.9%) 
                                                                               
Minority interest               (0.4)    0.1         -   (0.5)   (0.1)  400.0% 
                                                                               
EBIT margin (EBIT/Sales)         5.0%    8.8%  (3.8pp)    3.6%    8.0% (4.4pp) 
                                                                               
EBITDA                          35.2    50.4  (30.2%)    60.9     92.7 (34.3%) 
                                                                               
EBITDA margin (EBITDA/Sales)    11.8%   14.7%  (2.9pp)   10.6%   14.1% (3.5pp) 
                                                                               
Operating EBITDA (2)            38.7    62.0  (37.6%)    68.0    116.3 (41.5%) 
                                                                               
Operating EBITDA margin         13.0%   18.0%  (5.0pp)   11.9%   17.7% (5.8pp) 
(Operating EBITDA/Sales)                                                       
                                                                               

                                                                               

(1) excluding Special Projects;

(2) excluding non-cash cost of share-based payments.

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").

2.1. Financial results presented according to major segments of the Agora
Groupfor two quarters of 2009

As IFRS 8 Operating segments has become effective, the Group has adjusted its
operating segments presentation in this MD&A and financial statements to the
requirements of this standard (details are presented in a part IV of this MD&A
and in note 4 to condensed interim consolidated financial statements).

Due to this change, The Management Board would like to point out that the
amounts concerning major business lines presented in the quarterly reports for
previous reporting periods may not be comparable in full with the present data
prepared under the management approach.

 

                                                                         Tab. 2

   in PLN                                                 Matching      Total      
  million    Newspapers Internet Magazines Outdoor Radio  positions (consolidated) 
                                                             (3)       1 H 2009    
                                                                                   
Total sales       362.5     38.6      47.6    86.4   40.4     (3.3)          572.2 
(4)                                                                                
                                                                                   
% share           63.4%     6.7%      8.3%   15.1%   7.1%    (0.6%)         100.0% 
                                                                                   
Operating       (296.8)   (43.9)    (39.2)  (87.7) (40.9)    (43.1)        (551.6) 
cost net (4)                                                                       
                                                                                   
EBIT               65.7    (5.3)       8.4   (1.2)  (0.5)    (46.5)           20.6 
                                                                                   
Finance                                                                        0.8 
cost, net                                                                          
                                                                                   
Share of                                                                           
results of                                                                         
equity                                                                       (0.4) 
accounted                                                                          
investees                                                                          
                                                                                   
Income tax                                                                   (8.2) 
expense                                                                            
                                                                                   
Net profit                                                                    12.8 
                                                                                   
Attributable                                                                     - 
to:                                                                                
                                                                                   
Equity                                                                             
holders of                                                                    13.3 
the parent                                                                         
                                                                                   
Minority                                                                     (0.5) 
interest                                                                           
                                                                                   
EBITDA             79.4    (2.2)       8.6    10.5    1.0    (36.4)           60.9 
                                                                                   
Operating          82.7    (2.0)       8.9    11.1    1.4    (34.1)           68.0 
EBITDA (1)                                                                         
                                                                                   
CAPEX (2)         (2.2)    (2.8)     (0.1)   (7.2)  (1.8)     (8.7)         (22.8) 
                                                                                   

(1) excluding non-cash cost of share-based payments;

(2) based on invoices booked in the period;

(3) matching positions show data not included in particular segments, inter
alia: other revenues and costs of Agora's support divisions, 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.

 

 

2.2. Finance cost, net

Net financial activities in the first half of 2009 were affected mainly by bank
commissions, as well as interest on the bank loan.

 

3. BALANCE SHEET OF THE AGORA GROUP

Tab. 3

in PLN million               30/06/  31/03/ % change to 31/03/   31/12/  30/06/ 
                               2009    2009 2009                   2008   2008* 
                                                                                
Non-current assets          1,045.0 1,054.9              (0.9%) 1,065.8 1,064.4 
                                                                                
share in balance sheet        67.6%   67.1%              0.5 pp   66.7%   64.3% 
total                                                                           
                                                                                
Current assets                500.3   516.4              (3.1%)   532.7   590.8 
                                                                                
share in balance sheet        32.4%   32.9%            (0.5 pp)   33.3%   35.7% 
total                                                                           
                                                                                
                                                                                
                                                                                
TOTAL ASSETS                1,545.3 1,571.3             (1.65%) 1,598.5 1,655.2 
                                                                                
                                                                                
                                                                                
Equity holders of the       1,168.9 1,158.1                0.9% 1,167.2 1,251.4 
parent                                                                          
                                                                                
share in balance sheet        75.6%   73.7%              1.9 pp   73.0%   75.6% 
total                                                                           
                                                                                
Minority interest             (0.7)      -                    -   (0.1)   (0.6) 
                                                                                
share in balance sheet            -       -                           -       - 
total                                                         -                 
                                                                                
Non-current liabilities and   119.0   127.1              (6.4%)   138.5   158.3 
provisions                                                                      
                                                                                
share in balance sheet         7.7%    8.1%            (0.4 pp)    8.7%    9.6% 
total                                                                           
                                                                                
Current liabilities and       258.1   286.1              (9.8%)   292.9   246.1 
provisions                                                                      
                                                                                
share in balance sheet        16.7%   18.2%            (1.5 pp)   18.3%   14.8% 
total                                                                           
                                                                                
                                                                                
                                                                                
TOTAL LIABILITIES AND       1,545.3 1,571.3             (1.65%) 1,598.5 1,655.2 
EQUITY                                                                          
                                                                                

                                                                               
                                                                               

* In the financial statements for the year 2008 the Group has changed the
presentation of deferred tax assets and liabilities. The comparable data as at
30 June 2008 were restated thereupon.

 

3.1. Non-current assets

The decrease in non-current assets versus 31 March 2009 stems mainly from D&A
on fixed assets.

3.2. Current assets

The change of current assets versus 31 March 2009 results, inter alia, from:
the increase in inventories and decreases in: accounts receivable and income
tax receivable.

3.3. Non-current liabilities and provisions

The decrease of non-current liabilities and provisions versus 31 March 2009
stems mainly from the re-classification of the Agora's bank loan in the amount
of PLN 10.7 million from non-current to current liabilities.

3.4. Current liabilities and provisions

The decrease of non-current liabilities and provisions versus 31 March 2009 is
caused mainly by:

decrease in accounts payable (by PLN 18.8 million),

decrease in deferred revenues and accruals (by PLN 7.9 million).

In the first half of 2009, Agora SA signed a new annex to the loan bank
agreement with Pekao SA and repaid two quarterly installments of the credit
line used in previous years. Additionally, in the second quarter of 2009 AMS
repaid a credit in its current bank account in the amount of PLN 1.4 million,
on the basis of the debt limit agreement.

4. CASH FLOW STATEMENT OF THE AGORA GROUP

Tab. 4

                                                                             % 
in PLN million                    2Q      2Q % change     1 H      1H   change 
                                2009    2008      yoy    2009    2008      yoy 
                                                                               
                                                                               
Net cash from operating        26.2    28.4    (7.7%)   65.8    82.2   (20.0%) 
activities                                                                     
                                                                               
Net cash from investment      (44.3) (145.7)  (69.6%) (126.8) (111.8)    13.4% 
activities                                                                     
                                                                               
Net cash from financing       (23.1)   (4.5)   413.3%  (47.6)   (6.6)   621.2% 
activities                                                                     
                                                                               
Total movement of cash and    (41.2) (121.8) (66.2%)  (108.6)  (36.2) 200.0%   
cash equivalents                                                               
                                                                               
Cash and cash equivalents at  155.1   301.4  (48.5%)   155.1   301.4  (48.5%)  
the end of period                                                              
                                                                               

 

As at 30 June 2009, the Agora Group had PLN 246.6 million in cash and in
short-term monetary assets, of which PLN 155.1 million was in cash and cash
equivalents (cash, bank accounts and bank deposits) and PLN 91.5 million in
secure short-term securities.

Neither Agora nor any other company from the Agora Group have been or were in
the first half of 2009 engaged in any currency option instruments or other
derivatives.

Considering the cash position and the available loan facility, Agora SA does
not anticipate any liquidity problems with regards to its further investment
plans. As at the date of this quarterly report, the Company can still draw up
to PLN 200 million of the credit line. 

4.1. Operating activities

In the first half of 2009 the net cash inflow from operating activities
decreased due to lower operating result delivered.

4.2. Investment activities

Net outflow from investing activities in the first half of 2009 results mainly
from purchase of short-term securities and incurred investment expenditure.

4.3. Financing activities

In the first half of 2009 the net cash from financing activities included
spending on the execution of the share buy-back program (PLN 19 million) and
the repayment of two quarterly installment of the credit line used in previous
years (PLN 21.4 million). In the second quarter of 2009, the Company spent PLN
7.6 million on its share buy-back program and AMS SA repaid PLN 1.4 million of
a credit in its current bank account.


5. SELECTED FINANCIAL RATIOS [5]

Tab. 5

                              2Q      2Q % change       1 H      1H % change   
                            2009    2008 yoy           2009    2008 yoy        
                                                                               
                                                                               
                                                                               
Profitability ratios                                                           
                                                                               
Net profit margin           4.1%    6.3%               2.3%    6.1%            
                                            (2.2pp)                    (3.8pp) 
                                                                               
Gross profit margin        40.1%   48.3%              39.5%   46.1%            
                                            (8.2pp)                    (6.6pp) 
                                                                               
Return on equity            4.2%    6.9%               2.3%    6.5%            
                                            (2.7pp)                    (4.2pp) 
                                                                               
                                                                               
                                                                               
Efficiency ratios                                                              
                                                                               
Inventory turnover       10 days  7 days      42.9% 10 days  8 days      25.0% 
                                                                               
Debtors days             66 days 64 days       3.1% 71 days 67 days       6.0% 
                                                                               
Creditors days           50 days 41 days      22.0% 52 days 45 days      15.6% 
                                                                               
                                                                               
                                                                               
Liquidity ratio                                                                
                                                                               
Current ratio                1.9     2.4    (20.8%)     1.9     2.4    (20.8%) 
                                                                               
                                                                               
                                                                               
Financing ratios                                                               
                                                                               
Gearing ratio (1)              -       -          -       -       -          - 
                                                                               
Interest cover               9.5    13.2    (28.0%)     5.7    12.0    (52.5%) 
                                                                               
Free cash flow interest      7.5   (0.2)          -     7.8     5.7      36.8% 
cover                                                                          
                                                                               

 

(1) as at 30 June 2009 and 30 June 2008 the Group had net cash position.

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").


IV. OPERATING REVIEW - MAJOR SEGMENTS OF THE AGORA GROUP

IV.A. NEWSPAPERS [1]

As IFRS 8 Operating segments has become effective, the Group has adjusted its
operating segments presentation in MD&A and financial statements to the
requirements of this standard. The comparable data for previous reporting
periods were restated, respectively. Due to this change, The Management Board
would like to point out that the amounts concerning major business lines
presented in the quarterly reports for previous reporting periods may not be
comparable in full with the present data prepared under the management
approach. 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

                                  2Q      2Q   %            1H      1H %       
in PLN million                  2009    2008   change     2009    2008 change  
                                               yoy                     yoy     
                                                                               
Total sales                     186.6   218.9  (14.8%)  362.5   435.8  (16.8%) 
                                                                               
Copy sales                       37.6    38.5  (2.3%)    76.1    79.7  (4.5%)  
                                                                               
incl. Gazeta Wyborcza            37.1    38.2   (2.9%)   75.4    79.2   (4.8%) 
                                                                               
Advertising revenue (1)          97.3   150.1  (35.2%)  192.4   283.7  (32.2%) 
                                                                               
incl. Gazeta Wyborcza  (2)       88.7   139.5  (36.4%)  174.8   263.7  (33.7%) 
                                                                               
incl. Metro                       7.9     9.6  (17.7%)   16.3    18.3  (10.9%) 
                                                                               
Special Projects (including      29.4    10.9   169.7%   52.3    33.3    57.1% 
book collections)                                                              
                                                                               
Other revenue                    22.3    19.4    14.9%   41.7    39.1     6.6% 
                                                                               
Total operating cost,          (152.8) (175.6) (13.0%) (296.8) (346.9) (14.4%) 
including                                                                      
                                                                               
Raw materials, energy,                                                         
consumables and printing        (68.6)  (57.6)   19.1% (127.8) (123.0)    3.9% 
services                                                                       
                                                                               
Staff cost (3)                  (32.8)  (39.8) (17.6%)  (66.2)  (73.5)  (9.9%) 
                                                                               
Non-cash expense relating to     (1.6)   (6.2) (74.2%)   (3.3)  (12.5) (73.6%) 
share-based payments (5)                                                       
                                                                               
D&A                              (6.9)   (9.6) (28.1%)  (13.7)  (19.4) (29.4%) 
                                                                               
Promotion and marketing (1)     (26.1)  (45.2) (42.3%)  (52.5)  (84.7) (38.0%) 
(4)                                                                            
                                                                               
   Operating efficiency          (1.4)      -        -   (1.4)      -        - 
improvement plan                                                               
                                                                               
EBIT                             33.8    43.3  (21.9%)   65.7    88.9  (26.1%) 
                                                                               
                                 18.1%   19.8%           18.1%   20.4%         
EBIT margin                                    (1.7pp)                 (2.3pp) 
                                                                               
EBITDA                           40.7    52.9  (23.1%)   79.4   108.3  (26.7%) 
                                                                               
                                 21.8%   24.2%           21.9%   24.9%         
EBITDA margin                                  (2.4pp)                 (3.0pp) 
                                                                               
Operating EBITDA (3)             42.3    59.1  (28.4%)   82.7   120.8  (31.5%) 
                                                                               
                                 22.7%   27.0%           22.8%   27.7%         
Operating EBITDA margin                        (4.3pp)                 (4.9pp) 
                                                                               

                                                                               

                                                                               

(1) 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;

(2) the amounts refer to only a portion of total revenues from the dual media
offers ( published both in Gazeta Wyborcza, as well as on GazetaPraca.pl,
GazetaDom.pl and Komunikaty.pl verticals), which are allocated to print edition
of Gazeta;

(3) excluding non-cash cost of share-based payments;

(4) the amounts include the start-up cost of new book collections (i.e. initial
promotional cost in media) and the production and promotional cost of gadgets
attached to Gazeta;

(5) in 2008 the whole amount of non-cash expense relating to share-based
payments concerning the Agora's Internet Department was presented in the
Newspapers and Internet business line of activity.

1. GAZETA WYBORCZA

1.1. Revenue

1.1.1. Copy sales

In the first half of 2009 Gazeta Wyborcza maintained its leadership position
among the opinion-making newspapers. In the second quarter of 2009, Gazeta sold
379 thousand copies on average (down by 6.7% yoy). In the first half of 2009,
average paid circulation of the newspaper amounted to 388 thousand copies (down
by 7.2% yoy). The decline stems from lower number of the higher priced issues
(dual-pricing offer) and its diminishing effect on copy sales as well as from a
general trend of copy sales decrease. In the said period Gazeta's revenues from
copy sales went down by 4.8% yoy (in the second quarter of 2009: down by 2.9%
yoy). In the first half of 2009, there were 83 editions of Gazeta with products
in dual pricing offer; in the first half of 2008 there were 142 of them.

In 2009 Gazeta's cover price increased twice. From January 2, 2009, it cost PLN
1.80. The second cover price increase took place on April 10, 2009. As a
result, currently Gazeta sells for PLN 2 from Monday to Thursday and for PLN
2.5 on Friday and Saturday. In kiosk subscription every issue of Gazeta sells
for PLN 1.6. Despite these price changes, Gazeta has the same price as Dziennik
and still costs significantly less than Rzeczpospolita (its cover price equals
to PLN 3.4) and Gazeta Prawna (its cover price equals to PLN 3.5).

On June 1, 2009 Axel Springer Polska Sp. z o.o., publisher of Dziennik Polska
Europa Swiat, and INFOR PL SA, publisher of Gazeta Prawna, signed an agreement
giving Axel Springer 49% stake in the company INFOR Biznes Sp. z o.o. Axel
Springer will contribute, inter alia, its title Dziennik Polska Europa Swiat.
 The publishers declare that from the blend of the two titles a new daily will
appear on the Polish newspaper market in the autumn this year.

On March 1, 2009 Polskapresse Sp. z o.o. decided to close 9 out of 18 local
titles united under Polska brand. In the second quarter of 2009 Polskapresse's
local titles published under a brand Polska sold in total 304 thousand copies.
Comparing to the second quarter of 2008, the number of copies sold, excluding
closed titles, decreased by
35 thousand (down by 10% yoy).

In the second quarter of 2009 newspapers achieved readership reaches: Gazeta
Wyborcza 14.2%, Rzeczpospolita 3.7%, Dziennik 3.3%, Metro 7.6%. The readership
rates for tabloids Fakt and Super Express stood at 14.6% and 6.8%,
respectively.

In the first half of 2009, weekly readership rate of Gazeta Wyborcza stood at
14.8% which made it the most widely read quality daily. Rzeczpospolita achieved
4.1% readership reach and Dziennik - 3.8%. Metro was read by 7.8% of the
researched population in Poland. The readership rates for tabloids Fakt and
Super Express stood at 15.0% and 7.2%, respectively.

In the first half of 2009, Gazeta Wyborcza won a major award in the category
Prasowa Okladka Roku (Press Cover of the Year) and ArtFront award in the
category Gazety Ogolnopolskie (Nationwide Newspapers) in a prestigious contest
GrantFront 2008. Gazeta was awarded in this contest for the sixteenth time.

Additionally, the action Probne matury (Test High School Examination) organized
by Gazeta Wyborcza and Operon publisher, in cooperation with RMF FM radio and
Gazeta.pl portal, received the first stage award in a prestigious international
contest INMA Awards 2009. Gazeta received also a second stage award for a
special and intriguing way of encouraging its readers to lecture its editorial
series, for example: Siedem wyborow Walesy (Seven Walesa's choices), Polska to
nie jest kraj dla starych ludzi (Poland is not the country for old people),
Irak: Polacy na wojnie (Iraq: Poles on war) and Kim jest general (Who is
general) about general Wojciech Jaruzelski.

In May, Agora introduced an occasional image campaign and issued a special
supplement in connection with celebration of Gazeta Wyborcza's twentieth
birthday. Additionally, Gazeta's readers were offered many contests.

 

1.1.2. Advertising sales

In the first half of 2009, Gazeta's net advertising revenues (including display
advertising, classifieds and inserts) amounted to PLN 174.8 million (down by
33.7% yoy). The above figures include only a portion of revenues from
advertising dual-media offers (published both in print and in GazetaPraca.pl,
GazetaDom.pl, Komunikaty.pl verticals), which are allocated to print edition of
Gazeta Wyborcza.

In the second quarter of 2009, Gazeta's share in all display advertising in
dailies stood at 38% (down by 3.5pp yoy). In the first half of 2009, Gazeta's
share in all display advertising in dailies stood at nearly 39% (down by almost
4pp yoy). The main reason of Gazeta's decline in display ad share is the
decreasing number of ads in recruitment sector in which Gazeta holds a leader
position. During the period, total number of recruitment ads in dailies
decreased by 61% yoy (display advertising, excluding classifieds and inserts).
[3] If recruitment ads were excluded, Gazeta would maintain its share in
dailies ad expenditure in the first half of 2009. 

In the first half of 2009 Gazeta's share in national newspaper ad spend was
about 40% (down by 3.5pp yoy). In the second quarter this share stood at ca 39%
and went down by 4pp yoy.

Gazeta's share in Warsaw ad spend for newspapers (display advertising excluding
classifieds, inserts and obituaries) decreased by ca 1.5 pp and its share in
local dailies ad spend decreased by ca 2.5 pp yoy. In the second quarter of
2009, Gazeta's share in Warsaw ad spend for newspapers (display advertising
excluding classifieds, inserts and obituaries) decreased by 1.5 pp and its
share in local dailies ad spend decreased by 2pp yoy.

These market estimations may represent some margin of error due to significant
discount pressure on the market. Once the Company has a more reliable market
data, it may correct the market share estimations in the consecutive reporting
quarters.

In the first half of 2009, the share of ad pages in Gazeta's total pagecount
amounted to ca 39% (down by ca 7pp yoy), while the average number of ad pages
published daily in all local and national editions reached ca 203 (down  by ca
23% yoy).

1.1.3. Special Projects

Tab. 7

in PLN million              1Q 2008  2Q 2008  3Q 2008  4Q 2008  1Q 2009  2Q 2008
                                                                                
Revenue from collections      22.4     10.9      6.7      23.2    22.9      29.4
                                                                                

 

In the first half of 2009, the Company ran eight collections and nineteen
one-off projects. During this period it sold ca 2.9 million books and books
with attached DVDs and CDs.

In the described period, the Company continued two series from the year 2008:
book series Dziela Stanislawa Lema (Stanislaw Lem's Masterpieces) and the music
collection of Queen. Agora finished also book collections: Wielkie opery (Great
operas) with attached CDs and DVDs, Multikurs Jezykowy (Language Mutli-course)
with attached CDs, a collection of travel guides Miasta marzen (Cities of
Dreams), a series of Swiete ksiegi (Holy books), Dziela wybrane Adama Michnika
(Adam Michnik's Selected Materpieces) published in connection with the
twentieth birthday of Gazeta Wyborcza and a book collection Religie Swiata
(World Religions).

Among nineteen one-off projects launched by the Company in the first half of
2009 there were five booklets with attached CDs, inter alia,  Chopin/
Jagodzinski Sonata b-moll (Chopin/Jagodzinski Sonata b-moll), Nasz Niemen (Our
Niemen) - an anthology of the best songs created by Czeslaw Niemen, chosen by
the listeners of the Zlote Przeboje (Golden Oldies) radio station, Gazeta's
readers and users of the Gazeta.pl portal, one book with attached DVD Charlie
Chaplin with music composed by Krzesimir Debski (Charlin Chaplin with music of
Krzesimir Debski); nine separate book positions, inter alia, Spacer Poranny (My
Morning walk) written by Ryszard Kapuscinski,  a photo album Duzo kobiet (Many
women) by Mikolaj Grynberg., a photo album Od 20 lat z Gazeta Wyborcza (From 20
years with Gazeta Wyborcza), an album Upadek Peerelu 1986-1989 (Collapse of
People's Republic of Poland 1986-1989)

and four music albums, inter alia: Smooth Festival Zlote Przeboje Bydgoszcz
2009 and Voo Voo and Haydamaky.

1.1.4. Other revenues

In the first half of 2009, the Company's revenues from the sales of printing
services increased by 6% yoy, mainly due to more orders from external clients
(in the second quarter of 2009 by 13%).


1.2 Cost

1.2.1 Printing cost of Gazeta Wyborcza

Tab. 8

                                           %                                  
                              2Q      2Q   change     1H      1H   % change   
                            2009    2008   yoy      2009    2008   yoy        
in PLN million                                                                
                                                                              
Fixed cost                    9.8    14.4  (31.9%)   20.4    27.7      (26.4%)
                                                                              
incl. D&A                     3.4     6.1  (44.3%)    7.1    12.3      (42.3%)
                                                                              
Variable cost                32.7    35.8   (8.7%)   64.3    71.5      (10.1%)
                                                                              
incl. newsprint              26.2    29.5  (11.2%)   52.4    58.7      (10.7%)
                                                                              
TOTAL fixed and variable                                                      
cost                         42.5    50.2  (15.3%)   84.7    99.2  (14.6%)    
                                                                              

 

The decrease in the newsprint cost, in the first half and in the second quarter
of 2009, resulted from the lower circulation and volume printed which
outweighed the newsprint price increase (due to higher exchange rate for EUR
versus PLN).

 

1.2.2. Promotion and marketing cost

In the first half of 2009, Gazeta's promotion and marketing cost went down by
38% yoy. This decline results mainly from the decreased intensity and lower
number ofpromotional campaigns, as well as lower ad prices. Reduction in number
and volume of products sold in a dual-pricing offer contributed to the
reduction of this cost position. The change in the form of the free-of-charge
additions to Gazeta allowed for a significant cost reduction.

2.FREE PRESS

In the second quarter of 2009 as well as in the first half of 2009, Metro noted
very good readership results. In the second quarter 7.6% of Poles read Metro
throughout the week (nearly 2.3 million of readers) and in the first half this
rate stood at 7.8% (over 2.3 million of readers).

In the first half of 2009, Agora's free daily in Poland had the third position
among nationwide dailies with average daily readership index 4.3% (1.3 million
of Poles). That means, that Metro was read by twice more people than
Rzeczpospolita and a two and half times more people than Dziennik.

Despite that in the first half of 2009 ad expenditure assigned for dailies
decreased by 28%, Metro's total revenues decreased only by 10.9%, while its
revenues from display ads decreased by 13%. Metro's share in total display ad
spend on dailies grew to 4% by almost 1pp yoy. In Warsaw, Metro went up to the
second position as far as the share in display ads is concerned. Its share was
greater than the combined share of Dziennik and Fakt. In the second quarter of
2009, Metro's total revenues decreased by 17.7%, while its revenues from
display ads decreased by 19% yoy. During the period Metro's share in total ad
spend on dailies grew to over 3.5% by 0.5pp yoy. In Warsaw, Metro's share in
the Warsaw ad market on dailies stood at over 11% and increased by 4pp yoy.

Metroconstantly develops its advertising offer, particularly in non-standard
forms of advertising. One of the novelties introduced is the ad in the form of
Metro's front cover printed on a high quality magazine paper. The international
clothing chain H&M was the first client which promoted its products using this
form of advertising.

In June 2009, Agora launched an online service for mTarget - the ambient media
and BTL activities, available within the Free Press portfolio from January
2009. The website does not only present the advertising offer and a range of
delivered services, but also offers the possibility to see campaigns executed
within mTarget. Mtarget introduced new offers, for example: mTargets - packages
of precise reach to strictly selected target groups and promotional flags as
attractive advertising forms on the streets of large cities.

In March 2009, Metro's website received a new layout. The online service
enables its users to find the information in an easier and faster way. eMetro's
priority is interaction and fast contact with its users - who can not only send
information to editorial staff but can also be co-editors of the service. The
eMetro.pl service publishes the most interesting letters and pictures sent by
users as well as stories of Metro's journalists. The permanent element of the
Metro's online service is Cafeanimal.pl - a social online portal for pet
lovers.

In the first half of 2009, Metro continued development of its editorial line
focused on the young generation of Poles. It resulted in series of articles
about the generation of singles and high education. Articles about social trust
introduced an action Szkola Zaufania Metra (Metro's School of Trust) - led by
the experts and free daily's readers.

 

On May 31, 2009, during closing the Metro's debate entitled Jaka Polska 2029
(How will Poland look like in 2029), the representatives of young scientists,
people from media, non-governmental organizations and employers took part in
the Round Table debate. The goal of the action organized together with
Stowarzyszenie Polska Mlodych (The Association of the Young Poland) was to find
together with Metro's readers five major goals for Poland. On June 4, 2009 on
the twentieth anniversary of the first free parliamentary elections in Poland,
the above mentioned association initiated the e-voting, which attracted almost
19 thousand electors.

The jury of the international contest called World Young Reader Prize,
organized by WAN-IFRA (World Association of Newspapers and News Publishers
honored Metro for the Round Table 2009.

On June 18, 2009, Metro received the title of High Reputation Brand in the
Media category from the Independent Ranking of Brand Reputation in Poland -
Premium Brand.

In the second quarter of 2009, Metro noted a negative operating EBITDA of PLN
0.7 million and in the first half of 2009 - PLN 0.9 million [1].

IV.B INTERNET [1] [6]

As IFRS 8 Operating segments has become effective, the Group has adjusted its
operating segments presentation in this MD&A and financial statements to the
requirements of this standard. The comparable data for previous reporting
periods were restated, respectively. Due to this change, The Management Board
would like to point out that the amounts concerning major business lines
presented in the quarterly reports for previous reporting periods may not be
comparable in full with the present data prepared under the management
approach.

The Internet segment includes the pro-forma consolidated financials of Agora's
Internet Department, LLC Agora Ukraine and Trader.com (Polska) Sp. z o.o. The
acquisition of Trader.com (Polska) Sp. z o.o. has an influence on presented
financials of the segment to start from the third quarter of 2009.

Tab. 9

                                      2Q     2Q %            1H      1H %      
in PLN million                      2009   2008 change     2009    2008 change 
                                                yoy                     yoy    
                                                                               
Total sales , including            19.1   19.4  (1.5%)    38.6    33.9  13.9%  
                                                                               
Ad sales in verticals (2)           5.4    4.5    20.0%   11.3     9.1    24.2%
                                                                               
Display ad sales (1)               11.0   13.6  (19.1%)   21.4    22.5   (4.9%)
                                                                               
Total operating cost, including   (22.2) (21.3) 4.2%     (43.9)  (38.1) 15.2%  
                                                                               
IT and network maintenance         (1.1)  (1.1)       -   (2.0)   (2.3) (13.0%)
                                                                               
Staff cost (3)                    (10.8)  (7.9)   36.7%  (21.8)  (14.4)   51.4%
                                                                               
Non-cash expense relating to       (0.1)     -        -   (0.2)      -        -
share-based payments (4)                                                       
                                                                               
D&A                                (1.6)  (0.9)   77.8%   (3.1)   (1.6)   93.8%
                                                                               
Promotion and marketing (1)        (4.5)  (9.2) (51.1%)   (8.8)  (15.7) (43.9%)
                                                                               
Operating efficiency improvement   (0.4)     -        -   (0.4)      -        -
plan                                                                           
                                                                               
EBIT                               (3.1)  (1.9) (63.2%)   (5.3)   (4.2) (26.2%)
                                                                               
EBIT margin                      (16.2%) (9.8%) (6.4pp) (13.7%) (12.4%)        
                                                                        (1.3pp)
                                                                               
EBITDA                             (1.5)  (1.0) (50.0%)   (2.2)   (2.6) 15.4%  
                                                                               
EBITDA margin                     (7.9%) (5.2%) (2.7pp)  (5.7%)  (7.7%)        
                                                                          2.0pp
                                                                               
Operating EBITDA (3)               (1.4)  (1.0) (40.0%)   (2.0)   (2.6) 23.1%  
                                                                               
Operating EBITDA margin           (7.3%) (5.2%) (2.1pp)  (5.2%)  (7.7%)        
                                                                          2.5pp
                                                                               

 

(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, as
well as inter-company sales between Agora's Internet Department, LLC Agora
Ukraine and Trader.com (Polska) Sp. z o.o. From 2009, e-commerce ad sales
(performance advertising) are presented as display ad sales not in other
revenues; the comparable data were restated thereupon;

(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
and Komunikaty.pl verticals); from 2009 ad sales defined as Power Page
advertising (ads published within standing fees) in Trader.com (Polska) Sp. z
o.o. are presented in ad sales of verticals, not in display ad sales;

(3) excluding non-cash cost of share-based payments;

(4) in 2008 the whole amount of non cash cost of share-based payments
concerning the Agora's Internet Department was presented in the Newspapers and
Internet business line of activity.

In the first half of 2009, total revenues of Trader.com (Polska) Sp. z o.o.
amounted to PLN 8.3 million. The company recorded a negative EBIT of PLN 0.3
thousand. Revenues from the company's magazines amounted to PLN 2.4 million and
from its internet activities - PLN 5.9 million.

In the first half of 2009, LLC Agora Ukraine recorded a negative EBIT of PLN
1.1 million.

 

1. Revenue

In the second quarter of 2009, significant decrease in number of promotional
campaigns settled in barters influenced the level of ad revenues. Ad sales
settled in cash increased by over 8% in the first half of 2009. Display ad
sales recorded a high dynamic of growth (up by 24.2% yoy) and reached PLN 11.3
million. The amount includes PLN 3.7 million of allocated advertising sales
from dual media offers (print and Internet) and ad sales of Trader.com (Polska)
Sp. z o.o. in the amount of PLN 4.7 million.

2. Cost

Staff cost increase in the first half of 2009, reflects higher employment by
122 FTEs yoy, due to, inter alia, the development of the ad sales team, as well
as additional 87 FTEs of Trader.com (Polska), a subsidiary since June 2008.
Higher D&A cost reflect Agora's Internet segment's investments made in the
fourth quarter of 2008 (including, inter alia, purchase of Edulandia.pl) and in
the second quarter of 2009 (inter alia: acquisition of the license for online
series N1ckola).

In the first half of 2009, promotion and marketing cost decreased due to lower
intensity of advertising campaigns. The promotional campaigns settled in
barters were reduced by almost half and those settled in cash decreased by 40%
yoy.

3. Important information on Internet acitivities

In May 2009, reach of Agora's Internet brands among Polish users reached 59.5%,
while the number of users increased to 9.9 million (up by 47.8% yoy). During
the same month, total number of hits from Polish users was 857.3 million (25.6%
more than last year), with an average viewing time of 97 minutes per user
(down by 9.3% yoy).

The increase in number and range of Agora's Internet brands is caused partly by
the research methodology change by Megapanel PBI/Gemius [6].

Gazeta.pl's services are ranked among top thematic market players. According to
Megapanel PBI/Gemius data from May 2009 GazetaPraca.pl is the leader in
recruitment services. Gazeta.pl's social network sites (e.g. Forum.Gazeta.pl,
Blox.pl) are ranked second in the Communitiescategory as well as GazetaDom.pl
in the Building & real estate category. Gazeta.pl's information services were
second in the Information & journalism category and are leaders in the local
and regional news category. Online services on sport went up to the second
position in the Sport category. In new thematic Megapanel PBI/Gemius rankings
published for the first time in May 2009, Agora's online services became
leaders in the Child & family and Interior design categories and third in the
Cuisine & cooking and Gossips & celebrities categories.

At the end of first half of 2009, Agora signed an agreement with Microsoft
Inc., which gives Agora right to lead Msn.Gazeta.pl portal, sell and develop
online advertising offer.

In June 2009, Agora together with At Media Sp. z o.o. commenced cooperation in
offering advertisers Agora's online media together with TV stations represented
by At Media Sp. z o.o.

In the second quarter of 2009, online real estate services Domiporta.pl and
GazetaDom.pl launched joint offer of real estate display ads from the secondary
market. In May, fifty property developers presented its offers at Internetowe
Targi Nieruchomosci (Online Real Estate Fairs) for the first time in Poland (on
the online platform www.TargiNieruchomosci.Gazeta.pl).


 

IV.C. THE MAGAZINES [1] [7]

The Magazines segment presents the pro-forma consolidated financials of Agora's
Magazines and Agora Press Ltd. (Ukraine).

Tab. 10

                                     2Q     2Q    %        1H     1H    %      
in PLN million                      2009   2008  change   2009   2008  change  
                                                 yoy                   yoy     
                                                                               
Total sales, including              24.2   30.6  (20.9%)  47.6   56.7  (16.0%) 
                                                                               
Copy sales                           9.8   11.1  (11.7%)  20.5   23.1   (11.3%)
                                                                               
Advertising revenue (1)             14.3   19.6  (27.0%)  26.8   33.6   (20.2%)
                                                                               
Total operating cost, including    (18.6) (22.3) (16.6%) (39.2) (44.8) (12.5%) 
                                                                               
Raw materials, energy, consumables  (8.3)  (9.0)  (7.8%) (16.5) (17.5)   (5.7%)
and printing services                                                          
                                                                               
Staff cost (2)                      (4.5)  (5.4) (16.7%)  (9.2) (10.1)   (8.9%)
                                                                               
Non-cash expense relating to        (0.1)  (0.5) (80.0%)  (0.3)  (1.1)  (72.7%)
share-based payments                                                           
                                                                               
D&A                                 (0.1)     -        -  (0.2)  (0.1)   100.0%
                                                                               
Promotion and marketing (1)         (3.9)  (5.8) (32.8%)  (9.7) (12.9)  (24.8%)
                                                                               
Operating efficiency improvement    (0.1)     -        -  (0.1)     -         -
plan                                                                           
                                                                               
EBIT                                 5.6    8.3  (32.5%)   8.4   11.9  (29.4%) 
                                                                               
EBIT margin                         23.1%  27.1%          17.6%  21.0%         
                                                 (4.0pp)                (3.4pp)
                                                                               
EBITDA                               5.7    8.3  (31.3%)   8.6   12.0  (28.3%) 
                                                                               
EBITDA margin                       23.6%  27.1%          18.1%  21.2%         
                                                 (3.5pp)                (3.1pp)
                                                                               
Operating EBITDA (2)                 5.8    8.8  (34.1%)   8.9   13.1  (32.1%) 
                                                                               
Operating EBITDA margin             24.0%  28.8%          18.7%  23.1%         
                                                 (4.8pp)                (4.4pp)
                                                                               

 

(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.

In the first half of 2009 Magazines posted a decline in both copy sales and
advertising revenues. This decline results from the general economic slowdown. 
Total  copy  sales  decreased by  11.3% yoy,  while ad sales  dropped by 20.2%
 yoy.

In the first half of 2009, Agora Press Ltd. reported a negative operating EBIT
- about PLN 1 million.

1. REVENUE

1.1. Copy sales

Tab. 11

                                            %                                  
in thousand of copies      2Q 2009  2Q 2008 change   1H 2009  1H 2008 % change 
                                            yoy                       yoy      
                                                                               
                                                                               
Average copy sales of     1,008.3  1,125.8  (10.4%) 1,040.3  1,132.3     (8.1%)
monthlies                                                                      
                                                                               

 


Average number of copies sold of Agora's monthlies in the first half of 2009
decreased by 8.1% yoy.

1.2. Advertising sales

In the first half of 2009, advertising sales of Agora's magazines decreased by
20.2%. Agora's magazines occupied over 6.5% share of total magazine advertising
spending and 12% in monthlies (accordingly to rate card data) [7].

2. Cost

In the first half of 2009, the decrease in operating cost results mainly from
the lower production and promotion expense and decrease in staff cost.

3. other EVENTS

In June 2009, the Czterykaty.pl vertical received new, refreshed layout. The
internauts received an access to new online functionalities, inter alia: for
interior design and video materials with expert advices. Additionally, in the
first half of 2009, Agora's magazine covers were awarded in the GrandFront 2008
contest in the popular female magazines category (the February Poradnik
Domowy's cover and the January Dziecko's cover).


 

IV.D. OUTDOOR (AMS GROUP)

 

The Outdoor segment consists of the pro-forma consolidated data of four
companies which create the AMS Group (AMS SA, Akcent Sp. z o.o., Adpol Sp. z
o.o., Media System Sp. z o.o.).

 

Tab. 12

in PLN million                   2Q      2Q   % change    1H      1H   % change
                               2009    2008   yoy       2009    2008   yoy     
                                                                               
Total sales, including:         48.0    53.5  (10.3%)    86.4    93.5  (7.5%)  
                                                                               
Advertising revenue (1)         47.0    52.9   (11.2%)   84.7    92.1    (8.0%)
                                                                               
Total operating cost,          (46.1)  (46.4) (0.7%)    (87.7)  (85.6) 2.4%    
including:                                                                     
                                                                               
Execution of campaigns          (9.2)  (12.8)  (27.8%)  (16.7)  (22.1)  (24.6%)
                                                                               
Maintenance cost               (20.0)  (18.1)    10.9%  (39.8)  (34.9)    14.1%
                                                                               
Staff cost (2)                  (4.8)   (5.3)  (10.2%)   (9.6)   (9.9)   (3.1%)
                                                                               
Non-cash expense relating to    (0.3)   (0.9)  (70.7%)   (0.5)   (1.9)  (72.3%)
share-based payments                                                           
                                                                               
Promotion and marketing         (0.8)   (1.3)  (40.9%)   (1.6)   (2.3)  (30.2%)
                                                                               
D&A (4)                         (6.0)   (4.6)    31.0%  (12.1)   (8.7)    38.5%
                                                                               
Other operating revenue /       (2.3)      -         -   (2.4)   (0.1) 2,329.5%
(cost) net                                                                     
                                                                               
EBIT                             1.9     7.1  (73.5%)    (1.2)    7.9  -       
                                                                               
EBIT margin                      3.9%   13.3%           (1.4%)    8.4%         
                                               (9.4pp)                  (9.8pp)
                                                                               
EBITDA (4)                       7.8    11.5  (32.3%)    10.5    16.3  (35.3%) 
                                                                               
EBITDA margin                   16.2%   21.5%            12.2%   17.4%         
                                               (5.3pp)                  (5.2pp)
                                                                               
Operating EBITDA (2) (4)         8.0    12.4  (35.1%)    11.1    18.2  (39.2%) 
                                                                               
Operating EBITDA margin         16.8%   23.2%            12.8%   19.5%         
                                               (6.4pp)                  (6.7pp)
                                                                               
Number of advertising faces   25,627  25,280      1.4% 25,627  25,280      1.4%
(3)                                                                            
                                                                               

 

(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 Akcent Media Sp. z o.o. installed on petrol
stations, small panels at bus shelters and in the Warsaw subway, as well
as advertising panels on buses and trams;

(4) the amounts include reclassifying adjustment of D&A, resulting from
financing sources of fixed assets owned by AMS.

1. Revenue

In the first half of 2009, according to IGRZ estimates, the outdoor market rate
declined by 9% yoy. The decline in ad sales for external clients (outside the
Agora Group) was still lower from the decline of the whole outdoor advertising
market. An estimated AMS's share in spending on outdoor advertising, in the
first half of 2009 increased by 1.4pp yoy to 26.8% (in the second quarter it
grew by 0.6pp yoy to 26.1%) [8].

Better than the market's dynamics of the AMS's revenues stems mainly from the
sale of ad panels from the Premium segment. Reported an 8% decrease in ad sales
in the first half of 2009 stems from significant reduction in printing
services, connected with advertising campaigns. Last year AMS's clients often
ordered advertising campaigns on the company's panels together with printing
services. This year many of them have purchased only advertising panel space,
managing the poster print on their own.

2. Cost

Lower cost of campaign execution in the first half of 2009 results from fewer
orders on printing services from external clients.

Maintenance cost went up in the first half of 2009 due to increased number of
the Premium and Superpremium panels, which command higher unit cost. The pace
of increasing the maintenance cost became lower due to restructuring activities
aimed at optimalisation of AMS's panel system. Additionally, in the first half
of last year, the CityINFOtv channel did not influenced on the AMS's financial
result.

Lower staff cost is the effect of operating efficiency improvement plan within
the Agora Group companies.

D&A increase is a consequence of the execution of the company's capex plan in
previous years.

In the first half of 2009, lower promotional and marketing cost results from
smaller number of social and marketing campaigns.

In the first half of 2009 other revenues/cost net reported a negative amount of
PLN 2.4 million. The cost was connected with receiving the decisions on using
the waysides (more in note 9) and other small one-off impairment losses on
assets.

3. Other events

In the second quarter of 2009, AMS wan two tenders and became a partner of two
companies: Neste Polska Sp. z o.o. and Inter IKEA Centre Polska SA. As a
consequence of the signed contracts, AMS SA will use areas of Neste's
self-service petrol stations and IKEA trade centres to build its advertising
panels. In accordance with an agreement with Neste Polska Sp. z o.o. the
company shall create a net of billboard panels 18 square meter and backlights.
An agreement with Inter IKEA Centre Polska SA shall result in mounting
different types of advertising panels in places visited by thousand of people
everyday. AMS has developed its strategy to build the broad and the most
attractive advertising outdoor market offer to its clients by winning such
tenders.

 

 


IV.E. RADIO

As IFRS 8 Operating segments has become effective, the Group has adjusted its
operating segments presentation in this MD&A and financial statements to the
requirements of this standard. The comparable data for previous reporting
periods were restated, respectively. Due to this change, The Management Board
would like to point out that the amounts concerning major business lines
presented in the quarterly reports for previous reporting periods may not be
comparable in full with the present data prepared under the management
approach.

The Radio segment includes the pro-forma consolidated financials of Agora's
Radio Department, all local radiostations and a super-regional radio TOK FM,
being parts of the Agora Group. This includes: 18 Golden Oldies (Zlote
Przeboje) radio stations, 7 local radio stations (Radio Roxy FM), a
super-regional news radio TOK FM broadcasting in nine cities and one AC format
(Adult Contemporary) local station.

Tab. 13

                                    2Q     2Q    %         1H     1H    %      
in PLN million                     2009   2008  change    2009   2008  change  
                                                yoy                    yoy     
                                                                               
Total sales, including :           21.8   24.5  (11.0%)   40.4   42.5  (4.9%)  
                                                                               
Advertising revenue (1) (3)        21.2   23.9   (11.3%)  39.3   41.6    (5.5%)
                                                                               
Total operating cost, including:  (23.0) (22.7) 1.3%     (40.9) (40.6) 0.7%    
(3)                                                                            
                                                                               
Staff cost (2)                     (6.5)  (7.9)  (17.7%) (13.2) (14.3)   (7.7%)
                                                                               
Non-cash expense relating to       (0.2)  (0.6)  (66.7%)  (0.4)  (1.3)  (69.2%)
share-based payments                                                           
                                                                               
Licenses, rental and               (2.1)  (2.3)   (8.7%)  (4.4)  (4.2)     4.8%
telecommunication costs                                                        
                                                                               
D&A                                (0.8)  (0.6)    33.3%  (1.5)  (1.2)    25.0%
                                                                               
Promotion and marketing (3)        (8.6)  (4.4)    95.5% (11.2)  (7.5)    49.3%
                                                                               
EBIT                               (1.2)   1.8  -         (0.5)   1.9  -       
                                                                               
EBIT margin                       (5.5%)   7.3%          (1.2%)   4.5%         
                                                (12.8pp)                (5.7pp)
                                                                               
EBITDA                             (0.4)   2.4  -          1.0    3.1  (67.7%) 
                                                                               
EBITDA margin                     (1.8%)   9.8%            2.5%   7.3%         
                                                (11.6pp)                (4.8pp)
                                                                               
Operating EBITDA (2)               (0.2)   3.0  -          1.4    4.4  (68.2%) 
                                                                               
Operating EBITDA margin           (0.9%)  12.2%            3.5%  10.4%         
                                                (13.1pp)                (6.9pp)
                                                                               

(1) advertising revenues include revenues from brokerage services of the
proprietary and the 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.

 

After two quarters of 2009 the Radio segment reported positive operating EBITDA
of PLN 1.4 million, which decreased by PLN 3.0 million yoy.

1. Revenue

In the second quarter of 2009, the financial result of the Radio segment (both
revenue and cost) was influenced by barter settlements connected with the first
edition of Smooth Festival Zlote Przeboje (Smooth Golden Oldies Festival) in
Bydgoszcz. As a result, in the first half of 2009, the ad sales decreased by
only 5.5% yoy. Excluding barter settlements, the decrease in ad sales was
similar to the decline of the whole radio advertising market (down 13% yoy).

 

2. Cost

Operating cost of the Radio segment remained flat yoy.

In the first half of 2009, lower staff cost stems from the operating efficiency
plan implemented within the Group.

In the second quarter the promotion and marketing cost increased significantly
(mainly due to organized in May for the first time Smooth Festival Golden
Oldies in Bydgoszcz). The project was settled in barters, which influenced on
the Radio segment cost as well of its revenue.

3. Audience shares [9]

In the period of January to June of 2009 Agora's local radio stations had in
total 6.9% audience share (a decline from 8.5%). Comparing to the first quarter
of 2009, it decreased to 6.6% (by 0.6 pp).

In the first half of 2009, TOK FM reached 6.2% share of the Warsaw radio
audience (in its target group). In the same period of 2008, it reached 7.2%. In
all cities of broadcasting the station's audience ratings reached 4.2%
(4.4% in the first half of 2008).

In the second quarter of 2009, the Company recognised impairment loss on shares
in GRA Sp. z o.o.  in the amount of PLN 7.8 million. The cost was qualified as
financial cost in the unconsolidated financial statement of Agora SA. The
impairment loss has not affected the consolidated results of the Agora Group.

4. OTher EVENTS

In May 2009, Agora Radio Group initiated a new prestigious event on the Polish
musical scene : Smooth Festival Golden Oldies, which apart from the renown
Polish artists staged also such world - class stars as, inter alia: Macy Gray,
Chambao, Maria Mena and Lura. The festival gained large popularity and
attracted several thousand people. Agora Radio Group and the city of Bydgoszcz,
the host of the festival, confirmed the intention to continue the festival in
the coming years.

 

Since April 2009, radio Roxy FM changed its broadcast programming. Currently,
radio broadcasts more programs on widely - defined culture and is engaged in
creation of valuable content in public space. Influential Polish artists,
representing all fields of culture, run their own programs on air. The most
renown artists, journalists and prominent writers are invited to the Radio as
experts on the discussed issues. Moreover, radio Roxy FM tightened its
cooperation with other segments of the Group. Information program on culture
created with Gazeta Wyborcza and production of programs and concerts in video
format together with Internet segment for online services of Gazeta.pl Group
are the examples of such cooperation.

Moreover, in the second quarter 2009, radio Tuba FM was enriched with three new
channels. One of them with jazz music and two channels created together with
the portal Gazeta.pl.


 

NOTES

[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 matching 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 five media (print, radio, TV,
outdoor, Internet). In this MD&A Agora has corrected the advertising figures
for 2008 and the previous years.

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 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 do not include classifieds, inserts and obituaries. The estimates are
based on rate card data obtained from the following sources: Expert Monitor
monitoring, Agora SA monitoring.

The number of recruitment ads printed in dailies is based on Agora SA
monitoring.

Presented TV and Internet figures for the first quarter of 2009 and the
previous periods are based on Starlink media house estimates and do not include
sponsorships and teleshopping ads.

Internet ad spend estimates include display, search engines (Search Engine
Marketing) and since the first quarter of 2009 e-mail marketing and
classifieds. The media house Starlink has not adjusted the historical data,
concerning the estimates for Internet ad market, after the change of
measurement methodology; therefore the historical data is not fully comparable.

Outdoor advertising figures are based on Izba Gospodarcza Reklamy Zewnetrznej
estimates.

[4] The data on the number of copies sold 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.

Average number of copies sold of dailies associated under a common title Polska
= a sum of all copies sold of the dailies /number of days of publishing

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 following indices were used: CCS index (weekly readership index) -
percentage of respondents reading at least one edition of the title within 7
days of the week and CPW index (average issue readership index). Size of the
sample: nationwide PBC General for January - June 2009:
n = 24,701, April - June 2009 n = 12,254.

 [5] Definition of ratios:

                                         Net profit attributable to equity holders of the parent    
     Net profit margin=                                                                             
                                          Sales of finished products, merchandise and materials                                                                                                                                                                                                                                                                
                                                                                                     
                                                          Gross profit on sales                      
    Gross profit margin=                                                                             
                                          Sales of finished products, merchandise and materials      



                                         Net profit attributable to equity holders of the parent      
                                                                                                      
     Return on equity=        (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 / (2 for half of the year  and 4 for quarterly results)                                                                                                                                                     
                                                                                                             
                               (Trade receivables gross at the beginning of the period + Trade receivables   
       Debtors days=                               gross at the end of the period) / 2                       
                                                                                                             
                                   Sales of finished products, merchandise and materials / no. of days       


                             (Trade creditors at the beginning of the period + Trade creditors at the end of  
      Creditors days=                                        the period) / 2                                  
                                                                                                              
                                                       Cost of sales / no. of days                            


                               (Inventories at the beginning of the period + Inventories at the end of the  
    Inventory turnover=                                        period) / 2                                  
                                                                                                            
                                                       Cost of sales / no. of days                          
                                                                                                            


                                                             Current Assets       
      Current ratio =                                                             
                                                           Current liabilities    
                                                                                  


                              Current and non-current liabilities from loans - cash and cash equivalents -  
       Gearing ratio=                           highly liquid short-term monetary assets                    
                                                                                                            
                                                      Total equity and liabilities                          
                                                                                                            

                                                        Operating profit / (loss)  
      Interest cover=                                                              
                                                             Interest charge       
                                                                                   


  Free cash flow interest                                   Free cash flow *  
           cover=                                                             
                                                             Interest charge  
                                                                              

 

* Free cash flow =Net cash from operating activities + Purchase of property
plant and equipment and intangibles

[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 SA.
Real users data of Agora's Internet services are audited by Gemius SA.

The research methodology of Megapanel PBI/Gemius has changed from May 2009. It
has caused an increase by several percentage points as for range and number of
users of online services and websites in the Polish Internet. According to
Agora's estimates, for the comparison of May 2009 versus May 2008, the
mentioned change increased the number of real users of the Gazeta.pl Group by
almost a half and Agora's portal reach by two-thirds.

[7] Average paid circulation of monthlies is based on the Agora's own data.
Rate card data on magazines obtained from Expert Monitor monitoring; commercial
brand advertising, excluding specialized monthlies; accounted for 125 titles.

[8] Source: report on sales of outdoor companies prepared by Izba Gospodarcza
Reklamy Zewnetrznej (IGRZ) which include: AMS SA, Cityboard Media, Clear
Channel Poland, Stroeer Out of Home Media, News Outdoor Poland, Gigaboard
Polska, Mini Media/Publiprox, Business Consulting, CAM Media, Defi Poland and
from 2009 also BP Media, Warexpo and Zak. The report is prepared on the basis
of the financials provided by member companies of IGRZ. From the beginning of
2009, the reports for the outdoor market (defined by IGRZ as 'the out-of-home
market'), include immovable (traditional), mobile and digital outdoor
advertising. Market data in this MD&A are based on a new IGRZ definition of the
outdoor market.

[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 radiostations: in cities of broadcasting of Agora'a radiostations
and in the age group of 15+, from January to June (sample for 2008: 22,797,
sample for 2009: 21,907 and for 2009 (sample for January -March: 11,410,
April-June: 10,497);

- for TOK FM: in Warsaw and in the age group of 15+, from January to June
(sample for 2008: 3,020; sample for 2009: 2,748),

- for TOK FM: in cities of broadcasting and in the age group of 15+, from
January to June (sample for 2008: 16,202, sample for 2009: 15,863).


 

V. ADDITIONAL INFORMATION

1. Material agreement

Change in the agreement concerning credit line

In the current report published on April 30, 2009 the Company informed that on
April 30, 2009 in performance of the provisions of Annex no. 9 dated March 31,
2009 (the "Annex"), Agora signed appropriate documents regarding decreasing the
amount up to which the bank can enforce the provided collateral for the credit
line granted to Agora in accordance with the provisions of the said Annex.

2. Important events

Completion of Company's buy back program

In the current report published on April 8, 2009 the Management Board of Agora
SA informed that since the commencement of the share buy back program (Program
2) (i.e. February 16, 2009) the Company acquired in total 1,498,458 of its own
shares. They give the right to 1,498,458 votes at the General Meeting of
Shareholders and constitute 2.73% of the Company's share capital granting the
right to 2.08% of the total number of votes at the General Meeting of
Shareholders. As the funds allocated for the execution of the Program 2 had
been depleted, the Program 2 was completed on April 7, 2009. Total expenditure
on the execution of the Program 2, including the share repurchase costs and
other costs related to the Program 2, amounted to PLN 19 million. The average
share price amounted to PLN 12.65.

As a result of the execution of the buyback programs:

1) since July 14, 2008 until October 30, 2008, and

2) since February 16, 2009 until April 7, 2009,

the Company altogether acquired 4,040,149 of its own shares, giving the right
to 4,040,149 votes at the General Meeting of Shareholders and constituting
7.35% of the Company's share capital and granting the right to 5.60% of votes
at the General Meeting. 

Changes in subsidiaries

On April 21, 2009the District Court for the capital city of Warsaw, registered
the increase of the share capital of Grupa Radiowa Agory Sp. z o.o. The
Company's share capital was increased to PLN 25,019,500 and now consists of
50,039 shares with nominal value of PLN 500 per share. The total number of
votes after the capital increase amounts to 50,039. All the aforementioned
shares and votes at the General Meeting belong to Agora. Acquired shares were
brought as a contribution in kind.

On July 8, 2009 Agora SA, as a result of a purchase of part of shares from the
founders of AdTaily Sp. z o.o. (AdTaily)  with its seat in Krakow and taking up
new shares, became the owner of 182 shares with nominal value of PLN 50 per
share (which constitute a 50.28% stake in company's share capital). Other
shareholders are natural persons. The Agora's book value of the acquired shares
equals to PLN 936 thousand (including transaction costs). AdTaily is an owner
of a unique solution in the field of advertising monetization of online
services; the tool allows to use advertising potential of services from
so-called "Long Tail" segment, created by users on platforms belonging to
publishers (for example: Agora's Blox.pl) and other thematic websites.

 Recommendation of Agora's Management Board on profit distribution for the
fiscal year 2008

In the current report published on May 20, 2009the Management Board of Agora SA
informed that on May 20, 2009 they adopted the resolution on the submission, to
the Annual General Meeting of Shareholders of Agora SA, of a motion concerning
the distribution of the 2008 profit by transferring the total amount of this
profit to the Company's reserve capital and not paying out to the shareholders
a dividend for the fiscal year 2008.


Additionally, the Management Board of Agora SA stated that Agora's policy for
returning profits to shareholders, announced in the current report no. 6/2005
dated February 14, 2005 remains unchanged. According to this policy, the
Company pays out an annual dividend of PLN 0.50 unless, in the opinion of the
Management Board or the Supervisory Board, there are counter-indications
arising from the earnings and prospects of the Company or market conditions. In
the Company's opinion, in a situation of the world-wide economic crisis
bringing about an unstable macroeconomic situation and uncertainty in respect
of the economic situation in Poland, it is justifiable to make an exception
from the policy of dividend pay out to the shareholders and to distribute the
total net profit of PLN 26,365,008.66 for the fiscal year 2008 for the increase
of Company's reserve capital.

The above described motion received a positive opinion of the Company's
Supervisory Board.

 

Resolution of the Supervisory Board to adopt the concise evaluation of the
situation of the Company in 2008

In the current report published on May 20, 2009with the regard to the adoption
by Agora SA "Good practices of publicly traded companies quoted on Warsaw Stock
Exchange" resolved on the basis of § 29 of the Warsaw Stock Exchange S.A.
by-laws, the Company published the resolution of the Supervisory Board
regarding the concise evaluation of the situation of the Company in 2008.

Changes in the Supervisory Board

In the current report published on June 12, 2009the Company informed about Mr.
Sanford Schwartz's resignation from the membership in the Supervisory Board of
Agora SA, effective as of the moment of closing of the Annual General Meeting
approving the financial statements for 2008.

 

In the current report published on June 23, 2009the Management Board of Agora
SA informed that on the basis of the resolutions of the Annual General Meeting
on June 23, 2009 members of the Company's Supervisory Board were appointed: Mr.
Andrzej Szlezak for the position of the chairman of Agora's Supervisory Board,
Mr. Slawomir S. Sikora, Mr. Tomasz Sielicki, and Mr. Marcin Hejkaas members of
the Supervisory Board. Mrs. Wanda Rapaczynski was appointed a member of the
Supervisory Board and replaced Mr. Sanford Schwartz.

 

Important events regarding  the Management Board

In the current report published on June 23, 2009 in connection with the closing
of the Annual General Meeting of Agora SA, which approved the financial
statements for 2008 on 23rd June 2009, the Company informed that pursuant to
par. 33 section 1 of the Company's statutes, the Management Board of the
Company re-elected Mr. Piotr Niemczycki for the function of President of
Management Board of Agora SA with the effect of June 24, 2009.

 

On the basis of the resolutions passed by the Annual General Meeting on June
23, 2009 (disclosed  by means of a regulatory filing on June 23, 2009)and
pursuant to Art. 368 § 4 of the Commercial Companies Code as well as the
stipulations of § 28 item 3 the Company's Statutesthe General Meeting of
Shareholders approved the appointment to the Management Board of Mr. Tomasz
Jozefacki, elected by way of co-option on November 13, 2008 as well as the
appointment of Mr. Grzegorz Kossakowski elected by way of co-option on January
8, 2009.

Annual General Meeting of Agora (AGM)

In the current report published on May 20, 2009the Management Board of Agora
SA, informed about conveying the Annual General Meeting of Shareholders for
June 23, 2009 at 11 a.m. Additionally, the agenda of the AGM and proposed
changes of the Company's statute were published - in accordance with the
provisions of art. 402 of Commercial Companies Code.

 

In the current report published on June 5, 2009the Company published draft
resolutions, which the Management Board of the Company intended to submit to
the Annual General Meeting of Shareholders convened for June 23, 2009.

 

In the current report published on June 15, 2009, in connection with the
current report dated May 20, 2009 regarding the convention of Agora's AGM, the
Management Board of the Company announced that its shareholder, BZ WBK AIB
Asset Management S.A., submitted, in accordance with § 21 of Agora's Statutes,
a candidacy of Mr. Marcin Hejka for a member of Agora's Supervisory Board.

 

In the current report published on June 15, 2009the Management Board of Agora
SA informed that on this day, the Company received information that according
to § 21.1.(a)(i) of Agora's Statutes, Agora Holding Sp. z o.o., the shareholder
holding 100% of the registered preferred series A shares, submitted candidates
to the Supervisory Board of Agora SA: Mr. Andrzej Szlezak for the position of
the chairman of the Supervisory Board, Mr. Slawomir S. Sikora and, Mr. Tomasz
Sielicki for the position of the members of Agora's Supervisory Board and Ms.
Wanda Rapaczynski for the position of the member of Agora's Supervisory Board
to replace Mr. Sanford Schwartz.

 

In the current report published on June 23, 2009the Management Board of Agora
SA published the resolutions of the Annual General Meeting of Shareholders held
on June 23, 2009 at Company's premises at 8/10 Czerska Street in Warsaw.

In the current report published on June 23, 2009the Company informed that the
following shareholders exercised voting rights attached to shares representing
5% or more of total votes at the Annual General Meeting of Shareholders on June
23, 2009:


- Agora Holding Sp. z o.o., with its registered seat in Warsaw, exercised
voting rights from 7,064,137 shares giving right to 24,190,537 votes,
representing 63.85% of voting rights present at the Annual General Meeting of
Shareholders and representing 33.55% of total voting rights;


- BZ WBK AIB Towarzystwa Funduszy Inwestycyjnych SA, with its registered seat
in Poznan, exercised voting rights from 7,860,000 shares owned by Arka BZ WBK
Akcji Srodkowej i Wschodniej Europy Fundusz Inwestycyjny Zamknięty, Arka BZ WBK
Akcji Fundusz Inwestycyjny Otwarty, ARKA BZ WBK Zrownowazony Fundusz
Inwestycyjny Otwarty, giving in total the right to 7,860,000 votes,
representing 20.74% of voting rights present at the Annual General Meeting of
Shareholders and representing 10.90% of total voting rights.

Changes in the operating efficiency improvement plan

In the current report published on May 13, 2009the Management Board of Agora SA
announcedchanges to the operating efficiency improvement plan. On the basis of
the resolution adopted on May 13, 2009 the whole process of employment
reduction carried out since January 1, 2009 shall be executed till October 31,
2009, and shall concern about 400 people (which constitute about 10.4% of
employees in the Group as at November 30, 2008). The process includes the group
lay-offs in the Company.Due to the increased employment reductions, the Company
created additional provision for the cost of lay-offs execution in the amount
of about PLN 2.3 million, which affected Group's consolidated financial result
for the first half of 2009.

 

Admitting shares for trading

On July 13, 2009 382,013 shares of Agora SA were admitted for trading on the
main market of the Warsaw Stock Exchange. The shares had been purchased by
employees pursuant to stock participation programs.


 

3. Changes in ownership of shares and or other rights to shares (options) by
Management Board members in the SECOND quarter of 2009 and until the date of
publication of the report

Tab. 14

a. shares                      as of       decrease  increase       as of     
                           30 June 2009                         31 March 2009 
                                                                              
Piotr Niemczycki             1,548,373         0         0        1,548,373   
                                                                              
Zbigniew Bak                  68,006           0         0         68,006     
                                                                              
Tomasz Jozefacki                 0             0         0            0       
                                                                              
Grzegorz Kossakowski          44,451           0         0         44,451     
                                                                              
                                                                              
                                                                              
b. rights to shares            as of       decrease  increase       as of     
                           30 June 2009                         31 March 2009 
                                                                              
Piotr Niemczycki                 0             0         0            0       
                                                                              
Zbigniew Bak                     0             0         0            0       
                                                                              
Tomasz Jozefacki                 0             0         0            0       
                                                                              
Grzegorz Kossakowski             0             0         0            0       
                                                                              
                                                                              
                                                                              
c. shares                      as of       decrease  increase       as of     
                          13 August 2009                        30 June 2009  
                                                                              
Piotr Niemczycki             1,548,373         0         0        1,548,373   
                                                                              
Zbigniew Bak                  68,006           0         0         68,006     
                                                                              
Tomasz Jozefacki                 0             0         0            0       
                                                                              
Grzegorz Kossakowski          44,451           0         0         44,451     
                                                                              
                                                                              
                                                                              
d. rights to shares            as of       decrease  increase       as of     
                          13 August 2009                        30 June 2009  
                                                                              
Piotr Niemczycki                 0             0         0            0       
                                                                              
Zbigniew Bak                     0             0         0            0       
                                                                              
Tomasz Jozefacki                 0             0         0            0       
                                                                              
Grzegorz Kossakowski             0             0         0            0       
                                                                              

 

The members of the Management Board participate in the incentive plan described
in the note 5 of the financial statements.


 

 4. Changes in ownership of shares or other rights to shares (options) by
Supervisory Board members in the SECOND quarter of 2009 and until the date of
publication of the report

Tab. 15

a. shares                       as of       decrease  increase       as of     
                            30 June 2009                         31 March 2009 
                                                                               
Slawomir S. Sikora                0             0         0            0       
                                                                               
Tomasz Sielicki                  33             0         0           33       
                                                                               
Andrzej Szlezak                   0             0         0            0       
                                                                               
Sanford Schwartz (1)              0             0         0            0       
                                                                               
Marcin Hejka                      0             0         0            0       
                                                                               
Wanda Rapaczynski (2)         1,056,216         -         -           n/a      
                                                                               
                                                                               
                                                                               
b.shares                        as of       decrease  increase       as of     
                           13 August 2009                        30 June 2009  
                                                                               
Slawomir S. Sikora                0             0         0            0       
                                                                               
Tomasz Sielicki                  33             0         0           33       
                                                                               
Andrzej Szlezak                   0             0         0            0       
                                                                               
Sanford Schwartz (1)              0             0         0            0       
                                                                               
Marcin Hejka                      0             0         0            0       
                                                                               
Wanda Rapaczynski (2)         1,056,216         0         0        1,056,216   
                                                                               

                                                                               

The members of the Supervisory Board did not have any other rights to shares
(e.g. options). 

 

(1) On June 12, 2009 Mr. Sanford Schwartz submitted his resignation from the
post in the Supervisory Board; resignation is effective as of the moment of
closing of the AGM held on June 23, 2009, which approved the financial
statements for the year of 2008;

(2) On June 23, 2009 Mrs. Wanda Rapaczynski was appointed to the Supervisory
Board to replace Mr. Sanford Schwarz. The number of shares and rights to shares
is effective to start with June 23, 2009.

Mrs. Wanda Rapaczynski participated in the incentive plan described in the note
5 of the financial statements.


5. Shareholders entitled to exercise over 5% of total voting rights at the
General Meeting of agora sa, 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.

To the best of the Company's knowledge as of the day of publication of previous
report (i.e. May 14, 2009), the following shareholders were entitled to
exercise over 5% of voting rights at the General Meeting of Shareholders of the
Company:

Tab. 16

                               no. of   % of share       no. of   % of voting   
                               shares   capital          votes    rights        
                                                                                
Agora-Holding Sp. z o.o.     7,061,472  12.84          24,187,872 33.55         
                                                                                
BZ WBK AIB Asset Management  15,983,002 29.07          15,983,002 22.17         
S.A. (1)                                                                        
                                                                                
      BZ WBK AIB Towarzystwo                                                    
Funduszy                     11,684,052     21.25      11,684,052     16.20     
      Inwestycyjnych S.A.                                                       
(2)                                                                             
                                                                                
      Arka BZ WBK Akcji FIO  3,629,448       6.60      3,629,448       5.03     
(3)                                                                             
                                                                                
      Arka BZ WBK            3,631,330       6.61      3,631,330       5.04     
Zrownowazony FIO (4)                                                            
                                                                                

(1) as of April 7, 2009

(2) as of March 27, 2009

(3) as of May 27, 2008

(4) as of October 21, 2008 

Significant changes in the shareholders' structure

In the current report published on April 3, 2009 the Management Board of Agora
SA announced that on April 2, 2009 the Company obtained a notification about
exceeding the 5% threshold of voting rights at the General Meeting of
Shareholders of Agora SA by the Company, as a result of the share buy back
program calculated on April  2, 2009. Total number of shares acquired since the
commencement of the program (i.e. February 16, 2009) altogether with the shares
purchased during the previous program, between July 14, 2008 until October 30,
2008 (see: current report no. 29/2008 dated June 20, 2008 and current report
no. 33/2008 dated July 11, 2008) amounted to 3,847,323 of own shares and giving
the right to 3,847,323 votes at the General Meeting of Shareholders,
constituting 7.00% of the Company's share capital and granting the right to
5.34% of the total number of votes at the General Meeting of Shareholders.
According to the article 364 § 2 of the Commercial Code, Company, which had
purchased its own shares does not  perform its  rights attached to those
shares, apart from the right  to dispose of them or undertake actions necessary
to preserve  those rights, therefore Agora SA does not  exercise its voting
rights from its own shares. 

In the current report published on April 6, 2009 the Management Board of Agora
SA  announced that the Company obtained a notification from BZ WBK AIB
Towarzystwo Funduszy Inwestycyjnych S.A. with its registered seat in Poznan
about more than 2% increase of the voting rights at the General Meeting of
Shareholders of Agora SA. As a result of the aforementioned increase, Funds
represented by BZ WBK AIB Towarzystwo Funduszy Inwestycyjnych S.A. had the
right to 16.20 % of the total number of votes at the General Meeting of Agora
SA.

In the current report published on April 10, 2009 the Management Board of Agora
SA announced that the Company obtained a notification from BZ WBK AIB Asset
Management S.A. (BZ WBK), with its registered seat in Poznan, about an increase
in the total voting rights at the General Meeting of Shareholders of Agora SA
by over 2%. As a result of the change mentioned above BZ WBK clients had the
right to 22.17% of the total number of votes at the General Meeting of
Shareholders of Agora SA.  

In the current report published on June 10, 2009 the Management Board of Agora
SA announced that the Company obtained information about descending below the
5% threshold of voting rights at the General Meeting of Shareholders of Agora
SA  by Arka BZ WBK Zrownowazony Fundusz Inwestycyjny Otwarty (hereinafter
referred to as "Fund"). As a result of the change mentioned above the Fund had
the right to 4.84% of the total number of votes at the General Meeting of
Shareholders of Agora SA.

To the best of the Company's knowledge as of the day of publication of this
report the following shareholders were entitled to exercise over 5% of voting
rights at the General Meeting of Shareholders of the Company:

 

Tab. 17

                                    no. of   % of share    no. of   % of voting
                                    shares   capital       votes    rights     
                                                                               
Agora-Holding Sp. z o.o.          7,064,374  12.85       24,190,774 33.55      
                                                                               
BZ WBK AIB Asset Management S.A.  15,983,002    29.07    15,983,002 22.17      
(1)                                                                            
                                                                               
BZ WBK AIB Towarzystwo Funduszy   11,684,052    21.25    11,684,052    16.20   
Inwestycyjnych S.A. (2)                                                        
                                                                               
          Arka BZ WBK Akcji FIO   3,629,448     6.60     3,629,448     5.03    
(3)                                                                            
                                                                               

(1) as of April 7, 2009

(2) as of March 27, 2009

(3) as of May 27, 2008

 

6. Other INFORMATION

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.

Any changes in contingences since the date of the last financial year were
described in note 9 to the financial statements presented in this report.

 

 



 

 

 

 

 

 

 

 

 

 

 

 
                                  AGORA GROUP                                  

                                                                               

Condensed interim consolidated financial statements

         as at 30 June 2009 and for 3 and 6 month period ended thereon         

                                                                               

                                                                               


Consolidated balance sheet as at 30 June 2009


 

 

                                As at 30    As at 31      As at 31    As at 30
                               June 2009  March 2009 December 2008  June 2008*
                               unaudited   unaudited       audited   unaudited
                                                                              
Assets                                                                        
                                                                              
Non-current assets:                                                           
                                                                              
Intangible assets               397,462     396,599       396,986     412,357 
                                                                              
Property, plant and                                                           
equipment                       630,612     642,880       650,692     629,483 
                                                                              
Investments                         246         248           248         245 
                                                                              
Investments in equity                                                         
accounted investees               1,215       1,466           399       1,328 
                                                                              
Receivables and prepayments       7,470       6,663         6,802       6,816 
                                                                              
Deferred tax assets               8,025       7,058        10,692      14,158 
                                                                              
                              1,045,030   1,054,914     1,065,819   1,064,387 
                                                                              
                                                                              
                                                                              
Current assets:                                                               
                                                                              
Inventories                      20,668      19,427        18,861      14,498 
                                                                              
Accounts receivable and                                                       
prepayments                     230,877     235,842       244,860     272,295 
                                                                              
Income tax receivable             2,094       4,385         5,271       1,572 
                                                                              
Short-term securities and                                                     
other financial assets           91,473      60,363             7       1,020 
                                                                              
Cash and cash equivalents       155,124     196,380       263,743     301,422 
                                                                              
                                500,236     516,397       532,742     590,807 
                                                                              
                                                                              
                                                                              
Total assets                  1,545,266   1,571,311     1,598,561   1,655,194 
                                                                              

 

* In the financial statements for the year 2008 the Group has changed the
presentation of deferred tax assets and liabilities. The comparable data as at
30 June 2008 were restated thereupon.

Accompanying notes are an integral part of these condensed interim consolidated
financial statements.


Consolidated balance sheet as at 30 june 2009 (Continued)

 

                                                          As at 31            
                                  As at 30    As at 31    December    As at 30
                                 June 2009  March 2009        2008  June 2008*
                          Note   unaudited   unaudited     audited   unaudited
                                                                              
Equity and liabilities                                                        
                                                                              
Equity attributable to                                                        
equity holders of the                                                         
parent:                                                                       
                                                                              
Share capital                      54,978      54,978      54,978      54,978 
                                                                              
Treasury shares                   (89,994)    (85,133)    (71,007)          - 
                                                                              
Share premium                     290,506     290,506     290,506     290,506 
                                                                              
Foreign currency                                                              
translation reserve                   159         217         (37)         11 
                                                                              
Retained earnings and                                                         
other reserves                    913,255     897,494     892,771     905,918 
                                                                              
                                1,168,904   1,158,062   1,167,211   1,251,413 
                                                                              
                                                                              
                                                                              
Minority interest                    (733)         55         (93)       (631)
                                                                              
                                                                              
                                                                              
Total equity                    1,168,171   1,158,117   1,167,118   1,250,782 
                                                                              
                                                                              
                                                                              
Non-current liabilities:                                                      
                                                                              
Deferred tax liabilities           43,373      40,423      41,121      39,565 
                                                                              
Interest bearing loans                                                        
and borrowings             3       73,591      84,150      95,497     116,810 
                                                                              
Retirement severance                                                          
provision                           1,945       1,829       1,829       1,456 
                                                                              
Deferred revenues and                                                         
accruals                               47         722         101         441 
                                                                              
                                  118,956     127,124     138,548     158,272 
                                                                              
                                                                              
                                                                              
Current liabilities:                                                          
                                                                              
Retirement severance                                                          
provision                             136          91          91          98 
                                                                              
Accounts payable                  140,141     158,961     167,611     156,139 
                                                                              
Income tax liabilities                 49          73          20         269 
                                                                              
Short-term borrowings      3       58,190      59,549      59,736      21,461 
                                                                              
Provisions                         13,517      13,377      14,975       2,818 
                                                                              
Deferred revenues and                                                         
accruals                           46,106      54,019      50,462      65,355 
                                                                              
                                  258,139     286,070     292,895     246,140 
                                                                              
                                                                              
                                                                              
Total equity and                                                              
liabilities                     1,545,266   1,571,311   1,598,561   1,655,194 
                                                                              
                                                                              
                                                                              
Weighted average number                                                       
of shares (1)                  53,346,374  53,989,122  54,191,128  54,977,535 
                                                                              

 

(1) number of shares has changed following the share buy-back program.

 

* In the financial statements for the year 2008 the Group has changed the
presentation of deferred tax assets and liabilities. The comparable data as at
30 June 2008 were restated thereupon.

 

 

Accompanying notes are an integral part of these condensed interim consolidated
financial statements.


Consolidated income statement for six and three months ended 30 June 2009

 

                                      Three       Six      Three       Six
                                     months    months     months    months
                                      ended     ended      ended     ended
                                                                          
                                    30 June   30 June    30 June   30 June
                                       2009      2009       2008      2008
                            Note  unaudited unaudited  unaudited unaudited
                                                                          
                                                                          
                                                                          
Sales                        4     297,735   572,182    343,676   657,096 
                                                                          
Cost of sales                     (178,334) (346,279)  (177,592) (354,019)
                                                                          
Gross profit                       119,401   225,903    166,084   303,077 
                                                                          
                                                                          
                                                                          
Selling expenses                   (73,052) (143,274)   (97,138) (177,961)
                                                                          
Administrative expenses            (25,140)  (55,061)   (38,758)  (72,194)
                                                                          
Other operating income               3,089     6,917      3,636     6,184 
                                                                          
Other operating expenses            (9,405)  (13,893)    (3,639)   (6,337)
                                                                          
Operating profit             4      14,893    20,592     30,185    52,769 
                                                                          
                                                                          
                                                                          
Finance income                       2,525     6,264      5,664    11,578 
                                                                          
Finance costs                       (2,425)   (5,404)    (6,190)   (8,706)
                                                                          
Share of results of equity                                                
accounted investees                   (253)     (423)      (479)     (702)
                                                                          
Profit before income taxes          14,740    21,029     29,180    54,939 
                                                                          
                                                                          
                                                                          
Income tax expense                  (2,894)   (8,211)    (7,577)  (14,869)
                                                                          
Net profit  for the period          11,846    12,818     21,603    40,070 
                                                                          
                                                                          
                                                                          
Attributable to:                                                          
                                                                          
Equity holders of the                                                     
parent                              12,268    13,351     21,548    40,208 
                                                                          
Minority interests                    (422)     (533)        55      (138)
                                                                          
                                    11,846    12,818     21,603    40,070 
                                                                          
                                                                          
                                                                          
Earnings per share (in PLN)           0.23      0.25       0.39      0.73 
                                                                          

 

Accompanying notes are an integral part of these condensed interim consolidated
financial statements.


 

Consolidated statement of COMPREHENSIVE INCOME for three AND SIX months ended
30 JUne 2009

 

                                       Three       Six      Three       Six
                                      months    months     months    months
                                       ended     ended      ended     ended
                                                                           
                                     30 June   30 June    30 June   30 June
                                        2009      2009       2008      2008
                                   unaudited unaudited  unaudited unaudited
                                                                           
                                                                           
                                                                           
Profit for the period                11,846    12,818     21,603    40,070 
                                                                           
                                                                           
                                                                           
Foreign currency translation                                               
differences for foreign companies       (58)      196         50        32 
                                                                           
Other comprehensive income  for                                            
the period                              (58)      196         50        32 
                                                                           
Total comprehensive income for                                             
the period                           11,788    13,014     21,653    40,102 
                                                                           
                                                                           
                                                                           
Attributable to:                                                           
                                                                           
Equity holders of the parent         12,210    13,547     21,598    40,240 
                                                                           
Minority interest                      (422)     (533)        55      (138)
                                                                           
                                     11,788    13,014     21,653    40,102 
                                                                           

 

Accompanying notes are an integral part of these condensed interim consolidated
financial statements.


Consolidated statement of changes in equity for three AND sIX months ended 30
JUNE 2009

 

 

                                                                                               Minority   Total   
                                 Equity attributable to equity holders of the parent           interest   equity  
                                                                                                                  
                                                  Foreign currency     Retained                                   
                         Share  Treasury  Share     translation      earnings and                                 
                        capital  shares  premium      reserve       other reserves    Total                       
                                                                                                                  
Three months ended 30 June 2009                                                                                   
                                                                                                                  
                                                                                                                  
                                                                                                                  
As at 31 March 2009                                                                                               
unaudited               54,978  (85,133) 290,506              217          897,494  1,158,062       55  1,158,117 
                                                                                                                  
                                                                                                                  
                                                                                                                  
Profit/(loss) for the                                                                                             
period                       -        -        -                -           12,268     12,268     (422)    11,846 
                                                                                                                  
Other comprehensive                                                                                               
income                       -        -        -              (58)               -        (58)       -        (58)
                                                                                                                  
Total comprehensive                                                                                               
income for the period        -        -        -              (58)          12,268     12,210     (422)    11,788 
                                                                                                                  
Additional contribution                                                                                           
of minority shareholder      -        -        -                -                -          -      685        685 
                                                                                                                  
Share based payments         -        -        -                -            3,493      3,493        -      3,493 
                                                                                                                  
Share buy-back for                                                                                                
their redemption             -   (4,861)       -                -                -     (4,861)       -     (4,861)
                                                                                                                  
Dividends of                                                                                                      
subsidiares                  -        -        -                -                -          -   (1,051)    (1,051)
                                                                                                                  
                                                                                                                  
                                                                                                                  
As at 30 June 2009                                                                                                
unaudited               54,978  (89,994) 290,506              159          913,255  1,168,904     (733) 1,168,171 
                                                                                                                  

Accompanying notes are an integral part of these condensed interim consolidated
financial statements.


Consolidated statement of changes in equity for three AND sIX months ended 30
JUNE 2009 (CONTINUED)

 

 

                                                                                               Minority   Total   
                                Equity attributable to equity holders of the parent            interest   equity  
                                                                                                                  
                                                Foreign currency  Retained earnings                               
                       Share  Treasury  Share      translation        and other                                   
                      capital  shares  premium       reserve          reserves        Total                       
                                                                                                                  
Six months ended 30 June 2009                                                                                     
                                                                                                                  
                                                                                                                  
                                                                                                                  
As at 31 December                                                                                                 
2008                                                                                                              
audited               54,978  (71,007) 290,506               (37)          892,771  1,167,211      (93) 1,167,118 
                                                                                                                  
                                                                                                                  
                                                                                                                  
Net profit /(loss)                                                                                                
for the period             -        -        -                 -            13,351     13,351     (533)    12,818 
                                                                                                                  
Other comprehensive                                                                                               
income                     -        -        -               196                 -        196        -        196 
                                                                                                                  
Total comprehensive                                                                                               
income for the period      -        -        -               196            13,351     13,547     (533)    13,014 
                                                                                                                  
Additional                                                                                                        
contribution of                                                                                                   
minority shareholder       -        -        -                 -                 -          -      944        944 
                                                                                                                  
Share-based payments       -        -        -                 -             7,133      7,133        -      7,133 
                                                                                                                  
Share buy-back for                                                                                                
their redemption           -  (18,987)       -                 -                 -    (18,987)       -    (18,987)
                                                                                                                  
Dividends of                                                                                                      
subsidiaries               -        -        -                 -                 -          -   (1,051)    (1,051)
                                                                                                                  
                                                                                                                  
                                                                                                                  
As at 30 June 2009                                                                                                
unaudited             54,978  (89,994) 290,506               159           913,255  1,168,904     (733) 1,168,171 
                                                                                                                  

Accompanying notes are an integral part of these condensed interim consolidated
financial statements.


Consolidated statement of changes in equity for three AND SIX months ended 30
JUNE 2009 (CONTINUED)

 

                                                                                               Minority   Total   
                                   Equity attributable to equity holders of the parent         interest   equity  
                                                                                                                  
                                                         Foreign                                                  
                                                         currency       Retained                                  
                             Share  Treasury  Share    translation    earnings and                                
                            capital  shares  premium     reserve     other reserves   Total                       
                                                                                                                  
Twelve months ended 31 December 2008                                                                              
                                                                                                                  
                                                                                                                  
                                                                                                                  
As at 31 December 2007                                                                                            
audited                     54,978        -  290,506            (21)       870,220  1,215,683      (95) 1,215,588 
                                                                                                                  
                                                                                                                  
                                                                                                                  
Profit/(loss) for the                                                                                             
period                           -        -        -              -         23,421     23,421     (119)    23,302 
                                                                                                                  
Other comprehensive income       -        -        -            (16)             -        (16)       -        (16)
                                                                                                                  
Total comprehensive income                                                                                        
for the period                   -        -        -            (16)        23,421     23,405     (119)    23,286 
                                                                                                                  
Additional contribution of                                                                                        
minority shareholder             -        -        -              -              -          -    1,032      1,032 
                                                                                                                  
Adjustment from                                                                                                   
consolidation of a                                                                                                
subsidiary previously not                                                                                         
consolidated                     -        -        -              -           (617)      (617)       -       (617)
                                                                                                                  
Share-based payments             -        -        -              -         27,236     27,236        -     27,236 
                                                                                                                  
Share buy-back for their                                                                                          
redemption                       -  (71,007)       -              -              -    (71,007)       -    (71,007)
                                                                                                                  
Dividends declared               -        -        -              -        (27,489)   (27,489)       -    (27,489)
                                                                                                                  
Dividends of subsidiaries        -        -        -              -              -          -     (910)      (910)
                                                                                                                  
                                                                                                                  
                                                                                                                  
As at 31 December 2008                                                                                            
audited                     54,978  (71,007) 290,506            (37)       892,771  1,167,211      (93) 1,167,118 
                                                                                                                  

Accompanying notes are an integral part of these condensed interim consolidated
financial statements.


Consolidated statement of changes in equity for three AND SIX months ended 30
JUNE 2009 (continued)

 

                                                                                               Minority   Total   
                                    Equity attributable to equity holders of the parent        interest   equity  
                                                                                                                  
                                                           Foreign      Retained                                  
                                                          currency    earnings and                                
                               Share  Treasury  Share    translation      other                                   
                              capital  shares  premium     reserve      reserves      Total                       
                                                                                                                  
                                                                                                                  
                                                                                                                  
Six months ended 30 June 2008                                                                                     
                                                                                                                  
                                                                                                                  
                                                                                                                  
As at 31 December 2007                                                                                            
audited                       54,978        -  290,506           (21)      870,220  1,215,683      (95) 1,215,588 
                                                                                                                  
                                                                                                                  
                                                                                                                  
Profit/(loss) for the period       -        -        -             -        40,208     40,208     (138)    40,070 
                                                                                                                  
Other comprehensive income         -        -        -            32             -         32        -         32 
                                                                                                                  
Total comprehensive income                                                                                        
for the period                     -        -        -            32        40,208     40,240     (138)    40,102 
                                                                                                                  
Additional contribution of                                                                                        
minority shareholder               -        -        -             -             -          -      512        512 
                                                                                                                  
Adjustment from consolidation                                                                                     
of a subsidiary previously                                                                                        
not consolidated                   -        -        -             -          (617)      (617)       -       (617)
                                                                                                                  
Share-based payments               -        -        -             -        23,596     23,596        -     23,596 
                                                                                                                  
Dividends declared                 -        -        -             -       (27,489)   (27,489)       -    (27,489)
                                                                                                                  
Dividends of subsidiaries          -        -        -             -             -          -     (910)      (910)
                                                                                                                  
                                                                                                                  
                                                                                                                  
As at 30 June 2008                                                                                                
unaudited                     54,978        -  290,506            11       905,918  1,251,413     (631) 1,250,782 
                                                                                                                  

Accompanying notes are an integral part of these condensed interim consolidated
financial statements.


Consolidated cash flow statement for three and SIX months ended 30 JUNE 2009

 

                                   Three       Six     Three       Six
                                  months    months    months    months
                                   ended     ended     ended     ended
                                                                      
                                 30 June   30 June   30 June   30 June
                                    2009      2009      2008      2008
                               unaudited unaudited unaudited unaudited
                                                                      
Cash flows from operating                                             
activities                                                            
                                                                      
Profit before income taxes       14,740    21,029    29,180    54,939 
                                                                      
Adjustments for:                                                      
                                                                      
Share of results of equity                                            
accounted investees                 253       423       479       702 
                                                                      
Depreciation of property,                                             
plant and equipment              16,960    33,809    18,296    36,059 
                                                                      
Amortization of intangible                                            
assets                            3,521     6,778     2,124     4,145 
                                                                      
Interest, net                     1,564     3,622     2,292     4,393 
                                                                      
(Profit) / loss on investing                                          
activities                       (1,115)   (1,240)       16      (731)
                                                                      
(Decrease) / increase in                                              
provisions                          301    (1,297)      (70)     (221)
                                                                      
(Increase) / decrease in                                              
inventories                      (1,241)   (1,807)      228     3,003 
                                                                      
(Increase) / decrease in                                              
receivables and prepayments       4,226    13,239   (14,621)  (17,792)
                                                                      
(Decrease) / increase in                                              
payables                         (8,067)  (10,080)   (4,998)  (11,241)
                                                                      
(Decrease) / increase in                                              
deferred revenues and accruals   (7,909)   (4,387)   (4,576)    2,406 
                                                                      
Other adjustments (1)             3,940     8,197    11,885    23,928 
                                                                      
Cash generated from operations   27,173    68,286    40,235    99,590 
                                                                      
                                                                      
                                                                      
Income taxes (paid) / returned   (1,003)   (2,449)  (11,823)  (17,415)
                                                                      
Net cash from operating                                               
activities                       26,170    65,837    28,412    82,175 
                                                                      
                                                                      
                                                                      
Cash flows from investing                                             
activities                                                            
                                                                      
Proceeds from sale of                                                 
property, plant and equipment,                                        
and intangibles                     148     1,860        13        79 
                                                                      
Loan repayment received               -         -         3         7 
                                                                      
Interest received                     -         -         -       399 
                                                                      
Disposal of short-term                                                
securities                            -         -         -    63,431 
                                                                      
Purchase of property plant and                                        
equipment, and intangibles      (14,458)  (37,445)  (28,837)  (56,991)
                                                                      
Acquisition of subsidiary (net                                        
of cash acquired) associates                                          
and jointly controlled                                                
entities                              -    (1,235) (116,834) (118,747)
                                                                      
Acquisition of short-term                                             
securities                      (30,000)  (90,000)        -         - 
                                                                      
Loans granted                        (4)       (4)        -         - 
                                                                      
Net cash used in investing                                            
activities                      (44,314) (126,824) (145,655) (111,822)
                                                                      

 

Consolidated cash flow statement for three and SIX months ended 30 JUNE 2009

 

                                  Three       Six     Three       Six
                                 months    months    months    months
                                  ended     ended     ended     ended
                                                                     
                                30 June   30 June   30 June   30 June
                                   2009      2009      2008      2008
                              unaudited unaudited unaudited unaudited
                                                                     
Cash flows from financing                                            
activities                                                           
                                                                     
Proceeds from borrowings           422       422       266       266 
                                                                     
Repurchase of own shares        (7,580)  (18,987)        -         - 
                                                                     
Dividends paid to minority                                           
shareholders                    (1,051)   (1,051)     (910)     (910)
                                                                     
Repayment of borrowings        (12,053)  (22,816)        -         - 
                                                                     
Interest paid                   (1,564)   (3,622)   (2,292)   (4,393)
                                                                     
Other                           (1,286)   (1,578)   (1,554)   (1,554)
                                                                     
Net cash used in financing                                           
activities                     (23,112)  (47,632)   (4,490)   (6,591)
                                                                     
                                                                     
                                                                     
Net increase / (decrease) in                                         
cash and cash equivalents      (41,256) (108,619) (121,733)  (36,238)
                                                                     
                                                                     
                                                                     
Cash and cash equivalents                                            
                                                                     
At start of period             196,380   263,743   423,155   337,660 
                                                                     
At end of period               155,124   155,124   301,422   301,422 
                                                                     

(1) "other adjustments" include mainly non-cash share-based payment costs

Accompanying notes are an integral part of these condensed interim consolidated
financial statements.


Notes to the condensed INTERIM consolidated financial statements as at
30 JUNE 2009 and for three and six MONTH PERIOD ended thereon

1. General information

Agora SA with its registered seat in Warsaw, Czerska 8/10 street ("the
Company") principally produces, sells and promotes daily newspapers (including
flagship 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,
Art Marketing Syndicate SA ("AMS").

As at 30 June 2009 the Group comprised Agora SA, 15 subsidiaries and one
jointly controlled entity A2 Multimedia Sp. z o.o. The Group carries out
activity in all major cities of Poland and in Ukraine - through LLC Agora
Ukraine and Agora Press Ltd. Financial statements were prepared as at and for
three and six months ended 30 June 2009, with comparative figures presented as
at and for three and six months ended 30 June 2008.

The financial statements were authorized for issue by the Management Board of
Agora SA on August 13, 2009.

2. Statement of compliance

The Consolidated Balance Sheet as of 30 June 2009, 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 six months ended 30 June 2009 have not been audited. The Consolidated
Balance Sheet as of 31 December 2008, the Consolidated Income Statement, the
Consolidated Cash Flow Statement and the Consolidated Statement of Changes in
Equity for twelve months ended 31 December 2008 have been audited by an
independent auditor who issued an unqualified opinion.

The Condensed Consolidated Financial Statements have been prepared under
International Accounting Standard 34 "Interim Financial Reporting", according
to art. 45 point 1a-1c of Accounting Act (Official Journal from 2002, No 76,
item 694 with 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).

In the preparation of these condensed consolidated financial statements, the
Group has followed the same accounting policies as used in the Consolidated
Financial Statements as at 31 December 2008, except for the changes implemented
by the IAS 1 and changes caused by implementation of IFRS 8. The Consolidated
Financial Statements as at 31 December 2008 have been prepared in accordance
with International Financial Reporting Standards adopted by the International
Accounting Standards Board ("IASB") and interpretations issued by the
International Financial Reporting Interpretations Committee of the IASB
("IFRIC") published in the form of regulations of the European Union. The
Condensed Consolidated Financial Statements as at 30 June 2009, should be read
in conjunction with the audited Consolidated Financial Statements as at 31
December 2008.

Amendments to IAS 1 - Presentation of Financial Statements have become
effective from annual periods beginning on 1 January 2009. The revised Standard
requires information in financial statements to be aggregated on the basis of
shared characteristics and introduces a statement of comprehensive income. 
Items of income and expense and components of other comprehensive income may be
presented either in a single statement of comprehensive income with subtotals,
or in two separate statements (a separate income statement followed by a
statement of comprehensive income). The Group has chosen to present two
separate statements. 


 

3. Long-term and short-term borrowings

As at 30 June 2009, the Company had a PLN 339.5 million long-term loan facility
available from Bank Pekao SA, on the basis of the credit line agreement dated 5
April 2002 (with subsequent annexes). The loan liability as at 30 June 2009
amounted to PLN 116,013 thousand, including PLN 73,591 thousand presented in
the non-current part. In accordance with this agreement, the Company is able to
use the open credit line up to PLN 200 million till 31 March 2010.

Additionally, Group's subsidiaries - Inforadio Sp. z o.o. had a loan liability
to the minority shareholder in the amount of PLN 22,815 thousand and AMS had a
credit in its current bank account in the amount of PLN 15,745 thousand, on the
basis of the debt limit agreement with Raiffeisen Bank Polska S.A., dated 11
December 2003 (with subsequent annexes).

4. Sales and segment information

For annual periods beginning on 1 January 2009 IFRS 8 - Operating segments,
which replaced IAS 14 Segment Reporting has become effective. The standard
requires segment disclosure based on the 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 five 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,
Agora Poligrafia Sp. z o.o., which focus mainly on printing of 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),

3) the Magazines segment comprises the Group's activities on publishing the
magazines within Agora's Magazine Department and Agora Press Ltd.,

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.

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 recognized on consolidation (defined below).

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.

Matching positionsshow data not included in particular segments, inter alia:
other revenues and costs of Agora's support divisions overheads, 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 recognized on consolidation can be defined as consolidation
adjustments, inter alia: the amortisation of intangible assets recognized
directly on consolidation.

Impairment losses and reversals of impairment losses show impairment losses and
their reversals presented in other operating income and expenses.

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 SA. The financials
presented for three and six months ended 30 June 2009 and 30 June 2008 relate
only to A2 Multimedia Sp. z o.o.

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.

 


4. Sales and segment information (continued)

 

                                                                  Three months ended  30 June 2009                      
                                                                                                                        
                                                                                                 Matching               
                                             Newspapers Internet Magazines Outdoor   Radio       positions       Total  
                                                                                                                        
Revenues from external customers               185,628   19,002    24,164   46,064   21,424             1,452   297,735 
                                                                                                                        
Intersegment revenues (2)                          972      139        21    1,904      423            (3,458)        - 
                                                                                                                        
Total revenues                                 186,599   19,141    24,186   47,968   21,847            (2,007)  297,735 
                                                                                                                        
                                                                                                                        
                                                                                                                        
Total operating cost (1), (2), (3)            (152,805) (22,149)  (18,563) (46,099) (22,926)          (20,301) (282,842)
                                                                                                                        
Operating profit (loss) (1)                     33,795   (3,008)    5,623    1,870   (1,079)          (22,308)   14,893 
                                                                                                                        
                                                                                                                        
                                                                                                                        
Net finance income and cost                                                                                         100 
                                                                                                                        
Share of results of equity accounted                                                                                    
investees                                                  (253)                                                   (253)
                                                                                                                        
Income tax expense                                                                                               (2,894)
                                                                                                                        
                                                                                                                        
                                                                                                                        
Net profit                                                                                                       11,846 
                                                                                                                        

 

(1) segments do not include amortisation recognized 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) matching positionsshow data not included in particular segments, inter
alia: other cost and the result on other operating activities of Agora's
support divisions overheads and Agora TC Sp. z o.o. (PLN 23,967 thousand),
intercompany eliminations and other matching adjustments which reconcile the
data presented in the management reports to the consolidated financials of the
Agora Group.

 

 


4. Sales and segment information (continued)

 

                                                                      Three months ended  30 June 2009                 
                                                                                                                       
                                                                                                    Matching           
                                                      Newspapers Internet Magazines Outdoor Radio   positions   Total  
                                                                                                                       
Operating depreciation and amortisation                  (6,832)  (1,633)     (109) (6,024)  (740)     (4,346) (19,685)
                                                                                                                       
Amortisation recognised on consolidation (1)                  -     (662)        -       -   (200)         65     (797)
                                                                                                                       
Impairment losses                                        (1,825)    (381)      (89) (1,418)  (308)        195   (3,826)
                                                                                                                       
Reversals of impairment losses                            1,246       47        64      75    153          (7)   1,578 
                                                                                                                       
Share-based payment                                      (1,641)    (108)     (173)   (263)  (206)     (1,101)  (3,492)
                                                                                                                       
Amount of investment in associates and joint ventures                                                                  
accounted for by the equity method                            -        -         -       -      -           -        - 
                                                                                                                       
Capital expenditure (2)                                   1,997    1,758        10   1,621  1,585       2,404    9,374 
                                                                                                                       

 

(1) is not presented in operating result of the Group's segments

(2) based on invoices booked in the period.

 


4. Sales and segment information (continued)

 

                                                                    Six months ended 30 June 2009                       
                                                                                                                        
                                                                                                 Matching               
                                             Newspapers Internet Magazines Outdoor   Radio       positions       Total  
                                                                                                                        
Revenues from external customers               360,564   38,222    47,529   83,669   39,470             2,728   572,182 
                                                                                                                        
Intersegment revenues (2)                        1,947      408        50    2,775      968            (6,148)        - 
                                                                                                                        
Total revenues                                 362,511   38,630    47,578   86,444   40,438            (3,420)  572,182 
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
Total operating cost (1), (2), (3)            (296,841) (43,878)  (39,186) (87,687) (40,863)          (43,134) (551,590)
                                                                                                                        
Operating profit (loss) (1)                     65,670   (5,248)    8,392   (1,243)    (425)          (46,554)   20,592 
                                                                                                                        
                                                                                                                        
                                                                                                                        
Net finance income and cost                                                                                         860 
                                                                                                                        
Share of results of equity accounted                                                                                    
investees                                                  (423)                                                   (423)
                                                                                                                        
Income tax expense                                                                                               (8,211)
                                                                                                                        
                                                                                                                        
                                                                                                                        
Net profit                                                                                                       12,818 
                                                                                                                        

 

(1) segments do not include amortisation recognized 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 Outdoorsegment to other segments.

(3) matching positionsshow data not included in particular segments, inter
alia: other cost and the result on other operating activities of Agora's
support divisions overheads and Agora TC Sp. z o.o. (PLN 49,649 thousand),
intercompany eliminations and other matching adjustments which reconcile the
data presented in the management reports to the consolidated financials of the
Agora Group.

 

 


4. Sales and segment information (continued)

 

                                                                      Six months ended 30 June 2009                    
                                                                                                                       
                                                                                                  Matching             
                                                  Newspapers Internet Magazines Outdoor   Radio   positions    Total   
                                                                                                                       
Operating depreciation and amortisation             (13,673)  (3,148)     (217) (12,050) (1,465)     (8,444)   (38,997)
                                                                                                                       
Amortisation recognised on consolidation (1)              -   (1,326)        -        -    (401)        137     (1,590)
                                                                                                                       
Impairment losses                                    (2,944)    (543)     (346)  (2,321) (1,106)        (85)    (7,345)
                                                                                                                       
Reversals of impairment losses                        1,818      199       267      206     773          10      3,273 
                                                                                                                       
Share-based payment                                  (3,340)    (230)     (347)    (527)   (434)     (2,255)    (7,133)
                                                                                                                       
Amount of investment in associates and joint                                                                           
ventures accounted for by the equity method               -    1,235         -        -       -           -      1,235 
                                                                                                                       
Capital expenditure (2)                               2,212    2,787       105    7,218   1,813       8,693     22,828 
                                                                                                                       
                                                                                                                       
                                                                                                                       
                                                                           As at 30 June 2009                          
                                                                                                                       
                                                                                                  Matching             
                                                  Newspapers Internet Magazines Outdoor   Radio   positions    Total   
                                                                                                                       
                                                                                                                       
                                                                                                                       
Property, plant and equipment and intangible                                                                           
assets                                              329,749   69,272    74,454  297,524  67,298     189,777  1,028,074 
                                                                                                                       

 

(1) is not presented in operating result of the Group's segments

(2) based on invoices booked in the period.

 


 

4. Sales and segment information (continued)

 

                                                                  Three months ended  30 June 2008                      
                                                                                                                        
                                                                                                 Matching               
                                             Newspapers Internet Magazines Outdoor   Radio       positions       Total  
                                                                                                                        
Revenues from external customers               218,362   19,380    30,621   50,258   23,904             1,151   343,676 
                                                                                                                        
Intersegment revenues (2)                          515      (37)        3    3,228      566            (4,275)        - 
                                                                                                                        
Total revenues                                 218,876   19,343    30,624   53,486   24,471            (3,124)  343,676 
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
Total operating cost (1), (2), (3)            (175,538) (21,226)  (22,217) (46,385) (22,642)          (25,483) (313,492)
                                                                                                                        
Operating profit (loss) (1)                     43,338   (1,883)    8,407    7,101    1,828           (28,607)   30,184 
                                                                                                                        
                                                                                                                        
                                                                                                                        
Net finance income and cost                                                                                        (526)
                                                                                                                        
Share of results of equity accounted                                                                                    
investees                                                  (479)                                                   (479)
                                                                                                                        
Income tax expense                                                                                               (7,577)
                                                                                                                        
                                                                                                                        
                                                                                                                        
Net profit                                                                                                       21,603 
                                                                                                                        

 

(1) segments do not include amortisation recognized 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) matching positions show data not included in particular segments, inter
alia: other cost and the result on other operating activities of Agora's
support divisions overheads and Agora TC Sp. z o.o. (PLN 30,581 thousand),
intercompany eliminations and other matching adjustments which reconcile the
data presented in the management reports to the consolidated financials of the
Agora Group.


4. Sales and segment information (continued)

 

                                                                      Three months ended  30 June 2008                 
                                                                                                                       
                                                                                                    Matching           
                                                      Newspapers Internet Magazines Outdoor Radio  positions    Total  
                                                                                                                       
Operating depreciation and amortisation                  (9,662)    (860)      (73) (4,493) (575)      (4,621) (20,283)
                                                                                                                       
Amortisation recognised on consolidation (1)                  -        -         -       -  (212)          76     (136)
                                                                                                                       
Impairment losses                                        (1,524)     (25)      (33)   (546) (409)         (83)  (2,620)
                                                                                                                       
Reversals of impairment losses                            1,442      129       147     188   325           (7)   2,224 
                                                                                                                       
Share-based payment                                      (6,194)       -      (575)   (910) (600)      (3,279) (11,558)
                                                                                                                       
Amount of investment in associates and joint ventures                                                                  
accounted for by the equity method                            -        -         -       -     -            -        - 
                                                                                                                       
Capital expenditure (2)                                     451    3,627        99  17,705   536        7,549   29,968 
                                                                                                                       

 

(1) is not presented in operating result of the Group's segments

(2) based on invoices booked in the period.

 


4. Sales and segment information (continued)

 

                                                                    Six months ended 30 June 2008                       
                                                                                                                        
                                                                                                 Matching               
                                             Newspapers Internet Magazines Outdoor   Radio       positions       Total  
                                                                                                                        
Revenues from external customers               434,776   33,787    56,697   88,031   41,350             2,455   657,096 
                                                                                                                        
Intersegment revenues (2)                        1,032       84        34    5,456    1,151            (7,757)        - 
                                                                                                                        
Total revenues                                 435,809   33,871    56,731   93,487   42,501            (5,302)  657,096 
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        
Total operating cost (1), (2), (3)            (346,860) (38,055)  (44,773) (85,582) (40,541)          (48,516) (604,326)
                                                                                                                        
Operating profit (loss) (1)                     88,948   (4,184)   11,958    7,905    1,960           (53,818)   52,769 
                                                                                                                        
                                                                                                                        
                                                                                                                        
Net finance income and cost                                                                                       2,872 
                                                                                                                        
Share of results of equity accounted                                                                                    
investees                                                  (702)                                                   (702)
                                                                                                                        
Income tax expense                                                                                              (14,869)
                                                                                                                        
                                                                                                                        
                                                                                                                        
Net profit                                                                                                       40,070 
                                                                                                                        

 

(1) segments do not include amortisation recognized 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 Outdoorsegment to other segments.

(3) matching positionsshow data not included in particular segments, inter
alia: other cost and the result on other operating activities of Agora's
support divisions overheads and Agora TC Sp. z o.o. (PLN 57,671 thousand),
intercompany eliminations and other matching adjustments which reconcile the
data presented in the management reports to the consolidated financials of the
Agora Group

 


4. Sales and segment information (continued)

 

                                                                      Six months ended 30 June 2008                     
                                                                                                                        
                                                                                                   Matching             
                                                  Newspapers Internet Magazines Outdoor   Radio    positions    Total   
                                                                                                                        
Operating depreciation and amortisation             (19,414)  (1,582)     (145)  (8,663)  (1,151)     (8,973)   (39,929)
                                                                                                                        
Amortisation recognised on consolidation (1)              -        -         -        -     (425)        150       (275)
                                                                                                                        
Impairment losses                                    (2,653)     (27)     (262)    (940)    (574)       (167)    (4,623)
                                                                                                                        
Reversals of impairment losses                        2,030      156       188      331      416          65      3,187 
                                                                                                                        
Share-based payment                                 (12,505)       -    (1,150)  (1,884)  (1,286)     (6,771)   (23,596)
                                                                                                                        
Amount of investment in associates and joint                                                                            
ventures accounted for by the equity method               -    2,000         -        -        -           -      2,000 

                                                                                                                        
Capital expenditure (2)                                 918    4,287        99   36,169    1,392      11,780     54,646 
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                            As at 30 June 2008                          
                                                                                                                        
                                                                                                   Matching             
                                                  Newspapers Internet Magazines Outdoor   Radio    positions    Total   
                                                                                                                        
                                                                                                                        
                                                                                                                        
Property, plant and equipment and intangible                                                                            
assets                                              315,452   10,957    73,829  267,981  187,309     186,313  1,041,840 
                                                                                                                        

 

 

(1) is not presented in operating result of the Group's segments;

(2) based on invoices booked in the period.

 


 

5. Share-based payment

In the Agora Group the share incentive plans fuelled by Agora's shares are run.
These plans fall within the scope of IFRS 2 "Share-based Payment" which came
into force on 1 January 2005.

Eligible employees are entitled to purchase investment certificates in closed
end mutual fund. The fair value of certificates is determined by applying
described below valuation techniques and is included in staff cost with
corresponding increase in equity.

According to transitional provisions of IFRS 2, the standard should be applied
to equity instruments that were granted after 7 November 2002 and vested or
will vest after 1 January 2005. All restricted stock purchased within incentive
plans till 2004 inclusive was granted to employees either before November 7,
2002 or was vested before January 1, 2005. Consequently, shares purchased by
employees till the end of 2004 fall outside the scope of IFRS 2 and they do not
affect the income statement of the Group.

During periods covered by these financial statements, the following incentive
plans were carried out in the Group:

A. Incentive Plan based on investment certificates,

B. Employee Stock Purchase Plan and Stock Incentive Plan for the management
(carried out until the end of 2004).

A. Incentive plan based on investment certificates (carried out from 2005)

Eligible employees participate in an incentive plan based on investment
certificates in Participatory Closed Mutual Fund (PCMF), managed by Skarbiec
Towarzystwo Funduszy Inwestycyjnych SA.

The number of certificates granted depends on meeting performance criteria, not
on market conditions.

Detailed information on Incentive Plans for 2006, 2007, 2008 were presented in
the consolidated financial statements for the year of 2006, 2007 and 2008,
respectively.

 

The impact of share-based payments on the financial statements of the Agora
Group:

 

                 Three months     Six months   Three months     Six months
                ended 30 June  ended 30 June  ended 30 June  ended 30 June
                         2009           2009           2008           2008
                                                                          
Income                                                                    
statement -                                                               
staff cost             3,493          7,133         11,558         23,596 
                                                                          
Equity                 3,493          7,133         11,558         23,596 
                                                                          

 

The impact on the financial statements of the Group described above, results
in the first half of 2009 exclusively from the recognition of the plan carried
out in 2008; in the first half of 2008 - from the recognition of the plans
carried out in 2006-2007.


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 SA):

 

                 Three months    Six months   Three months    Six months
                ended 30 June ended 30 June  ended 30 June ended 30 June
                         2009          2009           2008          2008
                                                                        
At the                                                                  
beginning of                                                            
the period           964,221       966,967      1,242,692     1,247,227 
                                                                        
Granted                    -             -              -             - 
                                                                        
Forfeited            (10,085)      (12,831)        (5,178)       (9,713)
                                                                        
Vested              (954,136)     (954,136)    (1,237,514)   (1,237,514)
                                                                        
At the end of                                                           
the period                 -             -              -             - 
                                                                        

 

Investment certificates acquired by the Management Board of Agora SA (number
of certificates):

 

                   As at 30 Vested in  Forfeited   Granted      As at 31
                  June 2009      2009    in 2009   in 2009 December 2008
                                                                        
  Incentive plan 2008 (G                                                
          serie)                                                        
                                                                        
Piotr                    -   (18,942)         -         -        18,942 
Niemczycki                                                              
                                                                        
Zbigniew Bak             -   (27,717)         -         -        27,717 
                                                                        
Tomasz                   -    (8,349)         -                   8,349 
Jozefacki                                                               
                                                                        
Marek Sowa (1)           -   (23,760)         -         -        23,760 
                                                                        
Jarosław                 -   (21,737)         -         -        21,737 
Szalinski (2)                                                           
                                                                        
Grzegorz                 -    (6,824)         -         -         6,824 
Kossakowski (3)                                                         
                                                                        
                         -  (107,329)         -         -       107,329 
                                                                        

 

(1) Marek Sowa was the President and the Member of the Management Board of
Agora SA till November 13, 2008;

(2) Jaroslaw Szalinski was the Deputy President and the Member of the
Management Board of Agora SA till
November 28, 2008;

(3) Grzegorz Kossakowski was elected the Member of the Management Board on
January 8, 2009.

 

Vesting date and vesting period for purchased certificates:

Certificates Vesting date  Vesting period Time interval       No. of      
                                                           certificates   
                                                                          
     D       25 June 2008    21 months     October 2006            33,165 
                                            - June 2008                   
                                                                          
     E       25 June  2008    9 months     October 2007            57,709 
                                            - June 2008                   
                                                                          
     G       25 June  2009    9 months     October 2008           107,329 
                                            - June 2009                   
                                                                          

In the second quarter of 2009, the non-cash expense of the investment
certificates acquired by the Management Board, recognized according to IFRS 2,
amounted to PLN 405 thousand (in the second quarter of 2008: PLN 833 thousand).
In the first half of 2009, the cost mentioned above amounted to PLN 810
thousand (in the first half of 2008: PLN 1,664 thousand).

Investment certificates acquired by the Supervisory Board of Agora SA

On June 23, 2009 Wanda Rapaczynski was elected to the Supervisory Board of
Agora SA. As at election date, Wanda Rapaczynski had 13,745 investment
certificates of serie G (incentive plan 2008 for achievements in 2007, when
Wanda Rapaczynski was the President and Member of the Management Board of Agora
SA). For the first half of 2009, the non-cash expense of the certificates
amounted to PLN 104 thousand. The certificates were vested on June 25, 2009.

B. Employee Stock Purchase Plan and Stock Incentive Plan for the management
(carried out until the end of 2004)

In these plans, Agora Holding Sp. z o.o. sold Agora's shares to eligible
employees for fixed price of PLN 1 for each share with the following
restrictions: they were registered, not admitted for public trade and could not
be sold for a period of up to 10 years.

During the vesting period Agora Holding Sp. z o.o. has had an irrevocable right
to buy back shares for PLN 1 in case of non-compliance with share incentive
plan regulations by employees.

The number of shares granted depended on meeting performance criteria
(non-market criteria) by eligible managers.

Movements in the shares outstanding are as follows (including shares granted to
Members of the Management Board of Agora SA):

 

                 Three months    Six months   Three months    Six months
                ended 30 June ended 30 June  ended 30 June ended 30 June
                         2009          2009           2008          2008
                                                                        
At the               342,326       342,326      1,780,554     1,780,554 
beginning of                                                            
the period                                                              
                                                                        
Granted                    -             -              -             - 
                                                                        
Forfeited             (3,023)       (3,023)          (944)         (944)
                                                                        
Vested              (186,934)     (186,934)    (1,437,284)   (1,437,284)
                                                                        
At the end of        152,369       152,369        342,326       342,326 
the period                                                              
                                                                        

 

The shares granted have vesting and selling restrictions (with selling
obligation) for the period from 5 to 10 years (up to 2010).

The shares not vested yet as at December 31, 2004 were granted before November
7, 2002; consequently they are outside the scope of IFRS 2 (they are not valued
and recognized in the books). As a result they do not affect the results and
equity of the Group.

All shares have full dividend and voting rights.

The movements in shares purchased by Management Board of Agora are shown in
point V.3 of the Management Discussion and Analysis.

6. Provisions and impairment losses

In the period from January 1, 2009 to June 30, 2009 the following impairment
losses were accounted for (in brackets the amounts for the second quarter of
2009):

impairment loss for receivables: increase by PLN 2,762 thousand (increase by
PLN 1,530 thousand),

impairment loss for inventory: increase by PLN 2,516 thousand (increase by PLN
1,442 thousand),

impairment loss for property, plant and equipment and intangible assets:
decrease by PLN 2,168 thousand (decrease by PLN 895 thousand).

Additionally in the period from January 1, 2009 to June 30, 2009 the following
provisions were changed:

provision for certain and probable losses: increase by PLN 2,728 thousand
(increase by PLN 2,616 thousand),

provision for reorganization: decrease by PLN 3,286 thousand ( decrease by PLN
1,234 thousand),

provision for the costs connected with the sentence passed by the
Constitutional Tribunal concerning sick benefits: used in the amount of PLN 201
thousand (used in the amount of PLN 79 thousand),

provision for the remuneration and severances for the former Management Board
Members: used in the amount of PLN 1,700 thousand (used in the amount PLN 1,164
thousand),

retirement severance provision: increase by PLN 162 thousand (increase by PLN
162 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. Capital and investment commitments

Contractual capital and investment commitments (mainly relating to fixed and
intangible assets) existing at the balance sheet date amounted to PLN 969
thousand (31 March 2009: PLN 472 thousand, 31 December 2008:
PLN 5,978 thousand, 30 June 2008: PLN 9,869 thousand).

9. Contingencies

As of 30 June 2009 the Group had contingent liabilities (inter alia guarantees
and other matters arising in the ordinary course of business) from which it is
anticipated that no material liabilities will arise, other than those noted
below.

 

                                                               Amount                 
                                                                                      
       Benefiting party          Debtor      Valid till    30 June 31 Dec  Provisions 
                                                            2009    2008     booked   
                                                                                      
                                                                                      
                                                                                      
 Guarantees provided by Agora                                                         
              SA                                                                      
                                                                                      
                 Bank Pekao SA     Agora's   30 Jun 2009 -    691     608            -
                                 employees     20 Apr 2012                            
                                                                                      
                                                                                      
                                                                                      
Guarantees provided by AMS SA                                                         
                                                                                      
                 Gmina Wroclaw      AMS SA   30 Jun 2009 /    752     752            -
                                               31 Dec 2009                            
                                                                                      
  Przedsiebiorstwo Komunikacji      AMS SA     31 Dec 2011    100     100            -
           Miejskiej, Katowice                                                        
                                                                                      
         Gmina Miasto Szczecin      AMS SA      indefinite     90     120            -
                                                    period                            
                                                                                      
   Miejskie Zakłady Autobusowe      AMS SA     31 Dec 2009     80       -            -
          Sp. z o.o., Warszawa                                                        
                                                                                      
                                                                                      
                                                                                      
                                                            1,713   1,580             
                                                                                      

 

The total amount of the contingences (including guarantees) is smaller than 10%
of the Group's equity.


Advertising panels of the AMS group situated near the side of a road

In 2008, AMS finished to replace its advertising panels situated near the side
of the road in Warsaw. Simultaneously, the Management Board of AMS does not
abandon its efforts to receive positive administrative decisions for these
panels which meet criteria, stated in the decree of the President of Warsaw,
dated November 14, 2007, no. 961/2007. Shall AMS receive positive
administrative decisions; the company is able to use the sides of the road in
its business activities.

AMS received many administrative fines for using the waysides for its panels.
The appeal procedures are conducted to the Local Self-government Appeals
Committee (Samorzadowe Kolegium Odwolawcze) and to the Voivodeship
Administrative Court(Wojewodzki Sad Administracyjny). In accordance with
resolution taken by the Management Board of AMS on March 31, 2007, the company
set up provisions for possible administrative fines in the amount of PLN 4,821
thousand as at June 30, 2009.

10. Court cases

As at 30 June 2009 the Group has not entered into litigation for claims or
liabilities that in total exceed 10% of the Group's equity.

11. Seasonality

Advertising revenues are subject to seasonality - revenues earned in the first
and third quarters are lower than in the second and fourth quarters.

12. operating efficiency improvement plan

On December 29, 2008, the Management Board of Agora SA adopted the resolution
on implementing operating efficiency improvement plan within the Group. On May
13, 2009 the Management Board of Agora SA adopted aresolution on increasing the
number of laid-off people to 400 (which constitutes about 10.4% of employees in
the Group as at November 30, 2008). Due to the increased employment reductions,
the Company created additional provision for the cost of lay-offs execution in
the amount of about PLN 2,298 thousand, which cost affected Group's
consolidated financial result for the first half of 2009.

In the first half of 2009, 337 employees of the Agora Group received dismissal
notices.

13. Related-party transactions

(a) Management Board's remuneration

Remuneration of Management Board members of Agora SA paid pursuant to
employment and management contracts amounted to PLN 1,321 thousand (six months
ended 30 June 2008: PLN 1,904 thousand).

As at 30 June 2009 Agora SA did not have any dividend liability recognized to
members of the Management Board of Agora SA (30 June 2008: PLN 810 thousand).

Management Board members did not acquire shares in the period of six months
ended 30 June 2009. 

 

(b) Other related parties

There were no material transactions and balances with entities other that
disclosed below:

 

                 Three months     Six months   Three months     Six months
                ended 30 June  ended 30 June  ended 30 June  ended 30 June
                         2009           2009           2008           2008
                                                                          
                                                                          
                                                                          
Related                                                                   
companies                                                                 
                                                                          
Sales                     30            226            226            249 
                                                                          
Purchases of                                                              
goods and                                                                 
services                (104)          (466)          (363)          (420)
                                                                          
Other                                                                     
operating                                                                 
income                    59             63            112            112 
                                                                          

 

 

 

              As at 30 June As at 31 March         As at 31 As at 30 June
                       2009           2009    December 2008          2008
                                                                         
                                                                         
                                                                         
Related                                                                  
companies                                                                
                                                                         
Receivables             69            122              136           264 
                                                                         
Dividends                                                                
payable                  -              -                -         4,013 
                                                                         
Other                                                                    
payables                68             45              159            32 
                                                                         
Loans granted            4               -               -             - 
                                                                         

 

 

All transactions carried out between related parties are of routine nature.

 

 

14. Description of the Group

The list of companies from the Group:

                                                 % of shares held (effectively)
                                                                               
    Subsidiaries consolidated                      30 June 2009   31 March 2009
                                                                               
1   Agora Poligrafia Sp. z o.o., Tychy                   100.0%          100.0%
                                                                               
2   Art Marketing Syndicate SA (AMS), Warsaw             100.0%          100.0%
                                                                               
3   IM 40 Sp. z o.o., Warsaw (1)                          72.0%           72.0%
                                                                               
4   Grupa Radiowa Agory Sp. z o.o., Warsaw               100.0%          100.0%
                                                                               
5   Agencja Reklamowa Jowisz Sp. z o.o., Warsaw                                
   (1)                                                   100.0%          100.0%
                                                                               
6   Adpol Sp. z o.o., Warsaw (2)                         100.0%          100.0%
                                                                               
7   Akcent Media Sp. z o.o., Poznan (2)                  100.0%          100.0%
                                                                               
8   Inforadio Sp. z o.o., Warsaw                          66.1%           66.1%
                                                                               
9   Agora TC Sp. z o.o., Warsaw                          100.0%          100.0%
                                                                               
10  Radiowe Doradztwo Reklamowe Sp. z o.o.,                                    
   Warsaw (1), (4)                                       100.0%          100.0%
                                                                               
11  LLC Agora Ukraine, Kiev, Ukraine                     100.0%          100.0%
                                                                               
12  Media System Sp. z o.o., Warsaw (2)                  100.0%          100.0%
                                                                               
13 Trader.com (Polska) Sp. z o.o., Warszawa              100.0%          100.0%
                                                                               
14 Agora Press Ltd., Kiev, Ukraine (3)                   100.0%          100.0%
                                                                               
                                                                               
                                                                               
    Jointly controlled entities accounted for                                  
   the equity method                                                           
                                                                               
15 A2 Multimedia Sp. z o.o., Warsaw                       50.0%           50.0%
                                                                               
                                                                               
                                                                               
    Companies excluded from consolidation and                                  
   equity accounting                                                           
                                                                               
16  Polskie Badania Internetu Sp. z o.o., Warsaw          20.0%           20.0%
                                                                               
17  Projekt Inwestycyjny Sp. z o.o., Warsaw              100.0%          100.0%
                                                                               
18  Polskie Badania Outdooru Sp. z o.o., Warsaw                                
   (2)                                                    41.0%           41.0%
                                                                               

 

(1) indirectly through GRA Sp. z o.o., as a result of the transaction dated
April 21, 2009, described in note 15 the owner of the shares in IM40 Sp. z o.o.
and Radiowe Doradztwo Reklamowe Sp. z o.o. became GRA Sp. z o.o. (previously
Agora SA)

(2) indirectly through AMS SA

(3) 30% shares own Agora SA, 70% LLC Agora Ukraine.

(4) previously BOR Sp. z o.o.


 

15. Business Combinations

On April 21, 2009 the District Court for the capital city of Warsaw, registered
the increase of the share capital of Grupa Radiowa Agory Sp. z o.o. The
Company's share capital was increased to PLN 25,019,500 and now consists of
50,039 shares with nominal value of PLN 500 per share. The total number of
votes after the capital increase amounts to 50,039. All the aforementioned
shares and votes at the general meeting of shareholders belong to Agora.
Acquired shares were brought as a contribution in kind.

16. SHARE BuY-BACK PROGRAM

On June 20, 2008 the Annual General Meeting (AGM), on the motion submitted by
the shareholder, adopted resolutions concerning the execution of the share
buy-back program worth PLN 90 million (Program). In accordance with the
resolution taken by the AGM on June 20, 2008, the Program was finished on
October 30, 2008.

The intention of the Management Board was to utilize the whole amount of PLN 90
million which the AGM decided to allocate for the buy-back Program. Since on
the last day of the Program, i.e.  October 30, 2008, the entire mount of money
allocated to the Program was not utilised, the Management Board convened an
Extraordinary Shareholders Meeting (EGM) on February 12, 2009 in order to
obtain acceptance for a next buy-back program. The EGM convened on February 12,
2009 took the resolution to introduce the buy back program (Program 2). On
February 13, 2009, the Management Board decided to conduct the Program 2 and
presented its details. The mentioned above program started on February 16, 2009
and was to finish on June 30, 2009 or until the funds allocated for its
execution (i.e. PLN 19 million) would have been depleted. The Management Board
could have terminated the execution of the Program 2 before the expiration of
the authorization granted by the General Meeting (upon the consent of the
Company's Supervisory Board).

On April 7, 2009, as the funds were depleted, the Program 2 was completed.

In the Program 2 (i.e. conducted since February 16, 2009 until April 7, 2009)
the Company acquired in total 1,498,458 of its own shares. The aforementioned
shares give the right to 1,498,458 votes at the General Meeting of Shareholders
and constitute 2.73% of the Company's share capital granting the right to 2.08%
of the total number of votes at the General Meeting of Shareholders. The
average share price amounted to PLN 12.65.

 

As a result of the execution of the buyback programs:

1) since July 14, 2008 until October 30, 2008, and

2) since February 16, 2009 until April 7, 2009,

the Company altogether acquired 4,040,149 of its own shares, giving the right
to 4,040,149 votes at the General Meeting of Shareholders and constituting
7.35% of the Company's share capital and granting the right to 5.60% of votes
at the General Meeting.

On June 23, 2009 the General Meeting of Shareholders took the resolution on the
redemption of 4,040,149 shares.

 

17. Functional currency and presentation currency for the CONDENSED INTERIM
consolidated financial statements and condensed unconsolidated financial
statements of Agora SA and the translation method of financial data

The functional and presentation currency for Agora SA and other companies as
well as for the presented consolidated financial statements is Polish zloty.
There are two foreign companies within the Agora Group - LLC Agora Ukraine and
Agora Press Ltd., for which functional currency is hryvnia (UAH). Their
financial statements for the purpose of consolidation were 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 half of 2009
(the first half of 2008) using the arithmetic average of exchange rates
published by NBP and ruling on the last day of each month for two quarters. For
the first half of 2009 EURO 1 = PLN 4.5184 (EURO 1 = PLN 3.4776).

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 June 2009 -
EURO 1 = PLN 4.4696; as at 31 December 2008 - EURO 1 = PLN 4.1724, as at 30
June 2008 - EURO 1 = PLN 3.3542.


 

18. Selected consolidated financial data together with translation into EURO

 

                             PLN                                EURO                
                          thousand                            thousand              
                                                                                    
             Six months   As at 31   Six months  Six months   As at 31   Six months 
              ended 30    December    ended 30    ended 30    December    ended 30  
              June 2009     2008     June 2008*   June 2009     2008     June 2008* 
              unaudited    audited    unaudited   unaudited    audited    unaudited 
                                                                                    
                                                                                    
                                                                                    
Sales           572,182                 657,096     126,634                 188,951 
                                                                                    
Operating        20,592                  52,769       4,557                  15,174 
profit                                                                              
                                                                                    
Profit                                                                              
before           21,029                  54,939       4,654                  15,798 
income taxes                                                                        
                                                                                    
Net profit                                                                          
for the                                                                             
period                                                                              
attributable     13,351                  40,208       2,955                  11,562 
to equity                                                                           
holders of                                                                          
the parent                                                                          
                                                                                    
Net cash                                                                            
from             65,837                  82,175      14,571                  23,630 
operating                                                                           
activities                                                                          
                                                                                    
Net cash                                                                            
used in        (126,824)               (111,822)    (28,068)                (32,155)
investing                                                                           
activities                                                                          
                                                                                    
Net cash                                                                            
used in         (47,632)                 (6,591)    (10,542)                 (1,895)
financing                                                                           
activities                                                                          
                                                                                    
Net increase                                                                        
/ (decrease)                                                                        
in cash and    (108,619)                (36,238)    (24,039)                (10,420)
cash                                                                                
equivalents                                                                         
                                                                                    
Total assets  1,545,266   1,598,561   1,655,194     345,728     383,127     493,469 
                                                                                    
Non-current     118,956     138,548     158,272      26,614      33,206      47,186 
liabilities                                                                         
                                                                                    
Current         258,139     292,895     246,140      57,754      70,198      73,383 
liabilities                                                                         
                                                                                    
Equity                                                                              
attributable                                                                        
to equity     1,168,904   1,167,211   1,251,413     261,523     279,746     373,088 
holders of                                                                          
the parent                                                                          
                                                                                    
Share            54,978      54,978      54,978      12,300      13,177      16,391 
capital                                                                             
                                                                                    
Weighted                                                                            
average      53,346,374  54,191,128  54,977,535  53,346,374  54,191,128  54,977,535 
number of                                                                           
shares                                                                              
                                                                                    
Earnings per                                                                        
share (in          0.25                    0.73        0.06                    0.21 
PLN / in                                                                            
EURO)                                                                               
                                                                                    
Book value                                                                          
per share         21.91       21.54       22.76        4.90        5.16        6.79 
(in PLN / in                                                                        
EURO)                                                                               
                                                                                    

 

* In the financial statements for the year 2008 the Group has changed the
presentation of deferred tax assets and liabilities. The comparable data as at
30 June 2008 were restated thereupon.

 

19. POST-BALANCE sheet events

On July 13, 2009 382,013 shares of Agora SA were admitted for trading on the
main market of the Warsaw Stock Exchange. The shares had been purchased by
employees pursuant to stock participation programs.

On July 8, 2009 Agora SA as a result of a purchase of part of shares from the
founders of AdTaily Sp. z o.o. (AdTaily) and taking up new shares, became the
owner of 182 shares with nominal value of PLN 50 per share (which equals to a
50.28% stake in company's share capital). Other shareholders are natural
persons. The Agora's book value of the acquired shares equals to PLN 936
thousand (including transaction costs). AdTaily is an owner of a unique
solution in the field of advertising monetization of Internet services; the
tool allows to use advertising potential of services from so-called "Long Tail"
segment, created by users on platforms belonging to publishers (for example:
Agora's Blox.pl) and other thematic websites.

On August 3, 2009 the District Court for the capital city of Warsaw, XIII
Commercial Division, registered the merger of Akcent Media Sp. z o.o. with Art
Marketing Syndicate SA (AMS). The merger was executed pursuant to Art. 492 § 1
item 1 and Art. 516 § 1, § 5, § 6 (merger by acquisition) of the Commercial
Companies Code, this is by transferring all the assets of the company being
acquired by AMS - the acquiring company. Before the merger AMS held 100% of
share capital in the company being acquired therefore pursuant to Art. 515 of
the Commercial Companies Code the merger was effected without the increase of
the share capital of AMS.

 

20. Condensed unconsolidated financial statements of Agora SA

Unconsolidated balance sheet as at 30 June 2009

 

                                                       As at 31            
                              As at 30    As at 31     December    As at 30
                             June 2009  March 2009         2008  June 2008*
                             unaudited   unaudited      audited   unaudited
                                                                           
Assets                                                                     
                                                                           
Non-current assets:                                                        
                                                                           
Intangible assets              90,496      89,736       90,514      85,674 
                                                                           
Property, plant and                                                        
equipment                     387,749     393,264      395,595     404,113 
                                                                           
Investments                   392,530     400,296      399,061     426,787 
                                                                           
Receivables and prepayments    66,477      75,967       66,311      51,706 
                                                                           
                              937,252     959,263      951,481     968,280 
                                                                           
                                                                           
                                                                           
Current assets:                                                            
                                                                           
Inventories                    15,627      14,620       14,205      10,305 
                                                                           
Accounts receivable and                                                    
prepayments                   178,147     180,639      182,890     209,239 
                                                                           
Income tax receivable           1,311       3,709        4,607       1,307 
                                                                           
Short-term securities and                                                  
other financial assets         92,749      61,640        1,280         414 
                                                                           
Cash and cash equivalents     143,514     175,948      245,032     291,657 
                                                                           
                              431,348     436,556      448,014     512,922 
                                                                           
                                                                           
                                                                           
Total assets                1,368,600   1,395,819    1,399,495   1,481,202 
                                                                           

* In the financial statements for the year 2008 the Company has changed the
presentation of deferred tax assets and liabilities. The comparable data as at
30 June 2008 were restated thereupon.


 

Unconsolidated balance sheet as at 30 June 2009 (continued)

 

                           As at 30     As at 31      As at 31     As at 30
                          June 2009   March 2009 December 2008   June 2008*
                          unaudited    unaudited       audited    unaudited
                                                                           
Equity and liabilities                                                     
                                                                           
Equity:                                                                    
                                                                           
Share capital               54,978       54,978        54,978       54,978 
                                                                           
Treasury shares            (89,994)     (85,133)      (71,007)           - 
                                                                           
Share premium              290,506      290,506       290,506      290,506 
                                                                           
Other reserves              93,340       90,355        87,245       84,134 
                                                                           
Retained earnings          714,279      711,602       696,811      705,885 
                                                                           
                         1,063,109    1,062,308     1,058,533    1,135,503 
                                                                           
                                                                           
                                                                           
Non-current                                                                
liabilities:                                                               
                                                                           
Deferred tax                                                               
liabilities                 42,153       41,234        39,394       39,585 
                                                                           
Interest bearing loans                                                     
and borrowings              73,591       84,150        95,497      116,810 
                                                                           
Retirement severance                                                       
provision                    1,656        1,566         1,566        1,271 
                                                                           
Deferred revenues and                                                      
accruals                         -            1             1            - 
                                                                           
Other                           28          707            47          137 
                                                                           
                           117,428      127,658       136,505      157,803 
                                                                           
                                                                           
                                                                           
Current liabilities:                                                       
                                                                           
Retirement severance                                                       
provision                      128           79            79           75 
                                                                           
Accounts payable           102,743      114,107       115,352      119,068 
                                                                           
Short-term borrowings       42,445       42,479        42,633       21,195 
                                                                           
Provisions                   6,833        7,534         9,719        1,328 
                                                                           
Deferred revenues and                                                      
accruals                    35,914       41,654        36,674       46,230 
                                                                           
                           188,063      205,853       204,457      187,896 
                                                                           
                                                                         - 
                                                                           
Total equity and                                                           
liabilities              1,368,600    1,395,819     1,399,495    1,481,202 
                                                                           
                                                                           
                                                                           
Weighted average number                                                    
of shares (1)           53,346,374   53,989,122    54,191,128   54,977,535 
                                                                           

 

(1) number of shares has changed following the share buy-back program.

 

* In the financial statements for the year 2008 the Company has changed the
presentation of deferred tax assets and liabilities. The comparable data as at
30 June 2008 were restated thereupon.


Unconsolidated income statement for three and six months ended 30 June 2009

 

                       Three months   Six months   Three months   Six months
                              ended        ended          ended        ended
                                                                            
                       30 June 2009 30 June 2009   30 June 2008 30 June 2008
                          unaudited    unaudited      unaudited    unaudited
                                                                            
                                                                            
                                                                            
Sales                      224,522      439,078        268,045      524,810 
                                                                            
Cost of sales             (128,513)    (250,185)      (130,053)    (264,078)
                                                                            
Gross profit                96,009      188,893        137,992      260,732 
                                                                            
                                                                            
                                                                            
Selling expenses           (65,260)    (132,342)       (93,546)    (177,863)
                                                                            
Administrative                                                              
expenses                   (16,701)     (37,674)       (30,356)     (55,839)
                                                                            
Other operating                                                             
income                       1,896        3,882          2,296        3,779 
                                                                            
Other operating                                                             
expenses                    (5,458)      (7,771)        (2,241)      (4,026)
                                                                            
Operating profit            10,486       14,988         14,145       26,783 
                                                                            
                                                                            
                                                                            
Finance income               5,174       24,223         27,039       33,404 
                                                                            
Finance costs              (11,560)     (16,471)        (8,651)     (16,047)
                                                                            
Profit before income                                                        
taxes                        4,100       22,740         32,533       44,140 
                                                                            
                                                                            
                                                                            
Income tax expense          (1,423)      (5,272)        (4,370)      (8,701)
                                                                            
Net profit for the                                                          
period                       2,677       17,468         28,163       35,439 
                                                                            
                                                                            
                                                                            
Earnings per share                                                          
(in PLN)                      0.05         0.33           0.51         0.64 
                                                                            

 

 

Unconsolidated statement of comprehensive income for three and six months ended
30 June 2009

 

                             Three months  Six months Three months  Six months
                                    ended       ended        ended       ended
                                                                              
                                              30 June                  30 June
                             30 June 2009        2009 30 June 2008        2008
                                unaudited   unaudited    unaudited   unaudited
                                                                              
                                                                              
                                                                              
Profit net                         2,677      17,468       28,163      35,439 
                                                                              
                                                                              
                                                                              
Other comprehensive income                                                    
for the period                         -           -            -           - 
                                                                              
                                                                              
                                                                              
Total comprehensive income                                                    
for the period                     2,677      17,468       28,163      35,439 
                                                                              

 

 


Unconsolidated statement of changes in equity for three and six months ended 30
June 2009

                                             Share      Treasury        Share        Other        Retained       Total
                                           capital        shares      premium     reserves        earnings      equity
                                                                                                                      
Three months ended 30 June 2009                                                                                       
                                                                                                                      
                                                                                                                      
                                                                                                                      
As at 31 March 2009                                                                                                   
unaudited                                  54,978       (85,133)     290,506       90,355         711,602   1,062,308 
                                                                                                                      
                                                                                                                      
                                                                                                                      
Net profit                                      -             -            -            -           2,677       2,677 
                                                                                                                      
Total comprehensive income for the                                                                                    
period                                          -             -            -            -           2,677       2,677 
                                                                                                                      
Share-based payments                            -             -            -        2,985               -       2,985 
                                                                                                                      
Share buy-back for their redemption             -        (4,861)           -            -               -      (4,861)
                                                                                                                      
Dividends declared                              -             -            -            -               -           - 
                                                                                                                      
                                                                                                                      
                                                                                                                      
As at 30 June 2009                                                                                                    
unaudited                                  54,978       (89,994)     290,506       93,340         714,279   1,063,109 
                                                                                                                      
                                                                                                                      
                                                                                                                      
Six months ended 30 June 2009                                                                                         
                                                                                                                      
As at 31 December 2008                                                                                                
audited                                    54,978       (71,007)     290,506       87,245         696,811   1,058,533 
                                                                                                                      
                                                              -            -            -               -           - 
                                                                                                                      
Net profit                                      -             -            -            -          17,468      17,468 
                                                                                                                      
Total comprehensive income for the                                                                                    
period                                          -             -            -            -          17,468      17,468 
                                                                                                                      
Share-based payments                            -             -            -        6,095               -       6,095 
                                                                                                                      
Share buy-back for their redemption             -       (18,987)           -            -               -     (18,987)
                                                                                                                      
                                                                                                                      
                                                                                                                      
As at 30 June 2009                                                                                                    
unaudited                                  54,978       (89,994)     290,506       93,340         714,279   1,063,109 
                                                                                                                      


Unconsolidated statement of changes in equity for three and six months ended 30
June 2009 (continued)

                                             Share      Treasury        Share        Other        Retained       Total
                                           capital        shares      premium     reserves        earnings      equity
                                                                                                                      
Twelve months ended 31 December 2008                                                                                  
                                                                                                                      
                                                                                                                      
                                                                                                                      
As at 31 December 2007                                                                                                
audited                                    54,978             -      290,506       64,015         697,935   1,107,434 
                                                                                                                      
                                                                                                                      
                                                                                                                      
Net profit                                      -             -            -            -          26,365      26,365 
                                                                                                                      
Total comprehensive income for the                                                                                    
period                                          -             -            -            -          26,365      26,365 
                                                                                                                      
Share-based payments                            -             -            -       23,230               -      23,230 
                                                                                                                      
Share buy-back for their redemption             -       (71,007)           -            -               -     (71,007)
                                                                                                                      
Dividends declared                              -             -            -            -         (27,489)    (27,489)
                                                                                                                      
                                                                                                                      
                                                                                                                      
As at 31 December 2008                                                                                                
audited                                    54,978       (71,007)     290,506       87,245         696,811   1,058,533 
                                                                                                                      
                                                                                                                      
                                                                                                                      
Six months ended 30 June 2008                                                                                         
                                                                                                                      
                                                                                                                      
                                                                                                                      
As at 31 December 2007                                                                                                
audited                                    54,978             -      290,506       64,015         697,935   1,107,434 
                                                                                                                      
Net profit                                      -             -            -            -          35,439      35,439 
                                                                                                                      
Total comprehensive income for the                                                                                    
period                                          -             -            -            -          35,439      35,439 
                                                                                                                      
Share-based payments                            -             -            -       20,119               -      20,119 
                                                                                                                      
Dividends declared                              -             -            -            -         (27,489)    (27,489)
                                                                                                                      
                                                                                                                      
                                                                                                                      
As at 30 June 2008                                                                                                    
unaudited                                  54,978             -      290,506       84,134         705,885   1,135,503 
                                                                                                                      

 


Unconsolidated cash flow statement for three and six months ended 30 June 2009

 

                                        Three       Six     Three       Six
                                       months    months    months    months
                                        ended     ended     ended     ended
                                                                           
                                      30 June   30 June   30 June   30 June
                                         2009      2009      2008      2008
                                    unaudited unaudited unaudited unaudited
                                                                           
Cash flows from operating                                                  
activities                                                                 
                                                                           
Profit before income taxes             4,100    22,740    32,533    44,140 
                                                                           
Adjustments for:                                                           
                                                                           
Depreciation of property, plant and                                        
equipment                              8,841    17,465    10,658    21,100 
                                                                           
Amortization of intangible assets      1,928     3,653     1,537     2,978 
                                                                           
Foreign exchange (gain) /loss          9,409    (4,870)    2,625     7,783 
                                                                           
Interest, net                            337     1,054     1,486     2,703 
                                                                           
(Profit) / loss on investing                                               
activities                             8,543    10,573        31      (410)
                                                                           
Dividend income                      (10,889)  (10,889)  (20,990)  (20,990)
                                                                           
(Decrease) / increase in provisions     (562)   (2,747)       81       101 
                                                                           
(Increase) / decrease in                                                   
inventories                           (1,007)   (1,422)      419     2,715 
                                                                           
(Increase) / decrease in                                                   
receivables and prepayments            6,540    10,100    (4,592)   (9,954)
                                                                           
(Decrease) / increase in payables     (4,874)   (7,854)  (14,257)  (16,568)
                                                                           
(Decrease) / increase in deferred                                          
revenues and accruals                 (5,740)     (760)     (856)    6,573 
                                                                           
Other adjustments (1)                  3,524     7,033    10,207    20,492 
                                                                           
Cash generated from operations        20,150    44,076    18,882    60,663 
                                                                           
                                                                           
                                                                           
Income taxes paid                       (465)   (1,580)   (8,981)  (13,088)
                                                                           
Net cash from operating activities    19,685    42,496     9,901    47,575 
                                                                           
                                                                           
                                                                           
Cash flows from investing                                                  
activities                                                                 
                                                                           
Proceeds from sale of property,                                            
plant and equipment, and                                                   
intangibles                               22       589        13        77 
                                                                           
Dividends received                     5,889     5,889    14,000    14,000 
                                                                           
Repayment of loans granted                 -         -       103       205 
                                                                           
Interest received                      1,026     2,124       793     2,069 
                                                                           
Disposal of short-term securities          -         -         -    63,431 
                                                                           
Repayment of finance lease                                                 
receivables                            2,064     4,182     1,314     2,718 
                                                                           

 


 

Unconsolidated cash flow statement for three and six months ended 30 June 2009
(cont.)

 

                                        Three       Six     Three       Six
                                       months    months    months    months
                                        ended     ended     ended     ended
                                                                           
                                      30 June   30 June   30 June   30 June
                                         2009      2009      2008      2008
                                    unaudited unaudited unaudited unaudited
                                                                           
Purchase of property plant and                                             
equipment, and intangibles            (7,334)  (16,017)  (11,613)  (20,067)
                                                                           
Acquisition of subsidiary (net of                                          
cash acquired) associates and                                              
jointly controlled entities                -    (1,235) (117,471) (119,501)
                                                                           
Acquisition of short-term                                                  
securities                           (30,000)  (90,000)        -         - 
                                                                           
Loans granted                         (2,794)   (4,276)     (731)     (973)
                                                                           
Net cash used in investing                                                 
activities                           (31,127)  (98,744) (113,592)  (58,041)
                                                                           
                                                                           
                                                                           
Cash flows from financing                                                  
activities                                                                 
                                                                           
Repurchase of own shares              (7,580)  (18,987)        -         - 
                                                                           
Repayment of borrowings              (10,729)  (21,458)        -         - 
                                                                           
Interest paid                         (1,363)   (3,178)   (2,291)   (4,392)
                                                                           
Other                                 (1,320)   (1,647)   (1,589)   (1,624)
                                                                           
Net cash used in financing                                                 
activities                           (20,992)  (45,270)   (3,880)   (6,016)
                                                                           
                                                                           
                                                                           
Net increase / (decrease) in cash                                          
and cash equivalents                 (32,434) (101,518) (107,571)  (16,482)
                                                                           
                                                                           
                                                                           
Cash and cash equivalents                                                  
                                                                           
At start of period                   175,948   245,032   399,228   308,139 
                                                                           
At end of period                     143,514   143,514   291,657   291,657 
                                                                           

 

 (1) "other adjustments" include mainly non-cash share-based payment costs

 

Additional information to unconsolidated financial statements of Agora SA

In the period from January 1, 2009 to June 30, 2009 (in brackets the amounts
for the second quarter of 2009) the following impairment losses and provisions
were changed:

impairment loss for receivables: increase by PLN 815 thousand (increase by PLN
166 thousand),

impairment loss for financial assets, including impairment loss on GRA shares
in the amount of 7,766 thousand: increase by PLN 14,172 thousand (increase by
PLN 10,526 thousand),

impairment loss for inventory: increase by PLN 2,527 thousand (increase by PLN
1,357 thousand),

provision for certain and probable losses: increase by PLN 1,153 thousand
(increase by PLN 923 thousand),

provision for reorganization: decrease by PLN 2,153 thousand (decrease by PLN
419 thousand),

provision for the costs connected with the sentence passed by the
Constitutional Tribunal concerning sick benefits: used in the amount of PLN 186
thousand (used in amount of PLN 40 thousand),

provision for the remuneration and severances for the former Management Board
Members: used in the amount of PLN 1,700 thousand (used in the amount of PLN
1,164 thousand),

impairment loss on fixed assets and intangibles: decrease by PLN 1,203 thousand
(no change),

retirement severance provision: increase by PLN 139 thousand (increase by PLN
139 thousand).


 

Selected unconsolidated financial data together with translation into EURO

 

                            PLN                                EURO                
                         thousand                            thousand              
                                                                                   
            Six months   As at 31   Six months  Six months   As at 31   Six months 
             ended 30    December    ended 30    ended 30    December    ended 30  
             June 2009     2008     June 2008*   June 2009     2008     June 2008* 
             unaudited    audited    unaudited   unaudited    audited    unaudited 
                                                                                   
                                                                                   
                                                                                   
Sales          439,078                 524,810      97,176                 150,912 
                                                                                   
Operating       14,988                  26,783       3,317                   7,702 
profit                                                                             
                                                                                   
Profit                                                                             
before          22,740                  44,140       5,033                  12,693 
income                                                                             
taxes                                                                              
                                                                                   
Net profit                                                                         
for the         17,468                  35,439       3,866                  10,191 
period                                                                             
                                                                                   
Net cash                                                                           
from            42,496                  47,575       9,405                  13,680 
operating                                                                          
activities                                                                         
                                                                                   
Net cash                                                                           
used in        (98,744)                (58,041)    (21,854)                (16,690)
investing                                                                          
activities                                                                         
                                                                                   
Net cash                                                                           
used in        (45,270)                 (6,016)    (10,019)                 (1,730)
financing                                                                          
activities                                                                         
                                                                                   
Net                                                                                
increase /                                                                         
(decrease)    (101,518)                (16,482)    (22,468)                 (4,739)
in cash and                                                                        
cash                                                                               
equivalents                                                                        
                                                                                   
Total        1,368,600   1,399,495   1,481,202     306,202     335,417     441,596 
assets                                                                             
                                                                                   
Non-current    117,428     136,505     157,803      26,273      32,716      47,046 
liabilities                                                                        
                                                                                   
Current        188,063     204,457     187,896      42,076      49,002      56,018 
liabilities                                                                        
                                                                                   
Equity       1,063,109   1,058,533   1,135,503     237,853     253,699     338,532 
                                                                                   
Share           54,978      54,978      54,978      12,300      13,177      16,391 
capital                                                                            
                                                                                   
Weighted                                                                           
average     53,346,374  54,191,128  54,977,535  53,346,374  54,191,128  54,977,535 
number of                                                                          
shares                                                                             
                                                                                   
Earnings                                                                           
per share         0.33                    0.64        0.07                    0.19 
(in PLN /                                                                          
in EURO)                                                                           
                                                                                   
Book value                                                                         
per share        19.93       19.53       20.65        4.46        4.68        6.16 
(in PLN /                                                                          
in EURO)                                                                           
                                                                                   

 

* In the financial statements for the year 2008 the Company has changed the
presentation of deferred tax assets and liabilities. The comparable data as at
30 June 2008 were restated thereupon.

 


 

Warsaw, 13 August 2009

 

Piotr         ........................................................
Niemczycki -                                                          
President of                                                          
the                                                                   
Management                                                            
Board                                                                 
                                                                      
Zbigniew Bak  ........................................................
- Deputy                                                              
President of                                                          
the                                                                   
Management                                                            
Board                                                                 
                                                                      
Tomasz        ........................................................
Jozefacki -                                                           
Member of the                                                         
Management                                                            
Board                                                                 
                                                                      
Grzegorz      ........................................................
Kossakowski                                                           
-  Member of                                                          
the                                                                   
Management                                                            
Board                                                                 
                                                                      

 

 

 

 


                                         

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