Investor presentation September 2005 Consolidated figures according to International Financial Reporting Standards (IFRS)
IMPROVING ECONOMIC PICTURE Construction drives growth of industrial output Retail sales up significantly 3 18.5% 2 13.2% 21.8% 29.9% 17. 3 2 Lower spending on durables due to summer vacation 1 4.6% 2.3% -3.7% -1% 0.9% 6.9% 2.6% 1 7.5% 2. 8. 10.5% 5. -1-3.8% -0.3% -2-17.7% -1-3 Jan '05 Feb '05 Mar '05 Apr '05 May '05 Jun '05 Jul '05-2 -14. Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul '05 Industrial output (not corrected for seasonal factors) Construction Retail sales / current prices Jobs and salaries are growing New car sales are volatile 5% 4.5% 2 0.2% 3% 2% 1% 2.6% 1. 1.6% 1. 2.2% 1.6% 1.8% 1.7% 3. 1.6% 1.7% 3.2% 1.8% -2-4 -23.7% -34. -38.8% -57.1% -19.6% -10.7% Jan '05 Feb '05 Mar '05 Apr '05 May '05 Jun '05 Jul '05 Employment in companies Average income (gross) in companies 2 Source: Central Statistical Office, IBRM SAMAR -6 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul '05 No. of cars
MORE OPTIMISTIC ECONOMIC FORECASTS GDP growth CPI 5% 3.7% 4. 3% 2.9% 3% 2% 2. 2% 2.1% 1.5% 1% 1% 1H 2005 2005 AF 2006 F 1H 2005 2005 AF 2006 F 12% 1 8% Company investments 7. 10. 3% Individual consumption 2.8% 3.7% 6% 2% 1.6% 2% 2.6% 1% 1H 2005 2005 AF 2006 F 1H 2005 2005 AF 2006 F 3 Source: Central Statistical Office, Ministry of Finance - Budget assumptions for the year 2006
ADVERTISING MARKET CONTINUES TO GROW 18% 16% TV budgets shift to dailies 17% 1 12% 1 Total ad spend in 1H 2005 grew by ca.1 13% Deceleration driven by lower growth rate of TV 1 12% 1 8% 6% 2% 12% 11% 8% 8% TV Newspapers 6% 1Q 2005 2Q 2005 2% 4 35% 3 Strong growth in smaller media 3 1Q 2005 2Q 2005 25% 2 15% 1 8% 7% 13% 13% 11% 5% 4 Source: Agora s estimates adjusted for average discount rate (data in current prices). The estimates refer to advertising expenditures in four media (TV, print, radio and outdoor), which in case of print do not include classifieds, inserts and obituaries. The estimates are based on rate card data of AGB Polska monitoring, Expert Monitor monitoring, Agora monitoring and Izba Gospodarcza Reklamy Zewnetrznej (IGRZ) monitoring. Magazines Outdoor Radio 1Q 2005 2Q 2005
TV RUNS AT FULL CAPACITY % usage 10 TV inventory sell-out rates % usage 10 Prime time and off peak in commercial TV 9 8 8 7 6 6 5 4 3 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 Prime time (commercial TVN and Polsat) Prime time (public TVP1 and TVP2) 4 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Prime time Off peak One-week advertising break thou 90 Number of TV spots % usage Prime time and off peak in public TV 80 6 70 60 4 50 40 2 30 20 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 10 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 Commercial TVN and Polsat Public TVP1 and TVP2 5 Source: AGB Polska
ALL KEY ADVERTISING CATEGORIES PICKED UP Total ad spend growth in 1H 2005 Newspaper ad spend growth in 1H 2005 TOTAL! 240 million! 58 million Biggest contributors Biggest contributors Health & beauty 71 Retail 20 Retail Package goods 40 50 Automotive 9 of growth 9 of growth 16 Automotive 26 Employment 9 Telecom 25 Announcments 7 Fastest growing Fastest growing Retail!3 Retail!62% Employment!2 Automotive Telecoms!28%!26% Health & beauty!18% Finanace!23% 6 Employment Source: Agora s estimates adjusted for average discount rate (data in current prices). The estimates refer to advertising expenditures in four media (TV, print, radio, outdoor), which in case of print do not include classifieds, inserts and obituaries. The estimates are based on rate card data of AGB Polska, Expert Monitor and Izba Gospodarcza Reklamy Zewnetrznej (IGRZ) monitoring. The comparisons refer to 1H 2005 and 1H 2004.!21%
PRINT IS STILL VOLUME DRIVEN 3 000 2 500 Print will not reach 2000 level in 2005 2 000 1 500 1 000 1H 2000 1H 2005 constant prices + 1H 2005 current prices 500 0 TOTAL TV Dailies Magazines Outdoor Radio 7 Source: Agora s estimates adjusted for average discount rate (data in current prices). The estimates refer to advertising expenditures in four media (TV, print, radio, outdoor), which in case of print do not include classifieds, inserts and obituaries. The estimates are based on rate card data of AGB Polska, CR Media, Expert Monitor, Monitoring of Agora, AMS based on Media Watch and IGRZ. CPI adjustments based on Central Statistical Office data for 2000, 2001, 2002, 2003, 2004 and 1H 2005.
AGORA S PERFORMANCE TAKES OFF 120 100 80 60 40 20 Strong operating results Net earnings grow significantly yoy change "13.5pp 2 90 80 15% 70 60 1 50 40 30 5% 20 10 100 yoy change "473.9% "680.5% "12.4pp 2 15% 1 5% 0 0 1H 2004 1H 2005 1H 2004 1H 2005 EBIT EBIT margin Net prof it Net margin 120 100 Growth in free cash flow "165.7% 18% 16% 1 Return on equity ahead of Re 80 12% 60 1 8% 40 6% 20 2% 0 8 1H 2004 1H 2005 Free cash flow Capex 1H 2004 1H 2005 Re Return on equity
GROWTH IN SCALE CHANGES COMPOSITION OF REVENUES AND COST Revenues Operating cost 700 600 600 +11.3% "29.7% 500 +67.2% "11. 500 400 +37.1% 400 300-2.6% 300 200-0.8% 200-15.8% -11.2% PLN 4 million dedicated to development 100 +987. 100 +16.3% 0 1H 2004 1H 2005 0 1H 2004 1H 2005 advertising circulation books other materials promotion staff cost D&A other 9 Source: Consolidated figures according to International Financial Reporting Standards (IFRS)
MAJOR LINES OF BUSINESS GROW STRONGER THE GROUP Revenues PLN 615.9 million EBITDA PLN 154.8 million NEWSPAPER SEGMENT % of total yoy % growth 61% 7% PLN 139.6 million 60.6% EBITDA margin 28.7% 4.4pp 18% 987% 10 Source: Consolidated figures according to International Financial Reporting Standards (IFRS), 1H 2005. Newspaper segment includes: Gazeta Wyborcza, Metro, Internet, books, as well as cost of overhead.
MAJOR LINES OF BUSINESS GROW STRONGER THE GROUP Revenues PLN 615.9 million EBITDA PLN 154.8 million OUTDOOR % of total yoy % growth 11% 2 PLN 16.4 million EBITDA margin 2 507. 19.2pp Scale of operations increases! Over 1500 new citylight panels in three big cities! Fully operational by e/o June 2006! Investment of PLN 10 million 11 Source: Consolidated figures according to International Financial Reporting Standards (IFRS), 1H 2005
MAGAZINES AND RADIOS ARE SMALL MARKET PLAYERS THE GROUP Revenues PLN 615.9 million EBITDA PLN 154.8 million MAGAZINES % of total yoy % growth! Ad revenues in line with the market 7% 3% PLN 1.8 million EBITDA margin 3.9%! Copy sales decline reflecting market trend! Successful new magazines RADIO! Advertising share steady! Extra investment to improve 17% PLN (0.3) million long-term results! Slightly negative in 2005 12 Source: Consolidated figures according to International Financial Reporting Standards (IFRS), 1H 2005
NEWSPAPERS GROW CIRCULATION AND MARKET SHARE Circulation of Gazeta strengthens Metro nearly doubles its circulation thou copies 600 #5.5% thou copies 600 19 cities since mid April 2005 500 "5% Gazeta 500 400 Fakt Super Express 400 Metro Metropol 300 300 #9% 200 200 100 1H05 100 Jan Feb March April May June No of readers (thou) 7000 "8% Readership Advertising position 6000 5000 "1% Fakt Gazeta Other 36% Gazeta 43% -0.6pp 4000 3000 2000 1000 #8% "177% #6% Super Express Metro Rzeczpospolita Fakt 6.5% Rzeczpospolita Metro Super Express 9.5% 1% 0 1H05 13 Source: copy sales, circulation: ZKDP (Circulation Audit Office); readership: Polish Readership Research (PBC General), Millward Brown Company SMG/KRC, weekly readership, January June 2005, N=18 081, N=18 017; advertising: Agora, estimated data (current prices) corrected for average discount rate based on Agora Monitoring. The comparisons refer to 1H 2005 and 1H 2004.
BOOKS INCREASE VOLATILITY OF RESULTS Start of the project Duration of the project Accounting method (according to IFRS):! Cost booked when incurred (incl. first free volume)! Revenues booked when received! Profit in late phase of each project 1M 2M 3M 4M 5M 6M 7M 8M 9M 10M 11M 12M 13M 14M 15M 16M 17M 18M 19M 20M Revenues Costs Q1 Q2 Q3 Q4 Q1 Q2 The graph does not refer to real numbers it was prepared for illustrative purposes only. 14
WHAT TO EXPECT AHEAD IN 2005 Diminishing effect of base Expansion impacts results Accounting impact! Lower rate of revenue growth in 2H 2005! Books add cost and increase volatility and seasonality effects! IFRS 2 share based payments write-off to be booked in 4Q 2005! Cost cuts already reflected in 2H 2004 results! Upfront development new projects increase cost base! Improved cost base due to lower D&A but risk of provisions after impairment 15
GROWTH IS THE COMPANY S OVERARCHING PRIORITY Dividend payout! PLN 0.5 per share or PLN 28 million on 2nd September 2005 550 500 450 Immediate funds availability 400 Share buy-back back 350! Value: PLN 120 million! Timing: August 18, 2005 June 30, 2006 300 250 200 500 million operating cash 2H05 funds + = available! Method: main market (through the broker); no block 150 100 Dividend and share buy-back transactions; shares to be cancelled 50 0 2004 1H 2005 Credit line Net cash 16