REG-Agora S.A.: Half-yearly Report
* Reuters is not responsible for the content in this press release.
This document is a free translation of the Polish original. Terminology current
in Anglo-Saxon countries has been used where practicable for the purposes of
this translation in order to aid understanding. The binding Polish original
should be referred to in matters of interpretation.
INDEPENDENT AUDITORS' REVIEW REPORT
ON THE CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS OF
AGORA S.A. GROUP
FOR THE PERIOD
FROM 1 JANUARY 2009 TO 30 JUNE 2009
To the Shareholders of Agora S.A.
Introduction
We have reviewed the accompanying condensed interim consolidated financial
statements of Agora S.A. Group, with its registered office in Warsaw, ul.
Czerska 8/10 that consist of the consolidated balance sheet as at 30 June 2009,
with total assets and total liabilities and equity of PLN 1,545,266 thousand,
the consolidated income statement for the period from 1 January 2009 to 30 June
2009 with a net profit of PLN 12,818 thousand, the consolidated statement of
comprehensive income for the period from 1 January 2009 to 30 June 2009 with a
total comprehensive income of PLN 13,014 thousand, the consolidated statement
of changes in equity for the period from 1 January 2009 to 30 June 2009 with an
increase in equity of PLN 1,053 thousand, the consolidated cash flow statement
for the period from 1 January 2009 to 30 June 2009 with a decrease in cash
amounting to PLN 108,619 thousand, and notes to the condensed interim
consolidated financial statements.
Management of Agora S.A. is responsible for the preparation and presentation of
these condensed interim consolidated financial statements in accordance with
the International Accounting Standard 34 "Interim Financial Reporting" as
adopted by the European Union and other applicable regulations. Our
responsibility is to express a conclusion on these condensed interim
consolidated financial statements, based on our review.
Scope of Review
We conducted our review in accordance with Standard No. 4 of the professional
standards General principles for the review of financial statements, issued by
the Polish National Council of Certified Auditors and with the International
Standard on Review Engagements 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity. A review consists of making
inquiries, primarily of persons responsible for financial and accounting
matters and applying analytical and other review procedures. A review is
substantially less in scope than an audit and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the accompanying condensed interim consolidated financial
statements of Agora S.A. Group are not prepared, in all material respects, in
accordance with International Accounting Standard 34 "Interim Financial
Reporting" as adopted by the European Union.
Signed on the Polish original
.........................................................
On behalf of KPMG Audyt Sp. z o.o.
ul. Chłodna 51, 00-867 Warsaw
Certified Auditor No. 90046
Marcin Domagała,
Member of the Management Board
27 August 2009
Warsaw, Poland
AGORA GROUP
Condensed
semi-annual consolidated financial statements
as at 30 June 2009 and for 6 month period ended thereon
August 27, 2009
(all amounts in PLN thousands unless otherwise indicated)
translation only
Consolidated balance sheet as at 30 June 2009
As at 30 As at 31 As at 30
June 2009 December 2008 June 2008*
unaudited audited unaudited
Assets
Non-current assets:
Intangible assets 397,462 396,986 412,357
Property, plant and equipment 630,612 650,692 629,483
Investments 246 248 245
Investments in equity
accounted investees 1,215 399 1,328
Receivables and prepayments 7,470 6,802 6,816
Deferred tax assets 8,025 10,692 14,158
1,045,030 1,065,819 1,064,387
Current assets:
Inventories 20,668 18,861 14,498
Accounts receivable and
prepayments 230,877 244,860 272,295
Income tax receivable 2,094 5,271 1,572
Short-term securities and
other financial assets 91,473 7 1,020
Cash and cash equivalents 155,124 263,743 301,422
500,236 532,742 590,807
Total assets 1,545,266 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 semi-annual
consolidated financial statements.
Consolidated balance sheet as at 30 JUNE 2009 (Continued)
As at 30 As at 31 As at 30
June 2009 December 2008 June 2008*
Note unaudited audited unaudited
Equity and liabilities
Equity attributable to equity
holders of the parent:
Share capital 54,978 54,978 54,978
Treasury shares (89,994) (71,007) -
Share premium 290,506 290,506 290,506
Foreign currency translation
reserve 159 (37) 11
Retained earnings and other
reserves 913,255 892,771 905,918
1,168,904 1,167,211 1,251,413
Minority interest (733) (93) (631)
Total equity 1,168,171 1,167,118 1,250,782
Non-current liabilities:
Deferred tax liabilities 43,373 41,121 39,565
Interest bearing loans and
borrowings 3 73,591 95,497 116,810
Retirement severance provision 1,945 1,829 1,456
Deferred revenues and accruals 47 101 441
118,956 138,548 158,272
Current liabilities:
Retirement severance provision 136 91 98
Accounts payable 140,141 167,611 156,139
Income tax liabilities 49 20 269
Short-term borrowings 3 58,190 59,736 21,461
Provisions 13,517 14,975 2,818
Deferred revenues and accruals 46,106 50,462 65,355
258,139 292,895 246,140
Total equity and liabilities 1,545,266 1,598,561 1,655,194
Weighted average number of
shares (1) 53,346,374 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 semi-annual
consolidated financial statements.
Consolidated income statement for six months ended 30 June 2009
Six months Six months
ended ended
30 June 2009 30 June 2008
Note unaudited unaudited
Sales 4 572,182 657,096
Cost of sales (346,279) (354,019)
Gross profit 225,903 303,077
Selling expenses (143,274) (177,961)
Administrative expenses (55,061) (72,194)
Other operating income 6,917 6,184
Other operating expenses (13,893) (6,337)
Operating profit 4 20,592 52,769
Finance income 6,264 11,578
Finance costs (5,404) (8,706)
Share of results of equity accounted
investees (423) (702)
Profit before income taxes 21,029 54,939
Income tax expense (8,211) (14,869)
Net profit for the period 12,818 40,070
Attributable to:
Equity holders of the parent 13,351 40,208
Minority interests (533) (138)
12,818 40,070
Earnings per share (in PLN) 0.25 0.73
Accompanying notes are an integral part of these condensed semi-annual
consolidated financial statements.
Consolidated statement of COMPREHENSIVE INCOME for SIX months ended
30 JUNE 2009
Six months Six months
ended ended
30 June 2009 30 June 2008
unaudited unaudited
Profit for the period 12,818 40,070
Foreign currency translation differences for
foreign companies 196 32
Other comprehensive income for the period 196 32
Total comprehensive income for the period 13,014 40,102
Attributable to:
Equity holders of the parent 13,547 40,240
Minority interest (533) (138)
13,014 40,102
Accompanying notes are an integral part of these condensed semi-annual
consolidated financial statements.
Consolidated statement of changes in equity for SIX months ended 30 JUNE 2009
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 semi-annual
consolidated financial statements.
Consolidated statement of changes in equity for 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 semi-annual
consolidated financial statements.
Consolidated statement of changes in equity for 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 semi-annual
consolidated financial statements.
Consolidated cash flow statement for SIX months ended 30 JUNE 2009
Six months Six months
ended ended
30 June 30 June
2009 2008
unaudited unaudited
Cash flows from operating activities
Profit before income taxes 21,029 54,939
Adjustments for:
Share of results of equity accounted investees 423 702
Depreciation of property, plant and equipment 33,809 36,059
Amortization of intangible assets 6,778 4,145
Interest, net 3,622 4,393
(Profit) / loss on investing activities (1,240) (731)
(Decrease) / increase in provisions (1,297) (221)
(Increase) / decrease in inventories (1,807) 3,003
(Increase) / decrease in receivables and prepayments 13,239 (17,792)
(Decrease) / increase in payables (10,080) (11,241)
(Decrease) / increase in deferred revenues and
accruals (4,387) 2,406
Other adjustments (1) 8,197 23,928
Cash generated from operations 68,286 99,590
Income taxes (paid) / returned (2,449) (17,415)
Net cash from operating activities 65,837 82,175
Cash flows from investing activities
Proceeds from sale of property, plant and equipment,
and intangibles 1,860 79
Loan repayment received - 7
Interest received - 399
Disposal of short-term securities - 63,431
Purchase of property plant and equipment, and
intangibles (37,445) (56,991)
Acquisition of subsidiary (net of cash acquired)
associates and jointly controlled entities (1,235) (118,747)
Acquisition of short-term securities (90,000) -
Loans granted (4) -
Net cash used in investing activities (126,824) (111,822)
Consolidated cash flow statement for SIX months ended 30 JUNE 2009 (continued)
Six months Six months
ended ended
30 June 2009 30 June 2008
unaudited unaudited
Cash flows from financing activities
Proceeds from borrowings 422 266
Repurchase of own shares (18,987) -
Dividends paid to minority shareholders (1,051) (910)
Repayment of borrowings (22,816) -
Interest paid (3,622) (4,393)
Other (1,578) (1,554)
Net cash used in financing activities (47,632) (6,591)
Net increase / (decrease) in cash and cash
equivalents (108,619) (36,238)
Cash and cash equivalents
At start of period 263,743 337,660
At end of period 155,124 301,422
(1) "other adjustments" include mainly non-cash share-based payment costs
Accompanying notes are an integral part of these condensed semi-annual
consolidated financial statements.
Notes to the condensed SEMI-ANNUAL consolidated financial statements as at 30
JUne 2009 and for 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
six months ended 30 June 2009, with comparative figures presented as at and
for six months ended 30 June 2008.
The financial statements were authorized for issue by the Management Board of
Agora SA on August 27, 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 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 Semi-annual 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 with amendments).
In the preparation of these condensed semi-annual 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 Semi-annual 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.
Reconciling 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 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)
Six months ended 30 June 2009
Reconciling
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 reconciling positions.
(2) the amounts do not include revenues and total cost of cross-promotion of
Agora's different media if such promotion is executed without prior reservation
between segments of the Agora Group; the direct variable cost of campaigns
carried out on advertising panels is the only cost that is included above; it
is allocated from the Outdoor segment to other segments.
(3) reconciling positions show data not included in particular segments, inter
alia: other cost and the result on other operating activities of Agora's
support divisions 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
Reconciling
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
Reconciling
Newspapers Internet Magazines Outdoor Radio positions Total
Property, plant and equipment and intangible
assets (3) 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;
(3) reconciling positions include Company's headquarter (PLN 153,487 thousand)
and other property, plant and equipment and intangible assets of Agora's
support divisions and Agora TC Sp. z o.o. not included in particular segments
and intercompany eliminations.
4. Sales and segment information (continued)
Six months ended 30 June 2008
Reconciling
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 reconciling positions.
(2) the amounts do not include revenues and total cost of cross-promotion of
Agora's different media if such promotion is executed without prior reservation
between segments of the Agora Group; the direct variable cost of campaigns
carried out on advertising panels is the only cost that is included above; it
is allocated from the Outdoor segment to other segments.
(3) reconciling positions show data not included in particular segments, inter
alia: other cost and the result on other operating activities of Agora's
support divisions 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
Reconciling
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
Reconciling
Newspapers Internet Magazines Outdoor Radio positions Total
Property, plant and equipment and intangible
assets (3) 315,452 129,718 73,829 267,981 68,548 186,313 1,041,840
(1) is not presented in operating result of the Group's segments.
(2) based on invoices booked in the period;
(3) reconciling positions include Company's headquarter (PLN 151,325 thousand)
and other property, plant and equipment and intangible assets of Agora's
support divisions and Agora TC Sp. z o.o. not included in particular segments
and intercompany eliminations.
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:
Six months ended 30 June Six months ended 30 June
2009 2008
Income statement - staff
cost 7,133 23,596
Equity 7,133 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):
Six months ended 30 June Six months ended 30 June
2009 2008
At the beginning of the
period 966,967 1,247,227
Granted - -
Forfeited (12,831) (9,713)
Vested (954,136) (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 Time interval No. of
period 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 first half of 2009, the non-cash expense of the investment certificates
acquired by the Management Board, recognized according to IFRS 2, amounted to
PLN 810 thousand (in the firt 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):
Six months ended 30 June Six months ended 30 June
2009 2008
At the beginning of the 342,326 1,780,554
period
Granted - -
Forfeited (3,023) (944)
Vested (186,934) (1,437,284)
At the end of the period 152,369 342,326
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.D.2 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:
- impairment loss for receivables: increase by PLN 2,762 thousand,
- impairment loss for inventory: increase by PLN 2,516 thousand,
- impairment loss for property, plant and equipment and intangible
assets: decrease by PLN 2,168 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,
- provision for reorganization: decrease by PLN 3,286 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,
- provision for the remuneration and severances for the former
Management Board Members: used in the amount of PLN 1,700 thousand,
- retirement severance provision: 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 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 31 Dec Provisions
June 2008 booked
2009
Guarantees provided by
Agora SA
Bank Pekao SA Agora's 30 Jun 2009 691 608 -
employees - 20 Apr
2012
Bills of exchange
issued by AMS SA
Gmina Wroclaw AMS SA 30 Jun 2009 752 752 -
/ 31 Dec
2009
Przedsiebiorstwo AMS SA 31 Dec 2011 100 100 -
Komunikacji Miejskiej,
Katowice
Gmina Miasto Szczecin AMS SA indefinite 90 120 -
period
Miejskie Zakłady AMS SA 31 Dec 2009 80 - -
Autobusowe 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 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:
Six months ended 30 June Six months ended 30 June
2009 2008
Related companies
Sales 226 249
Purchases of goods and
services (466) (420)
Other operating income 63 112
As at 30 June As at 31 December As at 30 June
2009 2008 2008
Related
companies
Receivables 69 136 264
Dividends
payable - - 4,013
Other payables 68 159 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)
31 Dec 30 June
Subsidiaries consolidated 30 June 2009 2008 2008
1 Agora Poligrafia Sp. z o.o., Tychy 100.0% 100.0% 100.0%
2 Art Marketing Syndicate SA (AMS), Warsaw 100.0% 100.0% 100.0%
3 IM 40 Sp. z o.o., Warsaw 72.0% 72.0% 72.0%
4 Grupa Radiowa Agory Sp. z o.o., Warsaw 100.0% 100.0% 100.0%
5 Agencja Reklamowa Jowisz Sp. z o.o., Warsaw
(1) 100.0% 100.0% 100.0%
6 Adpol Sp. z o.o., Warsaw (2) 100.0% 100.0% 100.0%
7 Akcent Media Sp. z o.o., Poznan (2) 100.0% 100.0% 100.0%
8 Inforadio Sp. z o.o., Warsaw 66.1% 66.1% 66.1%
9 Agora TC Sp. z o.o., Warsaw 100.0% 100.0% 100.0%
10 Radiowe Doradztwo Reklamowe Sp. z o.o.,
Warsaw (4) 100.0% 100.0% 100.0%
11 LLC Agora Ukraine, Kiev, Ukraine 100.0% 100.0% 100.0%
12 Media System Sp. z o.o., Warsaw (2) 100.0% 100.0% 100.0%
13 Trader.com (Polska) Sp. z o.o., Warsaw 100.0% 100.0% 100.0%
14 Agora Press Ltd., Kiev, Ukraine (3) 100.0% 100.0% -
15 Barys Sp. o.o., Warsaw (1), (5) - - 100.0%
16 Radio Trefl Sp. z o.o., Warsaw (1), (5) - - 100.0%
Jointly controlled entities accounted for the
equity method
15 A2 Multimedia Sp. z o.o., Warsaw 50.0% 50.0% 50.0%
Companies excluded from consolidation and
equity accounting
16 Polskie Badania Internetu Sp. z o.o., Warsaw 20.0% 20.0% 20.0%
17 Projekt Inwestycyjny Sp. z o.o., Warsaw 100.0% 100.0% 100.0%
18 Polskie Badania Outdooru Sp. z o.o., Warsaw
(2) 41.0% 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.
(5) companies merged with GRA Sp. z o.o. on December 1, 2008
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 amount 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 SEMI-ANNUAL
consolidated financial statements and condensed SEMI-ANNUAL 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.
Warsaw, 27 August 2009
Piotr Niemczycki - President of the Signed on the Polish
Management Board original
Zbigniew Bak - Deputy President of the Signed on the Polish
Management Board original
Tomasz Jozefacki - Member of the Management Signed on the Polish
Board original
Grzegorz Kossakowski - Member of the Signed on the Polish
Management Board original
Signature of the person responsible for keeping the accounting records
Anna Kacprowicz - Chief Accountant Signed on the Polish original
END
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