RZECZPOSPOLITA POLSKA REPUBLIC OF POLAND THE PRESIDENT OF POLAND LECH KACZYNSKI.
February/March 2007 - Gazeta.plbi.gazeta.pl/im/0/4587/m4587400.pdf · Gazeta Dziennik...
Transcript of February/March 2007 - Gazeta.plbi.gazeta.pl/im/0/4587/m4587400.pdf · Gazeta Dziennik...
Investor presentationInvestor presentation
February/March 2007February/March 2007
2
REVIEW OF 2006: REVENUE AND PROFIT CONTRIBUTORS
EBIT structure
0
10
20
30
40
50
EBIT Newspaper segmentexcl. books
Books Magazines Outdoor Radio Other
Agora Group
Newspapers*
Books
Magazines
Outdoor
Radio
Otherincl. premises
PLN mln
Revenue structure
Source: consolidated financial statements according to IFRS, 2006; segment data include inter-segment transactions* include: Gazeta Wyborcza, Metro, Internet and overhead cost of the Agora Group
0
Gazeta
Books
Magazines
Outdoor
Metro
Internet Radio
+22 mln
+5 mln
+10 mln
+20 mln
-7 mln
-10 mln
2006
PLN
40
mln
3
REVIEW OF 2006: FINANCIAL PERFORMANCE
4.1%
5.7%
yoy % change
42.8
-68.4
yoy PLN mln change
1 094.1
1 133.7
2006PLN mln
Operating cost
Revenue
Source: consolidated financial statements according to IFRS, 2005, 2006 * excluding non-cash cost of share-based payments
yoy PLN mln changeyoy % change2006PLN mln
74.3%
40.2%
73.7%
-101.7151.2Operating EBITDA*
-94.1
-111.2
32.6
39.6EBIT
Net profit
yoy PLN mln changeyoy change2006PLN mln
0.30.7%42.2CAPEX
-80.943.4%105.4Free cashflow
8.4pp
36.2% -83.3147.1Operating cashflow
-2.8%ROE
4
REVIEW OF 2006: SALES
700
800
900
1000
1100
1200
1300
Source: consolidated financial statements according to IFRS, 2005, 2006 * excl. advertising and some publication sales which are included in „advertising” and „copy sales” categories
yoy PLN mln change
2006
Advertising
Copy sales
Books*
Other
2005
43mln
60mln
58mln7mln 68mln
PLN
1 2
02 m
ln
PLN
1 1
34 m
ln
PLN mlnGazeta’s price reduction
Newspapers grow belowtotal market rate
TOTALPLN 68.4 mln
Two hits in 2005: encyclopedia and
travelogs
5
700
800
900
1000
1100
1200
REVIEW OF 2006: OPERATING EXPENSES
Source: consolidated financial statements according to IFRS, 2005, 2006 * includes PLN 5.1 mln of restructuring cost
Marketing
Staff
Other*
Materials
D&A
2005 2006
26mln
43mln
45mln
9mln
40mln
19mln
PLN
1 0
51 m
ln
PLN
1 0
94 m
ln
PLN mln
Incentive plansConsolidation of more radios Some salary risesCompetitive battle in the
newspaper market Books with DVDs
TOTALPLN 42.8 mln
yoy PLN mln change
Production
22mln
Revamped TV Guide
6
REVIEW OF 2006: MARKET ACCOMPLISHMENTS
Source: copy sales: ZKDP, Apr 18-30 - Dec 31, 2006; readership: Polskie Badania Czytelnictwa, MillwardBrown SMG/KRC, Oct-Dec 2006, N=11 525, CCS index (weekly readership), *CPW index (Average Issue Readership); print advertising: Agora, estimated data corrected for average discount rate based on the monitoring of Agora; the data include paid-for and free dailies; financials: consolidated financial statements according to IFRS, 2006
100
200
300
400
500
18-30 Apr May Jun Jul Aug Sep Oct Nov Dec
Gazeta
Dziennik
Rzeczpospolita
thou. copies
Gazeta’s copy sales versus Dziennik and Rzeczpospolita
Protected franchise of Gazeta• Strong readership – 5.8 mln readers in 4Q 2006
• Growing circulation (480 K in Dec., up 77 K yoy)
• Solid advertising share at 41%
Protected franchise of Gazeta• Strong readership – 5.8 mln readers in 4Q 2006
• Growing circulation (480 K in Dec., up 77 K yoy)
• Solid advertising share at 41%
Metro grew scale and reach • 3-rd most widely read newspaper in Poland*• Main competitor withdraws from the market in January 2007
Metro grew scale and reach • 3-rd most widely read newspaper in Poland*• Main competitor withdraws from the market in January 2007
Internet accelerates expansion • 12 new services launched or revamped in 2006 • Ambitious growth plan for 2007-2008
Internet accelerates expansion • 12 new services launched or revamped in 2006 • Ambitious growth plan for 2007-2008
8.5%
18.3%19.2%
0%
10%
20%
Gazeta W yborcza Fakt Metro
no. o
f rea
ders
5.8
mln
% reachWeekly readership reach in 4Q 2006
5.5
mln
2.5
mln
AMS continues to grow • 1.78 thou. new faces in 2006 (1.71 thou. demolished) • Solid revenues of PLN 151 mln and profitability at 22%
AMS continues to grow • 1.78 thou. new faces in 2006 (1.71 thou. demolished) • Solid revenues of PLN 151 mln and profitability at 22%
2006
7
REVIEW OF 2006: COST REDUCTION PROGRAM
8 mlnExternal services
18 mlnPayroll
5 mlnMaterials and energy
Main areas:
13 mlnOverhead/corp utilities
22 mlnBusinesses
Cost reduction PLN 35 mln
4 mlnPromo expenses
Metro – monetize position
Internet operations – accelerate growth
Gazeta – editorial and product enhancements
Operating investments
AMS – expand network
Risk factors
Pressure on salaries following market trends
New competition in the newspaper market
Pressure on salaries following market trends
New competition in the newspaper market
8
8.5%
3.1%
4.7%5.1%5.3%
5.6%
4.5%
5.2%
4.0%
5.4%4.8%
3.6%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Average wage (gross) in PLN
PREVIEW OF 2007: THE ECONOMY
5.1%5.8%
12.0%
16.7%
0%
5%
10%
15%
20%
2006 2007F
6.3%5.5% 5.8%
5.2%4.5%4.1%
3.0%2.4%
19.3%19.8%
14.8%
7.7%
10.1%
6.4%
3.9%
1.2%
0%
5%
10%
15%
20%
1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06F
GDP growthCompany investments
GDP and company investments
Source: Central Statistical Office (GDP and company investments for 2006 - preliminary data); forecasts: Ministry of Finance, 2007 forecast as of 29 November 2006, 4Q06 forecast as of 17 January 2007; volume of Gazeta’s recruitment ads: monitoring of Agora
yoy % changeyoy % change
Average wage growth in companies Volume of Gazeta’s recruitment ads
22.1%20.7%
15.5%
19.5%
13.6%
10.4%11.2%9.5%
0
20
40
60
80
100
120
1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q060%
5%
10%
15%
20%
25%thou yoy % change
Unemployment rate
14.9%
15.2%
15.9%
17.8%17.6%17.6%
18.0%
19.2%
12%
14%
16%
18%
20%
1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06
Unemployment rate (end of period)
12.3%14.9%
0%
4%
8%
12%
16%
2006 2007F
yoy % change
2006
5.1% average annual growth
9
PREVIEW OF 2007: ADVERTISING MARKET
0
1000
2000
3000
4000
5000
6000
7000PLN mln
10%
11%
5%
10%
42%
2006 vs 2005 % change
3%
10%
Ad market structure in 2007
Source: the estimates are adjusted for average discount rate; 2006: Starlink estimates (TV and Internet), IGRZ (outdoor), Agora’s estimates based on Expert Monitor and monitoring of Agora (press and radio); 2007 estimates: Agora
0pp9%
OutdoorOutdoor
0pp9%
RadioRadio
1pp5%
InternetInternet
1pp15%
DailiesDailies
1pp16%
MagazinesMagazines
1ppyoy pp change47%% shareTV TV
12%
20062007E
12%
10%
59%
3%
5%
TV
Magazines
Dailies
Radio
Outdoor
Internet
2007 vs 2006 % change
10
PREVIEW OF 2007: OTHER FACTORS
Operations
Business seasonality deepens
Higher newsprint price, but cost of production materials 2% down (subject to f/x rate)
Non-cash
Share-based compensation down to PLN 28 million in 2007; volatile quarters (PLN 0.8 mln in 3Q 2007)
And keep in mind
1Q 2006 high revenue base – cover price cut in April 2006
No cost of Nowy Dzień in 2007 (PLN 26 million in 2006; provision set in 1Q 2006)
Collections deepen volatility of quarters
Source: consolidated financial statements according to IFRS, 2006
110
100
200
300
400
500
2001 2002 2003 2004 2005
0
2
4
6
8
10
2001 2002 2003 2004 2005Asia
Europe
North AmericaOther*
0
100
200
300
400
500
2001 2002 2003 2004 2005
Source: WAN, World Press Trends 2006, update January 2007 * other include: Africa, South America, Australia & Oceania
0
2
4
6
8
10
2001 2002 2003 2004 2005
Asia
Europe
North AmericaOther*
thou titles 13.2%
mln copies 6.4%
thou titles 14.2%
mln copies 10.0%
2.8%
0.7%
3.3%
2.4%
PREVIEW OF 2007: WORLD TRENDS DEFY CONVENTIONAL WISDOM
Paid-for dailies: titles and circulation
Total number of paid-for and free newspapers up 14% over the last 5 years
Total circulation of paid-for dailies up 6%over 5 years and 0.7 yoy
More than 450 million copies sold daily
In excess of 1.4 billion paid-for newspaper readers
More than 6 billion euros invested innewspaper technology in the past 5 years –new genres of newspapers, newaudiences, marketing and distributionscenarios
Paid-for and free dailies: titles and circulation
2005 vs 2004 % change
2005 vs 2004 % change
2005 vs 2001 % change
2005 vs 2001 % change
12
100
200
300
400
500
Fakt
Gazeta
Super ExpressDziennik
Rzeczpospolita
8.0%8.3%
18.3%19.2%
0%
5%
10%
15%
20%
25%
Gazeta
Fakt
Super Express
Dziennik
PREVIEW OF 2007: GAZETA
Other38%
Dziennik3%
Super Express3% Fakt
7%
Rzeczpospolita8%
Gazeta41%
0.8pp
0.9pp
0.8pp1.0pp
yoy pp change
2006
Copy sales and readership in 4Q 2006thou copies
2007
no. o
f rea
ders
5.8
mln
2.4
mln
5.5
mln
2.5
mln
Premier brand and franchise
Strong national and local presence (content and ads)
Proven promo strategies
Advertising breadth andinnovationsAdvertising share in 2006
High circulation
Copy price strategies
Protect ad share
Improve profitability andenhance sales
Leverage synergies with Metro and online
% reach
Source: copy sales: ZKDP, Oct-Dec 2006; readership: Polskie Badania Czytelnictwa, MillwardBrown SMG/KRC, CCS index (weekly readership), Oct-Dec 2006, N=11 525; print advertising: Agora, estimated data corrected for average discount rate based on the monitoring of Agora; the data include paid-for and free dailies
13.3%
7.4%
7.6%
5.9%
N/A
0.7pp
yoy % change
13
Weekly readership reach
PREVIEW OF 2007: METRO
Leverageleadership position – grow adsales
Introduceinnovative advertising formsand new supplements (Metro City)
Improve distributionefficiencyReach break-evenin 2008
2006 2007
0
10
20
30
40
2005 2006
Metro
Metropol
PLN mln
Advertising performance
55%
2%
26%
yoy % change
0%
5%
10%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Metro
Metropol
% reach
Source: readership: Polskie Badania Czytelnictwa, MillwardBrown SMG/KRC, Jan-Dec 2006, N=44 929, CCS index (weekly readership), **CPW index (Average Issue Readership); print advertising: Agora, estimated data corrected for average discount rate based on the monitoring of Agora
* distributed every day (Monday thru Friday)
Shut down in Jan 2007
Now the only national freedaily in the market*
#3 most read overall**
Tested formula: innovativeeditorial and marketingapproach
2006
14
2005 2006
8.4 mln
9.8 mln
0
50
100
150
200
2005 20060
6
12
18
24
RevenuesEBIT
PREVIEW OF 2007: BOOK COLLECTIONS
2006 2007
Maintain scale
Continueinnovating newcollections
Brand extensionsin other media
Increase margins
Volumes sold
Financial performancePLN mln PLN mln
14%
32%77%
Market innovator; ahead onthe learning curve
Leverages brand andfranchise strength
Ongoing innovation basedon reader input
Source: consolidated financial statements according to IFRS, 2005, 2006
yoy % change
yoy % change
15 Source: Megapanel PBI/Gemius, December 2006; internal statistics
PREVIEW OF 2007: INTERNET
5 mln users 120 thou. blogs,1.6 mln users
#2 job service,15 thou. job ads,
0.8 mln users
#1 real estate vortal,0.5 mln users
#1 newspaper online service,1 mln users
Gazeta.pl mobile service
Own video production,150 videos weekly,
0.4 mln users
1.3 mln users,56 mln posts
16
0
2
4
6
8
10
November 2006 December 2006
0,0
0,2
0,4
0,6
0,8
1,0
December 2006
GazetaDom.plGratka.pl/dom
0
1
2
3
4
5
Nov ember 2006 December 2006
PREVIEW OF 2007: INTERNET (CONT’d)
#3 player in reach and ad share intwo years
Revenue growth 3times in 2 years
Leadership inclassifieds
New internet-basedbusinesses, includingadvanced audiovisualcontent
Accelerated investments in 2007:growth of revenue and cost
2006 2007
Gazeta.pl reach vs market leader
Source: Megapanel PBI/Gemius
Attractive target group
Strong brands
Rich content: editorial andclassifieds
Commitment and resourcesto invest
72% 71%
38% 36%
29%
41%
28%
46%mln
real
use
rs
Online communities
27%
59%
23%
59%mln
real
use
rs
Recruitment and real estate services
mln
real
use
rs
December 2006
RecruitmentReal estate
Gazeta.pl
Onet.pl
Gazeta.pl
Onet.pl
GazetaPraca.pl
Pracuj.pl
yoy % change
yoy % change
yoy % change 93%136%
100%
180%
17
0
30
60
90
120
150
180
2005 20060%
5%
10%
15%
20%
25%
Rev enues
Operating EBITDA margin
STROER17%CITYBOARD
MEDIA13%
NEWS OUTDOOR
14%
CLEAR CHANNEL
9%
Other20%
AMS*27%
PREVIEW OF 2007: OUTDOOR
PLN mln
Ad market performance
2006 2007
Maintain leadership position– revenue enhancements
Further networkinvestments
Protect marginduring investmentphase
Financial performance
Source: financials: consolidated financial statements according to IFRS, 2005, 2006 ; outdoor advertising: AMS based on Media Watch, 2006 , monitoring in 12 largest agglomerations* out of 27%, 9pp comes from Agora’s media
#1 outdoor company in Poland
Solid profitability
Committed to market innovations and investments
5.4%2.9pp
yoy change
18 Source: financials: consolidated financial statements according to IFRS, 2005, 2006; average copy sales: Agora
PREVIEW OF 2007: MAGAZINES
2006 2007
Maintain copy sales and readership position of theleading titles
Continue improvingtheir financial parameters
Seek new growthopportunities: newtitles
Small but profitable business
Successful launches
Rich source of content
Strong brands
0
20
40
60
2005 20060
200
400
600
800
1000
1200
Revenues from copy sales Copy sales
PLN mlnCopy sales performance
2006
thou copies
2.4%
9.2%
0
20
40
60
80
100
2005 20060
2
4
6
8
10
12
14
Revenues Operating EBITDA
PLN mln5.7%
107.1%
Financial performancePLN mln
yoy % change
yoy % change
19Source: audience share: SMG/KRC A MillwardBrown Company, Jan-Dec 2005 and Jan-Dec 2006, cities of broadcasting; target audiences: Roxy FM: 20-35 years of age, N= 7 155 in 2006, 7 731 in 2005 , ZlotePrzeboje: 30-50 years of age, N= 15 212 in 2006, 16 053 in 2005, TOK FM +15 years of age, N= 31 256 in 2006, 31 321 in 2005; financials: consolidated financial statements according to IFRS, 2005, 2006; does not include TOK FM
PREVIEW OF 2007: RADIO
2.5%
Roxy FM
2006 2007
Key priority:financial performance
Roxy FM: keep growing audience
Golden Oldies: target new audiences
TOK FM: leverageaudience results
Audience share
2.8%
TOK FM
0.7pp
0.4pp 0.8pp
yoy pp change
Clear brand strategy
Revamped operatingstructure
TOK FM’s brand takes off
-10
0
10
20
30
40
50
60
70
2005 2006
Revenues
EBIT
PLN mln
14.7%
44.7%
Financial performance
yoy % change
10.0%
Złote Przeboje (Golden Oldies)
20
PRIORITIES FOR GROWTH: TOPLINE AND SCALE EXPANSION
2006 2007
Apply new tech perspective to
leverage equities and build new activities
Core business
Online business
New activities
on/off line
Strong brands
National/local franchises
Rich multimedia content
Proved promo strategies
Innovative ad forms
Comprehensive salesapproach