AGORA GROUP Management Discussion and Analysis for the year 2019 to the consolidated financial statements March 12, 2020 [www.agora.pl] Page 1 Agora Group Management Discussion and Analysis for the year 2019 to the consolidated financial statements translation only TABLE OF CONTENTS MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) FOR YEAR OF 2019 TO THE FINANCIAL STATEMENTS.............. 5 I. IMPORTANT EVENTS AND FACTORS WHICH INFLUENCE THE FINANCIALS OF THE GROUP [1] ............................. 5 II. EXTERNAL AND INTERNAL FACTORS IMPORTANT FOR THE DEVELOPMENT OF THE GROUP .............................. 8 1. EXTERNAL FACTORS ........................................................................................................................................... 8 1.1 Advertising market [3] ..................................................................................................................................... 8 1.2 Copy sales of dailies [4] ............................................................................................................................... 9 1.3 Cinema admissions [10] ............................................................................................................................... 9 2. INTERNAL FACTORS ......................................................................................................................................... 10 2.1. Revenue .................................................................................................................................................... 10 2.2. Operating cost .......................................................................................................................................... 12 3. PROSPECTS ....................................................................................................................................................... 15 3.1 Revenue ..................................................................................................................................................... 15 3.1.1 Advertising market [3] ....................................................................................................................... 15 3.1.2 Copy sales .......................................................................................................................................... 15 3.1.3 Ticket sales ......................................................................................................................................... 16 3.2 Operating cost ........................................................................................................................................... 16 3.2.1 Costs of external services................................................................................................................... 16 3.2.2 Staff cost ............................................................................................................................................ 16 3.2.3 Promotion and marketing cost .......................................................................................................... 17 3.2.4 Cost of raw materials and energy ...................................................................................................... 17 4. THE GROWTH DIRECTIONS OF THE AGORA GROUP ........................................................................................ 17 5. INFORMATION ON CURRENT AND EXPECTED FINANCIAL SITUATION OF THE GROUP ................................... 18 III. FINANCIAL RESULTS ........................................................................................................................................... 19 1. THE AGORA GROUP ......................................................................................................................................... 19 2. PROFIT AND LOSS ACCOUNT OF THE AGORA GROUP ..................................................................................... 19 2.1. Revenues .................................................................................................................................................. 21 2.2. Financial results presented according to major segments of the Agora Group for 2019 [1] ................... 21 2.3. Sales and markets ..................................................................................................................................... 22 2.4. Suppliers ................................................................................................................................................... 22 2.5. Finance cost, net ....................................................................................................................................... 22 3. BALANCE SHEET OF THE AGORA GROUP ......................................................................................................... 23 3.1. Non-current assets ................................................................................................................................... 23 3.2. Current assets ........................................................................................................................................... 23 3.3. Non-current liabilities and provisions ...................................................................................................... 24 3.4. Current liabilities and provisions .............................................................................................................. 24 4. CASH FLOW STATEMENT OF THE AGORA GROUP ........................................................................................... 24 4.1. Operating activities................................................................................................................................... 25 4.2. Investment activities ................................................................................................................................ 25 4.3. Financing activities ................................................................................................................................... 25 5. SELECTED FINANCIAL RATIOS [5] ..................................................................................................................... 26 IV. OPERATING REVIEW - MAJOR SEGMENTS OF THE AGORA GROUP .................................................................. 27 IV.A. MOVIES AND BOOKS [1] .............................................................................................................................. 27 1. Revenue [3] ...................................................................................................................................................... 28 2. Cost .................................................................................................................................................................. 29 3. New initiatives ................................................................................................................................................. 30 IV.B. PRESS [1] ......................................................................................................................................................... 33 1. Revenue ........................................................................................................................................................... 34 1.1. Copy sales ................................................................................................................................................. 34 1.2. Advertising sales [3] .................................................................................................................................. 35 1.3. Printing services........................................................................................................................................ 35 2. Cost .................................................................................................................................................................. 35 3. New initiatives ................................................................................................................................................. 36 IV.C. OUTDOOR ....................................................................................................................................................... 38 [www.agora.pl] Page 2 Agora Group Management Discussion and Analysis for the year 2019 to the consolidated financial statements translation only 1. Revenue [8] ...................................................................................................................................................... 39 2. Cost .................................................................................................................................................................. 39 3. New initiatives ................................................................................................................................................. 40 IV.D. INTERNET [1], [6] ............................................................................................................................................ 42 1. Revenue ........................................................................................................................................................... 42 2. Cost .................................................................................................................................................................