AS Ekspress Grupp: Consolidated unaudited interim report for the Fourth Quarter and 12 Months of 2020
The year 2020 as a whole was successful for AS Ekspress Grupp: despite the state of emergency and the economic uncertainty related to the corona crisis, the Group managed to strengthen its positions and significantly improve profitability. The revenue over the 12-month period decreased by 6% to EUR 63.2 million and net profit increased by 80% to EUR 2.5 million as compared to 2019. The share of the Group's digital revenue was 49% of the total revenue and 71% of the media segment revenue.
In the fourth quarter of 2020, the revenue of AS Ekspress Grupp totalled EUR 18.4 million and net profit totalled EUR 1.6 million. Considering the ongoing pandemic, the financial results of the Group were very strong in the 4th quarter. The revenue in the media segment demonstrated a strong recovery - as compared to the previous year, revenue remained at the same level, i.e. EUR 13 million. The media segment revenue for the entire year totalled EUR 43.7 million which is only 1% lower as compared to the previous year. The media segment revenue benefited from the strong sales of both online advertising as well as digital subscriptions.
The Group's 12-month revenue totalled EUR 63 million which is 6% lower than a year ago. The six per cent revenue drop is primarily related to the state of emergency in the 2nd quarter and the revenue drop of the printing services segment throughout the year.
In the 4th quarter, the digital revenue of Ekspress Grupp increased and accounted for 71% of the Group's media segment revenue and 49% of the Group's total revenue. In 2020, the volume of digital subscriptions of AS Ekspress Grupp increased by 73% in the Baltic States and was more than 81 thousand at the end of the year. The year 2020 was a breakthrough year for us in all of our markets in terms of the digital subscription growth of our periodicals. The key reason for subscription growth was the change in the people's attitudes and habits as well as the major changes and processes occurring in the society. Paying for high-quality digital content in one's native language is becoming a norm these days. The general background also supported the change – dissemination of fake news and conspiracy theories on social media platforms has in turn laid importance on objective journalism in the society.
Earnings before interest, tax, depreciation and amortisation (EBITDA) of Ekspress Grupp totalled EUR 2.4 million in the 4th quarter which is EUR 0.7 million lower as compared to the 4th quarter of 2019. Due to the ongoing impact of the COVID-19 crisis on the economic situation, in the 4th quarter of 2020 the Group recognised a one-off impairment loss of property, plant and equipment in the amount of EUR 1.0 million and one-off public measures related to the corona crisis in the amount of EUR 0.4 million. The 12-month EBITDA totalled EUR 7.0 million, increasing by 3% year-over-year. While over the 12-month period, the Group's revenue was ca EUR 4.2 million lower as compared to 2019, primarily due to the impact of the COVID-19 pandemic, cost savings in the same period totalled EUR 5.4 million.
The Group's net profit totalled EUR 1.6 million in the 4th quarter and EUR 2.5 million over the 12-month period. The fourth quarter results were positively impacted by ongoing cost savings, revenue recovery and the adjustment of fair value of the unpaid future liability of the acquisition price of the ticket sales platform which was recognised as one-off financial income in the amount of EUR 0.7 million. The net profit earned in 2020 is 80% higher as compared to the previous year.
The state of emergency related to the COVID-19 crisis has impacted the activities of the Latvian ticket sales platform the most. The Latvian government has set a 50% limit on the occupancy rate of movie theatres and in November, a new state of emergency was declared that will last at least until 4 April 2021. Due to the state of emergency, all events have been cancelled as a result of which the activities of the ticket sales platform are considerably impaired. However, the ticket sales platform has been able to focus on the development of its web platform.
The Group’s liquidity continues to be strong. As of 31 December 2020, the Group's available cash totalled EUR 6.3 million (31.12.2019: EUR 3.6 million). Liquidity was positively impacted by the grace periods granted by banks, periodisation of the tax payment liability and the salary subsidy received from the Estonian Unemployment Insurance Fund. For the Group, it is important to maintain its liquidity position as the future scope of the crisis related to the coronavirus is still unknown in 2021.
The Management Board makes a proposal not to distribute the profit for 2020 as the Group's goal is to continue to make investments in order to grow its digital business line. The strategic focus of AS Ekspress Grupp is the development of the highest quality and most effective media organisation, growth of its digital business both organically and through new acquisitions as well as maintaining its leadership position in print media as many readers still prefer the printed format in addition to digital media.
SUMMARY OF THE RESULTS OF THE FOURTH QUARTER AND 12 MONTHS
In accordance with International Financial Reporting Standards (IFRS), 50% joint venture should be recognised under the equity method in the consolidated financial statements. To provide a clearer uniform overview of the financial statements to the readers of the financial statements, from the 1st quarter of 2020, only the information relating to the joint ventures recognised under the equity method is presented in the financial statements and their results are shown as one line in the finance income.
The consolidated revenue for the 4th quarter of 2020 totalled EUR 18.4 million (4th quarter 2019: EUR 19.7 million). Revenue decreased by 7% year-over-year in the 4th quarter. The consolidated revenue for the 12 months of 2020 totalled EUR 63.2 million (12 months of 2019: EUR 67.5 million). For the full year the digital revenue accounted for 49% of total revenue and 71% of media segment revenue (12 months 2019: 45% of total revenue and 69% of media segment revenue, respectively).
In the 4th quarter of 2020, the consolidated EBITDA totalled EUR 2.45 million (4th quarter 2019: EUR 3.20 million) and in the 12 months of 2020, the consolidated EBITDA totalled EUR 7.00 million (12 months 2019: EUR 6.77 million). In the 4th quarter of 2020, EBITDA decreased by 23% year-over-year and the EBITDA margin was 13.3% (4th quarter 2019: 16.2%) and in the 12 months of 2020, EBITDA increased by 3% as compared to the previous year and the EBITDA margin was 11.1% (12 months 2019: 10.0%). Due to the continuing impact of COVID-19 on the economic situation, the Group has recognized a one-time impairment of property, plant and equipment in the amount of EUR 1.0 million in the 4th quarter of 2020. Profitability was positively impacted by cost savings implemented throughout the entire Group the 2nd to the 4th quarter and the salary subsidy of the Estonian Unemployment Insurance Fund in the amount of EUR 1.14 million that was received in the 2nd quarter and was accrued as income in the second, third and fourth quarters. The salary subsidy accounted for EUR 0.41 million of the EBITDA in the 4th quarter of 2020 and EUR 1.14 million of the EBITDA in the 12 months of 2020. Compared to 2019, the Group has lost approximately EUR 4.2 million in sales revenue, mainly due to the impact of the COVID-19 pandemic, while EUR 5.4 million have been saved in expenses compared to the same period.
In the 4th quarter of 2020, the consolidated net profit totalled EUR 1.61 million (4th quarter 2019: EUR 1.65 million) and for the 12 months of 2020 totalled EUR 2.54 million (12 months 2019: EUR 1.41) which is EUR 1.13 million and 80% higher than in 2019. The net profit of the 4th quarter was positively impacted by the continuous cost savings, the recovery of sales revenue and the adjustment of fair value of unpaid future liability of the acquisition price of the ticket sales platform, which was recognized as a one-off financial income of EUR 0.7 million.
At the end of the reporting period, the Group had available cash in the amount of EUR 6.3 million and equity in the amount of EUR 54.6 million (58% of total assets). The comparable data as of 31 December 2019 were EUR 3.6 million and EUR 51.6 million (54% of total assets), respectively. As of 31 December 2020, the Group’s net debt totalled EUR 15.9 million (31 December 2019: EUR 20.7 million). Due to the state of emergency related to COVID-19, the Group concluded an agreement with AS SEB Pank to suspend loan payments in the period March-August 2020 (EUR 1.2 million) and with AS Citadele banka in the period of June-November 2020 (EUR 0.3 million). The salary subsidy received from the Estonian Unemployment Insurance Fund (EUR 1.14 million) and the postponement of the payment of tax arrears (EUR 1.60 million) due to the state of emergency for the period of 24 months had an additional positive impact on the Group's cash position.
Key financial indicators for segments
| ||Q4 2020||Q4 2019||Change %||12 months 2020||12 months 2019||Change %|
|Media segment||13 061||13 441||-3%||43 728||44 218||-1%|
| incl. revenue from all digital and online channels||9 625||9 842||-2%||30 963||30 534||1%|
| incl. % of revenue from all digital and online channels||74%||73%|| ||71%||69%|| |
|Printing services segment||5 670||6 906||-18%||21 384||25 695||-17%|
|Corporate functions||1 032||518||99%||2 761||2 076||33%|
|Inter-segment eliminations||(1 387)||(1 180)|| ||(4 629)||(4 533)|| |
|TOTAL GROUP||18 377||19 685||-7%||63 243||67 456||-6%|
|incl. % of revenue from all digital and online channels||52%||50%|| ||49%||45%|| |
| ||Q4 2020||Q4 2019||Change %||12 months 2020||12 months 2019||Change %|
|Media segment||3 110||2 978||4%||6 601||5 966||11%|
|Printing services segment||790||567||39%||2 224||2 032||9%|
|Corporate functions||(394)||(296)||-33%||(720)||(1 150)||37%|
|Inter-segment eliminations*||(1 058)||(52)|| ||(1 101)||(75)|| |
|TOTAL GROUP||2 448||3 196||-23%||7 004||6 772||3%|
* Due to continuing impact of COVID-19 on economical situation the group has recognised an impairment loss for property, plant and equipment in amount of EUR 1.0 million in the 4th quarter 2020.
|EBITDA margin||Q4 2020||Q4 2019||12 months 2020||12 months 2019|
|Printing services segment||14%||8%||10%||8%|
Consolidated balance sheet (unaudited)
|ASSETS|| || |
|Current assets|| || |
|Cash and cash equivalents||6 269||3 647|
|Trade and other receivables||9 450||12 705|
|Corporate income tax prepayment||7||0|
|Inventories||2 756||3 120|
|Total current assets||18 482||19 472|
|Non-current assets|| || |
|Other receivables and investments||982||975|
|Deferred tax asset||30||38|
|Investments in joint ventures||1 661||1 254|
|Investments in associates||2 253||2 356|
|Property, plant and equipment||14 134||14 943|
|Intangible assets||56 635||56 369|
|Total non-current assets||75 696||75 935|
|TOTAL ASSETS||94 177||95 407|
|LIABILITIES|| || |
|Current liabilities|| || |
|Borrowings||3 613||5 100|
|Trade and other payables||15 251||16 483|
|Corporate income tax payable||81||65|
|Total current liabilities ||18 945||21 647|
|Non-current liabilities || || |
|Long-term borrowings||18 589||19 242|
|Other long-term liabilities||2 025||2 895|
|Total non-current liabilities||20 613||22 137|
|TOTAL LIABILITIES||39 558||43 784|
|EQUITY|| || |
|Capital and reserves attributable to equity holders of parent company:|| || |
|Share capital||18 478||17 878|
|Share premium||14 277||14 277|
|Reserves||1 758||1 688|
|Retained earnings||20 189||17 701|
|Total capital and reserves attributable to equity holders of parent company||54 493||51 522|
|TOTAL EQUITY ||54 619||51 622|
|TOTAL LIABILITIES AND EQUITY||94 177||95 407|
Consolidated statement of comprehensive income (unaudited)
|(EUR thousand)||Q4 2020||Q4 2019||12 months 2020||12 months 2019|
|Sales||18 377||19 685||63 243||67 456|
|Cost of sales||(13 312)||(14 660)||(50 637)||(54 044)|
|Gross profit||5 065||5 025||12 607||13 412|
|Other income||784||157||2 040||607|
|Marketing expenses||(752)||(814)||(2 701)||(3 124)|
|Administrative expenses||(2 379)||(2 156)||(7 532)||(8 024)|
|Other expenses||(1 232)||(94)||(1 336)||(148)|
|Operating profit /(loss)||1 485||2 119||3 078||2 722|
|Other finance income/(costs)||675||(24)||614||(61)|
|Net finance cost||465||(249)||(235)||(823)|
|Profit/(loss) on shares of joint ventures||(5)||(22)||102||(38)|
|Profit/(loss) on shares of associates||(54)||(17)||(129)||(114)|
|Profit /(loss) before income tax||1 891||1 831||2 816||1 746|
|Income tax expense||(277)||(186)||(280)||(339)|
|Net profit /(loss) for the reporting period||1 614||1 645||2 536||1 407|
|Net profit /(loss) for the reporting period attributable to|| || || || |
|Equity holders of the parent company||1 603||1 637||2 510||1 394|
|Total comprehensive income /(loss)||1 614||1 645||2 536||1 407|
|Comprehensive income /(loss) for the reporting period attributable to || || || || |
|Equity holders of the parent company||1 603||1 637||2 510||1 394|
|Basic earnings per share||0.05||0.05||0.08||0.05|
|Diluted earnings per share||0.05||0.05||0.08||0.05|
Consolidated cash flow statement (unaudited)
|(EUR thousand)||12 months 2020||12 months 2019|
|Cash flows from operating activities|| || |
|Operating profit for the reporting year||3 078||2 722|
|Adjustments for:|| || |
|Depreciation and amortisation||3 968||4 070|
|Gain from change in ownership interest in subsidiary||0||(31)|
|(Gain)/loss on sale, write-down and impairment of property, plant and equipment||986||(4)|
|Cash flows from operating activities:|| || |
|Trade and other receivables||3 274||(2 929)|
|Trade and other payables||(1 201)||3 594|
|Cash generated from operations||10 480||7 684|
|Income tax paid||(263)||(270)|
|Net cash generated from operating activities ||9 314||6 675|
|Cash flows from investing activities || || |
|Acquisition of subsidiaries/ associates (less cash acquired)||(342)||(6 648)|
|Purchase and receipts of other investments||16||9|
|Cash paid-in/ received from equity-accounted investees||(83)||(63)|
|Purchase of property, plant and equipment and intangible assets||(2 562)||(2 775)|
|Proceeds from sale of property, plant and equipment and intangible assets||308||19|
|Loan repayments received||0||303|
|Net cash used in investing activities ||(2 841)||(9 259)|
|Cash flows from financing activities|| || |
|Payment of lease liabilities||(949)||(978)|
|Change in overdraft||(1 018)||(265)|
|Notes issued||0||5 000|
|Loans received / Repayments of bank loans||(1 884)||1 207|
|Proceeds from share issuance||600||0|
|Purchases of treasury shares||(600)||0|
|Net cash used in financing activities ||(3 851)||4 964|
|NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS||2 621||2 379|
|Cash and cash equivalents at the beginning of the year||3 647||1 268|
|Cash and cash equivalents at the end of the year||6 269||3 647|
AS Ekspress Grupp
Phone: +372 669 8381
AS Ekspress Grupp is the leading media group in the Baltic States whose key activities include web media content production, publishing of newspapers and magazines and provision of printing services in Estonia, Latvia and Lithuania. The Group also manages the electronic ticket sales platform and ticket sales sites in Latvia. Ekspress Grupp that launched its operations in 1989 employs almost 1600 people, owns leading web media portals in the Baltic States and publishes the most popular daily and weekly newspapers as well as the majority of the most popular magazines in Estonia.