Published: 2021-10-29 07:00:00 CEST
Ekspress Grupp
Quarterly report

AS Ekspress Grupp: Consolidated unaudited interim report for the Third Quarter and Nine Months of 2021

In the 3rd quarter of 2021, the revenue of AS Ekspress Grupp totalled EUR 13.3 million and the revenue for the first nine months of the year totalled EUR 37.6 million. The Group’s net profit for the 3rd quarter of 2021 was EUR 1.15 million and the net profit for the first 9 months of the year was EUR 1.82 million. At the end of September, the share of the Group's digital revenue was 74% of total revenue

In the 3rd quarter of 2021, the consolidated revenue totalled EUR 13.3 million (3rd quarter 2020: EUR 10.9 million), increasing by 22%. The revenue growth is attributable to the online advertising market which continues to grow as compared to traditional media channels. The advertising customers have adapted to the circumstances and the growth of the advertising business in all countries demonstrates that the majority of companies have been able to digitalise their businesses more; they have opened or adapted their ways of trading to e-channels and the need to advertise has recovered. However, the revenue of both ticket sales platforms as well as outdoor screens continues to be under pressure which is directly attributable to the effects of the COVID-19 pandemic. The effect is especially evident in the Latvian market where restrictions are currently considerably stricter than in other countries.

The number of the digital subscriptions of AS Ekspress Grupp increased by 75% by the end of September 2021 as compared to the same period last year and was approximately 122 thousand subscriptions.

The additional growth in digital subscriptions is primarily attributable to new customers and it demonstrates that more readers who have not yet become subscribers to the Group's products are being addressed. The Group is able to come up with topics for an increasingly larger number of customers and thus those readers who have read articles for free also decide to sign up for digital subscriptions. The Group has also managed to keep its current digital subscribers for a longer period of time, lowering the share of those cancelling their subscriptions and increasing the average life of the subscription.

The earnings before interest, tax, depreciation and amortisation (EBITDA) of Ekspress Grupp totalled EUR 2.25 million in the 3rd quarter and EUR 5.05 million in the first 9 months of the year which is 38% and 62%, respectively, higher as compared to the same period in 2020. Strong sales of online advertising and digital subscriptions in all Baltic States and continued cost reductions have helped improve profitability. The net profit in the 3rd quarter totalled EUR 1.15 million which is 48% higher than in the same period last year. The net profit for the first 9 months of the year totalled EUR 1.82 million which is six times higher than in the same period last year (9 months 2020: EUR 0.29 million).

At the beginning of September 2021, the Group concluded an agreement to sell Printall AS. The transaction was completed on 6 September 2021, as a result of which the Group incurred a sales loss in the amount of EUR 2.3 million and according to the agreement, after the adjustments to the sales price, the Group received a net amount of EUR 6.3 million. At the beginning of 2026, the Group will receive another EUR 0.7 million, contingent upon the results of Printall in 2025. As a result of the transaction, the Group will exit the business with high CAPEX requirements that is not in line with the Group's digital revenue growth strategy. Availability of new capital will provide additional capacity for the Group to fund the digital area, both organically as well as through making new acquisitions. In this report, Ekspress Grupp presents the results for the 3rd quarter and 9 months of the current year as well as comparable periods in compliance with the requirements of IFRS set for interim reports, i.e. for its continuing operations. The loss from the sale of Printall and its operating results have been recognised as discontinued operations and are included in the Group's comprehensive income statement.

As of 30 September 2021, the Group had available cash in the amount of EUR 12.4 million (30 September 2020: EUR 5.8 million). The Group’s liquidity continues to be good. In order to strengthen the Group’s liquidity position and make more effective use of equity, the Group signed amendments to the loan agreements with AS SEB Pank in July 2021. The maturity dates of loans were extended by 5 years and monthly payments were reduced from EUR 0.2 million to EUR 0.06 million per month.

Due to its strong liquidity position and additional available funds from the sale of Printall AS, the Management Board of Ekspress Grupp made a proposition to the shareholders on 13 October 2021 to distribute extraordinary dividends of 10 euro cents per share in the total amount of EUR 3.03 million. Shareholder resolutions will be adopted without calling an extraordinary general meeting on 4 November 2021. The shareholders included in the share register of shareholders on 19 November 2021 will be entitled to receive dividends and dividends will be distributed on 23 November 2021.

The Supervisory Board of AS Ekspress Grupp has approved the Group's dividends policy according to which Ekspress Grupp will distribute at least 30% of its annual profit as dividends starting from 2022.

Q3 AND 9 MONTHS RESULTS

In accordance with the decision of the extraordinary general meeting of shareholders of AS Ekspress Grupp from 13 July 2021, AS Ekspress Grupp and OÜ Trükitung concluded a sales agreement on 3 September 2021, according to which Ekspress Grupp sold its 100% ownership interest in its subsidiary Printall AS. The transaction was completed as of 6 September 2021. In the consolidated interim report for the 3rd quarter and the first 9 months of the year, the information is presented about continuing operations where the revenue and expenses of discontinued operations are shown in a separate line in the comprehensive income statement "Gain/-loss from discontinued operations". Until the sale, the business of Printall AS used to be recognised a separate printing services segment which the Group will disclose as a discontinued operation starting from this period. In the comprehensive income statement of the interim report and the segment overview, the comparative information of continuing operations has been restated. No restatements have been made to the consolidated balance sheet and cash flows in accordance with the requirements of IFRS. The assets of the printing services segment continue to be consolidated line-by-line in the balance sheet as of 31 December 2020, because the sale of Printall AS was not yet recognised as a discontinued operation as of 31 December 2020.

REVENUE

In the 3rd quarter of 2021, the consolidated revenue from continuing operations totalled EUR 13.3 million (3rd quarter 2020: EUR 10.9 million). Revenue increased by 22% year-over-year in the 3rd quarter. Both advertising as well as digital subscription revenue increased. The consolidated revenue from continuing operations for the first nine months of 2021 totalled EUR 37.6 million (first nine months of 2020: EUR 31.0 million). At the end of the 3rd quarter of 2021, the share of the Group's digital revenue accounted for 74% of total revenue (at the end of 3rd quarter 2020: 69% of total revenue). Digital revenue increased by 30% as compared to the same period last year.

PROFITABILITY

In the 3rd quarter of 2021, the consolidated EBITDA of continuing operations totalled EUR 2.25 million (3rd quarter 2020: EUR 1.63 million). In the 3rd quarter of 2021, EBITDA increased by 38% as compared to the previous year and the EBITDA margin was 17.0% (3rd quarter 2020: 14.9%). Strong sales of online advertising, digital subscriptions and tight cost controls in all Baltic States have helped to improve profitability. The consolidated EBITDA of continuing operations for the first nine months of 2021 totalled EUR 5.05 million (first nine months of 2020: EUR 3.12 million) increasing by 62% compared to last year.

In the 3rd quarter of 2021, the consolidated net profit from continuing operations totalled EUR 1.15 million (3rd quarter 2020: EUR 0.77 million), which is EUR 0.37 million and 48% higher as compared to 2020. The consolidated net profit from continuing operations for the first nine months of 2021 totalled EUR 1.82 million (first nine months of 2020: EUR 0.29 million), which is EUR 1.53 million and 532% better as compared to 2020.

CASH POSITION

At the end of the reporting period, the Group had available cash in the amount of EUR 12.4 million and equity in the amount of EUR 54.4 million (61% of total assets). The comparable data as of 30 September 2020, including the printing services segment, were EUR 5.8 million and EUR 52.6 million (55% of total assets), respectively. As of 30 September 2021, the Group's net debt was EUR 6.2 million (30 September 2020: EUR 16.5 million). As of 30 September 2021, the cash position was positively impacted by net cash proceeds from the sale of the ownership interest in Printall AS in the amount of EUR 6.3 million (incl. premature payment of the outstanding loan balance of Printall AS to AS SEB Pank under the loan contract in the amount of EUR 2.06 million, see Note 7).

The cash position in 2020 was impacted by the agreements concluded with the banks due to the COVID-19 related state of emergency. Agreements were concluded 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 last year.

DIVIDENDS AND DIVIDEND POLICY

In conjunction with the sale of Printall AS, the Group's Management Board has proposed to the shareholders to distribute extraordinary dividends of 10 euro cents per share in the total amount of EUR 3.03 million. Shareholder resolutions will be adopted without calling the extraordinary general meeting of shareholders on 4 November 2021. The shareholders included in the register of shareholders on 19 November 2021 will be entitled to receive dividends and dividends will be distributed on 23 November 2021.

The Supervisory Board of AS Ekspress Grupp has approved the Group's dividends policy, according to which Ekspress Grupp will pay at least 30% of the annual profit as dividends starting from 2022.


Key financial indicators for segments (continuing operations)

(EUR thousand)Sales
 Q3 2021Q3 2020Change %9 months 20219 months 2020Change %12 months  2020
Media segment 12 92510 75020%36 48530 66719%43 728
     incl. revenue from all digital and online channels10 0617 81229%27 66421 33830%30 963
     % of revenue from all digital and online channels78%73% 76%70% 71%
Corporate functions99969344%3 1061 72880%2 761
Inter-segment eliminations(660)(529) (2 018)(1 417) (1 975)
TOTAL GROUP13 26510 91422%37 57330 97821%44 514
     % of revenue from all digital and online channels76%72% 74%69% 70%


(EUR thousand)EBITDA
 Q3 2021Q3 2020Change %9 months 20219 months 2020Change %12 months  2020
Media segment2 4011 72939%5 4783 49157%6 601
Corporate functions(134)(90)-49%(423)(325)-30%(720)
Inter-segment eliminations(16)(11) (3)(43) 43
TOTAL GROUP2 2511 62838%5 0513 12262%5 924


EBITDA marginQ3 2021Q3 20209 months 20219 months 202012 months 2020
Media segment19%16%15%11%15%
TOTAL GROUP17%15%13%10%13%


Consolidated balance sheet (unaudited)

(EUR thousand)30.09.202131.12.2020
ASSETS  
Current assets  
Cash and cash equivalents12 3646 269
Trade and other receivables8 8589 450
Corporate income tax prepayment2097
Inventories3122 756
Total current assets21 74318 482
Non-current assets  
Other receivables and investments1 662982
Deferred tax asset3030
Investments in joint ventures1 0071 661
Investments in associates2 0942 253
Property, plant and equipment 6 19114 134
Intangible assets56 70256 635
Total non-current assets67 68775 696
TOTAL ASSETS89 43094 177
LIABILITIES  
Current liabilities  
Borrowings1 6713 613
Trade and other payables14 38515 251
Corporate income tax payable13081
Total current liabilities 16 18718 945
Non-current liabilities   
Long-term borrowings 16 84618 589
Other long-term liabilities2 0462 025
Total non-current liabilities18 89220 613
TOTAL LIABILITIES35 07939 558
EQUITY  
Minority interest130126
Capital and reserves attributable to equity holders of parent company:  
Share capital18 47818 478
Share premium14 27714 277
Treasury shares(384)(209)
Reserves1 9111 758
Retained earnings19 93920 189
Total capital and reserves attributable to equity holders of parent company54 22154 493
TOTAL EQUITY 54 35154 619
TOTAL LIABILITIES AND EQUITY89 43094 177


Consolidated statement of comprehensive income (unaudited)

(EUR thousand)Q3 2021Q3 20209 months 20219 months 202012 months  2020
Continuing operations     
Sales13 26510 91437 57330 97844 514
Cost of sales(9 849)(8 482)(28 543)(24 874)(34 013)
Gross profit3 4152 4329 0306 10510 501
Other income2915216091 0361 691
Marketing expenses(494)(478)(1 593)(1 376)(1 905)
Administrative expenses (1 799)(1 529)(5 422)(4 718)(6 930)
Other expenses(13)(20)(62)(88)(286)
Operating profit /(loss)1 4019252 5639593 071
Interest income97251928
Interest expenses(175)(182)(537)(672)(860)
Other finance income/(costs)(67)(28)(62)(46)634
Net finance cost(233)(204)(574)(699)(198)
Profit/(loss) on shares of joint ventures4299(128)107102
Profit/(loss) on shares of associates16(48)83(75)(129)
Profit /(loss) before income tax1 2267731 9442922 846
Income tax expense(81)(1)(120)(3)(280)
Net profit from continuing operations1 1457721 8232892 566
Net profit /(loss) from discontinued operation(2 230)310(1 926)633(30)
Net profit /(loss) for the reporting period(1 085)1 081(103)9212 536
Net profit /(loss) for the reporting period attributable to   
Equity holders of the parent company (1 087)1 074(107)9062 510
Minority interest2741526
Total comprehensive income /(loss)(1 085)1 081(103)9212 536
Comprehensive income /(loss) for the reporting period attributable to   
Equity holders of the parent company (1 087)1 074(107)9062 510
Minority interest2741526
Earnings per share (euro) - continuing operations     
Basic earnings per share0.040.030.060.010.09
Diluted earnings per share0.040.020.060.010.08
Earnings per share (euro)     
Basic earnings per share(0.04)0.040.000.030.08
Diluted earnings per share(0.03)0.030.000.030.08


Consolidated cash flow statement (unaudited)

(EUR thousand)9 months 20219 months 202012 months 2020
Cash flows from operating activities   
Operating profit for the reporting year7091 5933 078
Adjustments for (non-cash):   
Depreciation and amortisation3 3492 9743 968
(Gain)/loss on sale, write-down and impairment of property, plant and equipment35(1)986
Change in value of share option2700
Loss on sale of discontinued operation2 07700
Cash flows from operating activities:   
Trade and other receivables(1 370)1 8803 274
Inventories(79)214375
Trade and other payables 337327(1 201)
Cash generated from operations5 0866 98710 480
Income tax paid(272)(91)(263)
Interest paid(405)(453)(903)
Net cash generated from operating activities 4 4096 4439 314
Cash flows from investing activities    
Acquisition of subsidiaries/ associates (less cash acquired) and other investments /
cash paid-in equity-accounted investees
(201)(203)(425)
Disposal of discontinued operation, net of cash disposed of6 32600
Receipts of other investments518416
Interest received312
Purchase of property, plant and equipment
and intangible assets
(1 901)(1 623)(2 562)
Proceeds from sale of property, plant and equipment
and intangible assets
329308
Loans granted(130)(187)(331)
Dividends received828150150
Net cash used in investing activities 4 978(1 750)(2 841)
Cash flows from financing activities   
Payment of lease liabilities (1 389)(693)(949)
Change in overdraft0(1 018)(1 018)
Loans received / Repayments of bank loans(1 455)(868)(1 884)
Proceeds from share issuance00600
Purchases of treasury shares(446)0(600)
Net cash used in financing activities (3 290)(2 579)(3 851)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS6 0962 1142 621
Cash and cash equivalents at the beginning of the period6 2693 6473 647
Cash and cash equivalents at the end of the period12 3645 7606 269


Signe Kukin
Group CFO
AS Ekspress Grupp
Telephone: +372 669 8381

E-mail address: signe.kukin@egrupp.ee


AS Ekspress Grupp is the leading Baltic media group whose key activities include web media content production, publishing of newspapers and magazines. The Group also manages the electronic ticket sales platform and ticket sales sites in Latvia and Estonia. Ekspress Grupp that launched its operations in 1989 employs almost 1400 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.

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EG_III_kvartal_2021_ENG.pdf