AS Ekspress Grupp: Consolidated unaudited interim report for the First Quarter of 2021

Tallinn, ESTONIA


In the 1st quarter of 2021, the Group managed to further strengthen its market position and improve profitability, despite the worsening pandemic in the Baltic States. The revenue in the first three months of the year declined by 3% to EUR 15.3 million as compared to 2020 while the Group's profitability improved by 64% and net loss decreased to EUR 0.26 million. The share of the Group's digital revenue was 50% of total revenue and 72% of media segment revenue.

In the 1st quarter of 2021, consolidated revenue totalled EUR 15.3 million (1st quarter 2020: EUR 15.7 million). The revenue decline is primarily attributed to the drop in export volumes in the printing services segment due to the European coronavirus restrictions. In the 1st quarter, digital revenue accounted for 50% of the Group's total revenue and 72% of media segment revenue (1st quarter 2020: 41% of total revenue and 65% of media segment revenue, respectively). Digital revenue increased by 18% as compared to the same period last year. The revenue of the media segment is primarily impacted by continued strong sales of online advertising and digital subscriptions.

The volume of digital subscriptions of AS Ekspress Grupp increased by 74% by the end of March as compared to the same period last year and totalled ca 95 thousand subscriptions. Readers' interest in high-quality content has been increasing. We have maintained our leadership position as compared to our competitors, although competition in the area of digital subscriptions is intensifying. Ekspress Grupp has set digital subscription growth as one of its key goals because it will create a differentiated and increasingly stronger digital revenue base for the Group's media outlets.

The earnings before interest, tax, depreciation and amortisation (EBITDA) of Ekspress Grupp totalled EUR 1.09 million in the 1st quarter which Is EUR 0.4 million or 62% higher as compared to the 1st quarter of 2020. Ongoing cost reduction and strong sales of online advertising and digital subscriptions in all Baltic States have helped improve profitability. The effects of the ongoing pandemic in the 1st quarter have not turned out to be of the same magnitude as in March 2020 when advertising sales received a major setback. The buyers of online advertisements have adjusted to the new environment and reality, however, the share of print media advertising has decreased. The Group's net loss in the 1st quarter was EUR 0.26 million which is EUR 0.48 million or 64% lower as compared to the 1st quarter of 2020.

The state of emergency related to COVID-19 has the greatest impact on the ticket sales platform in Latvia where all cultural events were cancelled in the 1st quarter. The activities related to the ticket sales area have been extremely limited over the last 12 months. We have used this period to focus on the development of the ticket sales platform and since April, we also launched the ticket sales platform Piletitasku in Estonia. With the expansion of the ticket sales business into Estonia, Ekspress Grupp will continue its current strategy, the purpose of which is to increase the share of digital revenue and identify synergies between new business lines and existing media activities. We wish to provide the most convenient platform both for ticket buyers as well as event organisers.

The 1st quarter marked a major milestone for the largest Estonian news portal Delfi, because we launched a portal with a revamped design and several changes. In addition to the visual layout, the web technologies of the entire portal and the internal tools of the editorial staff were upgraded in order to bring quality news even faster to the readers in the future. In addition to upgrading photo, video, multimedia and text entry tools, the administration settings of the Delfi comments block were also totally overhauled in order to facilitate substantive and reduce unsuitable commentary. Machines and other modern automated tools are now used to screen comments.

The need for the technological upgrade of the Delfi portal also arose due to the increasing shift of news consumption from desktop to mobile devices. At the moment, about two thirds of the visitors of Delfi use mobile devices due to which most of the upgrades were related to the mobile layout of Delfi. The entire revamped portal is visually cleaner and noise-free, the article viewing is smoother and moving to the following articles is easier and faster.

The new Delfi logo and the visual language are dynamic, modern and friendly, and they fit well into the broad digital media portfolio. The revamped portals were designed by the team of the designers of Ekspress Meedia. More than 30 people in the Baltic States worked on the development and launch of the new Delfi platform over the period of 18 months.


SUMMARY OF THE RESULTS OF THE FIRST QUARTER

REVENUE

The consolidated revenue for the 1st quarter of 2021 totalled EUR 15.3 million (1st quarter 2020: EUR 15.7 million). Revenue decreased by 3% year-over-year in the 1st quarter. The revenue decline is primarily attributed to the drop in export volumes in the printing services segment due to the European coronavirus restrictions. In the 1st quarter of 2021, the share of the Group's digital revenue accounted for 50% of total revenue and 72% of media segment revenue (1st quarter 2020: 41% of total revenue and 65% media segment revenue, respectively). Digital revenue increased by 18% as compared to the same period last year.

PROFITABILITY

In the 1st quarter of 2021, the consolidated EBITDA totalled EUR 1.09 million (1st quarter 2020: EUR 0.67 million). In the 1st quarter of 2021, EBITDA increased by 62% as compared to the previous year and the EBITDA margin was 7.1% (1st quarter 2020: 4.3%). Ongoing cost reduction and strong sales of online advertising and digital subscriptions in all Baltic States have helped improve profitability.

In the 1st quarter of 2021, the consolidated net loss totalled EUR 0.26 million (1st quarter 2020: EUR -0,74 million), which is EUR 0.48 million and 64% lower as compared to 2020.

CASH POSITION

At the end of the reporting period, the Group had available cash in the amount of EUR 4.6 million and equity in the amount of EUR 54.1 million (58% of total assets). The comparable data as of 31 March 2020 were EUR 3.5 million and EUR 50.9 million (54% of total assets), respectively. As of 31 March 2021, the Group's net debt was EUR 18.2 million (31 March 2020: EUR 20.4 million).

The cash position in 2020 was impacted by the agreements concluded with the banks due to the COVID-19 related state of emergency. An agreement was 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). In December 2020, an extraordinary one-off payment was made in the amount of EUR 0.35 million to cover principal payments in the period from January to June 2021. 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


(EUR thousand) Sales
  Q1 2021 Q1 2020 Change % 12 months  2020
Media segment 10 656 10 026 6% 43 728
     incl. revenue from all digital and online channels 7 663 6 505 18% 30 963
     % of revenue from all digital and online channels 72% 65%   71%
Printing services segment 4 908 6 243 -21% 21 384
Corporate functions 1 052 515 104% 2 761
Inter-segment eliminations (1 326) (1 082)   (4 629)
TOTAL GROUP 15 290 15 703 -3% 63 243
     % of revenue from all digital and online channels 50% 41%   49%


(EUR thousand) EBITDA
  Q1 2021 Q1 2020 Change % 12 months  2020
Media segment 795 248 221% 6 601
Printing services segment 493 584 -16% 2 224
Corporate functions (178) (143) -24% (720)
Inter-segment eliminations* (20) (17)   (1 101)
TOTAL GROUP 1 089 671 62% 7 004

* 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 Q1 2021 Q1 2020 12 months 2020
Media segment 7% 2% 15%
Printing services segment 10% 9% 10%
TOTAL GROUP 7% 4% 11%


Consolidated balance sheet (unaudited)

(EUR thousand) 31.03.2021 31.12.2020
ASSETS    
Current assets    
Cash and cash equivalents 4 571 6 269
Trade and other receivables 9 269 9 450
Corporate income tax prepayment 85 7
Inventories 2 746 2 756
Total current assets 16 671 18 482
Non-current assets    
Other receivables and investments 949 982
Deferred tax asset 30 30
Investments in joint ventures 1 676 1 661
Investments in associates 2 339 2 253
Property, plant and equipment 15 286 14 134
Intangible assets 56 682 56 635
Total non-current assets 76 962 75 696
TOTAL ASSETS 93 633 94 177
LIABILITIES    
Current liabilities    
Borrowings 3 695 3 613
Trade and other payables 14 863 15 251
Corporate income tax payable 76 81
Total current liabilities 18 635 18 945
Non-current liabilities    
Long-term borrowings 19 073 18 589
Other long-term liabilities 1 785 2 025
Total non-current liabilities 20 858 20 613
TOTAL LIABILITIES 39 493 39 558
EQUITY    
Minority interest 127 126
Capital and reserves attributable to equity holders of parent company:    
Share capital 18 478 18 478
Share premium 14 277 14 277
Treasury shares (420) (209)
Reserves 1 768 1 758
Retained earnings 19 910 20 189
Total capital and reserves attributable to equity holders of parent company 54 013 54 493
TOTAL EQUITY 54 140 54 619
TOTAL LIABILITIES AND EQUITY 93 633 94 177

 

Consolidated statement of comprehensive income (unaudited)

(EUR thousand) Q1 2021 Q1 2020 12 months  2020
Sales 15 290 15 703 63 243
Cost of sales (12 747) (13 472) (50 637)
Gross profit 2 544 2 230 12 607
Other income 107 84 2 040
Marketing expenses (596) (757) (2 701)
Administrative expenses (2 025) (1 893) (7 532)
Other expenses (26) (24) (1 336)
Operating profit /(loss) 4 (359) 3 078
Interest income 9 6 28
Interest expenses (211) (224) (877)
Other finance income/(costs) 11 (16) 614
Net finance cost (191) (234) (235)
Profit/(loss) on shares of joint ventures (107) (127) 102
Profit/(loss) on shares of associates 35 (20) (129)
Profit /(loss) before income tax (259) (740) 2 816
Income tax expense (5) (2) (280)
Net profit /(loss) for the reporting period (264) (742) 2 536
Net profit /(loss) for the reporting period attributable to      
Equity holders of the parent company (265) (743) 2 510
Minority interest 1 1 26
Total comprehensive income /(loss) (264) (742) 2 536
Comprehensive income /(loss) for the reporting period attributable to      
Equity holders of the parent company (265) (743) 2 510
Minority interest 1 1 26
Basic earnings per share (0.01) (0.02) 0.08
Diluted earnings per share (0.01) (0.02) 0.08


Consolidated cash flow statement (unaudited)

(EUR thousand) Q1 2021 Q1 2020
Cash flows from operating activities    
Operating profit for the reporting year 4 (359)
Adjustments for:    
Depreciation and amortisation 1 111 1 039
(Gain)/loss on sale, write-down and impairment of property, plant and equipment (1) 0
Change in value of share option 10 0
Cash flows from operating activities:    
Trade and other receivables 192 1 588
Inventories 10 (213)
Trade and other payables (573) (308)
Cash generated from operations    
Income tax paid (88) (93)
Interest paid (128) (127)
Net cash generated from operating activities 536 1 526
Cash flows from investing activities    
Acquisition of subsidiaries/ associates (less cash acquired)
and other investments / cash paid-in equity-accounted investees
(80) (84)
Receipts of other investments 51 0
Interest received 2 1
Purchase of property, plant and equipment and intangible assets (628) (610)
Proceeds from sale of property, plant and equipment and intangible assets 1 1
Loans granted (40) (59)
Net cash used in investing activities (696) (752)
Cash flows from financing activities    
Payment of lease liabilities (498) (310)
Change in overdraft 0 (25)
Loans received / Repayments of bank loans (618) (562)
Purchases of treasury shares (422) 0
Net cash used in financing activities (1 537) (897)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1 697) (123)
Cash and cash equivalents at the beginning of the period 6 269 3 647
Cash and cash equivalents at the end of the period 4 571 3 524


Signe Kukin
Group CFO
AS Ekspress Grupp
Phone: +372 669 8381
E-mail: signe.kukin@egrupp.ee


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.

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