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AS Ekspress Grupp: Consolidated unaudited interim report for the Second Quarter and First Half-Year of 2021

·13-min read

In the 2nd quarter of 2021, the revenue of AS Ekspress Grupp totalled EUR 17.9 million and the revenue for the first six months of the year totalled EUR 33.2 million. The Group’s net profit for the 2nd quarter of 2021 was EUR 1.25 million and the net profit for the first 6 months of the year was EUR 0.98 million. At the end of June, the share of the Group's digital revenue was 53% of total revenue and 75% of media segment revenue.

In the 2nd quarter of 2021, the consolidated revenue totalled EUR 17.9 million (2nd quarter 2020: EUR 13.9 million), increasing by 28%. The revenue growth is attributable to the online advertising market which has recovered well and has gained momentum on account of other types of media, demonstrating good growth in all Baltic States. Print advertising revenue continues to be under pressure and it has still not regained its pre-pandemic level. The consolidated revenue for the first six months of 2021 was EUR 33.2 million, increasing by 12% year-over-year.

The number of the digital subscriptions of AS Ekspress Grupp increased by 76% by the end of June 2021 as compared to the same period last year and was more than 110 thousand subscriptions. The addition of digital subscribers will have a positive impact on the results of operations of Ekspress Grupp and is a proof of the viability of its long-term strategic direction.

The earnings before interest, tax, depreciation and amortisation (EBITDA) of Ekspress Grupp totalled EUR 2.67 million in the 2nd quarter which on EUR 1.01 million or 61% higher as compared to the 2nd quarter of 2020. Strong sales of online advertising and digital subscriptions in all Baltic States and continued cost reduction have helped improve profitability. The effects of the ongoing pandemic in the 2nd quarter have not turned out to be of the same magnitude as in the 2nd quarter of 2020 when advertising sales received a major setback. Upon enforcement of national restrictions, the economy did not suffer similarly to 2020 but the restrictions enforced due to the pandemic still had an effect on outdoor advertising and ticket sales companies in the 2nd quarter of 2021. 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 business more; they have opened or adapted their ways of trading to e-channels and the need to advertise has recovered. Considering the availability of vaccines and the desire of people to move around and attend events, we are more optimistic about the recovery of the outdoor advertising and ticket sales business.

In the 2nd quarter, the consolidated net profit totalled EUR 1.25 million which is 114% more than in the same period in 2020. The net profit for the first six months totalled EUR 0.98 million which is EUR 1.14 million higher than in the same period last year.

A key event for the Group in the 2nd quarter was the receiving of the purchase offer for AS Printall from the company Trükitung OÜ, which is owned by Group's majority shareholder Hans Luik. Since the end of last year, the Group had considered various strategic alternatives for the printing services segment, including the sale of printing services, sale and leaseback of real estate properties and potential mergers. In July 2021, the shareholders approved this transaction and authorised the Management Board of AS Ekspress Grupp to complete the transaction which is planned to be finalised during the 3rd quarter. The outcome of the transaction will be the Group’s exit from the business with significant CAPEX requirements that is not in line with the Group’s strategy. Availability of new capital will provide additional capacity for the Group to fund the digital area.

In the 2nd quarter, the group company D Screens won a tender in Latvia relating to the right to lease the real estate properties in the ownership of the City of Riga. The lease agreement covers 91 advertising spaces owned by the City of Riga in excellent locations, the majority of which will be digitalised by the company. The investments in digital outdoor screens that are related to the new region will be completed at the end of 2022. The agreement will increase the network of the Group’s digital screens, which covers the key roads of the City of Riga, more than 100 properties.

The new Estonian ticket sales platform Piletitasku that had been launched at the beginning of the 2nd quarter gained momentum once the state of emergency was lifted and it has been well received by the event organisers and ticket buyers. We offer a fresh and convenient buying experience for ticket buyers and technologically a new level for organisers. We strive to make the entry and management of events and monitoring of reports and data as comprehensive as possible. The ticket sales platform is a good example of a digital business with a clear synergy with digital media that fits the strategy of the Group’s current complementing digital businesses.

Despite the pandemic, a conference Login on the topic of digital development was organised in Lithuania which lasted for 5 days and was available as a streaming in all the largest media portals of Lithuania. The interest of both participants and advertising customers was high. The largest digital conference of Lithuania acquired in 2019 is performing in line with the set goals.

As at 30 June 2021, the Group’s available cash is in the amount of EUR 4.2 million (30 June 2020: EUR 6.3 million). The Group’s liquidity is good, but in order to strengthen the Group’s liquidity position and flexibility as well as to increase the working capital, 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. As a result of the amendments, Ekspress Grupp will have another EUR 1.7 million available to strengthen the Group’s current key activities and increase investments in its digital businesses.


Q2 AND 6 MONTHS RESULTS

REVENUE

The consolidated revenue for the 2nd quarter of 2021 totalled EUR 17.9 million (2nd quarter 2020: EUR 13.9 million). Revenue increased by 28% year-over-year in the 2nd quarter. Advertising revenue has demonstrated a strong recovery. The consolidated revenue for the first six months of 2021 totalled EUR 33.2 million (first six months of 2020: EUR 29.6 million). At the end of 2nd quarter of 2021, the share of the Group's digital revenue accounted for 53% of total revenue and 75% of media segment revenue (at the end of 2nd quarter 2020: 46% of total revenue and 68% media segment revenue, respectively). Digital revenue increased by 30% as compared to the same period last year.

PROFITABILITY

In the 2nd quarter of 2021, the consolidated EBITDA totalled EUR 2.67 million (2nd quarter 2020: EUR 1.65 million). In the 2nd quarter of 2021, EBITDA increased by 61% as compared to the previous year and the EBITDA margin was 14.9% (2nd quarter 2020: 11.9%). Strong sales of online advertising, digital subscriptions and tight cost controls in all Baltic States have helped to improve profitability. The consolidated EBITDA for the first six months of 2021 totalled EUR 3.76 million (first six months of 2020: EUR 2.33 million).

In the 2nd quarter of 2021, the consolidated net profit totalled EUR 1.25 million (2nd quarter 2020: EUR 0.58 million), which is EUR 0.67 million and 114% better as compared to 2020. The consolidated net profit for the first six months of 2021 totalled EUR 0.98 million (first six months of 2020 net loss: EUR -0.16 million), which is EUR 1.14 million and 714% better as compared to 2020.

CASH POSITION

At the end of the reporting period, the Group had available cash in the amount of EUR 4.2 million and equity in the amount of EUR 55.4 million (59% of total assets). The comparable data as of 30 June 2020 were EUR 6.3 million and EUR 51.5 million (54% of total assets), respectively. As of 30 June 2021, the Group's net debt was EUR 17.9 million (30 June 2020: EUR 16.3 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). 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.


Key financial indicators for segments


(EUR thousand)

Sales

Q2 2021

Q2 2020

Change %

6M 2021

6M 2020

Change %

12 months 2020

Media segment

12 904

9 891

30%

23 560

19 917

18%

43 728

incl. revenue from all digital and
online channels

9 939

7 021

42%

17 603

13 526

30%

30 963

% of revenue from all digital and
online channels

77%

71%

75%

68%

71%

Printing services segment

5 255

4 569

15%

10 163

10 813

-6%

21 384

Corporate functions

1 054

520

103%

2 106

1 035

103%

2 761

Inter-segment eliminations

(1 322)

(1 037)

(2 648)

(2 118)

(4 629)

TOTAL GROUP

17 890

13 944

28%

33 181

29 646

12%

63 243

% of revenue from all digital and
online channels

56%

50%

53%

46%

49%


(EUR thousand)

EBITDA

Q2 2021

Q2 2020

Change %

6M 2021

6M 2020

Change %

12 months 2020

Media segment

2 281

1 514

51%

3 076

1 762

75%

6 601

Printing services segment

529

248

113%

1 022

831

23%

2 224

Corporate functions

(111)

(92)

-20%

(289)

(236)

-23%

(720)

Inter-segment eliminations*

(34)

(16)

(53)

(33)

(1 101)

TOTAL GROUP

2 666

1 654

61%

3 755

2 325

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

Q2 2021

Q2 2020

6M 2021

6M 2020

12 months 2020

Media segment

18%

15%

13%

9%

15%

Printing services segment

10%

5%

10%

8%

10%

TOTAL GROUP

15%

12%

11%

8%

11%


Consolidated balance sheet (unaudited)

(EUR thousand)

30.06.2021

31.12.2020

ASSETS

Current assets

Cash and cash equivalents

4 207

6 269

Trade and other receivables

11 369

9 450

Corporate income tax prepayment

153

7

Inventories

2 596

2 756

Total current assets

18 325

18 482

Non-current assets

Other receivables and investments

948

982

Deferred tax asset

30

30

Investments in joint ventures

898

1 661

Investments in associates

2 336

2 253

Property, plant and equipment

15 014

14 134

Intangible assets

56 766

56 635

Total non-current assets

75 992

75 696

TOTAL ASSETS

94 316

94 177

LIABILITIES

Current liabilities

Borrowings

3 421

3 613

Trade and other payables

14 721

15 251

Corporate income tax payable

53

81

Total current liabilities

18 196

18 945

Non-current liabilities

Long-term borrowings

18 652

18 589

Other long-term liabilities

2 040

2 025

Total non-current liabilities

20 692

20 613

TOTAL LIABILITIES

38 888

39 558

EQUITY

Minority interest

128

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

(384)

(209)

Reserves

1 903

1 758

Retained earnings

21 026

20 189

Total capital and reserves attributable to equity holders of parent company

55 300

54 493

TOTAL EQUITY

55 428

54 619

TOTAL LIABILITIES AND EQUITY

94 316

94 177

Consolidated statement of comprehensive income (unaudited)

(EUR thousand)

Q2 2021

Q2 2020

6M 2021

6M 2020

12 months 2020

Sales

17 890

13 944

33 181

29 646

63 243

Cost of sales

(13 763)

(11 598)

(26 509)

(25 070)

(50 637)

Gross profit

4 128

2 346

6 671

4 576

12 607

Other income

212

521

319

605

2 040

Marketing expenses

(892)

(531)

(1 488)

(1 288)

(2 701)

Administrative expenses

(1 898)

(1 602)

(3 923)

(3 495)

(7 532)

Other expenses

(29)

(56)

(55)

(80)

(1 336)

Operating profit /(loss)

1 521

678

1 524

319

3 078

Interest income

8

6

17

12

28

Interest expenses

(202)

(217)

(412)

(441)

(877)

Other finance income/(costs)

(15)

(12)

(4)

(28)

614

Net finance cost

(209)

(223)

(400)

(457)

(235)

Profit/(loss) on shares of joint ventures

(63)

135

(170)

8

102

Profit/(loss) on shares of associates

32

(8)

67

(28)

(129)

Profit /(loss) before income tax

1 281

582

1 021

(158)

2 816

Income tax expense

(34)

(1)

(39)

(2)

(280)

Net profit /(loss) for the reporting period

1 247

582

982

(160)

2 536

Net profit /(loss) for the reporting period attributable to

Equity holders of the parent company

1 246

575

980

(168)

2 510

Minority interest

1

7

2

8

26

Total comprehensive income /(loss)

1 247

582

982

(160)

2 536

Comprehensive income /(loss) for the reporting period attributable to

Equity holders of the parent company

1 246

575

980

(168)

2 510

Minority interest

1

7

2

8

26

Basic earnings per share

0.04

0.02

0.03

(0.01)

0.08

Diluted earnings per share

0.04

0.02

0.03

(0.01)

0.08


Consolidated cash flow statement (unaudited)

(EUR thousand)

6M 2021

6M 2020

12 months 2020

Cash flows from operating activities

Operating profit for the reporting year

1 524

319

3 078

Adjustments for:

Depreciation and amortisation

2 281

2 011

3 968

(Gain)/loss on sale, write-down and impairment of property, plant and equipment

36

(3)

986

Change in value of share option

19

0

0

Cash flows from operating activities:

Trade and other receivables

(1 150)

2 470

3 274

Inventories

160

68

375

Trade and other payables

(390)

1 515

(1 201)

Cash generated from operations

2 481

6 379

10 480

Income tax paid

(212)

(56)

(263)

Interest paid

(277)

(306)

(903)

Net cash generated from operating activities

1 992

6 017

9 314

Cash flows from investing activities

Acquisition of subsidiaries/ associates (less cash acquired) and
other investments / cash paid-in equity-accounted investees

(201)

(203)

(425)

Receipts of other investments

51

0

16

Interest received

2

1

2

Purchase of property, plant and equipment
and intangible assets

(1 268)

(1 037)

(2 562)

Proceeds from sale of property, plant and equipment
and intangible assets

1

29

308

Loans granted

(82)

(98)

(331)

Dividends received

78

150

150

Net cash used in investing activities

(1 419)

(1 158)

(2 841)

Cash flows from financing activities

Payment of lease liabilities

(954)

(519)

(949)

Change in overdraft

0

(1 018)

(1 018)

Loans received / Repayments of bank loans

(1 235)

(662)

(1 884)

Proceeds from share issuance

0

0

600

Purchases of treasury shares

(446)

0

(600)

Net cash used in financing activities

(2 635)

(2 200)

(3 851)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

(2 062)

2 659

2 621

Cash and cash equivalents at the beginning of the period

6 269

3 647

3 647

Cash and cash equivalents at the end of the period

4 207

6 306

6 269


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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