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

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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 2021

Q3 2020

Change %

9 months 2021

9 months 2020

Change %

12 months 2020

Media segment

12 925

10 750

20%

36 485

30 667

19%

43 728

incl. revenue from all digital and online channels

10 061

7 812

29%

27 664

21 338

30%

30 963

% of revenue from all digital and online channels

78%

73%

76%

70%

71%

Corporate functions

999

693

44%

3 106

1 728

80%

2 761

Inter-segment eliminations

(660)

(529)

(2 018)

(1 417)

(1 975)

TOTAL GROUP

13 265

10 914

22%

37 573

30 978

21%

44 514

% of revenue from all digital and online channels

76%

72%

74%

69%

70%


(EUR thousand)

EBITDA

Q3 2021

Q3 2020

Change %

9 months 2021

9 months 2020

Change %

12 months 2020

Media segment

2 401

1 729

39%

5 478

3 491

57%

6 601

Corporate functions

(134)

(90)

-49%

(423)

(325)

-30%

(720)

Inter-segment eliminations

(16)

(11)

(3)

(43)

43

TOTAL GROUP

2 251

1 628

38%

5 051

3 122

62%

5 924


EBITDA margin

Q3 2021

Q3 2020

9 months 2021

9 months 2020

12 months 2020

Media segment

19%

16%

15%

11%

15%

TOTAL GROUP

17%

15%

13%

10%

13%


Consolidated balance sheet (unaudited)

(EUR thousand)

30.09.2021

31.12.2020

ASSETS

Current assets

Cash and cash equivalents

12 364

6 269

Trade and other receivables

8 858

9 450

Corporate income tax prepayment

209

7

Inventories

312

2 756

Total current assets

21 743

18 482

Non-current assets

Other receivables and investments

1 662

982

Deferred tax asset

30

30

Investments in joint ventures

1 007

1 661

Investments in associates

2 094

2 253

Property, plant and equipment

6 191

14 134

Intangible assets

56 702

56 635

Total non-current assets

67 687

75 696

TOTAL ASSETS

89 430

94 177

LIABILITIES

Current liabilities

Borrowings

1 671

3 613

Trade and other payables

14 385

15 251

Corporate income tax payable

130

81

Total current liabilities

16 187

18 945

Non-current liabilities

Long-term borrowings

16 846

18 589

Other long-term liabilities

2 046

2 025

Total non-current liabilities

18 892

20 613

TOTAL LIABILITIES

35 079

39 558

EQUITY

Minority interest

130

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

1 911

1 758

Retained earnings

19 939

20 189

Total capital and reserves attributable to equity holders of parent company

54 221

54 493

TOTAL EQUITY

54 351

54 619

TOTAL LIABILITIES AND EQUITY

89 430

94 177


Consolidated statement of comprehensive income (unaudited)

(EUR thousand)

Q3 2021

Q3 2020

9 months 2021

9 months 2020

12 months 2020

Continuing operations

Sales

13 265

10 914

37 573

30 978

44 514

Cost of sales

(9 849)

(8 482)

(28 543)

(24 874)

(34 013)

Gross profit

3 415

2 432

9 030

6 105

10 501

Other income

291

521

609

1 036

1 691

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)

1 401

925

2 563

959

3 071

Interest income

9

7

25

19

28

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 ventures

42

99

(128)

107

102

Profit/(loss) on shares of associates

16

(48)

83

(75)

(129)

Profit /(loss) before income tax

1 226

773

1 944

292

2 846

Income tax expense

(81)

(1)

(120)

(3)

(280)

Net profit from continuing operations

1 145

772

1 823

289

2 566

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)

921

2 536

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

Equity holders of the parent company

(1 087)

1 074

(107)

906

2 510

Minority interest

2

7

4

15

26

Total comprehensive income /(loss)

(1 085)

1 081

(103)

921

2 536

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

Equity holders of the parent company

(1 087)

1 074

(107)

906

2 510

Minority interest

2

7

4

15

26

Earnings per share (euro) - continuing operations

Basic earnings per share

0.04

0.03

0.06

0.01

0.09

Diluted earnings per share

0.04

0.02

0.06

0.01

0.08

Earnings per share (euro)

Basic earnings per share

(0.04)

0.04

0.00

0.03

0.08

Diluted earnings per share

(0.03)

0.03

0.00

0.03

0.08


Consolidated cash flow statement (unaudited)

(EUR thousand)

9 months 2021

9 months 2020

12 months 2020

Cash flows from operating activities

Operating profit for the reporting year

709

1 593

3 078

Adjustments for (non-cash):

Depreciation and amortisation

3 349

2 974

3 968

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

35

(1)

986

Change in value of share option

27

0

0

Loss on sale of discontinued operation

2 077

0

0

Cash flows from operating activities:

Trade and other receivables

(1 370)

1 880

3 274

Inventories

(79)

214

375

Trade and other payables

337

327

(1 201)

Cash generated from operations

5 086

6 987

10 480

Income tax paid

(272)

(91)

(263)

Interest paid

(405)

(453)

(903)

Net cash generated from operating activities

4 409

6 443

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)

Disposal of discontinued operation, net of cash disposed of

6 326

0

0

Receipts of other investments

51

84

16

Interest received

3

1

2

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

3

29

308

Loans granted

(130)

(187)

(331)

Dividends received

828

150

150

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 overdraft

0

(1 018)

(1 018)

Loans received / Repayments of bank loans

(1 455)

(868)

(1 884)

Proceeds from share issuance

0

0

600

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 EQUIVALENTS

6 096

2 114

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

12 364

5 760

6 269


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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