AS Ekspress Grupp: Consolidated unaudited interim report for the Third Quarter and Nine Months of 2020
Comunicato Precedente
Comunicato Successivo
In the third quarter of 2020, the revenue of AS Ekspress Grupp totalled EUR 15.2 million and net profit totalled EUR 1.08 million. The revenue for the first nine months of the year totalled EUR 44.8 million and net profit was EUR 0.92 million. At the end of September, the Group's digital revenue accounted for 48% of total revenue and 70% of media segment revenue (9 months of 2019: 44% of total revenue and 68% of media segment revenue, respectively).
In the 3rd quarter, the Group's revenue recovered well from the downturn caused by the state of emergency and was at the same level as the year before. The revenue for the first 9 months of the year was ca 6% lower than in 2019, primarily related to the state of emergency in the 2nd quarter. While the revenue drop in 2nd quarter was clearly attributable to cautiousness of customers, in the 3rd quarter we witnessed revenue recovery, especially relating to the data of online advertising.
In the 3rd quarter, the digital revenue of Ekspress Grupp increased and accounted for 70% of the Group's media segment revenue and 48% of the Group's total revenue. In the 3rd quarter, growth was propelled by the steadily increasing volume of digital subscriptions of periodicals of Ekspress Grupp and reached 71 thousand subscribers in the Baltic States, growing by more than 12% in a quarter and being 42% higher than at the year-end 2019. The growth in digital subscriptions has accelerated following the extraordinary events in the world, demonstrating clearly that readers appreciate edited content and they are willing to pay for it. Digital revenue increased in Estonia, Latvia and Lithuania. In Estonia, where we have offered paid content the longest in the Baltic States, the number of digital subscriptions of the periodicals of Ekspress Grupp accounted for 53% of the volume of the entire market at end of the 3rd quarter, as reported by the Estonian Association of Media Companies. Latvia and Lithuania are also improving their potential and the number of digital subscriptions is growing strongly.
Earnings before interest, tax, depreciation and amortisation (EBITDA) of Ekspress Grupp were EUR 2.23 million in the 3rd quarter which is EUR 0.91 million higher as compared to the 3rd quarter of 2019. The EBITDA in the 3rd quarter also includes one-off public government measures related to the corona crisis in the amount of EUR 0.41 million. The EBITDA for the first 9 months of the year totalled EUR 4.56 million (incl. EUR 0.73 million of government measures related to the corona crisis), increasing by 27% year-over-year.
The Group's net profit in the 3rd quarter totalled EUR 1.08 million, which is EUR 1.06 million higher than in the previous year. Third quarter results were positively impacted by ongoing cost savings and revenue recovery. In the first 9 months of the year, the Group's net profit totalled EUR 0.92 million which is EUR 1.16 higher as compared to 2019. The key effect over the nine-month period comes from the 3rd quarter.
The Group continued to operate in the cost-cutting mode and searched for ways to increase efficiency. In the crisis months, the Group immediately took action by cutting costs and the cost base has been reduced by ca EUR 3 million over the nine-month period, the as compared to the previous year. It is within the same range as revenue reduction over the first 9 months of the year. The state of emergency in the 2nd quarter when most of the employees worked remotely, provided an excellent opportunity to review organisation of work, reallocation of the office space and preservation of a lower cost base. However, in the media segment home delivery costs of Estonian paper periodicals pose a major risk in the future, as no agreements have been reached in respect of delivery prices and the state's participation in the maintenance of the delivery network. For Ekspress Grupp, the danger lies in the limited interest of the state as the home delivery organisation in the optimisation of the delivery network. The Group has repeatedly addressed the issue and is ready to search for more efficient methods for a long-term outcome.
The state of emergency related to COVID-19 has impacted the activities of the Latvian ticket sales network the most. The Latvian State has set a 50% limit on the occupancy rate of movie theatres and the company's activities are therefore considerably more restricted than the year before. At the same time, the ticket sales platform has been able to focus on the development of its web platform and launched a new and more modern solution for its end users. New technological opportunities, including requirements for the customer profile of the ticket platform set by the state where each customer can be identified and that we have successfully developed in our systems, have helped to almost double our market share. However, due to the government restrictions, the activities will still be significantly impaired in the coming months.
At the beginning of September, the new season of Delfi TV was launched in Lithuania, where more than 50 different programmes and more than six hours of daily live broadcasts will be broadcast. At the beginning of 2020, Delfi TV was launched in Lithuania as a free-to-air Lithuania-wide TV station. Video content has become more popular among Delfi users. Delfi streaming services have already gained popularity on the Lithuanian market where Delfi is one of the most popular online television channels.
The Group's liquidity continues to be strong. As of 30 September 2020, the Group's available cash totalled EUR 5.8 million (30.09.2019: EUR 2.8 million). Liquidity was positively impacted by the grace periods granted by banks 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.
SUMMARY OF THE RESULTS OF THE THIRD QUARTER AND NINE 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.
REVENUE
The consolidated revenue for the 3rd quarter of 2020 totalled EUR 15.2 million (3rd quarter 2019: EUR 15.0 million). Revenue increased by 1% year-over-year in the 3rd quarter. The consolidated revenue for the first nine months of 2020 totalled EUR 44.8 million (9 months of 2019: EUR 47.8 million). At the end of the 3rd quarter, digital revenue accounted for 48% of total revenue and 70% of media segment revenue (3rd quarter 2019: 44% of total revenue and 68% of media segment revenue, respectively).
PROFITABILITY
In the 3rd quarter of 2020, the consolidated EBITDA totalled EUR 2.23 million (3rd quarter 2019: EUR 1.32 million) and in the first nine months of 2020, the consolidated EBITDA totalled EUR 4.56 million (first 9 months 2019: EUR 3.58 million). In the 3rd quarter of 2020, EBITDA grew by 69% year-over-year and the EBITDA margin was 14.7% (3rd quarter 2019: 8.8%) and in the first nine months of 2020, EBITDA increased by 27% as compared to the previous year and the EBITDA margin was 10.2% (first 9 months 2019: 7.5%). Profitability was positively impacted by cost savings implemented throughout the entire Group in the 2nd and 3rd quarters (incl. salary cuts) 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 that will be accrued as income in the second, third and fourth quarters. The salary subsidy accounted for EUR 0.41 million of the EBITDA in the 3rd quarter of 2020 and EUR 0.73 million of the EBITDA in the first nine months of 2020. The net profit for the 3rd quarter of 2020 totalled EUR 1.08 million which is EUR 1.06 million higher than in the same period of 2019.
CASH POSITION
At the end of the reporting period, the Group had available cash in the amount of EUR 5.8 million and equity in the amount of EUR 52.6 million (55% of total assets). The comparable data as of 30 September 2019 were EUR 2.8 million and EUR 50.0 million (55% of total assets), respectively. As of 30 September 2020, the Group's net debt totalled EUR 16.5 million (30 September 2019: EUR 16.7 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 to suspend loan payments in the period 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
| (EUR thousand) | Sales | ||||||
| Q3 2020 | Q3 2019 | Change % | 9 months 2020 | 9 months 2019 | Change % | 12 months 2019 | |
| Media segment | 10 709 | 9 908 | 8% | 30 572 | 30 777 | -1% | 44 218 |
| incl. revenue from all digital and online channels | 7 812 | 6 987 | 12% | 21 338 | 20 815 | 3% | 30 534 |
| incl. % of revenue from all digital and online channels | 73% | 71% | 70% | 68% | 69% | ||
| Printing services segment | 4 901 | 5 608 | -13% | 15 714 | 18 789 | -16% | 25 695 |
| Corporate functions | 693 | 512 | 35% | 1 728 | 1 558 | 11% | 2 076 |
| Inter-segment eliminations | (1 125) | (1 043) | (3 243) | (3 353) | (4 533) | ||
| TOTAL GROUP | 15 179 | 14 985 | 1% | 44 771 | 47 771 | -6% | 67 456 |
| incl. % of revenue from all digital and online channels | 51% | 47% | 48% | 44% | 45% | ||
| (EUR thousand) | EBITDA | ||||||
| Q3 2020 | Q3 2019 | Change % | 9 months 2020 | 9 months 2019 | Change % | 12 months 2019 | |
| Media segment | 1 729 | 1 188 | 45% | 3 491 | 2 988 | 17% | 5 966 |
| Printing services segment | 603 | 357 | 69% | 1 434 | 1 465 | -2% | 2 032 |
| Corporate functions | (90) | (219) | 59% | (325) | (854) | 62% | (1 150) |
| Inter-segment eliminations | (11) | (10) | (43) | (23) | (75) | ||
| TOTAL GROUP | 2 231 | 1 317 | 69% | 4 556 | 3 576 | 27% | 6 772 |
| EBITDA margin | Q3 2020 | Q3 2019 | 9 months 2020 | 9 months 2019 | 12 months 2019 |
| Media segment | 16% | 12% | 11% | 10% | 13% |
| Printing services segment | 12% | 6% | 9% | 8% | 8% |
| TOTAL GROUP | 15% | 9% | 10% | 7% | 10% |
Consolidated balance sheet (unaudited)
| (EUR thousand) | 30.09.2020 | 31.12.2019 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 5 760 | 3 647 |
| Trade and other receivables | 10 871 | 12 705 |
| Corporate income tax prepayment | 48 | 0 |
| Inventories | 2 906 | 3 120 |
| Total current assets | 19 585 | 19 472 |
| Non-current assets | ||
| Other receivables and investments | 1 041 | 975 |
| Deferred tax asset | 38 | 38 |
| Investments in joint ventures | 1 629 | 1 254 |
| Investments in associates | 2 276 | 2 356 |
| Property, plant and equipment | 14 348 | 14 943 |
| Intangible assets | 56 583 | 56 369 |
| Total non-current assets | 75 915 | 75 935 |
| TOTAL ASSETS | 95 499 | 95 407 |
| LIABILITIES | ||
| Current liabilities | ||
| Borrowings | 3 368 | 5 100 |
| Trade and other payables | 17 699 | 16 483 |
| Corporate income tax payable | 24 | 65 |
| Total current liabilities | 21 091 | 21 647 |
| Non-current liabilities | ||
| Long-term borrowings | 18 933 | 19 242 |
| Other long-term liabilities | 2 922 | 2 895 |
| Total non-current liabilities | 21 855 | 22 137 |
| TOTAL LIABILITIES | 42 947 | 43 784 |
| EQUITY | ||
| Minority shareholding | 115 | 100 |
| Capital and reserves attributable to equity holders of parent company: | ||
| Share capital | 17 878 | 17 878 |
| Share premium | 14 277 | 14 277 |
| Treasury shares | (22) | (22) |
| Reserves | 1 758 | 1 688 |
| Retained earnings | 18 546 | 17 701 |
| Total capital and reserves attributable to equity holders of parent company | 52 437 | 51 522 |
| TOTAL EQUITY | 52 552 | 51 622 |
| TOTAL LIABILITIES AND EQUITY | 95 499 | 95 407 |
Consolidated statement of comprehensive income (unaudited)
| (EUR thousand) | Q3 2020 | Q3 2019 | 9 months 2020 | 9 months 2019 | 12 months 2019 |
| Sales | 15 179 | 14 985 | 44 771 | 47 771 | 67 456 |
| Cost of sales | (12 255) | (12 161) | (37 325) | (39 384) | (54 044) |
| Gross profit | 2 924 | 2 824 | 7 446 | 8 387 | 13 412 |
| Other income | 693 | 161 | 1 352 | 450 | 607 |
| Marketing expenses | (661) | (685) | (1 949) | (2 311) | (3 124) |
| Administrative expenses | (1 658) | (1 962) | (5 153) | (5 868) | (8 024) |
| Other expenses | (24) | 1 | (104) | (54) | (148) |
| Operating profit /(loss) | 1 274 | 339 | 1 593 | 603 | 2 722 |
| Interest income | 7 | 6 | 19 | 18 | 22 |
| Interest expenses | (217) | (239) | (658) | (555) | (784) |
| Other finance income/(costs) | (33) | 7 | (61) | (37) | (61) |
| Net finance cost | (243) | (226) | (700) | (574) | (823) |
| Profit/(loss) on shares of joint ventures | 99 | (16) | 107 | (17) | (38) |
| Profit/(loss) on shares of associates | (48) | (22) | (75) | (97) | (114) |
| Profit /(loss) before income tax | 1 082 | 75 | 924 | (85) | 1 746 |
| Income tax expense | (1) | (55) | (3) | (153) | (339) |
| Net profit /(loss) for the reporting period | 1 081 | 20 | 921 | (238) | 1 407 |
| Net profit /(loss) for the reporting period attributable to | |||||
| Equity holders of the parent company | 1 074 | 20 | 906 | (243) | 1 394 |
| Minority shareholders | 7 | 0 | 15 | 5 | 13 |
| Total comprehensive income /(loss) | 1 081 | 20 | 921 | (238) | 1 407 |
| Comprehensive income /(loss) for the reporting period attributable to | |||||
| Equity holders of the parent company | 1 074 | 20 | 906 | (243) | 1 394 |
| Minority shareholders | 7 | 0 | 15 | 5 | 13 |
| Basic earnings per share | 0.04 | 0.00 | 0.03 | (0.01) | 0.05 |
| Diluted earnings per share | 0.03 | 0.00 | 0.03 | (0.01) | 0.05 |
Consolidated cash flow statement (unaudited)
| (EUR thousand) | 9 months 2020 | 9 months 2019 |
| Cash flows from operating activities | ||
| Operating profit for the reporting year | 1 593 | 603 |
| Adjustments for: | ||
| Depreciation, amortisation and impairment | 2 974 | 2 989 |
| (Gain)/loss on sale and write-down of property, plant and equipment | (1) | (17) |
| Cash flows from operating activities: | ||
| Trade and other receivables | 1 880 | (1 463) |
| Inventories | 214 | 130 |
| Trade and other payables | 327 | 3 347 |
| Cash generated from operations | ||
| Income tax paid | (91) | (220) |
| Interest paid | (453) | (428) |
| Net cash generated from operating activities | 6 443 | 4 940 |
| Cash flows from investing activities | ||
| Acquisition of subsidiaries/ associates (less cash acquired) and other investments / cash paid-in equity-accounted investees |
(203) | (4 858) |
| Proceeds from other investments | 84 | 323 |
| Interest received | 1 | 18 |
| Dividends received | 150 | 0 |
| Purchase of property, plant and equipment and intangible assets | (1 623) | (2 111) |
| Proceeds from sale of property, plant and equipment and intangible assets | 29 | 18 |
| Loans granted | (187) | (93) |
| Loan repayments received | 0 | 303 |
| Net cash used in investing activities | (1 750) | (6 400) |
| Cash flows from financing activities | ||
| Payment of lease liabilities | (693) | (669) |
| Change in overdraft | (1 018) | (267) |
| Loans received / Repayments of bank loans | (868) | 3 899 |
| Net cash used in financing activities | (2 579) | 2 963 |
| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | 2 114 | 1 503 |
| Cash and cash equivalents at the beginning of the year | 3 647 | 1 268 |
| Cash and cash equivalents at the end of the year | 5 760 | 2 771 |
Signe Kukin
Group CFO
AS Ekspress Grupp
Phone: +372 669 8381
E-mail: [email protected]
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 1700 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.
Attachment
- EG_III_kvartal_2020_ENG
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