Editoria e Media
AS Ekspress Grupp: Consolidated unaudited interim report for Q2 and 6 months of 2023
The Group continued to be successful in increasing its sales volumes in both advertising and digital subscriptions. The 2 quarter was successful in terms of increasing the market share in advertising as well as increasing the average price of digital subscriptions. The Group's 2 quarter's revenue grew strongly and increased by 13% as compared to the same period last year. In terms of the first 6 months of the year, the total revenue increased by 18%. Excluding from revenue the acquisitions made in Lithuania (news portal Lrytas and news agency ELTA) in the second half of 2022, revenue growth was 12% in the first 6 months of the year. Advertising revenue was strong in Estonia and Lithuania where the market has been stable so far and the volumes have remained at the same level as last year.
In Latvia, the total market volume decreased, and the advertising revenue earned by Ekspress Group in Latvia is about 4% less than last year. This decrease has been offset by the increase in sales revenue of the ticket platform and digital screens. The ticket platform operated by the Group successfully sold the tickets for the Jubilee Song and Dance Festival held in Riga, which increased both the number of tickets sold as well as the company's sales.
The inflationary environment and high-interest rates will increase the risks to advertising revenue in all Baltic States in the second half of the year.
The number of digital subscriptions of AS Ekspress Grupp increased by 24% year-over-year (Q2: 9%, 6 months: 20%) and totalled 175.4 thousand subscriptions. The number of the Group's digital subscriptions continued their fast growth in the first 6 months of the year, making up an increasingly higher share of the Group's revenue base. The Group has added nearly 34 000 readers with digital subscriptions in the Baltic States over the last year or 24% more as compared to the end of June last year. The Group's digital revenue base is increasingly based on the sales revenue from digital subscriptions. We have strengthened the quality and volume of content offered by the Group's media companies so as to be the leader in the field of digital subscriptions in all Baltic States. The Group is moving towards its strategic financial goals and aims to offer digital paid content to at least 340 000 subscribers by the year 2026.
The earnings before interest, tax, depreciation and amortisation (EBITDA) of Ekspress Grupp totalled EUR 2.4 million in the 2 quarter, growing by 8%. The EBITDA in the first 6 months of the year totalled EUR 3.6 million, increasing by 25%. Profitability was positively impacted by successful sales of online advertising and digital subscriptions in Estonia and Lithuania, and the volume growth of ticket sales platforms and digital outdoor screens.
The net profit in the first 6 months of 2023 totalled EUR 0.2 million, which is 71% lower as compared to the previous year. Including one-off extraordinary expenses, the net loss for the first 6 months of the year totalled EUR -0.1 million. The decrease in net profit is mainly due to the one-off costs related to the liquidation of the home delivery services of Express Post and its unprofitable operations in the first 6 months of the year in the total amount of EUR -0.6 million. The home delivery services of Express Post were liquidated in the first 6 months of the year and one-off liquidation expenses and unprofitable operations will no longer incur in the next quarters of the Group. In addition, the level of net profit has been impacted by higher interest rates resulting from the increase in the Euribor and higher depreciation expenses resulting from the Group's investments. The negative impact of interest is twofold and manifested itself as an additional expense of EUR 0.3 million in the results for the first 6 months of the year.
The Group's liquidity is solid, and we consider it important to keep liquidity reserves for possible new acquisitions as well as for the possible economic cooldown. As of 30 June 2023, the Group's monetary funds totalled EUR 6.1 million (31.12.2022: EUR 7.4 million). In the first 6 months of the year, the Group repurchased shares in the amount of EUR 1 million and paid dividends to the shareholders in the amount of EUR 1.5 million. Thus, in the first 6 months of 2023 the Group made payments to the shareholders in the total amount of EUR 2.5 million.
In the 2 quarter of 2023, the consolidated revenue totalled EUR 18.5 million (Q2 2022: EUR 16.4 million). The revenue for the 2 quarter increased by 13% year-over-year. The consolidated revenue for the first 6 months of 2023 totalled EUR 35.3 million (6 months 2022: EUR 29.8 million). The revenue for the first 6 months of the year increased by 18% as compared to the previous year. This growth was attributable to both online advertising revenue as well as digital subscription revenue. The share of the Group's digital revenue in total revenue was 82% in the first 6 months of 2023 (6 months 2022: 76% of total revenue). Digital revenue for the first 6 months of 2023 increased by 28% as compared to the same period last year.
In the 2 quarter of 2023, the consolidated EBITDA totalled EUR 2.4 million (Q2 2022: EUR 2.2 million). EBITDA increased by 8% as compared to last year and the EBITDA margin was 13% (Q2 2022: 14%). In the first 6 months of 2023, the consolidated EBITDA totalled EUR 3.6 million (6 months 2022: EUR 2.8 million). EBITDA increased by 25% as compared to last year and the EBITDA margin was 10% (6 months 2022: 9%). Profitability has been driven by successful sales of online advertising and digital subscriptions in Estonia and Lithuania, and the volume growth or ticket sales platforms and digital outdoor screens.
In the 2 quarter of 2023, the consolidated net profit totalled 0.6 million (Q2 2022: EUR 1.3 million). In the first 6 months of 2023, the consolidated net profit, excluding extraordinary expenses, totalled EUR 0.2 million (6 months 2022: EUR 0.8 million). In the first 6 months of 2023, the net profit decreased by 71% as compared to last year. Including one-off extraordinary expenses, the net loss for the first 6 months of the year totalled EUR -0.1 million. The decrease in net profit is mainly due to higher interest rates resulting from the increase in the Euribor and higher depreciation expenses resulting from the Group's investments. The negative impact of interest is twofold and manifests itself as an additional expense of EUR 0.3 million in the results for the first 6 months of the year. The results for the first 6 months of the year were also impacted by the one-off costs in the amount of EUR 0.3 million related to the liquidation of the home delivery services of AS Express Post and the higher operating loss in the amount of EUR 0.3 million earned by the joint venture in the first 6 months of the year. Thus, the negative effect of the liquidation and the unprofitable operations of Express Post on the Group's net profit was EUR 0.6 million higher than in the same period last year. The home delivery services of Express Post were liquidated in the first 6 months of the year and the Group will no longer incur any additional losses on this business in the second half of the year.
In the first 6 months of 2022, the positive one-off impact on the net profit in the amount of EUR 0.2 million was attributable to the profit which arose on the revaluation of the final payment related to the acquisition of Biļešu Paradīze.
In the first 6 months of 2023, the cost of goods sold, marketing, and general and administrative costs totalled EUR 34.0 million (6 months 2022: EUR 29.2 million). Operating expenses increased by EUR 4.8 million (+17%) as compared to the same period last year. Labour costs increased the most, by EUR 2.9 million (+18%).
In the first 6 months of 2023, the Group employed 974 employees on average which is 112 employees more as compared to the same period last year (6 months 2022: 862 employees). This growth is attributable to 88 employees who were transferred from the acquired companies, incl. ELTA news agency in Lithuania acquired in May 2022 and the news portal lrytas.lt acquired in December 2022. 24 employees were hired from other companies in Estonia, Latvia and Lithuania.
At the end of the reporting period, the Group had available cash in the amount of EUR 6.1 million and equity in the amount of EUR 53.1 million (51% of total assets). The comparable data as of 30 June 2022 were EUR 6.8 million and 52.1 million (56% of total assets), respectively. As of 30 June 2023, the Group's net debt totalled EUR 14.7 million (30 June 2022: EUR 10.5 million).
In the first 6 months of 2023, the Group's cash flows from operating activities totalled EUR 4.4 million (6 months 2022: EUR 2.6 million), that were positively impacted by the ticket sales platforms in Estonia and Latvia. The sales activity of the Latvian ticket sales platform has recovered and is in a better position due to higher ticket prices as compared to the pre-Covid-19 period.
In the first 6 months of 2023, the Group's cash flows from investing activities totalled EUR -1.5 million (6 months 2022: EUR -3.6 million), of which EUR -1.2 million was related to the development and acquisition of tangible and intangible assets, demonstrating higher investments in products and technologies. In the first 6 months of the year, the Group invested EUR -0.9 million in new LED screens using a finance lease.
In the first 6 months of 2023, the Group's cash flows from financing activities totalled EUR -4.3 million (6 months 2022: EUR -3.1 million), of which EUR -1.0 million is the share buy-back and EUR -1.5 million is the dividend payment to the shareholders of AS Ekspress Grupp. The financing activities also include the net change in borrowings in the amount of EUR -0.8 million and lease liabilities in the amount of EUR -0.9 million.
Within the framework of the share buy-back programme, on 9 March 2023 AS Ekspress Grupp purchased 588 235 shares at the price of EUR 1.70 per share in the total amount of EUR 1.0 million.
At the regular general meeting of shareholders of AS Ekspress Grupp held on 4 May 2023, it was decided to pay a dividend of 5 euro cents per share in the total amount of EUR 1.49 million. Dividends were paid to shareholders on 24 May 2023.
Signe Kukin
Group CFO
AS Ekspress Grupp
Telephone: +372 669 8381
E-mail address: signe.kukin@egrupp.ee
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