AS Ekspress Grupp: Consolidated unaudited interim report for the First Quarter of 2020
The revenue of Ekspress Grupp totalled EUR 15.7 million in the first quarter of 2020 which is EUR 0.4 million or 2 percent higher than in the same period last year. The Group’s earnings before interest, tax, depreciation and amortisation (EBITDA) totalled EUR 0.67 million, increasing by EUR 0.06 million or 9 per cent year-over-year. The Group consistently meets its long-term goal of growing its digital revenue: at the end of the 1st quarter, digital revenue accounted for 65 per cent the Group’s media segment revenue and it increased by 7 per cent as compared to the previous year.
The net loss of the 1st quarter totalled EUR 0.74 million which is EUR 0.13 million or 21 per cent higher than in the same period of 2019. The loss incurred in the 1st quarter is typical of a media group due to seasonality, but the increase in the loss was additionally caused by a higher interest cost as compared to the previous year.
The economy of the Baltic States was strong for the most part of the first quarter, evident in strong advertising sales of media companies. The growth of digital subscriptions also continued strongly in all three countries. Delfi Latvia achieved a situation in the local advertising market where the model of digital subscriptions launched on the market last year has yielded more subscribers today than most Latvia newspapers.
In February, Delfi Lithuania celebrated its 20th anniversary. Together with the launch of the linear TV station in the Lithuanian market, Delfi introduced its new visual identity to be adopted by both Delfi Estonia and Delfi Latvia.
In March, the Group received a major setback when the Baltic States declared a state of emergency to curb the spread of the coronavirus. This in turn led to dramatic changes in the economic environment. The Management Board is aware that the effects of the economic crisis accompanying the virus will be significant for the Group in the second and third quarters, and will depend on the duration and restrictions of the state of emergency. The Group's media companies are the most vulnerable to the effects arising from the restrictions, especially outdoor media and the ticket sales platform in Latvia.
To react to the crisis, the Group’s management significantly cut is cost base already in March. We are still analysing various scenarios and opportunities to cut costs and other measures to manage the economic effect. The Group is of opinion that after the end of the state of emergency, the expected economic recovery will depend on the duration of the state of emergency. We are applying for various national aid measures to alleviate the effect of the state of emergency on group companies in the second quarter which is expected to be difficult.
In the 1st quarter of 2020, the number of digital subscriptions of the periodicals of Ekspress Grupp increased strongly, reaching 54 thousand subscribers. A greater number of the readers of periodicals are willing to pay for the digital web content. The digital subscriptions in Estonia and Latvia increased the most, by 11% and 61%, respectively. The growth of digital subscriptions has also continued in the state of emergency which clearly demonstrates that we provide reliable journalism to our readers.
The journalists of Ekspress Grupp received a large number of nominations for journalism awards and won six awards in Estonia. The journalist of Eesti Ekspress, Sulev Vedler, received the Bonnier prize which is the most prestigious prize in Estonia.
The survey conducted by Kantar Emor on the state of emergency as well as the accelerating growth of digital subscriptions demonstrate a high level of trust of media consumers in local journalism.
For the purpose of providing a clearer and uniform view to the investors and readers of the financial statements, as well as for establishing a better link between the management report and the financial statements, from the 1st quarter of 2020, the Group discloses all figures and ratios in the management report according to International Financial Reporting Standards (IFRS). According to the IFRS, the Group's joint ventures are shown in the management report under the equity method and no longer by proportionate consolidation.
SUMMARY OF THE RESULTS OF THE FIRST QUARTER
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 1st quarter of 2020 totalled EUR 15.7 million (1st quarter 2019: EUR 15.3 million). The revenue for the 1st quarter increased by 2% year-over-year. Revenue growth is primarily attributable to the growth in digital revenue. At the end of the 1st quarter, digital revenue accounted for 41% of total revenue and 65% of the media segment revenue. The Group's digital revenue for the 1st quarter increased by 7% year-over-year. The consolidated revenue for the 1st quarter of 2020 where joint ventures have been 50% consolidated line-by-line, totalled EUR 17.6 million (1st quarter 2019: EUR 17.3 million).
PROFITABILITY
In the 1st quarter of 2020, the consolidated EBITDA totalled EUR 0.67 million (1st quarter 2019: EUR 0.62 million). EBITDA grew by 9% year-over-year and EBITDA margin was 4.3% (1st quarter 2019: 4.0%). The net loss for the 1st quarter was EUR 0.74 million, which is EUR 0.13 million or 21 per cent higher as compared to the same period in 2019. The loss incurred in the 1st quarter is typical of a media group due to seasonality, but the increase in the loss was caused by a higher interest cost as compared to the previous year.
CASH POSITION
At the end of the reporting period, the Group had available cash in the amount of EUR 3.5 million and equity In the amount of EUR 50.9 million (54% of total assets). The comparable figures as of 31 March 2019 were EUR 0.8 million and EUR 49.6 million (62% of total assets), respectively. As of 31 March 2020, the Group's net debt totalled EUR 20.4 million (31 March 2019: EUR 17.0 million). Due to the emergency state related to COVID-19, the Group has an agreement with AS SEB Pank to suspend loan repayments in the period March - May 2020.
Key financial indicators for segments
| (EUR thousand) | Sales | |||
| Q1 2020 | Q1 2019 | Change % | 12 months 2019 | |
| Media segment | 10 003 | 9 357 | 7% | 44 218 |
| incl. revenue from all digital and online channels | 6 505 | 6 054 | 7% | 30 534 |
| incl. % of revenue from all digital and online channels | 65% | 65% | 69% | |
| Printing services segment | 6 243 | 6 570 | -5% | 25 695 |
| Corporate functions | 515 | 539 | -4% | 2 076 |
| Inter-segment eliminations | (1 082) | (1 155) | (4 533) | |
| TOTAL GROUP | 15 680 | 15 310 | 2% | 67 456 |
| (EUR thousand) | EBITDA | |||
| Q1 2020 | Q1 2019 | Change % | 12 months 2019 | |
| Media segment | 248 | 436 | -43% | 5 966 |
| Printing services segment | 584 | 550 | 6% | 2 032 |
| Corporate functions | (143) | (363) | 61% | (1 150) |
| Inter-segment eliminations | (17) | (7) | (75) | |
| TOTAL GROUP | 671 | 616 | 9% | 6 772 |
| EBITDA margin | Q1 2020 | Q1 2019 | 12 months 2019 |
| Media segment | 2% | 5% | 13% |
| Printing services segment | 9% | 8% | 8% |
| TOTAL GROUP | 4% | 4% | 10% |
Consolidated balance sheet (unaudited)
| (EUR thousand) | 31.03.2020 | 31.12.2019 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 3 524 | 3 647 |
| Trade and other receivables | 11 193 | 12 705 |
| Corporate income tax prepayment | 66 | 0 |
| Inventories | 3 334 | 3 120 |
| Total current assets | 18 116 | 19 472 |
| Non-current assets | ||
| Other receivables and investments | 984 | 975 |
| Deferred tax asset | 38 | 38 |
| Investments in joint ventures | 1 170 | 1 254 |
| Investments in associates | 2 387 | 2 356 |
| Property, plant and equipment | 15 012 | 14 943 |
| Intangible assets | 56 305 | 56 369 |
| Total non-current assets | 75 896 | 75 935 |
| TOTAL ASSETS | 94 011 | 95 407 |
| LIABILITIES | ||
| Current liabilities | ||
| Borrowings | 5 016 | 5 100 |
| Trade and other payables | 16 285 | 16 483 |
| Corporate income tax payable | 40 | 65 |
| Total current liabilities | 21 341 | 21 647 |
| Non-current liabilities | ||
| Long-term borrowings | 18 908 | 19 242 |
| Other long-term liabilities | 2 884 | 2 895 |
| Total non-current liabilities | 21 791 | 22 137 |
| TOTAL LIABILITIES | 43 132 | 43 784 |
| EQUITY | ||
| Minority shareholding | 101 | 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 | 1 688 | 1 688 |
| Retained earnings | 16 958 | 17 701 |
| Total capital and reserves attributable to equity holders of parent company | 50 779 | 51 522 |
| TOTAL EQUITY | 50 880 | 51 622 |
| TOTAL LIABILITIES AND EQUITY | 94 011 | 95 407 |
Consolidated statement of comprehensive income (unaudited)
| (EUR thousand) | Q1 2020 | Q1 2019 | 12 months 2019 |
| Sales | 15 680 | 15 310 | 67 456 |
| Cost of sales | (13 472) | (13 097) | (54 044) |
| Gross profit | 2 208 | 2 214 | 13 412 |
| Other income | 107 | 119 | 607 |
| Marketing expenses | (757) | (731) | (3 124) |
| Administrative expenses | (1 893) | (1 938) | (8 024) |
| Other expenses | (24) | (21) | (148) |
| Operating profit /(loss) | (359) | (357) | 2 722 |
| Interest income | 6 | 6 | 22 |
| Interest expenses | (224) | (134) | (784) |
| Other finance income/(costs) | (16) | (19) | (61) |
| Net finance cost | (234) | (147) | (823) |
| Profit/(loss) on shares of joint ventures | (127) | (51) | (38) |
| Profit/(loss) on shares of associates | (20) | (59) | (114) |
| Profit /(loss) before income tax | (740) | (614) | 1 746 |
| Income tax expense | (2) | (1) | (339) |
| Net profit /(loss) for the reporting period | (742) | (615) | 1 407 |
| Net profit /(loss) for the reporting period attributable to | |||
| Equity holders of the parent company | (743) | (618) | 1 394 |
| Minority shareholders | 1 | 3 | 13 |
| Total comprehensive income /(loss) | (742) | (615) | 1 407 |
| Comprehensive income /(loss) for the reporting period attributable to | |||
| Equity holders of the parent company | (743) | (618) | 1 394 |
| Minority shareholders | 1 | 3 | 13 |
| Basic and diluted earnings per share | (0.02) | (0.02) | 0.05 |
Consolidated cash flow statement (unaudited)
| (EUR thousand) | Q1 2020 | Q1 2019 |
| Cash flows from operating activities | ||
| Operating profit for the reporting year | (359) | (357) |
| Adjustments for: | ||
| Depreciation, amortisation and impairment | 1 039 | 962 |
| (Gain)/loss on sale and write-down of property, plant and equipment | 0 | (1) |
| Cash flows from operating activities: | ||
| Trade and other receivables | 1 588 | (16) |
| Inventories | (213) | (217) |
| Trade and other payables | (308) | 993 |
| Cash generated from operations | ||
| Income tax paid | (93) | (73) |
| Interest paid | (127) | (134) |
| Net cash generated from operating activities | 1 526 | 1 158 |
| Cash flows from investing activities | ||
| Acquisition of subsidiaries/ associates (less cash acquired) and other investments / cash paid-in equity-accounted investees | (84) | (459) |
| Interest received | 1 | 6 |
| Purchase of property, plant and equipment and intangible assets | (610) | (597) |
| Proceeds from sale of property, plant and equipment and intangible assets | 1 | 3 |
| Loans granted | (59) | (49) |
| Loan repayments received | 0 | 199 |
| Net cash used in investing activities | (752) | (897) |
| Cash flows from financing activities | ||
| Payment of lease liabilities | (310) | (196) |
| Change in overdraft | (25) | (665) |
| Loans received / Repayments of bank loans | (562) | 138 |
| Net cash used in financing activities | (897) | (723) |
| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | (123) | (462) |
| Cash and cash equivalents at the beginning of the year | 3 647 | 1 268 |
| Cash and cash equivalents at the end of the year | 3 524 | 805 |
Signe Kukin
Group CFO
AS Ekspress Grupp
Phone:
E-mail:
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.
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