The revenue of AS Ekspress Grupp totalled EUR 13.9 million in the second quarter
of 2020 which is 20% less than in the same period last year. The revenue for the
first six months of the year totalled EUR 29.6 million which is 10% less as
compared to 2019. The Group's performance in the 2(nd) quarter was significantly
affected by the crisis months related to the spread of the coronavirus where the
Group's advertising revenue decreased by ca 19% in Estonia and Latvia as
compared to last year. The state of emergency related to COVID-19 has primarily
impacted the operations of the Latvian ticket sales platform and the advertising
sales of digital outdoor screens both in Estonia and Latvia. The revenue in
these areas was at a minimum level in the second quarter.
The Group responded quickly to the crisis. We reduced the cost base (incl. wage
cuts in almost all group companies) and applied for various public measures in
order to alleviate the situation and prevent employee layoffs. While the
advertising revenue showed signs of a recovery in the second quarter, the
restrictions applying to events will continue to impact the operating volumes of
the ticket business for several months and thus no fast recovery to the prior
level is to be expected.
The earnings before interest, tax, depreciation and amortisation (EBITDA) of
Ekspress Grupp were EUR 1.65 million in the 2(nd) quarter which is EUR 0.01
million higher as compared to the 2(nd) quarter of 2019. In the first six months
of the year, EBITDA totalled EUR 2.33 million, increasing by 3% year-over-year.
In an economic downturn, we adhered to the Group's long-term ambition to grow
Its digital revenue. We are close to meeting our targets for growing our digital
revenue: by the end of the 2(nd) quarter, digital revenue made up 68% of the
Group's media segment revenue and 46% of the Group's total revenue. The figures
for the first six months of 2019 were 66% and 42%, respectively.
In the second quarter of 2020, the digital subscriptions of the periodicals of
Ekspress Grupp grew strongly and reached 63 thousand subscribers in the Baltic
States which is 26% more as compared to the year-end 2019. By the end of 2(nd)
quarter of 2020, the number of digital subscriptions of the periodicals of
Ekspress Grupp made up 53% of the volume of the entire market as reported by the
Estonian Media Association. The growth in digital subscribers demonstrates
clearly that we are able to offer reliable journalism both in ordinary as well
as crisis circumstances. The so-called global digital transformation is also
supporting the trend where consumers are more willing to pay for good video,
audio or text content.
The Group's net profit for the 2(nd) quarter totalled EUR 0.58 million which is
EUR 0.23 million higher than in the same period of 2019. The loss for the first
six months of the year totalled EUR 0.16 million which is EUR 0.10 million less
as compared to last year.
Despite the crisis months, the Group managed to improve its liquidity. By the
end of June, the Group's cash totalled EUR 6.3 million (30.06.2019: EUR 1.5
million) which was positively impacted by the grace periods granted by banks,
deferral of tax liabilities and the salary subsidy received from the Estonian
Unemployment Insurance Fund. It is important for us to maintain our liquidity
position as the future scope of the crisis related to the coronavirus is still
unknown.
The forecasts call for a 10% decline in the GDP on average in the Baltic States
this year. We are witnessing how the effects of the economic crisis related to
the virus will also have a major impact on the Group in the third and fourth
quarters. The Group's media companies, especially outdoor media and the ticket
sales platform in Latvia are most vulnerable to future potential restrictions.
SUMMARY OF THE RESULTS OF THE SECOND QUARTER AND FIRST HALF-YEAR
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 1(st) 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 2(nd) quarter of 2020 totalled EUR 13.9 million
(2(nd) quarter 2019: EUR 17.5 million). The revenue for the 2(nd )quarter
decreased by 20% year-over-year. The revenue drop is primarily attributable to
the deterioration of the business environment related to the COVID-19 state of
emergency resulting in a decline in advertising and printing services revenue.
The consolidated revenue for the first six months of 2020 totalled EUR 29.6
million (first six months of 2019: EUR 32.8 million). At the end of the 2(nd)
quarter, digital revenue accounted for 46% of total revenue and 68% of the media
segment revenue (at the end of 2(nd) quarter 2019, 42% of the total revenue and
66% of the media segment revenue, respectively). The consolidated revenue for
the 2(nd) quarter of 2020 where joint ventures have been 50% consolidated line-
by-line, totalled EUR 15.7 million (2(nd) quarter 2019: EUR 19.5 million) and
the consolidated revenue for the first six months of 2020 totalled EUR 33.3
million (first six months of 2019: EUR 36.8 million).
PROFITABILITY
In the 2(nd) quarter of 2020, the consolidated EBITDA totalled EUR 1.65 million
(2(nd) quarter 2019: EUR 1.64 million) and in the first six months of 2020, the
consolidated EBITDA totalled EUR 2.33 million (first six months of 2019: EUR
2.26 million). In the 2(nd) quarter of 2020, EBITDA grew by 1% year-over-year
and the EBITDA margin was 11.9% (2(nd) quarter 2019: 9.4%). In the second
quarter of 2020, profitability was positively impacted by cost savings
throughout the entire Group (incl. wage cuts) and the salary subsidy received
from the Estonian Unemployment Insurance Fund in the amount of EUR 1.14 million,
that will be accrued as income in the second, third and fourth quarters. The
salary subsidy made up EUR 0.32 million of the EBITDA in the 2(nd) quarter of
2020. The net profit for the 2(nd) quarter of 2020 totalled EUR 0.58 million,
which is EUR 0.23 million or 63 per cent 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 6.3 million and equity in the amount of EUR 51.5 million (54% of total
assets). The comparable figures as of 30 June 2019 were EUR 1.5 million and EUR
50.0 million (55% of total assets), respectively. As of 30 June 2020, the
Group's net debt totalled EUR 16.3 million (30 June 2019: EUR 19.2 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
1.20 million) and with AS Citadele banka to suspend loan payments in the period
June-November 2020 (EUR 0.30 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
1(st) 1(st) 12
Half year Half year months
Q2 2020 Q2 2019 Change % 2020 2019 Change % 2019
Media segment 9 860 11 512 -14% 19 863 20 869 -5% 44 218
incl. revenue
from all
digital and
online channels 7 021 7 775 -10% 13 526 13 829 -2% 30 534
incl. % of
revenue from
all digital and
online channels 71% 68% 68% 66% 69%
Printing
services
segment 4 569 6 610 -31% 10 813 13 180 -18% 25 695
Corporate
functions 520 508 2% 1 035 1 046 -1% 2 076
Inter-segment
eliminations (1 037) (1 155) (2 118) (2 310) (4 533)
TOTAL GROUP 13 912 17 475 -20% 29 593 32 785 -10% 67 456
incl. % of
revenue from
all digital and
online channels 50% 44% 46% 42% 45%
(EUR thousand) EBITDA
1(st) 1(st) 12
Half year Half year months
Q2 2020 Q2 2019 Change % 2020 2019 Change % 2019
Media segment 1 514 1 364 11% 1 762 1 800 -2% 5 966
Printing
services
segment 248 558 -56% 831 1 108 -25% 2 032
Corporate
functions (92) (273) 66% (236) (636) 63% (1 150)
Inter-segment
eliminations (16) (7) (33) (13) (75)
TOTAL GROUP 1 654 1 643 1% 2 325 2 259 3% 6 772
1(st) Half 1(st) Half
EBITDA margin Q2 2020 Q2 2019 year 2020 year 2019 12 months 2019
Media segment 15% 12% 9% 9% 13%
Printing services
segment 5% 8% 8% 8% 8%
TOTAL GROUP 12% 9% 8% 7% 10%
Consolidated balance sheet (unaudited)
(EUR thousand) 30.06.2020 31.12.2019
-------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------
Current assets
-------------------------------------------------------------------------------
Cash and cash equivalents 6 306 3 647
-------------------------------------------------------------------------------
Trade and other receivables 9 799 12 705
-------------------------------------------------------------------------------
Corporate income tax prepayment 24 0
-------------------------------------------------------------------------------
Inventories 3 053 3 120
-------------------------------------------------------------------------------
Total current assets 19 181 19 472
-------------------------------------------------------------------------------
Non-current assets
-------------------------------------------------------------------------------
Other receivables and investments 1 002 975
-------------------------------------------------------------------------------
Deferred tax asset 38 38
-------------------------------------------------------------------------------
Investments in joint ventures 1 407 1 254
-------------------------------------------------------------------------------
Investments in associates 2 274 2 356
-------------------------------------------------------------------------------
Property, plant and equipment 14 561 14 943
-------------------------------------------------------------------------------
Intangible assets 56 664 56 369
-------------------------------------------------------------------------------
Total non-current assets 75 945 75 935
-------------------------------------------------------------------------------
TOTAL ASSETS 95 126 95 407
-------------------------------------------------------------------------------
LIABILITIES
-------------------------------------------------------------------------------
Current liabilities
-------------------------------------------------------------------------------
Borrowings 3 264 5 100
-------------------------------------------------------------------------------
Trade and other payables 18 118 16 483
-------------------------------------------------------------------------------
Corporate income tax payable 35 65
-------------------------------------------------------------------------------
Total current liabilities 21 416 21 647
-------------------------------------------------------------------------------
Non-current liabilities
-------------------------------------------------------------------------------
Long-term borrowings 19 310 19 242
-------------------------------------------------------------------------------
Other long-term liabilities 2 930 2 895
-------------------------------------------------------------------------------
Total non-current liabilities 22 239 22 137
-------------------------------------------------------------------------------
TOTAL LIABILITIES 43 655 43 784
-------------------------------------------------------------------------------
EQUITY
-------------------------------------------------------------------------------
Minority shareholding 108 100
-------------------------------------------------------------------------------
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 17 472 17 701
-------------------------------------------------------------------------------
Total capital and reserves attributable to equity
holders of parent company 51 363 51 522
-------------------------------------------------------------------------------
TOTAL EQUITY 51 471 51 622
-------------------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY 95 126 95 407
-------------------------------------------------------------------------------
Consolidated statement of comprehensive income (unaudited)
1(st) Half 1(st) Half 12 months
(EUR thousand) Q2 2020 Q2 2019 year 2020 year 2019 2019
-------------------------------------------------------------------------------
Sales 13 912 17 475 29 593 32 785 67 456
-------------------------------------------------------------------------------
Cost of sales (11 598) (14 126) (25 070) (27 223) (54 044)
-------------------------------------------------------------------------------
Gross profit 2 315 3 349 4 523 5 562 13 412
-------------------------------------------------------------------------------
Other income 552 170 659 289 607
-------------------------------------------------------------------------------
Marketing expenses (531) (894) (1 288) (1 625) (3 124)
-------------------------------------------------------------------------------
Administrative
expenses (1 602) (1 969) (3 495) (3 906) (8 024)
-------------------------------------------------------------------------------
Other expenses (56) (35) (80) (56) (148)
-------------------------------------------------------------------------------
Operating profit
/(loss) 678 621 319 264 2 722
-------------------------------------------------------------------------------
Interest income 6 6 12 12 22
-------------------------------------------------------------------------------
Interest expenses (217) (183) (441) (317) (784)
-------------------------------------------------------------------------------
Other finance
income/(costs) (12) (25) (28) (44) (61)
-------------------------------------------------------------------------------
Net finance cost (223) (202) (457) (349) (823)
-------------------------------------------------------------------------------
Profit/(loss) on
shares of joint
ventures 135 51 8 0 (38)
-------------------------------------------------------------------------------
Profit/(loss) on
shares of associates (8) (16) (28) (75) (114)
-------------------------------------------------------------------------------
Profit /(loss) before
income tax 582 454 (158) (160) 1 746
-------------------------------------------------------------------------------
Income tax expense (1) (97) (2) (98) (339)
-------------------------------------------------------------------------------
Net profit /(loss)
for the reporting
period 582 356 (160) (258) 1 407
-------------------------------------------------------------------------------
Net profit /(loss)
for the reporting
period attributable
to
-------------------------------------------------------------------------------
Equity holders of the
parent company 575 354 (168) (263) 1 394
-------------------------------------------------------------------------------
Minority shareholders 7 2 8 5 13
-------------------------------------------------------------------------------
Total comprehensive
income /(loss) 582 356 (160) (258) 1 407
-------------------------------------------------------------------------------
Comprehensive income
/(loss) for the
reporting period
attributable to
-------------------------------------------------------------------------------
Equity holders of the
parent company 575 354 (168) (263) 1 394
-------------------------------------------------------------------------------
Minority shareholders 7 2 8 5 13
-------------------------------------------------------------------------------
Basic and diluted
earnings per share 0.02 0.01 (0.01) (0.01) 0.05
-------------------------------------------------------------------------------
Consolidated cash flow statement (unaudited)
(EUR thousand) 1(st) Half year 2020 1(st) Half year 2019
-------------------------------------------------------------------------------
Cash flows from operating activities
-------------------------------------------------------------------------------
Operating profit for the reporting
year 319 264
-------------------------------------------------------------------------------
Adjustments for:
-------------------------------------------------------------------------------
Depreciation, amortisation and
impairment 2 011 1 977
-------------------------------------------------------------------------------
(Gain)/loss on sale and write-down
of property, plant and equipment (3) 2
-------------------------------------------------------------------------------
Cash flows from operating
activities:
-------------------------------------------------------------------------------
Trade and other receivables 2 470 (1 902)
-------------------------------------------------------------------------------
Inventories 68 (77)
-------------------------------------------------------------------------------
Trade and other payables 1 515 2 182
-------------------------------------------------------------------------------
Cash generated from operations 6 379 2 446
-------------------------------------------------------------------------------
Income tax paid (56) (140)
-------------------------------------------------------------------------------
Interest paid (306) (317)
-------------------------------------------------------------------------------
Net cash generated from operating
activities 6 017 1 989
-------------------------------------------------------------------------------
Cash flows from investing activities
-------------------------------------------------------------------------------
Acquisition of subsidiaries/
associates (less cash acquired) and
other investments / cash paid-in
equity-accounted investees (203) (4 960)
-------------------------------------------------------------------------------
Interest received 1 12
-------------------------------------------------------------------------------
Purchase of property, plant and
equipment and intangible assets (1 037) (1 352)
-------------------------------------------------------------------------------
Proceeds from sale of property,
plant and equipment and intangible
assets 29 4
-------------------------------------------------------------------------------
Loans granted (98) (78)
-------------------------------------------------------------------------------
Loan repayments received 0 301
-------------------------------------------------------------------------------
Net cash used in investing
activities (1 308) (6 073)
-------------------------------------------------------------------------------
Cash flows from financing activities
-------------------------------------------------------------------------------
Dividends received 150 0
-------------------------------------------------------------------------------
Payment of lease liabilities (519) (410)
-------------------------------------------------------------------------------
Change in overdraft (1 018) 67
-------------------------------------------------------------------------------
Loans received / Repayments of bank
loans (662) 4 667
-------------------------------------------------------------------------------
Net cash used in financing
activities (2 050) 4 324
-------------------------------------------------------------------------------
NET (DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS 2 659 240
-------------------------------------------------------------------------------
Cash and cash equivalents at the
beginning of the year 3 647 1 268
-------------------------------------------------------------------------------
Cash and cash equivalents at the end
of the year 6 306 1 507
-------------------------------------------------------------------------------
Signe Kukin
Group CFO
AS Ekspress Grupp
Phone: +372 669 8381
E-mail: signe.kukin@egrupp.ee (mailto: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 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.
|