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AS Ekspress Grupp: Consolidated unaudited interim report for the Third Quarter and Nine Months of 2020

Teade

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  3(rd) 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  2(nd) quarter. While the
revenue  drop  in  2(nd) 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  3(rd) 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  3(rd) 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  3(rd) 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  3(rd) quarter which is EUR 0.91
million  higher  as  compared  to  the  3(rd) quarter of 2019. The EBITDA in the
3(rd) 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 3(rd) 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 3(rd) 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  2(nd) 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 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 3(rd) quarter of 2020 totalled EUR 15.2 million
(3(rd)  quarter 2019: EUR 15.0 million).  Revenue increased by 1% year-over-year
in  the 3(rd) 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 3(rd) quarter,  digital revenue  accounted for  48% of total revenue and
70% of  media segment revenue (3(rd) quarter 2019: 44% of total revenue and 68%
of media segment revenue, respectively).

PROFITABILITY

In  the 3(rd )quarter of 2020, the consolidated EBITDA totalled EUR 2.23 million
(3(rd) 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 3(rd) quarter  of 2020, EBITDA grew  by 69% year-over-year and
the  EBITDA margin  was 14.7% (3(rd)  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  2(nd) and 3(rd) 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 2(nd) 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 3(rd) quarter  of 2020 and EUR 0.73 million  of the EBITDA in
the  first nine months  of 2020. The net  profit for the  3(rd) 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

                                                                       12
                                          9 months  9 months           months
                 Q3 2020 Q3 2019 Change % 2020      2019      Change % 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

                                                                       12
                                          9 months  9 months           months
                 Q3 2020 Q3 2019 Change % 2020      2019      Change % 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)

                                             9 months     9 months    12 months
 (EUR thousand)         Q3 2020  Q3 2019         2020         2019         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] (mailto:[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.