Published: 2020-07-31 07:00:00 CEST
Ekspress Grupp
Half Year financial report

AS Ekspress Grupp: Consolidated unaudited interim report for the Second Quarter and First Half-Year of 2020


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 2nd 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 2nd quarter which is EUR 0.01 million higher as compared to the 2nd 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 2nd 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 2nd 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 2nd 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 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 2nd quarter of 2020 totalled EUR 13.9 million (2nd quarter 2019: EUR 17.5 million). The revenue for the 2nd 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 2nd quarter, digital revenue accounted for 46% of total revenue and 68% of the media segment revenue (at the end of 2nd quarter 2019, 42% of the total revenue and 66% of the media segment revenue, respectively). The consolidated revenue for the 2nd quarter of 2020 where joint ventures have been 50% consolidated line-by-line, totalled EUR 15.7 million (2nd 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 2nd quarter of 2020, the consolidated EBITDA totalled EUR 1.65 million (2nd 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 2nd quarter of 2020, EBITDA grew by 1% year-over-year and the EBITDA margin was 11.9% (2nd 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 2nd quarter of 2020. The net profit for the 2nd 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
 Q2 2020Q2 2019Change %1st Half year 20201st Half year 2019Change %12 months 2019
Media segment 9 86011 512-14%19 86320 869-5%44 218
  incl. revenue from all digital and online channels7 0217 775-10%13 52613 829-2%30 534
  incl. % of revenue from all digital and online channels71%68% 68%66% 69%
Printing services segment4 5696 610-31%10 81313 180-18%25 695
Corporate functions5205082%1 0351 046-1%2 076
Inter-segment eliminations(1 037)(1 155) (2 118)(2 310) (4 533)
TOTAL GROUP13 91217 475-20%29 59332 785-10%67 456
incl. % of revenue from all digital and online channels50%44% 46%42% 45%


(EUR thousand)EBITDA
 Q2 2020Q2 2019Change %1st Half year 20201st Half year 2019Change %12 months 2019
Media segment 1 5141 36411%1 7621 800-2%5 966
Printing services segment248558-56%8311 108-25%2 032
Corporate functions(92)(273)66%(236)(636)63%(1 150)
Inter-segment eliminations(16)(7) (33)(13) (75)
TOTAL GROUP1 6541 6431%2 3252 2593%6 772


EBITDA marginQ2 2020Q2 20191st Half year 20201st Half year 201912 months 2019
Media segment15%12%9%9%13%
Printing services segment5%8%8%8%8%
TOTAL GROUP12%9%8%7%10%


Consolidated balance sheet (unaudited)

(EUR thousand)30.06.202031.12.2019
ASSETS  
Current assets  
Cash and cash equivalents6 3063 647
Trade and other receivables9 79912 705
Corporate income tax prepayment240
Inventories3 0533 120
Total current assets19 18119 472
Non-current assets  
Other receivables and investments1 002975
Deferred tax asset3838
Investments in joint ventures1 4071 254
Investments in associates2 2742 356
Property, plant and equipment 14 56114 943
Intangible assets 56 66456 369
Total non-current assets75 94575 935
TOTAL ASSETS95 12695 407
LIABILITIES  
Current liabilities  
Borrowings 3 2645 100
Trade and other payables18 11816 483
Corporate income tax payable3565
Total current liabilities 21 41621 647
Non-current liabilities   
Long-term borrowings 19 31019 242
Other long-term liabilities2 9302 895
Total non-current liabilities22 23922 137
TOTAL LIABILITIES43 65543 784
EQUITY  
Minority shareholding108100
Capital and reserves attributable to equity holders of parent company:  
Share capital 17 87817 878
Share premium14 27714 277
Treasury shares (22)(22)
Reserves 1 7581 688
Retained earnings17 47217 701
Total capital and reserves attributable to equity holders of parent company51 36351 522
TOTAL EQUITY 51 47151 622
TOTAL LIABILITIES AND EQUITY95 12695 407


Consolidated statement of comprehensive income (unaudited)

(EUR thousand)Q2 2020Q2 20191st Half year 20201st Half year 201912 months 2019
Sales13 91217 47529 59332 78567 456
Cost of sales(11 598)(14 126)(25 070)(27 223)(54 044)
Gross profit2 3153 3494 5235 56213 412
Other income552170659289607
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)6786213192642 722
Interest income66121222
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 ventures1355180(38)
Profit/(loss) on shares of associates(8)(16)(28)(75)(114)
Profit /(loss) before income tax582454(158)(160)1 746
Income tax expense(1)(97)(2)(98)(339)
Net profit /(loss) for the reporting period582356(160)(258)1 407
Net profit /(loss) for the reporting period attributable to     
Equity holders of the parent company 575354(168)(263)1 394
Minority shareholders728513
Total comprehensive income /(loss)582356(160)(258)1 407
Comprehensive income /(loss) for the reporting period attributable to      
Equity holders of the parent company 575354(168)(263)1 394
Minority shareholders728513
Basic and diluted earnings per share0.020.01(0.01)(0.01)0.05


Consolidated cash flow statement (unaudited)

(EUR thousand)1st Half year 20201st Half year 2019
Cash flows from operating activities  
Operating profit for the reporting year319264
Adjustments for:  
Depreciation, amortisation and impairment2 0111 977
(Gain)/loss on sale and write-down of property, plant and equipment(3)2
Cash flows from operating activities:  
Trade and other receivables2 470(1 902)
Inventories68(77)
Trade and other payables 1 5152 182
Cash generated from operations6 3792 446
Income tax paid(56)(140)
Interest paid(306)(317)
Net cash generated from operating activities 6 0171 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 received112
Purchase of property, plant and equipment and intangible assets(1 037)(1 352)
Proceeds from sale of property, plant and equipment and intangible assets294
Loans granted(98)(78)
Loan repayments received0301
Net cash used in investing activities (1 308)(6 073)
Cash flows from financing activities  
Dividends received1500
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 EQUIVALENTS2 659240
Cash and cash equivalents at the beginning of the year3 6471 268
Cash and cash equivalents at the end of the year6 3061 507



Signe Kukin
Group CFO
AS Ekspress Grupp
Phone: +372 669 8381
E-mail: 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.

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EG_II_kvartal_2020_ENG.pdf