Currency

Title

AS Ekspress Grupp: Consolidated unaudited interim report for the First Quarter of 2022

In the 1(st) quarter of 2022, the revenue of AS Ekspress Grupp increased by 22% to EUR 13.4 million and EBITDA increased by 3% to EUR 0.62 million. Due to the seasonality of the Group's business, as expected the Group's net loss in the 1(st) quarter of 2022 totalled EUR 0.51 million. Digital revenue contributed 78% to the Group's total revenue at the end of March. Digital revenue increased by 36% as compared to the same period last year.

The Group's performance in the 1(st) quarter met expectations: the consolidated revenue totalled EUR 13.4 million (1(st) quarter 2021: EUR 11.0 million), increasing by 22% as compared to the previous year. Revenue growth in the 1(st) quarter was primarily attributable to the growth in online advertising and digital subscription revenue. The total advertising market has not changed substantially in terms of its size as compared to the previous year, but the online advertising market has continued to grow as compared to traditional media channels. Revenue growth was as expected but it was still negatively impacted by Russia's offensive in Ukraine due to which several planned campaigns were postponed by advertising customers, primarily in Lithuania and Latvia. The wider impact of the war on the economies of the Baltic States is currently difficult to predict. The revenue of Geenius Meedia that was acquired at the end of 2021 totalled EUR 0.5 million in the 1(st) quarter, i.e. contributing ca 5% to the Group's sales.

The number of the digital subscriptions of AS Ekspress Grupp increased by 50% by the end of March 2022 as compared to the same period last year and totalled 146 thousand. Õhtuleht and Delfi Lithuania demonstrated the strongest growth. The growth of digital subscriptions also met expectations, but the number of subscribers increased at the end of February, because during turbulent times in the world, the readers are more interested in high-quality and objective journalism.

The earnings before interest, tax, depreciation and amortisation (EBITDA) of Ekspress Grupp totalled EUR 0.62 million in the 1(st) quarter which is 3% more as compared to the same period in 2021. Due to the seasonality of the business, the Group incurred a net loss of EUR 0.51 million in the 1(st) quarter. In the 1(st) quarter, the financial aid to Ukraine in the amount of EUR 0.09 million was recognised as a one-off expense. Operating expenses increased by EUR 2.54 million (22%) in the 1(st) quarter of which staff costs made up EUR 1.78 million (29%). In the 1(st) quarter, the number of employees increased by 18%, i.e. by 132 people, 46 employees of whom came from OÜ Geenius Meedia acquired at the end of 2021 and 86 employees from other media companies in Estonia, Latvia and Lithuania. In addition to the pressure on wages due to the general price inflation, the employee-related cost base has increased on account of additional expenditures of the editorial offices covering the warfare in Ukraine.

Due to the military operation launched in Ukraine on 24 February, the editorial offices in all our media companies are working 24/7. This will put enormous pressure on the work of the editorial offices as well as journalists. Our editorial offices are used to covering crises, and their work was reorganised quickly and efficiently. Special Russian language portals targeting Ukrainian refugees were launched operatively in Estonia, Latvia and Lithuania. The real estate portal Kinnisvara24.ee (https://kinnisvara24.delfi.ee/) that is co-owned by Ekspress Grupp developed as special real estate environment at the request of the Ministry of Social Affairs for the refugees who wish to find accommodation, and for the people of Estonia who wish to advertise accommodation for the Ukrainian refugees.

At the beginning of March, AS Ekspress Grupp, AS Postimees Grupp and AS Eesti Post operating under the trademark of Omniva concluded a contract, according to which Omniva will acquire all shares of AS Express Post from the media houses. Before entry into force, the transaction needs to be approved by the Estonia Competition Authority that has up to 5 months to develop a position. The operations of several parallel home delivery networks are getting more complicated in Estonia each year, despite continuous improvements of efficiency in both delivery organisations and state subsidies in rural areas. The Group is keen on offering affordable newspaper subscriptions for as long as possible, and in a country the size of Estonia, the merger of postal companies is the only possible outcome. As a result of the merger of Express Post and Omniva, a larger and stronger postal organisation will be established, from which all parties will gain, primarily the subscribers of newspapers and magazines.

Q1 RESULTS

REVENUE

In the 1(st) quarter of 2022, the consolidated revenue totalled EUR 13.4 million (1(st) quarter 2021: EUR 11.0 million). Revenue increased by 22% year-over-year in the 1(st) quarter. Both online advertising as well as digital subscriptions revenue contributed to this growth. The share of the Group's digital revenue in

the total revenue was 78% at the end of the 1(st) quarter of 2022 (at the end of the 1(st) quarter 2021: 70% of total revenue). Digital revenue increased by 36% as compared to the same period last year.

PROFITABILITY

In the 1(st) quarter of 2022, the consolidated EBITDA totalled EUR 0.62 million (1(st) quarter 2021: EUR 0.60 million). In the 1(st) quarter of 2022, EBITDA increased by 3% as compared to the previous year and the EBITDA margin was 5% (1(st) quarter 2021: 5%). In the 1(st) quarter of 2022, the consolidated net loss totalled EUR -0.51 million (1(st) quarter 2021: EUR -0.45 million).

EXPENSES

In the 1(st) quarter of 2022, the cost of goods sold, marketing, and general and administrative costs totalled EUR 13.84 million (1(st) quarter 2021: EUR 11.30 million). In the 1(st) quarter of 2022, operating expenses increased by EUR 2.54 million (22%), of which staff costs were EUR 1.78 million (29%). In the 1(st) quarter of 2022, the number of employees increased by 18% (+132 employees, incl. 46 employees from the acquisition of OÜ Geenius Meedia at the end of 2021 and 86 employees from other media companies in Estonia, Latvia and Lithuania). In addition to the pressure on wages due to the general price inflation, the employee-related cost base has increased on account of additional expenditures of the editorial offices covering the warfare in Ukraine.

In the 1(st) quarter, the financial aid to Ukraine in the amount of EUR 0.09 million was recognised as a one-off expense.

CASH POSITION

At the end of the reporting period, the Group had available cash in the amount of EUR 8.9 million and equity in the amount of EUR 53.2 million (57% of total assets). The comparable data as of 31 March 2021, including the printing services segment, were EUR 4.6 million and EUR 54.1 million (58% of total assets), respectively. As of 31 March 2022, the Group's net debt was EUR 12.7 million (31 December 2021: EUR 11.3 million).

In the 1(st) quarter of 2022, the Group's cash flows from operating activities totalled EUR 0.54 million (1(st) quarter 2021: EUR 0.54 million, incl. printing services segment).

In the 1(st) quarter of 2022, the Group's cash flows from investing activities totalled EUR -1.80 million (1(st) quarter 2021: EUR -0.70 million), of which EUR -1,63 million was related to development and acquisition of property, plant and equipment and intangible assets, indicating higher investments in products and technologies. In the 1(st) quarter, the Group invested EUR -1.18 million in new LED screens, partly to be funded with a finance lease in the 2(nd) and 3(rd) quarter of 2022.

In the 1(st) quarter of 2022, the Group's cash flows from financing activities totalled EUR -0.82 million (1(st) quarter 2021: EUR -1.54 million). Financing activities were primarily related to the net changes in borrowings and principal payments of the lease liability, where the changes made to SEB loan contracts entered into in summer 2021 had a positive impact. In the 1(st) quarter of 2021, treasury shares were purchased in the amount of EUR 0.42 million.

DIVIDENDS

In February 2022, the Management Board of the Group made a proposal to the shareholders to distribute dividends from the net profit of 2021 in the amount of 5 euro cents per share, i.e. in the total amount of EUR 1.51 million. As of 28.04.2022, the shareholders Hans Luik and HHL Rühm OÜ have submitted a new draft resolution to pay dividends of 8 euro cents per share, i.e. in the total amount of EUR 2.42 million. The decision on dividend distribution will be made at the General Meeting of Shareholders on 2 May 2022.

Key financial indicators for segments

(EUR thousand)		Sales
								Q1 2022 Q1 2021 Change % 12 months 2021
Media segment			13 081		10 656	23%		52 093
incl. revenue from all digital and online channels			10 434		7 663	36%		40 453
% of revenue from all digital and online channels		80%		72%			78%
Corporate functions		1 092			1 052	4%		4 118
Inter-segment eliminations		(747)			(706)			(2 695)
TOTAL GROUP			13 426		11 002	22%		53 516
% of revenue from all digital and online channels		78%		70%			76%
(EUR thousand)	EBITDA
	Q1 2022		Q1 2021			Change %		12 months 2021
Media segment	893	795			12%		8 927
Corporate functions	(230)		(179)		-29%		(669)

Inter-segment eliminations		(46)		(20)
TOTAL GROUP		616		596	3%	8 240
EBITDA margin	Q1 2022	Q1 2021		12 months 2021
Media segment	7%	7%	17%
TOTAL GROUP	5%	5%	15%
Consolidated balance sheet (unaudited)
(EUR thousand)							31.03.2022 31.12.2021
------------------------------------------------------------------------------- ASSETS
------------------------------------------------------------------------------- Current assets
------------------------------------------------------------------------------- Cash and cash equivalents						8 878		10 962
------------------------------------------------------------------------------- Trade and other receivables						9 517		9 323
------------------------------------------------------------------------------- Corporate income tax prepayment						120		2
------------------------------------------------------------------------------- Inventories						272		266
------------------------------------------------------------------------------- Total current assets						18 787		20 553
------------------------------------------------------------------------------- Non-current assets
------------------------------------------------------------------------------- Other receivables and investments						1 645		1 671
------------------------------------------------------------------------------- Deferred tax asset						42		42
------------------------------------------------------------------------------- Investments in joint ventures						1 041		1 011
------------------------------------------------------------------------------- Investments in associates						2 367		2 210
------------------------------------------------------------------------------- Property, plant and equipment						8 781		7 964
------------------------------------------------------------------------------- Intangible assets						60 924		60 807
------------------------------------------------------------------------------- Total non-current assets						74 801		73 705
------------------------------------------------------------------------------- TOTAL ASSETS						93 587		94 258
-------------------------------------------------------------------------------

		3 201
		17 664
73		82
		20 947

		19 018
601		601
		19 619
		40 566

139		140

		18 478
		14 277
		(384)
		1 9 2 0
		19 261



	2 754 18 087 20 913 18 846 19 447 40 361 18 478 14 277 (367) 1 929 18 771	53 088 53 552 53 227 53 692 93 587 94 258

Consolidated statement of comprehensive income (unaudited)

(EUR thousand)			Q1 2022 Q1 2021 12 months 2021
Continuing operations
Sales	13 426	11 002	53 516
Cost of sales	$(11\ 034)\ (9\ 002)$		(39 674)
Gross profit	2 3 9 3	2 000	13 842
Other income --------------------	119	106	929
Marketing expenses		$(655)$ $(417)$	(2 359)
Administrative expenses		$(2\ 147)$ $(1\ 876)$	(7435)
Other expenses	(42)	(24)	(113)
Operating profit /(loss)	(332)	(211)	4 864
Interest income	10	9	35
Interest expenses _______		$(169)$ $(181)$	(709)
Other finance income/(costs) .	(14)	16	339
Net finance cost		$(172)$ $(157)$	(335)
Profit/(loss) on shares of joint ventures		$(133)$ $(107)$	(281)
Profit/(loss) on shares of associates	130	35	161
Profit / (loss) before income tax	(508)	(440)	4 4 0 9
Income tax expense	(4)	(5)	(276)
Net profit / (loss) from continuing operations	(512)	(445)	4 1 3 3
Net profit /(loss) from discontinued operation	0	180	(1 876)
Net profit /(loss) for the reporting period (512) (264)			2 2 5 7
Net profit /(loss) for the reporting period attributable to
Equity holders of the parent company (511) (265) 2 243
Minority interest		$(1)$ 1	14

Total comprehensive income /(loss) -------------------------------------------------------------------------------	(512)	(264)	2 257
Comprehensive income /(loss) for the reporting period attributable to -------------------------------------------------------------------------------
Equity holders of the parent company -------------------------------------------------------------------------------	(511)	(265)	2 243
Minority interest -------------------------------------------------------------------------------	(1)	1	14
Earnings per share (euro) - continuing operations -------------------------------------------------------------------------------
Basic earnings per share -------------------------------------------------------------------------------	(0.02)	(0.01)	0.14
Diluted earnings per share -------------------------------------------------------------------------------	(0.02)	(0.01)	0.13
Earnings per share (euro) -------------------------------------------------------------------------------
Basic earnings per share -------------------------------------------------------------------------------	(0.02)	(0.01)	0.07
Diluted earnings per share -------------------------------------------------------------------------------	(0.02)	(0.01)	0.07

Consolidated cash flow statement (unaudited)

(EUR thousand)	Q1 2022	2021*	Q1 12 months 2021*
------------------------------------------------------------------------------- Cash flows from operating activities
------------------------------------------------------------------------------- Operating profit /(loss) for the reporting year	(332)	4	3 060
------------------------------------------------------------------------------- Adjustments for (non-cash):
------------------------------------------------------------------------------- Depreciation and amortisation -------------------------------------------------------------------------------	948	1 111	4 162
(Gain)/loss on sale, write-down and impairment of property, plant and equipment -------------------------------------------------------------------------------	(7)	(1)	(10)
Change in value of share option	9	10	36
------------------------------------------------------------------------------- Loss on sale of discontinued operation	0	0	2 077
------------------------------------------------------------------------------- Cash flows from operating activities:
------------------------------------------------------------------------------- Trade and other receivables	(214)	192	(1 599)
------------------------------------------------------------------------------- Inventories	(6)	10	(33)
------------------------------------------------------------------------------- Trade and other payables	378	(573)	1 464

------------------------------------------------------------------------------- Cash generated from operations
------------------------------------------------------------------------------- Income tax paid	(131)	(88)	(281)
------------------------------------------------------------------------------- Interest paid	(104)	(128)	(803)
------------------------------------------------------------------------------- Net cash generated from operating activities	542	536	8 073
------------------------------------------------------------------------------- Cash flows from investing activities
------------------------------------------------------------------------------- Acquisition of subsidiaries/ associates (less cash acquired) and other investments / cash paid-in equity-accounted investees	(257)	(80)	(3 325)
------------------------------------------------------------------------------- Disposal of discontinued operation, net of cash disposed of -------------------------------------------------------------------------------	0	0	6 326
Receipts of other investments	0	51	51
------------------------------------------------------------------------------- Interest received	1	2	3
------------------------------------------------------------------------------- Purchase of property, plant and equipment and intangible assets -------------------------------------------------------------------------------	(1 627)	(628)	(2 786)
Proceeds from sale of property, plant and equipment and intangible assets	25	1	3
------------------------------------------------------------------------------- Loans granted	(30)	(40)	(212)
------------------------------------------------------------------------------- Loan repayments received	86	0	156
------------------------------------------------------------------------------- Dividends received	0	0	828
------------------------------------------------------------------------------- Net cash used in investing activities	(1 803)	(696)	1 044
------------------------------------------------------------------------------- Cash flows from financing activities
------------------------------------------------------------------------------- Dividends paid	0	0	(3 028)
------------------------------------------------------------------------------- Payment of lease liabilities	(402)	(498)	(1 814)
------------------------------------------------------------------------------- Loans received / Repayments of bank loans	(420)	(618)	864
------------------------------------------------------------------------------- Purchases of treasury shares	0	(422)	(446)
------------------------------------------------------------------------------- Net cash used in financing activities		(823) (1 537)	(4 424)
------------------------------------------------------------------------------- NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (2 084) (1 697)			4 693

------------------------------------------------------------------------------- Cash and cash equivalents at the beginning of the period -------------------------------------------------------------------------------	10 962	6 269	6 269
Cash and cash equivalents at the end of the period -------------------------------------------------------------------------------	8 878	4 571	10 962

*No adjustments have been made to the consolidated cash flows for 2021 in accordance with the requirements of IFRS. Cash flows related to the printing services segment are still consolidated line-by-line.

Signe Kukin Group CFO AS Ekspress Grupp Telephone: +372 669 8381 E-mail address: [email protected] (mailto:[email protected])

AS Ekspress Grupp is the leading Baltic media group whose key activities include web media content production, publishing of newspapers, magazines and books. The Group also operates an electronic ticket sales platform and ticket sales sites in Estonia and Latvia. Ekspress Grupp that launched its operations in 1989 employs more than 1400 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.

AI Terminal

Ekspress Grupp

2214_rns_2022-04-29_9ae77622-f255-41bb-a7c7-a0dab181b1e9.pdf