Ekspress Grupp

Quarterly Report • Oct 31, 2023

Company AS Ekspress Grupp

Type Company Release

Category Management interim statement or quaterly financial report

Disclosure time 31 Oct 2023 08:00:00 +0200

Attachments:

• EG_III_kvartal_2023_ENG.pdf (http://oam.fi.ee/en/download?id=7766)

• EG_III_kvartal_2023_EST.pdf (http://oam.fi.ee/en/download?id=7767)

Currency

Title

AS Ekspress Grupp: Consolidated unaudited interim report for Q3 and 9 months of 2023

The revenue of AS Ekspress Grupp for the 3(rd) quarter of 2023 increased by 9% to EUR 16.5 million and EBITDA increased by 8% to EUR 2.4 million. The revenue for the first 9 months of 2023 increased by 15% to EUR 51.8 million and EBITDA increased by 18% to EUR 6.0 million as compared to last year. The Group's net profit for the 3(rd) quarter totalled EUR 0.9 million and for the first 9 months, EUR 1.2 million, decreasing by 28% year-over-year without taking into consideration one-off expenses. The decrease in net profit is mainly influenced by interest rates that have increased due to the increase in Euribor and the increase in depreciation expenses resulting from the Group's investments. Digital revenue increased by 24% as compared to the same period last year and made up 83% of the Group's total revenue. The income from digital subscriptions of the Group's media companies and the number of people with digital subscriptions grew strongly in all three countries during the year. The sales revenue from ticket platforms and advertising revenue from outdoor screens have increased strongly.

The Group's revenue growth for the 3(rd) quarter was strong, increasing by 9% as compared to the same period last year. Total revenue growth was 15% in the ninemonth period. Excluding from revenue the acquisitions made in Lithuania (news portal Lrytas and news agency ELTA) in the second half of 2022, revenue growth for the first 9 months was also 9%. Digital advertising sales have been in an upward trend both in Estonia and Lithuania.

In Latvia, the total market volume decreased, and the advertising revenue earned by Ekspress Grupp in Latvia is about 7% lower than last year. This decrease has been offset by higher sales revenue from the ticket platform and digital screens. The ticket platform, which is part of the Group, has increased its sales both through the number of events on the portal as well as through the increase of the average ticket price.

We remain moderately cautious regarding the end of the year, as the higher level of interest rates may affect people's consumption and thereby advertising sales volumes. Until now, the advertising market has behaved rather positively, and there have been no significant volume reductions by customers.

Over the past year, the Group has gained nearly 42 000 readers with digital subscriptions in the Baltic States, or 30% more than at the end of September last year, reaching 180 thousand subscriptions. The Group's digital revenue base is increasingly based on the sales revenue from digital subscriptions. The ability to increase the average price also contributed to the subscriber revenue growth. We have also strengthened the quality and volume of content offered by the Group's media companies to be the leader in the field of digital subscriptions in all Baltic States. The Group is moving towards its strategic financial goals and wishes to offer digital paid content to at least 340 000 subscribers by 2026.

The earnings before interest, tax, depreciation and amortisation (EBITDA) of Ekspress Grupp totalled EUR 2.4 million in the 3(rd) quarter, increasing by 8%. The EBITDA for the first 9 months totalled EUR 6.0 million, increasing by 18%. Profitability has been positively impacted by successful sales of online advertising and digital subscriptions in Estonia and Lithuania, and the volume growth of ticket sales platforms and digital outdoor screens.

The net profit for first 9 months of 2023 totalled EUR 1.2 million, which is 28% lower as compared to last year. Including one-off extraordinary expenses, the Group earned a profit of EUR 0.8 million in the first 9 months. Lower net profit is primarily attributable to one-off expenses related to the liquidation of Express Post and unprofitable operations in the amount of EUR -0.6 million in the first half of the year. The home delivery service of Express Post was terminated in the first half of the year, and the one-off liquidation expenses and unprofitable operations will no longer be reflected in the Group's upcoming quarters. In addition, the level of net profit has been impacted by higher interest rates due to the increase in Euribor and higher depreciation expenses due to the Group's investments. The negative effect of interest expenses is twofold, impacting the results for the first 9 months as an additional expense of EUR 0.5 million. The net profit for the first 9 months of 2022, which is the basis for comparison, also included a one-off extraordinary financial income of EUR 0.2 million resulting from the purchase price adjustment of the ticket sales environment.

The Group's liquidity is solid, and we consider it important to keep liquidity reserves for any potential new acquisitions as well as for a potential economic cooldown. As of 30 September 2023, the Group's monetary funds totalled EUR 6.1 million (31.12.2022: EUR 7.4 million). Over the 9-month period, the Group has repurchased shares in the total amount of 1 million and paid dividends to the shareholders in the amount of EUR 1.5 million. Thus, in first 9 months of 2023 the Group has made payments to the shareholders in the total amount of EUR 2.5 million.

REVENUE

In the 3(rd) quarter of 2023, the consolidated revenue totalled EUR 16.5 million (Q3 2022: EUR 15.1 million). The revenue for the 3(rd) quarter increased by 9% year-over-year. The consolidated revenue for the first 9 months of 2023 totalled EUR 51.8 million (9 months 2022: EUR 45.0 million). The revenue for the first 9 months of the year increased by 15% as compared to the previous year. This growth was attributable to both online advertising revenue as well as digital subscription revenue. The share of the Group's digital revenue in total revenue was 83% in the first 9 months of 2023 (9 months 2022: 77% of total revenue). Digital revenue for the first 9 months of 2023 increased by 24% as compared to the same period last year.

PROFITABILITY

In the 3(rd) quarter of 2023, the consolidated EBITDA totalled EUR 2.4 million (Q3 2022: EUR 2.3 million). EBITDA increased by 8% as compared to last year and the EBITDA margin was 15% (Q3 2022: 15%). In the first 9 months of 2023, the consolidated EBITDA totalled EUR 6.0 million (9 months 2022: EUR 5.1 million). EBITDA increased by 18% as compared to last year and the EBITDA margin was 12% (9 months 2022: 11%). Profitability has been driven by successful sales of online advertising and digital subscriptions in Estonia and Lithuania, and the volume growth or ticket sales platforms and digital outdoor screens.

In the 3(rd) quarter of 2023, the consolidated net profit totalled 0.95 million (Q3 2022: EUR 0.86 million). In the first 9 months of 2023, the consolidated net profit, excluding extraordinary expenses, totalled EUR 1.2 million (9 months 2022: EUR 1.6 million). In the first 9 months of 2023, the net profit decreased by 28% as compared to last year. Including one-off extraordinary expenses, the net profit for the first 9 months of the year totalled EUR 0.8 million. The decrease in net profit is mainly due to higher interest rates resulting from the increase in the Euribor and higher depreciation expenses resulting from the Group's investments. The negative impact of interest is twofold and manifests itself as an additional expense of EUR 0.5 million in the results for the first 9 months of the year. The results for the first 9 months of the year were also impacted by the one-off costs in the amount of EUR 0.3 million related to the liquidation of the home delivery services of AS Express Post. As of July, the home delivery services of Express Post were liquidated and the Group will no longer incur any additional losses on this business.

In the first 9 months of 2022, the positive one-off impact on the net profit in

the amount of EUR 0.2 million was attributable to the profit which arose on the revaluation of the final payment related to the acquisition of Bi?eshu Parad?ze.

EXPENSES

In the first 9 months of 2023, the cost of goods sold, marketing, and general and administrative costs totalled EUR 49.3 million (9 months 2022: EUR 43.3 million). Operating expenses increased by EUR 6.0 million (+14%) as compared to the same period last year. Labour costs increased the most, by EUR 4.0 million (+17%).

In the first 9 months of 2023, the Group employed 976 employees on average which is 104 employees more as compared to the same period last year (9 months 2022: 872 employees). This growth is attributable to 80 employees who were transferred from the acquired companies, incl. ELTA news agency in Lithuania acquired in May 2022 and the news portal lrytas.lt acquired in December 2022. 24 employees were hired from other companies in Estonia, Latvia and Lithuania.

CASH POSITION

At the end of the reporting period, the Group had available cash in the amount of EUR 6.1 million and equity in the amount of EUR 54.0 million (55% of total assets). The comparable data as of 30 September 2022 were EUR 6.1 million and EUR 53.0 million (57% of total assets), respectively. As of 30 September 2023, the Group's net debt totalled EUR 14.3 million (30 September 2022: EUR 10.5 million).

In the first 9 months of 2023, the Group's cash flows from operating activities totalled EUR 6.9 million (9 months 2022: EUR 3.9 million), that were positively impacted by the ticket sales platforms in Estonia and Latvia. The sales activity of the Latvian ticket sales platform has recovered and is in a better position due to higher ticket prices as compared to the pre-Covid-19 period.

In the first 9 months of 2023, the Group's cash flows from investing activities totalled EUR -3.0 million (9 months 2022: EUR -4.8 million), of which EUR -2.4 million was related to the development and acquisition of tangible and intangible assets, demonstrating higher investments in products and technologies. In the first 9 months of the year, the Group invested EUR -1.0 million in new LED screens using a finance lease.

In the first 9 months of 2023, the Group's cash flows from financing activities totalled EUR -5.2 million (9 months 2022: EUR -4.0 million), of which EUR -1.0 million is the share buy-back and EUR -1.5 million is the dividend payment to the shareholders of AS Ekspress Grupp. The financing activities also include the net change in borrowings in the amount of EUR -1.3 million and lease liabilities in the amount of EUR -1.4 million.

SHARE BUY-BACK AND DIVIDENDS

Within the framework of the share buy-back programme, on 9 March 2023 AS Ekspress Grupp purchased 588 235 shares at the price of EUR 1.70 per share in the total amount of EUR 1.0 million.

At the regular general meeting of shareholders of AS Ekspress Grupp held on 4 May 2023, it was decided to pay a dividend of 5 euro cents per share in the total amount of EUR 1.49 million. Dividends were paid to shareholders on 24 May 2023.

SEGMENT OVERVIEW

Key financial indicators for segments

(EUR thousand) Sales

			Q3 2023 Q3 2022 Change % 9M 2023 9M 2022 Change % 2022				12 months
Media segment	16 455	14 743	12%	52 088	43 887	19%	62 690
advertising revenue	9 413	8 588	10%	30 219	25 990	16%	37 613
subscriptions (incl. single- copy sales)	4 665	4 206	11%	13 884	12 142	14%	16 819
marketplaces	861	582	48%	2 099	1 410	49%	2 232
outdoor screens	823	608	35%	2 349	1 647	43%	2 396
sale of other goods and services	692	759	-9%	3 538	2 697	31%	3 630
Corporate functions	167	1 161	-86%	2 474	3 343	-26%	4 500
Inter-segment eliminations	(131)	(784)			(2 789) (2 274)		(3 050)
TOTAL GROUP	16 490	15 120	9%	51 773	44 956	15%	64 141
incl. revenue

from all digital channels	14 146	12 006	18%	42 942	34 586	24%		49 928
% of revenue from all digital channels	86%	79%		83%	77%			78%
(EUR thousand)	EBITDA
			Q3 2023 Q3 2022 Change % 9M 2023 9M 2022 Change % 2022					12 months
Media segment	2 852	2 614	9%	6 974	6 007	16%		10 183
Corporate functions	(416)	(311)	-34%	(977)	(802)	-22%		(1 122)
Inter-segment eliminations	3	(39)		(4)	(109)			(171)
TOTAL GROUP	2 440	2 264	8%	5 992	5 096	18%		8 891
EBITDA margin	Q3 2023	Q3 2022	9M 2023		9M 2022	12 months 2022
Media segment	17%	18%	13%	14%		16%
TOTAL GROUP	15%	15%	12%	11%		14%
Consolidated balance sheet (unaudited)
(EUR thousand) -------------------------------------------------------------------------------								30.09.2023 31.12.2022
ASSETS -------------------------------------------------------------------------------
Current assets -------------------------------------------------------------------------------
Cash and cash equivalents -------------------------------------------------------------------------------							6 132		7 448
Trade and other receivables -------------------------------------------------------------------------------							11 447		11 661
Corporate income tax prepayment -------------------------------------------------------------------------------							213		49
Inventories							282		286

------------------------------------------------------------------------------- Total current assets	18 075	19 444
------------------------------------------------------------------------------- Non-current assets
------------------------------------------------------------------------------- Other receivables and investments	1 580	1 580
------------------------------------------------------------------------------- Deferred tax asset	75	60
------------------------------------------------------------------------------- Investments in joint ventures	786	1 017
------------------------------------------------------------------------------- Investments in associates	2 106	2 279
------------------------------------------------------------------------------- Property, plant and equipment	8 981	8 736
------------------------------------------------------------------------------- Intangible assets	67 368	66 720
------------------------------------------------------------------------------- Total non-current assets	80 896	80 392
------------------------------------------------------------------------------- TOTAL ASSETS	98 970	99 836
------------------------------------------------------------------------------- LIABILITIES
------------------------------------------------------------------------------- Current liabilities
------------------------------------------------------------------------------- Borrowings	1 973	3 393
------------------------------------------------------------------------------- Trade and other payables	19 969	19 004
------------------------------------------------------------------------------- Corporate income tax payable	132	25
------------------------------------------------------------------------------- Total current liabilities	22 074	22 422
------------------------------------------------------------------------------- Non-current liabilities
------------------------------------------------------------------------------- Long-term borrowings	22 836	21 948
------------------------------------------------------------------------------- Other long-term liabilities	41	43
------------------------------------------------------------------------------- Total non-current liabilities	22 878	21 991
------------------------------------------------------------------------------- TOTAL LIABILITIES	44 952	44 413
------------------------------------------------------------------------------- EQUITY
------------------------------------------------------------------------------- Minority interest	0	147
------------------------------------------------------------------------------- Capital and reserves attributable to equity holders of parent company:

-------------------------------------------------------------------------------
Share capital	18 478	18 478
------------------------------------------------------------------------------- Share premium	14 277	14 277
------------------------------------------------------------------------------- Treasury shares	(1 057)	(334)
------------------------------------------------------------------------------- Reserves	2 283	2 059
------------------------------------------------------------------------------- Retained earnings	20 037	20 796
------------------------------------------------------------------------------- Total capital and reserves attributable to equity holders of parent company -------------------------------------------------------------------------------	54 018	55 276
TOTAL EQUITY	54 018	55 423
------------------------------------------------------------------------------- TOTAL LIABILITIES AND EQUITY -------------------------------------------------------------------------------	98 970	99 836

Consolidated statement of comprehensive income (unaudited)

(EUR thousand) -------------------------------------------------------------------------------	Q3 2023	Q3 2022	9M 2023		9M 2022 12 months 2022
Sales	16 490	15 120	51 773	44 956	64 141
------------------------------------------------------------------------------- Cost of sales		(12 384) (11 272) (40 131) (34 712)			(48 185)
------------------------------------------------------------------------------- Gross profit	4 107	3 849	11 642	10 243	15 956
------------------------------------------------------------------------------- Other income	167	209	348	526	789
------------------------------------------------------------------------------- Marketing expenses	(649)	(695)	(2 011)	(2 133)	(2 979)
------------------------------------------------------------------------------- Administrative expenses -------------------------------------------------------------------------------	(2 253)	(2 125)	(7 180)	(6 442)	(8 823)
Other expenses -------------------------------------------------------------------------------	(122)	(54)	(262)	(139)	(146)
Operating profit /(loss)	1 250	1 183	2 537	2 056	4 797
------------------------------------------------------------------------------- Interest income	12	9	32	28	36
------------------------------------------------------------------------------- Interest expenses	(383)	(183)	(1 059)	(529)	(738)
------------------------------------------------------------------------------- Other finance income/(costs)	(14)	(3)	(35)	194	179
------------------------------------------------------------------------------- Net finance cost	(384)	(177)	(1 063)	(308)	(523)

------------------------------------------------------------------------------- Profit/(loss) on shares of joint ventures	69	(107)	(726)	(327)	(242)
------------------------------------------------------------------------------- Profit/(loss) on shares of associates	65	53	196	326	325
------------------------------------------------------------------------------- Profit /(loss) before income tax	1 000	953	943	1 747	4 357
------------------------------------------------------------------------------- Income tax expense	(52)	(94)	(113)	(129)	(302)
------------------------------------------------------------------------------- Net profit /(loss) for the reporting period	949	859	830	1 618	4 055
------------------------------------------------------------------------------- Net profit /(loss) for the reporting period attributable to
------------------------------------------------------------------------------- Equity holders of the parent company	949	857	828	1 617	4 048
------------------------------------------------------------------------------- Minority interest	0	2	2	1	7
------------------------------------------------------------------------------- Total comprehensive income /(loss)	949	859	830	1 618	4 055
------------------------------------------------------------------------------- Comprehensive income /(loss) for the reporting period attributable to
------------------------------------------------------------------------------- Equity holders of the parent company	949	857	828	1 617	4 048
------------------------------------------------------------------------------- Minority interest	0	2	2	1	7
------------------------------------------------------------------------------- Earnings per share (euro)
------------------------------------------------------------------------------- Basic earnings per share	0.0315	0.0282	0.0275	0.0533	0.1335
------------------------------------------------------------------------------- Diluted earnings per share	0.0305	0.0273	0.0267	0.0515	0.1294
-------------------------------------------------------------------------------

Consolidated cash flow statement (unaudited)

	12 months
(EUR thousand)	9M 2023 9M 2022 2022
-------------------------------------------------------------------------------
Cash flows from operating activities
-------------------------------------------------------------------------------

Operating profit /(loss) for the reporting year -------------------------------------------------------------------------------	2 537	2 056	4 797
Adjustments for (non-cash): -------------------------------------------------------------------------------
Depreciation and amortisation -------------------------------------------------------------------------------	3 455	3 039	4 084
(Gain)/loss on sale, write-down and impairment of property, plant and equipment -------------------------------------------------------------------------------	165	30	29
Change in value of share option -------------------------------------------------------------------------------	24	27	29
Cash flows from operating activities:
------------------------------------------------------------------------------- Trade and other receivables		211 (1 168)	(1 939)
------------------------------------------------------------------------------- Inventories	3	(51)	(9)
------------------------------------------------------------------------------- Trade and other payables	1 518	607	2 188
------------------------------------------------------------------------------- Income tax paid	(184)	(319)	(401)
------------------------------------------------------------------------------- Interest paid	(852)	(327)	(767)
------------------------------------------------------------------------------- Net cash generated from operating activities	6 876	3 892	8 011
------------------------------------------------------------------------------- Cash flows from investing activities
------------------------------------------------------------------------------- Acquisition of subsidiaries/ associates (less cash acquired) and other investments / cash paid-in equity-accounted investees		(1 310) (2 600)	(7 632)
------------------------------------------------------------------------------- Receipts of other investments	13	10	10
------------------------------------------------------------------------------- Interest received	6	1	2
------------------------------------------------------------------------------- Purchase of property, plant and equipment and intangible assets -------------------------------------------------------------------------------		(2 405) (2 891)	(3 748)
Proceeds from sale of property, plant and equipment and intangible assets -------------------------------------------------------------------------------	25	60	66
Loans granted -------------------------------------------------------------------------------	0	(30)	(30)
Loan repayments received -------------------------------------------------------------------------------	0	86	86
Dividends received -------------------------------------------------------------------------------	674	601	601
Net cash used in investing activities -------------------------------------------------------------------------------		(2 997) (4 763)	(10 645)

Cash flows from financing activities

------------------------------------------------------------------------------- Dividends paid	(1 488) (2 425)		(2 425)
------------------------------------------------------------------------------- Payment of lease liabilities	(1 446) (1 305)		(1 751)
------------------------------------------------------------------------------- Loans received / Repayments of bank loans	(1 260)	(284)	3 296
------------------------------------------------------------------------------- Purchases of treasury shares	(1 000)	0	0
------------------------------------------------------------------------------- Net cash used in financing activities	(5 195) (4 014)		(880)
------------------------------------------------------------------------------- NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1 316) (4 885)			(3 514)
------------------------------------------------------------------------------- Cash and cash equivalents at the beginning of the period	7 448	10 962	10 962
------------------------------------------------------------------------------- Cash and cash equivalents at the end of the period -------------------------------------------------------------------------------	6 132	6 077	7 448

Mari-Liis Rüütsalu Chairman of the Management Board +372 512 2591 mariliis.ryytsalu@egrupp.ee (mailto:mariliis.ryytsalu@egrupp.ee)

AS Ekspress Grupp is the leading Baltic media group whose key activities include web media content production, and publishing of newspapers, magazines and books. The Group also operates an electronic ticket sales platform and ticket sales offices and offers outdoor screen service in Estonia and Latvia. Ekspress Grupp launched its operations in 1989 and employs almost 1100 people.