AS Ekspress Grupp: Consolidated unaudited interim report for Q2 and 6 months of 2023


The revenue of AS Ekspress Grupp for the 2nd quarter of 2023 increased by 13% to EUR 18.5 million and EBITDA increased by 8% to EUR 2.4 million. The revenue for the first 6 months of 2023 increased by 18% to EUR 35.3 million and EBITDA increased by 25% to EUR 3.6 million as compared to last year. The Group’s net profit for the 2nd quarter totalled EUR 0.6 million and for the first 6 months it totalled EUR 0.2 million, decreasing by 71% as compared to the same period last year. At the end of June, the share of digital revenue was 82% of the Group’s total revenue. Digital revenue increased by 28% as compared to the same period last year.

The Group continued to be successful in increasing its sales volumes in both advertising and digital subscriptions. The 2nd quarter was successful in terms of increasing the market share in advertising as well as increasing the average price of digital subscriptions. The Group’s 2nd quarter’s revenue grew strongly and increased by 13% as compared to the same period last year. In terms of the first 6 months of the year, the total revenue increased by 18%. Excluding from revenue the acquisitions made in Lithuania (news portal Lrytas and news agency ELTA) in the second half of 2022, revenue growth was 12% in the first 6 months of the year. Advertising revenue was strong in Estonia and Lithuania where the market has been stable so far and the volumes have remained at the same level as last year.

In Latvia, the total market volume decreased, and the advertising revenue earned by Ekspress Group in Latvia is about 4% less than last year. This decrease has been offset by the increase in sales revenue of the ticket platform and digital screens. The ticket platform operated by the Group successfully sold the tickets for the Jubilee Song and Dance Festival held in Riga, which increased both the number of tickets sold as well as the company's sales.

The inflationary environment and high-interest rates will increase the risks to advertising revenue in all Baltic States in the second half of the year.

The number of digital subscriptions of AS Ekspress Grupp increased by 24% year-over-year (Q2: 9%, 6 months: 20%) and totalled 175.4 thousand subscriptions. The number of the Group’s digital subscriptions continued their fast growth in the first 6 months of the year, making up an increasingly higher share of the Group’s revenue base. The Group has added nearly 34 000 readers with digital subscriptions in the Baltic States over the last year or 24% more as compared to the end of June last year. The Group's digital revenue base is increasingly based on the sales revenue from digital subscriptions. We have strengthened the quality and volume of content offered by the Group's media companies so as to be the leader in the field of digital subscriptions in all Baltic States. The Group is moving towards its strategic financial goals and aims to offer digital paid content to at least 340 000 subscribers by the year 2026.

The earnings before interest, tax, depreciation and amortisation (EBITDA) of Ekspress Grupp totalled EUR 2.4 million in the 2nd quarter, growing by 8%. The EBITDA in the first 6 months of the year totalled EUR 3.6 million, increasing by 25%. Profitability was 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 in the first 6 months of 2023 totalled EUR 0.2 million, which is 71% lower as compared to the previous year. Including one-off extraordinary expenses, the net loss for the first 6 months of the year totalled EUR -0.1 million. The decrease in net profit is mainly due to the one-off costs related to the liquidation of the home delivery services of Express Post and its unprofitable operations in the first 6 months of the year in the total amount of EUR -0.6 million. The home delivery services of Express Post were liquidated in the first 6 months of the year and one-off liquidation expenses and unprofitable operations will no longer incur in the next quarters of the Group. In addition, the level of net profit has been impacted by 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 manifested itself as an additional expense of EUR 0.3 million in the results for the first 6 months of the year.

The Group’s liquidity is solid, and we consider it important to keep liquidity reserves for possible new acquisitions as well as for the possible economic cooldown. As of 30 June 2023, the Group’s monetary funds totalled EUR 6.1 million (31.12.2022: EUR 7.4 million). In the first 6 months of the year, the Group repurchased shares in the amount of EUR 1 million and paid dividends to the shareholders in the amount of EUR 1.5 million. Thus, in the first 6 months of 2023 the Group made payments to the shareholders in the total amount of EUR 2.5 million.


Q2 AND 6 MONTHS RESULTS


REVENUE

In the 2nd quarter of 2023, the consolidated revenue totalled EUR 18.5 million (Q2 2022: EUR 16.4 million). The revenue for the 2nd quarter increased by 13% year-over-year. The consolidated revenue for the first 6 months of 2023 totalled EUR 35.3 million (6 months 2022: EUR 29.8 million). The revenue for the first 6 months of the year increased by 18% 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 82% in the first 6 months of 2023 (6 months 2022: 76% of total revenue). Digital revenue for the first 6 months of 2023 increased by 28% as compared to the same period last year.

PROFITABILITY

In the 2nd quarter of 2023, the consolidated EBITDA totalled EUR 2.4 million (Q2 2022: EUR 2.2 million). EBITDA increased by 8% as compared to last year and the EBITDA margin was 13% (Q2 2022: 14%). In the first 6 months of 2023, the consolidated EBITDA totalled EUR 3.6 million (6 months 2022: EUR 2.8 million). EBITDA increased by 25% as compared to last year and the EBITDA margin was 10% (6 months 2022: 9%). 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 2nd quarter of 2023, the consolidated net profit totalled 0.6 million (Q2 2022: EUR 1.3 million). In the first 6 months of 2023, the consolidated net profit, excluding extraordinary expenses, totalled EUR 0.2 million (6 months 2022: EUR 0.8 million). In the first 6 months of 2023, the net profit decreased by 71% as compared to last year. Including one-off extraordinary expenses, the net loss for the first 6 months of the year totalled EUR -0.1 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 0.3 million in the results for the first 6 months of the year. The results for the first 6 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 and the higher operating loss in the amount of EUR 0.3 million earned by the joint venture in the first 6 months of the year. Thus, the negative effect of the liquidation and the unprofitable operations of Express Post on the Group’s net profit was EUR 0.6 million higher than in the same period last year. The home delivery services of Express Post were liquidated in the first 6 months of the year and the Group will no longer incur any additional losses on this business in the second half of the year.

In the first 6 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 Biļešu Paradīze.

EXPENSES

In the first 6 months of 2023, the cost of goods sold, marketing, and general and administrative costs totalled EUR 34.0 million (6 months 2022: EUR 29.2 million). Operating expenses increased by EUR 4.8 million (+17%) as compared to the same period last year. Labour costs increased the most, by EUR 2.9 million (+18%).

In the first 6 months of 2023, the Group employed 974 employees on average which is 112 employees more as compared to the same period last year (6 months 2022: 862 employees). This growth is attributable to 88 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 53.1 million (51% of total assets). The comparable data as of 30 June 2022 were EUR 6.8 million and 52.1 million (56% of total assets), respectively. As of 30 June 2023, the Group’s net debt totalled EUR 14.7 million (30 June 2022: EUR 10.5 million).

In the first 6 months of 2023, the Group’s cash flows from operating activities totalled EUR 4.4 million (6 months 2022: EUR 2.6 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 6 months of 2023, the Group’s cash flows from investing activities totalled EUR -1.5 million (6 months 2022: EUR -3.6 million), of which EUR -1.2 million was related to the development and acquisition of tangible and intangible assets, demonstrating higher investments in products and technologies. In the first 6 months of the year, the Group invested EUR -0.9 million in new LED screens using a finance lease.

In the first 6 months of 2023, the Group’s cash flows from financing activities totalled EUR -4.3 million (6 months 2022: EUR -3.1 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 -0.8 million and lease liabilities in the amount of EUR -0.9 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
  Q2 2023 Q2 2022 Change % 6M 2023 6M 2022 Change % 12 months 2022
Media segment 18 766 16 062 17% 35 634 29 144 22% 62 690
 advertising revenue 11 124 9 562 16% 20 805 17 402 20% 37 613
subscriptions (incl. single-copy sales) 4 658 4 050 15% 9 219 7 936 16% 16 819
marketplaces 603 475 27% 1 239 828 50% 2 232
outdoor screens 837 637 31% 1 526 1 039 47% 2 396
sale of other goods and services 1 543 1 338 15% 2 845 1 938 47% 3 630
Corporate functions 1 081 1 090 -1% 2 308 2 182 6% 4 500
Inter-segment eliminations (1 320) (743)   (2 658) (1 490)   (3 050)
TOTAL GROUP 18 528 16 409 13% 35 283 29 836 18% 64 141
 incl. revenue from all digital channels 15 412 12 494 23% 28 796 22 580 28% 49 928
 % of revenue from all digital channels 83% 76%   82% 76%   78%


(EUR thousand) EBITDA
  Q2 2023 Q2 2022 Change % 6M 2023 6M 2022 Change % 12 months 2022
Media segment 2 643 2 501 6% 4 121 3 394 21% 10 183
Corporate functions (240) (261) 8% (561) (491) -14% (1 122)
Inter-segment eliminations (4) (24)   (8) (70)   (171)
TOTAL GROUP 2 399 2 216 8% 3 552 2 832 25% 8 891


EBITDA margin Q2 2023 Q2 2022 6M 2023 6M 2022 12 months 2022
Media segment 14% 16% 12% 12% 16%
TOTAL GROUP 13% 14% 10% 9% 14%


Consolidated balance sheet (unaudited)

(EUR thousand) 30.06.2023 31.12.2022
ASSETS    
Current assets    
Cash and cash equivalents 6 111 7 448
Trade and other receivables 17 298 11 661
Corporate income tax prepayment 144 49
Inventories 259 286
Total current assets 23 813 19 444
Non-current assets    
Other receivables and investments 1 580 1 580
Deferred tax asset 69 60
Investments in joint ventures 690 1 017
Investments in associates 2 030 2 279
Property, plant and equipment 9 165 8 736
Intangible assets 66 982 66 720
Total non-current assets 80 517 80 392
TOTAL ASSETS 104 330 99 836
LIABILITIES    
Current liabilities    
Borrowings 2 558 3 393
Trade and other payables 25 734 19 004
Corporate income tax payable 82 25
Total current liabilities 28 375 22 422
Non-current liabilities    
Long-term borrowings 22 852 21 948
Other long-term liabilities 41 43
Total non-current liabilities 22 893 21 991
TOTAL LIABILITIES 51 268 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 2 275 2 059
Retained earnings 19 089 20 796
Total capital and reserves attributable to equity holders of parent company 53 062 55 276
TOTAL EQUITY 53 062 55 423
TOTAL LIABILITIES AND EQUITY 104 330 99 836


Consolidated statement of comprehensive income (unaudited)

(EUR thousand) Q2 2023 Q2 2022 6M 2023 6M 2022 12 months 2022
Sales 18 528 16 409 35 283 29 836 64 141
Cost of sales (14 107) (12 407) (27 748) (23 441) (48 185)
Gross profit 4 422 4 002 7 535 6 395 15 956
Other income 110 198 181 317 789
Marketing expenses (791) (783) (1 362) (1 437) (2 979)
Administrative expenses (2 376) (2 170) (4 927) (4 317) (8 823)
Other expenses (120) (43) (140) (85) (146)
Operating profit /(loss) 1 245 1 205 1 287 873 4 797
Interest income 10 9 19 19 36
Interest expenses (347) (178) (677) (347) (738)
Other finance income/(costs) (11) 210 (21) 197 179
Net finance cost (347) 41 (679) (131) (523)
Profit/(loss) on shares of joint ventures (242) (87) (795) (220) (242)
Profit/(loss) on shares of associates 2 143 130 273 325
Profit /(loss) before income tax 658 1 302 (57) 794 4 357
Income tax expense (46) (31) (62) (36) (302)
Net profit /(loss) for the reporting period 612 1 271 (118) 759 4 055
Net profit /(loss) for the reporting period attributable to  
Equity holders of the parent company 613 1 272 (120) 761 4 048
Minority interest (1) (1) 2 (2) 7
Total comprehensive income /(loss) 612 1 271 (118) 759 4 055
Comprehensive income /(loss) for the reporting period attributable to
Equity holders of the parent company 613 1 272 (120) 761 4 048
Minority interest (1) (1) 2 (2) 7
Earnings per share (euro)
Basic earnings per share 0.0205 0.0419  (0.0040) 0.0251 0.1335
Diluted earnings per share 0.0199 0.0405  (0.0039) 0.0242 0.1294


Consolidated cash flow statement (unaudited)

(EUR thousand) 6M 2023 6M 2022 12 months
 2022
Cash flows from operating activities      
Operating profit /(loss) for the reporting year 1 287 873 4 797
Adjustments for (non-cash):      
Depreciation and amortisation 2 265 1 959 4 084
(Gain)/loss on sale, write-down and impairment of property, plant and equipment (4) 2 29
Change in value of share option 16 18 29
Cash flows from operating activities:      
Trade and other receivables (5 409) (1 385) (1 939)
Inventories 26 (27) (9)
Trade and other payables 6 885 1 572 2 188
Income tax paid (108) (262) (401)
Interest paid (540) (181) (767)
Net cash generated from operating activities 4 420 2 569 8 011
Cash flows from investing activities      
Acquisition of subsidiaries/ associates (less cash acquired) and other investments /
cash paid-in equity-accounted investees
(949) (1 971) (7 632)
Receipts of other investments 13 10 10
Interest received 2 1 2
Purchase of property, plant and equipment and intangible assets (1 232) (2 335) (3 748)
Proceeds from sale of property, plant and equipment and intangible assets 3 40 66
Loans granted 0 (30) (30)
Loan repayments received 0 86 86
Dividends received 674 601 601
Net cash used in investing activities (1 489) (3 598) (10 645)
Cash flows from financing activities      
Dividends paid (1 488) (2 425) (2 425)
Payment of lease liabilities (940) (851) (1 751)
Loans received / Repayments of bank loans (840) 136 3 296
Purchases of treasury shares (1 000) 0 0
Net cash used in financing activities (4 268) (3 140) (880)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1 337) (4 169) (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 6 111 6 793 7 448



Signe Kukin

Group CFO

AS Ekspress Grupp

Telephone: +372 669 8381

E-mail address: signe.kukin@egrupp.ee


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 offices in Estonia and Latvia. Ekspress Grupp launched its operations in 1989 and employs almost 1100 people.

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