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 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.
|Performance indicators (EUR thousand)||2020||2019||Change %||2018||2017||2016|
|EBITDA margin (%)||11.1%||10.0%||7.0%||11.6%||13.7%|
|Operating margin *(%)||4.9%||4.0%||2.0%||6.4%||8.1%|
|Profit (loss) of joint ventures under equity method||102||(38)||365%||(273)||(2)||772|
|Net profit/(loss) for the period*||2,536||1,407||80%||25||2,952||4,406|
|Net margin* (%)||4.0%||2.1%||0.0%||5.5%||8.3%|
|Net profit /(-loss) in the financial statements (incl. write-downs and gain from a change in ownership interest)||2,536||1,407||80%||25||3,146||4,406|
|Net margin (%)||4.0%||2.1%||0.0%||5.8%||8.3%|
|Return on assets ROA (%)||2.7%||1.6%||0.0%||4.2%||6.1%|
|Return on equity (%)||4.9%||2.8%||0.0%||6.1%||8.9%|
|Basic earnings per share||0.08||0.05||0.00||0.11||0.15|
|Diluted earnings per share||0.08||0.05||0.00||0.11||0.15|
|* The results reflect the outcome of regular business activities and do not include impairment losses on goodwill, gains from the changes in ownership interests in joint ventures, etc.|
|Balance sheet (EUR thousand)||31.12.2020||31.12.2019||Change %||31.12.2018||31.12.2017||31.12.2016|
|As of the end of the period|
|incl. cash and cash equivalents||6,269||3,647||72%||2,228||2,818||4,572|
|Financial ratios (%)||31.12.2020||31.12.2019||31.12.2018||31.12.2017||31.12.2016|
|Equity ratio (%)||58%||54%||66%||69%||69%|
|Debt to equity ratio (%)||41%||47%||31%||29%||31%|
|Debt to capital ratio (%)||23%||29%||22%||21%||20%|
|Total debt/EBITDA ratio||3.17||3.59||3.63||2.44||2.17|
The mission of AS Ekspress Grupp is to serve democracy. We wish to offer reliable, independent and timely information to our readers that would help Estonia, Latvia and Lithuania to become better- informed, open and digitally advanced societies. Our mission is especially important during the coronavirus pandemic. At the time when the number of users in all of our news portals reached an unprecedented level, we needed to quickly introduce remote working at our editorial staffs due to the state of emergency. Taking account of the interests of our readers turned out to be a challenge for all of us but the work of the periodicals never stopped for a second. I believe that solving such situations is one of the key reasons for a journalist to choose his or her profession. We continued to provide comprehensive services to our readers and the best possible services under the circumstances which meant major adjustment to new habits, practices and work procedures.
While the media sector was able to enjoy attention and plenty of work, the digital outdoor companies of Ekspress Grupp and the ticket sales platform in Latvia suffered the most during the pandemic. The main reason for setbacks was national restrictions that almost halted the activities of these businesses.
In summary, the year 2020 was a success for the Group: despite the state of emergency and the economic instability due to the coronavirus, the Group was able to strengthen its market position and significantly improve profitability. Sales revenue over the 12-month period decreased by 6% to 63.2 million euros and net profit increased by 80% to 2.5 million euros. The Group's digital revenue made up 49% of total and 71% of media segment revenue. Thus, it can be said that the year of the pandemic accelerated the Group’s digitalisation process to a significant degree.
The year 2020 started off on a positive note for the Group but since March the Group considered and applied all the necessary measures to avoid the spread of the COVID-19 virus in our organisation. The primary goal was to protect our employees while still providing our readers and viewers reliable and timely news and other services. A major setback hit the Group in mid-March when the Baltic States imposed a state of emergency to curb the spread of the coronavirus. This in turn led to sudden changes in the economic environment. The most susceptible companies to the effects of the restrictions were the Group’s media companies, especially outdoor media and the ticket sales platform in Latvia.
As we look back on the past year we can state that owing to our quick reaction, clear and open communication, keeping of promises, correct management decisions, and the loyalty and contribution of all Group employees, Ekspress Grupp was able to cope with the corona crisis and continue to provide our readers with what they needed the most - fast, relevant and reliable information in the most appropriate channels. We did not get stuck due to the virus and after our initial quick reaction to changed economic conditions we continued to focus on our key business goal – increase the digital revenue and profitability of Ekspress Grupp.
The year 2020 was a breakthrough year for the Group’s media publications in terms of the growth of digital subscriptions. The number of digital subscriptions of AS Ekspress Grupp increased by 73% in the Baltic States in 2020 and was more than 81 thousand at the end of December. The key reason for the growth in digital subscriptions was the change in the attitudes and habits of people: they are more willing to pay for high-quality digital content in their own language. The change was supported by the general background – objective journalism is more and more appreciated in a society dominated by global fragmented information. The hunger of people for balanced information increased further once the pandemic started.
In 2020, we tied social topics and initiatives with our brands. They do not represent short-term campaigns, but topics that really matter to the majority of the people of Estonia, Latvia and Lithuania: violence against women, mental health, use of smart devices while driving, and forestry and environmental issues. We have created an opportunity to cover these areas in more detail and tie them with different activities at the Group to reflect the Group’s values.
In 2020, Ekspress Grupp actively participated in the activities of the Estonian Association of Media Companies, the purpose of which is to increase equal competition in the Estonian media landscape, fight market distortions and increase availability of periodicals to the people of Estonia. The same focus is also in place in Latvia and Lithuania where people have similar concerns, but there are different ways to solve them. Therefore, we need to be active in all the markets to say competitive in the media landscape.
In the Estonian and Baltic media market, the global Internet platforms Facebook and Google create the largest market distortions, taking out tax-free about half of the local advertising market’s proceeds which in Estonia amounts to at least 100 million euros a year. This constitutes unfair competition which hampers the potential of media companies to invest in journalism. As a result, the media landscape will shrink and people are less informed which in a long term will be a threat to the region.
The second key factor distorting competition is the activity of broadcasting companies funded by the state. For example, the Estonian Public Broadcasting has expanded its activities into the areas which are not their key functions as laid down by law and where the activities of the media organisations funded from the state budget interfere with free competition. According to privately-funded media organisations, this constitutes unlawful state aid and the parties are taking legal steps to put an end to this market distortion.
The third central problem is raising the home delivery fees of paper periodicals by local state-run postal delivery companies. Raising the home delivery fees and unsatisfactory arrangement of home delivery puts the biggest pressure on traditional regional newspapers under the conditions of decreasing circulations, but has a negative impact on the future of the entire local printed press. The Estonian Association of Media Companies has made specific proposals to the state of Estonia to resolve the problem and it will continue to garner political support for their proposals.
In 2021, we will continue with the implementation of our strategy primarily aimed at growing digital business and revenue despite the challenges outlined above. The digital transformation has had a good momentum and as an innovation leader in our markets we are making a bigger contribution to the development of media companies so as to ensure greater satisfaction of current subscribers and thereby growth of subscription revenue.
As the digital market leader, we are dedicated to high-quality journalism and advanced product innovation that support growth and profitability in the years to come.
Thank you for the trust and support placed in us!