Management Commentary
The year 2022 challenged the Ekspress Group in many ways, which is also being reflected in our annual report.
On February 24th, 2022, the world changed completely for many people across Europe. Russia's military aggression against Ukraine came as a shock to the entire developed world.
For media companies, in many ways, it marked the beginning of a whole new era.
Our publications had to learn a lot of things that had previously seemed remote and even impossible: how to cover the war in a country close to us, whether and where to draw the line in reporting the details of what is happening, how to protect journalists and which tools to give them in the new situation. Additionally, in all our media outlets, we learnt how to counteract the large-scale Russian propaganda, how to combat constant cyber-attacks and how to ensure the operational continuity of media outlets in times of a crisis, such as possible power cuts.
The Group's performance was impacted by the inflation rates and rising input costs, but the board has taken steps to relieve this impact. We have managed costs and, where necessary, implemented cost-cutting measures, without compromising on the delivery of quality content. These efforts have proved themselves to be successful: compared to last year, we achieved a 20% increase in revenues and an 8% increase in EBITDA. Digital revenues grew by 23% and already made up for 78% of the Group's total revenues by the end of last year.
Chairman of the Management Board, Chief Executive Officer of the Group
Despite the extremely unstable economic environment, the Group’s financial results for 2022 showed strong and stable growth. The revenue of AS Ekspress Grupp totalled EUR 64.1 million, increasing by 20% as compared to the previous year. EBITDA was EUR 8.9 million that is 8% more than in the previous year. The net profit totalled EUR 4.1 million which is at the same level as in 2021, but considering that the revenue for 2021 included one-off finance income in the amount of EUR 0.4 million for fair value adjustment of the future commitment related the purchase price of the ticket sales platform, the net profit increased by approximately 11% as compared to the year before.
We have raised prices due to inflation, but most importantly, we have succeeded in increasing the Group's market share in digital subscriptions, online advertising and other areas. The Group's media companies grew at the expense of their competitors in 2022 by offering advertising clients better solutions to reach consumers. The demand for the events offered through the Group’s ticket business platforms also picked up. The sales volumes of outdoor screens increased as the digital outdoor screen network was expanded by 27 new screens. By the end of 2022, the network already consisted of 84 digital outdoor screens which is 50% more than in the previous year. We continue to actively expand the outdoor screen network, especially in Latvia where the number of digital outdoor screens added in 2022 remained below expectations. In 2023, we will continue to install outdoor screens in the framework of the public tender of the City of Riga.
Member of the Management Board, Chief Financial Officer of the Group
Statement of the chairman of the management board
The year 2022 challenged the Ekspress Group in many ways, which is also being reflected in our annual report.
On February 24th, 2022, the world changed completely for many people across Europe. Russia's military aggression against Ukraine came as a shock to the entire developed world.
For media companies, in many ways, it marked the beginning of a whole new era.
Our publications had to learn a lot of things that had previously seemed remote and even impossible: how to cover the war in a country close to us, whether and where to draw the line in reporting the details of what is happening, how to protect journalists and which tools to give them in the new situation. Additionally, in all our media outlets, we learnt how to counteract the large-scale Russian propaganda, how to combat constant cyber-attacks and how to ensure the operational continuity of media outlets in times of a crisis, such as possible power cuts.
I am proud to say that despite these challenges, we still remained committed to our mission to serve democracy. Even during the crisis, we remained focused on providing reliable and objective news, and remained devoted to reporting the conflict accurately and neutrally, reflecting our belief in the importance of free press. Thanks to our journalists devotion, we were able to provide our audiences with quality content that is highly appreciated by our readers and media experts alike. In addition to digital media, we continued publishing high quality media editions on paper for readers who value this format.
In 2022, to improve customer satisfaction, we made strategic investments to new media companies such as news agency ELTA and portal Lrytas in Lithuania. With these steps, we increased our capacity to reach out to and engage directly with readers in the Baltic countries.
Last year, we again significantly increased the number of digital subscribers in all Baltic countries. This shows that our readers highly value the content we provide and trust us as their main source of information.
The Group's performance was impacted by the inflation rates and rising input costs, but the board has taken steps to relieve this impact. We have managed costs and, where necessary, implemented cost-cutting measures, without compromising on the delivery of quality content. These efforts have proved themselves to be successful: compared to last year, we achieved a 20% increase in revenues and an 8% increase in EBITDA. Digital revenues grew by 23% and already made up for 78% of the Group's total revenues by the end of last year.
Looking to the future, I am confident that the Ekspress Group will continue to develop strongly and continue to play an even more increasingly important role in promoting democracy in the Baltic countries. We will continue to focus on providing accurate and objective news.
We thank our readers, viewers and listeners, shareholders and customers for their trust and support of our group companies!
Yours sincerely,
Mari-Liis Rüütsalu
Despite the extremely unstable economic environment, the Group’s financial results for 2022 showed strong and stable growth. The revenue of AS Ekspress Grupp totalled EUR 64.1 million, increasing by 20% as compared to the previous year. EBITDA was EUR 8.9 million that is 8% more than in the previous year. The net profit totalled EUR 4.1 million which is at the same level as in 2021, but considering that the revenue for 2021 included one-off finance income in the amount of EUR 0.4 million for fair value adjustment of the future commitment related the purchase price of the ticket sales platform, the net profit increased by approximately 11% as compared to the year before.
We have raised prices due to inflation, but most importantly, we have succeeded in increasing the Group's market share in digital subscriptions, online advertising and other areas. The Group's media companies grew at the expense of their competitors in 2022 by offering advertising clients better solutions to reach consumers. The demand for the events offered through the Group’s ticket business platforms also picked up. The sales volumes of outdoor screens increased as the digital outdoor screen network was expanded by 27 new screens. By the end of 2022, the network already consisted of 84 digital outdoor screens which is 50% more than in the previous year. We continue to actively expand the outdoor screen network, especially in Latvia where the number of digital outdoor screens added in 2022 remained below expectations. In 2023, we will continue to install outdoor screens in the framework of the public tender of the City of Riga.
In the last five years, the Group's compound annual growth rate (CAGR) has been approximately 14%. A significant share of this growth came from the organic increase in digital revenues, supported by the acquisition of new companies such as the acquisition of Lithuanian news agency ELTA and the portal lrytas.lt. We see good potential for further growth of digital revenue and digital subscriptions, but this requires wider adoption of new trends in the media market and reaching market participants, predominantly in Latvia and Lithuania and, in the business segment of digital outdoor screens, in Estonia and Latvia.
Both previous and current year have been challenging for the Group in terms of maintaining the cost base. This concerns the field of paper products in particular, where the impact of input prices is increasing for both the printing and home delivery service, and with decreasing print circulation volumes the cost base is not expected to decrease.
As a Group, we are seeking greater efficiency in order to maintain the EBITDA margin and achieve the minimum level of 15% laid down in our strategy. Realisation of our growth ambitions and transition to digital media requires investments in technology. At this point, we consider it important to maintain the capability of the internal development team at the maximum level. In 2022, investments in technology related to development activities amounted to approximately EUR 2.0 million (2021: EUR 1.7 million).
In 2022, we maintained a balanced liquidity position to give the Group the ability to make investments. When making major investments in 2022 (the purchase of the Lrytas portal and investments in outdoor screens), we raised debt in a prudent manner. We maintain a conservative view when raising loan capital, especially due to rising Euribor rates. The Group has an additional overdraft facility of EUR 3 million, which ensures the necessary liquidity buffer for further activities. The liquidity buffer was unused at the end of the year (2021: also unused).
We expect the economic environment to remain challenging in 2023, which is likely to lead to certain economic stagnation in the Baltic countries. At the same time, despite the economic stagnation or, in the case of a negative scenario, an economic decline, we are still rather optimistic about the growth of business volumes, both from the point of view of digital subscription revenue and the revenue of all other digital areas. In 2023, we will focus on developing the long-term strengths of our business in media, ticket sales platforms and outdoor media. We remain committed to our growth strategy and achievement of our long-term financial goals.
Yours sincerely,
Signe Kukin
Despite the extremely unstable economic environment, the Group’s financial results for 2022 showed strong and stable growth. The revenue of AS Ekspress Grupp totalled EUR 64.1 million, increasing by 20% as compared to the previous year. EBITDA was EUR 8.9 million that is 8% more than in the previous year. The net profit totalled EUR 4.1 million which is at the same level as in 2021, but considering that the revenue for 2021 included one-off finance income in the amount of EUR 0.4 million for fair value adjustment of the future commitment related the purchase price of the ticket sales platform, the net profit increased by approximately 11% as compared to the year before.
We have raised prices due to inflation, but most importantly, we have succeeded in increasing the Group's market share in digital subscriptions, online advertising and other areas. The Group's media companies grew at the expense of their competitors in 2022 by offering advertising clients better solutions to reach consumers. The demand for the events offered through the Group’s ticket business platforms also picked up. The sales volumes of outdoor screens increased as the digital outdoor screen network was expanded by 27 new screens. By the end of 2022, the network already consisted of 84 digital outdoor screens which is 50% more than in the previous year. We continue to actively expand the outdoor screen network, especially in Latvia where the number of digital outdoor screens added in 2022 remained below expectations. In 2023, we will continue to install outdoor screens in the framework of the public tender of the City of Riga.
In the last five years, the Group's compound annual growth rate (CAGR) has been approximately 14%. A significant share of this growth came from the organic increase in digital revenues, supported by the acquisition of new companies such as the acquisition of Lithuanian news agency ELTA and the portal lrytas.lt. We see good potential for further growth of digital revenue and digital subscriptions, but this requires wider adoption of new trends in the media market and reaching market participants, predominantly in Latvia and Lithuania and, in the business segment of digital outdoor screens, in Estonia and Latvia.
Both previous and current year have been challenging for the Group in terms of maintaining the cost base. This concerns the field of paper products in particular, where the impact of input prices is increasing for both the printing and home delivery service, and with decreasing print circulation volumes the cost base is not expected to decrease.
As a Group, we are seeking greater efficiency in order to maintain the EBITDA margin and achieve the minimum level of 15% laid down in our strategy. Realisation of our growth ambitions and transition to digital media requires investments in technology. At this point, we consider it important to maintain the capability of the internal development team at the maximum level. In 2022, investments in technology related to development activities amounted to approximately EUR 2.0 million (2021: EUR 1.7 million).
In 2022, we maintained a balanced liquidity position to give the Group the ability to make investments. When making major investments in 2022 (the purchase of the Lrytas portal and investments in outdoor screens), we raised debt in a prudent manner. We maintain a conservative view when raising loan capital, especially due to rising Euribor rates. The Group has an additional overdraft facility of EUR 3 million, which ensures the necessary liquidity buffer for further activities. The liquidity buffer was unused at the end of the year (2021: also unused).
We expect the economic environment to remain challenging in 2023, which is likely to lead to certain economic stagnation in the Baltic countries. At the same time, despite the economic stagnation or, in the case of a negative scenario, an economic decline, we are still rather optimistic about the growth of business volumes, both from the point of view of digital subscription revenue and the revenue of all other digital areas. In 2023, we will focus on developing the long-term strengths of our business in media, ticket sales platforms and outdoor media. We remain committed to our growth strategy and achievement of our long-term financial goals.
Yours sincerely,
Signe Kukin