AS EKSPRESS GRUPP CONSOLIDATED ANNUAL REPORT 2019 TABLE OF CONTENTS TABLE OF CONTENTS ........................................................................... 2 supervisory and management Note 15. Property, plant and equipment ...........................94 GENERAL INFORMATION ..................................................................... 3 boards of subsidiaries ..................................................................58 Note 16. Intangible assets ...........................................................95 Management Board’s confirmation Audit Committee .............................................................................59 Note 17. Trade and other payables ........................................98 of the consolidated annual report ............................................... 3 Selection and pay of auditor ....................................................59 Note 18. Bank loans and borrowings ....................................99 STATEMENT OF THE CHAIRMAN CONFLICT OF INTEREST AND Note 19. Leases .................................................................................101 OF THE MANAGEMENT BOARD .......................................................4 TREATMENT OF INSIDE INFORMATION ................................59 Note 20. Segment reporting ....................................................102 BRIEF OVERVIEW OF THE GROUP .................................................. 6 Other information ......................................................................... 60 Note 21. Sales revenue ............................................................... 104 GROUP’S KEY BUSINESSES .................................................................7 STATEMENT OF CONFORMITY TO THE Note 22. Cost of sales .................................................................105 OUR MEDIA BRANDS ............................................................................. 8 RECOMMENDATIONS OF THE CORPORATE Note 23. Marketing expenses ..................................................105 OUR CHAIN OF ACTIVITY .................................................................... 9 GOVERNANCE CODE......................................................................61 Note 24. Administrative expenses ........................................106 RESPONSIBILITY OF A MEDIA GROUP IN THE SOCIETY .. 10 CONSOLIDATED FINANCIAL STATEMENTS ...............................62 Note 25. Expenses by type .......................................................106 DIGITAL MEDIA COMPANY ................................................................15 Consolidated balance sheet....................................................62 Note 26. Other income ...............................................................106 KEY EVENTS AND DEVELOPMENTS IN 2019 ...............................18 Consolidated statement of comprehensive income ....63 Note 27. Share option plans ...................................................107 MEDIA DISTINCTIONS AND AWARDS IN 2019 .........................22 Consolidated statement of changes in equity ............. 64 Note 28. Equity ................................................................................107 MANAGEMENT REPORT .....................................................................24 Consolidated cash flow statement .......................................65 Note 29. Contingent assets and liabilities .......................107 BUSINESS OPERATIONS ....................................................................25 NOTES TO THE CONSOLIDATED Note 30. Related party transactions ..................................108 FINANCIAL INDICATORS AND RATIOS – FINANCIAL STATEMENTS ...............................................................66 Note 31. Subsequent events .....................................................110 joint ventures consolidated 50% line-by-line ..................25 Note 1. General information .......................................................66 Note 32. Financial information SEGMENT OVERVIEW .....................................................................27 Note 2. Accounting policies adopted about the Parent Company .....................................................110 MEDIA SEGMENT ..........................................................................28 in the preparation of the financial statements ...............67 Independent auditor’s report ......................................................114 PRINTING SERVICES SEGMENT.............................................29 Note 3. Critical accounting PROPOSAL FOR PROFIT FINANCIAL INDICATORS AND RATIOS ....................................31 estimates and judgements ....................................................... 80 ALLOCATION FOR THE YEAR 2019 .............................................119 CUSTOMER EXPERIENCE AND SATISFACTION .......................35 Note 4. Financial risk management ......................................82 DECLARATION OF THE MANAGEMENT EMPLOYEES .............................................................................................38 Note 5. Cash and bank ................................................................87 BOARD AND SUPERVISORY BOARD .........................................120 DEVELOPMENT OF THE SOCIETY AND THE SECTOR ..........41 Note 6. Trade and other receivables ....................................87 KEY FINANCIAL INDICATORS IN 2015-2019 .............................121 ENVIRONMENTAL MANAGEMENT ................................................. 46 Note 7. Trade receivables ............................................................87 SHARES AND SHAREHOLDERS OF AS EKSPRESS GRUPP .. 48 Note 8. Corporate income tax and deferred tax...........88 REPORT OF THE CORPORATE GOVERNANCE CODE ........53 Note 9. Other short-term receivables ...................................88 CONSOLIDATED ANNUAL REPORT 2019 Corporate governance and STRUCTURE ..........................53 Note 10. Inventories.........................................................................89 GROUP’s legal structure ..............................................................53 Note 11. Other receivables and investments .....................89 GENERAL MEETING OF SHAREHOLDERS .............................55 Note 12. Business combinations ..............................................89 SUPERVISORY BOARD ...................................................................56 Note 13. Joint ventures ...................................................................91 MANAGEMENT BOARD ..................................................................57 Note 14. Associates .........................................................................93 AS EKSPRESS GRUPP 2 GENERAL MANAGEMENT BOARD’S INFORMATION CONFIRMATION OF THE Beginning of reporting period 1 January 2019 CONSOLIDATED ANNUAL REPORT End of reporting period 31 December 2019 The Management Board confirms that the management knowledge a true and fair view of the assets, liabilities, Company name AS Ekspress Grupp report of AS Ekspress Grupp disclosed on pages 4 to 61 financial position and results of the issuer and its group Registration number 10004677 presents a true and fair view of the business develop- companies in accordance with International Financial Address Parda 6, 10151 Tallinn Phone +372 669 8381 ments, results and financial position of the Parent Reporting Standards (IFRS) as adopted by the European Fax +372 669 8180 Company and its group companies. The Management Commission and include a description of major risks and E-mail [email protected] Board confirms that the consolidated financial state- uncertainties. Internet homepage www.egrupp.ee ments disclosed on pages 62 to 113 give to the best of its Main field of activity Publishing and related services (5814) Management Board Mari-Liis Rüütsalu Signe Kukin Kaspar Hanni AS EKSPRESS GRUPP Supervisory Board Ahto Pärl Hans H. Luik Indrek Kasela Peeter Saks Aleksandras Česnavičius CONSOLIDATED ANNUAL REPORT 2019 Auditor KPMG Baltics OÜ The Annual Report consists of the Management Board’s confirmation of the annual report, state ment of the chairman of the Management Board, mana- gement report, report of corporate gover nance Mari-Liis Rüütsalu Signe Kukin Kaspar Hanni code, consolidated financial statements, indepen- Chairman of the Management Board Member of the Management Board Member of the Management Board dent auditor’s report, proposal for profit allocation, signed digitally signed digitally signed digitally and declaration of the Management Board and 23.03.2020 23.03.2020 23.03.2020 Supervisory Board. The document comprises 122 pages. 3 STATEMENT OF THE CHAIRMAN OF THE MANAGEMENT BOARD The year 2019 as a whole was successful for AS Ekspress Grupp. The Group’s revenue and profit growth was attributable to our strategy over the last several years to increase digital revenue and find new digital business areas. A favourable economic environment as well as joint efforts and dedication by our team helped achieve positive results. In 2019, the Group’s consolidated revenue was 75.3 million euros (2018: 69.1 million euros) and net profit was 1.41 million euros (2018: 0.03 million euros). The Group’s digital revenue increased by ca 22% and it made up already 60% of segment revenue at the year-end 2019. In 2019, the Group made significant investments in the development of its existing companies as well as new business areas. Acquisitions included the ticket sales platform operator SIA Biļešu Paradīze in Latvia and we also acquired a minority holding