Quarterly report January - March 2020 Everysport Media Group AB (publ.)

The pandemic has a negative impact, but the group is well positioned when sports returns

This information is such information that Everysport Media Group AB (publ.) is required to publish in accordance with the EU Market Abuse Regulation. The information was provided, through the agency of the above contact person, for publication on May 26th, 2020.

This is a translated version of the Swedish original, in case of deviations is the Swedish version considered to be the one to apply.
 

Summary of the first quarter 2020

• Net sales: 20,8 mkr (23,6 mkr)

• EBITDA: 0,8 mkr (2,3 mkr)
• Profit after tax: −0,4 mkr (1,4 mkr)
• Earnings per share: −0,08 kr (0,01 kr)
• Cashflow from operating activities: 1,6 mkr (1,1 mkr)

CEO, Hannes Andersson, comments:

The coronavirus pandemic is testing the world and wherever you are, restrictions have become part of everyday life. The global economy has been severely affected and thus the markets in which the group's companies are active. The negative effect became stronger towards the end of the first quarter where we had to launch a number of measures to adapt to a world without sports, in order to counteract a clear loss of revenue.

As sports events around the world have been canceled, all parts of our business have been affected as there are simply no games to cover. An exception is Swedish horse racing which has continued to run, but with restrictions. The amount of visitors to our media sites remain strong, but we experience a significant drop in advertising revenue. However, we see that revenue from our end-customer products, primarily premium services linked to our media products, increased during the period.

Support packages from governments have been launched to ensure corporate survival during this period. In Sweden, we have seen a number of solutions that have helped companies secure their liquidity, where we within the group have taken part in a number. In March, we initiated a temporary layoff program that included parts of our staff and we also took part in other stimulus measures and subsidies, like the PPP program for our American entity.

Right now I am very impressed with the level of innovation that flows within the group and in our teams. Although we are not physically close to each other for the time being, new products and services have emerged more or less daily that will continue to live even when everyday life returns. A key factor for our long-term growth is to continue to deliver innovative and leading solutions for sports and iGaming to our customers worldwide. So even though the current situation is challenging, I am convinced that ESMG is well positioned, with products that have strengthened their competitive positions, already during the second half of 2020.Our cash position was strengthened during the first quarter and we feel that we have a good financial position. This means that we can be sustainable and ready to gear up our business as soon as easing of restrictions allow sports events to be held again.

Outlook

The current global uncertainty requires that we have a humble attitude when predicting the future. We continue to be very positive about the group’s performance in the long run, as business has returned to normal when sporting events can be held again. In the short term, however, we will see a decline in sales during the second quarter, which will also have a negative impact on our earnings. We compensate for the loss of sales with reduced costs, but believe that the group will deliver an EBITDA result in the range of SEK 0 to SEK -2.0 million during the second quarter.

Significant events during and after the end of the period

During the first quarter 2020, the Covid-19 pandemic emerged over the world. It has had significant impacts on the possibilities of conduction live events and almost all major sports leagues has been postponed or cancelled.. That had immediate negative effects of demand for several of the products and services sold by Everysport Media Group. At the time of writing, Everysport Media Group cannot accurately assess the long-term effects on the Group's operations and financial development, as an end date for the pandemic cannot be estimated with certainty. The Board of Directors and management are continuously monitoring the development of the business in this context in order too quickly and efficiently manage any risks and situations that may arise. Several measures and actions has already been implemented in order to adjust the cost base to the reduced demand of several products and services,. Hence Everysport Media Group is ready to scale up the operations again as soon as the restrictions release and the sports events are able to be conducted again.Everysport Media Group asses that the group have sufficient funds to ensure continued operations for at least a year during todays circumstances.During the reporting period, Everysport Media Group announced that the Group was planning for a change of accounting principles from K3 to IFRS. The IFRS conversion was also finalized during the period and the purpose of the change is to create better comparability with other listed companies and to increase the transparency and understanding for International investors regarding the financial reports.

The most significant impact on the financial outcome, due to the IFRS conversion, is the change in depreciations. According to previous accounting standard K3, linear amortization was applied which on a yearly basis had a negative impact on the financial outcome with approximately SEK 12 million. According to IFRS, goodwill is instead tested through an impairment test on quarterly basis and according to the test no depreciation was needed. This had a positive effect on the financial outcome and also on equity with the same amount, which have significantly strengthened the financial position of the company.

Leasing costs also change according to IFRS and are instead amortized over the length of the lease and fall below the depreciation and amortization line in the income statement.For detailed information about the transition to IFRS, see appendix - ”Övergång till IFRS”, the appendix is only available in Swedish. For information in English, contact CEO Hannes Andersson.

Net Sales, earnings and financial position during the period
 

Net Sales
Net sales for the first quarter amounted to SEK 20.8 million (SEK 23.6 million). A decrease of 12,0 % compared with the same quarter last year. The outbreak of Covid-19 had a major impact on sales during the latter part of the quarter, which resulted in a decrease in sales compared to the same quarter last year.

B2B
The Covid-19 pandemic has had the strongest negative impact on sales in the B2B segment. In the B2B segment, it was primarily the advertising business that suffered as the demand for advertisement products decreased during the latter part of the quarter when corporate customers had to cut down on marketing campaigns. However, Everysport Media Group have a number of assignments based on longer production agreements which have not been affected to any great extent. For example within Swedish trotting, which is one of the sports that has continued to be practiced despite the pandemic.

B2C
Although sales for the Group as a whole have decreased compared to the same period last year, there has been an increase in the B2C segment of just over 10%. Although sales in the B2C segment have also had a negative impact because of Covid-19 during the latter part of the quarter, this is the result of a long-term effort to find new revenue within subscription income, unit purchase income and other income linked directly to consumers. The transfer of revenue from the B2B to B2C segments is important from a strategic perspective as they are more stable over time and have a better margin.

EBITDA and EBIT

EBITDA for the first quarter amounted to SEK 0.8million (SEK 2.3 million). A decrease of 65 % compared to the same quarter last year.

The decrease in EBITDA compared to the same quarter last year is directly linked to the negative impact Covid-19 had on sales during the first quarter. The variable operating costs, which are more closely linked to sales, have decreased, while personnel costs and other external costs are at a relatively even level compared to the same period previous year. The measures and actions taken in the latter part of the quarter to meet the lower level of sales due to Covid-19 will not have full effect until the second quarter.

EBIT for the first quarter amounted to SEK -0.1million (SEK 1.6million). A decrease of 109 % compared to the same quarter last year.

EBIT during the first quarter of 2020 is affected by depreciation by SEK -0.9 million (SEK -0.7 million). The increase in depreciation is linked to the investments made during the previous year.Capitalized work on own account during the quarter amounts to SEK 0.9 mkr (0.5 mkr).
 

Financial position
At the end of the period, Everysport Media Group AB (publ.) has equity of SEK 21,9 million (SEK 17,7 million) and an equity ratio of 41% (31%)Cash and cash equivalents at the end of the period were SEK 1,9 million (SEK 2,7 million).
In addition to cash and cash equivalents, Everysport Media Group has access to additional banking facilities that strengthen the financial position.
 

Share and shareholders
As of the date on 31st of March, 2019, 4 542 496 shares were issued. All shares have equal rights to the company's profit and assets.

Decision has, through the extraordinary general meeting of 2018-01-16, been adopted to adopt an incentive program for the Board of Directors and an incentive program for the CEO and other senior executives and certain employees of Everysport Media Group (publ.). The incentive programs entail an issue of a maximum of 6,754,847 warrants. 25 warrants entitles the holder to convert for one new share in the company at a price of SEK 14,25 per share. The exercise of the warrants shall be possible during the period from January 13, 2020 to June 13, 2020.

The total number of shares at full future dilution amounts to 4 812 689.
At the end of the quarter, Everysport Media Group AB had 766 (907) shareholders.

Employees
The average number of full time equivalents during the quarter was 68 (59).

Accounting principles

This interim report includes the Swedish parent company Everysport Media Group AB (publ), corporate ID 556739-8143, and its subsidiaries. The Group’s main operations are divided into Content and Media. Within Content the Group is a leasing provider of results data, game tips and sports tips. Within Media the Group owns and runs digital sites like, EliteProspects, Svenska Fans, Fotboll Direkt, HockeySverige, Travtjänsten and Sporttjänsten which acts as engines for the products offered within the Group.

The parent company is limited liability company registered in Stockholm, Sweden. The adress for the headquarters is Gamla Brogatan 11, 111 20 Stockholm.

The consolidated accounts for Everysport Media Group AB (ESMG) have been prepared in accordance with IAS 34 Interim Financial Reporting, the Swedish Annual Accounts Act and RFR 1 Complementary Accounting Rules for Groups . This is the Groups first financial report in accordance with the International Financial Reporting Standards (IFRS) with transition date as 1st of January 2019. The Group has previously applied BFNAR 2012: 1 Annual Report and Consolidated Accounts (K3). The transition to IFRS has been made in accordance with IFRS 1 The first time IFRS is applied and described in more detail in the appendix Transition to IFRS. The Group's complete accounting principles are described in the Appendix Transition to IFRS, where full accounting principles and transition tables are found.The interim report regarding the parent company has been prepared in accordance with the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities issued by the Swedish Financial Reporting Board. The parent company has previously applied the Annual Accounts Act and BFNAR 2012: 1 Annual Report and Consolidated Accounts (K3) in the preparation of financial reports. As of these financial reports, the Parent Company, as a result of the Group's transition to IFRS, applies RFR 2 Accounting for legal entities. See separate paragraph for a description of the Parent Company's accounting principles.

Audit

This report has not been reviewed by auditors.

Further reporting dates

The quarterly report for the period April - June 2020 will be published on the 23rd of July 2020.
The quarterly reports for Everysport Media Group are published in the company’s website www.esmg.se

Interim Report 2020: 23rd of July

Interim Report July - Sep 2020: 29th of October 2020

 Year end report 2020: 18th of February 2021

Stockholm 2020-05-26

Hannes Andersson

CEO

Any questions answered by:

Hannes Andersson, CEO Everysport Media Group AB, tel: +46 70 736  56 25
e-mail: hannes.andersson@esmg.se

Alexander Rödström, CFO Everysport Media Group AB, tel: +46 70 633 91 21
e-mail: alexander.rodstrom@esmg.se

Everysport Media Group (publ.) (ESMG) is a Swedish publicly listed media group with roots in sports and gaming. Our strategy is based on two main components: Content and Media. Within Content, ESMG is a leading provider of performance data, betting tips and sports news. Some of our clients are gaming operators, sports associations and media organizations. Our media portfolio garners over 2 million interactive viewers across multiple platforms, sites, and networks within the industry.