Year-End Report 2019 Everysport Media Group AB (publ.)
Consumer revenue boosts earnings
This is a translated version of the Swedish original, in case of deviations is the Swedish version considered to be the one to apply.
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 February 20th, 2020
Summary of the fourth quarter 2019:
• Net sales: 22,6 mkr (23,7 mkr)
• EBITDA: 2,8 mkr (2,6 mkr)
• Profit after tax: -1,7 mkr (-1,1 mkr)
• Earnings per share: -0,38 (-0,01 mkr)
• Cashflow from operating activities: 3,1 (1,4 mkr)
Summary of the full year 2019
• Net sales: 90,2 mkr (89,6 mkr)
• EBITDA: 9,2 mkr (8,9 mkr)
• Profit after tax: -5,3 mkr (-4,7 mkr)
• Earnings per share: -1,17 (-0,04 mkr)
• Cashflow from operating activities: 4,8 (5,9 mkr)
CEO, Hannes Andersson, comments:
ESMG delivered a higher full-year result in 2019 than 2018, despite challenges in the Swedish advertising market. A record high EBITDA result of SEK 9.2 million (SEK 8.9 million) was achieved, and with net sales of SEK 90.2 million (SEK 89.6 million) we saw an EBITDA margin of 10.2%. The increase was primarily driven by growth in consumer revenue and strong international growth. We thus achieved our communicated financial goals for 2019, while we were able to maintain a high level of investment. During the year we also saw one-off payments of SEK 0.7 million attributable to changes of accounting standard (see below), which had a negative impact on earnings.
We ended 2019 in a strong way. During the fourth quarter, growth continued to be high within our primary focus areas, leading to the highest EBITDA result achieved during a quarter in the history of the company. We launched several new products and services, including a new premium service for FotbollDirekt and a product for shared betting in collaboration with Svenska Spel.
As we now move into 2020, we see several catalysts for ongoing growth. We continue to invest at a high rate in new products both in sports media and gaming information, where large efforts will be spent on launching additional products internationally. In North America, we now have seven employees and we plan to grow even further as our business grows. But we also turn to our neighboring countries in Scandinavia, and towards new markets in Europe. We have a scalable and successful model that we plan to over time apply to more markets.
As a step to increase comparability to other listed companies, we have made the decision to change accounting standard from K3 to IFRS in 2020. The effect of the transition becomes significant to our result, since goodwill will no longer be subject to linear depreciation but instead will be subject to quarterly impairment tests. In 2019, where K3 was still applied, write-downs of goodwill were made of close to SEK 12 million, which is reversed upon the transition to IFRS in 2020 and will lead to a highly improved operating profit and increased equity.
The digital advertising market in Sweden weakened in 2019, led by the decline of gaming companies’ marketing spend. We now see small first signs of recovery, and the fact that we are now in a sports year, with both the European Championship in men's football and the Olympics in the making, makes us cautiously positive towards a more stable advertising market. Also, our growth is led by consumer-products, where we predict a sustained trend in continuing growth of subscription rates. We have just launched our biggest recruitment effort ever, when we during this spring plan to hire ten new employees and expand our presence with new offices in Gothenburg (Sweden) and Tampa (USA).
Significant events during and after the end of the period
In November an aggregation of the company’s class A shares (the ”reverse share split” 1:25) were implemented. Due to the reverse share split, a recalculation of the subscription price for the company’s warrants of series 2018/2020:1 and series 2018/2020:2 must be made in accordance with the terms of the warrants. The new subscription price is SEK 14,25 for both series of warrants.
In February 2020, it was announced that the company plans to change accounting principles from K3 to IFRS in 2020. The purpose of the change of accounting principles is to create better comparability with other listed companies and to increase transparency and understanding for international investors regarding the financial reports.
Net Sales, earnings and financial position during the period
Net Sales
Net sales for the full year 2019 amounted to SEK 90.2 million (SEK 89.4 million). An increase of 1% in comparison to the previous year.
Despite the decline in the digital advertising market during the year, mainly linked to decreased advertising from gaming operators, net sales increased overall in 2019. Growth in new focus areas, such as consumer products and new markets during the year were strong and outweighed the negative development in the advertising market.
Net sales for the fourth quarter amounted to SEK 22.6 million (SEK 23.7 million). A decrease of -4.6% in comparison to the same quarter last year.
The decrease in the fourth quarter is linked to the reduced turnover from gaming operators in the digital advertising market. During the fourth quarter of last year, order bookings from gaming operators were high as they aimed to take a stronger position in the Swedish market prior to the re-regulation that was implemented on January 1st 2019. The decline in the advertising market is offset by growth in new products and markets during the fourth quarter, which follows the company's long-term strategy.
EBITDA and EBIT
EBITDA for the full year 2019 amounted to SEK 9.2 million (SEK 8.9 million).
EBITDA for the fourth quarter amounted to SEK 2.8 million (SEK 2.6 million).
Although investments in new products and markets have led to increased personnel and other costs, EBITDA earnings have improved as a result of growth in new products with a higher margin. The investments are not only having a positive effect in the short term, but they are also strategically important from a long-term value-creating perspective. The variable operating costs have decreased as a result of the completion of a number of external sales assignments, which in the past led to high commission costs.
EBIT for the full year 2019 amounted to SEK -4.6 million (-3.4 million). EBIT result for the full year 2019 is affected by amortization of goodwill and development projects of SEK -13.8 million (-12.4 million).
EBIT for the fourth quarter was SEK -1.5 million (-0.5 million). EBIT result during the fourth quarter of 2019 is affected by amortization of goodwill and development projects of SEK -4.3 million (-3.2 million). In the fourth quarter of 2019, in addition to planned depreciation, an old obsolete platform of SEK 1.0 million was written down.
Amortization of goodwill will continue for as long as the company applies the K3 regulations and there is still balance of goodwill. Depreciation does not affect cash flow.
Activated work for own account for the full year 2019 amounted to SEK 3.0 million (SEK 2.0 million) and during the fourth quarter to SEK 0.6 million (SEK 1.1 million)
Share and shareholders
As of the date on 31st of December, 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 fourth quarter, Everysport Media Group AB (publ.) had 824 shareholders.
Employees
The average number of full time equivalents during the the fourth quarter was 66.
Accounting principles
The consolidated accounts for Everysport Media Group AB have been drawn up in accordance with the K3 regulatory framework.
Dividends
The Board of Directors suggests no dividends for the financial year of 2019
Audit
This report has not been reviewed by auditors.
Further reporting dates
The Annual report will be released on the latest 3 week before the Annual General Meeting on the companies website as well as Spotlight’s website. The Annual General Meeting will be held on the 26th of May 2020.
Interim report Jan - March 2020: 20th of May 2020
Interim report 2020: 23rd of July 2020
Interim Report July - Sep 2020: 29th of October 2020
Year-End report 2020: 18th of February 2021
Stockholm 2020-02-20
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