Baltic Classifieds : Annual Report and Accounts 2023

Baltic Classifieds Group PLC

Annual Report and Accounts 2023

Contents

STRATEGIC REPORT

1. Strategic Highlights

1. Chair's Statement

1. CEO's Statement

1. Market Overview

1. Our Business at a Glance
2. • Our business model
   • Our market position
   • Our strategy
   • Our purpose and culture

1. Moving our Strategy Forward
2. Section 172(1) Statement
3. Financial Review

1. Operational Review

1. Sustainability Report
2. • The Task Force for Climate-Related Financial Disclosure ("TCFD") Report
   • Non-financialand sustainability information statement

1. Risk Management
2. • Principal risks and uncertainties

1. Viability Statement

GOVERNANCE REPORT

51 Corporate Governance Report

• Introduction by the Chair of the Board Trevor Mather
• Corporate Governance Statement 2023
• Board of Directors
• Senior Management
• Board Leadership and Company Purpose
• Division of Responsibilities
• Board Composition, Succession and Evaluation
• Audit, Risk and Internal Control
• Remuneration

1. Nomination Committee Report

1. Audit Committee Report

1. Directors' Remuneration Report

1. Directors' Report

FINANCIAL STATEMENTS

97 Independent Auditor's report to the members of Baltic

Classifieds Group PLC

1. Consolidated Statement of Profit or Loss and Other
   Comprehensive Income
2. Consolidated Statement of Financial Position
3. Consolidated Statement of Changes in Equity
4. Consolidated Statement of Cash Flows
5. Notes to the consolidated financial statements
6. • Going concern

1. Company Statement of Financial Position
2. Company Statement of Changes in Equity
3. Notes to the Company financial statements

ADDITIONAL INFORMATION

1. Glossary
2. Shareholder Information

STRATEGIC REPORT

1. Strategic Highlights

1. Chair's Statement

1. CEO's Statement

1. Market Overview

1. Our Business at a Glance
2. • Our business model
   • Our market position
   • Our strategy
   • Our purpose and culture

1. Moving our Strategy Forward
2. Section 172(1) Statement
3. Financial Review

1. Operational Review

1. Sustainability Report
2. • The Task Force for Climate-Related Financial Disclosure ("TCFD") Report
   • Non-financialand sustainability information statement

46 Risk Management

• Principal risks and uncertainties

49 Viability Statement

STRATEGIC REPORT

Strategic Highlights

The Group's objective is to provide trusted marketplaces to connect sellers and buyers across the Baltic region through "easy-to-use" and "feature-rich" portals that result in an efficient transaction experience for all parties.

We believe the Group achieves this with its portfolio of leading brands, individually strong market positions and generally scalable business model.

We aim to continue to deliver profitable growth by further monetising our portfolio of leading online classifieds portals through systematic price increases of our core classifieds products, supported by a strong value proposition and new features and products (including listings promotions), the development of ancillary services and selective bolt-on acquisitions and in-market consolidation in the Group's existing markets and beyond.

3

more 95% than

STRATEGIC REPORT

Strategic Highlights continued

Strategic Highlights continued

STRATEGIC REPORT

Financial highlights

Operational highlights

The Group's six strategic priorities are listed below:

Revenue				+
				19%
2023: €60.8m
2022: €51.0m
2021: €42.3m
Operating profit		+
				113%
2023: €29.1m
2022: €13.6m
2021: €15.7m
Adjusted				+
Operating profit1
				17%
2023: €45.3m
2022: €38.5m
2021: €32.2m
EBITDA1				+
				17%
2023: €46.0m
	1
2022: Adjusted EBITDA	€39.3m
2021: Adjusted EBITDA1 €33.0m
EBITDA margin1			76%

Leverage3

2023: 1.0x		1.0x
2022: 1.7x
2021: 6.0x

Traffic2023: 61.9m4 61.9m 2022: 65.1m

2021: 69.2m

Lead vs closest competitor

Autoplius		5.6	8.6
CVbankas											29.2
Auto24
Aruodas			20.7	2023
Skelbiu										19.3
												20225
KV + City24		16.4				20215
in Estonia

Cultural highlights

1. Drive monetisation of core services

The Group is considered to be at an early monetisation stage. The primary growth driver and focus of the Group is to drive increased monetisation of its core services, by increasing average revenue per B2C lister and average revenue from each C2C lister. Increased monetisation can take different forms, including pricing actions and product and packaging development (including listing promotions) enabling upsell and cross-sell.

How we measure progress

• Revenue
• C2C yield1
• B2C ARPU

2023 progress

We ended our year 20232 with the highest ever yearly revenue in all four business units, exceeding the guidance of c.15% growth for the Group. Group's revenue grew 19% to €60.8 million (2022: €51.0 million).

It was a very healthy growth from all four business lines, underpinned by strength in the core business. The growth came from B2C and C2C which are the core revenue streams and together represent almost 90% of BCG revenue. B2C and C2C revenue grew 21% and 25% respectively.

Before the start of the period reported on, we increased the yield from C2C ads across all of our business units and ended this year with the following growth in yield:

+	+	+	+
7%	14%	51%	14%
in Auto3	in Real Estate	in Services4	in Generalist5

Improvements to our products and packages for B2C customers towards the end of the first half of the period reported supported price increases in our Auto, Real Estate and Jobs & Services business lines and contributed to revenue in the second half of the year. Monthly average revenue per user ("ARPU"6) has grown:

+	+	+
30%	22%	17%
in Auto	in Real Estate	in Jobs7

Associated risks

• Geopolitical risk
• Risk of disruption to our customer and / or supplier operations
• Competition risk
• Laws & regulations risk
• Technology risks

2023: 76%

2022: Adjusted EBITDA margin1 77%

Total	decrease by
CO2	emissions
			45%

2. Drive more listings and traffic across the Group's portals

2021: Adjusted EBITDA margin1 78%
Basic EPS	€
cents
2023: 4.7 € cents 2	4.7
2022: 0.22 € cents
2021: (0.02) € cents	€
Adjusted basic EPS1
	cents
	7.7

2023: 100

2022: 183

the total amount of CO2 emissions includes Scope 1 and Scope 2 (market-based), tonnes of carbon dioxide equivalent

Employee engagement

% of employees who are proud to be part of the BCG team

The Group will continue to leverage the existing strong market positions of its portals, high brand recognition and traffic to drive more listings and traffic across its portals. As more listings are added, consumer audience traffic is expected to increase, and the more traffic increases, the more attractive the portals are, which again attracts more listings. These network effects are expected to continue to support more revenue growth through an increased income from listing fees, subscription fees and other revenue sources.

2023 progress

During the last years, all our leading sites have either increased or maintained their significant audience lead8 over the closest competitor. Leadership position in times has remained very strong.

During 2023, the Group's portals were visited on average 61.99 million times a month (Source: Google Analytics). During the year 2022, it was 65.1 million monthly visits on average.

2023: 7.7 € cents
2022: 6.4 € cents
2021: 3.4 € cents	+41%
Cash generated from
operating activities
2023: €48.0m
2022: €34.1m
2021: €33.1m	99%
Cash conversion1
2023: 99%
2022: 99%
2021: 100%

Gender 51% : 49% diversity

2023: 51%:49%

2022: 51%:49%

2021: 49%:51%

female : male, as at 30 April each year

1. Alternative performance measure (see Note 5 to the consolidated financial statements on pages 118 to 119).
2. Restated, see note 3 to the consolidated financial statements on pages 109 to

1. for further details.

1. See note 5 to the consolidated financial statements.
2. Note: there were changes in the cookie consent policy (general obligation to consent with all cookies that are not strictly necessary for website operation) and internet browsers policy of more strict control of 3rd party cookies on websites. Both mentioned reasons result in loss of data collected by web analytics services like Google Analytics.
3. Historical data was updated after Similarweb released an improved Mobile Web algorithm and rerun historical data last August.

How we measure progress	Associated risks
• Audience lead versus closest competitor	•	Geopolitical risk
• Traffic to our sites	• Risk of disruption to our customer and / or supplier
	•	operations
	Competition risk
	• Laws & regulations risk

1. "Yield" refers to the change in average monthly revenue per active (Auto or Real Estate) or listed (Generalist) C2C listing.
2. "2023" means the financial year (12 months) ended 30 April 2023, "2022" means the financial year ended 30 April 2022, "2021" means the financial year ended 30 April 2021.
   3-7 See Financial review section.

1. Audience lead. Leadership position based on time on site except for Auto24. Auto24 has no significant vertical competitor; the next relevant player is Generalist portal; therefore, relative market share is calculated based on time on site proportion relating to the number of active automotive listings as at the end of the reported period.
2. Note: there were changes in the cookie consent policy (general obligation to consent with all cookies that are not strictly necessary for website operation) and internet browsers policy of more strict control of 3rd party cookies on websites. Both mentioned reasons result in loss of data collected by web analytics services like Google Analytics.

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Baltic Classifieds Group PLC Annual Report and Accounts 2023

Baltic Classifieds Group PLC Annual Report and Accounts 2023

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STRATEGIC REPORT

Strategic Highlights continued

3. Grow ancillary revenue through existing and new partnerships

Strategic Highlights continued

STRATEGIC REPORT

5. Pursue strategic opportunities through acquisitions

In addition to increasing monetisation of the core classifieds services, the Group aims to grow revenue by offering ancillary products and services, with the overall objective of enhancing the transaction journey of consumers and listers in the Baltic markets.

How we measure progress

• Developments
• Innovations
• Partnerships

2023 progress

Auto: In Lithuania we have a new strategic partner for our private label car financing offering, also improved our offering by introducing two more business packages providing more choice to the advertisers.

In Estonia we have also introduced a new B2C package and ad activation limit to improve both the customer experience and monetisation.

Real Estate: We introduced a fourth B2C package targeting premium real estate agents. We also made authentication of our business clients mandatory to improve content quality and customer experience.

We have also further developed a virtual telephone numbers service for C2C customers in Lithuania as virtual numbers strongly contribute to the personal data privacy and marketing of the service.

Jobs & Services: We have introduced a salary estimating tool which now provides comprehensive salary statistics for over 100 popular job positions across different cities in Lithuania.

On our newly acquired Services marketplace GetaPro in Latvia, we implemented a subscription based monetisation model which we also apply in Services portal Paslaugos in Lithuania.

Generalist: On our biggest generalist in Lithuania, in automotive and real estate categories we implemented value-based pricing.

We have also implemented upgrades in relation to fraud prevention by introducing a two-factor authentication for the advertisers.

• More details in our Operational Review (pages 24 to 25).

Associated risks

• Competition risk
• Technology risks

One of the capital policy priorities is to continue considering value-creating M&A opportunities.

The Group constantly evaluates its portfolio to optimise value creation and is continuing pursuit of attractive options for inorganic growth, particularly through bolt-on acquisitions and in-market consolidation within the Group's existing markets, and potentially new markets outside of the Baltics with a strong focus on similarly high-quality,market-leading businesses.

How we measure progress

• Filling in the "gaps" in the matrix of geographies and business lines

2023 progress

In July 2022 a Group subsidiary, SIA City24, acquired certain assets of SIA GetaPro ("GetaPro") as a business acquisition, paying €1.6 million for it.

GetaPro is a Services classifieds portal operating in Latvia and Estonia. We believe this acquisition will allow us to increase our presence in the Services classifieds market in the Baltics.

BCG also owns a Services vertical in Lithuania - Paslaugos. lt - which almost doubled during the year. Therefore, the acquisition of Services vertical GetaPro in Latvia and Estonia, marked a strategic expansion of the fastest growing segment into a new territory.

GetaPro business and strategy integration is progressing well - now applying best practices from our existing Services vertical in Lithuania.

Associated risks

• Acquisition risk

4. Continuously improve the Group's scalability and maintain high levels of operational efficiency while making necessary investments

6. Promote circular economy and minimise our own impact on the environment

While the Group already demonstrates high operating leverage, operational and cost efficiency, it is committed to continue optimising costs and maintaining high cash conversion. However, the commitment to a lean and efficient organisation does not prevent the Group from making strategic investments, for example in technology, to maintain its market-leading position and strong value proposition for listers and consumers, and to support the sustainability of a growing organisation. The Group has a robust process of assessing business areas requiring further investments, and a streamlined approach to implementing internal change, with recent examples including the increased investment in the technology team and additional security infrastructure.

How we measure progress

• EBITDA1 and margin, adjusted EBITDA1 and margin
• Operating profit and adjusted operating profit2
• Cash generated from operating activities
• Cash conversion3
• Basic EPS and adjusted basic EPS4

of D&A is amortisation of acquired intangible assets) and in the last year's case also one-timeIPO-related costs. Despite the still growing cost base relating to being a public listed company, this year our EBITDA grew 17% to €46.0 million (€39.3 million adjusted EBITDA in 2022).

We ended our year with 76% EBITDA margin (77% adjusted EBITDA margin in 2022).

Adjusted operating profit5 grew 17% to €45.3 million (€38.5 million in 2022).

Reported operating profit more than doubled: we ended our year with €29.1 when last year it was €13.6 million, reflecting IPO related expenses.

Cash generated from operating activities, when adjusted for IPO fees in 2022, grew 18% - from €40.5 million in 2022 to €48.0 million in 2023. Reported cash generated from operating activities grew 41% from €34.1 million in 2022.

Cash conversion maintained at 99% (99% in 2022). Basic EPS for 2023 was 4.7 € cents (2022: 0.2 € cents6). Adjusted basic EPS7 was 7.7 € cents (2022: 6.4 € cents).

BCG is committed to being a responsible business and our priority is to protect our people and continue to protect the environment around us.

Climate change is treated as a Board-level governance issue. The ESG working group that was formed in 2022 evidences our commitment to ensuring as a business we keep progressing with our climate change agenda.

We are highly focused on providing a safe, happy, and supportive working environment and we are continuously looking for ways to improve internal communications to ensure our employees stay connected and feel engaged.

How we measure progress

• Total CO2 emissions
• Employee engagement level
• Gender diversity

2023 progress

During 2023 we made progress in our net zero journey by setting clear targets that will help us minimise our impact on the environment. In addition to that, we submitted our near-term targets to the Science Based Targets initiative (SBTi) Business Ambition for 1.5°C. We have already made steps towards our goal to become net zero:

• we reduced the total CO2 emissions in direct operations by 45% and
• increased the portion of electricity used from renewable sources from 63% to 73%, while
• emission-freeelectricity was increased from 66% to 87%.

During the year we have conducted an employee engagement survey and were pleased that more than 95% of our employees answered YES to both questions

• "Do you feel proud to be part of the BCG team?" and
• "Would you recommend your friends to work here?"

2023 progress

We ended our year 2023 with the highest ever yearly profitability, exceeding the guidance.

This year there were no add-backs to our EBITDA. We compare this year's EBITDA to last year's adjusted EBITDA because both reflect core operating profit before D&A (95%

1-5,7 See note 5 to the consolidated financial statements.

Associated risks

• Geopolitical risk
• Risk of disruption to our customer and / or supplier operations
• Technology risks
• Laws & regulations risk

We acknowledge the significance of gender diversity and take pride in concluding the year with a nearly equal female- to-male ratio of 51:49 (as of the end of 2022: 51:49).

Associated risks

• Climate change risk

6 The Company has restated a 2022 deferred tax amount as set out in note 3 to the financial statements. The amount was a non-cash item and related to the IPO refinancing, therefore in 2022 we were adjusting our performance measures for this item to present the adjusted operating business profitability. Accordingly, the adjustment has no impact on the prior year consolidated net cash flow, normalised business profitability or consolidated statement of financial position. However, there is a €1.3 million reduction on 2022 accounting profit.

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Baltic Classifieds Group PLC Annual Report and Accounts 2023

Baltic Classifieds Group PLC Annual Report and Accounts 2023

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