AS Ekspress Grupp: Consolidated Interim Report for the third quarter and 9-months of 2016 31.10

In the third quarter of 2016, the revenue of the Group increased 2% as compared to the same period year before, amounting to EUR 14.4 million. The revenue of the media segment increased 6%, whereas the revenue of digital and online channels was up significantly, by 12%, as compared to the third quarter in  previous year. It’s impressive considering the tough situation of the media market in all countries. Another positive result was that actual revenue of the media segment exceeded the forecast by 1%. The segment of printing services remains under pressure because of the market situation and strong price competition. Production volumes have increased, but the third-quarter revenue was 2% lower as compared to the year before and ca 11% lower than the forecast. The Group’s EBITDA amounted to EUR 1.9 million, being 10% lower compared to the third quarter of 2015 and 8% lower than our most recent forecast. This was predominantly attributable to the lower EBITDA level of the printing services segment. The above figures include all our joint ventures (AS SL Õhtuleht, AS Ajakirjade Kirjastus and AS Express Post) consolidated 50% line-by-line. 

In the third quarter the revenue of the media segment reached EUR 10 million, having increased 6% in a year, whereas revenue from digital and online channels was up 12%. EBITDA amounted to EUR 1.2 million, an increase of 1% as compared to the third quarter a year earlier.

In a pleasant surprise, Delfi Latvia increased its third-quarter revenue by 11% and EBITDA by 76%, although the competition situation between online portals is tough and the need to strengthen the editorial office remains continues. This secured to Delfi in the last eight months the largest Internet portal’s title in Latvia based on Gemius TOTAL Reach data. The company’s revenue reached EUR 751 thousand and EBITDA was EUR 58 thousand. In July we acquired in Latvia the leading classified portal in its niche - www.atverskapi.lv. 

In the third quarter the revenue of Ekspress Meedia increased 5% and amounted to EUR 4.6 million. This includes 18% growth in online advertising sales and even 2% growth in print advertising. This was achieved mainly as a result of focusing on the efficiency of the sales team, the increasingly versatile portfolio and innovation. Subscriptions and retail sales revenue increased 1.3% compared to last year. We constantly invest in new products and IT solutions, which explains why third-quarter EBITDA was by EUR 0.3 million lower than a year earlier. The quarterly result was also affected by the allowance for receivables of a few problematic customers. The summer which is normally a quiet season featured several major projects including the European Football Championships, Rio Olympics and intense coverage of presidential elections. We started cooperation with the Tallinna Kalev/Cramo and BC Tartu basketball teams and are the streaming and advertising partners of both clubs. In August we launched a vertical www.homme.ee that is targeted at men. The vertical’s name is a reference to the French word „man“ and the former supplement of Eesti Ekspress. In September we launched the Family Package that enables subscribers to read 15 leading Estonian publications for a single monthly fee. Of developments, one should mention the ad-free Delfi solution for mobile phones where users can remove all ads from the Delfi environment for a monthly fee. During the summer nine magazine brands of joint venture Ajakirjade Kirjastus were helped to be turned into digital format. In addition, also the Maakodu magazine is now available in a digital format.

In the third quarter, Delfi Lithuania increased advertising sales by 8% and EBITDA by 52%. Total revenue was EUR 2 million and EBITDA was EUR 474 thousand. Online sales continues to grow, but magazine circulations, print advertising and content sales decrease at a stable rate. 

The revenue and profit growth of Ajakirjade Kirjastus, 11% and 70% respectively, is mainly attributable to the expansion in our product portfolio in April when we acquired Estonian largest women’s weekly Naisteleht as well as magazines Nipiraamat and Müstiline Ajalugu. As a result of the transaction, we merged the newly acquired weekly Naisteleht with the existing magazine Naised and reached significant synergies, giving a boost to both revenue and profit. The third-quarter revenue of Ajakirjade Kirjastuse totalled EUR 1.1 million and EBITDA was EUR 0.2 million.

SL Õhtuleht increased its revenue, which exceeded of one million euros, 3% compared to the same period last year. Both advertising and content sales revenue increased. Õhtuleht remains the newspaper with the largest circulation in weekdays, the level of subscribers remains high and single-copy sales are higher than planned. The number of digital subscribers has tripled as compared to the start of the year. We have become more active in developing new products such as magazines and books. In September we posted the best web results in competition with large portals and are especially strong in the female target group. The new portal www.televeeb.ee has been successfully launched. Starting from June, the Russian-language news portal www.vecherka.ee  has been constantly half bigger than at the start of the year. We have invested considerably in advertising sales capacity. In August we launched a new mobile advertising engine and will shortly implement it also in the main web. Several experienced professionals have joined our sales team. The third-quarter EBITDA of SL Õhtuleht remained 27% below last year’s result.

The third quarter in the printing services segment was again complicated. While the revenue had increased in the previous quarter, it decreased 2% in the third quarter. The amount of orders and work volume keeps increasing, but price pressure is dampening revenue growth. The 16% decrease in EBITDA is attributable to the growth in labour costs resulting from increased volumes. The closure of several Scandinavian printing houses in the first half of 2016 did not ease the price pressure as much as expected.  As a new trend emerging in the market is that some Scandinavian printing houses have been able to continue operating with the assistance of state. In spite of the tough market situation, persistent and aggressive work has helped us to attract new products and customers in Scandinavia and improved also our price level. Albeit slowly, Printall is expanding its reputation into printing sectors outside periodicals. This enables to expand into B2B segment that requires product catalogues and other specific sales materials that are suitable for our sheet-fed printing machines. In the last year, Printall has been transforming from a large and elite printing plant to wide-based tool for promoting communication.

In July we signed a contract to acquire 50% holding in OÜ Linna Ekraanid, which is engaged in the sale of digital outdoor advertising in Estonia. In September we acquired 49% holding in Babahh Media OÜ which is engaged in the video production, media solutions and streaming related infrastructure sales in Estonia. In the second quarter of 2019 we will acquire the remaining 50% of OÜ Linna Ekraanid, and thereby will become the company’s sole shareholder. The purpose of the acquisition is to create preconditions for the Group to set off a new business line and thereby expand the Group’s portfolio of business areas. The objective of AS Ekspress Grupp is to develop the business line of digital outdoor advertising in all three Baltic countries and take the leading role in this business segment. With regard to Babahh Media OÜ, the Group has an option to acquire the additional ownership in Babahh Media OÜ in 2021, as a result AS Ekspress Grupp could increase its share holding in Babahh Media OÜ up to 70% in total. The purpose of the acquisition is to expand the business of AS Ekspress Grupp in the fast-growing market of online video production and video streaming.

The financial position of the Group remains strong, the ratio of total debt and EBITDA is approaching 2.0 and the debt service coverage ratio is almost 2.7.

Our outlook for the next quarter and the whole year has turned even more modest. However, we expect small growth in online media and the recovery of the printing services segment in fourth quarter which keeps our quarterly revenue and EBITDA on the same level as last year. The shortage from beginning of the year remains to be unreachable.  

Our mission remains to offer new and interesting experiences both on paper and in digital media, without ever compromising on news quality, choice of topics and journalistic objectivity.

The Group’s goal is to be a truly modern media group with a strong foothold in all markets where actively present, with a leading position in online media.

FINANCIAL INDICATORS AND RATIOS – joint ventures consolidated 50% line-by-line

In the consolidated financial reports 50% joint ventures are recognised under the equity method, in compliance with international financial reporting standards (IFRS). In its monthly reports, the management monitors the Group’s performance on a basis of proportional consolidation of joint ventures and the syndicated loan contract also determines the calculation of some loan covenants by proportional consolidation. For the purpose of clarity, the management report shows two sets of indicators: one where joint ventures are consolidated line-by-line 50% and the other where joint ventures are recognised under the equity method and their net result is presented as financial income in one line.

Performance indicators – joint ventures 50%

consolidated (EUR thousand)

Q3

2016

Q3 2015

Change %

Q3

2014

Q3 

2013

Q3

2012

For the period

 

 

 

 

 

 

Sales

14 437

14 169

2%

13 833

12 977

13 278

EBITDA

1 932

2 143

-10%

1 732

1 359

1 495

EBITDA margin (%)

13.4%

15.1%

 

12.5%

10.5%

11.3%

Operating profit

1 085

1 423

-24%

872

718

676

Operating margin (%)

7.5%

10.0%

 

6.3%

5.5%

5.1%

Interest expenses

(125)

(157)

20%

(189)

(204)

(301)

Net profit /(loss) for the period*

902

1 210

-25%

644

455

263

Net margin (%)*

6.2%

8.5%

 

4.7%

3.5%

2.0%

Net profit for the period in the financial statements (incl. impairments and gain on change of ownership interest)

902

1 210

-25%

1 599

455

263

Net margin (%)

6.2%

8.5%

 

11.6%

3.5%

2.0%

Return on assets ROA (%)

1.2%

1.6%

 

2.1%

0.6%

0.3%

Return on equity ROE (%)

1.9%

2.5%

 

3.6%

1.1%

0.7%

Earnings per share (EPS)

0.03 

0.04

 

0.05

0.02

0.01


Performance indicators – joint ventures

consolidated 50% (EUR thousand)

9 months 2016

9 months 2015

Change %

9 months 2014

9 months

2013

9 months

2012

For the period

 

 

 

 

 

 

Sales

45 384

44 346

2%

44 606

41 901

43 260

EBITDA

5 507

5 148

7%

6 124

5 246

5 634

EBITDA margin (%)

12.1%

11.6%

 

13.7%

12.5%

13.0%

Operating profit

3 108

2 930

6%

3 743

3 299

3 102

Operating margin (%)

6.8%

6.6%

 

8.4%

7.9%

7.2%

Interest expenses

(394)

(477)

17%

(546)

(578)

(1 343)

Net profit /(loss) for the period*

2 538

2 247

13%

3 005

2 490

1 414

Net margin (%)*

5.6%

5.1%

 

6.7%

5.9%

3.3%

Net profit for the period in the financial statements (incl. impairments and gain on change of ownership interest)

2 538

2 247

13%

3 960

2 490

1 414

Net margin(%)

5.6%

5.1%

 

8.9%

5.9%

3.3%

Return on assets ROA (%)

3.3%

2.9%

 

5.1%

3.2%

1.7%

Return on equity ROE (%)

5.2%

4.7%

 

9.0%

5.9%

3.7%

Earnings per share (EPS)

0.09

0.08

 

0.13

0.08

0.05

 

* The results exclude the revenue earned from the acquisition of shares of AS Ajakirjade Kirjastus and AS SL Õhtuleht from AS Eesti Meedia in 2014, their sale to OÜ Suits Meedia and further restructuring in the amount of EUR 1.0 million, where joint ventures with AS Eesti Meedia were essentially terminated and new joint ventures with OÜ Suits Meedia were created.

 

 

Balance sheet – joint ventures 50% consolidated (EUR thousand)

30.09.2016

31.12.2015

Change %

As of the end of the period

 

 

 

Current assets

13 308

15 553

-14%

Non-current assets

61 950

61 588

1%

Total assets

75 258

77 141

-2%

       incl. cash and bank

2 270

4 666

-51%

       incl. goodwill

39 035

38 232

2%

Current liabilities

10 840

12 539

-14%

Non-current liabilities

15 247

15 928

-4%

Total liabilities

26 087

28 467

-8%

       incl. borrowing

17 241

18 787

-8%

 

Equity

49 171

48 674

1%

 

 

 

 

 

 

 

 

 

  Financial ratios (%) – joint ventures consolidated 50%

30.09.2016

31.12.2015

Equity ratio (%)

65%

63%

Debt to equity ratio (%)

35%

39%

Debt to capital ratio (%)

23%

22%

Total debt/EBITDA ratio

2.10

2.39

Debt service coverage ratio

2.66

1.79

Liquidity ratio

1.23

1.24

 

 

FINANCIAL INDICATORS AND RATIOS – joint ventures recognised under the equity method

Performance indicators – joint ventures under equity method (EUR thousand)

Q3

2016

Q3

2015

Change %

Q3

2014

Q3

2013

Q3

2012

For the period

 

 

 

 

 

 

Sales (only subsidiaries)

12 205

12 105

1%

11 841

10 985

11 377

EBITDA (only subsidiaries)

1 633

1 889

-14%

1 487

1 164

1 435

EBITDA margin (%)

13.4%

15.6%

 

12.6%

10.6%

12.6%

Operating profit (only subsidiaries)

867

1 230

-30%

783

544

643

Operating margin (%)

7.1%

10.2%

 

6.6%

5.0%

5.7%

Interest expenses (only subsidiaries)

(117)

(140)

17%

(175)

(204)

(301)

Profit of joint ventures by equity method

206

170

21%

87

174

33

Net profit for the period*

902

1 210

-25%

658

455

263

Net margin (%)*

7.4%

10.0%

 

5.6%

4.1%

2.3%

Net profit for the period in the financial statements (incl. impairments and gain on change of ownership interest)

902

1 210

-25%

1 613

455

263

Net margin (%)

7.4%

10.0%

 

13.6%

4.1%

2.3%

Return on assets ROA (%)

1.3%

1.6%

 

2.2%

0.6%

0.3%

Return on equity ROE (%)

1.9%

2.5%

 

3.5%

1.1%

0.7%

Earnings per share (EPS)

0.03 

0.04

 

0.05

0.02

0.01

 

 

 

Performance indicators – joint ventures under equity method (EUR thousand)

9 months 2016

9 months

2015

Change %

9 months 

2014

9 months

2013

9 months

2012

For the period

 

 

 

 

 

 

Sales (only subsidiaries)

38 581

37 962

2%

38 338

35 796

37 125

EBITDA (only subsidiaries)

4 620

4 240

9%

5 481

4 777

5 328

EBITDA margin (%)

12.0%

11.2%

 

14.3%

13.3%

14.4%

Operating profit (only subsidiaries)

2 439

2 202

11%

3 313

2 897

2 879

Operating margin (%)

6.3%

5.8%

 

8.6%

8.1%

7.8%

Interest expenses (only subsidiaries)

(357)

(425)

16%

(531)

(578)

(1 344)

Profit of joint ventures by equity method

562

589

-5%

375

320

137

Net profit for the period*

2 538

2 247

13%

3 019

2 490

1 414

Net margin (%)*

6.6%

5.9%

 

7.9%

7.0%

3.8%

Net profit for the period in the financial statements (incl. impairments and gain on change of ownership interest)

2 538

2 247

13%

3 974

2 490

1 414

Net margin (%)

6.6%

5.9%

 

10.4%

7.0%

3.8%

Return on assets ROA (%)

3.5%

3.0%

 

5.3%

3.3%

1.8%

Return on equity ROE (%)

5.2%

4.7%

 

9.0%

5.9%

3.6%

Earnings per share (EPS)

0.09 

0.08

 

0.13

0.08

0.05

 

* The results exclude the revenue earned from the acquisition of shares of AS Ajakirjade Kirjastus and AS SL Õhtuleht from AS Eesti Meedia in 2014, their sale to OÜ Suits Meedia and further restructuring in the amount of EUR 1.0 million, where joint ventures with AS Eesti Meedia were essentially terminated and new joint ventures with OÜ Suits Meedia were created

 

 

Balance sheet – joint ventures under equity method 

(EUR thousand)

30.09.2016

31.12.2015

Change %

As of the end of the period

 

 

 

Current assets

10 554

12 386

-15%

Non-current assets

61 353

60 794

1%

Total assets

71 907

73 180

-2%

       incl. cash and bank

913

2 927

-69%

       incl. goodwill

36 953

36 953

0%

Current liabilities

8 656

9 033

-4%

Non-current liabilities

14 080

15 473

-9%

Total liabilities

22 736

24 506

-7%

       incl. borrowing

16 356

17 687

-8%

Equity

49 171

48 674

1%

 

 

 

  Financial ratios (%) – joint ventures under equity method

30.09.2016

31.12.2015

Equity ratio (%)

68%

67%

Debt to equity ratio (%)

33%

36%

Debt to capital ratio (%)

24%

23%

Total debt/EBITDA ratio

2.32

2.65

Debt service coverage ratio

2.58

1.67

Liquidity ratio

1.22

1.37

 

Cyclicality

All operating areas of the Group are characterised by cyclicality and fluctuation, related to the changes in the overall economic conditions and consumer confidence. The Group’s revenue can be adversely affected by an economic slowdown or recession in home and export markets. It can appear in lower advertising costs in retail, preference of other advertising channels like preference of internet rather than print media and changes in consumption habits of retail consumers e.g. following current news in news portals versus reading printed newspapers, preference of the younger generation to use mobile devices and other communication channels, etc.

 

Seasonality

The revenue from the Group’s advertising sales as well as in the printing services segment is impacted by major seasonal fluctuations. The level of both types of revenue is the highest in the 2nd and 4th quarter of each year and the lowest in the 3rd quarter. Revenue is higher in the 4th quarter because of higher consumer spending during the Christmas season, accompanied by the increase in advertising expenditure. Advertising expenditure is usually the lowest during the summer months, as well as during the first months of the year following Christmas and New Year’s celebrations. Book sales are the strongest in the last quarter of the year. Subscriptions and retail sales of periodicals do not fluctuate as much as advertising revenue. However the summer period is always more quiet and at the beginning of the school year in September there is an increase in subscriptions and retail sale which usually continues until next summer holiday period.

 

Formulas used to calculate the financial ratios

EBITDA

Earnings before interest, tax, depreciation and amortization. EBITDA does not include any impairment losses recognized during the period or result from restructuring.

EBITDA margin (%)

 EBITDA/sales x 100

Operating margin* (%)

 Operating profit*/sales x100

Net margin (%)

 Net profit/sales x100

Net margin (%)

 Net profit /sales x100

Earnings per share

 Net profit / average number of shares

Equity ratio (%)

Equity/ (liabilities + equity) x100

Debt to equity ratio (%)

Interest bearing liabilities /equity x 100

Debt to capital ratio (%)

Interest bearing liabilities – cash and cash equivalents (net debt) /(net debt +equity) x 100

Total debt/EBITDA ratio

Interest bearing borrowings /EBITDA

Debt service coverage ratio

EBITDA/loan and interest payments for the period

Liquidity ratio

Current assets / current liabilities

Return on assets ROA (%)

Net profit /average assets x 100

Return on equity ROE (%)

Net profit /average equity x 100

SEGMENT OVERVIEW

The Group’s activities are divided into two large segments - media segment and printing services segment. Last year, there was also an entertainment segment.

The segments’ EBITDA does not include intragroup management fees, impairment of goodwill and trademarks. Volume-based and other fees payable to advertising agencies have not been deducted from the advertising sales of segments, because the management monitors gross advertising sales. Discounts and rebates are reduced from the Group’s sales and are included in the combined line of eliminations.

Key financial data of the segments Q3 2012-2016

 

(EUR thousand)

Sales

Sales

 

Q3

 2016

Q3

2015

Change %

Q3

 2014

Q3

 2013

Q3

 2012

media segment (by equity method)

7 436

7 098

5%

6 017

5 551

5 841

       incl. revenue from all digital and online channels

3 996

3 544

13%

2 918

2 479

2 315

printing services segment

5 629

5 753

-2%

6 596

6 147

6 263

entertainment segment

64

-

0

0

0

corporate functions

535

434

23%

427

396

268

intersegment eliminations

(1 395)

(1 245)

 

(1 200)

(1 109)

(995)

TOTAL GROUP by equity method

12 205

12 105

1%

11 841

10 985

11 377

media segment (by proportional consolidation)

9 965

9 432

6%

8 202

7 724

7 929

       incl. revenue from all digital and online channels

4 268

3 812

12%

3 101

2 621

2 435

printing services segment

5 629

5 753

-2%

6 596

6 147

6 263

entertainment segment

64

-

0

0

0

corporate functions

535

434

23%

427

396

268

intersegment eliminations

(1 692)

(1 514)

 

(1 392)

(1 290)

(1 182)

TOTAL GROUP by proportional consolidation

14 437

14 169

2%

13 833

12 977

13 278

 

 

 

(EUR thousand)

EBITDA

EBITDA

 

Q3

 2016

Q3

2015

Change %

Q3

 2014

Q3

 2013

Q3

 2012

media segment by equity method

860

889

-3%

323

102

330

media segment by proportional consolidation

1 159

1 143

1%

567

297

390

printing services segment

986

1 178

-16%

1 326

1 245

1 310

entertainment segment

0

(1)

95%

0

0

0

corporate functions

(213)

(178)

-20%

(162)

(183)

(206)

intersegment eliminations

0

0

 

0

0

1

TOTAL GROUP by equity method

1 633

1 889

-14%

1 487

1 164

1 435

TOTAL GROUP by proportional consolidation

1 932

2 143

-10%

1 732

1 359

1 495

 

 

 

EBITDA margin

Q3

 2016

Q3

 2015

Q3

 2014

Q3

 2013

Q3

 2012

media segment by equity method

12%

13%

5%

2%

6%

media segment by proportional consolidation

11%

12%

7%

4%

5%

printing services segment

18%

20%

20%

20%

21%

TOTAL GROUP by equity method

13%

16%

13%

11%

13%

TOTAL GROUP by proportional consolidation

13%

15%

13%

10%

11%

 

 

Key financial data of the segments in nine months 2012-2016

 

(EUR thousand)

Sales

Sales

 

9 months

 2016

9 months

2015

Change %

9 months

 2014

9 months

 2013

9 months

 2012

media segment (by equity method)

22 718

21 663

5%

19 923

18 225

18 513

       incl. revenue from all digital and online channels

12 294

11 011

12%

9 434

8 206

7 532

printing services segment

18 633

18 457

1%

20 868

19 896

21 121

entertainment segment

517

-

0

0

0

corporate functions

1 667

1 394

20%

1 271

1 137

688

intersegment eliminations

(4 438)

(4 068)

 

(3 725)

(3 462)

(3 197)

TOTAL GROUP by equity method

38 581

37 962

2%

38 338

35 796

37 125

media segment (by proportional consolidation)

30 394

28 899

5%

26 788

24 912

25 241

       incl. revenue from all digital and online channels

13 193

11 778

12%

10 050

8 643

7 963

printing services segment

18 633

18 457

1%

20 868

19 896

21 121

entertainment segment

517

-

0

0

0

corporate functions

1 667

1 394

20%

1 271

1 137

688

intersegment eliminations

(5 310)

(4 921)

 

(4 321)

(4 044)

(3 790)

TOTAL GROUP by proportional consolidation

45 384

44 346

2%

44 606

41 901

43 260

 

 

 

(EUR thousand)

EBITDA

EBITDA

 

9 months

 2016

9 months

2015

Change%

9 months

 2014

9 months

 2013

9 months

 2012

media segment by equity method

1 954

2 425

-19%

1 922

1 109

1 478

media segment by proportional consolidation

2 840

3 334

-15%

2 565

1 579

1 785

printing services segment

3 317

3 611

-8%

4 321

4 258

4 402

entertainment segment

(1)

(1 106)

100%

0

0

0

corporate functions

(649)

(689)

6%

(763)

(593)

(555)

intersegment eliminations

0

0

 

0

2

2

TOTAL GROUP by equity method

4 620

4 240

9%

5 481

4 777

5 328

TOTAL GROUP by proportional consolidation

5 507

5 148

7%

6 124

5 246

5 634

 

 

 

EBITDA margin

9 months

 2016

9 months

 2015

9 months

 2014

9 months

 2013

9 months

 2012

media segment by equity method

9%

11%

10%

6%

8%

media segment by proportional consolidation

9%

12%

10%

6%

7%

printing services segment

18%

20%

21%

21%

21%

TOTAL GROUP by equity method

12%

11%

14%

13%

14%

TOTAL GROUP by proportional consolidation

12%

12%

14%

13%

13%

 

 

MEDIA SEGMENT

The media segment includes Delfi operations in wholly-owned subsidiaries in Estonia, Latvia and Lithuania, publishing of Estonian newspapers Maaleht, Eesti Ekspress and Eesti Päevaleht, book publishing in Estonia, magazine publishing in Lithuania, activities of the retail offer portal Zave and holding company Delfi Holding. This segment also includes 50% joint ventures AS SL Õhtuleht (publisher of Õhtuleht and Linnaleht), magazine publisher AS Ajakirjade Kirjastus, home delivery company AS Express Post and, since the summer 2016, OÜ Linna Ekraanid, engaged in sale of digital outdoor advertising.

In July 2015 AS Delfi and newspaper publisher AS Eesti Ajalehed were merged in Estonia. New company continued to operate under name of AS Ekspress Meedia. In 2014, Delfi UAB and magazine publisher Ekspress Leidyba UAB were merged in Lithuania.

 

News portals owned by the Group

 

Owner

Portal

Owner

Portal

Ekspress Meedia

www.delfi.ee

Ekspress Meedia

www.ekspress.ee

 

rus.delfi.ee

 

www.maaleht.ee

Delfi Latvia

www.delfi.lv

 

www.epl.ee

 

rus.delfi.lv

 

 

Delfi Lithuania

www.delfi.lt

SL Õhtuleht

www.ohtuleht.ee

 

ru.delfi.lt

 

www.vecherka.ee

 

 

 

(EUR thousand)

Sales

 

Q3

 2016

Q3

2015

Change 

%

Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed)

4 601

4 373

5%

        incl. Delfi Estonia online revenue

1 615

1 363

18%

Delfi Latvia

751

678

11%

Delfi Lithuania (incl. Ekspress Leidyba)

1 979

1 941

2%

        incl Delfi Lithuania online revenue

1 498

1 377

8%

OÜ Hea Lugu

106

106

0%

OÜ Zave Media

0

3

-100%

Other companies (Delfi Holding)

-

 

Intersegment eliminations

(1)

(2)

 

TOTAL subsidiaries

7 436

7 098

5%

AS SL Õhtuleht*

1 034

1 001

3%

AS Ajakirjade Kirjastus*

1 139

1 024

11%

AS Express Post*

612

564

8%

Linna Ekraanid OÜ*

51

-

-

Intersegment eliminations

(306)

(256)

 

TOTAL joint ventures

2 529

2 333

8%

TOTAL segment by proportional consolidation

9 965

9 432

6%

 

 

 

(EUR thousand)

EBITDA

 

Q3

2016

Q3

2015

Change

 %

Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed)

328

613

-46%

Delfi Latvia

58

33

76%

Delfi Lithuania (incl. Ekspress Leidyba)

474

311

52%

OÜ Hea Lugu

0

(5)

100%

OÜ Zave Media

0

(60)

99%

Other companies (Delfi Holding)

0

(2)

100%

Intersegment eliminations

0

(1)

 

TOTAL subsidiaries

860

889

-3%

AS SL Õhtuleht*

81

111

-27%

AS Ajakirjade Kirjastus*

181

107

70%

AS Express Post*

35

36

-5%

Linna Ekraanid OÜ*

2

-

-

Intersegment eliminations

0

0

 

TOTAL joint ventures

299

254

18%

TOTAL segment by proportional consolidation

1 159

1 143

1%

 

* Proportional share of joint ventures

 

 

(EUR thousand)

Sales

 

9 months 2016

9 months 2015

Change  %

Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed)

14 031

13 491

4%

        incl. Delfi Estonia online revenue

4 957

4 339

14%

Delfi Latvia

2 378

2 139

11%

Delfi Lithuania (incl. Ekspress Leidyba)

6 005

5 816

3%

        incl Delfi Lithuania online revenue

4 560

4 164

9%

OÜ Hea Lugu

307

347

-12%

OÜ Zave Media

1

3

-62%

Other companies (Delfi Holding)

-

 

Intersegment eliminations

(4)

(133)

 

TOTAL subsidiaries

22 718

21 663

5%

AS SL Õhtuleht*

3 195

3 089

3%

AS Ajakirjade Kirjastus*

3 398

3 130

9%

AS Express Post*

1 933

1 828

6%

Linna Ekraanid OÜ*

51

-

-

Intersegment eliminations

(901)

(810)

 

TOTAL joint ventures

7 675

7 237

6%

TOTAL segment by proportional consolidation

30 394

28 899

5%

 

 

 

(EUR thousand)

EBITDA

 

9 months 2016

9 months 2015

Change %

Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed)

1 005

1 474

-32%

Delfi Latvia

150

144

4%

Delfi Lithuania (incl. Ekspress Leidyba)

876

867

1%

OÜ Hea Lugu

(17)

6

-383%

OÜ Zave Media

(60)

(60)

0%

Other companies (Delfi Holding)

(1)

(5)

80%

Intersegment eliminations

1

(1)

 

TOTAL subsidiaries

1 953

2 425

-19%

AS SL Õhtuleht*

328

396

-17%

AS Ajakirjade Kirjastus*

384

306

25%

AS Express Post*

172

206

-17%

Linna Ekraanid OÜ*

2

-

-

Intersegment eliminations

0

0

 

TOTAL joint ventures

887

908

-2%

TOTAL segment by proportional consolidation

2 840

3 334

-15%

 

* Proportional share of joint ventures

 

DELFI and related products

As a market leader Delfi continues to invest into new technologies and IT solutions to improve user experience of its readers and advertisers. Last year, new Delfi mobile applications for both IOS and Android devices were launched, enabling to use more creative solutions in the mobile environment. Programmatic advertising sales will be further developed in all three countries. Delfi TV platforms will continue to be enhanced and developed. The clients of Levira and Starman in Estonia are now able to watch Delfi TV broadcasts and programmes on television screens. In Lithuania, Delfi launched its app for users of Apple TV and Sony Android TV.

Starting from this year, our advertising sales departments are offering in addition to online advertising in our own portals also the possibility to buy advertising in other local or international channels. We also offer our customers a full advertising service from the idea to execution and booking media space.

In Lithuania, Delfi was the first publisher that introduced Facebook messenger bots. Delfi was also the first in Lithuania to use Facebook Live streaming. Of pan-Baltic developments, the solution to use Facebook Instant Article was completed and AdFree Delfi for mobile phones was completed that removes all ads in the Delfi environment for a monthly fee.

 

The range of vertical products continues to expand. This year, Delfi Estonia launched www.filmiveeb.ee dedicated to the film art and www.homme.ee that is targeted at men and refers to an Eesti Ekpress supplement. Delfi Latvia launched an esoterics portal www.orakuls.lv and two video sub-verticals www.retvplay.lv and www.360play.lv. In Lithuania, in cooperation with the Lithuanian Marketing Association (LiMA), a new unique website for marketing professionals was launched that aims to promote communication between them. Delfi FIT, a Delfi subsite that is promoting healthy lifestyle, was launched  in cooperation with the Lithuanian Basketball Federation. Also portal www.busiumama.lt, a portal targeted at expecting mothers, and a new Delfi subsite Delfi Style, were launched.

Delfi Lithuania continues developing the classified portal www.alio.lt. In July, Delfi Latvia acquired a specialized classified portal www.atverskapi.lv. As a new e-commerce service, www.spetsialist.ee was launched in Estonia that accumulates and mediates jobseekers and people looking for handymen.

In all three Baltic countries the focus is on writing more long-read analytical articles in order to increase the value of Delfi to users. In Estonia this is being provided in co-operation with editorial teams of our daily and weekly newspapers Eesti Päevaleht, Eesti Ekspress and Maaleht.

A lot of attention is being paid on socially responsible behaviour and to supporting various charity projects, cultural, sport, social and business events in all Baltic countries.

Estonian online readership 2015-2016

In the first quarter of 2016, Postimees merged two classified portals www.kv.ee and www.osta.ee owned by

Eesti Meedia under its postimees.ee domain. This increased the number of users of Postimees.ee by 17%.

In the third quarter 2016, Gemius changed the methodology of the online readership survey, as a result of which the readership of mobile devices and tablets was added to the above readership of computer or PC users. As a result of the change of the methodology that was made in September, the total number of PC users in Estonia fell by 11%. The number of computer users of Postimees.ee decreased less than that of computers users of Delfi.

 

Latvian online readership 2015-2016

At the beginning of 2016 research company Gemius changed its method of online survey, and, as a result, the online readership figure in February decreased. This figure shows only the online readership of PC users. Inbox.lv remains Latvia’s largest portal among PC users. Delfi.lv has increased its lead over tvnet.lv. The local social network draugiem.lv steadily continues to lose users to Facebook. As in other Baltic countries, the main competition in Latvia is for attracting new mobile users. In the third quarter, there were no significant changes in the competition of the three largest portals.

 

Lithuanian online readership 2015-2016

Delfi.lt remains Lithuania’s largest online portal. In the third quarter 2016, there were no major changes in the preferences of online users in Lithuania. 15min.lt has somewhat lost readership, while Delfi has slightly increased readership. In the competition for third place, TV3 has fallen fourth and Lietuvas Rytas is stable on third place. As in other markets, development and marketing activities in Lithuania are focused on increasing the number of mobile users. In this segment, Delfi has notably increased its readership.

 

Print media in Estonia

Estonian newspaper circulation 2015-2016

 

Circulations of newspapers in Estonia have been falling moderately in the long run. In this respect, 2015 was a pleasant exception since newspaper circulations stabilized. We will probably see similar trends in 2016 – the first half of the year has been quite stable in comparison with earlier periods. Circulations of weekly newspapers have been falling, whereas circulations of daily newspapers have been relatively stable.

 

One also needs to add to the above readership the number of subscribers of digital newspapers. At the end of the third quarter 2016, Eesti Päevaleht had ca 23 thousand subscribers, Eesti Ekspress ca 10 thousand and Maaleht ca 6,5 thousand subscribers.  

 

Estonian newspaper readership 2015-2016

Similarly with the circulation of newspapers, the readership of publications also remained relatively stable in the third quarter of 2016. As compared to the third quarter 2015, readership of Eesti Ekspress and Eesti Päevaleht increased, while that of Postimees and Õhtuleht decreased. As this survey does not cover the readership of digital newspapers, it does not represent the complete readership. The number of digital subscriptions of periodicals of the Ekspress Group amounts to ca 40 thousand. Increasing the readership of digital newspapers remains the main task for the Group’s publications.

PRINTING SERVICES SEGMENT

All printing services of the Group are provided by AS Printall which is one of the largest printing companies in Estonia. We are able to print high-quality magazines, newspapers, advertising materials, product and service catalogues, paperback books and other publications in our printing plant. The new printing machine installed in 2015 has enabled us to further expand the range of printed products.   

 

 

(thousand EUR)

Sales

 

Q3

2016

Q3

2015

Change

%

AS Printall

5 629

5 753

-2%

 

 

 

(thousand EUR)

EBITDA

 

Q3

2016

Q3

2015

Change %

AS Printall

986

1 178

-16%

 

 

 

(thousand EUR)

Sales

 

9 months

2016

9 months

2015

Change

%

AS Printall

18 633

18 457

1%

 

 

 

(thousand EUR)

EBITDA

 

9 months

2016

9 months

2015

Change %

AS Printall

3 317

3 611

-8%

 

 

The printing services segment continues to be impacted by the economic sanctions imposed towards Russia, the negative impact of which on the Scandinavian printing industry also impacts us. The production volume of Printall continues to increase, but the price pressure is still strong due to the production capacity which has become available in Scandinavia. The sales keep increasing, however the profit margin continues to fall due to lower prices. 

 

Printing services and the environment

The Nordic Council of Ministers has awarded Printall with the environmental label “The Nordic Ecolabel”, used to acknowledge the companies in the Nordic countries that use environmentally efficient production. Printall consumes green energy. GREEN CHOICE certificate confirms that 100% of energy consumed by printing plant has been produced from renewable energy sources. The Minister of the Environment of the Republic of Estonia and the waste managing company AS Ragn-Sells awarded Printall with the title of the Top Recycler of the Year, because the company recycles 95% of its waste.

Printall also has FSC and PEFC Chain of Custody (COC) certificates, which the company uses to promote a green way of thinking in the printing industry. Both of those certificates indicate compliance with monitoring and product production process requirements which are issued to businesses that comply with the requirements established by the FSC (Forest Stewardship Council) and the PEFC (Programme for the Endorsement of Forest Certification). A business that is received these certificates helps to support the environmentally friendly, socially fair and economically viable management of the world’s forests.

 

Consolidated balance sheet (unaudited)

(thousand EUR)

30.09.2016

31.12.2015

ASSETS

 

 

Current assets

 

 

Cash and cash equivalents

868

2 927

Term deposits

45

0

Trade and other receivables

7 068

6 741

Corporate income tax prepayment

123

0

Inventories

2 450

2 718

Total current assets

10 554

12 386

Non-current assets

 

 

Trade and other receivables

1 144

1 149

Deferred tax asset

42

42

Investments in joint ventures

2 225

1 007

Investments in associates

536

215

Property, plant and equipment

13 159

13 791

Intangible assets

44 247

44 590

Total non-current assets

61 353

60 794

TOTAL ASSETS

71 907

73 180

LIABILITIES

 

 

Current liabilities

 

 

Borrowings

2 302

2 240

Trade and other payables

6 224

6 679

Corporate income tax payable

130

114

Total current liabilities

8 656

9 033

Non-current liabilities

 

 

Long-term borrowings

14 054

15 447

Deferred tax liability

26

26

Total non-current liabilities

14 080

15 473

TOTAL LIABILITIES

22 736

24 506

EQUITY

 

 

Share capital

17 878

17 878

Share premium

14 277

14 277

Treasury shares

(863)

(176)

Reserves

2 024

1 787

Retained earnings

15 855

14 908

TOTAL EQUITY

49 171

48 674

TOTAL LIABILITIES AND EQUITY

71 907

73 180

Consolidated statement of comprehensive income (unaudited)

(thousand EUR)

Q3 2016

Q3 2015

9 months 2016

9 months 2015

Sales revenue

12 205

12 105

38 581

37 962

Cost of sales

(9 812)

(9 315)

(30 959)

(30 660)

Gross profit

2 393

2 790

7 622

7 302

Other income

270

132

505

378

Marketing expenses

(517)

(502)

(1 717)

(1 634)

Administrative expenses

(1 262)

(1 161)

(3 911)

(3 764)

Other expenses

(17)

(29)

(60)

(80)

Operating profit

867

1 230

2 439

2 202

Interest income

6

11

25

32

Interest expense

(117)

(140)

(357)

(425)

Other finance costs

 (17)

 (27)

 (49)

 (61)

Net finance cost

 (128)

 (156)

 (381)

 (454)

Profit on shares of joint ventures

206

170

562

589

Profit from shares of associates

25

5

41

14

Profit before income tax

970

1 249

2 661

2 351

Income tax expense

(68)

(39)

(123)

(104)

Net profit  for the reporting period

902

1 210

2 538

2 247

Net profit for the reporting period attributable to:

 

 

 

 

Equity holders of the parent company

902

1 210

2 538

2 247

Other comprehensive income

0

0

0

0

Total comprehensive income

902

1 210

2 538

2 247

Attributable to equity holders of the parent company

902

1 210

2 538

2 247

Basic and diluted earnings per share

0.03

0.04

0.09

0.08

Consolidated cash flow statement (unaudited)

(thousand EUR)

9 months 2016

9 months 2015

Cash flows from operating activities

 

 

Operating profit for the reporting year

2 439

2 202

Adjustments for:

 

 

Depreciation, amortisation and impairment

2 180

2 038

(Gain)/loss on sale and write-down of property, plant and equipment

(25)

(3)

Change in value of share option

102

98

Cash flows from operating activities:

 

 

Trade and other receivables

(319)

(7)

Inventories

267

(25)

Trade and other payables

(496)

(434)

Cash generated from operations

4 148

3 869

Income tax paid

(231)

(110)

Interest paid

(357)

(425)

Net cash generated from operating activities

3 560

3 334

Cash flows from investing activities

 

 

Term deposit release

0

1 600

Acquisition of joint venture

(868)

0

Acquisition of associate

(311)

0

Purchase of other investments

0

(50)

Interest received

25

32

Purchase of  property, plant and equipment

(866)

(1 429)

Proceeds from sale of property, plant and equipment

31

147

Loans granted

(25)

0

Loan repayments received

12

74

Net cash used in investing activities

(2 002)

374

Cash flows from financing activities

 

 

Dividends paid

(1 456)

0

Dividends received from joint ventures

246

278

Finance lease repayments

(52)

(62)

Change in use of overdraft

0

(1 117)

Loan received

11

687

Repayments of bank loans

(1 634)

(4 414)

Purchase of treasury shares

(687)

(103)

Net cash used in financing activities

(3 572)

(4 731)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

(2 014)

(1 023)

Cash and cash equivalents at the beginning of the year

2 927

3 656

Cash and cash equivalents at the end of the year

913

2 633

 

         Additional information:

         Gunnar Kobin

         Chairman of the Management Board

         GSM: +372 5188111

         e-mail: gunnar@egrupp.ee

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