Consolidated Interim Report for the First Quarter of 2012 03.05

For the first time since 2008, the Group earned  net profit from its main operations which totalled EUR 179 thousand in the 1st quarter (EUR 0.01 per share). The Group’s operating profit, excluding the net extraordinary gain in relation to  the acquisition of Eesti Päevalehe AS, amounted to EUR 755 thousand, which is 36% more than last year. EBITDA increased by 16% and totalled EUR 1 614 thousand. The Group’s revenue for the 1st quarter exceeded the budget by 4% and EBITDA was better than the budget by 47%. The EBITDA margin increased by 0.8 percentage points. 

All segments earned a profit in the 1st quarter. The online media segment showed the strongest results with its EBITDA growth being the highest among the segments. While online media had a loss of EUR 37 thousand in the 1st quarter of last year, it earned now a profit of EUR 238 thousand, thus increasing by EUR 275 thousand. The sales of online media increased by 18%, which also led to an increase in the share of online media in the Group’s total sales, i.e. from 14.1% to 15.4%. In the 1st quarter, the advertising sales of online media exceeded the advertising sales of periodicals by 8% and its EBITDA also exceeded that of the periodicals segment.

Delfi Lithuania contributed the most to the result of online media. The small loss of Delfi Latvia incurred in the 1st quarter is related to one-off salary payments. Delfi Latvia essentially more than doubled its profit for the 1st quarter as compared to last year. The loss of Delfi Ukraine continues to shrink due to increasing advertising revenue.

In the periodicals segment, all companies had weaker results than last year. In respect of AS Eesti Ajalehed this is attributable to the fact that in the first two months of last year the company did not pay rent for the premises of Eesti Päevaleht as Eesti Päevalehe AS was also the owner of its premises. By normalising the result for the last year by excluding unpaid rent, the EBITDA of AS Eesti Ajalehed in the 1st quarter of the current year was higher than last year. Taking into consideration the 10% lower revenue of AS Eesti Ajalehed, and higher normalised EBITDA, the company’s efficiency has significantly improved after the completion of organisational mergers with Eesti Päevalehe AS. The results of the periodicals segment are still impacted by lower sales from book publishing.

In the printing services segment, there were no significant  changes, revenue increased by 14% and EBITDA growth was 2%. Export sales increased by 20% and domestic sales increased by 2%. Finland, Russia, Sweden and Norway are  still the key export markets.

In March, the next stage in the creation of the multi-media news space across media units located in Estonia was completed. During this stage, a new editorial office of Daily News was created on the basis of former editorial offices of Eesti Päevaleht and Delfi. The editor in chief of Delfi Estonia, Urmo Soonvald became its new head and also the editor in chief of Eesti Päevaleht.

The establishment of Ekspress Group’s technology company OÜ EG Digital was completed. The goal is to combine all our IT competences both in online as well as digital media into one entity. The first step was to transfer Delfi IT’s development team to the company. OÜ EG Digital does not constitute a separate segment and its results are included within corporate functions.   

The Group’s management is moderately optimistic about growth over the next quarters. We expect growth in online media to continue, and the sales in periodicals and printing services to stay at the same level as last year. Profit growth is expected to be the highest in online media and in percentage terms especially at Delfi Ukraine where the concept developed last year seems to be working. This is evidenced by growing unique user numbers and increasing advertising sales. We will continue with the development of digital publications of Eesti Ekspress and Eesti Päevaleht. We have also started to actively seek opportunities to increase the Group’s market share with acquisitions, primarily in the area of online media and we also constantly try to identify investing ideas in various areas related to IT and new media. 

Consolidated Interim Report for the First Quarter of 2012

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