Consolidated Interim Report For the Third Quarter and 9 months of 2011 02.11

In the 3rd quarter, the net profit of the Group totalled EUR 118 thousand. This is the first time since the beginning of the financial crisis, when the Group managed to achieve a positive net profit for the 3rd quarter. The Group’s EBITDA totalled EUR 1.6 million in the 3rd quarter, which is 22% higher than a year ago. Sales increased by 10% despite the very weak beginning of the first month of the quarter.

In light of the seasonality of the Group’s business, the 3rd quarter’s revenue is the lowest. The advertising market is quiet during the summer months and summer has the same effect on the readers, due to which the number of periodical subscriptions and single copy sales drops. The sale of books is also lacklustre, the peak season of which comes in the last quarter of the year and especially during the Christmas period. Lower subscriptions also impact the volume of printed products and the utilisation of printing machines in July and August is lower than in the 2nd and 4th quarter.   

The key event in the 3rd quarter was presentation of the new, modern printed publication of Eesti Päevaleht,  time-based payment wall of digital publications of Eesti Ekspress and Eesti Päevaleht, and successful launching of new projects of Delfi e-business.

The product upgrade of Eesti Päevaleht was received well in the market, evidenced by the fact that Eesti Päevaleht was the only national daily newspaper whose readership grew in the 3rd quarter. The creation of a multimedia newsroom across the Group’s media units based in Estonia has also successfully continued. The editorial offices of miscellaneous publications were relocated to the same premises at the end of the 2nd quarter, followed by content integration, fostering of collaboration between various editorial offices and people. Trust in the new form of collaboration is slow to form, however, optimism and growth of faith in the new steps taken is evident.

A significant acknowledgement of our digital product development is the 9th place achieved by Eesti Ekspress IPad application in the global digital publications competition WAN-IFRA XMA Cross Media Awards 2011, whereas our competitors were large, globally well-known publications.

The newspapers Eesti Ekspress and Eesti Päevaleht launched a time-based payment wall for gaining access to their online content. The model taken into use is unique in the world. The new payment wall enables the readers to read digital issue of Eesti Päevaleht five minutes per day and Eesti Ekspress fifteen minutes per week free of charge. After that period, the readers are asked to register themselves and complete the subscription. If the user does not wish to proceed with it, he will get a right to read free of charge again next newspaper issue.

We are working towards IT-synergies within the group by moving web environments of Eesti Ekspress, Eesti Päevaleht and Maaleht to Delfi’s portal platform.

An e-business department was launched at Delfi, the goal of which is to collaborate with the best internet businesses and in addition to the regular advertising revenue, also benefit from e-commerce. Delfi e-business was launched with two new projects: Delfi Diil offering special deals and the e-book sales environment Delfi Digiraamat. Delfi Digiraamat represents a collaboration project between the Estonian Digital Books’ Centre (EDBC) and Delfi, in which Delfi resells all e-books digitalised by the EDBC or purchased for resale. Delfi Digiraamat enables to purchase all e-books published in Estonia. The most successful new project was Delfi Diil, which achieved in the second month the 2nd place in the market of intermediation of promotion coupons.

Delfi Estonia, Latvia, Lithuania and Ukraine have launched additional fee-based services in the classified portals Müü!; Pardod!; Parduok! and Prodai!

In July, Delfi Estonia had the highest number of users ever, being the most visited webpage with  524 000 users a month. Based on the results of the survey conducted by TNS Latvia and the global advertising agency DDB, Delfi Latvia is in the 18th place among the most recognised brands in Latvia. In Twitter, Delfi Latvia was considered to be the third most powerful brand. 

In September, Äripäev Marketing TOP was published, where Äripäev ranked the most successful companies in terms of advertising revenue, considering sales amount and sales growth as compared to last year. Among 73 media channels, Delfi shared the first place with TV3. Maaleht achieved the first place in the newspaper category.

The Estonian Competition Authority  prohibited the concentration of AS Eesti Post and AS Express Post. The Management Board of Ekspress Group is looking for alternative scenarios for determining the future destiny of Express Post.

With regard to structural changes, the establishment of a separate subsidiary OÜ Hea Lugu on the basis of the book publishing department of the merged newspapers is worth mentioning. It was registered in the Commercial Register on 4 October 2011. On 1 October, the merger of Eesti Ajalehed AS and Eesti Päevalehe AS took place. The closing balance sheet of Eesti Päevalehe AS will be prepared as of 30 September 2011. In August AS SL Õhtuleht acquired AS Linnaleht from Eesti Päevalehe AS and Eesti Meedia. On 1 November, the legal merger of two companies will take place. 

Consolidated Interim Report For the Third Quarter and 9 months of 2011

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