Consolidated Interim Report for the Third Quarter and 9 Months of 2017 31.10

The year 2017 has not brought significant surprises to the Group so far, and competition in the media and print services market remains strong. It's important to continuously test new products and opportunities to keep customers engaged. This approach has helped to increase the Group's revenue and provides a good basis for future growth, but in the short term it will lead to cost growth and lower profitability.

In the third quarter the Group's consolidated revenue grew by 4% and the 9-month revenue increase is 2%. In the third quarter, the revenue amounted to EUR 15.0 million and the 9-month revenue was EUR 46 million. Third-quarter EBITDA was EUR 1.8 million, which is 8% lower than the year before. In the 9-month period, the decline is 6% compared to the previous year and the EBITDA amounted to EUR 5.2 million. The Group earned a net profit of EUR 0.8 million in the third quarter and EUR 2.4 million in 9 months.  

Online revenues increased strongly, especially in Latvia and Lithuania, where third-quarter growth was 15% and 17% respectively. Online revenues account for 31% of the Group's total revenue. The Estonian print media market remains stable, both in terms of advertising and paying readers. The circulations of our newspapers remain more stable than in the neighboring markets, thanks to strong consumption habits and the interest and need for reliable media, be it on paper or digital format.

The aforementioned numbers include the results of 50% of our joint ventures (AS SL Õhtuleht, AS Ajakirjade Kirjastus, AS Express Post and OÜ Linna Ekraanid).

The third-quarter revenue of the media segment increased by 6%, totalling EUR 10.6 million. The EBITDA amounted to EUR 1.1 million, which is 1% less than in the same period last year. The revenue growth was once again led by Latvia and Lithuania, but SL Õhtuleht and Ekspress Meedia also achieved a good result. The joint venture Ajakirjade Kirjastus is currently in the active investment phase to generate new revenue, which has slightly affected its profitability.

In the 9 month period, the segment's revenue has increased by 5% and the EBITDA has grown 9%, amounting to EUR 32 million and 3.1 million, respectively. In order to remain competitive, we are engaged in continuous innovation in the development of various products as well as technical platforms. The basis of our success is growing together with clients and their preferences. We have launched on the market an almost barrier-free content consumption model and it has contributed to a significant increase in our digital distribution revenues.

Rapid growth in Latvia continues. In the third quarter, the revenue of Delfi Latvia increased by 15%, amounting to EUR 0.9 million. The EBITDA remained below last year's level, but this is due to a one-off allowance for doubtful receivable. In July, the number of Internet users in Delfi Latvia exceeded one million, and in the whole third quarter Delfi has been the leader in Latvia in terms of the number of users. Delfi Latvia is recognized as the most trusted media channel in Latvia.

The third quarter revenue of Ekspress Meedia increased by 2% to EUR 4.7 million. The EBITDA was up 58% to EUR 0.5 million. The number of digital subscriptions increased by 5% compared to the second quarter and by 46% compared to the period a year earlier. To provide added value to our customers, we are organizing more experience marketing events. In August, on the re-independence day, Estonian rock band Ruja held a hugely successful reunion concert on the Song Festival Grounds, and there were also a number of smaller events aimed at subscribers under our various brands.

In the third quarter, the revenue of Delfi Lithuania increased by a significant 17% to EUR 2.3 million, while online revenues increased by as much as 26%. In the third quarter, the EBITDA amounted to EUR 0.5 million, par with the previous year. As the biggest initiative in its history, Delfi has launched a massive project "Idea for Lithuania", the aim of which is to find the three most prominent ideas for the country's future development, and also to make sure that these ideas are implemented. The initiative is supported by the Lithuanian President, the Parliament Speaker and the Prime Minister. Other media companies are also involved.

The third-quarter revenue of Ajakirjade Kirjastus fell by 9% to EUR 2.1 million. The EBITDA remained modest and amounted to EUR 110 thousand, being significantly lower than a year ago. This is in particular attributable to the complicated situation on the print advertising market, changes in the sales team, and increased development costs, especially online. Also the amount of book titles published has been reduced, which in turn has affected the revenue figure. Half of the results is included in the consolidated figures of Ekspress Group. In the fourth quarter the company's book publishing department will be merged with the group's 100% subsidiary Hea Lugu, making it one of the Estonian five largest book publishers, and enabling for a more efficient operation. As a result of the transaction, Ajakirjade Kirjastus OÜ will own a third of OÜ Hea Lugu.  

For SL Õhtuleht, the third quarter was successful. The revenue increased to EUR 2.2 million, which is 7% more than last year, whereas the EBITDA growth was 28% and amounted to EUR 210 thousand. Half of it is included in the consolidated figures of Ekspress Group. Compared to other market players, Õhtuleht is able to raise both advertising and subscription revenue thanks to its loyal customers. This is partly achieved by the increase in automated sales and the provision of special advertising solutions. In the last 12 months Õhtuleht has had the largest circulation in Estonia among daily newspapers. In addition, the number of digital subscribers is increasing strongly, having increased 10% quarter-on-quarter and has almost doubled over the past year.

The situation in the printing services segment has not changed and the usual hard struggle for every customer continues. Strong price competition, especially by printing houses in Latvia and Lithuania has reduced revenues and profitability. However Printall's revenue fell only 4% compared to last year, reaching EUR 5.4 million. The EBITDA remained below 13% last year's level, amounting to EUR 0.9 million. Over the last year, we have been more active towards Central Europe, which allows us to compete in larger markets and create new and profitable customer relationships there. High reputation and high quality of our printing house are the best reference in this regard.

The Group's financial position has substantially strengthened over the past year. Thanks to the amendments to the loan agreement, which ended the monthly loan repayments, we can even more actively invest in new companies and grow our business scope.

In the third quarter we acquired a 100% ownership in ACM LV SIA, which deals with the sale of digital outdoor advertising in Latvia and is our first such step in Latvia. The acquisition supports the Group's goal of developing a digital outdoor advertising business line.

In August, OÜ Kinnisvarakeskkond, a new affiliate with a holding of 49% was founded, whose main area of activity is the development of a new real estate portal.

The Group contributes more and more to expanding its business and increasing employee motivation. In the third quarter we launched Hans H Luik Educational Training Fund which has helped many employees to choose different courses that will help to develop further their competencies.

The quarter ended has added optimism about the potential growth of revenue, but due to increased investment in our employees and products it is not yet reflected in the EBITDA growth.

Our ambition 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 2017

Q3 2016

Change %

Q3 2015

Q3 2014

Q3 2013

For the period

 

 

 

 

 

 

Sales

15 014

14 437

4%

14 169

13 833

12 977

EBITDA

1 775

1 932

-8%

2 143

1 732

1 359

EBITDA margin (%)

11.8%

13.4%

 

15.1%

12.5%

10.5%

Operating profit

1 005

1 085

-7%

1 423

872

718

Operating margin (%)

6.7%

7.5%

 

10.0%

6.3%

5.5%

Interest expenses

(102)

(125)

19%

(157)

(189)

(204)

Net profit/(loss) for the period*

813

902

-10%

1 210

644

455

Net margin (%)*

5.4%

6.2%

 

8.5%

4.7%

3.5%

Net profit for the period in financial statements (incl. write-downs and gain from change in ownership interest)

813

902

-10%

1 210

1 599

455

Net margin (%)

5.4%

6.2%

 

8.5%

11.6%

3.5%

Return on assets ROA (%)

1.1%

1.2%

 

1.6%

2.1%

0.6%

Return on equity ROE (%)

1.6%

1.9%

 

2.5%

3.6%

1.1%

Earnings per share (EPS)

0.03

0.03

 

0.04

0.05

0.02

 

Performance indicators – joint ventures 50%

consolidated (EUR thousand)

9 months 2017

9 months 2016

Change %

9 months 2015

9 months 2014

9 months

2013

For the period

 

 

 

 

 

 

Sales

46 093

45 384

2%

44 346

44 606

41 901

EBITDA

5 202

5 507

-6%

5 148

6 124

5 246

EBITDA margin (%)

11.3%

12.1%

 

11.6%

13.7%

12.5%

Operating profit

2 896

3 108

-7%

2 930

3 743

3 299

Operating margin (%)

6.3%

6.8%

 

6.6%

8.4%

7.9%

Interest expenses

(324)

(394)

18%

(477)

(546)

(578)

Net profit/(loss) for the period*

2 444

2 538

-4%

2 247

3 005

2 490

Net margin (%)*

5.3%

5.6%

 

5.1%

6.7%

5.9%

Net profit for the period in financial statements (incl. write-downs and gain from change in ownership interest)

2 444

2 538

-4%

2 247

3 960

2 490

Net margin (%)

5.3%

5.6%

 

5.1%

8.9%

5.9%

Return on assets ROA (%)

3.2%

3.3%

 

2.9%

5.1%

3.2%

Return on equity ROE (%)

4.8%

5.2%

 

4.7%

9.0%

5.9%

Earnings per share (EPS)

0.08

0.09

 

0.08

0.13

0.08

* 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 (thousand EUR)

30.09.2017

31.12.2016

Change %

As of the end of the period

 

 

 

Current assets

15 905

16 251

-2%

Non-current assets

60 997

61 506

-1%

Total assets

76 902

77 757

-1%

      incl. cash and bank

2 987

4 572

-35%

      incl. goodwill

39 208

38 904

1%

Current liabilities

9 290

12 222

-24%

Non-current liabilities

15 882

14 462

10%

Total liabilities

25 172

26 684

-6%

      incl. borrowings

16 172

16 603

-3%

 

Equity

51 730

51 073

1%

 

  Financial ratios (%) – joint ventures consolidated 50%

30.09.2017

31.12.2016

Equity ratio (%)

67%

66%

Debt to equity ratio (%)

31%

33%

Debt to capital ratio (%)

20%

19%

Total debt/EBITDA ratio

1.98

1.96

Liquidity ratio

1.71

1.33

 

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

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

Q3 2017

Q3 2016

Change %

Q3 2015

Q3 2014

Q3 2013

For the period

 

 

 

 

 

 

Sales (only subsidiaries)

12 723

12 205

4%

12 105

11 841

10 985

EBITDA (only subsidiaries)

1 653

1 633

1%

1 889

1 487

1 164

EBITDA margin (%)

13.0%

13.4%

 

15.6%

12.6%

10.6%

Operating profit (only subsidiaries)

974

867

12%

1 230

783

544

Operating margin (%)

7.7%

7.1%

 

10.2%

6.6%

5.0%

Interest expenses (only subsidiaries)

(95)

(117)

19%

(140)

(175)

(204)

Profit of joint ventures by equity method

22

206

-89%

170

87

174

Net profit for the period*

813

902

-10%

1 210

658

455

Net margin (%)*

6.4%

7.4%

 

10.0%

5.6%

4.1%

Net profit for the period in financial statements (incl. write-downs and gain from change in ownership interest)

813

902

-10%

1 210

1 613

455

Net margin (%)

6.4%

7.4%

 

10.0%

13.6%

4.1%

Return on assets ROA (%)

1.1%

1.3%

 

1.6%

2.2%

0.6%

Return on equity ROE (%)

1.6%

1.9%

 

2.5%

3.5%

1.1%

Earnings per share (EPS)

0.03

0.03

 

0.04

0.05

0.02

 

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

9 months 2017

9 months

2016

Change %

9 months

2015

9 months

2014

9 months

2013

For the period

 

 

 

 

 

 

Sales (only subsidiaries)

39 054

38 581

1%

37 962

38 338

35 796

EBITDA (only subsidiaries)

4 671

4 620

1%

4 240

5 481

4 777

EBITDA margin (%)

12.0%

12.0%

 

11.2%

14.3%

13.3%

Operating profit (only subsidiaries)

2 635

2 439

8%

2 202

3 313

2 897

Operating margin (%)

6.7%

6.3%

 

5.8%

8.6%

8.1%

Interest expenses (only subsidiaries)

(303)

(357)

15%

(425)

(531)

(578)

Profit of joint ventures by equity method

232

562

-59%

589

375

320

Net profit for the period*

2 444

2 538

-4%

2 247

3 019

2 490

Net margin (%)*

6.3%

6.6%

 

5.9%

7.9%

7.0%

Net profit for the period in financial statements (incl. write-downs and gain from change in ownership interest)

2 444

2 538

-4%

2 247

3 974

2 490

Net margin (%)

6.3%

6.6%

 

5.9%

10.4%

7.0%

Return on assets ROA (%)

3.3%

3.5%

 

3.0%

5.3%

3.3%

Return on equity ROE (%)

4.8%

5.2%

 

4.7%

9.0%

5.9%

Earnings per share (EPS)

0.08

0.09

 

0.08

0.13

0.08

* 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

(thousand EUR)

30.09.2017

31.12.2016

Change %

As of the end of the period

 

 

 

Current assets

12 966

13 094

-1%

Non-current assets

60 801

61 074

0%

Total assets

73 767

74 168

-1%

      incl. cash and bank

1 391

2 856

-51%

      incl. goodwill

37 258

36 953

1%

Current liabilities

6 895

9 591

-28%

Non-current liabilities

15 142

13 504

12%

Total liabilities

22 037

23 095

-5%

      incl. borrowings

15 558

15 784

-1%

Equity

51 730

51 073

1%

 

  Financial ratios (%) – joint ventures consolidated under equity

30.09.2017

31.12.2016

Equity ratio (%)

70%

69%

Debt to equity ratio (%)

30%

31%

Debt to capital ratio (%)

21%

20%

Total debt/EBITDA ratio

2.12

2.17

Liquidity ratio

1.88

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 margin in financial statements/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. In previous years, 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 2013-2017

(thousand EUR)

Sales

Sales

 

Q3

 2017

Q3

2016

Change %

Q3

 2015

Q3

 2014

Q3

 2013

media segment (by equity method)

8 000

7 436

8%

7 098

6 017

5 551

      incl. revenue from all digital and online channels

4 617

3 996

16%

3 544

2 918

2 479

printing services segment

5 418

5 629

-4%

5 753

6 596

6 147

entertainment segment

0

0

-

64

0

0

corporate functions

633

535

18%

434

427

396

intersegment eliminations

(1 328)

(1 395)

 

(1 245)

(1 200)

(1 109)

TOTAL GROUP under equity method

12 723

12 205

4%

12 105

11 841

10 985

media segment (by proportional consolidation)

10 601

9 965

6%

9 432

8 202

7 724

      incl. revenue from all digital and online channels

4 812

4 142

16%

3 678

3 008

2 550

printing services segment

5 418

5 629

-4%

5 753

6 596

6 147

entertainment segment

0

0

-

64

0

0

corporate functions

633

535

18%

434

427

396

intersegment eliminations

(1 639)

(1 692)

 

(1 514)

(1 392)

(1 290)

TOTAL GROUP by proportional consolidation

15 014

14 437

4%

14 169

13 833

12 977

 

(thousand EUR)

EBITDA

EBITDA

 

Q3

 2017

Q3

2016

Change %

Q3

 2015

Q3

 2014

Q3

 2013

media segment by equity method

1 019

860

18%

889

323

102

media segment by proportional consolidation

1 142

1 159

-1%

1 143

567

297

printing services segment

860

986

-13%

1 178

1 326

1 245

entertainment segment

0

0

-

(1)

0

0

corporate functions

(226)

(213)

-6%

(178)

(162)

(183)

intersegment eliminations

0

0

 

0

0

0

TOTAL GROUP under equity method

1 653

1 633

1%

1 889

1 487

1 164

TOTAL GROUP by proportional consolidation

1 775

1 932

-8%

2 143

1 732

1 359

 

EBITDA margin

Q3

 2017

Q3

 2016

Q3

 2015

Q3

 2014

Q3

 2013

media segment by equity method

13%

12%

13%

5%

2%

media segment by proportional consolidation

11%

11%

12%

7%

4%

printing services segment

16%

18%

20%

20%

20%

TOTAL GROUP under equity method

13%

13%

16%

13%

11%

TOTAL GROUP by proportional consolidation

12%

13%

15%

13%

10%

 

Key financial data of the segments 9 months 2013-2017

(thousand EUR)

Sales

Sales

 

9 months

 2017

9 months

2016

Change %

9 months

 2015

9 months

 2014

9 months

 2013

media segment (by equity method)

24 049

22 718

6%

21 663

19 923

18 225

      incl. revenue from all digital and online channels

13 916

12 294

13%

11 011

9 434

8 206

printing services segment

17 383

18 633

-7%

18 457

20 868

19 896

entertainment segment

0

0

-

517

0

0

corporate functions

1 799

1 667

8%

1 394

1 271

1 137

intersegment eliminations

(4 177)

(4 438)

 

(4 068)

(3 725)

(3 462)

TOTAL GROUP under equity method

39 054

38 581

1%

37 962

38 338

35 796

media segment (by equity method)

32 037

30 394

5%

28 899

26 788

24 912

      incl. revenue from all digital and online channels

14 511

12 744

14%

11 394

9 740

8 423

printing services segment

17 383

18 633

-7%

18 457

20 868

19 896

entertainment segment

0

0

-

517

0

0

corporate functions

1 799

1 667

8%

1 394

1 271

1 137

intersegment eliminations

(5 126)

(5 310)

 

(4 921)

(4 321)

(4 044)

TOTAL GROUP by proportional consolidation

46 093

45 384

2%

44 346

44 606

41 901

 

(thousand EUR)

EBITDA

EBITDA

 

9 months

 2017

9 months

2016

Change %

9 months

 2015

9 months

 2014

9 months

 2013

media segment (by equity method)

2 562

1 954

31%

2 425

1 922

1 109

media segment by proportional consolidation

3 093

2 840

9%

3 334

2 565

1 579

printing services segment

2 782

3 317

-16%

3 611

4 321

4 258

entertainment segment

0

(1)

-

(1 106)

0

0

corporate functions

(672)

(649)

-4%

(689)

(763)

(593)

intersegment eliminations

0

0

 

0

0

2

TOTAL GROUP under equity method

4 671

4 620

1%

4 240

5 481

4 777

TOTAL GROUP by proportional consolidation

5 202

5 507

-6%

5 148

6 124

5 246

 

EBITDA margin

9 months

 2017

9 months

 2016

9 months

 2015

9 months

 2014

9 months

 2013

media segment (by equity method)

11%

9%

11%

10%

6%

media segment by proportional consolidation

10%

9%

12%

10%

6%

printing services segment

16%

18%

20%

21%

21%

TOTAL GROUP under equity method

12%

12%

11%

14%

13%

TOTAL GROUP by proportional consolidation

11%

12%

12%

14%

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, outdoor screen company ACL LV acquired in the 3rd quarter of 2017 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.

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

 

(thousand EUR)

Sales

 

Q3
 2017

Q3
2016

Change
%

Ekspress Meedia

4 709

4 601

2%

        incl. Delfi Estonia online revenue

1 661

1 615

3%

Delfi Latvia

863

751

15%

Delfi Lithuania

2 314

1 979

17%

        incl. Delfi Lithuania online revenue

1 892

1 498

26%

Hea Lugu

96

106

-9%

Zave Media

0

0

-

ACM LV

21

-

-

Other companies

-

-

-

Intersegment eliminations

(3)

(1)

 

TOTAL subsidiaries

8 000

7 436

8%

SL Õhtuleht*

1 111

1 034

7%

Ajakirjade Kirjastus*

1 039

1 139

-9%

Express Post*

543

612

-11%

Linna Ekraanid*

153

51

200%

Intersegment eliminations

(243)

(306)

 

TOTAL subsidiaries

2 602

2 529

3%

TOTAL segment by proportional consolidation

10 601

9 965

6%

 

(thousand EUR)

EBITDA

 

Q3
2017

Q3
2016

Change
 %

Ekspress Meedia

519

328

58%

Delfi Latvia

46

58

-21%

Delfi Lithuania

475

474

0%

Hea Lugu

(3)

0

-

Zave Media

0

0

-

ACM LV

(18)

-

-

Other companies

0

0

-

Intersegment eliminations

0

0

 

TOTAL subsidiaries

1 019

860

19%

SL Õhtuleht*

104

81

28%

Ajakirjade Kirjastus*

55

181

-70%

Express Post*

(55)

35

-259%

Linna Ekraanid*

18

2

662%

Intersegment eliminations

0

0

 

TOTAL subsidiaries

122

299

-59%

TOTAL segment by proportional consolidation

1 142

1 159

-1%

* Proportional share of joint ventures

 

(thousand EUR)

Sales

 

9 months
 2017

9 months
2016

Change
%

Ekspress Meedia

14 270

14 031

2%

        incl. Delfi Estonia online revenue

5 100

4 957

3%

Delfi Latvia

2 725

2 378

15%

Delfi Lithuania

6 758

6 005

13%

        incl. Delfi Lithuania online revenue

5 504

4 560

21%

Hea Lugu

282

307

-8%

Zave Media

0

1

-100%

ACM LV

21

-

-

Other companies

-

-

-

Intersegment eliminations

(7)

(4)

 

TOTAL subsidiaries

24 049

22 718

6%

SL Õhtuleht*

3 389

3 195

6%

Ajakirjade Kirjastus*

3 331

3 398

-2%

Express Post*

1 730

1 933

-11%

Linna Ekraanid*

327

51

542%

Intersegment eliminations

(787)

(901)

 

TOTAL subsidiaries

7 989

7 675

4%

TOTAL segment by proportional consolidation

32 037

30 394

5%

 

(thousand EUR)

EBITDA

 

 

9 months
2017

9 months
2016

Change
 %

Ekspress Meedia

1 163

1 005

16%

Delfi Latvia

263

150

75%

Delfi Lithuania

1 171

876

34%

Hea Lugu

(17)

(17)

0%

Zave Media

0

(60)

100%

ACM LV

(18)

-

-

Other companies

(1)

(1)

0%

Intersegment eliminations

1

2

-

TOTAL subsidiaries

2 562

1 954

31%

SL Õhtuleht*

362

328

10%

Ajakirjade Kirjastus*

192

384

-50%

Express Post*

(81)

172

-147%

Linna Ekraanid*

57

2

2276%

Intersegment eliminations

(0)

(0)

-1200%

TOTAL subsidiaries

530

887

-40%

TOTAL segment by proportional consolidation

3 093

2 840

9%

* Proportional share of joint ventures

 

ONLINE MEDIA AND DELFI

As the market leader, Delfi continues to invest into new technologies and IT solutions, with the goal of improving the user experience of its reader and advertisers.

This year the zlick innovation has been developed further that now enables to buy paid content with zero click in all our channels. Ad-free Delfi has been launched enabling to read ad-free Delfi portal for a monthly fee. Delfi Sport launched a separate mobile application. In digital newspapers the Android application of Eesti Ekspress now also includes an offline option. The family package that includes all Estonian digital newspapers and magazines of our Group enables access from a separate Android application. Android application enables to send the so-called push messages containing images. Launch of Delfi TV Youtube and Facebook channel. Delfi Latvia has transferred all its verticals to the so-called responsive design and has renewed its local news portal atverskapi.lv. Delfi Lithuania was the first local portal in Lithuania to launch an innovative voiceover solution that enables to listen to the news. Ads.txt solution was also taken into use that enables ad buyers to avoid illegitimate sellers that arbitrage inventory and spoof domains.  

Starting from last year, in addition to online advertising in our own portals our advertising sales departments also offer 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, and also offer programmatic advertising sales.

The range and content of vertical products continues to expand. Delfi Estonia launched a new Russian language portal – Polesnoje. An agreement was been concluded to broadcast WTA tennis tournaments in order to show the matches of Anett Kontaveit. Exclusive blog and content cooperation is conducted with Estonian rally driver Ott Tänak. Delfi Latvia has been actively broadcasting Latvia’s local elections through various multi-media and video projects. Various projects and sub-sites such as “Latvia 2020” and “200 Years of Latvian Art” were also launched. Delfi Lithuania launched new sub-sites “Delfi Food”, “Delfi Travel Guide” and “Delfi Home”. The National Basketball Association (NBA) and Delfi Lithuania started a multi-year cooperation project and launched NBA’s first official Lithuanian online portal in the Delfi environment at www.delfi.lt/nba. To fight fake news, a separate disclose portal was set up at www.demaskuok.lt consisting of information that is distributed, but is not true.

In addition to technological and content improvements, we also focus on design. In the third quarter, Delfi Lithuania launched new, more modern and cleaner design for the portal.

Testing of various e-commerce projects and development of classified portals in Latvia and Lithuania continues.

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 2016-2017

In the third quarter 2016, Gemius changed the methodology of the online readership survey in Estonia, Latvia and Lithuania, as a result of which the readership of mobile devices and tablet PCs was added to the above readership of computer users. Comparable data from Estonia are available from September 2016.

In the measurement period, the readership of Delfi and Postimees has been relatively stable. In the first quarter of 2016, Postimees merged classified portals www.kv.ee and www.osta.ee owned by Eesti Meedia into its postimees.ee domain. By adding the number of users of classified portals Postimees achieved a higher number of users than Delfi. Delfi usership increase in July 2017 is technical and does not represent a real growth.

Latvian online readership 2016-2017

At the beginning of 2016 research company Gemius changed its method of online survey. These figures now show the number of users of Latvian Internet portals in computers, mobile devices and tablet PCs. Delfi remains stable and is the largest new portal in Latvia by online readership. The number of users of Latvian portals has been relatively stable and is similar for all portals. According to the survey commissioned by the Latvian government in the spring 2017, Latvia’s most trusted media channel is Delfi.lv that is trusted more than even the state-owned TV station. Tvnet.lv that belongs to Eesti Meedia has lost users and the gap between Delfi.lv is the biggest during last several years. Also Draugiem is losing users at a stable rate. Delfi usership increase in July 2017 is technical and and does not represent a real growth.

Lithuanian online readership 2016-2017

At the beginning of 2016 research company Gemius changed its method of online survey. These figures now show the number of users of Lithuanian Internet portals in computers, mobile devices and tablet PCs.

Delfi.lt remains Lithuania’s largest online portal. In the third quarter 2016, 15min.lt merged several portals that did not belong to this media group and therefore, the number of users of 15min.lt domain increased in the fourth quarter 2016. This growth does not show the number of users of media services and therefore cannot be regarded as the improvement of the market situation of 15min.lt. In March 2017 the readership of such third portals is no longer considered part of 15min.lt and, as a result, the readership of 15min.lt has decreased notably. Tv3.lt has been growing usership and 15min.lt that belongs to Eesti Meedis has been surrendering users.

 

NEWSPAPERS IN ESTONIA

To get a fair picture of the newspaper market, one must look at the circulation of newspapers together with the number of subscribers of digital newspaper. The newspaper with the largest circulation in Estonia is Õhtuleht whose number of users exceeded 51 thousand in September 2017. Päevaleht has about 48 thousand and Eesti Ekspress has 36 thousand users. The number of users of digital newspapers has notably increased in the recent year and exceeds the decrease in the readership of paper newspapers. For Postimees, the data on users of digital newspapers are not available and the graph shows the number of readers of paper newspapers only.

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.

 

(thousand EUR)

Sales

 

Q3

2017

Q3

2016

Change

%

Printall

5 418

5 629

-4%

 

(thousand EUR)

EBITDA

 

Q3

2017

Q3

2016

Change %

Printall

860

986

-13%

 

(thousand EUR)

Sales

 

9 months

2017

9 months

2016

Change

%

Printall

17 383

18 633

-7%

 

(thousand EUR)

EBITDA

 

9 months

2017

9 months

2016

Change %

Printall

2 782

3 317

-16%

The printing services segment continues to be impacted by the economic recession which also has a negative impact on our printing plant. 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 as well as the activities of competitors in the Baltic States. A sheet-fed machine acquired two years ago has helped to prevent a steeper revenue decline, and has helped to expand the product range outside the normal media sector. More active sales approach has been taken outside of Nordic countries.

Consolidated balance sheet (unaudited)

(thousand EUR)

30.09.2017

31.12.2016

ASSETS

 

 

Current assets

 

 

Cash and cash equivalents

1 355

2 805

Term deposits

36

51

Trade and other receivables

8 506

7 468

Corporate income tax prepayment

207

0

Inventories

1 862

2 770

Total current assets

12 966

13 094

Non-current assets

 

 

Trade and other receivables

993

982

Deferred tax asset

34

34

Investments in joint ventures

2 667

2 435

Investments in associates

578

591

Property, plant and equipment

12 044

12 722

Intangible assets

44 485

44 310

Total non-current assets

60 801

61 074

TOTAL ASSETS

73 767

74 168

LIABILITIES

 

 

Current liabilities

 

 

Borrowings

449

2 313

Trade and other payables

6 286

7 170

Corporate income tax payable

160

108

Total current liabilities

6 895

9 591

Non-current liabilities

 

 

Long-term borrowings

15 109

13 471

Deferred tax liability

33

33

Total non-current liabilities

15 142

13 504

TOTAL LIABILITIES

22 037

23 095

EQUITY

 

 

Share capital

17 878

17 878

Share premium

14 277

14 277

Treasury shares

(22)

(863)

Reserves

1 531

2 058

Retained earnings

18 066

17 723

TOTAL EQUITY

51 730

51 073

TOTAL LIABILITIES AND EQUITY

73 767

74 168

Consolidated statement of comprehensive income (unaudited)

(thousand EUR)

Q3 2017

Q3 2016

9 months 2017

9 months 2016

Sales revenue

12 723

12 205

39 054

38 581

Cost of sales

(10 168)

(9 812)

(30 968)

(30 959)

Gross profit

2 555

2 393

8 086

7 622

Other income

269

270

717

505

Marketing expenses

(563)

(517)

(2 077)

(1 717)

Administrative expenses

(1 275)

(1 262)

(4 037)

(3 911)

Other expenses

(12)

(17)

(54)

(60)

Operating profit

974

867

2 635

2 439

Interest income

23

6

137

25

Interest expense

(95)

(117)

(303)

(357)

Other finance costs

 (19)

 (17)

 (52)

 (49)

Net finance cost

 (91)

 (128)

 (218)

 (381)

Profit on shares of joint ventures

22

206

232

562

Profit/(loss) from shares of associates

 (28)

25

 (51)

41

Profit before income tax

877

970

2 598

2 661

Income tax expense

(64)

(68)

(154)

(123)

Net profit for the reporting period

813

902

2 444

2 538

Net profit for the reporting period attributable to:

 

 

 

 

Equity holders of the parent company

813

902

2 444

2 538

Other comprehensive income

0

0

0

0

Total comprehensive income

813

902

2 444

2 538

Attributable to equity holders of the parent company

813

902

2 444

2 538

Basic and diluted earnings per share  

0.03

0.03

0.08

0.09

Consolidated cash flow statement (unaudited)

(thousand EUR)

9 months 2017

9 months 2016

Cash flows from operating activities

 

 

Operating profit for the reporting year

2 635

2 439

Adjustments for:

 

 

Depreciation, amortisation and impairment

2 036

2 180

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

(4)

(25)

Change in value of share option

0

102

Cash flows from operating activities:

 

 

Trade and other receivables

20

(319)

Inventories

(92)

267

Trade and other payables

(936)

(496)

Cash generated from operations

3 649

4 148

Income tax paid

(309)

(231)

Interest paid

(303)

(357)

Net cash generated from operating activities

3 047

3 560

Cash flows from investing activities

 

 

Interest received

144

25

Purchase of subsidiary

(390)

0

Purchase of joint venture

0

(868)

Purchase of associate

(74)

(311)

Purchase of other investments

(35)

0

Purchase of property, plant and equipment

(1 185)

(866)

Proceeds from sale of property, plant and equipment

14

31

Loans granted

(2 079)

(25)

Loan repayments received

1 053

12

Net cash used in investing activities

(2 552)

(2 002)

Cash flows from financing activities

 

 

Dividends paid

(1 787)

(1 456)

Dividends received

56

246

Change in overdraft

376

0

Finance lease payments made

(52)

(52)

Loan received

0

11

Repayments of bank loans

(552)

(1 634)

Purchase of treasury shares

0

(687)

Net cash used in financing activities

(1 960)

(3 572)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

(1 465)

(2 014)

Cash and cash equivalents at the beginning of the year

2 856

2 927

Cash and cash equivalents at the end of the year

1 391

913

 


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