Financial results for the first quarter 06.05

In the 1st quarter of 2011, Ekspress Group significantly improved its operating results for the period. Despite the most modest quarter of the year in terms of advertising revenue, EBITDA increased to EUR 2.93 million and EBITDA growth was 300%. The Group’s net profit totalled EUR 1.38 million and net profit growth was 280%.

After normalising the operating results with the impact of business combination with Eesti Päevalehe AS in 2011 (see Note 3 for details), the Group’s EBITDA was EUR 1.39 million and it grew by 90%. Excluding the one-off effects of the aforementioned acquisition of Eesti Päevalehe AS, the net loss was EUR 155 thousand in the 1st quarter of the year

The key contributors to the significant improvement of EBITDA included AS Printall, whose EBITDA improved by 25% (EUR 303 thousand); the online portal Delfi whose EBITDA improved by 56% (EUR 47 thousand); the publisher of Eesti Ekspress and Maaleht, Eesti Ajalehed AS whose EBITDA improved by 365% (EUR 139 thousand).  

In the periodicals segment, the results of companies improved due to better efficiency and in the online media segment, due to sales growth. In the printing services segment, better results were primarily related to higher sales in export markets. The sales in the periodicals segment have stabilised at the last year’s level, but the recovery from the decline in advertising sales is very uneven. In the middle of the quarter, sales were propelled by elections to the Riigikogu (Parliament), but the last month of the quarter experienced a sales setback. The revenue from subscriptions of periodicals and single copy sales have remained quite stable in terms of the monetary amount. While the revenue from single copy sales declined by 5.6%, then the revenue from subscriptions increased by 5.3% during the same time period. At Ajakirjade Kirjastus, the results of the 1st quarter were impacted by the additional allowance for the books.  

The key event of the quarter was the acquisition of a controlling interest in Eesti Päevalehe AS. Negotiations with the former co-shareholder Jaan Manitski’s company OÜ Vivarone resulted in OÜ Vivarone acquiring the real estate property which had previously been in the ownership of Eesti Päevalehe AS (former premises of the publisher) and AS Ekspress Grupp acquired the shares of Eesti Päevalehe AS from OÜ Vivarone. The parties did not pay any cash for the transaction. The transaction has created preconditions for better cooperation of Ekspress Group’s media organisations and for increasing the competitiveness of the newspaper Eesti Päevaleht. Although Eesti Päevalehe AS is a loss-making company, the publishing of Eesti Päevaleht is a profitable activity for Ekspress Group as the Group’s joint ventures and subsidiaries earn a profit from providing services to Eesti Päevaleht. With the acquisition of Eesti Päevaleht, Ekspress Group launched development of a new multimedia newsroom using the media brands in its ownership as the basis, which will represent the greatest challenge for the Group this year and an opportunity to save costs as well as increase competitiveness in the field of journalism. 

Another significant event in the periodicals segment was conclusion of a preliminary contract for the sale of the periodical and newspaper home delivery company AS Express Post to AS Eesti Post. The reason for the conclusion of the preliminary sales contract was the vision of the management of Ekspress Group that during the time of media digitalisation, the strategic value of a company engaged in classic home delivery will diminish over time for the Group. The precondition for the conclusion of the transaction is the respective concentration permit to be granted by the Competition Board, the application for which was submitted in the month after the end of the quarter and proceedings of which are expected in being completed in the 3rdquarter. The transaction amount is EUR 2.6 million. 

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