Tallinn, Estonia, 2014-04-30 13:42 CEST (GLOBE NEWSWIRE) --
In the 1st quarter of 2014, the normalised EBITDA of Ekspress Group amounted to EUR 1.64 million and the net profit was EUR 0.69 million. The normalised EBITDA increased by 9.2% year-on-year and the net profit figure was 8.3% higher as compared to Q1 2013. In the 1st quarter, extraordinary expenses included the amount of EUR 0.19 million in costs related to the court dispute with AS Eesti Meedia. The normalised result exceeds last year’s figures, as well as the Group’s budgeted quarterly result by approximately EUR 0.4 million in terms of both EBITDA and the net profit. Almost all Group companies contributed to that positive result. Without normalising the figures, the company’s EBITDA was EUR 1.45 million and the net profit was EUR 0.50 million. The Company has a strong financial position. The debt service coverage ratio is as high as 1.64 and the liquidity ratio is over 1.0. By the end of the quarter, the Company’s ratio of total debt to EBTIDA decreased to 3.26.
The above numbers relate to all our joint ventures (AS SL Õhtuleht, AS Ajakirjade Kirjastus and AS Express Post) consolidated line-by-line 50%. Starting from 2014, in accordance with new international financial reporting standards (IFRS) 50% joint ventures are recognized under the equity method in the consolidated financial statements. The change in these accounting policies did not affect the net profit, but decreased the first-quarter revenue by EUR 2 million and the EBITDA by EUR 0.1 million. In its monthly reports, the management monitors the Group’s performance by continuing proportionate consolidation of joint ventures. Also loan covenants set in the syndicated loan contract are calculated based on proportionate consolidation. For purposes of clarity, the management report shows two sets of indicators: one where joint ventures are consolidated line by line and the other where joint ventures are recognised under the equity method and their results are presented in one line as financial income. In Note 3 of the interim financial statements, the impact of each joint venture on relevant lines of the income statement and balance sheet is shown in more detail.
In the 1st quarter, the biggest growth in both revenue and EBITDA was recorded in the online media segment, where sales revenue increased by 12% and EBITDA were up by 96%. The periodicals segment managed to increase the revenue by 4%, but EBITDA improved by 42%. In the printing services segment, revenue increased by 7% and EBITDA improved by 3%.
In the online media segment, the biggest revenue growth was posted by Delfi Estonia, and was up by 26%. The revenue of Delfi Lithuania increased by 11%. In the 1st quarter, the revenue of Delfi Latvia decreased by 5%, but the result was still better in the light of the possible price shock related to the euro changeover. The EBITDA figure improved significantly both in Estonia and Lithuania. In the 1st quarter, the operations in the online media segment were characterised by focusing in addition on core products also on specialized verticals. In all three countries we also continued developing portals zave.ee, zave.lv and zave.lt that publish discount campaign offers of retailers. By the end of the 1st quarter, the fastest-growing of the three was Zave in Estonia with more than 20 different retailers in their system.
The periodicals segment is characterised by weak print advertising market that is partly being off-set by revenue from subscriptions and single-copy sales. In the segment, the revenue of AS Eesti Ajalehed increased by 9% and EBITDA improved by 82%. The growth is largely attributable to an increase in cover prices in both retail sales and subscriptions, as well as the success in criminal novels series. Because of the popularity of the book series, it was decided to extend it by 10 titles. The digital subscriptions of Eesti Ekspress and Eesti Päevaleht have also strongly increased as compared to the year earlier, by 98% and 134%, respectively, reaching 7 thousand subscribers by the end of the quarter. In the 1st quarter, the first digital subscriptions for Maaleht were sold and by the end of the quarter, Maaleht had approximately 3.5 thousand paying digital subscribers. In the periodicals segment, the revenue of AS SL Õhtuleht and AS Ajakirjade Kirjastus also increased moderately. The EBITDA of AS SL Õhtuleht for the quarter was 12% lower than a year earlier, whereas the EBITDA of AS Ajakirjade Kirjastus was 1.5 times higher as compared to the year before, reaching EUR 10 thousand in profit in absolute figures. The book publishing enterprise OÜ Hea Lugu earned 20% higher EBITDA year-over-year, whereas AS Express Post increased its profit by 14%. The Lithuanian magazine publishing company ended the first quarter with a loss of EUR 29 thousand.
In January, Eesti Päevaleht underwent modernisation and separate topical days were launched. Every day, four final pages are dedicated to one specific topic (sports, business, science, health and consumers, respectively). Maakodu (Country Home) that this year celebrates its 25th anniversary, has been published in a new format since March. Changes also concern Eesti Ekspress that at the end of April will be published on Wednesdays and not on Thursdays, as at present.
Specially should be mentioned our journalists who outperformed the yearly competition by winning the biggest number of press awards for articles published in 2013 including the most prestigious one – the Bonnier Award.
In the printing services segment, the revenue of AS Printall increased by 7% and EBITDA was up by 3%. Estonian revenue increased in the 1st quarter, decreasing the share of exports by one percentage point to 68%. The breakdown of exports by countries is constantly changing: in the first quarter, sales to Finland increased by 58% whereas sales of Russia fell by 33% as compared to the year before.
On the Group level, the dispute with the competing media enterprise Eesti Meedia over the realisation of the purchasing right pertaining to the ownership of joint ventures continued.
In the second quarter, we expect sales to grow moderately by 5% as compared to the year before, evenly in all segments, and the increase of EBITDA and the net profit by 10%. Our view for the second quarter does not take into consideration possible negative developments in our neighbouring economies that may be caused by the dramatic deterioration of the economic environment.
In the 2nd quarter, the Group’s Lithuanian subsidiaries will be merged into one media-house. The objective is to strengthen our position and to achieve synergy both in expenses and in quality. Close cooperation with Lithuania’s largest advertising network Adnet, in which the acquisition of a minority ownership is being completed, is expected to help it.
We continue to look for new sources of growth that would help to develop innovative solutions for our demanding readers and customers. With our solutions we continue to offer new and interesting experiences both on paper and in digital media, without compromising on news quality, choice of topics and journalistic objectivity.
FINANCIAL INDICATORS AND RATIOS –joint ventures line-by-line 50% consolidated
| Performance indicators – joint ventures consolidated by 50% (EUR thousand) | Q1 2014 | Q1 2013 | Change% | Q1 2012 | Q1 2011 |
| For the period | |||||
| Sales | 14 766 | 13 809 | 7% | 14 219 | 13 146 |
| EBITDA | 1 454 | 1 503 | -3% | 1 615 | 1 395 |
| EBITDA margin (%) | 9.8% | 10.9% | 11.4% | 10.6% | |
| Operating profit* | 691 | 840 | -18% | 756 | 555 |
| Operating margin* (%) | 4.7% | 6.1% | 5.3% | 4.2% | |
| Interest expenses | (176) | (197) | 11% | (488) | (559) |
| Profit / (loss) for the period * | 503 | 638 | -21% | 179 | (155) |
| Net margin* (%) | 3.4% | 4.6% | 1.3% | -1.2% | |
| Net profit / (loss) for the period in the financial statements (incl. impairments and gain on sale of ownership interest) | 503 | 638 | -21% | 179 | 1 385 |
| Net margin (%) | 3.4% | 4.6% | 1.3% | 10.5% | |
| ROA (%) | 0.7% | 0.8% | 0.2% | 1.6% | |
| ROE (%) | 1.2% | 1.5% | 0.5% | 3.8% | |
| Earnings per share (EPS) | 0.02 | 0.02 | 0.01 | 0.05 |
*The results exclude impairment of goodwill and trademarks, and the net extraordinary gain in relation to the acquisition of an additional ownership interest in Eesti Päevalehe AS. In the 1st quarter of 2011, an additional 50% ownership interest in Eesti Päevalehe AS was acquired. The transaction was accounted for in two parts: firstly, as the sale of the current 50% ownership interest on which the net extraordinary gain totalled EUR 1 540 thousand and secondly, as the acquisition of the wholly-owned subsidiary.
| Balance sheet – joint ventures consolidated by 50% (EUR thousand) | 31.03.2014 | 31.12.2013 | Change % |
| As at the end of the period | |||
| Current assets | 12 943 | 14 447 | -10% |
| Non-current assets | 62 476 | 63 019 | -1% |
| Total assets | 75 419 | 77 466 | -3% |
| incl. cash and bank | 3 230 | 4 501 | -28% |
| incl. goodwill | 40 052 | 40 052 | 0% |
| Current liabilities | 12 843 | 14 468 | -11% |
| Non-current liabilities | 19 750 | 20 673 | -4% |
| Total liabilities | 32 593 | 35 141 | -7% |
| incl. borrowings | 23 510 | 24 432 | -4% |
| Equity | 42 826 | 42 325 | 1% |
| Financial ratios (%) – joint ventures consolidated by 50% | 31.03.2014 | 31.12.2013 |
| Equity ratio (%) | 57% | 55% |
| Debt to equity ratio (%) | 55% | 58% |
| Debt to capital ratio (%) | 32% | 32% |
| Total debt / EBITDA ratio | 3.26 | 3.36 |
| Debt service coverage ratio | 1.64 | 1.66 |
| Liquidity ratio | 1.01 | 1.00 |
| Formulas used to calculate the financial ratios | |
| 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 |
| ROA (%) | Net profit /average assets x 100 |
| ROE (%) | Net profit /average equity x 100 |
FINANCIAL INDICATORS AND RATIOS – joint ventures by equity method
| Performance indicators – joint ventures by equity method (EUR thousand) | Q1 2014 | Q1 2013 | Change % | Q1 2012 | Q1 2011 |
| For the period | |||||
| Sales (subsidiaries only) | 12 734 | 11 812 | 8% | 12 177 | 11 149 |
| EBITDA (subsidiaries only) | 1 330 | 1 417 | -6% | 1 548 | 1 295 |
| EBITDA margin (%) | 10.4% | 12.0% | 12.7% | 11.6% | |
| Operating profit* (subsidiaries only) | 593 | 777 | -24% | 720 | 496 |
| Operating margin* (%) | 4.7% | 6.6% | 5.9% | 4.4% | |
| Interest expenses (subsidiaries only) | (176) | (197) | 11% | (489) | (563) |
| Profit from joint ventures by equity method | 98 | 63 | 55% | 40 | 70 |
| Profit / (loss) for the period * | 503 | 638 | -21% | 179 | (155) |
| Net margin* (%) | 3.9% | 5.4% | 1.5% | -1.4% | |
| Net profit / (loss) for the period in the financial statements (incl. impairments and gain on sale of ownership interest) | 503 | 638 | -21% | 179 | 1 385 |
| Net margin (%) | 3.9% | 5.4% | 1.5% | 12.5% | |
| ROA (%) | 0.7% | 0.8% | 0.2% | 1.7% | |
| ROE (%) | 1.2% | 1.5% | 0.5% | 3.8% | |
| Earnings per share (EPS) | 0.02 | 0.02 | 0.01 | 0.05 |
*The results exclude impairment of goodwill and trademarks, and the net extraordinary gain in relation to the acquisition of an additional ownership interest in Eesti Päevalehe AS. In the 1st quarter of 2011, an additional 50% ownership interest in Eesti Päevalehe AS was acquired. The transaction was accounted for in two parts: firstly, as the sale of the current 50% ownership interest on which the net extraordinary gain totalled EUR 1 540 thousand and secondly, as the acquisition of the wholly-owned subsidiary.
| Balance sheet – joint ventures by equity method (EUR thousand) | 31.03.2014 | 31.12.2013 | Change % |
| As at the end of the period | |||
| Current assets | 9 985 | 11 357 | -12% |
| Non-current assets | 63 452 | 63 898 | -1% |
| Total assets | 73 437 | 75 255 | -2% |
| incl. cash and bank | 1 348 | 2 209 | -39% |
| incl. goodwill | 39 596 | 39 596 | 0% |
| Current liabilities | 10 861 | 12 258 | -11% |
| Non-current liabilities | 19 750 | 20 672 | -4% |
| Total liabilities | 30 611 | 32 930 | -7% |
| incl. borrowings | 23 510 | 24 432 | -4% |
| Equity | 42 826 | 42 325 | 1% |
| Financial ratios (%) – joint ventures by equity method | 31.03.2014 | 31.12.2013 |
| Equity ratio (%) | 58% | 56% |
| Debt to equity ratio (%) | 55% | 58% |
| Debt to capital ratio (%) | 34% | 34% |
| Total debt /EBITDA ratio | 3.61 | 3.71 |
| Debt service coverage ratio | 1.48 | 1.50 |
| Liquidity ratio | 0.92 | 0.93 |
| Formulas used to calculate the financial ratios | |
| 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 |
| ROA (%) | Net profit /average assets x 100 |
| ROE (%) | Net profit /average equity x 100 |
| Operating margin* (%) | Operating profit*/sales x100 |
OVERVIEW OF THE SEGMENTS
Since 2009 the Group operates in the following operating segments:
- Online media
- Periodicals (newspapers, magazines and books)
- Printing services.
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. It can appear in lower advertising costs in retail, preference of other advertising channels (e.g. preference of internet rather than print media) and changes in consumption habits of retail consumers (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.
Key financial data of the segments Q1 2011-2014
| (EUR thousand) | Sales | Sales | |||
| Q1 2014 | Q1 2013 | Change % | Q1 2012 | Q1 2011 | |
| Online media | 2 737 | 2 437 | 12% | 2 187 | 1 852 |
| Periodicals (incl. consolidated joint ventures) | 5 967 | 5 743 | 4% | 5 781 | 5 562 |
| Printing services | 7 062 | 6 617 | 7% | 7 376 | 6 470 |
| Corporate functions | 422 | 355 | 19% | 140 | 26 |
| Intersegment eliminations | (1 422) | (1 343) | -6% | (1 264) | (765) |
| TOTAL GROUP | 14 766 | 13 809 | 7% | 14 219 | 13 146 |
| Impact of joint ventures | (2 032) | (1 997) | (2 042) | (1 997) | |
| TOTAL GROUP by new accounting standards | 12 734 | 11 812 | 8% | 12 177 | 11 149 |
| (EUR thousand) | EBITDA | EBITDA | |||
| Q1 2014 | Q1 2013 | Change % | Q1 2012 | Q1 2011 | |
| Online media | 165 | 84 | 96% | 238 | (37) |
| Periodicals (incl. consolidated joint ventures) | 298 | 210 | 42% | 21 | 144 |
| Printing services | 1 459 | 1 414 | 3% | 1 529 | 1 496 |
| Corporate functions | (467) | (206) | -127% | (174) | (214) |
| Intersegment eliminations | 0 | 1 | -78% | 0 | 5 |
| TOTAL GROUP | 1 454 | 1 503 | -3% | 1 615 | 1 395 |
| Impact of joint ventures | (125) | (86) | (67) | (100) | |
| TOTAL GROUP by new accounting standards | 1 330 | 1 417 | -6% | 1 548 | 1 295 |
| EBITDA margin | Q1 2014 | Q1 2013 | Q1 2012 | Q1 2011 |
| Online media | 6% | 3% | 11% | -2% |
| Periodicals | 5% | 4% | 0% | 3% |
| Printing services | 21% | 21% | 21% | 23% |
| TOTAL | 10% | 11% | 11% | 11% |
| TOTAL GROUP by new accounting standards | 10% | 12% | 13% | 12% |
The segments’ EBITDA does not include intragroup management fees, and 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 deducted from the consolidated sales revenues and are included in the combined line of eliminations.
News portals owned by the Group
| Owner | Portal | Owner | Portal |
| Delfi Estonia | www.delfi.ee | AS Eesti Ajalehed | www.ekspress.ee |
| rus.delfi.ee | www.maaleht.ee | ||
| Delfi Latvia | www.delfi.lv | www.epl.ee | |
| rus.delfi.lv | www.arileht.ee | ||
| Delfi Lithuania | www.delfi.lt | AS SL Õhtuleht | www.ohtuleht.ee |
| ru.delfi.lt |
Advertising portals owned by the Group
| Owner | Portal | Owner | Portal |
| Delfi Lithuania | www.alio.lt | AS Eesti Ajalehed | www.ekspressjob.ee |
| www.ekspressauto.ee | |||
| www.hyppelaud.ee |
Online media segment
The online media segment includes Delfi operations in Estonia, Latvia, Lithuania and Ukraine as well as the Parent Company Delfi Holding. Starting from 1 March 2014, the operations in Ukraine have been terminated. The first-quarter EBITDA of Delfi Ukraine includes expenses related to the termination of operations.
| (EUR thousand) | Sales | ||
|
Q1 2014 |
Q1 2013 |
Change % | |
| Delfi Estonia | 1 073 | 852 | 26% |
| Delfi Latvia | 494 | 520 | -5% |
| Delfi Lithuania | 1 169 | 1 055 | 11% |
| Delfi Ukraine | 2 | 10 | -80% |
| Other Delfi companies | 0 | 0 | - |
| Intersegment eliminations | (1) | 0 | - |
| TOTAL | 2 737 | 2 437 | 12% |
| (EUR thousand) | EBITDA | ||
|
Q1 2014 |
Q1 2013 |
Change % | |
| Delfi Estonia | 37 | (29) | 228% |
| Delfi Latvia | (83) | 38 | -318% |
| Delfi Lithuania | 161 | 43 | 274% |
| Delfi Ukraine | (51) | (59) | 14% |
| Other Delfi companies | 100 | 90 | 11% |
| Intersegment eliminations | 1 | 1 | - |
| TOTAL | 165 | 84 | 96% |
In the 1st quarter, sales and number of users of Delfi continued to grow strongly both in Estonia and in Lithuania. The sales growth was mainly attributable to the successful launch of new verticals and topical portals, new advertising solutions, Delfi TV and the growing use of the mobile app. The EBITDA of Delfi in Lithuania increased mainly because of higher efficiency of the sales team, improved customer focus and more active handling of overdue receivables. The sales and the EBITDA of Delfi in Latvia have decreased as compared to the year before, but exceeded the budget significantly. We had budgeted the possible negative impact of the euro changeover, but it turned out to be smaller than we estimated. On the other hand, the events unfolding in Ukraine have had an impact and are likely to affect business also in the future. We believe that initiatives launched all over the Baltic states will add boost to our growth in Latvia and that this year will generally be more successful in sales and product development as compared to the year earlier.
Delfi Estonia
· Launch of separate Delfi TV on a new platform.
· Delfi Estonia continued live webcasts under the Delfi TV brand. Major projects included, already for the second year, events dedicated to the anniversary of the Republic of Estonia, reports from Olympic Games, streams from basketball matches abroad, etc.
· Websites for weather and jokes were renewed. The latter was re-named www.igav.ee.
· In connection with launching a new comments’ section, the number of comments posted by registered users has increased.
· Delfi has received a lot of feedback and support in connection with the complaint that the Grand Chamber of European Court of Human Rights has decided to give further examination. AS Delfi continuously is in an opinion that website owners are not under the obligation to pre-edit user-created content. The court case started in 2006 when Vjatšeslav Leedo sued Delfi for comments published at the article „SLK destroys planned ice route“. The article received a total of 185 readers’ comments, 20 of which Mr. Leedo considered defamatory.
Estonian online readership 2013-2014
The 1st quarter of 2014 has been successful for Delfi. The difference in the number of users with the competing portal postimees.ee has been stable at more than 150 thousand unique browsers a week. Also the consumption of news portals by smartphones continues to increase – in the 1st quarter there were weeks when the number of mobile users of Delfi has exceeded 330 thousand unique browsers. This shows that at times 25% of Delfi news is consumed via mobile equipment.
Delfi Latvia
· Delfi TV streams based on a new platform from such events as matches of the Latvian basketball league and ice hockey league, an exclusive cabaret show from Concert Hall Palladium, opening of the National Library, etc.
· New Latvian-language and Russian-language travel portals, portal for discount offers www.zave.lv and humour website www.loli.lv were launched
· In Q1, the cooking portal www.tasty.lv has become Latvia’s largest and most popular recipe portal.
· Separate topical sites such as Sochi Olympics, Valentine’s Day, Women’s Day, etc.
· Cooperation projects:
- Latvian Music Awards „The Great Music Award“ (media partner),
- Marketing Festival „Password“ (media partner),
- Riga Fashion Week (media partner).
Latvian online readership 2013-2014
In the 1st quarter, the users’ activity in news portals was again very high. This was attributable to the users’ interest to the tragic accident that happened in Riga in November and the escalation of events in Ukraine.
The number of unique visitors of Delfi has been growing sharply during last few months. Delfi is close to get the biggest portal of Latvia and based on the March statistics there is only 20 thousand real users that inbox.lv has more than Delfi. Taking into the account that these figures do not consist mobile users it is fair to assume that with mobile traffic Delfi would be the biggest portal in Latvia.
In the 1st quarter, the most important event on the market was the acquisition of Apollo.lv by Tvnet.lv. As a result, Delfi will have a strong competitor in Latvia.
Starting from January 2014, the method of the Gemius online survey has changed. The readership in 2014 includes only results for computer users (PC) and excludes all mobile equipment. Separate statistics on mobile equipment will be created within 2014.
Delfi Lithuania
· Delfi TV was launched on a new platform and has produced live webcast and streams from such events as Login, the largest tech conference in the Baltic states, ideas conference Tedx Vilnius, Davis Cup tennis match between Lithuania and Norway, various fashion and theatre events, Geneva Automotive Show, etc.
· Delfi TV launched a daily TV programme with news in brief that in 2 minutes wraps up the most important and interesting news.
· Delfi TV produced a documentary series about Bushido and the history of samurais, the mission of NATO Air Force in Lithuania, a popular science project ScienceExpress, cooking projects, etc.
· New TV channels „Moteris TV“ (“Lithuanian Woman”) and „Mano namai TV“ (“My Home”) were launched.
· Coverage of news in Ukraine which included local freelance journalists and photographers from Ukraine and covering economy, politics and defence policy were very popular with the audience.
· Cooperation projects in different fields:
- Lithuanian Winter Rally (cooperation partner),
- Economic conference "Valstybė" (cooperation partner),
- BZN START - awards gala of start-ups (official media partner).
Lithuanian online readership 2013-2014
Among Lithuanian internet users, Delfi Lithuania remains an uncontested market leader, with more than 1.2 million unique users a month. The events in Ukraine have notably increased the readership of Delfi and users’ numbers show that Delfi’s coverage has been most successful since competing publications have been losing readers.
Starting from January 2014, the method of the Gemius online survey has changed. The readership in 2014 includes only results for computer users (PC) and excludes all mobile equipment. Separate statistics on mobile equipment will be created within 2014.
Periodicals segment
The periodicals segment includes AS Eesti Ajalehed, the publisher of Maaleht, Eesti Ekspress and Eesti Päevaleht, AS SL Õhtuleht, the publisher of Õhtuleht and Linnaleht, book publisher OÜ Hea Lugu, magazine publishers AS Ajakirjade Kirjastus in Estonia and UAB Ekspress Liedyba in Lithuania. This segment also includes AS Express Post, engaged in home delivery of periodicals.
| (EUR thousand) | Sales | ||
| Q1 2014 | Q1 2013 | Change % | |
| AS Eesti Ajalehed | 2 862 | 2 615 | 9% |
| OÜ Hea Lugu | 308 | 329 | -6% |
| UAB Ekspress Leidyba | 584 | 628 | -7% |
| Intersegment eliminations | (10) | (12) | 17% |
| TOTAL (subsidiaries) | 3 744 | 3 560 | 5% |
| SL Õhtuleht AS* | 948 | 900 | 5% |
| AS Ajakirjade Kirjastus* | 960 | 918 | 4% |
| AS Express Post* | 584 | 601 | -3% |
| Additional eliminations | (270) | (236) | -15% |
| TOTAL (joint ventures) | 2 223 | 2 183 | 2% |
| TOTAL segment | 5 967 | 5 743 | 4% |
| (EUR thousand) | EBITDA | ||
| Q1 2014 | Q1 2013 | Change % | |
| AS Eesti Ajalehed | 133 | 73 | 82% |
| OÜ Hea Lugu | 66 | 55 | 20% |
| UAB Ekspress Leidyba | (29) | (5) | -480% |
| Intersegment eliminations | 4 | 0 | - |
| TOTAL (subsidiaries) | 174 | 123 | 41% |
| SL Õhtuleht AS* | 31 | 35 | -12% |
| AS Ajakirjade Kirjastus* | 10 | (22) | 145% |
| AS Express Post* | 84 | 74 | 14% |
| Additional eliminations | (1) | 1 | -192% |
| TOTAL (joint ventures) | 124 | 87 | 43% |
| TOTAL segment | 298 | 210 | 42% |
*Proportionate share of joint ventures
It was a challenging quarter for the periodicals segment. Whereas the advertising market of magazines has been slightly improving, advertising income of all newspapers is decreasing. Revenue has been maintained by special projects, book series and also by the increase in cover price, although circulations are shrinking. The positive factor is the growth in the number of subscribers, especially in digital subscriptions, that is off-setting the disappearance of retail locations. The number of digital subscriptions has increased by 98% for Eesti Ekspress and 134% for Eesti Päevaleht, amounting to more than 7 thousand subscribers. The series of criminal novels of LP has been relatively successful, whereas the results of the series of children’s movies on DVDs is significantly below expectations. We continue to publish more book titles. “Late-night Textbook of Maths”, a new concept launched at the end of 2013, has been very successful and is now available also electronically for free.
In cooperation with Ajakirjade Kirjastus, AS SL Õhtuleht has through its network significantly increased online advertising sales.
In the 1st quarter, Ajakirjade Kirjastus launched new products Kilo&Kalor, a special supplement of TervisPluss, and Unistuste Pulmad, a special wedding publication of Anne&Stiil. Special attention has been paid on developing online portal www.ideesahver.ee and a new parenting portal www.tarklapsevanem.ee. Significant changes have also been made in the work of the telemarketing department that should improve future sales results.
Estonian newspaper readership 2013-2014
Circulations of Estonian newspapers have remained stable or are falling moderately. The circulation of daily newspapers is falling faster than that of weeklies. As at Q1 2014, the highest decline in the circulation was recorded for Postimees, more than 10% in comparison with Q1 2013. In the 1st quarter 2014, the circulation of largest daily newspapers has fallen by 3% on average.
Weekly newspapers have done relatively well. As for the weekly publications of Ekspress Grupp, Eesti Ekspress managed to maintain average circulation and Maaleht being the only larger newspaper that has increased its circulation. With regard to the publications of Ekspress Grupp, one needs to add also subscribers of digital newspapers numbering about 7 000 for both Eesti Ekspress and for Eesti Päevaleht as of the 1st quarter of 2014. The number of digital subscribers continues to grow.
Estonian newspaper readership 2013-2014
In the 1st quarter of 2014, there were no major changes in the readership of Estonian newspapers. According to the readership survey of Turu-uuringute AS, the number of newspaper readers fell by 2% on average in Q1 2014. Monthly fluctuations have been bigger, but it is attributed mainly to the survey methods. It should be mentioned that the number of digital newspapers of Ekspress Grupp is not included in the above figures and the number of readers of all publications of Ekspress Grupp is higher than shown in the graph.
Printing services segment
All printing services of the Group are provided by AS Printall which is one of the largest printing companies in Estonia. Printall is able to print both newspapers (coldset) and magazines (heatset).
| (EUR thousand) | Sales | ||
| Q1 2014 | Q1 2013 | Change % | |
| AS Printall | 7 062 | 6 617 | 7% |
| (EUR thousand) | EBITDA | ||
| Q1 2014 | Q1 2013 | Change % | |
| AS Printall | 1 459 | 1 414 | 3% |
In the 1st quarter, the revenue of AS Printall from printing services only increased by 5.6% and sale of paper increased by 8%. After a long period, the non-Group sales in Estonia increased, by as much as 20%. This was attributable to the growth in circulation of existing customers, printing of new publications and additional new customers. The share of exports in revenue decreased from 69% to 68%. There have also been significant changes in the geographical break-down of export markets. The share of Finland and Denmark has increased, whereas exports to Russia, Norway and Sweden decreased. The Company continues to increase its productivity. Although the volume of printing production increased in the 1st quarter, the number of working hours remained on the same level as compared to the previous year same period.
Printing services and the environment
In addition to its very strong financial position, Printall also focuses on environmentally conscious production. In 2012, Printall was granted ISO 9001 management and ISO 14001 environmental certificates.
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.
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 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 issued these certificates helps to support the environmentally friendly, socially fair and economically viable management of the world’s forests.
Printall cares about the environment and uses green energy. The POWERED BY GREEN certificate is a proof that the company buys electricity, 70% of which has been generated by renewable sources of energy.
Consolidated balance sheet (unaudited)
| (EUR thousand) | 31.03.2014 | 31.12.2013 | |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 1 245 | 2 111 | |
| Term deposit | 103 | 98 | |
| Trade and other receivables | 6 538 | 6 819 | |
| Inventories | 2 099 | 2 329 | |
| Total current assets | 9 985 | 11 357 | |
| Non-current assets | |||
| Trade and other receivables | 410 | 399 | |
| Investment in joint ventures and associates | 1 642 | 1 543 | |
| Property, plant and equipment | 13 234 | 13 595 | |
| Intangible assets | 48 166 | 48 361 | |
| Total non-current assets | 63 452 | 63 898 | |
| TOTAL ASSETS | 73 437 | 75 255 | |
| LIABILITIES | |||
| Current liabilities | |||
| Borrowings | 3 782 | 3 760 | |
| Trade and other payables | 7 079 | 8 498 | |
| Total current liabilities | 10 861 | 12 258 | |
| Long term liabilities | |||
| Long-term borrowings | 19 728 | 20 672 | |
| Other long-term payables | 22 | 0 | |
| Total non-current liabilities | 19 750 | 20 672 | |
| TOTAL LIABILITIES | 30 611 | 32 930 | |
| EQUITY | |||
| Share capital | 17 878 | 17 878 | |
| Share premium | 14 277 | 14 277 | |
| Reserves | 1 284 | 1 250 | |
| Retained earnings | 9 351 | 8 848 | |
| Currency translation reserve | 36 | 72 | |
| TOTAL EQUITY | 42 826 | 42 325 | |
| TOTAL LIABILITIES AND EQUITY | 73 437 | 75 255 | |
Consolidated statement of comprehensive income (unaudited)
| (EUR thousand) | Q1 2014 | Q1 2013 |
| Sales revenue | 12 734 | 11 812 |
| Cost of sales | (10 223) | (9 482) |
| Gross profit | 2 511 | 2 330 |
| Other income | 116 | 93 |
| Marketing expenses | (440) | (364) |
| Administrative expenses | (1 536) | (1 259) |
| Other expenses | (58) | (23) |
| Operating profit | 593 | 777 |
| Interest income | 2 | 0 |
| Interest expense | (176) | (197) |
| Foreign exchange gains/losses | 36 | 16 |
| Other finance income/costs | (16) | (11) |
| Total finance income/costs | (154) | (192) |
| Profit (loss) on shares of joint ventures | 98 | 63 |
| Profit (loss) on shares of associates | (12) | (7) |
| Profit (loss) before income tax | 525 | 641 |
| Income tax expense | (22) | (3) |
| Net profit for the reporting period | 503 | 638 |
| Net profit for the reporting period attributable to: | ||
| Equity holders of the parent company | 503 | 638 |
| Other comprehensive income (expense) that can be later reclassified to profit or loss | ||
| Currency translation differences | (36) | (20) |
| Total other comprehensive income for the period | (36) | (20) |
| Comprehensive income (expense) for the reporting period | 467 | 618 |
| Attributable to equity holders of the parent company | 467 | 618 |
| Basic and diluted earnings per share | 0.02 | 0.02 |
Consolidated cash flow statement (unaudited)
| (EUR thousand) | Q1 2014 | Q1 2013 |
| Cash flows from operating activities | ||
| Operating profit for the reporting period | 593 | 777 |
| Adjustments: | ||
| Depreciation, amortisation and impairment | 736 | 639 |
| Loss on sale and write-down of property, plant and equipment | (3) | (1) |
| Change in value of share option | 34 | 0 |
| Cash flows from operating activities: | ||
| Trade and other receivables | 275 | 827 |
| Inventories | 229 | 470 |
| Trade and other payables | (1 387) | (992) |
| Cash generated from operations | 477 | 1 720 |
| Income tax paid | (47) | (15) |
| Interest paid | (176) | (197) |
| Net cash generated from operating activities | 254 | 1 508 |
| Cash flows from investing activities | ||
| Purchase of other financial investments | 0 | (15) |
| Interest received | 2 | 0 |
| Purchase of property, plant and equipment | (175) | (172) |
| Proceeds from sale of property, plant and equipment | 4 | 3 |
| Loans granted | (20) | (2) |
| Loan repayments received | 1 | 2 |
| Net cash generated from investing activities | (188) | (184) |
| Cash flows from financing activities | ||
| Finance lease repayments made | (18) | 0 |
| Change in use of overdraft | 0 | (745) |
| Repayments of borrowings | (914) | (894) |
| Net cash used in financing activities | (932) | (1 639) |
| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | (866) | (315) |
| Cash and cash equivalents at the beginning of the period | 2 111 | 1 193 |
| Cash and cash equivalents at the end of the period | 1 245 | 877 |
Additional information:
Gunnar Kobin
Chairman of the Management Board
GSM: +372 5188111
e-mail: gunnar@egrupp.ee
