Tallinn, Estonia, 2016-07-29 08:44 CEST (GLOBE NEWSWIRE) --
In the second quarter of 2016, the revenue of the Group increased 3% as compared to the year before amounting to EUR 16.5 million. Considering only the Group’s core business and excluding the revenue earned from the Titanic exhibition, the revenue increased even more impressively by 6%. Revenue grew both in the media and printing services segments. In comparison with the forecast, the actual result was 2% lower, mainly in the printing services segment that continues to be influenced by strong price competition in Scandinavia caused by sanctions imposed against Russia. In the second quarter, the Group’s EBITDA increased 57% year on year, totalling EUR 2.3 million. Including elimination of the loss of EUR 1.1 million in connection with the Titanic exhibition, our profit in the core business was 11% lower than a year earlier and 12% lower than our forecast. The decrease in core business’ EBITDA and net profit by EUR 0.3 million in a year are mainly attributable to the decision to deliberately increase the cost basis in the highly competitive media segment, lower page prices in advertising and strong price pressure in the printing services segment. The above figures include all our joint ventures (AS SL Õhtuleht, AS Ajakirjade Kirjastus and AS Express Post) consolidated 50% line-by-line.
In the second quarter revenue in the media segment amounted to EUR 11.2 million and increased 7% year on year, whereas revenue from digital and online channels increased 15%. EBITDA totalled EUR 1.4 million, decreasing 12% or by approximately EUR 0.2 million compared to the second quarter of 2015. In the second quarter, Delfi Lithuania increased advertising revenue by 8% and EBITDA by 15% as compared to the year earlier, but the shortfall of the first quarter was not yet offset fully. In the second quarter, online advertising revenue grew strongly by 15%, but the Lithuanian magazine market continues to shrink. During the quarter, Ekspress Meedia posted strong growth in advertising sales in both online (16%) and in print (3%). The latter figure is significant, especially when taking into consideration the overall negative trend in the print market. This was achieved as a result of strong and efficient sales team, the increasingly versatile portfolio and innovative approach to advertising products and activities in the sales department. Subscription and retail sales revenue were both up by 3%, despite decreasing circulations. The decrease of EBITDA by EUR 0.3 million was attributable mainly to additional marketing costs of the new LP book series (last year’s advertising costs related to Maaleht book series were recognised in the first quarter), increased personnel and growth in printing and delivery costs resulting from growth in advertising volumes. Of various projects, one should mention the arrangement of the historic basketball game Kalev25 that was sold out and that was viewed by a record number of people via Delfi TV. Ekspress Meedia also signed a new contract with the Estonian Basketball Federation, under which Delfi was granted three-year exclusive rights for web broadcasts. The Latvian Internet market has also shown good growth this year and in the second quarter Delfi Latvia increased its revenue by 14%. The competition situation between Internet portals remains tough which forces to continue investments in strong editorial offices. Despite that, Delfi Latvia managed to increase EBITDA 40% up to EUR 0.1 million in the second quarter.
The priority in the media segment continues to be innovation in developing different products and technical platforms. In all three countries, several new topical portals were launched, various new multimedia projects carried out, e-commerce services developed, and various advertising sales channels and solutions specific to target groups developed. Activities in social media also continue.
The revenue and profit growth of Ajakirjade Kirjastus 12% and 23%, respectively, were mainly attributable to the increase of our product portfolio. At the beginning of April, the company acquired from OÜ Presshouse Estonian largest women’s weekly magazine Naisteleht, as well as the rights and obligations related to the publication of magazines Nipiraamat and Müstiline Ajalugu. As a result of the transaction, existing magazine Naised and new acquired Naisteleht were merged and reached significant synergy that has enabled to increase both revenue and profit.
In the second quarter, SL Õhtuleht increased its revenue 6%. The growth was attributable to advertising revenue, circulation sales revenue and new projects. The book about Estonian football player Raio Piiroja and the magazine dedicated to the UEFA European Championships were published. Structural changes in the advertising department have had a particularly good impact on the print advertising sale. In May and June, advertising sales of Õhtuleht increased 5% and in May Linnaleht posted the best revenue of recent six years. Web advertising sales are growing at similar pace as print advertising. May was record month in web advertising sales of Õhtuleht. The number of digital subscribers has doubled since beginning of the year.
The printing segment has managed to halt the decrease of revenue and profit from last year. While in the first quarter the result was similar to the period a year earlier, the second-quarter revenue already increased 4%. While growth in the amount of orders and work volume was positive, continued price pressure does not allow revenue to increase at the same rate. In addition to competition in the export markets, Printall’s print prices outside of euro-zone are negatively affected also by the strengthening of the euro. For us, the positive news has been the closure of printing houses in the first half of 2016 and the decrease in capacities on the Scandinavian print market as this is already having an impact in the more stable and improved price levels. Thanks to consistent sales work, we have attained new products and customers in Scandinavia. Awareness about Printall is also growing in other printing sectors than newspapers and magazines. The objective is to further expand from periodicals to the B2B segment that produces for own use product catalogues and other specific products that are suitable for our sheet-fed machines. The 10% decrease in EBITDA is attributable to the growth in labour costs resulting from increased volumes and, in particular, growth in salaries of lower-level positions.
In July, we signed a contract to acquire 50% holding in OÜ Linna Ekraanid, which is engaged in the sale of digital outdoor advertising in Estonia. In the second quarter of 2019, AS Ekspress Grupp will acquire the remaining 50% of the shares of OÜ Linna Ekraanid and thereby will become the company’s sole shareholder.
The purpose of the acquisition is to create preconditions for the Group to set off a new business line and thereby expand the Group’s portfolio of business areas. The objective of AS Ekspress Grupp is to develop the business line of digital outdoor advertising in all three Baltic countries and take the leading role in this business segment.
The financial position of the Group remains strong, the ratio of total debt and EBITDA is already approaching 2.0 and the debt service coverage ratio is almost 2.4.
Our outlook for the next quarter and the whole year remains modest. However, we expect the online media and print media to continue stable growth and the printing services segment to recover. We believe that the second half will be more positive than the start of the year. In the third quarter we expect the revenue of our core business to grow approximately 8% and EBITDA to remain on last year’s level.
Our mission 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) |
Q2 2016 | Q2 2015 | Change % | Q2 2014 |
Q2 2013 |
Q2 2012 |
| For the period | ||||||
| Sales | 16 545 | 15 998 | 3% | 16 007 | 15 115 | 15 763 |
| EBITDA | 2 332 | 1 488 | 57% | 2 935 | 2 384 | 2 525 |
| EBITDA margin (%) | 14.1% | 9.3% | 18.3% | 15.8% | 16.0% | |
| Operating profit | 1 546 | 745 | 107% | 2 180 | 1 742 | 1 670 |
| Operating margin (%) | 9.3% | 4.7% | 13.6% | 11.5% | 10.6% | |
| Interest expenses | (134) | (146) | 8% | (181) | (178) | (553) |
| Net profit /(loss) for the period | 1 324 | 481 | 175% | 1 858 | 1 398 | 972 |
| Net margin (%) | 8.0% | 3.0% | 11.6% | 9.3% | 6.2% | |
| Return on assets ROA (%) | 1.7% | 0.6% | 2.4% | 1.8% | 1.1% | |
| Return on equity ROE (%) | 2.7% | 1.0% | 4.3% | 3.3% | 2.5% | |
| Earnings per share (EPS) | 0.05 | 0.02 | 0.06 | 0.05 | 0.03 |
| Performance indicators – joint ventures consolidated 50% (EUR thousand) | 1st Half year 2016 | 1st Half year 2015 | Change % | 1st Half year 2014 |
1st Half year 2013 |
1st Half year 2012 |
| For the period | ||||||
| Sales | 30 947 | 30 178 | 3% | 30 773 | 28 925 | 29 982 |
| EBITDA | 3 574 | 3 005 | 19% | 4 389 | 3 888 | 4 140 |
| EBITDA margin (%) | 11.5% | 10.0% | 14.3% | 13.4% | 13.8% | |
| Operating profit | 2 022 | 1 507 | 34% | 2 871 | 2 582 | 2 426 |
| Operating margin (%) | 6.5% | 5.0% | 9.3% | 8.9% | 8.1% | |
| Interest expenses | (269) | (320) | 16% | (357) | (374) | (1 041) |
| Net profit /(loss) for the period | 1 636 | 1 037 | 58% | 2 361 | 2 036 | 1 151 |
| Net margin (%) | 5.3% | 3.4% | 7.7% | 7.0% | 3.8% | |
| Return on assets ROA (%) | 2.1% | 1.3% | 3.1% | 2.6% | 1.3% | |
| Return on equity ROE (%) | 3.4% | 2.2% | 5.5% | 4.9% | 3.1% | |
| Earnings per share (EPS) | 0.06 | 0.03 | 0.08 | 0.07 | 0.04 |
| Balance sheet – joint ventures 50% consolidated (EUR thousand) | 30.06.2016 | 31.12.2015 | Change % | |
| As of the end of the period | ||||
| Current assets | 16 019 | 15 553 | 3% | |
| Non-current assets | 60 792 | 61 588 | -1% | |
| Total assets | 76 811 | 77 141 | 0% | |
| incl. cash and bank | 4 858 | 4 666 | 4% | |
| incl. goodwill | 38 232 | 38 232 | 0% | |
| Current liabilities | 13 367 | 12 539 | 7% | |
| Non-current liabilities | 15 209 | 15 928 | -5% | |
| Total liabilities | 28 576 | 28 467 | 0% | |
| incl. borrowings | 17 520 | 18 787 | -7% | |
| Equity | 48 235 | 48 674 | -1% | |
| Financial ratios (%) – joint ventures consolidated 50% | 30.06.2016 | 31.12.2015 |
| Equity ratio (%) | 63% | 63% |
| Debt to equity ratio (%) | 36% | 39% |
| Debt to capital ratio (%) | 21% | 22% |
| Total debt /EBITDA ratio | 2.08 | 2.39 |
| Debt service coverage ratio | 2.39 | 1.79 |
| Liquidity ratio | 1.20 | 1.24 |
FINANCIAL INDICATORS AND RATIOS – joint ventures recognised under the equity method
| Performance indicators – joint ventures under the equity method (EUR thousand) | Q2 2016 |
Q2 2015 |
Change % |
Q2 2014 |
Q2 2013 |
Q2 2012 |
| For the period | ||||||
| Sales (only subsidiaries) | 14 120 | 13 765 | 3% | 13 764 | 12 998 | 13 570 |
| EBITDA (only subsidiaries) | 1 962 | 1 113 | 76% | 2 664 | 2 196 | 2 345 |
| EBITDA margin (%) | 13.9% | 8.1% | 19.4% | 16.9% | 17.3% | |
| Operating profit (only subsidiaries) | 1 249 | 429 | 191% | 1 936 | 1 576 | 1 516 |
| Operating margin (%) | 8.8% | 3.1% | 14.1% | 12.1% | 11.2% | |
| Interest expenses (only subsidiaries) | (121) | (130) | 7% | (181) | (178) | (553) |
| Profit of joint ventures by equity method | 224 | 225 | -1% | 190 | 82 | 64 |
| Net profit for the period | 1 324 | 481 | 175% | 1 858 | 1 398 | 972 |
| Net margin (%) | 9.4% | 3.5% | 13.5% | 10.8% | 7.2% | |
| Return on assets ROA (%) | 1.8% | 0.6% | 2.5% | 1.8% | 1.2% | |
| Return on equity ROE (%) | 2.7% | 1.0% | 4.2% | 3.3% | 2.5% | |
| Earnings per share (EPS) | 0.05 | 0.02 | 0.06 | 0.05 | 0.03 |
| Performance indicators – joint ventures under equity method (EUR thousand) | 1st Half year 2016 | 1st Half year 2015 | Change % |
1st Half year 2014 |
1st Half year 2013 |
1st Half year 2012 |
| For the period | ||||||
| Sales (only subsidiaries) | 26 375 | 25 858 | 2% | 26 498 | 24 811 | 25 748 |
| EBITDA (only subsidiaries) | 2 987 | 2 351 | 27% | 3 993 | 3 612 | 3 893 |
| EBITDA margin (%) | 11.3% | 9.1% | 15.1% | 14.6% | 15.1% | |
| Operating profit (only subsidiaries) | 1 573 | 972 | 62% | 2 529 | 2 354 | 2 236 |
| Operating margin (%) | 6.0% | 3.8% | 9.5% | 9.5% | 8.7% | |
| Interest expenses (only subsidiaries) | (241) | (285) | 15% | (357) | (374) | (1 042) |
| Profit of joint ventures by equity method | 356 | 419 | -15% | 288 | 146 | 104 |
| Net profit for the period | 1 636 | 1 037 | 58% | 2 361 | 2 036 | 1 151 |
| Net margin (%) | 6.2% | 4.0% | 8.9% | 8.2% | 4.5% | |
| Return on assets ROA (%) | 2.2% | 1.4% | 3.2% | 2.7% | 1.5% | |
| Return on equity ROE (%) | 3.4% | 2.2% | 5.5% | 4.9% | 3.0% | |
| Earnings per share (EPS) | 0.06 | 0.03 | 0.08 | 0.07 | 0.04 |
|
Balance sheet– joint ventures under equity method (EUR thousand) |
30.06.2016 | 31.12.2015 | Change % |
| As of the end of the period | |||
| Current assets | 13 402 | 12 386 | 8% |
| Non-current assets | 59 917 | 60 794 | -1% |
| Total assets | 73 319 | 73 180 | 0% |
| incl. cash and bank | 3 663 | 2 927 | 25% |
| incl. goodwill | 36 953 | 36 953 | 0% |
| Current liabilities | 10 718 | 9 033 | 19% |
| Non-current liabilities | 14 367 | 15 473 | -7% |
| Total liabilities | 25 085 | 24 506 | 2% |
| incl. borrowings | 16 570 | 17 687 | -6% |
| Equity | 48 235 | 48 674 | -1% |
| Financial ratios (%) – joint ventures by equity method | 30.06.2016 | 31.12.2015 |
| Equity ratio (%) | 66% | 67% |
| Debt to equity ratio (%) | 34% | 36% |
| Debt to capital ratio (%) | 21% | 23% |
| Total debt /EBITDA ratio | 2.26 | 2.65 |
| Debt service coverage ratio | 2.30 | 1.67 |
| Liquidity ratio | 1.25 | 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 (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. 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 sales 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 |
| 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. Last year, 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 Q2 2012-2016
| (EUR thousand) | Sales | Sales | ||||
|
Q2 2016 |
Q2 2015 |
Change % |
Q2 2014 |
Q2 2013 |
Q2 2012 |
|
| media segment (by equity method) | 8 511 | 7 984 | 7% | 7 492 | 6 751 | 7 040 |
| incl. revenue from all digital and online channels | 4 740 | 4 116 | 15% | 3 730 | 3 257 | 2 984 |
| printing services segment | 6 663 | 6 386 | 4% | 7 210 | 7 131 | 7 482 |
| entertainment segment | - | 392 | - | - | - | - |
| corporate functions | 593 | 488 | 22% | 423 | 385 | 279 |
| intersegment eliminations | (1 648) | (1 485) | (1 361) | (1 270) | (1 231) | |
| TOTAL GROUP by equity method | 14 120 | 13 765 | 3% | 13 764 | 12 998 | 13 570 |
| media segment by proportional consolidation | 11 231 | 10 507 | 7% | 9 950 | 9 082 | 9 443 |
| incl. revenue from all digital and online channels | 5 067 | 4 400 | 15% | 3 963 | 3 422 | 3 158 |
| printing services segment | 6 663 | 6 386 | 4% | 7 210 | 7 131 | 7 482 |
| entertainment segment | - | 392 | - | - | - | - |
| corporate functions | 593 | 488 | 22% | 423 | 385 | 279 |
| intersegment eliminations | (1 943) | (1 775) | (1 576) | (1 483) | (1 441) | |
| TOTAL GROUP by proportional consolidation | 16 545 | 15 998 | 3% | 16 007 | 15 115 | 15 763 |
| (EUR thousand) | EBITDA | EBITDA | ||||
|
Q2 2016 |
Q2 2015 |
Change % |
Q2 2014 |
Q2 2013 |
Q2 2012 |
|
| media segment by equity method | 1 059 | 1 256 | -16% | 1 261 | 800 | 956 |
| media segment by proportional consolidation | 1 430 | 1 631 | -12% | 1 532 | 989 | 1 138 |
| printing services segment | 1 148 | 1 271 | -10% | 1 537 | 1 599 | 1 563 |
| entertainment segment | - | (1 129) | - | - | - | - |
| corporate functions | (246) | (285) | 14% | (134) | (204) | (175) |
| intersegment eliminations | 0 | 0 | 0 | 1 | 1 | |
| TOTAL GROUP by equity method | 1 962 | 1 113 | 76% | 2 664 | 2 196 | 2 345 |
| TOTAL GROUP by proportional consolidation | 2 332 | 1 488 | 57% | 2 935 | 2 384 | 2 525 |
| EBITDA margin |
Q2 2016 |
Q2 2015 |
Q2 2014 |
Q2 2013 |
Q2 2012 |
| media segment by equity method | 12% | 16% | 17% | 12% | 14% |
| media segment by proportional consolidation | 13% | 16% | 15% | 11% | 12% |
| printing services segment | 17% | 20% | 21% | 22% | 21% |
| TOTAL GROUP by equity method | 14% | 8% | 19% | 17% | 17% |
| TOTAL GROUP by proportional consolidation | 14% | 9% | 18% | 16% | 16% |
Key financial data of the segments in the first half-year 2012-2016
| (EUR thousand) | Sales | Sales | ||||
|
1st Half year 2016 |
1st Half year 2015 |
Change % |
1st Half year 2014 |
1st Half year 2013 |
1st Half year 2012 | |
| media segment (by equity method) | 15 282 | 14 565 | 5% | 13 906 | 12 674 | 12 673 |
| incl. revenue from all digital and online channels | 8 298 | 7 466 | 11% | 6 517 | 5 727 | 5 217 |
| printing services segment | 13 004 | 12 704 | 2% | 14 272 | 13 749 | 14 858 |
| entertainment segment | - | 453 | - | - | - | - |
| corporate functions | 1 132 | 960 | 18% | 844 | 740 | 420 |
| intersegment eliminations | (3 043) | (2 823) | (2 524) | (2 353) | (2 202) | |
| TOTAL GROUP by equity method | 26 375 | 25 858 | 2% | 26 498 | 24 811 | 25 748 |
| media segment by proportional consolidation | 20 428 | 19 469 | 5% | 18 588 | 17 044 | 16 300 |
| incl. revenue from all digital and online channels | 8 906 | 7 966 | 12% | 6 949 | 6 022 | 5 528 |
| printing services segment | 13 004 | 12 704 | 2% | 14 272 | 13 749 | 14 858 |
| entertainment segment | - | 453 | - | - | - | - |
| corporate functions | 1 132 | 960 | 18% | 844 | 740 | 420 |
| intersegment eliminations | (3 617) | (3 408) | (2 931) | (2 752) | (2 608) | |
| TOTAL GROUP by proportional consolidation | 30 947 | 30 178 | 3% | 30 773 | 28 925 | 29 982 |
| (EUR thousand) | EBITDA | EBITDA | ||||
|
1st Half year 2016 |
1st Half year 2015 | Change % |
1st Half year 2014 |
1st Half year 2013 |
1st Half year 2012 | |
| media segment by equity method | 1 094 | 1 535 | -29% | 1 599 | 1 007 | 1 148 |
| media segment by proportional consolidation | 1 681 | 2 189 | -23% | 1 997 | 1 283 | 1 397 |
| printing services segment | 2 330 | 2 432 | -4% | 2 995 | 3 013 | 3 093 |
| entertainment segment | (1) | (1 105) | 100% | 0 | 0 | 0 |
| corporate functions | (436) | (511) | 15% | (601) | (410) | (349) |
| intersegment eliminations | 0 | 0 | 0 | 2 | 1 | |
| TOTAL GROUP by equity method | 2 987 | 2 351 | 27% | 3 993 | 3 612 | 3 893 |
| TOTAL GROUP by proportional consolidation | 3 574 | 3 005 | 19% | 4 389 | 3 888 | 4 140 |
| EBITDA margin |
1st Half year 2016 |
1st Half year 2015 |
1st Half year 2014 |
1st Half year 2013 |
1st Half year 2012 |
| media segment by equity method | 7% | 11% | 12% | 8% | 9% |
| media segment by proportional consolidation | 8% | 11% | 11% | 8% | 9% |
| printing services segment | 18% | 19% | 21% | 22% | 21% |
| TOTAL GROUP by equity method | 11% | 9% | 15% | 15% | 15% |
| TOTAL GROUP by proportional consolidation | 12% | 10% | 14% | 13% | 14% |
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 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 and home delivery company AS Express Post.
The entities’ EBITDA is presented before the trademark royalty fees that were paid to the direct parent company Delfi Holding until April 2015. In May 2015, Delfi group was restructured to better reflect the management structure that had changed over the years and as a consequence of which Delfi’s local companies are directly owned by AS Ekspress Grupp.
In July 2015 AS Delfi and newspaper publisher AS Eesti Ajalehed were merged in Estonia. New company continued to operate under name of AS Ekspress Meedia. In 2014, Delfi UAB and magazine publisher Ekspress Leidyba UAB were merged in Lithuania.
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 | AS SL Õhtuleht | www.ohtuleht.ee |
| ru.delfi.lt |
www.vecherka.ee |
| (EUR thousand) | Sales | ||
| Q2 2016 | Q2 2015 | Change % | |
| Ekspress Meedia AS (Delfi Eesti + Eesti Ajalehed) | 5 218 | 5 008 | 4% |
| incl. Delfi Estonia online revenue | 1 906 | 1 647 | 16% |
| Delfi Latvia | 893 | 785 | 14% |
| Delfi Lithuania (incl. Ekspress Leidyba) | 2 305 | 2 136 | 8% |
| incl. Delfi Lithuania online revenue | 1 819 | 1 578 | 15% |
| OÜ Hea Lugu | 97 | 124 | -22% |
| OÜ Zave Media | 0 | 0 | - |
| Other companies (Delfi Holding) | 0 | 0 | - |
| Intersegment eliminations | (2) | (69) | |
| TOTAL subsidiaries | 8 511 | 7 984 | 7% |
| AS SL Õhtuleht* | 1 134 | 1 074 | 6% |
| AS Ajakirjade Kirjastus* | 1 218 | 1 088 | 12% |
| AS Express Post* | 680 | 626 | 9% |
| Intersegment eliminations | (312) | (265) | |
| TOTAL joint ventures | 2 720 | 2 523 | 8% |
| TOTAL segment by proportional consolidation | 11 231 | 10 507 | 7% |
| (EUR thousand) | EBITDA | ||
| Q2 2016 | Q2 2015 | Change % | |
| Ekspress Meedia AS (Delfi Eesti + Eesti Ajalehed) | 479 | 743 | -36% |
| Delfi Latvia | 95 | 68 | 40% |
| Delfi Lithuania (incl. Ekspress Leidyba) | 505 | 440 | 15% |
| OÜ Hea Lugu | (9) | 6 | -250% |
| OÜ Zave Media | (10) | 0 | - |
| Other companies (Delfi Holding) | (1) | (1) | 0% |
| Intersegment eliminations | (0) | (0) | |
| TOTAL subsidiaries | 1 059 | 1 256 | -16% |
| AS SL Õhtuleht* | 150 | 166 | -10% |
| AS Ajakirjade Kirjastus* | 157 | 127 | 23% |
| AS Express Post* | 64 | 82 | -21% |
| Intersegment eliminations | (0) | (0) | |
| TOTAL joint ventures | 371 | 375 | -1% |
| TOTAL segment by proportional consolidation | 1 430 | 1 631 | -12% |
| (EUR thousand) | Sales | ||
| 1st Half year 2016 | 1st Half year 2015 | Change % | |
| Ekspress Meedia AS (Delfi Eesti + Eesti Ajalehed) | 9 430 | 9 118 | 3% |
| incl. Delfi Estonia online revenue | 3 342 | 3 005 | 11% |
| Delfi Latvia | 1 627 | 1 460 | 11% |
| Delfi Lithuania (incl. Ekspress Leidyba) | 4 026 | 3 875 | 4% |
| incl. Delfi Lithuania online revenue | 3 061 | 2 787 | 10% |
| OÜ Hea Lugu | 201 | 241 | -17% |
| OÜ Zave Media | 1 | 0 | - |
| Other companies (Delfi Holding) | 0 | 0 | - |
| Intersegment eliminations | (3) | (129) | |
| TOTAL subsidiaries | 15 282 | 14 565 | 5% |
| AS SL Õhtuleht* | 2 162 | 2 088 | 4% |
| AS Ajakirjade Kirjastus* | 2 259 | 2 106 | 7% |
| AS Express Post* | 1 321 | 1 264 | 4% |
| Intersegment eliminations | (596) | (554) | |
| TOTAL joint ventures | 5 146 | 4 904 | 5% |
| TOTAL segment by proportional consolidation | 20 428 | 19 469 | 5% |
| (EUR thousand) | EBITDA | ||
| 1st Half year 2016 | 1st Half year 2015 | Change % | |
| Ekspress Meedia AS (Delfi Eesti + Eesti Ajalehed) | 677 | 861 | -21% |
| Delfi Latvia | 92 | 111 | -17% |
| Delfi Lithuania (incl. Ekspress Leidyba) | 402 | 556 | -28% |
| OÜ Hea Lugu | (17) | 11 | -255% |
| OÜ Zave Media | (60) | 0 | - |
| Other companies (Delfi Holding) | (1) | (4) | 75% |
| Intersegment eliminations | 1 | (0) | |
| TOTAL subsidiaries | 1 094 | 1 535 | -29% |
| AS SL Õhtuleht* | 247 | 284 | -13% |
| AS Ajakirjade Kirjastus* | 203 | 200 | 2% |
| AS Express Post* | 137 | 170 | -19% |
| Intersegment eliminations | (0) | (0) | |
| TOTAL joint ventures | 587 | 654 | -10% |
| TOTAL segment by proportional consolidation | 1 681 | 2 189 | -23% |
*Proportional share of joint ventures
DELFI and related products
As a market leader Delfi continues to invest into new technologies and IT solutions to improve user experience of its readers and advertisers. Last year, new Delfi mobile applications for both IOS and Android devices were launched, enabling to use more creative solutions in the mobile environment. Programmatic advertising sales will be further developed in all three countries. Delfi TV platforms will continue to be enhanced and developed. The clients of Levira and Starman in Estonia are now able to watch Delfi TV broadcasts and programmes on television screens.
Starting from this year, our advertising sales departments are offering in addition to online advertising in our own portals also 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.
In Lithuania, Delfi was the first publisher that introduced Facebook messenger bots. Bot covered the whole information need and provided reminders in connection with the UEFA European Championship including the schedule, team rosters, results, news, etc. Delfi was also the first in Lithuania to use Facebook Live streaming. The solution to use Facebook Instant Article was completed and preparations are underway to launch AdFree Delfi in all Baltic countries.
The range of vertical products continues to expand. In the second quarter, Delfi launched in Latvia two video sub-verticals www.retvplay.lv and www.360play.lv. In Lithuania, in cooperation with the Lithuanian Marketing Association (LiMA), a new unique website for marketing professionals was launched aimed at promoting communication between them. As a new e-commerce service, www.spetsialist.ee was launched in Estonia that accumulates and mediates jobseekers and people looking for handymen.
In all three Baltic countries the focus is on writing more long-read analytical articles in order to increase the value of Delfi to users. In Estonia this has been provided in co-operation with editorial teams of our daily and weekly newspapers Eesti Päevaleht, Eesti Ekspress and Maaleht. In the second quarter, an interactive multimedia project was presented in all Baltic countries that was dedicated to the 30th anniversary of the Chernobyl nuclear disaster. In Latvia, there was a longer project about Positivus music festival.
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 2015-2016
In the first quarter of 2016, Postimees merged two classified portals www.kv.ee and www.osta.ee owned by Eesti Meedia into its postimees.ee domain. This increased the number of users of Postimees.ee by 17%. In the second quarter of 2016, the gap decreased to the minimum and the number of users of Delfi.ee and Postimees.ee are nearly the same. It was the second quarter in a row when the number of mobile users in Estonia was decreasing.
During 2016, the methodology of the online readership survey in Estonia, Latvia and Lithuania will change, as a result of which the readership of mobile devices and tablet PCs will be added to the above readership of computer users.
Latvian online readership 2015-2016
Since at the beginning of 2016 Gemius changed its method of online survey, the online readership figure decreased in February. This figure shows only the online readership of PC users. Inbox.lv remains Latvia’s largest portal among PC users. Delfi.lv has increased its lead over tvnet.lv. The local social network draugiem.lv steadily continues to lose users to Facebook. As in other Baltic countries, the main competition in Latvia is for attracting new mobile users. In the second quarter, there were no significant changes in the competition of the three largest portals.
Lithuanian online readership 2015-2016
Delfi.lt remains Lithuania’s largest online portal. In the second quarter 2016, there were no major changes in the preferences of online users in Lithuania. 15min.lt has somewhat lost readership, especially in the recent month. As in other markets, development and marketing activities in Lithuania are focused on increasing the number of mobile users. In this segment, Delfi has notably increased its readership.
Print media in Estonia
Estonian newspaper circulation 2015-2016
Circulations of newspapers in Estonia have been falling moderately in the long run. In this respect, 2015 was a pleasant exception since newspaper circulations stabilized. We will probably see similar trends in 2016 – the first half of the year has been quite stable in comparison with earlier periods.
One also needs to add to the above readership the number of subscribers of digital newspapers. At the end of the second quarter 2016, Eesti Päevaleht had ca 18 thousand subscribers, Eesti Ekspress ca 9 thousand and Maaleht ca 6 thousand.
Estonian newspaper readership 2015-2016
Similarly with the circulation of newspapers, the readership of publications also remained relatively stable in the second quarter of 2016. As compared to the second quarter 2015, readership of Eesti Ekspress and Eesti Päevaleht increased, while that of Postimees and Õhtuleht decreased. As this survey does not cover the readership of digital newspapers, it does not represent the complete readership. The number of digital subscriptions of periodicals of the Ekspress Group amounts to ca 30 thousand. Increasing the readership of digital newspapers remains the main task for the Group’s publications.
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. The new printing machine installed in 2015 has enabled us to further expand the range of printed products.
| (EUR thousand) | Sales | ||
|
Q2 2016 |
Q2 2015 |
Change % |
|
| AS Printall | 6 663 | 6 386 | 4% |
| (EUR thousand) | EBITDA | ||
|
Q2 2016 |
Q2 2015 |
Change % | |
| AS Printall | 1 148 | 1 271 | -10% |
| (EUR thousand) | Sales | ||
|
1st Half year 2016 |
1st Half year 2015 |
Change % |
|
| AS Printall | 13 004 | 12 704 | 2% |
| (EUR thousand) | EBITDA | ||
|
1st Half year 2016 |
1st Half year 2015 |
Change % | |
| AS Printall | 2 330 | 2 432 | -4% |
The printing services segment continues to be negatively impacted by to the economic sanctions imposed to Russia, the negative impact of which on the Scandinavian printing industry also impacts us. 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 appreciating paper prices. The sales keep increasing, however the profit margin continues to fall due to lower prices.
Printing services and the environment
In addition to its very strong financial position, Printall also focuses on environmentally conscious production. Printall has been 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) | 30.06.2016 | 31.12.2015 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 3 658 | 2 927 |
| Term deposits | 5 | 0 |
| Trade and other receivables | 7 226 | 6 741 |
| Corporate income tax prepayment | 78 | 0 |
| Inventories | 2 435 | 2 718 |
| Total current assets | 13 402 | 12 386 |
| Non-current assets | ||
| Trade and other receivables | 1 144 | 1 149 |
| Deferred tax asset | 42 | 42 |
| Investments in joint ventures | 1 151 | 1 007 |
| Investments in associates | 206 | 215 |
| Property, plant and equipment | 13 035 | 13 791 |
| Intangible assets | 44 339 | 44 590 |
| Total non-current assets | 59 917 | 60 794 |
| TOTAL ASSETS | 73 320 | 73 180 |
| LIABILITIES | ||
| Current liabilities | ||
| Borrowings | 2 229 | 2 240 |
| Trade and other payables | 8 426 | 6 679 |
| Corporate income tax payable | 63 | 114 |
| Total current liabilities | 10 718 | 9 033 |
| Non-current liabilities | ||
| Long-term borrowings | 14 341 | 15 447 |
| Deferred tax liability | 26 | 26 |
| Total non-current liabilities | 14 367 | 15 473 |
| TOTAL LIABILITIES | 25 085 | 24 506 |
| EQUITY | ||
| Share capital | 17 878 | 17 878 |
| Share premium | 14 277 | 14 277 |
| Treasury shares | (863) | (176) |
| Reserves | 1 990 | 1 787 |
| Retained earnings | 14 953 | 14 908 |
| TOTAL EQUITY | 48 235 | 48 674 |
| TOTAL LIABILITIES AND EQUITY | 73 320 | 73 180 |
Consolidated statement of comprehensive income (unaudited)
| (EUR thousand) | Q2 2016 | Q2 2015 | 1st Half year 2016 | 1st Half year 2015 |
| Sales revenue | 14 120 | 13 765 | 26 375 | 25 857 |
| Cost of sales | (10 947) | (11 550) | (21 146) | (21 344) |
| Gross profit | 3 173 | 2 215 | 5 229 | 4 513 |
| Other income | 123 | 138 | 236 | 246 |
| Marketing expenses | (684) | (579) | (1 201) | (1 132) |
| Administrative expenses | (1 340) | (1 314) | (2 649) | (2 603) |
| Other expenses | (23) | (31) | (42) | (52) |
| Operating profit | 1 249 | 429 | 1 573 | 972 |
| Interest income | 10 | 11 | 19 | 22 |
| Interest expense | (121) | (130) | (241) | (285) |
| Other finance costs | (18) | (19) | (33) | (34) |
| Net finance cost | (129) | (138) | (255) | (297) |
| Profit on shares of joint ventures | 224 | 225 | 356 | 419 |
| Profit from shares of associates | 34 | 24 | 16 | 9 |
| Profit before income tax | 1 378 | 540 | 1 690 | 1 103 |
| Income tax expense | (54) | (59) | (54) | (66) |
| Net profit for the reporting period | 1 324 | 481 | 1 636 | 1 037 |
| Net profit for the reporting period attributable to: | ||||
| Equity holders of the parent company | 1 324 | 481 | 1 636 | 1 037 |
| Other comprehensive income | 0 | 0 | 0 | 0 |
| Total comprehensive income | 1 324 | 481 | 1 636 | 1 037 |
| Attributable to equity holders of the parent company | 1 324 | 481 | 1 636 | 1 037 |
| Basic and diluted earnings per share | 0.05 | 0.02 | 0.06 | 0.03 |
Consolidated cash flow statement (unaudited)
| (EUR thousand) | 1st Half year 2016 | 1st Half year 2015 |
| Cash flows from operating activities | ||
| Operating profit for the reporting year | 1 573 | 972 |
| Adjustments for: | ||
| Depreciation, amortisation and impairment | 1 413 | 1 379 |
| (Gain)/loss on sale and write-down of property, plant and equipment | (11) | (3) |
| Change in value of share option | 68 | 64 |
| Cash flows from operating activities: | ||
| Trade and other receivables | (497) | 170 |
| Inventories | 282 | 31 |
| Trade and other payables | 262 | 521 |
| Cash generated from operations | 3 090 | 3 134 |
| Income tax paid | (184) | (66) |
| Interest paid | (241) | (285) |
| Net cash generated from operating activities | 2 665 | 2 783 |
| Cash flows from investing activities | ||
| Term deposit release | 0 | 1 600 |
| Interest received | 19 | 33 |
| Purchase of property, plant and equipment | (407) | (457) |
| Proceeds from sale of property, plant and equipment | 16 | 16 |
| Loans granted | (9) | 0 |
| Loan repayments received | 9 | 73 |
| Net cash used in investing activities | (372) | 1 254 |
| Cash flows from financing activities | ||
| Dividends received from joint ventures | 246 | 278 |
| Finance lease repayments | (42) | (40) |
| Change in use of overdraft | 0 | (1 117) |
| Loan received | 11 | 0 |
| Repayments of bank loans | (1 086) | (3 458) |
| Purchase of treasury shares | (687) | (81) |
| Net cash used in financing activities | (1 557) | (4 419) |
| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | 736 | (382) |
| Cash and cash equivalents at the beginning of the year | 2 927 | 3 656 |
| Cash and cash equivalents at the end of the year | 3 663 | 3 274 |
Additional information:
Gunnar Kobin
Chairman of the Management Board
GSM: +372 5188111
e-mail: gunnar@egrupp.ee
