AS Ekspress Grupp: Consolidated Interim Report for the third quarter and 9-months of 2016


Tallinn, Estonia, 2016-10-31 15:09 CET (GLOBE NEWSWIRE) --  

In the third quarter of 2016, the revenue of the Group increased 2% as compared to the same period year before, amounting to EUR 14.4 million. The revenue of the media segment increased 6%, whereas the revenue of digital and online channels was up significantly, by 12%, as compared to the third quarter in  previous year. It’s impressive considering the tough situation of the media market in all countries. Another positive result was that actual revenue of the media segment exceeded the forecast by 1%. The segment of printing services remains under pressure because of the market situation and strong price competition. Production volumes have increased, but the third-quarter revenue was 2% lower as compared to the year before and ca 11% lower than the forecast. The Group’s EBITDA amounted to EUR 1.9 million, being 10% lower compared to the third quarter of 2015 and 8% lower than our most recent forecast. This was predominantly attributable to the lower EBITDA level of 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 third quarter the revenue of the media segment reached EUR 10 million, having increased 6% in a year, whereas revenue from digital and online channels was up 12%. EBITDA amounted to EUR 1.2 million, an increase of 1% as compared to the third quarter a year earlier.

 

In a pleasant surprise, Delfi Latvia increased its third-quarter revenue by 11% and EBITDA by 76%, although the competition situation between online portals is tough and the need to strengthen the editorial office remains continues. This secured to Delfi in the last eight months the largest Internet portal’s title in Latvia based on Gemius TOTAL Reach data. The company’s revenue reached EUR 751 thousand and EBITDA was EUR 58 thousand. In July we acquired in Latvia the leading classified portal in its niche - www.atverskapi.lv.

 

In the third quarter the revenue of Ekspress Meedia increased 5% and amounted to EUR 4.6 million. This includes 18% growth in online advertising sales and even 2% growth in print advertising. This was achieved mainly as a result of focusing on the efficiency of the sales team, the increasingly versatile portfolio and innovation. Subscriptions and retail sales revenue increased 1.3% compared to last year. We constantly invest in new products and IT solutions, which explains why third-quarter EBITDA was by EUR 0.3 million lower than a year earlier. The quarterly result was also affected by the allowance for receivables of a few problematic customers. The summer which is normally a quiet season featured several major projects including the European Football Championships, Rio Olympics and intense coverage of presidential elections. We started cooperation with the Tallinna Kalev/Cramo and BC Tartu basketball teams and are the streaming and advertising partners of both clubs. In August we launched a vertical www.homme.ee that is targeted at men. The vertical’s name is a reference to the French word „man“ and the former supplement of Eesti Ekspress. In September we launched the Family Package that enables subscribers to read 15 leading Estonian publications for a single monthly fee. Of developments, one should mention the ad-free Delfi solution for mobile phones where users can remove all ads from the Delfi environment for a monthly fee. During the summer nine magazine brands of joint venture Ajakirjade Kirjastus were helped to be turned into digital format. In addition, also the Maakodu magazine is now available in a digital format.

 

In the third quarter, Delfi Lithuania increased advertising sales by 8% and EBITDA by 52%. Total revenue was EUR 2 million and EBITDA was EUR 474 thousand. Online sales continues to grow, but magazine circulations, print advertising and content sales decrease at a stable rate.

 

The revenue and profit growth of Ajakirjade Kirjastus, 11% and 70% respectively, is mainly attributable to the expansion in our product portfolio in April when we acquired Estonian largest women’s weekly Naisteleht as well as magazines Nipiraamat and Müstiline Ajalugu. As a result of the transaction, we merged the newly acquired weekly Naisteleht with the existing magazine Naised and reached significant synergies, giving a boost to both revenue and profit. The third-quarter revenue of Ajakirjade Kirjastuse totalled EUR 1.1 million and EBITDA was EUR 0.2 million.

 

SL Õhtuleht increased its revenue, which exceeded of one million euros, 3% compared to the same period last year. Both advertising and content sales revenue increased. Õhtuleht remains the newspaper with the largest circulation in weekdays, the level of subscribers remains high and single-copy sales are higher than planned. The number of digital subscribers has tripled as compared to the start of the year. We have become more active in developing new products such as magazines and books. In September we posted the best web results in competition with large portals and are especially strong in the female target group. The new portal www.televeeb.ee has been successfully launched. Starting from June, the Russian-language news portal www.vecherka.ee  has been constantly half bigger than at the start of the year. We have invested considerably in advertising sales capacity. In August we launched a new mobile advertising engine and will shortly implement it also in the main web. Several experienced professionals have joined our sales team. The third-quarter EBITDA of SL Õhtuleht remained 27% below last year’s result.

The third quarter in the printing services segment was again complicated. While the revenue had increased in the previous quarter, it decreased 2% in the third quarter. The amount of orders and work volume keeps increasing, but price pressure is dampening revenue growth. The 16% decrease in EBITDA is attributable to the growth in labour costs resulting from increased volumes. The closure of several Scandinavian printing houses in the first half of 2016 did not ease the price pressure as much as expected.  As a new trend emerging in the market is that some Scandinavian printing houses have been able to continue operating with the assistance of state. In spite of the tough market situation, persistent and aggressive work has helped us to attract new products and customers in Scandinavia and improved also our price level. Albeit slowly, Printall is expanding its reputation into printing sectors outside periodicals. This enables to expand into B2B segment that requires product catalogues and other specific sales materials that are suitable for our sheet-fed printing machines. In the last year, Printall has been transforming from a large and elite printing plant to wide-based tool for promoting communication.

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 September we acquired 49% holding in Babahh Media OÜ which is engaged in the video production, media solutions and streaming related infrastructure sales in Estonia. In the second quarter of 2019 we will acquire the remaining 50% 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. With regard to Babahh Media OÜ, the Group has an option to acquire the additional ownership in Babahh Media OÜ in 2021, as a result AS Ekspress Grupp could increase its share holding in Babahh Media OÜ up to 70% in total. The purpose of the acquisition is to expand the business of AS Ekspress Grupp in the fast-growing market of online video production and video streaming.

The financial position of the Group remains strong, the ratio of total debt and EBITDA is approaching 2.0 and the debt service coverage ratio is almost 2.7.

 

Our outlook for the next quarter and the whole year has turned even more modest. However, we expect small growth in online media and the recovery of the printing services segment in fourth quarter which keeps our quarterly revenue and EBITDA on the same level as last year. The shortage from beginning of the year remains to be unreachable.  

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)
Q3
2016
Q3 2015 Change % Q3
2014
Q3
2013
Q3
2012
For the period            
Sales 14 437 14 169 2% 13 833 12 977 13 278
EBITDA 1 932 2 143 -10% 1 732 1 359 1 495
EBITDA margin (%) 13.4% 15.1%   12.5% 10.5% 11.3%
Operating profit 1 085 1 423 -24% 872 718 676
Operating margin (%) 7.5% 10.0%   6.3% 5.5% 5.1%
Interest expenses (125) (157) 20% (189) (204) (301)
Net profit /(loss) for the period* 902 1 210 -25% 644 455 263
Net margin (%)* 6.2% 8.5%   4.7% 3.5% 2.0%
Net profit for the period in the financial statements (incl. impairments and gain on change of ownership interest) 902 1 210 -25% 1 599 455 263
Net margin (%) 6.2% 8.5%   11.6% 3.5% 2.0%
Return on assets ROA (%) 1.2% 1.6%   2.1% 0.6% 0.3%
Return on equity ROE (%) 1.9% 2.5%   3.6% 1.1% 0.7%
Earnings per share (EPS) 0.03  0.04   0.05 0.02 0.01

 

 

 

Performance indicators – joint ventures
consolidated 50% (EUR thousand)
9 months 2016 9 months 2015 Change % 9 months 2014 9 months
2013
9 months
2012
For the period            
Sales 45 384 44 346 2% 44 606 41 901 43 260
EBITDA 5 507 5 148 7% 6 124 5 246 5 634
EBITDA margin (%) 12.1% 11.6%   13.7% 12.5% 13.0%
Operating profit 3 108 2 930 6% 3 743 3 299 3 102
Operating margin (%) 6.8% 6.6%   8.4% 7.9% 7.2%
Interest expenses (394) (477) 17% (546) (578) (1 343)
Net profit /(loss) for the period* 2 538 2 247 13% 3 005 2 490 1 414
Net margin (%)* 5.6% 5.1%   6.7% 5.9% 3.3%
Net profit for the period in the financial statements (incl. impairments and gain on change of ownership interest) 2 538 2 247 13% 3 960 2 490 1 414
Net margin(%) 5.6% 5.1%   8.9% 5.9% 3.3%
Return on assets ROA (%) 3.3% 2.9%   5.1% 3.2% 1.7%
Return on equity ROE (%) 5.2% 4.7%   9.0% 5.9% 3.7%
Earnings per share (EPS) 0.09 0.08   0.13 0.08 0.05

 

* 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 (EUR thousand) 30.09.2016 31.12.2015 Change %
As of the end of the period      
Current assets 13 308 15 553 -14%
Non-current assets 61 950 61 588 1%
Total assets 75 258 77 141 -2%
       incl. cash and bank 2 270 4 666 -51%
       incl. goodwill 39 035 38 232 2%
Current liabilities 10 840 12 539 -14%
Non-current liabilities 15 247 15 928 -4%
Total liabilities 26 087 28 467 -8%
       incl. borrowing 17 241 18 787 -8%
  Equity 49 171 48 674 1%
         

 

 

 

 

  Financial ratios (%) – joint ventures consolidated 50% 30.09.2016 31.12.2015
Equity ratio (%) 65% 63%
Debt to equity ratio (%) 35% 39%
Debt to capital ratio (%) 23% 22%
Total debt/EBITDA ratio 2.10 2.39
Debt service coverage ratio 2.66 1.79
Liquidity ratio 1.23 1.24

 

 

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

Performance indicators – joint ventures under equity method (EUR thousand) Q3
2016
Q3
2015
Change % Q3
2014
Q3
2013
Q3
2012
For the period            
Sales (only subsidiaries) 12 205 12 105 1% 11 841 10 985 11 377
EBITDA (only subsidiaries) 1 633 1 889 -14% 1 487 1 164 1 435
EBITDA margin (%) 13.4% 15.6%   12.6% 10.6% 12.6%
Operating profit (only subsidiaries) 867 1 230 -30% 783 544 643
Operating margin (%) 7.1% 10.2%   6.6% 5.0% 5.7%
Interest expenses (only subsidiaries) (117) (140) 17% (175) (204) (301)
Profit of joint ventures by equity method 206 170 21% 87 174 33
Net profit for the period* 902 1 210 -25% 658 455 263
Net margin (%)* 7.4% 10.0%   5.6% 4.1% 2.3%
Net profit for the period in the financial statements (incl. impairments and gain on change of ownership interest) 902 1 210 -25% 1 613 455 263
Net margin (%) 7.4% 10.0%   13.6% 4.1% 2.3%
Return on assets ROA (%) 1.3% 1.6%   2.2% 0.6% 0.3%
Return on equity ROE (%) 1.9% 2.5%   3.5% 1.1% 0.7%
Earnings per share (EPS) 0.03  0.04   0.05 0.02 0.01

 

 

 

Performance indicators – joint ventures under equity method (EUR thousand) 9 months 2016 9 months
2015
Change % 9 months
2014
9 months
2013
9 months
2012
For the period            
Sales (only subsidiaries) 38 581 37 962 2% 38 338 35 796 37 125
EBITDA (only subsidiaries) 4 620 4 240 9% 5 481 4 777 5 328
EBITDA margin (%) 12.0% 11.2%   14.3% 13.3% 14.4%
Operating profit (only subsidiaries) 2 439 2 202 11% 3 313 2 897 2 879
Operating margin (%) 6.3% 5.8%   8.6% 8.1% 7.8%
Interest expenses (only subsidiaries) (357) (425) 16% (531) (578) (1 344)
Profit of joint ventures by equity method 562 589 -5% 375 320 137
Net profit for the period* 2 538 2 247 13% 3 019 2 490 1 414
Net margin (%)* 6.6% 5.9%   7.9% 7.0% 3.8%
Net profit for the period in the financial statements (incl. impairments and gain on change of ownership interest) 2 538 2 247 13% 3 974 2 490 1 414
Net margin (%) 6.6% 5.9%   10.4% 7.0% 3.8%
Return on assets ROA (%) 3.5% 3.0%   5.3% 3.3% 1.8%
Return on equity ROE (%) 5.2% 4.7%   9.0% 5.9% 3.6%
Earnings per share (EPS) 0.09  0.08   0.13 0.08 0.05

 

* 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
(EUR thousand)
30.09.2016 31.12.2015 Change %
As of the end of the period      
Current assets 10 554 12 386 -15%
Non-current assets 61 353 60 794 1%
Total assets 71 907 73 180 -2%
       incl. cash and bank 913 2 927 -69%
       incl. goodwill 36 953 36 953 0%
Current liabilities 8 656 9 033 -4%
Non-current liabilities 14 080 15 473 -9%
Total liabilities 22 736 24 506 -7%
       incl. borrowing 16 356 17 687 -8%
Equity 49 171 48 674 1%

 

 

 

  Financial ratios (%) – joint ventures under equity method 30.09.2016 31.12.2015
Equity ratio (%) 68% 67%
Debt to equity ratio (%) 33% 36%
Debt to capital ratio (%) 24% 23%
Total debt/EBITDA ratio 2.32 2.65
Debt service coverage ratio 2.58 1.67
Liquidity ratio 1.22 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 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 Q3 2012-2016

 

(EUR thousand) Sales Sales
  Q3
 2016
Q3
2015
Change % Q3
 2014
Q3
 2013
Q3
 2012
media segment (by equity method) 7 436 7 098 5% 6 017 5 551 5 841
       incl. revenue from all digital and online channels 3 996 3 544 13% 2 918 2 479 2 315
printing services segment 5 629 5 753 -2% 6 596 6 147 6 263
entertainment segment 64 - 0 0 0
corporate functions 535 434 23% 427 396 268
intersegment eliminations (1 395) (1 245)   (1 200) (1 109) (995)
TOTAL GROUP by equity method 12 205 12 105 1% 11 841 10 985 11 377
media segment (by proportional consolidation) 9 965 9 432 6% 8 202 7 724 7 929
       incl. revenue from all digital and online channels 4 268 3 812 12% 3 101 2 621 2 435
printing services segment 5 629 5 753 -2% 6 596 6 147 6 263
entertainment segment 64 - 0 0 0
corporate functions 535 434 23% 427 396 268
intersegment eliminations (1 692) (1 514)   (1 392) (1 290) (1 182)
TOTAL GROUP by proportional consolidation 14 437 14 169 2% 13 833 12 977 13 278

 

 

 

(EUR thousand) EBITDA EBITDA
  Q3
 2016
Q3
2015
Change % Q3
 2014
Q3
 2013
Q3
 2012
media segment by equity method 860 889 -3% 323 102 330
media segment by proportional consolidation 1 159 1 143 1% 567 297 390
printing services segment 986 1 178 -16% 1 326 1 245 1 310
entertainment segment 0 (1) 95% 0 0 0
corporate functions (213) (178) -20% (162) (183) (206)
intersegment eliminations 0 0   0 0 1
TOTAL GROUP by equity method 1 633 1 889 -14% 1 487 1 164 1 435
TOTAL GROUP by proportional consolidation 1 932 2 143 -10% 1 732 1 359 1 495

 

 

 

EBITDA margin Q3
 2016
Q3
 2015
Q3
 2014
Q3
 2013
Q3
 2012
media segment by equity method 12% 13% 5% 2% 6%
media segment by proportional consolidation 11% 12% 7% 4% 5%
printing services segment 18% 20% 20% 20% 21%
TOTAL GROUP by equity method 13% 16% 13% 11% 13%
TOTAL GROUP by proportional consolidation 13% 15% 13% 10% 11%

 

 

Key financial data of the segments in nine months 2012-2016

 

(EUR thousand) Sales Sales
  9 months
 2016
9 months
2015
Change % 9 months
 2014
9 months
 2013
9 months
 2012
media segment (by equity method) 22 718 21 663 5% 19 923 18 225 18 513
       incl. revenue from all digital and online channels 12 294 11 011 12% 9 434 8 206 7 532
printing services segment 18 633 18 457 1% 20 868 19 896 21 121
entertainment segment 517 - 0 0 0
corporate functions 1 667 1 394 20% 1 271 1 137 688
intersegment eliminations (4 438) (4 068)   (3 725) (3 462) (3 197)
TOTAL GROUP by equity method 38 581 37 962 2% 38 338 35 796 37 125
media segment (by proportional consolidation) 30 394 28 899 5% 26 788 24 912 25 241
       incl. revenue from all digital and online channels 13 193 11 778 12% 10 050 8 643 7 963
printing services segment 18 633 18 457 1% 20 868 19 896 21 121
entertainment segment 517 - 0 0 0
corporate functions 1 667 1 394 20% 1 271 1 137 688
intersegment eliminations (5 310) (4 921)   (4 321) (4 044) (3 790)
TOTAL GROUP by proportional consolidation 45 384 44 346 2% 44 606 41 901 43 260

 

 

 

(EUR thousand) EBITDA EBITDA
  9 months
 2016
9 months
2015
Change% 9 months
 2014
9 months
 2013
9 months
 2012
media segment by equity method 1 954 2 425 -19% 1 922 1 109 1 478
media segment by proportional consolidation 2 840 3 334 -15% 2 565 1 579 1 785
printing services segment 3 317 3 611 -8% 4 321 4 258 4 402
entertainment segment (1) (1 106) 100% 0 0 0
corporate functions (649) (689) 6% (763) (593) (555)
intersegment eliminations 0 0   0 2 2
TOTAL GROUP by equity method 4 620 4 240 9% 5 481 4 777 5 328
TOTAL GROUP by proportional consolidation 5 507 5 148 7% 6 124 5 246 5 634

 

 

 

EBITDA margin 9 months
 2016
9 months
 2015
9 months
 2014
9 months
 2013
9 months
 2012
media segment by equity method 9% 11% 10% 6% 8%
media segment by proportional consolidation 9% 12% 10% 6% 7%
printing services segment 18% 20% 21% 21% 21%
TOTAL GROUP by equity method 12% 11% 14% 13% 14%
TOTAL GROUP by proportional consolidation 12% 12% 14% 13% 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 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.

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 SL Õhtuleht www.ohtuleht.ee
  ru.delfi.lt   www.vecherka.ee

 

 

 

(EUR thousand) Sales
  Q3
 2016
Q3
2015
Change 
%
Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed) 4 601 4 373 5%
        incl. Delfi Estonia online revenue 1 615 1 363 18%
Delfi Latvia 751 678 11%
Delfi Lithuania (incl. Ekspress Leidyba) 1 979 1 941 2%
        incl Delfi Lithuania online revenue 1 498 1 377 8%
OÜ Hea Lugu 106 106 0%
OÜ Zave Media 0 3 -100%
Other companies (Delfi Holding) -  
Intersegment eliminations (1) (2)  
TOTAL subsidiaries 7 436 7 098 5%
AS SL Õhtuleht* 1 034 1 001 3%
AS Ajakirjade Kirjastus* 1 139 1 024 11%
AS Express Post* 612 564 8%
Linna Ekraanid OÜ* 51 - -
Intersegment eliminations (306) (256)  
TOTAL joint ventures 2 529 2 333 8%
TOTAL segment by proportional consolidation 9 965 9 432 6%

 

 

 

(EUR thousand) EBITDA
  Q3
2016
Q3
2015
Change
 %
Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed) 328 613 -46%
Delfi Latvia 58 33 76%
Delfi Lithuania (incl. Ekspress Leidyba) 474 311 52%
OÜ Hea Lugu 0 (5) 100%
OÜ Zave Media 0 (60) 99%
Other companies (Delfi Holding) 0 (2) 100%
Intersegment eliminations 0 (1)  
TOTAL subsidiaries 860 889 -3%
AS SL Õhtuleht* 81 111 -27%
AS Ajakirjade Kirjastus* 181 107 70%
AS Express Post* 35 36 -5%
Linna Ekraanid OÜ* 2 - -
Intersegment eliminations 0 0  
TOTAL joint ventures 299 254 18%
TOTAL segment by proportional consolidation 1 159 1 143 1%

 

* Proportional share of joint ventures

 

 

(EUR thousand) Sales
  9 months 2016 9 months 2015 Change  %
Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed) 14 031 13 491 4%
        incl. Delfi Estonia online revenue 4 957 4 339 14%
Delfi Latvia 2 378 2 139 11%
Delfi Lithuania (incl. Ekspress Leidyba) 6 005 5 816 3%
        incl Delfi Lithuania online revenue 4 560 4 164 9%
OÜ Hea Lugu 307 347 -12%
OÜ Zave Media 1 3 -62%
Other companies (Delfi Holding) -  
Intersegment eliminations (4) (133)  
TOTAL subsidiaries 22 718 21 663 5%
AS SL Õhtuleht* 3 195 3 089 3%
AS Ajakirjade Kirjastus* 3 398 3 130 9%
AS Express Post* 1 933 1 828 6%
Linna Ekraanid OÜ* 51 - -
Intersegment eliminations (901) (810)  
TOTAL joint ventures 7 675 7 237 6%
TOTAL segment by proportional consolidation 30 394 28 899 5%

 

 

 

(EUR thousand) EBITDA
  9 months 2016 9 months 2015 Change %
Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed) 1 005 1 474 -32%
Delfi Latvia 150 144 4%
Delfi Lithuania (incl. Ekspress Leidyba) 876 867 1%
OÜ Hea Lugu (17) 6 -383%
OÜ Zave Media (60) (60) 0%
Other companies (Delfi Holding) (1) (5) 80%
Intersegment eliminations 1 (1)  
TOTAL subsidiaries 1 953 2 425 -19%
AS SL Õhtuleht* 328 396 -17%
AS Ajakirjade Kirjastus* 384 306 25%
AS Express Post* 172 206 -17%
Linna Ekraanid OÜ* 2 - -
Intersegment eliminations 0 0  
TOTAL joint ventures 887 908 -2%
TOTAL segment by proportional consolidation 2 840 3 334 -15%

 

* 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. In Lithuania, Delfi launched its app for users of Apple TV and Sony Android TV.

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. Delfi was also the first in Lithuania to use Facebook Live streaming. Of pan-Baltic developments, the solution to use Facebook Instant Article was completed and AdFree Delfi for mobile phones was completed that removes all ads in the Delfi environment for a monthly fee.

 

The range of vertical products continues to expand. This year, Delfi Estonia launched www.filmiveeb.ee dedicated to the film art and www.homme.ee that is targeted at men and refers to an Eesti Ekpress supplement. Delfi Latvia launched an esoterics portal www.orakuls.lv and 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 that aims to promote communication between them. Delfi FIT, a Delfi subsite that is promoting healthy lifestyle, was launched  in cooperation with the Lithuanian Basketball Federation. Also portal www.busiumama.lt, a portal targeted at expecting mothers, and a new Delfi subsite Delfi Style, were launched.

Delfi Lithuania continues developing the classified portal www.alio.lt. In July, Delfi Latvia acquired a specialized classified portal www.atverskapi.lv. 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 is being provided in co-operation with editorial teams of our daily and weekly newspapers Eesti Päevaleht, Eesti Ekspress and Maaleht.

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 under its postimees.ee domain. This increased the number of users of Postimees.ee by 17%.

In the third quarter 2016, Gemius changed the methodology of the online readership survey, as a result of which the readership of mobile devices and tablets was added to the above readership of computer or PC users. As a result of the change of the methodology that was made in September, the total number of PC users in Estonia fell by 11%. The number of computer users of Postimees.ee decreased less than that of computers users of Delfi.

 

Latvian online readership 2015-2016

At the beginning of 2016 research company Gemius changed its method of online survey, and, as a result, the online readership figure in February decreased. 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 third 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 third quarter 2016, there were no major changes in the preferences of online users in Lithuania. 15min.lt has somewhat lost readership, while Delfi has slightly increased readership. In the competition for third place, TV3 has fallen fourth and Lietuvas Rytas is stable on third place. 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. Circulations of weekly newspapers have been falling, whereas circulations of daily newspapers have been relatively stable.

 

One also needs to add to the above readership the number of subscribers of digital newspapers. At the end of the third quarter 2016, Eesti Päevaleht had ca 23 thousand subscribers, Eesti Ekspress ca 10 thousand and Maaleht ca 6,5 thousand subscribers.  

 

Estonian newspaper readership 2015-2016

Similarly with the circulation of newspapers, the readership of publications also remained relatively stable in the third quarter of 2016. As compared to the third 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 40 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.   

 

 

(thousand EUR) Sales
  Q3
2016
Q3
2015
Change
%
AS Printall 5 629 5 753 -2%

 

 

 

(thousand EUR) EBITDA
  Q3
2016
Q3
2015
Change %
AS Printall 986 1 178 -16%

 

 

 

(thousand EUR) Sales
  9 months
2016
9 months
2015
Change
%
AS Printall 18 633 18 457 1%

 

 

 

(thousand EUR) EBITDA
  9 months
2016
9 months
2015
Change %
AS Printall 3 317 3 611 -8%

 

 

The printing services segment continues to be impacted by the economic sanctions imposed towards 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. The sales keep increasing, however the profit margin continues to fall due to lower prices. 

 

Printing services and the environment

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 consumes green energy. GREEN CHOICE certificate confirms that 100% of energy consumed by printing plant has been produced from renewable energy sources. 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.

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 received these certificates helps to support the environmentally friendly, socially fair and economically viable management of the world’s forests.

 

Consolidated balance sheet (unaudited)

(thousand EUR) 30.09.2016 31.12.2015
ASSETS    
Current assets    
Cash and cash equivalents 868 2 927
Term deposits 45 0
Trade and other receivables 7 068 6 741
Corporate income tax prepayment 123 0
Inventories 2 450 2 718
Total current assets 10 554 12 386
Non-current assets    
Trade and other receivables 1 144 1 149
Deferred tax asset 42 42
Investments in joint ventures 2 225 1 007
Investments in associates 536 215
Property, plant and equipment 13 159 13 791
Intangible assets 44 247 44 590
Total non-current assets 61 353 60 794
TOTAL ASSETS 71 907 73 180
LIABILITIES    
Current liabilities    
Borrowings 2 302 2 240
Trade and other payables 6 224 6 679
Corporate income tax payable 130 114
Total current liabilities 8 656 9 033
Non-current liabilities    
Long-term borrowings 14 054 15 447
Deferred tax liability 26 26
Total non-current liabilities 14 080 15 473
TOTAL LIABILITIES 22 736 24 506
EQUITY    
Share capital 17 878 17 878
Share premium 14 277 14 277
Treasury shares (863) (176)
Reserves 2 024 1 787
Retained earnings 15 855 14 908
TOTAL EQUITY 49 171 48 674
TOTAL LIABILITIES AND EQUITY 71 907 73 180

Consolidated statement of comprehensive income (unaudited)

(thousand EUR) Q3 2016 Q3 2015 9 months 2016 9 months 2015
Sales revenue 12 205 12 105 38 581 37 962
Cost of sales (9 812) (9 315) (30 959) (30 660)
Gross profit 2 393 2 790 7 622 7 302
Other income 270 132 505 378
Marketing expenses (517) (502) (1 717) (1 634)
Administrative expenses (1 262) (1 161) (3 911) (3 764)
Other expenses (17) (29) (60) (80)
Operating profit 867 1 230 2 439 2 202
Interest income 6 11 25 32
Interest expense (117) (140) (357) (425)
Other finance costs  (17)  (27)  (49)  (61)
Net finance cost  (128)  (156)  (381)  (454)
Profit on shares of joint ventures 206 170 562 589
Profit from shares of associates 25 5 41 14
Profit before income tax 970 1 249 2 661 2 351
Income tax expense (68) (39) (123) (104)
Net profit  for the reporting period 902 1 210 2 538 2 247
Net profit for the reporting period attributable to:        
Equity holders of the parent company 902 1 210 2 538 2 247
Other comprehensive income 0 0 0 0
Total comprehensive income 902 1 210 2 538 2 247
Attributable to equity holders of the parent company 902 1 210 2 538 2 247
Basic and diluted earnings per share 0.03 0.04 0.09 0.08

Consolidated cash flow statement (unaudited)

(thousand EUR) 9 months 2016 9 months 2015
Cash flows from operating activities    
Operating profit for the reporting year 2 439 2 202
Adjustments for:    
Depreciation, amortisation and impairment 2 180 2 038
(Gain)/loss on sale and write-down of property, plant and equipment (25) (3)
Change in value of share option 102 98
Cash flows from operating activities:    
Trade and other receivables (319) (7)
Inventories 267 (25)
Trade and other payables (496) (434)
Cash generated from operations 4 148 3 869
Income tax paid (231) (110)
Interest paid (357) (425)
Net cash generated from operating activities 3 560 3 334
Cash flows from investing activities    
Term deposit release 0 1 600
Acquisition of joint venture (868) 0
Acquisition of associate (311) 0
Purchase of other investments 0 (50)
Interest received 25 32
Purchase of  property, plant and equipment (866) (1 429)
Proceeds from sale of property, plant and equipment 31 147
Loans granted (25) 0
Loan repayments received 12 74
Net cash used in investing activities (2 002) 374
Cash flows from financing activities    
Dividends paid (1 456) 0
Dividends received from joint ventures 246 278
Finance lease repayments (52) (62)
Change in use of overdraft 0 (1 117)
Loan received 11 687
Repayments of bank loans (1 634) (4 414)
Purchase of treasury shares (687) (103)
Net cash used in financing activities (3 572) (4 731)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (2 014) (1 023)
Cash and cash equivalents at the beginning of the year 2 927 3 656
Cash and cash equivalents at the end of the year 913 2 633

 

         Additional information:
         Gunnar Kobin
         Chairman of the Management Board
         GSM: +372 5188111
         e-mail: gunnar@egrupp.ee


Attachments

EG_III_kvartal_2016_ENG.pdf