Tallinn, Estonia, 2017-03-27 07:57 CEST (GLOBE NEWSWIRE) --
The year 2016 was a year of new challenges for the Group, both within and outside the Group. The end of the year was also influenced by the rotation in the management of our parent company, subsidiaries and joint ventures that provided new challenges for several managing directors.
Consolidated revenue increased 2% as compared to the year before and EBITDA increased 8%, amounting to EUR 62.8 million and EUR 8.5 million, respectively In revenue terms, it was an especially successful year for the online business of our media segment, with online revenue growing 12% in a year, totalling EUR 18.6 million and reaching almost 30% of the Group’s total revenues. It was also positive that in spite of predictions, the print media in Estonia is showing continued viability and increased revenue from last year. The latter is attributable to new products in our portfolio and additional products targeted at subscribers and retail consumer such as books or special magazine issues. The growth in the print media is mainly being driven by subscription and single-copy sales although average circulations are decreasing. The printing services segment continues to stagnate, with strong price pressure decreasing revenue by 1% and lowering profitability. We were more optimistic when preparing the budget which is why the yearly consolidated revenue and EBITDA of the Group as compared to the budget were 5% below expectations. The above figures include all our joint ventures (AS SL Õhtuleht, AS Ajakirjade Kirjastus, AS Express Post and OÜ Linna Ekraanid) consolidated 50% line-by-line.
The management proposes to pay dividends for 2016 six euro cents per share in total amount EUR 1.8 million.
The revenue of the media segment reached EUR 42.2 million, having increased 6% in a year, whereas revenue from digital and online channels was up 12%. EBITDA amounted to EUR 4.8 million which was 3% lower than the year before, but exceeded the budget by 7%. The priorities of the media segment continue to be innovation in developing various products and technical platforms. In all three countries, we launched new topical portals, carried out several new multimedia projects, developed e-commerce services and different advertising sales channels and implemented new solutions for target groups. We remain active also in the social media. A major emphasis is on web-based TV production and broadcasting. Since 2016, the apps of our international brand Delfi TV are available for Android TV and Apple TV. In addition, web TV can be watched also traditionally, for instance as a client of Starman or Levira Hybrid TV. One should also mention active development for mobile telephones that have almost become the main channel for consuming news. Delfi and our classical newspaper brands are here clearly market leaders in innovation.
A major surprise was the strong performance of Delfi Latvia that has built momentum in recent years, increasing revenue 10% to EUR 3.4 million and EBITDA by 37% to EUR 413 thousand. This was achieved in spite of the exit of a long-term sales manager and part of the sales team in September and tough competition between online portals. In a year, Delfi Latvia has launched and tested several new products and has been kind of a start-up incubator. In July we acquired www.atverskapi.lv, the leading classified portal in its niche in Latvia. The editorial office continues to focus on publishing more long-read analytical articles and carrying out media projects, as reflected in our readership and recognised by press awards.
In a year, the revenue of Ekspress Meedia increased 5% and amounted to more than EUR 19.1 million. This includes 13% growth in Delfi online and newspaper digital revenue, totalling EUR 7.3 million. Print advertising grew 3%. This was achieved mainly as a result of focusing on the efficiency of the sales team, the increasingly versatile portfolio and innovative approach. Press subscriptions and single copy sales revenue increased 1% from the previous year, and the number of digital subscriptions is up by about 30% thanks to different cooperation projects. We constantly invest in new products and IT solutions. We also invest in our staff to enable them to increase the quality of journalism. This explains why the company’s EBITDA was 24% lower than a year earlier. The annual result was also affected by the growth in print and delivery costs, resulting from the increase in advertising sales volumes.
Delfi Lithuania is growing more modestly, but consistently. The company’s revenue increased 4% to EUR 8.6 million. The growth of online advertising revenue was 9%. EBITDA increased 9% totalling EUR 1.7 million. This result can be considered positive in all aspects, especially in the light of the very disappointing first quarter. Thanks to persistent work, Lithuania has become a clear market leader in mobile platforms where we were losing out to competition in earlier years. Online continues to grow, but magazine circulations, print advertising and distribution costs decrease at a stable rate.
The revenue and profit growth of Ajakirjade Kirjastus, respectively 10% and 39%, is mainly attributable to the expansion in our product portfolio in April when we acquired Estonia’s 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. In addition, we continue to organise events and courses by using our brands in order to build brands, offer additional value to subscribers and help to increase revenue. The revenue of Ajakirjade Kirjastus for the year totalled EUR 9.5 million and EBITDA was EUR 1.1 million, of which half is recognized in the consolidated figures of the Ekspress Group.
This year SL Õhtuleht has been in the winds of change. There have been changes in the team, organizational and management structure. We have invested in increasing the efficiency of advertising sales, modernization of the company and development of new products. All this has helped to make Õhtuleht the newspaper with the largest circulation in weekdays, keep the level of subscribers and single-copy sales high and increase advertising revenue. The number of digital subscribers has more than tripled as compared to the start of the year. The revenue of SL Õhtuleht increased 4% in a year and amounted to EUR 8.7 million. EBITDA amounted to EUR 0.8 million and was 23% lower than in the previous year. Half of this is reflected in the consolidated figures of the Ekspress Group.
It was another difficult year in the printing services segment. The revenue of Printall decreased 1% from the year before and amounted to EUR 25.6 million. EBITDA remained 6% below last year’s level and amounted to EUR 4.6 million. The number of orders and work volume keeps increasing, but price pressure is dampening revenue growth and increased volume is pushing up labour costs. Despite the tough market situation, persistent and aggressive marketing has helped us to attract new products and customers in Scandinavia, improved our price level in the second half of the year and attracted recognition also in printing sectors outside periodicals. This enables to expand the B2B segment that produces for own use product catalogues and other specific products that are suitable for our sheet-fed printing machines. In the last year, Printall has been transforming from a large and elite plant to wide-based tool for promoting communication. The situation on the printing services market in 2017 is not expected to improve.
In July we signed a contract to acquire a 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 an additional ownership in Babahh Media OÜ in 2021, thereby AS Ekspress Grupp would increase its ownership in Babahh Media OÜ 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 acquisition of Babahh Media OÜ also helps to supplement the video production portfolio of our Delfis in all our markets through wide-based knowledge.
The financial position of the Group has strengthened notably during the year. As at the end of the year, the ratio of total debt to EBITDA was below 2.0, which according to the syndicate loan contract means a lower interest margin and enables even more aggressively to invest with the help of loan capital. The debt service coverage ratio is almost 2.8.
For the first time the Group has prepared a corporate social responsibility report, the results and summaries have been added to the respective subsections of the management report.
Despite the challenging situation in the media landscape, we are looking forward to the next year with excitement, especially because of several personnel changes in the Group at the start of the year. On January 1, Mari-Liis Rüütsalu who has earlier management experience from Delfi Estonia and Ekspress Meedia took office as the new Group CEO. New managers, all of whom were promoted from within the Group, started also in Ekspress Meedia, Ajakirjade Kirjastus and SL Õhtuleht.
In financial terms we expect the revenue of the media segment to increase 4-5% and EBITDA to grow, assisted by acquisitions made in 2016. In the printing services segment we will try to maintain this year’s revenue level in spite of price pressure. In a more optimistic outlook we hope that the profit growth of the media segment will cover the decrease in EBITDA in the printing services segment. This means that the share of media and online activities in the Group revenue and profit will grow. However, a significantly more negative background of the external environment may lower EBITDA of the printing services segment by 10-15%, which in turn would mean that in consolidated terms, the revenue would grow by about 4%, but EBITDA would decrease by about the same percentage.
Our ambition remains to offer new and interesting experiences both on paper and in digital media, without ever compromising on news quality, choice of topics and journalistic objectivity.
The Group’s goal is to be a truly modern media group with a strong foothold in all markets where actively present, with a leading position in online media.
In 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.
FINANCIAL INDICATORS AND RATIOS – joint ventures consolidated 50% line-by-line
| Performance indicators – joint ventures consolidated 50% (EUR thousand) | 2016 | 2015 | Change % | 2014 | 2013 | 2012 |
| Sales revenue | 62 793 | 61 528 | 2% | 61 384 | 58 427 | 59 706 |
| EBITDA | 8 487 | 7 869 | 8% | 8 878 | 7 264 | 7 882 |
| EBITDA margin (%) | 13.5% | 12.8% | 14.5% | 12.4% | 13.2% | |
| Operating profit* | 5 221 | 4 866 | 7% | 5 638 | 4 647 | 4 596 |
| Operating margin* (%) | 8.3% | 7.9% | 9.2% | 8.0% | 7.7% | |
| Interest expenses | (518) | (618) | 16% | (732) | (763) | (1 549) |
| Profit for the period* | 4 406 | 3 907 | 13% | 4 620 | 3 548 | 2 682 |
| Net margin* (%) | 7.0% | 6.4% | 7.5% | 6.1% | 4.5% | |
|
Net profit for the period in the financial statements (incl. impairments and gain on change of ownership interest) |
4 406 | 2 707 | 63% | 5 110 | 1 081 | 2 525 |
| Net margin (%) | 7.0% | 4.4% | 8.3% | 1.9% | 4.2% | |
| Return on assets ROA (%) | 5.8% | 3.5% | 6.6% | 1.4% | 3.2% | |
| Return on equity ROE (%) | 8.9% | 5.6% | 11.4% | 2.5% | 6.4% | |
| Earnings per share (EPS) | 0.15 | 0.09 | 0.17 | 0.04 | 0.08 |
* The results reflect the outcome of regular business activities and do not include impairment losses on goodwill, profit arised from the changes in ownership interests in our joint ventures etc.
| Balance sheet – joint ventures consolidated 50% (EUR thousand) | 31.12.2016 | 31.12.2015 |
Change % |
31.12.2014 | 31.12.2013 | 31.12.2012 |
| At the end of the period | ||||||
| Current assets | 16 251 | 15 553 | 4% | 15 189 | 14 447 | 13 545 |
| Non-current assets | 61 506 | 61 588 | 0% | 65 665 | 63 019 | 66 754 |
| Total assets | 77 757 | 77 141 | 1% | 80 854 | 77 466 | 80 299 |
| incl. cash and bank | 4 572 | 4 666 | -2% | 6 788 | 4 501 | 3 280 |
| incl. goodwill | 38 904 | 38 232 | 2% | 39 432 | 40 052 | 41 093 |
| Current liabilities | 12 222 | 12 539 | -3% | 14 110 | 14 468 | 14 967 |
| Non-current liabilities | 14 462 | 15 928 | -9% | 19 569 | 20 673 | 24 233 |
| Total liabilities | 26 684 | 28 467 | -6% | 33 679 | 35 141 | 39 200 |
| incl. borrowings | 16 603 | 18 787 | -12% | 24 592 | 24 432 | 28 580 |
| Equity | 51 073 | 48 674 | 5% | 47 175 | 42 325 | 41 099 |
|
Financial ratios (%) – joint ventures consolidated 50% |
31.12.2016 | 31.12.2015 | 31.12.2014 | 31.12.2013 | 31.12.2012 |
| Equity ratio (%) | 66% | 63% | 58% | 55% | 51% |
| Debt to equity ratio (%) | 33% | 39% | 52% | 58% | 70% |
| Debt to capital ratio (%) | 19% | 22% | 27% | 32% | 38% |
| Total debt/EBITDA ratio | 1.96 | 2.39 | 2.61 | 3.36 | 3.63 |
| Debt service coverage ratio | 2.75 | 1.79 | 1.90 | 1.66 | 1.52 |
| Liquidity ratio | 1.33 | 1.24 | 1.08 | 1.00 | 0.90 |
FINANCIAL INDICATORS AND RATIOS – joint ventures recognised under the equity method
| Performance indicators – joint ventures by the equity method (EUR thousand) | 2016 | 2015 | Change % | 2014 | 2013 | 2012 |
| Sales revenue (only subsidiaries) | 53 324 | 52 773 | 1% | 52 793 | 50 086 | 51 290 |
| EBITDA (only subsidiaries) | 7 280 | 6 680 | 9% | 7 894 | 6 591 | 7 345 |
| EBITDA margin (%) | 13.7% | 12.7% | 15.0% | 13.2% | 14.3% | |
| Operating profit* (only subsidiaries) | 4 328 | 3 920 | 10% | 4 973 | 4 071 | 4 173 |
| Operating margin* (%) | 8.1% | 7.4% | 9.4% | 8.1% | 8.1% | |
| Interest expenses (only subsidiaries) | (471) | (550) | 14% | (689) | (763) | (1 550) |
| Profit of joint ventures by equity method | 772 | 785 | -2% | 557 | 494 | 339 |
| Profit for the period* | 4 406 | 3 907 | 13% | 4 621 | 3 548 | 2 682 |
| Net margin* (%) | 8.3% | 7.4% | 8.8% | 7.1% | 5.2% | |
|
Net profit for the period in the financial statements (incl. impairments and gain on change of ownership interest) |
4 406 | 2 707 | 63% | 5 110 | 1 081 | 2 525 |
| Net margin (%) | 8.3% | 5.1% | 9.7% | 2.2% | 4.9% | |
| Return on assets ROA (%) | 6.1% | 3.7% | 6.8% | 1.4% | 3.2% | |
| Return on equity ROE (%) | 8.9% | 5.6% | 11.4% | 2.5% | 6.4% | |
| Earnings per share (EPS) | 0.15 | 0.09 | 0.17 | 0.04 | 0.08 |
* The results reflect the outcome of regular business activities and do not include impairment losses on goodwill, profit arised from the changes in ownership interests in our joint ventures etc.
| Balance sheet– joint ventures by equity method (EUR thousand) | 31.12.2016 | 31.12.2015 | Change % | 31.12.2014 | 31.12.2013 | 31.12.2012 |
| As at the end of the period | ||||||
| Current assets | 13 094 | 12 386 | 6% | 12 303 | 11 357 | 10 747 |
| Non-current assets | 61 074 | 60 794 | 0% | 64 292 | 63 899 | 67 470 |
| Total assets | 74 168 | 73 180 | 1% | 76 595 | 75 256 | 78 217 |
| incl. cash and bank | 2 856 | 2 927 | -2% | 5 275 | 2 209 | 1 291 |
| incl. goodwill | 36 953 | 36 953 | 0% | 38 153 | 39 596 | 40 637 |
| Current liabilities | 9 591 | 9 033 | 6% | 11 481 | 12 259 | 12 885 |
| Non-current liabilities | 13 504 | 15 473 | -13% | 17 939 | 20 672 | 24 233 |
| Total liabilities | 23 095 | 24 506 | -6% | 29 420 | 32 931 | 37 118 |
| incl. borrowings | 15 784 | 17 687 | -11% | 23 152 | 24 432 | 28 580 |
| Equity | 51 073 | 48 674 | 5% | 47 175 | 42 325 | 41 099 |
|
Financial ratios (%) – joint ventures by the equity method |
31.12.2016 | 31.12.2015 | 31.12.2014 | 31.12.2013 | 31.12.2012 |
| Equity ratio (%) | 69% | 67% | 62% | 56% | 53% |
| Debt to equity ratio (%) | 31% | 36% | 49% | 58% | 70% |
| Debt to capital ratio (%) | 20% | 23% | 27% | 34% | 40% |
| Total debt / EBITDA ratio | 2.17 | 2.65 | 2.93 | 3.71 | 3.89 |
| Debt service coverage ratio | 2.67 | 1.67 | 1.77 | 1.50 | 1.36 |
| Liquidity ratio | 1.37 | 1.37 | 1.07 | 0.93 | 0.83 |
| 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 |
* The results reflect the outcome of regular business activities and do not include impairment losses on goodwill, profit arised from the changes in ownership interests in our joint ventures etc.
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.
SEGMENT OVERVIEW
Key financial data of the segments 2012-2016
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.
| (EUR thousand) | Sales | Sales | ||||
| 2016 | 2015 | Change % | 2014 | 2013 | 2012 | |
| media segment (by equity method) | 31 579 | 30 063 | 5% | 27 459 | 25 842 | 25 562 |
| incl. revenue from all digital and online channels | 17 269 | 15 555 | 11% | 13 449 | 11 595 | 10 561 |
| printing services | 25 585 | 25 842 | -1% | 28 951 | 27 462 | 29 167 |
| entertainment segment | 0 | 517 | -100% | 0 | 0 | 0 |
| corporate functions | 2 233 | 1 937 | 15% | 1 731 | 1 530 | 996 |
| intersegment eliminations | (6 073) | (5 586) | -9% | (5 347) | (4 748) | (4 435) |
| TOTAL GROUP by equity method | 53 324 | 52 773 | 1% | 52 793 | 50 086 | 51 290 |
| media segment by proportional consolidation | 42 229 | 39 943 | 6% | 36 930 | 34 955 | 34 773 |
| incl. revenue from all digital and online channels | 18 574 | 16 619 | 12% | 14 306 | 12 226 | 11 147 |
| printing services | 25 585 | 25 842 | -1% | 28 951 | 27 462 | 29 167 |
| entertainment segment | 0 | 517 | -100% | 0 | 0 | 0 |
| corporate functions | 2 233 | 1 937 | 15% | 1 731 | 1 530 | 996 |
| intersegment eliminations | (7 254) | (6 711) | (6 228) | (5 520) | (5 230) | |
| TOTAL GROUP by proportional consolidation | 62 793 | 61 528 | 2% | 61 384 | 58 427 | 59 706 |
| (EUR thousand) | EBITDA | EBITDA | ||||
| 2016 | 2015 | Change % | 2014 | 2013 | 2012 | |
| media segment by equity method | 3 572 | 3 724 | -4% | 3 025 | 2 123 | 2 089 |
| media segment by proportional consolidation | 4 779 | 4 913 | -3% | 4 013 | 2 792 | 2 624 |
| printing services | 4 645 | 4 966 | -6% | 5 944 | 5 862 | 6 052 |
| entertainment segment | (2) | (1 110) | 100% | 0 | 0 | 0 |
| corporate functions | (936) | (899) | -4% | (1 076) | (1 356) | (797) |
| intersegment eliminations | 0 | 0 | -65% | 0 | (38) | 1 |
| TOTAL GROUP by equity method | 7 280 | 6 680 | 9% | 7 894 | 6 591 | 7 345 |
| TOTAL GROUP by proportional consolidation | 8 487 | 7 869 | 8% | 8 878 | 7 264 | 7 882 |
| EBITDA margin | 2016 | 2015 | 2014 | 2013 | 2012 |
| media segment by equity method | 11% | 12% | 11% | 8% | 8% |
| media segment by proportional consolidation | 11% | 12% | 11% | 8% | 8% |
| printing services | 18% | 19% | 21% | 21% | 21% |
| TOTAL GROUP by equity method | 14% | 13% | 15% | 13% | 14% |
| TOTAL GROUP by proportional consolidation | 14% | 13% | 15% | 12% | 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. A year earlier Delfi UAB and magazine publisher Ekspress Leidyba UAB were merged in Lithuania. In Lithuania mergered entity continued under name of Delfi.
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 | ||
| 2016 | 2015 | Change % | |
| Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed) | 19 116 | 18 248 | 5% |
| incl. Delfi Estonia online revenue | 6 728 | 5 931 | 13% |
| Delfi Latvia | 3 375 | 3 066 | 10% |
| Delfi Lithuania (incl. magazine publishing) | 8 563 | 8 230 | 4% |
| incl Delfi Lithuania online revenue | 6 602 | 6 051 | 9% |
| Hea Lugu OÜ | 538 | 651 | -17% |
| Zave Media OÜ | 1 | 5 | -77% |
| Other companies (Delfi Holding) | - | - | - |
| Intersegment eliminations | (14) | (136) | 89% |
| TOTAL subsidiaries | 31 579 | 30 063 | 5% |
| SL Õhtuleht AS* | 4 329 | 4 154 | 4% |
| Ajakirjade Kirjastus AS* | 4 765 | 4 347 | 10% |
| Express Post AS* | 2 609 | 2 477 | 5% |
| Linna Ekraanid OÜ* | 166 | - | - |
| Intersegment eliminations | (1 219) | (1 099) | -11% |
| TOTAL joint ventures | 10 651 | 9 879 | 8% |
| TOTAL segment by proportional consolidation | 42 229 | 39 943 | 6% |
| (EUR thousand) | EBITDA | ||
| 2016 | 2015 | Change % | |
| Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed) | 1 448 | 1 899 | -24% |
| Delfi Latvia | 413 | 301 | 37% |
| Delfi Lithuania (incl. magazine publishing) | 1 741 | 1 590 | 9% |
| Hea Lugu OÜ | 33 | 91 | -64% |
| Zave Media OÜ | (61) | (147) | 59% |
| Other companies (Delfi Holding) | (2) | (9) | 78% |
| Intersegment eliminations | (0) | (1) | - |
| TOTAL subsidiaries | 3 572 | 3 724 | -4% |
| SL Õhtuleht AS* | 394 | 508 | -23% |
| Ajakirjade Kirjastus AS* | 544 | 392 | 39% |
| Express Post AS* | 247 | 289 | -14% |
| Linna Ekraanid OÜ* | 22 | - | - |
| Intersegment eliminations | 0 | 0 | 118% |
| TOTAL joint ventures | 1 207 | 1 189 | 2% |
| TOTAL segment by proportional consolidation | 4 779 | 4 913 | -3% |
* Proportional share of joint ventures
ONLINE MEDIA and DELFI
As a market leader Delfi continues to invest into new technologies and IT solutions to improve user experience of its readers and advertisers. This year Delfi mobile application for IOS and Android devices and m.delfi environment were renewed together with more functionality. New feature zlick was introduced enabling to purchase paid content with 0-click. Ad-free Delfi solution for mobile phones where users can remove all ads from the Delfi environment for a monthly fee was introduced. Since 2016 Delfi app is available for Apple TV and Sony Android TV users. The clients of Levira and Starman in Estonia are able to watch Delfi TV broadcasts and programmes traditionally on television screens.
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.
Starting from 2016, our advertising sales departments offer in addition to online advertising in our own portals also the possibility to buy advertising in other local or international channels. We also offer to our customers a full advertising service from the idea to execution including booking media space and provide programmatic advertising solutions.
The range of vertical products continues to expand. This year, Delfi Estonia launched www.kinoveeb.ee dedicated to the film art and www.homme.ee that is targeted at men and refers to a supplement of newspaper Eesti Ekpress. 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. The National Basketball Association (NBA) and DELFI Lithuania announced a new multiyear partnership that includes plans to launch www.nba.com/Lithuania, the NBA’s new official online destination in Lithuania.
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.tobook.lv was launched in Latvia that gathers different beauty saloons and possibility of making reservations on-line.
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 into its postimees.ee domain. This increased the number of users of Postimees.ee by 17%.
In the third quarter of 2016, Gemius changed the methodology of the online readership survey in Estonia, Latvia and Lithuania, as a result of which the readership of mobile devices and tablet PCs was added to the above readership of computer users. As a result of the change of methodology that was made in September, the total number of computer users in Estonia fell by 11%. The number of computer users of Postimees.ee decreased less than that of computers users of Delfi. Competition between Delfi and Postimees remains active. In spite of changes in methodology, the readership of Õhtuleht has been very stable. Starting from the summer of 2016, the Gemius survey also shows separate readership in mobile devices and tablet PCs.
Latvian online readership 2015-2016
At the beginning of 2016, the research company Gemius changed its method of online surveys, and, as a result, 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. Contrary to expectations, Inbox increased its readership at the end of the year, especially in mobile devices. The readership of Delfi.lv as compared to tvnet.lv is practically unchanged. The number of mobile users continues to grow. 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.
Lithuanian online readership 2015-2016
Delfi.lt remains Lithuania’s largest online portal. In the third quarter 2016, 15min.lt added several portals that do not belong to this media group, which is why the readership of the 15min.lt domain increased in the fourth quarter of 2016. This growth does not mean growth in readership of media services and therefore does not mean that the market situation of 15min.lt has improved. TV3 and Lrytas.lt are competing for the 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
Estonian newspaper circulation 2015-2016
Circulations of newspapers in Estonia have been falling moderately in the long run. In the fourth quarter 2016 there was a significant change in the circulations of paper versions of newspapers in Estonia. For three months, Õhtuleht has been the newspaper with the largest circulation in Estonia and Postimees has fallen to the second place. In December, Postimees fell to the third place because, traditionally, Maaleht gained considerably in December. The circulation of Päevaleht has somewhat decreased in 2016, but the growth in the number of digital subscribers of Päevaleht has been much quicker than the decrease in the circulation of the paper version of the newspaper.
Estonian newspaper readership 2015-2016
Similarly to the circulation of newspapers, the readership of publications also remained relatively stable in 2016. As compared to the fourth quarter 2015, the 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 total readership. The number of digital subscriptions of periodicals of Ekspress Group amounts to ca 50 thousand. Increasing the readership of digital newspapers remains the main task for the Group’s publications.
MEDIA AWARDS in 2016
Professionalism, ambition and dedication of journalists of Ekspress Group is outstanding and their work has won many awards. In ensuring the sustainability of free and strong press, the organisation and the employees consider real and positive social impact of their work more important than the prize.
Press awards of the Estonian Newspaper Association
- Winner of investigative journalism aka the Bonnier Award: Tuuli Jõesaar (Eesti Päevaleht) with her stories on parents who feed toxic chlorine dioxide to their children (so-called MMS scandal).
- Winner of Lifetime Achievement Award (first issued in 2016): senior journalist and journalism lecturer Priit Hõbemägi.
- Winner of Young Journalist Award: Urmas Jaagant (Eesti Päevaleht).
- Winners of Video Award: Tiit Blaat and Kairi Prints with a video story of a man who lives in a tree in Lasnamäe.
- Winner of Web Design Award: Eesti Ekspress.
Awards of the Latvian Press Association
- Delfi Latvia won the Latvian Press Association's Excellence Award 2015 for the multimedia project "#10memories".
- In 2016 Delfi Latvia won The Most Influential Brand in Social Media Award.
Awards in Lithuania
- Delfi Sports was awarded a special prize for the best media outlet in Lithuania during "Lithuanian Sports Management Awards 2016".
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 | ||
| 2016 | 2015 | Change % | |
| AS Printall | 25 585 | 25 842 | -1% |
| (EUR thousand) | EBITDA | ||
| 2016 | 2015 | Change % | |
| AS Printall | 4 645 | 4 966 | -6% |
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.
Consolidated balance sheet
| (EUR thousand) | 31.12.2016 | 31.12.2015 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 2 805 | 2 927 |
| Term deposits | 51 | 0 |
| Trade and other receivables | 7 468 | 6 741 |
| Inventories | 2 770 | 2 718 |
| Total current assets | 13 094 | 12 386 |
| Non-current assets | ||
| Trade and other receivables | 982 | 1 149 |
| Deferred tax asset | 34 | 42 |
| Investments in joint ventures | 2 435 | 1 007 |
| Investments in associates | 591 | 215 |
| Property, plant and equipment | 12 722 | 13 791 |
| Intangible assets | 44 310 | 44 590 |
| Total non-current assets | 61 074 | 60 794 |
| TOTAL ASSETS | 74 168 | 73 180 |
| LIABILITIES | ||
| Current liabilities | ||
| Borrowings | 2 313 | 2 240 |
| Trade and other payables | 7 170 | 6 679 |
| Corporate income tax payable | 108 | 114 |
| Total current liabilities | 9 591 | 9 033 |
| Non-current liabilities | ||
| Long-term borrowings | 13 471 | 15 447 |
| Deferred tax liability | 33 | 26 |
| Total non-current liabilities | 13 504 | 15 473 |
| TOTAL LIABILITIES | 23 095 | 24 506 |
| EQUITY | ||
| Share capital | 17 878 | 17 878 |
| Share premium | 14 277 | 14 277 |
| Treasury shares | (863) | (176) |
| Reserves | 2 058 | 1 787 |
| Retained earnings | 17 723 | 14 908 |
| TOTAL EQUITY | 51 073 | 48 674 |
| TOTAL LIABILITIES AND EQUITY | 74 168 | 73 180 |
Consolidated statement of comprehensive income
| (EUR thousand) | 2016 | 2015 |
| Sales revenue | 53 324 | 52 773 |
| Cost of sales | (42 122) | (41 781) |
| Gross profit | 11 202 | 10 992 |
| Other income | 1 085 | 659 |
| Marketing expenses | (2 488) | (2 377) |
| Administrative expenses | (5 357) | (5 236) |
| Other expenses | (114) | (118) |
| Impairment of goodwill | 0 | (1 200) |
| Operating profit | 4 328 | 2 720 |
| Interest income | 32 | 42 |
| Interest expense | (471) | (550) |
| Foreign exchange gains (losses) | (10) | (6) |
| Other finance costs | (56) | (71) |
| Net finance cost | (505) | (585) |
| Profit (loss) on shares of joint ventures | 772 | 785 |
| Profit (loss) from investments in associates | 113 | 86 |
| Profit before income tax | 4 708 | 3 006 |
| Income tax expense | (302) | (299) |
| Profit for the reporting period | 4 406 | 2 707 |
| Net profit for the reporting period attributable to: | ||
| Equity holders of the parent company | 4 406 | 2 707 |
| Other comprehensive income | 0 | 0 |
| Total other comprehensive income for the period | 4 406 | 2 707 |
| Comprehensive income for the reporting period attributable to: | ||
| Equity holders of the parent company | 4 406 | 2 707 |
| Basic and diluted earnings per share | 0.15 | 0.09 |
Consolidated cash flow statement
| (EUR thousand) | 2016 | 2015 |
| Cash flows from operating activities | ||
| Operating profit for the reporting year | 4 328 | 2 720 |
| Adjustments for: | ||
| Depreciation, amortisation and impairment | 2 953 | 2 760 |
| Loss on trademark and goodwill impairment | 0 | 1 200 |
| (Gain)/loss on sale and write-down of property, plant and equipment | 37 | (4) |
| Change in value of share option | 136 | 91 |
| Cash flows from operating activities: | ||
| Trade and other receivables | (709) | (191) |
| Inventories | (53) | (645) |
| Trade and other payables | 484 | 361 |
| Cash generated from operations | 7 175 | 6 292 |
| Income tax paid | (293) | (118) |
| Interest paid | (519) | (525) |
| Net cash generated from operating activities | 6 363 | 5 649 |
| Cash flows from investing activities | ||
| Term deposit (placement)/release | 0 | 1 600 |
| Acquisition of joint ventures | (868) | 0 |
| Acquisition of associate | (311) | 0 |
| Purchase and receipts of other investments | 5 | (50) |
| Interest received | 32 | 33 |
| Purchase of property, plant and equipment | (1 335) | (1 575) |
| Proceeds from sale of property, plant and equipment | 39 | 33 |
| Loans granted | (25) | 0 |
| Loan repayments received | 175 | 74 |
| Net cash used in investing activities | (2 289) | 115 |
| Cash flows from financing activities | ||
| Dividends paid | (1 456) | (1 187) |
| Dividend received from joint ventures | 246 | 278 |
| Finance lease repayments | (72) | (89) |
| Change in use of overdraft | 0 | (1 117) |
| Loan received | 11 | 687 |
| Repayments of bank loans | (2 186) | (4 952) |
| Purchase of treasury shares | (687) | (112) |
| Net cash used in financing activities | (4 144) | (6 492) |
| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | (71) | (729) |
| Cash and cash equivalents at the beginning of the year | 2 927 | 3 656 |
| Cash and cash equivalents at the end of the year | 2 856 | 2 927 |
Additional information:
Mari-Liis Rüütsalu
Chairman of the Management Board
GSM: +372 512 2591
e-mail: mariliis.ryytsalu@egrupp.ee
