Tallinn, Estonia, 2017-07-31 15:20 CEST (GLOBE NEWSWIRE) --
The 2nd quarter of 2017 brought no major surprises for the Group. Competition remains intense both in the media as well as printing services segment and the Group is confronted with new trends and consumer preferences. It is necessary to dare to experiment with new things. Such an approach will enable the Group to increase its sales as well as EBITDA in the long term while leading to higher costs and lower profitability in the short term.
In the 2nd quarter, the Group’s consolidated revenue was slightly lower than in the same period last year but over the first half-year we have managed to hold on to last year’s level despite a significant decline in the sales of printing services. In the 2nd quarter, the revenue totalled EUR 16.4 million and EBITDA totalled EUR 1.2 million which is 6% lower than last year. Media segment and especially online revenue increased considerably, but it still fails to offset the declining revenue of the printing house. Such a decline in the revenue of the printing services segment was to be expected and in a more optimistic scenario we had hoped to offset it with the revenue growth of the media sector. The Group’s net profit amounted to EUR 1.2 million which is nevertheless 8% less than in the same period last year. In the first half-year, the net profit remained at the same level as last year despite a decline in the revenue of printing services and it totalled EUR 1.6 million.
The online business of the media sector continues to demonstrate strong revenue growth where revenue was 8% higher than a year earlier, totalling EUR 5.3 million and now accounting for 31% of the Group's total revenue. A special mention should be given to Delfi Latvia and Delfi Lithuania which increased their online revenue by 13% and 11%, respectively. We are also satisfied with the stability of print media revenue in Estonia and interest of our paying readers and their need for trustworthy news whether consumed on paper of digitally. While the print advertising market is in a sharp downward trend worldwide, the newspapers and magazines of Ekspress Group have greatly managed to hold on to their level in Estonia.
The above figures include the results of all our joint ventures (AS SL Õhtuleht, AS Ajakirjade Kirjastus, AS Express Post and OÜ Linna Ekraanid) consolidated 50% line-by-line.
The printing services segment has been in a recession for several years, accompanied by strong price competition, especially from printing houses in Latvia and Lithuania that have reduced revenues and profitability. In the printing services segment we are attracting new markets and clients in order to overcome this recession.
In the 2nd quarter, the revenue of the media segment increased by 2%, totalling EUR 11.4 million. EBITDA was EUR 1.4 million, which is the same as in the same period last year. In the 2nd quarter, revenue growth was driven primarily by Latvia and Lithuania. Competition is the strongest in Estonia, impacted in turn by uncertainty of the advertising market. Despite this we continue with innovation in developing various products and technical platforms as we consider it to be driving force behind future success. In the online business, traditional banner advertising continues to give way to more innovative solutions, and more creative approaches also need to be found in paper. In the online market, the consumers are using more mobile devices and our investments into this business are continuous.
We are glad to see strong growth in Delfi Latvia. In the 2nd quarter, the revenue of Delfi Latvia increased by 13%, totalling EUR 1.0 million. EBITDA increased by 39% and totalled over EUR 100 thousand. Delfi as the news portal continues to be the market leader in Latvia in terms of internet users, increasing its gap with its key competitor further, i.e. to 10.4%.
The revenue of Ekspress Meedia decreased by 3% in the 2nd quarter and totalled EUR 5.1 million, primarily attributable to the delayed launch of the new book series “Eestile elatud elu“ (“Life lived to Estonia”) as compared to the series launched last year. EBITDA decreased by 11% and was still in excess of EUR 400 thousand. The entire quarter is characterised by the instability of the advertising market, evident both in the revenue of the online as well as print advertising which remained at the same level as in the comparable period last year. The number of digital subscribers increased by 6% as compared to the 1st quarter and 42% as compared to the same period last year. New projects include experience marketing events – a successful concert with Ott Lepland was held in May and a reunion concert of Ruja to be held on the Song Festival Ground in August. The latter business generates additional income and increases profitability.
The revenue of Delfi Lithuania increased in a more modest speed this quarter than in the last one, but growth was still 7% and revenue totalled EUR 4.4 million. Online revenue increased by 11% and 20% in the first half-year. We are especially pleased to see that most of the revenue growth has led to a profit, as a result of which EBITDA totalled EUR 0.6 million which is 28% better than in the same period last year. In the 2nd quarter, we managed to halt the decline in the print media advertising revenue, however, the declining trend has continued in subscription and retail sales.
The revenue of Ajakirjade Kirjastus declined by 5% and totalled EUR 2.3 million. EBITDA reached over EUR 100 thousand. One half of it is reflected in the consolidated figures of Ekspress Group, primarily attributable to the complicated advertising market which also impacted other Estonian companies. The result also includes investments into increasing the web team in order to enter more aggressively to the Internet with its products and brands, similarly to the movement of readers. The volume of books to be published has also reduced which in turn has led to a decrease in revenue.
SL Õhtuleht continued to successfully swim against the tide and it increased its revenue in the 2nd quarter by 4% and EBITDA by 8%. The revenue in the 2nd quarter totalled EUR 2.4 million and EBITDA totalled EUR 320 thousand. One half of it is reflected in the consolidated figures of Ekspress Group. For the ninth consecutive month, Õhtuleht is the daily newspaper with the largest circulation in Estonia. The number of digital subscribers has increased by 34% since the end of last year.
A complicated situation continues in the printing services segment. The revenue of Printall decreased by 7% as compared to the year before and totalled EUR 6.2 million. EBITDA was 11% lower than a year earlier and totalled EUR 1.0 million. Over the last half-year we have actively looked for new clients in Central Europe, where the first positive signs are already visible.
The financial position of the Group has notably strengthened during the year. The ratio of total debt and EBITDA has been below 2.0 since last year. This has led to the next round of syndicated loan agreement negotiations as a result of which the interest margin decreased and monthly repayments ceased.
In the first half-year, we launched a loyalty programme for the key managers at the Group, which motivates them to contribute more to the entity. The share option programme was approved at the General Meeting of Shareholders held in June. A special education fund was launched within the Group, helping to increase our employees’ qualification and motivation.
A new development programme was adopted at the technology company Ekspress Digital in order to contribute to the company’s growth and capability and to be able to provide development services outside the Group.
The activities mentioned above demonstrate that we continue to contribute more to expanding our activities and increasing our employees’ motivation.
The quarter ended has made as cautious when forecasting our financial results. In light of the last forecasts we believe that we will be able to maintain our revenue at the last year’s level but necessary investments accompanied by the complicated market situation increase our costs and lower EBITDA.
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 2017 |
Q2 2016 | Change % |
Q2 2015 |
Q2 2014 |
Q2 2013 |
| For the period | ||||||
| Sales | 16 382 | 16 545 | -1% | 15 998 | 16 007 | 15 115 |
| EBITDA | 2 184 | 2 332 | -6% | 1 488 | 2 935 | 2 384 |
| EBITDA margin (%) | 13.3% | 14.1% | 9.3% | 18.3% | 15.8% | |
| Operating profit | 1 403 | 1 546 | -9% | 745 | 2 180 | 1 742 |
| Operating margin (%) | 8.6% | 9.3% | 4.7% | 13.6% | 11.5% | |
| Interest expenses | (106) | (134) | 21% | (146) | (181) | (178) |
| Net profit/(loss) for the period | 1 221 | 1 324 | -8% | 481 | 1 858 | 1 398 |
| Net margin (%) | 7.5% | 8.0% | 3.0% | 11.6% | 9.3% | |
| Return on assets ROA (%) | 1.6% | 1.7% | 0.6% | 2.4% | 1.8% | |
| Return on equity ROE (%) | 2.4% | 2.7% | 1.0% | 4.2% | 3.3% | |
| Earnings per share (EPS) | 0.04 | 0.05 | 0.02 | 0.06 | 0.05 |
|
Performance indicators – joint ventures 50% consolidated (EUR thousand) |
1st Half year 2017 |
1st Half year 2016 | Change % |
1st Half year 2015 |
1st Half year 2014 |
1st Half year 2013 |
| For the period | ||||||
| Sales | 31 079 | 30 947 | 0% | 30 178 | 30 773 | 28 925 |
| EBITDA | 3 427 | 3 574 | -4% | 3 005 | 4 389 | 3 888 |
| EBITDA margin (%) | 11.0% | 11.5% | 10.0% | 14.3% | 13.4% | |
| Operating profit | 1 891 | 2 022 | -6% | 1 507 | 2 871 | 2 582 |
| Operating margin (%) | 6.1% | 6.5% | 5.0% | 9.3% | 8.9% | |
| Interest expenses | (222) | (269) | 18% | (320) | (357) | (374) |
| Net profit/(loss) for the period | 1 631 | 1 636 | 0% | 1 037 | 2 361 | 2 036 |
| Net margin (%) | 5.2% | 5.3% | 3.4% | 7.7% | 7.0% | |
| Return on assets ROA (%) | 2.1% | 2.1% | 1.3% | 3.1% | 2.6% | |
| Return on equity ROE (%) | 3.2% | 3.4% | 2.2% | 5.5% | 4.9% | |
| Earnings per share (EPS) | 0.05 | 0.06 | 0.03 | 0.08 | 0.07 |
| Balance sheet – joint ventures 50% consolidated (thousand EUR) | 30.06.2017 | 31.12.2016 | Change % | |
| As of the end of the period | ||||
| Current assets | 17 066 | 16 251 | 5% | |
| Non-current assets | 60 874 | 61 506 | -1% | |
| Total assets | 77 940 | 77 757 | 0% | |
| incl. cash and bank | 4 430 | 4 572 | -3% | |
| incl. goodwill | 38 904 | 38 904 | 0% | |
| Current liabilities | 11 074 | 12 222 | -9% | |
| Non-current liabilities | 15 949 | 14 462 | 10% | |
| Total liabilities | 27 023 | 26 684 | 1% | |
| incl. borrowings | 15 860 | 16 603 | -4% | |
| Equity | 50 917 | 51 073 | 0% | |
| Financial ratios (%) – joint ventures consolidated 50% | 30.06.2017 | 31.12.2016 |
| Equity ratio (%) | 65% | 66% |
| Debt to equity ratio (%) | 31% | 33% |
| Debt to capital ratio (%) | 18% | 19% |
| Total debt/EBITDA ratio | 1.90 | 1.96 |
| Liquidity ratio | 1.54 | 1.33 |
FINANCIAL INDICATORS AND RATIOS – joint ventures recognised under the equity method
| Performance indicators – joint ventures under equity method (thousand EUR) |
Q2 2017 |
Q2 2016 |
Change % |
Q2 2015 |
Q2 2014 |
Q2 2013 |
| For the period | ||||||
| Sales (only subsidiaries) | 13 923 | 14 120 | -1% | 13 765 | 13 764 | 12 998 |
| EBITDA (only subsidiaries) | 1 944 | 1 962 | -1% | 1 113 | 2 664 | 2 196 |
| EBITDA margin (%) | 14.0% | 13.9% | 8.1% | 19.4% | 16.9% | |
| Operating profit (only subsidiaries) | 1 253 | 1 249 | 0% | 429 | 1 936 | 1 576 |
| Operating margin (%) | 9.0% | 8.8% | 3.1% | 14.1% | 12.1% | |
| Interest expenses (only subsidiaries) | (99) | (121) | 18% | (130) | (181) | (178) |
| Profit of joint ventures by equity method | 141 | 224 | -37% | 225 | 190 | 82 |
| Net profit for the period | 1 221 | 1 324 | -8% | 481 | 1 858 | 1 398 |
| Net margin (%) | 8.8% | 9.4% | 3.5% | 13.5% | 10.8% | |
| Return on assets ROA (%) | 1.6% | 1.8% | 0.6% | 2.5% | 1.8% | |
| Return on equity ROE (%) | 2.4% | 2.7% | 1.0% | 4.2% | 3.3% | |
| Earnings per share (EPS) | 0.04 | 0.05 | 0.02 | 0.06 | 0.05 |
| Performance indicators – joint ventures under equity method (thousand EUR) |
1st Half year 2017 |
1st Half year 2016 |
Change % |
1st Half year 2015 |
1st Half year 2014 |
1st Half year 2013 |
| For the period | ||||||
| Sales (only subsidiaries) | 26 332 | 26 375 | 0% | 25 858 | 26 498 | 24 811 |
| EBITDA (only subsidiaries) | 3 018 | 2 987 | 1% | 2 351 | 3 993 | 3 612 |
| EBITDA margin (%) | 11.5% | 11.3% | 9.1% | 15.1% | 14.6% | |
| Operating profit (only subsidiaries) | 1 661 | 1 573 | 6% | 972 | 2 529 | 2 354 |
| Operating margin (%) | 6.3% | 6.0% | 3.8% | 9.5% | 9.5% | |
| Interest expenses (only subsidiaries) | (208) | (241) | 14% | (285) | (357) | (374) |
| Profit of joint ventures by equity method | 210 | 356 | -41% | 419 | 288 | 146 |
| Net profit for the period | 1 631 | 1 636 | 0% | 1 037 | 2 361 | 2 036 |
| Net margin (%) | 6.2% | 6.2% | 4.0% | 8.9% | 8.2% | |
| Return on assets ROA (%) | 2.2% | 2.2% | 1.4% | 3.2% | 2.7% | |
| Return on equity ROE (%) | 3.2% | 3.4% | 2.2% | 5.5% | 4.9% | |
| Earnings per share (EPS) | 0.05 | 0.06 | 0.03 | 0.08 | 0.07 |
|
Balance sheet – joint ventures under equity method (thousand EUR) |
30.06.2017 | 31.12.2016 | Change % |
| As of the end of the period | |||
| Current assets | 14 080 | 13 094 | 8% |
| Non-current assets | 60 673 | 61 074 | -1% |
| Total assets | 74 753 | 74 168 | 1% |
| incl. cash and bank | 2 842 | 2 856 | 0% |
| incl. goodwill | 36 953 | 36 953 | 0% |
| Current liabilities | 8 677 | 9 591 | -10% |
| Non-current liabilities | 15 159 | 13 504 | 12% |
| Total liabilities | 23 836 | 23 095 | 3% |
| incl. borrowings | 15 197 | 15 784 | -4% |
| Equity | 50 917 | 51 073 | 0% |
| Financial ratios (%) – joint venture consolidated under equity | 30.06.2017 | 31.12.2016 |
| Equity ratio (%) | 68% | 69% |
| Debt to equity ratio (%) | 30% | 31% |
| Debt to capital ratio (%) | 20% | 20% |
| Total debt/EBITDA ratio | 2.08 | 2.17 |
| Liquidity ratio | 1.62 | 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 | |
| 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 | |
| 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 2013-2017
| (thousand EUR) | Sales | Sales | ||||
|
Q2 2017 |
Q2 2016 |
Change % |
Q2 2015 |
Q2 2014 |
Q2 2013 |
|
| media segment (by equity method) | 8 621 | 8 511 | 1% | 7 984 | 7 492 | 6 751 |
| incl. revenue from all digital and online channels | 5 127 | 4 740 | 8% | 4 116 | 3 730 | 3 257 |
| printing services segment | 6 199 | 6 663 | -7% | 6 386 | 7 210 | 7 131 |
| entertainment segment | 0 | 0 | - | 392 | 0 | 0 |
| corporate functions | 592 | 593 | 0% | 488 | 423 | 385 |
| intersegment eliminations | (1 490) | (1 648) | 10% | (1 485) | (1 361) | (1 270) |
| TOTAL GROUP under equity method | 13 923 | 14 120 | -1% | 13 765 | 13 764 | 12 998 |
| media segment by proportional consolidation | 11 409 | 11 231 | 2% | 10 507 | 9 950 | 9 082 |
| incl. revenue from all digital and online channels | 5 344 | 4 903 | 9% | 4 258 | 3 848 | 3 342 |
| printing services segment | 6 199 | 6 663 | -7% | 6 386 | 7 210 | 7 131 |
| entertainment segment | 0 | 0 | - | 392 | 0 | 0 |
| corporate functions | 592 | 593 | 0% | 488 | 423 | 385 |
| intersegment eliminations | (1 818) | (1 942) | (1 775) | (1 576) | (1 483) | |
| TOTAL GROUP by proportional consolidation | 16 382 | 16 545 | -1% | 15 998 | 16 007 | 15 115 |
| (thousand EUR) | EBITDA | EBITDA | |||||
|
Q2 2017 |
Q2 2016 |
Change % |
Q2 2015 |
Q2 2014 |
Q2 2013 |
||
| media segment by equity method | 1 189 | 1 059 | 12% | 1 256 | 1 261 | 800 | |
| media segment by proportional consolidation | 1 430 | 1 430 | 0% | 1 631 | 1 532 | 989 | |
| printing services segment | 1 024 | 1 148 | -11% | 1 271 | 1 537 | 1 599 | |
| entertainment segment | 0 | 0 | - | (1 129) | 0 | 0 | |
| corporate functions | (270) | (246) | -10% | (285) | (134) | (204) | |
| intersegment eliminations | 0 | 0 | 0 | 0 | 1 | ||
| TOTAL GROUP under equity method | 1 944 | 1 962 | -1% | 1 113 | 2 664 | 2 196 | |
| TOTAL GROUP by proportional consolidation | 2 184 | 2 332 | -6% | 1 488 | 2 935 | 2 384 | |
| EBITDA margin |
Q2 2017 |
Q2 2016 |
Q2 2015 |
Q2 2014 |
Q2 2013 |
| media segment by equity method | 14% | 12% | 16% | 17% | 12% |
| media segment by proportional consolidation | 13% | 13% | 16% | 15% | 11% |
| printing services segment | 17% | 17% | 20% | 21% | 22% |
| TOTAL GROUP under equity method | 14% | 14% | 8% | 19% | 17% |
| TOTAL GROUP by proportional consolidation | 13% | 14% | 9% | 18% | 16% |
Key financial data of the segments in the first half-year 2013-2017
| (thousand EUR) | Sales | Sales | |||||
|
1st Half year 2017 |
1st Half year 2016 |
Change % |
1st Half year 2015 |
1st Half year 2014 |
1st Half year 2013 |
||
| media segment (by equity method) | 16 049 | 15 282 | 5% | 14 565 | 13 906 | 12 674 | |
| incl. revenue from all digital and online channels | 9 345 | 8 298 | 13% | 7 466 | 6 517 | 5 727 | |
| printing services segment | 11 966 | 13 004 | -8% | 12 704 | 14 272 | 13 749 | |
| entertainment segment | 0 | 0 | - | 453 | 0 | 0 | |
| corporate functions | 1 167 | 1 132 | 3% | 960 | 844 | 740 | |
| intersegment eliminations | (2 849) | (3 043) | 6% | (2 823) | (2 524) | (2 353) | |
| TOTAL GROUP under equity method | 26 332 | 26 375 | 0% | 25 858 | 26 498 | 24 811 | |
| media segment by proportional consolidation | 21 436 | 20 428 | 5% | 19 469 | 18 588 | 17 188 | |
| incl. revenue from all digital and online channels | 9 746 | 8 602 | 13% | 7 716 | 6 735 | 5 876 | |
| printing services segment | 11 966 | 13 004 | -8% | 12 704 | 14 272 | 13 749 | |
| entertainment segment | 0 | 0 | - | 453 | 0 | 0 | |
| corporate functions | 1 167 | 1 132 | 3% | 960 | 844 | 740 | |
| intersegment eliminations | (3 489) | (3 617) | (3 408) | (2 929) | (2 752) | ||
| TOTAL GROUP by proportional consolidation | 31 079 | 30 947 | 0% | 30 178 | 30 773 | 28 925 | |
| (thousand EUR) | EBITDA | EBITDA | ||||
|
1st Half year 2017 |
1st Half year 2016 |
Change % |
1st Half year 2015 |
1st Half year 2014 |
1st Half year 2013 |
|
| media segment (by equity method) | 1 543 | 1 094 | 41% | 1 535 | 1 599 | 1 007 |
| media segment by proportional consolidation | 1 951 | 1 681 | 16% | 2 189 | 1 997 | 1 283 |
| printing services segment | 1 922 | 2 330 | -18% | 2 432 | 2 995 | 3 013 |
| entertainment segment | 0 | (1) | - | (1 105) | 0 | 0 |
| corporate functions | (446) | (436) | -2% | (511) | (601) | (410) |
| intersegment eliminations | 0 | 0 | 0 | 0 | 2 | |
| TOTAL GROUP under equity method | 3 018 | 2 987 | 1% | 2 351 | 3 993 | 3 612 |
| TOTAL GROUP by proportional consolidation | 3 427 | 3 574 | -4% | 3 005 | 4 389 | 3 888 |
| EBITDA margin |
1st Half year 2017 |
1st Half year 2016 |
1st Half year 2015 |
1st Half year 2014 |
1st Half year 2013 |
| media segment (by equity method) | 10% | 7% | 11% | 12% | 8% |
| media segment by proportional consolidation | 9% | 8% | 11% | 11% | 8% |
| printing services segment | 16% | 18% | 19% | 21% | 22% |
| TOTAL GROUP under equity method | 11% | 11% | 9% | 15% | 15% |
| TOTAL GROUP by proportional consolidation | 11% | 12% | 10% | 14% | 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.
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 |
| (thousand EUR) | Sales | EBITDA | ||||
|
Q2 2017 |
Q2 2016 |
Change % |
Q2 2017 |
Q2 2016 |
Change % |
|
| Ekspress Meedia | 5 065 | 5 218 | -3% | 424 | 479 | -11% |
| incl. Delfi Estonia online revenue | 1 903 | 1 906 | 0% | |||
| Delfi Latvia | 1 007 | 893 | 13% | 131 | 95 | 38% |
| Delfi Lithuania | 2 461 | 2 305 | 7% | 645 | 505 | 28% |
| incl. Delfi Lithuania online revenue | 2 026 | 1 819 | 11% | |||
| Hea Lugu | 90 | 97 | -7% | (10) | (9) | -11% |
| Zave Media | 0 | 0 | - | 0 | (10) | 100% |
| Other companies | 0 | 0 | - | (1) | (1) | 0% |
| Intersegment eliminations | (2) | (2) | 1% | 0 | (0) | - |
| TOTAL subsidiaries | 8 621 | 8 511 | 1% | 1 189 | 1 059 | 12% |
| SL Õhtuleht* | 1 181 | 1 134 | 4% | 161 | 150 | 8% |
| Ajakirjade Kirjastus* | 1 161 | 1 218 | -5% | 53 | 157 | -66% |
| Express Post* | 601 | 680 | -12% | (0) | 64 | -101% |
| Linna Ekraanid* | 101 | - | - | 27 | - | - |
| Intersegment eliminations | (256) | (312) | 18% | (0) | 0 | -100% |
| TOTAL subsidiaries | 2 788 | 2 720 | 3% | 241 | 371 | -35% |
| TOTAL segment by proportional consolidation | 11 409 | 11 231 | 2% | 1 430 | 1 430 | 0% |
* Proportional share of joint ventures
| (thousand EUR) | Sales | EBITDA | ||||
|
1st Half year 2017 |
1st Half year 2016 |
Change % |
1st Half year 2017 |
1st Half year 2016 |
Change % |
|
| Ekspress Meedia | 9 560 | 9 430 | 1% | 645 | 677 | -5% |
| incl. Delfi Estonia online revenue | 3 439 | 3 342 | 3% | |||
| Delfi Latvia | 1 862 | 1 627 | 14% | 218 | 92 | 137% |
| Delfi Lithuania | 4 444 | 4 026 | 10% | 696 | 402 | 73% |
| incl. Delfi Lithuania online revenue | 3 658 | 3 061 | 20% | |||
| Hea Lugu | 186 | 201 | -7% | (15) | (17) | 12% |
| Zave Media | 0 | 1 | -100% | (0) | (60) | 100% |
| Other companies | 0 | 0 | - | (1) | (1) | 0% |
| Intersegment eliminations | (3) | (3) | -6% | 0 | 1 | - |
| TOTAL subsidiaries | 16 049 | 15 282 | 5% | 1 543 | 1 094 | 41% |
| SL Õhtuleht* | 2 278 | 2 162 | 5% | 258 | 247 | 4% |
| Ajakirjade Kirjastus* | 2 292 | 2 259 | 1% | 137 | 203 | -33% |
| Express Post* | 1 187 | 1 321 | -10% | (25) | 137 | -119% |
| Linna Ekraanid* | 174 | - | - | 39 | - | - |
| Intersegment eliminations | (544) | (596) | 9% | (0) | (0) | 0% |
| TOTAL subsidiaries | 5 387 | 5 146 | 5% | 408 | 587 | -30% |
| TOTAL segment by proportional consolidation | 21 436 | 20 428 | 5% | 1 951 | 1 681 | 16% |
* 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 the zlick innovation has been developed further that now enables to buy paid content with zero click in all our channels. Ad-free Delfi has been launched enabling to read ad-free Delfi portal for a monthly fee. Delfi Sport launched a separate mobile application. In digital newspapers the Android application of Eesti Ekspress now also includes an offline option. The family package that includes all Estonian digital newspapers and magazines of our Group enables access from a separate Android application. Delfi Latvia has transferred all its verticals to the so-called responsive design and has renewed its classified portal atverskapi.lv. Delfi Lithuania was the first local portal in Lithuania to launch an innovative voiceover solution that enables to listen to the news.
Starting from last year, in addition to online advertising in our own portals our advertising sales departments also offer 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, and also offer programmatic advertising sales.
The range and content of vertical products continues to expand. Delfi Estonia launched a new Russian language portal – Polesnoje. An agreement has been concluded to broadcast WTA tennis tournaments in order to show the matches of Estonian tennis star Anett Kontaveit. Exclusive blog and content cooperation is conducted with Estonian rally driver Ott Tänak. Delfi Latvia has been actively broadcasting Latvia’s local elections through various multi-media and video projects. Delfi Lithuania launched a new sub-site “Delfi Food“ and “Delfi Travel”. The National Basketball Association (NBA) and Delfi Lithuania started a multi-year cooperation project and launched NBA’s first official Lithuanian online portal in the Delfi environment at www.delfi.lt/nba. To fight fake news, a separate disclose portal was set up at www.demaskuok.lt consisting of information that is distributed, but is not true.
Testing of various e-commerce projects and development of classified portals in Latvia and Lithuania continues.
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 2016-2017
In the third quarter 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. Comparable data from Estonia are available from September 2016.
In the measurement period, the readership of Delfi and Postimees has been relatively stable. In the first quarter of 2016, Postimees merged classified portals www.kv.ee and www.osta.ee owned by Eesti Meedia into its postimees.ee domain. By adding the number of users of classified portals Postimees achieved a higher number of users than Delfi. Õhtuleht has increased its readership to 330,000 unique users.
Latvian online readership 2016-2017
At the beginning of 2016 research company Gemius changed its method of online survey. These figures now show the number of users of Latvian Internet portals in computers, mobile devices and tablet PCs. Delfi remains stable and is the largest new portal in Latvia by online readership. Inbox that is slightly bigger than Delfi by the number of users is an email environment and not a news portal. The number of users of Latvian portals has been relatively stable and is similar for all portals. Only Draugiem is losing users at a stable rate. According to the survey commissioned by the Latvian government in the spring 2017, Latvia’s most trusted media channel is Delfi.lv that is trusted more than even the state-owned TV station.
Lithuanian online readership 2016-2017
At the beginning of 2016 research company Gemius changed its method of online survey. These figures now show the number of users of Lithuanian Internet portals in computers, mobile devices and tablet PCs.
Delfi.lt remains Lithuania’s largest online portal. In the third quarter 2016, 15min.lt merged several portals that did not belong to this media group and therefore, the number of users of 15min.lt domain increased in the fourth quarter 2016. This growth does not show the number of users of media services and therefore cannot be regarded as the improvement of the market situation of 15min.lt. In March 2017 the readership of such third portals is no longer considered part of 15min.lt and, as a result, the readership of 15min.lt has decreased notably. Delfi increased its readership significantly thanks to new products and active marketing activities. TV3 and Lrytas.lt are battling for the third place.
NEWSPAPERS IN ESTONIA
To get a fair picture of the newspaper market, one must look at the circulation of newspapers together with the number of subscribers of digital newspaper. The newspaper with the largest circulation in Estonia is Õhtuleht whose number of users exceeded 50 thousand in June 2017. Päevaleht has about 45,200 and Eesti Ekspress has 35,400 users. The number of users of digital newspapers has notably increased in the recent year and exceeds the decrease in the readership of paper newspapers. For Postimees, the data on users of digital newspapers are not available and the graph shows the number of readers of paper newspapers.
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.
| (thousand EUR) | Sales | EBITDA | ||||
|
Q2 2017 |
Q2 2016 |
Change % |
Q2 2017 |
Q2 2016 |
Change % | |
| Printall | 6 199 | 6 663 | -7% | 1 024 | 1 148 | -11% |
| (thousand EUR) | Sales | EBITDA | ||||
| 1st Half year 2017 | 1st Half year 2016 |
Change % |
1st Half year 2017 | 1st Half year 2016 | Change % | |
| Printall | 11 966 | 13 004 | -8% | 1 922 | 2 330 | -18% |
The printing services segment continues to be impacted by the economic recession which also has a negative impact on our printing plant. 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 the activities of competitors in the Baltic States. A sheet-fed machine acquired two years ago has helped to prevent a steeper revenue decline, and has helped to expand the product range outside the normal media sector.
Consolidated balance sheet (unaudited)
| (thousand EUR) | 30.06.2017 | 31.12.2016 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 2 804 | 2 805 |
| Term deposits | 38 | 51 |
| Trade and other receivables | 8 412 | 7 468 |
| Corporate income tax prepayment | 134 | 0 |
| Inventories | 2 692 | 2 770 |
| Total current assets | 14 090 | 13 094 |
| Non-current assets | ||
| Trade and other receivables | 993 | 982 |
| Deferred tax asset | 34 | 34 |
| Investments in joint ventures | 2 645 | 2 435 |
| Investments in associates | 522 | 591 |
| Property, plant and equipment | 12 267 | 12 722 |
| Intangible assets | 44 212 | 44 310 |
| Total non-current assets | 60 673 | 61 074 |
| TOTAL ASSETS | 74 753 | 74 168 |
| LIABILITIES | ||
| Current liabilities | ||
| Borrowings (Note 7) | 71 | 2 313 |
| Trade and other payables | 8 505 | 7 170 |
| Corporate income tax payable | 101 | 108 |
| Total current liabilities | 8 677 | 9 591 |
| Non-current liabilities | ||
| Long-term borrowings | 15 126 | 13 471 |
| Deferred tax liability | 33 | 33 |
| Total non-current liabilities | 15 159 | 13 504 |
| TOTAL LIABILITIES | 23 836 | 23 095 |
| EQUITY | ||
| Share capital | 17 878 | 17 878 |
| Share premium | 14 277 | 14 277 |
| Treasury shares | (22) | (863) |
| Reserves | 1 531 | 2 058 |
| Retained earnings | 17 253 | 17 723 |
| TOTAL EQUITY | 50 917 | 51 073 |
| TOTAL LIABILITIES AND EQUITY | 74 753 | 74 168 |
Consolidated statement of comprehensive income (unaudited)
| (thousand EUR) | Q2 2017 | Q2 2016 | 1st Half year 2017 | 1st Half year 2016 |
| Sales revenue | 13 923 | 14 120 | 26 332 | 26 375 |
| Cost of sales | (10 724) | (10 947) | (20 800) | (21 146) |
| Gross profit | 3 199 | 3 173 | 5 532 | 5 229 |
| Other income | 270 | 123 | 448 | 236 |
| Marketing expenses | (798) | (684) | (1 514) | (1 201) |
| Administrative expenses | (1 400) | (1 340) | (2 762) | (2 649) |
| Other expenses | (18) | (23) | (43) | (42) |
| Operating profit | 1 253 | 1 249 | 1 661 | 1 573 |
| Interest income | 55 | 10 | 114 | 19 |
| Interest expense | (99) | (121) | (208) | (241) |
| Other finance costs | (19) | (18) | (33) | (33) |
| Net finance cost | (63) | (129) | (127) | (255) |
| Profit on shares of joint ventures | 141 | 224 | 210 | 356 |
| Profit/(loss) from shares of associates | (21) | (34) | (23) | (16) |
| Profit before income tax | 1 310 | 1 378 | 1 721 | 1 690 |
| Income tax expense | (89) | (54) | (90) | (54) |
| Net profit for the reporting period | 1 221 | 1 324 | 1 631 | 1 636 |
| Net profit for the reporting period attributable to: | ||||
| Equity holders of the parent company | 1 221 | 1 324 | 1 631 | 1 636 |
| Other comprehensive income | 0 | 0 | 0 | 0 |
| Total comprehensive income | 1 221 | 1 324 | 1 631 | 1 636 |
| Attributable to equity holders of the parent company | 1 221 | 1 324 | 1 631 | 1 636 |
| Basic and diluted earnings per share | 0.04 | 0.05 | 0.05 | 0.06 |
Consolidated cash flow statement (unaudited)
| (thousand EUR) | 1st Half year 2017 | 1st Half year 2016 |
| Cash flows from operating activities | ||
| Operating profit for the reporting year | 1 661 | 1 573 |
| Adjustments for: | ||
| Depreciation, amortisation and impairment | 1 357 | 1 413 |
| (Gain)/loss on sale and write-down of property, plant and equipment | (3) | (11) |
| Change in value of share option | 0 | 68 |
| Cash flows from operating activities: | ||
| Trade and other receivables | 80 | (497) |
| Inventories | 78 | 282 |
| Trade and other payables | (487) | 262 |
| Cash generated from operations | 2 686 | 3 090 |
| Income tax paid | (231) | (184) |
| Interest paid | (208) | (241) |
| Net cash generated from operating activities | 2 247 | 2 665 |
| Cash flows from investing activities | ||
| Interest received | 102 | 19 |
| Purchase of other investments | (35) | 0 |
| Purchase of property, plant and equipment | (814) | (407) |
| Proceeds from sale of property, plant and equipment | 13 | 16 |
| Loans granted | (2 025) | (9) |
| Loan repayments received | 1 028 | 9 |
| Net cash used in investing activities | (1 732) | (372) |
| Cash flows from financing activities | ||
| Dividends received | 56 | 246 |
| Finance lease payments made | (35) | (42) |
| Loan received | 0 | 11 |
| Repayments of bank loans | (552) | (1 086) |
| Purchase of treasury shares | 0 | (687) |
| Net cash used in financing activities | (531) | (1 557) |
| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | (15) | 736 |
| Cash and cash equivalents at the beginning of the year | 2 856 | 2 927 |
| Cash and cash equivalents at the end of the year | 2 842 | 3 663 |
Additional information:
Mari-Liis Rüütsalu
Chairman of the Management Board
GSM: +372 512 2591
e-mail: mariliis.ryytsalu@egrupp.ee
