Consolidated Interim Report for the Second Quarter and First Half-Year of 2017 31.07

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

 


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