Tallinn, Estonia, 2014-07-31 14:57 CEST (GLOBE NEWSWIRE) --
In the 2 nd quarter of 2014 , the consolidated EBITDA of Ekspress Group amounted to EUR 2.94 million and the consolidated net profit was EUR 1.86 million. The EBITDA increased 23% year-on-year and the net profit figure was 33% higher compared to last year same period. The results for the 2 nd quarter include the settlement of legal expenses in the amount of ca EUR 50 thousand related to the legal dispute regarding the ownership of the shares of AS SL Õhtuleht and AS Ajakirjade Kirjastus that ended in June. After normalising the result with regard to these expense claims, EBITDA was EUR 2.89 million and the net profit was EUR 1.81 million in the 2 nd quarter. The EBITDA of the first-half year amounted to EUR 4.39 million and consolidated net profit totalled EUR 2.36 million. After normalising the first-half year result with extraordinary expenses from the 1 st and 2 nd quarters, the Group earned EUR 4.64 million in EBITDA and EUR 2.61 million in net profit.
The above figures include all our joint ventures (AS SL Õhtuleht, AS Ajakirjade Kirjastus and AS Express Post) consolidated 50% line-by-line. Starting from 2014, in consolidated financial reports 50% joint ventures shall be recognised under the equity method, in compliance with new international financial reporting standards (IFRS) . The change in these accounting policies did not affect the net profit, but decreased the second-quarter revenue by approximately EUR 2.2 million and the EBITDA by approximately EUR 0.27 million (first-half year sales revenue was approximately EUR 4.3 million lower and EBITDA was approximately EUR 0.4 million lower). In its monthly reports, the management monitors the Group’s performance by continuing proportional consolidation of joint ventures and the syndicated loan contract determines the calculation of ratios by proportional consolidation. For purposes of clarity, the management report shows two sets of indicators: one where joint ventures are consolidated line-by-line and the other where joint ventures are recognised under the equity method and their result is presented on one line as financial income. In Note 3 of the interim financial statements, the impact of every joint venture on the respective lines of the income statement and balance sheet is described in more detail.
The main cause for good economic results was significant growth of both the online media segment and the periodicals segment as compared to last year.
In the online media segment, the EBITDA improved more than 30% and the result of the periodicals segment improved more than 120%. In the online segment, the biggest profit growth was posted by Delfi Estonia, exceeding last year’s result by 63% and earning approximately EUR 300 thousand in EBITDA. The EBITDA figure of Delfi Latvia increased 93%, but was almost three times lower than in Delfi Estonia in absolute figures. The profit of Delfi Lithuania increased 7%. The profit of Delfi Estonia improved due to the 21% revenue growth as compared to the previous year. Delfi Estonia increased both the share of video advertising and successfully launched online verticals portals and various special projects, while keeping costs under control. In the 2 nd quarter , the revenue of Delfi Lithuania increased 16%, but the revenue of Delfi Latvia decreased. In the Latvian market we are still feeling the impact of the price shock resulting from the transition to the euro. In the online media segment, we continued to develop the discount price portal Zave in all three Baltic countries, increasing the number of retailers who participate in the portal to 40 in Estonia and to 25 in Latvia and Lithuania. We also launched new specialized verticals in all three Baltic markets.
In the periodicals segment, AS Eesti Ajalehed and AS Ajakirjade Kirjastus posted the strongest result, increasing their EBITDA by 165% and 96%, respectively, as compared to the 2 nd quarter in 2013. The result of AS Eesti Ajalehed that showed significant improvement in the segment of periodicals was due to the successful series of crime novels and keeping costs under control. The result of Ajakirjade Kirjastus was better than last year due to the improved magazine advertising market.
In the printing services segment, although revenue increased, but because of price pressure and appreciation of production inputs, EBITDA remained 4% lower than a year earlier. In the market of printing services, the result was greatly affected by the Ukraine crisis that has reduced the share of Russian orders in the company’s revenue from 11% a year ago to 7% this year. At the same time the share of Finland’s orders has increased from 12% to 18%.
In the 2 nd quarter, the Group’s EBITDA margin improved significantly, climbing to 18.3% from 15.8% a year earlier.
One of the most significant events in the 2 nd quarter was the ending of the court dispute with AS Eesti Meedia over the shares of joint ventures AS SL Õhtuleht and AS Ajakirjade Kirjastus. The dispute resulted in the acquisition of shares by Ekspress Group and their sale to the new partner OÜ Suits Meedia. The third joint venture - AS Express Post - will remain in the joint ownership of Ekspress Group and Eesti Meedia. Another significant event was the organizational merger of Delfi Lithuania and Lithuanian magazine publisher Express Leidyba into one company which will create cost synergies and better possibilities for developing both Delfi and our published magazines. Legally, the companies merged as at 1 July.
In the 3 rd quarter , we expect consolidated sales revenue and profit growth around 4 -5%. In the last quarter, revenue growth should also be in the same range, but we expect to increase the profit notably more. One factor behind improved results will be the new printing contracts of AS SL Õhtuleht and AS Ajakirjade Kirjastus that will enter into force in the summer and will give both companies significant savings in printing costs. New printing contracts were concluded because of the change of ownership in both enterprises that enabled the management of the companies, as a result of free market competition, to negotiate notably better printing prices whereas both companies will save in total approximately EUR 700 thousand a year, 50% of which will influence the result of Ekspress Group. Õhtuleht continues to be printed in the printing house owned by AS Eesti Meedia, but its annual printing cost will now be approximately EUR 550 thousand lower than before.
We continue to look for new sources of growth that would help to develop innovative solutions and provision of new services for our demanding customers. With our solutions we continue 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.
FINANCIAL INDICATORS AND RATIOS – joint ventures consolidated 50% line-by-line
| Performance indicators – joint ventures consolidated 50% (EUR thousand) | Q2 2014 | Q2 2013 | Change % | Q2 2012 | Q2 2011 |
| For the period | |||||
| Sales | 16 007 | 15 115 | 6% | 15 762 | 14 963 |
| EBITDA | 2 935 | 2 384 | 23% | 2 527 | 2 025 |
| EBITDA margin (%) | 18.3% | 15.8% | 16.0% | 13.5% | |
| Operating profit | 2 180 | 1 742 | 25% | 1 670 | 1 136 |
| Operating margin (%) | 13.6% | 11.5% | 10.6% | 7.6% | |
| Interest expenses | (181) | (178) | -2% | (553) | (576) |
| Profit /(loss) for the period | 1 858 | 1 398 | 33% | 972 | 396 |
| Net margin (%) | 11.6% | 9.3% | 6.2% | 2.6% | |
| ROA (%) | 2.4% | 1.8% | 1.2% | 0.5% | |
| ROE (%) | 4.2% | 3.3% | 2.5% | 1.0% | |
| Earnings per share (EPS) | 0.06 | 0.05 | 0.03 | 0.01 |
| Performance indicators – joint ventures consolidated 50% (EUR thousand) | 1 st Half year 2014 | 1 st Half year 2013 | Change % | 1 st Half year 2012 | 1 st Half year 2011 |
| For the period | |||||
| Sales | 30 772 | 28 925 | 6% | 29 982 | 28 109 |
| EBITDA | 4 389 | 3 888 | 13% | 4 142 | 3 419 |
| EBITDA margin (%) | 14.3% | 13.4% | 13.8% | 12.2% | |
| Operating profit* | 2 871 | 2 582 | 11% | 2 426 | 1 691 |
| Operating margin* (%) | 9.3% | 8.9% | 8.1% | 6.0% | |
| Interest expenses | (357) | (374) | 5% | (1 041) | (1 135) |
| Profit /(loss) for the period* | 2 361 | 2 036 | 16% | 1 151 | 241 |
| Net margin* (%) | 7.7% | 7.0% | 3.8% | 0.9% | |
| Net profit /(loss) for the period in the financial statements (incl. impairments and gain on sale of ownership interest) | 2 361 | 2 036 | 16% | 1 151 | 1 781 |
| Net margin (%) | 7.7% | 7.0% | 3.8% | 6.3% | |
| ROA (%) | 3.1% | 2.6% | 1.4% | 2.1% | |
| ROE (%) | 5.5% | 4.9% | 3.0% | 4.7% | |
| Earnings per share (EPS) | 0.08 | 0.07 | 0.04 | 0.06 |
* The results exclude impairment of goodwill and trademarks, and the net extraordinary gain in relation to the acquisition of an additional 50% ownership interest in Eesti Päevalehe AS in the 1 st quarter 2011. The transaction was accounted for in two parts: firstly, as the sale of the current 50% ownership interest on which the net extraordinary gain totalled EUR 1 540 thousand and secondly, as the acquisition of the wholly-owned subsidiary.
| Balance sheet – joint ventures 50% consolidated (EUR thousand) | 30.06.2014 | 31.12.2013 | Change % |
| As of the end of the period | |||
| Current assets | 15 630 | 14 447 | 8% |
| Non-current assets | 62 429 | 63 019 | -1% |
| Total assets | 78 059 | 77 466 | 1% |
| incl. cash and bank | 3 566 | 4 501 | -21% |
| incl. goodwill | 40 052 | 40 052 | 0% |
| Current liabilities | 14 814 | 14 468 | 2% |
| Non-current liabilities | 18 851 | 20 673 | -9% |
| Total liabilities | 33 665 | 35 141 | -4% |
| incl. borrowings | 25 184 | 24 432 | 3% |
| Equity | 44 394 | 42 325 | 5% |
| Financial ratios (%) – joint ventures consolidated 50% | 30.06.2014 | 31.12.2013 |
| Equity ratio (%) | 57% | 55% |
| Debt to equity ratio (%) | 57% | 58% |
| Debt to capital ratio (%) | 33% | 32% |
| Total debt / EBITDA ratio | 3.24 | 3.36 |
| Debt service coverage ratio | 1.75 | 1.66 |
| Liquidity ratio | 1.06 | 1.00 |
| Formulas used to calculate the financial ratios | |
| 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 |
| ROA (%) | Net profit /average assets x 100 |
| ROE (%) | Net profit /average equity x 100 |
FINANCIAL INDICATORS AND RATIOS – joint ventures consolidated under the equity method
| Performance indicators – joint ventures by equity method (EUR thousand) | Q2 2014 | Q2 2013 | Change % | Q2 2012 | Q2 2011 |
| For the period | |||||
| Sales (only subsidiaries) | 13 764 | 12 998 | 6% | 13 570 | 12 837 |
| EBITDA (only subsidiaries) | 2 664 | 2 196 | 21% | 2 347 | 1 806 |
| EBITDA margin (%) | 19.4% | 16.9% | 17.3% | 14.1% | |
| Operating profit (only subsidiaries) | 1 936 | 1 576 | 23% | 1 516 | 951 |
| Operating margin (%) | 14.1% | 12.1% | 11.2% | 7.4% | |
| Interest expenses (only subsidiaries) | (181) | (178) | -2% | (553) | (577) |
| Profit of joint ventures by equity method | 190 | 82 | 131% | 64 | 90 |
| Profit / (loss) for the period | 1 858 | 1 398 | 33% | 972 | 396 |
| Net margin (%) | 13.5% | 10.8% | 7.2% | 3.1% | |
| ROA (%) | 2.5% | 1.8% | 1.2% | 0.5% | |
| ROE (%) | 4.2% | 3.3% | 2.5% | 1.0% | |
| Earnings per share (EPS) | 0.06 | 0.05 | 0.03 | 0.01 |
| Performance indicators – joint ventures under the equity method (EUR thousand) | 1 st Half year 2014 | 1 st Half year 2013 | Change % | 1 st Half year 2012 | 1 st Half year 2011 |
| For the period | |||||
| Sales (only subsidiaries) | 26 499 | 24 810 | 7% | 25 748 | 23 986 |
| EBITDA (only subsidiaries) | 3 990 | 3 612 | 10% | 3 895 | 3 101 |
| EBITDA margin (%) | 15.1% | 14.6% | 15.1% | 12.9% | |
| Operating profit* (only subsidiaries) | 2 529 | 2 354 | 7% | 2 236 | 1 447 |
| Operating margin* (%) | 9.5% | 9.5% | 8.7% | 6.0% | |
| Interest expenses (only subsidiaries) | (357) | (374) | 5% | (1 042) | (1 140) |
| Profit of joint ventures by equity method | 288 | 146 | 98% | 104 | 160 |
| Profit / (loss) for the period* | 2 361 | 2 036 | 16% | 1 151 | 241 |
| Net margin* (%) | 8.9% | 8.2% | 4.5% | 1.0% | |
| Net profit / (loss) for the period in the financial statements (incl. impairments and gain on sale of ownership interest) | 2 361 | 2 036 | 16% | 1 151 | 1 781 |
| Net margin (%) | 8.9% | 8.2% | 4.5% | 7.4% | |
| ROA (%) | 3.2% | 2.7% | 1.5% | 2.1% | |
| ROE (%) | 5.5% | 4.9% | 3.0% | 4.7% | |
| Earnings per share (EPS) | 0.08 | 0.07 | 0.04 | 0.06 |
* The results exclude impairment of goodwill and trademarks, and the net extraordinary gain in relation to the acquisition of an additional 50% ownership interest in Eesti Päevalehe AS in the 1 st quarter 2011. The transaction was accounted for in two parts: firstly, as the sale of the current 50% ownership interest on which the net extraordinary gain totalled EUR 1 540 thousand and secondly, as the acquisition of the wholly-owned subsidiary.
| Balance sheet– joint ventures by equity method (EUR thousand) | 30.06.2014 | 31.12.2013 | Change % |
| As at the end of the period | |||
| Current assets | 12 657 | 11 357 | 11% |
| Non-current assets | 63 407 | 63 898 | -1% |
| Total assets | 76 064 | 75 255 | 1% |
| incl. cash and bank | 1 739 | 2 209 | -21% |
| incl. goodwill | 39 596 | 39 596 | 0% |
| Current liabilities | 12 819 | 12 258 | 5% |
| Non-current liabilities | 18 851 | 20 672 | -9% |
| Total liabilities | 31 670 | 32 930 | -4% |
| incl. borrowings | 25 184 | 24 432 | 3% |
| Equity | 44 394 | 42 325 | 5% |
| Financial ratios (%) – joint ventures by equity method | 30.06.2014 | 31.12.2013 |
| Equity ratio (%) | 58% | 56% |
| Debt to equity ratio (%) | 57% | 58% |
| Debt to capital ratio (%) | 35% | 34% |
| Total debt / EBITDA ratio | 3.61 | 3.71 |
| Debt service coverage ratio | 1.57 | 1.50 |
| Liquidity ratio | 0.99 | 0.93 |
| Formulas used to calculate the financial ratios | |
| 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 |
| ROA (%) | Net profit /average assets x 100 |
| ROE (%) | Net profit /average equity x 100 |
OVERVIEW OF THE SEGMENTS
Since 2009 the Group operates in the following operating segments:
- Online media
- Periodicals (newspapers, magazines and books)
- Printing services.
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. It can appear in lower advertising costs in retail, preference of other advertising channels (e.g. preference of internet rather than print media) and changes in consumption habits of retail consumers (following current news in news portals versus reading printed newspapers, preference of the younger generation to use mobile devices and other communication channels, etc.).
Seasonality
The revenue from the Group’s advertising sales as well as in the printing services segment is impacted by major seasonal fluctuations. The level of both types of revenue is the highest in the 2 nd and 4 th quarter of each year and the lowest in the 3 rd quarter. Revenue is higher in the 4 th 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.
Key financial data of the segments Q2 2011-2014
| (EUR thousand) | Sales | Sales | |||
| Q2 2014 | Q2 2013 | Change% | Q2 2012 | Q2 2011 | |
| Online media | 3 648 | 3 224 | 13% | 2 912 | 2 505 |
| Periodicals (incl. consolidated joint ventures) | 6 383 | 5 947 | 7% | 6 606 | 6 356 |
| Printing services | 7 210 | 7 131 | 1% | 7 482 | 6 998 |
| Corporate functions | 422 | 385 | 10% | 279 | 48 |
| Intersegment eliminations | (1 656) | (1 572) | -5% | (1 518) | (943) |
| TOTAL GROUP | 16 007 | 15 115 | 6% | 15 762 | 14 963 |
| Impact of joint ventures | (2 243) | (2 117) | (2 192) | (2 126) | |
| TOTAL GROUP by new accounting standards | 13 764 | 12 998 | 6% | 13 570 | 12 837 |
| (EUR thousand) | EBITDA | EBITDA | |||
| Q2 2014 | Q2 2013 | Change% | Q2 2012 | Q2 2011 | |
| Online media | 962 | 730 | 32% | 743 | 534 |
| Periodicals (incl. consolidated joint ventures) | 571 | 259 | 120% | 392 | 157 |
| Printing services | 1 537 | 1 599 | -4% | 1 563 | 1 551 |
| Corporate functions | (134) | (204) | 34% | (173) | (221) |
| Intersegment eliminations | 0 | 1 | -100% | 1 | 3 |
| TOTAL GROUP | 2 935 | 2 384 | 23% | 2 527 | 2 025 |
| Impact of joint ventures | (271) | (189) | (180) | (219) | |
| TOTAL GROUP by new accounting standards | 2 664 | 2 196 | 21% | 2 347 | 1 806 |
| EBITDA margin | Q2 2014 | Q2 2013 | Q2 2012 | Q2 2011 |
| Online media | 26% | 23% | 26% | 21% |
| Periodicals | 9% | 4% | 6% | 2% |
| Printing services | 21% | 22% | 21% | 22% |
| TOTAL | 18% | 16% | 16% | 14% |
| TOTAL GROUP by new accounting standards | 19% | 17% | 17% | 14% |
Key financial data of the segments 1 st half year 2011-2014
| (EUR thousand) | Sales | Sales | |||
| 1 st Half year 2014 | 1 st Half year 2013 | Change% | 1 st Half year 2012 | 1 st Half year 2011 | |
| Online media | 6 385 | 5 660 | 13% | 5 099 | 4 358 |
| Periodicals (incl. consolidated joint ventures) | 12 351 | 11 690 | 6% | 12 387 | 11 918 |
| Printing services | 14 272 | 13 749 | 4% | 14 858 | 13 467 |
| Corporate functions | 844 | 740 | 14% | 420 | 74 |
| Intersegment eliminations | (3 079) | (2 914) | -6% | (2 782) | (1 708) |
| TOTAL GROUP | 30 772 | 28 925 | 6% | 29 982 | 28 109 |
| Impact of joint ventures | (4 274) | (4 115) | (4 234) | (4 123) | |
| TOTAL GROUP by new accounting standards | 26 499 | 24 810 | 7% | 25 748 | 23 986 |
| (EUR thousand) | EBITDA | EBITDA | |||
| 1 st Half year 2014 | 1 st Half year 2013 | Change% | 1 st Half year 2012 | 1 st Half year 2011 | |
| Online media | 1 126 | 814 | 38% | 981 | 497 |
| Periodicals (incl. consolidated joint ventures) | 868 | 469 | 85% | 413 | 301 |
| Printing services | 2 995 | 3 013 | -1% | 3 093 | 3 047 |
| Corporate functions | (601) | (410) | -47% | (347) | (434) |
| Intersegment eliminations | 0 | 2 | -87% | 1 | 8 |
| TOTAL GROUP | 4 389 | 3 888 | 13% | 4 142 | 3 419 |
| Impact of joint ventures | (398) | (275) | (247) | (319) | |
| TOTAL GROUP by new accounting standards | 3 990 | 3 612 | 10% | 3 895 | 3 101 |
| EBITDA margin | 1 st Half year 2014 | 1 st Half year 2013 | 1 st Half year 2012 | 1 st Half year 2011 |
| Online media | 18% | 14% | 19% | 11% |
| Periodicals (incl. consolidated joint ventures) | 7% | 4% | 3% | 3% |
| Printing services | 21% | 22% | 21% | 23% |
| TOTAL GROUP | 14% | 13% | 14% | 12% |
| TOTAL GROUP by new accounting standards | 15% | 15% | 15% | 13% |
The segments’ EBITDA does not include intragroup management fees, and 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.
News portals owned by the Group
| Owner | Portal | Owner | Portal |
| Delfi Estonia | www.delfi.ee | AS Eesti Ajalehed | www.ekspress.ee |
| rus.delfi.ee | www.maaleht.ee | ||
| Delfi Latvia | www.delfi.lv | www.epl.ee | |
| rus.delfi.lv | www.arileht.ee | ||
| Delfi Lithuania | www.delfi.lt | AS SL Õhtuleht | www.ohtuleht.ee |
| ru.delfi.lt |
Advertising portals owned by the Group
| Owner | Portal | Owner | Portal |
| Delfi Lithuania | www.alio.lt | AS Eesti Ajalehed | www.ekspressjob.ee |
| www.ekspressauto.ee | |||
| www.hyppelaud.ee |
Online media segment
The online media segment includes Delfi operations in Estonia, Latvia, Lithuania and Ukraine as well as the Parent Company Delfi Holding. Starting from 1 March 2014, the operations in Ukraine have been terminated. The first-half year EBITDA of Delfi Ukraine includes expenses related to the termination of operations.
| (EUR thousand) | Sales | ||
| Q2 2014 | Q2 2013 | Change % | |
| Delfi Estonia | 1 398 | 1 154 | 21% |
| Delfi Latvia | 648 | 677 | -4% |
| Delfi Lithuania | 1 602 | 1 377 | 16% |
| Delfi Ukraine | 0 | 15 | -100% |
| Other Delfi companies | 0 | 0 | - |
| Intersegment eliminations | 0 | 1 | -100% |
| TOTAL | 3 648 | 3 224 | 13% |
| (EUR thousand) | EBITDA | ||
| Q2 2014 | Q2 2013 | Change % | |
| Delfi Estonia | 290 | 178 | 63% |
| Delfi Latvia | 58 | 30 | 93% |
| Delfi Lithuania | 482 | 452 | 7% |
| Delfi Ukraine | 0 | (49) | 100% |
| Other Delfi companies | 133 | 120 | 11% |
| Intersegment eliminations | (1) | (1) | - |
| TOTAL | 962 | 730 | 32% |
| (EUR thousand) | Sales | ||
| 1 st Half year 2014 | 1 st Half year 2013 | Change % | |
| Delfi Estonia | 2 471 | 2 006 | 23% |
| Delfi Latvia | 1 141 | 1 198 | -5% |
| Delfi Lithuania | 2 771 | 2 432 | 14% |
| Delfi Ukraine | 2 | 25 | -92% |
| Other Delfi companies | 0 | 0 | - |
| Intersegment eliminations | 0 | (1) | 100% |
| TOTAL | 6 385 | 5 660 | 13% |
| (EUR thousand) | EBITDA | ||
| 1 st Half year 2014 | 1 st Half year 2013 | Change % | |
| Delfi Estonia | 326 | 149 | 119% |
| Delfi Latvia | (25) | 69 | -136% |
| Delfi Lithuania | 644 | 495 | 30% |
| Delfi Ukraine | (51) | (108) | 53% |
| Other Delfi companies | 232 | 210 | 10% |
| Intersegment eliminations | 0 | (1) | - |
| TOTAL | 1 126 | 814 | 38% |
In the 2 nd quarter, both Delfi Estonia and Delfi Lithuania continued to grow strongly. The sales growth was mainly attributable to the successful launch of new specialized verticals, new advertising solutions, Delfi TV, growing use of the mobile app, as well as such large events as the FIFA World Cup and European Parliament elections. The EBITDA of Delfi Lithuania increased mainly because of higher efficiency of the sales team, improved customer focus and more active handling of overdue receivables. For various reasons, the Latvian advertising market remains subdued and the sales of Delfi Latvia decreased as compared to the year before. The EBITDA increased in the 2 nd quarter thanks to cost-cutting. At the same time the merger among competitive news portals requires additional investments to be made by ourselves and the results of Delfi Latvia for the second half year mayremain below expectations. However, we believe that initiatives launched all over the Baltic states will also add momentum to our growth in Latvia and that this year will generally be more successful in sales and product development as compared to the year earlier.
Delfi Estonia
· Further development of Delfi TV as a separate service and on a new platform as well as new live streams under the Delfi TV brand.
· A new vertical www.kasulik.ee targeted at consumers was launched.
· Delfi’s mobile application was renewed.
· Cooperation with the New Age portal www.alkeemia.ee
Estonian online readership 2013-2014
The 2 nd quarter 2014 has been successful for Delfi. The difference in the number of users with the competing portal postimees.ee has been stable at more than 150 thousand unique browsers a week. At the end of the quarter, Postimees acquired a number of smaller portals (meeldib.ee, etc.) that to a certain extent increased the total number of users of postimees.ee.
Starting from the next quarter, the methodology of the TNS Metric survey will be changed so that it will be more accurately reflecting the number of mobile users.
Delfi Latvia
· Delfi TV streams based on a new platform from different events continued.
· New topical verticals such as the weather portal, Home&Garden vertical, Day in Photo, etc. were launched.
· Separate topical sites for FIFA World Cup, Ice Hockey Championship, Positivus.
· The number of followers of Delfi Latvia in Facebook, Twitter and Draugiem continues to grow and is already approximately 200 thousand.
· Cooperation projects:
- Media partner for the international advertising festival “Golden Hammer 2014”,
- Media partner for Riga Marathon,
- Media partner of the Latvian national ice-hockey team.
Latvian online readership 2013-2014
In the 2 nd quarter of 2014, the users’ activity in news portals was again very high, although in June there was a significant change in users’ activity. In the 1 st qurter, the most important event in the market was the acquisition of Apollo.lv by AS Eesti Meedia. Since June, Apollo.lv is no longer a separate domain and has been fully merged under the Tvnet.lv domain. Therefore, the June figures already represent the total number of users for the two merged portals. As a result, Tvnet.lv passed draugiem.lv in the total number of users, but in the overall ranking of portals Tvnet.lv still placed third after Inbox.lv and Delfi.lv. Delfi.lv remains the largest news portal in Latvia.
Starting from January 2014, the method of the Gemius online survey has changed. The readership in 2014 includes only results for computer users (PC) and excludes all mobile equipment. Separate statistics on mobile equipment will be created during 2014.
Delfi Lithuania
· Production of live webcasts and streams through Delfi TV on a new platform continued
· The layout of the mobile application was renewed and information was added, making Delfi the most popular newsportal in mobile phones and tablet PCs.
· Several new verticals and existing sub-sites were renewed.
· Delfi English Channel, a new English-language channel, was launched in June.
· The organizations of the Lithuanian magazine publisher Ekspress Leidyba and Delfi weres merged into one media house.
Lithuanian online readership 2013-2014
There were no big changes among Lithuanian internet users in the 2 nd quarter. The total number of internet users in the first half-year of 2014 were significantly higher compared to the first half-year in 2013. This can be explained with the extreamly high news activity during the first half of the year. This number is also affected with the change in total internet usership statistics that was decreasing the usership numbers in April. Delfi remains the market leader with 180 thousand readers more than their closest competitor.
Starting from January 2014, the method of the Gemius online survey has changed. The readership in 2014 includes only results for computer users (PC) and excludes all mobile equipment. Separate statistics on mobile equipment will be created during 2014.
Periodicals segment
The periodicals segment includes AS Eesti Ajalehed (publisher of Maaleht, Eesti Ekspress and Eesti Päevaleht), AS SL Õhtuleht (publisher of Õhtuleht and Linnaleht), book publisher OÜ Hea Lugu, magazine publishers AS Ajakirjade Kirjastus in Estonia and UAB Ekspress Leidyba in Lithuania. This segment also includes AS Express Post, engaged in home delivery of periodicals.
| (EUR thousand) | Sales | ||
| Q2 2014 | Q2 2013 | Change % | |
| AS Eesti Ajalehed | 3 076 | 2 848 | 8% |
| OÜ Hea Lugu | 182 | 122 | 49% |
| UAB Ekspress Leidyba | 673 | 651 | 3% |
| Intersegment eliminations | (6) | (5) | -20% |
| TOTAL (subsidiaries) | 3 925 | 3 616 | 9% |
| SL Õhtuleht AS* | 1 015 | 965 | 5% |
| AS Ajakirjade Kirjastus* | 1 120 | 1 029 | 9% |
| AS Express Post* | 607 | 591 | 3% |
| Additional eliminations | (285) | (254) | -12% |
| TOTAL (joint ventures) | 2 458 | 2 331 | 5% |
| TOTAL segment | 6 383 | 5 947 | 7% |
| (EUR thousand) | EBITDA | ||
| Q2 2014 | Q2 2013 | Change % | |
| AS Eesti Ajalehed | 204 | 77 | 165% |
| OÜ Hea Lugu | 10 | (10) | 200% |
| UAB Ekspress Leidyba | 85 | 4 | 2025% |
| Intersegment eliminations | 1 | (1) | - |
| TOTAL (subsidiaries) | 300 | 70 | 329% |
| SL Õhtuleht AS* | 83 | 69 | 20% |
| AS Ajakirjade Kirjastus* | 88 | 45 | 96% |
| AS Express Post* | 100 | 75 | 34% |
| Additional eliminations | 0 | 0 | -5% |
| TOTAL (joint ventures) | 271 | 189 | 43% |
| TOTAL segment | 571 | 259 | 121% |
| (EUR thousand) | Sales | ||
| 1 st Half year 2014 | 1 st Half year 2013 | Change % | |
| AS Eesti Ajalehed | 5 938 | 5 464 | 9% |
| OÜ Hea Lugu | 491 | 451 | 9% |
| UAB Ekspress Leidyba | 1 257 | 1 279 | -2% |
| Intersegment eliminations | (17) | (18) | 6% |
| TOTAL (subsidiaries) | 7 669 | 7 176 | 7% |
| SL Õhtuleht AS* | 1 964 | 1 865 | 5% |
| AS Ajakirjade Kirjastus* | 2 080 | 1 947 | 7% |
| AS Express Post* | 1 192 | 1 191 | 0% |
| Additional eliminations | (553) | (490) | -13% |
| TOTAL (joint ventures) | 4 682 | 4 514 | 4% |
| TOTAL segment | 12 351 | 11 690 | 6% |
| (EUR thousand) | EBITDA | ||
| 1 st Half year 2014 | 1 st Half year 2013 | Change % | |
| AS Eesti Ajalehed | 338 | 150 | 125% |
| OÜ Hea Lugu | 76 | 45 | 69% |
| UAB Ekspress Leidyba | 56 | (1) | 5700% |
| Intersegment eliminations | 3 | 0 | - |
| TOTAL (subsidiaries) | 473 | 194 | 144% |
| SL Õhtuleht AS* | 114 | 104 | 9% |
| AS Ajakirjade Kirjastus* | 98 | 23 | 330% |
| AS Express Post* | 184 | 148 | 24% |
| Additional eliminations | 0 | 0 | - |
| TOTAL (joint ventures) | 395 | 275 | 44% |
| TOTAL segment | 868 | 469 | 85% |
*Proportional share of joint venture
In the periodicals segment, newspaper print advertising continues its downward trend. Also single-copy sales of newspapers and magazines keep decreasing, but the number of paper and digital subscribers as well as subscription income shows signs of growth. The revenue of companies is maintained by special projects and different supplements. The focus is on increasing production efficiency.
Since 30 April, our weekly newspaper Eesti Ekspress is published on Wednesdays instead of Thursdays as before. The development of a new platform for digital newspapers began in June and should be completed in the 3 rd quarter. In AS Eesti Ajalehed, a new application has been taken into use in the newspaper production process which simplifies the publication of newspaper content in various channels and should achieve some cost-cutting in the second half of the year.
Estonian newspaper circulation 2013-2014
Circulations of Estonian newspapers have remained stable or are falling moderately. The circulation of daily newspapers is falling faster than that of weeklies. As of the first half-year 2014, the highest decline in circulation was recorded for Postimees, published by Eesti Meedia, which decreased 10.3% in comparison with the first half-year in 2013. In the first half-year 2014, the circulation of the largest daily newspapers has fallen by 3.7% on average. Weekly newspapers have done relatively well. As for the weekly publications of Ekspress Grupp, Eesti Ekspress managed to maintain average circulation and Maaleht is the only larger newspaper that has increased its circulation. With regard to the publications of Ekspress Grupp, one needs to add also subscribers of digital newspapers numbering more than 7 000 for both Eesti Ekspress and Eesti Päevaleht as of the end of first half-year 2014.
Estonian newspaper readership 2013-2014
In the first half-year 2014, there were no major changes in the readership of Estonian newspapers. The readership is decreasing faster among daily newspapers, as is circulation. The number of readers of weekly newspapers is more stable. In the 2 nd quarter 2014, Eesti Ekspress is the only larger publication whose number of readers has increased year-on-year. It should be mentioned that the number of readers of digital newspapers of Ekspress Grupp is not included in the above figures and the number of readers of all publications of Ekspress Grupp is higher than shown in the graph.
Printing services segment
All printing services of the Group are provided by AS Printall which is one of the largest printing companies in Estonia. Printall is able to print both newspapers (coldset) and magazines (heatset).
| (EUR thousand) | Sales | ||
| Q2 2014 | Q2 2013 | Change % | |
| AS Printall | 7 210 | 7 131 | 1% |
| (EUR thousand) | EBITDA | ||
| Q2 2014 | Q2 2013 | Change % | |
| AS Printall | 1 537 | 1 599 | -4% |
| (EUR thousand) | Sales | ||
| 1 st Half year 2014 | 1 st Half year 2013 | Change % | |
| AS Printall | 14 272 | 13 749 | 4% |
| (EUR thousand) | EBITDA | ||
| 1 st Half year 2014 | 1 st Half year 2013 | Change % | |
| AS Printall | 2 995 | 3 013 | -1% |
In the 2 nd quarter, revenue of AS Printall from printing services increased 2.4%. Sale of paper remained unchanged. In the 2 nd quarter, exports increased 3.5%. There have been changes in the geographical break-down of export markets and the share of Russia continues to decrease.
In June, AS Printall signed a contract for the acquisition of a new sheetfed printing machine. The machine will be used for printing magazine covers, small-circulation magazines and advertising products. The estimated time of starting production is 1 st quarter of 2015. Approximately 2/3 of the acquisition cost is financed with a long-term loan.
Printing services and the environment
In addition to its very strong financial position, Printall also focuses on environmentally conscious production. In 2012, Printall was granted ISO 9001 management and ISO 14001 environmental certificates.
The Minister of the Environment of the Republic of Estonia and the waste managing company AS Ragn-Sells awarded Printall with the title of the Top Recycler of the Year, because the company recycles 95% of its waste.
The Nordic Council of Ministers has awarded Printall with the environmental label “The Nordic Ecolabel”, used to acknowledge the companies in the Nordic countries that use environmentally efficient production. Printall also has FSC and PEFC Chain of Custody (COC) certificates, which the company uses to promote a green way of thinking in the printing industry. Both of those certificates indicate compliance with monitoring and product production process requirements which are issued to businesses that comply with the requirements established by the FSC (Forest Stewardship Council) and the PEFC (Programme for the Endorsement of Forest Certification). A business that is issued these certificates helps to support the environmentally friendly, socially fair and economically viable management of the world’s forests.
Printall cares about the environment and uses green energy. The POWERED BY GREEN certificate is a proof that the company buys electricity, 70% of which has been generated by renewable sources of energy.
Consolidated balance sheet (unaudited)
| (EUR thousand) | 30.06.2014 | 31.12.2013 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 1 636 | 2 111 |
| Term deposit | 103 | 98 |
| Trade and other receivables | 8 734 | 6 819 |
| Inventories | 2 184 | 2 329 |
| Total current assets | 12 657 | 11 357 |
| Non-current assets | ||
| Trade and other receivables | 401 | 399 |
| Investment in joint ventures and associates | 1 629 | 1 543 |
| Property, plant and equipment | 13 390 | 13 595 |
| Intangible assets | 47 987 | 48 361 |
| Total non-current assets | 63 407 | 63 898 |
| TOTAL ASSETS | 76 064 | 75 255 |
| LIABILITIES | ||
| Current liabilities | ||
| Borrowings | 6 422 | 3 760 |
| Trade and other payables | 6 397 | 8 498 |
| Total current liabilities | 12 819 | 12 258 |
| Non-current liabilities | ||
| Long-term borrowings | 18 762 | 20 672 |
| Other long-term payables | 89 | 0 |
| Total non-current liabilities | 18 851 | 20 672 |
| TOTAL LIABILITIES | 31 670 | 32 930 |
| EQUITY | ||
| Share capital | 17 878 | 17 878 |
| Share premium | 14 277 | 14 277 |
| Treasury shares | (28) | 0 |
| Reserves | 1 372 | 1 250 |
| Retained earnings | 10 857 | 8 848 |
| Currency translation reserve | 38 | 72 |
| TOTAL EQUITY | 44 394 | 42 325 |
| TOTAL LIABILITIES AND EQUITY | 76 064 | 75 255 |
Consolidated statement of comprehensive income (unaudited)
| (EUR thousand) | Q2 2014 | Q2 2013 | 1 st Half year 2014 | 1 st Half year 2013 |
| Sales revenue | 13 764 | 12 998 | 26 499 | 24 810 |
| Cost of sales | (10 139) | (9 812) | (20 362) | (19 294) |
| Gross profit | 3 625 | 3 186 | 6 137 | 5 516 |
| Other income | 106 | 93 | 221 | 185 |
| Marketing expenses | (526) | (472) | (966) | (836) |
| Administrative expenses | (1 242) | (1 203) | (2 778) | (2 462) |
| Other expenses | (27) | (28) | (85) | (49) |
| Operating profit | 1 936 | 1 576 | 2 529 | 2 354 |
| Interest income | 2 | 3 | 3 | 3 |
| Interest expense | (181) | (178) | (357) | (374) |
| Foreign exchange gains/(losses) | (1) | (11) | 35 | 5 |
| Other finance costs | (15) | (14) | (30) | (28) |
| Total finance income/costs | (195) | (200) | (349) | (394) |
| Profit (loss) on shares of joint ventures | 190 | 82 | 288 | 146 |
| Profit (loss) on shares of associates | 3 | 4 | (9) | (3) |
| Profit before income tax | 1 934 | 1 462 | 2 459 | 2 103 |
| Income tax expense | (76) | (64) | (98) | (67) |
| Net profit for the reporting period | 1 858 | 1 398 | 2 361 | 2 036 |
| Net profit for the reporting period attributable to : | ||||
| Equity holders of the parent company | 1 858 | 1 398 | 2 361 | 2 036 |
| Other comprehensive income (expense ) that can be later reclassified to profit or loss | ||||
| Currency translation differences | 2 | 9 | (34) | (11) |
| Total other comprehensive income | 2 | 9 | (34) | (11) |
| Comprehensive income for the reporting period | 1 860 | 1 407 | 2 327 | 2 025 |
| Attributable to equity holders of the parent company | 1 860 | 1 407 | 2 327 | 2 025 |
| Basic and diluted earnings per share | 0.06 | 0.05 | 0.08 | 0.07 |
Consolidated cash flow statement (unaudited)
| (EUR thousand) | 1 st Half year 2014 | 1 st Half year 2013 |
| Cash flows from operating activities | ||
| Operating profit for the reporting period | 2 529 | 2 354 |
| Adjustments: | ||
| Depreciation, amortisation and impairment | 1 464 | 1 258 |
| Loss on sale and write-down of property, plant and equipment | (3) | 0 |
| Change in value of share option | 68 | 0 |
| Cash flows from operating activities: | ||
| Trade and other receivables | (1 706) | 961 |
| Inventories | 145 | 369 |
| Trade and other payables | (2 298) | (767) |
| Cash generated from operations | 199 | 4 175 |
| Income tax paid | (138) | (41) |
| Interest paid | (357) | (374) |
| Net cash generated from operating activities | (296) | 3 760 |
| Cash flows from investing activities | ||
| Purchase of other financial investments | 0 | (15) |
| Acquisition of subsidiary | 0 | (4) |
| Interest received | 3 | 3 |
| Purchase of property, plant and equipment | (881) | (505) |
| Proceeds from sale of property, plant and equipment | 5 | 16 |
| Loans granted | (22) | (3) |
| Loan repayments received | 2 | 3 |
| Net cash generated from investing activities | (893) | (505) |
| Cash flows from financing activities | ||
| Finance lease repayments made | (34) | 0 |
| Change in use of overdraft | 2 606 | (745) |
| Repayments of borrowings | (1 831) | (1 790) |
| Purchase of treasury shares | (28) | 0 |
| Net cash used in financing activities | 714 | (2 535) |
| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | (475) | 720 |
| Cash and cash equivalents at the beginning of the period | 2 111 | 1 193 |
| Cash and cash equivalents at the end of the period | 1 636 | 1 913 |
Additional information:
Gunnar Kobin
Chairman of the Management Board
GSM: +372 5188111
e-mail: gunnar@egrupp.ee
