Published: 2014-10-31 15:15:14 CET
Ekspress Grupp
Quarterly report

AS EKSPRESS GRUPP: Consolidated Interim Report for the Third Quarter and 9 Months of 2014

Tallinn, Estonia, 2014-10-31 15:15 CET --  

In the third quarter of 2014, at the revenue level of EUR 13.8 million, the Group earned from ordinary business operations EBITDA of EUR 1.7 million and the net profit EUR 0.6 million. In a year-on-year comparison, revenue growth was 7%, EBITDA was higher by 27% and the net profit increased 42%. The result notably exceeded our expectations. Year-to-date revenue amounted to EUR 44.6 million, EBITDA was EUR 6.1 million and net profit was EUR 3.0 million. In comparison with the same period last year EBITDA increased 17% and net profit was 21% higher. Third-quarter EBITDA margin was 12.5%, as compared to 10.5% a year earlier, and year-to-date EBITDA margin was 13.7%, up from 12.5% a year ago.

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 this accounting policy does not affect the net profit, but decreases the third-quarter sales revenue by approximately EUR 2 million and the EBITDA by approximately EUR 0.25 million (nine-month sales revenue was approximately EUR 6.3 million lower and EBITDA was approximately EUR 0.64 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 also determines the calculation of loan covenants 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 as financial income in one line. In Note 3 of the interim financial statements, the impact of every joint venture on the respective line of the income statement and balance sheet is described in more detail.

The income statement for the third quarter includes financial income in amount of EUR 1 million resulting from the acquisition of shares of AS Ajakirjade Kirjastus and AS SL Õhtuleht from AS Eesti Meedia, their sale to OÜ Suits Meedia and subsequent restructuring. In essence, joint ventures with AS Eesti Meedia were sold and new joint ventures were acquired together with OÜ Suits Meedia. In addition, as a result of the transactions, trademarks and goodwill in the acquired joint ventures are now recognised at their fair value in the Group’s balance sheet.

For the first time, the Group’s total debt/EBITDA ratio fell below the level of 3, and was 2.69 at the end of the period. Over the last five years, we have been significantly reducing our loan burden and increasing EBITDA, and have now reached the level we have set as an internal target. This will open up new opportunities for financing the company’s further development and enables us to more aggressively consider potential investments for business growth.

In the third quarter, all business segments of the Group showed strong growth in both sales revenue and profit. The EBITDA of the media segment increased over 200% in a year, amounting to EUR 323 thousand. Revenue of printing services increased 6% and profit amounted to EUR 1 326 thousand. Starting from the third quarter when the Lithuanian magazine publisher UAB Ekspress Leidyba was merged with Delfi Lithuania, we no longer separate online media from periodicals, and talk about one media segment which represents both online and print media. The online revenue of Delfi Lithuania continues to be reported separately.  

In the third quarter we were positively surprised by the strong performance of the media segment, in particular our online businesses. As in the first quarter, sales revenue is usually lower also in the third quarter, because of the two summer months. Unlike in earlier years, the advertising market remained active this summer and Delfi sales organisations were able to benefit from this activity in all our markets. Revenue growth was attributable mainly to successful launches of new topical portals, new advertising solutions, Delfi TV, growing use of mobile applications and special projects. Revenue has increased also because of the growing focus on direct customers and expansion of the sales workforce. It is especially encouraging that Delfi Latvia managed to offset the disappointing start of the year already from the first month of the quarter. In the third quarter, Delfi Latvia increased sales revenue 28% as compared to the year earlier, becoming the fastest-growing online business in the Group. In addition, Delfi Latvia’s revenue increased also thanks to the weakening impact of Latvia’s accession to the euro and the fact that in the third quarter Delfi became the largest online environment in Latvia, overtaking the local e-mail service provider Inbox, and managed to keep the leadership position for two months in spite of the merger of two competing portals - Apollo and Tvnet.

While in earlier years, online media has struggled to remain positive in the third quarter, this year Delfis of all three Baltic countries earned a total of EUR 174 thousand in EBITDA. Growth in earnings is stemming from higher revenue, better cost control and synergy created by the merger of Lithuanian enterprises.

Of the print media companies, AS SL Õhtuleht posted the strongest result, increasing its EBITDA by 79%, mainly thanks to a notably more efficient printing contract. AS Eesti Ajalehed also posted a better result than last year, whereas the business environment of daily and weekly newspapers in the company’s product portfolio remains challenging and achieving last year’s revenue both in sales and advertising sales remain difficult. At the same time, the development of digital products has been moving at the same aggressive pace than a year earlier, with the number of digital subscribers increasing approximately 80% and bringing the number of paid subscribers per publication up to almost 9 thousand subscribers. In the fourth quarter, Eesti Päevaleht will launch a new digital publication that will notably expand the possibilities of increasing the number of potential users by making the newspaper also accessible in smartphones, in addition to its currently popular tablet version.

The 25th anniversary of Eesti Ekspress included the production of the birthday issue with the largest-ever circulation and the free distribution of 200 thousand newspapers all over Estonia. In the third quarter, tests with sale of digital books to newspaper subscribers were started and this is exceeding expectations. The focus is on increasing efficiency of production. In October, Eesti Ekspress will be produced by using the new content management system and there are plans to implement it also in the production of Maaleht.

The third quarter result of AS Ajakirjade Kirjastus remained below last year’s result mainly because of unexpectedly weak advertising sales in September. In advertising sales, magazines directly depend on international advertisers. The growing economic uncertainty in Europe as well as the Ukraine-Russia conflict and its possible impact on Estonia have made international advertising brands more cautious.

AS Express Post that is included in the media segment increased its result 27% as compared to last year, mainly because of growth in direct mail.

We are also satisfied with the performance of Printall, provider of printing services, whose third-quarter revenue and EBITDA exceeded last year’s result by 7%, despite the impact of the Ukraine conflict on exports to Russia. At present, the biggest export markets for Printall are Sweden, Finland and Norway. Single orders are being fulfilled for France and Holland. 

One of the key events in the third quarter also included the final approval by the Lithuanian Competition Authority of the acquisition of Adnet Media and the legal closure of the transaction on 30 September 2014. Another significant event was the appointment of Vytautas Benokraitis, former sales manager of Delfi Lithuania, to the position of CEO of Delfi Lithuania.

We remain cautious with regard to the fourth quarter, although the first 9 months have shown good results. In the fourth quarter, we expect consolidated sales revenue growth 2-3% and EBITDA growth at around 20%. Annual sales revenue growth should be in the range of 4-5% and EBITDA growth is excepted at least 15%. One factor behind improved results is the new printing contracts of SL Õhtuleht and AS Ajakirjade Kirjastus that entered 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. Since only the net profit of our joint ventures is recognised in the Group’s income statement prepared under new IFRS, the direct positive impact on consolidated results will be smaller due to amortization of the trademarks and customer relations which now appear in the balance sheet of the joint ventures. However the positive impact is reflected in the EBITDA of the joint ventures themselves.

We continue to look for new sources of growth that would help the Group to expand its products and services. Currently we have started preparations for several new projects to be launched next year. As our mission states, 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) Q3 2014 Q3 2013 Change % Q3 2012 Q3 2011
For the period          
Sales 13 833 12 977 7% 13 278 12 969
EBITDA 1 732 1 359 27% 1 495 1 568
EBITDA margin (%) 12.5% 10.5%   11.3% 12.1%
Operating profit* 872 718 21% 676 715
Operating margin* (%) 6.3% 5.5%   5.1% 5.5%
Interest expenses (189) (204) 7% (301) (554)
Profit /(loss) for the period* 644 455 42% 263 119
Net margin* (%) 4.7% 3.5%   2.0% 0.9%
Net profit /(loss) for the period in the financial statements (incl. impairments and gain on change of ownership interest) 1 599 455 251% 263 119
Net margin (%) 11.6% 3.5%   2.0% 0.9%
ROA (%) 2.0% 0.6%   0.3% 0.1%
ROE (%) 3.5% 1.1%   0.7% 0.3%
Earnings per share (EPS) 0.05 0.02   0.01 0.00

 

 

 

Performance indicators – joint ventures consolidated 50% (EUR thousand) 9 months 2014 9 months 2013 Change % 9 months 2012 9 months 2011
For the period          
Sales 44 606 41 901 6% 43 260 41 078
EBITDA 6 124 5 246 17% 5 634 4 988
EBITDA margin (%) 13.7% 12.5%   13.0% 12.1%
Operating profit* 3 743 3 299 13% 3 102 2 407
Operating margin* (%) 8.4% 7.9%   7.2% 5.9%
Interest expenses (546) (578) 6% (1 343) (1 689)
Profit /(loss) for the period* 3 005 2 490 21% 1 414 360
Net margin* (%) 6.7% 5.9%   3.3% 0.9%
Net profit /(loss) for the period in the financial statements (incl. impairments and gain on change of ownership interest) 3 960 2 490 59% 1 414 1 900
Net margin (%) 8.9% 5.9%   3.3% 4.6%
ROA (%) 5.1% 3.2%   1.8% 2.2%
ROE (%) 9.0% 5.9%   3.6% 5.0%
Earnings per share (EPS) 0.13 0.08   0.05 0.06

 

* The results exclude impairments and the net extraordinary gain in relation to the acquisition of an additional 50% ownership interest in Eesti Päevalehe AS in the 1st 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. They also exclude a gain in the amount of EUR 1.0 million from the acquisition of the shares of AS Ajakirjade Kirjastus and AS SL Õhtuleht from AS Eesti Media, their sale to OÜ Suits Media and further restructuring in 2014 where essentially joint ventures with AS Eesti Media were liquidated and new joint ventures with OÜ Suits Media were set up.

 

Balance sheet – joint ventures consolidated 50% (EUR thousand) 30.09.2014 31.12.2013 Change %
As of the end of the period      
Current assets 13 466 14 447 -7%
Non-current assets 64 979 63 019 3%
Total assets 78 445 77 466 1%
       incl. cash and bank 4 383 4 501 -3%
       incl. goodwill 40 339 40 052 1%
Current liabilities 13 324 14 468 -8%
Non-current liabilities 19 110 20 673 -8%
Total liabilities 32 434 35 141 -8%
       incl. borrowings 23 457 24 432 -4%
Equity 46 011 42 325 9%

 

 

 

  Financial ratios (%) – joint ventures consolidated 50% 30.09.2014 31.12.2013
Equity ratio (%) 59% 55%
Debt to equity ratio (%) 51% 58%
Debt to capital ratio (%) 31% 32%
Total debt/EBITDA ratio (adjusted as per syndicate agreement) 2.69 3.36
Debt service coverage ratio 1.82 1.66
Liquidity ratio 1.01 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 (adjusted) Interest bearing liabilities – security deposit/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 under the equity method (EUR thousand) Q3 2014 Q3 2013 Change % Q3 2012 Q3 2011
For the period          
Sales (only subsidiaries) 11 841 10 985 8% 11 377 11 046
EBITDA (only subsidiaries) 1 487 1 164 28% 1 435 1 476
EBITDA margin (%) 12.6% 10.6%   12.6% 13.4%
Operating profit* (only subsidiaries) 783 544 44% 643 661
Operating margin* (%) 6.6% 5.0%   5.7% 6.0%
Interest expenses (only subsidiaries) (175) (204) 14% (301) (555)
Profit of joint ventures by equity method 87 174 -50% 33 53
Profit /(loss) for the period* 658 455 45% 263 119
Net margin* (%) 5.6% 4.1%   2.3% 1.1%
Net profit /(loss) for the period in the financial statements (incl. impairments and gain on change of ownership interest) 1 613 455 254% 263 119
Net margin (%) 13.6% 4.1%   2.3% 1.1%
ROA (%) 2.2% 0.6%   0.3% 0.1%
ROE (%) 3.5% 1.1%   0.7% 0.3%
Earnings per share (EPS) 0.05 0.02   0.01 0.00

 

 

 

Performance indicators – joint ventures under the equity method (EUR thousand) 9 months 2014 9 months 2013 Change % 9 months 2012 9 months 2011
For the period          
Sales (only subsidiaries) 38 338 35 796 7% 37 125 35 032
EBITDA (only subsidiaries) 5 481 4 777 15% 5 328 4 577
EBITDA margin (%) 14.3% 13.3%   14.4% 13.1%
Operating profit* (only subsidiaries) 3 313 2 897 14% 2 879 2 108
Operating margin* (%) 8.6% 8.1%   7.8% 6.0%
Interest expenses (only subsidiaries) (531) (578) 8% (1 344) (1 695)
Profit of joint ventures by equity method 375 320 17% 137 212
Profit / (loss) for the period* 3 019 2 490 21% 1 414 360
Net margin* (%) 7.9% 7.0%   3.8% 1.0%
Net profit / (loss) for the period in the financial statements (incl. impairments and gain on change of ownership interest) 3 974 2 490 60% 1 414 1 900
Net margin (%) 10.4% 7.0%   3.8% 5.4%
ROA (%) 5.3% 3.3%   1.8% 2.3%
ROE (%) 9.0% 5.9%   3.6% 5.0%
Earnings per share (EPS) 0.13 0.08   0.05 0.06

 

* The results exclude impairments and the net extraordinary gain in relation to the acquisition of an additional 50% ownership interest in Eesti Päevalehe AS in the 1st 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. They also exclude a gain in the amount of EUR 1.0 million from the acquisition of the shares of AS Ajakirjade Kirjastus and AS SL Õhtuleht from AS Eesti Media, their sale to OÜ Suits Media and further restructuring in 2014 where essentially joint ventures with AS Eesti Media were liquidated and new joint ventures with OÜ Suits Media were set up.

 

 

Balance sheet– joint ventures under equity method (EUR thousand) 30.09.2014 31.12.2013 Change %
As at the end of the period      
Current assets 10 797 11 357 -5%
Non-current assets 63 343 63 898 -1%
Total assets 74 140 75 255 -1%
       incl. cash and bank 2 415 2 209 9%
       incl. goodwill 39 596 39 596 0%
Current liabilities 10 220 12 258 -17%
Non-current liabilities 17 895 20 672 -13%
Total liabilities 28 115 32 930 -15%
       incl. borrowings 21 857 24 432 -11%
Equity 46 025 42 325 9%

 

 

 

  Financial ratios (%) – joint ventures under the equity method 30.09.2014 31.12.2013
Equity ratio (%) 62% 56%
Debt to equity ratio (%) 47% 58%
Debt to capital ratio (%) 31% 34%
Total debt / EBITDA ratio 3.00 3.71
Debt service coverage ratio 1.63 1.50
Liquidity ratio 1.06 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

SEGMENT OVERVIEW

From the third quarter of the current year when the Group’s Lithuanian subsidiaries were merged, the Group’s activities are divided into the media segment and the printing services segment. Previously, the entities of the media segment were divided between – online media and publishing of periodicals.

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 2nd and 4th quarter of each year and the lowest in the third 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.  

Key financial data of the segments Q3 2011-2014

 

(EUR thousand) Sales Sales
  Q3 2014 Q3 2013 Change % Q3 2012 Q3 2011
media segment (incl. online sales) 6 017 5 551 8% 5 841 5 501
     incl. revenue from digital channels 2 918 2 479 18% 2 315 2 045
printing services 6 596 6 147 7% 6 263 6 126
corporate functions 427 396 8% 268 64
intersegment eliminations (1 200) (1 109) -8% (995) (643)
TOTAL GROUP
by new accounting standards
11 841 10 985 8% 11 377 11 046

 

 

 

(EUR thousand) EBITDA EBITDA
  Q3 2014 Q3 2013 Change % Q3 2012 Q3 2011
media segment 323 102 218% 330 334
printing services 1 326 1 245 6% 1 310 1 417
corporate functions (162) (183) 12% (206) (278)
intersegment eliminations (0) 0 -100% 1 3
TOTAL GROUP
by new accounting standards
1 487 1 164 28% 1 435 1 476

 

 

 

EBITDA margin Q3 2014 Q3 2013 Q3 2012 Q3 2011
media segment 5% 2% 6% 6%
printing services 20% 20% 21% 23%
TOTAL GROUP
by new accounting standards
13% 11% 13% 13%

 

 

Key financial data of the segments 9 months 2011-2014

 

(EUR thousand) Sales Sales
  9 months 2014 9 months 2013 Change % 9 months 2012 9 months 2011
media segment (incl. online sales) 19 923 18 225 9% 18 513 17 240
       incl. revenue from digital channels 9 434 8 206 15% 7 532 6 495
printing services 20 868 19 896 5% 21 121 19 593
corporate functions 1 271 1 137 12% 688 138
intersegment eliminations (3 725) (3 462) -8% (3 197) (1 939)
TOTAL GROUP
by new accounting standards
38 338 35 796 7% 37 125 35 032

 

 

 

(EUR thousand) EBITDA EBITDA
  9 months 2014 9 months 2013 Change % 9 months 2012 9 months 2011
media segment 1 922 1 109 73% 1 478 814
printing services 4 321 4 258 1% 4 402 4 464
corporate functions (763) (593) -29% (555) (712)
intersegment eliminations 0 2 -89% 2 11
TOTAL GROUP
by new accounting standards
5 481 4 777 15% 5 328 4 577

 

 

 

EBITDA margin 9 months 2014 9 months 2013 9 months 2012 9 months 2011
media segment 10% 6% 8% 5%
printing services 21% 21% 21% 23%
TOTAL GROUP
by new accounting standards
14% 13% 14% 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    
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.ej.ee
      www.ekspressauto.ee

 

 

Media segment

The media segment includes Delfi operations in Estonia, Latvia and Lithuania as well as the parent company Delfi Holding. Starting from 1 March 2014, the operations of Delfi in Ukraine have been terminated. The nine-month EBITDA of Delfi Ukraine also includes expenses related to the termination of operations. The media segment also 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 as well as magazine publishers AS Ajakirjade Kirjastus in Estonia and UAB Ekspress Leidyba in Lithuania, the latter having been merged into Delfi Lithuania on 1 July 2014. This segment also includes AS Express Post, engaged in home delivery of periodicals.

 

 

(EUR thousand) Sales
  Q3 2014 Q3 2013 Change %
Delfi Estonia 1 089 877 24%
Delfi Latvia 635 498 28%
Delfi Lithuania (sh. Ekspress Leidyba) 1 768 1 643 8%
        incl. online revenue of Delfi Lithuania 1 135 1 024 11%
Delfi Ukraine 0 11 -100%
AS Eesti Ajalehed 2 487 2 484 0%
OÜ Hea Lugu 99 105 -6%
Other companies (Delfi Holding) - -
Intersegment eliminations (61) (67) 9%
TOTAL (subsidiaries) 6 017 5 551 8%
AS SL Õhtuleht* 923 904 2%
AS Ajakirjade Kirjastus* 939 952 -1%
AS Express Post* 569 555 2%
Intersegment eliminations (246) (239) -3%
TOTAL (joint ventures) 2 185 2 173 1%
TOTAL segment 8 202 7 724 6%

 

 

 

(EUR thousand) EBITDA
  Q3 2014 Q3 2013 Change %
Delfi Estonia 19 (28) 168%
Delfi Latvia 20 (33) 161%
Delfi Lithuania (sh. Ekspress Leidyba) 135 99 36%
        incl. online revenue of Delfi Lithuania      
Delfi Ukraine 0 (48) 100%
AS Eesti Ajalehed 52 35 49%
OÜ Hea Lugu (5) (10) 50%
Other companies (Delfi Holding) 102 90 13%
Intersegment eliminations 0 (3) -
TOTAL (subsidiaries) 323 102 217%
AS SL Õhtuleht* 115 64 79%
AS Ajakirjade Kirjastus* 55 75 -26%
AS Express Post* 75 59 27%
Intersegment eliminations (1) (3) 70%
TOTAL (joint ventures) 244 195 26%
TOTAL segment 567 297 91%

 

 

 

(EUR thousand) Sales
  9 months 2014 9 months 2013 Change %
Delfi Estonia 3 560 2 884 23%
Delfi Latvia 1 776 1 696 5%
Delfi Lithuania (incl. Ekspress Leidyba) 5 797 5 354 8%
        incl. online revenues of Delfi Lithuania 3 878 3 390 14%
Delfi Ukraine 2 36 -94%
AS Eesti Ajalehed 8 425 7 948 6%
OÜ Hea Lugu 590 556 6%
Other companies - -
Intersegment eliminations (227) (249) 9%
TOTAL (subsidiaries) 19 923 18 225 9%
AS SL Õhtuleht* 2 887 2 769 4%
AS Ajakirjade Kirjastus* 3 019 2 900 4%
AS Express Post* 1 761 1 747 1%
Additional eliminations (801) (729) -10%
TOTAL (joint ventures) 6 865 6 687 3%
TOTAL segment 26 788 24 912 8%

 

 

 

(EUR thousand) EBITDA
  9 months 2014 9 months 2013 Change %
Delfi Estonia 345 121 185%
Delfi Latvia (6) 36 -117%
Delfi Lithuania (incl. Ekspress Leidyba) 835 592 41%
        incl. online revenues of Delfi Lithuania      
Delfi Ukraine (51) (156) 67%
AS Eesti Ajalehed 390 185 111%
OÜ Hea Lugu 71 35 103%
Other companies 334 299 12%
Intersegment eliminations 4 (3) -
TOTAL (subsidiaries) 1 922 1 109 73%
AS SL Õhtuleht* 229 169 36%
AS Ajakirjade Kirjastus* 153 97 57%
AS Express Post* 258 207 25%
Additional eliminations 2 (3) 138%
TOTAL (joint ventures) 643 470 37%
TOTAL segment 2 565 1 579 62%

 

*Proportional share of joint ventures

 

Delfi Estonia

  • Further development of Delfi TV on a standalone and new platform and the increasing number of live webcasts under the Delfi TV brand including FIBA World Cup, Song and Dance Festival, visit of US President Barack Obama in Estonia, etc. 
  • Starting from September, basketball webcasts from games of 5 different leagues.
  • Marketing actions in connection with Delfi’s 15th anniversary.

Estonian online readership 2013-2014

In the third quarter 2014, TNS Emor changed the methodology of its TNS Metric survey, which explains the sharp increase in the number of users. The main essence of the change is more accurate measurement and separate reporting of the number of mobile users. As a result of this change, Delfi remains the largest news portal in Estonia. This applies both to the number of PC and mobile users who visit the news portals. The third quarter was the all-time best also for the www.ohtuleht.ee portal.

 

Delfi Latvia

  • In July and August, Delfi was the largest online portal in Latvia.
  • Production of streams from various events through Delfi TV on a new platform continued.
  • New topical verticals for women (www.vina.lv) and politics in the Russian language (www.spektr.lv) were launched.
  • Separate topical sites for basketball, Positivus, 25th anniversary of the Baltic Chain, etc. were launched.
  • The number of followers of Delfi Latvia in Facebook, Twitter and Draugiemis continues to grow, totalling approximately 200 thousand.
  • Cooperation projects:
    • Media partner for Positivus Festival,
    • Media partner for Baltic Pearl Film Festival,
    • Media partner of the Latvian national ice-hockey team.

 

Latvian online readership 2013-2014

In July and August 2014, Delfi.lv became Latvia’s largest online portal for the first time, exceeding the readership of inbox.lv. In September, however, Inbox.lv had again more users than Delfi.lv. In spite of the merger of tvnet.lv and apollo.lv in the 2nd quarter, their readership has not exceeded that of Delfi. In addition, the first available data on the number of users of mobile equipment are very favourable for Delfi.lv and Delfi is exceeding Latvian competitors in terms of mobile equipment by more than 20%.

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 ad streams through Delfi TV on a new platform continued.
  • A special co-site dedicated to auto fans in a partnership with Top Gear magazine.
  • Special project with Lithuanian entertainment guide Kur.lt. Content oriented to young city audience.
  • A special food order platform lekste.lt was integrated into Delfi recipes vertical 1000receptu.lt.
  • In September, great attention was allocated to FIBA World Cup. Big special project with interactive widgets, modern design and big marketing campaign was launched.
  • The organisations of Lithuanian magazine publisher Ekspress Leidyba and Delfi were merged into one media house.
  • Delfi image campaign was launched in TV, Outdoor, Radio and Internet which involved famous Lithuanian athletes, public and political celebrities.

 

Lithuanian online readership 2013-2014

Delfi continues to be the largest online portal in Lithuania. In the third quarter, there were no major changes in preferences of Internet users in Lithuania, with the exception of lrytas.lt that has been losing more readers than other portals. The initial data about the users of mobile equipment shows that the competition in this segment in Lithuania is very tough and other portals are closer to Delfi in readership than in computer users (PC). 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.

 

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 weekly newspapers. As of the third quarter 2014, there has also been a significant development in the market – Õhtuleht has been the newspaper with the largest circulation in Estonia for three consecutive months. Other Group publications also performed well in the third quarter, with both Maaleht and Eesti Ekspress increasing circulation. Only the circulation of Eesti Päevaleht has decreased. One also needs to add to these figures the number of subscribers of digital newspapers which totalled approximately 9 thousand for both Eesti Ekspress and Eesti Päevaleht, as of the end of the third quarter.

Estonian newspaper readership 2013-2014

Over the recent two years, newspaper readership has been fairly stable. The majority of measurable publications have increased their readership slightly as compared to the same period a year earlier. The number of readers of digital newspapers of Ekspress Group is not included in the above figures and the number of readers of all publications of Ekspress Group is higher than shown in the graph above.

 

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
  Q3 2014 Q3 2013 Change %
AS Printall 6 596 6 147 7%

 

 

 

(EUR thousand) EBITDA
  Q3 2014 Q3 2013 Change %
AS Printall 1 326 1 245 7%

 

 

 

(EUR thousand) Sales
  9 months 2014 9 months 2013 Change %
AS Printall 20 868 19 896 5%

 

 

 

(EUR thousand) EBITDA
  9 months 2014 9 months 2013 Change %
AS Printall 4 321 4 258 1%

 

 

In the third  quarter, the revenue of AS Printall from printing services increased 7.4%, including 8.5% for sale of paper and 6.3% for sale of pure printing services. In the third quarter, exports increased 10%. There have been changes in the structure 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 the 1st 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) 30.09.2014 31.12.2013
ASSETS    
Current assets    
Cash and cash equivalents 810 2 111
Term deposit 5 98
Trade and other receivables 7 854 6 819
Inventories 2 128 2 329
Total current assets 10 797 11 357
Non-current assets    
Term deposit 1 600 0
Trade and other receivables 401 399
Investments in joint ventures and subsidiaries 454 1 543
Property, plant and equipment 13 064 13 595
Intangible assets 47 824 48 361
Total non-current assets 63 343 63 898
TOTAL ASSETS 74 140 75 255
LIABILITIES    
Current liabilities    
Borrowings 4 068 3 760
Trade and other payables 6 152 8 498
Total current liabilities 10 220 12 258
Non-current liabilities    
Long-term borrowings 17 789 20 672
Other long-term payables 106 0
Total non-current liabilities 17 895 20 672
TOTAL LIABILITIES 28 115 32 930
EQUITY    
Share capital  17 878 17 878
Share premium 14 277 14 277
Treasury shares   (44) 0
Reserves 1 406 1 250
Retained earnings 12 470 8 848
Currency translation reserve 38 72
TOTAL EQUITY 46 025 42 325
TOTAL LIABILITIES AND EQUITY 74 140 75 255

Consolidated statement of comprehensive income (unaudited)

(EUR thousand) Q3 2014 Q3 2013 9 months 2014 9 months 2013
Sales revenue 11 841 10 985 38 338 35 796
Cost of sales (9 545) (9 048) (29 906) (28 343)
Gross profit 2 296 1 937 8 432 7 453
Other income 116 156 338 341
Marketing expenses (446) (406) (1 411) (1 242)
Administrative expenses (1 164) (1 121) (3 943) (3 583)
Other expenses (19) (22) (103) (72)
Gain from change in ownership interest in joint ventures 955 0 955 0
Operating profit 1 738 544 4 268 2 897
Interest income 2 1 5 4
Interest expense (175) (204) (531) (578)
Foreign exchange gains/(losses) 0  (30) 35  (26)
Other finance costs (15) (17) (48) (43)
Total finance income/costs  (188)  (250)  (539)  (643)
Profit (loss) on shares of joint ventures 87 174 375 320
Profit (loss) on shares of associates  (7) 4  (16) 0
Profit before income tax 1 630 472 4 088 2 574
Income tax expense (17) (17) (114) (84)
Net profit for the reporting period 1 613 455 3 974 2 490
Net profit for the reporting period attributable to:        
Equity holders of the parent company 1 613 455 3 974 2 490
Other comprehensive income (expense) that may be subsequently reclassified to profit or loss         
Currency translation differences 0 24  (34) 14
Total other comprehensive income 0 24  (34) 14
Comprehensive income for the reporting period 1 613 479 3 940 2 504
Attributable to equity holders of the parent company 1 613 479 3 940 2 504
Basic and diluted earnings per share 0.05 0.02 0.13 0.08

Consolidated cash flow statement (unaudited)

(EUR thousand) 9 months 2014 9 months 2013
Cash flows from operating activities    
Operating profit for the reporting period 4 268 2 897
Adjustments:    
Depreciation, amortisation and impairment 2 168 1 859
Gain from change in ownership interest in joint ventures (955) 0
Loss on sale and write-down of property, plant and equipment (8) (2)
Change in value of share option 102 0
Cash flows from operating activities:    
Trade and other receivables 603 359
Inventories 201 432
Trade and other payables (2 600) (956)
Cash generated from operations 3 779 4 589
Income tax paid (150) (174)
Interest paid (531) (578)
Net cash generated from operating activities 3 098 3 837
Cash flows from investing activities    
Term deposit (placement)/release (1 600) 0
Received on restructuring of joint ventures 820 0
Investments in joint ventures (3) 0
Acquisition of associate (80) 0
Acquisition of subsidiary 0 (349)
Interest received 5 4
Purchase of  property, plant and equipment (1 107) (671)
Proceeds from sale of property, plant and equipment 11 18
Loans granted (22) (3)
Loan repayments received 4 5
Net cash generated from investing activities (1 972) (996)
Cash flows from financing activities    
Dividend received 203 312
Finance lease repayments made (56) (10)
Change in use of overdraft 228 (745)
Repayments of borrowings (2 758) (2 691)
Purchase of treasury shares   (44) 0
Net cash used in financing activities (2 427) (3 134)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1 301) (293)
Cash and cash equivalents at the beginning of the period 2 111 1 193
Cash and cash equivalents at the end of the period 810 899

 

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


EG_III_kvartal_2014_ENG.pdf