OREANDA-NEWS. August 04, 2015. In the 2nd quarter of 2015, the Group’s EBITDA totalled EUR 1.5 million and net profit totalled EUR 0.5 million. The quarter’s result was impacted by the extraordinary loss of EUR 1.1 million related to the arrangement of the exhibition of the voyage of M/S Titanic. After elimination of this one-off loss from the Group’s result, its EBITDA from the main operations totalled EUR 2.6 million and net profit totalled EUR 1.6 million in the 2nd quarter. As compared to the same period last year, EBITDA and net profit from the main operations were 11.7% and 14.6% lower, respectively. On a normalised basis, the Group’s EBITDA from the main operations in the first half of the year was 6.4% lower and net profit was 9.3% lower than last year. We failed to match the last year’s result in the main operations primarily due to weaker profit of the printing company and Lithuanian media company. These figures also include 50% of the results of our joint ventures.

The loss related to Titanic exhibition was caused by extremely weak ticket sales. As compared to the exhibition arranged in Tallinn, the number of tickets sold per capita was five times lower in Riga than in Tallinn. Wishing to repeat the success of Titanic exhibition in other cities in the Baltics, we had prior to the exhibition in Riga also acquired the rights to arrange the same exhibition in Vilnius. However, due to the failure of Riga’s exhibition we decided to waive this right. Already paid license fee was not refunded, but we concluded an agreement which will partially compensate the fee paid if the owner of the exhibition is able to fill the vacant period. The Group’s results of operations in the 2nd quarter  include the loss of exhibitions in Riga and Vilnius in the total amount of EUR 1.1 million. 

After elimination the loss of EUR 1.1 million from the entertainment business, in the 2nd quarter the EBITDA of the Group’s subsidiaries calculated under the equity method was 16% lower and revenue was almost 10% lower than a year ago. 

The printing services company Printall continues to be impacted by the unstable economic situation in Russia and the economic sanctions imposed against the country. The latter have negatively impacted the exports of the Scandinavian printing industry, resulting in lower revenue from Russia and a major price pressure in the region. In the 2nd quarter, Printall’s revenue decreased by 11% and EBITDA by 17% which is similar to the result posted in the 1st quarter. The situation is expected to slightly improve in the autumn due to the new customers obtained and extension of product range of current customers.  

The media segment in Estonia and Latvia posted strong revenue growth in the 2nd quarter. In the first half of the year, Delfi Lithuania was still under pressure due the effects of the adoption of the euro which affected consumption and advertising sales. According to the data of market research companies, the volume of internet adverting sales has decreased by almost 15% in the first five months of 2015 while online sales of Delfi Lithuania have increased by 2% as compared to the first half of last year. Since June the local internet market has started to recover, which enabled the company to increase its online revenues 15% compared to June last year. The same trend seems to continue at the beginning of second half of the year. The Lithuanian magazine market is in a modest downward trend in advertising sales, single copy sales as well as subscriptions revenue. 

Delfi Estonia managed to increase its advertising revenue by 18%, exceeding the growth in the online market as a whole. The 2nd quarter of the current year was the best quarter ever in terms of advertising sales for Delfi Estonia. The strong result is result of a good work by the sales team and the fast-growing mobile phone market. Exclusive reports and articles have helped Delfi to attract a record high number of users and widen the gap with the competitors which has also helped the sales team. Eesti Ajalehed increased its advertising revenue by 3%. Positive surprises included advertising revenue growth of Eesti P?evaleht which got a boost following the merger with Delfi sales team. Single copy sales and subscription revenue of Eesti Ajalehed have also increased by 1% and 6%, respectively. The growth in the number of digital subscribers has stabilised in the 2nd quarter and totals about 12 thousand both for Eesti P?evaleht and Eesti Ekspress. The decline in the circulation of printed newspapers is offset by the increase in the cover price. While Delfi and Eesti Ajalehed have functioned as one organisation from the beginning of the year, the legal merger will be completed on 1 July. The companies will continue to operate under the trademark and name of Ekspress Meedia.

Delfi Latvia has managed to successfully launch its topical portals and this has helped to increase both the number of users as well as advertising revenue. Revenue grew by 21% as compared to the same period last year. The growth of Delfi is much faster as compared to the Latvian internet market as a whole. Delfi Latvia achieved a new record high number of users totaaling 890 thousand in May.    

With regard to joint ventures, AS SL ?htuleht succeeded in increasing its advertising revenue by 5% in the 2nd quarter, primarily due to the growth in online advertising revenue. Subscription revenue also posted a strong result (8%). EBITDA growth got a significant boost from the lower printing price set last summer. Advertising sales were volatile for AS Ajakirjade Kirjastus in the 2nd quarter. April and June were very positive months, while sales fell in May. In total, advertising revenue decreased by 2% year-on-year. Subscription revenue also fell while retail sales remained stable. EBITDA growth was primarily impacted by lower printing costs, similarly to SL ?htuleht. Although revenue of AS Express Post keeps increasing, pressure on wages in this sector has a negative impact on the profit.   

The EBITDA of the subsidiaries in the media segment remained at the same level, although revenue increased by almost 7%. The EBITDA of the media segment with joint ventures was almost 6% better as compared to the same period last year.  

We expect a more positive result in the third quarter as compared to the first half of the year. In the printing services segment, fierce price competition continues in the Scandinavian market, but the closing of printing companies in this region may present additional opportunities for Printall to procure new works. We are more optimistic about the prospects of the media segment, primarily in Lithuania. In the 3rd quarter, we will continue more extensive development of the discount offer portal Zave, with the goal of providing a new innovative tool for retailers to communicate with their customers. Based on the above, in the 3rd quarter we expect consolidated revenue to increase by ca 5%, but EBITDA and net profit to remain the same as last year. These figures also include 50% of the results of our joint ventures.

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 company’s goal is to be a truly modern media company 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

Starting from 2014, in consolidated financial reports 50% joint ventures are recognised under the equity method, in compliance with international financial reporting standards (IFRS). In its monthly reports, the management has continued to monitor 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% as previously 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 consolidated  50% (EUR thousand) Q2 2015 Q2 2014 Change % Q2 2013 Q2 2012 Q2 2011
For the period            
Sales 15 998 16 007 0% 15 115 15 763 14 963
EBITDA 1 488 2 935 -49% 2 384 2 525 2 025
EBITDA margin (%) 9.3% 18.3%   15.8% 16.0% 13.5%
Operating profit 745 2 180 -66% 1 742 1 670 1 136
Operating margin (%) 4.7% 13.6%   11.5% 10.6% 7.6%
Interest expenses (146) (181) 19% (178) (553) (576)
Net profit/(loss) for the period 481 1 858 -74% 1 398 972 396
Net margin (%) 3.0% 11.6%   9.3% 6.2% 2.6%
Return on assets ROA (%) 0.6% 2.4%   1.8% 1.2% 0.5%
Return on equity ROE (%) 1.0% 4.2%   3.3% 2.5% 1.0%
Earnings per share (EPS) 0.02  0.06   0.05 0.03 0.01

 

 

 

Performance indicators  - joint ventures consolidated  50% (EUR thousand) 1st Half year 2015 1st Half
year 2014		 Change % 1st Half year 2013 1st Half year 2012 1st Half year 2011
For the period            
Sales 30 178 30 773 -2% 28 925 29 982 28 109
EBITDA 3 005 4 389 -32% 3 888 4 140 3 420
EBITDA margin (%) 10.0% 14.3%   13.4% 13.8% 12.2%
Operating profit* 1 507 2 871 -48% 2 582 2 426 1 691
Operating margin* (%) 5.0% 9.3%   8.9% 8.1% 6.0%
Interest expenses (320) (357) 10% (374) (1 041) (1 135)
Net profit /(loss) for the period* 1 037 2 361 -56% 2 036 1 151 241
Net margin* (%) 3.4% 7.7%   7.0% 3.8% 0.9%
Net profit for the period in the financial statements (incl. impairments and gain on change of ownership interest) 1 037 2 361 -56% 2 036 1 151 1 781
Net margin (%) 3.4% 7.7%   7.0% 3.8% 6.3%
Return on assets ROA (%) 1.3% 3.1%   2.6% 1.4% 2.1%
Return on equity ROE (%) 2.2% 5.5%   4.9% 3.0% 4.7%
Earnings per share (EPS) 0.03  0.08   0.07 0.04 0.06

 

* The results exclude one-off gains in relation to the acquisition of Eesti P?evalehe AS in 2011.

 

Balance sheet– joint ventures consolidated  50%
(EUR thousand)		 30.06.2015 31.12.2014 Change %
As of the end of the period      
Current assets 14 205 15 189 -6%
Non-current assets 63 619 65 665 -3%
Total assets 77 824 80 854 -4%
       incl. cash and bank 4 461 6 788 -34%
       incl. goodwill 39 432 39 432 0%
Current liabilities 14 708 14 110 4%
Non-current liabilities 16 108 19 569 -18%
Total liabilities 30 816 33 679 -9%
       incl. borrowings 19 792 24 592 -20%
Equity 47 008 47 175 0%

 

 

 

  Financial ratios (%) – joint ventures consolidated  50% 30.06.2015 31.12.2014
Equity ratio (%) 60% 58%
Debt to equity ratio (%) 42% 52%
Debt to capital ratio (%) 25% 27%
Total debt /EBITDA ratio 2.64 2.61
Debt service coverage ratio 1.55 1.90
Liquidity ratio 0.97 1.08

 

 

FINANCIAL INDICATORS AND RATIOS – joint ventures recognised                       under the equity method

Performance indicators – joint ventures under the equity method (EUR thousand) Q2 2015 Q2 2014 Change % Q2 2013 Q2 2012 Q2 2011
For the period            
Sales (only subsidiaries) 13 765 13 764 0% 12 998 13 570 12 837
EBITDA (only subsidiaries) 1 113 2 664 -58% 2 196 2 345 1 806
EBITDA margin (%) 8.1% 19.4%   16.9% 17.3% 14.1%
Operating profit (only subsidiaries) 429 1 936 -78% 1 576 1 516 951
Operating margin (%) 3.1% 14.1%   12.1% 11.2% 7.4%
Interest expenses (only subsidiaries) (130) (181) 28% (178) (553) (577)
Profit of joint ventures by equity method 225 190 18% 82 64 90
Net profit for the period 481 1 858 -74% 1 398 972 396
Net margin (%) 3.5% 13.5%   10.8% 7.2% 3.1%
Return on assets ROA (%) 0.6% 2.5%   1.8% 1.2% 0.5%
Return on equity ROE (%) 1.0% 4.2%   3.3% 2.5% 1.0%
Earnings per share (EPS) 0.02  0.06   0.05 0.03 0.01

 

 

 

Performance indicators – joint ventures under the equity method (EUR thousand) 1st Half year 2015 1st Half year 2014 Change % 1st Half year 2013 1st Half year 2012 1st Half year 2011
For the period            
Sales (only subsidiaries) 25 858 26 498 -2% 24 811 25 748 23 986
EBITDA (only subsidiaries) 2 351 3 993 -41% 3 612 3 893 3 101
EBITDA margin (%) 9.1% 15.1%   14.6% 15.1% 12.9%
Operating profit* (only subsidiaries) 972 2 529 -62% 2 354 2 236 1 447
Operating margin* (%) 3.8% 9.5%   9.5% 8.7% 6.0%
Interest expenses (only subsidiaries) (285) (357) 20% (374) (1 042) (1 140)
Profit of joint ventures by equity method 419 288 45% 146 104 160
Net profit for the period* 1 037 2 361 -56% 2 036 1 151 241
Net margin* (%) 4.0% 8.9%   8.2% 4.5% 1.0%
Net profit for the period in the financial statements (incl. impairments and gain on change of ownership interest) 1 037 2 361 -56% 2 036 1 151 1 781
Net margin (%) 4.0% 8.9%   8.2% 4.5% 7.4%
Return on assets ROA (%) 1.4% 3.2%   2.7% 1.5% 2.1%
Return on equity ROE (%) 2.2% 5.5%   4.9% 3.0% 4.7%
Earnings per share (EPS) 0.03  0.08   0.07 0.04 0.06

 

* The results exclude one-off gains in relation to the acquisition of Eesti P?evalehe AS in 2011.

 

 

Balance sheet– joint ventures under equity method (EUR thousand) 30.06.2015 31.12.2014 Change %
As of the end of the period      
Current assets 11 702 12 303 -5%
Non-current assets 62 436 64 292 -3%
Total assets 74 138 76 595 -3%
       incl. cash and bank 3 298 5 275 -37%
       incl. goodwill 38 153 38 153 0%
Current liabilities 12 426 11 481 8%
Non-current liabilities 14 704 17 939 -18%
Total liabilities 27 130 29 420 -8%
       incl. borrowings 18 542 23 152 -20%
Equity 47 008 47 175 0%

 

 

 

  Financial ratios (%) – joint ventures under the equity method 30.06.2015 31.12.2014
Equity ratio (%) 63% 62%
Debt to equity ratio (%) 39% 49%
Debt to capital ratio (%) 24% 27%
Total debt /EBITDA ratio 2.97 2.93
Debt service coverage ratio 1.41 1.77
Liquidity ratio 0.94 1.07

 

Cyclicality

All operating areas of the Group are characterised by cyclicality and fluctuation, related to the changes in the overall economic conditions and consumer behaviour. The Group’s revenue can be adversely affected by an economic slowdown or recession. It can appear in lower advertising costs in retail but also in  preferences of other advertising channels for example preference of internet rather than print media. Revenues can also be affected by changes in consumption habits of retail consumers like 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 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
Return on assets ROA (%) Net profit /average assets x 100
Return on equity ROE (%) Net profit /average equity x 100

 

* The results exclude one-off gains in relation to the acquisition of Eesti P?evalehe AS in 2011.

SEGMENT OVERVIEW

From the 3rd quarter of 2014, when the Group’s Lithuanian subsidiaries were merged, the Group’s activities are divided into the media segment, printing services segment and entertainment segment launched this year. Previously, the entities of the media segment were divided into online media and periodicals segments.

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 deducted from the Group’s sales and are included in the combined line of eliminations.

Key financial data of the segments Q2 2011-2015

 

(EUR thousand) Sales Sales
  Q2 2015 Q2 2014 Change % Q2 2013 Q2 2012 Q2 2011
media segment (by equity method) 7 984 7 492 7% 6 751 7 040 6 511
       incl. revenue from all digital and online channels 4 102 3 730 10% 3 257 2 984 2 551
printing services segment 6 386 7 210 -11% 7 131 7 482 6 998
entertainment segment 392 - - - - -
corporate functions 488 423 15% 385 279 48
intersegment eliminations (1 485) (1 361) -9% (1 270) (1 231) (720)
TOTAL GROUP by equity method 13 765 13 764 0% 12 998 13 570 12 837
media segment by proportional consolidation 10 507 9 950 6% 9 082 9 443 8 796
       incl. revenue from all digital and online channels 4 385 3 963 11% 3 422 3 158 2 711
printing services segment 6 386 7 210 -11% 7 131 7 482 6 998
entertainment segment 392 - - - - -
corporate functions 488 423 15% 385 279 48
intersegment eliminations (1 775) (1 576)   (1 483) (1 441) (879)
TOTAL GROUP by proportional consolidation 15 998 16 007 0% 15 115 15 763 14 963

 

 

 

(EUR thousand) EBITDA EBITDA
  Q2 2015 Q2 2014 Change % Q2 2013 Q2 2012 Q2 2011
media segment by equity method 1 256 1 261 0% 800 956 472
media segment by proportional consolidation 1 631 1 532 6% 989 1 138 691
printing services segment 1 271 1 537 -17% 1 599 1 563 1 551
entertainment segment (1 129) - - - - -
corporate functions (285) (134) -113% (204) (175) (221)
intersegment eliminations 0 0 - 1 1 3
TOTAL GROUP by equity method 1 113 2 664 -58% 2 196 2 345 1 806
TOTAL GROUP by proportional consolidation 1 488 2 935 -49% 2 384 2 525 2 025

 

 

 

EBITDA margin Q2 2015 Q2 2014 Q2 2013 Q2 2012 Q2 2011
media segment by equity method 16% 17% 12% 14% 7%
media segment by proportional consolidation 16% 15% 11% 12% 8%
printing services segment 20% 21% 22% 21% 22%
TOTAL GROUP by equity method 8% 19% 17% 17% 14%
TOTAL GROUP by proportional consolidation 9% 18% 16% 16% 14%

 

 

Key financial data of the segments 1st half year 2011-2015

 

(EUR thousand) Sales Sales
  1st Half year 2015 1st Half year 2014 Change % 1st Half
year 2013		 1st Half
 year 2012		 1st Half
year 2011
media segment (by equity method) 14 565 13 906 5% 12 674 12 673 11 739
       incl. revenue from all digital and online channels 7 437 6 517 14% 5 727 5 217 4 447
printing services segment 12 704 14 272 -11% 13 749 14 858 13 467
entertainment segment 453 - - - - -
corporate functions 960 844 14% 740 420 74
intersegment eliminations (2 823) (2 524) -12% (2 353) (2 202) (1 295)
TOTAL GROUP by equity method 25 858 26 498 -2% 24 811 25 748 23 986
media segment by proportional consolidation 19 469 18 588 5% 17 044 16 300 17 320
       incl. revenue from all digital and online channels 7 936 6 949 14% 6 022 5 528 4 736
printing services segment 12 704 14 272 -11% 13 749 14 858 13 467
entertainment segment 453 - - - - -
corporate functions 960 844 14% 740 420 74
intersegment eliminations (3 408) (2 931) (2 752) (2 608) (1 596) (2 752)
TOTAL GROUP by proportional consolidation 30 178 30 773 -2% 28 925 29 982 28 109

 

 

 

(EUR thousand) EBITDA EBITDA
  1st Half year 2015 1st Half year 2014 Change % 1st Half
year 2013		 1st Half
year 2012		 1st Half
year 2011
media segment by equity method 1 535 1 599 -4% 1 007 1 148 480
media segment by proportional consolidation 2 189 1 997 10% 1 283 1 397 798
printing services segment 2 432 2 995 -19% 3 013 3 093 3 047
entertainment segment (1 105) - - - - -
corporate functions (511) (601) 14% (410) (349) (434)
intersegment eliminations 0 0 -69% 2 1 8
TOTAL GROUP by equity method 2 351 3 993 -41% 3 612 3 893 3 101
TOTAL GROUP by proportional consolidation 3 005 4 389 -32% 3 888 4 140 3 420

 

 

 

EBITDA margin 1st Half year 2015 1st Half year 2014 1st Half year 2013 1st Half year 2012 1st Half year 2011
media segment by equity method 11% 12% 8% 9% 4%
media segment by proportional consolidation 11% 11% 8% 9% 5%
printing services segment 19% 21% 22% 21% 23%
TOTAL GROUP by equity method 9% 15% 15% 15% 13%
TOTAL GROUP by proportional consolidation 10% 14% 13% 14% 12%

 

 

MEDIA SEGMENT

The media segment includes Delfi operations in Estonia, Latvia and Lithuania as well as the parent company Delfi Holding. Until March 2014, it also included Delfi operations in Ukraine. The media segment also includes AS Eesti Ajalehed (publisher of Maaleht, Eesti Ekspress and Eesti P?evaleht), book publisher O? Hea Lugu as well as magazine publisher UAB Ekspress Leidyba in Lithuania that was merged into Delfi Lithuania on 1 July 2014. On 1 July 2015, AS Delfi and AS Eesti Ajalehed in Estonia were merged into one entity under the name of AS Ekspress Meedia. 

This segment also includes 50% joint ventures AS SL ?htuleht (publisher of ?htuleht and Linnaleht), magazine publisher AS Ajakirjade Kirjastus and home delivery company AS Express Post.

The EBITDA of Delfi Estonia, Latvia and Lithuania are presented before the trademark royalty fees that were paid to the direct parent company Delfi Holding until April 2015. In May 2015, Delfi group was restructured, as a consequence of which Delfi’s local companies are directly owned by AS Ekspress Grupp. In Latvia and Lithuania, the change in ownership is still in progress. The new structure will reflect better the actual management structure which has due to econimical considerations changed over the years.

News portals owned by the Group

Classified portals owned by the Group

(EUR thousand) Sales
  Q2 2015 Q2 2014 Change %
Delfi Estonia 1 647 1 398 18%
Delfi Latvia 785 648 21%
Delfi Lithuania (incl. Ekspress Leidyba) 2 136 2 275 -6%
        incl. online revenue of Delfi Lithuania 1 578 1 588 -1%
AS Eesti Ajalehed 3 361 3 076 9%
O? Hea Lugu 124 182 -32%
Other companies (Delfi Holding) -  - -
Intersegment eliminations (69) (87) 20%
TOTAL subsidiaries 7 984 7 492 7%
AS SL ?htuleht* 1 074 1 015 6%
AS Ajakirjade Kirjastus* 1 088 1 120 -3%
AS Express Post* 626 607 3%
Intersegment eliminations (265) (285) 7%
TOTAL joint ventures 2 523 2 458 3%
TOTAL segment by proportional consolidation 10 507 9 950 6%

 

(EUR thousand) EBITDA
  Q2 2015 Q2 2014 Change %
Delfi Estonia 367 344 7%
Delfi Latvia 68 83 -18%
Delfi Lithuania (incl. Ekspress Leidyba) 440 624 -29%
AS Eesti Ajalehed 376 204 84%
O? Hea Lugu 6 10 -40%
Other companies (Delfi Holding) (1) (4) 75%
Intersegment eliminations (0) 0 -
TOTAL subsidiaries 1 256 1 261 0%
AS SL ?htuleht* 166 83 100%
AS Ajakirjade Kirjastus* 127 88 45%
AS Express Post* 82 100 -18%
Intersegment eliminations (0) 0 -129%
TOTAL joint ventures 375 271 38%
TOTAL segment by proportional consolidation 1 631 1 532 6%

 *Proportional share of joint ventures

(EUR thousand) Sales
  1st Half year 2015 1st Half year 2014 Change %
Delfi Estonia 3 005 2 471 22%
Delfi Latvia 1 460 1 141 28%
Delfi Lithuania (incl. Ekspress Leidyba) 3 875 4 028 -4%
        incl. online revenue of Delfi Lithuania 2 787 2 743 2%
Delfi Ukraine 0 2 -100%
AS Eesti Ajalehed 6 113 5 938 3%
O? Hea Lugu 241 491 -51%
Other companies (Delfi Holding) -  - -
Intersegment eliminations (129) (165) 22%
TOTAL subsidiaries 14 565 13 906 5%
AS SL ?htuleht* 2 088 1 964 6%
AS Ajakirjade Kirjastus* 2 106 2 080 1%
AS Express Post* 1 264 1 192 6%
Intersegment eliminations (554) (554) 0%
TOTAL joint ventures 4 904 4 681 5%
TOTAL segment by proportional consolidation 19 469 18 588 5%

 

(EUR thousand) EBITDA
  1st Half year 2015 1st Half year 2014 Change %
Delfi Estonia 461 421 10%
Delfi Latvia 111 19 484%
Delfi Lithuania (incl. Ekspress Leidyba) 556 798 -30%
Delfi Ukraine 0 (51) 100%
AS Eesti Ajalehed 400 338 18%
O? Hea Lugu 11 76 -86%
Other companies (Delfi Holding) (4) (4) 0%
Intersegment eliminations (0) 2 -
TOTAL subsidiaries 1 535 1 599 -4%
AS SL ?htuleht* 284 114 150%
AS Ajakirjade Kirjastus* 200 98 104%
AS Express Post* 170 184 -7%
Intersegment eliminations (0) 3 -100%
TOTAL joint ventures 654 398 64%
TOTAL segment by proportional consolidation 2 189 1 997 10%

*Proportional share of joint ventures

Delfi Estonia

  • Growth in the number of live webcasts in Delfi TV.
  • Delfi image campaign was launched to increase awareness of Delfi as the fastest news portal and of the option for everyone to participate in news production. 
  • Several Delfi sub-sites and topical portals were updated and diversified.
  • Improvement of the comments section.  
  • Merger of Delfi and AS Eesti Ajalehed and relocation to a joint office.
  • Several media partnership cooperation projects in various events and projects, such as Jazzkaar, new Estonian children’s movie “Secret Society of Soup Town”, Estonian Cancer Society, etc.

Estonian online readership 2014-2015

In the 2nd quarter of 2015, Delfi remains the largest online portal in Estonia. There have been no major changes in the competitive landscape of online environments. The number of users who use Delfi with their mobile phones continues to grow. This in turn will increase the total number of internet users and lead to a situation where the share of content consumed via mobile devices will grow. At the end of the quarter, there was a traditional decrease in the number of users related to the summer period. One of the minor changes in the 2nd quarter included the sale of Smartad media agency to Modern Times Group (MTG) that operates under TV3 trademark in Estonia. With this transaction, MTG continues to expand its operations in the online segment similarly to other Baltic States.

 

Delfi Latvia

  • Continuation of fast development of Delfi TV and live webcasts.
  • Another record was achieved in May  – over 890 thousand unique users per month.
  • Launch of the new technology portal www.techlife.lv.
  • Focus on production of longer original content continued.
  • Cooking portal www.tasty.lv received a new and more modern design.
  • Mobile version of the forum of the family and home portal  www.C?lis.lv was launched.
  • New technology (HTML5) of animated banners in mobile devices was used for the first time.
  • Media partner for several concert tours, teams and events.

 

Latvian online readership 2014-2015

In the 2nd quarter of 2015, the number of readers of the three largest portals has been relatively stable and there have been no major changes. Inbox.lv remains the largest internet environment in Latvia and Delfi.lv is the largest news portal in Latvia. From January 2015, the methodology of Gemius online survey has changed. The user figures for 2015 include the statistics for the age group of 7-74. In prior periods, the statics was presented for the age group of 15-74.

Delfi Lithuania

  • New portal www.vyriskai.lt was launched. This portal is dedicated to men and includes such themes like leisure, style, hobbies, other practical info.
  • We finalised to build a new video streaming system in cooperation with TEO. This solution will help  to maintain about 25-30 thousand video viewers in one time. In 2nd quarter DELFI TV had 239 live broadcasts. 
  • Delfi sponsored biggest progress conference in Baltics LOGIN, which also had live broadcasting on DELFI TV.
  • Successful relaunch of a Panele magazine with a new editorial team.

 

Lithuanian online readership 2014-2015

Delfi.lt remains the largest internet portal in Lithuania. In the 2nd quarter of 2015, no major changes occurred in the preferences of internet users. However, there will be new competitors in the market, as  MTG acquired the products of Tipro group combining several portals and combined them under tv3.lt. This resulted in the formation of the third largest internet portal group in Lithuania, with a higher number of users than that of Lrytas.lt.

 

Print media in Estonia

Estonian newspaper circulation  2014-2015

Over the long term, the circulation of Estonian newspapers is in a modest downward trend. The circulation of daily newspapers is decreasing more rapidly, and that of weekly newspapers less. As of the 2nd quarter of 2015, some changes have occurred in the market – ?htuleht has lost its position and became again the newspaper with the second largest circulation in Estonia. Maaleht continues to grow its circulation in a stable manner. In addition to these circulation figures, the Group’s newspapers also have subscribers of digital newspapers, the total number of whom is approximately 12 thousand for Eesti P?evaleht and Eesti Ekspress.    

Estonian newspaper readership 2014-2015

Similarly to the newspaper circulation, the number of readers of periodicals is relatively stable, but decreases by ca 3-5% per year over the long term. Due to the fact that the readership of digital newspapers is not covered by this survey, these data do not reflect actual readership figures. The number of subscribers of the Group’s digital newspapers is approximately 12 thousand for Eesti P?evaleht and Eesti Ekspress. Therefore, the growth in the number of readers of digital newspapers is the main focus for the Group’s periodicals. The competitive situation in the readers’ market has not significantly changed in 2nd quarter of 2015. Typical of the 2nd quarter, the readership of ?htuleht has decreased. On the other hand, the readership of Maaleht has increased and it is related to the increase in the circulation of Maaleht. The readership of other newspapers has remained stable.  

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 2015 Q2 2014 Change %
AS Printall 6 386 7 210 -11%

 

(EUR thousand) EBITDA
  Q2 2015 Q2 2014 Change %
AS Printall 1 271 1 537 -17%

 

(EUR thousand) Sales
  1st Half year 2015 1st Half year 2014 Change %
AS Printall 12 704 14 272 -11%

 

(EUR thousand) EBITDA
  1st Half year 2015 1st Half year 2014 Change %
AS Printall 2 432 2 995 -19%

Sanctions against Russia and the related decrease in orders and price pressure in Scandinavia caused sales revenue and EBITDA to fall in the first half of the year as compared to the year earlier. Due to changes in the political landscape there have been changes in the structure of export markets where the share of Russia continues to decrease. The increase of the share of Estonia is primarily attributable to the  new sheet-fed printing machine installed at the beginning of 2015, used for printing magazine covers, small-circulation magazines and advertising products.

Printing services and the environment

In addition to its very strong financial position, Printall also focuses on environmentally conscious production.  Printall has been 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) 30.06.2015 31.12.2014
ASSETS    
Current assets    
Cash and cash equivalents 3 274 3 656
Term deposits 24 19
Trade and other receivables 6 287 6 519
Corporate income tax prepayment 76 37
Inventories 2 041 2 072
Total current assets 11 702 12 303
Non-current assets    
Term deposit 0 1 600
Trade and other receivables 1 101 1 170
Deferred tax asset 65 65
Investments in joint ventures 641 500
Investments in associates 185 164
Property, plant and equipment 14 466 14 506
Intangible assets 45 978 46 287
Total non-current assets 62 436 64 292
TOTAL ASSETS 74 138 76 595
LIABILITIES    
Current liabilities    
Borrowings 3 838 5 213
Trade and other payables 8 518 6 249
Corporate income tax payable 70 19
Total current liabilities 12 426 11 481
Non-current liabilities    
Long-term borrowings  14 704 17 939
Total non-current liabilities 14 704 17 939
TOTAL LIABILITIES 27 130 29 420
EQUITY    
Share capital 17 878 17 878
Share premium 14 277 14 277
Treasury shares (145) (64)
Reserves 1 760 1 440
Retained earnings 13 238 13 644
TOTAL EQUITY 47 008 47 175
TOTAL LIABILITIES AND EQUITY 74 138 76 595

Consolidated statement of comprehensive income (unaudited)

(EUR thousand) Q2 2015 Q2 2014 1st Half year 2015 1st Half year 2014
Sales revenue 13 765 13 764 25 858 26 498
Cost of sales (11 550) (10 139) (21 345) (20 361)
Gross profit 2 215 3 625 4 513 6 137
Other income 138 106 246 221
Marketing expenses (579) (526) (1 132) (966)
Administrative expenses (1 314) (1 242) (2 603) (2 778)
Other expenses (31) (27) (52) (85)
Operating profit 429 1 936 972 2 529
Interest income 11 2 22 3
Interest expense (130) (181) (285) (357)
Foreign exchange gains/(losses)  (4)  (1)  (4) 35
Other finance costs (15) (15) (30) (30)
Total finance income/costs  (138)  (195)  (297)  (349)
Profit on shares of joint ventures 225 190 419 288
Profit (loss) on shares of associates 24 3 9  (9)
Profit before income tax 540 1 934 1 103 2 459
Income tax expense (59) (76) (66) (98)
Net profit  for the reporting period 481 1 858 1 037 2 361
Net profit for the reporting period attributable to:        
Equity holders of the parent company 481 1 858 1 037 2 361
Other comprehensive income (expense) that may be subsequently reclassified to profit or loss         
Currency translation differences 0 2 0  (34)
Total other comprehensive income (expense) 0 2 0  (34)
Comprehensive income (expense) for the reporting period 481 1 860 1 037 2 327
Attributable to equity holders of the parent company 481 1 860 1 037 2 327
Basic and diluted earnings per share 0.02 0.06 0.03 0.08

Consolidated cash flow statement (unaudited)

(EUR thousand) 1st Half year 2015 1st Half year 2014
Cash flows from operating activities    
Operating profit for the reporting year 972 2 529
Adjustments for:    
Depreciation, amortisation and impairment 1 379 1 464
(Gain)/loss on sale and write-down of property, plant and equipment (3) (3)
Change in value of share option 64 68
Cash flows from operating activities:    
Trade and other receivables 170 (1 909)
Inventories 31 145
Trade and other payables 521 (2 298)
Cash generated from operations 3 134 (4)
Income tax paid (66) (138)
Interest paid (285) (357)
Net cash generated from operating activities 2 783 (499)
Cash flows from investing activities    
Term deposit (placement)/release 1 600 0
Interest received 33 3
Purchase of  property, plant and equipment (457) (881)
Proceeds from sale of property, plant and equipment 16 5
Loans granted 0 (22)
Loan repayments received 73 2
Net cash used in investing activities 1 254 (893)
Cash flows from financing activities    
Dividend received from joint ventures 278 203
Finance lease repayments (40) (34)
Change in use of overdraft (1 117) 2 606
Repayments of bank loans (3 458) (1 831)
Purchase of treasury shares (81) (28)
Net cash used in financing activities (4 419) 917
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (382) (475)
Cash and cash equivalents at the beginning of the year 3 656 2 111
Cash and cash equivalents at the end of the year 3 274 1 636