OREANDA-NEWS. AS Ekspress Grupp: Consolidated Interim Report for the fourth quarter and 12-months of 2015.

In the final quarter of 2015, the Group increased revenue by 2% as compared to the same period last year, amounting to more than EUR 17 million, and earned EUR 2.7 million in EBITDA, a decrease of 1% year on year. Compared to latest forecast presented in the third quarter report, the actual consolidated sales revenue remained 1.6% behind but EBITDA was 12% better. Media segment exceeded its latest sales forecast by 2.3% and EBITDA by 38% while printing services expected quicker recovery and thus remained 6% behind sales expectations and 15% in EBITDA expectations. In the 4th quarter, the consolidated net profit before any impairment losses increased almost by 3% compared to previous year and amounted to EUR 1.7 million.

The Group’s consolidated revenue for full year remained at last year’s level, EBITDA decreased by 11% to EUR 7.9 million and the net profit decreased by 15% to EUR 3.9 million. The Group’s financial leverage improved, the total debt to EBITDA ratio fell to 2.39 and the equity ratio increased to 63%.

The Group’s result was most affected by the loss of EUR 1.1 million in connection with the exhibition of RMS Titanic held in the middle of the year in Riga and the one cancelled in Vilnius. Total EBITDA earned by the Group’s main segments amounted to EUR 9 million, an increase of 1% from the previous year, however 6% behind the yearly budget. The net profit from core business amounted to EUR 5 million, and was 8% higher than a year earlier but also remained 7% behind the budget. The above figures include all our joint ventures (AS SL ?htuleht, AS Ajakirjade Kirjastus and AS Express Post) consolidated 50% line-by-line.

The profit earned from the Group’s core business was unchanged from last year, in spite of the 11% decrease in sales revenue of the printing house and the year-on-year decrease of EBITDA by EUR 1 million. This means that the profit of media segment offset the loss of the printing services segment. Whereas in 2014, the media segment accounted for 40% in the profit earned by the Group’s core business, it increased to 50% in 2015, proving the viability of the media segment.

The key factor affecting the result of the printing services segment was the negative impact of economic sanctions imposed on Russia on exports of the Scandinavian printing industry. This resulted in the notable increase of price pressure in export markets and forced the Group’s printing house Printall to lower sales prices. In addition to fierce price pressure, the company’s business volumes also decreased. In the final quarter of 2015, the revenue of AS Printall was 9% lower and the profit was 17% lower than a year before. For the year, the result decreased 11% and EBITDA fell by 16%. At the end of 2015 the situation has stabilized and the company is determined to maintain its last year’s level and expects moderate growth in 2016. The company’s activities have been streamlined as much as possible and its very competitive profit margin enables Printall to be flexible in pricing. The company’s management has decided that Printall must compete with its quality of service rather than low pricing.

Keywords in the media segment were higher profitability of the Group’s Estonian and Latvian enterprises, and the price shock in Lithuania caused by the changeover to the euro. In the 4th quarter of 2015, the media segment’s consolidated sales revenue and EBITDA both increased by 9% compared to the same quarter a year earlier. In financial terms, the income amounted to EUR 11 million and EBITDA totalled EUR 1.6 million. Yearly revenues of media segment grew 8% compared to year ago and 2% compared to budget, amounting to EUR 40 million.  EBITDA increased 22% compared to previous year and exceeded the budget by 15% amounting to EUR 4.9 million.

For Delfi Lithuania, the start of the year was difficult because of the price shock from the abovementioned transition to the euro. As a result, EBITDA increased only 6% in a year, which was below our expectations. The annual result of Delfi Latvia increased 60% as compared to the year before. Most of the growth came from active participation on the advertising market and the content quality of online products. The year’s most important event in the media segment was the merger of Estonian newspaper publisher AS Eesti Ajalehed and online portal Delfi into a new company, AS Ekspress Meedia. This resulted in EBITDA growth of 45% as compared to the year earlier. The merger has both improved cost efficiency of various departments as well as notably increased competitiveness on the advertising market. Today, Ekspress Meedia employs over 300 people and the company serves approximately 100 thousand different subscribers, many of whom subscribe to more than one title published by the Group. In 2015 the company sold advertising for more than EUR 10 million. In the final quarter, advertising income earned by the mobile version of the news portal amounted to more than EUR 100 thousand a month.

For the year as a whole, also joint ventures AS SL ?htuleht and AS Ajakirjade Kirjastus increased their profit notably, by 43% and 52% respectively. The only one that earned less profit in the media segment for the year was Express Post, the home delivery company that saw its annual profit to decrease 22%. One important factor behind the decrease of profit in Express Post was the increase in wage costs of the company’s postmen. Hea Lugu, the Group’s book publishing enterprise earned more or less the same profit as a year ago and this without any series, publishing only individual titles in 2015. Best selling book was the biography of the Estonian singer Jaak Joala that has been sold more than 10,000 copies and more than tripled the company’s result in the final quarter of 2015.

In the media segment, we continued investing in digital platforms of our publications. Among others we launched a new digital solution for the Eesti Ekspress weekly, launched a new evening digital paper for Eesti P?evaleht  and brought to the market the first digital magazine in the portfolio of AS Ajakirjade Kirjastus. In 2016 we will launch digital versions of the rural weekly Maaleht and key magazines, increasing the digital portfolio of the Group’s subsidiaries and joint ventures to more than ten different titles. In the field of digital publishing, we have found a very cost-effective solution that enables us to relatively rapidly and with minimum costs to make progress in digital media. 

From print media side we surprised our readers with the introduction of a more substantial weekly LP newspaper in September. Maaleht has issued successful book series of Tarkusepuu (Wisdomtree), which supported well the retail sales of Maaleht. The paper version of Eesti P?evaleht was redesigned. Ajakirjade Kirjastus acquired the Sensa magazine, widening its activities towards self-development and psychology.

During the year we also founded one new legal entity, O? Zave Media. It’s a startup that is building up an online consumer portal in all Baltic countries to help customers find the best vendor for the products that they need. Every month, the portal has ca 100 thousand unique users in Estonia, 60 thousand in Latvia and over 200 thousand in Lithuania who regularly browse products of an average of 100 different merchants per country.

During the year, we also made our first passive investment in a startup enterprise by investing EUR 50 thousand in Jobbatical, a job exchange portal. On the first month of the new year, Jobbatical completed the next funding round for development, raising ca USD 2 millions, mainly from US institutional investors. Although this investment is not directly in line with the Group’s investment policy, we consider it a good first step in entering the world of seed companies and will continue to study new potential investment targets.

In the new year we will continue analysing business areas related to new media with the objective of finding new activities and enterprises to add to the Group’s portfolio of subsidiaries. We find that the media sector in all three Baltic countries is saturated which is why we are looking for growth from outside the traditional media segment however on targets related to the same industry.

Our forecast for the new year is sales growth of 7% and EBITDA growth of 14% provided, of course, that stable development of the global economy remains unchanged.

Our mission remains to offer new and interesting experiences both on paper and in digital media, without ever compromising on news quality, choice of topics and journalistic objectivity.

The Group’s goal is to be a truly modern media group with a strong foothold in all markets where actively present, with a leading position in online media.

FINANCIAL INDICATORS AND RATIOS – joint ventures consolidated 50%line-by-line

In consolidated financial reports 50% joint ventures are recognised under the equity method, in compliance with international financial reporting standards (IFRS). In its monthly reports, the management monitors the Group’s performance on a basis of proportional consolidation of joint ventures and the syndicated loan contract also determines the calculation of some loan covenants by proportional consolidation. For the purpose of clarity, the management report shows two sets of indicators: one where joint ventures are consolidated line-by-line 50% and the other where joint ventures are recognised under the equity method and their net result is presented as financial income in one line. 

Performance indicators  - joint ventures consolidated  50% (EUR thousand) Q4 2015 Q4 2014 Change % Q4 2013 Q4 2012 Q4 2011
For the period            
Sales 17 181 16 778 2% 16 526 16 447 16 313
EBITDA 2 720 2 757 -1% 2 015 2 246 1 986
EBITDA margin (%) 15.8% 16.4%   12.2% 13.7% 12.2%
Operating profit* 1 936 1 895 2% 1 348 1 496 1 037
Operating margin* (%) 11.3% 11.3%   8.2% 9.1% 6.4%
Interest expenses (141) (186) 24% (185) (206) (523)
Net profit /(loss) for the period* 1 660 1 614 3% 1 057 1 268 535
Net margin* (%) 9.7% 9.6%   6.4% 7.7% 3.3%
Net profit for the period in financial statements
(incl. impairments and gain on change of ownership interest)		 460 1 149 -60% (1 410) 1 112 (215)
Net margin (%) 2.7% 6.8%   -8.5% 6.8% -1.3%
Return on assets ROA (%) 0.6% 1.4%   -1.8% 1.4% -0.3%
Return on equity ROE (%) 0.9% 2.4%   -3.3% 2.7% -0.6%
Earnings per share (EPS) 0.02 0.04   (0.05) 0.04 (0.01)

  

Performance indicators  - joint ventures consolidated  50% (EUR thousand) 12 months 2015 12 months 2014 Change % 12 months 2013 12 months 2012 12 months 2011
For the period            
Sales 61 528 61 384 0% 58 427 59 706 57 391
EBITDA 7 869 8 878 -11% 7 264 7 882 6 968
EBITDA margin (%) 12.8% 14.5%   12.4% 13.2% 12.1%
Operating profit* 4 866 5 638 -14% 4 647 4 596 3 443
Operating margin* (%) 7.9% 9.2%   8.0% 7.7% 6.0%
Interest expenses (618) (732) 16% (763) (1 549) (2 212)
Net profit /(loss) for the period* 3 907 4 620 -15% 3 548 2 682 893
Net margin* (%) 6.4% 7.5%   6.1% 4.5% 1.6%
Net profit for the period in financial statements (incl. impairments and gain on change of ownership interest) 2 707 5 110 -47% 1 081 2 525 1 683
Net margin (%) 4.4% 8.3%   1.9% 4.2% 2.9%
Return on assets ROA (%) 3.5% 6.6%   1.4% 3.2% 2.0%
Return on equity ROE (%) 5.6% 11.4%   2.5% 6.4% 4.4%
Earnings per share (EPS) 0.09 0.17   0.04 0.08 0.06

 * The results exclude allowances on impairments and one-off gains in relation to the acquisition in Eesti P?evalehe AS in 2011 and the change in ownership structure in joint ventures AS Ajakirjade Kirjastus and AS SL ?htuleht in 2014. 

Balance sheet– joint ventures consolidated  50%
(EUR thousand)		 31.12.2015 31.12.2014 Change %
As of the end of the period      
Current assets 15 553 15 189 2%
Non-current assets 61 588 65 665 -6%
Total assets 77 141 80 854 -5%
       incl. cash and bank 4 666 6 788 -31%
       incl. goodwill 38 232 39 432 -3%
Current liabilities 12 539 14 110 -11%
Non-current liabilities 15 928 19 569 -19%
Total liabilities 28 467 33 679 -15%
       incl. borrowings 18 787 24 592 -24%
Equity 48 674 47 175 3%

 

  Financial ratios (%) – joint ventures consolidated  50% 31.12.2015 31.12.2014
Equity ratio (%) 63% 58%
Debt to equity ratio (%) 39% 52%
Debt to capital ratio (%) 22% 27%
Total debt /EBITDA ratio 2.39 2.61
Debt service coverage ratio 1.79 1.90
Liquidity ratio 1.24 1.08

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

Performance indicators – joint ventures under the equity method (EUR thousand) Q4 2015 Q4 2014 Change % Q4 2013 Q4 2012 Q4 2011
For the period            
Sales (only subsidiaries) 14 811 14 454 2% 14 291 14 165 13 995
EBITDA (only subsidiaries) 2 440 2 413 1% 1 815 2 017 1 740
EBITDA margin (%) 16.5% 16.7%   12.7% 14.2% 12.4%
Operating profit* (only subsidiaries) 1 718 1 661 3% 1 175 1 293 822
Operating margin* (%) 11.6% 11.5%   8.2% 9.1% 5.9%
Interest expenses (only subsidiaries) (125) (158) 21% (185) (206) (524)
Profit of joint ventures by equity method 196 182 8% 174 202 208
Net profit for the period* 1 660 1 601 4% 1 057 1 269 535
Net margin* (%) 11.2% 11.1%   7.4% 9.0% 3.8%
Net profit for the period in financial statements
(incl. impairments and gain on change of ownership interest)		 460 1 136 -60% (1 410) 1 112 (215)
Net margin (%) 3.1% 7.9%   -9.9% 7.8% -1.5%
Return on assets ROA (%) 0.6% 1.5%   -1.8% 1.4% -0.3%
Return on equity ROE (%) 0.9% 2.4%   -3.2% 2.7% -0.6%
Earnings per share (EPS) 0.02 0.04   (0.05) 0.04 (0.01)

 

Performance indicators – joint ventures under the equity method (EUR thousand) 12 months 2015 12 months 2014 Change % 12 months 2013 12 months 2012 12 months 2011
For the period            
Sales (only subsidiaries) 52 773 52 793 0% 50 086 51 290 49 027
EBITDA (only subsidiaries) 6 680 7 894 -15% 6 591 7 345 6 311
EBITDA margin (%) 12.7% 15.0%   13.2% 14.3% 12.9%
Operating profit* (only subsidiaries) 3 920 4 973 -21% 4 071 4 173 2 930
Operating margin* (%) 7.4% 9.4%   8.1% 8.1% 6.0%
Interest expenses (only subsidiaries) (550) (689) 20% (763) (1 550) (2 219)
Profit of joint ventures by equity method 785 557 41% 494 339 421
Net profit for the period* 3 907 4 621 -15% 3 548 2 682 893
Net margin* (%) 7.4% 8.8%   7.1% 5.2% 1.8%
Net profit for the period in financial statements (incl. impairments and gain on change of ownership interest) 2 707 5 110 -47% 1 081 2 525 1 683
Net margin (%) 5.1% 9.7%   2.2% 4.9% 3.4%
Return on assets ROA (%) 3.7% 6.8%   1.4% 3.2% 2.0%
Return on equity ROE (%) 5.6% 11.4%   2.5% 6.4% 4.4%
Earnings per share (EPS) 0.09 0.17   0.04 0.08 0.06

 * The results exclude allowances on impairments and one-off gains in relation to the acquisition in Eesti P?evalehe AS in 2011 and the change in ownership structure in joint ventures AS Ajakirjade Kirjastus and AS SL htuleht in 2014.  

Balance sheet– joint ventures under equity method (EUR thousand) 31.12.2015 31.12.2014 Change %
As of the end of the period      
Current assets 12 386 12 303 1%
Non-current assets 60 794 64 292 -5%
Total assets 73 180 76 595 -4%
       incl. cash and bank 2 927 5 275 -45%
       incl. goodwill 36 953 38 153 -3%
Current liabilities 9 033 11 481 -21%
Non-current liabilities 15 473 17 939 -14%
Total liabilities 24 506 29 420 -17%
       incl. borrowings 17 687 23 152 -24%
Equity 48 674 47 175 3%

 

 

 

  Financial ratios (%) – joint ventures by equity method 31.12.2015 31.12.2014
Equity ratio (%) 67% 62%
Debt to equity ratio (%) 36% 49%
Debt to capital ratio (%) 23% 27%
Total debt /EBITDA ratio 2.65 2.93
Debt service coverage ratio 1.67 1.77
Liquidity ratio 1.38 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 confidence. The Group’s revenue can be adversely affected by an economic slowdown or recession in home and export markets. It can appear in lower advertising costs in retail, preference of other advertising channels like preference of internet rather than print media and changes in consumption habits of retail consumers e.g. following current news in news portals versus reading printed newspapers, preference of the younger generation to use mobile devices and other communication channels, etc.   

Seasonality

The revenue from the Group’s advertising sales as well as revenue in the printing services segment is impacted by major seasonal fluctuations. The level of both types of revenue is the highest in the 2nd and 4th quarter of each year and the lowest in the 3rd quarter. Revenue is higher in the 4th quarter because of higher consumer spending during the Christmas season, accompanied by the increase in advertising expenditure. Advertising expenditure is usually the lowest during the summer months, as well as during the first months of the year following Christmas and New Year’s celebrations. Book sales are the strongest in the last quarter of the year. Subscriptions and retail sales of periodicals do not fluctuate as much as advertising revenue. However the summer period is always more quiet and at the beginning of the school year in September there is an increase in subscriptions and retail sale which usually continues until next summer holiday period.   

 

Formulas used to calculate the financial ratios
EBITDA Earnings before interest, tax, depreciation and amortization. EBITDA does not include any impairment losses recognized during the period or result from restructuring.
EBITDA margin(%)  EBITDA/sales x 100
Operating margin* (%)  Operating profit*/sales x100
Net margin* (%)  Net profit*/sales x100
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 allowances on impairments and one-off gains in relation to the acquisition in Eesti P?evalehe AS in 2011 and the change in ownership structure in joint ventures AS Ajakirjade Kirjastus and AS SL ?htuleht in 2014.

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, impairment of goodwill and trademarks. Volume-based and other fees payable to advertising agencies have not been deducted from the advertising sales of segments, because the management monitors gross advertising sales. Discounts and rebates are reduced from the Group’s sales and are included in the combined line of eliminations.

Key financial data of the segments Q4 2011-2015 

(EUR thousand) Sales Sales
  Q4 2015 Q4 2014 Change % Q4 2013 Q4 2012 Q4 2011
media segment  (by equity method) 8 399 7 535 11% 7 617 7 049 6 550
       incl. revenue from all digital and online channels 4 544 4 015 13% 3 389 3 029 2 618
printing services segment 7 386 8 083 -9% 7 566 8 046 8 143
entertainment segment 0 0 - 0 0 0
corporate functions 543 459 18% 393 308 71
intersegment eliminations (1 517) (1 624)   (1 286) (1 238) (769)
TOTAL GROUP by equity method 14 811 14 454 2% 14 291 14 165 13 995
media segment by proportional consolidation 11 041 10 141 9% 10 043 9 532 9 030
       incl. revenue from all digital and online channels 4 832 4 257 14% 3 584 3 184 2 773
printing services segment 7 386 8 083 -9% 7 566 8 046 8 143
entertainment segment 0 0 - 0 0 0
corporate functions 543 459 18% 393 308 71
intersegment eliminations (1 789) (1 905)   (1 476) (1 439) (931)
TOTAL GROUP by proportional consolidation 17 181 16 778 2% 16 526 16 447 16 313

 

(EUR thousand) EBITDA EBITDA
  Q4 2015 Q4 2014 Change % Q4 2013 Q4 2012 Q4 2011
media segment by equity method 1 299 1 103 18% 1 014 611 511
media segment by proportional consolidation 1 579 1 448 9% 1 214 839 758
printing services segment 1 355 1 623 -17% 1 604 1 650 1 495
entertainment segment (4) 0 - 0 0 0
corporate functions (210) (313) 33% (763) (242) (268)
intersegment eliminations 0 0   (40) (1) 2
TOTAL GROUP by equity method 2 440 2 413 1% 1 815 2 017 1 740
TOTAL GROUP by proportional consolidation 2 720 2 757 -1% 2 015 2 246 1 986

 

 

 

EBITDA margin Q4 2015 Q4 2014 Q4 2013 Q4 2012 Q4 2011
media segment  by equity method 15% 15% 13% 9% 8%
media segment  by proportional consolidation 14% 14% 12% 9% 8%
printing services segment 18% 20% 21% 21% 18%
TOTAL GROUP by equity method 16% 17% 13% 14% 12%
TOTAL GROUP by proportional consolidation 16% 16% 12% 14% 12%

 Key financial data of the segments 12 months 2011-2015

 

(EUR thousand) Sales Sales
  12 months 2015 12 months 2014 Change % 12 months 2013 12 months 2012 12 months 2011
media segment  (by equity method) 30 063 27 459 9% 25 842 25 562 23 789
       incl. revenue from all digital and online channels 15 530 13 449 15% 11 595 10 561 9 111
printing services segment 25 842 28 951 -11% 27 462 29 167 27 736
entertainment segment 517 0 - 0 0 0
corporate functions 1 937 1 731 12% 1 530 996 209
intersegment eliminations (5 586) (5 347)   (4 748) (4 435) (2 707)
TOTAL GROUP by equity method 52 773 52 793 0% 50 086 51 290 49 027
media segment by proportional consolidation 39 943 36 930 8% 34 955 34 773 32 771
       incl. revenue from all digital and online channels 16 577 14 306 16% 12 226 11 147 9 673
printing services segment 25 842 28 951 -11% 27 462 29 167 27 736
entertainment segment 517 0 - 0 0 0
corporate functions 1 937 1 731 12% 1 530 996 209
intersegment eliminations (6 711) (6 228)   (5 520) (5 230) (3 325)
TOTAL GROUP by proportional consolidation 61 528 61 384 0% 58 427 59 706 57 391

  

(EUR thousand) EBITDA EBITDA
  12 months 2015 12 months 2014 Change % 12 months 2013 12 months 2012 12 months 2011
media segment by equity method 3 724 3 025 23% 2 123 2 089 1 325
media segment by proportional consolidation 4 913 4 013 22% 2 792 2 624 1 977
printing services segment 4 966 5 944 -16% 5 862 6 052 5 959
entertainment segment (1 110) 0 - 0 0 0
corporate functions (899) (1 076) 16% (1 356) (797) (980)
intersegment eliminations 0 0   (38) 1 7
TOTAL GROUP by equity method 6 680 7 894 -15% 6 591 7 345 6 311
TOTAL GROUP by proportional consolidation 7 869 8 878 -11% 7 264 7 882 6 968

  

EBITDA margin 12 months 2015 12 months 2014 12 months 2013 12 months 2012 12 months 2011
media segment  by equity method 12% 11% 8% 8% 6%
media segment  by proportional consolidation 12% 11% 8% 8% 6%
printing services segment 19% 21% 21% 21% 21%
TOTAL GROUP by equity method 13% 15% 13% 14% 13%
TOTAL GROUP by proportional consolidation 13% 15% 12% 13% 12%

MEDIA SEGMENT

The media segment includes Delfi operations in Estonia, Latvia and Lithuania, publishing of Estonian newspapers Maaleht, Eesti Ekspress and Eesti P?evaleht, book publishing in Estonia, magazine publishing in Lithuania, activities of the retail offer portal Zave and holding company Delfi Holding. This segment also includes 50% joint ventures AS SL ?htuleht (publisher of ?htuleht and Linnaleht), magazine publisher AS Ajakirjade Kirjastus and home delivery company AS Express Post.

Delfi companies’ EBITDA is 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. The ownership was changed in Lithuania in October 2015. The new structure reflects better the actual management structure which has gradually changed over the years.

In July 2015 AS Delfi and newspaper publisher AS Eesti Ajalehed were mergered in Estonia. New company continues to operate under name AS Ekspress Meedia. A year earlier Delfi UAB and magazine publisher Ekspress Leidyba UAB were merged in Lithuania. In Lithuania mergered entity continued under name of Delfi.

News portals owned by the Group 

(EUR thousand) Sales
  Q4 2015 Q4 2014 Change %
Ekspress Meedia AS (Delfi Eesti + Eesti Ajalehed) 4 756 4 365 9%
        incl. Delfi Estonia online revenue 1 592 1 439 11%
Delfi Latvia 927 786 18%
Delfi Lithuania (incl. Ekspress Leidyba) 2 414 2 250 7%
        incl. Delfi Lithuania online revenue 1 887 1 679 12%
O? Hea Lugu 304 202 50%
O? Zave Media 2 0 -
Other companies (Delfi Holding) 0  0 -
Intersegment eliminations (4) (68)  
TOTAL subsidiaries 8 399 7 535 11%
AS SL ?htuleht* 1 066 1 022 4%
AS Ajakirjade Kirjastus* 1 218 1 205 1%
AS Express Post* 648 654 -1%
Intersegment eliminations (289) (275)  
TOTAL joint ventures 2 643 2 606 1%
TOTAL segment by proportional consolidation 11 041 10 141 9%

  

(EUR thousand) EBITDA
  Q4 2015 Q4 2014 Change %
Ekspress Meedia AS (Delfi Eesti + Eesti Ajalehed) 425 434 -2%
Delfi Latvia 157 126 25%
Delfi Lithuania (incl. Ekspress Leidyba) 723 523 38%
O? Hea Lugu 85 23 270%
O? Zave Media (87) 0 -
Other companies (Delfi Holding) (4) (4) -3%
Intersegment eliminations (1) 1  
TOTAL subsidiaries 1 299 1 103 18%
AS SL ?htuleht* 113 127 -11%
AS Ajakirjade Kirjastus* 86 104 -18%
AS Express Post* 82 114 -28%
Intersegment eliminations (0) (0)  
TOTAL joint ventures 281 344 -19%
TOTAL segment by proportional consolidation 1 579 1 448 9%

 *Proportional share of joint ventures 

(EUR thousand) Sales
  12 months 2015 12 months 2014 Change %
Ekspress Meedia AS (Delfi Eesti + Eesti Ajalehed) 18 248 16 350 12%
        incl. Delfi Estonia online revenue 5 931 4 953 20%
Delfi Latvia 3 066 2 562 20%
Delfi Lithuania (incl. Ekspress Leidyba) 8 230 8 047 2%
        incl. Delfi Lithuania online revenue 6 051 5 557 9%
Delfi Ukraine 0 2 -100%
O? Hea Lugu 651 792 -18%
O? Zave Media 5 0 -
Other companies (Delfi Holding) 0 0 -
Intersegment eliminations (136) (294)  
TOTAL subsidiaries 30 063 27 459 9%
AS SL ?htuleht* 4 154 3 909 6%
AS Ajakirjade Kirjastus* 4 347 4 224 3%
AS Express Post* 2 477 2 415 3%
Intersegment eliminations (1 099) (1 077)  
TOTAL joint ventures 9 879 9 471 4%
TOTAL segment by proportional consolidation 39 943 36 930 8%

  

(EUR thousand) EBITDA
  12 months 2015 12 months 2014 Change %
Ekspress Meedia AS (Delfi Eesti + Eesti Ajalehed) 1 899 1 306 45%
Delfi Latvia 301 188 60%
Delfi Lithuania (incl. Ekspress Leidyba) 1 590 1 495 6%
Delfi Ukraine 0 (51) 100%
O? Hea Lugu 91 94 -3%
O? Zave Media (147) 0 -
Other companies (Delfi Holding) (9) (10) 9%
Intersegment eliminations (1) 2  
TOTAL subsidiaries 3 724 3 025 23%
AS SL ?htuleht* 508 356 43%
AS Ajakirjade Kirjastus* 392 257 52%
AS Express Post* 289 372 -22%
Intersegment eliminations (0) 2  
TOTAL joint ventures 1 189 987 20%
TOTAL segment by proportional consolidation 4 913 4 013 22%

*Proportional share of joint ventures

DELFI and its related products

As a market leader Delfi continues to invest into new technologies and IT solutions to improve user experience of its readers and advertisers. During a year a new Delfi mobile applications for both IOS and Android devices were launched providing possibility of using more creative solutions in mobile environment. Launch of different programmatic direct platforms for advertisers was done independently by each country. Also HTML5 animated technology for displaying advertising banners was deployed in all three countries. New modern DELFI TV platform with a responsive design was launched. Newly made design and interactive technological features improved viewing of DELFI video content, made it more convenient and adjusted to watch on different devices like computer, mobile, tablet. Delfi Lithuania built a new video streaming system in cooperation with TEO. This solution will help to maintain about 25-30 thousand video viewers at the same time.

In all countries there is a focus on writing more long-read analytical articles in order to increase Delfi’s position in all qualitative indexes like “trust”, “usability”, “originality” and etc. In Estonia this has been provided in co-operation with editorial teams of our daily and weekly newspapers Eesti P?evaleht, Eesti Ekspress and Maaleht.

All Delfies contribute to society by supporting different charity projects, cultural, sport, social and business events in all countries.    

Estonian online readership 2014-2015

In the 4th quarter 2015, Delfi remains the largest online portal in Estonia. There is more competition for the attention of readers and competitors have managed to increase their readership by active marketing activities. Special attention continues to be paid on mobile users as their number keeps growing. Delfi is the market leader among mobile users. New mobile applications that were launched in the 4th quarter will definitely improve convenience of use and, as a result, increase customer satisfaction. In 2015, online readership of Delfi grew by 10% in average. Most of this growth has come from the increase in the number of mobile devices. The growth rate of new devices is expected to slow down in 2016 since the majority of new telephones are already smartphones. At the same time we expect readership of video content to increase. 

Latvian online readership 2014-2015

2015 was full of changes for Latvian online portals as a whole. At the start of the year, Delfi overtook Inbox.lv and was Latvia’s largest portal for several months. At the end of the year, however, Inbox.lv regained the leader position in readership. The gap between news portals Delfi and Tvnet has remained largely unchanged. Unlike in Estonia, the number of mobile users in Latvia is not growing as rapidly and there is less competition. At the same time, the number of mobile users is expected to increase notably in 2016.

Starting from January 2015, the method of the Gemius online survey has changed. The readership in 2015 includes statistics of users in the age group 7-74 years of age. In previous periods, statistics was published on the age group 15-74 years of age. 

Lithuanian online readership 2014-2015

Delfi remains Lithuanian largest online portal. In the 4th quarter 2015, there were no major changes in preferences of online users in Lithuania. However, competition on the market is increasing because MTG has acquired products of Tipro group including several online portals and merged them with tv3.lt, creating Lithuanian fourth largest group of online portals. However, its readership has been decreasing as is characteristic to the merger of various portals. Among mobile users, the two leading competitors in Lithuania are Delfi.lt and 15min.lt. In 2016 it is expected that the fastest-growing business will be creating and marketing video content.

PRINT MEDIA IN ESTONIA

Estonian newspaper circulation 2014-2015

Circulations of newspapers in Estonia are falling moderately, although in the second half of 2015 the circulations once again posted growth. The newspaper market is clearly stabilizing and the number of subscribers and retail buyers remains unchanged or is even growing. This may be partly due to stronger marketing of digital newspapers that is bringing people back to local newspapers. Stable and even growth of ?htuleht and Maaleht is encouraging. In different months, both newspapers had Estonian largest print circulations. One also needs to add to these figures the number of subscribers of digital newspapers which totalled more than 12 thousand for newspapers published by the Ekspress Group at the end of 2015.

Estonian newspaper readership 2014-2015

With regard to the circulation of newspapers, also the readership of publications has remained relatively stable, although in the long run it is decreasing ca 3-5% a year. Since this survey does not cover the readership of digital newspapers, it does not represent the actual readership. The number of digital subscribers of periodicals of the Ekspress Group exceeds 12 thousand. Increasing the readership of digital newspapers remains the main task for the Group’s publications. There have been no significant changes in the competition situation in readership in 2015. The only newspapers that have increased readership from the 4th quarter 2015 were Eesti P?evaleht and Maaleht.

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
  Q4 2015 Q4 2014 Change %
AS Printall 7 386 8 083 -9%

  

(EUR thousand) EBITDA
  Q4 2015 Q4 2014 Change %
AS Printall 1 355 1 623 -17%

  

(EUR thousand) Sales
  12 months 2015 12 months 2014 Change %
AS Printall 25 842 28 951 -11%

 

(EUR thousand) EBITDA
  12 months 2015 12 months 2014 Change %
AS Printall 4 966 5 944 -16%

 Sanctions against Russia and the related decrease in orders and price pressure in Scandinavia characterize the whole year, resulting in the decrease of sales revenue and EBITDA. Situation has stabilized in December thus giving hope for better results next year. Due to changes in the political landscape there have also been changes in the structure of export markets where the share of Russia continues to decrease. The increase of the proportion of services sold to Estonia is primarily attributable to the new sheet-fed 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 has 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) 31.12.2015 31.12.2014
ASSETS    
Current assets    
Cash and cash equivalents 2 927 3 656
Term deposit 0 19
Trade and other receivables 6 741 6 519
Corporate income tax prepayment 0 37
Inventories 2 718 2 072
Total current assets 12 386 12 303
Non-current assets    
Term deposit 0 1 600
Trade and other receivables 1 149 1 170
Deferred tax asset 42 65
Investments in joint ventures 1 007 500
Investments in associates 215 164
Property, plant and equipment 13 791 14 506
Intangible assets 44 590 46 287
Total non-current assets 60 794 64 292
TOTAL ASSETS 73 180 76 595
LIABILITIES    
Current liabilities    
Borrowings 2 240 5 213
Trade and other payables 6 679 6 249
Corporate income tax payable 114 19
Total current liabilities 9 033 11 481
Non-current liabilities    
Long-term borrowings 15 447 17 939
Deferred tax liability 26 0
Total non-current liabilities 15 473 17 939
TOTAL LIABILITIES 24 506 29 420
EQUITY    
Share capital 17 878 17 878
Share premium 14 277 14 277
Treasury shares (176) (64)
Reserves 1 787 1 440
Retained earnings 14 908 13 644
TOTAL EQUITY 48 674 47 175
TOTAL LIABILITIES AND EQUITY 73 180 76 595

Consolidated statement of comprehensive income (unaudited)

(EUR thousand) Q4 2015 Q4 2014 12 months 2015 12 months 2014
Sales revenue 14 811 14 454 52 773 52 793
Cost of sales (11 121) (10 781) (41 781) (40 688)
Gross profit 3 690 3 673 10 992 12 105
Other income 281 132 659 470
Marketing expenses (743) (600) (2 377) (2 011)
Administrative expenses (1 472) (1 495) (5 236) (5 438)
Other expenses (38) (49) (118) (153)
Gain from change in ownership interest in joint ventures 0 978 0 1 933
Impairment of goodwill (1 200) (1 443) (1 200) (1 443)
Operating profit 518 1 196 2 720 5 463
Interest income 10 22 42 27
Interest expense (125) (158) (550) (689)
Foreign exchange gains/(losses)  (1)  (2) (6) 33
Other finance costs (15) (43) (71) (90)
Net finance cost  (131)  (181) (585)  (719)
Profit (loss) on shares of joint ventures 196 182 785 557
Profit (loss) from investments in associates 72 39 86  23
Profit before income tax 655 1 236 3 006 5 324
Income tax expense (195) (100) (299) (214)
Net profit  for the reporting period 460 1 136 2 707 5 110
Net profit for the reporting period attributable to:        
Equity holders of the parent company 460 1 136 2 707 5 110
Other comprehensive income (expense) that may be subsequently reclassified to profit or loss         
Currency translation differences 0 0 0 (34)
Total other comprehensive income (expense) 460 1 136 2 707 5 076
Comprehensive income (expense) for the reporting period        
Attributable to equity holders of the parent company 460 1 136 2 707 5 076
Basic and diluted earnings per share 0.02 0.04 0.09 0.17

Consolidated cash flow statement (unaudited)

(EUR thousand) 12 months 2015 12 months 2014
Cash flows from operating activities    
Operating profit for the reporting year 2 720 5 463
Adjustments for:    
Depreciation, amortisation and impairment 2 760 2 921
Loss on goodwill impairment 1 200 1 443
Gain from change in ownership interest in joint ventures 0 (1 933)
(Gain)/loss on sale and write-down of property, plant and equipment (4) 6
Change in value of share option 91 136
Cash flows from operating activities:    
Trade and other receivables (191) 334
Inventories (645) 251
Trade and other payables 361 (2 250)
Cash generated from operations 6 292 6 371
Income tax paid (118) (185)
Interest paid (525) (692)
Net cash generated from operating activities 5 649 5 494
Cash flows from investing activities    
Term deposit (placement)/release 1 600 (1 600)
Received on restructuring of joint ventures 0 2 354
Investments in joint ventures 0 (3)
Acquisition of associate 0 (135)
Purchase of other investments (50) 0
Interest received 33 6
Purchase of  property, plant and equipment (1 575) (3 101)
Proceeds from sale of property, plant and equipment 33 13
Loans granted 0 (24)
Loan repayments received 74 7
Net cash used in investing activities 115 (2 483)
Cash flows from financing activities    
Dividends paid (1 187) (298)
Dividends received from joint ventures 278 203
Finance lease repayments (89) (75)
Change in use of overdraft (1 117) 1 117
Loan received 687 1 346
Repayments of bank loans (4 952) (3 695)
Purchase of treasury shares (112) (64)
Net cash used in financing activities (6 492) (1 466)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (729) 1 545
Cash and cash equivalents at the beginning of the year 3 656 2 111
Cash and cash equivalents at the end of the year 2 927 3 656