AS Ekspress Grupp: Consolidated Interim Report for the Fourth Quarter and Twelve Months of 2012

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Tallinn, Estonia, 2013-02-28 16:39 CET (GLOBE NEWSWIRE) --  

The following report presents the consolidated financial information of AS Ekspress Grupp, the related market developments and management decisions. The financial indicators and ratios show the outcome of the Group’s continuing operations, i.e. they express the consolidated operating results of online media, periodicals and printing services segments and corporate functions.

Key financial indicators and financial ratios

Financial indicators
(EUR thousand)
Q4 2012 Q4 2011 Change% Q4 2010 Q4 2009
For the reporting period          
Sales 16 447 16 313 1% 14 885 13 514
Gross profit 3 914 3 660 7% 3 466 2 598
EBITDA* 2 246 1 986 13%
 
1 854 896
Operating profit* 1 496 1 037 44%
 
1 016 37
Profit /(loss) from continuing operations                 for the period * 1 269 535 137% 210 (780)
EBITDA margin* (%) 13,7% 12,2%   12,5% 6,6%
Operating margin* (%) 9,1% 6,4%   6,8% 0,3%
Net margin* (%) 7,7% 3,3%   1,4% -5,8%
Impairment of goodwill (157) (750) -79% 0 (5 844)
Net profit / (loss) from continuing operations for the period 1 112  (215) 617% 210 (6 624)
Net profit  for the period in the financial statements 1 112  (215) 617% 210 (6 986)
Net margin (%) 6.8% -1.3%   1.4% -51.7%

*The results exclude impairment of goodwill and trademarks.

Financial indicators
(EUR thousand)
12 months 2012 12 months 2011 Change% 12 months 2010 12 months 2009
For the period          
Sales 59 706 57 391 4% 51 814 51 974
Gross margin 13 187 12 544 5% 11 294 9 292
EBITDA* 7 882 6 968 13%
 
6 041 3 014
Operating profit* 4 596 3 443 33%
 
2 760  (445)
Profit /(loss) from continuing operations                 for the period * 2 682 893 200%  (509)  (3 613)
EBITDA margin* (%) 13,2% 12,1%   11,7% 5,8%
Operating margin* (%) 7,7% 6,0%   5,3% -0,9%
Net margin* (%) 4,5% 1,6%   -1,0% -7,0%
Extraordinary gain related to acquisition of Eesti Päevalehe AS** 0 1 540 -100% 0 0
Impairment of goodwill and trademarks (157) (750) -79% 0 (5 844)
Net profit / (loss) from continuing operations for the period in the financial statements 2 525 1 683 50% (509) (9 457)
Net profit / (loss) for the period in the financial statements 2 525 1 683 50%  (146) (12   144)
Net margin (%) 4,2% 2,9%   -0,3% -23,4%
Earnings per share (EPS) 0.08 0.06   (0.01) (0.58)

*The results exclude impairment of goodwill and trademarks, and the net extraordinary gain in relation to the acquisition of an additional ownership interest in Eesti Päevalehe AS (see below).

**In the 1st quarter of 2011, an additional 50% ownership interest in Eesti Päevalehe AS was acquired. 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 (see Note 4 to the financial statements).

 

Balance sheet
(EUR thousand)
31.12.2012 31.12.2011 Change %
As of the end of the period      
Current assets 13 545 12 523 8%
Non-current assets 66 754 68 986 -3%
Total assets 80 299 81 509 -1%
Current liabilities 14 967 16 547 -10%
Non-current liabilities 24 233 26 574 -9%
Total liabilities 39 200 43 121 -9%
Equity 41 099 38 388 7%

 

Financial ratios (%) 31.12.2012 31.12.2011
Equity ratio (%) 51% 47%
Debt to equity ratio (%) 70% 83%
Debt to capital ratio (%) 38% 43%
Total debt/EBITDA ratio 3.6 4.6
Debt service coverage ratio 1.52 1.06
Liquidity ratio 0.90 0.76
ROA (%) 3.2% 2.0%
ROE (%) 6.4% 4.4%

 

Formulas used to calculate the financial ratios
EBITDA margin* (%)  EBITDA*/sales x 100
Operating margin* (%)  Operating profit*/sales x 100
Net margin* (%)  Net profit*/sales x 100
Net margin (%)  Net profit/sales x 100
Earnings per share  Net profit/average number of shares
Equity ratio (%) Equity /(liabilities + equity) x 100
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 Interest bearing borrowings/EBITDA
Debt service coverage ratio EBITDA/loan and interest payments for the period
Formulas used to calculate the financial ratios
Liquidity ratio Current assets/current liabilities
ROA (%) Net profit/average assets x 100
ROE (%) Net profit/average equity  x 100

Despite the setbacks that hit the advertising market in the 2nd half of the year, it was a solid year of growth for the Group. Improved financial results mainly derived from restructuring activities carried out in prior years which had a major economic effect. In addition to successful business operations, net profit growth was also greatly impacted by the agreement to refinance the Group’s loans concluded in mid-year which considerably reduced the Group’s interest expenses.  

In the last quarter of the year, the Group’s sales increased by 1% as compared to the same period last year and totalled EUR 16.4 million. Achieving of higher efficiency was more important than sales growth, due which EBITDA increased by 13% as compared to the 4th quarter last year and the net profit excluding impairment losses increased by 137% and totalled EUR 1.27 million. In 2012, the Group’s sales increased by 4% and totalled EUR 59.7 million. The consolidated net profit from continuing operations (excluding extraordinary gains and impairment losses) tripled, totalling EUR 2.7 million, the net margin increased to 4.5%. EBITDA increased by 14% in a year, totalling EUR 7.9 million. Simultaneously with the refinancing of loans, the Group continued to reduce its outstanding borrowings as a result of which the debt to EBITDA ratio fell to 3.6 by the year-end and it still continues to fall rapidly. As compared to the budget, the Group’s actual sales were almost 1% better. EBITDA failed to meet the target by being 1.5% lower, however the net profit target met expectations.

In a year, the share of the online media segment in non-group sales (Note 8) has increased from 15% to 17%, and the share of EBITDA from 18% to 20%. The share of the periodicals segment in sales has decreased from 42% to 40%, but the share in EBITDA has increased from 7% to 10%. The share of printed services in sales has remained unchanged and is 43%, the share of EBITDA has decreased from 75% to 70%. These changes are attributable to continued strong online sales and also to improved  profitability of the periodicals segment. This is also evident in the improvement of the EBITDA margin of the periodicals segment from 2% to 3%. The margin in the printing services segment stayed at the same level as last year and increased from 16% to 17% in the online media segment. The share of the online media segment in the Group’s sales and profit has increased steadily since 2009 and exceeded its share of the profit in 2008. With regard to EBITDA, we expect the share of printing services to continue to decline steadily and that of the periodicals and online media segments to increase next year.

An impairment loss on trademarks related to the sale of Lithuanian children’s magazines in the amount of EUR 157 thousand had a one-off effect on the financial results of the Group in the fourth  quarter.  

In 2012, several important changes and developments occurred in the Group.

In the online media segment, we redesigned all Delfi’s front pages in the Baltic States. The redesigning process will continue on the front pages of the portals and is planned to be completed in the 1st quarter of 2013. As a result of redesigning, the Delfi environment will receive a consistently new and modern look, which will significantly improve the ease of use of its visitors. Along with the redesign of the front pages, all Delfi portals also introduced an alternative front page in the market with the goal of providing a different kind of ease of use primarily to younger and more proficient media consumers. In Latvia and Lithuania, the alternative front page is called Delfi Easy while in Estonia it bears the name Delfi 2. With the help of Delfi portal, we launched a business line of new online verticals, under which we introduced a new Cosmopolitan portal in the market and revamped current portals moteris.lt, 5braskes.lt and klubas.lt. In the 4th quarter, we acquired a classified ads portal and magazine Alio in Lithuania, which we combined with Delfi. With this step, we made a huge leap forward in the Lithuanian online ads business. In all Baltic countries, we introduced Delfi’s Facebook version MyDelfi with the goal of providing an opportunity to Facebook users to read personalised Delfi news flows in Facebook. The development of the project will continue in 2013. During the year, we continued to develop the mobile versions of all Delfi sites with the goal to strengthen our position among the mobile web leaders in all Baltic States. Although the share of mobile ad sales in our total sales is still modest, mobile ad sales have increased rapidly in all counties during the last year. In Delfi Estonia, we launched live basketball TV broadcasts, taking a huge step forward in online television. We believe that online television is a significant trend and we will continue to make our best effort in this direction. In the last quarter of the year, Delfi Estonia received a new Chief Executive Officer Mari-Liis Rüütsalu and its previous Chief Executive Officer started to manage our content production unit within AS Eesti Ajalehed. In Ukraine, we have managed to double Delfi’s user base and if this trend continues, Delfi Ukraine will become a Delfi portal with the highest number of users by the end of the 1st quarter of 2013. Although Delfi Ukraine is still unprofitable, we have agreed with the management to adopt a new business model in 2013 which will limit our annual expenses to EUR 150 thousand. Once the Ukrainian advertising market develops further, it is realistic that we will become profitable with our product in 2014.

In the periodicals segment, we launched a new week-end newspaper LP in the 4th quarter. This is a former week-end edition of Eesti Päevaleht, which we completely reorganised, hiring a separate editor-in-chief for the edition, and changing the format and design of the newspaper. LP has been received very well among the readers, its advertising sales have also exceeded our conservative estimates.

In the 2nd half of the year, we optimised the product portfolio of magazine publishers. In Estonia, we combined weekly magazines Nädal and Kroonika, and discontinued some unprofitable smaller-scale products. In Lithuania, we disposed of children’s magazines and terminated the agreement with the company’s Chief Executive Officer, appointing the current Marketing Manager as the head of the company. As a result of these changes, the financial results of both publishers should significantly improve, which will be assisted by the reduction of VAT on magazines introduced in Lithuania at the beginning of the year 2013.

We have also made significant progress in our business line of digital newspapers. We have decided to disclose the results of digital subscriptions in this report for the first time since we are convinced of the success of this business line. At the year-end, both of the two main newspapers Eesti Ekspress and Eesti Päevaleht which are published on the digital platform had approximately 10 thousand clients with personal accounts and reading access, divided into subscribers of printed and digital newspapers (ca. 7 thousand) and clients who subscribe only to the fee-based digital newspaper (ca. 3 thousand). On a monthly basis with the help by various marketing activities approximately 12 thousand unique users use both digital newspapers.

Considering the number of paying subscribers of digital newspapers, we managed to increase the total number of  subscribers of Eesti Ekspress by 5% last year and compensate for the decline in the number of subscribers of Eesti Päevaleht. Today, the portfolio of our digital newspapers consists of four products: Eesti Päevaleht, weekly newspapers Eesti Ekspress and LP, and monthly newspaper Ärileht. We plan to continue with the development of the business line, by offering to as many potential readers as possible an opportunity to introduce the product and subscribe it at favourable conditions. We will also continue to develop a marketing model unique in the world, which will enable us to use our dominant position in online media to guide readers to digital products. During 2012, we made direct investments in the development of digital products in the amount of ca. EUR 140 thousand and invested approximately half a million euros through operating costs. We expect this business line to continue to be capital and cost intensive in 2013, but the continued growth of paying subscribers and advertising sales will reduce the pressure that the business line costs exerts on the company. In the periodical segment, another success story of 2012 was the joint project of Eesti Päevaleht and the book publisher Hea Lugu in publishing a DVD series of Estonian films. This project made a significant contribution to the financial results of the periodicals segment as well as the single copy sales of Eesti Päevaleht.

In the printing services segment, the year 2012 was primarily a year of utilisation of production capacity reserves. No new investments were made in the expansion of the equipment park. No significant changes occurred in export markets. In the 3rd quarter of the year, Printall received ISO 9001 management certificate and ISO 14001 environmental certificate.

Another important event of 2012 was also the establishment of the Group’s information technology company OÜ Ekspress Digital. With the establishment of the company we consolidated the Group’s total IT capacity into one entity, thereby creating an important technology competence centre with the goal of serving the technology needs of the Group as well as third parties. The company conducts business with group companies under market conditions and has the right to sell acquired know-how to third parties that are not related to the Group. The company currently employs 23 people.  

In 2013, we expect the share of the online media segment to continue to grow both in sales as well as in profit. In the upcoming year, we will increase the content production offered by Delfi, but will also create new online products in addition to Delfi. The challenging economic environment will continue to put pressure on the periodicals segment, but  our hopes are pinned to the growth of subscribers of Eesti Päevaleht and weekly newspapers through provision of digital products. Through applications produced separately for tablet computers, we plan to provide access to subscribers to the content of our online environments which had been inaccessible until now, for which purpose we will make necessary technological rearrangements. In the printing services segment, we will continue to optimise production capacity and will continue to discuss opportunities to increase production capacity.

All our improvements and innovations should primarily support the vision of the Group to be the most professional and innovative partner for our demanding readers and clients, and continue to offer new and interesting  journalism experiences both in printed and digital media.   

OVERVIEW OF THE SEGMENTS

In 2012 and 2011, the Group operated in the following segments:

-        online media

-        periodicals (newspapers, magazines and books)

-        printing services

 

Key financial data of the segments in Q4 2012/2011

 (EUR thousand) Sales
  Q4
2012
Q4
2011
Change%
online media 2 989 2 586 16%
periodicals 6 626 6 544 1%
printing services 8 046 8 143 -1%
corporate functions 308 71 334%
intersegment eliminations (1 522) (1 031) -48%
GROUP TOTAL 16 447 16 313 1%

 

(EUR thousand) EBITDA
  Q4 2012 Q4
 2011
Change%
online media 586 696 -16%
periodicals 253 62 308%
printing services 1 650 1 495 10%
corporate functions (242) (268) 10%
intersegment eliminations (1) 1 -200%
GROUP TOTAL 2 246 1 986 13%

 

Key financial data of the segments 12 months 2012/2011

(EUR thousand) Sales
  12 months
2012
12 months 2011 Change%
online media 10 370 8 977 16%
periodicals 24 741 24 069 3%
printing services 29 167 27 736 5%
corporate functions 996 209 377%
intersegment eliminations (5 568) (3 600) -55%
GROUP TOTAL 59 706 57 391 4%

 

(EUR thousand) EBITDA
  12 months 2012 12 months
 2011
Change%
online media 1 776 1 425 25%
periodicals 848 552 54%
printing services 6 052 5 959 2%
corporate functions (795) (980) 19%
intersegment eliminations 1 12 -92%
GROUP TOTAL 7 882 6 968 13%

 

EBITDA margin Q4 2012 Q4 2011
online media 20% 27%
periodicals 4% 1%
printing services 21% 18%
GROUP TOTAL 14% 12%

 

EBITDA margin 12 months 2012 12 months 2011
online media 17% 16%
periodicals 3% 2%
printing services 21% 21%
GROUP TOTAL 13% 12%

 

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 AS SL Õhtuleht www.ohtuleht.ee
Delfi Lithuania www.delfi.lt    
  ru.delfi.lt    
Delfi Ukraine www.delfi.ua    

Classified portals owned by the Group

Owner Portal Owner Portal
Delfi Lithuania www.alio.lt Eesti Ajalehed AS www.ekspressjob.ee
      www.ekspressauto.ee
      www.hyppelaud.ee

 

Online media segment

The online media segment includes Delfi operations in Estonia, Latvia, Lithuania and Ukraine as well as the Parent Company Delfi Holding.

 

(EUR thousand) Sales
  Q4
 2012
Q4
2011
Change%
Delfi Estonia 951 913 4%
Delfi Latvia 653 591 10%
Delfi Lithuania 1 369 1 054 30%
Delfi Ukraine 16 17 -6%
other Delfi companies 0 11 -100%
intersegment eliminations 0 0 -
TOTAL 2 989 2 586 16%

 

(EUR thousand) EBITDA
  Q4
2012
Q4
2011
Change%
Delfi Estonia 118 117 1%
Delfi Latvia 89 135 -34%
Delfi Lithuania 332 285 16%
Delfi Ukraine (59) (62) 5%
other Delfi companies 108 221 -51%
intersegment eliminations (2) 0 -
TOTAL 586 696 -16%

 

(EUR thousand) Sales
  12 months
2012
12 months
2011
Change%
Delfi Estonia 3 469 3 177 9%
Delfi Latvia 2 292 2 014 14%
Delfi Lithuania 4 531 3 703 22%
Delfi Ukraine 73 56 30%
other Delfi companies 6 26 -77%
intersegment eliminations (1) 1 -200%
TOTAL 10 370 8 977 16%

 

(EUR thousand) EBITDA
  12 months
2012
12 months
2011
Change%
Delfi Estonia 279 154 81%
Delfi Latvia 183 230 -20%
Delfi Lithuania 1 182 653 81%
Delfi Ukraine (260) (259) 0%
other Delfi companies 399 647 -38%
intersegment eliminations (7) 0 -
TOTAL 1 776 1 425 25%

Throughout the year, the main driver behind the sales and EBITDA growth of the online segment has been primarily Delfi Lithuania, contributing more than the others to the sales in the 4th quarter. Sales have also grown in other countries, but the EBITDA growth in number terms has been more modest. The lower result of  Delfi Latvia in 2012 and in the 4th quarter was related to the hiring of additional editors in the 2nd half of the year to improve the coverage of news and to increase content production in 2013. In Latvia, subsidies and grants received were also lower.  

The key highlights of the year worth mentioning separately include:

·       A new version of mobile applications to read Delfi portals was introduced in all countries

·       Alternative Delfi front pages with a greater focus on pictures were introduced

·       A new location-based weather forecast section was introduced which is also available in the mobile version.

 

Delfi Estonia

·       Delfi Estonia was the first portal in Estonia whose number of unique users exceeded 1 million, which represents ca. 80% of all Estonian internet users. This result reinforced Delfi’s position as the most popular website in Estonia while also widening the gap with its closest competitors.

·       The number of people who use Delfi via their mobile phones has increased at a fast pace. Successful coverage of the Olympic Games increased the number of people reading Delfi via their mobile phones up to 100 thousand people per week. 

·       For the first time, Delfi Estonia transmitted a live programme of a public event, using 4G mobile communication solutions for this purpose. It is now possible to regularly view basketball  broadcasts in Delfi.

·       New categories and subsites in Estonian language version of Delfi, such as the subsection of Saturday newspaper LP of Eesti Päevaleht, EU-related debate section, live sports blog and VIASAT highlights in Delfi Sport, Eesti otsib superstaari (Estonia is Searching for a Superstar), Tähed jääl (Stars on Ice), Spordimeditsiin (Sports Medicine), Kuldne mask (Golden Mask), Puhka Eestis (Visit Estonia), Olümpia 2012 (Olympic Games 2012), Purjetamine (Sailing), Kirev maailm, (Colourful World), Suvetüdruk (Summer Girl), Kuldrula (Golden Skateboard), Viru Folk, new TOP Gear news block, etc.

·       A separate soccer category in Delfi Estonian and Russian versions as well as mobile applications.

·       New categories and new look in Delfi Russian language sections and functionality to share the news in social network.

·       A Russian language e-store and filmilaenutus.ee were launched.

·       A new Facebook wall in Noorte Hääl (Voice of Young People) and Reisileidja (Travel Finder) is now also available on Facebook.

·       Delfi archive received a fresher and more user-friendly facelift.

·       In cooperation with SEB Heategevusfond (SEB Charity Fund), Delfi Estonia implemented again a cooperation project “Jõulusoovide puu” (Christmas Wish Tree), providing gifts to almost 1200 children in shelter and foster homes.

At the end of 2012, Delfi.ee continues to be the largest online media portal in Estonia. Although the gap with its closest competitors in terms of the number of users decreased primarily in summer months, it increased steadily at the year-end and in December 2012, the gap with the closest competitor in terms of the average number of users per week was ca. 80 thousand. During 2012, the average number of users per month  in the Estonian online market increased by 84 thousand users. This primarily means that users use more often various appliances to consume Delfi. This trend is also expected to continue in 2013 because the sales figures of smart phones and tablet computers demonstrate solid growth. 

Throughout 2012, the online environment of Eesti Päevaleht www.epl.ee has also experienced steady growth, becoming a portal of solely quality news. The week-end newspaper of Eesti Päevaleht  LP which was launched in the last quarter offers a distinct alternative to those consumers who prefer information to entertainment.

 

Delfi Latvia

·       Delfi Latvia’s Russian language portal achieved the best result in readership numbers, including in daily, weekly and monthly terms.

·       New categories and subsections such as the entertainment section, ice hockey, European Football Championships and London Olympics, and content and functional development of several subsections (Auto, Woman, Technology).

·       Reorganisation of the editorial staff to ensure better news coverage on weekends.

·       Fast and widespread coverage of summer events in Delfi attracted many new readers. The coverage of Positivus Festival in Delfi was especially popular.

·       According to the survey carried out by the advertising agency DDB, Delfi was the most popular and powerful online brand in Latvia in December 2012.

·       Cooperation partners in miscellaneous fields:

o   Media partner for the Latvian music awards „The Great Music Award“ and classical music festival “Riga Festival”,

o   Media partner in the international advertising festival Golden Hammer and Riga Fashion Week,

o   National journalism cooperation project “Road Reporter” with TV3+  continued.

At the end of 2012, Delfi.lv continued to be the most popular online media portal in Latvia. In terms of the overall internet use, both the e-mail environment Inbox.lv as well as the social network Draugiem.lv still continue to surpass Delfi with their higher number of users. However, with regard to portals, Delfi surpasses its closest competitors by more than 100 users per month. The gap with its closest competitor  tvnet.lv has remained stable during the year and totalled 106 thousand users in December 2012. Throughout 2012, apollo.lv owned by Sanoma News has increased steadily, which will definitely threaten the position of tvnet.lv in 2013. The total Latvian market of internet users has decreased rather than increased during 2012 unlike the Estonian,  Lithuanian and Ukrainian markets where the number of users has increased. In 2013, we expect the overall number of users to increase because the growth in the number of mobile appliances should also have a positive impact in Latvia.

 

Delfi Lithuania

·       In cooperation with the Group’s magazine publisher Ekspress Leidyba, various vertical portals targeted primarily at women, such as www.cosmopolitan.lt, www.moteris.lt, and www.panele.lt, were launched, thus forming internet sites with a strong lifestyle and entertainment focus.

·       In November, Alio which is the oldest and most popular classified ads portal in Lithuania, was acquired, which marked an important milestone in this market segment. In addition to the internet portal, a printed newspaper was also obtained.  

·       Delfi’s Polish language portal was launched.

·       New categories and subsections such as London Olympics,  “Mano litai“ (My Litas) targeted at consumers and upgrades in Delfi games and Rahva Hääl (Voice of People) sections.

·       Delfi was the exclusive Eurovision partner in Lithuania and official communications partner at  the Lithuanian Internet conference LOGIN.

·       Active collaboration with the Lithuanian national television.

·       The existing IT team was restructured.

At the year-end of 2012, Delfi.lt continued to be the largest internet media portal in Lithuania. Despite the fact that its largest competitor 15min.lt has acquired and merged three different portals during the year, the gap increased in the 2nd half of the year and is still 166 thousand users in December 2012.

 

Delfi Ukraine

·       The company continues with the strategy launched last year to offer easier and more tabloid-like news.

·       Marketing activities in social media and cooperation projects with radio and TV channels to improve  Delfi’s visibility in the market.

·       From September 2012 has increased content production of news targeted at women due to the profile of the users of Delfi.ua.

The Ukrainian internet market operates in a significantly different manner than that of the Baltic States. The year 2012 as a whole was extremely successful for Delfi.ua – the number of users of Delfi’s news production has practically doubled. This achievement is even more extraordinary if to compare it with other portals where the number of users has decreased rather than increased during the year.  Unfortunately such growth in the number of users has not translated into similar growth in advertising sales. This also represents a unique sentiment characteristic of the Ukrainian market where it is the advertising intermediaries and not the media portals that retain the bigger share in advertising budgets.

 

Periodicals segment

The periodicals segment includes the publishers of newspapers, magazines and books. This segment also includes AS Express Post, engaged in home delivery of periodicals.

As of 1 October 2011, Eesti Päevalehe AS and AS Eesti Ajalehed were merged. At the same date, the book publishing department of the merged company was spun off as a separate legal entity. The new book publisher under the name of OÜ Hea Lugu operated as the subsidiary of AS Eesti Ajalehed until January 2013 when it became directly owned by the parent company. The merger of the joint ventures AS SL Õhtuleht and AS Linnaleht occurred on 1 November 2011 and that of OÜ Uniservice and AS Ajakirjade Kirjastus occurred on 1 January 2012. 

(EUR thousand) Sales
  Q4 2012 Q4 2011 Change%
AS Eesti Ajalehed** 3 529 3 330 6%
AS SL Õhtuleht* 950 915 4%
AS Ajakirjade Kirjastus* 1 186 1 206 -2%
UAB Ekspress Leidyba 641 742 -14%
AS Express Post* 601 628 -4%
intersegment eliminations (281) (277) -1%
TOTAL 6 626 6 544 1%

 

(EUR thousand) EBITDA
  Q4 2012 Q4 2011 Change%
AS Eesti Ajalehed** 105 (192) 155%
AS SL Õhtuleht* 51 62 -18%
AS Ajakirjade Kirjastus* 93 102 -9%
UAB Ekspress Leidyba (80) 12 -767%
AS Express Post* 85 82 4%
intersegment eliminations (1) (4) -
TOTAL 253 62 308%

 

(EUR thousand) Sales
  12 months 2012 12 months 2011 Change%
AS Eesti Ajalehed** 12 999 12 761 2%
AS SL Õhtuleht* 3 705 3 432 8%
AS Ajakirjade Kirjastus* 4 196 4 190 0%
UAB Ekspress Leidyba 2 629 2 816 -7%
AS Express Post* 2 313 2 396 -3%
intersegment eliminations*** (1 101) (1 535) 28%
TOTAL 24 741 24 069 3%

 

(EUR thousand) EBITDA
  12 months 2012 12 months 2011 Change%
AS Eesti Ajalehed** 502 (211) 338%
AS SL Õhtuleht* 244 203 20%
AS Ajakirjade Kirjastus* 35 164 -79%
UAB Ekspress Leidyba (190) 14 -1457%
AS Express Post* 258 290 -11%
intersegment eliminations*** (1) 91 -
TOTAL 848 552 54%

*Proportionate share of joint ventures

** For the purpose of comparability, AS Eesti Ajalehed combines the data for AS Eesti Ajalehed, Eesti Päevalehe AS (100% in both years) with that of OÜ Hea Lugu.

*** Intra-segment eliminations in EBITDA in 2011 include the elimination of the 50% negative EBITDA of  Eesti Päevalehe AS and adjustment of the goodwill which arose on acquisition of an ownership interest in Eesti Päevalehe AS.

Despite the difficult conditions in the advertising sales market, the periodicals segment managed to increase its sales both in the 4th quarter as well as in 2012. This was attributable to several initiatives and product developments.

To celebrate the 100th anniversary of Estonian film industry, a joint project of OÜ Hea Lugu and Eesti Päevaleht was launched, providing an opportunity for the readers of Eesti Päevaleht to purchase a series of 30 Estonian classic films together with their subscription of Eesti Päevaleht. The additional series with another 15 films will continue until February 2013. AS Eesti Ajalehed introduced a new Saturday newspaper LP of Eesti Päevaleht which has been received very well by readers. The jubilee book and annual book projects of Maaleht were also successful, as was the retail sales project of Eesti Ekspress with the bestseller “Fifty Shades of Gray“.

Ajakirjade Kirjastus started to publish a new magazine Top Gear with its Lithuanian partner who owns  the magazine publishing license. In November, the first issue of the quarterly magazine Elu Lood (Life Stories) published as a supplement to Eesti Naine (Estonian Woman) which was received very well by readers. In October, the magazines Kroonika and Nädal were merged. From June, the Lithuanian magazine publisher publishes magazine GEO under a license. In November, the publishing business of the Lithuanian children’s magazines was sold at a marginal price as it was an unprofitable business, its circulation was low and it had no growth outlook.

 

Estonian newspaper circulation  2011-2012

The year 2012 was relatively stable in terms of the circulation of newspapers. There is a slight downward trend in circulation over the long term but it is similar to the processes taking place in the rest of the world. In 2012, the average circulation of the newspapers decreased by 2% as compared to 2011. Only Maaleht managed to increase its average annual circulation (+2.5%) while that of other publications fell. This analysis does not reflect the overall situation in the newspaper market because the publications of AS Eesti Ajalehed have been published in a digital form for the second consecutive year already. Once the subscribers of digital newspapers are added to the circulation of printed newspapers, both the circulation of Eesti Ekspress as well as Eesti Päevaleht increased in 2012.

Estonian newspaper readership  2011-2012

On a positive note, the average newspaper readership figures for 2012 are in an upward trend. This is a somewhat unexpected result, because the circulation of newspapers is in a slight downward trend. The average growth is also attributable to a correction made to the survey, because all people aged 15 and above have been included in the sample since the 2nd quarter of 2012. This growth is also partly attributable to the fact that Eesti Päevaleht and Eesti Ekspress have been published in a digital form for the second consecutive year. As there is no separate survey of the readers of digital newspapers, there is no methodological basis to compare it with the number of printed newspapers. AS Eesti Ajalehed ordered a special survey in December 2012, as a result of which we can confirm that both Eesti Päevaleht as well as Eesti Ekspress have ca. 30 thousand readers, who use these editions in an electronic form and which the comparison of readers described above does not reflect. One of the key goals of the Group for the year 2013 is to significantly increase the number of electronic readers.

 

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 2012 Q4 2011 Change%
AS Printall 8 046 8 143 -1%

 

(EUR thousand) EBITDA
  Q4 2012 Q4 2011 Change%
AS Printall 1 650 1 495 10%

 

(EUR thousand) Sales
  12 months 2012 12 months 2011 Change%
AS Printall 29 167 27 736 5%

 

(EUR thousand) EBITDA
  12 months 2012 12 months 2011 Change%
AS Printall 6 052 5 959 2%

 

The printing company Printall continues to exceed previous year’s results, but which due to operating at the maximum production capacity levels in the peak season is becoming more complicated. The share of group companies in sales decreases and the share of exports increases. Most of the volume growth is generated by printing on heatset machines, which makes up ca. 85% of total sales.

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 production process requirements which are issued to businesses that comply with the requirements established by FSC (Forest Stewardship Council) and 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) 31.12.2012 31.12.2011
ASSETS    
Current assets    
Cash and cash equivalents 3 182 2 729
Trade and other receivables 7 344 6 921
Inventories 2 922 2 833
Total 13 448 12 483
Non-current assets held for sale 97 40
Total current assets 13 545 12 523
Non-current assets    
Term deposit 98 98
Trade and other receivables 365 167
Property, plant and equipment 14 841 16 751
Intangible assets 51 450 51 970
Total non-current assets 66 754 68 986
   TOTAL ASSETS 80 299 81 509
LIABILITIES    
Current liabilities    
Borrowings 4 347 5 436
Trade and other payables 10 620 11 111
Total current liabilities 14 967 16 547
Non-current liabilities      
Long-term borrowings   24 233 26 397
Derivate financial instruments 0 176
Total non-current liabilities 24 233 26 574
Total liabilities 39 200 43 121
EQUITY    
Share capital 17 878 17 878
Share premium 14 277 14 277
Reserves 740 480
Retained earnings 8 190 5 749
Currency translation reserve 14 4
TOTAL EQUITY 41 099 38 388
TOTAL LIABILITIES AND EQUITY 80 299 81 509
       

Consolidated statement of comprehensive income (unaudited)

 
(EUR thousand)
 
Q4 2012 Q4 2011 12 months 2012 12 months 2011
Sales revenue 16 447 16 313 59 706 57 391
Cost of sales 12 533 12 653 (46 519) 44 847
Gross profit 3 914 3 660 13 187 12 544
Other income (768) (649) (2 378) (2 098)
Marketing expenses (1 805) (1 929) (6 643) (7 081)
Administrative expenses (90) (343) (220) (542)
Other expenses 245 298 650 620
Gain from disposal of ownership in joint venture  0 0 0 1 540
Impairment of goodwill and loss from sales of trademarks  (157)  (750) (157) (750)
Operating profit 1 339 287 4 439 4 233
Interest income 0 12 5 45
Interest expense (206) (523) (1 549) (2 212)
Foreign exchange gains (losses)  (13) 73  (15) 45
Other finance costs (14) (47) (117) (154)
Net finance cost  (233)  (485)  (1 676)  (2 276)
Profit (loss) on shares of associates  (8)  (8)  (41)  (52)
Profit (loss) before income tax 1 098  (206) 2 722 1 905
Income tax expense (14) (9) 197 (222)
Net profit (loss) for the reporting period 1 112  (215) 2 525 1 683
Net profit (loss) for the reporting period attributable to:        
Equity holders of the parent company 1 112  (215) 2 525 1 683
Other comprehensive income (expense)        
Currency translation differences 8  (63) 10  (28)
Profit (loss) on change in value of a hedging instrument  0 63 176 434
Total other comprehensive income for the period 8 0 186 406
Comprehensive income (expense) for the reporting period attributable to: 1 120  (215) 2 711 2 089
Equity holders of the parent company 1 120  (215) 2 711 2 089
Basic and diluted earnings per share 0,04  (0,01) 0,08 0,06

Consolidated cash flow statement (unaudited)

(EUR thousand) 12 months 2012 12 months 2011
Cash flows from operating activities    
Operating profit (loss) for the reporting period) 4 439 4 233
Adjustments for:    
Depreciation, amortisation and impairment 3 285 3 524
Gain from disposal of ownership in joint venture, loss on sale of trademarks and goodwill impairment 157 (790)
Gain (loss) on sale and write-downs of property, plant and equipment 63 249
Cash flows from operating activities:    
Trade and other receivables (715) (121)
Inventories (146) 249
Trade and other payables (433) (690)
Cash generated from operations 6 650 6 654
Income tax paid (188) (98)
Interest paid (1 591) (2 318)
Net cash generated from operating activities 4 871 4 238
Cash flows from investing activities    
Business combinations (434) (26)
Purchase of other financial investments (15) 0
Term deposit release 0 1 500
Interest received 5 51
Purchase of  property, plant and equipment (785) (914)
Proceeds from sale of property, plant and equipment 42 92
Loans granted (10) (30)
Loan repayments received 182 126
Net cash generated from investing activities (1 015) 799
Cash flows from financing activities    
Finance lease repayments made (390) (1 245)
Change in use of overdraft 731 (712)
Change in use of factoring (270) 90
Repayments of borrowings (3 474) (3 208)
Net cash used in financing activities (3 403) (5 075)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS 453 (38)
Cash and cash equivalents at the beginning of the period 2 729 2 767
Cash and cash equivalents at the end of the period 3 182 2 729

 

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