While the first quarter passed in celebration of the 100th anniversary of Estonia and Lithuania, one of the key topics in the second quarter was the reorganisation of the joint venture Ajakirjade Kirjastus is Estonia. On 1 June, one part of Estonia's largest magazine publisher was merged with the Group's subsidiary Ekspress Meedia and the other part was merged with the joint venture SLÕhtuleht which bears the name Õhtuleht Kirjastus after the merger.
The key objective of the change was to find a better online output for the content of the printed publications of Ajakirjade Kirjastus and to foster the publications' cooperation with the existing strong web platforms. In 2018, it is not reasonable to start setting up a large new web-centre, but to offer high-quality content to the readers in cooperation with the existing platforms, i.e. Delfi and Õhtuleht. Due to a thorough planning process, the transfers and changes were completed without any major incidents. The accompanying one-off expenses related to these changes amounted to ca EUR 200 thousand. We are able to state today that the content created by the companies of the former Ajakirjade Kirjastus has received greater visibility and readability due to large web portals.
After very large-scale events in Lithuania in the first quarter such as the conference "The Idea for Lithuania" and "The Day of Best Classes" targeted at school children, slightly more modest but not less exciting projects were implemented in all countries in the second quarter. Ekspress Meedia organised an exclusive rally day with Ott Tänak on Tallinn Song Festival Ground, there was a concert given by Stig Rästa who performed the hits of Paul McCartney and the Beatles. Ajakirjade Kirjastus organised another Estonian Entertainment Awards event. As a media partner, Delfi Latvia contributed to several local conferences and festivals. The debate festival called Lampa is worth mentioning separately where one of the key speakers was President Toomas Hendrik Ilves. In collaboration with the Business Management Institute (BMI), Delfi Lithuania launched a new educational programme "Innovation and Digital Transformation" where one of the lecturers will also be the head of Delfi Lithuania. The joint project of Delfi Lithuania and Google DNI to fight fake news is successfully promoted at an international level. Delfi Lithuania was the main communication partner at the largest innovation conference in the Baltic States - Login.
The arrangement of events and activities under our different brands is becoming an increasingly important activity throughout the entire group. This will lead to the addition of a new revenue type and create an opportunity to grow advertising revenues which differ from the traditional approach.
Besides all of the above, we will continue producing strong journalistic content, and create the best and most reliable content for our readers. This is evidenced by the record number of journalism prizes awarded to our journalists by the Estonian Newspaper Association in the first quarter. We also received several awards for our journalistic activities in Latvia. We are trying to involve more young people in our activities. Eesti Ekspress has a summer youth campaign for the first time, the main objective of which is to encourage young people to make video and picture content, and introduce the Eesti Ekspress brand to them.
We continue to invest in people and software solutions to enable new products to enter the market and to further develop, enhance and upgrade our digital platforms and online products. We are looking for synergies between printed products and online output. We are launching new verticals and shut down or reorganise the current ones.
We are also expanding the direction of the outdoor advertising. In addition to the company acquired in Tartu in January, we are also expanding our network organically in Estonia and Latvia. The media buyer is beginning to understand the advantages of digital outdoor advertising; therefore the growth in this market as a whole is picking up.
The acquisition of a majority holding in Adnet, a provider of an advertising network and target group-based advertising sales solutions last November has together with Delfi companies significantly increased the Group’s online revenue and its share in total revenue. The share of the Group's digital revenue has increased to 37% of total revenue by the end of June. Delfi Lithuania has demonstrated especially strong growth. In Latvia, due to the local banking crisis and a change in the pricing policy of a major media monopoly, the advertising market is still stagnant. However, there is some pick-up in activities over the last month and an innovative approach to advertising sales has been successful.
The most complicated situation is at the Group's printing house that is under strong price pressures due to falling circulations. Our strength remains a very good service and quality of work which has made it possible to expand our service to the rest of Europe, but which will take longer than expected to grow. Paper shortages and a price increase have also had a negative impact. The decline in circulation and higher labour costs are also significantly affecting the results of our home delivery company.
The Group's revenue for the first half-year increased by 9% and totalled EUR 34 million. However, EBITDA decreased and amounted to EUR 2.3 million which is one-third less than in the same period last year. The main reason for the decrease in EBITDA is the lower-than-expected result of printing services, the difficult situation of the home delivery company and one-off reorganisation costs.
We are expecting the printing services segment to pick up in the second half of the year. The growth of media companies is forecasted to be modest and the reorganisation of the former Ajakirjade Kirjastus is still underway leading to stronger products that also have a future potential in the digital world.
In the 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 the 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.
FINANCIAL INDICATORS AND RATIOS – joint ventures consolidated 50% line-by-line
| Performance indicators – joint ventures consolidated 50% (EUR thousand) | Q2 2018 | Q2 2017 | Change % | Q2 2016 | Q2 2015 | Q2 2014 |
| For the period | ||||||
| Sales | 17 659 | 16 382 | 8% | 16 545 | 15 998 | 16 007 |
| EBITDA | 1 676 | 2 184 | -23% | 2 332 | 1 488 | 2 935 |
| EBITDA margin (%) | 9.5% | 13.3% | 14.1% | 9.3% | 18.3% | |
| Operating profit | 854 | 1 403 | -39% | 1 546 | 745 | 2 180 |
| Operating margin (%) | 4.8% | 8.6% | 9.3% | 4.7% | 13.6% | |
| Interest expenses | (102) | (106) | 3% | (134) | (146) | (181) |
| Net profit/(loss) for the period | 893 | 1 221 | -27% | 1 324 | 481 | 1 858 |
| Net margin (%) | 5.1% | 7.5% | 8.0% | 3.0% | 11.6% | |
| Return on assets ROA (%) | 1.1% | 1.6% | 1.7% | 0.6% | 2.4% | |
| Return on equity ROE (%) | 1.7% | 2.4% | 2.7% | 1.0% | 4.2% | |
| Earnings per share (EPS) | 0.03 | 0.04 | 0.05 | 0.02 | 0.06 |
| Performance indicators – joint ventures consolidated 50% (EUR thousand) | 1st Half year 2018 | 1st Half year 2017 | Change % | 1st Half year 2016 | 1st Half year 2015 | 1st Half year 2014 |
| For the period | ||||||
| Sales | 34 010 | 31 079 | 9% | 30 947 | 30 179 | 30 773 |
| EBITDA | 2 344 | 3 427 | -32% | 3 574 | 3 005 | 4 389 |
| EBITDA margin (%) | 6.9% | 11.0% | 11.5% | 10.0% | 14.3% | |
| Operating profit | 695 | 1 891 | -63% | 2 022 | 1 507 | 2 871 |
| Operating margin (%) | 2.0% | 6.1% | 6.5% | 5.0% | 9.3% | |
| Interest expenses | (205) | (222) | 7% | (269) | (320) | (357) |
| Net profit/(loss) for the period | 653 | 1 631 | -60% | 1 636 | 1 037 | 2 361 |
| Net margin (%) | 1.9% | 5.2% | 5.3% | 3.4% | 7.7% | |
| Return on assets ROA (%) | 0.8% | 2.1% | 2.1% | 1.3% | 3.1% | |
| Return on equity ROE (%) | 1.2% | 3.2% | 3.4% | 2.2% | 5.5% | |
| Earnings per share (EPS) | 0.02 | 0.05 | 0.06 | 0.03 | 0.08 |
| Balance sheet – joint ventures consolidated 50% (EUR thousand) | 30.06.2018 | 31.12.2017 | Change % |
| As of the end of the period | |||
| Current assets | 16 703 | 16 725 | 0% |
| Non-current assets | 62 946 | 62 597 | 1% |
| Total assets | 79 649 | 79 322 | 0% |
| incl. cash and bank | 1 391 | 2 818 | -51% |
| incl. goodwill | 39 685 | 39 920 | -1% |
| Current liabilities | 13 325 | 11 081 | 20% |
| Non-current liabilities | 15 262 | 15 747 | -3% |
| Total liabilities | 28 587 | 26 828 | 7% |
| incl. borrowings | 15 366 | 15 791 | -3% |
| Equity | 51 062 | 52 494 | -3% |
| Financial ratios (%) - joint ventures consolidated 50% | 30.06.2018 | 31.12.2017 |
| Equity ratio (%) | 64% | 66% |
| Debt to equity ratio (%) | 30% | 30% |
| Debt to capital ratio (%) | 21% | 20% |
| Total debt/EBITDA ratio | 2.73 | 2.35 |
| Liquidity ratio | 1.25 | 1.51 |
FINANCIAL INDICATORS AND RATIOS – joint ventures recognised under the equity method
| Performance indicators – joint ventures under equity method (EUR thousand) | Q2 2018 | Q2 2017 | Change % | Q2 2016 | Q2 2015 | Q2 2014 |
| For the period | ||||||
| Sales | 15 304 | 13 923 | 10% | 14 120 | 13 765 | 13 763 |
| EBITDA | 1 626 | 1 944 | -16% | 1 962 | 1 113 | 2 664 |
| EBITDA margin (%) | 10.6% | 14.0% | 13.9% | 8.1% | 19.4% | |
| Operating profit | 897 | 1 253 | -28% | 1 249 | 429 | 1 936 |
| Operating margin (%) | 5.9% | 9.0% | 8.8% | 3.1% | 14.1% | |
| Interest expenses | (99) | (99) | 0% | (121) | (130) | (181) |
| Profit /(loss) of joint ventures under equity method | 152 | 141 | 8% | 224 | 225 | 190 |
| Net profit/(loss) for the period | 893 | 1 221 | -27% | 1 324 | 481 | 1 858 |
| Net margin (%) | 5.8% | 8.8% | 9.4% | 3.5% | 13.5% | |
| Return on assets ROA (%) | 1.2% | 1.6% | 1.8% | 0.6% | 2.5% | |
| Return on equity ROE (%) | 1.7% | 2.4% | 2.7% | 1.0% | 4.2% | |
| Earnings per share (EPS) | 0.03 | 0.04 | 0.05 | 0.02 | 0.06 |
| Performance indicators – joint ventures under equity method (EUR thousand) | 1st Half year 2018 | 1st Half year 2017 | Change % | 1st Half year 2016 | 1st Half year 2015 | 1st Half year 2014 |
| For the period | ||||||
| Sales | 29 321 | 26 332 | 11% | 26 375 | 25 858 | 26 498 |
| EBITDA | 2 248 | 3 018 | -26% | 2 987 | 2 351 | 3 993 |
| EBITDA margin (%) | 7.7% | 11.5% | 11.3% | 9.1% | 15.1% | |
| Operating profit | 790 | 1 661 | -52% | 1 573 | 972 | 2 529 |
| Operating margin (%) | 2.7% | 6.3% | 6.0% | 3.8% | 9.5% | |
| Interest expenses | (196) | (208) | 6% | (241) | (285) | (357) |
| Profit /(loss) of joint ventures under equity method | 91 | 210 | -57% | 356 | 419 | 288 |
| Net profit/(loss) for the period | 653 | 1 631 | -60% | 1 636 | 1 037 | 2 361 |
| Net margin (%) | 2.2% | 6.2% | 6.2% | 4.0% | 8.9% | |
| Return on assets ROA (%) | 0.9% | 2.2% | 2.2% | 1.4% | 3.2% | |
| Return on equity ROE (%) | 1.2% | 3.2% | 3.4% | 2.2% | 5.5% | |
| Earnings per share (EPS) | 0.02 | 0.05 | 0.06 | 0.03 | 0.08 |
| Balance sheet - joint ventures under equity method (EUR thousand) | 30.06.2018 | 31.12.2017 | Change % |
| As of the end of the period | |||
| Current assets | 14 975 | 13 827 | 8% |
| Non-current assets | 62 488 | 62 130 | 1% |
| Total assets | 77 464 | 75 957 | 2% |
| incl. cash and bank | 595 | 1 073 | -45% |
| incl. goodwill | 37 969 | 37 969 | 0% |
| Current liabilities | 11 347 | 8 372 | 36% |
| Non-current liabilities | 15 054 | 15 091 | 0% |
| Total liabilities | 26 401 | 23 463 | 13% |
| incl. borrowings | 15 128 | 15 257 | -1% |
| Equity | 51 062 | 52 494 | -3% |
| Financial ratios (%) – joint ventures consolidated under equity method | 30.06.2018 | 31.12.2017 |
| Equity ratio (%) | 66% | 69% |
| Debt to equity ratio (%) | 30% | 29% |
| Debt to capital ratio (%) | 22% | 21% |
| Total debt/EBITDA ratio | 2.75 | 2.44 |
| Liquidity ratio | 1.32 | 1.65 |
| 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 margin in financial statements/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 |
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 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.
SEGMENT OVERVIEW
The Group’s activities are divided into two large segments - media segment and printing services segment.
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 Q2 2014–2018
| (EUR thousand) | Sales | Sales | ||||
| Q2 2018 | Q2 2017 | Change % | Q2 2016 | Q2 2015 | Q2 2014 | |
| media segment (under equity method) | 9 889 | 8 621 | 15% | 8 511 | 7 984 | 7 492 |
| incl. revenue from all digital and online channels | 6 492 | 5 117 | 27% | 4 740 | 4 116 | 3 730 |
| printing services segment | 6 355 | 6 199 | 3% | 6 663 | 6 386 | 7 210 |
| entertainment segment | - | - | - | - | 392 | - |
| corporate functions | 697 | 592 | 18% | 593 | 488 | 422 |
| intersegment eliminations | (1 637) | (1 490) | (1 648) | (1 485) | (1 361) | |
| TOTAL GROUP under equity method | 15 304 | 13 923 | 10% | 14 120 | 13 765 | 13 763 |
| media segment (by proportional consolidation) | 12 527 | 11 410 | 10% | 11 232 | 10 506 | 9 950 |
| incl. revenue from all digital and online channels | 6 870 | 5 422 | 27% | 4 903 | 4 258 | 3 848 |
| printing services segment | 6 355 | 6 199 | 3% | 6 663 | 6 386 | 7 210 |
| entertainment segment | - | - | - | - | 392 | - |
| corporate functions | 697 | 592 | 18% | 593 | 488 | 422 |
| intersegment eliminations | (1 920) | (1 819) | (1 944) | (1 774) | (1 575) | |
| TOTAL GROUP by proportional consolidation | 17 659 | 16 382 | 8% | 16 545 | 15 998 | 16 007 |
(EUR thousand) | EBITDA | EBITDA | ||||
| Q2 2018 | Q2 2017 | Change % | Q2 2016 | Q2 2015 | Q2 2014 | |
| media segment (under equity method) | 1 151 | 1 189 | -3% | 1 059 | 1 256 | 1 261 |
| media segment (by proportional consolidation) | 1 202 | 1 430 | -16% | 1 430 | 1 631 | 1 532 |
| printing services segment | 783 | 1 024 | -24% | 1 148 | 1 271 | 1 537 |
| entertainment segment | - | - | - | - | (1 129) | - |
| corporate functions | (309) | (270) | -15% | (246) | (285) | (134) |
| TOTAL GROUP under equity method | 1 626 | 1 944 | -16% | 1 962 | 1 113 | 2 664 |
| TOTAL GROUP by proportional consolidation | 1 676 | 2 184 | -23% | 2 332 | 1 488 | 2 935 |
| EBITDA margin | Q2 2018 | Q2 2017 | Q2 2016 | Q2 2015 | Q2 2014 |
| media segment (under equity method) | 12% | 14% | 12% | 16% | 17% |
| media segment (by proportional consolidation) | 10% | 13% | 13% | 16% | 15% |
| printing services segment | 12% | 17% | 17% | 20% | 21% |
| TOTAL GROUP under equity method | 11% | 14% | 14% | 8% | 19% |
| TOTAL GROUP by proportional consolidation | 9% | 13% | 14% | 9% | 18% |
Key financial data of the segments in the first-half year 2014–2018
| (EUR thousand) | Sales | Sales | ||||
| 1st Half year 2018 | 1st Half year 2017 | Change % | 1st Half year 2016 | 1st Half year 2015 | 1st Half year 2014 | |
| media segment (under equity method) | 18 419 | 16 049 | 15% | 15 282 | 14 565 | 13 906 |
| incl. revenue from all digital and online channels | 11 913 | 9 317 | 28% | 8 298 | 7 466 | 6 517 |
| printing services segment | 12 576 | 11 966 | 5% | 13 004 | 12 704 | 14 272 |
| entertainment segment | - | - | - | - | 453 | - |
| corporate functions | 1 388 | 1 167 | 19% | 1 132 | 960 | 844 |
| intersegment eliminations | (3 062) | (2 849) | (3 043) | (2 823) | (2 524) | |
| TOTAL GROUP under equity method | 29 321 | 26 332 | 11% | 26 375 | 25 858 | 26 498 |
| media segment (by proportional consolidation) | 23 688 | 21 436 | 11% | 20 428 | 19 468 | 18 587 |
| incl. revenue from all digital and online channels | 12 597 | 9 875 | 28% | 8 602 | 7 716 | 6 735 |
| printing services segment | 12 576 | 11 966 | 5% | 13 004 | 12 704 | 14 272 |
| entertainment segment | - | - | - | - | 453 | - |
| corporate functions | 1 388 | 1 167 | 19% | 1 132 | 960 | 844 |
| intersegment eliminations | (3 643) | (3 489) | (3 618) | (3 406) | (2 930) | |
| TOTAL GROUP by proportional consolidation | 34 010 | 31 079 | 9% | 30 947 | 30 179 | 30 773 |
(EUR thousand) | EBITDA | EBITDA | ||||
| 1st Half year 2018 | 1st Half year 2017 | Change % | 1st Half year 2016 | 1st Half year 2015 | 1st Half year 2014 | |
| media segment (under equity method) | 1 397 | 1 543 | -9% | 1 094 | 1 535 | 1 600 |
| media segment (by proportional consolidation) | 1 492 | 1 951 | -24% | 1 681 | 2 189 | 1 995 |
| printing services segment | 1 484 | 1 922 | -23% | 2 330 | 2 432 | 2 995 |
| entertainment segment | - | - | - | (1) | (1 105) | - |
| corporate functions | (633) | (446) | -42% | (436) | (511) | (601) |
| TOTAL GROUP under equity method | 2 248 | 3 018 | -26% | 2 987 | 2 351 | 3 993 |
| TOTAL GROUP by proportional consolidation | 2 344 | 3 427 | -32% | 3 574 | 3 005 | 4 389 |
| EBITDA margin | 1st Half year 2018 | 1st Half year 2017 | 1st Half year 2016 | 1st Half year 2015 | 1st Half year 2014 |
| media segment (under equity method) | 8% | 10% | 7% | 11% | 12% |
| media segment (by proportional consolidation) | 6% | 9% | 8% | 11% | 11% |
| printing services segment | 12% | 16% | 18% | 19% | 21% |
| TOTAL GROUP under equity method | 8% | 11% | 11% | 9% | 15% |
| TOTAL GROUP by proportional consolidation | 7% | 11% | 12% | 10% | 14% |
MEDIA SEGMENT
The media segment includes the Group's activities in Estonia, Latvia and Lithuania. It comprises the operations of online portal Delfi, several different news portal providing online advertising network and programmatic sales, outdoor digital screen advertising in Estonia and Latvia, publishing of the Estonian weekly newspapers Maaleht, Eesti Ekspress and LP, the daily newspaper Päevaleht, tabloid Õhtuleht, freesheet Linnaleht, publishing of books and magazines in Estonia, publishing of magazines in Lithuania until December 2017 and providing home delivery services.
We acquired the Latvian digital screen company ACM LV in the 3rd quarter of 2017 and a 100% ownership in Adnet Media in the 4th quarter of 2017. On 1 June 2018, the joint venture Ajakirjade Kirjastus was organised. The publishing of primarily monthly magazines was moved to Ekspress Meedia and that of the weekly magazines to Õhtuleht Kirjastus (former name SL Õhtuleht). From the same date, Ajakirjade Kirjastus and SL Õhtuleht are considered as merged and it now bears the name of Õhtuleht Kirjastus. The figures of Ajakirjade Kirjastus for June include the revenue and EBITDA earned until the end of May. The revenue and expenses of the magazines moved to Ekspress Meedia are 100% included in the figures of AS Ekspress Meedia. The figures of magazines moved to Õhtuleht Kirjastus for June are included in the income statement of Õhtuleht Kirjastus.
News portals owned by the Group
| Owner | Portal | Owner | Portal |
| Ekspress Meedia | www.delfi.ee | Ekspress Meedia | www.ekspress.ee |
| rus.delfi.ee | www.maaleht.ee | ||
| Delfi Latvia | www.delfi.lv | www.epl.ee | |
| rus.delfi.lv | |||
| Delfi Lithuania | www.delfi.lt | Õhtuleht Kirjastus | www.ohtuleht.ee |
| ru.delfi.lt | www.vecherka.ee |
(EUR thousand) | Sales | EBITDA | ||||
| Q2 2018 | Q2 2017 | Change % | Q2 2018 | Q2 2017 | Change % | |
| Ekspress Meedia | 5 476 | 5 065 | 8% | 416 | 424 | -2% |
| incl. online advertising revenue | 1 946 | 1 903 | 2% | |||
| Delfi Latvia | 1 028 | 1 007 | 2% | 146 | 131 | 11% |
| Delfi Lithuania | 2 497 | 2 461 | 1% | 590 | 645 | -8% |
| incl. online advertising revenue | 2 469 | 1 993 | 24% | |||
| Adnet | 1 003 | - | - | 57 | - | - |
| Hea Lugu | 145 | 90 | 60% | (9) | (10) | 5% |
| ACM LV | 45 | - | - | (54) | - | - |
| Other companies | - | - | - | 5 | (1) | 657% |
| Intersegment eliminations | (304) | (2) | 0 | 0 | ||
| TOTAL subsidiaries | 9 889 | 8 621 | 15% | 1 151 | 1 189 | -3% |
| Õhtuleht Kirjastus* | 1 413 | 1 181 | 20% | 103 | 161 | -36% |
| Ajakirjade Kirjastus (until May 2018)* | 809 | 1 161 | -30% | 15 | 53 | -72% |
| Express Post* | 516 | 601 | -14% | (105) | (0) | -29445% |
| Linna Ekraanid* | 144 | 101 | 42% | 38 | 27 | 43% |
| Intersegment eliminations | (244) | (256) | 0 | 0 | ||
| TOTAL subsidiaries | 2 638 | 2 789 | -5% | 51 | 241 | -79% |
| TOTAL segment by proportional consolidation | 12 527 | 11 410 | 10% | 1 202 | 1 430 | -16% |
| (EUR thousand) | Sales | EBITDA | ||||
| 1st Half year 2018 | 1st Half year 2017 | Change % | 1st Half year 2018 | 1st Half year 2017 | Change % | |
| Ekspress Meedia | 10 330 | 9 560 | 8% | 549 | 645 | -15% |
| incl. online advertising revenue | 3 553 | 3 439 | 3% | |||
| Delfi Latvia | 1 868 | 1 862 | 0% | 133 | 218 | -39% |
| Delfi Lithuania | 4 545 | 4 444 | 2% | 708 | 696 | 2% |
| incl. online advertising revenue | 4 495 | 3 611 | 24% | |||
| Adnet | 1 927 | - | - | 105 | - | - |
| Hea Lugu | 304 | 186 | 63% | (10) | (15) | 29% |
| ACM LV | 88 | - | - | (93) | - | - |
| Other entities | - | - | - | 5 | (1) | 508% |
| Intersegment eliminations | (644) | (3) | 0 | 0 | ||
| TOTAL subsidiaries | 18 419 | 16 049 | 15% | 1 397 | 1 543 | -9% |
| Õhtuleht Kirjastus* | 2 585 | 2 278 | 13% | 172 | 258 | -33% |
| Ajakirjade Kirjastus (until May 2018)* | 1 862 | 2 292 | -19% | 59 | 137 | -57% |
| Express Post* | 1 080 | 1 187 | -9% | (180) | (25) | -608% |
| Linna Ekraanid* | 240 | 174 | 38% | 45 | 39 | 15% |
| Intersegment eliminations | (497) | (544) | 0 | 0 | ||
| TOTAL subsidiaries | 5 269 | 5 387 | -2% | 96 | 408 | -77% |
| TOTAL segment by proportional consolidation | 23 688 | 21 436 | 11% | 1 492 | 1 951 | -24% |
* Proportional share of joint ventures
ONLINE MEEDIA
Estonian online readership
In the quarter ended, Ekspress Meedia launched new online outputs for all magazines: www.eestinaine.ee; www.tervispluss.ee; www.omamaitse.ee; www.kroonika.ee; www.annestiil.ee; www.perejakodu.ee. Delfi IOS app was updated, the interior design channel www.dekor.ee was launched for the Russian population. Popular coverages worth mentioning include the WRC series and Anett Kontaveit games. Õhtuleht Kirjastus launched new websites: www.linnaleht.ee and www.ohtulehtkirjastus.ee.
Latvian online readership
Delfi has maintained its stable position as the news portal with the largest user base in Latvia. In the quarter ended, several major projects were implemented, e.g. a special China-themed page, coverage of the song and dance festival. Hockey and soccer themed special pages were launched and a new video studio was opened. Since June, an updated methodology of Gemius audience survey is used in Latvia.
Lithuanian online readership
Delfi.lt remains the largest online portal in Lithuania and has a significant impact on the society. In the first quarter of 2018, DELFI's innovative solution “Hot spots” and an interactive map of the places around the world with the most news coverage were launched, and Delfi TV https://www.delfi.lt/video/ was revamped. From April, an updated methodology of Gemius audience survey was used in Lithuania. As a result, since April we have used the average daily users as the basis for comparing the number of readers in Lithuania.
PRINT MEDIA
Estonian newspaper circulation
Õhtuleht continues to be the largest daily newspaper by circulation. Traditionally, Maaleht was the largest newspaper in January and last December.
PRINTING SERVICES SEGMENT
All printing services of the Group are provided by AS Printall which is one of the largest printing companies in Estonia. We are able to print high-quality magazines, newspapers, advertising materials, product and service catalogues, paperback books and other publications in our printing plant.
| (EUR thousand) | Sales | EBITDA | ||||
| Q2 2018 | Q2 2017 | Change % | Q2 2018 | Q2 2017 | Change % | |
| Printall | 6 355 | 6 199 | 3% | 783 | 1 024 | -24% |
| (EUR thousand) | Sales | EBITDA | ||||
| 1st Half year 2018 | 1st Half year 2017 | Change % | 1st Half year 2018 | 1st Half year 2017 | Change % | |
| Printall | 12 576 | 11 966 | 5% | 1 484 | 1 922 | -23% |
For several years already, the printing services segment has been under pressure due to continued digitalisation of regular journalism and the increasing popularity of Internet as compared to printed products. The price pressure is very strong both in Scandinavia and Estonia, because other Baltic States also have very competitive services. A sheet-fed printing press purchased two years ago has helped us expand the product range also outside the regular media sector. We are also engaged in active sales activities outside Nordic countries.
Consolidated balance sheet (unaudited)
| (EUR thousand) | 30.06.2018 | 31.12.2017 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 595 | 1 073 |
| Trade and other receivables | 10 587 | 9 917 |
| Corporate income tax prepayment | 148 | 4 |
| Inventories | 3 646 | 2 832 |
| Total current assets | 14 975 | 13 827 |
| Non-current assets | ||
| Trade and other receivables | 1 241 | 1 750 |
| Deferred tax asset | 47 | 47 |
| Investments in joint ventures | 2 504 | 2 372 |
| Investments in associates | 354 | 354 |
| Property, plant and equipment | 12 079 | 12 189 |
| Intangible assets | 46 264 | 45 419 |
| Total non-current assets | 62 488 | 62 130 |
| TOTAL ASSETS | 77 464 | 75 957 |
| LIABILITIES | ||
| Current liabilities | ||
| Borrowings | 74 | 166 |
| Trade and other payables | 11 177 | 8 095 |
| Corporate income tax payable | 96 | 111 |
| Total current liabilities | 11 347 | 8 372 |
| Non-current liabilities | ||
| Long-term borrowings | 15 054 | 15 091 |
| Total non-current liabilities | 15 054 | 15 091 |
| TOTAL LIABILITIES | 26 401 | 23 463 |
| EQUITY | ||
| Minority shareholding | 67 | 68 |
| Capital and reserves attributable to equity holders of parent company: | ||
| Share capital | 17 878 | 17 878 |
| Share premium | 14 277 | 14 277 |
| Treasury shares | (22) | (22) |
| Reserves | 1 688 | 1 531 |
| Retained earnings | 17 174 | 18 762 |
| Total capital and reserves attributable to equity holders of parent company | 50 996 | 52 426 |
| TOTAL EQUITY | 51 062 | 52 494 |
| TOTAL LIABILITIES AND EQUITY | 77 464 | 75 957 |
Consolidated statement of comprehensive income (unaudited)
| (EUR thousand) | Q2 2018 | Q2 2017 | 1st Half year 2018 | 1st Half year 2017 |
| Sales | 15 304 | 13 923 | 29 321 | 26 332 |
| Cost of sales | (12 027) | (10 725) | (23 591) | (20 800) |
| Gross profit | 3 278 | 3 198 | 5 731 | 5 532 |
| Other income | 121 | 270 | 160 | 448 |
| Marketing expenses | (718) | (798) | (1 485) | (1 514) |
| Administrative expenses | (1 766) | (1 400) | (3 582) | (2 762) |
| Other expenses | (18) | (18) | (34) | (42) |
| Operating profit | 897 | 1 253 | 790 | 1 661 |
| Interest income | 44 | 55 | 87 | 114 |
| Interest expenses | (99) | (99) | (196) | (208) |
| Other finance income and costs | (15) | (18) | (34) | (34) |
| Net finance cost | (70) | (63) | (142) | (127) |
| Profit (loss) on shares of joint ventures | 152 | 141 | 91 | 210 |
| Profit (loss) on shares of associates | 0 | (21) | 0 | (23) |
| Profit before income tax | 979 | 1 310 | 740 | 1 721 |
| Income tax expense | (86) | (89) | (86) | (90) |
| Net profit for the reporting period | 893 | 1 221 | 653 | 1 631 |
| Net profit for the reporting period attributable to | ||||
| Equity holders of the parent company | 894 | 1 221 | 654 | 1 631 |
| Minority shareholders | (1) | 0 | (1) | 0 |
| Other comprehensive income | 0 | 0 | 0 | 0 |
| Total comprehensive income | 893 | 1 221 | 653 | 1 631 |
| Comprehensive income for the reporting period attributable to | ||||
| Equity holders of the parent company | 894 | 1 221 | 654 | 1 631 |
| Minority shareholders | (1) | 0 | (1) | 0 |
| Basic and diluted earnings per share | 0.03 | 0.04 | 0.02 | 0.05 |
Consolidated cash flow statement (unaudited)
| (EUR thousand) | 1st Half year 2018 | 1st Half year 2017 |
| Cash flows from operating activities | ||
| Operating profit for the reporting year | 790 | 1 661 |
| Adjustments for: | ||
| Depreciation, amortisation and impairment | 1 458 | 1 357 |
| (Gain)/loss on sale and write-down of property, plant and equipment | (7) | (3) |
| Cash flows from operating activities: | ||
| Trade and other receivables | (274) | 80 |
| Inventories | (814) | 78 |
| Trade and other payables | 960 | (487) |
| Cash generated from operations | 2 113 | 2 686 |
| Income tax paid | (245) | (231) |
| Interest paid | (196) | (208) |
| Net cash generated from operating activities | 1 672 | 2 247 |
| Cash flows from investing activities | ||
| Interest received | 67 | 102 |
| Purchase of other investments | (1 000) | (35) |
| Purchase of property, plant and equipment | (1 212) | (814) |
| Proceeds from sale of property, plant and equipment | 25 | 13 |
| Loans granted | (476) | (2 025) |
| Loan repayments received | 574 | 1 028 |
| Net cash used in investing activities | (2 022) | (1 732) |
| Cash flows from financing activities | ||
| Dividends received | 0 | 56 |
| Finance lease payments made | (37) | (35) |
| Change in overdraft | (92) | 0 |
| Repayments of bank loans | 0 | (552) |
| Net cash used in financing activities | (129) | (531) |
| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | (479) | (15) |
| Cash and cash equivalents at the beginning of the year | 1 073 | 2 856 |
| Cash and cash equivalents at the end of the year | 595 | 2 842 |
Additional information:
Mari-Liis Rüütsalu
Chairman of the Management Board
GSM: +372 512 2591
e-mail: mariliis.ryytsalu@egrupp.ee
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