Market announcement

Title

AS Ekspress Grupp: Consolidated Interim Report for the Fourth Quarter and 12-months of 2016

Message

Tallinn, Estonia, 2017-02-28 08:34 CET (GLOBE NEWSWIRE) --


The year 2016 was a year of new challenges for the Group, both within and
outside the Group. The end of the year was also influenced by the rotation in
the management of our parent company, subsidiaries and joint ventures that
provided new challenges for several managing directors. 



Consolidated revenue for the fourth quarter increased 1% amounting to EUR 17.4
million and EBITDA growth amounted to 10% and reached EUR 3 million.
Consolidated revenue for the whole year increased 2% as compared to the year
before and EBITDA increased 8%, amounting to EUR 62.8 million and EUR 8.5
million, respectively. In revenue terms, it was an especially successful year
for the online business of our media segment, with online revenue growing 12%
in a year, totalling EUR 18.6 million and reaching almost 30% of the Group’s
total revenues. It was also positive that in spite of predictions, the print
media in Estonia is showing continued viability and increased revenue from last
year. The latter is attributable to new products in our portfolio and
additional products targeted at subscribers and retail consumer such as books
or special magazine issues. The growth in the print media is mainly being
driven by subscription and single-copy sales although average circulations are
decreasing. The printing services segment continues to stagnate, with strong
price pressure decreasing revenue by 1% and lowering profitability. We were
more optimistic when preparing the budget which is why the yearly consolidated
revenue and EBITDA of the Group as compared to the budget were 5% below
expectations. The above figures include all our joint ventures (AS SL Õhtuleht,
AS Ajakirjade Kirjastus, AS Express Post and OÜ Linna Ekraanid) consolidated
50% line-by-line. 



The revenue of the media segment reached EUR 11.8 million in the fourth quarter
having increased 7% and EBITDA increased up to EUR 1.9 million growing 23%
compared to the same period in previous year.  Annual sales of media segment
reached EUR 42.2 million, having increased 6% in a year, whereas revenue from
digital and online channels was up 12%. EBITDA amounted to EUR 4.8 million
which was 3% lower than the year before, but exceeded the budget by 7%. The
priorities of the media segment continue to be innovation in developing various
products and technical platforms. In all three countries, we launched new
topical portals, carried out several new multimedia projects, developed
e-commerce services and different advertising sales channels and implemented
new solutions for target groups. We remain active also in the social media. A
major emphasis is on web-based TV production and broadcasting. Since 2016, the
apps of our international brand Delfi TV are available for Android TV and Apple
TV. In addition, web TV can be watched also traditionally, for instance as a
client of Starman or Levira Hybrid TV. One should also mention active
development for mobile telephones that have almost become the main channel for
consuming news. Delfi and our classical newspaper brands are here clearly
market leaders in innovation. 



A major surprise was the strong performance of Delfi Latvia which started
already in the third quarter and continued with the same pace at the end of the
year. In the fourth quarter Delfi Latvia increased its revenue by 8% reaching
EUR 1 million. Annual revenue increased even more, 10% and totalled EUR 3.4
million. EBITDA grew by 37% to EUR 413 thousand. This was achieved in spite of
the exit of a long-term sales manager and part of the sales team in September
and tough competition between online portals. In a year, Delfi Latvia has
launched and tested several new products and has been kind of a start-up
incubator. In July we acquired www.atverskapi.lv, the leading classified portal
in its niche in Latvia. The editorial office continues to focus on publishing
more long-read analytical articles and carrying out media projects, as
reflected in our readership and recognised by press awards. 



Last quarter was also good for Ekspress Meedia, which managed to grow its
revenues by 7% reaching over EUR 5 million. EBITDA growth was more modest,
staying on the level of 4%. However taking into consideration personnel changes
in top management, it was a great result achieved by the team.  Annual revenues
increased 5% and amounted to more than EUR 19.1 million. This includes 13%
growth in Delfi online and newspaper digital revenue, totalling EUR 7.3
million. Print advertising grew 3%. This was achieved mainly as a result of
focusing on the efficiency of the sales team, the increasingly versatile
portfolio and innovative approach. Press subscriptions and single copy sales
revenue increased 1% from the previous year, and the number of digital
subscriptions is up by about 30% thanks to different cooperation projects. We
constantly invest in new products and IT solutions. We also invest in our staff
to enable them to increase the quality of journalism. This explains why the
company’s EBITDA was 24% lower than a year earlier. The annual result was also
affected by the growth in print and delivery costs, resulting from the increase
in advertising sales volumes. 



Delfi Lithuania is growing more modestly, but consistently. The company’s
revenue in the fourth quarter increased 6% totalling EUR 2.6 million while
annual terms revenue increased 4% up to EUR 8.6 million. The growth of annual
online advertising revenue was 9%. Annual EBITDA increased 9% totalling EUR 1.7
million, while the EBITDA in the fourth quarter increased 20% and thus was a
great final to the year. This result can be considered positive in all aspects,
especially in the light of the very disappointing first quarter. Thanks to
persistent work, Lithuania has become a clear market leader in mobile platforms
where we were losing out to competition in earlier years. Online continues to
grow, but magazine circulations, print advertising and distribution costs
decrease at a stable rate. 

The annual revenue and profit growth of Ajakirjade Kirjastus, respectively 10%
and 39% and the growth in the fourth quarter in percentage terms even more is
mainly attributable to the expansion in our product portfolio in April when we
acquired Estonia’s largest women’s weekly Naisteleht as well as magazines
Nipiraamat and Müstiline Ajalugu. As a result of the transaction, we merged the
newly acquired weekly Naisteleht with the existing magazine Naised and reached
significant synergies, giving a boost to both revenue and profit. In addition,
we continue to organise events and courses by using our brands in order to
build brands, offer additional value to subscribers and help to increase
revenue. The revenue of Ajakirjade Kirjastus for the year totalled EUR 9.5
million and EBITDA was EUR 1.1 million, of which half is recognized in the
consolidated figures of the Ekspress Group. 



This year SL Õhtuleht has been in the winds of change. There have been changes
in the team, organizational and management structure. We have invested in
increasing the efficiency of advertising sales, modernization of the company
and development of new products. All this has helped to make Õhtuleht the
newspaper with the largest circulation in weekdays, keep the level of
subscribers and single-copy sales high and increase advertising revenue. The
number of digital subscribers has more than tripled as compared to the start of
the year. The revenue of SL Õhtuleht increased 4% in a year and amounted to EUR
8.7 million. EBITDA amounted to EUR 0.8 million and was 23% lower than in the
previous year. The fourth quarter was slightly better for the revenues, which
grew 6% up to EUR 2.3 million, while EBITDA at the same time decreased 42% and
remained on the level of EUR 130 thousand. Half of this is reflected in the
consolidated figures of the Ekspress Group. 

It was another difficult quarter and also year in the printing services
segment. The revenue of Printall decreased 1% from the year before and amounted
to EUR 25.6 million. EBITDA remained 6% below last year’s level and amounted to
EUR 4.6 million. Despite of expectations and some positive signs in autumn, the
fourth quarter showed even more slowdown and revenues dropped 6% down to EUR 7
million, however EBITDA remained only 2% behind the same period in last year.
The number of orders and work volume keeps increasing, but price pressure is
dampening revenue growth and increased volume is pushing up labour costs.
Despite the tough market situation, persistent and aggressive marketing has
helped us to attract new products and customers in Scandinavia, improved our
price level in the second half of the year and attracted recognition also in
printing sectors outside periodicals. This enables to expand the B2B segment
that produces for own use product catalogues and other specific products that
are suitable for our sheet-fed printing machines. In the last year, Printall
has been transforming from a large and elite plant to wide-based tool for
promoting communication. The situation on the printing services market in 2017
is not expected to improve. 

In July we signed a contract to acquire a 50% holding in OÜ Linna Ekraanid,
which is engaged in the sale of digital outdoor advertising in Estonia. In
September we acquired 49% holding in Babahh Media OÜ which is engaged in the
video production, media solutions and streaming related infrastructure sales in
Estonia. In the second quarter of 2019 we will acquire the remaining 50% of OÜ
Linna Ekraanid, and thereby will become the company’s sole shareholder. The
purpose of the acquisition is to create preconditions for the Group to set off
a new business line and thereby expand the Group’s portfolio of business areas.
The objective of AS Ekspress Grupp is to develop the business line of digital
outdoor advertising in all three Baltic countries and take the leading role in
this business segment. With regard to Babahh Media OÜ, the Group has an option
to acquire an additional ownership in Babahh Media OÜ in 2021, thereby AS
Ekspress Grupp would increase its ownership in Babahh Media OÜ to 70% in total.
The purpose of the acquisition is to expand the business of AS Ekspress Grupp
in the fast-growing market of online video production and video streaming. The
acquisition of Babahh Media OÜ also helps to supplement the video production
portfolio of our Delfis in all our markets through wide-based knowledge. 

The financial position of the Group has strengthened notably during the year.
As at the end of the year, the ratio of total debt to EBITDA was below 2.0,
which according to the syndicate loan contract means a lower interest margin
and enables even more aggressively to invest with the help of loan capital. The
debt service coverage ratio is almost 2.8. 



Despite the challenging situation in the media landscape, we are looking
forward to the next year with excitement, especially because of several
personnel changes in the Group at the start of the year. On January 1,
Mari-Liis Rüütsalu who has earlier management experience from Delfi Estonia and
Ekspress Meedia took office as the new Group CEO. New managers, all of whom
were promoted from within the Group, started also in Ekspress Meedia,
Ajakirjade Kirjastus and SL Õhtuleht. 



In financial terms we expect the revenue of the media segment to increase 4-5%
and EBITDA to grow, assisted by acquisitions made in 2016. In the printing
services segment we will try to maintain this year’s revenue level in spite of
price pressure. In a more optimistic outlook we hope that the profit growth of
the media segment will cover the decrease in EBITDA in the printing services
segment. This means that the share of media and online activities in the Group
revenue and profit will grow. However, a significantly more negative background
of the external environment may lower EBITDA of the printing services segment
by 10-15%, which in turn would mean that in consolidated terms, the revenue
would grow by about 4%, but EBITDA would decrease by about the same percentage. 

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 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 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        Q4      Q4  Change      Q4      Q4      Q4
 ventures 50%                       2016    2015       %    2014    2013    2012
consolidated (EUR thousand)                                                     
For the period                                                                  
Sales                             17 409  17 181      1%  16 778  16 526  16 447
EBITDA                             2 981   2 720     10%   2 757   2 015   2 246
EBITDA margin (%)                  17.1%   15.8%           16.4%   12.2%   13.7%
Operating profit*                  2 113   1 936      9%   1 895   1 348   1 496
Operating margin* (%)              12.1%   11.3%           11.3%    8.2%    9.1%
Interest expenses                  (123)   (141)     13%   (186)   (185)   (206)
Net profit /(loss) for the         1 868   1 660     13%   1 614   1 057   1 268
 period*                                                                        
Net margin (%)*                    10.7%    9.7%            9.6%    6.4%    7.7%
Net profit for the period in the   1 868     460    306%   1 149      (1   1 112
 financial statements (incl.                                        410)        
 impairments and gain on change                                                 
 of ownership interest)                                                         
Net margin (%)                     10.7%    2.7%            6.8%   -8.5%    6.8%
Return on assets ROA (%)            2.4%    0.6%            1.4%   -1.8%    1.4%
Return on equity ROE (%)            3.7%    0.9%            2.4%   -3.2%    2.7%
Earnings per share (EPS)            0.06    0.02            0.04  (0.05)    0.04







Performance indicators – joint        12      12  Change      12      12      12
 ventures                         months  months       %  months  months  months
consolidated 50% (EUR thousand)     2016    2015            2014    2013    2012
For the period                                                                  
Sales                             62 793  61 528      2%  61 384  58 427  59 706
EBITDA                             8 487   7 869      8%   8 878   7 264   7 882
EBITDA margin (%)                  13.5%   12.8%           14.5%   12.4%   13.2%
Operating profit*                  5 221   4 866      7%   5 638   4 647   4 596
Operating margin* (%)               8.3%    7.9%            9.2%    8.0%    7.7%
Interest expenses                  (518)   (618)     16%   (732)   (763)      (1
                                                                            549)
Net profit/(loss) for the          4 406   3 907     13%   4 620   3 548   2 682
 period*                                                                        
Net margin (%)*                     7.0%    6.4%            7.5%    6.1%    4.5%
Net profit for the period in the   4 406   2 707     63%   5 110   1 081   2 525
 financial statements (incl.                                                    
 impairments and gain on change                                                 
 of ownership interest)                                                         
Net margin(%)                       7.0%    4.4%            8.3%    1.9%    4.2%
Return on assets ROA (%)            5.8%    3.5%            6.6%    1.4%    3.2%
Return on equity ROE (%)            8.9%    5.6%           11.4%    2.5%    6.4%
Earnings per share (EPS)            0.15    0.09            0.17    0.04    0.08



* The results reflect the outcome of regular business activities and do not
include impairment losses on goodwill, profit arised from the changes in
ownership interests in our joint ventures etc. 



Balance sheet – joint ventures 50%              31.12.2016  31.12.2015  Change %
 consolidated (EUR thousand)                                                    
As of the end of the period                                                     
Current assets                                      16 251      15 553        4%
Non-current assets                                  61 506      61 588        0%
Total assets                                        77 757      77 141        1%
incl. cash and bank                                  4 572       4 666       -2%
incl. goodwill                                      38 904      38 232        2%
Current liabilities                                 12 222      12 539       -3%
Non-current liabilities                             14 462      15 928       -9%
Total liabilities                                   26 684      28 467       -6%
incl. borrowing                                     16 603      18 787      -12%
                      Equity                        51 073      48 674        5%
                                                                                







Financial ratios (%) – joint ventures consolidated 50%  31.12.2016  31.12.2015
Equity ratio (%)                                           66%         63%    
Debt to equity ratio (%)                                   33%         39%    
Debt to capital ratio (%)                                  19%         22%    
Total debt/EBITDA ratio                                    1.96        2.39   
Debt service coverage ratio                                2.75        1.79   
Liquidity ratio                                            1.33        1.24   





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

Performance indicators – joint        Q4      Q4  Change      Q4      Q4      Q4
 ventures under equity method       2016    2015       %    2014    2013    2012
 (EUR thousand)                                                                 
For the period                                                                  
Sales (only subsidiaries)         14 743  14 811      0%  14 454  14 291  14 165
EBITDA (only subsidiaries)         2 660   2 440      9%   2 413   1 815   2 017
EBITDA margin (%)                  18.0%   16.5%           16.7%   12.7%   14.2%
Operating profit* (only            1 889   1 718     10%   1 661   1 175   1 293
 subsidiaries)                                                                  
Operating margin* (%)              12.8%   11.6%           11.5%    8.2%    9.1%
Interest expenses (only            (114)   (125)      9%   (158)   (185)   (206)
 subsidiaries)                                                                  
Profit of joint ventures by          210     196      7%     182     174     202
 equity method                                                                  
Net profit for the period*         1 868   1 660     13%   1 601   1 057   1 269
Net margin (%)*                    12.7%   11.2%           11.1%    7.4%    9.0%
Net profit for the period in the   1 868     460    306%   1 136      (1   1 112
 financial statements (incl.                                        410)        
 impairments and gain on change                                                 
 of ownership interest)                                                         
Net margin (%)                     12.7%    3.1%            7.9%   -9.9%    7.8%
Return on assets ROA (%)            2.5%    0.6%            1.5%   -1.8%    1.4%
Return on equity ROE (%)            3.7%    0.9%            2.4%   -3.2%    2.7%
Earnings per share (EPS)            0.06    0.02            0.04  (0.05)    0.04







Performance indicators – joint        12      12  Change      12      12      12
 ventures under equity method     months  months       %  months  months  months
 (EUR thousand)                     2016    2015            2014    2013    2012
For the period                                                                  
Sales (only subsidiaries)         53 324  52 773      1%  52 793  50 086  51 290
EBITDA (only subsidiaries)         7 280   6 680      9%   7 894   6 591   7 345
EBITDA margin (%)                  13.7%   12.7%           15.0%   13.2%   14.3%
Operating profit* (only            4 328   3 920     10%   4 973   4 071   4 173
 subsidiaries)                                                                  
Operating margin* (%)               8.1%    7.4%            9.4%    8.1%    8.1%
Interest expenses (only            (471)   (550)     14%   (689)   (763)      (1
 subsidiaries)                                                              550)
Profit of joint ventures by          772     785     -2%     557     494     339
 equity method                                                                  
Net profit for the period*         4 406   3 907     13%   4 621   3 548   2 682
Net margin (%)*                     8.3%    7.4%            8.8%    7.1%    5.2%
Net profit for the period in the   4 406   2 707     63%   5 110   1 081   2 525
 financial statements (incl.                                                    
 impairments and gain on change                                                 
 of ownership interest)                                                         
Net margin (%)                      8.3%    5.1%            9.7%    2.2%    4.9%
Return on assets ROA (%)            6.1%    3.7%            6.8%    1.4%    3.2%
Return on equity ROE (%)            8.9%    5.6%           11.4%    2.5%    6.4%
Earnings per share (EPS)            0.15    0.09            0.17    0.04    0.08



* The results reflect the outcome of regular business activities and do not
include impairment losses on goodwill, profit arised from the changes in
ownership interests in our joint ventures etc. 





Balance sheet – joint ventures under equity     31.12.2016  31.12.2015  Change %
 method                                                                         
(EUR thousand)                                                                  
As of the end of the period                                                     
Current assets                                      13 094      12 386        6%
Non-current assets                                  61 074      60 794        0%
Total assets                                        74 168      73 180        1%
incl. cash and bank                                  2 856       2 927       -2%
incl. goodwill                                      36 953      36 953        0%
Current liabilities                                  9 591       9 033        6%
Non-current liabilities                             13 504      15 473      -13%
Total liabilities                                   23 095      24 506       -6%
incl. borrowing                                     15 784      17 687      -11%
Equity                                              51 073      48 674        5%







Financial ratios (%) – joint ventures under equity        31.12.2016  31.12.2015
 method                                                                         
Equity ratio (%)                                             69%         67%    
Debt to equity ratio (%)                                     31%         36%    
Debt to capital ratio (%)                                    20%         23%    
Total debt/EBITDA ratio                                      2.17        2.65   
Debt service coverage ratio                                  2.67        1.67   
Liquidity ratio                                              1.37        1.37   



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. 



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       EBITDA/sales x 100                                                 
 margin (%)                                                                     
Operating    Operating profit*/sales x100                                       
 margin*                                                                        
 (%)                                                                            
Net margin   Net profit/sales x100                                              
 (%)                                                                            
Net margin   Net profit /sales x100                                             
 (%)                                                                            
Earnings     Net profit / average number of shares                              
 per share                                                                      
Equity       Equity/ (liabilities + equity) x100                                
 ratio (%)                                                                      
Debt to      Interest bearing liabilities /equity x 100                         
 equity                                                                         
 ratio (%)                                                                      
Debt to      Interest bearing liabilities – cash and cash equivalents (net debt)
 capital      /(net debt +equity) x 100                                         
 ratio (%)                                                                      
Total        Interest bearing borrowings /EBITDA                                
 debt/EBITD                                                                     
A ratio                                                                         
Debt         EBITDA/loan and interest payments for the period                   
 service                                                                        
 coverage                                                                       
 ratio                                                                          
Liquidity    Current assets / current liabilities                               
 ratio                                                                          
Return on    Net profit /average assets x 100                                   
 assets ROA                                                                     
 (%)                                                                            
Return on    Net profit /average equity x 100                                   
 equity ROE                                                                     
 (%)                                                                            

SEGMENT OVERVIEW

The Group’s activities are divided into two large segments - media segment and
printing services segment. Last year, there was also an entertainment 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 Q4 2012-2016



(EUR thousand)                        Sales                      Sales          
                                  Q4       Q4  Change       Q4       Q4       Q4
                                2016     2015       %     2014     2013     2012
media segment (by equity       8 861    8 399      6%    7 535    7 617    7 049
 method)                                                                        
incl. revenue from all         4 974    4 544      9%    4 015    3 389    3 029
 digital and online                                                             
 channels                                                                       
printing services segment      6 952    7 386     -6%    8 083    7 566    8 046
entertainment segment              0        0       -        0        0        0
corporate functions              566      543      4%      459      393      308
intersegment eliminations    (1 636)  (1 517)     -8%  (1 624)  (1 286)  (1 238)
TOTAL GROUP by equity         14 743   14 811      0%   14 454   14 291   14 165
 method                                                                         
media segment (by             11 836   11 041      7%   10 141   10 043    9 532
 proportional                                                                   
 consolidation)                                                                 
incl. revenue from all         5 381    4 841     11%    4 257    3 584    3 184
 digital and online                                                             
 channels                                                                       
printing services segment      6 952    7 386     -6%    8 083    7 566    8 046
entertainment segment              0        0       -        0        0        0
corporate functions              566      543      4%      459      393      308
intersegment eliminations    (1 945)  (1 789)          (1 905)  (1 476)  (1 439)
TOTAL GROUP by proportional   17 409   17 181      1%   16 778   16 526   16 447
 consolidation                                                                  







(EUR thousand)                               EBITDA                 EBITDA      
                                         Q4     Q4   Change     Q4     Q4     Q4
                                       2016   2015        %   2014   2013   2012
media segment by equity method        1 618  1 299      25%  1 103  1 014    611
media segment by proportional         1 938  1 579      23%  1 448  1 214    839
 consolidation                                                                  
printing services segment             1 329  1 355      -2%  1 623  1 604  1 650
entertainment segment                   (0)    (4)      94%      0      0      0
corporate functions                   (287)  (210)     -36%  (313)  (763)  (242)
intersegment eliminations                 0    (0)     189%      0   (40)    (1)
TOTAL GROUP by equity method          2 660  2 440       9%  2 413  1 815  2 017
TOTAL GROUP by proportional           2 981  2 720      10%  2 757  2 015  2 246
 consolidation                                                                  







EBITDA margin                                  Q4    Q4    Q4    Q4    Q4
                                             2016  2015  2014  2013  2012
media segment by equity method                18%   15%   15%   13%    9%
media segment by proportional consolidation   16%   14%   14%   12%    9%
printing services segment                     19%   18%   20%   21%   21%
TOTAL GROUP by equity method                  18%   16%   17%   13%   14%
TOTAL GROUP by proportional consolidation     17%   16%   16%   12%   14%





Key financial data of the segments in 12 months 2012-2016



(EUR thousand)                        Sales                      Sales          
                                  12       12  Change       12       12       12
                              months   months       %   months   months   months
                                2016     2015             2014     2013     2012
media segment (by equity      31 579   30 063      5%   27 459   25 842   25 562
 method)                                                                        
incl. revenue from all        17 269   15 555     11%   13 449   11 595   10 561
 digital and online                                                             
 channels                                                                       
printing services segment     25 585   25 842     -1%   28 951   27 462   29 167
entertainment segment              0      517   -100%        0        0        0
corporate functions            2 233    1 937     15%    1 731    1 530      996
intersegment eliminations    (6 073)  (5 586)     -9%  (5 347)  (4 748)  (4 435)
TOTAL GROUP by equity         53 324   52 773      1%   52 793   50 086   51 290
 method                                                                         
media segment (by             42 229   39 943      6%   36 930   34 955   34 773
 proportional                                                                   
 consolidation)                                                                 
incl. revenue from all        18 574   16 619     12%   14 306   12 226   11 147
 digital and online                                                             
 channels                                                                       
printing services segment     25 585   25 842     -1%   28 951   27 462   29 167
entertainment segment              0      517   -100%        0        0        0
corporate functions            2 233    1 937     15%    1 731    1 530      996
intersegment eliminations    (7 254)  (6 711)          (6 228)  (5 520)  (5 230)
TOTAL GROUP by proportional   62 793   61 528      2%   61 384   58 427   59 706
 consolidation                                                                  







(EUR thousand)                        EBITDA                    EBITDA          
                                  12       12  Change       12       12       12
                              months   months       %   months   months   months
                                2016     2015             2014     2013     2012
media segment by equity        3 572    3 724     -4%    3 025    2 123    2 089
 method                                                                         
media segment by               4 779    4 913     -3%    4 013    2 792    2 624
 proportional consolidation                                                     
printing services segment      4 645    4 966     -6%    5 944    5 862    6 052
entertainment segment            (2)  (1 110)    100%        0        0        0
corporate functions            (936)    (899)     -4%  (1 076)  (1 356)    (797)
intersegment eliminations          0        0    -65%        0     (38)        1
TOTAL GROUP by equity          7 280    6 680      9%    7 894    6 591    7 345
 method                                                                         
TOTAL GROUP by proportional    8 487    7 869      8%    8 878    7 264    7 882
 consolidation                                                                  







EBITDA margin                          12        12        12       12        12
                                   months    months    months   months    months
                                     2016      2015      2014     2013      2012
media segment by equity method        11%       12%       11%       8%        8%
media segment by proportional         11%       12%       11%       8%        8%
 consolidation                                                                  
printing services segment             18%       19%       21%      21%       21%
TOTAL GROUP by equity method          14%       13%       15%      13%       14%
TOTAL GROUP by proportional           14%       13%       14%      12%       13%
 consolidation                                                                  





MEDIA SEGMENT

The media segment includes Delfi operations in wholly-owned subsidiaries in
Estonia, Latvia and Lithuania, publishing of Estonian newspapers Maaleht, Eesti
Ekspress and Eesti Päevaleht, 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 Õhtuleht
(publisher of Õhtuleht and Linnaleht), magazine publisher AS Ajakirjade
Kirjastus, home delivery company AS Express Post and, since the summer 2016, OÜ
Linna Ekraanid, engaged in sale of digital outdoor advertising. 

In July 2015 AS Delfi and newspaper publisher AS Eesti Ajalehed were merged in
Estonia. New company continued to operate under name of 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



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  SL Õhtuleht      www.ohtuleht.ee
                 ru.delfi.lt                    www.vecherka.ee







(EUR thousand)                                                Sales        
                                                         Q4      Q4  Change
                                                       2016    2015       %
Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed)   5 085   4 756      7%
incl. Delfi Estonia online revenue                    1 772   1 592     11%
Delfi Latvia                                            997     927      8%
Delfi Lithuania (incl. Ekspress Leidyba)              2 558   2 414      6%
incl Delfi Lithuania online revenue                   2 043   1 887      8%
OÜ Hea Lugu                                             230     304    -24%
OÜ Zave Media                                             0       2   -100%
Other companies (Delfi Holding)                           -       -       -
Intersegment eliminations                               (9)     (4)   -128%
TOTAL subsidiaries                                    8 861   8 399      5%
AS SL Õhtuleht*                                       1 134   1 066      6%
AS Ajakirjade Kirjastus*                              1 368   1 218     12%
AS Express Post*                                        677     648      4%
Linna Ekraanid OÜ*                                      115       -       -
Intersegment eliminations                             (318)   (289)    -10%
TOTAL joint ventures                                  2 975   2 643     13%
TOTAL segment by proportional consolidation          11 836  11 041      7%







(EUR thousand)                                              EBITDA       
                                                        Q4     Q4  Change
                                                      2016   2015       %
Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed)    443    425      4%
Delfi Latvia                                           262    157     67%
Delfi Lithuania (incl. Ekspress Leidyba)               865    723     20%
OÜ Hea Lugu                                             50     85    -41%
OÜ Zave Media                                          (0)   (87)     99%
Other companies (Delfi Holding)                        (2)    (4)     50%
Intersegment eliminations                              (0)    (1)       -
TOTAL subsidiaries                                   1 618  1 299     25%
AS SL Õhtuleht*                                         65    113    -42%
AS Ajakirjade Kirjastus*                               160     86     87%
AS Express Post*                                        75     82     -9%
Linna Ekraanid OÜ*                                      20      -       -
Intersegment eliminations                                0    (0)    217%
TOTAL joint ventures                                   321    281     14%
TOTAL segment by proportional consolidation          1 938  1 579     23%



* Proportional share of joint ventures





(EUR thousand)                                             Sales                
                                               12 months     12 months    Change
                                                    2016          2015         %
Ekspress Meedia AS (Delfi Estonia + Eesti         19 116        18 248        5%
 Ajalehed)                                                                      
incl. Delfi Estonia online revenue                 6 728         5 931       13%
Delfi Latvia                                       3 375         3 066       10%
Delfi Lithuania (incl. Ekspress Leidyba)           8 563         8 230        4%
incl Delfi Lithuania online revenue                6 602         6 051        9%
OÜ Hea Lugu                                          538           651      -17%
OÜ Zave Media                                          1             5      -77%
Other companies (Delfi Holding)                        -             -         -
Intersegment eliminations                           (14)         (136)       89%
TOTAL subsidiaries                                31 579        30 063        5%
AS SL Õhtuleht*                                    4 329         4 154        4%
AS Ajakirjade Kirjastus*                           4 765         4 347       10%
AS Express Post*                                   2 609         2 477        5%
Linna Ekraanid OÜ*                                   166             -         -
Intersegment eliminations                        (1 219)       (1 099)      -11%
TOTAL joint ventures                              10 651         9 879        8%
TOTAL segment by proportional                     42 229        39 943        6%
 consolidation                                                                  







(EUR thousand)                                              EBITDA              
                                                12 months     12 months   Change
                                                     2016          2015        %
Ekspress Meedia AS (Delfi Estonia + Eesti           1 448         1 899     -24%
 Ajalehed)                                                                      
Delfi Latvia                                          413           301      37%
Delfi Lithuania (incl. Ekspress Leidyba)            1 741         1 590       9%
OÜ Hea Lugu                                            33            91     -64%
OÜ Zave Media                                        (61)         (147)      59%
Other companies (Delfi Holding)                       (2)           (9)      78%
Intersegment eliminations                             (0)           (1)        -
TOTAL subsidiaries                                  3 572         3 724      -4%
AS SL Õhtuleht*                                       394           508     -23%
AS Ajakirjade Kirjastus*                              544           392      39%
AS Express Post*                                      247           289     -14%
Linna Ekraanid OÜ*                                     22             -        -
Intersegment eliminations                               0           (0)     118%
TOTAL joint ventures                                1 207         1 189       2%
TOTAL segment by proportional consolidation         4 779         4 913      -3%



* Proportional share of joint ventures



ONLINE MEDIA and DELFI

As a market leader Delfi continues to invest into new technologies and IT
solutions to improve user experience of its readers and advertisers. This year
Delfi mobile application for IOS and Android devices and m.delfi environment
were renewed together with more functionality. New feature zlick was introduced
enabling to purchase paid content with 0-click. Ad-free Delfi solution for
mobile phones where users can remove all ads from the Delfi environment for a
monthly fee was introduced. Since 2016 Delfi app is available for Apple TV and
Sony Android TV users. The clients of Levira and Starman in Estonia are able to
watch Delfi TV broadcasts and programmes traditionally on trtelevision screens. 

In Lithuania, Delfi was the first publisher that introduced Facebook messenger
bots. Delfi was also the first in Lithuania to use Facebook Live streaming. Of
pan-Baltic developments, the solution to use Facebook Instant Article was
completed. 

Starting from 2016, our advertising sales departments offer in addition to
online advertising in our own portals also the possibility to buy advertising
in other local or international channels. We also offer to our customers a full
advertising service from the idea to execution including booking media space
and provide programmatic advertising solutions. 



The range of vertical products continues to expand. This year, Delfi Estonia
launched www.kinoveeb.ee dedicated to the film art and www.homme.ee that is
targeted at men and refers to a supplement of newspaper Eesti Ekpress. Delfi
Latvia launched an esoterics portal www.orakuls.lv and two video sub-verticals
www.retvplay.lv and www.360play.lv. In Lithuania, in cooperation with the
Lithuanian Marketing Association (LiMA), a new unique website for marketing
professionals was launched that aims to promote communication between them.
Delfi FIT, a Delfi subsite that is promoting healthy lifestyle, was launched 
in cooperation with the Lithuanian Basketball Federation. Also portal
www.busiumama.lt, a portal targeted at expecting mothers, and a new Delfi
subsite Delfi Style, were launched. The National Basketball Association (NBA)
and DELFI Lithuania announced a new multiyear partnership that includes plans
to launch www.nba.com/Lithuania, the NBA’s new official online destination in
Lithuania. 

Delfi Lithuania continues developing the classified portal www.alio.lt. In
July, Delfi Latvia acquired a specialized classified portal www.atverskapi.lv.
As a new e-commerce service, www.tobook.lv  was launched in Latvia that gathers
different beauty saloons and possibility of making reservations on-line. 

In all three Baltic countries the focus is on writing more long-read analytical
articles in order to increase the value of Delfi to users. In Estonia this is
being provided in co-operation with editorial teams of our daily and weekly
newspapers Eesti Päevaleht, Eesti Ekspress and Maaleht. 

A lot of attention is being paid on socially responsible behaviour and to
supporting various charity projects, cultural, sport, social and business
events in all Baltic countries. 

Estonian online readership 2015-2016

In the first quarter of 2016, Postimees merged two classified portals www.kv.ee
and www.osta.ee owned by Eesti Meedia into its postimees.ee domain. This
increased the number of users of Postimees.ee by 17%. 



In the third quarter of 2016, Gemius changed the methodology of the online
readership survey in Estonia, Latvia and Lithuania, as a result of which the
readership of mobile devices and tablet PCs was added to the above readership
of computer users. As a result of the change of methodology that was made in
September, the total number of computer users in Estonia fell by 11%. The
number of computer users of Postimees.ee decreased less than that of computers
users of Delfi. Competition between Delfi and Postimees remains active. In
spite of changes in methodology, the readership of Õhtuleht has been very
stable. Starting from the summer of 2016, the Gemius survey also shows separate
readership in mobile devices and tablet PCs. 



Latvian online readership 2015-2016

At the beginning of 2016, the research company Gemius changed its method of
online surveys, and, as a result, the online readership figure decreased in
February. This figure shows only the online readership of PC users. Inbox.lv
remains Latvia’s largest portal among PC users. Contrary to expectations, Inbox
increased its readership at the end of the year, especially in mobile devices.
The readership of Delfi.lv as compared to tvnet.lv is practically unchanged.
The number of mobile users continues to grow. The local social network
draugiem.lv steadily continues to lose users to Facebook. As in other Baltic
countries, the main competition in Latvia is for attracting new mobile users. 

Lithuanian online readership 2015-2016

Delfi.lt remains Lithuania’s largest online portal. In the third quarter 2016,
15min.lt added several portals that do not belong to this media group, which is
why the readership of the 15min.lt domain increased in the fourth quarter of
2016. This growth does not mean growth in readership of media services and
therefore does not mean that the market situation of 15min.lt has improved. TV3
and Lrytas.lt are competing for the third place. As in other markets,
development and marketing activities in Lithuania are focused on increasing the
number of mobile users. In this segment, Delfi has notably increased its
readership. 



PRINT MEDIA IN ESTONIA



Estonian newspaper circulation 2015-2016

Circulations of newspapers in Estonia have been falling moderately in the long
run. In the fourth quarter 2016 there was a significant change in the
circulations of paper versions of newspapers in Estonia. For three months,
Õhtuleht has been the newspaper with the largest circulation in Estonia and
Postimees has fallen to the second place. In December, Postimees fell to the
third place because, traditionally, Maaleht gained considerably in December.
The circulation of Päevaleht has somewhat decreased in 2016, but the growth in
the number of digital subscribers of Päevaleht has been much quicker than the
decrease in the circulation of the paper version of the newspaper. 



Estonian newspaper readership 2015-2016

Similarly to the circulation of newspapers, the readership of publications also
remained relatively stable in 2016. As compared to the fourth quarter 2015, the
readership of Eesti Ekspress and Eesti Päevaleht increased, while that of
Postimees and Õhtuleht decreased. As this survey does not cover the readership
of digital newspapers, it does not represent the total readership. The number
of digital subscriptions of periodicals of Ekspress Group amounts to ca 50
thousand. Increasing the readership of digital newspapers remains the main task
for the Group’s publications. 

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. The new printing
machine installed in 2015 has enabled us to further expand the range of printed
products. 





(thousand EUR)         Sales        
                   Q4   Q4    Change
                 2016   2015     %  
AS Printall     6 952  7 386     -6%







(thousand EUR)          EBITDA        
                 Q4     Q4    Change %
                 2016   2015          
AS Printall     1 329  1 355       -2%







(thousand EUR)             Sales            
                12 months  12 months  Change
                     2016     2015       %  
AS Printall        25 585     25 842     -1%







(thousand EUR)              EBITDA            
                12 months  12 months  Change %
                   2016       2015            
AS Printall         4 645      4 966       -6%







The printing services segment continues to be impacted by the economic
sanctions imposed towards Russia, the negative impact of which on the
Scandinavian printing industry also impacts us. The production volume of
Printall continues to increase, but the price pressure is still strong due to
the production capacity which has become available in Scandinavia. The sales
keep increasing, however the profit margin continues to fall due to lower
prices. 

Printing services and the environment

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 consumes
green energy. GREEN CHOICE certificate confirms that 100% of energy consumed by
printing plant has been produced from renewable energy sources. 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. 



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 received these certificates helps to support the environmentally friendly,
socially fair and economically viable management of the world’s forests. 



Consolidated balance sheet (unaudited)

(thousand EUR)                 31.12.2016  31.12.2015
ASSETS                                               
Current assets                                       
Cash and cash equivalents           2 805       2 927
Term deposits                          51           0
Trade and other receivables         7 468       6 741
Inventories                         2 770       2 718
Total current assets               13 094      12 386
Non-current assets                                   
Trade and other receivables           982       1 149
Deferred tax asset                     34          42
Investments in joint ventures       2 435       1 007
Investments in associates             591         215
Property, plant and equipment      12 722      13 791
Intangible assets                  44 310      44 590
Total non-current assets           61 074      60 794
TOTAL ASSETS                       74 168      73 180
LIABILITIES                                          
Current liabilities                                  
Borrowings                          2 313       2 240
Trade and other payables            7 170       6 679
Corporate income tax payable          108         114
Total current liabilities           9 591       9 033
Non-current liabilities                              
Long-term borrowings               13 471      15 447
Deferred tax liability                 33          26
Total non-current liabilities      13 504      15 473
TOTAL LIABILITIES                  23 095      24 506
EQUITY                                               
Share capital                      17 878      17 878
Share premium                      14 277      14 277
Treasury shares                     (863)       (176)
Reserves                            2 058       1 787
Retained earnings                  17 723      14 908
TOTAL EQUITY                       51 073      48 674
TOTAL LIABILITIES AND EQUITY       74 168      73 180

Consolidated statement of comprehensive income (unaudited)

(thousand EUR)                              Q4      Q4    12 months    12 months
                                          2016    2015         2016         2015
Sales revenue                           14 743  14 811       53 324       52 773
Cost of sales                              (11     (11     (42 122)     (41 781)
                                          163)    121)                          
Gross profit                             3 580   3 690       11 202       10 992
Other income                               579     281        1 085          659
Marketing expenses                       (770)   (743)      (2 488)      (2 377)
Administrative expenses                     (1      (1      (5 357)      (5 236)
                                          446)    472)                          
Other expenses                            (54)    (38)        (114)        (118)
Impairment of goodwill                       0      (1            0      (1 200)
                                                  200)                          
Operating profit                         1 889     518        4 328        2 720
Interest income                              7      10           32           42
Interest expense                         (114)   (125)        (471)        (550)
Foreign exchange gains (losses)            (6)     (1)         (10)          (6)
Other finance costs                       (10)    (15)         (56)         (71)
Net finance cost                         (123)   (131)        (505)        (585)
Profit on shares of joint ventures         210     196          772          785
Profit from shares of associates            72      72          113           86
Profit before income tax                 2 048     655        4 708        3 006
Income tax expense                       (180)   (195)        (302)        (299)
Net profit  for the reporting period     1 868     460        4 406        2 707
Net profit for the reporting period                                             
 attributable to:                                                               
Equity holders of the parent company     1 868     460        4 406        2 707
Other comprehensive income                   0       0            0            0
Total comprehensive income               1 868     460        4 406        2 707
Attributable to equity holders of the    1 868     460        4 406        2 707
 parent company                                                                 
Basic and diluted earnings per share      0.06    0.02         0.15         0.09

Consolidated cash flow statement (unaudited)

(EUR thousand)                                           12 months     12 months
                                                              2016          2015
Cash flows from operating activities                                            
Operating profit for the reporting year                      4 328         2 720
Adjustments for:                                                                
Depreciation, amortisation and impairment                    2 953         2 760
Loss on trademark and goodwill impairment                        0         1 200
(Gain)/loss on sale and write-down of property,                 37           (4)
 plant and equipment                                                            
Change in value of share option                                136            91
Cash flows from operating activities:                                           
Trade and other receivables                                  (709)         (191)
Inventories                                                   (53)         (645)
Trade and other payables                                       484           361
Cash generated from operations                               7 175         6 292
Income tax paid                                              (293)         (118)
Interest paid                                                (519)         (525)
Net cash generated from operating activities                 6 363         5 649
Cash flows from investing activities                                            
Term deposit (placement)/release                                 0         1 600
Acquisition of joint ventures                                (868)             0
Acquisition of associate                                     (311)             0
Purchase and receipts of other investments                       5          (50)
Interest received                                               32            33
Purchase of  property, plant and equipment                 (1 335)       (1 575)
Proceeds from sale of property, plant and equipment             39            33
Loans granted                                                 (25)             0
Loan repayments received                                       175            74
Net cash used in investing activities                      (2 289)           115
Cash flows from financing activities                                            
Dividends paid                                             (1 456)       (1 187)
Dividend received from joint ventures                          246           278
Finance lease repayments                                      (72)          (89)
Change in use of overdraft                                       0       (1 117)
Loan received                                                   11           687
Repayments of bank loans                                   (2 186)       (4 952)
Purchase of treasury shares                                  (687)         (112)
Net cash used in financing activities                      (4 144)       (6 492)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS          (71)         (729)
Cash and cash equivalents at the beginning of the            2 927         3 656
 year                                                                           
Cash and cash equivalents at the end of the year             2 856         2 927




         Additional information:
         Mari-Liis Rüütsalu
         Chairman of the Management Board
         GSM: +372 512 2591
         e-mail: [email protected]